UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

☑ ☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2020~~2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the transition period from to

Commission File Number 001-36362

BioLife Solutions, Inc.

(Exact name of registrant as specified in its charter)

Delaware

94-3076866

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification No.)

3303 ~~Monte Villa Parkway, Suite~~MONTE VILLA PARKWAY, SUITE 310, ~~Bothell,~~BOTHELL, Washington, 98021

(Address of ~~registrant’s~~registrant’s principal executive offices, Zip Code)

(425) 402-1400

(Telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (S232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit said files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated ~~filer,”~~filer”, “accelerated ~~filer,”~~filer”, “smaller reporting ~~company,”~~company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☑☐ Non-accelerated filer ☐☑ Smaller reporting company ☑

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑

As of November ~~6, 2020, 32,735,912~~9, 2021, 41,646,916 shares of the registrant’s common stock were outstanding.

Table of Contents

BIOLIFE SOLUTIONS, INC.

FORM 10-Q

FOR THE QUARTER ENDED ~~SEPTEMBER~~ September 30, ~~2020~~2021

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION		3

Item 1.	Unaudited Condensed Consolidated Financial Statements ~~(unaudited)~~	3

	Unaudited Condensed Consolidated Balance Sheets as of September 30, ~~2020~~2021 and December 31, ~~2019~~2020	3

	Unaudited Condensed Consolidated Statements of Operations for the three and nine month periods ended September 30, ~~2020~~2021 and ~~2019~~2020	4

	Unaudited Condensed Consolidated Statements of ~~Shareholders’~~Comprehensive Income (Loss) for the three and nine month periods ended September 30, 2021 and 2020	5

	Unaudited Condensed Consolidated Statements of Shareholders’ Equity for the three and nine month periods ended September 30, ~~2020~~2021 and ~~2019~~2020	56

	Unaudited Condensed Consolidated Statements of Cash Flows for the nine month periods ended September 30, ~~2020~~2021 and ~~2019~~2020	67

	Notes to Unaudited Condensed Consolidated Financial Statements	78

Item 2.	~~Management’s~~Management’s Discussion and Analysis of Financial Condition and Results of Operations	27 31

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	35 38

Item 4.	Controls and Procedures	35 38

PART II.	OTHER INFORMATION	39

Item 1.	Legal Proceedings	3639

Item 1A.	Risk Factors	3639

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3639

Item 3.	Defaults Upon Senior Securities	3639

Item 4.	Mine Safety Disclosures	3639

Item 5.	Other Information	3639

Item 6.	Exhibits	3740

	Signatures	3841

Table of Contents

PART I. FINANCIAL INFORMATION

Item~~Item~~ 1.Financial Statements

~~Financial Statements~~

BioLife Solutions, Inc.

Unaudited Condensed Consolidated Balance Sheets

~~(unaudited)~~

	September 30,			December 31,			September 30,			December 31,
(In thousands, except per share and share data)	2020			2019			2021			2020
Assets
Current assets
Current assets:
Cash and cash equivalents	$	93,984		$	6,448		$	75,098		$	90,403
Restricted cash in escrow		15,000		––
Accounts receivable, trade, net		6,095			5,345
Inventories		11,037			10,972
Restricted cash								53			53
Accounts receivable, trade, net of allowance for doubtful accounts of $287 and $85 as of September 30, 2021 and December 31, 2020, respectively								20,232			8,006
Inventories, net								29,696			11,602
Prepaid expenses and other current assets		1,668			1,348			5,426			4,648
Total current assets		127,784			24,113			130,505			114,712

Assets held for rent, net		5,131			3,922			10,086			4,705
Property and equipment, net		5,300			5,572			17,462			10,120
Operating lease right-of-use assets, net		585			1,040			17,157			9,675
Financing lease right-of-use assets, net								476			17
Long-term deposits and other assets		35			50			386			230
Investments		3,610			2,500			4,372			5,872
Accrued interest receivable		54		––
Intangible assets, net		19,882			21,982			155,011			31,049
Goodwill		33,506			33,637			223,936			58,449
Total assets	$	195,887		$	92,816		$	559,391		$	234,829

Liabilities and Shareholders’ Equity
Current liabilities
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	2,355		$	3,119		$	14,296		$	3,672
Line of credit								2,161			0
Accrued expenses and other current liabilities		3,364			3,369			12,057			4,755
Lease liabilities, operating, current portion		729			804			2,648			1,107
Lease liabilities, financing, current portion								146			8
Debt, current portion								1,771			614
Warrant liability, current portion								0			2,780
Contingent consideration, current portion	––				377			2,714			2,637
Warrant liability, current portion		1,914		––
Total current liabilities		8,362			7,669			35,793			15,573

Warrant liability, long-term	––				39,602
Contingent consideration, long-term		386			1,537			5,524			4,515
Lease liabilities, operating, long-term		26			550			15,047			8,757
Lease liabilities, financing, long-term								329			12
Debt, long-term								6,122			655
Deferred tax liabilities								7,269			0
Other long-term liabilities		262			4			48			71
Total liabilities		9,036			49,362			70,132			29,583

Commitments and Contingencies (Note 11)
Commitments and Contingencies (Note 12)

Shareholders’ equity
Preferred stock, $0.001 par value; 1,000,000 shares authorized, Series A, 4,250 shares designated, and 0 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		0			0
Common stock, $0.001 par value; 150,000,000 shares authorized, 32,131,165 and 20,825,452 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		32			21
Shareholders’ equity:
Preferred stock, $0.001 par value; 1,000,000 shares authorized, Series A, 4,250 shares designated, and 0 shares issued and outstanding as of September 30, 2021 and December 31, 2020								0			0
Common stock, $0.001 par value; 150,000,000 shares authorized, 41,444,191 and 33,039,146 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively								41			33
Additional paid-in capital		282,076			143,485			579,929			302,598
Accumulated other comprehensive loss								(163	)		0
Accumulated deficit		(95,257	)		(100,052	)		(90,548	)		(97,385	)
Total shareholders’ equity		186,851			43,454			489,259			205,246
Total liabilities and shareholders’ equity	$	195,887		$	92,816		$	559,391		$	234,829

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

Table of Contents

BioLife Solutions, Inc.

~~BioLife Solutions, Inc.~~

Unaudited Condensed Consolidated Statements of Operations

~~(unaudited)~~

													Three Months Ended						Nine Months Ended
	Three Months Ended September 30,						Nine Months Ended September 30,						September 30,						September 30,
(In thousands, except per share and share data)	2020			2019			2020			2019			2021			2020			2021			2020

Product revenue	$	10,804		$	6,422		$	32,020		$	18,864		$	29,201		$	10,804		$	70,445		$	32,020
Service revenue														2,250			0			6,417			0
Rental revenue		475			182			1,341			211			2,349			475			4,989			1,341
Total product and rental revenue		11,279			6,604			33,361			19,075
Operating expenses
Cost of product and rental revenue (exclusive of intangible assets amortization)		4,826			2,094			13,893			5,710
Total product, rental, and service revenue														33,800			11,279			81,851			33,361
Costs and operating expenses:
Cost of product revenue (exclusive of intangible assets amortization)														21,672			4,402			43,280			12,938
Cost of service revenue (exclusive of intangible assets amortization)														1,768			0			4,548			0
Cost of rental revenue (exclusive of intangible assets amortization)														1,424			424			3,140			955
Research and development		1,725			1,032			4,865			2,082			3,219			1,725			8,250			4,865
Sales and marketing		1,588			1,250			4,530			3,032			4,065			1,588			9,228			4,530
General and administrative		3,503			2,348			9,916			6,707			10,081			3,503			22,058			9,916
Intangible assets amortization		706			361			2,100			465
Intangible asset amortization														2,525			706			5,340			2,100
Acquisition costs		179			291			417			538			345			179			1,616			417
Change in fair value of contingent consideration		(2	)		—			(1,528	)		—			(140	)		(2	)		1,086			(1,528	)
Total operating expenses		12,525			7,376			34,193			18,534			44,959			12,525			98,546			34,193
Operating income (loss)		(1,246	)		(772	)		(832	)		541
Operating loss														(11,159	)		(1,246	)		(16,695	)		(832	)

Other income (expense)
Other income (expense):
Change in fair value of warrant liability		(1,005	)		1,128			4,467			(14,949	)		0			(1,005	)		(121	)		4,467
Change in fair value of investments		1,110			0			1,110			0			0			1,110			0			1,110
Interest income		16			110			63			417
Interest expense		(3	)		(1	)		(4	)		(5	)
Interest (expense) income, net														(194	)		13			(331	)		59
Other expense		(5	)		(13	)		(9	)		(13	)		(7	)		(5	)		(7	)		(9	)
Loss from equity method investment in SAVSU		—			(291	)		—			(739	)
Gain on Acquisition of SAVSU		0			10,108			0			10,108
Total other income (expenses)		113			11,041			5,627			(5,181	)
Gain on acquisition of Sexton Biotechnologies, Inc.														6,451			0			6,451			0
Total other income, net														6,250			113			5,992			5,627

Net income (loss) before provision for income taxes		(1,133	)		10,269			4,795			(4,640	)
Income tax (benefit)		0			0			0			0
(Loss) income before income tax benefit														(4,909	)		(1,133	)		(10,703	)		4,795
Income tax benefit														4,988			0			17,540			0
Net income (loss)		(1,133	)		10,269			4,795			(4,640	)	$	79		$	(1,133	)	$	6,837		$	4,795

Net income attributable to common stockholders:
Net income (loss) attributable to common shareholders:
Basic	$	(1,133	)	$	8,380		$	4,322		$	(4,640	)	$	77		$	(1,133	)	$	6,621		$	4,322
Diluted	$	(1,133	)	$	8,862		$	279		$	(4,640	)		77			(1,133	)		6,628			279
Earnings per share attributable to common stockholders
Earnings (loss) per share attributable to common shareholders:
Basic	$	(0.04	)	$	0.42		$	0.17		$	(0.24	)	$	0.00		$	(0.04	)	$	0.18		$	0.17
Diluted	$	(0.04	)	$	0.35		$	0.01		$	(0.24	)	$	0.00		$	(0.04	)	$	0.17		$	0.01
Weighted average shares used to compute earnings per share attributable to common stockholders:
Weighted average shares used to compute earnings (loss) per share attributable to common shareholders:
Basic		31,639,420			19,735,364			25,418,375			19,071,722			40,911,801			31,639,420			37,435,224			25,418,375
Diluted		31,639,420			25,343,112			29,412,538			19,071,722			43,296,470			31,639,420			39,984,923			29,412,538

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

Table of Contents

BioLife Solutions, Inc.

~~BioLife Solutions, Inc.~~

Unaudited Condensed Consolidated Statements of ~~Shareholders’ Equity~~

~~(unaudited)~~

Nine Months Ended September 30, 2020

(In thousands, except share data)

Preferred
Stock
Shares –
Series A

Preferred
Stock
Amount –
Series A

Common
Stock
Shares

Common
Stock
Amount

Additional
Paid-in
Capital

Accumulated
Deficit

Total
Shareholders’
Equity

Balance, December 31, 2019
0 $ 0 20,825,452 $ 21 $ 143,485 $ (100,052
)
$ 43,454
Stock issued as 2019 bonus payout
— 0 — 0 314 0 314
Sale of common stock, net of costs
0 0 7,856,012 8 100,113 0 100,121
Common stock issued for services
3,175 0 60 0 60
Stock-based compensation
— 0 — 0 3,818 0 3,818
Stock option exercises
0 0 528,793 0 1,028 0 1,028
Cashless exercises of 3,871,405 warrants
0 0 2,747,970 3 33,108 0 33,111
Warrant exercises
— — 8,500 0 150 0 150
Stock issued – on vested RSUs
0 0 161,263 0 0 0 0
Net income
— 0 — 0 0 4,795 4,795
Balance, September 30, 2020
0 $ 0 32,131,165 $ 32 $ 282,076 $ (95,257
)
$ 186,851

Three Months Ended September 30, 2020

(In thousands, except share data)

Preferred
Stock
Shares –
Series A

Preferred
Stock
Amount –
Series A

Common
Stock
Shares

Common
Stock
Amount

Additional
Paid-in
Capital

Accumulated
Deficit

Total
Shareholders’
Equity

Balance, June 30, 2020
0 $ 0 25,982,367 $ 26 $ 199,941 $ (94,124
)
$ 105,843
Sale of common stock, net of costs
0 0 5,951,250 6 80,201 0 80,207
Common stock issued for services
0 0 3,175 0 60 0 60
Stock-based compensation
— 0 — 0 1,560 0 1,560
Stock option exercises
0 0 118,000 0 244 0 244
Warrant exercises
— — 3,500 0 70 0 70
Stock issued – on vested RSUs
0 0 72,873 0 0 0 0
Net loss
— 0 — 0 0 (1,133
)
(1,133
)
Balance, September 30, 2020
0 $ 0 32,131,165 $ 32 $ 282,076 $ (95,257
)
$ 186,851

Nine Months Ended September 30, 2019

(In thousands, except share data)

Preferred
Stock
Shares –
Series A

Preferred
Stock
Amount –
Series A

Common
Stock
Shares

Common
Stock
Amount

Additional
Paid-in
Capital

Accumulated
Deficit

Total
Shareholders’
Equity

Balance, December 31, 2018
0 $ 0 18,547,406 $ 19 $ 113,008 $ (98,395
)
$ 14,632
Stock-based compensation
— 0 — 0 2,179 0 2,179
Shares issued as consideration in SAVSU acquisition
1,100,000 1 19,931 0 19,932
Stock option exercises
0 0 474,237 0 841 0 841
Warrant exercises
— — 116,500 0 2,247 0 2,247
Stock issued – on vested RSUs
0 0 106,682 0 0 0 0
Net loss
— 0 — 0 0 (4,640
)
(4,640
)
Balance, September 30, 2019
0 $ 0 20,344,825 $ 20 $ 138,206 $ (103,035
)
$ 35,191

Three Months Ended September 30, 2019

(In thousands, except share data)

Preferred
Stock
Shares –
Series A

Preferred
Stock
Amount –
Series A

Common
Stock
Shares

Common
Stock
Amount

Additional
Paid-in
Capital

Accumulated
Deficit

Total
Shareholders’
Equity

Balance, June 30, 2019
0 $ 0 18,898,609 $ 19 $ 115,357 $ (113,304
)
$ 2,072
Stock-based compensation
— 0 — 0 829 0 829
Shares issued as consideration in SAVSU acquisition
0 0 1,100,000 1 19,931 0 19,932
Stock option exercises
0 0 238,176 0 378 0 378
Warrant exercises
— — 87,500 0 1,711 0 1,711
Stock issued – on vested RSUs
0 0 20,540 0 0 0 0
Net income
— 0 — 0 0 10,269 10,269
Balance, September 30, 2019
0 $ 0 20,344,825 $ 20 $ 138,206 $ (103,035
)
$ 35,191

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

~~Table of Contents~~

~~BioLife Solutions, Inc.~~

~~Condensed Consolidated Statements of Cash Flows~~

~~(unaudited~~)Comprehensive Income (Loss)

Nine Months Ended
September 30,

(In thousands)

2020

2019

Cash flows from operating activities

Net income (loss)
$ 4,795 $ (4,640
)
Adjustments to reconcile net income to net cash provided by operating activities
��
Depreciation
1,454 373
Amortization of intangible assets
2,100 465
Non cash lease expense
455 361
Stock-based compensation
3,818 2,179
Loss from equity method investment in SAVSU
0 739
Gain on acquisition of SAVSU
0 (10,108
)
Change in fair value of investments
(1,110
)
0
Change in fair value of contingent consideration
(1,528
)
0
Change in fair value of warrant liability
(4,467
)
14,949
Stock issued for services
30 0
Other
9 15

Change in operating assets and liabilities

Accounts receivable, trade, net
(820
)
(372
)
Inventories
(65
)
(1,730
)
Prepaid expenses and other current assets
68

(272
)
Accounts payable
(604
)
377
Other payables
(406
)
(87
)
Accrued compensation and other current liabilities
689 65
Other
(30
)
(98
)
Net cash provided by operating activities
4,388 2,216

Cash flows from investing activities

Payments related to the SciSafe acquisition (500 ) 0
Cash acquired on acquisition of SAVSU
0 1,251
Payments related to the Astero Bio acquisition, net of cash acquired
0 (12,439
)
Investment in iVexSol
0 (1,000
)
Purchase of property and equipment
(370
)
(356
)
Purchase of assets held for rent, net
(1,791
)
(453
)
Proceeds from sale of equipment
3 0
Net cash used in investing activities
(2,658
)
(12,997
)

Cash flows from financing activities

Proceeds from PPP Loan
2,175 0
Payoff of PPP Loan
(2,175
)
0
Payments of contingent consideration
(483
)
0
Proceeds from sale of common stock, net of $6.2 million of costs 100,251 0
Proceeds from exercise of common stock options
1,028 841
Proceeds from exercise of warrants
40 553
Payments of costs related to stock issuance
0 (44
)
Other
(30
)
(21
)
Net cash provided by financing activities
100,806 1,329

Net increase (decrease) in cash, cash equivalents and restricted cash
102,536 (9,452
)
Cash, cash equivalents and restricted cash - beginning of period
6,448 30,657
Cash, cash equivalents and restricted cash - end of period
$ 108,984 $ 21,205

Non-cash investing and financing activities

Cashless exercise of warrants reclassed from warrant liability to common stock
$ 33,111 $ 0
Reclassification of warrant liability to equity upon exercise
$ 110 $ 1,694
Purchase of property & equipment not yet paid
$ 29 $ 146
Financing costs paid in a prior period $ 130 $ 0
Deferred financing costs not yet paid
$ 0 $ 53
Stock issued as prepayment of services
$ 30 $ 0
Purchase of equipment with debt
$ 270 $ 0
Stock issued as bonus consideration
$ 314 $ 0
Stock issued as consideration to acquire SAVSU
$ 0 $ 19,932

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(In thousands)	2021			2020			2021			2020

Net income (loss)	$	79		$	(1,133	)	$	6,837		$	4,795

Other comprehensive loss		(166	)		0			(163	)		0

Comprehensive (loss) income	$	(87	)	$	(1,133	)	$	6,674		$	4,795

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

Table of Contents

BioLife Solutions, Inc.

Unaudited Condensed Consolidated Statements of Shareholders’ Equity

	Nine Months Ended September 30, 2021
	Series A		Series A									Accumulated
	Preferred		Preferred		Common		Common		Additional			Other						Total
	Stock		Stock		Stock		Stock		Paid-in			Comprehensive			Accumulated			Shareholders’
(In thousands, except share data)	Shares		Amount		Shares		Amount		Capital			Loss			Deficit			Equity
Balance, December 31, 2020		-	$	-		33,039,146	$	33	$	302,598		$	0		$	(97,385	)	$	205,246
Stock issued as consideration in GCI acquisition		-		-		6,636,470		7		232,734			-			-			232,741
Stock issued as consideration in Sexton acquisition		-		-		530,502		-		31,977			-			-			31,977
Fees incurred for registration filings		-		-		-		-		(188	)		-			-			(188	)
Stock based compensation		-		-		-		-		8,891			-			-			8,891
Stock option exercises		-		-		632,665		1		1,016			-			-			1,017
Cashless exercises of 79,100 warrants		-		-		70,030		-		2,901			-			-			2,901
Stock issued – on vested RSAs		0		-		535,378		-		-			-			-			-
Foreign currency translation		-		-		-		-		-			(163	)		-			(163	)
Net income		-		-		-		-		-			-			6,837			6,837
Balance, September 30, 2021		-	$	-		41,444,191	$	41	$	579,929		$	(163	)	$	(90,548	)	$	489,259

	Three Months Ended September 30, 2021
	Series A		Series A									Accumulated
	Preferred		Preferred		Common		Common		Additional			Other						Total
	Stock		Stock		Stock		Stock		Paid-in			Comprehensive			Accumulated			Shareholders’
(In thousands, except share data)	Shares		Amount		Shares		Amount		Capital			Income (Loss)			Deficit			Equity
Balance, June 30, 2021		-	$	-		40,560,720	$	41	$	542,864		$	3		$	(90,627	)	$	452,281
Stock issued as consideration in Sexton acquisition		-		-		530,502		-		31,977			-			-			31,977
Fees incurred for registration filings		-		-		-		-		(188	)		-			-			(188	)
Stock based compensation		-		-		-		-		4,868			-			-			4,868
Stock option exercises		-		-		244,906		-		408			-			-			408
Stock issued – on vested RSAs		0		-		108,063		-		-			-			-			-
Foreign currency translation		-		-		-		-		-			(166	)		-			(166	)
Net income		-		0		-		0		0			0			79			79
Balance, September 30, 2021		-	$	-		41,444,191	$	41	$	579,929		$	(163	)	$	(90,548	)	$	489,259

	Nine Months Ended September 30, 2020
	Series A		Series A								Accumulated
	Preferred		Preferred		Common		Common		Additional		Other					Total
	Stock		Stock		Stock		Stock		Paid-in		Comprehensive		Accumulated			Shareholders’
(In thousands, except share data)	Shares		Amount		Shares		Amount		Capital		Income		Deficit			Equity
Balance, December 31, 2019		0	$	0		20,825,452	$	21	$	143,485	$	-	$	(100,052	)	$	43,454
Stock issued as 2019 bonus payout		-		-		-		-		314		-		-			314
Sale of common stock, net of fees		-		-		7,856,012		8		100,113		-		-			100,121
Common stock issued for services		-		-		3,175		-		60		-		-			60
Stock based compensation		-		-		-		-		3,818		-		-			3,818
Stock option exercises		-		-		528,793		-		1,028		-		-			1,028
Cashless exercise of 3,871,405 warrants		-		-		2,747,970		3		33,108		-		-			33,111
Warrant exercises		-		-		8,500		-		150		-		-			150
Stock issued – on vested RSAs		0		-		161,263		-		-		-		-			-
Net income		-		-		-		-		-		-		4,795			4,795
Balance, September 30, 2020		-	$	-		32,131,165	$	32	$	282,076	$	0	$	(95,257	)	$	186,851

	Three Months Ended September 30, 2020
	Series A		Series A								Accumulated
	Preferred		Preferred		Common		Common		Additional		Other					Total
	Stock		Stock		Stock		Stock		Paid-in		Comprehensive		Accumulated			Shareholders’
(In thousands, except share data)	Shares		Amount		Shares		Amount		Capital		Income		Deficit			Equity
Balance, June 30, 2020		-	$	-		25,982,367	$	26	$	199,941	$	-	$	(94,124	)	$	105,843
Sale of common stock, net of fees		-		-		5,951,250		6		80,201		-		-			80,207
Common stock issued for services		-		-		3,175		-		60		-		-			60
Stock based compensation		-		-		-		-		1,560		-		-			1,560
Stock option exercises		-		-		118,000		-		244		-		-			244
Warrant exercises		-		-		3,500		-		70		-		-			70
Stock issued – on vested RSAs		0		-		72,873		-		-		-		-			-
Net loss		-		-		-		-		-		-		(1,133	)		(1,133	)
Balance, September 30, 2020		-	$	-		32,131,165	$	32	$	282,076	$	-	$	(95,257	)	$	186,851

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

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BioLife Solutions, Inc.

