10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2014

OR

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

For the transition period from to

Commission file number: 000-53252

WaferGen Bio-systems, Inc.

(Exact Name of Registrant as Specified in its Charter)

Nevada	90-0416683
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

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

(510) 651-4450

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ   No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ   No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨  (Do not check if a smaller reporting company)	Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o   No þ

The Registrant had 5,870,793 shares of common stock outstanding as of November 10, 2014.

TABLE OF CONTENTS

				Page
Part I	FINANCIAL INFORMATION
		Item 1.	Financial Statements (Unaudited)	1
			Condensed Consolidated Balance Sheets	1
			Condensed Consolidated Statements of Operations and Comprehensive Loss	2
			Condensed Consolidated Statements of Cash Flows	3
			Notes to the Condensed Consolidated Financial Statements	5
		Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
		Item 4.	Controls and Procedures	31
Part II	OTHER INFORMATION
		Item 1.	Legal Proceedings	32
		Item 1A.	Risk Factors	32
		Item 2.	Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities	32
		Item 6.	Exhibits	32
SIGNATURES				33
EXHIBIT INDEX				34

PART I FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)

WAFERGEN BIO-SYSTEMS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

	September 30, 2014			December 31, 2013
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$	17,328,471		$	10,708,646
Accounts receivable		1,754,437			367,266
Inventories		953,336			292,650
Prepaid expenses and other current assets		528,991			350,540
Total current assets		20,565,235			11,719,102
Property and equipment, net		387,984			269,618
Goodwill		990,000			—
Intangible assets, net		1,486,600			—
Other assets		79,898			42,209
Total assets	$	23,509,717		$	12,030,929
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	1,897,688		$	980,887
Accrued payroll and related costs		939,112			289,053
Other current liabilities		747,703			1,143,335
Total current liabilities		3,584,503			2,413,275
Long-term debt, net of discount		1,913,256			1,683,942
Derivative liabilities		362,836			9,147,507
Other liabilities		564,379			—
Total liabilities		6,424,974			13,244,724
Commitments and contingencies (Note 14)		––			––
Stockholders’ equity (deficit):
Preferred Stock: $0.001 par value; 10,000,000 shares authorized; 0 and 2,944.7080 shares of Series 1 Convertible Preferred Stock issued and outstanding at September 30, 2014 and December 31, 2013		—			13,595,662
Common Stock: $0.001 par value; 300,000,000 shares authorized; 5,871,793 and 911,256 shares issued and outstanding at September 30, 2014 and December 31, 2013		105,352,474			66,028,712
Accumulated deficit		(88,267,731	)		(80,838,169	)
Total stockholders’ equity (deficit)		17,084,743			(1,213,795	)
Total liabilities and stockholders’ equity (deficit)	$	23,509,717		$	12,030,929

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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WAFERGEN BIO-SYSTEMS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Revenue:
Product	$	1,125,201		$	264,547		$	4,014,622		$	480,949
License and royalty		125,000			125,000			375,000			333,333
Total revenue		1,250,201			389,547			4,389,622			814,282
Cost of product revenue		374,776			192,814			1,739,757			335,182
Gross profit		875,425			196,733			2,649,865			479,100
Operating expenses:
Sales and marketing		961,891			625,390			3,598,880			1,577,317
Research and development		1,909,310			1,581,449			4,749,193			4,246,796
General and administrative		1,132,418			1,217,899			3,233,461			2,443,317
Total operating expenses		4,003,619			3,424,738			11,581,534			8,267,430
Operating loss		(3,128,194	)		(3,228,005	)		(8,931,669	)		(7,788,330	)
Other income and (expenses):
Interest income		19			830			46			2,917
Interest expense		(107,464	)		(848,464	)		(319,946	)		(2,821,093	)
Gain on revaluation of derivative liabilities, net		589,336			623,613			1,963,532			145,133
Loss on extinguishment of debt		(128,546	)		(4,970,410	)		(128,546	)		(4,970,410	)
Issuance of warrants due to organic change		—			(2,553,318	)		—			(2,553,318	)
Miscellaneous income (expense)		(5,686	)		167,952			(9,879	)		235,295
Total other income and (expenses)		347,659			(7,579,797	)		1,505,207			(9,961,476	)
Net loss before provision for income taxes		(2,780,535	)		(10,807,802	)		(7,426,462	)		(17,749,806	)
Provision for income taxes		—			530			3,100			3,191
Net loss		(2,780,535	)		(10,808,332	)		(7,429,562	)		(17,752,997	)
Accretion on Series 1 Convertible Preferred Stock associated with beneficial conversion feature		—			(898,623	)		—			(898,623	)
Accretion on Series A and B convertible preference shares of subsidiary associated with premium		—			(408,651	)		—			(2,898,550	)
Series A-1 preferred dividend		—			(131,219	)		—			(547,171	)
Net loss attributable to common stockholders	$	(2,780,535	)	$	(12,246,825	)	$	(7,429,562	)	$	(22,097,341	)
Net loss per share – basic and diluted	$	(1.02	)	$	(43.51	)	$	(4.87	)	$	(180.16	)
Shares used to compute net loss per share – basic and diluted		2,727,810			281,466			1,526,963			122,657
Comprehensive Loss:
Net loss	$	(2,780,535	)	$	(10,808,332	)	$	(7,429,562	)	$	(17,752,997	)
Foreign currency translation adjustments		—			(175,686	)		—			(273,736	)
Total comprehensive loss	$	(2,780,535	)	$	(10,984,018	)	$	(7,429,562	)	$	(18,026,733	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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WAFERGEN BIO-SYSTEMS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

	Nine Months Ended September 30,
	2014			2013
Cash flows from operating activities:
Net loss	$	(7,429,562	)	$	(17,752,997	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		633,049			560,220
Stock-based compensation		935,280			260,068
Gain on revaluation of derivative liabilities, net		(1,963,532	)		(145,133	)
Interest converted to principal on long-term debt		68,219			547,866
Provision for excess and obsolete inventory		(682,632	)		492
Amortization of debt discount		250,768			2,094,335
Loss on extinguishment of debt		128,546			4,970,410
Issuance of warrants due to organic change		—			2,553,318
Change in operating assets and liabilities:
Accounts receivable		(1,387,171	)		(41,854	)
Inventories		583,152			131,151
Prepaid expenses and other assets		(216,140	)		99,589
Accounts payable		916,801			248,105
Accrued payroll and related costs		586,059			1,055,332
Other accrued expenses		(241,253	)		490,692
Net cash used in operating activities		(7,818,416	)		(4,928,406	)
Cash flows from investing activities:
Purchase of property and equipment		(215,221	)		(41,906	)
Acquisition of business		(2,000,000	)		—
Net cash used in investing activities		(2,215,221	)		(41,906	)
Cash flows from financing activities:
Net proceeds from issuance of common stock and warrants (and Series 1 Convertible Preferred Stock in 2013 only)		17,971,681			13,393,162
Repayment of promissory note		(1,318,219	)		—
Net cash provided by financing activities		16,653,462			13,393,162
Effect of exchange rates on cash		—			(268,562	)
Net increase in cash and cash equivalents		6,619,825			8,154,288
Cash and cash equivalents at beginning of the period		10,708,646			6,328,753
Cash and cash equivalents at end of the period	$	17,328,471		$	14,483,041

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

WAFERGEN BIO-SYSTEMS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited) (continued)

	Nine Months Ended September 30,
	2014		2013
Supplemental disclosures of cash flow information:
Cash paid for interest	$	69,178	$	4,341
Cash paid for income taxes	$	3,100	$	26,182
Cash (received) for income taxes	$	—	$	(1,051	)
Supplemental disclosure of non-cash investing and financing activities:
Issuance of promissory note, net of debt discount, in business acquisition	$	1,100,000	$	—
Initial valuation of revenue earn-out contingency in business acquisition	$	410,000	$	—
Warrant derivative liabilities transferred to equity on waiver of potential cash settlement provisions	$	6,821,139	$	—
Inventory transferred to property and equipment	$	44,794	$	—
Exchange of convertible promissory notes forcommon stock and Series 1 Convertible Preferred Stock	$	—	$	6,035,360
Exchange of Series A-1 Convertible Preferred Stock for common stock and Series 1 Convertible Preferred Stock	$	—	$	9,838,569
Issuance of warrants to underwriters and placement agents	$	395,766	$	1,147,021
Accretion on Series 1 Convertible Preferred Stock associated with beneficial conversion feature	$	—	$	898,623

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

WAFERGEN BIO-SYSTEMS, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

NOTE 1.  The Company

General – WaferGen Bio-systems, Inc. and its subsidiaries (the “Company”) are engaged in the development, manufacture and sales of systems for gene expression quantification, genotyping and stem cell research. The Company’s products are aimed at researchers who perform genetic analysis, primarily at pharmaceutical and biotech companies, academic and private research centers and diagnostics companies involved in biomarker discovery and genetic research. Through its SmartChip and Apollo product lines, the Company plans to provide new performance standards with significant savings in time and cost for professionals in the field of gene expression research and to facilitate biomarker discovery, toxicology, and clinical research.

Wafergen, Inc. was incorporated in the State of Delaware on October 22, 2002, and was acquired by WaferGen Bio-systems, Inc. in a reverse merger on May 31, 2007.

On January 24, 2008, the Company formed a subsidiary, WaferGen Biosystems (M) Sdn. Bhd. (“WGBM”), in Malaysia. Prior to WGBM’s liquidation on November 26, 2013, the Company owned 100% of the common stock and 17.2% (comprising shares that had been assumed by the Company) of the preference shares of this entity, with the remaining preference shares owned by Malaysian Technology Development Corporation Sdn. Bhd. (“MTDC”). See Notes 6 and 7 below.

On August 30, 2011, the Company formed a new wholly owned subsidiary in Luxembourg, WaferGen Biosystems Europe S.a.r.l., to establish a presence for its marketing and research activities in Europe.

On August 27, 2013, the Company effected a reverse stock split of its common stock by a ratio of one-for-99.39 (the “2013 Reverse Split”). Every 99.39 outstanding shares of common stock became one share of common stock. No fractional shares were issued in connection with the 2013 Reverse Split. Stockholders who were otherwise entitled to receive a fractional share of common stock received one whole share of common stock. The 2013 Reverse Split did not change the number of shares of common or preferred stock that the Company is authorized to issue, or the par value of the Company’s common or preferred stock.

On June 30, 2014, the Company effected a reverse stock split of its common stock by a ratio of one-for-ten (the “2014 Reverse Split”). Every ten outstanding shares of common stock became one share of common stock. No fractional shares were issued in connection with the 2014 Reverse Split. Stockholders who were otherwise entitled to receive a fractional share of common stock received one whole share of common stock. The 2014 Reverse Split did not change the number of shares of common or preferred stock that the Company is authorized to issue, or the par value of the Company’s common or preferred stock.

The 2013 Reverse Split and the 2014 Reverse Split resulted in a proportionate adjustment to the per share exercise price and the number of shares of common stock issuable upon the exercise of outstanding warrants and stock options, as well as the number of shares of common stock eligible for issuance under the 2008 Stock Incentive Plan. All of the information in these financial statements has been presented to reflect the combined impact of the one-for-99.39 2013 Reverse Split and the one-for-ten 2014 Reverse Split on a retroactive basis.

On January 6, 2014, the Company acquired 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 (“NGS”), including the Apollo 324TM instrument and the PrepXTM reagents (the “Apollo Business”). See Note 3 below.

On August 27, 2014, the Company completed a public offering (the “2014 Public Offering”) of 2,000 Units (the “Units”) for $10,000 per Unit, with each Unit consisting of 2,000 shares of the Company’s common stock and 2,000 warrants to purchase one share of common stock. In aggregate, the Company issued 4,000,000 shares of its common stock (excluding 600,000 shares of common stock sold by certain stockholders to the underwriters) and 4,600,000 warrants to purchase shares of its common stock (inclusive of 600,000 shares of common stock sold by the Company from the full exercise of the overallotment option of warrants granted to the underwriters). Subject to certain ownership limitations, the warrants are exercisable at any time within five years of their issuance date at an exercise price of $5.00 per share. The total gross proceeds from the offering to the Company were $20,000,006. After deducting underwriting discounts, commissions and offering expenses payable by the Company, the aggregate net proceeds received by the Company totaled approximately $18.0 million.

5

WAFERGEN BIO-SYSTEMS, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The Company retained underwriters in connection with the 2014 Public Offering, and pursuant to the terms of an underwriting agreement, the Company paid the underwriters an aggregate fee totaling approximately $1,675,000. In addition, the Company issued the underwriters 120,000 warrants at the closing of the 2014 Offering, each warrant entitling the holder to purchase one share of common stock for $6.25 at any time within five years of their issuance date. The fair value of the warrants issued on August 27, 2014, was estimated to be $395,766, using a closing stock price of $4.60 and assumptions including estimated volatility of 108.07%, a risk-free interest rate of 1.48%, a zero dividend rate and an estimated remaining term of 4.50 years. This estimated fair value was recorded in offering costs.

NOTE 2.  Summary of Significant Accounting Policies

Basis of Presentation – The Company has prepared the accompanying condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to these rules and regulations. These condensed consolidated financial statements should be read in conjunction with our audited financial statements and footnotes related thereto for the year ended December 31, 2013, included in our Form 10-K filed with the SEC. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the Company’s financial position and the results of its operations and cash flows. The results of operations for such interim periods are not necessarily indicative of the results to be expected for the full year.

Basis of Consolidation – The condensed consolidated financial statements include the financial statements of WaferGen Bio-systems, Inc. and its subsidiaries. All significant transactions and balances between the WaferGen Bio-systems, Inc. and its subsidiaries have been eliminated in consolidation.

Use of Estimates – Preparing condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results and outcomes could differ from these estimates and assumptions.

Foreign Currencies – Assets and liabilities of non-U.S. subsidiaries for which the local currency is the functional currency are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenues and expenses are translated at the average rates of exchange prevailing during each reporting period. Translation adjustments resulting from this process are charged or credited to other comprehensive income (loss). Foreign exchange gains and losses for assets and liabilities of the Company’s non-U.S. subsidiaries for which the functional currency is the U.S. dollar are recorded in miscellaneous income (expense) in the Company’s condensed consolidated statements of operations.

Accounts Receivable – An allowance for doubtful accounts will be recorded based on a combination of historical experience, aging analysis, and information on specific accounts. Account balances will be written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Inventory – Inventory is recorded at the lower of cost (first-in, first-out) or market value. Additionally, the Company evaluates its inventory in terms of excess and obsolete exposures and records provisions as needed.

Goodwill and Long-lived Intangible Assets–Goodwill is tested for impairment on an annual basis in the fourth quarter and between annual tests if events occur or circumstances indicate that the carrying amount of goodwill may not be recoverable. Impairment losses, if any, are recorded in the statement of operations as “Impairment of goodwill.”

Long-lived intangibles are carried at cost less accumulated amortization and are subject to review for impairment when events or circumstances indicate that the carrying value may not be recoverable. Amortization is recognized over the estimated useful life of the respective asset on a straight-line basis except for customer lists, which are amortized in proportion to the present value of projected cash flows within their estimated useful lives, since this methodology more closely reflects the pattern in which economic benefits are derived.

Revenue Recognition – The Company recognizes revenue when (i) delivery of product has occurred or services have been rendered, (ii) there is persuasive evidence of a sale arrangement, (iii) selling prices are fixed or determinable, and (iv) collectability from the customers (individual customers and distributors) is reasonably assured. Revenue consists primarily of revenue generated from the sale of the Company’s products. Revenue is recorded when the risk and rewards of ownership are transferred to the Company’s customers (individual customers and distributors). This

6

WAFERGEN BIO-SYSTEMS, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

generally occurs when the Company’s products are shipped from its facility as title has passed. Revenue is recorded net of estimated cash discounts. The Company estimates and accrues an allowance for sales returns at the time the product is sold. To date, sales returns have not been material.

Revenue from multi-deliverable arrangements is recognized for each element on delivery of product or completion of service. A typical multi-deliverable arrangement would be the shipment of capital equipment to a customer, followed by the delivery of services or of expendable equipment, provided such delivery is both probable and substantially within the Company’s control. Revenue for each deliverable is allocated based on full list selling prices, although if none of the deliverables is disproportionately discounted relative to the overall discount, this allocation is approximated by using the actual selling price of each deliverable to the customer. The actual cost of revenue for each deliverable is recognized when the revenue for that deliverable is recognized.

Governmental Subsidies – Incentives received from governments in the form of grants are recorded as a reduction in expense in accordance with their purpose. Grants awarded for the purpose of matching specified expenditures are not recognized until a definitive agreement has been signed by both parties; thereafter income is recognized to the extent that the related expenses have been incurred. The Company recognized governmental subsidies of $161,981 and $86,577 in the three months ended September 30, 2014 and 2013, respectively, and $334,521 and $236,167 in the nine months ended September 30, 2014 and 2013, respectively, which were offset against operating expenses in the statement of operations.

Stock-Based Compensation – The Company measures the fair value of all stock-based awards to employees, including stock options, on the grant date and records the fair value of these awards, net of estimated forfeitures, to compensation expense over the service period. The fair value of awards to consultants is measured on the dates on which performance of services is completed, with interim valuations recorded at balance sheet dates while performance is in progress. The fair value of options is estimated using the Black-Scholes valuation model, and of restricted stock is based on the Company’s closing share price on the measurement date.

Change in Fair Value of Derivatives – The Company recognizes (or recognized until the time of their settlement) its warrants with certain cash settlement provisions or with certain anti-dilution protection, the redemption option of the Series A convertible preference shares of its Malaysian subsidiary, and the conversion element of its convertible promissory notes and of the Series B convertible preference shares of its Malaysian subsidiary as derivative liabilities. Such liabilities are valued when the financial instruments are initially issued or the derivative first requires recognition and are also revalued at each reporting date, with the change in their respective fair values being recorded as a gain or loss on revaluation within other income and expenses in the statement of operations. The Company determines the fair value of those warrants for which no anti-dilution adjustment is projected prior to the expiration date using the Black-Scholes valuation model, and all other derivative liabilities using a Monte Carlo Simulation approach, with key input variables provided by management.

Warranty Reserve – The Company’s standard warranty agreement is one year from shipment of certain products. The Company accrues for anticipated warranty costs upon shipment of these products. The Company’s warranty reserve is based on management’s judgment regarding anticipated rates of warranty claims and associated repair costs, and is updated quarterly.

Net Income (Loss) Per Share – Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding plus common share equivalents from conversion of dilutive stock options, warrants, and restricted stock using the treasury method, and convertible securities using the as-converted method, except when antidilutive. In the event of a net loss, the effects of all potentially dilutive shares are excluded from the diluted net loss per share calculation as their inclusion would be antidilutive.

Recent Accounting Pronouncements

In April 2014, the FASB issued ASU 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity” (“ASU 2014-08”). ASU 2014-08 clarifies the circumstances under which discontinued operations should be reported and increases the disclosure requirements. ASU 2014-08 is effective for annual periods beginning after December 15, 2014, and interim periods within those years, and will become effective for the Company on January 1, 2015. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial condition or results of operations.

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WAFERGEN BIO-SYSTEMS, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 will replace most of the existing revenue recognition guidance within U.S. GAAP. The core principle of this guidance is that an entity should recognize revenue for the transfer of goods or services to customers in an amount that it expects to be entitled to receive for those goods or services. In doing so, companies will be required to make certain judgments and estimates, including identifying contract performance obligations, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price among separate performance obligations. Further, ASU 2014-09 will require companies to make additional disclosures. ASU 2014-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those years, and will become effective for the Company beginning on January 1, 2017, with early adoption not permitted. ASU 2014-09 allows for two methods of adoption, a full retrospective method or a modified retrospective approach with the cumulative effect recognized at the date of initial application. The Company is in the process of determining the method of adoption and its impact on the Company’s consolidated financial condition and results of operations.

In May 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements – Going Concern (Topic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). ASU 2014-15 will add guidance to U.S. GAAP that is presently available only in auditing standards, and provides clarification of such guidance. ASU 2014-15 is effective for annual periods ending after December 16, 2016, with early adoption permitted, and will become effective for the Company for the year ending December 31, 2016. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial condition or results of operations.

NOTE 3.  Acquisitions

On January 6, 2014, the Company acquired the Apollo Business (see Note 1). Since that date the results of its operations have been included in the consolidated financial statements. As a result of the acquisition, the Company can now offer a wide spectrum of products for sample preparation for NGS to laboratories performing targeted sequencing. The Company expects to achieve significant synergies, especially in its sales and marketing efforts, since the SmartChip and Apollo products and services serve the same customer base.

The total purchase price for the Apollo Business is summarized as follows:

Cash	$	2,000,000
Promissory note (see Note 6)		1,100,000
Contingent earn-out payments		410,000
Total	$	3,510,000

The contingent consideration arrangement requires the Company to pay IntegenX a percentage of revenues, on a sliding scale up to 20%, should certain revenue targets be achieved in 2014, 2015 and 2016. We estimated the fair value of the contingent consideration using a probability-weighted discounted cash flow model based on key assumptions including annual revenues ranging from $4.0 million to $9.9 million and a discount rate of 14%. This is measured as a Level 3 fair value liability. In connection with the Apollo Business acquisition, the Company allocated the total purchase consideration to the net assets and liabilities acquired, including identifiable intangible assets, based on their respective fair values at the acquisition date. The following table summarizes the allocation of the purchase price to the fair value of the respective assets and liabilities acquired:

Inventory	$	606,000
Property and equipment		118,000
Intangible assets:
Customer lists and trademarks		1,500,000
Purchased technology		360,000
Goodwill (1)		990,000
Total assets		3,574,000
Liabilities – accrued vacation		(64,000	)
Total purchase price	$	3,510,000

__________

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WAFERGEN BIO-SYSTEMS, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(1) Goodwill, which represents the excess of the purchase price over the fair value of tangible and identified intangible assets acquired, is attributable primarily to expected synergies and the assembled workforce. All of the goodwill is expected to be deductible for income tax purposes except to the extent that it arose due to an over-estimate of contingent earn-out payments.

In addition, the Company incurred and expensed costs directly related to this acquisition totaling approximately $140,000, of which nil and $95,000 was incurred in the three and nine months ended September 30, 2014, respectively, and are included in general and administrative expenses in the condensed consolidated statement of operations.

Selected amounts related to the Apollo Business included in the Company’s condensed consolidated statement of operations for the three and nine months ended September 30, 2014, are as follows:

	Period Ended September 30,
	Three Months			Nine Months
Revenue	$	520,085		$	1,583,207
Net loss	$	(665,000	)	$	(1,918,000	)

The unaudited pro forma information in the table below summarizes the combined results of operations of WaferGen Bio-systems, Inc. and subsidiaries with those of the Apollo Business as though these entities were combined as of January 1, 2013. The results of the Apollo Business for the three and nine months ended September 30, 2013, are based on the actual historic quarterly allocations of the Abbreviated Financial Statements prepared for the year ended December 31, 2013, and for the three and nine months ended September 30, 2014, are based on the Company’s results of operations, adjusted for estimated operating expenses in the five days prior to the acquisition. The pro forma financial information for all periods presented also includes the removal of direct acquisition-related costs, the additional charges for interest expense on acquisition-related borrowing, and the actual depreciation and amortization that would have been charged assuming the fair value adjustments to property and equipment and intangible assets had been applied as of January 1, 2013.

This unaudited pro forma information is summarized as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Total revenue	$	1,250,201		$	907,617		$	4,389,622		$	2,830,806
Net loss	$	(2,651,152	)	$	(11,216,243	)	$	(7,200,865	)	$	(18,879,658	)
Net loss per share - basic and diluted	$	(0.97	)	$	(44.96	)	$	(4.72	)	$	(189.34	)

The pro forma financial information as presented above is for informational purposes only and is not indicative of the consolidated results of operations of future periods or the results of operations that would have been achieved had the acquisition taken place on January 1, 2013.

NOTE 4.  Inventories

Inventories, net of provisions for potentially excess, obsolete or impaired goods, consisted of the following at September 30, 2014, and December 31, 2013:

	September 30, 2014		December 31, 2013
Raw materials	$	63,800	$	125,068
Work in process		169,067		46,974
Finished goods		720,469		120,608
Inventories	$	953,336	$	292,650

9

WAFERGEN BIO-SYSTEMS, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

NOTE 5.  Goodwill and Other Intangible Assets

Changes in the carrying amount of goodwill in the nine months ended September 30, 2014, were as follows:

Balance at January 1, 2014	$	—
Additions (see Note 3)		990,000
Balance at September 30, 2014	$	990,000

Other intangible assets as of September 30, 2014, consist of:

	Gross		Net
	Carrying		Accumulated		Intangible
	Amount		Amortization		Assets
Purchased technology	$	360,000	$	75,000	$	285,000
Customer lists and trademarks		1,500,000		298,400		1,201,600
Total as of September 30, 2014	$	1,860,000	$	373,400	$	1,486,600

The estimated future amortization expenses by fiscal year are as follows:

Year ending December 31,
2014 (three months remaining)	$	124,500
2015		449,900
2016		421,000
2017		313,900
2018		148,500
Thereafter		28,800
Total amortization	$	1,486,600

Intangible asset amortization expense was $124,400 and nil for the three months ended September 30, 2014 and 2013, respectively, and $373,400 and nil for the nine months ended September 30, 2014 and 2013, respectively.

NOTE 6.  Long Term Obligations

On May 27, 2011, the Company sold convertible promissory notes (“CPNs”) in the aggregate principal amount of $15,275,000, convertible into an aggregate of approximately 2,679,824 shares of Series A-2 Convertible Preferred Stock (see Note 8) at a price of $5.70 per share, with each 99.39 shares being convertible into one share of common stock. The CPNs were sold along with Series A-1 Convertible Preferred Stock and warrants for aggregate gross proceeds of $30,550,000, which after deducting issuance costs of $2,524,963 left net proceeds of $28,025,037. Interest on the CPNs accrued at a rate of 5% per annum, and could either be paid on the last day of each fiscal quarter, or added to the principal amount of the notes, at the Company’s option.

The debt discount related to the debt element of the convertible promissory notes of $14,442,497 was, prior to their exchange for equity securities on August 27, 2013 (the “2013 Exchange”), being amortized as non-cash interest expense using the effective yield method over the 3.5 year contractual term of the CPNs. $832,502 in issuance costs allocated to the CPNs was recorded as a deferred financing cost, which was also being amortized as a non-cash interest expense using the effective yield method over their 3.5 year contractual term.

The Company valued the derivative liability for the conversion element of the CPNs using a Monte Carlo Simulation approach, using assumptions provided by management reflecting conditions at the valuation dates.

The fair value of this derivative liability at December 31, 2012, was estimated to be $274,928. It had diminished to nil by the time of the 2013 Exchange. The decrease in the fair value of this derivative liability of $274,928 during the nine months ended September 30, 2013, was recorded as a revaluation gain (see Note 11).

10

WAFERGEN BIO-SYSTEMS, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

On August 15, 2013, the Company issued WGBM notes with a face value of $6.6 million, maturing on August 15, 2020 (the “Malaysian Notes”), in consideration of WGBM’s cancellation of the Company’s obligations under a term loan owing to WGBM which, as of that date, had an outstanding loan balance of approximately $5.3 million. Under the terms of an agreement between the Company, WGBM and MTDC (see Notes 1 and 7), upon liquidation of WGBM (which occurred on November 26, 2013), the Malaysian Notes were divided such that the Company received notes with an aggregate principal amount of $1.4 million and MTDC received notes with an aggregate principal amount of $5.2 million (the “MTDC Notes”).

The MTDC Notes were recorded using an effective interest rate of 17.39% and are summarized as follows at September 30, 2014 and December 31, 2013:

	September 30, 2014		December 31, 2013
MTDC Notes Payable:
Face value	$	5,200,000	$	5,200,000
Debt discount, net of accumulated amortization of $256,572 and $27,258 at September 30, 2014 and December 31, 2013, respectively		3,286,744		3,516,058
Notes payable, net of debt discount	$	1,913,256	$	1,683,942

At any time prior to their maturity date, the Company may issue to MTDC shares of the Company’s common stock with a value, based on the average closing price in the preceding 30 days, equal to the face value of the MTDC Notes. Based on an average closing price of $4.4075 in the 30 days preceding September 30, 2014, the MTDC Notes could have been settled by issuing 1,179,807 shares of the Company’s common stock.

As part of the consideration for the Apollo Business (see Notes 1 and 3), the Company issued a $1.25 million secured promissory note to IntegenX (the “IntegenX Note”), due on January 6, 2017 (the “Maturity Date”). The IntegenX Note earned simple interest at 8% per annum over its three year term, payable on the Maturity Date. It was repayable early without premium or penalty at the Company’s option at any time and it had to be repaid within 45 days of the closing of an equity offering yielding the Company net cash proceeds of at least $15,000,000. Such an equity offering closed on August 27, 2014 (see Note 1) and the IntegenX Note was repaid on September 12, 2014.

The IntegenX Note was recorded using an effective interest rate of 11.60% and is summarized as follows at September 30, 2014 and January 6, 2014:

	September 30, 2014			January 6, 2014
IntegenX Notes Payable:
Face value	$	1,250,000		$	1,250,000
Interest added to principal		68,219			—
Stated value		1,318,219			1,250,000
Debt discount, net of accumulated amortization of $21,454 and nil at September 12 and January 6, 2014, respectively		128,546			150,000
Notes payable, net of debt discount, prior to repayment		1,189,673			1,100,000
Loss on extinguishment of debt		128,546			—
Balance repaid to IntegenX		(1,318,219	)		—
Notes payable, net of debt discount	$	—		$	1,100,000

The Company recorded a loss on early extinguishment of debt of $128,546 as a result of the repayment of the IntegenX Note on September 12, 2014.

11

WAFERGEN BIO-SYSTEMS, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

NOTE 7.  Convertible Preference Shares of Former Subsidiary

Prior to its dissolution in November 2013, in 2008, the Company’s former Malaysian subsidiary, WGBM, issued Series A Convertible Preference Shares (“CPS”) to MTDC (see Notes 1 and 6), a venture capital and development firm in Malaysia, in a private placement under a Share Subscription and Shareholders’ Agreement dated May 8, 2008, at the U.S. dollar equivalent of $2.25 per share. In 2009 and 2010, WGBM issued Series B CPS to Expedient Equity Ventures Sdn. Bhd. (“EEV”) and Prima Mahawangsa Sdn. Bhd. (“PMSB”), both venture capital and development firms in Malaysia, in a private placement under a Share Subscription Agreement dated April 3, 2009, (“Series B SSA”) at the U.S. dollar equivalent of $2.25 per share. In 2009, WGBM issued Series B CPS to Kumpulan Modal Perdana Sdn. Bhd. (“KMP”), a venture capital and development firm in Malaysia, in a private placement under a Share Subscription Agreement dated July 1, 2009, at the U.S. dollar equivalent of $2.25 per share.

