8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K/A

(Amendment No.1)

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of report (Date of earliest event reported): January 6, 2014

WaferGen Bio-systems, Inc.

(Exact name of registrant as specified in its charter)

Nevada	000-53252	90-0416683
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

7400 Paseo Padre Parkway, Fremont, CA	94555
(Address of principal executive offices)	(Zip Code)

(Registrant’s telephone number, including area code):  (510) 651-4450

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)  

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)  

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))  

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))  

Item 2.01.  Completion of Acquisition or Disposition of Assets.

This Amendment No. 1 on Form 8-K/A (the “Form 8-K/A”) amends the Current Report on Form 8-K of WaferGen Bio-systems, Inc. (the “Company”) filed with the Securities and Exchange Commission on January 6, 2014 (the “Initial Form 8-K”) to report additional information under Items 5.02 and 8.01 and to add Exhibits 99.1 and 99.2 filed herewith. The Initial Form 8-K reported under Item 2.01 that the Company had completed the acquisition of substantially all of the assets of the product line of IntegenX Inc.  (“IntegenX”) used in connection with developing, manufacturing, marketing and selling instruments and reagents relating to library preparation for next generation sequencing, including the Apollo 324TM instrument and the PrepXTM reagents (the “Apollo Product Line”), pursuant to an Asset Purchase Agreement dated January 6, 2014, by and between the Company and IntegenX. This Form 8-K/A provides the financial statements required by Item 9.01 (a) and (b).

Item 5.02.  Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On March 21, 2014, our Board of Directors retained Stephen T. Baker of Randstad Professionals US, LP, d/b/a Tatum (“Tatum”), a leading financial consultancy firm, to serve as our Chief Financial Officer. Mr. Baker will serve as our Chief Financial Officer and principal financial and accounting officer and will replace John Harland who submitted his resignation on March 18, 2014, effective as of April 15, 2014.

Mr. Baker has over 25 years of financial, operational and international experience, and has been a partner at Tatum since 2013. He has served as a Chief Financial Officer at Frontrange Solutions, Roamware, and Geoworks Corporation.   Earlier in his career, he has held a number of executive positions of increasing responsibility at Bell Communications Research, Novell, Inc., Unix Systems, and AT&T.  Mr. Baker holds a BA in Molecular Biology from University of Pennsylvania, and a Masters in Business Administration (Finance and Accounting) from Columbia University.

In connection with retaining Mr. Baker as our Chief Financial Officer, we entered into a Confidential Consulting Agreement with Tatum, effective March 21, 2014, for the provision of Mr. Baker’s services (the “Consulting Agreement”), and will pay Tatum $4,500 per week for up to 20 hours of professional services. In addition, for work by Mr. Baker or other Tatum professional in excess of 20 hours, we will pay Tatum at a rate of $250 per hour. The Consulting Agreement requires that the Company indemnify Mr. Baker and Tatum in connection with services thereunder. The Consulting Agreement has an indefinite term, subject to termination in accordance with its terms.

Item 8.01.  Other Events.

As previously reported in the Form 8-K filed by the Company on February 12, 2014, as the result of a provision contained in certain common stock warrants and unit warrants that were issued in August and September 2013, such warrants were required to be classified as liabilities on the Company’s Consolidated Balance Sheets.  In an effort to reduce the amount of such liabilities, which totaled approximately $8.7 million as of December 31, 2013, in March 2014 the Company began requesting warrant holders to agree to amendments to such warrants to enable the Company to reclassify such warrants as equity.

Item 9.01.  Financial Statements and Exhibits.

(a)           Financial Statements of Businesses Acquired.

The audited statements of assets acquired and liabilities assumed and the related statements of net revenues and direct costs and operating expenses of the Apollo Product Line for the year ended December 31, 2013, and the related notes to the financial statements.

(b)           Pro Forma Financial Information.

The unaudited consolidated financial information, comprising an unaudited pro forma condensed consolidated balance sheet as of December 31, 2013 and an unaudited pro forma condensed consolidated statement of operations for the year then ended, prepared on the basis as described therein, of WaferGen Bio-systems, Inc.

(d)        Exhibits.

