10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2016

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

For the transition period from to

Commission File Number 001-36362

BioLife Solutions, Inc.

(Exact name of registrant as specified in its charter)

 

DELAWARE	94-3076866
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

3303 MONTE VILLA PARKWAY, SUITE 310, BOTHELL, WASHINGTON, 98021

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

(425) 402-1400

(Telephone number, including area code)

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 þ  No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted 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 and post said files). Yes þ  No ¨

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

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company þ

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

As of August 9, 2016, 12,883,246 shares of the registrant’s common stock were outstanding.

BIOLIFE SOLUTIONS, INC.

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2016

TABLE OF CONTENTS

PART I.  FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements
	Consolidated Balance Sheets as of June 30, 2016 (unaudited) and December 31, 2015	3
	Consolidated Statements of Operations (unaudited) for the three and six month periods ended June 30, 2016 and 2015	4
	Consolidated Statements of Comprehensive Loss (unaudited) for the three and six month periods ended June 30, 2016 and 2015	5
	Consolidated Statements of Cash Flows (unaudited) for the six month periods ended June 30, 2016 and 2015	6
	Notes to Consolidated Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	19
Item 4.	Controls and Procedures	19
PART II.	OTHER INFORMATION
Item 1.A.	Risk Factors	19
Item 2.	Unregistered Sales of Equity Securities	19
Item 6.	Exhibits	19
	Signatures	20
	Index to Exhibits	21

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PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

BioLife Solutions, Inc.

Consolidated Balance Sheets

(Unaudited)

	June 30,			December 31,
	2016			2015
Assets
Current assets
Cash and cash equivalents	$	1,318,469		$	2,173,258
Short term investments		––			1,651,341
Accounts receivable, trade, net of allowance for doubtful accounts of $0 at June 30, 2016 and December 31, 2015		1,284,015			929,289
Inventories		1,910,729			1,834,635
Prepaid expenses and other current assets		402,342			384,414
Total current assets		4,915,555			6,972,937
Property and equipment
Leasehold improvements		1,284,491			1,284,491
Furniture and computer equipment		652,941			557,666
Manufacturing and other equipment		1,029,600			1,025,521
Subtotal		2,967,032			2,867,678
Less: Accumulated depreciation		(1,605,173	)		(1,421,279	)
Net property and equipment		1,361,859			1,446,399
Internal use software		2,021,489			1,698,735
Intangible asset		2,215,385			2,215,385
Long term deposits		36,166			36,166
Total assets	$	10,550,454		$	12,369,622
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	864,452		$	1,029,373
Note payable, related party, net of discount of $343,191 at June 30, 2016		656,809			––
Accrued interest, related party		8,333			––
Accrued expenses and other current liabilities		80,037			146,438
Accrued compensation		523,694			419,766
Deferred rent		130,216			130,216
Total current liabilities		2,263,541			1,725,793
Deferred rent, long term		740,888			784,458
Total liabilities		3,004,429			2,510,251
Commitments and contingencies (Note 9)
Shareholders’ equity
Common stock, $0.001 par value; 150,000,000 shares authorized, 12,607,055 and 12,448,391 shares issued and outstanding at June 30, 2016 and December 31, 2015		12,607			12,447
Additional paid-in capital		73,719,666			72,823,398
Accumulated other comprehensive loss		––			(451	)
Accumulated deficit		(66,909,834	)		(64,326,923	)
Total BioLife Solutions, Inc. shareholders’ equity		6,822,439			8,508,471
Total non-controlling interest equity		723,586			1,350,900
Total shareholders’ equity		7,546,025			9,859,371
Total liabilities and shareholders’ equity	$	10,550,454		$	12,369,622

The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements

3

BIoLife Solutions, Inc.

Consolidated Statements of Operations

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Product sales	$	1,989,988		$	1,496,759		$	3,842,005		$	2,997,481
Cost of product sales		872,835			678,111			1,643,840			1,296,210
Gross profit		1,117,153			818,648			2,198,165			1,701,271
Operating expenses
Research and development		599,031			301,334			1,103,270			623,499
Sales and marketing		849,193			642,490			1,583,106			1,142,745
General and administrative		1,262,818			1,030,701			2,598,110			2,251,406
Total operating expenses		2,711,042			1,974,525			5,284,486			4,017,650
Operating loss		(1,593,889	)		(1,155,877	)		(3,086,321	)		(2,316,379	)
Other income (expenses)
Interest income		445			5,482			2,364			13,719
Interest expense, related party		(8,333	)		––			(8,333	)		––
Amortization of debt discount		(31,199	)		––			(31,199	)		––
Write-off of deferred financing costs		(86,736	)		––			(86,736	)		––
Total other income (expenses)		(125,823	)		5,482			(123,904	)		13,719
Net loss		(1,719,712	)		(1,150,395	)		(3,210,225	)		(2,302,660	)
Net loss attributable to non-controlling interest		363,629			156,016			627,314			276,799
Net loss attributable to BioLife Solutions, Inc.	$	(1,356,083	)	$	(994,379	)	$	(2,582,911	)	$	(2,025,861	)
Basic and diluted net loss per common share attributable to BioLife Solutions, Inc.	$	(0.11	)	$	(0.08	)	$	(0.21	)	$	(0.17	)
Basic and diluted weighted average common shares used to calculate net loss per common share		12,568,041			12,144,776			12,512,949			12,122,667

The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements

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BIoLife Solutions, Inc.

Consolidated Statements of Comprehensive Loss

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Net loss	$	(1,719,712	)	$	(1,150,395	)	$	(3,210,225	)	$	(2,302,660	)
Other comprehensive income (loss)
Unrealized gain (loss) on available-for-sale investments		––			(441	)		451			5,058
Total other comprehensive income (loss)		––			(441	)		451			5,058
Comprehensive loss		(1,719,712	)		(1,150,836	)		(3,209,774	)		(2,297,602	)
Comprehensive loss attributable to non- Controlling interest		363,629			156,016			627,314			276,799
Comprehensive loss attributable to BioLife Solutions, Inc.	$	(1,356,083	)	$	(994,820	)	$	(2,582,460	)	$	(2,020,803	)

The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements

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BioLife Solutions, Inc.

Consolidated Statements of Cash Flows

(unaudited)

	Six Month Period Ended June 30,
	2016			2015
Cash flows from operating activities
Net loss	$	(3,210,225	)	$	(2,302,660	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation		183,893			168,727
Stock-based compensation expense		402,763			158,371
Write-off of deferred financing costs		86,736			––
Amortization of deferred rent related to lease incentives		(63,499	)		(63,500	)
Amortization of debt discount		31,199			––
Accretion and amortization on available for sale investments		1,792			65,485
Change in operating assets and liabilities
(Increase) Decrease in
Accounts receivable, trade		(354,726	)		92,236
Inventories		(76,094	)		(356,033	)
Prepaid expenses and other current assets		(50,151	)		47,762
Increase (Decrease) in
Accounts payable		207,369			(99,771	)
Accrued compensation and other current liabilities		37,527			(267,229	)
Accrued interest, related party		8,333			––
Deferred rent		19,929			21,651
Net cash used in operating activities		(2,775,154	)		(2,534,961	)
Cash flows from investing activities
Sales of available-for-sale investments		1,650,000			4,725,000
Purchases of available-for-sale investments		––			(342,872	)
Costs associated with internal use software development		(695,044	)		(497,480	)
Purchase of property and equipment		(99,353	)		(72,009	)
Net provided by investing activities		855,603			3,812,639
Cash flows from financing activities
Proceeds from related party debt		1,000,000			––
Proceeds from exercise of common stock options		151,498			79,969
Deferred costs related to potential stock issuance		(86,736	)		––
Net cash provided by financing activities		1,064,762			79,969
Net increase (decrease) in cash and cash equivalents		(854,789	)		1,357,647
Cash and cash equivalents - beginning of period		2,173,258			2,538,758
Cash and cash equivalents - end of period	$	1,318,469		$	3,896,405
Non-cash investing and financing activities
Costs incurred for capitalized internal use software not paid as of quarter end (amounts are included in liabilities)		42,760			265,380
Debt discount related to warrants	$	374,390		$	—

The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements

6

BioLife Solutions, Inc.

Notes to Consolidated Financial Statements

(unaudited)

1. Organization and Significant Accounting Policies

Business

BioLife Solutions, Inc. (“BioLife,” “us,” “we,” “our,” or the “Company”) is a developer, manufacturer and marketer of proprietary clinical grade cell and tissue hypothermic storage and cryopreservation freeze media and a related cloud hosted biologistics cold chain management app for smart shippers. Our proprietary HypoThermosol® and CryoStor® platform of solutions are highly valued in the biobanking, drug discovery, and regenerative medicine markets. Our biopreservation media products are serum-free and protein-free, fully defined, and are formulated to reduce preservation-induced cell damage and death. Our enabling technology provides commercial companies and clinical researchers significant improvement in shelf life and post-preservation viability and function of cells, tissues, and organs. Additionally, for our direct, distributor, and contract customers, we perform custom formulation, fill, and finish services.

Basis of Presentation

We have prepared the accompanying unaudited consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Pursuant to these rules and regulations, we have condensed or omitted certain information and footnote disclosures we normally include in our annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In management’s opinion, we have made all adjustments (consisting only of normal, recurring adjustments) necessary to fairly present our financial position, results of operations and cash flows. Our interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full year. These consolidated financial statements and accompanying notes should be read in conjunction with the financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2015 on file with the SEC.

There have been no material changes to our significant accounting policies as compared to the significant accounting policies described in the financial statements in our Annual Report on Form 10-K for the year ended December 31, 2015.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its majority-owned subsidiary. All intercompany balances and transactions have been eliminated in consolidation.

Concentrations of credit risk and business risk

In the three and six months ended June 30, 2016, we derived approximately 12% and 12% of our product revenue from one customer. In the three and six months ended June 30, 2015, we derived approximately 15% and 10% of our product revenue from one customer. No other customer accounted for more than 10% of revenue in the three and six months ended June 30, 2016 or 2015. At June 30, 2016, three customers accounted for approximately 41% of total gross accounts receivable. At December 31, 2015, three customers accounted for approximately 53% of total gross accounts receivable.

Revenue from customers located in foreign countries represented 17% and 20% of total revenue during the three and six months ended June 30, 2016, respectively, and 20% and 21% during the three and six months ended June 30, 2015, respectively.

Recent Accounting Pronouncements

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU-2016-09). The updated guidance simplifies and changes how companies account for certain aspects of share-based payment awards to employees, including accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification of certain items in the statement of cash flows. Adoption of ASU 2016-09 is required for fiscal reporting periods beginning after December 15, 2016, including interim reporting periods within those fiscal years with early adoption being permitted. The Company is currently evaluating the potential impact of the pending adoption of ASU 2016-09 on its consolidated financial statements.

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In February 2016, FASB issued Accounting Standards Update No. 2016-02, Leases: Topic 842 (ASU 2016-02) that replaces existing lease guidance. The new standard is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet. Under the new guidance, leases will continue to be classified as either finance or operating, with classification affecting the pattern of expense recognition in the Consolidated Statements of Operations. Lessor accounting is largely unchanged under ASU 2016-02. Adoption of ASU 2016-02 is required for fiscal reporting periods beginning after December 15, 2018, including interim reporting periods within those fiscal years with early adoption being permitted. The new standard is required to be applied with a modified retrospective approach to each prior reporting period presented with various optional practical expedients. The Company is currently evaluating the potential impact of the pending adoption of ASU 2016-02 on its consolidated financial statements.

In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities: Topic 825 (ASU 2016-01). The updated guidance enhances the reporting model for financial instruments, which includes amendments to address aspects of recognition, measurement, presentation and disclosure. Adoption of ASU 2016-01 is required for fiscal reporting periods beginning after December 15, 2017, including interim reporting periods within those fiscal years. The Company is currently evaluating the potential impact of the pending adoption of ASU 2016-01 on its consolidated financial statements.

In November 2015, FASB issued Accounting Standards Update No. 2015-17, Balance Sheet Classification of Deferred Taxes: Topic 740 (ASU 2015-17). Current GAAP requires the deferred taxes for each jurisdiction to be presented as a net current asset or liability and net noncurrent asset or liability. This requires a jurisdiction-by-jurisdiction analysis based on the classification of the assets and liabilities to which the underlying temporary differences relate, or, in the case of loss or credit carryforwards, based on the period in which the attribute is expected to be realized. Any valuation allowance is then required to be allocated on a pro rata basis, by jurisdiction, between current and noncurrent deferred tax assets. The new guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. As a result, each jurisdiction will now only have one net noncurrent deferred tax asset or liability. The guidance does not change the existing requirement that only permits offsetting within a jurisdiction. Adoption of ASU 2015-17 is required for fiscal reporting periods beginning after December 15, 2016, including interim reporting periods within those fiscal years, and either prospective or retrospective application is permitted. Early adoption of ASU 2015-17 is permitted. At the time of adoption, all of the Company’s deferred tax assets and liabilities, along with any related valuation allowance, will be classified as noncurrent on its Consolidated Balance Sheet. The Company does not plan to early adopt ASU 2015-17.

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory: Topic 330 (ASU 2015-11). Topic 330 currently requires an entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. ASU 2015-11 requires that inventory measured using either the first-in, first-out (FIFO) or average cost method be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Adoption of ASU 2015-11 is required for fiscal reporting periods beginning after December 15, 2016, including interim reporting periods within those fiscal years. The Company does not expect adoption of ASU 2015-11 to have a material impact on its consolidated financial statements.

On May 28, 2014, FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, Topic 606, requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. Early adoption is not permitted. The updated standard becomes effective for us in the first quarter of fiscal 2018. We have not yet selected a transition method and we are currently evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures.

8

With the exception of the new standards discussed above, there have been no new accounting pronouncements not yet effective that have significance, or potential significance, to our Consolidated Financial Statements.

2. Accumulated Other Comprehensive Loss

The following table shows the changes in Accumulated Other Comprehensive Loss by component for the six months ended June 30, 2016:

	Six Months Ended June 30, 2016
Unrealized Loss on Investments, Beginning Balance	$	(451	)
Unrealized Gain on Investments, Current Period		451
Unrealized Gain/(Loss) on Investments, Ending Balance	$	––

3. 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 short term investments at fair value on a recurring basis. 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 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.

As of June 30, 2016 and December 31, 2015, the Company does not have liabilities that are measured at fair value.

