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~~June 30, ~~2021~~2022

☐ 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,~~Monte Villa Parkway, SUITE 310, ~~BOTHELL,~~Bothell, Washington, 98021

(Address of 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”, “accelerated filer”, “smaller reporting 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 9, 2021, 41,646,916~~August 1, 2022, 42,605,036 shares of the registrant’s common stock were outstanding.

Table of Contents

BIOLIFE SOLUTIONS, INC.

FORM 10-Q

FOR THE QUARTER ENDED ~~September~~JUNE 30, ~~2021~~2022

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION		3

Item 1.	Unaudited Condensed Consolidated Financial Statements	3

	Unaudited Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021	3

	Unaudited Condensed Consolidated Statements of Operations for the three and ~~nine~~six month periods ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021	4

	Unaudited Condensed Consolidated Statements of Comprehensive ~~Income (Loss)~~Loss for the three and ~~nine~~six month periods ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021	5

	Unaudited Condensed Consolidated Statements of ~~Shareholders~~’Shareholders’ Equity for the three and ~~nine~~six month periods ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021	6 -7

	Unaudited Condensed Consolidated Statements of Cash Flows for the ~~nine~~six month periods ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021	7 8

	Notes to Unaudited Condensed Consolidated Financial Statements	8 9

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

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	38

Item 4.	Controls and Procedures	3839

PART II.		OTHER INFORMATION	39

Item 1.	Legal Proceedings	39

Item 1A.	Risk Factors	39 40

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39 40

Item 3.	Defaults Upon Senior Securities	39 40

Item 4.	Mine Safety Disclosures	39 40

Item 5.	Other Information	39 40

Item 6.	Exhibits	40 41

	Signatures	41 42

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BioLife Solutions, Inc.

Unaudited Condensed Consolidated Balance Sheets

	September 30,			December 31,			June 30,			December 31,
(In thousands, except per share and share data)	2021			2020			2022			2021
Assets
Current assets:
Cash and cash equivalents	$	75,098		$	90,403		$	24,001		$	69,860
Restricted cash		53			53			28			10
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
Available-for-sale securities, current portion								22,546			0
Accounts receivable, trade, net of allowance for doubtful accounts of $458 and $275 as of June 30, 2022 and December 31, 2021, respectively								31,257			23,217
Inventories								33,335			28,345
Prepaid expenses and other current assets		5,426			4,648			6,890			4,427
Total current assets		130,505			114,712			118,057			125,859

Assets held for rent, net		10,086			4,705			9,083			9,809
Property and equipment, net		17,462			10,120			19,117			17,657
Operating lease right-of-use assets, net		17,157			9,675			17,306			18,705
Financing lease right-of-use assets, net		476			17			367			440
Long-term deposits and other assets		386			230			323			325
Investments		4,372			5,872
Available-for-sale securities, long-term								489			0
Equity investments								4,372			4,372
Intangible assets, net		155,011			31,049			76,524			152,149
Goodwill		223,936			58,449			224,741			224,741
Total assets	$	559,391		$	234,829		$	470,379		$	554,057

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	14,296		$	3,672		$	11,537		$	14,945
Line of credit		2,161			0
Accrued expenses and other current liabilities		12,057			4,755			7,187			7,142
Warranty liability								8,722			9,398
Lease liabilities, operating, current portion		2,648			1,107			2,733			2,758
Lease liabilities, financing, current portion		146			8			153			149
Debt, current portion		1,771			614			1,363			862
Warrant liability, current portion		0			2,780
Contingent consideration, current portion		2,714			2,637			1,603			5,127
Total current liabilities		35,793			15,573			33,298			40,381

Contingent consideration, long-term		5,524			4,515			1,912			4,900
Lease liabilities, operating, long-term		15,047			8,757			15,205			16,466
Lease liabilities, financing, long-term		329			12			213			291
Debt, long-term		6,122			655			6,188			6,353
Deferred tax liabilities		7,269			0			1,149			5,487
Other long-term liabilities		48			71			101			42
Total liabilities		70,132			29,583			58,066			73,920

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 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
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 June 30, 2022 and December 31, 2021								0			0
Common stock, $0.001 par value; 150,000,000 shares authorized, 42,536,734 and 41,817,503 shares issued and outstanding, respectively, as of June 30, 2022 and December 31, 2021								43			42
Additional paid-in capital		579,929			302,598			597,810			585,397
Accumulated other comprehensive loss		(163	)		0
Accumulated other comprehensive loss, net of taxes								(900	)		(282	)
Accumulated deficit		(90,548	)		(97,385	)		(184,640	)		(105,020	)
Total shareholders’ equity		489,259			205,246			412,313			480,137
Total liabilities and shareholders’ equity	$	559,391		$	234,829		$	470,379		$	554,057

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

Table of Contents

BioLife Solutions, Inc.

Unaudited Condensed Consolidated Statements of Operations

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
(In thousands, except per share and share data)	2021			2020			2021			2020			2022			2021			2022			2021

Product revenue	$	29,201		$	10,804		$	70,445		$	32,020		$	34,170		$	27,468		$	64,558		$	41,244
Service revenue		2,250			0			6,417			0			3,698			1,963			6,787			4,167
Rental revenue		2,349			475			4,989			1,341			2,665			1,773			5,407			2,640
Total product, rental, and service revenue		33,800			11,279			81,851			33,361			40,533			31,204			76,752			48,051
Costs and operating expenses:
Cost of product revenue (exclusive of intangible assets amortization)		21,672			4,402			43,280			12,938			21,561			15,986			41,501			21,609
Cost of service revenue (exclusive of intangible assets amortization)		1,768			0			4,548			0			2,968			1,427			5,557			2,779
Cost of rental revenue (exclusive of intangible assets amortization)		1,424			424			3,140			955			1,665			1,141			3,582			1,716
General and administrative														11,351			7,146			22,546			11,974
Sales and marketing														5,415			3,142			10,306			5,164
Research and development		3,219			1,725			8,250			4,865			3,428			3,045			7,209			5,032
Sales and marketing		4,065			1,588			9,228			4,530
General and administrative		10,081			3,503			22,058			9,916
Intangible asset impairment charges														69,900			0			69,900			0
Intangible asset amortization		2,525			706			5,340			2,100			2,863			1,882			5,725			2,815
Acquisition costs		345			179			1,616			417			5			272			16			1,271
Change in fair value of contingent consideration		(140	)		(2	)		1,086			(1,528	)		(2,361	)		1,718			(5,695	)		1,226
Total operating expenses		44,959			12,525			98,546			34,193			116,795			35,759			160,647			53,586
Operating loss		(11,159	)		(1,246	)		(16,695	)		(832	)		(76,262	)		(4,555	)		(83,895	)		(5,535	)

Other income (expense):
Other expense:
Interest expense, net														(9	)		(121	)		(173	)		(137	)
Other (expense) income, net														(22	)		0			110			(1	)
Change in fair value of warrant liability		0			(1,005	)		(121	)		4,467			0			0			0			(121	)
Change in fair value of investments		0			1,110			0			1,110
Interest (expense) income, net		(194	)		13			(331	)		59
Other expense		(7	)		(5	)		(7	)		(9	)
Gain on acquisition of Sexton Biotechnologies, Inc.		6,451			0			6,451			0
Total other income, net		6,250			113			5,992			5,627
Total other expense, net														(31	)		(121	)		(63	)		(259	)

(Loss) income before income tax benefit		(4,909	)		(1,133	)		(10,703	)		4,795
Loss before income tax benefit														(76,293	)		(4,676	)		(83,958	)		(5,794	)
Income tax benefit		4,988			0			17,540			0			3,739			12,552			4,338			12,552
Net income (loss)	$	79		$	(1,133	)	$	6,837		$	4,795
Net (loss) income													$	(72,554	)	$	7,876		$	(79,620	)	$	6,758

Net income (loss) attributable to common shareholders:
Net (loss) income attributable to common shareholders:
Basic	$	77		$	(1,133	)	$	6,621		$	4,322		$	(72,554	)	$	7,661		$	(79,620	)	$	6,543
Diluted		77			(1,133	)		6,628			279			(72,554	)		7,668			(79,620	)		6,551
Earnings (loss) per share attributable to common shareholders:
Net (loss) income per share attributable to common shareholders:
Basic	$	0.00		$	(0.04	)	$	0.18		$	0.17		$	(1.71	)	$	0.20		$	(1.89	)	$	0.18
Diluted	$	0.00		$	(0.04	)	$	0.17		$	0.01		$	(1.71	)	$	0.19		$	(1.89	)	$	0.17
Weighted average shares used to compute earnings (loss) per share attributable to common shareholders:
Weighted average shares used to compute (loss) earnings per share attributable to common shareholders:
Basic		40,911,801			31,639,420			37,435,224			25,418,375			42,460,189			38,072,712			42,238,355			35,668,124
Diluted		43,296,470			31,639,420			39,984,923			29,412,538			42,460,189			40,390,098			42,238,355			38,275,603

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

Table of Contents

BioLife Solutions, Inc.

Unaudited Condensed Consolidated Statements of Comprehensive ~~Income (Loss)~~Loss

	Three Months Ended						Nine Months Ended					Three Months Ended					Six Months Ended
	September 30,						September 30,					June 30,					June 30,
(In thousands)	2021			2020			2021			2020		2022			2021		2022			2021

Net income (loss)	$	79		$	(1,133	)	$	6,837		$	4,795
Net (loss) income												$	(72,554	)	$	7,876	$	(79,620	)	$	6,758

Other comprehensive loss		(166	)		0			(163	)		0
Other comprehensive (loss) income:
Foreign currency translation adjustment, net of tax													(422	)		3		(578	)		3
Unrealized loss on available-for-sale securities, net of tax													(40	)		0		(40	)		0

Comprehensive (loss) income	$	(87	)	$	(1,133	)	$	6,674		$	4,795	$	(73,016	)	$	7,879	$	(80,238	)	$	6,761

The accompanying notes are an integral part of these 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

	Six Months Ended June 30, 2022
	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, 2021		0	$	0		41,817,503	$	42	$	585,397		$	(282	)	$	(105,020	)	$	480,137
Fees incurred for registration filings		-		0		-		0		(76	)		0			0			(76	)
Stock-based compensation		-		0		-		0		11,372			0			0			11,372
Stock option exercises		0		0		154,504		0		301			0			0			301
Stock issued – on vested RSAs		0		0		500,597		1		0			0			0			1
Contingent consideration shares issued		0		0		64,130		0		816			0			0			816
Foreign currency translation		-		0		-		0		0			(578	)		0			(578	)
Unrealized loss on available-for-sale securities		-		0		-		0		0			(40	)		0			(40	)
Net loss		-		0		-		0		0			0			(79,620	)		(79,620	)
Balance, June 30, 2022		0	$	0		42,536,734	$	43	$	597,810		$	(900	)	$	(184,640	)	$	412,313

	Three Months Ended September 30, 2021																				Three Months Ended June 30, 2022
	Series A		Series A									Accumulated									Series A		Series A									Accumulated
	Preferred		Preferred		Common		Common		Additional			Other						Total			Preferred		Preferred		Common		Common		Additional			Other						Total
	Stock		Stock		Stock		Stock		Paid-in			Comprehensive			Accumulated			Shareholders’			Stock		Stock		Stock		Stock		Paid-in			Comprehensive			Accumulated			Shareholders’
(In thousands, except share data)	Shares		Amount		Shares		Amount		Capital			Income (Loss)			Deficit			Equity			Shares		Amount		Shares		Amount		Capital			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
Balance, March 31, 2022																						0	$	0		42,331,082	$	42	$	591,002		$	(438	)	$	(112,086	)	$	478,520
Fees incurred for registration filings		-		-		-		-		(188	)		-			-			(188	)		-		0		-		0		(24	)		0			0			(24	)
Stock based compensation		-		-		-		-		4,868			-			-			4,868			-		0		-		0		5,973			0			0			5,973
Stock option exercises		-		-		244,906		-		408			-			-			408			0		0		24,571		0		43			0			0			43
Stock issued – on vested RSAs		0		-		108,063		-		-			-			-			-			0		0		116,951		1		0			0			0			1
Contingent consideration shares issued																						0		0		64,130		0		816			0			0			816
Foreign currency translation		-		-		-		-		-			(166	)		-			(166	)		-		0		-		0		0			(422	)		0			(422	)
Net income		-		0		-		0		0			0			79			79
Balance, September 30, 2021		-	$	-		41,444,191	$	41	$	579,929		$	(163	)	$	(90,548	)	$	489,259
Unrealized loss on available-for-sale securities																						-		0		-		0		0			(40	)		0			(40	)
Net loss																						-		0		-		0		0			0			(72,554	)		(72,554	)
Balance, June 30, 2022																						-	$	0		42,536,734	$	43	$	597,810		$	(900	)	$	(184,640	)	$	412,313

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.~~

Table of Contents

~~BioLife Solutions, Inc.~~

	Six Months Ended June 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		0	$	0		33,039,146	$	33	$	302,598	$	0	$	(97,385	)	$	205,246
Stock issued as consideration in GCI acquisition		0		0		6,636,470		7		232,734		0		0			232,741
Stock-based compensation		-		0		-		0		4,024		0		0			4,024
Stock option exercises		0		0		387,759		1		607		0		0			608
Stock issued – on vested RSAs		0		0		427,315		0		0		0		0			0
Cashless exercises of 79,100 warrants		0		0		70,030		0		2,901		0		0			2,901
Foreign currency translation		-		0		-		0		0		3		0			3
Net income		-		0		-		0		0		0		6,758			6,758
Balance, June 30, 2021		0	$	0		40,560,720	$	41	$	542,864	$	3	$	(90,627	)	$	452,281

~~Unaudited Condensed Consolidated Statements of Cash Flows~~

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

	Three Months Ended June 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		Deficit			Equity
Balance, March 31, 2021		0	$	0		33,634,194	$	34	$	307,246	$	0	$	(98,503	)	$	208,777
Stock issued as consideration in GCI acquisition		0		0		6,636,470		7		232,734		0		0			232,741
Stock based compensation		-		0		-		0		2,520		0		0			2,520
Stock option exercises		0		0		224,894		0		364		0		0			364
Stock issued – on vested RSAs		0		0		65,162		0		0		0		0			0
Foreign currency translation		-		0		-		0		0		3		0			3
Net income		-		0		-		0		0		0		7,876			7,876
Balance, June 30, 2021		0	$	0		40,560,720	$	41	$	542,864	$	3	$	(90,627	)	$	452,281

