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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_____________________________

FORM 10-Q

_____________________________

(Mark one)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

or

TRANSITION REPORT PURSUANT TO 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

 

06-1614015

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. employer

identification no.)

9717 Key West Avenue, Suite 100, Rockville, MD

20850

(Address of principal executive offices)

(Zip code)

Registrant’s telephone number, including area code: (240) 813-1260

_____________________________

Securities registered or to be registered pursuant to Section 12(b) of the Act.

 

Title of each class

Trading Symbols

Name of each exchange on  which

registered

Common Stock

OPGN

Nasdaq Capital Market

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

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

Emerging growth 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

38,270,250 shares of the Company’s common stock, par value $0.01 per share, were outstanding as of August 11, 2021.



OPGEN, INC.

TABLE OF CONTENTS FOR FORM 10-Q

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

3

 

PART I.FINANCIAL INFORMATION

 

Item 1.Unaudited Condensed Consolidated Financial Statements

4

Condensed Consolidated Balance Sheets at June 30, 2021 and December 31, 2020

4

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2021 and 2020

5

Condensed Consolidated Statements of Stockholders’ Equity for the six months ended June 30, 2021 and 2020

6

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020

7

Notes to Unaudited Condensed Consolidated Financial Statements

8

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations 30
Item 3.Quantitative and Qualitative Disclosures About Market Risk 38
Item 4.Controls and Procedures 38
   
PART II.OTHER INFORMATION 38
   
Item 1.Legal Proceedings 38
Item 1A.Risk Factors 38
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds 38
Item 3.Defaults Upon Senior Securities 38
Item 4.Mine Safety Disclosures 38
Item 5.Other Information 38
Item 6.Exhibits 39
   
SIGNATURES 40
 

2


INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q of OpGen, Inc. 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 quarterly report, we refer to OpGen, Inc. as the “Company,” “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 II 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 ability to integrate the OpGen, Curetis, and Ares Genetics businesses;

receipt of regulatory clearance of our submitted 510(k) pre-market submission for our Acuitas AMR Gene Panel test for use with bacterial isolates;

the impact of COVID-19 on our business and operations;

our liquidity and working capital requirements, including our cash requirements over the next 12 months;

our use of proceeds from capital financing transactions;

the completion of our development efforts for our Acuitas Lighthouse Software, Unyvero UTI and IJI panels, Unyvero A30 RQ platform and ARESdb and the timing of regulatory submissions;

our ability to sustain or grow our customer base for our Unyvero IVD products as well as our current research use only products;

regulations and changes in laws or regulations applicable to our business, including regulation by the FDA and China’s NMPA;

anticipated trends and challenges in our business and the competition that we face;

the execution of our business plan and our growth strategy;

our expectations regarding the size of and growth in potential markets;

our opportunity to successfully enter into new collaborative or strategic agreements;

our ability to maintain compliance with the ongoing listing requirements for the Nasdaq Capital Market;

compliance with the U.S. and international 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. These risks 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 II, Item 1A of this quarterly 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 quarterly 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.

NOTE REGARDING TRADEMARKS

We own various U.S. federal trademark registrations and applications and unregistered trademarks and servicemarks, including but not limited to OpGen®, Curetis®, Unyvero®, ARES® and ARES GENETICS®, Acuitas®, Acuitas Lighthouse®, AdvanDx®, QuickFISH®, and PNA FISH®. All other trademarks, servicemarks or trade names referred to in this quarterly report are the property of their respective owners. Solely for convenience, the trademarks and trade names in this quarterly 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.

3


Part I. FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

OpGen, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(unaudited)