In 2010, both EEV and KMP exercised their option to sell to the Company their holdings of 222,222 and 188,057 Series B CPS, respectively, in exchange for shares of the Company’s common stock.

In October 2013 the Company purchased PMSB’s 444,444 Series B CPS for $70,000.

These transactions, along with the issuance of Series C CPS in 2011 (see below), were summarized as follows immediately prior to the liquidation of WGBM on November 26, 2013:

Class	Number	Initial	Issuance	Gross		Issuance			Exchange			Net Cash		Date if	CPS
of CPS	of CPS	Investor	Date	Proceeds		(Costs)			Gain (loss)			Proceeds		Exchanged	Outstanding
Series A	444,444	MTDC	07/18/2008	$	1,000,000	$	(30,000	)	$	—		$	970,000	—	444,444
Series A	444,444	MTDC	11/27/2008		1,000,000		(30,000	)		—			970,000	—	444,444
Series B	111,111	EEV	06/08/2009		250,000		(19,393	)		(18,029	)		212,578	08/17/2010	—
Series B	111,111	EEV	03/09/2010		250,000		(8,929	)		(3,005	)		238,066	08/17/2010	—
Series B	222,222	PMSB	09/23/2009		500,000		(7,500	)		—			492,500	10/11/2013	—
Series B	222,222	PMSB	05/13/2010		500,000		(5,000	)		—			495,000	10/11/2013	—
Series B	188,057	KMP	09/18/2009		423,128		(11,319	)		—			411,809	09/29/2010	—
Subtotal	1,743,611				3,923,128		(112,141	)		(21,034	)		3,789,953		888,888
Series C	3,233,734	MTDC	03/10/2011		5,000,000		(6,272	)		58,575			5,052,303	—	3,233,734
	4,977,345			$	8,923,128	$	(118,413	)	$	37,541		$	8,842,256		4,122,622

The holders of Series B CPS had the right to cause the Company to exchange their CPS for common stock of the Company at an exchange rate of US$2,236.30 per share of common stock, provided that if during the 10-day trading period immediately prior to the holder’s exercise notice the average closing price of the Company’s common stock was less than US$2,630.90, then the holder could exchange CPS at an exchange rate equal to 85% of such 10-day average closing price. Since this afforded the holders the right to receive a variable number of shares of the Company’s common stock, this feature was not indexed to the Company’s equity and was therefore accounted for as a derivative liability, with the estimated fair value being calculated at each reporting date using a Monte Carlo Simulation approach, using key input variables provided by management, with changes in fair value recorded as gains or losses on revaluation in non-operating income (expense).

Series B CPS derivative liability fair values at September 30, 2013 and December 31, 2012, were estimated to be $1,300,923 and $1,210,909, respectively, using a closing stock price of $19.60 and $29.82, respectively, and based on the following assumptions:

	September 30, 2013			December 31, 2012
Risk-free interest rate		0.04	%		0.16	%
Expected remaining term	0.51 Years			1.00 Years
Expected volatility		102.38	%		125.53	%
Dividend yield		0	%		0	%

The increase in the fair value of this derivative liability of $90,014 during the nine months ended September 30, 2013, was recorded as a revaluation loss (see Note 11).

12

WAFERGEN BIO-SYSTEMS, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The holders of Series A CPS had the right to redeem their shares for cash (or, at the Company’s option, shares of Company common stock at an Applicable Stock Price (“ASP”), calculated as 85% of the average closing price of that stock during the 10-day trading period immediately prior to MTDC’s exercise notice) in the amount originally invested in USD plus a premium of 8%, compounded annually. In addition, the ASP was subject to a ceiling of $1,540.55 and a floor of $99.39. Since this afforded the holders the right to receive a variable number of shares of the Company’s common stock, this feature caused the Series A CPS to not be indexed to the Company’s equity. As a result, the Company recognized this right as an embedded derivative requiring bifurcation and the host instrument (the Series A CPS absent this option) as part of temporary equity.

The Series A CPS derivative liability fair values at September 30, 2013 and December 31, 2012, were estimated to be $424,794 and $619,652, respectively, using a closing stock price of $19.60 and $29.82, respectively, and based on the following assumptions:

	September 30, 2013			December 31, 2012
Risk-free interest rate		0.02% - 0.03	%		0.11% - 0.15	%
Expected remaining term	0.10 - 0.16 Years			0.55 - 0.90 Years
Expected volatility		77.99% - 78.79	%		123.55% - 127.94	%
Dividend yield		0	%		0	%

The decrease in the fair value of this derivative liability of $194,858 during the nine months ended September 30, 2013, was recorded as a revaluation gain (see Note 11).

On March 10, 2011, WGBM received $5,000,000, less issuance costs totaling $6,272, in exchange for the issuance of 3,233,734 Series C convertible preference shares (“CPS”) to MTDC, in a private placement at the U.S. dollar equivalent of $1.5462 per share, representing the first subscription under a Share Subscription Agreement dated December 14, 2010, (“Series C SSA”) to sell 3,233,734 Series C CPS at an initial closing and, should MTDC so elect within 36 months of the initial closing, to sell 1,077,911 shares of Series C CPS at a subsequent closing at the U.S. dollar equivalent of US$2.3193 per share. MTDC could also elect to convert their Series C CPS into ordinary shares of the subsidiary, WGBM, at any time, at a conversion rate of one ordinary share per 100 CPS. Each 993.9 Series C CPS issued at the initial closing was convertible into one share of the Company on April 3, 2014, and each 993.9 Series C CPS issued at the subsequent closing was convertible into one share of the Company on the anniversary of that closing, but the Series C was convertible at any earlier date following each closing at MTDC’s option.

The net sum of $4,993,728 received on issuance of Series C CPS was recorded in stockholders’ equity; this sum was considered in the determination of the gain on liquidation of subsidiary on November 26, 2013. WGBM was authorized to issue 200,000,000 preference shares with a par value of RM0.01. Due to the liquidation of WGBM, no shares remained authorized, issued or outstanding as of December 31, 2013.

NOTE 8.  Preferred Stock

The Company has 10,000,000 shares of preferred stock authorized. Effective August 27, 2013, the Company designated 3,663 shares as Series 1 Convertible Preferred Stock. The Series 1 Convertible Preferred Stock has no voting rights, and holders are entitled to a liquidation preference equal to $0.001 per share. Each share of Series 1 Convertible Preferred Stock is convertible into 2,515.3436 shares of common stock, subject to an ownership cap whereby conversion may not occur to the extent the holder would own more than 9.98% of the common stock following conversion.

On August 27, 2013, the Company issued 2,987.0168 shares of Series 1 Convertible Preferred Stock in exchange for CPNs (see Note 6) and Series A-1 Convertible Preferred Stock (see below) and sold 646.0351 shares of Series 1 Convertible Preferred Stock in a private placement (the “2013 Private Placement”). As of September 30, 2014, all the 3,633.0519 shares of Series 1 Convertible Preferred Stock have been converted into 913,837 shares of common stock.

Effective May 26, 2011, the Company designated 4,500,000 shares as Series A-1 Convertible Preferred Stock and 4,500,000 shares as Series A-2 Convertible Preferred Stock (together, the “Series A Preferred Stock”). Each 99.39 shares of Series A Preferred Stock was convertible into one share of common stock, subject to an ownership cap, and entitled the holder to receive dividends, as, when and if declared by the Company’s Board of Directors, at an annual

13

WAFERGEN BIO-SYSTEMS, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

rate of 5% of the stated value per share of the respective series. Such dividends accrued, compounding quarterly, and accumulated on each share of Series A Preferred Stock from the date of issuance, whether or not declared, until November 27, 2014, when the right to further dividends would cease. The Series A Preferred Stock had no voting rights, and in the event of liquidation ranked senior to common stock.

Effective May 27, 2011, the Company sold an aggregate of 2,937,500 shares of Series A-1 Convertible Preferred Stock with a stated value of $5.20 per share. $131,219 and $547,171 was accrued with respect to undeclared dividends in the three and nine months ended September 30, 2013, respectively. All of the Series A-1 Convertible Preferred Stock was exchanged for common stock and Series 1 Convertible Preferred Stock in the 2013 Exchange, following which the Company retired all of the Series A Preferred Stock, none of which remains issued and outstanding and none will be issued in the future.

NOTE 9.  Stock Awards

The Company has awards outstanding under three plans - the 2003 Incentive Stock Plan (the “2003 Plan”), the 2007 Stock Option Plan (the “2007 Plan”) and the 2008 Stock Incentive Plan (the “2008 Plan”) (collectively, the “Plans”). In addition, there are 98,932 inducement options outstanding that were awarded to executive officers on August27, 2014, not covered by the Plans, with the same standard terms as non-qualified stock options awarded under the 2008 Plan. Under the 2003 Plan and 2007 Plan, incentive stock options, non-qualified stock options, restricted stock and restricted stock units could be granted. Awards vested over varying periods,as specified by the Company’s Board of Directors for each grant, and are exercisable for a maximum period of ten years after date of grant. Both of these plans have been frozen, resulting in no further shares being available for grant.

The Company presently issues most of its awards under the 2008 Plan, initially adopted by the Company’s stockholders on June 5, 2008, and subsequently amended to authorize the issuance of additional shares of the Company’s common stock. This includes an amendment adopted by the Company’s stockholders on May 29, 2014, which increased the total number of shares authorized for issuance from 14,589 to 314,589. The purpose of the 2008 Plan is to provide an incentive to retain the employment of directors, officers, consultants, advisors and employees of the Company, to attract new personnel whose training, experience and ability are considered valuable, to encourage the sense of proprietorship, and to stimulate the active interest of such persons in the Company’s development and financial success. Under the 2008 Plan, the Company is authorized to issue incentive stock options, non-qualified stock options, restricted stock and restricted stock units. Awards that expire or are canceled generally become available for issuance again under the 2008 Plan. The number of shares of the Company’s common stock available under the 2008 Plan will be subject to adjustment in the event of a stock split, stock dividend or other extraordinary dividend, or other similar change in the Company’s common stock or capital structure. Awards may vest over varying periods, as specified by the Company’s Board of Directors for each grant, and have a maximum term of seven years from the grant date. The 2008 Plan is administered by the Company’s Board of Directors.

The Company has issued both options and restricted stock (including restricted stock units), mostly under the Plans. Restricted stock grants afford the recipient the opportunity to receive shares of common stock, subject to certain terms, whereas options give them the right to purchase common stock at a set price. Both the Company’s options and restricted stock issued to employees generally have vesting restrictions that are eliminated over three or four years, although vesting may be over a shorter period, or may occur on the grant date, depending on the terms of each individual award.

The weighted average grant date fair value of options awarded in the nine months ended September 30, 2014 and 2013, was $6.33 and $37.25, respectively. Fair values were estimated using the following assumptions:

	Nine Months Ended September 30,
	2014	2013
Risk-free interest rate	1.43% - 1.57%	0.71% - 1.22%
Expected term	4.75 Years	4.75 Years
Expected volatility	93.89% - 105.97%	96.73% - 108.14%
Dividend yield	0%	0%

14

WAFERGEN BIO-SYSTEMS, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

A summary of stock option and restricted stock transactions in the nine months ended September 30, 2014, is as follows:

				Stock Options					Restricted Stock
							Weighted					Weighted
	Shares			Number of			Average		Number of			Average
	Available			Options			Exercise		Shares			Grant Date
	For Grant			Outstanding			Price		Outstanding			Fair Value
Balance at January 1, 2014		2,779			11,353		$	353.92		—		$	—
2008 Plan Amendment		300,000			—		$	—		—		$	—
Granted		(303,970	)		178,490		$	8.79		224,412		$	4.87
Forfeited		6,404			(404	)	$	99.21		(6,000	)	$	4.55
Canceled		1,830			(1,863	)	$	208.58		––		$	––
Balance at September 30, 2014		7,043			187,576		$	27.48		218,412		$	4.87

No options were exercised during the nine months ended September 30, 2014 or 2013. The aggregate intrinsic value of options outstanding and exercisable at September 30, 2014, was nil, based on our common stock closing price of $4.35. Aggregate intrinsic value is the total pretax amount (i.e., the difference between the Company’s stock price and the exercise price) that would have been received by the option holders had all their in-the-money options been exercised.

The amounts expensed for stock-based compensation totaled $175,746 and $77,283 for the three months ended September 30, 2014 and 2013, respectively, and $935,280 and $260,068 for the nine months ended September 30, 2014 and 2013, respectively.

At September 30, 2014, the total stock-based compensation cost not yet recognized, net of estimated forfeitures, was $1,269,643. This cost is expected to be recognized over an estimated weighted average amortization period of 2.33 years. No amounts related to stock-based compensation costs have been capitalized. The tax benefit and the resulting effect on cash flows from operating and financing activities related to stock-based compensation costs were not recognized as the Company currently provides a full valuation allowance for all of its deferred taxes.

NOTE 10.  Warrants

A summary of outstanding common stock warrants as of September 30, 2014, is as follows:

Securities Into Which	Total Warrants	Warrants Recorded	Exercise	Expiration
Warrants are Convertible	Outstanding	as Liabilities	Price	Date
Common stock	4,600,000	—	$5.00	August 2019
Common stock	120,000	—	$6.25	August 2019
Common stock	307,015	307,015	$7.59	December 2014 and January 2015
Common stock	612,838	110,527	$26.00	August and September 2018
Common stock	102	—	$834.88	December 2014
Common stock	96	—	$1,459.05	December 2015
Common stock	205	—	$1,490.85	July 2015
Common stock	3,019	—	$1,540.55	July 2015
Common stock	201	—	$2,981.70	December 2014 and November 2015
Total	5,643,476	417,542

In addition, there are 25.88 unit warrants outstanding which expire in August and September 2018, 0.35 of which are recorded as liabilities, each entitling the holder to purchase, for $50,000, 2,500 shares of common stock and 1,250 warrants to purchase one share of common stock at an exercise price of $26.00, expiring in August and September 2018.

The warrants expiring in August 2019 comprise 4,600,000 warrants issued to investors and 120,000 warrants issued to underwriters in the 2014 Public Offering (see Note 1).

15

WAFERGEN BIO-SYSTEMS, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

The warrants expiring in December 2014 and January 2015 were originally issued in December 2009 and January 2010 with an exercise price of $2,484.75 and entitled the holders thereof to purchase an aggregate of 972 shares. As a result of anti-dilution adjustments with respect to such warrants pursuant to their terms, such warrants, as of May 27, 2011, had an exercise price of $834.88 and entitled the holders thereof to purchase an aggregate of 2,893 shares. In May 2011, members of management with warrants to purchase a total of 102 shares (after giving effect to prior anti-dilution adjustments) waived their right to further anti-dilution adjustments. As a result of anti-dilution adjustments with respect to the remaining 2,791 warrants pursuant to their terms, such warrants, as of September 30, 2014, had an exercise price of $7.59 and entitled the holders thereof to purchase an aggregate of 307,015 shares.

The Company records warrants and unit warrants with certain anti-dilution protection or certain cash settlement provisions as liabilities, with the estimated fair value of those warrants for which no anti-dilution adjustment is projected prior to the expiration date being calculated using the Black-Scholes valuation model, with all others being calculated using a Monte Carlo Simulation approach, using key input variables provided by management, at each reporting date. Changes in fair value are recorded as gains or losses on revaluation in non-operating income (expense).

The warrants expiring in August and September 2018 comprise 236,900 warrants issued in the 2013 Exchange and 341,713 and 34,225 issued in the initial and final closing, respectively, of the 2013 Private Placement. As the result of a provision contained in these warrants and the unit warrants that were issued in August and September 2013 that would have required cash settlement in certain rare circumstances, these securities were required to be classified as liabilities on the Company’s Consolidated Balance Sheet. 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 holders of these warrants and unit warrants to consent to amendments to their terms to enable the Company to reclassify them as equity.

On March 31, 2014, the Company amended the terms of 412,933 warrants and 22.54 unit warrants such that the liability was settled, having received consent from their holders. The fair value of the securities settled and reclassified as equity on March 31, 2014, was estimated to be $6,109,179. On June 30, 2014, the Company amended the terms of a further 89,378 warrants and 2.99 unit warrants such that the liability was settled, having received consent from their holders after March 31, 2014. The fair value of the securities settled and reclassified as equity on June 30, 2014, was estimated to be $711,960, based on assumptions described below. There were no such reclassifications in the three months ended September 30, 2014.

The total fair values of those warrants and unit warrants accounted for as liabilities as of September 30, 2014 and 2013, was estimated to be $362,836 and $8,299,415, respectively, using a closing stock price of $4.35 and $19.60, respectively, and based on the following assumptions:

	September 30, 2014			September 30, 2013
Risk-free interest rate		0.02% - 1.28	%		0.07% - 1.01	%
Expected remaining term	0.23 - 3.60 Years			0.71 - 4.00 Years
Expected volatility		118.65% - 140.41	%		85.06% - 112.18	%
Dividend yield		0	%		0	%

The aggregate fair value of such warrants and unit warrants at December 31, 2013 and 2012, was estimated to be $9,147,507 and $102,695, respectively, and the aggregate fair value of warrants and unit warrants issued during the three months ended September 30, 2013, was estimated to be $7,962,081 on their issuance dates. During the nine months ended September 30, 2014, to the extent that it did not arise from settlements, a decrease in the fair value of the warrant derivative liability of $1,963,532 was recorded as a revaluation gain, and during the nine months ended September 30, 2013, to the extent that it did not arise from new issuances, the increase in the fair value of the warrant derivative liability of $234,639 was recorded as a revaluation loss (see Note 11).

NOTE 11.  Fair Value of Financial Instruments

Fair value measurements are determined under a three-level hierarchy for fair value measurements that prioritizes the inputs to valuation techniques used to measure fair value, distinguishing between market participant assumptions developed based on market data obtained from sources independent of the reporting entity (“observable inputs”) and the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (“unobservable inputs”).

16

WAFERGEN BIO-SYSTEMS, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

Fair value is the price that would be received to sell an asset or would be paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. In determining fair value, the Company primarily uses prices and other relevant information generated by market transactions involving identical or comparable assets (“market approach”). The Company also considers the impact of a significant decrease in volume and level of activity for an asset or liability when compared with normal activity to identify transactions that are not orderly.

The highest priority is given to unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Securities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Thethree hierarchy levels are defined as follows:

Level 1 – Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly;

Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

The following tables present the Company’s liabilities that are measured at fair value on a recurring basis at September 30, 2014 and December 31, 2013:

	Level 1		Level 2		Level 3		Total
September 30, 2014
Financial Liabilities:
Warrant derivative liabilities	$	—	$	—	$	362,836	$	362,836
Total liabilities	$	—	$	—	$	362,836	$	362,836

	Level 1		Level 2		Level 3		Total
December 31, 2013
Financial Liabilities:
Warrant derivative liabilities	$	—	$	—	$	9,147,507	$	9,147,507
Total liabilities	$	—	$	—	$	9,147,507	$	9,147,507

The following tables present a reconciliation of all liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2014 and 2013:

				Conversion
				Element of		Conversion
	Warrant			Promissory		Element of		Series A CPS
	Derivatives			Notes		Series B CPS		Derivatives		Total
Balance at January 1, 2014	$	9,147,507		$	—	$	—	$	—	$	9,147,507
Issuances		—			—		—		—		—
Revaluation gains included in other income and expenses		(1,963,532	)		—		—		—		(1,963,532	)
Settlements		(6,821,139	)		—		—		—		(6,821,139	)
Balance at September 30, 2014	$	362,836		$	—	$	—	$	—	$	362,836
Total gains included in other income and expenses attributable to liabilities still held as of September 30, 2014	$	1,276,897		$	—	$	—	$	—	$	1,276,897

17

WAFERGEN BIO-SYSTEMS, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

				Conversion
				Element of			Conversion
	Warrant			Promissory			Element of			Series A CPS
	Derivatives			Notes			Series B CPS			Derivatives			Total
Balance at January 1, 2013	$	102,695		$	274,928		$	1,210,909		$	619,652		$	2,208,184
Issuances		7,962,081			—			—			—			7,962,081
Revaluation (gains) losses included in other income and expenses		234,639			(274,928	)		90,014			(194,858	)		(145,133	)
Settlements		—			—			—			—			—
Balance at September 30, 2013	$	8,299,415		$	—		$	1,300,923		$	424,794		$	10,025,132
Total gains (losses) included in other income and expenses attributable to liabilities still held as of September 30, 2013	$	(234,640	)	$	—		$	(90,014	)	$	194,858		$	(129,796	)

Assumptions used in evaluating the warrant derivative liabilities, the conversion element of the promissory notes, the conversion element of the Series B CPS and the Series A CPS derivative liabilities are discussed in Notes 10, 6, 7 and 7, respectively. The principal assumptions used, and their impact on valuations, are as follows:

Risk-Free Interest Rate.  This is the U.S. Treasury rate for the measurement date having a term equal to the weighted average expected remaining term of the instrument. An increase in the risk-free interest rate will increase the fair value and the associated derivative liability.

Expected Remaining Term.This is the period of time over which the instrument is expected to remain outstanding and is based on management’s estimate, taking into consideration the remaining contractual life, historical experience and the possibility of liquidation. An increase in the expected remaining term will increase the fair value and the associated derivative liability.

Expected Volatility.This is a measure of the amount by which the Company’s common stock price has fluctuated or is expected to fluctuate. The Company applies equal weighting to the Company’s own historic volatility and the historic volatility of a group of publicly traded companies over the retrospective period corresponding to the expected remaining term of the instrument on the measurement date. Since the 2013 Exchange, the Company has applied a reduced weighting to its own historic volatility during the period in which it was highly leveraged. The group of publicly traded companies is selected from the same industry or market index, with extra weighting attached to those companies most similar in terms of business activity, size and financial leverage. An increase in the expected volatility will increase the fair value and the associated derivative liability.

Dividend Yield.The Company has not made any dividend payments and does not plan to pay dividends in the foreseeable future. An increase in the dividend yield will decrease the fair value and the associated derivative liability.

NOTE 12.  Net Loss Per Share

Basic and diluted net loss per share are shown on the statement of operations.

No adjustment has been made to the net loss for charges, gains, losses and accretion related to Series A, B and C CPS, MTDC Notes, Series A-1 Convertible Preferred Stock and CPNs, as the effect would be anti-dilutive due to the net loss.

The following outstanding stock options, warrants and unit warrants (on an as-converted into common stock basis) and shares issuable or contingently issuable upon conversion of restricted stock, Series 1 Convertible Preferred Stock, Series A, B and C CPS, MTDC Notes, Series A-1 Convertible Preferred Stock and CPNs were excluded from the computation of diluted net loss per share attributable to holders of common stock as they had antidilutive effects for the three and nine months ended September 30, 2014 and 2013:

18

WAFERGEN BIO-SYSTEMS, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Common share equivalents issuable upon exercise of common stock options		21,621		59		12,992		84
Common share equivalents issuable upon exercise of common stock warrants		995,501		47,297		432,434		28,244
Common share equivalents issuable upon exercise of unit warrants		—		11,201		—		5,346
Shares issuable upon vesting of restricted stock		87,586		—		30,291		—
Shares issuable upon conversion of Series 1 Convertible Preferred Stock		447,311		287,601		638,603		96,920
Shares issuable upon conversion of Series A CPS		—		29,384		—		29,384
Shares issuable upon conversion of Series B CPS		—		59,119		—		59,119
Shares issuable upon conversion of Series C CPS		—		3,254		—		3,254
Shares issuable upon conversion of MTDC Notes		1,179,807		—		1,179,807		—
Shares issuable upon conversion of Series A-1 Convertible Preferred Stock		—		20,401		—		28,351
Shares issuable upon conversion of convertible promissory notes		—		18,614		—		25,887
Total common share equivalents excluded from denominator for diluted earnings per share computation		2,731,826		476,930		2,294,127		276,589

NOTE 13.  Concentrations

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and accounts receivable. The Company places its cash in commercial banks. Accounts in the United States are secured by the Federal Deposit Insurance Corporation. Accounts in Luxembourg are similarly guaranteed. The Company’s total deposits at commercial banks usually exceed the balances insured.

The Company generally requires no collateral from its customers. No provision was made for doubtful accounts at September 30, 2014, or December 31, 2013.

Customers accounting for more than 10% of total revenues during the three or nine months ended September 30, 2014 or 2013, are tabulated as follows:

	Three Months Ended September 30,								Nine Months Ended September 30,
	2014				2013				2014				2013
Customer A	$	166,919	13	%	$	—	—		$	166,919	4	%	$	—	—
Customer B	$	125,000	10	%	$	125,000	32	%	$	375,000	9	%	$	333,333	41	%
Customer C	$	35,307	3	%	$	123,201	32	%	$	260,773	6	%	$	123,201	15	%
Customer D	$	983	0	%	$	114,600	29	%	$	12,181	0	%	$	114,600	14	%
Customer E	$	194	0	%	$	7,664	2	%	$	164,529	4	%	$	168,906	21	%

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WAFERGEN BIO-SYSTEMS, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

NOTE 14.  Contingencies

From time to time the Company may be involved in claims arising in connection with its business. Based on information currently available, the Company believes that the amount, or range, of reasonably possible losses in connection with any pending actions against it, including the matter described below, in excess of established reserves, in the aggregate, not to be material to its consolidated financial condition or cash flows. However, losses may be material to the Company’s operating results for any particular future period, depending on the level of income or loss for such period.

Coalesce v. WaferGen.  On April 24, 2012, an action entitled Coalesce Corporation (“Coalesce”) v. WaferGen Bio-systems, Inc. was filed in the Alameda County Superior Court. Coalesce, a company that had been providing marketing services between 2006 and 2010, sued the Company for alleged non-payment of sums due, breach of contract, misrepresentation and unjust enrichment. On September 5, 2012, Coalesce filed an amended complaint, with additional claims, for compensatory damages in excess of $500,000 and other compensation. In August 2014, the plaintiff and Company agreed to an out-of-court settlement. Related legal costs were expensed as incurred.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion highlights the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described.

The information contained in this Form 10-Q is intended to update the information contained in our annual report on Form 10-K for the year ended December 31, 2013 (the “Form 10-K”), and our quarterly reports on Form 10-Q for the quarter ended March 31, 2014, and June 30, 2014 (the “First and Second Quarter Forms 10-Q”), both as filed with the Securities and Exchange Commission, and presumes that readers have access to, and will have read, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our consolidated financial statements and the notes thereto, and other information contained in the Form 10-K and the First and Second Quarter Forms 10-Q. The following discussion and analysis also should be read together with our condensed consolidated financial statements and the notes thereto included elsewhere in this Form 10-Q.

Forward-Looking Statements

Information included in this Form 10-Q may contain forward-looking statements. Except for the historical information contained in this discussion of the business and the discussion and analysis of financial condition and results of operations, the matters discussed herein are forward looking statements. These forward looking statements include but are not limited to our plans for sales growth and expectations of gross margin, expenses, new product introduction, integration and potential benefits of our recent business acquisition, and our liquidity and capital needs. This information may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “estimate,” “believe,” “intend,” “contemplate,” “predict,” “project,” “potential” or “continue” or the negative of these words or other variations on these words or comparable terminology. In addition to the risks and uncertainties described in “Risk Factors” contained in the Form 10-K, these risks and uncertainties may include consumer trends, business cycles, scientific developments, changes in governmental policy and regulation, currency fluctuations, economic trends in the United States and inflation. Forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that any projections or other expectations included in any forward-looking statements will come to pass. Our actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, we undertake no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

Company Overview and Background

Since beginning operations in 2003, we have been engaged in the development, manufacture and sales of systems for gene expression quantification, genotyping and stem-cell research for the life sciences and pharmaceutical drug discovery industries. Most recently, our R&D efforts have been concentrated on the commercialization of the SmartChip Target Enrichment System. Our products are aimed at researchers who perform genetic analysis and cell biology, primarily at pharmaceutical and biotech companies, academic and private research centers and diagnostics companies involved in biomarker research. We plan to provide new performance standards with significant savings of time and cost for professionals in the field of gene expression research and to facilitate biomarker discovery, toxicology and clinical research through the SmartChip products and services.

Our revenue is subject to fluctuations due to the timing of sales of high-value products and service projects, the impact of seasonal spending patterns, the timing and size of research projects our customers perform, changes in overall spending levels in the life science industry and other unpredictable factors that may affect customer ordering patterns. Any significant delays in the commercial launch or any lack or delay of commercial acceptance of new products, unfavorable sales trends in existing product lines, or impacts from the other factors mentioned above, could adversely affect our revenue growth or cause a sequential decline in quarterly revenue. Due to the possibility of fluctuations in our revenue and net income or loss, we believe that quarterly comparisons of our operating results are not a good indicator of future performance.

Since inception, we have incurred substantial operating losses. As of September 30, 2014, our accumulated deficit was $88,267,731. Losses have principally occurred as a result of the substantial resources required for the research, development and manufacturing start-up costs required to commercialize our initial products. We expect to continue to incur substantial costs for research and development activities for at least the next year as we expand and improve our core technology and its applications in the life science research market.

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Acquisition of Assets from IntegenX Inc.

In January 2014, we entered into an Asset Purchase Agreement with IntegenX Inc. (“IntegenX”), pursuant to which we acquired substantially all of the assets of its product line 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 Business”). The purchase price for the Apollo Business comprised (1) a cash payment of $2.0 million, (2) a $1.25 million secured promissory note (the “IntegenX Note”), (3) up to three earn-out payments payable, if at all, in 2015, 2016 and 2017, respectively (the “Earnout”), and (4) our assumption of certain liabilities, including obligations to perform under contracts and liabilities for certain accrued but unpaid vacation for certain employees.