The following tables set forth the Company’s financial assets measured at fair value on a recurring basis as of June 30, 2016 and December 31, 2015, based on the three-tier fair value hierarchy:

As of June 30, 2016	Level 1		Level 2		Total
Bank deposits	$	1,264,989	$	—	$	1,264,989
Money market funds		53,480		—		53,480
Cash and cash equivalents		1,318,469		—		1,318,469
Total	$	1,318,469	$	—	$	1,318,469

As of December 31, 2015	Level 1		Level 2		Total
Bank deposits	$	440,809	$	—	$	440,809
Money market funds		1,732,449		—		1,732,449
Cash and cash equivalents		2,173,258		—		2,173,258
Corporate debt securities		1,401,453		—		1,401,453
Commercial paper		249,888		—		249,888
Short term investments		1,651,341		—		1,651,341
Total	$	3,824,599	$	—	$	3,824,599

The fair values of bank deposits, money market funds, corporate debt securities and commercial paper classified as Level 1 were derived from quoted market prices as active markets for these instruments exist. The Company has no Level 2 or Level 3 financial assets. The Company did not have any transfers between Level 1 and Level 2 of the fair value hierarchy during the six months ended June 30, 2016 and the twelve months ended December 31, 2015.

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4. Inventory

Inventory consists of the following at June 30, 2016 and December 31, 2015:

	June 30, 2016		December 31, 2015
Raw materials	$	504,652	$	299,952
Work in progress		344,946		666,124
Finished goods		1,061,131		868,559
Total	$	1,910,729	$	1,834,635

5. Deferred Rent

Deferred rent consists of the following at June 30, 2016 and December 31, 2015:

	June 30, 2016			December 31, 2015
Landlord-funded leasehold improvements	$	1,124,790		$	1,124,790
Less accumulated amortization		(439,029	)		(375,530	)
Total		685,761			749,260
Straight line rent adjustment		185,343			165,414
Total deferred rent	$	871,104		$	914,674

During the three and six month periods ended June 30, 2016, the Company recorded $31,749 and $63,499, respectively, in deferred rent amortization of these landlord funded leasehold improvements. During the three and six month periods ended June 30, 2015, the Company recorded $31,750 and $63,500, respectively, in deferred rent amortization of these landlord funded leasehold improvements.

Straight line rent adjustment represents the difference between cash rent payments and the recognition of rent expense on a straight-line basis over the terms of the lease.

6. Share-based Compensation 

Stock Options

The following is a summary of stock option activity for the six month period ended June 30, 2016, and the status of stock options outstanding at June 30, 2016:

	Six Month Period Ended
	June 30, 2016
				Wtd. Avg.
				Exercise
	Options			Price
Outstanding at beginning of year		2,555,263		$	1.80
Granted		704,000		$	1.80
Exercised		(96,166	)	$	1.24
Forfeited		(372,458	)	$	2.14
Expired		(59,026	)	$	1.95
Outstanding at June 30, 2016		2,731,613		$	1.77
Stock options exercisable at June 30, 2016		1,355,954		$	1.57

As of June 30, 2016, there was $423,326 of aggregate intrinsic value of outstanding stock options, including $422,326 of aggregate intrinsic value of exercisable 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 June 30, 2016. This amount will change based on the fair market value of the Company’s stock. During the three and six months ended June 30, 2016 intrinsic value of awards exercised was $41,413 and $45,667, respectively. Weighted average grant date fair value for options granted during the three and six months ended June 30, 2016 was $1.24 and $1.25 per share, respectively and $1.75 for each of the three and six months ended June 30, 2015.

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The fair value of share-based payments made with stock options to employees and non-employee directors was estimated on the measurement date using the Black-Scholes model using the following weighted average assumptions.

	Three Month Period Ended						Six Month Period Ended
	June 30,						June 30,
	2016			2015			2016			2015
Risk free interest rate		1.45	%		1.77	%		1.52	%		1.77	%
Dividend yield		0.0	%		0.0	%		0.0	%		0.0	%
Expected term (in years)		7			7			7			7
Volatility		75	%		105	%		75	%		105	%

Management applies an estimated forfeiture rate that is derived from historical employee termination data. The estimated forfeiture rate applied for the three and six month periods ended June 30, 2016 and 2015 was approximately 8.1% and 7.0%, respectively.

As of June 30, 2016, we had $2,007,687 of unrecognized compensation expense related to unvested stock options. We expect to recognize this compensation expense over a weighted average period of approximately 3.1 years.

Restricted Stock

The following is a summary of restricted stock activity for the six month period ended June 30, 2016, and the status of unvested restricted stock outstanding at June 30, 2016:

	Six Month Period Ended
	June 30, 2016
	Number of Restricted Shares			Grant-Date Fair Value
Outstanding at beginning of year		—			$ N/A
Granted		200,000		$	1.90
Vested		(62,498	)	$	1.90
Outstanding at June 30, 2016		137,502		$	1.90

The aggregate fair value of the awards granted during the three and six months ended June 30, 2016 was $0 and $380,000, 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 restricted stock awards that vested for the three and six months ended June 30, 2016 was $21,704 and $116,704, respectively.

We recognized stock compensation expense of $23,633 and $122,351 related to restricted stock awards for the three and six months ended June 30, 2016. As of June 30, 2016, there was $257,649 in unrecognized compensation costs related to restricted stock awards. We expect to recognize those costs over 2.7 years.

We recorded stock compensation expense for the three and six month periods ended June 30, 2016 and 2015, as follows:

	Three Month Period Ended				Six Month Period Ended
	June 30,				June 30,
	2016		2015		2016			2015
Research and development costs	$	47,366	$	19,414	$	84,835		$	26,358
Sales and marketing costs		54,748		19,270		118,247			25,025
General and administrative costs		142,367		57,677		219,878			65,450
Cost of product sales		11,754		28,501		(20,197	)		41,538
Total	$	256,235	$	124,862	$	402,763		$	158,371

During the three and six month periods ended June 30, 2016, we reversed stock compensation expense related to stock compensation expense previously recorded on unvested stock options that were forfeited upon termination of certain employees during the periods in the amount of $215 and $40,532 to cost of product sales, respectively and $213 and $52,029 to operating expenses, respectively.

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7. Warrants

At June 30, 2016 and December 31, 2015, we had 7,745,997 and 7,195,997 warrants outstanding, respectively and exercisable with a weighted average exercise price of $4.40 and $4.60, respectively. The outstanding warrants have expiration dates between August 2016 and May 2021.

8. Net Loss per Common Share

Basic net loss per common share is calculated by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated using the weighted average number of common shares outstanding plus dilutive common stock equivalents outstanding during the period. Common stock equivalents are excluded for the three and six month periods ended June 30, 2016 and 2015, since the effect is anti-dilutive due to the Company’s net losses. Common stock equivalents include stock options and warrants.

Basic weighted average common shares outstanding, and the potentially dilutive securities excluded from loss per share computations because they are anti-dilutive, are as follows as of June 30, 2016 and 2015, respectively:

	Three Month Period Ended				Six Month Period Ended
	June 30,				June 30,
	2016		2015		2016		2015
Basic and diluted weighted average common stock shares outstanding		12,568,041		12,144,776		12,512,949		12,122,667
Potentially dilutive securities excluded from loss per share computations:
Common stock options		2,731,613		2,601,652		2,731,613		2,601,652
Common stock purchase warrants		7,745,997		7,428,141		7,745,997		7,428,141
Restricted stock unvested		137,502		-		137,502		-

9. Commitments & Contingencies

Leases

We lease approximately 30,000 square feet in our Bothell, Washington headquarters. The term of our lease continues until July 31, 2021 with two options to extend the term of the lease, each of which is for an additional period of five years, with the first extension term commencing, if at all, on August 1, 2021, 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 $59,700, with scheduled annual increases each August and again in October for the most recent amendment. We are also required to pay an amount equal to the Company’s proportionate share of certain taxes and operating expenses.

Employment agreements

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

biologistex

On September 29, 2014 we agreed to purchase approximately $2.4 million in evo Smart Containers from the biologistex joint venture partner, SAVSU. As of June 30, 2016, the purchase commitment remaining is $2.0 million.

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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.

10. Credit Facility

On May 12, 2016 we entered into a $4 million credit facility agreement with our largest shareholder WAVI Holding AG (“WAVI”). The agreement calls for WAVI to provide four $1 million tranches at specified times throughout the next 12 months. The promissory note carries an annual interest rate of 10%. The related promissory note matures on June 1, 2017, and is unsecured, but senior to any existing debt. In conjunction with the credit facility, we issued 550,000 detachable vested warrants at a $1.75 exercise price, expiring May 12, 2021. On June 1, 2016, we received the first $1 million tranche related to the credit facility agreement. The Company recorded a debt discount related to the value of the warrants in the amount of $374,390. The debt discount amount recorded related to the warrants was determined based on the relative fair value of the note payable and the warrants. The debt discount will amortize monthly at a rate of $31,199 per month until June 1, 2017. The fair value of the warrants was determined using the Black-Scholes model.

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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”. 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 future financial and operating results, plans, objectives, expectations and intentions, costs and expenses, interest rates, outcome of contingencies, financial condition, results of operations, liquidity, business strategies, cost savings, objectives of management and other statements that are not historical facts. You can find many of these statements by looking for words like “believes,” “expects,” “anticipates,” “estimates,” “may,” “should,” “will,” “could,” “plan,” “intend,” or similar expressions in this Quarterly Report on Form 10-Q. We intend that such forward-looking statements be subject to the safe harbors created thereby. Examples of these forward-looking statements include, but are not limited to:

· anticipated product developments, regulatory filings and related requirements;

· timing and amount of future contractual payments, product revenue, gross margin and operating expenses;

· evaluation of acquisition and other strategic transactions;

· market acceptance of our products and the estimated potential size of these markets; and

· projections regarding liquidity, capital requirements and the terms of any financing agreements.

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 for the fiscal year ended December 31, 2015 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 for the fiscal year ended December 31, 2015 filed with the SEC.

We were incorporated in Delaware in 1987 under the name Trans Time Medical Products, Inc. In 2002, the Company, then known as Cryomedical Sciences, Inc., and engaged in manufacturing and marketing cryosurgical products, completed a merger with our wholly-owned subsidiary, BioLife Solutions, Inc., which was engaged as a developer and marketer of biopreservation media products for cells and tissues. Following the merger, we changed our name to BioLife Solutions, Inc. We have one majority-owned subsidiary, biologistex CCM, LLC, a Delaware limited liability company.

Our proprietary, clinical grade HypoThermosol® FRS and CryoStor® biopreservation media products are marketed to the regenerative medicine, biobanking and drug discovery markets, including hospital-based stem cell transplant centers, pharmaceutical companies, cord blood and adult stem cell banks, hair transplant centers, and suppliers of cells to the drug discovery, toxicology testing and diagnostic markets. All of our biopreservation media products are serum-free and protein-free, fully defined, and are manufactured under current Good Manufacturing Practices (cGMP) using United States Pharmacopia (USP)/Multicompendial or the highest available grade components.  

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Our patented biopreservation media products are formulated to reduce preservation-induced, delayed-onset cell damage and death. Our platform enabling technology provides our customers significant shelf life extension of biologic source material and final cell products, and also greatly improved post-preservation cell, tissue, and organ viability and function.

The discoveries made by our scientists and consultants relate to how cells, tissues, and organs respond to the stress of hypothermic storage, cryopreservation, and the thawing process. These discoveries enabled the formulation of innovative biopreservation media products that protect biologic material from preservation-related cellular injury, much of which is not apparent immediately after return to normothermic body temperature. Our product formulations have demonstrated notable reduction in apoptotic (programmed) and necrotic (pathologic) cell death mechanisms and are enabling the clinical and commercial development of dozens of innovative regenerative medicine products.

On September 29, 2014, we entered into a limited liability company agreement with SAVSU Technologies, LLC, a Delaware limited liability company, to create a 20-year joint venture for the purpose of acquiring, developing, maintaining, owning, operating, marketing and selling an integrated platform of a cloud-based information service and precision thermal shipping products. The evo™ line is our new line of “smart shippers” designed for the shipment of biologic materials, which must be maintained frozen, at 2-8˚C and/or controlled room temperature temperatures and where near real time monitoring of temperature, location, and payload status information is necessary. A sophisticated electronics package embedded in the evo provides streaming data to the biologistex web-based application; where real time shipment status, history, and reports can be generated. Designed for small volume shipments; it fills a critical need in chain-of-custody scenarios for temperature sensitive shipments of cells, tissues, and other cell based products.

Highlights for the Second Quarter of 2016

· Biopreservation media products revenue was $2.0 million in the second quarter of 2016, an increase of 39% over the same period in 2015. For the first six months of 2016, proprietary products revenue increased 32% as compared to last year. Second quarter revenue growth drivers include 60% higher direct sales to our regenerative medicine customers and 36% higher sales through our distribution network compared to the same period in 2015.

· Gross margin in the second quarter of 2016 was 56%, compared to 55% in the second quarter of 2015. For the first six months of 2016 and 2015, gross margin was 57%. The margin was unchanged due to increase in overhead expense, offset by lower underutilization adjustments.

· Consolidated net loss for the second quarter of 2016 was $1.7 million and net loss attributable to Biolife was $1.4 million or $0.11/share, compared to consolidated net loss of $1.2 million and net loss attributable to Biolife of $1.0 million or $0.08/share in the second quarter of 2015. Consolidated net loss for the six months ended June 30, 2016 was $3.2 million and net loss attributable to Biolife was $2.6 million or $0.21/share, compared to consolidated net loss of $2.3 million and net loss attributable to Biolife of $2.0 million or $0.17/share in the same period in 2015. The increase in the loss is primarily the result of increased headcount and spending related to development activities of our biologistex joint venture.

· MNX Global Logistics will use the biologistex evo Smart Shipper and biologistex cold chain SaaS to offer an enhanced managed logistics service to support ImmunoCellular Therapeutics with Cold Chain Logistics in ICT-107 Phase 3 Clinical Trial in Glioblastoma.

· Named Washington State Manufacturer of the Year, for the small firm category by Seattle Business Magazine.

· Senior management new hires: Chief Financial Officer and Secretary, Roderick de Greef, Vice President of Operations, Karen Foster, and Vice President of Sales, James Mathers.

· Seventy-five new customers were gained in the first half of 2016, with 24 in the high growth regenerative medicine segment.

· Customer Adoption: Management believes that BioLife products are now embedded in over 220 pre-clinical validation projects and human clinical trials for new cell and tissue-based regenerative medicine products and therapies.

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Results of Operations

Our revenue, results of operations and cash balances are likely to fluctuate significantly from quarter-to-quarter. These fluctuations are due to a number of factors, specifically the progress of our customers’ clinical trials, where the pace of enrollment affects customer orders for our products. The majority of our net sales come from a relatively small number of customers and a limited number of market sectors. Each of these sectors is subject to macroeconomic conditions as well as trends and conditions that are sector specific. Any weakness in the market sectors in which our customers are concentrated could affect our business and results of operations.