June 30, 2021

December 31, 2020

Assets

Current assets

Cash and cash equivalents

$

31,182,385

$

13,360,463

Accounts receivable, net

472,567

653,104

Inventory, net

1,333,880

1,485,986

Prepaid expenses and other current assets

2,081,549

1,388,090

Total current assets

35,070,381

16,887,643

Property and equipment, net

4,223,155

3,259,487

Finance lease right-of-use assets, net

227,209

449,628

Operating lease right-of-use assets

2,038,073

2,082,300

Goodwill

7,790,595

8,024,729

Intangible assets, net

15,662,324

16,580,963

Strategic inventory

2,995,436

1,686,342

Other noncurrent assets

555,190

779,953

Total assets

$

68,562,363

$

49,751,045

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable

$

1,207,113

$

1,868,666

Accrued compensation and benefits

1,541,898

2,126,511

Accrued liabilities

1,137,196

1,437,141

Deferred revenue

9,808

Current maturities of long-term debt

699,000

Short-term finance lease liabilities

116,829

266,470

Short-term operating lease liabilities

854,233

964,434

Total current liabilities

4,857,269

7,372,030

Long-term debt, net

20,670,941

19,378,935

Long-term finance lease liabilities

18,693

46,794

Long-term operating lease liabilities

2,910,810

1,492,544

Derivative liabilities

222,387

112,852

Other long-term liabilities

146,344

156,635

Total liabilities

28,826,444

28,559,790

Commitments and contingencies (Note 9)

Stockholders' equity

Preferred stock, $0.01 par value; 10,000,000 shares authorized; none issued and

outstanding at June 30, 2021 and December 31, 2020

Common stock, $0.01 par value; 50,000,000 shares authorized; 38,270,250 and

25,085,534 shares issued and outstanding at June 30, 2021 and

December 31, 2020, respectively

382,703

250,855

Additional paid-in capital

260,027,841

219,129,045

Accumulated deficit

(222,672,979

)

(200,735,827

)

Accumulated other comprehensive income

1,998,354

2,547,182

Total stockholders’ equity

39,735,919

21,191,255

Total liabilities and stockholders’ equity

$

68,562,363

$

49,751,045

See accompanying notes to unaudited condensed consolidated financial statements.

4


OpGen, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss

(unaudited)

Three months ended June 30,

Six months ended June 30,

2021

2020

2021

2020

Revenue

Product sales

$

307,804

$

601,304

$

835,383

$

968,237

Laboratory services

266,784

25,992

450,849

25,992

Collaboration revenue

237,027

561,089

355,099

811,089

Total revenue

811,615

1,188,385

1,641,331

1,805,318

Operating expenses

Cost of products sold

342,580

713,916

896,634

990,470

Cost of services

137,934

252,655

242,918

390,321

Research and development

2,859,590

2,979,025

5,673,081

4,196,581

General and administrative

2,692,255

2,491,571

5,355,912

4,193,019

Sales and marketing

802,549

1,044,032

1,701,801

1,326,309

Transaction costs

225,000

470,322

Impairment of right-of-use asset

115,218

170,714

Impairment of intangibles assets

750,596

Total operating expenses

6,950,126

7,706,199

14,041,060

12,317,618

Operating loss

(6,138,511

)

(6,517,814

)

(12,399,729

)

(10,512,300

)

Other (expense) income

Gain on extinguishment of debt

259,353

259,353

Warrant inducement expense

(7,755,541

)

Interest and other income (expense)

4,702

(5,656

)

9,627

81,679

Interest expense

(1,198,169

)

(1,044,891

)

(2,363,151

)

(1,083,158

)

Foreign currency transaction (losses) gains

(915

)

(289,788

)

426,700

(293,664

)

Change in fair value of derivative financial instruments

(13,021

)

382,511

(114,411

)

382,511

Total other (expense) income

(948,050

)

(957,824

)

(9,537,423

)

(912,632

)

Loss before income taxes

(7,086,561

)

(7,475,638

)

(21,937,152

)

(11,424,932

)

Provision for income taxes

Net loss

$

(7,086,561

)

$

(7,475,638

)

$

(21,937,152

)

$

(11,424,932

)

Net loss available to common stockholders

$

(7,086,561

)

$

(7,475,638

)

$

(21,937,152

)

$

(11,424,932

)

Net loss per common share - basic and diluted

$

(0.19

)

$

(0.49

)

$

(0.65

)

$

(1.00

)

Weighted average shares outstanding - basic and diluted

38,268,293

15,403,986

33,900,964

11,427,322

Net loss

$

(7,086,561

)

$

(7,475,638

)

$

(21,937,152

)

$

(11,424,932

)

Other comprehensive income (loss) - foreign currency translation

529,651

324,939

(548,828

)

364,416

Comprehensive loss

$

(6,556,910

)

$

(7,150,699

)

$

(22,485,980

)

$

(11,060,516

)

See accompanying notes to unaudited condensed consolidated financial statements.

