BIOLIFE SOLUTIONS INC - Quarter Report: 2024 September (Form 10-Q)

Foreign currency translation-- -- - ()- ()Unrealized gain on available-for-sale securities-- -- - - Net loss-- -- - - ()()Balance, September 30, 2023$ $ $ $()$()$

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

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BioLife Solutions, Inc.

Unaudited Condensed Consolidated Statements of Shareholders’ Equity

Nine Months Ended September 30, 2024

(In thousands, except share data)

Series A
Preferred
Stock
Shares

Series A
Preferred
Stock
Amount

Common
Stock
Shares

Common
Stock
Amount

Additional
Paid-in
Capital

Accumulated
Other
Comprehensive
Income

Accumulated Deficit

Total Shareholders’ Equity

Balance, December 31, 2023

()

Stock-based compensation

Stock option exercises

Stock issued – on vested RSUs

Common stock shares issued

()

Foreign currency translation

Unrealized gain on available-for-sale securities

Net loss

()

Balance, September 30, 2024

()

Nine Months Ended September 30, 2023

(In thousands, except share data)

Series A
Preferred
Stock
Shares

Series A
Preferred
Stock
Amount

Common
Stock
Shares

Common
Stock
Amount

Additional Paid-in Capital

Accumulated

Other

Comprehensive

Loss

Accumulated
Deficit

Total Shareholders’ Equity

Balance, December 31, 2022

()

15.

$ Exercised() Outstanding as of September 30, 2024 $ Stock options exercisable as of September 30, 2024 $

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million of aggregate intrinsic value of outstanding and exercisable service-based vesting stock options. Intrinsic value is the total pretax intrinsic value for all “in-the-money” options (i.e., the difference between the Company’s closing stock price on the last trading day of the reporting period and the exercise price, multiplied by the number of shares) that would have been received by the option holders had all option holders exercised their options on September 30, 2024. This amount will change based on the fair market value of the Company’s stock. We did recognize stock compensation expense related to service-based options during the three and nine months ended September 30, 2024. The intrinsic value of service vesting-based awards exercised was $ million and $ million during the three and nine months ended September 30, 2024, respectively. There were service-based vesting options granted during the three and nine months ended September 30, 2024. The weighted average remaining contractual life of service-based vesting stock options outstanding and exercisable as of September 30, 2024 is years. There were unrecognized compensation costs for service-based vesting stock options as of September 30, 2024.

Restricted stock

Service-based vesting restricted stock

$ Granted Vested() Forfeited() Non-vested as of September 30, 2024 $

The aggregate fair value of the service-based vesting awards granted was $ million and $ million during the three and nine months ended September 30, 2024, respectively. The aggregate fair value of the service-based vesting awards that vested was $ million and $ million during the three and nine months ended September 30, 2024, respectively.

We recognized stock compensation expense related to service-based vesting awards of $ million and $ million during the three and nine months ended September 30, 2024, respectively. As of September 30, 2024, there was $ million in unrecognized compensation costs related to service-based vesting awards. We expect to recognize those costs over years.

Performance-based restricted stock

On March 8, 2024, the Company granted shares of performance-based stock to an executive in the form of restricted stock. The shares granted contain performance conditions based on Company metrics related to future performance. The grant date fair value of this award was $ per share. The fair value of this award is being expensed on a straight-line basis over the requisite service period ending on December 31, 2025.

We recognized stock compensation expense of $ million and $ million related to performance-based restricted stock awards for the three and nine months ended September 30, 2024, respectively. As of September 30, 2024, there was $ million in unrecognized non-cash compensation costs related to performance-based restricted stock awards expected to vest. We expect to recognize those costs over years. Non-cash compensation costs are expensed over the period for which performance was measured.

The aggregate fair value of the performance-based awards granted during the three and nine months ended September 30, 2024 was $ million. performance-based awards vested during the three and nine months ended September 30, 2024.

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performance-based restricted stock awards were granted or vested during the three and nine months ended September 30, 2023.