The IntegenX Note accrued interest at 8.0% per year and was payable in a single payment of principal and accrued interest on January 6, 2017. However if, prior to the IntegenX Note’s maturity, we completed an equity offering yielding net cash proceeds of at least $15.0 million, the IntegenX Note had to be repaid within 45 days of the closing of the equity offering. Such an equity offering closed on August 27, 2014 and the IntegenX Note was repaid on September 12, 2014. To secure our obligations under the IntegenX Note, we granted IntegenX a security interest in the assets acquired from them.

The Earnout contemplates three earn-out payments based on gross revenues from certain products of the Apollo Business (“Covered Revenues”). In particular:

· If, in 2014, Covered Revenues exceed $4 million but are less than $6 million, we will pay IntegenX an amount equal to 15% of the amount by which the 2014 Covered Revenues exceed $4 million. If, in 2014, Covered Revenues exceed $6 million, we will pay IntegenX an amount equal to the sum of (i) $300,000 plus (ii) 20% of the amount by which the 2014 Covered Revenues exceed $6 million.

· If, in 2015, Covered Revenues exceed $4 million but are less than $6 million, we will pay IntegenX an amount equal to 10% of the amount by which the 2015 Covered Revenues exceed $4 million. If, in 2015, Covered Revenues exceed $6 million but are less than $10 million, we will pay IntegenX an amount equal to the sum of (i) $200,000 plus (ii) 15% of the amount by which the 2015 Covered Revenues exceed $6 million. If, in 2015, Covered Revenues exceed $10 million, we will pay IntegenX an amount equal to (i) $800,000 plus (ii) 20% of the amount by which the 2015 Covered Revenues exceed $10 million.

· If, in 2016, Covered Revenues exceed $4 million but are less than $10 million, we will pay IntegenX an amount equal to 10% of the amount by which the 2016 Covered Revenues exceed $4 million. If, in 2016, Covered Revenues exceed $10 million but are less than $15 million, we will pay IntegenX an amount equal to the sum of (i) $600,000 plus (ii) 15% of the amount by which the 2016 Covered Revenues exceed $10 million. If, in 2016, Covered Revenues exceed $15 million, we will pay IntegenX an amount equal to (i) $1.35 million plus (ii) 20% of the amount by which the 2016 Covered Revenues exceed $15 million.

On June 30, 2014, we effected a reverse stock split of our common stock by a ratio of one-for-ten (the “2014 Reverse Split”). Every ten outstanding shares of common stock became one share of common stock. No fractional shares were issued in connection with the 2014 Reverse Split. Stockholders who were otherwise entitled to receive a fractional share of common stock received one whole share of common stock. The 2014 Reverse Split did not change the number of shares of common or preferred stock that we are authorized to issue, or the par value of our common or preferred stock. Except as otherwise noted in this Quarterly Report on Form 10-Q, all share numbers are presented on a post-2014 Reverse Split basis.

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Results of Operations

The following table presents selected items in the condensed consolidated statements of operations for the three and nine months ended September 30, 2014 and 2013, respectively:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Revenue:
Product	$	1,125,201		$	264,547		$	4,014,622		$	480,949
License and royalty		125,000			125,000			375,000			333,333
Total revenue		1,250,201			389,547			4,389,622			814,282
Cost of product revenue		374,776			192,814			1,739,757			335,182
Gross profit		875,425			196,733			2,649,865			479,100
Operating expenses:
Sales and marketing		961,891			625,390			3,598,880			1,577,317
Research and development		1,909,310			1,581,449			4,749,193			4,246,796
General and administrative		1,132,418			1,217,899			3,233,461			2,443,317
Total operating expenses		4,003,619			3,424,738			11,581,534			8,267,430
Operating loss		(3,128,194	)		(3,228,005	)		(8,931,669	)		(7,788,330	)
Other income and (expenses):
Interest income		19			830			46			2,917
Interest expense		(107,464	)		(848,464	)		(319,946	)		(2,821,093	)
Gain on revaluation of derivative liabilities, net		589,336			623,613			1,963,532			145,133
Loss on extinguishment of debt		(128,546	)		(4,970,410	)		(128,546	)		(4,970,410	)
Issuance of warrants due to organic change		—			(2,553,318	)		—			(2,553,318	)
Miscellaneous income (expense)		(5,686	)		167,952			(9,879	)		235,295
Total other income and (expenses)		347,659			(7,579,797	)		1,505,207			(9,961,476	)
Net loss before provision for income taxes		(2,780,535	)		(10,807,802	)		(7,426,462	)		(17,749,806	)
Provision for income taxes		—			530			3,100			3,191
Net loss	$	(2,780,535	)	$	(10,808,332	)	$	(7,429,562	)	$	(17,752,997	)

Product Revenue

The following table presents our product revenue for the three and nine months ended September 30, 2014 and 2013, respectively:

Three Months Ended September 30,					Nine Months Ended September 30,
2014		2013		% Change	2014		2013		% Change
$	1,125,201	$	264,547	325%	$	4,014,622	$	480,949	735%

For the three months ended September 30, 2014, product revenue increased by $860,654, or 325%, as compared to the three months ended September 30, 2013. The increase is primarily due to revenue from the newly-acquired Apollo Business, which accounted for 46% of our product revenue in the three months ended September 30, 2014, compared to none in the comparable 2013 period. There was also a significant increase in sales of our Real-Time PCR Chip panels, which represented 24% of product revenue in the three months ended September 30, 2014. We also increased sales of SmartChip Real-Time PCR Systems and SmartChip Target Enrichment Systems (launched in mid-2013), which represented 23% of our product revenue in the three months ended September 30, 2014.

For the nine months ended September 30, 2014, product revenue increased by $3,533,673, or 735%, as compared to the nine months ended September 30, 2013. The increase is primarily due to revenue from the newly-acquired Apollo Business, which accounted for 39% of our product revenue in the nine months ended September 30, 2014, compared to

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none in the comparable 2013 period. We also increased sales of SmartChip Real-Time PCR Systems and SmartChip Target Enrichment Systems (launched in mid-2013) in the nine months ended September 30, 2014, representing 40% of our product revenue in the 2014 period, more than 4.5 times the revenue in the 2013 period. There was also a significant increase in sales of our Real-Time PCR Chip panels and other projects and services, which represented 20% of product revenue in the nine months ended September 30, 2014, more than 6 times the revenue in the 2013 period.

License and Royalty Revenue

The following table presents our license and royalty revenue for the three and nine months ended September 30, 2014 and 2013, respectively:

Three Months Ended September 30,					Nine Months Ended September 30,
2014		2013		% Change	2014		2013		% Change
$	125,000	$	125,000	—	$	375,000	$	333,333	13%

For the three months ended September 30, 2014 and 2013, license and royalty revenue was unchanged at $125,000. For the nine months ended September 30, 2014, license and royalty revenue increased by $41,667, or 13%, as compared to the nine months ended September, 2013. The increase reflects revenue recognition for one additional month in the nine months ended September 30, 2014. This revenue was generated by an agreement signed at the beginning of February 2013, expected to generate revenue of $500,000 annually for three years.

Cost of Product Revenue

The following table presents our cost of product revenue for the three and nine months ended September 30, 2014 and 2013, respectively:

Three Months Ended September 30,					Nine Months Ended September 30,
2014		2013		% Change	2014		2013		% Change
$	374,776	$	192,814	94%	$	1,739,757	$	335,182	419%

Cost of product revenue includes the cost of products paid to third party vendors and raw materials, labor and overhead for products manufactured internally, and reserves for warranty and inventory obsolescence.

For the three months ended September 30, 2014, cost of product revenue increased by $181,962, or 94%, as compared to the three months ended September 30, 2013. For the nine months ended September 30, 2014, cost of product revenue increased by $1,404,575, or 419%, as compared to the nine months ended September 30, 2013. The increase in both the three- and nine-month periods ended September 30, 2014, related primarily to the increase in product revenue, offset by improved margins. These improved margins were caused by reductions in the provision for excess inventory and by an increase in the percentage of revenue from consumables, which generate higher margins than system sales.

Sales and Marketing

The following table presents our sales and marketing expenses for the three and nine months ended September 30, 2014 and 2013, respectively:

Three Months Ended September 30,					Nine Months Ended September 30,
2014		2013		% Change	2014		2013		% Change
$	961,891	$	625,390	54%	$	3,598,880	$	1,577,317	128%

Sales and marketing expenses consist primarily of compensation costs of our sales and marketing team, commissions and the costs associated with various marketing programs.

For the three months ended September 30, 2014, sales and marketing expenses increased by $336,501, or 54%, as compared to the three months ended September 30, 2013. The increase resulted primarily from increases in headcount, largely due to our hiring employees in Europe, increased commissions due to increased revenue, and increased amortization related to intangible assets acquired with the Apollo Business, offset by a reduction in accrued retention bonuses.

For the nine months ended September 30, 2014, sales and marketing expenses increased by $2,021,563, or 128%, as compared to the nine months ended September 30, 2013. The increase resulted primarily from increases in headcount, largely due to our hiring employees from the Apollo Business and in Europe, an additional expense recorded for an out-

24

of-court settlement, increased commissions due to increased revenue, amortization related to intangible assets acquired with the Apollo Business and the scale-up of marketing activities, including travel and subsistence and the cost of presenting at one major trade show.

We expect sales and marketing expenses for the remainder of 2014 to remain at a similar level to, or slightly lower than, that of the first three quarters.

Research and Development

The following table presents our research and development expense for the three and nine months ended September 30, 2014 and 2013, respectively:

Three Months Ended September 30,					Nine Months Ended September 30,
2014		2013		% Change	2014		2013		% Change
$	1,909,310	$	1,581,449	21%	$	4,749,193	$	4,246,796	12%

Research and development expenses consist primarily of salaries and other personnel-related expenses, laboratory supplies and other expenses related to the design, development, testing and enhancement of our products. Research and development expenses are expensed as they are incurred.

For the three months ended September 30, 2014, research and development expenses increased by $327,861, or 21%, as compared to the three months ended September 30, 2013. The increase resulted primarily from increases in headcount, most notably due to our hiring employees from the Apollo Business and our new Chief Technology Officer, recruitment costs and increased reagent costs, offset by a reduction in accrued retention bonuses.

For the nine months ended September 30, 2014, research and development expenses increased $502,397, or 12%, as compared to the nine months ended September 30, 2013. The increase resulted primarily from increases in headcount, most notably due to our hiring employees from the Apollo Business and our new Chief Technology Officer, and increased reagent costs, offset by reductions in the cost of instrument development and facilities costs.

We believe a substantial investment in research and development is essential in the long term to remain competitive and expand into additional markets. Accordingly, we expect our research and development expenses to remain at a high level of total expenditures for the foreseeable future.

General and Administrative

The following table presents our general and administrative expenses for the three and nine months ended September 30, 2014 and 2013, respectively:

Three Months Ended September 30,					Nine Months Ended September 30,
2014		2013		% Change	2014		2013		% Change
$	1,132,418	$	1,217,899	(7)%	$	3,233,461	$	2,443,317	32%

General and administrative expenses consist primarily of personnel costs for finance, human resources, business development, and general management, as well as professional fees, such as expenses for legal and accounting services.

For the three months ended September 30, 2014, general and administrative expenses decreased by $85,481, or 7%, as compared to the three months ended September 30, 2013. The decrease resulted primarily from the absence of a one-time accrual of a discretionary bonus awarded to our CEO, the accrual of retention incentives for other U.S. employees and severance costs for Malaysian employees, along with a reduction in legal fees incurred in conjunction with capital restructuring. This was offset by an increase in consultancy costs, principally due to outsourcing the CFO and controller functions until late August, and an increase in accrued performance bonuses.

For the nine months ended September 30, 2014, general and administrative expenses increased by $790,144, or 32%, as compared to the nine months ended September 30, 2013. The increase resulted primarily from recording a one-time, non-cash charge of approximately $600,000 related to stock options vesting over three years commencing on March 8, 2012, awarded to our Chief Executive Officer following our Annual Stockholders’ Meeting, an increase in accrued performance bonuses and an increase in consultancy costs, principally due to outsourcing the CFO and controller functions between late March and late August and the acquisition of the Apollo Business. This was offset by the absence of a one-time accrual of a discretionary bonus awarded to our CEO, the accrual of retention incentives for other U.S. employees and severance costs for Malaysian employees and a reduction in legal fees incurred in conjunction with capital restructuring.

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We expect our general and administrative expenses to be lower for the remainder of 2014 due to the non-recurrence of one-off stock option costs and a reduction in professional fees related to past projects, offset by the cost of having a full-time Chief Operating Officer.

Interest Income

The following table presents our interest income for the three and nine months ended September 30, 2014 and 2013, respectively:

Three Months Ended September 30,					Nine Months Ended September 30,
2014		2013		% Change	2014		2013		% Change
$	19	$	830	(98)%	$	46	$	2,917	(98)%

The interest income is solely earned on cash balances held in interest-bearing bank accounts.

For the three months ended September 30, 2014, interest income decreased by $811, or 98%, as compared to the three months ended September 30, 2013, and for the nine months ended September 30, 2014, interest income decreased by $2,871, or 98%, as compared to the nine months ended September 30, 2013. The decrease was mainly due to the absence of cash invested in interest-bearing accounts in Malaysia, with banks in the U.S. paying negligible interest in both periods.

Interest Expense

The following table presents our interest expense for the three and nine months ended September 30, 2014 and 2013, respectively:

Three Months Ended September 30,					Nine Months Ended September 30,
2014		2013		% Change	2014		2013		% Change
$	107,464	$	848,464	(87)%	$	319,946	$	2,821,093	(89)%

For the three months ended September 30, 2014, interest expense decreased by $741,000, or 87%, as compared to the three months ended September 30, 2013. For the nine months ended September 30, 2014, interest expense decreased $2,501,147, or 89%, as compared to the nine months ended September 30, 2013. The decrease in both periods was due to the absence of charges for 5% interest and amortization of the debt discount and loan origination fees related to the convertible promissory notes (“CPNs”) in the aggregate principal amount of $15,275,000 issued in the May 2011 Private Placement and converted into equity securities on August 27, 2013. This decrease was offset by interest on the $5,200,000 in long-term debt issued to Malaysian Technology Development Corporation Sdn. Bhd. (“MTDC”), an investor in WaferGen Biosystems (M) Sdn. Bhd. (“WGBM”), our now-dissolved Malaysian subsidiary (the “MTDC Notes”), and on the IntegenX Note until it was repaid on September 12, 2014. Such interest is amortized using the effective yield method, which weights the charges towards the latter stages of the contractual term of the debt. Interest on the MTDC Notes is expected to be approximately $370,000 in 2015, rising each year up to $732,000 in 2019, the last full year before this debt matures.

Gain on Revaluation of Derivative Liabilities, Net

The following table represents the gain on revaluation of our derivative liabilities, net for the three and nine months ended September 30, 2014 and 2013, respectively:

Three Months Ended September 30,					Nine Months Ended September 30,
2014		2013		% Change	2014		2013		% Change
$	589,336	$	623,613	(5)%	$	1,963,532	$	145,133	1,253%

Our derivative liabilities arise due to the cash settlement provisions in certain warrants and unit warrants and the variable number of shares of our common stock that may be issued upon the exercise of those warrants with certain anti-dilution protection and, until the time of their settlement in 2013, upon the exchange of Series A and Series B Convertible Preference Shares (“CPS”) of WGBM, and under the conversion element of our CPNs.

The net gain from revaluation of derivative liabilities for the three months ended September 30, 2014, was $589,336, compared to a net gain of $623,613 for the three months ended September 30, 2013. The net gain from revaluation of derivative liabilities for the nine months ended September 30, 2014, was $1,963,532, compared to a net gain of $145,133 for the nine months ended September 30, 2013. Gains and losses are directly attributable to revaluations of all of our derivatives and result primarily from a net decrease or increase, respectively, in our stock price in the period. Our

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closing stock price was $4.35 on September 30, 2014, compared to $12.50 on June 30, 2014, and $20.00 on December 31, 2013, and was $19.60 on September 30, 2013, compared to $39.76 on June 30, 2013, and $29.82 on December 31, 2012. Future gains or losses on revaluation will result primarily from net decreases or increases, respectively, in our stock price during the reporting period. Derivative liabilities will also decrease as the remaining term of each instrument diminishes. With the present number of outstanding warrants accounted for as liabilities, at our closing stock price of $4.35 on September 30, 2014, an increase in our share price of $1.00 would generate a revaluation loss of approximately $70,000; conversely, a decrease in our share price of $1.00 would generate a revaluation gain of approximately $70,000. Should our stock price rise above $10.00, the impact of a $1.00 change on our share price would increase to approximately $90,000.

Loss on Extinguishment of Debt

The following table presents the loss on extinguishment of debt we recognized in the three and nine months ended September 30, 2014 and 2013, respectively:

Three Months Ended September 30,					Nine Months Ended September 30,
2014		2013		% Change	2014		2013		% Change
$	128,546	$	4,970,410	N/A	$	128,546	$	4,970,410	N/A

Loss on extinguishment of debt in the three and nine months ended September 30, 2014, is a one-time non-cash charge recorded as a result of the early repayment of the IntegenX Note on September 12, 2014. Loss on extinguishment of debt in the three and nine months ended September 30, 2013, is a one-time non-cash charge recorded as a result of the CPNs being exchanged for other securities per the terms of the Exchange Agreement on August 27, 2013. No comparable costs are expected in the near future, although if the MTDC Notes had been repaid or exchanged for shares of our common stock on September 30, 2014, we would have recorded a one-time non-cash charge of approximately $3.3 million.

Issuance of Warrants Due to Organic Change

The following table presents the charge for issuance of warrants due to organic change that we incurred for the three and nine months ended September 30, 2014 and 2013, respectively:

Three Months Ended September 30,					Nine Months Ended September 30,
2014		2013		% Change	2014		2013		% Change
$	—	$	2,553,318	N/A	$	—	$	2,553,318	N/A

The charge for issuance of warrants due to organic change is a one-time non-cash charge recorded as a result of the warrants issued in May 2011 (the “May 2011 Warrants”) being exchanged for securities with a greater value. Per the terms of the May 2011 warrants, holders were entitled to compensation should an Organic Change, as defined therein, occur, and the issuance of new shares in the 2013 Private Placement that occurred on August 27, 2013, met that definition. No comparable costs are expected in the foreseeable future.

Miscellaneous Income (Expense)

The following table presents miscellaneous income (expense) for the three and nine months ended September 30, 2014 and 2013, respectively:

Three Months Ended September 30,					Nine Months Ended September 30,
2014		2013		% Change	2014		2013		% Change
$	(5,686)	$	167,952	N/A	$	(9,879)	$	235,295	N/A

For the three months ended September 30, 2014, we recorded miscellaneous expense of $5,686, compared to income of $167,952 for the three months ended September 30, 2013. For the nine months ended September 30, 2014, we recorded miscellaneous expense of $9,879, compared to income of $235,295 for the nine months ended September 30, 2013. Miscellaneous income or expense is the result of net foreign currency exchange gains and losses which, until it was dissolved in November 2013, arose mainly in WGBM, principally due to revaluation of the inter-company account at the balance sheet date. WGBM had a net receivable on its dollar denominated balances, so if the value of the Malaysian Ringgit decreased against the dollar, income was recorded, whereas if it increased against the dollar, an expense was recorded. Foreign currency exchange gains and losses also arise on our subsidiary in Luxembourg, and on U.S. expenses denominated in foreign currencies. Following the liquidation of WGBM, miscellaneous income and expense is not expected to be significant in future periods.

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Provision for Income Taxes

The following table presents our provision for income taxes for the three and nine months ended September 30, 2014 and 2013, respectively:

Three Months Ended September 30,					Nine Months Ended September 30,
2014		2013		% Change	2014		2013		% Change
$	—	$	530	(100)%	$	3,100	$	3,191	(3)%

For the three and nine months ended September 30, 2014, we recorded a charge of nil and $3,100, respectively, for U.S. state taxes. For the three and nine months ended September 30, 2013, we recorded a charge of $530 and $3,191, respectively, for U.S. state taxes. We provide a full valuation allowance against our net deferred tax assets.

Headcount

Our consolidated headcount as of November 10, 2014, comprised 45 regular employees, 44 of whom were employed full-time, compared to 28 regular employees as of December 31, 2013, all of whom were employed full-time.

Liquidity and Capital Resources

From inception through September 30, 2014, we have raised a total of $3,665,991 from the issuance of notes payable, $66,037 from the sale of Series A Preferred Stock, $1,559,942 from the sale of Series B Preferred Stock, $31,226,191, net of offering costs, from the sale of common stock and warrants in various private placements, $8,842,256, net of offering costs, from the sale of CPS of our now-dissolved Malaysian subsidiary, $1,842,760, net of origination fees, from a secured term loan, $27,492,876, net of offering costs and liquidated damages for late registration, from the sale of the Series A-1 Convertible Preferred Stock, CPNs and warrants in the May 2011 Private Placement, $13,393,162, net of offering costs, from the sale of common stock, Series 1 Convertible Preferred Stock and warrants in the 2013 Private Placement, and $17,971,681, net of offering costs, from the sale of common stock and warrants in the 2014 Public Offering. As of September 30, 2014, we had $17,328,471 in unrestricted cash and cash equivalents, and working capital of $16,980,732.

Net Cash Used in Operating Activities

We experienced negative cash flow from operating activities for the nine months ended September 30, 2014 and 2013, in the amounts of $7,818,416 and $4,928,406, respectively. The cash used in operating activities in the nine months ended September 30, 2014, was due to cash used to fund a net loss of $7,429,562, adjusted for net non-cash income related to depreciation and amortization, stock-based compensation, net gains on revaluation of derivative liabilities, interest converted to principal on long-term debt, inventory provision, amortization of debt discount and loss on extinguishment of debt totaling $630,302, and cash provided by a change in working capital of $241,448. The cash used in operating activities in the nine months ended September 30, 2013, was due to cash used to fund a net loss of $17,752,997, adjusted for net non-cash expense related to depreciation and amortization, stock-based compensation, net gains on revaluation of derivative liabilities, interest converted to principal on CPNs, inventory provision, amortization of debt discount, loss on extinguishment of debt and issuance of warrants due to organic change totaling $10,841,576, and cash provided by a change in working capital of $1,983,015. The increase in cash used in the nine months ended September 30, 2014, compared to 2013, was driven primarily by the increase in the net operating loss from $7,788,330 to $8,931,669, and the cash not yet provided by the increase in accounts receivable.

Net Cash Used in Investing Activities

We used $215,221 in the nine months ended September 30, 2014, and $41,906 in the nine months ended September 30, 2013, to acquire property and equipment. Further, in the nine months ended September 30, 2014, we used $2,000,000 to acquire the Apollo Business.

Net Cash Provided by Financing Activities

Cash provided by financing activities in the nine months ended September 30, 2014, was $16,653,462, being $17,971,681 from the issuance of common stock and warrants in the 2014 Public Offering, offset by $1,318,219 used to repay the IntegenX Note.

Cash provided by financing activities in the nine months ended September 30, 2013, was $13,393,162, all from the issuance of common stock, Series 1 Convertible Preferred Stock and warrants in the 2013 Private Placement.

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Availability of Additional Funds

We believe funds available at September 30, 2014, along with our revenue, are sufficient to fund our operations well into 2016. To continue our operations thereafter, it is likely that we will need to raise further capital, through the sale of additional securities or otherwise. Our operating needs include the planned costs to operate our business, including amounts required to fund working capital and capital expenditures. At the present time, we have commitments for capital expenditure totaling $400,000, $300,000 of which is expected to be funded by a capital lease. Our future capital requirements and the adequacy of our available funds will depend on many factors, most notably our ability to successfully commercialize our SmartChip products and services.

While we have sufficient cash to fund our operating, investing and financing activities in the near term, we consider it likely that additional working capital will be needed to sustain our operations before we achieve profitability. We have no commitments to obtain any additional funds and there can be no assurance that we will be able to raise sufficient additional capital as we need it on favorable terms, or at all. The conversion of our MTDC Notes, and the sale of equity or convertible debt securities in the future, may be dilutive to our stockholders, and debt financing arrangements may require us to pledge certain assets and enter into covenants that could restrict certain business activities or our ability to incur further indebtedness, and may contain other terms that are not favorable to us or our stockholders. If we are unable to obtain capital as needed we may not be able to continue our efforts to develop and commercialize our SmartChip products and services and may be forced to significantly curtail or suspend our operations.

Principles of Consolidation

The consolidated financial statements of WaferGen Bio-systems, Inc. include the accounts of Wafergen, Inc., WaferGen Biosystems Europe S.a.r.l., our Luxembourg subsidiary and, prior to its liquidation, WaferGen Biosystems (M) Sdn. Bhd., our Malaysian subsidiary. All significant inter-company transactions and balances are eliminated in consolidation.

Critical Accounting Policies and Estimates

Deferred Tax Valuation Allowance

We believe sufficient uncertainties exist regarding the future realization of deferred tax assets, and, accordingly, a full valuation allowance is required, amounting to approximately $30,000,000 at December 31, 2013. In subsequent periods, if and when we generate pre-tax income, a tax expense will not be recorded to the extent that the remaining valuation allowance can be used to offset that expense. Once a consistent pattern of pre-tax income is established or other events occur that indicate that the deferred tax assets will be realized, additional portions or all of the remaining valuation allowance will be reversed back to income. Should we generate pre-tax losses in subsequent periods, a tax benefit will not be recorded and the valuation allowance will be increased.

Inventory Valuation

Inventories are stated at the lower of cost and market value. We perform a detailed assessment of inventory on a regular basis, which includes, among other factors, a review of projected demand requirements, product pricing, product expiration and product lifecycle. As a result of this assessment, we record provisions for potentially excess, obsolete or impaired goods, when appropriate, in order to reduce the reported amount of inventory to its net realizable value. If actual demand and market conditions are less favorable than those projected by management, additional inventory write-downs may be required.

Warranty Reserve

Our standard warranty agreement is one year from shipment for SmartChip cyclers and dispensers and Apollo systems. We accrue for anticipated warranty costs upon shipment of these products. Our warranty reserve is based on management’s judgment regarding anticipated rates of warranty claims and associated repair costs, and we update our assessment quarterly.

Stock-Based Compensation

We measure the fair value of all stock option and restricted stock awards to employees on the grant date, and record the fair value of these awards, net of estimated forfeitures, as compensation expense over the service period. The fair value of options is estimated using the Black-Scholes valuation model, and for restricted stock it is based on our closing share price on the measurement date. Amounts expensed with respect to options were $813,436 and $260,068, net of estimated forfeitures, for the nine months ended September 30, 2014 and 2013, respectively. These sums exclude the

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compensation expense for restricted stock awards, for which the fair value is based on our closing stock price on the grant date for directors and employees, and on the dates on which performance of services is recognized for consultants.

The weighted average grant date fair value of options awarded in the nine months ended September 30, 2014 and 2013, was $6.33 and $37.25, respectively. Fair values were estimated using the following assumptions:

	Nine Months Ended September 30,
	2014			2013
Risk-free interest rate		1.43% - 1.57	%		0.71% - 1.22	%
Expected term	4.75 Years			4.75 Years
Expected volatility		93.89% - 105.97	%		96.73% - 108.14	%
Dividend yield		0	%		0	%

Risk-Free Interest Rate.  This is the U.S. Treasury rate for the day of the grant having a term equal to the expected term of the option. An increase in the risk-free interest rate will increase the fair value and the related compensation expense.

Expected Term.  This is the period of time over which the award is expected to remain outstanding and is based on management’s estimate, taking into consideration the vesting terms, the contractual life, and historical experience. An increase in the expected term will increase the fair value and the related compensation expense.

Expected Volatility.  This is a measure of the amount by which our common stock price has fluctuated or is expected to fluctuate. We apply 50% weighting to our own historic volatility and 50% to the historic volatility of a group of publicly traded companies over the retrospective period corresponding to the expected term of the options on the measurement date. Since the 2013 Exchange, we have applied a reduced weighting to our own historic volatility during the period in which we were highly leveraged. The group of publicly traded companies is selected from the same industry or market index, with extra weighting attached to those companies most similar in terms of business activity, size and financial leverage. An increase in the expected volatility will increase the fair value and the related compensation expense.

Dividend Yield.  We have not made any dividend payments and do not plan to pay dividends in the foreseeable future. An increase in the dividend yield will decrease the fair value and the related compensation expense.

Forfeiture Rate.  This is a measure of the amount of awards that are expected to not vest. An increase in the estimated forfeiture rate will decrease the related compensation expense.

Derivative Liabilities

Our derivative liabilities arise due to the cash settlement provisions in certain warrants and unit warrants and the variable number of shares of our common stock that may be issued upon the exercise of those warrants with certain anti-dilution protection and, until the time of their settlement in 2013, upon the exchange of Series A and Series B CPS of our Malaysian subsidiary, and under the conversion element of our CPNs. We evaluate the liability for those warrants for which no anti-dilution adjustment is projected prior to the expiration date using the Black-Scholes valuation model, and all other derivatives using a Monte Carlo Simulation approach, using critical assumptions provided by management reflecting conditions at the valuation dates.

Our derivatives are revalued at each balance sheet date, and at the time of issuance and settlement, and are estimated using the following assumptions:

Risk-Free Interest Rate.  This is the U.S. Treasury rate for the measurement date having a term equal to the weighted average expected remaining term of the instrument. An increase in the risk-free interest rate will increase the fair value and the associated derivative liability.

Expected Remaining Term.  This is the period of time over which the instrument is expected to remain outstanding and is based on management’s estimate, taking into consideration the remaining contractual life, historical experience and the possibility of liquidation. An increase in the expected remaining term will increase the fair value and the associated derivative liability.

Expected Volatility.  This is a measure of the amount by which our common stock price has fluctuated or is expected to fluctuate. We apply 50% weighting to our own historic volatility and 50% to the historic volatility of a group of publicly traded companies over the retrospective period corresponding to the expected remaining term of the instrument on the measurement date. Since the 2013 Exchange, we have applied a reduced weighting to our own

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historic volatility during the period in which we were highly leveraged. The group of publicly traded companies is selected from the same industry or market index, with extra weighting attached to those companies most similar in terms of business activity, size and financial leverage. An increase in the expected volatility will increase the fair value and the associated derivative liability.