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

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BioLife Solutions, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

	Six Months Ended
	June 30,
(In thousands)	2022			2021
Cash flows from operating activities
Net (loss) income	$	(79,620	)	$	6,758
Adjustments to reconcile net (loss) income to net cash used in operating activities
Intangible asset impairment charges		69,900			0
Stock-based compensation		11,372			4,024
Amortization of intangible assets		5,725			2,815
Depreciation		3,257			1,895
Non-cash lease expense		1,308			1,047
Change in fair value of warrant liability		0			121
Loss on disposal of property and equipment, net		35			0
(Gain) loss on disposal of assets held for rent, net		(264	)		102
Deferred income tax benefit		(4,338	)		(12,552	)
Change in fair value of contingent consideration		(5,695	)		1,226
Other		200			175

Change in operating assets and liabilities, net of effects of acquisitions
Accounts receivable, trade, net		(8,128	)		(8,494	)
Inventories		(4,990	)		1,283
Prepaid expenses and other assets		(1,492	)		2,370
Accounts payable		(3,402	)		(2,790	)
Accrued expenses and other current liabilities		(1,033	)		(681	)
Warranty liability		(676	)		(3,201	)
Net cash used in operating activities		(17,841	)		(5,902	)

Cash flows from investing activities
Cash acquired in acquisition of Global Cooling, Inc.		0			43
Proceeds from sale of equipment		0			1
Purchases of assets held for rent		(774	)		(4,280	)
Purchases of property and equipment		(3,491	)		(4,407	)
Investment in available-for-sale securities		(23,075	)		0
Net cash used in investing activities		(27,340	)		(8,643	)

Cash flows from financing activities
Proceeds from exercise of common stock options		301			608
Proceeds from line of credit		0			11,800
Proceeds from equipment loans		0			1,282
Payments on line of credit		0			(12,738	)
Fees incurred for registration filings		(76	)		0
Payments on equipment loans		(247	)		0
Payments on financed insurance premium		(458	)		(187	)
Other		10			(380	)
Net cash (used in) provided by financing activities		(470	)		385

Net decrease in cash, cash equivalents, and restricted cash		(45,651	)		(14,160	)
Cash, cash equivalents, and restricted cash – beginning of period		69,870			90,456
Effects of currency translation on cash, cash equivalents, and restricted cash		(190	)		3
Cash, cash equivalents, and restricted cash – end of period	$	24,029		$	76,299
Non-cash investing and financing activities
Cashless exercise of warrants reclassified from warrant liability to common stock	$	0		$	2,901
Cashless issuance of SciSafe earnout shares	$	816		$	0
Stock issued as consideration to acquire Global Cooling, Inc.	$	0		$	232,741
Equipment acquired under operating leases	$	243		$	6,971
Equipment acquired under finance leases	$	0		$	440
Purchase of property and equipment not yet paid	$	102		$	0
Cash interest paid	$	121		$	0

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

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BioLife Solutions, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

1. Organization and significant accounting policies

Business

BioLife Solutions, Inc. (“BioLife”, “us”, “we”, “our”, or the “Company”) is a developer, manufacturer, and supplier of a portfolio of bioproduction tools and services including proprietary biopreservation media, automated cell processing fill machines, closed system cryogenic vials, human platelet lysate (“hPL”) growth media, automated thawing devices, cloud-connected shipping containers, ultra-low temperature mechanical freezers, cryogenic and controlled rate freezers and biological and pharmaceutical materials storage. Our CryoStor® freeze media and HypoThermosol® hypothermic storage media ~~are optimized to preserve cells 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. Our Sexton cell processing product line includes ~~human platelet lysates (“hPL”)~~hPL media, for cell expansion reducing risk and improving downstream performance ~~over~~inherent with the use of fetal bovine serum and human serum, and ~~other chemically defined media,~~ CellSeal® cryogenic vials, ~~that~~which are purpose-built rigid containers used as a primary final package for cells used in ~~cell~~research and ~~gene therapy (“CGT”) that~~clinical applications. These vials can be filled manually or with high throughput systems and automated cell processing machines that bring multiple processes traditionally performed by manual techniques under a higher level of control to protect ~~therapies~~cells from loss or contamination. Our ThawSTAR® product line is comprised of a family of automated thawing devices for frozen ~~cell and gene therapies~~biologic material packaged in cryovials and cryobags. These products ~~administer~~help to reduce thawing related damage to temperature-sensitive biologic ~~therapies to patients~~materials by standardizing the thawing process and reducing the risks of contamination and overheating, which are inherent with the use of traditional water baths. Our cryogenic freezer technology provides for controlled rate freezing and cryogenic 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℃~~86℃. 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.

Use of estimates

The preparation of financial statements in 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, fair value of marketable debt securities, 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, warranty reserves, 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 Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the 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, ~~2020.~~2021.

The 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” acquired on~~ ~~April 1, 2019),~~ SAVSU Technologies, Inc. (“SAVSU” acquired on August 8, 2019), Arctic Solutions, Inc. doing business as Custom Biogenic Systems (“CBS” acquired on November 12, 2019), SciSafe Holdings, Inc. (“SciSafe” acquired on October 1, 2020), BioLife Solutions B.V. (formed on April 1, 2021), 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 intercompany accounts and transactions have been eliminated in consolidation.

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In the opinion of management, the accompanying 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.

~~Table of Contents~~

~~Financial Statement Reclassification~~

Foreign currency translation

~~Certain classifications~~The Company translates items presented on its Unaudited Condensed Consolidated Balance Sheet, Unaudited Condensed Consolidated Statements of Operations, Unaudited Condensed Consolidated Statements of Shareholders’ Equity, and Unaudited Condensed Consolidated Statements of Cash Flows into U.S. dollars. For the Company’s subsidiaries that operate in a local currency functional environment, all assets and liabilities are translated into U.S. dollars using current exchange rates at the balance sheet date; revenue and expenses are translated using average exchange rates in effect during each period. Resulting translation adjustments are reported as a separate component of Accumulated Other Comprehensive Loss in the Unaudited Condensed Consolidated ~~Balance Sheets related to accrued expenses and other current liabilities, debt, current portion, and debt, long-term as~~Statements of ~~December 31, 2020~~ ~~were reclassified to conform to current period presentation. These reclassifications have~~ no ~~impact on previously reported total revenue, net (loss) income, net assets, or total operating cash flows.~~Shareholders' Equity.

Segment reporting

The Company ~~operates~~views its operations and makes decisions regarding how to allocate resources and manages its business as one reportable segment and ~~operating segment, which is the business of bioproduction tools and services.~~one reporting unit. 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

~~There have been~~ no ~~significant changes~~The following describes an update to the Company’s accounting policies ~~during the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021,~~ ~~as compared to the~~for investments. For a full discussion of significant accounting policies, ~~described in our Annual Report on~~including additional information regarding the Company’s accounting policies for investments, refer to the Notes to the Consolidated Financial Statements included within the Company’s 2021 Form 10-K.

The Company classifies its investment in marketable debt securities as “available-for-sale.” Available-for-sale securities are carried at fair value with unrealized holding gains or losses recorded in other comprehensive income, net of tax. Gains or losses are included in earnings in the period in which they are realized. The cost of securities sold is determined based on the specific identification method. The cost of available-for-sale debt securities is adjusted for premiums and discounts, with the accretion or amortization of such amounts included as a portion of interest. Available-for-sale debt securities with an original maturity date less than one year are classified as current investments. Available-for-sale debt securities with an original maturity date exceeding one year are classified as long-term.

Liquidity and capital resources

On ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had ~~$75.1~~$47.0 million and ~~$90.4~~$69.9 million in cash, ~~and~~ cash equivalents, and available-for-sale securities, 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, and other liquid assets will be sufficient to meet our liquidity needs for at least the ~~foreseeable future.~~next twelve months from the date of the filing of this Form 10-Q. However, the Company may choose to raise additional capital through a debt or equity financing 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

On COVID-~~March 10, 2020,~~ 19 pandemic

Our domestic and international operations have been and continue to be affected by the ~~World Health Organization declared the outbreak~~ongoing global pandemic of ~~the~~a novel strain of coronavirus ~~SARS-CoV-~~2, ~~which causes coronavirus disease~~ ~~2019~~(“COVID-19”) and the resulting volatility and uncertainty it has caused in the U.S. and international markets. Many businesses and countries, including the U.S., continue to apply preventative and precautionary measures to mitigate the spread of the virus including government orders and other restrictions on the conduct of business operations.

In the six months ended June 30, 2022 and year ended December 31, 2021, we experienced supply chain disruptions due to the effects of COVID-19 on our suppliers of sheet metal and electronic components that incorporate semiconductor chips. These supply chain disruptions decreased our profitability as a ~~pandemic.~~result of increased supplier pricing and production stoppages. We cannot be assured that a continued or prolonged global pandemic will not have other negative impacts on our manufacturing and shipping processes or our product costs. The extent to which the COVID-19 pandemic affects our future financial results and operations will depend on future developments which are highly uncertain and cannot be predicted, including the ~~resulting restrictions intended~~recurrence, severity and/or duration of the ongoing pandemic, and current or future domestic and international actions to ~~slow the spread of COVID-~~~~19,~~ ~~including stay-at-home orders, business shutdowns~~contain and ~~other restrictions, has affected the Company’s business in several ways. The CGT industry that BioLife services has a complex and highly controlled supply chain that has been impacted by~~treat COVID-19. ~~Challenges faced include, but are~~ ~~not~~ ~~limited to, the diversion of healthcare industry resources towards studying and treating COVID-~~~~19,~~ ~~logistics operations slowing down on a global scale, and changing environments related to 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.

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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”) 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.

~~Table of Contents~~

~~As of~~ ~~March 30, 2020,~~ ~~the Company started deferring the employer side of social security tax payments as allowed by the CARES Act. As of~~ ~~September 30, 2021,~~ ~~the amount of deferred social security tax payments was $432,000. We 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.~~

~~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 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

~~We derived approximately 19% and 14% of revenue from~~ ~~one~~ ~~customer in the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021,~~ ~~respectively, and approximately 11% and 12% from~~ ~~one~~ ~~customer in the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020,~~ ~~respectively.~~ No ~~other customer accounted for~~Significant customers are those that represent more than 10% of the Company’s total revenues or gross accounts receivable balances for the periods and as of each balance sheet date presented. For each significant customer, revenue inas a percentage of total revenues and gross accounts receivable as a percentage of total gross accounts receivable as of the periods presented were as follows:

Accounts Receivable

Revenue

June 30,

December 31,

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021

2022

2021

Customer A

Customer B

* less than ~~three~~10% ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~ ~~and~~ ~~2020.~~ ~~All revenue~~

Revenue from foreign customers is denominated in United States ~~dollars.~~dollars or euros.

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

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
Revenue by customers’ geographic locations	2021			2020			2021			2020			2022			2021			2022			2021
North America		88	%		84	%		87	%		86	%
United States														75	%		82	%		77	%		80	%
Europe, Middle East, Africa (EMEA)		9	%		13	%		10	%		12	%		17	%		10	%		17	%		11	%
Canada														5	%		5	%		3	%		6	%
Other		3	%		3	%		3	%		2	%		3	%		3	%		3	%		3	%
Total revenue		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%

~~We derived approximately 30% and 33% of our revenue from CryoStor products in~~In the three and ~~nine~~six months ended ~~September~~June 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~~2022 and ~~December 31, 2020,~~ ~~two~~ ~~customers and~~ ~~one~~ ~~customer accounted for approximately 29% and 17% of total gross accounts receivable, respectively.~~ No2021, ~~other customers accounted for more than~~ ~~10%~~no ~~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~~purchases.

As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~2021, no suppliers accounted for more than 10% of our accounts payable.

Recent accounting pronouncements

In ~~October 2021,~~June 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ~~2021~~No.2022-~~08,~~03, ~~Business Combinations~~Fair Value Measurements (Topic ~~805~~820), ~~Accounting for Contract Assets and Contract Liabilities from Contracts with Customers~~: Fair Value Measurement of Equity Securities Subject to Contractual Sales Restrictions. ~~This update amends~~The FASB issued ASU 2022-03 to (1) clarify the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to ~~require~~contractual restrictions that prohibit the sale of an ~~entity (acquirer) recognize~~equity security, (2) to amend a related illustrative example, and ~~measure contract assets and contract liabilities acquired in a business combination in accordance with Revenue from Contracts with Customers (Topic~~ (~~606~~3)~~. At the acquisition date, an acquirer should account~~ to introduce new disclosure requirements for ~~the~~equity related ~~revenue contracts~~securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic ~~606~~820. ~~as if it had originated the contracts.~~ ASU ~~2021~~2022-0803 clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years with early adoption permitted. BioLife Solutions is evaluating when to adopt the amendments in ASU 2022-03. BioLife Solutions does not expect a material impact as a result of adopting this amendment.

In March 2022, the FASB issued ASU No.2022-02Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. ASU 2022-02 eliminates the accounting guidance for troubled debt restructurings and requires disclosure of current-period gross write-offs by year of loan origination. Additionally, ASU 2022-02 updates the accounting for credit losses under ASC 326 and adds enhanced disclosures with respect to loan refinancings and restructurings in the form of principal forgiveness, interest rate concessions, other-than-insignificant payment delays, or term extensions when the borrower is experiencing financial difficulties. ASU 2022-02 is effective for fiscal years beginning after December 15, 2022 ~~including interim periods within those fiscal years. Early~~and early adoption ~~of the amendments~~ is ~~permitted including adoption in an interim period. The Company is~~permitted. We are currently evaluating the impact ~~of this standard~~ASU 2022-02 will have on ~~its~~our 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 Instruments~~ – ~~Credit Losses (Topic~~ ~~326~~~~): Measurement of Credit Losses on Financial 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, 2023,~~ ~~including interim periods within those fiscal years. The Company is evaluating the impact of the guidance on its financial statements.~~

2. Fair value measurement

In accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures, (“ASC Topic 820”), the Company measures its ~~cash and cash equivalents and investments~~financial instruments at fair value on a recurring basis. The carrying values of certain of our financial instruments including cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value because of their short maturities. The carrying value of our marketable debt securities, which are accounted for as available-for-sale, are classified within either Level 1 or Level 2 in the fair value hierarchy because we use quoted market prices or alternative pricing sources and models utilizing market observable inputs to determine their fair value. The carrying values of our long-term debt, which is classified within Level 2 in the fair value hierarchy, approximates fair value as our borrowings with lenders are at interest rates that approximate market rates for comparable loans. 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 value fair ~~value~~ 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.

