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Charts
Technical Analysis
CMSI
Symbol Last Trade Date Change Open High Low Volume
CMSI 0.9 May-14-2010 0.12 0.74 1.1 0.53 2,680,100
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Support/Resistance
Type Value Conf.
supp 0.56 1
supp 0.20 15
supp 0.16 15
supp 0.14 7
supp 0.10 6
supp 0.08 2
supp 0.00 541
Chart Indicators
Ind. short Inter Long
EMA VBu VBu VBu
MACD VBu VBu VBu
RSI VBu
TDD Bu
Fibs Bu Bu Bu
Highs N N N
Lows VBu VBu N
Trends N Bu N
Stoch. VBe
VBu=Very Bullish,
 Bu=Bullish
N=Neutral
Be=Bearish,  VBe=Very
Bearish
Recent CandleStick Analysis Open Gaps
Neutral Direction Date range
Date Candle up Jun-17-2005 to 0.13
May-11-2010 Bearish Engulfing
May-10-2010 Bearish Harami
Technical Analysis
Detailed Opinion Show Signal Strength and Direction
Composite Indicators Signal
Trend Spotter Buy
Short Term Indicators
7 Day Average Directional Indicator Buy
10 - 8 Day Moving Average Hilo Channel Buy
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20 Day Moving Average vs Price Buy
20 - 50 Day MACD Oscillator Buy
20 Day Bollinger Bands Buy
Short Term Indicators Average: 100% Buy
20-Day Average Volume - 366,278
Medium Term Indicators
40 Day Commodity Channel Index Buy
50 Day Moving Average vs Price Buy
20 - 100 Day MACD Oscillator Buy
50 Day Parabolic Time/Price Buy
Medium Term Indicators Average: 100% Buy
50-Day Average Volume - 161,253
Long Term Indicators
60 Day Commodity Channel Index Buy
100 Day Moving Average vs Price Buy
50 - 100 Day MACD Oscillator Buy
Long Term Indicators Average: 100% Buy
100-Day Average Volume - 96,471
Overall Average: 100% Buy
Price Support Pivot Point Resistance
0.615 0.5433 0.7483 0.9533
Profile
Basics
Address: One Blue Hill Plaza, P.O. Box 1548 Pearl River, NY, US
Telephone: (845) 623-8553 Website: www.frontline.net
Facsimile: (845) 623-8669 Email: Investinfo@frontline.net
The Company is engaged in online and wireless merchant payment solutions. It offers transaction processing solutions
Business Description:
using Internet Point-of-Sale, e-commerce and mobile terminals.
Details
CEO: Ventura Martinez Del Rio, Sr.
Employees: 3
Issue Type: CS
Market Cap: 18,816,910
Auditor: Larry O'Donnell, CPA, P.C.
Last Audit: UQ
Industry Classification
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Sector: TECHNOLOGY NAICS: 517100
Industry: Telecom Services - Foreign CIK: 1040850
SIC:
Profitability
Gross Margin: NC Return on Equity: NE
EBIT Margin: NC Return on Capital: 1263.1
Profit Margin: NC Return on Assets: -370.5
Share Statistics
Outstanding: 20,907,678 Float: 452,678
Short Interest: 0 as of (2005/04/12)
Short Int Ratio: 0.0 % of Float: 0.0%
Non-Corp. Insider Holdings: 26.1% as of (2009/10)
Bought Prev 3 Mo: 0 Sold Prev 3 Mo: 0
Institution Holdings: 0.0% as of (2009/10)
Total Held: 1 Institutions: 1
Bought Prev Mo: 0 Sold Prev Mo: 1
Insiders
Net Insider Date Insider Shares Bought Insider Shares Sold Net Insider Transactions
Eleven Months Ago 2009/03 0 0 0
Ten Months Ago 2009/04 0 0 0
Nine Months Ago 2009/05 0 0 0
Eight Months Ago 2009/06 0 0 0
Seven Months Ago 2009/07 0 0 0
Six Months Ago 2009/08 0 0 0
Five Months Ago 2009/09 0 0 -20,000
Four Months Ago 2009/10 0 0 -245,000
Three Months Ago 2009/11 0 0 -245,000
Two Months Ago 2009/12 0 0 -225,000
One Month Ago 2010/01 0 0 0
Current 2010/02 0 0 0
Institutional
Institutional Holdings Institutional Shares Institutional Shares Shrs Held By Institutions Holding
Date Bought Sold Institutions Shares
Eleven Months Ago 0 0 0 0
Ten Months Ago 0 0 0 0
Nine Months Ago 0 0 0 0
Eight Months Ago 0 0 0 0
Seven Months Ago 0 0 0 0
Six Months Ago 0 0 0 0
Five Months Ago 0 0 0 0
Four Months Ago 0 0 0 0
Three Months Ago 0 0 0 0
Two Months Ago 0 0 0 0
One Month Ago 0 0 0 0
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Current 2009/10 1 0 1 1
Split Factor
Split Factor Date Split Facto
Nine Splits Ago 0000/00/00 0.000
Eight Splits Ago 0000/00/00 0.000
Seven Splits Ago 0000/00/00 0.000
Six Splits Ago 0000/00/00 0.000
Five Splits Ago 0000/00/00 0.000
Four Splits Ago 0000/00/00 0.000
Three Splits Ago 2004/01/30 1.500
Two Splits Ago 2007/03/23 200.000
One Split Ago 2007/06/29 0.500
Current 2008/12/02 1,499.250
Short Interest
Short Interest Date Short Interest Shares Short Interest Ratio
Eleven Months Ago 2004/05/11 11,600 8.7
Ten Months Ago 2004/06/09 10,200 3.1
Nine Months Ago 2004/07/12 17,000 25.3
Eight Months Ago 2004/08/10 11,000 9.9
Seven Months Ago 2004/09/10 3,400 6.2
Six Months Ago 2004/10/12 3,600 6.5
Five Months Ago 2004/11/10 3,400 4.5
Four Months Ago 2004/12/10 4,400 1.2
Three Months Ago 2005/01/11 11,400 3.7
Two Months Ago 2005/02/10 5,600 4.8
One Month Ago 2005/03/10 4,400 6.3
Current 2005/04/12 0 0.0
Financials
Balance Sheet
Assets (in Thousands of US dollars)
12/2009 12/2008 12/2003 12/2002 12/2001
Cash and Equivalents 2 5 106 209 603
Marketable Securities 0 0 0 0 0
Accounts Receivable 0 0 6,861 212 264
Loans Receivable 0 0 0 0 0
Other Receivable 0 0 0 0 0
Receivables 0 0 6,861 212 264
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Raw Materials 0 0 0 0 0
Work in Progress 0 0 0 0 0
Purchased Components 0 0 0 0 0
Finished Goods 0 0 0 0 0
Other Inventories 0 0 812 0 0
Inventories Adjustments & Allowances 0 0 0 0 0
Inventories 0 0 812 0 0
Prepaid Expenses 0 0 348 58 33
Current Deferred Income Taxes 0 0 0 0 0
Other Current Assets 0 0 532 0 0
Total Current Assets 2 5 8,785 479 900
Land & Improvements 0 0 0 0 143
Building & Improvements 0 0 149 149 0
Machinery, Furniture & Equipment 0 0 3,165 2,686 2,697
Construction in Progress 0 0 0 0 0
Other Fixed Assets 0 0 0 0 0
Total Fixed Assets 0 0 3,314 2,835 2,840
Gross Fixed Assets 0 0 3,314 2,835 2,840
Accumulated Depreciation 0 0 2,908 2,164 1,573
Net Fixed Assets 0 0 406 671 1,268
Intangibles 0 0 5,344 0 141
Cost in Excess 0 0 0 0 0
Non-Current Deferred Income Taxes 0 0 28 0 0
Other Non-Current Assets 112 92 2,343 109 105
Total Non-Current Assets 112 92 8,122 780 1,514
Total Assets 114 98 16,907 1,259 2,414
Financials
Balance Sheet
Liabilities (in Thousands of US dollars)
12/2009 12/2008 12/2003 12/2002 12/2001
Accounts Payable 140 67 1,834 766 910
Notes Payable 7 0 0 0 0
Short Term Debt 0 0 8,489 940 248
Accrued Expenses 0 0 962 904 852
Accrued Liabilities 0 0 0 0 0
Deferred Revenues 0 0 463 525 615
Current Deferred Income Taxes 0 0 0 0 0
Other Current Liabilities 0 397 1,095 0 0
Total Current Liabilities 147 464 12,843 3,134 2,625
Long Term Debt 0 0 686 153 859
Capital Lease Obligations 0 0 0 0 0
Deferred Income Tax 0 0 -574 0 0
Other Non-Current Liabilities 0 0 0 0 0
Minority Interest 0 0 0 0 0
Preferred Securities of Subsidiary Trust 0 0 0 0 0
Preferred Equity Outside Stock Equity 0 0 0 0 0
Total Non-Current Liabilities 0 0 686 153 859
Total Liabilities 147 464 13,529 3,288 3,484
Financials
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Balance Sheet
Stockholder's Equity
12/2009 12/2008 12/2003 12/2002 12/2001
Preferred Stock Equity 0 0 1 5 5
Common Stock Equity -33 -366 3,377 -2,034 -1,076
Common Par 197 2 290 99 96
Additional Paid in Capital 141 -418 46,904 36,204 36,074
Cumulative Translation Adjustment 0 0 0 0 0
Retained Earnings -371 51 -42,715 -37,466 -36,381
Treasury Stock 0 0 -871 -871 -865
Other Equity Adjustments 0 0 -230 0 0
Total Capitalization -33 -366 4,064 -1,876 -211
Total Equity -33 -366 3,378 -2,029 -1,070
Total Liabililites & Stock Equity 114 98 16,907 1,259 2,414
Financials
Income Statements
Income (in Thousands of US dollars)
12/2009 12/2008 12/2003 12/2002 12/2001
Operating Revenue 2 97 58,288 5,047 6,503
Total Revenues 2 97 58,288 5,047 6,503
Adjustments to Revenue 0 0 0 0 0
Cost of Sales 0 0 54,128 2,477 3,483
Cost of Sales with Depreciation 0 0 54,168 2,493 3,483
Gross Margin 2 97 0 0 0
Gross Operating Profit 2 97 4,160 2,570 3,020
Research & Development 0 0 0 0 0
Selling/General/Admin Expense 423 103 8,915 2,505 4,068
Advertising 0 0 0 0 0
Operating Income -422 -6 -5,351 -697 -6,819
EBITDA - Operating Profit before Depreciation -422 -6 -4,755 65 -1,047
Depreciation 0 0 845 762 2,944
Depreciation Unreconciled 0 0 557 745 2,944
Amortization 0 0 249 0 0
Amortization of Intangibles 0 0 0 0 0
Operating Income After Depreciation -422 -6 -5,601 -697 -3,991
Interest Income 0 0 21 8 54
Earnings from Equity Interest 0 0 0 0 0
Other Income, Net 0 0 686 0 0
Income, Acquired in Process R&D 0 0 0 0 0
Income, Restructuring and M&A
Other Special Charges 0 0 0 -3 -2,960
Special Income/Charges 0 0 0 -3 -2,960
EBIT - Total Income Avail for Interest Expense -422 -6 -4,894 -692 -6,898
Interest Expense 0 0 660 95 132
EBT - Pre-Tax Income -422 -6 -5,554 -788 -7,029
Income Taxes 0 0 -561 0 0
Minority Interest 0 0 0 0 0
Preferred Securities of Subsidiary Trust 0 0 0 0 0
Income Before Income Taxes -422 -6 0 0 0
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Net Income from Continuing Operations -422 -6 -4,966 -788 -7,029
Net Income from Discontinued Operations 0 0 0 0 0
Net Income from Total Operations -422 -6 -4,966 -788 -7,029
Extraordinary Income/Losses 0 0 0 0 0
Income from Cum. Effect of Acct Change 0 0 0 0 0
Income from Tax Loss Carryforward 0 0 0 0 0
Other Gains/Losses 0 0 0 0 0
Total Net Income -422 -6 -4,966 -788 -7,029
Normalized Income -422 -6 -4,966 -784 -4,069
Net Income Available for Common -422 -6 -5,189 -1,085 -7,350
Preferred Dividends 0 0 223401 297867 320910
Excise Taxes 0 0 0 0 0
Financials
Income Statements
Results (in U.S. Dollars (Preferred Dividends in Thousands)
12/2009 12/2008 12/2003 12/2002 12/2001
Basic EPS from Continuing Operations 0.00 0.00 -66.00 -18.00 -150.00
Basic EPS from Discontinued Operations 0.00 0.00 0.00 0.00 0.00
Basic EPS from Total Operations 0.00 0.00 -66.00 -18.00 -150.00
Basic EPS from Extraordinary Income 0 0 0 0 0
Basic EPS from Cum. Effect of Accounting Change 0 0 0 0 0
Basic EPS from Tax Loss Carryforward 0 0 0 0 0
Basic EPS from Other Gains/Losses -0 0 0 0 0
Basic EPS Total -0 0 -0 -0 -0
Basic Normalized Net Income/Share - - -0 -0 -0
Diluted EPS from Continuing Operations 0.00 0.00 -66.00 -18.00 -150.00
Diluted EPS from Discontinued Operations 0.00 0.00 0.00 0.00 0.00
Diluted EPS from Total Operations 0.00 0.00 -66.00 -18.00 -150.00
Diluted EPS from Extraordinary Income 0 0 0 0 0
Diluted EPS from Cum. Effect of Accounting Change 0 0 0 0 0
Diluted EPS from Tax Loss Carryforward 0 0 0 0 0
Diluted EPS from Other Gains/Losses -0 0 0 0 0
Diluted EPS Total -0 0 -0 -0 -0
Diluted Normalized Net Income/Share - - -0 -0 -0
Dividends Paid Per Share 0.00 0.00 0.00 0.00 0.00
Financials
Cash Flow
Cash From Operating Activities (in Thousands of US dollars)
12/2009 12/2008 12/2003 12/2002 12/2001
Net Income (Loss) -422 -6 -4,966 -788 -7,029
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Depreciation 0 0 557 745 2,944
Amortization 0 0 289 17 0
Amortization of Intangibles 0 0 0 0 0
Deferred Income Taxes 0 0 -574 0 0
Operating (Gains) Losses 377 0 1,529 62 3,167
Extraordinary (Gains) Losses 0 0 0 0 0
(Increase) Decrease in Receivables 0 0 1,113 52 313
(Increase) Decrease in Inventories 0 0 908 0 0
(Increase) Decrease in Prepaid Expenses 0 0 197 -25 94
(Increase) Decrease in Other Current Assets 0 0 201 -4 1,819
(Increase) Decrease in Payables -29 67 965 -390 -564
(Increase) Decrease in Other Current Liabilities 0 397 -32 -91 -475
(Increase) Decrease in Other Working Capital -21 -92 0 0 0
Other Non-Cash Items 0 0 0 0 0
Net Cash from Continuing Operations -95 365 188 -422 268
Net Cash from Discontinued Operations 0 0 0 0 0
Net Cash from Operating Activities -95 365 188 -422 268
Financials
Cash Flow
Cash from Investing Activities (in Thousands of US dollars)
12/2009 12/2008 12/2003 12/2002 12/2001
Sale of Property, Plant, Equipment 0 0 0 5 52
Sale of Long Term Investments 0 0 0 0 0
Sale of Short Term Investments 0 0 0 0 0
Purchase of Property, Plant, Equipment 0 0 -12 -15 -51
Acquisitions 0 0 -255 0 0
Purchase of Long Term Investments 0 0 0 0 0
Purchase of Short Term Investments 0 0 0 0 0
Other Investment Changes, Net 0 0 0 0 0
Cash from Discontinued Investing Activities 0 0 0 0 0
Net Cash from Investing Activities 0 0 -267 -10 1
Financials
Cash Flow
Cash from Financing Activities (in Thousands of US dollars)
12/2009 12/2008 12/2003 12/2002 12/2001
Issuance of Debt 0 0 566 200 0
Issuance of Capital Stock 0 0 717 0 0
Repayment of Debt 0 0 -1,222 -155 -443
Repurchase of Capital Stock 0 0 0 -7 -4
Payment of Cash Dividends 0 0 0 0 0
Other Financing Charges, Net 97 -365 0 0 0
Cash from Discontinued Financing Activities 0 0 0 0 0
Net Cash from Financing Activities 97 -365 61 38 -447
Financials
Cash Flow
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Net Cash Flow (in Thousands of US dollars)
12/2009 12/2008 12/2003 12/2002 12/2001
Effect of Exchange Rate Changes 0 0 -85 0 0
Net Change in Cash & Equivalents 2 0 -102 -394 -179
Cash at Beginning of Period 0 0 209 603 781
Cash at End of Period 0 0 106 209 603
Filings - Form 8-K CANNABIS MEDICAL SOLUTIO For: May 10 (10K)
8-K
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 10, 2010
Cannabis Medical Solutions, Inc.
(Name of small business issuer as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
000-1321002 20-8484256
(Commission File Number) (I.R.S. Employer
Identification No.)
18565 Soledad Canyon Road #153
Canyon Country, Ca. 91351
(310) 309-9080
(Issuer’s telephone number)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions (see General Instruction A.2 below):
. Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
. Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
. Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
. Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
As used in this report, the terms "we", “us", “our", “our company" refer to Cannabis Medical Solutions, Inc., a Delaware
corporation.
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CHANGES IN REGISTRANT AND MATERIAL EVENTS
Section 1.01 Entry into a Material Definitive Agreement
On March 8, 2010, Cannabis Medical Solutions, Inc., with Board Approval, entered into a Subsidiary Acquisition Agreement
with 800 COMMERCE INC. 800 COMMERCE INC. will be a 100% wholly owned subsidiary of Cannabis Medical Solutions,
Inc.
The Resolutions and the agreement of the March 8, 2010 Acquisition Agreement have been ratified as of May 10, 2010.
The Board of Directors decision to acquire 800 COMMERCE INC. as a wholly owned division and the assets thereof, was
based on the recent name change of Commerce Online Inc. to Cannabis Medical Solutions, Inc. The Commerce Online and 800
COMMERCE brand represent majority banking and reseller agreements with existing processing clients, allowing additional
revenue streams from merchant processing other than medical marijuana dispensaries to remain under the new parent company.
Section 8.01 Other Events
As of May 6, 2010, the Company has changed its authorized amount of common shares from 250,000,000 to 500,000,000 shares
of common stock authorized.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Date: May 10, 2010 By: /s/ Kyle Gotshalk
Kyle Gotshalk
Chairman, Chief Executive Officer
Filings - Form 8-K CANNABIS MEDICAL SOLUTIO For: Mar 05 (10K)
8-K
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 5, 2010
Cannabis Medical Solutions, Inc.
(Name of small business issuer as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
000-1321002 20-8484256
(Commission File Number) (I.R.S. Employer
Identification No.)
12 of 152
18565 Soledad Canyon Road #153
Canyon Country, Ca. 91351
(310) 309-9080
(Issuer’s telephone number)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions ( see General Instruction A.2 below):
. Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
. Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
. Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
. Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
As used in this report, the terms "we", “us", “our", “our company" refer to Cannabis Medical Solutions, Inc., a
Delaware corporation.
13 of 152
CHANGES IN REGISTRANT AND MATERIAL EVENTS
Section 8.01 OTHER EVENTS: Name Change, Reverse Split & Symbol Change
Effective March 4, 2010, the name of the Company was changed to “Cannabis Medical Solutions, Inc.”
Additionally, also effective March 4, 2010, the Company’s trading symbol was changed to “CMSI” in conjunction
with the name change of the Company.
2
14 of 152
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
Cannabis Medical Solutions, Inc.
By: /s/ Kyle Gotshalk
Kyle Gotshalk, CEO
Date: March 5, 2010
3
Filings - Form 10QSB/A BIOLIFE SOLUTIONS INC For: Jun 30 (10K)
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
------------- -------
BIOLIFE SOLUTIONS, INC.
-----------------------
(Exact name of small business issuer as specified in its charter)
Delaware 94-3076866
-------- ----------
(State of Incorporation) (IRS Employer I.D. Number)
171 Front Street
Owego, NY 13827
---------------
(Address of principal executive offices)
Issuer's telephone number, including area code: (607) 687-4487
--------------
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
---
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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
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BIOLIFE SOLUTIONS, INC.
BALANCE SHEET
(UNAUDITED)
JUNE 30,
2005
RESTATED
---------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 189,391
Receivables 40,763
Inventories 156,146
Prepaid expenses and other current assets 24,992
---------------
TOTAL CURRENT ASSETS 411,292
---------------
PROPERTY AND EQUIPMENT
Leasehold improvements 45,783
Furniture and computer equipment 39,760
Manufacturing and other equipment 213,196
---------------
TOTAL 298,739
Less: Accumulated depreciation and amortization (189,183)
---------------
NET PROPERTY AND EQUIPMENT 109,556
---------------
TOTAL ASSETS $ 520,848
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 138,517
Accrued expenses 60,913
---------------
TOTAL CURRENT LIABILITIES 199,430
---------------
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)
---------------
TOTAL STOCKHOLDERS' EQUITY 321,418
---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 520,848
===============
See notes to financial statements
2
17 of 152
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
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(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.
19 of 152
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
20 of 152
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
21 of 152
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.
22 of 152
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.
23 of 152
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.
24 of 152
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
25 of 152
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
26 of 152
(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.
-----------------------
(Registrant)
Date: November 14, 2005 By: /s/ John G. Baust
---------------------------------
John G. Baust, PhD
President and Chief Executive Officer
(Principal Accounting Officer )
14
Exhibit 31.1
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 of Biolife Soltutions, Inc.;
2. Based on my knowledge, this 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 report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the small business
issuer as of, and for, the periods presented in this report;
27 of 152
4. The small business issuers other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small
business issuer and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the small business issuer,
including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being
prepared;
b) Evaluated the effectiveness of the small business issuer's disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the small business issuer's
internal control over financial reporting that occurred during the small
business issuer's most recent fiscal quarter (the small business issuer's fourth
fiscal quarter in the case of an annual report) that has materially affected, or
is reasonably likely to materially affect, the small business issuers internal
control over financial reporting; and
5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of small business issuer's board of directors (or persons performing
the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the small business issuer's ability to record,
process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the small business issuer's internal
control over financial reporting.
Date: November 14, 2005
/s/ John G. Baust
----------------------------
John G. Baust, PhD
Chief Executive Officer
and Chief Financial Officer
15
Exhibit 32.1
CERTIFICATION OF PERIODIC REPORT
I, John G. Baust, Chief Executive Officer and Chief Financial Officer of Biolife
Solutions, Inc. (the "Company"), certify, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
28 of 152
1. the Quarterly Report on Form 10-QSB of the Company for the quarterly
period ended June 30, 2005 (the "Report") fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 (15 U.S.C. 78m or 78o(d)); and
2. the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
Dated: November 14, 2005
/s/ John G. Baust
-----------------------------
John G. Baust, PhD
Chief Executive Officer and
Chief Financial Officer
16
Filings - Form 10QSB BIOLIFE SOLUTIONS INC For: Sep 30 (10K)
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 SEPTEMBER 30, 2005 Commission file number 0-18170
BIOLIFE SOLUTIONS, INC.
-----------------------
(Exact name of small business issuer as specified in its charter)
Delaware 94-3076866
-------- ----------
(State of Incorporation) (IRS Employer I.D. Number)
171 Front Street
Owego, NY 13827
---------------
(Address of principal executive offices)
Issuer's telephone number, including area code: (607) 687-4487
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
29 of 152
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 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_
BIOLIFE SOLUTIONS, INC.
FORM 10-QSB
QUARTER ENDED SEPTEMBER 30, 2005
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements:
Unaudited Balance Sheet at September 30, 2005................................................. 2
Unaudited Statements of Operations for the three and nine month periods ended
September 30, 2005 and September 30, 2004..................................................... 3
Unaudited Statements of Cash Flows for the nine month periods ended September 30, 2005
and September 30, 2004........................................................................ 4
Notes to Financial Statements................................................................. 5-8
Item 2. Management's Discussion and Analysis....................................................... 9-12
Item 3. Controls and Procedures..................................................................... 13
Part II. Other Information
Item 6. Exhibits.................................................................................... 14
Signatures.......................................................................................... 15
Certifications...................................................................................... 16-17
1
PART I
FINANCIAL INFORMATION
ITEM 1. UNAUDITED FINANCIAL STATEMENTS
BIOLIFE SOLUTIONS, INC.
BALANCE SHEET
(UNAUDITED)
SEPTEMBER 30,
2005
------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 305,788
Receivables 54,139
Inventories 168,866
Prepaid expenses and other current assets 23,383
------------------
TOTAL CURRENT ASSETS 552,176
30 of 152
------------------
PROPERTY AND EQUIPMENT
Leasehold improvements 45,783
Furniture and computer equipment 39,760
Manufacturing and other equipment 213,196
------------------
TOTAL 298,739
Less: Accumulated depreciation and amortization (206,165)
------------------
NET PROPERTY AND EQUIPMENT 92,574
------------------
TOTAL ASSETS $ 644,750
==================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 166,581
LDC Loan - current maturities 25,777
Accrued expenses 66,154
------------------
TOTAL CURRENT LIABILITIES 258,512
------------------
LONG TERM LIABILITIES
LDC Loan - less current maturities above 204,723
------------------
TOTAL CURRENT LIABILITIES 204,723
------------------
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, 100,000,000 shares
authorized, 12,413,209 shares issued and outstanding 12,413
Additional paid-in capital 40,680,222
Accumulated deficit (40,511,133)
------------------
TOTAL STOCKHOLDERS' EQUITY 181,515
------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 644,750
==================
See notes to financial statements
2
BIOLIFE SOLUTIONS, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2005 2004 2005 2004
----------------------------------- -----------------------------------
REVENUE
Product sales $ 122,676 $ 84,215 $ 311,793 $ 225,305
Facilities fee - related party 24,386 35,651 66,112 72,617
Management fee - related party 13,412 19,608 36,362 39,939
Seminar fees - 1,400 - 2,475
Consulting revenue - 14,000 - 86,000
Grant revenue - - - 38,936
--------------- --------------- --------------- ---------------
TOTAL REVENUE 160,474 154,874 414,267 465,272
--------------- --------------- --------------- ---------------
31 of 152
OPERATING EXPENSES
Product sales 50,326 40,523 134,651 121,739
Sales and marketing 31,436 57,661 65,234 216,883
Research and development 6,430 36,855 19,315 100,394
General and administrative 230,208 173,297 649,362 686,467
--------------- --------------- --------------- ---------------
TOTAL EXPENSES 318,400 308,336 868,562 1,125,483
--------------- --------------- --------------- ---------------
OPERATING LOSS (157,926) (153,462) (454,295) (660,211)
--------------- --------------- --------------- ---------------
OTHER INCOME
Interest income 974 3,284 5,798 18,692
--------------- --------------- --------------- ---------------
TOTAL OTHER INCOME 974 3,284 5,798 18,692
--------------- --------------- --------------- ---------------
NET LOSS $ (156,952) $ (150,178) $ (448,497) $ (641,519)
=============== =============== =============== ==
BASIC AND DILUTED NET LOSS PER
COMMON SHARE:
TOTAL BASIC AND DILUTED NET LOSS PER
COMMON SHARE $ (0.01) $ (0.01) $ (0.04) $ (0.05)
=============== =============== =============== ==
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)
NINE MONTHS ENDED
SEPTEMBER 30,
2005 2004
---------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (448,497) $ (641,519)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
PROVIDED (USED) BY OPERATING ACTIVITIES
Depreciation 49,051 43,953
Amortization of loan financing costs - 106,408
Stock-based compensation 17,050 -
CHANGE IN OPERATING ASSETS AND LIABILITIES
(INCREASE) DECREASE IN
Receivables 21,198 1,791,097
Inventories (74,547) (43,477)
Prepaid expenses and other current assets (20,458) (27,800)
INCREASE (DECREASE) IN
Accounts payable 81,544 (464,051)
Accrued expenses (69,117) (213,407)
---------------- ----------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (443,776) 551,204
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (12,620) (61,791)
---------------- ----------------
NET CASH USED BY INVESTING ACTIVITIES (12,620) (61,791)
---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
32 of 152
Proceeds from notes payable 230,500 -
Principal payments on notes payable - (705,525)
---------------- ----------------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 230,500 (705,525)
---------------- ----------------
NET DECREASE IN CASH (225,896) (216,112)
CASH - BEGINNING OF PERIOD 531,684 787,904
---------------- ----------------
CASH - END OF PERIOD $ 305,788 $ 571,792
================ ================
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ - $ 81,597
================ ================
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 September 30, 2005, and the Statements of Operations for
the three month and nine month periods ended September 30, 2005 and 2004 and
Statements of Cash Flows for the nine month periods ended September 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 September 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 nine month periods ended
September 30, 2005 are not necessarily indicative of the operating results
anticipated for the full year.
5
33 of 152
BIOLIFE SOLUTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
B. FINANCIAL CONDITION
At September 30, 2005, the Company had stockholders' equity of approximately
$182,000 and a working capital surplus of approximately $294,000. 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.
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 consisted of $143,281 of finished product and $25,585 of
manufacturing materials at September 30, 2005.
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 issuable common shares were not
included in the diluted earnings per share amounts for the three month and nine
month periods ended September 30, 2005 and 2004 as their effect would have been
anti-dilutive.
F. AUTHORIZED SHARES
On 9/28/2005, the Stockholders approved an increase in the number of authorized
shares from 25,000,000 to 100,000,000 and approved an increase in the number of
shares reserved for issuance under the 1998 stock option plan from 4,000,000 to
10,000,000.
6
G. 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.
During the quarter ended September 30, 2005, the Company granted options to
34 of 152
employees and directors to purchase 2,660,000 shares of Common Stock for $.08
per share which was a price that was less than the fair market value ($.09) at
the date of grant. Compensation expense of $17,050 is reflected in the Statement
of Operations for the quarter ended September 30, 2005.
The fair value of each option granted was estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted average
assumptions: risk-free interest rate of 4.40%, no dividend yield, 67%
volatility, and expected lives of ten years.
The following table illustrates the effect on net loss and loss per share if the
Company had applied the fair value recognition provisions of FASB Statement No.
123:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2005 2004 2005 2004
Net Income (Loss) as reported $ (156,952) $ (150,178) $ (448,497) $ (641,519)
Add: Stock-based compensation costs included
in reported net loss 17,050 - 17,050 -
Less: Stock-based compensation costs under
SFAS No. 123 (138,563) (17,805) (174,172) (53,415)
---------------- ----------------- ----------------- -----------------
Pro forma net loss $ (278,465) $ (167,983) $ (605,619) $ (694,934)
================ ================= ===============
Basic and diluted net loss per share as reported $ (0.01) $ (0.01) $ (0.04) $ (0.05)
================ ================= ===============
Pro forma $ (0.02) $ (0.01) $ (0.05) $ (0.06)
================ ================= ===============
7
H. ADJUSTMENT
During the quarter ended September 30, 2005, the Company determined that certain
inventory had not been accounted for at June 30, 2005. This error caused net
loss and loss per share to be overstated by $58,718 and $.01 for the three and
six months ended June 30, 2005. The following represents the amounts as reported
and as adjusted for the periods ended June 30, 2005:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2005 JUNE 30, 2005
Net loss as reported $ (187,483) $ (350,260)
=========== ===========
Basic and diluted loss per share
as reported $ (.02) $ (.03)
=========== ===========
Net loss as adjusted $ (128,766) $ (291,543)
=========== ===========
Basic and diluted loss per share
as adjusted $ (.01) $ (.02)
=========== ===========
The company has filed a form 10-QSB/A for the quarter ended June 30, 2005 to
reflect this adjustment.
35 of 152
I. RECLASSIFICATIONS
Certain amounts in the quarter and nine month period ended September 30, 2004
have been reclassified to conform to the September 2005 presentation.
8
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 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 NINE MONTH PERIODS ENDED SEPTEMBER 30,
2005 AND 2004
REVENUE
Revenue for the quarter ended September 30, 2005 increased $5,601, or 4%, to
$160,475, compared to $154,874 for the quarter ended September 30, 2004. The
shift in focus toward product sales resulted in an 46% increase in product sales
in the third quarter of 2005 as compared to the third quarter of 2004. While
product sales rose, consulting revenue declined as a result of the scheduled
completion of contracts with consulting clients. In addition, grant revenue
declined as the Company shifted focus toward product sales from research and
development activities. For the quarter ended September 30, 2005, the Company
36 of 152
received management and facilities fees totaling $37,798, as compared to $55,259
for the quarter ended September 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.
Revenue for the nine month period ended September 30, 2005 decreased $51,005, or
11%, to $414,267, compared to $465,272 for the nine month period ended September
30, 2004. The shift in focus toward product
9
sales resulted in a 38% increase in product sales for the nine month period
ended September 30, 2005, compared to the nine month period ended September 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 nine month period ended September 30, 2004. For the nine month
period ended September 30, 2005, the Company received management and facilities
fees totaling $102,474 as compared to $112,555 for the nine month period ended
September 30, 2004, as a result of the research agreement between the Company
and CPSI.
COST OF PRODUCT SALES
For the quarter ended September 30, 2005, the cost of product sales was $50,326
as compared to $40,523 for the quarter ended September 30, 2004. For the nine
month period ended September 30, 2005, the cost of product sales was $134,651 as
compared to $121,739 for the nine month period ending September 30, 2004. This
increase was primarily due to an increase in 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 September
30, 2005 declined $30,425, or 83%, from the previous quarter ended September 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, rather than
Research and Development expenses, as the Company's focus shifted away from
research and development to product sales.
Expenses relating to research and development for the nine month period ended
September 30, 2005 declined $81,079 or 81% from the previous nine month period
ended September 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, rather than Research and Development expenses,
as the Company's focus shifted away from research and development to product
sales.
SALES AND MARKETING
For the quarter ended September 30, 2005, sales and marketing expenses decreased
$26,225, or 45%, to $31,436, compared to $57,661 for the quarter ended September
37 of 152
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, the Company hired a Marketing Manager on June 13, 2005.
For the nine month period ended September 30, 2005, sales and marketing expenses
decreased $151,649, or 70%, to $65,234, compared to $216,883 for the nine month
period ended September 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 September 30, 2005, general and administrative expense
increased $56,911, or 33%, to $230,208, compared to $173,297 for the quarter
ended September 30, 2004. Facilities expenses for the quarter ended September
30, 2005 totaled $23,659. There were no facilities expenses recorded as General
and Administrative expenses for the quarter ended September 30, 2004 as
facilities expenses were recorded as Research and Development expenses.
Similarly, depreciation totaled $6,207 for the quarter ended September
10
30, 2005, while depreciation was recorded as Research and Development expenses
for the quarter ended September 30, 2004. In addition, the Company incurred
additional production and legal fees related to the printing, mailing, and
tracking of the Proxy solicitation and annual report for the shareholder meeting
held September 28, 2005
For the nine month period ended September 30, 2005, general and administrative
expense decreased $37,105, or 5% to $649,362, compared to $686,467 for the nine
month period ended September 30, 2004. This decrease was due in large part to
amortization 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 $48,448 for the nine month period ending September 30,
2005, as compared to $100,379 for the nine month period ending September 30,
2004. These additional legal fees incurred in 2004 were related to the Endocare
lawsuit. There were several items that partially offset the additional legal
fees and amortization expense incurred in the third quarter of 2004. The Company
was able to negotiate and write off $57,844 in liabilities during the first
quarter of 2004. In addition, the Company incurred additional production and
legal fees related to the printing, mailing, and tracking of the Proxy
solicitation and annual report for the shareholder meeting dated September 28,
2005. There were no facilities expenses recorded as General and Administrative
expenses for the nine months ended September 30, 2004 as facilities expenses
were recorded as Research and Development expenses during that period.
Similarly, depreciation totaled $18,895 for the quarter ended September 30,
2005, while depreciation was recorded as Research and Development expenses for
the quarter ended September 30, 2004.
OPERATING EXPENSES AND NET INCOME
For the quarter ended September 30, 2005, operating expenses increased $10,065,
or 3%, to $318,401, compared to $308,336 for the quarter ended September 30,
2004. The Company reported a net loss of $(156,952) for the quarter ended
September 30, 2005, compared to a net loss of ($150,178) for the quarter ended
September 30, 2004.
