UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB/A
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended JUNE 30, 2005 Commission file number 0-18170
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BIOLIFE SOLUTIONS, INC.
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(Exact name of small business issuer as specified in its charter)
Delaware 94-3076866
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(State of Incorporation) (IRS Employer I.D. Number)
171 Front Street
Owego, NY 13827
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(Address of principal executive offices)
Issuer's telephone number, including area code: (607) 687-4487
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Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
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12,413,209 SHARES OF BIOLIFE SOLUTIONS, INC. COMMON STOCK, PAR VALUE $.001 PER
SHARE, WERE OUTSTANDING AS OF AUGUST 14, 2005.
Transitional Small Business Disclosure Format (check one). Yes ___ No _X_
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Securities Exchange Act of 1934). Yes ___ No _X_
Subsequent to the end of the period covered by this report, the Company
uncovered a deficiency in its internal control over financial reporting
regarding the counting of physical inventory which if left uncorrected could
result in a material control weakness. Specifically, the Company discovered that
there were finished good lots that were not counted during the physical
inventory count at the end of the period covered by this report. This had the
affect of understating inventory and overstating the loss for the period covered
by this report. As a result thereof, the Company adopted new internal control
procedures with respect to physical inventory counts for raw materials, goods in
progress and finished goods and has remitted this report to correct the error.
BIOLIFE SOLUTIONS, INC.
FORM 10-QSB
QUARTER ENDED JUNE 30, 2005
INDEX
Page
No.
Part I. Financial Information
Item 1. Financial Statements:
Unaudited Balance Sheet at June 30, 2005................... 2
Unaudited Statements of Operations for the three and
six month periods ended June 30, 2005 and
June 30, 2004............................................ 3
Unaudited Statements of Cash Flows for the three and
six month periods ended June 30, 2005 and
June 30, 2004............................................ 4
Notes to Financial Statements.............................. 5-7
Item 2. Management's Discussion and Analysis.................... 8-11
Item 3. Controls and Procedures................................. 12
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K........................ 13-14
Signatures...................................................... 14
Certifications.................................................. 15
1
PART I
FINANCIAL INFORMATION
ITEM 1. UNAUDITED FINANCIAL STATEMENTS
BIOLIFE SOLUTIONS, INC.
BALANCE SHEET
(UNAUDITED)
JUNE 30,
2005
RESTATED
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ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 189,391
Receivables 40,763
Inventories 156,146
Prepaid expenses and other current assets 24,992
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TOTAL CURRENT ASSETS 411,292
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PROPERTY AND EQUIPMENT
Leasehold improvements 45,783
Furniture and computer equipment 39,760
Manufacturing and other equipment 213,196
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TOTAL 298,739
Less: Accumulated depreciation and amortization (189,183)
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NET PROPERTY AND EQUIPMENT 109,556
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TOTAL ASSETS $ 520,848
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 138,517
Accrued expenses 60,913
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TOTAL CURRENT LIABILITIES 199,430
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Series F convertible preferred stock, $.001 par value; 12,000
shares authorized, 12,000 shares issued and outstanding 12
Series G convertible preferred stock, $.001 par value; 80
shares authorized, 55 shares issued and outstanding 1
Common stock, $0.001 par value, 25,000,000 shares
authorized, 12,413,209 shares issued and outstanding 12,413
Additional paid-in capital 40,663,172
Accumulated deficit (40,354,180)
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TOTAL STOCKHOLDERS' EQUITY 321,418
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 520,848
===============
See notes to financial statements
2
BIOLIFE SOLUTIONS, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2005 RESTATED 2004 2005 RESTATED 2004
------------------------------------ ----------------------------------------
REVENUE
Grant revenue $ - $ $11,650 $ - $ $38,936
Facilities fee - related party 20,863 22,179 41,725 36,965
Management fee - related party 11,475 12,198 22,950 20,331
Seminar Fees - 1,075 - 1,075
Consulting revenue - 13,000 - 72,000
Product sales 101,754 86,145 189,117 141,091