Dividend Yield.  We have not made any dividend payments and do not plan to pay dividends in the foreseeable future. An increase in the dividend yield will decrease the fair value and the associated derivative liability.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, revenues or expenses, result of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Recent Accounting Pronouncements

See the “Recent Accounting Pronouncements” in Note 2 to the Condensed Consolidated Financial Statements in Part I, Item 1 for information related to the adoption of new accounting standards in the first nine months of 2014, none of which had a material impact on our condensed consolidated financial statements.

Item 4.  Controls and Procedures

Management’s Report on Internal Control over Financial Reporting

As of the end of the period covered by this Quarterly Report, management performed, with the participation of our principal executive officer and principal financial officer, an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the report we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s forms, and that such information is accumulated and communicated to our management including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosures. Based on the evaluation, our principal executive officer and principal financial officer concluded that, as of September 30, 2014, the Company’s disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There was no material change in the Company’s internal control over financial reporting that occurred during the quarter ended September 30, 2014, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II OTHER INFORMATION

Item 1.  Legal Proceedings

From time to time we may be involved in claims arising in connection with our business. Based on information currently available, we believe that the amount, or range, of reasonably possible losses in connection with any pending actions against us, in excess of established reserves, in the aggregate, not to be material to our consolidated financial condition or cash flows. However, losses may be material to our operating results for any particular future period, depending on the level of income for such period.

Coalesce v. WaferGen.  On April 24, 2012, an action entitled Coalesce Corporation (“Coalesce”) v. WaferGen Bio-systems, Inc. was filed in the Alameda County Superior Court. Coalesce, a company that had been providing marketing services between 2006 and 2010, sued us for alleged non-payment of sums due, breach of contract, misrepresentation and unjust enrichment. On September 5, 2012, Coalesce filed an amended complaint, with additional claims, for compensatory damages in excess of $500,000 and other compensation. In August 2014, we agreed to an out-of-court settlement with the plaintiff.

Item 1A.  Risk Factors

You should consider the risks and uncertainties described under Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, which we filed with the Securities and Exchange Commission on March 14, 2014, together with all other information contained or incorporated by reference in this Quarterly Report on Form 10-Q when evaluating our business and our prospects. There are no material changes from the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2013.

Item 2.  Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

In connection with his appointment and as an inducement to join the Company, on August 27, 2014 we granted to Keith Warner, our Chief Operating Officer, a nonstatutory stock award to purchase 70,666 shares of Company common stock at an exercise price of $4.60 per share. In connection with his appointment and as an inducement to join the Company, on August 27, 2014 we granted to Michael P. Henighan, our Chief Financial Officer, a nonstatutory stock award to purchase 28,266 shares of Company common stock at an exercise price of $4.60 per share. The options will vest and become exercisable as follows: one-third on the first anniversary of the date of grant and the remaining two-thirds in eight equal quarterly installments over two years thereafter. These new hire inducement awards were granted pursuant to NASDAQ Listing Rule 5635(c)(4) and Section 4(a)(2) of the Securities Act of 1933.

Item 6.  Exhibits

The exhibits required to be filed as a part of this report are listed in the Exhibit Index.

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SIGNATURES

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

	WAFERGEN BIO-SYSTEMS, INC.
Dated: November 12, 2014
	By:  /s/ MICHAEL P. HENIGHAN
	Michael P. Henighan
	Chief Financial Officer
	(principal financial officer)

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EXHIBIT INDEX

Exhibit
Number	Description
4.1	Form of Warrant to purchase shares of Common Stock of the Company, issued August 27, 2014, to investors in the Company’s August 2014 public offering (incorporated by reference to Exhibit 4.15 to the Registration Statement on Form S-1 filed on August 19, 2014)
4.2	Form of Underwriter Warrant to purchase shares of Common Stock of the Company, issued August 27, 2014, to underwriters and certain related parties in the Company’s August 2014 public offering (incorporated by reference to Exhibit 4.16 to the Registration Statement on Form S-1 filed on July 18, 2014)
10.1	Letter Agreement, dated as of July 17, 2014, by and among certain affiliates of Great Point Partners, LLC and the Company (incorporated by reference to Exhibit 10.18 to the Registration Statement on Form S-1 filed on July 18, 2014)
10.2 †	Executive Employment Agreement, dated as of August 12, 2014, by and between Michael P. Henighan and the Company (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on August 18, 2014)
10.3 †	Executive Employment Agreement, dated as of August 13, 2014, by and between Keith Warner and the Company (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on August 18, 2014)
10.4 †	Nonstatutory Stock Option issued August 27, 2014, to Keith Warner
10.5 †	Nonstatutory Stock Option issued August 27, 2014, to Michael P. Henighan
31.1	Rule 13a-14(a)/15d-15(e) Certification of principal executive officer
31.2	Rule 13a-14(a)/15d-15(e) Certification of principal financial officer
32.1	Section 1350 Certification of principal executive officer
32.2	Section 1350 Certification of principal financial officer
101 §	The following financial information from the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2014, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets at September 30, 2014 and December 31, 2013, (ii) the Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2014 and 2013, (iii) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2014 and 2013, and (iv) Notes to the Condensed Consolidated Financial Statements.

†

Indicates a management contract or compensatory plan or arrangement.

§

Pursuant to Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed part of a registration statement, prospectus or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filings.

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EX-10.4

EXHIBIT 10.4

WAFERGEN BIO-SYSTEMS, INC.

NONSTATUTORY STOCK OPTION AGREEMENT

This Nonstatutory Stock Option Agreement (this “Agreement”) is executed August 27th, 2014, by and between WAFERGEN BIO-SYSTEMS, INC., a Delaware corporation (the “Company”), and Keith Warner (“Employee”).

W I T N E S S E T H:

WHEREAS, the Compensation Committee of the Board of Directors of the Company wishes to grant Employee a Nonstatutory Stock Option in connection with Employee’s recent appointment as Chief Operating Officer (“COO”) of the Company, subject to the terms provided in this Agreement; and

WHEREAS, the Compensation Committee of the Board of Directors of the Company anticipates that this Agreement will promote the best interests of the Company and its stockholders by providing Employee a proprietary interest in the Company with a stronger incentive to put forth maximum effort for the continued success and growth of the Company and its subsidiaries.

NOW, THEREFORE, in consideration of the Employee’s entering into that certain Executive Employment Agreement, dated August 13th, 2014, by and between the Employee and the Company (the “Employment Agreement”) and the benefits that the Company will derive in connection with the services to be rendered by Employee thereunder, the Company and Employee hereby agree as follows:

1.  Capitalized Terms; Determinations by Administrator.

(a)           Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Employment Agreement.

(b)           The Administrator (as defined below) shall make all interpretations, rules and regulations necessary to administer this Agreement, and such determinations of the Administrator shall be binding upon Employee.  For purposes of this Agreement, the term “Administrator” shall mean the Compensation Committee of the Board of Directors.

2.  Option; Number of Shares; Option Price.  The Option (as defined below) granted hereunder is intended to be a nonstatutory stock option and therefore shall not qualify as an incentive stock option pursuant to Section 422 of the Internal Revenue Code of 1986, as amended.  Employee shall have the right and option to purchase all or any part of an aggregate of seventy thousand, six hundred sixty six (70,666) shares of $0.001 par value common stock of the Company (“Share(s)”) at the purchase price of $4.60 per Share (the “Option”).

3.  Vesting and Expiration.

(a)           Vesting.  The Option shall vest (become exercisable) and remain exercisable only in accordance with Annex 1 attached hereto.

(b)           Expiration.  To the extent not previously exercised according to the terms hereof, the Option shall expire on the seventh (7th) anniversary of the date hereof.

4.  Exercise Period.

(a)           Disability.  Upon Employee’s termination of employment due to a Disability, Employee shall have one (1) year from the date of such termination to exercise the Option granted hereunder as to all or part of the Shares subject to this Option provided Employee has a present right to exercise such Option as of the date of such termination; provided, however, that this Option shall not be exercisable subsequent to the expiration date specified in Section 3(b), above.

(b)           Death.  Upon Employee’s termination of employment due to death, the Option, as to all or any part of the Shares subject to this Option, shall be exercisable provided Employee has a present right to exercise such Option as of the date of such termination:

(1)           for one (1) year after Employee’s death, but in no event subsequent to the expiration dates specified in Section 3(b), above; and

(2)           only (i) by the designated beneficiary of Employee (such designation to be made in writing at such time and in such manner as the Administrator shall approve or prescribe), or (ii) if Employee dies without a surviving designated beneficiary, by the personal representative, administrator, or other representative of the estate of Employee, or by the person or persons to whom the deceased rights of Employee under the Option shall pass by will or the laws of descent and distribution.  Employee may change the beneficiary designation at any time, by giving written notice to the Administrator, subject to such conditions and requirements as the Administrator may prescribe in accordance with applicable law.

(c)           Other Terminations of Employment.  Upon Employee’s termination of employment for any reason other than those specified above in this Section 4, Employee shall have ninety (90) days from the date of such termination to exercise the Option as to all or part of the Shares, provided Employee has a present right to exercise such Option as of the date of such termination; provided, however, that the Option shall not be exercisable subsequent to the expiration dates specified in Section 3(b), above.  Notwithstanding the foregoing, if Employee’s employment is terminated for Cause, to the extent the Option held by Employee is not effectively exercised prior to such termination, it shall lapse immediately upon such termination.

(d)           Extension of Exercise Period.  The Administrator may in its sole discretion extend the period permitted for exercise of the Option upon Employee’s termination of employment as otherwise provided in this Section 4 if allowable under applicable law.

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5.  Method of Exercising Option.  Except as otherwise permitted by the Administrator, the Option shall be exercisable by delivery to the Company (to the attention of its Secretary), at its offices in Fremont, California, of (i) written notice identifying the Option and stating the number of Shares with respect to which it is being exercised, (ii) payment in full of the exercise price of the Shares then being acquired as provided in Section 6, below, and (iii) execution of such other documentation as is determined to be necessary or appropriate by the Administrator from time to time the form of which shall be provided to Employee at the time of execution and delivery of this Agreement.  The Company shall have the right to delay the issue or delivery of any Shares to be delivered hereunder until (i) the completion of such registration or qualification of such Shares under federal, state, or foreign law, ruling, or regulation as the Company shall deem to be necessary or advisable, and (ii) receipt from Employee of such documents and information as the Administrator may deem necessary or appropriate in connection with such registration or qualification or the issuance of Shares hereunder.

6.  Payment of Exercise Price.  The exercise price shall be payable in whole or in part in cash, Shares held by Employee, other property, or such other consideration consistent with the Agreement’s purpose and applicable law as may be determined by the Administrator from time to time.  Except as otherwise determined by the Administrator at the time of grant, such price shall be paid in cash in full at the time that the Option is exercised.  If Employee is permitted by the Administrator to pay all or a part of the exercise price in Shares and elects to do so, Employee may make such payment by delivering to the Company a number of Shares, either directly or by attestation, which are equal in value to the purchase or exercise price hereunder.  For this purpose, all Shares so delivered shall be valued per share at the Fair Market Value (as defined above; provided, however, if a Share is not susceptible to valuation by the above method, the term “Fair Market Value” of a Share shall mean the fair market value of a Share as the Administrator may determine in conformity with pertinent law) of a Share on the business day immediately preceding the day on which such Shares are delivered.

7.  Prohibition Against Transfer.  Unless otherwise provided by the Administrator and except as provided below, the Option, and the rights and privileges conferred hereby, may not be transferred by Employee, and shall be exercisable during the lifetime of Employee only by Employee.  The Option shall not be subjected to execution, attachment or similar process.  Employee shall have the right to transfer the Option upon Employee’s death, either to Employee’s designated beneficiary (such designation to be made in writing at such time and in such manner as the Administrator shall approve or prescribe), or, if Employee dies without a surviving designated beneficiary, by the terms of Employee’s will or under the laws of descent and distribution, subject to any limitations set forth in this Agreement and all such distributees shall be subject to all terms and conditions of this Agreement to the same extent as Employee would be if still living.

8.  Nature of Option.  Employee shall not have any interest in any fund or in any specific asset or assets of the Company by reason of the Option granted hereunder, or any right to exercise any of the rights or privileges of a stockholder with respect to the Option until Shares are issued in connection with any exercise.

9.  Adjustment provisions.

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(a)           Share Adjustments.  In the event of any stock dividend, stock split, recapitalization, merger, consolidation, combination or exchange of shares of Company stock, or the like, as a result of which shares of any class shall be issued in respect of the outstanding Shares, or the Shares shall be changed into the same or a different number of the same or another class of stock, or into securities of another person, cash or other property (not including a regular cash dividend), the number of Shares subject to the Option and the exercise price applicable to the Option shall be appropriately adjusted in such equitable and proportionate amount as determined by the Administrator.  No fractional Share shall be issued under the Agreement resulting from any such adjustment but the Administrator in its sole discretion may make a cash payment in lieu of a fractional Share.

(b)           Acquisitions.  In the event of a merger or consolidation of the Company with another corporation or entity, or a sale or disposition by the Company of all or substantially all of its assets, the Administrator shall, in its sole discretion, have authority to provide for (i) waiver in whole or in part of any remaining restrictions or vesting requirements in connection with the Option granted hereunder, (ii) the conversion of the outstanding Option into cash, (iii) the conversion of the Option into the right to receive securities, including options, of another person or entity upon such terms and conditions as are determined by the Administrator in its sole discretion and/or (iv) the lapse of the Option after notice in writing has been given that the Option may be exercised within a set period from the date of such notice and that any Option not exercised within such period shall lapse.

(c)           Binding Effect.  Without limiting the generality of what is provided in Section 1 hereof and for avoidance of doubt, any adjustment, waiver, conversion or other action taken by the Administrator under this Section 9 shall be conclusive and binding on Employee and the Company and any respective successors and assigns.

10.  Notices.  Any notice to be given to the Company under the terms of this Agreement shall be given in writing to the Company at its offices in Fremont, California.  Any notice to be given to Employee may be addressed to Employee’s address as it appears on the payroll records of the Company or any subsidiary thereof.  Any such notice shall be deemed to have been duly given if and when actually received by the party to whom it is addressed, as evidenced by a written receipt to that effect.

11.  Taxes.  The Company may require payment or reimbursement of or may withhold any minimum tax that it believes is required as a result of the grant or exercise of the Option, and the Company may defer making delivery with respect to Shares or cash payable hereunder or otherwise until arrangements satisfactory to the Company have been made with respect to such withholding obligations.

12.  Rights of Employee.  The Option, and any payments or other benefits received by Employee under the Option, is discretionary and shall not be deemed a part of Employee’s regular, recurring compensation for any purpose, including without limitation for purposes of termination, indemnity, or severance pay law of any country and shall not be included in, nor have any effect on, the determination of benefits under any other employee benefit plan, contract or similar

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arrangement provided to Employee unless expressly so provided by such other plan, contract or arrangement, or unless the Administrator expressly determines otherwise.

13.  Amendment.  The Administrator may amend the Agreement; provided, however, that Employee’s consent to such action shall be required unless the Administrator determines that the action, taking into account any related action, would not materially and adversely affect Employee’s rights under the Employment Agreement.  However, notwithstanding any other provision of the Agreement, the Administrator may not adjust or amend the exercise price of the Option, whether through amendment, cancellation and replacement grants, or any other means, except in accordance with Section 9 hereof.

14.  No Right To Employment.  The Agreement shall not confer upon Employee any right to continue employment with the Company or a subsidiary, nor shall it interfere in any way with the right of the Company or such subsidiary to terminate Employee’s employment any time.

15.  Entire Agreement.  This Agreement, together with the Employment Agreement by and between the Employee and Company dated August 13th, 2014 (the “Employment Agreement”), constitutes the final understanding between Employee and the Company regarding the Option.  In the event there is a conflict between this Agreement and the Employment Agreement, the Employment Agreement shall govern.

16.  Severability.  In the event any provision of this Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Agreement, and this Agreement shall be construed and enforced as if the illegal or invalid provision had not been included.

17.  Governing Law.  This Agreement and all actions taken hereunder shall be governed by, and construed in accordance with, the laws of the State of California, applied without regard to the laws of any other jurisdiction that otherwise would govern under conflict of law principles.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Company has caused these presents to be executed as of the date and year first above written, which is the date of the granting of the Option evidenced hereby.

WAFERGEN BIO-SYSTEMS, INC.
By:	/s/ Ivan Trifunovich
	Name: Ivan Trifunovich
	Title: President and Chief Executive Officer

The undersigned Employee hereby accepts the foregoing Option and agrees to the several terms and conditions hereof.

 /s/ Keith Warner

Keith Warner

[Signature Page - Option Award Agreement]

Annex 1

For so long as Employee remains continuously an employee of the Company, this Option shall vest and become exercisable over a three (3) year period with one-third (1/3) of the Option vesting on the first (1st) anniversary hereof, and the remaining two-thirds (2/3) of the Option vesting in eight (8) equal quarterly installments over two (2) years following the first (1st) anniversary hereof.

Notwithstanding the foregoing, if the Company terminates Employee’s employment with the Company other than For Cause within three (3) months before or twelve (12) months following a Change of Control, this Option shall vest and become exercisable in full on the date of such termination.

Except as described in the preceding paragraph or determined by the Administrator, upon Employee’s termination of employment for any reason, Employee shall forfeit the Option or portion of the Option that has not vested at the time of such termination.  Notwithstanding the foregoing, the Administrator may, in its discretion, accelerate the date that any installment of this Option becomes exercisable.  The foregoing rights are cumulative and may be exercised only before the date which is seven (7) years from the date of this Option.  Following the expiration of this Option in accordance with the preceding sentence, all of Employee’s rights hereunder will be forfeited and canceled in their entirety.

If Employee ceases to remain continuously an employee of the Company, other than by reason of death or Disability or termination For Cause, no further installments of this Option shall become exercisable, and this Option shall expire (may no longer be exercised) after the passage of ninety (90) days from Employee’s last day of employment, but in no event later than the scheduled expiration date.  Following the expiration of this Option in accordance with the preceding sentence, all of Employee’s rights to exercise the Option will be forfeited and canceled in their entirety.

If Employee ceases to remain continuously an employee of the Company as the result of termination For Cause, this Option shall expire (that is, may no longer be exercised) upon Employee’s receipt of written notice of such termination and shall thereafter not be exercisable to any extent whatsoever. Following the expiration of this Option in accordance with the preceding sentence, all of Employee’s rights hereunder to exercise the Option will be forfeited and canceled in their entirety.

If Employee dies while employed by the Company, this Option may be exercised, to the extent otherwise exercisable on the date of death, by Employee’s estate, personal representative or beneficiary to whom this Option has been transferred, only at any time within one (1) year after the date of death, but not later than the scheduled expiration date.  Following the expiration of this Option in accordance with the preceding sentence, all of Employee’s rights to exercise the Option will be forfeited and canceled in their entirety.

If Employee ceases to remain continuously an employee of the Company by reason of Disability, this Option may be exercised, to the extent otherwise exercisable on the date of cessation of employment, only at any time within one year after such cessation of employment, but not later

than the scheduled expiration date.  Following the expiration of this Option in accordance with the preceding sentence, all of Employee’s rights to exercise the Option will be forfeited and canceled in their entirety.

EX-10.5

EXHIBIT 10.5

WAFERGEN BIO-SYSTEMS, INC.

NONSTATUTORY STOCK OPTION AGREEMENT

This Nonstatutory Stock Option Agreement (this “Agreement”) is executed August 27th, 2014, by and between WAFERGEN BIO-SYSTEMS, INC., a Delaware corporation (the “Company”), and Michael P. Henighan (“Employee”).

W I T N E S S E T H:

WHEREAS, the Compensation Committee of the Board of Directors of the Company wishes to grant Employee a Nonstatutory Stock Option in connection with Employee’s recent appointment as Chief Financial Officer (“CFO”) of the Company, subject to the terms provided in this Agreement; and

WHEREAS, the Compensation Committee of the Board of Directors of the Company anticipates that this Agreement will promote the best interests of the Company and its stockholders by providing Employee a proprietary interest in the Company with a stronger incentive to put forth maximum effort for the continued success and growth of the Company and its subsidiaries.

NOW, THEREFORE, in consideration of the Employee’s entering into that certain Executive Employment Agreement, effective August 25th, 2014, by and between the Employee and the Company (the “Employment Agreement”) and the benefits that the Company will derive in connection with the services to be rendered by Employee thereunder, the Company and Employee hereby agree as follows:

1.  Capitalized Terms; Determinations by Administrator.

(a)           Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Employment Agreement.

(b)           The Administrator (as defined below) shall make all interpretations, rules and regulations necessary to administer this Agreement, and such determinations of the Administrator shall be binding upon Employee.  For purposes of this Agreement, the term “Administrator” shall mean the Compensation Committee of the Board of Directors.

2.  Option; Number of Shares; Option Price.  The Option (as defined below) granted hereunder is intended to be a nonstatutory stock option and therefore shall not qualify as an incentive stock option pursuant to Section 422 of the Internal Revenue Code of 1986, as amended.  Employee shall have the right and option to purchase all or any part of an aggregate of twenty eight thousand, two hundred sixty six (28,266) shares of $0.001 par value common stock of the Company (“Share(s)”) at the purchase price of $4.60 per Share (the “Option”).

3.  Vesting and Expiration.

(a)           Vesting.  The Option shall vest (become exercisable) and remain exercisable only in accordance with Annex 1 attached hereto.

(b)           Expiration.  To the extent not previously exercised according to the terms hereof, the Option shall expire on the seventh (7th) anniversary of the date hereof.

4.  Exercise Period.

(a)           Disability.  Upon Employee’s termination of employment due to a Disability, Employee shall have one (1) year from the date of such termination to exercise the Option granted hereunder as to all or part of the Shares subject to this Option provided Employee has a present right to exercise such Option as of the date of such termination; provided, however, that this Option shall not be exercisable subsequent to the expiration date specified in Section 3(b), above.

(b)           Death.  Upon Employee’s termination of employment due to death, the Option, as to all or any part of the Shares subject to this Option, shall be exercisable provided Employee has a present right to exercise such Option as of the date of such termination:

(1)           for one (1) year after Employee’s death, but in no event subsequent to the expiration dates specified in Section 3(b), above; and

(2)           only (i) by the designated beneficiary of Employee (such designation to be made in writing at such time and in such manner as the Administrator shall approve or prescribe), or (ii) if Employee dies without a surviving designated beneficiary, by the personal representative, administrator, or other representative of the estate of Employee, or by the person or persons to whom the deceased rights of Employee under the Option shall pass by will or the laws of descent and distribution.  Employee may change the beneficiary designation at any time, by giving written notice to the Administrator, subject to such conditions and requirements as the Administrator may prescribe in accordance with applicable law.

(c)           Other Terminations of Employment.  Upon Employee’s termination of employment for any reason other than those specified above in this Section 4, Employee shall have ninety (90) days from the date of such termination to exercise the Option as to all or part of the Shares, provided Employee has a present right to exercise such Option as of the date of such termination; provided, however, that the Option shall not be exercisable subsequent to the expiration dates specified in Section 3(b), above.  Notwithstanding the foregoing, if Employee’s employment is terminated for Cause, to the extent the Option held by Employee is not effectively exercised prior to such termination, it shall lapse immediately upon such termination.

(d)           Extension of Exercise Period.  The Administrator may in its sole discretion extend the period permitted for exercise of the Option upon Employee’s termination of employment as otherwise provided in this Section 4 if allowable under applicable law.

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5.  Method of Exercising Option.  Except as otherwise permitted by the Administrator, the Option shall be exercisable by delivery to the Company (to the attention of its Secretary), at its offices in Fremont, California, of (i) written notice identifying the Option and stating the number of Shares with respect to which it is being exercised, (ii) payment in full of the exercise price of the Shares then being acquired as provided in Section 6, below, and (iii) execution of such other documentation as is determined to be necessary or appropriate by the Administrator from time to time the form of which shall be provided to Employee at the time of execution and delivery of this Agreement.  The Company shall have the right to delay the issue or delivery of any Shares to be delivered hereunder until (i) the completion of such registration or qualification of such Shares under federal, state, or foreign law, ruling, or regulation as the Company shall deem to be necessary or advisable, and (ii) receipt from Employee of such documents and information as the Administrator may deem necessary or appropriate in connection with such registration or qualification or the issuance of Shares hereunder.

6.  Payment of Exercise Price.  The exercise price shall be payable in whole or in part in cash, Shares held by Employee, other property, or such other consideration consistent with the Agreement’s purpose and applicable law as may be determined by the Administrator from time to time.  Except as otherwise determined by the Administrator at the time of grant, such price shall be paid in cash in full at the time that the Option is exercised.  If Employee is permitted by the Administrator to pay all or a part of the exercise price in Shares and elects to do so, Employee may make such payment by delivering to the Company a number of Shares, either directly or by attestation, which are equal in value to the purchase or exercise price hereunder.  For this purpose, all Shares so delivered shall be valued per share at the Fair Market Value (as defined above; provided, however, if a Share is not susceptible to valuation by the above method, the term “Fair Market Value” of a Share shall mean the fair market value of a Share as the Administrator may determine in conformity with pertinent law) of a Share on the business day immediately preceding the day on which such Shares are delivered.

7.  Prohibition Against Transfer.  Unless otherwise provided by the Administrator and except as provided below, the Option, and the rights and privileges conferred hereby, may not be transferred by Employee, and shall be exercisable during the lifetime of Employee only by Employee.  The Option shall not be subjected to execution, attachment or similar process.  Employee shall have the right to transfer the Option upon Employee’s death, either to Employee’s designated beneficiary (such designation to be made in writing at such time and in such manner as the Administrator shall approve or prescribe), or, if Employee dies without a surviving designated beneficiary, by the terms of Employee’s will or under the laws of descent and distribution, subject to any limitations set forth in this Agreement and all such distributees shall be subject to all terms and conditions of this Agreement to the same extent as Employee would be if still living.

8.  Nature of Option.  Employee shall not have any interest in any fund or in any specific asset or assets of the Company by reason of the Option granted hereunder, or any right to exercise any of the rights or privileges of a stockholder with respect to the Option until Shares are issued in connection with any exercise.

9.  Adjustment provisions.

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(a)           Share Adjustments.  In the event of any stock dividend, stock split, recapitalization, merger, consolidation, combination or exchange of shares of Company stock, or the like, as a result of which shares of any class shall be issued in respect of the outstanding Shares, or the Shares shall be changed into the same or a different number of the same or another class of stock, or into securities of another person, cash or other property (not including a regular cash dividend), the number of Shares subject to the Option and the exercise price applicable to the Option shall be appropriately adjusted in such equitable and proportionate amount as determined by the Administrator.  No fractional Share shall be issued under the Agreement resulting from any such adjustment but the Administrator in its sole discretion may make a cash payment in lieu of a fractional Share.

(b)           Acquisitions.  In the event of a merger or consolidation of the Company with another corporation or entity, or a sale or disposition by the Company of all or substantially all of its assets, the Administrator shall, in its sole discretion, have authority to provide for (i) waiver in whole or in part of any remaining restrictions or vesting requirements in connection with the Option granted hereunder, (ii) the conversion of the outstanding Option into cash, (iii) the conversion of the Option into the right to receive securities, including options, of another person or entity upon such terms and conditions as are determined by the Administrator in its sole discretion and/or (iv) the lapse of the Option after notice in writing has been given that the Option may be exercised within a set period from the date of such notice and that any Option not exercised within such period shall lapse.

(c)           Binding Effect.  Without limiting the generality of what is provided in Section 1 hereof and for avoidance of doubt, any adjustment, waiver, conversion or other action taken by the Administrator under this Section 9 shall be conclusive and binding on Employee and the Company and any respective successors and assigns.

10.  Notices.  Any notice to be given to the Company under the terms of this Agreement shall be given in writing to the Company at its offices in Fremont, California.  Any notice to be given to Employee may be addressed to Employee’s address as it appears on the payroll records of the Company or any subsidiary thereof.  Any such notice shall be deemed to have been duly given if and when actually received by the party to whom it is addressed, as evidenced by a written receipt to that effect.

11.  Taxes.  The Company may require payment or reimbursement of or may withhold any minimum tax that it believes is required as a result of the grant or exercise of the Option, and the Company may defer making delivery with respect to Shares or cash payable hereunder or otherwise until arrangements satisfactory to the Company have been made with respect to such withholding obligations.

12.  Rights of Employee.  The Option, and any payments or other benefits received by Employee under the Option, is discretionary and shall not be deemed a part of Employee’s regular, recurring compensation for any purpose, including without limitation for purposes of termination, indemnity, or severance pay law of any country and shall not be included in, nor have any effect on, the determination of benefits under any other employee benefit plan, contract or similar

4

arrangement provided to Employee unless expressly so provided by such other plan, contract or arrangement, or unless the Administrator expressly determines otherwise.

13.  Amendment.  The Administrator may amend the Agreement; provided, however, that Employee’s consent to such action shall be required unless the Administrator determines that the action, taking into account any related action, would not materially and adversely affect Employee.  However, notwithstanding any other provision of the Agreement, the Administrator may not adjust or amend the exercise price of the Option, whether through amendment, cancellation and replacement grants, or any other means, except in accordance with Section 9 hereof.

14.  No Right To Employment.  The Agreement shall not confer upon Employee any right to continue employment with the Company or a subsidiary, nor shall it interfere in any way with the right of the Company or such subsidiary to terminate Employee’s employment any time.

15.  Entire Agreement.  This Agreement, together with the Employment Agreement by and between the Employee and Company effective August 25th, 2014 (the “Employment Agreement”), constitutes the final understanding between Employee and the Company regarding the Option.

16.  Severability.  In the event any provision of this Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Agreement, and this Agreement shall be construed and enforced as if the illegal or invalid provision had not been included.

17.  Governing Law.  This Agreement and all actions taken hereunder shall be governed by, and construed in accordance with, the laws of the State of California, applied without regard to the laws of any other jurisdiction that otherwise would govern under conflict of law principles.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Company has caused these presents to be executed as of the date and year first above written, which is the date of the granting of the Option evidenced hereby.

WAFERGEN BIO-SYSTEMS, INC.
By:	/s/ Ivan Trifunovich
	Name: Ivan Trifunovich
	Title: President and Chief Executive Officer

The undersigned Employee hereby accepts the foregoing Option and agrees to the several terms and conditions hereof.

 /s/ Michael P. Henighan

Michael P. Henighan

[Signature Page - Option Award Agreement]

Annex 1

For so long as Employee remains continuously an employee of the Company, this Option shall vest and become exercisable over a three (3) year period with one-third (1/3) of the Option vesting on the first (1st) anniversary hereof, and the remaining two-thirds (2/3) of the Option vesting in eight (8) equal quarterly installments over two (2) years following the first (1st) anniversary hereof.