~~Table of Contents~~
The fair value of the Astero 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 2.29% and 2.41% and revenue volatility of 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 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. Subsequent to the acquisition date, as of each reporting period, 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 assessed the probability of meeting previously determined metrics as unlikely. The Company recognized reductions of $0 and $81,000 in the Change in Fair Value of Contingent Consideration in the Unaudited Condensed Consolidated Statements of Operations for the ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021,~~ ~~respectively. This Contingent Consideration liability is presented in the Consolidated Balance Sheet as of~~ ~~December 31, 2020~~ ~~in the amount of~~ ~~$81,000.~~ ~~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 CBS Contingent Consideration ~~liability~~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, ~~as of~~at each reporting period, the Contingent Consideration ~~liability~~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~~Liability as of ~~September 30,~~December 31, 2021, the Company used a discount rate of 21.0%, a risk-free rate of 0.23% and revenue volatility of 63%. This Contingent Consideration Liability is ~~presented~~included in the Unaudited Condensed Consolidated Balance ~~Sheet~~Sheets as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 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~~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~~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. ~~As of~~At the acquisition date, the ~~Contingent Consideration~~contingent consideration was determined to have a fair value of $3.7 million. Subsequent to the acquisition date, the Contingent Consideration ~~liability is~~Liability was 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~~Liability as of ~~September~~June 30, ~~2021,~~2022, the Company used a discount rate of ~~6.8%~~11.0%, a risk-free rate of approximately ~~0.47%~~2.9%, asset volatility of ~~61%~~69%, and revenue volatility of ~~22%~~30%. 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~~Liability is ~~presented~~included in the Unaudited Condensed Consolidated Balance ~~Sheet~~Sheets as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 in the ~~amount~~amounts of ~~$8.1~~$3.4 million and ~~$6.9~~$9.9 million, respectively. The changes in fair value of contingent consideration associated with this liability are included within 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~~in the Unaudited Condensed Consolidated Statements of ~~Operations~~Operations. These changes were $2.4 million and $5.7 million for the three and ~~nine~~six months ended ~~September~~June 30, 2022, respectively, and $1.8 million and $1.3 million for the three and six month periods ended June 30, 2021, respectively. ~~Certain assumptions used in estimating~~During the ~~fair value of~~ three and six months ended June 30, 2022, the ~~Contingent Consideration are uncertain by nature. Actual results~~ ~~may~~ first~~differ materially from estimates.~~ hurdle associated with this liability was satisfied and 64,130 shares were issued as payment.

For the warrant liability, the significant Level 3 inputs included the 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 expired March 25, 2021. ~~For the volatility 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 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.~~ On ~~March 25, 2021,~~ ~~the expiration~~that 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.

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There were no remeasurements to fair value during the ~~nine~~three and six months ended ~~September~~June 30, ~~2021~~2022 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 and liabilities measured at fair value on a recurring basis as of ~~September~~June 30, ~~2021~~2022 and December 31, 2021, ~~31,~~~~2020,~~based on the three-tier fair value hierarchy:

(In thousands)
As of September 30, 2021

Level 1

Level 2

Level 3

Total

As of June 30, 2022

Level 1

Level 2

Level 3

Total

Assets:

Cash equivalents:

Money market accounts
$ 70,152 $ 0 $ 0 $ 70,152 $ 17,086 $ 0 $ 0 $ 17,086
Corporate debt securities
0 2,242 0 2,242
Non-U.S. government agency securities
0 748 0 748
Marketable debt securities:

U.S. government securities
10,335 0 0 10,335
Corporate debt securities
0 11,515 0 11,515
Other debt securities
0 1,185 0 1,185
Total
70,152 0 0 70,152 27,421 15,690 0 43,111
Liabilities:

Contingent consideration - business combinations
0 0 8,238 8,238 0 0 3,515 3,515
Debt
0 7,551 0 7,551
Total
$ 0 $ 0 $ 8,238 $ 8,238 $ 0 $ 7,551 $ 3,515 $ 11,066

As of December 31, 2020

Level 1

Level 2

Level 3

Total

As of December 31, 2021

Level 1

Level 2

Level 3

Total

Assets:

Money market accounts
$ 90,403 $ 0 $ 0 $ 90,403 $ 63,873 $ 0 $ 0 $ 63,873
Total
90,403 0 0 90,403 63,873 0 0 63,873
Liabilities:

Contingent consideration - business combinations
0 0 7,152 7,152 0 0 10,027 10,027
Warrant liability
0 0 2,780 2,780
Debt
0 7,215 0 7,215
Total
$ 0 $ 0 $ 9,932 $ 9,932 $ 0 $ 7,215 $ 10,027 $ 17,242

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 and contingent consideration ~~and warrant liabilities~~ classified as Level 3 were derived from management ~~assumptions.~~assumptions (see Note 1 – “Organization and Significant Accounting Policies.”) There have been no transfers of assets or liabilities between the fair value measurement levels.

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

Nine Months Ended

Six Months Ended

September 30,

June 30,

(In thousands)

2021

2020

2022

2021

Beginning balance
$ 7,152 $ 1,914 $ 10,027 $ 7,152
Change in fair value recognized in net income (loss) 1,086 (1,528 )
Change in fair value recognized in net (loss) income
(5,695 ) 1,226
Payment of contingent consideration earned
(817 ) 0
Ending balance
$ 8,238 $ 386 $ 3,515 $ 8,378

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

Nine Months Ended

Six Months Ended

September 30,

June 30,

(In thousands)

2021

2020

2022

2021

Beginning balance
$ 2,780 $ 39,602 $ 0 $ 2,780
Exercised warrants
(2,901 ) (33,221 ) 0 (2,901 )
Change in fair value recognized in net income (loss) 121 (4,467 )
Change in fair value recognized in net (loss) income
0 121
Ending balance
$ 0 $ 1,914 $ 0 $ 0
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3. Investments
Available-for-sale securities
The Company’s portfolio of available-for-sale marketable securities consists of the following:

June 30, 2022

Amortized

Gross unrealized

Estimated

(In thousands)

Cost

Gains

Losses

Fair Value

Available-for-sale securities, current portion

U.S. government securities
$ 10,361 $ - $ 26 $ 10,335
Corporate debt securities
11,524 - 8 11,516
Other debt securities
699 - 4 695
Total short-term
22,584 - 38 22,546

Available-for-sale securities, long-term

Other debt securities
491 - 2 489

Total marketable securities
$ 23,075 $ - $ 40 $ 23,035
There were no outstanding available-for-sale marketable securities as of December 31, 2021.
The contractual maturities of our available-for-sale marketable securities as of June 30, 2022 are as follows:

Amortized

Estimated

(In thousands)

Cost

Fair Value

Due in one year or less
$ 22,584 $ 22,546
Due after one year through five years
491 489
Total
$ 23,075 $ 23,035
Equity investments
We periodically invest in securities of private companies to promote business and strategic objectives. At June 30, 2022 and December 31, 2021, we held non-marketable equity securities without a readily determinable fair value, comprised of $3.4 million in Series A-1 and A-2 Preferred Stock in iVexSol, Inc. and $995,000 in Series E Preferred Stock in PanTHERA CryoSolutions, Inc.
4. Inventory
Inventory consists of the following as of June 30, 2022 and December 31, 2021:
(In thousands)

2022

2021

Raw materials
$ 18,457 $ 17,252
Work in progress
4,791 5,015
Finished goods
10,087 6,078
Total
$ 33,335 $ 28,345
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5. Leases
We have various operating lease agreements for office space, warehouses, manufacturing, and production locations as well as vehicles and other equipment. Our real estate leases have remaining lease terms of one to ten years. We exclude options that are not reasonably certain to be exercised from our lease terms, ranging from one to five years. Our lease payments consist primarily of fixed rental payments for the right to use the underlying leased assets over the lease terms. For certain leases, we receive incentives from our landlords, such as rent abatements, which effectively reduce the total lease payments owed for these leases. Vehicle and other equipment operating leases have terms between one and five years.
Our financing leases relate to research equipment, machinery, and other equipment.
The table below presents certain information related to the weighted average discount rate and weighted average remaining lease term for the Company’s leases as of June 30, 2022 and December 31, 2021:

June 30,

December 31,

(In thousands)

2022

2021

Weighted average discount rate - operating leases
3.8
%
3.8
%
Weighted average discount rate - finance leases
6.1
%
6.1
%
Weighted average remaining lease term in years - operating leases
7.5 7.8
Weighted average remaining lease term in years - finance leases
2.5 3.0
The components of lease expense for the three and six months ended June 30, 2022 and 2021 were as follows:

Three Months Ended

Six Months Ended

June 30,

June 30,

(In thousands)

2022

2021

2022

2021

Operating lease costs
$ 929 $ 679 $ 1,836 $ 1,154
Short-term lease costs
519 450 986 661
Total operating lease costs
1,448 1,129 2,822 1,815

Variable lease costs
254 157 559 284
Total lease costs
$ 1,702 $ 1,286 $ 3,381 $ 2,099
Maturities of our lease liabilities as of June 30, 2022 are as follows:
(In thousands)

Operating
Leases

Financing
Leases

2022 (6 months remaining)
$ 1,756 $ 86
2023
3,199 171
2024
2,921 101
2025
2,461 37
2026
2,001 1
Thereafter
8,364 0
Total lease payments
20,702 396
Less: interest
(2,764 ) (30 )
Total present value of lease liabilities
$ 17,938 $ 366
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6.Assets held for rent
Assets held for rent consist of the following as of June 30, 2022 and December 31, 2021:
(In thousands)

2022

2021

Shippers placed in service
$ 6,274 $ 5,645
Fixed assets held for rent
4,686 4,040
Accumulated depreciation
(3,737 ) (2,272 )
Net
7,223 7,413
Shippers and related components in production
1,860 2,396
Total
$ 9,083 $ 9,809
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 $868,000 and $1.8 million in depreciation expense related to assets held for rent during the three and six months ended June 30, 2022, respectively, and $299,000 and $483,000 during the three and six months ended June 30, 2021, respectively.
7. Property and equipment
Property and equipment consist of the following as of June 30, 2022 and December 31, 2021:

June 30,

December 31,

(In thousands)

2022

2021

Property and equipment

Leasehold improvements
$ 4,049 $ 3,840
Furniture and computer equipment
1,878 1,861
Manufacturing and other equipment
18,047 16,675
Construction in-progress
2,990 2,022
Subtotal
26,964 24,398
Less: Accumulated depreciation
(7,847 ) (6,741 )
Property and equipment, net $ 19,117 $ 17,657
Depreciation expense for property and equipment was $730,000 and $1.5 million for the three and six months ended June 30, 2022, respectively, and $819,000 and $1.4 million during the three and six months ended June 30, 2021, respectively.
8. 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 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.
Intangible assets
Intangible assets, net consisted of the following as of June 30, 2022 and December 31, 2021:
(In thousands, except weighted average useful life)

June 30, 2022

Intangible assets:

Gross Carrying Value

Accumulated Amortization

Net Carrying Value

Weighted Average Useful Life (in years)

Customer Relationships
$ 15,984 $ (2,976 ) $ 13,008 9.8
Tradenames
29,635 (3,571 ) 26,064 13.3
Technology - acquired
38,410 (10,766 ) 27,644 5.4
Non-compete agreements
1,986 (725 ) 1,261 2.5
In-process research and development⁽¹⁾
8,547 - 8,547 N/A
Total intangible assets
$ 94,562 $ (18,038 ) $ 76,524 9.2

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(In thousands, except weighted average useful life)

December 31, 2021

Intangible assets:

Gross Carrying Value

Accumulated
Amortization

Net Carrying
Value

Weighted
Average Useful
Life (in years)

Customer Relationships
$ 17,516 $ (1,776 ) $ 15,740 10.3
Tradenames
35,574 (2,306 ) 33,268 13.8
Technology - acquired
41,942 (7,789 ) 34,153 5.9
Non-compete agreements
1,990 (442 ) 1,548 3.0
In-process research and development⁽¹⁾
67,440 0 67,440 N/A
Total intangible assets
$ 164,462 $ (12,313 ) $ 152,149 9.8
(1) In-process R&D represents the fair value of incomplete research and development. We will begin to amortize the asset upon completion of development.
Amortization expense for definite-lived intangible assets was $2.9 million and $5.7 million for the three and six months ended June 30, 2022, respectively, and $1.9 million and $2.8 million for the three and six months ended June 30, 2021, respectively. As of June 30, 2022, the Company expects to record the following amortization expense for definite-lived intangible assets:
(In thousands)