----------------- --------------- ----------------- ---------------
TOTAL REVENUE 134,092 146,247 253,792 310,398
----------------- --------------- ----------------- ---------------
OPERATING EXPENSES
Research and development 1,553 57,005 12,884 63,539
Sales and marketing 9,742 87,823 33,798 159,222
Product sales 36,212 38,266 84,325 81,216
General and administrative 217,393 200,732 419,152 513,170
----------------- --------------- ----------------- ---------------
TOTAL EXPENSES 264,900 383,826 550,159 817,147
----------------- --------------- ----------------- ---------------
OPERATING LOSS (130,808) (237,579) (296,367) (506,749)
----------------- --------------- ----------------- ---------------
OTHER INCOME (EXPENSE)
Interest income 2,042 4,085 4,824 15,408
----------------- --------------- ----------------- ---------------
TOTAL OTHER INCOME (EXPENSE) 2,042 4,085 4,824 15,408
----------------- --------------- ----------------- ---------------
LOSS BEFORE BENEFIT FOR TAXES (128,766) (233,494) (291,543) (491,341)
(BENEFIT) PROVISION FOR INCOME TAXES - - - -
----------------- --------------- ----------------- ---------------
NET LOSS $ (128,766) $ (233,494) $ (291,543) $ (491,341)
================= =============== ================= ===============
BASIC AND DILUTED NET LOSS PER
COMMON SHARE:
TOTAL BASIC AND DILUTED NET LOSS PER
COMMON SHARE $ (0.01) $ (0.02) $ (0.02) $ (0.04)
================= =============== ================= ===============
Basic and diluted weighted average common
shares used to compute net loss per
per share 12,413,209 12,413,209 12,413,209 12,413,209
================= =============== ================= ===============
See notes to financial statements
3
BIOLIFE SOLUTIONS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
2005 RESTATED 2004
---------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (291,543) $ (491,341)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
PROVIDED(USED) BY OPERATING ACTIVITIES
Depreciation 32,069 27,574
Amortization of loan financing costs - 106,408
CHANGE IN OPERATING NET ASSETS AND LIABILITIES
(INCREASE) DECREASE IN
Accounts receivable 34,574 1,801,454
Inventories (61,826) (35,578)
Prepaid and other current assets (22,067) (27,800)
INCREASE (DECREASE) IN
Accounts payable 53,481 (447,425)
Accrued expenses (1,320) (73,074)
Accrued salaries (73,039) (156,461)
---------------- -----------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (329,671) 703,757
---------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (12,622) (61,793)
---------------- -----------------
NET CASH USED BY INVESTING ACTIVITIES (12,622) (61,793)
---------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on notes payable - (705,525)
---------------- -----------------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES - (705,525)
---------------- -----------------
NET DECREASE IN CASH (342,293)
(63,561)
CASH - BEGINNING OF PERIOD 531,684 787,905
---------------- -----------------
CASH - END OF PERIOD $ 189,391 $ 724,344
================ =================
See notes to financial statements
4
BIOLIFE SOLUTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
A. GENERAL
BioLife Solutions, Inc. ("BioLife" or the "Company") was incorporated in 1998 in
Delaware as a wholly owned subsidiary of Cryomedical Sciences, Inc.
("Cryomedical"), a company that was engaged in manufacturing and marketing
cryosurgical products. BioLife (a) provides cryopreservation process evaluation
services, and (b), based upon its patented HypoThermosol(R) platform technology,
develops, manufactures and markets proprietary cryopreservation solutions that
markedly improve the biological processing and preservation of cells and
tissues.
On June 25, 2002 the Company sold its cryosurgery product line and related
intellectual property assets to Irvine, CA-based Endocare, Inc., a public
company, in exchange for $2.2 million in cash and 120,022 shares of Endocare
restricted common stock. In conjunction therewith, Cryomedical's Board of
Directors approved merging BioLife into Cryomedical and changing its name to
BioLife Solutions, Inc. In September 2002, the merger and name change were
completed and the Company began to trade under the new ticker symbol, "BLFS" on
the OTCBB.
The Balance Sheet as of June 30, 2005, and the Statements of Operations for the
three month and six month periods ended June 30, 2005 and 2004 and Statements of
Cash Flows for the six month periods ended June 30, 2005 and 2004, have been
prepared without audit. In the opinion of management, all adjustments necessary
to present fairly the financial position, results of operations, and cash flows
at June 30, 2005, and for all periods then ended, have been recorded. All
adjustments recorded were of a normal recurring nature.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these financial statements
be read in conjunction with the financial statements and notes thereto, included
in the Company's Annual Report on Form 10-KSB for the year ended December 31,
2004.
