See
accompanying notes.
Notes
to Financial Statements
(unaudited)
1. Nature
of the Business
Note: The terms “the Company,” “us,” “we” and “our”
refer to BioLife Solutions, Inc.
BioLife Solutions, Inc. develops, manufactures, and markets patented
hypothermic storage and cryopreservation solutions for cells, tissues, and
organs, and provides contracted research and development and consulting services
related to optimization of biopreservation processes and
protocols. Our proprietary HypoThermosol®, CryoStor™, and generic BloodStor® biopreservation media products are marketed to cell therapy
companies, pharmaceutical companies, cord blood banks, hair transplant surgeons,
and suppliers of cells to the toxicology testing and diagnostic
markets. All of our products are serum-free and protein-free, fully
defined, and are manufactured under current Good Manufacturing Practices using
United States Pharmacopeia (“USP”) or the highest available grade
components.
Our product line of serum-free and protein-free biopreservation media
products are fully defined and formulated to reduce preservation-induced,
delayed-onset cell damage and death. This platform enabling technology provides
academic and clinical researchers significant extension in biologic source
material shelf life and also improved post-thaw cell, tissue, and organ
viability and function.
The discoveries made by our scientists and consultants relate to how
cells, tissues, and organs respond to the stress of hypothermic storage,
cryopreservation, and the thawing process, and enables the formulation of truly
innovative biopreservation media products that protect biologic material from
preservation related cellular injury, much of which is not apparent immediately
post-thaw. Our enabling technology provides significant improvement in
post-preservation viability and function of biologic material. This yield
improvement can reduce research, development, and commercialization costs of new
cell and tissue based clinical therapies.
2. Financial Condition and Going
Concern
We have been unable to generate sufficient income from operations in
order to meet our operating needs and have an accumulated deficit of
approximately $51 million at March 31, 2010. This raises substantial
doubt about our ability to continue as a going concern.
On January 11, 2008, we entered into a Secured Convertible Multi-Draw
Term Loan Facility Agreement with each of Thomas Girschweiler, a director and
stockholder of the Company, and Walter Villiger, an affiliate of the Company
(the “Investors”), pursuant to which each Investor extended to the Company a
secured convertible multi-draw term loan facility (the “Facility”) of
$2,500,000, which Facility (a) incorporated (i) a refinancing of then existing
indebtedness of the Company to the Investor, and accrued interest thereon, in
the aggregate amount of $1,431,563.30, (ii) a then current advance of $300,000,
and (iii) a commitment to advance to the Company, from time to time, additional
amounts up to a maximum of $768,436.70, (b) bears interest at the rate of 7% per
annum on the principal balance outstanding from time to time, (c) is evidenced
by a secured convertible multi-draw term loan note (the “Multi-Draw Term Loan
Note”), which was due and payable, together with accrued interest thereon, the
earlier of (i) January 11, 2010, or (ii) an Event of Default (as defined in the
Multi-Draw Term Loan Note), (d) if outstanding at the time of any bona fide
equity financing of the Company of at least Two Million Dollars ($2,000,000) (a
“Financing”), at the option of the Investor, could be converted into that number
of fully paid and non-assessable shares or units of the equity security(ies) of
the Company sold in the Financing (“New Equity Securities”) as is equal to the
quotient obtained by dividing the principal amount of the Facility outstanding
at the time of the conversion plus accrued interest thereon by 85% of the per
share or per unit purchase price of the New Equity Securities, and (e) is
secured by all of the Company’s assets.
In May and July 2008, we received an additional $1,000,000 in total from
the Investors pursuant to the Multi-Draw Term Loan Facility. On
October 20, 2008, each Facility was increased by $2,000,000 to $4,500,000 (an
aggregate of $9,000,000), and, on October 24, 2008, we received an additional
$600,000 in total from the Investors pursuant to the amended Multi-Draw Term
Loan Facilities. In January, May, July, August, and November 2009, we
received an additional $2,825,000 in total from the Investors pursuant to the
amended Multi-Draw Term Loan Facilities. In December 2009, the
Investors granted an extension of the repayment date to January 11,
2011. In February 2010, we received an additional $250,000 in total
from the Investors pursuant to the amended Multi-Draw Term Loan Facilities,
which brought our total principal balance owed under the Multi-Draw Term Loan
Notes to $8,138,127, and leaves $861,873 left to draw from the Facilities at
March 31, 2010. We analyzed the Facility in accordance with the
authoritative literature with respect to derivatives related to the contingent
conversion feature of the promissory notes at a variable exercise
price. According to our analysis, the resulting derivatives are not
material to the transaction or to the financial statements taken as a whole and
as a result, we did not record the derivative liabilities at each draw
date. In December 2009, the Facility was amended such that the
conversion feature was deleted in its entirety.
