UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______.
Commission file number 001-37367
OPGEN, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
9717 Key West Avenue, Suite 100
Rockville, MD
(Address of principal executive offices)
06-1614015
(I.R.S. Employer
Identification No.)
20850
(Zip Code)
(240) 813-1260
(Registrant’s telephone number, including area code)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock
Trading Symbols
OPGN
Name of each exchange on which registered
Nasdaq Capital Market
Securities registered or to be registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☐ NO ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES ☐ NO ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES ☐ NO ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). YES ☐ NO ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company”
in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
Emerging growth company
☐
☒
☐
Accelerated filer
Smaller reporting company
☐
☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received
by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ☐ NO ☒
The aggregate market value of the voting common stock held by non-affiliates of the registrant June 30, 2023, was $5,681,755 (based upon the last reported
sale price of $8.20 per share on June 30, 2023), on The Nasdaq Capital Market.
As of May 31, 2024, 1,343,739 shares of common stock of the registrant were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
OPGEN, INC.
ANNUAL REPORT ON FORM 10-K
For the Year Ended December 31, 2023
TABLE OF CONTENTS
PART I
Item 1.
Item 1A.
Item 1B.
Item 1C.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.
Signatures
Business
Risk Factors
Unresolved Staff Comments
Cybersecurity
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
[Reserved]
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Person Transactions, and Director Independence
Principal Accounting Fees and Services
Exhibits and Financial Statement Schedules
Form 10-K Summary
Consolidated Financial Statements
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F-1
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This annual report on Form 10-K for the year ended December 31, 2023 (the “Annual Report”) contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). In this Annual Report, we refer to OpGen, Inc. as the “Company,” “OpGen,” “we,” “our” or “us.” All statements, other than statements
of historical facts contained herein, including statements regarding our future results of operations and financial position, strategy and plans, and our
expectations for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “design,”
“intend,” “expect” or the negative version of these words and similar expressions are intended to identify forward-looking statements.
We have based these forward-looking statements on our current expectations and projections about future events and trends that we believe may affect our
financial condition, results of operations, strategy, short- and long-term business operations and objectives, and financial needs. These forward-looking
statements are subject to a number of risks, uncertainties and assumptions, including those described in Part I, Item 1A “Risk Factors.” In light of these
risks, uncertainties and assumptions, the forward-looking events and circumstances included herein may not occur, and actual results could differ materially
and adversely from those anticipated or implied in the forward-looking statements. Given these uncertainties, you should not place undue reliance on these
forward-looking statements. Forward-looking statements include, but are not limited to, statements about:
● our liquidity and working capital requirements, including our cash requirements over the next 12 months;
● our ability to maintain compliance with the ongoing listing requirements for the Nasdaq Capital Market;
● our ability to execute upon and achieve the benefits of the strategic direction under the Company’s new leadership and Board;
● our ability to identify and realize the benefits of potential strategic transactions;
● adverse effects on our business condition and results of operations from general economic and market conditions and overall fluctuations in the
United States and international markets, including deteriorating market conditions due to investor concerns regarding inflation;
● our use of proceeds from capital financing transactions;
● compliance with the U.S. regulations applicable to our business; and
● our expectations regarding future revenue and expenses.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity,
performance or achievements. In addition, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these
forward-looking statements. Any forward-looking statement made by us in this Annual Report speaks only as of the date on which it is made. We disclaim
any duty to update any of these forward-looking statements after the date of this Annual Report to confirm these statements to actual results or revised
expectations.
These factors should not be construed as exhaustive and should be read in conjunction with our other disclosures, including but not limited to the risk
factors described in Part I, Item 1A of this Annual Report. Other risks may be described from time to time in our filings made under the securities laws.
New risks emerge from time to time. It is not possible for our management to predict all risks. All forward-looking statements in this Annual Report speak
only as of the date made and are based on our current beliefs and expectations. We undertake no obligation to update or revise any forward-looking
statement, whether as a result of new information, future events or otherwise.
ii
NOTE REGARDING TRADEMARKS
We own various U.S. federal trademark registrations and applications and unregistered trademarks and servicemarks, including but not limited to OpGen®
and Acuitas®. All other trademarks, servicemarks or trade names referred to in this Annual Report are the property of their respective owners. Solely for
convenience, the trademarks and trade names in this Annual Report are sometimes referred to without the ® and ™ symbols, but such references should
not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend
the use or display of other companies’ trademarks and trade names to imply a relationship with, or endorsement or sponsorship of us by, any other
companies, products or services.
iii
Item 1. Business
PART I
Please refer to the Glossary at the end of this Business section for definitions or descriptions of scientific, diagnostic, healthcare, regulatory, and OpGen-
specific terms used in this Annual Report.
Overview
OpGen, Inc. (“OpGen” or the “Company”) was incorporated in Delaware in 2001. On April 1, 2020, OpGen completed its business combination
transaction with Curetis N.V., a public company with limited liability under the laws of the Netherlands. As part of the transaction, the Company acquired
all the shares of Curetis GmbH, a private limited liability company organized under the laws of the Federal Republic of Germany (“Curetis”), and certain
other assets and liabilities of Curetis GmbH, including all its shares of Ares Genetics GmbH (“Ares Genetics”). From inception through November 2023,
the Company operated as a precision medicine company harnessing the power of molecular diagnostics and informatics to help combat infectious disease.
The Company, along with its subsidiaries, Curetis and Ares Genetics, developed and commercialized molecular microbiology solutions helping to guide
clinicians with more rapid and actionable information about life threatening infections to improve patient outcomes and decrease the spread of infections
caused by multidrug-resistant microorganisms, or MDROs.
During the year ended December 31, 2023, the Company implemented certain cash management initiatives, including restructuring its U.S. operations by
reducing headcount from 24 to 5 and has since continued scaling down operations at OpGen’s U.S. headquarters to the core functions of a U.S. Nasdaq
listed company with only minimal distribution, marketing, and sales support, allowing the Company to conserve cash and focus on the functions needed to
pursue potential strategic alternatives. However, on November 6, 2023, Curetis filed a petition for insolvency with the district court of Stuttgart, Germany,
and Ares Genetics filed a petition for insolvency with the commercial court in Vienna, Austria. The insolvency proceedings of Curetis and Ares Genetics
were adjudicated under the insolvency laws of Germany and Austria, respectively.
The insolvency administrators assumed control over the assets and liabilities of Curetis and Ares Genetics, respectively, which eliminated the authority and
power of the Company and its officers to act on behalf of the subsidiaries. The loss of control required that the Company no longer include Curetis and
Ares Genetics in its consolidated financial statements. Prior to the insolvency filings, Curetis and Ares Genetics had been included in the Company’s
consolidated financial statements. Upon deconsolidation of Curetis and Ares Genetics, the Company recognized gains on deconsolidation of subsidiaries at
the subsidiary levels of $46.6 million for Curetis and $7.7 million for Ares Genetics, which was offset by a loss on deconsolidation of subsidiary for the
Company of $67.3 million. The deconsolidation charges to operations represent the excess of the carrying value over the fair value of the Company’s
interest in and intercompany payables to and receivables from Curetis and Ares Genetics as of the insolvency filing date.
Since the insolvency filings and through the three months ended March 31, 2024, the Company continues to sell the Curetis Unyvero products to its
existing customers in the United States via drop shipments from Curetis directly to customer locations. The Unyvero tests are sold to hospitals, laboratories,
and public health organizations as products and on a fee-for-service basis. When hospital and health system clients purchase our products, we bill them
directly for the purchase of test kits and consumables. As of December 31, 2023, OpGen had an installed base of approximately 28 Unyvero A50 Analyzers
across the United States in different types of hospitals and laboratories, including installations for clinical studies. The sale of Ares Genetics’ related
products and services was discontinued during the first quarter of 2024 due to the sale of the Ares Genetics assets to a strategic acquiror by its insolvency
administrator in Austria.
In March 2024, the Company entered into a securities purchase agreement (the “March 2024 Purchase Agreement”) with David E. Lazar, pursuant to which
the Company agreed to sell 3,000,000 shares of Series E Convertible Preferred Stock (“Series E Preferred Stock”) to Mr. Lazar at a price of $1.00 per share
for aggregate gross proceeds of $3.0 million (the “March 2024 Private Placement”). In connection with the transactions contemplated by the March 2024
Purchase Agreement, the members of the Board of Directors, prior to the closing of such transactions, resigned and a new Board of Directors was
appointed, of which Mr. Lazar was appointed Chairman. The focus of OpGen going forward, under new leadership and a new Board of Directors, will be
on the identification of a privately held company to complete a reverse merger or similar strategic transaction.
1
On January 5, 2023, the Company effected a reverse stock split of its issued and outstanding shares of common stock at a ratio of 1 post-reverse-split share
for every 20 pre-reverse-split shares. The common stock continues to be traded on The Nasdaq Capital Market under the symbol “OPGN” and began
trading on a split-adjusted basis on January 5, 2023. All share amounts and per share prices in this Annual Report have been adjusted to reflect the reverse
stock split.
On May 9, 2024, the Company held a special meeting of stockholders to vote on certain matters, including the removal of certain restrictions applicable to
the voting of Mr. Lazar’s shares of Series E Preferred Stock. Following approval of the proposals at such special meeting, subject to limited exceptions,
Mr. Lazar may vote his shares without restrictions.
On May 20, 2024, the Company effected a reverse stock split of its issued and outstanding shares of common stock at a ratio of 1 post-reverse-split share
for every 10 pre-reverse-split shares. The common stock continues to be traded on The Nasdaq Capital Market under the symbol “OPGN” and began
trading on a split-adjusted basis on May 20, 2024. All share amounts and per share prices in this Annual Report have been adjusted to reflect the reverse
stock split.
Glossary
The following scientific, healthcare, regulatory and OpGen-specific terms are used throughout this Annual Report:
“Annual Report” means this Annual Report on Form 10-K.
“ATM offering” means an at-the-market public offering.
“EIB” means European Investment Bank.
“NOL” means net operating loss.
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
Corporate Information
OpGen, Inc. was incorporated in Delaware in 2001. The Company’s headquarters are located at 9717 Key West Avenue, Suite 100, in Rockville, Maryland,
through the end of the second quarter of 2024. The Company operates in one business segment.
Available Information
The Company maintains a website at www.opgen.com. Our Code of Conduct is available on our website. We are not incorporating our website into this
Annual Report. Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to those reports, filed
or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, are available free of charge on our website as soon as practicable after electronic filing
of such material with, or furnishing it to, the SEC. This information may be read at the SEC website at http://www.sec.gov.
2
Item 1A. Risk Factors
The following are significant factors known to us that could materially harm our business, financial condition or operating results or could cause our actual
results to differ materially from our anticipated results or other expectations, including those expressed in any forward-looking statement made in this
Annual Report. The risks described are not the only risks we face. Additional risks and uncertainties not currently known to us, or that we currently deem
to be immaterial, may also adversely affect our business, financial condition and operating results. If any of these risks actually occur, our business,
financial condition, and operating results could suffer significantly.
Risks Related to Our Business
We have only a modest amount of cash, which is not sufficient to support our plan of operations for the long-term.
We have obtained short-term financing as a result of the March 2024 Private Placement; however, such financing provided the Company limited capital and
there can be no assurance that additional financing will be available to us, or if available, will be on terms satisfactory to us in the longer-term. If we are
unable to obtain funds when we need them or if we cannot obtain funds on terms favorable to us within the longer-term, we may not be able to maintain our
operations as a going concern.
We scaled down operations, will not generate significant revenues unless we complete a business combination with an operating company, and need
additional capital to fund our activities.
We continue to implement cash management initiatives, included scaled down operations to the core functions of a U.S. Nasdaq listed company with only
minimal distribution, marketing, and sales support, allowing the Company to conserve cash and focus on the functions needed to pursue potential strategic
alternatives. As we have transitioned our business model, unless we complete a business combination with an operating company, we will not generate
significant new revenues in the future and we will continue to incur expenses related to identifying and acquiring an operating company and compliance
with our reporting obligations under applicable federal securities laws. We will need to raise additional funds, and such funds may not be available on
commercially acceptable terms, if at all. If we cannot raise funds on acceptable terms, we may not be able to continue to execute our plan to acquire an
operating company and in the extreme case, we may need to liquidate the Company.
We have a history of losses, and we expect to incur losses for the next several years. The report of our independent registered public accounting firm on
our financial statements for the years ended December 31, 2023 and 2022 contains explanatory language that substantial doubt exists about our ability
to continue as a going concern.
We have incurred substantial losses since our inception, and we expect to continue to incur additional losses for the next several years. For the years ended
December 31, 2023 and 2022, we had net losses of $32.7 million and $37.3 million, respectively. From our inception through December 31, 2023, we had
an accumulated deficit of $305.5 million. The reports of our independent registered public accounting firm on our financial statements for the years ended
December 31, 2023 and 2022 each contain explanatory language that substantial doubt exists about our ability to continue as a going concern. We
completed a number of financings in 2022 and 2023. We completed an at-the-market offering which raised net proceeds of approximately $0.99 million in
2022, a registered direct financing in October 2022, which raised net proceeds of approximately $3.04 million, a registered direct financing in
January 2023, which raised net proceeds of approximately $6.9 million, a best-efforts public offering in May 2023, which raised net proceeds of
approximately $3.0 million, a preferred stock purchase agreement in October 2023 for up to $1.0 million in proceeds, and a warrant inducement agreement
in October 2023, which raised net proceeds of $2.057 million. Additionally, we entered into a securities purchase agreement for the sale of preferred stock
in March 2024, which is expected to raise proceeds of approximately $3.0 million. We cannot assure you that we can continue to raise the capital necessary
to fund our business. Failure to achieve profitable operations may require us to seek additional financing when none is available or is only available on
unfavorable terms.
3
We have substantial amount of debt which must be liquidated prior to entering an acquisition of an operating company.
We have made significant progress in negotiating our debt with our creditors. As part of the March 2024 Purchase Agreement, the Company entered into
settlement agreements (the “Settlement Agreements”) with each of the European Investment Bank (“EIB”) and Curetis GmbH, the Company’s subsidiary
(“Curetis”), and Curetis’ trustee in insolvency, pursuant to which the parties agreed to settle outstanding liabilities amongst the parties. Pursuant to the
settlement agreements and March 2024 Purchase Agreement, following the final closing of the transactions contemplated by the March 2024 Purchase
Agreement, the Company will pay $2.0 million of the proceeds to settle all outstanding debt of the Company to each of EIB and Curetis. The settlement
agreement with EIB also terminated that certain Guarantee and Indemnity Agreement, dated as of July 9, 2020, by and between the EIB and the Company,
pursuant to which the Company had guaranteed all of Curetis’ debt to EIB. If we are unable to pay and settle such outstanding liabilities in accordance with
the terms of the settlement agreements, the Company will continue to have substantial debt to the EIB, and we will not have capital to pay such debt in
accordance with its terms, which would have a material adverse effect and, if the EIB exercises its rights and remedies under our guarantee agreement,
would likely force us to seek bankruptcy protection.
We may not be able to acquire an operating company and if we complete such an acquisition, we expect that we will need to raise additional capital.
Assuming we transition our business model as expected, our sole business objective, following liquidation of our debts, will be to seek to identify strategic
opportunities. As of the date of this report, we have commenced the process of identifying strategic opportunities, but there can be no assurance that we
will be able to complete such a transaction.
In the event we complete such a transaction, we expect that we will need to raise substantial additional capital. We intend to rely on external sources of
financing to meet any capital requirements and to obtain such funding through the debt and equity markets. We cannot provide any assurances that we will
be able to obtain additional funding when it is required or that it will be available to us on commercially acceptable terms, if at all. If we fail to obtain such
necessary funding, any such transaction may not be successful.
Our Board of Directors has sole discretion to identify and evaluate transaction candidates and complete transactions without the approval of our
stockholders.
We have not developed any specific transaction guidelines and we are not obligated to follow any particular operating, financial, geographic or other
criteria in evaluating candidates for potential transactions or business combinations. We will target companies that we believe will provide the best
potential long-term financial return for our stockholders and we will determine the purchase price and other terms and conditions of such transactions
without review or approval of our stockholders. Accordingly, our stockholders will not have the opportunity to evaluate the relevant economic, financial,
and other information that our Board will use and consider in deciding whether or not to enter into a particular transaction.
We will not generate any significant revenue or earnings in the near future unless and until we merge with or acquire an operating business.
Upon settlement of our debts to EIB, if such an event occurs, we will have limited assets and operations. As a result, we do not expect to generate any
significant revenue or realize significant revenue unless and until we successfully complete a strategic transaction.
There is competition for those private companies suitable for a merger transaction of the type being contemplated by management.
There is currently a very competitive market for business opportunities, which could reduce the likelihood of consummating a successful business
combination. We expect to be an insignificant participant in the business of seeking mergers with, joint ventures with, and acquisitions of small private and
public entities. A large number of established and well-financed entities, including small public companies, venture capital firms, and special purpose
acquisition companies, or “SPACs”, are active in mergers and acquisitions of companies that may be desirable target candidates for us. Nearly all these
entities have significantly greater financial resources, technical expertise and managerial capabilities than we do. As a result, we may be unable to
effectively compete with such entities in identifying possible business opportunities and successfully completing a business combination. These
competitive factors may reduce the likelihood of us identifying and consummating a successful business combination.
4
Security breaches, loss of data and other disruptions could compromise sensitive information related to our business or prevent us from accessing
critical information and expose us to liability, which could adversely affect our business and our reputation.
In the ordinary course of our business, we collect and store sensitive data, which may include legally protected health information and personally
identifiable information about our customers and their patients. We also store sensitive intellectual property and other proprietary business information,
including that of our customers. We manage and maintain our applications and data utilizing a combination of on-site systems and cloud-based data center
systems. These applications and data encompass a wide variety of business-critical information, including research and development information,
commercial information and business and financial information. We face four primary risks relative to protecting this critical information: loss of access
risk, inappropriate disclosure risk, inappropriate modification risk and the risk of our being unable to identify and audit our controls over the first three
risks.
We are highly dependent on information technology networks and systems, including the Internet, to securely process, transmit and store this critical
information. Security breaches of this infrastructure, including physical or electronic break-ins, computer viruses, phishing attempts, ransomware attacks or
other attacks by hackers and similar breaches, can create system disruptions, shutdowns or unauthorized disclosure or modification of confidential
information. The secure processing, storage, maintenance, and transmission of this critical information is vital to our operations and business strategy, and
we devote significant resources to protecting such information. Although we take measures to protect sensitive information from unauthorized access or
disclosure, our information technology and infrastructure may be vulnerable to attacks by hackers or viruses or breached due to employee error,
malfeasance or other disruptions.
A security breach or privacy violation that leads to disclosure or modification of or prevents access to consumer information (including personally
identifiable information or protected health information) could harm our reputation, compel us to comply with disparate state breach notification laws,
require us to verify the correctness of database contents and otherwise subject us to liability under laws that protect personal data, resulting in increased
costs or loss of revenue. If we are unable to prevent such security breaches or privacy violations or implement satisfactory remedial measures, our
operations could be disrupted, and we may suffer loss of reputation, financial loss and other regulatory penalties because of lost or misappropriated
information, including sensitive consumer data. In addition, these breaches and other inappropriate access can be difficult to detect, and any delay in
identifying them may lead to increased harm, as described above.
Any such breach or interruption could compromise our networks, and the information stored there could be inaccessible or could be accessed by
unauthorized parties, publicly disclosed, lost or stolen. Any such interruption in access, improper access, disclosure or other loss of information could result
in legal claims or proceedings, liability under laws that protect the privacy of personal information, such as the federal Health Insurance Portability and
Accountability Act, or HIPAA, and regulatory penalties. Unauthorized access, loss or dissemination could also disrupt our operations, including our ability
to collect, process, and prepare Company financial information as well as manage the administrative aspects of our business, all of which could adversely
affect our business.
In addition, the interpretation and application of consumer, health-related, privacy and data protection laws in the United States and elsewhere are often
uncertain, contradictory and in flux. It is possible that these laws may be interpreted and applied in a manner that is inconsistent with our practices. If so,
this could result in government-imposed fines or orders requiring that we change our practices, which could adversely affect our business. Complying with
these various laws could cause us to incur substantial costs or require us to change our business practices and compliance procedures in a manner adverse
to our business.
We are subject to risks with respect to counterparties, and failure of such counterparties to meet their obligations could cause us to suffer losses or
negatively impact our results of operations and cash flows.
We have entered into various contracts that are material to the operation of our business that subject us to counterparty risks. The ability and willingness of
our counterparties to perform their obligations under any contract will depend on a number of factors that are beyond our control and may include, among
other things, general economic conditions, the condition of such counterparty’s industry and the overall financial condition of the counterparty. A
prolonged period of difficult industry conditions could lead to changes in a counterparty’s liquidity and increase our exposure to counterparty risk. If our
counterparties are unable or unwilling to perform, it could negatively impact our results of operations and cash flows.
5
Risks Related to Our Securities and Public Company Status
If we are unable to maintain effective internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our
reported financial information and the market price of our common stock may be negatively affected.
As a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such internal control.
Section 404 of the Sarbanes-Oxley Act of 2002 requires that we evaluate and determine the effectiveness of our internal control over financial reporting
and provide a management report on internal control over financial reporting. If we have a material weakness in our internal control over financial
reporting, we may not detect errors on a timely basis and our financial statements may be materially misstated.
When we are no longer a smaller reporting company, our independent registered public accounting firm will be required to issue an attestation report on the
effectiveness of our internal control over financial reporting. Even if our management concludes that our internal control over financial reporting is
effective, our independent registered public accounting firm may conclude that there are material weaknesses with respect to our internal controls or the
level at which our internal controls are documented, designed, implemented, or reviewed.
When we are no longer a smaller reporting company, if our auditors were to express an adverse opinion on the effectiveness of our internal control over
financial reporting because we had one or more material weaknesses, investors could lose confidence in the accuracy and completeness of our financial
disclosures, which could cause the price of our common stock to decline. Internal control deficiencies could also result in a restatement of our financial
results in the future.
We cannot assure you that we will be able to continue to comply with the Nasdaq Minimum Bid Price Rule, the Periodic Filing Rule, or other
continued listing standards of the Nasdaq Capital Market. If we are unable to maintain compliance with such standards, we could be subject to
delisting or other adverse action, which could negatively impact the trading of our common stock.
As previously disclosed, we requested a hearing by the Nasdaq Hearings Panel of The Nasdaq Stock Market LLC to appeal the Nasdaq listing staff’s
determination to delist the Company’s securities as a result of the failure of the Company’s common stock to comply with the minimum bid price
requirement of Nasdaq Listing Rule 5550(a)(2). In response to the Company’s request, on February 9, 2024, the Company received written notification
from Nasdaq notifying the Company that the Panel had granted the Company’s request for an additional period, during which the Company will remain
listed on Nasdaq, to regain compliance with the Bid Price Rule. Pursuant to the Notice, the Panel granted the Company an additional period until June 3,
2024 to regain compliance. The extension is subject to certain conditions specified by the Panel in the Notice. Thereafter, Nasdaq notified the Company
that it failed to comply with Nasdaq Listing Rule 5250(c)(1) for failing to timely file this Annual Report and the Company’s Quarterly Report on Form 10-
Q for the three-month period ended March 31, 2024. The Panel again granted the Company’s request for additional time to cure such delinquencies,
provided that the Company file this Annual Report by June 3, 2024 and the Quarterly Report on Form 10-Q by July 8, 2024.
While the Company intends to comply with such conditions and rules, there can be no assurance that the Company will be able to regain or remain in
compliance with the applicable Nasdaq listing requirements on an ongoing basis or that the Panel will afford the Company additional time to achieve
compliance. If we are unable to satisfy these requirements or standards, we could be subject to delisting, which would have a negative effect on the price of
our common stock and would impair your ability to sell or purchase our common stock when you wish to do so.
The 2024 Reverse Stock Split may decrease the liquidity of the shares of our common stock.
The liquidity of the shares of our common stock may be affected adversely by the 2024 Reverse Stock Split given the reduced number of shares
outstanding after the 2024 Reverse Stock Split, especially if the market price of our common stock does not increase as a result of the 2024 Reverse Stock
Split. In addition, the 2024 Reverse Stock Split may increase the number of stockholders who own odd lots (less than 100 shares) of our common stock,
creating the potential for such stockholders to experience an increase in the cost of selling their shares and greater difficulty effecting such sales.
6
Following the 2024 Reverse Stock Split, the resulting market price of our common stock may not attract new investors, including institutional investors,
and may not satisfy the investing requirements of those investors. Consequently, the trading liquidity of our common stock may not improve.
There can be no assurance that the 2024 Reverse Stock Split will result in a share price that will attract new investors, including institutional investors. In
addition, there can be no assurance that the market price of our common stock will satisfy the investing requirements of those investors. As a result, the
trading liquidity of our common stock may not necessarily improve.
The market price of our common stock and the trading volume of our common stock has been, and may continue to be, highly volatile, and such
volatility could cause the market price of our common stock to decrease.
During 2023, the market price of our common stock fluctuated from a low of $1.70 per share to a high of $34.60 per share, and our stock price continues to
fluctuate. The market price and trading volume of our common stock may continue to fluctuate significantly in response to numerous factors, some of
which are beyond our control, such as:
● our ability to consummate a strategic transaction;
● the trading volume of our common stock;
● variations in our and our competitors’ results of operations;
● changes in earnings estimates or recommendations by securities analysts, if our common stock is covered by analysts;
● successes or challenges in our collaborative arrangements or alternative funding sources;
● adverse effects on our business condition and results of operations from general economic and market conditions and overall fluctuations in the
United States and international markets, including deteriorating market conditions due to investor concerns regarding inflation;
● adverse developments affecting the financial services industry, including events or concerns involving liquidity, defaults or non-performance by
financial institutions that could adversely affect our business, financial condition or results of operations;
● future issuances of common stock or other securities;
● the addition or departure of key personnel;
● announcements by us or our competitors of acquisitions, investments or strategic alliances; and
● general market conditions and other factors, including factors unrelated to our operating performance.
Further, the stock market in general, and the market for health care and life sciences companies in particular, has recently experienced extreme price and
volume fluctuations. The volatility of our common stock is further exacerbated due to its low trading volume. Continued market fluctuations could result in
extreme volatility in the price of our common stock, which could cause a decline in the value of our common stock and the loss of some or all of your
investment.
7
Trading of our common stock is limited, and trading restrictions imposed on us by applicable regulations may further reduce trading in our common
stock, making it difficult for our stockholders to sell their shares; and future sales of common stock could reduce our stock price.
Trading of our common stock is currently conducted on the NASDAQ Capital Market. The liquidity of our common stock is limited, including in terms of
the number of shares that can be bought and sold at a given price and reduction in security analysts’ and the media’s coverage of us, if any. These factors
may result in different prices for our common stock than might otherwise be obtained in a more liquid market and could also result in a larger spread
between the bid and ask prices for our common stock. In addition, in the absence of a large market capitalization, our common stock is less liquid than the
stock of companies with broader public ownership, and, as a result, the trading prices of our common stock may be more volatile. In the absence of an
active public trading market, an investor may be unable to liquidate his or her investment in our common stock. Trading of a relatively small volume of our
common stock may have a greater impact on the trading price of our stock. We cannot predict the prices at which our common stock will trade in the future,
if at all.
The exercise of outstanding common stock purchase warrants and stock options will have a dilutive effect on the percentage ownership of our capital
stock by existing stockholders.
As of December 31, 2023, we had outstanding warrants to acquire 1,095,517 shares of our common stock, and stock options to purchase 9,624 shares of
our common stock. A significant number of such warrants have exercise prices above our common stock’s recent trading prices, but the holders have the
right to effect a cashless exercise of such warrants. If a significant number of such warrants and stock options are exercised by the holders, the percentage
of our common stock owned by our existing stockholders will be diluted.
We have never paid dividends on our capital stock, and we do not anticipate paying dividends in the foreseeable future.
We have never paid dividends on any of our capital stock and currently intend to retain any future earnings to fund the growth of our business. We may also
enter into credit agreements or other borrowing arrangements in the future that will restrict our ability to declare or pay cash dividends on our common
stock. Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will depend on our financial condition,
operating results, capital requirements, general business conditions and other factors that our Board of Directors may deem relevant. As a result, capital
appreciation, if any, of our common stock will be the sole source of gain, if any, for the foreseeable future.
Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and stock price.
The global credit and financial markets have recently experienced extreme volatility and disruptions, including severely diminished liquidity and credit
availability, declines in consumer confidence, declines in economic growth, instability in inflation in U.S. and foreign markets, increases in unemployment
rates and uncertainty about economic stability. The financial markets and the global economy may also be adversely affected by the current or anticipated
impact of military conflict, including the conflicts between Russia and Ukraine and Israel and Hamas, terrorism or other geopolitical events. Sanctions
imposed by the United States and other countries in response to such conflicts may also adversely impact the financial markets and the global economy,
and any economic countermeasures by affected countries and others could exacerbate market and economic instability. There can be no assurance that
further deterioration in credit and financial markets and confidence in economic conditions will not occur. Our general business strategy may be adversely
affected by any such economic downturn, volatile business environment or continued unpredictable and unstable market conditions, including instability in
inflation. If the current equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly and more
dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy,
financial performance, and stock price.
We may be subject to litigation or government investigations for a variety of claims, which could adversely affect our operating results, harm our
reputation, or otherwise negatively impact our business.
We may be subject to litigation or government investigations. These may include claims, lawsuits, and proceedings involving securities laws, fraud and
abuse, healthcare compliance, product liability, labor and employment, wage and hour, commercial and other matters. Any such litigation or investigations
could result in substantial costs and a diversion of management’s resources and attention. In addition, any adverse determination could expose us to
significant liabilities, which could have a material adverse effect on our business, financial condition, and results of operations.
8
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Risk Management and Strategy
Following the March 2024 Private Placement, our focus has been on the identification of a privately held company to complete a reverse merger or similar
strategic transaction. While we continue to maintain minimal distribution, marketing, and sales support, we have scaled down operations to the core
functions of a U.S. Nasdaq listed company to conserve cash and focus on the functions needed to pursue potential strategic alternatives. We have
implemented risk management processes to manage the risks associated with reliance on vendors, critical service providers, and other third-parties that may
lead to a service disruption or an adverse cybersecurity incident. This includes an assessment of vendors during the selection/onboarding process and a
review of SOC 1 reports on an annual basis.
In addition, we maintain policies over areas such as information security, access on/offboarding, and access and account management, to help govern the
processes put in place by management designed to protect our IT assets, data, and services from threats and vulnerabilities. We partner with industry
recognized IT providers leveraging third-party technology and expertise. These third-party service providers are a key part of our current cybersecurity risk
management and provide services including, maintenance of an IT assets inventory, periodic vulnerability scanning, identity access management controls
including restricted access of privileged accounts, network integrity safeguarded by employing web-based software, including endpoint protection,
endpoint detection and response, and remote monitoring management on all devices, industry-standard encryption protocols and critical data backups. Our
outsourced information technology consultant conducts proactive patching and monitoring of all of our existing systems and has implemented systems and
procedures to mitigate cybersecurity risks that we believe are appropriate for a company of our size, stage of growth and financial condition. In addition,
we carry insurance with coverage for cyber events that we believe is suitable for a company of our size, stage of growth and financial condition.
Governance
Management is responsible for the day-to-day management of the risks we face, while our Board of Directors and Audit Committee has responsibility for
the oversight of risk management, including risks from cybersecurity threats. In its risk oversight role, our Board of Directors has the responsibility to
satisfy itself that the risk management processes designed and implemented by management are appropriate and functioning as designed. The Board of
Directors has delegated to the Audit Committee of the Board of Directors the responsibility for the oversight of information technology, including
cybersecurity risks. Member(s) of management assigned with cybersecurity oversight responsibility and/or third-party consultants providing cyber risk
services brief the Audit Committee on cyber vulnerabilities identified through the risk management process, emerging threat landscape and new cyber
risks, and provide updates on our processes to prevent, detect, and mitigate cybersecurity incidents.
We face risks from cybersecurity threats that could have a material adverse effect on its business, financial condition, results of operations, cash flows or
reputation. We acknowledge that the risk of cyber incident is prevalent in the current threat landscape and that a future cyber incident may occur in the
normal course of its business. We proactively seek to detect and investigate unauthorized attempts and attacks against our IT assets, data, and services, and
to prevent their occurrence and recurrence where practicable through changes or updates to internal processes and tools and changes or updates to service
delivery; however, potential vulnerabilities to known or unknown threats will remain.
As of the date of this Annual Report, we are not aware of any cybersecurity threats, and have not experienced any cybersecurity incidents, that have
materially affected us, including our business strategy, results of operations or financial condition.
For additional information concerning risks related to cybersecurity, see Item 1A. Risk Factors: Security breaches, loss of data and other disruptions could
compromise sensitive information related to our business or prevent us from accessing critical information and expose us to liability, which could adversely
affect our business and our reputation.
9
Item 2. Properties
The Company leased 10,100 square feet of office and laboratory space at our headquarters in Rockville, Maryland. The original lease term expires in
February 2032. Effective April 1, 2024, the Company entered into a lease assignment agreement where the Company assigned the lease to a third party.
The Company’s security deposit will remain with the landlord and be repaid over time as agreed upon with the assignee of the lease. The Company
previously leased 12,770 square feet of space at its facility in Woburn, Massachusetts, under an operating lease that expired in January 2022, which the
Company had sublet to a third party from February 2021 to January 2022.
Rent expenses under the Company’s facility operating leases for the years ended December 31, 2023 and 2022 were $618,764 and $594,569, respectively,
which for 2023 includes the rent expenses of Curetis and Ares Genetics through the insolvency filing date.
Item 3. Legal Proceedings
From time to time, we may be a party to litigation or subject to claims incident to the ordinary course of business. Although the results of litigation and
claims cannot be predicted with certainty, we do not believe we are party to any claim or litigation; the outcome of which, if determined adversely to us,
would individually or in the aggregate be reasonably expected to have a material adverse effect on our business. Regardless of the outcome, litigation can
have an adverse impact on us due to defense and settlement costs, diversion of management resources and other factors.
On November 6, 2023, Curetis filed a petition for insolvency with the district court of Stuttgart, Germany, and Ares Genetics filed a petition for insolvency
with the commercial court in Vienna, Austria. The insolvency proceedings of Curetis and Ares Genetics were adjudicated under the insolvency laws of
Germany and Austria, respectively. The insolvency administrator for each entity assumed control over the assets and liabilities of Curetis and Ares
Genetics, respectively, which eliminated the authority and power of the Company and its officers to act on behalf of the subsidiaries. As part of the
insolvency proceedings, in April 2024, the insolvency administrator for Curetis sold all of Curetis’ assets to Camtech Pte Ltd., a Singaporean family office.
In April 2024, the insolvency administrator for Ares Genetics sold all of Ares Genetics’ assets to bioMerieux S.A.
Item 4. Mine Safety Disclosures
Not applicable.
10
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
PART II
Our common stock has traded on The Nasdaq Capital Market under the symbol “OPGN” since May 5, 2015. Prior to such time, there was no public market
for our common stock.
Stockholder Information
As of December 31, 2023, there were approximately 18 stockholders of record of our common stock, which does not include stockholders that beneficially
own shares held in a “nominee” or in “street” name.
Sales of Unregistered Securities
None other than as disclosed in the Company’s Current Reports on Form 8-K.
Issuer Purchases of Equity Securities
None.
Item 6. [Reserved]
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our audited
consolidated financial statements and the accompanying notes thereto included elsewhere in this Annual Report. This discussion contains forward-looking
statements, based on current expectations and related to future events and our future financial performance, that involve risks and uncertainties. Our
actual results may differ materially from those anticipated in these forward-looking statements as a result of many important factors, including those set
forth in the section titled “Risk Factors” included under Part I, Item 1A of this Annual Report.
Overview
OpGen, Inc. (“OpGen” or the “Company”) was incorporated in Delaware in 2001. On April 1, 2020, OpGen completed its business combination
transaction with Curetis N.V., a public company with limited liability under the laws of the Netherlands. As part of the transaction, the Company acquired
all the shares of Curetis GmbH, a private limited liability company organized under the laws of the Federal Republic of Germany (“Curetis”), and certain
other assets and liabilities of Curetis GmbH including all its shares of Ares Genetics GmbH (“Ares Genetics”). From inception through November 2023,
the Company operated as a precision medicine company harnessing the power of molecular diagnostics and informatics to help combat infectious disease.
The Company, along with its subsidiaries, Curetis and Ares Genetics, developed and commercialized molecular microbiology solutions helping to guide
clinicians with more rapid and actionable information about life threatening infections to improve patient outcomes and decrease the spread of infections
caused by multidrug-resistant microorganisms, or MDROs.
During the year ended December 31, 2023, the Company implemented certain cash management initiatives, including restructuring its U.S. operations by
reducing headcount from 24 to 5 and has since continued scaling down operations at OpGen’s U.S. headquarters to the core functions of a U.S. Nasdaq
listed company with only minimal distribution, marketing, and sales support, allowing the Company to conserve cash and focus on the functions needed to
pursue potential strategic alternatives. However, on November 6, 2023, Curetis filed a petition for insolvency with the district court of Stuttgart, Germany,
and Ares Genetics filed a petition for insolvency with the commercial court in Vienna, Austria. The insolvency proceedings of Curetis and Ares Genetics
were adjudicated under the insolvency laws of Germany and Austria, respectively.
The insolvency administrators assumed control over the assets and liabilities of Curetis and Ares Genetics, respectively, which eliminated the authority and
power of the Company and its officers to act on behalf of the subsidiaries. The loss of control required that the Company no longer include Curetis and
Ares Genetics in its consolidated financial statements. Prior to the insolvency filings, Curetis and Ares Genetics had been included in the Company’s
consolidated financial statements. Upon deconsolidation of Curetis and Ares Genetics, the Company recognized gains on deconsolidation of subsidiaries at
the subsidiary levels of $46.6 million for Curetis and $7.7 million for Ares Genetics, which was offset by a loss on deconsolidation of subsidiary for the
Company of $67.3 million. The deconsolidation charges to operations represent the excess of the carrying value over the fair value of the Company’s
interest in and intercompany payables to and receivables from Curetis and Ares Genetics as of the insolvency filing date.
Since the insolvency filings and through the three months ended March 31, 2024, the Company continues to sell the Curetis Unyvero products to its
existing customers in the United States via drop shipments from Curetis directly to customer locations. The Unyvero tests are sold to hospitals, laboratories,
and public health organizations as products and on a fee-for-service basis. When hospital and health system clients purchase our products, we bill them
directly for the purchase of test kits and consumables. As of December 31, 2023, OpGen had an installed base of approximately 28 Unyvero A50 Analyzers
across the United States in different types of hospitals and laboratories, including installations for clinical studies. The sale of Ares Genetics’ related
products and services was discontinued during the first quarter of 2024 due to the sale of the Ares Genetics assets to a strategic acquiror by its insolvency
administrator in Austria.
