Unassociated Document
UNITED
STATES
Securities
and Exchange Commission
Washington,
DC 20549
FORM
10-QSB
Quarterly
Report Under Section 13 or 15(d)
of
the
Securities Exchange Act of 1934
For
the
quarterly period ended March
31,
2006 Commission
file number 0-18170
BioLife
Solutions, Inc.
(Exact
name of small business issuer as specified in its charter)
Delaware
94-3076866
(State
of
Incorporation)
(IRS
Employer I.D. Number)
171
Front Street
Owego,
NY
13827
(Address
of principal executive offices)
Issuer's
telephone number, including area code: (607)
687-4487
Check
whether the issuer (1) filed all reports required to be filed by Section 13
or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes
x
No o
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12G-2 of the Exchange
Act). Yes o No x
68,773,188
shares of BioLife Solutions, Inc. Common Stock, par value $.001 per share,
were
outstanding as of May 14, 2006.
Transitional
Small Business Disclosure Format (check one).
Yes o No x
BioLife
Solutions, Inc.
Form
10-QSB
Quarter
Ended March 31, 2006
Index
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|
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Page
No.
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Part
I. Financial Information
|
|
Item
1. Financial Statements:
|
|
|
Unaudited
Balance Sheet at March 31, 2006
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2
|
|
|
Unaudited
Statements of Operations for the three month periods ended March
31, 2006
and March 31, 2005
|
3
|
|
|
Unaudited
Statements of Cash Flows for the three month periods ended March
31, 2006
and March 31, 2005
|
4
|
|
|
Notes
to Financial Statements
|
5-7
|
|
Item
2. Management’s Discussion and Analysis
|
8-10
|
|
Item
3. Controls and Procedures
|
11
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|
Part
II. Other
Information
|
|
Item
6. Exhibits and Reports
|
12-13
|
|
Signatures
|
14
|
|
Certifications
|
15-17
|
Part
I
Financial
Information
Item
1. Financial Statements
BioLife
Solutions, Inc.
Balance
Sheet
(Unaudited)
|
|
|
March
31,
|
|
|
|
|
2006
|
|
Assets
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
30,863
|
|
Receivables,
net of allowance for doubtful accounts
|
|
|
82,975
|
|
Inventories
|
|
|
101,336
|
|
Prepaid
expenses and other current assets
|
|
|
21,317
|
|
Total
current assets
|
|
|
236,491
|
|
Property
and equipment
|
|
|
|
|
Leasehold
improvements
|
|
|
49,627
|
|
Furniture
and computer equipment
|
|
|
42,247
|
|
Manufacturing
and other equipment
|
|
|
130,575
|
|
Total
|
|
|
222,449
|
|
Less:
Accumulated depreciation and amortization
|
|
|
(168,733
|
)
|
Net
property and equipment
|
|
|
53,716
|
|
Total
assets
|
|
$
|
290,207
|
|
Liabilities
and Stockholders' Deficit
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Accounts
payable
|
|
$
|
142,657
|
|
LDC
Loan - current maturities
|
|
|
28,807
|
|
Accrued
compensation
|
|
|
77,428
|
|
Total
current liabilities
|
|
|
248,892
|
|
Long
term liabilities
|
|
|
|
|
LDC
Loan - less current maturities above
|
|
|
190,140
|
|
Total
liabilities
|
|
|
439,032
|
|
Commitments
and contingencies
|
|
|
|
|
Stockholders’
deficit
|
|
|
|
|
Series
F convertible preferred stock, $.001 par value; 12,000 shares authorized,
issued and outstanding
|
|
|
12
|
|
Series
G convertible preferred stock, $.001 par value; 80 shares authorized,
55
shares issued and outstanding
|
|
|
-
|
|
Common
stock, $0.001 par value, 100,000,000 shares authorized, 12,413,209
shares
issued and outstanding
|
|
|
12,413
|
|
Additional
paid-in capital
|
|
|
40,731,725
|
|
Accumulated
deficit
|
|
|
(40,892,975
|
)
|
Total
stockholders’ deficit
|
|
|
(148,825
|
)
|
Total
liabilities and stockholders’ deficit
|
|
$
|
290,207
|
|
See
notes
to financial statements
BioLife
Solutions, Inc.