Comparison of Results of Operations for the Three and Six Month Periods Ended June 30, 2016 and 2015

Percentage comparisons have been omitted within the following table where they are not considered meaningful.

Revenue and Gross Margin

	Three Month Period Ended
	June 30,
	2016			2015			% Change
Revenue:
Core product sales	$	1,989,988		$	1,433,425			39	%
Contract manufacturing services		—			63,334			(100	)%
Total revenue		1,989,988			1,496,759			33	%
Cost of sales		872,835			678,111			29	%
Gross profit	$	1,117,153		$	818,648			36	%
Gross margin %		56	%		55	%

	Six Month Period Ended
	June 30,
	2016			2015			% Change
Revenue:
Core product sales	$	3,842,005		$	2,910,600			32	%
Contract manufacturing services		—			86,881			(100	)%
Total revenue		3,842,005			2,997,481			28	%
Cost of sales		1,643,840			1,296,210			27	%
Gross profit	$	2,198,165		$	1,701,271			29	%
Gross margin %		57	%		57	%

Biopreservation Media Product Sales. Our core products are sold through both direct and indirect channels to customers in the regenerative medicine, biobanking and drug discovery markets. Sales of our core proprietary products in the three and six months ended June 30, 2016 increased 39% and 32%, respectively, compared to the same periods in 2015, due primarily to an increase in selling price per liter sold due to changes in product mix sold and customized biopreservation media formulations. Proprietary revenue growth was driven by a 60% year over year increase from customers in the regenerative medicine segment and 36% increase in our US and international distributors. We expect to see continued growth in adoption and use of our proprietary biopreservation media products, and estimate 20% - 30% growth in core product revenue for the full year over 2015, and nominal revenue from our biologistex product line in the second half of the year.

Contract Manufacturing Services. We had no contract manufacturing revenue in the first and second quarter of 2016. We do not expect to have any contract manufacturing revenue in the near term. In 2015, the contract manufacturing revenue was the result of process validation work performed for one customer and sales of certain raw materials related to this customer.

Cost of Sales. Cost of sales consists of raw materials, labor and overhead expenses. Cost of sales in the three and six months ended June 30, 2016 increased compared to the same periods in 2015 due to increased sales of our proprietary products and overhead costs.

Gross Margin. Gross margin as a percentage of revenue was 56% and 57% in the three and six months ended June 30, 2016, compared to 55% and 57% in the three and six months ended June 30, 2015. For the full year, we expect gross margin to be in the range of 55% to 65% on core biopreservation media products, excluding the impact of any sales from our biologistex product line.

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Revenue Concentration. In the three and six months ended June 30, 2016, we derived approximately 12% and 12% of our product revenue from one customer. In the three and six months ended June 30, 2015, we derived approximately 15% and 10%, respectively, of our product revenue from one customer. No other customer accounted for more than 10% of revenue in the three and six months ended June 30, 2016 or 2015.

Operating Expenses

Our operating expenses for the three and six month periods ended June 30, 2016 and 2015 were:

	Three Month Period Ended
	June 30,
	2016			2015			% Change
Operating Expenses:
Research and development	$	599,031		$	301,334			99	%
Sales and marketing		849,193			642,490			32	%
General and administrative		1,262,818			1,030,701			23	%
Operating Expenses		2,711,042			1,974,525			37	%
% of revenue		136	%		132	%

	Six Month Period Ended
	June 30,
	2016			2015			% Change
Operating Expenses:
Research and development	$	1,103,270		$	623,499			77	%
Sales and marketing		1,583,106			1,142,745			39	%
General and administrative		2,598,110			2,251,406			15	%
Operating Expenses		5,284,486			4,017,650			32	%
% of revenue		138	%		134	%

Research and Development. Research and development expenses consist primarily of salaries and other personnel-related expenses, consulting and other outside services, laboratory supplies, and other costs. We expense all research and development costs as incurred, with the exception of the costs associated with the development of customized internal-use software systems, which are capitalized. Research and development expenses for the three and six months ended June 30, 2016 increased compared to the three and six months ended June 30, 2015, due primarily to expensed costs related to customized internal-use software and costs associated with new media and biologistex product development.

Sales and Marketing. Sales and marketing expenses consist primarily of salaries and other personnel-related expenses, consulting, trade shows and advertising. The increase in the three and six months ended June 30, 2016 compared to the same periods in 2015 was due primarily to higher personnel costs and costs related to marketing activities of our biologistex joint venture

General and Administrative Expenses. General and administrative expenses consist primarily of personnel-related expenses, non-cash stock-based compensation for administrative personnel and members of the board of directors, professional fees, such as accounting and legal, corporate insurance, and in 2015, participation fees to SAVSU related to the biologistex joint venture. The increase in the three and six months ended June 30, 2016 compared to the same periods in 2015 was due primarily to higher personnel costs, including severance expense for two former executives in the first quarter of 2016, and stock-based compensation related to new issuances of options and restricted stock grants in the first quarter of 2016, partially offset by no SAVSU participation fees in 2016.

Other Income (Expenses)

Interest Expense. The interest expense in the three and six months ended June 30, 2016 is due to the note payable related to the credit facility financing arrangement entered into in May 2016.

Amortization of debt discount. The amortization of short-term debt discount in the three and six months ended June 30, 2016 is due to the amortization of the allocated value of the detachable warrants associated with the credit facility financing on arrangement entered into in May 2016.

Write off of deferred financing costs. The write off of deferred financing costs in the three and six months ended June 30, 2016 is due to the write off of deferred capital costs related to Registration Statement on Form S-3 filed with the SEC on January 8, 2016.

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Interest Income. The reduction in interest income in the three and six months ended June 30, 2016 compared to the same period in 2015 is due to the lower average short-term investments balance in 2016 compared to 2015.

Liquidity and Capital Resources

On June 30, 2016, we had $1.3 million in cash and cash equivalents, compared to cash, cash equivalents and short-term investments of $3.8 million at December 31, 2015.

On May 12, 2016, we entered into a $4 million credit facility with our largest shareholder, WAVI Holding AG (“WAVI”), pursuant to which WAVI agreed to make a series of four $1 million advances on June 1, 2016, September 1, 2016, December 1, 2016 and March 1, 2017 (each, an “Advance”). We entered into a promissory note (the “Note”) in favor of WAVI whereby we agreed to pay WAVI the principal amount of all Advances under the Note, plus interest. We also issued WAVI a 5 year warrants to purchase 550,000 shares of common stock at a fixed exercise price of $1.75 per share. The Note is unsecured, carries an annual interest rate of 10% and matures on June 1, 2017. WAVI is not obligated to pay any Advance if an event of default (as defined in the Note) has occurred or is occurring. In addition, if an event of default has occurred, WAVI may, at its option, declare the Note to be immediately due and payable, together with all unpaid interest, without further notice or demand. The Note also provides that we will not permit any liens on our assets, subject to certain exceptions. On June 1, 2016, we received the first $1 million Advance.

We believe the remaining $3 million of Advances, when combined with cash from operations, will be sufficient to reach positive cash flow from operations, which we expect next year. However, our funds from operations may not be sufficient to repay the Note on its maturity date. Accordingly, we may need to obtain additional debt or equity financing or negotiate with WAVI an amendment to the maturity date or terms of the Note prior to the existing maturity date. If we are unable to comply with the terms of the Note as of the date of any Advance, we may need to take such actions of an earlier date. We cannot assure you that we will be successful in doing so on favorable terms, or at all. See Part II, Item 1.A. Risk Factors.

We are continuously monitoring and evaluating opportunities to strengthen our balance sheet and competitive position over the long term. These actions may include acquisitions or other strategic transactions that we believe would generate significant advantages and substantially strengthen our business. The consideration we pay in such transactions may include, among other things, shares of our common stock, other equity or debt securities of our Company or cash. We may elect to seek debt or equity financing in anticipation of, or in connection with, such transactions or to fund or invest in any operations acquired thereby.

Net Cash Used In Operating Activities

During the six months ended June 30, 2016, net cash used in operating activities was $2.8 million compared to $2.5 million for the six months ended June 30, 2015. Cash used in operating activities increased primarily due to the use of cash to fund a higher net loss and cash used by changes in operating assets and liabilities during the period ended June 30, 2016 compared to the same period in 2015.

Net Cash Provided by Investing Activities

Net cash provided by investing activities totaled $0.9 million during the six months ended June 30, 2016, compared to $3.8 million for the six months ended June 30, 2015 which was the result of sales and maturities of short term investments, net of purchases of equipment and costs associated with internal use software development.

Net Cash Provided by Financing Activities

Net cash provided by financing activities was $1.1 million and $80,000 in the six months ended June 30, 2016 and 2015, respectively. Net cash provided by financing activities during the six months ended June 30, 2016 was the result of proceeds received from our credit facility and employee stock option exercises net of cash payments related to the filing of the Registration Statement on Form S-3. Net cash provided by financing activities in the six months ended June 30, 2015 was the result of proceeds received from employee stock option exercises.

Off-Balance Sheet Arrangements

As of June 30, 2016, we did not have any off-balance sheet arrangements.

Critical Accounting Policies and Significant Judgments and Estimates

Management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements as well as reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate estimates, including, but not limited to those related to accounts receivable allowances, determination of fair value of share-based compensation, contingencies, income taxes, useful lives and impairment of intangible assets and internal use software, and expense accruals. We base our estimates on historical experience and on other factors that we believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.

Our critical accounting policies and estimates have not changed significantly from those policies and estimates disclosed under the heading “Critical Accounting Policies and Significant Judgments and Estimates” in Part II, Item 7, “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed with the SEC.

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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, 2015, as filed with the SEC on February 25, 2016. There have been no significant changes to these obligations in the six months ended June 30, 2016. For more information regarding our current contingencies and commitments, see note 9 to the consolidated financial statements included above.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in our periodic reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to ensure that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer as appropriate, to allow timely decisions regarding required disclosure. During the quarter ended June 30, 2016, we carried out an evaluation, under the supervision and with the participation of our management, including the chief executive officer and chief financial officer, as required by the rules and regulations under the Exchange Act, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our chief executive officer and chief financial officer concluded that, as of June 30, 2016, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting. There have been no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2016 that have materially affected or are 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 over financial reporting will prevent all errors 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 our Company have been detected.

PART II: Other Information

Item 1.A. Risk Factors

We anticipate the need to obtain additional equity or debt financing or negotiate with WAVI an amendment to the maturity date or terms of the Note, which we may not obtain on favorable terms, or at all.

We believe the remaining $3 million of Advances when combined with cash from operations, will be sufficient to reach positive cash flow from operations, which we expect next year. However, we cannot assure you that we will receive the remaining Advances, or that our funds will be sufficient for this period. Our funds from operations may not be sufficient to pay the Note on its current maturity date. Accordingly, we expect we may need to obtain additional debt or equity financing or negotiate with WAVI an amendment to the maturity date or terms of the Note prior to the existing maturity date. Any new equity financing, including any equity issued in connection with debt financings or amendments, may dilute our existing shareholders and may adversely affect our stock price. If we are unable to comply with the terms of the Note, obtain any required financing or comply with any amendment to the Note, our business and financial condition may be adversely affected.

Item 2. Unregistered Sales of Equity Securities

On May 12, 2016, in partial consideration for entry into the credit facility agreement with WAVI, we issued a common stock purchase warrant to purchase 550,000 shares of common stock at a fixed exercise price of $1.75 per share. That warrant expires on May 12, 2021. The issuance was made pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended, provided by Regulation S thereunder. At the time WAVI was offered the warrant and at the time WAVI executed and delivered the credit facility agreement and related documentation, WAVI was outside the United States, and WAVI is not a “U.S. person” (as defined in Regulation S).

Item 6. Exhibits

See accompanying Index to Exhibits included after the signature page of this report for a list of exhibits filed or furnished with this report.

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SIGNATURES

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

	BIOLIFE SOLUTIONS, INC.
Dated: August 11, 2016	/s/ Roderick de Greef
	Roderick de Greef
	Chief Financial Officer
	(Duly authorized officer and principal financial and accounting officer)

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BioLife Solutions, Inc.

INDEX TO EXHIBITS

Exhibit No.	Description
10.1	Employment Agreement dated June 3, 2016 between the Company and James Mathers
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

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EX-10.1

Exhibit 10.1

EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is made between BioLife Solutions Inc., a Delaware corporation (“Employer” or the “Company”), and Jim Mathers (“Executive”). Executive and the Company are sometimes referred to herein as the “Parties.” The effective date is June 3, 2016, the Executive’s first day of employment with the Company.

RECITALS

A.Employer is in the business (the “Business”) of manufacturing and marketing proprietary biopreservation media and cold chain products for cells, tissues, and organs.

B.Employer desires to obtain the services of Executive, in which capacity Executive has access to Employer’s Confidential Information (as hereinafter defined), and to obtain assurance that Executive will protect Employer’s Confidential Information and will not compete with Employer or solicit its customers or its other employees during the term of employment and for a reasonable period of time after termination of employment pursuant to this Agreement, and Executive is willing to agree to these terms.

C.Executive desires to be assured of the salary and other benefits provided for in this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties agree as follows:

1.Employment.

(a)Employer hereby employs Executive, and Executive agrees to be employed as Vice President, Sales (“V.P. Sales”), in accordance with the terms and conditions set forth in this Agreement. Changes may be made from time to time by Employer and/or the Board in its sole discretion to the duties, authorities, reporting relationships and title of Executive.

(b)Executive will devote full time, attention, and best efforts to achieving the purposes and discharging the responsibilities of the V.P. Sales. Executive will comply with all rules, policies and procedures of Employer as modified from time to time, including without limitation, rules and procedures set forth in the Employer’s employee handbook, supervisor’s manuals and operating manuals. Executive will perform all of Executive’s responsibilities in compliance with all applicable laws and will ensure that the operations that Executive manages are in compliance with all applicable laws. During Executive’s employment, Executive will not engage in any other business activity which, in the reasonable judgment of the Employer, conflicts with the duties of Executive under this Agreement, whether or not such activity is pursued for gain, profit or other pecuniary advantage.

(c)Nothing herein shall preclude Executive from: (1) continuing to serve on the board of directors or trustees of any business corporation or any charitable organization on which he currently serves and which is identified on Exhibit A hereto, or (2) subject to the prior approval of the Board, appointment to any additional directorships or trusteeships, or (3) serving in an advisory role for other business entities, provided in each case, and in the aggregate, that such activities do not interfere with the performance of Executive’s duties hereunder or conflict with Section 9 of this Agreement.

