Management's Discussion and Analysis of Financial Condition and Results of Operations

The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our audited consolidated financial statements and the accompanying notes thereto included elsewhere in this Annual Report. This discussion contains forward-looking statements, based on current expectations and related to future events and our future financial performance, that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many important factors, including those set forth in the section titled "Risk Factors" included under Part I, Item 1A of this Annual Report.

Overview

OpGen, Inc. ("OpGen" or the "Company") was incorporated in Delaware in 2001. In April 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, the Company entered into a securities purchase agreement (the "March 2024 Purchase Agreement") with David E. Lazar, pursuant to which the Company agreed to sell 3,000,000 shares of Series E Convertible Preferred Stock ("Series E Preferred Stock") to Mr. Lazar at a price of $1.00 per share for aggregate gross proceeds of $3.0 million. In connection with the transactions contemplated by the March 2024 Purchase Agreement, the members of the Board of Directors, prior to the closing of such transactions, resigned and a new Board of Directors was appointed, of which Mr. Lazar was appointed Chairman. Furthermore, in April 2024, the Company entered into an employment agreement with David E. 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 under the March 2024 Purchase Agreement to AEI Capital Ltd. In conjunction with the transaction, Mr. Lazar resigned as CEO, Chairman and Director of the Company, effective August 2, 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 under the terms of the March 2024 Purchase Agreement. 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. As of September 30, 2024, no shares of Series E Preferred Stock remain outstanding. Upon conversion, such shares of Series E Preferred Stock resumed the status of authorized but unissued shares of undesignated preferred stock of the Company.

Under the direction of AEI Capital Ltd., the Company has continued scaling down legacy operations. The Company has repositioned itself and established a wholly-owned subsidiary, CapForce International Holdings Ltd. ("CapForce"), which has launched a new business 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, cross border securities trading, advanced computational model-enabled investment banking advisory, asset management services, and FinTech-enabled capital table management.

On January 5, 2023 and May 20, 2024, the Company effected 1-for-20 and 1-for-10 reverse stock splits of its issued and outstanding shares of common stock, respectively. All share amounts and per share prices in this Annual Report have been adjusted to reflect the reverse stock splits.

Financing Transactions

Since inception, the Company has incurred significant losses from operations and negative operating cash flows. Historically, the Company has funded its operations primarily through external investor financing arrangements and strategic actions taken by the Company, but going forward, the Company anticipates funding its operations primarily through financing arrangements with AEI Capital Ltd. The following financing transactions took place during 2023 and 2024:

●

In January 2023, we closed a best-efforts public offering for the purchase of (i) 32,121 shares of common stock, (ii) pre-funded warrants to purchase up to an aggregate of 226,500 shares of common stock, (iii) Series A-1 common warrants to purchase an aggregate of 258,621 shares of common stock, and (iv) Series A-2 common warrants to purchase an aggregate of 258,621 shares of common stock. The offering raised aggregate gross proceeds of approximately $7.5 million before deducting the placement agent's fees and the offering expenses, and net proceeds of approximately $6.9 million.

●

In May 2023, we closed a best-efforts public offering for the purchase of (i) 60,500 shares of the Company's common stock, par value $0.01 per share, (ii) pre-funded warrants to purchase up to an aggregate of 389,083 shares of common stock, and (iii) common warrants to purchase up to an aggregate of 449,583 shares of common stock. The offering raised aggregate gross proceeds of approximately $3.5 million and net proceeds of approximately $3.0 million.

●

In October 2023, Curetis received a payment of €0.75 million related to the sale of certain Unyvero A50 systems by Curetis to a strategic partner. Such purchase of systems and payment was made in connection with the negotiation of a potential strategic transaction involving Curetis and the Company's subsidiary, Ares Genetics, with such strategic partner; however, the potential strategic transaction was unsuccessful.

