The Company is filing this Quarterly Report on Form 10-Q (the “10-Q”) on a delayed basis in accordance with the order (the “Order”) promulgated by the Securities and Exchange Commission on March 25, 2020 in Release No. 34-88465 relating to the Securities and Exchange Act of 1934, as amended. The Company was unable to file the Form 10-Q in a timely manner because the Seattle area, including the location of the Company’s corporate headquarters and its media production facility and warehouse was, and is currently, at an epicenter of the coronavirus outbreak in the United States. The Company has been following the recommendations of local health authorities to minimize exposure risk for its team members for the past several months, including the temporary closures of its offices and having team members work remotely, and, as a result, the Form 10-Q was not able to be completed by the filing deadline. Reference is made to our disclosures in this Form 10-Q regarding the impact of COVID-19 on the Company and to the disclosures in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed on May 15, 2020, including those disclosures discussed under the heading “Risk Factors” therein.

The accompanying ~~Notes to Consolidated Financial Statements~~notes are an integral part of these condensed consolidated financial ~~statements~~statements.

~~BIoLife Solutions, Inc.~~

~~Consolidated~~ ~~Statements of Operations~~

~~(unaudited)~~

Three Months
Ended June 30,

Six Months
Ended June 30,

(In thousands, except per share and share data)

2019

2018

2019

2018

Product sales
$ 6,701 $ 5,178 $ 12,471 $ 8,993
Cost of product sales
1,958 1,537 3,606 2,901
Gross profit
4,743 3,641 8,865 6,092

Operating expenses

Research and development
739 325 1,111 671
Sales and marketing
928 641 1,776 1,253
General and administrative
2,118 1,390 4,321 2,744
Acquisition costs
39
––
247
––

Total operating expenses
3,824 2,356 7,455 4,668

Operating income
919 1,285 1,410 1,424

Other income (expenses), net

Interest income
137 32 307 41
Interest expense
(1
)
(1
)
(4
)
(1
)
Loss from equity-method investment in SAVSU
(217
)
(177
)
(448
)
(321
)
Total other income (expenses), net
(81
)
(146
)
(145
)
(281
)

Income before provision for income taxes
838 1,139 1,265 1,143
Income taxes

––

––

––

––

Net income
838 1,139 1,265 1,143
Less: Preferred stock dividends

––
(93
)

––
(200
)
Net income attributable to common stockholders
$ 838 $ 1,046 $ 1,265 $ 943

Basic net income per common share
$ 0.04 $ 0.07 $ 0.07 $ 0.06
Diluted net income per common share
$ 0.03 $ 0.05 $ 0.05 $ 0.05

Basic shares used to compute earnings per share
18,819,459 15,180,169 18,734,401 14,642,378
Diluted shares used to compute earnings per share
24,539,299 20,374,358 24,439,959 19,063,595

~~The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements~~

~~Table of Contents~~

~~BioLife Solutions, Inc.~~

~~Consolidated Statements of Shareholders’ Equity~~

~~(unaudited)~~

Six Months Ended June 30, 2019

(In thousands, except share data)

Preferred
Stock
Shares –
Series A

Preferred
Stock
Amount –
Series A

Common
Stock
Shares

Common
Stock
Amount

Additional
Paid-in
Capital

Accumulated
Deficit

Total
Shareholders’
Equity

Balance, December 31, 2018
— $ — 18,547,406 $ 19 $ 114,160 $ (71,031
)
$ 43,148
Stock based compensation
— 1,252 1,252
Stock option/warrant exercises
265,061 — 601 601
Stock issued – on vested RSUs
86,142 — — —
Net income
1,265 1,265
Balance, June 30, 2019
— $ — 18,898,609 $ 19 $ 116,013 $ (69,766
)
$ 46,266

Three Months Ended June 30, 2019

(In thousands, except share data)

Preferred
Stock
Shares –
Series A

Preferred
Stock
Amount –
Series A

Common
Stock
Shares

Common
Stock
Amount

Additional
Paid-in
Capital

Accumulated
Deficit

Total
Shareholders’
Equity

Balance, March 31, 2019
— $ — 18,717,095 $ 19 $ 114,951 $ (70,604
)
$ 44,366
Stock based compensation
— 646 646
Stock option/warrant exercises
160,364 — 416 416
Stock issued – on vested RSUs
21,150 — — —
Net income
838 838
Balance, June 30, 2019
— $ — 18,898,609 $ 19 $ 116,013 $ (69,766
)
$ 46,266

Six Months Ended June 30, 2018

(In thousands, except share data)

Preferred
Stock
Shares –
Series A

Preferred
Stock
Amount –
Series A

Common
Stock
Shares

Common
Stock
Amount

Additional
Paid-in
Capital

Accumulated
Deficit

Total
Shareholders’
Equity

Balance, December 31, 2017
4,250 $ — 14,021,422 $ 14 $ 84,036 $ (73,958
)
$ 10,092
Series A preferred stock redemption
(1,063
)
(1,063
)
(1,063
)
Stock based compensation
748 748
Stock option/warrant exercises
2,003,605 2 8,897 8,899
Stock issued – on vested RSUs
76,539 — — —
Stock issued for services
5,939 36 36
Preferred stock dividends
(200
)
(200
)
Net income
1,143 1,143
Balance, June 30, 2018
3,187 $ — 16,107,505 $ 16 $ 92,654 $ (73,015
)
$ 19,655

Three Months Ended June 30, 2018

(In thousands, except share data)

Preferred
Stock
Shares –
Series A

Preferred
Stock
Amount –
Series A

Common
Stock
Shares

Common
Stock
Amount

Additional
Paid-in
Capital

Accumulated
Deficit

Total
Shareholders’
Equity

Balance, March 31, 2018
4,250 $ — 14,145,413 $ 14 $ 84,518 $ (74,061
)
$ 10,471
Series A preferred stock redemption
(1,063
)
(1,063
)
(1,063
)
Stock based compensation
374 374
Stock option/warrant exercises
1,941,167 2 8,825 8,827
Stock issued – on vested RSUs
20,925 — — —
Preferred stock dividends
(93
)
(93
)
Net income
1,139 1,139
Balance, June 30, 2018
3,187 $ — 16,107,505 $ 16 $ 92,654 $ (73,015
)
$ 19,655

~~The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements~~

~~Table of Contents~~

BioLife Solutions, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

	Three Months Ended March 31,
(In thousands, except per share and share data)	2020			2019
Product revenue	$	11,727		$	5,770
Rental revenue		435			—
Total product and rental revenue		12,162			5,770
Operating expenses
Cost of product and rental revenue (exclusive of intangible assets amortization)		4,568			1,647
Research and development		1,663			359
Sales and marketing		1,576			837
General and administrative		3,135			2,153
Intangible assets amortization		688			—
Acquisition costs		225			208
Change in fair value of contingent consideration		(63	)		—
Total operating expenses		11,792			5,204
Operating income (loss)		370			566

Other income (expense)
Change in fair value of warrant liability		21,914			(19,663	)
Interest income		29			171
Interest expense		(1	)		(3	)
Other expense		(4	)		—
Loss from equity method investment in SAVSU		—			(232	)
Total other income (expenses)		21,938			(19,727	)

Net income (loss) before provision for income taxes		22,308			(19,161	)
Income tax (benefit)		—			—
Net income (loss)		22,308			(19,161	)

Net income attributable to common stockholders:
Basic	$	18,364		$	(19,161	)
Diluted	$	(174	)	$	(19,161	)
Earnings per share attributable to common stockholders
Basic	$	0.87		$	(1.03	)
Diluted	$	(0.01	)	$	(1.03	)
Weighted average shares used to compute earnings per share attributable to common stockholders:
Basic		21,010,817			18,648,397
Diluted		21,010,817			18,648,397

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

Table of Contents

BioLife Solutions, Inc.

Condensed Consolidated Statements of Shareholders’ Equity

(unaudited)

(In thousands, except share data)	Preferred Stock Shares – Series A		Preferred Stock Amount – Series A		Common Stock Shares		Common Stock Amount		Additional Paid-in Capital		Accumulated Deficit			Total Shareholders’ Equity/(Deficit)
Balance, December 31, 2018		—		—		18,547,406	$	19	$	113,008	$	(98,395	)	$	14,632
Stock-based compensation		—		—		—		—		531		—			531
Stock option exercises		—		—		99,697		—		161		—			161
Warrant exercises						5,000		—		97		—			97
Stock issued – on vested RSUs		—		—		64,992		—		—		—			—
Net loss		—		—		—		—		—		(19,161	)		(19,161	)
Balance, March 31, 2019		—	$	—		18,717,095	$	19	$	113,797	$	(117,556	)	$	(3,740	)

Balance, December 31, 2019		—		—		20,825,452	$	21	$	143,485	$	(100,052	)	$	43,454
Stock issued as 2019 bonus payout		—		—		—		—		314		—			314
Stock-based compensation		—		—		—		—		1,113		—			1,113
Stock option exercises		—		—		268,293		—		490		—			490
Warrant exercises		—		—		2,000		—		30		—			30
Stock issued – on vested RSUs		—		—		53,026		—		—		—			—
Net income		—		—		—		—		—		22,308			22,308
Balance, March 31, 2020		—	$	—		21,148,771	$	21	$	145,432	$	(77,744	)	$	67,709

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

Table of Contents

BioLife Solutions, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

Six Month Period Ended
June 30,

(In thousands)

2019

2018

Cash flows from operating activities

Net income
$ 1,265 $ 1,143
Adjustments to reconcile net income to net cash provided by operating activities

Depreciation
209 161
Stock-based compensation expense
1,252 748
Amortization of deferred rent related to lease incentives
— (63
)
Amortization of operating lease liability
(87
)
—
Interest expense – finance type lease
2 —
Loss from equity-method investment in SAVSU
448 321
Amortization of intangible assets
104 —

Change in operating assets and liabilities

(Increase) Decrease in

Accounts receivable, trade
(632
)
(1,145
)
Inventories
(1,341
)
(275
)
Prepaid expenses and other current assets
(32
)
(103
)
Increase (Decrease) in

Accounts payable
(36
)
168
Accrued compensation and other current liabilities
(20
)
4
Deferred rent
— (6
)
Other liabilities
(53
)
—
Net cash provided by operating activities
1,079 953

Cash flows from investing activities

Payments related to the Astero Bio Acquisition, net of cash acquired
(12,438
)
—
Investment in equity investment SAVSU
— (1,000
)
Purchase of property and equipment
(267
)
(61
)
Net cash used in investing activities
(12,705
)
(1,061
)

Cash flows from financing activities

Payments on equipment loan
(8
)
(5
)
Payments on capital lease obligations
(7
)
(7
)
Proceeds from exercise of common stock options and warrants
601 8,899
Payments of preferred stock dividends
— (213
)
Payments for redemption of preferred stock
— (1,063
)
Net cash provided by financing activities
586 7,611

Net increase (decrease) in cash and cash equivalents
(11,040
)
7,503

Cash and cash equivalents - beginning of period
30,657 6,663

Cash and cash equivalents - end of period
$ 19,617 $ 14,166

Non-cash investing and financing activities

Series A preferred stock dividends accrued not yet paid
$ — $ 93
Stock issued for services provided in prior period included in liabilities at year-end
— 36
Receivables converted to equity investment in SAVSU
— 150
Purchase of equipment with debt

––
18
Purchase of property and equipment not yet paid
$ 4 $ 20

	Three Months Ended March 31,
(In thousands)	2020			2019
Cash flows from operating activities
Net income (loss)	$	22,308		$	(19,161	)
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation		413			98
Amortization of intangible assets		688			—
Stock-based compensation		1,113			531
Non cash lease expense		148			124
Gain from equity method investment in SAVSU		—			232
Change in fair value of contingent consideration		(63	)		—
Change in fair value of warrant liability		(21,914	)		19,663

Change in operating assets and liabilities
Accounts receivable, trade		(2,929	)		118
Inventories		143			(551	)
Prepaid expenses and other current assets		317			6
Accounts payable		561			—
Accrued expenses and other current liabilities		304			(469	)
Other		(402	)		555
Net cash provided by operating activities		687			1,146

Cash flows from investing activities
Purchase of property and equipment		(146	)		—
Purchase of assets held for rent, net		(1,081	)		(156	)
Net cash used in investing activities		(1,227	)		(156	)

Cash flows from financing activities
Proceeds from exercise of common stock options		490			161
Proceeds from exercise of warrants		9			23
Other		(7	)		(7	)
Net cash provided by financing activities		492			177

Net increase (decrease) in cash and cash equivalents		(48	)		1,167
Cash and cash equivalents - beginning of period		6,448			30,657
Cash and cash equivalents - end of period	$	6,400		$	31,824

Non-cash investing and financing activities
Reclassification of warrant liability to equity upon exercise	$	21		$	73
Purchase of property & equipment not yet paid	$	6		$	46
Stock issued as 2019 bonus payout	$	314			—

The accompanying ~~Notes to Consolidated Financial Statements~~notes are an integral part of these condensed consolidated financial ~~statements~~statements.

Table of Contents

~~BIOLIFE SOLUTIONS, INC.~~BioLife Solutions, Inc.

Notes toCondensed Consolidated Financial Statements

(unaudited)

1.	1. Organization and Significant Accounting Policies

Business

BioLife Solutions, Inc. (“BioLife,” “us,” “we,” “our,” or the “Company”) is a leading developer, manufacturer and supplier of a portfolio of bioproduction tools including; proprietary biopreservation media, ~~and~~ automated thawing devices, cloud-connected shipping containers, and freezer technology for cell and gene therapies. Our ~~CryoStor~~^®CryoStor® freeze media and ~~HypoThermosol~~^®HypoThermosol® hypothermic storage ~~and shipping media~~ are ~~highly valued~~optimized to preserve cells in the regenerative medicine market. These novel biopreservation media products are serum-free and protein-free, fully defined, and are formulated to reduce preservation-induced cell damage and death; offering commercial companies and clinical researchers significant improvement in shelf life and post-preservation viability and function. Our ~~recently acquired ThawSTAR~~^®ThawSTAR® product line is comprised of a family of automated thawing devices for frozen cell and gene therapies packaged in cryovials and cryobags. These products improve the quality of administration of high-value, temperature-sensitive biologic therapies to patients by standardizing the thawing process and reducing the risks of contamination and overheating, which are inherent with the use of traditional water baths. Our evo shipping containers are innovative high-performance cloud-connected passive storage and transport containers for temperature-sensitive biologics and pharmaceuticals.Our cryogenic freezer technology provides for controlled rate freezing and storage of biologic materials.

