UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended Commission file number 0-18170
September 30, 2002 -------
------------------
BIOLIFE SOLUTIONS, INC.
-----------------------
(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)
Suite 144 - Science III.
SUNY Park
Binghamton, NY 13902
--------------------
(Address of principal executive offices)
Issuer's telephone number, including area code: (607) 777-4415
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CRYOMEDICAL SCIENCES, INC.
--------------------------
(Former name or former address, if changed since last report)
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
---- -------
12,413,209 SHARES OF BIOLIFE SOLUTIONS, INC. COMMON STOCK, PAR VALUE $.001 PER
SHARE, WERE OUTSTANDING AS OF NOVEMBER 13, 2002.
BIOLIFE SOLUTIONS, INC.
FORM 10-QSB
QUARTER ENDED SEPTEMBER 30, 2002
INDEX
Page
No.
Part I. Financial Information
Item 1. Financial Statements:
Balance Sheets at September 30, 2002 (unaudited) and December 31, 2001................................. 2
Unaudited Statements of Operations for the three-and nine-month periods ended September
30, 2002 and September 30, 2001........................................................................ 3
Unaudited Statements of Comprehensive Income (Loss) for the three-and nine-month
periods ended September 30, 2002 and September 30, 2001................................................ 4
Unaudited Statements of Cash Flows for the nine-month periods ended September 30, 2002
and September 30, 2001................................................................................. 5
Notes to Financial Statements.......................................................................... 6-9
Item 2. Management's Discussion and Analysis................................................................ 10-12
Item 3. Controls and Procedures............................................................................. 13
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K.................................................................... 14
Signatures.................................................................................................. 15
Certification............................................................................................... 16
1
PART I
FINANCIAL INFORMATION
ITEM 1. UNAUDITED FINANCIAL STATEMENTS
BIOLIFE SOLUTIONS, INC.
BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31,
2002 2001
------------ ------------
(Unaudited)
ASSETS
------
Current assets:
Cash and cash equivalents $ 273,076 $ 286,105
Marketable securities 1,717,515 --
Accounts receivable, net of allowance for doubtful accounts of $ 0
and $26,970, respectively 1,733 54,043
Inventories -- 487,858
Prepaid expenses and other current assets 8,460 23,192
------------ ------------
Total current assets 2,000,784 851,198
------------ ------------
Fixed assets, net of accumulated depreciation of $40,411 and
$2,138,614, respectively 161,225 454,293
Intangible assets, net of accumulated amortization of $0 and
$87,855, respectively -- 471,099
Deferred financing cost, net of accumulated amortization of
$90,209 and $0, respectively 64,420 --
------------ ------------
Total assets $ 2,226,429 $ 1,776,590
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 76,093 $ 1,000,027
Accrued expenses 337,047 465,797
Notes payable 369,841 --
------------ ------------
Total current liabilities 782,981 1,465,824
------------ ------------
Total liabilities 782,981 1,465,824
------------ ------------
Stockholders' equity:
Preferred stock, $0.001 par value per share, 1,000,000 shares
authorized; 12,000 issued and outstanding 12 12
Common stock, $0.001 par value per share, 25,000,000 shares
authorized; 12,413,209 issued and outstanding 12,413 12,413
Additional paid-in capital 38,352,195 38,009,325
Accumulated deficit (37,204,424) (37,710,984)
Accumulated other comprehensive income 283,252 --
------------ ------------
Total stockholders' equity 1,443,448 310,766
------------ ------------
Total liabilities and stockholders' equity $ 2,226,429 $ 1,776,590
============ ============
See notes to financial statements
2
BIOLIFE SOLUTIONS, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED NINE MONTH ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------ ------------------------------
2002 2001 2002 2001
------------ ------------ ------------ ------------
Revenue:
Product sales $ 1,975 $ -- $ 20,527 $ --
Grants 106,032 125,199 385,572 202,237
Services and other 30,000 25,000 110,720 25,000
------------ ------------ ------------ ------------
Total revenue 138,007 150,199 516,819 227,237
Cost of product sales -- 1,089 25,646 2,455
------------ ------------ ------------ ------------
Gross profit 138,007 149,110 491,173 224,782
------------ ------------ ------------ ------------
Expenses:
Research and development 209,434 115,299 441,684 254,926
Sales and marketing 4,126 715 4,146 29,561
General and administrative 134,520 25,853 417,068 110,599