2.Term of Employment. The term of employment (“Term”) will not be for a definite period, but rather continue indefinitely until terminated in accordance with the terms and conditions of this Agreement.

3.Compensation. For the duration of Executive’s employment hereunder, the Executive will be entitled to compensation which will be computed and paid pursuant to the following subparagraphs.

(a)Base Salary. Employer will pay to Executive a base salary (“Base Salary”) at an annual rate of two hundred thousand Dollars ($200,000), payable in such installments (but in no event less than monthly), subject to withholdings and deductions as required or permitted by law, as is Employer’s policy with respect to other employees. Executive’s Base Salary will be reviewed periodically by the Board of Directors of Employer during the term of Executive’s employment and may be adjusted in the sole discretion of the Board of Directors based on such review, but will not be reduced by Employer unless a material adverse change in the financial condition or operations of Employer has occurred or unless Executive’s responsibilities are altered to reflect less responsibility.

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(b)Commissions on Net Revenue. On a monthly basis, Employer will pay Executive commissions, subject to withholdings and deductions as required or permitted by law, as follows:

1. Biopreservation media products: 0.25% of net revenue for the preceding month

2. StorGanix organ preservation solution: 0.25% of net revenue for the preceding month

3. Biologistex SaaS: 1.0% of net subscription revenue for the preceding month

4.Other Benefits.

(a)Certain Benefits. Executive will be eligible to participate in all employee benefit programs established by Employer that are applicable to management personnel such as medical, pension, disability and life insurance plans on a basis commensurate with Executive’s position and in accordance with Employer’s policies from time to time, but nothing herein shall require the adoption or maintenance of any such plan.

(b)Vacations, Holidays and Expenses. Executive will be provided accrued paid vacation of three (3) weeks each calendar year, which shall be the maximum number of days Executive may accrue at any time, and which shall be taken at such times as are consistent with Executive’s responsibilities hereunder. Executive will be provided such holidays and vacation as Executive makes available to its management level employees generally. Employer will reimburse Executive in accordance with company policies and procedures for reasonable expenses necessarily incurred in the performance of duties hereunder against appropriate receipts and vouchers indicating the specific business purpose for each such expenditure. In no case shall any reimbursement be made later than December 31 of the year following the calendar year in which such expense is incurred.

(c)Right of Set-off. By accepting this Agreement, Executive consents to a deduction from any amounts Employer owes Executive from time to time (including amounts owed to Executive as wages or other compensation, fringe benefits, or vacation pay, as well as any other amounts owed to Executive by Employer), to the extent of the amounts Executive owes to Employer. Whether or not Employer elects to make any set-off in whole or in part, if Employer does not recover by means of set-off the full amount Executive owes it, calculated as set forth above, Executive agrees to pay immediately the unpaid balance to Employer.

5.Termination Or Discharge By Employer.

(a)For Cause. Employer will have the right to immediately terminate Executive’s services and this Agreement for Cause. “Cause” means the Employer’s belief that any of the following has occurred:

(i)any breach of this Agreement by Executive, including, without limitation, breach of Executive’s covenants in Sections 9, 10, 11 and 12;

(ii)any failure to perform assigned job responsibilities that continues unremedied for a period of ten (10) days after written notice to Executive by Employer;

(iii)Executive’s malfeasance or misconduct in connection with Executive’s duties hereunder or any act or omission of Executive which is materially injurious to the financial condition or business reputation of the Company or any of its subsidiaries or affiliates,

(iv)commission of a felony or misdemeanor or failure to contest prosecution for a felony or misdemeanor;

(v)the Employer’s reasonable belief that Executive engaged in a violation of any statute, rule or regulation, any of which in the judgment of Employer is harmful to the Business or to Employer’s reputation;

(vi)the Employer’s reasonable belief that Executive engaged in unethical practices, dishonesty or disloyalty;

(vii)or any reason that would constitute Cause under the laws the State of Washington.

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Upon termination of Executive’s employment hereunder for Cause, the Company shall pay the Executive no later than fourteen (14) days from the termination date in a lump sum: (i) his salary through the date of termination, (ii) for any unused vacation time, and (iii) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses. Executive will have no rights to any unvested benefits or any other compensation or payments after the termination date.

(b)Due to Death or Disability. Employer will have the right to immediately terminate Executive’s services and this Agreement due to death or disability. For purposes of this Agreement, “disability” means the incapacity or inability of Executive, whether due to accident, sickness or otherwise, as determined by a medical doctor acceptable to the Board of Directors of Employer and confirmed in writing by such doctor, to perform the essential functions of Executive’s position under this Agreement, with or without reasonable accommodation (provided that no accommodation that imposes undue hardship on Employer will be required) for a period of sixty (60) consecutive days or for an aggregate of ninety (90) days during any period of twelve (12) months, or such longer period as may be required under disability law.

Upon termination of Executive’s employment hereunder due to death or disability, the Company shall pay the Executive no later than fourteen (14) days from the termination date in a lump sum: (i) his salary through the date of termination, (ii) for any unused vacation time, and (iii) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses. Upon termination of Executive’s employment hereunder due to death or disability, Executive or Executive’s estate (as the case may be) shall be entitled to receive any vested benefits required to be paid by law and any vested compensation required to be paid by law. Executive and Executive’s estate will have no rights to any unvested benefits or any other compensation or payments after the termination date.

(c)Without Cause. Employer may terminate Executive’s employment under this Agreement without cause and without advance notice; provided, however, that Employer will pay (unless subparagraph 5(d) of this Agreement applies, in which case the provisions therein shall govern), no later than sixty (60) days from the termination date in a lump sum:

(i) (i) his salary through the date of termination, (ii) for any unused vacation time, and (iii) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses.

(ii) severance pay of three (3) months’ worth of Executive’s salary at the rate in effect on the termination date.

Such payments will be subject to all appropriate deductions and withholdings. Upon termination, Executive will have no rights to any unvested benefits or any other compensation.

Executive shall only be entitled to such severance pay if, within thirty (30) days following the date of termination, both Employer and Executive have signed (and then Executive does not rescind, as may be permitted by law) a mutual general release of claims in a form mutually acceptable to both parties (provided, however, that such release of claims shall only require each party to release the other party from claims relating directly to Executive’s employment and the termination thereof, and shall not require Executive to release claims relating to vested employee benefits or relating to other matters, including, but not limited to, claims relating to his status as a shareholder of the Company.

(d)Change in Control.

(i)For purposes of this Agreement, Change in Control shall mean (i) the consummation of a merger or consolidation of the Company with or into another entity, (ii) the dissolution, liquidation or winding up of the Company or (iii) the sale of all or substantially all of the Company's assets. The foregoing notwithstanding, a merger or consolidation of the Company shall not constitute a "Change in Control" if immediately after such merger or consolidation a majority of the voting power of the capital stock of the continuing or surviving entity, or any direct or indirect parent corporation of such continuing or surviving entity, will be owned by the persons who were the Company's stockholders immediately prior to such merger or consolidation in substantially the same proportions as their ownership of the voting power of the Company's capital stock immediately prior to such merger or consolidation.

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(ii)Employer may terminate Executive’s employment under this Agreement upon or within 90 days following a Change in Control without advance notice; provided, however, that Employer will pay, no later than sixty (60) days from the termination date in a lump sum:

(1)(i) his salary through the date of termination, (ii) for any unused vacation time, and (iii) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses.

(2) as severance pay, three (3) months’ worth of Executive’s salary at the rate in effect on the termination date.

Such payments will be subject to all appropriate deductions and withholdings. Upon termination, Executive will have no rights to any unvested benefits or any other compensation.

(iii)Executive shall only be entitled to such severance pay if, within thirty (30) days following the date of termination, both Employer and Executive have signed (and then Executive does not rescind, as may be permitted by law) a mutual general release of claims in a form mutually acceptable to both parties (provided, however, that such release of claims shall only require each party to release the other party from claims relating directly to Executive’s employment and the termination thereof, and shall not require Executive to release claims relating to vested employee benefits or relating to other matters, including, but not limited to, claims relating to his status as a shareholder of the Company.

6.No Fault Termination By Executive. Executive may terminate Executive’s employment under this Agreement for any reason provided that Executive gives Employer at least ninety (90) days’ notice in writing. Employer may, at its option, accelerate such termination date to any date at least two weeks after Executive’s notice of termination. Employer may also, at its option, relieve Executive of all duties and authority after notice of termination has been provided. All compensation, payments and unvested benefits will cease on the termination date. Employer will pay Executive (i) Executive’s salary through the date of termination, (ii) for any unused vacation time, and (iii) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses.

7.Termination By Executive for Good Reason. Executive’s employment pursuant to this Agreement shall terminate in the event Executive shall determine that there is “Good Reason” to terminate his employment, which shall mean the following:

(a) Employer’s material breach of the terms of this Agreement or any other written agreement between Executive and Employer;

(b) a material reduction of Executive’s salary, other than as a result of a general salary reduction affecting substantially all Company employees;

(c) any failure by the Company to obtain the assumption of this Agreement by any successor or assign of the Company; or

Provided that Executive has provided with notice of the existence of a condition giving rise to “Good Reason” to terminate within ninety (90) days following the initial existence of such a condition, Employer shall have thirty (30) days to cure any such alleged breach, assignment, reduction or requirement referenced above, after Executive provides Employer written notice of the actions or omissions constituting such breach, assignment, reduction or requirement.

If Executive resigns his employment for Good Reason, Executive shall be paid no later than sixty (60) days from the termination date in a lump sum:

a. (i) his salary through the date of termination, (ii) for any unused vacation time, and (iii) for any unreimbursed business expenses that are subject to reimbursement under Employer’s then current policy on business expenses.

b. severance pay of three (3) months’ worth of Executive’s salary at the rate in effect on the termination date.

Such payments will be subject to all appropriate deductions and withholdings. Upon termination, Executive will have no rights to any unvested benefits or any other compensation.

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Executive shall only be entitled to such severance pay if, within thirty (30) days following the date of termination, both Employer and Executive have signed (and then Executive does not rescind, as may be permitted by law) a mutual general release of claims in a form mutually acceptable to both parties (provided, however, that such release of claims shall only require each party to release the other party from claims relating directly to Executive’s employment and the termination thereof, and shall not require Executive to release claims relating to vested employee benefits or relating to other matters, including, but not limited to, claims relating to his status as a shareholder of the Company.

8.Return of Company Property. Upon termination of this Agreement or upon request of the Company, Executive shall deliver to the Corporation all property, documents and materials pertaining to the Company’s business including, but not limited to, memoranda, notes, records, drawings, manuals, disks, copies, representations, extracts, summaries and analyses, all inventory, demonstration units, and any other property, documents or media of the Corporation, and all equipment belonging to the company, including but not limited to corporate cards, access cards, office keys, office equipment, laptop and desktop computers, cell phones and other wireless devices, thumb drives, zip drives and all other media storage devices.

9.Covenant Not To Compete. During Executive’s employment by Employer and for a period expiring one (1) year after the termination of Executive’s employment for any reason, Executive covenants and agrees that Executive will not:

(a)Directly, indirectly, or otherwise, own, manage, operate, control, serve as a consultant to, be employed by, participate in, or be connected, in any manner, with the ownership, management, operation or control of any business that competes with the Business or that competes with Employer or any of its affiliates or that is engaged in any type of business which, at any time during Executive’s employment with Employer, Employer or any of its affiliates planned to develop;

(b)Hire, offer to hire, entice away or in any other manner persuade or attempt to persuade any officer, employee or agent of Employer or any of its affiliates to alter or discontinue a relationship with Employer or to do any act that is inconsistent with the interests of Employer or any of its affiliates;

(c)Directly or indirectly solicit, divert, take away or attempt to solicit, divert or take away any customers of Employer or any of its affiliates; or

(d)Directly or indirectly solicit, divert, or in any other manner persuade or attempt to persuade any supplier of Employer or any of its affiliates to alter or discontinue its relationship with Employer or any of its affiliates.

For the purposes of this Section 9, businesses that are deemed to compete with Employer include, without limitation, businesses engaged in manufacturing and marketing biopreservation media for cells, tissues, and organs or cold chain management products and/or services. The geographic scope of the prohibitions in this Section 9 shall be any city, town or county in which the Company conducts or does any business as of or within one (1) year of Executive’s last day of employment with the Company. Notwithstanding Executive’s obligations under this Section 9, Executive will be entitled to own, as a passive investor, up to five percent (5%) of any publicly traded company without violating this provision.

Employer and Executive agree that: this provision does not impose an undue hardship on Executive and is not injurious to the public; that this provision is necessary to protect the business of Employer and its affiliates; the nature of Executive’s responsibilities with Employer under this Agreement require Executive to have access to confidential information which is valuable and confidential to all of the Business; the scope of this Section 9 is reasonable in terms of length of time and geographic scope; and adequate consideration supports this Section 9, including consideration herein.

10.Confidential Information. Executive recognizes that Employer’s business and continued success depend upon the use and protection of confidential and proprietary business information, including, without limitation, the information and technology developed by or available through licenses to Employer, to which Executive has access (all such information being “Confidential Information”). For purposes of this Agreement, the phrase “Confidential Information” includes, for Employer and its current or future subsidiaries and affiliates, without limitation, and whether or not specifically designated as confidential or proprietary: all business plans and marketing strategies; information concerning existing and prospective markets and customers; financial information; information concerning the development of new products and services; information concerning any personnel of Employer (including, without limitation, skills and compensation information); intellectual property; and technical and non-technical data related to software programs, designs, specifications, compilations, inventions, improvements, methods, processes, procedures and techniques; provided, however, that the phrase does not include information that (a) was lawfully in Executive’s possession prior to disclosure of such information by Employer; (b) was, or at any time becomes, available in the public domain other than through a violation of this Agreement; (c) is documented by Executive as having been developed by Executive outside the scope of Executive’s employment and independently; or (d) is furnished to Executive by a third party not under an obligation of confidentiality to Employer. Executive agrees that during Executive’s employment and after termination of employment irrespective of cause, Executive will use Confidential Information only (i) while employed by the Company, in the business of and for the benefit of the Company, or (ii) when required to do so by a court of competent jurisdiction, by any governmental agency having supervisory authority over the business of the Company, or by any administrative body or legislative body (including a committee thereof) with jurisdiction to order Executive to divulge, disclose or make accessible such information, and then only after providing written notice to Employer that such a demand has been made. Executive’s obligation under this Agreement is in addition to any obligations Executive has under state or federal law. Executive agrees to deliver to Employer immediately upon termination of Executive’s employment, or at any time Employer so requests, all tangible items containing any Confidential Information (including, without limitation, all memoranda, photographs, records, reports, manuals, drawings, blueprints, prototypes, notes taken by or provided to Executive, and any other documents or items of a confidential nature belonging to Employer), together with all copies of such material in Executive’s possession or control. Executive agrees that in the course of Executive’s employment with Employer, Executive will not violate in any way the rights that any entity has with regard to trade secrets or proprietary or confidential information. Executive’s obligations under this Section 10 are indefinite in term and shall survive the termination of this Agreement.