5


OpGen, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

Common Stock

Preferred Stock

Number of

Shares

Amount

Number of

Shares

Amount

Additional

Paid-

in Capital

Accumulated

Other

Comprehensive

Income (Loss)

Accumulated

Deficit

Total

Balances at December 31, 2019

5,582,280

$

55,823

$

$

178,779,814

$

(17,315

)

$

(174,524,983

)

$

4,293,339

At the market offering, net of offering costs

2,814,934

28,149

5,449,283

5,477,432

Common stock warrant exercises

4,071,000

40,710

8,101,290

8,142,000

Stock compensation expense

79,740

79,740

Foreign currency translation

39,477

39,477

Net loss

(3,949,294

)

(3,949,294

)

Balances at March 31, 2020

12,468,214

124,682

192,410,127

22,162

(178,474,277

)

14,082,694

At the market offering, net of offering costs

2,739,442

27,394

5,870,807

5,898,201

Shares issued in business combination

2,028,208

20,282

4,827,135

4,847,417

Value of equity awards assumed in business combination

136,912

136,912

Issuance of RSUs​​

5,166

52

(52

)

Shares issued to settle convertible notes

452,902

4,529

875,903

880,432

Stock compensation expense

33,587

33,587

Foreign currency translation

324,939

324,939

Net loss

(7,475,638

)

(7,475,638

)

Balances at June 30, 2020

17,693,932

$

176,939

$

$

204,154,419

$

347,101

$

(185,949,915

)

$

18,728,544

 

 

Balances at December 31, 2020

25,085,534

$

250,855

$

$

219,129,045

$

2,547,182

$

(200,735,827

)

$

21,191,255

Offering of common stock and warrants, net of issuance costs

8,333,333

83,334

23,390,628

23,473,962

Inducement expense related to warrant reprice

7,755,541

7,755,541

Common stock warrant exercises, net of issuance costs

4,847,615

48,476

9,045,696

9,094,172

Proceeds from issuance of common stock warrants

255,751

255,751

Stock compensation expense

189,670

189,670

Foreign currency translation

(1,078,479

)

(1,078,479

)

Net loss

(14,850,591

)

(14,850,591

)

Balances at March 31, 2021

38,266,482

382,665

259,766,331

1,468,703

(215,586,418

)

46,031,281

Issuance of RSUs

3,768

38

(38

)

Stock compensation expense

261,548

261,548

Foreign currency translation

529,651

529,651

Net loss

(7,086,561

)

(7,086,561

)

Balances at June 30, 2021

38,270,250

$

382,703

$

$

260,027,841

$

1,998,354

$

(222,672,979

)

$

39,735,919

See accompanying notes to unaudited condensed consolidated financial statements.

6


OpGen, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(unaudited)

Six months ended June 30,

2021

2020

Cash flows from operating activities

Net loss

$

(21,937,152

)

$

(11,424,932

)

Adjustments to reconcile net loss to net cash used in operating activities

Depreciation and amortization

1,290,139

913,443

Noncash interest expense

1,934,356

810,368

Noncash interest income

(87,233

)

Stock compensation expense

451,218

113,327

Gain on extinguishment of debt

(259,353

)

Inducement expense related to warrant reprice

7,755,541

Change in fair value of derivative liabilities

114,411

(382,511

)

Impairment of right-of-use asset

170,714

Impairment of intangible assets

750,596

Changes in operating assets and liabilities

Accounts receivable

172,048

820,505

Inventory

(1,253,260

)

(373,379

)

Other assets

(303,073

)

662,694

Accounts payable

(627,285

)

(487,314

)

Accrued compensation and other liabilities

(57,706

)

(97,586

)

Deferred revenue

(9,808

)

(450,719

)

Net cash used in operating activities

(12,559,210

)

(9,232,741

)

Cash flows from investing activities

Acquisition of business, net of cash acquired of $1,266,849

1,266,849

Note receivable

(2,200,000

)

Purchases of property and equipment

(1,723,064

)

(1,057

)

Net cash used in investing activities

(1,723,064

)

(934,208

)

Cash flows from financing activities

Proceeds from issuance of common stock, net of issuance costs

11,375,633

Proceeds from issuance of common stock warrants

255,751

Proceeds from issuance of common stock and pre-funded warrants in registered offering, net of selling costs