Exhibit No.	Description
23.1	Consent of SingerLewak LLP Independent Auditor
99.1	Apollo Product Line audited statement of assets acquired and liabilities assumed and the related statement of revenues and direct expenses as of and for the year ended December 31, 2013
99.2	WaferGen Bio-systems, Inc. unaudited pro forma condensed consolidated balance sheet as of December 31, 2013 and unaudited pro forma condensed consolidated statement of operations for the year then ended

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	WaferGen Bio-systems, Inc.
Date: March 21, 2014	By:	/s/ IVAN TRIFUNOVICH
		Ivan Trifunovich
		President and Chief Executive Officer

EXHIBIT INDEX

Exhibit No.	Description
23.1	Consent of SingerLewak LLP Independent Auditor
99.1	Apollo Product Line audited statement of assets acquired and liabilities assumed and the related statement of revenues and direct expenses as of and for the year ended December 31, 2013
99.2	WaferGen Bio-systems, Inc. unaudited pro forma condensed consolidated balance sheet as of December 31, 2013 and unaudited pro forma condensed consolidated statement of operations for the year then ended

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITOR

We consent to the incorporation by reference in the Registration Statements (No. 333-152597, 333-164558, 333-170029 and 333-180287) on Form S-8 of WaferGen Bio-systems, Inc. of our report dated March 20, 2014, relating to our audit of the statement of assets acquired and liabilities assumed of the Apollo Product Line as of December 31, 2013, and the related statement of revenues and direct expenses for the year then ended, included in this Current Report on Form 8-K/A.

/s/ SingerLewak LLP

San Jose, California

March 20, 2014

EX-99.1

EXHIBIT 99.1

APOLLO PRODUCT LINE

FINANCIAL STATEMENTS

FOR THE YEAR ENDED

DECEMBER 31, 2013

APOLLO PRODUCT LINE

CONTENTS

December 31, 2013

	Page
INDEPENDENT AUDITOR’S REPORT	1 - 2
FINANCIAL STATEMENTS
Statement of Assets Acquired and Liabilities Assumed	3
Statement of Revenues and Direct Expenses	4
Notes to Financial Statements	5 – 11

INDEPENDENT AUDITOR’S REPORT

To the Board of Directors and Stockholders

IntegenX Inc.

Report on the Financial Statements

We have audited the accompanying financial statements of the Apollo Product Line of IntegenX Inc. (the “Company”) which comprise the statement of assets acquired and liabilities assumed as of December 31, 2013, and the related statement of revenues and direct expenses for the year then ended and the related notes to the financial statements.  The assets acquired and liabilities assumed by Wafergen, Inc. pursuant to an acquisition agreement dated January 6, 2014 with the Company are referred to as the “Apollo Product Line”.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.

To the Board of Directors and Stockholders

March 20, 2014

Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the statement of assets acquired and liabilities assumed of the Apollo Product Line as of December 31, 2013, and the statement of revenues and direct expenses for the year then ended in accordance with GAAP.

Emphasis of Matter

As described in note 1, the accompanying abbreviated financial statements of the Apollo Product Line were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (“SEC”), and are not intended to be a complete presentation of the financial position or the results of operations of the Apollo Product Line.  Our opinion is not modified with respect to this matter.

SingerLewak LLP

San Jose, California

March 20, 2014

APOLLO PRODUCT LINE

FINANCIAL STATEMENTS

December 31, 2013

Statement of Assets Acquired and Liabilities Assumed

ASSETS ACQUIRED
Inventories	$	449,914
Property and equipment, net		38,756
Total assets		488,670
LIABILITIES ASSUMED
Accrued vacation		60,303
Total liabilities assumed		60,303
Net assets acquired	$	428,367

3

APOLLO PRODUCT LINE

FINANCIAL STATEMENTS

December 31, 2013

Statement of Revenues and Direct Expenses

Revenues	$	2,940,839
Direct expenses
Cost of sales		1,358,258
Sales and marketing		1,235,325
General and administrative		570,727
Engineering, research and development		478,136
Depreciation expense		73,346
Total direct expenses		3,715,792
Revenues less direct expenses	$	(774,953	)