Market-based restricted stock

$ Granted Vested() Non-vested as of September 30, 2024 $

On February 24, 2022, the Company granted shares of market-based stock to its executives in the form of restricted stock. The shares granted contain a market condition based on total shareholder return ("TSR"). The TSR market condition measures the Company’s performance against a peer group. On March 8, 2024, the Company’s Compensation Committee determined the TSR attainment was % of the targeted shares and shares were granted and immediately vested to the executives of the Company based on our TSR during the period beginning on January 1, 2022 through December 31, 2023 as compared to the TSR of of our peers. The fair value of this award was determined using a Monte Carlo simulation with the following assumptions: a historical volatility of %, % dividend yield and a risk-free interest rate of %. The historical volatility was based on the most recent -year period for the Company and correlated with the components of the peer group. The stock price projection for the Company and the components of the peer group assumes a % dividend yield. This is mathematically equivalent to reinvesting dividends in the issuing entity over the performance period. The risk-free interest rate is based on the yield on the U.S. Treasury Strips as of the Measurement Date with a maturity consistent with the -year term associated with the market condition of the award. The fair value of this award of $ million was expensed on a straight-line basis over the grant date to the vesting date of December 31, 2023.

On January 3, 2023, the Company granted shares of market-based stock to its executives in the form of restricted stock. The shares granted contain a market condition based on TSR. The TSR market condition measures the Company’s performance against a peer group. The market-based restricted stock awards will vest as to between % and % of the number of restricted shares granted to each recipient based on our TSR during the period beginning on January 1, 2023 through December 31, 2024 as compared to the TSR of of our peers. The fair value of this award was determined using a Monte Carlo simulation with the following assumptions: a historical volatility of %, % dividend yield and a risk-free interest rate of %. The historical volatility was based on the most recent -year period for the Company and correlated with the components of the peer group. The stock price projection for the Company and the components of the peer group assumes a % dividend yield. This is mathematically equivalent to reinvesting dividends in the issuing entity over the performance period. The risk-free interest rate is based on the yield on the U.S. Treasury Strips as of the Measurement Date with a maturity consistent with the -year term associated with the market condition of the award. The fair value of this award of $ million is being expensed on a straight-line basis over the grant date to the vesting date of December 31, 2024, excluding $ million of expense recognized in 2023 to reflect accelerations in the vesting period of certain awards.

On March 8, 2024, the Company granted shares of market-based stock to its executives in the form of restricted stock. The shares granted contain a market condition based on TSR. The TSR market condition measures the Company’s performance against a peer group. The market-based restricted stock awards will vest as to between % and % of the number of restricted shares granted to each recipient based on our TSR during the period beginning on January 1, 2024 through December 31, 2025 as compared to the TSR of of our peers. The fair value of this award was determined using a Monte Carlo simulation with the following assumptions: a historical volatility of %, % dividend yield and a risk-free interest rate of %. The historical volatility was based on the most recent 2-year period for the Company and correlated with the components of the peer group. The stock price projection for the Company and the components of the peer group assumes a % dividend yield. This is mathematically equivalent to reinvesting dividends in the issuing entity over the performance period. The risk-free interest rate is based on the yield on the U.S. Treasury Strips as of the Measurement Date with a maturity consistent with the -year term associated with the market condition of the award. The fair value of this

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million is being expensed on a straight-line basis over the grant date to the vesting date of December 31, 2025.

We recognized stock compensation expense of $ million and $ million related to market-based restricted stock awards for the three and nine months ended September 30, 2024, respectively, and $ million and $ million during the three and nine months ended September 30, 2023, respectively. As of September 30, 2024, there was $ million in unrecognized non-cash compensation costs related to market-based restricted stock awards expected to vest. We expect to recognize those costs over years.

The aggregate fair value of the market-based awards granted was and $ million during the three and nine months ended September 30, 2024, respectively, and and $ million during the three and nine months ended September 30, 2023, respectively. The aggregate fair value of the market-based awards that vested was and $ million during the three and nine months ended September 30, 2024, respectively, and and $ million during the three and nine months ended September 30, 2023, respectively.

Total stock compensation expense

Compensation expense associated with equity-based awards is recognized on a straight-line basis over the requisite service period, with awards generally vesting over a period, and forfeitures recognized as incurred.

$ $ $ General and administrative costs Sales and marketing costs Research and development costs Total$ $ $ $

16.

million for the nine months ended September 30, 2024 resulted in an effective income tax rate of negative %. Included in the $ million of tax expense was discrete tax expense of $ million related to stock compensation, which was offset by a change in the valuation allowance.