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In October 2023, we entered into a Preferred Stock Purchase Agreement with a single investor for 1,000 shares of the Company's Series D Preferred Stock, par value $0.01 per share, where each share of preferred stock was agreed to sell at a price of $1,000 per share for aggregate gross proceeds of $1.0 million before deducting offering expenses. The investor funded $250,000 of the expected aggregate gross proceeds of $1.0 million before deducting offering expenses in November 2023. In December 2023, in coordination with the investor, the Company issued 250 shares of Series D Preferred Stock to the investor in consideration for the partial payment. As of December 31, 2024, all 250 Series D Preferred Shares remain outstanding and the remaining $750,000 of the purchase price remains unpaid. The private placement was conducted in connection with the negotiation of a potential strategic transaction involving the Company and the investor. The Company's discussions with this investor have ceased.

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In October 2023, we entered into a warrant inducement agreement with a holder of certain existing warrants to purchase shares of common stock, par value $0.01 per share, of the Company. Pursuant to the Inducement Agreement, the holder agreed to exercise for cash their existing warrants to purchase up to 1,089,274 shares of the Company's common stock at an exercise price of $7.785 per share, the exercise price per share of the existing warrants, during the period from the date of the Inducement Agreement until 7:30 a.m., Eastern Time, on October 26, 2023; however, on October 26, 2023, and subsequently on February 7, 2024, the Company and the holder agreed to initially extend the offer period through December 31, 2023, and later through April 30, 2024. In October 2023, the holder exercised 200,000 shares of Common Stock under the existing warrants pursuant to the Inducement Agreement for aggregate gross proceeds to the Company of $2.057 million before deducting financial advisory fees and other expenses payable by the Company. The holder did not exercise any additional Existing Warrants prior to the termination of the April 30, 2024 extended offer period.

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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, Reference Number 38 S 175/23x. The insolvency proceedings of Curetis and Ares Genetics were adjudicated under the insolvency laws of Germany and Austria, respectively. The insolvency administrators assumed control over the assets and liabilities of Curetis and Ares Genetics, respectively, which eliminated the authority and power of the Company and its officers to act on behalf of the subsidiaries. The German and Austrian insolvency administrators both successfully completed asset sales of the assets of Curetis and Ares Genetics, but the Company does not anticipate receiving any proceeds from such sales as the proceeds will be allocated amongst each entity's creditors.

●

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. In March 2024, Mr. Lazar paid $200,000 at the initial closing in exchange for 200,000 shares of Series E Preferred Stock. Mr. Lazar subsequently paid $350,000 in exchange for an additional 350,000 shares of Series E Preferred Stock in April 2024. 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 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.

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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 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: (1) 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 (2) our ability to sell shares of common stock to AEI Capital Ltd. under the securities purchase agreement was extended until December 31, 2025.

Financial Overview

Revenue

Prior to the repositioning of our business, we generated product revenues from sales of our products, including through our distribution partners, such as our Unyvero instruments and consumables. We also generated revenue from sales by 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 establishment 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 relates to the material and labor costs associated with providing our services. Research and development expenses consist primarily of expenses incurred in connection with our clinical and pre-clinical research activities. Selling, general and administrative expenses consist of public company costs, salaries, and related costs for administrative, sales, and business development personnel. Following the acquisition of a controlling interest in the Company by AEI Capital Ltd. and the establishment 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 the 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 Years Ended December 31, 2024 and 2023

Revenues

		Years ended December 31,
		2024				2023
Revenue
Product sales		$	169,373			$	2,400,053
Laboratory services			26,776				153,719
Listing sponsorship services			5,000,000				-
Collaboration revenue			-				864,548
Total revenue		$	5,196,149			$	3,418,320

The Company's total revenue for the year ended December 31, 2024 increased $1.8 million or 52%. This increase is primarily attributable to the recognition of listing sponsorship services revenues in 2024, partially offset by a decrease in product sales, laboratory services, and collaboration revenues as the Company scaled down its legacy operations. The breakdown of total revenues is as follows:

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Product Sales: the decrease of approximately 93% during the year ended December 31, 2024 compared to the same period in 2023 is primarily attributable to the exclusion of Curetis' and Ares Genetics' product sales in the 2024 period following their insolvency filings in November 2023 as well as the scaling down of legacy operations at the Company in connection with the Company repositioning its business;