Statements
of Operations
(Unaudited)
|
|
Three
Months Ended
|
|
|
|
March
31,
|
|
|
|
2006
|
|
|
2005
|
|
Revenue
|
|
|
|
|
|
|
|
Product
sales
|
|
$
|
147,045
|
|
$
|
87,364
|
|
Facilities
fee - related party
|
|
|
-
|
|
|
20,863
|
|
Management
fee - related party
|
|
|
-
|
|
|
11,475
|
|
Total
revenue
|
|
|
147,045
|
|
|
119,702
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Product
sales
|
|
|
81,219
|
|
|
48,113
|
|
Research
and development
|
|
|
4,280
|
|
|
11,330
|
|
Sales
and marketing
|
|
|
37,867
|
|
|
24,056
|
|
General
and administrative
|
|
|
232,799
|
|
|
201,762
|
|
Total
expenses
|
|
|
356,165
|
|
|
285,261
|
|
Operating
loss
|
|
|
(209,120
|
)
|
|
(165,559
|
)
|
Other
income (expense)
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(2,795
|
)
|
|
-
|
|
Other
income
|
|
|
901
|
|
|
2,782
|
|
Total
other income (expense)
|
|
|
(1,894
|
)
|
|
2,782
|
|
Net
Loss
|
|
$
|
(211,014
|
)
|
$
|
(162,777
|
)
|
Basic
and diluted net loss per common share:
|
|
|
|
|
|
|
|
Total
basic and diluted net loss per common share
|
|
$
|
(0.02
|
)
|
$
|
(0.01
|
)
|
Basic
and diluted weighted average common shares used to compute net
loss per
share
|
|
|
12,413,209
|
|
|
12,413,209
|
|
See
notes
to financial statements
BioLife
Solutions, Inc.
Statements
of Cash Flows
(Unaudited)
|
|
Three
Months Ended
|
|
|
|
March
31,
|
|
|
|
2006
|
|
2005
|
|
Cash
flows from operating activities
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(211,014
|
)
|
$
|
(162,777
|
)
|
Adjustments
to reconcile net loss to net cash used by operating
activities
|
|
|
|
|
|
|
|
Depreciation
|
|
|
12,382
|
|
|
15,976
|
|
Stock-based
compensation expense
|
|
|
23,708
|
|
|
-
|
|
Change
in operating net assets and liabilities
|
|
|
|
|
|
|
|
(Increase)
decrease in
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(6,632
|
)
|
|
18,431
|
|
Inventories
|
|
|
22,078
|
|
|
(706
|
)
|
Prepaid
and other current assets
|
|
|
(21,317
|
)
|
|
(23,383
|
)
|
Increase
(decrease) in
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
76,993
|
|
|
12,668
|
|
Accrued
expenses
|
|
|
(45,736
|
)
|
|
(6,560
|
)
|
Accrued
compensation
|
|
|
6,130
|
|
|
(26,201
|
)
|
Net
cash used by operating activities
|
|
|
(143,408
|
)
|
|
(170,262
|
)
|
Cash
flows from investing activities
|
|
|
|
|
|
|
|
Purchase
of property and equipment
|
|
|
(3,844
|
)
|
|
-
|
|
Net
cash used by investing activities
|
|
|
(3,844
|
)
|
|
-
|
|
Cash
flows from financing activities
|
|
|
|
|
|
|
|
Principal
payments on notes payable
|
|
|
(6,980
|
)
|
|
-
|
|
Net
cash used by financing activities
|
|
|
(6,980
|
)
|
|
-
|
|
Net
decrease in cash
|
|
|
(154,232
|
)
|
|
(170,262
|
)
|
Cash
- beginning of period
|
|
|
185,095
|
|
|
531,684
|
|
Cash
- end of period
|
|
$
|
30,863
|
|
$
|
361,422
|
|
See
notes
to financial statements
BioLife
Solutions, Inc.