The Company’s projected effective income tax rate for the year ending December 31, 2024 excluding the impact, if any, of discrete items is negative %, which is lower than the U.S. federal statutory rate of % primarily due to the increase in the valuation allowance on deferred tax assets and non-deductible executive compensation offset by state tax benefits and research tax credits.

Realization of deferred tax assets is dependent upon the generation of future taxable income, the timing and amount of which are uncertain. In determining the need for a valuation allowance, the Company’s management evaluates all available positive and negative evidence to determine if it is more likely than not that its deferred tax assets are realizable. As of September 30, 2024, the Company continues to provide a full valuation allowance against its deferred tax assets as the realization of such assets is not considered to be more likely than not at this time. If the Company's conclusion about the realizability of its deferred tax assets and therefore the appropriateness of the valuation allowance changes in a future

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17.

)$()$()$()Net loss from continuing operations allocated to common shareholders()()()()Denominator:Weighted-average common shares issued and outstandingBasic and diluted loss from continuing operations per common share$()$()$()$()Total

18.

% of their annual compensation to this plan as limited by an annual maximum amount as determined by the Internal Revenue Service. The Company matches employee contributions in amounts to be determined at the Company’s sole discretion. The Company made $ million and $ million in contributions to this plan for the three and nine months ended September 30, 2024, respectively. During the three and nine months ended September 30, 2023, the Company made $ million and $ million, respectively, in contributions to this plan.

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19.

million (subject to adjustment as set forth in the Purchase Agreement) (the “Transaction”). Following the execution of the Purchase Agreement, the Transaction was consummated on November 12, 2024 (the “Closing Date”). We anticipate the divestiture to qualify and be presented as Discontinued Operations in our Annual Report on Form 10-K for the year ended December 31, 2024.

The Purchase Agreement contains customary representations, warranties, covenants and indemnities of the parties thereto, including customary covenants that prevent the Company from competing with SciSafe, soliciting its employees or interfering with its business relationships for after the Closing Date. In connection with the closing of the Transaction, the Company was required to repay approximately $ million of outstanding indebtedness of SciSafe, estimates to incur approximately $ million in fees to be paid for legal and other transaction services, and estimates to incur approximately $ million in severance costs. The Company also paid the former stockholders of SciSafe approximately $ million in cash to waive all rights with respect to certain potential earn-out payments that would have otherwise accelerated and become due in connection with the Transaction pursuant to the purchase agreement by which the Company acquired SciSafe in October 2020. Finally, the Company expects to recognize approximately $ million in stock compensation expense in connection with the acceleration of unvested shares for all former employees of the Company that remained with SciSafe upon the closing of the Transaction.

In addition, upon the closing of the Transaction, the Company and SciSafe entered into a transition services agreement, pursuant to which the Company will provide certain transition services to SciSafe for up to following the Closing Date.

The Company expects to recognize a gain on the Transaction of approximately $ million before $ million of goodwill allocation.

The Company’s estimates are subject to a number of assumptions, and actual results may differ.

Consent and Third Amendment to Loan and Security Agreement with Silicon Valley Bank

November 11, 2024, the Company entered into a Consent and Third Amendment to Loan and Security Agreement, by and among Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (“Bank”), the Company, SAVSU Technologies, Inc., a Delaware corporation (“SAVSU”), Arctic Solutions, Inc., a Delaware corporation doing business as Custom Biogenic Systems (“Arctic”), SciSafe Holdings, Inc., a Delaware corporation (“SciSafe Parent”), and Sexton Biotechnologies, Inc., a Delaware corporation (“Sexton,” and together with the Company, SAVSU, Arctic and SciSafe Parent, “Borrower”). Pursuant to the Amendment and subject to the conditions set forth therein, Bank consented to the Transaction as required pursuant to the Loan and Security Agreement, dated September 20, 2022, by and among Bank and Borrower, as amended by that certain Waiver and First Amendment to Loan and Security Agreement, dated February 26, 2024, and that certain Consent and Second Amendment to Loan and Security Agreement, dated April 17, 2024 (the “Loan Agreement”). In addition, effective as of the closing of the Transaction, the Amendment amended the Loan Agreement to provide for a non-refundable termination fee in the amount of $ payable by Borrower to Bank in the event that the Loan Agreement is terminated prior to the Term Loan Maturity Date (as defined in the Loan Agreement) for any reason. The Amendment also made certain other ministerial changes to the Loan Agreement, contains customary representations and warranties of Borrower and provides for a release of Bank by Borrower for any claims existing or arising through the date of the Amendment, including, without limitation, those arising out of or in any manner connected with or related to the Loan Agreement.