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Laboratory Services: the decrease of approximately 83% during the year ended December 31, 2024 compared to the same period in 2023 is primarily attributable to the discontinuance of Ares Genetics' related products and services during the first quarter of 2024 due to the sale of the Ares Genetics assets to a strategic acquiror by its insolvency administrator in Austria;

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Listing Sponsorship Service: the increase of 100% during the year ended December 31, 2024 compared to the same period in 2023 is due to the listing sponsorship and consulting services performed by CapForce in the fourth quarter of 2024, when CapForce commenced this new business line; and

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Collaboration Revenue: the decrease of 100% during the year ended December 31, 2024 compared to the same period in 2023 is due to the Company no longer receiving revenues under the collaboration agreement with FIND as a result of the deconsolidation following Curetis' insolvency filing in 2023.

Operating expenses

		Years Ended December 31,
		2024				2023
Cost of products sold		$	31,636			$	3,084,075
Cost of services			1,575				424,939
Research and development			48,820				4,732,851
General and administrative			4,542,025				8,081,664
Sales and marketing			172,238				2,783,268
Loss on deconsolidation of subsidiaries			75,138				12,979,061
Impairment of right-of-use asset			-				849,243
Impairment of property and equipment			-				1,231,874
Total operating expenses		$	4,871,432			$	34,166,975

The Company's total operating expenses for the year ended December 31, 2024 decreased 86%, from $34.2 million to $4.9 million, when compared to the same period in 2023. This decrease is primarily attributable to:

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Cost of products sold: cost of products sold for the year ended December 31, 2024 decreased 99% when compared to the same period in 2023. The decrease in cost of products sold aligns with the decrease in the Company's legacy, lower margin product sales business during 2024;

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Cost of services: cost of services for the year ended December 31, 2024 decreased 100% when compared to the same period in 2023. The decrease in cost of services aligns with the decrease in laboratory services and collaboration revenue during 2024, which is due to the sale of Ares Genetics' business in the first quarter of 2024 as part of Ares Genetics' insolvency proceedings and the Company no longer collaborating with FIND as a result of the deconsolidation following Ares Genetics' and Curetis' insolvency filings in 2023;

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Research and development, general and administrative, and sales and marketing: research and development, general and administrative, and sales and marketing expenses decreased approximately 99%, 44%, and 94%, respectively, for the year ended December 31, 2024 compared to the same period in 2023. The decreases are primarily attributable to the Company no longer including expenses related to Curetis and Ares Genetics in the consolidated figures as a result of the deconsolidation following their insolvency filings in November 2023, and the scaling down of legacy operations at the Company in connection with the Company repositioning its business;

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Loss on deconsolidation of subsidiaries: loss on deconsolidation of subsidiaries for the year ended December 31, 2024 decreased 99% when compared to the same period in 2023 as the deconsolidation of the Company's Colombia and Denmark subsidiaries in 2024 was much less significant than the losses incurred by the Company associated with the insolvency filings of Curetis and Ares Genetics in November 2023;

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Impairment of right-of-use asset: impairment of right-of-use asset for the year ended December 31, 2023 represents the impairment of the Company's right-of-use lease asset at its Rockville, MD office; and

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Impairment of property and equipment: impairment of property and equipment for the year ended December 31, 2023 represents the impairment of the Company's property and equipment at its Rockville, MD office.

Other income (expense)

		Years Ended December 31,
		2024				2023
Interest and other income		$	371,444			$	142,488
Interest expense			(7,555	)			(1,838,933	)
Gain on extinguishment of debt			9,738,487				-
Gain on impairment adjustment			2,079,575				-
Gain on settlement of compensation expenses			570,785				-
Change in fair value of EIB loan guaranty			(908,586	)			-
Foreign currency transaction gains (losses)			575				(289,306	)
Change in fair value of derivative financial instruments			-				65,876
Total other income (expense)		$	11,844,725			$	(1,919,875	)

The Company's increase in total other income for the year ended December 31, 2024 compared to the same period of 2023 is primarily due to the recognition of a gain on extinguishment of debt of $9.7 million following the Company's settlement of the EIB loan guaranty in August 2024, the 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, and the recognition of a gain on settlement of compensation expenses of $0.6 million following the Company's settlement of deferred and accrued compensation and severance expenses with the Company's former CEO, David E. Lazar. In addition, the Company did not recognize interest expense on the Company's EIB liability during 2024 because, upon deconsolidation of the Company's subsidiaries in the fourth quarter of 2023, the Company reclassified the EIB liability from a loan to a loan guaranty, which is recorded based on its fair value with changes being recognized as part of net income (loss) at each reporting date.