The results of operations for the three month and six month periods ended June
30, 2005 are not necessarily indicative of the operating results anticipated for
the full year.
B. FINANCIAL CONDITION
At June 30, 2005, the Company had stockholders' equity of approximately $321,000
and a working capital surplus of approximately $212,000. To date, the Company
has been unable to generate sufficient income from operations to meet its
operating needs.
The Company believes it has sufficient funds to continue operations in the near
term. Future capital requirements will depend on many factors, including the
ability to market and sell the Company's product line, research and development
programs, the scope and results of clinical trials, the time and costs involved
in obtaining regulatory approvals, the costs involved in obtaining and enforcing
patents or any litigation by third parties regarding intellectual property, the
status of competitive products, the maintenance of our manufacturing facility,
the maintenance of sales and marketing capabilities, and the establishment of
collaborative relationships with other parties.
5
These financial statements assume that the Company will be able to continue as a
going concern. If the Company is unable to continue as a going concern, the
Company may be unable to realize its assets and discharge its liabilities in the
normal course of business. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts nor to amounts and classification of liabilities that may be necessary
should the Company be unable to continue as a going concern.
C. INVENTORIES
Inventories consist of $118,470 of finished product and $37,676 of manufacturing
materials at June 30, 2005.
D. EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share is calculated by dividing the net income (loss)
attributable to common stockholders by the weighted average number of common
shares outstanding during the period. Diluted earnings per share is calculated
by dividing net income by the weighted average number of shares outstanding,
including potentially dilutive securities such as preferred stock, stock options
and warrants. Potential common shares were not included in the diluted earnings
per share amounts for the three month and six month periods ended June 30, 2005
and 2004 as their effect would have been anti-dilutive.
E. STOCK OPTIONS
In accounting for stock options to employees, the Company follows the intrinsic
value method prescribed by Accounting Principles Board Opinion No. 25,
ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, as opposed to the fair value method
prescribed by Statement of Financial Accounting Standards No. 123, ACCOUNTING
FOR STOCK-BASED COMPENSATION. The following table illustrates the effect on net
income and earnings per share if the Company had applied the fair value
recognition provisions of FASB Statement No. 123:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2005 RESTATED 2004 2005 RESTATED 2004
Net Income (Loss) as reported $ (128,766) $ (233,494) $ (291,543) $ (491,341)
Compensation expense based on fair value,
net of related tax effects (17,805) (17,805) (35,610) (35,610)
-------------- --------------- -------------- ---------------
Pro forma net loss $ (146,571) $ (251,299) $ (327,153) $ (526,951)
============== =============== ============== ===============
Basic and diluted net loss per share as reported $ (0.01) $ (0.02) $ (0.02) $ (0.04)
============== =============== ============== ===============
Pro forma $ (0.01) $ (0.02) $ (0.03) $ (0.04)
============== =============== ============== ===============
This disclosure is in accordance with Statement of Financial Accounting
Standards No. 148, ACCOUNTING FOR STOCK-BASED COMPENSATION - TRANSITION AND
DISCLOSURE.
6
F. RECLASSIFICATIONS
Certain June 2004 amounts have been reclassified to conform to the June 2005
presentation. The reclassifications had no material effect on operations.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion should be read in conjunction with the Company's
financial statements and notes thereto set forth elsewhere herein.
BioLife has pioneered the next generation of preservation solutions designed to
maintain the viability and health of cellular matter and tissues during
freezing, transportation and storage. Based on the Company's proprietary,
bio-packaging technology and a patented understanding of the mechanism of
cellular damage and death, these products enable the biotechnology and medical
community to address a growing problem that exists today. The expanding practice
of cell and gene therapy has created a need for products that ensure the
biological viability of mammalian cell and tissue material during transportation
and storage. The Company believes that the HypoThermosol(R), GelStor(TM) and
CryoStor(TM) products it is selling today are a significant step forward in
meeting these needs.
The Company's line of preservation solutions is composed of complex synthetic,
aqueous solutions containing, in part, minerals and other elements found in
human blood, which are necessary to maintain fluids and chemical balances
throughout the body at near freezing temperatures. The solutions preserve cells
and tissue in low temperature environments for extended periods after removal of
the cells through minimally invasive biopsy or surgical extraction, as well as
in shipping the propagated material for the application of cell or gene therapy
or tissue engineering. BioLife has entered into research agreements with several
emerging biotechnology companies engaged in the research and commercialization
of cell and gene therapy technology and has received several government research
grants in partnership with academic institutions to conduct basic research,
which research could lead to further commercialization of technology to preserve
human cells, tissues and organs.