As announced during the second quarter of 2023, the Company has continued to actively seek the divestiture of its CBS business and anticipates Discontinued Operations treatment upon the closure of a deal.

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Item 2. Management’s discussion and analysis of financial condition and results of operations

Forward looking statements

Certain statements contained in this Quarterly Report on Form 10-Q are not historical facts and may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “plans,” “expects,” “believes,” “anticipates,” “designed,” and similar words are intended to identify forward-looking statements. Forward-looking statements are based on our current expectations and beliefs, and involve a number of risks and uncertainties that are difficult to predict and that could cause actual results to differ materially from those stated or implied by the forward-looking statements. A description of certain of these risks, uncertainties and other matters can be found in filings we make with the U.S. Securities and Exchange Commission (the “SEC”), all of which are available at www.sec.gov, including our Annual Report on Form 10-K as of and for the fiscal year ended December 31, 2023, filed with the SEC on February 29, 2024, (the "Annual Report"). Because forward-looking statements involve risks and uncertainties, actual results and events may differ materially from results and events currently expected by us. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update these forward-looking statements to reflect events or circumstances that occur after the date hereof or to reflect any change in its expectations with regard to these forward-looking statements or the occurrence of unanticipated events.

Overview

Management’s discussion and analysis provides additional insight into the Company and is provided as a supplement to, and should be read in conjunction with, our Annual Report.

We are a life sciences company that develops, manufactures and supplies bioproduction tools and services which are designed to improve quality and de-risk biologic manufacturing, storage, distribution, and transportation in the cell and gene therapy industry. Our products are used in basic and applied research and commercial manufacturing of biologic-based therapies. Customers use our products to maintain the health and function of biologic material during sourcing, manufacturing, storage, and distribution.

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

On April 17, 2024, the Company sold all of the issued and outstanding shares of common stock of Global Cooling, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Global Cooling”), to GCI Holdings Company, LLC, an Ohio limited liability company (“GCI Holdings”), pursuant to a Stock Purchase Agreement, by and between the Company and GCI Holdings (the “Global Cooling Divestiture”). Upon the execution of the Purchase Agreement, the Global Cooling business is presented in the accompanying condensed financial statements as a discontinued operation for all periods presented. See Note 3: Discontinued operations, to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.for further details regarding the divestiture.

On November 12, 2024, the Company the Company entered into a Stock Purchase Agreement, by and among the Company, Subzero Purchaser Corp., a Delaware corporation, SciSafe, Inc., a Delaware corporation and an indirect, wholly owned subsidiary of the Company, and SciSafe, Inc., a New Jersey corporation and an indirect wholly owned subsidiary of the Company, for the sale by Seller of all of the issued and outstanding shares of common stock of SciSafe to Buyer. The divestiture of SciSafe was considered a subsequent event to the financial results presented as of September 30, 2024. SciSafe is therefore presented as a part of our continuing operations as of the three and nine months ended September 30, 2024. For additional information on the divestiture of SciSafe, see Note 19: Subsequent events, to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

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Our products

Our bioproduction tools and services are composed of two revenue lines that contain seven main offerings:

•Cell processing

◦Biopreservation media

◦Human platelet lysate media (“hPL”), cryogenic vials, and automated cell-processing fill machines

•Biostorage services

◦Biological and pharmaceutical material storage

◦Cloud connected “smart” shipping containers

◦Automated thawing devices

Critical accounting policies and estimates

A “critical accounting policy” is one which is both important to the portrayal of our financial condition and results and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. For a description of our critical accounting policies that affect our more significant judgments and estimates used in the preparation of our Unaudited Condensed Consolidated Financial Statements, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations and our significant accounting policies in Note 1 to the Consolidated Financial Statements included in our Annual Report and Part I, Note 1 to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Results of operations

The following discussion of the financial condition and results of operations should be read in conjunction with the accompanying Unaudited Condensed Consolidated Financial Statements and the related footnotes thereto.