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11.Work Product and Copyrights. Executive agrees that all right, title and interest in and to the materials resulting from the performance of Executive’s duties at Employer and all copies thereof, including works in progress, in whatever media, (the “Work”), will be and remain in Employer upon their creation. Executive will mark all Work with Employer’s copyright or other proprietary notice as directed by Employer. Executive further agrees:

(a)To the extent that any portion of the Work constitutes a work protectable under the copyright laws of the United States (the “Copyright Law”), that all such Work will be considered a “work made for hire” as such term is used and defined in the Copyright Law, and that Employer will be considered the “author” of such portion of the Work and the sole and exclusive owner throughout the world of copyright therein; and

(b)If any portion of the Work does not qualify as a “work made for hire” as such term is used and defined in the Copyright Law, that Executive hereby assigns and agrees to assign to Employer, without further consideration, all right, title and interest in and to such Work or in any such portion thereof and any copyright therein and further agrees to execute and deliver to Employer, upon request, appropriate assignments of such Work and copyright therein and such other documents and instruments as Employer may request to fully and completely assign such Work and copyright therein to Employer, its successors or nominees, and that Executive hereby appoints Employer as attorney-in-fact to execute and deliver any such documents on Executive’s behalf in the event Executive should fail or refuse to do so within a reasonable period following Employer’s request.

12.Inventions and Patents. For purposes of this Agreement, “Inventions” includes, without limitation, information, inventions, contributions, improvements, ideas, or discoveries, whether protectable or not, and whether or not conceived or made during work hours. Executive agrees that all Inventions conceived or made by Executive during the period of employment with Employer belong to Employer, provided they grow out of Executive’s work with Employer or are related in some manner to the Business, including, without limitation, research and product development, and projected business of Employer or its affiliated companies. Accordingly, Executive will:

(a)Make adequate written records of such Inventions, which records will be Employer’s property;

(b)Assign to Employer, at its request, any rights Executive may have to such Inventions for the U.S. and all foreign countries;

(c)Waive and agree not to assert any moral rights Executive may have or acquire in any Inventions and agree to provide written waivers from time to time as requested by Employer; and

(d)Assist Employer (at Employer’s expense) in obtaining and maintaining patents or copyright registrations with respect to such Inventions.

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Executive understands and agrees that Employer or its designee will determine, in its sole and absolute discretion, whether an application for patent will be filed on any Invention that is the exclusive property of Employer, as set forth above, and whether such an application will be abandoned prior to issuance of a patent. Employer will pay to Executive, either during or after the term of this Agreement, the following amounts if Executive is sole inventor, or Executive’s proportionate share if Executive is joint inventor: $750 upon filing of the initial application for patent on such Invention; and $1,500 upon issuance of a patent resulting from such initial patent application, provided Executive is named as an inventor in the patent.

Executive further agrees that Executive will promptly disclose in writing to Employer during the term of Executive’s employment and for one (1) year thereafter, all Inventions whether developed during the time of such employment or thereafter (whether or not Employer has rights in such Inventions) so that Executive’s rights and Employer’s rights in such Inventions can be determined. Except as set forth on the initialed Exhibit B (List of Inventions) to this Agreement, if any, Executive represents and warrants that Executive has no Inventions, software, writings or other works of authorship useful to Employer in the normal course of the Business, which were conceived, made or written prior to the date of this Agreement and which are excluded from the operation of this Agreement.

NOTICE: In accordance with Washington law, this Section 12 does not apply to Inventions for which no equipment, supplies, facility, or trade secret information of Employer was used and which was developed entirely on Executive’s own time, unless: (a) the Invention relates (i) directly to the business of Employer or (ii) to Employer’s actual or demonstrably anticipated research or development, or (b) the Invention results from any work performed by Executive for Employer.

13.Remedies. Notwithstanding other provisions of this Agreement regarding dispute resolution, Executive agrees that Executive’s violation of any of Sections 9, 10, 11 or 12 of this Agreement would cause Employer irreparable harm which would not be adequately compensated by monetary damages and that an injunction may be granted by any court or courts having jurisdiction, restraining Executive from violation of the terms of this Agreement, upon any breach or threatened breach of Executive of the obligations set forth in any of Sections 9, 10, 11 or 12. The preceding sentence shall not be construed to limit Employer from any other relief or damages to which it may be entitled as a result of Executive’s breach of any provision of this Agreement, including Sections 9, 10, 11 or 12. Executive also agrees that a violation of any of Sections 9, 10, 11 or 12 would entitle Employer, in addition to all other remedies available at law or equity, to recover from Executive any and all funds, including, without limitation, wages, salary and profits, which will be held by Executive in constructive trust for Employer, received by Executive in connection with such violation.

14.Dispute Resolution. Except for the right of Employer and Executive to seek injunctive relief in court, any controversy, claim or dispute of any type arising out of or relating to Executive’s employment or the provisions of this Agreement shall be resolved in accordance with this Section 14 regarding resolution of disputes, which will be the sole and exclusive procedure for the resolution of any disputes. This Agreement shall be enforced in accordance with the Federal Arbitration Act, the enforcement provisions of which are incorporated by this reference. Matters subject to these provisions include, without limitation, claims or disputes based on statute, contract, common law and tort and will include, for example, matters pertaining to termination, discrimination, harassment, compensation and benefits. Matters to be resolved under these procedures also include claims and disputes arising out of statutes such as the Fair Labor Standards Act, Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Washington Minimum Wage Act, and the Washington Law Against Discrimination. Nothing in this provision is intended to restrict Executive from submitting any matter to an administrative agency with jurisdiction over such matter.

(a)Mediation. Employer and Executive will make a good faith attempt to resolve any and all claims and disputes by submitting them to mediation in Snohomish County, Washington before resorting to arbitration or any other dispute resolution procedure. The mediation of any claim or dispute must be conducted in accordance with the then-current JAMS procedures for the resolution of employment disputes by mediation, by a mediator who has had both training and experience as a mediator of general employment and commercial matters. If the parties to this Agreement cannot agree on a mediator, then the mediator will be selected by JAMS in accordance with JAMS’ strike list method. Within thirty (30) days after the selection of the mediator, Employer and Executive and their respective attorneys will meet with the mediator for one mediation session of at least four hours. If the claim or dispute cannot be settled during such mediation session or mutually agreed continuation of the session, either Employer or Executive may give the mediator and the other party to the claim or dispute written notice declaring the end of the mediation process. All discussions connected with this mediation provision will be confidential and treated as compromise and settlement discussions. Nothing disclosed in such discussions, which is not independently discoverable, may be used for any purpose in any later proceeding. The mediator’s fees will be paid in equal portions by Employer and Executive, unless Employer agrees to pay all such fees.

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(b)Arbitration. If any claim or dispute has not been resolved in accordance with Section a, then the claim or dispute will be determined by arbitration in accordance with the then-current JAMS employment arbitration rules and procedures, except as modified herein. The arbitration will be conducted by a sole neutral arbitrator who has had both training and experience as an arbitrator of general employment and commercial matters and who is and for at least ten (10) years has been, a partner, a shareholder, or a member in a law firm. The arbitration shall be held in Snohomish County, Washington. If Employer and Executive cannot agree on an arbitrator, then the arbitrator will be selected by JAMS in accordance with Rule 15 of the JAMS employment arbitration rules and procedures. No person who has served as a mediator under the mediation provision, however, may be selected as the arbitrator for the same claim or dispute. Reasonable discovery will be permitted and the arbitrator may decide any issue as to discovery. The arbitrator may decide any issue as to whether or as to the extent to which any dispute is subject to the dispute resolution provisions in Section 14 and the arbitrator may award any relief permitted by law. The arbitrator must base the arbitration award on the provisions of Section 14 and applicable law and must render the award in writing, including an explanation of the reasons for the award. Judgment upon the award may be entered by any court having jurisdiction of the matter, and the decision of the arbitrator will be final and binding. The statute of limitations applicable to the commencement of a lawsuit will apply to the commencement of an arbitration under Section b. The arbitrator’s fees will be paid in equal portions by Employer and Executive, unless Employer agrees to pay all such fees.

15.Fees Related to Dispute Resolution. Unless otherwise agreed, the prevailing party will be entitled to its costs and attorneys’ fees incurred in any litigation or dispute relating to the interpretation or enforcement of this Agreement.

16.409A. It is intended that any payment or benefit that is provided pursuant to or in connection with this Agreement that is considered to be deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as amended (“Code”) shall be paid and provided in a manner, and at such time and form, as complies with the applicable requirements of Section 409A of the Code to avoid the unfavorable tax consequences provided therein for non-compliance. It is further intended that the payments hereunder shall, to the maximum extent permissible under Section 409A of the Code, be exempt from Section 409A of the Code under either (i) the exception for involuntary separation pay to the extent that all payments are payable within the limitations described in Treasury Regulation Section 1.409A-1(b)(9), or (ii) the short-term deferral exception described in Treasury Regulation Section 1.409A-1(b)(4) to the extent that all payments are payable no later than two and a half months after the end of the first taxable year in which the right to the payment is no longer subject to a substantial risk of forfeiture.

(a)If the Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code at such time, any payments to be made or benefits to be delivered in connection with the Executive’s “Separation from Service” (as defined below) that constitute deferred compensation subject to Section 409A of the Code shall not be made until the later of (i) eighteen months following the Effective Date or (ii) six months plus one day after the Executive’s Separation from Service (the “409A Deferral Period”) as required by Section 409A of the Code, provided that the payment of any such deferred compensation may be paid immediately following the Executive’s death. Payments of any such deferred compensation otherwise due to be made in installments or periodically during the 409A Deferral Period shall be accumulated and paid in a lump sum as soon as the 409A Deferral Period ends, and the balance of the payment shall be made as otherwise scheduled.

(b)For purposes of this Agreement, all rights to payments and benefits hereunder shall be treated as rights to receive a series of separate payments and benefits to the fullest extent allowed by Section 409A of the Code.

(c)For purposes of this Agreement, with respect to the timing of any amounts that constitute deferred compensation subject to Section 409A of the Code that depends on termination of employment or separation from service, termination of employment or separation from service shall mean a “separation from service” within the meaning of Section 409A of the Code where it is reasonably anticipated that no further services would be performed after such date or that the level of bona fide services the Executive would perform after that date (whether as an employee or independent contractor) would permanently decrease to a level less than or equal to twenty percent (20%) of the average level of bona fide services the Executive performed over the immediately preceding thirty-six (36) month period.

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17.Disclosure. Executive agrees fully and completely to reveal the terms of this Agreement to any future employer or potential employer of Executive and authorizes Employer, at its election, to make such disclosure.

18.Representation of Executive. Executive represents and warrants to Employer that Executive is free to enter into this Agreement and has no contract, commitment, arrangement or understanding to or with any party that restrains or is in conflict with Executive’s performance of the covenants, services and duties provided for in this Agreement, and is not contravene the terms of any statute, law, or regulation to which Executive is subject. Executive agrees to indemnify Employer and to hold it harmless against any and all liabilities or claims arising out of any unauthorized act or acts by Executive that, the foregoing representation and warranty to the contrary notwithstanding, are in violation, or constitute a breach, of any such contract, commitment, arrangement or understanding.

19.Conditions of Employment. Employer’s obligations to Executive under this Agreement are conditioned upon Executive’s timely compliance with requirements of the United States immigration laws.

20.Assignability. This Agreement shall not be assignable by Executive. This Agreement may be assigned by the Company to a company which is a successor in interest to substantially all of the business operations of the Company. Such assignment shall become effective when the Company notifies the Executive of such assignment or at such later date as may be specified in such notice. Upon such assignment, the rights and obligations of the Company hereunder shall become the rights and obligations of such successor company, provided that any assignee expressly assumes the obligations, rights and privileges of this Agreement.

21.Notices. Any notices required or permitted to be given hereunder are sufficient if in writing and delivered by hand, by facsimile, by registered or certified mail, postage prepaid, or by overnight courier, to Executive at Executive’s home address as most recently updated in Executive’s Human Resources records, or to BioLife Solutions, Inc., 3303 Monte Villa Parkway, #310, Bothell, WA 98021, Attention: Chief Executive Officer. Notices shall be deemed to have been given (i) upon delivery, if delivered by hand or by email, (ii) seven days after mailing, if mailed, (iii) one business day after delivery, if delivered by courier, and (iv) one business day following receipt of an appropriate electronic confirmation, if by facsimile.

22.Severability. If any provision of this Agreement or compliance by any of the parties with any provision of this Agreement constitutes a violation of any law, or is or becomes unenforceable or void, then such provision, to the extent only that it is in violation of law, unenforceable or void, shall be deemed modified to the extent necessary so that it is no longer in violation of law, unenforceable or void, and such provision will be enforced to the fullest extent permitted by law. The Parties shall engage in good faith negotiations to modify and replace any provision which is declared invalid or unenforceable with a valid and enforceable provision, the economic effect of which comes as close as possible to that of the invalid or unenforceable provision which it replaces. If such modification is not possible, said provision, to the extent that it is in violation of law, unenforceable or void, shall be deemed severable from the remaining provisions of this Agreement, which provisions will remain binding on the parties.

23.Waivers. No failure on the part of either party to exercise, and no delay in exercising, any right or remedy hereunder will operate as a waiver thereof; nor will any single or partial waiver of a breach of any provision of this Agreement operate or be construed as a waiver of any subsequent breach; nor will any single or partial exercise of any right or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right or remedy granted hereby or by law.

24.Governing Law. Except as provided in Section 14 above, the validity, construction and performance of this Agreement shall be governed by the laws of the State of Washington without regard to the conflicts of law provisions of such laws. The parties hereto expressly recognize and agree that the implementation of this Section 24 is essential in light of the fact that Employer has its corporate headquarters and its principal executive offices within the State of Washington, and there is a critical need for uniformity in the interpretation and enforcement of the employment agreements between Employer and its key employees. The Snohomish County Superior Court in Washington shall have exclusive jurisdiction of any lawsuit arising from or relating to Executive’s employment with, or termination from, Employer, or arising from or relating to this Agreement. Executive consents to such venue and personal jurisdiction.

25.Counterparts. This agreement may be executed in counterpart in different places, at different times and on different dates, and in that case all executed counterparts taken together collectively constitute a single binding agreement.