We believe that continued access to the amended Multi-Draw Term Loan
Facilities, in combination with cash generated from operations, will provide
sufficient funds for the next nine months. However, we would require additional
capital in the immediate short term if our ability to draw on the amended
Multi-Draw Term Loan Facilities is restricted or terminated. Other
factors that would negatively impact our ability to finance our operations
include (a) significant reductions in revenue from our internal projections, (b)
increased capital expenditures, (c) significant increases in cost of goods and
operating expenses, or; (d) an adverse outcome resulting from current
litigation. We expect that we may need additional capital to reach a sustainable
level of positive cash flow. Although the Investors who have provided
the amended Multi-Draw Term Loan Facilities historically have demonstrated a
willingness to grant access to the Facilities and renegotiate terms of previous
credit arrangements there is no assurance they will continue to do so in the
future. If the Investors were to become unwilling to provide access
to additional funds through the amended Multi-Draw Term Loan Facilities we would
need to find immediate additional sources of capital. There can be no
assurance that such capital would be available at all, or, if available, that
the terms of such financing would not be dilutive to other stockholders. If we
are unable to secure additional capital as circumstances require, we may not be
able to continue our operations.
These financial statements assume that we will continue as a going
concern. If we are unable to continue as a going concern, we may be
unable to realize our assets and discharge our liabilities in the normal course
of business. The financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts or
to amounts and classification of liabilities that may be necessary should we be
unable to continue as a going concern.
3. Summary of Significant Accounting
Policies
Basis of Presentation
The unaudited financial statements have been prepared by the Company
according to the rules and regulations of the Securities and Exchange Commission
(SEC), and, therefore, certain information and disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States have been omitted.
In the opinion of management, the accompanying unaudited financial
statements for the periods presented reflect all adjustments, which are normal
and recurring, necessary to fairly state the financial position, results of
operations and cash flows. These unaudited financial statements
should be read in conjunction with the audited financial statements included on
Form 10-K for the fiscal year ended December 31, 2009 filed with the
SEC.
Reclassifications
Certain prior period amounts in the financial statements have been
reclassified to conform to current period presentation. There has
been no impact on previously reported net loss or stockholders’ equity
(deficit).
Recent Accounting Pronouncements
In January 2010, the Financial Accounting Standard Board (“FASB”) issued
an amendment regarding improving disclosures about fair value measurements. This
new guidance requires some new disclosures and clarifies some existing
disclosure requirements about fair value measurement. The new disclosures and
clarifications of existing disclosures are effective for interim and annual
reporting periods beginning after December 15, 2009, except for the
disclosures about purchases, sales, issuances and settlements in the roll
forward of activity in Level 3 fair value measurements. Those disclosures are
effective for fiscal years beginning after December 15, 2010 and for
interim periods within those fiscal years. The adoption of this guidance did not
have an impact on our financial statements.
Fair Value of Financial
Instruments
We generally have the following financial instruments: cash and cash
equivalents, accounts receivable, accounts payable, accrued expenses and notes
payable. The carrying value of cash and cash equivalents, accounts
receivable, accounts payable and accrued expenses approximate their fair value
based on the short-term nature of these financial instruments. The
carrying value of notes payable approximate their fair value because interest
rates of notes payable approximate market interest rates.