23,473,962

Proceeds from the exercise of common stock warrants, net of issuance costs

9,094,172

8,142,000

Proceeds from debt, net of issuance costs

1,138,983

Payments on debt

(441,076

)

(206,933

)

Payments on finance lease obligations

(177,742

)

(324,278

)

Net cash provided by financing activities

32,205,067

20,125,405

Effects of exchange rates on cash

(296,403

)

325,908

Net increase in cash and cash equivalents and restricted cash

17,626,390

10,284,364

Cash and cash equivalents and restricted cash at beginning of period

14,107,255

2,893,603

Cash and cash equivalents and restricted cash at end of period

$

31,733,645

$

13,177,967

Supplemental disclosure of cash flow information

Cash paid for interest

$

888,374

$

94,073

Supplemental disclosures of noncash investing and financing activities

Right-of-use assets acquired through operating leases

$

748,294

$

Shares issued in business combination

$

$

4,847,417

Shares issued to settle convertible notes

$

$

880,432

See accompanying notes to unaudited condensed consolidated financial statements.

7


OpGen, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2021

Note 1 – Organization

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 (“Purchaser”). Pursuant to the Implementation Agreement, the Purchaser acquired all of 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”) (see Note 4). References in this report to the “Company” include OpGen and its wholly-owned subsidiaries. The Company’s headquarters are in Rockville, Maryland and the Company’s principal operations are in Rockville, Maryland; Holzgerlingen and Bodelshausen, Germany; and Vienna, Austria. The Company operates in one business segment.

OpGen Overview

OpGen is a precision medicine company harnessing the power of molecular diagnostics and informatics to help combat infectious disease. The Company is developing and commercializing 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. OpGen’s current product portfolio includes Unyvero, Acuitas AMR Gene Panel and Acuitas Lighthouse, and the ARES Technology Platform including ARESdb, using NGS technology and AI-powered bioinformatics solutions for antibiotic response prediction as well as the Curetis CE-IVD-marked PCR-based SARS-CoV-2 test kit.

On October 13, 2020, the Company announced its decision to discontinue the QuickFISH and PNA FISH product portfolio in its entirety by June 30, 2021 and certain licensing agreements with Life Technologies, a subsidiary of ThermoFisher, have therefore been terminated accordingly as of such date (see Note 11). The Company's FISH customers and distribution partners have been informed accordingly and last orders were received and processed in the first quarter of 2021. The discontinuance of these product lines did not qualify for discontinued operations reporting.

The focus of OpGen is on its combined broad portfolio of products, which include high impact rapid diagnostics and bioinformatics to interpret AMR genetic data. OpGen will continue to develop and seek FDA and other regulatory clearances or approvals, as applicable, for the Acuitas AMR Gene Panel (Isolates) diagnostic test, Unyvero UTI and IJI products. OpGen will continue to offer the FDA-cleared Unyvero LRT and LRT BAL Panels, as well as Unyvero UTI Panel and Acuitas AMR Gene Panel (Isolates) and Acuitas Lighthouse Software as RUO products to hospitals, public health departments, clinical laboratories, pharmaceutical companies and contract research organizations, or CROs. OpGen will also continue to commercialize its Unyvero Panels in Europe and other global markets via distributors.

Note 2 – Going Concern and Management’s Plans

The accompanying unaudited condensed 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. The Company has funded its operations primarily through external investor financing arrangements and significant actions taken by the Company, including the following:

On March 9, 2021, the Company entered into a Warrant Exercise Agreement (the “Exercise Agreement”) with the institutional investor (the “Holder”) from our 2020 PIPE financing (see discussion below for a description of the 2020 PIPE). Pursuant to the Exercise Agreement, in order to induce the Holder to exercise all of the remaining 4,842,615 outstanding warrants (the “Existing Warrants”) for cash, pursuant to the terms of and subject to beneficial ownership limitations contained in the Existing Warrants, the Company agreed to issue to the Holder new warrants (the “New Warrants”) to purchase 0.65 shares of common stock for each share of common stock issued upon such exercise of the remaining 4,842,615 outstanding Existing Warrants pursuant to the Exercise Agreement or an aggregate of 3,147,700 New Warrants. The terms of the New Warrants are substantially similar to those of the Existing Warrants, except that the New Warrants have an exercise price of $3.56. The New Warrants are immediately exercisable and will expire five years from the date of the Exercise Agreement. The Holder paid an aggregate of $255,751 to the Company for the purchase of the New Warrants. The Company received aggregate gross proceeds before expenses of approximately $9.65 million from the exercise of all of the remaining 4,842,615 outstanding Existing Warrants held by the Holder and the payment of the purchase price for the New Warrants (together, the “2021 Warrant Exercise”). As additional compensation, A.G.P./Alliance Global Partners will receive a cash fee equal to $200,000 upon the cash exercise in full of the New Warrants.