~~BIOLIFE SOLUTIONS, INC.~~Unaudited Condensed Consolidated Statements of Cash Flows

~~Notes to~~

	Nine Months Ended
	September 30,
(In thousands)	2021			2020
Cash flows from operating activities
Net income	$	6,837		$	4,795
Adjustments to reconcile net income to net cash (used in) provided by operating activities
Depreciation		3,035			1,454
Amortization of intangible assets		5,340			2,100
Stock-based compensation		8,891			3,818
Non-cash lease expense		1,795			455
Deferred income tax benefit		(17,540	)		0
Change in fair value of contingent consideration		1,086			(1,528	)
Change in fair value of warrant liability		121			(4,467	)
Change in fair value of investments		0			(1,110	)
Gain on acquisition of Sexton Biotechnologies, Inc.		(6,451	)		0
Stock issued for services		0			30
Loss on disposal of assets held for rent, net		333			0
Other		504			9

Change in operating assets and liabilities, net of effects of acquisitions
Accounts receivable, trade, net		(7,140	)		(820	)
Inventories		(1,237	)		(65	)
Prepaid expenses and other current assets		1,769			68
Accounts payable		1,368			(604	)
Accrued expenses and other current liabilities		(2,530	)		689
Other		0			(436	)
Net cash (used in) provided by operating activities		(3,819	)		4,388

Cash flows from investing activities
Cash acquired in acquisition of Global Cooling, Inc. and Sexton Biotechnologies, Inc.		1,559			-
Payments related to the acquisition of SciSafe, net of cash acquired		-			(500	)
Purchases of property and equipment		(6,819	)		(370	)
Purchases of assets held for lease		(5,412	)		(1,791	)
Proceeds from sale of equipment		22			3
Net cash used in investing activities		(10,650	)		(2,658	)

Cash flows from financing activities
Proceeds from Paycheck Protection Program ("PPP") Loan		0			2,175
Payoff of PPP Loan		0			(2,175	)
Proceeds from equipment loans		1,640			0
Payments of contingent consideration		0			(483	)
Proceeds from sale of common stock, net of $6.2 million of costs in 2020		0			100,251
Fees paid related to issuance of common stock		(145	)		-
Proceeds from line of credit		26,450			0
Payments on line of credit		(28,657	)		0
Proceeds from exercise of common stock options		1,017			1,028
Proceeds from exercise of warrants		0			40
Payments on financed insurance premium		(698	)		0
Other		(280	)		(30	)
Net cash (used in) provided by financing activities		(673	)		100,806

Net (decrease) increase in cash, cash equivalents, and restricted cash		(15,142	)		102,536
Cash, cash equivalents, and restricted cash – beginning of period		90,456			6,448
Effects of currency translation on cash, cash equivalents, and restricted cash		(163	)		0
Cash, cash equivalents, and restricted cash – end of period	$	75,151		$	108,984
Non-cash investing and financing activities
Cashless exercise of warrants reclassified from warrant liability to common stock	$	2,901		$	33,111
Stock issued as consideration to acquire Global Cooling, Inc. and Sexton Biotechnologies, Inc.	$	264,718		$	0
Equipment acquired under operating leases	$	6,971		$	0
Equipment acquired under finance leases	$	440		$	0
Purchase of property and equipment not yet paid	$	305		$	29
Reclassification of warrant liabilities to equity upon exercise	$	0		$	110
Financing costs paid in a prior period	$	0		$	130
Stock issued as a prepayment of services	$	0		$	30
Stock issued as bonus consideration	$	0		$	314
Purchase of equipment with debt	$	0		$	270

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

~~(unaudited)~~Statements.

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BioLife Solutions, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

1. Organization and significant accounting policies

~~Organization and Significant Accounting Policies~~

Business

BioLife Solutions, Inc. (“~~BioLife,” “us,” “we,” “our,”~~BioLife”, “us”, “we”, “our”, or the “Company”) is a ~~leading~~ developer, manufacturer, and supplier of a portfolio of ~~cell and gene therapy~~ bioproduction ~~products~~tools and services including proprietary biopreservation media, automated thawing devices, cloud-connected shipping containers, ultra-low temperature mechanical freezers, cryogenic and ~~freezer technology.~~controlled rate freezers and biological and pharmaceutical materials storage. Our CryoStor® freeze media and HypoThermosol® hypothermic storage media are optimized to preserve cells ~~during distribution and storage.~~in the regenerative medicine market. These novel biopreservation media products are serum-free and protein-free, fully defined, and are formulated to reduce preservation-induced cell damage and ~~death; offering commercial companies~~death. Our Sexton cell processing product line includes human platelet lysates (“hPL”) for cell expansion reducing risk and ~~clinical researchers significant improvement~~improving downstream performance over fetal bovine serum, human serum, and other chemically defined media, CellSeal® cryogenic vials that are purpose-built rigid containers used in ~~shelf life~~cell and ~~post-preservation viability~~gene therapy (“CGT”) that can be filled manually or with high throughput systems, and ~~function.~~automated cell processing machines that bring multiple processes traditionally performed by manual techniques under a higher level of control to protect therapies from loss or contamination. Our ThawSTAR® product line is comprised of a family of automated thawing devices for frozen cell and gene therapies packaged in cryovials and cryobags. These products ~~improve the quality of high-value,~~administer temperature-sensitive biologic therapies to patients by standardizing the thawing process and reducing the risks of contamination and overheating, which are inherent with the use of traditional water baths. Our ~~evo® shipping containers are innovative high-performance cloud-connected passive storage and transport containers for temperature-sensitive biologics and pharmaceuticals.Our~~ cryogenic freezer technology provides for controlled rate freezing and storage of biologic materials. Our ultra-low temperature mechanical freezers allow biological materials and vaccines to be stored at temperatures which range from negative 20℃ to negative 80℃. Our evo® shipping containers provide cloud-connected passive storage and transport containers for temperature-sensitive biologics and pharmaceuticals. Our biological and pharmaceutical materials storage services provide facilities that allow for real-time tracking of biologic materials and vaccines that can be stored at a wide range of temperatures.

~~Basis~~Use of ~~Presentation~~estimates

The ~~condensed consolidated~~preparation of financial statements ~~included herein have been prepared by BioLife Solutions, Inc.~~ in ~~accordance~~conformity with generally accepted accounting principles in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Significant estimates and assumptions by management affect the Company’s allowance for doubtful accounts, the net realizable value of inventory, fair value of warrant liability, valuation of market based awards, valuations and purchase price allocations related to investments and business combinations, expected future cash flows including growth rates, discount rates, terminal values and other assumptions and estimates used to evaluate the recoverability of long-lived assets, estimated fair values of intangible assets and goodwill, amortization methods and periods, certain accrued expenses, share-based compensation, contingent consideration from business combinations, tax reserves, and the recoverability of the Company’s net deferred tax assets and the related valuation allowance.

The Company regularly assesses these estimates; however, actual results could differ materially from these estimates. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances.

Basis of presentation

The Unaudited Condensed Consolidated Financial Statements included herein have been prepared by BioLife in accordance with U.S. GAAP and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), for Quarterly Reports on Form 10-Q and Article 10 of Regulation S-X and do not include all of the information and footnote disclosures required by U.S. GAAP. These ~~condensed consolidated financial statements~~Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the ~~audited consolidated financial statements~~Audited Consolidated Financial Statements and accompanying notes thereto included in the Company’s Annual Report on Form 10-K as of and for the fiscal year ended December 31, ~~2019.~~2020.

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

~~The condensed consolidated financial statements~~Unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries, Astero Bio Corporation (“Astero,” and the Astero product line, ~~“ThawSTAR”~~“ThawStar” acquired on April 1, 2019), SAVSU Technologies, Inc. (“SAVSU” ~~and the product line “evo”~~ acquired on August 8, 2019), ~~and~~ Arctic Solutions, Inc. ~~dba~~doing business as Custom Biogenic Systems (“CBS” ~~and the freezer and accessory product lines~~ acquired on November 12, 2019), SciSafe Holdings, Inc. (“SciSafe” acquired on October 1, 2020), Global Cooling, Inc. doing business as Stirling Ultracold (“Global Cooling” or “GCI” acquired on May 3, 2021), and Sexton Biotechnologies, Inc. (“Sexton” acquired on September 1, 2021). All ~~significant~~ intercompany accounts and transactions have been eliminated in consolidation.

In the opinion of management, the accompanying ~~unaudited condensed consolidated financial statements~~Unaudited Condensed Consolidated Financial Statements include all adjustments, consisting of only normal, recurring adjustments necessary for a fair presentation of the financial position, results of operations, and cash flows. The results of operations for the interim periods presented are not necessarily indicative of results to be expected for the entire year.

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Financial Statement Reclassification

Certain classifications on the Unaudited Condensed Consolidated ~~Statements of Cash Flows~~Balance Sheets related to ~~non cash lease expense and~~ accrued expenses and other current liabilities, ~~for the~~debt, current portion, and debt, long-term as of ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2019~~December 31, 2020 were reclassified to conform to current period presentation. These reclassifications have no impact on previously reported total revenue, net (loss) income, ~~(loss),~~ net assets, or total operating cash flows.

Segment reporting

The Company operates and manages its business as one reportable and operating segment, which is the business of bioproduction tools and services. The Company’s Chief Executive Officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance.

Significant ~~Accounting Policies~~accounting policies

There have been no significant changes to the accounting policies during the nine months ended September 30, ~~2020,~~2021, as compared to the significant accounting policies described in our Annual Report on Form 10-K.

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Liquidity and ~~Capital Resources~~capital resources

On September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, we had ~~$109~~$75.1 million and ~~$6.4 million in cash, cash equivalents and restricted cash, respectively. We acquired Astero on~~ ~~April 1, 2019~~ ~~for $12.5~~$90.4 million in cash and ~~contingent consideration of up to $8.5 million. We paid $483,000 of contingent consideration related to~~ ~~2019~~ ~~revenues of Astero in the~~ ~~second~~ ~~quarter of~~ ~~2020.~~ On ~~August 8, 2019,~~ ~~we acquired the remaining shares of SAVSU which we did~~ ~~not~~ ~~own for 1,100,000 shares of common stock. On~~ ~~November 12, 2019,~~ ~~we acquired CBS for $11.0 million in~~ cash ~~$4.0 million in shares of our common stock, and up to $15.0 million in contingent consideration payable in cash or stock (which payment requirement has~~ ~~not~~ ~~been triggered or otherwise paid to date). On~~ ~~October 1, 2020,~~ we acquired SciSafe Holdings, Inc. (“SciSafe”) for $15.0 million in cash, 611,383 shares of common stock, and up to 626,000 additional shares of common stock as contingent consideration (which payment requirement has ~~not~~ ~~been triggered or otherwise paid to date).~~

On ~~July 7, 2020,~~ the Company closed its public offering of 5,951,250 shares of common stock at the public offering price of $14.50 per share, which includes the shares purchased pursuant to the exercise in full of the underwriters' option to purchase up to an additional 776,250 shares of its common stock. The net proceeds from the offering to BioLife, after deducting underwriting discounts and commissions and estimated underwriter offering expenses of $6.1 million, were approximately $80.2 million.

~~As of~~ ~~September 30, 2020,~~ ~~amounts included in restricted cash in escrow represent those required to be held by a~~ ~~third~~ ~~party for the purchase of SciSafe by the Company. On~~ ~~October 1, 2020,~~ ~~the purchase was completed and the funds held in escrow were disbursed to the selling shareholders.~~

equivalents, respectively. Based on our current expectations with respect to our future revenue and expenses, we believe that our current level of cash and cash equivalents ~~including proceeds from the public offering,~~ will be sufficient to meet our liquidity needs for at least the foreseeable future. However, the Company may choose to raise additional capital through a debt or equity financing ~~in an attempt to mitigate the heightened level of business uncertainty caused by the COVID-~~19 ~~pandemic, or~~ in order to pursue additional acquisition or strategic investment opportunities. Additional capital, if required, may not be available on reasonable terms, if at all.

Risks and ~~Uncertainties~~

~~COVID-~~19 ~~Pandemic~~uncertainties

On March 10, 2020, the World Health Organization declared the outbreak of the novel strain of coronavirus, SARS-CoV-2, which causes coronavirus disease 2019 (“COVID-19”) a pandemic. The COVID-19 pandemic, and the resulting restrictions intended to slow the spread of COVID-19, including stay-at-home orders, business shutdowns and other restrictions, has affected the Company’s business in several ways. ~~Further, while the sales of our automated thaw~~The CGT industry that BioLife services has a complex and ~~freezer product lines were~~highly controlled supply chain that has been impacted by COVID-19. Challenges faced include, but are not ~~materially affected in the~~ ~~three~~ ~~months ended~~ ~~March 31, 2020,~~ ~~we believe the sales of these capital equipment products were negatively impacted in the~~ ~~second~~ ~~quarter ended~~ ~~June 30, 2020,~~ ~~and to a lesser degree the~~ ~~third~~ ~~quarter ended~~ ~~September 30, 2020,~~ due to customer facility closures resulting in delayed deliveries and continued limitations on our in-person, direct selling process. Our automated thaw product line continued to be negatively impacted, while we saw an increase in sales in our freezer product line in the ~~third~~ ~~quarter ended~~ ~~September 30, 2020~~ ~~compared~~limited to, the ~~second~~ ~~quarter ended~~ ~~June 30, 2020.~~ ~~We believe that new capital equipment decisions~~ ~~may~~ ~~be delayed due to the pandemic, which would impact our automated thaw~~diversion of healthcare industry resources towards studying and ~~freezer product lines, although at this time, the Company cannot estimate the financial impact.~~

~~The Company reviews capital and amortizing intangible assets (long-lived assets) for impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amount~~ ~~may~~ ~~not~~ ~~be recoverable. The Company determined that the economic uncertainty caused by the~~treating COVID-19, ~~pandemic was~~logistics operations slowing down on a ~~trigger for an impairment review in the quarter ended~~ ~~June 30, 2020~~ ~~of certain long-lived assets based on the expected near-term weakness in ThawSTAR~~global scale, and ~~freezer revenue resulting from the impact of COVID-~~~~19.~~

As a result of the Company’s outlook for near term revenue from the ThawSTAR and freezer product lines, estimated undiscounted cash flow projections were developed to determine if any impairment of the related intangible assets was warranted. After conducting such review, the Company determined that there was 0 impairment of the remaining long-lived assets as of ~~June 30, 2020.~~ ~~Given the inherent uncertainties of the COVID-~~19 ~~pandemic and the estimates used in these cash flow projections, changes based on facts and circumstances in future quarters could give rise to impairment.~~

~~The Company revised the revenue projections for the ThawSTAR and freezer product lines in the~~ ~~second~~ ~~quarter ended~~ ~~June 30, 2020~~ ~~to determine the impact on the fair value of the contingent consideration~~changing environments related to ~~the existing earnout provisions. Based on results of the~~ ~~third~~ ~~quarter ended~~ ~~September 30, 2020~~ ~~related to these~~ ~~two~~ ~~product lines, we did~~ ~~not~~ ~~make further adjustments to our revenue projections. The Company reduced the fair value of the combined contingent consideration liability from $388,000 at~~ ~~June 30, 2020,~~ ~~to $386,000 at~~ ~~September 30, 2020~~ ~~due to the time value of money and actual results for the~~ ~~third~~ ~~quarter ended~~ ~~September 30, 2020.~~in-person sales efforts.

The Company may also experience other negative impacts of the COVID-19 outbreak such as the lack of availability of the Company’s key personnel, additional temporary closures of the Company’s office or the facilities of the Company’s business partners, customers, third party service providers or other vendors, the inability to travel to market and sell our products, and the interruption of the Company’s supply chain, distribution channels, liquidity and capital or financial markets.

Any disruption and volatility in the global capital markets as a result of the pandemic may increase the Company’s cost of capital and adversely affect the Company’s ability to access financing when and on terms that the Company desires. In addition, a potential recession resulting from the spread of COVID-19 could materially affect the Company’s business, especially if a recession results in higher unemployment causing potential patients to not have access to health insurance.

The ultimate extent to which the COVID-19 pandemic and its repercussions impact the Company’s business will depend on future developments, which are highly uncertain. However, the foregoing and other continued disruptions to the Company’s business as a result of COVID-19 could result in a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

On March 27, 2020, the President of the United States signed into law the “Coronavirus Aid, Relief, and Economic Security ~~(CARES)~~(“CARES”) Act.” The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security tax payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions, and technical corrections to tax depreciation methods for qualified improvement property. ~~The Company will continue to monitor the impact that the CARES Act~~ ~~may~~ ~~have on the Company’s business, financial condition, results of operations, or liquidity.~~

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As of March 30, 2020, the ~~company~~Company started deferring the employer side of social security tax ~~payments.~~payments as allowed by the CARES Act. As of September 30, 2021, the amount of deferred social security tax payments was $432,000. We ~~will~~are required to pay back 50% of our total deferred payments in 2021 and the remaining 50% in 2022.

On March 11, 2021, the President of the United States signed into law the “American Rescue Plan Act of 2021” (the American Rescue Plan), which included additional economic stimulus and tax credits, including the expansion of the Employee Retention Credit.

~~Table~~

In the SciSafe acquisition, the Company assumed a $295,300 loan from the PPP. The loan incurs interest at 1% and is unsecured. Should any portion of ~~Contents~~

the principal of the note not meet the forgiveness provisions, monthly principal and interest payments will be repayable using a monthly amortization schedule starting from the end of the covered period until maturity in October 2022. The provisions under the PPP allow for recipients to receive loan forgiveness from the Small Business Association, who is the lender of the funds. There can be no assurance that the Company will obtain full forgiveness of the loans.

Concentrations of credit risk and business risk

InWe derived approximately 19% and 14% of revenue from one customer in the three and nine months ended September 30, ~~2020,~~2021, ~~we derived~~respectively, and approximately 11% ~~of our product revenue~~and 12% from 1one customer ~~and~~ in thethree and nine months ended September 30, 2020, ~~we derived approximately 12% of our revenue from 1 customer. In the~~ ~~three~~ ~~months ended~~ ~~September 30, 2019,~~ ~~we derived approximately 33% of our product revenue from~~ ~~three~~ ~~customers and in the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2019,~~ ~~we derived approximately 17% of our revenue from 1 customer.~~respectively. No other customer accounted for more than 10% of revenue in the three and nine months ended September 30, ~~2020~~ or ~~2019.~~ ~~In the~~ ~~three~~ ~~months ended~~ ~~September 30, 2020~~2021 and ~~2019,~~2020. ~~we derived approximately 62% and 81%, of our~~All revenue from ~~CryoStor products, respectively. Due to our acquisitions~~foreign customers is denominated in ~~2019~~ ~~and~~ ~~2020,~~ ~~we expect both our revenue concentration related to CryoStor and our customer concentrations to be reduced for the year ended~~ ~~December 31, 2020.~~ At ~~September 30, 2020,~~ ~~2 customers accounted for approximately 32% of total gross accounts receivable. At~~ ~~December 31, 2019,~~ ~~2 customers accounted for approximately 25% of total gross accounts receivable.~~ United States dollars.

The following table represents the Company’s total revenue by geographic area (based on the location of the customer):

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended						Nine Months Ended
Revenue by customers’ geographic locations	2020			2019			2020			2019
United States		73	%		76	%		73	%		70	%
Canada		11	%		12	%		13	%		17	%
													September 30,						September 30,
Revenue by customers’ geographic locations													2021			2020			2021			2020
North America														88	%		84	%		87	%		86	%
Europe, Middle East, Africa (EMEA)		13	%		11	%		12	%		11	%		9	%		13	%		10	%		12	%
Other		3	%		1	%		2	%		2	%		3	%		3	%		3	%		2	%
Total revenue		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%

We derived approximately 30% and 33% of our revenue from CryoStor products in the three and nine months ended September 30, 2021, respectively, and 62% and 64% in the three and nine months ended September 30, 2020. We also derived approximately 29% and 21% of our revenue from our 780XLE freezer line in the three and nine months ended September 30, 2021, respectively. The 780XLE freezer line did not account for more than 10% of revenues during the three and nine months ended September 30, 2020.

As of September 30, 2021 and December 31, 2020, two customers and one customer accounted for approximately 29% and 17% of total gross accounts receivable, respectively. No other customers accounted for more than 10% of gross accounts receivable as of September 30, 2021 and December 31, 2020.

As of September 30, 2021 and December 31, 2020, one supplier accounted for 11% and 21% of accounts payable, respectively. No other suppliers accounted for more than 10% of accounts payable as of September 30, 2021 and December 31, 2020.

Recent accounting pronouncements

In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This update amends guidance to require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Revenue from Contracts with Customers (Topic 606). At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption of the amendments is permitted including adoption in an interim period. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

In July 2021, the FASB issued ASU 2021-05, Leases (Topic 842): Lessors - Certain Leases with Variable Lease Payments ("ASU 2021-05"). The guidance in ASU 2021-05 amends the lease classification requirements for the lessors under certain leases containing variable payments to align with practice under Accounting Standards Codification (“ASC”) 840. The lessor should classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if both of the following criteria are met: 1) the lease would have been classified as a sales-type lease or a direct financing lease in accordance with the classification criteria in ASC 842-10-25-2 through 25-3; and 2) the lessor would have otherwise recognized a day-one loss. The amendments in ASU 2021-05 are effective for fiscal years beginning after December 15, 2021, with early adoption permitted. The Company is currently evaluating the timing and impact of the adoption of ASU 2021-05 on the Company’s consolidated financial statements.

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In May 2021, the FASB issued ASU No.2021-04, Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, which clarifies the accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange. Specifically, ASU 2021-04 requires the issuer to treat a modification of an equity-classified warrant as an exchange of the original warrant. The difference between the fair value of the modified warrant and the fair value of the warrant immediately before modification is then recognized as an issuance cost or discount of the related transaction. ASU 2021-04 is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted. ASU 2021-04 should be applied prospectively to modifications or exchanges occurring after the effective date. Either the full or modified retrospective adoption method is allowed. We do not have any equity-classified written call options that would be subject to this guidance. Therefore, we do not expect any impact on our consolidated financial statements and related disclosures.

In August 2020, the FASB issued ASU No.2020-06,Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40). ASU 2020-06 simplifies the accounting for convertible debt instruments and convertible preferred stock by reducing the number of accounting models and the number of embedded conversion features that could be recognized separately from the primary contract. ASU 2020-06 also enhances transparency and improves disclosures for convertible instruments and earnings per share guidance. ASU 2020-06 is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. This update permits the use of either the modified retrospective or fully retrospective method of transition. The Company adopted this guidance and it did not have a material impact on the company’s financial position, results of operation or cash flows.

In March 2020, the FASB issued ASU No.2020-04,Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates and, particularly, the risk of cessation of the London Interbank Offered Rate (“LIBOR”), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction-based and less susceptible to manipulation. The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform—Scope, which clarified the scope and application of the original guidance. The Company will adopt these standards when LIBOR is discontinued. The ASU can be adopted no later than December 1, 2022, with early adoption permitted. The Company has not yet adopted this ASU and is evaluating the effect of adopting this new accounting guidance.

In June 2016, the FASB issued ASU No. 2016-13, ~~“Financial~~Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial ~~Instruments.”~~Instruments. ASU 2016-13 requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For Smaller Reporting Companies as defined by the SEC, ASU 2016-13 is effective for fiscal years beginning after December 15, ~~2022,~~2023, including interim periods within those fiscal years. The Company is evaluating the impact of the guidance on its financial statements.

~~August 2018,~~ 2.~~the FASB issued ASU~~ ~~2018~~-~~13,~~ ~~“Fair Value Measurement (Topic~~ ~~820~~~~): Disclosure Framework – Changes to the Disclosure Requirements for~~ Fair ~~Value Measurement.” ASU~~ ~~2018~~-13 ~~includes amendments that aim to improve the effectiveness of fair~~ value measurement disclosures. The amendments in this guidance modify the disclosure requirements on fair value measurements based on the concepts in FASB Concepts Statement, “Conceptual Framework for Financial Reporting—Chapter 8: ~~Notes to Financial Statements,” including the consideration of costs and benefits. The amendments become effective for the Company in the year ending~~ ~~December 31, 2020~~ ~~and early adoption is permitted. The Company adopted this guidance~~ ~~January 1, 2020~~ ~~and there was~~ no ~~material impact on its consolidated financial statements.~~

In ~~August 2018,~~ ~~the FASB issued ASU~~ ~~No.~~~~2018~~-~~15,~~ ~~“Intangibles—Goodwill and Other—Internal-Use Software (Subtopic~~ ~~350~~-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract”, which clarifies the accounting for implementation costs in cloud computing arrangements. ASU ~~2018~~-15 ~~is effective for fiscal years beginning after~~ ~~December 15, 2019,~~ ~~including interim periods within those fiscal years. The Company adopted this guidance~~ ~~January 1, 2020~~ ~~and there was~~ no ~~material impact on its consolidated financial statements.~~

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

2.	~~Fair Value Measurement~~

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

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

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

Level 3 – Unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. ~~Valuations based on inputs that are unobservable and involve management judgment and the reporting entity’s own assumptions about market participants and pricing. As of~~ ~~September 30, 2020~~ ~~and~~ ~~December 31, 2019,~~ ~~the Company’s Level~~ 3 financial instruments measured at fair value on the Condensed Consolidated Balance Sheets consisted of convertible debt in iVexSol held at fair value, the contingent consideration liability related to the acquisitions of Astero and CBS and a warrant liability.

