10KSB

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-KSB

(Mark One)

[X]

ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the year ended December 31, 2006

[  ]

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

0-18170

(Commission File No.)

BioLife Solutions, Inc.

(Name of Small Business Issuer in its Charter)

Delaware	94-3076866
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer I.D. Number)

171 Front Street, Owego, New York	13827
(Address of Principal Executive Offices)	(Zip Code)

(607) 687-4487

(Issuer’s Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Exchange Act:  None

Securities registered under Section 12(g) of the Exchange Act:  Common Stock, par value $.001 per share

Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. ¨  

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No¨

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12G-2 of the Exchange Act).

Yes ¨  Nox

Issuer's revenues for the fiscal year ended December 31, 2006 were $603,219.

As of March 26, 2007, the aggregate market value of voting stock held by non-affiliates was $2,556,405.

As of March 26, 2007, there were 69,606,520 shares of Common Stock (par value $.001 per share) outstanding.

Transitional Small Business Disclosure Format (check one). Yes ¨  Nox

PART I

ITEM 1.  DESCRIPTION OF BUSINESS

Note: The terms “the Company,” “us,” “we” and “our” refer to BioLife Solutions, Inc.

General

BioLife Solutions, Inc. ("BioLife” or the “Company”) was incorporated in 1998 in Delaware as a wholly owned subsidiary of Cryomedical Sciences, Inc. ("Cryomedical"), a company that was engaged in manufacturing and marketing cryosurgical products.  We develop, manufacture and market patented hypothermic storage and cryopreservation solutions for cells, tissues, and organs.  Our proprietary HypoThermosol^® and CryoStor™ preservation media are marketed directly to companies, laboratories, and academic institutions engaged in research and commercial clinical applications.  Our line of serum-free and protein-free preservation solutions are fully defined and formulated to reduce or prevent preservation-induced, delayed-onset cell damage and death.  This platform enabling technology provides academic and clinical researchers significant improv ement in post-thaw cell, tissue, and organ viability and function.  

In May 2002, Cryomedical implemented a restructuring and recapitalization program designed to shift its focus away from cryosurgery toward addressing preservation needs of the biotech and related markets.  On June 25, 2002 the Company completed the sale of its cryosurgery product line and related intellectual property assets to Irvine, CA-based Endocare, Inc. (NASDAQ: ENDO). In the transaction, the Company transferred ownership of all of its cryosurgical installed base, inventory, and related intellectual property, in exchange for $2.2 million in cash and 120,022 shares of Endocare restricted common stock.  In conjunction with the sale of Cryomedical’s cryosurgical assets, Cryomedical’s Board of Directors also approved merging BioLife into Cryomedical and changing its name to BioLife Solutions, Inc.  In September 2002, Cryomedical changed its name to BioLife Solutions, Inc. and began to trade under the new ticker symbol, “BLFS”, on the OT CBB.

Our principal executive offices are located at 171 Front Street, Owego, New York 13827 and our telephone number is (607) 687-4487.  

Departure of Director or Principal Officer

On January 8, 2007, the Company terminated the employment of John G. Baust, the Chairman, Sr. Vice President and Chief Scientific Officer of the Company.  Dr. Baust resigned from the Board of Directors on February 2, 2007.

Termination of a Material Definitive Agreement of Certain Officers

On January 8, 2007, the Company sent a written notice to Cell Preservation Services, Inc. (“CPSI”) that the Company has elected not to renew the Research Agreement, dated the 15^th day of March, 2004, between the Company and CPSI, which Research Agreement is set to expire on March 15, 2007, but is automatically renewed for one-year periods unless notice of non-renewal is given by either party at least sixty (60) days prior to the expiration of the then current term. CPSI is owned by Dr. John M. Baust, who was also employed by the Company and is the son of John G. Baust, the former CEO and President of the Company and until recently the Chairman, Sr. Vice President and Chief Scientific Officer of the Company. Pursuant to the Research Agreement, the Company outsourced to CPSI all of the Company’s research funded through SBIR grants. The Company elected not to renew the Research Agreement in connection with the termination of emplo yment of John G. Baust and John M. Baust.

Technological Overview

Time management is a crucial aspect of many facets of academic research and clinical practice including cell and gene therapy.  Modern therapies must be accomplished under time constraints if they are to be effective.  This problem becomes especially critical in the field of cell and tissue therapy, where harvested cell culture and tissue, if maintained at body temperature (98.6ºF/37ºC), will lose viability over time.  To slow the "metabolic engine" of the harvested cell and tissue, chilling is required.  However, chilling is of mixed benefit.  Although cooling successfully reduces metabolism (i.e., lowers demand for oxygen), chilling, or hypothermia, is also damaging to cells.  To solve this problem, transplant surgeons, for example, will flush the donor tissue with a cold solution designed to provide short-term preservation support after removal of the organ from the donor and during transportation.  Clinicians engag ed in cell and gene therapy will also attempt to maintain the original and derived cellular material in a cold solution before and after application of the specific cell or gene

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therapy technique, and during necessary transportation.  Support solutions range from simple "balanced salt" (electrolyte) formulations to complex mixtures of electrolytes, energy substrates such as sugars, acid buffers, osmolytes and antibiotics.  Clinically, there is not a great deal of protective difference between these various solutions and few offer long-term protection.  Often, the basis for selection of a liquid preservation media is a matter of local preference dictated primarily by the traditional source of supply at an academic research institute, transplant center, or cellular therapy company.

Because of the cascading destructive cellular effects that begin with the arrest of metabolism as a result of cooling, and end with cell death through apoptosis, development of new methods of cell and tissue preservation are important to ensure that tissue-engineered products survive the trip from the factory to the operating room in good working order and do not die during transplantation.  Porr post-cooling and post-thaw cell, tissue and organ viability and function are the key to unmet needs in the field of preservation of biologic material.

Our scientific research activities over the last 20 years enabled a detailed understanding of the molecular basis for the cryogenic destruction of cells through apoptosis.  This research led directly to the development of our specifically formulated and patented HypoThermosol® ("HTS") technology.  Working from our HTS technology base, we developed a family of proprietary cell, tissue and organ specific hypothermic storage and cryopreservation media solutions to address  the current unmet needs of academic and clinical researchers and transplant physicians.  Our products are specifically formulated to:

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minimize cell and tissue swelling

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remove free radicals upon formation

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maintain appropriate ion balances

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provide regenerative, high energy substrates to stimulate recovery upon warming

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avoid the creation of an acidic state (acidosis)

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inhibit the onset of apoptosis

A key feature of the our products is their fully “defined” nature.  All of our products are serum-free, protein-free and packaged under sterile conditions using USP grade or highest quality available synthetic components.

The results of independent testing demonstrate that our patented HypoThermosol® solutions significantly improve cell and tissue post-thaw viability and function, which may, in turn, improve clinical outcomes for existing and new cell and tissue therapy applications.  Our proprietary HypoThermosol® technology is optimized based on molecular biology principles and genetic analysis, not on conventional “cookbook” techniques incorporated in other solutions currently on the market.  

BioLife Products

Hypothermosol®

HypoThermosol® is a family of cell-specific, optimized hypothermic (4-10°C) preservation media that allows for improved and extended preservation of biologics.  A full line of customized HypoThermosol® preservation solutions are available to researchers and clinicians to preserve cells and tissue in low temperature environments for extended periods. Our HypoThermosol® family of preservation media for the hypothermic maintenance and cryopreservation of mammalian cell systems include:

HypoThermosol® FRS

This solution has been formulated to decrease the free radical accumulation in cells undergoing prolonged hypothermic preservation. Numerous investigators have shown that an increase in free radicals can lead to either pathological cell death or apoptosis (programmed cell death) in clinical conditions.  HypoThermosol®-FRS is very effective at preserving myocardial and kidney tissues, both of which have high-energy demands that can lead to free radical accumulation.

HypoThermosol® Purge

HypoThermosol®-Purge is an acellular flush solution specifically designed for use during the transition from normothermic to mild hypothermic temperatures (37°C to 20°C) to rinse culture media and native fluids from tissue and whole organ systems prior to suspension in a preservation solution.

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CryoStor™

Based on our proprietary HypoThermosol® technology, we developed CryoStor™, a family of cell-specific, optimized cryopreservation media designed for frozen storage (temperature of -196°C) of cells and tissues.  Its purpose is to extend the cryopreservation window for gene and cell therapy and tissue engineering. CryoStor™ is uniquely formulated to address the molecular-biological aspects of cells during the preservation process thereby directly reducing the level of preservation-induced, delayed-onset cell damage and death.

CryoStor™ CS5

CryoStor™ CS5 is a base cryopreservation solution which is designed to incorporate the principles which led to the successful development of the HypoThermosol® series with the incorporation of agents to modulate the physical damaging effects associated with ice formation and cellular freezing such as dimethyl sulfoxide (“DMSO”).  As a result of solution design, utilization of the CryoStor™ platform facilitates substantially improved post-thaw cell survival and function and allows for the maintenance of this enhanced recovery with substantially reduced levels of cryoprotective agents such as DMSO.

CryoStor™ CS10

CryoStor™ CS10, a member of the CryoStor™ Series of solutions, addresses the molecular-biological properties of systems undergoing preservation processes.   CryoStor™ CS-10 contains increased concentrations of cryoprotective agents (10% DMSO).

CryoStor™ DLite

CryoStor™ DLite, a member of the CryoStor™ Series of solutions, addresses the molecular-biological properties of systems undergoing preservation processes.  CryoStor™ DLite has been further formulated to provide reduced concentrations of cryoprotective agents (2% DMSO), for use in applications where a reduction in the levels of DMSO is preferred.  

CryoStor™ CS_B

CryoStor™ CS_B is a uniquely formulated hypothermic preservation solution designed to address the molecular-biological aspects of cells during the preservation process thereby directly reducing the level of cell death during and following the preservation interval.  It has been formulated to provide broad-spectrum chill preservation to most mammalian cell systems. This variant has proven effective at preserving and maintaining cells, tissues and organs of the abdominal and thoracic origins, blood vessels, muscular and neural tissues.

The Company currently markets its HypoThermosol® and CryoStor™ products directly to companies and laboratories engaged in pre-clinical research, and to academic institutions.   

 Market Opportunity

Recent advances in cell therapy and tissue engineering have highlighted the significant and unmet requirement to maintain the health and viability of biological material across time and space.  

At the leading edge of biomedicine is cell therapy, which involves a method of growing human cells that may be able to treat cancers and a variety of chronic disorders.  Embryonic stem cells are the earliest precursor of human differentiated cells.  Adult stem cells, as their name suggests, rely on other sources of stem cells rather than from the blastocysts of embryos.  Many researchers believe that cell therapy may revolutionize the treatment of chronic disorders by allowing scientists to utilize stem cells from these sources, as well as from cord blood, to grow new cells that specifically replace and treat diseased tissue.  Applications include the treatment of heart disease, Parkinson’s, Alzheimer’s, stroke, spinal cord injuries, burns and other wounds.  

Time management in cell therapy becomes especially critical where myoblasts are extracted from a patient, transported to a culture laboratory, and then transported back to the patient to be inserted into the target tissue.  Because this entire process can take months and may involve transportation over long distances, cellular viability is of paramount importance.  

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Similar to techniques used in whole organ transplantation, clinicians engaged in cell therapy will attempt to maintain the original and derived cellular material in a cold solution to extend cell viability before and after application of the specific cell or gene therapy technique, and during necessary transportation.  Support solutions range from simple balanced salt formulations to complex mixtures of electrolytes and other components. Until now, there has not been a great deal of protective difference between these various solutions and few offer long-term protection.  

Tissue engineering has led to the development of several artificial tissue substitutes for the therapeutic treatment of injury and disease.  The process of preparing engineered tissue involves isolation of cells, manipulation and purification, expansion to larger quantities – often requiring appropriate media and support materials, some mechanism to control differentiation and longevity of the cells, and processes and conditions for maintaining viability during transportation and storage.  The development of effective delivery systems for engineered tissue has been the subject of enormous investment for the last several years.  The delivery systems serve to protect cells from arduous conditions during culture and distribution, and these delivery systems are often vital for protection of cells.  

Areas such as vaccine and medicine development and toxicological testing, for application in clinical, military, law enforcement, cosmetic, academic, environmental and pharmaceutical settings, also rely heavily on the utilization of biological components.  As with the biological components in these areas, development, banking, distribution and storage of these biologics is a critical component for successful and ultimately their practical application.  

Common to each of these markets is the need for hypothermic preservation media that yields both extended survival time and superior post-preservation performance when contrasted with current processes and non-specific solutions currently in use.  For companies in these market segments, the therapeutic benefit they deliver to clinicians and patients is dependent on establishing a reasonable shelf-life for the end product.  The Company’s products address this underlying and unmet need by providing an enabling technology – a platform of superior preservation media to the entire biotechnology industry.  

In the third and fourth quarters of 2006, we engaged the services of an industry leading consulting firm to estimate the current and future worldwide demand for preservation media.  A demand model was created for both short term hypothermic storage and long term cryopreservation of cells, tissue, and whole organs.  The aggregate worldwide demand for our products in its target market segments is estimated at $200 million in 2007, and growing to nearly $350 million by the end of 2011.  The specific market segments used to create the aggregate total available market for our products include:

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Cell and tissue banks

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Cell suppliers

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Cord blood collection and storage

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Toxicity testing

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Hair transplantation

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Reproductive biology

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Tissue engineering

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Organ transplantation

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Cellular therapy

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Pharmaceutical drug discovery

We are unable to forecast our potential product sales in any of these markets because most of these markets are in their infancy.

Sales and Marketing

On May 12, 2005, we signed an Exclusive Private Labeling and Distribution Agreement with VWR International, Inc., a global leader in the distribution of scientific supplies, pursuant to which we will manufacture our HypoThermosol® and CryoStor™ product lines under the VWR label for sale by VWR to non-clinical customers in North America and Western Europe.  We maintain the right to directly market our products to all clinical and non-clinical markets under its own label throughout the world.  In the fourth quarter of 2006, we hired a Vice President of Sales who will expand and lead our direct sales team.

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Manufacturing

We are an FDA registered Class2 Medical Device manufacturer and holds a current Good Manufacturing Practices (cGMP) certification.  Our HypoThermosol® line of preservation solutions are currently manufactured in-house at our Owego facility in accordance with our patented and proprietary formulas.  In the future, the Company may elect to outsource the production of its Products to one of several qualified, ISO and cGMP certified liquid media contract manufacturers.