Revenues

Total revenue for three and nine months ended September 30, 2024 and 2023 consisted of the following:


	Three Months Ended September 30,								Nine Months Ended September 30,
(In thousands, except percentages)	2024		2023		$ Change		% Change		2024		2023		$ Change		% Change
Product revenue
Cell processing	$	19,030	$	13,338	$	5,692	43	%	$	53,154	$	51,004	$	2,150	4	%
Biostorage services	543		365		$	178	49	%	970		1,099		$	(129)	(12)	%
Freezer and thaw	3,884		3,434		$	450	13	%	10,500		11,341		$	(841)	(7)	%
Service revenue
Biostorage services	4,526		4,186		$	340	8	%	13,708		12,166		$	1,542	13	%
Freezer and thaw	134		191		$	(57)	(30)	%	465		407		$	58	14	%
Rental revenue
Biostorage services	2,454		2,059		$	395	19	%	6,881		5,975		$	906	15	%
Total revenue	$	30,571	$	23,573	$	6,998	30	%	$	85,678	$	81,992	$	3,686	4	%

Product revenue

Product revenue was $23.5 million for the three months ended September 30, 2024, representing an increase of $6.3 million, or 37%, compared with the same period in 2023 and was $64.6 million for the nine months ended September 30, 2024, representing an increase of $1.2 million, or 2%, compared with the same period in 2023. The increase in product revenues for the three and nine months ended September 30, 2024 is largely driven by an increase in customer demand for our cell processing products compared to the prior year. During the third and fourth quarters of 2023, we experienced a decrease in our revenues from our customers destocking inventory levels in addition to decreases in broader biotech funding that we did not experience during the current period.

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Product revenue: Cell processing

Product revenue from our cell processing products increased by $5.7 million and $2.2 million, or by 43% and 4%, during the three and nine months ended September 30, 2024, respectively, compared with the same period in 2023. The increase in revenue from cell processing products is driven by an overall market improvement compared to the prior year when our customers reduced safety stock levels in addition to the broader biotech industry experiencing decreases in funding.

Product revenue: Biostorage services

Product revenue from our biostorage services increased by $0.2 million, or 49%, and decreased $0.1 million, or or 12%, in the three and nine months ended September 30, 2024, respectively, compared with the same period in 2023. The increase in the three months ended September 30, 2024 is primarily due to new customer acquisitions and increased demand from existing customers. The decrease in the nine month period relates to lower volumes of consumable products sold from our evo product line.

Product revenue: Freezer and thaw

Product revenue from our freezer and thaw products increased by $0.5 million, or 13%, during the three months ended September 30, 2024 and decreased by $0.8 million, or 7%, in the nine months ended September 30, 2024, compared with the same period in 2023. The increase in the three months ended period was primarily driven by an increase in customer demand for our ThawSTAR product line compared to the prior year. The decrease in the nine months ended can be attributed to lower overall sales of our freezer products in the first half of 2024 compared to the prior year.

Service revenue

Service revenue was $4.7 million and $14.2 million for the three and nine months ended September 30, 2024, respectively, representing an increase of $0.3 million and $1.6 million, or 6% and 13%, compared with the same period in 2023. The increase in the three and nine month periods relates primarily to the expansion of service revenue generated by SciSafe storage services.

Rental revenue

Rental revenue was $2.5 million and $6.9 million for the three and nine months ended September 30, 2024, respectively, representing an increase of $0.4 million, or 19%, and $0.9 million, or 15%, compared with the same periods in 2023. The increase is associated with an increased demand from existing customers.

Costs and operating expenses

Total costs and operating expenses for three and nine months ended September 30, 2024 and 2023 were composed of the following:


	Three Months Ended September 30,								Nine Months Ended September 30,
(In thousands, except percentages)	2024		2023		$ Change		% Change		2024		2023		$ Change		% Change
Cost of product, rental, and service revenue	$	14,276	$	11,578	$	2,698	23	%	$	40,278	$	44,989	$	(4,711)	(10)	%
General and administrative	11,351		10,813		$	538	5	%	33,953		37,568		$	(3,615)	(10)	%
Sales and marketing	3,543		4,876		$	(1,333)	(27)	%	10,401		12,731		$	(2,330)	(18)	%
Research and development	2,050		3,739		$	(1,689)	(45)	%	6,827		10,772		$	(3,945)	(37)	%
Asset impairment charges	—		8,310		$	(8,310)	(100)	%	—		8,310		$	(8,310)	(100)	%
Intangible asset amortization	910		1,312		$	(402)	(31)	%	2,734		4,135		$	(1,401)	(34)	%
Change in fair value of contingent consideration	—		(1,580)		$	1,580	NM		—		(1,778)		$	1,778	NM
Total operating expenses	$	32,130	$	39,048	$	(6,918)	(18)	%	$	94,193	$	116,727	$	(22,534)	(19)	%