------------ ------------ ------------ ------------
Total expenses 348,080 141,867 862,898 395,086
------------ ------------ ------------ ------------
Operating income (loss) (210,073) 7,243 (371,725) (170,304)
Interest expense, net -- 749 -- 765
------------ ------------ ------------ ------------
Income (loss) from continuing operations (210,073) 6,494 (371,725) (171,069)
------------ ------------ ------------ ------------
Discontinued operations:
Loss from discontinued operations (92,934) (1,140,775) (1,547,824) (3,409,153)
Gain on disposal of cryosurgical assets, net -- -- 2,426,109 --
------------ ------------ ------------ ------------
Net income (loss) (303,007) (1,134,281) 506,560 (3,580,222)
============ ============ ============ ============
Basic earnings (loss) per share:
Loss from continuing operations $ (0.02) $ -- $ (0.03) $ (0.01)
Loss from operation of cryosurgical assets (0.01) (0.09) (0.12) (0.27)
Gain on disposal of cryosurgical assets, net -- -- 0.20 --
----------- ------------ ----------- ------------
Total $ (0.02) $ (0.09) $ 0.04 $ (0.29)
============ ============ ============ ============
Diluted earnings per share from
continuing operations $ --
============
Weighted average number of common shares outstanding:
----------- ------------ ----------- ------------
Basic 12,413,209 12,413,209 12,413,209 12,413,209
----------- ------------ ----------- ------------
Diluted 17,213,209
------------
See notes to financial statements
3
BIOLIFE SOLUTIONS, INC.
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------ ----------------------------
2002 2001 2002 2001
---------- ------------ --------- ------------
Net income (loss) $ (303,007) $ (1,134,281) $ 506,560 $ (3,580,222)
Unrealized gain on marketable securities 132,024 -- 283,252 --
---------- ------------ --------- ------------
Comprehensive income (loss) $ (170,983) $ (1,134,281) $ 789,812 $ (3,580,222)
========== ============ ========= ============
See notes to financial statements
4
BIOLIFE SOLUTIONS, INC.
STATEMENTS OF CASH FLOW
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------------
2002 2001
----------- -----------
Cash flows from operating activities:
Net income (loss) $ 506,560 $(3,580,222)
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
Gain on sale of cryosurgical assets, net (2,426,109) --
Loss from discontinued operations 1,547,823 3,409,153
Depreciation 29,032 5,025
Amortization of deferred financing costs 90,209 --
Write-down of inventory 25,685 --
Allowance for doubtful accounts -- (4,600)
Issuance of warrants for non-cash consideration 188,241 --
Changes in operating assets and liabilities net of effects from
sale of cryosurgical assets:
(Increase) decrease in accounts receivable 9,650 13,018
Decrease (increase) in inventories 49,252 (25,684)
Decrease (increase) in prepaids and other current assets (12,552) --
Increase (decrease) in accounts payable (923,934) 13,903
Increase (decrease) in accrued expenses (128,750) 14,146
----------- -----------
Cash provided (used) by continuing operations (1,044,893) (155,261)
Cash used in discontinued operations (1,292,748) (2,311,158)
----------- -----------
Net cash used in operations (2,337,641) (2,466,419)
----------- -----------
Cash flows from investing activities:
Purchase of equipment, net (89,405) (75,207)
Purchase of equipment by discontinued operations -- (177,469)
Proceeds from sale of cryosurgical assets 2,200,000 --
----------- -----------
Net cash provided (used) by investing activities 2,110,595 (252,676)
----------- -----------
Cash flows from financing activities:
Proceeds from notes payable 434,780 931,341
Payments on notes payable (220,763) --
Decrease in capital leases -- (8,870)
----------- -----------
Net cash provided by financing activities 214,017 922,471
----------- -----------
Net increase/(decrease) in cash and cash equivalents (13,029) (1,796,624)
Cash and cash equivalents at beginning of period 286,105 2,150,112
----------- -----------
Cash and cash equivalents at end of period $ 273,076 $ 353,488
=========== ===========
See notes to financial statements
5
BIOLIFE SOLUTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
A. General
Incorporated in 1998 as a wholly owned subsidiary of Cryomedical
Sciences, Inc.("Cryomedical"), BioLife Solutions, Inc. ("BioLife" or the
"Company") develops, manufactures and markets low temperature technologies for
use in preserving and prolonging the viability of cellular and genetic material
for use in cell therapy and tissue engineering. The Company's patented
HypoThermosol(R) platform technology is used to provide customized preservation
solutions which significantly prolong cell, tissue and organ viability, which
could, in turn, improve clinical outcomes for new and existing cell and tissue
therapy applications, as well as for organ transplantation. The Company
currently markets its HypoThermosol(R) line of solutions directly and through a
distributor to companies and labs engaged in pre-clinical research, and to
academic institutions.