Governmental Regulation

Governmental regulation in the United States and other countries is a significant factor affecting the research and development, manufacture and marketing of our products.  In the United States, the FDA has broad authority under the Federal Food, Drug and Cosmetic Act and the Public Health Service Act to regulate the distribution, manufacture and sale of medical devices.  Foreign sales of medical devices are subject to foreign governmental regulation and restrictions which vary from country to country.

The process of obtaining FDA and other required regulatory clearances or approvals is lengthy and expensive.  There can be no assurance that we will be able to obtain necessary clearances or approvals for clinical testing or for manufacturing or marketing of those of our products if needed.  Failure to comply with applicable regulatory approvals can, among other things, result in warning letters, fines, suspensions of regulatory approvals, product recalls, operating restrictions and criminal prosecution.  In addition, governmental regulations may be established which could prevent, delay, modify or rescind regulatory clearance or approval of our products.

Regulatory clearances or approvals, if granted, may include significant limitations on the indicated uses for which our products may be marketed.  In addition, to obtain such clearances or approvals, the FDA and foreign regulatory authorities may impose numerous other requirements on the Company.  FDA enforcement policy strictly prohibits the marketing of approved medical devices for unapproved uses.  In addition, product approvals can be withdrawn for failure to comply with regulatory standards or the occurrence of unforeseen problems following initial marketing.  There can be no assurance that we will be able to obtain regulatory clearances or approvals for products on a timely basis or at all, and delays in receipt of, or failure to receive such, approvals, or the loss of previously obtained approvals, or the failure to comply with existing or future regulatory requirements, would have a material adverse effect on our business, financial condition an d results of operations.

As a component of other developed technology, HypoThermosol® is not subject to specific FDA pre-market approval.  In particular, the Company is not required to sponsor formal prospective, controlled clinical-trials in order to establish safety and efficacy.  However, it is highly likely that all potential customers would require us to comply with Current Good Manufacturing Procedures (“cGMP”) as mandated by FDA.  

There can be no assurance that we will not be required to obtain approval from the FDA prior to marketing any of our products in the future.  We do not market our products for use in embryo and gamete preservation or for tissue or organ transplants, and expect that we will need to obtain pre market approval from the FDA before we do so.  This would entail substantial financial and other resources and could take several years before the products are approved, if at all.  

Intellectual Property

Maintaining and expanding a strong intellectual property position is a key component of our competitive strategy.  In addition to keeping competitors out of our key markets, a broad portfolio of intellectual property will enable us to negotiate more favorable licensing and distribution agreements than could otherwise occur.  We are committed to aggressively protecting BioLife’s intellectual property portfolio.

On January 8, 2007, the Company terminated the employment of John G. Baust, the Chairman, Sr. Vice President and Chief Scientific Officer of the Company, pursuant to the terms of his employment agreement dated July 26, 2006, which includes a non-compete, non-solicitation clause effective for 24 months.  Dr. Baust resigned from the Board of Directors on February 2, 2007.

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On January 8, 2007, we sent a written notice to Cell Preservation Services, Inc. (“CPSI”) that we elected not to renew the Research Agreement, with CPSI, which is scheduled to expire on March 15, 2007. The agreement with CPSI includes a non-disclosure provision that remains in force for 24 months and also specifies that BioLife owns all rights, titles, and interests in any and all technology, inventions, designs, and ideas that resulted from CPSI’s research and development activities in support of specific projects directed by BioLife.  The board of directors also terminated the employment of John M. Baust as the Company’s director of research and development. He is the son of John G. Baust.

We have commenced searches for a new scientific officer and research and development officer as part of our strategic decision to bring its intellectual property and product development in-house.

Our core HypoThermosol® cell preservation technology is protected by U.S. Patent No. 6,045,990, “Inclusion of Apoptotic Regulators in Solutions for Cell Storage at Low Temperature,” owned by the Company, which covers the use of cell-free solution compositions for hypothermic cell storage supplemented with agents inhibiting apoptotic induced cell death. Additionally, solutions for cell storage at hypothermic temperatures supplemented with cell death inhibitors for cryopreservation are disclosed.  BioLife’s other core patent (No. 5,405,942) contains claims relating to tissue preservation and bloodless surgery in the field of organ transplantation.

In February 2003, the Company filed a patent application (Serial No. 10/372,379) entitled “Method and Use of Protein Microarray Technology and Proteomic Analysis to Determine Efficacy of Human and Xenographic Cell, Tissue and Organ Transplant” which contains claims related to systems, tools, and methods for assessing the success of the transplant of a cell, tissue, or organ before and after transplant.  This patent will be jointly assigned to the Research Foundation of the State of New York.

In October 2003, the Company was awarded U.S. Patent No. 6,632,666 B2 entitled “Normothermic, Hypothermic and Cryopreservation Maintenance and Storage Cells, Tissues and Organs in Gel-Based Media.”  This patent covers gel-based compositions for normothermic, Hypothermic and cryopreservative transport or storage of plant tissues or cells and animal organs, tissues or cells, the gel-based compositions comprising a cell maintenance and preservation medium and a gelling agent.  

The Company also has several additional patents (U.S. Patent Nos. 4,923,442 and 5,130,230), relating to blood substitute products, dating back to 1990.  These patents were originally filed with the purpose of providing surgeons with the ability to perform bloodless surgery in the event of severe trauma or under battlefield conditions.

In addition to these U.S. patents, the Company has filed for similar claims for patent protection in Europe and other major international markets, relating to each of these patents.

The Company’s patents protect HypoThermosol® from both literal infringement and also infringement under the Doctrine of Equivalents.  This doctrine does not allow infringement to be avoided by simply replacing an element or component of BioLife’s invention.  

In addition to the Company’s corporate logo and name, BioLife has trademarked the following product names:

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HypoThermosol®

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CryoStor™

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GelStor™

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BioPak™

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Powering the Preservation Sciences™

Prior to the terminations of John G. Baust and John M. Baust, the Company had identified several additional potential patentable claims related to the use of our technology.  Although we intend to continue to develop and file patents relating to our core technology and to rigorously defend our patent position, there can be no assurance that any additional patents will be granted.  To the extent that any unique applications of our technologies are developed by our scientists, such applications or procedures may not be subject to any protection and there can also be no assurance that we will develop additional patentable processes or products or, if developed, that we would be able to obtain patents with respect thereto, or that others may not assert claims successfully with respect to such patents or patent applications.  Furthermore, we might not be able to afford the expense of any litigation which might be necessary to enforce its rights under any patents we may obtain, and there can be no assurance that we would be successful in any such suit.  There is also no assurance that our proposed products will not infringe on patents owned by others.

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While we believe that the protection of patents and trademarks is important to its business, we also rely on a combination of copyright, trade secret, nondisclosure and confidentiality agreements, know-how and continuing technological innovation to maintain its competitive position.  Despite these precautions, it may be possible for unauthorized third parties to copy certain aspects of the Company's products or to obtain and use information that the Company regards as proprietary.  The laws of some foreign countries in which the Company may sell its products do not protect the Company's proprietary rights to the same extent as do the laws of the United States.

Research and Development

In the past, the Company has conducted its internal research through Small Business Innovative Research ("SBIR") grants.  In conjunction with academic investigators, BioLife has been awarded six National Institute of Health (“NIH”) grants and one National Science Foundation grant, valued at $1.38 million, since 2000.  These grants involve research based around BioLife’s core HypoThermosol® technology and includes work on optimizing preservation media for different cellular and tissue applications and more fundamental research into cellular apoptosis and cell and tissue preservation.

In 2004, the Company elected to discontinue engaging directly in the SBIR program to support it’s research and development activities.  Accordingly, based upon numerous discussions with the Small Business Administration and a review of applicable SBIR rules and regulations, the Company entered into a research agreement with Cell Preservation Services, Inc. ("CPSI") to outsource to CPSI all BioLife research currently funded through SBIR grants.  CPSI is owned by John M. Baust, a former employee of BioLife, and the son of John G. Baust, the past Chief Scientific Officer of BioLife.  The research agreement, which was negotiated on an arms length basis and designed to comply with the rules and regulations applicable to the performance of research with respect to SBIR grants, established a format pursuant to which CPSI would (a) take over the processing of the then existing applications for SBIR grants applied for by BioLife ("Current Projects "), (b) apply for additional SBIR grants for future research projects related to BioLife’s core products ("Future Projects"), (c) perform a substantial portion of the principal work to be done, in terms of (i) time spent, and (ii) research, in connection with Current Projects and Future Projects (the "Research"), and (d) utilize BioLife personnel as consultants with respect to the Research.  In conjunction therewith, BioLife granted to CPSI a non-exclusive, royalty free license (with no right to sublicense) to use BioLife's technology solely for the purpose of conducting the Research in connection with the Current Projects and Future Projects.  Pursuant to the research agreement, (x) BioLife was to, among other things, provide CPSI with (i) suitable facilities in which to conduct the Research, including basic research equipment and office equipment ("Facilities"), and (ii) management services ("Management Services"), and (y) CPSI was to (i) accept a ssignment of Current Projects, (ii) be responsible for conducting the Research with respect to Current Projects and Future Projects, (iii) as mutually agreed to by the parties and within the confines of the rules and regulations applicable to the performance of the Research with respect to SBIR grants, utilize BioLife's personnel as consultants, (iv) provide suitable experienced personnel, including, without limitation, a principal investigator/program director, to conduct the Research, (v) comply with all federal laws, rules and regulations applicable to SBIR grants and file all necessary forms and reports with the federal agency awarding the SBIR grants, and (vi) utilize the Facilities and Management Services and pay BioLife fees with respect thereto.  BioLife owns all right, title and interest in and to any technology, inventions, designs, ideas, and the like (whether or not patentable) that emanates from the Current Projects and Future Projects related to BioLife’s core products and technology.  

For the full year 2006, we received no fees from CPSI for Management Services or Facilities.  However, on September 25, 2006, CPSI was awarded two NIH SBIR grants which amounted to $724,865 in aggregate.  We are currently working to recover all fees which may be owed to the Company from CPSI for these grants.  Due to the uncertain nature of the ultimate collection of these fees, no amounts were recorded as revenues for 2006.   During 2006, the Company spent $57,330 on its own research and development activities.

On January 8, 2007, we elected to not renew its research and development agreement with CPSI, which is scheduled to expire on March 15, 2007. The agreement with CPSI includes a non-disclosure provision that remains in force for 24 months.  We have commenced searches for a new senior scientific officer and research and development officer as part of our strategic decision to bring our intellectual property and product development in-house.

In the third quarter of 2006, we formed a Scientific Advisory Board (SAB) initially comprised of external members including leaders in the fields of cellular therapy, preservation of biologic material, and regulatory compliance.  We intend to expand the SAB with additional members who by their individual experience and experience, will provide us guidance and counsel in the areas of research and development and market development.  The founding outside members are:

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Shelly Heimfeld, Ph.D, Director of the Cellular Therapy Laboratory at the Fred Hutchinson Cancer Research Center in Seattle, and President of the International Society of Cellular Therapy.  Dr. Heimfeld is internationally recognized for research in hematopoietic-derived stem cells and the development of cell processing technologies for improved cancer therapy.

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Dayong Gao, Ph.D, professor of biomedical engineering at the University of Washington in Seattle.  Dr. Gao has been actively engaged in cryopreservation research for more than 20 years, having authored over 130 peer-reviewed journal articles on cryopreservation.

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Darin Weber, Ph.D, a leading regulatory expert for cellular and tissue based products, and former FDA cellular therapy reviewer. Dr. Weber’s knowledge of the regulatory landscape for cell and gene therapy is extensive and directly relevant to our business since the Company’s preservation solutions are a critical process component in several active clinical trials for new cellular therapy products.

Competition

The medical products industry is highly competitive.  Most of our potential competitors have considerably greater financial, technical, marketing, and other resources than the Company.

BioLife faces competition in the markets for its line of HypoThermosol® preservation solutions from several much larger companies, including Barr Laboratories, Inc., which markets Viaspan, an organ preservation solution.  

BioLife faces competition in the markets for its line of CryoStor™ preservation solutions from several much larger companies, including Invitrogen, Cambrex, and Sigma Aldrich, which market alternative cryopreservation media for cell culture applications.  

The Company expects competition to intensify with respect to the areas in which it is involved as technical advances are made and become more widely known.

Employees

The Company's business is highly dependent upon its ability to attract and retain qualified scientific, technical and management personnel.  BioLife had nine full-time employees and one part-time research and development employee at December 31, 2006.  The Company is not a party to any collective bargaining agreements.

Reports to Security Holders

This annual report on Form 10-KSB, including the exhibits and schedules filed as part of the annual report, may be inspected at the public reference facility maintained by the Securities and Exchange Commission ("SEC") at its public reference room at 450 Fifth Street, NW, Washington, DC 20549 and copies of all or any part thereof may be obtained from that office upon payment of the prescribed fees.  You may call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room and you may request copies of the documents upon payment of a duplicating fee, by writing to the SEC.  In addition, the SEC maintains a website that contains reports, proxy and information statements and other information regarding registrants, including us, that file electronically with the SEC which can be accessed at www.sec.gov.

The Company also makes its periodic and current reports available, free of charge, on its website, www.BioLifeSolutions.com, as soon as reasonably practicable after such material is electronically filed with the SEC.  Information available on our website is not a part of, and should not be incorporated into, this annual report on Form 10-KSB.

Safe Harbor for Forward-Looking Statements Under the Securities Litigation Reform Act of 1995; Risk Factors

This Annual Report on Form 10-KSB and other reports, releases, and statements (both written and oral) issued by the Company and its officers from time to time may contain statements concerning the Company’s future results, future performance, intentions, objectives, plans, and expectations that are deemed to be “forward-looking statements.”  Such statements are made in reliance upon safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  The

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Company’s actual results, performance, and achievements may differ significantly from those discussed or implied in the forward-looking statements as a result of a number of known and unknown risks and uncertainties including, without limitation, those discussed below and in “Management’s Discussion and Analysis or Plan of Operation.”  In light of the significant uncertainties inherent in such forward-looking statements, the inclusion of such statements should not be regarded as a representation by the Company or any other person that the Company’s objectives and plans will be achieved.  Words such as “believes,” “anticipates,” “expects,” “intends,” “may,” and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements.  The Company undertakes no obligation to revise any of these forw ard-looking statements.