Cost of product, rental, and service revenue

Cost of revenue increased $2.7 million, or 23%, for the three months ended September 30, 2024 and decreased $4.7 million, or 10%, for the nine months ended September 30, 2024, compared to the same periods in 2023. The increase during the three months ended September 30, 2024 is due primarily to increases in sales across multiple product lines

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compared to the same period in the prior year. The decrease in cost of revenue during the nine months ended September 30, 2024 can be attributed to decreases in personnel expenses, a more favorable product mix, and increased operational efficiencies.

Cost of revenue inclusive of intangible amortization related to acquired technology was 49% as a percentage of revenue for both the three and nine months ended September 30, 2024, compared to 52% and 58% as a percentage of revenue for the three and nine months ended September 30, 2023, respectively. The decrease in cost of revenue inclusive of intangible amortization related to acquired technology as a percentage of sales for the three and nine months ended September 30, 2024 is a result of increased utilization at our biorepository facilities, operational efficiencies, and a more favorable product mix in our biopreservation media product line, in addition to decreases in personnel expenses, including stock-based compensation expenses.

General and administrative expenses

General and administrative (“G&A”) expense consists primarily of personnel-related expenses, stock-based compensation, professional fees, such as accounting and consulting fees, and corporate insurance.

G&A expenses for the three months ended September 30, 2024 increased $0.5 million, or 5%, and decreased $3.6 million, or 10%, during the nine months ended September 30, 2024. The increase for the three months ended September 30, 2024 consists primarily of an increase in lease expenses and legal fees compared to the same period in the prior year. The decrease in G&A expenses during the nine months ended September 30, 2024 is primarily due to decreases in consultation service fees, a decrease in severance expenses, and a decrease in headcount resulting in decreased salary and stock-based compensation.

Sales and marketing expenses

Sales and marketing expense (“S&M”) consists primarily of personnel-related costs, stock-based compensation, consulting, advertising, and travel expense.

S&M expense for the three and nine months ended September 30, 2024 decreased $1.3 million and $2.3 million, or 27% and 18%, respectively, compared with the same periods in 2023. The decrease is primarily due to a decrease in headcount compared to the prior year.

Research and development expenses

Research and development (“R&D”) expense consists primarily of personnel-related costs, consulting, research supplies, and milestone expenses related to third party research agreements.

R&D expense for the three and nine months ended September 30, 2024 decreased $1.7 million and $3.9 million, or 45% and 37%, respectively, compared with the same periods in 2023. The decrease is primarily due to a decrease in headcount compared to the prior year, and lower research milestone payments in relation to our investment in PanTHERA.

Intangible asset amortization expense

Intangible asset amortization expense consists of charges related to the amortization of intangible assets associated with the acquisitions of Astero, SAVSU, CBS, SciSafe, and Sexton in which we acquired definite-lived intangible assets. Decreases in our intangible asset amortization expenses for the three and nine months ended September 30, 2024 can be attributed to the write-off of intangible assets related to CBS during the third quarter of 2023.

Change in fair value of contingent consideration

Change in fair value of contingent consideration consists of changes in estimated fair value of our potential earnouts related to our SciSafe acquisition. The benefit recognized in the three and nine months ended September 30, 2023 relates primarily to changes in our estimated probability of achieving earnout targets set forth within the purchase agreements.

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Other expense

Total other income and expenses for the three and nine months ended September 30, 2024 and 2023 were composed of the following:


	Three Months Ended September 30,								Nine Months Ended September 30,
(In thousands, except percentages)	2024		2023		$ Change		% Change		2024		2023		$ Change		% Change
Change in fair value of equity investments	$	—	$	—	$	—	NM		$	(4,074)	$	—	$	(4,074)	NM
Gain on settlement of Global Cooling escrow	$	—	$	—	$	—	NM		$	—	$	5,115	$	(5,115)	NM
Interest expense, net	$	(267)	$	(449)	$	182	41	%	$	(796)	$	(1,216)	$	420	35	%
Other income	95		235		$	(140)	(60)	%	417		1,002		$	(585)	(58)	%
Total other (expense) income, net	$	(172)	$	(214)	$	42	20	%	$	(4,453)	$	4,901	$	(9,354)	(191)	%

Change in fair value of equity investments. Reflects the change in fair value of our equity investments. During the second quarter of 2024, the Company determined that the fair value of its equity interest in iVexSol was less than its carrying amount, and no longer recoverable. The equity investment was fully impaired as a result of the analysis. For further details, see Note 5: Investments in Part I, Item 1 of this Form 10-Q.