4

APOLLO PRODUCT LINE

NOTES TO FINANCIAL STATEMENTS

December 31, 2013

NOTE 1 – ORGANIZATION

Pursuant to an asset purchase agreement (the “APA”) dated as of January 6, 2014 between IntegenX Inc. (the “Company”) and WaferGen Bio-systems, Inc. (the “Acquirer”), the Acquirer purchased certain assets and assumed certain liabilities related to a certain product line of the Company in return for (a) a cash payment of approximately $2,000,000 and (b) a promissory note of $1,250,000 and (c) up to three earnout payments payable in 2015, 2016 and 2017, and (d) the assumption of liabilities. Hereinafter, the assets, liabilities, and related business sold under the APA are referred to as the “Apollo Product Line.” The Apollo Product Line consists of the Apollo 324TM System and the Validated PrepXTM reagents and protocols (collectively, referred to as the Apollo Product Line).  The Apollo 324TM System is marketed primarily in the United States as an automated next-generation sequencing library preparation instrument that integrates and automates tedious library preparation steps.

The accompanying financial statements, including the unaudited selected cash flow information below, of the Apollo Product Line were prepared for the purpose of providing historical information to comply with the rules and regulations of the SEC pursuant to a waiver letter obtained from the SEC staff. These statements are derived from the Company’s historical accounting records, and are in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The financial statements are not intended to be a complete presentation of the Apollo Product Line and are not necessarily indicative of the financial position and results of

5

APOLLO PRODUCT LINE

NOTES TO FINANCIAL STATEMENTS

December 31, 2013

operations that would have been achieved if the Company had operated as a separate, stand-alone business.

For the year ended December 31, 2013, the Apollo Product Line was controlled by the Company. The statement of revenues and direct expenses reflect only those revenues directly attributable to the Apollo Product Line. The direct expenses of the Apollo Product Line presented in this statement includes cost of sales related to the Apollo Product Line’s net revenues and which are directly attributed to products included in the Apollo Product Line. The Company allocated other direct expenses to the Apollo Product Line based on estimates of the employee time spent in research and development, sales and marketing and general and administrative, as well as direct costs specifically identified to the Apollo Product Line.  Management considers these allocations to be a reasonable reflection of the utilization of goods and the services provided. Corporate overhead, including items such as human resources, certain unallocated employee costs related to benefit plans not assumed, legal services and settlements, compliance, finance, tax, and treasury functions that are managed by the Company have not been allocated to the Apollo Product Line in these financial statements. Additionally, depreciation expense of assets not acquired, interest expense and income taxes have also been excluded from the financial statements.

6

APOLLO PRODUCT LINE

NOTES TO FINANCIAL STATEMENTS

December 31, 2013

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with US GAAP.

The preparation of complete statements of cash flows and statements of stockholder’s equity was not practicable because of the integration of the Apollo Product Line into the total operations of the Company prior to the divestiture of the Apollo Product Line. The following unaudited selected cash flow information has been prepared from cash flows related solely to cash flows used in or provided by changes in the specific assets and liabilities comprising the Apollo Product Line.

Selected Cash Flows for the Year Presented (unaudited)

	Year ended
	December 31, 2013
	(Unaudited)
Selected cash flows:
Net revenues less direct costs and operating expenses	$	( 774,953	)
Depreciation		73,346
Change in inventories		170,883
Change in accrued vacation		(4,187	)
Net selected cash flows	$	( 534,911	)

7

APOLLO PRODUCT LINE

NOTES TO FINANCIAL STATEMENTS

December 31, 2013

Estimates

Preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect amounts reported in the financial statements and the accompanying notes. Actual results could differ from these estimates. The most significant estimates in these financial statements relate to judgments and estimate in allocating costs to the Apollo Product Line.

Inventories

Inventories are stated at lower of cost, using a weighted average method, or market. The Company periodically reviews its inventories for potential slow-moving or obsolete items and writes down specific items to their net realizable value, as appropriate.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the respective asset, generally three to five years.

Concentration of Significant Customer

The Company had one major customer for the Apollo Product Line in 2013.  Major customers are defined as customers who represent greater than 10% of the Company’s annual revenue.  One major customer accounted for 10% of the revenue of the Apollo Product line in 2013.

8

APOLLO PRODUCT LINE

NOTES TO FINANCIAL STATEMENTS

December 31, 2013

Revenue Recognition

Revenues (including shipping and handling costs billed to customers) are recognized at the time of shipment when persuasive evidence of an arrangement exists, transfer of ownership has occurred, the sales price is fixed and determinable, and collection of the related receivable is reasonably assured. Returns and allowances have been insignificant to date.