|
|
March 31,
2010
|
|
|
December 31,
2009
|
|
Product, Finished Goods
|
|
$ |
171,849 |
|
|
$ |
185,448 |
|
Product, Work in Progress
|
|
|
136,547 |
|
|
|
49,350 |
|
Raw Materials
|
|
|
128,133 |
|
|
|
123,421 |
|
Total Inventory
|
|
$ |
436,529 |
|
|
$ |
358,219 |
|
5. Share-based Compensation
During 1998, we adopted the 1998 Stock Option Plan (“the Plan”). An
aggregate of 4,000,000 shares of common stock were reserved for issuance upon
the exercise of options granted under the Plan. In September 2005, the
shareholders approved an increase in the number of shares available for issuance
to 10,000,000 shares. The purchase price of the common stock underlying each
option may not be less than the fair market value at the date the option is
granted (110% of fair market value for optionees that own more than 10% of the
voting power of the Company). The Plan expired on August 31, 2008. The
options are exercisable for up to ten years from the grant
date.
During the three month period ended March 31, 2010, and subsequent to the
expiration of the Company’s 1998 Stock Option Plan, we issued, outside of the
Plan, non-incentive stock options for an aggregate of 5,299,815 shares of
Company common stock to five directors and nine employees. Options to
purchase 750,000 shares were awarded to five outside directors which vest 100%
on the first anniversary date of the awards. Options to purchase
4,549,815 shares were awarded to one director and nine employees which vests as
follows: twenty-five percent on the first anniversary date of the
award, and then one-thirty sixth of the remaining balance in each of the ensuing
thirty-six months following the first anniversary date of the
award.
We recorded stock compensation expense of $36,607 and $27,794 for the
three months ended March 31, 2010 and 2009, respectively, which is included in
general and administration expenses on the statements of
operations.
As of March 31, 2010, we had approximately $464,308 of unrecognized
compensation expense related to unvested stock options. We expect to
recognize this compensation expense over a weighted average period of
approximately three years.
We use the Black-Scholes options-pricing model (Black-Scholes model) to
value share-based employee and non-employee director stock option
awards. The determination of fair value of stock-based payment awards
using an option-pricing model requires the use of certain estimates and
assumptions that affect the reported amount of share-based compensation cost
recognized in the Statements of Operations. Among these are expected
term of options, estimated forfeitures, expected volatility of the Company’s
stock price, expected dividends and risk-free interest rate.
The fair value of share-based payments made to employees and non-employee
directors was estimated on the measurement date using the Black-Scholes model
using the following weighted average assumptions:
|
|
Three-month Period Ended
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
Risk free interest rate
|
|
|
2.23 |
% |
|
|
1.78 |
% |
Dividend yield
|
|
|
0.0 |
% |
|
|
0.0 |
% |
Expected term (in years)
|
|
|
6.8 |
|
|
|
6.4 |
|
Volatility
|
|
|
88 |
% |
|
|
82 |
% |
Management applies an estimated forfeiture rate that is derived from
historical employee termination data. The estimated forfeiture rate
applied for the three months ended March 31, 2010 and 2009 was 7.45% and 8.75%,
respectively.
A summary of
the Company’s stock option activity and related information for the three months
ended March 31, 2010 is as follows:
|
|
|
|
|
Wgtd. Avg.
|
|
|
|
|
|
|
Exercise
|
|
|
|
Shares
|
|
|
Price
|
|
Outstanding at December 31, 2009
|
|
|
9,265,000 |
|
|
$ |
0.09 |
|
Granted
|
|
|
5,299,815 |
|
|
|
0.10 |
|
Exercised
|
|
|
- |
|
|
|
- |
|
Forfeited/expired
|
|
|
- |
|
|
|
- |
|
Outstanding at March 31, 2010
|
|
|
14,564,815 |
|
|
$ |
0.09 |
|
Outstanding options vested and exercisable at March 31, 2010
|
|
|
7,012,917 |
|
|
$ |
0.09 |
|
The weighted average grant-date fair value of option awards granted was
$.08 and $.06 per share during the three months ended March 31, 2010 and 2009,
respectively.
As of March 31, 2010, there was $210,600 of aggregate intrinsic value of
outstanding stock options, including $147,633 of aggregate intrinsic value of
exercisable stock options. Intrinsic value is the total pretax
intrinsic value for all “in-the-money” options (i.e., the difference between the
Company’s closing stock price on the last trading day of March 31, 2010 and the
exercise price, multiplied by the number of shares) that would have been
received by the option holders had all option holders exercised their options as
of March 31, 2010. This amount may change, based on the fair market
value of the Company’s stock.