Basis of Presentation

~~We have prepared the accompanying unaudited~~The condensed consolidated financial statements included herein have been prepared by BioLife Solutions, Inc. in accordance with generally accepted accounting principles in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission ~~(the “SEC”~~(“SEC”)~~. Pursuant to these rules~~, for Quarterly Reports on Form 10-Q and ~~regulations, we have condensed or omitted certain~~Article 10 of Regulation S-X and do not include all of the information and footnote disclosures ~~we normally include in our annual~~required by GAAP. These condensed consolidated financial statements ~~prepared~~should be read in ~~accordance~~conjunction with ~~accounting principles generally accepted~~the audited consolidated financial statements and accompanying notes thereto included in the ~~United States~~Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

The preparation of ~~America~~financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Astero Bio Corporation (“~~GAAP”)~~Astero,” and the Astero product line, “ThawStar” acquired on April 1, 2019), SAVSU Technologies, Inc. (“SAVSU” acquired on August 8, 2019), and Arctic Solutions, Inc. dba Custom Biogenic Systems (“CBS” acquired on November 12, 2019). All significant intercompany accounts and transactions have been eliminated in consolidation.

In ~~management’s~~the opinion ~~we have made~~of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, ~~(consisting~~consisting of only of normal, recurring ~~adjustments)~~adjustments necessary ~~to fairly present our~~for a fair presentation of the financial position, results of operations, and cash flows. ~~Our~~The results of operations for the interim ~~period operating results do~~periods presented are not necessarily ~~indicate the~~indicative of results ~~that may~~to be expected for ~~any~~the entire year.

Financial Statement Reclassification

Certain classifications on the Condensed Consolidated Statements of Cash Flows related to Non cash lease expense and Accrued expenses and other ~~interim period or~~current liabilities for the ~~full year.~~three months ended March 31, 2019 were reclassified to conform to current period presentation. These ~~consolidated financial statements and accompanying notes should be read in conjunction with~~reclassifications have no impact on previously reported total revenue, net income (loss), net assets, or total operating cash flows.

Significant Accounting Policies

There have been no significant changes to the ~~financial statements and notes thereto~~accounting policies during the three months ended March 31, 2020, as compared to the significant accounting policies described in our Annual Report on Form ~~10-K~~10-K.

Liquidity and Capital Resources

On March 31, 2020 and December 31, 2019, we had $6.4 million in cash and cash equivalents. We acquired Astero on April 1, 2019 for $12.5 million in cash and contingent consideration of up to $8.5 million (which payment requirement has not been triggered or otherwise paid to date). We anticipate paying $484,000 for the ~~year ended December 31, 2018 on file with~~earnout related to 2019 revenues of Astero in the ~~SEC.~~second quarter of 2020. On August 8, 2019, we acquired SAVSU for 1,100,000 shares of common stock. On November 12, 2019, we acquired CBS for $11.0 million in cash, $4.0 million in shares of our common stock, and up to $15.0 million in contingent consideration payable in cash or stock (which payment requirement has not been triggered or otherwise paid to date).

~~Changes in Significant Accounting Policies~~

~~The following significant accounting policies have been added or updated since our Annual Report on Form 10-K for the year ended December 31, 2018.~~

~~Business Combinations~~

The Company’s identifiable assets acquired and liabilities assumed in a business combination are recorded at their acquisition date fair values. The valuation requires management to make significant estimates and assumptions, especially with respect to long-lived and intangible assets. Critical estimates in valuing intangible assets include, but are not limited to:

��

~~future expected cash flows, including revenue and expense projections;~~

●

~~discount rates to determine the present value of recognized assets and liabilities and;~~

●

~~revenue volatility to determine contingent consideration using option pricing models~~

The Company’s estimates of fair value are based upon assumptions it believes to be reasonable, but that are inherently uncertain and unpredictable. Assumptions may be incomplete or inaccurate, and unanticipated events and circumstances may occur.

Goodwill is calculated as the excess of the purchase price over the fair value of net assets acquired, including the amount assigned to identifiable intangible assets. Acquisition-related costs, including advisory, legal, accounting, valuation, and other costs, are expensed in the periods in which these costs are incurred. The results of operations of an acquired business are included in the consolidated financial statements beginning at the acquisition date.

The Company estimates the acquisition date fair value of the acquisition-related contingent consideration using various valuation approaches, including option pricing models, as well as significant unobservable inputs, reflecting the Company’s assessment of the assumptions market participants would use to value these liabilities. The fair value of the contingent consideration is remeasured each reporting period, with any change in the value recorded as other income or expense.

During the measurement period, which may be up to one year from the acquisition date, any refinements made to the fair value of the assets acquired, liabilities assumed, or contingent consideration are recorded in the period in which the adjustments are recognized. Upon the conclusion of the measurement period or final determination of the fair value of the assets acquired, liabilities assumed, or contingent consideration, whichever comes first, any subsequent adjustments are recognized in the consolidated statements of operations.

~~Goodwill~~

Goodwill represents the excess of the purchase price over the net amount of identifiable assets acquired and liabilities assumed in a business combination measured at fair value. Goodwill is not amortized but is tested for impairment at least annually. The Company reviews goodwill for impairment annually at the end of its fourth fiscal quarter and whenever events or changes in circumstances indicate that the fair value of a reporting unit may be less than its carrying amount (a triggering event). The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative goodwill impairment test described in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 350. The more likely than not threshold is defined as having a likelihood of more than 50 percent. If, after assessing the totality of events or circumstances, the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the quantitative goodwill impairment test is unnecessary and goodwill is considered to be unimpaired. However, if based on the qualitative assessment the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company will proceed with performing the quantitative goodwill impairment test. In performing the quantitative goodwill impairment test, the Company determines the fair value of each reporting unit and compares it to its carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired. If the carrying value of a reporting unit exceeds its fair value, the Company records an impairment loss equal to the difference. As of June 30, 2019, management believes there are no indications of impairment.

Table of Contents

~~Intangible Assets~~On May 22, 2020, the Company closed on a share purchase agreement with Casdin Capital LLC, a current stockholder of the Company (“Casdin”), pursuant to which Casdin invested $20 million in the Company. Based on our current expectations with respect to our future revenue and expenses, we believe that our current level of cash and cash equivalents including proceeds from the Casdin investment, will be sufficient to meet our liquidity needs for at least the next 12 months. However, if our revenues do not grow as expected, including as a result of the COVID-19 pandemic, and if we are not able to manage expenses sufficiently, we may be required to obtain additional equity or debt financing if our cash resources are depleted. Further, the Company may choose to raise additional capital through a debt or equity financing in an attempt to mitigate the heightened level of business uncertainty caused by the COVID-19 pandemic, or in order to pursue additional acquisition or strategic investment opportunities. Additional capital, if required, may not be available on reasonable terms, if at all.

~~Intangible assets consist~~Risks and Uncertainties

On March 10, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. The virus and actions taken to mitigate its spread have had and are expected to continue to have a broad adverse impact on the economies and financial markets of ~~developed technology, customer relationships,~~many countries, including the geographical areas in which the Company operates and ~~tradenames~~conducts its business. In particular, the Seattle area, including the location of our corporate headquarters and ~~trademarks,~~our media production facility and warehouse, is at one of the epicenters of the coronavirus outbreak in the U.S. We are currently following the recommendations of local health authorities to minimize exposure risk for our team members and visitors. However, the scale and scope of this pandemic is unknown and the duration of the business disruption and related financial impact cannot be reasonably estimated at this time. While we have implemented specific business continuity plans to reduce the potential impact of COVID-19 and believe that we have sufficient biopreservation media inventory to meet previously forecasted demand for the next six to nine months, there is no guarantee that our continuity plan, once in place, will be successful or that our inventory will meet forecasted or actual demand.

We have already experienced certain disruptions to our business such as temporary closure of our offices and similar disruptions may occur for our customers or suppliers that may materially affect our ability to obtain supplies or other components for our products, produce our products or deliver inventory in a timely manner. This would result in lost product revenue, additional costs, or penalties, or damage our reputation. Similarly, COVID-19 could impact our customers and/or suppliers as a result of a health epidemic or other outbreak occurring in other locations which could reduce their demand for our products or their ability to deliver needed supplies for the production of our products. The extent to which COVID-19 or any other health epidemic may impact our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. Accordingly, COVID-19 could have a material adverse effect on our business, results of operations, financial condition and prospects.

There are many uncertainties regarding the current pandemic of the novel coronavirus (“COVID-19”), and the Company is closely monitoring the impact of COVID-19 on all aspects of its business, including how it will impact its customers, employees, suppliers, vendors, business partners and distribution channels. While COVID-19 did not materially affect the Company’s financial results and business operations in the Company’s first quarter ended March 31, 2020, the Company is unable to predict the impact that COVID-19 may have on its financial position and operations moving forward due to numerous uncertainties. We estimate that we received approximately $1.5-$2.0 million in incremental media revenue resulting from ~~the Company’s acquisitions. Intangible assets are recorded at fair value on the date~~what we believe were safety stock purchases of ~~acquisition~~media. These estimates may change as new events occur and ~~amortized over their estimated useful lives on a straight-line basis.~~

~~Significant Accounting Policies Update~~

~~In February 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-02, Leases: Topic 842 (“ASU 2016-02”) that replaces existing lease guidance.~~additional information is obtained, and actual results could differ materially from these estimates under different assumptions or conditions. The new standard is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet. Under the new guidance, leasesCompany will continue to ~~be classified~~assess the evolving impact of COVID-19 and will make adjustments to its operations as ~~either finance or operating, with classification affecting the pattern of expense recognition in the Statements of Operations. Lessor accounting is largely unchanged under ASU 2016-02.~~necessary.

We adopted ASU 2016-02 and related ASUs (collectively ASC 842) effective January 1, 2019 using the additional transition option for the modified retrospective method and did not restate comparative periods. Consequently, periods before January 1, 2019 will continue to be reported in accordance with the prior accounting guidance, ASC 840, Leases. We elected the package of practical expedients, which permits us to retain prior conclusions about lease identification, lease classification and initial direct costs for leases that commenced before January 1, 2019. The new standard also provides practical expedients for an entity’s ongoing accounting. We elected the short-term lease recognition exemption for all leases that qualify. We also elected the practical expedient to combine lease and non-lease components for all of our leases other than net lease real estate leases.

The adoption of this standard resulted in the recording of operating lease right-of-use assets of $1.3 million and short-term and long-term lease liabilities of $1.8 million as of January 1, 2019. The difference between right-of-use assets and lease liabilities relates to liabilities of $0.5 million for deferred rent and lease incentives liabilities that were included on our Balance Sheet prior to adoption of ASC 842. These amounts were eliminated at the time of adoption and are included in the lease liabilities. Adoption of ASC 842 did not have a material impact on the Company’s net earnings and had no impact on cash flows.

~~Principles of Consolidation~~

The consolidated financial statements for the three and six months ended June 30, 2019 include the accounts of the Company and as of April 1, 2019, its wholly-owned subsidiary, Astero Bio Corporation. All intercompany balances and transactions have been eliminated in consolidation. The acquisition of Astero closed on April 1, 2019 and thus the financial statements for the three and six months ended June 30, 2018 and the balance sheet as of December 31, 2018, only include accounts of the Company.

~~Equity Method Investments~~

We account for our ownership in SAVSU Technologies, Inc. (“SAVSU”) using the equity method of accounting. This method states that if the investment provides us the ability to exercise significant influence, but not control, over the investee, we account for the investment under the equity method. Significant influence is generally deemed to exist if the Company’s ownership interest in the voting stock of the investee ranges between 20% and 50%, although other factors, such as representation on the investee’s board of directors, are considered in determining whether the equity method of accounting is appropriate. Under the equity method of accounting, the investment is recorded at its initial carrying value in the consolidated balance sheet and is periodically adjusted for capital contributions, dividends received and our share of the investee’s earnings or losses together with other-than-temporary impairments which are recorded as a component of other income (expense), net in the consolidated statements of operations. For the three and six months ended June 30, 2019, SAVSU’s net loss totaled $0.5 million and $1.0 million, respectively which our ownership resulted in a $0.2 million and $0.4 million loss, respectively. For the three and six months ended June 30, 2018, SAVSU’s net loss totaled $0.6 million and $1.1 million, respectively, of which our ownership resulted in a $0.2 million and $0.3 million loss, respectively.

Concentrations of credit risk and business risk

In the three months ended ~~June 30, 2019,~~March 31, 2020, we derived approximately ~~17%~~25% of our product revenue from ~~one customer and in the six months ended June 30, 2019, we derived approximately 20% of our revenue from one customer.~~two customers. In the three months ended ~~June 30, 2018,~~March 31, 2019, we derived approximately ~~38%~~34% of our product ~~revenue from three customers and in the six months ended June 30, 2018, we derived approximately 27% of our~~ revenue from two customers. No other customer accounted for more than 10% of revenue in the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 or ~~2018.~~2019. In the three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ we derived approximately ~~82%~~66% and ~~87%~~90%, of our revenue from CryoStor products, respectively. ~~In each of the six months ended June 30,~~Due to our acquisitions in 2019, ~~and 2018,~~ we ~~derived approximately 86%, of~~expect both our revenue ~~from~~concentration related to CryoStor, ~~products.~~and our customer concentration to be reduced for the year ended December 31, 2020. At ~~June 30, 2019,~~March 31, 2020, two customers accounted for approximately ~~28%~~33% of total gross accounts receivable. At December 31, ~~2018, three~~2019, two customers accounted for approximately ~~71%~~25% of total gross accounts receivable.

~~Revenue from customers located in Canada represented 17% and 20% and in all other foreign countries represented 12% and 14% of~~The following table represents the Company’s total revenue ~~during~~by geographic area (based on the ~~three and six months ended June 30, 2019, respectively. Revenue from customers located in Canada represented 11% and 12% and in all other foreign countries represented 11% and 11%~~location of ~~total revenue during~~ the ~~three and six months ended June 30, 2018, respectively. All revenue from foreign customers is denominated in United States dollars.~~customer):

	Three Months Ended March 31,
Revenue by customers’ geographic locations	2020			2019
United States		74	%		60	%
Canada		11	%		23	%
Europe, Middle East, Africa (EMEA)		12	%		13	%
Other		3	%		4	%
Total revenue		100	%		100	%

Recent accounting pronouncements

~~Recent Accounting Pronouncements~~In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 includes amendments that aim to improve the effectiveness of fair value measurement disclosures. The amendments in this guidance modify the disclosure requirements on fair value measurements based on the concepts in FASB Concepts Statement, “Conceptual Framework for Financial Reporting—Chapter 8: Notes to Financial Statements,” including the consideration of costs and benefits. The amendments become effective for the Company in the year ending December 31, 2020 and early adoption is permitted. The Company adopted this guidance January 1, 2020 and there was no material impact on its consolidated financial statements.

~~There have been~~In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes.” ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740, including, but not limited to, the exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items, the exceptions related to the recognition of a deferred tax liability related to an equity method investment and the exception to methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. ASU 2019-12 becomes effective for the Company in the year ended December 31, 2021, including interim periods. The Company is considering early adoption in 2020. Due to the full valuation allowance on the Company’s net deferred tax assets, the Company is currently expecting no ~~new~~material impact from the adoption of ASU 2019-12 on its consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For Smaller Reporting Companies as defined by the SEC, ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is evaluating the impact of the guidance on its financial statements.