Gain on settlement of Global Cooling escrow. Reflects the non-cash gain associated with our settlement of the GCI General Escrow during the second quarter of 2023 upon indemnification of shares within the escrow.

Interest expense, net

Interest expense, net incurred during the three and nine months ended September 30, 2024 related primarily to the Term Loan (as defined in Note 13: Long-term debt, to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q) obtained in September 2022, financed insurance premiums, and indirect tax liabilities. We also earn interest on cash held in our money market account. Decreases in interest expense, net during the three and nine months ended September 30, 2024 can be attributed to the increases in interest income from our available-for-sale securities compared to the same period in 2023.

Liquidity and capital resources

On September 30, 2024 and December 31, 2023, we had $39.3 million and $50.2 million in cash, cash equivalents, and available-for-sale securities, respectively, in our continuing operations.

On April 17, 2024, the Company consummated the Global Cooling Divestiture. The Company provided $6.7 million in cash funding to effectuate the transaction and paid $0.6 million to the brokers, attorneys, and other external parties. In addition, the Company recognized $6.1 million in cash expenditures from operations during the three months ended September 30, 2024 to meet certain post-closing requirements, costs to sell Global Cooling, the assumption of certain liabilities and debt, and severance expenses related to the RIF implemented on the business of Global Cooling, which reduced the Company’s workforce by 47 employees. For additional information on the details of the Transaction and its related costs, see Item I, Note 3: Discontinued operations to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

On November 12, 2024, the Company consummated the SciSafe Divestiture. In connection with the closing of the Transaction, the Company was required to repay approximately $0.9 million of outstanding indebtedness of SciSafe, estimates to incur approximately $1.8 million in fees to be paid for legal and other transaction services, and estimates to incur approximately $0.4 million in severance costs. The Company also paid the former stockholders of SciSafe approximately $3.3 million in cash to waive all rights with respect to certain potential earn-out payments and expects to recognize approximately $4.0 million in stock compensation expense in connection with the acceleration of unvested shares for all former employees of the Company that remained with SciSafe upon the closing of the Transaction. For

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additional information on the divestiture of SciSafe, see Note 19: Subsequent events, to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Based on our current expectations with respect to our future revenue and expenses, we believe that our current level of cash, cash equivalents, and other liquid assets will be sufficient to meet our liquidity needs for at least the next twelve months from the date of the filing of this Quarterly Report on Form 10-Q. However, the Company may choose to raise additional capital through a debt or equity financing for strategic purposes. Additional capital, if required, may not be available on reasonable terms, if at all.

Cash flows


	Nine Months Ended September 30,
(In thousands, except percentages)	2024		2023		$ Change
Operating activities	$	6,786	$	(14,809)	$	21,595
Investing activities	(15,337)		13,880		$	(29,217)
Financing activities	(2,697)		$	750	$	(3,447)
Net decrease in cash and cash equivalents	$	(11,248)	$	(179)	$	(11,069)

Net cash provided by (used in) operating activities

Net cash provided by operating activities was $6.8 million during the nine months ended September 30, 2024 compared to $14.8 million used in operating activities during the nine months ended September 30, 2023. The increase in cash provided by operating activities was primarily due to a decrease in operating losses compared to the prior year in addition to the timing of collection and disbursement of working capital related items in accounts receivable, inventories, prepaid expenses, and accrued expenses.

Net cash (used in) provided by investing activities

Net cash used by investing activities totaled $15.3 million during the nine months ended September 30, 2024 compared to $13.9 million provided by investing activities for the nine months ended September 30, 2023. The increase in cash used by investing activities was primarily driven by the $13.0 million in payments made on the divestiture of Global Cooling in addition to a decrease of $20.5 million in purchases, proceeds, and maturities of our investments in available-for-sale marketable securities compared to the prior year. This was offset by a decrease of $4.4 million in capital expenditures compared to the prior year.