Notwithstanding the foregoing, if the Company terminates Employee’s employment with the Company other than For Cause within three (3) months before or twelve (12) months following a “Change of Control”, this Option shall vest and become exercisable in full on the date of such termination.  For purposes of this Agreement, “Change of Control” shall mean (A) a sale or disposition (including by way of liquidation) of all or substantially all of the assets of the Company; or (B) the acquisition of the Company by another entity by means of any reorganization, merger or consolidation (but excluding any reorganization, merger or consolidation effected exclusively for the purpose of changing the domicile of the Company) or series of related transactions, in each case in which the Company’s stockholders of record as constituted immediately prior to such transaction or series of related transactions will, immediately after such transaction or series of related transactions (by virtue of securities issued in such transaction or series of related transactions) fail to hold at least 50% of the voting power of the resulting or surviving corporation following such transaction or series of related transactions; provided, however, that (i) any transaction or series of transactions principally for bona fide equity financing purposes in which cash is received by the Company or indebtedness of the Company is cancelled or converted (or a combination thereof) shall not be deemed to be a Change of Control; (ii) any transaction or series of transactions resulting in Great Point Partners, LLC, Deerfield Management or their affiliates owning individually or together in the aggregate 50% or more of the voting power of the resulting or surviving corporation following such transaction or series of related transactions shall not be deemed to be a Change of Control; or (iii) any transaction or series of transactions in which individual investors are selling their equity interests in the Company to individual buyers in privately-negotiated transactions to which the Company is not a party shall not be deemed to be a Change of Control.

Except as described in the preceding paragraph or determined by the Administrator, upon Employee’s termination of employment for any reason, Employee shall forfeit the Option or portion of the Option that has not vested at the time of such termination.  Notwithstanding the foregoing, the Administrator may, in its discretion, accelerate the date that any installment of this Option becomes exercisable.  The foregoing rights are cumulative and may be exercised only before the date which is seven (7) years from the date of this Option.  Following the expiration of this Option in accordance with the preceding sentence, all of Employee’s rights hereunder will be forfeited and canceled in their entirety.

If Employee ceases to remain continuously an employee of the Company, other than by reason of death or Disability or termination For Cause, no further installments of this Option shall become exercisable, and this Option shall expire (may no longer be exercised) after the passage of ninety (90) days from Employee’s last day of employment, but in no event later than the scheduled expiration date.  Following the expiration of this Option in accordance with the preceding

sentence, all of Employee’s rights to exercise the Option will be forfeited and canceled in their entirety.

If Employee ceases to remain continuously an employee of the Company as the result of termination For Cause, this Option shall expire (that is, may no longer be exercised) upon Employee’s receipt of written notice of such termination and shall thereafter not be exercisable to any extent whatsoever. Following the expiration of this Option in accordance with the preceding sentence, all of Employee’s rights hereunder to exercise the Option will be forfeited and canceled in their entirety.

If Employee dies while employed by the Company, this Option may be exercised, to the extent otherwise exercisable on the date of death, by Employee’s estate, personal representative or beneficiary to whom this Option has been transferred, only at any time within one (1) year after the date of death, but not later than the scheduled expiration date.  Following the expiration of this Option in accordance with the preceding sentence, all of Employee’s rights to exercise the Option will be forfeited and canceled in their entirety.

If Employee ceases to remain continuously an employee of the Company by reason of Disability, this Option may be exercised, to the extent otherwise exercisable on the date of cessation of employment, only at any time within one year after such cessation of employment, but not later than the scheduled expiration date.  Following the expiration of this Option in accordance with the preceding sentence, all of Employee’s rights to exercise the Option will be forfeited and canceled in their entirety.

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Ivan Trifunovich, certify that:

1. I have reviewed this quarterly report on Form 10-Q of WaferGen Bio-systems, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2014
	/s/  IVAN TRIFUNOVICH
	Ivan Trifunovich
	Chief Executive Officer
	(principal executive officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Michael P. Henighan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of WaferGen Bio-systems, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2014
	/s/  MICHAEL P. HENIGHAN
	Michael P. Henighan
	Chief Financial Officer
	(principal financial officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ENACTED BY

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), I, Ivan Trifunovich, certify that:

1. The Quarterly Report of WaferGen Bio-systems, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2014 (the “Report”) as filed with the Securities and Exchange Commission as of the date hereof, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 12, 2014
	/s/  IVAN TRIFUNOVICH
	Ivan Trifunovich
	Chief Executive Officer
	(principal executive officer)

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to WaferGen Bio-systems, Inc., and will be retained by WaferGen Bio-systems, Inc., and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ENACTED BY

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), I, Michael P. Henighan, certify that:

1. The Quarterly Report of WaferGen Bio-systems, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2014 (the “Report”) as filed with the Securities and Exchange Commission as of the date hereof, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 12, 2014
	/s/  MICHAEL P. HENIGHAN
	Michael P. Henighan
	Chief Financial Officer
	(principal financial officer)

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to WaferGen Bio-systems, Inc., and will be retained by WaferGen Bio-systems, Inc., and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Goodwill and Other Intangible Assets (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of Intangible Assets	$ 124,400	$ 0	$ 373,400	$ 0

XML

Stock Awards (Details) - The weighted average grant date fair value of options awarded	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Stock Awards (Details) - The weighted average grant date fair value of options awarded [Line Items]
Expected term	4 years 9 months	4 years 9 months
Dividend yield	0.00%	0.00%
Minimum [Member]
Stock Awards (Details) - The weighted average grant date fair value of options awarded [Line Items]
Risk-free interest rate	1.43%	0.71%
Expected volatility	93.89%	96.73%
Maximum [Member]
Stock Awards (Details) - The weighted average grant date fair value of options awarded [Line Items]
Risk-free interest rate	1.57%	1.22%
Expected volatility	105.97%	108.14%

XML

Convertible Preference Shares of Former Subsidiary (Details) (USD $)	9 Months Ended			12 Months Ended		1 Months Ended	9 Months Ended		9 Months Ended			9 Months Ended				0 Months Ended		0 Months Ended			9 Months Ended	0 Months Ended							9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Dec. 31, 2010 Series B Preferred Stock [Member] KMP [Member] Convertible Preferred Stock [Member]	Dec. 31, 2010 Series B Preferred Stock [Member] EEV [Member] Convertible Preferred Stock [Member]	Oct. 31, 2013 Series B Preferred Stock [Member] PMSB [Member] Convertible Preferred Stock [Member]	Sep. 30, 2014 Series B Preferred Stock [Member] Rights of the Holders of Series A and BCPS [Member] Convertible Preferred Stock [Member]	Sep. 30, 2014 Series B Preferred Stock [Member] Convertible Preferred Stock [Member] Maximum [Member]	Sep. 30, 2014 Series B Preferred Stock [Member] Convertible Preferred Stock [Member]	Sep. 30, 2013 Series B Preferred Stock [Member] Convertible Preferred Stock [Member]	Dec. 31, 2012 Series B Preferred Stock [Member] Convertible Preferred Stock [Member]	Sep. 30, 2014 Series A Preferred Stock [Member] MTDC [Member] Convertible Preferred Stock [Member]	Sep. 30, 2013 Series A Preferred Stock [Member] Convertible Preferred Stock [Member]	Sep. 30, 2014 Series A Preferred Stock [Member] Convertible Preferred Stock [Member]	Dec. 31, 2012 Series A Preferred Stock [Member] Convertible Preferred Stock [Member]	Dec. 14, 2010 Series C Preferred Stock [Member] MTDC [Member] Private Placement [Member] Convertible Preferred Stock [Member]	Dec. 14, 2010 Series C Preferred Stock [Member] MTDC [Member] Private Placement [Member] Convertible Preferred Stock [Member]	Apr. 03, 2014 Series C Preferred Stock [Member] MTDC [Member] Convertible Preferred Stock [Member]	Dec. 14, 2010 Series C Preferred Stock [Member] MTDC [Member] Convertible Preferred Stock [Member]	Dec. 14, 2010 Series C Preferred Stock [Member] MTDC [Member] Convertible Preferred Stock [Member]	Sep. 30, 2014 Series C Preferred Stock [Member] WGBM [Member] Convertible Preferred Stock [Member]	Apr. 03, 2014 Series C Preferred Stock [Member] Convertible Preferred Stock [Member]	Nov. 26, 2013 Series C Preferred Stock [Member] Convertible Preferred Stock [Member]	Mar. 10, 2011 Series C Preferred Stock [Member] Convertible Preferred Stock [Member]	May 08, 2008 MTDC [Member] Private Placement [Member]	Apr. 03, 2009 Issuance of Series B CPS to EEV and PMSB [Member] Private Placement [Member]	Jul. 01, 2009 KMP [Member] Private Placement [Member]	Nov. 26, 2013 WGBM [Member] Convertible Preferred Stock [Member]	Sep. 30, 2014 Convertible Preferred Stock [Member]
Convertible Preference Shares of Former Subsidiary (Details) [Line Items]
Sale of Stock, Price Per Share																									$ 2.25	$ 2.25	$ 2.25
Sale of Stock, Number of Shares Issued in Transaction (in Shares)				188,057	222,222											3,233,734			1,077,911
Conversion of Stock, Shares Issued (in Shares)						444,444																		3,233,734
Conversion of Stock, Amount Issued (in Dollars)		$ 9,838,569				$ 70,000
Share Price	$ 4.35							$ 2,630.90	$ 2,236.30	$ 19.60	$ 29.82		$ 19.60		$ 29.82		$ 1.5462			$ 2.3193
Number of Trading Days							10 days		10 days			10 days
Applicable Stock Price Calculation Percentage							85.00%					85.00%
Derivative Liability, Fair Value, Gross Liability (in Dollars)										1,300,923	1,210,909		424,794		619,652
Increase (Decrease) in Derivative Liabilities (in Dollars)		(274,928)							90,014				(194,858)
Share Premium Percentage												8.00%
Derivative, Cap Price (in Dollars per Item)														1,540.55
Derivative, Floor Price (in Dollars per Item)														99.39
Proceeds from Issuance of Convertible Preferred Stock (in Dollars)																								5,000,000					8,842,256
Payments of Stock Issuance Costs (in Dollars)																								6,272					118,413
Preferred Stock Conversion Rate																		1			1	1
Denominator for Conversion of Preferred Stock (in Dollars)																					100
Conversion of Stock, Shares Converted (in Shares)																		993.9				993.9
Stock Issued During Period, Value, Conversion of Convertible Securities (in Dollars)																							$ 4,993,728
Preferred Stock, Shares Authorized (in Shares)	10,000,000		10,000,000																									200,000,000
Preferred Stock, Par or Stated Value Per Share	$ 0.001		$ 0.001																									$ 0.01

XML

Stock Awards (Details) - Summary of stock option and restricted stock transaction (USD $)	9 Months Ended
	Sep. 30, 2014
Stock Awards (Details) - Summary of stock option and restricted stock transaction [Line Items]
Balance at January 1, 2014	2,779
Granted	(303,970)
Forfeited	6,404
Canceled	1,830
Balance at September 30, 2014	7,043
Employee Stock Option [Member]
Stock Awards (Details) - Summary of stock option and restricted stock transaction [Line Items]
Balance at January 1, 2014	11,353
Balance at January 1, 2014 (in Dollars per share)	$ 353.92
Granted	178,490
Granted (in Dollars per share)	$ 8.79
Forfeited	(404)
Forfeited (in Dollars per share)	$ 99.21
Canceled	(1,863)
Canceled (in Dollars per share)	$ 208.58
Balance at September 30, 2014	187,576
Balance at September 30, 2014 (in Dollars per share)	$ 27.48
Restricted Stock [Member]
Stock Awards (Details) - Summary of stock option and restricted stock transaction [Line Items]
Balance at January 1, 2014
Balance at January 1, 2014 (in Dollars per share)
Granted	224,412
Granted (in Dollars per share)	$ 4.87
Forfeited	(6,000)
Forfeited (in Dollars per share)	$ 4.55
Canceled
Canceled (in Dollars per share)
Balance at September 30, 2014	218,412
Balance at September 30, 2014 (in Dollars per share)	$ 4.87
2008 Plan Amendment [Member]
Stock Awards (Details) - Summary of stock option and restricted stock transaction [Line Items]
2008 Plan Amendment	300,000

XML

Long Term Obligations (Details) - IntegenX Note (USD $)	3 Months Ended		9 Months Ended			0 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Jan. 06, 2014 Integen X Note [Member]	Sep. 30, 2014 Integen X Note [Member]	Jan. 06, 2014 Integen X Note [Member]
Debt Instrument [Line Items]
Face value							$ 1,250,000	$ 1,250,000
Interest added to principal							68,219
Stated value							1,318,219	1,250,000
Debt discount, net of accumulated amortization of $21,454 and nil at September 12 and January 6, 2014, respectively							128,546	150,000
Notes payable, net of debt discount, prior to repayment							1,189,673	1,100,000
Loss on extinguishment of debt	128,546	4,970,410	128,546	4,970,410			128,546
Balance repaid to IntegenX			(1,318,219)				(1,318,219)
Notes payable, net of debt discount	$ 1,913,256		$ 1,913,256		$ 1,683,942			$ 1,100,000

XML

Acquisitions (Details) (USD $)	9 Months Ended
	Sep. 30, 2014	Jan. 06, 2014
Business Combinations [Abstract]
Business Combination, Contingent Consideration Arrangements, Description	The contingent consideration arrangement requires the Company to pay IntegenX a percentage of revenues, on a sliding scale up to 20%, should certain revenue targets be achieved in 2014, 2015 and 2016. We estimated the fair value of the contingent consideration using a probability-weighted discounted cash flow model based on key assumptions including annual revenues ranging from $4.0 million to $9.9 million and a discount rate of 14%.
Business Combination, Contingent Consideration Arrangements, Change in Range of Outcomes, Contingent Consideration, Liability, Valuation Technique	We estimated the fair value of the contingent consideration using a probability-weighted discounted cash flow model based on key assumptions including annual revenues ranging from $4.0 million to $9.9 million and a discount rate of 14%.
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, Low	$ 4,000,000
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High	9,900,000
Business Combination Contingent Consideration Arrangements Range of Outcomes Key Assumptions Discount Rate	14.00%
Business Acquisition, Transaction Costs		140,000
Other Selling, General and Administrative Expense	$ 95,000
Business Acquisition, Pro Forma Information, Description	The results of the Apollo Business for the three and nine months ended September 30, 2013, are based on the actual historic quarterly allocations of the Abbreviated Financial Statements prepared for the year ended December 31, 2013, and for the three and nine months ended September 30, 2014, are based on the Company’s results of operations, adjusted for estimated operating expenses in the five days prior to the acquisition. The pro forma financial information for all periods presented also includes the removal of direct acquisition-related costs, the additional charges for interest expense on acquisition-related borrowing, and the actual depreciation and amortization that would have been charged assuming the fair value adjustments to property and equipment and intangible assets had been applied as of January 1, 2013.

XML

Warrants (Details) - Summary of outstanding common stock warrants (USD $)	9 Months Ended
	Sep. 30, 2014
Class of Warrant or Right [Line Items]
Securities Into Which Warrants are Convertible	Total
Warrants Outstanding	5,643,476
Warrants Recorded as Liabilities	417,542
Warrant A [Member]
Class of Warrant or Right [Line Items]
Securities Into Which Warrants are Convertible	Common stock
Warrants Outstanding	4,600,000
Exercise Price	$ 5.00
Expiration Date	August 2019
Warrant B [Member]
Class of Warrant or Right [Line Items]
Securities Into Which Warrants are Convertible	Common stock
Warrants Outstanding	120,000
Exercise Price	$ 6.25
Expiration Date	August 2019
Warrant C [Member]
Class of Warrant or Right [Line Items]
Securities Into Which Warrants are Convertible	Common stock
Warrants Outstanding	307,015
Warrants Recorded as Liabilities	307,015
Exercise Price	$ 7.59
Expiration Date	December 2014 and January 2015
Warrant D [Member]
Class of Warrant or Right [Line Items]
Securities Into Which Warrants are Convertible	Common stock
Warrants Outstanding	612,838
Warrants Recorded as Liabilities	110,527
Exercise Price	$ 26.00
Expiration Date	August and September 2018
Warrant E [Member]
Class of Warrant or Right [Line Items]
Securities Into Which Warrants are Convertible	Common stock
Warrants Outstanding	102
Exercise Price	$ 834.88
Expiration Date	December 2014
Warrant F [Member]
Class of Warrant or Right [Line Items]
Securities Into Which Warrants are Convertible	Common stock
Warrants Outstanding	96
Exercise Price	$ 1,459.05
Expiration Date	December 2015
Warrant G [Member]
Class of Warrant or Right [Line Items]
Securities Into Which Warrants are Convertible	Common stock
Warrants Outstanding	205
Exercise Price	$ 1,490.85
Expiration Date	July 2015
Warrant H [Member]
Class of Warrant or Right [Line Items]
Securities Into Which Warrants are Convertible	Common stock
Warrants Outstanding	3,019
Exercise Price	$ 1,540.55
Expiration Date	July 2015
Warrant I [Member]
Class of Warrant or Right [Line Items]
Securities Into Which Warrants are Convertible	Common stock
Warrants Outstanding	201
Exercise Price	$ 2,981.70
Expiration Date	December 2014 and November 2015

XML

Convertible Preference Shares of Former Subsidiary (Tables)

9 Months Ended

Sep. 30, 2014

Convertible Preference Shares of Former Subsidiary (Tables) [Line Items]

Schedule of Stock by Class [Table Text Block]

Class	Number	Initial	Issuance	Gross		Issuance			Exchange			Net Cash		Date if	CPS
of CPS	of CPS	Investor	Date	Proceeds		(Costs)			Gain (loss)			Proceeds		Exchanged	Outstanding
Series A	444,444	MTDC	07/18/2008	$	1,000,000	$	(30,000	)	$	—		$	970,000	—	444,444
Series A	444,444	MTDC	11/27/2008		1,000,000		(30,000	)		—			970,000	—	444,444
Series B	111,111	EEV	06/08/2009		250,000		(19,393	)		(18,029	)		212,578	08/17/2010	—
Series B	111,111	EEV	03/09/2010		250,000		(8,929	)		(3,005	)		238,066	08/17/2010	—
Series B	222,222	PMSB	09/23/2009		500,000		(7,500	)		—			492,500	10/11/2013	—
Series B	222,222	PMSB	05/13/2010		500,000		(5,000	)		—			495,000	10/11/2013	—
Series B	188,057	KMP	09/18/2009		423,128		(11,319	)		—			411,809	09/29/2010	—
Subtotal	1,743,611				3,923,128		(112,141	)		(21,034	)		3,789,953		888,888
Series C	3,233,734	MTDC	03/10/2011		5,000,000		(6,272	)		58,575			5,052,303	—	3,233,734
	4,977,345			$	8,923,128	$	(118,413	)	$	37,541		$	8,842,256		4,122,622

Series B Preferred Stock [Member] | Convertible Preferred Stock [Member]

Convertible Preference Shares of Former Subsidiary (Tables) [Line Items]

Schedule of Fair Value Estimated Assumption Derivative Liabilty [Table Text Block]

	September 30, 2013			December 31, 2012
Risk-free interest rate		0.04	%		0.16	%
Expected remaining term	0.51 Years			1.00 Years
Expected volatility		102.38	%		125.53	%
Dividend yield		0	%		0	%

Series A Preferred Stock [Member] | Convertible Preferred Stock [Member]

Convertible Preference Shares of Former Subsidiary (Tables) [Line Items]

Schedule of Fair Value Estimated Assumption Derivative Liabilty [Table Text Block]

		September 30, 2013			December 31, 2012
Risk-free interest rate	0		0.02% - 0.03	%		0.11% - 0.15	%
Expected remaining term		0.10 - 0.16 Years			0.55 - 0.90 Years
Expected volatility			77.99% - 78.79	%		123.55% - 127.94	%
Dividend yield			0	%		0	%

XML

Convertible Preference Shares of Former Subsidiary (Details) - Series B CPS Fair values estimated assumptions (Series B CPS Derivative Liability [Member])	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Series B CPS Derivative Liability [Member]
Convertible Preference Shares of Former Subsidiary (Details) - Series B CPS Fair values estimated assumptions [Line Items]
Risk-free interest rate	0.04%	0.16%
Expected remaining term	186 days	1 year
Expected volatility	102.38%	125.53%
Dividend yield	0.00%	0.00%

XML

Goodwill and Other Intangible Assets (Details) - Estimated future amortization expenses (USD $)	Sep. 30, 2014
Estimated future amortization expenses [Abstract]
2014 (three months remaining)	$ 124,500
2015	449,900
2016	421,000
2017	313,900
2018	148,500
Thereafter	28,800
Total amortization	$ 1,486,600

XML

Acquisitions (Details) - Unaudited pro forma information (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Unaudited pro forma information [Abstract]
Total revenue	$ 1,250,201	$ 907,617	$ 4,389,622	$ 2,830,806
Net loss	$ (2,651,152)	$ (11,216,243)	$ (7,200,865)	$ (18,879,658)
Net loss per share - basic and diluted (in Dollars per share)	$ (0.97)	$ (44.96)	$ (4.72)	$ (189.34)

XML

Preferred Stock (Details) (USD $)	0 Months Ended			0 Months Ended			0 Months Ended			0 Months Ended		3 Months Ended	9 Months Ended
	May 26, 2011	Sep. 30, 2014	Dec. 31, 2013	May 26, 2011 Series A Preferred Stock [Member]	Aug. 27, 2013 Private Placement [Member] Series 1 Convertible Preferred Stock [Member]	Aug. 27, 2013 Series 1 Convertible Preferred Stock [Member] In Exchange of CPNs [Member]	Sep. 30, 2014 Series 1 Convertible Preferred Stock [Member]	Aug. 27, 2013 Series 1 Convertible Preferred Stock [Member]	Aug. 27, 2013 Series 1 Convertible Preferred Stock [Member]	Sep. 30, 2014 Common Stock [Member]	May 27, 2011 Series A1 Convertible Preferred Stock [Member]	Sep. 30, 2013 Series A1 Convertible Preferred Stock [Member]	Sep. 30, 2013 Series A1 Convertible Preferred Stock [Member]	May 27, 2011 Series A1 Convertible Preferred Stock [Member]	May 26, 2011 Series A1 Convertible Preferred Stock [Member]	May 27, 2011 Series A2 Convertible Preferred Stock [Member]	May 26, 2011 Series A2 Convertible Preferred Stock [Member]
Preferred Stock (Details) [Line Items]
Preferred Stock, Shares Authorized		10,000,000	10,000,000						3,663						4,500,000		4,500,000
Preferred Stock, Liquidation Preference Per Share (in Dollars per share)									$ 0.001
Convertible Preferred Stock, Shares Issued upon Conversion									2,515.3436							99.39
Ownership Cap Threshold Percentage								9.98%
Preferred Stock, Shares Issued		0	2,944.7080			2,987.0168
Stock Issued During Period, Shares, New Issues					646.0351						2,937,500
Conversion of Stock, Shares Converted							3,633.0519
Conversion of Stock, Shares Issued										913,837
Preferred Stock, Conversion Basis	Each 99.39 shares of Series A Preferred Stock was convertible into one share of common stock
Preferred Stock, Dividend Rate, Percentage				5.00%
Share Price (in Dollars per share)		$ 4.35												$ 5.20
Dividends (in Dollars)												$ 131,219	$ 547,171

XML

Net Loss Per Share (Details) - Antidilutive Securities Excluded from Computation of Earnings Per Share	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common share equivalents excluded from denominator for diluted earnings per share computation	2,731,826	476,930	2,294,127	276,589
Equity Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common share equivalents excluded from denominator for diluted earnings per share computation	21,621	59	12,992	84
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common share equivalents excluded from denominator for diluted earnings per share computation	995,501	47,297	432,434	28,244
Unit Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common share equivalents excluded from denominator for diluted earnings per share computation		11,201		5,346
Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common share equivalents excluded from denominator for diluted earnings per share computation	87,586		30,291
Series 1 Convertible Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common share equivalents excluded from denominator for diluted earnings per share computation	447,311	287,601	638,603	96,920
Series ACPS [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common share equivalents excluded from denominator for diluted earnings per share computation		29,384		29,384
Series B CPS [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common share equivalents excluded from denominator for diluted earnings per share computation		59,119		59,119
Series C CPS [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common share equivalents excluded from denominator for diluted earnings per share computation		3,254		3,254
MTDC Notes [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common share equivalents excluded from denominator for diluted earnings per share computation	1,179,807		1,179,807
Series A1 Convertible Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common share equivalents excluded from denominator for diluted earnings per share computation		20,401		28,351
Convertible Debt Securities [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common share equivalents excluded from denominator for diluted earnings per share computation		18,614		25,887

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Long Term Obligations (Details) - IntegenX Note (Parentheticals) (Integen X Note [Member], USD $)	Sep. 30, 2014
Integen X Note [Member]
Debt Instrument [Line Items]
Accumulated amortization	$ 21,454

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Inventories

9 Months Ended

Sep. 30, 2014

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

NOTE 4.  Inventories

Inventories, net of provisions for potentially excess, obsolete or impaired goods, consisted of the following at September 30, 2014, and December 31, 2013:

	September 30, 2014		December 31, 2013
Raw materials	$	63,800	$	125,068
Work in process		169,067		46,974
Finished goods		720,469		120,608
Inventories	$	953,336	$	292,650

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Concentrations (Details) (Minimum [Member], Customer Concentration Risk [Member])	9 Months Ended
	Sep. 30, 2014
Minimum [Member] | Customer Concentration Risk [Member]
Concentrations (Details) [Line Items]
Concentration Risk, Percentage	10.00%

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Long Term Obligations (Details) (USD $)	3 Months Ended		9 Months Ended			0 Months Ended		0 Months Ended		0 Months Ended		0 Months Ended						9 Months Ended			0 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2012	Aug. 27, 2013 2013 Exchange Agreement [Member] Convertible Promissory Note [Member]	Aug. 27, 2013 2013 Exchange Agreement [Member] Convertible Promissory Note [Member]	May 27, 2011 Series A2 Convertible Preferred Stock [Member] Convertible Promissory Note [Member]	May 27, 2011 Series A2 Convertible Preferred Stock [Member] Convertible Promissory Note [Member]	May 27, 2011 Series A2 Convertible Preferred Stock [Member]	May 27, 2011 Series A2 Convertible Preferred Stock [Member]	Aug. 27, 2013 Convertible Promissory Note [Member]	May 27, 2011 Convertible Promissory Note [Member]	Aug. 27, 2013 Convertible Promissory Note [Member]	May 27, 2011 Convertible Promissory Note [Member]	Nov. 26, 2013 WGBM Notes [Member]	Aug. 15, 2013 WGBM Notes [Member]	Sep. 30, 2014 MTDC Notes [Member]	Dec. 31, 2013 MTDC Notes [Member]	Nov. 26, 2013 MTDC Notes [Member]	Sep. 12, 2014 Integen X Note [Member]	Sep. 30, 2014 Integen X Note [Member]
Long Term Obligations (Details) [Line Items]
Debt Instrument, Face Amount															$ 15,275,000	$ 1,400,000	$ 6,600,000			$ 5,200,000
Debt Instrument, Convertible, Number of Equity Instruments								2,679,824
Debt Instrument, Convertible, Conversion Price (in Dollars per share)									$ 5.70
Convertible Preferred Stock, Terms of Conversion										each 99.39 shares being convertible into one share of common stock.
Convertible Preferred Stock, Shares Issued upon Conversion (in Shares)											99.39
Proceeds from Sale of Promissory Notes Convertible Preferred Stock and Warrants Gross													30,550,000
Payments of Debt Issuance Costs													2,524,963
Proceeds from Debt, Net of Issuance Costs													28,025,037
Debt Instrument, Interest Rate During Period													5.00%
Debt Instrument, Unamortized Discount							14,442,497
Debt Instrument, Convertible, Remaining Discount Amortization Period						3 years 6 months						3 years 6 months
Unamortized Debt Issuance Expense														832,502
Derivative, Fair Value, Net					274,928
Increase (Decrease) in Derivative Liabilities				(274,928)
Long-term Debt, Gross																	5,300,000
Debt Instrument, Interest Rate, Effective Percentage																		17.39%	17.39%			11.60%
Share Price (in Dollars per share)	$ 4.35		$ 4.35															$ 4.4075
Stock Issued During Period, Shares, Conversion of Convertible Securities (in Shares)																		1,179,807
Notes Issued			1,100,000																			1,250,000
Debt Instrument, Maturity Date, Description																						The IntegenX Note earned simple interest at 8% per annum over its three year term, payable on the Maturity Date. It was repayable early without premium or penalty at the Company’s option at any time and it had to be repaid within 45 days of the closing of an equity offering yielding the Company net cash proceeds of at least $15,000,000.
Debt Instrument, Interest Rate, Stated Percentage																						8.00%
Proceeds from Future Fundraising																						15,000,000
Gains (Losses) on Extinguishment of Debt	$ (128,546)	$ (4,970,410)	$ (128,546)	$ (4,970,410)																	$ (128,546)

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Net Loss Per Share (Tables)

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Common share equivalents issuable upon exercise of common stock options		21,621		59		12,992		84
Common share equivalents issuable upon exercise of common stock warrants		995,501		47,297		432,434		28,244
Common share equivalents issuable upon exercise of unit warrants		—		11,201		—		5,346
Shares issuable upon vesting of restricted stock		87,586		—		30,291		—
Shares issuable upon conversion of Series 1 Convertible Preferred Stock		447,311		287,601		638,603		96,920
Shares issuable upon conversion of Series A CPS		—		29,384		—		29,384
Shares issuable upon conversion of Series B CPS		—		59,119		—		59,119
Shares issuable upon conversion of Series C CPS		—		3,254		—		3,254
Shares issuable upon conversion of MTDC Notes		1,179,807		—		1,179,807		—
Shares issuable upon conversion of Series A-1 Convertible Preferred Stock		—		20,401		—		28,351
Shares issuable upon conversion of convertible promissory notes		—		18,614		—		25,887
Total common share equivalents excluded from denominator for diluted earnings per share computation		2,731,826		476,930		2,294,127		276,589

