Quarterly Report for Quarter Ending March 31, 2025 (Form 10-Q)

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 the unaudited condensed consolidated financial statements and the accompanying notes thereto included in Part I, Item 1 of this quarterly report on Form 10-Q. 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 under Part II. Item 1A. "Risk Factors" of this quarterly report on Form 10-Q and Part 1. Item 1A of our annual report on Form 10-K for the year ended December 31, 2024.

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.

In November 2023, the Company implemented certain cash management initiatives, including restructuring its U.S. operations by reducing headcount and scaling down operations at OpGen's U.S. headquarters to the core functions of a U.S. Nasdaq listed company, allowing the Company to conserve cash and focus on the functions needed to pursue potential strategic alternatives. In November 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 and, consequently, the subsidiaries were deconsolidated from the Company's consolidated financial statements. As part of the insolvency proceedings, in April 2024, all of Curetis' assets were sold to Camtech Pte Ltd., a Singaporean family office ("Camtech"), and all of Ares Genetics' assets were sold to bioMerieux S.A.

In March 2024, as a result of the Company's efforts to explore a strategic transaction, the Company entered into a securities purchase agreement (the "March 2024 Purchase Agreement") with David E. Lazar. 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. Furthermore, in April 2024, the Company entered into an employment agreement with Mr. Lazar, pursuant to which the Company engaged Mr. Lazar to act as its Chief Executive Officer ("CEO").

In July 2024, Mr. Lazar consummated a transaction pursuant to which he sold 550,000 shares of Series E Preferred Stock together with his rights to purchase the additional 2,450,000 shares of Series E Preferred Stock to AEI Capital Ltd., a private limited company incorporated under the laws of the British Virgin Islands, which forms part of AEI Capital Group, with groupwide assets under management exceeding $3.0 billion. In conjunction with the transaction, Mr. Lazar resigned as CEO, Chairman and Director of the Company, effective August 2024, but he currently maintains a role as President. Subsequently, AEI Capital Ltd. paid the Company $2.45 million in August 2024 in exchange for the remaining 2,450,000 shares of Series E Preferred Stock. All 3,000,000 shares of Series E Preferred Stock were subsequently converted into 7,200,000 shares of the Company's common stock in August 2024.

Under the direction of AEI Capital Ltd., the Company further scaled down legacy operations while repositioning itself to operate in the financial services and technology industry. In furtherance of such shift, the Company formed a wholly-owned subsidiary, CapForce International Holdings Ltd. ("CapForce"), which launched a new business line offering listing sponsorship and consultancy services to international companies seeking to list their securities on securities exchanges. Additionally, CapForce contemplates entering the financial technology industry supporting digital investment banking activities and capital table management.

On May 20, 2024, the Company effected a 1-for-10 reverse stock split of its issued and outstanding shares of common stock. All share amounts and per share prices in this quarterly report have been adjusted to reflect the reverse stock split.

Subsequent to the Company's assignment of its office lease in April 2024, the Company has operated virtually. The Company operates in one business segment.

Financial Overview

Revenue

Prior to the repositioning of our business, we generated revenues from sales of our products, including sales of our products through our distribution partners, such as our Unyvero instruments and consumables. We also generated revenue from sales by Ares Genetics of its AI-powered prediction models and solutions. Revenues generated from our laboratory services related to services that we and our subsidiaries provided to customers. Lastly, our collaboration revenues consisted of revenue received from research and development collaborations that we entered into with third parties, such as our collaboration agreement with FIND.

Following the acquisition of a controlling interest in the Company by AEI Capital Ltd. and the formation of CapForce as OpGen's wholly-owned subsidiary, we generate revenues from CapForce's listing sponsorship and consulting services, and we anticipate generating revenues from CapForce's other business ventures including cross-border securities trading, advanced computational model-enabled investment banking advisory and asset management services, and FinTech-enabled capital table management solutions via CapForce's next generation global digital investment banking platform.