For the nine month period ended September 30, 2005, operating expenses decreased
$256,921, or 23%, to $868,562, compared to $1,125,483 for the nine month period
ended September 30, 2004. The Company reported a net loss of $(448,497) for the
nine month period ended September 30, 2005, compared to a net loss of ($641,519)
for the nine month period ended September 30, 2004.
38 of 152
CASH AND CASH EQUIVALENTS
At September 30, 2005, the Company had cash and cash equivalents of $305,788,
compared to cash and cash equivalents of $571,792 at September 30, 2004. At
September 30, 2005, the Company had a working capital surplus of $319,441,
compared to a working capital surplus of $573,765 at September 30, 2004. The
decrease in the Company's cash and working capital position compared to
September 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. In addition, the Company secured a loan from Tioga County LDC in the
amount of $230,500 to support its working capital needs and enhance production
capabilities to support the distribution agreement with VWR International.
LIQUIDITY AND CAPITAL RESOURCES
During the third quarter of 2005, the Company generated $122,676 in product
sales, the highest product sales quarter since inception. This represents a 21%
increase over the previous high product sales quarter (second quarter of 2005)
of $101,754. 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.
In September 2005, the Company secured a loan from the Tioga County LDC in the
amount of $230,500 to support its working capital needs and enhance production
capabilities to support the distribution agreement with
11
VWR International. The loan is a 7 year note with an annual interest rate of 5%
requiring monthly payments of $3,258.
During the nine month period ended September 30, 2005, net cash used by
operating activities was $443,776 as compared to net cash provided by operating
activities of $551,204 for the nine month period ended September 30, 2004. The
net cash provided from operating activities for the nine month period ending
September 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.
Net cash used in investing activities totaled $12,620 for the nine month period
ended September 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
39 of 152
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.
12
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 and 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.
During 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
40 of 152
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 September 30,
2005 that has materially affected, or is reasonably likely to materially affect,
the Company's internal control over financial reporting.
13
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
14
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, 2005 By: /s/ JOHN G. BAUST
-------------------------------------
John G. Baust, PhD
President and Chief Executive Officer
(Principal Accounting Officer )
15
41 of 152
Exhibit 31.1
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 of Biolife Soltutions, Inc.;
2. Based on my knowledge, this 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 report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the small business
issuer as of, and for, the periods presented in this report;
4. The small business issuers other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small
business issuer and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the small business issuer,
including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being
prepared;
b) Evaluated the effectiveness of the small business issuer's disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the small business issuer's
internal control over financial reporting that occurred during the small
business issuer's most recent fiscal quarter (the small business issuer's fourth
fiscal quarter in the case of an annual report) that has materially affected, or
is reasonably likely to materially affect, the small business issuers internal
control over financial reporting; and
5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of small business issuer's board of directors (or persons performing
the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the small business issuer's ability to record,
process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the small business issuer's internal
control over financial reporting.
Date: November 14, 2005
/s/ JOHN G. BAUST
42 of 152
---------------------------
John G. Baust, PhD
Chief Executive Officer
and Chief Financial Officer
16
Exhibit 32.1
CERTIFICATION OF PERIODIC REPORT
I, John G. Baust, Chief Executive Officer and Chief Financial Officer of Biolife
Solutions, Inc. (the "Company"), certify, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
1. the Quarterly Report on Form 10-QSB of the Company for the quarterly
period ended March 31, 2005 (the "Report") fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 (15 U.S.C. 78m or 78o(d)); and
2. the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
Dated: November 14, 2005
/s/ JOHN G. BAUST
---------------------------
John G. Baust, PhD
Chief Executive Officer and
Chief Financial Officer
17
Filings - Form ARS BIOLIFE SOLUTIONS INC For: Dec 31 (10K)
[BIOLIFE SOLUTIONS LOGO]
BIOLIFE SOLUTIONS, INC.
ANNUAL REPORT
2004
TABLE OF CONTENTS
SHAREHOLDERS' LETTER....................................................... 1
SELECTED FINANCIAL DATA.................................................... 3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS...................................................... 4
INDEPENDENT AUDITORS' REPORT............................................... 7
43 of 152
FINANCIAL STATEMENTS....................................................... 8
CORPORATE INFORMATION...................................................... 22
[BIOLIFE SOLUTIONS LOGO]
TO OUR SHAREHOLDERS
BioLife has experienced notable developments that hold the promise of placing a
secure foundation under the Company in support of a profitable future. One of
our critical milestones was detailed in our May 2005 announcement of the
Exclusive Private Label Agreement with VWR International, Inc. In addition, we
continue to ramp sales upward, diversify our markets and establish a significant
presence in the emerging Cell Therapy - Regenerative Medicine arena.
Before addressing our future, I believe you will find it of value to understand
the course the Company (formerly Cryomedical Sciences, Inc. ("CMSI")) has
followed since divestiture of its cryosurgical device assets in the summer of
2002 with the intent of developing a sole focus on its preservation
solutions-based technology.
Following the divestiture, the Company had to sue the purchaser to realize the
balance of the purchase price valued at approximately $1.88 million. Thus,
BioLife entered 2003 with $67,000 cash on hand and residual CMSI debt of
approximately $500,000. While our lawsuit progressed rather rapidly, BioLife
faced a serious cash flow issue. We began the year without sufficient cash on
hand to maintain the business. While a number of our principal investors
generously provided bridge funds for an additional quarter in anticipation of a
favorable court decision, the legal process extended when Endocare appealed the
court's verdict in our favor.
We faced two options at that point - either tighten our belts in anticipation of
a near term settlement or re-finance the Company. The employees chose the former
and worked through a six-month period during which neither payroll was met nor
employee expenses reimbursed for five of those six months. I mention this point
as it reflects on the level of dedication of our staff, their belief in our
technology and their commitment to the Company's success. Even with these
sacrifices, by late autumn the legal appeal process continued, and we proceeded
with an employee/investor structured Series G preferred stock financing.
With the addition of the settlement funds of $1.88 million received in March
2004, BioLife was able to clear itself of all critical debt and was positioned
to move forward with building a successful company based on its novel cell and
tissue preservation solutions. To set the stage for this growth, BioLife, in
2003, developed dozens of accounts, entered into supply and development
agreements that provided a revenue base moving forward, registered with the FDA
as a Class 2 medical device manufacturer, established an internal manufacturing
capability, launched a series of national training workshops that served to
accelerate the exposure of our technology, and had our products included in a
number of FDA approved cell therapy-based IND's. The Company was successful in
moving the sales of Hypothermosol(R) from $26,000 in 2002 to $147,000 in 2003
and to $316,000 in 2004. Our product sales in Q2 2005 were the highest ever.
These numbers, while moving in the right direction, are modest and only provide
a base from which we plan to grow.
In the spring of 2004, BioLife moved its headquarters and manufacturing to a
newly remodeled facility. Previously, the Company was housed in incubator space
on the campus of Binghamton University (SUNY).
With the establishment of a GMP-compliant manufacturing facility, the Company
was positioned to aggressively pursue both strategic relationships and expand
out technology into diverse clinical and
44 of 152
1
non-clinical markets. Our partnership with VWR International provides for
minimal sales of $7.4 MM over five-years in non-clinical markets for VWR to
maintain exclusivity with the Company. The Company will manufacture under this
dual-labeling agreement, share the non-clinical markets with VWR International
while retaining exclusivity in the clinical marketplace. VWR has approximately
1400 sales staff in North America and Europe. We are working together closely to
structure formal product launches on both continents and have begun shipments of
product to Europe.
In addition, we have established a direct client base of nearly two hundred
accounts, have our products included in numerous FDA approved INDs, have
received FDA permission to label our products "For Human Cell and Tissue
Preservation," and continue to expand our patent portfolio. With regard to the
latter, the Company was issued a "methods and composition" patent by the U.S.
Patent Office on July 26, 2005 which should provide an important extension of
protection for our proprietary molecular biological-based preservation
technology.
I am confident that the Company has the necessary technological and managerial
assets necessary to sustain and grow the business and to establish marketplace
dominance.
John G. Baust
President & CEO
--------------------------------------------------------------------------------
"Safe Harbor" statement under the Private Securities Litigation Reform Act of
1995. The statements which are not historical facts contained in this Annual
Report are forward-looking statements that involve risks and uncertainties,
including, but not limited to the Company's relative success in increasing
product sales and reducing expenses. Additional risks and uncertainties include
variances in the demand for the Company's products due to customer, industry,
and technological developments, as well as variances in the costs to produce
such products. Such statements are made in reliance upon safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. The Company's actual
results, performance, and achievements may differ significantly from those
discussed or implied in the forward-looking statements as a result of a number
of known and unknown risks and uncertainties including, without limitation,
those discussed below and in "Management's Discussion and Analysis of Financial
Condition and Results of Operations." 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 obligation to
revise any of these forward-looking statements.
--------------------------------------------------------------------------------
2
[BIOLIFE SOLUTIONS LOGO]
SELECTED FINANCIAL DATA
The following tables summarize certain financial data which should be read in
conjunction with the report of the Company's independent auditors and the more
detailed financial statements and the notes thereto which appear elsewhere
herein.
45 of 152
STATEMENT OF OPERATIONS DATA:
Year ended December 31,
-----------------------------------------------------------------------------------
2004 2003 2002 2001 2000
---- ---- ---- ---- ----
Net sales ................................ $ 626,709 $ 605,511 $ 848,791 $ 1,344,016 $ 1,189,505
Net income (loss) ........................ (743,162) (1,824,368) 215,876 (4,410,257) (2,771,927)
Net income (loss) per share .............. (0.06) (0.15) 0.02 (0.36) (0.28)
Basic and diluted weighted average common
shares used to compute net income (loss)
per share .............................. 12,413,209 12,413,209 12,413,209 12,413,209 9,921,056
BALANCE SHEET DATA:
December 31,
-----------------------------------------------------------------------------------
2004 2003 2002 2001 2000
---- ---- ---- ---- ----
Total assets............................... $ 833,269 $ 2,963,911 $ 313,846 $ 1,776,590 $ 3,988,819
Total liabilities.......................... 220,310 1,607,790 868,097 1,465,824 360,265
Working capital............................ 483,955 1,233,123 (711,965) (614,626) 2,666,295
Stockholders' equity....................... 612,959 1,356,121 (554,251) 310,766 3,628,554
3
BIOLIFE SOLUTIONS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
GENERAL
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 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
46 of 152
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), CryoStor(TM) and
GelStor(TM) lines of solutions to companies and labs engaged in pre-clinical
research, and to academic institutions.
YEAR ENDED DECEMBER 31, 2004 COMPARED TO THE YEAR ENDED DECEMBER 31, 2003
Revenue for the year ended December 31, 2004 increased $21,198 or 4%,
to $626,709, compared to $605,511 for the year ended December 31, 2003. Grant
revenue for the year ended December 31, 2004 totaled $38,936, compared to
$309,359 for the year ended December 31, 2003. This decrease was the result of
the transition of grant related activities to Cell Preservation Services, Inc.
(CPSI) per a research agreement pursuant to which the Company outsourced to CPSI
all BioLife research funded through SBIR grants. Consulting revenue declined as
a result of scheduled completion of contracts. In addition, the Company earned
$64,822 and $117,858 in management fees and facilities fees, respectively, as a
result of the research agreement with CPSI (See Note 9 to the Financial
Statements) in 2004. The shift of the Company's focus toward product sales
resulted in a 115% increase in product sales over 2003.
For the year ended December 31, 2004, the cost of product sales totaled
$163,979 as compared to $109,387 for the year ended December 31, 2003. In 2003,
the Company had more idle capacity resulting in a change in the gross margin on
product sales from 25% to 48%.
Expenses relating to research and development for the year ended
December 31, 2004 decreased to $29,087, compared to $659,309 for the year ended
December 31, 2003. The decrease in research and development expense was due
primarily to the shift in focus away from grant related research activities
toward product sales. The research agreement with CPSI enabled the Company to
eliminate most expenses related to research and development as well as shift the
focus toward product sales.
For the year ended December 31, 2004, sales and marketing expense
increased $45,415, or 22%, to $253,106, compared to $207,691 for the year ended
December 31, 2003. The increase in sales and marketing expense was due to
additional sales commissions earned with the increase in product sales in 2004
as well as an increase in advertising expenses in 2004 in the amount of $19,769.
For the year ended December 31, 2004, general and administrative
expense decreased $181,638, or 18% to $838,961, compared to $1,020,599 for the
year ended December 31, 2003. This decrease was due to several
4
[BIOLIFE SOLUTIONS LOGO]
factors including a decrease in legal fees of $47,675, or 29%, from 2003 as most
legal expenses pertaining to the Endocare lawsuit were incurred in 2003.
Accounting and consulting fees decreased substantially in 2004 as the Company
hired a full time Controller to replace previously outsourced consultants.
For the year ended December 31, 2004, operating expenses decreased
$711,853, or 36% to $1,285,133, compared to $1,996,986 for the year ended
December 31, 2003. The Company reported a net loss of $(743,162) for the year
ended December 31, 2004, compared to a net loss of $(1,303,368) for the year
ended December 31, 2003. While revenue for the year ended December 31, 2004
increased $21,198 from the year ended December 31, 2003, the Company was able to
reduce operating expenses significantly resulting in a net loss of $(743,162) in
2004 compared to a net loss of $(1,303,368) in 2003. This was due in large part
47 of 152
to the reduction in research and development related expenses as the Company
shifted its focus away from grant related research activities toward product
sales. The research agreement with CPSI enabled the Company to eliminate most
expenses related to research and development.
At December 31, 2004, the Company had cash and cash equivalents of
$531,684, compared to cash and cash equivalents of $787,904 at December 31,
2003. At December 31, 2004, the Company had a working capital surplus of
$483,955, compared to a working capital surplus $1,233,123 at December 31, 2003.
LIQUIDITY AND CAPITAL RESOURCES
During 2004, our second full year of product sales, we financed our
operations from the proceeds from the settlement with Endocare as well as
proceeds from product sales, consulting fees, and management and facilities fees
earned. Proceeds from the legal settlement totaled $1,887,474. Cash used by
financing activities totaled $705,224 during the year and was comprised of
principal payments on notes payable. As of December 31, 2004, we had cash and
cash equivalents of $531,684 and total assets of $833,268.
During the year ended December 31, 2004, net cash provided by
operations was $515,104 as compared to net cash used by operating activities of
$(854,228) for the year ended December 31, 2003. This was due in large part from
receipt in 2004 of the legal settlement receivable of $1,871,945. In addition,
the Company realized a net loss of $(743,162) in 2004 as compared to a net loss
of $(1,303,368) in 2003. Accounts receivable (net) increased to $75,337 at
December 31, 2004 from $34,851 at December 31, 2003. This increase was due
primarily to the increase in product sales during 2004. Inventories increased to
$94,319 at December 31, 2004 from $39,805 at December 31, 2003 as the Company
began to utilize the new production facility to support the increase in product
sales in 2004. Accounts payable decreased from $563,359 at December 31, 2003 to
$85,037 at December 31, 2004 as the Company was able to pay off much of the
outstanding debt upon receipt of the Endocare settlement. Similarly, accrued
expenses and accrued salaries declined as liabilities were paid down from the
receipt of the Endocare settlement.
Net cash used in investing activities totaled $(65,800) during the year
ended December 31, 2004, which resulted from purchase of property and equipment
to support the new manufacturing facility. Net cash used in investing activities
totaled $(11,219) during the year ended December 31, 2003 resulting from
purchase of property and equipment during the year.
Net cash used by financing activities totaled $(705,524) for the year
ended December 31, 2004, and resulted from principal payments on notes payable.
Net cash provided by financing activities totaled $1,586,233 for the year ended
December 31, 2003. In 2003, net cash was provided by issuance of notes in the
amount of $400,000 and issuance of preferred stock and warrants in the amount of
$1,226,533. Principal payments on existing notes during the year totaled
$40,300.
During 2004, although the Company experienced a growth in product sales
of 115% from 2003, the Company was not able to support its operating activities
through sales of its products or contracted revenue sources. As a result,
operations were funded primarily with proceeds from the settlement of the
Endocare lawsuit. The Company maintains no line of credit or bank notes. In
February 2004, the Company collected proceeds in the amount of $1,887,474 from
its settlement of the Endocare lawsuit. With these proceeds, the Company was
able to pay all outstanding note obligations as well as pay off a majority of
the accrued liabilities.
Strategies for 2005 and beyond include procuring multiyear agreements
with manufacturing and distributing companies in an effort to establish
additional revenue streams. In February 2004, the Company announced that it
signed a multi-year supply agreement with Pittsboro, NC-based Hepatotech Inc., a
48 of 152
privately-held manufacturer and distributor of hepatocytes (liver cells). Under
the terms of the agreement, BioLife will sell Hepatotech its off-the-shelf
HypoThermosol(R) and CryoStor(TM) preservation solutions to support Hepatotech's
cell harvest and shipment services. The agreement with Hepatotech further
expands the sales opportunities for BioLife's technology.
5
In February 2004, the Company entered into a research agreement with
Ann Arbor, MI-based Aastrom Biosciences, Inc., a company specializing in
developing, manufacturing, and marketing tissue repair cells. Under the terms of
the agreement, Aastrom will provide BioLife with cartilage biopsies and
materials derived therefrom as are necessary to conduct the Research Program
with the goal of providing solution formulations to Aastrom.
The Company believes it has sufficient funds to continue operations in
the near term. However, it may need to raise additional funds through additional
financings, including private or public equity and/or debt offerings and
collaborative research and development arrangements with corporate partners if
our revenues are insufficient to meet our operating needs. Our 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.
6
[BIOLIFE SOLUTIONS LOGO]
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
BIOLIFE SOLUTIONS, INC.
Owego, New York
We have audited the accompanying Balance Sheets of BIOLIFE SOLUTIONS, INC. as of
December 31, 2004 and 2003, and the related Statements of Operations,
Comprehensive Income (Loss), Stockholders' Equity (Deficiency) and Cash Flows
for the years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
49 of 152
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of BIOLIFE SOLUTIONS, INC. as of
December 31, 2004 and 2003, and the results of its operations and its cash flows
for the years then ended, in conformity with accounting principles generally
accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has been unable to generate sufficient income
from operations to meet its operating needs and may not have sufficient
liquidity to meet its financial obligations in the future. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 2. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
[ARONSON & COMPANY SIG]
Rockville, Maryland
February 4, 2005
7
BIOLIFE SOLUTIONS, INC.
BALANCE SHEETS
December 31, December 31,
2004 2003
------------ ------------
ASSETS
Current assets
Cash and cash equivalents $ 531,684 $ 787,904
Accounts receivables, trade, net of allowance for doubtful
accounts of $13,500 at December 31, 2004 75,337 34,851
Legal settlement receivable -- 1,871,945
Inventories 94,319 39,805
Loan financing costs, net of accumulated amortization of $440,937
and $334,529 at December 31, 2004 and 2003, respectively -- 106,408
Prepaid expenses and other current assets 2,925 --
------------ ------------
Total current assets 704,265 2,840,913
------------ ------------
Property and equipment
Leasehold improvements 39,283 --
Furniture and computer equipment 39,760 36,486
Manufacturing and other equipment 207,075 183,830
------------ ------------
Total 286,118 220,316
Less: Accumulated depreciation and amortization (157,114) (97,318)
------------ ------------
Net property and equipment 129,004 122,998
------------ ------------
Total assets $ 833,269 $ 2,963,911
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 57,010 $ 495,963
Accounts payable - related parties 28,027 67,396
Accrued expenses 12,426 83,422
Accrued salaries 122,847 255,485
50 of 152
Notes payable - related parties -- 650,000
Notes payable - other -- 55,524
------------ ------------
Total current liabilities 220,310 1,607,790
------------ ------------
Commitments and contingencies
Stockholders' equity
Series F convertible preferred stock, $.001 par value; 12,000
shares authorized, 12,000 shares issued and outstanding 12 12
Series G convertible preferred stock, $.001 par value; 80
shares authorized, 55 shares issued and outstanding -- --
Common stock, $0.001 par value; 25,000,000
shares authorized, 12,413,209 shares issued and outstanding 12,413 12,413
Additional paid-in capital 40,663,172 40,663,172
Accumulated deficit (40,062,638) (39,319,476)
------------ ------------
Total stockholders' equity 612,959 1,356,121
------------ ------------
Total liabilities and stockholders' equity $ 833,269 $ 2,963,911
============ ============
The accompanying Notes to Financials Statements are an integral part of
these financial statements
8
[BIOLIFE SOLUTIONS LOGO]
BIOLIFE SOLUTIONS, INC.
STATEMENTS OF OPERATIONS
Years Ended
December 31,
------------------------------
2004 2003
---- ----
Revenue
Product sales $ 315,818 $ 146,792
Grant revenue 38,936 309,359
Consulting revenue 86,000 149,360
Management fees, related party 64,822 --
Facilities fees, related party 117,858 --
Other 3,275 --
------------ ------------
Total revenue 626,709 605,511
------------ ------------
Operating expenses
Product sales 163,979 109,387
Research and development 29,087 659,309
Sales and marketing 253,106 207,691
General and administrative 838,961 1,020,599
------------ ------------
Total expenses 1,285,133 1,996,986
------------ ------------
Operating loss (658,424) (1,391,475)
------------ ------------
51 of 152
Other income (expense)
Legal settlement income -- 214,672
Interest income 27,103 128,202
Interest expense - related parties (117,241) (257,667)
Interest expense - other -- (300)
Other income 5,400 3,200
------------ ------------
Total other income (expense) (84,738) 88,107
------------ ------------
Loss from operations before provision for income taxes (743,162) (1,303,368)
Provision for income taxes -- --
------------ ------------
Net Loss (743,162) (1,303,368)
Series G preferred stock deemed dividend -- 521,000
------------ ------------
Net loss attributable to holders of common stock $ (743,162) $ (1,824,368)
============ ============
Total basic and diluted net loss per common share
attributable to holders of common stock: $ (0.06) $ (0.15)
============ ============
Basic and diluted weighted average common shares used
to compute net loss per share 12,413,209 12,413,209
============ ============
The accompanying Notes to Financials Statements are an integral part of
these financial statements
9
BIOLIFE SOLUTIONS, INC.
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Years Ended
December 31,
----------------------------
2004 2003
---- ----
Net loss $ (743,162) $(1,303,368)
----------- -----------
Recovery of previously recognized unrealized loss on
marketable securities -- 1,434,263
----------- -----------
Total other comprehensive income -- 1,434,263
----------- -----------
Cash - end of year $ (743,162) $ 130,895
=========== ===========
The accompanying Notes to Financials Statements are an integral part of
these financial statements
10
[BIOLIFE SOLUTIONS LOGO]
BIOLIFE SOLUTIONS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
52 of 152
Convertible
Series F and G Accumulated Total
Preferred Stock Common Stock Additional other stockholders'
--------------------------------------- paid-in Accumulated comprehensive equity
Shares Amount Shares Amount capital deficit loss (deficiency)
-----------------------------------------------------------------------------------------------------------------------------
Balance, 12,000 $12 12,413,209 $12,413 $38,362,695 $(37,495,108) $(1,434,263) $ (554,2
January 1, 2003
Issuance of -- -- -- -- 47,589 -- -- 47,589
warrants for
professional
services
Issuance of -- -- -- -- 286,308 -- -- 286,308
warrants for loan
financing costs
Issuance of -- -- -- -- 90,922 -- -- 90,922
warrants in lieu
of cash
compensation
Issuance of 55 -- -- -- 1,354,658 -- -- 1,354,658
convertible
Series G pref
stock
Deemed dividend on -- -- -- -- 521,000 (521,000) -- --
Series G pref
stock
Disposal of -- -- -- -- -- -- 1,434,263 1,434,263
marketable
securities
Net loss -- -- -- -- -- (1,303,368) -- (1,303,368)
-----------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 2003 12,055 12 12,413,209 12,413 40,663,172 (39,319,476) -- $ 1,356,12
Net loss -- -- -- -- -- (743,162 -- (743,162)
-----------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 2004 12,055 $12 12,413,209 $12,413 $40,663,172 $(40,062,638) $ -- $ 612,9
============================================================================
The accompanying Notes to Financials Statements are an integral part of
these financial statements
11
BIOLIFE SOLUTIONS, INC.
STATEMENTS OF CASH FLOWS
Years Ended
December 31,
----------------------------
2004 2003
---- ----
Cash flows from operating activiies:
Net loss $ (743,162) $(1,303,368)
53 of 152
Adjustments to reconcile net loss to net cash provided (used) by
operating activities
Depreciation 59,796 45,935
Amortization of loan financing costs 106,408 205,653
Disposal of marketable securities -- 1,434,263
Issuance of warrants and options for compensation, consulting and
professional services -- 138,511
Change in operating assets and liabilities:
(Increase) decrease in
Accounts receivable, trade (40,487) 9,815
Legal settlement receivable 1,871,945 (1,871,945)
Inventories (54,514) (39,805)
Prepaid expenses and other current assets (2,925) 18,595
Increase (decrease) in
Accounts payable (438,953) 328,429
Accounts payable - related parties (39,369) 63,264
Accrued expenses (70,996) (22,379)
Accrued salaries (132,639) 138,804
----------- -----------
Net cash used by operating activities 515,104 (854,228)
----------- -----------
Cash flows from investing activities
Purchase of property and equipment (65,800) (11,219)
----------- -----------
Net cash provided (used) by investing activities (65,800) (11,219)
----------- -----------
Cash flows from financing activities
Proceeds from notes payable -- 400,000
Principal payments on notes payable (705,524) (40,300)
Issuance of preferred stock and warrants -- 1,226,533
----------- -----------
Net cash provided (used) by financing activities (705,524) 1,586,233
----------- -----------
Net (decrease) increase in cash $ (256,220) $ 720,786
Cash - beginning of year 787,904 67,118
----------- -----------
Cash - end of year $ 531,684 $ 787,904
=========== ===========
Supplemental cash flow information
Actual cash payments for:
Interest - related parties $ 81,598 $ --
=========== ===========
Interest - other $ -- $ 300
=========== ===========
Noncash investing and financing activities
Warrants issued for payment of loan financing costs $ -- $ 286,308
=========== ===========
Series G convertible preferred stock issued for accrued salaries $ -- $ 128,125
=========== ===========
The accompanying Notes to Financials Statements are an integral part of
these financial statements
12
[BIOLIFE SOLUTIONS LOGO]
54 of 152
BIOLIFE SOLUTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
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 contract-based services for the
development of cryopreservation solutions and processes, 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.
In May 2002, Cryomedical implemented a restructuring and recapitalization
program designed to shift its focus away from cryosurgery toward addressing
preservation needs in the biomedical marketplace. On June 25, 2002, the Company
completed the sale of its cryosurgery product line and related intellectual
property assets to Irvine, CA-based Endocare Inc. (NASDAQ:ENDO). In the
transaction, the Company transferred ownership of all of its cryosurgical
installed base, inventory, and related intellectual property, in exchange for
$2.2 million in cash and 120,022 shares of Endocare restricted common stock. In
conjunction with the sale of Cryomedical's cryosurgical assets, Cryomedical's
Board of Directors also approved merging BioLife into Cryomedical and changing
its name to BioLife Solutions, Inc. In September 2002, Cryomedical changed its
name to BioLife Solutions, Inc. and began to trade under the new ticker sybol,
"BLFS" on the OTCBB. Subsequent to the merger, the Company ceased to have any
subsidiaries.
In 2001, the Company was awarded a research grant from the National Institute of
Health (the "NIH") for $804,014, titled, "Apoptosis Intervention in Cell and
Organ Preservation." Portions of the funds from this grant were recognized in
2002 and 2003, matching research related to this grant carried out in 2002 and
2003, respectively. Furthermore, the Company was awarded a grant from NIH for
$100,000, titled "Pro/Anti-Apoptotic Grant." Portions of the funds from this
grant were recognized in 2002 and 2003, matching research related to this grant
carried out in 2002 and 2003, respectively. In September 2003, the Company was
awarded a research grant from the NIH for $177,000, titled "Improved
Preservation of Suspended Cells." Portions of the funds from this grant were
recognized in 2003 and 2004, matching research related to this grant carried out
in 2003 and 2004. Total grant revenue recognized during the years ended December
31, 2004 and 2003 totaled $38,936 and $309,359, respectively.
During the first quarter of 2004, the Company discontinued applying for grants
and now provides services to a related entity that has become the grant
recipient. (See Note 9)
NET INCOME (LOSS) PER SHARE: Basic net income (loss) per common share is
calculated by dividing the net income (loss) by the weighted average number of
common shares outstanding during the period. Diluted earnings per share is
calculated using the weighted average number of common shares plus dilutive
common stock equivalents outstanding during the period. Anti-dilutive common
stock equivalents are excluded. Common stock equivalents are stock options,
warrants and convertible preferred stock.
CASH EQUIVALENTS: Cash equivalents consist primarily of interest-bearing money
market accounts. The Company considers all highly liquid debt instruments
purchased with an initial maturity of three months or less to be cash
equivalents. The Company maintains cash balances which may exceed Federally
insured limits. The Company does not believe that this results in any
significant credit risk.
INVENTORIES: Inventories are stated at the lower of cost or market. Cost is
determined using the first-in, first-out ("FIFO") method.
55 of 152
ACCOUNTS RECEIVABLE: Generally, the Company has had favorable experience in
extending credit to a limited number of customers and the terms are usually
short term. An allowance for uncollectible accounts is established when a
specific account appears uncertain, even though the Company continues its
collection efforts. Accounts considered uncollectible are charged against the
established allowance.
LOAN FINANCING COSTS: Loan financing costs are amortized on a straight-line
basis over the 12-month life of the related debt (See Note 6).
FIXED ASSETS: Furniture and equipment are stated at cost and are depreciated
using the straight-line method over estimated useful lives of three to five
years. Leasehold improvements are stated at cost and are amortized using the
straight-line method over the lesser of the life of the asset or the remaining
term of the lease.
13
REVENUE RECOGNITION: Revenue from sales of products is recognized at the time of
shipment. The Company recognizes revenue on cost plus fixed fee basis for grant
funds received from various government agencies in the same period that expenses
relating to the grants are incurred by the Company. Expenses related to grants
are included in research and development expenses. Consulting revenue is
recognized at the completion of milestones and/or according to specific terms
within individual agreements. Management and facilities fees are recognized
during the period in which the services are performed.
INCOME TAXES: The Company accounts for income taxes using an asset and liability
method which generally requires recognition of deferred tax assets and
liabilities for the expected future tax effects of events that have been
included in the financial statements or tax returns. Under this method, deferred
tax assets and liabilities are recognized for the future tax effects of
differences between tax bases of assets and liabilities, and financial reporting
amounts, based upon enacted tax laws and statutory rates applicable to the
periods in which the differences are expected to affect taxable income. The
Company evaluates the likelihood of realization of deferred tax assets and
provides an allowance where, in management's opinion, it is more likely than not
that the asset will not be realized.
ADVERTISING: Advertising costs are expensed as incurred and totaled $19,769 for
the year ended December 31, 2004. No advertising costs were incurred for the
year ended December 31, 2003.
USE OF ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
STOCK-BASED COMPENSATION: Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"), allows companies to
account for stock-based compensation either under the provision of SFAS 123 or
under the provision of Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" ("APB 25"), as amended by FASB Interpretation No.
44, "Accounting for Certain Transaction Involving Stock Compensation (an
Interpretation of APB Opinion No. 25)," but requires pro forma disclosure in the
footnotes to the financial statements as if the measurement provisions of SFAS
123 had been adopted. The Company has elected to account for its stock-based
compensation in accordance with the provision of APB 25. The following table
illustrates the effect on loss attributable to holders of common stock and loss
per share if the Company had applied the fair value recognition provisions of
SFAS 123:
56 of 152
2004 2003
------------ ------------
Loss attributable to holders of
common stock $(743,162) $(1,824,368)
Compensation expense based on fair
value, net of related tax effects 98,568 107,684
--------------------------------------------------------------------------
PRO FORMA LOSS
ATTRIBUTABLE TO HOLDERS OF
OF COMMON STOCK $(841,730) $(1,932,052)
==========================================================================
Basic and diluted net loss per
share attributable to holders of common
stock as reported $ (0.06) $ (0.15)
==========================================================================
Pro forma $ (0.07) $ (0.16)
==========================================================================
Stock options and warrants granted to non-employees are accounted for in
accordance with SFAS 123 and the Emerging Issues Task Force Consensus No. 96-18,
"ACCOUNTING FOR EQUITY INSTRUMENTS THAT ARE ISSUED TO OTHER THAN EMPLOYEES FOR
ACQUIRING, OR IN CONJUNCTION WITH SELLING, GOODS OR SERVICES," which requires
the value of the options to be periodically re-measured as they vest over a
performance period.
The fair value of each option/warrant granted is estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 2003: expected volatility of 63%; expected
dividend yield of 0%; risk-free interest rate of 4.5% and expected lives of five
to ten years, as applicable. No options or warrants were granted in 2004.
FAIR VALUE OF FINANCIAL INSTRUMENTS: The fair value of the financial instruments
included in the consolidated financial statements, except as otherwise discussed
in the notes to financial statements, approximates their carrying value.
BUSINESS SEGMENTS: As described above, the Company's activities are directed in
the field of hypothermic solutions. As of December 31, 2004 and 2003 this is the
Company's only business segment.
14
[BIOLIFE SOLUTIONS LOGO]
RECLASSIFICATIONS: Certain reclassifications have been made in the 2003
financial statements to conform to the 2004 presentation.
RECENT PRONOUNCEMENTS: In November 2004, the Financial Accounting Standards
Board (FASB) issued SFAS No. 151, "Inventory Costs." This Statement amends the
guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the
accounting for abnormal amounts of idle facility expense, freight, handling
costs, and wasted material (spoilage). In addition, this statement requires that
allocation of fixed production overhead to the costs of conversion be based on
the normal capacity of the production facilities. The provisions of this
statement will be effective for the Company beginning with its fiscal year
ending 2006. The adoption of this standard is not expected to have any material
impact on the Company's financial position, results of operations or cash flows.
In December 2004, the FASB issued SFAS No. 152, "Accounting for Real Estate
Time-Sharing Transactions." This statement will not have any effect on the
Company's financial positions, results of operations or cash flows.
In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets
57 of 152
- an amendment of APB Opinion No. 29." This statement amended APB Opinion 29 to
eliminate the exception for non-monetary exchanges of similar productive assets
and replaces it with a general exception for exchanges of non-monetary assets
that do not have commercial substance. A non-monetary exchange has commercial
substance if the future cash flows of the entity are expected to change
significantly as a result of the exchange. The adoption of this standard is not
expected to have any material impact on the Company's financial position,
results of operations or cash flows.
In December 2004, the FASB issued SFAS 123 (revised 2004) "Share-Based Payment."
This statement requires that the cost resulting from all share-based
transactions be recorded in the financial statements. The statement establishes
fair value as the measurement objective in accounting for share-based payment
arrangements. The statement replaces SFAS 123 "Accounting for Stock-Based
Compensation" and supersedes APB Opinion No. 25 "Accounting for Stock Issued to
Employees". The provisions of this statement will be effective for the Company
beginning with its year ending December 31, 2006. Refer to the stock based
compensation information presented earlier in this note for discussion of the
methodology. The impact cannot be determined as the pronouncement only applies
to grants made in 2006 and later.
NOTE 2 - FINANCIAL CONDITION
The Company has been unable to generate sufficient income from operations in
order to meet its operating needs. This raises doubt about the Company's ability
to continue as a going concern.
On February 25, 2004, the Company settled its lawsuit with Endocare and
collected $1,887,474 in damages, including interest and legal fees reimbursement
(See Note 3). This settlement improved the Company's cash position and enabled
it to pay many of its outstanding liabilities. The Company has focused on
generating product sales in 2004 and will continue to focus on this in the
future. However, the Company can make no assurances that it will be successful
in generating adequate product sales to sustain itself. The Company may need to
raise additional capital. Furthermore, any additional equity financing may be
dilutive to stockholders, and debt financing, if available, may involve
restrictive covenants. Other arrangements, if necessary to raise additional
funds, may require the Company to relinquish rights to certain of its
technologies, products, marketing territories or other assets. The failure to
generate adequate product sales or raise additional capital when needed will
have a significant negative effect on the Company's financial condition and may
force the Company to curtail or cease its activities.
These financial statements assume that the Company will 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 or
to amounts and classification of liabilities that may be necessary should the
Company be unable to continue as a going concern.
