(Mark One) | ||
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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.) |
34700 Campus Drive, Fremont, CA | 94555 | |||
(Address of principal executive offices) | (Zip Code) |
(510) 651-4450 | ||
(Registrant’s telephone number, including area code) |
Large accelerated filer ¨ | Accelerated filer ¨ |
Non-accelerated filer ¨ (Do not check if a smaller reporting company) | Smaller reporting company þ |
Page | ||||
Part I | FINANCIAL INFORMATION | |||
Part II | OTHER INFORMATION | |||
September 30, 2016 | December 31, 2015 | |||||||
Assets | (Unaudited) | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 5,147 | $ | 15,236 | ||||
Accounts receivable, net of allowance ($30 in 2016, none in 2015) | 1,620 | 2,201 | ||||||
Inventories | 1,391 | 1,998 | ||||||
Prepaid expenses and other current assets | 517 | 404 | ||||||
Total current assets | 8,675 | 19,839 | ||||||
Property and equipment, net | 992 | 1,052 | ||||||
Goodwill | 990 | 990 | ||||||
Intangible assets, net | 596 | 912 | ||||||
Other assets | 138 | 80 | ||||||
Total assets | $ | 11,391 | $ | 22,873 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 2,020 | $ | 2,029 | ||||
Accrued payroll and related costs | 1,587 | 1,200 | ||||||
Current portion of long-term debt | 186 | 180 | ||||||
Other current liabilities | 981 | 917 | ||||||
Total current liabilities | 4,774 | 4,326 | ||||||
Long-term debt, net of discount and current portion | 2,751 | 2,570 | ||||||
Deferred income taxes | 128 | 128 | ||||||
Other liabilities | 69 | 152 | ||||||
Total liabilities | 7,722 | 7,176 | ||||||
Commitments and contingencies (Notes 5 and 12) | ||||||||
Stockholders’ equity: | ||||||||
Preferred Stock: $0.001 par value; 10,000 shares authorized; 1.108 and 0.430 shares of Series 2 Convertible Preferred Stock issued and outstanding, respectively, at September 30, 2016 and December 31, 2015 | 2,214 | 2,214 | ||||||
Common Stock: $0.001 par value; 300,000 shares authorized; 19,317 and 19,163 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively | 121,266 | 120,329 | ||||||
Accumulated deficit | (119,811 | ) | (106,846 | ) | ||||
Total stockholders’ equity | 3,669 | 15,697 | ||||||
Total liabilities and stockholders’ equity | $ | 11,391 | $ | 22,873 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Revenue: | ||||||||||||||||
Product | $ | 2,394 | $ | 1,885 | $ | 6,799 | $ | 4,391 | ||||||||
License and royalty | — | 125 | 42 | 375 | ||||||||||||
Total revenue | 2,394 | 2,010 | 6,841 | 4,766 | ||||||||||||
Cost of product revenue | 1,124 | 848 | 3,377 | 1,938 | ||||||||||||
Gross profit | 1,270 | 1,162 | 3,464 | 2,828 | ||||||||||||
Operating expenses: | ||||||||||||||||
Sales and marketing | 1,737 | 1,425 | 5,342 | 3,890 | ||||||||||||
Research and development | 2,219 | 2,387 | 6,881 | 7,137 | ||||||||||||
General and administrative | 880 | 781 | 3,873 | 3,635 | ||||||||||||
Total operating expenses | 4,836 | 4,593 | 16,096 | 14,662 | ||||||||||||
Operating loss | (3,566 | ) | (3,431 | ) | (12,632 | ) | (11,834 | ) | ||||||||
Other income and (expenses): | ||||||||||||||||
Interest expense, net | (117 | ) | (113 | ) | (337 | ) | (326 | ) | ||||||||
Gain on revaluation of warrant derivative liabilities, net | 1 | 68 | 4 | 108 | ||||||||||||
Miscellaneous income (expense) | 7 | — | 10 | (49 | ) | |||||||||||
Total other income and (expenses) | (109 | ) | (45 | ) | (323 | ) | (267 | ) | ||||||||
Net loss before provision for income taxes | (3,675 | ) | (3,476 | ) | (12,955 | ) | (12,101 | ) | ||||||||
Provision for income taxes | (5 | ) | — | 10 | 2 | |||||||||||
Net loss | $ | (3,670 | ) | $ | (3,476 | ) | $ | (12,965 | ) | $ | (12,103 | ) | ||||
Net loss per share - basic and diluted | $ | (0.19 | ) | $ | (0.61 | ) | $ | (0.69 | ) | $ | (2.13 | ) | ||||
Shares used to compute net loss per share - basic and diluted | 18,928 | 5,707 | 18,826 | 5,681 |
Nine Months Ended September 30, | ||||||||
2016 | 2015 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (12,965 | ) | $ | (12,103 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 775 | 647 | ||||||
Stock-based compensation | 979 | 1,108 | ||||||
Gain on revaluation of warrant derivative liabilities, net | (4 | ) | (108 | ) | ||||
Allowance for doubtful accounts | 30 | — | ||||||
Provision for excess and obsolete inventory | 259 | (60 | ) | |||||
Amortization of debt discount | 322 | 272 | ||||||
Change in operating assets and liabilities: | ||||||||
Accounts receivable | 551 | (493 | ) | |||||
Inventories | 248 | (719 | ) | |||||
Prepaid expenses and other assets | (171 | ) | (57 | ) | ||||
Accounts payable | (9 | ) | 528 | |||||
Accrued payroll and related costs | 387 | 227 | ||||||
Other accrued expenses | (15 | ) | 46 | |||||
Net cash used in operating activities | (9,613 | ) | (10,712 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchase of property and equipment | (299 | ) | (146 | ) | ||||
Net cash used in investing activities | (299 | ) | (146 | ) | ||||
Cash flows from financing activities: | ||||||||
Repayment of capital lease obligations | (135 | ) | (108 | ) | ||||
Payment of taxes for restricted stock forfeited, net | (42 | ) | (94 | ) | ||||
Net cash used in financing activities | (177 | ) | (202 | ) | ||||
Net decrease in cash and cash equivalents | (10,089 | ) | (11,060 | ) | ||||
Cash and cash equivalents at beginning of the period | 15,236 | 14,732 | ||||||
Cash and cash equivalents at end of the period | $ | 5,147 | $ | 3,672 |
Supplemental disclosures of cash flow information: | ||||||||
Cash paid for interest | $ | 10 | $ | 19 | ||||
Cash paid for income taxes | $ | 13 | $ | 2 |
Supplemental disclosure of non-cash investing and financing activities: | ||||||||
Property and equipment acquired with capital leases | $ | — | $ | 178 | ||||
Inventory transferred to property and equipment | $ | 102 | $ | 58 | ||||
Property and equipment transferred to inventory | $ | 2 | $ | — |
September 30, 2016 | December 31, 2015 | ||||||
(in thousands) | |||||||
Raw materials | $ | 388 | $ | 630 | |||
Work in process | 271 | 288 | |||||
Finished goods | 732 | 1,080 | |||||
Inventories, net | $ | 1,391 | $ | 1,998 |
(in thousands) | |||
Balance at January 1, 2016 | $ | 990 | |
Additions | — | ||
Balance at September 30, 2016 | $ | 990 |
Gross Carrying Amount | Net Accumulated Amortization | Intangible Assets | |||||||||
(in thousands) | |||||||||||
Purchased technology | $ | 360 | $ | 275 | $ | 85 | |||||
Customer lists and trademarks | 1,500 | 989 | 511 | ||||||||
Total as of September 30, 2016 | $ | 1,860 | $ | 1,264 | $ | 596 |
(in thousands) | |||
Year ending December 31, | |||
2016 (three months remaining) | $ | 105 | |
2017 | 314 | ||
2018 | 148 | ||
2019 | 29 | ||
Total amortization | $ | 596 |
September 30, 2016 | December 31, 2015 | ||||||
(in thousands) | |||||||