12
In March 2024, the Company entered into a securities purchase agreement (the “March 2024 Purchase Agreement”) with David E. Lazar, pursuant to which
the Company agreed to sell 3,000,000 shares of Series E Convertible Preferred Stock (“Series E Preferred Stock”) to Mr. Lazar at a price of $1.00 per share
for aggregate gross proceeds of $3.0 million. In connection with the transactions contemplated by the March 2024 Purchase Agreement, the members of the
Board of Directors, prior to the closing of such transactions, resigned and a new Board of Directors was appointed, of which Mr. Lazar was appointed
Chairman. The focus of OpGen going forward under new leadership and a new Board of Directors will be on the identification of a privately held company
to complete a reverse merger or similar strategic transaction.
On May 9, 2024, the Company held a special meeting of stockholders to vote on certain matters, including the removal of certain restrictions applicable to
the voting of Mr. Lazar’s shares of Series E Preferred Stock. Following approval of the proposals at such special meeting, subject to limited exceptions,
Mr. Lazar may vote his shares without restrictions.
Following receipt of approval from stockholders at a special meeting of stockholders held on November 30, 2022, the Company filed an amendment to its
Amended and Restated Certificate of Incorporation to effect a one-for-twenty reverse stock split of the issued and outstanding shares of common stock on
January 5, 2023. All share amounts and per share prices in this Annual Report have been adjusted to reflect the reverse stock split.
Following receipt of approval from stockholders at a special meeting of stockholders held on May 9, 2024, the Company filed an amendment to its
Amended and Restated Certificate of Incorporation to effect a one-for-ten reverse stock split of the issued and outstanding shares of common stock on
May 20, 2024. All share amounts and per share prices in this Annual Report have been adjusted to reflect the reverse stock split.
The Company’s headquarters are located at 9717 Key West Avenue, Suite 100, in Rockville, Maryland, through the end of the second quarter of 2024. The
Company operates in one business segment.
Financing Transactions
Since inception, the Company has incurred, and continues to incur, significant losses from operations. The Company has funded its operations primarily
through external investor financing arrangements. The following financing transactions took place during 2022 and 2023:
● On June 24, 2022, the Company entered into an At-the-Market, or ATM, Offering Agreement (the “2022 ATM Agreement”) with H.C.
Wainwright & Co., LLC (“Wainwright”), as a sales agent, pursuant to which the Company may offer and sell from time to time in an “at the
market offering”, at its option, up to an aggregate of $10.65 million of shares of the Company’s common stock through Wainwright. As of
December 31, 2022, the Company sold 8,574 shares under the 2022 ATM Agreement totaling $1.03 million in gross proceeds and $0.99 million in
net proceeds. The Company did not sell any shares under the 2022 ATM Agreement in 2023.
● On October 3, 2022, the Company closed a registered direct offering of shares of common stock and Series C Mirroring Preferred Stock pursuant
to a securities purchase agreement entered into with a certain institutional investor. In the offering, the Company agreed to issue and sell to the
investor (i) 26,800 shares of the Company’s common stock, par value $0.01 per share, (ii) 33,810 shares of the Company’s Series C Mirroring
Preferred Stock, par value $0.01 per share and stated value of $0.01 per share, and (iii) pre-funded warrants to purchase an aggregate of 21,500
shares of common stock. Each share of common stock was sold at a price of $70.00 per share, each share of preferred stock was sold at a price of
$0.01 per share, and each pre-funded warrant was sold at an offering price of $68.00 per share underlying such pre-funded warrants, for aggregate
gross proceeds of $3.34 million before deducting the placement agent’s fees and the offering expenses, and net proceeds of $3.04 million. Under
the purchase agreement, the Company also agreed to issue and sell to the investor, in a concurrent private placement, warrants to purchase an
aggregate of 48,300 shares of common stock. In connection with the offering, the Company also entered into a warrant amendment agreement
with the investor pursuant to which the Company agreed to amend certain existing warrants to purchase up to 74,150 shares of common stock that
were previously issued to the investor in 2018 and 2021, with exercise prices ranging from $410.00 to $13,000.00 per share as a condition to their
purchase of the securities in the offering, as follows: (i) lower the exercise price of the investor’s existing warrants to $75.40 per share, (ii) provide
that the existing warrants, as amended, will not be exercisable until six months following the closing date of the offering, and (iii) extend the
original expiration date of the existing warrants by five and one-half years following the close of the offering. The increase in fair value resulting
from the warrant modifications is accounted for as an equity issuance cost, resulting in a debit and credit to additional paid in capital for
approximately $1.8 million. As of December 31, 2022, all 21,500 pre-funded warrants were exercised and all 33,810 shares of the Company’s
Series C Mirroring Preferred Stock were automatically cancelled and ceased to be outstanding following receipt of stockholder approval for the
Company’s reverse stock split on November 30, 2022. In connection with the Company’s best-efforts public offering consummated in May 2023,
the Company amended the exercise price of the existing warrants to $7.785 per share.
13
● On January 11, 2023, the Company closed a best-efforts public offering pursuant to a securities purchase agreement with a certain institutional
investor for the purchase of (i) 32,121 shares of the Company’s common stock, par value $0.01 per share, (ii) pre-funded warrants to purchase up
to an aggregate of 226,500 shares of common stock (the “Pre-funded Warrants”), (iii) Series A-1 common warrants to purchase an aggregate of
258,621 shares of common stock (the “Series A-1 Warrants”), and (iv) Series A-2 common warrants to purchase an aggregate of 258,621 shares of
common stock (the “Series A-2 Warrants,” and together with the Series A-1 Warrants, the “Common Warrants”). Each share of common stock and
accompanying Common Warrants were sold at a price of $29.00 per share and accompanying Common Warrants, and each Pre-funded Warrant
and accompanying Common Warrants were sold at an offering price of $28.90 per share underlying such Pre-funded Warrants and accompanying
Common Warrants, for aggregate gross proceeds of approximately $7.5 million before deducting the placement agent’s fees and the offering
expenses, and net proceeds of approximately $6.9 million. The Common Warrants have an exercise price of $26.50 per share. The Series A-1
Warrants were immediately exercisable upon issuance and will expire five years following the issuance date. The Series A-2 Warrants were
immediately exercisable upon issuance and will expire eighteen months following the issuance date. Subject to certain ownership limitations
described in the Pre-funded Warrants, the Pre-funded Warrants were immediately exercisable and could be exercised at a nominal consideration of
$0.10 per share of common stock any time until all the Pre-funded Warrants are exercised in full. All Pre-funded Warrants were exercised by
February 15, 2023. In connection with the Company’s best-efforts public offering consummated in May 2023, the Company amended the exercise
price of the Common Warrants to $7.785 per share.
● On May 4, 2023, the Company closed a best-efforts public offering pursuant to a securities purchase agreement with a certain institutional
investor, pursuant to which the Company issued and sold to the Investor (i) 60,500 shares of the Company’s common stock, par value $0.01 per
share, (ii) pre-funded warrants to purchase up to an aggregate of 389,083 shares of common stock, and (iii) common warrants to purchase up to an
aggregate of 449,583 shares of common stock. Each share of common stock and accompanying common warrant was sold at a price of $7.785 per
share and accompanying common warrant, and each pre-funded warrant and accompanying common warrant was sold at an offering price of
$7.685 per share underlying such pre-funded warrant and accompanying common warrant, for aggregate gross proceeds of approximately $3.5
million and net proceeds of approximately $3.0 million. The common warrants have an exercise price of $7.785 per share and will be exercisable
beginning on the date of stockholder approval of the exercisability of the warrants under Nasdaq rules or may be exercised through October 26,
2023, pursuant to the Warrant Inducement Agreement entered into on October 12, 2023. Pursuant to amendment agreements entered into by the
Company and Holder on October 26, 2023 and February 7, 2024, the Company agreed to initially extend the offer period until December 31,
2023, and subsequently extend the offer period until April 30, 2024. In order to permit the exercise of the Existing Warrants pursuant to the rules
of the Nasdaq Capital Market, the Holder agreed to pay as additional consideration $0.25 per share of common stock issued upon exercise of the
Existing Warrants. The common warrants not exercised as part of the Inducement Agreement will expire on the five-year anniversary of the date
of such stockholder approval. Each pre-funded warrant has an exercise price per share of common stock equal to $0.10 per share and may be
exercised at any time until the pre-funded warrants are exercised in full. In connection with the offering, the Company also entered into a warrant
amendment agreement with the investor pursuant to which the Company amended certain existing warrants to purchase up to 639,691 shares of
common stock that were previously issued in 2018, 2021, 2022 and 2023 to the investor, with exercise prices ranging from $26.50 to $75.40 per
share, in consideration for their purchase of the securities in the offering, as follows: (i) lower the exercise price of the existing warrants to $7.785
per share, (ii) provide that the existing warrants, as amended, will not be exercisable until the receipt of stockholder approval for the exercisability
of the common warrants in the offering, and (iii) extend the original expiration date of the existing warrants by five years following the receipt of
such stockholder approval. The increase in fair value resulting from the warrant modifications is accounted for as an equity issuance cost, resulting
in a debit and credit to additional paid in capital of approximately $0.3 million. As of December 31, 2023, the Holder exercised 200,000 shares of
Common Stock under the Existing Warrants pursuant to the Inducement Agreement for aggregate gross proceeds to the Company of $2.057
million before deducting financial advisory fees and other expenses payable by the Company. Pursuant to the Amendment on February 7, 2024,
the Company and the Holder agreed to extend the offer period until April 30, 2024; however, no additional warrants were exercised during the
extended warrant inducement offer period. Since the warrant inducement period was not extended beyond April 30, 2024, the Company is
required to hold a stockholders’ meeting to obtain approval for the exercisability of the existing common warrants within 70 days of the end of the
extension period.
14
● On June 26, 2023, the Company announced that its subsidiary Curetis and the European Investment Bank (“EIB”) agreed in principle to certain
terms relating to the repayment of the second tranche of Curetis’ loan from the EIB pursuant to that certain Finance Contract, dated December 12,
2016, as amended, by and between Curetis and the EIB (the “Finance Contract”). The second tranche had a principal balance of €3 million plus
accumulated and deferred interest. The second tranche was drawn down in June 2018 and matured on June 22, 2023. On July 4, 2023, the EIB and
Curetis entered into a Standstill Agreement (the “Standstill Agreement”) pursuant to which the EIB agreed that, with respect to each default or
event of default relating to such second tranche, the EIB would not take any action or exercise any right under the Finance Contract until the
earlier of a restructuring of the second tranche and November 30, 2023. As a condition to entering into the Standstill Agreement, Curetis paid the
EIB a partial payment of interest on the second tranche of €1 million on June 22, 2023. In addition, Curetis agreed to certain undertakings during
the standstill period, including the delivery of a rolling cash flow forecast and to cause a third-party restructuring expert to prepare and deliver a
restructuring opinion to the EIB. On November 20, 2023, Curetis received a termination notice from the EIB terminating the Standstill Agreement
effective as of November 20, 2023. The EIB’s termination notice stated that the termination of the Standstill Agreement was as a result of and in
connection with certain defaults of the Standstill Agreement arising from, among other related reasons, Curetis’ and Ares’ entry into insolvency
proceedings. On December 4, 2023, the Company received a notice from the EIB stating that Curetis is in default of the Finance Contract as a
result of, among other things, Curetis’ failure to repay when due certain outstanding indebtedness under the Finance Contract. In its notice, the
EIB stated that, as of November 16, 2023, the aggregate amount of principal, accrued interest and all other amounts owed by Curetis to the EIB
under the Finance Contract was approximately 9.66 million euro and that interest will continue to accrue in accordance with the Finance Contract
until all amounts owed are paid in full. Pursuant to that certain Guarantee and Indemnity Agreement, dated July 9, 2020 (the “Guaranty”), between
the EIB and the Company, the EIB demanded that the Company, as guarantor, immediately repay the EIB all amounts owed to the EIB under the
Finance Contract and reserved all of its other rights and remedies in connection with the Finance Contract. As of the year ended December 31,
2023, the Guaranty remained unpaid and outstanding, with the liability reflected on the Company’s financial statements, which was previously on
Curetis’ balance sheet. In connection with the Company’s entry into the March 2024 Purchase Agreement with David E. Lazar on March 25, 2024,
the Company entered into settlement agreements with each of the EIB and Curetis and Curetis’ trustee in insolvency, pursuant to which the parties
agreed to settle outstanding liabilities amongst the parties. Pursuant to the settlement agreements, following the final closing of the transactions
contemplated by the March 2024 Purchase Agreement, the Company will pay $2.0 million of the proceeds to settle all outstanding debt of the
Company to each of EIB and Curetis. The settlement agreement with EIB also terminated the Guaranty.
15
● On October 11, 2023, the Company entered into a Preferred Stock Purchase Agreement (the “Purchase Agreement”) with a single investor (the
“Investor”), pursuant to which the Company agreed to issue and sell to the Investor in a private placement (the “Private Placement”) 1,000 shares
of the Company’s Series D Preferred Stock, par value $0.01 per share (the “Preferred Stock”). Each share of preferred stock was agreed to sell at a
price of $1,000 per share for expected aggregate gross proceeds of $1.0 million before deducting offering expenses. The Private Placement was
conducted in connection with the negotiation of a potential strategic transaction involving the Company and the Investor. The Company intended
to use the proceeds of the Private Placement to fund the Company’s operations while it pursued a potential strategic transaction with the Investor.
Pursuant to the Purchase Agreement, the Company filed a certificate of designation (the “Certificate of Designation”) with the Secretary of State
of the State of Delaware designating the rights, preferences and limitations of the shares of preferred stock on October 11, 2023. The Certificate of
Designation provides that the shares of preferred stock have a stated value of $1,000 per share and are convertible into shares of common stock,
par value $0.01 per share of the Company at a price of $4.09 per share, subject to adjustment in the event of certain stock dividends and
distributions, stock splits, stock combinations, reclassifications, or similar events affecting the common stock. The preferred stock may be
converted at any time at the option of the holder. Notwithstanding the foregoing, the Certificate of Designation provides that in no event will the
preferred stock be convertible into common stock in a manner that would result in the holder, its permitted transferees and affiliates holding more
than 19.99% (together with any shares of common stock otherwise held by the Investor, its permitted transferees and their affiliates) of the then
issued and outstanding common stock (the “Ownership Limitation”), prior to the date that the Company’s stockholders approve the issuance of
shares of common stock to the holder upon conversion of the preferred stock (the “stockholder approval”). Upon receipt of stockholder approval,
the shares of preferred stock will automatically be converted into shares of common stock without further action of the holder thereof. The
Investor funded $250,000 of the expected aggregate gross proceeds of $1.0 million before deducting offering expenses on November 14, 2023. On
December 13, 2023, in coordination with the Investor, the Company issued to the Investor 250 shares of Series D Preferred Stock in consideration
for the partial payment. As of December 31, 2023, all 250 Series D Preferred Shares remain outstanding and the remaining $750,000 of the
purchase price remains unpaid. The Company reserves all rights and remedies arising from the Investor’s failure to close the transaction and the
Investor will continue to be in breach of the Purchase Agreement until the remaining amount is paid in full.
● On October 12, 2023, the Company entered into a warrant inducement agreement (the “Inducement Agreement”) with a holder (the “Holder”) of
certain existing warrants (the “Existing Warrants”) to purchase shares of common stock, par value $0.01 per share, of the Company. Pursuant to
the Inducement Agreement, the Holder agreed to exercise for cash their Existing Warrants to purchase up to 1,089,274 shares of the Company’s
common stock at an exercise price of $7.785 per share, the exercise price per share of the Existing Warrants, during the period from the date of the
Inducement Agreement until 7:30 a.m., Eastern Time, on October 26, 2023. Pursuant to amendment agreements entered into by the Company and
Holder on October 26, 2023 and February 7, 2024, the Company agreed to initially extend the offer period until December 31, 2023, and
subsequently extend the offer period until April 30, 2024. In order to permit the exercise of the Existing Warrants pursuant to the rules of the
Nasdaq Capital Market, the Holder agreed to pay as additional consideration $0.25 per share of common stock issued upon exercise of the
Existing Warrants. In consideration of the Holder’s agreement to exercise the Existing Warrants in accordance with the Inducement Agreement,
the Company agreed to issue new warrants (the “Inducement Warrants”) to purchase shares of common stock equal to 100% of the number of
shares of common stock issued upon exercise of the Existing Warrants (the “Inducement Warrant Shares”). The Inducement Warrants will have an
exercise price of $3.36 per share and will be exercisable on the six-month anniversary of the date of issuance and expire on the five-year
anniversary of the Inducement Warrant’s first becoming exercisable. As of December 31, 2023, the Holder exercised 200,000 shares of Common
Stock under the Existing Warrants pursuant to the Inducement Agreement for aggregate gross proceeds to the Company of $2.057 million before
deducting financial advisory fees and other expenses payable by the Company. The Holder did not exercise any additional Existing Warrants after
December 31, 2023. Since the warrant inducement period was not extended beyond April 30, 2024, the Company is required to hold a
stockholders’ meeting to obtain approval for the exercisability of the existing common warrants within 70 days of the end of the extension period.
16
In addition, subsequent to December 31, 2023, on March 25, 2024, the Company entered into the March 2024 Purchase Agreement with David E. Lazar,
pursuant to which the Company agreed to sell 3,000,000 shares of Series E Convertible Preferred Stock (“Series E Preferred Stock”) to Mr. Lazar at a price
of $1.00 per share for aggregate gross proceeds of $3.0 million. The proceeds of the transaction will be used to repay and settle outstanding indebtedness
and liabilities of the Company and for other general corporate and operating purposes. On March 25, 2024, Mr. Lazar paid $200,000 at the initial closing of
the transactions under the March 2024 Purchase Agreement in exchange for 200,000 shares of Series E Preferred Stock. Mr. Lazar subsequently paid
$200,000 and $150,000 on April 5, 2024 and April 23, 2024, respectively, in exchange for an additional 350,000 shares of Series E Preferred Stock.
Mr. Lazar is expected to fund the remaining $2.45 million in early June 2024, at which time he will receive the remaining 2.45 million shares of Series E
Preferred Stock.
Financial Overview
Revenue
During the years ended December 31, 2023 and 2022, we recognized three types of revenues: product sales, laboratory services and collaboration revenue.
We generated product revenues from sales of our products, including through our distribution partners, such as our Unyvero instruments and consumables.
We also generated revenue from sales by OpGen’s subsidiary, Ares Genetics, of its AI-powered prediction models and solutions. Revenues generated from
our laboratory services relate to services that we and our subsidiaries provide to customers. Lastly, our collaboration revenues consist of revenue received
from research and development collaborations that we have entered into with third parties, such as our collaboration agreement with FIND.
Cost of Products, Cost of Services, and Operating Expenses
Our cost of products consists of product and inventory costs, including materials costs and overhead, and other costs related to the recognition of revenue.
Cost of services relate to the material and labor costs associated with providing our services. Research and development expenses consist primarily of
expenses incurred in connection with our clinical and pre-clinical research activities. Selling, general and administrative expenses consist of public
company costs, salaries, and related costs for administrative, sales, and business development personnel.
Results of Operations for the Years Ended December 31, 2023 and 2022
Revenues
Revenue
Product sales
Laboratory services
Collaboration revenue
Total revenue
Years Ended
December 31,
2023
2022
$
$
2,400,053 $
153,719
864,548
3,418,320 $
1,893,862
172,633
540,798
2,607,293
The Company’s total revenue for the year ended December 31, 2023 increased 31%, from $2.6 million to $3.4 million, when compared to the same period
in 2022. This increase is primarily attributable to:
● Product Sales: the increase in revenue of approximately 27% in 2023 compared to 2022 is primarily attributable to the Company completing a
one-time sale of 25 sets of Unyvero instruments to a strategic partner in Q4 2023;
17
● Laboratory Services: the decrease in revenue of approximately 11% in 2023 compared to 2022 is primarily attributable to the insolvency filings of
Curetis and Ares Genetics in early November 2023, resulting in just over 10 months of revenue activity in 2023 compared to 12 months in 2022;
and
● Collaboration Revenue: the increase in revenue of approximately 60% in 2023 compared to 2022 is primarily attributable to extensions and
expansions of the Company’s collaboration with FIND in 2023.
Operating expenses
Cost of products sold
Cost of services
Research and development
General and administrative
Sales and marketing
Loss on deconsolidation of subsidiaries
Impairment of right-of-use asset
Impairment of property and equipment
Impairment of intangible assets
Goodwill impairment charge
Total operating expenses
Years Ended
December 31,
2023
3,084,075 $
424,939
4,732,851
8,081,664
2,783,268
12,979,061
849,243
1,231,874
-
-
34,166,975 $
2022
3,319,586
104,405
8,173,435
8,884,084
4,344,656
-
-
-
5,407,699
6,940,549
37,174,414
$
$
The Company’s total operating expenses for the year ended December 31, 2023 decreased 8%, from $37.2 million to $34.2 million, when compared to the
same period in 2022. This decrease is primarily attributable to:
● Costs of products sold: expenses for the year ended December 31, 2023 decreased approximately 7% when compared to the same period in 2022.
The decrease in cost of products sold is primarily attributable to increases of only $1.3 million in inventory reserves for obsolescence, expirations,
and slow-moving inventory in 2023 compared to $1.7 million in 2022;
● Costs of services: expenses for the year ended December 31, 2023 increased approximately 307% when compared to the same period in 2022. The
increase in cost of services is primarily attributable to additional expenses from the Company’s collaboration with FIND in 2023;
● Research and development: expenses for the year ended December 31, 2023 decreased approximately 42% when compared to the same period in
2022. The decrease in research and development expenses is primarily attributable to the completion of clinical trials for Unyvero UTI in 2022,
slower than anticipated project developments in 2023, understaffing across the Company, and the shortened operating period for Curetis and Ares
Genetics due to the insolvency filings in November 2023;
● General and administrative: expenses for the year ended December 31, 2023 decreased approximately 9% when compared to the same period in
2022, primarily due to a reduction in payroll related costs resulting from the Company’s cash management activities;
● Sales and marketing: expenses for the year ended December 31, 2023 decreased approximately 36% when compared to the same period in 2022,
primarily due to the Company’s reduction in force at its Rockville, MD office and the shortened operating period for Curetis and Ares Genetics
due to the insolvency filings in November 2023;
18
● Loss on deconsolidation of subsidiaries: loss on deconsolidation of subsidiaries for the year ended December 31, 2023 represents the loss incurred
by the Company associated with the insolvency filings of Curetis and Ares Genetics in November 2023;
● Impairment of right-of-use asset: impairment of right-of-use asset for the year ended December 31, 2023 represents the impairment of the
Company’s right-of-use lease asset at its Rockville, MD office;
● Impairment of property and equipment: impairment of property and equipment for the year ended December 31, 2023 represents the impairment
of the Company’s property and equipment at its Rockville, MD office;
● Impairment of intangible assets: impairment of intangible assets for the year ended December 31, 2022 represents the impairment of the
Company’s infinite-lived intangible asset, which was deemed necessary since the contracted and expected future cash flows associated with these
assets did not support the carrying amount; and
● Goodwill impairment charge: goodwill impairment charge for the year ended December 31, 2022 represents the impairment of the Company’s
goodwill primarily due to decreases in the Company’s stock price and market capitalization.
Other income (expense)
Interest expense
Foreign currency transaction (losses) gains
Change in fair value of derivative financial instruments
Interest and other income
Total other expense
Years Ended
December 31,
2023
(1,838,933) $
(289,306)
65,876
142,488
(1,919,875) $
2022
(3,256,410)
379,622
113,741
46,935
(2,716,112)
$
$
Other expense for the year ended December 31, 2023 decreased to a net expense of $1.9 million from a net expense of $2.7 million in the same period in
2022. The decrease was primarily due to a reduction in interest expense as the Company repaid a portion of the outstanding debt.
Liquidity and Capital Resources
At December 31, 2023, the Company had cash and cash equivalents of $1.2 million, compared to $7.4 million at December 31, 2022. The Company has
funded its operations primarily through external investor financing arrangements and has raised significant funds in 2023 and 2022, including:
On June 24, 2022, we entered into the 2022 ATM Agreement with H.C. Wainwright, as a sales agent, pursuant to which the Company may offer and sell
from time to time in an at the market offering, at its option, up to an aggregate of $10.65 million of shares of the Company’s common stock through the
sales agent. As of December 31, 2022, the Company sold 8,574 shares under the 2022 ATM Offering totaling $1.03 million in gross proceeds and $0.99
million in net proceeds. The Company did not sell any shares under the 2022 ATM Agreement in 2023.
On October 3, 2022, we closed a registered direct offering for the purchase of 26,800 shares of the Company’s common stock, 33,810 shares of the
Company’s Series C Mirroring Preferred Stock, and pre-funded warrants to purchase an aggregate of 21,500 shares of common stock. The offering raised
aggregate gross proceeds of $3.34 million before deducting the placement agent’s fees and the offering expenses, and net proceeds of $3.04 million.
19
On January 11, 2023, we closed a best-efforts public offering for the purchase of (i) 32,121 shares of common stock, (ii) pre-funded warrants to purchase
up to an aggregate of 226,500 shares of common stock, (iii) Series A-1 common warrants to purchase an aggregate of 258,621 shares of common stock,
and (iv) Series A-2 common warrants to purchase an aggregate of 258,621 shares of common stock. The offering raised aggregate gross proceeds of
approximately $7.5 million before deducting the placement agent’s fees and the offering expenses, and net proceeds of approximately $6.9 million.
On May 4, 2023, we closed a best-efforts public offering for the purchase of (i) 60,500 shares of the Company’s common stock, par value $0.01 per share,
(ii) pre-funded warrants to purchase up to an aggregate of 389,083 shares of common stock, and (iii) common warrants to purchase up to an aggregate of
449,583 shares of common stock. The offering raised aggregate gross proceeds of approximately $3.5 million and net proceeds of approximately $3.0
million.
On October 6, 2023, Curetis received a payment of €0.75 million related to the sale of certain Unyvero A50 systems by Curetis to a strategic partner. Such
purchase of systems and payment was made in connection with the negotiation of a potential strategic transaction involving Curetis and the Company’s
subsidiary, Ares Genetics, with such strategic partner; however, the potential strategic transaction was unsuccessful.
On October 11, 2023, we entered into a Preferred Stock Purchase Agreement with a single investor for 1,000 shares of the Company’s Series D Preferred
Stock, par value $0.01 per share, where each share of preferred stock was agreed to sell at a price of $1,000 per share for aggregate gross proceeds of $1.0
million before deducting offering expenses. The investor funded $250,000 of the expected aggregate gross proceeds of $1.0 million before deducting
offering expenses on November 14, 2023. On December 13, 2023, in coordination with the investor, the Company issued to the investor 250 shares of
Series D Preferred Stock in consideration for the partial payment. As of December 31, 2023, all 250 Series D Preferred Shares remain outstanding and the
remaining $750,000 of the purchase price remains unpaid. The private placement was conducted in connection with the negotiation of a potential strategic
transaction involving the Company and the investor. The Company’s discussions with this investor have ceased.
On October 12, 2023, we entered into a warrant inducement agreement with a holder of certain existing warrants to purchase shares of common stock, par
value $0.01 per share, of the Company. Pursuant to the Inducement Agreement, the holder agreed to exercise for cash their existing warrants to purchase up
to 1,089,274 shares of the Company’s common stock at an exercise price of $7.785 per share, the exercise price per share of the existing warrants, during
the period from the date of the Inducement Agreement until 7:30 a.m., Eastern Time, on October 26, 2023; however, on October 26, 2023, and
subsequently on February 7, 2024, the Company and the holder agreed to initially extend the offer period through December 31, 2023, and later through
April 30, 2024. As of December 31, 2023, the holder exercised 200,000 shares of Common Stock under the existing warrants pursuant to the Inducement
Agreement for aggregate gross proceeds to the Company of $2.057 million before deducting financial advisory fees and other expenses payable by the
Company. The Holder did not exercise any additional Existing Warrants after December 31, 2023.
On November 6, 2023, Curetis filed a petition for insolvency with the district court of Stuttgart, Germany, and Ares Genetics filed a petition for insolvency
with the commercial court in Vienna, Austria, Reference Number 38 S 175/23x. The insolvency proceedings of Curetis and Ares Genetics were adjudicated
under the insolvency laws of Germany and Austria, respectively. The insolvency administrators assumed control over the assets and liabilities of Curetis
and Ares Genetics, respectively, which eliminated the authority and power of the Company and its officers to act on behalf of the subsidiaries. The German
and Austrian insolvency administrators both successfully completed asset sales of the assets of Curetis and Ares Genetics, but the Company does not
anticipate receiving any proceeds from such sales as the proceeds will be allocated amongst each entity’s creditors.
20
To meet its capital needs, the Company entered into a securities purchase agreement (the “March 2024 Purchase Agreement”) with David E. Lazar,
pursuant to which the Company agreed to sell 3,000,000 shares of Series E Convertible Preferred Stock (“Series E Preferred Stock”) to Mr. Lazar at a price
of $1.00 per share for aggregate gross proceeds of $3.0 million. Although Mr. Lazar is expected to provide the Company with $3.0 million in total funding,
the Company believes that current cash will only be sufficient to fund operations into the third quarter of 2024. This has led management to conclude that
there is substantial doubt about the Company’s ability to continue as a going concern. In the event the Company does not receive additional funding from
the individual investor or other investors or find a reverse merger partner or other strategic transaction partner before or during the third quarter of 2024, the
Company will not have sufficient cash flows and liquidity to finance its business operations. Accordingly, in such circumstances, the Company would be
compelled to immediately reduce general and administrative expenses until it is able to obtain sufficient financing. If such sufficient financing is not
received on a timely basis, the Company would then need to pursue a plan to seek to be acquired by another entity, cease operations and/or seek bankruptcy
protection. There can be no assurance that the Company will be able to identify or execute on any of these alternatives on acceptable terms or that any of
these alternatives will be successful.
On March 10, 2023, the Company learned that Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and
Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver, due to the sudden and massive financial collapse of the bank.
On March 12, 2023, the Secretary of the Treasury, the chair of the Federal Reserve Board and the chairman of the FDIC released a joint statement related to
the FDIC’s resolution of the SVB receivership (the “Statement”). The Statement provided that “[d]epositors will have access to all of their money starting
Monday, March 13.” At the time, the Company had most of its cash and cash equivalents held in deposit accounts at SVB, which the Statement said the
Company would have access to starting on March 13, 2023. While we regained access to our accounts at Silicon Valley Bank (now a division of First
Citizens Bank) and created additional banking relationships to diversify our holdings, future disruptions of financial institutions where we bank or have
credit arrangements, or disruptions of the financial services industry in general, could adversely affect our ability to access our cash and cash equivalents. If
we are unable to access our cash and cash equivalents as needed, our financial position and ability to operate our business will be adversely affected.
Sources and uses of cash
The following table summarizes the net cash provided by (used in) operating activities, investing activities and financing activities for the periods
indicated:
Net cash used in operating activities
Net cash used in investing activities
Net cash provided by (used in) financing activities
Net cash used in operating activities
Years Ended
December 31,
2023
2022
$ (14,319,542) $ (20,449,698)
(590,772)
(6,735,681)
(800,412)
8,373,314
Net cash used in operating activities in 2023 consisted primarily of our net loss of $32.7 million, reduced by certain non-cash items, including loss on
deconsolidation of subsidiaries of $13.0 million, depreciation and amortization expense of $1.3 million, non-cash interest of $1.7 million, impairment of
property and equipment of $1.2 million, impairment of right-of-use asset of $0.8 million, and change in inventory reserve of $0.8 million, partially offset
by the net change in operating assets and liabilities of $1.0 million. Net cash used in operating activities in 2022 consisted primarily of our net loss of $37.3
million, reduced by certain non-cash items, including depreciation and amortization expense of $1.6 million, non-cash interest of $2.4 million, change in
inventory reserve of $1.6 million, share-based compensation of $1.0 million, impairment of intangible assets of $5.4 million, and goodwill impairment
charge of $6.9 million, partially offset by the net change in operating assets and liabilities of $2.0 million.
21
Net cash used in investing activities
Net cash used in investing activities in 2022 and 2023 consisted of purchases of property and equipment.
Net cash provided by (used in) financing activities
Net cash provided by financing activities in 2023 of $8.4 million consisted primarily of net proceeds from the January 2023 Offering of $6.9 million, the
May 2023 Offering of $3.0 million, and the October 2023 Warrant Inducement of $2.1 million, partially offset by payments on debt of $3.9 million. Net
cash used in financing activities in 2022 of $6.7 million consisted primarily of payments on debt of $10.8 million, partially offset by net proceeds from the
October 2022 Offering of $3.1 million and ATM offerings of $1.0 million.
Contractual Commitments
OpGen’s subsidiary, Curetis, has contractual commitments under its 2016 senior, unsecured loan financing facility of up to €25.0 million with the European
Investment Bank (“EIB”). Following the consummation of our business combination with Curetis in April 2020, the Company guaranteed Curetis’
obligations under the loan financing facility. Curetis drew down three tranches under the facility: €10.0 million in April 2017, €3.0 million in June 2018,
and €5.0 million in June 2019. The first tranche had, and second tranche has, a floating interest rate of EURIBOR plus 4% payable after each 12-month-
period from the draw-down-date and an additional 6% interest per annum that is deferred and payable at maturity together with the principal. The third
tranche originally had a 2.1% PPI. Upon maturity of the third tranche, the EIB would have been entitled to an additional payment that is equity-linked and
equivalent to 2.1% of the then total valuation of Curetis N.V. As part of an amendment between the Company and the EIB on July 9, 2020, the parties
adjusted the PPI percentage applicable to the third EIB tranche of €5.0 million, which was funded in June 2019, from its original 2.1% PPI in Curetis N.V.’s
equity value upon maturity to a new 0.3% PPI in OpGen’s equity value upon maturity. This right constitutes an embedded derivative, which is separated
and measured at fair value with changes being accounted for through income or loss.
As of December 31, 2023, the outstanding borrowings under all tranches were €9.8 million (approximately $10.9 million), including deferred interest
payable at maturity of €1.5 million (approximately $1.7 million).
On May 23, 2022, the Company and the EIB entered into a Waiver and Amendment Letter (the “2022 EIB Amendment”), which amended the EIB loan
facility. The 2022 EIB Amendment restructured the first tranche of approximately €13.4 million (including accumulated and deferred interest) of the
Company’s indebtedness with the EIB. Pursuant to the 2022 EIB Amendment, the Company repaid €5.0 million to the EIB in April 2022. The Company
also agreed, among other things, to amortize the remainder of the debt tranche over a twelve-month period beginning in May 2022. As a result, the
Company paid twelve monthly installments totaling approximately €8.4 million through April 2023, at which point the first tranche was repaid in full. The
2022 EIB Amendment also provided for the increase of the PPI of the third tranche under the loan facility from 0.3% to 0.75% beginning in June 2024.
On July 4, 2023, the Company entered into a Standstill Agreement, by and among Curetis, as borrower, the Company and Ares Genetics, as guarantors, and
the EIB, as lender, relating to that certain Finance Contract, originally dated December 12, 2016, as amended, by and between Curetis and EIB. Pursuant to
the Standstill Agreement, the EIB agreed that, with respect to each default or event of default relating to €3 million in principal plus accumulated interest
that (i) was due and payable on June 22, 2023 under the Finance Contract and (ii) continues to exist as of the date of the Standstill Agreement, the EIB
would not take any action or exercise any right under the Finance Contract, including, but not limited to, any right of acceleration or termination, until the
earlier of the entry into a definitive agreement for the restructuring of the second tranche and November 30, 2023. As a condition of entering into such
standstill agreement, Curetis paid the EIB a partial payment of interest on the second tranche of €1 million on June 22, 2023. In addition, Curetis agreed to
certain undertakings during the standstill period, including the delivery of a rolling cash flow forecast and to cause a third-party restructuring expert to
prepare and deliver a restructuring opinion to the EIB. On November 20, 2023, Curetis received a termination notice from the EIB terminating the
Standstill Agreement effective as of November 20, 2023. The EIB’s termination notice stated that the termination of the Standstill Agreement was as a
result of and in connection with certain defaults of the Standstill Agreement arising from, among other related reasons, Curetis’ and Ares’ entry into
insolvency proceedings.
22
On December 4, 2023, the Company received a notice from the EIB stating that Curetis is in default of the Finance Contract as a result of, among other
things, Curetis’ failure to repay when due certain outstanding indebtedness under the Finance Contract. In its notice, the EIB stated that, as of
November 16, 2023, the aggregate amount of principal, accrued interest and all other amounts owed by Curetis to the EIB under the Finance Contract was
approximately 9.66 million euro and that interest will continue to accrue in accordance with the Finance Contract until all amounts owed are paid in full.
Pursuant to that certain Guarantee and Indemnity Agreement, dated July 9, 2020 (the “Guaranty”), between the EIB and the Company, the EIB demanded
that the Company, as guarantor, immediately repay the EIB all amounts owed to the EIB under the Finance Contract and reserved all of its other rights and
remedies in connection with the Finance Contract. In connection with the Company’s entry into the March 2024 Purchase Agreement with David E. Lazar
on March 25, 2024, the Company entered into settlement agreements with each of the EIB and Curetis and Curetis’ trustee in insolvency, pursuant to which
the parties agreed to settle outstanding liabilities amongst the parties. Pursuant to the settlement agreements, following the final closing of the transactions
contemplated by the March 2024 Purchase Agreement, the Company will pay $2.0 million of the proceeds to settle all outstanding debt of the Company to
each of EIB and Curetis. The settlement agreement with the EIB also terminated the Guaranty.
Funding requirements
Going forward, our primary use of cash is to fund operating expenses, including those costs for general administrative and corporate purposes. Our future
funding requirements will depend on the costs required to comply with our obligations as a public company. We cannot assure you that additional financing
will not be required in the future to support our operations. We intend to use financing opportunities strategically to continue to strengthen our financial
position.
Critical Accounting Estimates
This Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our audited consolidated financial statements,
which have been prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amount of revenues and expenses during the reporting period. In our audited consolidated financial statements, estimates are used for, but
not limited to, liquidity assumptions, revenue recognition, share-based compensation, allowances for doubtful accounts and inventory obsolescence,
valuation of derivative financial instruments measured at fair value on a recurring basis, deferred tax assets and liabilities and related valuation allowance,
estimated useful lives of long-lived assets, and the recoverability of long-lived assets. Actual results could differ from those estimates.