8


On February 11, 2021, the Company closed a registered direct offering (the "February 2021 Offering”) with a single U.S.-based, healthcare-focused institutional investor for the purchase of (i) 2,784,184 shares of common stock and (ii) 5,549,149 pre-funded warrants, with each pre-funded warrant exercisable for one share of common stock. The Company also issued to the investor, in a concurrent private placement, unregistered common share purchase warrants to purchase 4,166,666 shares of the Company's common stock. Each share of common stock and accompanying common warrant were sold together at a combined offering price of $3.00, and each pre-funded warrant and accompanying common warrant were sold together at a combined offering price of $2.99. The pre-funded warrants are immediately exercisable, at an exercise price of $0.01, and may be exercised at any time until all of the pre-funded warrants are exercised in full. The common warrants will have an exercise price of $3.55 per share, will be exercisable commencing on the six-month anniversary of the date of issuance, and will expire five and one-half (5.5) years from the date of issuance. The February 2021 Offering raised aggregate net proceeds of $23.5 million, and gross proceeds of $25.0 million. As of June 30, 2021, all 5,549,149 pre-funded warrants issued in the February 2021 Offering have been exercised.

On November 25, 2020, the Company closed a private placement (the “2020 PIPE”) with one healthcare-focused U.S. institutional investor for the purchase of (i) 2,245,400 shares of common stock, (ii) 4,842,615 warrants to purchase shares of common stock and (iii) 2,597,215 pre-funded warrants, with each pre-funded warrant exercisable for one share of common stock. Each share of common stock and accompanying common warrant were sold together at a combined offering price of $2.065, and each pre-funded warrant and accompanying common warrant were sold together at a combined offering price of $2.055. The common warrants have an exercise price of $1.94 per share, and are exercisable commencing on the six-month anniversary of the date of issuance, and will expire five and one-half (5.5) years from the date of issuance. The 2020 PIPE raised aggregate net proceeds of $9.3 million, and gross proceeds of $10.0 million. As of December 31, 2020, all 2,597,215 pre-funded warrants issued in the 2020 PIPE have been exercised.

On February 11, 2020, the Company entered into an At the Market Common Offering (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”), which was amended and restated on November 13, 2020 to add BTIG, LLC (“BTIG”), 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 $22.1 million of shares of the Company's common stock through the sales agents (the “2020 ATM Offering”). During the year ended December 31, 2020, the Company sold 7,521,610 shares of its common stock under the 2020 ATM Offering resulting in aggregate net proceeds to the Company of approximately $15.8 million, and gross proceeds of $16.7 million.

To meet its capital needs, the Company is considering multiple alternatives, including, but not limited to, strategic financings or other transactions, additional equity financings, debt financings and other funding transactions, licensing and/or partnering arrangements. There can be no assurance that the Company will be able to complete any such transaction on acceptable terms or otherwise. The Company believes that current cash will be sufficient to fund operations into the second quarter of 2022. This has led management to conclude that substantial doubt about the Company’s ability to continue as a going concern exists. In the event the Company is unable to successfully raise additional capital during or before the end of the second quarter of 2022, the Company will not have sufficient cash flows and liquidity to finance its business operations as currently contemplated. Accordingly, in such circumstances, the Company would be compelled to immediately reduce general and administrative expenses and delay research and development projects, pause or abort clinical trials including the purchase of scientific equipment and supplies, 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 license or sell its assets, seek to be acquired by another entity, cease operations and/or seek bankruptcy protection.