In May 2002, Cryomedical implemented a restructuring and
recapitalization program designed to shift its focus away from cryosurgery
towards addressing preservation and transportation needs of the biomedical
marketplace, an arena in which the Company is currently selling its products and
in which it holds important proprietary assets and intellectual property. In
conjunction with the sale of Cryomedical's cryosurgical assets on June 25,
2002, Cryomedical's Board of Directors also approved merging BioLife into
Cryomedical and changing its name to BioLife Solutions, Inc. During the quarter
ended September 30, 2002, Cryomedical changed its name to BioLife Solutions,
Inc. and began to trade under the new symbol, "BLFS" on the OTCBB.
The Balance Sheet as of September 30, 2002, the Statements of
Operations for the three-and nine-month periods ended September 30, 2002 and
2001, and the Statements of Cash Flows for the nine-month periods ended
September 30, 2002 and 2001, 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 September 30, 2002, 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 should be read in conjunction with the financial statements and notes
thereto for the year ended December 31, 2001 included in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 2001.
The results of operations for the three-and nine-month periods ended
September 30, 2002 is not necessarily indicative of the operating results
anticipated for the full year.
B. Continued Existence
Additional capital is needed to fulfill the Company's current
marketing, research and product development goals and to sustain and ensure its
viability. Recovery of the Company's assets is dependent upon future events, the
outcome of which is indeterminable. Additionally, successful completion of the
Company's product development program and its transition to attain profitable
operations is dependent upon achieving a level of revenues adequate to support
the Company's cost structure. The Company anticipates that its current cash
balance will be sufficient to meet its cash requirements into the first quarter
of 2003. This does not include the effect of any sale of the Company's
marketable securities (see Note D in the Company's Notes to Financial
Statements).
There can be no assurance that the Company will be successful in
accessing additional capital, or that any financing transaction will be
available at terms acceptable to the Company, if at all, that any financing
transactions will not be dilutive to current stockholders, or that the Company
will have sufficient working capital to fund future operations. If the Company
does not have access to additional funds, it may be required to significantly
curtail or cease its operating activities. The accompanying financial statements
have been prepared assuming that the Company will continue as a going concern.
6
BIOLIFE SOLUTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
C. Sale of Cryosurgical Assets
On June 25, 2002 the Company completed the sale of its cryosurgery
product line and related intellectual property assets to Irvine, CA-based
Endocare, Inc. (NASDAQ: ENDO). In the transaction, which was originally
announced on May 29, 2002, the Company transferred ownership of all of its
cryosurgical installed base, inventory, and related intellectual property, in
exchange for $2.2 million in cash and 120,022 shares of Endocare common stock
(valued at $1,434,263 on June 25, 2002).
Operating results of the cryosurgical operations for the nine months
ended September 30, 2002 are shown separately in the accompanying statement of
operations. The Company recorded a gain on sale of cryosurgical assets of
$2,426,109 for the nine months ended September 30, 2002.
Net sales of discontinued operations for the three and the nine months
ended September 30, 2002 were $0 and $128,419, respectively. These amounts are
included in the loss from discontinued operations in the accompanying statement
of operations.