Notes
to Financial Statements
A. General
Incorporated
in 1998 in the State of Delaware as a wholly owned subsidiary of Cryomedical
Sciences, Inc. (“Cryomedical”), BioLife Solutions, Inc. (“BioLife” or the
“Company”) develops, manufactures and markets low temperature technologies for
use in preserving and prolonging the viability of cellular and genetic material
for use in cell therapy and tissue engineering. The Company’s patented
HypoThermosol® platform technology is used to provide customized preservation
solutions designed to significantly prolong cell, tissue and organ viability.
These solutions, in turn, could improve clinical outcomes for new and existing
cell and tissue therapy applications, as well as for organ transplantation.
The
Company currently markets its HypoThermosol® line of solutions directly to
companies and labs engaged in pre-clinical research, and to academic
institutions.
In
May
2002, Cryomedical implemented a restructuring and recapitalization program
designed to shift its focus away from cryosurgery toward addressing preservation
and transportation needs in the biomedical marketplace. On June 25, 2002 the
Company completed the sale of its cryosurgery product line and related
intellectual property assets to Irvine, CA-based Endocare Inc., a public
company. In the transaction, the Company transferred ownership of all of its
cryosurgical installed base, inventory, and related intellectual property,
in
exchange for $2.2 million in cash and 120,022 shares of Endocare restricted
common stock. In conjunction with the sale of Cryomedical’s cryosurgical assets,
Cryomedical’s Board of Directors also approved merging BioLife into Cryomedical
and changing its name to BioLife Solutions, Inc. In September 2002, Cryomedical
changed its name to BioLife Solutions, Inc. and began to trade under the new
ticker symbol, “BLFS” on the OTCBB. Subsequent to the merger, the Company ceased
to have any subsidiaries.
The
Balance Sheet as of March 31, 2006, and the Statements of Operations and
Statements of Cash Flows for the three month periods ended March 31, 2006 and
2005 have been prepared without audit. In the opinion of management, all
adjustments necessary to present fairly the financial position, results of
operations, and cash flows at March 31, 2006, and for all periods then ended,
have been recorded. All adjustments recorded were of a normal recurring
nature.
Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted. It is suggested that these financial statements be read
in
conjunction with the financial statements and notes thereto, included in the
Company's Annual Report on Form 10-KSB for the year ended December 31,
2005.
The
results of operations for the three-month period ended March 31, 2006 are not
necessarily indicative of the operating results anticipated for the full
year.
B. Financial
Condition
The
Company has been unable to generate sufficient income from operations to meet
its operating needs. At March 31, 2006, the Company had stockholders' deficit
of
approximately $149,000 and a working capital deficit of approximately $12,000.
These factors raise doubt about the Company’s ability to continue as a going
concern.
In
March
2006, in order to secure much needed capital, the Board of Directors approved
a
plan to raise additional capital from the holders of its outstanding warrants
and stock options at a reduced price of $0.04 per share, in order to a) prevent
further dilution by the issuance of additional securities to outsiders, and
(b)
to restructure the capitalization of the Company. For the period April 1 through
May 1, 2006, the Company was able to raise approximately $879,000 in cash and
was relieved of certain liabilities totaling approximately $113,000 and is
due
approximately $30,000 in subscriptions for a total of approximately $1,022,000
through (a) the exercise of warrants to purchase 23,022,783 shares of the
Company’s Common Stock at $0.04, and (b) the exercise of stock options to
purchase 2,547,000 shares of the Company’s Common Stock at $0.04.
The
offering was conditioned upon all shares of the Company’s Series F Preferred
Stock and Series G Preferred Stock converting into Common Stock of the Company.
As a result, subsequent to March 31, 2006, 12,000 shares of the Company’s Series
F Preferred Stock were converted to 4,800,000 shares of Common Stock and 55.125
shares of the Company’s Series G Preferred Shares were converted to 17,226,563
shares of Common Stock.
The
Company believes it has sufficient funds to continue operations in the near
term. Future capital requirements will depend on many factors, including the
ability to market and sell the Company’s product line, research and development
programs, the scope and results of clinical trials, the time and costs involved
in obtaining regulatory approvals, the costs involved in obtaining and enforcing
patents or any litigation by third parties regarding intellectual property,
the
status of competitive products, the maintenance of our manufacturing facility,
the maintenance of sales and marketing capabilities, and the establishment
of
collaborative relationships with other parties.