Amortization

For the Years Ending December 31,

Expense

2022 (6 months remaining)
$ 5,005
2023
9,570
2024
8,745
2025
8,398
2026
7,975
Thereafter
28,284
Total
$ 67,977
Interim impairment testing as of June 30, 2022
In the six months ended June 30, 2022, the Company experienced a significant decline in its market capitalization. In July 2022, the Company abandoned an in-process research and development project within the asset group acquired in the acquisition of Global Cooling and revised its forecasts for net income and net cash flows to be generated by that asset group. The Company determined that these three events constituted interim triggering events that required further analysis with respect to potential impairment to goodwill, indefinite-lived intangibles, and definite-lived intangibles. The Company performed an interim quantitative impairment test as of the June 30, 2022 balance sheet date.
To assess any potential impairment of goodwill, the Company compared the carrying value of its single reporting unit against its market capitalization, noting that the market capitalization exceeded the carrying value. As such, goodwill was not impaired as of June 30, 2022.
The abandonment of the aforementioned in-process research and development project resulted in a $8.0 million non-cash impairment charge during the three months ended June 30, 2022 in the line item intangible asset impairment charges in the Company's Unaudited Condensed Consolidated Statements of Operations, which represents the entirety of the asset’s carrying value.
In order to determine the fair value of our in-process research and development intangible assets not related to the abandoned project, the Company utilized an average of a discounted cash flow analysis and comparable public company analysis. The key assumptions associated with determining the estimated fair value include projected future revenue growth rates, earnings before interest, taxes, depreciation and amortization ("EBITDA") margins, the terminal growth rate, and the discount rate. As a result of the changes in these assumptions, we recognized a $50.9 million non-cash impairment charge during the three months ended June 30, 2022 in the line item intangible asset impairment charges in the Company's Unaudited Condensed Consolidated Statements of Operations, which represents the difference between the estimated fair value of the Company’s in-process research and development intangible assets and their carrying value. The carrying value of these assets prior to the impairment charge was $59.4 million.
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In order to determine the fair value of the acquired technology, customer relationships, tradename, and non-compete definite-lived intangible assets, the Company utilized the excess earnings approach, distributor method, relief from royalty method, and with and without approach, respectively. The key assumptions associated with determining the estimated fair value include (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. As a result of the analysis, we recognized non-cash impairment charges of $3.5 million, $1.5 million, $5.9 million, and $4,000 during the period ended June 30, 2022 for the acquired technology, customer relationships, tradename, and non-compete definite-lived intangible assets, respectively, in the line item intangible asset impairment charges in the Company's Unaudited Condensed Consolidated Statements of Operations, which represents the difference between the estimated fair value of the Company’s definite-lived intangible assets and their carrying values. The carrying value of the acquired technology, customer relationships, tradename, and non-compete definite-lived intangible assets were $31.2 million, $14.5 million, $32.0 million, and $1.3 million respectively prior to the impairment charges.
Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates and market factors. Estimating the fair value of the Company’s reporting unit, indefinite-lived intangible assets, and definite-lived intangible assets requires us to make assumptions and estimates regarding our future plans, as well as industry, economic, and regulatory conditions. These assumptions and estimates include projected future revenue growth rates, EBITDA margins, terminal growth rates, discount rates, royalty rates and other market factors. If current expectations of future growth rates, margins and cash flows are not met, or if market factors outside of our control change significantly, then our reporting unit, indefinite-lived intangible assets, and definite-lived intangible assets might become impaired in the future, negatively impacting our operating results and financial position. As the carrying amounts of the Company’s indefinite-lived and definite-lived intangible assets were impaired as of June 30, 2022 and written down to fair value, those amounts are more susceptible to an impairment risk if there are unfavorable changes in assumptions and estimates.

3.9. Accrued expenses and other current liabilities
Accrued expenses and other current liabilities consist of the following as of June 30, 2022 and December 31, 2021:

June 30,

December 31,

(In thousands)

2022

2021

Accrued compensation
$ 4,638 $ 4,351
Accrued expenses
1,954 1,656
Deferred revenue, current
431 814
Accrued taxes
33 27
Other
131 294
Total accrued expenses and other current liabilities
$ 7,187 $ 7,142
10. Warranty reserve liability
We reserve estimated exposures on known claims, as well as 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:

Six Months Ended

June 30,

(In thousands)

2022

2021

Beginning balance
$ 9,398 $ 212
Warranty reserve acquired in the acquisition of Global Cooling
0 3,353
Provision for warranties
1,514 610
Settlements of warranty claims
(2,190 ) (761 )
Ending Balance
$ 8,722 $ 3,414
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11. Long-term debt
Long-term debt consisted of the following as of June 30, 2022 and December 31, 2021:

June 30,

December 31,

(In thousands)
Maturity Date

Interest Rate

2022

2021

2022 term loan 1
Sep-24
4.0 % $ 1,750 $ 1,750
2022 term loan 2
Various
4.0 % 2,896 2,813
Insurance premium financing
Apr-23
5.0 % 869 373
Freezer equipment loan
Dec-25
5.7 % 537 612
Manufacturing equipment loans
Oct-25
5.7 % 311 355
Freezer installation loan
Various
6.3 % 1,208 1,334
Other loans
Various

Various
7 9
Total debt, excluding unamortized debt issuance costs
7,578 7,246
Less: unamortized debt issuance costs
(27 ) (31 )
Total debt
7,551 7,215
Less: current portion
(1,363 ) (862 )
Total long-term debt
$ 6,188 $ 6,353
The 2022 term loans are secured by substantially all assets of Global Cooling. Equipment loans are secured by the financed equipment.
As of June 30, 2022, the scheduled maturities of loans payable for each of the next five years and thereafter were as follows:
(In thousands)

Amount

2022 (6 months remaining)
$ 759
2023
1,165
2024
2,294
2025
543
2026
221
Thereafter
2,596
Total debt, excluding unamortized debt issuance costs
7,578
Less: unamortized debt issuance costs
(27 )
Total debt
$ 7,551
12. Warrants
In March 2014, pursuant to a registered public offering and 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 had an original expiration date of March 2021.
In May 2016, in connection with a credit facility, the Company issued a warrant to purchase 550,000 shares of common stock at $1.75 per share. The warrant was immediately exercisable and had an original expiration date of May 2021.
In May 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.
In March 2021, all remaining outstanding warrants were exercised via a “cashless” exercise. As a result of the cashless exercise, the Company issued an aggregate of 70,030 shares of Company common stock upon cashless exercise of an aggregate of 79,100 warrants.
The following table summarizes warrant activity for the six months ended June 30, 2022 and 2021:

Six Months Ended June 30,

2022
2021

Shares

Wtd. Avg.
Exercise Price

Shares

Wtd. Avg.
Exercise Price

Beginning balance
0 $ 0 79,100 $ 4.75
Exercised
0 0 (79,100 ) 4.75
Ending balance
0 $ 0 0 $ 0
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13. 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 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. Contracts with customers may contain multiple performance obligations. For such arrangements, the transaction price is allocated to each performance obligation based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. The Company determines standalone selling prices based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price, taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. Payment terms and conditions vary, although terms generally include a requirement of payment within 30 to 90 days. During the three and six months ended June 30, 2022, the Company recognized approximately $382,000 and $456,000, respectively, of revenue that was included in the deferred revenue balance at the beginning of the year.
The Company primarily recognizes product revenues, service revenues, and rental revenues. Product revenues are generated from the sale of cell processing tools, freezers, thawing devices, and cold chain products. We recognize product revenue, including shipping and handling charges billed to customers, at a point in time when we transfer control of our products to our customers, which is upon shipment for substantially all transactions. Shipping and handling costs are classified as part of cost of product revenue in the Consolidated Statements of Operations. Service revenue is generated from the storage of biological and pharmaceutical materials. We recognize service revenue over time as services are performed or ratably over the contract term. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing the expected value method or the most likely amount method, depending on the facts and circumstances relative to the contract. When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. Applying the practical expedient in paragraph 606-10-32-18, the Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and when the customer pays is one year or less. None of the Company’s contracts contained a significant financing component as of and during the three and six months ended June 30, 2022.
The Company also generates revenue from the leasing of our property, plant, and equipment, operating right-of-use assets, and evo cold chain systems within its storage and storage services product line to customers pursuant to service contracts or rental arrangements entered into with the customer. Revenue from these arrangements is not within the scope of FASB ASC Topic 606 as it 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.
The Company 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. These agreements may include extension and termination clauses. These Service Contracts do not allow for customers to purchase the underlying assets.
The Company 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 the Company 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 the Company’s property, plant, and equipment or operating right-of-use assets.
Under ASC 842, consistent with the previous guidance, the Company 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 the Company qualify as a sales-type or direct finance lease. None of the operating leases for which the Company 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.
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Embedded Leases may contain both lease and non-lease components. We have elected to utilize the practical expedient to account for lease and non-lease components together as a single combined lease component as the timing and pattern of transfer are the same for the non-lease components and associated lease component and, the lease component, if accounted for separately, would be classified as an operating lease. Non-lease components of the Company’s rental arrangements include reimbursements of lessor costs.
Total bioproduction tools and services revenue for the three and six months ended June 30, 2022 and 2021 were comprised of the following:

Three Months Ended

Six Months Ended

June 30,

June 30,

(In thousands, except percentages)

2022

2021

2022

2021

Product revenue

Freezer and thaw
$ 18,670 $ 17,564 $ 34,005 $ 22,411
Cell processing
15,356 9,699 30,254 18,626
Storage and storage services
144 205 299 207
Service revenue

Storage and storage services
3,698 1,963 6,787 4,167
Rental revenue

Storage and storage services
2,665 1,773 5,407 2,640
Total revenue
$ 40,533 $ 31,204 $ 76,752 $ 48,051
The following table 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 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 June 30, 2022.
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)

2022 (6 months
remaining)

2023

2024

Total

Rental revenue
$ 3,901 $ 3,735 $ 900 $ 8,536
Service revenue
$ 151 $ 188 $ 10 $ 349
14.Share-based compensation
Service vesting-based stock options
The following is a summary of service vesting-based stock option activity for the June 30, 2022, and the status of service vesting-based stock options outstanding as of June 30, 2022:

Six Months Ended

June 30, 2022

Shares

Wtd. Avg.
Exercise Price

Outstanding as of beginning of year
624,531 $ 2.13
Exercised
(154,504 ) 1.95
Outstanding as of June 30, 2022
470,027 $ 2.19

Stock options exercisable as of June 30, 2022
470,027 $ 2.19
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We recognized stock compensation expense related to service-based options of zero during the three and six months ended June 30, 2022 and $6,000 and $15,000 during the three and six months ended June 30, 2021, respectively. As of June 30, 2022, there was $5.5 million of aggregate intrinsic value of outstanding and 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 year 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 June 30, 2022. This amount will change based on the fair market value of the Company’s stock. Intrinsic value of service vesting-based awards exercised was $390,000 and $3.9 million during the three and six months ended June 30, 2022, respectively, and $475,000 and $3.8 million during the three and six months ended June 30, 2021, respectively. There were 0 service based-vesting options granted during the three and six months ended June 30, 2022. The weighted average remaining contractual life of service vesting-based options outstanding and exercisable as of June 30, 2022 is 3.3 years. There were 0 unrecognized compensation costs for service vesting-based stock options as of June 30, 2022.
Performance-based stock options
No stock compensation expense was recognized during the three and six months ended June 30, 2022 and 2021 related to performance-based options. There were 0 performance-based stock options exercised in the three and six months ended June 30, 2022. The intrinsic value of performance-based awards exercised was $6.9 million and $9.8 million during the three and six months ended 2021, respectively. There were 0 stock options granted to employees and non-employee directors in the three and six months ended June 30, 2022 and 2021.
Restricted stock
Service vesting-based restricted stock
The following is a summary of service vesting-based restricted stock activity for the six months ended June 30, 2022, and the status of unvested service vesting-based restricted stock outstanding as of June 30, 2022:

Six Months Ended

June 30, 2022

Shares

Wtd. Avg. Grant Date Fair Value

Outstanding as of beginning of year
1,212,783 $ 37.48
Granted
372,069 23.72
Vested
(282,317 ) 34.65
Forfeited
(55,802 ) 45.38
Non-vested as of June 30, 2022
1,246,733 $ 33.65
The aggregate fair value of the service vesting-based awards granted was $883,000 and $8.8 million during the three and six months ended June 30, 2022, respectively, and $2.4 million and $4.6 million during the three and six months ended June 30, 2021, respectively. The aggregate fair value of the service vesting-based awards that vested was $2.0 million and $7.0 million during the three and six months ended June 30, 2022, respectively, and $2.5 million and $5.2 million during the three and six months ended June 30, 2021, respectively.
We recognized stock compensation expense related to service vesting-based awards of $4.7 million and $9.4 million during the three and six months ended June 30, 2022, respectively, and $2.1 million and $3.5 million during the three and six months ended June 30, 2021, respectively. As of June 30, 2022, there was $35.8 million in unrecognized compensation costs related to service vesting-based awards. We expect to recognize those costs over 2.7 years.
Market-based restricted stock
The following is a summary of market-based restricted stock activity under our stock option plan for the six months ended June 30, 2022 and the status of market-based restricted stock outstanding as of June 30, 2022:

Six Months Ended

June 30, 2022

Shares

Wtd. Avg.
Grant Date
Fair Value

Outstanding as of beginning of year
139,756 $ 19.86
Granted
349,568 22.66
Vested
(218,280 ) 10.95
Non-vested as of June 30, 2022
271,044 $ 30.64
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On March 25, 2020, the Company granted 109,140 shares of market-based stock to its executives in the form of restricted stock. The shares granted contain a market condition based on Total Shareholder Return (“TSR”). The TSR market condition measures the Company’s performance against a peer group. On February 24, 2022, the Company’s Compensation Committee determined the TSR attainment was 200% of the targeted shares and 218,280 shares were granted and immediately vested to the executives of the Company 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 at the grant date 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 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 of $1.2 million was expensed on a straight-line basis over the grant date to the vesting date of December 31, 2021.
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 term associated with the market condition of the award. The fair value of this award of $1.3 million is being expensed on a straight-line basis over the grant date to the vesting date of December 31, 2022.
On February 24, 2022, the Company granted 240,428 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, 2022 through December 31, 2023 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 63%, 0% dividend yield and a risk-free interest rate of 1.5%. 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 of $6.7 million is being expensed on a straight-line basis over the grant date to the vesting date of December 31, 2023.
We recognized stock compensation expense of $1.2 million and $1.8 million related to market-based restricted stock awards for the three and six months ended June 30, 2022, respectively, and $441,000 and $726,000 during the three and six months ended June 30, 2021, respectively. As of June 30, 2022, there was $5.7 million in unrecognized non-cash compensation costs related to market-based restricted stock awards expected to vest. We expect to recognize those costs over 1.4 years.
The aggregate fair value of the market-based awards granted was zero and $6.7 million during the three and six months ended June 30, 2022, respectively, and $261,000 and $1.8 million during the three and six months ended June 30, 2021, respectively. The aggregate fair value of the market-based awards that vested was zero and $5.0 million during the three and six months ended June 30, 2022, respectively, and zero and $10.2 million during the three and six months ended June 30, 2021, respectively.
Total stock compensation expense
We recorded total stock compensation expense for the three and six months ended June 30, 2022 and 2021, as follows:

Three Months Ended

Six Months Ended

June 30,

June 30,

2022

2021

2022

2021

Research and development costs
$ 714 $ 437 $ 1,391 $ 620
Sales and marketing costs
738 269 1,443 453
General and administrative costs
3,719 1,667 6,729 2,646
Cost of revenue
802 147 1,809 305
Total
$ 5,973 $ 2,520 $ 11,372 $ 4,024
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15. Acquisitions

Sexton acquisition

General terms and effects

On 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. The acquisition strengthens BioLife’s offerings in the cell and gene therapy and broader biopharma markets.