MTDC Notes Payable: | |||||||
Face value | $ | 5,200 | $ | 5,200 | |||
Debt discount, net of accumulated amortization of $1,032 and $710 at September 30, 2016 and December 31, 2015, respectively | 2,511 | 2,833 | |||||
Notes payable, net of debt discount | $ | 2,689 | $ | 2,367 |
Capital Leases | |||
(in thousands) | |||
Year ending September 30, | |||
2017 | $ | 192 | |
2018 | 63 | ||
thereafter | — | ||
Total minimum obligations | 255 | ||
Amounts representing interest | (7 | ) | |
Present value of future minimum payments | 248 | ||
Current portion of long term obligations | (186 | ) | |
Long term obligations, less current portion | $ | 62 |
Nine Months Ended September 30, | |||||
2016 | 2015 | ||||
Risk-free interest rate | 1.13% - 1.40% | 1.25% - 1.44% | |||
Expected remaining term | 3.33 - 4.50 Years | 3.55 - 4.50 Years | |||
Expected volatility | 105.05% - 111.44% | 106.11% - 119.36% | |||
Dividend yield | — | % | — | % |
Stock Options | Restricted Stock | |||||||||||||||
Shares Available for Grant | Number of Options Outstanding | Weighted Average Exercise Price | Number of Shares Outstanding | Weighted Average Grant-Date Fair Value | ||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||
Balance at January 1, 2016 | 438 | 477 | $ | 11.43 | 451 | $ | 3.77 | |||||||||
2008 Plan Amendment | 2,500 | — | $ | — | — | $ | — | |||||||||
Granted | (726 | ) | 592 | $ | 0.56 | 133 | $ | 0.69 | ||||||||
Vested | — | — | $ | — | (174 | ) | $ | 3.81 | ||||||||
Forfeited | 20 | — | $ | — | (20 | ) | $ | 1.24 | ||||||||
Balance at September 30, 2016 | 2,232 | 1,069 | $ | 5.26 | 390 | $ | 2.83 |
Securities Into Which | Total Warrants | Warrants Recorded | Exercise | Expiration | ||||||||
Warrants are Convertible | Outstanding | as Liabilities | Price | Date | ||||||||
(in thousands, except per share amounts) | ||||||||||||
Common stock | 17,250 | — | $ | 1.44 | October 2020 | |||||||
Common stock | 450 | — | $ | 1.44 | October 2018 | |||||||
Common stock | 4,600 | — | $ | 5.00 | August 2019 | |||||||
Common stock | 120 | — | $ | 6.25 | August 2017 | |||||||
Common stock | 613 | 111 | $ | 26.00 | August and September 2018 | |||||||
Total | 23,033 | 111 |
September 30, 2016 | September 30, 2015 | ||||
Risk-free interest rate | 0.72% - 0.73% | 0.81% - 0.84% | |||
Expected remaining term | 1.71 - 1.80 Years | 2.62 - 2.70 Years | |||
Expected volatility | 87.12% - 88.44% | 106.20% - 109.95% | |||
Dividend yield | — | % | — | % |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
September 30, 2016 | (in thousands) | ||||||||||||||
Recurring Financial Liabilities: | |||||||||||||||
Warrant derivative liabilities | $ | — | $ | — | $ | — | $ | — | |||||||
Contingent earn-out payments | — | — | 48 | 48 | |||||||||||
Total liabilities | $ | — | $ | — | $ | 48 | $ | 48 |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
December 31, 2015 | (in thousands) | ||||||||||||||
Recurring Financial Liabilities: | |||||||||||||||
Warrant derivative liabilities | $ | — | $ | — | $ | 4 | $ | 4 | |||||||
Contingent earn-out payments | — | — | 44 | 44 | |||||||||||
Total liabilities | $ | — | $ | — | $ | 48 | $ | 48 |
Warrant Derivatives | Contingent Earn-out Payments | Total | |||||||||
(in thousands) | |||||||||||
Balance at January 1, 2016 | $ | 4 | $ | 44 | $ | 48 | |||||
Issuances | — | — | — | ||||||||
Gain on revaluation of warrant derivative liabilities, net | (4 | ) | — | (4 | ) | ||||||
Change in contingent earn-out adjustment included in interest expense | — | 4 | 4 | ||||||||
Settlements | — | — | — | ||||||||
Balance at September 30, 2016 | $ | — | $ | 48 | $ | 48 | |||||
Total gains (losses) included in other income and expenses attributable to liabilities still held as of September 30, 2016 | $ | 4 | $ | (4 | ) | $ | — |
Warrant Derivatives | Contingent Earn-out Payments | Total | |||||||||
(in thousands) | |||||||||||
Balance at January 1, 2015 | $ | 126 | $ | 279 | $ | 405 | |||||
Issuances | — | — | — | ||||||||
Gain on revaluation of warrant derivative liabilities, net | (108 | ) | — | (108 | ) | ||||||
Change in contingent earn-out adjustment included in interest expense | — | 35 | 35 | ||||||||
Settlements | — | — | — | ||||||||
Balance at September 30, 2015 | $ | 18 | $ | 314 | $ | 332 | |||||
Total gains (losses) included in other income and expenses attributable to liabilities still held as of September 30, 2015 | $ | 108 | $ | (35 | ) | $ | 73 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
(in thousands) | (in thousands) | ||||||||||
Common share equivalents issuable upon exercise of common stock options | 224 | — | 144 | 6 | |||||||
Shares issuable upon vesting of restricted stock | 392 | 441 | 491 | 371 | |||||||
Shares issuable upon conversion of Series 2 Convertible Preferred Stock | 4,300 | — | 4,300 | — | |||||||
Shares issuable upon conversion of MTDC Notes | 6,190 | 3,233 | 6,190 | 3,233 | |||||||
Total common share equivalents excluded from denominator for diluted earnings per share computation | 11,106 | 3,674 | 11,125 | 3,610 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||||
(in thousands, except percentages) | (in thousands, except percentages) | ||||||||||||||||||||||||||
Customer A | $ | 240 | 10 | % | $ | — | — | % | $ | 240 | 4 | % | $ | — | — | % | |||||||||||
Customer B | $ | 153 | 6 | % | $ | — | — | % | $ | 998 | 15 | % | $ | — | — | % | |||||||||||
Customer C | $ | 1 | — | % | $ | 291 | 14 | % | $ | 50 | 1 | % | $ | 291 | 6 | % | |||||||||||
Customer D | $ | — | — | % | $ | 221 | 11 | % | $ | 344 | 5 | % | $ | 629 | 13 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(in thousands) | (in thousands) | ||||||||||||||
Revenue: | |||||||||||||||
Product | $ | 2,394 | $ | 1,885 | $ | 6,799 | $ | 4,391 | |||||||
License and royalty | — | 125 | 42 | 375 | |||||||||||
Total revenue | 2,394 | 2,010 | 6,841 | 4,766 | |||||||||||
Cost of product revenue | 1,124 | 848 | 3,377 | 1,938 | |||||||||||
Gross profit | 1,270 | 1,162 | 3,464 | 2,828 | |||||||||||
Operating expenses: | |||||||||||||||
Sales and marketing | 1,737 | 1,425 | 5,342 | 3,890 | |||||||||||
Research and development | 2,219 | 2,387 | 6,881 | 7,137 | |||||||||||
General and administrative | 880 | 781 | 3,873 | 3,635 | |||||||||||
Total operating expenses | 4,836 | 4,593 | 16,096 | 14,662 | |||||||||||
Operating loss | (3,566 | ) | (3,431 | ) | (12,632 | ) | (11,834 | ) | |||||||
Other income and (expenses): | |||||||||||||||
Interest expense, net | (117 | ) | (113 | ) | (337 | ) | (326 | ) | |||||||
Gain on revaluation of warrant derivative liabilities, net | 1 | 68 | 4 | 108 | |||||||||||
Miscellaneous income (expense) | 7 | — | 10 | (49 | ) | ||||||||||
Total other income and (expenses) | (109 | ) | (45 | ) | (323 | ) | (267 | ) | |||||||
Net loss before provision for income taxes | (3,675 | ) | (3,476 | ) | (12,955 | ) | (12,101 | ) | |||||||