NOTE 3 - 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, California-based Endocare,
Inc. 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 $2,200,000 in cash
and 120,022 shares of restricted Endocare common stock. Subsequent to closing,
the Company initiated legal proceedings against Endocare, Inc., arising out of
Endocare's failure to register the 120,022 shares of its stock (the "Stock"). In
the lawsuit, the Company claimed damages of $1,648,935, comprising the proceeds
that could have been realized had Endocare properly registered the Stock within
the time frame set forth in the Registration Rights Agreement entered into
58 of 152
between the
15
parties. Endocare filed an answer and counterclaim, seeking damages of over
$5,000,000 as a result of various alleged breaches by the Company of the Asset
Purchase Agreement entered into between the parties. Trial in this matter began
on March 31, 2003 and concluded on April 3, 2003. On October 10, 2003, the Court
issued a Final Order and Judgment in favor of the Company in the amount of
$1,648,935 plus prejudgment interest. On February 25, 2004, the Company
collected $1,887,474 from Endocare for damages, interest, and legal fees.
NOTE 4 - INVENTORIES
Inventories consist of the following at December 31, 2004 and 2003:
2004 2003
------- -------
Raw materials $46,340 $20,309
Finished goods 47,979 19,496
------------------------------------------
TOTAL $94,319 $39,805
==========================================
NOTE 5 - LEGAL SETTLEMENT RECEIVABLE
The Company classifies its marketable securities as "available-for-sale" as
defined under Financial Accounting Standard No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." At December 31, 2002, the Company's
marketable securities consisted of 120,022 shares of Endocare restricted common
stock that were received in connection with the sale of Cryosurgical assets (See
Note 3). Pursuant to the terms of the sale, Endocare was required to have filed
a registration statement with the SEC covering the sale of the shares by
September 22, 2002, thereby removing the restriction. The registration statement
was never filed. As a result, the Company engaged in litigation in connection
with such failure to file the registration statement (See Note 3). Given the
lack of marketability due to the restriction, the uncertainty of pending
litigation against Endocare and the significant decline of Endocare's stock
price, the Company considered the value of the securities to have temporarily
declined at December 31, 2002, and recorded an unrealized loss of $1,434,263 in
the Statement of Comprehensive Loss for the year then ended. On October 10,
2003, the Company was awarded $1,648,935 plus accrued interest and the ability
to petition the Court for its reasonable legal fees. On February 25, 2004, the
Company settled all of its claims against Endocare, including legal fees, and
collected $1,887,474 from Endocare for damages, legal fees, and interest though
the date of settlement. In addition, the Company surrendered the 120,022 shares
back to Endocare. Accordingly, at December 31, 2003, the Company recorded a
receivable for $1,871,945 for the settlement and the previously recorded
unrealized loss of $1,434,263 was removed from other comprehensive loss.
NOTE 6 - NOTES PAYABLE
At December 31, 2004 and 2003, notes payable consisted of the following:
2004 2003
-------- --------
NOTES PAYABLE - RELATED PARTIES:
Note payable to stockholder, unsecured, bearing
interest at 10%, due April 2004. The note
granted a warrant to the payee to purchase
1,000,000 shares of common stock at $0.25 per
share (subsequently changed to $0.08), as
59 of 152
additional consideration for the loan (See
Note 8) $ -- $250,000
Note payable to stockholder, unsecured, bearing
interest at 10%, due March 2004. The note
granted a warrant to the payee to purchase
500,000 shares of common stock at $0.08 per
share, as additional consideration for the loan
(See Note 8) -- 100,000
Note payable to stockholder, unsecured, bearing
interest at 10%, due May 2004. The note
granted a warrant to the payee to purchase
500,000 shares of common stock at $0.08 per
share, as additional consideration for the loan
(See Note 8) -- 100,000
Note payable to stockholder, unsecured, bearing
interest at 10%, due May 2004. The note
granted a warrant to the payee to purchase
250,000 shares of common stock at $0.08 per
share, as additional consideration for the loan
(See Note 8) -- 50,000
Note payable to stockholder, unsecured, bearing
interest at 10%, due May 2004. The note
granted a warrant to the payee to purchase
750,00 shares of common stock at $0.08 per
share, as additional consideration for the loan
(See Note 8) -- 150,000
----------------------------------------------------------------------------
TOTAL NOTES PAYABLE
- RELATED PARTIES -- 650,000
NOTES PAYABLE - OTHER:
Note payable to equipment vendor, unsecured,
noninterest bearing, payable in monthly
installments of $10,000, due October 2003
The Company is currently in default on the
note -- 55,524
----------------------------------------------------------------------------
TOTAL NOTES PAYABLE $ -- $705,524
============================================================================
16
[BIOLIFE SOLUTIONS LOGO]
NOTE 7 - INCOME TAXES
Income tax (benefit) reconciled to tax calculated at statutory rates is as
follows:
2004 2003
--------- ---------
Federal taxes (benefit) at statutory rate $(252,675) $(443,145)
State income taxes (benefit), net of federal
expense/benefit (36,787) (60,216)
Expiration of net of operating loss
carryforwards 183,758 --
Expiration of tax credits 20,000 --
Change in valuation allowance 83,424 523,537
60 of 152
Other 2,280 (20,176)
-------------------------------------------------------------------------
PROVISION FOR INCOME TAXES, NET $ -- $ --
=========================================================================
The components of the deferred tax asset at December 31, 2004 and 2003, are as
follows:
Net operating loss carryforwards $14,043,789 $13,972,330
Tax credits 697,000 717,000
Accrued Compensation 44,137 19,026
-------------------------------------------------------------------------
Total 14,784,926 14,708,356
Deferred tax liabilities, depreciation (2,884) (9,738)
Less: Valuation allowance (14,782,042) (14,698,618)
-------------------------------------------------------------------------
NET DEFERRED TAX ASSET $ -- $ --
=========================================================================
The Company provides a valuation allowance for deferred tax assets when, in its
opinion, is more likely than not that they will not be realized.
The Company has the following net operating loss and research and development
(R&D) tax credit carryforwards available at December 31, 2004:
R&D
Year of Net Operating Tax
Expiration Losses Credits
-------------- -------------- --------------
2005 1,747,000 42,000
2006 2,523,000 88,000
2007 4,505,000 125,000
2008 5,893,000 150,000
2009 1,431,000 114,000
2010 1,562,000 145,000
2011 5,277,000 33,000
2012 1,570,000 --
2013 1,425,000 --
2014 1,234,000 --
2020 2,849,000 --
2021 4,168,000 --
2023 1,217,000 --
2024 655,000 --
-----------------------------------------------
TOTAL $36,056,000 $ 697,000
===============================================
In the event of a significant change in the ownership of the Company, the
utilization of such loss and tax credit carryforwards could be substantially
limited.
NOTE 8 - STOCKHOLDERS' EQUITY
The Company has granted options and warrants to consultants and others who have
provided services to the Company at an exercise price per share not less than
the market price of the common stock on the date of grant. The expiration of
such options and warrants range from one to ten years with various vesting
arrangements.
PREFERRED SERIES F STOCK: In October 2001, the Company completed a private
61 of 152
placement of 5,000 Units, raising approximately $1,000,000. Each Unit was priced
at $200.01 and consisted of two shares of Series F convertible preferred stock,
convertible into 800 shares of common stock, and one warrant to purchase 400
shares of common stock at $0.375 per share, on or before October 2006. The
Company retained an advisor to assist the Company in finding qualified investors
to purchase the Units. The Advisor was entitled to a finder's fee equal to 10
percent of the monies received by the Company, payable in Units valued at
$200.01 per Unit. The Advisor was also entitled to a cash fee of 7 percent with
respect to the monies received by the Company upon exercise of the warrants. The
Units were placed with investors in the United States and Europe, and the sales
of the Units were exempt from Registration
17
under the Securities Act pursuant to Rule 506 of Regulation D and Rule 903 of
Regulation S.
In December 2001, the Company received an additional $200,000 after completing a
private placement of an additional 1,000 Units under the same terms as the Units
issued in October 2001.
In connection with the private placement of Units in 2001, the Company issued
warrants to purchase 240,000 shares of the Company's common stock to the
Advisor.
The key rights of the Series F convertible preferred stock, par value $0.001,
issued in the Unit financing include the following:
Dividends - Series F preferred stockholders are entitled to annual cumulative
dividends at the rate of $10.00 per share payable in the Company's common stock.
The number of common shares to be issued for dividend purposes is based upon the
market value of the common stock on the date such dividends are declared. No
dividends were declared or paid during 2004 and 2003 on the preferred stock. The
Series F preferred is adjusted for dividends paid to common stockholders so that
each preferred stockholder will receive the same number of shares of common
stock which the stockholder would have owned or been entitled to receive before
the dividend. At December 31, 2004 and 2003 dividends in arrears on the
cumulative preferred stock were $390,000 and $270,000, respectively.
Conversion Rights - Each Series F preferred share is convertible, at any time,
into 400 shares of common stock. In the event the closing price for the common
stock is $0.75 or greater for 10 consecutive trading days, the Series F
preferred stock shall automatically be converted into common stock at 400 shares
of common stock for each share of preferred stock.
Voting Rights - The Series F preferred stock has full voting rights on all
matters that holders of common stock are entitled to vote and are entitled to
one vote for each share of common stock into which the Series F preferred stock
held is convertible. In the event of a proposed dissolution, liquidation or
winding up of the Company, or a sale of all or substantially all of the assets
of the Company (other than in connection with a consolidation or merger), the
affirmative vote of the holders of at least two thirds of the outstanding shares
of Series F preferred stock is required.
Senior Ranking - The Company may not issue a security with rights and
preferences that are senior to those of the holders of Series F preferred stock.
Series F preferred stock and Series G preferred stock are equal in their
seniority.
Liquidation Preference - In the event of any liquidation, dissolution, or
winding up of the Company, the Series F preferred stockholders are entitled to
receive, before any distribution to any other class of stock ranking junior to
62 of 152
the Series F preferred stock, liquidating distribution in the amount of $150.00
per share and all unpaid dividends.
PREFERRED SERIES G STOCK: In December 2003, the Company completed a private
placement of 55.125 Units, raising $1,226,533 in cash, net of issuance costs of
$23,467 and $128,125 as payment of accrued salaries to certain employees. Each
Unit was priced at $25,000 and consisted of one share of Series G convertible
non-redeemable preferred stock, convertible into 312,500 shares of common stock,
and one warrant to purchase 312,500 shares of common stock at $0.08 per share,
on or before October 2013. The Units were placed with investors in the United
States and Europe, and the sales of the Units were exempt from Registration
under the Securities Act pursuant to Rule 506 of Regulation D and Rule 903 of
Regulation S.
In connection with the issuance of the Series G preferred stock, the Company has
recorded a deemed dividend of $521,000 in accordance with the accounting
requirements for a beneficial conversion feature. The proceeds received in the
Series G offering were first allocated between the convertible instrument and
the Series G warrant on a relative fair value basis. A calculation then was
performed to determine the difference between the effective conversion price and
the fair market value of the Common Stock at the date of issuance.
The key rights of the Series G convertible preferred stock, par value $0.001,
issued in the Unit financing include the following:
Dividends - Series G preferred stockholders are entitled to annual cumulative
dividends at the rate of $1,875 per share payable at the option of the Company
in cash or shares of common stock. The number of common shares to be issued for
dividend purposes is based upon the average market value of the common stock for
the thirty calendar days immediately prior to the date such dividends are
declared. No dividends have been declared or paid on the preferred stock. At
December 31, 2004 and 2003 dividends in arrears on the cumulative preferred
stock were $113,821 and $10,462, respectively.
Conversion Rights - Each Series G preferred share is convertible, at any time,
into 312,500 shares of common stock and the Company will reserve authorized and
unissued shares of common stock in the event of conversion. The conversion ratio
is subject to equitable adjustment for stock splits, stock dividends,
combinations or similar transactions.
18
[BIOLIFE SOLUTIONS LOGO]
Voting Rights - The Series G preferred stock has full voting rights on all
matters that holders of common stock are entitled to vote and are entitled to
one vote for each share of common stock into which the Series G preferred stock
held is convertible. In the event of a proposed dissolution, liquidation or
winding up of the Company, or a sale of all or substantially all of the assets
of the Company (other than in connection with a consolidation or merger), the
affirmative vote of the holders of at least two thirds of the outstanding shares
of Series G preferred stock is required.
Senior Ranking - The Company may not issue a security with rights and
preferences that are senior to those of the holders of Series G preferred stock.
Series G preferred stock and Series F preferred stock are equal in their
seniority.
Liquidation Preference - In the event of any liquidation, dissolution, or
winding up of the Company, the Series G preferred stockholders are entitled to
receive, before any distribution to any other class of stock ranking junior to
the Series G preferred stock, liquidating distributions in the amount of $25,000
per share and all unpaid dividends.
63 of 152
WARRANTS: In August 2003, the Company issued to Breslow & Walker, LLP (Breslow),
the Company's general counsel, and de Greef & Partners, LLC (deGreef), a
consultant for the Company, five-year warrants, to purchase 282,910 and 252,500
shares, respectively, of the Company's common stock at $0.08 per share for
professional services rendered. The Company recorded additional paid-in capital
of $47,589 and $139,677, respectively, to reflect the fair market value of the
warrants issued and recorded a corresponding expense in the Company's Statement
of Operations.
In connection with the issuance of 12-month promissory notes in March and May
2003, the Company issued four separate five-year warrants to purchase an
aggregate of 2,000,000 shares of the Company's common stock at $0.08 per share.
The Company recorded additional paid in capital of $211,713 to reflect the fair
market value of the warrants issued. In addition, as a consideration for
receiving a one-year extension for a note payable originally maturing in March
2003, the Company reduced the exercise price of the warrant, issued with the
note in March 2002, from $0.25 to $0.08. The Company recorded additional paid in
capital of $74,595 to reflect the fair market value of the change in exercise
price of the warrant.
In August 2003, the Company issued six separate five-year warrants valued at
$90,922 to purchase an aggregate of 1,022,885 shares of the Company's common
stock at $0.08 per share to employees as a payment of accrued payroll
liabilities for services performed.
The following table summarizes warrant activity for the years ended December 31,
2004 and 2003:
Year Ended Year Ended
December 31, 2004 December 31, 2003
----------------------- ----------------------
Wgtd. Avg. Wgtd. Avg.
Exercise Exercise
Shares Price Shares Price
-------------------------------------------------------------------------------
Outstanding at beginning
of year 27,268,858 $ 0.20 6,484,000 $0.61
Granted -- -- 20,784,858 $0.08
Cancelled (2,000) $(2.00) -- --
------------------------------------------- ----------
Outstanding at end
of year 27,266,858 $ 0.20 27,268,858 $0.20
=========================================== ==========
Warrants exercisable at
year end 27,266,858 $ 0.20 27,268,858 $0.20
=========================================== ==========
STOCK COMPENSATION PLANS: The Company's 1988 Stock Option Plan was approved and
adopted by the Board of Directors in July 1988 and had a term of ten years. The
plan expired in 1998. The options are exercisable for up to ten years from the
grant date.
During 1998, the Company adopted the 1998 Stock Option Plan. Under the plan, an
aggregate of 4,000,000 shares of common stock are reserved for issuance upon the
exercise of options granted under the plan. During 2004, the Board of Directors
approved an increase in the number of shares available for issuance to 7,500,000
shares. The increase is subject to shareholder approval at the shareholder's
meeting to be held in 2005. The purchase price of the common stock underlying
each option may not be less than the fair market value at the date the option is
granted (110% of fair market value for optionees that own more than 10% of the
voting power of the Company). The options are exercisable for up to ten years
from the grant date. The plan expires August 30, 2008.
64 of 152
19
The following is a summary of stock option activity under the plans for 2004 and
2003, and the status of stock options outstanding and available under the plans
at December 31, 2004 and 2003:
Year Ended Year Ended
December 31, 2004 December 31, 2003
----------------------- -----------------------
Wgtd. Avg. Avg. Wgtd.
Exercise Exercise
Shares Price Shares Price
-------------------------------------------------
Outstanding at beginning 4,176,000 $ 0.49 4,216,000 $ 0.49
of year
Granted -- -- -- --
Cancelled (20,000) (10.63) (40,000) (1.25)
--------------------------------------------------------------------------------
Outstanding at end of year 4,156,000 $ 0.44 4,176,000 $ 0.49
============================================================================
Stock options exercisable
at year end 2,906,000 $ 0.52 2,376,000 $ 0.66
============================================================================
The following table summarizes information about stock options outstanding at
December 31, 2004:
Weighted
Number Average Weighted
Range of Outstanding Remaining Average
Exercise at December Contractual Exercise
Prices 31, 2004 Life Price
------------------------------------------------------------------------
$0.25 3,400,000 7.05 $0.25
1.25 741,000 3.91 1.25
2.50 15,000 2.11 2.50
------------------------------------------------------------------------
4,156,000 6.47 $0.44
========================================================================
The Company has 25,000,000 shares of authorized common stock at December 31,
2004 and 2003, of which 12,413,209 shares are issued. During 2003, the Board of
Directors approved an increase in the authorized shares from 25,000,000 to
100,000,000 subject to shareholders' approval. At December 31, 2004, there are
53,449,421 of common stock that could be issued upon the conversion/exercise of
stock warrants, options and convertible preferred stock. The following table
summarizes the potential shares to be issued upon conversion/exercise of the
above instruments:
Series F preferred stock 4,800,000
Series G preferred stock 17,226,563
Common stock options 4,156,000
Common stock warrants 27,266,858
-------------------------------------------------------------------
TOTAL 53,449,421
===================================================================
On December 27, 2004, the Board of Directors approved the granting of options to
certain employees and consultants for the purchase of 910,000 shares of common
stock at $.08 per share with 50% of the options vesting immediately and the
65 of 152
balance vesting in 12 months. The options are subject to shareholder approval of
increasing the Company's authorized stock as noted above.
NOTE 9 - RELATED PARTY TRANSACTIONS
The Company incurred $80,118 and $79,000 in legal fees during the years ended
December 31, 2004 and 2003, respectively, for services provided by a law firm in
which Howard S. Breslow, a director and stockholder of the Company, is a
partner. For the year ended December 31, 2003, the Company also issued 282,910
warrants exercisable at $0.08 per share as partial consideration for services
rendered by the related party. At December 31, 2004 and 2003, accounts payable
includes $28,027 and $67,396, respectively, due to the related party.
On March 15, 2004, the Company entered into a three year research agreement (the
"Agreement") with Cell Preservation Services, Inc. ("CPSI") to outsource to CPSI
all of the Company's research that was funded through SBIR grants. CPSI is owned
by a former employee of BioLife, who is also the son of the Chief Executive
Officer of the Company. The Research Agreement established a format pursuant to
which CPSI (a) took over the processing of existing applications of SBIR grants
applied for by BioLife, (b) applied for additional SBIR grants for future
research projects, (c) performed a substantial portion of the principal work to
be done, in terms of (i) time spent, and (ii) research, in connection with
existing and future projects, and (d) utilize BioLife personnel as consultants
with respect to the research. In conjunction therewith, BioLife granted to CPSI
a non-exclusive, royalty free license (with no right to sublicense) to use
BioLife's technology solely for the purpose of conducting the research in
connection with the projects. Pursuant to the Research Agreement, BioLife
provides CPSI with (a) facilities in which to conduct the research, including
basic research equipment and office equipment, and (b) management services.
During the year ended December 31, 2004, the Company recognized $117,858 and
$64,822 for facilities and management services, respectively. At December 31,
2004, the Company was due $2,290 from CPSI.
In January 2004, BioLife signed a 3 year lease with Field Afar Properties, LLC
whereby BioLife leases 6,161 square feet of office, laboratory, and
manufacturing space in Owego, NY at a rental rate of $6,200 per month.
Renovation of the new facility was completed in April 2004. The Company's Chief
Executive Officer is a partial owner of Field Afar Properties, LLC.
20
[BIOLIFE SOLUTIONS LOGO]
See Note 8 for other related party financing transactions.
NOTE 10 - COMMITMENTS
LEASES: The Company leases equipment as lessee, under operating leases expiring
on various dates through 2005. The leases require monthly payments of
approximately $2,340.
The following is a schedule of future minimum lease payments required under the
operating leases:
Year Ending Office
December 31 Equipment (Note 9) Total
-------------------------------------------------------
2005 $ 14,273 $ 74,400 $ 88,673
2006 -- 74,400 74,400
2007 -- 12,400 12,400
-------------------------------------------------------
TOTAL $ 14,273 $ 161,200 $175,473
66 of 152
=======================================================
Rental expense for facilities and equipment operating leases for the years ended
December 31, 2004 and 2003, totaled $86,647 and $51,014, respectively.
EMPLOYMENT AGREEMENT: The Company has an employment agreement with the CEO of
the Company which expires in June 2005, and is renewable for an additional year.
The agreement provides for certain minimum compensation per month and incentive
bonuses at the discretion of the Board of Directors. The officer received
incentive stock options to purchase shares of the Company's common stock, which
are included in the table in Note 8.
NOTE 11 - CONCENTRATION OF RISK
SIGNIFICANT CUSTOMERS: Sales to individual customers representing more than 10%
of total revenues totaled approximately $396,000 and $84,000 in 2004 and 2003,
respectively. These amounts represent sales to three customers in 2004 and one
customer in 2003. Of the $396,000 in 2004, approximately $197,000 was derived
from management fees, facilities fees, and product sales to CPSI, a related
party (See Note 9). Pursuant to the Research Agreement BioLife provides CPSI
with (a) facilities in which to conduct the research including basic research
equipment and office equipment, and (b) management services. During the year
ended December 31, 2004, the Company recognized $117,858 and $64,822 for
facilities and management services, respectively.
At December 31, 2004, three customers accounted for approximately 85% of total
accounts receivable, and at December 31, 2003, three customers accounted for
approximately 71% of total accounts receivable.
21
[BIOLIFE SOLUTIONS LOGO]
CORPORATE INFORMATION
EXECUTIVE OFFICES
171 Front Street
Owego, NY 13827
DIRECTORS AND EXECUTIVE OFFICERS
John G. Baust
President, Chief Executive Officer and Director
Howard S. Breslow, Esq.
Director, Secretary
Roderick de Greef
Director
Thomas Girschweiler
Director
AUDITORS
Aronson & Company
Certified Public Accountants
700 King Farm Boulevard
Rockville, MD 20850
LEGAL COUNSEL
67 of 152
Breslow & Walker, LLP
767 Third Avenue
New York, NY 10017
TRANSFER AGENT
American Stock Transfer & Trust Company
59 Maiden Lane
New York, NY 10038
STOCK LISTING
The Common Stock trades on the OTC Bulletin Board under the symbol "BLFS." The
following table sets forth the high and low closing prices for the Common Stock
for the periods indicated.
QUARTERLY COMMON STOCK DATA
HIGH AND LOW BID
------------------------------------------------
FISCAL 2004 HIGH LOW
------------------------------------------------
1st Quarter $0.24 $0.08
2nd Quarter $0.23 $0.14
3rd Quarter $0.19 $0.13
4th Quarter $0.14 $0.07
------------------------------------------------
FISCAL 2003 HIGH LOW
------------------------------------------------
1st Quarter $0.17 $0.11
2nd Quarter $0.22 $0.11
3rd Quarter $0.15 $0.08
4th Quarter $0.18 $0.08
The above quotations represent prices between dealers, do not include
retail mark-ups, markdowns, or commissions and do not necessarily reflect actual
transactions.
As of July 30, 2005 there were approximately 549 holders of record of
Common Stock. Since many shares are registered in street name, the number of
beneficial owners is considerably higher.
The Company has never paid cash dividends on its Common Stock. Payment
of dividends, if any, will be within the discretion of the Company's Board of
Directors and will depend, among other factors, on earnings, capital
requirements, and the operating and financial condition of the Company. At the
present time, the Company's anticipated capital requirements are such that it
intends to follow a policy of retaining earnings, if any, in order to finance
its business.
FORM 10-KSB
Copies of the Company's Annual Report on Form 10-KSB, as filed with the
Securities and Exchange Commission (exclusive of exhibits) may be obtained,
without charge, by writing to:
BIOLIFE SOLUTIONS, INC.
171 FRONT STREET
OWEGO, NY 13827
68 of 152
ATTN: DR. JOHN G. BAUST
Filings - Form DEF 14A BIOLIFE SOLUTIONS INC For: Sep 28 (10K)
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant|X|
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Biolife Solutions, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
[] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
--------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
--------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
69 of 152
(1) Amount Previously Paid:
--------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------------------------
(3) Filing Party:
--------------------------------------------------------------------------------
(4) Date Filed:
--------------------------------------------------------------------------------
BIOLIFE SOLUTIONS, INC.
171 Front Street
Owego, NY 13827
--------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 28, 2005
To the Stockholders of
BIOLIFE SOLUTIONS, INC.
Notice is hereby given that the Annual Meeting of Stockholders of BioLife
Solutions, Inc., a Delaware corporation (the "Company"), will be held at the
offices of Breslow & Walker, LLP, 767 Third Avenue, New York, NY 10017, on
September 28, 2005, at 10:00 am, Eastern Standard Time, for the following
purposes:
1. To elect a board of four directors to serve until the next Annual
Meeting of Stockholders and until their successors are duly
elected and qualified.
2. To approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of
common stock from 25,000,000 to 100,000,000.
3. To approve an amendment to the Company's 1998 Stock Option Plan to
increase the number of shares of common stock reserved for
issuance thereunder from 4,000,000 to 10,000,000.
4. To ratify the appointment of Aronson & Company to serve as
independent auditors for the year ending December 31, 2005.
5. To transact such other business as may properly come before the
meeting or any postponements or adjournments thereof.
The Board of Directors has fixed the close of business on August 19, 2005 as the
record date for the determination of stockholders entitled to notice of and to
vote at the Annual Meeting or any adjournments thereof.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO COMPLETE, SIGN, AND DATE
THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IF YOU
ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON IF YOU WISH TO DO SO,
EVEN IF YOU HAVE SIGNED AND RETURNED YOUR PROXY CARD.
By Order of the Board of Directors,
-------------------------------
70 of 152
John G. Baust, President
Owego, New York
August 26, 2005
IT IS IMPORTANT THAT THE ENCLOSED PROXY FORM
BE COMPLETED AND RETURNED PROMPTLY
BIOLIFE SOLUTIONS, INC.
171 FRONT STREET
OWEGO, NY 13827
---------------
PROXY STATEMENT
---------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 28, 2005
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of BioLife Solutions, Inc., a Delaware corporation (the
"Company"), of proxies to be voted at the Annual Meeting of Stockholders of the
Company to be held on September 28, 2005 (the "Meeting"), at 10:00 a.m., Eastern
Standard Time, at the offices of Breslow & Walker, LLP, 767 Third Avenue, New
York, NY 10017, and at any adjournments thereof.
A form of proxy is enclosed for use at the Meeting. The proxy may be revoked by
a stockholder at any time before it is voted by execution of a proxy bearing a
later date or by written notice to the Secretary of the Company before the
Meeting, and any stockholder present at the Meeting may revoke his or her proxy
thereat and vote in person if he or she desires. When such proxy is properly
executed and returned, the shares of Common Stock, Series F Preferred Stock, and
Series G Preferred Stock it represents will be voted at the Meeting in
accordance with any instructions noted thereon. If no direction is indicated,
all shares of Common Stock, Series F Preferred Stock, and Series G Preferred
Stock represented by valid proxies received pursuant to this solicitation (and
not revoked prior to exercise) will be voted (i) FOR the election of the
nominees for directors named in this Proxy Statement, (ii) FOR the proposed
amendment to the Certificate of Incorporation to increase the number of
authorized shares of common stock from 25,000,000 to 100,000,000 (the "Common
Stock Increase"), (iii) FOR the proposed amendment to the Company's 1998 Stock
Option Plan to increase the number of shares of Common Stock reserved for
issuance thereunder from 4,000,000 to 10,000,000 (the "Plan Increase"), and (iv)
FOR the ratification of the appointment of Aronson & Company to serve as
independent auditors for the year ending December 31, 2005, and (v) in
accordance with the judgment of the persons named in the proxy as to such other
matters as may properly come before the Meeting.
The cost for soliciting proxies on behalf of the Board of Directors will be
borne by the Company. In addition to solicitation by mail, proxies may be
solicited in person or by telephone, telefax, or cable by personnel of the
Company who will not receive any additional compensation for such solicitation.
The Company may reimburse brokers or other persons holding stock in their names
or the names of their nominees for the expenses of forwarding soliciting
material to their principals and obtaining their proxies. The approximate date
of mailing of this Proxy Statement and accompanying form of proxy is August 26,
2005.
71 of 152
The close of business on August 19, 2005 has been fixed as the record date for
the determination of stockholders entitled to notice of and to vote at the
Meeting. On that date there were 12,413,209 shares of the Company's Common
Stock, par value $.001 per share ("Common Stock"), issued and outstanding, each
of which has one vote on each matter to be presented at the Meeting (the
"Proposals"), 12,000 shares of the Company's Series F Convertible Preferred
Stock, par value $.001 ("Series F Preferred Stock"), issued and outstanding,
each of which has four hundred (400) votes on each Proposal, and 55.125 shares
of the Company's Series G Convertible Preferred Stock, par value $.001 ("Series
G Preferred Stock"), issued and outstanding, each of which has three hundred
twelve thousand five hundred (312,500) votes on each Proposal. The holders of
Common Stock, the holders of Series F Preferred Stock, and the holders of Series
G Preferred Stock will vote together on the proposals as if they held one class
of stock. The holders of stock representing a majority of the votes entitled to
be cast at the Meeting, present in person or by proxy, will constitute a quorum
for the transaction of business at the Meeting and any adjournments thereof.
Election of the Directors requires a plurality of the votes entitled to be cast
by holders of stock represented in person or by proxy at the Meeting. Approval
of the Common Stock Increase Proposal requires the affirmative vote of the
holders of stock representing a majority of the votes entitled to be cast at the
Meeting. Approval of the Plan Increase Proposal and the ratification of the
independent auditors requires the affirmative vote of the holders of stock
representing a majority of shares present in person or represented by proxy at
the Meeting and entitled to vote thereon.
All votes will be tabulated by the inspector(s) of election appointed for the
Meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions and broker non-votes shall each be
included as shares present and voting for the purpose of determining whether a
quorum is present at the Meeting. Abstentions will be counted toward the
tabulation of votes cast on the Proposals and will have the same effect as
negative votes. Broker non-votes are not counted in determining whether a
Proposal has been approved.
2
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
--------------------------------------
NOMINEES
Four persons, all of whom are members of the present Board of Directors, are
nominees for election at the Annual Meeting to hold office until the next annual
meeting and until their respective successors are elected and qualified. Unless
authority to vote for any director is withheld in a proxy, it is intended that
each proxy will be voted for the four nominees named below.
It is expected that all nominees will be able and willing to serve as directors.
However, in the event that any nominee is unable or declines to serve as a
director at the time of the Annual Meeting, the proxies will be voted for any
nominee who shall be designated by the present Board of Directors to fill the
vacancy. The Board of Directors has no reason to believe that any of the persons
named will be unable or unwilling to serve as director if elected.
REASON FOR SUBMISSION TO STOCKHOLDERS
This Proposal is being submitted to stockholders to satisfy the requirements of
the Delaware General Corporation Law.
REQUIRED VOTE
72 of 152
Approval of the nominees for election to the Board of Directors will require the
affirmative vote of the holders of stock representing a plurality of the votes
present at the Annual Meeting in person or by proxy and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF
ALL NOMINEES LISTED TO THE BOARD OF DIRECTORS.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
Name Age Present Office or Position
---- --- --------------------------
John G. Baust, Ph.D. 62 Director, Chief Executive Officer
Howard S. Breslow 65 Director, Secretary
Roderick de Greef 43 Director
Thomas Girschweiler 47 Director
The following information is submitted concerning the nominees named for
election as directors based upon information received by the Company from such
persons.
3
John G. Baust, Ph.D., has been the President and Chief Executive Officer of the
Company since July 2002. Previously he was Senior Vice President of Cryomedical
Sciences, Inc. ("CMSI"), the Company's predecessor, since January 1995, Chief
Scientific Officer since August 1993, Vice President, Research and Development
from July 1990 to January 1995, and a consultant from April 1990 to July 1990.
Dr. Baust became a director of CMSI on October 13, 2000. Since 1987, Dr. Baust
has also been a Professor and the Director of the Center for Cryobiological
Research at the State University of New York at Binghamton, and since July 1994,
Dr. Baust has also been Adjunct Professor of Surgery, Medical College of
Pennsylvania. From 1984 to 1987, he was a Professor at, and the Director of, the
Institute of Low Temperature Biology at the University of Houston.
Howard S. Breslow has served as a director of the Company since July 1988. He
has been a practicing attorney in New York City for 40 years and is a member of
the law firm of Breslow & Walker, LLP, New York, New York, which firm serves as
general counsel to the Company. Mr. Breslow currently serves as a director of
Excel Technology, Inc., a publicly-held company engaged in the manufacture and
marketing of photonics-based solutions, consisting of laser systems and
electro-optical components, primarily for industrial and scientific
applications, and Lucille Farms, Inc., a company engaged in the manufacture and
marketing of dairy products.
Roderick de Greef has served as a director of the Company since June 19, 2000.
From March 2001 to present, Mr. de Greef has served as Executive Vice President,
Chief Financial Officer and Secretary of Cardiac Sciences, Inc., a public
company traded on NASDAQ, under the ticker "DFIB". Since 1995 Mr. de Greef has
provided corporate finance advisory services to a number of early stage
companies, including the Company, where he was instrumental in securing the
Company's equity capital beginning in June 2000, and advising on merger and
acquisition activity. From 1989 to 1995, Mr. de Greef was Vice President and
Chief Financial Officer of BioAnalogics, Inc. and International BioAnalogics,
Inc., publicly held, development stage medical technology companies located in
Portland, Oregon. From 1986 to 1989, Mr. de Greef was Controller and then Chief
Financial Officer of Brentwood Instruments, Inc., a publicly held cardiology
products distribution company based in Torrance, California. Mr. de Greef has a
73 of 152
B.A. in Economics and International Relations from California State University
at San Francisco and an M.BA. from the University of Oregon.
Thomas Girschweiler joined the Board in 2003. Mr. Girschweiler has been engaged
in corporate financing activities on his own behalf since 1996. From 1981 to
1996 he was an investment banker with Union Bank of Switzerland. Thomas
Girschweiler was graduated at the Swiss Banking School.
DIRECTOR COMPENSATION
The Company has not compensated its directors for their services in such
capacity, except that on May 12, 2005, each of the directors received a ten-year
fully vested non-incentive stock option to purchase 250,000 shares of the
Company's common stock at $0.08 per share.
4
BOARD MEETINGS
The Board of Directors held meetings or acted by unanimous consent on fourteen
(14) occasions during the twelve months ended December 31, 2004. Meetings were
attended by all directors. Although the Company does not have a formal policy
regarding attendance by the Board of Directors at the Company's Annual Meeting
of Stockholders, it strongly encourages directors to attend. Because of
financial constraints, the Company did not hold an Annual Meeting of
Stockholders last year.
BOARD COMMITTEES
AUDIT COMMITTEE. The Board of Directors does not have an audit committee or an
audit committee financial expert. The Company does believe, based on its current
operations, that the failure to have such a committee or expert is material to
the integrity of the financial statements of the Company.
COMPENSATION COMMITTEE. The Board of Directors does not have a compensation
committee. Management compensation for fiscal year 2004 was determined by the
non-employee members of the Board of Directors.
NOMINATING COMMITTEE. The Board of Directors has no standing nominating
committee. The Company believes that obtaining input from all of its directors
in connection with Board nominations enhances the nomination process. The
Company currently does not have a charter with regard to the nomination process.
The nominations of the directors standing for election or re-election at the
Meeting were unanimously recommended for selection by the independent directors
(as defined by NASDAQ rules), and were unanimously approved by the Board of
Directors.
The Company does not have a formal policy concerning stockholder recommendations
of nominees to the Board of Directors. The need for such a policy has not arisen
since, to date, the Company has not received any recommendations from
stockholders requesting that the Board of Directors consider a candidate for
inclusion among the Board's slate of nominees in the Company's proxy statement.
The absence of such a policy does not mean, however, that a recommendation would
not have been considered had one been received. The Company will consider
director candidates recommended by stockholders. Any stockholder desiring to
make such a recommendation should send the recommendation, in writing, to the
Corporate Secretary at the address of the Company set forth on the first page of
this Proxy Statement, no later than the date by which stockholder proposals for
action must be submitted. The recommendation should include the recommended
candidate's biographical data, and should be accompanied by the candidate's
written consent to nomination and to serving as a director, if elected.