Note 3 – Summary of Significant Accounting Policies

Basis of presentation and consolidation

The Company has prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and the standards of accounting measurement set forth in the Interim Reporting Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted, although the Company believes that the disclosures made are adequate to make the information not misleading. The Company recommends that the unaudited condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s latest Annual Report on Form 10-K. In the opinion of management, all adjustments that are necessary for a fair presentation of the Company’s financial position for the periods presented have been reflected. All adjustments are of a normal, recurring nature, unless otherwise stated. The interim condensed consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year. The December 31, 2020 consolidated balance sheet included herein was derived from the audited consolidated financial statements, but does not include all disclosures including notes required by GAAP for complete financial statements.

The accompanying unaudited condensed consolidated financial statements include the accounts of OpGen and its wholly-owned subsidiaries as of June 30, 2021 including Curetis GmbH and subsidiaries acquired on April 1, 2020; all intercompany transactions and balances have been eliminated.

9


Foreign currency

The Company has subsidiaries located in Holzgerlingen, Germany; Vienna, Austria; and Copenhagen, Denmark, each of which use currencies other than the U.S. dollar as their functional currency. As a result, all assets and liabilities 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, a component of stockholders’ equity. Foreign currency translation adjustments are the sole component of accumulated other comprehensive income at June 30, 2021 and December 31, 2020.

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 unaudited condensed consolidated financial statements, estimates are used for, but not limited to, liquidity assumptions, revenue recognition, inducement expense related to warrant reprice, 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, determining the fair value of assets acquired and liabilities assumed in business combinations, the estimated useful lives of long-lived assets, and the recoverability of long-lived assets. Actual results could differ from those estimates.

Fair value of financial instruments

Financial instruments classified as current assets and liabilities (including cash and cash equivalents, 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.

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 exceed the Federal Deposit Insurance Corporation (“FDIC”) insured limit of $250,000. The Company has not experienced any losses in such accounts and management believes it is not exposed to any significant credit risk.

At June 30, 2021 and December 31, 2020, the Company had funds totaling $551,260 and $746,792, 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 unaudited condensed consolidated balance sheets.

10


The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same amounts shown in the condensed consolidated statements of cash flows:

June 30, 2021

December 31, 2020

June 30, 2020

December 31, 2019

Cash and cash equivalents

$

31,182,385

$

13,360,463

$

12,886,547

$

2,708,223

Restricted cash

551,260

746,792

291,420

185,380

Total cash and cash equivalents and restricted cash in the condensed consolidated statements of cash flows

$

31,733,645

$

14,107,255

$

13,177,967

$

2,893,603

Accounts receivable

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 and $20,753 as of June 30, 2021 and December 31, 2020, respectively.

At June 30, 2021, the Company had accounts receivable from three customers which individually represented 50%, 16% and 13% of total accounts receivable, respectively. At December 31, 2020, the Company had accounts receivable from one customer which individually represented 20% of total accounts receivable. For the three months ended June 30, 2021, revenue earned from two customers represented 29% and 13% of total revenues, respectively. For the three months ended June 30, 2020, revenue earned from one customer represented 38% of total revenues. For the six months ended June 30, 2021, revenue earned from three customers represented 21%, 13%, and 11% of total revenues, respectively. For the six months ended June 30, 2020, revenue earned from two customers represented 22% and 14% of total revenues, respectively.

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:

June 30, 2021

December 31, 2020

Raw materials and supplies

$

810,800

$

773,021

Work-in-process

67,058

87,159

Finished goods

3,451,458

2,312,148

Total

$

4,329,316

$

3,172,328

Inventory includes Unyvero instrument systems, Unyvero cartridges, reagents and components for Unyvero, Acuitas, QuickFISH and PNA FISH products, Curetis SARS-CoV-2 test kits, and reagents and supplies used for the Company’s laboratory services. Inventory reserves for obsolescence and expirations were $91,066 and $288,378 at June 30, 2021 and December 31, 2020, respectively.

The Company 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.

The Company classifies finished goods inventory it does not expect to sell or use in clinical studies within 12 months of the unaudited condensed consolidated balance sheets date as strategic inventory, a non-current asset.

11


Long-lived assets

Property and equipment

Property and equipment 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 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 three and six months ended June 30, 2021 and 2020, the Company determined that its property and equipment were not impaired.