In August 2018, the FASB issued ASU No. 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract”, which clarifies the accounting ~~pronouncements not yet~~for implementation costs in cloud computing arrangements. ASU 2018-15 is effective ~~that have significance, or potential significance, to our Financial Statements.~~ for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company will adopt the standard prospectively on January 1, 2020. The Company adopted this guidance January 1, 2020 and there was no material impact on its consolidated financial statements.

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2.Fair Value Measurement

~~Fair Value Measurement~~

In accordance with FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” (“ASC Topic 820”), the Company measures its cash and cash equivalents and ~~short-term~~ investments at fair value on a recurring basis. The Company also measures certain assets and liabilities at fair value on a non-recurring basis when applying acquisition accounting. ASC Topic 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC Topic 820 establishes a three-tier value fair hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1 – Observable inputs that reflect quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than quoted prices included in Level 1 for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.

Level 3 – Unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, the Company ~~does not have~~valued the Astero and CBS contingent consideration and warrant liability at fair value.

There were no remeasurements to fair value during the three months ended March 31, 2020 of financial assets and liabilities that are not measured at fair ~~value.~~value on a recurring basis.

The following tables set forth the Company’s financial assets measured at fair value on a recurring basis as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, based on the three-tier fair value hierarchy:

(In thousands)

As of June 30, 2019	Level 1		Level 2		Level 3		Total
As of March 31, 2020									Level 1		Level 2		Level 3		Total
Assets:
Total cash and cash equivalents	$	19,617	$	—	$	—	$	19,617
Money market accounts									$	6,400	$	—	$	—	$	6,400
Convertible debt held at fair value										—		—		1,000		1,000
Total										6,400		—		1,000		7,400
Liabilities:
Contingent consideration - business combinations	$	—	$	—	$	1,931	$	1,931		—		—		1,851		1,851
Warrant liability										—		—		17,667		17,667
Total									$	—	$	—	$	19,518	$	19,518

As of December 31, 2018

Level 1

Level 2

Total

Total cash and cash equivalents
$ 30,657 $ — $ 30,657

As of December 31, 2019	Level 1		Level 2		Level 3		Total
Assets:
Money market accounts	$	6,448	$	—	$	—	$	6,448
Convertible debt held at fair value		—		—		1,000		1,000
Total		6,448		—		1,000		7,448
Liabilities:
Contingent consideration - business combinations		—		—		1,914		1,914
Warrant liability		—		—		39,602		39,602
Total	$	—	$	—	$	41,516	$	41,516

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The fair values of ~~cash and cash equivalents~~money market funds classified as Level 1 were derived from quoted market prices as active markets for these instruments exist. The fair ~~value~~values of investments, warrant liability and contingent consideration classified as Level 3 ~~is described in Note 3.~~were derived from management assumptions. There ~~was~~have been no ~~change in contingent consideration from the acquisition date to June 30, 2019, during the three and six months ended June 30, 2019. The Company has no level 2~~transfers of assets or ~~level 3 financial assets. The Company did not have any transfers~~liabilities between ~~Level 1 and Level 2 of~~ the fair value ~~hierarchy during~~measurement levels. The following table presents the ~~six months ended June 30, 2019 and the twelve months ended December 31, 2018.~~ changes in investments held at fair value which are measured using Level 3 inputs:

	March 31,		December 31,
(In thousands)	2020		2019
Beginning balance	$	1,000	$	1,000
Purchases		—		—
Change in fair value recognized in net income		—		—
Total	$	1,000	$	1,000

The following table presents the changes in fair value of contingent consideration liabilities which are measured using Level 3 inputs:

	March 31,			December 31,
(In thousands)	2020			2019
Beginning balance	$	1,914		$	—
Additions		—			2,347
Change in fair value recognized in net income		(63	)		50
Payments earned, reclassified to accrued liabilities		—			(483	)
Total	$	1,851		$	1,914

The following table presents the changes in fair value of warrant liabilities which are measured using Level 3 inputs:

	March 31,			December 31,
(In thousands)	2020			2019
Beginning balance	$	39,602		$	28,516
Exercised warrants		(21	)		(1,749	)
Change in fair value recognized in net income		(21,914	)		12,835
Ending balance	$	17,667		$	39,602

3. Acquisitions

Astero Acquisition

~~Acquisition of Astero Bio Corporation~~

On April 1, 2019, ~~the acquisition date,~~ BioLife completed the acquisition of all the outstanding shares of ~~Astero Bio Corporation (“Astero”), pursuant to the terms of a Stock Purchase Agreement by and among BioLife and~~ Astero.

Astero’s ThawSTAR product line is comprised of a family of automated thawing devices for frozen cell and gene therapies packaged in cryovials and cryobags. The products improve the quality of administration of high-value, temperature-sensitive biologic therapies to patients by standardizing the thawing process and reducing the risks of contamination and overheating, which are inherent with the use of traditional water baths.

In connection with the acquisition, the Company paid (i) a base payment in the amount of $12.5 million consisting of (x) an initial cash payment of $8.0 million at the closing of the transactions, subject to adjustment for working capital, net debt and transaction expenses, and (y) a deferred cash payment that was paid into escrow of $4.5 million payable upon the earlier of Astero meeting certain product development milestones or one year after the date of the Closing and (ii) earnout payments in calendar years 2019, 2020 and 2021 of up to an aggregate of $3.5 million, which shall be payable upon Astero achieving certain specified revenue targets in each year and a separate earnout payment of $5.0 million for calendar year 2021, which shall be payable upon Astero achieving a cumulative revenue target over the three-year period from 2019 to 2021.

Consideration transferred

The Astero ~~Acquisition~~acquisition was accounted for as a purchase of a business under FASB ASC Topic 805, “Business Combinations”. The Astero ~~Acquisition~~acquisition was funded through payment of approximately $12.5 million in cash and under the terms of the share purchase agreement, Astero shareholders are eligible to receive up to an additional $8.5 million of contingent consideration in cash over the next three years based on attainment of specific revenue ~~targets (“contingent consideration”).~~targets. Under the acquisition method of accounting, the assets acquired and liabilities assumed from Astero were recorded as of the acquisition date, at their respective fair values, and consolidated with those of BioLife. The fair value of the contingent consideration of ~~$1.9~~$1.5 million was determined using ~~the~~an option pricing ~~model based on the most recent guidance from the Appraisal Foundation.~~model. The fair value of the net tangible assets acquired is estimated to be approximately $324,000, the fair value of the intangible assets acquired is estimated to be approximately ~~$4.6~~$4.1 million, and the residual goodwill is estimated to be approximately $9.5 million. The fair value estimates required critical estimates, including, but not limited to, future expected cash flows, revenue and expense projections, discount rates, revenue volatility, and royalty rates. BioLife believes these estimates to be reasonable. Actual results may differ from these estimates.

Total consideration recorded for the acquisition of Astero is as follows (amounts in thousands):

Cash consideration	$	12,521		$	12,521
Contingent consideration		1,931			1,491
Working capital adjustment		(71	)		(71	)
Total consideration transferred	$	14,381		$	13,941

Transaction costs related to the acquisition are expensed as incurred and are not included in the calculation of consideration transferred. The Company incurred $39,000 and $247,000 in transaction costs for the three- and six-month periods ended June 30, 2019, respectively.

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Fair Value of Net Assets Acquired

The table below represents the purchase price allocation to the net assets acquired based on their estimated fair values (amounts in thousands). We may make appropriate adjustments to the fair value measurements of the intangible assets and contingent consideration and residual goodwill, if any, as additional information is received prior to the completion of the measurement period, which is up to one year from the acquisition date. Such amounts were estimated using the most recent financial statements from Astero as of March 31, 2019.

Cash and cash equivalents	$	12		$	11
Accounts receivable		154
Accounts receivable, net					154
Inventory		456			456
Customer relationships		160			160
Tradenames		470			470
Developed technology		3,920			2,840
In-process research and development					650
Goodwill		9,524			9,515
Other assets		100			99
Accounts Payable		(251	)
Accounts payable					(250	)
Other liabilities		(164	)		(164	)
Fair value of net assets acquired	$	14,381		$	13,941

The fair value of Astero’s identifiable intangible assets and estimated useful lives have been ~~preliminary~~ estimated as follows (amounts in ~~thousands)~~thousands except years):

	Estimated Fair Value		Estimated Useful Life (Years)				Estimated Fair Value		Estimated Useful Life (Years)
Customer relationships	$	160			4		$	160		4
Tradenames		470			9			470		9
Developed technologies		3,920		5	–	9
Developed technology								2,840	5	–	9
In-process research and development								650		9
Total identifiable intangible assets	$	4,550					$	4,120

Fair value measurement methodologies used to calculate the value of any asset can be broadly classified into one of three approaches, referred to as the cost, market and income approaches. In any fair value measurement analysis, all three approaches must be considered, and the approach or approaches deemed most relevant will then be selected for use in the fair value measurement of that asset. The fair value of identifiable intangible assets was determined by third-party appraisal primarily using variations of the ~~“income~~income approach,” which is based on the present value of the future after-tax cash flows attributable to each identifiable intangible asset. The fair value of inventories was determined using both the ~~“cost approach”~~cost approach and the ~~“market approach”.~~market approach.

Some of the more significant assumptions inherent in the development of intangible asset fair values, from the perspective of a market participant, include, but are not limited to (i) the amount and timing of projected future cash flows (including revenue and expenses), (ii) the discount rate selected to measure the risks inherent in the future cash flows, (iii) the assessment of the asset’s life cycle, and (iv) the competitive trends impacting the asset. Some of the more significant assumptions inherent in valuing the contingent consideration, include, but are not limited to (i) the amount and timing of projected future revenue, (ii) the volatility rate selected to measure the risks inherent in the revenue, and (iii) risk free interest rate.

The goodwill of $9.5 million represents future economic benefits expected to arise from synergies from combining operations and commercial organizations to increase market presence and the extension of existing customer relationships. ~~Substantially all~~All but $1.1 million of the goodwill recorded is not expected to be deductible for income tax purposes.

~~The Company recorded revenue~~On August 8, 2019, we closed the acquisition of SAVSU pursuant to a Share Exchange Agreement. Pursuant to the Share Exchange Agreement, SAVSU Origin, LLC agreed to transfer to us and we agreed to acquire from ~~Astero~~the seller 8,616 shares of ~~$374,000 and a net loss~~common stock of ~~$542,000~~SAVSU, representing the remaining 56% of the outstanding shares of SAVSU that we did not previously own, in ~~its consolidated statements of operations~~exchange for the three and six months ended June 30, 2019. The Company has included the operating results of Astero in its consolidated statements of operations since the April 1, 2019 acquisition date. The following pro forma financial information presents the combined results of operations1,100,000 shares of BioLife ~~and Astero as if~~common stock. As a result of the acquisition, ~~had occurred~~SAVSU became a wholly-owned subsidiary on January 1, 2018 after giving effect to certain pro forma adjustments. The pro forma adjustments reflected herein include only those adjustments that are directly attributable to the Astero Acquisition, factually supportable and have a recurring impact. These pro forma adjustments for the six months ended June 30,August 8, 2019, and 2018 include a $104,000 and $208,000 net increase in amortization expense, respectively, to record amortization expense for the $4.6 million of acquired identifiable intangible assets, adjustments to stock-based compensation of $108,000 and $216,000, respectively and $47,000 and $94,000, respectively for salary increases related to employment agreements signed in conjunction with the acquisition. In addition, acquisition-related transaction costs of $247,000 and a $103,000 purchase accounting adjustment to record inventory at net realizable value were excluded from pro forma net income for the six months ended June 30, 2019. The pro forma financial information does not reflect any adjustments for anticipated expense savings resulting from the acquisition ~~and is not necessarily indicative of the operating results that would have actually occurred had the transaction been consummated on January 1, 2018 or of future results:~~date.

The SAVSU acquisition was accounted for as a purchase of a business under FASB ASC Topic 805, “Business Combinations”. The acquisition of 56% of SAVSU was funded through a transfer of 1,100,000 shares of BioLife common stock, which had a fair value of $18.12 per share or $19.9 million at time of closing. The total value of 100% of SAVSU consisting of the fair value of the stock issued and the fair value of our existing investment in SAVSU was $35.8 million at time of closing. Prior to the acquisition, we accounted for our investment of SAVSU using the equity method of accounting which resulted in a recorded book value of $5.8 million at the acquisition date. We remeasured to fair value the equity interest in SAVSU held immediately before the business combination. The fair value of our equity interest was determined to be $15.9 million on our existing 44% ownership based on the fair value of shares transferred at the time of acquisition for the 56% we did not previously own. As a result, we recorded a non-operating gain of $10.1 million.

Under the acquisition method of accounting, the assets acquired and liabilities assumed from SAVSU were recorded as of the acquisition date, at their respective fair values, and consolidated with those of BioLife. The fair value of the net tangible assets acquired is estimated to be approximately $4.2 million, the fair value of the intangible assets acquired is estimated to be approximately $12.2 million, and the residual goodwill is estimated to be approximately $19.5 million. The fair value estimates required critical estimates, including, but not limited to, future expected cash flows, revenue and expense projections, discount rates, revenue volatility, and royalty rates. BioLife believes these estimates to be reasonable. Actual results may differ from these estimates.

Total consideration paid for the acquisition of SAVSU is as follows (amounts in thousands):

This stock consideration plus the fair value of our existing equity investment in SAVSU of $15.9 million results in the total purchase price for accounting purposes of $35.8 million.

The table below represents the purchase price allocation to the net assets acquired based on their estimated fair values (amounts in thousands). Such amounts were estimated using the most recent financial statements from SAVSU as of August 7, 2019.

The fair value of SAVSU’s identifiable intangible assets and estimated useful lives have been estimated as follows (amounts in thousands except years):

Fair value measurement methodologies used to calculate the value of any asset can be broadly classified into one of three approaches, referred to as the cost, market and income approaches. In any fair value measurement analysis, all three approaches must be considered, and the approach or approaches deemed most relevant will then be selected for use in the fair value measurement of that asset. The fair value of identifiable intangible assets was determined primarily using variations of the income approach, which is based on the present value of the future after-tax cash flows attributable to each identifiable intangible asset. The fair value of assets held for rent and property, plant and equipment was determined using both the cost approach and the market approach.

Some of the more significant assumptions inherent in the development of intangible asset fair values, from the perspective of a market participant, include, but are not limited to (i) the amount and timing of projected future cash flows (including revenue and expenses), (ii) the discount rate selected to measure the risks inherent in the future cash flows, (iii) the assessment of the asset’s life cycle, and (iv) the competitive trends impacting the asset. Some of the more significant assumptions inherent in the in valuing the contingent consideration, include, but are not limited to (i) the amount and timing of projected future revenue, (ii) the volatility rate selected to measure the risks inherent in the revenue, and (iii) risk free interest rate.

The goodwill of $21.0 million represents future economic benefits expected to arise from synergies from combining operations and commercial organizations to increase market presence and the extension of existing customer relationships. None of the goodwill recorded is expected to be deductible for income tax purposes.