ITEM 2. DESCRIPTION OF PROPERTY

Rental expense for all of the Company’s facilities for the year ended December 31, 2006 totaled approximately $74,000.

In January 2004, we signed a three year lease with Field Afar Properties, LLC whereby we lease 6,161 square feet of office, laboratory, and manufacturing space in Owego, NY at a rental rate of $6,200 per month.  Renovation of the new facility was completed in April 2004.   A one year lease extension was signed in November 2006 extending the lease through January 2008 at the same monthly rental rate.  Dr. John G. Baust, the Company’s former Chief Executive Officer and Chief Scientific Officer, and John M. Baust, the Company’s former Director, Research and Development, are partial owners of Field Afar Properties, LLC.  

ITEM 3.  LEGAL PROCEEDINGS

On February 7, 2007, a former employee of the Company filed a complaint in the New York State Supreme Court, County of Broome, against the Company alleging a breach of an employment agreement and seeking damages of up to $300,000 plus attorneys’ fees.  The Company does not believe there is any merit to such lawsuit and, if need be, intends to defend the same vigorously..

On or about March 21, 2007, Christine Baust, a former employee of the Company and daughter of John G. Baust, the Company’s former Chief Executive Officer and Chief Scientific Officer, filed a complaint with the State of New York, Division of Human Rights alleging unlawful discrimination practices against the Company based on wrongful termination due to disability, and gender and sexual harassment.  If discrimination is found, the Company would be ordered to cease and desist and take appropriate action, such as reinstatement.  The Division of Human Rights may award money damages, including back pay and compensatory damages for mental pain and suffering.  The Company does not believe there is any merit to such complaint and, if need be, intends to defend the same vigorously.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

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PART II

ITEM 5.  MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

Price Range of Common Stock

The common stock, par value $.001 per share, of the Company ("Common Stock") is traded on the OTC Bulletin Board under the symbol "BLFS."  The following table sets forth the high and low closing prices for the Common Stock for the periods indicated.

	Price Range
	High	Low
Quarter Ended:
March 31, 2005	$0.15	$0.06
June 30, 2005	$0.25	$0.07
September 30, 2005	$0.21	$0.09
December 31, 2005	$0.16	$0.09
	$0.12	$0.07
March 31, 2006	$0.10	$0.06
June 30, 2006	$0.10	$0.07
September 30, 2006	$0.09	$0.06
December 31, 2006

Holders

As of December 31, 2006, there were 568 holders of record of the Common Stock.

Dividend History and Policy

The Company has never paid cash dividends on its Common Stock and does not anticipate that any cash dividends will be paid in the foreseeable future.

Private Placements

In October 2001, the Company completed a private placement of 5,000 Units, raising approximately $1,000,000.  Each Unit was priced at $200.01 and consisted of two shares of Series F convertible preferred stock, convertible into 800 shares of common stock, and one warrant to purchase 400 shares of common stock at $0.375 per share, on or before October 2006.  The Company retained an advisor to assist the Company in finding qualified investors to purchase the Units.  The Advisor was entitled to a finder’s fee equal to 10 percent of the monies received by the Company, payable in Units valued at $200.01 per Unit.  The Advisor was also entitled to a cash fee of 7 percent with respect to the monies received by the Company upon exercise of the warrants.  The Units were placed with investors in the United States and Europe, and the sales of the Units were exempt from Registration under the Securities Act pursuant to Rule 506 of Regulation D and Rule 90 3 of Regulation S.

In December 2003, the Company completed a private placement of 55.125 Units, raising $1,226,533 in cash, net of issuance costs of $23,467, and $128,125 as payment of accrued salaries to certain employees.  Each Unit was priced at $25,000 and consisted of one share of Series G convertible non-redeemable preferred stock, convertible into 312,500 share of common stock, and one warrant to purchase 312,500 shares of common stock a $.08 per share, on or before October 2013.  The Units were placed with investors in the United States and Europe, and the sales of the Units were exempt from Registration under the Securities Act pursuant to Rule 506 of Regulation D and Rule 903 of Regulation S.

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ITEM 6.    MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion should be read in conjunction with the Company's financial statements and notes thereto set forth elsewhere herein. The discussion of the results from operations includes only the Company's continuing operations.

We have pioneered the next generation of liquid preservation media designed to maintain the viability and health of cellular matter and tissues during refrigeration, freezing, transportation and storage. Based on our proprietary, bio-packaging technology and a patented understanding of the mechanism of cellular damage and death, these products enable the biotechnology and medical community to address a growing problem that exists today. The expanding practice of cell and gene therapy has created a need for enabling products that ensure the biological viability of mammalian cell and tissue material during transportation and storage.  We believe that our HypoThermosol® and CryoStor™ products are a significant step forward in meeting these needs.

We develop, manufacture and market patented hypothermic storage and cryopreservation solutions for cells, tissues, and organs.  Our proprietary HypoThermosol^® and CryoStor™ preservation media are marketed directly to companies, laboratories, and academic institutions engaged in research and commercial clinical applications.  Our line of serum-free and protein-free preservation solutions are fully defined and formulated to reduce or prevent preservation-induced, delayed-onset cell damage and death.  This platform enabling technology provides academic and clinical researchers significant improvement in post-thaw cell, tissue, and organ viability and function.  

Liquidity and Capital Resources

During 2006, our fourth full year of solution product sales, we financed our operations from the proceeds received from the exercise of options and warrants in 2006, as well as from product sales.  Additionally, we recovered approximately $406,000 from an insurance claim for product inventory lost in a flood during 2006.    

At December 31, 2006, the Company had cash and cash equivalents of $118,674, compared to cash and cash equivalents of $185,095 at December 31, 2005.  At December 31, 2006, the Company had a working capital surplus of $135,314, compared to a working capital surplus $173,704 at December 31, 2005.  

During the year ended December 31, 2006, net cash used in operating activities was $(712,196) as compared to net cash used by operating activities of $(576,333) for the year ended December 31, 2005.

Net cash used in investing activities totaled $(35,555) during the year ended December 31, 2006 which resulted from the purchase of property and equipment. Net cash provided by investing activities totaled $3,817 during the year ended December 31, 2005 resulting from the sale of old property and equipment offset by the purchase of property and equipment to support the new manufacturing facility in the amount of $15,108.

Net cash provided by financing activities totaled $681,330 for the year ended December 31, 2006 resulting from proceeds received from the exercise of options and warrants of $879,341, collections of stock subscription receivables of $21,276 offset by principal note payments totaling $28,450 and an increase in restricted cash of $190,837.  Net cash provided by financing activities totaled $225,927 for the year ended December 31, 2005 resulting from proceeds borrowed from the Tioga County LDC totaling $230,500 offset by principal payments on the note totaling $4,573.  

During 2006, the Company experienced a growth in product sales of 36% from 2005.  In addition, the Company experienced continued product sales growth, quarter by quarter, during 2006, with each quarterly product sales surpassing the previous year’s (2005) quarterly product sales.  Although a promising trend, the Company was not able to support its operating activities through sales of its products. As a result, operations were funded primarily with proceeds ($879,341) received from the exercise of options and warrants.  The Company maintains no line of credit or bank notes.    

In March 2006, in an effort to secure additional capital, the Board of Directors approved a plan to raise additional capital from the holders of its outstanding warrants and stock options at a reduced price of $0.04 per share, in order to (a) prevent further dilution by the issuance of additional securities to outsiders, and (b) to restructure the capitalization of the Company.  Under the terms of the plan, the Company offered to:

11

1.

the holders of the Company’s (a) 12,000 shares of Series F Preferred Stock, convertible into 4,800,000 shares of the Company’s Common Stock, and (b) the 6,000 Series F Warrants to purchase 2,400,000 shares of the Company’s Common Stock at $.375 per share purchased in conjunction with the Series F Preferred Stock,  the right to exercise the Series F Warrants and purchase the shares of Common Stock issuable upon exercise thereof at $.04 per share (same number of shares at a lower price), provided that (a) simultaneously with the exercise of such right, the holder converts his shares of Series F Preferred Stock into shares of the Company’s Common Stock, and (b) the conversion of the Series F Preferred Stock and exercise of the Series F Warrants take place on or before May 1, 2006;

2.

the holders of the Company’s 55.125 shares of Series G Preferred. Stock, which Series G Preferred. Stock is convertible into 17,226,563 shares of the Company’s Common Stock, and (b) the 55.125 Series G Warrants to purchase 17,226,563 of the Company’s Common Stock at $.08 per share purchased in conjunction with the Series G Preferred Stock, the right to exercise the Series G Warrants and purchase the shares of Common Stock issuable upon exercise thereof at $.04 per share (same number of shares at a lower price), provided that (a) simultaneously with the exercise of such right, they convert their shares of Series  G Preferred Stock into shares of the Company’s Common Stock, and (b) the conversion of the Series G Preferred Stock and exercise of the Series G Warrants take place on or before May 1, 2006;

3.

the holders of all exercisable Stock Options to purchase shares of the Company’s Common Stock (an aggregate of 3,511,000 shares of the Company’s Common Stock) at prices ranging from $.08-$2.50 per share, the right to exercise such Stock Options and purchase the shares of Common Stock issuable upon exercise thereof at $.04 per share (the same number of shares at a lower exercise price), provided that the exercise of such stock options takes place on or before May 1, 2006; and

4.

the holders of all Warrants to purchase shares of the Company’s Common Stock (an aggregate of 7,640,295 shares of the Company’s Common Stock) at prices ranging from $.08-$41.25 per share, the right to exercise such warrants and purchase the shares of Common Stock issuable upon exercise thereof at $.04 per share (the same number of shares at a lower price), provided the exercise of the warrants takes place on or before May 1, 2006.

The offering was conditioned upon all shares of the Company’s Series F Preferred Stock and Series G Preferred Stock converting into Common Stock of the Company.

The offering was completed on May 1, 2006 and the Company was able to raise $879,341 in cash and reduce liabilities by $113,187 through (a) the exercise of warrants to purchase 23,022,783 shares of the Company’s Common Stock at $0.04, and (b) the exercise of stock options to purchase 2,547,000 shares of the Company’s Common Stock at $0.04.  As part of the plan, 12,000 shares of the Company’s Series F Preferred Stock were converted to 4,800,000 shares of Common Stock and 55.125 shares of the Company’s Series G Preferred Shares were converted to 17,226,563 shares of Common Stock.  After the conversion, the company terminated all designations of Series F and G Preferred Shares.  In addition, on May 1, 2006, the Company declared, effective as of December 31, 2005, $507,808 and $217,181 in accumulated dividends payable on the Series F preferred stock and Series G preferred stock, respectively, which dividends were paid in common stock of the C ompany on May 1, 2006.  The total number of shares paid in connection with such dividends was 8,763,633.  After the payment of such dividends, the issuance of shares of common stock in connection with the conversion of the Series F preferred stock and Series G preferred and the aforementioned exercise of options and warrants, the Company had 68,773,188 shares of common stock issued and outstanding.

In February 2007, the Company borrowed an aggregate of $750,000, represented by two promissory note agreements, from Thomas Girschweiler and Walter Villiger, stockholders of the Company.  Each Note, together with interest accrued thereon at the rate of 7% per annum (collectively, the “Conversion Amount”), shall become due and payable in one lump sum on the earlier of (a) the second anniversary of the date of such Note, or (b) an Event of Default (as defined in the Notes).  In addition, if the Note is outstanding at the time of any bona fide equity financing of the Company of at least $1,000,000 (excluding conversion of the Notes) (a “Financing”), then the Note holder may convert the Note into that number of shares or units of the equity securities of the Company sold in the Financing (“New Equity Securities”) as is equal to the Conversion Amount divided by 85% of the per share or per unit purchase price of the New Equity Securities.  In connection with the issuance of the Notes, each Note holder received a loan origination fee equal to 10% of the principal amount of the Note, payable in shares of the Company’s common stock based on the closing price of the shares on the OTCBB on the day preceding the date of issuance of the Note.  The Notes were issued pursuant to an exemption from registration under Regulation S of the Securities Act of 1933, as amended.

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The Company may need to raise additional funds through additional financings, including private or public equity and/or debt offerings and collaborative research and development arrangements with corporate partners if our revenues are insufficient to meet our operating needs. Our future capital requirements will depend on many factors, including the ability to market and sell our product line, research and development programs, the scope and results of clinical trials, the time and costs involved in obtaining regulatory approvals, the costs involved in obtaining and enforcing patents or any litigation by third parties regarding intellectual property, the status of competitive products, the maintenance of our manufacturing facility, the maintenance of sales and marketing capabilities, and the establishment of collaborative relationships with other parties.

Critical Accounting Policies and Estimates

The Company’s discussion and analysis of its financial condition and results of operations are based upon its financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.  The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures.  On an ongoing basis, the Company evaluates estimates, including those related to bad debts, inventories, fixed assets, income taxes, contingencies and litigation.  The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of the Company’s judgments on the carrying value of assets and liabilities.  Actual results may differ from these estimates under different assumptions or condi tions.

The Company believes that the following accounting policies involve more significant judgments and estimates in the preparation of the financial statements.  The Company maintains an allowance for doubtful accounts for estimated losses that may result from the inability of its customers to make payments.  If the financial condition of the Company’s customers were to deteriorate, resulting in their inability to make payments, the Company may be required to make additional allowances.  The Company writes down inventory for estimated obsolete or unmarketable inventory to the lower of cost or market based on assumptions of future demand.  If the actual demand and market conditions are less favorable than projected, additional write-downs may be required.  Also, the Company uses the Black Scholes method to determine the fair value of stock based compensation, which requires assumptions as to expected volatility, risk-free interest rate and expected lives of the equity instruments.

Results of Operations (Year ended December 31, 2006 compared to the year ended December 31, 2005)

Revenue

Revenue for the year ended December 31, 2006 decreased $11,499 or 2%, to $603,219, compared to $614,718 for the year ended December 31, 2005.  In 2006, the Company had product sales revenue of $603,219 as compared to $444,662 in 2005.  The shift of the Company’s focus toward product sales resulted in a 36% increase in product sales over 2005.  In addition, the Company experienced continued product sales growth, quarter by quarter, during 2006, with each quarterly product sales surpassing the previous year’s (2005) quarterly product sales. The Company had no facilities and management fees revenue for the year ended December 31, 2006, compared to $170,056 for the year ended December 31, 2005.  In 2004, the Company elected to discontinue engaging directly in Small Business Innovative Research (“SBIR”) grants and entered into a research agreement with Cell Preservation Services, Inc. (“CPSI”) to outsource to CPSI all BioLife re search funded through SBIR grants.  In addition to shifting R&D related expenses to CPSI, BioLife received facilities and management fees from CPSI in exchange for the use of BioLife facilities and management services in connection with the research performed. BioLife received no facilities or management fees in 2006.  