A summary of our significant accounting policies is included in Note 3 of the accompanying audited consolidated financial statements. Certain of our
accounting policies are considered critical, as these policies require significant, difficult or complex judgments by management, often requiring the use of
estimates about the effects of matters that are inherently uncertain.
Revenue Recognition
During the years ended December 31, 2022 and 2023, the Company derived revenues from (i) the sale of Unyvero Application cartridges, Unyvero
Systems, Acuitas AMR Gene Panel test products, and SARS CoV-2 tests, (ii) providing laboratory services, and (iii) providing collaboration services
including funded software arrangements, license arrangements, and the FIND NGO collaboration on our Unyvero A30 platform.
The Company analyzes contracts to determine the appropriate revenue recognition using the following steps: (i) identification of contracts with customers,
(ii) identification of distinct performance obligations in the contract, (iii) determination of contract transaction price, (iv) allocation of contract transaction
price to the performance obligations, and (v) determination of revenue recognition based on timing of satisfaction of the performance obligation.
23
The Company recognizes revenues upon the satisfaction of its performance obligation (upon transfer of control of promised goods or services to our
customers) in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services.
The Company defers incremental costs of obtaining a customer contract and amortizes the deferred costs over the period that the goods and services are
transferred to the customer. The Company had no material incremental costs to obtain customer contracts in any period presented.
Deferred revenue results from amounts billed in advance to customers or cash received from customers in advance of services being provided.
Valuation of Inventory
The Company’s inventory includes Unyvero system instruments, Unyvero cartridges, reagents and components for Unyvero, and supplies used for the
Company’s laboratory services. The Company periodically reviews inventory quantities on hand and analyzes the provision for excess and obsolete
inventory based primarily on product expiration dating and its estimated sales forecast, which is based on sales history and anticipated future demand. The
Company’s estimates of future product demand may not be accurate, and it may understate or overstate the provision required for excess and obsolete
inventory. Accordingly, any significant unanticipated changes in demand could have a significant impact on the value of the Company’s inventory and
results of operations. Based on the Company’s assumptions and estimates, inventory reserves for obsolescence, expirations, and slow-moving inventory
were $1,280,805 at December 31, 2023.
Impairment of Long-Lived Assets
Property and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash
flows expected to be generated by the asset. Recoverability measurement and estimating of undiscounted cash flows is done at the lowest possible level for
which we can identify assets. If such assets are considered to be impaired, impairment is recognized as the amount by which the carrying amount of assets
exceeds the fair value of the assets. During the year ended December 31, 2023, the Company determined that its operating right-of-use lease asset for its
Rockville, MD office was impaired due to the Company’s inability to support the lease given its financial position. As a result, the Company recorded an
impairment charge in the amount of $849,243. In addition, for the year ended December 31, 2023, the Company determined that its property and
equipment, including leasehold improvements and computer and networking equipment, at its Rockville, MD office was impaired. As a result, the
Company recorded an impairment charge in the amount of $1,231,874.
Finite-lived intangible assets include trademarks, developed technology, software and customer relationships. If any indicators were present, the Company
would test for recoverability by comparing the carrying amount of the asset to the net undiscounted cash flows expected to be generated from the asset. If
those net undiscounted cash flows do not exceed the carrying amount (i.e., the asset is not recoverable), the Company would perform the next step, which
is to determine the fair value of the asset and record an impairment loss, if any. All the Company’s finite-lived intangible assets with net balances were held
by Curetis and Ares Genetics. As a result of the insolvency filings for Curetis and Ares Genetics and the associated deconsolidation of all balance sheet
balances related to these entities, the Company does not have any finite-lived intangible asset balances as of December 31, 2023.
Acquired In-Process Research & Development (IPR&D) represents the fair value assigned to those research and development projects that were acquired in
a business combination for which the related products have not received regulatory approval and have no alternative future use. IPR&D is capitalized at its
fair value as an indefinite-lived intangible asset, and any development costs incurred after the acquisition are expensed as incurred. Upon achieving
regulatory approval or commercial viability for the related product, the indefinite-lived intangible asset is accounted for as a finite-lived asset and is
amortized on a straight-line basis over the estimated useful life. If the project is not completed or is terminated or abandoned, the Company may have an
impairment related to the IPR&D which is charged to expense. Indefinite-lived intangible assets are tested for impairment annually and whenever events or
changes in circumstances indicate that the carrying amount may be impaired. Impairment is calculated as the excess of the asset’s carrying value over its
fair value. During the Company’s annual impairment test for its IPR&D intangible asset in 2022, it was determined that the infinite-lived intangible asset
was impaired because although the Company had an ongoing collaboration utilizing the intangible asset, the contracted cash flow associated with this
collaboration and projected future cash flows did not support the carrying amount. As a result, the Company recorded an impairment charge in the amount
of $5,407,699 for the year ended December 31, 2022.
24
Goodwill represented the excess of the purchase price paid when the Company acquired AdvanDx, Inc. in July 2015 and Curetis in April 2020, over the
fair values of the acquired tangible or intangible assets and assumed liabilities. The Company conducts an impairment test of goodwill on an annual basis
as of December 31 of each year and will also conduct tests if events occur or circumstances change that would, more likely than not, reduce the Company’s
fair value below its net equity value. As circumstances changed during the year ended December 31, 2022, that would, more likely than not, reduce the
Company’s fair value below its net equity value, the Company performed qualitative and quantitative analyses, assessing trends in market capitalization,
current and future cash flows, revenue growth rates, and the impact of global unrest and the COVID-19 pandemic on the Company and its performance.
Based on the analysis performed, and primarily due to changes in the Company’s stock price and market capitalization in the third quarter of 2022, it was
determined that goodwill was impaired. As a result, the Company recorded a goodwill impairment charge in the full amount of $6,940,549 for the year
ended December 31, 2022.
Share-Based Compensation
Share-based payments to employees, directors and consultants are recognized at fair value. The resulting fair value is recognized ratably over the requisite
service period, which is generally the vesting period of the option. The estimated fair value of equity instruments issued to non-employees is recorded at
fair value on the earlier of the performance commitment date or the date the services required are completed.
For all time-vesting awards granted, expense is amortized using the straight-line attribution method. For awards that contain a performance condition,
expense is amortized using the accelerated attribution method. Share-based compensation expense recognized is based on the value of the portion of stock-
based awards that is ultimately expected to vest during the period. The fair value of share-based payments is estimated, on the date of grant, using the
Black-Scholes model. Option valuation models, including the Black-Scholes model, require the input of highly subjective estimates and assumptions, and
changes in those estimates and assumptions can materially affect the grant-date fair value of an award. These assumptions include the fair value of the
underlying and the expected life of the award.
See additional discussion of the use of estimates relating to share-based compensation, and a discussion of management’s methodology for developing each
of the assumptions used in such estimates, in Note 3 of the accompanying consolidated financial statements.
Recent Accounting Pronouncements
We have reviewed all recently issued standards and have determined that, other than as disclosed in Note 3 of our consolidated financial statements
appearing elsewhere in this filing, such standards will not have a material impact on our consolidated financial statements or do not otherwise apply to our
operations.
Off-Balance Sheet Arrangements
As of December 31, 2023 and 2022, the Company did not have any off-balance sheet arrangements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, the Company is not required to provide the information required by this Item.
Item 8. Financial Statements
The Company’s consolidated financial statements and the report of our independent registered public accounting firm are included in this Annual Report as
indicated in Part IV, Item 15.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
25
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company’s management evaluated, with the participation of the Company’s principal executive and principal financial officer, the effectiveness of the
Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2023. We
maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the
Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is
accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow for
timely decisions regarding disclosure. Based on their evaluation, management has concluded that the Company’s disclosure controls and procedures were
effective as of December 31, 2023.
Changes in Internal Control over Financial Reporting
For the year ended December 31, 2023, there have been no changes in the Company’s internal controls over financial reporting that have materially
affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.
Management’s Annual Report on Internal Control over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-
15(f) and 15d-15(f) under the Exchange Act). The Company’s internal control system was designed to provide reasonable assurance regarding the
preparation and fair presentation of published financial statements. Because of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and
with the participation of management, including the then-appointed Company’s Chief Executive Officer and Chief Financial Officer, the Company assessed
the effectiveness of internal control over financial reporting as of December 31, 2023. In making this assessment, management used the criteria set forth by
the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in its statement “Internal Control-Integrated Framework (2013).”
Based on this assessment, management has concluded that, as of December 31, 2023, internal control over financial reporting is effective based on these
criteria.
This Annual Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over
financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to the
rules of the SEC that permit the Company to provide only management’s report in this Annual Report.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
26
Item 10. Directors, Executive Officers and Corporate Governance
PART III
Our executive officers are appointed by the Board and serve until their successors have been elected and qualified or until their earlier resignation or
removal by the Board. There are no family relationships among any of the directors and executive officers of the Company. Incumbent directors are elected
to serve until our next annual meeting and until each director’s successor is duly elected and qualified. No director or executive officer has been involved in
any legal proceeding during the past ten years that is material to an evaluation of his ability or integrity.
The following table sets forth information regarding the Company’s directors and officers as of the date hereof.
Name
David Lazar
Avraham Ben-Tzvi
Matthew McMurdo
David Natan
Age
33
53
52
70
Positions
Chairman of the Board and Chief Executive Officer
Director
Director
Director
David E. Lazar has served as the Chief Executive Officer of Titan Pharmaceuticals Inc. listed on the Nasdaq (TTNP) since August 2022, where he also
served as a director and board chairman from August 2022 until October 2023. On December 28, 2023, Mr. Lazar was appointed Chief Executive Officer
and to the Board of Directors of Minim, Inc. (NASDAQ: MINM). Mr. Lazar has successfully served as a custodian to numerous public companies across a
wide range of industries, including without limitation, C2E Energy, Inc. (OTCMKTS: OOGI), China Botanic Pharmaceutical Inc. (OTCMKTS: CBPI),
One 4 Art Ltd., Romulus Corp., Moveix, Inc., Arax Holdings Corp. (OTCMKTS: ARAT), ESP Resources, Inc. (OTCMKTS: ESPIQ), Adorbs, Inc.,
Exobox Technologies Corp. (OTCMKTS: EXBX), Petrone Worldwide, Inc. (OTCMKTS: PFWIQ), Superbox, Inc. (OTCMKTS: SBOX), Sino Green Land
Corp. (OTCMKTS: SGLA), SIPP International Industries, Inc. (OTCMKTS: SIPN), Cereplast, Inc. (OTCMKTS: CERPQ), Energy 1 Corp. (OTCMKTS:
EGOC), ForU Holdings, Inc. (OTCMKTS: FORU), China Yanyuan Yuhui National Education Group, Inc. (OTCMKTS: YYYH), Pan Global Corp.
(OTCMKTS: PGLO), Shengtang International, Inc. (OTCMKTS: SHNL), Alternaturals, Inc. (OTCMKTS: ANAS), USA Recycling Industries, Inc.
(OTCMKTS: USRI), Tele Group Corp., Xenoics Holdings, Inc. (OTCMKTS: XNNHQ), Richland Resources International Group, Inc. (OTCMKTS:
RIGG), AI Technology Group, Inc., Reliance Global Group, Inc. (NASDAQ: RELI), Melt, Inc., Ketdarina Corp., 3D MarkerJet, Inc. (OTCMKTS: MRJT),
Lvpai Group Ltd., Gushen, Inc., FHT Future Technology Ltd., Inspired Builders, Inc., Houmu Holdings Ltd. (OTCMKTS: HOMU), Born, Inc.
(OTCMKTS: BRRN), Changsheng International Group Ltd., Sollensys Corp. (OTCMKTS: SOLS), Guozi Zhongyu Capital Holdings Co. (OTCMKTS:
GZCC) and Cang Bao Tian Xia International Art Trade Center, Inc. Mr. Lazar currently serves as an Advisor to PROMAX Investments LLC, a position he
has held since July 2022, and as an Ambassador at Large for the Arab African Council for Integration and Development, since March 2022.
Avraham Ben-Tzvi is the founder of ABZ Law Office, a boutique Israeli law firm specializing in corporate & securities laws, commercial law & contracts,
and various civil law matters, as well as providing outsourced general counsel services for publicly traded as well as private companies and corporations,
which he established in January 2017. Mr. Ben-Tzvi served as Chief Legal Officer and General Counsel of Purple Biotech Ltd. (formerly Kitov Pharma
Ltd.) (NASDAQ/TASE: PPBT), a clinical-stage company advancing first-in-class therapies to overcome tumor immune evasion and drug resistance, from
November 2015 until April 2020. Prior to that, Mr. Ben-Tzvi served as General Counsel and Company Secretary at Medigus Ltd. (NASDAQ/TASE:
MDGS), a minimally invasive endosurgical tools medical device and miniaturized imaging equipment company, from April 2014 until November 2015.
Prior to that he served as an attorney at one of Israel’s leading international law firms where, amongst other corporate and commercial work, he advised
companies and underwriters on various offerings by Israeli companies listing in the US and on various SEC related filings. Prior to becoming a lawyer,
Mr. Ben-Tzvi worked in several business development, corporate finance and banking roles at companies in the financial services, lithium battery
manufacturing and software development industries. Since December 2023, Mr. Ben-Tzvi has been serving as a member of the Board of Directors of
Minim, Inc. (NASDAQ: MINM), a company which delivers smart software-driven communications products under the globally recognized Motorola
brand and Minim® trademark. Since August 2022, Mr. Ben-Tzvi has been serving as a member of the Board of Directors of Titan Pharmaceuticals, Inc.
(NASDAQ: TTNP), a pharmaceutical company, where he is also Chair of the Nominating Committee. Mr. Ben-Tzvi is a licensed attorney and member of
the Israel Bar Association, and he is also licensed as a Notary by the Israeli Ministry of Justice. Based on Mr. Ben-Tzvi’s extensive legal experience and
knowledge in the fields of civil-commercial law and corporate and securities law, and his previous public company and commercial business experience,
our Board believes that Mr. Ben-Tzvi has the appropriate set of skills to serve as a member of the Board.
27
David Natan currently serves as President and Chief Executive Officer of Natan & Associates, LLC, a consulting firm offering chief financial officer
services to public and private companies in a variety of industries, since 2007. From February 2010 to May 2020, Mr. Natan served as Chief Executive
Officer of ForceField Energy, Inc. (OTCMKTS: FNRG), a company focused on the solar industry and LED lighting products. From February 2002 to
November 2007, Mr. Natan served as Executive Vice President of Reporting and Chief Financial Officer of PharmaNet Development Group, Inc., a drug
development services company, and, from June 1995 to February 2002, as Chief Financial Officer and Vice President of Global Technovations, Inc., a
manufacturer and marketer of oil analysis instruments and speakers and speaker components. Prior to that, Mr. Natan served in various roles of increasing
responsibility with Deloitte & Touche LLP, a global consulting firm. Mr. Natan currently serves as a member of the Board of Directors and Chair of the
Audit Committee of NetBrands Inc. f/k/a Global Diversified Marketing Group, Inc. (OTCMKTS: NBND), a manufacturer, marketer and distributor of food
and snack products, since February 2021 and serves as a member of the Board of Directors and Chair of the Audit Committee of Sunshine Biopharma, Inc.
(NASDAQ: SBFM), a pharmaceutical and nutritional supplement company, since February 2022. Additionally in November 2023, Mr. Natan was
appointed to the Board of Directors and Audit Committee Chair of Minim, Inc. (NASDAQ: MINM). In December 2022, Mr. Natan was appointed to the
Board of Directors and Audit Committee Chair of Vivakor Inc. (NASDAQ: VIVK) and served until December 2023. Previously, Mr. Natan served as
Chairman of the Board of Directors of ForceField Energy, Inc., from April 2015 to May 2020, and as a member of the Board of Directors of Global
Technovations, Inc., from December 1999 to December 2001. Mr. Natan holds a B.A. in Economics from Boston University. Based on Mr. Natan’s
extensive experience, our Board believes that Mr. Natan has the appropriate set of skills to serve as a member of the Board.
Matthew C. McMurdo has served as Managing Member of McMurdo Law Group, LLC, a corporate law practice, since 2010. Previously, Mr. McMurdo
was a Partner at Nannarone & McMurdo, LLP, a boutique law firm, from 2008 to 2010. In addition, Mr. McMurdo served as General Counsel of Berkley
Asset Management LLC, the general partner of a real estate fund focused on opportunistic and distressed real estate assets, from 2011 to 2013.
Mr. McMurdo was Of-Counsel at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., from 2007 to 2008 and an associate at Greenberg Traurig, LLP
from 2006 to 2007. On December 28, 2023, Mr. McMurdo was appointed to the Board of Directors of Minim Inc (NASDAQ: MINM), where he serves on
the compensation and nominating committees. Mr. McMurdo holds a B.S. in Finance from Lehigh University and a J.D., cum laude, from Benjamin N.
Cardozo School of Law. Based on Mr. McMurdo’s extensive experience and knowledge in the fields of corporate and securities law, and his previous
public company and commercial business experience, our Board believes that Mr. McMurdo has the appropriate set of skills to serve as a member of the
Board.
28
Corporate Governance
Board and Board Committees
The Company’s Bylaws provide that the Board, by resolution adopted by a majority of the whole Board, may designate one or more other committees, with
each such committee to consist of two or more directors. As of the date of this Proxy Statement, the Board consists of four members.
The Board annually elects from its members the Audit and Compensation Committees. The Board may also from time to time appoint ad hoc committees.
Currently, the Board has not appointed a Nominating and Corporate Governance Committee. The Board believes the nominating and corporate governance
responsibilities are best handled at this time by the full Board given its size.
During its fiscal year ended December 31, 2023, the Board held 25 meetings. Each director attended at least 75% of the aggregate of all meetings of the
Board and the Committees on which each such director served held during 2023. The Board encourages all directors to attend the Company’s annual
meeting of stockholders.
Each of the standing Committees of the Board operates pursuant to a written Committee Charter. Copies of these Charters can be obtained free of charge
from the Corporate Governance portion of the Investors section of the Company’s website, www.opgen.com.
Director Independence
An “independent director” is defined generally as a person other than an executive officer or employee of the company or its subsidiaries or any other
individual having a relationship which, in the opinion of the company’s Board of Directors, would interfere with the director’s exercise of independent
judgment in carrying out the responsibilities of a director. The Board has determined that, upon their appointments, Messrs. Ben-Tzvi, McMurdo and Natan
will be “independent” directors as defined in the applicable Nasdaq listing standards and applicable SEC rules. Our independent directors will conduct
regularly scheduled meetings at which only independent directors are present.
While Nasdaq listing standards generally require that a majority of the Board be independent, under NASDAQ Rule 4350(c), a controlled company (as
defined by Nasdaq listing standards) is exempt from certain independent director requirements set forth in this rule. Following the Company’s special
meeting of stockholders on May 9, 2024, the Company became a controlled company and may rely on such exemption.
Audit Committee
The current members of our audit committee are: David Natan (Chair), Matthew McMurdo, and Avraham Ben-Tzvi. Each member of the audit committee
is expected to be financially literate, and Mr. Natan qualifies as an “audit committee financial expert” as defined in applicable SEC rules and has
accounting or related financial management expertise. During its fiscal year ended December 31, 2023, the former audit committee held 11 meetings. We
have adopted an audit committee charter that details the purposes and responsibilities of the committee, including:
-
-
-
-
appointing, approving the compensation of, and assessing the independence of our independent registered public accounting firm;
approving auditing and permissible non-audit services, and the terms of such services, to be provided by our independent registered public
accounting firm;
reviewing the audit plan with the independent registered public accounting firm and members of management responsible for preparing our
financial statements;
reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements
and related disclosures as well as critical accounting policies and practices used by us;
29
-
-
-
-
reviewing the adequacy of our internal control over financial reporting;
establishing policies and procedures for the receipt and retention of accounting-related complaints and concerns;
reviewing the Company’s periodic reports to be filed with the SEC;
recommending, based upon the Audit Committee’s review and discussions with management and the independent registered public accounting
firm, whether our audited financial statements shall be included in our Annual Report on Form 10-K;
- monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to our financial
statements and accounting matters;
-
-
-
-
preparing the Audit Committee report required by SEC rules to be included in our annual proxy statement;
overseeing our compliance with applicable legal and regulatory requirements;
reviewing all related person transactions for potential conflict of interest situations and approving all such transactions; and
reviewing quarterly earnings releases.
Compensation Committee
The current members of our compensation committee are: Matthew McMurdo (Chair), David Natan, and Avraham Ben-Tzvi. During its fiscal year ended
December 31, 2023, the former compensation committee held 4 meetings. We have adopted a compensation committee charter that details the purposes and
responsibilities of the committee, including:
-
-
-
-
-
-
-
-
annually reviewing and recommending to our Board corporate goals and objectives, and determining the achievement thereof, relevant to the
compensation of our Chief Executive Officer and other executive officers;
evaluating the performance of our Chief Executive Officer in light of such corporate goals and objectives and recommending to our Board the
compensation of our Chief Executive Officer;
determining, or reviewing and recommending to our Board for approval, the compensation of our other executive officers;
reviewing and establishing our overall management compensation philosophy and policy;
overseeing and administering our compensation and similar plans;
evaluating and assessing potential current compensation advisors in accordance with the independence standards identified in the applicable
Nasdaq Stock Market rules;
retaining and approving the compensation of any compensation advisors;
reviewing and approving, or reviewing and recommending to our Board for approval, our policies and procedures for the grant of equity-based
awards;
30
-
-
-
-
determining or reviewing and making recommendations to our Board with respect to director compensation;
preparing the compensation committee report required by SEC rules to be included in our annual proxy statement;
reviewing and discussing with management the compensation discussion and analysis to be included in our annual proxy statement or Annual
Report on Form 10-K; and
reviewing and discussing with our Board corporate succession plans for the Chief Executive Officer and other key officers.
Nomination of Directors
The full Board acts to evaluate, on an annual basis, the composition of the Board and the skills, qualifications, business attributes and experience of the
existing Board members. The specific process for identifying and evaluating new directors, including stockholder-recommended nominees, if any, will vary
based on an assessment of the then-current needs of the Board and the Company. The Board will determine the desired profile of a new director, the
competencies we are seeking, including experience in one or more areas of need, as determined by the Board. Candidates will be evaluated in light of the
target criteria chosen.
Procedures for Nominating a Director Candidate
The Board considers nominations by stockholders who recommend candidates for election to the Board. The Board evaluates nominees recommended by
stockholders in the same manner as it evaluates other nominees. A stockholder seeking to recommend a prospective candidate for the Board’s consideration
may do so by writing to the Corporate Secretary c/o OpGen, Inc., 9717 Key West Ave, Suite 100, Rockville, MD 20850.
With respect to the 2024 Annual Meeting of Stockholders, recommendations for director candidates must be received not later than the close of business on
the tenth day following the earlier of the day on which notice of the date of the meeting was mailed and public disclosure was made. Recommendations
submitted for consideration by the Board in preparation for the 2025 Annual Meeting of Stockholders must be received after the close of business on 120th
day prior to the first anniversary of the date on notice of the 2025 Annual Meeting of Stockholders is first made available to our stockholders, and no later
than the close of business on the 90th day prior to the first anniversary of the date on which such notice is first made available to our stockholders in
connection with such meeting. However, if we change the date of the 2025 Annual Meeting by 30 days from the anniversary of the 2024 Annual Meeting
of Stockholders, recommendations for director candidates must be received not later than the close of business on the tenth day following the earlier of the
day on which notice of the date of the meeting was mailed and public disclosure was made.
Each notice of recommendation must contain the information required under our Bylaws, including: (a) for each person whom the stockholder proposes to
nominate for election or reelection as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for
elections of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act (including such person’s written consent to
being named in the proxy statement as a nominee and to serving as a director if elected); (b) as to the stockholder giving the notice, (i) the name and
address, as they appear on the Company’s books, of such stockholder and (ii) the class and number of shares of the Company which are owned beneficially
and of record by such stockholder of record and by the beneficial owner, if any, on whose behalf the nomination is made; and (c) as to the beneficial owner,
if any, on whose behalf the nomination is made, (i) the name and address of such person and (ii) the class and number of shares of the Company which are
beneficially owned by such person. At the request of the Board, any person nominated by the Board for election as a director shall furnish to the Secretary
of the Company that information required to be set forth in a stockholder’s notice of nomination which pertains to the nominee.
31
Board Diversity
Although the Board does not have a formal diversity policy, in addition to the considerations described above, the Board considers race and gender
diversity in selection of qualified candidates as well as the overall skills and experience of such candidates. The following Board Diversity Matrix provides
certain information regarding the diversity of our current Board members based on such members’ self-identification.
Board Diversity Matrix
(as of April 15, 2024)
Total Number of Directors
Gender
Directors
Demographic Background
African American or Black
Alaskan Native or Native American
Asian
Hispanic or Latinx
Native Hawaiian or Pacific Islander
White
Two or More Races or Ethnicities
LGBTQ+
Did Not Disclose Demographic Background
Board Leadership Structure and Role in Risk Oversight
4
Female
0
Male
4
0
0
0
0
0
0
0
0
0
0
0
0
0
0
2
2
0
0
The Board assesses this leadership structure to ensure the interests of the Company and its stockholders are best served. The Board does not currently have
a lead independent director. The Board determines what leadership structure it deems appropriate based on factors such as the experience of the applicable
individuals, the current business environment of the Company or other relevant factors. Currently, Mr. Lazar serves as the Company’s chairman.
The Board is responsible for oversight of the Company’s risk management practices, while management is responsible for the day-to-day risk management
processes. The Board receives periodic reports from management regarding the most significant risks facing the Company. We believe that this division of
responsibilities is the most effective approach for addressing the risks facing the Company, and the Company’s Board leadership structure will support this
approach.
Board Role in Risk Management
Our Board oversees the management of risks inherent in the operation of our business and the implementation of our business strategies. Our Board
performs this oversight role by using several different levels of review. In connection with its reviews of the operations and corporate functions of our
Company, our Board addresses the principal risks associated with those operations and corporate functions. This includes risks relating to healthcare and
regulatory matters and compliance needs of the organization. In addition, our Board reviews the risks associated with our Company’s business strategies
periodically throughout the year as part of its consideration of undertaking any such business strategies.
32
Each of our Board committees also oversees the management of our risk that falls within the committee’s areas of responsibility. In performing this
function, each committee has full access to management, as well as the ability to engage advisors. In connection with its risk management role, our Audit
Committee meets privately with representatives from our independent registered public accounting firm. The Audit Committee oversees the operation of
our risk management program, including the identification of the principal risks associated with our business and periodic updates to such risks, and reports
to our Board regarding these activities.
The Compensation Committee assesses the impact risks inherent in the annual and long-term incentive plans could have on the Company. After review, the
Compensation Committee does not believe that the Company’s executive compensation practices or programs are likely to have a material adverse effect
on the Company.
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s officers and directors and persons who own more than 10% of
the Company’s outstanding common stock to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and any
other equity securities of the Company. Directors, officers, and greater than 10% stockholders are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on a review of the Company’s records and written representations by the persons required to file
such reports, all filing requirements of Section 16(a) were satisfied with respect to the 2023 fiscal year.
Code of Ethics
We have adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive
officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A current copy of the code is posted
on the Corporate Governance section of our website, which is located at www.opgen.com. If we make any substantive amendments to, or grant any waivers
from, the code of business conduct and ethics for any officer, we will disclose the nature of such amendment or waiver on our website or in a Current
Report on Form 8-K.
Insider Trading Policies
We have adopted an insider trading policy governing the purchase, sale, and other dispositions of our securities by directors, officers, and employees. A
copy of the insider trading policy is attached as an exhibit to this Annual Report.
Communications with the Board of Directors
Stockholders who want to communicate with members of the Board, including the independent directors, individually or as a group, should address their
communications to the Board, the Board members or the Board committee, as the case may be, and send them to c/o Chair of the Audit Committee,
OpGen, Inc., 9717 Key West Ave, Suite 100, Rockville, MD 20850. The Chair of the Audit Committee will forward all such communications directly to
such Board members. Any such communications may be made on an anonymous and confidential basis.
There have been no changes to the procedures by which interested parties may communicate with the Board.
33
Item 11. Executive Compensation
We are currently a “smaller reporting company” as defined by Item 10 of the Regulation S-K promulgated under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and have elected to provide certain scaled disclosures permitted under the Exchange Act for smaller reporting companies.
Summary Compensation Table for 2023 and 2022
Our named executive officers for 2023 are Oliver Schacht, Ph.D., our former Chief Executive Officer, Albert Weber, our former Chief Financial Officer,
and Johannes Bacher, our former Chief Operating Officer. This table below provides disclosure, for the years ended December 31, 2023 and 2022 for our
named executive officers. In connection with the transactions contemplated by the March 2024 Private Placement, in March 2024, each of Messrs. Schacht,
Weber and Bacher resigned as officers of the Company, and Mr. Lazar was appointed as our Chief Executive Officer.
Named Executive Officer
and Principal Position
Oliver Schacht, Ph.D.
Chief Executive Officer
Year
2023
2022
$
$
Salary
($)
353,484 $
408,000 $
Bonus
($)
Stock
Awards (1)
($)
11,000 $
60,750 $
- $
- $
Option
Awards (1)
($)
- $
52,047 $
Albert Weber
Chief Financial Officer
2023
2022
$
$
244,200 $
300,000 $
Johannes Bacher
Chief Operating Officer
2023
2022
$
$
244,200 $
300,000 $
- $
- $
- $
- $
11,000 $
- $
- $
195,892 $
11,000 $
36,450 $
- $
31,228 $
Non-Equity
Incentive Plan
Compensation
(2)(3)
($)
All Other
Compensation
($)
Total
($)
364,484
520,797
-
-
$
$
15,900(4) $
17,500(4) $
271,100
513,392
-
-
$
$
255,200
367,678
- $
- $
- $
- $
- $
- $
(1) The “Stock Awards” column reflects the grant date fair value for all restricted stock units awarded under the Amended and Restated 2015 Incentive
Plan (the “Plan”) during 2023 and 2022, respectively. The “Option Awards” column reflects the grant date fair value for all stock option awards
granted under the 2015 and 2022 Incentive Plans during 2023 and 2022, respectively. These amounts are determined in accordance with FASB
Accounting Standards Codification 718 (ASC 718), without regard to any estimate of forfeiture for service vesting. Assumptions used in the
calculation of the amounts in these columns for 2023 and 2022 are will be included in a footnote to the Company’s condensed consolidated audited
financial statements for the year ended December 31, 2023 and 2022.
(2) Represents annual incentive bonuses paid under an annual performance-based cash incentive plan. Corporate performance goals are established by the
Compensation Committee for each year. The incentive bonuses are determined by the Compensation Committee based on the achievement of
corporate performance goals. In lieu of cash incentive bonuses, Mr. Schacht and Mr. Bacher agreed to receive the value of their approved 2021 bonuses
in the form of 1,247 and 644 restricted stock units, respectively, which were granted on March 31, 2022, with a value of $150.00 per share, the closing
price of the Company’s common stock on March 31, 2022. The restricted stock units vested completely on the one-year anniversary of the grant.
(3) The named executive officers were eligible to receive performance-based cash bonuses for the fiscal year ended December 31, 2023 and 2022. The
Compensation Committee determined not to grant any such bonuses to the named executed officers for the fiscal years ended December 31, 2023 and
2022.
(4) Mr. Weber’s “All Other Compensation” for 2022 and 2023 represents reimbursement for commuting expenses incurred by Mr. Weber in 2022 and
2023, respectively, for travel to the Company’s offices in Germany.
34
Agreements with Our Named Executive Officers
Prior to the initial closing of the March 2024 Private Placement in March 2024, the Company was party to an Executive Employment Agreement with
Oliver Schacht, Ph.D., the Company’s Chief Executive Officer. Mr. Schacht’s employment agreement provided that Mr. Schacht would receive an annual
base salary of $408,000 per year and will be eligible to receive an annual bonus of up to $285,600, or seventy percent (70%) of the base salary. The annual
bonus opportunity was based on key performance metrics established by the Board of the Company. Mr. Schacht was also entitled to participate in the
Company’s standard equity incentive and benefits plans. In connection with certain cash management initiatives, the Company temporarily reduced
Mr. Schacht’s compensation under his employment agreement to $244,800 in September 2023, which was subsequently increased to $300,000 in
January 2024.
In connection with the transactions contemplated by the March 2024 Private Placement, Mr. Schacht resigned at the Initial Closing, and the Company and
Mr. Schacht entered into a new employment agreement that superseded his existing employment agreement and pursuant to which Mr. Schacht would
continue as an employee for a transition period.
Prior to January 2024, the Company’s subsidiary, Curetis GmbH, was party to employment agreements with each of Mr. Bacher and Mr. Weber.
Mr. Bacher’s employment agreement provided that Mr. Bacher would receive a base salary of $300,000 per year and would be eligible to receive an annual
bonus of up to forty-five percent (45%) of the base salary. The annual bonus opportunity was based on key performance metrics established by the Board
and the Compensation Committee. Mr. Bacher was also entitled to participate in the Company’s 2015 Equity Incentive Plan. In connection with certain
cash management initiatives, the Company temporarily reduced Mr. Bacher’s compensation under his employment agreement to $180,000 in
September 2023.
Mr. Weber’s employment agreement provided that Mr. Weber would receive a base salary of $300,000 per year and would be eligible to receive an annual
bonus of up to forty-five percent (45%) of the base salary. The annual bonus opportunity was based on key performance metrics established by the Board
and the Compensation Committee. Mr. Weber was also entitled to participate in the Company’s 2015 Equity Incentive Plan. In connection with certain cash
management initiatives, the Company temporarily reduced Mr. Weber’s compensation under his employment agreement to $180,000 in September 2023.
Following January 2024, as a result of Curetis GmbH’s, the Company’s subsidiary, insolvency proceedings, the Company entered into consulting
agreements with each of Mr. Bacher and Mr. Weber to ensure that they would continue to be compensated at the same rates as under their employment
agreements while they continue to serve as officers of the Company. Following the initial closing of the March 2024 Private Placement, Mr. Bacher and
Mr. Weber resigned as officers of the Company, and their consulting agreements terminated in April 2024.
In April 2024, in connection with Mr. Lazar’s appointment as our Chief Executive Officer, the Company entered into an employment agreement with
Mr. Lazar. Pursuant to the employment agreement, the Company engaged Mr. Lazar to act as its Chief Executive Officer (“CEO”) and, effective April 1,
2024, is paid a base salary of $406,000 per annum, which shall be deferred and accrued until the Company’s compensation committee determines that the
Company is sufficiently liquid to pay the accrued salary. Under the employment agreement, Mr. Lazar will also be eligible for annual bonuses of up to
100% of his then current base salary (payable in cash or restricted stock) and an annual grant of incentive equity awards in an amount equal to 100% of his
then current base salary. The employment agreement has a three (3) year term. Mr. Lazar is also entitled to a bonus upon a change of control of the
Company payable in a lump-sum amount equal to three percent (3%) of the increased valuation of the Company resulting from the change of control. Such
bonus is payable in cash, restricted stock or a combination thereof.
35
Outstanding Equity Awards at Fiscal Year-End Table
The following table shows the outstanding equity awards held by the named executive officers as of December 31, 2023.
OPTION AWARDS
STOCK AWARDS
Number of
Securities
Underlying
Unexercised
Options
Exercisable
48
28
2,559(1)
388
188(2)
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
-
-
591(1)
-
187(2)
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
Option
Exercise
Price
($)
Option
Expiration
Date
Market
Value of
Shares of
Stock
that have
not
Vested
($) (3)
Number
of
Shares
of Stock
that
have not
Vested
187
- 14,736.00 6/16/2026
- 1,712.00 6/16/2026
424.00 9/29/2030
-
382.00 3/02/2031
-
162.00 3/01/2032
-
785.40
1,000 4,200.00
-
-
-
-
-
-
48
20
853(1)
213
113(2)
459(1)
-
-
197(1)
-
112(2)
591(1)
- 14,736.00 6/16/2026
- 1,712.00 6/16/2026
424.00 9/29/2030
-
382.00 3/02/2031
-
162.00 3/01/2032
-
112
470.40
1,000 4,200.00
-
-
-
-
-
-
-
216.00 1/02/2032
1,000 4,200.00
-
-
-
-
-
-
Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
other
Rights
that have
not
Vested
($) (3)
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
that have
not
Vested
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Name
Oliver Schacht(4)
Johannes Bacher(5)
Albert Weber(6)
(1) The vesting schedule is vesting over four years with twenty-five percent (25%) vesting on the first anniversary of the date of grant and six and one-
quarter percent (6.25%) vesting on the last day of each fiscal quarter over the next three years.
(2) The vesting schedule is vesting over two years with fifty percent (50%) vesting on the first anniversary of the date of grant and fifty percent (50%)
vesting on the second anniversary of the date of grant.
(3) Calculated based on the closing price of the common stock on the Nasdaq Capital Market on December 29, 2023 (the last trading day of 2023) of
$4.20 per share.
36
(4) Mr. Schacht’s awards on July 1, 2016 (48 shares) and July 1, 2019 (28 shares) were Curetis ESOP shares assumed by OpGen as part of OpGen’s
business combination with Curetis N.V. in April 2020. These awards vested over three years with thirty three percent (33%) vesting on the first
anniversary of the date of grant and one twenty-fourth (4.2%) vesting monthly over the following two years. Mr. Schacht was granted stock option
awards on September 30, 2020 (3,150) which vest over four years with twenty-five percent (25%) vesting on the first anniversary of the date of grant
and six and one-quarter percent (6.25%) vesting on the quarterly anniversary of the first vesting date thereafter over the next three years. Mr. Schacht
was granted stock option awards on March 3, 2021 (388) which vest over two years with fifty percent (50%) vesting annually. Mr. Schacht was granted
restricted stock units on March 3, 2021 (388) which vest over two years with fifty percent (50%) vesting annually. Mr. Schacht was granted stock
option awards on March 2, 2022 (375) which vest over two years with fifty percent (50%) vesting annually. Mr. Schacht was granted restricted stock
units on March 2, 2022 (375) which vest over two years with fifty percent (50%) vesting annually, though the second fifty percent (50%) is not
exercisable until December 31, 2024. Mr. Schacht was granted restricted stock units on March 2, 2023 (1,000) which vest over two years with fifty
percent (50%) vesting annually, though the first fifty percent (50%) is not exercisable until December 31, 2024. Mr. Schacht received his 2021 non-
equity incentive cash performance bonus in the form of restricted stock units on March 31, 2022 (1,247), which vested on March 31, 2023.