On November 10, 2019, we entered into an Asset Purchase Agreement, by and among the Company, Arctic Solutions, Inc., a Delaware corporation and wholly-owned subsidiary of the Company, and Custom Biogenic Systems, Inc., a Michigan corporation (“CBS Seller”), pursuant to which we agreed to purchase from the CBS Seller substantially all of CBS Seller’s assets, properties and rights (the “CBS Acquisition”). The CBS Seller, a privately held company with operations located near Detroit, Michigan, designs and manufactures liquid nitrogen laboratory freezers and cryogenic equipment and also offers a related cloud-based monitoring system that continuously assesses biologic sample storage conditions and alerts equipment owners if a fault condition occurs. The Acquisition closed on November 12, 2019.

In connection with the CBS Acquisition, we paid to CBS Seller (i) a base payment in the amount of $15.0 million, consisting of a cash payment of $11.0 million paid at the closing of the CBS Acquisition, less a cash holdback escrow of $550,000 to satisfy certain indemnification claims, and an aggregate number of shares of our common stock, with an aggregate fair value equal to $4.0 million, less a holdback escrow of shares of Common Stock with an aggregate value equal to $3.0 million to satisfy potential payments related to any product liability claims outstanding as of March 13, 2019, and (ii) potential earnout payments in calendar years 2020, 2021, 2022, 2023 and 2024 of up to an aggregate of, but not exceeding, $15.0 million payable to CBS Seller upon achieving certain specified revenue targets in each year for certain product lines.

The CBS acquisition was accounted for as a purchase of a business under FASB ASC Topic 805, “Business Combinations”. Under the acquisition method of accounting, the acquired assets and liabilities assumed from CBS were recorded as of the acquisition date, at their fair values, and consolidated with BioLife. The fair value of the net tangible assets acquired is $6.0 million, the fair value of the identifiable intangibles is $6.8 million, and the residual goodwill is $3.1 million. The fair value estimates required critical estimates, including, but not limited to, future expected cash flows, revenue and expense projections, discount rates, revenue volatility, and royalty rates. BioLife believes these estimates to be reasonable. Actual results may differ from these estimates.

The table below represents the purchase price allocation to the net assets acquired based on their fair values (amounts in thousands). Such amounts were estimated using the most recent financial statements from CBS as of November 11, 2019.

The fair value of CBS’s identifiable intangible assets and weighted average useful lives have been estimated as follows (amounts in thousands except years):

Fair value measurement methodologies used to calculate the value of any asset can be broadly classified into one of three approaches, referred to as the cost, market and income approaches. In any fair value measurement analysis, all three approaches must be considered, and the approach or approaches deemed most relevant will then be selected for use in the fair value measurement of that asset. The fair value of identifiable intangible assets was determined primarily using variations of the income approach, which is based on the present value of the future after-tax cash flows attributable to each identifiable intangible asset. The fair value of inventories was determined using both the cost approach and the market approach and the fair value of property, plant and equipment was determined using the cost and market approach.

The goodwill of $3.0 million represents future economic benefits expected to arise from synergies from combining operations and commercial organizations to increase market presence and the extension of existing customer relationships. All of the goodwill recorded is expected to be deductible for income tax purposes.

We recognized stock compensation expense of $61,000 and $144,000 related to service vesting-based options ~~of $95,000 and $149,000~~ during the three ~~months ended June 30,~~month periods ending March 31, 2020 and 2019, ~~and 2018, respectively, and $240,000 and $303,000 during the six months ended June 30, 2019 and June 30, 2018,~~ respectively. As of ~~June 30, 2019,~~March 31, 2020, there was ~~$27.2~~$9.9 million of aggregate intrinsic value of outstanding service vesting-based stock options, including ~~$24.1~~$9.5 million of aggregate intrinsic value of exercisable service vesting-based 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 the quarter 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 on ~~June 30, 2019.~~March 31, 2020. This amount will change based on the fair market value of the Company’s stock. ~~Intrinsic~~During the quarters ended March 31, 2020 and 2019 intrinsic value of service vesting-based awards exercised ~~during the three months ended June 30, 2019 and 2018~~ was ~~$2.0~~$3.0 million and ~~$724,000, respectively, and during the six months ended June 30, 2019 and 2018 was $3.5~~$1.4 million, and $1.0 million, respectively. There were no service based-vesting options granted granted during the six months ended June 30, 2019 and 2018. The weighted average remaining contractual life of service vesting-based options outstanding and exercisable at June 30, 2019, is 5.2 years and 5.1 years, respectively. Total unrecognized compensation cost of service vesting-based stock options at ~~June 30, 2019~~March 31, 2020 of ~~$279,000~~$86,000 is expected to be recognized over a weighted average period of ~~1.4~~1.2 years.

The Company’s Board of Directors implemented a Management Performance Bonus Plan for 2017. Based on achieving varying levels of specified revenue for the year ended December 31, 2017, up to 1,000,000 options to purchase shares of the Company’s common stock could have vested. The options have an exercise price of $1.64, and if revenue levels for 2017 were met, would vest 50% on the release of the Company’s audited financial statements for 2017, and 50% one year thereafter. If the minimum performance targets were not achieved, no options would vest. On February 27, 2018, the Company’s Board of Directors determined that, subject to the completion of the 2017 audit, the specified revenue target had been achieved. Accordingly, 999,997 options to purchase shares of the Company’s common stock vest as follows: 50% of the options vested on March 8, 2018 and the remaining 50% vested on March 8, 2019.

The following is a summary of performance-based stock option activity under our stock option plans for the ~~six month period~~three months ended ~~June 30, 2019,~~March 31, 2020, and the status of performance-based stock options outstanding at ~~June 30, 2019:~~March 31, 2020:

We recognized stock compensation expense related to performance-based options of none and $127,000 during the three month periods ending June 30, 2019 and 2018, respectively, and none and $252,000 during the six month periods ending June 30, 2019 and 2018. As of ~~June 30, 2019,~~March 31, 2020, there was ~~$14.8~~$5.7 million of aggregate intrinsic value of outstanding and exercisable performance-based 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 the quarter 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 on ~~June 30, 2019.~~March 31, 2020. This amount will change based on the fair market value of the Company’s stock. ~~Intrinsic value of performance-based awards exercised during the three months and six months ended June 30, 2019 was none and in the three and six months ended June 30, 2018 was $285,000.~~ The weighted average remaining contractual life of performance-based options outstanding and exercisable at ~~June 30, 2019,~~March 31, 2020, is ~~2.5~~1.7 years. All compensation cost of performance-based stock options outstanding at ~~June 30, 2019~~March 31, 2020 has been recognized.

There were no stock options granted to employees and non-employee directors in the three ~~and six~~ month periods ended ~~June 30, 2019~~March 31, 2020 and ~~2018.~~2019.

Service vesting-based restricted stock generally vests over a four-year period, with 25% vesting on the first anniversary of the date of grant and the remainder vesting in equal quarterly installments thereafter. The following is a summary of service vesting-based restricted stock activity for the ~~six~~three month period ended ~~June 30, 2019,~~March 31, 2020, and the status of unvested service vesting-based restricted stock outstanding at ~~June 30, 2019:~~March 31, 2020:

The aggregate fair value of the service vesting-based awards granted during the three months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ was ~~$548,000 and $154,000, respectively, and during the six months ended June 30, 2019 and 2018 was $3.2~~$1.7 million and ~~$1.1~~$2.6 million, respectively, which represents the market value of ~~our~~BioLife common stock on the date that the restricted stock awards were granted. The aggregate fair value of the service vesting-based restricted stock awards that vested ~~during~~was $813,000 and $853,000 for the three months ended ~~June 30,~~March 31, 2020 and March 31, 2019, ~~and 2018 was $369,000 and $174,000, respectively and during the six months ended June 30, 2019 and 2018 was $1.2 million and $481,000,~~ respectively.

We recognized stock compensation expense of ~~$268,000~~$394,000 and ~~$98,000~~$255,000 related to service vesting-based restricted stock awards for the three months ended ~~June 30,~~March 31, 2020 and March 31, 2019, ~~and 2018, respectively and $522,000 and $193,000 related to service vesting-based awards for the six months ended June 30, 2019 and 2018,~~ respectively. As of ~~June 30, 2019,~~March 31, 2020, there was ~~$3.6~~$5.7 million in unrecognized compensation costs related to service vesting-based restricted stock awards. We expect to recognize those costs over ~~3.4~~3.3 years.

~~In 2019, we engaged an independent executive compensation firm, FW Cook,~~On March 25, 2020 the Company granted 82,805 shares of performance-based stock to ~~review current compensation practices~~its executives in the form of restricted stock. The shares granted contain a performance condition based on several Company metrics related to 2020 performance. The performance-based restricted stock awards will vest as to between 0% and ~~make updated recommendations to the Compensation Committee and the full Board of Directors. With consideration to the recommendations of FW Cook, including an evaluation~~125% of the number of restricted shares granted to each recipient. The grant date fair value of this award was $9.18 per share. The fair value of this award will be expensed on a straight-line basis over the requisite service period ending on December 31, 2020.

We recognized stock compensation ~~practices~~expense of a like-situated peer group of public life science companies, our Compensation Committee recommended and our Board of Directors approved a compensation program which included apportioning a portion of management’s equity compensation$189,000 for the three months ended March 31, 2020 related to performance-based restricted stock awards. ~~Specifically, our executive officers were granted service-based restricted stock awards (94,247 shares~~As of ~~restricted stock~~March 31, 2020, there was $571,000 in ~~the aggregate vesting over four years) and~~unrecognized non-cash compensation costs related to performance-based restricted stock awards ~~(94,247 shares of~~expected to vest. We expect to recognize those costs over 0.8 years.

On March 25, 2020 the ~~aggregate)~~board of directors granted 34,154 restricted stock awards, at a fair value grant date of $9.18 per share, in lieu of the 2019 cash performance bonus for our executive compensation plan. The award vests in full on September 25, 2020 regardless of employment status on that date. All expenses related to these awards were incurred in the year ended December 31, 2019.

On February 25, 2019 the Company granted 94,247 shares and on April 1, 2019 granted 29,604 shares of market-based stock to its executives in the form of restricted stock. The shares granted contain a market condition based on Total Shareholder Return (“TSR”). The ~~performance-based~~TSR market condition measures the Company’s performance against a peer group. The market-based restricted stock awards will vest as to between 0% and 200% of the number of restricted shares granted to each recipient based on our total shareholder return during the period beginning on January 1, 2019 through December 31, 2020 as compared to the total shareholder return of 20 of our ~~peers (such peers having been~~peers. The fair value of this award was determined ~~by our Compensation Committee~~using a Monte Carlo simulation with ~~assistance~~the following assumptions: a historical volatility of ~~FW Cook immediately prior~~69%, 0% dividend yield and a risk-free interest rate of 2.5%. The historical volatility was based on the most recent 2-year period for the Company and correlated with the components of the peer group. The stock price projection for the Company and the components of the peer group assumes a 0% dividend yield. This is mathematically equivalent to reinvesting dividends in the issuing entity over the performance period. The risk-free interest is based on the yield on the U.S. Treasury Strips as of the Measurement Date with a maturity consistent with the 2-year term associated with the market condition of the award. The fair value of this award will be expensed on a straight-line basis over the grant date to the ~~grant date).~~vesting date of December 31, 2020.

On March 25, 2020 the Company granted 109,140 shares of market-based stock to its executives in the form of restricted stock. The ~~94,247 performance-based~~shares granted contain a market condition based on TSR. The TSR market condition measures the Company’s performance against a peer group. The market-based restricted stock awards will ~~be awarded if we are in~~vest as to between 0% and 200% of the ~~50th percentile~~number of restricted shares granted to each recipient based on our total shareholder return ~~versus~~during the period beginning on January 1, 2020 through December 31, 2021 as compared to the total shareholder return of 20 of our peers. The fair value of this award was determined using a Monte Carlo simulation with the following assumptions: a historical volatility of 78%, 0% dividend yield and a risk-free interest rate of 0.3%. The historical volatility was based on the most recent 2-year period for the Company and correlated with the components of the peer group. The ~~maximum number~~stock price projection for the Company and the components of ~~performance-based restricted stock awards that may be granted (188,494 shares in the aggregate) will be awarded if we are in the 80th percentile of total shareholder return versus~~ the peer group ~~and no units will be awarded for less than 30th percentile~~assumes a 0% dividend yield. This is mathematically equivalent to reinvesting dividends in the issuing entity over the performance period. The risk-free interest is based on the yield on the U.S. Treasury Strips as of ~~total shareholder return versus~~ the ~~peer group. We granted an additional 29,604 performance based awards on April 1, 2019 to two newly hired employees from~~Measurement Date with a maturity consistent with the ~~Astero acquisition.~~

~~For~~2-year term associated with the ~~period ended June 30, 2019,~~market condition of the ~~aggregate~~award. The fair value of this award will be expensed on a straight-line basis over the ~~performance-based restricted stock awards expected~~grant date to ~~vest was $2.2 million.~~ the vesting date of December 31, 2021.

We recognized stock compensation expense of ~~$283,000~~$469,000 and ~~$490,000~~$132,000 for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019, ~~respectively.~~respectively, related to market-based restricted stock awards. As of ~~June 30, 2019,~~March 31, 2020, there was ~~$1.7~~$2.6 million in unrecognized non-cash compensation costs related to ~~performance-based~~market-based restricted stock awards expected to vest. We expect to recognize those costs over ~~1.5~~1.2 years.

We recorded total stock compensation expense for the three ~~and six~~ month periods ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ as follows:

~~13.~~

~~Subsequent Event~~

On July 8, 2019, we announced that we exercised our option to acquire the remaining 56% of the outstanding shares of privately held SAVSU Technologies that we do not currently own in exchange for 1.1 million shares of BioLife common stock. The acquisition closed on August 7, 2019.

Due to the limited time since the acquisition date and the effort required to assess the fair value of assets acquired and liabilities assumed, the initial accounting for the business combination is incomplete at the time of this filing. As a result, the Company is unable to provide the amounts recognized for the major classes of assets acquired and liabilities assumed, acquisition contingencies and goodwill. Also, the Company is unable to provide pro forma revenues and earnings of the combined entity. This information is expected to be included in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.