Cost of Products, Cost of Services, and Operating Expenses

Prior to the repositioning of our business, our cost of products consisted of product and inventory costs, including materials costs and overhead, and other costs related to the recognition of revenue. Cost of services related to the material and labor costs associated with providing our services. Research and development expenses consisted primarily of expenses incurred in connection with our clinical and pre-clinical research activities. Selling, general and administrative expenses consisted of public company costs, salaries, and related costs for administrative, sales, and business development personnel.

Following the acquisition of a controlling interest in the Company by AEI Capital Ltd. and the formation of CapForce as OpGen's wholly-owned subsidiary, the Company's cost of sales will primarily be subcontractor and advisor fees and technology infrastructure costs associated with providing our services. Research and development expenses consist of fees to expand and innovate CapForce's digital investment banking platform, and selling, general, and administrative expenses continue to consist of public company costs, salaries, and related costs for administrative and business development purposes.

Results of operations for the three months ended March 31, 2025 and 2024

Revenues

		Three Months Ended March 31,
		2025				2024
Product sales		$	-			$	141,373
Laboratory services			-				26,776
Listing sponsorship services			-				-
Total revenue		$	-			$	168,149

We did not generate any revenue in the three months ended March 31, 2025, as we continued to wind down our legacy precision medicine business and reposition ourselves in the financial services and technology industry.

Operating expenses

		Three Months Ended March 31,
		2025				2024
						(As Restated)
Cost of products sold		$	-			$	73,236
Cost of services			-				1,575
Research and development			-				25,856
General and administrative			513,344				1,684,151
Sales and marketing			9,502				128,646
Total operating expenses		$	522,846			$	1,913,464

Our total operating expenses for the three months ended March 31, 2025 decreased approximately 73% when compared to the same period in 2024. Operating expenses changed as follows:

●

Cost of products sold: cost of products sold for the three months ended March 31, 2025 decreased 100% when compared to the same period in 2024. The decrease in cost of products sold aligns with the decrease in product sales in the first quarter of 2025, which is due to the Company scaling down its legacy operations and repositioning its business;

●

Cost of services: cost of services for the three months ended March 31, 2025 decreased 100% when compared to the same period in 2024. The decrease in cost of services aligns with the decrease in laboratory services in the first quarter of 2025, which is due to the Company scaling down its legacy operations and repositioning its business; and

●

Research and development, general and administrative, and sales and marketing: research and development, general and administrative, and sales and marketing expenses decreased approximately 100%, 70%, and 93%, respectively, for the three months ended March 31, 2025 compared to the same period in 2024. The decreases are primarily attributable to the Company scaling down its legacy operations and repositioning its business.

Other income (expense)

		Three Months Ended March 31,
		2025				2024
						(As Restated)
Interest and other income		$	117,845			$	10
Interest expense			(3,238	)			-
Gain on impairment adjustment			-				2,079,575
Change in fair value of EIB loan guaranty			-				(46,584	)
Foreign currency transaction gains			106				281
Total other income		$	114,713			$	2,033,282

Our total other income for the three months ended March 31, 2025 decreased to $0.1 million from $2.0 million in the same period in 2024 primarily due to the Company's recording of a gain on impairment adjustment of $2.1 million in March 2024 following the Company's identification of a subtenant for its Rockville, Maryland office.

Liquidity and Capital Resources

As of March 31, 2025, we had cash and cash equivalents of $1.1 million compared to $1.3 million at December 31, 2024. Historically, we have funded our operations primarily through external investor financing arrangements and strategic actions taken by us.

The following financing transactions generating gross proceeds of $5.0 million took place during 2024:

●

In March 2024, we entered into a securities purchase agreement with David E. Lazar, pursuant to which we agreed to sell 3,000,000 shares of Series E Convertible Preferred Stock to Mr. Lazar at a price of $1.00 per share for aggregate gross proceeds of $3.0 million. Pursuant to the agreement, Mr. Lazar paid a total of $550,000 in exchange for 550,000 shares of Series E Preferred Stock. In July 2024, Mr. Lazar consummated a transaction pursuant to which he sold the 550,000 shares of Series E Preferred Stock together with his rights to purchase the additional 2,450,000 shares of Series E Preferred Stock under the March 2024 Purchase Agreement to AEI Capital Ltd. Subsequently, AEI Capital Ltd. paid the Company $2.45 million in August 2024 in exchange for the remaining 2,450,000 shares of Series E Preferred Stock under the terms of the March 2024 Purchase Agreement.

