Company: OPGN
Filing Date: 2025-08-21
Form Type: 10-K
Source: 0001829126-25-006628
Chunk: 257

Company: OPGEN INC
Filing Date: 2025-08-21
Form: 10-K
Item: Item 1A
Chunk 257
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Risk-free interest rate

The risk-free interest rate is the U.S. Treasury rate for the day of each option grant during the year, having a term that most closely resembles the expected term of the option.

Expected term

The expected term of a stock option grant is the period of time that the options granted are expected to remain unexercised. Options granted have a maximum term of 10 years. The Company uses the simplified method to estimate the expected term of stock options, as permitted by SAB No. 107 and SAB No. 110, due to limited historical exercise data. Under this method, the expected term is calculated as the midpoint between the vesting period and the contractual term. Accordingly, the Company estimates an expected term of 5.75 years for options with a standard two-year vesting period and 6.25 years for options with a standard four-year vesting period. Over time, management will track actual terms of the options and adjust their estimate accordingly so that estimates will approximate actual behavior for similar options.

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 financial statements when it is more likely than not 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 $227,148,055 at December 31, 2024. NOL’s created prior to 2018 began expiring in 2022 while those created 2018 and after do not expire. Despite the existence of federal NOL’s, the Company may have state tax requirements. Also, use of the NOL carryforwards may be subject to an annual limitation as provided