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~~For the investment in convertible debt, the significant Level~~ 3 inputs are the expected term of the instrument, the underlying credit worthiness of the issuer and the valuation of various embedded features in the note, which are based on future financings of the issuer. We considered a range of probability-weighted financing or payoff settlements between 5% and 50% with outcomes occurring over a range of 1 to 2 years. The estimated market interest rate of approximately 8.0% was based on an average of indexes of below investment grade debt. The market rate was calibrated to the rate implied in the original issuance in ~~September 2019~~ ~~and adjusted for changes in market rates quarterly. Certain assumptions used in estimating the fair value of the convertible debt are uncertain by nature. Actual results~~ ~~may~~ ~~differ materially from estimates.~~

The fair value of the Astero ~~contingent consideration~~Contingent Consideration liability was initially valued based on unobservable inputs using a Black-Scholes valuation model. These inputs included the estimated amount and timing of projected future revenue, a discount rate of 17.5%, risk-free rates between ~~2.30%~~2.29% and ~~2.43%~~2.41% and revenue volatility of ~~90%~~56%. Significant increases (decreases) in any of those inputs in isolation would result in a significantly higher (lower) fair value measurement. Generally, changes used in the assumptions for projected future revenue and revenue volatility would be accompanied by a directionally similar change in the fair value measurement. Conversely, changes in the discount rate would be accompanied by a directionally opposite change in the related fair value measurement. However, due to the ~~contingent consideration~~Contingent Consideration having a maximum payout amount, changes in these assumptions would not affect the fair value of the ~~contingent consideration~~Contingent Consideration if they increase (decrease) beyond certain amounts. Subsequent to the acquisition date, atas of each reporting period, the ~~contingent consideration~~Contingent Consideration liability is re-measured to fair value with changes recorded in the ~~change~~Change in ~~fair value~~Fair Value of ~~contingent consideration~~Contingent Consideration in the Unaudited Condensed Consolidated Statements of Operations. During the most recent re-measurement of the ~~contingent consideration~~Contingent Consideration liability as of September 30, ~~2020,~~2021, the Company ~~used a discount rate~~assessed the probability of ~~12.5%, risk-free rates between approximately 0.08%~~meeting previously determined metrics as unlikely. The Company recognized reductions of $0 and ~~0.12%~~$81,000 in the Change in Fair Value of Contingent Consideration in the Unaudited Condensed Consolidated Statements of Operations for the three and ~~revenue volatility of 64%.~~nine months ended September 30, 2021, respectively. This ~~contingent consideration~~Contingent Consideration liability is presented in the ~~Condensed~~ Consolidated Balance Sheet at ~~September 30, 2020~~ ~~and~~as of December 31, ~~2019~~2020 in the amount of ~~$80,000 and $1.1 million, respectively.~~$81,000. Certain assumptions used in estimating the fair value of the ~~contingent consideration~~Contingent Consideration are uncertain by nature. Actual results may differ materially from estimates.

The fair value of the CBS ~~contingent consideration~~Contingent Consideration liability was initially valued based on unobservable inputs using a Monte Carlo simulation. These inputs included the estimated amount and timing of projected future revenue, a discount rate of 26.0%, a risk-free rate of approximately 1.74% and revenue volatility of 70%. Significant increases (decreases) in any of those inputs in isolation would result in a significantly higher (lower) fair value measurement. Generally, changes used in the assumptions for projected future revenue and revenue volatility would be accompanied by a directionally similar change in the fair value measurement. Conversely, changes in the discount rate would be accompanied by a directionally opposite change in the related fair value measurement. However, due to the ~~contingent consideration~~Contingent Consideration having a maximum payout amount, changes in these assumptions would not affect the fair value of the ~~contingent consideration~~Contingent Consideration if they increase (decrease) beyond certain amounts. Subsequent to the acquisition date, atas of each reporting period, the ~~contingent consideration~~Contingent Consideration liability is re-measured to fair value with changes recorded in the ~~change~~Change in ~~fair value~~Fair Value of ~~contingent consideration~~Contingent Consideration in the Unaudited Condensed Consolidated Statements of Operations. During the most recent re-measurement of the ~~contingent consideration~~Contingent Consideration liability as of September 30, ~~2020,~~2021, the Company used a discount rate of ~~23.0%~~21.0%, a risk-free rate of ~~approximately 0.25%~~0.23% and revenue volatility of 63%. This ~~contingent consideration~~Contingent Consideration Liability is presented in the Unaudited Condensed Consolidated Balance Sheet as of September 30, 2021 and December 31, 2020 in the amount of $140,000. Certain assumptions used in estimating the fair value of the Contingent Consideration are uncertain by nature. Actual results may differ materially from estimates.

The fair value of the SciSafe Contingent Consideration liability was initially valued based on unobservable inputs using a Monte Carlo simulation. These inputs included the estimated amount and timing of projected future revenue, a discount rate of 4.5%, a risk-free rate of approximately 0.20%, asset volatility of 60%, and revenue volatility of 15%. Significant increases (decreases) in any of those inputs in isolation would result in a significantly higher (lower) fair value measurement. Generally, changes used in the assumptions for projected future revenue and revenue volatility would be accompanied by a directionally similar change in the fair value measurement. Conversely, changes in the discount rate would be accompanied by a directionally opposite change in the related fair value measurement. However, due to the Contingent Consideration having a maximum payout amount, changes in these assumptions would not affect the fair value of the Contingent Consideration if they increase (decrease) beyond certain amounts. As of the acquisition date, the Contingent Consideration was determined to have a fair value of $3.7 million. Subsequent to the acquisition date, the Contingent Consideration liability is re-measured to fair value with changes recorded in the Change in Fair Value of Contingent Consideration in the Unaudited Condensed Consolidated Statements of Operations. During the most recent re-measurement of the Contingent Consideration liability as of September 30, 2021, the Company used a discount rate of 6.8%, a risk-free rate of approximately 0.47%, asset volatility of 61%, and revenue volatility of 22%. The SciSafe Contingent Consideration, if earned, is to be paid in shares of BioLife’s common stock. As such, changes in BioLife’s stock price directly impact the fair value of the SciSafe Contingent Consideration as of each measurement date. This Contingent Consideration liability is presented in the Unaudited Condensed Consolidated Balance Sheet atas of September 30, ~~2020~~2021 and December 31, ~~2019~~2020 in the amount of ~~$306,000~~$8.1 million and ~~$856,000,~~ $6.9 million, respectively. The Change in Fair Value of Contingent Consideration of a decrease of $141,000 and an increase of $1.2 million associated with this liability is presented within the Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021, respectively. Certain assumptions used in estimating the fair value of the ~~contingent consideration~~Contingent Consideration are uncertain by nature. Actual results may differ materially from estimates.

For the warrant liability, the significant Level 3 inputs ~~include~~included the ~~estimated~~contractual remaining term of the warrants and the volatility of the Company’s common stock. For the estimated term of the warrants, we used the actual terms of the warrants, which ~~are all currently less than~~ ~~one~~ ~~year.~~ expired March 25, 2021. For the volatility ~~off~~of the Company’s stock as of December 31, 2020, we used historical volatility for the remaining term of each warrant. These amounts ranged from ~~64.0%~~56.8% to 84.6%. We did not make any adjustments to the historical volatility. Certain assumptions used in estimating the fair value of the warrants are uncertain by nature. ~~Actual results~~On ~~may~~March 25, 2021, ~~differ materially from estimates.~~the expiration date of all remaining warrants, all remaining warrants were exercised via a “cashless” exercise and the warrant liability was revalued to its intrinsic value, as the Company’s stock price was observable as of that date.

There were no remeasurements to fair value during the nine months ended September 30, ~~2020~~2021 of financial assets and liabilities that are not measured at fair value on a recurring basis.

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The following tables set forth the Company’s financial assets measured at fair value on a recurring basis as of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, based on the three-tier fair value hierarchy:

(In thousands)
As of September 30, 2020

Level 1

Level 2

Level 3

Total

As of September 30, 2021

Level 1

Level 2

Level 3

Total

Assets:

Money market accounts
$ 93,984 $ 0 $ 0 $ 93,984 $ 70,152 $ 0 $ 0 $ 70,152
Restricted cash held in escrow
15,000 0 0 15,000
Convertible debt held at fair value
0 0 2,110 2,110
Total
108,984 0 2,110 111,094 70,152 0 0 70,152
Liabilities:

Contingent consideration - business combinations
0 0 386 386 0 0 8,238 8,238
Warrant liability
0 0 1,914 1,914
Total
$ 0 $ 0 $ 2,300 $ 2,300 $ 0 $ 0 $ 8,238 $ 8,238

As of December 31, 2019

Level 1

Level 2

Level 3

Total

Assets:

Money market accounts
$ 6,448 $ 0 $ 0 $ 6,448
Convertible debt held at fair value
0 0 1,000 1,000
Total
6,448 0 1,000 7,448
Liabilities:

Contingent consideration - business combinations
0 0 1,914 1,914
Warrant liability
0 0 39,602 39,602
Total
$ 0 $ 0 $ 41,516 $ 41,516
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As of December 31, 2020

Level 1

Level 2

Level 3

Total

Assets:

Money market accounts
$ 90,403 $ 0 $ 0 $ 90,403
Total
90,403 0 0 90,403
Liabilities:

Contingent consideration - business combinations
0 0 7,152 7,152
Warrant liability
0 0 2,780 2,780
Total
$ 0 $ 0 $ 9,932 $ 9,932

The fair values of money market funds classified as Level 1 were derived from quoted market prices as active markets for these instruments exist. The fair values of ~~investments,~~contingent consideration and warrant ~~liability and contingent consideration~~liabilities classified as Level 3 were derived from management assumptions. There have been no transfers of assets or liabilities between the fair value measurement levels. ~~The following tables present the changes in investments held at fair value which are measured using Level~~ 3 ~~inputs:~~

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

(In thousands)

Balance, beginning of period
$ 1,000 $ 0 $ 1,000 $ 0
Purchases
0 1,000 0 1,000
Change in fair value recognized in net income
1,110 0 1,110 0
Balance, end of period
$ 2,110 $ 1,000 $ 2,110 $ 1,000

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

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

(In thousands)

Balance, beginning of period
$ 388 $ 1,492 $ 1,914 $ 0
Additions
0 0 0 1,492
Change in fair value recognized in net income
(2
)
0 (1,528
)
0
Payments earned, reclassified to accrued liabilities
0 0 0 0
Balance, end of period
$ 386 $ 1,492 $ 386 $ 1,492

Nine Months Ended

September 30,

(In thousands)

2021

2020

Beginning balance
$ 7,152 $ 1,914
Change in fair value recognized in net income (loss) 1,086 (1,528 )
Ending balance
$ 8,238 $ 386

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

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

(In thousands)

Balance, beginning of period
$ 963 $ 44,194 $ 39,602 $ 28,516
Exercised warrants
(54
)
(1,295
)
(33,221
)
(1,694
)
Change in fair value recognized in net income
1,005 (1,128
)
(4,467
)
14,949
Balance, end of period
$ 1,914 $ 41,771 $ 1,914 $ 41,771

Nine Months Ended

September 30,

(In thousands)

2021

2020

Beginning balance
$ 2,780 $ 39,602
Exercised warrants
(2,901 ) (33,221 )
Change in fair value recognized in net income (loss) 121 (4,467 )
Ending balance
$ 0 $ 1,914

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3. Acquisitions
~~Acquisitions~~

~~Astero Acquisition~~ Sexton acquisition
General terms and effects

On ~~April~~August 9, 2021, BioLife entered into an Agreement and Plan of Merger (the “Sexton Merger Agreement”) with BLFS Merger Sub, Inc., a Delaware corporation (“Sexton Merger Sub”), Fortis Advisors LLC, in its capacity as the representative of the stockholders of Sexton (the “Sexton Seller Representative”) and Sexton Biotechnologies, Inc., a Delaware corporation.
On September 1, ~~2019,~~2021, ~~BioLife~~the Company completed the ~~acquisition~~merger of ~~all~~Sexton Merger Sub with and into Sexton and Sexton became a wholly-owned subsidiary of the ~~outstanding~~Company (the “Sexton Merger”). As consideration for the Sexton Merger (the “Sexton Merger Consideration”), holders of common stock, preferred stock and options of Sexton, other than the Company (collectively, the “Sexton Participating Holders”), are entitled to receive an aggregate of 530,502 newly issued shares of ~~Astero. Astero’s ThawSTAR product line is comprised~~the Company’s common stock, subject to certain post-closing adjustments, of which 477,452 shares of Common Stock were issued to the Sexton Participating Holders at the Closing, and 53,050 shares of Common Stock, or approximately 10% of the Merger consideration, were deposited into an escrow account for indemnification and post-closing purchase price adjustment purposes. Prior to the merger, the Company held preferred stock in Sexton, which was accounted for using a measurement alternative that measures the securities at cost minus impairment, if any. The Company accounted for the merger as a step acquisition, which required remeasurement of the Company’s existing ownership in Sexton to fair value prior to completing the acquisition method of accounting. Using step acquisition accounting, the Company increased the value of its existing equity interest to its fair value, resulting in the recognition of a ~~family~~non-cash gain of automated thawing devices for frozen cell and gene therapies packaged in cryovials and cryobags. The products improve the quality of administration of high-value, temperature-sensitive biologic therapies to patients by standardizing the thawing process and reducing the risks of contamination and overheating, which are inherent with the use of traditional water baths.
In connection with the acquisition, the Company paid (i) a base payment in the amount of $12.5 million consisting of an initial cash payment of $8.0 million at the closing of the transactions, subject to adjustment for working capital, net debt and transaction expenses, and a deferred cash payment that was paid into escrow and subsequently paid to Astero of $4.5$6.5 million, which was ~~payable upon~~included in the ~~earlier~~gain on acquisition of ~~Astero meeting certain product development milestones or~~Sexton Biotechnologies, Inc. in the Unaudited Condensed Consolidated Statements of Operations for the ~~one~~three ~~year after~~and nine months ended September 30, 2021. The Company utilized a market-based valuation approach to determine the ~~date~~fair value of the ~~Closing~~existing equity interest based on the total merger consideration offered and ~~(ii) earnout payments in calendar years~~ ~~2019,~~~~2020~~the Company’s stock price at acquisition.
Total consideration transferred (in thousands, except number of shares and ~~2021~~ ~~of up to an aggregate of $3.5 million, which shall be payable upon Astero achieving certain specified revenue targets in each year (in the~~ ~~second~~ ~~quarter of~~ ~~2020~~ ~~we paid $483,000 for the earnout~~stock price):
Merger consideration shares
530,502
BioLife stock price (as of September 1, 2021)
$ 60.50
Value of issued shares
$ 32,095
plus: Fair value of BioLife’s existing investment in Sexton
$ 7,951
less: Net working capital adjustment
$ (118 )
Merger Consideration
$ 39,928
Transaction costs related to the acquisition are expensed as incurred and are ~~2019~~not ~~revenues) and a separate earnout payment~~included in the calculation of ~~$5.0 million for calendar year~~ ~~2021,~~ ~~which shall be payable upon Astero achieving a cumulative revenue target over the~~ ~~three~~~~-year period from~~ ~~2019~~ to ~~2021.~~consideration transferred.

~~Consideration transferred~~Fair value of net assets acquired
~~The Astero acquisition was accounted for as a purchase~~As the Company finalizes its estimation of ~~a business under FASB ASC Topic~~the fair value of the assets acquired and liabilities assumed, additional adjustments ~~805,~~may be recorded during the measurement period (a period not ~~“Business Combinations”~~to exceed 12 months). The ~~Astero acquisition was funded through payment~~initial accounting is incomplete as of ~~approximately $12.5 million~~September 30, 2021 for the acquired assets and liabilities as the Company is currently in ~~cash~~the process of completing the assessment of intangible assets, goodwill, income taxes, and ~~under the terms~~other assets and liabilities including contractual rights and obligations acquired that continue to be evaluated based on facts that existed as of the ~~share purchase agreement, Astero shareholders are eligible~~acquisition date. Our valuations will be finalized when certain information arranged to ~~receive up to an additional $8.5 million~~be obtained has been received and our review of ~~contingent consideration in cash over the next~~ ~~three~~ ~~years based on attainment of specific revenue targets.~~ that information has been completed.
Under the acquisition method of accounting, the assets acquired and liabilities assumed from ~~Astero~~Sexton were ~~recorded~~estimated as of the ~~acquisition~~merger date, at their respective fair values, and consolidated with those of BioLife. The ~~fair value of the contingent consideration of $1.5 million was determined using an option pricing model. The~~estimated fair value of the net tangible assets acquired is approximately $4.1 million, the estimated ~~to be~~fair value of the deferred tax liability acquired is approximately ~~$324,000,~~$1.3 million, the estimated fair value of the intangible assets acquired is ~~estimated to be~~ approximately ~~$4.1~~$8.8 million, and the estimated residual goodwill is approximately $28.3 million. The gross contractual accounts receivable acquired in the acquisition was $509,000. Of the acquired accounts receivable, $17,000 is estimated to be ~~approximately $9.5 million.~~uncollectable. The fair value ~~estimates~~calculations required critical estimates, including, but not limited to, future expected cash flows, revenue and expense projections, discount rates, revenue volatility, and royalty rates. ~~BioLife believes these estimates to be reasonable. Actual results~~ ~~may~~ ~~differ from these estimates.~~

~~Total consideration~~The table below represents the estimated fair value of the net assets acquired and liabilities assumed, which were recorded ~~for~~as of the ~~acquisition of Astero is as follows~~merger date (amounts in thousands):.

Cash consideration
$ 12,521
Contingent consideration
1,491
Working capital adjustment
(71
)
Total consideration transferred
$ 13,941
Cash
$ 1,516
Accounts receivable, net
492
Inventory
1,310
Prepaid expenses and other current assets
670
Property, plant and equipment, net
737
Operating lease right-of-use assets, net
470
Developed technology
4,132
Customer relationships
2,276
Tradenames
2,324
Non-compete agreements
90
Goodwill
28,273
Accounts payable
(291
)
Lease liabilities, operating
(470
)
Deferred tax liability
(1,284
)
Other liabilities
(317
)
Fair value of net assets acquired
$ 39,928

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~~Fair Value of Net Assets Acquired~~
The table below represents the purchase price allocation to the net assets acquired based on their estimated fair values (amounts in thousands). Such amounts were estimated using the most recent financial statements from Astero as of ~~March 31, 2019.~~
Cash and cash equivalents
$ 11
Accounts receivable, net
154
Inventory
456
Customer relationships
160
Tradenames
470
Developed technology
2,840
In-process research and development
650
Goodwill
9,515
Other assets
99
Accounts payable
(250
)
Other liabilities
(164
)
Fair value of net assets acquired
$ 13,941
The fair value of ~~Astero’s~~Sexton’s identifiable intangible assets and ~~estimated~~ useful lives ~~have been estimated~~are as follows (amounts in thousands, except years):

Estimated Fair
Value

Estimated
Useful
Life (Years)

Fair
Value

Useful
Life (Years)

Developed technology
$ 4,132 5 - 9
Customer relationships
$ 160 4 2,276 2
Tradenames
470 9 2,324 11
Developed technology
2,840 5 – 9
In-process research and development
650 9
Non-compete agreements
90 1
Total identifiable intangible assets
$ 4,120 $ 8,822

Fair value measurement methodologies used to calculate the value of any asset can be broadly classified into one of three approaches, referred to as the cost, market and income approaches. In any fair value measurement analysis, all three approaches must be considered, and the approach or approaches deemed most relevant will then be selected for use in the fair value measurement of that asset. The estimated fair values of developed technology were estimated using a multi-period excess earnings approach. The estimated fair values of customer relationships and non-compete agreements were estimated using a “with and without” approach, comparing projected cash flows under scenarios assuming the customer relationships and non-compete agreements were and were not in place. The estimated fair value of ~~identifiable intangible assets was determined by~~ ~~third~~~~-party appraisal primarily using variations of~~ the ~~income approach, which~~tradenames is based on the ~~present~~relief from royalty method, which estimates the value of the ~~future after-tax cash flows attributable to each identifiable intangible~~trade names based on the hypothetical royalty payments that are saved by owning the asset. ~~The fair value of inventories was determined using both the cost approach and the market approach.~~

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

Acquired ~~Goodwill~~goodwill

The goodwill of ~~$9.5~~$28.3 million represents future economic benefits expected to arise from synergies from combining operations and commercial organizations to increase market presence and the extension of existing customer relationships. ~~All but $1.1 million of the~~The goodwill recorded is not ~~expected to be~~ deductible for income tax purposes.

~~SAVSU Acquisition~~ Global Cooling acquisition
General terms and effects

On ~~August 8, 2019,~~March 19, 2021, ~~we closed~~ the ~~acquisition~~Company entered into an Agreement and Plan of ~~SAVSU~~ Merger (the “GCI Merger Agreement”) with BLFS Merger Subsidiary, Inc., a Delaware corporation (“GCI Merger Sub”), Global Cooling, a Delaware corporation and Albert Vierling and William Baumel, in their capacity as the representatives of the stockholders of GCI (collectively, the “GCI Seller Representative”).
On May 3, 2021, pursuant to ~~a Share Exchange Agreement. Pursuant~~the GCI Merger Agreement, subject to the ~~Share Exchange~~terms and conditions set forth therein, the transactions contemplated by the GCI Merger Agreement ~~SAVSU Origin, LLC agreed~~were consummated (the “GCI Closing”), GCI Merger Sub merged with and into GCI (the “GCI Merger” and, together with other transactions contemplated by the GCI Merger Agreement, the “GCI Transactions”), with GCI continuing as the surviving corporation in the GCI Merger and a wholly-owned subsidiary of the Company. In the GCI Merger, all of the issued and outstanding shares of capital stock of GCI immediately prior to ~~transfer~~the filing of the Certificate of Merger with the Secretary of State of the State of Delaware (other than those properly exercising any applicable dissenter’s rights under Delaware law) were converted into the right to usreceive the GCI Merger Consideration (as defined below). The Company paid the GCI Merger Consideration to the holders of common stock and ~~we agreed~~preferred stock of GCI (collectively, the “GCI Stockholders”).
Merger consideration
The aggregate merger consideration paid pursuant to ~~acquire from~~ the ~~seller 8,616~~GCI Merger Agreement to the GCI Stockholders was 6,646,870 newly issued shares of common stock, ~~of SAVSU, representing~~provided, however, that the ~~remaining 56%~~GCI Merger Consideration otherwise payable to GCI Stockholders is subject to the withholding of the GCI Escrow Shares (as defined below) and is subject to reduction for indemnification obligations. The GCI Merger Consideration allocable to one GCI stockholder was reduced by 10,400 shares to satisfy an outstanding ~~shares~~note receivable of ~~SAVSU that we did~~$374,000. In accordance with ASC 805, the Company recognized the settlement of pre-existing relationships in the forms of cash deposits, trade receivables, and trade payables, which are included in the consideration transferred. The GCI Merger Consideration is not ~~previously own, in exchange for 1,100,000 shares of BioLife common stock. As a result of the acquisition, SAVSU became a wholly-owned subsidiary on~~ ~~August 8, 2019,~~ ~~the acquisition date.~~subject to any purchase price adjustments.

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Total consideration transferred (in thousands, except number of shares, stock price, and consideration percentage):
BioLife shares outstanding (as of March 19, 2021)
33,401,359
Merger consideration percentage
19.9 %
Merger consideration shares
6,646,870
less: Merger consideration shares withheld to satisfy outstanding GCI stockholder obligations to GCI
10,400
Subtotal
6,636,470
BioLife stock price (as of May 3, 2021)
$ 35.07
Value of issued shares
$ 232,741
plus: Settlement of BioLife prepaid deposits
$ 2,152
plus: Net settlement of BioLife accounts receivable
$ 16
Merger Consideration
$ 234,909
Transaction costs related to the acquisition are expensed as incurred and are not included in the calculation of consideration transferred.

Escrow shares
At the GCI Closing, approximately nine percent (9%) of the GCI Merger Consideration ~~transferred~~(the “Escrow Shares”, along with any other dividends, distributions or other income on the GCI Escrow Shares, the “GCI Escrow Property”) otherwise issuable to the GCI Stockholders (allocated pro rata among the GCI Stockholders based on the GCI Merger Consideration otherwise issuable to them at the GCI Closing), was deposited into a segregated escrow account in accordance with an escrow agreement to be entered into in connection with the GCI Transactions (the “GCI Escrow Agreement”).

The ~~SAVSU acquisition was accounted~~GCI Escrow Property will be held for a period of up to twenty-four (24) months after the GCI Closing as ~~a purchase~~the sole and exclusive source of ~~a business under FASB ASC Topic~~ ~~805,~~ ~~“Business Combinations”. The acquisition~~payment for any post-GCI Closing indemnification claims (other than fraud claims), unless earlier released in accordance with the terms of ~~56% of SAVSU was funded through a transfer of 1,100,000 shares of BioLife common stock, which had a fair~~the GCI Escrow Agreement.
Fair value of ~~$18.12 per share or $19.9 million at time of closing. The total value of~~ ~~100%~~ ~~of SAVSU consisting~~net assets acquired
As the Company finalizes its estimation of the fair value of the ~~stock issued~~assets acquired and liabilities assumed, additional adjustments may be recorded during the ~~fair value~~measurement period (a period not to exceed 12 months). The initial accounting is incomplete as of ~~our existing investment~~September 30, 2021 for the acquired assets and liabilities as the Company is currently in ~~SAVSU was $35.8 million at time~~the process of ~~closing. Prior to~~completing the ~~acquisition, we accounted for our investment~~assessment of ~~SAVSU using~~ the ~~equity method~~tax attributes of ~~accounting which resulted in a recorded book value of $5.8 million at the acquisition date. We remeasured to fair value the equity interest in SAVSU held immediately before~~ the business combination. The ~~fair value~~finalization of ~~our equity interest was determined to be $15.9 million on our existing 44% ownership based~~the acquisition accounting valuation assessment may result in a change in the valuation of the deferred tax assets and liabilities and goodwill, which could have a material impact on the ~~fair value~~Company’s results of ~~shares transferred at the time of acquisition for the 56% we did~~ ~~not~~ ~~previously own. As a result, we recorded a non-operating gain of $10.1 million.~~operations and financial position.