These
financial statements assume that the Company will be able to continue as a
going
concern. If the Company is unable to continue as a going concern, the Company
may be unable to realize its assets and discharge its 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
nor
to amounts and classification of liabilities that may be necessary should the
Company be unable to continue as a going concern.
C. Inventories
Inventories
consist of $77,736 of finished product and $23,600 of manufacturing materials
at
March 31, 2006.
D. Earnings
(Loss) Per Share
Basic
earnings (loss) per share is calculated by dividing the net income (loss)
attributable to common stockholders by the weighted average number of common
shares outstanding during the period. Diluted earnings per share is calculated
by dividing income from operations by the weighted average number of shares
outstanding, including potentially dilutive securities such as preferred stock,
stock options and warrants. Potential common shares were not included in the
diluted earnings per share amounts for the three-month periods ended March
31,
2006 and 2005 as their effect would have been anti-dilutive.
E. Stock-Based
Compensation
In
December 2004, the FASB issued SFAS No. 123(R) (revised 2004) "Share-Based
Payment." This statement replaces SFAS No. 123, "Accounting for Stock-Based
Compensation," and supersedes Accounting Principles Board ("APB") Opinion No.
25, "Accounting for Stock Issued to Employees." This statement requires that
the
cost resulting from all share-based payment transactions be recognized in the
financial statements. Pro forma disclosure is no longer an alternative. This
statement establishes fair value as the measurement objective in accounting
for
share-based payment arrangements and requires all entities to apply a
fair-value-based measurement method in accounting for share-based payment
transactions with employees. This statement uses the terms compensation and
payment in their broadest senses to refer to the consideration paid for goods
or
services, regardless of whether the supplier is an employee.
The
Company adopted SFAS No. 123(R) effective January 1, 2006 and is recognizing
the
cost of stock-based compensation, consisting of stock options, using the
“Modified Prospective Application” transition method whereby the cost of new
awards and awards modified, repurchased or cancelled after January 1, 2006
and
the portion of awards for which the requisite service has not been rendered
(unvested awards) that are outstanding as of January 1, 2006, as the requisite
service is rendered on or after the effective date, January 1, 2006. This
standard will have a material impact on the Company’s financial statements.
Under the modified prospective application transition method, no restatement
of
previously issued financial statements is required. Compensation expense is
measured and recognized beginning in 2006 as follows:
AWARDS
GRANTED AFTER DECEMBER 31, 2005 - Awards are measured at their fair value at
date of grant. The resulting compensation expense is recognized in the Statement
of Operations ratably over the vesting period of the award.
AWARDS
GRANTED PRIOR TO DECEMBER 31, 2005 - Awards were measured at their fair value
at
the date of original grant. Compensation expense associated with the unvested
portion of these options at January 1, 2006 is recognized in the Statement
of
Operations ratably over the remaining vesting period. Compensation expense
associated with options granted prior to January 1, 2006 totaled $23,708 for
the
quarter ended March 31, 2006. No similar expense was charged against income
in
the prior periods as the Company had elected to apply the provisions of APB
No.
25 to those periods as permitted by SFAS No. 123.
For
all
grants issued after December 31, 2005 the amount of recognized compensation
expense is adjusted based upon an estimated forfeiture rate which is derived
from
historical data.
For
the
three months ended March 31, 2005, the intrinsic value based method of
accounting for stock options prescribed by APB No. 25 was applied. Accordingly,
no compensation expense was recognized for these stock options since all options
granted had an exercise price equal to the market value of the underlying stock
on the grant date. If compensation expense had been recognized based on the
estimate of the fair value of each option granted in accordance with the
provisions of SFAS No. 123 as amended by SFAS No. 148, net loss would have
been
increased to the following proforma amount as follows:
|
|
|
Three
Months Ended
|
|
|
|
|
March
31,
|
|
|
|
|
2005
|
|
Net
loss as reported
|
|
$
|
(162,777
|
)
|
|
|
|
|
|
Compensation
expense based on fair value, net
of related tax effects
|
|
|
(17,805
|
)
|
|
|
|
|
|
Pro
forma net loss
|
|
$
|
(180,582
|
)
|
|
|
|
|
|
Basic
and diluted net loss per share as reported
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
Pro
forma
|
|
$
|
(0.01
|
)
|
Proforma
compensation expense recognized under SFAS No. 123 does not consider estimated
forfeitures.