Revenues from separately priced extended maintenance and warranty plans are deferred and recognized over the extended warranty service period, generally one year.

Cost of Sales and Operating Expenses

Cost of goods sold consists primarily of product and product related costs, and shipping and handling costs.

Research and Development

Research and development costs are charged to operations as incurred.  Research and development costs consist of the cost of personnel, material, and related overhead to research, develop and launch new products.

9

APOLLO PRODUCT LINE

NOTES TO FINANCIAL STATEMENTS

December 31, 2013

NOTE 3 – SIGNIFICANT BALANCE SHEET COMPONENTS

Inventories

Inventories consisted of the following at December 31, 2013:

Finished goods	$	240,878
Demo units		78,003
Purchased parts and materials		131,033
	$	449,914

Property and Equipment

Property and equipment consisted of the following at December 31, 2013:

Lab equipment	$	227,731
Manufacturing and other equipment		217,096
		444,827
Accumulated depreciation		(406,071	)
	$	38,756

10

APOLLO PRODUCT LINE

NOTES TO FINANCIAL STATEMENTS

December 31, 2013

NOTE 4 – SUBSEQUENT EVENTS

As discussed in Note 1 to the financial statements, the Company and the Acquirer entered into an APA where the Acquirer purchased certain assets and assumed certain liabilities related to the Apollo product line.

The Company has evaluated subsequent events through March 20, 2014, the date on which the financial statements were available to be issued.

11

EX-99.2

EXHIBIT 99.2

WAFERGEN BIO-SYSTEMS, INC.

Unaudited Pro Forma Condensed Consolidated Financial Information

December 31, 2013

WAFERGEN BIO-SYSTEMS, INC.

Unaudited Pro Forma Condensed Consolidated Financial Information

December 31, 2013

Table of Contents

	Page
Overview of Unaudited Pro Forma Condensed Consolidated Financial Information as of December 31, 2013	1
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2013	3
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2013	4
Notes to the Unaudited Pro Forma Condensed Consolidated Financial Information	5

WAFERGEN BIO-SYSTEMS, INC.

Unaudited Pro Forma Condensed Consolidated Financial Information

December 31, 2013

Overview

On January 6, 2014, WaferGen Bio-systems, Inc. (the “Company”) completed its acquisition of certain operational assets and certain liabilities relating to the product line of IntegenX Inc. used in connection with developing, manufacturing, marketing and selling instruments and reagents relating to library preparation for next generation sequencing, including the Apollo 324TM instrument and the PrepXTM reagents (the “Apollo Product Line”), pursuant to an Asset Purchase Agreement dated January 6, 2014. The Company has prepared the Unaudited Pro Forma Condensed Consolidated Balance Sheet with the assumption that the date of acquisition was December 31, 2013, for a total purchase price of approximately $3.5 million.

The Company’s Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2013, is based on the historical audited Condensed Consolidated Balance Sheet of the Company as of December 31, 2013, combined with the audited Statement of Assets Acquired and Liabilities Assumed of the Apollo Product Line as of December 31, 2013, after giving effect to the Company’s acquisition of the Apollo Product Line on December 31, 2013, and includes the assumptions and adjustments as described in the accompanying notes hereto. The Company’s Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2013, is based on the historical audited Condensed Consolidated Statement of Operations of the Company for the year ended December 31, 2013, combined with the audited Statement of Revenues and Direct Expenses of the Apollo Product Line for the year ended December 31, 2013, after giving effect to the Company’s acquisition of the Apollo Product Line as if it had occurred on January 1, 2013, and includes the assumptions and adjustments as described in the accompanying notes hereto.

The Unaudited Pro Forma Condensed Consolidated Balance Sheet is presented as if the acquisition of the Apollo Product Line had occurred on December 31, 2013. The Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2013, assumes the acquisition of the Apollo Product Line was completed on January 1, 2013. The Unaudited Pro Forma Condensed Consolidated Financial Information contained in this Form 8-K/A is presented for illustrative purposes only, contains a variety of adjustments, assumptions and preliminary estimates, is subject to numerous other uncertainties and does not reflect what the combined entity’s financial position or results of operations would have been had the acquisition been completed as of the dates assumed for purposes of that pro forma financial information, nor does it reflect the financial position or results of operations of the combined company following the acquisition. The pro forma adjustments are based on the preliminary information available at the time of the preparation of this document.