Cost of Product Sales

For the year ended December 31, 2006, the cost of product sales totaled $298,065 as compared to $250,078 for the year ended December 31, 2005.  These increases are primarily the result of increased production costs associated with the increase in product sales.  Additionally, in 2005, the Company wrote off obsolete inventory (approximately $23,000 in 2005 Q4) resulting in a reduction in gross margin.  

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Research and development

Expenses relating to research and development for the year ended December 31, 2006 increased 106% to $57,330, compared to $27,855 for the year ended December 31, 2005.  This increase was due to the addition of an employee, beginning in the second quarter of 2006, to perform research and development work.    

Sales and marketing

For the year ended December 31, 2006, sales and marketing expenses increased $253,495, or 324%, to $331,762, compared to $78,267 for the year ended December 31, 2005. The increase in sales and marketing expense in 2006 was due to increased sales and marketing activities such as tradeshows, advertising, travel, and supplies as well as the addition of two marketing employees, beginning in the second quarter of 2006.  Additionally, a Vice President of Sales was added in October 2006.        

General and administrative expenses

For the year ended December 31, 2006, general and administrative expenses increased $524,366, or 59% to $1,410,417, compared to $886,051 for the year ended December 31, 2005.  Notable increases in general and administration expenses include an increase in travel expenses for 2006 totaling approximately $72,000 when compared to 2005.  This increase resulted primarily from allowances based on travel expenditures made which were granted to two employees, including the former Chief Executive Officer.  In addition, compensation and benefits expenses for 2006 increased approximately $396,000 when compared to 2005 as a result of the addition of two new employees in the third quarter of 2006, including a new Chief Executive Officer, as well as implementation of a Company policy to compensate outside directors in 2006.  Also included in this compensation increase is an increase of approximately $173,000 in stock-based compensation.  Professional fees for 20 06 increased approximately $67,000 when compared to 2005 as a result of increased accounting fees and fees for a market demand consulting project.  These increases were partially offset by a decrease in equipment rental fees for 2006 totaling approximately $19,000 when compared to 2005 as several of the Company’s equipment leases expired and more cost effective solutions were implemented.

Interest expense

For year ended December 31, 2006, interest expense was $56,544.  For the year ended December 31, 2005, interest expense was $1,943.  This increase is primarily the result of approximately $44,000 in interest recorded as a result of modification of stock warrants which were originally issued in connection with promissory notes.

Insurance recovery

During the year ended December 31, 2006 the company recorded a gain from an insurance settlement of $406,388.  There was no such insurance recovery in 2005.  The recovery related to proceeds from an insurance claim for a loss of preservation solution inventory the Company suffered in June 2006.  

Operating expenses and net income

For the year ended December 31, 2006, operating expenses increased $807,336, or 81% to $1,799,509, compared to $992,173 for the year ended December 31, 2005.  The Company reported a net loss of $(1,134,018) for the year ended December 31, 2006, compared to a net loss of $(619,323) for the year ended December 31, 2005.  

Cash and cash equivalents

At December 31, 2006, the Company had cash and cash equivalents of $118,674, compared to cash and cash equivalents of $185,095 at December 31, 2005.  At December 31, 2006, the Company had a working capital surplus of $135,314, compared to a working capital surplus $173,704 at December 31, 2005.  

Contract Obligations

The Company leases equipment as lessee, under an operating lease expiring in October 2010.  The lease requires monthly payments of approximately $337.

In January 2004, BioLife signed a three-year lease with Field Afar Properties, LLC whereby BioLife leases 6,161 square feet of office, laboratory, and manufacturing space in Owego, NY at a rental rate of $6,200 per month.  A one-year lease extension was signed in November 2006 extending the lease through January 2008 at the same monthly rental rate.  Dr. John G. Baust, the Company’s former Chief Executive Officer and Chief Scientific Officer, and John M. Baust, the Company’s former Director of Research and Development, are partial owners of Field Afar Properties, LLC.  

14

Risk Factors

The risks presented below may not be all of the risks the Company may face.  These are the factors that the Company believes could cause actual results to be different from expected and historical results.  Other sections of this report include additional factors that could have an effect on the Company’s business and financial performance.  The industry in which the Company competes is very competitive and changes rapidly.  Sometimes new risks emerge and management may not be able to predict all of them or how they may cause actual results to be different from those contained in any forward-looking statements.  You should not rely upon forward-looking statements as a prediction of future results.

The Company has a history of losses and may never achieve or maintain profitability.

The Company has incurred annual operating losses since inception, and may continue to incur operating losses because new products will require substantial development, clinical, regulatory, manufacturing, marketing and other expenditures.  For the fiscal years ended December 31, 2006 and December 31, 2005, the Company had net losses of $(1,134,018) and $(619,323), respectively.  As of December 31, 2006, the Company’s accumulated deficit was $(41,815,979).  The Company may not be able to successfully commercialize its current or future products, achieve significant revenues from sales, or achieve or sustain profitability.  Successful completion of the Company’s development program and its transition to attaining profitable operations is dependent upon achieving a level of revenues adequate to support its cost structure.

The market for the Company’s Common Stock is limited and its stock price is volatile.

The Company’s Common Stock, traded on the OTC Bulletin Board, has historically traded at low average daily volumes, resulting in a limited market for the purchase and sale of the Company’s Common Stock on the OTC Bulletin Board.

The market prices of many publicly traded companies, including emerging companies in the health care industry, have been, and can be expected to be, highly volatile.  The future market price of the Company’s common stock could be significantly impacted by

·

future sales of the Company’s common stock,

·

announcements of technological innovations for new commercial products by the Company’s present or potential competitors,

·

developments concerning proprietary rights,

·

adverse results in the Company’s field or with clinical tests,

·

adverse litigation,

·

unfavorable legislation or regulatory decisions,

·

public concerns regarding the Company’s products,

·

variations in quarterly operating results,

·

general trends in the health care industry, and

·

other factors outside of the Company’s control.  

There is uncertainty surrounding the Company’s ability to successfully commercialize its preservative solutions.

The Company’s growth depends, in part, on its continued ability to successfully develop, commercialize and market the Company’s HypoThermosol® and CryoStor™preservative solutions.  Even in markets that do not require the Company to undergo clinical trials and obtain regulatory approvals, the Company’s line of HypoThermosol® and CryoStor™preservative solutions will not be used unless they present an attractive alternative to competitive products and the benefits and cost savings achieved through their use outweigh the cost of the solutions.  The Company believes that recommendations and endorsements of physicians will be essential for market acceptance of the HypoThermosol® and CryoStor™product lines.   

The success of the Company’s HypoThermosol® and CryoStor™preservative solutions is dependant, in part, on the commercial success of new cell and gene therapy technology.

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The Company is developing preservative media for, and marketing its HypoThermosol® and CryoStor™preservative solutions to, biotechnology companies and research institutions engaged in research and development of cell, gene and tissue reengineering therapy.  Although the Company, as a component supplier, may not be subject to the same formal prospective, controlled clinical-trials to establish safety and efficacy, and to substantial regulatory oversight by the FDA and other regulatory bodies, with respect to the commercialized end products or therapies developed by these biotechnology companies and research institutions, the development of these therapies are years away from commercialization, and demand, if any, for the HypoThermosol® and CryoStor™preservative solutions in these markets, is expected to be limited for several years.  

The Company faces significant competition.

The Company faces competition in the markets for its HypoThermosol® and CryoStor™ preservation solution from several much larger companies, including Organ Recovery Systems, Inc., which is developing low temperature technologies for the preservation and transportation of tissue and Barr Laboratories, Inc., which markets Viaspan, an organ preservation solution.  

Many of the Company’s competitors are significantly larger than the Company and have greater financial, technical, research, marketing, sales, distribution and other resources than the Company. Additionally, the Company believes there will be intense price competition with respect to the Company’s products.  There can be no assurance that the Company’s competitors will not succeed in developing or marketing technologies and products that are more effective or commercially attractive than any that are being developed or marketed by the Company, or that such competitors will not succeed in obtaining regulatory approval, introducing, or commercializing any such products prior to the Company.  Such developments could have a material adverse effect on the Company’s business, financial condition and results of operations.  Further, even if the Company is able to compete successfully, there can be no assurance that it could do so in a profitable manner.

The Company’s success will depend on its ability to attract and retain key personnel.

In order to execute its business plan, the Company must attract, retain and motivate highly qualified managerial, technical and sales personnel.  If the Company fails to attract and retain skilled scientific and sales personnel, the Company’s research and development and sales efforts will be hindered.   The Company’s future success depends to a significant degree upon the continued services of key scientific and technical personnel.  If the Company does not attract and retain qualified personnel it will not be able to achieve its growth objectives.

If the Company fails to protect its intellectual property rights, the Company’s competitors may take advantage of its ideas and compete directly against it.

The Company’s success will depend to a significant degree on its ability to secure and protect intellectual proprietary rights and enforce patent and trademark protections relating to the Company’s technology.  While the Company believes that the protection of patents and trademarks is important to its business, the Company also relies on a combination of copyright, trade secret, nondisclosure and confidentiality agreements, know-how and continuing technological innovation to maintain its competitive position. From time to time, litigation may be advisable to protect its intellectual property position.  However, these legal means afford only limited protection and may not adequately protect the Company’s rights or permit it to gain or keep any competitive advantage. Any litigation in this regard could be costly, and it is possible that the Company will not have sufficient resources to fully pursue litigation or to protect the Company’s intelle ctual property rights. This could result in the rejection or invalidation of the Company’s existing and future patents.  Any adverse outcome in litigation relating to the validity of its patents, or any failure to pursue litigation or otherwise to protect its patent position, could materially harm the Company’s business and financial condition.  In addition, confidentiality agreements with the Company’s employees, consultants, customers, and key vendors may not prevent the unauthorized disclosure or use of the Company’s technology. It is possible that these agreements will be breached or that they will not be enforceable in every instance, and that the Company will not have adequate remedies for any such breach.  Enforcement of these agreements may be costly and time consuming.  Furthermore, the laws of foreign countries may not protect the Company’s intellectual property rights to the same extent as the laws of the United States.   

Because the medical device industry is litigious, the Company may be sued for allegedly violating the intellectual property rights of others.

16

The medical technology industry in the past has been characterized by a substantial amount of litigation and related administrative proceedings regarding patents and intellectual property rights. In addition, many medical device companies have used litigation against emerging growth companies as a means of gaining a competitive advantage.

Should third parties file patent applications or be issued patents claiming technology claimed by the Company in pending applications, the Company may be required to participate in interference proceedings in the U.S. Patent and Trademark Office to determine the relative priorities of its inventions and the third parties’ inventions.  The Company could also be required to participate in interference proceedings involving its issued patents and pending applications of another entity.  An adverse outcome in an interference proceeding could require the Company to cease using the technology or to license rights from prevailing third parties.   Third parties may claim that the Company is using their patented inventions and may go to court to stop the Company from engaging in its normal operations and activities.  These lawsuits are expensive to defend and conduct and would also consume and divert the time and attention of the Company’s managem ent.  A court may decide that the Company is infringing on a third party’s patents and may order the Company to cease the infringing activity.  The court could also order the Company to pay damages for the infringement.  These damages could be substantial and could harm the Company’s business, financial condition and operating results.   If the Company is unable to obtain any necessary license following an adverse determination in litigation or in interference or other administrative proceedings, the Company would have to redesign its products to avoid infringing a third party’s patent and temporarily or permanently discontinue manufacturing and selling some of its products. If this were to occur, it would negatively impact future sales.

If the Company fails to obtain or maintain necessary regulatory clearances or approvals for products, or if approvals are delayed or withdrawn, the Company will be unable to commercially distribute and market its products or any product modifications.

Government regulation has a significant impact on the Company’s business.  Government regulation in the United States and other countries is a significant factor affecting the research and development, manufacture and marketing of the Company’s products.  In the United States, the FDA has broad authority under the Federal Food, Drug and Cosmetic Act to regulate the distribution, manufacture and sale of medical devices.  Foreign sales of drugs and medical devices are subject to foreign governmental regulation and restrictions, which vary from country to country.  The process of obtaining FDA and other required regulatory clearances and approvals is lengthy and expensive. The Company may not be able to obtain or maintain necessary approvals for clinical testing or for the manufacturing or marketing of its products.  Failure to comply with applicable regulatory approvals can, among other things, result in fines, suspension or withdrawal of r egulatory approvals, product recalls, operating restrictions, and criminal prosecution.  In addition, governmental regulations may be established which could prevent, delay, modify or rescind regulatory approval of the Company’s products.  Any of these actions by the FDA, or change in FDA regulations, may adversely impact the Company’s business and financial condition.

Regulatory approvals, if granted, may include significant limitations on the indicated uses for which the Company’s products may be marketed. In addition, to obtain such approvals, the FDA and foreign regulatory authorities may impose numerous other requirements on the Company.  FDA enforcement policy prohibits the marketing of approved medical devices for unapproved uses.  Furthermore, product approvals can be withdrawn for failure to comply with regulatory standards or unforeseen problems following initial marketing.  The Company may not be able to obtain or maintain regulatory approvals for its products on a timely basis, or at all, and delays in receipt of or failure to receive such approvals, the loss of previously obtained approvals, or failure to comply with existing or future regulatory requirements would have a significant negative effect on the Company’s financial condition.

The Company is dependent on outside suppliers for all of its manufacturing supplies.

The Company relies on outside suppliers for all of its manufacturing supplies, parts and components.  Although the Company believes it could develop alternative sources of supply for most of these components within a reasonable period of time, there can be no assurance that, in the future, its current or alternative sources will be able to meet all of the Company’s demands on a timely basis.  Unavailability of necessary components could require the Company to re-engineer its products to accommodate available substitutions which would increase costs to the Company and/or have a material adverse effect on manufacturing schedules, products performance and market acceptance.