6. Warrants
The following table summarizes warrant activity for the three months
ended March 31, 2010:
|
|
Period Ended
|
|
|
|
March 31, 2010
|
|
|
|
|
|
|
Wgtd. Avg.
|
|
|
|
|
|
|
Exercise
|
|
|
|
Shares
|
|
|
Price
|
|
Outstanding at beginning of year
|
|
|
2,218,750
|
|
|
$
|
0.12
|
|
Exercised
|
|
|
––
|
|
|
|
––
|
|
Forfeited
|
|
|
––
|
|
|
|
––
|
|
Outstanding at March 31, 2010
|
|
|
2,218,750
|
|
|
$
|
0.12
|
|
|
|
|
|
|
|
|
|
|
Warrants exercisable at March 31, 2010
|
|
|
2,218,750
|
|
|
$
|
0.12
|
|
The outstanding warrants have expiration dates between May 2012 and
December 2013.
7. Net Loss per Common Share
Basic net loss per common share is calculated by dividing the net loss by
the weighted average number of common shares outstanding during the period.
Diluted earnings per share is calculated using the weighted average number of
common shares outstanding plus dilutive common stock equivalents outstanding
during the period. Common stock equivalents are excluded for the periods ended
March 31, 2010 and 2009 since the effect is anti-dilutive due to the Company’s
net losses. Common stock equivalents include stock options, warrants, and
convertible debt (2009 only).
Basic weighted average common shares outstanding, and the potentially
dilutive securities excluded from loss per share computations because they are
anti-dilutive, are as follows for the periods ended March 31, 2010 and
2009:
|
|
Three-month period ended
March 31,
|
|
|
|
2010
|
|
|
2009
|
|
Basic and diluted weighted average common stock shares
outstanding
|
|
|
69,679,854 |
|
|
|
69,639,854 |
|
Potentially dilutive securities excluded from loss per share
computations:
|
|
|
|
|
|
|
|
|
Common stock options
|
|
|
14,564,815 |
|
|
|
9,725,000 |
|
Common stock purchase warrants
|
|
|
2,218,750 |
|
|
|
2,218,750 |
|
8. Related Party Transactions
We incurred $12,756 and $15,956 in legal fees during the three
months ended March 31, 2010 and 2009, respectively, for services provided by a
law firm in which a director and stockholder of the Company is a
partner. Pursuant to a consulting agreement, we incurred $24,000 and
$30,000 in consulting fees during the three months ended March 31, 2010 and
2009, respectively, for services provided by a director and stockholder of the
Company.
Included in accounts payable and accrued expenses are $39,182 and $23,895
due to related parties for services rendered as of March 31, 2010 and December
31, 2009, respectively.
In April 2010, the Company received an additional $350,000 in total
from Messrs. Girschweiler and Villiger pursuant to the amended Multi-Draw
Term Loan Facility described in Note 2.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The statements contained in this Quarterly Report on Form 10-Q,
including under the section titled “Management’s Discussion and Analysis of
Financial Condition and Results of Operations,” include forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, including, without limitation, statements regarding the Company
management’s expectations, hopes, beliefs, intentions or strategies regarding
the future. The words “believe,” “may,” “will,” “estimate,” “continue,”
“anticipate,” “intend,” “expect,” “plan” and similar expressions may identify
forward-looking statements, but the absence of these words does not mean that a
statement is not forward-looking. The forward-looking statements contained
in this Quarterly Report on Form 10-Q are based on its current expectations and
beliefs concerning future developments and their potential effects on the
Company. There can be no assurance that future developments affecting it
will be those that the Company anticipated. These forward-looking
statements involve a number of risks, uncertainties or other assumptions that
may cause actual results or performance to be materially different from those
expressed or implied by these forward-looking statements. These risks and
uncertainties include those factors described in greater detail in the risk
factors disclosed in our Form 10-K for the fiscal year ended December 31, 2009
filed with the Securities and Exchange Commission. Should one or more of these
risks or uncertainties materialize, or should any of our assumptions prove
incorrect, actual results may vary in material respects from those anticipated
in these forward-looking statements. The Company undertakes no obligation
to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required under
applicable securities laws.