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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value, Liabilities Measured on Recurring Basis [Table Text Block]

	Level 1		Level 2		Level 3		Total
September 30, 2014
Financial Liabilities:
Warrant derivative liabilities	$	—	$	—	$	362,836	$	362,836
Total liabilities	$	—	$	—	$	362,836	$	362,836

	Level 1		Level 2		Level 3		Total
December 31, 2013
Financial Liabilities:
Warrant derivative liabilities	$	—	$	—	$	9,147,507	$	9,147,507
Total liabilities	$	—	$	—	$	9,147,507	$	9,147,507

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

				Conversion
				Element of		Conversion
	Warrant			Promissory		Element of		Series A CPS
	Derivatives			Notes		Series B CPS		Derivatives		Total
Balance at January 1, 2014	$	9,147,507		$	—	$	—	$	—	$	9,147,507
Issuances		—			—		—		—		—
Revaluation gains included in other income and expenses		(1,963,532	)		—		—		—		(1,963,532	)
Settlements		(6,821,139	)		—		—		—		(6,821,139	)
Balance at September 30, 2014	$	362,836		$	—	$	—	$	—	$	362,836
Total gains included in other income and expenses attributable to liabilities still held as of September 30, 2014	$	1,276,897		$	—	$	—	$	—	$	1,276,897

				Conversion
				Element of			Conversion
	Warrant			Promissory			Element of			Series A CPS
	Derivatives			Notes			Series B CPS			Derivatives			Total
Balance at January 1, 2013	$	102,695		$	274,928		$	1,210,909		$	619,652		$	2,208,184
Issuances		7,962,081			—			—			—			7,962,081
Revaluation (gains) losses included in other income and expenses		234,639			(274,928	)		90,014			(194,858	)		(145,133	)
Settlements		—			—			—			—			—
Balance at September 30, 2013	$	8,299,415		$	—		$	1,300,923		$	424,794		$	10,025,132
Total gains (losses) included in other income and expenses attributable to liabilities still held as of September 30, 2013	$	(234,640	)	$	—		$	(90,014	)	$	194,858		$	(129,796	)

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Warrants (Details) (USD $)	9 Months Ended																9 Months Ended
	Sep. 30, 2013	Sep. 30, 2014	Dec. 31, 2013	Dec. 31, 2012	Sep. 30, 2014 Investor [Member] Warrants Expiring in August 2019 [Member]	Sep. 30, 2014 Underwriters [Member] Warrants Expiring in August 2019 [Member]	May 27, 2011 Private Placement [Member] Anti Dilution Adjustment [Member] Warrants Expiring in December 2014 and January 2015 [Member]	Sep. 30, 2014 2013 Private Placement Initial Closing [Member] Warrants Expiring in August and September 2018 [Member]	Sep. 30, 2014 2013 Private Placement Final Closing [Member] Warrants Expiring in August and September 2018 [Member]	Sep. 30, 2014 Anti Dilution Adjustment [Member] Warrants Expiring in December 2014 and January 2015 [Member]	May 27, 2011 Anti Dilution Adjustment [Member] Warrants Expiring in December 2014 and January 2015 [Member]	Sep. 30, 2014 Warrants Expiring in August and September 2018 [Member] Common Stock [Member]	Dec. 31, 2013 Warrants Expiring in August and September 2018 [Member] Warrant [Member]	Sep. 30, 2014 Warrants Expiring in August and September 2018 [Member]	Sep. 30, 2014 Warrants Expiring in December 2014 and January 2015 [Member]	May 27, 2011 Warrants Expiring in December 2014 and January 2015 [Member]	Sep. 30, 2014 Warrant [Member]	Sep. 30, 2013 Warrant [Member]	Jun. 30, 2014 Warrant [Member]	Mar. 31, 2014 Warrant [Member]	Dec. 31, 2013 Warrant [Member]	Jun. 30, 2013 Warrant [Member]	Dec. 31, 2012 Warrant [Member]
Warrants (Details) [Line Items]
Warrant Units Outstanding														25.88					2.99	22.54
Unit Warrants Number Recorded as Liability														0.35
Warrants and Rights Outstanding (in Dollars)														$ 50,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		417,542			4,600,000	120,000	102	341,713	34,225	307,015	2,893	2,500		1,250	972
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right														1
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share)		$ 7.59												$ 26.00	$ 2,484.75	$ 834.88
Class of Warrant or Right, Outstanding		5,643,476								2,791				236,900					89,378	412,933
Other Liabilities (in Dollars)													8,700,000
Warrants Not Settleable in Cash, Fair Value Disclosure (in Dollars)																			711,960	6,109,179
Derivative Liability (in Dollars)	10,025,132	362,836	9,147,507	2,208,184													362,836	8,299,415			9,147,507	7,962,081	102,695
Share Price (in Dollars per share)		$ 4.35															$ 4.35	$ 19.60
Increase (Decrease) in Derivative Liabilities (in Dollars)	$ (274,928)																$ (1,963,532)	$ 234,639

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Long Term Obligations (Details) - MTDC Notes (MTDC Notes [Member], USD $)	Sep. 30, 2014	Dec. 31, 2013
MTDC Notes [Member]
Debt Instrument [Line Items]
Face value	$ 5,200,000	$ 5,200,000
Debt discount, net of accumulated amortization of $256,572 and $27,258 at September 30, 2014 and December 31, 2013, respectively	3,286,744	3,516,058
Notes payable, net of debt discount	$ 1,913,256	$ 1,683,942

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Concentrations (Tables)

9 Months Ended

Sep. 30, 2014

Risks and Uncertainties [Abstract]

Schedules of Concentration of Risk, by Risk Factor [Table Text Block]

	Three Months Ended September 30,								Nine Months Ended September 30,
	2014				2013				2014				2013
Customer A	$	166,919	13	%	$	—	—		$	166,919	4	%	$	—	—
Customer B	$	125,000	10	%	$	125,000	32	%	$	375,000	9	%	$	333,333	41	%
Customer C	$	35,307	3	%	$	123,201	32	%	$	260,773	6	%	$	123,201	15	%
Customer D	$	983	0	%	$	114,600	29	%	$	12,181	0	%	$	114,600	14	%
Customer E	$	194	0	%	$	7,664	2	%	$	164,529	4	%	$	168,906	21	%

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The Company (Details) (USD $)		0 Months Ended			0 Months Ended				0 Months Ended	9 Months Ended	0 Months Ended	9 Months Ended
	Sep. 30, 2014	Aug. 27, 2014 Underwriters [Member] 2014 Public Offering [Member]	Aug. 27, 2014 2014 Public Offering [Member] Underwriting Agreement [Member]	Aug. 27, 2014 2014 Public Offering [Member] Underwriting Agreement [Member]	Aug. 27, 2014 2014 Public Offering [Member]	Aug. 27, 2014 2014 Public Offering [Member]	Nov. 26, 2013 Common Stock [Member]	Aug. 27, 2014 Preferred Stock [Member]	Aug. 27, 2013 The 2013 Reverse Split [Member]	Sep. 30, 2014 The 2013 Reverse Split [Member]	Jun. 30, 2014 The 2014 Reverse Split [Member]	Sep. 30, 2014 The 2014 Reverse Split [Member]
The Company (Details) [Line Items]
Noncontrolling Interest, Ownership Percentage by Parent							100.00%	17.20%
Stockholders' Equity Note, Stock Split, Conversion Ratio									99.39
Stockholders' Equity Note, Stock Split, Shares Issued for Fractional Share									1
Stockholders' Equity, Reverse Stock Split										one-for-99.39	ten	one-for-ten
Units Issued During Period Units New Issues					2,000
Unit Issued During Period Price Per Unit New Issues (in Dollars per share)					$ 10,000
Sale of Stock Number of Shares in Each Unit Sold					2,000
Sale of Warrant Number of Warrant in Each Unit Sold					2,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	417,542					1
Sale of Stock, Number of Shares Issued in Transaction		600,000			4,000,000
Sale Of Stock Number Of Warrants Issued In Transaction					4,600,000
Class of Warrant or Right Expiration Period					5 years
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share)	$ 7.59			$ 6.25		$ 5.00
Gross Proceeds From Public Offering (in Dollars)					$ 20,000,006
Proceeds from Issuance of Common Stock (in Dollars)					18,000,000
Payment For Underwriting Fees (in Dollars)			1,675,000
Issuance of Warrants to Underwriters				120,000
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right				1
Warrants Aggregate Grant Date Fair Value (in Dollars)				$ 395,766
Share Price (in Dollars per share)	$ 4.35			$ 4.60
Fair Value Assumptions, Expected Volatility Rate			108.07%
Fair Value Assumptions, Risk Free Interest Rate			1.48%
Fair Value Assumptions, Expected Dividend Rate			0.00%
Fair Value Assumptions, Expected Term			4 years 6 months

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Acquisitions

9 Months Ended

Sep. 30, 2014

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

NOTE 3.  Acquisitions

On January 6, 2014, the Company acquired the Apollo Business (see Note 1). Since that date the results of its operations have been included in the consolidated financial statements. As a result of the acquisition, the Company can now offer a wide spectrum of products for sample preparation for NGS to laboratories performing targeted sequencing. The Company expects to achieve significant synergies, especially in its sales and marketing efforts, since the SmartChip and Apollo products and services serve the same customer base.

The total purchase price for the Apollo Business is summarized as follows:

Cash	$	2,000,000
Promissory note (see Note 6)		1,100,000
Contingent earn-out payments		410,000
Total	$	3,510,000

The contingent consideration arrangement requires the Company to pay IntegenX a percentage of revenues, on a sliding scale up to 20%, should certain revenue targets be achieved in 2014, 2015 and 2016. We estimated the fair value of the contingent consideration using a probability-weighted discounted cash flow model based on key assumptions including annual revenues ranging from $4.0 million to $9.9 million and a discount rate of 14%. This is measured as a Level 3 fair value liability. In connection with the Apollo Business acquisition, the Company allocated the total purchase consideration to the net assets and liabilities acquired, including identifiable intangible assets, based on their respective fair values at the acquisition date. The following table summarizes the allocation of the purchase price to the fair value of the respective assets and liabilities acquired:

Inventory	$	606,000
Property and equipment		118,000
Intangible assets:
Customer lists and trademarks		1,500,000
Purchased technology		360,000
Goodwill (1)		990,000
Total assets		3,574,000
Liabilities – accrued vacation		(64,000	)
Total purchase price	$	3,510,000

(1) Goodwill, which represents the excess of the purchase price over the fair value of tangible and identified intangible assets acquired, is attributable primarily to expected synergies and the assembled workforce. All of the goodwill is expected to be deductible for income tax purposes except to the extent that it arose due to an over-estimate of contingent earn-out payments.

In addition, the Company incurred and expensed costs directly related to this acquisition totaling approximately $140,000, of which nil and $95,000 was incurred in the three and nine months ended September 30, 2014, respectively, and are included in general and administrative expenses in the condensed consolidated statement of operations.

Selected amounts related to the Apollo Business included in the Company’s condensed consolidated statement of operations for the three and nine months ended September 30, 2014, are as follows:

	Period Ended September 30,
	Three Months			Nine Months
Revenue	$	520,085		$	1,583,207
Net loss	$	(665,000	)	$	(1,918,000	)

The unaudited pro forma information in the table below summarizes the combined results of operations of WaferGen Bio-systems, Inc. and subsidiaries with those of the Apollo Business as though these entities were combined as of January 1, 2013. The results of the Apollo Business for the three and nine months ended September 30, 2013, are based on the actual historic quarterly allocations of the Abbreviated Financial Statements prepared for the year ended December 31, 2013, and for the three and nine months ended September 30, 2014, are based on the Company’s results of operations, adjusted for estimated operating expenses in the five days prior to the acquisition. The pro forma financial information for all periods presented also includes the removal of direct acquisition-related costs, the additional charges for interest expense on acquisition-related borrowing, and the actual depreciation and amortization that would have been charged assuming the fair value adjustments to property and equipment and intangible assets had been applied as of January 1, 2013.

This unaudited pro forma information is summarized as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Total revenue	$	1,250,201		$	907,617		$	4,389,622		$	2,830,806
Net loss	$	(2,651,152	)	$	(11,216,243	)	$	(7,200,865	)	$	(18,879,658	)
Net loss per share - basic and diluted	$	(0.97	)	$	(44.96	)	$	(4.72	)	$	(189.34	)

The pro forma financial information as presented above is for informational purposes only and is not indicative of the consolidated results of operations of future periods or the results of operations that would have been achieved had the acquisition taken place on January 1, 2013.

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Summary of Significant Accounting Policies (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Accounting Policies [Abstract]
Government Subsidies Recognized During The Period	$ 161,981	$ 86,577	$ 334,521	$ 236,167

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Goodwill and Other Intangible Assets (Details) - Changes in carrying amount of goodwill (USD $)	9 Months Ended
	Sep. 30, 2014	Jan. 06, 2014
Changes in carrying amount of goodwill [Abstract]
Balance at January 1, 2014		$ 990,000
Additions (see Note 3)	990,000
Balance at September 30, 2014	$ 990,000	$ 990,000

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Stock Awards (Details) (USD $)	3 Months Ended		9 Months Ended			9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Aug. 27, 2014 Inducement Options [Member]	Sep. 30, 2014 Maximum [Member] 2008 Plan Amendment [Member]	Sep. 30, 2014 Maximum [Member]	Sep. 30, 2014 Minimum [Member]	May 29, 2014 2008 Plan Member	May 29, 2014 2008 Plan Amendment [Member]
Stock Awards (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number					98,932
Share-based Compensation Arrangement by Share-based Payment Award Exercisable Period						7 years	10 years
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized									14,589	314,589
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period							4 years	3 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Grant Date Intrinsic Value			$ 6.33	$ 37.25
Share Price	$ 4.35		$ 4.35
Share-based Compensation	$ 175,746	$ 77,283	$ 935,280	$ 260,068
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized	$ 1,269,643		$ 1,269,643
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition			2 years 120 days

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Condensed Consolidated Balance Sheets (USD $)	Sep. 30, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 17,328,471	$ 10,708,646
Accounts receivable	1,754,437	367,266
Inventories	953,336	292,650
Prepaid expenses and other current assets	528,991	350,540
Total current assets	20,565,235	11,719,102
Property and equipment, net	387,984	269,618
Goodwill	990,000
Intangible assets, net	1,486,600
Other assets	79,898	42,209
Total assets	23,509,717	12,030,929
Current liabilities:
Accounts payable	1,897,688	980,887
Accrued payroll and related costs	939,112	289,053
Other current liabilities	747,703	1,143,335
Total current liabilities	3,584,503	2,413,275
Long-term debt, net of discount	1,913,256	1,683,942
Derivative liabilities	362,836	9,147,507
Other liabilities	564,379
Total liabilities	6,424,974	13,244,724
Commitments and contingencies (Note 14)
Stockholders’ equity (deficit):
Preferred Stock: $0.001 par value; 10,000,000 shares authorized; 0 and 2,944.7080 shares of Series 1 Convertible Preferred Stock issued and outstanding at September 30, 2014 and December 31, 2013		13,595,662
Common Stock: $0.001 par value; 300,000,000 shares authorized; 5,871,793 and 911,256 shares issued and outstanding at September 30, 2014 and December 31, 2013	105,352,474	66,028,712
Accumulated deficit	(88,267,731)	(80,838,169)
Total stockholders’ equity (deficit)	17,084,743	(1,213,795)
Total liabilities and stockholders’ equity (deficit)	$ 23,509,717	$ 12,030,929

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Long Term Obligations (Details) - MTDC Notes (Parentheticals) (MTDC Notes [Member], USD $)	Sep. 30, 2014	Dec. 31, 2013
MTDC Notes [Member]
Debt Instrument [Line Items]
Accumulated amortization	$ 256,572	$ 27,258

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The Company

9 Months Ended

Sep. 30, 2014

Disclosure Text Block [Abstract]

Nature of Operations [Text Block]

NOTE 1.  The Company

General – WaferGen Bio-systems, Inc. and its subsidiaries (the “Company”) are engaged in the development, manufacture and sales of systems for gene expression quantification, genotyping and stem cell research. The Company’s products are aimed at researchers who perform genetic analysis, primarily at pharmaceutical and biotech companies, academic and private research centers and diagnostics companies involved in biomarker discovery and genetic research. Through its SmartChip and Apollo product lines, the Company plans to provide new performance standards with significant savings in time and cost for professionals in the field of gene expression research and to facilitate biomarker discovery, toxicology, and clinical research.

Wafergen, Inc. was incorporated in the State of Delaware on October 22, 2002, and was acquired by WaferGen Bio-systems, Inc. in a reverse merger on May 31, 2007.

On January 24, 2008, the Company formed a subsidiary, WaferGen Biosystems (M) Sdn. Bhd. (“WGBM”), in Malaysia. Prior to WGBM’s liquidation on November 26, 2013, the Company owned 100% of the common stock and 17.2% (comprising shares that had been assumed by the Company) of the preference shares of this entity, with the remaining preference shares owned by Malaysian Technology Development Corporation Sdn. Bhd. (“MTDC”). See Notes 6 and 7 below.

On August 30, 2011, the Company formed a new wholly owned subsidiary in Luxembourg, WaferGen Biosystems Europe S.a.r.l., to establish a presence for its marketing and research activities in Europe.

On August 27, 2013, the Company effected a reverse stock split of its common stock by a ratio of one-for-99.39 (the “2013 Reverse Split”). Every 99.39 outstanding shares of common stock became one share of common stock. No fractional shares were issued in connection with the 2013 Reverse Split. Stockholders who were otherwise entitled to receive a fractional share of common stock received one whole share of common stock. The 2013 Reverse Split did not change the number of shares of common or preferred stock that the Company is authorized to issue, or the par value of the Company’s common or preferred stock.

On June 30, 2014, the Company effected a reverse stock split of its common stock by a ratio of one-for-ten (the “2014 Reverse Split”). Every ten outstanding shares of common stock became one share of common stock. No fractional shares were issued in connection with the 2014 Reverse Split. Stockholders who were otherwise entitled to receive a fractional share of common stock received one whole share of common stock. The 2014 Reverse Split did not change the number of shares of common or preferred stock that the Company is authorized to issue, or the par value of the Company’s common or preferred stock.

The 2013 Reverse Split and the 2014 Reverse Split resulted in a proportionate adjustment to the per share exercise price and the number of shares of common stock issuable upon the exercise of outstanding warrants and stock options, as well as the number of shares of common stock eligible for issuance under the 2008 Stock Incentive Plan. All of the information in these financial statements has been presented to reflect the combined impact of the one-for-99.39 2013 Reverse Split and the one-for-ten 2014 Reverse Split on a retroactive basis.

On January 6, 2014, the Company acquired 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 (“NGS”), including the Apollo 324TM instrument and the PrepXTM reagents (the “Apollo Business”). See Note 3 below.

On August 27, 2014, the Company completed a public offering (the “2014 Public Offering”) of 2,000 Units (the “Units”) for $10,000 per Unit, with each Unit consisting of 2,000 shares of the Company’s common stock and 2,000 warrants to purchase one share of common stock. In aggregate, the Company issued 4,000,000 shares of its common stock (excluding 600,000 shares of common stock sold by certain stockholders to the underwriters) and 4,600,000 warrants to purchase shares of its common stock (inclusive of 600,000 shares of common stock sold by the Company from the full exercise of the overallotment option of warrants granted to the underwriters). Subject to certain ownership limitations, the warrants are exercisable at any time within five years of their issuance date at an exercise price of $5.00 per share. The total gross proceeds from the offering to the Company were $20,000,006. After deducting underwriting discounts, commissions and offering expenses payable by the Company, the aggregate net proceeds received by the Company totaled approximately $18.0 million.

The Company retained underwriters in connection with the 2014 Public Offering, and pursuant to the terms of an underwriting agreement, the Company paid the underwriters an aggregate fee totaling approximately $1,675,000. In addition, the Company issued the underwriters 120,000 warrants at the closing of the 2014 Offering, each warrant entitling the holder to purchase one share of common stock for $6.25 at any time within five years of their issuance date. The fair value of the warrants issued on August 27, 2014, was estimated to be $395,766, using a closing stock price of $4.60 and assumptions including estimated volatility of 108.07%, a risk-free interest rate of 1.48%, a zero dividend rate and an estimated remaining term of 4.50 years. This estimated fair value was recorded in offering costs.

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Fair Value of Financial Instruments (Details) - Liabilities measured at fair value on a recurring basis (USD $)	Sep. 30, 2014	Dec. 31, 2013
Financial Liabilities:
Warrant derivative liabilities	$ 362,836	$ 9,147,507
Total liabilities	362,836	9,147,507
Warrant [Member] | Fair Value, Inputs, Level 1 [Member]
Financial Liabilities:
Warrant derivative liabilities
Warrant [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Liabilities:
Warrant derivative liabilities
Warrant [Member] | Fair Value, Inputs, Level 3 [Member]
Financial Liabilities:
Warrant derivative liabilities	362,836	9,147,507
Warrant [Member]
Financial Liabilities:
Warrant derivative liabilities	362,836	9,147,507
Fair Value, Inputs, Level 1 [Member]
Financial Liabilities:
Total liabilities
Fair Value, Inputs, Level 2 [Member]
Financial Liabilities:
Total liabilities
Fair Value, Inputs, Level 3 [Member]
Financial Liabilities:
Total liabilities	$ 362,836	$ 9,147,507

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Acquisitions (Details) - Schedule of identifiable assets and liabilities (USD $)	Sep. 30, 2014	Jan. 06, 2014	Dec. 31, 2013
Acquisitions (Details) - Schedule of identifiable assets and liabilities [Line Items]
Inventory		$ 606,000
Property and equipment		118,000
Intangible assets:
Goodwill (1)	990,000	990,000
Total assets		3,574,000
Liabilities – accrued vacation		(64,000)
Total purchase price		3,510,000
Customer Lists and Trademarks [Member]
Intangible assets:
Intangible Assets Excluding Goodwill		1,500,000
Technology-Based Intangible Assets [Member]
Intangible assets:
Intangible Assets Excluding Goodwill		$ 360,000

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Inventories (Tables)

9 Months Ended

Sep. 30, 2014

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

	September 30, 2014		December 31, 2013
Raw materials	$	63,800	$	125,068
Work in process		169,067		46,974
Finished goods		720,469		120,608
Inventories	$	953,336	$	292,650

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Acquisitions (Details) - Selected amounts related to the Apollo Business (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Business Combination, Separately Recognized Transactions [Line Items]
Revenue	$ 1,250,201	$ 389,547	$ 4,389,622	$ 814,282
Net loss	(2,780,535)	(10,808,332)	(7,429,562)	(17,752,997)
Apollo Business [Member]
Business Combination, Separately Recognized Transactions [Line Items]
Revenue	520,085		1,583,207
Net loss	$ (665,000)		$ (1,918,000)

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Long Term Obligations (Tables)

9 Months Ended

Sep. 30, 2014

MTDC Notes [Member]

Long Term Obligations (Tables) [Line Items]

Schedule of Long-term Debt Instruments [Table Text Block]

	September 30, 2014		December 31, 2013
MTDC Notes Payable:
Face value	$	5,200,000	$	5,200,000
Debt discount, net of accumulated amortization of $256,572 and $27,258 at September 30, 2014 and December 31, 2013, respectively		3,286,744		3,516,058
Notes payable, net of debt discount	$	1,913,256	$	1,683,942

Integen X Note [Member]

Long Term Obligations (Tables) [Line Items]

Schedule of Long-term Debt Instruments [Table Text Block]

	September 30, 2014			January 6, 2014
IntegenX Notes Payable:
Face value	$	1,250,000		$	1,250,000
Interest added to principal		68,219			—
Stated value		1,318,219			1,250,000
Debt discount, net of accumulated amortization of $21,454 and nil at September 12 and January 6, 2014, respectively		128,546			150,000
Notes payable, net of debt discount, prior to repayment		1,189,673			1,100,000
Loss on extinguishment of debt		128,546			—
Balance repaid to IntegenX		(1,318,219	)		—
Notes payable, net of debt discount	$	—		$	1,100,000

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

NOTE 2.  Summary of Significant Accounting Policies

Basis of Presentation – The Company has prepared the accompanying condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to these rules and regulations. These condensed consolidated financial statements should be read in conjunction with our audited financial statements and footnotes related thereto for the year ended December 31, 2013, included in our Form 10-K filed with the SEC. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the Company’s financial position and the results of its operations and cash flows. The results of operations for such interim periods are not necessarily indicative of the results to be expected for the full year.

Basis of Consolidation – The condensed consolidated financial statements include the financial statements of WaferGen Bio-systems, Inc. and its subsidiaries. All significant transactions and balances between the WaferGen Bio-systems, Inc. and its subsidiaries have been eliminated in consolidation.

Use of Estimates – Preparing condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results and outcomes could differ from these estimates and assumptions.

Foreign Currencies – Assets and liabilities of non-U.S. subsidiaries for which the local currency is the functional currency are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenues and expenses are translated at the average rates of exchange prevailing during each reporting period. Translation adjustments resulting from this process are charged or credited to other comprehensive income (loss). Foreign exchange gains and losses for assets and liabilities of the Company’s non-U.S. subsidiaries for which the functional currency is the U.S. dollar are recorded in miscellaneous income (expense) in the Company’s condensed consolidated statements of operations.

Accounts Receivable – An allowance for doubtful accounts will be recorded based on a combination of historical experience, aging analysis, and information on specific accounts. Account balances will be written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Inventory – Inventory is recorded at the lower of cost (first-in, first-out) or market value. Additionally, the Company evaluates its inventory in terms of excess and obsolete exposures and records provisions as needed.

Goodwill and Long-lived Intangible Assets–Goodwill is tested for impairment on an annual basis in the fourth quarter and between annual tests if events occur or circumstances indicate that the carrying amount of goodwill may not be recoverable. Impairment losses, if any, are recorded in the statement of operations as “Impairment of goodwill.”

Long-lived intangibles are carried at cost less accumulated amortization and are subject to review for impairment when events or circumstances indicate that the carrying value may not be recoverable. Amortization is recognized over the estimated useful life of the respective asset on a straight-line basis except for customer lists, which are amortized in proportion to the present value of projected cash flows within their estimated useful lives, since this methodology more closely reflects the pattern in which economic benefits are derived.

Revenue Recognition – The Company recognizes revenue when (i) delivery of product has occurred or services have been rendered, (ii) there is persuasive evidence of a sale arrangement, (iii) selling prices are fixed or determinable, and (iv) collectability from the customers (individual customers and distributors) is reasonably assured. Revenue consists primarily of revenue generated from the sale of the Company’s products. Revenue is recorded when the risk and rewards of ownership are transferred to the Company’s customers (individual customers and distributors). This generally occurs when the Company’s products are shipped from its facility as title has passed. Revenue is recorded net of estimated cash discounts. The Company estimates and accrues an allowance for sales returns at the time the product is sold. To date, sales returns have not been material.

Revenue from multi-deliverable arrangements is recognized for each element on delivery of product or completion of service. A typical multi-deliverable arrangement would be the shipment of capital equipment to a customer, followed by the delivery of services or of expendable equipment, provided such delivery is both probable and substantially within the Company’s control. Revenue for each deliverable is allocated based on full list selling prices, although if none of the deliverables is disproportionately discounted relative to the overall discount, this allocation is approximated by using the actual selling price of each deliverable to the customer. The actual cost of revenue for each deliverable is recognized when the revenue for that deliverable is recognized.

Governmental Subsidies – Incentives received from governments in the form of grants are recorded as a reduction in expense in accordance with their purpose. Grants awarded for the purpose of matching specified expenditures are not recognized until a definitive agreement has been signed by both parties; thereafter income is recognized to the extent that the related expenses have been incurred. The Company recognized governmental subsidies of $161,981 and $86,577 in the three months ended September 30, 2014 and 2013, respectively, and $334,521 and $236,167 in the nine months ended September 30, 2014 and 2013, respectively, which were offset against operating expenses in the statement of operations.

Stock-Based Compensation – The Company measures the fair value of all stock-based awards to employees, including stock options, on the grant date and records the fair value of these awards, net of estimated forfeitures, to compensation expense over the service period. The fair value of awards to consultants is measured on the dates on which performance of services is completed, with interim valuations recorded at balance sheet dates while performance is in progress. The fair value of options is estimated using the Black-Scholes valuation model, and of restricted stock is based on the Company’s closing share price on the measurement date.

Change in Fair Value of Derivatives – The Company recognizes (or recognized until the time of their settlement) its warrants with certain cash settlement provisions or with certain anti-dilution protection, the redemption option of the Series A convertible preference shares of its Malaysian subsidiary, and the conversion element of its convertible promissory notes and of the Series B convertible preference shares of its Malaysian subsidiary as derivative liabilities. Such liabilities are valued when the financial instruments are initially issued or the derivative first requires recognition and are also revalued at each reporting date, with the change in their respective fair values being recorded as a gain or loss on revaluation within other income and expenses in the statement of operations. The Company determines the fair value of those warrants for which no anti-dilution adjustment is projected prior to the expiration date using the Black-Scholes valuation model, and all other derivative liabilities using a Monte Carlo Simulation approach, with key input variables provided by management.

Warranty Reserve – The Company’s standard warranty agreement is one year from shipment of certain products. The Company accrues for anticipated warranty costs upon shipment of these products. The Company’s warranty reserve is based on management’s judgment regarding anticipated rates of warranty claims and associated repair costs, and is updated quarterly.

Net Income (Loss) Per Share – Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding plus common share equivalents from conversion of dilutive stock options, warrants, and restricted stock using the treasury method, and convertible securities using the as-converted method, except when antidilutive. In the event of a net loss, the effects of all potentially dilutive shares are excluded from the diluted net loss per share calculation as their inclusion would be antidilutive.

Recent Accounting Pronouncements

In April 2014, the FASB issued ASU 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity” (“ASU 2014-08”). ASU 2014-08 clarifies the circumstances under which discontinued operations should be reported and increases the disclosure requirements. ASU 2014-08 is effective for annual periods beginning after December 15, 2014, and interim periods within those years, and will become effective for the Company on January 1, 2015. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial condition or results of operations.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 will replace most of the existing revenue recognition guidance within U.S. GAAP. The core principle of this guidance is that an entity should recognize revenue for the transfer of goods or services to customers in an amount that it expects to be entitled to receive for those goods or services. In doing so, companies will be required to make certain judgments and estimates, including identifying contract performance obligations, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price among separate performance obligations. Further, ASU 2014-09 will require companies to make additional disclosures. ASU 2014-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those years, and will become effective for the Company beginning on January 1, 2017, with early adoption not permitted. ASU 2014-09 allows for two methods of adoption, a full retrospective method or a modified retrospective approach with the cumulative effect recognized at the date of initial application. The Company is in the process of determining the method of adoption and its impact on the Company’s consolidated financial condition and results of operations.