 9

26.Costs and Fees Related to Negotiation and Execution of Agreement. Each Party Shall be responsible for the payment of its own costs and expenses, including legal fees and expenses, in connection with the negotiation and execution of this Agreement. Neither Party will be liable for the payment of any commissions or compensation in the nature of finders' fees or brokers' fees, gratuity or other similar thing or amount in consideration of the other Party entering into this Agreement to any broker, agent or third party acting on behalf of the other Party.

27.Entire Agreement. This instrument contains the entire agreement of the parties with respect to the relationship between Executive and Employer and supersedes all prior agreements and understandings, and there are no other representations or agreements other than as stated in this Agreement related to the terms and conditions of Executive’s employment. This Agreement may be changed only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought, and any such modification will be signed by an authorized representative of Employer.

 10

IN WITNESS WHEREOF, the parties have duly signed and delivered this Agreement as of the day and year first above written.

EMPLOYER
By	/s/ Michael Rice
Title:	Chief Executive Officer
EXECUTIVE
/s/ James Mathers
Jim Mathers

 11

EXHIBIT A

DISCLOSURE OF OUTSIDE BOARD OF DIRECTORS AND TRUSTEE POSITIONS

 12

EXHIBIT B

LIST OF INVENTIONS

 13

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

RULE 13a-14(a) or RULE 13d-14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934

I, Michael Rice, certify that:

1. I have reviewed this quarterly report on Form 10-Q of BioLife Solutions, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2016

/s/ Michael Rice

Michael Rice

Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

RULE 13a-14(a) or RULE 13d-14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934

I, Roderick de Greef, certify that:

1. I have reviewed this quarterly report on Form 10-Q of BioLife Solutions, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2016

/s/ Roderick de Greef

Roderick de Greef

Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of BioLife Solutions, Inc. (the “Company”) on Form 10-Q for the three month period ended June 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Rice, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 11, 2016

/s/ Michael Rice

Michael Rice

Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of BioLife Solutions, Inc. (the “Company”) on Form 10-Q for the three month period ended June 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Roderick de Greef, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 11, 2016

/s/ Roderick de Greef

Roderick de Greef

Chief Financial Officer

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 09, 2016
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Entity Registrant Name	BIOLIFE SOLUTIONS INC
Entity Central Index Key	0000834365
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	BLFS
Entity Common Stock, Shares Outstanding		12,883,246

XML

Consolidated Balance Sheets - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Current assets
Cash and cash equivalents	$ 1,318,469	$ 2,173,258
Short term investments	0	1,651,341
Accounts receivable, trade, net of allowance for doubtful accounts of $0 at June 30, 2016 and December 31, 2015	1,284,015	929,289
Inventories	1,910,729	1,834,635
Prepaid expenses and other current assets	402,342	384,414
Total current assets	4,915,555	6,972,937
Property and equipment
Leasehold improvements	1,284,491	1,284,491
Furniture and computer equipment	652,941	557,666
Manufacturing and other equipment	1,029,600	1,025,521
Subtotal	2,967,032	2,867,678
Less: Accumulated depreciation	(1,605,173)	(1,421,279)
Net property and equipment	1,361,859	1,446,399
Internal use software	2,021,489	1,698,735
Intangible asset	2,215,385	2,215,385
Long term deposits	36,166	36,166
Total assets	10,550,454	12,369,622
Current liabilities
Accounts payable	864,452	1,029,373
Note payable, related party, net of discount of $343,191 at June 30, 2016	656,809	0
Accrued interest, related party	8,333	0
Accrued expenses and other current liabilities	80,037	146,438
Accrued compensation	523,694	419,766
Deferred rent	130,216	130,216
Total current liabilities	2,263,541	1,725,793
Deferred rent, long term	740,888	784,458
Total liabilities	3,004,429	2,510,251
Commitments and contingencies (Note 9)
Shareholders' equity
Common stock, $0.001 par value; 150,000,000 shares authorized, 12,607,055 and 12,448,391 shares issued and outstanding at June 30, 2016 and December 31, 2015	12,607	12,447
Additional paid-in capital	73,719,666	72,823,398
Accumulated other comprehensive loss	0	(451)
Accumulated deficit	(66,909,834)	(64,326,923)
Total BioLife Solutions, Inc. shareholders' equity	6,822,439	8,508,471
Total non-controlling interest equity	723,586	1,350,900
Total shareholders' equity	7,546,025	9,859,371
Total liabilities and shareholders' equity	$ 10,550,454	$ 12,369,622

XML

Consolidated Balance Sheets (Parenthetical) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Accounts receivable allowances	$ 0	$ 0
Debt Instrument, Unamortized Discount, Current	$ 343,191
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized	150,000,000	150,000,000
Common stock, issued	12,607,055	12,448,391
Common stock, outstanding	12,607,055	12,448,391

XML

Consolidated Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Product sales	$ 1,989,988	$ 1,496,759	$ 3,842,005	$ 2,997,481
Cost of product sales	872,835	678,111	1,643,840	1,296,210
Gross profit	1,117,153	818,648	2,198,165	1,701,271
Operating expenses
Research and development	599,031	301,334	1,103,270	623,499
Sales and marketing	849,193	642,490	1,583,106	1,142,745
General and administrative	1,262,818	1,030,701	2,598,110	2,251,406
Total operating expenses	2,711,042	1,974,525	5,284,486	4,017,650
Operating loss	(1,593,889)	(1,155,877)	(3,086,321)	(2,316,379)
Other income (expenses)
Interest income	445	5,482	2,364	13,719
Interest expense, related party	(8,333)	0	(8,333)	0
Amortization of debt discount	(31,199)	0	(31,199)	0
Write-off of deferred financing costs	(86,736)	0	(86,736)	0
Total other income (expenses)	(125,823)	5,482	(123,904)	13,719
Net loss	(1,719,712)	(1,150,395)	(3,210,225)	(2,302,660)
Net loss attributable to non-controlling interest	363,629	156,016	627,314	276,799
Net loss attributable to BioLife Solutions, Inc.	$ (1,356,083)	$ (994,379)	$ (2,582,911)	$ (2,025,861)
Basic and diluted net loss per common share attributable to BioLife Solutions, Inc. (in dollars per share)	$ (0.11)	$ (0.08)	$ (0.21)	$ (0.17)
Basic and diluted weighted average common shares used to calculate net loss per common share (in shares)	12,568,041	12,144,776	12,512,949	12,122,667

XML

Consolidated Statements of Comprehensive Loss - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Net loss	$ (1,719,712)	$ (1,150,395)	$ (3,210,225)	$ (2,302,660)
Other comprehensive income (loss)
Unrealized gain (loss) on available-for-sale investments	0	(441)	451	5,058
Total other comprehensive income (loss)	0	(441)	451	5,058
Comprehensive loss	(1,719,712)	(1,150,836)	(3,209,774)	(2,297,602)
Comprehensive loss attributable to non- Controlling interest	363,629	156,016	627,314	276,799
Comprehensive loss attributable to BioLife Solutions, Inc.	$ (1,356,083)	$ (994,820)	$ (2,582,460)	$ (2,020,803)

XML

Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities
Net loss	$ (3,210,225)	$ (2,302,660)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation	183,893	168,727
Stock-based compensation expense	402,763	158,371
Write-off of deferred financing costs	86,736	0
Amortization of deferred rent related to lease incentives	(63,499)	(63,500)
Amortization of debt discount	31,199	0
Accretion and amortization on available for sale investments	1,792	65,485
(Increase) Decrease in
Accounts receivable, trade	(354,726)	92,236
Inventories	(76,094)	(356,033)
Prepaid expenses and other current assets	(50,151)	47,762
Increase (Decrease) in
Accounts payable	207,369	(99,771)
Accrued compensation and other current liabilities	37,527	(267,229)
Accrued interest, related party	8,333	0
Deferred rent	19,929	21,651
Net cash used in operating activities	(2,775,154)	(2,534,961)
Cash flows from investing activities
Sales of available-for-sale investments	1,650,000	4,725,000
Purchases of available-for-sale investments	0	(342,872)
Costs associated with internal use software development	(695,044)	(497,480)
Purchase of property and equipment	(99,353)	(72,009)
Net provided by investing activities	855,603	3,812,639
Cash flows from financing activities
Proceeds from related party debt	1,000,000	0
Proceeds from exercise of common stock options	151,498	79,969
Deferred costs related to potential stock issuance	(86,736)	0
Net cash provided by financing activities	1,064,762	79,969
Net increase (decrease) in cash and cash equivalents	(854,789)	1,357,647
Cash and cash equivalents - beginning of period	2,173,258	2,538,758
Cash and cash equivalents - end of period	1,318,469	3,896,405
Non-cash investing and financing activities
Costs incurred for capitalized internal use software not paid as of quarter end (amounts are included in liabilities)	42,760	265,380
Debt discount related to warrants	$ 374,390	$ 0

XML

Organization and Significant Accounting Policies

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Organization and Significant Accounting Policies

1. Organization and Significant Accounting Policies

Business

BioLife Solutions, Inc. (“BioLife,” “us,” “we,” “our,” or the “Company”) is a developer, manufacturer and marketer of proprietary clinical grade cell and tissue hypothermic storage and cryopreservation freeze media and a related cloud hosted biologistics cold chain management app for smart shippers. Our proprietary HypoThermosol® and CryoStor® platform of solutions are highly valued in the biobanking, drug discovery, and regenerative medicine markets. Our biopreservation media products are serum-free and protein-free, fully defined, and are formulated to reduce preservation-induced cell damage and death. Our enabling technology provides commercial companies and clinical researchers significant improvement in shelf life and post-preservation viability and function of cells, tissues, and organs. Additionally, for our direct, distributor, and contract customers, we perform custom formulation, fill, and finish services.

Basis of Presentation

We have prepared the accompanying unaudited consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Pursuant to these rules and regulations, we have condensed or omitted certain information and footnote disclosures we normally include in our annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In management’s opinion, we have made all adjustments (consisting only of normal, recurring adjustments) necessary to fairly present our financial position, results of operations and cash flows. Our interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full year. These consolidated financial statements and accompanying notes should be read in conjunction with the financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2015 on file with the SEC.

There have been no material changes to our significant accounting policies as compared to the significant accounting policies described in the financial statements in our Annual Report on Form 10-K for the year ended December 31, 2015.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its majority-owned subsidiary. All intercompany balances and transactions have been eliminated in consolidation.

Concentrations of credit risk and business risk

In the three and six months ended June 30, 2016, we derived approximately 12% and 12% of our product revenue from one customer. In the three and six months ended June 30, 2015, we derived approximately 15% and 10% of our product revenue from one customer. No other customer accounted for more than 10% of revenue in the three and six months ended June 30, 2016 or 2015. At June 30, 2016, three customers accounted for approximately 41% of total gross accounts receivable. At December 31, 2015, three customers accounted for approximately 53% of total gross accounts receivable.

Revenue from customers located in foreign countries represented 17% and 20% of total revenue during the three and six months ended June 30, 2016, respectively, and 20% and 21% during the three and six months ended June 30, 2015, respectively.

Recent Accounting Pronouncements

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU-2016-09). The updated guidance simplifies and changes how companies account for certain aspects of share-based payment awards to employees, including accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification of certain items in the statement of cash flows. Adoption of ASU 2016-09 is required for fiscal reporting periods beginning after December 15, 2016, including interim reporting periods within those fiscal years with early adoption being permitted. The Company is currently evaluating the potential impact of the pending adoption of ASU 2016-09 on its consolidated financial statements.

In February 2016, FASB issued Accounting Standards Update No. 2016-02, Leases: Topic 842 (ASU 2016-02) that replaces existing lease guidance. The new standard is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet. Under the new guidance, leases will continue to be classified as either finance or operating, with classification affecting the pattern of expense recognition in the Consolidated Statements of Operations. Lessor accounting is largely unchanged under ASU 2016-02. Adoption of ASU 2016-02 is required for fiscal reporting periods beginning after December 15, 2018, including interim reporting periods within those fiscal years with early adoption being permitted. The new standard is required to be applied with a modified retrospective approach to each prior reporting period presented with various optional practical expedients. The Company is currently evaluating the potential impact of the pending adoption of ASU 2016-02 on its consolidated financial statements.

In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities: Topic 825 (ASU 2016-01). The updated guidance enhances the reporting model for financial instruments, which includes amendments to address aspects of recognition, measurement, presentation and disclosure. Adoption of ASU 2016-01 is required for fiscal reporting periods beginning after December 15, 2017, including interim reporting periods within those fiscal years. The Company is currently evaluating the potential impact of the pending adoption of ASU 2016-01 on its consolidated financial statements.

In November 2015, FASB issued Accounting Standards Update No. 2015-17, Balance Sheet Classification of Deferred Taxes: Topic 740 (ASU 2015-17). Current GAAP requires the deferred taxes for each jurisdiction to be presented as a net current asset or liability and net noncurrent asset or liability. This requires a jurisdiction-by-jurisdiction analysis based on the classification of the assets and liabilities to which the underlying temporary differences relate, or, in the case of loss or credit carryforwards, based on the period in which the attribute is expected to be realized. Any valuation allowance is then required to be allocated on a pro rata basis, by jurisdiction, between current and noncurrent deferred tax assets. The new guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. As a result, each jurisdiction will now only have one net noncurrent deferred tax asset or liability. The guidance does not change the existing requirement that only permits offsetting within a jurisdiction. Adoption of ASU 2015-17 is required for fiscal reporting periods beginning after December 15, 2016, including interim reporting periods within those fiscal years, and either prospective or retrospective application is permitted. Early adoption of ASU 2015-17 is permitted. At the time of adoption, all of the Company’s deferred tax assets and liabilities, along with any related valuation allowance, will be classified as noncurrent on its Consolidated Balance Sheet. The Company does not plan to early adopt ASU 2015-17.

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory: Topic 330 (ASU 2015-11). Topic 330 currently requires an entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. ASU 2015-11 requires that inventory measured using either the first-in, first-out (FIFO) or average cost method be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Adoption of ASU 2015-11 is required for fiscal reporting periods beginning after December 15, 2016, including interim reporting periods within those fiscal years. The Company does not expect adoption of ASU 2015-11 to have a material impact on its consolidated financial statements.

On May 28, 2014, FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, Topic 606, requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. Early adoption is not permitted. The updated standard becomes effective for us in the first quarter of fiscal 2018. We have not yet selected a transition method and we are currently evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures.

With the exception of the new standards discussed above, there have been no new accounting pronouncements not yet effective that have significance, or potential significance, to our Consolidated Financial Statements.