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ITEM 7.  FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

BioLife Solutions, Inc.

Owego, New York

We have audited the accompanying Balance Sheets of BioLife Solutions, Inc. as of December 31, 2006 and 2005, and the related Statements of Operations, Stockholders’ Equity and Cash Flows for the years then ended.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of BioLife Solutions, Inc. as of December 31, 2006 and 2005, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 2 to the financial statements, the Company has been unable to generate sufficient income from operations to meet its operating needs and may not have sufficient liquidity to meet its financial obligations in the future.  These conditions raise substantial doubt about the Company’s ability to continue as a going concern.  Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As discussed in Note 1 to the financial statements, on January 1, 2006, the Company adopted Statement of Financial Accounting Standards No. 123(R) “Share-Based Payment.”

/s/ Aronson & Company

Aronson & Company

Rockville, Maryland

March 26, 2007

F-1

BioLife Solutions, Inc.

Balance Sheets

			December 31,		December 31,
			2006		2005
Assets
Current assets
		Cash and cash equivalents	$	118,674	$	185,095
		Cash - restricted		190,837		-
		Accounts receivable, trade, net of allowance for doubtful accounts
		of $2,000 and $13,500 at December 31, 2006 and 2005, respectively		98,980		76,343
		Inventories		92,751		123,413
		Prepaid expenses and other current assets		14,414		-
Total current assets				515,656		384,851
Property and equipment
Leasehold improvements				59,264		45,783
Furniture and computer equipment				48,387		42,247
Manufacturing and other equipment				128,448		130,575
Subtotal				236,099		218,605
Less: Accumulated depreciation and amortization				(191,323)		(156,351)
Net property and equipment				44,776		62,254
Total assets			$	560,432	$	447,105
Liabilities and Stockholders’ Equity
Current liabilities
	Accounts payable		$	66,418	$	56,934
	Accounts payable – related parties			23,879		8,729
	Accrued expenses			30,087		45,736
	Accrued compensation			62,481		71,298
	Notes payable – LDC Loan – current portion			197,477		28,450
Total current liabilities				380,342		211,147
Long term liabilities
Note payable – LDC Loan – long term portion				-		197,477
Total liabilities				380,342		408,624
Commitments and Contingencies
Stockholders' equity
		Series F convertible preferred stock, $.001 par value; 12,000
		shares authorized, issued and outstanding, with an aggregate		-		12
		liquidation value of $2,307,493 at December 31, 2005
		Series G convertible preferred stock, $.001 par value; 80
		shares authorized, 55 shares issued and outstanding, with an		-		-
		aggregate liquidation value of $1,595,409 at December 31, 2005
		Common stock, $0.001 par value; 100,000,000
		shares authorized, 68,773,188 and 12,413,209 shares issued     and outstanding at December 31, 2006 and 2005, respectively		68,773		12,413
		Additional paid-in capital		41,936,284		40,739,041
		Deferred compensation		-		(31,024)
		Accumulated deficit		(41,815,979)		(40,681,961)
		Subtotal		189,078		38,481
		Stock subscriptions receivable		(8,988)		-
Total stockholders' equity				180,090		38,481
Total liabilities and stockholders' equity			$	560,432	$	447,105

The accompanying Notes to Financials Statements are an integral part of these financial statements

F-2

BioLife Solutions, Inc.

Statements of Operations

		Years Ended
		December 31,
		2006		2005
Revenue
Product sales		$	603,219	$	444,662
Management fees, related party			-		60,342
Facilities fees, related party			-		109,714
Total revenue			603,219		614,718
Operating expenses
	Cost of product sales		298,065		250,078
	Research and development		57,330		27,855
	Sales and marketing		331,762		78,267
	General and administrative		1,410,417		886,051
Total expenses			2,097,574		1,242,251
Operating loss			(1,494,355)		(627,533)
	Other income (expenses)
	Interest income		13,766		6,998
	Interest expense		(56,544)		(1,943)
	Insurance recovery		406,388		-
	(Loss) gain on disposal of property and equipment		(3,273)		3,155
	Total other income (expenses)		360,337		8,210
Loss from operations before provision for income taxes			(1,134,018)		(619,323)
Provision for income taxes			-		-
	Net Loss	$	(1,134,018)	$	(619,323)
	Basic and diluted net loss per common share	$	(0.02)	$	(0.05)
Basic and diluted weighted average common shares used to calculate net loss per share			52,868,865		12,413,209

The accompanying Notes to Financials Statements are an integral part of these financial statements

F-3

BioLife Solutions, Inc.

Statements of Stockholders’ Equity

	Convertible
	Series F & G Preferred Stock		Common Stock		Additional Paid-in	Deferred	Retained	Subscriptions	Total Stockholders'
	Shares	Amount	Shares	Amount	Capital	Compensation	Deficit	Receivable	Equity
Balance, January 1, 2005	12,055	$ 12	12,413,209	$12,413	$40,663,172	$       -	$(40,062,638)	$   -	$   612,959
Compensation expense for stock options granted	-	-	-	-	75,869	(75,869)	-	-	-
Amortization of deferred compensation	-	-	-	-	-	44,845	-	-	44,845
Net loss	-	-	-	-	-	-	(619,323)	-	(619,323)
Balance, December 31, 2005	12,055	12	12,413,209	12,413	40,739,041	(31,024)	(40,681,961)	-	38,481
Reclassification of deferred stock compensation pursuant to adoption of SFAS 123R	-	-	-	-	(31,024)	31,024	-	-	-
Preferred Stock dividends paid in common shares	-	-	8,763,633	8,764	(8,764)	-	-	-	-
Conversion of Series F & G preferred stock	(12,055)	(12)	22,026,563	22,026	(22,014)	-	-	-	-
Exercise of options and warrants to purchase common stock	-	-	25,569,783	25,570	997,222	-	-	(30,264)	992,528
Stock-based compensation	-	-	-	-	261,823	-	-	-	261,823
Collection of stock subscriptions receivable	-	-	-	-	-	-	-	21,276	21,276
Net loss	-	-	-	-	-	-	(1,134,018)	-	(1,134,018)
Balance, December 31, 2006	-	$   -	68,773,188	$68,773	$41,936,284	$       -	$(41,815,979)	$  (8,988)	$   180,090

The accompanying Notes to Financials Statements are an integral part of these financial statements

F-4

BioLife Solutions, Inc.

Statements of Cash Flows

			Years Ended December 31,
			2006	2005
Cash flows from operating activities
Net loss			$(1,134,018)	$ (619,323)
Adjustments to reconcile net loss to net cash used in operating activities
	Depreciation		49,760	66,088
	Loss (gain) on disposal of property and equipment		3,273	(3,155)
	Stock-based compensation expense		218,030	44,845
	Non-cash interest expense		43,793	-
Change in operating net assets and liabilities
	(Increase) Decrease in
		Accounts receivable, trade	(22,637)	(1,006)
		Inventories	30,662	(29,094)
		Prepaid expenses and other current assets	(14,414)	2,925
	Increase (Decrease) in
		Accounts payable	55,171	(76)
		Accounts payable – related parties	15,150	(19,298)
		Accrued expenses	(15,649)	33,310
		Accrued compensation	58,683	(51,549)
Net cash used in operating activities			(712,196)	(576,333)
Cash flows from investing activities
	Proceeds from disposal of property and equipment		-	18,925
	Purchase of property and equipment		(35,555)	(15,108)
Net cash (used) provided by investing activities			(35,555)	3,817
Cash flows from financing activities
	Increase in restricted cash		(190,837)	-
	Proceeds from note payable		-	230,500
	Principal payments on note payable		(28,450)	(4,573)
	Proceeds from exercise of options and warrants		879,341	-
	Collection of stock subscriptions receivable		21,276	-
Net cash provided by financing activities			681,330	225,927
Net decrease in cash and cash equivalents			(66,421)	(346,589)
Cash and cash equivalents - beginning of year			185,095	531,684
Cash and cash equivalents - end of year			$     118,674	$      185,095

The accompanying Notes to Financials Statements are an integral part of these financial statements

F-5

BIOLIFE SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

1.

Organization and significant accounting policies

Incorporated in 1998 in the State of Delaware as a wholly owned subsidiary of Cryomedical Sciences, Inc. (“Cryomedical”), BioLife Solutions, Inc. (“BioLife” or the “Company”) develops, manufactures and markets low temperature technologies for use in preserving and prolonging the viability of cellular and genetic material for use in cell therapy and tissue engineering.  The Company’s patented HypoThermosol® platform technology is used to provide customized preservation solutions designed to significantly prolong cell, tissue and organ viability.  These solutions, in turn, could improve clinical outcomes for new and existing cell and tissue therapy applications, as well as for organ transplantation.  The Company currently markets its HypoThermosol® and CryoStor™ lines of solutions directly to companies and labs engaged in pre-clinical research, and to academic institutions.

In May 2002, Cryomedical implemented a restructuring and recapitalization program designed to shift its focus away from cryosurgery toward addressing preservation and transportation needs in the biomedical marketplace.  On June 25, 2002 the Company completed the sale of its cryosurgery product line and related intellectual property assets to Irvine, CA-based Endocare Inc., a public company.  In the transaction, the Company transferred ownership of all of its cryosurgical installed base, inventory, and related intellectual property, in exchange for $2.2 million in cash and 120,022 shares of Endocare restricted common stock.  In conjunction with the sale of Cryomedical’s cryosurgical assets, Cryomedical’s Board of Directors also approved merging BioLife into Cryomedical and changing its name to BioLife Solutions, Inc.  In September 2002, Cryomedical changed its name to BioLife Solutions, Inc. and began to trade under the new ticker symbol, “ ;BLFS” on the OTCBB.  Subsequent to the merger, the Company ceased to have any subsidiaries.  

Net income (loss) per share:  Basic net income (loss) per common share is calculated by dividing the net income (loss) by the weighted average number of common shares outstanding during the period.  Diluted earnings per share is calculated using the weighted average number of common shares plus dilutive common stock equivalents outstanding during the period.  Anti-dilutive common stock equivalents are excluded.  Common stock equivalents are stock options, warrants and convertible preferred stock.

Cash equivalents:  Cash equivalents consist primarily of interest-bearing money market accounts.  The Company considers all highly liquid debt instruments purchased with an initial maturity of three months or less to be cash equivalents.  The Company maintains cash balances which may exceed Federally insured limits.  The Company does not believe that this results in any significant credit risk.

Inventories:  Inventories represent preservation solutions and raw materials and are stated at the lower of cost or market.  Cost is determined using the first-in, first-out (“FIFO”) method.

Accounts receivable:  The Company has generally had favorable experience in extending credit to a limited number of customers and the terms are usually short term.  An allowance for uncollectible accounts is established when a specific account appears uncertain, even though the Company continues its collection efforts.  Accounts considered uncollectible are charged against the established allowance.

Fixed assets:  Furniture and equipment are stated at cost and are depreciated using the straight-line method over estimated useful lives of three to five years.  Leasehold improvements are stated at cost and are amortized using the straight-line method over the lesser of the life of the asset or the remaining term of the lease.

Revenue recognition:  Revenue from sales of products is recognized at the time of shipment.  Management and facilities fees are recognized during the period in which the services are performed.  

Income taxes:  The Company accounts for income taxes using an asset and liability method which generally requires recognition of deferred tax assets and liabilities for the expected future tax effects of events that have been included in the financial statements or tax returns.  Under this method, deferred tax assets and liabilities are recognized for the future tax effects of differences between tax bases of assets and liabilities, and financial reporting amounts, based upon enacted tax laws and statutory rates applicable to the periods in which the differences are expected to affect taxable income.  The Company evaluates the likelihood of realization of deferred tax assets and provides an allowance where, in management’s opinion, it is more likely than not that the asset will not be realized.

F-6

Advertising:  Advertising costs are expensed as incurred and totaled $16,857 and $2,825 for the years ended December 31, 2006 and 2005, respectively.  

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

Fair value of financial instruments:  The fair value of the financial instruments included in the consolidated financial statements, except as otherwise discussed in the notes to financial statements, approximates their carrying value.

Business segments:  As described above, the Company’s activities are directed in the field of hypothermic solutions.  As of December 31, 2006 and 2005 this is the Company’s only business segment.

Stock-based compensation:  In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123(R) (revised 2004) "Share-Based Payment."  This statement replaces SFAS No. 123, "Accounting for Stock-Based Compensation," and supersedes Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." This statement requires that the cost resulting from all share-based payment transactions be recognized in the financial statements.  Pro forma disclosure is no longer an alternative.  This statement establishes fair value as the measurement objective in accounting for share-based   payment arrangements and requires all entities to apply a fair-value-based measurement method in accounting for share-based payment transactions with employees.  This statement uses the terms compensation and payment in their broadest senses to refer to the cons ideration paid for goods or services, regardless of whether the supplier is an employee.

The Company adopted SFAS No. 123(R) effective January 1, 2006 and is recognizing the cost of stock-based compensation, consisting of stock options, using the “Modified Prospective Application” transition method whereby the cost of new awards and awards modified, repurchased or cancelled after January 1, 2006 and the portion of awards for which the requisite service has not been rendered (unvested awards) that are outstanding as of January 1, 2006, is recognized as the requisite service is rendered on or after the effective  date, January 1, 2006.  Under the modified prospective application transition method, no restatement of previously issued financial statements is required.  Compensation expense is measured and recognized beginning in 2006 as follows:

AWARDS GRANTED AFTER DECEMBER 31, 2005 - Awards are measured at their fair value at date of grant.  The resulting compensation expense is recognized in the Statement of Operations ratably over the vesting period of the award.  Compensation expense recorded in association with options issued after December 31, 2005 totaled $20,362 for the year ended December 31, 2006.

For all grants issued after December 31, 2005, the amount of recognized compensation expense is adjusted based upon an estimated forfeiture rate which is derived from historical data.

AWARDS GRANTED PRIOR TO JANUARY 1, 2006 - Awards were measured at their fair value at the date of original grant.  Compensation expense associated with the unvested portion of these options at January 1, 2006 is recognized in the Statement of Operations ratably over the remaining vesting period.  Compensation expense associated with options granted prior to January 1, 2006 totaled $94,569 for the year ended December 31, 2006.  

Modified awards are treated as an exchange of the original award for a new award and compensation cost is incurred for any incremental value.  Incremental compensation is measured as the excess, if any, of the fair value of the modified award over the fair value of the original award immediately before its terms are modified.  Incremental compensation and interest expense of approximately $147,000 was recorded in connection with the repricing of previously awarded option and warrant awards during 2006.