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14. Condensed Consolidated Balance Sheet Detail

Property and Equipment

(In thousands)	March 31, 2020			December 31, 2019
Property and equipment
Leasehold improvements	$	2,137		$	2,112
Furniture and computer equipment		810			794
Manufacturing and other equipment		5,261			5,187
Subtotal		8,208			8,093
Less: Accumulated depreciation		(2,801	)		(2,521	)
Net property and equipment	$	5,407		$	5,572

Depreciation expense for property and equipment was $285,000 and $98,000 for the three months ended March 31, 2020 and 2019, respectively.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following:

(In thousands)	March 31, 2020		December 31, 2019
Accrued expenses and other current liabilities	$	337	$	302
Other payables		676		1,018
Accrued compensation		1,762		1,554
Deferred revenue		282		324
Other		23		171
Total accrued expenses and other current liabilities	$	3,080	$	3,369

15. Employee Benefit Plan

The Company sponsors a 401(k) defined contribution plan for its employees. This plan provides for pre-tax and post-tax contributions for all employees. Employee contributions are voluntary. Employees may contribute up to 100% of their annual compensation to this plan, as limited by an annual maximum amount as determined by the Internal Revenue Service. The Company matches employee contributions in amounts to be determined at the Company’s sole discretion. The Company made $84,000 and $50,000 contributions to the plan for the three months ended March 31, 2020 and 2019, respectively.

16. Subsequent Event

Paycheck Protection Program

We determined that we met the original eligibility requirements per the guidelines original established by the U.S. federal government as part of the CARES Act for the Pursuant to the Paycheck Protection Program (the “PPP”). As such, on April 20, 2020, the Company received $2,175,320 in support from the PPP. Because the U.S. government subsequently changed its position and guidelines related to the PPP and publicly traded companies, the Company repaid the load on April 29, 2020.

Casdin Financing

On May 22, 2020, the Company closed on a share purchase agreement with Casdin Capital LLC, a current stockholder of the Company, pursuant to which Casdin invested $20 million in the Company at a price per share of $10.50. Pursuant to the terms of the share purchase agreement, the Company issued to Casdin 1,904,762 shares of Company common stock. The Company also granted Casdin certain registration rights requiring the Company to file a registration statement with the Securities and Exchange Commission covering the resale by Casdin of the shares issued in the transaction.

Cashless warrant exercises

On May 14, 2020, the Company entered into separate warrant exercise agreements with WAVI Holding AG and Taurus4757 GmbH pursuant to which the warrant holders immediately exercised their respective warrants via a “cashless” exercise as agreed to by the Company. As a result of the cashless exercise, the Company issued an aggregate of 2,747,970 shares of Company common stock upon cashless exercise of an aggregate of 3,871,405 warrants.

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~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

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

Forward Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements involve a number of risks and uncertainties. We caution readers that any forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement. These statements are based on current expectations of future events. Such statements include, but are not limited to, statements about our products, including our newly acquired products, customers, regulatory approvals, the potential utility of and market for our products and services, our ability to implement our business strategy and anticipated business and operations, in particular following our 2019 acquisitions, future financial and operational performance, our anticipated future growth strategy, including the acquisition of synergistic cell and gene therapy manufacturing tools and services or technologies or other companies or technologies, capital requirements, intellectual property, suppliers, joint venture partners, future financial and operating results, the impact of the COVID-19 pandemic, plans, objectives, expectations and intentions, revenues, costs and expenses, interest rates, outcome of contingencies, financial condition, results of operations, liquidity, business strategies, regulatory filings and requirements, the estimated potential size of markets, capital requirements, the terms of any capital financing agreements, cost savings, objectives of management and other statements that are not historical facts. You can find many of these statements by looking for words like “believes,” “expects,” “anticipates,” “estimates,” “may,” “should,” “will,” “could,” “plan,” “intend,” or similar expressions in this Quarterly Report on Form 10-Q. We intend that such forward-looking statements be subject to the safe harbors created thereby. ~~Examples of these forward-looking statements include, but are not limited to:~~

●

~~anticipated product developments, regulatory filings and related requirements;~~

●

~~timing and amount of future contractual payments, product revenue and operating expenses;~~

●

our ability to consummate acquisitions or other strategic transactions and our ability to achieve any benefits from such acquisitions (including our recent acquisition of Astero and our acquisition of the remaining outstanding shares of SAVSU Technologies that we do not currently own);

●

~~market acceptance of our products and the estimated potential size of these markets; and~~

●

~~projections regarding liquidity, capital requirements and the terms of any financing agreements.~~

These forward-looking statements are based on the current beliefs and expectations of our management and are subject to significant risks and uncertainties. If underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results may differ materially from current expectations and projections. 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, ~~2018~~2019 filed with the SEC. 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.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q or, in the case of documents referred to or incorporated by reference, the date of those documents.

All subsequent written or oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events, except as may be required under applicable U.S. securities law. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

Overview

Management’s discussion and analysis provides additional insight into the Company and is provided as a supplement to, and should be read in conjunction with, our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018~~2019 filed with the SEC.

We were incorporated in Delaware in 1987 under the name Trans Time Medical Products, Inc. In 2002, the Company, then known as Cryomedical Sciences, Inc., and engaged in manufacturing and marketing cryosurgical products, completed a merger with our wholly-owned subsidiary, BioLife Solutions, Inc., which was engaged as a developer and marketer of biopreservation media products for cells and tissues. Following the merger, we changed our name to BioLife Solutions, Inc.

~~Our proprietary HypoThermosol FRS~~We develop, manufacture and ~~CryoStor biopreservation media~~market bioproduction tools to the cell and gene therapy (“C&GT”) industry, which are designed to improve quality and de-risk biologic manufacturing and delivery. Our products are ~~marketed~~used in basic and applied research, and commercial manufacturing of biologic-based therapies. Customers use our products to maintain the ~~regenerative medicine, biobanking~~health and ~~drug discovery markets, including hospital-based stem cell transplant centers, pharmaceutical companies, cord blood~~function of biologic material during sourcing, manufacturing, storage, and ~~adult stem cell banks, hair transplant centers, and suppliers~~distribution of cells ~~to the drug discovery, toxicology testing~~ and diagnostic markets. All of our biopreservation media products are serum-free and protein-free, fully defined, and are manufactured under current Good Manufacturing Practices (cGMP) using United States Pharmacopia (USP)/Multicompendial or the highest available grade components.tissues.

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We currently operate as one bioproduction tools business with product lines that support several steps in the biologic material manufacturing and delivery process. We have a diversified portfolio of tools that focus on biopreservation, frozen storage, and thawing of biologic materials. We have in-house expertise in cryobiology and continue to capitalize on opportunities to maximize the value of our product platform for our extensive customer base through both organic growth innovations and acquisitions.

Our ~~patented~~Products

Our bioproduction tools are comprised of four main product lines

	●	Biopreservation media
	●	Automated thawing devices
	●	Cloud connected “smart” shipping containers
	●	Freezer and storage technology and related components

Biopreservation media

Our proprietary biopreservation media products, HypoThermosol® FRS and CryoStor®, are formulated to ~~reduce~~mitigate preservation-induced, delayed-onset cell damage and ~~death.~~death, which result when cells and tissues are subjected to reduced temperatures. Our ~~platform enabling~~ technology ~~provides~~can provide our C&GT customers with significant shelf life extension of biologic source material and ~~manufactured~~final cell products, and can also greatly ~~improved~~improve post-preservation cell and tissue viability and function. Our biopreservation media is serum-free, protein-free, fully defined, and manufactured under current Good Manufacturing Practices (cGMP). We strive to source wherever possible, the highest available grade, multi-compendium raw materials. We estimate our media products have been incorporated in over 400 customer clinical applications, including numerous chimeric antigen receptor (CAR) T cell and other cell types.

Stability (i.e. shelf-life) and functional recovery are crucial aspects of academic research and clinical practice in the biopreservation of biologic-based source material, intermediate derivatives, and isolated/derived/expanded cellular products and therapies. Limited stability is especially critical in the C&GT field, where harvested cells and tissues will lose viability over time, if not maintained appropriately at normothermic body temperature (37ºC) or stored in a hypothermic state in an effective preservation medium. Chilling (hypothermia) is used to reduce metabolism and delay degradation of harvested cells and tissues. However, subjecting biologic material to hypothermic environments induces damaging molecular stress and structural changes. Although cooling successfully reduces metabolism (i.e., lowers demand for energy), various levels of cellular damage and death occur when using suboptimal methods. Traditional biopreservation media range from simple “balanced salt” (electrolyte) formulations to complex mixtures of electrolytes, energy substrates such as sugars, osmotic buffering agents and antibiotics. The ~~discoveries made by~~limited stability which results from the use of these traditional biopreservation media formulations is a significant shortcoming that our ~~scientists~~optimized proprietary products address with great success.

Our scientific research activities over the last 20+ years enabled a detailed understanding of the molecular basis for the hypothermic and ~~consultants relate to how~~cryogenic (low-temperature induced) damage/destruction of cells ~~tissues,~~through apoptosis and ~~organs respond~~necrosis. This research led directly to the ~~stress~~development of ~~hypothermic storage, cryopreservation,~~our HypoThermosol® FRS and ~~the thawing process. These discoveries enabled the formulation of innovative~~CryoStor® technologies. Our proprietary biopreservation media products that protect biologic material from preservation-related cellular injury, much of which is not apparent immediately after return to normothermic body temperature. Our product formulations have demonstrated notable reduction in apoptotic (programmed) and necrotic (pathologic) cell death mechanisms and are ~~enabling the clinical and commercial development of dozens of innovative regenerative medicine products.~~

Our recently acquired ThawSTAR product line is comprised of a family of automated thawing devices for frozen cell and gene therapies packaged in cryovials and cryobags. These products improve the quality of administration of high-value, temperature-sensitive biologic therapies to patients by standardizing the thawing process and reducing the risks of contamination and overheating, which are inherent with the use of traditional water baths.

Additionally, as of June 30, 2019, we owned a 44.4% interest in SAVSU Technologies, Inc. (“SAVSU”), a Delaware corporation. We had an 18-month purchase option, entered into on September 4, 2018, which provides us, at our sole discretion, with the right to acquire the 56% ownership interest of SAVSU not already owned. On July 8, 2019, we announced that we exercised our option to acquire the remaining 56% of the outstanding shares of privately held SAVSU that we do not currently own in exchange for 1.1 million shares of BioLife common stock. The acquisition closed on August 7, 2019. SAVSU, a privately held company headquartered in Albuquerque, New Mexico, designs, manufactures and markets integrated, innovative hardware and software solutions designed to protect living biologic materials during transport and storage. SAVSU’s customers include cell and gene therapy companies, specialty couriers, and research institutions.

~~Highlights for the Second Quarter of~~ ~~2019~~specifically formulated to:

	●	Revenue was $6.7 million in the second quarter of 2019, an increase of 29% over the same period in 2018. For the first six months of 2019, revenue increased 39% as compared to the same period last year. Second quarter revenue growth was primarily driven by a 33% increase in direct sales to our regenerative medicine customersMinimize cell and a 31% growth from our distributors compared to the same period in 2018. Additionally, we generated revenue of $374,000 from our Astero acquisition included in our consolidated financials for the three months ended June 30, 2019.tissue swelling
	●	Gross margin in the second quarter of 2019 was 71%, compared to 70% in the second quarter of 2018. For the first six months of 2019 gross margin was 71% compared to 68% in the first six months of 2018. The margin increased due to lower overhead and raw material cost per liter sold, offset by lower margins from the inventory stepped-up to net realizable value from the Astero acquisition.Reduce free radical levels upon formation
	●	Consolidated operating income for the three months ended June 30, 2019 and 2018 was $919,000 and $1.3 million, respectively. Consolidated operating income decreased in the three months ended June 30, 2019 due to costs related to the Astero acquisition and consolidating Astero’s net loss of $542,000 for the three months ended June 30, 2019. The reduction in operating income was partially offset by higher sales and gross margin from the same period in the prior year. Consolidated operating income in each of the six months ended June 30, 2019 and 2018 was $1.4 million. Operating income remained flat due to costs related to the Astero acquisition and consolidating Astero’s financials, partially offset by higher sales and gross margin from the same period in the prior year.Maintain appropriate low temperature ionic balances
	●	~~In the three months ended June 30, 2019 and 2018, consolidated net income attributable~~Provide regenerative, high energy substrates to common stockholders was $838,000 and $1.0 million, respectively. Consolidated net income decreased in the three months ended June 30, 2019 due to costs related to the Astero acquisition and consolidating Astero’s net loss for the three months ended June 30, 2019, partially offset by higher sales, gross margin and interest income from the same period in the prior year. In the six months ended June 30, 2019 and 2018, consolidated net income was $1.3 million and $943,000, respectively. Consolidated net income increased due to higher interest income and the elimination of preferred dividends.stimulate recovery upon warming
	●	~~Gained 51 new customers in~~Avoid the ~~second quarter~~creation of ~~2019, including first time orders from 37 regenerative medicine companies.~~an acidic state (acidosis)
	●	~~Announced~~Inhibit the ~~exercise~~onset of our option to acquire the remaining 56% of the outstanding shares of privately held SAVSU that we currently did not own in exchange for 1.1 million shares of BioLife common stock. The acquisition was pursuant to a share purchase agreementapoptosis and ~~closed on August 7, 2019.~~
	●	SAVSU was selected by Novartis to supply advanced cold chain management technologies for ZOLGENSMA® (onasemnogene abeparvovec-xioi), a one-time-only gene therapy for the treatment of children less than two years old with spinal muscular atrophy ("SMA"). ZOLGENSMA was approved by the FDA on May 24, 2019. AveXis, developer of ZOLGENSMA and acquired by Novartis in April 2018 for $8.7 billion, qualified and adopted the SAVSU evo® system to enhance in-transit visibility and improve delivery quality of ZOLGENSMA.
	●	~~SAVSU partnered with United Cargo to offer timely, efficient, same-day airport-to-airport service of vital medical shipments when time is of the utmost importance.~~
	●	~~SAVSU completed a significant expansion of its intellectual property portfolio related to protecting high value cell and gene therapies during storage and distribution.~~
	●	~~Our common public shares were added to the broad-market Russell 3000 Index at the conclusion of the 2019 Russell indexes annual reconstitution, effective after the US market opened on July 1, 2019.~~necrosis

A key feature of our biopreservation media products is their “fully-defined” profile. All of our cGMP products are serum-free, protein-free and are formulated and filled using aseptic processing. We strive to use USP/Multicompendial grade or the highest quality available synthetic components. We believe that all of these features benefit prospective customers by facilitating the qualification process required to incorporate our products into their regulatory filings.

The results of independent testing demonstrate that our biopreservation media products significantly extend shelf-life and improve cell and tissue post-thaw viability and function. Our products have demonstrated improved biopreservation outcomes, including greatly extended shelf-life and post-thaw viability, across a broad array of cell and tissue types.

Competing biopreservation media products are often formulated with simple isotonic media cocktails, animal serum, potentially a single sugar or human protein. A key differentiator of our proprietary HypoThermosol FRS formulation is the engineered optimization of the key ionic component concentrations for low temperature environments, as opposed to normothermic body temperature around 37°C, as found in culture media or saline-based isotonic formulas. Competing cryopreservation freeze media is often comprised of a single permeating cryoprotectant such as dimethyl sulfoxide (“DMSO”). Our CryoStor formulations incorporate multiple permeating and non-permeating cryoprotectant agents which allow for multiple mechanisms of protection and reduces the dependence on a single cryoprotectant. We believe that our products offer significant advantages over in-house formulations, or commercial “generic” preservation media, including, time saving, improved quality of components, more rigorous quality control release testing, more cost effective and improved preservation efficacy.