Liquidity and Capital Resources

At December 31, 2024, the Company had cash and cash equivalents of $1.3 million compared to $1.2 million at December 31, 2023. The Company has funded its operations primarily through external investor financing arrangements and strategic actions taken by the Company, but going forward, the Company anticipates funding its operations primarily through financing arrangements with AEI Capital Ltd. The following financing transactions took place during 2023 and 2024:

●

In January 2023, we closed a best-efforts public offering for the purchase of (i) 32,121 shares of common stock, (ii) pre-funded warrants to purchase up to an aggregate of 226,500 shares of common stock, (iii) Series A-1 common warrants to purchase an aggregate of 258,621 shares of common stock, and (iv) Series A-2 common warrants to purchase an aggregate of 258,621 shares of common stock. The offering raised aggregate gross proceeds of approximately $7.5 million before deducting the placement agent's fees and the offering expenses, and net proceeds of approximately $6.9 million.

●

In May 2023, we closed a best-efforts public offering for the purchase of (i) 60,500 shares of the Company's common stock, par value $0.01 per share, (ii) pre-funded warrants to purchase up to an aggregate of 389,083 shares of common stock, and (iii) common warrants to purchase up to an aggregate of 449,583 shares of common stock. The offering raised aggregate gross proceeds of approximately $3.5 million and net proceeds of approximately $3.0 million.

●

In October 2023, Curetis received a payment of €0.75 million related to the sale of certain Unyvero A50 systems by Curetis to a strategic partner. Such purchase of systems and payment was made in connection with the negotiation of a potential strategic transaction involving Curetis and the Company's subsidiary, Ares Genetics, with such strategic partner; however, the potential strategic transaction was unsuccessful.

●

In October 2023, we entered into a Preferred Stock Purchase Agreement with a single investor for 1,000 shares of the Company's Series D Preferred Stock, par value $0.01 per share, where each share of preferred stock was agreed to sell at a price of $1,000 per share for aggregate gross proceeds of $1.0 million before deducting offering expenses. The investor funded $250,000 of the expected aggregate gross proceeds of $1.0 million before deducting offering expenses in November 2023. In December 2023, in coordination with the investor, the Company issued 250 shares of Series D Preferred Stock to the investor in consideration for the partial payment. As of December 31, 2024, all 250 Series D Preferred Shares remain outstanding and the remaining $750,000 of the purchase price remains unpaid. The private placement was conducted in connection with the negotiation of a potential strategic transaction involving the Company and the investor. The Company's discussions with this investor have ceased.

●

In October 2023, we entered into a warrant inducement agreement with a holder of certain existing warrants to purchase shares of common stock, par value $0.01 per share, of the Company. Pursuant to the Inducement Agreement, the holder agreed to exercise for cash their existing warrants to purchase up to 1,089,274 shares of the Company's common stock at an exercise price of $7.785 per share, the exercise price per share of the existing warrants, during the period from the date of the Inducement Agreement until 7:30 a.m., Eastern Time, on October 26, 2023; however, on October 26, 2023, and subsequently on February 7, 2024, the Company and the holder agreed to initially extend the offer period through December 31, 2023, and later through April 30, 2024. In October 2023, the Holder exercised 200,000 shares of Common Stock under the existing warrants pursuant to the Inducement Agreement for aggregate gross proceeds to the Company of $2.057 million before deducting financial advisory fees and other expenses payable by the Company. The Holder did not exercise any additional Existing Warrants prior to the termination of the April 30, 2024 extended offer period.