(5) Mr. Bacher’s awards on July 1, 2016 (48 shares) and July 1, 2019 (20 shares) were Curetis ESOP shares assumed by OpGen as part of OpGen’s
business combination with Curetis N.V. in April 2020. These awards vested over three years with thirty three percent (33%) vesting on the first
anniversary of the date of grant and one twenty-fourth percent (4.2%) vesting monthly over the following two years. Mr. Bacher was granted stock
option awards on September 30, 2020 (1,050) which vest over four years with twenty-five percent (25%) vesting on the first anniversary of the date of
grant and six and one-quarter percent (6.25%) vesting on the quarterly anniversary of the first vesting date thereafter over the next three years.
Mr. Bacher was granted stock option awards on March 3, 2021 (213), which vest over two years with fifty percent (50%) vesting annually. Mr. Bacher
was granted restricted stock units on March 3, 2021 (213) which vest over two years with fifty percent (50%) vesting annually. Mr. Bacher was granted
stock option awards on March 2, 2022 (225) which vest over two years with fifty percent (50%) vesting annually. Mr. Bacher was granted restricted
stock units on March 2, 2022 (225) which vest over two years with fifty percent (50%) vesting annually, though the second fifty percent (50%) is not
exercisable until December 31, 2024. Mr. Bacher was granted restricted stock units on March 2, 2023 (1,000) which vest over two years with fifty
percent (50%) vesting annually, though the first fifty percent (50%) is not exercisable until December 31, 2024. Mr. Bacher received his 2021 bonus in
the form of restricted stock units on March 31, 2022 (644), which vested on March 31, 2023.
(6) Mr. Weber was granted stock option awards on January 3, 2022 (1,050), which vest over four years with twenty-five percent (25%) vesting on the first
anniversary of the date of grant and six and one-quarter percent (6.25%) vesting on the last day of each fiscal quarter over the next three years.
Mr. Weber was granted restricted stock units on March 2, 2023 (1,000) which vest over two years with fifty percent (50%) vesting annually, though the
first fifty percent (50%) is not exercisable until December 31, 2024.
37
Director Compensation
Prior to the initial closing of the March 2024 Private Placement, our Board of Directors adopted a non-employee director compensation plan providing for
certain cash and equity compensation to be provided to the Company’s non-employee directors for their service on the Board and its committees. Pursuant
to such plan, each non-employee director received an annual cash retainer of $25,000, or, with respect to the Chairman of the Board, $75,000, plus
additional annual cash compensation for the Board and committee chairs ($15,000 for Audit Committee and $12,000 for Compensation Committee) and for
committee members ($7,000 for Audit Committee and $6,000 for Compensation Committee). In addition, new non-employee directors received an initial
equity grant and each non-employee director received an annual equity grant. Under such program, each non-employee director received an initial grant of
between 1,500 and 3,000 restricted stock units and an annual grant to non-employee directors of 1,500 restricted stock units. All such awards are made
under the Company’s 2015 Equity Incentive Plan. For a portion of 2023, consistent with the Company’s cash management efforts, the Company reduced its
director compensation plan by forty percent (40%). Mr. Schacht did not receive additional compensation for his service on the Board. See “Summary
Compensation Table” for his 2023 compensation.
Following the initial closing of the March 2024 Private Placement, the Company entered into director agreements with each of Messrs. Ben-Tzvi, Lazar,
McMurdo and Natan. Pursuant to the director agreements, each director will be entitled to receive from the Company a cash fee of $12,500 per quarter
(pro-rated for any partial quarter) plus a one-time fee of $50,000 upon signing their director agreements. Such cash fees will accrue until such time as the
Company raises sufficient capital to pay the accrued but unpaid cash fees or the director elects to convert such unpaid fees into shares of common stock of
the Company. The cash director fee would convert at a rate of $4.00 per share for each $1.00 of accrued and unpaid fee that is converted. In addition to the
quarterly cash fee, under the director agreements, each director was granted 100,000 shares of restricted common stock.
Compensation for the non-employee directors for the year ended December 31, 2023 was:
Name
Mario Crovetto(2)
R. Donald Elsey(2)
Dr. Prabhavathi Fernandes(2)
William E. Rhodes, III(2)
Yvonne Schlaeppi(2)
Fees Earned
or Paid in
Cash
($)
Stock Awards
($) (1)
All Other
Compensation
($)
Total
($)
$
$
$
$
$
39,433 $
34,667 $
32,933 $
78,433 $
30,767 $
932 $
932 $
932 $
932 $
932 $
- $
- $
- $
- $
- $
40,365
35,599
33,865
79,365
31,699
(1) The “Stock Awards” column reflects the grant date fair value for all restricted stock awards granted under the 2015 Stock Options Plan during 2023.
These amounts are determined in accordance with FASB Accounting Standards Codification 718 (ASC 718), without regard to any estimate of
forfeiture for service vesting.
(2) As of December 31, 2023, the non-employee directors held the following vested stock options: Rhodes (267), Crovetto (267), Elsey (250), Fernandes
(267) and Schlaeppi (0).
38
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The number of shares of the Company’s Common Stock outstanding at the close of business on April 15, 2024 was 1,262,491 shares. In addition, as of
April 15, 2024, there were 250 shares of Series D Preferred Stock outstanding and 400,000 shares of Series E Preferred Stock outstanding. Each share of
Series D Preferred Stock is convertible into 244.40 shares of Common Stock, and each share of Series E Preferred Stock is convertible into 2.40 shares of
Common Stock, in each case, subject to applicable ownership limitations that restrict a holder’s ability to convert in excess of designated percentages. The
following table sets forth the beneficial ownership of the Company’s common stock, as of April 15, 2024, by each Company director and executive officer,
and by all directors and executive officers as a group. Beneficial ownership is determined in accordance with Rule 13d-3 under the Exchange Act. In
computing the number of shares beneficially owned by a person or a group and the percentage ownership of that person or group, shares of our common
stock subject to options and warrants currently exercisable or exercisable within 60 days after April 15, 2024 are deemed outstanding, but are not deemed
outstanding for the purpose of computing the percentage ownership of any other person. To the knowledge of the directors and executive officers of the
Company, as of April 15, 2024, there are no persons and/or companies who or which beneficially own, directly or indirectly, shares representing more than
5% of the voting rights attached to all outstanding shares of the Company, other than as set forth below. Unless otherwise indicated, the address of each
beneficial owner listed below is c/o OpGen, Inc., 9717 Key West Ave, Suite 100, Rockville, MD 20850.
Name and Address of Beneficial Owner
5% Stockholders
David Lazar(1)
Directors and Officers
David Lazar(1)
Avraham Ben-Tzvi(2)
Matthew McMurdo(3)
David Natan(4)
All directors and officers as a group (4 persons)
*
Less than one percent of shares outstanding.
Number of
Shares of
common stock
Percentage
Beneficially
Owned
970,000
42.48%
970,000
10,000
10,000
10,000
1,000,000
42.48%
*
*
*
43.80%
(1) Consists of: (i) 400,000 shares of Series E Preferred Stock; and (ii) 10,000 shares of restricted stock that were issued upon Mr. Lazar’s appointment to
the Board. Each share of Series E Preferred Stock converts into 2.40 shares of Common Stock; provided, that Mr. Lazar may not vote shares of Series
E Preferred Stock representing, or convert shares of Series E Preferred Stock that would result in, Mr. Lazar or his transferees voting or holding, in
excess of the Ownership Limitation.
(2) Consists of 10,000 shares of restricted stock that were issued upon Mr. Ben-Tzvi’s appointment to the Board.
(3) Consists of 10,000 shares of restricted stock that were issued upon Mr. McMurdo’s appointment to the Board.
(4) Consists of 10,000 shares of restricted stock that were issued upon Mr. Natan’s appointment to the Board.
39
Change of Control
As disclosed above, in March 2024, the Company entered into the March 2024 Purchase Agreement with Mr. Lazar, pursuant to which the Company
agreed to sell 3,000,000 shares of Series E Preferred Stock to Mr. Lazar at a price of $1.00 per share for aggregate gross proceeds of $3.0 million. On
March 25, 2024, Mr. Lazar paid $200,000 at the initial closing of the transactions under the March 2024 Purchase Agreement in exchange for 200,000
shares of Series E Preferred Stock. Mr. Lazar subsequently paid $200,000 and $150,000 on April 5, 2024 and April 23, 2024, respectively, in exchange for
an additional 350,000 shares of Series E Preferred Stock. Mr. Lazar is expected to fund the remaining $2.45 million in early June 2024, at which time he
will receive the remaining 2.45 million shares of Series E Preferred Stock for an aggregate of 3.0 million shares of Series E Preferred Stock. Each share of
Series E Preferred Stock is convertible in 2.4 shares of common stock. Accordingly, following the final closing, upon conversion of all his shares of Series
E Preferred Stock, Mr. Lazar will be entitled to receive 7.2 million shares of common stock, which would represent approximately 85% of the total
outstanding shares of common stock of the Company.
Equity Compensation Plan Information
The following table shows, as of December 31, 2023, the Company’s equity compensation plans under which the Company’s equity securities are
authorized for issuance:
Plan Category
Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders
Total
Number of
securities to
be issued upon
exercise of
outstanding
options,
warrants and
rights (1)
Weighted
average
exercise price
of outstanding
options,
warrants and
rights (2)
1,112,417 $
1,050
1,113,467 $
20.97
216.00
21.15
Number of
securities
remaining
available for
future
issuance (3)
11,852
-
11,852
(1) Includes 8,326 outstanding restricted stock units for which there is no exercise price.
(2) Includes the weighted-average exercise price of stock options and warrants only.
(3) Does not include 48,057 shares of common stock that became available under the 2015 Plan on January 1, 2024 as a result of the evergreen provision
of the plan.
2008 Plan
Our 2008 Stock Option and Restricted Stock Plan, as amended, or 2008 Plan, was approved by our Board and stockholders in April 2008; subsequent
increases in the number of shares available for awards under the 2008 Plan were approved by our Board and stockholders in January 2009, February 2011,
March 2012, December 2012, April 2014 and October 2014. As of December 31, 2022, a total of 290 shares of our common stock are reserved for issuance
under the 2008 Plan.
The 2008 Plan provided for the grant of stock options and restricted stock awards. The Compensation Committee determined the time or times at which a
stock option will vest or become exercisable and the terms on which such option will remain exercisable. The Compensation Committee determined the
conditions and restrictions and purchase price, if any, for grants or sales or restricted stock to plan participants. The Compensation Committee may also at
any time accelerate the vesting or exercisability of an award.
40
Under the 2008 Plan, in the event of any dissolution or liquidation of the Company, the sale of all or substantially all of the Company’s assets, or the
merger or consolidation of the Company where the Company is not the surviving entity or which results in the acquisition of all or substantially all of the
Company’s then outstanding common stock, the Compensation Committee may: (a) provide for the assumption or substitution of some or all of the
outstanding awards; (b) provide for a cash-out payment; or (c) in the case there is no assumption, substitution or cash-out, provide that all awards not
exercised or awards providing for the future delivery of common stock will terminate upon the closing of the transaction.
Following our 2015 Equity Incentive Plan, or 2015 Plan, becoming effective, no further grants have been or will be made under our 2008 Plan.
2015 Plan
The 2015 Plan provides for the granting of incentive stock options within the meaning of Section 422 of the Code to employees and the granting of non-
qualified stock options to employees, non-employee directors and consultants. The 2015 Plan also provides for grants of restricted stock, restricted stock
units, stock appreciation rights, dividend equivalents and stock payments to employees, non-employee directors and consultants. The 2015 Plan was
amended by the Compensation Committee in February 2017 to revise the provisions with respect to net settlement of awards in response to change in
regulations, and to establish standard periods for exercise of vested stock options following termination of service events.
Administration. The Compensation Committee administers the 2015 Plan, including the determination of the recipient of an award, the number of shares or
amount of cash subject to each award, whether an option is to be classified as an incentive stock option or non-qualified stock option, and the terms and
conditions of each award, including the exercise and purchase prices and the vesting and duration of the award. Our Board may appoint one or more
separate committees of our Board, each consisting of one or more members of our Board, to administer our 2015 Plan with respect to employees who are
not subject to Section 16 of the Exchange Act. Subject to applicable law, our Board may also authorize one or more officers to designate employees, other
than employees who are subject to Section 16 of the Exchange Act, to receive awards under our 2015 Plan and/or determine the number of such awards to
be received by such employees subject to limits specified by our Board.
Authorized shares. Under our 2015 Plan, the aggregate number of shares of our common stock authorized for issuance may not exceed (1) 271 plus (2) the
sum of the number of shares subject to outstanding awards under the 2008 Plan as of the 2015 Plan’s effective date that are subsequently forfeited or
terminated for any reason before being exercised or settled, plus the number of shares subject to vesting restrictions under the 2008 Plan on the 2015 Plan’s
effective date that are subsequently forfeited. In addition, the number of shares that have been authorized for issuance under the 2015 Plan are
automatically increased on the first day of each fiscal year beginning on January 1, 2016 and ending on (and including) January 1, 2025, in an amount
equal to the lesser of (i) 4% of the outstanding shares of our common stock on the last day of the immediately preceding fiscal year, and (ii) another lesser
amount determined by our Board. As of December 31, 2023, 11,852 shares remain available for future awards under the 2015 Plan.
Shares subject to awards granted under the 2015 Plan that are forfeited or terminated before being exercised or settled, or are not delivered to the
participant because such award is settled in cash, will again become available for issuance under the 2015 Plan. However, shares that have actually been
issued shall not again become available unless forfeited. No more than 800 shares may be delivered upon the exercise of incentive stock options granted
under the 2015 Plan.
41
Types of Awards
Stock options. A stock option is the right to purchase a certain number of shares of stock, at a certain exercise price, in the future. Under our 2015 Plan,
incentive stock options and non-qualified options must be granted with an exercise price of at least 100% of the fair market value of our common stock on
the date of grant. Incentive stock options granted to any holder of more than 10% of our voting shares must have an exercise price of at least 110% of the
fair market value of our common stock on the date of grant. The stock option agreement specifies the date when all or any installment of the option is to
become exercisable. Payment of the exercise price may be made in cash or, if provided for in the stock option agreement evidencing the award, (1) by
surrendering, or attesting to the ownership of, shares which have already been owned by the optionee, (2) by delivery of an irrevocable direction to a
securities broker to sell shares and to deliver all or part of the sale proceeds to us in payment of the aggregate exercise price, (3) by a “net exercise”
arrangement, or (4) by any other form that is consistent with applicable laws, regulations and rules.
Restricted stock. Restricted stock is a share award that may be subject to vesting conditioned upon continued service, the achievement of performance
objectives or the satisfaction of any other condition as specified in a restricted stock agreement. Participants who are granted restricted stock awards
generally have all of the rights of a stockholder with respect to such stock, other than the right to transfer such stock prior to vesting.
Restricted stock units. Restricted stock units give recipients the right to acquire a specified number of shares of stock at a future date upon the satisfaction
of certain conditions, including any vesting arrangement, established by our Compensation Committee and as set forth in a restricted stock unit agreement.
Unlike restricted stock, the stock underlying restricted stock units will not be issued until the restricted stock units have vested and are settled, and
recipients of restricted stock units generally will have no voting or dividend rights prior to the time the vesting conditions are satisfied and the award is
settled.
Dividend equivalents. At our Compensation Committee’s discretion, performance-based restricted stock or restricted stock unit awards may provide for the
right to dividend equivalents. Subject to the terms of the 2015 Plan, our Compensation Committee will determine the terms and conditions of any stock unit
award, which will be set forth in a stock unit agreement to be entered into between us and each recipient.
Stock appreciation rights. Stock appreciation rights typically will provide for payments to the recipient based upon increases in the price of our common
stock over the exercise price of the stock appreciation right. The exercise price of a stock appreciation right will be determined by our Compensation
Committee, which shall not be less than the fair market value of our common stock on the date of grant. Our Compensation Committee may elect to pay
stock appreciation rights in cash or in common stock or in a combination of cash and common stock.
Performance-based awards. Awards under our 2015 Plan may be made subject to the attainment of performance goals.
Other Plan Features
No Transfer. Unless the agreement evidencing an award expressly provides otherwise, no award granted under the 2015 Plan may be transferred in any
manner (prior to the vesting and lapse of any and all restrictions applicable to shares issued under such award), other than by will or the laws of descent and
distribution, provided, however, that an incentive stock option may be transferred or assigned only to the extent consistent with Section 422 of the Code.
Adjustments. In the event of a recapitalization, stock split or similar capital transaction, our Compensation Committee will make appropriate and equitable
adjustments to the number of shares reserved for issuance under the 2015 Plan, the limitations regarding the total number of shares underlying awards
given to an individual participant in any calendar year, the number of shares that can be issued as incentive stock options, the number of shares subject to
outstanding awards and the exercise price under each outstanding option or stock appreciation right.
42
Change in Control. If we are involved in a merger or other reorganization, outstanding awards will be subject to the agreement of merger or reorganization.
Such agreement will provide for (1) the continuation of the outstanding awards by us if we are the surviving corporation, (2) the assumption or substitution
of the outstanding awards by the surviving corporation or its parent or subsidiary, (3) immediate vesting, exercisability and settlement of the outstanding
awards followed by their cancellation, or (4) settlement of the intrinsic value of the outstanding awards (whether or not vested or exercisable) in cash, cash
equivalents, or equity (including cash or equity subject to deferred vesting and delivery consistent with the vesting restrictions applicable to such award or
the underlying shares) followed by cancellation of such awards.
Termination or Amendment. Our Board may amend or terminate the 2015 Plan at any time, subject to stockholder approval where required by applicable
law. Any amendment or termination may not materially impair the rights of holders of outstanding awards without their consent. No incentive stock option
may be granted after the tenth anniversary of the date the 2015 Plan was adopted by our Board.
Effective Date. The 2015 Plan was initially adopted by our Board and subsequently approved by our stockholders in April 2015. The 2015 Plan became
effective on May 4, 2015. Awards may be granted under the 2015 Plan until April 1, 2025.
Amended and Restated Stock Option Plan
In connection with the consummation of the Company’s business combination transaction with Curetis N.V., on April 1, 2020, the Company assumed and
adopted the 2016 Stock Option Plan, as amended, of Curetis N.V., the former parent company of Curetis GmbH. The Company assumed the 2016 Stock
Option Plan as the Amended and Restated Stock Option Plan of the Company (the “A&R Plan”). In connection with the foregoing, the Company assumed
all awards thereunder that were outstanding as of April 1, 2020 and converted such awards into options to purchase shares of common stock of the
Company pursuant to the terms of the applicable award.
The A&R Plan provides for the grant of stock options, which are the right to purchase a certain number of shares of stock, at a certain exercise price, in the
future. The stock option agreement specifies the date when all or any installment of the option is to become exercisable. The Compensation Committee
administers the A&R Plan, including taking all actions required or advisable for the administration and proper implementation of the A&R Plan;
interpreting the A&R Plan unless specifically provided otherwise in the A&R Plan; and making all other decisions necessary or advisable to enable the
administration and proper implementation of the A&R Plan. Under the A&R Plan, the aggregate number of shares of our common stock authorized for
issuance shall not exceed 677. Following the assumption of the A&R Plan, no further grants have been or will be made under the A&R Plan.
Under the A&R Plan, in the event of a “change in control”, as defined in the A&R Plan, all the outstanding options will vest fully at the date of the change
in control. However, in the event of a change in control due to a sale, merger, sale of substantially all of the assets or consolidation of the Company, all the
outstanding options will be addressed in the applicable acquisition agreement. Such agreement may at the sole discretion of the Compensation Committee
and without the approval or the advice of the optionees being required, provide the following: (1) the continuation of the outstanding options by the
Company (if the Company is the company that continues to exist); (2) the take-over of the A&R Plan and the outstanding options by the acquiring
company or the company that continues to exist, or its parent company; (3) the replacement of the outstanding options by new option rights with conditions
that are equivalent to the conditions of the outstanding options by the acquiring company or the company that continues to exist, or its parent company; or
(4) the cancellation of each outstanding option in return for payment to the optionee of an amount per option equal to the difference between the fair market
value of the common stock of the Company at the time of the closing under the purchase, merger, or consolidation agreement less the option price.
Except as expressly provided for under the A&R Plan, the awards granted under the A&R Plan may not be sold, assigned, transferred, pledged, mortgaged
or otherwise disposed of. The Compensation Committee and the Board may alter, amend or terminate the Plan or any part thereof at any time and from
time to time, provided, however, that no such alteration or amendment shall adversely affect the rights relating to any options granted or shares acquired
upon exercise of options prior to that time.
43
2020 Stock Options Plan
The 2020 Stock Options Plan was approved by stockholders at the 2020 Annual Meeting of Stockholders and were granted on the date thereof. The 2020
Stock Options were granted with an exercise price equal to the fair market value of the common stock on the date of grant, or $424.00. No shares remain
available for future awards under the 2020 Stock Options Plan. The following sets forth the principal terms of, and constitutes, the 2020 Stock Options
Plan.
Administration. The Compensation Committee will administer the 2020 Stock Options Plan, including, whether, for U.S. taxpayer employees, an option is
to be classified as an incentive stock option or non-qualified stock option.
Authorized shares. The aggregate number of shares of our common stock authorized for issuance under the 2020 Stock Options Plan is 6,500 shares of
common stock. Shares subject to awards granted under the 2020 Stock Options Plan that are forfeited or terminated before being exercised will not be
available for re-issuance under the 2020 Stock Options Plan. No more than 2,500 shares may be delivered upon the exercise of incentive stock options
granted under the 2020 Stock Options Plan.
Stock options. A stock option is the right to purchase a certain number of shares of stock, at a certain exercise price, in the future. Under our 2020 Stock
Options Plan, incentive stock options and non-qualified options must be granted with an exercise price of at least 100% of the fair market value of our
common stock on the date of grant. Incentive stock options granted to any holder of more than 10% of our voting shares must have an exercise price of at
least 110% of the fair market value of our common stock on the date of grant. The stock option agreement specifies the date when all or any installment of
the option is to become exercisable. For non-employee directors, payment of the exercise price must be made in cash. For executive officers, payment of
the exercise price may be made in cash or, if provided for in the stock option agreement evidencing the award, (1) by surrendering, or attesting to the
ownership of, shares which have already been owned by the optionee, (2) by delivery of an irrevocable direction to a securities broker to sell shares and to
deliver all or part of the sale proceeds to us in payment of the aggregate exercise price, (3) by a “net exercise” arrangement, or (4) by any other form that is
consistent with applicable laws, regulations and rules.
No Transfer. No award granted under the 2020 Stock Options Plan may be transferred in any manner, other than by will or the laws of descent and
distribution, provided, however, that an incentive stock option may be transferred or assigned only to the extent consistent with Section 422 of the Code.
Adjustments. In the event of a recapitalization, stock split or similar capital transaction, the Compensation Committee will make appropriate and equitable
adjustments to the number of shares reserved for issuance under the 2020 Stock Options Plan, the number of shares that can be issued as incentive stock
options, the number of shares subject to outstanding awards and the exercise price under each outstanding stock option.
Change in Control. If we are involved in a merger or other reorganization, outstanding awards will be subject to the agreement of merger or reorganization.
Such agreement will provide for (1) the continuation of the outstanding awards by us if we are the surviving corporation, (2) the assumption or substitution
of the outstanding awards by the surviving corporation or its parent or subsidiary, (3) immediate vesting, exercisability and settlement of the outstanding
awards followed by their cancellation, or (4) settlement of the intrinsic value of the outstanding awards (whether or not vested or exercisable) in cash, cash
equivalents, or equity (including cash or equity subject to deferred vesting and delivery consistent with the vesting restrictions applicable to such award or
the underlying shares) followed by cancellation of such awards.
Termination or Amendment. The 2020 Stock Options Plan can be terminated by the Board of Directors or Compensation Committee at any time, and,
subject to stockholder approval where required by applicable law, can be amended. Any amendment or termination may not materially impair the rights of
holders of outstanding awards without their consent.
44
Effective Date. The 2020 Stock Options Plan became effective upon approval by the stockholders at the 2020 Annual Meeting of Stockholders. The 2020
Stock Options Plan will terminate upon the expiration or termination of the last outstanding award.
Awards to Non-Employee Directors. The 2020 Stock Options granted to the members of the Board have a one-year vesting schedule, vesting quarterly in
equal installments on the first day of each three-month period as long as the director is providing services to the Company on each such vesting date. The
term of such stock options is ten (10) years after the date of grant; provided, however, that any unvested stock options will expire if the director ceases
providing services to the Company, and a departing director will have ninety (90) days to exercise vested stock options after the director ceases providing
services to the Company.
Awards to Executive Officers. The 2020 Stock Options granted to the executive officers have a four-year vesting schedule, vesting 25% on the first
anniversary of the date of grant and the remaining options vesting 6.25% on the quarterly anniversary of the first vesting date for a period of three years, as
long as the executive officer continues providing services to the Company on each such vesting date. The term of such stock options is ten (10) years after
the date of grant; provided, however, that any unvested stock options will expire if the executive officer ceases providing services to the Company, and a
departing officer will have ninety (90) days to exercise vested stock options after the executive officer ceases providing services to the Company.
2022 Inducement Plan
In connection with the appointment of the Company's former CFO, Mr. Weber, OpGen granted him an inducement grant of stock options to purchase an
aggregate of 1,050 shares of OpGen’s common stock with a grant date of January 3, 2022. The equity award was granted pursuant to Nasdaq Listing Rule
5635(c)(4) inducement grant exception as a component of Mr. Weber’s employment compensation and was granted as an inducement material to his
acceptance of employment with OpGen. The options have an exercise price of $216.00. The option award vests over a four-year period with 25% vesting
on the first anniversary of the date of grant, January 3, 2023, and in equal quarterly installments on each quarterly anniversary thereafter. The award is
subject to Mr. Weber’s continued service with OpGen through the applicable vesting dates.
45
Item 13. Certain Relationships and Related Person Transactions, and Director Independence
Certain Relationships and Related Person Transactions
Other than compensation for our directors and named executive officers that are described elsewhere in this Annual Report and for the transactions
described below, there were and are no transactions or series of similar transactions, during or after our last two fiscal years, to which we were a party or
will be a party, in which: (i) the amounts involved exceeded or will exceed the lesser of $120,000 or one percent of the average of the Company’s total
assets at year-end for the past two completed fiscal years; and (ii) any of our directors, executive officers or holders of more than 5% of our capital stock, or
any member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest.
In March 2024, we entered into a securities purchase agreement with David E. Lazar, a private investor, pursuant to which he agreed to purchase 3,000,000
shares of Series E Convertible Preferred Stock (the “Series E Preferred Stock”) of the Company at a price of $1.00 per share for aggregate gross proceeds
of $3,000,000 (the “March 2024 Private Placement”). The final closing and aggregate purchase price is expected to be paid in early June 2024, upon
consummation of certain conditions. Each share of Series E Preferred Stock is convertible into 2.40 shares of common stock (as adjusted for the 2024
Reverse Stock Split). Upon conversion of all of the shares of Series E Preferred Stock, the Series E Preferred Stock would represent approximately 85% of
the Company’s total outstanding shares of common stock as of May 15, 2024. Upon the initial closing of the transaction, Mr. Lazar was appointed as our
Chief Executive Officer and to our Board. Mr. Lazar’s compensation for service as our Chief Executive Officer is described in Item 11 of this Annual
Report on Form 10-K, which information is incorporated herein by reference.
Policies for Approval of Related Person Transactions
We have adopted a written policy that transactions with directors, officers, and holders of 5% or more of our voting securities and their affiliates, each, a
related person, must be approved by our Audit Committee.
Director Independence
Information concerning the independence of the members of our Board of Directors is described in Item 11 of this Annual Report on Form 10-K and is
incorporated herein by reference.
46
Item 14. Principal Accounting Fees and Services
Independent Registered Public Accounting Firm
Our Audit Committee previously appointed UHY LLP as the Company’s independent registered public accounting firm for the fiscal year ended
December 31, 2023 and related interim periods after CohnReznick LLP, the Company’s independent registered public accounting firm for the fiscal year
ended December 31, 2022, notified the Company that CohnReznick would decline to stand for re-appointment after completion of the audit for the fiscal
year ended December 31, 2022. CohnReznick had served as the Company’s independent registered public accounting firm since 2014. In light of such
determination by CohnReznick, the Company conducted a competitive selection process where the Audit Committee invited several public accounting
firms to participate. Following the completion of such process, the Audit Committee selected UHY in March 2023 to serve as the Company’s independent
registered public accounting firm for the fiscal year ending December 31, 2023 and related interim periods. As previously disclosed in April 2024, UHY
notified the Company that it would resign as the Company’s independent registered public accounting firm effective as of April 22, 2024.
In light of such resignation, on April 23, 2024, the Board appointed and engaged Beckles & Co., Inc. (“Beckles”) to serve as the Company’s independent
registered public accounting firm for the fiscal year ending December 31, 2023 and upcoming interim period.
During the period of UHY’s engagement, which commenced in March 2023, UHY did not provide any report on the financial statements of the Company.
During the fiscal years ended December 31, 2023 and 2022 and the subsequent interim period through April 22, 2024, there were no: (1) disagreements
with UHY on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not
resolved to their satisfaction, would have caused them to make reference in connection with their opinion to the subject matter of the disagreement, or (2)
reportable events under Item 304(a)(1)(v) of Regulation S-K. During the Company’s fiscal years ended December 31, 2022 and December 31, 2021 and the
subsequent interim period through January 18, 2023, there were no: (i) disagreements with CohnReznick on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedures, which disagreement, if not resolved to their satisfaction, would have caused them
to make reference to the subject matter of the disagreement in their reports on the Company’s consolidated financial statements, or (ii) reportable events
under Item 304(a)(1)(v) of Regulation S-K. CohnReznick’s audit report on the Company’s consolidated financial statements as of and for the fiscal years
ended December 31, 2022 and 2021 did not contain an adverse opinion or a disclaimer of opinion, and was not qualified or modified as to uncertainty, audit
scope or accounting principles, except that the reports contained an explanatory paragraph stating that there was substantial doubt about the Company’s
ability to continue as a going concern.
Audit Fees
The following table presents the aggregate fees billed to the Company by UHY and CohnReznick for its audits of the Company’s consolidated annual
financial statements and other services for the years ended December 31, 2023 and 2022, respectively.
Audit Fees(1)
Audit Related Fees
Tax Fees
All Other Fees
Total Fees
2023
2022
729,104 $
-
-
-
729,104 $
603,439
-
-
-
603,439
$
$
(1) Audit Fees consist of fees billed for professional services performed by UHY and CohnReznick for the audit of our consolidated annual financial
statements for the years ended December 31, 2023 and 2022, respectively, the review of our quarterly financial statements on Form 10-Q, filing of
Registration Statements on Forms S-1, S-3, and S-8, and associated Consent Letters and related services that are normally provided in connection with
statutory and regulatory filings or engagements.
47
Policy on Audit Committee Pre-Approval
Our Audit Committee has a policy in place that requires its review and pre-approval of all audit and permissible non-audit services provided by our
independent registered public accounting firm. The services requiring pre-approval by the audit committee may include audit services, audit-related
services, tax services and other services. All such audit and permissible non-audit services were pre-approved in accordance with this policy during the
fiscal year ended December 31, 2023. The Audit Committee considers whether the provision of each non-audit service is compatible with maintaining the
independence of our independent registered public accounting firm. The responsibility to pre-approve audit and non-audit services may be delegated by the
Audit Committee to one or more members of the Audit Committee; provided that any decisions made by such member or members must be presented to
the full Audit Committee at its next scheduled meeting.
48
Item 15. Exhibits and Financial Statement Schedules
(a)(1) Financial Statements.
PART IV
The consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive
loss, stockholders’ equity and cash flows for the years then ended, the related notes to the consolidated financial statements and the reports of Beckles &
Co., Inc., independent registered public accounting firm, and CohnReznick LLP, independent registered public accounting firm, are filed herewith
following the signature page.
(a)(2) Financial Statement Schedules.
Not applicable.
(a)(3) Exhibits: See below
(b) Exhibits
49
Exhibit
Number
3.1.1
Description
Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 of Current Report on Form 8-
K, File No. 001-37367, filed on May 13, 2015).
EXHIBIT INDEX
3.1.2
Certificate of Correction to Amended and Restated Certificate of Incorporation of the Registrant, dated June 6, 2016 (incorporated by
reference to Exhibit 3.1 of Current Report on Form 8-K, filed on June 6, 2016).
3.1.3
3.1.4
3.1.5
3.1.6
3.1.7
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Registrant dated and filed with the Delaware
Secretary of State on January 17, 2018 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on
January 17, 2018).
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of OpGen, Inc., filed with the Secretary of the State of
Delaware on August 28, 2019 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on August 28,
2019).
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of OpGen, Inc., filed with the Secretary of the State of
Delaware on December 8, 2021 (incorporated by reference to Appendix A to the Registrant’s definitive proxy statement filed on October 29,
2021).
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of OpGen, Inc., filed with the Secretary of the State of
Delaware on December 9, 2021 (incorporated by reference to Appendix B to the Registrant’s definitive proxy statement filed on October 29,
2021).
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of OpGen, Inc., filed with the Secretary of the State of
Delaware on January 4, 2023 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on January 4,
2023).
3.2
Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant’s Form S-1, File No. 333-202478,
filed on March 3, 2015).
3.3
Amendment to the Amended and Restated Bylaws of OpGen, Inc., dated August 5, 2020 (incorporated by reference to Exhibit 3.1 to the
Registrant’s Current Report on Form 8-K filed on August 11, 2020).
3.4
Amendment to the Amended and Restated Bylaws of OpGen, Inc., dated October 15, 2021 (incorporated by reference to Exhibit 3.2 to the
Registrant’s Current Report on Form 8-K filed on October 15, 2021).
3.5
Form of Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock (incorporated by reference
to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on October 15, 2021).
3.6
Certificate of Designation of Preferences, Rights and Limitations of Series C Mirroring Preferred Stock (incorporated by reference to Exhibit
3.1 to the Registrant’s Current Report on Form 8-K filed on October 3, 2022).
3.7
Certificate of Designation of Preferences, Rights and Limitations of Series D Preferred Stock (incorporated by reference to Exhibit 3.1 to the
Registrant’s Current Report on Form 8-K filed on October 11, 2023).
50
Exhibit
Number
4.1
Description
Form of Common Stock Certificate of the Registrant (incorporated by reference to Exhibit 4.1 to the Registrant’s Annual Report on Form 10-
K, filed on March 24, 2020).
4.2
Form of 2015 Warrant to Purchase Common Stock of the Registrant (incorporated by reference to Exhibit 4.6 of Form S-1/A, File No. 333-
202478, filed on March 20, 2015).
4.3
Form of Underwriters’ Warrant to Purchase Common Stock of the Registrant (incorporated by reference to Exhibit 4.2 of Current Report on
Form 8-K, File No. 001-37367, filed on May 13, 2015).
4.4
Form of Warrant to Purchase Common Stock (issued to jVen Capital, LLC and Merck Global Health Innovation Fund) (incorporated by
reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K Amendment No. 2, filed on July 10, 2017).
4.5
Form of Offered Warrant to Purchase Common Stock of the Registrant (incorporated by reference to Exhibit 4.8 of Form S-1/A, File No.
333-202478, filed on April 23, 2015).
4.6
Form of 2016 Warrant to Purchase Common Stock of the Registrant (incorporated by reference to Exhibit 4.1 of Current Report on Form 8-
K, filed on May 17, 2016).
4.7
Form of Common Stock Purchase Warrant for July 2017 Public Offering (incorporated by reference to Exhibit 4.4 to the Registrant’s Form S-
1, Amendment No. 2, File No. 333-218392, filed on July 11, 2017).
4.8
Form of Placement Agent Warrant for July 2017 Public Offering (incorporated by reference to Exhibit 4.5 to the Registrant’s Form S-1, File
No. 333-218392, filed on July 11, 2017).
4.9
Form of Common Stock Purchase Warrant for February 2018 Public Offering (incorporated by reference to Exhibit 4.3 to the Registrant’s
Form S-1/A, File No. 333-222140, filed on January 31, 2018).
4.10
Form of Placement Agent Warrant for February 2018 Public Offering (incorporated by reference to Exhibit 4.5 to the Registrant’s Form S-
1/A, File No. 333-222140, filed on January 31, 2018).
4.11
Form of Underwriter’s Warrant for October 2019 Public Offering (incorporated by reference to Exhibit 4.10 to the Registrant’s Form S-1/A,
File No. 333-233775, filed on October 11, 2019).
4.12
Form of Common Stock Purchase Warrant for October 2019 Public Offering (incorporated by reference to Exhibit 4.11 to the Registrant’s
Form S-1/A, File No. 333-233775, filed on October 15, 2019).
4.13
Form of Common Stock Purchase Warrant for 2020 PIPE (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on
Form 8-K, filed on November 24, 2020).
4.14
Form of Pre-Funded Common Stock Purchase Warrant for 2020 PIPE (incorporated by reference to Exhibit 4.2 to the Registrant’s Current
Report on Form 8-K, filed on November 24, 2020).
4.15
Form of Common Stock Purchase Warrant for 2021 Offering (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on
Form 8-K, filed on February 10, 2021).
4.16
Form of Pre-Funded Common Stock Purchase Warrant for 2021 Offering (incorporated by reference to Exhibit 4.1 to the Registrant’s Current
Report on Form 8-K, filed on February 10, 2021).
51
Exhibit
Number
4.17
Description
Form of New Warrant (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on March 9, 2021).
4.18
Form of Common Stock Purchase Warrant for October 2021 Offering (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K,
filed on October 15, 2021).
4.19
Form of Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on
October 3, 2022).
4.20
Form of Pre-Funded Common Stock Warrant (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed
on October 3, 2022).
4.21
Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on January 11,
2023).
4.22
Form of Series A-1 and Series A-2 Warrants (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on
January 11, 2023).
4.23
Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by
reference to Exhibit 4.23 on the Company’s Annual Report on Form 10-K filed on March 30, 2023).
4.24
Form of Pre-funded Warrant (incorporated by reference to Exhibit 4.20 to the Company’s Registration Statement on Form S-1/A (File No.
333-268648) filed on January 5, 2023).
4.25
Form of Series A-1 and Series A-2 Warrants (incorporated by reference to Exhibit 4.21 to the Company’s Registration Statement on Form S-
1/A (File No. 333-268648) filed on January 5, 2023).
4.26
Form of Pre-funded Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on May 4, 2023).
4.27
Form of Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on
May 4, 2023).