Cryosurgical assets sold in the transaction with Endocare consisted of
the following (all assets are shown at the lower of cost or market):
JUNE 25,
2002
-----------
Accounts receivable, net $ 42,660
Inventory 438,606
Other current assets 27,284
Fixed assets, net 245,680
Intangible assets, net 453,923
-----------
Net assets sold $ 1,208,153
===========
D. Marketable Securities
We have classified our marketable securities as "available-for-sale" as
defined under Financial Accounting Standard No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." At September 30, 2002, our
marketable securities consisted of 120,022 shares of Endocare common stock. Fair
value has been determined based on the quoted market price for Endocare common
stock as of the date of the balance sheet. As of November 13, 2002 the aggregate
fair value of our marketable securities decreased to $354,065. Pursuant to the
terms of the sale of Cryomedical's cryosurgical assets, Endocare was required to
have filed a registration statement with the SEC covering the sale of the shares
by September 22, 2002. To date, no such registration statement has been filed.
The Company intends to seek the legal remedies available to it in connection
with such failure to file the registration statement.
7
BIOLIFE SOLUTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
E. Earnings (Loss) per Share
Basic earnings (loss) per share is calculated by dividing the net
income (loss) attributable to common stockholders by the weighted average number
of common shares outstanding during the period. Diluted earnings per share is
calculated by dividing income from continuing operations by the weighted average
number of shares outstanding, including potentially dilutive securities such as
preferred stock, stock options and warrants. Potential common shares totaling
4,800,000 were included in the dilluted earnings per share amount for the three
months ended September 30, 2001 due to their dilutive effect, but were not
included for the three months ended September 30, 2002 and nine month periods
ending September 30, 2002 and September 30, 2001 as their effect would have been
anti-dilutive.
F. Notes Payable and Issuance of Company Warrants
In March 2002, in consideration for a loan in the amount of $250,000,
the Company issued (i) a 12-month promissory note in the principal amount of
$250,000, bearing interest at 10% per annum, and (ii) a five year warrant to
purchase 1,000,000 shares of the Company's common stock at $0.25 per share. The
Company recorded additional-paid-in-capital on the balance sheet of $154,629 to
reflect the fair market value of the warrants issued in conjunction with the
loan and recorded a corresponding deferred financing cost which is being
amortized on a straight line basis over the life of the loan. At September 30,
2002, the Company owed $250,000 on this promissory note.
In March 2002, the Company entered into a promissory note with a vendor
of the Company in the amount of $200,824 payable in $10,000 monthly
installments, without interest, until the principal amount is paid in full. At
September 30, 2002, the Company owed $115,824 on this promissory note.
In May 2002, in consideration for loans in the amount of $115,000, the
Company issued (i) three separate 12-month promissory notes in the aggregate
principal amount of $115,000, bearing interest at 10% per annum, and (ii) three
separate five year warrants to purchase an aggregate of 460,000 shares of the
Company's common stock at $0.25 per share. The Company recorded
additional-paid-in-capital on the balance sheet of $48,564 to reflect the fair
market value of the warrants issued in conjunction with the loans and recorded a
corresponding expense in the Company's statement of operations. The Company
subsequently paid these notes in full during June and July of 2002.
In connection with the sale of the Company's cryosurgical assets, as
partial consideration for services rendered, the Company issued to each of
Breslow & Walker, LLP, the Company's general counsel, and de Greef & Partners,
LLC, a consultant for the Company, a 10-year warrant to purchase 500,000 shares
of the Company's common stock at $0.25 per share. The Company recorded
additional-paid-in-capital on the balance sheet of $139,677 to reflect the fair
market value of the warrants issued and recorded a corresponding expense in the
Company's statement of operations.
8
BIOLIFE SOLUTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
G. Employment Agreements
In July, 2002, the Company entered into a two year employment agreement
with John G. Baust, PhD, pursuant to which Dr. Baust is employed as the
Company's President and Chief Executive Office. Also in July, 2002, the Company
entered into a one year employment agreement with Robert Van Buskirk, PhD,
pursuant to which Dr. Van Buskirk is employed as the Company's Vice President
of Business Development.