The Company currently markets its HypoThermosol(R), CryoStor(TM) and GelStor(TM)
line of solutions to companies and labs engaged in pre-clinical research, and to
academic institutions.
On May 12, 2005, the Company signed an Exclusive Private Labeling and
Distribution Agreement with VWR International, Inc., a global leader in the
distribution of scientific supplies, pursuant to which the Company will
manufacture its HypoThermosol(R) and CryoStor(TM) product lines under the VWR
label for sale to non-clinical customers via the 1,400 person VWR worldwide
sales force. The Company maintains the right to sell its products to
non-clinical customers under its own label.
RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2005
AND 2004
REVENUE
Revenue for the quarter ended June 30, 2005 decreased $12,155, or 8%, to
$134,092, compared to $146,247 for the quarter ended June 30, 2004. The shift in
focus toward product sales resulted in an 18% increase in product sales in the
second quarter of 2005 as compared to the second quarter of 2004. While product
sales rose, consulting revenue declined as a result of the scheduled completion
of contracts with consulting clients. In addition, the shift in focus toward
product sales resulted in a decline in grant revenue of $11,650 to $0, from the
second quarter of 2004, as research and development related activities were
shifted to Cell Preservation Services, Inc. For the quarter ended June 30, 2005,
the Company received management and facilities fees totaling $32,338, as
compared to $34,377 for the quarter ended June 30, 2004, as a result of the
research agreement between the Company and Cell Preservation Services, Inc.
(CPSI), pursuant to which the Company receives facilities and management fees
from CPSI in exchange for the use of BioLife facilities and management services
in connection with the research performed on behalf of CPSI. CPSI is a company
formed by Dr. John M. Baust, a former Biolife employee and the son of Dr. John
G. Baust, President of BioLife.
8
Revenue for the six month period ended June 30, 2005 decreased $56,606, or 18%,
to $253,792, compared to $310,398 for the six month period ended June 30, 2004.
The shift in focus toward product sales resulted in a 34% increase in product
sales for the six month period ended June 30, 2005, compared to the six month
period ended June 30, 2004. While product sales rose, consulting revenue
declined as a result of the scheduled completion of contracts with consulting
clients. In addition, the shift in focus toward product sales resulted in a
decline in grant revenue of $38,936 from the six month period ended June 30,
2004. For the six month period ended June 30, 2005, the Company received
management and facilities fees totaling $64,675 as compared to $57,296 for the
six month period ended June 30, 2004, as a result of the research agreement
between the Company and CPSI.
COST OF PRODUCT SALES
For the quarter ended June 30, 2005, the cost of product sales was $36,212 as
compared to $38,266 for the quarter ended June 30, 2004. For the six month
period ended June 30, 2005, the cost of product sales was $84,325 as compared to
$81,216 for the six month period ending June 30, 2004. This increase was
primarily due to an increase product sales volume as well as increases in labor
and raw materials expenditures necessary for fulfillment of the VWR agreement
including new labeling requirements and new packaging requirements.
RESEARCH AND DEVELOPMENT
Expenses relating to research and development for the quarter ended June 30,
2005 declined $55,452, or 97%, from the previous quarter ended June 30, 2004.
This decrease in research and development costs was due to the shift of grant
related research activities to CPSI pursuant to the research agreement. Three
former employees of BioLife became CPSI employees to perform grant related
research and development work. In addition, depreciation and facilities expenses
were recorded as General and Administrative expenses in 2005 as the Company's
focus shifted away from research and development to product sales.
Expenses relating to research and development for the six month period ended
June 30, 2005 declined $50,655 or 80% from the previous six month period ended
June 30, 2004. This decrease in research and development costs was in large part
due to the shift of grant related research activities to CPSI pursuant to the
research agreement. Three former employees of BioLife became CPSI employees to
perform grant related research and development work. In addition, depreciation
and facilities expenses were recorded as General and Administrative expenses in
2005, as the Company's focus shifted away from research and development to
product sales.