Overview
Management’s discussion and analysis provides additional insight into
BioLife Solutions, Inc. and is provided as a supplement to, and should be read
in conjunction with, its annual report on Form 10-K for the fiscal year ended
December 31, 2009 filed with the Securities and Exchange
Commission.
BioLife Solutions, Inc. develops, manufactures, and markets patented
hypothermic storage and cryopreservation solutions for cells, tissues, and
organs, and provides contracted research and development and consulting services
related to optimization of biopreservation processes and
protocols. Our proprietary HypoThermosol®, CryoStor™, and generic BloodStor® biopreservation media products are marketed to cell therapy
companies, pharmaceutical companies, cord blood banks, hair transplant surgeons,
and suppliers of cells to the toxicology testing and diagnostic
markets. All of our products are serum-free and protein-free, fully
defined, and are manufactured under current Good Manufacturing Practices using
United States Pharmacopeia (“USP”) or the highest available grade
components.
Our product line of serum-free and protein-free biopreservation media
products are fully defined and formulated to reduce preservation-induced,
delayed-onset cell damage and death. This platform enabling technology provides
academic and clinical researchers significant extension in biologic source
material shelf life and also improved post-thaw cell, tissue, and organ
viability and function.
The discoveries made by our scientists and consultants relate to how
cells, tissues, and organs respond to the stress of hypothermic storage,
cryopreservation, and the thawing process, and enables the formulation of truly
innovative biopreservation media products that protect biologic material from
preservation related cellular injury, much of which is not apparent immediately
post-thaw. Our enabling technology provides significant improvement in
post-preservation viability and function of biologic material. This yield
improvement can reduce research, development, and commercialization costs of new
cell and tissue based clinical therapies.
Critical Accounting Policies and Significant Judgments and
Estimates
Management’s discussion and analysis of the Company’s financial condition
and results of operations is based on its financial statements, which have been
prepared in accordance with U.S. generally accepted accounting principles for
interim financial reporting. The preparation of financial statements requires
the Company to make estimates and assumptions that affect the reported amounts
of assets and liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements, and reported revenues and expenses
during the reporting periods presented. On an ongoing basis, it evaluates
estimates, including those related to share-based compensation and expense
accruals. The Company bases its estimates on historical experience and on other
factors that it believes are reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results
may differ materially from these estimates under different assumptions or
conditions. The Company’s critical accounting policies and estimates have not
changed significantly from those policies and estimates disclosed under the
heading “Critical Accounting Policies and Estimates” under Item 7 in the
Company’s Form 10-K for the fiscal year ended December 31, 2009, filed with
the Securities and Exchange Commission.
Liquidity and Capital Resources
As of March 31, 2010, we had $2,292 in cash and cash
equivalents. To date, we have financed our operations primarily
through proceeds from debt instruments including the Secured Convertible
Multi-draw Term Loan Facilities described in detail below.
On January 11, 2008, we entered into a Secured Convertible Multi-Draw
Term Loan Facility Agreement with each of Thomas Girschweiler, a director and
stockholder of the Company, and Walter Villiger, an affiliate of the Company
(the “Investors”), pursuant to which each Investor extended to the Company a
secured convertible multi-draw term loan facility (the “Facility”) of
$2,500,000, which Facility (a) incorporated (i) a refinancing of then existing
indebtedness of the Company to the Investor, and accrued interest thereon, in
the aggregate amount of $1,431,563.30, (ii) a then current advance of $300,000,
and (iii) a commitment to advance to the Company, from time to time, additional
amounts up to a maximum of $768,436.70, (b) bears interest at the rate of 7% per
annum on the principal balance outstanding from time to time, (c) is evidenced
by a secured convertible multi-draw term loan note (the “Multi-Draw Term Loan
Note”), which was due and payable, together with accrued interest thereon, the
earlier of (i) January 11, 2010, or (ii) an Event of Default (as defined in the
Multi-Draw Term Loan Note), (d) if outstanding at the time of any bona fide
equity financing of the Company of at least Two Million Dollars ($2,000,000) (a
“Financing”), at the option of the Investor, could be converted into that number
of fully paid and non-assessable shares or units of the equity security(ies) of
the Company sold in the Financing (“New Equity Securities”) as is equal to the
quotient obtained by dividing the principal amount of the Facility outstanding
at the time of the conversion plus accrued interest thereon by 85% of the per
share or per unit purchase price of the New Equity Securities, and (e) is
secured by all of the Company’s assets.