The Company's goal is to assemble a Board of Directors that brings to the
74 of 152
Company a variety of perspectives and skills derived from business and
professional experience. The Company does not have any formal rules or policies
regarding minimum qualifications for nominees, but expects that its candidates
be of the highest ethical character, share the values of the Company, have
reputations, both personal and professional, consistent with the image and
reputation of the
5
Company, be highly accomplished in their respective field, and possess the
relevant expertise and experience necessary to assist the Board of Directors and
the Company to increase stockholder value.
The Board of Directors identifies nominees by first evaluating the current
members of the Board of Directors willing to continue in service. Current
members of the Board with skills and experience that are relevant to the
Company's business and who are willing to continue in service are considered for
re-nomination, balancing the value of continuity of service by existing members
of the Board with that of obtaining a new perspective. If any member of the
Board does not wish to continue in service or if the Board of Directors decides
not to re-nominate a member for re-election, the Board of Directors will seek to
identify nominees that possess the characteristics outlined above. Current
members of the Board of Directors are polled for suggestions. Research also may
be performed to identify qualified individuals. To date, the Company has not
engaged third parties to identify, evaluate, or assist in identifying potential
nominees, although the Company reserves the right in the future to retain a
third party search firm, if necessary.
In evaluating director nominees, the Board of Directors may consider the
following factors:
o the appropriate size and the diversity of the Company's Board of
Directors;
o the needs of the Company with respect to the particular talents and
experience of its directors;
o the knowledge, skills and experience of nominees, including experience
in technology, business, or finance, in light of prevailing business
conditions and the knowledge, skills and experience already possessed by
other members of the Board;
o familiarity with national and international business matters;
o experience with accounting rules and practices; and
o the need to satisfy governance and other standards set by the SEC.
The Board of Directors may also consider such other factors as it may deem to be
in the best interests of the Company and its stockholders.
COMMUNICATING WITH DIRECTORS
Stockholders may contact any of our directors or our Board of Directors as a
group by writing to them c/o BioLife Solutions, Inc., 171 Front Street, Owego,
NY 13827, Att: Dr. John G. Baust. All communications will be received, processed
and forwarded to the directors by the Corporate Secretary. You will receive a
written acknowledgement from the Corporate Secretary upon receipt of your
communication if you include a return address.
6
75 of 152
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company are as follows:
Name Age Present Office or Position
---- --- --------------------------
John G. Baust, Ph.D. 62 Chief Executive Officer, President
Officers are appointed by, and hold office at the pleasure of, the Board of
Directors. Officers serve at the discretion of the Board of Directors and are
elected at the annual meeting of the Board of Directors.
7
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the compensation
paid by the Company to its Chief Executive Officer and to each of its executive
officers (other than the Chief Executive Officer) who received salary and bonus
payments in excess of $100,000 during the fiscal year ended December 31, 2004
(collectively the "Named Executive Officers").
Annual Compensation Long Term Compensation
--------------------------------------------------
--------------------------------------
Awards Payouts
----------------------- ------------------------
Other Annual Restricted
Name and Principal Fiscal Salary Bonus Compensation Stock Options/ LTIP All Other
Positions Year ($) ($) ($) Award(s) SARs (#) Payouts Compensation
------------------------ --------- --------- --------- -------------- --------- ---------- -------- -------------
John G. Baust, Ph.D 2004 240,000(1) -- -- -- -- -- --
Chief Executive
Office,r 2003 240,000(2) -- 7,490 (3) -- -- -- --
President, and 2002 202,369 50,000 3,600 (3) -- 1,000,000 -- --
Director
Alan Rich 2004 174,587(4) -- 7,200(3) -- -- -- --
VP Sales & Marketing 2003 150,000(5) -- -- -- 100,000 -- --
2002 15,000 -- -- -- -- -- --
(1) Consists of $176,490 paid compensation and $63,510 accrued salary paid in
2005.
(2) Consists of $170,654 paid compensation, $53,125 paid in 2.125 units of
Series G Preferred Stock, and $16,221 accrued salary paid in 2004.
(3) Represents auto allowance.
(4) Consists of $150,000 paid compensation, $20,248 paid commissions, and
$4,339 accrued commissions paid in 2005.
(5) Consists of $103,846 paid compensation, $12,500 paid in 1.0 units of Series
G Preferred Stock, and $33,654 accrued salary paid in 2004.
OPTION/SAR GRANTS IN YEAR-ENDED DECEMBER 31, 2004
In 2004, the Company issued no options to purchase shares of Common Stock to its
Named Executive Officers.
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8
AGGREGATED OPTION/SAR EXERCISES DURING THE 2004 FISCAL YEAR AND THE 2004 FISCAL
YEAR OPTION/SAR VALUES
The following table provides information related to options exercised by each of
the Named Executive Officers during the 2004 fiscal year and the number and
value of options held at December 31, 2004. The Company does not have any
outstanding stock appreciation rights. None of the options were in the money at
December 31, 2004.
Number of Securities Value of Unexercised
Underlying Unexercised in the money
Options/SAR at Fiscal Options/SAR at Fiscal
Year End (#) Year End ($)(1)
-------------------------- ---------------------------
Shares Acquired Value
Name On Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---------- --------------- ----------- ----------- ------------- ----------- -------------
John G. Baust, Ph.D. -- -- 1,542,000 1,000,000 -- --
Alan F. Rich -- -- -- -- -- --
----------------------------------------
(1) The closing price for the Common Stock as reported on the OTC Bulletin
Board on December 31, 2004 was $0.09. Value is calculated on the basis
of the difference between the option exercise price and $0.09
multiplied by the number of shares of Common Stock underlying the
option.
(2) Mr. Rich's employment relationship with the Company ended in February
2005.
EMPLOYMENT AGREEMENTS
The Company has an employment agreement with its President and Chief Executive
Officer, dated July 1, 2002, which was to expire on June 30, 2004, but which was
automatically renewed for a one-year term. The agreement provides for a salary
of $20,000 per month and an incentive bonus based on certain milestones, as
determined by the Board of Directors. The officer also received a $50,000
signing bonus in 2002 and ten-year incentive stock options to purchase 1,000,000
shares of Common Stock, which options vest ratably over five years on the
anniversary date of the grant. The agreement also provides an automobile
allowance of $600 per month.
The Company had an employment agreement with its Vice President, Sales and
Marketing which expired on October 31, 2004. The agreement provided for a salary
of $12,500 per month, an incentive bonus based on certain milestones, as
determined by the Board of Directors, ten-year incentive stock options to
purchase 400,000 shares of Common Stock vesting ratably over four years on the
anniversary date of the grant, and an automobile allowance of $600 per month.
Mr. Rich's employment relationship with the Company ended in February 2005.
Every officer of the Company has executed a Proprietary Information and
Inventions Agreement pursuant to which each agreed, among other things, to keep
the Company's information confidential and assigned all inventions to the
Company, except for certain personal inventions not related to the Company's
work, whether existing or later developed.
9
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Management compensation for fiscal year 2004 was determined by the non-employee
members of the Board. There were no compensation committee interlocks.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Until 2004, the Company conducted its internal research through Small Business
Innovative Research ("SBIR") grants awarded by the National Institutes of
Health. In 2004, the Company elected to not continue to directly engage in the
SBIR grant program. Accordingly, the Company entered into a Research Agreement
with Cell Preservation Services, Inc. ("CPSI") to outsource to CPSI all BioLife
research currently funded through SBIR grants. CPSI is owned by Dr. John M.
Baust, a recognized expert in cell preservation, a former employee of BioLife
and the son of John G. Baust, the CEO of BioLife. Robert Van Buskirk, formerly
Vice President, Business Development of BioLife and the person primarily
responsible for processing applications for SBIR grants for BioLife, also has
left the employ of BioLife and joined CPSI. The Research Agreement, which was
negotiated on an arms length basis and designed to comply with the rules and
regulations applicable to the performance of research with respect to SBIR
grants, establishes a format pursuant to which CPSI will (a) take over the
processing of existing applications for SBIR grants applied for by BioLife
("Current Projects"), (b) apply for additional SBIR grants for future research
projects ("Future Projects"), (c) perform a substantial portion of the principal
work to be done, in terms of (i) time spent, and (ii) research, in connection
with Current Projects and Future Projects (the "Research"), and (d) utilize
BioLife personnel as consultants with respect to such Research. In conjunction
therewith BioLife has granted to CPSI a non-exclusive, royalty free license
(with no right to sublicense) to use BioLife's technology solely for the purpose
of conducting the research in connection with the Current Projects and Future
Projects. Pursuant to the Research Contract, (x) BioLife will, among other
matters, provide CPSI with (i) suitable facilities in which to conduct the
Research, including basic research equipment and office equipment
("Facilities"), and (ii) management services ("Management Services"), and (y)
CPSI will (i) accept assignment of Current Projects, (ii) be responsible for
conducting Research with respect to Current Projects and Future Projects, (iii)
as mutually agreed to by the parties and within the confines of the rules and
regulations applicable to the performance of Research with respect to SBIR
grants, utilize BioLife's personnel as consultants, (iv) provide suitable
experienced personnel, including, without limitation, a principal
investigator/program director, to conduct the Research, (v) comply with all
federal laws, rules and regulations applicable to SBIR grants and file all
necessary forms and reports with the federal agency awarding the SBIR grants,
and (vi) utilize the Facilities and Management Services and pay BioLife fees
with respect thereto. BioLife is to own all right, title and interest in and to
any technology, inventions, designs, ideas, and the like (whether or not
patentable) that emanates from the Current Projects, Future Projects and
Research.
Howard S. Breslow, a director of the Company, is a member of Breslow & Walker,
LLP, general
10
counsel to the Company. Mr. Breslow currently owns 53,600 shares of Common Stock
of the Company and directly or indirectly owns options and warrants to purchase
an aggregate of 2,477,910 additional shares. The Company incurred $80,118 in
legal fees during the year ended December 31, 2004 for services provided by
Breslow & Walker, LLP. At December 31, 2004 accounts payable includes $28,027
due to Breslow & Walker, LLP.
Thomas Girschweiler, a director of the Company, loaned the Company, in the form
78 of 152
of notes, $250,000, $100,000 and $100,000 in March 2002, March 2003 and May
2003, respectively. The notes accrued interest at the rate of 10% per annum. On
March 1, 2004, the Company paid Mr. Girschweiler $515,418, including principal
and accrued interest, in satisfaction of the outstanding notes.
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
COMPENSATION GUIDELINES
The Company is engaged in a highly competitive industry and must attain
high levels of quality and safety in the formulation and production of its
products. To succeed, the Company believes that it must offer executive
compensation that reflects competitive pay practices of other companies and job
responsibility, and enables the Company to attract, retain, and reward
qualified, experienced executives. The Company also believes that any
competitive pay package should be structured, in part, to align management's
interests with the success of the Company by making a portion of compensation
dependent on operating achievements and, to a lesser extent, on stock
performance. The non-employee members of the Board of Directors have determined
that these objectives are best met by offering the Company's executive officers
competitive base salaries, stock options that vest over time, and, where
appropriate, bonuses based on the achievement of milestones, as determined by
the Board of Directors.
CHIEF EXECUTIVE OFFICER COMPENSATION
Based on the criteria described above, the non-employee members of the
Board of Directors ratified the automatic renewal provision of Dr. Baust's
employment contract in 2004. In making the determination, the non-employee
directors considered several factors including the Company's revenues, losses,
and cash-flow and future business prospects. Dr. Baust did not receive a bonus
in 2004.
Howard S. Breslow
Roderick deGreef
Thomas Girschweiler
11
BENEFICIAL OWNERSHIP OF THE COMPANY'S SECURITIES
The following table sets forth, as of August 15, 2005, certain information
regarding the beneficial ownership of Common Stock and Series F Preferred Stock
and Series G Preferred Stock by (i) each stockholder known by the Company to be
the beneficial owner of more than 5% of the outstanding shares thereof; (ii)
each director of the Company; (iii) each Named Executive Officer of the Company;
and (iv) all of the Company's current directors and executive officers as a
group.
Name and Address Common Stock Series F Preferred Series G Preferred
of Beneficial Owner (% of class) (1) (% of class) (% of class)
-------------------------------------------- --------------------- -------------------- ---------------------
John G. Baust (Director, Executive Officer)
c/o BioLife Solutions, Inc.
171 Front Street 3,640,525 (22.7%)(2) -- 2.125 (3.9%)
Owego, NY 13827
Howard S. Breslow, Esq. (Director)
c/o Breslow & Walker, LLP
767 Third Avenue 2,531,510 (17.0%)(3) -- -
New York, NY 10017
79 of 152
Roderick de Greef (Director)
c/o BioLife Solutions, Inc.
171 Front Street 4,514,699 (27.4%)(4) 1,000 (8.3%) 4.0 (7.3%)
Owego, NY 13827
Walter Villiger
Hurdnerstrasse 10
P.O. Box 1474 17,072,314 (58.7%)(5) 5,000 (41.7%) 18.0 (32.7%)
CH-8649 Hurden, Switzerland
Thomas Girschweiler (Director)
Wissmannstrasse 15 12,854,278 (52.0%)(6) 3,450 (28.8%) 10.0 (18.1%)
8057 Zurich, Switzerland
Karl-Heinz Illenseer
Wissmannstrasse 15 3,910,714 (24.0%)(7) -- 6.0 (10.9%)
8057 Zurich, Switzerland
Clariden Bank
Claridenstrasse 26
Postfach 5080 2,520,513 (17.8%)(8) 2,000 (16.7%) --
CH-8022 Zurich, Switzerland
Richard Molinsky
c/o BioLife Solutions, Inc.
171 Front Street 2,583,333 (17.2%)(9) -- 4.0 (7.3%)
Owego, NY 13827
Francois Illenseer
Wissmannstrasse 15 2,607,143 (17.4%)(10) -- 4.0 (7.3%)
8057 Zurich, Switzerland
Charlotte Illenseer
Wissmannstrasse 15 2,607,143 (17.4%)(11) -- 4.0 (7.3%)
8057 Zurich, Switzerland
Robert Van Buskirk 1,095,935 (8.1%)(12) -- 1 (1.8%)
c/o CPSI, 2 Court Street
Owego, New York 13827
12
Name and Address Common Stock Series F Preferred Series G Preferred
of Beneficial Owner (% of class) (1) (% of class) (% of class)
-------------------------------------------- --------------------- -------------------- ---------------------
John M. Baust 1,085,340(8.0%)(13) -- 1 (1.8%)
c/o CPSI, 2 Court Street
Owego, New York 13827
All officers and directors as a group
(four persons) 23,541,012 (67.9%) 4,450 (37.1%) 16.125 (29.3%)
----------
(1) Shares of Common Stock subject to options and warrants currently
exercisable or exercisable within 60 days of July 31, 2005 are deemed
outstanding for computing the number of shares and the percentage of
the outstanding shares held by a person holding such options or
warrants, but are not deemed outstanding for computing the percentage
of any other person. Except as indicated by footnote, and subject to
community property laws where applicable, the Company believes that
the persons named in the table have sole voting and investment power
with respect to all shares shown as beneficially owned by them.
80 of 152
(2) Includes 1,942,000 shares of Common Stock issuable upon the exercise
of outstanding stock options under the Company's 1988 and 1998 Stock
Option Plans, 664,063 shares of Common Stock issuable upon the
conversion of Series G Preferred Stock, 990,618 shares of Common Stock
issuable upon the exercise of outstanding warrants, and 43,844 shares
of Common Stock, 39,844 of which were earned as dividend on Preferred
Stock.
(3) Includes 399,000 shares of Common Stock issuable upon the exercise of
outstanding stock options under the Company's 1988 and 1998 Stock
Option Plans, 2,078,910 shares of Common Stock issuable upon the
exercise of outstanding warrants owned of record by Breslow & Walker,
LLP (1,358,910) and B & W Investments (720,000), both of which are
entities in which Mr. Breslow is a partner, and 53,600 common shares.
(4) Includes 250,000 shares of Common Stock issuable upon the exercise of
outstanding stock options under the Company's 1988 and 1998 Stock
Option Plans, 400,000 shares of Common Stock issuable upon the
conversion of Series F Preferred Stock, 1,250,000 shares of Common
Stock issuable upon the conversion of Series G Preferred Stock,
1,814,000 shares of Common Stock issuable upon the exercise of
outstanding warrants, and 800,699 shares of Common Stock, 367,399 of
which were earned as dividend on Preferred Stock.
(5) Includes 2,000,000 shares of Common Stock issuable upon the conversion
of Series F Preferred Stock, 5,625,000 shares of Common Stock issuable
upon the conversion of Series G Preferred Stock, 7,375,000 shares of
Common Stock issuable upon the exercise of outstanding warrants, and
2,072,314 shares of Common Stock, 1,672,314 of which were earned as
dividend on Preferred Stock.
(6) Includes 250,000 shares of Common Stock issuable upon the exercise of
outstanding stock options under the Company's 1988 and 1998 Stock
Option Plans, 1,380,000 shares of Common Stock issuable upon the
conversion of Series F Preferred Stock, 3,125,000 shares of Common
Stock issuable upon the conversion of Series G Preferred Stock,
6,455,000 shares of Common Stock issuable upon the exercise of
outstanding warrants, and 1,644,278 shares of Common Stock, 1,106,218
of which were earned as dividend on Preferred Stock.
(7) Includes 1,875,000 shares of Common Stock issuable upon the conversion
of Series G Preferred Stock, 1,875,000 shares of Common Stock issuable
upon the exercise of outstanding warrants, and 160,714 shares of
Common Stock earned as dividend on Preferred Stock.
(8) Includes 800,000 shares of Common Stock, 800,000 shares of Common
Stock issuable upon the conversion of Series F Preferred Stock,
400,000 shares of Common Stock issuable upon the exercise of
outstanding warrants, and 520,513 shares of Common Stock earned as
dividend on Preferred Stock.
(9) Includes 1,250,000 shares of Common Stock issuable upon the conversion
of Series G Preferred Stock, 1,250,000 shares of Common Stock issuable
upon the exercise of outstanding warrants, and 83,333 shares of Common
Stock earned as dividend on Preferred Stock.
(10) Includes 1,250,000 shares of Common Stock issuable upon the conversion
of Series G Preferred Stock, 1,250,000 shares of Common Stock issuable
upon the exercise of outstanding warrants, and 107,143 shares of
Common Stock earned as dividend on Preferred Stock.
(11) Includes 1,250,000 shares of Common Stock issuable upon the conversion
of Series G Preferred Stock, 1,250,000 shares of Common Stock issuable
81 of 152
upon the exercise of outstanding warrants, and 107,143 shares of
Common Stock earned as dividend on Preferred Stock.
(12) Includes 275,000 shares of Common Stock issuable upon the exercise of
outstanding stock options under the Company's 1988 and 1998 Stock
Option Plans, 312,500 shares of Common Stock issuable upon the
conversion of Series G Preferred Stock, 489,685 shares of Common Stock
issuable upon the exercise of outstanding warrants, and 18,750 shares
of Common Stock earned as dividend on Preferred Stock.
(13) Includes 250,000 shares of Common Stock issuable upon the exercise of
outstanding stock options under the Company's 1988 and 1998 Stock
Option Plans, 312,500 shares of Common Stock issuable upon the
conversion of Series G Preferred Stock, 504,090 shares of Common Stock
issuable upon the exercise of outstanding warrants, and 18,750 shares
of Common Stock earned as dividend on Preferred Stock.
13
COMPARISON OF CUMULATIVE TOTAL STOCKHOLDER RETURN
The following chart compares the percentage change in the cumulative total
stockholder return on the Common Stock during the period from December 31, 1999
through the year ended December 31, 2004 with the cumulative total return on the
NASDAQ Composite Index and the Company Peer Group. The comparison assumes $100
was invested in the Common Stock on December 31, 1999, and in each of the stocks
included in the NASDAQ Composite Index and the Company Peer Group.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG BIOLIFE SOLUTIONS, INC.,
NASDAQ MARKET INDEX AND PEER GROUP INDEX
[GRAPHIC OMITTED]
ASSUMES $100 INVESTED ON DEC. 31, 1999
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 2004
--------------------------------------------------------------------------------------------------------------
---------------------------- FISCAL YEAR ENDING ---------------------------
COMPANY/INDEX/MARKET 12/31/1999 12/29/2000 12/31/2001 12/31/2002 12/31/2003 12/31/2004
BIOLIFE SOLUTIONS, INC 100.00 312.50 131.25 75.00 68.75 56.25
CUSTOMER SELECTED STOCK LIST 100.00 177.16 201.11 142.50 212.07 227.24
NASDAQ MARKET INDEX 100.00 62.85 50.10 34.95 52.55 56.97
--------------------------------------------------------------------------------------------------------------
14
PROPOSAL NO. 2 - AMEND THE CERTIFICATE OF INCORPORATION TO EFFECT THE COMMON
STOCK INCREASE
REASON FOR SUBMISSION TO STOCKHOLDERS
The Board of Directors unanimously adopted a resolution proposing that Article
Four of the Company's Certificate of Incorporation be amended to increase the
number of shares of Common Stock that the Company is authorized to issue from
25,000,000 to 100,000,000 shares. This proposal is being submitted to
stockholders to satisfy the requirements of the Delaware General Corporation
Law.
REASONS FOR INCREASING THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
82 of 152
Presently, the charter authorizes the issuance of 25,000,000 shares of Common
Stock, of which 12,413,209 shares of Common Stock are issued and outstanding.
Also, there are outstanding (i) shares of Series F Preferred Stock convertible
into 4,800,000 shares of Common Stock, (ii) shares of Series G Preferred Stock
convertible into 17,226,563 shares of Common Stock, (iii) warrants and options
exercisable into an aggregate of 30,777,858 shares of Common Stock, and (iv)
4,365,432 shares of Common Stock earned as dividends on Preferred Stock.
Assuming the conversion/exercise of all outstanding Series F Preferred Stock,
Series G Preferred Stock, and warrants and options, there would be 69,583,062
shares of Common Stock issued and outstanding. Thus, there are not a sufficient
number of authorized shares of Common Stock available for the Company to meet
its outstanding commitments as well as to provide the Company with flexibility
in connection with various corporate purposes, including possible future
financings and stock option grants. In connection with the issuance of various
securities convertible/exercisable into shares of Common Stock, the Company
undertook to amend its certificate of incorporation to increase the number of
authorized shares of Common Stock so as to meet its commitments upon the
conversion/exercise of such securities (the "Committed Shares").
EFFECTS OF THE COMMON STOCK INCREASE
The Common Stock Increase will not alter the par value of the Common Stock or
the rights of stockholders. It will allow the Company to meet its commitments to
those security holders who are entitled to the Committed Shares. To the extent
the Company issued shares of common stock over and above the amount required to
satisfy its commitments to current security holders, such issuances would reduce
the proportionate interests in the Company held by current stockholders as well
as those who receive the Committed Shares.
NO RIGHT OF APPRAISAL
Under the Delaware General Corporation Law, dissenting stockholders are not
entitled to appraisal rights with respect to the Common Stock Increase, and the
Company will not provide stockholders with any such right.
15
METHOD OF EFFECTING THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION
The Common Stock Increase shall become effective, automatically and without
further action by the stockholders, upon the filing with the Delaware Secretary
of State of an appropriate Certificate of Amendment to the Certificate of
Incorporation. The complete text of such amendment is set forth in Exhibit A
hereto.
VOTING REQUIREMENT
Approval of the Common Stock Increase requires the affirmative vote of the
holders of stock representing a majority of the votes entitled to be cast at the
Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE PROPOSED
AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO EFFECT THE COMMON STOCK
INCREASE.
16
PROPOSAL NO. 3 - AMEND THE 1998 STOCK OPTION PLAN
REASONS FOR THE PLAN INCREASE
83 of 152
The Company's 1998 Stock Option Plan (the "Plan") was adopted by the Board of
Directors in August 1998 and approved by stockholders at a special meeting in
December 1998. Currently, the Plan allows for a maximum of 4,000,000 shares of
Common Stock (subject to adjustment to cover stock splits, stock dividends,
recapitalizations, and other capital adjustments) to be issued pursuant to the
Plan. In contemplation of increasing the number of shares of Common Stock
covered by the Plan, and subject to approval of the Plan Increase by the
stockholders of the Company, options were granted to employees and directors of
and consultants to the Company over and above those currently authorized by the
Plan. In order to honor the commitments made in connection with such grants, and
to provide the Company with sufficient flexibility for future grants, the Board
of Directors amended the Plan, subject to the approval of the Company's
stockholders, to increase to 10,000,000 the maximum number of shares of Common
Stock that may be issued pursuant to the Plan (subject to adjustment to cover
stock splits, stock dividends, recapitalizations, and other capital
adjustments). The proposal to approve the Plan Increase is now being submitted
to stockholders for their approval.
A summary of the Plan as proposed to be amended is set forth below. The summary
does not purport to be complete and is qualified in its entirety by the text of
the Plan as proposed to be amended, a copy of which is attached to this Proxy
Statement as Annex B.
SUMMARY OF PLAN
The Plan covers 10,000,000 shares of Common Stock (subject to adjustment to
cover stock splits, stock dividends, recapitalizations, and other capital
adjustments). The options granted under the Plan are designated as incentive
stock options or non-incentive stock options by the Board of Directors or a
committee thereof, which also have discretion as to the persons to be granted
options, the number of shares subject to the options, and the terms of the
option agreements. Only employees (including officers) of the Company and its
affiliates may be granted incentive stock options. The options to be granted
under the Plan and designated as incentive stock options are intended to receive
incentive stock option tax treatment pursuant to Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
The Plan provides that all options thereunder shall be exercisable during a
period of no more than ten years from the date of grant (five years for options
granted to holders who own more than 10% of the total combined voting power of
all classes of stock of the Company), depending upon the specific stock option
agreement, and that the option exercise price for incentive stock options shall
be at least equal to 100% of the fair market value of the Common Stock at the
time of grant (110% for options granted to holders who own more than 10% of the
total combined voting power of all classes of stock of the Company). In
addition, the aggregate fair market value (determined on the date of grant) of
the Common Stock with respect to which incentive stock options are exercisable
for the first time by an employee during any calendar year shall not exceed
$100,000.
The Plan permits optionees whose employment is terminated without cause and
other than by
17
reason of death, disability or retirement at age 65, to exercise their options
prior to the expiration thereof or within three months, or such longer period as
the Board of Directors (or a committee thereof) may decide on a case by case
basis, of termination, whichever is earlier, but only to the extent the holder
had the right to exercise such options on the date of termination. If the
employment of an optionee is terminated for cause and other than by reason of
death, disability or retirement at age 65, any options granted to the optionee
will terminate automatically. If employment is terminated by reason of
84 of 152
disability or retirement at age 65, the optionee may exercise his options at any
time prior to the expiration thereof or within one year from the date of
termination (three months from the date of termination in the event of
termination by reason of retirement at age 65), whichever is earlier, but only
to the extent the holder had the right to exercise such options on the date of
termination. If employment is terminated by death, the person or persons to whom
the optionee's rights under the option are transferred by will or the laws of
descent and distribution have similar rights of exercise within three months
after such death (but not after the expiration of the option). Options are not
transferable otherwise than by will or the laws of descent and distribution, or
pursuant to a qualified domestic relations order as defined under the Code or
Title I of the Employee Retirement Income Security Act or the rules thereunder,
and are exercisable during the optionee's lifetime only by the optionee. Shares
subject to options which expire or terminate may be the subject of future
options. The Plan terminates on August 30, 2008.
If shares are issued to the holder of a non-incentive option under the Plan (a)
no income will be recognized by the holder at the time of grant of the option;
(b) except as stated below, upon exercise of the option, the holder will
recognize taxable ordinary income in an amount equal to the excess of the fair
market value of the shares over the option price; (c) if the holder exercising
the option is restricted from selling the shares so acquired because the holder
is an officer or director of the Company and would be subject to liability under
Section 16(b) of the Exchange Act, then, unless the holder makes an election to
be taxed under the rule of clause (b) above, the holder will recognize taxable
ordinary income, at the time such Section 16(b) restriction terminates, equal to
the excess of the fair market value of the shares at that time over the option
price, and any dividends he or she receives on the shares before that time will
be taxable to him or her as income; (d) the Company will be entitled to a
deduction at the same time and in the same amount as the holder has income under
clause (b) or (c); and (e) upon a sale of shares so acquired, the holder may
have additional short-term or long-term capital gain or loss.
If shares are issued to the holder of an incentive stock option under the Plan,
(a) no income will be recognized by such holder at the time of the grant of the
option or the transfer of shares to the holder pursuant to his or her exercise
of the option; (b) the difference between the option price and the fair market
value of the shares at the time of exercise will be treated as an item of tax
preference to the holder; (c) no deduction will be allowed to the Company for
federal income tax purposes in connection with the grant or exercise of the
option; and (d) upon a sale or exchange of the shares after the later of (i) one
year from the date of transfer of the shares to the original holder, or (ii) two
years from the date of grant of the option, any amount realized by the holder in
excess of the option price will be taxed to the holder as a long-term capital
gain, and any loss sustained by the holder will be a long-term capital loss. If
the shares are disposed of before the holding period requirements described in
the preceding sentence are satisfied, (aa) the holder will recognize taxable
ordinary income in the year of disposition in an amount determined under the
rules of the Code; (bb) the Company will be entitled to a deduction for such
year in the amount
18
of the ordinary income so recognized; (cc) the holder may have additional
long-term or short-term capital gain or loss; and (dd) the tax preference
provision might not be applicable.
The Plan provides for the cashless payment of the exercise price of options
granted under the Plan by (a) delivery to the Company of shares of Common Stock
having a fair market value equal to such purchase price, (b) irrevocable
instructions to a broker to sell shares of Common Stock to be issued upon
exercise of the option, followed by delivery to the Company of the amount of
sale proceeds necessary to pay such purchase price, and delivery of the
85 of 152
remaining cash proceeds less commissions and brokerage fees to the optionee or
delivery of the remaining shares of Common Stock to the optionee, or (c) by any
combination of the methods of payment described in (a) and (b) above.
The Plan also provides that in the event any distribution consists of securities
(including common stock) held by the Company in any subsidiary or any other
company, then (i) with respect to securities of a subsidiary, each holder of
options under the Plan on the record date for such distribution shall be
entitled to receive options to purchase such number of such securities as is
equal to the number of securities such holder would have received had he
exercised all of his options under the Plan (vested and unvested) and owned the
common stock in the Company underlying such options, which options in the
subsidiary shall be vested or shall vest to the same extent as such holder's
options in the Company, and, generally, shall contain such provisions as to put
such holder in the same equitable position such holder was in prior to the
distribution, including an allocation of the exercise price for the options
issued under this Plan to both such option and the options in the subsidiary,
and (ii) with respect to securities of another company, each holder of options
under the Plan on the record date for such distribution shall be entitled to
receive such number of securities as such holder would have received had he
exercised all of his options under the Plan (vested and unvested) and owned the
common stock in the Company underlying such options, which securities shall be
vested or shall vest to the same extent as such holder's options in the Company.
To the extent such securities do not vest in the holder, they shall be retained
by the Company.
If the shares of Common Stock outstanding are changed in number, kind, or class
by reason of a stock split, combination, merger, consolidation, reorganization,
reclassification, exchange, or any capital adjustment, including a stock
dividend, or if any distribution is made to stockholders other than a cash
dividend and the Board of Directors (or Committee) deems it appropriate to make
an adjustment, then (i) the aggregate number and class of shares that may be
issued under the Plan, (ii) the number and class of shares which are issuable
under outstanding options, and (iii) the purchase price to be paid per share
under outstanding options, shall be adjusted in a proportionate and equitable
manner by the Board of Directors.
In the event of a liquidation of the Company, or a merger, reorganization, or
consolidation of the Company with any other corporation in which the Company is
not the surviving corporation or the Company becomes a wholly-owned subsidiary
of another corporation, any unexercised options theretofore granted under the
Plan shall be deemed canceled unless the surviving corporation in any such
merger, reorganization, or consolidation elects to assume the options under the
Plan or to issue substitute options in place thereof; provided, however, if such
options would otherwise be canceled in accordance with the foregoing, the
optionee shall have the right,
19
exercisable during a ten-day period immediately prior to such liquidation,
merger, or consolidation, to exercise the option, in whole or in part. The
granting of an option pursuant to the Plan shall not affect in any way the right
or power of the Company to make adjustments, reorganizations, reclassifications,
or changes of its capital or business structure or to merge, consolidate,
dissolve, liquidate, or sell or transfer all or any part of its business or
assets.
NEW PLAN BENEFITS
For each of the Named Executive Officers and the various indicated groups, the
table below shows the benefits that will be allocated to each of the following
under the plan being acted upon.
86 of 152
NUMBER OF
NAME AND PRINCIPAL POSITION OPTION SHARES (1) DOLLAR VALUE
---------------------------------------- ----------------- ------------
John G. Baust
President and Chief Executive Officer 1,000,000 $80,000
Executive group (1 persons) 1,000,000 $80,000
Non-executive director group (3 persons) 750,000 $60,000
Non-executive officer employee group
(7 persons) 910,000 $72,800
----------
(1) Stock options exercisable at $.08 per share
The closing price per share for the Common Stock as reported on the OTC Bulletin
Board on July 25, 2005 was $0.16.
20
EQUITY COMPENSATION PLAN INFORMATION
Number of
securities
available for
Number of future issuance
securities to be under equity
issued upon Weighted average compensation plans
exercise of exercise price of (excluding
outstanding outstanding securities
options, warrants options, warrants reflected in
Plan Category and rights and rights column (a)
------------- ----------------- ----------------- ------------------
(a) (b) (c)
Equity compensation
plan approved by
shareholders 2,906,000 $0.52 -0-
Equity compensation
plan not approved
by shareholders 29,926,858 $0.19 4,449,000
---------- ----- ---------
Total 32,832,858 $0.22 4,449,000
========== ===== =========
VOTING REQUIREMENT
The Plan Increase requires the affirmative vote of the holders of stock
representing a majority of shares present in person or represented by proxy at
the Meeting and entitled to vote thereon.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE PROPOSED
AMENDMENT TO THE PLAN TO EFFECT THE PLAN INCREASE.
21
PROPOSAL NO. 4 - RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
87 of 152
The Board of Directors has selected the accounting firm of Aronson & Company to
serve as the Company's independent auditors for the year ending December 31,
2005 and proposes the ratification of such decision.
Aronson & Company has audited the Company's financial statements for the year
ended December 31, 2004. Representatives of Aronson & Company are expected to be
present at the Annual Meeting, with the opportunity to make a statement if they
desire to do so, and to respond to appropriate questions.
During 2004, Aronson & Company acted as the independent auditors for the
Company. The following table sets forth the aggregate fees billed by Aronson &
Company for audit and review services rendered in connection with the financial
statements and reports for the years ending December 31, 2004 and December 31,
2003 and for other services rendered during the years ending December 31, 2004
and December 31, 2003 on behalf of the Company:
2004 2003
------- -------
Audit Fees $49,275 $64,317
Audit-related fees -0- -0-
Tax fees 6,775 17,163
All other fees 475 -0-
------- -------
Total $56,525 $81,480
The Board of Directors pre-approves all audit and non-audit services to be
performed by the Company's independent auditors.
VOTING REQUIREMENT
Ratification of the appointment of the independent auditors requires the
affirmative vote of the holders of stock representing a majority of shares
present in person or represented by proxy at the Meeting and entitled to vote
thereon.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT AUDITORS.
22
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
John G. Baust, the Chief Executive Officer of the Company, and Messrs. Breslow,
deGreef and Girschweiler, directors of the Company, have an interest in the
approval of the Plan Increase. On May 12, 2005, the Board of Directors of the
Company granted to (a) Dr. Baust ten-year options to purchase 1,000,000 shares
of Common Stock at a price of $.08 per share, which options shall vest to the
extent of 250,000 shares on the first day of the month following the first
anniversary date of the grant (the "First Vesting Date") and 20,833 on the first
day of each of the next 36 months following the First Vesting Date, and (b) to
each of the aforesaid directors a ten-year, fully vested non-incentive stock
option to purchase 250,000 shares of Common Stock at a price of $0.08 per share;
provided, however, that such stock options may not be exercised until such time
as (x) the amendment to the Company's Stock Option Plan, approved by the
Company's Board of Directors on October 12, 2004, increasing the number of
shares of Common Stock covered by Plan from 4,000,000 shares to 7,500,000 shares
(subsequently increased to 10,000,000 shares) is approved by the Company's
stockholders, which approval must take place on or before October 12, 2005 (and
in the event such approval does not take place on or before October 12, 2005,
the options are rescinded), and (y) the certificate of incorporation of the
Company is amended to increase the authorized number of shares of common stock
to a number that is sufficient to accommodate the exercise of all options
88 of 152
granted to them.