1

WAFERGEN BIO-SYSTEMS, INC.

Unaudited Pro Forma Condensed Consolidated Financial Information

December 31, 2013

The Unaudited Pro Forma Condensed Consolidated Financial Information has been prepared using the acquisition method of accounting. The estimated fair values of the acquired assets and assumed liabilities as of the date of acquisition, which are based on estimates and assumptions of the Company and the consideration paid, are reflected therein. As explained in more detail in the accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Balance Sheet, the total purchase price of approximately $3.5 million to acquire the Apollo Product Line has been allocated to the assets acquired and assumed liabilities based upon preliminary estimated fair values at the date of acquisition. Independent valuation specialists are conducting analyses in order to assist management of the Company in determining the fair values of the acquired assets and liabilities assumed. The Company’s management is responsible for these internal and third party valuations and appraisals. The Company is continuing to finalize the valuations of these net assets. The fair value allocation consists of preliminary estimates and analyses and is subject to change upon the finalization of the appraisals and other valuation analyses, which will be completed during the one year measurement period following the acquisition date. Although the final determination may result in asset and liability fair values that are different from the preliminary estimates of these amounts included herein, it is not expected that those differences will be material to an understanding of the impact of this transaction on the financial results of the Company.

The Unaudited Pro Forma Condensed Consolidated Financial Information should be read in conjunction with the historical consolidated financial statements and accompanying notes of the Apollo Product Line that are included in this Form 8-K/A and the historical financial statements of the Company.

2

WAFERGEN BIO-SYSTEMS, INC.

Unaudited Pro Forma Condensed Consolidated Balance Sheet

December 31, 2013

						Pro Forma				WaferGen
	WaferGen			Apollo		Adjustments				Bio-systems, Inc.
	Bio-systems, Inc.			Product Line		(Note 3)			Notes	Pro forma
Assets
Current assets:
Cash and cash equivalents	$	10,708,646		$	—	$	(2,000,000	)	(a)	$	8,708,646
Accounts receivable, net		367,266			—		—				367,266
Inventories, net		292,650			449,914		(37,914	)	(b)		704,650
Prepaid expenses and other current assets		350,540			—		—				350,540
Total current assets		11,719,102			449,914		(2,037,914	)			10,131,102
Property and equipment, net		269,618			38,756		79,244		(c)		387,618
Intangible assets, net		—			—		1,860,000		(d)		1,860,000
Goodwill		—			—		1,170,303		(e)		1,170,303
Other assets		42,209			—		—				42,209
Total assets	$	12,030,929		$	488,670	$	1,071,633			$	13,591,232
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	980,887		$	—	$	—			$	980,887
Accrued payroll and related costs		289,053			60,303		—				349,356
Other accrued expenses		1,143,335			—		104,656		(f)		1,247,991
Total current liabilities		2,413,275			60,303		104,656				2,578,234
Other liabilities
Long-term debt		1,683,942			—		1,100,000		(g)		2,783,942
Long-term liabilities		—			—		400,000		(h)		400,000
Derivative liabilities		9,147,507			—		—				9,147,507
Total liabilities		13,244,724			60,303		1,604,656				14,909,683
Commitments and contingencies
Stockholders’ equity (deficit)
Preferred Stock		13,595,662			—		—				13,595,662
Common stock		66,028,712			428,367		(428,367	)	(i)		66,028,712
Accumulated deficit		(80,838,169	)		—		(104,656	)	(f)		(80,942,825	)
Total stockholders’ equity (deficit)		(1,213,795	)		428,367		(533,023	)			(1,318,451	)
Total liabilities and stockholders’ equity (deficit)	$	12,030,929		$	488,670	$	1,071,633			$	13,591,232

See notes to unaudited pro forma condensed consolidated financial information.

3

WAFERGEN BIO-SYSTEMS, INC.