Under the acquisition method of accounting, the assets acquired and liabilities assumed from ~~SAVSU~~Global Cooling were ~~recorded~~estimated as of the ~~acquisition~~merger date, at their respective fair values, and consolidated with those of BioLife. The estimated fair value of the net tangible assets acquired is approximately $740,000, the estimated ~~to be~~fair value of the deferred tax liability acquired is approximately ~~$4.2~~$23.5 million, the estimated fair value of the intangible assets acquired is approximately $120.5 million, and the estimated residual goodwill is approximately $137.2 million. The gross contractual accounts receivable acquired in the acquisition was $7.1 million. Of the acquired accounts receivable, $53,000 was estimated to be ~~approximately $12.2 million, and the residual goodwill is estimated to be approximately $19.5 million.~~uncollectable. The fair value ~~estimates~~calculations required critical estimates, including, but not limited to, future expected cash flows, revenue and expense projections, discount rates, revenue volatility, and royalty rates. ~~BioLife believes these estimates to be reasonable. Actual results~~ ~~may~~ ~~differ from these estimates.~~
~~Total consideration paid for the acquisition of SAVSU is as follows (amounts in thousands):~~
~~Stock consideration for 55.6% equity interest purchased~~
$
~~19,932~~
~~This stock consideration plus the fair value of our existing equity investment in SAVSU of $15.9 million results in the total purchase price for accounting purposes of $35.8 million.~~
~~Fair Value of Net Assets Acquired~~

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

Cash and cash equivalents
$ 1,251
Cash
$ 43
Accounts receivable, net
753 7,076
Inventory
15,547
Prepaid expenses and other current assets
19 639
Property, plant and equipment, net
546 3,512
Operating right-of-use asset
233
Assets held for rent, net
2,441
Operating lease right-of-use assets, net
1,741
Financing lease right-of-use assets, net
114
Long-term deposits and other assets
4
Developed technology
18,140
Customer relationships
80 7,020
Tradenames
1,320 26,640
Developed technology
10,750
Non-compete agreements
1,240
In-process research and development
67,440
Goodwill
21,037 137,215
Accounts payable and accrued expenses
(807
)
Deferred tax liabilities
(1,541
)
Accounts payable
(9,837
)
Line of credit
(4,231
)
Lease liabilities, operating
(1,880
)
Lease liabilities, financing
(114
)
Long-term debt
(4,410
)
Deferred tax liability
(23,526
)
Other liabilities
(232
)
(7,464
)
Fair value of net assets acquired
$ 35,850 $ 234,909

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

Estimated Fair
Value

Estimated
Useful
Life (Years)

Fair
Value

Useful
Life (Years)

Developed technology
$ 18,140 6
Customer relationships
$ 80 6 7,020 12
Tradenames
1,320 9 26,640 15
Developed technology
10,750 7 – 8
Non-compete agreements
1,240 4
In-process research and development
67,440 N/A
Total identifiable intangible assets
$ 12,150 $ 120,480

Fair value measurement methodologies used to calculate the value of any asset can be broadly classified into one of three approaches, referred to as the cost, market and income approaches. In any fair value measurement analysis, all three approaches must be considered, and the approach or approaches deemed most relevant will then be selected for use in the fair value measurement of that asset. The estimated fair values of developed technology and in-process research and development were estimated using a multi-period excess earnings approach. The estimated fair values of customer relationships were estimated using the “distributor method”. The estimated fair value of ~~identifiable intangible assets was determined primarily using variations of~~ the ~~income approach, which~~tradenames is based on the ~~present~~relief from royalty method, which estimates the value of the ~~future after-tax~~trade names based on the hypothetical royalty payments that are saved by owning the asset. The estimated fair values of non-compete agreements were estimated using a “with and without” approach, comparing projected cash flows ~~attributable to each identifiable intangible asset.~~under scenarios assuming the non-compete agreements were and were not in place. The fair value of ~~assets held for rent~~inventory and property, plant and equipment ~~was~~were determined using ~~both~~ the ~~cost approach and the market approach.~~“market approach”.

Some of the more significant assumptions inherent in the development of intangible asset fair values, from the perspective of a market participant, include, but are not limited to (i) the amount and timing of projected future cash flows (including revenue and expenses), (ii) the discount rate selected to measure the risks inherent in the future cash flows, (iii) the assessment of the asset’s life cycle, and (iv) the competitive trends impacting the asset. ~~Some of the more significant assumptions inherent in the in valuing the contingent consideration, include, but are~~ ~~not~~ ~~limited to (i) the amount and timing of projected future revenue, (ii) the volatility rate selected to measure the risks inherent in the revenue, and (iii) risk free interest rate.~~
14

~~Table of Contents~~

Acquired ~~Goodwill~~goodwill

The goodwill of ~~$21.0~~$137.2 million represents future economic benefits expected to arise from synergies from combining operations and commercial organizations to increase market presence and the extension of existing customer relationships. ~~None~~ ~~of the~~The goodwill recorded is ~~expected to be~~not deductible for income tax purposes.

~~Custom Biogenic Systems Acquisition~~
OnThe Company recorded revenue from Sexton of $425,000 and a net loss of $227,000 from ~~November 10, 2019,~~September 1, 2021, ~~we entered into an Asset Purchase Agreement, by~~the date of acquisition, to September 30, 2021. The Company recorded revenue from Global Cooling of $28.5 million and ~~among~~ a net loss of $7.6 million from May 3, 2021, the date of acquisition, to September 30, 2021. The Company ~~Arctic Solutions, Inc., a Delaware corporation and wholly-owned subsidiary~~has included the operating results of the ~~Company, and CBS, a Michigan corporation, pursuant to which we agreed to purchase from CBS substantially all~~acquisitions in its Unaudited Condensed Consolidated Statements of CBS’s assets, properties and rights (the “CBS Acquisition”). CBS, a privately held company with operations located near Detroit, Michigan, designs and manufactures liquid nitrogen laboratory freezers and cryogenic equipment and also offers a related cloud-based monitoring system that continuously assesses biologic sample storage conditions and alerts equipment owners if a fault condition occurs. The CBS Acquisition closed on ~~November 12, 2019.~~
In connection with the CBS Acquisition, we paid to CBS (i) a base payment in the amount of $15.0 million, consisting of a cash payment of $11.0 million paid at the closing of the CBS Acquisition, less a cash holdback escrow of $550,000 to satisfy certain indemnification claims, and an aggregate number of shares of our common stock, with an aggregate fair value equal to $4.0 million, less a holdback escrow of shares of Common Stock with an aggregate value equal to $3.0 million to satisfy potential payments related to any product liability claims outstanding as of ~~March 13, 2019,~~ ~~and (ii) potential earnout payments in calendar years~~ ~~2020,~~~~2021,~~~~2022,~~~~2023~~ ~~and~~ ~~2024~~ ~~of up to an aggregate of, but~~ ~~not~~ ~~exceeding, $15.0 million payable to the sole shareholder of CBS upon achieving certain specified revenue targets in each year for certain product lines.~~Operations since their respective acquisition date.

The ~~CBS Acquisition was accounted for~~following unaudited pro forma financial information presents the combined results of operations of Sexton as ~~a purchase of a business under FASB ASC Topic~~ ~~805,~~ ~~“Business Combinations”. Under~~if the acquisition ~~method of accounting,~~had occurred on January 1, 2020 after giving effect to certain pro forma adjustments. These pro forma adjustments include intangible amortization, stock-based compensation expense and salary expense related to a key employee, and the ~~acquired assets and liabilities assumed from CBS were recorded as~~income tax effect of the acquisition date, at their fair values, and consolidated with BioLife. The fair value of the net tangible assets acquired is $6.0 million, the fair value of the identifiable intangibles is $6.8 million, and the residual goodwill is $3.1 million. The fair value estimates required critical estimates, including, but ~~not~~ ~~limited to, future expected cash flows, revenue and expense projections, discount rates, revenue volatility, and royalty rates. BioLife believes these estimates to be reasonable. Actual results~~ ~~may~~ ~~differ from these estimates.~~adjustments made:

~~Total consideration transferred (in thousands):~~
Cash consideration
$ 11,000
Stock consideration
4,000
Contingent consideration
856
Total consideration transferred
$ 15,856
~~Fair Value of Net Assets Acquired~~

Three Months Ended

Nine Months Ended

September 30,

September 30,

(In thousands)

2021
(unaudited)

2020
(unaudited)

2021
(unaudited)

2020
(unaudited)

Total revenue
$ 34,524 $ 11,697 $ 85,189 $ 34,707
Net (loss) income
$ (685 ) $ (1,850 ) $ 4,612 $ 2,056

The ~~table below represents~~following unaudited pro forma financial information presents the ~~purchase price allocation~~combined results of operations of Global Cooling as if the acquisition had occurred on January 1, 2020 after giving effect to certain pro forma adjustments. These pro forma adjustments include intangible amortization, amortization of increased inventory basis, depreciation expense, lease expense, transaction costs, interest expense, stock-based compensation expense and salary expense related to a key employee, and the ~~net assets acquired based on their fair values (amounts in thousands). Such amounts were estimated using~~income tax effect of the ~~most recent financial statements from CBS as of~~ ~~November 11, 2019.~~adjustments made:

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

Three Months Ended

Nine Months Ended

September 30,

September 30,

(In thousands)

2021
(unaudited)

2020
(unaudited)

2021
(unaudited)

2020
(unaudited)

Total revenue
$ 33,800 $ 21,204 $ 106,427 $ 58,056
Net income (loss) $ 79 $ (3,393 ) $ (1,939 ) $ 4,912

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

Estimated Fair
Value

Estimated
Useful
Life (Years)

Customer relationships
$ 560 6
Tradenames
800 6
Developed technology
5,430 9
Total identifiable intangible assets
$ 6,790
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~~Fair value measurement methodologies used to calculate the value of any asset can be broadly classified into~~ ~~one~~ of ~~three~~ ~~approaches, referred to as the cost, market and income approaches. In any fair value measurement analysis, all~~ ~~three~~ approaches must be considered, and the approach or approaches deemed most relevant will then be selected for use in the fair value measurement of that asset. The fair value of identifiable intangible assets was determined primarily using variations of the income approach, which is based on the present value of the future after-tax cash flows attributable to each identifiable intangible asset. The fair value of inventories was determined using both the cost approach and the market approach and the fair value of property, plant and equipment was determined using the cost and market approach.
~~Some of the more significant assumptions inherent in the development of intangible asset fair values, from the perspective of a market participant, include, but are~~ ~~not~~ limited to (i) the amount and timing of projected future cash flows (including revenue and expenses), (ii) the discount rate selected to measure the risks inherent in the future cash flows, (iii) the assessment of the asset’s life cycle, and (iv) the competitive trends impacting the asset. Some of the more significant assumptions inherent in valuing the contingent consideration, include, but are ~~not~~ ~~limited to (i) the amount and timing of projected future revenue, (ii) the volatility rate selected to measure the risks inherent in the revenue, and (iii) risk free interest rate.~~
~~Acquired Goodwill~~
The goodwill of $3.0 million represents future economic benefits expected to arise from synergies from combining operations and commercial organizations to increase market presence and the extension of existing customer relationships. All of the goodwill recorded is expected to be deductible for income tax purposes.

4. Inventory
~~Inventory~~

Inventory consists of the following atas of September 30, ~~2020~~2021 and December 31, ~~2019:~~2020:

(In thousands)

September 30,
2020

December 31,
2019

2021

2020

Raw materials
$ 2,731 $ 2,979 $ 16,445 $ 2,855
Work in progress
2,252 1,896 4,597 2,006
Finished goods
6,054 6,097 8,654 6,741
Total
$ 11,037 $ 10,972 $ 29,696 $ 11,602

5.Assets held for rent
~~Assets held for rent~~

Assets held for rent consist of the following atas of September 30, ~~2020~~2021 and December 31, ~~2019:~~2020:

(In thousands)

September 30,
2020

December 31,
2019

2021

2020

Shippers placed in service
$ 4,666 $ 3,073 $ 5,433 $ 3,171
Accumulated deprecation
(755
)
(174
)
Fixed assets held for rent
3,603 0
Accumulated depreciation
(1,284 ) (411 )
Net
3,911 2,899 7,752 2,760
Shippers and related components in production
1,220 1,023 2,334 1,945
Total
$ 5,131 $ 3,922 $ 10,086 $ 4,705

Shippers and related components in production include shippers complete and ready to be deployed and placed in service upon a customer order, shippers in the process of being assembled, and components available to build shippers. We recognized ~~$186,000~~$410,000 and ~~$581,000~~$873,000 in depreciation expense related to assets held for rent during the three and nine months ended September 30, ~~2020.~~2021, ~~We recognized $51,000 in depreciation expense related to assets held for rent~~respectively, and $186,000 and $581,000 during the three and nine months ended September 30, ~~2019.~~2020, respectively.

6. Goodwill and intangible assets
~~Goodwill and Intangible Assets~~

Goodwill

Goodwill represents the difference between the purchase price and the estimated fair value of identifiable assets acquired and liabilities assumed. Goodwill acquired in a business combination ~~and~~is determined to have an indefinite useful life and is not amortized, but instead is tested for impairment at least annually in accordance with ASC 350. The ~~following table represents the change in the carrying value~~Company has not identified any triggering events which indicate an impairment of goodwill ~~for~~in the nine months ended September 30, ~~2020:~~2021.

(In thousands)

Balance as of December 31, 2019
$ 33,637
Correction of an error related to CBS goodwill
(131
)
Balance as of September 30, 2020
$ 33,506
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We adjusted goodwill from the CBS Acquisition related to an immaterial error of $131,000 in payables that were paid during closing and incorrectly recorded as liabilities in our purchase price accounting as of ~~December 31, 2019.~~ ~~We reduced our goodwill and accounts payable by $131,000.~~
Intangible ~~Assets~~assets

Intangible assets, net consisted of the following atas of September 30, ~~2020:~~2021:

(In thousands, except weighted average useful life)

September 30, 2020

September 30, 2021

Finite-lived intangible assets:

Gross
Carrying
Value

Accumulated
Amortization

Net
Carrying
Value

Weighted
Average
Useful Life
(in years)

Gross Carrying
Value

Accumulated
Amortization

Net Carrying
Value

Weighted
Average Useful
Life (in years)

Customer Relationships
$ 800 $ (161
)
$ 639 4.5 $ 17,516 $ (1,177 ) $ 16,339 10.8
Tradenames
2,590 (372
)
2,218 6.9 35,574 (1,672 ) 33,902 14.4
Technology – acquired (1)
19,670 (2,646
)
17,024 7.3
Technology - acquired
41,942 (6,300 ) 35,642 6.1
Non-compete agreements
1,990 (302 ) 1,688 3.3
In-process research and development⁽¹⁾
67,440 - 67,440 N/A
Total intangible assets
$ 23,060 $ (3,179
)
$ 19,881 7.2 $ 164,462 $ (9,451 ) $ 155,011 10.1

(1~~) We transferred $650,000 out of “in-process R&D” into “Technology – acquired” on~~ ~~April 1, 2020,~~ ~~which was the date on which the product line became technologically feasible.~~
~~Intangible assets, net consisted of the following at~~ ~~December 31, 2019:~~
(In thousands, except weighted average useful life)

December 31, 2019

Finite-lived intangible assets:

Gross
Carrying
Value

Accumulated
Amortization

Net
Carrying
Value

Weighted
Average
Useful Life
(in years)

Customer Relationships
$ 800 $ (51
)
$ 749 5.6
Tradenames
2,590 (123
)
2,467 8.1
Technology – acquired
19,020 (904
)
18,116 8.4
In-process R&D (2)
650 0 650 9.0
Total intangible assets
$ 23,060 $ (1,078
)
$ 21,982 8.3
(2) In-process R&D represents the fair value of incomplete research and development that has not yet reached technological feasibility. On ~~April 1, 2020,~~ ~~we began amortizing~~We will amortize the asset ~~since it reached~~upon technological ~~feasibility (see footnote~~feasibility.
Intangible assets, net consisted of the following as of 1December 31, 2020: ~~above).~~

December 31, 2020

Finite-lived intangible assets:

Gross Carrying
Value

Accumulated
Amortization

Net Carrying
Value

Weighted Average
Useful Life
(in years)

Customer Relationships
$ 8,220 $ (330 ) $ 7,890 12.8
Tradenames
6,610 (508 ) 6,102 14.0
Technology - acquired
19,670 (3,232 ) 16,438 7.1
Non-compete agreements
660 (41 ) 619 3.8
Total intangible assets
$ 35,160 $ (4,111 ) $ 31,049 9.7

Amortization expense for finite-lived intangible assets was $2.5 million and $5.3 million for the three and nine months ended September 30, 2021, respectively, and $706,000 and $2.1 million for the three and nine months ended September 30, 2020, respectively. As of September 30, 2021, the Company expects to record the following amortization expense for finite-lived intangible assets:
(In thousands)

For the Years Ending December 31,

Estimated
Amortization
Expense

2021 (3 months remaining)
$ 2,858
2022
11,403
2023
10,934
2024
10,109
2025
9,730
Thereafter
42,537
Total
$ 87,571
7. Line of credit and long-term debt
At September 30, 2021 the Company maintained a line of credit, which was assumed in the acquisition of Global Cooling, with a bank which had an original expiration date of June 2023. The outstanding balance bore interest at a floating rate equal to the 3-month LIBOR rate plus 5.50%. The maximum allowed on the line of credit was $5,000,000. The line was secured by substantially all assets of Global Cooling. On October 14, 2021, the Company paid off the entirety of the outstanding balance on the line of credit and all related interest.
Long-term debt consisted of the following as of September 30, 2021 and December 31, 2020:

September 30,

December 31,

(In thousands)
Maturity Date

Interest Rate

2021

2020

2019 term loan
Sep-23
10.5 % $ 1,750 $ 0
2018 term loan
Sep-23
10.5 % 2,813 0
Insurance premium financing
Apr-22
4.0 % 726 0
Paycheck Protection Program loan
May-22
1.0 % 295 295
Freezer equipment loan
Dec-25
5.7 % 652 365
Manufacturing equipment loans
Oct-25
5.7 % 376 439
Freezer installation loan
Various
6.3 % 1,395 156
Other loans
Various

Various
10 14
Total debt
8,017 1,269
Less: Unamortized debt issuance costs
(124 ) 0
Total debt, net of unamortized debt issuance costs
$ 7,893 $ 1,269
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Table of Contents
The 2019 and 2018 term loans are secured by substantially all assets of Global Cooling.
As of September 30, 2021, the scheduled maturities of loans payable for each of the next five years and thereafter were as follows:
(In thousands)

Amount

2021 (3 months remaining)
$ 950
2022
1,208
2023
2,038
2024
1,944
2025
543
Thereafter
1,334
Total
$ 8,017
Debt covenants and default provisions
The line of credit, 2019 term loan, and 2018 term loan assumed in the acquisition of Global Cooling contain affirmative and negative covenants that are customary for financings of their respective types. As of September 30, 2021, the Company was not in compliance with certain reporting and financial covenants. To remedy the non-compliance related to the financial covenants associated with the line of credit, the Company paid off the entirety of the outstanding balance on the line of credit and all related interest on October 14, 2021. To remedy the non-compliance related to the financial covenants associated with the 2019 and 2018 term loans, the Company entered into amended and restated term notes.
On October 1, 2021, the Company entered into amended and restated term notes (the “Loan Agreements”) with Advantage Capital (“Advantage”) and Enhanced Capital (“Enhanced”). Pursuant to the Loan Agreements, Advantage provided two term notes in the amount of $1.4 million (“Advantage Term Note I”) and $1.4 million (“Advantage Term Note II”) (collectively the “Advantage Term Notes”). Enhanced provided one term note in the amount of $1.8 million (the “Enhanced Term Note”). The Advantage and Enhanced Term Notes were used to refinance the term notes outstanding under the amended and restated term notes dated December 7, 2018 and October 1, 2019, respectively, mature on December 18, 2027 and September 7, 2024, respectively, and ~~$361,000~~bear interest at a fixed rate of 4%. The Advantage and ~~$465,000~~Enhanced Term Notes are interest-only with one balloon principal payment at maturity and can be pre-paid without penalty at any time. All financial covenants included in the original agreements previously in effect were removed by the Loan Agreements.
8.Share-based compensation
Service vesting-based stock options
The following is a summary of service vesting based stock option activity for the nine months ended September 30, 2021, and the status of stock options outstanding as of September 30, 2021:

Nine Months Ended

September 30, 2021

Shares

Wtd. Avg.
Exercise Price

Outstanding as of beginning of year
844,455 $ 2.00
Exercised
(131,590 ) 1.48
Forfeited
(1,146 ) 5.69
Expired
(35,714 ) 1.73
Outstanding as of September 30, 2021
676,005 $ 2.12

Stock options exercisable as of September 30, 2021
671,964 $ 2.11
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Table of Contents
We recognized $6,000 and $21,000 in stock compensation expense related to service vesting-based options during the three and nine months ended September 30, ~~2019.~~2021, ~~In-process research~~respectively, and ~~development was put into service in the~~ ~~second~~ ~~quarter of~~ ~~2020,~~ ~~as such we have included the amortization in the schedule below based on an estimated life of 9 years. As of~~ ~~September 30, 2020,~~ ~~the Company expects to record the following amortization expense:~~
(In thousands)

For the Years Ended December 31,

Estimated
Amortization
Expense

2020 (3 months remaining)
$ 705
2021
2,825
2022
2,825
2023
2,795
2024
2,770
Thereafter
7,961
Total
$ 19,881
17

~~Table of Contents~~
7.
~~Share-based Compensation~~
~~Service Vesting-Based Stock Options~~
~~The following is a summary of service vesting-based stock option activity for the~~ ~~nine~~ ~~month period ended~~ ~~September 30, 2020~~ ~~and the status of service vesting-based options outstanding at~~ ~~September 30, 2020:~~

Nine Month Period Ended

September 30, 2020

Wtd. Avg.

Exercise

Options

Price

Outstanding at beginning of year
1,570,455 $ 1.96
Granted
0 $ 0
Exercised
(511,680
)
$ 1.95
Forfeited
0 $ 0
Expired
0 $ 0
Outstanding service vesting-based at September 30, 2020
1,058,775 $ 1.96

Service vesting-based options exercisable at September 30, 2020
1,039,399 $ 1.94
~~We recognized stock compensation expense related to service vesting-based options of~~ $15,000 and ~~$65,000~~$104,000 during the three ~~months ended~~ ~~September 30, 2020~~ and~~2019,~~ ~~respectively, and $104,000 and $305,000 during the~~ nine months ended September 30, 2020, ~~and~~ ~~September 30, 2019,~~ respectively. As of September 30, ~~2020,~~2021, there was ~~$28.6~~$27.2 million of aggregate intrinsic value of outstanding service vesting-based stock options, including ~~$28.1~~$27.0 million of aggregate intrinsic value of exercisable service vesting-based stock options. Intrinsic value is the total pretax intrinsic value for all “in-the-money” options (i.e., the difference between the Company’s closing stock price on the last trading day of the quarter and the exercise price, multiplied by the number of shares) that would have been received by the option holders had all option holders exercised their options on September 30, ~~2020.~~2021. This amount will change based on the fair market value of the Company’s stock. ~~Intrinsic~~The intrinsic value of service vesting-based awards exercised was $1.4 million and $5.2 million during the three and nine months ended September 30, ~~2020~~2021, respectively, and~~2019~~ ~~was~~ $2.2 million and ~~$1.7~~$6.8 million ~~respectively, and~~ during thethree and nine months ended September 30, 2020, ~~and~~ ~~2019~~ ~~was $6.8 million and $5.2 million,~~ respectively. ~~There were 0 service based-vesting options granted during the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020~~ ~~and~~ ~~2019.~~ The weighted average remaining contractual life of service vesting-based options outstanding and exercisable atas of September 30, ~~2020~~2021 is ~~3.8~~3.3 years. ~~Total~~As of September 30, 2021, there was $4,000 in unrecognized compensation ~~cost of~~costs related to service vesting-based stock ~~options at~~ ~~September 30, 2020~~ ~~of $43,000 is expected~~options. We expect to ~~be recognized~~recognize those costs over ~~a weighted average period of 1.0~~0.2 years.