STOCKHOLDER PROPOSALS
Stockholder proposals for action at the Company's Annual Meeting of Stockholders
for the fiscal year ending December 31, 2004 must be submitted in writing to the
Company at its address set forth on the first page of this Proxy Statement and
received by the Company no later than June 1, 2005 in order that they may be
considered for inclusion in the proxy statement and form of proxy relating to
that meeting. Stockholders who intend to present a proposal at the Company's
Annual Meeting of Stockholders for the year ending December 31, 2004 without
inclusion of such proposal in the Company's proxy materials are required to
provide notice of such proposal to the Company no later than August 1, 2005. The
Company reserves the right to reject, rule out of order, or take other
appropriate action with respect to any proposal that does not comply with these
and other applicable requirements.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
The Company's officers, directors and beneficial owners of more than 10% of any
class of its equity securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934 ("Reporting Persons") are required under that
Act to file reports of ownership and changes in beneficial ownership of the
Company's equity securities with the Securities and Exchange Commission. Copies
of those reports must also be furnished to the Company. Based solely on a review
of the copies of reports furnished to the Company pursuant to that Act, the
Company believes that during the fiscal year ended December 31, 2004, all filing
requirements applicable to Reporting Persons were complied with.
23
OTHER MATTERS
The Board of Directors of the Company does not know of any other matters that
are to be presented for action at the Meeting. Should any other matters properly
come before the Meeting or any adjournments thereof, the persons named in the
enclosed proxy will have the discretionary authority to vote all proxies
received with respect to such matters in accordance with their judgment.
This Proxy Statement is sent by order of the Board of Directors of the Company.
--------------------------
John G. Baust
President and
Chief Executive Officer
Owego, New York
August 26, 2005
STOCKHOLDERS ARE URGED TO SPECIFY THEIR CHOICES AND DATE, SIGN, AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. A PROMPT RESPONSE IS HELPFUL AND YOUR
COOPERATION WILL BE APPRECIATED.
24
ANNEX A
-------
CERTIFICATE OF AMENDMENT
89 of 152
OF THE
CERTIFICATE OF INCORPORATION
OF
BIOLIFE SOLUTIONS, INC.
-----------------------
(Pursuant to Section 242
of the General Corporation Law of the State of Delaware)
BioLife Solutions, Inc. (the "Corporation"), a corporation organized and
existing under the General Corporation Law of the State of Delaware (the "GCL"),
certifies as follows:
1. The name of the Corporation is BioLife Solutions, Inc.
2. The date of filing of the Corporation's certificate of incorporation
(the "Certificate of Incorporation") with the Secretary of State of the State of
Delaware was November 5, 1987.
3. Subdivision (a) of Article Fourth of the Certificate of Incorporation
is hereby amended so that it shall now read as follows:
"FOURTH: The aggregate number of shares of stock which the
Corporation shall have the authority to issue shall be:
One hundred million (100,000,000) shares of common stock,
each having a par value of $.001 (the "Common Stock"), and one
million (1,000,000) shares of preferred stock, each having a par
value of $.001 (the "Preferred Stock"). The Board of Directors,
in its sole discretion, shall have full and complete authority,
by resolution, from time to time, to establish one or more series
or classes and to issue shares of Preferred Stock, and to fix,
determine and vary the voting rights, designations, preferences,
restrictions, qualifications, privileges, limitation, options,
conversion rights and other special rights of each series or
class of Preferred Stock, including, but not limited to, dividend
rates and manner of payment, preferential amounts payable upon
voluntary or involuntary liquidation, voting rights, conversion
rights, redemption prices, terms and conditions, and sinking fund
and stock purchase prices, terms and conditions."
4. This Certificate of Amendment to the Certificate of Incorporation was
authorized by the affirmative vote of the holders of a majority of the
outstanding shares entitled to vote thereon at a meeting of stockholders
pursuant to Sections 222 and 242 of the GCL.
IN WITNESS WHEREOF, I hereunto sign my name and affirm that the statements
made herein are true under penalties of perjury this ____ day of
_________________, 2005.
BIOLIFE SOLUTIONS, INC.
By: ____________________________
John G. Baust, President and
Chief Executive Officer
90 of 152
2
ANNEX B
-------
BIOLIFE SOLUTIONS, INC.
1998 STOCK OPTION PLAN
(as amended May 10, 2001)
1. PURPOSE OF PLAN. The purpose of this 1998 Stock Option Plan (the "Plan")
is to further the growth and development of BioLife Solutions, Inc. (the
"Company") by encouraging and enabling employees, officers, and directors of,
and consultants and advisors to, the Company to obtain a proprietary interest in
the Company through the ownership of stock (thereby providing such persons with
an added incentive to continue in the employ or service of the Company and to
stimulate their efforts in promoting the growth, efficiency, and profitability
of the Company), and affording the Company a means of attracting to its service
persons of outstanding quality.
2. SHARES OF STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section
12 hereof, an aggregate of 10,000,000 shares of the common stock, par value
$.001 per share, of the Company ("Common Stock") shall be reserved for issuance
upon the exercise of options which may be granted from time to time in
accordance with the Plan. As the Board of Directors of the Company ("Board of
Directors") shall from time to time determine, such shares may be, in whole or
in part, authorized but unissued shares or issued shares which have been
reacquired by the Company. If, for any reason, an option shall lapse, expire, or
terminate without having been exercised in full, the unpurchased shares
underlying such option shall (unless the Plan shall have been terminated) again
be available for issuance pursuant to the Plan.
3. ADMINISTRATION.
(a) The Board of Directors shall administer the Plan and, subject to
the provisions of the Plan, shall have authority to determine and designate from
time to time those persons eligible for a grant of options under the Plan, those
persons to whom options are to be granted, the purchase price of the shares
covered by each option, the time or times at which options shall be granted, and
the manner in which said options are exercisable. In making such determination,
the Board of Directors may take into account the nature of the services rendered
by the respective persons, their present and potential contributions to the
Company's success, and such other factors as the Board of Directors in its sole
discretion shall deem relevant. Subject to the express provisions of the Plan,
the Board of Directors also shall have authority to interpret the Plan, to
prescribe, amend, and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of the instruments by which options shall be
evidenced (which shall not be inconsistent with the terms of the Plan), and to
make all other determinations necessary or advisable for the administration of
the Plan, all of which determinations shall be final, binding, and conclusive.
(b) The Board of Directors may, at its discretion, in accordance with
the provisions of the Company's By-Laws, appoint from among its members a Stock
Option or Compensation Committee (the "Committee"). The Committee shall be
composed of two or more directors and shall have and may exercise any and all of
the powers relating to the administration of the Plan and
the grant of options hereunder as are set forth above in Section 3(a), as the
91 of 152
Board of Directors shall confer and delegate. The Board of Directors shall have
the power at any time to fill vacancies in, to change the membership of, or to
discharge, the Committee. The Committee shall select one of its members as its
Chairman and shall hold its meetings at such time and at such places as it shall
deem advisable. A majority of the Committee shall constitute a quorum and such
majority shall determine its action. The Committee shall keep minutes of its
proceedings and shall report the same to the Board of Directors at the meeting
next succeeding. No director or member of the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
option granted thereunder.
4. PERSONS TO WHOM SHARES MAY BE GRANTED.
(a) Options may be granted to persons who are, at the time of the
grant, employees (including part-time employees), officers, and directors of, or
consultants or advisors to, the Company or any subsidiary corporation (as
defined in Section 425 of the Internal Revenue Code of 1986, as amended (the
"Code"), a "Subsidiary") as the Board of Directors (or Committee) shall select
from time to time from among those nominated by the Board of Directors (or
Committee). For the purposes of the Plan, options only may be granted to those
consultants and advisors who shall render bona fide services to the Company and
such services must not be in connection with the offer or sale of securities in
a capital raising transaction. Subject to the provisions hereinafter set forth,
options granted under the Plan shall be designated either (i) "Incentive Stock
Options" (which term, as used herein, shall mean options intended to be
"incentive stock options" within the meaning of Section 422 of the Code) or (ii)
"Non-Incentive Stock Options" (which term, as used herein, shall mean options
not intended to be incentive stock options" within the meaning of Section 422 of
the Code). Each option granted to a person who is solely a director of, or
consultant or advisor to, the Company or a Subsidiary on the date of the grant
shall be designated a Non-Incentive Stock Option.
(b) The Board of Directors (or Committee) may grant, at any time, new
options to a person who has previously received options, whether such prior
options are still outstanding, have previously been exercised in whole or in
part, have expired, or are canceled in connection with the issuance of new
options. The purchase price of the new options may be established by the Board
of Directors (or Committee) without regard to the existing option price.
5. OPTION PRICE.
(a) The purchase price of the Common Stock underlying each option
shall be determined by the Board of Directors (or Committee), which
determination shall be final, binding, and conclusive; provided, however, in no
event shall the purchase price of Incentive Stock Options be less than 100%
(110% in the case of optionees who own more than 10% of the total combined
voting power of all classes of stock of the Company) of the fair market value of
the Common Stock on the date the option is granted. In determining such fair
market value, the Board of Directors (or Committee) shall consider (i) the last
sale price of the Common Stock on the date on which the option is granted or, if
no such reported sale takes place on such day, the last reported bid price on
such day, on NASDAQ or on the principal national securities exchange on which
the Common
2
Stock is admitted to trading or listed, or (ii) if not listed or admitted to
trading on NASDAQ or a national securities exchange, the closing bid price as
quoted by the National Quotation Bureau or a recognized dealer in the Common
Stock on the date of grant. If the Common Stock is not publicly traded at the
time an option is granted, the Board of Directors (or Committee) shall deem fair
market value to be the fair value of the Common Stock after taking into account
appropriate factors which may be relevant under applicable federal tax laws and
92 of 152
Internal Revenue rules and regulations. For purposes of the Plan, the date of
grant of an option shall be the date specified by the Board of Directors (or
Committee) at the time it grants such option; provided, however, such date shall
not be prior to the date on which the Board of Directors (or Committee) acts to
approve the grant.
(b) The aggregate fair market value (determined at the time the
Incentive Stock Options are granted) of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by an employee during
any calendar year shall not exceed $100,000. Non-Incentive Stock Options shall
not be subject to the limitations of this paragraph 5(b).
6. EXERCISE OF OPTIONS.
(a) The number of shares which are issued pursuant to the exercise of
an option shall be charged against the maximum limitations on shares set forth
in Section 2 hereof.
(b) The exercise of an option shall be made contingent upon receipt by
the Company from the holder thereof of (i) if deemed necessary by the Company, a
written representation and acknowledgement that (1) at the time of such exercise
it is the holder's then present intention to acquire the option shares for
investment and not with a view to distribution or resale thereof, (2) the holder
knows that the Company is not obligated to register the option shares and that
the option shares may have to be held indefinitely unless an exemption from the
registration requirements of the Securities Act of 1933, as amended (the "Act"),
is available or the Company has registered the shares underlying the options,
and (3) the Company may place a legend on the certificate(s) evidencing the
option shares reflecting the fact that they were acquired for investment and
cannot be sold or transferred unless registered under the Act, and (ii) payment
in full of the purchase price of the shares being purchased. Payment may be made
in cash; by certified check payable to the order of the Company in the amount of
such purchase price; by delivery to the Company of shares of Common Stock having
a fair market value equal to such purchase price; by irrevocable instructions to
a broker to sell shares of Common Stock to be issued upon exercise of the option
and to deliver to the Company the amount of sale proceeds necessary to pay such
purchase price and to deliver the remaining cash proceeds, less commissions and
brokerage fees, to the optionee; or by any combination of such methods of
payment.
7. TERM OF OPTIONS. The period during which each option granted hereunder
shall be exercisable shall be determined by the Board of Directors (or
Committee); provided, however, no option shall be exercisable for a period
exceeding ten (10) years from the date such option is granted.
8. NON-TRANSFERABILITY OF OPTIONS. No option granted pursuant to the Plan
shall be subject to
3
anticipation, sale, assignment, pledge, encumbrance, or charge, or shall be
otherwise transferable except by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order (as defined by the Code or
Title I of the Employee Retirement Income Security Act or the rules thereunder),
and an option shall be exercisable during the lifetime of the holder thereof
only by such holder.
9. TERMINATION OF SERVICES. If an employee, officer, or director to whom an
option has been granted under the Plan shall cease to be an employee, officer,
or director of the Company or a Subsidiary by reason of a termination of such
relationship without cause and other than by reason of death or disability, such
holder may exercise such option at any time prior to the expiration date of the
options or within three months (or such longer period as the Board of Directors
93 of 152
(or Committee) may decide on a case by case basis) after the date of
termination, whichever is earlier, but only to the extent the holder had the
right to exercise such option on the date of termination. If an employee,
officer, or director to whom an option has been granted under the Plan shall
cease to be an employee, officer, or director of the Company or a Subsidiary by
reason of a termination of such relationship for cause and other than by reason
of death or disability, such options shall terminate, lapse, and expire
forthwith and automatically. So long as the holder of an option shall continue
to be in the employ, or continue to be a director, of the Company or one or more
of its Subsidiaries, such holder's option shall not be affected by any change of
duties or position. Absence on leave approved by the employing corporation shall
not be considered an interruption of employment for any purpose under the Plan.
The granting of an option in any one year shall not give the holder of the
option any rights to similar grants in future years or any right to be retained
in the employ or service of the Company or any of its Subsidiaries or interfere
in any way with the right of the Company or any such Subsidiary to terminate
such holder's employment or services at any time. Notwithstanding the foregoing,
no option may be exercised after ten years from the date of its grant.
10. DISABILITY OF HOLDER OF OPTION. If any employee, officer, or director to
whom an option has been granted under the Plan shall cease to be an employee,
officer, or director of the Company or a Subsidiary by reason of disability,
such holder may exercise such option at any time prior to the expiration date of
the option or within one year after the date of termination for such reason,
whichever is earlier, but only to the extent the holder had the right to
exercise such option on the date of termination. Notwithstanding the foregoing,
no option may be exercised after ten years from the date of its grant. For the
purposes of the Plan, "disability" shall mean "permanent and total disability"
as defined in Section 22(e)(3) of the Code.
11. DEATH OF HOLDER OF OPTION. If any employee, officer, or director to whom
an option has been granted under the Plan shall cease to be an employee,
officer, or director of the Company or a Subsidiary by reason of death, or such
holder of an option shall die within three months after termination, or in the
case of the death of an advisor or consultant to whom an option has been granted
under the Plan, the option may be exercised by the person or persons to whom the
optionee's rights under the option are transferred by will or by the laws of
descent and distribution at any time prior to the expiration date of the option
or, in the case of an employee, officer, or director, within three months from
the date of death, whichever is earlier, but only to the extent the holder of
the option had the right to exercise such option on the date of such
termination. Notwithstanding the foregoing, no option may be exercised after ten
years from the date of its grant.
4
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
(a) If the shares of Common Stock outstanding are changed in number,
kind, or class by reason of a stock split, combination, merger, consolidation,
reorganization, reclassification, exchange, or any capital adjustment, including
a stock dividend, or if any distribution is made to stockholders other than a
cash dividend and the Board of Directors (or Committee) deems it appropriate to
make an adjustment, then (i) the aggregate number and class of shares that may
be issued or transferred pursuant to Section 2, (ii) the number and class of
shares which are issuable under outstanding options, and (iii) the purchase
price to be paid per share under outstanding options, shall be adjusted as
hereinafter provided. In the event any distribution consists of common stock
held by the Company in any subsidiary, then each holder of options under this
Plan on the record date for such distribution shall be entitled to receive
options to purchase such number of shares of such common stock as is equal to
the number of shares of common stock such holder would have received had such
holder exercised all of such holder's options under this Plan (vested and
94 of 152
unvested) and owned the common stock in the Company underlying such options,
which options in the subsidiary shall be vested or shall vest to the same extent
as such holder's options in the Company, and, generally, shall contain such
provisions as to put such holder in the same equitable position such holder was
in prior to the distribution, including an allocation of the exercise price for
the options issued under this Plan to both such options and the options in the
subsidiary.
(b) Adjustments under this Section 12 shall be made in a proportionate
and equitable manner by the Board of Directors (or Committee), whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding, and conclusive. In the event that a fraction of a share
results from the foregoing adjustment, said fraction shall be eliminated and the
price per share of the remaining shares subject to the option adjusted
accordingly.
(c) In the event of a liquidation of the Company, or a merger,
reorganization, or consolidation of the Company with any other corporation in
which the Company is not the surviving corporation or the Company becomes a
wholly-owned subsidiary of another corporation, any unexercised options
theretofore granted under the Plan shall be deemed canceled unless the surviving
corporation in any such merger, reorganization, or consolidation elects to
assume the options under the Plan or to issue substitute options in place
thereof; provided, however, if such options would otherwise be canceled in
accordance with the foregoing, the optionee shall have the right, exercisable
during a ten-day period immediately prior to such liquidation, merger, or
consolidation, to exercise the option, in whole or in part. The granting of an
option pursuant to the Plan shall not affect in any way the right or power of
the Company to make adjustments, reorganizations, reclassifications, or changes
of its capital or business structure or to merge, consolidate, dissolve,
liquidate, or sell or transfer all or any part of its business or assets.
13. VESTING OF RIGHTS UNDER OPTIONS. Nothing contained in the Plan or in any
resolution adopted or to be adopted by the Board of Directors (or Committee) or
the stockholders of the Company shall constitute the vesting of any rights under
any option. The vesting of such rights shall take place only when a written
agreement shall be duly executed and delivered by and on
5
behalf of the Company to the person to whom the option shall be granted.
14. RIGHTS AS A STOCKHOLDER. A holder of an option shall have no rights of a
stockholder with respect to any shares covered by such holder's option until the
date of issuance of a stock certificate to such holder for such shares.
15. TERMINATION AND AMENDMENT. The Plan was adopted by the Board of Directors
on August 31, 1998, subject, with respect to the validation of Incentive Stock
Options granted under the Plan, to approval of the Plan by the stockholders of
the Company at the next Meeting of Stockholders or, in lieu thereof, by written
consent. If the approval of stockholders is not obtained prior to August 30
1999, any grants of Incentive Stock Options under the Plan made prior to that
date will be rescinded. The Plan shall expire at the end of the day on August
30, 2008 (except as to options outstanding on that date). Options may be granted
under the Plan prior to the date of stockholder approval of the Plan. The Board
of Directors (or Committee) may terminate or amend the Plan in any respect at
any time, except that, without the approval of the stockholders obtained within
12 months before or after the Board of Directors (or Committee) adopts a
resolution authorizing any of the following actions, (a) the total number of
shares that may be issued under the Plan may not be increased (except by
adjustment pursuant to paragraph 12); (b) the provisions regarding eligibility
for grants of Incentive Stock Options may not be modified; (c) the provisions
regarding the exercise price at which shares may be offered pursuant to
95 of 152
Incentive Stock Options may not be modified (except by adjustment pursuant to
paragraph 12), and (d) the expiration date of the Plan may not be extended.
Except as otherwise provided in this paragraph 15, in no event may action of the
Board of Directors (or Committee) or stockholders alter or impair the rights of
an optionee, without such optionee's consent, under any option previously
granted to such optionee.
16. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to the terms and
conditions and within the limitations of the Plan, the Board of Directors (or
Committee) may modify, extend, or renew outstanding options granted under the
Plan, or accept the surrender of outstanding options (to the extent not
theretofore exercised) and authorize the granting of new options in substitution
therefor. Notwithstanding the foregoing, no modification of an option shall,
without the consent of the holder thereof, alter or impair any rights or
obligations under any option theretofore granted under the Plan.
17. CONVERSION OF INCENTIVE STOCK OPTIONS INTO NON-QUALIFIED OPTIONS. Without
the prior written consent of the holder of an Incentive Stock Option, the Board
of Directors (or Committee) shall not alter the terms of such Incentive Stock
Option (including the means of exercising such Incentive Stock Option) if such
alteration would constitute a modification within the meaning of Section
424(h)(3) of the Code. The Board of Directors (or Committee), at the written
request or with the written consent of any optionee, may in its discretion take
such actions as may be necessary to convert such optionee's Incentive Stock
Options (or any installments or portions of installments thereof) that have not
been exercised on the date of conversion into Non-Incentive Stock Options at any
time prior to the expiration of such Incentive Stock Options, regardless of
whether the optionee is an employee of the Company at the time of such
conversion. Such actions may include, but shall not be limited to, extending the
exercise period or reducing the exercise price of the appropriate installments
of such Incentive Stock Options. At the time of such conversion, the
6
Board of Directors (or Committee) (with the consent of the optionee) may impose
such conditions on the exercise of the resulting Non-Incentive Stock Options as
the Board of Directors (or Committee) in its discretion may determine, provided
that such conditions shall not be inconsistent with the Plan. Nothing in the
Plan shall be deemed to give any optionee the right to have such optionee's
Incentive Stock Options converted into Non-Incentive Stock Options, and no such
conversion shall occur until and unless the Board of Directors (or Committee)
takes appropriate action.
18. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of a
Non-Incentive Stock Option, the transfer of a Non-Incentive Stock Option
pursuant to an arm's length transaction, the making of a Disqualifying
Disposition (as described in Sections 421, 422 and 424 of the Code and
regulations thereunder), the vesting of transfer of restricted stock or
securities acquired on the exercise of an option hereunder, or the making of a
distribution or other payment with respect to such stock or securities, the
Company may withhold taxes in respect of amounts that constitute compensation
includible in gross income. The Board of Directors (or Committee) in its
discretion may condition the exercise of an option, the transfer of a
Non-Incentive Stock Option, or the vesting or transferability of restricted
stock or securities acquired by exercising an option on the optionee's making
satisfactory arrangement for such withholding. Such arrangement may include
payment by the optionee in cash or by check of the amount of the withholding
taxes or, at the discretion of the Board of Directors (or Committee), by the
optionee's delivery of previously held shares of Common Stock or the withholding
from the shares of Common Stock otherwise deliverable upon exercise of option
shares having an aggregate fair market value equal to the amount of such
withholding taxes.
96 of 152
19. INDEMNIFICATION. In addition to such other rights of indemnification as
they may have as members of the Board of Directors (or Committee), the members
of the Board of Directors (or Committee) administering the Plan shall be
indemnified by the Company against reasonable expenses, including attorneys'
fees, actually and necessarily incurred in connection with the defense of any
action, suit, or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan or any option granted thereunder, and
against all amounts paid by them in settlement thereof (provided such settlement
is approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any action, suit, or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit, or
proceeding that such member is liable for negligence or misconduct in the
performance of his duties, and provided that within 60 days after institution of
any such action, suit, or proceeding, the member shall in writing offer the
Company the opportunity, at its own expense, to handle and defend the same.
20. GOVERNING LAW. The validity and construction of the Plan and the
instruments evidencing options shall be governed by the laws of Delaware, or the
laws of any jurisdiction in which the Company or its successors in interest may
be organized.
7
BIOLIFE SOLUTIONS, INC.
171 FRONT STREET
OWEGO, NY 13827
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, acknowledging receipt of the proxy statement dated
August 26, 2005 of BioLife Solutions, Inc., hereby constitutes and appoints John
G. Baust and Howard S. Breslow and each or any of them, attorney, agent and
proxy of the undersigned, with full power of substitution to each of them, for
and in the name, place and stead of the undersigned on the books of said
corporation, to appear and vote all the shares of stock of BioLife Solutions,
Inc. standing in the name of the undersigned on the books of said corporation on
August 19, 2005, at the Annual Meeting of Stockholders of BioLife Solutions,
Inc. to be held at Breslow & Walker, LLP, 767 Third Avenue, New York, NY 10017
on September 28, 2005, at 10:00 A.M., Eastern Standard Time, and any
adjournments thereof.
When properly executed, this proxy will be voted as designated by the
undersigned. If no choice is specified, the proxy will be voted FOR the
following proposals, which are set forth in the Proxy Statement.
1. ELECTION OF DIRECTORS
_______ For all nominees listed below
(except as marked to the contrary below)
_______ Withhold Authority to vote for all nominees
listed below
John G. Baust
Howard S. Breslow
Rod de Greef
Thomas Girschweiler
(INSTRUCTION: to withhold authority to vote for any individual nominee, strike a
line through or otherwise strike nominee's name in the list above.)
97 of 152
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM
25,000,000 TO 100,000,000.
FOR____ AGAINST____ ABSTAIN____
3. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S 1998 STOCK OPTION PLAN TO
INCREASE THE NUMBER OF SHARES OF COMMON STOCK RESERVED FOR ISSUANCE THEREUNDER
FORM 4,000,000 TO 10,000,000.
FOR____ AGAINST____ ABSTAIN____
4. PROPOSAL TO RATIFY THE APPOINTMENT OF ARONSON & COMPANY TO SERVE AS
INDEPENDENT AUDITORS FOR THE YEAR ENDING DECEMBER 31, 2005.
FOR____ AGAINST____ ABSTAIN____
5. TO VOTE, IN THE DISCRETION OF THE PROXIES, ON SUCH OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS THEREOF.
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
DATED: ,2005
------------------
------------------------------
Signature
-------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY IN THE
ENCLOSED ENVELOPE
Filings - Form 10QSB BIOLIFE SOLUTIONS INC For: Jun 30 (10K)
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 June 30, 2005 Commission file number 0-18170
------------- -------
98 of 152
BIOLIFE SOLUTIONS, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 94-3076866
-------- ----------
(State of Incorporation) (IRS Employer I.D. Number)
171 Front Street
Owego, NY 13827
---------------
(Address of principal executive offices)
Issuer's telephone number, including area code: (607) 687-4487
--------------
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
--- ---
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
--- ---
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 six month periods ended June 30, 2005 and
June 30, 2004.................................................................................... 4
Notes to Financial Statements.................................................................... 5-6
Item 2. Management's Discussion and Analysis......................................................... 7-10
Item 3. Controls and Procedures....................................................................... 11
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K.............................................................. 12-13
Signatures............................................................................................ 14
Certifications
1
99 of 152
PART I
FINANCIAL INFORMATION
ITEM 1. UNAUDITED FINANCIAL STATEMENTS
BIOLIFE SOLUTIONS, INC.
BALANCE SHEET
(UNAUDITED)
JUNE 30,
2005
------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 189,391
Receivables 40,763
Inventories 97,429
Prepaid expenses and other current assets 24,992
------------
TOTAL CURRENT ASSETS 352,575
------------
PROPERTY AND EQUIPMENT
Leasehold improvements 45,783
Furniture and computer equipment 39,760
Manufacturing and other equipment 213,196
------------
TOTAL 298,739
Less: Accumulated depreciation and amortization (189,183)
------------
NET PROPERTY AND EQUIPMENT 109,556
------------
TOTAL ASSETS $ 462,131
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 138,517
Accrued expenses 60,913
------------
TOTAL CURRENT LIABILITIES 199,430
------------
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 (40,412,897)
------------
TOTAL STOCKHOLDERS' EQUITY 262,701
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 462,131
============
See notes to financial statements
2
BIOLIFE SOLUTIONS, INC.
STATEMENTS OF OPERATIONS
100 of 152
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------- -------------------------------
2005 2004 2005 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 94,929 38,266 143,042 81,216
General and administrative 217,393 200,732 419,152 513,170
------------ ------------ ------------ ------------
TOTAL EXPENSES 323,617 383,826 608,876 817,147
------------ ------------ ------------ ------------
OPERATING LOSS (189,525) (237,579) (355,084) (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 (187,483) (233,494) (350,260) (491,341)
(BENEFIT) PROVISION FOR INCOME TAXES -- -- -- --
------------ ------------ ------------ ------------
NET LOSS $ (187,483) $ (233,494) $ (350,260) $ (491,341)
============ ============ ============ ==========
BASIC AND DILUTED NET LOSS PER
COMMON SHARE:
TOTAL BASIC AND DILUTED NET LOSS PER
COMMON SHARE $ (0.02) $ (0.02) $ (0.03) $ (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 2004
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
101 of 152
Net loss $ (350,260) $ (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 (3,109) (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
102 of 152
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 $263,000
and a working capital surplus of approximately $153,000. 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 $59,753 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.
103 of 152
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 2004 2005 2004
--------- --------- --------- ---------
Net Income (Loss) as reported $(187,483) $(233,494) $(350,260) $(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 $(205,288) $(251,299) $(385,870) $(526,951)
========= ========= ========= =========
Basic and diluted net loss per share as reported $ (0.02) $ (0.02) $ (0.03) $ (0.04)
========= ========= ========= =========
Pro forma $ (0.02) $ (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.
F. RECLASSIFICATIONS
Certain June 2004 amounts have been reclassified to conform to the June 2005
presentation. The reclassifications had no material effect on operations.
6
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 and
CryoStor products it is selling today are a significant step forward in meeting
these needs.
The Company's line of preservation solutions is composed of complex synthetic,
aqueous solutions containing, in part, minerals and other elements found in
human blood, which are necessary to maintain fluids and chemical balances
throughout the body at near freezing temperatures. The solutions preserve cells
and tissue in low temperature environments for extended periods after removal of
104 of 152
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), CryoStor(TM) and GelStor
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. The Agreement further calls for VWR
to purchase a minimum of $7.4 million in products from the Company over the
5-year life of the Agreement in order to maintain exclusivity.
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.
7
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
105 of 152
For the quarter ended June 30, 2005, the cost of product sales was $94,929 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 $143,042 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 sample production, 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.
8
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 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
106 of 152
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 $60,209, or
16%, to $323,617, compared to $383,826 for the quarter ended June 30, 2004. The
Company reported a net loss of $(187,483) 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
$208,271, or 25%, to $608,876, compared to $817,147 for the six month period
ended June 30, 2004. The Company reported a net loss of $(350,260) 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 $153,145, 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.
9
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
107 of 152
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 is an owner of Field Afar Properties, LLC.
10
ITEM 3. CONTROLS AND PROCEDURES
At the end of the period covered by this Quarterly Report on Form 10-QSB, the
Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including the CEO/CFO, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation,
the Company's CEO/CFO concluded that the Company's disclosure controls and
procedures are effective in timely alerting him to material information relating
to the Company required to be included in the Company's periodic SEC filings and
are designed to ensure that information required to be disclosed by the Company
in the reports is filed or submitted under the Exchange Act is recorded,
processed, summarized and reported within the time permitted as specified by the
rules and forms.
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The Company does not expect that its disclosure controls and procedures will
prevent all error and all fraud. A control procedure, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control procedure are met. Because of the inherent
limitations in all control procedures, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any,
within the Company have been detected. These inherent limitations include the
realities that judgments in decision-making can be faulty, and that breakdowns
can occur because of simple error or mistake. Additionally, controls can be
circumvented by the individual acts of some persons, by collusion of two or more
people, or by management override of the control. The design of any control
procedure also is based in part upon certain assumptions about the likelihood of
future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions; over time,
controls may become inadequate because of changes in conditions, or the degree
of compliance with the policies or procedures may deteriorate. Because of the
inherent limitations in a cost-effective control procedures, misstatements due
to error or fraud may occur and not be detected. The Company's disclosure and
controls procedures are designed to provide reasonable assurance of achieving
their objectives. The Company's CEO/CFO has concluded that the Company's
disclosure controls and procedures are effective at the reasonable assurance
level.
There were no significant changes in the Company's internal control over
financial reporting during the quarterly period ended June 30, 2005 that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.
11
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements - filed as part of this report
beginning on page 2.
(2) Exhibits
Exhibit
Number Document
------- --------
3.1 Certificate of Incorporation, as amended (1)
3.2 By-Laws, and amendment, dated March 19, 1990, thereto (1)
4.1 Specimen of Common Stock Certificate (1)
10.1 Stock Option Plan, dated July 7, 1988, and amendment, dated
July 19, 1989 (1)
10.2 1998 Stock Option Plan (2)
10.3 Employment Agreement dated July 1, 2002 between the Company
and Robert Van Buskirk (3)
10.4 Employment Agreement dated July 1, 2002 between the Company
and John G. Baust (3)
10.5 Employment Agreement dated November 1, 2002 between the
109 of 152
Company and Alan F. Rich (6)
10.6 Incubator License Agreement, dated the first day of March
1999, between BioLife Technologies, Inc. (name subsequently
changed to BioLife Solutions, Inc.) and The Research
Foundation of the State University of New York, and extensions
thereto, dated February 23, 2000 and February 7, 2001 relating
to the incubator space at the State University of New York at
Binghamton. (4)
10.7 Asset Purchase Agreement dated May 26, 2002 (5)
10.8 Research Agreement dated March 15, 2004 between the Company
and CPSI (7)
10.9 Commercial Lease Agreement dated January 8, 2004 between the
Company and Field Afar Properties, LLC (8)
10.10 Exclusive Private Labeling and Distribution Agreement, dated
May 12, 2005, by and between the Company and VWR
International, Inc.
31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002*
32.1 Certification pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002*
----------
(1) Incorporated by reference to the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 2000.
12
(2) Incorporated by reference to the Company's Definitive Proxy Statement
for the special meeting of stockholders held on December 16, 1998.
(3) Incorporated by reference to the Company's annual report on Form 10-K
for the year ended December 31, 2000.
(4) Incorporated by reference to the Company's quarterly report on Form
10-QSB for the quarter ended September 30, 2002.
(5) Incorporated by reference to the Company's quarterly report on Form 8-k
filed July 10, 2002.
(6) Incorporated by reference to the Company's annual report on From 10-KSB
for the year ended December 31, 2002.
(7) Incorporated by reference to the Company's annual report on From 10-KSB
for the year ended December 31, 2003.
(8) Incorporated by reference to the Company's annual report on From 10-KSB
for the year ended December 31, 2004.
* Filed herewith
(b) Form 8-K, filed May 17, 2005, regarding a material agreement
between the Company and VWR International, Inc.
13
SIGNATURES
110 of 152
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: August 15, 2005 By: /s/ John G. Baust
-------------------------------------
John G. Baust, PhD
President and Chief Executive Officer
(Principal Executive Officer)
14
Exhibit 31.1
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 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 report;
3. Based on my knowledge, the financial statements, and other
financial information included in this 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 report;
4. I am responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Registrant and I have:
a) designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed under my
supervision, 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 report is being prepared; and
b) evaluated the effectiveness of the Registrant's
disclosure controls and procedures and presented in this report my
conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on
such evaluation.
111 of 152
Dated: August 15, 2005
/s/ John G. Baust
---------------------------
John G. Baust, PhD
Chief Executive Officer
and Chief Financial Officer
Exhibit 32.1
CERTIFICATION OF PERIODIC REPORT
I, John G. Baust, Chief Executive Officer and Chief Financial Officer of Biolife
Solutions, Inc. (the "Company"), certify, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
1. the Quarterly Report on Form 10-QSB of the Company for the
quarterly period ended March 31, 2005 (the "Report") fully
complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d));
and
2. the information contained in the Report fairly presents, in
all material respects, the financial condition and results of
operations of the Company.
Dated: August 15, 2005
/s/ John G. Baust
---------------------------
John G. Baust, PhD
Chief Executive Officer and
Chief Financial Officer
A signed original of this written statement required by Section 906 of the
Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained
by the Company and furnished to the Securities and Exchange Commission or its
staff upon request.
Filings - Form PRE 14A BIOLIFE SOLUTIONS INC For: Sep 28 (10K)
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant|X|
Filed by a Party other than the Registrant [ ]
112 of 152
Check the appropriate box:
|X| Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as
permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BIOLIFE SOLUTIONS, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
--------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
--------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
--------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------------------------
(3) Filing Party:
--------------------------------------------------------------------------------
(4) Date Filed:
--------------------------------------------------------------------------------
BIOLIFE SOLUTIONS, INC.
171 Front Street
Owego, NY 13827
--------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 28, 2005
To the Stockholders of
BIOLIFE SOLUTIONS, INC.
Notice is hereby given that the Annual Meeting of Stockholders of BioLife
113 of 152
Solutions, Inc., a Delaware corporation (the "Company"), will be held at the
offices of Breslow & Walker, LLP, 767 Third Avenue, New York, NY 10017, on
September 28, 2005, at 10:00 am, Eastern Standard Time, for the following
purposes:
1. To elect a board of four directors to serve until the next
Annual Meeting of Stockholders and until their successors are
duly elected and qualified.