4.28
Form of Inducement Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on October 16,
2023).
10.1
Form of Indemnification Agreement between the Registrant and each of its directors and executive officers (incorporated by reference to
Exhibit 10.2 of Form S-1, File No. 333-202478, filed on March 3, 2015).
10.2 !
2015 Equity Incentive Plan, as amended and restated on March 29, 2018 (incorporated by reference to Exhibit 10.4 to the Registrant’s
Annual Report on Form 10-K for the year ended December 31, 2017, filed on March 29, 2018).
10.3 !
Amended and Restated Stock Option Plan, as assumed and adopted April 1, 2020 (incorporated by reference to Exhibit 10.1 to the
Registrant’s Current Report on Form 8-K dated April 2, 2020).
10.4 !
Non-Employee Director Compensation Policy (incorporated by reference to Exhibit 10.3 on the Company’s Annual Report on Form 10-K
filed on March 30, 2023).
52
Exhibit
Number
10.5
Description
Warrant Agreement, dated as of May 8, 2015, between the Registrant and Philadelphia Stock Transfer, Inc., as warrant agent (incorporated by
reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on May 13, 2015).
10.6 !
Form of Stock Option Agreement under the 2015 Equity Incentive Plan for employees and consultants (incorporated by reference to Exhibit
10.9.1 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 24, 2017).
10.7 !
Form of Stock Option Agreement under the 2015 Equity Incentive Plan for non-employee directors (initial grant) (incorporated by reference
to Exhibit 10.9.2 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 24, 2017).
10.8 !
Form of Stock Option Agreement under the 2015 Equity Incentive Plan for non-employee directors (annual grant) (incorporated by reference
to Exhibit 10.9.3 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 24, 2017).
10.9 !
Form of Restricted Stock Unit Award Agreement under 2015 Equity Incentive Plan (incorporated by reference to Exhibit 10.10 to the
Registrant’s Annual Report on Form 10-K for the year ended December 31, 2016, filed March 24, 2017).
10.10 !
OpGen, Inc. Retention Plan for Executives (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed
on September 25, 2018).
10.11 !
Managing Director’s Employment Contract by and between Curetis GmbH and Johannes Bacher, dated August 6, 2020 (incorporated by
reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on August 11, 2020).
10.12 !
Executive Employment Agreement by and between the Company and Oliver Schacht, dated as of October 29, 2020 (incorporated by
reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on November 2, 2020).
10.13 !
Executive Employment Agreement by and between the Company and Albert Weber, dated as of November 11, 2021 (incorporated by
reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on November 4, 2021).
10.14 !
2020 Stock Options Plan, dated September 30, 2020 (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form
10-Q filed on November 16, 2020).
10.15 !
Form of Director Grant to the 2020 Stock Options Plan (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on
Form 10-Q filed on November 16, 2020).
10.16
Form of Employee Grant to the 2020 Stock Options Plan (incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on
Form 10-Q filed on November 16, 2020).
10.17
Form of Securities Purchase Agreement, dated February 9, 2021, by and between OpGen, Inc. and the purchaser party thereto for 2021
Offering (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on February 10, 2021).
10.18
Placement Agent Agreement, dated February 9, 2021, by and between OpGen, Inc. and A.G.P./Alliance Global Partners for 2021 Offering
(incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed on February 10, 2021).
10.19
Form of Warrant Exercise Agreement, dated as of March 9, 2021, by and between OpGen, Inc. and the Holder (incorporated by reference to
Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on March 9, 2021).
53
Exhibit
Number
10.20
Description
Letter Agreement, dated as of March 9, 2021, by and between A.G.P./Alliance Global Partners and OpGen Inc. (incorporated by reference to
Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed on March 9, 2021).
10.21
Form of Securities Purchase Agreement, dated September 30, 2022, by and between OpGen, Inc. and the Investor (incorporated by reference
to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on October 3, 2022).
10.22
Form of Warrant Amendment Agreement, dated September 30, 2022, by and between OpGen, Inc. and the Investor (incorporated by
reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on October 3, 2022).
10.23
Waiver and Amendment Letter, dated May 23, 2022 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-
K filed on May 24, 2022).
10.24
At the Market Offering Agreement, dated June 24, 2022, by and between OpGen, Inc. and H.C. Wainwright & Co., LLC (incorporated by
reference to Exhibit 1.1 to the Registrant’s Current Report on Form 8-K filed on June 24, 2022).
10.25
Form of Securities Purchase Agreement, dated January 6, 2023, by and between OpGen, Inc. and the investor party thereto (incorporated by
reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on January 11, 2023).
10.26
Amendment and Restatement Agreement, dated as of July 9, 2020, by and among Curetis GmbH, as borrower, the Company, as guarantor,
Ares Genetics GmbH, as guarantor, and European Investment Bank (incorporated by reference to Exhibit 10.1 to the Registrant’s Current
Report on Form 8-K filed on July 13, 2020).
10.27 #
Finance Contract, as amended and restated pursuant to the First Amendment and Restatement Agreement dated May 20, 2019 and the Second
Amendment and Restatement Agreement dated as of July 9, 2020, by and between the European Investment Bank and Curetis GmbH
(incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on July 13, 2020).
10.28
Guarantee and Indemnity Agreement, dated as of July 9, 2020, by and between European Investment Bank and the Company (incorporated
by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on July 13, 2020).
10.29
Guarantee and Indemnity Agreement, dated as of July 9, 2020, by and between European Investment Bank and Ares Genetics (incorporated
by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed on July 13, 2020).
10.30
Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.55 to the Company’s Registration Statement on Form S-1/A
(File No. 333-268648) filed on January 5, 2023).
10.31
Form of Securities Purchase Agreement, dated May 1, 2023, between OpGen, Inc. and the purchaser party thereto (incorporated by reference
to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 4, 2023).
10.32
Form of Warrant Amendment Agreement, dated May 1, 2023, between OpGen, Inc. and the purchaser party thereto (incorporated by
reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on May 4, 2023).
10.33
Standstill Agreement, dated July 4, 2023, by and between OpGen, Inc. and the Investor (incorporated by reference to Exhibit 10.1 to the
Registrant’s Current Report on Form 8-K filed on July 4, 2023.
10.34
Finance Contract, as amended and restated pursuant to the First Amendment and Restatement Agreement dated May 20, 2019 and the Second
Amendment and Restatement Agreement dated as of July 9, 2020, by and between the European Investment Bank and Curetis GmbH
(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on July 13, 2020).
54
Exhibit
Number
10.35
Description
Guarantee and Indemnity Agreement, dated as of July 9, 2020, by and between European Investment Bank and the Company (incorporated
by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on July 13, 2020).
10.36
Guarantee and Indemnity Agreement, dated as of July 9, 2020, by and between European Investment Bank and Ares Genetics (incorporated
by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed on July 13, 2020).
10.37
Standstill Agreement, dated July 4, 2023, by and among Curetis GmbH, as borrower, OpGen, Inc. and Ares Genetics GmbH, as guarantors,
and the European Investment Bank, as lender (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed
on July 5, 2023).
10.38
Exclusive International Distributor Agreement, dated as of September 25, 2015, between Curetis AG and Beijing Clear Biotech Co. Ltd
(incorporated by reference to Exhibit 10.32 to the Registrant’s Form S-4/A filed on December 20, 2019).
10.39
Amendment 1 to the Exclusive International Distributor Agreement, dated as of October 11, 2018, between Curetis GmbH and Beijing Clear
Biotech (incorporated by reference to Exhibit 10.32.2 to the Registrant’s Form S-4/A filed on December 20, 2019).
10.40
Non-Exclusive Patent License and Research Collaboration Agreement, dated as of October 5, 2015, between Acumen Research Laboratories
Pte Ltd and Curetis AG (incorporated by reference to Exhibit 10.33 to the Registrant’s Form S-4/A filed on December 20, 2019).
10.41
Exclusive International Distributor Agreement, dated as of October 5, 2015, between Curetis AG and Acumen Research Laboratories Pte Ltd
(incorporated by reference to Exhibit 10.34.1 to the Registrant’s Form S-4/A filed on December 20, 2019).
10.42
Amendment 1 to the Exclusive International Distributor Agreement, dated as of November 15, 2015, between Curetis GmbH and Acumen
Research Laboratories Pte Ltd (incorporated by reference to Exhibit 10.34.2 to the Registrant’s Form S-4/A filed on December 20, 2019).
10.43
10.44
Technology Transfer, Technical Cooperation and License Agreement, dated as of September 7, 2016, by and between Curetis GmbH and
Siemens Technology Accelerator GmbH (incorporated by reference to Exhibit 10.35.1 to the Registrant’s Form S-4/A filed on December 20,
2019).
First Amendment Agreement to the Technology Transfer, Technical Cooperation and License Agreement, dated as of May 17, 2018, by and
between Ares Genetics GmbH and Siemens Technology Accelerator GmbH (incorporated by reference to Exhibit 10.35.2 to the Registrant’s
Form S-4/A filed on December 20, 2019).
10.45
Technology Purchase Agreement, dated as of December 13, 2016, between Systec Elektronik und Software GmbH, Carpegen GmbH and
Curetis GmbH (incorporated by reference to Exhibit 10.38 to the Registrant’s Form S-4/A filed on December 20, 2019).
10.46
Services Frame Agreement, dated as of December 14, 2018, between Ares Genetics GmbH and Sandoz International GmbH (incorporated by
reference to Exhibit 10.39.1 to the Registrant’s Form S-4/A filed on December 20, 2019).
10.47
Work Order Agreement, dated as of December 14, 2018, between Ares Genetics GmbH and Sandoz International GmbH (incorporated by
reference to Exhibit 10.39.2 to the Registrant’s Form S-4/A filed on December 20, 2019).
10.48
License Agreement, dated as of February 18, 2019, between Ares Genetics GmbH and QIAGEN GmbH and the QIAGEN Affiliates
(incorporated by reference to Exhibit 10.40.1 to the Registrant’s Form S-4/A filed on December 20, 2019).
55
Exhibit
Number
10.49
Description
First Amendment to License Agreement, dated as of September 18, 2019, between Ares Genetics GmbH and QIAGEN GmbH (incorporated
by reference to Exhibit 10.40.2 to the Registrant’s Form S-4/A filed on December 20, 2019).
10.50
Lease Agreement, dated as of November 11, 2020, between the Registrant and Key West MD Owner, LLC (the “Landlord”) (incorporated by
reference to Exhibit 10.6 to the Registrants Quarterly Report on Form 10-Q filed on November 16, 2020).
10.51
Standstill Agreement, dated July 4, 2023, by and between Curetis GmbH, Ares Genetics GmbH, OpGen, Inc. and the European Investment
Bank (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 5, 2023).
10.52
Form of Securities Purchase Agreement, dated October 11, 2023, between OpGen, Inc. and the investor thereto (incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 11, 2023).
10.53
Form of Warrant Inducement Agreement, dated October 12, 2023, between OpGen, Inc. and the warrant holder thereto (incorporated by
reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 16, 2023).
10.54
Form of Amendment Agreement to Warrant Inducement Agreement, dated October 26, 2023, between OpGen, Inc. and the warrant holder
thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 26, 2023).
19 *
Insider Trading Policy
21.1 *
Subsidiaries of the Registrant
23.1 *
Consent of Beckles & Co., Inc.
23.2 *
Consent of CohnReznick LLP
24.1
Power of Attorney (included on signature page hereto)
31.1 *
Certification pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
32.1 *
Certification pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
97.1 *
Clawback Policy
101 *
Interactive data files pursuant to Rule 405 of Regulation S-T; (i) the Balance Sheets, (ii) the Statements of Operations and Comprehensive
Loss, (iii) the Statements of Stockholders’ Equity, (iv) Statements of Cash Flows and (v) the Notes to the Financial Statements
*
!
#
Filed herewith
Denotes management compensation plan or contract
Subject to confidential treatment request for certain portions of the agreement
(c) Not applicable.
Item 16. Form 10-K Summary
None.
56
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
SIGNATURES
OPGEN, INC.
By:
/s/ David E. Lazar
David E. Lazar
Chief Executive Officer and Chairman
Date: June 3, 2024
POWER OF ATTORNEY
We, the undersigned officers and directors of OpGen, Inc., hereby severally constitute and appoint David E. Lazar, our true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution in her or him for her or him and in her or his name, place and stead, and in any and all capacities, to
sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises, as full to all intents and purposes as she or he might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and agent, or her or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
Signature
/s/ David E. Lazar
David E. Lazar
/s/ Avraham Ben-Tzvi
Avraham Ben-Tzvi, Adv.
/s/ David Natan
David Natan
/s/ Matthew McMurdo
Matthew McMurdo, Esq.
Title
Chief Executive Officer and Chairman
(principal executive officer, principal financial officer, and
principal accounting officer)
Director
Director
Director
57
Date
June 3, 2024
June 3, 2024
June 3, 2024
June 3, 2024
OPGEN, INC.
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID 7116)
Report of Independent Registered Public Accounting Firm (PCAOB ID 596)
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Loss
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
F-1
F-2
F-4
F-5
F-6
F-7
F-8
F-9
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of OpGen, Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of OpGen, Inc. and Subsidiaries (the “Company”) as of December 31, 2023, and the related
consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for the year then ended and the related notes
(collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position
of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
Prior Period Financial Statements
The financial statements of the Company as of December 31, 2022, were audited by other auditors whose report dated March 30, 2023 expressed an
unmodified opinion on those statements.
The Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has incurred recurring losses from operations since inception and has stated that substantial doubt exists about the
Company’s ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding these matters
are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial
statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor
were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of
internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over
financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
F-2
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or
required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2)
involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion
on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical
audit matters or on the accounts or disclosures to which they relate.
Revenue Recognition on Collaboration Agreements
As described in Note 11 to the consolidated financial statements, the Company recognizes revenue arising from a collaboration and license agreement with
FIND, which totaled $0.6 million for the year ended December 31, 2023. The promised goods and services represent multiple distinct performance
obligations and the entire transaction price was allocated to these performance obligations and recognized over-time. When management concludes that a
contract should be recognized over-time, management must then determine the period over which revenue should be recognized and the method by which
to measure revenue. Management generally recognizes revenue as deliverables are accepted, but at times, management uses a cost-based input method,
which measures the extent of progress towards completion based on the ratio of actual costs incurred to the total estimated costs expected upon satisfying
the performance obligation.
The principal considerations for our determination that performing procedures relating to revenue recognition for the collaboration and license agreement
with FIND recognized under an input method is a critical audit matter due to the significant judgment by management when determining the total estimated
costs expected upon satisfying the performance obligation, which in turn led to significant auditor judgment, subjectivity and effort in performing
procedures to evaluate the total estimated costs expected upon satisfying the performance obligation.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated
financial statements. These procedures included understanding the design and implementation of internal controls relating to the revenue arising from the
collaboration and license agreement with FIND, including controls over the total estimated costs expected upon satisfying the performance obligations.
These procedures also included, among others, evaluating and testing management’s process for determining the total estimated costs expected upon
satisfying the performance obligations, which included testing actual costs incurred and evaluating the reasonableness of estimated costs to satisfy the
performance obligations. Evaluating the reasonableness of estimated costs to satisfy the performance obligation involved assessing management’s ability to
reasonably estimate costs to satisfy the performance obligation by (i) evaluating the appropriateness of changes to management’s estimates of total costs to
satisfy the performance obligations; (ii) performing a comparison of management’s prior period cost estimates to actual costs incurred; and (iii) evaluating
whether the cost estimates used by management were reasonable considering consistency with industry and company-specific data.
/s/ Beckles & Co., Inc.
We have served as the Company’s auditor since 2024.
West Palm Beach, Florida
June 3, 2024
F-3
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of OpGen, Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of OpGen, Inc. and Subsidiaries (the “Company”) as of December 31, 2022, and the related
consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for the year then ended and the related notes
(collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position
of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
The Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has incurred recurring losses from operations since inception and has stated that substantial doubt exists about the
Company’s ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding these matters
are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial
statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor
were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of
internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over
financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ CohnReznick LLP
We served as the Company’s auditor from 2014 to 2022.
Tysons, Virginia
March 30, 2023, except for the effects of the reverse stock split discussed in Note 12, as to which the date is May 20, 2024
F-4
OpGen, Inc.
Consolidated Balance Sheets
As of December 31,
Assets
Current assets
Cash and cash equivalents
Accounts receivable, net
Inventory, net
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Finance lease right-of-use assets, net
Operating lease right-of-use assets
Intangible assets, net
Strategic inventory
Other noncurrent assets
Total assets
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable
Accrued compensation and benefits
Accrued liabilities
Deferred revenue
Short-term notes payable
Short-term finance lease liabilities
Short-term operating lease liabilities
Total current liabilities
Note payable
Derivative liabilities
Long-term finance lease liabilities
Long-term operating lease liabilities
Other long-term liabilities
Total liabilities
Commitments and Contingencies (Note 9)
Stockholders’ (deficit) equity
Preferred stock, $0.01 par value; 10,000,000 shares authorized; 250 and 0 shares issued and outstanding at
December 31, 2023 and 2022, respectively
Common stock, $0.01 par value; 100,000,000 shares authorized; 1,282,686 and 289,992 shares issued and outstanding
at December 31, 2023 and 2022, respectively
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive loss
Total stockholders’ (deficit) equity
Total liabilities and stockholders’ (deficit) equity
See accompanying notes to consolidated financial statements.
F-5
$
$
$
$
2023
2022
1,151,823 $
103,316
-
324,735
1,579,874
-
138
-
-
-
302,262
1,882,274 $
111,149 $
127,601
135,476
25,926
10,873,867
280
147,943
11,422,242
-
-
-
2,021,616
-
13,443,858
7,440,030
514,372
1,345,137
1,355,949
10,655,488
3,457,531
3,500
1,459,413
7,440,974
2,300,614
495,629
25,813,149
420,821
1,097,654
1,526,204
142,061
7,023,901
3,364
377,626
10,591,631
4,850,686
99,498
280
2,566,138
129,368
18,237,601
2,500
-
12,827
2,900
293,991,529 281,193,260
(305,493,302) (272,824,772)
(795,840)
7,575,548
25,813,149
(75,138)
(11,561,584)
1,882,274 $
OpGen, Inc.
Consolidated Statements of Operations and Comprehensive Loss
For The Years Ended December 31,
Revenue
Product sales
Laboratory services
Collaboration revenue
Total revenue
Operating expenses
Cost of products sold
Cost of services
Research and development, net
General and administrative
Sales and marketing
Impairment of right-of-use asset
Impairment of property and equipment
Impairment of intangible assets
Goodwill impairment charge
Loss on deconsolidation of subsidiaries
Total operating expenses
Operating loss
Other income (expense)
Interest and other income, net
Interest expense
Foreign currency transaction (losses) gains
Change in fair value of derivative financial instruments
Total other expense
Loss before income taxes
Provision for income taxes
Net loss
Basic and diluted net loss per share attributable to common stockholders
Weighted average shares outstanding - basic and diluted
Net loss
Other comprehensive gain (loss) - foreign currency translation
Comprehensive loss
See accompanying notes to consolidated financial statements.
F-6
2023
2022
$
2,400,053 $
153,719
864,548
3,418,320
1,893,862
172,633
540,798
2,607,293
3,084,075
424,939
4,732,851
8,081,664
2,783,268
849,243
1,231,874
-
-
12,979,061
34,166,975
(30,748,655)
3,319,586
104,405
8,173,435
8,884,084
4,344,656
-
-
5,407,699
6,940,549
-
37,174,414
(34,567,121)
46,935
142,488
(3,256,410)
(1,838,933)
379,622
(289,306)
113,741
65,876
(2,716,112)
(1,919,875)
(37,283,233)
(32,668,530)
-
-
$ (32,668,530) $ (37,283,233)
(152.70)
$
244,158
$ (32,668,530) $ (37,283,233)
(1,381,466)
$ (31,947,828) $ (38,664,699)
(41.47) $
787,832
720,702
OpGen, Inc.
Consolidated Statements of Stockholders’ Equity
For the Years Ended December 31, 2023 and 2022
Common Stock
Preferred Stock
Additional
Number of
Shares
Amount
232,252 $ 2,323
Number of
Shares
Amount
- $
Paid-in
Capital
- $ 276,170,670 $
Accumulated
Deficit
Total
585,626 $ (235,541,539) $ 41,217,080
Accumulated
Other
Comprehensive
Income
(Loss)
-
3,082,045
-
-
3,082,528
48,300
483
8,574
866
-
-
-
86
8
-
-
-
289,992 $ 2,900
908,204
9,082
-
-
-
-
-
-
- $
-
989,618
-
(8)
-
950,935
-
-
-
-
-
- $ 281,193,260 $
- 12,032,086
-
3,465
-
-
35
-
250
-
-
2,500
-
-
247,500
(35)
235,974
-
-
(220)
(2)
81,245
812
-
-
-
-
1,282,686 $ 12,827
-
-
-
-
-
283,554
2
(812)
-
-
250 $ 2,500 $ 293,991,529 $
-
-
-
-
-
See accompanying notes to consolidated financial statements.
F-7
-
-
-
(1,381,466)
-
989,704
-
-
-
950,935
-
(1,381,466)
-
(37,283,233) (37,283,233)
(795,840) $ (272,824,772) $ 7,575,548
-
-
-
-
- 12,041,168
-
-
-
250,000
-
235,974
-
-
-
720,702
-
283,554
-
-
-
-
-
720,702
-
(32,668,530) (32,668,530)
(75,138) $ (305,493,302) $ (11,561,584)
Balances at December 31, 2021
Offering of common stock and
warrants, net of issuance costs
At the market offering, net of
offering costs
Issuance of RSUs
Stock compensation expense
Foreign currency translation
Net loss
Balances at December 31, 2022
Offering of common stock and
warrants, net of issuance costs
Offering of preferred stock, net of
issuance costs
Issuance of RSUs
Stock compensation expense
Cash bonus taken in the form of
stock compensation
Share cancellation
Share issuance
Foreign currency translation
Net loss
Balances at December 31, 2023
OpGen, Inc.
Consolidated Statements of Cash Flows
For the Years Ended December 31,
Cash flows from operating activities
Net loss
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization
Noncash interest expense
Change in inventory reserve
Stock compensation expense
Loss on sale of equipment
Cash bonus taken in the form of stock compensation
Loss on deconsolidation of subsidiaries
Change in fair value of derivative financial instruments
Impairment of right-of-use asset
Impairment of property and equipment
Impairment of intangible assets
Goodwill impairment charge
Changes in operating assets and liabilities
Accounts receivable
Inventory
Other assets
Accounts payable
Accrued compensation and other liabilities
Deferred revenue
Net cash used in operating activities
Cash flows from investing activities
Purchases of property and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issuance of common stock and warrants, net of issuance cost
Proceeds from at the market offering, net of issuance costs
Proceeds from issuance of common stock and pre-funded warrants in registered direct offering, net of issuance costs
Proceeds from issuance of preferred stock, net of issuance costs
Payments on debt
Payments on finance lease obligations
Net cash provided by (used in) financing activities
Effects of exchange rates on cash
Net decrease in cash, cash equivalents and restricted cash
Cash and cash equivalents and restricted cash at beginning of year
Cash and cash equivalents and restricted cash at end of year
Supplemental disclosure of cash flow information
Cash paid for interest
Supplemental disclosures of noncash investing and financing activities
Right-of-use assets acquired through operating leases
Purchased equipment not yet paid for
Property and equipment transferred to inventory
$
$
$
$
$
See accompanying notes to consolidated financial statements.
F-8
2023
2022
$ (32,668,530) $ (37,283,233)
1,318,597
1,741,422
797,840
235,974
10,288
283,554
12,979,061
(64,259)
849,243
1,231,874
-
-
1,642,781
2,359,219
1,582,026
950,935
16,000
-
-
(113,740)
-
-
5,407,699
6,940,549
39,115
748,445
(259,173)
(24,158)
(1,612,944)
74,109
(14,319,542)
587,761
(728,548)
151,456
(814,299)
(1,287,874)
139,570
(20,449,698)
(800,412)
(800,412)
(590,772)
(590,772)
12,041,168
-
-
250,000
(3,914,490)
(3,364)
8,373,314
265,066
(6,481,574)
7,935,659
1,454,085 $
-
989,704
3,082,528
-
(10,764,763)
(43,150)
(6,735,681)
(920,376)
(28,696,527)
36,632,186
7,935,659
1,424,140 $
1,079,113
801,321 $
108,715 $
- $
-
-
152,243
Note 1 - Organization
OpGen, Inc.
Notes to Consolidated Financial Statements
OpGen, Inc. (“OpGen” or the “Company”) was incorporated in Delaware in 2001. On April 1, 2020, OpGen completed its business combination
transaction (the “Transaction”) with Curetis N.V., a public company with limited liability under the laws of the Netherlands (the “Seller” or “Curetis N.V.”),
as contemplated by the Implementation Agreement, dated as of September 4, 2019 (the “Implementation Agreement”) by and among the Company, the
Seller, and Crystal GmbH, a private limited liability company organized under the laws of the Federal Republic of Germany and wholly owned subsidiary
of the Company (the “Purchaser”). Pursuant to the Implementation Agreement, the Purchaser acquired all the shares of Curetis GmbH, a private limited
liability company organized under the laws of the Federal Republic of Germany (“Curetis GmbH”), and certain other assets and liabilities of the Seller
(together, “Curetis”). As of December 31, 2022, Crystal GmbH has been dissolved and merged into Curetis GmbH. As of November 6, 2023, Curetis filed
a petition for insolvency with the district court of Stuttgart, Germany, and Ares Genetics filed a petition for insolvency with the commercial court in
Vienna, Austria, and insolvency administrators in the respective jurisdictions assumed control over the assets and liabilities of these entities. For the years
ended December 31, 2023 and 2022, the Company’s headquarters were in Rockville, Maryland and the Company’s principal operations were in Rockville,
Maryland. The Company operates in one business segment.
OpGen Overview
From inception through November 2023, OpGen operated as a precision medicine company harnessing the power of molecular diagnostics and informatics
to help combat infectious disease. The Company, along with its subsidiaries, Curetis and Ares Genetics, developed and commercialized molecular
microbiology solutions helping to guide clinicians with more rapid and actionable information about life threatening infections to improve patient outcomes
and decrease the spread of infections caused by multidrug-resistant microorganisms, or MDROs.
During the year ended December 31, 2023, the Company implemented certain cash management initiatives, including restructuring its U.S. operations by
reducing headcount from 24 to 5 and has since continued scaling down operations at OpGen’s U.S. headquarters to the core functions of a U.S. Nasdaq
listed company with only minimal distribution, marketing, and sales support, allowing the Company to conserve cash and focus on the functions needed to
pursue potential strategic alternatives. However, on November 6, 2023, Curetis filed a petition for insolvency with the district court of Stuttgart, Germany,
and Ares Genetics filed a petition for insolvency with the commercial court in Vienna, Austria. The insolvency proceedings of Curetis and Ares Genetics
were adjudicated under the insolvency laws of Germany and Austria, respectively.
The insolvency administrators assumed control over the assets and liabilities of Curetis and Ares Genetics, respectively, which eliminated the authority and
power of the Company and its officers to act on behalf of the subsidiaries. The loss of control required that the Company no longer include Curetis and
Ares Genetics in its consolidated financial statements. Prior to the insolvency filings, Curetis and Ares Genetics had been included in the Company’s
consolidated financial statements. Upon deconsolidation of Curetis and Ares Genetics, the Company recognized gains on deconsolidation of subsidiaries at
the subsidiary levels of $46.6 million for Curetis and $7.7 million for Ares Genetics, which was offset by a loss on deconsolidation of subsidiary for the
Company of $67.3 million. The deconsolidation charges to operations represent the excess of the carrying value over the fair value of the Company’s
interest in and intercompany payables to and receivables from Curetis and Ares Genetics as of the insolvency filing date.
In March 2024, the Company entered into a securities purchase agreement (the “March 2024 Purchase Agreement”) with David E. Lazar, pursuant to which
the Company agreed to sell 3,000,000 shares of Series E Convertible Preferred Stock (“Series E Preferred Stock”) to Mr. Lazar at a price of $1.00 per share
for aggregate gross proceeds of $3.0 million. In connection with the transactions contemplated by the March 2024 Purchase Agreement, the members of the
Board of Directors prior to the closing of such transactions resigned, and a new Board of Directors was appointed, of which Mr. Lazar was appointed
Chairman. The focus of OpGen going forward under new leadership and a new Board of Directors will be on the identification of a privately held company
to complete a reverse merger or similar strategic transaction (see Note 12).
F-9
Note 2 - Going Concern and Management’s Plans
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business. Since inception, the Company has incurred, and continues to incur, significant losses from
operations and negative operating cash flows. The Company has funded its operations primarily through external investor financing arrangements and
significant actions taken by the Company, including the following:
● On October 12, 2023, the Company entered into a warrant inducement agreement (the “Inducement Agreement”) with a holder (the “Holder”) of
certain existing warrants (the “Existing Warrants”) to purchase shares of common stock, par value $0.01 per share, of the Company. Pursuant to
the Inducement Agreement, the Holder agreed to exercise for cash their Existing Warrants to purchase up to 1,089,274 shares of the Company’s
common stock at an exercise price of $7.785 per share, the exercise price per share of the Existing Warrants, during the period from the date of the
Inducement Agreement until 7:30 a.m., Eastern Time, on October 26, 2023. Pursuant to amendment agreements entered into by the Company and
Holder on October 26, 2023 and February 7, 2024, the Company agreed to initially extend the offer period until December 31, 2023, and
subsequently extend the offer period until April 30, 2024 (see Note 12). In order to permit the exercise of the Existing Warrants pursuant to the
rules of the Nasdaq Capital Market, the Holder agreed to pay as additional consideration $0.25 per share of common stock issued upon exercise of
the Existing Warrants. In consideration of the Holder’s agreement to exercise the Existing Warrants in accordance with the Inducement
Agreement, the Company agreed to issue new warrants (the “Inducement Warrants”) to purchase shares of common stock equal to 100% of the
number of shares of common stock issued upon exercise of the Existing Warrants (the “Inducement Warrant Shares”). The Inducement Warrants
will have an exercise price of $3.36 per share and will be exercisable on the six-month anniversary of the date of issuance and expire on the five-
year anniversary of the Inducement Warrant’s first becoming exercisable. As of December 31, 2023, the Holder exercised 200,000 shares of
Common Stock under the existing warrants pursuant to the Inducement Agreement for aggregate gross proceeds to the Company of $2.057 million
before deducting financial advisory fees and other expenses payable by the Company.
● On October 11, 2023, the Company entered into a Preferred Stock Purchase Agreement (the “Purchase Agreement”) with a single investor (the
“Investor”), pursuant to which the Company agreed to issue and sell to the Investor in a private placement (the “Private Placement”) 1,000 shares
of the Company’s Series D Preferred Stock, par value $0.01 per share (the “Preferred Stock”). Each share of preferred stock was agreed to sell at a
price of $1,000 per share for expected aggregate gross proceeds of $1.0 million before deducting offering expenses. The Private Placement was
conducted in connection with the negotiation of a potential strategic transaction involving the Company and the Investor. The Company intended
to use the proceeds of the Private Placement to fund the Company’s operations while it pursued a potential strategic transaction with the Investor.
Pursuant to the Purchase Agreement, the Company filed a certificate of designation (the “Certificate of Designation”) with the Secretary of State
of the State of Delaware designating the rights, preferences and limitations of the shares of preferred stock on October 11, 2023. The Certificate of
Designation provides that the shares of preferred stock have a stated value of $1,000 per share and are convertible into shares of common stock,
par value $0.01 per share of the Company at a price of $4.09 per share, subject to adjustment in the event of certain stock dividends and
distributions, stock splits, stock combinations, reclassifications, or similar events affecting the common stock. The preferred stock may be
converted at any time at the option of the holder. Notwithstanding the foregoing, the Certificate of Designation provides that in no event will the
preferred stock be convertible into common stock in a manner that would result in the holder, its permitted transferees and affiliates holding more
than 19.99% (together with any shares of common stock otherwise held by the Investor, its permitted transferees and their affiliates) of the then
issued and outstanding common stock (the “Ownership Limitation”), prior to the date that the Company’s stockholders approve the issuance of
shares of common stock to the holder upon conversion of the preferred stock (the “stockholder approval”). Upon receipt of stockholder approval,
the shares of preferred stock will automatically be converted into shares of common stock without further action of the holder thereof. The
Investor funded $250,000 of the expected aggregate gross proceeds of $1.0 million before deducting offering expenses on November 14, 2023. On
December 13, 2023, in coordination with the Investor, the Company issued to the Investor 250 shares of Series D Preferred Stock in consideration
for the partial payment. As of December 31, 2023, all 250 Series D Preferred Shares remain outstanding and the remaining $750,000 of the
purchase price remains unpaid. The Company reserves all rights and remedies arising from the Investor’s failure to close the transaction and the
Investor will continue to be in breach of the Purchase Agreement until the remaining amount is paid in full.
F-10
● On June 26, 2023, the Company announced that its subsidiary Curetis and the European Investment Bank (“EIB”) agreed in principle to certain
terms relating to the repayment of the second tranche of Curetis’ loan from the EIB pursuant to that certain Finance Contract, dated December 12,
2016, as amended, by and between Curetis and the EIB (the “Finance Contract”). The second tranche had a principal balance of €3 million plus
accumulated and deferred interest. The second tranche was drawn down in June 2018 and matured on June 22, 2023. On July 4, 2023, the EIB and
Curetis entered into a Standstill Agreement (the “Standstill Agreement”) pursuant to which the EIB agreed that, with respect to each default or
event of default relating to such second tranche, the EIB would not take any action or exercise any right under the Finance Contract until the
earlier of a restructuring of the second tranche and November 30, 2023. As a condition to entering into the Standstill Agreement, Curetis paid the
EIB a partial payment of interest on the second tranche of €1 million on June 22, 2023. In addition, Curetis agreed to certain undertakings during
the standstill period, including the delivery of a rolling cash flow forecast and to cause a third-party restructuring expert to prepare and deliver a
restructuring opinion to the EIB. On November 20, 2023, Curetis received a termination notice from the EIB terminating the Standstill Agreement
effective as of November 20, 2023. The EIB’s termination notice stated that the termination of the Standstill Agreement was as a result of and in
connection with certain defaults of the Standstill Agreement arising from, among other related reasons, Curetis’ and Ares’ entry into insolvency
proceedings. On December 4, 2023, the Company received a notice from the EIB stating that Curetis is in default of the Finance Contract as a
result of, among other things, Curetis’ failure to repay when due certain outstanding indebtedness under the Finance Contract. In its notice, the
EIB stated that, as of November 16, 2023, the aggregate amount of principal, accrued interest and all other amounts owed by Curetis to the EIB
under the Finance Contract was approximately 9.66 million euro and that interest will continue to accrue in accordance with the Finance Contract
until all amounts owed are paid in full. Pursuant to that certain Guarantee and Indemnity Agreement, dated July 9, 2020 (the “Guaranty”), between
the EIB and the Company, the EIB demanded that the Company, as guarantor, immediately repay the EIB all amounts owed to the EIB under the
Finance Contract and reserved all of its other rights and remedies in connection with the Finance Contract. As of the year ended December 31,
2023, the Guaranty remained unpaid and outstanding, with the liability reflected on the Company’s financial statements, which was previously on
Curetis’ balance sheet. In connection with the Company’s entry into the March 2024 Purchase Agreement with David E. Lazar on March 25, 2024,
the Company entered into settlement agreements with each of the EIB and Curetis and Curetis’ trustee in insolvency, pursuant to which the parties
agreed to settle outstanding liabilities amongst the parties. Pursuant to the settlement agreements, following the final closing of the transactions
contemplated by the March 2024 Purchase Agreement, the Company will pay $2.0 million of the proceeds to settle all outstanding debt of the
Company to each of EIB and Curetis. The settlement agreement with EIB also terminated the Guaranty (see Note 12).
● On May 4, 2023, the Company closed a best-efforts public offering pursuant to a securities purchase agreement with a certain institutional
investor, pursuant to which the Company issued and sold to the Investor (i) 60,500 shares of the Company’s common stock, par value $0.01 per
share, (ii) pre-funded warrants to purchase up to an aggregate of 389,083 shares of common stock, and (iii) common warrants to purchase up to an
aggregate of 449,583 shares of common stock. Each share of common stock and accompanying common warrant was sold at a price of $7.785 per
share and accompanying common warrant, and each pre-funded warrant and accompanying common warrant was sold at an offering price of
$7.685 per share underlying such pre-funded warrant and accompanying common warrant, for aggregate gross proceeds of approximately $3.5
million and net proceeds of approximately $3.0 million. The common warrants have an exercise price of $7.785 per share and will be exercisable
beginning on the date of stockholder approval of the exercisability of the warrants under Nasdaq rules or may be exercised through October 26,
2023, pursuant to the Warrant Inducement Agreement entered into on October 12, 2023. Pursuant to amendment agreements entered into by the
Company and Holder on October 26, 2023 and February 7, 2024, the Company agreed to initially extend the offer period until December 31,
2023, and subsequently extend the offer period until April 30, 2024 (see Note 12). In order to permit the exercise of the Existing Warrants
pursuant to the rules of the Nasdaq Capital Market, the Holder agreed to pay as additional consideration $0.25 per share of common stock issued
upon exercise of the Existing Warrants. The common warrants not exercised as part of the Inducement Agreement will expire on the five-year
anniversary of the date of such stockholder approval. Each pre-funded warrant has an exercise price per share of common stock equal to $0.10 per
share and may be exercised at any time until the pre-funded warrants are exercised in full. In connection with the offering, the Company also
entered into a warrant amendment agreement with the investor pursuant to which the Company amended certain existing warrants to purchase up
to 639,691 shares of common stock that were previously issued in 2018, 2021, 2022 and 2023 to the investor, with exercise prices ranging from
$26.50 to $75.40 per share, in consideration for their purchase of the securities in the offering, as follows: (i) lower the exercise price of the
existing warrants to $7.785 per share, (ii) provide that the existing warrants, as amended, will not be exercisable until the receipt of stockholder
approval for the exercisability of the common warrants in the offering, and (iii) extend the original expiration date of the existing warrants by five
years following the receipt of such stockholder approval. The increase in fair value resulting from the warrant modifications is accounted for as an
equity issuance cost, resulting in a debit and credit to additional paid in capital of approximately $0.3 million. As of December 31, 2023, the
Holder exercised 200,000 shares of Common Stock under the existing warrants pursuant to the Inducement Agreement for aggregate gross
proceeds to the Company of $2.057 million before deducting financial advisory fees and other expenses payable by the Company.