Provision for income taxes | (5 | ) | — | 10 | 2 | ||||||||||
Net loss | $ | (3,670 | ) | $ | (3,476 | ) | $ | (12,965 | ) | $ | (12,103 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
2016 | 2015 | % Change | 2016 | 2015 | % Change | |||||||||||||||
(dollars in thousands) | (dollars in thousands) | |||||||||||||||||||
$ | 2,394 | $ | 1,885 | 27 | % | $ | 6,799 | $ | 4,391 | 55 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
2016 | 2015 | % Change | 2016 | 2015 | % Change | |||||||||||||||
(dollars in thousands) | (dollars in thousands) | |||||||||||||||||||
$ | — | $ | 125 | (100 | )% | $ | 42 | $ | 375 | (89 | )% |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
2016 | 2015 | % Change | 2016 | 2015 | % Change | |||||||||||||||
(dollars in thousands) | (dollars in thousands) | |||||||||||||||||||
$ | 1,124 | $ | 848 | 33 | % | $ | 3,377 | $ | 1,938 | 74 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
2016 | 2015 | % Change | 2016 | 2015 | % Change | |||||||||||||||
(dollars in thousands) | (dollars in thousands) | |||||||||||||||||||
$ | 1,737 | $ | 1,425 | 22 | % | $ | 5,342 | $ | 3,890 | 37 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
2016 | 2015 | % Change | 2016 | 2015 | % Change | |||||||||||||||
(dollars in thousands) | (dollars in thousands) | |||||||||||||||||||
$ | 2,219 | $ | 2,387 | (7 | )% | $ | 6,881 | $ | 7,137 | (4 | )% |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
2016 | 2015 | % Change | 2016 | 2015 | % Change | |||||||||||||||
(dollars in thousands) | (dollars in thousands) | |||||||||||||||||||
$ | 880 | $ | 781 | 13 | % | $ | 3,873 | $ | 3,635 | 7 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
2016 | 2015 | % Change | 2016 | 2015 | % Change | |||||||||||||||
(dollars in thousands) | (dollars in thousands) | |||||||||||||||||||
$ | 117 | $ | 113 | 4 | % | $ | 337 | $ | 326 | 3 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
2016 | 2015 | % Change | 2016 | 2015 | % Change | |||||||||||||||
(dollars in thousands) | (dollars in thousands) | |||||||||||||||||||
$ | 1 | $ | 68 | (99 | )% | $ | 4 | $ | 108 | (96 | )% |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
2016 | 2015 | % Change | 2016 | 2015 | % Change | |||||||||||||
(dollars in thousands) | (dollars in thousands) | |||||||||||||||||
$ | 7 | $ | — | N/A | $ | 10 | $ | (49 | ) | N/A |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
2016 | 2015 | % Change | 2016 | 2015 | % Change | ||||||||||||||
(dollars in thousands) | (dollars in thousands) | ||||||||||||||||||
$ | (5 | ) | $ | — | N/A | $ | 10 | $ | 2 | 400 | % |
Nine Months Ended September 30, | |||||
2016 | 2015 | ||||
Risk-free interest rate | 1.13% - 1.40% | 1.25% - 1.44% | |||
Expected remaining term | 3.33 - 4.50 Years | 3.55 - 4.50 Years | |||
Expected volatility | 105.05% - 111.44% | 106.11% - 119.36% | |||
Dividend yield | — | % | — | % |
WAFERGEN BIO-SYSTEMS, INC. | |||
Dated: | November 10, 2016 | ||
By: /s/ MICHAEL P. HENIGHAN | |||
Michael P. Henighan | |||
Chief Financial Officer | |||
(principal financial and accounting officer) |
Exhibit | ||
No. | Description | |
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, 2016, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets at September 30, 2016 and December 31, 2015, (ii) the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2016 and 2015, (iii) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015, and (iv) Notes to the Condensed Consolidated Financial Statements. |
§ | 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. |
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 10, 2016 | ||
/s/ ROLLAND CARLSON | |||
Rolland Carlson | |||
Chief Executive Officer | |||
(principal executive officer) |
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 10, 2016 | ||
/s/ MICHAEL P. HENIGHAN | |||
Michael P. Henighan | |||
Chief Financial Officer | |||
(principal financial officer) |
1. | The Quarterly Report of WaferGen Bio-systems, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2016 (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 10, 2016 | ||
/s/ ROLLAND CARLSON | |||
Rolland Carlson | |||
Chief Executive Officer | |||
(principal executive officer) |
1. | The Quarterly Report of WaferGen Bio-systems, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2016 (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 10, 2016 | ||
/s/ MICHAEL P. HENIGHAN | |||
Michael P. Henighan | |||
Chief Financial Officer | |||
(principal financial officer) |
Document And Entity Information - shares |
9 Months Ended | |
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Sep. 30, 2016 |
Nov. 09, 2016 |
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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 | 18,927,726 | |
Amendment Flag | false | |
Entity Central Index Key | 0001368993 | |
Entity Filer Category | Smaller Reporting Company | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Allowance for doubtful accounts receivable, current | $ 30 | $ 0 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
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 | 19,317,000 | 19,163,000 |
Common stock, shares outstanding | 19,317,000 | 19,163,000 |
Series 2 Convertible Preferred Stock | ||
Preferred stock, shares issued | 1,108 | 430 |
Preferred stock, shares outstanding | 1,108 | 430 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
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Revenue: | ||||
Product | $ 2,394 | $ 1,885 | $ 6,799 | $ 4,391 |
License and royalty | 0 | 125 | 42 | 375 |
Total revenue | 2,394 | 2,010 | 6,841 | 4,766 |
Cost of product revenue | 1,124 | 848 | 3,377 | 1,938 |
Gross profit | 1,270 | 1,162 | 3,464 | 2,828 |
Operating expenses: | ||||
Sales and marketing | 1,737 | 1,425 | 5,342 | 3,890 |
Research and development | 2,219 | 2,387 | 6,881 | 7,137 |
General and administrative | 880 | 781 | 3,873 | 3,635 |
Total operating expenses | 4,836 | 4,593 | 16,096 | 14,662 |
Operating loss | (3,566) | (3,431) | (12,632) | (11,834) |
Other income and (expenses): | ||||
Interest expense, net | (117) | (113) | (337) | (326) |
Gain on revaluation of warrant derivative liabilities, net | 1 | 68 | 4 | 108 |
Miscellaneous income (expense) | 7 | 0 | 10 | (49) |
Total other income and (expenses) | (109) | (45) | (323) | (267) |
Net loss before provision for income taxes | (3,675) | (3,476) | (12,955) | (12,101) |
Provision for income taxes | (5) | 0 | 10 | 2 |
Net loss | $ (3,670) | $ (3,476) | $ (12,965) | $ (12,103) |
Net loss per share - basic and diluted (in dollars per share) | $ (0.19) | $ (0.61) | $ (0.69) | $ (2.13) |
Shares used to compute net loss per share - basic and diluted | 18,928 | 5,707 | 18,826 | 5,681 |
The Company |
9 Months Ended |