The fair value of options at the date of grant is determined under the Black-Scholes option-pricing model.  During the years ended December 31, 2006 and 2005, the following weighted-average assumptions were used:

F-7

Assumptions	2006	2005
Risk-free rate	4.86%	4.40%
Annual rate of dividends	-	-
Historical volatility	71.34%	67.36%
Option life	6.6 years	10.0 years

The “shortcut method” (an expected term based on the midpoint between the vesting date and the end of the contractual term) was used to determine option lives during the years ended December 31, 2006 and 2005.

During the year ended December 31, 2005, the Company granted options to employees and directors to purchase 1,850,000 shares of Common Stock for $0.08 per share which was a price that was less than the fair market value ($0.09) at the date of grant.  Compensation expense recorded in association with these options totaled $8,773 for the year ended December 31, 2005.  

If compensation expense had been recognized based on the estimate of the fair value of each option granted in accordance with the provisions of SFAS No. 123 as amended by SFAS No. 148, net loss would have been increased to the following pro forma amount as follows:

	2005
Loss attributable to holders of common stock	$      (619,323)
Add:  Stock-based employee compensation costs
included in reported net income	8,773
Less:  Stock-based employee compensation costs
under SFAS No. 123	(9,794)
Pro forma loss attributable to holders
of common stock	$      (620,344)
Basic and diluted net loss per share attributable
to holders of common stock as reported	$            (0.05)
Pro forma	$            (0.05)

Pro forma compensation expense recognized under SFAS No. 123 does not consider estimated forfeitures.    

Reclassifications:  Certain reclassifications have been made in the 2005 financial statements to conform to the 2006 presentation.

Recent pronouncements:  

In September 2006, the FASB issued SFAS No 157 “Fair Value Measurements”.  This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements.  The adoption of this new accounting pronouncement has not had an impact on the Company’s financial position or results of operations.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106 and 132(R).”  This statement would require a company to (a) recognize in its balance sheet an asset for a plan’s overfunded status or a liability for a plan’s underfunded status, (b) measure a plan’s assets and its obligations that determine its funded status as of the end of the employer’s fiscal year, and (c) recognize changes in the funded status of a defined postretirement plan in the year in which the changes occur (reported in comprehensive income).  The adoption of this new accounting pronouncement has not had an impact on the Company’s financial position or results of operations as the Company does not have any such plans.

F-8

In June 2006, the FASB issued Interpretation 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109, Accounting for Income Taxes.  FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109.  FIN 48 describes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.  The guidance is effective for fiscal years beginning after December 15, 2006, which the Company intends to adopt during the fiscal year ending December 31, 2007.  The Company has not yet determined the impact from adoption of this new accounting pronouncement on its financial position or results of operations.

In May 2005, the FASB issued SFAS 154, “Accounting Changes and Error Corrections” (SFAS 154) which replaces APB Opinion No. 20, “Accounting Changes” and SFAS 3, “Reporting Accounting Changes in Interim Financial Statements-An Amendment of APB Opinion No. 28.”  SFAS 154 provides guidance on the accounting for and reporting of accounting changes and error corrections.  It establishes retrospective application, or the latest practicable date, as the required method for reporting a change in accounting principle and the reporting of a correction of an error.  SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.  The adoption of SFAS 154 did not have an impact on the Company’s financial position, results of operations or cash flows.

2.

Financial condition

The Company has been unable to generate sufficient income from operations in order to meet its operating needs.  This raises doubt about the Company’s ability to continue as a going concern.

The Company has focused on generating product sales in 2005 and 2006 and will continue to focus on this in the future.  However, the Company can make no assurances that it will be successful in generating adequate product sales to sustain itself.  In April 2006, the Company was able to raise additional capital through the repricing and exercise of outstanding warrants and options.  In February 2007, the Company was able to raise additional funds by borrowing $750,000, represented by two promissory note agreements, from two stockholders of the Company (see Note 11).  Other arrangements, if necessary to raise additional funds, may require the Company to relinquish rights to certain of its technologies, products, marketing territories or other assets.  The failure to generate adequate product sales or raise additional capital when needed will have a significant negative effect on the Company’s financial condition and may force the Company to curt ail or cease its activities.

These financial statements assume that the Company will continue as a going concern.  If the Company is unable to continue as a going concern, the Company may be unable to realize its assets and discharge its liabilities in the normal course of business.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or to amounts and classification of liabilities that may be necessary should the Company be unable to continue as a going concern.

3.

Inventories

Inventories consist of the following at December 31, 2006 and 2005:

	2006	2005
Raw materials	$       33,335	$          23,393
Finished goods	59,416	100,020
Total	$       92,751	$        123,413

The Company has a policy of segregating from its finished product inventory its preservation solutions inventory with labeled expiration dates that have passed.  During June 2006, the Company suffered a loss related to this segregated inventory and subsequently submitted an insurance claim.  The Company settled the claim in December 2006, which resulted in a total gain of $406,388.

F-9

4.

Notes payable

At December 31, 2006 and 2005, notes payable consisted of the following:

	2006	2005
Note payable to Tioga County LDC, secured by all assets, payable
in monthly installments of $3,258, including interest of 5%,
final payment made in February 2007.	$       197,477	$       225,927
Total notes payable	197,477	225,927

Less: current portion           197,477              28,450 

Long-term portion  $                  -   $       197,477 

In December 2006, the Company received an insurance settlement check of $190,837 which was made payable to the Company and the Tioga County LDC (“the LDC”).  Since the insurance settlement was related to assets lost in a flood which served as collateral on the note, the LDC subsequently called the note and demanded the Company sign over the insurance check to be applied to the outstanding note balance.  The Company agreed to these terms and paid the remaining balance of the note in February 2007.   The amount of the settlement check has been reflected as restricted cash in the accompanying financial statements.

5.

Income taxes

Income tax benefit reconciled to tax calculated at statutory rates is as follows:

	2006	2005
Federal tax (benefit) at statutory rate	$      (385,566)	$      (210,570)
State income tax (benefit), net of federal tax	(56,134)	(30,656)
Expiration of net operating loss carryforwards	982,673	680,379
Expiration of tax credits	88,000	42,000
Change in valuation allowance	(676,692)	(505,943)
Non-deductible stock-based compensation	57,214	17,265
Other	(9,495)	7,525
Provision for income taxes, net	$                 -	$               -

At December 31, 2006 and 2005, the components of the Company’s deferred taxes are as follows:

	2006	2005
Deferred tax assets (liabilities)
Net operating loss carryforwards	$   12,946,597	$   13,582,867
Tax credits	567,000	655,000
Accrued compensation	24,194	27,771
Depreciation	16,073	5,203
Stock-based compensation	44,766	17,467
Other	777	(12,209)
Total	13,599,407	14,276,099
Less:  Valuation allowance	(13,599,407)	(14,276,099)
Net deferred tax asset	$                 -	$                 -

F-10

The Company provides a valuation allowance for deferred tax assets when, in its opinion, it is more likely than not that they will not be realized.

The Company has the following net operating loss and research and development (R&D) tax credit carryforwards available at December 31, 2006:

	Net Operating	R&D Tax
Year of Expiration	Losses	Credits
2007	$     4,505,000	$     125,000
2008	5,893,000	150,000
2009	1,431,000	114,000
2010	1,562,000	145,000
2011	5,277,000	33,000
2012	1,570,000	-
2013	1,425,000	-
2014	1,234,000	-
2020	2,849,000	-
2021	4,168,000	-
2023	1,217,000	-
2024	646,000	-
2025	589,000	-
2026	873,000	-
Total	$     33,239,000	$     567,000

In the event of a significant change in the ownership of the Company, the utilization of such loss and tax credit carryforwards could be substantially limited.

6.

Stockholders’ equity

In March 2006, in an effort to secure additional capital, the Board of Directors approved a plan to raise additional capital from the holders of its outstanding warrants and stock options at a reduced price of $0.04 per share, in order to (a) prevent further dilution by the issuance of additional securities to outsiders, and (b) to restructure the capitalization of the Company.  Under the terms of the plan, the Company offered to:

1.

the holders of the Company’s (a) 12,000 shares of Series F Preferred Stock, convertible into 4,800,000 shares of the Company’s Common Stock, and (b) the 6,000 Series F Warrants to purchase 2,400,000 shares of the Company’s Common Stock at $.375 per share purchased in conjunction with the Series F Preferred Stock,  the right to exercise the Series F Warrants and purchase the shares of Common Stock issuable upon exercise thereof at $.04 per share (same number of shares at a lower price), provided that (a) simultaneously with the exercise of such right, the holder converts his shares of Series F Preferred Stock into shares of the Company’s Common Stock, and (b) the conversion of the Series F Preferred Stock and exercise of the Series F Warrants take place on or before May 1, 2006;

2.

the holders of the Company’s 55.125 shares of Series G Preferred. Stock, which Series G Preferred. Stock is convertible into 17,226,563 shares of the Company’s Common Stock, and (b) the 55.125 Series G Warrants to purchase 17,226,563 of the Company’s Common Stock at $.08 per share purchased in conjunction with the Series G Preferred Stock, the right to exercise the Series G Warrants and purchase the shares of Common Stock issuable upon exercise thereof at $.04 per share (same number of shares at a lower price), provided that (a) simultaneously with the exercise of such right, they convert their shares of Series  G Preferred Stock into shares of the Company’s Common Stock, and (b) the conversion of the Series G Preferred Stock and exercise of the Series G Warrants take place on or before May 1, 2006;

F-11

3.

the holders of all exercisable Stock Options to purchase shares of the Company’s Common Stock (an aggregate of 3,511,000 shares of the Company’s Common Stock) at prices ranging from $.08-$2.50 per share, the right to exercise such Stock Options and purchase the shares of Common Stock issuable upon exercise thereof at $.04 per share (the same number of shares at a lower exercise price), provided that the exercise of such stock options takes place on or before May 1, 2006; and

4.

the holders of all Warrants to purchase shares of the Company’s Common Stock (an aggregate of 7,640,295 shares of the Company’s Common Stock) at prices ranging from $.08-$41.25 per share, the right to exercise such warrants and purchase the shares of Common Stock issuable upon exercise thereof at $.04 per share (the same number of shares at a lower price), provided the exercise of the warrants takes place on or before May 1, 2006.

The offering was conditioned upon all shares of the Company’s Series F Preferred Stock and Series G Preferred Stock converting into Common Stock of the Company.

The offering was completed on May 1, 2006 and the Company was able to raise $879,341 in cash and reduce liabilities by $113,187 through (a) the exercise of warrants to purchase 23,022,783 shares of the Company’s Common Stock at $0.04, and (b) the exercise of stock options to purchase 2,547,000 shares of the Company’s Common Stock at $0.04.  As part of the plan, 12,000 shares of the Company’s Series F Preferred Stock were converted to 4,800,000 shares of Common Stock and 55.125 shares of the Company’s Series G Preferred Shares were converted to 17,226,563 shares of Common Stock.  After the conversion, the company terminated all designations of Series F and G Preferred Shares.  In addition, on May 1, 2006, the Company declared, effective as of December 31, 2005, $507,808 and $217,181 in accumulated dividends payable on the Series F preferred stock and Series G preferred stock, respectively, which dividends were paid in common stock of the C ompany on May 1, 2006.  The total number of shares paid in connection with such dividends was 8,763,633.  After the payment of such dividends, the issuance of shares of common stock in connection with the conversion of the Series F preferred stock and Series G preferred and the aforementioned exercise of options and warrants, the Company had 68,773,188 shares of common stock issued and outstanding.

Preferred Series F stock:  In October 2001, the Company completed a private placement of 5,000 Units, raising approximately $1,000,000.  Each Unit was priced at $200.01 and consisted of two shares of Series F convertible preferred stock, convertible into 800 shares of common stock, and one warrant to purchase 400 shares of common stock at $0.375 per share, on or before October 2006.  The Company retained an advisor to assist the Company in finding qualified investors to purchase the Units.  The Advisor was entitled to a finder’s fee equal to 10 percent of the monies received by the Company, payable in Units valued at $200.01 per Unit.  The Advisor was also entitled to a cash fee of 7 percent with respect to the monies received by the Company upon exercise of the warrants.  The Units were placed with investors in the United States and Europe, and the sales of the Units were exempt from Registration under the Securities Act pursuant to Rule 506 of Regulation D and Rule 903 of Regulation S.

In December 2001, the Company received an additional $200,000 after completing a private placement of an additional 1,000 Units under the same terms as the Units issued in October 2001.

In connection with the private placement of Units in 2001, the Company issued warrants to purchase 240,000 shares of the Company’s common stock to the Advisor.

In May 2006, all 12,000 shares of the Company’s Series F preferred stock were converted to 4,800,000 shares of common stock.  After the conversion, the Company terminated all designations of Series F Preferred Shares.

The key rights of the Series F convertible preferred stock, par value $0.001, issued in the Unit financing included the following:

Dividends – Series F preferred stockholders were entitled to annual cumulative dividends at the rate of $10.00 per share payable in the Company’s common stock.  The number of common shares to be issued for dividend purposes was based upon the market value of the common stock on the date such dividends are declared.  Series F preferred stock dividends of $507,808 were declared during 2006 and paid in 6,138,361 shares of the Company’s common stock.  No dividends were declared or paid during 2005.  The Series F preferred stock is adjusted for dividends paid to common stockholders so that each preferred stockholder will receive the same number of shares of common stock which the stockholder would have owned or been entitled to receive before the dividend.  At December 31, 2005 dividends in arrears on the cumulative preferred stock were $507,808.

F-12

Conversion Rights – Each Series F preferred share was convertible, at any time, into 400 shares of common stock.  In the event the closing price for the common stock is $0.75 or greater for 10 consecutive trading days, the Series F preferred stock would have been automatically converted into common stock at 400 shares of common stock for each share of preferred stock.

Voting Rights – The Series F preferred stock had full voting rights on all matters that holders of common stock are entitled to vote and are entitled to one vote for each share of common stock into which the Series F preferred stock held is convertible.  In the event of a proposed dissolution, liquidation or winding up of the Company, or a sale of all or substantially all of the assets of the Company (other than in connection with a consolidation or merger), the affirmative vote of the holders of at least two thirds of the outstanding shares of Series F preferred stock was required.