F-11
● On January 11, 2023, the Company closed a best-efforts public offering pursuant to a securities purchase agreement with a certain institutional
investor for the purchase of (i) 32,121 shares of the Company’s common stock, par value $0.01 per share, (ii) pre-funded warrants to purchase up
to an aggregate of 226,500 shares of common stock (the “Pre-funded Warrants”), (iii) Series A-1 common warrants to purchase an aggregate of
258,621 shares of common stock (the “Series A-1 Warrants”), and (iv) Series A-2 common warrants to purchase an aggregate of 258,621 shares of
common stock (the “Series A-2 Warrants,” and together with the Series A-1 Warrants, the “Common Warrants”). Each share of common stock and
accompanying Common Warrants were sold at a price of $29.00 per share and accompanying Common Warrants, and each Pre-funded Warrant
and accompanying Common Warrants were sold at an offering price of $28.90 per share underlying such Pre-funded Warrants and accompanying
Common Warrants, for aggregate gross proceeds of approximately $7.5 million before deducting the placement agent’s fees and the offering
expenses, and net proceeds of approximately $6.9 million. The Common Warrants have an exercise price of $26.50 per share. The Series A-1
Warrants were immediately exercisable upon issuance, and will expire five years following the issuance date. The Series A-2 Warrants were
immediately exercisable upon issuance, and will expire eighteen months following the issuance date. Subject to certain ownership limitations
described in the Pre-funded Warrants, the Pre-funded Warrants were immediately exercisable and could be exercised at a nominal consideration of
$0.10 per share of common stock any time until all the Pre-funded Warrants are exercised in full. All Pre-funded Warrants were exercised by
February 15, 2023. In connection with the Company’s best-efforts public offering consummated in May 2023, the Company amended the exercise
price of the Common Warrants to $7.785 per share.
● On October 3, 2022, the Company closed a registered direct offering of shares of common stock and Series C Mirroring Preferred Stock pursuant
to a securities purchase agreement entered into with a certain institutional investor. In the offering, the Company agreed to issue and sell to the
investor (i) 26,800 shares of the Company’s common stock, par value $0.01 per share, (ii) 33,810 shares of the Company’s Series C Mirroring
Preferred Stock, par value $0.01 per share and stated value of $0.01 per share, and (iii) pre-funded warrants to purchase an aggregate of 21,500
shares of common stock. Each share of common stock was sold at a price of $70.00 per share, each share of preferred stock was sold at a price of
$0.01 per share, and each pre-funded warrant was sold at an offering price of $68.00 per share underlying such pre-funded warrants, for aggregate
gross proceeds of $3.34 million before deducting the placement agent’s fees and the offering expenses, and net proceeds of $3.04 million. Under
the purchase agreement, the Company also agreed to issue and sell to the investor, in a concurrent private placement, warrants to purchase an
aggregate of 48,300 shares of common stock. In connection with the offering, the Company also entered into a warrant amendment agreement
with the investor pursuant to which the Company agreed to amend certain existing warrants to purchase up to 74,150 shares of common stock that
were previously issued to the investor in 2018 and 2021, with exercise prices ranging from $410.00 to $13,000.00 per share as a condition to their
purchase of the securities in the offering, as follows: (i) lower the exercise price of the investor’s existing warrants to $75.40 per share, (ii) provide
that the existing warrants, as amended, will not be exercisable until six months following the closing date of the offering, and (iii) extend the
original expiration date of the existing warrants by five and one-half years following the close of the offering. The increase in fair value resulting
from the warrant modifications is accounted for as an equity issuance cost, resulting in a debit and credit to additional paid in capital for
approximately $1.8 million. As of December 31, 2022, all 21,500 pre-funded warrants were exercised and all 33,810 shares of the Company’s
Series C Mirroring Preferred Stock were automatically cancelled and ceased to be outstanding following receipt of stockholder approval for the
Company’s reverse stock split on November 30, 2022. In connection with the Company’s best-efforts public offering consummated in May 2023,
the Company amended the exercise price of the existing warrants to $7.785 per share.
F-12
● On June 24, 2022, the Company entered into an At-the-Market, or ATM, Offering Agreement (the “2022 ATM Agreement”) with H.C.
Wainwright & Co., LLC (“Wainwright”), as a sales agent, pursuant to which the Company may offer and sell from time to time in an “at the
market offering”, at its option, up to an aggregate of $10.65 million of shares of the Company’s common stock through Wainwright. As of
December 31, 2022, the Company sold 8,574 shares under the 2022 ATM Agreement totaling $1.03 million in gross proceeds and $0.99 million in
net proceeds. The Company did not sell any shares under the 2022 ATM Agreement in 2023.
To meet its capital needs, the Company entered into a securities purchase agreement (the “March 2024 Purchase Agreement”) with David E. Lazar,
pursuant to which the Company agreed to sell 3,000,000 shares of Series E Convertible Preferred Stock (“Series E Preferred Stock”) to Mr. Lazar at a price
of $1.00 per share for aggregate gross proceeds of $3.0 million. Although Mr. Lazar is expected to provide the Company with $3.0 million in total funding,
the Company believes that current cash will only be sufficient to fund operations into the third quarter of 2024. This has led management to conclude that
there is substantial doubt about the Company’s ability to continue as a going concern. In the event the Company does not receive additional funding from
the individual investor or other investors or find a reverse merger partner or other strategic transaction partner before or during the third quarter of 2024, the
Company will not have sufficient cash flows and liquidity to finance its business operations. Accordingly, in such circumstances, the Company would be
compelled to immediately reduce general and administrative expenses until it is able to obtain sufficient financing. If such sufficient financing is not
received on a timely basis, the Company would then need to pursue a plan to seek to be acquired by another entity, cease operations and/or seek bankruptcy
protection. There can be no assurance that the Company will be able to identify or execute on any of these alternatives on acceptable terms or that any of
these alternatives will be successful.
The accompanying consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
Note 3 - Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of
America (“GAAP”). The consolidated financial statements consolidate the operations of all controlled subsidiaries; all intercompany activity is eliminated.
Foreign Currency
Curetis and Ares Genetics are located in Holzgerlingen, Germany and Vienna, Austria, respectively, each of which use currencies other than the U.S. dollar
as their functional currency. As a result, all assets and liabilities of these entities are translated into U.S. dollars based on exchange rates at the end of the
reporting period. Income and expense items are translated at the average exchange rates prevailing during the reporting period. Translation adjustments are
reported in accumulated other comprehensive income (loss), a component of stockholders’ equity. Foreign currency translation adjustments are the sole
component of accumulated other comprehensive income (loss) at December 31, 2023 and 2022.
Foreign currency transaction gains and losses, excluding gains and losses on intercompany balances where there is no current intent to settle such amounts
in the foreseeable future, are included in the determination of net loss. Unless otherwise noted, all references to “$” or “dollar” refer to the United States
dollar.
Use of Estimates
In preparing financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. In the accompanying consolidated financial statements, estimates are used for, but not limited to, liquidity
assumptions, revenue recognition, inducement expense related to warrant repricing, stock-based compensation, allowances for doubtful accounts and
inventory obsolescence, discount rates used to discount unpaid lease payments to present values, valuation of derivative financial instruments measured at
fair value on a recurring basis, deferred tax assets and liabilities and related valuation allowance, the estimated useful lives of long-lived assets, and the
recoverability of long-lived assets. Actual results could differ from those estimates.
F-13
Fair value of financial instruments
Financial instruments classified as current assets and liabilities (including cash and cash equivalent, receivables, accounts payable, deferred revenue and
short-term notes) are carried at cost, which approximates fair value, because of the short-term maturities of those instruments.
For additional fair value disclosures, see Note 5.
Cash and cash equivalents and restricted cash
The Company considers all highly liquid instruments with original maturities of three months or less to be cash equivalents. The Company has cash and
cash equivalents deposited in financial institutions in which the balances occasionally exceed the Federal Deposit Insurance Corporation (“FDIC”) insured
limit of $250,000. On March 10, 2023, the Company learned that Silicon Valley Bank (“SVB”), the Company’s primary bank at the time (now a division of
First Citizens Bank), was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance
Corporation as receiver. The Company did not experience any losses in such accounts, but since the Company was exposed to credit risk with the failure of
SVB, management diversified the Company’s holdings to minimize credit risk in the future.
At December 31, 2023 and 2022, the Company had funds totaling $302,262 and $495,629, respectively, which are required as collateral for letters of credit
benefiting its landlords and for credit card processors. These funds are reflected in other noncurrent assets on the accompanying consolidated balance
sheets.
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets that sum to
the total of the same amounts shown in the consolidated statements of cash flows:
Cash and cash equivalents
Restricted cash
Total cash and cash equivalents and restricted cash in the consolidated statements of cash flows
Accounts receivable
December 31,
2023
1,151,823 $
302,262
1,454,085 $
December 31,
2022
7,440,030
495,629
7,935,659
$
$
The Company’s accounts receivable result from revenues earned but not yet collected from customers. Credit is extended based on an evaluation of a
customer’s financial condition and, generally, collateral is not required. Accounts receivable are due within 30 to 90 days and are stated at amounts due
from customers. The Company evaluates if an allowance is necessary by considering a number of factors, including the length of time accounts receivable
are past due, the Company’s previous loss history and the customer’s current ability to pay its obligation. If amounts become uncollectible, they are charged
to operations when that determination is made. The allowance for doubtful accounts was $0 as of December 31, 2023 and 2022.
At December 31, 2023, the Company had accounts receivable from three customers which individually represented 39%, 26%, and 10% of total accounts
receivable, respectively. At December 31, 2022, the Company had accounts receivable from two customers which individually represented 41% and 21%
of total accounts receivable, respectively. For the year ended December 31, 2023, revenue earned from three customers represented 24%, 19%, and 13% of
total revenues, respectively. For the year ended December 31, 2022, revenue earned from three customers represented 32%, 14%, and 11% of total
revenues, respectively.
F-14
Inventory
Inventories are valued using the first-in, first-out method and stated at the lower of cost or net realizable value and consist of the following:
Raw materials and supplies
Work-in-process
Finished goods
Total
December 31,
2023
2022
1,011,476
37,445
2,596,830
3,645,751
- $
-
-
- $
$
$
Inventory includes Unyvero system instruments, Unyvero cartridges, reagents and components for Unyvero and Acuitas kits, and reagents and supplies
used for the Company’s laboratory services.
The Company periodically reviews inventory quantities on hand and analyzes the provision for excess and obsolete inventory based primarily on product
expiration dating and its estimated sales forecast, which is based on sales history and anticipated future demand. The Company’s estimates of future
product demand may not be accurate, and it may understate or overstate the provision required for excess and obsolete inventory. Accordingly, any
significant unanticipated changes in demand could have a significant impact on the value of the Company’s inventory and results of operations. Based on
the Company’s assumptions and estimates, inventory reserves for obsolescence, expirations, and slow-moving inventory were $1,280,805 and $1,694,843
at December 31, 2023 and December 31, 2022, respectively. Due to the insolvency proceedings and deconsolidation of the Company’s subsidiaries, the
Company reserved for the full value of its inventory at December 31, 2023 given the uncertainty surrounding the net realizable value and future demand for
the Company’s products.
The Company classifies finished goods inventory it does not expect to sell or use in clinical studies within 12 months of the consolidated balance sheets
date as strategic inventory, a non-current asset.
Long-lived assets
Property and equipment
Property and equipment is stated at cost and depreciated on a straight-line basis over the estimated useful lives of the related assets. The estimated service
lives range from three to ten years. Depreciation expense for property and equipment was $584,230 and $830,757 for the years ended December 31, 2023
and 2022, respectively. Property and equipment consisted of the following at December 31, 2023 and 2022:
Laboratory and manufacturing equipment
Office furniture and equipment
Computers and network equipment
Leasehold improvements
Less accumulated depreciation
Property and equipment, net
December 31,
2023
614,036 $
207,164
245,983
397,666
1,464,849
(1,464,849)
- $
2022
4,712,668
707,054
431,787
1,667,302
7,518,811
(4,061,280)
3,457,531
$
$
Property and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash
flows expected to be generated by the asset. Recoverability measurement and estimating of undiscounted cash flows is done at the lowest possible level for
which we can identify assets. If such assets are considered to be impaired, impairment is recognized as the amount by which the carrying amount of assets
exceeds the fair value of the assets. During the year ended December 31, 2023, the Company determined that its property and equipment, including
leasehold improvements and computer and networking equipment, at its Rockville, MD office was impaired due to the Company’s financial condition and
the impairment of the Company’s ROU lease asset. As a result, the Company recorded an impairment charge in the amount of $1,231,874. During the year
ended December 31, 2022, the Company determined that its property and equipment was not impaired.
F-15
Leases
The Company determines if an arrangement is a lease at inception. For leases where the Company is the lessee, right-of-use (“ROU”) assets represent the
Company’s right to use the underlying asset for the term of the lease and the lease liabilities represent an obligation to make lease payments arising from
the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of the future lease payments over the
lease term. The Company uses its incremental borrowing rate based on the information available at the commencement date of the underlying lease
arrangement to determine the present value of lease payments. The ROU asset also includes any prepaid lease payments and any lease incentives received.
The lease term to calculate the ROU asset and related lease liability includes options to extend or terminate the lease when it is reasonably certain that the
Company will exercise the option. The Company’s lease agreements generally do not contain any material variable lease payments, residual value
guarantees or restrictive covenants.
Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense while expense for financing leases is
recognized as depreciation expense and interest expense using the effective interest method of recognition. The Company has made certain accounting
policy elections whereby the Company (i) does not recognize ROU assets or lease liabilities for short-term leases (those with original terms of 12 months
or less) and (ii) combines lease and non-lease elements of our operating leases.
ROU Assets
ROU assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash
flows expected to be generated by the asset. Recoverability measurement and estimating of undiscounted cash flows is done at the lowest possible level for
which the Company can identify assets. If such assets are considered to be impaired, impairment is recognized as the amount by which the carrying amount
of assets exceeds the fair value of the assets. Given the deconsolidation of Curetis and Ares Genetics following their insolvency filings, the ROU assets
associated with these entities are removed from the consolidated balance sheet for the year ended December 31, 2023. During the year ended December 31,
2023, the Company determined that its operating right-of-use lease asset for its Rockville, MD office was impaired due to the Company’s inability to
support the lease given its financial position. As a result, the Company recorded an impairment charge in the amount of $849,243. The Company did not
identify any impaired ROU assets for the year ended December 31, 2022.
Intangible assets and goodwill
Intangible assets and goodwill consist of finite-lived and indefinite-lived intangible assets and goodwill.
Finite-lived and indefinite-lived intangible assets
Intangible assets include trademarks and tradenames, developed technology and software, in-process research & development (“IPR&D”), and distributor
relationships and consisted of the following as of December 31, 2023 and 2022:
December 31, 2023
December 31, 2022
Accumulated
Amortization,
Deconsolidation,
and Impairment
Effect of
Foreign
Exchange
Rates
Accumulated
Amortization,
Deconsolidation,
and Impairment
Effect of
Foreign
Exchange
Rates
Net
Balance
Net
Balance
Subsidiary
Cost
Trademarks and
tradenames
Distributor relationships
A50 – Developed
technology
Ares – Developed
technology
Curetis
Curetis
$ 1,768,000 $
2,362,000
(1,766,880) $
(2,360,505)
(1,120) $
(1,495)
Curetis
349,000
(348,779)
(221)
Ares Genetics 5,333,000
(5,329,624)
(3,376)
A30 – Acquired in-
process research &
development
Curetis
5,706,000
$ 15,518,000 $
(5,702,388)
(15,508,176) $
(3,612)
(9,824) $
F-16
- $
-
-
-
-
- $
(469,011) $
(417,728)
(62,520) $ 1,236,469
(83,525) 1,860,747
(132,273)
(12,342)
204,385
(1,010,495)
(183,132) 4,139,373
(5,407,699)
-
(7,437,206) $ (639,820) $ 7,440,974
(298,301)
Identifiable intangible assets will be amortized on a straight-line basis over their estimated useful lives. The estimated useful lives of the intangibles are:
Trademarks and tradenames
Customer/distributor relationships
A50 – Developed technology
Ares – Developed technology
A30 – Acquired in-process research & development
Estimated
Useful Life
10 years
15 years
7 years
14 years
Indefinite
Acquired IPR&D represents the fair value assigned to those research and development projects that were acquired in a business combination for which the
related products have not received regulatory approval and have no alternative future use. IPR&D is capitalized at its fair value as an indefinite-lived
intangible asset, and any development costs incurred after the acquisition are expensed as incurred. Upon achieving regulatory approval or commercial
viability for the related product, the indefinite-lived intangible asset is accounted for as a finite-lived asset and is amortized on a straight-line basis over the
estimated useful life. If the project is not completed or is terminated or abandoned, the Company may have an impairment related to the IPR&D which is
charged to expense. Indefinite-lived intangible assets are tested for impairment annually and whenever events or changes in circumstances indicate that the
carrying amount may be impaired. Impairment is calculated as the excess of the asset’s carrying value over its fair value. During the Company’s annual
impairment test for its IPR&D intangible asset in 2022, it was determined that the infinite-lived intangible asset was impaired because although the
Company had an ongoing collaboration utilizing the intangible asset, the contracted cash flow associated with this collaboration and projected future cash
flows did not support the carrying amount. As a result, the Company recorded an impairment charge in the amount of $5,407,699 for the year ended
December 31, 2022.
Intangible assets, other than IPR&D as discussed above, are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount of the asset may not be recoverable. If any indicators were present, the Company would test for recoverability by comparing the carrying
amount of the asset to the net undiscounted cash flows expected to be generated from the asset. If those net undiscounted cash flows do not exceed the
carrying amount (i.e., the asset is not recoverable), the Company would perform the next step, which is to determine the fair value of the asset and record
an impairment loss, if any. All the Company’s finite-lived intangible assets with net balances were held by Curetis and Ares Genetics. As a result of the
insolvency filings for Curetis and Ares Genetics and the associated deconsolidation of all balance sheet balances related to these entities, the Company does
not have any finite-lived intangible asset balances as of December 31, 2023.
Total amortization expense of intangible assets was $624,240 and $725,060 for the years ended December 31, 2023 and 2022, respectively. Due to the
removal of the Curetis and Ares Genetics’ intangible assets, the Company does not anticipate any future amortization associated with these intangible
assets.
Goodwill
Goodwill represents the excess of the purchase price paid when the Company acquired AdvanDx, Inc. in July 2015 and Curetis in April 2020, over the fair
values of the acquired tangible or intangible assets and assumed liabilities. Goodwill is not tax deductible in any relevant jurisdictions. The Company’s
goodwill balance as of December 31, 2022 was $0.
The changes in the carrying amount of goodwill as of December 31, 2022, and since December 31, 2021, were as follows:
Balance as of December 31, 2021
Changes in currency translation
Goodwill impairment charge
Balance as of December 31, 2022
F-17
$
$
7,453,007
(512,458)
(6,940,549)
-
The Company conducts an impairment test of goodwill on an annual basis and will also conduct tests if events occur or circumstances change that would,
more likely than not, reduce the Company’s fair value below its net equity value. During the year ended December 31, 2022, since the Company identified
circumstances that would, more likely than not, reduce the Company’s fair value below its net equity value, the Company performed qualitative and
quantitative analyses, assessing trends in market capitalization, current and future cash flows, revenue growth rates, and the impact of global unrest and the
COVID-19 pandemic on the Company and its performance. Based on the analysis performed, and primarily due to changes in the Company’s stock price
and market capitalization in the third quarter of 2022, it was determined that goodwill was impaired. As a result, the Company recorded a goodwill
impairment charge in the full amount of $6,940,549 for the year ended December 31, 2022.
Revenue recognition
During the years ended December 31, 2022 and 2023, the Company derived revenues from (i) the sale of Unyvero Application cartridges, Unyvero
Systems, Acuitas AMR Gene Panel test products, and SARS CoV-2 tests, (ii) providing laboratory services, and (iii) providing collaboration services
including funded software arrangements, license arrangements, and the FIND NGO collaboration on our Unyvero A30 platform.
The Company analyzes contracts to determine the appropriate revenue recognition using the following steps: (i) identification of contracts with customers,
(ii) identification of distinct performance obligations in the contract, (iii) determination of contract transaction price, (iv) allocation of contract transaction
price to the performance obligations and (v) determination of revenue recognition based on timing of satisfaction of the performance obligation.
The Company recognizes revenues upon the satisfaction of its performance obligation (upon transfer of control of promised goods or services to our
customers) in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services.
The Company defers incremental costs of obtaining a customer contract and amortizes the deferred costs over the period that the goods and services are
transferred to the customer. The Company had no material incremental costs to obtain customer contracts in any period presented.
Deferred revenue results from amounts billed in advance to customers or cash received from customers in advance of services being provided.
Government grant agreements and research incentives
From time to time, the Company may enter into arrangements with governmental entities for the purposes of obtaining funding for research and
development activities. The Company recognized funding from grants and research incentives received through its subsidiary, Ares Genetics, from
Austrian government agencies in the consolidated statements of operations and comprehensive loss in the period during which the related qualifying
expenses are incurred, provided that the conditions under which the grants or incentives were provided have been met. For grants under funding agreements
and for proceeds under research incentive programs, the Company recognizes grant and incentive income in an amount equal to the estimated qualifying
expenses incurred in each period multiplied by the applicable reimbursement percentage. The Company classifies government grants received under these
arrangements as a reduction to the related research and development expense incurred. The Company analyzes each arrangement on a case-by-case basis.
For the year ended December 31, 2023, the Company recognized $301,575 as a reduction of research and development expense related to Ares Genetics’
government grant arrangements. For the year ended December 31, 2022, the Company recognized $424,304 as a reduction of research and development
expense related to government grant arrangements. As of December 31, 2023 and 2022, the Company had earned but not yet received $0 and $401,436,
respectively related to these agreements and incentives included in prepaid expenses and other current assets.
F-18
Research and development costs, net
Research and development costs are expensed as incurred. Research and development costs primarily consist of salaries and related expenses for personnel,
other resources, laboratory supplies, development materials, fees paid to consultants and outside service partners.
Stock-based compensation
Stock-based compensation expense is recognized at fair value. The fair value of stock-based compensation to employees and directors is estimated, on the
date of grant, using the Black-Scholes model. The resulting fair value is recognized ratably over the requisite service period, which is generally the vesting
period of the option. For all time-vesting awards granted, expense is amortized using the straight-line attribution method. The Company accounts for
forfeitures as they occur.
Option valuation models, including the Black-Scholes model, require the input of highly subjective assumptions, and changes in the assumptions used can
materially affect the grant-date fair value of an award. These assumptions include the risk-free rate of interest, expected dividend yield, expected volatility
and the expected life of the award. A discussion of management’s methodology for developing each of the assumptions used in the Black-Scholes model is
as follows:
Fair value of common stock
The Company uses the quoted market price of its common stock as its fair value.
Expected volatility
Through 2020, since OpGen did not have sufficient history to estimate the expected volatility of its common stock price, expected volatility was based on
the volatility of peer public entities that were similar in size and industry. Beginning in 2021, for stock options with an expected term where there is
sufficient history available, expected volatility is based on the volatility of OpGen’s common stock.
Expected dividend yield
The Company has never declared or paid dividends on its common stock and has no plans to do so in the foreseeable future.
Risk-free interest rate
The risk-free interest rate is the U.S. Treasury rate for the day of each option grant during the year, having a term that most closely resembles the expected
term of the option.
Expected term
The expected term of a stock option grant is the period of time that the options granted are expected to remain unexercised. Options granted have a
maximum term of 10 years. The Company estimates the expected term of the option to be 5.75 years for options with a standard two-year vesting period
and 6.25 years for options with a standard four-year vesting period, using the simplified method. Over time, management will track actual terms of the
options and adjust their estimate accordingly so that estimates will approximate actual behavior for similar options.
F-19
Income taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax
consequences attributable to temporary differences between financial statement carrying amounts of existing assets and liabilities and their respective tax
basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred income tax assets to the amount expected
to be realized.
Tax benefits are initially recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax
authorities. Such tax positions are initially, and subsequently, measured as the largest amount of tax benefit that is greater than 50% likely of being realized
upon ultimate settlement with the tax authority, assuming full knowledge of the position and all relevant facts.
The Company had federal net operating loss (“NOL”) carryforwards of $241,110,447 and $232,682,072 at December 31, 2023 and 2022, respectively.
Despite the NOL carryforwards, which started expiring in 2022, the Company may have state tax requirements. Also, use of the NOL carryforwards may
be subject to an annual limitation as provided by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). To date, the Company has
not performed a formal study to determine if any of its remaining NOL and credit attributes might be further limited due to the ownership change rules of
Section 382 or Section 383 of the Code. The Company will continue to monitor this matter going forward. There can be no assurance that the NOL
carryforwards will ever be fully utilized.
Loss per share
Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock
outstanding during the period.
For periods of net income, and when the effects are not anti-dilutive, diluted earnings per share is computed by dividing net income available to common
stockholders by the weighted-average number of shares outstanding plus the impact of all potential dilutive common shares, consisting primarily of
common stock options and stock purchase warrants using the treasury stock method, and convertible preferred stock and convertible debt using the if-
converted method.
For periods of net loss, diluted loss per share is calculated similarly to basic loss per share because the impact of all dilutive potential common shares is
anti-dilutive. The number of anti-dilutive shares, consisting of (i) common stock options, (ii) stock purchase warrants, (iii) restricted stock units
representing the right to acquire shares of common stock, and (iv) convertible preferred stock which have been excluded from the computation of diluted
loss per share, was 1.2 million shares and 0.1 million shares as of December 31, 2023 and 2022, respectively.
Adopted accounting pronouncements
In June 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Codification (ASC) Update No. 2016-13, Financial
Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The purpose of Update No. 2016-13 is to replace the
incurred loss impairment methodology for financial assets measured at amortized cost with a methodology that reflects expected credit losses and requires
consideration of a broader range of reasonable and supportable information, including forecasted information, to develop credit loss estimates. Update No.
2016-13 did not have a material impact on the Company’s financial position or results of operations.
In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50),
Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2021-04”).
ASU 2021-04 clarifies and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options,
including warrants, that remain equity-classified after modification or exchange. ASU 2021-04 requires an entity to treat a modification or an exchange of a
freestanding equity-classified written call option that remains equity-classified after the modification or exchange as an exchange of the original instrument
for a new instrument and provides guidance on measuring and recognizing the effect of a modification or an exchange. The Company adopted ASU 2021-
04 on January 1, 2022. The adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures.
F-20
Recently issued accounting standards
The Company has evaluated all other issued and unadopted ASUs and believes the adoption of these standards will not have a material impact on its results
of operations, financial position or cash flows.
Note 4 - Revenue from Contracts with Customers
Disaggregated Revenue
The Company provided diagnostic test products and laboratory services to hospitals, clinical laboratories and other healthcare providing customers, and
entered into collaboration agreements with government agencies, non-governmental organizations, and healthcare providers. The revenues by type of
service consist of the following:
Product sales
Laboratory services
Collaboration revenue
Total revenue
Revenues by geography are as follows:
Domestic
International
Total revenue
Deferred revenue
Changes in deferred revenue for the period were as follows:
Balance at December 31, 2021
New deferrals, net of amounts recognized in the period
Balance at December 31, 2022
Contracts with customers
Recognized in the current period
Currency translation adjustment
Balance at December 31, 2023
F-21
Years Ended
December,
2023
2,400,053 $
153,719
864,548
3,418,320 $
2022
1,893,862
172,633
540,798
2,607,293
$
$
Years Ended
December,
2023
678,093 $
2,740,227
3,418,320 $
2022
520,614
2,086,679
2,607,293
$
$
$
$
-
142,061
142,061
74,109
(144,196)
(46,048)
25,926
Contract assets
The Company had no contract assets as of December 31, 2023 and 2022, which are generated when contractual billing schedules differ from revenue
recognition timing. Contract assets represent a conditional right to consideration for satisfied performance obligations that becomes a billed receivable
when the conditions are satisfied.
Unsatisfied performance obligations
The Company had no unsatisfied performance obligations related to its contracts with customers at December 31, 2023 and 2022.
Note 5 - Fair value measurements
The Company classifies its financial instruments using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers
include:
● Level 1 - defined as observable inputs such as quoted prices in active markets;
● Level 2 - defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and
● Level 3 - defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions such
as expected revenue growth and discount factors applied to cash flow projections.
During the year ended December 31, 2023, the Company has not transferred any assets between fair value measurement levels.
Financial assets and liabilities measured at fair value on a recurring basis
The Company evaluates financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level at which to
classify them each reporting period. This determination requires the Company to make subjective judgments as to the significance of inputs used in
determining fair value and where such inputs lie within the hierarchy.
In 2016, Curetis entered into a contract for an up to €25.0 million senior, unsecured loan financing facility from the EIB (see Note 6). In June 2019, Curetis
drew down a third tranche of €5.0 million from the EIB. In return for the EIB waiving the condition precedent of a minimum cumulative equity capital
raised of €15.0 million to disburse this €5.0 million tranche, the parties agreed on a 2.1% participation percentage interest (“PPI”). Upon maturity of the
tranche, the EIB would be entitled to an additional payment that is equity-linked and equivalent to 2.1% of the then total valuation of Curetis N.V. On
July 9, 2020, the Company negotiated an amendment to the EIB debt financing facility. As part of the amendment, the parties adjusted the PPI percentage
applicable to the previous EIB tranche of €5.0 million which was funded in June 2019 from its original 2.1% PPI in Curetis N.V.’s equity value upon
maturity to a new 0.3% PPI in OpGen’s equity. On May 23, 2022, the Company entered into a Waiver and Amendment Letter which increased the PPI to
0.75% upon maturity. This right constituted an embedded derivative, which is separated and measured at fair value with changes being accounted for
through profit or loss. The Company determines the fair value of the derivative using a Monte Carlo simulation model. Using this model, level 3
unobservable inputs include estimated discount rates and estimated risk-free interest rates.
F-22
Following Curetis’ insolvency filing, on November 20, 2023, Curetis received a termination notice from the EIB terminating the Standstill Agreement
effective as of November 20, 2023. On December 4, 2023, the Company received a notice from the EIB stating that Curetis is in default of the Finance
Contract as a result of, among other things, Curetis’ failure to repay when due certain outstanding indebtedness under the Finance Contract. Pursuant to that
certain Guarantee and Indemnity Agreement, dated July 9, 2020, between the EIB and the Company, the EIB demanded that the Company, as guarantor,
immediately repay the EIB all amounts owed to the EIB under the Finance Contract and reserved all its other rights and remedies in connection with the
Finance Contract. The Company determined the fair value of the PPI using the Monte Carlo simulation model as of December 31, 2023, but as the EIB
demanded that OpGen immediately repay the aggregate amount of principal, accrued interest and all other amounts owed, the Company included the PPI
component along with the principal and interest in short-term notes payable as of December 31, 2023.
The fair value of level 3 liabilities measured at fair value on a recurring basis for the years ended December 31, 2023 and 2022 was as follows:
Description
Participation percentage interest liability
Total revenue
Description
Participation percentage interest liability
Total revenue
Balance at
December 31,
2022
Change in
Fair Value
Effect of
Foreign
Exchange
Rates
Balance at
December 31,
2023
$
$
99,498 $
99,498 $
(65,876) $
(65,876) $
(33,622) $
(33,622) $
-
-
Balance at
December 31,
2021
Change in
Fair Value
Effect of
Foreign
Exchange
Rates
Balance at
December 31,
2022
$
$
228,589 $
228,589 $
(113,741) $
(113,741) $
(15,350) $
(15,350) $
99,498
99,498
Financial assets and liabilities carried at fair value on a non-recurring basis
The Company does not have any financial assets and liabilities measured at fair value on a non-recurring basis.
Non-financial assets and liabilities carried at fair value on a recurring basis
The Company does not have any non-financial assets and liabilities measured at fair value on a recurring basis.
Non-financial assets and liabilities carried at fair value on a non-recurring basis
The Company measures its long-lived assets, including property and equipment and intangible assets (including goodwill), at fair value on a non-recurring
basis when a triggering event requires such evaluation. During the year ended December 31, 2023, the Company recorded impairment expense of
$1,231,874 related to its property and equipment (see Note 3) and $849,243 related to its right-of-use lease asset (see Note 3). During the year ended
December 31, 2022, the Company recorded impairment expense of $6,940,549 related to its goodwill (see Note 3) and $5,407,699 related to its indefinite-
lived intangible asset (see Note 3).
F-23
Note 6 - Debt
The following table summarizes the Company’s long-term debt and short-term borrowings as December 31, 2023 and 2022:
EIB
Total debt obligations
Unamortized debt discount
Carrying value of debt
Less current portion
Long-term debt
EIB Loan Facility
December 31,
2023
10,873,867 $
10,873,867
-
10,873,867
(10,873,867)
- $
$
$
2022
13,489,178
13,489,178
(1,614,591)
11,874,587
(7,023,901)
4,850,686
In 2016, Curetis entered into a contract for an up to €25.0 million senior, unsecured loan financing facility from the EIB. The funding could be drawn in up
to five tranches within 36 months of entry into the contract, under the EIB amendment, and each tranche was to be repaid upon maturity five years after
draw-down.
In April 2017, Curetis drew down a first tranche of €10.0 million from this facility. This tranche had a floating interest rate of EURIBOR plus 4% payable
after each 12-month-period from the draw-down-date and another additional 6% interest per annum that is deferred and payable at maturity together with
the principal. In June 2018, a second tranche of €3.0 million was drawn down. The terms and conditions are analogous to the first one. In June 2019,
Curetis drew down a third tranche of €5.0 million from the EIB. In line with all prior tranches, the majority of interest is also deferred until repayment upon
maturity. In return for the EIB waiving the condition precedent of a minimum cumulative equity capital raised of €15.0 million to disburse this €5.0 million
third tranche, the parties agreed on a 2.1% PPI. Upon maturity of the tranche, the EIB would be entitled to an additional payment that is equity-linked and
equivalent to 2.1% of the then total valuation of Curetis N.V. As part of the amendment between the Company and the EIB on July 9, 2020, the parties
adjusted the PPI percentage applicable to the third EIB tranche of €5.0 million, which was funded in June 2019, from its original 2.1% PPI in Curetis N.V.’s
equity value upon maturity to a new 0.3% PPI in OpGen’s equity value upon maturity. This right constituted an embedded derivative, which is separated
and measured at fair value with changes being accounted for through income or loss. The EIB debt was measured and recognized at fair value as of the
acquisition date. The fair value of the EIB debt was approximately €14.4 million (approximately $15.8 million) as of the acquisition date. The resulting
debt discount will be amortized over the life of the EIB debt as an increase to interest expense.
On May 23, 2022, the Company and the EIB entered into a Waiver and Amendment Letter (the “2022 EIB Amendment”) relating to the amendment of the
EIB loan facility, between the EIB and Curetis, pursuant to which Curetis borrowed an aggregate amount of €18.0 million in three tranches. The 2022 EIB
Amendment restructured the first tranche of approximately €13.4 million (including accumulated and deferred interest) of the Company’s outstanding
indebtedness with the EIB. Pursuant to the 2022 EIB Amendment, the Company repaid €5.0 million to the EIB in April 2022. The Company also agreed,
among other things, to amortize the remainder of the debt tranche over the twelve-month period beginning in May 2022. Accordingly, the Company agreed
to pay a monthly amount of approximately €0.7 million through April 2023. The Amendment also provided for an increase of the PPI applicable to the
third tranche under the loan facility from 0.3% to 0.75%. The terms of the second and third tranches of the Company’s indebtedness of €3.0 million and
€5.0 million, respectively, plus accumulated deferred interest, remained unchanged pursuant to the 2022 EIB Amendment. The second tranche became due
and payable by the Company to the EIB in June 2023, and the third tranche will become due and payable in June 2024. As the effective borrowing rate
under the amended agreement is less than the effective borrowing rate under the previous agreement, a concession is deemed to have been granted under
ASC 470-60. As a concession has been granted, the agreement was accounted for as a troubled debt restructuring under ASC 470-60. The amendment did
not result in a gain on restructuring as the future undiscounted cash outflows required under the amended agreement exceed the carrying value of the debt
immediately prior to the amendment.
F-24
On June 26, 2023, the Company announced that its subsidiary Curetis and the European Investment Bank (“EIB”) agreed in principle to certain terms
relating to the repayment of the second tranche of Curetis’ loan from the EIB pursuant to that certain Finance Contract, dated December 12, 2016, as
amended, by and between Curetis and the EIB (the “Finance Contract”). The second tranche had a principal balance of €3 million plus accumulated and
deferred interest. The second tranche was drawn down in June 2018 and matured on June 22, 2023. On July 4, 2023, the EIB and Curetis entered into a
Standstill Agreement pursuant to which the EIB agreed that, with respect to each default or event of default relating to such second tranche, the EIB would
not take any action or exercise any right under the Finance Contract until the earlier of a restructuring of the second tranche and November 30, 2023. As a
condition to entering into the Standstill Agreement, Curetis paid the EIB a partial payment of interest on the second tranche of €1 million on June 22, 2023.
In addition, Curetis agreed to certain undertakings during the standstill period, including the delivery of a rolling cash flow forecast and to cause a third-
party restructuring expert to prepare and deliver a restructuring opinion to the EIB. EIB could terminate the Standstill Agreement upon notice to Curetis if,
among other customary termination rights, Curetis or the guarantors fail to comply with any undertakings in the Standstill Agreement, the third party expert
determines that there are no prospects for a successful restructuring of the second tranche and that it therefore will be unable to issue a restructuring
opinion, or the cash flow forecast shows a negative liquidity shortfall during the specified period.
On November 20, 2023, Curetis received a termination notice from the EIB terminating the Standstill Agreement effective as of November 20, 2023. The
EIB’s termination notice stated that the termination of the Standstill Agreement was as a result of and in connection with certain defaults of the Standstill
Agreement arising from, among other related reasons, Curetis’ and Ares’ entry into insolvency proceedings. On December 4, 2023, the Company received
a notice from the EIB stating that Curetis is in default of the Finance Contract as a result of, among other things, Curetis’ failure to repay when due certain
outstanding indebtedness under the Finance Contract. In its notice, the EIB stated that, as of November 16, 2023, the aggregate amount of principal,
accrued interest and all other amounts owed by Curetis to the EIB under the Finance Contract was approximately 9.66 million euro and that interest will
continue to accrue in accordance with the Finance Contract until all amounts owed are paid in full. Pursuant to that certain Guarantee and Indemnity
Agreement, dated July 9, 2020 (the “Guaranty”), between the EIB and the Company, the EIB demanded that the Company, as guarantor, immediately repay
the EIB all amounts owed to the EIB under the Finance Contract and reserved all of its other rights and remedies in connection with the Finance Contract.