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We estimate that annual revenue from each customer commercial application in which our products are used could range from $0.5 million to $2.0 million, if such application is approved and our customer commences large scale commercial manufacturing of the biologic based therapy.

Automated, Water-Free Thawing Products

In April 2019, we acquired Astero Bio Corporation (“Astero”), to expand our bioprocessing tools portfolio and diversify our revenue streams. The Astero ThawSTAR® line includes automated vial and cryobag thawing products that control the heat and timing of the thawing process of biologic material. Our customizable, automated, water-free thawing products uses algorithmic programmed, heating plates to consistently bring biologic material from a frozen state to a liquid state in a controlled and consistent manner. This helps reduce damage during the temperature transition. The ThawSTAR products can reduce risks of contamination versus using a traditional water bath.

evo® Cloud Connected Shipping Containers

In August 2019, we acquired the remaining shares of SAVSU Technologies, Inc. (“SAVSU”) we did not previously own. SAVSU is a leading developer and supplier of next generation cold chain management tools for cell and gene therapies. The evo.is cloud app allows biologic products to be traced and tracked in real time. Our evo platform consists of rentable cloud-connected shippers and include technologies that enable tracking software provides real-time information on geolocation, payload temperature, ambient temperature, tilt of shipper, humidity, altitude, and real-time alerts when a shipper has been opened. Our internally developed evo.is software allows customers to customize alert notifications both in data measurements and user requirements. The evo Dry Vapor Shipper (“DVS”) is specifically marketed to cell and gene therapies. The evo DVS has improved form factor and ergonomics over the traditional dewar, including extended thermal performance, reduced liquid nitrogen recharge time, improved payload extractors and ability to maintain temperature for longer periods on its side.

We utilize couriers who already have established logistic channels and distribution centers. Our strategy greatly reduces the cash need to build out specialized facilities around the world. Our partnerships with several white glove couriers allow us to scale our sales and marketing effort by utilizing their salesforce. Our courier partnerships market our evo platform to their existing cell and gene therapy customers as a cost effective and innovative solution. We also market directly to our existing and prospective customers who can utilize the evo platform through our courier partnerships.

Liquid Nitrogen Freezer and Storage Devices

In November 2019, we acquired Custom Biogenic Systems, Inc. (“CBS”) a global leader in the design and manufacture of state-of-the-art liquid nitrogen laboratory freezers, cryogenic equipment and accessories. The addition of CBS allows for product line growth, diversification of revenue and reduction of supply chain costs for our evo dry vapor shippers.

Included in CBS’s product line of liquid nitrogen freezers are the Isothermal LN2 freezers, constructed with a patented system which stores liquid nitrogen in a jacketed space in the walls of the freezer. This dry storage method eliminates liquid nitrogen contact with stored specimens, reduces the risk of cross-contamination and provides increased user safety in a laboratory setting. To accommodate customer requirements, we offer customizable features including wide bodied and extended height.

Our freezer offerings also include high capacity rate freezers which are fully customizable to customer needs with temperature range of -180°C to +50°C and freezing rates of 0.01 to 99.9 per minute. Password protected software aids in compliance with 21 CFR Part 11 and unlimited programming capability, these high capacity rate freezers provide a searchable database for freeze run history and allow freeze data to be saved.

To accompany the offerings of cryogenic freezer equipment, we supply equipment for storing critically important biological materials. This storage equipment includes upright freezer racks, chest freezer racks, liquid nitrogen freezer racks, canisters/cassettes and frames as well as laboratory boxes and dividers. Due to our onsite design and manufacturing capability, racks and canisters can be customized to address customers’ varying requirements,

In order to provide customers with a proactive approach to safety and monitoring of equipment containing liquefied gas, CBS offers Versalert, a patented wireless remote asset monitoring system that can monitor and record temperatures from -200°C to +50°C, and monitor and record two additional variables using 0-5v or 4-20mA inputs. With an intelligent mesh network with three times the range of competing products, the system enables customers to view current equipment conditions and receive alarm notification on smartphones, tablets or personal computers and maintain permanent electronic records for regulatory compliance and legal verification.

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Critical Accounting Policies and Estimates

A “critical accounting policy” is one which is both important to the portrayal of our financial condition and results and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. For a description of our critical accounting policies that affect our more significant judgments and estimates used in the preparation of our consolidated financial statements, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations and our significant accounting policies in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC.

Results of Operations

~~Our revenue,~~We did not observe significant impacts on our results of operations ~~and cash balances are likely to fluctuate significantly from quarter-to-quarter. These fluctuations are~~for the three months ended March 31, 2020 due to ~~a number~~the global outbreak of ~~factors, specifically the progress~~novel strain of ~~our customers’ clinical trials, where the pace~~coronavirus, SARS-CoV-2, which causes coronavirus disease 2019 (“COVID-19”). We estimate that we received approximately $1.5-$2.0 million in incremental media revenue resulting from what we believe were safety stock purchases of ~~enrollment affects customer orders for our products.~~media. The ~~majority~~ultimate impacts of our net sales come from a relatively small number of customers and a limited number of market sectors. Each of these sectors is subject to macroeconomic conditions as well as trends and conditions that are sector specific. Any weakness in the market sectors in which our customers are concentrated could affectCOVID-19 on our business and results of ~~operations.~~operations are currently unknown. We expect to continue to actively monitor the situation and may take further precautionary and preemptive actions as may be required by federal, state or local authorities or that we determine are in the best interests of public health and safety and that of our patient community, employees, partners, suppliers and stockholders. We cannot predict the effects that such actions, or the impact of COVID-19 on global business operations and economic conditions, may have on our business or strategy, including the effects on our financial and operating results.

The following discussion of the financial condition and results of operations should be read in conjunction with the accompanying condensed consolidated financial statements and the related footnotes thereto.

~~Comparison of Results of Operations for the Three and Six Month Periods Ended June 30,~~ ~~2019~~ ~~and~~ ~~2018~~Revenues

~~Percentage comparisons have been omitted within~~In 2019, we acquired three companies which resulted in increased revenue diversification compared to prior years, in which nearly all revenue was derived from our biopreservation media product line. In the three months ended March 31, 2020, we saw a more diversified revenue, both in terms of product and customer concentration, a trend we expect to see continue through 2020.

The following table ~~where they are not considered meaningful.~~

~~Revenue and Gross Margin:~~

Three Month Period Ended

June 30,

2019

2018

% Change

Revenue:

Total revenue
$ 6,701 $ 5,178 29
%

Cost of sales
1,958 1,537 27
%
Gross profit
$ 4,743 $ 3,641 30
%
Gross margin %
71
%
70
%

Six Month Period Ended

June 30,

2019

2018

% Change

Revenue:

Total revenue
$ 12,471 $ 8,993 39
%

Cost of sales
3,606 2,901 24
%
Gross profit
$ 8,865 $ 6,092 46
%
Gross margin %
71
%
68
%

~~Total Revenue.~~ ~~Our products are sold primarily through both direct and indirect channels to customers in the regenerative medicine market. Product sales in~~represents revenues by product line for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and 2019:

	Three Months Ended March 31,
(In thousands, except percentages)	2020		2019
Biopreservation media	$	8,672	$	5,770
Automated thawing		394		—
evo shippers		438		—
Freezers and accessories		2,658		—
Total revenue	$	12,162	$	5,770

Revenue increased ~~29% and 39%~~by $6.4 million, or 111%, respectively, compared to the same periods in 2018, due primarily to an increase in volume and selling price per liter sold due to increased orders from the regenerative medicine segment and our distributors. We also realized initial revenue from ThawStar products in the three months ended ~~June 30,~~March 31, 2020 compared with 2019. ~~Revenue growth for~~The increase is due to the ~~second quarter was driven~~acquisitions throughout 2019 and an increase in product revenue of our biopreservation media products. Product revenue of our biopreservation media products increased by $2.9 million, or 50% in the three months ended March 31, 2020 compared with the same period in 2019. We estimate that we received approximately $1.5-$2.0 million in incremental media revenue resulting from what we believe were safety stock purchases of media as a ~~33% year over year increase from~~result of COVID-19. Our biopreservation media products continued to be adopted by customers in the ~~regenerative medicine segment~~C> market and ~~31% growth from sales~~we realized a higher selling price per liter in 2020 compared to 2019. Revenue is impacted by the relatively high degree of customer concentration, the timing of orders, the development efforts of our ~~distributors.~~customers or end-users and regulatory approvals for biologics that incorporate our products, which may result in significant quarterly fluctuations. Such quarterly fluctuations are expected, but they may not be predictive of future revenue or otherwise indicative of a trend. We also expect to see ~~continued growth~~quarterly fluctuations based on large customer ordering patterns throughout 2020.

Costs and Operating Expenses

Total costs and operating expenses for three months ended March 31, 2020 and 2019 were comprised of the following:

	Three Months Ended March 31,
(In thousands)	2020			2019			% Change
Operating expenses:
Cost of product and rental revenue	$	4,568		$	1,647			177	%
Research and development		1,663			359			363	%
Sales and marketing		1,576			837			88	%
General and administrative		3,135			2,153			46	%
Intangible assets amortization		688			—			100	%
Acquisition costs		225			208			8	%
Change in fair value of contingent consideration		(63	)		—			(100	%)
Total costs and operating expenses	$	11,792		$	5,204			127	%
% of revenue		97	%		90	%

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Cost of product and rental revenue

In the three months ended March 31, 2020 cost of revenue increased $2.9 million, or 177% when compared to the same period in ~~adoption~~2019, due primarily to the increase in revenue mentioned above. We expect that cost of product revenue may fluctuate in future quarters based on production volumes and ~~use~~product mix. The product lines acquired in 2019 have a higher cost of product revenue than our ~~proprietary~~ biopreservation media products.

Cost of ~~Sales.~~ Cost of sales consists of raw materials, labor and overhead expenses. Cost of sales in the three and six months ended June 30, 2019 increased compared to the same periods in 2018 due to increased sales of our proprietary products and inventory step-up to net realizable value from the Astero acquisition resulting in higher per unit costs on ThawSTAR products sold in the three months ended June 30, 2019, partially offset by lower overhead costs and raw materials per liter sold in the three and six months ended June 30, 2019.

~~Gross Margin.~~ ~~Gross margin~~product revenue as a percentage of revenue was ~~71% in each of the three~~38%, and six months ended June 30, 2019, compared to 70% and 68% in the three and six months ended June 30, 2018, respectively. Gross margin in the three and six months ended June 30, 2019 increased compared to the same periods in 2018 due to lower overhead and raw material costs per liter sold resulting in higher production volume to support increased demand in the three and six months ended June 30, 2019, partially offset by lower margin inventory due to the step-up to net realizable value from the Astero acquisition resulting in lower margins on ThawSTAR products sold in29% for the three months ended ~~June 30, 2019.~~

~~Table~~March 31, 2020 and 2019, respectively. Cost of ~~Contents~~

~~Revenue Concentration.~~ Inproduct revenue in 2020 includes $196,000 in inventory step-up related amortization recorded in the ~~three months ended June 30, 2019, we derived approximately 17%~~purchase accounting of our Astero and CBS acquisitions. The increase in cost of product revenue ~~from one customer~~as a percentage of revenue is a result of the inventory step-up, and ~~in the six months ended June 30, 2019, we derived approximately 20%~~higher costs of ~~our revenue from one customer.In the three months ended June 30, 2018, we derived approximately 38% of our~~ product revenue ~~from three customers and in the six months ended June 30, 2019, we derived approximately 27%~~as a percentage of ~~our~~ revenue ~~from two customers. In the three and six months ended June 30, 2019 and 2018, we did not derive 10% or more of our product revenue from any one customer.~~

~~Operating Expenses~~

~~Our operating expenses~~ for the ~~three~~product lines acquired in 2019 through the Astero, Savsu and ~~six month periods ended June 30, 2019 and 2018 were:~~CBS acquisitions.

Three Month Period Ended

June 30,

2019

2018

% Change

Operating Expenses:

Research and development
$ 739 $ 325 128
%
Sales and marketing
928 641 45
%
General and administrative
2,118 1,390 52
%
Acquisition costs
39 — 100
%
Operating Expenses
$ 3,824 $ 2,356 62
%
% of revenue
57
%
46
%

Six Month Period Ended

June 30,

2019

2018

% Change

Operating Expenses:

Research and development
$ 1,111 $ 671 66
%
Sales and marketing
1,776 1,253 42
%
General and administrative
4,321 2,744 57
%
Acquisition costs
247 — 100
%
Operating Expenses
$ 7,455 $ 4,668 60
%
% of revenue
60
%
52
%

Research and ~~Development.~~ Development Expenses

Research and development ~~expenses~~(“R&D”) expense consist primarily of salaries and other personnel-related ~~expenses,~~costs, consulting and ~~other outside services, laboratory supplies, and other costs. We~~external product development services.

R&D expense ~~all research and development costs as incurred. Research and development expenses~~ for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 increased $1.3 million in 2019, ~~increased~~or 363%, compared with the same period in 2019. The increase is primarily due to our three acquisitions in 2019 and stock compensation expense.

We expect our R&D expense to increase as we continue to expand, develop and refine the ~~three and six months ended June 30, 2018, due primarily to Astero development activity and amortization of intangible assets from acquisition.~~product lines we acquired in 2019.

Sales and ~~Marketing.~~ Marketing Expenses

Sales and marketing ~~expenses consist~~expense (“S&M”) consists primarily of salaries and other personnel-related ~~expenses, consulting,~~costs, stock compensation expense, trade shows, sales commissions and advertising. ~~Sales and marketing expenses~~

S&M expense for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 increased $0.7 million, or 88%, compared with the same period in 2019. The increase reflects the S&M costs we absorbed related to our acquisitions, stock compensation expense and an increase in our direct selling costs.

We expect S&M expense to increase, as we expand our direct selling efforts to support the broader product line offerings resulting from our 2019 ~~increased compared to the three and six months ended June 30, 2018, due primarily to Astero sales and marketing activity and amortization of intangible assets from acquisition.~~acquisitions.

General and Administrative ~~Expenses.~~Expenses

General and administrative ~~expenses consist~~(“G&A”) expense consists primarily of personnel-related expenses, non-cash stock-based compensation for administrative personnel and members of the board of directors, professional fees, such as accounting and legal, and corporate insurance. ~~General and administrative~~

G&A expenses for the three months ended ~~June 30,~~March 31, 2020 increased by $1.0 million, or 46%, compared with the same period in 2019. The increase reflects the assumption of G&A expenses related to our 2019 acquisitions, and the continued buildout of our administrative infrastructure, primarily through increased ~~compared~~headcount and information technology expenditures, to support expected future growth and stock compensation expense.

We expect G&A expense to increase reflecting the infrastructure and costs related to supporting the larger expected enterprise created as a result of our 2019 acquisitions.