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. During the three and six months ended June 30, 2021, the Company determined that the ROU asset associated with its San Diego, California office lease may not be recoverable. As a result, the Company recorded an impairment charge of $115,218 and $ 170,714 during the three and six months ended June 30, 2021, respectively.

Intangible assets and goodwill

Intangible assets and goodwill as of June 30, 2021 consist of finite-lived and indefinite-lived intangible assets and goodwill.

12


Finite-lived and indefinite-lived intangible assets

Intangible assets include trademarks, developed technology, In-Process Research & Development, software and customer relationships and consisted of the following as of June 30, 2021 and December 31, 2020:

June 30, 2021

December 31, 2020

Subsidiary

Cost

Accumulated

Amortization

Effect of

Foreign

Exchange

Rates

Net Balance

Accumulated

Amortization

Impairment

Effect of

Foreign

Exchange

Rates

Net Balance

Trademarks and tradenames

AdvanDx

$

461,000

$

$

$

$

(217,413

)

$

(243,587

)

$

$

Developed technology

AdvanDx

458,000

(308,526

)

(149,474

)

Customer relationships

AdvanDx

1,094,000

(736,465

)

(357,535

)

Trademarks and tradenames

Curetis

1,768,000

(237,532

)

132,238

1,662,706

(147,161

)

194,119

1,814,958

Distributor relationships

Curetis

2,362,000

(211,560

)

176,665

2,327,105

(131,070

)

259,336

2,490,266

A50 - Developed technology

Curetis

349,000

(66,991

)

26,104

308,113

(41,504

)

38,319

345,815

Ares - Developed technology

Curetis

5,333,000

(511,768

)

398,879

5,220,111

(317,060

)

585,536

5,601,476

A30 - In-Process Research & Development

Curetis

5,706,000

438,289

6,144,289

622,448

6,328,448

$

17,531,000

$

(1,027,851

)

$

1,172,175

$

15,662,324

$

(1,899,199

)

$

(750,596

)

$

1,699,758

$

16,580,963

Identifiable intangible assets will be amortized on a straight-line basis over their estimated useful lives. The estimated useful lives of the intangibles are:

Estimated Useful Life

Trademarks and tradenames

10 years

Customer/distributor relationships

15 years

A50 – Developed technology

7 years

Ares – Developed technology

14 years

A30 – Acquired in-process research & development

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 its 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.

The Company reviews the useful lives of intangible assets when events or changes in circumstances occur which may potentially impact the estimated useful life of the intangible assets.

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Total amortization expense of intangible assets was $204,800 and $192,709 for the three months ended June 30, 2021 and 2020, respectively. Total amortization expense of intangible assets was $402,642 and $259,663 for the six months ended June 30, 2021 and 2020, respectively. Expected future amortization of intangible assets is as follows:

Year Ending December 31,

 

2021 (Six months)

$

411,139

2022

822,278

2023

822,278

2024

822,278

2025

822,278

2026

822,278

Thereafter

4,995,506

Total

$

9,518,035

Intangible assets 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.

In accordance with ASC 360-10, Property, Plant and Equipment, the Company records impairment losses on long-lived assets used in operations when events and circumstances indicate that long-lived assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. During the six months ended June 30, 2021, the Company determined that its finite-lived intangible assets were not impaired. During the six months ended June 30, 2020, events and circumstances indicated the Company’s FISH intangible assets might be impaired. These circumstances included decreased product sales related to the COVID-19 pandemic and the loss of significant customers. Management’s updated estimate of undiscounted cash flows indicated that such carrying amounts were no longer expected to be recovered and that the FISH intangible assets were impaired. The Company’s analysis determined that the fair value of the assets was $0 and the Company recorded an impairment loss of $750,596.

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 June 30, 2021 and December 31, 2020 was $7,790,595 and $8,024,729, respectively.

The changes in the carrying amount of goodwill as of June 30, 2021, and since December 31, 2020, were as follows:

Balance as of December 31, 2020

 

$

8,024,729

Changes in currency translation

(234,134

)

Balance as of June 30, 2021

$

7,790,595

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 six months ended June 30, 2021 and 2020, the Company determined that its goodwill was not impaired.