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Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Company | The Company General – WaferGen Bio-systems, Inc. and its subsidiaries (the “Company”) are engaged in the development, manufacture and sale of systems for genomic technology solutions for single-cell analysis and clinical research. The Company’s ICELL8™ Single-Cell System is a cutting edge platform that can isolate thousands of single cells and process specific cells for analysis, including Next Generation Sequencing (“NGS”). The Company’s SmartChip™ platform can be used for profiling and validating molecular biomarkers, and can perform massively parallel singleplex PCR for one-step target enrichment and library preparation for clinical NGS. The Company’s Apollo 324™ system can be used to process DNA and RNA from clinical samples to NGS-ready libraries. 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 the 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 August 30, 2011, the Company formed a new wholly owned subsidiary in Luxembourg to establish a presence for its marketing and research activities in Europe. |
Summary of Significant Accounting Policies |
9 Months Ended |
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Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 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 the Company’s audited financial statements and footnotes related thereto for the year ended December 31, 2015, included in the Company’s 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 – 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 statement of operations. The Company has no subsidiaries for which the local currency is the functional currency. 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 net realizable 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” within operating expenses. 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. 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 no governmental subsidies in the three months ended September 30, 2016 or 2015, or in the nine months ended September 30, 2016, the balance of available matching funds having been fully used by March 31, 2015, and recognized $164,000 in the nine months ended September 30, 2015, which was 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 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. Reclassification – Certain reclassifications have been made to prior periods’ data to conform to the current presentation. These reclassifications had no effect on reported net losses. Recent Accounting Pronouncements 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. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective date” (“ASU 2015-14”),which permits deferral of the effective date of ASU 2014-09 by one year, so the Company may delay adopting the standard until January 1, 2018. In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” (“ASU 2016-08”), in April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” (“ASU 2016-10”) and in May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”). ASU 2016-08, ASU 2016-10 and ASU 2016-12 all update and clarify the guidance previously issued in ASU 2014-09 and will become effective for the Company when it adopts ASU 2014-09. ASU 2014-09, as amended, 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 both the timing and the method of adoption and its impact on the Company’s consolidated financial condition and results of operations. In August 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 provide clarification of such guidance. Further, an assessment of going concern will be required at each interim reporting period (in addition to the existing auditing guideline of an annual assessment), and will require a look-forward period of one year from the date of issuance (as opposed to the existing auditing guideline of one year from the balance sheet date). ASU 2014-15 is effective for annual periods ending after December 15, 2016, with early adoption permitted, and will become effective for the Company for the year ending December 31, 2016, and for each interim period thereafter. 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 February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 requires the recognition of lease assets (representing the value of the right to use the property over the lease term) and lease liabilities (representing the present value of future liabilities) by lessees for those leases presently classified as operating leases (superseding the previous requirement that they be expensed over the lease term, without recognition of assets and liabilities). ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, and will become effective for the Company beginning on January 1, 2019. The Company is in the process of determining the impact on the Company’s consolidated financial condition and results of operations. In March 2016, the FASB issued ASU 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 permits entities to make an accounting policy election to account for forfeitures as they occur when recognizing the expense of share-based compensation (as opposed to the existing requirement to use estimated forfeitures), reduces the tax withholding threshold at which equity accounting is permitted for shares withheld on vesting and requires that payments by an employer when withholding shares for tax-withholding purposes be reported as financing activities within the statement of cash flows, along with guidance related to excess tax benefits. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those years, with early adoption permitted. The Company adopted this standard effective January 1, 2016, without electing to change its existing accounting policy of accounting for forfeitures based on expected vesting, and its adoption did not have a significant impact on the Company’s consolidated financial condition or results of operations. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 provides guidance on the required presentation and classification in the statement of cash flows for various issues for which there has been diversity in practice in the past. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those years, with early adoption permitted. The Company adopted this standard effective July 1, 2016, and its adoption did not have a significant impact on the Company’s consolidated financial condition or results of operations. |
Inventories |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories, net of provisions for potentially excess, obsolete or impaired goods, consisted of the following at September 30, 2016, and December 31, 2015:
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Goodwill and Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Changes in the carrying amount of goodwill in the nine months ended September 30, 2016, were as follows:
Other intangible assets as of September 30, 2016, consist of:
The estimated future amortization expenses by fiscal year are as follows:
Intangible asset amortization expense was $106,000 and $112,000 for the three months ended September 30, 2016 and 2015, respectively, and $316,000 and $337,000 for the nine months ended September 30, 2016 and 2015, respectively. |
Long Term Obligations |
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Long-term Debt and Capital Lease Obligations, Including Current Maturities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long Term Obligations | Long Term Obligations On August 15, 2013, the Company issued WaferGen Biosystems (M) Sdn. Bhd. (“WGBM”), a wholly owned subsidiary in Malaysia, 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 Malaysian Technology Development Corporation Sdn. Bhd. (“MTDC,” a major investor in WGBM’s preference shares), 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, 2016 and December 31, 2015:
At any time prior to the MTDC Notes’ 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 $0.8400 in the 30 days preceding September 30, 2016, the MTDC Notes could have been settled by issuing 6,190,000 shares of the Company’s common stock. The Company also leases equipment under three capital leases that expire between December 2017 and May 2018. Aggregate future minimum obligations for capital leases in effect as of September 30, 2016, are as follows:
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Preferred Stock |
9 Months Ended |
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Sep. 30, 2016 | |
Preferred Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | |
Preferred Stock | Preferred Stock The Company has 10,000,000 shares of preferred stock authorized. Effective October 20, 2015, the Company designated 1,108 shares as Series 2 Convertible Preferred Stock. Each share of Series 2 Convertible Preferred Stock was convertible into 10,000 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. The Series 2 Convertible Preferred Stock has no voting rights and is on a par with common stock on an as-converted basis with respect to dividend rights and distributions of assets in the event of liquidation, without regard to the ownership cap. On October 21, 2015, the Company sold 1,108 shares of Series 2 Convertible Preferred Stock in a public offering. As of September 30, 2016, 678 shares of Series 2 Convertible Preferred Stock issued had been converted into 6,780,000 shares of common stock and 430 shares of Series 2 Convertible Preferred Stock remained outstanding. |
Stock Awards |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Awards | Stock Awards The Company has awards outstanding under 3 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 178,000 inducement options and 33,000 inducement restricted stock units outstanding that were awarded to executive officers on August 27, 2014 and May 12, 2015, not covered by the Plans, with the same standard terms as non-qualified stock options or restricted stock units awarded under the 2008 Plan. Under the 2003 Plan and 2007 Plan, incentive stock options, nonqualified 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 25, 2016, which increased the total number of shares authorized for issuance from 1,215,000 to 3,715,000. 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. On January 22, 2016, 292,000 conditional options were issued to the Company’s executive chairman (the “January 2016 Conditional Award”). The January 2016 Conditional Award was not covered by the Plans at the time of issuance and was conditional on the Company obtaining stockholder approval to amend the 2008 Plan to authorize at least 2,000,000 additional shares. In the event of failure to receive such stockholder approval by June 30, 2016, the January 2016 Conditional Award would convert into a cash-settled stock appreciation right. Due to the possibility of cash settlement, the January 2016 Conditional Award was initially recorded as a liability, with its fair value updated at each balance sheet date. When stockholder approval to authorize an additional 2,500,000 shares was obtained on May 25, 2016, the January 2016 Conditional Award was revalued at its fair value on that date, since when it has been reflected as an option awarded under the 2008 Plan and has not been subject to revaluation. The weighted average grant date fair value of the options awarded in the nine months ended September 30, 2016 and 2015, measured on the date on which potential cash settlement provisions were eliminated, was estimated to be $0.59 and $2.56, respectively, using grant date closing stock prices ranging from $0.56 to $0.99 on the valuation dates in 2016 and $3.19 to $3.78 on the award dates in 2015, respectively, and based on the following assumptions:
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. A summary of stock option (including conditional options) and restricted stock transactions in the nine months ended September 30, 2016, is as follows:
No options were exercised during the nine months ended September 30, 2016 or 2015. The aggregate intrinsic value of options outstanding and exercisable at September 30, 2016, was $172,000 and $85,000, respectively, based on the Company’s common stock closing price of $0.85. 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 $225,000 and $149,000 for the three months ended September 30, 2016 and 2015, respectively, and $979,000 and $1,108,000 for the nine months ended September 30, 2016 and 2015, respectively. At September 30, 2016, the total stock-based compensation cost not yet recognized, net of estimated forfeitures, was $1,034,000. This cost is expected to be recognized over an estimated weighted average amortization period of 1.49 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 related deferred taxes. |
Warrants |
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Warrants and Rights Note Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants | Warrants A summary of outstanding common stock warrants as of September 30, 2016, is as follows:
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 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 aggregate fair value of those warrants and unit warrants accounted for as liabilities as of September 30, 2016 and 2015, was estimated to be $0 and $18,000, respectively, using a closing stock price of $0.85 and $1.36, respectively, and based on the following assumptions:
The aggregate fair value of such warrants and unit warrants at December 31, 2015 and 2014, was estimated to be $4,000 and $126,000, respectively. During the nine months ended September 30, 2016, the decrease in the fair value of the warrant derivative liability of $4,000 was recorded as a revaluation gain. During the nine months ended September 30, 2015, the decrease in the fair value of the warrant derivative liability of $108,000 was recorded as a revaluation gain (see Note 9). |
Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | 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. The three 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, 2016 and December 31, 2015:
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, 2016 and 2015:
The liability for contingent earn-out payments arises from the Company’s requirement to pay IntegenX Inc. (“IntegenX”) a percentage of revenues of the product line that the Company acquired from IntegenX in January 2014 (the “Apollo Business”), on a sliding scale up to 20%, should certain revenue targets be achieved in 2014, 2015 and 2016. The fair value of the acquisition earn-out contingencies is determined using a modeling technique based on significant unobservable inputs calculated using a probability-weighted revenue approach. At December 31, 2014, the fair value was estimated using future annual revenues ranging from $3.4 million to $7.7 million and a discount rate of 14%. At September 30, 2015, the annual revenue estimates were unchanged from the estimates at December 31, 2014, the liability increasing due to a reduction in the amount of discount, which was expensed as interest. At December 31, 2015, the estimate of fair value was updated using future annual revenue ranging from $3.1 million to $5.0 million and a discount rate of 14%. At September 30, 2016, the annual revenue estimates are unchanged from the estimates at December 31, 2015, the liability increasing due to a reduction in the amount of discount, which was expensed as interest. Assumptions used in evaluating the warrant derivative liabilities are discussed in Note 8. 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. The Company applies a reduced weighting to its own historic volatility during the period prior to August 27, 2013, when 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. There were no transfers between Level 1, Level 2 and Level 3 of the fair value hierarchy during the nine months ended September 30, 2016 or 2015. |
Net Loss Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss Per Share | 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 related to MTDC Notes, 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 2 Convertible Preferred Stock and MTDC Notes 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, 2016 and 2015:
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Concentrations |
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Risks and Uncertainties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Concentrations | 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. An allowance for doubtful accounts of $30,000 was provided as of September 30, 2016. No such provision was made as of December 31, 2015. Customers accounting for more than 10% of total revenues during the three or nine months ended September 30, 2016 or 2015, as well as revenues in all corresponding periods, are tabulated as follows:
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Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | 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 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. |
Summary of Significant Accounting Policies (Policies) |
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Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 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 the Company’s audited financial statements and footnotes related thereto for the year ended December 31, 2015, included in the Company’s 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 | 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 | 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 | Foreign Currencies – 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 statement of operations. The Company has no subsidiaries for which the local currency is the functional currency. |
Accounts Receivable | 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 – Inventory is recorded at the lower of cost (first-in, first-out) or net realizable 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 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” within operating expenses. 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 | 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. 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 | 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. |
Stock-Based Compensation | 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. |
Changes in Fair Value of Derivatives | 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 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 | 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 | 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 | Recent Accounting Pronouncements 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. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective date” (“ASU 2015-14”),which permits deferral of the effective date of ASU 2014-09 by one year, so the Company may delay adopting the standard until January 1, 2018. In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” (“ASU 2016-08”), in April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” (“ASU 2016-10”) and in May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”). ASU 2016-08, ASU 2016-10 and ASU 2016-12 all update and clarify the guidance previously issued in ASU 2014-09 and will become effective for the Company when it adopts ASU 2014-09. ASU 2014-09, as amended, 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 both the timing and the method of adoption and its impact on the Company’s consolidated financial condition and results of operations. In August 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 provide clarification of such guidance. Further, an assessment of going concern will be required at each interim reporting period (in addition to the existing auditing guideline of an annual assessment), and will require a look-forward period of one year from the date of issuance (as opposed to the existing auditing guideline of one year from the balance sheet date). ASU 2014-15 is effective for annual periods ending after December 15, 2016, with early adoption permitted, and will become effective for the Company for the year ending December 31, 2016, and for each interim period thereafter. 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 February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 requires the recognition of lease assets (representing the value of the right to use the property over the lease term) and lease liabilities (representing the present value of future liabilities) by lessees for those leases presently classified as operating leases (superseding the previous requirement that they be expensed over the lease term, without recognition of assets and liabilities). ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, and will become effective for the Company beginning on January 1, 2019. The Company is in the process of determining the impact on the Company’s consolidated financial condition and results of operations. In March 2016, the FASB issued ASU 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 permits entities to make an accounting policy election to account for forfeitures as they occur when recognizing the expense of share-based compensation (as opposed to the existing requirement to use estimated forfeitures), reduces the tax withholding threshold at which equity accounting is permitted for shares withheld on vesting and requires that payments by an employer when withholding shares for tax-withholding purposes be reported as financing activities within the statement of cash flows, along with guidance related to excess tax benefits. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those years, with early adoption permitted. The Company adopted this standard effective January 1, 2016, without electing to change its existing accounting policy of accounting for forfeitures based on expected vesting, and its adoption did not have a significant impact on the Company’s consolidated financial condition or results of operations. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 provides guidance on the required presentation and classification in the statement of cash flows for various issues for which there has been diversity in practice in the past. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those years, with early adoption permitted. The Company adopted this standard effective July 1, 2016, and its adoption did not have a significant impact on the Company’s consolidated financial condition or results of operations. |
Inventories (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory | Inventories, net of provisions for potentially excess, obsolete or impaired goods, consisted of the following at September 30, 2016, and December 31, 2015:
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Goodwill and Other Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | Changes in the carrying amount of goodwill in the nine months ended September 30, 2016, were as follows:
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Schedule of Finite-Lived Intangible Assets | Other intangible assets as of September 30, 2016, consist of:
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The estimated future amortization expenses by fiscal year are as follows:
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Long Term Obligations (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt and Capital Lease Obligations, Including Current Maturities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | The MTDC Notes were recorded using an effective interest rate of 17.39% and are summarized as follows at September 30, 2016 and December 31, 2015:
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Schedule of Maturities of Long-term Debt | Aggregate future minimum obligations for capital leases in effect as of September 30, 2016, are as follows:
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Stock Awards (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The weighted average grant date fair value of the options awarded in the nine months ended September 30, 2016 and 2015, measured on the date on which potential cash settlement provisions were eliminated, was estimated to be $0.59 and $2.56, respectively, using grant date closing stock prices ranging from $0.56 to $0.99 on the valuation dates in 2016 and $3.19 to $3.78 on the award dates in 2015, respectively, and based on the following assumptions:
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Schedule of Share-based Compensation, Activity | A summary of stock option (including conditional options) and restricted stock transactions in the nine months ended September 30, 2016, is as follows:
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Warrants (Tables) |
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Warrants and Rights Note Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stockholders' Equity Note, Warrants or Rights | A summary of outstanding common stock warrants as of September 30, 2016, is as follows:
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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] | The aggregate fair value of those warrants and unit warrants accounted for as liabilities as of September 30, 2016 and 2015, was estimated to be $0 and $18,000, respectively, using a closing stock price of $0.85 and $1.36, respectively, and based on the following assumptions:
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Fair Value of Financial Instruments (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Liabilities Measured on Recurring Basis | The following tables present the Company’s liabilities that are measured at fair value on a recurring basis at September 30, 2016 and December 31, 2015:
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Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | 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, 2016 and 2015:
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Net Loss Per Share (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | 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 2 Convertible Preferred Stock and MTDC Notes 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, 2016 and 2015:
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Concentrations (Tables) |
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Risks and Uncertainties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedules of Concentration of Risk, by Risk Factor | Customers accounting for more than 10% of total revenues during the three or nine months ended September 30, 2016 or 2015, as well as revenues in all corresponding periods, are tabulated as follows:
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Summary of Significant Accounting Policies (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
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Accounting Policies [Abstract] | ||||
Government subsidies recognized during the period | $ 0 | $ 0 | $ 0 | $ 164,000 |
Standard product warranty, term | 1 year |
Inventories (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 388 | $ 630 |
Work in process | 271 | 288 |
Finished goods | 732 | 1,080 |
Inventories, net | $ 1,391 | $ 1,998 |
Goodwill and Other Intangible Assets - Changes in the Carrying Amount of Goodwill (Details) $ in Thousands |
9 Months Ended |
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Sep. 30, 2016
USD ($)
| |
Goodwill [Roll Forward] | |
Balance at January 1, 2016 | $ 990 |
Additions | 0 |
Balance at September 30, 2016 | $ 990 |