In May and July 2008, we received an additional $1,000,000 in total from
the Investors pursuant to the Multi-Draw Term Loan Facility. On
October 20, 2008, each Facility was increased by $2,000,000 to $4,500,000 (an
aggregate of $9,000,000), and, on October 24, 2008, we received an additional
$600,000 in total from the Investors pursuant to the amended Multi-Draw Term
Loan Facilities. In January, May, July, August, and November 2009, we
received an additional $2,825,000 in total from the Investors pursuant to the
amended Multi-Draw Term Loan Facilities. In December 2009, the
Investors granted an extension of the repayment date to January 11,
2011. In February 2010, we received an additional $250,000 in total
from the Investors pursuant to the amended Multi-Draw Term Loan Facilities,
which brought our total principal balance owed under the Multi-Draw Term Loan
Notes to $8,138,127, and leaves $861,873 left to draw from the Facilities at
March 31, 2010. We analyzed the Facility in accordance with the
authoritative literature with respect to derivatives related to the contingent
conversion feature of the promissory notes at a variable exercise
price. According to our analysis, the resulting derivatives are not
material to the transaction or to the financial statements taken as a whole and
as a result, we did not record the derivative liabilities at each draw
date. In December 2009, the Facility was amended such that the
conversion feature was deleted in its entirety.
Operating Capital and Capital Expenditure
Requirements
We believe that continued access to the amended Multi-Draw Term Loan
Facilities, in combination with cash generated from operations, will provide
sufficient funds for the next nine months. However, we would require additional
capital in the immediate short term if our ability to draw on the amended
Multi-Draw Term Loan Facilities is restricted or terminated. Other
factors that would negatively impact our ability to finance our operations
include (a) significant reductions in revenue from our internal projections, (b)
increased capital expenditures, (c) significant increases in cost of goods and
operating expenses, or; (d) an adverse outcome resulting from current
litigation. We expect that we may need additional capital to reach a sustainable
level of positive cash flow. Although the Investors who have provided
the amended Multi-Draw Term Loan Facilities historically have demonstrated a
willingness to grant access to the Facilities and renegotiate terms of previous
credit arrangements there is no assurance they will continue to do so in the
future. If the Investors were to become unwilling to provide access
to additional funds through the amended Multi-Draw Term Loan Facilities we would
need to find immediate additional sources of capital. There can be no
assurance that such capital would be available at all, or, if available, that
the terms of such financing would not be dilutive to other stockholders. If we
are unable to secure additional capital as circumstances require, we may not be
able to continue our operations.
Net Cash Used in Operating
Activities
For the three month period ended March 31, 2010, net cash used in
operating activities was $(377,476) as compared to net cash used in operating
activities of $(811,807) for the three month period ended March 31,
2009. The $434,331 decrease in net cash used by operations primarily
is reflected in the lower net loss for the year to date, partially offset by
non-cash operating expenses including share-based compensation, and changes in
operating assets and liabilities.
Net Cash Used in Investing
Activities
Net cash used in investing activities consisted of purchases of property
and equipment. For the three month period ended March 31, 2010, the
aggregate investment in property and equipment was $(9,383), compared to
$(258,721) for the three month period ended March 31, 2009, primarily due to the
manufacturing facility build-out that took place in the first quarter of
2009.
Net Cash Provided by Financing
Activities
Net cash provided by financing activities totaled $250,000 for the three
month period ended March 31, 2010, which resulted from the draws taken on the
Multi-Draw Term Loan Facilities. Net cash provided by financing
activities totaled $1,400,000 for the three month period ended March 31, 2009
resulting primarily from draws taken on the Multi-Draw Term Loan
Facilities.