In May 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements – Going Concern (Topic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). ASU 2014-15 will add guidance to U.S. GAAP that is presently available only in auditing standards, and provides clarification of such guidance. ASU 2014-15 is effective for annual periods ending after December 16, 2016, with early adoption permitted, and will become effective for the Company for the year ending December 31, 2016. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial condition or results of operations.

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Condensed Consolidated Balance Sheets (Parentheticals) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Preferred Stock par value (in Dollars per share)	$ 0.001	$ 0.001
Preferred Stock, shares authorized	10,000,000	10,000,000
Preferred Stock, shares issued	0	2,944.7080
Preferred Stock, shares outstanding	0	2,944.7080
Common Stock par value (in Dollars per share)	$ 0.001	$ 0.001
Common Stock, shares authorized	300,000,000	300,000,000
Common Stock, shares issued	5,871,793	911,256
Common Stock, shares outstanding	5,871,793	911,256

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Net Loss Per Share

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

NOTE 12.  Net Loss Per Share

Basic and diluted net loss per share are shown on the statement of operations.

No adjustment has been made to the net loss for charges, gains, losses and accretion related to Series A, B and C CPS, MTDC Notes, Series A-1 Convertible Preferred Stock and CPNs, as the effect would be anti-dilutive due to the net loss.

The following outstanding stock options, warrants and unit warrants (on an as-converted into common stock basis) and shares issuable or contingently issuable upon conversion of restricted stock, Series 1 Convertible Preferred Stock, Series A, B and C CPS, MTDC Notes, Series A-1 Convertible Preferred Stock and CPNs were excluded from the computation of diluted net loss per share attributable to holders of common stock as they had antidilutive effects for the three and nine months ended September 30, 2014 and 2013:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Common share equivalents issuable upon exercise of common stock options		21,621		59		12,992		84
Common share equivalents issuable upon exercise of common stock warrants		995,501		47,297		432,434		28,244
Common share equivalents issuable upon exercise of unit warrants		—		11,201		—		5,346
Shares issuable upon vesting of restricted stock		87,586		—		30,291		—
Shares issuable upon conversion of Series 1 Convertible Preferred Stock		447,311		287,601		638,603		96,920
Shares issuable upon conversion of Series A CPS		—		29,384		—		29,384
Shares issuable upon conversion of Series B CPS		—		59,119		—		59,119
Shares issuable upon conversion of Series C CPS		—		3,254		—		3,254
Shares issuable upon conversion of MTDC Notes		1,179,807		—		1,179,807		—
Shares issuable upon conversion of Series A-1 Convertible Preferred Stock		—		20,401		—		28,351
Shares issuable upon conversion of convertible promissory notes		—		18,614		—		25,887
Total common share equivalents excluded from denominator for diluted earnings per share computation		2,731,826		476,930		2,294,127		276,589

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Document And Entity Information	9 Months Ended
	Sep. 30, 2014	Nov. 10, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	WaferGen Bio-systems, Inc.
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		5,870,793
Amendment Flag	false
Entity Central Index Key	0001368993
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Sep. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3

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Concentrations

9 Months Ended

Sep. 30, 2014

Risks and Uncertainties [Abstract]

Concentration Risk Disclosure [Text Block]

NOTE 13.  Concentrations

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and accounts receivable. The Company places its cash in commercial banks. Accounts in the United States are secured by the Federal Deposit Insurance Corporation. Accounts in Luxembourg are similarly guaranteed. The Company’s total deposits at commercial banks usually exceed the balances insured.

The Company generally requires no collateral from its customers. No provision was made for doubtful accounts at September 30, 2014, or December 31, 2013.

Customers accounting for more than 10% of total revenues during the three or nine months ended September 30, 2014 or 2013, are tabulated as follows:

	Three Months Ended September 30,								Nine Months Ended September 30,
	2014				2013				2014				2013
Customer A	$	166,919	13	%	$	—	—		$	166,919	4	%	$	—	—
Customer B	$	125,000	10	%	$	125,000	32	%	$	375,000	9	%	$	333,333	41	%
Customer C	$	35,307	3	%	$	123,201	32	%	$	260,773	6	%	$	123,201	15	%
Customer D	$	983	0	%	$	114,600	29	%	$	12,181	0	%	$	114,600	14	%
Customer E	$	194	0	%	$	7,664	2	%	$	164,529	4	%	$	168,906	21	%

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Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Revenue:
Product	$ 1,125,201	$ 264,547	$ 4,014,622	$ 480,949
License and royalty	125,000	125,000	375,000	333,333
Total revenue	1,250,201	389,547	4,389,622	814,282
Cost of product revenue	374,776	192,814	1,739,757	335,182
Gross profit	875,425	196,733	2,649,865	479,100
Operating expenses:
Sales and marketing	961,891	625,390	3,598,880	1,577,317
Research and development	1,909,310	1,581,449	4,749,193	4,246,796
General and administrative	1,132,418	1,217,899	3,233,461	2,443,317
Total operating expenses	4,003,619	3,424,738	11,581,534	8,267,430
Operating loss	(3,128,194)	(3,228,005)	(8,931,669)	(7,788,330)
Other income and (expenses):
Interest income	19	830	46	2,917
Interest expense	(107,464)	(848,464)	(319,946)	(2,821,093)
Gain on revaluation of derivative liabilities, net	589,336	623,613	1,963,532	145,133
Loss on extinguishment of debt	(128,546)	(4,970,410)	(128,546)	(4,970,410)
Issuance of warrants due to organic change		(2,553,318)		(2,553,318)
Miscellaneous income (expense)	(5,686)	167,952	(9,879)	235,295
Total other income and (expenses)	347,659	(7,579,797)	1,505,207	(9,961,476)
Net loss before provision for income taxes	(2,780,535)	(10,807,802)	(7,426,462)	(17,749,806)
Provision for income taxes		530	3,100	3,191
Net loss	(2,780,535)	(10,808,332)	(7,429,562)	(17,752,997)
Accretion on Series 1 Convertible Preferred Stock associated with beneficial conversion feature		(898,623)		(898,623)
Accretion on Series A and B convertible preference shares of subsidiary associated with premium		(408,651)		(2,898,550)
Series A-1 preferred dividend		(131,219)		(547,171)
Net loss attributable to common stockholders	(2,780,535)	(12,246,825)	(7,429,562)	(22,097,341)
Net loss per share – basic and diluted (in Dollars per share)	$ (1.02)	$ (43.51)	$ (4.87)	$ (180.16)
Shares used to compute net loss per share – basic and diluted (in Shares)	2,727,810	281,466	1,526,963	122,657
Comprehensive Loss:
Net loss	(2,780,535)	(10,808,332)	(7,429,562)	(17,752,997)
Foreign currency translation adjustments		(175,686)		(273,736)
Total comprehensive loss	$ (2,780,535)	$ (10,984,018)	$ (7,429,562)	$ (18,026,733)

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Convertible Preference Shares of Former Subsidiary

9 Months Ended

Sep. 30, 2014

Convertible Preference Shares Of Subsidiary [Abstract]

Convertible Preference Shares Of Subsidiary [Text Block]

NOTE 7.  Convertible Preference Shares of Former Subsidiary

Prior to its dissolution in November 2013, in 2008, the Company’s former Malaysian subsidiary, WGBM, issued Series A Convertible Preference Shares (“CPS”) to MTDC (see Notes 1 and 6), a venture capital and development firm in Malaysia, in a private placement under a Share Subscription and Shareholders’ Agreement dated May 8, 2008, at the U.S. dollar equivalent of $2.25 per share. In 2009 and 2010, WGBM issued Series B CPS to Expedient Equity Ventures Sdn. Bhd. (“EEV”) and Prima Mahawangsa Sdn. Bhd. (“PMSB”), both venture capital and development firms in Malaysia, in a private placement under a Share Subscription Agreement dated April 3, 2009, (“Series B SSA”) at the U.S. dollar equivalent of $2.25 per share. In 2009, WGBM issued Series B CPS to Kumpulan Modal Perdana Sdn. Bhd. (“KMP”), a venture capital and development firm in Malaysia, in a private placement under a Share Subscription Agreement dated July 1, 2009, at the U.S. dollar equivalent of $2.25 per share.

In 2010, both EEV and KMP exercised their option to sell to the Company their holdings of 222,222 and 188,057 Series B CPS, respectively, in exchange for shares of the Company’s common stock.

In October 2013 the Company purchased PMSB’s 444,444 Series B CPS for $70,000.

These transactions, along with the issuance of Series C CPS in 2011 (see below), were summarized as follows immediately prior to the liquidation of WGBM on November 26, 2013:

Class	Number	Initial	Issuance	Gross		Issuance			Exchange			Net Cash		Date if	CPS
of CPS	of CPS	Investor	Date	Proceeds		(Costs)			Gain (loss)			Proceeds		Exchanged	Outstanding
Series A	444,444	MTDC	07/18/2008	$	1,000,000	$	(30,000	)	$	—		$	970,000	—	444,444
Series A	444,444	MTDC	11/27/2008		1,000,000		(30,000	)		—			970,000	—	444,444
Series B	111,111	EEV	06/08/2009		250,000		(19,393	)		(18,029	)		212,578	08/17/2010	—
Series B	111,111	EEV	03/09/2010		250,000		(8,929	)		(3,005	)		238,066	08/17/2010	—
Series B	222,222	PMSB	09/23/2009		500,000		(7,500	)		—			492,500	10/11/2013	—
Series B	222,222	PMSB	05/13/2010		500,000		(5,000	)		—			495,000	10/11/2013	—
Series B	188,057	KMP	09/18/2009		423,128		(11,319	)		—			411,809	09/29/2010	—
Subtotal	1,743,611				3,923,128		(112,141	)		(21,034	)		3,789,953		888,888
Series C	3,233,734	MTDC	03/10/2011		5,000,000		(6,272	)		58,575			5,052,303	—	3,233,734
	4,977,345			$	8,923,128	$	(118,413	)	$	37,541		$	8,842,256		4,122,622

The holders of Series B CPS had the right to cause the Company to exchange their CPS for common stock of the Company at an exchange rate of US$2,236.30 per share of common stock, provided that if during the 10-day trading period immediately prior to the holder’s exercise notice the average closing price of the Company’s common stock was less than US$2,630.90, then the holder could exchange CPS at an exchange rate equal to 85% of such 10-day average closing price. Since this afforded the holders the right to receive a variable number of shares of the Company’s common stock, this feature was not indexed to the Company’s equity and was therefore accounted for as a derivative liability, with the estimated fair value being calculated at each reporting date using a Monte Carlo Simulation approach, using key input variables provided by management, with changes in fair value recorded as gains or losses on revaluation in non-operating income (expense).

Series B CPS derivative liability fair values at September 30, 2013 and December 31, 2012, were estimated to be $1,300,923 and $1,210,909, respectively, using a closing stock price of $19.60 and $29.82, respectively, and based on the following assumptions:

	September 30, 2013			December 31, 2012
Risk-free interest rate		0.04	%		0.16	%
Expected remaining term	0.51 Years			1.00 Years
Expected volatility		102.38	%		125.53	%
Dividend yield		0	%		0	%

The increase in the fair value of this derivative liability of $90,014 during the nine months ended September 30, 2013, was recorded as a revaluation loss (see Note 11).

The holders of Series A CPS had the right to redeem their shares for cash (or, at the Company’s option, shares of Company common stock at an Applicable Stock Price (“ASP”), calculated as 85% of the average closing price of that stock during the 10-day trading period immediately prior to MTDC’s exercise notice) in the amount originally invested in USD plus a premium of 8%, compounded annually. In addition, the ASP was subject to a ceiling of $1,540.55 and a floor of $99.39. Since this afforded the holders the right to receive a variable number of shares of the Company’s common stock, this feature caused the Series A CPS to not be indexed to the Company’s equity. As a result, the Company recognized this right as an embedded derivative requiring bifurcation and the host instrument (the Series A CPS absent this option) as part of temporary equity.

The Series A CPS derivative liability fair values at September 30, 2013 and December 31, 2012, were estimated to be $424,794 and $619,652, respectively, using a closing stock price of $19.60 and $29.82, respectively, and based on the following assumptions:

		September 30, 2013			December 31, 2012
Risk-free interest rate	0		0.02% - 0.03	%		0.11% - 0.15	%
Expected remaining term		0.10 - 0.16 Years			0.55 - 0.90 Years
Expected volatility			77.99% - 78.79	%		123.55% - 127.94	%
Dividend yield			0	%		0	%

The decrease in the fair value of this derivative liability of $194,858 during the nine months ended September 30, 2013, was recorded as a revaluation gain (see Note 11).

On March 10, 2011, WGBM received $5,000,000, less issuance costs totaling $6,272, in exchange for the issuance of 3,233,734 Series C convertible preference shares (“CPS”) to MTDC, in a private placement at the U.S. dollar equivalent of $1.5462 per share, representing the first subscription under a Share Subscription Agreement dated December 14, 2010, (“Series C SSA”) to sell 3,233,734 Series C CPS at an initial closing and, should MTDC so elect within 36 months of the initial closing, to sell 1,077,911 shares of Series C CPS at a subsequent closing at the U.S. dollar equivalent of US$2.3193 per share. MTDC could also elect to convert their Series C CPS into ordinary shares of the subsidiary, WGBM, at any time, at a conversion rate of one ordinary share per 100 CPS. Each 993.9 Series C CPS issued at the initial closing was convertible into one share of the Company on April 3, 2014, and each 993.9 Series C CPS issued at the subsequent closing was convertible into one share of the Company on the anniversary of that closing, but the Series C was convertible at any earlier date following each closing at MTDC’s option.

The net sum of $4,993,728 received on issuance of Series C CPS was recorded in stockholders’ equity; this sum was considered in the determination of the gain on liquidation of subsidiary on November 26, 2013. WGBM was authorized to issue 200,000,000 preference shares with a par value of RM0.01. Due to the liquidation of WGBM, no shares remained authorized, issued or outstanding as of December 31, 2013.

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Long Term Obligations

9 Months Ended

Sep. 30, 2014

Disclosure Text Block [Abstract]

Long-term Debt [Text Block]

NOTE 6.  Long Term Obligations

On May 27, 2011, the Company sold convertible promissory notes (“CPNs”) in the aggregate principal amount of $15,275,000, convertible into an aggregate of approximately 2,679,824 shares of Series A-2 Convertible Preferred Stock (see Note 8) at a price of $5.70 per share, with each 99.39 shares being convertible into one share of common stock. The CPNs were sold along with Series A-1 Convertible Preferred Stock and warrants for aggregate gross proceeds of $30,550,000, which after deducting issuance costs of $2,524,963 left net proceeds of $28,025,037. Interest on the CPNs accrued at a rate of 5% per annum, and could either be paid on the last day of each fiscal quarter, or added to the principal amount of the notes, at the Company’s option.

The debt discount related to the debt element of the convertible promissory notes of $14,442,497 was, prior to their exchange for equity securities on August 27, 2013 (the “2013 Exchange”), being amortized as non-cash interest expense using the effective yield method over the 3.5 year contractual term of the CPNs. $832,502 in issuance costs allocated to the CPNs was recorded as a deferred financing cost, which was also being amortized as a non-cash interest expense using the effective yield method over their 3.5 year contractual term.

The Company valued the derivative liability for the conversion element of the CPNs using a Monte Carlo Simulation approach, using assumptions provided by management reflecting conditions at the valuation dates.

The fair value of this derivative liability at December 31, 2012, was estimated to be $274,928. It had diminished to nil by the time of the 2013 Exchange. The decrease in the fair value of this derivative liability of $274,928 during the nine months ended September 30, 2013, was recorded as a revaluation gain (see Note 11).

On August 15, 2013, the Company issued WGBM notes with a face value of $6.6 million, maturing on August 15, 2020 (the “Malaysian Notes”), in consideration of WGBM’s cancellation of the Company’s obligations under a term loan owing to WGBM which, as of that date, had an outstanding loan balance of approximately $5.3 million. Under the terms of an agreement between the Company, WGBM and MTDC (see Notes 1 and 7), upon liquidation of WGBM (which occurred on November 26, 2013), the Malaysian Notes were divided such that the Company received notes with an aggregate principal amount of $1.4 million and MTDC received notes with an aggregate principal amount of $5.2 million (the “MTDC Notes”).

The MTDC Notes were recorded using an effective interest rate of 17.39% and are summarized as follows at September 30, 2014 and December 31, 2013:

	September 30, 2014		December 31, 2013
MTDC Notes Payable:
Face value	$	5,200,000	$	5,200,000
Debt discount, net of accumulated amortization of $256,572 and $27,258 at September 30, 2014 and December 31, 2013, respectively		3,286,744		3,516,058
Notes payable, net of debt discount	$	1,913,256	$	1,683,942

At any time prior to their maturity date, the Company may issue to MTDC shares of the Company’s common stock with a value, based on the average closing price in the preceding 30 days, equal to the face value of the MTDC Notes. Based on an average closing price of $4.4075 in the 30 days preceding September 30, 2014, the MTDC Notes could have been settled by issuing 1,179,807 shares of the Company’s common stock.

As part of the consideration for the Apollo Business (see Notes 1 and 3), the Company issued a $1.25 million secured promissory note to IntegenX (the “IntegenX Note”), due on January 6, 2017 (the “Maturity Date”). The IntegenX Note earned simple interest at 8% per annum over its three year term, payable on the Maturity Date. It was repayable early without premium or penalty at the Company’s option at any time and it had to be repaid within 45 days of the closing of an equity offering yielding the Company net cash proceeds of at least $15,000,000. Such an equity offering closed on August 27, 2014 (see Note 1) and the IntegenX Note was repaid on September 12, 2014.

The IntegenX Note was recorded using an effective interest rate of 11.60% and is summarized as follows at September 30, 2014 and January 6, 2014:

	September 30, 2014			January 6, 2014
IntegenX Notes Payable:
Face value	$	1,250,000		$	1,250,000
Interest added to principal		68,219			—
Stated value		1,318,219			1,250,000
Debt discount, net of accumulated amortization of $21,454 and nil at September 12 and January 6, 2014, respectively		128,546			150,000
Notes payable, net of debt discount, prior to repayment		1,189,673			1,100,000
Loss on extinguishment of debt		128,546			—
Balance repaid to IntegenX		(1,318,219	)		—
Notes payable, net of debt discount	$	—		$	1,100,000

The Company recorded a loss on early extinguishment of debt of $128,546 as a result of the repayment of the IntegenX Note on September 12, 2014.

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Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill [Table Text Block]

Balance at January 1, 2014	$	—
Additions (see Note 3)		990,000
Balance at September 30, 2014	$	990,000

Schedule of Finite-Lived Intangible Assets [Table Text Block]

	Gross		Net
	Carrying		Accumulated		Intangible
	Amount		Amortization		Assets
Purchased technology	$	360,000	$	75,000	$	285,000
Customer lists and trademarks		1,500,000		298,400		1,201,600
Total as of September 30, 2014	$	1,860,000	$	373,400	$	1,486,600

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

Year ending December 31,
2014 (three months remaining)	$	124,500
2015		449,900
2016		421,000
2017		313,900
2018		148,500
Thereafter		28,800
Total amortization	$	1,486,600

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Contingencies

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

NOTE 14.  Contingencies

From time to time the Company may be involved in claims arising in connection with its business. Based on information currently available, the Company believes that the amount, or range, of reasonably possible losses in connection with any pending actions against it, including the matter described below, in excess of established reserves, in the aggregate, not to be material to its consolidated financial condition or cash flows. However, losses may be material to the Company’s operating results for any particular future period, depending on the level of income or loss for such period.

Coalesce v. WaferGen.  On April 24, 2012, an action entitled Coalesce Corporation (“Coalesce”) v. WaferGen Bio-systems, Inc. was filed in the Alameda County Superior Court. Coalesce, a company that had been providing marketing services between 2006 and 2010, sued the Company for alleged non-payment of sums due, breach of contract, misrepresentation and unjust enrichment. On September 5, 2012, Coalesce filed an amended complaint, with additional claims, for compensatory damages in excess of $500,000 and other compensation. In August 2014, the plaintiff and Company agreed to an out-of-court settlement. Related legal costs were expensed as incurred.

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Warrants

9 Months Ended

Sep. 30, 2014

Warrants Disclosure [Abstract]

Warrants Disclosure [Text Block]

NOTE 10.  Warrants

A summary of outstanding common stock warrants as of September 30, 2014, is as follows:

Securities Into Which	Total Warrants	Warrants Recorded	Exercise	Expiration
Warrants are Convertible	Outstanding	as Liabilities	Price	Date
Common stock	4,600,000	—	$5.00	August 2019
Common stock	120,000	—	$6.25	August 2019
Common stock	307,015	307,015	$7.59	December 2014 and January 2015
Common stock	612,838	110,527	$26.00	August and September 2018
Common stock	102	—	$834.88	December 2014
Common stock	96	—	$1,459.05	December 2015
Common stock	205	—	$1,490.85	July 2015
Common stock	3,019	—	$1,540.55	July 2015
Common stock	201	—	$2,981.70	December 2014 and November 2015
Total	5,643,476	417,542

In addition, there are 25.88 unit warrants outstanding which expire in August and September 2018, 0.35 of which are recorded as liabilities, each entitling the holder to purchase, for $50,000, 2,500 shares of common stock and 1,250 warrants to purchase one share of common stock at an exercise price of $26.00, expiring in August and September 2018.

The warrants expiring in August 2019 comprise 4,600,000 warrants issued to investors and 120,000 warrants issued to underwriters in the 2014 Public Offering (see Note 1).

The warrants expiring in December 2014 and January 2015 were originally issued in December 2009 and January 2010 with an exercise price of $2,484.75 and entitled the holders thereof to purchase an aggregate of 972 shares. As a result of anti-dilution adjustments with respect to such warrants pursuant to their terms, such warrants, as of May 27, 2011, had an exercise price of $834.88 and entitled the holders thereof to purchase an aggregate of 2,893 shares. In May 2011, members of management with warrants to purchase a total of 102 shares (after giving effect to prior anti-dilution adjustments) waived their right to further anti-dilution adjustments. As a result of anti-dilution adjustments with respect to the remaining 2,791 warrants pursuant to their terms, such warrants, as of September 30, 2014, had an exercise price of $7.59 and entitled the holders thereof to purchase an aggregate of 307,015 shares.

The Company records warrants and unit warrants with certain anti-dilution protection or certain cash settlement provisions as liabilities, with the estimated fair value of those warrants for which no anti-dilution adjustment is projected prior to the expiration date being calculated using the Black-Scholes valuation model, with all others being calculated using a Monte Carlo Simulation approach, using key input variables provided by management, at each reporting date. Changes in fair value are recorded as gains or losses on revaluation in non-operating income (expense).

The warrants expiring in August and September 2018 comprise 236,900 warrants issued in the 2013 Exchange and 341,713 and 34,225 issued in the initial and final closing, respectively, of the 2013 Private Placement. As the result of a provision contained in these warrants and the unit warrants that were issued in August and September 2013 that would have required cash settlement in certain rare circumstances, these securities were required to be classified as liabilities on the Company’s Consolidated Balance Sheet. 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 holders of these warrants and unit warrants to consent to amendments to their terms to enable the Company to reclassify them as equity.

On March 31, 2014, the Company amended the terms of 412,933 warrants and 22.54 unit warrants such that the liability was settled, having received consent from their holders. The fair value of the securities settled and reclassified as equity on March 31, 2014, was estimated to be $6,109,179. On June 30, 2014, the Company amended the terms of a further 89,378 warrants and 2.99 unit warrants such that the liability was settled, having received consent from their holders after March 31, 2014. The fair value of the securities settled and reclassified as equity on June 30, 2014, was estimated to be $711,960, based on assumptions described below. There were no such reclassifications in the three months ended September 30, 2014.

The total fair values of those warrants and unit warrants accounted for as liabilities as of September 30, 2014 and 2013, was estimated to be $362,836 and $8,299,415, respectively, using a closing stock price of $4.35 and $19.60, respectively, and based on the following assumptions:

		September 30, 2014			September 30, 2013
Risk-free interest rate	0		0.02% - 1.28	%		0.07% - 1.01	%
Expected remaining term		0.23 - 3.60 Years			0.71 - 4.00 Years
Expected volatility			118.65% - 140.41	%		85.06% - 112.18	%
Dividend yield			0	%		0	%

The aggregate fair value of such warrants and unit warrants at December 31, 2013 and 2012, was estimated to be $9,147,507 and $102,695, respectively, and the aggregate fair value of warrants and unit warrants issued during the three months ended September 30, 2013, was estimated to be $7,962,081 on their issuance dates. During the nine months ended September 30, 2014, to the extent that it did not arise from settlements, a decrease in the fair value of the warrant derivative liability of $1,963,532 was recorded as a revaluation gain, and during the nine months ended September 30, 2013, to the extent that it did not arise from new issuances, the increase in the fair value of the warrant derivative liability of $234,639 was recorded as a revaluation loss (see Note 11).

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Fair Value of Financial Instruments (Details) - Reconciliation of all liabilities measured at fair value (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Dec. 31, 2012
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance	$ 362,836	$ 10,025,132	$ 9,147,507	$ 2,208,184
Issuances		7,962,081
Revaluation (gains) losses included in other income and expenses	(1,963,532)	(145,133)
Settlements	(6,821,139)
Total gains (losses) included in other income and expenses attributable to liabilities still held	1,276,897	(129,796)
Warrant [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance	362,836	8,299,415	9,147,507	102,695
Issuances		7,962,081
Revaluation (gains) losses included in other income and expenses	(1,963,532)	234,639
Settlements	(6,821,139)
Total gains (losses) included in other income and expenses attributable to liabilities still held	1,276,897	(234,640)
Conversion Element of Promissory Notes [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance				274,928
Issuances
Revaluation (gains) losses included in other income and expenses		(274,928)
Settlements
Total gains (losses) included in other income and expenses attributable to liabilities still held
Conversion Element of Convertible Preferred Stock [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance		1,300,923		1,210,909
Issuances
Revaluation (gains) losses included in other income and expenses		90,014
Settlements
Total gains (losses) included in other income and expenses attributable to liabilities still held		(90,014)
Convertible Preferred Stock Derivatives [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance		424,794		619,652
Issuances
Revaluation (gains) losses included in other income and expenses		(194,858)
Settlements
Total gains (losses) included in other income and expenses attributable to liabilities still held		$ 194,858

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Preferred Stock

9 Months Ended

Sep. 30, 2014

Disclosure Text Block Supplement [Abstract]

Preferred Stock [Text Block]

NOTE 8.  Preferred Stock

The Company has 10,000,000 shares of preferred stock authorized. Effective August 27, 2013, the Company designated 3,663 shares as Series 1 Convertible Preferred Stock. The Series 1 Convertible Preferred Stock has no voting rights, and holders are entitled to a liquidation preference equal to $0.001 per share. Each share of Series 1 Convertible Preferred Stock is convertible into 2,515.3436 shares of common stock, subject to an ownership cap whereby conversion may not occur to the extent the holder would own more than 9.98% of the common stock following conversion.

On August 27, 2013, the Company issued 2,987.0168 shares of Series 1 Convertible Preferred Stock in exchange for CPNs (see Note 6) and Series A-1 Convertible Preferred Stock (see below) and sold 646.0351 shares of Series 1 Convertible Preferred Stock in a private placement (the “2013 Private Placement”). As of September 30, 2014, all the 3,633.0519 shares of Series 1 Convertible Preferred Stock have been converted into 913,837 shares of common stock.

Effective May 26, 2011, the Company designated 4,500,000 shares as Series A-1 Convertible Preferred Stock and 4,500,000 shares as Series A-2 Convertible Preferred Stock (together, the “Series A Preferred Stock”). Each 99.39 shares of Series A Preferred Stock was convertible into one share of common stock, subject to an ownership cap, and entitled the holder to receive dividends, as, when and if declared by the Company’s Board of Directors, at an annual rate of 5% of the stated value per share of the respective series. Such dividends accrued, compounding quarterly, and accumulated on each share of Series A Preferred Stock from the date of issuance, whether or not declared, until November 27, 2014, when the right to further dividends would cease. The Series A Preferred Stock had no voting rights, and in the event of liquidation ranked senior to common stock.

Effective May 27, 2011, the Company sold an aggregate of 2,937,500 shares of Series A-1 Convertible Preferred Stock with a stated value of $5.20 per share. $131,219 and $547,171 was accrued with respect to undeclared dividends in the three and nine months ended September 30, 2013, respectively. All of the Series A-1 Convertible Preferred Stock was exchanged for common stock and Series 1 Convertible Preferred Stock in the 2013 Exchange, following which the Company retired all of the Series A Preferred Stock, none of which remains issued and outstanding and none will be issued in the future.

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Stock Awards

9 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE 9.  Stock Awards

The Company has awards outstanding under three plans - the 2003 Incentive Stock Plan (the “2003 Plan”), the 2007 Stock Option Plan (the “2007 Plan”) and the 2008 Stock Incentive Plan (the “2008 Plan”) (collectively, the “Plans”). In addition, there are 98,932 inducement options outstanding that were awarded to executive officers on August 27, 2014, not covered by the Plans, with the same standard terms as non-qualified stock options awarded under the 2008 Plan. Under the 2003 Plan and 2007 Plan, incentive stock options, non-qualified stock options, restricted stock and restricted stock units could be granted. Awards vested over varying periods,as specified by the Company’s Board of Directors for each grant, and are exercisable for a maximum period of ten years after date of grant. Both of these plans have been frozen, resulting in no further shares being available for grant.