On September 1, 2021, the Company completed the merger of Sexton Merger Sub with and into Sexton and Sexton became a wholly-owned subsidiary of the 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 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.~~any, plus or minus changes resulting from observable process changes in orderly transactions for identical or similar investments of the same issuer. 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 non-cash gain of $6.5 ~~million, which was included in the gain on acquisition of Sexton Biotechnologies, Inc. in the Unaudited Condensed Consolidated Statements of Operations for the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021.~~ million. The Company utilized a market-based valuation approach to determine the fair value of the existing equity interest based on the total merger consideration offered and the Company’s stock price at acquisition.

Total consideration transferred (in thousands, except number of shares and 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 not included in the calculation of consideration transferred.

Fair value of net assets acquired

~~As the Company finalizes its estimation of the fair value of the assets acquired and liabilities assumed, additional adjustments~~ ~~may~~ ~~be recorded during the measurement period (a period~~ ~~not~~ ~~to exceed~~ 12 ~~months). The initial accounting is incomplete as of~~ ~~September 30, 2021~~ for the acquired assets and liabilities as the Company is currently in the process of completing the assessment of intangible assets, goodwill, income taxes, and other assets and liabilities including contractual rights and obligations acquired that continue to be evaluated based on facts that existed as of the acquisition date. Our valuations will be finalized when certain information arranged to be obtained has been received and our review of that information has been completed.
Under the acquisition method of accounting, the assets acquired and liabilities assumed from Sexton were ~~estimated~~calculated as of the 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 $4.1 million, the estimated fair value of the deferred tax liability acquired is approximately $1.3 million, the estimated fair value of the intangible assets acquired is approximately $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 uncollectable. The fair value calculations required critical estimates, including, but not limited to, future expected cash flows, revenue and expense projections, discount rates, revenue volatility, and royalty rates.

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The table below represents the ~~estimated~~ fair value of the net assets acquired and liabilities assumed, which were recorded as of the merger date (amounts in thousands).

Cash
$ 1,516 $ 1,516
Accounts receivable, net
492 492
Inventory
1,310
Inventories
1,310
Prepaid expenses and other current assets
670 670
Property, plant and equipment, net
737 737
Operating lease right-of-use assets, net
470 470
Developed technology
4,132 4,132
Customer relationships
2,276 2,276
Tradenames
2,324 2,324
Non-compete agreements
90 90
Goodwill
28,273 28,470
Accounts payable
(291
)
(291
)
Lease liabilities, operating
(470
)
(470
)
Deferred tax liability
(1,284
)
(1,482
)
Other liabilities
(317
)
(316
)
Fair value of net assets acquired
$ 39,928 $ 39,928

We recorded a measurement period adjustment in the 14fourth

~~Table~~ quarter of ~~Contents~~
the year ended December 31, 2021 of $198,000 to the fair value of goodwill and the deferred tax liability. This adjustment related to the tax attributes of the business combination.
The fair value of Sexton’s identifiable intangible assets and useful lives are as follows (amounts in thousands, except years):

Fair
Value

Useful
Life (Years)

Fair Value

Useful
Life (Years)
Developed technology
$ 4,132 5 - 9 $ 4,132 5 - 9
Customer relationships
2,276 2 2,276 2
Tradenames
2,324 11 2,324 11
Non-compete agreements
90 1 90 1
Total identifiable intangible assets
$ 8,822 $ 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 the tradenames is based on the relief from royalty method, which estimates the value of the trade names based on the hypothetical royalty payments that are saved by owning the asset.

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.

Acquired goodwill

The goodwill of ~~$28.3~~$28.5 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. The goodwill recorded is not deductible for income tax purposes.

Global Cooling acquisition

General terms and effects

On March 19, 2021, the Company entered into an Agreement and Plan of 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”). The acquisition strengthens BioLife’s offerings in the cell and gene therapy and broader biopharma markets.

On May 3, 2021, pursuant to the GCI Merger Agreement, subject to the terms and conditions set forth therein, the transactions contemplated by the GCI Merger Agreement 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 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 receive the GCI Merger Consideration (as defined below). The Company paid the GCI Merger Consideration to the holders of common stock and preferred stock of GCI (collectively, the “GCI Stockholders”).

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Table of Contents
Merger consideration

The aggregate merger consideration paid pursuant to the GCI Merger Agreement to the GCI Stockholders was 6,646,870 newly issued shares of common stock, provided, however, that the 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 note receivable of $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 subject to any purchase price adjustments.

15

~~Table of Contents~~
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 (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 GCI Escrow Property will be held for a period of up to twenty-four (24) months after the GCI Closing as the sole and exclusive source of payment for any post-GCI Closing indemnification claims (other than fraud claims), unless earlier released in accordance with the terms of the GCI Escrow Agreement.

Fair value of net assets acquired

~~As the Company finalizes its estimation of the fair value of the assets acquired and liabilities assumed, additional adjustments~~ ~~may~~ ~~be recorded during the measurement period (a period~~ ~~not~~ ~~to exceed~~ 12 ~~months). The initial accounting is incomplete as of~~ ~~September 30, 2021~~ for the acquired assets and liabilities as the Company is currently in the process of completing the assessment of the tax attributes of the business combination. The finalization of 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 Company’s results of operations and financial position.~~
Under the acquisition method of accounting, the assets acquired and liabilities assumed from Global Cooling were ~~estimated~~calculated as of the 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 fair value of the deferred tax liability acquired is approximately $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 uncollectable. The fair value calculations required critical estimates, including, but not limited to, future expected cash flows, revenue and expense projections, discount rates, revenue volatility, and royalty rates.

26
Table of Contents
The table below represents the ~~estimated~~ fair value of the net assets acquired and liabilities assumed, which were recorded as of the merger date (amounts in thousands).

Cash
$ 43 $ 43
Accounts receivable, net
7,076 7,076
Inventory
15,547
Inventories
15,547
Prepaid expenses and other current assets
639 639
Property, plant and equipment, net
3,512 3,512
Operating lease right-of-use assets, net
1,741 1,741
Financing lease right-of-use assets, net
114 114
Long-term deposits and other assets
4 4
Developed technology
18,140 18,140
Customer relationships
7,020 7,020
Tradenames
26,640 26,640
Non-compete agreements
1,240 1,240
In-process research and development
67,440 67,440
Goodwill
137,215 137,822
Accounts payable
(9,837
)
(9,837
)
Line of credit
(4,231
)
(4,231
)
Lease liabilities, operating
(1,880
)
(1,880
)
Lease liabilities, financing
(114
)
(114
)
Long-term debt
(4,410
)
(4,410
)
Deferred tax liability
(23,526
)
(24,133
)
Other liabilities
(7,464
)
(7,464
)
Fair value of net assets acquired
$ 234,909 $ 234,909

We recorded a measurement period adjustment in the 16fourth

~~Table~~ quarter of ~~Contents~~
the year ended December 31, 2021 of $607,000 to the fair value of goodwill and the deferred tax liability. This adjustment related to the tax attributes of the business combination.
The fair value of Global Cooling’s identifiable intangible assets and useful lives are as follows (amounts in thousands, except years):

Fair
Value

Useful
Life (Years)

Fair Value

Useful
Life (Years)

Developed technology
$ 18,140 6 $ 18,140 6
Customer relationships
7,020 12 7,020 12
Tradenames
26,640 15 26,640 15
Non-compete agreements
1,240 4 1,240 4
In-process research and development
67,440 N/A 67,440 N/A
Total identifiable intangible assets
$ 120,480 $ 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 the tradenames is based on the relief from royalty method, which estimates the value of the 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 under scenarios assuming the non-compete agreements were and were not in place. The fair value of inventory and property, plant and equipment were determined using 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.

In July 2022, the Company abandoned an in-process research and development project within the asset group acquired in the acquisition of Global Cooling and revised its forecasts for net income and net cash flows to be generated by that asset group. The Company determined that these events constituted interim triggering events that required further analysis with respect to potential impairment to indefinite-lived intangibles and definite-lived intangibles. The Company performed an interim quantitative impairment test as of the June 30, 2022 balance sheet date, noting that the values of indefinite-lived intangibles and definite-lived intangibles were impaired by $58.9 million and $11.0 million, respectively. See Note 8 – “Goodwill and intangible assets” for details.
Acquired goodwill

The goodwill of ~~$137.2~~$137.8 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. The goodwill recorded is not deductible for income tax purposes.

~~The Company recorded revenue from Sexton~~
27
Table of ~~$425,000 and a net loss of $227,000 from~~ ~~September 1, 2021,~~ ~~the date of acquisition, to~~ ~~September 30, 2021.~~ ~~The Company recorded revenue from Global Cooling of $28.5 million and a net loss of $7.6 million from~~ ~~May 3, 2021,~~ ~~the date of acquisition, to~~ ~~September 30, 2021.~~ ~~The Company has included the operating results of the acquisitions in its Unaudited Condensed Consolidated Statements of Operations since their respective acquisition date.~~Contents
Pro forma presentation

The following unaudited pro forma financial information presents the combined results of operations of Sexton as if the acquisition had occurred on January 1, ~~2020~~2021 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 income tax effect of the adjustments made:

Three Months Ended

Nine Months Ended

Three Months Ended June 30,

Six Months Ended June 30,

September 30,

September 30,

2021

2021

(In thousands)

2021
(unaudited)

2020
(unaudited)

2021
(unaudited)

2020
(unaudited)

(unaudited)

(unaudited)

Total revenue
$ 34,524 $ 11,697 $ 85,189 $ 34,707 $ 32,810 $ 50,665
Net (loss) income
$ (685 ) $ (1,850 ) $ 4,612 $ 2,056 $ 7,085 $ 5,162

The following unaudited pro forma financial information presents the combined results of operations of Global Cooling as if the acquisition had occurred on January 1, ~~2020~~2021 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 income tax effect of the adjustments made:

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
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~~Table of Contents~~
4. ~~Inventory~~
~~Inventory consists of the following as of~~ ~~September 30, 2021~~ ~~and~~ ~~December~~ ~~31,~~~~2020:~~
(In thousands)

2021

2020

Raw materials
$ 16,445 $ 2,855
Work in progress
4,597 2,006
Finished goods
8,654 6,741
Total
$ 29,696 $ 11,602
5.~~Assets held for rent~~
~~Assets held for rent consist of the following as of~~ ~~September 30, 2021~~ ~~and~~ ~~December 31, 2020:~~
(In thousands)

2021

2020

Shippers placed in service
$ 5,433 $ 3,171
Fixed assets held for rent
3,603 0
Accumulated depreciation
(1,284 ) (411 )
Net
7,752 2,760
Shippers and related components in production
2,334 1,945
Total
$ 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 $410,000 and $873,000 in depreciation expense related to assets held for rent during the ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021,~~ ~~respectively, and $186,000 and $581,000 during the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020,~~ ~~respectively.~~
6. ~~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 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 Company has~~ ~~not~~ ~~identified any triggering events which indicate an impairment of goodwill in the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021.~~
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~~Table of Contents~~
~~Intangible assets~~
~~Intangible assets, net consisted of the following as of~~ ~~September 30, 2021:~~
(In thousands, except weighted average useful life)

September 30, 2021

Finite-lived intangible assets:

Gross Carrying
Value

Accumulated
Amortization

Net Carrying
Value

Weighted
Average Useful
Life (in years)

Customer Relationships
$ 17,516 $ (1,177 ) $ 16,339 10.8
Tradenames
35,574 (1,672 ) 33,902 14.4
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
$ 164,462 $ (9,451 ) $ 155,011 10.1
(1~~) In-process R&D represents the fair value of incomplete research and development that has~~ ~~not~~ ~~yet reached technological feasibility. We will amortize the asset upon technological feasibility.~~
~~Intangible assets, net consisted of the following as of~~ ~~December 31, 2020:~~

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 bear interest at a fixed rate of 4%. The Advantage and 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.