Goodwill and Other Intangible Assets - Other Intangible Assets (Details) $ in Thousands |
Sep. 30, 2016
USD ($)
|
---|---|
Finite-Lived Intangible Assets [Line Items] | |
Gross Carrying Amount | $ 1,860 |
Net Accumulated Amortization | 1,264 |
Intangible Assets | 596 |
Purchased technology | |
Finite-Lived Intangible Assets [Line Items] | |
Gross Carrying Amount | 360 |
Net Accumulated Amortization | 275 |
Intangible Assets | 85 |
Customer lists and trademarks | |
Finite-Lived Intangible Assets [Line Items] | |
Gross Carrying Amount | 1,500 |
Net Accumulated Amortization | 989 |
Intangible Assets | $ 511 |
Goodwill and Other Intangible Assets - The Estimated Future Amortization Expenses (Details) $ in Thousands |
Sep. 30, 2016
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
2016 (three months remaining) | $ 105 |
2017 | 314 |
2018 | 148 |
2019 | 29 |
Intangible Assets | $ 596 |
Goodwill and Other Intangible Assets - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization of intangible assets | $ 106 | $ 112 | $ 316 | $ 337 |
Long Term Obligations - Narrative (Details) |
9 Months Ended | |||
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Sep. 30, 2016
USD ($)
capital_lease
$ / shares
shares
|
Dec. 31, 2015
USD ($)
|
Nov. 26, 2013
USD ($)
|
Aug. 15, 2013
USD ($)
|
|
Debt Instrument [Line Items] | ||||
Capital lease obligations, number of leases | capital_lease | 3 | |||
Notes Payable | WGBM Notes | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, face amount | $ 1,400,000.0 | $ 6,600,000.0 | ||
Debt instrument, maturity date | Aug. 15, 2020 | |||
Long-term debt, gross | $ 5,300,000 | |||
Notes Payable | MTDC Notes | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, face amount | $ 5,200,000 | $ 5,200,000 | $ 5,200,000.0 | |
Long-term debt, gross | $ 2,689,000 | $ 2,367,000 | ||
Debt instrument, interest rate, effective percentage | 17.39% | |||
Debt instrument, payment terms, number of days required in value of common stock calculation for note settlement prior to maturity | 30 days | |||
Share price (in dollars per share) | $ / shares | $ 0.8400 | |||
Stock issued during period, shares, conversion of convertible securities (in shares) | shares | 6,190,000 |
Long Term Obligations - MTDC Notes (Details) - Notes Payable - MTDC Notes - USD ($) |
Sep. 30, 2016 |
Dec. 31, 2015 |
Nov. 26, 2013 |
---|---|---|---|
MTDC Notes Payable: | |||
Face value | $ 5,200,000 | $ 5,200,000 | $ 5,200,000.0 |
Debt discount, net of accumulated amortization of $1,032 and $710 at September 30, 2016 and December 31, 2015, respectively | 2,511,000 | 2,833,000 | |
Notes payable, net of debt discount | 2,689,000 | 2,367,000 | |
Accumulated amortization | $ 1,032,000 | $ 710,000 |
Long Term Obligations - Schedule of Future Minimum Obligations (Details) $ in Thousands |
Sep. 30, 2016
USD ($)
|
---|---|
Long-term Debt and Capital Lease Obligations, Including Current Maturities [Abstract] | |
2017 | $ 192 |
2018 | 63 |
thereafter | 0 |
Total minimum obligations | 255 |
Amounts representing interest | (7) |
Present value of future minimum payments | 248 |
Current portion of long term obligations | (186) |
Long term obligations, less current portion | $ 62 |
Preferred Stock (Details) - shares |
9 Months Ended | |||
---|---|---|---|---|
Oct. 21, 2015 |
Oct. 20, 2015 |
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Class of Stock [Line Items] | ||||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | ||
Series 2 Convertible Preferred Stock | ||||
Class of Stock [Line Items] | ||||
Preferred stock, shares issued | 1,108 | |||
Convertible preferred stock, shares issued upon conversion | 10,000 | |||
Ownership cap, threshold percentage | 9.98% | |||
Preferred stock, voting rights | no | |||
Conversion of stock, shares converted | 678 | |||
Preferred stock, shares outstanding | 430 | |||
Common Stock | ||||
Class of Stock [Line Items] | ||||
Conversion of stock, shares issued | 6,780,000 | |||
Public Offering | Series 2 Convertible Preferred Stock | ||||
Class of Stock [Line Items] | ||||
Stock issued during period, shares, new issues | 1,108 |
Stock Awards - Valuation Assumptions (Details) |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Dividend yield | 0.00% | 0.00% |
Employee Stock Option | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rate, minimum | 1.13% | 1.25% |
Risk-free interest rate, maximum | 1.40% | 1.44% |
Expected volatility, minimum | 105.05% | 106.11% |
Expected volatility, maximum | 111.44% | 119.36% |
Minimum | Employee Stock Option | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected remaining term | 3 years 3 months 29 days | 3 years 6 months 18 days |
Maximum | Employee Stock Option | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected remaining term | 4 years 6 months | 4 years 6 months |
Warrants - Aggregate Fair Value of Such Warrants (Details) - Warrant Derivatives |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
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 | ||
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 | 0.72% | 0.81% |
Expected remaining term | 1 year 8 months 16 days | 2 years 7 months 13 days |
Expected volatility | 87.12% | 106.20% |
Maximum | ||
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 | 0.73% | 0.84% |
Expected remaining term | 1 year 9 months 18 days | 2 years 8 months 12 days |
Expected volatility | 88.44% | 109.95% |
Fair Value of Financial Instruments - Company's Liabilities Measured at Fair Value (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Recurring Financial Liabilities: | ||
Warrant derivative liabilities | $ 0 | $ 4 |
Contingent earn-out payments | 48 | 44 |
Total liabilities | 48 | 48 |
Level 1 | ||
Recurring Financial Liabilities: | ||
Warrant derivative liabilities | 0 | 0 |
Contingent earn-out payments | 0 | 0 |
Total liabilities | 0 | 0 |
Level 2 | ||
Recurring Financial Liabilities: | ||
Warrant derivative liabilities | 0 | 0 |
Contingent earn-out payments | 0 | 0 |
Total liabilities | 0 | 0 |
Level 3 | ||
Recurring Financial Liabilities: | ||
Warrant derivative liabilities | 0 | 4 |
Contingent earn-out payments | 48 | 44 |
Total liabilities | $ 48 | $ 48 |
Fair Value of Financial Instruments - Narrative (Details) - USD ($) $ in Millions |
1 Months Ended | 12 Months Ended | |
---|---|---|---|
Jan. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |||
Fair value inputs, discount rate | 14.00% | 14.00% | |
Maximum | |||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |||
Business combination, contingent consideration, percentage of revenue | 20.00% | ||
Fair value inputs, estimated future annual revenue | $ 5.0 | $ 7.7 | |
Minimum | |||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |||
Fair value inputs, estimated future annual revenue | $ 3.1 | $ 3.4 |
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