18

~~Table of Contents~~
Performance-based ~~Stock Options~~stock options

The following is a summary of performance-based stock option activity under our stock option plan for the nine ~~month period~~months ended September 30, ~~2020,~~2021, and the status of performance-based stock options outstanding atas of September 30, ~~2020:~~2021:

Nine Month Period Ended

September 30, 2020

Wtd. Avg.

Exercise

Options

Price

Outstanding at beginning of year
737,497 $ 1.64
Granted
0 $ 0
Exercised
(17,113
)
$ 1.64
Outstanding performance-based at September 30, 2020
720,384 $ 1.64

Performance-based options exercisable at September 30, 2020
720,384 $ 1.64

Nine Months Ended

September 30, 2021

Shares

Wtd. Avg.
Exercise Price

Outstanding as of beginning of year
686,001 $ 1.64
Exercised
(501,075 ) 1.64
Outstanding as of September 30, 2021
184,926 $ 1.64

Stock options exercisable as of September 30, 2021
184,926 $ 1.64

~~All~~NaN stock compensation ~~cost of performance-based stock options outstanding~~expense was recognized ~~as of~~during the ~~December 31, 2018.~~ three and nine months ended September 30, 2021 and 2020 related to performance-based options. As of September 30, ~~2020,~~2021, there was ~~$19.7~~$7.5 million of aggregate intrinsic value of outstanding and exercisable performance-based stock options. Intrinsic value is the total pretax intrinsic value for all “in-the-money” options (i.e., the difference between the Company’s closing stock price on the last trading day of the quarter and the exercise price, multiplied by the number of shares) that would have been received by the option holders had all option holders exercised their options on September 30, ~~2020.~~2021. This amount will change based on the fair market value of the Company’s stock. ~~Intrinsic~~The intrinsic value of performance-based awards exercised ~~during the~~ ~~three~~ ~~months~~was $9.7 million and ~~nine~~ ~~months ended~~ ~~September 30, 2020~~ ~~was~~ ~~none~~ ~~and $239,000, respectively, and in~~$19.5 million during the three and nine months ended September 30, ~~2019~~2021, ~~was $2.3 million.~~respectively, and $0 and $239,000 during the three and nine months ended September 30, 2020, respectively. The weighted average remaining contractual life of performance-based options outstanding and exercisable atas of September 30, ~~2020~~2021 is ~~1.2~~0.2 years. All compensation cost of performance-based stock options outstanding as of September 30, 2021 has been recognized.

There were no0 stock options granted to employees and non-employee directors in the three and nine ~~month periods~~months ended September 30, ~~2020~~2021 and ~~2019.~~2020.

19

~~Table of Contents~~
Restricted ~~Stock~~stock

Service vesting-based restricted stock

The following is a summary of service vesting-based restricted stock activity for the nine ~~month period~~months ended September 30, ~~2020,~~2021, and the status of unvested service vesting-based restricted stock outstanding atas of September 30, ~~2020:~~2021:

Nine Month Period Ended

September 30, 2020

Service vesting-based restricted stock

Number of
Restricted
Shares

Grant-Date
Fair Value

Outstanding at beginning of year
429,399 $ 13.25
Granted
448,267 $ 15.78
Granted in lieu of cash
34,154 $ 9.18
Vested
(161,263
)
$ 11.12
Forfeited
(24,861
)
$ 14.80
Outstanding at September 30, 2020
725,696 $ 15.04

Nine Months Ended

September 30, 2021

Shares

Wtd. Avg.
Grant Date
Fair Value

Outstanding as of beginning of year
930,854 $ 19.31
Granted
751,363 47.50
Vested
(241,590 ) 15.97
Forfeited
(79,079 ) 34.86
Non-vested as of September 30, 2021
1,361,548 $ 34.56

The aggregate fair value of the service vesting-based awards granted was $31.1 million and $35.7 million during the three and nine months ended September 30, ~~2020~~2021, respectively, and~~2019~~ ~~was~~ $4.2 million and ~~$802,000, respectively, and~~$7.4 million during thethree and nine months ended September 30, 2020 ~~and~~ ~~2019~~was, ~~$7.4 million and $4.0 million,~~ respectively, which represents the market value of ~~our~~BioLife common stock on the date that the restricted stock awards were granted. The aggregate fair value of the service vesting-based restricted stock awards that vested was $5.1 million and $10.3 million during the three and nine months ended September 30, ~~2020~~2021, respectively, and~~2019~~ ~~was~~ $1.6 million and ~~$368,000, respectively and~~$2.9 million during thethree and nine months ended September 30, 2020, ~~and~~ respectively.
~~2019~~21 ~~was $2.9~~
Table of Contents
We recognized $4.4 million and ~~$1.6~~$8.0 million ~~respectively.~~
On ~~March 25, 2020,~~ ~~our board of directors granted 34,154 restricted stock awards, based on a fair value on the grant date of $9.18 per share,~~ in ~~lieu of the~~ ~~2019~~ ~~cash performance bonus for our executive compensation plan. The award vested in full on~~ ~~September 25, 2020~~ ~~regardless of employment status on that date. All expenses related to these awards were incurred in the year ended~~ ~~December 31, 2019.~~
~~We recognized~~ stock compensation expense ~~of $754,000 and $303,000~~ related to service vesting-based restricted stock awards ~~for~~during the three ~~months ended~~ ~~September 30, 2020~~ and~~2019,~~ ~~respectively, and $1.6 million and $826,000 related to service vesting-based awards for the~~ nine months ended September 30, ~~2020~~2021, respectively, and ~~2019,~~ ~~respectively. As of~~ ~~September 30, 2020,~~ ~~there was $10.0~~$754,000 and $1.6 million ~~in unrecognized compensation costs related to service vesting-based awards. We expect to recognize those costs over 3.3 years.~~
~~Performance-based restricted stock~~
On ~~March 25, 2020,~~ the Company granted 82,805 shares of performance-based stock to its executives in the form of restricted stock. The shares granted contain a performance condition based on several Company metrics related to ~~2020~~ performance. The performance-based restricted stock awards will vest as to between 0% and 125% of the number of restricted shares granted to each recipient. The grant date fair value of this award was $9.18 per share. The fair value of this award will be expensed on a straight-line basis over the requisite service period ending on ~~December 31, 2020.~~
~~The following is a summary of performance-based restricted stock activity for the~~ ~~nine~~ ~~month period ended~~ ~~September 30, 2020,~~ ~~and the status of unvested service vesting-based restricted stock outstanding at~~ ~~September 30, 2020:~~

Nine Month Period Ended

September 30, 2020

Performance-based restricted stock

Number of
Restricted
Shares

Grant-Date
Fair Value

Outstanding at beginning of year
0 $ 0
Expected to vest
82,805 $ 9.18
Vested
0 $ 0
Forfeited
0 $ 0
Outstanding at September 30, 2020
82,805 $ 9.18
~~We recognized stock compensation expense of $191,000 and $569,000 related to performance-based restricted stock awards for~~during the three and nine months ended September 30, 2020, respectively. As of September 30, ~~2020,~~2021, there was $41.7 million in unrecognized compensation costs related to service vesting-based restricted stock awards. We expect to recognize those costs over 3.3 years.
Performance-based restricted stock
We recognized stock compensation benefit of $0 and $186,000 for the three and nine months ended September 30, 2021 related to 20,285 performance-based restricted stock awards that were awarded but did not vest. We recognized stock compensation expense of $191,000 inand $569,000 during the three and nine months ended September 30, 2020, respectively, related to performance-based restricted stock awards. As of September 30, 2021, there were 0 unrecognized non-cash compensation costs related to performance-based restricted stock ~~awards expected to vest. We expect to recognize those costs over 0.3 years.~~awards.

20

~~Table of Contents~~
Market-based restricted stock
The following is a summary of market-based restricted stock option activity under our stock option plan for the nine months ended September 30, 2021 and the status of market-based restricted stock options outstanding as of September 30, 2021:

Nine Months Ended

September 30, 2021

Shares

Wtd. Avg.
Grant Date
Fair Value

Outstanding as of beginning of year
224,774 $ 19.20
Granted
152,665 30.85
Vested
(231,268 ) 26.98
Non-vested as of September 30, 2021
146,171 $ 20.78

On February 25, 2019, the Company granted 94,247 shares and on April 1, 2019 granted 29,604 shares of market-based stock to its executives in the form of restricted stock. The shares granted contain a market condition based on Total Shareholder Return (“TSR”). The TSR market condition measures the Company’s performance against a peer group. ~~The market-based restricted stock awards will vest as to between 0% and~~On February 8, 2021, the Company determined the TSR attainment was 200% of the ~~number~~targeted shares and 231,268 shares were granted and immediately vested to current executives of ~~restricted shares granted to each recipient~~the Company based on our total shareholder return during the period beginning on January 1, 2019 through December 31, 2020 as compared to the total shareholder return of 20 of our peers. The fair value of this award was determined as of the grant date using a Monte Carlo simulation with the following assumptions: a historical volatility of 69%, 0% dividend yield and a risk-free interest rate of 2.5%. The historical volatility was based on the most recent 2-year period for the Company and correlated with the components of the peer group. The stock price projection for the Company and the components of the peer group assumes a 0% dividend yield. This is mathematically equivalent to reinvesting dividends in the issuing entity over the performance period. The risk-free interest rate is based on the yield on the U.S. Treasury Strips as of the Measurement Date with a maturity consistent with the 2-year term associated with the market condition of the award. The fair value of this award ~~will be~~of $3.1 million was expensed on a straight-line basis over the grant date to the vesting date of December 31, 2020.

On March 25, 2020, the Company granted 109,140 shares of market-based stock to ~~its~~certain 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 0% and 200% of the number of restricted shares granted to each recipient based on our total shareholder return during the period beginning on January 1, 2020 through December 31, 2021 as compared to the total shareholder return of 20 of our peers. The fair value of this award was determined using a Monte Carlo simulation with the following assumptions: a historical volatility of 78%, 0% dividend yield and a risk-free interest rate of 0.3%. The historical volatility was based on the most recent 2-year period for the Company and correlated with the components of the peer group. The stock price projection for the Company and the components of the peer group assumes a 0% dividend yield. This is mathematically equivalent to reinvesting dividends in the issuing entity over the performance period. The risk-free interest rate is based on the yield on the U.S. Treasury Strips as of the Measurement Date with a maturity consistent with the 2-year term associated with the market condition of the award. The fair value of this award is being expensed on a straight-line basis over the grant date to the vesting date of December 31, 2021.
22
Table of Contents
On February 8, 2021, the Company granted 30,616 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 0% and 200% of the number of restricted shares granted to each recipient based on our total shareholder return during the period beginning on January 1, 2021 through December 31, 2022 as compared to the total shareholder return of 20 of our peers. The fair value of this award was determined using a Monte Carlo simulation with the following assumptions: a historical volatility of 68%, 0% dividend yield and a risk-free interest rate of 0.1%. The historical volatility was based on the most recent 2-year period for the Company and correlated with the components of the peer group. The stock price projection for the Company and the components of the peer group assumes a 0% dividend yield. This is mathematically equivalent to reinvesting dividends in the issuing entity over the performance period. The risk-free interest rate is based on the yield on the U.S. Treasury Strips as of the Measurement Date with a maturity consistent with the 2~~-year~~2-year term associated with the market condition of the award. The fair value of this award ~~will be~~is being expensed on a straight-line basis over the grant date to the vesting date of December 31, ~~2021.~~2022.
On May 3, 2021, the Company granted 6,415 shares of market-based stock to one executive 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 0% and 200% of the number of restricted shares granted to each recipient based on our total shareholder return during the period beginning on January 1, 2021 through December 31, 2022 as compared to the total shareholder return of 20 of our peers. The fair value of this award was determined using a Monte Carlo simulation with the following assumptions: a historical volatility of 68%, 0% dividend yield and a risk-free interest rate of 0.2%. The historical volatility was based on the most recent 2-year period for the Company and correlated with the components of the peer group. The stock price projection for the Company and the components of the peer group assumes a 0% dividend yield. This is mathematically equivalent to reinvesting dividends in the issuing entity over the performance period. The risk-free interest rate is based on the yield on the U.S. Treasury Strips as of the Measurement Date with a maturity consistent with the 2-year term associated with the market condition of the award. The fair value of this award is being expensed on a straight-line basis over the grant date to the vesting date of December 31, 2022.

We recognized $413,000 and $1.1 million in stock compensation expense ~~of $600,000 and $461,000~~ related to market-based restricted stock awards ~~for~~during the three and nine months ended September 30, ~~2020~~2021, respectively, and ~~2019,~~ ~~respectively,~~$600,000 and $1.5 million during the threeand ~~$1.0 million related to market-based restricted stock awards for the~~ nine months ended September 30, 2020, ~~and~~ ~~2019,~~respectively. As of September 30, ~~2020,~~2021, there was ~~$1.3~~$1.4 million in unrecognized non-cash compensation costs related to market-based restricted stock awards expected to vest. We expect to recognize those costs over ~~0.9~~1.1 years.
~~Total Stock Compensation Expense~~

We recorded total stock compensation expense for the three and nine ~~month periods~~months ended September 30, ~~2020~~2021 and ~~2019,~~2020, as follows:

Three Month Period Ended

Nine Month Period Ended

September 30,

September 30,

(In thousands)

2020

2019

2020

2019

Research and development costs
$ 291 $ 165 $ 687 $ 400
Sales and marketing costs
256 182 581 507
General and administrative costs
868 429 2,144 1,145
Cost of product sales
145 53 406 127
Total
$ 1,560 $ 829 $ 3,818 $ 2,179
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~~Table of Contents~~

Three Months Ended

Nine Months Ended

September 30,

September 30,

2021

2020

2021

2020

Research and development costs
$ 551 $ 291 $ 1,171 $ 687
Sales and marketing costs
560 256 1,012 581
General and administrative costs
3,015 868 5,662 2,144
Cost of revenue
742 145 1,047 406
Total
$ 4,868 $ 1,560 $ 8,892 $ 3,818

8.
9. Warrants
~~Warrants~~

In March 2014, in a registered public offering and in accordance with a separate note conversion agreement with certain note holders, the Company issued warrants to purchase 6,910,283 shares of common stock at $4.75 per share. The warrants ~~expire~~expired in March 2021.

In May 2016, in connection with a credit facility with WAVI Holding AG, a significant stockholder of the Company, the Company issued a warrant to purchase 550,000 shares of common stock at $1.75 per share. The warrant was immediately exercisable and ~~expires in~~had an original expiration date of May 2021.

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

~~Additionally, during the~~On ~~three~~March 25, 2021, ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020,~~ ~~3,500 and 8,500~~all remaining outstanding warrants were exercised ~~with~~via a ~~weighted average~~“cashless” exercise. As a result of the cashless exercise, ~~price~~the Company issued an aggregate of ~~$4.75, yielding proceeds~~70,030 shares of ~~$17,000 and $40,000, respectively. The outstanding warrants expire in~~ ~~March 2021.~~Company common stock upon cashless exercise of an aggregate of 79,100 warrants.

The following table summarizes warrant activity for the nine months ended September 30, ~~2020:~~2021:

Shares

Wtd. Avg.
Exercise
Price

Outstanding at December 31, 2019
3,959,005 $ 4.33
Exercised
(3,879,905
)
4.33
Outstanding at September 30, 2020
79,100 $ 4.75

Shares

Wtd. Avg.
Exercise Price

Outstanding as of December 31, 2020
79,100 $ 4.75
Exercised
(79,100 ) 4.75
Outstanding and exercisable as of September 30, 2021
0 $ 0

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Table of Contents

9.
10. Income taxes
~~Income Taxes~~

The Company accounts for income taxes under ASC Topic 740 – Income Taxes. Under this standard, deferred tax assets and liabilities are recognized for future tax benefits or consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

~~We have recorded~~The Company’s tax provision for interim periods is determined using an estimate of the annual effective income tax rate, adjusted for discrete items, if any, that occur in the relevant period. The income tax benefit of $17.5 million for the nine months ended September 30, 2021 resulted in an effective income tax rate of 161%. Included in the $17.5 million were discrete tax benefits of $8.5 million related to the Global Cooling acquisition on May 3, 2021 and $6.3 million related to stock compensation windfall tax benefits.
The income tax benefit of $5.0 million for the three months ended September 30, 2021 resulted in an effective income tax rate of 98%. The income tax benefit included $3.1 million of discrete tax benefits related to stock compensation windfall tax benefits.
The Company’s US projected effective income tax rate without discrete items was 18%, which is lower than the US federal statutory rate of 21% primarily due to the impact of a ~~full~~projected partial valuation allowance ~~against our~~on net operating loss carryforwards, non-deductible transaction costs and executive compensation offset by state tax benefits and research tax credits.
Realization of deferred tax ~~assets. If we have multiple quarters~~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 both positive ~~net income, we will assess our valuation allowance. Based on all available~~and negative evidence ~~we determined that we have~~when concluding whether it is more likely than not ~~yet attained~~that deferred tax assets are realizable. After reviewing the evidence available, the Company’s management believes there is uncertainty regarding the future realizability of the U.S. net operating loss carryforward and is projecting a ~~sustained level of profitability. Therefore, we have maintained the full~~partial valuation allowance as of ~~September 30, 2020.~~ We ~~may~~ ~~release~~$1.2 million by year end. If operating results improve and projections indicate future utilization of the tax attributes, all or a portion of the valuation allowance would be released, resulting in ~~the near-term, dependent on the verifiable positive evidence observed in future quarters.~~
On ~~March 27, 2020,~~ ~~President Trump signed the CARES Act into law. The Company has reviewed the aspects of this law as it relates to~~a corresponding non-cash income ~~taxes and have concluded that at this time, the CARES Act will have~~ no ~~material impact to the Company’s~~ ~~2020~~ ~~provision for income taxes.~~tax benefit. The Company will ~~continue~~also maintain a full valuation allowance on its current losses in the Netherlands due to ~~evaluate~~a lack of earnings history.
In connection with the ~~impact~~Global Cooling acquisition on May 3, 2021, the Company recognized a deferred tax liability estimated to be $23.5 million. As a result, the Company recorded an income tax benefit of $8.5 million for the full release of the ~~CARES Act~~valuation allowance on ~~its financial position, results~~our existing deferred tax assets as a result of ~~operations and cash flows.~~the offset of the deferred tax liabilities established for intangible assets from the acquisition. In connection with the Sexton acquisition on August 9, 2021, the Company recorded a deferred tax liability estimated to be $1.3 million with an offset to goodwill.

AsFuture utilization of ~~March 30, 2020,~~ the ~~company started deferring~~net operating loss and tax credit carryforwards may be subject to a substantial annual limitation in the ~~employer side~~event of ~~social security tax payments~~a change in ownership as ~~allowed under the CARES Act. We will pay back~~set forth in Section ~~50%~~382 of ~~our total deferred payments~~the Internal Revenue Code of 1986, as amended. It is possible that there have been past changes in ownership as defined under Section ~~2021~~382, which would limit the Company’s ability to utilize NOLs and other tax attributes. The Company is currently in the ~~remaining~~process a completing a Section ~~50%~~382 study and a state nexus study, which may result in ~~2022.~~adjustments to the accounting for the acquisition of Global Cooling and Sexton.

~~10.~~
11. Net (loss) income per common share
~~Net Income (Loss) per Common Share~~

The Company considers its unexercised warrants and unvested restricted shares, which contain non-forfeitable rights to dividends, participating securities, and includes such participating securities in its computation of earnings per share pursuant to the two-class method. Basic earnings per share for the two classes of stock (common stock and warrants) is calculated by dividing ~~the~~ net income ~~(loss)~~ by the weighted average number of shares of common ~~shares~~stock and warrants outstanding during the reporting period. Diluted earnings per share is calculated using the weighted average number of shares of common stock plus the potentially dilutive effect of common equivalent shares outstanding determined under both the two ~~class~~-class method and the treasury stock method, whichever is more dilutive. In periods when we have a net loss, common stock equivalents are excluded from our calculation of earnings per share as their inclusion would have an antidilutive effect. ~~For the~~ ~~three~~ ~~months ended~~ ~~September 30, 2020,~~ ~~we excluded 1.9 million common stock options,~~ ~~63,000~~ ~~warrants and 286,000 unvested stock awards from our calculation of diluted weighted average shares because they were antidilutive. For the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2019,~~ ~~we excluded 2.5 million common stock options, 3.0 million warrants and~~ ~~146,000~~ ~~unvested stock awards from our calculation of diluted weighted average shares because they were antidilutive.~~

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Table of Contents
The following table presents computations of basic and diluted earnings per share under the two-class method:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended

Nine Months Ended

2020

2019

2020

2019

September 30,

September 30,

(In thousands, except per share and share data)

(In thousands, except share and earnings per share data)

2021

2020

2021

2020

Basic earnings (loss) per common share

Numerator:

Net income (loss)
$ (1,133
)
$ 10,269 $ 4,795 $ (4,640
)
$ 79 $ (1,133 ) $ 6,837 $ 4,795
Amount attributable to unvested restricted shares
0 (207
)
(138
)
0 (2 ) 0 (212 ) (138 )
Amount attributable to warrants outstanding
0 (1,682
)
(335
)
0 0 0 (4 ) (335 )
Net income (loss) allocated to common shareholders
(1,133
)
8,380 4,322 (4,640
)
77 (1,133 ) 6,621 4,322

Denominator:

Weighted-average common shares issued and outstanding
31,639,420 19,735,364 25,418,375 19,071,722 40,911,801 31,639,420 37,435,224 25,418,375
Basic earnings (loss) per common share
(0.04
)
0.42 0.17 (0.24
)
$ 0.00 $ (0.04 ) $ 0.18 $ 0.17

Diluted earnings (loss) per common share

Numerator:

Net income (loss)
(1,133
)
10,269 4,795 (4,640
)
$ 79 $ (1,133 ) $ 6,837 $ 4,795
Amount attributable to non-participating warrants
0 (279
)
(49
)
0
Amount attributable to unvested restricted shares
(2 ) 0 (205 ) 0
Amount attributable to warrants
0 0 (4 ) (49 )
Less: gain related to change in fair value of warrants
0 (1,128
)
(4,467
)
0 0 0 0 (4,467 )
Diluted net income (loss) allocated to common shareholders
(1,133
)
8,862 279 (4,640
)
Diluted earnings (loss) per common share
77 (1,133 ) 6,628 279

Denominator:

Weighted-average common shares issued and outstanding
31,639,420 19,735,364 25,418,375 19,071,722 40,911,801 31,639,420 37,435,224 25,418,375
Dilutive potential common shares:
��
Dilutive potential common shares from:

Stock options
0 2,420,884 1,754,051 0 1,069,207 0 1,330,207 1,754,051
Restricted stock awards
0 140,501 285,975 0
Restricted shares
1,315,462 0 1,195,154 285,975
Warrants
0 3,046,363 1,954,137 0 0 0 24,338 1,954,137
Diluted weighted-average shares issued and outstanding
31,639,420 25,343,112 29,412,538 19,071,722
Diluted weighted average shares issued and outstanding
43,296,470 31,639,420 39,984,923 29,412,538
Diluted earnings (loss) per common share
(0.04
)
0.35 0.01 (0.24
)
$ 0.00 $ (0.04 ) $ 0.17 $ 0.01

The following table sets forth the number of weighted-average common shares excluded from the computation of diluted loss per share, as their inclusion would have been anti-dilutive:

Three Months Ended

Nine Months Ended

September 30,

September 30,

2021

2020

2021

2020

Stock options and restricted stock awards
0 2,183,537 0 0
Warrants
0 62,769 0 0
Total
0 2,246,306 0 0

~~11.~~
~~Commitments & Contingencies~~
12. Commitments and contingencies
Employment agreements

We have employment agreements with our Chief Executive Officer, Chief Financial and Operating Officer, Chief Science Officer, Chief Quality Officer, Chief Marketing Officer, Vice President - Freezer Technologies, Vice President of Sales - Thaw Technologies, Vice President of Product Development - Thaw Technologies, and Vice President - Global Sales.certain key employees. None of these employment agreements is for a definitive period, but rather each will continue indefinitely until terminated in accordance with its terms. The agreements provide for a base annual salary, payable in monthly (or shorter) installments. ~~In addition, the agreement with the Chief Executive Officer provides for incentive bonuses at the discretion of the Board of Directors.~~ Under certain conditions and for certain of these officers, we may be required to pay additional amounts upon terminating the ~~officer~~employee or upon the ~~officer~~employee resigning for good reason.

Litigation

From time to time, the Company is subject to various legal proceedings that arise in the ordinary course of business, none of which are currently material to the Company’s business. The Company’s industry is characterized by frequent claims and litigation, including claims regarding intellectual property. As a result, the Company may be subject to various legal proceedings from time to time. The results of any future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors. Management is not aware of any pending or threatened litigation.