The Company presently issues most of its awards under the 2008 Plan, initially adopted by the Company’s stockholders on June 5, 2008, and subsequently amended to authorize the issuance of additional shares of the Company’s common stock. This includes an amendment adopted by the Company’s stockholders on May 29, 2014, which increased the total number of shares authorized for issuance from 14,589 to 314,589. The purpose of the 2008 Plan is to provide an incentive to retain the employment of directors, officers, consultants, advisors and employees of the Company, to attract new personnel whose training, experience and ability are considered valuable, to encourage the sense of proprietorship, and to stimulate the active interest of such persons in the Company’s development and financial success. Under the 2008 Plan, the Company is authorized to issue incentive stock options, non-qualified stock options, restricted stock and restricted stock units. Awards that expire or are canceled generally become available for issuance again under the 2008 Plan. The number of shares of the Company’s common stock available under the 2008 Plan will be subject to adjustment in the event of a stock split, stock dividend or other extraordinary dividend, or other similar change in the Company’s common stock or capital structure. Awards may vest over varying periods, as specified by the Company’s Board of Directors for each grant, and have a maximum term of seven years from the grant date. The 2008 Plan is administered by the Company’s Board of Directors.

The Company has issued both options and restricted stock (including restricted stock units), mostly under the Plans. Restricted stock grants afford the recipient the opportunity to receive shares of common stock, subject to certain terms, whereas options give them the right to purchase common stock at a set price. Both the Company’s options and restricted stock issued to employees generally have vesting restrictions that are eliminated over three or four years, although vesting may be over a shorter period, or may occur on the grant date, depending on the terms of each individual award.

The weighted average grant date fair value of options awarded in the nine months ended September 30, 2014 and 2013, was $6.33 and $37.25, respectively. Fair values were estimated using the following assumptions:

		Nine Months Ended September 30,
		2014			2013
Risk-free interest rate	0		1.43% - 1.57	%		0.71% - 1.22	%
Expected term		4.75 Years			4.75 Years
Expected volatility			93.89% - 105.97	%		96.73% - 108.14	%
Dividend yield			0	%		0	%

A summary of stock option and restricted stock transactions in the nine months ended September 30, 2014, is as follows:

				Stock Options					Restricted Stock
							Weighted					Weighted
	Shares			Number of			Average		Number of			Average
	Available			Options			Exercise		Shares			Grant Date
	For Grant			Outstanding			Price		Outstanding			Fair Value
Balance at January 1, 2014		2,779			11,353		$	353.92		—		$	—
2008 Plan Amendment		300,000			—		$	—		—		$	—
Granted		(303,970	)		178,490		$	8.79		224,412		$	4.87
Forfeited		6,404			(404	)	$	99.21		(6,000	)	$	4.55
Canceled		1,830			(1,863	)	$	208.58		––		$	––
Balance at September 30, 2014		7,043			187,576		$	27.48		218,412		$	4.87

No options were exercised during the nine months ended September 30, 2014 or 2013. The aggregate intrinsic value of options outstanding and exercisable at September 30, 2014, was nil, based on our common stock closing price of $4.35. Aggregate intrinsic value is the total pretax amount (i.e., the difference between the Company’s stock price and the exercise price) that would have been received by the option holders had all their in-the-money options been exercised.

The amounts expensed for stock-based compensation totaled $175,746 and $77,283 for the three months ended September 30, 2014 and 2013, respectively, and $935,280 and $260,068 for the nine months ended September 30, 2014 and 2013, respectively.

At September 30, 2014, the total stock-based compensation cost not yet recognized, net of estimated forfeitures, was $1,269,643. This cost is expected to be recognized over an estimated weighted average amortization period of 2.33 years. No amounts related to stock-based compensation costs have been capitalized. The tax benefit and the resulting effect on cash flows from operating and financing activities related to stock-based compensation costs were not recognized as the Company currently provides a full valuation allowance for all of its deferred taxes.

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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

NOTE 11.  Fair Value of Financial Instruments

Fair value measurements are determined under a three-level hierarchy for fair value measurements that prioritizes the inputs to valuation techniques used to measure fair value, distinguishing between market participant assumptions developed based on market data obtained from sources independent of the reporting entity (“observable inputs”) and the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (“unobservable inputs”).

Fair value is the price that would be received to sell an asset or would be paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. In determining fair value, the Company primarily uses prices and other relevant information generated by market transactions involving identical or comparable assets (“market approach”). The Company also considers the impact of a significant decrease in volume and level of activity for an asset or liability when compared with normal activity to identify transactions that are not orderly.

The highest priority is given to unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Securities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Thethree hierarchy levels are defined as follows:

Level 1 – Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly;

Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

The following tables present the Company’s liabilities that are measured at fair value on a recurring basis at September 30, 2014 and December 31, 2013:

	Level 1		Level 2		Level 3		Total
September 30, 2014
Financial Liabilities:
Warrant derivative liabilities	$	—	$	—	$	362,836	$	362,836
Total liabilities	$	—	$	—	$	362,836	$	362,836

	Level 1		Level 2		Level 3		Total
December 31, 2013
Financial Liabilities:
Warrant derivative liabilities	$	—	$	—	$	9,147,507	$	9,147,507
Total liabilities	$	—	$	—	$	9,147,507	$	9,147,507

The following tables present a reconciliation of all liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2014 and 2013:

				Conversion
				Element of		Conversion
	Warrant			Promissory		Element of		Series A CPS
	Derivatives			Notes		Series B CPS		Derivatives		Total
Balance at January 1, 2014	$	9,147,507		$	—	$	—	$	—	$	9,147,507
Issuances		—			—		—		—		—
Revaluation gains included in other income and expenses		(1,963,532	)		—		—		—		(1,963,532	)
Settlements		(6,821,139	)		—		—		—		(6,821,139	)
Balance at September 30, 2014	$	362,836		$	—	$	—	$	—	$	362,836
Total gains included in other income and expenses attributable to liabilities still held as of September 30, 2014	$	1,276,897		$	—	$	—	$	—	$	1,276,897

				Conversion
				Element of			Conversion
	Warrant			Promissory			Element of			Series A CPS
	Derivatives			Notes			Series B CPS			Derivatives			Total
Balance at January 1, 2013	$	102,695		$	274,928		$	1,210,909		$	619,652		$	2,208,184
Issuances		7,962,081			—			—			—			7,962,081
Revaluation (gains) losses included in other income and expenses		234,639			(274,928	)		90,014			(194,858	)		(145,133	)
Settlements		—			—			—			—			—
Balance at September 30, 2013	$	8,299,415		$	—		$	1,300,923		$	424,794		$	10,025,132
Total gains (losses) included in other income and expenses attributable to liabilities still held as of September 30, 2013	$	(234,640	)	$	—		$	(90,014	)	$	194,858		$	(129,796	)

Assumptions used in evaluating the warrant derivative liabilities, the conversion element of the promissory notes, the conversion element of the Series B CPS and the Series A CPS derivative liabilities are discussed in Notes 10, 6, 7 and 7, respectively. The principal assumptions used, and their impact on valuations, are as follows:

Risk-Free Interest Rate.  This is the U.S. Treasury rate for the measurement date having a term equal to the weighted average expected remaining term of the instrument. An increase in the risk-free interest rate will increase the fair value and the associated derivative liability.

Expected Remaining Term.This is the period of time over which the instrument is expected to remain outstanding and is based on management’s estimate, taking into consideration the remaining contractual life, historical experience and the possibility of liquidation. An increase in the expected remaining term will increase the fair value and the associated derivative liability.

Expected Volatility.This is a measure of the amount by which the Company’s common stock price has fluctuated or is expected to fluctuate. The Company applies equal weighting to the Company’s own historic volatility and the historic volatility of a group of publicly traded companies over the retrospective period corresponding to the expected remaining term of the instrument on the measurement date. Since the 2013 Exchange, the Company has applied a reduced weighting to its own historic volatility during the period in which it was highly leveraged. The group of publicly traded companies is selected from the same industry or market index, with extra weighting attached to those companies most similar in terms of business activity, size and financial leverage. An increase in the expected volatility will increase the fair value and the associated derivative liability.

Dividend Yield.The Company has not made any dividend payments and does not plan to pay dividends in the foreseeable future. An increase in the dividend yield will decrease the fair value and the associated derivative liability.

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Contingencies (Details) (USD $)	0 Months Ended	9 Months Ended
	Sep. 05, 2012	Sep. 30, 2014
Contingencies (Details) [Line Items]
Loss Contingency, Name of Plaintiff		Coalesce Corporation
Coalescev Wafer Gen [Member]
Contingencies (Details) [Line Items]
Loss Contingency, Allegations		On April 24, 2012, an action entitled Coalesce Corporation (“Coalesce”) v. WaferGen Bio-systems, Inc. was filed in the Alameda County Superior Court. Coalesce, a company that had been providing marketing services between 2006 and 2010, sued the Company for alleged non-payment of sums due, breach of contract, misrepresentation and unjust enrichment. On September 5, 2012, Coalesce filed an amended complaint, with additional claims, for compensatory damages in excess of $500,000 and other compensation. In August 2014, the plaintiff and Company agreed to an out-of-court settlement. Related legal costs were expensed as incurred
Loss Contingency, Domicile of Litigation		Alameda County Superior Court
Loss Contingency, Damages Sought		in excess of $500,000
Loss Contingency, Damages Sought, Value	$ 500,000

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Concentrations (Details) - Customers accounting for more than 10% of total revenues (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Concentration Risk [Line Items]
Revenue, Major Customer	$ 1,250,201	$ 389,547	$ 4,389,622	$ 814,282
Customer A [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Revenue, Major Customer	166,919		166,919
Revenue,Major Customer, Percentage	13.00%		4.00%
Customer B [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Revenue, Major Customer	125,000	125,000	375,000	333,333
Revenue,Major Customer, Percentage	10.00%	32.00%	9.00%	41.00%
Customer C [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Revenue, Major Customer	35,307	123,201	260,773	123,201
Revenue,Major Customer, Percentage	3.00%	32.00%	6.00%	15.00%
Customer D [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Revenue, Major Customer	983	114,600	12,181	114,600
Revenue,Major Customer, Percentage	0.00%	29.00%	0.00%	14.00%
Customer E [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Revenue, Major Customer	$ 194	$ 7,664	$ 164,529	$ 168,906
Revenue,Major Customer, Percentage	0.00%	2.00%	4.00%	21.00%

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Acquisitions (Details) - Schedule of Purchase Price (USD $)	0 Months Ended	9 Months Ended
	Jan. 06, 2014	Sep. 30, 2014	Sep. 30, 2013	Jan. 06, 2014
Schedule of Purchase Price [Abstract]
Cash	$ 2,000,000	$ 2,000,000
Promissory note (see Note 6)	1,100,000
Contingent earn-out payments				410,000
Total	$ 3,510,000

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Convertible Preference Shares of Former Subsidiary (Details) - Series A CPS Fair values estimated assumptions (Series A CPS Derivative Liability [Member])	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Convertible Preference Shares of Former Subsidiary (Details) - Series A CPS Fair values estimated assumptions [Line Items]
Dividend yield	0.00%	0.00%
Minimum [Member]
Convertible Preference Shares of Former Subsidiary (Details) - Series A CPS Fair values estimated assumptions [Line Items]
Risk-free interest rate	0.02%	0.11%
Expected remaining term	36 days	200 days
Expected volatility	77.99%	123.55%
Maximum [Member]
Convertible Preference Shares of Former Subsidiary (Details) - Series A CPS Fair values estimated assumptions [Line Items]
Risk-free interest rate	0.03%	0.15%
Expected remaining term	58 days	328 days
Expected volatility	78.79%	127.94%

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Acquisitions (Tables)

9 Months Ended

Sep. 30, 2014

Business Combinations [Abstract]

Schedule of Business Acquisition Purchase Price [Table Text block]

Cash	$	2,000,000
Promissory note (see Note 6)		1,100,000
Contingent earn-out payments		410,000
Total	$	3,510,000

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

Inventory	$	606,000
Property and equipment		118,000
Intangible assets:
Customer lists and trademarks		1,500,000
Purchased technology		360,000
Goodwill (1)		990,000
Total assets		3,574,000
Liabilities – accrued vacation		(64,000	)
Total purchase price	$	3,510,000

Business Combination, Separately Recognized Transactions [Table Text Block]

	Period Ended September 30,
	Three Months			Nine Months
Revenue	$	520,085		$	1,583,207
Net loss	$	(665,000	)	$	(1,918,000	)

Business Acquisition, Pro Forma Information [Table Text Block]

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Total revenue	$	1,250,201		$	907,617		$	4,389,622		$	2,830,806
Net loss	$	(2,651,152	)	$	(11,216,243	)	$	(7,200,865	)	$	(18,879,658	)
Net loss per share - basic and diluted	$	(0.97	)	$	(44.96	)	$	(4.72	)	$	(189.34	)

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Stock Awards (Tables)

9 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

		Nine Months Ended September 30,
		2014			2013
Risk-free interest rate	0		1.43% - 1.57	%		0.71% - 1.22	%
Expected term		4.75 Years			4.75 Years
Expected volatility			93.89% - 105.97	%		96.73% - 108.14	%
Dividend yield			0	%		0	%

Schedule of Share-based Compensation, Activity [Table Text Block]

				Stock Options					Restricted Stock
							Weighted					Weighted
	Shares			Number of			Average		Number of			Average
	Available			Options			Exercise		Shares			Grant Date
	For Grant			Outstanding			Price		Outstanding			Fair Value
Balance at January 1, 2014		2,779			11,353		$	353.92		—		$	—
2008 Plan Amendment		300,000			—		$	—		—		$	—
Granted		(303,970	)		178,490		$	8.79		224,412		$	4.87
Forfeited		6,404			(404	)	$	99.21		(6,000	)	$	4.55
Canceled		1,830			(1,863	)	$	208.58		––		$	––
Balance at September 30, 2014		7,043			187,576		$	27.48		218,412		$	4.87

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Convertible Preference Shares of Former Subsidiary (Details) - Transactions along with the issuance of Series C CPS (USD $)	9 Months Ended									0 Months Ended	9 Months Ended
	Sep. 30, 2014 Series A Preferred Stock [Member] Convertible Preferred Stock [Member] 07/18/2008 [Member]	Sep. 30, 2014 Series A Preferred Stock [Member] Convertible Preferred Stock [Member] 11/27/2008 [Member]	Sep. 30, 2014 Series B Preferred Stock [Member] Convertible Preferred Stock [Member] 06/08/2009 [Member]	Sep. 30, 2014 Series B Preferred Stock [Member] Convertible Preferred Stock [Member] 03/09/2010 [Member]	Sep. 30, 2014 Series B Preferred Stock [Member] Convertible Preferred Stock [Member] 09/23/2009 [Member]	Sep. 30, 2014 Series B Preferred Stock [Member] Convertible Preferred Stock [Member] 05/13/2010 [Member]	Sep. 30, 2014 Series B Preferred Stock [Member] Convertible Preferred Stock [Member] 09/18/2009 [Member]	Sep. 30, 2014 Subtotal [Member]	Sep. 30, 2014 Series C Preferred Stock [Member] Convertible Preferred Stock [Member] 03/10/2011 [Member]	Mar. 10, 2011 Series C Preferred Stock [Member] Convertible Preferred Stock [Member]	Sep. 30, 2014 Convertible Preferred Stock [Member]
Class of Stock [Line Items]
Number of CPS (in Shares)	444,444	444,444	111,111	111,111	222,222	222,222	188,057	1,743,611	3,233,734		4,977,345
Initial Investor	MTDC	MTDC	EEV	EEV	PMSB	PMSB	KMP		MTDC
Gross Proceeds	$ 1,000,000	$ 1,000,000	$ 250,000	$ 250,000	$ 500,000	$ 500,000	$ 423,128	$ 3,923,128	$ 5,000,000		$ 8,923,128
Issuance (Costs)	(30,000)	(30,000)	(19,393)	(8,929)	(7,500)	(5,000)	(11,319)	(112,141)	(6,272)	(6,272)	(118,413)
Exchange Gain (loss)			(18,029)	(3,005)				(21,034)	58,575		37,541
Net Cash Proceeds	$ 970,000	$ 970,000	$ 212,578	$ 238,066	$ 492,500	$ 495,000	$ 411,809	$ 3,789,953	$ 5,052,303	$ 5,000,000	$ 8,842,256
Date if Exchanged			08/17/2010	08/17/2010	10/11/2013	10/11/2013	09/29/2010
CPS Outstanding (in Shares)	444,444	444,444						888,888	3,233,734		4,122,622

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Goodwill and Other Intangible Assets (Details) - Other intangible assets (USD $)	Sep. 30, 2014	Dec. 31, 2013
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 1,860,000
Net Accumulated Amortization	373,400
Intangible Assets	1,486,600
Technology-Based Intangible Assets [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	360,000
Net Accumulated Amortization	75,000
Intangible Assets	285,000
Customer Lists and Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,500,000
Net Accumulated Amortization	298,400
Intangible Assets	$ 1,201,600

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Cash flows from operating activities:
Net loss	$ (7,429,562)	$ (17,752,997)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	633,049	560,220
Stock-based compensation	935,280	260,068
Gain on revaluation of derivative liabilities, net	(1,963,532)	(145,133)
Interest converted to principal on long-term debt	68,219	547,866
Provision for excess and obsolete inventory	(682,632)	492
Amortization of debt discount	250,768	2,094,335
Loss on extinguishment of debt	128,546	4,970,410
Issuance of warrants due to organic change		2,553,318
Change in operating assets and liabilities:
Accounts receivable	(1,387,171)	(41,854)
Inventories	583,152	131,151
Prepaid expenses and other assets	(216,140)	99,589
Accounts payable	916,801	248,105
Accrued payroll and related costs	586,059	1,055,332
Other accrued expenses	(241,253)	490,692
Net cash used in operating activities	(7,818,416)	(4,928,406)
Cash flows from investing activities:
Purchase of property and equipment	(215,221)	(41,906)
Acquisition of business	(2,000,000)
Net cash used in investing activities	(2,215,221)	(41,906)
Cash flows from financing activities:
Net proceeds from issuance of common stock and warrants (and Series 1 Convertible Preferred Stock in 2013 only)	17,971,681	13,393,162
Repayment of promissory note	(1,318,219)
Net cash provided by financing activities	16,653,462	13,393,162
Effect of exchange rates on cash		(268,562)
Net increase in cash and cash equivalents	6,619,825	8,154,288
Cash and cash equivalents at beginning of the period	10,708,646	6,328,753
Cash and cash equivalents at end of the period	17,328,471	14,483,041
Supplemental disclosures of cash flow information:
Cash paid for interest	69,178	4,341
Cash paid for income taxes	3,100	26,182
Cash (received) for income taxes		(1,051)
Supplemental disclosure of non-cash investing and financing activities:
Issuance of promissory note, net of debt discount, in business acquisition	1,100,000
Initial valuation of revenue earn-out contingency in business acquisition	410,000
Warrant derivative liabilities transferred to equity on waiver of potential cash settlement provisions	6,821,139
Inventory transferred to property and equipment	44,794
Exchange of convertible promissory notes for common stock and Series 1 Convertible Preferred Stock		6,035,360
Exchange of Series A-1 Convertible Preferred Stock for common stock and Series 1 Convertible Preferred Stock		9,838,569
Issuance of warrants to underwriters and placement agents	395,766	1,147,021
Accretion on Series 1 Convertible Preferred Stock associated with beneficial conversion feature		$ 898,623

XML

Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

NOTE 5.  Goodwill and Other Intangible Assets

Changes in the carrying amount of goodwill in the nine months ended September 30, 2014, were as follows:

Balance at January 1, 2014	$	—
Additions (see Note 3)		990,000
Balance at September 30, 2014	$	990,000

Other intangible assets as of September 30, 2014, consist of:

	Gross		Net
	Carrying		Accumulated		Intangible
	Amount		Amortization		Assets
Purchased technology	$	360,000	$	75,000	$	285,000
Customer lists and trademarks		1,500,000		298,400		1,201,600
Total as of September 30, 2014	$	1,860,000	$	373,400	$	1,486,600

The estimated future amortization expenses by fiscal year are as follows:

Year ending December 31,
2014 (three months remaining)	$	124,500
2015		449,900
2016		421,000
2017		313,900
2018		148,500
Thereafter		28,800
Total amortization	$	1,486,600

Intangible asset amortization expense was $124,400 and nil for the three months ended September 30, 2014 and 2013, respectively, and $373,400 and nil for the nine months ended September 30, 2014 and 2013, respectively.

XML

Warrants (Details) - Aggregate fair value of such warrants (Warrant [Member])	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Assumption for Fair Value as of Balance Sheet Date of Assets or Liabilities that relate to Transferor's Continuing Involvement [Line Items]
Dividend yield	0.00%	0.00%
Minimum [Member]
Assumption for Fair Value as of Balance Sheet Date of Assets or Liabilities that relate to Transferor's Continuing Involvement [Line Items]
Risk-free interest rate	0.02%	0.07%
Expected remaining term	83 days	259 days
Expected volatility	118.65%	85.06%
Maximum [Member]
Assumption for Fair Value as of Balance Sheet Date of Assets or Liabilities that relate to Transferor's Continuing Involvement [Line Items]
Risk-free interest rate	1.28%	1.01%
Expected remaining term	3 years 219 days	4 years
Expected volatility	140.41%	112.18%

XML

Warrants (Tables)

9 Months Ended

Sep. 30, 2014

Warrants (Tables) [Line Items]

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]

Securities Into Which	Total Warrants	Warrants Recorded	Exercise	Expiration
Warrants are Convertible	Outstanding	as Liabilities	Price	Date
Common stock	4,600,000	—	$5.00	August 2019
Common stock	120,000	—	$6.25	August 2019
Common stock	307,015	307,015	$7.59	December 2014 and January 2015
Common stock	612,838	110,527	$26.00	August and September 2018
Common stock	102	—	$834.88	December 2014
Common stock	96	—	$1,459.05	December 2015
Common stock	205	—	$1,490.85	July 2015
Common stock	3,019	—	$1,540.55	July 2015
Common stock	201	—	$2,981.70	December 2014 and November 2015
Total	5,643,476	417,542

Warrant [Member]

Warrants (Tables) [Line Items]

Schedule of Assumptions for Fair Value as of Balance Sheet Date of Assets or Liabilities that relate to Transferor's Continuing Involvement [Table Text Block]

		September 30, 2014			September 30, 2013
Risk-free interest rate	0		0.02% - 1.28	%		0.07% - 1.01	%
Expected remaining term		0.23 - 3.60 Years			0.71 - 4.00 Years
Expected volatility			118.65% - 140.41	%		85.06% - 112.18	%
Dividend yield			0	%		0	%

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Inventories (Details) - Inventories (USD $)	Sep. 30, 2014	Dec. 31, 2013
Inventories [Abstract]
Raw materials	$ 63,800	$ 125,068
Work in process	169,067	46,974
Finished goods	720,469	120,608
Inventories	$ 953,336	$ 292,650

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Accounting Policies, by Policy (Policies)

9 Months Ended

Sep. 30, 2014

Accounting Policies, by Policy (Policies) [Line Items]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation – The Company has prepared the accompanying condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to these rules and regulations. These condensed consolidated financial statements should be read in conjunction with our audited financial statements and footnotes related thereto for the year ended December 31, 2013, included in our Form 10-K filed with the SEC. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the Company’s financial position and the results of its operations and cash flows. The results of operations for such interim periods are not necessarily indicative of the results to be expected for the full year.

Consolidation, Policy [Policy Text Block]

Basis of Consolidation – The condensed consolidated financial statements include the financial statements of WaferGen Bio-systems, Inc. and its subsidiaries. All significant transactions and balances between the WaferGen Bio-systems, Inc. and its subsidiaries have been eliminated in consolidation.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates – Preparing condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results and outcomes could differ from these estimates and assumptions.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign Currencies – Assets and liabilities of non-U.S. subsidiaries for which the local currency is the functional currency are translated into U.S. dollars at the exchange rate on the balance sheet date. Revenues and expenses are translated at the average rates of exchange prevailing during each reporting period. Translation adjustments resulting from this process are charged or credited to other comprehensive income (loss). Foreign exchange gains and losses for assets and liabilities of the Company’s non-U.S. subsidiaries for which the functional currency is the U.S. dollar are recorded in miscellaneous income (expense) in the Company’s condensed consolidated statements of operations.

Receivables, Policy [Policy Text Block]

Accounts Receivable – An allowance for doubtful accounts will be recorded based on a combination of historical experience, aging analysis, and information on specific accounts. Account balances will be written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Inventory, Policy [Policy Text Block]

Inventory – Inventory is recorded at the lower of cost (first-in, first-out) or market value. Additionally, the Company evaluates its inventory in terms of excess and obsolete exposures and records provisions as needed.

Goodwill and Intangible Assets, Policy [Policy Text Block]

Goodwill and Long-lived Intangible Assets–Goodwill is tested for impairment on an annual basis in the fourth quarter and between annual tests if events occur or circumstances indicate that the carrying amount of goodwill may not be recoverable. Impairment losses, if any, are recorded in the statement of operations as “Impairment of goodwill.”

Long-lived intangibles are carried at cost less accumulated amortization and are subject to review for impairment when events or circumstances indicate that the carrying value may not be recoverable. Amortization is recognized over the estimated useful life of the respective asset on a straight-line basis except for customer lists, which are amortized in proportion to the present value of projected cash flows within their estimated useful lives, since this methodology more closely reflects the pattern in which economic benefits are derived.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition – The Company recognizes revenue when (i) delivery of product has occurred or services have been rendered, (ii) there is persuasive evidence of a sale arrangement, (iii) selling prices are fixed or determinable, and (iv) collectability from the customers (individual customers and distributors) is reasonably assured. Revenue consists primarily of revenue generated from the sale of the Company’s products. Revenue is recorded when the risk and rewards of ownership are transferred to the Company’s customers (individual customers and distributors). This generally occurs when the Company’s products are shipped from its facility as title has passed. Revenue is recorded net of estimated cash discounts. The Company estimates and accrues an allowance for sales returns at the time the product is sold. To date, sales returns have not been material.

Revenue from multi-deliverable arrangements is recognized for each element on delivery of product or completion of service. A typical multi-deliverable arrangement would be the shipment of capital equipment to a customer, followed by the delivery of services or of expendable equipment, provided such delivery is both probable and substantially within the Company’s control. Revenue for each deliverable is allocated based on full list selling prices, although if none of the deliverables is disproportionately discounted relative to the overall discount, this allocation is approximated by using the actual selling price of each deliverable to the customer. The actual cost of revenue for each deliverable is recognized when the revenue for that deliverable is recognized.

Governmental Subsidies Policy [Policy Text Block]

Governmental Subsidies – Incentives received from governments in the form of grants are recorded as a reduction in expense in accordance with their purpose. Grants awarded for the purpose of matching specified expenditures are not recognized until a definitive agreement has been signed by both parties; thereafter income is recognized to the extent that the related expenses have been incurred. The Company recognized governmental subsidies of $161,981 and $86,577 in the three months ended September 30, 2014 and 2013, respectively, and $334,521 and $236,167 in the nine months ended September 30, 2014 and 2013, respectively, which were offset against operating expenses in the statement of operations.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-Based Compensation – The Company measures the fair value of all stock-based awards to employees, including stock options, on the grant date and records the fair value of these awards, net of estimated forfeitures, to compensation expense over the service period. The fair value of awards to consultants is measured on the dates on which performance of services is completed, with interim valuations recorded at balance sheet dates while performance is in progress. The fair value of options is estimated using the Black-Scholes valuation model, and of restricted stock is based on the Company’s closing share price on the measurement date.

Standard Product Warranty, Policy [Policy Text Block]

Warranty Reserve – The Company’s standard warranty agreement is one year from shipment of certain products. The Company accrues for anticipated warranty costs upon shipment of these products. The Company’s warranty reserve is based on management’s judgment regarding anticipated rates of warranty claims and associated repair costs, and is updated quarterly.

Earnings Per Share, Policy [Policy Text Block]

Net Income (Loss) Per Share – Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding plus common share equivalents from conversion of dilutive stock options, warrants, and restricted stock using the treasury method, and convertible securities using the as-converted method, except when antidilutive. In the event of a net loss, the effects of all potentially dilutive shares are excluded from the diluted net loss per share calculation as their inclusion would be antidilutive.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In April 2014, the FASB issued ASU 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity” (“ASU 2014-08”). ASU 2014-08 clarifies the circumstances under which discontinued operations should be reported and increases the disclosure requirements. ASU 2014-08 is effective for annual periods beginning after December 15, 2014, and interim periods within those years, and will become effective for the Company on January 1, 2015. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial condition or results of operations.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 will replace most of the existing revenue recognition guidance within U.S. GAAP. The core principle of this guidance is that an entity should recognize revenue for the transfer of goods or services to customers in an amount that it expects to be entitled to receive for those goods or services. In doing so, companies will be required to make certain judgments and estimates, including identifying contract performance obligations, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price among separate performance obligations. Further, ASU 2014-09 will require companies to make additional disclosures. ASU 2014-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those years, and will become effective for the Company beginning on January 1, 2017, with early adoption not permitted. ASU 2014-09 allows for two methods of adoption, a full retrospective method or a modified retrospective approach with the cumulative effect recognized at the date of initial application. The Company is in the process of determining the method of adoption and its impact on the Company’s consolidated financial condition and results of operations.

In May 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements – Going Concern (Topic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). ASU 2014-15 will add guidance to U.S. GAAP that is presently available only in auditing standards, and provides clarification of such guidance. ASU 2014-15 is effective for annual periods ending after December 16, 2016, with early adoption permitted, and will become effective for the Company for the year ending December 31, 2016. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial condition or results of operations.

Derivative [Member]

Accounting Policies, by Policy (Policies) [Line Items]

Fair Value of Financial Instruments, Policy [Policy Text Block]

Change in Fair Value of Derivatives – The Company recognizes (or recognized until the time of their settlement) its warrants with certain cash settlement provisions or with certain anti-dilution protection, the redemption option of the Series A convertible preference shares of its Malaysian subsidiary, and the conversion element of its convertible promissory notes and of the Series B convertible preference shares of its Malaysian subsidiary as derivative liabilities. Such liabilities are valued when the financial instruments are initially issued or the derivative first requires recognition and are also revalued at each reporting date, with the change in their respective fair values being recorded as a gain or loss on revaluation within other income and expenses in the statement of operations. The Company determines the fair value of those warrants for which no anti-dilution adjustment is projected prior to the expiration date using the Black-Scholes valuation model, and all other derivative liabilities using a Monte Carlo Simulation approach, with key input variables provided by management.