Senior Ranking – The Company could not issue a security with rights and preferences that are senior to those of the holders of Series F preferred stock.  Series F preferred stock and Series G preferred stock were equal in their seniority.

Liquidation Preference – In the event of any liquidation, dissolution, or winding up of the Company, the Series F preferred stockholders were entitled to receive, before any distribution to any other class of stock ranking junior to the Series F preferred stock, liquidating distribution in the amount of $150.00 per share and all unpaid dividends.

Preferred Series G stock:  In December 2003, the Company completed a private placement of 55.125 Units, raising $1,226,533 in cash, net of issuance costs of $23,467 and $128,125 as payment of accrued salaries to certain employees.  Each Unit was priced at $25,000 and consisted of one share of Series G convertible non-redeemable preferred stock, convertible into 312,500 shares of common stock, and one warrant to purchase 312,500 shares of common stock at $0.08 per share, on or before October 2013.  The Units were placed with investors in the United States and Europe, and the sales of the Units were exempt from Registration under the Securities Act pursuant to Rule 506 of Regulation D and Rule 903 of Regulation S.

In connection with the issuance of the Series G preferred stock, the Company recorded a deemed dividend of $521,000 in accordance with the accounting requirements for a beneficial conversion feature.  The proceeds received in the Series G offering were first allocated between the convertible instrument and the Series G warrant on a relative fair value basis.  A calculation then was performed to determine the difference between the effective conversion price and the fair market value of the common stock at the date of issuance.

In May 2006, all 55.125 shares of the Company’s Series G preferred stock were converted to 17,226,563 shares of common stock.  After the conversion, the Company terminated all designations of Series G Preferred Shares.

The key rights of the Series G convertible preferred stock, par value $0.001, issued in the Unit financing included the following:

Dividends – Series G preferred stockholders were entitled to annual cumulative dividends at the rate of $1,875 per share payable at the option of the Company in cash or shares of common stock.  The number of common shares to be issued for dividend purposes was based upon the average market value of the common stock for the thirty calendar days immediately prior to the date such dividends are declared.  Series G preferred stock dividends of $217,181 were declared during 2006 and paid in 2,625,272 shares of the Company’s common stock.  No dividends were declared or paid during 2005.  At December 31, 2005, dividends in arrears on the cumulative preferred stock were $217,181.

Conversion Rights – Each Series G preferred share was convertible, at any time, into 312,500 shares of common stock and the Company reserved authorized and unissued shares of common stock in the event of conversion.  The conversion ratio was subject to equitable adjustment for stock splits, stock dividends, combinations or similar transactions.  

Voting Rights – The Series G preferred stock had full voting rights on all matters that holders of common stock are entitled to vote and are entitled to one vote for each share of common stock into which the Series G preferred stock held is convertible.  In the event of a proposed dissolution, liquidation or winding up of the Company, or a sale of all or substantially all of the assets of the Company (other than in connection with a consolidation or

F-13

merger), the affirmative vote of the holders of at least two thirds of the outstanding shares of Series G preferred stock was required.

Senior Ranking – The Company could not issue a security with rights and preferences that are senior to those of the holders of Series G preferred stock.  Series G preferred stock and Series F preferred stock were equal in their seniority.

Liquidation Preference – In the event of any liquidation, dissolution, or winding up of the Company, the Series G preferred stockholders were entitled to receive, before any distribution to any other class of stock ranking junior to the Series G preferred stock, liquidating distributions in the amount of $25,000 per share and all unpaid dividends.

Warrants:  In August 2003, the Company issued to Breslow & Walker, LLP (Breslow), the Company’s general counsel, and de Greef & Partners, LLC (deGreef), a consultant for the Company, five-year warrants, to purchase 282,910 and 252,500 shares, respectively, of the Company’s common stock at $0.08 per share for professional services rendered.  

In connection with the issuance of 12-month promissory notes in March and May 2003, the Company issued four separate five-year warrants to purchase an aggregate of 2,000,000 shares of the Company’s common stock at $0.08 per share.  

In August 2003, the Company issued six separate five-year warrants to purchase an aggregate of 1,022,885 shares of the Company’s common stock at $0.08 per share to employees as a payment of accrued payroll liabilities for services performed.

The following table summarizes warrant activity for the years ended December 31, 2006 and 2005:

	Year Ended		Year Ended
	December 31, 2006		December 31, 2005
		Wgtd. Avg.		Wgtd. Avg.
		Exercise		Exercise
	Shares	Price	Shares	Price
Outstanding at beginning
of year	27,266,858	$      0.20	27,266,858	$      0.20
Exercised	(23,022,783)	(0.04)	-	-
Outstanding at end of year	4,244,075	$      0.46	27,266,858	$      0.20
Warrants exercisable at
year end	4,244,075	$      0.46	27,266,858	$      0.20

The total intrinsic value of warrants exercised was $690,683 and $0 during the years ended December 31, 2006 and 2005, respectively.

Stock compensation plans:  The Company’s 1988 Stock Option Plan was approved and adopted by the Board of Directors in July 1988 and had a term of ten years.  The plan expired in 1998.  The options are exercisable for up to ten years from the grant date.

During 1998, the Company adopted the 1998 Stock Option Plan.  Under the plan, an aggregate of 4,000,000 shares of common stock are reserved for issuance upon the exercise of options granted under the plan.  In September 2005, the shareholders approved an increase in the number of shares available for issuance to 10,000,000 shares.  The purchase price of the common stock underlying each option may not be less than the fair market value at the date the option is granted (110% of fair market value for optionees that own more than 10% of the voting power of the Company).  The options are exercisable for up to ten years from the grant date.  The plan expires August 30, 2008.  

F-14

The following is a summary of stock option activity under the plans for 2006 and 2005, and the status of stock options outstanding and available under the plans at December 31, 2006 and 2005:

	Year Ended		Year Ended
	December 31, 2006		December 31, 2005
		Wgtd. Avg.		Wgtd. Avg.
		Exercise		Exercise
	Shares	Price	Shares	Price
Outstanding at beginning
of year	5,566,000	$      0.31	4,156,000	$      0.44
Granted	2,440,000	0.07	2,660,000	0.08
Exercised	(2,547,000)	(0.04)	-	-
Cancelled	(20,000)	(0.08)	(1,250,000)	(0.25)
Outstanding at end of year	5,439,000	$      0.15	5,566,000	$      0.31
Stock options exercisable at
year end	2,215,666	$      0.24	3,511,000	$      0.41

The weighted average grant-date fair value of options awards was $.05 and $.07 per share during the years ended December 31, 2006 and 2005, respectively.

The total fair value of shares vested was $111,491 and $144,550 for the years ended December 31, 2006 and 2005, respectively.

The total intrinsic value of options exercised was $76,410 and $0 for the years ended December 31, 2006 and 2005, respectively.

The following table summarizes information about stock options outstanding at December 31, 2006:

		Weighted
	Number	Average	Weighted
Range of	Outstanding	Remaining	Average
Exercise	at December	Contractual	Exercise
Prices	31, 2006	Life	Price
0.07	1,925,000	9.64	$          0.07
0.08	2,050,000	8.75	$          0.08
0.085	500,000	9.33	$         0.085
0.25	750,000	5.26	$          0.25
1.25	209,000	1.89	$          1.25
2.50	5,000	0.00	$          2.50
	5,439,000	8.36	$          0.15

Total compensation cost at December 31, 2006 of $145,271 is expected to be recognized over a weighted average period of 3 years.

During the year ended December 31, 2006, the Company issued ten-year options to employees and directors to purchase 2,440,000 common shares.  Options to purchase 500,000 shares were awarded to an outside director which were 25% exercisable upon grant with the remaining shares vesting to the extent of 125,000 shares on the next three anniversary dates of the award.  Options to purchase 1,940,000 shares were awarded to employees which vest as follows:  one third on the first  anniversary date of the awards, one third on the second anniversary date of the awards, and the remainder on the third anniversary date of the awards.

F-15

During the year ended December 31, 2005, the Company issued ten-year options to employees and directors to purchase 1,850,000 common shares and ten-year options to outside consultants to purchase 810,000 common shares.  The awards issued to the outside consultants as well as 100,000 options issued to employees were 50% exercisable upon grant with the remainder vesting on the first anniversary of the grant date.  Options to purchase 750,000 shares which were 100% exercisable upon grant were awarded to outside directors.  Options to purchase 1,000,000 shares were awarded to the then-CEO of the Company which vested to the extent of 250,000 shares on the first anniversary date of the award and then 20,833 shares on the first day of each month thereafter.

Certain options awarded during 2005 and 2006 contain provisions which allow for the automatic proportionate adjustment of the number of shares covered and the exercise price of each share in the event that the Company changes its shares of common stock by a stock dividend, stock split, combination, reclassification, exchange, merger or consolidation.  Certain options awarded during 2005 and 2006 are adjustable at the discretion of the Board of Directors in the event that the Company changes its shares of common stock by a stock dividend, stock split, combination, reclassification, exchange, merger or consolidation.

In September 2005, the shareholders approved an increase in the number of authorized shares of common stock from 25,000,000 shares to 100,000,000 shares.  There were 68,773,188 and 12,413,209 shares issued at December 31, 2006 and 2005, respectively.  At December 31, 2006, there are 6,459,741 shares of common stock that could be issued upon the exercise of stock warrants and options.  The following table summarizes the potential shares to be issued upon exercise of the above instruments:

	Shares
Common stock options	2,215,666
Common stock warrants	4,244,075
Total	6,459,741

Stock subscriptions receivable:  As of December 31, 2006 the Company was due $8,988 in stock subscriptions receivable.

7.

Related party transactions

The Company incurred $64,535 and $59,817 in legal fees during the years ended December 31, 2006 and 2005, respectively, for services provided by a law firm in which a director and stockholder of the Company is a partner.  In 2005, the Company granted options to purchase 250,000 shares of common stock to this director and stockholder with an exercise price of $0.08 which vested immediately upon grant and have a life of 10 years.  At December 31, 2006 and 2005, accounts payable includes $8,066 and $8,729, respectively, due to the related party for services rendered.

On March 15, 2004, the Company entered into three year Research Agreement with Cell Preservation Services, Inc. (“CPSI”) to outsource to CPSI all of the Company’s research that was funded through SBIR grants.  CPSI is owned by a former employee of BioLife and who is also the son of the former Chief Executive Officer of the Company.  The Research Agreement established a format pursuant to which CPSI (a) took over the processing of existing applications of SBIR grants applied for by BioLife, (b) applied for additional SBIR grants for future research projects, (c) performed a substantial portion of the principal work to be done, in terms of (i) time spent, and (ii) research, in connection with existing and future projects, and (d) utilized BioLife personnel as consultants with respect to the research.  In conjunction therewith BioLife granted to CPSI a non-exclusive, royalty free license (with no right to sublicense) to use BioLife’s technol ogy soley for the purpose of conducting the research in connection with the projects.  Pursuant to the Research Agreement BioLife provides CPSI with (a) facilities in which to conduct the research including basic research equipment and office equipment, and (b) management services.  During the year ended December 31, 2005, the Company recognized $109,714 and $60,342 for facilities and management services, respectively.  No facilities or management fees were received during 2006.  At December 31, 2006 and 2005, the Company was due $0 and $1,321 from CPSI, respectively.  On January 8, 2007, the Company sent a written notice to CPSI that the Company has elected not to renew the Research Agreement, which expired on March 14, 2007.

F-16

Effective January 8, 2004, the Company entered into a non-cancelable operating lease with Field Afar, LLC for its corporate and manufacturing facilities in Owego, New York that expires in January 2007.  During 2006, the lease was extended through January 2008.  The lease requires payments of $6,200 per month.  Field Afar, LLC is partially owned by the Company’s former CEO who was an employee and officer of the Company during 2006, and the Company’s former Director of Research and Development, who was an employee of the Company during 2006.  For the years ended December 31, 2006 and December 31, 2005, the Company paid rents of $74,400 and $74,400, respectively.

During 2006, the Company, CPSI and Field Afar, LLC experienced damage and destruction of property and equipment as a result of a flood.  Accounts payable as of December 31, 2006 includes $4,409 and $11,404 due to CPSI and Field Afar, LLC, respectively, in connection with an insurance claim submitted and recovered by the Company.

8.

Commitments

Leases:  The Company leases equipment as lessee, under an operating lease expiring in October 2010.  

The following is a schedule of future minimum lease payments required under the operating leases:

Year Ending		Office
December 31	Equipment	(Note 7)	Total
2007	$       4,044	$   74,400	$  78,444
2008	4,044	6,200	10,244
2009	4,044	-	4,044
2010	3,707	-	3,707
Total	$     15,839	$   80,600	$  96,439

Rental expense for facilities and equipment operating leases for the years ended December 31, 2006 and 2005, totaled $78,107 and $100,999, respectively.

Employment agreements:  The Company has an employment agreement with the Chief Executive Officer of the Company expiring August 7, 2007 and an employment agreement with the Vice President of Sales expiring October 17, 2007.  The agreements provide for certain minimum compensation per month and incentive bonuses at the discretion of the Board of Directors.  Under certain conditions, the Company may be required to continue to pay the base salaries under the agreements for a period of one to two years.

The Company had an employment agreement with the former Chief Executive/Scientific Officer of the Company expiring July 25, 2007 which was terminated on January 8, 2007; however, the Company will continue to make salary payments through July 25, 2007 in accordance with the employment agreement with a total expected payout of approximately $70,000.  

9.

Concentration of risk

Significant customers:  Sales to individual customers representing more than 10% of total revenues totaled approximately $234,000 and $362,000 in 2006 and 2005, respectively.  These amounts represent revenues from one customer in 2006 and two customers in 2005.  Of the $362,000 in 2005, approximately $178,000 was derived from management fees, facilities fees, and product sales to CPSI, a related party (See Note 7).

At December 31, 2006, two customers accounted for approximately 52% of total accounts receivable, and at December 31, 2005, two customers accounted for approximately 72% of total accounts receivable.

F-17

10.