2. To approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of
common stock from 25,000,000 to 100,000,000.
3. To approve an amendment to the Company's 1998 Stock Option
Plan to increase the number of shares of common stock reserved
for issuance thereunder from 4,000,000 to 10,000,000.
4. To ratify the appointment of Aronson & Company to serve as
independent auditors for the year ending December 31, 2005.
5. To transact such other business as may properly come before
the meeting or any postponements or adjournments thereof.
The Board of Directors has fixed the close of business on August 19, 2005 as the
record date for the determination of stockholders entitled to notice of and to
vote at the Annual Meeting or any adjournments thereof.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO COMPLETE, SIGN, AND DATE
THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IF YOU
ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON IF YOU WISH TO DO SO,
EVEN IF YOU HAVE SIGNED AND RETURNED YOUR PROXY CARD.
By Order of the Board of Directors,
-------------------------------
John G. Baust, President
Owego, New York
August 26, 2005
IT IS IMPORTANT THAT THE ENCLOSED PROXY FORM
BE COMPLETED AND RETURNED PROMPTLY
BIOLIFE SOLUTIONS, INC.
171 FRONT STREET
OWEGO, NY 13827
---------------
PROXY STATEMENT
---------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 28, 2005
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation by the
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Board of Directors of BioLife Solutions, Inc., a Delaware corporation (the
"Company"), of proxies to be voted at the Annual Meeting of Stockholders of the
Company to be held on September 28, 2005 (the "Meeting"), at 10:00 a.m., Eastern
Standard Time, at the offices of Breslow & Walker, LLP, 767 Third Avenue, New
York, NY 10017, and at any adjournments thereof.
A form of proxy is enclosed for use at the Meeting. The proxy may be revoked by
a stockholder at any time before it is voted by execution of a proxy bearing a
later date or by written notice to the Secretary of the Company before the
Meeting, and any stockholder present at the Meeting may revoke his or her proxy
thereat and vote in person if he or she desires. When such proxy is properly
executed and returned, the shares of Common Stock, Series F Preferred Stock, and
Series G Preferred Stock it represents will be voted at the Meeting in
accordance with any instructions noted thereon. If no direction is indicated,
all shares of Common Stock, Series F Preferred Stock, and Series G Preferred
Stock represented by valid proxies received pursuant to this solicitation (and
not revoked prior to exercise) will be voted (i) FOR the election of the
nominees for directors named in this Proxy Statement, (ii) FOR the proposed
amendment to the Certificate of Incorporation to increase the number of
authorized shares of common stock from 25,000,000 to 100,000,000 (the "Common
Stock Increase"), (iii) FOR the proposed amendment to the Company's 1998 Stock
Option Plan to increase the number of shares of Common Stock reserved for
issuance thereunder from 4,000,000 to 10,000,000 (the "Plan Increase"), and (iv)
FOR the ratification of the appointment of Aronson & Company to serve as
independent auditors for the year ending December 31, 2005, and (v) in
accordance with the judgment of the persons named in the proxy as to such other
matters as may properly come before the Meeting.
The cost for soliciting proxies on behalf of the Board of Directors will be
borne by the Company. In addition to solicitation by mail, proxies may be
solicited in person or by telephone, telefax, or cable by personnel of the
Company who will not receive any additional compensation for such solicitation.
The Company may reimburse brokers or other persons holding stock in their names
or the names of their nominees for the expenses of forwarding soliciting
material to their principals and obtaining their proxies. The approximate date
of mailing of this Proxy Statement and accompanying form of proxy is August 26,
2005.
The close of business on August 19, 2005 has been fixed as the record date for
the determination of stockholders entitled to notice of and to vote at the
Meeting. On that date there were 12,413,209 shares of the Company's Common
Stock, par value $.001 per share ("Common Stock"), issued and outstanding, each
of which has one vote on each matter to be presented at the Meeting (the
"Proposals"), 12,000 shares of the Company's Series F Convertible Preferred
Stock, par value $.001 ("Series F Preferred Stock"), issued and outstanding,
each of which has four hundred (400) votes on each Proposal, and 55.125 shares
of the Company's Series G Convertible Preferred Stock, par value $.001 ("Series
G Preferred Stock"), issued and outstanding, each of which has three hundred
twelve thousand five hundred (312,500) votes on each Proposal. The holders of
Common Stock, the holders of Series F Preferred Stock, and the holders of Series
G Preferred Stock will vote together on the proposals as if they held one class
of stock. The holders of stock representing a majority of the votes entitled to
be cast at the Meeting, present in person or by proxy, will constitute a quorum
for the transaction of business at the Meeting and any adjournments thereof.
Election of the Directors requires a plurality of the votes entitled to be cast
by holders of stock represented in person or by proxy at the Meeting. Approval
of the Common Stock Increase Proposal requires the affirmative vote of the
holders of stock representing a majority of the votes entitled to be cast at the
Meeting. Approval of the Plan Increase Proposal and the ratification of the
independent auditors requires the affirmative vote of the holders of stock
representing a majority of shares present in person or represented by proxy at
the Meeting and entitled to vote thereon.
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All votes will be tabulated by the inspector(s) of election appointed for the
Meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions and broker non-votes shall each be
included as shares present and voting for the purpose of determining whether a
quorum is present at the Meeting. Abstentions will be counted toward the
tabulation of votes cast on the Proposals and will have the same effect as
negative votes. Broker non-votes are not counted in determining whether a
Proposal has been approved.
2
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
NOMINEES
Four persons, all of whom are members of the present Board of Directors, are
nominees for election at the Annual Meeting to hold office until the next annual
meeting and until their respective successors are elected and qualified. Unless
authority to vote for any director is withheld in a proxy, it is intended that
each proxy will be voted for the four nominees named below.
It is expected that all nominees will be able and willing to serve as directors.
However, in the event that any nominee is unable or declines to serve as a
director at the time of the Annual Meeting, the proxies will be voted for any
nominee who shall be designated by the present Board of Directors to fill the
vacancy. The Board of Directors has no reason to believe that any of the persons
named will be unable or unwilling to serve as director if elected.
REASON FOR SUBMISSION TO STOCKHOLDERS
This Proposal is being submitted to stockholders to satisfy the requirements of
the Delaware General Corporation Law.
REQUIRED VOTE
Approval of the nominees for election to the Board of Directors will require the
affirmative vote of the holders of stock representing a plurality of the votes
present at the Annual Meeting in person or by proxy and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF
ALL NOMINEES LISTED TO THE BOARD OF DIRECTORS.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
Name Age Present office or Position
---- --- --------------------------
John G. Baust, Ph.D. 62 Director, Chief Executive Officer
Howard S. Breslow 65 Director, Secretary
Roderick de Greef 43 Director
Thomas Girschweiler 47 Director
The following information is submitted concerning the nominees named for
election as directors based upon information received by the Company from such
persons.
3
John G. Baust, Ph.D., has been the President and Chief Executive Officer of the
116 of 152
Company since July 2002. Previously he was Senior Vice President of Cryomedical
Sciences, Inc. ("CMSI"), the Company's predecessor, since January 1995, Chief
Scientific Officer since August 1993, Vice President, Research and Development
from July 1990 to January 1995, and a consultant from April 1990 to July 1990.
Dr. Baust became a director of CMSI on October 13, 2000. Since 1987, Dr. Baust
has also been a Professor and the Director of the Center for Cryobiological
Research at the State University of New York at Binghamton, and since July 1994,
Dr. Baust has also been Adjunct Professor of Surgery, Medical College of
Pennsylvania. From 1984 to 1987, he was a Professor at, and the Director of, the
Institute of Low Temperature Biology at the University of Houston.
Howard S. Breslow has served as a director of the Company since July 1988. He
has been a practicing attorney in New York City for 40 years and is a member of
the law firm of Breslow & Walker, LLP, New York, New York, which firm serves as
general counsel to the Company. Mr. Breslow currently serves as a director of
Excel Technology, Inc., a publicly-held company engaged in the manufacture and
marketing of photonics-based solutions, consisting of laser systems and
electro-optical components, primarily for industrial and scientific
applications, and Lucille Farms, Inc., a company engaged in the manufacture and
marketing of dairy products.
Roderick de Greef has served as a director of the Company since June 19, 2000.
From March 2001 to present, Mr. de Greef has served as Executive Vice President,
Chief Financial Officer and Secretary of Cardiac Sciences, Inc., a public
company traded on NASDAQ, under the ticker "DFIB". Since 1995 Mr. de Greef has
provided corporate finance advisory services to a number of early stage
companies, including the Company, where he was instrumental in securing the
Company's equity capital beginning in June 2000, and advising on merger and
acquisition activity. From 1989 to 1995, Mr. de Greef was Vice President and
Chief Financial Officer of BioAnalogics, Inc. and International BioAnalogics,
Inc., publicly held, development stage medical technology companies located in
Portland, Oregon. From 1986 to 1989, Mr. de Greef was Controller and then Chief
Financial Officer of Brentwood Instruments, Inc., a publicly held cardiology
products distribution company based in Torrance, California. Mr. de Greef has a
B.A. in Economics and International Relations from California State University
at San Francisco and an M.BA. from the University of Oregon.
Thomas Girschweiler joined the Board in 2003. Mr. Girschweiler has been engaged
in corporate financing activities on his own behalf since 1996. From 1981 to
1996 he was an investment banker with Union Bank of Switzerland. Thomas
Girschweiler was graduated at the Swiss Banking School.
DIRECTOR COMPENSATION
The Company has not compensated its directors for their services in such
capacity, except that on May 12, 2005, each of the directors received a ten-year
fully vested non-incentive stock option to purchase 250,000 shares of the
Company's common stock at $0.08 per share.
4
BOARD MEETINGS
The Board of Directors held meetings or acted by unanimous consent on fourteen
(14) occasions during the twelve months ended December 31, 2004. Meetings were
attended by all directors. Although the Company does not have a formal policy
regarding attendance by the Board of Directors at the Company's Annual Meeting
of Stockholders, it strongly encourages directors to attend. Because of
financial constraints, the Company did not hold an Annual Meeting of
Stockholders last year.
BOARD COMMITTEES
AUDIT COMMITTEE. The Board of Directors does not have an audit committee or an
117 of 152
audit committee financial expert. The Company does believe, based on its current
operations, that the failure to have such a committee or expert is material to
the integrity of the financial statements of the Company.
COMPENSATION COMMITTEE. The Board of Directors does not have a compensation
committee. Management compensation for fiscal year 2004 was determined by the
non-employee members of the Board of Directors.
NOMINATING COMMITTEE. The Board of Directors has no standing nominating
committee. The Company believes that obtaining input from all of its directors
in connection with Board nominations enhances the nomination process. The
Company currently does not have a charter with regard to the nomination process.
The nominations of the directors standing for election or re-election at the
Meeting were unanimously recommended for selection by the independent directors
(as defined by NASDAQ rules), and were unanimously approved by the Board of
Directors.
The Company does not have a formal policy concerning stockholder recommendations
of nominees to the Board of Directors. The need for such a policy has not arisen
since, to date, the Company has not received any recommendations from
stockholders requesting that the Board of Directors consider a candidate for
inclusion among the Board's slate of nominees in the Company's proxy statement.
The absence of such a policy does not mean, however, that a recommendation would
not have been considered had one been received. The Company will consider
director candidates recommended by stockholders. Any stockholder desiring to
make such a recommendation should send the recommendation, in writing, to the
Corporate Secretary at the address of the Company set forth on the first page of
this Proxy Statement, no later than the date by which stockholder proposals for
action must be submitted. The recommendation should include the recommended
candidate's biographical data, and should be accompanied by the candidate's
written consent to nomination and to serving as a director, if elected.
The Company's goal is to assemble a Board of Directors that brings to the
Company a variety of perspectives and skills derived from business and
professional experience. The Company does not have any formal rules or policies
regarding minimum qualifications for nominees, but expects that its candidates
be of the highest ethical character, share the values of the Company, have
reputations, both personal and professional, consistent with the image and
reputation of the
5
Company, be highly accomplished in their respective field, and possess the
relevant expertise and experience necessary to assist the Board of Directors and
the Company to increase stockholder value.
The Board of Directors identifies nominees by first evaluating the current
members of the Board of Directors willing to continue in service. Current
members of the Board with skills and experience that are relevant to the
Company's business and who are willing to continue in service are considered for
re-nomination, balancing the value of continuity of service by existing members
of the Board with that of obtaining a new perspective. If any member of the
Board does not wish to continue in service or if the Board of Directors decides
not to re-nominate a member for re-election, the Board of Directors will seek to
identify nominees that possess the characteristics outlined above. Current
members of the Board of Directors are polled for suggestions. Research also may
be performed to identify qualified individuals. To date, the Company has not
engaged third parties to identify, evaluate, or assist in identifying potential
nominees, although the Company reserves the right in the future to retain a
third party search firm, if necessary.
In evaluating director nominees, the Board of Directors may consider the
following factors:
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o the appropriate size and the diversity of the Company's Board of
Directors;
o the needs of the Company with respect to the particular talents and
experience of its directors;
o the knowledge, skills and experience of nominees, including experience
in technology, business, or finance, in light of prevailing business
conditions and the knowledge, skills and experience already possessed
by other members of the Board;
o familiarity with national and international business matters;
o experience with accounting rules and practices; and
o the need to satisfy governance and other standards set by the SEC.
The Board of Directors may also consider such other factors as it may deem to be
in the best interests of the Company and its stockholders.
COMMUNICATING WITH DIRECTORS
Stockholders may contact any of our directors or our Board of Directors as a
group by writing to them c/o BioLife Solutions, Inc., 171 Front Street, Owego,
NY 13827, Att: Dr. John G. Baust. All communications will be received, processed
and forwarded to the directors by the Corporate Secretary. You will receive a
written acknowledgement from the Corporate Secretary upon receipt of your
communication if you include a return address.
6
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company are as follows:
Name Age Present office or Position
---- --- --------------------------
John G. Baust, Ph.D. 62 Chief Executive Officer, President
Officers are appointed by, and hold office at the pleasure of, the Board of
Directors. Officers serve at the discretion of the Board of Directors and are
elected at the annual meeting of the Board of Directors.
7
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the compensation
paid by the Company to its Chief Executive Officer and to each of its executive
officers (other than the Chief Executive Officer) who received salary and bonus
payments in excess of $100,000 during the fiscal year ended December 31, 2004
(collectively the "Named Executive Officers").
Annual Compensation
----------------------------------------------------
119 of 152
Name and Principal Fiscal Other Annual
Positions Year Salary ($) Bonus ($) Compensation ($)
-------------------------------- ------------- -------------- ------------- ------------------
John G. Baust, Ph.D 2004 240,000(1) - -
Chief Executive Office,r 2003 240,000(2) - 7,490 (3)
President, and 2002 202,369 50,000 3,600 (3)
Director
Alan Rich 2004 174,587(4) - 7,200(3)
VP Sales & Marketing 2003 150,000(5) - -
2002 15,000 - -
Long Term Compensation
-------------------------------------------------------------------------
Awards Payouts
-------------------------------- -----------------------------------
Restricted
Name and Principal Stock Options/ LTIP All Other
Positions Award(s) SARs (#) Payouts Compensation
-------------------------------- -------------- -------------- ----------- -------------------
John G. Baust, Ph.D - - - -
Chief Executive Office,r - - - -
President, and - 1,000,000 - -
Director
Alan Rich - - - -
VP Sales & Marketing - 100,000 - -
- - - -
(1) Consists of $176,490 paid compensation and $63,510 accrued salary paid in
2005.
(2) Consists of $170,654 paid compensation, $53,125 paid in 2.125 units of
Series G Preferred Stock, and $16,221 accrued salary paid in 2004.
(3) Represents auto allowance.
(4) Consists of $150,000 paid compensation, $20,248 paid commissions, and
$4,339 accrued commissions paid in 2004. (5) Consists of $103,846 paid
compensation, $12,500 paid in 1.0 units of Series G Preferred Stock, and
$33,654 accrued salary paid in 2004.
OPTION/SAR GRANTS IN YEAR-ENDED DECEMBER 31, 2004
In 2004, the Company issued no options to purchase shares of Common Stock to its
Named Executive Officers.
8
AGGREGATED OPTION/SAR EXERCISES DURING THE 2004 FISCAL YEAR AND THE 2004 FISCAL
YEAR OPTION/SAR VALUES
The following table provides information related to options exercised by each of
the Named Executive Officers during the 2004 fiscal year and the number and
value of options held at December 31, 2004. The Company does not have any
outstanding stock appreciation rights. None of the options were in the money at
December 31, 2004.
Number of Securities Value of Unexercised
Underlying Unexercised in the money
Options/SAR at Fiscal Options/SAR at Fiscal
Year End (#) Year End ($)(1)
120 of 152
------------ ---------------
Shares Acquired Value
Name On Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
------ --------------- ----------- ----------- ------------- ----------- -------------
John G. Baust, Ph.D. - - 1,542,000 1,000,000 - -
Alan F. Rich - - - - - -
--------------------------
(1) The closing price for the Common Stock as reported on the OTC Bulletin
Board on December 31, 2004 was $0.09. Value is calculated on the basis
of the difference between the option exercise price and $0.09
multiplied by the number of shares of Common Stock underlying the
option.
(2) Mr. Rich's employment relationship with the Company ended in February
2005.
EMPLOYMENT AGREEMENTS
The Company has an employment agreement with its President and Chief Executive
Officer, dated July 1, 2002, which was to expire on June 30, 2004, but which was
automatically renewed for a one-year term. The agreement provides for a salary
of $20,000 per month and an incentive bonus based on certain milestones, as
determined by the Board of Directors. The officer also received a $50,000
signing bonus in 2002 and ten-year incentive stock options to purchase 1,000,000
shares of Common Stock, which options vest ratably over five years on the
anniversary date of the grant. The agreement also provides an automobile
allowance of $600 per month.
The Company had an employment agreement with its Vice President, Sales and
Marketing which expired on October 31, 2004. The agreement provided for a salary
of $12,500 per month, an incentive bonus based on certain milestones, as
determined by the Board of Directors, ten-year incentive stock options to
purchase 400,000 shares of Common Stock vesting ratably over four years on the
anniversary date of the grant, and an automobile allowance of $600 per month.
Mr. Rich's employment relationship with the Company ended in February 2005.
Every officer of the Company has executed a Proprietary Information and
Inventions Agreement pursuant to which each agreed, among other things, to keep
the Company's information confidential and assigned all inventions to the
Company, except for certain personal inventions not related to the Company's
work, whether existing or later developed.
9
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Management compensation for fiscal year 2004 was determined by the non-employee
members of the Board. There were no compensation committee interlocks.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Until 2004, the Company conducted its internal research through Small Business
Innovative Research ("SBIR") grants awarded by the National Institutes of
Health. In 2004, the Company elected to not continue to directly engage in the
SBIR grant program. Accordingly, the Company entered into a Research Agreement
with Cell Preservation Services, Inc. ("CPSI") to outsource to CPSI all BioLife
research currently funded through SBIR grants. CPSI is owned by Dr. John M.
Baust, a recognized expert in cell preservation, a former employee of BioLife
and the son of John G. Baust, the CEO of BioLife. Robert Van Buskirk, formerly
Vice President, Business Development of BioLife and the person primarily
121 of 152
responsible for processing applications for SBIR grants for BioLife, also has
left the employ of BioLife and joined CPSI. The Research Agreement, which was
negotiated on an arms length basis and designed to comply with the rules and
regulations applicable to the performance of research with respect to SBIR
grants, establishes a format pursuant to which CPSI will (a) take over the
processing of existing applications for SBIR grants applied for by BioLife
("Current Projects"), (b) apply for additional SBIR grants for future research
projects ("Future Projects"), (c) perform a substantial portion of the principal
work to be done, in terms of (i) time spent, and (ii) research, in connection
with Current Projects and Future Projects (the "Research"), and (d) utilize
BioLife personnel as consultants with respect to such Research. In conjunction
therewith BioLife has granted to CPSI a non-exclusive, royalty free license
(with no right to sublicense) to use BioLife's technology solely for the purpose
of conducting the research in connection with the Current Projects and Future
Projects. Pursuant to the Research Contract, (x) BioLife will, among other
matters, provide CPSI with (i) suitable facilities in which to conduct the
Research, including basic research equipment and office equipment
("Facilities"), and (ii) management services ("Management Services"), and (y)
CPSI will (i) accept assignment of Current Projects, (ii) be responsible for
conducting Research with respect to Current Projects and Future Projects, (iii)
as mutually agreed to by the parties and within the confines of the rules and
regulations applicable to the performance of Research with respect to SBIR
grants, utilize BioLife's personnel as consultants, (iv) provide suitable
experienced personnel, including, without limitation, a principal
investigator/program director, to conduct the Research, (v) comply with all
federal laws, rules and regulations applicable to SBIR grants and file all
necessary forms and reports with the federal agency awarding the SBIR grants,
and (vi) utilize the Facilities and Management Services and pay BioLife fees
with respect thereto. BioLife is to own all right, title and interest in and to
any technology, inventions, designs, ideas, and the like (whether or not
patentable) that emanates from the Current Projects, Future Projects and
Research.
Howard S. Breslow, a director of the Company, is a member of Breslow & Walker,
LLP, general
10
counsel to the Company. Mr. Breslow currently owns 53,600 shares of Common Stock
of the Company and directly or indirectly owns options and warrants to purchase
an aggregate of 2,477,910 additional shares. The Company incurred $80,118 in
legal fees during the year ended December 31, 2004 for services provided by
Breslow & Walker, LLP. At December 31, 2004 accounts payable includes $28,027
due to Breslow & Walker, LLP.
Thomas Girschweiler, a director of the Company, loaned the Company, in the form
of notes, $250,000, $100,000 and $100,000 in March 2002, March 2003 and May
2003, respectively. The notes accrued interest at the rate of 10% per annum. On
March 1, 2004, the Company paid Mr. Girschweiler $515,418, including principal
and accrued interest, in satisfaction of the outstanding notes.
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
COMPENSATION GUIDELINES
The Company is engaged in a highly competitive industry and must attain
high levels of quality and safety in the formulation and production of its
products. To succeed, the Company believes that it must offer executive
compensation that reflects competitive pay practices of other companies and job
responsibility, and enables the Company to attract, retain, and reward
qualified, experienced executives. The Company also believes that any
competitive pay package should be structured, in part, to align management's
interests with the success of the Company by making a portion of compensation
dependent on operating achievements and, to a lesser extent, on stock
122 of 152
performance. The non-employee members of the Board of Directors have determined
that these objectives are best met by offering the Company's executive officers
competitive base salaries, stock options that vest over time, and, where
appropriate, bonuses based on the achievement of milestones, as determined by
the Board of Directors.
CHIEF EXECUTIVE OFFICER COMPENSATION
Based on the criteria described above, the non-employee members of the
Board of Directors ratified the automatic renewal provision of Dr. Baust's
employment contract in 2004. In making the determination, the non-employee
directors considered several factors including the Company's revenues, losses,
and cash-flow and future business prospects. Dr. Baust did not receive a bonus
in 2004.
Howard S. Breslow
Roderick deGreef
Thomas Girschweiler
11
BENEFICIAL OWNERSHIP OF THE COMPANY'S SECURITIES
The following table sets forth, as of August 15, 2005, certain information
regarding the beneficial ownership of Common Stock and Series F Preferred Stock
and Series G Preferred Stock by (i) each stockholder known by the Company to be
the beneficial owner of more than 5% of the outstanding shares thereof; (ii)
each director of the Company; (iii) each Named Executive Officer of the Company;
and (iv) all of the Company's current directors and executive officers as a
group.
Name and Address Common Stock Series F Preferred Series G Preferred
of Beneficial Owner (% of class) (1) (% of class) (% of class)
------------------------------------------------------------------------------------------------------------------------
John G. Baust (Director, Executive Officer)
c/o BioLife Solutions, Inc.
171 Front Street 3,640,525 (22.7%)(2) - 2.125 (3.9%)
Owego, NY 13827
Howard S. Breslow, Esq. (Director)
c/o Breslow & Walker, LLP
767 Third Avenue 2,531,510 (17.0%)(3) - -
New York, NY 10017
Roderick de Greef (Director)
c/o BioLife Solutions, Inc.
171 Front Street 4,514,699 (27.4%)(4) 1,000 (8.3%) 4.0 (7.3%)
Owego, NY 13827
Walter Villiger
Hurdnerstrasse 10
P.O. Box 1474 17,072,314 5,000 (41.7%) 18.0 (32.7%)
CH-8649 Hurden, Switzerland (58.7%)(5)
Thomas Girschweiler (Director)
Wissmannstrasse 15 12,854,278 3,450 (28.8%) 10.0 (18.1%)
8057 Zurich, Switzerland (52.0%)(6)
Karl-Heinz Illenseer
Wissmannstrasse 15 3,910,714 (24.0%)(7) - 6.0 (10.9%)
8057 Zurich, Switzerland
Clariden Bank
123 of 152
Claridenstrasse 26
Postfach 5080 2,520,513 (17.8%)(8) 2,000 (16.7%) -
CH-8022 Zurich, Switzerland
Richard Molinsky
c/o BioLife Solutions, Inc.
171 Front Street 2,583,333 (17.2%)(9) - 4.0 (7.3%)
Owego, NY 13827
Francois Illenseer
Wissmannstrasse 15 2,607,143 - 4.0 (7.3%)
8057 Zurich, Switzerland (17.4%)(10)
Charlotte Illenseer
Wissmannstrasse 15 2,607,143 - 4.0 (7.3%)
8057 Zurich, Switzerland (17.4%)(11)
Robert Van Buskirk 1,095,935 (8.1%)(12) - 1 (1.8%)
c/o CPSI, 2 Court Street
Owego, New York 13827
12
Name and Address Common Stock Series F Preferred Series G Preferred
of Beneficial Owner (% of class) (1) (% of class) (% of class)
------------------------------------------------------------------------------------------------------------------------
John M. Baust 1,085,340(8.0%)(13) - 1 (1.8%)
c/o CPSI, 2 Court Street
Owego, New York 13827
All officers and directors as a group
(four persons) 23,541,012 (67.9%) 4,450 (37.1%) 16.125 (29.3%)
-------------------------------------------------------------
(1) Shares of Common Stock subject to options and warrants currently
exercisable or exercisable within 60 days of July 31, 2005 are deemed
outstanding for computing the number of shares and the percentage of
the outstanding shares held by a person holding such options or
warrants, but are not deemed outstanding for computing the percentage
of any other person. Except as indicated by footnote, and subject to
community property laws where applicable, the Company believes that the
persons named in the table have sole voting and investment power with
respect to all shares shown as beneficially owned by them.
(2) Includes 1,942,000 shares of Common Stock issuable upon the exercise of
outstanding stock options under the Company's 1988 and 1998 Stock
Option Plans, 664,063 shares of Common Stock issuable upon the
conversion of Series G Preferred Stock, 990,618 shares of Common Stock
issuable upon the exercise of outstanding warrants, and 43,844 shares
of Common Stock, 39,844 of which were earned as dividend on Preferred
Stock.
(3) Includes 399,000 shares of Common Stock issuable upon the exercise of
outstanding stock options under the Company's 1988 and 1998 Stock
Option Plans, 2,078,910 shares of Common Stock issuable upon the
exercise of outstanding warrants owned of record by Breslow & Walker,
LLP (1,358,910) and B & W Investments (720,000), both of which are
entities in which Mr. Breslow is a partner, and 53,600 common shares.
(4) Includes 250,000 shares of Common Stock issuable upon the exercise of
outstanding stock options under the Company's 1988 and 1998 Stock
Option Plans, 400,000 shares of Common Stock issuable upon the
conversion of Series F Preferred Stock, 1,250,000 shares of Common
Stock issuable upon the conversion of Series G Preferred Stock,
124 of 152
1,814,000 shares of Common Stock issuable upon the exercise of
outstanding warrants, and 800,699 shares of Common Stock, 367,399 of
which were earned as dividend on Preferred Stock.
(5) Includes 2,000,000 shares of Common Stock issuable upon the conversion
of Series F Preferred Stock, 5,625,000 shares of Common Stock issuable
upon the conversion of Series G Preferred Stock, 7,375,000 shares of
Common Stock issuable upon the exercise of outstanding warrants, and
2,072,314 shares of Common Stock, 1,672,314 of which were earned as
dividend on Preferred Stock.
(6) Includes 250,000 shares of Common Stock issuable upon the exercise of
outstanding stock options under the Company's 1988 and 1998 Stock
Option Plans, 1,380,000 shares of Common Stock issuable upon the
conversion of Series F Preferred Stock, 3,125,000 shares of Common
Stock issuable upon the conversion of Series G Preferred Stock,
6,455,000 shares of Common Stock issuable upon the exercise of
outstanding warrants, and 1,644,278 shares of Common Stock, 1,106,218
of which were earned as dividend on Preferred Stock.
(7) Includes 1,875,000 shares of Common Stock issuable upon the conversion
of Series G Preferred Stock, 1,875,000 shares of Common Stock issuable
upon the exercise of outstanding warrants, and 160,714 shares of Common
Stock earned as dividend on Preferred Stock.
(8) Includes 800,000 shares of Common Stock, 800,000 shares of Common Stock
issuable upon the conversion of Series F Preferred Stock, 400,000
shares of Common Stock issuable upon the exercise of outstanding
warrants, and 520,513 shares of Common Stock earned as dividend on
Preferred Stock.
(9) Includes 1,250,000 shares of Common Stock issuable upon the conversion
of Series G Preferred Stock, 1,250,000 shares of Common Stock issuable
upon the exercise of outstanding warrants, and 83,333 shares of Common
Stock earned as dividend on Preferred Stock.
(10) Includes 1,250,000 shares of Common Stock issuable upon the conversion
of Series G Preferred Stock, 1,250,000 shares of Common Stock issuable
upon the exercise of outstanding warrants, and 107,143 shares of Common
Stock earned as dividend on Preferred Stock.
(11) Includes 1,250,000 shares of Common Stock issuable upon the conversion
of Series G Preferred Stock, 1,250,000 shares of Common Stock issuable
upon the exercise of outstanding warrants, and 107,143 shares of Common
Stock earned as dividend on Preferred Stock.
(12) Includes 275,000 shares of Common Stock issuable upon the exercise of
outstanding stock options under the Company's 1988 and 1998 Stock
Option Plans, 312,500 shares of Common Stock issuable upon the
conversion of Series G Preferred Stock, 489,685 shares of Common Stock
issuable upon the exercise of outstanding warrants, and 18,750 shares
of Common Stock earned as dividend on Preferred Stock.
(13) Includes 250,000 shares of Common Stock issuable upon the exercise of
outstanding stock options under the Company's 1988 and 1998 Stock
Option Plans, 312,500 shares of Common Stock issuable upon the
conversion of Series G Preferred Stock, 504,090 shares of Common Stock
issuable upon the exercise of outstanding warrants, and 18,750 shares
of Common Stock earned as dividend on Preferred Stock.
13
COMPARISON OF CUMULATIVE TOTAL STOCKHOLDER RETURN
125 of 152
The following chart compares the percentage change in the cumulative
total stockholder return on the Common Stock during the period from December 31,
1999 through the year ended December 31, 2004 with the cumulative total return
on the NASDAQ Composite Index and the Company Peer Group. The comparison assumes
$100 was invested in the Common Stock on December 31, 1999, and in each of the
stocks included in the NASDAQ Composite Index and the Company Peer Group.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG BIOLIFE SOLUTIONS, INC.,
NASDAQ MARKET INDEX AND PEER GROUP INDEX
[GRAPHIC OMITTED]
-----------------------------------------------------------------------------------------------------------------------
------------------------------- FISCAL YEAR ENDING ------------------------------
COMPANY/INDEX/MARKET 12/31/1999 12/29/2000 12/31/2001 12/31/2002 12/31/2003 12/31/2
BIOLIFE SOLUTIONS, INC. 100.00 312.50 131.25 75.00 68.75 56.25
CUSTOMER SELECTED STOCK LIST 100.00 177.16 201.11 142.50 212.07 227.24
NASDAQ MARKET INDEX 100.00 62.85 50.10 34.95 52.55 56.97
-----------------------------------------------------------------------------------------------------------------------
14
PROPOSAL NO. 2 - AMEND THE CERTIFICATE OF INCORPORATION TO EFFECT THE COMMON
STOCK INCREASE
REASON FOR SUBMISSION TO STOCKHOLDERS
The Board of Directors unanimously adopted a resolution proposing that Article
Four of the Company's Certificate of Incorporation be amended to increase the
number of shares of Common Stock that the Company is authorized to issue from
25,000,000 to 100,000,000 shares. This proposal is being submitted to
stockholders to satisfy the requirements of the Delaware General Corporation
Law.
REASONS FOR INCREASING THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
Presently, the charter authorizes the issuance of 25,000,000 shares of Common
Stock, of which 12,413,209 shares of Common Stock are issued and outstanding.
Also, there are outstanding (i) shares of Series F Preferred Stock convertible
into 4,800,000 shares of Common Stock, (ii) shares of Series G Preferred Stock
convertible into 17,226,563 shares of Common Stock, (iii) warrants and options
exercisable into an aggregate of 30,777,858 shares of Common Stock, and (iv)
4,365,432 shares of Common Stock earned as dividends on Preferred Stock.
Assuming the conversion/exercise of all outstanding Series F Preferred Stock,
Series G Preferred Stock, and warrants and options, there would be 69,583,062
shares of Common Stock issued and outstanding. Thus, there are not a sufficient
number of authorized shares of Common Stock available for the Company to meet
its outstanding commitments as well as to provide the Company with flexibility
in connection with various corporate purposes, including possible future
financings and stock option grants. In connection with the issuance of various
securities convertible/exercisable into shares of Common Stock, the Company
undertook to amend its certificate of incorporation to increase the number of
authorized shares of Common Stock so as to meet its commitments upon the
conversion/exercise of such securities (the "Committed Shares").
EFFECTS OF THE COMMON STOCK INCREASE
126 of 152
The Common Stock Increase will not alter the par value of the Common Stock or
the rights of stockholders. It will allow the Company to meet its commitments to
those security holders who are entitled to the Committed Shares. To the extent
the Company issued shares of common stock over and above the amount required to
satisfy its commitments to current security holders, such issuances would reduce
the proportionate interests in the Company held by current stockholders as well
as those who receive the Committed Shares.
NO RIGHT OF APPRAISAL
Under the Delaware General Corporation Law, dissenting stockholders are not
entitled to appraisal rights with respect to the Common Stock Increase, and the
Company will not provide stockholders with any such right.
15
METHOD OF EFFECTING THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION
The Common Stock Increase shall become effective, automatically and without
further action by the stockholders, upon the filing with the Delaware Secretary
of State of an appropriate Certificate of Amendment to the Certificate of
Incorporation. The complete text of such amendment is set forth in Exhibit A
hereto.
VOTING REQUIREMENT
Approval of the Common Stock Increase requires the affirmative vote of the
holders of stock representing a majority of the votes entitled to be cast at the
Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE PROPOSED
AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO EFFECT THE COMMON STOCK
INCREASE.
16
PROPOSAL NO. 3 - AMEND THE 1998 STOCK OPTION PLAN
REASONS FOR THE PLAN INCREASE
The Company's 1998 Stock Option Plan (the "Plan") was adopted by the Board of
Directors in August 1998 and approved by stockholders at a special meeting in
December 1998. Currently, the Plan allows for a maximum of 4,000,000 shares of
Common Stock (subject to adjustment to cover stock splits, stock dividends,
recapitalizations, and other capital adjustments) to be issued pursuant to the
Plan. In contemplation of increasing the number of shares of Common Stock
covered by the Plan, and subject to approval of the Plan Increase by the
stockholders of the Company, options were granted to employees and directors of
and consultants to the Company over and above those currently authorized by the
Plan. In order to honor the commitments made in connection with such grants, and
to provide the Company with sufficient flexibility for future grants, the Board
of Directors amended the Plan, subject to the approval of the Company's
stockholders, to increase to 10,000,000 the maximum number of shares of Common
Stock that may be issued pursuant to the Plan (subject to adjustment to cover
stock splits, stock dividends, recapitalizations, and other capital
adjustments). The proposal to approve the Plan Increase is now being submitted
to stockholders for their approval.
