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MarketScreener Homepage  >  Equities  >  Nasdaq  >  OpGen Inc    OPGN

OPGEN INC

(OPGN)
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OpGen : Note 2 - Liquidity and management's plans

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08/14/2019 | 05:05pm EDT

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 transactions, including the following in 2018 and 2019 to date:

   •  On March 29, 2019, the Company closed a public offering (the "March 2019
      Public Offering") of 9,000,000 shares of its common stock at a public
      offering price of $0.60 per share. The offering raised gross proceeds of
      $5.4 million and net proceeds of approximately $4.8 million.


   •  On October 22, 2018, the Company closed a public offering (the "October 2018
      Public Offering") of 2,220,000 shares of its common stock at a public
      offering price of $1.45 per share. The offering raised gross proceeds of
      approximately $3.2 million and net proceeds of approximately $2.8 million.




   •  On June 11, 2018, the Company executed an Allonge (the "Allonge") to its
      Second Amended and Restated Senior Secured Promissory Note, dated June 28,
      2017, with a principal amount of $1,000,000 issued to Merck Global Health
      Innovation Fund, LLC ("MGHIF"). The Allonge provided that accrued and unpaid
      interest of $285,512 due as of July 14, 2018, the


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      original maturity date, be paid through the issuance of shares of OpGen's
      common stock in a private placement transaction. In addition, the Allonge
      revised and extended the maturity date for payment of the Promissory Note to
      six semi-annual payments of $166,667 plus accrued and unpaid interest
      beginning on January 2, 2019 and ending on July 1, 2021. On July 30, 2018,
      the Company issued 144,238 shares of common stock to MGHIF in a private
      placement transaction for $285,512 of accrued and unpaid interest due as of
      July 14, 2018 under the MGHIF Note.


   •  On February 6, 2018, the Company closed a public offering (the "February
      2018 Public Offering") of 2,841,152 units at $3.25 per unit, and 851,155
      pre-funded units at $3.24 per pre-funded unit, raising gross proceeds of
      approximately $12 million and net proceeds of approximately $10.7
      million. Each unit included one share of common stock and one common warrant
      to purchase 0.5 share of common stock at an exercise price of $3.25 per
      share.  Each pre-funded unit included one pre-funded warrant to purchase one
      share of common stock for an exercise price of $0.01 per share, and one
      common warrant to purchase 0.5 share of common stock at an exercise price of
      $3.25 per share. The common warrants are exercisable immediately and have a
      five-year term from the date of issuance. The 851,155 pre-funded warrants
      issued in the February 2018 Public Offering were exercised during the year
      ended December 31, 2018.


   •  On September 13, 2016, the Company entered into the Sales Agreement (the
      "Sales Agreement") with Cowen and Company LLC ("Cowen") pursuant to which
      the Company could offer and sell from time to time, up to an aggregate of
      $25 million of shares of its common stock through Cowen, as sales agent,
      with initial sales limited to an aggregate of $11.5 million. During the year
      ended December 31, 2018, the Company sold 318,236 shares of its common stock
      under this at the market offering resulting in aggregate net proceeds to the
      Company of approximately $0.6 million, and gross proceeds of $0.6 million.
      The at the market offering was terminated in connection with the October
      2018 Public Offering.

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 and business combination transactions. 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 third quarter of 2019. 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 third quarter of 2019, 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, 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 2018 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, 2018 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; all intercompany transactions and balances have been eliminated.


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Foreign currency

The Company has subsidiaries located in Copenhagen, Denmark, and Bogota, Colombia, both 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 loss, a component of stockholders' equity. Foreign currency translation adjustments are the sole component of accumulated other comprehensive loss at June 30, 2019 and December 31, 2018.

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 U.S. 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, 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.

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.

Cash, 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 government agency ("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, 2019, the Company has funds totaling $185,380, which are required as collateral for letters of credit benefiting its landlords and for credit card processors. At December 31, 2018, the Company had funds totaling $164,720, 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.

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

© Edgar Online, source Glimpses

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