Results of Operations
Three-Month Period Ended March 31, 2010 compared to
the Three-Month Period Ended March 31, 2009
Revenue
Product sales for the three months ended March 31, 2010 increased
$139,964, or 38%, to $507,909, compared to $367,945 for the three months ended
March 31, 2009. This increase in revenue is primarily due to higher
product sales, including our BloodStor® cord blood stem cell freeze media introduced in the third
quarter of 2009, to existing customers and new
customers. Additionally, licensing revenue for the three months ended
March 31, 2010 was $5,000, compared to $9,167 for the three months ended March
31, 2009. For 2010 licensing revenue is related to two product
license agreements with one customer.
Cost of Product Sales
Cost of product sales for the three months ended March 31, 2010 increased
by $43,912, or 19%, to $274,189, compared to $230,277 for the three months ended
March 31, 2009. This increase is primarily the result of increased
production costs associated with the increase in product sales. Gross
margin as a percentage of revenue increased to 47%, compared to 39% for the same
period in 2009. The gross margin reflects the transition from a
contract manufacturer to internal manufacturing which began in May
2009.
Research and Development
Expenses
Expenses relating to research and development for the three months ended
March 31, 2010 decreased $66,692, or 50%, to $66,932, compared to $133,624 for
the three months ended March 31, 2009. The decrease primarily is due
to approximately $40,000 in personnel related cost as a result of a reduction in
workforce that took place at the end of July 2009, and a decrease of
approximately $11,000 in lab supplies and small equipment expenses related to
the build-out of the research and development lab facility in the first quarter
of 2009.
Sales and Marketing Expenses
For the three months ended March 31, 2010, sales and marketing expenses
decreased $553, or .5%, to $123,028, compared to $123,581 for the three months
ended March 31, 2009. The lower expense primarily is due to a
decrease of approximately $25,000 in personnel related cost due as a result of a
reduction in workforce that took place at the end of July 2009, offset by an
increase of approximately $24,000 in trade show and travel related costs
resulting from the timing of attendance at key trade shows.
General and Administrative
Expenses
For the three months ended March 31, 2010, general and administrative
expenses decreased $13,501, or 3%, to $442,574, compared to $456,075 for the
three months ended March 31, 2009. The reduction primarily is due to
lower costs of approximately $13,000 in personnel related cost as a result of
staff salary reductions that took place in August 2009.
Manufacturing Start-up Costs
There were no manufacturing start-up costs for the three months ended
March 31, 2010. In the third quarter of 2008, to reduce cost of
product sales and enhance production flexibility, we decided to transition our
manufacturing process in-house. The first production run was
completed half way through the second quarter in May 2009 at which time costs
were no longer classified as manufacturing start-up. Manufacturing
start-up costs were $166,951 for the three months ended March 31,
2009.
Interest Expense
Interest expense increased to $136,372 for the three months ended March
31, 2010 compared to $106,853 for the three months ended March 31,
2009. The increase is due to a higher average debt
balance.
Contractual Obligations
We did not
have any off-balance sheet arrangements as defined in S-K
303(a)(4)(ii).
ITEM 4T. CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures designed to ensure that we
are able to collect the information required to be disclosed in the reports that
are filed with the SEC, and to record, process, summarize and disclose this
information within the time periods specified in the rules of the SEC.
Based on an evaluation of our disclosure controls and procedures as of the end
of the period covered by this report conducted by its management, with the
participation of the Company’s Chief Executive/Chief Financial Officer, the
Chief Executive/Chief Financial Officer believes that these controls and
procedures are effective.
There were no changes in our internal control over financial reporting
during the first quarter of fiscal 2010 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
PART II: OTHER
INFORMATION
ITEM
6. EXHIBITS
See accompanying Index to Exhibits included after the signature page of
this report for a list of exhibits filed or furnished with this
report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized.
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BIOLIFE
SOLUTIONS, INC.
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Dated:
May 13, 2010
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Michael
Rice
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President
and Chief Executive Officer
(Principal Executive and
Financial Officer)
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BioLife
Solutions, Inc.
INDEX TO
EXHIBITS
Exhibit
No.
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Description
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31.1*
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Certification
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
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32.1*
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Certification
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
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*Filed
herewith
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