H. Recent Accounting Pronouncements
None
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read in conjunction with the
Company's financial statements and notes thereto set forth elsewhere herein. The
discussion of the results from operations includes only the Company's continuing
operations.
BioLife Solutions, Inc. ("BioLife" or the "Company") 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 HypoThermosol(R)
and CryoStor(TM) products that the Company is selling today are a significant
step forward in meeting these needs.
The Company's line of preservation solutions is composed of complex
synthetic, aqueous solutions containing, in part, minerals and other elements
found in human blood which are necessary to maintain fluids and chemical
balances throughout the body at near freezing temperatures. The solutions
preserve cells and tissue in low temperature environments for extended periods
after removal of the cells through minimally invasive biopsy or surgical
extraction, as well as in shipping the propagated material for the application
of cell or gene therapy or tissue engineering. BioLife has entered into research
agreements with several emerging biotechnology companies engaged in the research
and commercialization of cell and gene therapy technology and has received
several government research grants in partnership with academic institutions to
conduct basic research, which could lead to further commercialization of
technology to preserve human cells, tissues and organs.
The Company currently markets its HypoThermosol(R) line of solutions
directly and through a distributor to companies and labs engaged in pre-clinical
research, and to academic institutions.
On June 25, 2002, the Company completed the sale of its cryosurgery
product line and related intellectual property assets to Irvine, CA-based
Endocare, Inc. In the transaction, the Company transferred ownership of all of
its cryosurgical installed base, inventory and related intellectual property in
exchange for $2.2 million in cash and 120,022 shares of Endocare Common Stock.
RESULTS OF OPERATIONS
FOR THE THREE-AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001
Revenue. For the three-months ended September 30, 2002 revenue from
continuing operations decreased $12,192, or 8%, to $138,007, compared to
$150,199 for the three-months ended September 30, 2001. The decrease was due to
slightly lower National Institutes of Health ("NIH") grant revenue, offset by
slightly higher revenues from corporate consulting contracts. For the
nine-months ended September 30, 2002, revenue increased $289,582, or 127% to
$516,819, compared to $227,237 for the nine-months ended September 30, 2001. The
increase was due to higher revenues across the board, including product sales
revenue of $20,527, NIH grant revenue of $385,572 and corporate research
contract revenue of 110,720.
Cost of product sales. There were no expenses relating to cost of
product sold for the three-months ended September 30, 2002. Cost of product sold
for the three-months ended September 30, 2001 totaled $1,089.
10
This improvement in cost of product sales was due to a low level of product
sales in both periods and the writedown of the Company's inventory in the
previous quarter. For the nine-months ended September 30, 2002, cost of product
sales increased to $25,646, compared to $2,455 for the nine-months ended
September 30, 2001. This increase in cost of product sales was the result of
product inventory that was written down by $25,685 to reflect a zero inventory
balance at June 30, 2002.
Research and development. Expenses relating to research and development
for the three-months ended September 30, 2002 increased $94,135, or 82%, to
$209,434, compared to $115,299 for the three-months ended September 30, 2001.
The increase in research and development expense was due primarily to higher
expenses relating to academic presentations made by the Company's engineers at
scientific conferences and higher headcount. Expenses relating to research and
development for the nine-months ended September 30, 2002 increased $186,758, or
73%, to $441,684, compared to $254,926 for the nine-months ended September 30,
2001. The increase in research and development expenditure for the nine month
period was due to an overall higher level of product development activity
reflected in higher salaries expense from the addition of research and
development personnel, higher consulting fees, higher legal expenses relating to
the Company's intellectual property portfolio and a higher level of expenditure
on lab supplies and research facilities.
Sales and marketing. For the three-months ended September 30, 2002,
sales and marketing expense increased $3,411, or 470%, to $4,126, compared to
$715 for the three-months ended September 30, 2001. The increase in sales and
marketing expense was the direct result of the presence of the Company at a
tradeshow during the period. For the nine-months ended September 30, 2002, sales
and marketing expense decreased $25,415, or 86%, to $4,146, compared to $29,561
for the nine-months ended September 30, 2001. The decrease was principally due
to a shift in the allocation of sales and marketing personnel related
expenditure to product development.