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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, Reference Number 38 S 175/23x. The insolvency proceedings of Curetis and Ares Genetics were adjudicated under the insolvency laws of Germany and Austria, respectively. The insolvency administrators assumed control over the assets and liabilities of Curetis and Ares Genetics, respectively, which eliminated the authority and power of the Company and its officers to act on behalf of the subsidiaries. The German and Austrian insolvency administrators both successfully completed asset sales of the assets of Curetis and Ares Genetics, but the Company does not anticipate receiving any proceeds from such sales as the proceeds will be allocated amongst each entity's creditors.

●

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. In March 2024, Mr. Lazar paid $200,000 at the initial closing in exchange for 200,000 shares of Series E Preferred Stock. Mr. Lazar subsequently paid $350,000 in exchange for an additional 350,000 shares of Series E Preferred Stock in April 2024. 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 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.

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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 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.

Sources and uses of cash

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

		Years ended December 31,
		2024				2023
Net cash provided by (used in)
Operating activities		$	(4,869,744	)		$	(14,319,542	)
Investing activities			-				(800,412	)
Financing activities			5,028,574				8,373,314
Net increase (decrease) in cash and cash equivalents		$	158,830			$	(6,746,640	)

Net cash used in operating activities

Net cash used in operating activities in 2024 consisted primarily of our net income of $12.0 million, adjusted for certain non-cash items, including the change in fair value of the EIB loan guaranty of $10.9 million, the gain on impairment adjustment of $2.1 million, and the net change in operating assets and liabilities of $4.1 million. Net cash used in operating activities in 2023 consisted primarily of our net loss of $32.7 million, adjusted for certain non-cash items, including loss on deconsolidation of subsidiaries of $13.0 million, depreciation and amortization expense of $1.3 million, non-cash interest of $1.7 million, impairment of property and equipment of $1.2 million, impairment of right-of-use asset of $0.8 million, and change in inventory reserve of $0.8 million, partially offset by the net change in operating assets and liabilities of $1.0 million.

Net cash used in investing activities

Net cash used in investing activities in 2023 consisted of purchases of property and equipment.

Net cash provided by financing activities

Net cash provided by financing activities in 2024 of $5.0 million consisted primarily of proceeds from the issuance of preferred stock in connection with the March 2024 Purchase Agreement with David E. Lazar and, subsequently, AEI Capital Ltd., as assignee from Mr. Lazar of $3.0 million, and proceeds from the issuance of common stock in connection with the August 2024 Securities Purchase Agreement with AEI Capital Ltd. of $2.0 million. Net cash provided by financing activities in 2023 of $8.4 million consisted primarily of net proceeds from the January 2023 Offering of $6.9 million, the May 2023 Offering of $3.0 million, and the October 2023 Warrant Inducement of $2.1 million, partially offset by payments on debt of $3.9 million.

Contractual Commitments

Subsequent to the insolvency filings of Curetis and Ares Genetics in November 2023 and the resulting deconsolidation, and following the Company's related settlements with EIB and Curetis in August 2024, 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 December 31, 2024.

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 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 assure you 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 Estimates

This Management's Discussion and Analysis of Financial Condition and Results of Operations is based on our audited consolidated financial statements, which have been prepared in accordance with United States General Accepted Accounting Principles ("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 the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. In our audited consolidated financial statements, estimates are used for, but not limited to, liquidity assumptions, revenue recognition, 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 of the accompanying audited consolidated financial statements. Certain of our accounting policies are considered critical, as these policies require significant, difficult or complex judgments by management, often requiring the use of estimates about the effects of matters that are inherently uncertain.

Revenue Recognition

During the years ended December 31, 2024 and 2023, the Company derived revenues from (i) listing sponsorship and consultancy services, (ii) the sale of Unyvero Application cartridges, Unyvero Systems, Acuitas AMR Gene Panel test products, and SARS CoV-2 tests, (iii) providing laboratory services, and (iv) providing collaboration services including funded software arrangements, license arrangements, and the FIND NGO collaboration on our Unyvero A30 platform.