SALES AND MARKETING
For the quarter ended June 30, 2005, sales and marketing expenses decreased
$78,081, or 89%, to $9,742, compared to $87,823 for the quarter ended June 30,
2004. The decrease in sales and marketing expense was due primarily to the
resignation of Alan Rich, Vice President of Sales, on January 31, 2005. In
addition to the reduction in salaries and insurance expenses, trade show
attendance fees, advertising, and sales related travel expenses were reduced.
For the six month period ended June 30, 2005, sales and marketing expenses
decreased $125,424, or 79%, to $33,798, compared to $159,222 for the six month
period ended June 30, 2004. The decrease in sales and marketing expense was due
primarily to the resignation of Alan Rich, Vice President of Sales, on January
31, 2005. In addition to the reduction in salaries and insurance expenses, trade
show attendance fees, advertising, and sales related travel expenses were
reduced.
GENERAL AND ADMINISTRATIVE EXPENSE
For the quarter ended June 30, 2005, general and administrative expense
increased $16,661, or 8%, to $217,393, compared to $200,732 for the quarter
ended June 30, 2004. Facilities expenses for the quarter ended June 30, 2005
totaled $16,031. There were no facilities expenses recorded as General and
Administrative expenses for
9
the quarter ended June 30, 2004 as facilities expenses related to and were
recorded as Research and Development expenses. Similarly, depreciation totaled
$6,207 for the quarter ended June 30, 2005, while depreciation related to and
was recorded as Research and Development expenses for the quarter ended June 30,
2004.
For the six month period ended June 30, 2005, general and administrative expense
decreased $94,018, or 18% to $419,152, compared to $513,170 for the six month
period ended June 30, 2004. This decrease was due in large part to writing off
of previously capitalized loan financing costs of $106,408 associated with note
obligations that were paid during the first quarter of 2004. Legal fees totaled
$37,332 for the six month period ending June 30, 2005, as compared to $92,776
for the six month period ending June 30, 2004. These additional legal fees
incurred in 2004 were related to the Endocare lawsuit. In addition, the Company
was able to negotiate and write off $57,844 in liabilities during the first
quarter of 2004.
OPERATING EXPENSES AND NET INCOME
For the quarter ended June 30, 2005, operating expenses decreased $118,926, or
31%, to $264,900, compared to $383,826 for the quarter ended June 30, 2004. The
Company reported a net loss of $(128,766) for the quarter ended June 30, 2005,
compared to a net loss of ($233,494) for the quarter ended June 30, 2004.
For the six month period ended June 30, 2005, operating expenses decreased
$266,988, or 33%, to $550,159, compared to $817,147 for the six month period
ended June 30, 2004. The Company reported a net loss of $(291,543) for the six
month period ended June 30, 2005, compared to a net loss of ($491,341) for the
six month period ended June 30, 2004.
CASH AND CASH EQUIVALENTS
At June 30, 2005, the Company had cash and cash equivalents of $189,391,
compared to cash and cash equivalents of $724,344 at June 30, 2004. At June 30,
2005, the Company had a working capital surplus of $211,862, compared to a
working capital surplus of $707,564 at June 30, 2004. The decrease in the
Company's cash and working capital position compared to June 30, 2004 was due to
the inability of the Company to generate sufficient income from operations to
meet its operating needs. In addition, the Company made capital improvements and
expenditures to support product sales growth.
LIQUIDITY AND CAPITAL RESOURCES
During the second quarter of 2005, the Company generated $101,754 in product
sales, the highest product sales quarter since inception. This represents a 12%
increase over the previous high product sales quarter of $90,513. The second
quarter exceeded first quarter sales by $14,390, a 16% increase. While the
increasing product sales appear promising, the Company has been unable to
support its operations solely from revenue generated from product sales. In
February 2004, the Company collected $1.88 million from its lawsuit settlement
with Endocare. This settlement has provided the necessary cash flow to support
operating activities to date.
During the six month period ended June 30, 2005, net cash used by operating
activities was $329,671 as compared to net cash provided by operating activities
of $703,757 for the six month period ended June 30, 2004. The net cash provided
from operating activities for the six month period ending June 30, 2004 resulted
primarily from the collection of the Endocare settlement and was partially
offset by the reduction in accounts payable, loans payable, accrued expenses,
and accrued salaries.
10
Net cash used in investing activities totaled $12,622 for the six month period
ended June 30, 2005 as the Company purchased new equipment and made leasehold
improvements to support the manufacturing facility and product sales.