F. Reclassifications
Certain
March 2005 amounts have been reclassified to conform to the March 2006
presentation. The reclassifications had no material effect on
operations.
G. Subsequent
Event
On
May 1,
2006, a new member was elected to the Board of Directors. The Company granted
to
the new director options to purchase 500,000 shares of the Company’s common
stock at an exercise price of $0.085 per share.
On
May 1,
2006, the Company declared the accumulated dividends payable on the Series
F
preferred stock and Series G preferred stock through December 31, 2005, which
are to be paid in common stock of the Company on May 1, 2006. The total number
of shares payable in connection with such dividend is 8,763,633. After the
payment of such dividends and the issuance of shares of common stock in
connection with the conversion of the Series F preferred stock and Series G
preferred stock and the exercise of the aforementioned options/warrants, the
Company will have 68,773,188 shares of common stock issued and
outstanding.
Item
2. Management’s Discussion and Analysis
The
following discussion should be read in conjunction with the Company's financial
statements and notes thereto set forth elsewhere herein.
BioLife
has pioneered the next generation of preservation solutions designed to maintain
the viability and health of cellular matter and tissues during freezing,
transportation and storage. Based on the Company's proprietary,
bio-packaging technology and a patented understanding of the mechanism of
cellular damage and death, these products enable the biotechnology and medical
community to address a growing problem that exists today. The expanding practice
of cell and gene therapy has created a need for products that ensure the
biological viability of mammalian cell and tissue material during transportation
and storage. The Company believes that
the
HypoThermosol®,
GelStor
and
CryoStor products it is selling today are a significant step forward in meeting
these needs.
The
Company's line of preservation solutions is composed of complex synthetic,
aqueous solutions containing, in part, minerals and other elements found in
human blood, which are necessary to maintain fluids and chemical balances
throughout the body at near freezing temperatures. The solutions preserve cells
and tissue in low temperature environments for extended periods after removal
of
the cells through minimally invasive biopsy or surgical extraction, as well
as
in shipping the propagated material for the application of cell or gene therapy
or tissue engineering. BioLife has entered into research agreements with several
emerging biotechnology companies engaged in the research and commercialization
of cell and gene therapy technology and has received several government research
grants in partnership with academic institutions to conduct basic research,
which could lead to further commercialization of technology to preserve human
cells, tissues and organs.
The
Company currently markets its HypoThermosol®,
CryoStor and GelStor
line of
solutions to companies and labs engaged in pre-clinical research, and to
academic institutions.
Results
of Operations (Quarter ended March 31, 2006 compared to the quarter ended March
31, 2005)
Revenue
Revenue
for the quarter ended March 31, 2006 increased $27,343, or 23%, to $147,045,
compared to $119,702 for the quarter ended March 31, 2005. The shift in focus
toward product sales resulted in a 68% increase in revenue from product sales
in
the first quarter of 2006 as compared to the first quarter of 2005. In 2004,
the
Company elected to discontinue engaging directly in Small Business Innovative
Research (“SBIR”) grants and entered into a research agreement with Cell
Preservation Services, Inc. (“CPSI”) to outsource to CPSI all BioLife research
funded through SBIR grants. In addition to shifting R&D related expenses to
CPSI, BioLife received facilities and management fees from CPSI in exchange
for
the use of BioLife facilities and management services in connection with the
research performed in 2005. In the first quarter of 2005, BioLife had revenues
of $20,863 and $11,475 for facilities fees and management fees, respectively.
BioLife earned no facilities or management fees in the first quarter of 2006
as
CPSI engaged in no grant related research activity in the first quarter of
2006.
Cost
of Product Sales
Cost
of
product sales for the quarter ended March 31, 2006 increased $33,106, or 69%,
to
$81,219, compared to $48,113 for the quarter ended March 31, 2005. The increase
in cost of product sales is the result of increased production costs associated
with the increase in product sales.