XML

Accumulated Other Comprehensive Loss

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

Accumulated Other Comprehensive Loss

2. Accumulated Other Comprehensive Loss

The following table shows the changes in Accumulated Other Comprehensive Loss by component for the six months ended June 30, 2016:

	Six Months Ended June 30, 2016
Unrealized Loss on Investments, Beginning Balance	$	(451)
Unrealized Gain on Investments, Current Period		451
Unrealized Gain/(Loss) on Investments, Ending Balance	$	––

XML

Fair Value Measurement

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurement

3. 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 short term investments at fair value on a recurring basis. 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 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.

As of June 30, 2016 and December 31, 2015, the Company does not have liabilities that are measured at fair value.

The following tables set forth the Company’s financial assets measured at fair value on a recurring basis as of June 30, 2016 and December 31, 2015, based on the three-tier fair value hierarchy:

As of June 30, 2016	Level 1		Level 2		Total
Bank deposits	$	1,264,989	$	—	$	1,264,989
Money market funds		53,480		—		53,480
Cash and cash equivalents		1,318,469		—		1,318,469
Total	$	1,318,469	$	—	$	1,318,469

As of December 31, 2015	Level 1		Level 2		Total
Bank deposits	$	440,809	$	—	$	440,809
Money market funds		1,732,449		—		1,732,449
Cash and cash equivalents		2,173,258		—		2,173,258
Corporate debt securities		1,401,453		—		1,401,453
Commercial paper		249,888		—		249,888
Short term investments		1,651,341		—		1,651,341
Total	$	3,824,599	$	—	$	3,824,599

The fair values of bank deposits, money market funds, corporate debt securities and commercial paper classified as Level 1 were derived from quoted market prices as active markets for these instruments exist. The Company has no Level 2 or Level 3 financial assets. The Company did not have any transfers between Level 1 and Level 2 of the fair value hierarchy during the six months ended June 30, 2016 and the twelve months ended December 31, 2015.

XML

Inventory

6 Months Ended

Jun. 30, 2016

Inventory Disclosure [Abstract]

Inventory

4. Inventory

Inventory consists of the following at June 30, 2016 and December 31, 2015:

	June 30, 2016		December 31, 2015
Raw materials	$	504,652	$	299,952
Work in progress		344,946		666,124
Finished goods		1,061,131		868,559
Total	$	1,910,729	$	1,834,635

XML

Deferred Rent

6 Months Ended

Jun. 30, 2016

Deferred Rent Disclosure [Abstract]

Deferred Rent

5. Deferred Rent

Deferred rent consists of the following at June 30, 2016 and December 31, 2015:

	June 30, 2016		December 31, 2015
Landlord-funded leasehold improvements	$	1,124,790	$	1,124,790
Less accumulated amortization		(439,029)		(375,530)
Total		685,761		749,260
Straight line rent adjustment		185,343		165,414
Total deferred rent	$	871,104	$	914,674

During the three and six month periods ended June 30, 2016, the Company recorded $31,749 and $63,499, respectively, in deferred rent amortization of these landlord funded leasehold improvements. During the three and six month periods ended June 30, 2015, the Company recorded $31,750 and $63,500, respectively, in deferred rent amortization of these landlord funded leasehold improvements.

Straight line rent adjustment represents the difference between cash rent payments and the recognition of rent expense on a straight-line basis over the terms of the lease.

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Share-based Compensation

6 Months Ended

Jun. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-based Compensation

6. Share-based Compensation

Stock Options

The following is a summary of stock option activity for the six month period ended June 30, 2016, and the status of stock options outstanding at June 30, 2016:

	Six Month Period Ended
	June 30, 2016
			Wtd. Avg.
			Exercise
	Options		Price
Outstanding at beginning of year		2,555,263	$	1.80
Granted		704,000	$	1.80
Exercised		(96,166)	$	1.24
Forfeited		(372,458)	$	2.14
Expired		(59,026)	$	1.95
Outstanding at June 30, 2016		2,731,613	$	1.77
Stock options exercisable at June 30, 2016		1,355,954	$	1.57

As of June 30, 2016, there was $423,326 of aggregate intrinsic value of outstanding stock options, including $422,326 of aggregate intrinsic value of exercisable 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 June 30, 2016. This amount will change based on the fair market value of the Company’s stock. During the three and six months ended June 30, 2016 intrinsic value of awards exercised was $41,413 and $45,667, respectively. Weighted average grant date fair value for options granted during the three and six months ended June 30, 2016 was $1.24 and $1.25 per share, respectively and $1.75 for each of the three and six months ended June 30, 2015.

 

The fair value of share-based payments made with stock options to employees and non-employee directors was estimated on the measurement date using the Black-Scholes model using the following weighted average assumptions.

	Three Month Period Ended						Six Month Period Ended
	June 30,						June 30,
	2016			2015			2016			2015
Risk free interest rate		1.45	%		1.77	%		1.52	%		1.77	%
Dividend yield		0.0	%		0.0	%		0.0	%		0.0	%
Expected term (in years)		7			7			7			7
Volatility		75	%		105	%		75	%		105	%

Management applies an estimated forfeiture rate that is derived from historical employee termination data. The estimated forfeiture rate applied for the three and six month periods ended June 30, 2016 and 2015 was approximately 8.1% and 7.0%, respectively.

As of June 30, 2016, we had $2,007,687 of unrecognized compensation expense related to unvested stock options. We expect to recognize this compensation expense over a weighted average period of approximately 3.1 years.

 

Restricted Stock

The following is a summary of restricted stock activity for the six month period ended June 30, 2016, and the status of unvested restricted stock outstanding at June 30, 2016:

	Six Month Period Ended
	June 30, 2016
	Number of Restricted Shares		Grant-Date Fair Value
Outstanding at beginning of year		—	$	N/A
Granted		200,000	$	1.90
Vested		(62,498)	$	1.90
Outstanding at June 30, 2016		137,502	$	1.90

The aggregate fair value of the awards granted during the three and six months ended June 30, 2016 was $0 and $380,000, 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 restricted stock awards that vested for the three and six months ended June 30, 2016 was $21,704 and $116,704, respectively.

We recognized stock compensation expense of $23,633 and $122,351 related to restricted stock awards for the three and six months ended June 30, 2016. As of June 30, 2016, there was $257,649 in unrecognized compensation costs related to restricted stock awards. We expect to recognize those costs over 2.7 years.

 

We recorded stock compensation expense for the three and six month periods ended June 30, 2016 and 2015, as follows:

	Three Month Period Ended				Six Month Period Ended
	June 30,				June 30,
	2016		2015		2016		2015
Research and development costs	$	47,366	$	19,414	$	84,835	$	26,358
Sales and marketing costs		54,748		19,270		118,247		25,025
General and administrative costs		142,367		57,677		219,878		65,450
Cost of product sales		11,754		28,501		(20,197)		41,538
Total	$	256,235	$	124,862	$	402,763	$	158,371

During the three and six month periods ended June 30, 2016, we reversed stock compensation expense related to stock compensation expense previously recorded on unvested stock options that were forfeited upon termination of certain employees during the periods in the amount of $215 and $40,532 to cost of product sales, respectively and $213 and $52,029 to operating expenses, respectively.

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Warrants

6 Months Ended

Jun. 30, 2016

Stockholders' Equity Note [Abstract]

Warrants

7. Warrants

At June 30, 2016 and December 31, 2015, we had 7,745,997 and 7,195,997 warrants outstanding, respectively and exercisable with a weighted average exercise price of $4.40 and $4.60, respectively. The outstanding warrants have expiration dates between August 2016 and May 2021.

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Net Loss per Common Share

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Net Loss per Common Share

8. Net Loss per Common Share

Basic net loss per common share is calculated by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated using the weighted average number of common shares outstanding plus dilutive common stock equivalents outstanding during the period. Common stock equivalents are excluded for the three and six month periods ended June 30, 2016 and 2015, since the effect is anti-dilutive due to the Company’s net losses. Common stock equivalents include stock options and warrants.

Basic weighted average common shares outstanding, and the potentially dilutive securities excluded from loss per share computations because they are anti-dilutive, are as follows as of June 30, 2016 and 2015, respectively:

	Three Month Period Ended				Six Month Period Ended
	June 30,				June 30,
	2016		2015		2016		2015
Basic and diluted weighted average common stock shares outstanding		12,568,041		12,144,776		12,512,949		12,122,667
Potentially dilutive securities excluded from loss per share computations:
Common stock options		2,731,613		2,601,652		2,731,613		2,601,652
Common stock purchase warrants		7,745,997		7,428,141		7,745,997		7,428,141
Restricted stock unvested		137,502		-		137,502		-

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Commitments & Contingencies

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments & Contingencies

9. Commitments & Contingencies

Leases

We lease approximately 30,000 square feet in our Bothell, Washington headquarters. The term of our lease continues until July 31, 2021 with two options to extend the term of the lease, each of which is for an additional period of five years, with the first extension term commencing, if at all, on August 1, 2021, 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 $59,700, with scheduled annual increases each August and again in October for the most recent amendment. We are also required to pay an amount equal to the Company’s proportionate share of certain taxes and operating expenses.

Employment agreements

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

biologistex

On September 29, 2014 we agreed to purchase approximately $2.4 million in evo Smart Containers from the biologistex joint venture partner, SAVSU. As of June 30, 2016, the purchase commitment remaining is $2.0 million.

 

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.

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Credit Facility

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Credit Facility

10. Credit Facility

On May 12, 2016 we entered into a $4 million credit facility agreement with our largest shareholder WAVI Holding AG (“WAVI”). The agreement calls for WAVI to provide four $1 million tranches at specified times throughout the next 12 months. The promissory note carries an annual interest rate of 10%. The related promissory note matures on June 1, 2017, and is unsecured, but senior to any existing debt. In conjunction with the credit facility, we issued 550,000 detachable vested warrants at a $1.75 exercise price, expiring May 12, 2021. On June 1, 2016, we received the first $1 million tranche related to the credit facility agreement. The Company recorded a debt discount related to the value of the warrants in the amount of $374,390. The debt discount amount recorded related to the warrants was determined based on the relative fair value of the note payable and the warrants. The debt discount will amortize monthly at a rate of $31,199 per month until June 1, 2017. The fair value of the warrants was determined using the Black-Scholes model.

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Organization and Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Business

Business

BioLife Solutions, Inc. (“BioLife,” “us,” “we,” “our,” or the “Company”) is a developer, manufacturer and marketer of proprietary clinical grade cell and tissue hypothermic storage and cryopreservation freeze media and a related cloud hosted biologistics cold chain management app for smart shippers. Our proprietary HypoThermosol® and CryoStor® platform of solutions are highly valued in the biobanking, drug discovery, and regenerative medicine markets. Our biopreservation media products are serum-free and protein-free, fully defined, and are formulated to reduce preservation-induced cell damage and death. Our enabling technology provides commercial companies and clinical researchers significant improvement in shelf life and post-preservation viability and function of cells, tissues, and organs. Additionally, for our direct, distributor, and contract customers, we perform custom formulation, fill, and finish services.

Basis of Presentation

Basis of Presentation

We have prepared the accompanying unaudited consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Pursuant to these rules and regulations, we have condensed or omitted certain information and footnote disclosures we normally include in our annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In management’s opinion, we have made all adjustments (consisting only of normal, recurring adjustments) necessary to fairly present our financial position, results of operations and cash flows. Our interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full year. These consolidated financial statements and accompanying notes should be read in conjunction with the financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2015 on file with the SEC.

There have been no material changes to our significant accounting policies as compared to the significant accounting policies described in the financial statements in our Annual Report on Form 10-K for the year ended December 31, 2015.

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its majority-owned subsidiary. All intercompany balances and transactions have been eliminated in consolidation.

Concentrations of credit risk and business risk

Concentrations of credit risk and business risk

In the three and six months ended June 30, 2016, we derived approximately 12% and 12% of our product revenue from one customer. In the three and six months ended June 30, 2015, we derived approximately 15% and 10% of our product revenue from one customer. No other customer accounted for more than 10% of revenue in the three and six months ended June 30, 2016 or 2015. At June 30, 2016, three customers accounted for approximately 41% of total gross accounts receivable. At December 31, 2015, three customers accounted for approximately 53% of total gross accounts receivable.

Revenue from customers located in foreign countries represented 17% and 20% of total revenue during the three and six months ended June 30, 2016, respectively, and 20% and 21% during the three and six months ended June 30, 2015, respectively.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU-2016-09). The updated guidance simplifies and changes how companies account for certain aspects of share-based payment awards to employees, including accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification of certain items in the statement of cash flows. Adoption of ASU 2016-09 is required for fiscal reporting periods beginning after December 15, 2016, including interim reporting periods within those fiscal years with early adoption being permitted. The Company is currently evaluating the potential impact of the pending adoption of ASU 2016-09 on its consolidated financial statements.

In February 2016, FASB issued Accounting Standards Update No. 2016-02, Leases: Topic 842 (ASU 2016-02) that replaces existing lease guidance. The new standard is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet. Under the new guidance, leases will continue to be classified as either finance or operating, with classification affecting the pattern of expense recognition in the Consolidated Statements of Operations. Lessor accounting is largely unchanged under ASU 2016-02. Adoption of ASU 2016-02 is required for fiscal reporting periods beginning after December 15, 2018, including interim reporting periods within those fiscal years with early adoption being permitted. The new standard is required to be applied with a modified retrospective approach to each prior reporting period presented with various optional practical expedients. The Company is currently evaluating the potential impact of the pending adoption of ASU 2016-02 on its consolidated financial statements.

In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities: Topic 825 (ASU 2016-01). The updated guidance enhances the reporting model for financial instruments, which includes amendments to address aspects of recognition, measurement, presentation and disclosure. Adoption of ASU 2016-01 is required for fiscal reporting periods beginning after December 15, 2017, including interim reporting periods within those fiscal years. The Company is currently evaluating the potential impact of the pending adoption of ASU 2016-01 on its consolidated financial statements.

In November 2015, FASB issued Accounting Standards Update No. 2015-17, Balance Sheet Classification of Deferred Taxes: Topic 740 (ASU 2015-17). Current GAAP requires the deferred taxes for each jurisdiction to be presented as a net current asset or liability and net noncurrent asset or liability. This requires a jurisdiction-by-jurisdiction analysis based on the classification of the assets and liabilities to which the underlying temporary differences relate, or, in the case of loss or credit carryforwards, based on the period in which the attribute is expected to be realized. Any valuation allowance is then required to be allocated on a pro rata basis, by jurisdiction, between current and noncurrent deferred tax assets. The new guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. As a result, each jurisdiction will now only have one net noncurrent deferred tax asset or liability. The guidance does not change the existing requirement that only permits offsetting within a jurisdiction. Adoption of ASU 2015-17 is required for fiscal reporting periods beginning after December 15, 2016, including interim reporting periods within those fiscal years, and either prospective or retrospective application is permitted. Early adoption of ASU 2015-17 is permitted. At the time of adoption, all of the Company’s deferred tax assets and liabilities, along with any related valuation allowance, will be classified as noncurrent on its Consolidated Balance Sheet. The Company does not plan to early adopt ASU 2015-17.

