WaferGen Biosystems second-quarter revenue increases to $432,000

WaferGen Biosystems, Inc. (OTC Bulletin Board: WGBS), a leading developer of state-of-the-art genomic analysis systems, today reported financial results for the three and six months ended June 30, 2010.  

Revenue

Revenue for the second quarter ended June 30, 2010 grew to $432,000 compared to $69,000 for the second quarter ended June 30, 2009.  Revenue for the six months ended June 30, 2010 grew to $822,000 compared to $111,000 for the six months ended June 30, 2009.  The majority of the revenue was from the SmartChip Early-Access Program under which WaferGen sold a combination of one or more of its SmartChip Systems, SmartChips, and/or SmartChip Gene Expression Profiling Services to certain early-access customers. The company's SmartChip revenue growth for the quarter increased approximately 70 percent over the prior quarter.  The company aims to reach approximately $1.5 million to $2.0 million of total revenue by year end with respect to its SmartChip sales.

Net Income/Loss

WaferGen reported a net income of $646,000, or $0.02 per share (basic and diluted), for the second quarter of 2010 compared to a net loss of $2.9 million or $(0.11) per share (basic and diluted), for the same period in 2009.  The company reported a net loss of $3.9 million, or $(0.12) per share (basic and diluted), for the first six months ended June 30, 2010 compared to a net loss of $4.7 million, or $(0.19) per share (basic and diluted), from the same period in 2009.

The net income for the three months ended June 30, 2010 and the net loss for the first six months of 2010 include operating losses of $2.8 million for the three months ended June 30, 2010 compared to the same amount of $2.8 million in the same period of 2009; and $5.4 million for the first six months of 2010 compared to $4.6 million for the first six months of 2009.

Net income/loss for the three and six months ended June 30, 2010, was significantly impacted by warrant derivative revaluations.  Net gains from warrant derivative revaluations for the three months ended June 30, 2010 were $3.6 million, compared to $34 thousand for the three months ended June 30, 2009; and $1.7 million for the six months ended June 30, 2010 compared to $48 thousand for the six months ended June 30, 2009.  These non-cash gains are attributed to revaluations of warrants and result primarily from a decrease in the company's stock price in the period.

Operating Expenses

For the three months ended June 30, 2010, research and development expenses increased $282,000 as compared to the three months ended June 30, 2009.  For the six months ended June 30, 2010, research and development expenses increased $864,000, as compared to the six months ended June 30, 2009.  The increase resulted primarily from increases in salaries, wages and facilities costs, which arose due to an increase in the head count of employees and an expansion in space occupied in conjunction with the development of SmartChip products and services.  The increase was partially offset by a reduction in depreciation expense.

For the three months ended June 30, 2010, sales and marketing expenses increased by $295,000, as compared to the three months ended June 30, 2009.  For the six months ended June 30, 2010, sales and marketing expenses increased by $409,000, as compared to the six months ended June 30, 2009.  The increase resulted primarily from increases in salaries and wages, including commissions, non-cash stock compensation expense, consulting fees, trade shows and travel, which arose due to an increase in the head count of sales and marketing employees and consultants, and increases in promotional activities in conjunction with the commercialization and early-access sales of SmartChip products and services.

For the three months ended June 30, 2010, general and administrative expenses decreased $214,000, as compared to the three months ended June 30, 2009. The decrease resulted primarily from the absence of certain severance costs incurred in 2009 related to the departure of two executive officers in 2009.  For the six months ended June 30, 2010, general and administrative expenses increased $98,000 as compared to the six months ended June 30, 2009.  The increase is primarily due to higher personnel costs, mainly for senior management and consultants.

Assets

The company ended the second quarter with approximately $3.6 million in total assets, including $1.5 million in cash and cash equivalents.  This does not include the funds that the company raised from the sale of common stock and warrants in July 2010 of $7.2 million ($6.8 million after closing costs).  The company ended the first quarter 2010 with $4.9 million in total assets, including cash of $3.6 million, and working capital of $2.1 million.