A summary of the Plan as proposed to be amended is set forth below. The summary
does not purport to be complete and is qualified in its entirety by the text of
the Plan as proposed to be amended, a copy of which is attached to this Proxy
Statement as Annex B.
127 of 152
SUMMARY OF PLAN
The Plan covers 10,000,000 shares of Common Stock (subject to adjustment to
cover stock splits, stock dividends, recapitalizations, and other capital
adjustments). The options granted under the Plan are designated as incentive
stock options or non-incentive stock options by the Board of Directors or a
committee thereof, which also have discretion as to the persons to be granted
options, the number of shares subject to the options, and the terms of the
option agreements. Only employees (including officers) of the Company and its
affiliates may be granted incentive stock options. The options to be granted
under the Plan and designated as incentive stock options are intended to receive
incentive stock option tax treatment pursuant to Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
The Plan provides that all options thereunder shall be exercisable during a
period of no more than ten years from the date of grant (five years for options
granted to holders who own more than 10% of the total combined voting power of
all classes of stock of the Company), depending upon the specific stock option
agreement, and that the option exercise price for incentive stock options shall
be at least equal to 100% of the fair market value of the Common Stock at the
time of grant (110% for options granted to holders who own more than 10% of the
total combined voting power of all classes of stock of the Company). In
addition, the aggregate fair market value (determined on the date of grant) of
the Common Stock with respect to which incentive stock options are exercisable
for the first time by an employee during any calendar year shall not exceed
$100,000.
The Plan permits optionees whose employment is terminated without cause and
other than by
17
reason of death, disability or retirement at age 65, to exercise their options
prior to the expiration thereof or within three months, or such longer period as
the Board of Directors (or a committee thereof) may decide on a case by case
basis, of termination, whichever is earlier, but only to the extent the holder
had the right to exercise such options on the date of termination. If the
employment of an optionee is terminated for cause and other than by reason of
death, disability or retirement at age 65, any options granted to the optionee
will terminate automatically. If employment is terminated by reason of
disability or retirement at age 65, the optionee may exercise his options at any
time prior to the expiration thereof or within one year from the date of
termination (three months from the date of termination in the event of
termination by reason of retirement at age 65), whichever is earlier, but only
to the extent the holder had the right to exercise such options on the date of
termination. If employment is terminated by death, the person or persons to whom
the optionee's rights under the option are transferred by will or the laws of
descent and distribution have similar rights of exercise within three months
after such death (but not after the expiration of the option). Options are not
transferable otherwise than by will or the laws of descent and distribution, or
pursuant to a qualified domestic relations order as defined under the Code or
Title I of the Employee Retirement Income Security Act or the rules thereunder,
and are exercisable during the optionee's lifetime only by the optionee. Shares
subject to options which expire or terminate may be the subject of future
options. The Plan terminates on August 30, 2008.
If shares are issued to the holder of a non-incentive option under the Plan (a)
no income will be recognized by the holder at the time of grant of the option;
(b) except as stated below, upon exercise of the option, the holder will
recognize taxable ordinary income in an amount equal to the excess of the fair
market value of the shares over the option price; (c) if the holder exercising
the option is restricted from selling the shares so acquired because the holder
is an officer or director of the Company and would be subject to liability under
Section 16(b) of the Exchange Act, then, unless the holder makes an election to
128 of 152
be taxed under the rule of clause (b) above, the holder will recognize taxable
ordinary income, at the time such Section 16(b) restriction terminates, equal to
the excess of the fair market value of the shares at that time over the option
price, and any dividends he or she receives on the shares before that time will
be taxable to him or her as income; (d) the Company will be entitled to a
deduction at the same time and in the same amount as the holder has income under
clause (b) or (c); and (e) upon a sale of shares so acquired, the holder may
have additional short-term or long-term capital gain or loss.
If shares are issued to the holder of an incentive stock option under the Plan,
(a) no income will be recognized by such holder at the time of the grant of the
option or the transfer of shares to the holder pursuant to his or her exercise
of the option; (b) the difference between the option price and the fair market
value of the shares at the time of exercise will be treated as an item of tax
preference to the holder; (c) no deduction will be allowed to the Company for
federal income tax purposes in connection with the grant or exercise of the
option; and (d) upon a sale or exchange of the shares after the later of (i) one
year from the date of transfer of the shares to the original holder, or (ii) two
years from the date of grant of the option, any amount realized by the holder in
excess of the option price will be taxed to the holder as a long-term capital
gain, and any loss sustained by the holder will be a long-term capital loss. If
the shares are disposed of before the holding period requirements described in
the preceding sentence are satisfied, (aa) the holder will recognize taxable
ordinary income in the year of disposition in an amount determined under the
rules of the Code; (bb) the Company will be entitled to a deduction for such
year in the amount
18
of the ordinary income so recognized; (cc) the holder may have additional
long-term or short-term capital gain or loss; and (dd) the tax preference
provision might not be applicable.
The Plan provides for the cashless payment of the exercise price of options
granted under the Plan by (a) delivery to the Company of shares of Common Stock
having a fair market value equal to such purchase price, (b) irrevocable
instructions to a broker to sell shares of Common Stock to be issued upon
exercise of the option, followed by delivery to the Company of the amount of
sale proceeds necessary to pay such purchase price, and delivery of the
remaining cash proceeds less commissions and brokerage fees to the optionee or
delivery of the remaining shares of Common Stock to the optionee, or (c) by any
combination of the methods of payment described in (a) and (b) above.
The Plan also provides that in the event any distribution consists of securities
(including common stock) held by the Company in any subsidiary or any other
company, then (i) with respect to securities of a subsidiary, each holder of
options under the Plan on the record date for such distribution shall be
entitled to receive options to purchase such number of such securities as is
equal to the number of securities such holder would have received had he
exercised all of his options under the Plan (vested and unvested) and owned the
common stock in the Company underlying such options, which options in the
subsidiary shall be vested or shall vest to the same extent as such holder's
options in the Company, and, generally, shall contain such provisions as to put
such holder in the same equitable position such holder was in prior to the
distribution, including an allocation of the exercise price for the options
issued under this Plan to both such option and the options in the subsidiary,
and (ii) with respect to securities of another company, each holder of options
under the Plan on the record date for such distribution shall be entitled to
receive such number of securities as such holder would have received had he
exercised all of his options under the Plan (vested and unvested) and owned the
common stock in the Company underlying such options, which securities shall be
vested or shall vest to the same extent as such holder's options in the Company.
To the extent such securities do not vest in the holder, they shall be retained
by the Company.
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If the shares of Common Stock outstanding are changed in number, kind, or class
by reason of a stock split, combination, merger, consolidation, reorganization,
reclassification, exchange, or any capital adjustment, including a stock
dividend, or if any distribution is made to stockholders other than a cash
dividend and the Board of Directors (or Committee) deems it appropriate to make
an adjustment, then (i) the aggregate number and class of shares that may be
issued under the Plan, (ii) the number and class of shares which are issuable
under outstanding options, and (iii) the purchase price to be paid per share
under outstanding options, shall be adjusted in a proportionate and equitable
manner by the Board of Directors.
In the event of a liquidation of the Company, or a merger, reorganization, or
consolidation of the Company with any other corporation in which the Company is
not the surviving corporation or the Company becomes a wholly-owned subsidiary
of another corporation, any unexercised options theretofore granted under the
Plan shall be deemed canceled unless the surviving corporation in any such
merger, reorganization, or consolidation elects to assume the options under the
Plan or to issue substitute options in place thereof; provided, however, if such
options would otherwise be canceled in accordance with the foregoing, the
optionee shall have the right,
19
exercisable during a ten-day period immediately prior to such liquidation,
merger, or consolidation, to exercise the option, in whole or in part. The
granting of an option pursuant to the Plan shall not affect in any way the right
or power of the Company to make adjustments, reorganizations, reclassifications,
or changes of its capital or business structure or to merge, consolidate,
dissolve, liquidate, or sell or transfer all or any part of its business or
assets.
NEW PLAN BENEFITS
For each of the Named Executive Officers and the various indicated groups, the
table below shows the benefits that will be allocated to each of the following
under the plan being acted upon.
NUMBER OF OPTION DOLLAR VALUE
NAME AND PRINCIPAL POSITION SHARES (1)
-------------------------------------------------- --------------------- -----------------------
John G. Baust
President and Chief Executive Officer 1,000,000 $80,000
Executive group (1 persons) 1,000,000 $80,000
Non-executive director group (3 persons) 750,000 $60,000
Non-executive officer employee group
(7 persons) 910,000 $72,800
-------------------------------------
(1) Stock options exercisable at $.08 per share
The closing price per share for the Common Stock as reported on the OTC Bulletin
Board on July 25, 2005 was $0.16.
20
EQUITY COMPENSATION PLAN INFORMATION
Number of
Number of securities Weighted average exercise securities available for
to be issued upon exercise price of outstanding future issuance under equity
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of outstanding options, warrants compensation plans (excluding
Plan Category options, warrants and rights and rights securities reflected in column (a)
------------- ---------------------------- ---------- ----------------------------------
(a) (b) (c)
Equity compensation plan
approved by shareholders 2,906,000 $0.52 -0-
Equity compensation plan not
approved by shareholders 29,926,858 $0.19 4,449,000
---------- ----- ---------
Total 32,832,858 $0.22 4,449,000
========== ===== =========
VOTING REQUIREMENT
The Plan Increase requires the affirmative vote of the holders of stock
representing a majority of shares present in person or represented by proxy at
the Meeting and entitled to vote thereon.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE PROPOSED
AMENDMENT TO THE PLAN TO EFFECT THE PLAN INCREASE.
21
PROPOSAL NO. 4 - RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected the accounting firm of Aronson & Company to
serve as the Company's independent auditors for the year ending December 31,
2005 and proposes the ratification of such decision.
Aronson & Company has audited the Company's financial statements for the year
ended December 31, 2004. Representatives of Aronson & Company are expected to be
present at the Annual Meeting, with the opportunity to make a statement if they
desire to do so, and to respond to appropriate questions.
During 2004, Aronson & Company acted as the independent auditors for the
Company. The following table sets forth the aggregate fees billed by Aronson &
Company for audit and review services rendered in connection with the financial
statements and reports for the years ending December 31, 2004 and December 31,
2003 and for other services rendered during the years ending December 31, 2004
and December 31, 2003 on behalf of the Company:
2004 2003
---- ----
Audit Fees $49,275 $64,317
Audit-related fees -0- -0-
Tax fees 6,775 17,163
All other fees 475 -0-
-------- -------
Total $56,525 $81,480
The Board of Directors pre-approves all audit and non-audit services to be
performed by the Company's independent auditors.
VOTING REQUIREMENT
Ratification of the appointment of the independent auditors requires the
affirmative vote of the holders of stock representing a majority of shares
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present in person or represented by proxy at the Meeting and entitled to vote
thereon.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT AUDITORS.
22
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
John G. Baust, the Chief Executive Officer of the Company, and Messrs. Breslow,
deGreef and Girschweiler, directors of the Company, have an interest in the
approval of the Plan Increase. On May 12, 2005, the Board of Directors of the
Company granted to (a) Dr. Baust ten-year options to purchase 1,000,000 shares
of Common Stock at a price of $.08 per share, which options shall vest to the
extent of 250,000 shares on the first day of the month following the first
anniversary date of the grant (the "First Vesting Date") and 20,833 on the first
day of each of the next 36 months following the First Vesting Date, and (b) to
each of the aforesaid directors a ten-year, fully vested non-incentive stock
option to purchase 250,000 shares of Common Stock at a price of $0.08 per share;
provided, however, that such stock options may not be exercised until such time
as (x) the amendment to the Company's Stock Option Plan, approved by the
Company's Board of Directors on October 12, 2004, increasing the number of
shares of Common Stock covered by Plan from 4,000,000 shares to 7,500,000 shares
(subsequently increased to 10,000,000 shares) is approved by the Company's
stockholders, which approval must take place on or before October 12, 2005 (and
in the event such approval does not take place on or before October 12, 2005,
the options are rescinded), and (y) the certificate of incorporation of the
Company is amended to increase the authorized number of shares of common stock
to a number that is sufficient to accommodate the exercise of all options
granted to them.
STOCKHOLDER PROPOSALS
Stockholder proposals for action at the Company's Annual Meeting of Stockholders
for the fiscal year ending December 31, 2004 must be submitted in writing to the
Company at its address set forth on the first page of this Proxy Statement and
received by the Company no later than June 1, 2005 in order that they may be
considered for inclusion in the proxy statement and form of proxy relating to
that meeting. Stockholders who intend to present a proposal at the Company's
Annual Meeting of Stockholders for the year ending December 31, 2004 without
inclusion of such proposal in the Company's proxy materials are required to
provide notice of such proposal to the Company no later than August 1, 2005. The
Company reserves the right to reject, rule out of order, or take other
appropriate action with respect to any proposal that does not comply with these
and other applicable requirements.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
The Company's officers, directors and beneficial owners of more than 10% of any
class of its equity securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934 ("Reporting Persons") are required under that
Act to file reports of ownership and changes in beneficial ownership of the
Company's equity securities with the Securities and Exchange Commission. Copies
of those reports must also be furnished to the Company. Based solely on a review
of the copies of reports furnished to the Company pursuant to that Act, the
Company believes that during the fiscal year ended December 31, 2004, all filing
requirements applicable to Reporting Persons were complied with.
23
OTHER MATTERS
The Board of Directors of the Company does not know of any other matters that
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are to be presented for action at the Meeting. Should any other matters properly
come before the Meeting or any adjournments thereof, the persons named in the
enclosed proxy will have the discretionary authority to vote all proxies
received with respect to such matters in accordance with their judgment.
This Proxy Statement is sent by order of the Board of Directors of the Company.
-----------------------------
John G. Baust
President and
Chief Executive Officer
Owego, New York
August 26, 2005
STOCKHOLDERS ARE URGED TO SPECIFY THEIR CHOICES AND DATE, SIGN, AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. A PROMPT RESPONSE IS HELPFUL AND YOUR
COOPERATION WILL BE APPRECIATED.
24
ANNEX A
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
BIOLIFE SOLUTIONS, INC.
(Pursuant to Section 242 of the General Corporation Law of the
State of Delaware)
BioLife Solutions, Inc. (the "Corporation"), a corporation organized and
existing under the General Corporation Law of the State of Delaware (the "GCL"),
certifies as follows:
1. The name of the Corporation is BioLife Solutions, Inc.
2. The date of filing of the Corporation's certificate of incorporation (the
"Certificate of Incorporation") with the Secretary of State of the State of
Delaware was November 5, 1987.
3. Subdivision (a) of Article Fourth of the Certificate of Incorporation is
hereby amended so that it shall now read as follows:
"FOURTH: The aggregate number of shares of stock which the Corporation
shall have the authority to issue shall be:
One hundred million (100,000,000) shares of common stock, each
having a par value of $.001 (the "Common Stock"), and one million
(1,000,000) shares of preferred stock, each having a par value of $.001
(the "Preferred Stock"). The Board of Directors, in its sole discretion,
shall have full and complete authority, by resolution, from time to time,
to establish one or more series or classes and to issue shares of
Preferred Stock, and to fix, determine and vary the voting rights,
designations, preferences, restrictions, qualifications, privileges,
limitation, options, conversion rights and other special rights of each
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series or class of Preferred Stock, including, but not limited to,
dividend rates and manner of payment, preferential amounts payable upon
voluntary or involuntary liquidation, voting rights, conversion rights,
redemption prices, terms and conditions, and sinking fund and stock
purchase prices, terms and conditions."
4. This Certificate of Amendment to the Certificate of Incorporation was
authorized by the affirmative vote of the holders of a majority of the
outstanding shares entitled to vote thereon at a meeting of stockholders
pursuant to Sections 222 and 242 of the GCL.
IN WITNESS WHEREOF, I hereunto sign my name and affirm that the statements
made herein are true under penalties of perjury this ____ day of
_________________, 2005.
BIOLIFE SOLUTIONS, INC.
By:
-----------------------------
John G. Baust, President and
Chief Executive Officer
2
ANNEX B
BIOLIFE SOLUTIONS, INC.
1998 STOCK OPTION PLAN
(as amended May 10, 2001)
1. PURPOSE OF PLAN. The purpose of this 1998 Stock Option Plan (the "Plan")
is to further the growth and development of BioLife Solutions, Inc. (the
"Company") by encouraging and enabling employees, officers, and directors of,
and consultants and advisors to, the Company to obtain a proprietary interest in
the Company through the ownership of stock (thereby providing such persons with
an added incentive to continue in the employ or service of the Company and to
stimulate their efforts in promoting the growth, efficiency, and profitability
of the Company), and affording the Company a means of attracting to its service
persons of outstanding quality.
2. SHARES OF STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section
12 hereof, an aggregate of 10,000,000 shares of the common stock, par value
$.001 per share, of the Company ("Common Stock") shall be reserved for issuance
upon the exercise of options which may be granted from time to time in
accordance with the Plan. As the Board of Directors of the Company ("Board of
Directors") shall from time to time determine, such shares may be, in whole or
in part, authorized but unissued shares or issued shares which have been
reacquired by the Company. If, for any reason, an option shall lapse, expire, or
terminate without having been exercised in full, the unpurchased shares
underlying such option shall (unless the Plan shall have been terminated) again
be available for issuance pursuant to the Plan.
3. ADMINISTRATION.
(a) The Board of Directors shall administer the Plan and, subject to the
provisions of the Plan, shall have authority to determine and designate from
time to time those persons eligible for a grant of options under the Plan, those
persons to whom options are to be granted, the purchase price of the shares
covered by each option, the time or times at which options shall be granted, and
the manner in which said options are exercisable. In making such determination,
the Board of Directors may take into account the nature of the services rendered
by the respective persons, their present and potential contributions to the
134 of 152
Company's success, and such other factors as the Board of Directors in its sole
discretion shall deem relevant. Subject to the express provisions of the Plan,
the Board of Directors also shall have authority to interpret the Plan, to
prescribe, amend, and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of the instruments by which options shall be
evidenced (which shall not be inconsistent with the terms of the Plan), and to
make all other determinations necessary or advisable for the administration of
the Plan, all of which determinations shall be final, binding, and conclusive.
(b) The Board of Directors may, at its discretion, in accordance with the
provisions of the Company's By-Laws, appoint from among its members a Stock
Option or Compensation Committee (the "Committee"). The Committee shall be
composed of two or more directors and shall have and may exercise any and all of
the powers relating to the administration of the Plan and
the grant of options hereunder as are set forth above in Section 3(a), as the
Board of Directors shall confer and delegate. The Board of Directors shall have
the power at any time to fill vacancies in, to change the membership of, or to
discharge, the Committee. The Committee shall select one of its members as its
Chairman and shall hold its meetings at such time and at such places as it shall
deem advisable. A majority of the Committee shall constitute a quorum and such
majority shall determine its action. The Committee shall keep minutes of its
proceedings and shall report the same to the Board of Directors at the meeting
next succeeding. No director or member of the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
option granted thereunder.
4. PERSONS TO WHOM SHARES MAY BE GRANTED.
(a) Options may be granted to persons who are, at the time of the grant,
employees (including part-time employees), officers, and directors of, or
consultants or advisors to, the Company or any subsidiary corporation (as
defined in Section 425 of the Internal Revenue Code of 1986, as amended (the
"Code"), a "Subsidiary") as the Board of Directors (or Committee) shall select
from time to time from among those nominated by the Board of Directors (or
Committee). For the purposes of the Plan, options only may be granted to those
consultants and advisors who shall render bona fide services to the Company and
such services must not be in connection with the offer or sale of securities in
a capital raising transaction. Subject to the provisions hereinafter set forth,
options granted under the Plan shall be designated either (i) "Incentive Stock
Options" (which term, as used herein, shall mean options intended to be
"incentive stock options" within the meaning of Section 422 of the Code) or (ii)
"Non-Incentive Stock Options" (which term, as used herein, shall mean options
not intended to be incentive stock options" within the meaning of Section 422 of
the Code). Each option granted to a person who is solely a director of, or
consultant or advisor to, the Company or a Subsidiary on the date of the grant
shall be designated a Non-Incentive Stock Option.
(b) The Board of Directors (or Committee) may grant, at any time, new
options to a person who has previously received options, whether such prior
options are still outstanding, have previously been exercised in whole or in
part, have expired, or are canceled in connection with the issuance of new
options. The purchase price of the new options may be established by the Board
of Directors (or Committee) without regard to the existing option price.
5. OPTION PRICE.
(a) The purchase price of the Common Stock underlying each option shall
be determined by the Board of Directors (or Committee), which determination
shall be final, binding, and conclusive; provided, however, in no event shall
the purchase price of Incentive Stock Options be less than 100% (110% in the
case of optionees who own more than 10% of the total combined voting power of
all classes of stock of the Company) of the fair market value of the Common
135 of 152
Stock on the date the option is granted. In determining such fair market value,
the Board of Directors (or Committee) shall consider (i) the last sale price of
the Common Stock on the date on which the option is granted or, if no such
reported sale takes place on such day, the last reported bid price on such day,
on NASDAQ or on the principal national securities exchange on which the Common
2
Stock is admitted to trading or listed, or (ii) if not listed or admitted to
trading on NASDAQ or a national securities exchange, the closing bid price as
quoted by the National Quotation Bureau or a recognized dealer in the Common
Stock on the date of grant. If the Common Stock is not publicly traded at the
time an option is granted, the Board of Directors (or Committee) shall deem fair
market value to be the fair value of the Common Stock after taking into account
appropriate factors which may be relevant under applicable federal tax laws and
Internal Revenue rules and regulations. For purposes of the Plan, the date of
grant of an option shall be the date specified by the Board of Directors (or
Committee) at the time it grants such option; provided, however, such date shall
not be prior to the date on which the Board of Directors (or Committee) acts to
approve the grant.
(b) The aggregate fair market value (determined at the time the Incentive
Stock Options are granted) of the Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by an employee during any
calendar year shall not exceed $100,000. Non-Incentive Stock Options shall not
be subject to the limitations of this paragraph 5(b).
6. EXERCISE OF OPTIONS.
(a) The number of shares which are issued pursuant to the exercise of an
option shall be charged against the maximum limitations on shares set forth in
Section 2 hereof.
(b) The exercise of an option shall be made contingent upon receipt by
the Company from the holder thereof of (i) if deemed necessary by the Company, a
written representation and acknowledgement that (1) at the time of such exercise
it is the holder's then present intention to acquire the option shares for
investment and not with a view to distribution or resale thereof, (2) the holder
knows that the Company is not obligated to register the option shares and that
the option shares may have to be held indefinitely unless an exemption from the
registration requirements of the Securities Act of 1933, as amended (the "Act"),
is available or the Company has registered the shares underlying the options,
and (3) the Company may place a legend on the certificate(s) evidencing the
option shares reflecting the fact that they were acquired for investment and
cannot be sold or transferred unless registered under the Act, and (ii) payment
in full of the purchase price of the shares being purchased. Payment may be made
in cash; by certified check payable to the order of the Company in the amount of
such purchase price; by delivery to the Company of shares of Common Stock having
a fair market value equal to such purchase price; by irrevocable instructions to
a broker to sell shares of Common Stock to be issued upon exercise of the option
and to deliver to the Company the amount of sale proceeds necessary to pay such
purchase price and to deliver the remaining cash proceeds, less commissions and
brokerage fees, to the optionee; or by any combination of such methods of
payment.
7. TERM OF OPTIONS. The period during which each option granted hereunder
shall be exercisable shall be determined by the Board of Directors (or
Committee); provided, however, no option shall be exercisable for a period
exceeding ten (10) years from the date such option is granted.
8. NON-TRANSFERABILITY OF OPTIONS. No option granted pursuant to the Plan
shall be subject to
3
136 of 152
anticipation, sale, assignment, pledge, encumbrance, or charge, or shall be
otherwise transferable except by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order (as defined by the Code or
Title I of the Employee Retirement Income Security Act or the rules thereunder),
and an option shall be exercisable during the lifetime of the holder thereof
only by such holder.
9. TERMINATION OF SERVICES. If an employee, officer, or director to whom an
option has been granted under the Plan shall cease to be an employee, officer,
or director of the Company or a Subsidiary by reason of a termination of such
relationship without cause and other than by reason of death or disability, such
holder may exercise such option at any time prior to the expiration date of the
options or within three months (or such longer period as the Board of Directors
(or Committee) may decide on a case by case basis) after the date of
termination, whichever is earlier, but only to the extent the holder had the
right to exercise such option on the date of termination. If an employee,
officer, or director to whom an option has been granted under the Plan shall
cease to be an employee, officer, or director of the Company or a Subsidiary by
reason of a termination of such relationship for cause and other than by reason
of death or disability, such options shall terminate, lapse, and expire
forthwith and automatically. So long as the holder of an option shall continue
to be in the employ, or continue to be a director, of the Company or one or more
of its Subsidiaries, such holder's option shall not be affected by any change of
duties or position. Absence on leave approved by the employing corporation shall
not be considered an interruption of employment for any purpose under the Plan.
The granting of an option in any one year shall not give the holder of the
option any rights to similar grants in future years or any right to be retained
in the employ or service of the Company or any of its Subsidiaries or interfere
in any way with the right of the Company or any such Subsidiary to terminate
such holder's employment or services at any time. Notwithstanding the foregoing,
no option may be exercised after ten years from the date of its grant.
10. DISABILITY OF HOLDER OF OPTION. If any employee, officer, or director to
whom an option has been granted under the Plan shall cease to be an employee,
officer, or director of the Company or a Subsidiary by reason of disability,
such holder may exercise such option at any time prior to the expiration date of
the option or within one year after the date of termination for such reason,
whichever is earlier, but only to the extent the holder had the right to
exercise such option on the date of termination. Notwithstanding the foregoing,
no option may be exercised after ten years from the date of its grant. For the
purposes of the Plan, "disability" shall mean "permanent and total disability"
as defined in Section 22(e)(3) of the Code.
11. DEATH OF HOLDER OF OPTION. If any employee, officer, or director to whom
an option has been granted under the Plan shall cease to be an employee,
officer, or director of the Company or a Subsidiary by reason of death, or such
holder of an option shall die within three months after termination, or in the
case of the death of an advisor or consultant to whom an option has been granted
under the Plan, the option may be exercised by the person or persons to whom the
optionee's rights under the option are transferred by will or by the laws of
descent and distribution at any time prior to the expiration date of the option
or, in the case of an employee, officer, or director, within three months from
the date of death, whichever is earlier, but only to the extent the holder of
the option had the right to exercise such option on the date of such
termination. Notwithstanding the foregoing, no option may be exercised after ten
years from the date of its grant.
4
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
(a) If the shares of Common Stock outstanding are changed in number,
kind, or class by reason of a stock split, combination, merger, consolidation,
137 of 152
reorganization, reclassification, exchange, or any capital adjustment, including
a stock dividend, or if any distribution is made to stockholders other than a
cash dividend and the Board of Directors (or Committee) deems it appropriate to
make an adjustment, then (i) the aggregate number and class of shares that may
be issued or transferred pursuant to Section 2, (ii) the number and class of
shares which are issuable under outstanding options, and (iii) the purchase
price to be paid per share under outstanding options, shall be adjusted as
hereinafter provided. In the event any distribution consists of common stock
held by the Company in any subsidiary, then each holder of options under this
Plan on the record date for such distribution shall be entitled to receive
options to purchase such number of shares of such common stock as is equal to
the number of shares of common stock such holder would have received had such
holder exercised all of such holder's options under this Plan (vested and
unvested) and owned the common stock in the Company underlying such options,
which options in the subsidiary shall be vested or shall vest to the same extent
as such holder's options in the Company, and, generally, shall contain such
provisions as to put such holder in the same equitable position such holder was
in prior to the distribution, including an allocation of the exercise price for
the options issued under this Plan to both such options and the options in the
subsidiary.
(b) Adjustments under this Section 12 shall be made in a proportionate
and equitable manner by the Board of Directors (or Committee), whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding, and conclusive. In the event that a fraction of a share
results from the foregoing adjustment, said fraction shall be eliminated and the
price per share of the remaining shares subject to the option adjusted
accordingly.
(c) In the event of a liquidation of the Company, or a merger,
reorganization, or consolidation of the Company with any other corporation in
which the Company is not the surviving corporation or the Company becomes a
wholly-owned subsidiary of another corporation, any unexercised options
theretofore granted under the Plan shall be deemed canceled unless the surviving
corporation in any such merger, reorganization, or consolidation elects to
assume the options under the Plan or to issue substitute options in place
thereof; provided, however, if such options would otherwise be canceled in
accordance with the foregoing, the optionee shall have the right, exercisable
during a ten-day period immediately prior to such liquidation, merger, or
consolidation, to exercise the option, in whole or in part. The granting of an
option pursuant to the Plan shall not affect in any way the right or power of
the Company to make adjustments, reorganizations, reclassifications, or changes
of its capital or business structure or to merge, consolidate, dissolve,
liquidate, or sell or transfer all or any part of its business or assets.
13. VESTING OF RIGHTS UNDER OPTIONS. Nothing contained in the Plan or in any
resolution adopted or to be adopted by the Board of Directors (or Committee) or
the stockholders of the Company shall constitute the vesting of any rights under
any option. The vesting of such rights shall take place only when a written
agreement shall be duly executed and delivered by and on
5
behalf of the Company to the person to whom the option shall be granted.
14. RIGHTS AS A STOCKHOLDER. A holder of an option shall have no rights of a
stockholder with respect to any shares covered by such holder's option until the
date of issuance of a stock certificate to such holder for such shares.
15. TERMINATION AND AMENDMENT. The Plan was adopted by the Board of Directors
on August 31, 1998, subject, with respect to the validation of Incentive Stock
Options granted under the Plan, to approval of the Plan by the stockholders of
the Company at the next Meeting of Stockholders or, in lieu thereof, by written
consent. If the approval of stockholders is not obtained prior to August 30
138 of 152
1999, any grants of Incentive Stock Options under the Plan made prior to that
date will be rescinded. The Plan shall expire at the end of the day on August
30, 2008 (except as to options outstanding on that date). Options may be granted
under the Plan prior to the date of stockholder approval of the Plan. The Board
of Directors (or Committee) may terminate or amend the Plan in any respect at
any time, except that, without the approval of the stockholders obtained within
12 months before or after the Board of Directors (or Committee) adopts a
resolution authorizing any of the following actions, (a) the total number of
shares that may be issued under the Plan may not be increased (except by
adjustment pursuant to paragraph 12); (b) the provisions regarding eligibility
for grants of Incentive Stock Options may not be modified; (c) the provisions
regarding the exercise price at which shares may be offered pursuant to
Incentive Stock Options may not be modified (except by adjustment pursuant to
paragraph 12), and (d) the expiration date of the Plan may not be extended.
Except as otherwise provided in this paragraph 15, in no event may action of the
Board of Directors (or Committee) or stockholders alter or impair the rights of
an optionee, without such optionee's consent, under any option previously
granted to such optionee.
16. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to the terms and
conditions and within the limitations of the Plan, the Board of Directors (or
Committee) may modify, extend, or renew outstanding options granted under the
Plan, or accept the surrender of outstanding options (to the extent not
theretofore exercised) and authorize the granting of new options in substitution
therefor. Notwithstanding the foregoing, no modification of an option shall,
without the consent of the holder thereof, alter or impair any rights or
obligations under any option theretofore granted under the Plan.
17. CONVERSION OF INCENTIVE STOCK OPTIONS INTO NON-QUALIFIED OPTIONS. Without
the prior written consent of the holder of an Incentive Stock Option, the Board
of Directors (or Committee) shall not alter the terms of such Incentive Stock
Option (including the means of exercising such Incentive Stock Option) if such
alteration would constitute a modification within the meaning of Section
424(h)(3) of the Code. The Board of Directors (or Committee), at the written
request or with the written consent of any optionee, may in its discretion take
such actions as may be necessary to convert such optionee's Incentive Stock
Options (or any installments or portions of installments thereof) that have not
been exercised on the date of conversion into Non-Incentive Stock Options at any
time prior to the expiration of such Incentive Stock Options, regardless of
whether the optionee is an employee of the Company at the time of such
conversion. Such actions may include, but shall not be limited to, extending the
exercise period or reducing the exercise price of the appropriate installments
of such Incentive Stock Options. At the time of such conversion, the
6
Board of Directors (or Committee) (with the consent of the optionee) may impose
such conditions on the exercise of the resulting Non-Incentive Stock Options as
the Board of Directors (or Committee) in its discretion may determine, provided
that such conditions shall not be inconsistent with the Plan. Nothing in the
Plan shall be deemed to give any optionee the right to have such optionee's
Incentive Stock Options converted into Non-Incentive Stock Options, and no such
conversion shall occur until and unless the Board of Directors (or Committee)
takes appropriate action.
18. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of a
Non-Incentive Stock Option, the transfer of a Non-Incentive Stock Option
pursuant to an arm's length transaction, the making of a Disqualifying
Disposition (as described in Sections 421, 422 and 424 of the Code and
regulations thereunder), the vesting of transfer of restricted stock or
securities acquired on the exercise of an option hereunder, or the making of a
distribution or other payment with respect to such stock or securities, the
Company may withhold taxes in respect of amounts that constitute compensation
includible in gross income. The Board of Directors (or Committee) in its
139 of 152
discretion may condition the exercise of an option, the transfer of a
Non-Incentive Stock Option, or the vesting or transferability of restricted
stock or securities acquired by exercising an option on the optionee's making
satisfactory arrangement for such withholding. Such arrangement may include
payment by the optionee in cash or by check of the amount of the withholding
taxes or, at the discretion of the Board of Directors (or Committee), by the
optionee's delivery of previously held shares of Common Stock or the withholding
from the shares of Common Stock otherwise deliverable upon exercise of option
shares having an aggregate fair market value equal to the amount of such
withholding taxes.
19. INDEMNIFICATION. In addition to such other rights of indemnification as
they may have as members of the Board of Directors (or Committee), the members
of the Board of Directors (or Committee) administering the Plan shall be
indemnified by the Company against reasonable expenses, including attorneys'
fees, actually and necessarily incurred in connection with the defense of any
action, suit, or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan or any option granted thereunder, and
against all amounts paid by them in settlement thereof (provided such settlement
is approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any action, suit, or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit, or
proceeding that such member is liable for negligence or misconduct in the
performance of his duties, and provided that within 60 days after institution of
any such action, suit, or proceeding, the member shall in writing offer the
Company the opportunity, at its own expense, to handle and defend the same.
20. GOVERNING LAW. The validity and construction of the Plan and the
instruments evidencing options shall be governed by the laws of Delaware, or the
laws of any jurisdiction in which the Company or its successors in interest may
be organized.
BIOLIFE SOLUTIONS, INC.
171 FRONT STREET
OWEGO, NY 13827
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, acknowledging receipt of the proxy statement dated
August 26, 2005 of BioLife Solutions, Inc., hereby constitutes and appoints John
G. Baust and Howard S. Breslow and each or any of them, attorney, agent and
proxy of the undersigned, with full power of substitution to each of them, for
and in the name, place and stead of the undersigned on the books of said
corporation, to appear and vote all the shares of stock of BioLife Solutions,
Inc. standing in the name of the undersigned on the books of said corporation on
August 19, 2005, at the Annual Meeting of Stockholders of BioLife Solutions,
Inc. to be held at Breslow & Walker, LLP, 767 Third Avenue, New York, NY 10017
on September 28, 2005, at 10:00 A.M., Eastern Standard Time, and any
adjournments thereof.
When properly executed, this proxy will be voted as designated by the
undersigned. If no choice is specified, the proxy will be voted FOR the
following proposals, which are set forth in the Proxy Statement.
1. ELECTION OF DIRECTORS
_______ For all nominees listed below
(except as marked to the contrary below)
_______ Withhold Authority to vote for all nominees
140 of 152
listed below
John G. Baust
Howard S. Breslow
Rod de Greef
Thomas Girschweiler
(INSTRUCTION: to withhold authority to vote for any individual nominee, strike a
line through or otherwise strike nominee's name in the list above.)
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM
25,000,000 TO 100,000,000.
FOR____ AGAINST____ ABSTAIN____
3. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S 1998 STOCK OPTION PLAN TO
INCREASE THE NUMBER OF SHARES OF COMMON STOCK RESERVED FOR ISSUANCE THEREUNDER
FORM 4,000,000 TO 10,000,000.