General and administrative expense. For the three-months ended
September 30, 2002, general and administrative expense increased $108,667 to
$134,520, compared to $25,853 for the three-months ended September 30, 2001.
This increase in general and administrative expense was due to the shift in the
burden of general and administrative expense to the Company's continuing
operations from discontinued operations. As a result of this shift, the Company
experienced higher salary, travel, legal and accounting expense. For the
nine-months ended September 30, 2002, general and administrative expense
increased $306,469 to $417,068, compared to $110,599 for the nine-months ended
September 30, 2001. This increase was also due to the shift in the burden of
general and administrative expense noted above.
Discontinued operations. On June 25, 2002, all of the cryosurgical
assets, including customer receivables, inventory, fixed assets and intangible
assets related to the cryosurgical business, were sold to Endocare for a
combination of cash and common stock of the purchaser. For the three-months
ended September 30, 2002 loss from the operation of cryosurgical assets was
$(92,934) compared to a loss of $(1,140,775) for the three-months ended
September 30, 2001. For the nine-months ended September 30, 2002, loss from the
operation of cryosurgical assets was $(1,547,824) compared to a loss of
$(3,409,153) for the nine-months ended September 30, 2001. For the nine-months
ended September 30, 2002, the gain on disposal of cryosurgical assets, net of
assets sold at cost, was $2,426,109.
Operating expenses and net income. For the three-months ended September
30, 2002, operating expenses increased $206,213 to $348,080, compared to
$141,867 for the three-months ended September 30, 2001. For the nine-months
ended September 30, 2002, operating expenses increased $467,812 to $862,898,
compared to $395,086 for the nine-months ended September 30, 2001. The Company
reported a net loss of $(303,007) for the three months ended September 30, 2002,
compared to a net loss of $(1,134,281) for the three months ended September 30,
2001. The company reported net income of $506,560 for the nine- months ended
11
September 30, 2002, compared to a net loss of $(3,580,222) for the nine-months
ended September 30, 2001. The Company's reported net income/(loss) for the three
and nine months ended September 30, 2002 and 2001 includes results from
discontinued operations.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2002, the Company had cash and cash equivalents of
$273,076 and marketable securities of $1,717,515, compared to cash and cash
equivalents of $286,105 and no marketable securities at December 31, 2001. As of
November 13, 2002 the aggregate fair value of our marketable securities declined
to $354,065 (see Note D, in our Notes to Financial Statements). At September 30,
2002, the Company had a working capital surplus of $1,217,803, compared to a
working capital deficit of $(614,626) at December 31, 2001. The increase in the
Company's cash and working capital positions from December 31, 2001 was due to
the sale of the Company's cryosurgical assets, and was partially offset by net
losses during the three- and nine-month periods ending September 30, 2002.
The Company anticipates that its current cash balance will be
sufficient to meet the Company's operating cash requirements into the first
quarter of 2003. This does not reflect the effect of any sale of the Company's
marketable securities (see Note B in the Company's Notes to Financial
Statements).
Capital expenditures related to continuing operations, totaled $89,405
in the nine month period ended September 30, 2002, compared to $75,207 in the
nine month period ended September 30, 2001.
In March 2002, the Company borrowed $250,000 under a 12-month
promissory note agreement. In connection with this debt raise, the Company
issued warrants to purchase one million shares of the Company's Common Stock at
$0.25 per share. Also in March 2002, the Company entered into a promissory note
with a vendor of the Company in the amount of $200,824 payable in $10,000
monthly installments, without interest, until the principal amount is paid in
full. In May 2002, the Company borrowed an aggregate of $115,000 under 12-month
promissory note agreements. In connection with this debt raise, the Company
issued warrants to purchase 460,000 shares of the Company's common stock at
$0.25 per share. The Company has paid down $200,000 of these notes.