Revenue recognition

The Company derives revenues from (i) the sale of QuickFISH and PNA FISH diagnostic test products, Unyvero Application cartridges, Unyvero Systems, SARS-CoV-2 tests, Acuitas AMR Gene Panel (Isolates) RUO test products, (ii) providing laboratory services, and (iii) providing collaboration services including funded software arrangements, and license arrangements.

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.

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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.

Research and development costs

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, and fees paid to consultants and outside service partners.

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 recognizes funding from grants and research incentives received from Austrian government agencies in the condensed 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 three months ended June 30, 2021, the Company recognized $154,850 as a reduction of research and development expense related to government grant arrangements. For the six months ended June 30, 2021, the Company recognized $374,072 as a reduction of research and development expense related to government grant arrangements. There were no grant proceeds recognized for the three and six months ended June 30, 2020. The Company had earned but not yet received $727,659 and $413,530 related to these agreements and incentives included in prepaid expenses and other current assets, as of June 30, 2021 and December 31, 2020, respectively.

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.

15


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 condensed consolidated financial statements when it is more likely than not that 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 $196,511,928 and $188,282,298 at December 31, 2020 and 2019, respectively. Despite the NOL carryforwards, which begin to expire 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.

The Company also has foreign NOL carryforwards of $160,540,528 at December 31, 2020 from its foreign subsidiaries. $138,576,755 of those foreign NOL carryforwards are from the Company’s operations in Germany. Despite the NOL carryforwards, the Company may have a current and future tax liability due to the nuances of German tax law around the use of NOL’s within a consolidated group. There is no assurance that these foreign 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, and (iii) restricted stock units representing the right to acquire shares of common stock which have been excluded from the computation of diluted loss per share, was 11.0 million shares and 1.1 million shares as of June 30, 2021 and 2020, respectively.

Adopted accounting pronouncements

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes, which removes certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period, the recognition of deferred tax liabilities for outside basis differences and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The Company adopted ASU 2019-12 on January 1, 2021. The impact of adopting ASU 2019-12 did not have a material impact on the Company’s condensed consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The new guidance under ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The impact of adopting ASU 2020-04 did not have a material impact on the Company’s condensed consolidated financial statements.

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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 – Business Combination

On April 1, 2020, the Company completed its business combination transaction with Curetis N.V., a public company with limited liability under the laws of the Netherlands, as contemplated by the Implementation Agreement, dated as of September 4, 2019, 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. Pursuant to the Implementation Agreement, the Purchaser acquired all of the shares of Curetis GmbH, a private limited liability company organized under the laws of the Federal Republic of Germany, and certain other assets and liabilities of the Seller, as further described below, and paid, as the sole consideration, 2,028,208 shares of the Company’s common stock to the Seller, and reserved for future issuance (a) 134,356 shares of Common Stock, in connection with its assumption of the Seller’s 2016 Stock Option Plan, as amended (the “Seller Stock Option Plan”), and the outstanding awards thereunder, and (b) 500,000 shares of common stock to be issued upon the conversion, if any, of certain convertible notes issued by the Seller.

At the closing, the Company assumed all of the liabilities of the Seller solely and exclusively related to the acquired business, which is providing innovative solutions, through development of proprietary platforms, diagnostic content, applied bioinformatics, lab services, research services and commercial collaborations and agreements, for molecular microbiology, diagnostics designed to address the global challenge of detecting severe infectious diseases and identifying antibiotic resistances in hospitalized patients. Pursuant to the Implementation Agreement, the Company also assumed and adopted the Seller Stock Option Plan as an Amended and Restated Stock Option Plan of the Company. In connection with the foregoing, the Company assumed all awards thereunder that were outstanding as of the Closing Date and converted such awards into options to purchase shares of the Company’s Common Stock pursuant to the terms of the applicable award. In addition, the Company assumed, at the closing, all of the outstanding convertible notes issued by Seller in favor of YA II PN, LTD, pursuant to the previously disclosed Assignment of the Agreement for the Issuance of and Subscription to Notes Convertible into Shares, dated February 24, 2020, and entered into pursuant to the Implementation Agreement.

Curetis’ assets and liabilities were measured and recognized at their fair values as of the transaction date and combined with the assets, liabilities, and results of operations of OpGen after the consummation of the business combination. The allocation of the purchase price to acquired assets