Three Months Ended June 30,

Six Months Ended June 30,

2021

2021

(In thousands)

(unaudited)

(unaudited)

Total revenue
$ 51,035 $ 85,985
Net income (loss)
$ (4,141 ) $ (6,095 )

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, 2021,~~ ~~respectively, and $15,000 and $104,000 during the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020,~~ ~~respectively. As of~~ ~~September 30, 2021,~~ there was $27.2 million of aggregate intrinsic value of outstanding service vesting-based stock options, including $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, 2021.~~ ~~This amount will change based on the fair market value of the Company’s stock. 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, 2021,~~ ~~respectively, and $2.2 million and $6.8 million during the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020,~~ ~~respectively. The weighted average remaining contractual life of service vesting-based options outstanding and exercisable as of~~ ~~September 30, 2021~~ ~~is 3.3 years. As of~~ ~~September 30, 2021,~~ ~~there was $4,000 in unrecognized compensation costs related to service vesting-based stock options. We expect to recognize those costs over 0.2 years.~~
~~Performance-based stock options~~
~~The following is a summary of performance-based stock option activity under our stock option plan for the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021,~~ ~~and the status of performance-based 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
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
~~NaN stock compensation expense was recognized during the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~ ~~and~~ ~~2020~~ ~~related to performance-based options. As of~~ ~~September 30, 2021,~~ there was $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, 2021.~~ ~~This amount will change based on the fair market value of the Company’s stock. The intrinsic value of performance-based awards exercised was $9.7 million and $19.5 million during the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021,~~ ~~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 as of~~ ~~September 30, 2021~~ ~~is 0.2 years. All compensation cost of performance-based stock options outstanding as of~~ ~~September 30, 2021~~ ~~has been recognized.~~
~~There were 0 stock options granted to employees and non-employee directors in the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~ ~~and~~ ~~2020.~~
~~Restricted stock~~
~~Service vesting-based restricted stock~~
~~The following is a summary of service vesting-based restricted stock activity for the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021,~~ ~~and the status of unvested service vesting-based restricted stock 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
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, 2021,~~ ~~respectively, and $4.2 million and $7.4 million during the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020~~ was, respectively, which represents the market value of 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, 2021,~~ ~~respectively, and $1.6 million and $2.9 million during the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020,~~ ~~respectively.~~
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~~Table of Contents~~
~~We recognized $4.4 million and $8.0 million in stock compensation expense related to service vesting-based restricted stock awards during the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021,~~ ~~respectively, and $754,000 and $1.6 million during the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020,~~ ~~respectively. As of~~ ~~September 30, 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 and $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.~~
~~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. On ~~February 8, 2021,~~ the Company determined the TSR attainment was 200% of the targeted shares and 231,268 shares were granted and immediately vested to current executives of 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 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 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.~~
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~~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 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.~~
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 related to market-based restricted stock awards during the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021,~~ ~~respectively, and $600,000 and $1.5 million during the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020,~~ ~~respectively. As of~~ ~~September 30, 2021,~~ ~~there was $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 1.1 years.~~
~~We recorded total stock compensation expense for the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~ ~~and~~ ~~2020,~~ ~~as follows:~~

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
9. ~~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 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 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.
On ~~March 25, 2021,~~ all remaining outstanding warrants were exercised via a “cashless” exercise. As a result of the cashless exercise, the Company issued an aggregate of 70,030 shares of 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, 2021:~~

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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~~10.~~16. 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.

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~~$4.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 resulted in an effective income tax rate of ~~161%~~5%. Included in the $~~17.5~~4.3 million were discrete tax benefits of ~~$8.5 million related to the Global Cooling acquisition on~~ ~~May 3, 2021~~ ~~and $6.3 million~~$235,000 related to stock compensation windfall tax ~~benefits.~~
~~The income tax benefit of $5.0 million for~~benefits offset by an increase in 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.~~valuation allowance.

The Company’s US projected effective income tax rate without discrete items was ~~18%~~5%, which is lower than the US federal statutory rate of 21% primarily due to the impact of a projected ~~partial~~ valuation allowance on net operating loss carryforwards and non-deductible ~~transaction costs and~~ executive compensation offset by state tax benefits and research tax credits.

Realization of deferred tax assets is dependent upon the generation of future taxable income, the timing and amount of which are uncertain. In determining the need for a valuation allowance, the Company’s management evaluates both positive and negative evidence when concluding whether it is more likely than not 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 ~~partial~~full valuation allowance of ~~$1.2~~$21.6 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 a corresponding non-cash income tax benefit. ~~The Company will also maintain a full valuation allowance on its current losses in the Netherlands due to a lack of earnings history.~~
~~In connection with the 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 valuation allowance on our existing deferred tax assets as a result of 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.~~
~~Future utilization of the net operating loss and tax credit carryforwards~~ ~~may~~ ~~be subject to a substantial annual limitation in the event of a change in ownership as set forth in Section~~ ~~382~~ ~~of the Internal Revenue Code of~~ ~~1986,~~ ~~as amended. It is possible that there have been past changes in ownership as defined under Section~~ ~~382,~~ ~~which would limit the Company’s ability to utilize NOLs and other tax attributes. The Company is currently in the process a completing a Section~~ ~~382~~ ~~study and a state nexus study, which~~ ~~may~~ ~~result in adjustments to the accounting for the acquisition of Global Cooling and Sexton.~~

~~11.~~17. Net (loss) income 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 net ~~income~~loss by the weighted average number of shares of common 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 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.

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

Three Months Ended

Nine Months Ended

Three Months Ended

Six Months Ended

September 30,

September 30,

June 30,

June 30,

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

2021

2020

2021

2020

2022

2021

2022

2021

Basic earnings (loss) per common share

Numerator:

Net income (loss)
$ 79 $ (1,133 ) $ 6,837 $ 4,795
Basic earnings (loss) per common share Numerator:

Net (loss) income
$ (72,554 ) $ 7,876 $ (79,620 ) $ 6,758
Amount attributable to unvested restricted shares
(2 ) 0 (212 ) (138 ) 0 0 0 (7 )
Amount attributable to warrants outstanding
0 0 (4 ) (335 ) 0 (215 ) 0 (208 )
Net income (loss) allocated to common shareholders
77 (1,133 ) 6,621 4,322
Net (loss) income allocated to common shareholders
(72,554 ) 7,661 (79,620 ) 6,543

Denominator:

Weighted-average common shares issued and outstanding
40,911,801 31,639,420 37,435,224 25,418,375 42,460,189 38,072,712 42,238,355 35,668,124
Basic earnings (loss) per common share
$ 0.00 $ (0.04 ) $ 0.18 $ 0.17
Basic (loss) earnings per common share
$ (1.71 ) $ 0.20 $ (1.89 ) $ 0.18

Diluted earnings (loss) per common share

Numerator:

Net income (loss)
$ 79 $ (1,133 ) $ 6,837 $ 4,795
Diluted earnings (loss) per common share Numerator:

Net (loss) income
$ (72,554 ) $ 7,876 $ (79,620 ) $ 6,758
Amount attributable to unvested restricted shares
(2 ) 0 (205 ) 0 0 (208 ) 0 (200 )
Amount attributable to warrants
0 0 (4 ) (49 ) 0 0 0 (7 )
Less: gain related to change in fair value of warrants
0 0 0 (4,467 ) 0 0 0 0
Diluted earnings (loss) per common share
77 (1,133 ) 6,628 279
Diluted (loss) earnings per common share
(72,554 ) 7,668 (79,620 ) 6,551

Denominator:

Weighted-average common shares issued and outstanding
40,911,801 31,639,420 37,435,224 25,418,375 42,460,189 38,072,712 42,238,355 35,668,124
Dilutive potential common shares from:

Stock options
1,069,207 0 1,330,207 1,754,051 0 1,249,810 0 1,436,767
Restricted shares
1,315,462 0 1,195,154 285,975 0 1,067,576 0 1,134,003
Warrants
0 0 24,338 1,954,137 0 0 0 36,709
Diluted weighted average shares issued and outstanding
43,296,470 31,639,420 39,984,923 29,412,538 42,460,189 40,390,098 42,238,355 38,275,603
Diluted earnings (loss) per common share
$ 0.00 $ (0.04 ) $ 0.17 $ 0.01
Diluted (loss) earnings per common share
$ (1.71 ) $ 0.19 $ (1.89 ) $ 0.17

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

Three Months Ended

Six Months Ended

September 30,

September 30,

June 30,

June 30,

2021

2020

2021

2020

2022

2021

2022

2021

Stock options and restricted stock awards
0 2,183,537 0 0 1,942,812 0 2,767,841 0
Warrants
0 62,769 0 0
Total
0 2,246,306 0 0 1,942,812 0 2,767,841 0

~~12.~~18. Commitments and contingencies

Employment agreements

We have employment agreements with 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. Under certain conditions and for certain of these officers, we may be required to pay additional amounts upon terminating the employee or upon the 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 significant 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~~June 30, ~~2021.~~2022.

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~~13.~~ ~~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 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 biopreservation media, ThawStar, and 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 statement of operations. Service revenues are generated from the storage of biological and pharmaceutical materials. We recognize service revenues over time as services are performed or ratably over the contract 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 to customers pursuant to service contracts or rental arrangements entered into with the customer. Revenue from these arrangements is ~~not~~ ~~within the scope of FASB ASC Topic~~ ~~606~~ ~~as it 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.
~~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 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 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.~~
~~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
~~14.~~ ~~Leases~~
~~Lessee arrangements~~
~~We lease approximately 32,106 square feet in our Bothell, Washington headquarters. In~~ ~~November~~ of ~~2020,~~ ~~the Company entered into an amendment to the lease agreement associated with this facility to extend the term of the lease 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~~ ~~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, 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 $70,000 as of~~ ~~September 30, 2021,~~ ~~with scheduled annual increases each~~ ~~August.~~ ~~We are also required to pay an amount equal to the Company’s proportionate share of certain taxes and operating expenses.~~
~~We lease approximately 3,460 square feet in our Menlo Park, California location. The term of our lease continues until~~ ~~December 31, 2021.~~ ~~In accordance with the lease agreement, the monthly base rent is approximately $11,000 as of~~ ~~September 30, 2021.~~ ~~We are also required to pay an amount equal to the Company’s proportionate electrical 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 as of~~ ~~September 30, 2021,~~ ~~with 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 under a month-to-month arrangement. The monthly base rent is approximately $35,000 as of~~ ~~September 30, 2021.~~
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~~We lease approximately 16,800 square feet in the United States. The term of 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 1, 2031~~ ~~with~~ ~~two~~ ~~options to extend the terms of the lease, each of which is for an additional period of~~ ~~five~~ ~~years, with the~~ ~~first~~ ~~extension term commencing, if at all, on~~ ~~November 1, 2031,~~ ~~and the~~ ~~second~~ ~~extension term commencing, if at all, on~~ ~~November 1, 2036.~~ ~~In accordance with the lease agreement, the monthly base rent is approximately $27,000 as of~~ ~~September 30, 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 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 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 approximately $13,000 as of~~ ~~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 Unaudited Condensed Consolidated Balance Sheets are primarily related to our Bothell, Washington headquarters space lease and our SciSafe space leases in the United States. We have ~~not~~ ~~included extension options in our 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; Menlo Park, California; Columbus, Ohio; and Nelsonville, Ohio leases are~~ ~~not~~ ~~recorded on our Unaudited Condensed Consolidated Balance Sheets as the term expires in~~ ~~one~~ ~~year or less.~~
~~Our financing leases relate to research equipment, machinery, and other equipment.~~
~~The table below presents certain information related to the weighted average discount rate and 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
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~~Operating cash paid for amounts included in the measurement of operating lease liabilities in the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~ ~~was $702,000 and $2.0 million, respectively, and in the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020~~ ~~was $219,000 and $653,000, respectively.~~
~~The components of operating lease expense for the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~ ~~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, 2021~~ ~~are as follows:~~
(In thousands)

Operating
Leases

Financing
Leases

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
20,306 524
Less: interest
(2,611 ) (49 )
Total present value of lease liabilities
$ 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.
~~15.~~ ~~Unaudited Condensed Consolidated Balance Sheet detail~~
~~Property and equipment~~

September 30,

December 31,

(In thousands)

2021

2020

Property and equipment

Leasehold improvements
$ 3,301 $ 2,393
Furniture and computer equipment
1,793 902
Manufacturing and other equipment
13,798 10,076
Construction in-progress
4,747 591
Subtotal
23,639 13,962
Less: Accumulated depreciation
(6,177 ) (3,842 )
Net property and equipment
$ 17,462 $ 10,120
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~~Depreciation expense for property and equipment was $691,000 and $2.1 million for the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021,~~ ~~respectively, and $296,000 and $873,000 for the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020,~~ ~~respectively.~~
~~Accrued expenses and other current liabilities~~
~~Accrued expenses and other current liabilities consist of the following:~~

September 30,

December 31,

(In thousands)

2021

2020

Accrued expenses
$ 1,435 $ 472
Accrued taxes
62 112
Accrued compensation
4,167 2,898
Warranty reserve liability
5,552 212
Deferred revenue, current
710 931
Other
131 130
Total accrued expenses and other current liabilities
$ 12,057 $ 4,755
~~Warranty reserve liability~~
We reserve estimated exposures on known claims, as well as on a portion of 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
~~16.~~19. Employee benefit plan

The Company sponsors a 401(k) defined contribution ~~plan~~plans for its employees. ~~This plan provides~~These plans provide 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,~~these plans, 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 ~~$237,000~~$301,000 and ~~$587,000~~$527,000 in contributions to the plan for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively, and ~~$89,000~~$216,000 and ~~$268,000~~$350,000 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively.

~~17.~~20. Subsequent events

OnThe Company has evaluated events subsequent to ~~October 8, 2021,~~ the Company entered into an amendment to the current lease agreement associated with our Bothell, Washington location. The amendment expands the leased premises by approximately 8,342 square feet and includes a $417,000 tenant allowance that the Company expects to receive as improvements are made. The term of the amendment will begin on the earlier of ~~October 1,~~June 30, 2022 or ~~six~~ ~~months following~~through the date of this filing to assess the need for potential recognition or disclosure. Based upon ~~which all improvements are completed and continues until~~this evaluation, it was determined that ~~July 31, 2031.~~ no~~In accordance with~~ subsequent events occurred that require recognition or disclosure in the ~~amendment, the monthly base rent will increase by approximately $19,000 at commencement and the lease includes provisions for standard 3% rent increases each year.~~
On ~~October 31, 2021,~~ ~~the Company entered into a lease agreement associated with our Albuquerque, New Mexico location. The lease agreement extends the current lease through~~ ~~December 31, 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.~~Unaudited Condensed Consolidated Financial Statements.

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

Forward 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,~~2021, 2020, and ~~2021~~2019 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,”~~“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, ~~2020~~2021 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.

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, ~~2020~~2021 filed with the SEC.