Net cash (used in) provided by financing activities

Net cash used by financing activities totaled $2.7 million during the nine months ended September 30, 2024, compared to $0.8 million provided by financing activities during the nine months ended September 30, 2023. The increase in cash used by financing activities was primarily the result of increases in payments on the Company's Term Loan compared to the prior year.

Contractual obligations

Our material cash requirements include contractual and other obligations which we previously disclosed within the financial statements and Management Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report. Other than the contractual obligation listed below, there have been no significant changes to these obligations in the three months ended September 30, 2024.

Purchase obligations

Purchase obligations are defined as agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms, including fixed or minimum quantities to be purchased, fixed, minimum, or variable pricing provisions and the approximate timing of the transactions. As of September 30, 2024, our total short-term obligations were $4.2 million.

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Item 3. Quantitative and qualitative disclosures about market risk

Interest rate risk

Our exposure to market risk for changes in interest rates relates primarily to our long-term debt. Our long-term debt primarily bears interest at a fixed rate, with a variable component subject to an interest rate ceiling. Fluctuations in interest rates therefore do not materially impact our consolidated financial statements from long-term debt. For additional information, see Note 13, Long-term debt to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Foreign currency exchange risk

For a discussion of market risks related to foreign currency exchange rates, refer to Item 7A, “Quantitative and Qualitative Disclosures about Market Risk” in our Annual Report. During the nine months ended September 30, 2024, there were no material changes or developments that would materially alter the market risk assessment of our exposures to foreign currency exchange rates performed as of December 31, 2023.

Item 4. Controls and procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q were not effective, due to the material weaknesses in our internal control over financial reporting. As previously reported, we identified material weaknesses in our internal control over financial reporting as of December 31, 2023 with regard to (i) inappropriately designed entity-level controls impacting the control environment, risk assessment procedures, and monitoring activities to prevent or detect material misstatements to the consolidated financial statements attributed to an insufficient number of qualified resources and inadequate oversight and accountability over the performance of controls, ineffective identification and assessment or risks impacting internal control over financial reporting, and ineffective monitoring controls; (ii) information system logical access within certain key financial systems; (iii) ineffective accounting procedures and related controls over certain financial statement areas; (iv) inadequate risk assessment, accounting policies, procedures and related controls performed over the procure to pay and revenue recognition processes in the consolidated financial statements in accordance with the applicable financial reporting requirements.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Control

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

Remediation

We are continuing to implement remediation plans outlined in our Part II, Item 9A of Annual Report. We also may implement additional changes to our internal control over financial reporting as may be appropriate in the course of remediating the material weaknesses. Management, with the oversight of the Audit Committee of the Board, will continue

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to take steps necessary to remedy the material weaknesses to reinforce the overall design and capability of our control environment.

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PART II: Other information

Item 1. LEGAL PROCEEDINGS

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

Item 1A. RISK FACTORS

During the nine months ended September 30, 2024, there were no material changes to the risk factors described in Part I, Item 1A of our Annual Report.

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

None.

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

Item 4. MINE SAFETY DISCLOSURES

None.

Item 5. OTHER INFORMATION

None.

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Item 6. Exhibits


Exhibit No.						Description

3.1						Amended and Restated Bylaws of BioLife Solutions, Inc. (included as Exhibit 3.1 to the current report on Form 8-K filed with the SEC on November 12, 2024)

31.1						Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

31.2						Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

32.1#						Certifications of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2#						Certifications of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS**						XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH**						Inline XBRL Taxonomy Extension Schema Document

101.CAL**						Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF**						Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB**						Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE**						Inline XBRL Taxonomy Extension Presentation Linkbase Document

104						Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101)

#						The information in Exhibits 32.1 and 32.2 shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act (including this Quarterly Report on Form 10-Q), unless the Company specifically incorporates the foregoing information into those documents by reference.

**						In accordance with Rule 402 of Regulation S-T, this interactive data file is deemed not filed or part of this Quarterly Report on Form 10-Q for purposes of Sections 11 or 12 of the Securities Act or Section 18 of the Exchange Act and otherwise is not subject to liability under these sections.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.


			BIOLIFE SOLUTIONS, INC.

Date: November 12, 2024			/s/ Troy Wichterman
			Troy Wichterman
			Chief Financial Officer
			(Duly authorized officer and principal financial and accounting officer)

BIOLIFE SOLUTIONS INC - Quarter Report: 2024 September (Form 10-Q)

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