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory: Topic 330 (ASU 2015-11). Topic 330 currently requires an entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. ASU 2015-11 requires that inventory measured using either the first-in, first-out (FIFO) or average cost method be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Adoption of ASU 2015-11 is required for fiscal reporting periods beginning after December 15, 2016, including interim reporting periods within those fiscal years. The Company does not expect adoption of ASU 2015-11 to have a material impact on its consolidated financial statements.

On May 28, 2014, FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, Topic 606, requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. Early adoption is not permitted. The updated standard becomes effective for us in the first quarter of fiscal 2018. We have not yet selected a transition method and we are currently evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures.

With the exception of the new standards discussed above, there have been no new accounting pronouncements not yet effective that have significance, or potential significance, to our Consolidated Financial Statements.

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Accumulated Other Comprehensive Loss (Tables)

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

Changes in Accumulated Other Comprehensive Loss

The following table shows the changes in Accumulated Other Comprehensive Loss by component for the six months ended June 30, 2016:

	Six Months Ended June 30, 2016
Unrealized Loss on Investments, Beginning Balance	$	(451)
Unrealized Gain on Investments, Current Period		451
Unrealized Gain/(Loss) on Investments, Ending Balance	$	––

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Fair Value Measurement (Tables)

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Assets Measured on Recurring Basis

The following tables set forth the Company’s financial assets measured at fair value on a recurring basis as of June 30, 2016 and December 31, 2015, based on the three-tier fair value hierarchy:

As of June 30, 2016	Level 1		Level 2		Total
Bank deposits	$	1,264,989	$	—	$	1,264,989
Money market funds		53,480		—		53,480
Cash and cash equivalents		1,318,469		—		1,318,469
Total	$	1,318,469	$	—	$	1,318,469

As of December 31, 2015	Level 1		Level 2		Total
Bank deposits	$	440,809	$	—	$	440,809
Money market funds		1,732,449		—		1,732,449
Cash and cash equivalents		2,173,258		—		2,173,258
Corporate debt securities		1,401,453		—		1,401,453
Commercial paper		249,888		—		249,888
Short term investments		1,651,341		—		1,651,341
Total	$	3,824,599	$	—	$	3,824,599

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Inventory (Tables)

6 Months Ended

Jun. 30, 2016

Inventory Disclosure [Abstract]

Inventories

Inventory consists of the following at June 30, 2016 and December 31, 2015:

	June 30, 2016		December 31, 2015
Raw materials	$	504,652	$	299,952
Work in progress		344,946		666,124
Finished goods		1,061,131		868,559
Total	$	1,910,729	$	1,834,635

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Deferred Rent (Tables)

6 Months Ended

Jun. 30, 2016

Deferred Rent Disclosure [Abstract]

Deferred rent

Deferred rent consists of the following at June 30, 2016 and December 31, 2015:

	June 30, 2016		December 31, 2015
Landlord-funded leasehold improvements	$	1,124,790	$	1,124,790
Less accumulated amortization		(439,029)		(375,530)
Total		685,761		749,260
Straight line rent adjustment		185,343		165,414
Total deferred rent	$	871,104	$	914,674

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Share-based Compensation (Tables)

6 Months Ended

Jun. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of stock option activity

The following is a summary of stock option activity for the six month period ended June 30, 2016, and the status of stock options outstanding at June 30, 2016:

	Six Month Period Ended
	June 30, 2016
			Wtd. Avg.
			Exercise
	Options		Price
Outstanding at beginning of year		2,555,263	$	1.80
Granted		704,000	$	1.80
Exercised		(96,166)	$	1.24
Forfeited		(372,458)	$	2.14
Expired		(59,026)	$	1.95
Outstanding at June 30, 2016		2,731,613	$	1.77
Stock options exercisable at June 30, 2016		1,355,954	$	1.57

Weighted average assumptions of share based payment

The fair value of share-based payments made with stock options to employees and non-employee directors was estimated on the measurement date using the Black-Scholes model using the following weighted average assumptions.

	Three Month Period Ended						Six Month Period Ended
	June 30,						June 30,
	2016			2015			2016			2015
Risk free interest rate		1.45	%		1.77	%		1.52	%		1.77	%
Dividend yield		0.0	%		0.0	%		0.0	%		0.0	%
Expected term (in years)		7			7			7			7
Volatility		75	%		105	%		75	%		105	%

Share-based Compensation, Restricted Stock and Restricted Stock Units Activity

The following is a summary of restricted stock activity for the six month period ended June 30, 2016, and the status of unvested restricted stock outstanding at June 30, 2016:

	Six Month Period Ended
	June 30, 2016
	Number of Restricted Shares		Grant-Date Fair Value
Outstanding at beginning of year		—	$	N/A
Granted		200,000	$	1.90
Vested		(62,498)	$	1.90
Outstanding at June 30, 2016		137,502	$	1.90

Stock compensation expense

We recorded stock compensation expense for the three and six month periods ended June 30, 2016 and 2015, as follows:

	Three Month Period Ended				Six Month Period Ended
	June 30,				June 30,
	2016		2015		2016		2015
Research and development costs	$	47,366	$	19,414	$	84,835	$	26,358
Sales and marketing costs		54,748		19,270		118,247		25,025
General and administrative costs		142,367		57,677		219,878		65,450
Cost of product sales		11,754		28,501		(20,197)		41,538
Total	$	256,235	$	124,862	$	402,763	$	158,371

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Net Loss per Common Share (Tables)

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Loss Per share computation

Basic weighted average common shares outstanding, and the potentially dilutive securities excluded from loss per share computations because they are anti-dilutive, are as follows as of June 30, 2016 and 2015, respectively:

	Three Month Period Ended				Six Month Period Ended
	June 30,				June 30,
	2016		2015		2016		2015
Basic and diluted weighted average common stock shares outstanding		12,568,041		12,144,776		12,512,949		12,122,667
Potentially dilutive securities excluded from loss per share computations:
Common stock options		2,731,613		2,601,652		2,731,613		2,601,652
Common stock purchase warrants		7,745,997		7,428,141		7,745,997		7,428,141
Restricted stock unvested		137,502		-		137,502		-

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Organization and Significant Accounting Policies (Details Narrative)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Sales Revenue, Net [Member]
Revenue from customers located in foreign countries	17.00%	20.00%	20.00%	21.00%
Sales Revenue, Net [Member] | One Customer [Member]
Concentration Risk, Percentage	12.00%	15.00%	12.00%	10.00%
Sales Revenue, Net [Member] | Zero Customer [Member]
Concentration Risk, Percentage	10.00%	10.00%	10.00%	10.00%
Accounts Receivable [Member] | Three Customer [Member]
Concentration Risk, Percentage			41.00%		53.00%

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Accumulated Other Comprehensive Loss (Details)	6 Months Ended
	Jun. 30, 2016 USD ($)
Accumulated Other Comprehensive Income (Loss) [Line Items]
Unrealized Loss on Investments, Beginning Balance	$ (451)
Unrealized Gain on Investments, Current Period	451
Unrealized Gain/(Loss) on Investments, Ending Balance	$ 0

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Fair Value Measurement (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Bank deposits	$ 1,264,989	$ 440,809
Money market funds	53,480	1,732,449
Cash and cash equivalents	1,318,469	2,173,258
Corporate debt securities		1,401,453
Commercial paper		249,888
Short term investments		1,651,341
Total	1,318,469	3,824,599
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Bank deposits	1,264,989	440,809
Money market funds	53,480	1,732,449
Cash and cash equivalents	1,318,469	2,173,258
Corporate debt securities		1,401,453
Commercial paper		249,888
Short term investments		1,651,341
Total	1,318,469	3,824,599
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Bank deposits	0	0
Money market funds	0	0
Cash and cash equivalents	0	0
Corporate debt securities		0
Commercial paper		0
Short term investments		0
Total	$ 0	$ 0

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Inventory (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Inventory [Line Items]
Raw materials	$ 504,652	$ 299,952
Work in progress	344,946	666,124
Finished goods	1,061,131	868,559
Total	$ 1,910,729	$ 1,834,635

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Deferred Rent (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Deferred Rent [Line Items]
Landlord-funded leasehold improvements	$ 1,124,790	$ 1,124,790
Less accumulated amortization	(439,029)	(375,530)
Total	685,761	749,260
Straight line rent adjustment	185,343	165,414
Total deferred rent	$ 871,104	$ 914,674

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Deferred Rent (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Landlord Funded Leasehold Improvements [Member]
Deferred Rent [Line Items]
Deferred Rent Amortization	$ 31,749	$ 31,750	$ 63,499	$ 63,500

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Share-based Compensation (Details) - Common stock options	6 Months Ended
	Jun. 30, 2016 $ / shares shares
Options
Outstanding at beginning of year | shares	2,555,263
Granted | shares	704,000
Exercised | shares	(96,166)
Forfeited | shares	(372,458)
Expired | shares	(59,026)
Outstanding at June 30, 2016 | shares	2,731,613
Stock options exercisable at June 30, 2016 | shares	1,355,954
Wtd. Avg. Exercise Price
Outstanding at beginning of year | $ / shares	$ 1.8
Granted | $ / shares	1.8
Exercised | $ / shares	1.24
Forfeited | $ / shares	2.14
Vested Shares Expired | $ / shares	1.95
Outstanding at June 30, 2016 | $ / shares	1.77
Stock options exercisable at June 30, 2016 | $ / shares	$ 1.57

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Share-based Compensation (Details 1)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk free interest rate	1.45%	1.77%	1.52%	1.77%
Dividend yield	0.00%	0.00%	0.00%	0.00%
Expected term (in years)	7 years	7 years	7 years	7 years
Volatility	75.00%	105.00%	75.00%	105.00%

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Share-based Compensation (Details 2) - Restricted Stock [Member]	6 Months Ended
	Jun. 30, 2016 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Restricted Shares, Outstanding at beginning of year | shares	0
Number of Restricted Shares, Granted | shares	200,000
Number of Restricted Shares, Vested | shares	(62,498)
Number of Restricted Shares, Outstanding at June 30, 2016 | shares	137,502
Grant-Date Fair Value, Outstanding at beginning of year | $ / shares
Grant-Date Fair Value, Granted | $ / shares	1.9
Grant-Date Fair Value, Vested | $ / shares	1.9
Grant-Date Fair Value, Outstanding at June 30, 2016 | $ / shares	$ 1.9

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Share-based Compensation (Details 3) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total Share Based Compensation	$ 256,235	$ 124,862	$ 402,763	$ 158,371
Research and development costs
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total Share Based Compensation	47,366	19,414	84,835	26,358
Sales and marketing costs
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total Share Based Compensation	54,748	19,270	118,247	25,025
General and administrative costs
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total Share Based Compensation	142,367	57,677	219,878	65,450
Cost of product sales
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total Share Based Compensation	$ 11,754	$ 28,501	$ (20,197)	$ 41,538

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Share-based Compensation (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Total	$ 2,007,687		$ 2,007,687
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition			3 years 1 month 6 days
Estimated Forfeiture Rate	8.10%	7.00%	8.10%	7.00%
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value	$ 423,326		$ 423,326
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value	422,326		422,326
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value	$ 41,413		$ 45,667
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 1.24	$ 1.75	$ 1.25	$ 1.75
Restricted Stock or Unit Expense	$ 23,633		$ 122,351
Cost of Sales [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock or Unit Option Plan Expense	215		40,532
Operating Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock or Unit Option Plan Expense	213		52,029
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Total	257,649		$ 257,649
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition			2 years 8 months 12 days
Amended Restated 2013 Performance Incentive Plan [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock Issued During Period, Value, Restricted Stock Award, Gross	0		$ 380,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value	$ 21,704		$ 116,704

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Warrants (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Class of Warrant or Right [Line Items]
Warrants and Rights Outstanding	$ 7,745,997	$ 7,195,997
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 4.40	$ 4.60
Outstanding Warrants Expiration Dates	The outstanding warrants have expiration dates between August 2016 and May 2021.

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Net Loss per Common Share (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Net Loss per Common Share [Line Items]
Basic and diluted weighted average common stock shares outstanding	12,568,041	12,144,776	12,512,949	12,122,667
Common stock options
Net Loss per Common Share [Line Items]
Potentially dilutive securities excluded from loss per share computations	2,731,613	2,601,652	2,731,613	2,601,652
Common stock purchase warrants
Net Loss per Common Share [Line Items]
Potentially dilutive securities excluded from loss per share computations	7,745,997	7,428,141	7,745,997	7,428,141
Restricted stock unvested
Net Loss per Common Share [Line Items]
Potentially dilutive securities excluded from loss per share computations	137,502	0	137,502	0

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Commitments & Contingencies (Details Narrative)	1 Months Ended	6 Months Ended
	Sep. 29, 2014 USD ($)	Jun. 30, 2016 USD ($) a
Loss Contingencies [Line Items]
Operating Leases, Rent Expense, Minimum Rentals		$ 59,700
Long-term Purchase Commitment, Amount	$ 2,400,000
Purchase Commitment, Remaining Minimum Amount Committed		$ 2,000,000
Area of Land | a		30,000
Lease Expiration Date		Jul. 31, 2021
Lessee Leasing Arrangements, Operating Leases, Renewal Term		5 years

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Credit Facility (Details Narrative) - USD ($)	1 Months Ended		3 Months Ended		6 Months Ended
	Jun. 01, 2016	May 12, 2016	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Line of Credit Facility [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 4.40		$ 4.40		$ 4.60
Debt Issuance Costs Incurred During Noncash or Partial Noncash Transaction					$ 374,390	$ 0
Amortization of Debt Discount (Premium)			$ 31,199	$ 0	$ 31,199	$ 0
Wavi Holdings AG [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity		$ 4,000,000
Line of Credit Facility, Interest Rate During Period		10.00%
Line of Credit Facility, Expiration Date		Jun. 01, 2017
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		550,000
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 1.75
Proceeds from Lines of Credit	$ 1,000,000
Warrants Expiration Date		May 12, 2021
Line of Credit Facility, Description		The agreement calls for WAVI to provide four $1 million tranches at specified times throughout the next 12 months.
Amortization of Debt Discount (Premium)		$ 31,199