Research
and development expenses
Expenses
relating to research and development for the quarter ended March 31, 2006
decreased $7,050, or 62%, from the previous quarter ended March 31, 2005.
Research and development expenses were $4,280 for the quarter ended March 31,
2006, compared to $11,330 for the quarter ended March 31, 2005. This decrease
was due to a decrease in patent attorney related fees for the first
quarter.
Sales
and marketing expenses
For
the
quarter ended March 31, 2006, sales and marketing expenses increased $13,811,
or
57%, to $37,867, compared to $24,056 for the quarter ended March 31, 2005.
The
increase in sales and marketing expense was due to the increased sales and
marketing activities in 2006 such as tradeshows, advertising, travel, and
supplies.
General
and administrative expenses
For
the
quarter ended March 31, 2006, general and administrative expense increased
$31,037, or 15%, to $232,799, compared to $201,762 for the quarter ended March
31, 2005. Notable increases in general and administration expenses from the
first quarter of 2005 to the first quarter of 2006 include an increase in
accounting and legal expenses totaling approximately $11,700. This increase
in
the first quarter of 2006 resulted from additional expenses incurred as a result
of the financing activity and related events during the period. The Company
also
recorded stock-based compensation expense totaling $23,708. These increases
were
partially offset by a decrease in equipment rental fees totaling approximately
$4,200 from the first quarter of 2005 to the first quarter of 2006 as several
of
the Company’s equipment leases expired and more cost effective solutions were
implemented. In addition, expenses related to commercial insurance decreased
by
approximately $4,100 in the first quarter of 2006 as the Company was able to
reduce commercial insurance premiums.
Operating
expenses and net loss
For
the
quarter ended March 31, 2006, operating expenses (excluding product costs)
increased $37,798, or 16%, to $274,946, compared to $237,149 for the quarter
ended March 31, 2005. The Company reported a net loss of ($211,014) for the
quarter ended March 31, 2006, compared to a net loss of ($162,777) for the
quarter ended March 31, 2005.
Liquidity
and Capital Resources
At
March
31, 2006, the Company had cash and cash equivalents of $30,863, compared to
cash
and cash equivalents of $361,422 at March 31, 2005. At March 31, 2006, the
Company had a working capital deficit of $12,401, compared to a working capital
surplus of $337,155 at March 31, 2005. These decreases are a result of the
Company not able to provide sufficient working capital from
operations.
During
the first quarter of 2006, the Company generated approximately $147,000 in
product sales, the highest product sales quarter since the Company began to
focus on product sales. This represents an 11% increase over the previous high
product sales quarter (fourth quarter of 2005) of $132,867. While the increasing
product sales appear promising, the Company has been unable to support its
operations solely from revenue generated from product sales.
In
September 2005, the Company secured a loan from the Tioga County LDC in the
amount of $230,500 to support its working capital needs and enhance production
capabilities to support the distribution agreement with VWR International.
The
loan is a 7 year note with an annual interest rate of 5% requiring monthly
payments of $3,258.
During
the quarter ended March 31, 2006, net cash used by operating activities was
approximately $143,000, compared to net cash used by operating activities of
approximately $170,000 for the quarter ended March 31, 2005. The use of cash
is
indicative of the Company’s lack of sufficient sales to support the operations.
During
the quarter ended March 31, 2006, net cash used by investing activities was
approximately $3,800 resulting from purchases of property and equipment to
support the manufacturing facility. There was no cash used in investing
activities for the quarter ended March 31, 2005.
During
the quarter ended March 31, 2006, net cash used by financing activities was
approximately $7,000 resulting from principal payments on the Tioga County LDC
loan. There was no cash used by financing activities for the quarter ended
March
31, 2005.