Unaudited Pro Forma Condensed Consolidated Statement of Operations

Year Ended December 31, 2013

							Pro Forma				WaferGen
	WaferGen			Apollo			Adjustments				Bio-systems, Inc.
	Bio-systems, Inc.			Product Line			(Note 3)			Notes	Pro Forma
Revenue:
Product	$	846,414		$	2,940,839		$	—			$	3,787,253
License and royalty		458,333			—			—				458,333
Total Revenue		1,304,747			2,940,839			—				4,245,586
Cost of product revenue		574,195			1,358,258			—				1,932,453
Gross profit		730,552			1,582,581			—				2,313,133
Operating expenses:
Sales and marketing		2,240,116			1,235,325			—				3,475,441
Research and development		5,399,775			478,136			—				5,877,911
General and administrative		3,013,104			570,727			(45,126	)	(j)		3,538,705
Depreciation and amortization		—			73,346			350,554		(k)		423,900
Total operating expenses		10,652,995			2,357,534			305,428				13,315,957
Operating loss		(9,922,443	)		(774,953	)		(305,428	)			(11,002,824	)
Other income and (expenses):
Interest income		3,091			—			—				3,091
Interest expense		(2,880,718	)		—			—				(2,880,718	)
Gain (loss) on revaluation of derivative liabilities, net		(506,195	)		—			—				(506,195	)
Gain on settlement of derivative liability		1,012,351			—			—				1,012,351
Loss on extinguishment of debt		(4,970,410	)		—			—				(4,970,410	)
Issuance of warrants due to organic change		(2,553,318	)		—			—				(4,970,410	)
Gain on liquidation of subsidiary		3,386,297			—			—				3,386,297
Miscellaneous income (expense)		171,414			—			—				171,414
Total other income and (expenses)		(6,337,488	)		—			—				(6,337,488	)
Net loss before provision for income taxes		(16,259,931	)		(774,953	)		(305,428	)			(17,340,312	)
Provision for income taxes		6,341			—			—				6,341
Net loss		(16,266,272	)		(774,953	)		(305,428	)			(17,346,653	)
Accretion on Series 1 convertible preferred stock associated with beneficial conversion feature		(898,623	)		—			—				(898,623	)
Series A-1 preferred dividend		(547,171	)		—			—				(547,171	)
Net loss attributable to common stockholders	$	(17,712,066	)		(774,953	)	$	(305,428	)		$	(18,792,447	)
Net loss per share – basic and diluted	$	(5.82	)								$	(6.17	)
Shares used to compute net loss per share – basic and diluted		3,045,266										3,045,266

See notes to unaudited pro forma condensed consolidated financial information.

4

WAFERGEN BIO-SYSTEMS, INC.

Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

December 31, 2013

(1)         Description of the Transaction and Basis of Presentation

On January 6, 2014, WaferGen Bio-systems, Inc. and subsidiaries (collectively, the “Company”) completed its acquisition of certain operational assets and certain liabilities relating to the product line of IntegenX Inc. used in connection with developing, manufacturing, marketing and selling instruments and reagents relating to library preparation for next generation sequencing, including the Apollo 324TM instrument and the PrepXTM reagents (the “Apollo Product Line”), pursuant to an Asset Purchase Agreement dated January 6, 2014. The Company has prepared the Unaudited Pro Forma Condensed Consolidated Balance Sheet with the assumption that the date of acquisition was December 31, 2013, for a total purchase price of approximately $3.5 million.

The acquisition has been accounted for using the acquisition method of accounting under generally accepted accounting principles in the United States of America (“U.S. GAAP”). Under the acquisition method of accounting, the total purchase price is allocated to the tangible and intangible acquired assets and assumed liabilities of the Apollo Product Line, based on their respective preliminary estimated fair values as of the date of acquisition.

The Financial Statements of the Apollo Product Line are Abbreviated Financial Statements prepared for the purposes of complying with the rules and regulations of the Securities and Exchange Commission (“SEC”) and are not intended to be a complete presentation of the financial position or the results of operations of the Apollo Product Line. These Abbreviated Financial Statements are not indicative of the Apollo Product Line’s operations going forward because of changes in the business and the omission of various operating expenses.