The Company analyzes contracts to determine the appropriate revenue recognition using the following steps: (i) identification of contracts with customers, (ii) identification of distinct performance obligations in the contract, (iii) determination of contract transaction price, (iv) allocation of contract transaction price to the performance obligations and (v) determination of revenue recognition based on timing of satisfaction of the performance obligation.

The Company recognizes revenues upon the satisfaction of its performance obligation (upon transfer of control of promised goods or services to our customers) in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services.

The Company defers incremental costs of obtaining a customer contract and amortizes the deferred costs over the period that the goods and services are transferred to the customer. The Company had no material incremental costs to obtain customer contracts in any period presented.

Deferred revenue results from amounts billed in advance to customers or cash received from customers in advance of services being provided.

Valuation of Inventory

The Company's inventory is entirely made up of Unyvero system instruments and components.

The Company periodically reviews inventory quantities on hand and analyzes the provision for excess and obsolete inventory based primarily on product expiration dating and its estimated sales forecast, which is based on sales history and anticipated future demand. The Company's estimates of future product demand is subjective, 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. Due to the insolvency proceedings and the deconsolidation of Curetis and Ares Genetics in 2023, there is significant uncertainty surrounding the future demand and net realizable value of the Company's products. As a result of these events, the Company recorded a full reserve against its inventory, resulting in a net carrying value of zero as of December 31, 2024 and December 31, 2023. The total inventory reserves, which equal the gross inventory value, were $1,225,975 and $1,280,805 at December 31, 2024 and 2023, respectively.

Impairment of Long-Lived Assets

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 estimation of undiscounted cash flows are done at the lowest possible level for which we can identify assets. If such assets are considered to be impaired, impairment is recognized as the amount by which the carrying amount of assets exceeds the fair value of the assets. During the year ended December 31, 2023, the Company determined that its property and equipment, including leasehold improvements and computer and networking equipment, at its Rockville, MD office was impaired due to the Company's financial condition and the impairment of the Company's ROU lease asset. As a result, the Company recorded an impairment charge in the amount of $1,231,874. In the Company's Amended Form 10-Q for the three months ended March 31, 2024, the Company recorded a change in accounting estimate on the Company's leasehold improvement property and equipment, adjusting the balance as of the beginning of the period to $1,230,332 following the Company's identification of a subtenant. During the year ended December 31, 2024, the Company determined that its property and equipment was not impaired.

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. All the Company's finite-lived intangible assets with net balances were held by Curetis and Ares Genetics. As a result of the insolvency filings for Curetis and Ares Genetics and the associated deconsolidation of these entities in 2023, the Company does not have any finite-lived or indefinite-lived intangible asset balances as of December 31, 2024.

Share-Based Compensation

Share-based payments to employees, directors and consultants are recognized at fair value. The resulting fair value is recognized ratably over the requisite service period, which is generally the vesting period of the option. The estimated fair value of equity instruments issued to non-employees is recorded at fair value on the grant date.

For all time-vesting awards granted, expense is amortized using the straight-line attribution method. For awards that contain a performance condition, expense is amortized using either the straight-line or accelerated attribution method, depending on the vesting structure. Share-based compensation expense recognized is based on the value of the portion of stock-based awards that is ultimately expected to vest during the period. The fair value of share-based payments is estimated, on the date of grant, using the Black-Scholes model. Option valuation models, including the Black-Scholes model, require the input of highly subjective estimates and assumptions, and changes in those estimates and assumptions can materially affect the grant-date fair value of an award. These assumptions include the fair value of the underlying award and the expected life of the award.

See additional discussion of the use of estimates relating to share-based compensation, and a discussion of management's methodology for developing each of the assumptions used in such estimates, in Note 3 of the accompanying consolidated financial statements.

Recent Accounting Pronouncements

We have reviewed all recently issued standards and have determined that, other than as disclosed in Note 3 of our consolidated financial statements appearing elsewhere in this filing, such standards will not have a material impact on our consolidated financial statements or do not otherwise apply to our operations.

Off-Balance Sheet Arrangements

As of December 31, 2024 and 2023, the Company did not have any off-balance sheet arrangements.