FOR____ AGAINST____ ABSTAIN____
4. PROPOSAL TO RATIFY THE APPOINTMENT OF ARONSON & COMPANY TO SERVE AS
INDEPENDENT AUDITORS FOR THE YEAR ENDING DECEMBER 31, 2005.
FOR____ AGAINST____ ABSTAIN____
5. TO VOTE, IN THE DISCRETION OF THE PROXIES, ON SUCH OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS THEREOF.
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
DATED: ,2005
------------------
------------------------------
Signature
-------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY IN THE
ENCLOSED ENVELOPE
Filings - Form 4 BIOLIFE SOLUTIONS INC For: May 12 Filed by: BRESLOW HOWARD S (10K)
FORM 4 OMB APPROVAL
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 OMB Number: 3235-0287
Check this box if no longer February 28,
subject to Section 16. Form 4 or Expires:
STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP 2011
Form 5 obligations may continue.
Estimated average burden
See Instruction 1(b). Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility
Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940
141 of 152
hours per
0.5
response
1. Name and Address of Reporting Person* 2. Issuer Name and Ticker or Trading Symbol 5. Relationship of Reporting Person(s) to Issuer
BIOLIFE SOLUTIONS INC [BLFS] (Check all applicable)
BRESLOW HOWARD S
X Director 10% Owner
3. Date of Earliest Transaction (Month/Day/Year) Officer (give title Other (specify
(Last) (First) (Middle) below) below)
05/12/2005
C/O BIOLIFE SOLUTIONS, INC., 171 FRONT
STREET
4. If Amendment, Date of Original Filed (Month/Day/Year) 6. Individual or Joint/Group Filing (Check Applicable
Line)
(Street)
X Form filed by One Reporting Person
OWEGO NY 13827
Form filed by More than One Reporting Person
(City) (State) (Zip)
142 of 152
Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned
1.Title of Security 2. 2A. 3. Transaction 4. Securities Acquired 5. Amount of Securities Beneficially 6. 7. Nature
(Instr. 3) Transaction Deemed Code (A) or Disposed of (D) Owned Following Reported Ownership of Indirect
Date Execution (Instr. 8) (Instr. 3, 4 and 5) Transaction(s) Form: Beneficial
(Month/Day Date, if any (Instr. 3 and 4) Direct (D) Ownership
/Year) (Month/Day or Indirect (Instr. 4)
/Year) (A) or (I)
Code V Amount (D) Price (Instr. 4)
143 of 152
Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned
(e.g., puts, calls, warrants, options, convertible securities)
1. Title of 2. 3. 3A. 4. 5. Number 6. Date Exercisable 7. Title and Amount 8. Price 9. Number of 10. 11. Nature
Derivative Conversion Transaction Deemed Transaction of Derivative and Expiration Date of Underlying of Derivative Ownership of Indirect
Security or Exercise Date Execution Code Securities (Month/Day/Year) Securities Derivative Securities Form of Beneficial
(Instr. 3) Price of (Month/Day Date, if any (Instr. 8) Acquired (A) (Instr. 3 and 4) Security Beneficially Derivative Ownership
Derivative /Year) (Month/Day or Disposed (Instr. 5) Owned Security: (Instr. 4)
Security /Year) of (D) Following Direct (D)
(Instr. 3, 4, Reported or Indirect
and 5) Transaction(s) (I)
(Instr. 4) (Instr. 4)
Amount
or
Number
Date Expiration of
Code V (A) (D) Exercisable Date Title Shares
Stock
Option Common
(right to
$ 0.08 03/25/2005 A 250,000 05/12/2005 05/12/2015
Stock 250,000 $0 250,000 D
buy)
Explanation of Responses:
Howard S. Breslow 05/19/2005
** Signature of Reporting Person Date
Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.
* If the form is filed by more than one reporting person, see Instruction 4(b)(v).
** Intentional misstatements or omissions of facts constitute Federal Criminal Violations See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
Note: File three copies of this Form, one of which must be manually signed. If space is insufficient, see Instruction 6 for procedure.
Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB Number.
Filings - Form 4 BIOLIFE SOLUTIONS INC For: May 12 Filed by: DE GREEF RODERICK (10K)
FORM 4 OMB APPROVAL
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 OMB Number: 3235-0287
February 28,
Expires:
Check this box if no longer STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP 2011
subject to Section 16. Form 4 or Estimated average burden
Form 5 obligations may continue. Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility
See Instruction 1(b). hours per
Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940 0.5
response
1. Name and Address of Reporting Person* 2. Issuer Name and Ticker or Trading Symbol 5. Relationship of Reporting Person(s) to Issuer
BIOLIFE SOLUTIONS INC [BLFS] (Check all applicable)
DE GREEF RODERICK
X Director 10% Owner
3. Date of Earliest Transaction (Month/Day/Year) Officer (give title Other (specify
(Last) (First) (Middle) below) below)
05/12/2005
C/O BIOLIFE SOLUTIONS, INC., 171 FRONT
STREET
4. If Amendment, Date of Original Filed (Month/Day/Year) 6. Individual or Joint/Group Filing (Check Applicable
Line)
(Street)
X Form filed by One Reporting Person
OWEGO NY 13827
Form filed by More than One Reporting Person
(City) (State) (Zip)
144 of 152
Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned
1.Title of Security 2. 2A. 3. Transaction 4. Securities Acquired 5. Amount of Securities Beneficially 6. 7. Nature
(Instr. 3) Transaction Deemed Code (A) or Disposed of (D) Owned Following Reported Ownership of Indirect
Date Execution (Instr. 8) (Instr. 3, 4 and 5) Transaction(s) Form: Beneficial
(Month/Day Date, if any (Instr. 3 and 4) Direct (D) Ownership
/Year) (Month/Day or Indirect (Instr. 4)
/Year) (A) or (I)
Code V Amount (D) Price (Instr. 4)
145 of 152
Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned
(e.g., puts, calls, warrants, options, convertible securities)
1. Title of 2. 3. 3A. 4. 5. Number 6. Date Exercisable 7. Title and Amount 8. Price 9. Number of 10. 11. Nature
Derivative Conversion Transaction Deemed Transaction of Derivative and Expiration Date of Underlying of Derivative Ownership of Indirect
Security or Exercise Date Execution Code Securities (Month/Day/Year) Securities Derivative Securities Form of Beneficial
(Instr. 3) Price of (Month/Day Date, if any (Instr. 8) Acquired (A) (Instr. 3 and 4) Security Beneficially Derivative Ownership
Derivative /Year) (Month/Day or Disposed (Instr. 5) Owned Security: (Instr. 4)
Security /Year) of (D) Following Direct (D)
(Instr. 3, 4, Reported or Indirect
and 5) Transaction(s) (I)
(Instr. 4) (Instr. 4)
Amount
or
Number
Date Expiration of
Code V (A) (D) Exercisable Date Title Shares
Stock
Option Common
(right to
$ 0.08 03/25/2005 A 250,000 05/12/2005 05/12/2015
Stock 250,000 $0 250,000 D
buy)
Explanation of Responses:
Roderick de Greef 05/19/2005
** Signature of Reporting Person Date
Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.
* If the form is filed by more than one reporting person, see Instruction 4(b)(v).
** Intentional misstatements or omissions of facts constitute Federal Criminal Violations See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
Note: File three copies of this Form, one of which must be manually signed. If space is insufficient, see Instruction 6 for procedure.
Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB Number.
News - Skymark Research Initiates Independent Research Coverage on Cannabis Medical Solutions, Inc. (GNW)
May 17, 2010 9:15:00 AM
CALGARY, Alberta, May 17, 2010 (GLOBE NEWSWIRE) -- Skymark Research, a leading provider of small- and micro-cap independent investment
research, today initiated coverage on Cannabis Medical Solutions, Inc. (OTCBB:CMSI).
Skymark Research is currently offering a complimentary trial subscription. To view our research go to: www.skymarkresearch.com.
About SMR:
Skymark Research is a leading provider of independent investment research in North America. Our services include research analysis on the small-
and micro-cap markets, real-time news and financial data, market commentary and the SMR newsletter. Skymark Research's staff of small-cap
investment professionals is dedicated to providing the small market's investment community with the tools and avenues necessary to make the important
investment decisions. To view our research reports on a complimentary trial basis and take advantage of our other services, go to
www.skymarkresearch.com and click on the complimentary trial subscription button on our home page, or go directly to our registration page at
www.skymarkresearch.com/signup.php.
The Skymark Research logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6683
About Cannabis Medical Solutions, Inc. (OTCBB:CMSI):
Cannabis Medical Solutions, Inc. (OTCBB:CMSI) provides both online and wireless merchant payment solutions. The Company offers a range of
secure transaction processing solutions using Internet point-of-sale (POS), e-commerce, social networks and mobile (wireless) terminals through its
alliance partner network.
SMR Disclosure:
Skymarkresearch.com is not a registered investment advisor and nothing contained in any materials should be construed as a recommendation to buy or
sell any securities. Skymark Research has not been compensated by any of the above mentioned companies. Please read our report and visit our Web
site, www.skymarkresearch.com, for complete risks and disclosures.
CONTACT: Skymark Research
Dylan Boyle
480-626-1911
info@skymarkresearch.com
News - Cannabis Medical Solutions Announces Clarification Regarding Recently Announced Stock Dividend (GNW)
May 17, 2010 9:10:00 AM
LOS ANGELES, May 17, 2010 (GLOBE NEWSWIRE) -- Cannabis Medical Solutions Inc. (www.cannabismedsolutions.com) (OTCBB:CMSI), a
leading company specializing in both brick-and-mortar and online merchant payment solutions and financial security products for medical marijuana
dispensaries and high-risk merchant accounts and services, today issued the following clarification regarding the recently announced stock dividend
146 of 152
and forward stock split.
In response to questions from stockholders, the Company wishes to clarify for stockholders and brokers the procedure through which stockholders may
obtain their dividend certificate or shares. On May12, 2010 Cannabis Medical Solutions Inc. (OTCBB:CMSI) announced that its Board of Directors
had declared a special stock dividend. The company initially announced that the dividend would be payable to stockholders of record on May 14,
2010 with the dividend being paid on or about June 1, 2010.
This clarification and second announcement provides that the Financial Industry Regulatory Authority (FINRA) has advised the company of the
operation of Nasdaq Rule 11140(b)(2), which states:
In respect to cash dividends or distributions, stock dividends and/or splits, and the distribution of warrants, which are 25% or greater of the value of
the subject security, the ex-dividend date shall be the first business day following the payable date. This has been interpreted by the Company and its
advisors that the dividend will trade with the stock until June 1, 2010, the payable date. Purchasers on June 2, 2010 or later will not be entitled to the
dividend. If a stockholder is already a record owner of the Company holding certificates for Cannabis Medical Solutions Class A common stock
issued in the stockholders name prior to or by May 14, 2010, the shareholder does not need to take any further action. A Dividend Certificate will be
mailed directly to the shareholder by the transfer agent. All Registered Shareholders who purchased shares in the open market as of the record date of
June 1, 2010, will be issued shares electronically representing the dividend shares entitled.
Cannabis Medical Solutions recommends that non-registered shareholders after May 14, 2010 should contact their representatives (Brokerage firms,
On-line trading companies etc.) to ensure they are credited with the stock dividend. They should not contact Island Stock Transfer directly as that will
be done by the Brokerage Firm. The Brokerage Firm will provide proof of ownership to Island Transfer. Persons needing further information or
interpretation should consult with their broker-dealer or legal advisors.
"This stock dividend is intended to lay the groundwork for the growth of our Company, allowing us to continue our ongoing efforts to improve trading
liquidity, broaden ownership, promote capital investment for acquisition and enhance shareholder value" stated CEO Kyle Gotshalk.
About Cannabis Medical Solutions Inc.
Cannabis Medical Solutions Inc. (OTCBB:CMSI) (http://www.cannabismedsolutions.com/) has quickly become the most recognized brand and partner
in both online and wireless niche merchant payment solutions. The Company offers a full spectrum of secure and reliable transaction processing
solutions using traditional, Internet Point-of-Sale (POS), e-commerce and mobile (wireless) terminals in conjunction with Industry Alliance Partners.
The Company has recently focused on providing payment solutions to the licensed medical marijuana dispensaries throughout 14 states. In an effort to
keep these businesses within the guidelines of CA Proposition 215 and SB 420, Cannabis Medical Solutions offers reliable merchant payment
solutions and closed loop pre-paid stored value and loyalty cards as a unique cash alternative to these regulated dispensaries for both operators and
members of collectives. CMSI will seek to capitalize on this presently untapped and much needed solution, and presently provides services to multiple
locations throughout California, New Mexico, Colorado and Montana.
FORWARD-LOOKING DISCLAIMER
This press release may contain certain forward-looking statements and information, as defined within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the Safe Harbor created by those sections. This material contains
statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. Such forward-
looking statements by definition involve risks, uncertainties and other factors, which may cause the actual results, performance or achievements of
Cannabis Medical Solutions Inc. to be materially different from the statements made herein.
CONTACT: Cannabis Medical Solutions Inc.
Investor Relations:
615.371.6148
800.420-CALL
http://www.cannabismedsolutions.com/
info@cannabismedsolutions.com
News - Cannabis Medical Solutions Announces Plan to Franchise Ownership of Medical Marijuana Dispensaries in California
(GNW)
May 13, 2010 5:26:00 PM
LOS ANGELES, May 13, 2010 (GLOBE NEWSWIRE) -- Cannabis Medical Solutions Inc. (www.cannabismedsolutions.com) (OTCBB:CMSI), a
leading company specializing in both brick-and-mortar and online merchant payment solutions and financial security products for medical marijuana
dispensaries and high-risk merchant accounts and services, today announced that the Company is presently in negotiations to acquire and open at least
two medical marijuana dispensaries within the state of California.
"The network of medical marijuana dispensaries that CMSI has created by providing financial services to our clients in three states over the last six
months, has presented a unique opportunity for our company and shareholders. It has always been a part of our business plan to not only partner with
dispensaries on the merchant processing and financial security side, but to franchise, consult and brand licensed dispensaries throughout legal
jurisdictions under the Cannabis Medical Solutions name. We are presently in the due diligence process and seeking legal advice with regard to
federal legislation that would allow us to follow this path and provide a proven model of ownership, financial accountability to reporting state
147 of 152
agencies and be within federal and state guidelines," stated Kyle Gotshalk, CEO for Cannabis Medical Solutions.
About Cannabis Medical Solutions Inc.
Cannabis Medical Solutions Inc. (OTCBB:CMSI) (http://www.cannabismedsolutions.com/) has quickly become the most recognized brand and partner
in both online and wireless niche merchant payment solutions. The Company offers a full spectrum of secure and reliable transaction processing
solutions using traditional, Internet Point-of-Sale (POS), e-commerce and mobile (wireless) terminals in conjunction with Industry Alliance Partners.
The Company has recently focused on providing payment solutions to the licensed medical marijuana dispensaries throughout 14 states. In an effort to
keep these businesses within the guidelines of CA Proposition 215 and SB 420, Cannabis Medical Solutions offers reliable merchant payment
solutions and closed loop pre-paid stored value and loyalty cards as a unique cash alternative to these regulated dispensaries for both operators and
members of collectives. CMSI will seek to capitalize on this presently untapped and much needed solution, and presently provides services to multiple
locations throughout California, New Mexico, Colorado and Montana.
FORWARD-LOOKING DISCLAIMER
This press release may contain certain forward-looking statements and information, as defined within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the Safe Harbor created by those sections. This material contains
statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. Such forward-
looking statements by definition involve risks, uncertainties and other factors, which may cause the actual results, performance or achievements of
Cannabis Medical Solutions Inc. to be materially different from the statements made herein.
CONTACT: Cannabis Medical Solutions Inc.
Investor Relations:
615.371.6148
800.420-CALL
http://www.cannabismedsolutions.com/
News - Cannabis Medical Solutions Board Announces Increase in Authorized Shares and Stock Dividend (GNW)
May 12, 2010 10:19:00 AM
LOS ANGELES, May 12, 2010 (GLOBE NEWSWIRE) -- Cannabis Medical Solutions Inc. (www.cannabismedsolutions.com) (OTCBB:CMSI), a
leading company specializing in both brick-and-mortar and online merchant payment solutions and financial security products for medical marijuana
dispensaries and high-risk merchant accounts and services, today announced that its board of directors has approved a resolution authorizing an
increase in the number of authorized shares of the Corporation's common stock from 250,000,000 to 500,000,000. The Company's board of directors
and majority shareholders have also voted for an issuance of a stock dividend to each shareholder of CMSI. Pursuant to the resolutions, holders of the
company's common stock will each receive an additional nine shares of common stock for each share they own of the record date set for May 14, 2010.
Distribution of the dividend will begin on June 1, 2010.
"The Board of Directors believes that an increase in the number of shares of authorized common stock and stock dividend will benefit CMSI and our
stockholders by giving us needed flexibility in our corporate planning and in responding to developments in our business, including possible
acquisition transactions, financings, stock dividends and other general corporate purposes," stated Kyle Gotshalk, CEO of Cannabis Medical
Solutions.
About Cannabis Medical Solutions Inc.
Cannabis Medical Solutions Inc. (OTCBB:CMSI) (http://www.cannabismedsolutions.com/) has quickly become the most recognized brand and partner
in both online and wireless niche merchant payment solutions. The Company offers a full spectrum of secure and reliable transaction processing
solutions using traditional, Internet Point-of-Sale (POS), e-commerce and mobile (wireless) terminals in conjunction with Industry Alliance Partners.
The Company has recently focused on providing payment solutions to the licensed medical marijuana dispensaries throughout 14 states. In an effort to
keep these businesses within the guidelines of CA Proposition 215 and SB 420, Cannabis Medical Solutions offers reliable merchant payment
solutions and closed loop pre-paid stored value and loyalty cards as a unique cash alternative to these regulated dispensaries for both operators and
members of collectives. CMSI will seek to capitalize on this presently untapped and much needed solution, and presently provides services to multiple
locations throughout California, New Mexico, Colorado and Montana.
FORWARD-LOOKING DISCLAIMER
This press release may contain certain forward-looking statements and information, as defined within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the Safe Harbor created by those sections. This material contains
statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. Such forward-
looking statements by definition involve risks, uncertainties and other factors, which may cause the actual results, performance or achievements of
Cannabis Medical Solutions Inc. to be materially different from the statements made herein.
CONTACT: Cannabis Medical Solutions Inc.
Investor Relations:
615.371.6148
800.420-CALL
148 of 152
http://www.cannabismedsolutions.com/
News - Cannabis Medical Solutions Announces New Merchant Services Agreements for Up to 30 Additional Medical
Marijuana Dispensaries in Colorado and California (GNW)
May 4, 2010 11:16:00 AM
LOS ANGELES, May 4, 2010 (GLOBE NEWSWIRE) -- Cannabis Medical Solutions Inc. (OTCBB:CMSI), a leading company specializing in both
brick-and-mortar and online merchant payment solutions and financial security products for medical marijuana dispensaries and high-risk merchant
accounts and services, today announced the signing of an exclusive agreement with Specialized Payment Solutions Inc. of Colorado to provide
merchant and financial services for up to thirty (30) medical marijuana dispensary clients throughout Colorado and California through its alliance
partner network. Details of the agreement include that Specialized Payment Solutions will work with Cannabis Medical Solutions to provide banking,
merchant and ATM services for existing clients, which presently represent approximately 30 dispensaries. The accounts are expected to reach over
$7,000,000 in gross processing volume over the next year.
"It is clear that CMSI is becoming the 'go to' source for banking and payment solutions within the medical marijuana space across the country. We have
worked hard to enable our clients to partner with the proper banking institutions, who understand this business, and therefore accounts we set up are in
fact set up as medical dispensaries, not wellness centers or the like. The fact that we look at these businesses as a pharmacy, with the ability to
administer or distribute a controlled substance, we insure that the bank has all the necessary paperwork to make an intelligent decision for
underwriting this business, and for the merchant, we are allowing the owners to take alternative forms of payment without the worry of having accounts
shut down for miscoding and monies held," stated Michael Friedman for Cannabis Medical Solutions.
About Cannabis Medical Solutions Inc.
Cannabis Medical Solutions Inc. (OTCBB:CMSI) (http://www.cannabismedsolutions.com/) has quickly become the most recognized brand and partner
in both online and wireless niche merchant payment solutions. The Company offers a full spectrum of secure and reliable transaction processing
solutions using traditional, Internet Point-of-Sale (POS), e-commerce and mobile (wireless) terminals in conjunction with Industry Alliance Partners.
The Company has recently focused on providing payment solutions to the licensed medical marijuana dispensaries throughout 14 states. In an effort to
keep these businesses within the guidelines of CA Proposition 215 and SB 420, Cannabis Medical Solutions offers reliable merchant payment
solutions and closed loop pre-paid stored value and loyalty cards as a unique cash alternative to these regulated dispensaries for both operators and
members of collectives. CMSI will seek to capitalize on this presently untapped and much needed solution, and presently provides services to multiple
locations throughout California, New Mexico, Colorado and Montana.
FORWARD-LOOKING DISCLAIMER
This press release may contain certain forward-looking statements and information, as defined within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the Safe Harbor created by those sections. This material contains
statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. Such forward-
looking statements by definition involve risks, uncertainties and other factors, which may cause the actual results, performance or achievements of
Cannabis Medical Solutions Inc. to be materially different from the statements made herein.
CONTACT: Cannabis Medical Solutions Inc.
615.371.6148
800.420-CALL
http://www.cannabismedsolutions.com/
News - Cannabis Medical Solutions Discusses "Marijuana and Money" a CNBC Special Report (GNW)
CMSI Continues Leading Role in Payment Processing and Financial Security Products to Medical Marijuana Dispensaries
Apr 28, 2010 9:25:00 AM
LOS ANGELES, April 28, 2010 (GLOBE NEWSWIRE) -- Cannabis Medical Solutions Inc. (OTCBB:CMSI), a leading company specializing in both
brick-and-mortar and online merchant payment solutions and financial security products for medical marijuana dispensaries and high-risk merchant
accounts and services, today announced "Marijuana And Money", a special report by CNBC to its shareholders and investment audience. The special
report now available online at http://www.cnbc.com/id/36022433/ covers the entire spectrum of the medical marijuana debate including legalization,
state by state coverage, enforcement and the Wall Street perspective.
"We believe the recent front page coverage and national debate of medical marijuana is further proof of our chosen business model, and provides real
opportunity to our present shareholders and investors alike. CMSI is the only public company within the medical marijuana sector with a clear and
concise business model, enabling the medical marijuana industry with financial and banking partnerships as well as secure payment solutions to
eliminate fraud and criminal activity often associated with the industry", stated Michael Friedman, for Cannabis Medical Solutions.
About Cannabis Medical Solutions Inc.
Cannabis Medical Solutions Inc. (OTCBB:CMSI) (http://www.cannabismedsolutions.com/) has quickly become the most recognized brand and partner
in both online and wireless niche merchant payment solutions. The Company offers a full spectrum of secure and reliable transaction processing
solutions using traditional, Internet Point-of-Sale (POS), e-commerce and mobile (wireless) terminals in conjunction with Industry Alliance Partners.
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The Company has recently focused on providing payment solutions to the licensed medical marijuana dispensaries throughout 14 states. In an effort to
keep these businesses within the guidelines of CA Proposition 215 and SB 420, Cannabis Medical Solutions offers reliable merchant payment
solutions and closed loop pre-paid stored value and loyalty cards as a unique cash alternative to these regulated dispensaries for both operators and
members of collectives. CMSI will seek to capitalize on this presently untapped and much needed solution, and presently provides services to multiple
locations throughout California, New Mexico, Colorado and Montana.
FORWARD-LOOKING DISCLAIMER
This press release may contain certain forward-looking statements and information, as defined within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the Safe Harbor created by those sections. This material contains
statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. Such forward-
looking statements by definition involve risks, uncertainties and other factors, which may cause the actual results, performance or achievements of
Cannabis Medical Solutions Inc. to be materially different from the statements made herein.
CONTACT: Cannabis Medical Solutions Inc.
615.371.6148
800.420-CALL
http://www.cannabismedsolutions.com/
News - Cannabis Medical Solutions Announces New Merchant Services Agreements for Multiple Marijuana Dispensaries in
California, Colorado and Montana (GNW)
Apr 7, 2010 9:09:00 AM
LOS ANGELES, April 7, 2010 (GLOBE NEWSWIRE) -- Cannabis Medical Solutions Inc. (OTCBB:CMSI), a leading company specializing in both
brick-and-mortar and online merchant payment solutions, insurance and accounting services for medical marijuana dispensaries and high-risk merchant
accounts and services, today announced the signing of new merchant agreements for the states of California, Colorado and Montana. Under the
exclusive agreements, CMSI will provide merchant processing and POS solutions through its alliance network, enabling these dispensary operations to
take credit card transactions legally and provide inventory control of patient medical marijuana.
Eighteen states have discussed medical marijuana through legislation or citizen initiatives this year, most visibly, California announced on March 24th,
that this year's ballot would include a question to allow local governments to legalize and tax marijuana. In addition to saving the state of California
millions of dollars in law enforcement, the Regulate, Control and Tax Cannabis Act will also give local governments the ability to tax marijuana.
Proponents of the act estimate that $15 billion worth of gray-market and black market marijuana is sold each year in California according to the
Associated Press. An excise tax on the retail sales of marijuana would bring in an estimated $1.3 billion a year or more in revenue. Some counties and
cities within California currently tax medical marijuana dispensaries. These city and county taxes bring in as much as $350,000 per dispensary.
"It is our goal at Cannabis Medical Solutions to bring the banking industry for these businesses in line with the rapid favorable legislation of the states
for legalization. We are quickly proving ourselves as the responsible choice for bringing cash alternatives and solutions to the medical marijuana
industry through inventory control of medication, credit card services and state tax reporting for non-profits and profit reporting states. CMSI has
partnered with the only banking solutions allowing legitimate bank accounts and merchant services without fear of cancellation of merchant accounts or
freezing of funds for miscoding," stated Kyle Gotshalk, CEO of CMSI.
About Cannabis Medical Solutions Inc.
Cannabis Medical Solutions Inc. (http://www.cannabismedsolutions.com/) has quickly become the most recognized brand and partner in both online
and wireless niche merchant payment solutions. The Company offers a full spectrum of secure and reliable transaction processing solutions using
traditional, Internet Point-of-Sale (POS), e-commerce and mobile (wireless) terminals in conjunction with Industry Alliance Partners. The Company
has recently focused on providing payment solutions to the licensed medical marijuana dispensaries throughout 14 states. In an effort to keep these
businesses within the guidelines of CA Proposition 215 and SB 420, Cannabis Medical Solutions offers reliable merchant payment solutions and
closed loop pre-paid stored value and loyalty cards as a unique cash alternative to these regulated dispensaries for both operators and members of
collectives. CMSI will seek to capitalize on this presently untapped and much needed solution, and presently provides services to multiple locations
throughout California, New Mexico, Colorado and Montana.
FORWARD-LOOKING DISCLAIMER
This press release may contain certain forward-looking statements and information, as defined within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the Safe Harbor created by those sections. This material contains
statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. Such forward-
looking statements by definition involve risks, uncertainties and other factors, which may cause the actual results, performance or achievements of
Cannabis Medical Solutions Inc. to be materially different from the statements made herein.
CONTACT: Cannabis Medical Solutions Inc.
800.420-CALL
http://www.cannabismedsolutions.com/
News - Cannabis Medical Solutions Inc. Exceeds Projected Sales for Quarter in New Merchant Services Contracts on Heels
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of USA Today Article Covering Legalization of Medical Marijuana (GNW)
Mar 10, 2010 9:35:00 AM
LOS ANGELES, March 10, 2010 (GLOBE NEWSWIRE) -- Cannabis Medical Solutions Inc. (OTCBB:CMSI), a leading company specializing in both
brick-and-mortar and online merchant payment solutions, insurance and accounting services for medical marijuana dispensaries and high-risk merchant
accounts and services, today announced record sales for the month of March in new merchant services contracts. Through its alliance banking network,
CMSI has exceeded $500,000 in gross processing business for new merchant accounts signed in March 2010. The Company added three new medical
marijuana dispensaries as merchant clients this week alone, on the heels of yesterday's USA Today article covering the legalization of medical
marijuana.
The USA Today article entitled "Slowly, states are lessening limits on marijuana" by William M. Welchand and Donna Leinwand, discussed the
present state of affairs of legalization and use of medical marijuana within 14 states. Specifically, the article notes James Gray, a former federal
prosecutor and county judge who spent two decades as a superior court judge in Orange County, Calif., and once ran for Congress as a Republican --
who switched sides in the war on drugs, becoming an advocate for legalizing marijuana.
Gray is part of a growing national movement to rethink pot laws. From California, where lawmakers may outright legalize marijuana, to New Jersey,
which implemented a medical use law Jan. 19, states are taking unprecedented steps to loosen marijuana restrictions. Advocates of legalizing
marijuana say generational, political and cultural shifts have taken the USA to a unique moment in its history of drug prohibition that could topple 40
years of tough restrictions on both medicinal and recreational marijuana use.
Further, USA Today quoted Gallup Poll last October found 44% favor making marijuana legal, an eight-point jump since the question was asked in
2005. An ABC News-Washington Post poll in January found 81% favor making marijuana legal for medical use.
Attorney General Eric Holder last fall announced that raiding medical marijuana facilities would be the lowest priority for U.S. law enforcement
agents -- a major shift that is spurring many states to re-examine their policies. The American Medical Association recommended in November that
Congress reclassify marijuana as a drug with possible medicinal benefit.
At least 14 states this year -- some deeply conservative and Republican-leaning, such as Kansas -- will consider legalizing pot for medical purposes
or lessening the penalties for possessing small amounts for personal use. Fourteen other states and the District of Columbia already have liberalized
their marijuana laws.
The Obama administration still opposes smoking marijuana for its medicinal benefit, says Tom McLellan, deputy director of the White House Office of
National Drug Control Policy. He says more research is needed to deliver the medically useful ingredients in a non-smokable form.
* Alabama, Delaware, New York, North Carolina and Pennsylvania, are debating allowing medicinal use of marijuana for people with certain
illnesses;
* Hawaii and Rhode Island are considering bills to reduce the penalties for marijuana possession to fines rather than jail time;
* Vermont is weighing whether to allow state-licensed liquor stores to sell medical marijuana.
California became the first state to allow marijuana for medical use when voters approved a statewide ballot issue in 1996, and its provisions are so
broad that tens of thousands of people have obtained a doctor's recommendation to use marijuana for ailments from cancer to arthritis.
Now California's Legislature is considering a bill that would make it the first state to legalize marijuana for recreational use as well. It is unlikely to
pass this year, but Gray and other advocates hope to have a proposition on the November ballot that would legalize marijuana use for anyone 21 or
older. California would levy taxes that the state tax board says could raise $1.3 billion or more a year for the deficit-plagued state, while saving tens
of millions in prison and law-enforcement costs. Sponsors of the ballot issue have turned in 690,161 signatures on petitions for verification, far more
than the 433,971 valid signatures required to get on the ballot.
A 2009 statewide Field Poll found 56% support making pot legal for recreational use and taxing it. Assemblyman Tom Ammiano, a Democrat from
San Francisco who introduced the tax and regulate bill, predicts California eventually will legalize marijuana and other states will follow. "It's
inevitable that there will be some kind of legalization of recreational marijuana," Ammiano says. "How and where it's going to happen I think is an
open question, but I think a lot sooner than later." Source: USA Today.
The full article may be found at the following link:
http://www.usatoday.com/news/nation/2010-03-08-marijuana_N.htm?csp=hf
"Our ultimate goal is to bring present banking legislation and accessibility to alternative payment options rather than cash only transactions in line with
present legislation for legalization of medical marijuana," stated founder Michael Friedman. Presently, many dispensary owners and patients are not
utilizing credit cards or alternative payment solutions properly, and are being shut down for improper coding of the account, with funds being held
indefinitely. Our banking institutions understand this business, and our merchant accounts are set up properly from the beginning as to prevent closure
of the accounts, and allow several payment options to the dispensary owners as well as patients," further stated Friedman, founder of Cannabis
Medical Solutions.
About Cannabis Medical Solutions Inc.
151 of 152
Cannabis Medical Solutions Inc. (http://www.cannabismedsolutions.com/) has quickly become the most recognized brand and partner in both online
and wireless niche merchant payment solutions. The Company offers a full spectrum of secure and reliable transaction processing solutions using
traditional, Internet Point-of-Sale (POS), e-commerce and mobile (wireless) terminals in conjunction with Industry Alliance Partners. The Company
has recently focused on providing payment solutions to the licensed medical marijuana dispensaries throughout 14 states. In an effort to keep these
businesses within the guidelines of CA Proposition 215 and SB 420, Cannabis Medical Solutions offers reliable merchant payment solutions and
closed loop pre-paid stored value and loyalty cards as a unique cash alternative to these regulated dispensaries for both operators and members of
collectives. CMSI will seek to capitalize on this presently untapped and much needed solution, and presently provides services to multiple locations
throughout California, New Mexico, Colorado and Montana.
FORWARD-LOOKING DISCLAIMER
This press release may contain certain forward-looking statements and information, as defined within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the Safe Harbor created by those sections. This material contains
statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. Such forward-
looking statements by definition involve risks, uncertainties and other factors, which may cause the actual results, performance or achievements of
Cannabis Medical Solutions Inc. to be materially different from the statements made herein.
CONTACT: Cannabis Medical Solutions Inc.
800.420-CALL
http://www.cannabismedsolutions.com/
News - Commerce Online Inc. Announces Official Name and Symbol Change to "Cannabis Medical Solutions, Inc." OTCBB
SYMBOL:CMSI Effective Thursday March 4th, 2010 (GNW)
Company Launches 800-420-CALL With Name Change as First Medical Marijuana Services Directory Hotline for Dispensaries, Physicians, Patients and Investment
Community
Mar 4, 2010 9:23:00 AM
LOS ANGELES, March 4, 2010 (GLOBE NEWSWIRE) -- Commerce Online Inc. (OTCBB:CMIB) (http://www.commerceonlineinc.com), a leading
company specializing in both brick-and-mortar and online merchant payment solutions for medical marijuana dispensaries and high-risk merchant
accounts and services, today announced that the Company has officially been granted its name change on the OTCBB to "Cannabis Medical Solutions,
Inc." (www.cannabismedsolutions.com) with a new trading symbol of "CMSI".
"Since becoming the most respected name in merchant services and banking solutions for medical marijuana dispensaries and championing the cause of
bringing secure banking and patient services in line with rapid legislation toward legalization, we felt it in the best interest of our shareholders and
clients to brand our parent company as Cannabis Medical Solutions to eliminate any further confusion as an ecommerce company. As of the first of this
year, we have added several new medical marijuana dispensary clients providing merchant payment solutions, accounting and insurance
recommendations for these businesses. We will continue to explore vertical growth into not only becoming a financial partner to new dispensaries
under the Cannabis Medical Solutions Brand, but to potentially expanding our role into ownership, branded food and beverage products and biopharma
products, stated Kyle Gotshalk, CEO of Cannabis Medical Solutions.
About Cannabis Medical Solutions Inc.
Cannabis Medical Solutions Inc. (http://www.cannabismedsolutions.com/) has quickly become the most recognized brand and partner in both online
and wireless niche merchant payment solutions. The Company offers a full spectrum of secure and reliable transaction processing solutions using
traditional, Internet Point-of-Sale (POS), e-commerce and mobile (wireless) terminals in conjunction with Industry Alliance Partners. The Company
has recently focused on providing payment solutions to the licensed medical marijuana dispensaries throughout 14 states. In an effort to keep these
businesses within the guidelines of CA Proposition 215 and SB 420, Cannabis Medical Solutions offers reliable merchant payment solutions and
closed loop pre-paid stored value and loyalty cards as a unique cash alternative to these regulated dispensaries for both operators and members of
collectives. CMSI will seek to capitalize on this presently untapped and much needed solution, and presently provides services to multiple locations
throughout California, New Mexico, Denver and Montana.
FORWARD-LOOKING DISCLAIMER
This press release may contain certain forward-looking statements and information, as defined within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the Safe Harbor created by those sections. This material contains
statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. Such forward-
looking statements by definition involve risks, uncertainties and other factors, which may cause the actual results, performance or achievements of
Commerce Online Inc. to be materially different from the statements made herein.
CONTACT: Cannabis Medical Solutions Inc.
615.371.6148
800-420-CALL
info@cannabismedsolutions.com
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