Indemnification

As permitted under Delaware law and in accordance with the Company’s bylaws, the Company is required to indemnify its officers and directors for certain errors and occurrences while the officer or director is or was serving in such capacity. The Company is also party to indemnification agreements with its directors. The Company believes the fair value of the indemnification rights and agreements is minimal. Accordingly, the Company has not recorded any liabilities for these indemnification rights and agreements as of September 30, ~~2020.~~2021.

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Table of Contents

~~12.~~
~~Revenue~~
~~We currently operate as~~ ~~one~~13. ~~operating segment focusing on bioproduction products and services.~~Revenue

To determine revenue recognition for contractual arrangements that we determine are within the scope of Financial Accounting Standards Board (“FASB”) Topic 606,Revenue from Contracts with Customers, we perform the following five steps: (i) identify each contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to our performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy the relevant performance obligation. We ~~generate revenue~~only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. The Company primarily recognizes product revenues, service revenues, and rental revenues. Product revenues are generated from the sale of ~~bioproduction products, equipment devices,~~biopreservation media, ThawStar, and ~~related consumables used with these equipment devices~~freezer products. We recognize product revenue, including shipping and handling charges billed to customers, when we transfer control of our products to our customers (transfer of control generally occurs upon shipment of our product). Shipping and handling costs are classified as part of cost of product revenue in the ~~life science~~statement of operations. Service revenues are generated from the storage of biological and ~~biopharmaceutical industries. Under ASC~~ ~~606,~~ ~~“Revenue from Contracts with Customers,” revenue is recognized when,~~pharmaceutical materials. We recognize service revenues over time as services are performed or ~~as, obligations under~~ratably over the ~~terms of a~~ contract ~~are satisfied, which occurs when control of the promised products or services is transferred to customers.~~term.

The Company also generates revenue from the leasing of our property, plant, and equipment, operating right-of-use assets, and evo cold chain systems ~~which are typically cloud-connected shippers with enabling cold chain cloud applications,~~ to customers pursuant to service contracts or rental arrangements entered into with the customer. Revenue from ~~the rental of cold chain systems~~these arrangements is not within the scope of FASB ASC Topic 606 as it is within the scope of FASB ASC Topic 842, ~~“Leases”~~Leases. All customers leasing shippers currently do so under month-to-month rental arrangements. We account for these rental transactions as operating leases and record rental revenue on a straight-line basis over the rental term.

Total bioproduction tools and services revenue for three and nine months ended September 30, 2021 and 2020 was comprised of the following:

Three Months Ended

Nine Months Ended

September 30,

September 30,

(In thousands, except percentages)

2021

2020

2021

2020

Product revenue

Freezer and thaw
$ 17,610 $ 3,371 $ 40,021 $ 9,237
Cell processing
11,505 7,414 30,131 22,753
Storage and cold chain services
86 19 293 30
Service revenue

Storage and cold chain services
2,250 0 6,417 0
Rental revenue

Storage and cold chain services
2,349 475 4,989 1,341
Total revenue
$ 33,800 $ 11,279 $ 81,851 $ 33,361
The following table ~~represents revenues~~includes estimated rental revenue expected to be recognized in the future related to embedded leases as well as estimated service revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied as of the end of the reporting periods. The Company is electing not to disclose the value of the remaining unsatisfied performance obligation with a duration of one year or less as permitted by ~~product line:~~ the practical expedient in ASU 2014-09,Revenue from Contracts with Customers. The estimated revenue in the following table does not include contracts with the original durations of one year or less, amounts of variable consideration attributable to royalties, or contract renewals that are unexercised as of September 30, 2021.

Three Month Period Ended

Nine Month Period Ended

September 30,

September 30,

(In thousands)

2020

2019

2020

2019

Biopreservation media
$ 7,414 $ 6,069 $ 22,753 $ 18,165
Automated thawing
277 324 1,047 699
evo shippers
494 211 1,372 211
Freezers and accessories
3,094 0 8,189 0
Total
$ 11,279 $ 6,604 $ 33,361 $ 19,075
The balances in the table below are partially based on judgments involved in estimating future orders from customers subject to the exercise of material rights pursuant to respective contracts:

Year Ending December 31,

(In thousands)

2021

2022

2023

2024

Total

Rental revenue
$ 2,983 $ 7,733 $ 422 $ 0 $ 11,138
Service revenue
$ 40 $ 31 $ 31 $ 10 $ 112

~~13.~~
14. Leases
Lessee arrangements
~~Leases~~

We lease approximately 32,106 square feet in our Bothell, Washington headquarters. ~~The~~In November of 2020, the Company entered into an amendment to the lease agreement associated with this facility to extend the term of ~~our~~the lease ~~continues~~ until July 31, 2031. The amendment included a $2.6 million tenant allowance that the Company expects to receive as improvements are made between 2021~~with~~ and 2023. This lease includes two options to extend the term of the lease, each of which is for an additional period of five years, with the first extension term commencing, if at all, on August 1, ~~2021,~~2031, and the second extension term commencing, if at all, immediately following the expiration of the first extension term. In accordance with the amended lease agreement, our monthly base rent is approximately ~~$63,000 at~~$70,000 as of September 30, ~~2020,~~2021, with scheduled annual increases each ~~August~~August. ~~and again in~~ ~~October~~ ~~for the most recent amendment.~~ We are also required to pay an amount equal to the Company’s proportionate share of certain taxes and operating expenses.

We lease approximately ~~1,250~~3,460 square feet in our Menlo Park, California location. The term of our lease ~~is on a month-to-month term.~~ continues until December 31, 2021. In accordance with the lease agreement, the monthly base rent is approximately ~~$5,000 at~~$11,000 as of September 30, ~~2020.~~2021. We are also required to pay an amount equal to the Company’s proportionate electrical ~~expenses.~~expenses and common area maintenance fees.

We lease approximately 9,932 square feet in our Albuquerque, New Mexico location. The term of our lease continues until December 31, 2021 with two options to extend the terms of the lease, each of which is for an additional period of three years, with the first extension term commencing, if at all, on December 1, 2021, and the second extension term commencing, if at all, on December 1, 2024. In accordance with the lease agreement, the monthly base rent is approximately $9,000 atas of September 30, ~~2020,~~2021, with ~~a monthly~~an increase at the beginning of each extension term if the lease term is extended.

We lease approximately 106,998 square feet in our Detroit, Michigan ~~location.~~location under a month-to-month arrangement. The monthly base rent is approximately $35,000 as of September 30, 2021.
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Table of Contents
We lease approximately 16,800 square feet in the United States. The term of ~~our~~the lease continues until February 28, 2026 and has no option to extend the term. In accordance with the lease agreement, the Company’s monthly base rent is approximately $14,000 as of September 30, 2021, with scheduled increases each March. We are also required to pay an amount equal to the Company’s proportionate share of certain taxes and operating expenses.
We lease approximately 20,000 square feet in the United States. The term of the lease continues until March 31, 2024 and has no option to extend the term. In accordance with the lease agreement, the Company’s monthly base rent is approximately $14,000 as of September 30, 2021, with scheduled increases each April. We are also required to pay an amount equal to the Company’s proportionate share of certain taxes and operating expenses.
We lease approximately 12,500 square feet in the United States. The term of the lease continues until January 31, 2023 and has no option to extend the term. In accordance with the lease agreement, the Company’s monthly base rent is approximately $8,000 as of September 30, 2021. We are also required to pay an amount equal to the Company’s proportionate share of certain taxes and operating expenses.
We lease approximately 16,153 square feet in the United States. The term of the lease continues until June 30, 2024 and has no option to extend the term. In accordance with the amended lease agreement, the Company’s monthly base rent is approximately $13,000 as of September 30, 2021, with scheduled increases each July. We are also required to pay an amount equal to the Company’s proportionate share of certain taxes and operating expenses.
We lease approximately 26,800 square feet in the United States. The term of the lease continues until November ~~30, 2020~~1, 2031 with ~~one~~two ~~option~~options to extend the ~~term~~terms of the lease, each of which is for an additional period of ~~sixty~~five ~~months,~~years, with thefirst extension term commencing, if at all, on November ~~12, 2020.~~1, 2031, ~~These extension options are~~ ~~not~~ ~~accounted for under ASC Topic~~ ~~842,~~ ~~“Leases” because we are~~ ~~not~~ ~~reasonably certain we will enter into the renewal options in their current terms~~ and the ~~current~~second extension term ~~is less than~~commencing, if at all, on 12November 1, 2036. months. With adequate notice prior to expiration of the option notice period, we have the right to purchase the premises for a purchase price that is mutually acceptable to landlord and tenant as agreed to by the parties on or before the expiration of the option notice period. In the event that the parties are unable to mutually agree on the option purchase price then each party shall obtain, at its sole cost and expense, an appraisal of the premises and the option purchase price will be the average of the ~~two~~ ~~appraisals. For the avoidance of doubt, our right to elect to purchase the premises for the option purchase price will terminate upon the expiration of the option notice period, but we will~~ ~~not~~ ~~be obligated to close on the purchase of the premises prior to the expiration of the initial term.~~ In accordance with the lease agreement, the monthly base rent is approximately ~~$15,000 at~~$27,000 as of September 30, ~~2020,~~2021, with scheduled increases each June, and includes provisions for rent increases of approximately 2.5% on the first day of the first month that follows the first anniversary of the beginning of the lease of each year and on each anniversary date thereafter.
We lease approximately 47,533 square feet in the Netherlands. The term of our lease began on April 1, 2021 and continues until March 31, 2026, with options to extend the lease for an additional five years at each expiration date. In accordance with the lease agreement, the monthly base rent is approximately €29,000 (approximately $33,000 as of September 30, 2021) and includes provisions for rent increases tied to the Netherlands consumer price index in January of each year.
We lease approximately 50,000 square feet in our Athens, Ohio location. The term of our lease continues until March 31, 2028 with a negotiable renewal between parties. In accordance with the amended lease agreement, our monthly base rent is approximately $23,000 as of September 30, 2021, with scheduled annual increases ifeach April. We are also required to pay an amount equal to the Company’s proportionate share of certain taxes and operating expenses.
We lease approximately 1,807 square feet in Columbus, Ohio under a month-to-month arrangement. The monthly base rent is approximately $4,000 as of September 30, 2021.
We lease approximately 22,764 square feet in Nelsonville, Ohio. The term of the lease continues until May 31, 2022, with options to extend the lease for an additional year as of each expiration date. In accordance with the lease agreement, the Company’s monthly base rent is approximately $10,000 as of September 30, 2021.
We lease approximately 11,415 square feet in Indianapolis, Indiana. The term of our lease continues until September 30, 2024 with an option to extend the term of the lease for an additional period of one year. In accordance with the lease agreement, our monthly base rent is ~~extended.~~
24

~~Table~~approximately $13,000 as of ~~Contents~~
September 30, 2021. We are also required to pay an amount equal to the Company’s proportionate share of certain operating expenses.

Operating leases recorded on our ~~condensed consolidated balance sheet~~Unaudited Condensed Consolidated Balance Sheets are primarily related to our Bothell, Washington headquarters space lease and our ~~Albuquerque, New Mexico, SAVSU,~~SciSafe space ~~lease.~~leases in the United States. We have not included extension options in our ~~right of use~~ROU assets or lease liabilities as we are not reasonably certain we will enter into the renewal options in their current terms. Our Detroit, ~~Michigan and~~Michigan; Menlo Park, ~~California lease~~California; Columbus, Ohio; and Nelsonville, Ohio leases are not recorded on our ~~condensed consolidated balance sheet~~Unaudited Condensed Consolidated Balance Sheets as the term expires in one year or less.

Our financing ~~lease is related~~leases relate to research equipment, machinery, and other equipment.

~~We used a~~The table below presents certain information related to the weighted average discount rate ~~of 6.5%, our market collateralized borrowing rate,~~ and ~~8.1%, the weighted average implied interest on our leases, to determine our operating and financing lease liabilities, respectively. The~~ weighted average remaining lease term for the Company’s leases:

September 30,

December 31,

(In thousands)

2021

2020

Weighted average discount rate - operating leases
3.6
%
3.3
%
Weighted average discount rate - finance leases
6.1
%
5.7
%
Weighted average remaining lease term in years - operating leases 7.9 1.5
Weighted average remaining lease term in years - finance leases 3.2 0.9
27
Table of ~~our operating and financing leases are 1 year and 0.4 years, respectively. We initially recognized $1.3 million~~Contents
Operating cash paid for amounts included in the measurement of operating lease right of use assets and initially recognized $1.8 million in operating lease liabilities. Through the SAVSU acquisition we acquired $233,000 in operating lease right of use assets and acquired $232,000 in operating lease liabilities. The operating lease costs recognizedliabilities in the three ~~months ended~~ ~~September 30, 2020~~ ~~were $229,000, which consist of $170,000 in operating lease costs~~ and ~~$59,000 in short-term lease costs, and we did~~ ~~not~~ ~~have any variable lease costs. The operating lease costs recognized in the~~ nine months ended September 30, ~~2020~~2021 ~~were $685,000, which consist of $509,000 in operating lease costs~~was $702,000 and ~~$176,000 in short-term lease costs,~~$2.0 million, respectively, and ~~we did~~ ~~not~~ ~~have any variable lease costs. The operating lease cash paid~~ in the three and nine months ended September 30, 2020 was $219,000 and $653,000, respectively. ~~Rent~~
The components of operating lease expense for the three and nine months ended September 30, ~~2019,~~2021 ~~was $160,000 and $444,000, respectively.~~are as follows:

Three Months Ended

Nine Months Ended

September 30,

September 30,

(In thousands)

2021

2020

2021

2020

Operating lease costs
$ 805 $ 170 $ 1,998 $ 509
Short-term lease costs
498 59 1,158 176
Total operating lease costs
1,303 229 3,156 685

Variable lease costs
193 0 477 0
Total lease expense
$ 1,496 $ 229 $ 3,633 $ 685

Maturities of our operating lease liabilities as of September 30, ~~2020~~2021 isare as follows:

(In thousands)

Operating
Leases

Financing
Leases

Operating
Leases

Financing
Leases

2020
220 4
2021
559 2
2021 (3 months remaining) $ 890 $ 43
2022
3,108 171
2023
2,760 171
2024
2,523 101
2025
2,245 37
Thereafter
8,780 1
Total lease payments
779 6 20,306 524
Less: interest
(24
)
(1
)
(2,611 ) (49 )
Total present value of lease liabilities
$ 755 $ 5 $ 17,695 $ 475

Lessor arrangements
Rental arrangements
The Company generates revenue from the leasing of our evo cold chain systems, which are typically cloud-connected shippers with enabling cold chain cloud applications, to customers pursuant to rental arrangements entered into with the customer. Revenue from the rental of cold chain systems is within the scope of FASB ASC Topic 842,Leases. All customers leasing shippers currently do so under month-to-month rental arrangements. We account for these rental transactions as operating leases and record rental revenue on a straight-line basis over the rental term.
Embedded leases
BioLife enters into various customer service agreements (collectively, “Service Contracts”) with customers to provide biological and pharmaceutical storage services. In certain of these Service Contracts, the property, plant, and equipment or operating right-of-use assets used to store the customer product are used only for the benefit of one customer. This is primarily driven by the customer’s desire to ensure that sufficient storage capacity is available in a specific geographic location for a set period of time.
BioLife has assessed its Service Contracts and concluded that certain of the contracts for the storage of customer products met the criteria to be considered a leasing arrangement (“Embedded Leases”), with BioLife as the lessor. The specific Service Contracts that met the criteria were those that provided a single customer with the ability to substantially direct the use of BioLife property, plant, and equipment or operating right-of-use assets.
Under ASC 842, consistent with the previous guidance, BioLife will continue to recognize operating right-of-use asset embedded lessor arrangements on its Unaudited Condensed Consolidated Balance Sheets in operating right-of-use assets.
None of the Embedded Leases identified by BioLife qualify as a sales-type or direct finance lease. None of the operating leases for which BioLife is the lessor include options for the lessee to purchase the underlying asset at the end of the lease term or residual value guarantees, nor are any such operating leases with related parties.

~~14.~~
15. Unaudited Condensed Consolidated Balance Sheet detail
~~Condensed Consolidated Balance Sheet Detail~~

Property and ~~Equipment~~equipment

September 30,

December 31,

(In thousands)

September 30,
2020

December 31,
2019

2021

2020

Property and equipment

Leasehold improvements
$ 2,145 $ 2,112 $ 3,301 $ 2,393
Furniture and computer equipment
827 794 1,793 902
Manufacturing and other equipment
5,707 5,187 13,798 10,076
Construction in-progress
4,747 591
Subtotal
8,679 8,093 23,639 13,962
Less: Accumulated depreciation
(3,379
)
(2,521
)
(6,177 ) (3,842 )
Net property and equipment
$ 5,300 $ 5,572 $ 17,462 $ 10,120

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Table of Contents
Depreciation expense for property and equipment was ~~$296,000~~$691,000 and ~~$114,000~~$2.1 million for the three and nine months ended September 30, ~~2020~~2021, ~~and~~ ~~2019,~~respectively, and ~~$873,000~~$296,000 and ~~$322,000~~$873,000 for thethree and nine months ended September 30, 2020, ~~and~~ ~~2019,~~respectively.

Accrued ~~Expenses~~expenses and ~~Other Current Liabilities~~other current liabilities

Accrued expenses and other current liabilities consist of the following:

September 30,

December 31,

(In thousands)

September 30,
2020

December 31,
2019

2021

2020

Accrued expenses and other current liabilities
$ 275 $ 302
Other payables
208 1,018
Accrued expenses
$ 1,435 $ 472
Accrued taxes
62 112
Accrued compensation
2,538 1,554 4,167 2,898
Deferred revenue
334 324
Warranty reserve liability
5,552 212
Deferred revenue, current
710 931
Other
9 171 131 130
Total accrued expenses and other current liabilities
$ 3,364 $ 3,369 $ 12,057 $ 4,755

25

~~Table~~
Warranty reserve liability
We reserve estimated exposures on known claims, as well as on a portion of ~~Contents~~
anticipated claims, for product warranty and rework cost, based on historical product liability claims. Claim costs are deducted from the accrual when paid. Factors that could have an impact on the warranty accrual in any given period include the following: changes in manufacturing quality, changes in product costs, changes in product mix and any significant changes in sales volume.
A rollforward of our warranty liability is as follows:

Nine Months Ended

September 30,

(In thousands)

2021

2020

Beginning balance
$ 212 $ 191
Warranty reserve acquired in the acquisition of Global Cooling
3,353 0
Provision for warranties

4,446 109
Settlements of warranty claims
(2,459 ) (92 )
Ending Balance
$ 5,552 $ 208

~~15.~~
16. Employee benefit plan
~~Employee Benefit Plan~~

The Company sponsors a 401(k) defined contribution plan for its employees. This plan provides for pre-tax and post-tax contributions for all employees. Employee contributions are voluntary. Employees may contribute up to 100% of their annual compensation to this plan, as limited by an annual maximum amount as determined by the Internal Revenue Service. The Company matches employee contributions in amounts to be determined at the Company’s sole discretion. The Company made ~~$89,000~~$237,000 and ~~$33,000~~$587,000 in contributions to the plan for the three and ninemonths ended September 30, ~~2020~~2021, ~~and~~ ~~2019,~~respectively, and ~~$268,000~~$89,000 and ~~$113,000 contributions to the plan~~$268,000 for thethree and nine months ended September 30, 2020, ~~and~~ ~~2019,~~respectively.

~~16.~~
17. Subsequent events
~~Subsequent Event~~
~~SciSafe Acquisition~~

On October ~~1, 2020,~~8, 2021, the Company ~~completed~~entered into an amendment to the ~~acquisition of SciSafe, which became~~current lease agreement associated with our Bothell, Washington location. The amendment expands the leased premises by approximately 8,342 square feet and includes a ~~wholly owned subsidiary~~$417,000 tenant allowance that the Company expects to receive as improvements are made. The term of the ~~Company~~amendment will begin on the earlier of October 1, ~~2020.~~2022 ~~SciSafe is a privately held multi-facility provider of biological materials storage to~~or six months following the ~~cell~~date upon which all improvements are completed and ~~gene therapy~~continues until July 31, 2031. In accordance with the amendment, the monthly base rent will increase by approximately $19,000 at commencement and ~~pharmaceutical industries. At~~ the ~~closing of the acquisition, the Company (i) paid the sellers an aggregate initial cash payment of $15,000,000, which amount is subject to post-closing adjustments~~lease includes provisions for ~~working capital, net debt and transaction expenses, and (ii) issued to the sellers 441,472 shares of common stock with an additional 169,911 share of common stock to be issued in~~ ~~January 2021.~~ ~~The Company~~ ~~may~~ ~~pay the sellers, if earned, earnout payments in calendar years~~ ~~2021,~~~~2022,~~~~2023~~ ~~and~~ ~~2024~~ ~~of up to an aggregate of an additional 626,000 shares of common stock, which shares will be issued and delivered to the sellers upon SciSafe achieving certain specified revenue targets in~~standard 3% rent increases each year.

~~We incurred $179,000 of related acquisition costs for the~~ ~~three~~ ~~month period ending~~ ~~September 30, 2020,~~ ~~which are reflected in our Consolidated Statement of Operations. We expect to report SciSafe as a consolidated entity as of~~On October ~~1, 2020.~~31, 2021, ~~The acquisition qualifies as a business combination and will be accounted for using the acquisition method of accounting.~~
Due to the limited time since the acquisition date and the effort required to assess the fair value of assets acquired and liabilities assumed, the initial accounting for the business combination is incomplete at the time of this filing. As a result, the Company ~~is unable to provide~~entered into a lease agreement associated with our Albuquerque, New Mexico location. The lease agreement extends the amounts recognized for the major classes of assets acquired and liabilities assumed, acquisition contingencies and goodwill. Also, the Company is unable to provide pro forma revenues and earnings of the combined entity. This information is expected to be included in the Company's Annual Report on Form 10~~-K for the year ended~~current lease through December 31, ~~2020.~~2022. In accordance with the lease, the monthly base rent will increase to approximately $10,000 at January 1, 2022 and includes two options to extend the terms of the lease, each of which is for an additional period of one year, with the first extension term commencing, if at all, on January 1, 2023, and the second extension term commencing, if at all, on January 1, 2024.

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Table of Contents

Item~~Item~~ 2.Management’s discussion and analysis of financial condition and results of operations
~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~
Forward ~~Looking Statements~~looking statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements involve a number of risks and uncertainties. We caution readers that any forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement. These statements are based on current expectations of future events. Such statements include, but are not limited to, statements about our products, including our newly acquired products, customers, regulatory approvals, the potential utility of and market for our products and services, our ability to implement our business strategy and anticipated business and operations, in particular following our 2019, 2020, and ~~2020~~2021 acquisitions, future financial and operational performance, our anticipated future growth strategy, including the acquisition of synergistic cell and gene therapy manufacturing tools and services or technologies or other companies or technologies, capital requirements, intellectual property, suppliers, joint venture partners, future financial and operating results, the impact of the COVID-19 pandemic, plans, objectives, expectations and intentions, revenues, costs and expenses, interest rates, outcome of contingencies, financial condition, results of operations, liquidity, business strategies, regulatory filings and requirements, the estimated potential size of markets, capital requirements, the terms of any capital financing agreements, cost savings, objectives of management and other statements that are not historical facts. You can find many of these statements by looking for words like “believes,” “expects,” “anticipates,” “estimates,” “may,” “should,” “will,” “could,” “plan,” “intend,” or similar expressions in this Quarterly Report on Form 10-Q. We intend that such forward-looking statements be subject to the safe harbors created thereby.

These forward-looking statements are based on the current beliefs and expectations of our management and are subject to significant risks and uncertainties. If underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results may differ materially from current expectations and projections. These risks and uncertainties include those factors described in greater detail in the risk factors disclosed in our Form 10-K as of and for the fiscal year ended December 31, ~~2019 and our Form 10-Qs for the fiscal quarters ended March 30, 2020 and June 30,~~ 2020 filed with the SEC. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those anticipated in these forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

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

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

Further information on potential risk factors that could affect our financial results are included in the filings made by us from time to time with the Securities and Exchange Commission including under the sections entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 and our Quarterly Report on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020.
Overview

Management’s discussion and analysis provides additional insight into the Company and is provided as a supplement to, and should be read in conjunction with, our Annual Report on Form 10-K as of and for the fiscal year ended December 31, ~~2019, as amended,~~2020 filed with the SEC.
We were incorporated in Delaware in 1987 under the name Trans Time Medical Products, Inc. In 2002, the Company, then known as Cryomedical Sciences, Inc., and engaged in manufacturing and marketing cryosurgical products, completed a merger with our wholly-owned subsidiary, BioLife Solutions, Inc., which was engaged as a developer and marketer of biopreservation media products for cells and tissues. Following the merger, we changed our name to BioLife Solutions, Inc.