Intangible asset amortization expense

Amortization expense consists of charges related to the amortization of intangible assets associated with acquisitions, Astero, SAVSU and CBS in which we acquired definite-lived intangible assets.

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Acquisition costs

Acquisition costs consist of legal, accounting, third-party valuations, and other due diligence costs incurred related to our Astero, SAVSU and CBS acquisitions.

Change in fair value of contingent consideration

Change in fair value of contingent consideration consists of changes in estimated fair value of our potential earnouts related to our Astero acquisition.

Other Income and Expense

Total other income and expenses for the three months ended ~~June 30, 2018, due primarily~~March 31, 2020 and 2019 were comprised of the following:

	Three Months Ended March 31,
(In thousands, except percentages)	2020			2019			$ Change			% Change
Change in fair value of warrant liability	$	21,914		$	(19,663	)	$	41,577			211	%
Interest income (expense), net		28			168			(140	)		(83	%)
Other		(4	)		—			(4	)		—

Loss on equity method investment – SAVSU		—			(232	)		(232	)		100	%
Total other income (expenses)	$	21,938		$	(19,727	)	$	41,665			211	%

Change in fair value of warrant liability. Reflects the changes in fair value associated with the periodic “mark to ~~higher performance-based compensation and general and administrative expenses for~~market” valuation of certain warrants that were issued in 2014. Due to the ~~six~~change in our stock price during the three months ended ~~June 30,~~March 31, 2020 from December 31, 2019, ~~increased compared to the six months ended June 30, 2018, due primarily to higher performance-based compensation as well as consulting~~we had a lower warrant liability and ~~accounting fees~~a corresponding unrealized, non-cash gain of $21.9 million due to the ~~audit~~change in fair value of our ~~internal controls over financial reporting.~~warrant liability.

~~Acquisition costs.~~Interest ~~Acquisition expenses consist primarily of legal and consulting fees. Acquisition costs~~income (expense), net. We earn interest on cash held in our money market account. We had a lower weighted average cash balance in our money market account for the three ~~and six~~ months ended ~~June 30, 2019 consist of legal and consulting fees~~March 31, 2020 compared to 2019. Interest expense is related ~~to the Astero acquisition.~~

~~Other Income (Expenses)~~

~~Interest Expense.~~ ~~The interest expense in the three and six months ended June 30, 2019 and 2018 is due~~ to equipment financing.

Loss on equity method ~~investment.~~investment. The non-cash loss associated with our proportionate share of the net loss in our investment in SAVSU ~~for~~prior to our acquisition of the ~~period based on~~remaining shares of SAVSU and subsequent consolidation of SAVSU in our ~~ownership for the three and six months ended June 30, 2019 and 2018.~~financial statements.

~~Interest income.~~ The increase in interest income in the three and six months ended June 30, 2019 compared to the same periods in 2018 is due to the higher average short-term liquid investments balance in 2019 compared to 2018.

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Liquidity and Capital Resources

On ~~June 30,~~March 31, 2020 and December 31, 2019, we had ~~$19.6~~$6.4 million in cash and cash ~~equivalents, compared to~~equivalents. We acquired Astero on April 1, 2019 for $12.5 million in cash and ~~cash equivalents~~contingent consideration of ~~$30.7 million at December 31, 2018. We are obligated to pay~~ up to $8.5 million ~~in cash over~~(which payment requirement has not been triggered or otherwise paid to date). We anticipate paying $484,000 for the ~~next three years based on attainment of specific revenue targets~~earnout related to 2019 revenues of Astero in the ~~Astero acquisition.~~second quarter of 2020. On ~~July~~August 8, 2019, we ~~announced that~~acquired SAVSU for 1,100,000 shares of common stock. On November 12, 2019, we ~~exercised~~acquired CBS for $11.0 million in cash, $4.0 million in shares of our ~~option~~common stock, and up to ~~acquire~~$15.0 million in contingent consideration payable in cash or stock (which payment requirement has not been triggered or otherwise paid to date).

On May 22, 2020, the ~~remaining 56%~~Company closed on a share purchase agreement with Casdin Capital LLC, a current stockholder of the ~~outstanding shares of privately held SAVSU that we do not currently own~~Company, pursuant to which Casdin invested $20 million in ~~exchange for 1.1 million shares of BioLife common stock. The acquisition closed on August 7, 2019.~~the Company. Based on our current expectations with respect to our future revenue and ~~operating~~ expenses, we ~~expect~~believe that our current level of cash and cash equivalents including proceeds from the Casdin investment, will be sufficient to meet our liquidity needs for at least the ~~foreseeable future in excess of one year. If~~next 12 months. However, if our revenues do not grow as expected, including as a result of the COVID-19 pandemic, and if we are not able to manage expenses sufficiently, we may be required to obtain additional equity or debt financing if our cash resources are depleted.

~~We continue~~ Further, the Company may choose to monitor and evaluate opportunities to strengthen our balance sheet and competitive position over the long term. These actions may include acquisitions or other strategic transactions that we believe would generate significant advantages and substantially strengthen our business. The consideration we pay in such transactions may include, among other things, shares of our common stock, other equity or debt securities of our Company or cash. We may elect to seekraise additional capital through a debt or equity financing in ~~anticipation~~an attempt to mitigate the heightened level of business uncertainty caused by the COVID-19 pandemic, or in ~~connection with, such transactions~~order to pursue additional acquisition or ~~to fund or invest in any operations acquired thereby. We~~strategic investment opportunities. Additional capital, if required, may ~~also seek equity or debt financing opportunistically for these purposes~~not be available on reasonable terms, if ~~we believe that market conditions are conducive to obtaining such financing.~~at all.

Cash Flows

	Three Months Ended March 31,
(In thousands)	2020			2019			$ Change
Operating activities	$	687		$	1,146		$	(459	)
Investing activities		(1,227	)		(156	)		(1,071	)
Financing activities		492			177			315
Net increase (decrease) in cash and cash equivalents	$	(48	)	$	1,167		$	(1,215	)

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Net Cash Provided by Operating Activities

During the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, net cash provided by operating activities was ~~$1.1 million~~$687,000 compared to ~~$1.0~~$1.1 million for the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. The ~~increase~~decrease in cash ~~from~~provided by operating activities was the result of ~~increased sales and gross margins partially offset by a planned~~ increase ~~in inventory~~operating expenses from ~~the prior period.~~our 2019 acquisitions.

Net Cash Used In Investing Activities

Net cash used by investing activities totaled $1.2 million during the three months ended March 31, 2020 compared to $156,000 for the three months ended March 31, 2019. The increase in investing activities ~~totaled $12.7 million during the six months ended June 30, 2019, compared to $1.1 million during the six months ended June 30, 2018. The increase in cash used by investing activities~~ was ~~primarily~~ the result of ~~the Astero acquisition.~~purchasing assets held for rent for SAVSU. Both period investing activities included purchases of property and equipment.

Net Cash Provided by Financing Activities

Net cash provided by financing activities ~~was $586,000~~totaled $492,000 during the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, compared to ~~$7.6 million~~$177,000 during the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. Net cash provided by financing activities ~~during~~in the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ was primarily the result of proceeds received from ~~warrant~~stock option exercises and ~~employee stock option~~warrant exercises. ~~In the six months ended June 30, 2018 we used $1.0 million to redeem Series A Preferred shares.~~

Off-Balance Sheet Arrangements

As of ~~June 30, 2019,~~March 31, 2020, we did not have any off-balance sheet arrangements.

~~Critical Accounting Policies and Significant Judgments and Estimates~~

Management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements as well as reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate estimates, including, but not limited to those related to accounts receivable allowances, determination of fair value of share-based compensation, contingencies, income taxes, useful lives of intangible assets, estimates of fair value of intangible assets and contingent consideration in business combination accounting and expense accruals. We base our estimates on historical experience and on other factors that we believe 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.

Except as noted below, our critical accounting policies and estimates have not changed significantly from those policies and estimates disclosed under the heading “Critical Accounting Policies and Significant Judgments and Estimates” in Part II, Item 7, “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the SEC. On April 1, 2019 as a result of the Astero acquisition, we have made significant policies and estimates around useful lives of intangible assets, estimates of fair value of intangible assets, contingent consideration in business combination accounting and other business combination accounting estimates. See Note 2 to the consolidated financial statements in Part I, Item I for these accounting policies.

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Contractual Obligations

We previously disclosed certain contractual obligations and contingencies and commitments relevant to us within the financial statements and Management Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, as filed with the ~~SEC on March 15, 2019.~~SEC. There have been no significant changes to these obligations in the ~~six~~three months ended ~~June 30, 2019. For more information regarding our current contingencies and commitments, see note 10 to the consolidated financial statements included above.~~ March 31, 2020.

Item 3.Quantitative and Qualitative Disclosures about Market Risk

~~Quantitative and Qualitative Disclosures about Market Risk~~

Not applicable.

Item 4.Controls and Procedures

~~Controls and Procedures~~

Evaluation of Disclosure Controls and ~~Procedures.~~Procedures We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in our periodic reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to ensure that such information is accumulated and communicated to our. Our management, including our chief executive officer and chief financial officer as appropriate, to allow timely decisions regarding required disclosure. During the quarter ended June 30, 2019, we carried out an evaluation, under the supervision and with the participation of our ~~management, including~~Chief Executive Officer and Chief Financial Officer, evaluated the ~~chief executive officer and chief financial officer, as required by the rules and regulations under the Exchange Act, of the~~ effectiveness ~~of the design and operation~~ of our disclosure controls and procedures as(as defined in ~~Rule~~Rules 13a-15(e) and 15d-15(e) under the Exchange ~~Act.~~Act) as of the end of the period covered by this Form 10-Q. Based on ~~this~~that evaluation, our ~~chief executive officer~~Chief Executive Officer and ~~chief financial officer~~Chief Financial Officer concluded that ~~as of June 30, 2019,~~ our disclosure controls and procedures as of the end of the period covered by this Form 10-Q were ~~effective.~~not effective due to the existence of a material weakness in our internal controls over complex equity transactions because we have insufficient technical resources to appropriately analyze and account for complex financial instruments, specifically with regard to our prior interpretation of ASC 480, “Distinguishing Liabilities from Equity”, as it related to the initial classification and subsequent accounting of certain of our outstanding warrants as equity instruments dating back to March 2014, and ASC 718, “Stock Compensation” as it related to the accounting for stock awards with market-based vesting conditions. Errors in the accounting for these transactions resulted in the restatement of previously issued financial statements.

Changes in Internal Control ~~over~~Over Financial ~~Reporting.~~Reporting. There ~~have been~~was no ~~changes~~change in our internal control over financial reporting that occurred during the quarter ended ~~June 30, 2019~~March 31, 2020 that ~~have~~has materially affected, or ~~are~~is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Control. Our management, including our ~~chief executive officer~~Chief Executive Officer and ~~chief financial officer,~~Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls ~~over financial reporting~~ will prevent all ~~errors~~error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within ~~our Company~~BioLife Solutions have been detected.

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PART II: Other Information

Item ~~1 through Item 5. None~~1. LEGAL PROCEEDINGS

From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. We are not currently aware of any such proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations.

Item 1A. RISK FACTORS

The matters discussed in this Quarterly Report on Form 10-Q include forward-looking statements that involve risks or uncertainties. These statements are neither promises nor guarantees, but are based on various assumptions by management regarding future circumstances, over many of which BioLife has little or no control. A number of important risks and uncertainties, including those identified under the caption “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the period ended December 31, 2019 and in subsequent filings, could cause our actual results to differ materially from those in the forward-looking statements. There are no material changes to the risk factors described in our Annual Report on Form 10-K for the period ended December 31, 2019.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

Item 4. MINE SAFETY DISCLOSURES

None.

Item 5. OTHER INFORMATION

None.

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Item 6. Exhibits

~~Exhibits~~

Exhibit No.		Description

31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		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

32.2		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.DEF		XBRL Taxonomy Extension Definition Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase

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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.

	BIOLIFE SOLUTIONS, INC.


Dated: ~~August 9, 2019~~May 29, 2020	/s/ Roderick de Greef
	Roderick de Greef
	Chief Financial and Chief Operating Officer (Duly authorized officer and principal financial and accounting officer)

Table of Contents

BIOLIFE SOLUTIONS, INC.

INDEX TO EXHIBITS

Exhibit No.		Description
	~~(Duly authorized officer and principal financial and accounting officer)~~
31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		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

32.2		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.DEF		XBRL Taxonomy Extension Definition Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase

Title of each class	Trading symbol	Name of exchange on which registered
BioLife Solutions, Inc. Common Shares	BLFS	NASDAQ Capital Market

	June 30,			December 31,			March 31,			December 31,
(In thousands, except per share and share data)	2019 (unaudited)			2018			2020			2019
Assets
Current assets
Cash and cash equivalents	$	19,617		$	30,657		$	6,400		$	6,448
Accounts receivable, trade, net of allowance for doubtful accounts of $26 and $0 at June 30, 2019 and December 31, 2018, respectively		3,832			3,045
Accounts receivable, trade, net								8,205			5,345
Inventories		5,306			3,509			10,829			10,972
Prepaid expenses and other current assets		384			353			1,016			1,348
Total current assets		29,139			37,564			26,450			24,113

Property and equipment
Leasehold improvements		1,284			1,284
Furniture and computer equipment		577			706
Manufacturing and other equipment		1,733			1,657
Subtotal		3,594			3,647
Less: Accumulated depreciation		(2,276	)		(2,328	)
Net property and equipment		1,318			1,319
Operating lease right-of-use assets		1,079			—
Investment in SAVSU		6,100			6,548
Assets held for rent, net								4,875			3,922
Property and equipment, net								5,407			5,572
Operating lease right-of-use assets, net								892			1,040
Long-term deposits and other assets								36			50
Investments								2,500			2,500
Accrued interest receivable								27		––
Intangible assets, net		4,446			—			21,294			21,982
Goodwill		9,524			—			33,506			33,637
Long-term deposits		136			36
Total assets	$	51,742		$	45,467		$	94,987		$	92,816

Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	876		$	720		$	3,522		$	3,119
Accrued expenses and other current liabilities		204			91			3,080			3,369
Accrued compensation		963			998
Lease liability - operating, current portion		665			—
Lease liability – financing, current portion		14			—
Deferred rent, current portion		—			130
Contingent consideration - current		371			—
Lease liabilities, operating, current portion								826			804
Contingent consideration, current portion								365			377
Warrant liability								17,667		––
Total current liabilities		3,093			1,939			25,460			7,669
Deferred rent, long-term		—			349
Long-term lease liability - operating		806			—
Long-term lease liability - financing		10			—

Warrant liability							––				39,602
Contingent consideration, long-term								1,486			1,537
Lease liabilities, operating, long-term								332			550
Other long-term liabilities		7			31		––				4
Contingent consideration – long-term		1,560			—
Total liabilities		5,476			2,319			27,278			49,362

Commitments and Contingencies (Note 10)
Commitments and Contingencies (Note 11)