As of the year ended December 31, 2023, the Guaranty remained unpaid and outstanding, with the liability reflected on the Company’s financial
statements, which was previously on Curetis’ balance sheet.
In connection with the Company’s entry into the March 2024 Purchase Agreement with David E. Lazar on March 25, 2024, the Company entered into
settlement agreements with each of the EIB and Curetis and Curetis’ trustee in insolvency, pursuant to which the parties agreed to settle outstanding
liabilities amongst the parties. Pursuant to the settlement agreements, following the final closing of the transactions contemplated by the March 2024
Purchase Agreement, the Company will pay $2.0 million of the proceeds to settle all outstanding debt of the Company to each of EIB and Curetis. The
settlement agreement with EIB also terminated the Guaranty (see Note 12).
As of December 31, 2023, the outstanding borrowings under all tranches were €9.8 million (approximately $10.9 million), including deferred interest
payable at maturity of €1.5 million (approximately $1.7 million).
Total interest expense (including amortization of debt discounts and financing fees) on all debt instruments was $1,838,933 and $3,256,410 for the years
ended December 31, 2023 and 2022, respectively.
F-25
Note 7 - Stockholders’ Equity
As of December 31, 2023, the Company had 100,000,000 shares of authorized common stock and 1,282,686 shares issued and outstanding, and 10,000,000
shares of authorized preferred stock, of which 250 were issued and outstanding.
Following receipt of approval from stockholders at a special meeting of stockholders held on November 30, 2022, the Company filed an amendment to its
Amended and Restated Certificate of Incorporation to effect a reverse stock split of the issued and outstanding shares of common stock, at a ratio of one
share for twenty shares, and the reverse stock split was effective January 5, 2023. All share amounts and per share prices in this Annual Report have been
adjusted to reflect the reverse stock split.
Following receipt of approval from stockholders at a special meeting of stockholders held on May 9, 2024, the Company filed an amendment to its
Amended and Restated Certificate of Incorporation to effect a reverse stock split of the issued and outstanding shares of common stock, at a ratio of one
share for ten shares, and the reverse stock split was effective May 20, 2024. All share amounts and per share prices in this Annual Report have been
adjusted to reflect the reverse stock split (see Note 12).
On June 24, 2022, the Company entered into an At-the-Market, or ATM, Offering Agreement (the “2022 ATM Agreement”) with H.C. Wainwright & Co.,
LLC (“Wainwright”), as a sales agent, pursuant to which the Company may offer and sell from time to time in an “at the market offering”, at its option, up
to an aggregate of $10.65 million of shares of the Company’s common stock through Wainwright. As of December 31, 2022, the Company sold 8,574
shares under the 2022 ATM Agreement totaling $1.03 million in gross proceeds and $0.99 million in net proceeds. The Company did not sell any shares
under the 2022 ATM Agreement in 2023.
On October 3, 2022, the Company closed a registered direct offering of shares of common stock and Series C Mirroring Preferred Stock pursuant to a
securities purchase agreement entered into with a certain institutional investor. In the offering, the Company agreed to issue and sell to the investor (i)
26,800 shares of the Company’s common stock, par value $0.01 per share, (ii) 33,810 shares of the Company’s Series C Mirroring Preferred Stock, par
value $0.01 per share and stated value of $0.01 per share, and (iii) pre-funded warrants to purchase an aggregate of 21,500 shares of common stock. Each
share of common stock was sold at a price of $70.00 per share, each share of preferred stock was sold at a price of $0.01 per share, and each pre-funded
warrant was sold at an offering price of $68.00 per share underlying such pre-funded warrants, for aggregate gross proceeds of $3.34 million before
deducting the placement agent’s fees and the offering expenses, and net proceeds of $3.04 million. Under the purchase agreement, the Company also
agreed to issue and sell to the investor, in a concurrent private placement, warrants to purchase an aggregate of 48,300 shares of common stock. In
connection with the offering, the Company also entered into a warrant amendment agreement with the investor pursuant to which the Company agreed to
amend certain existing warrants to purchase up to 74,150 shares of common stock that were previously issued to the investor in 2018 and 2021, with
exercise prices ranging from $410.00 to $13,000.00 per share as a condition to their purchase of the securities in the offering, as follows: (i) lower the
exercise price of the investor’s existing warrants to $75.40 per share, (ii) provide that the existing warrants, as amended, will not be exercisable until six
months following the closing date of the offering, and (iii) extend the original expiration date of the existing warrants by five and one-half years following
the close of the offering. The increase in fair value resulting from the warrant modifications is accounted for as an equity issuance cost, resulting in a debit
and credit to additional paid in capital for approximately $1.8 million. As of December 31, 2022, all 21,500 pre-funded warrants were exercised and all
33,810 shares of the Company’s Series C Mirroring Preferred Stock were automatically cancelled and ceased to be outstanding following receipt of
stockholder approval for the Company’s reverse stock split on November 30, 2022. In connection with the Company’s best-efforts public offering
consummated in May 2023, the Company amended the exercise price of the existing warrants to $7.785 per share.
F-26
On January 11, 2023, the Company closed a best-efforts public offering pursuant to a securities purchase agreement with a certain institutional investor for
the purchase of (i) 32,121 shares of the Company’s common stock, par value $0.01 per share, (ii) pre-funded warrants to purchase up to an aggregate of
226,500 shares of common stock (the “Pre-funded Warrants”), (iii) Series A-1 common warrants to purchase an aggregate of 258,621 shares of common
stock (the “Series A-1 Warrants”), and (iv) Series A-2 common warrants to purchase an aggregate of 258,621 shares of common stock (the “Series A-2
Warrants,” and together with the Series A-1 Warrants, the “Common Warrants”). Each share of common stock and accompanying Common Warrants were
sold at a price of $29.00 per share and accompanying Common Warrants, and each Pre-funded Warrant and accompanying Common Warrants were sold at
an offering price of $28.90 per share underlying such Pre-funded Warrants and accompanying Common Warrants, for aggregate gross proceeds of
approximately $7.5 million before deducting the placement agent’s fees and the offering expenses, and net proceeds of approximately $6.9 million. The
Common Warrants have an exercise price of $26.50 per share. The Series A-1 Warrants were immediately exercisable upon issuance, and will expire five
years following the issuance date. The Series A-2 Warrants were immediately exercisable upon issuance, and will expire eighteen months following the
issuance date. Subject to certain ownership limitations described in the Pre-funded Warrants, the Pre-funded Warrants were immediately exercisable and
could be exercised at a nominal consideration of $0.10 per share of common stock any time until all the Pre-funded Warrants are exercised in full. All Pre-
funded Warrants were exercised by February 15, 2023. In connection with the Company’s best-efforts public offering consummated in May 2023, the
Company amended the exercise price of the Common Warrants to $7.785 per share.
On May 4, 2023, the Company closed a best-efforts public offering pursuant to a securities purchase agreement with a certain institutional investor,
pursuant to which the Company issued and sold to the Investor (i) 60,500 shares of the Company’s common stock, par value $0.01 per share, (ii) pre-
funded warrants to purchase up to an aggregate of 389,083 shares of common stock, and (iii) common warrants to purchase up to an aggregate of 449,583
shares of common stock. Each share of common stock and accompanying common warrant was sold at a price of $7.785 per share and accompanying
common warrant, and each pre-funded warrant and accompanying common warrant was sold at an offering price of $7.685 per share underlying such pre-
funded warrant and accompanying common warrant, for aggregate gross proceeds of approximately $3.5 million and net proceeds of approximately $3.0
million. The common warrants have an exercise price of $7.785 per share and will be exercisable beginning on the date of stockholder approval of the
exercisability of the warrants under Nasdaq rules or may be exercised through October 26, 2023, pursuant to the Warrant Inducement Agreement entered
into on October 12, 2023. Pursuant to amendment agreements entered into by the Company and Holder on October 26, 2023 and February 7, 2024, the
Company agreed to initially extend the offer period until December 31, 2023, and subsequently extend the offer period until April 30, 2024 (see Note 12).
In order to permit the exercise of the Existing Warrants pursuant to the rules of the Nasdaq Capital Market, the Holder agreed to pay as additional
consideration $0.25 per share of common stock issued upon exercise of the Existing Warrants. The common warrants not exercised as part of the
Inducement Agreement will expire on the five-year anniversary of the date of such stockholder approval. Each pre-funded warrant has an exercise price per
share of common stock equal to $0.10 per share and may be exercised at any time until the pre-funded warrants are exercised in full. In connection with the
offering, the Company also entered into a warrant amendment agreement with the investor pursuant to which the Company amended certain existing
warrants to purchase up to 639,691 shares of common stock that were previously issued in 2018, 2021, 2022 and 2023 to the investor, with exercise prices
ranging from $26.50 to $75.40 per share, in consideration for their purchase of the securities in the offering, as follows: (i) lower the exercise price of the
existing warrants to $7.785 per share, (ii) provide that the existing warrants, as amended, will not be exercisable until the receipt of stockholder approval
for the exercisability of the common warrants in the offering, and (iii) extend the original expiration date of the existing warrants by five years following
the receipt of such stockholder approval. The increase in fair value resulting from the warrant modifications is accounted for as an equity issuance cost,
resulting in a debit and credit to additional paid in capital of approximately $0.3 million. As of December 31, 2023, the Holder exercised 200,000 shares of
Common Stock under the existing warrants pursuant to the Inducement Agreement for aggregate gross proceeds to the Company of $2.057 million before
deducting financial advisory fees and other expenses payable by the Company.
F-27
On October 11, 2023, the Company entered into a Preferred Stock Purchase Agreement (the “Purchase Agreement”) with a single investor (the “Investor”),
pursuant to which the Company agreed to issue and sell to the Investor in a private placement (the “Private Placement”) 1,000 shares of the Company’s
Series D Preferred Stock, par value $0.01 per share (the “Preferred Stock”). Each share of preferred stock was agreed to sell at a price of $1,000 per share
for expected aggregate gross proceeds of $1.0 million before deducting offering expenses. The Private Placement was conducted in connection with the
negotiation of a potential strategic transaction involving the Company and the Investor. The Company intended to use the proceeds of the Private
Placement to fund the Company’s operations while it pursued a potential strategic transaction with the Investor. Pursuant to the Purchase Agreement, the
Company filed a certificate of designation (the “Certificate of Designation”) with the Secretary of State of the State of Delaware designating the rights,
preferences and limitations of the shares of preferred stock on October 11, 2023. The Certificate of Designation provides that the shares of preferred stock
have a stated value of $1,000 per share and are convertible into shares of common stock, par value $0.01 per share of the Company at a price of $4.09 per
share, subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications, or similar events
affecting the common stock. The preferred stock may be converted at any time at the option of the holder. Notwithstanding the foregoing, the Certificate of
Designation provides that in no event will the preferred stock be convertible into common stock in a manner that would result in the holder, its permitted
transferees and affiliates holding more than 19.99% (together with any shares of common stock otherwise held by the Investor, its permitted transferees and
their affiliates) of the then issued and outstanding common stock (the “Ownership Limitation”), prior to the date that the Company’s stockholders approve
the issuance of shares of common stock to the holder upon conversion of the preferred stock (the “stockholder approval”). Upon receipt of stockholder
approval, the shares of preferred stock will automatically be converted into shares of common stock without further action of the holder thereof. The
Investor funded $250,000 of the expected aggregate gross proceeds of $1.0 million before deducting offering expenses on November 14, 2023. On
December 13, 2023, in coordination with the Investor, the Company issued to the Investor 250 shares of Series D Preferred Stock in consideration for the
partial payment. As of December 31, 2023, all 250 Series D Preferred Shares remain outstanding and the remaining $750,000 of the purchase price remains
unpaid. The Company reserves all rights and remedies arising from the Investor’s failure to close the transaction and the Investor will continue to be in
breach of the Purchase Agreement until the remaining amount is paid in full.
On October 12, 2023, the Company entered into a warrant inducement agreement (the “Inducement Agreement”) with a holder (the “Holder”) of certain
existing warrants (the “Existing Warrants”) to purchase shares of common stock, par value $0.01 per share, of the Company. Pursuant to the Inducement
Agreement, the Holder agreed to exercise for cash their Existing Warrants to purchase up to 1,089,274 shares of the Company’s common stock at an
exercise price of $7.785 per share, the exercise price per share of the Existing Warrants, during the period from the date of the Inducement Agreement until
7:30 a.m., Eastern Time, on October 26, 2023. Pursuant to amendment agreements entered into by the Company and Holder on October 26, 2023 and
February 7, 2024, the Company agreed to initially extend the offer period until December 31, 2023, and subsequently extend the offer period until April 30,
2024 (see Note 12). In order to permit the exercise of the Existing Warrants pursuant to the rules of the Nasdaq Capital Market, the Holder agreed to pay as
additional consideration $0.25 per share of common stock issued upon exercise of the Existing Warrants. In consideration of the Holder’s agreement to
exercise the Existing Warrants in accordance with the Inducement Agreement, the Company agreed to issue new warrants (the “Inducement Warrants”) to
purchase shares of common stock equal to 100% of the number of shares of common stock issued upon exercise of the Existing Warrants (the “Inducement
Warrant Shares”). The Inducement Warrants will have an exercise price of $3.36 per share and will be exercisable on the six-month anniversary of the date
of issuance and expire on the five-year anniversary of the Inducement Warrant’s first becoming exercisable. As of December 31, 2023, the Holder exercised
200,000 shares of Common Stock under the existing warrants pursuant to the Inducement Agreement for aggregate gross proceeds to the Company of
$2.057 million before deducting financial advisory fees and other expenses payable by the Company.
F-28
Stock options
In 2008, the Company adopted the 2008 Stock Option and Restricted Stock Plan (the “2008 Plan”), pursuant to which the Company’s Board of Directors
could grant either incentive or non-qualified stock options or shares of restricted stock to directors, key employees, consultants and advisors.
In April 2015, the Company adopted, and the Company’s stockholders approved, the 2015 Equity Incentive Plan (the “2015 Plan”); the 2015 Plan became
effective upon the execution and delivery of the underwriting agreement for the Company’s initial public offering in May 2015. Following the effectiveness
of the 2015 Plan, no further grants will be made under the 2008 Plan. The 2015 Plan provides for the granting of incentive stock options within the
meaning of Section 422 of the Code to employees and the granting of non-qualified stock options to employees, non-employee directors and consultants.
The 2015 Plan also provides for the grants of restricted stock, restricted stock units, stock appreciation rights, dividend equivalents and stock payments to
employees, non-employee directors and consultants.
Under the 2015 Plan, the aggregate number of shares of the common stock authorized for issuance may not exceed (1) 271 plus (2) the sum of the number
of shares subject to outstanding awards under the 2008 Plan as of the 2015 Plan’s effective date, that are subsequently forfeited or terminated for any reason
before being exercised or settled, plus (3) the number of shares subject to vesting restrictions under the 2008 Plan as of the 2015 Plan’s effective date that
are subsequently forfeited. In addition, the number of shares that have been authorized for issuance under the 2015 Plan will be automatically increased on
the first day of each fiscal year beginning on January 1, 2016 and ending on (and including) January 1, 2025, in an amount equal to the lesser of (1) 4% of
the outstanding shares of common stock on the last day of the immediately preceding fiscal year, or (2) another lesser amount determined by the
Company’s Board of Directors. Following Board of Director approval, 11,600 shares were automatically added to the 2015 Plan in 2023. Shares subject to
awards granted under the 2015 Plan that are forfeited or terminated before being exercised or settled, or are not delivered to the participant because such
award is settled in cash, will again become available for issuance under the 2015 Plan. However, shares that have actually been issued shall not again
become available unless forfeited. As of December 31, 2023, 11,852 shares remain available for issuance under the 2015 Plan.
For the years ended December 31, 2023 and 2022, the Company recognized share-based compensation expense as follows:
Cost of services
Research and development
General and administrative
Sales and marketing
Years Ended
December 31,
2023
2022
$
$
(442) $
(10,647)
333,863
(86,800)
235,974 $
10,092
302,021
497,128
141,694
950,935
No income tax benefit for share-based compensation arrangements was recognized in the consolidated statements of operations and comprehensive loss
due to the Company’s net loss position.
As of December 31, 2023, the Company had unrecognized expense related to its stock options of $0.3 million, which will be recognized over a weighted
average period of 1.2 years.
F-29
A summary of the status of options granted is presented below as of and for the years ended December 31, 2023 and 2022:
Outstanding at December 31, 2021
Granted
Exercised
Forfeited
Expired
Outstanding at December 31, 2022
Granted
Exercised
Forfeited
Expired
Outstanding at December 31, 2023
Vested and expected to vest
Exercisable at December 31, 2023
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Life (in years)
Aggregate
Intrinsic
Value
Number of
Options
8,567 $
2,813 $
- $
(324) $
(295) $
10,761 $
- $
- $
(420) $
(717) $
9,624 $
9,624 $
7,433 $
1,376.00
156.10
-
311.10
6,417.80
934.50
-
-
299.80
1,012.10
1,064.84
1,064.84
1,378.72
8.5 $
7.9 $
6.8 $
6.8 $
5.1 $
-
-
-
-
-
The total fair value of options vested in the years ended December 31, 2023 and 2022 was $646,606 and $571,282, respectively. The fair value of each
option grant was estimated at the date of grant using the Black-Scholes option pricing model based on the assumptions below:
Annual dividend
Expected life (in years)
Risk free interest rate
Expected volatility
F-30
Years Ended
December 31,
2023
-
-
-
-
2022
-
5.75 – 6.25
1.46% – 4.24%
117.2% – 119.8%
Restricted stock units
A summary of the status of restricted stock units granted is presented below as of and for the years ended December 31, 2023 and 2022:
Unvested at December 31, 2021
Granted
Vested
Forfeited
Unvested at December 31, 2022
Granted
Vested
Forfeited
Unvested at December 31, 2023
Weighted-
Average
Grant Date
Fair Value
406.00
149.40
1,793.50
223.30
173.30
1.06
181.63
19.70
20.55
Number of
Units
1,432 $
3,903 $
(867) $
(177) $
4,291 $
10,500 $
(3,465) $
(2,550) $
8,326 $
As of December 31, 2023, there were approximately $66,000 of unrecognized compensation costs related to restricted stock units, which is expected to be
recognized over a weighted average period of 1.0 years.
Stock purchase warrants
At December 31, 2023 and 2022, the following warrants to purchase shares of common stock were outstanding:
Issuance
February 2015
February 2018
February 2018
October 2019
October 2019
November 2020
February 2021
October 2022
May 2023
October 2023
Exercise
Price
660,000.00
16,250.00
13,000.00
400.00
520.00
504.40
780.00
75.40
7.785
3.36
$
$
$
$
$
$
$
$
$
$
Expiration
February 2025
February 2023
February 2023
October 2024
October 2024
May 2026
August 2026
April 2028
(2)
April 2029
Outstanding at
December 31,
2023 (1)
2022 (1)
3
-
-
1,770
1,175
1,211
2,084
-
889,274
200,000
1,095,517
3
47
385
1,770
1,175
1,211
2,084
122,450
-
-
129,125
The warrants listed above were issued in connection with various equity, debt, or development contract agreements.
(1) Warrants to purchase fractional shares of common stock resulting from the reverse stock splits effected on January 5, 2023 and May 20, 2024 were
rounded up to the next whole share of common stock on a holder by holder basis.
(2) Warrants will be exercisable beginning on the date of stockholder approval of the exercisability of the warrants under Nasdaq rules or, pursuant to the
Warrant Inducement Agreement entered into on October 12, 2023, as amended on October 26, 2023 and February 7, 2024 (the “Inducement
Agreement”), upon the payment of additional consideration of $0.25 per share of common stock issued upon exercise of any existing warrants (see
Note 12). The warrants not exercised as part of the Inducement Agreement will expire on the five-year anniversary of the date of such stockholder
approval.
F-31
Note 8 - Income Taxes
The Company’s loss before income taxes was $32.7 million and $37.3 million for the years ended December 31, 2023 and 2022, respectively.
The Company’s provision for income taxes consists of the following for the years ended December 31, 2023 and 2022:
Current income tax provision
Federal
State
Foreign
Total
Deferred income tax provision
Federal
State
Foreign
Total
Total provision for income taxes
December 31,
2023
2022
$
$
- $
-
-
-
-
-
-
-
- $
-
-
-
-
-
-
-
-
-
At December 31, 2023 and 2022, the Company had deferred tax assets of $110,664,601 and $106,624,343, respectively, primarily due to NOL
carryforwards, research and development (“R&D”) credits, and the deconsolidation of subsidiaries. The Company’s net deferred tax assets at December 31,
2023 and 2022 have been offset by a valuation allowance of $110,358,421 and $106,060,462, respectively. The valuation allowance has been recorded due
to the uncertainty of realization of the deferred tax assets. The Company’s deferred tax assets and liabilities as of December 31, 2023 and 2022 are as
follows:
Deferred tax assets:
NOL carryforward
R&D credit carryforward
Share-based compensation
Interest expense
ROU liabilities
Deconsolidation of subsidiary
Accruals and other
Total deferred tax assets
Valuation allowance
Deferred tax liabilities:
Intangible assets
ROU assets
Depreciation
Net
December 31,
2023
2022
$
89,055,237 $ 102,095,463
2,559,479
2,559,479
724,265
729,693
-
-
586,067
553,374
17,161,363
-
659,069
605,455
110,664,601 106,624,343
(110,358,421) (106,060,462)
-
(35)
(306,145)
- $
-
(220,040)
(343,841)
-
$
F-32
The difference between the Company’s expected income tax provision (benefit) from applying federal statutory tax rates to the pre-tax loss and actual
income tax provision (benefit) relates to the effect of the following:
Federal income tax benefit at statutory rates
Permanent adjustment
Provision to return adjustment
State income tax benefit, net of federal benefit
Foreign rate differential
Lost or expired NOLs
Blended state tax rate change effect on deferrals
Change in valuation allowance
Total
2023
2022
21.0%
(0.1)%
0.2%
10.7%
(11.6)%
(7.0)%
0.0%
(13.2)%
0.0%
21.0%
(0.5)%
0.5%
2.2%
3.8%
(28.4)%
1.3%
0.1%
0.0%
Management followed the guidance in ASC 740, which states that “a cumulative loss in recent years is a significant piece of negative evidence that is
difficult to overcome” and concluded that the Company’s net deferred tax assets were not realizable as of December 31, 2023 and 2022. Accordingly, a
valuation allowance of $110.4 million and $106.1 million has been recorded to offset the net deferred tax assets.
The Company has federal NOL carryforwards of $241,110,447 and $232,682,072 at December 31, 2023 and 2022, respectively. The NOL carryforwards
incurred prior to 2018 began expiring in 2023. In December 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the
Tax Cuts and Jobs Act (the "Tax Act"), most of the provisions of which took effect starting in 2018. Under the Tax Act, the amount of post 2017 NOLs that
we are permitted to deduct in any taxable year is limited to 80% of our taxable income in such year, where taxable income is determined without regard to
the NOL deduction itself. In addition, the Tax Act generally eliminates the ability to carry back any NOL to prior taxable years, while allowing post 2017
unused NOLs to be carried forward indefinitely. Utilization of the NOL carryforwards may be subject to an annual limitation as provided by Section 382 of
the Code, defined earlier. There can be no assurance that the NOL carryforwards will ever be fully utilized. To date, the Company has not performed a
formal study to determine if any of its remaining NOL and credit attributes might be further limited due to the ownership change rules of Section 382 or
Section 383 of the Code, as amended. The Company will continue to monitor this matter going forward. There can be no assurance that the NOL
carryforwards will ever be fully utilized.
On March 27, 2020, the United States enacted the CARES Act. The CARES Act is an emergency economic stimulus package that includes spending and
tax breaks to strengthen the United States economy and fund a nationwide effort to curtail the effect of COVID-19. While the CARES Act provides
sweeping tax changes in response to the COVID-19 pandemic, some of the more significant provisions which are expected to impact the Company’s
financial statements include removal of certain limitations on utilization of net operating losses, increasing the loss carryback period for certain losses to
five years, and increasing the ability to deduct interest expense, as well as amending certain provisions of the previously enacted Tax Cuts and Jobs Act.
The Company doesn’t believe that the CARES Act will have a material impact on its financial position, results of operations, or cash flows.
The Tax Act amended IRC Section 174 to require capitalization of all research and development ("R&D") costs incurred in tax years beginning after
December 31, 2021. These costs are required to be amortized over five years if the R&D activities are performed in the U.S., or over 15 years if the
activities were performed outside the U.S. The Company capitalized approximately $23 thousand of R&D expenses incurred as of December 31, 2023.
F-33
Note 9 - Commitments and Contingencies
Registration and other stockholder rights
In connection with the various investment transactions, the Company entered into certain registration rights agreements with stockholders, pursuant to
which the investors were granted certain demand registration rights and/or piggyback and/or resale registration rights in connection with subsequent
registered offerings of the Company’s common stock.
Note 10 - Leases
The following table presents the Company’s ROU assets and lease liabilities as of December 31, 2023 and 2022:
Lease Classification
ROU Assets:
Operating
Financing
Total ROU assets
Liabilities
Current:
Operating
Finance
Noncurrent:
Operating
Finance
Total lease liabilities
Maturities of lease liabilities as of December 31, 2023 by year are as follows:
December 31,
2023
December 31,
2022
$
$
$
$
- $
138
138 $
1,459,413
3,500
1,462,913
147,943 $
280
377,626
3,364
2,021,616
-
2,169,839 $
2,566,138
280
2,947,408
Maturity of Lease Liabilities
2024
2025
2026
2027
2028
Thereafter
Total lease payments
Less: Interest
Present value of lease liabilities
Operating
$
358,348 $
368,179
378,279
388,682
399,388
1,338,300
3,231,176
(1,061,617)
2,169,559 $
Finance
280 $
-
-
-
-
-
280
-
280 $
Total
358,628
368,179
378,279
388,682
399,388
1,338,300
3,231,456
(1,061,617)
2,169,839
$
F-34
Consolidated statements of operations classification of lease costs as of the years ended December 31, 2023 and 2022 are as follows:
Classification
Operating expenses
Operating expenses
Other expenses
Years ended
December 31,
2023
2022
582,001 $
605,139
3,362
-
585,363 $
86,967
1,701
693,807
$
$
Lease Cost
Operating
Finance:
Amortization
Interest expense
Total lease costs
Other lease information as of December 31, 2023 is as follows:
Other Information
Weighted average remaining lease term (in years)
Operating leases
Finance leases
Weighted average discount rate:
Operating leases
Finance leases
Supplemental cash flow information as of the years ended December 31, 2023, and 2022 is as follows:
Supplemental Cash Flow Information
Cash paid for amounts included in the measurement of lease liabilities
Cash used in operating activities
Operating leases
Finance leases
Cash used in financing activities
Finance leases
ROU assets obtained in exchange for lease obligations:
Operating leases
Note 11 - License Agreements, Research Collaborations and Development Agreements
Sandoz
Total
8.2
0.1
10.0%
1.0%
2023
2022
$
$
$
$
582,001 $
- $
605,139
1,701
3,364 $
43,150
801,321 $
-
In December 2018, Ares Genetics entered into a service frame agreement with Sandoz International GmbH (“Sandoz”), to leverage Ares Genetics’
database on the genetics of antibiotic resistance, ARESdb, and the ARES Technology Platform for Sandoz’ anti-infective portfolio.
Under the terms of the framework agreement, which had an initial term of 36 months and was subsequently extended to January 31, 2025, Ares Genetics
and Sandoz intended to develop a digital anti-infectives platform, combining established microbiology laboratory methods with advanced bioinformatics
and artificial intelligence methods to support drug development and life-cycle management. The collaboration, in the short- to mid-term, aimed to both
rapidly and cost-effectively re-purpose existing antibiotics and design value-added medicines with the objective of expanding indication areas and to
overcome antibiotic resistance, in particular with regards to infections with bacteria that have already developed resistance against multiple treatment
options. In the longer-term, the platform was expected to enable surveillance for antimicrobial resistant pathogens to inform antimicrobial stewardship and
the development of novel anti-infectives that are less prone to encounter resistance and thereby preserve antibiotics as an effective treatment option.
Following Ares Genetics’ insolvency filing, the Company will no longer benefit from this framework agreement.
F-35
Qiagen
On February 18, 2019, Ares Genetics and Qiagen GmbH, or Qiagen, entered into a strategic licensing agreement for ARESdb and AREStools, in the area
of AMR research. The agreement has a term of 20 years and may be terminated by Qiagen for convenience with 180 days written notice.
Ares Genetics has retained the rights to use ARESdb and AREStools for AMR research, customized bioinformatics services, and for the development of
specific AMR assays and applications for the Curetis Group (including Ares Genetics), as well as third parties (e.g., other diagnostics companies or
partners in the pharmaceutical industry). As the Qiagen research offering is expected to also enable advanced molecular diagnostic services and products,
Qiagen’s customers may obtain a diagnostic use license from Ares Genetics.
Under the terms of the original agreement, Qiagen, in exchange for a moderate six figure up-front licensing payment, has received an exclusive RUO
license to develop and commercialize general bioinformatics offerings and services for AMR research use only, based on Ares Genetics’ database on the
genetics of antimicrobial resistance, ARESdb, as well as on the ARES bioinformatics AMR toolbox, AREStools. Under the agreement, the parties had
agreed to a mid-single digit percentage royalty rate on Qiagen net sales, which is subject to a minimum royalty rate that steps up upon certain achieved
milestones, which is payable to Ares Genetics. The parties also agreed to further modest six figure milestone payments upon certain product launches. The
contract was subsequently amended in May 2021 to a non-exclusive license and a flat annual license fee as well as a royalty percentage on potential future
panel-based products that are developed by Qiagen. Following the insolvency filings of Curetis and Ares Genetics, the Company will no longer benefit
from this strategic licensing agreement.
Siemens
In 2016, Ares Genetics acquired the GEAR assets from Siemens Technology Accelerator GmbH (“STA”), providing the original foundation to ARESdb.
Under the agreement with STA, Ares Genetics incurs royalties on revenues from licensed product sales or sublicensing proceeds. Royalty rates under the
Siemens agreement range from 1.3% to 40% depending on the specifics of the licenses and rights provided by Ares Genetics to third parties and whether
such third parties may have been originally introduced by Siemens to Ares Genetics. The total net royalty expense related to this agreement was $7,318 and
$9,546 for the years ended December 31, 2023 and 2022, respectively. Following Ares Genetics’ insolvency filing, the Company will no longer generate
licensed product sales or sublicense revenues nor incur royalty expenses related to the Siemens GEAR assets.
Foundation for Innovative New Diagnostics (FIND)
On September 20, 2022, Curetis GmbH and FIND entered into a research and development collaboration agreement for a total amount due to Curetis of
€0.7 million to develop a simple to use molecular diagnostic test for identification of pathogens and antibiotic resistances in positive blood cultures for
deployment in low- and middle-income countries (“LMICs”). On April 4, 2023, the Company entered into an amendment to its research and development
collaboration agreement with FIND to expand the deliverables in exchange for an additional €0.13 million in milestone payments (“Amendment 1”). The
additional deliverables were completed by June 30, 2023. Following successful completion of the feasibility phase of the collaboration, including the
additional deliverables, FIND and Curetis, on August 1, 2023, extended the research and development collaboration agreement through May 31, 2024, to
include AMR assay and cartridge development, analytical testing, and software development for an additional €0.5 million (“Amendment 2”). The
Company recognized revenues of $0.6 million and $0.3 million from the FIND collaboration for the years ended December 31, 2023 and 2022,
respectively. Following Curetis’ insolvency filing, the Company will no longer benefit from this collaboration agreement.
F-36
Note 12 - Subsequent Events
The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the consolidated financial statements
are issued.
Other than as disclosed in this Note 12 and as was disclosed in Notes 1, 2, 6, and 7 to the accompanying consolidated financial statements, there have been
no subsequent events that require adjustment or disclosure in the accompanying consolidated financial statements.
On February 7, 2024, the Company and a holder (the “Holder”) of certain existing warrants (the “Existing Warrants”) to purchase shares of common stock,
par value $0.01 per share (the “Common Stock”), of the Company agreed to amend (the “Amendment”) that certain warrant inducement agreement entered
into by the Company and the Holder on October 12, 2023 and amended on October 26, 2023 (as amended, the “Inducement Agreement”). Pursuant to the
Inducement Agreement, the Holder agreed to exercise for cash their Existing Warrants to purchase up to 1,089,274 shares of the Company’s Common
Stock at an exercise price of $7.785 per share, the exercise price per share of the Existing Warrants, during the period from the date of the Inducement
Agreement until December 31, 2023. As of December 31, 2023, the Holder exercised 200,000 shares of Common Stock under the Existing Warrants
pursuant to the Inducement Agreement for aggregate gross proceeds to the Company of $2.057 million before deducting financial advisory fees and other
expenses payable by the Company. The Holder did not exercise any additional Existing Warrants after December 31, 2023. Except for the extension of the
offer period pursuant to the Amendment, the terms and conditions of the Inducement Agreement remain unchanged. Since the warrant inducement period
was not extended beyond April 30, 2024, the Company is required to hold a stockholders’ meeting to obtain approval for the exercisability of the existing
common warrants within 70 days of the end of the extension period.
As previously disclosed, on December 11, 2023, the Company requested a hearing by the Nasdaq Hearings Panel (the “Panel”) of The Nasdaq Stock
Market LLC (“Nasdaq”) to appeal the Nasdaq listing staff’s (the “Staff”) determination to delist the Company’s securities as a result of the failure of the
Company’s common stock to comply with the minimum bid price requirement of Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). In response to the
Company’s request, on February 9, 2024, the Company received written notification (the “Notice”) from Nasdaq notifying the Company that the Panel had
granted the Company’s request for an additional period, during which the Company will remain listed on Nasdaq, to regain compliance with the Bid Price
Rule. Pursuant to the Notice, the Panel granted the Company an additional period until June 3, 2024 to regain compliance. The extension is subject to
certain conditions specified by the Panel in the Notice. While the Company intends to comply with such conditions, there can be no assurance that the
Company will be able to regain or remain in compliance with the applicable Nasdaq listing requirements on an ongoing basis or that the Panel will afford
the Company additional time to achieve compliance.
On March 25, 2024, the then-current members of the Board of Directors (the “Board”) approved an increase in the size of the Board and appointed
Mr. Lazar to the Board. On March 25, 2024, in connection with the initial closing of the transactions contemplated by the March 2024 Purchase Agreement
noted below, the then-current members of the Board of Directors (the “Board”) of the Company voted to appoint Avraham Ben-Tzvi, David Natan, and
Matthew C. McMurdo as new, independent directors. The then-current members of the Board thereafter resigned effective as of March 25, 2024. The initial
term as director for Messrs. Ben-Tzvi, Natan, McMurdo, and Lazar will expire at the Company’s 2025 annual meeting of stockholders. At the time of the
election, none of the new directors were appointed to any committees of the Board of Directors. The Board deemed Mr. Ben-Tzvi, Mr. Natan, and
Mr. McMurdo as independent pursuant to Rule 5605 of the Nasdaq Listing Requirements. The Board intends to engage Mr. Lazar as an executive officer of
the Company, and thereby does not deem him independent.
F-37
On March 25, 2024, the Company entered into a securities purchase agreement (the “March 2024 Purchase Agreement”) with David E. Lazar, pursuant to
which the Company agreed to sell 3,000,000 shares of Series E Convertible Preferred Stock (“Series E Preferred Stock”) to Mr. Lazar at a price of $1.00
per share for aggregate gross proceeds of $3.0 million. In connection with the transactions contemplated by the March 2024 Purchase Agreement, the
members of the Board of Directors prior to the closing of such transactions resigned, and a new Board of Directors was appointed, of which Mr. Lazar was
appointed Chairman. On March 25, 2024, Mr. Lazar paid $200,000 at the initial closing of the transactions under the March 2024 Purchase Agreement in
exchange for 200,000 shares of Series E Preferred Stock. Mr. Lazar subsequently paid $200,000 and $150,000 on April 5, 2024 and April 23, 2024,
respectively, in exchange for an additional 350,000 shares of Series E Preferred Stock. Mr. Lazar is expected to fund the remaining $2.45 million in early
June 2024, at which time he will receive the remaining 2.45 million shares of Series E Preferred Stock. Each share of Series E Preferred Stock is
convertible into 2.4 shares of the Company’s common stock (“Common Stock”); provided, that, in no event, will the Series E Preferred Stock be
convertible into Common Stock in a manner that would result in Mr. Lazar or his transferees or their affiliates holding more than the lesser of (i) 19.99%
(together with any other shares of Common Stock otherwise held by them or their affiliates) and (ii) such lower percentage as may be required by
applicable stock exchange rules of the then issued and outstanding Common Stock (the “Ownership Limitation”), prior to the date that the Company’s
stockholders approve the issuance of shares of Common Stock to Mr. Lazar upon conversion of the Series E Preferred Stock. In connection with the
transactions contemplated by the March 2024 Purchase Agreement, the Company entered into settlement agreements (the “Settlement Agreements”) with
each of the European Investment Bank (“EIB”) and Curetis GmbH, the Company’s subsidiary (“Curetis”), and Curetis’ trustee in insolvency, pursuant to
which the Company settled outstanding liabilities amongst the parties. Pursuant to the settlement agreements and the March 2024 Purchase Agreement,
following the final closing of transactions contemplated by the March 2024 Purchase Agreement, the Company will pay $2.0 million of the proceeds to
settle all outstanding debt of the Company to each of EIB and Curetis. The settlement agreement with EIB also terminated that certain Guarantee and
Indemnity Agreement, dated as of July 9, 2020, by and between the EIB and the Company, pursuant to which the Company had guaranteed all of Curetis’
debt to EIB.
On March 26, 2024, the Company entered into an Inducement Offer to Amend Common Stock Purchase Warrants (the “Offer”) with an investor (the
“Investor”). Pursuant to the Offer, the investor agreed to waive certain rights that would otherwise have been triggered under their warrants as a result of
the transactions contemplated by the March 2024 Purchase Agreement, in exchange for the Company entering into the March 2024 Purchase Agreement.
Effective April 1, 2024, the Company entered into a lease assignment agreement where the Company assigned, transferred, set over and conveyed to an
assignee all its estate, right, title and interest in and to the lease at its Rockville, Maryland headquarters. The Company’s security deposit will remain with
the landlord and be repaid over time as agreed upon with the assignee.