The Company has prepared the Unaudited Pro Forma Condensed Consolidated Balance Sheet as of the date of acquisition, using the acquisition method of accounting. The estimated fair values of the acquired assets and assumed liabilities as of the date of acquisition, which are based on estimates and assumptions of the Company, the consideration paid and the entries to record the direct transaction costs incurred are reflected within the pro forma adjustment entries. The Unaudited Pro Forma Condensed Consolidated Balance Sheet gives effect to the acquisition as if it had occurred on December 31, 2013. The Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2013, assumes the acquisition of the Apollo Product Line was completed on January 1, 2013. See note 2 for information on the Company’s preliminary allocation of the estimated purchase price.

(2)         Preliminary Purchase Price Allocation

For purposes of the Unaudited Pro Forma Condensed Consolidated Balance Sheet, the approximate $3.5 million purchase price has been allocated based upon a preliminary estimate of the fair value of assets acquired and liabilities assumed. The determination of the estimated fair value required management to make significant estimates and assumptions. These estimates and assumptions of the fair value allocation are preliminary and subject to change upon the finalization of the appraisals and other valuation analyses, which are in the process of being completed. Independent valuation specialists are conducting a valuation to assist management of the Company in determining the estimated fair values of intangible assets. The Company’s management is responsible for these internal and third party valuations and appraisals.

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WAFERGEN BIO-SYSTEMS, INC.

Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

December 31, 2013

The preliminary estimated allocation of the fair values as of December 31, 2013, is as follows:

Purchase Price
Cash paid	$	2,000,000
Promissory note		1,100,000
Contingent Earnouts		400,000
Total purchase price	$	3,500,000
Preliminary Purchase Price Allocation
Net tangible assets	$	469,697
Identified intangibles		1,860,000
Goodwill		1,170,303
	$	3,500,000

(3)         Pro Forma Adjustments

The Pro Forma Adjustments within the Unaudited Pro Forma Condensed Consolidated Balance Sheet represent the adjustments to the historical carrying amounts as of December 31, 2013 for certain assets acquired and assumed liabilities of the Apollo Product Line to reflect the preliminary purchase price allocation to assets and liabilities as of the date of acquisition. The Pro Forma Adjustments within the Unaudited Pro Forma Condensed Consolidated Statement of Operations represent the adjustments to reflect the date of acquisition as if it had occurred on January 1, 2013.

Adjustments included in the column under the heading “Pro Forma Adjustments” relate to the following:

(a)	Represents the cash paid on the date of acquisition, as summarized in note 2.
(b)	Represents the purchase accounting adjustments related to assigning a fair value to the acquired inventory on the date of acquisition of $412,000.
(c)	Represents the purchase accounting adjustments related to assigning a fair value to the acquired property and equipment on the date of acquisition of $118,000.
(d)	Represents the fair value of the identified intangible assets on the date of acquisition, as summarized in note 2.
(e)	Represents the fair value of goodwill on the date of acquisition, as summarized in note 2.
(f)	Represents the direct incremental costs of the acquisition which are not yet reflected in the historical financial statements of either the Company or the Apollo Product Line.
(g)	Represents the fair value of the Note Payable to IntegenX on the date of acquisition, as summarized in note 2.

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WAFERGEN BIO-SYSTEMS, INC.

Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

December 31, 2013

(h)	Represents the fair value of the contingent Earnouts payable to IntegenX on the date of acquisition, as summarized in note 2.
(i)	Represents the elimination of the Apollo Product Line’s net asset position based on historic U.S. GAAP which, for purposes of the Unaudited Pro Forma Condensed Balance Sheet, has been reflected in common stock.
(j)	Represents the direct incremental costs of the acquisition incurred by the Company through December 31, 2013. These costs have not been included in the Pro Forma Condensed Consolidated Statement of Operations because they are non-recurring.
(k)	Represents the additional depreciation and amortization expense that the Company anticipates incurring as a result of the adjustment to the carrying value of the Apollo Product Line assets to their fair value as described in note 2. The Company expects to depreciate the fair value of the purchased property and equipment over the estimated useful lives of 3 years, and expects to amortize the fair value of the identified intangibles of $1.86 million acquired on a straight line basis over their estimated useful lives of between 3 and 6 years. Upon finalization of the asset valuations, specific useful lives will be assigned to the acquired assets, and depreciation and amortization will be adjusted accordingly. The Company does not expect to have any identifiable intangibles with indefinite lives.

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