In
March
2006, in order to secure much needed capital, the Board of Directors approved
a
plan to raise additional capital from the holders of its outstanding warrants
and stock options at a reduced price of $0.04 per share, in order to a) prevent
further dilution by the issuance of additional securities to outsiders, and
(b)
to restructure the capitalization of the Company. For the period April 1, 2006
through May 1, 2006, the Company was able to raise $879,340 through (a) the
exercise of warrants to purchase 23,022,783 shares of the Company’s Common Stock
at $0.04, and (b) the exercise of stock options to purchase 2,547,000 shares
of
the Company’s Common Stock at $0.04. Under the terms of the plan, the Company
offered to:
1. |
the
holders of the Company’s (a) 12,000 shares of Series F Preferred Stock,
convertible into 4,800,000 shares of the Company’s Common Stock, and (b)
the 6,000 Series F Warrants to purchase 2,400,000 shares of the
Company’s
Common Stock at $.375 per share purchased in conjunction with the
Series F
Pfd. Stock, the right to exercise the Series F Warrants and purchase
the
shares of Common Stock issuable upon exercise thereof at $.04 per
share
(same number of shares at a lower price), provided that (a) simultaneously
with the exercise of such right, the holder converts his shares
of Series
F Pfd. Stock into shares of the Company’s Common Stock, and (b) the
conversion of the Series F Pfd. Stock and exercise of the Series
F
Warrants take place on or before March 31, 2006 (which date was
extended
to May 1, 2006) ;
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2. |
the
holders of the Company’s 55.125 shares of Series G Pfd. Stock, which
Series G Pfd. Stock is convertible into 17,226,563 shares of the
Company’s
Common Stock, and (b) the 55.125 Series G Warrants to purchase
17,226,563
of the Company’s Common Stock at $.08 per share purchased in conjunction
with the Series G. Pfd. Stock, the right to exercise the Series
G Warrants
and purchase the shares of Common Stock issuable upon exercise
thereof at
$.04 per share (same number of shares at a lower price), provided
that (a)
simultaneously with the exercise of such right, they convert their
shares
of Series G Pfd. Stock into shares of the Company’s Common Stock, and (b)
the conversion of the Series G Pfd. Stock and exercise of the Series
G
Warrants take place on or before March 31, 2006 (which date was
extended
to May 1, 2006);
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3. |
the
holders of all exercisable Stock Options to purchase shares of
the
Company’s Common Stock (an aggregate of 3,511,000 shares of the Company’s
Common Stock) at prices ranging from $.08-$2.50 per share, the
right to
exercise such Stock Options and purchase the shares of Common Stock
issuable upon exercise thereof at $.04 per share (the same number
of
shares at a lower exercise price), provided that the exercise of
such
stock options takes place on or before March 31, 2006 (which date
was
extended to May 1, 2006); and
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4. |
the
holders of all Warrants to purchase shares of the Company’s Common Stock
(an aggregate of 7,640,295 shares of the Company’s Common Stock) at prices
ranging from $.08-$41.25 per share, the right to exercise such
warrants
and purchase the shares of Common Stock issuable upon exercise
thereof at
$.04 per share (the same number of shares at a lower price), provided
the
exercise of the warrants takes place on or before March 31, 2006
(which
date was extended to May 1,
2006).
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The
offering was conditioned upon all shares of the Company’s Series F Preferred
Stock and Series G Preferred Stock converting into Common Stock of the Company.
As a result, subsequent to March 31, 2006, 12,000 shares of the Company’s Series
F Preferred Stock were converted to 4,800,000 shares of Common Stock and 55.125
shares of the Company’s Series G Preferred Shares were converted to 17,226,563
shares of Common Stock. In addition, on May 1, 2006, the Company declared,
effective as of December 31, 2005, the accumulated dividends payable on the
Series F preferred stock and Series G preferred stock, which dividends are
to be
paid in common stock of the Company on May 1, 2006. The total number of shares
payable in connection with such dividend is 8,763,633. After the payment of
such
dividends and the issuance of shares of common stock in connection with the
conversion of the Series F preferred stock and Series G preferred stock and
the
exercise of the aforementioned options/warrants, the Company will have
68,773,188 shares of common stock issued and outstanding.
The
Company believes it has sufficient funds to continue operations in the near
term. Future capital requirements will depend on many factors, including the
ability to market and sell our product line, research and development programs,
the scope and results of clinical trials, the time and costs involved in
obtaining regulatory approvals, the costs involved in obtaining and enforcing
patents or any litigation by third parties regarding intellectual property,
the
status of competitive products, the maintenance of our manufacturing facility,
the maintenance of sales and marketing capabilities, and the establishment
of
collaborative relationships with other parties.