FORWARD LOOKING INFORMATION
The information set forth in this Report (and other reports issued by
the Company and its officers from time to time) contain certain statements
concerning the Company's future results, future performance, intentions,
objectives, plans and expectations that are or may be deemed to be
"forward-looking statements." Such statements are made in reliance upon safe
harbor provisions of the Private Securities Litigation Act of 1995. These
forward-looking statements are based on current expectations that involve
numerous risks and uncertainties, including those risks and uncertainties
discussed in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 2001. Assumptions relating to the foregoing involve judgments with
respect to, among other things, future economic, competitive, and market
conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond the Company's
control. Although the Company believes that its assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could prove
inaccurate and, therefore, the Company cannot assure you that the results
discussed or implied in such forward-looking statements will prove to be
accurate. In light of the significant uncertainties inherent in such
forward-looking statements, the inclusion of such statements should not be
regarded as a representation by the Company or any other person that the
Company's objectives and plans will be achieved. Words such as "believes,"
"anticipates," "expects," "intends," "may," and similar expressions are intended
to identify forward-looking statements, but are not the exclusive means of
identifying such statements. The Company undertakes no obligations to revise any
of these forward-looking statements.
12
ITEM 3. CONTROLS AND PROCEDURES
Under the supervision and with the participation of the Company's
management, including the principal executive officer/principal financial
officer, the Company has evaluated the effectiveness of the design and operation
of the Company's disclosure controls and procedures within 90 days of the filing
date of this quarterly report, and, based on his evaluation, the Company's
principal executive officer/principal financial officer has concluded that
these controls and procedures are effective. There were no significant changes
in the Company's internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation.
Disclosure controls and procedures are the Company's controls and other
procedures that are designed to ensure that information required to be disclosed
by the Company in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the Securities and Exchange Commission's rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by the Company in the reports
that it files under the Exchange Act is accumulated and communicated to the
Company's management, including the principal executive officer/principal
financial officer, as appropriate to allow timely decisions regarding required
disclosure.
13
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 10.1 Employment Agreement dated July 1, 2002 between the
Company and John G. Baust
Exhibit 10.2 Employment Agreement dated July 1, 2002 between the
Company and Robert Van Buskirk
Exhibit 99.1 Certification of Periodic Report dated November 14, 2002
(b) Reports on Form 8-K
Current Report on Form 8-K, filed July 10, 2002, relating to the sale
of the Company's cryosurgical assets to Endocare.
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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.
-----------------------
(Registrant)
Date: November 14, 2002 By: /s/ John G. Baust
------------------------------------
John G. Baust, PhD
President and Chief Executive Officer
(Principal Executive Officer)
15
CERTIFICATION
I, John G. Baust, Chief Executive Officer and Chief Financial Officer
of BioLife Solutions, Inc. (the "Registrant"), certify that:
(1) I have reviewed this quarterly report on Form 10-QSB of the
Registrant;
(2) Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly
report;
(3) Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the Registrant as of, and for, the
periods presented in this quarterly report;
(4) I am responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-14
and 15d-14) for the Registrant and I have:
a. designed such disclosure controls and procedures to ensure
that material information relating to the Registrant,
including its consolidated subsidiaries, is made known to
me by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b. evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within 90 days prior
to the filing date of this quarterly report (the
"Evaluation Date"); and
c. presented in this quarterly report my conclusions about the
effectiveness of the disclosure controls and procedures
based on my evaluation as of the Evaluation Date;
(5) I have disclosed, based on my most recent evaluation, to the
registrant's auditors and the audit committee of Registrant's
board of directors (or persons performing the equivalent
function):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the
Registrant's ability to record, process, summarize and
report financial data and have identified for the
Registrant's auditors any material weaknesses in internal
controls; and
b. any fraud, whether or not material, that involves
management or other employees who have a significant role
in the Registrant's internal controls; and
(6) I have indicated in this quarterly report whether or not there
were significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent to
the date of the most recent evaluation, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
Dated: November 14, 2002 By: /s/ John G. Baust
-----------------------------
John G. Baust, PhD
Chief Executive Officer
and Chief Financial Officer
16
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------- -------------------------------------------------------------
10.1* Employment Agreement dated July 1, 2002 between the Company
and John G. Baust
10.2* Employment Agreement dated July 1, 2002 between the Company
and Robert Van Buskirk
99.1* Certification of Periodic Report dated November 14, 2002
* Filed herewith