We ~~develop, manufacture,~~are a life sciences company that develops, manufactures, and ~~market~~markets bioproduction tools and services to the cell and gene therapy (“CGT”) industry and broader biopharma market, which are designed to improve quality and de-risk biologic manufacturing, storage, distribution, and ~~delivery. We also provide biological and pharmaceutical storage services to the CGT industry.~~transportation. 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~~distribution.
Our current portfolio of ~~vaccines,~~bioproduction tools and services are comprised of three revenue lines that contain seven main offerings: (i) cell processing (including biopreservation media for the preservation of cells and ~~tissues.~~tissues, human platelet lysate media for the supplementation of cell expansion, cryogenic vials and automated fill machines that provide high-quality, efficient, and precise mixes of solutions), (ii) freezers and thaw systems (including a full line of mechanical ultra-low temperature (“ULT”), isothermal, and liquid nitrogen freezers and accessories, automated thaw devices which provide controlled, consistent thawing of frozen biologics in vials and cryobags), and (iii) storage and storage services (including biological and pharmaceutical storage services, and “smart”, cloud connected devices for transporting biologic payloads).
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We currently operate as one bioproduction tools and services business ~~with product lines that support~~which supports several steps in the biologic material manufacturing ~~storage,~~ and delivery process. We have a diversified portfolio of tools and services that focus on biopreservation, cell processing, frozen biologic storage products and services, cold-chain transportation, and thawing of biologic materials. We have in-house expertise in cryobiology and continue to capitalize on opportunities to maximize the value of our product platform for our extensive customer base through both organic growth innovations and acquisitions.

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~~Table of Contents~~
Our products

Our bioproduction tools and services are comprised of three revenue lines that contain ~~six~~seven main offerings:

●
Cell processing

○
Biopreservation media

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

●
Freezers and thaw systems

○
~~Freezer and storage technology and related components~~Ultra-low temperature freezers
○
Cryogenic freezers and accessories

○
Automated thawing devices

●
Storage and ~~cold chain~~storage 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 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 525~~more than 550 customer clinical 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+~~30+ 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 grade or the highest quality available synthetic components. All of these features benefit prospective customers by facilitating the qualification process required to incorporate our products into their regulatory filings.

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Table of Contents
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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~~Table of Contents~~
We estimate that annual revenue from each customer commercial application in which our products are used could range from $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”)~~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)~~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~~controlled-rate freezers and 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

In April 2019, we acquired Astero Bio Corporation (“Astero”)~~, to expand our bioprocessing tools portfolio and diversify our revenue streams.~~. The Astero 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 cell structure damage during the temperature transition. The ~~ThawSTAR~~ThawSTAR® products can reduce risks of contamination versus using a traditional water bath.
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Table of Contents

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~~six storage facilities in the USA and one facility in the Netherlands.
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~~Table of Contents~~

evo® 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 an improved form factor and ergonomics over ~~the~~ traditional ~~dewar,~~dewars, including extended thermal performance, reduced liquid nitrogen recharge time, improved payload extractors and ability to maintain temperature for longer periods ~~on its side.~~during transit or otherwise in a non-upright orientation.

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.

Critical accounting policies and estimates

A “critical accounting policy” is one which is both important to the portrayal of our financial condition and results and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. For a description of our critical accounting policies that affect our more significant judgments and estimates used in the preparation of our Unaudited Condensed Consolidated Financial Statements, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations and our significant accounting policies in Note 1 to the ~~Unaudited Condensed~~ Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 filed with the ~~SEC.~~SEC and Note 1 to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on form 10-Q.

Results of operations

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

Revenues

Total bioproduction tools and services revenue for three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 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

Three Months Ended

September 30,

June 30,

(In thousands, except percentages)

2021

2020

$ Change

% Change

2022

2021

$ Change

% Change

Product revenue

Freezer and thaw
$ 40,021 $ 9,237 $ 30,784 333
%
$ 18,670 $ 17,564 $ 1,106 6
%
Cell processing
30,131 22,753 7,378 32
%
15,356 9,699 5,657 58
%
Storage and cold chain services
293 30 263 877
%
Storage and storage services
144 205 (61 ) (30
)%
Service revenue

Storage and cold chain services
6,417 - 6,417 -
%
Storage and storage services
3,698 1,963 1,735 88
%
Rental revenue

Storage and cold chain services
4,989 1,341 3,648 272
%
Storage and storage services
2,665 1,773 892 50
%
Total revenue
$ 81,851 $ 33,361 $ 48,490 145
%
$ 40,533 $ 31,204 $ 9,329 30
%

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Six Months Ended

June 30,

(In thousands, except percentages)

2022

2021

$ Change

% Change

Product revenue

Freezer and thaw
$ 34,005 $ 22,411 $ 11,594 52
%
Cell processing
30,254 18,626 11,628 62
%
Storage and storage services
299 207 92 44
%
Service revenue

Storage and storage services
6,787 4,167 2,620 63
%
Rental revenue

Storage and storage services
5,407 2,640 2,767 105
%
Total revenue
$ 76,752 $ 48,051 $ 28,701 60
%
Product revenue

Product revenue was ~~$29.2~~$34.2 million for the three months ended ~~September~~June 30, ~~2021,~~2022, representing an increase of ~~$18.4~~$6.7 million, or ~~170%~~24%, ~~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 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, 2021~~ compared with the same period in ~~2020. In addition~~2021, and was $64.6 million for the six months ended June 30, 2022, representing an increase of $23.3 million, or 57%, compared with the same period in 2021. Organic revenue grew 36% in the six months ended June 30, 2022 due to ~~our recent acquisition~~the continued adoption 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 and we realized a higher selling price per liter in the three months ended September 30, 2021 compared to 2020.~~market.

Product revenue from our freezer and thaw products increased by ~~$14.2~~$1.1 million and ~~$30.8~~$11.6 million, or ~~422%~~6% and ~~333%~~52%, ~~respectively,~~ in the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022, respectively, compared with the same period in ~~2020. The acquisition of Global Cooling~~2021. Of the increase noted in ~~Q2 2021 contributed $14.0~~the six months ended June 30, 2022, $10.7 million ~~and $27.3 million, or 416% and 296% of the total~~is attributable to revenue generated by our ULT freezer products, which were acquired in May 2021. Organic freezer and thaw revenue ~~growth,~~increased by 9% in the six months ended June 30, 2022 due to strong cryogenic freezer sales in the three months ended June 30, 2022.
Product revenue from our cell processing products increased by $5.7 million and $11.6 million, or 58% and 62%, in the three and ~~nine~~six months ended ~~September~~June 30, 2022, respectively, compared with the same period in 2021. ~~Other significant contributors to this growth include isothermal freezer sales and~~Of the ~~launch of our High-Capacity Rate Freezer line~~increase noted in the ~~nine~~three and six months ended June 30, 2022, $1.2 million and $2.4 million of the increases are respectively attributable to revenue generated by our hPL, cryogenic vial, and automated fill machine products, which were acquired in September 2021. Organic cell processing revenue increased 49% in the six months ended June 30, 2022, as our cell processing products continue to be adopted by customers in the CGT market.
Product revenue from our storage and storage services decreased by $61,000 and increased by $92,000, or a 30% decrease and a 44% increase, in the three and six months ended June 30, 2022, respectively, compared with the same period in 2021.

Service revenue

Service revenue was ~~$2.3~~$3.7 million and ~~$6.4~~$6.8 million for the three and ~~nine~~six months ended ~~September~~June 30, 2022, respectively, representing increases of $1.7 million and $2.6 million, or 88% and 63%, compared with the same period in 2021. ~~There was no service~~The entirety of these increases were generated organically. The increase relates primarily to $1.8 million of revenue generated by our Netherlands biorepository storage expansion which became operational in the ~~three and nine months ended September 30, 2020. The increase in service revenues is directly attributable to the acquisition~~fourth quarter of ~~SciSafe in Q4 2020.~~2021.

Rental revenue

Rental revenue was ~~$2.3~~$2.7 million and ~~$5.0~~$5.4 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively, representing an increase of ~~$1.9 million~~$892,000 and ~~$3.6~~$2.8 million, or ~~395%~~50% and ~~272%~~105%, compared with ~~2020.~~2021. The entirety of these increases were generated organically. 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.~~our biological and pharmaceutical services product line.

Costs and operating expenses

Total costs and operating expenses for three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 were comprised of the following:

Three Months Ended

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
3,219 1,725 1,494 87
%
Sales and marketing
4,065 1,588 2,477 156
%
General and administrative
10,081 3,503 6,578 188
%
Intangible asset amortization
2,525 706 1,819 258
%
Acquisition costs
345 179 166 93
%
Change in fair value of contingent consideration
(140 ) (2 ) (138 ) 6,900
%
Total operating expenses
$ 44,959 $ 12,525 $ 32,434 259
%

Nine Months Ended

Three Months Ended

September 30,

June 30,

(In thousands, except percentages)

2021

2020

$ Change

% Change

2022

2021

$ Change

% Change

Cost of product, rental, and service revenue
$ 50,968 $ 13,893 $ 37,075 267
%
$ 26,194 $ 18,554 $ 7,640 41
%
General and administrative
11,351 7,146 4,205 59
%
Sales and marketing
5,415 3,142 2,273 72
%
Research and development
8,250 4,865 3,385 70
%
3,428 3,045 383 13
%
Sales and marketing
9,228 4,530 4,698 104
%
General and administrative
22,058 9,916 12,142 122
%
Intangible asset impairment charges
69,900 - 69,900 NM

Intangible asset amortization
5,340 2,100 3,240 154
%
2,863 1,882 981 52
%
Acquisition costs
1,616 417 1,199 288
%
5 272 (267 ) (98
)%
Change in fair value of contingent consideration
1,086 (1,528 ) 2,614 (171
)%
(2,361 ) 1,718 (4,079 ) (237
)%
Total operating expenses
$ 98,546 $ 34,193 $ 64,353 188
%
$ 116,795 $ 35,759 $ 81,036 227
%

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Six Months Ended

June 30,

(In thousands, except percentages)

2022

2021

$ Change

% Change

Cost of product, rental, and service revenue
$ 50,640 $ 26,104 $ 24,536 94
%
General and administrative
22,546 11,974 10,572 88
%
Sales and marketing
10,306 5,164 5,142 100
%
Research and development
7,209 5,032 2,177 43
%
Intangible asset impairment charges
69,900 - 69,900 NM

Intangible asset amortization
5,725 2,815 2,910 103
%
Acquisition costs
16 1,271 (1,255 ) (99
)%
Change in fair value of contingent consideration
(5,695 ) 1,226 (6,921 ) (565
)%
Total operating expenses
$ 160,647 $ 53,586 $ 107,061 200
%

Cost of product, rental, and service revenue

Cost of revenue increased ~~$20.0~~$7.6 million and ~~$37.1~~$24.5 million for the three and six months ended June 30, 2022, or ~~415%~~41% and ~~267%~~94%, respectively, compared to the same ~~periods~~period in ~~2020,~~2021, due primarily to the 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, raw material and transportation costs, customer mix, and product mix.

Cost of revenue net of intangible amortization related to acquired technology was 67% and 69% as a percentage of revenue ~~was 74% and 62%~~ for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively, and ~~43%~~61% and ~~42%~~57% as a percentage of revenue for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively. The increase in cost of revenue ~~as a percentage~~net of ~~revenue~~intangible amortization related to acquired technology is a result of increased revenues from lower margin product lines acquired in ~~the 2020 and 2021 acquisitions.~~
~~Research and 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, 2021 increased $1.5 million and $3.4 million, or 87% and 70%, respectively, compared with the same period in 2020. The increase is primarily due to our acquisition of Global Cooling in Q2 2021, increased headcount and non-cash stock 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, 2020, and 2021.~~
~~Sales and marketing expenses~~
Sales and marketing expense (“S&M”) consists primarily of salaries and other personnel-related costs, 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, 2021 increased $2.5 million and $4.7 million, or 156% and 104%, respectively, compared with the same period in 2020. The increase is primarily due to our acquisitions 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 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~~ 2021.

General and administrative expenses

General and administrative (“G&A”) expense consists primarily of personnel-related costs, non-cash stock-based 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~~six months ended ~~September~~June 30, ~~2021~~2022 increased ~~$6.6~~$4.2 million and ~~$12.1~~$10.6 million, or ~~188%~~59% and ~~122%~~88%, respectively, compared with the same period in ~~2020.~~2021. The increase reflects the assumption of G&A expenses related to our acquisitions of Global Cooling in Q2 2021 ~~and SciSafe~~Sexton in ~~Q4 2020,~~Q3 2021, increased headcount and non-cash stock-based compensation expense, ~~insurance expense,~~ accounting fees, and ~~information technology~~insurance 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 growth strategy.
Sales and marketing expenses
Sales and marketing expense (“S&M”) consists primarily of salaries and other personnel-related costs, non-cash stock-based expense, consulting, trade shows, travel, sales commissions, and advertising.
S&M expense for the three and six months ended June 30, 2022 increased $2.3 million and $5.1 million, or 72% and 100%, respectively, compared with the same period in 2021. The increase is primarily due to our acquisitions of Global Cooling in Q2 2021 and Sexton in Q3 2021, increased non-cash stock-based expense and increased expenses related to travel and tradeshows.
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 2021.
36
Table of Contents
Research and 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 six months ended June 30, 2022 increased $383,000 and $2.2 million, or 13% and 43%, respectively, compared with the same period in 2021. The increase is primarily due to our acquisitions of Global Cooling in Q2 2021 and Sexton in Q3 2021.
We expect our R&D expense to increase as we continue to expand, develop, and refine the product lines we acquired in 2019, 2020, and 2021.
Intangible asset impairment charges
Relates to the non-cash write-down of both indefinite-lived intangible assets and definite-lived intangible assets that resulted from a quantitative fair value assessment performed as of June 30, 2022. Macroeconomic conditions and persisting supply chain challenges have increased the cost of inputs used in the manufacture of our ULT freezer products. In the wake of these increased costs, the Company’s updated forecasts for projected net income and net cash flows were lowered, resulting in a lower future expected value of the asset group containing our ULT freezer products. In addition, the Company has opted to focus our ULT research and development group towards launching the next generation of ULT freezers, which involved suspending the development of an early-stage product.

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 Sexton in which we acquired definite-lived intangible assets.

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 Sexton acquisitions.
35

~~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 SciSafe acquisitions. The benefit recognized in the three and six months ended June 30, 2022 relates primarily to a decrease in BioLife’s share price, as certain contingent consideration arrangements are payable in BioLife’s shares.