●

In August 2024, we entered into a securities purchase agreement (the "August 2024 Securities Purchase Agreement") with AEI Capital Ltd., pursuant to which we have the right, in our sole discretion, to sell to AEI Capital Ltd., at any time prior to September 30, 2024, shares of common stock, par value $0.01 per share, of the Company having an aggregate value of up to $3.0 million. As of September 30, 2024, the Company sold 1,079,109 shares of common stock to AEI Capital Ltd. for gross proceeds of $2.0 million before deducting offering expenses. In October 2024, we entered into a First Amendment (the "Amendment") to the securities purchase agreement with AEI Capital Ltd. whereby we were: (i) granted the right to sell two additional tranches of common stock to AEI Capital Ltd. of $3.0 million each, for an aggregate amount of $9.0 million under the securities purchase agreement; and (ii) our ability to sell shares of common stock to AEI Capital Ltd. under the securities purchase agreement was extended until December 31, 2025.

Going forward, we anticipate funding our operations primarily through financing arrangements with AEI Capital Ltd, including the August 2024 Securities Purchase Agreement noted above.

Sources and uses of cash

The following table summarizes the net cash and cash equivalents (used in) provided by operating activities, investing activities and financing activities for the periods indicated:

		Three Months ended March 31,
		2025				2024
						(As Restated)
Net cash (used in) provided by
Operating activities		$	(197,872	)		$	(1,084,050	)
Investing activities			-				-
Financing activities			-				199,720
Net decrease in cash and cash equivalents		$	(197,872	)		$	(884,330	)

Net cash used in operating activities

Net cash used in operating activities for the three months ended March 31, 2025 consists primarily of our net loss of $0.4 million, partially offset by noncash share-based compensation expense of $0.1 million and changes in operating assets and liabilities of $0.1 million. Net cash used in operating activities for the three months ended March 31, 2024 consists primarily of our net income of $0.3 million, noncash share-based compensation expense of $0.2 million, and changes in operating assets and liabilities of $0.4 million, reduced by certain other noncash items including gain on impairment adjustment of $2.1 million.

Net cash used in investing activities

There was no cash used in investing activities during the three months ended March 31, 2025 or 2024.

Net cash provided by financing activities

There was no cash provided by financing activities during the three months ended March 31, 2025. Net cash provided by financing activities for the three months ended March 31, 2024 consists of proceeds from the issuance of preferred stock in connection with the March 2024 Purchase Agreement with Mr. Lazar, net of payments on the Company's finance lease obligations.

Contractual Commitments

Other than the continuing liability under our former headquarters' office lease, which lease was assigned to a third party in April 2024, the Company has no other material contractual commitments as of March 31, 2025.

Funding requirements

Going forward, our primary use of cash is to fund the Company's revenue growth and operating expenses, including those costs for general administrative, digital investment banking platform development and maintenance, and corporate purposes. Our future funding requirements will depend on the costs associated with repositioning our business and complying with our obligations as a public company. We cannot provide any assurances that additional financing will not be required in the future to support our operations, but we intend to use financing opportunities strategically to continue strengthening our financial position and we anticipate funding our operations primarily through financing arrangements with AEI Capital Ltd., our controlling shareholder.

Critical accounting policies and use of estimates

This Management's Discussion and Analysis of Financial Condition and Results of Operations is based on our unaudited condensed 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 unaudited condensed 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 credit losses 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.

A summary of our significant accounting policies is included in Note 3 "Summary of significant accounting policies" to the accompanying unaudited condensed 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. Our critical policies are summarized in Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our annual report on Form 10-K for the year ended December 31, 2024.

Recently issued accounting pronouncements

See Note 3 "Summary of significant accounting policies" in this quarterly report on Form 10-Q for a full description of recent accounting pronouncements, including the respective expected dates of adoption and effects on our unaudited condensed consolidated financial statements.

Off-balance sheet arrangements

As of March 31, 2025 and December 31, 2024, we did not have any off-balance sheet arrangements.