Critical
Accounting Policies and Estimates
The
Company’s discussion and analysis of its financial condition and results of
operations are based upon its financial statements, which have been prepared
in
accordance with accounting principles generally accepted in the United States.
The preparation of these financial statements requires the Company to make
estimates and judgments that affect the reported amounts of assets and
liabilities, revenues and expenses and related disclosures. On an ongoing basis,
the Company evaluates estimates,
including those related to bad debts, inventories, fixed assets, income taxes,
contingencies and litigation. The Company bases its estimates on historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis of the Company’s
judgments on the carrying value of assets and liabilities. Actual results may
differ from these estimates under different assumptions or
conditions.
The
Company believes that following accounting policies involves more significant
judgments and estimates in the preparation of the financial statements. The
Company maintains an allowance for doubtful accounts for estimated losses that
may result from the inability of its customers to make payments. If the
financial condition of the Company’s customers were to deteriorate, resulting in
their inability to make payments, the Company may be required to make additional
allowances. The Company writes down inventory for estimated obsolete or
unmarketable inventory to the lower of cost or market based on assumptions
of
future demand. If the actual demand and market conditions are less favorable
than projected, additional write-downs may be required.
Contract
Obligations
The
Company leases equipment as lessee, under an
operating
lease expiring in
November 2011.
The
lease
requires
monthly
payments of $337.
In
January 2004, BioLife signed a 3 year lease with Field Afar Properties, LLC
whereby BioLife
leases 6,161 square feet of office, laboratory, and manufacturing space in
Owego, NY at a rental rate of $6,200 per month. Renovation of the
new
facility was
completed in April
2004. The
Company’s Chief Executive Officer is an owner of Field Afar Properties,
LLC.
Item
3. Controls
and Procedures
At
the
end of the period covered by this Quarterly Report on Form 10-QSB, the Company
carried out an evaluation, under the supervision and with the participation
of
the Company's management, including the CEO/CFO, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures
pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Company's
CEO/CFO concluded that the Company's disclosure controls and procedures are
effective in timely alerting him to material information relating to the Company
required to be included in the Company's periodic SEC filings and are designed
to ensure that information required to be disclosed by the Company in the
reports is filed or submitted under the Exchange Act is recorded, processed,
summarized and reported within the time permitted as specified by the rules
and
forms.
The
Company does not expect that its disclosure controls and procedures will prevent
all error and all fraud. A control procedure, no matter how well conceived
and
operated, can provide only reasonable, not absolute, assurance that the
objectives of the control procedure are met. Because of the inherent limitations
in all control procedures, no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if any, within the
Company have been detected. These inherent limitations include the realities
that judgments in decision-making can be faulty, and that breakdowns can occur
because of simple error or mistake. Additionally, controls can be circumvented
by the individual acts of some persons, by collusion of two or more people,
or
by management override of the control. The design of any control procedure
also
is based in part upon certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions; over time, control may
become inadequate because of changes in conditions, or the degree of compliance
with the policies or procedures may deteriorate. Because of the inherent
limitations in a cost-effective control procedure, misstatements due to error
or
fraud may occur and not be detected. The Company’s disclosure and controls
procedures are designed to provide reasonable assurance of achieving their
objectives. The Company’s CEO/CFO has concluded that the Company’s disclosure
controls and procedures are effective at the reasonable assurance
level.
There
were no significant changes in the Company’s internal control over financial
reporting during the quarterly period ended March 31, 2006 that has materially
affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting.
Part
II - Other Information
Item
6. Exhibits
and Reports on Form 8-K
31.1*
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
32.1*
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
(b) |
Reports
on Form 8-K: No reports on Form 8-K were filed during the period
covered
by this report.
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*
Filed
herewith
Signatures
In
accordance with the requirements of the Exchange Act, the registrant caused
this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
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BioLife
Solutions, Inc.
(Registrant)
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Date: May
15, 2006 |
By: |
/s/ John
G. Baust |
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John
G. Baust, PhD |
|
President
and Chief Executive Officer
(Principal
Executive Officer )
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