Other income and expense

Total other income and expenses for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 were comprised of the following:

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
%

Three Months Ended

June 30,

(In thousands, except percentages)

2022

2021

$ Change

% Change

Interest expense, net
$ (9 ) $ (121 ) 112 (93
)%
Other (expense) income, net
(22 ) - (22 ) NM

Total other income, net
$ (31 ) $ (121 ) $ 90 (74
)%

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
%

Six Months Ended

June 30,

(In thousands, except percentages)

2022

2021

$ Change

% Change

Interest expense, net
$ (173 ) $ (137 ) $ (36 ) 26
%
Other (expense) income, net
110 (1 ) 111 (11,100
)%
Change in fair value of warrant liability
- (121 ) 121 NM

Total other income, net
$ (63 ) $ (259 ) $ 196 (76
)%

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. All outstanding warrants were exercised via a “cashless” exercise on March 25, 2021. Due to the change in our stock price 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 change in fair value of our warrant liability.

Interest ~~income (expense),~~expense, net. We earn interest on cash held in our money market account. Interest expense in the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 grew compared to ~~2020~~2021 due to debt acquired in the acquisition of Global Cooling and equipment financing.

~~Gain on acquisition~~
37

Table of ~~Sexton Biotechnologies, Inc~~~~. Reflects the markup in the carrying value of BioLife’s investment in Sexton to fair value as a result of incremental equity acquisition.~~
Contents

Liquidity and capital resources

On ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had ~~$75.1~~$47.0 million and ~~$90.4~~$69.9 million in cash, ~~and~~ cash equivalents, and available-for-sale securities, 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, and other liquid assets will be sufficient to meet our liquidity needs for at least the ~~foreseeable future.~~next twelve months from the date of the filing of this Form 10-Q. However, the Company may choose to raise additional capital through a debt or equity financing 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

Nine Months Ended

September 30,

(In thousands)

2021

2020

$ Change

Operating activities
$ (3,819 ) $ 4,388 $ (8,207 )
Investing activities
(10,650 ) (2,658 ) (7,992 )
Financing activities
(673 ) 100,806 (101,479 )
Net (decrease) increase in cash and cash equivalents $ (15,142 ) $ 102,536 $ (117,678 )
36

~~Table of Contents~~

Six Months Ended

June 30,

(In thousands)

2022

2021

$ Change

Operating activities
$ (17,841
)
$ (5,902
)
$ (11,939
)
Investing activities
(27,340
)
(8,643
)
(18,697
)
Financing activities
(470
)
385 (855
)
Net decrease in cash and cash equivalents
$ (45,651
)
$ (14,160
)
$ (31,491
)

Net cash (used in) provided by operating activities

~~During~~Net cash used by operating activities was $17.8 million during the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022 compared to net cash used by operating activities ~~was $3.8~~of $5.9 million ~~compared to net cash provided by operating activities of $4.4 million for~~during the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. The increase in cash used by operating activities was primarily the result of the timing of collection and disbursement of working capital related items in accounts receivable, ~~inventory, prepaid expenses~~inventories, and ~~other current assets,~~ accounts ~~payable, and accrued expenses and other current liabilities.~~payable.

Net cash used in investing activities

Net cash used by investing activities totaled ~~$10.7~~$27.3 million during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared to ~~$2.7~~net cash used by investing activities of $8.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. The increase in cash used by 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~~significant investments in ~~the US and Europe.~~available-for-sale marketable securities made in Q2 2022.

Net cash (used in) provided by financing activities

Net cash used by financing activities totaled ~~$673,000~~$470,000 during the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, compared to ~~net cash provided by financing activities of $100.8 million~~$385,000 during the ~~nine~~six months ended ~~September~~June 30, 2020. Net cash used by financing activities in the nine months ended September 30, 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.2021.

Off-balance sheet arrangements

As of ~~September~~June 30, ~~2021,~~2022, we did not have any off-balance sheet arrangements.

Contractual 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, ~~2020,~~2021, as filed with the SEC. There have been no significant changes to these obligations in the three and ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022.

Item 3. Quantitative and qualitative disclosures about market risk

Not applicable.

38
Table of Contents
Item 4. Controls and procedures

Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this 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 material ~~weakness~~weaknesses in our internal controls over financial reporting. As previously reported, we identified a material ~~weakness~~weaknesses in our internal ~~control~~controls over financial reporting as of December 31, ~~2019~~2021 with regard to ~~our~~(i) inappropriately designed entity-level controls impacting the control environment, risk assessment, and monitoring activities to prevent or detect material misstatements to the consolidated financial statements attributed to an insufficient number of qualified resources and inadequate oversight and accountability over the performance of controls, ineffective identification and assessment or risks impacting internal control over financial reporting, and ineffective monitoring controls; (ii) information system logical access within certain key financial systems; (iii) accounting policies and procedures and related controls over complex financial statement areas; (iv) accounting policies, procedures, and related controls over assets held for lease; (v) accounting policies, procedures, and related controls over the ~~accounting for~~preparation and review of projected financial ~~instruments containing characteristics~~information used in determining the valuation of ~~both liabilities~~acquired intangible assets and ~~equity. Although substantial progress has been made~~contingent consideration in ~~remediating this material weakness, it has not been fully remediated~~business combinations as well as the quantitative impairment analysis of ~~September 30, 2021,~~indefinite-lived intangible assets; and ~~therefore this control weakness continues to constitute a material weakness. Specifically, due to insufficient technical resources,~~(vi) policies, procedures, and related controls over the ~~Company’s controls were not operating effectively to allow management to timely identify errors related to~~presentation and disclosure of amounts presented in the ~~recording of certain transactions involving~~consolidated financial ~~instruments as previously described.~~statements in accordance with the applicable financial reporting requirements.

Changes in Internal Control Over Financial Reporting. ~~There~~Other than the remediation of a previously identified material weakness as described below, there was no change in our internal control over financial reporting that occurred during the quarter ended ~~September~~June 30, ~~2021~~2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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

37

~~Table of Contents~~
Remediation.

~~Remediation.~~With respect to the material weakness related to information system logical access within certain key financial systems 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.~~
date, which consisted of removing administrator access rights from accounting personnel. 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~~was fully remediated as of ~~September~~June 30, ~~2021.~~2022.
With respect to the other material weaknesses described above, management plans to implement the following measures:
●
The Company plans to hire and retain additional individuals with the appropriate skills related to technical accounting and internal control over financial reporting;
●
The Company will enhance its reconciliations and management review controls with the added stability of new hires and the implementation of technology solutions to automate visibility and enforcement of the independent review and documentation of journal entries, including proper segregation of duties, thus mitigating risks of both unintentional errors and fraud; and
●
The Company plans to develop processes and procedures to enhance the precision of management review of financial statement information.

As we continue to evaluate and test the remediation plan outlined above, we may also identify additional measures to address the material ~~weakness~~weaknesses 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.~~weaknesses. Management, with the oversight of the Audit Committee, will continue to take steps necessary to remedy the material ~~weakness~~weaknesses to reinforce the overall design and capability of our control environment.

PART II: Other information

Item 1. LEGAL PROCEEDINGS

From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. We are not currently aware of any such proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations.
39
Table of Contents

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, ~~2020~~2021 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, ~~2020.~~2021.

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.

3840
Table of Contents

Item 6. 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.~~

3941
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.
Date: ~~November 15, 2021~~August 9, 2022
/s/ Troy Wichterman
Troy Wichterman
Chief Financial Officer

(Duly authorized officer and principal

financial and accounting officer)

4042
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.~~

4143

As of September 30, 2021	Level 1		Level 2		Level 3		Total
As of June 30, 2022									Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market accounts	$	70,152	$	0	$	0	$	70,152	$	17,086	$	0	$	0	$	17,086
Corporate debt securities										0		2,242		0		2,242
Non-U.S. government agency securities										0		748		0		748
Marketable debt securities:
U.S. government securities										10,335		0		0		10,335
Corporate debt securities										0		11,515		0		11,515
Other debt securities										0		1,185		0		1,185
Total		70,152		0		0		70,152		27,421		15,690		0		43,111
Liabilities:
Contingent consideration - business combinations		0		0		8,238		8,238		0		0		3,515		3,515
Debt										0		7,551		0		7,551
Total	$	0	$	0	$	8,238	$	8,238	$	0	$	7,551	$	3,515	$	11,066

As of December 31, 2020	Level 1		Level 2		Level 3		Total
As of December 31, 2021									Level 1		Level 2		Level 3		Total
Assets:
Money market accounts	$	90,403	$	0	$	0	$	90,403	$	63,873	$	0	$	0	$	63,873
Total		90,403		0		0		90,403		63,873		0		0		63,873
Liabilities:
Contingent consideration - business combinations		0		0		7,152		7,152		0		0		10,027		10,027
Warrant liability		0		0		2,780		2,780
Debt										0		7,215		0		7,215
Total	$	0	$	0	$	9,932	$	9,932	$	0	$	7,215	$	10,027	$	17,242

	June 30, 2022
	Amortized		Gross unrealized				Estimated
(In thousands)	Cost		Gains		Losses		Fair Value
Available-for-sale securities, current portion
U.S. government securities	$	10,361	$	-	$	26	$	10,335
Corporate debt securities		11,524		-		8		11,516
Other debt securities		699		-		4		695
Total short-term		22,584		-		38		22,546

Available-for-sale securities, long-term
Other debt securities		491		-		2		489

Total marketable securities	$	23,075	$	-	$	40	$	23,035

(In thousands)	Operating Leases			Financing Leases
2022 (6 months remaining)	$	1,756		$	86
2023		3,199			171
2024		2,921			101
2025		2,461			37
2026		2,001			1
Thereafter		8,364			0
Total lease payments		20,702			396
Less: interest		(2,764	)		(30	)
Total present value of lease liabilities	$	17,938		$	366

(In thousands, except weighted average useful life)	June 30, 2022
Intangible assets:	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Weighted Average Useful Life (in years)
Customer Relationships	$	15,984	$	(2,976	)	$	13,008		9.8
Tradenames		29,635		(3,571	)		26,064		13.3
Technology - acquired		38,410		(10,766	)		27,644		5.4
Non-compete agreements		1,986		(725	)		1,261		2.5
In-process research and development⁽¹⁾		8,547		-			8,547		N/A
Total intangible assets	$	94,562	$	(18,038	)	$	76,524		9.2

(In thousands, except weighted average useful life)	December 31, 2021
Intangible assets:	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Weighted Average Useful Life (in years)
Customer Relationships	$	17,516	$	(1,776	)	$	15,740		10.3
Tradenames		35,574		(2,306	)		33,268		13.8
Technology - acquired		41,942		(7,789	)		34,153		5.9
Non-compete agreements		1,990		(442	)		1,548		3.0
In-process research and development⁽¹⁾		67,440		0			67,440		N/A
Total intangible assets	$	164,462	$	(12,313	)	$	152,149		9.8

(In thousands)	Amortization
For the Years Ending December 31,	Expense
2022 (6 months remaining)	$	5,005
2023		9,570
2024		8,745
2025		8,398
2026		7,975
Thereafter		28,284
Total	$	67,977

	Six Months Ended June 30,
	2022					2021
	Shares		Wtd. Avg. Exercise Price		Shares			Wtd. Avg. Exercise Price
Beginning balance		0	$	0		79,100		$	4.75
Exercised		0		0		(79,100	)		4.75
Ending balance		0	$	0		0		$	0

	Year Ending December 31,
(In thousands)	2022 (6 months remaining)		2023		2024		Total
Rental revenue	$	3,901	$	3,735	$	900	$	8,536
Service revenue	$	151	$	188	$	10	$	349

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	$	1,516		$	1,516
Accounts receivable, net		492			492
Inventory		1,310
Inventories					1,310
Prepaid expenses and other current assets		670			670
Property, plant and equipment, net		737			737
Operating lease right-of-use assets, net		470			470
Developed technology		4,132			4,132
Customer relationships		2,276			2,276
Tradenames		2,324			2,324
Non-compete agreements		90			90
Goodwill		28,273			28,470
Accounts payable		(291	)		(291	)
Lease liabilities, operating		(470	)		(470	)
Deferred tax liability		(1,284	)		(1,482	)
Other liabilities		(317	)		(316	)
Fair value of net assets acquired	$	39,928		$	39,928

	Fair Value		Useful Life (Years)			Fair Value		Useful Life (Years)
Developed technology	$	4,132	5	-	9	$	4,132		5	-	9
Customer relationships		2,276		2			2,276			2
Tradenames		2,324		11			2,324			11
Non-compete agreements		90		1			90			1
Total identifiable intangible assets	$	8,822				$	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	$	43		$	43
Accounts receivable, net		7,076			7,076
Inventory		15,547
Inventories					15,547
Prepaid expenses and other current assets		639			639
Property, plant and equipment, net		3,512			3,512
Operating lease right-of-use assets, net		1,741			1,741
Financing lease right-of-use assets, net		114			114
Long-term deposits and other assets		4			4
Developed technology		18,140			18,140
Customer relationships		7,020			7,020
Tradenames		26,640			26,640
Non-compete agreements		1,240			1,240
In-process research and development		67,440			67,440
Goodwill		137,215			137,822
Accounts payable		(9,837	)		(9,837	)
Line of credit		(4,231	)		(4,231	)
Lease liabilities, operating		(1,880	)		(1,880	)
Lease liabilities, financing		(114	)		(114	)
Long-term debt		(4,410	)		(4,410	)
Deferred tax liability		(23,526	)		(24,133	)
Other liabilities		(7,464	)		(7,464	)
Fair value of net assets acquired	$	234,909		$	234,909

(In thousands, except weighted average useful life)	September 30, 2021
Finite-lived intangible assets:	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Weighted Average Useful Life (in years)
Customer Relationships	$	17,516	$	(1,177	)	$	16,339		10.8
Tradenames		35,574		(1,672	)		33,902		14.4
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	$	164,462	$	(9,451	)	$	155,011		10.1

	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

	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

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

		○	~~Freezer and storage technology and related components~~Ultra-low temperature freezers
		○	Cryogenic freezers and accessories
		○	Automated thawing devices

		○	Biological and pharmaceutical material storage
		○	Cloud connected “smart” shipping containers

	●	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

	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	%


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.~~


	BIOLIFE SOLUTIONS, INC.


Date: ~~November 15, 2021~~August 9, 2022	/s/ Troy Wichterman
	Troy Wichterman
	Chief Financial Officer
	(Duly authorized officer and principal
	financial and accounting officer)