We develop, manufacture, and market bioproduction ~~products~~tools and services to the cell and gene therapy (“CGT”) industry, which are designed to improve quality and de-risk biologic manufacturing and delivery. We also provide biological and pharmaceutical storage services to the CGT 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 of vaccines, cells, and tissues.
27

~~Table of Contents~~

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

30

Table of Contents
Our ~~Products~~products

Our bioproduction ~~products~~tools and services are comprised of ~~four~~three revenue lines that contain six main ~~product and service lines~~offerings:

●
●Cell processing
○
Biopreservation media
○
Human platelet lysate media (“hPL”), cryogenic vials, and automated cell-processing fill machines
●
~~Automated thawing devices~~Freezers and thaw systems
●
~~Cloud connected “smart” shipping containers~~
●○
Freezer and storage technology and related components
○
Automated thawing devices
~~Further, we acquired SciSafe Holdings, Inc. (“SciSafe”) on October 1, 2020 which provides biologic materials storage.~~
●
Storage and cold chain services
○
Biological and pharmaceutical material storage
○
Cloud connected “smart” shipping containers

Biopreservation media

Our proprietary biopreservation media products, HypoThermosol® FRS and CryoStor®, are formulated to mitigate preservation-induced, delayed-onset cell damage and death, which result when cells and tissues are subjected to reduced temperatures. Our technology can provide our CGT customers with significant ~~shelf life~~shelf-life extension of biologic source material and final cell products, and can also greatly improve post-preservation cell and tissue viability and function. Our biopreservation media is serum-free, protein-free, fully defined, and manufactured under current Good Manufacturing Practices (cGMP). We strive to source wherever possible, the highest available grade, multi-compendium raw materials. We estimate our media products have been incorporated in over ~~450~~525 customer clinical ~~applications.~~applications, including numerous chimeric antigen receptor (CAR) T cell and other cell types.

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

Our scientific research activities over the last 20+ years enabled a detailed understanding of the molecular basis for the hypothermic and cryogenic (low-temperature induced) damage/destruction of cells through apoptosis and necrosis. This research led directly to the development of our HypoThermosol® FRS and CryoStor® technologies. Our proprietary biopreservation media products are specifically formulated to:

●
Minimize cell and tissue swelling
●
Reduce free radical levels upon formation
●
Maintain appropriate low temperature ionic balances
●
Provide regenerative, high energy substrates to stimulate recovery upon warming
●
Avoid the creation of an acidic state (acidosis)
●
Inhibit the onset of apoptosis and necrosis

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

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

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

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We estimate that annual revenue from each customer commercial application in which our products are used could range from ~~$0.5 million~~$500,000 to $2.0 million, if such application is approved and our customer commences large scale commercial manufacturing of the biologic based therapy.

Human platelet lysate media, cryogenic vials and automated cell-processing fill machines
In September 2021, we acquired Sexton Biotechnologies, Inc., a producer of bioproduction tools. Sexton's bioproduction tools portfolio includes human platelet lysates (“hPL”) for cell expansion reducing risk and improving downstream performance over fetal bovine serum, human serum, and other chemically defined media, CellSeal® closed system vials that are purpose-built rigid containers used in CGT that can be filled manually or with high throughput systems, and automated cell processing machines bring multiple processes traditionally performed by manual techniques under a higher level of control to protect therapies from loss or contamination.
Compressor-free ultra low temperature (ULT) freezers
In May 2021, we acquired Global Cooling, Inc. (“Global Cooling”), a manufacturer of class defining ultra-low temperature freezers. Global Cooling carries a portfolio of freezers that range in size from portable units to stationary upright freezers to accommodate a wide variety of use cases. Users can configure these freezers to achieve temperatures between -20°C and -86°C. The portfolio was designed to be environmentally friendly and energy efficient, using as little as 2.8 kWh/day at temperatures of -80°C. The freezers do not use compressor-based or cascade refrigeration systems. Instead, they use patented free-piston Stirling engine technology that uses fewer moving parts, resulting in maintenance cost savings for end users.
Liquid nitrogen freezers and storage devices
In November 2019, we acquired Custom Biogenic Systems, Inc. (“CBS”) a global leader in the design and manufacture of state-of-the-art liquid nitrogen laboratory freezers, cryogenic equipment and accessories.
Included in CBS’s product line of liquid nitrogen freezers are the Isothermal LN2 freezers, constructed with a patented system which stores liquid nitrogen in a jacketed space in the walls of the freezer. This dry storage method eliminates liquid nitrogen contact with stored specimens, reduces the risk of cross-contamination and provides increased user safety in a laboratory setting. To accommodate customer requirements, we offer customizable features including wide bodied and extended height.
To accompany the offerings of cryogenic freezer equipment, we supply equipment for storing critically important biological materials. This storage equipment includes upright freezer racks, chest freezer racks, liquid nitrogen freezer racks, canisters/cassettes and frames as well as laboratory boxes and dividers. Due to our onsite design and manufacturing capability, racks and canisters can be customized to address customers’ varying requirements.
In order to provide customers with a proactive approach to safety and monitoring of equipment containing liquefied gas, CBS offers Versalert, a patented wireless remote asset monitoring system that can monitor and record temperatures. Versalert has an intelligent mesh network system that enables customers to view current equipment conditions and receive alarm notification on smartphones, tablets or personal computers and maintain permanent electronic records for regulatory compliance and legal verification.
Automated, ~~Water-Free Thawing Products~~water-free thawing products

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

Biological and pharmaceutical storage
In October 2020, we acquired SciSafe Holdings, Inc. (“SciSafe”), a premier provider of biological and pharmaceutical storage. In addition to providing storage services, SciSafe provides cold chain logistics that ensures materials are kept at target temperatures from the moment that the materials leave the customer’s premises to their ultimate return. State-of-the-art monitoring systems employed by SciSafe allow for customers to monitor the storage temperatures of their materials throughout the entire logistics chain.
We operate five storage facilities in the USA and one facility in the Netherlands.
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Table of Contents
evo® ~~Cloud Connected Shipping Containers~~cloud connected shipping containers

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

We utilize couriers who already have established logistic channels and distribution centers. Our strategy greatly reduces the cash need to build out specialized facilities around the world. Our partnerships with several white glove couriers allow us to scale our sales and marketing effort by utilizing their salesforce. Our courier partnerships market our evo platform to their existing cell and gene therapy customers as a cost effective and innovative solution. We also market directly to our existing and prospective customers who can utilize the evo platform through our courier partnerships.
~~Liquid Nitrogen Freezer and Storage Devices~~
In November 2019, we acquired Custom Biogenic Systems, Inc. (“CBS”) a global leader in the design and manufacture of state-of-the-art liquid nitrogen laboratory freezers, cryogenic equipment and accessories. The addition of CBS allows for product line growth, diversification of revenue and reduction of supply chain costs for our evo dry vapor shippers.
Included in CBS’s product line of liquid nitrogen freezers are the Isothermal LN2 freezers, constructed with a patented system which stores liquid nitrogen in a jacketed space in the walls of the freezer. This dry storage method eliminates liquid nitrogen contact with stored specimens, reduces the risk of cross-contamination and provides increased user safety in a laboratory setting. To accommodate customer requirements, we offer customizable features including wide bodied and extended height.
Our freezer offerings also include high capacity rate freezers which are fully customizable to customer needs with temperature range of -196°C and with freezing rates of 0.01 to 99.9 per minute. Password protected software aids in compliance with 21 CFR Part 11 and unlimited programming capability, these high capacity rate freezers provide a searchable database for freeze run history and allow freeze data to be saved.
To accompany the offerings of cryogenic freezer equipment, we supply equipment for storing critically important biological materials. This storage equipment includes upright freezer racks, chest freezer racks, liquid nitrogen freezer racks, canisters/cassettes and frames as well as laboratory boxes and dividers. Due to our onsite design and manufacturing capability, racks and canisters can be customized to address customers’ varying requirements,
~~In order to provide customers with a proactive approach to safety and monitoring of equipment containing liquefied gas, CBS offers Versalert~~^®, a patented wireless remote asset monitoring system that can monitor and record temperatures. With an intelligent mesh network with three times the range of competing products, the system enables customers to view current equipment conditions and receive alarm notification on smartphones, tablets or personal computers and maintain permanent electronic records for regulatory compliance and legal verification.
~~Biologic Material Storage~~
In October 2020, we acquired SciSafe, a multi-facility provider of biologic material storage to the CGT and pharmaceutical industries. SciSafe biorepositories are able to maintain and store all types of samples through a wide variety of conditions including -150 degrees Celsius and below.
29

~~Table of Contents~~

Critical ~~Accounting Policies~~accounting policies and ~~Estimates~~estimates

A “critical accounting policy” is one which is both important to the portrayal of our financial condition and results and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. For a description of our critical accounting policies that affect our more significant judgments and estimates used in the preparation of our ~~consolidated financial statements,~~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~~Unaudited Condensed Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 filed with the SEC.

Results of ~~Operations~~
The recent COVID-19 outbreak, and the resulting restrictions intended to slow the spread of COVID-19, including stay-at-home orders, business shutdowns and other restrictions, has affected the Company’s business in several ways. In the last two weeks of March 2020, the Company received higher than average orders for its cryopreservation media products. At this time, the Company believes that the increase in cryopreservation media revenue was largely a “pull forward” of demand, which could result in lower cryopreservation orders in subsequent periods. Further, while the sales of our automated thaw and freezer product lines were not materially affected in the three months ended March 31, 2020, we believe the sales of these capital equipment products were negatively impacted in the second quarter ended June 30, 2020, and to a lesser degree the third quarter ended September 30, 2020, due to customer facility closures resulting in delayed deliveries and continued limitations on our in-person, direct selling process. Our automated thaw product line continued to be negatively impacted, while we saw an increase in sales in our freezer product line in the third quarter ended September 30, 2020 compared to the second quarter ended June 30, 2020. We believe that new capital equipment decisions may be delayed due to the pandemic, which would impact our automated thaw and freezer product lines, although at this time, the Company cannot estimate the financial impact.operations

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

Revenues
Total bioproduction tools and services revenue for three and nine months ended September 30, 2021 and 2020 was comprised of the following:

Three Months Ended

September 30,

(In thousands, except percentages)

2021

2020

$ Change

% Change

Product revenue

Freezer and thaw
$ 17,610 $ 3,371 $ 14,239 422
%
Cell processing
11,505 7,414 4,091 55
%
Storage and cold chain services
86 19 67 353
%
Service revenue

Storage and cold chain services
2,250 - 2,250 -
%
Rental revenue

Storage and cold chain services
2,349 475 1,874 395
%
Total revenue
$ 33,800 $ 11,279 $ 22,521 200
%

Nine Months Ended

September 30,

(In thousands, except percentages)

2021

2020

$ Change

% Change

Product revenue

Freezer and thaw
$ 40,021 $ 9,237 $ 30,784 333
%
Cell processing
30,131 22,753 7,378 32
%
Storage and cold chain services
293 30 263 877
%
Service revenue

Storage and cold chain services
6,417 - 6,417 -
%
Rental revenue

Storage and cold chain services
4,989 1,341 3,648 272
%
Total revenue
$ 81,851 $ 33,361 $ 48,490 145
%
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Table of Contents
Product revenue

~~In 2019, we acquired three companies which resulted in increased revenue diversification compared to prior years, in which nearly all~~Product revenue was ~~derived~~$29.2 million for the three months ended September 30, 2021, representing an increase of $18.4 million, or 170%, compared with 2020, and was $70.4 million for the nine months ended September 30, 2021, representing an increase of $38.4 million, or 120%, compared with 2020.
Product revenue from our ~~biopreservation media product line. In~~cell processing products increased by $4.1 million and $7.4 million, or 55% and 32%, respectively, in the three and nine months ended September 30, ~~2020, we saw a more diversified revenue, both in terms of product and customer concentration, a trend we expect to see continue through 2020.~~
~~The following table represents revenues by product line for the three and nine months ended September 30, 2020 and 2019:~~

Three Month Period Ended

Nine Month Period Ended

September 30,

September 30,

(In thousands)

2020

2019

2020

2019

Biopreservation media
$ 7,414 $ 6,069 $ 22,753 $ 18,165
Automated thawing
277 324 1,047 699
evo shippers
494 211 1,372 211
Freezers and accessories
3,094 — 8,189 —
Total
$ 11,279 $ 6,604 $ 33,361 $ 19,075
Revenue increased by $4.7 million, or 71%, in the three months ended September 30, 2020 compared with 2019, and by $14.3 million, or 75% in the nine months ended September 30, 2020, compared to 2019. The increase is due to the acquisitions throughout 2019 and an increase in product revenue of our biopreservation media products. Product revenue of our biopreservation media products increased by $1.3 million, or 22% in the three months ended September 30, 20202021 compared with the same period in ~~2019, and increased by $4.6 million, or 25% in the nine months ended September 30, 2020 compared~~2020. In addition to ~~the same period in 2019. Our biopreservation media~~our recent acquisition of Sexton generating an additional $425,000 for this product line, our cell processing products continued to be adopted by customers in the CGT ~~market. The average~~market and we realized a higher selling price ~~of our biopreservation media products increased by $11, or less than 1%~~per liter in the three months ended September ~~20, 2020~~30, 2021 compared to 2020.
Product revenue from our freezer and thaw products increased by $14.2 million and $30.8 million, or 422% and 333%, respectively, in the three and nine months ended September 30, 2021 compared with the same period in ~~2019,~~2020. The acquisition of Global Cooling in Q2 2021 contributed $14.0 million and ~~increased by $219,~~$27.3 million, or ~~10%~~416% and 296% of the total freezer and thaw revenue growth, to the three and nine months ended September 30, 2021. Other significant contributors to this growth include isothermal freezer sales and the launch of our High-Capacity Rate Freezer line in the nine months ended September 30, ~~2020 compared to the same period in 2019. Liters sold of our biopreservation media products increased by 519, or 20% in~~2021.
Service revenue
Service revenue was $2.3 million and $6.4 million for the three ~~months ended September 20, 2020 compared with the same period in 2019,~~ and ~~increased by 1,267, or 15% in the~~ nine months ended September 30, 2020 compared to the same period in 2019. Revenue is impacted by the relatively high degree of customer concentration, the timing of orders, the development efforts of our customers or end-users and regulatory approvals for biologics that incorporate our products, which may result in significant quarterly fluctuations. Such quarterly fluctuations are expected, but they may not be predictive of future2021. There was no service revenue or otherwise indicative of a trend. We also expect to see quarterly fluctuations based on large customer ordering patterns throughout 2020. Due to the COVID-19 pandemic, while the sales of our automated thaw and freezer product lines were not materially effected in the three ~~months ended March 31, 2020, we believe the sales of these capital equipment products were negatively impacted in the second quarter ended June 30, 2020,~~ and ~~to a lesser degree the third quarter~~nine months ended September 30, ~~2020, due to customer facility closures resulting~~2020. The increase in ~~delayed deliveries. We also believe that new capital equipment decisions may be delayed due~~service revenues is directly attributable to the ~~pandemic, which would impact our automated thaw and freezer product lines, although at this time, the Company cannot estimate the financial impact.~~
30

~~Table~~acquisition of ~~Contents~~
SciSafe in Q4 2020.

Rental revenue
Rental revenue was $2.3 million and $5.0 million for the three and nine months ended September 30, 2021, representing an increase of $1.9 million and $3.6 million, or 395% and 272%, compared with 2020. Increases in rental revenues are attributable to increased rental volumes to existing customers in our evo® shipping line and the leasing of dedicated storage spaces and other assets through SciSafe, which was acquired in Q4 2020.
Costs and ~~Operating Expenses~~operating expenses

Total costs and operating expenses for three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 were comprised of the following:

Three Months Ended
September 30,

Three Months Ended

(In thousands)

2020

2019

% Change

Operating expenses:

Cost of product and rental revenue
$ 4,826 $ 2,094 130
%

September 30,

(In thousands, except percentages)

2021

2020

$ Change

% Change

Cost of product, rental, and service revenue
$ 24,864 $ 4,826 $ 20,038 415
%
Research and development
1,725 1,032 67
%
3,219 1,725 1,494 87
%
Sales and marketing
1,588 1,250 27
%
4,065 1,588 2,477 156
%
General and administrative
3,503 2,348 49
%
10,081 3,503 6,578 188
%
Intangible assets amortization
706 361 96
%
Intangible asset amortization
2,525 706 1,819 258
%
Acquisition costs
179 291 (38
%)
345 179 166 93
%
Change in fair value of contingent consideration
(2
)
— —
%
(140 ) (2 ) (138 ) 6,900
%
Total costs and operating expenses
$ 12,525 $ 7,376 70
%
Total operating expenses
$ 44,959 $ 12,525 $ 32,434 259
%

Nine Months Ended
September 30,

Nine Months Ended

(In thousands)

2020

2019

% Change

Operating expenses:

Cost of product and rental revenue
$ 13,893 $ 5,710 143
%

September 30,

(In thousands, except percentages)

2021

2020

$ Change

% Change

Cost of product, rental, and service revenue
$ 50,968 $ 13,893 $ 37,075 267
%
Research and development
4,865 2,082 134
%
8,250 4,865 3,385 70
%
Sales and marketing
4,530 3,032 49
%
9,228 4,530 4,698 104
%
General and administrative
9,916 6,707 48
%
22,058 9,916 12,142 122
%
Intangible assets amortization
2,100 465 352
%
Intangible asset amortization
5,340 2,100 3,240 154
%
Acquisition costs
417 538 (22
%)
1,616 417 1,199 288
%
Change in fair value of contingent consideration
(1,528
)
— —
%
1,086 (1,528 ) 2,614 (171
)%
Total costs and operating expenses
$ 34,193 $ 18,534 84
%
Total operating expenses
$ 98,546 $ 34,193 $ 64,353 188
%

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Cost of product, rental, and ~~rental~~service revenue

~~In the three and nine months ended September 30, 2020 cost~~Cost of revenue increased ~~$2.7~~$20.0 million and ~~$8.2~~$37.1 million, or ~~130%~~415% and ~~143%~~267%, respectively, ~~when~~ compared to the same ~~period~~periods in ~~2019,~~2020, due primarily to the ~~increase in revenue mentioned above.~~acquisitions of Global Cooling, SciSafe, and Sexton. In addition to the acquisitions, the Company experienced higher than expected warranty expense and material costs. We expect that cost of product revenue may fluctuate in future quarters based on production volumes and product mix. ~~The product lines acquired in 2019 have a higher cost of product revenue than our biopreservation media products.~~

Cost of ~~product~~ revenue as a percentage of revenue was ~~43%~~74% and ~~32%~~62% for the three ~~months ended September 30, 2020~~ and ~~2019, respectively. Cost of product revenue as a percentage of revenue was 42%, and 30% for the~~ nine months ended September 30, ~~2020~~2021, respectively, and ~~2019, respectively. Cost of product revenue in~~43% and 42% for the three and nine months ended September 30, 2020, ~~includes $4,000 and $390,000 in inventory step-up related amortization recorded in the purchase accounting of our Astero and CBS acquisitions.~~respectively. The increase in cost of ~~product~~ revenue as a percentage of revenue is a result of ~~the inventory step-up and higher costs of product revenue as a percentage of revenue for the~~increased revenues from lower margin product lines acquired in ~~2019 through~~ the ~~Astero, Savsu~~2020 and ~~CBS~~2021 acquisitions.

Research and ~~Development Expenses~~development expenses

Research and development (“R&D”) expense consist primarily of salaries and other personnel-related costs, non-cash stock-based expense, consulting, and external product development services.

R&D expense for the three and nine months ended September 30, ~~2020~~2021 increased ~~$693,000~~$1.5 million and ~~$2.8~~$3.4 million, or ~~67%~~87% and ~~134%~~70%, respectively, compared with the same ~~periods~~period in ~~2019.~~2020. The increase is primarily due to our ~~three acquisitions~~acquisition of Global Cooling in ~~2019~~Q2 2021, increased headcount and non-cash stock ~~compensation expense.~~expense, research material purchases, consulting fees, and a payment to PanTHERA, a company in which BioLife holds an invested interest, for development milestones achieved.

We expect our R&D expense to increase as we continue to expand, develop, and refine the product lines we acquired in ~~2019.~~2019, 2020, and 2021.

Sales and ~~Marketing Expenses~~marketing expenses

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

S&M expense for the three and nine months ended September 30, ~~2020~~2021 increased ~~$338,000~~$2.5 million and ~~$1.5~~$4.7 million, or ~~27%~~156% and ~~49%~~104%, respectively, compared with the same ~~periods~~period in ~~2019.~~2020. The increase ~~reflects the S&M costs we absorbed related~~is primarily due to our acquisitions ~~stock compensation~~of Global Cooling in Q2 2021 and SciSafe in Q4 2020, increased headcount and non-cash stock-based expense, advertising, content creation, consulting fees, and an increase ~~in our direct selling costs.~~commission expense as a result of increased revenues.

We expect S&M expense to increase, as we expand our direct selling efforts to support the broader product line offerings resulting from our acquisitions in 2019, 2020, and ~~2020 acquisitions.~~ 2021.

General and ~~Administrative Expenses~~administrative expenses

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

G&A expenses for the three and nine months ended September 30, ~~2020~~2021 increased ~~by $1.2~~$6.6 million and ~~$3.2~~$12.1 million, or ~~49%~~188% and ~~48%~~122%, respectively, compared with the same ~~periods~~period in ~~2019.~~2020. The increase reflects the assumption of G&A expenses related to our ~~2019~~ acquisitions of Global Cooling in Q2 2021 and ~~the continued buildout of our administrative infrastructure, primarily through~~SciSafe in Q4 2020, increased headcount and non-cash stock-based compensation expense, insurance expense, accounting fees, and information technology ~~expenditures, to support expected future growth and stock compensation~~ expense.

We expect G&A expense to increase reflecting the infrastructure and costs related to supporting the larger expected enterprise created as a result of our ~~2019 and 2020 acquisitions.~~growth strategy.

Intangible asset amortization expense

Amortization expense consists of charges related to the amortization of intangible assets associated with the acquisitions of Astero, SAVSU, CBS, SciSafe, Global Cooling, and ~~CBS~~Sexton in which we acquired definite-lived intangible assets.
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~~Table of Contents~~

Acquisition costs

Acquisition costs consist of legal, accounting, third-party valuations, and other due diligence costs incurred related to our Astero, SAVSU, CBS, SciSafe, Global Cooling, and ~~SciSafe~~Sexton acquisitions.
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Table of Contents

Change in fair value of contingent consideration

Change in fair value of contingent consideration consists of changes in estimated fair value of our potential earnouts related to our Astero, CBS, and ~~CBS~~SciSafe acquisitions. Due to COVID-19 and the near-term reduction in capital expenditures by our customers, we reduced our expected revenue in the earnout period related to Astero and CBS in the second quarter of 2020. We did not change our revenue projections for these product lines in the third quarter of 2020, as such, we recorded a gain in the change of fair value of contingent consideration of $2,000 due to actual results from the third quarter of 2020.

Other ~~Income~~income and ~~Expense~~expense

Total other income and expenses for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 were comprised of the following:

Three Months Ended
September 30,

(In thousands, except percentages)

2020

2019

$ Change

% Change

Change in fair value of warrant liability
$ (1,005
)
$ 1,128 $ (2,133
)
(189
%)
Change in fair value of investments
1,110 — 1,110 —
%
Interest income (expense), net
13 109 (96
)
(88
%)
Other
(5
)
(13
)
8 (62
%)
Loss on equity method investment – SAVSU
— (291
)
291 (100
%)
Gain on acquisition of SAVSU
— 10,108 (10,108
)
(100
%)
Total other income (expenses)
$ 113 $ 11,041 $ (10,928
)
(99
%)

Three Months Ended

September 30,

(In thousands, except percentages)

2021

2020

$ Change

% Change

Change in fair value of warrant liability
$ - $ (1,005 ) $ 1,005 (100
)%
Interest (expense) income, net
(194 ) 13 (207 ) (1,592
)%
Other expense
(7 ) (5 ) (2 ) 40
%
Gain on acquisition of Sexton Biotechnologies, Inc. 6,451 - 6,451 -
%
Total other income, net $ 6,250 $ 113 $ 6,137 5,431
%

Nine Months Ended
September 30,

(In thousands, except percentages)

2020

2019

$ Change

% Change

Change in fair value of warrant liability
$ 4,467 $ (14,949
)
$ 19,416 (130
%)
Change in fair value of investments
1,110 — 1,110 —
%
Interest income (expense), net
59 412 (353
)
(86
%)
Other
(9
)
(13
)
4 (31
%)
Loss on equity method investment – SAVSU
— (739
)
739 (100
%)
Gain on acquisition of SAVSU
— 10,108 (10,108
)
(100
%)
Total other income (expenses)
$ 5,627 $ (5,181
)
$ 10,808 (209
%)

Nine Months Ended

September 30,

(In thousands, except percentages)

2021

2020

$ Change
% Change
Change in fair value of warrant liability
$ (121 ) $ 4,467 $ (4,588 ) (103
)%
Interest (expense) income, net
(331 ) 59 (390 ) (661
)%
Other expense
(7 ) (9 ) 2 (22
)%
Gain on acquisition of Sexton Biotechnologies, Inc. 6,451 - 6,451 -
%
Total other income, net $ 5,992 $ 5,627 $ 365 6
%

Change in fair value of warrant liability. Reflects the changes in fair value associated with the periodic “mark to market” valuation of certain warrants that were issued in 2014. ~~On May 14, 2020, we issued an aggregate of 2,747,970 shares of Company common stock upon cashless~~All outstanding warrants were exercised via a “cashless” exercise ~~of an aggregate of 3,871,405 warrants, reducing our warrant liability by $33.1 million, which represents the fair value of the warrants at the time or exercise.~~on March 25, 2021. Due to the ~~increase~~change in our stock price ~~and the timing of warrant exercises~~ during ~~the three months ended September 30, 2020, we recorded a non-cash loss of $1.0 million in Other income (expenses) due to the changes in fair value of our warrant liability. During~~ the nine months ended September 30, 2020 from December 31, 2019, we had a lower warrant liability and a corresponding unrealized, non-cash gain of $4.5 million due to the ~~cashless exercises and~~ change in fair value of our warrant liability.
~~Change in fair value of investments.~~ Reflects the fair value adjustments based on our investment in the iVexSol convertible debt. The fair value is determined by expected term of the instrument, the underlying credit worthiness of the issuer and the valuation of various embedded features in the note, which are based on future financings of the issuer. The expected term range of our estimate is 1 to 5 years, with projected weighting over this term.