The Company believes it has sufficient funds to continue operations in the near
term. Future capital requirements will depend on many factors, including the
ability to market and sell our product line, research and development programs,
the scope and results of clinical trials, the time and costs involved in
obtaining regulatory approvals, the costs involved in obtaining and enforcing
patents or any litigation by third parties regarding intellectual property, the
status of competitive products, the maintenance of our manufacturing facility,
the maintenance of sales and marketing capabilities, and the establishment of
collaborative relationships with other parties.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The Company's discussion and analysis of its financial condition and results of
operations are based upon its financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States.
The preparation of these financial statements requires the Company to make
estimates and judgments that affect the reported amounts of assets and
liabilities, revenues and expenses and related disclosures. On an ongoing basis,
the Company evaluates estimates, including those related to bad debts,
inventories, fixed assets, income taxes, contingencies and litigation. The
Company bases its estimates on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances, the
results of which form the basis of the Company's judgments on the carrying value
of assets and liabilities. Actual results may differ from these estimates under
different assumptions or conditions.
The Company believes that following accounting policies involves more
significant judgments and estimates in the preparation of the financial
statements. The Company maintains an allowance for doubtful accounts for
estimated losses that may result from the inability of its customers to make
payments. If the financial condition of the Company's customers were to
deteriorate, resulting in their inability to make payments, the Company may be
required to make additional allowances. The Company writes down inventory for
estimated obsolete or unmarketable inventory to the lower of cost or market
based on assumptions of future demand. If the actual demand and market
conditions are less favorable than projected, additional write-downs may be
required.
CONTRACT OBLIGATIONS
The Company leases equipment as a lessee, under operating leases expiring on
various dates through 2005. The leases require monthly payments of approximately
$2,340.
In January 2004, BioLife signed a 3 year lease with Field Afar Properties, LLC,
whereby BioLife leases 6,161 square feet of office, laboratory, and
manufacturing space in Owego, NY at a rental rate of $6,200 per month.
Renovation of the new facility was completed in April 2004. The Company's Chief
Executive Officer and family members are the members of Field Afar Properties,
LLC.
11
ITEM 3. CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the Company's periodic
Securities Exchange Act of 1934 ("Exchange Act") reports is recorded, processed,
summarized, and reported within the time periods specified in the SEC's rules
and forms, and that such information is accumulated and communicated to the
Company's management, including its Chief Executive Officer/Chief Financial
Officer, as appropriate, to allow timely decisions regarding required financial
disclosure.
At the end of the period covered by this Quarterly Report on Form 10-QSB, the
Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including the CEO/CFO, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation,
the CEO/CFO concluded that the Company's disclosure controls and procedures are
not effective in timely alerting him to material information relating to the
Company required to be included in the Company's periodic SEC filings and ensure
that the information required to be disclosed by the Company in the report it
files or submits under the Exchange Act is recorded, processed, summarized, and
reported within the time periods specified by the rules and forms.
Subsequent to the end of the period covered by this report, the Company
uncovered a deficiency in its internal control over financial reporting
regarding the counting of physical inventory which if left uncorrected could
result in a material control weakness. Specifically, the Company discovered that
there were finished goods lots that were not counted during the physical
inventory count at the end of the second quarter of 2005. As a result thereof,
the Company adopted new internal control procedures with respect to physical
inventory counts for raw materials, goods in progress, and finished goods and
has amended its form 10-QSB filing for the second quarter of 2005. To prevent
this from happening in the future, the Company adopted new internal control
procedures for obtaining physical inventory counts for raw materials, goods in
progress, and finished goods. Other than as described herein, there were no
significant changes in the Company's internal control over financial reporting
during the quarterly period ended June 30, 2005 that has materially affected, or
is reasonably likely to materially affect, the Company's internal control over
financial reporting.
12
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
31.1* Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
32.1* Certification of Periodic Report pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002. 18 U.S.C. Section 1350
(b) Reports on Form 8-K, filed in the quarter ended June 30, 2005.
Agreement dated May 12, 2005, between May 17, 2005, regarding a
material agreement between the Company and VWR International, Inc.
* Filed herewith
13
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Biolife Solutions, Inc.
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(Registrant)
Date: November 14, 2005 By: /s/ John G. Baust
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John G. Baust, PhD
President and Chief Executive Officer
(Principal Accounting Officer )
14