On April 11, 2024, the Company entered into an Employment Agreement with David E. Lazar. Pursuant to the Employment Agreement, the Company
engaged Mr. Lazar to act as its Chief Executive Officer (“CEO”). Mr. Lazar will have the customary powers and responsibilities of a CEO of a corporation
of the size and type of the Company. Effective April 1, 2024, Mr. Lazar shall be paid a base salary of $406,000 per annum, which shall be deferred and
accrued until the Company’s compensation committee determines that the Company is sufficiently liquid to pay the accrued salary. Under the Agreement,
Mr. Lazar will also be eligible for certain annual bonuses, annual incentive bonuses, and special bonuses. The Agreement has a three (3) year term.
Mr. Lazar also serves as the Chairman of the Board of Directors of the Company.
F-38
On April 18, 2024, the Company received a notice from The Nasdaq Stock Market LLC (“Nasdaq”) stating that the Company was delinquent in filing its
Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “Form 10-K”) and was therefore not in compliance with Nasdaq Listing
Rule 5250(c)(1). The notice indicated that such delinquency serves as an additional basis for delisting the Company’s securities in addition to the failure to
comply with the Minimum Bid Price Rule described previously. In accordance with the notice, the Company submitted its response to the Nasdaq Hearings
Panel regarding such delinquency and the Company’s plan to cure such delinquency by June 3, 2024, the additional period to regain compliance granted by
such Nasdaq Hearings Panel. The Company plans to file its Form 10-K as soon as practicable; however, no assurance can be given as to the definitive date
on which such reports will be filed or the final decision of the Nasdaq Hearings Panel regarding a delisting of the Company’s securities. As with the prior
notices, the most recent notice from Nasdaq has no immediate effect on the listing of the Company’s securities on The Nasdaq Capital Market.
On April 22, 2024, UHY LLP (“UHY”), the Company’s then-current independent public accounting firm, notified the Company that UHY would resign as
the Company’s auditor effective as of April 22, 2024. During the period of UHY’s engagement, which commenced in March 2023, UHY did not provide
any report on the financial statements of the Company. During the fiscal years ended December 31, 2023 and 2022 and the subsequent interim period
through April 22, 2024, there were no: (1) disagreements with UHY on any matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedures, which disagreements, if not resolved to their satisfaction, would have caused them to make reference in connection with their
opinion to the subject matter of the disagreement, or (2) reportable events under Item 304(a)(1)(v) of Regulation S-K. In light of such resignation, on
April 23, 2024, the Company engaged Beckles & Co., Inc. (“Beckles”) to serve as the Company’s independent registered public accounting firm for the
fiscal year ending December 31, 2023 and upcoming interim period. The appointment of Beckles as the Company’s independent registered public
accounting firm was approved by the Company’s Board of Directors.
On April 23, 2024, the Company entered into a letter agreement with Camtech Pte Ltd, a Singaporean family office (“Camtech”), for the sale of certain of
the Company’s inventory and customer contracts for its Unyvero products. The transaction was entered into following the prior acquisition by Camtech in
April 2024 of the assets from the Company’s subsidiary, Curetis GmbH (“Curetis”), as part of Curetis’ insolvency proceedings. The purchase price for the
transaction is $218,000, and the transaction closed in May 2024. As part of such letter agreement, the Company also offered Camtech the opportunity to
purchase its remaining Unyvero inventory and assets for up to an additional $176,000. Until such sale for the remaining inventory is completed, the
Company will maintain commercial operations and service support for the Unyvero systems. The foregoing transactions are part of the Company’s planned
exit from its Unyvero business, as the Company continues to seek strategic alternatives.
On May 9, 2024, the Company held a special meeting of stockholders (the “Special Meeting”). The Company’s stockholders voted on three proposals, each
of which was described in the Company’s proxy statement for the Special Meeting dated May 9, 2024. At the Special Meeting, shares of the Company’s
capital stock representing 14,795,642 votes out of a total of 26,435,902 votes of the Company’s capital stock, as of April 26, 2024, the record date for the
Special Meeting, were represented in person or by proxy at the Special Meeting. All three of the following proposals were voted upon and approved at the
Special Meeting. Proposal 1 approved (i) the issuance to David E. Lazar of the common stock issuable upon the conversion of the Company’s Series E
Preferred Stock in excess of applicable beneficial ownership limitations, the issuance of which would result in a “change of control” under the rules of The
Nasdaq Capital Market and (ii) an amendment of the Certificate of Designation for the Series E Preferred Stock removing such ownership limitations.
Proposal 2 approved the amendment to the Company’s Amended and Restated Certificate of Incorporation, as amended (the “Charter”), to effect a reverse
stock split at a ratio not less than two-to-one and not more than ten-to-one, such ratio and the implementation and timing of such reverse stock split to be
determined in the discretion of our Board of Directors. Proposal 3 approved of an adjournment of the Special Meeting to a later date, if necessary or
appropriate, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, Proposals 1
and 2. Following the approval of the amendment of the Certificate of Designation, the Company filed the amendment with the Secretary of State of the
State of Delaware on May 9, 2024. Except for the removal of the Ownership Limitation, the amendment does not make any other changes to the Certificate
of Designation.
F-39
On May 16, 2024, the Company entered into an Amendment Agreement (the “Amendment Agreement”) with the European Investment Bank (the “EIB”)
relating to the previously disclosed settlement agreement, dated March 25, 2024, by and between the Company and the EIB (the “Settlement Agreement”).
As previously disclosed, in connection with the sale and issuance of shares of preferred stock of the Company to David E. Lazar (the “Private Placement”),
the Company entered into the Settlement Agreement with the EIB, which provided, among other things, for the settlement of outstanding liabilities
between the EIB, the Company and the Company’s subsidiary, Curetis GmbH (“Curetis”), and the termination of the Company’s guarantee of Curetis’ debt
to EIB. Pursuant to the Settlement Agreement, the Company agreed to pay a portion of the proceeds (the “Settlement Amount”) of the Private Placement to
the EIB upon the final closing of the Private Placement. As a result of the delay of the final closing of the Private Placement due to the delay in filing the
Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, the Company and the EIB entered into the Amendment Agreement
in order to extend the timing for the payment of the Settlement Amount to June 3, 2024.
On May 16, 2024, the Company announced that it intended to effect a reverse stock split (the “Reverse Stock Split”) of its issued and outstanding shares of
common stock, par value $0.01 per share (the “Common Stock”), at a ratio of 1 post-reverse-split share for every 10 pre-reverse-split shares (the “Reverse
Split Ratio”). The Common Stock will continue to be traded on The Nasdaq Capital Market under the symbol “OPGN” and began trading on a split-
adjusted basis when the markets opened on Monday, May 20, 2024, under a new CUSIP number, 68373L505. The Company filed an Amendment to the
Company’s Amended and Restated Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware on May 17, 2024, and the
Reverse Stock Split became effective in accordance with the terms of the Amendment on May 20, 2024 (the “Effective Time”). The Reverse Stock Split
impacts all holders of OpGen’s common stock proportionally and will not impact any stockholders’ percentage ownership of common stock (except to the
extent the Reverse Stock Split results in any stockholder owning a fractional share). No fractional shares will be issued in connection with the Reverse
Stock Split. Stockholders of record who would otherwise be entitled to receive a fractional share will receive a whole share in lieu of the fractional share.
On May 20, 2024, the Company received a notice from The Nasdaq Stock Market LLC (“Nasdaq”) stating that the Company was delinquent in filing its
Quarterly Report on Form 10-Q for the period ended March 31, 2024 (the “Form 10-Q”) and was therefore not in compliance with Nasdaq Listing
Rule 5250(c)(1). The notice indicated that such delinquency serves as an additional basis for delisting the Company’s securities in addition to the failure to
comply with the Minimum Bid Price Rule as well as the failure to timely file its Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
In accordance with the notice, the Company submitted its response to the Nasdaq Hearings Panel regarding such delinquency and the Company’s plan to
cure such delinquency. On May 29, 2024, the Nasdaq Hearings Panel granted the Company’s request for continued listing subject to the Company filing its
Form 10-Q by July 8, 2024. The Company plans to file its Form 10-Q as soon as practicable; however, no assurance can be given as to the definitive date
on which such report will be filed.
F-40
OPGEN, INC.
INSIDER TRADING POLICY
Exhibit 19
I. Purpose
This Insider Trading Policy (the “Policy”) provides guidelines with respect to transactions in the securities of OpGen, Inc. (the “Company”) and the
handling of confidential information about the Company and the companies with which the Company does business. The Company’s Board of Directors
has adopted this Policy to promote compliance with federal and state securities laws that prohibit certain persons who are aware of material nonpublic
information about a company from: (i) trading in securities of that company; or (ii) providing material nonpublic information to other persons who may
trade on the basis of that information.
II. Persons Subject to the Policy
This Policy applies to all officers, all members of the Board of Directors and all employees of the Company and its affiliates and subsidiaries. The
Company may also determine that other persons should and will be subject to this Policy, such as contractors or consultants who have access to material
nonpublic information.
This Policy also applies to your family members who reside with you (including a spouse, a child, a child away at college, stepchildren, grandchildren,
parents, stepparents, grandparents, siblings and in-laws), anyone else who lives in your household, and any family members who do not live in your
household but whose transactions in the Company’s securities (collectively referred to in this Policy as “Company Securities”) are directed by you or are
subject to your influence or control, such as parents or children who consult with you before they trade in Company Securities (collectively referred to as
“Family Members”). You are responsible for the transactions of these other persons and therefore should make them aware of the need to confer with you
before they trade in Company Securities, and you should treat all such transactions for the purposes of this Policy and applicable securities laws as if the
transactions were for your own account. This Policy does not, however, apply to personal securities transactions of Family Members where the purchase or
sale decision is made by a third party not controlled by, influenced by or related to you or your Family Members.
III. Transactions Subject to the Policy
This Policy applies to transactions in Company Securities, including (but not limited to) the Company’s common stock, options to purchase common stock,
preferred stock, convertible debt and warrants, or any other type of securities that the Company has or may issue, as well as derivative securities that are
not issued by the Company, such as exchange-traded put or call options or swaps relating to the Company Securities. In addition, this Policy applies to
transactions in securities of other companies as described below in more detail under the heading “Statement of Policy.”
This Policy applies to transactions by any entities that you influence or control, including any corporations, partnerships or trusts (collectively referred to as
“Controlled Entities”), and transactions by these Controlled Entities should be treated for the purposes of this Policy and applicable securities laws as if
they were for your own account.
IV. Individual Responsibility
Persons subject to this Policy have ethical and legal obligations to maintain the confidentiality of information about the Company and to not engage in
transactions in Company Securities while in possession of material nonpublic information. Each individual is responsible for making sure that he or she
complies with this Policy, and that any Family Members or Controlled Entities whose transactions are subject to this Policy, as discussed below, also
comply with this Policy. In all cases, the responsibility for determining whether an individual is in possession of material nonpublic information rests with
that individual, and any action on the part of the Company, the legal counsel to the Company or any other employee or director pursuant to this Policy (or
otherwise) does not in any way constitute legal advice or insulate an individual from liability under applicable securities laws. You could be subject to
severe legal penalties and disciplinary action by the Company for any conduct prohibited by this Policy or applicable securities laws, as described below in
more detail under the heading “Consequences of Violations.”.
V. Statement of Policy
It is the policy of the Company that no person subject to this Policy, who is aware of material nonpublic information relating to the Company may, directly,
or indirectly through family members or other persons or entities:
1.
2.
3.
engage in transactions in Company Securities, except as otherwise specified in this Policy under the headings “Transactions Not Subject to the
Policy,” “Transactions Not Involving a Purchase or Sale” and “Rule 10b5-1 Plans;”
recommend the purchase or sale of any Company Securities;
disclose material nonpublic information to persons within the Company, also including its affiliates and subsidiaries, whose jobs do not require
them to have that information, or outside of the Company and its affiliates and subsidiaries to other persons, including, but not limited to, family,
friends, business associates, investors and expert consulting firms, unless any such disclosure is made in accordance with the Company’s policies
regarding the protection or authorized external disclosure of information regarding the Company; or
4.
assist anyone engaged in the above activities.
In addition, it is the policy of the Company that no person subject to this Policy who, in the course of working for the Company or its affiliates and
subsidiaries, learns of material nonpublic information about a company with which the Company does business, including a customer, supplier or
competitor of the Company, may engage in any of the activities set forth above with respect to such company’s securities until the information becomes
public or is no longer material.
Furthermore, short-term trading of Company Securities may be distracting to a person and may unduly focus such person on the Company’s short-term
stock market performance instead of the Company’s long-term business objectives. In addition, directors and officers are subject to short swing profit
forfeiture for purchases and sales (or sales and purchases) within a six-month period. For these reasons, it is the policy of the Company that any director or
officer of the Company, also including its affiliates and subsidiaries, who purchases Company Securities in the open market may not sell any Company
Securities of the same class during the six months following the purchase (or vice versa).
There are no exceptions to this Policy, except as specifically noted herein. Transactions that may be necessary or justifiable for independent reasons (such
as the need to raise money for an emergency expenditure), or small transactions, are not excepted from this Policy. The securities laws do not recognize any
mitigating circumstances, and, in any event, even the appearance of an improper transaction must be avoided to preserve the Company’s reputation for
adhering to the highest standards of conduct.
2
VI. Definition of Material Nonpublic Information
Material Information. Information is considered “material” if a reasonable investor would consider that information important in making a
decision to buy, hold or sell securities. Any information that could be expected to affect the Company’s stock price, whether it is positive or negative,
should be considered material. Determining whether information is material is not always straightforward; rather, materiality is based on an assessment of
all of the facts and circumstances and is often evaluated by enforcement authorities with the benefit of hindsight. While it is not possible to define all
categories of material information, some examples of information that ordinarily would be regarded as material are (non-exhaustive):
● Projections of future earnings or losses, or other earnings guidance;
● Changes to previously announced earnings guidance, or the decision to suspend earnings guidance;
● Development of significant new products or discoveries;
● Results of significant clinical trials;
● The gain or loss of a significant customer or supplier;
● Major marketing changes;
● A pending or proposed merger, acquisition or tender offer;
● A pending or proposed acquisition or disposition of a significant asset or entities;
● Pending or threatened significant litigation, or the resolution of such litigation;
● A pending or proposed joint venture;
● A change in dividend policy, the declaration of a stock split, or an offering of additional securities;
● Bank borrowings or other financing transactions out of the ordinary course;
● The establishment of a repurchase program for Company Securities;
● A change in the Company’s pricing or cost structure;
● A change in management;
● A Company restructuring;
● Significant related party transactions; and
● A change in auditors or notification that the auditor’s reports may no longer be relied upon.
3
When Information is Considered Public. Information that has not been disclosed to the public is generally considered to be nonpublic information.
In order to establish that the information has been disclosed to the public, it may be necessary to demonstrate that the information has been widely
disseminated. Information generally would be considered widely disseminated if it has been disclosed through the Dow Jones “broad tape,” newswire
services, publication in a widely available newspaper, magazine or news website, or public disclosure documents filed with the Securities and Exchange
Commission (“SEC”) that are available on the SEC’s website. By contrast, information would likely not be considered widely disseminated if it is available
only to the Company’s employees, or if it is only available to a select group of analysts, brokers and institutional investors.
Once information is widely disseminated, it is still necessary to afford the investing public with sufficient time to absorb the information. As a general rule,
information should not be considered fully absorbed by the marketplace until after the second business day after the day on which the information is
released. If, for example, the Company were to make an announcement at the close of business on a Monday, a person covered by this Policy should not
trade in Company Securities until Thursday. Depending on the particular circumstances, the Company may determine that a longer or shorter period should
apply to the release of specific material nonpublic information.
VII. Special and Prohibited Transactions
The Company has determined that there is a heightened legal risk and/or the appearance of improper or inappropriate conduct if persons subject to this
Policy engage in certain types of transactions. It therefore is the Company’s policy that any persons covered by this Policy may not engage in any of the
following transactions, or should otherwise consider the Company’s preferences as described below:
Short Sales. Section 16(c) of the Securities Exchange Act of 1934 (the “Exchange Act”) prohibits officers and directors from engaging in short
sales. In addition, short sales of Company Securities (i.e., the sale of a security that the seller does not own) may evidence an expectation on the part of the
seller that the securities will decline in value, and therefore have the potential to signal to the market that the seller lacks confidence in the Company’s
prospects. In addition, short sales may reduce a seller’s incentive to seek to improve the Company’s performance. For these reasons, short sales of
Company Securities are prohibited (Short sales arising from certain types of hedging transactions are governed by the paragraph below entitled “Hedging
Transactions”).
Publicly Traded Options. Given the relatively short term of publicly traded options, transactions in options may create the appearance that a
director or officer is trading based on material nonpublic information and focus a director’s or officer’s attention on short-term performance at the expense
of the Company’s long-term objectives. Accordingly, transactions in put options, call options or other derivative securities, on an exchange or in any other
organized market, are prohibited by this Policy (Option positions arising from certain types of hedging transactions are governed by the next paragraph
below.).
Hedging Transactions. Hedging or monetization transactions can be accomplished through a number of possible mechanisms, including through
the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds. Such hedging transactions may permit a
director or officer to continue to own Company Securities obtained through employee benefit plans or otherwise, but without the full risks and rewards of
ownership. When that occurs, the director or officer may no longer have the same objectives as the Company’s other shareholders. Therefore, directors,
officers and other persons designated by the CEO or CFO (or any other person designated as subject to this Policy) are prohibited from engaging in any
such transactions.
Margin Accounts and Pledged Securities. Securities held in a margin account as collateral for a margin loan may be sold by the broker without the
customer’s consent if the customer fails to meet a margin call. Similarly, securities pledged (or hypothecated) as collateral for a loan may be sold in
foreclosure if the borrower defaults on the loan. Because a margin sale or foreclosure sale may occur at a time when the pledgor is aware of material
nonpublic information or otherwise is not permitted to trade in Company Securities, directors, officers and other persons designated by the CEO or CFO
(and any other person designated as subject to this Policy) are prohibited from holding Company Securities in a margin account or otherwise pledging
Company Securities as collateral for a loan. Pledges of Company Securities arising from certain types of hedging transactions are governed by the
paragraph above captioned “Hedging Transactions”.
4
Standing and Limit Orders. Standing and limit orders (except standing and limit orders under approved Rule 10b5-1 Plans, as described below)
create heightened risks for insider trading violations similar to the use of margin accounts. There is no control over the timing of purchases or sales that
result from standing instructions to a broker, and as a result the broker could execute a transaction when a director, officer, or other employee (or any other
person designated as subject to this Policy) is in possession of material nonpublic information. The Company therefore discourages placing standing or
limit orders on Company Securities. If a person subject to this Policy determines that they must use a standing order or limit order, the order should be
limited to short duration and should otherwise comply with the restrictions and procedures outlined below under the heading “Additional Procedures”.
VIII. Transactions Not Subject to the Policy
Transactions Under Company Plans: This Policy does not apply in the case of the following transactions, except as specifically noted.
Stock Option Exercises. This Policy does not apply to the exercise of a stock option acquired pursuant to the Company’s stock option and
incentive plans, nor to the exercise of a tax withholding right pursuant to which a person has elected to have the Company withhold shares subject to an
option to satisfy tax withholding requirements. This Policy does apply, however, to any sale of stock as part of a broker-assisted cashless exercise of an
option, or any other market sale for the purpose of generating the cash needed to pay the exercise price of an option.
Restricted Stock Awards/RSUs. This Policy does not apply to the vesting of restricted stock or restricted stock units (“RSUs”), nor to the exercise
of a tax withholding right pursuant to which a person has elected to have the Company withhold shares of stock to satisfy tax withholding requirements
upon the vesting of any restricted stock or RSUs. The Policy does not apply to any market sale of shares to cover withholding or related tax obligations
under vesting restricted stock or RSUs.
401(k) Plan. This Policy does not apply to purchases of Company Securities in any Company 401(k) plan resulting from your periodic
contribution of money to the plan pursuant to your payroll deduction election. This Policy does or can, in the future, apply to certain elections you may
make under a 401(k) plan, including: (a) an election to increase or decrease the percentage of your periodic contributions that will be allocated to the
Company stock fund; (b) an election to make an intra-plan transfer of an existing account balance into or out of the Company stock fund; (c) an election to
borrow money against a 401(k) plan account if the loan will result in a liquidation of some or all of your Company stock fund balance; and (d) an election
to pre-pay a plan loan if the pre-payment will result in allocation of loan proceeds to the Company stock fund.
Other Similar Transactions. Any other purchase of Company Securities from the Company or sales of Company Securities to the Company are not
subject to this Policy.
Transactions not involving a Purchase or Sale: Bona fide gifts are not transactions subject to this Policy, unless the person making the gift has reason to
believe that the recipient intends to sell the Company Securities while the director, officer, or other employee (or any other person designated as subject to
this Policy) is aware of material nonpublic information. Further, transactions in mutual funds that are invested in Company Securities are not transactions
subject to this Policy.
IX. Additional Procedures
The Company has established additional procedures to assist the Company in the administration of this Policy, to facilitate compliance with laws
prohibiting insider trading while in possession of material nonpublic information, and to avoid the appearance of any impropriety. These additional
procedures are applicable only to those individuals described below.
5
Pre-Clearance Procedures. When being an insider, any person subject to this Policy, as well as the Family Members and Controlled Entities of
such persons, may not engage in any transaction in Company Securities without first obtaining pre-clearance of the transaction from the CFO. A request for
pre-clearance should be submitted to the CFO in writing at least two business days in advance of the proposed transaction. The CFO is under no obligation
to approve a transaction submitted for pre-clearance and may determine not to permit the transaction. If a person seeks pre-clearance and permission to
engage in the transaction is denied, then he or she should refrain from initiating any transaction in Company Securities and should not inform any other
person of the restriction. If permission to trade is given, the trade must be affected within five business days unless otherwise agreed by the CFO.
When a request for pre-clearance is made, the requestor should carefully consider whether he or she may be aware of any material nonpublic information
about the Company and should describe fully those circumstances to the CFO. The requestor should also indicate whether he or she has affected any non-
exempt “opposite-way” transactions within the past six months and should be prepared to report the proposed transaction on an appropriate Form 4 or Form
5. The requestor should also be prepared to comply with SEC Rule 144 and file Form 144, if necessary, at the time of any sale.
Quarterly Blackout Period. No person subject to this Policy may buy or sell Company Securities during the “Quarterly Blackout Period,”
beginning two (2) weeks before the last day of each quarter of the Company’s fiscal year and ending on the close of business of the third full trading day
after the public announcement of the Company’s quarterly results. An exercise of a stock option is not prohibited during a Quarterly Blackout Period (but
the sale of the shares acquired on exercise is prohibited). Likewise, purchases pursuant to any Company employee stock purchase plan are not prohibited
(but the subsequent sale of such shares is prohibited, as is the sale of shares held in a 401(k) plan).
Event-Specific Blackout Period. From time to time, an event may occur that is material to the Company and is known by only a few directors,
officers and/or employees. So long as the event remains material and nonpublic, the persons designated by the EC may not trade in Company Securities. In
addition, the Company’s financial results may be sufficiently material in a particular fiscal quarter that, in the judgment of the CEO or CFO, designated
persons should refrain from trading in Company Securities even sooner than the Quarterly Blackout Period described above. In such situations (an “Event-
Specific Blackout Period”), the EC or any other employee designated by them will notify these persons that they may not trade in Company Securities. The
existence of an Event-Specific Blackout Period or extension of a Quarterly Blackout Period will not be announced to the Company as a whole and should
not be communicated to any other person.
Even if you are not designated as a person who may not trade during an Event-Specific Blackout Period, you should not trade while aware of material
nonpublic information. Exceptions will not be granted during an Event-Specific Blackout Period. The existence or non-existence of a blackout period does
not alter the general prohibitions against trading based on material nonpublic information, which are applicable at all times.
X. Rule 10b5-1 Plans
Rule 10b5-1 under the Exchange Act provides a defense from insider trading liability under Rule 10b-5. In order to be eligible to rely on this defense, a
person subject to this Policy must enter into a Rule 10b5-1 plan for transactions in Company Securities that meets certain conditions specified in the rule (a
“Rule 10b5-1 Plan”). If the plan meets the requirements of Rule 10b5-1, Company Securities may be purchased or sold without regard to certain insider
trading restrictions. To comply with the Policy, a Rule 10b5-1 Plan must be acknowledged and authorized by the CEO or CFO and meet the requirements
of Rule 10b5-1. In general, a Rule 10b5-1 Plan must be entered into at a time when the person entering into the plan is not aware of material nonpublic
information. Once the plan is adopted, the person must not exercise any influence over the amount of securities to be traded, the price at which they are to
be traded or the date of the trade. The plan must either specify the amount, pricing and timing of transactions in advance or delegate discretion on these
matters to an independent third party.
Any Rule 10b5-1 Plan must be submitted for approval ten days prior to the entry into the Rule 10b5-1 Plan. No further pre-approval of transactions
conducted pursuant to the Rule 10b5-1 Plan will be required.
6
XI. Post-Termination Transactions
This Policy continues to apply to transactions in Company Securities even after a person’s termination of service to the Company or its respective affiliates
or subsidiaries. If an individual is in possession of material nonpublic information when his or her service terminates, that individual may not trade in
Company Securities until that information has become public or is no longer material.
XII. Consequences of Violations
The purchase or sale of securities while aware of material nonpublic information, or the disclosure of material nonpublic information to others who then
trade in Company Securities, is prohibited by federal and state laws. Insider trading violations are pursued vigorously by the SEC, U.S. Attorneys and state
enforcement authorities as well as the laws and authorities of foreign jurisdictions. Insider trading is a criminal offense, not merely a misdemeanor, and the
punishment for insider trading violations are therefore severe and could include significant fines and even imprisonment. While the regulatory authorities
concentrate their efforts on the individuals who trade, or who tip inside information to others who trade, the US federal securities laws, as well as the
corresponding laws of other countries, also impose potential liability on companies and other “controlling persons” if they fail to take reasonable steps to
prevent insider trading by company personnel.
In addition, an individual’s failure to comply with this Policy may subject the individual to Company-imposed sanctions, including and up to, without
limitation, removal from one’s position and dismissal for cause, whether or not a person’s failure to comply with the Policy results in a violation of law.
Needless to say, a violation of law, or even an SEC investigation that does not result in prosecution, can tarnish a person’s reputation and irreparably
damage a career.
XIII. Administration of the Policy
The Company’s CEO and CFO, and in such person’s absence, the Company’s Controller or another employee designated by the CEO, shall be responsible
for administration of this Policy. All determinations and interpretations by the CEO and CFO shall be final and not subject to further review.
Any person who has a question about this Policy or its application to any proposed transaction may obtain additional guidance from the CFO. Just drop by
at his office, give him a call on his phone or send him an email to CFO@opgen.com.
XIV. Certification
All persons subject to this Policy must certify their understanding of, and intent to comply with, this Policy by signing and returning the respective
certification or (electronic) training record to the respective HR-dept. Certification is necessary upon joining OpGen-group or after material changes were
made to the policy.
7
CERTIFICATION
I have read and understand OpGen Inc.’s Insider Trading Policy (the “Policy”). I understand that the Chief Financial Officer is available to
answer any questions I have regarding the Policy.
Since I have been affiliated with the Company, I have complied with the Policy.
I will continue to comply with the Policy for as long as I am subject to the Policy.
I certify that:
1.
2.
3.
Print name:
Signature:
Date:
8
OPGEN, INC.
The following is a list of subsidiaries of OpGen, Inc. as of December 31, 2023:
Name
Curetis GmbH (in insolvency)
Ares Genetics GmbH (in insolvency)
Jurisdiction of Incorporation
Germany
Austria
Exhibit 21.1
Consent of Independent Registered Public Accounting Firm
Exhibit 23.1
We consent to the incorporation by reference in Registration Statements No. 333-265421, No. 333-265420, No. 333-256821, No. 333-246354, No. 333-
237513, No.333-231511, No. 333-224035, No. 333-216932, No. 333-216929, No. 333-210489 and No. 333-205864 on Form S-8, Registration Statements
No. 333-275516, No. 333-258646, No. 333-256820, No. 333-250983, No. 333-239240, No. 333-236106, No. 333-213356 and No. 333-211996 on Form S-
3, and Registration Statements No. 333-271190, 333-268648, 333-233775 and 333-222140 on Form S-1 of OpGen, Inc. of our report, dated June 3, 2024,
which includes an explanatory paragraph related to OpGen, Inc.’s ability to continue as a going concern, with respect to our audit of the consolidated
financial statements of OpGen, Inc. as of December 31, 2023 and for the year then ended, which report is included in this Annual Report on Form 10-K of
OpGen, Inc. for the year ended December 31, 2023.
/s/ Beckles & Co., Inc.
West Palm Beach, Florida
June 3, 2024
Consent of Independent Registered Public Accounting Firm
Exhibit 23.2
We consent to the incorporation by reference in Registration Statements No. 333-265421, No. 333-265420, No. 333-256821, No. 333-246354, No. 333-
237513, No.333-231511, No. 333-224035, No. 333-216932, No. 333-216929, No. 333-210489, and No. 333-205864 on Form S-8 and Registration
Statements No. 333-275516, No. 333-258646, No. 333-256820, No. 333-250983, No. 333-239240, No. 333-236106, No. 333-213356 and No. 333-211996
on Form S-3 of OpGen, Inc. of our report, which includes an explanatory paragraph related to OpGen, Inc.’s ability to continue as a going concern, dated
March 30, 2023 (except for the effects of the reverse stock split discussed in Note 12, as to which the date is May 20, 2024), on our audit of the
consolidated financial statements of OpGen, Inc. as of December 31, 2022 and for the year then ended, included in this Annual Report on Form 10-K of
OpGen, Inc. for the year ended December 31, 2023.
/s/ CohnReznick LLP
Tysons, Virginia
June 3, 2024
CERTIFICATION PURSUANT TO
RULE 13A-14(A)/15D-14(A)
Exhibit 31.1
I, David E. Lazar, Chief Executive Officer of OpGen, Inc., certify that:
1.
I have reviewed this Annual Report on Form 10-K of OpGen, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–
15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
Date: June 3, 2024
/s/ David E. Lazar
David E. Lazar
Chief Executive Officer and Chairman
(principal executive officer, principal financial officer, and
principal accounting officer)
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.1
In connection with the Annual Report on Form 10-K of OpGen, Inc. (the “Company”) for the year ended December 31, 2023 (the “Report”) as filed with
the Securities and Exchange Commission on the date hereof, the undersigned Chief Executive Officer of the Company hereby certifies that, to such
officer’s knowledge:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
This certification is provided solely pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Date: June 3, 2024
/s/ David E. Lazar
David E. Lazar
Chief Executive Officer and Chairman
(principal executive officer, principal financial officer, and
principal accounting officer)
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished
to the Securities and Exchange Commission or its staff upon request.
OPGEN, INC.
COMPENSATION RECOUPMENT POLICY
Exhibit 97.1
1. Restatement. In the event of any required accounting restatement of the financial statements of OpGen, Inc. (the “Company”) due to the
material noncompliance of the Company with any financial reporting requirement under the applicable U.S. federal securities laws, including any required
accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that
would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period (a “Restatement”), the
Company will recover reasonably promptly from any person who is or was an “Executive Officer,” as such term is defined in Rule 10D-1 adopted under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 5608 of the Nasdaq listing rules, of the Company (each, a “Covered
Person”) the amount of any “Erroneously Awarded Incentive-Based Compensation” (as defined below). This Policy is effective as of October 2, 2023, the
effective date of Rule 5608 of the Nasdaq listing rules (the “Effective Date”).
2. Amount. The amount of Incentive-Based Compensation (as defined below) that must be recovered from a Covered Person pursuant to the
immediately preceding paragraph is the amount of “Recoverable Incentive-Based Compensation” (as defined below) received by a Covered Person that
exceeds the amount of Recoverable Incentive-Based Compensation that otherwise would have been received had it been determined based on the restated
amounts, computed without regard to any taxes paid (referred to as the “Erroneously Awarded Incentive-Based Compensation”). For Recoverable
Incentive-Based Compensation based on stock price or total shareholder return, where the amount of Erroneously Awarded Incentive-Based Compensation
is not subject to mathematical recalculation directly from the information in a Restatement, the amount must be based on a reasonable estimate of the effect
of the Restatement on the stock price or total shareholder return, as applicable, upon which the Recoverable Incentive-Based Compensation was received,
and the Company must maintain documentation of that reasonable estimate and provide such documentation to the Nasdaq Stock Market LLC (“Nasdaq”).
For the purposes of this Policy, Recoverable Incentive-Based Compensation will be deemed to be received in the fiscal period during which the financial
reporting measure specified in the applicable Incentive-Based Compensation award is attained, even if the payment or grant occurs after the end of that
period.
3. Definitions:
(a) “Incentive-Based Compensation” means any compensation that is granted, earned or vested based wholly or in part upon the
attainment of a “financial reporting measure,” which means a measure that is determined and presented in accordance with Generally Accepted Accounting
Principles which are used in preparing the Company’s financial statements, and any measure that is derived wholly or in part from such measures. Stock
price and total shareholder return are also financial reporting measures for this purpose. For avoidance of doubt, a financial reporting measure need not be
presented within the Company’s financial statements or included in a filing with the Securities and Exchange Commission.
(b) “Recoverable Incentive-Based Compensation” means all Incentive-Based Compensation received on or after the Effective Date of
this Policy set forth above by a Covered Person: (i) after beginning service as an executive officer; (ii) who served as an Executive Officer at any time
during the performance period for the Incentive-Based Compensation; (iii) while the Company has a class of securities listed on a national securities
exchange or a national securities association; and (iv) during the three completed fiscal years immediately preceding the date that the Company is required
to prepare a Restatement, including any applicable transition period that results from a change in the Company’s fiscal year within or immediately
following those three completed fiscal years. For this purpose, the Company is deemed to be required to prepare a Restatement on the earlier of: (i) the date
the Board of Directors of the Company (the “Board”), or the Company’s officers authorized to take such action if Board action is not required, concludes,
or reasonably should have concluded, that the Company is required to prepare a Restatement; and (ii) the date a court, regulator or other legally authorized
body directs the Company to prepare a Restatement. The Company’s obligation to recover Erroneously Awarded Incentive-Based Compensation is not
dependent on if or when the restated financial statements are filed with the Securities and Exchange Commission.
4. Recovery. The Company must recover the Erroneously Awarded Incentive-Based Compensation from Covered Persons unless the Board
determines that recovery is impracticable because: (i) the direct expense to a third party to assist in enforcing this Policy would exceed the amount of
Erroneously Awarded Incentive-Based Compensation; provided that, the Company must make a reasonable attempt to recover the Erroneously Awarded
Incentive-Based Compensation before concluding that recovery is impracticable, document such reasonable attempt to recover the Erroneously Awarded
Incentive-Based Compensation and provide such documentation to Nasdaq; or (ii) recovery would likely cause an otherwise tax-qualified retirement plan,
under which benefits are broadly available to employees of the Company, to fail to meet the applicable requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C.
411(a) and regulations thereunder.
5. No Indemnification. In no event will the Company indemnify any Covered Person for any amounts that are recovered under this Policy. This
Policy is in addition to (and not in lieu of) any right of repayment, forfeiture or right of offset against any employees that is required pursuant to any
statutory repayment requirement (regardless of whether implemented at any time prior to or following the adoption or amendment of this Policy), including
Section 304 of the Sarbanes-Oxley Act of 2002. Any amounts paid to the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 will be
considered in determining any amounts recovered under this Policy.
6. Other Company Rights. The application and enforcement of this Policy does not preclude the Company from taking any other action to enforce
a Covered Person’s obligations to the Company, including termination of employment or institution of legal proceedings. Nothing in this Policy restricts the
Company from seeking recoupment under any other compensation recoupment Policy or any applicable provisions in plans, agreements, awards or other
arrangements that contemplate the recoupment of compensation from a Covered Person. If a Covered Person fails to repay Erroneously Awarded Incentive-
Based Compensation that is owed to the Company under this Policy, the Company must take all appropriate action to recover any Erroneously Awarded
Incentive-Based Compensation from the Covered Person, and the Covered Person will be required to reimburse the Company for all expenses (including
legal expenses) incurred by the Company in recovering the Erroneously Awarded Incentive-Based Compensation.
7. Binding Effect. The terms of this Policy will be binding and enforceable against all Covered Persons subject to this Policy and their
beneficiaries, heirs, executors, administrators or other legal representatives. If any provision of this Policy or the application of such provision to any
Covered Person is adjudicated to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability will not affect any other
provisions of this Policy, and the invalid, illegal or unenforceable provisions will be deemed amended to the minimum extent necessary to render any such
provision (or the application of such provision) valid, legal or enforceable.
8. Acknowledgement by Employee. Each Covered Person must sign and return to the Company, within 30 calendar days following the later of (i)
the Effective Date of this Policy first set forth above or (ii) the date the individual becomes a Covered Person, the Acknowledgement Form attached hereto
as Exhibit A, pursuant to which the Covered Person agrees to be bound by, and to comply with, the terms and conditions of this Policy.
9. Interpretation. This Policy will be interpreted in a manner that is consistent with Rule 10D-1 under the Exchange Act, Rule 5608 of the Nasdaq
listing rules and any related rules or regulations adopted by the Securities and Exchange Commission or Nasdaq (the “Applicable Rules”) as well as any
other applicable law. To the extent the Applicable Rules require recovery of incentive-based compensation in additional circumstances beyond those
specified above, nothing in this Policy will be deemed to limit or restrict the right or obligation of the Company to recover incentive-based compensation to
the fullest extent required by the Applicable Rules.
Adopted as of [________], 2023
2
EXHIBIT A
OPGEN, INC.
COMPENSATION RECOUPMENT POLICY
ACKNOWLEDGEMENT FORM
By signing below, the undersigned acknowledges and confirms that the undersigned has received and reviewed a copy of the OpGen, Inc. (the
“Company”) Compensation Recoupment Policy (the “Policy”).
By signing this Acknowledgement Form, the undersigned acknowledges and agrees that the undersigned is and will continue to be subject to the
Policy and that the Policy will apply both during and after the undersigned’s employment with the Company. Further, by signing below, the undersigned
agrees to abide by the terms of the Policy, including, without limitation, by returning any Erroneously Awarded Incentive-Based Compensation (as defined
in the Policy) to the Company to the extent required by, and in a manner consistent with, the Policy.
The undersigned expressly agrees that the Company may deduct from the undersigned’s paycheck or other compensation otherwise to the
undersigned any Erroneously Awarded Incentive-Based Compensation
COVERED PERSON
Signature
Print Name
Date
A-1