Shareholders’ equity
Common stock, $0.001 par value; 150,000,000 shares authorized, 18,898,609 and 18,547,406 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively		19			19
Preferred stock, $0.001 par value; 1,000,000 shares authorized, Series A, 4,250 shares designated, and 0 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively								—			—
Common stock, $0.001 par value; 150,000,000 shares authorized, 21,148,771 and 20,825,452 shares issued and outstanding at March 31, 2020 and December 31 2019, respectively								21			21
Additional paid-in capital		116,013			114,160			145,432			143,485
Accumulated deficit		(69,766	)		(71,031	)		(77,744	)		(100,052	)
Total shareholders’ equity		46,266			43,148			67,709			43,454
Total liabilities and shareholders’ equity	$	51,742		$	45,467		$	94,987		$	92,816

Cash and cash equivalents	$	1,251
Accounts receivable, net		753
Prepaid expenses and other current assets		19
Property, plant and equipment, net		546
Operating right-of-use asset		233
Assets held for rent, net		2,441
Customer relationships		80
Tradenames		1,320
Developed technology		10,750
Goodwill		21,037
Accounts payable and accrued expenses		(807	)
Deferred tax liabilities		(1,541	)
Other liabilities		(232	)
Fair value of net assets acquired	$	35,850

(In thousands)	June 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Raw materials	$	2,068	$	1,453	$	3,282	$	2,979
Work in progress		275		652		1,658		1,896
Finished goods		2,963		1,404		5,889		6,097
Total	$	5,306	$	3,509	$	10,829	$	10,972

(In thousands)	March 31, 2020			December 31, 2019
Shippers placed in service	$	3,748		$	3,073
Accumulated deprecation		(302	)		(174	)
Net		3,446			2,899
Shippers and related components in production		1,429			1,023
Total	$	4,875		$	3,922

Explanatory Note		3

PART I. FINANCIAL INFORMATION		4

Item 1.	Condensed Consolidated Financial Statements (unaudited)	4

	Condensed Consolidated Balance Sheets as of ~~June 30, 2019 (unaudited)~~March 31, 2020 and December 31, ~~2018~~2019	34

	Condensed Consolidated Statements of Operations ~~(unaudited)~~ for the three ~~and six~~ month periods ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	45

	~~Consolidated Statements of Shareholders’ Equity (unaudited) for the three and six month periods ended June 30, 2019 and 2018~~	5

	Condensed Consolidated Statements of ~~Cash Flows (unaudited)~~Shareholders’ Equity for the ~~six~~three month periods ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	6

	Condensed Consolidated Statements of Cash Flows for the three month periods ended March 31, 2020 and 2019	7

	Notes to Condensed Consolidated Financial Statements ~~(unaudited)~~	78

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1626

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2132

Item 4.	Controls and Procedures	2132

PART II.	OTHER INFORMATION	33

Item 1.	Legal Proceedings	33

Item 1A.	Risk Factors	33

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33

Item 3.	Defaults Upon Senior Securities	33

Item 4.	Mine Safety Disclosures	33

Item 5.	Other Information	33

Item 6.	Exhibits	2134

	Signatures	2235

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands, except per share and share data)	2019			2018			2019			2018
Product sales	$	6,701		$	5,178		$	12,471		$	8,993
Cost of product sales		1,958			1,537			3,606			2,901
Gross profit		4,743			3,641			8,865			6,092

Operating expenses
Research and development		739			325			1,111			671
Sales and marketing		928			641			1,776			1,253
General and administrative		2,118			1,390			4,321			2,744
Acquisition costs		39		––				247		––
Total operating expenses		3,824			2,356			7,455			4,668

Operating income		919			1,285			1,410			1,424

Other income (expenses), net
Interest income		137			32			307			41
Interest expense		(1	)		(1	)		(4	)		(1	)
Loss from equity-method investment in SAVSU		(217	)		(177	)		(448	)		(321	)
Total other income (expenses), net		(81	)		(146	)		(145	)		(281	)

Income before provision for income taxes		838			1,139			1,265			1,143
Income taxes	––			––			––			––
Net income		838			1,139			1,265			1,143
Less: Preferred stock dividends	––				(93	)	––				(200	)
Net income attributable to common stockholders	$	838		$	1,046		$	1,265		$	943

Basic net income per common share	$	0.04		$	0.07		$	0.07		$	0.06
Diluted net income per common share	$	0.03		$	0.05		$	0.05		$	0.05

Basic shares used to compute earnings per share		18,819,459			15,180,169			18,734,401			14,642,378
Diluted shares used to compute earnings per share		24,539,299			20,374,358			24,439,959			19,063,595

	Six Months Ended June 30, 2019
(In thousands, except share data)	Preferred Stock Shares – Series A		Preferred Stock Amount – Series A		Common Stock Shares		Common Stock Amount		Additional Paid-in Capital		Accumulated Deficit			Total Shareholders’ Equity
Balance, December 31, 2018		—	$	—		18,547,406	$	19	$	114,160	$	(71,031	)	$	43,148
Stock based compensation								—		1,252					1,252
Stock option/warrant exercises						265,061		—		601					601
Stock issued – on vested RSUs						86,142		—		—					—
Net income												1,265			1,265
Balance, June 30, 2019		—	$	—		18,898,609	$	19	$	116,013	$	(69,766	)	$	46,266

	Three Months Ended June 30, 2019
(In thousands, except share data)	Preferred Stock Shares – Series A		Preferred Stock Amount – Series A		Common Stock Shares		Common Stock Amount		Additional Paid-in Capital		Accumulated Deficit			Total Shareholders’ Equity
Balance, March 31, 2019		—	$	—		18,717,095	$	19	$	114,951	$	(70,604	)	$	44,366
Stock based compensation								—		646					646
Stock option/warrant exercises						160,364		—		416					416
Stock issued – on vested RSUs						21,150		—		—					—
Net income												838			838
Balance, June 30, 2019		—	$	—		18,898,609	$	19	$	116,013	$	(69,766	)	$	46,266

	Six Months Ended June 30, 2018
(In thousands, except share data)	Preferred Stock Shares – Series A			Preferred Stock Amount – Series A		Common Stock Shares		Common Stock Amount		Additional Paid-in Capital			Accumulated Deficit			Total Shareholders’ Equity
Balance, December 31, 2017		4,250		$	—		14,021,422	$	14	$	84,036		$	(73,958	)	$	10,092
Series A preferred stock redemption		(1,063	)								(1,063	)					(1,063	)
Stock based compensation											748						748
Stock option/warrant exercises							2,003,605		2		8,897						8,899
Stock issued – on vested RSUs							76,539		—		—						—
Stock issued for services							5,939				36						36
Preferred stock dividends														(200	)		(200	)
Net income														1,143			1,143
Balance, June 30, 2018		3,187		$	—		16,107,505	$	16	$	92,654		$	(73,015	)	$	19,655

	Three Months Ended June 30, 2018
(In thousands, except share data)	Preferred Stock Shares – Series A			Preferred Stock Amount – Series A		Common Stock Shares		Common Stock Amount		Additional Paid-in Capital			Accumulated Deficit			Total Shareholders’ Equity
Balance, March 31, 2018		4,250		$	—		14,145,413	$	14	$	84,518		$	(74,061	)	$	10,471
Series A preferred stock redemption		(1,063	)								(1,063	)					(1,063	)
Stock based compensation											374						374
Stock option/warrant exercises							1,941,167		2		8,825						8,827
Stock issued – on vested RSUs							20,925		—		—						—
Preferred stock dividends														(93	)		(93	)
Net income														1,139			1,139
Balance, June 30, 2018		3,187		$	—		16,107,505	$	16	$	92,654		$	(73,015	)	$	19,655

	Six Month Period Ended June 30,
(In thousands)	2019			2018
Cash flows from operating activities
Net income	$	1,265		$	1,143
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation		209			161
Stock-based compensation expense		1,252			748
Amortization of deferred rent related to lease incentives		—			(63	)
Amortization of operating lease liability		(87	)		—
Interest expense – finance type lease		2			—
Loss from equity-method investment in SAVSU		448			321
Amortization of intangible assets		104			—

Change in operating assets and liabilities
(Increase) Decrease in
Accounts receivable, trade		(632	)		(1,145	)
Inventories		(1,341	)		(275	)
Prepaid expenses and other current assets		(32	)		(103	)
Increase (Decrease) in
Accounts payable		(36	)		168
Accrued compensation and other current liabilities		(20	)		4
Deferred rent		—			(6	)
Other liabilities		(53	)		—
Net cash provided by operating activities		1,079			953

Cash flows from investing activities
Payments related to the Astero Bio Acquisition, net of cash acquired		(12,438	)		—
Investment in equity investment SAVSU		—			(1,000	)
Purchase of property and equipment		(267	)		(61	)
Net cash used in investing activities		(12,705	)		(1,061	)

Cash flows from financing activities
Payments on equipment loan		(8	)		(5	)
Payments on capital lease obligations		(7	)		(7	)
Proceeds from exercise of common stock options and warrants		601			8,899
Payments of preferred stock dividends		—			(213	)
Payments for redemption of preferred stock		—			(1,063	)
Net cash provided by financing activities		586			7,611

Net increase (decrease) in cash and cash equivalents		(11,040	)		7,503

Cash and cash equivalents - beginning of period		30,657			6,663

Cash and cash equivalents - end of period	$	19,617		$	14,166

Non-cash investing and financing activities
Series A preferred stock dividends accrued not yet paid	$	—		$	93
Stock issued for services provided in prior period included in liabilities at year-end		—			36
Receivables converted to equity investment in SAVSU		—			150
Purchase of equipment with debt	––				18
Purchase of property and equipment not yet paid	$	4		$	20

As of December 31, 2018		Level 1				Level 2				Total
Total cash and cash equivalents		$	30,657			$	—			$	30,657

	Six Months Ended June 30,
(In thousands)	2019		2018
Total revenue	$	12,681	$	9,016
Net income attributable to common stockholders	$	801	$	258
Earnings per share:
Basic	$	0.04	$	0.02
Diluted	$	0.03	$	0.01

	Estimated Fair Value		Estimated Useful Life (Years)
Customer relationships	$	80		6
Tradenames		1,320		9
Developed technology		10,750	7	–	8
Total identifiable intangible assets	$	12,150

Cash consideration	$	11,000
Stock consideration		4,000
Contingent consideration		856
Total consideration transferred	$	15,856

Accounts receivable, net	$	1,044
Inventory		3,232
Prepaid expenses and other current assets		29
Property, plant and equipment, net		3,615
Customer relationships		560
Tradenames		800
Developed technology		5,430
Goodwill		2,954
Accounts payable		(1,197	)
Other liabilities		(611	)
Fair value of net assets acquired	$	15,856

(In thousands)
Balance as of December 31, 2019	$	33,637
Correction of an error related to CBS goodwill		(131	)
Balance as of March 31, 2020	$	33,506

(In thousands, except weighted average useful life)	March 31, 2020
Finite-lived intangible assets:	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Weighted Average Useful Life (in years)
Customer Relationships	$	800	$	(88	)	$	712		5.0
Tradenames		2,590		(205	)		2,385		7.4
Technology – acquired		19,020		(1,473	)		17,547		7.8
In-process R&D⁽¹⁾		650		—			650		9.0
Total intangible assets	$	23,060	$	(1,766	)	$	21,294		7.7

(In thousands)	December 31, 2018
Landlord-funded leasehold improvements	$	1,125
Less accumulated amortization		(757	)
Total		368
Straight line rent adjustment		111
Total deferred rent	$	479

(In thousands) For the Years Ended December 31,	Estimated Amortization Expense
2020 (9 months remaining)	$	2,100
2021		2,825
2022		2,825
2023		2,795
2024		2,770
Thereafter		7,979
Total	$	21,294

	Six Month Period Ended					Three Months Ended
	June 30, 2019					March 31, 2020
				Wtd. Avg.		Options			Weighted Avg. Exercise Price
				Exercise
	Options			Price
Outstanding at beginning of year		2,043,402		$	1.91
Outstanding at beginning of period							1,570,455		$	1.96
Granted		—		$	—		—		$	—
Exercised		(236,061	)	$	1.96		(251,180	)	$	1.84
Forfeited		(3,438	)	$	5.69		—		$	—
Expired		—		$	—		—		$	—
Outstanding service vesting-based at June 30, 2019		1,803,903		$	1.90
Outstanding at March 31, 2020							1,319,275		$	1.98

Service vesting-based options exercisable at June 30, 2019		1,600,799		$	1.87
Service vesting-based stock options exercisable at March 31, 2020							1,263,377		$	1.96

	Three Months Ended March 31, 2020
	Options			Wtd. Avg. Exercise Price
Outstanding at beginning of period		737,497		$	1.64
Granted		—		$	—
Exercised		(17,113	)	$	1.64
Outstanding performance-based at March 31, 2020		720,384		$	1.64

Performance-based stock options exercisable at March 31, 2020		720,384		$	1.64

	Six Month Period Ended					Three Months Ended March 31, 2020
	June 30, 2019					Number of Restricted Shares			Grant-Date Fair Value
Service vesting-based restricted stock	Number of Restricted Shares			Grant-Date Fair Value
Outstanding at beginning of year		279,919		$	5.00
Unvested outstanding at beginning of period							429,399		$	13.25
Granted		177,718		$	17.80		175,971		$	9.43
Vested		(86,142	)	$	4.51		(53 026	)	$	12.90
Forfeited		(21,269	)	$	10.17		(7,000	)	$	15.92
Outstanding at June 30, 2019		350,226		$	11.30
Unvested outstanding at March 31, 2020							545,344		$	12.01

	Six Month Period Ended
	June 30, 2019
Performance-based restricted stock	Number of Restricted Shares		Grant-Date Fair Value
Outstanding at beginning of year		—	$	—
Expected to vest		123,851	$	17.79
Vested		—	$	—
Outstanding at June 30, 2019		123,851	$	17.79

	Three Month Period Ended				Six Month Period Ended
	June 30,				June 30,				Three Months Ended March 31,
(In thousands)	2019		2018		2019		2018		2020		2019
Research and development costs	$	97	$	65	$	177	$	130	$	174	$	67
Sales and marketing costs		131		69		297		138		229		154
General and administrative costs		350		191		677		382		577		278
Cost of product sales		68		49		101		98		133		32
Total	$	646	$	374	$	1,252	$	748	$	1,113	$	531

	Shares			Wtd. Avg. Exercise Price
Outstanding at December 31, 2019		3,959,005		$	4.33
Exercised		(2,000	)		4.75
Outstanding at March 31, 2020		3,957,005		$	4.33

(In thousands)	Operating Leases			Financing Leases			Operating Leases			Financing Leases
2019 (less than one year)	$	362		$	7
2020		764			15		$	656		$	11
2021		452			3			559			3
Total lease payments		1,578			25			1,215			14
Less: interest		(107	)		(2	)		(57	)		(1	)
Total present value of lease liabilities	$	1,471		$	23		$	1,158		$	13