OpGen(US:OPGN)2024-07-08 20:30PART I. FINANCIAL INFORMATION This section details the company's unaudited financial performance, management's analysis, market risks, and internal controls Item 1. Unaudited Condensed Consolidated Financial Statements The unaudited condensed consolidated financial statements for the quarter ended March 31, 2024, reflect a significant operational and financial transformation following the November 2023 insolvency and subsequent deconsolidation of its main subsidiaries, Curetis and Ares Genetics. The company swung from a substantial net loss of $5.7 million in Q1 2023 to a net income of $0.4 million in Q1 2024, primarily driven by a $2.1 million one-time gain on lease indemnification and drastically reduced operating expenses. However, revenue plummeted by 82% to $0.17 million. The balance sheet shows a critical liquidity position with cash and cash equivalents at $0.3 million, and the notes highlight a substantial doubt about the company's ability to continue as a going concern Condensed Consolidated Financial Statements (Balance Sheets, Operations, Stockholders' Equity, Cash Flows) This section presents the company's key financial statements including balance sheets, statements of operations, stockholders' equity, and cash flows Condensed Consolidated Statements of Operations (Q1 2024 vs Q1 2023) | Metric | Three months ended March 31, 2024 | Three months ended March 31, 2023 | | :--- | :--- | :--- | | Total Revenue | $168,149 | $913,444 | | Operating Loss | $(1,703,218) | $(5,070,111) | | Net Income (Loss) | $386,033 | $(5,736,603) | | Diluted EPS | $0.207 | $(12.53) | Condensed Consolidated Balance Sheets (Assets & Liabilities) | Metric | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $267,493 | $1,151,823 | | Total Assets | $2,970,380 | $1,882,274 | | Total Liabilities | $13,682,556 | $13,443,858 | | Total Stockholders' Deficit | $(10,712,176) | $(11,561,584) | Condensed Consolidated Statements of Cash Flows | Metric | Three months ended March 31, 2024 | Three months ended March 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,084,050) | $(4,962,618) | | Net cash used in investing activities | $0 | $(330,446) | | Net cash provided by financing activities | $199,720 | $4,743,649 | Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed explanatory notes to the unaudited condensed consolidated financial statements - The company's subsidiaries, Curetis GmbH and Ares Genetics, filed for insolvency in November 2023, leading to their deconsolidation. The assets of these subsidiaries were subsequently sold to third parties in April 2024, and OpGen does not expect to receive any proceeds2549210 - Management has concluded there is substantial doubt about the Company's ability to continue as a going concern, as current cash is only sufficient to fund operations into the third quarter of 202455239 - In March 2024, the company secured a $3.0 million financing commitment from David E. Lazar through the sale of Series E Preferred Stock. This transaction also involved a new Board of Directors and a plan to settle outstanding EIB debt for $2.0 million, which is expected to result in a gain of over $8 million upon completion52125211 - Effective April 1, 2024, the company assigned its Rockville, MD headquarters lease. The new tenant indemnifies OpGen from future liabilities, resulting in the recognition of a $2.1 million gain on lease indemnification in Q1 2024217234 - Subsequent to the quarter end, the company effected a 1-for-10 reverse stock split on May 20, 2024, and regained compliance with Nasdaq's minimum bid price rule, but remains non-compliant with other listing requirements such as minimum stockholders' equity206207223 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section details the profound impact of the November 2023 insolvency and deconsolidation of its primary subsidiaries. This event caused an 82% year-over-year revenue decline and a 69% drop in operating expenses for Q1 2024. The company's strategic focus has shifted under new leadership to pursuing a reverse merger or similar transaction. Liquidity is a critical issue, with cash projected to last only into Q3 2024, reinforcing the 'going concern' uncertainty despite new financing commitments Results of Operations This section analyzes the company's financial performance, highlighting key revenue and expense trends - Total revenue for Q1 2024 decreased by 82% compared to Q1 2023, primarily due to the exclusion of product sales and the complete elimination of collaboration revenue from the deconsolidated subsidiaries215231 - Total operating expenses for Q1 2024 decreased by 69% compared to Q1 2023. This was driven by decreases of 99% in R&D, 32% in G&A, and 87% in Sales & Marketing, reflecting the deconsolidation and scaling down of operations258259 - Other income increased to a net income of $2.1 million in Q1 2024 from a net expense of $0.7 million in Q1 2023. The increase is primarily due to a $2.1 million gain on lease indemnification and the cessation of interest expense recognition on the EIB loan, which is now treated as a loan guaranty measured at fair value234260 Liquidity and Capital Resources This section discusses the company's cash position, funding needs, and capital-raising activities - As of March 31, 2024, the company had cash and cash equivalents of $0.3 million, a significant decrease from $1.2 million at December 31, 2023235 - The company has substantial doubt about its ability to continue as a going concern, as it projects that current cash will only be sufficient to fund operations into the third quarter of 2024239 - In March 2024, the company entered into an agreement to sell $3.0 million of Series E Preferred Stock to David E. Lazar, with funds being received in tranches. The remaining $2.45 million is expected in Q3 2024238 Sources and Uses of Cash (Q1 2024 vs Q1 2023) | Cash Flow Activity | Three months ended March 31, 2024 | Three months ended March 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,084,050) | $(4,962,618) | | Net cash used in investing activities | $0 | $(330,446) | | Net cash provided by financing activities | $199,720 | $4,743,649 | Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, OpGen is not required to provide the information for this item - The Company is a smaller reporting company and is not required to provide the information required by this Item247 Item 4. Controls and Procedures Management evaluated the company's disclosure controls and procedures and concluded that they were effective as of March 31, 2024. There were no material changes in the company's internal controls over financial reporting during the quarter - Based on an evaluation as of March 31, 2024, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective248 - There were no changes in the Company's internal controls over financial reporting during the quarter ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, these controls291 PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, other required disclosures, and a list of exhibits Item 1. Legal Proceedings The company reports the insolvency proceedings of its former subsidiaries, Curetis and Ares Genetics, which began in November 2023. The assets of these entities were sold by their respective administrators in April 2024. OpGen states it is not party to any other material litigation - In November 2023, subsidiaries Curetis and Ares Genetics filed for insolvency in Germany and Austria, respectively. In April 2024, their assets were sold to Camtech Pte Ltd. and bioMerieux S.A276 Item 1A. Risk Factors This section refers to the risk factors disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2023 - The report directs readers to the Risk Factors section included in the Annual Report on Form 10-K for the year ended December 31, 2023277 Other Items (Items 2, 3, 4, 5) The company reports no information for several items: Unregistered Sales of Equity Securities (other than as previously disclosed), Defaults Upon Senior Securities, Mine Safety Disclosures, and Other Information - The company reports nothing under Item 2 (Unregistered Sales of Equity Securities) other than what was disclosed in Current Reports on Form 8-K278 - The company reports no defaults upon senior securities (Item 3), no mine safety disclosures (Item 4), and no other information (Item 5)279280281 Item 6. Exhibits This section lists the exhibits filed with the quarterly report, including key agreements such as the Certificate of Designation for Series E Preferred Stock, the Securities Purchase Agreement with David Lazar, and settlement agreements with the European Investment Bank and the Curetis insolvency administrator - A list of exhibits filed with the Form 10-Q is provided, including certifications and various material agreements294