Interest income (expense), net. We earn interest on cash held in our money market account. ~~We had a lower weighted average interest rate~~Interest expense in ~~our money market account for~~ the three and nine months ended September 30, ~~2020~~2021 grew compared to ~~2019. Interest expense is related~~2020 due to ~~equipment financing.~~
~~Loss on equity method investment~~~~. The non-cash loss associated with our proportionate share of~~debt acquired in the ~~net loss in our investment in SAVSU prior to our~~ acquisition of ~~the remaining shares of SAVSU~~Global Cooling and ~~subsequent consolidation of SAVSU in our financial statements.~~equipment financing.

Gain on acquisition of ~~SAVSU.~~ Sexton Biotechnologies, Inc~~The non-cash gain associated with~~. Reflects the ~~acquisition~~markup in the carrying value of ~~our ownership of SAVSU on August 7, 2019 due to remeasuring our existing recorded~~BioLife’s investment in ~~SAVSU~~Sexton to fair value from carrying value under the equity method on our balance sheet prior to acquisition. Specifically, the fair value of our equity interest of SAVSU was determined to be $15.9 million on our previously existing 44% ownership based on the fair value of shares transferred at the time of acquisition for the 56% we did not previously own. Asas a result ~~we recorded a non-operating gain~~ of ~~$10.1 million.~~incremental equity acquisition.
33

~~Table of Contents~~

Liquidity and ~~Capital Resources~~capital resources

On September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, we had ~~$109~~$75.1 million and ~~$6.4 million in cash, cash equivalents and restricted cash, respectfully. We acquired Astero on April 1, 2019 for $12.5~~$90.4 million in cash and contingent consideration of up to $8.5 million. We paid $483,000 for the earnout related to 2019 revenues of Astero in the second quarter of 2020. On August 8, 2019, we acquired the remaining shares of SAVSU which we did not own for 1,100,000 shares of common stock. On November 12, 2019, we acquired CBS for $11.0 million in cash $4.0 million in shares of our common stock, and up to $15.0 million in contingent consideration payable in cash or stock (which payment requirement has not been triggered or otherwise paid to date). On October 1, 2020, we acquired SciSafe for $15.0 million in cash, 611,383 shares of common stock, and up to 626,000 additional shares of common stock as contingent consideration (which payment requirement has not been triggered or otherwise paid to date).
On July 7, we closed our public offering of 5,951,250 shares of common stock at the public offering price of $14.50 per share, which includes the shares purchased pursuant to the exercise in full of the underwriters' option to purchase up to an additional 776,250 shares of its common stock. The net proceeds from the offering to BioLife, after deducting underwriting discounts and commissions and estimated underwriter offering expenses of $6.1 million, were approximately $80.2 million.
As of September 30, 2020, amounts included in restricted cash in escrow represent those required to be held by a third party for the purchase of SciSafe by the Company. On October 1, 2020, the purchase was completed and the funds held in escrow were disbursed to the selling shareholders.
equivalents, respectively. Based on our current expectations with respect to our future revenue and expenses, we believe that our current level of cash and cash equivalents ~~including proceeds from the public offering,~~ will be sufficient to meet our liquidity needs for at least the foreseeable future. However, the Company may choose to raise additional capital through a debt or equity financing in ~~an attempt to mitigate the heightened level of business uncertainty caused by the COVID-19 pandemic, or in~~ order to pursue additional acquisition or strategic investment opportunities. Additional capital, if required, may not be available on reasonable terms, if at all.

Cash ~~Flows~~flows

c

Nine Months Ended

Nine Months Ended September 30,

September 30,

(In thousands)

2020

2019

$ Change

2021

2020

$ Change

Operating activities
$ 4.4 $ 2.2 $ 2.2 $ (3,819 ) $ 4,388 $ (8,207 )
Investing activities
(2.7
)
(13.0
)
10.3 (10,650 ) (2,658 ) (7,992 )
Financing activities
100.8 1.3 99.5 (673 ) 100,806 (101,479 )
Net increase (decrease) in cash, cash equivalents and restricted cash
$ 102.5 $ (9.5
)
$ 112.0
Net (decrease) increase in cash and cash equivalents $ (15,142 ) $ 102,536 $ (117,678 )

3436

Table of Contents

Net ~~Cash Provided~~cash (used in) provided by ~~Operating Activities~~operating activities

During the nine months ended September 30, ~~2020,~~2021, net cash used by operating activities was $3.8 million compared to net cash provided by operating activities ~~was~~of $4.4 ~~million compared to $2.2~~ million for the nine months ended September 30, ~~2019.~~2020. The increase in cash ~~provided~~used by operating activities was the result of the timing of ~~collections from our increased revenue~~collection and ~~reduced cash expenditures~~disbursement of working capital related toitems in accounts receivable, inventory, ~~partially offset by increased~~prepaid expenses ~~from our 2019 acquisitions.~~and other current assets, accounts payable, and accrued expenses and other current liabilities.

Net ~~Cash Used In Investing Activities~~cash used in investing activities

Net cash used by investing activities totaled ~~$2.7~~$10.7 million during the nine months ended September 30, ~~2020~~2021 compared to ~~$13.0~~$2.7 million for the nine months ended September 30, ~~2019. Cash~~2020. The increase in cash used inby investing activities was the result of increased purchases of equipment and assets held for rent to facilitate future revenue growth, primarily related to the expansion and establishment of SciSafe facilities in the US and Europe.
Net cash (used in) provided by financing activities
Net cash used by financing activities totaled $673,000 during the nine months ended September 30, ~~2020 was primarily from the purchase of assets held for rent. In the nine months ended September 30, 2019, we used $12.4 million~~2021, compared to ~~purchase Astero. Both period investing activities included similar amounts of purchases of property and equipment.~~
~~Net Cash Provided by Financing Activities~~
~~Net~~net cash provided by financing activities ~~totaled~~of $100.8 million during the nine months ended September 30, ~~2020, compared to $1.3 million during~~2020. Net cash used by financing activities in the nine months ended September 30, ~~2019.~~2021 was primarily the result of net payments on the line of credit, payments on financed insurance premiums, and payments on loans proceeds received from equipment loans, offset by proceeds received from the exercise of stock options. Net cash provided by financing activities in the nine months ended September 30, 2020 was primarily the result of our $86 million capital raise in July of 2020 net of $6.2 million of issuance costs and our $20 million sale of common stock to Casdin ~~Capital and $81.1 million public offering. Both the 2020 and 2019 periods included proceeds received from stock option exercises and warrant exercises.~~Capital.

~~Off-Balance Sheet Arrangements~~Off-balance sheet arrangements

As of September 30, ~~2020,~~2021, we did not have any off-balance sheet arrangements.

Contractual ~~Obligations~~obligations

We previously disclosed certain contractual obligations and contingencies and commitments relevant to us within the financial statements and Management Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, as filed with the SEC. There have been no significant changes to these obligations in the three and nine months ended September 30, ~~2020.~~2021.

Item3. Quantitative and ~~Qualitative Disclosures~~qualitative disclosures about ~~Market Risk~~market risk

Not applicable.

Item4. Controls and ~~Procedures~~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 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 Form 10-Q were not effective, due to the ~~existence of a~~ material weakness in our internal controls over ~~complex equity transactions because~~financial reporting. As previously reported, we ~~have insufficient technical resources to appropriately analyze and account for complex~~identified a material weakness in our internal control over financial ~~instruments, specifically~~reporting as of December 31, 2019 with regard to our ~~prior interpretation~~controls over the accounting for financial instruments containing characteristics of ~~ASC 480, “Distinguishing Liabilities from Equity”,~~both liabilities and equity. Although substantial progress has been made in remediating this material weakness, it has not been fully remediated as itof September 30, 2021, and therefore this control weakness continues to constitute a material weakness. Specifically, due to insufficient technical resources, the Company’s controls were not operating effectively to allow management to timely identify errors related to the ~~initial classification and subsequent accounting~~recording of certain ~~of our outstanding warrants~~transactions involving financial instruments as equity instruments dating back to March 2014, and ASC 718, “Stock Compensation” as it related to the accounting for stock awards with market-based vesting conditions. Errors in the accounting for these transactions resulted in the restatement of previously ~~issued financial statements.~~described.

Changes in Internal Control Over Financial Reporting. ~~Except for the changes to address our material weakness as discussed below, there were~~There was no ~~other changes~~change in our internal control over financial reporting that occurred during the quarter ended September 30, ~~2020~~2021 that ~~have~~has materially affected, or ~~are~~is reasonably likely to materially affect, our internal control over financial reporting.
~~Remediation of Material Weakness.~~ We are in the process of remediating the material weakness in our internal control over financial reporting as noted in Part II, Item 9A of the 2019 Form 10-K. During the quarter ended September 30, 2020, we engaged a technical expert consulting firm to meet on a quarterly basis to discuss any new accounting pronouncements or changes in applicability to the Company. In addition, on a quarterly basis, we review and discuss any significant or unusual transactions with a technical expert for interpretation and application of GAAP. The material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

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 BioLife Solutions have been detected.

3537

Table of Contents

Remediation. With respect to the material weakness described above, management has continued to test and evaluate the elements of the remediation plan implemented to date. These elements include:
●
Implementing a risk assessment process by which management identifies transactions involving financial instruments that give rise to specific risks of inappropriate accounting;
●
Hiring of additional resources, including third-party consultants, to address complex accounting matters primarily related to the expanding scope of our business operations; and,
●
Enhancing the design and implementation of key internal controls in response to identified risks.
Based on management’s review and the oversight of the Audit Committee, we have determined that, although substantial progress has been made in remediating this material weakness, the weakness has not been fully remediated as of September 30, 2021.
As we continue to evaluate and test the remediation plan outlined above, we may also identify additional measures to address the material weakness or modify certain of the remediation procedures described above. We also may implement additional changes to our internal control over financial reporting as may be appropriate in the course of remediating the material weakness. Management, with the oversight of the Audit Committee, will continue to take steps necessary to remedy the material weakness to reinforce the overall design and capability of our control environment.
PART II: Other ~~Information~~information

Item1. LEGAL PROCEEDINGS

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

Item 1A. RISK FACTORS

The matters discussed in this Quarterly Report on Form 10-Q include forward-looking statements that involve risks or uncertainties. These statements are neither promises nor guarantees, but are based on various assumptions by management regarding future circumstances, over many of which BioLife has little or no control. A number of important risks and uncertainties, including those identified under the caption “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the period ended December 31, ~~2019, in Part II, Item 1A of our Quarterly Report on Form 10-Q for the period ended June 20,~~ 2020 and in subsequent filings, could cause our actual results to differ materially from those in the forward-looking statements. There are no material changes to the risk factors described in our Annual Report on Form 10-K for the period ended December 31, ~~2019 and our Quarterly Report on Form 10-Q for the period ended June 30,~~ 2020.

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.

3638

Table of Contents

Item 6. Exhibits
~~Exhibits~~

Exhibit No.
Description
10.1*
Employment Agreement dated November 4, 2021 between the Company and Troy Wichterman (filed herewith)
10.2*
Amended Employment Agreement dated November 4, 2021 between the Company and Roderick de Greef (filed herewith)
31.1
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS
~~Inline~~ XBRL Instance Document ~~(the Instance Document~~– the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL ~~document)~~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 ~~and~~with applicable taxonomy extension information contained in ~~Exhibit~~Exhibits 101)
*
Management contract or compensatory plan or arrangement.

3739

Table of Contents

SIGNATURES

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

BIOLIFE SOLUTIONS, INC.
~~Dated:~~Date: November ~~9, 2020~~15, 2021
/s/ ~~Roderick de Greef~~Troy Wichterman
~~Roderick de Greef~~Troy Wichterman
Chief Financial Officer ~~and Chief Operating Officer~~
(Duly authorized officer and principal
financial and accounting officer)
40

Table of Contents
BIOLIFE SOLUTIONS, INC.
INDEX TO EXHIBITS
Exhibit No.
Description
10.1*
Employment Agreement dated November 4, 2021 between the Company and Troy Wichterman (filed herewith)
10.2*
Amended Employment Agreement dated November 4, 2021 between the Company and Roderick de Greef (filed herewith)
31.1
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS
XBRL Instance Document – 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)
*
Management contract or compensatory plan or arrangement.

3841

	Nine Months Ended September 30, 2020
(In thousands, except share data)	Preferred Stock Shares – Series A		Preferred Stock Amount – Series A		Common Stock Shares		Common Stock Amount		Additional Paid-in Capital		Accumulated Deficit			Total Shareholders’ Equity
Balance, December 31, 2019		0	$	0		20,825,452	$	21	$	143,485	$	(100,052	)	$	43,454
Stock issued as 2019 bonus payout		—		0		—		0		314		0			314
Sale of common stock, net of costs		0		0		7,856,012		8		100,113		0			100,121
Common stock issued for services						3,175		0		60		0			60
Stock-based compensation		—		0		—		0		3,818		0			3,818
Stock option exercises		0		0		528,793		0		1,028		0			1,028
Cashless exercises of 3,871,405 warrants		0		0		2,747,970		3		33,108		0			33,111
Warrant exercises		—		—		8,500		0		150		0			150
Stock issued – on vested RSUs		0		0		161,263		0		0		0			0
Net income		—		0		—		0		0		4,795			4,795
Balance, September 30, 2020		0	$	0		32,131,165	$	32	$	282,076	$	(95,257	)	$	186,851

As of September 30, 2020	Level 1		Level 2		Level 3		Total
As of September 30, 2021									Level 1		Level 2		Level 3		Total
Assets:
Money market accounts	$	93,984	$	0	$	0	$	93,984	$	70,152	$	0	$	0	$	70,152
Restricted cash held in escrow		15,000		0		0		15,000
Convertible debt held at fair value		0		0		2,110		2,110
Total		108,984		0		2,110		111,094		70,152		0		0		70,152
Liabilities:
Contingent consideration - business combinations		0		0		386		386		0		0		8,238		8,238
Warrant liability		0		0		1,914		1,914
Total	$	0	$	0	$	2,300	$	2,300	$	0	$	0	$	8,238	$	8,238

As of December 31, 2019	Level 1		Level 2		Level 3		Total
Assets:
Money market accounts	$	6,448	$	0	$	0	$	6,448
Convertible debt held at fair value		0		0		1,000		1,000
Total		6,448		0		1,000		7,448
Liabilities:
Contingent consideration - business combinations		0		0		1,914		1,914
Warrant liability		0		0		39,602		39,602
Total	$	0	$	0	$	41,516	$	41,516

As of December 31, 2020	Level 1		Level 2		Level 3		Total
Assets:
Money market accounts	$	90,403	$	0	$	0	$	90,403
Total		90,403		0		0		90,403
Liabilities:
Contingent consideration - business combinations		0		0		7,152		7,152
Warrant liability		0		0		2,780		2,780
Total	$	0	$	0	$	9,932	$	9,932

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
(In thousands)
Balance, beginning of period	$	1,000	$	0	$	1,000	$	0
Purchases		0		1,000		0		1,000
Change in fair value recognized in net income		1,110		0		1,110		0
Balance, end of period	$	2,110	$	1,000	$	2,110	$	1,000

Merger consideration shares		530,502
BioLife stock price (as of September 1, 2021)	$	60.50
Value of issued shares	$	32,095
plus: Fair value of BioLife’s existing investment in Sexton	$	7,951
less: Net working capital adjustment	$	(118	)
Merger Consideration	$	39,928

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

Cash	$	1,516
Accounts receivable, net		492
Inventory		1,310
Prepaid expenses and other current assets		670
Property, plant and equipment, net		737
Operating lease right-of-use assets, net		470
Developed technology		4,132
Customer relationships		2,276
Tradenames		2,324
Non-compete agreements		90
Goodwill		28,273
Accounts payable		(291	)
Lease liabilities, operating		(470	)
Deferred tax liability		(1,284	)
Other liabilities		(317	)
Fair value of net assets acquired	$	39,928

	Estimated Fair Value		Estimated Useful Life (Years)				Fair Value		Useful Life (Years)
Developed technology							$	4,132	5	-	9
Customer relationships	$	160			4			2,276		2
Tradenames		470			9			2,324		11
Developed technology		2,840		5	–	9
In-process research and development		650			9
Non-compete agreements								90		1
Total identifiable intangible assets	$	4,120					$	8,822

BioLife shares outstanding (as of March 19, 2021)		33,401,359
Merger consideration percentage		19.9	%
Merger consideration shares		6,646,870
less: Merger consideration shares withheld to satisfy outstanding GCI stockholder obligations to GCI		10,400
Subtotal		6,636,470
BioLife stock price (as of May 3, 2021)	$	35.07
Value of issued shares	$	232,741
plus: Settlement of BioLife prepaid deposits	$	2,152
plus: Net settlement of BioLife accounts receivable	$	16
Merger Consideration	$	234,909

Cash and cash equivalents	$	1,251
Cash				$	43
Accounts receivable, net		753			7,076
Inventory					15,547
Prepaid expenses and other current assets		19			639
Property, plant and equipment, net		546			3,512
Operating right-of-use asset		233
Assets held for rent, net		2,441
Operating lease right-of-use assets, net					1,741
Financing lease right-of-use assets, net					114
Long-term deposits and other assets					4
Developed technology					18,140
Customer relationships		80			7,020
Tradenames		1,320			26,640
Developed technology		10,750
Non-compete agreements					1,240
In-process research and development					67,440
Goodwill		21,037			137,215
Accounts payable and accrued expenses		(807	)
Deferred tax liabilities		(1,541	)
Accounts payable					(9,837	)
Line of credit					(4,231	)
Lease liabilities, operating					(1,880	)
Lease liabilities, financing					(114	)
Long-term debt					(4,410	)
Deferred tax liability					(23,526	)
Other liabilities		(232	)		(7,464	)
Fair value of net assets acquired	$	35,850		$	234,909

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

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

(In thousands)	September 30, 2020		December 31, 2019		2021		2020
Raw materials	$	2,731	$	2,979	$	16,445	$	2,855
Work in progress		2,252		1,896		4,597		2,006
Finished goods		6,054		6,097		8,654		6,741
Total	$	11,037	$	10,972	$	29,696	$	11,602


6. Goodwill and intangible assets	~~Goodwill and Intangible Assets~~

(In thousands)
Balance as of December 31, 2019	$	33,637
Correction of an error related to CBS goodwill		(131	)
Balance as of September 30, 2020	$	33,506

(In thousands, except weighted average useful life)	September 30, 2020									September 30, 2021
Finite-lived intangible assets:	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Weighted Average Useful Life (in years)		Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Weighted Average Useful Life (in years)
Customer Relationships	$	800	$	(161	)	$	639		4.5	$	17,516	$	(1,177	)	$	16,339		10.8
Tradenames		2,590		(372	)		2,218		6.9		35,574		(1,672	)		33,902		14.4
Technology – acquired (1)		19,670		(2,646	)		17,024		7.3
Technology - acquired											41,942		(6,300	)		35,642		6.1
Non-compete agreements											1,990		(302	)		1,688		3.3
In-process research and development⁽¹⁾											67,440		-			67,440		N/A
Total intangible assets	$	23,060	$	(3,179	)	$	19,881		7.2	$	164,462	$	(9,451	)	$	155,011		10.1

(In thousands, except weighted average useful life)	December 31, 2019
Finite-lived intangible assets:	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Weighted Average Useful Life (in years)
Customer Relationships	$	800	$	(51	)	$	749		5.6
Tradenames		2,590		(123	)		2,467		8.1
Technology – acquired		19,020		(904	)		18,116		8.4
In-process R&D (2)		650		0			650		9.0
Total intangible assets	$	23,060	$	(1,078	)	$	21,982		8.3

	December 31, 2020
Finite-lived intangible assets:	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Weighted Average Useful Life (in years)
Customer Relationships	$	8,220	$	(330	)	$	7,890		12.8
Tradenames		6,610		(508	)		6,102		14.0
Technology - acquired		19,670		(3,232	)		16,438		7.1
Non-compete agreements		660		(41	)		619		3.8
Total intangible assets	$	35,160	$	(4,111	)	$	31,049		9.7

(In thousands)
For the Years Ending December 31,	Estimated Amortization Expense
2021 (3 months remaining)	$	2,858
2022		11,403
2023		10,934
2024		10,109
2025		9,730
Thereafter		42,537
Total	$	87,571

(In thousands) For the Years Ended December 31,	Estimated Amortization Expense
2020 (3 months remaining)	$	705
2021		2,825
2022		2,825
2023		2,795
2024		2,770
Thereafter		7,961
Total	$	19,881

	Nine Month Period Ended
	September 30, 2020
				Wtd. Avg.
				Exercise
	Options			Price
Outstanding at beginning of year		1,570,455		$	1.96
Granted		0		$	0
Exercised		(511,680	)	$	1.95
Forfeited		0		$	0
Expired		0		$	0
Outstanding service vesting-based at September 30, 2020		1,058,775		$	1.96

Service vesting-based options exercisable at September 30, 2020		1,039,399		$	1.94

	Nine Month Period Ended
	September 30, 2020
Service vesting-based restricted stock	Number of Restricted Shares			Grant-Date Fair Value
Outstanding at beginning of year		429,399		$	13.25
Granted		448,267		$	15.78
Granted in lieu of cash		34,154		$	9.18
Vested		(161,263	)	$	11.12
Forfeited		(24,861	)	$	14.80
Outstanding at September 30, 2020		725,696		$	15.04

	Nine Month Period Ended
	September 30, 2020
Performance-based restricted stock	Number of Restricted Shares		Grant-Date Fair Value
Outstanding at beginning of year		0	$	0
Expected to vest		82,805	$	9.18
Vested		0	$	0
Forfeited		0	$	0
Outstanding at September 30, 2020		82,805	$	9.18

	Three Month Period Ended				Nine Month Period Ended
	September 30,				September 30,
(In thousands)	2020		2019		2020		2019
Research and development costs	$	291	$	165	$	687	$	400
Sales and marketing costs		256		182		581		507
General and administrative costs		868		429		2,144		1,145
Cost of product sales		145		53		406		127
Total	$	1,560	$	829	$	3,818	$	2,179

	Shares			Wtd. Avg. Exercise Price
Outstanding at December 31, 2019		3,959,005		$	4.33
Exercised		(3,879,905	)		4.33
Outstanding at September 30, 2020		79,100		$	4.75

	Shares			Wtd. Avg. Exercise Price
Outstanding as of December 31, 2020		79,100		$	4.75
Exercised		(79,100	)		4.75
Outstanding and exercisable as of September 30, 2021		0		$	0

	Year Ending December 31,
(In thousands)	2021		2022		2023		2024		Total
Rental revenue	$	2,983	$	7,733	$	422	$	0	$	11,138
Service revenue	$	40	$	31	$	31	$	10	$	112

(In thousands)	Operating Leases			Financing Leases			Operating Leases			Financing Leases
2020		220			4
2021		559			2
2021 (3 months remaining)							$	890		$	43
2022								3,108			171
2023								2,760			171
2024								2,523			101
2025								2,245			37
Thereafter								8,780			1
Total lease payments		779			6			20,306			524
Less: interest		(24	)		(1	)		(2,611	)		(49	)
Total present value of lease liabilities	$	755		$	5		$	17,695		$	475

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