Supplemental cash flow disclosures

Actual cash payments:  Cash payments were as follows for the years ended December 31, 2006 and 2005:

	2006	2005
Interest	$       12,751	$       1,943

Non-cash investing and financing activities:  During the year ended December 31, 2006, in conjunction with employees’ exercise of stock options and warrants to purchase Company common stock, the Company received consideration in the form of forgiveness of $113,187 in accrued vacation pay and travel allowances as well as the assumption of $30,264 in stock subscriptions receivable.  During the year ended December 31, 2006, 12,055 shares of Company Series F and G preferred stock were converted into 22,026,563 shares of Company common stock.  Additionally, $724,989 in Series F and G preferred stock dividends were declared and paid in 8,763,633 shares of Company common stock.

11.

Subsequent event

In February 2007, in an effort to secure much needed capital, the Company borrowed $750,000, represented by two promissory note agreements from two stockholders of the Company.  Each Note, together with interest accrued thereon at the rate of 7% per annum (collectively, the “Conversion Amount”), shall become due and payable in one lump sum on the earlier of (a) the second anniversary of the date of such Note, or (b) an Event of Default (as defined in the Notes).  In addition, if the Note is outstanding at the time of any bona fide equity financing of the Company of at least $1,000,000 (excluding conversion of the Notes) (a “Financing”), then the Note holder may convert the Note into that number of shares or units of the equity securities of the Company sold in the Financing (“New Equity Securities”) as is equal to the Conversion Amount divided by 85% of the per share or per unit purchase price of the New Equity Securities.  In c onnection with the issuance of the Notes, each Note holder received a loan origination fee equal to 10% of the principal amount of the Note, payable in shares of the Company’s common stock based on the closing price of the shares on the OTCBB on the day preceding the date of issuance of the Note.  The Notes were issued pursuant to an exemption from registration under Regulation S of the Securities Act of 1933, as amended.

On February 7, 2007, a former employee of the Company filed a complaint in the New York State Supreme Court, County of Broome, against the Company alleging a breach of an employment agreement and seeking damages of up to $300,000 plus attorneys’ fees.  The Company does not believe there is any merit to such lawsuit and, if need be, intends to defend the same vigorously.

On or about March 21, 2007, Christine Baust, a former employee of the Company and daughter of John G. Baust, the Company’s former Chief Executive Officer and Chief Scientific Officer, filed a complaint with the State of New York, Division of Human Rights alleging unlawful discrimination practices against the Company based on wrongful termination due to disability, and gender and sexual harassment.  If discrimination is found, the Company would be ordered to cease and desist and take appropriate action, such as reinstatement.  The Division of Human Rights may award money damages, including back pay and compensatory damages for mental pain and suffering.  The Company does not believe there is any merit to such complaint and, if need be, intends to defend the same vigorously.

F-18

ITEM 8: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

ITEM 8A.  CONTROLS AND PROCEDURES

As of the end of the period covered by this Annual Report on Form 10-KSB, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the CEO/CFO, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-14.  Based upon that evaluation, the Company's CEO/CFO concluded that the Company's disclosure controls and procedures are effective in timely alerting him to material information relating to the Company required to be included in the Company's periodic SEC filings.  

There were no significant changes in the Company’s internal control over financial reporting during the quarterly period ended December 31, 2006 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

18

PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following table and text set forth the names and ages of all directors and executive officers of the Company as of March 30, 2007.  The Board of Directors is comprised of only one class.  All of the directors will serve until the next annual meeting of shareholders, which is anticipated to be held in 2007, and until their successors are elected and qualified, or until their earlier death, retirement, resignation or removal.  There are no family relationships among directors and executive officers.  Also provided herein are brief descriptions of the business experience of each director and executive officer during the past five years (based on information supplied by them) and an indication of directorships held by each director in other companies subject to the reporting requirements under the Federal securities laws.

Position and Offices

Name

Age

  With the Company  

Michael Rice

44

Chief Executive Officer,  

President, and Director

Matthew Snyder

55

Vice President

Jesse Wheeler

32

Controller/Consultant

Howard S. Breslow

67

Director, Secretary

Roderick de Greef

46

Director

Thomas Girschweiler

49

Director

Raymond Cohen

47

Director

Andrew

Hinson

41

Director

Michael Rice has been President and Chief Executive Officer and a director of the Company since August 2006.  From October 2004 to August 2006, Mr. Rice served as Sr. Business Development Manager for the Medical & Wireless Products Group at AMI Semiconductor, Inc. (NASDAQ: AMIS).  Prior thereto, from October 2000 to October 2004 he served as Director of Marketing & Business Development, Western Region Sales Manager, and Director, Commercial Sales at Cardiac Science, Inc. (NASDAQ: CSCX), from May 1998 to October 2000 as Vice President, Sales and Marketing at TEGRIS Corporation, and from May 1986 to May 1998 in several sales and marketing roles at PhysioControl Corporation.

Matthew Snyder has been Vice President of Sales since October 2006.   He has over 25 years of sales, marketing and training experience.  Prior to joining BioLife, he served in various management positions with Genentech, Bristol-Meyers Squibb, SpaceLabs Medical and most recently played a critical role in the merger of Cardiac Science and Quinton Corporation.

Jesse Wheeler served as Controller of the Company from July 2006 through January 2007 and has served as a financial management consultant since January 2007.  Prior to joining BioLife, he served as an accountant at various levels up to Manager for Davidson, Fox & Company, LLP, a public accounting firm with offices in upstate New York from January 1998 to July 2006.  Mr. Wheeler returned to Davidson, Fox & Company in January 2007 at which time BioLife contracted with the firm to provide outsourced controllership duties.  As a certified public accountant and certified fraud examiner, he is a member of the American Institute of Certified Public Accountants, the New York State Society of Certified Accountants and the Association of Certified Fraud Examiners.  Mr. Wheeler earned his BS in Accounting from Binghamton University in 1996.

Howard S. Breslow has served as a director of the Company since July 1988.  He has been a practicing attorney in New York City for more than 40 years and is a member of the law firm of Breslow & Walker, LLP, New York, New York, which firm serves as general counsel to the Company.  

19

Roderick de Greef has served as a director of the Company since June 19, 2000.  From March 2001 to September 2005, Mr. de Greef served as Executive Vice President, Chief Financial Officer and Secretary of Cardiac Sciences, Inc. (NASDAQ: CSCX).  In October 2005, Mr. de Greef became the Chief Financial Officer of Cambridge Heart, Inc., a medical device manufacturer located in Bedford, MA.  Since 1995, Mr. de Greef has provided corporate finance advisory services to a number of early-stage companies, including the Company, where he was instrumental in securing the Company’s equity capital beginning in June 2000, and advising on merger and acquisition activity. From 1989 to 1995, Mr. de Greef was Vice President and Chief Financial Officer of BioAnalogics, Inc. and International BioAnalogics, Inc., publicly held, development stage medical technology companies located in Portland, Oregon. From 1986 to 1989, Mr. de Greef was Controlle r and then Chief Financial Officer of Brentwood Instruments, Inc., a publicly held cardiology products distribution company based in Torrance, California.  Mr. de Greef has a B.A. in Economics and International Relations from California State University at San Francisco and an MBA from the University of Oregon.

Thomas Girschweiler joined the Board in 2003.  Mr. Girschweiler has been engaged in corporate financing activities on his own behalf since 1996.  From 1981 to 1996 he was an investment banker with Union Bank of Switzerland.  Mr. Girschweiler was graduated at the Swiss Banking School.

Raymond Cohen joined the Board in May 2006.   Mr. Cohen currently serves as Chief Executive Officer of Laguna Hills, CA-based Symphony Medical, Inc., a venture capital backed privately-held developer of biologic solutions for the treatment of cardiac conduction abnormalities. Mr. Cohen also serves as the Chairman of Board of Directors of Bothell, WA-based Cardiac Science Corporation (NASDAQ: CSCX), a global leader in advanced cardiac monitoring and defibrillation products formed by the September merger of Quinton Cardiology Systems, Inc., and Cardiac Science, Inc., where he served as Chief Executive Officer for nine years.  Mr. Cohen also serves as a member of the Board of Directors of Syncroness, Inc., a privately-held contract engineering and product development firm based in Westminster, CO.  He is a member of the Advisory Board for the College of Osteopathic Medicine, Western University of Health Sciences in Pomona, CA.

Andrew Hinson joined the Board in February 2007.  He is currently the Vice President for Clinical and Regulatory Affairs for Symphony Medical, Inc., a developer of proprietary biopolymer and cellular-based biologic therapies to effectively treat chronic and post-operative atrial fibrillation and other cardiac conduction abnormalities.  Mr. Hinson has diverse experience in the cell and gene therapy markets and extensive experience managing clinical trials for new biologic based therapies for cardiac, neurologic, and gastrointestinal applications.  

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

The Company’s executive officers, directors, and beneficial owners of more than 10% of any class of its equity securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 (collectively, the “Reporting Persons”) are required to file reports of ownership and changes in beneficial ownership of the Company’s equity securities with the Securities Exchange Commission. Copies of those reports also must be furnished to the Company.  Based solely on a review of copies of the reports furnished to the Company, the Company noted that the following officers failed to file reports on a timely basis during the fiscal year ended December 31, 2006:  Michael Rice – Form 3 and one (1) Form 4 relating to one (1) transaction; and Matthew Snyder – Form 3 and one (1) Form 4 relating to one (1) transaction.  The Form 3 for both such officers and a Form 5 relating to the Form 4s were filed on February 4, 2007 when the delinquency was discovered.

Code of Ethics

The Company has always encouraged its employees, including officers and directors to conduct business in an honest and ethical manner.  Additionally, it has always been our policy to comply with all applicable laws and provide accurate and timely disclosure.  Accordingly, the Board has adopted formal written codes of ethics for both our executive officers and for our directors.

Our codes of ethics are designed to deter wrongdoing and promote honest and ethical conduct and compliance with applicable laws and regulations.  These codes also incorporate our expectations of our executives that enable us to provide accurate and timely disclosure in our filings with the Securities and Exchange Commission and other public communications.  Our code of ethics is posted on our website, www.BioLifeSolutions.com.  Any future changes or amendments to our code of ethics, and any waiver of our codes of ethics will also be posted on our website when applicable.

20

No Audit Committee and Audit Committee Financial Expert:

The Company does not have an audit committee or an audit committee financial expert.  The Company does not believe, based upon its present operations, that the failure to have such a committee or expert is material to the financial controls of the Company.

ITEM 10.  EXECUTIVE COMPENSATION

The following table sets forth certain information concerning the compensation paid by the Company to its Chief Executive Officer, its two highest compensated executive officers (other than the Chief Executive Officer) and any additional executive officers who received salary and bonus payments in excess of $100,000 during the fiscal year ended December 31, 2006 (collectively the  “Named Executive Officers”).

SUMMARY COMPENSATION TABLE

							Nonqualified
Name and Principal				Stock	Option	Non-Equity Incentive Plan	Deferred Compensation	All Other
Positions  (a)	Year  (b)	Salary ($) (c)	Bonus ($) (d)	Awards ($) (e)	Awards ($) (f) (1)	Compensation ($) (g)	Earnings ($) (h)	Compensation ($)  (i)	Total ($) (j)
Michael Rice	2006	79,861	25,000	-	9,254 (2)	-	-	-	114,115
President, Chief
Executive Officer and
Director (8/06 – present)
John G. Baust, Ph.D	2006	224,253(4)	-	-	119,249 (5)	-	-	157,560 (6)	501,062
President, Chief	2005	220,000(3)	-	-	-	-	-	-	220,000
Executive Officer and
Director (through
8/06); Chief Scientific
Officer and Board
Chairman (8/06 – 1/07)
Matthew Snyder	2006	29,167	-	-	405 (2)	-	-	2,912 (7)	32,484
Vice President
(10/06 – present)

(1)

See Item 7 note 1 for a description on the valuation methodology of stock option awards.

(2)

Amounts are a result of options granted to each officer in accordance with the employment contracts described below.  

(3)

Includes voluntary salary reduction in 2005 of $20,000 to support cash flow

(4)

Includes voluntary salary reduction in 2006 of $15,747 to support cash flow

(5)

Includes $70,905 for ten-year option awards granted during 2001, 2002 and 2005 to purchase 1,000,000 shares with each award and $48,344 for fully vested option and warrant awards to purchase 2,258,555 shares which were repriced to $0.04 per share and exercised during 2006.  The 2001 and 2002 awards vest ratably over a five-year period, commencing with the first anniversary date of the date of grant and the 2005 award vest ratably over a four-year period, commencing with the first anniversary date of the date of grant.  See “Private Placements” under Item 5 for a further description of the repriced option and warrant awards.

(6)

Includes $89,503 for payment for unused vacation time and travel allowance and $68,057 for the excess of the fair market value of the shares acquired when repriced options and warrants were exercised over the reduced exercise price thereof.

(7)

Represents sales commissions

Employment Agreements

The Company has an employment agreement with Michael Rice, its President and Chief Executive Officer, which expires on August 7, 2007.  The agreement will automatically renew for successive one year periods in the event either party does not send the other a “termination notice” not less than 90 days prior to the expiration of the initial term or any subsequent term.  The agreement provides for a salary of $200,000 per year and an incentive bonus based on certain milestones, to be determined by the Board of Directors.  The officer also received ten-year incentive stock options to purchase 1,500,000 shares of common stock at $.07 per share (the fair market value on the date of grant), which vest to the extent of 500,000 shares on each of the first three anniversary dates of the date of grant.  The Company amended this employment agreement

21

on February 7, 2007 to provide that if, in connection with a “change in control,” Mr. Rice’s employment is terminated without “Cause” or he resigns for “Good Reason,” he will be entitled to the continued payment of salary and bonuses and the reimbursement of medical insurance premiums for 24 months following the change in control event.

The Company has an employment agreement with John G. Baust, its former Chief Scientific Officer, which expires on July 25, 2007. The agreement provides for a salary of $20,000 per month through January 26, 2007 and then $10,000 per month thereafter as well as an incentive bonus based on certain milestones to be determined by the Board of Directors.  Dr. Baust’s employment was terminated on January 8, 2007; however, the Company will continue to make salary payments in accordance with the employment agreement.

The Company has an employment agreement with Matthew Snyder, its Vice President of Sales, which expires on October 17, 2007.  The agreement will automatically renew for successive one year periods in the event either party does not send the other a “termination notice” not less than 90 days prior to the expiration of the initial term or any subsequent term.  The agreement provides for a salary of $140,000 per year and commissions of 2% of all Company product sales.   The officer also received ten-year incentive stock options to purchase 100,000 shares of common stock at $0.07 per share (the fair market value on the date of grant), which vest to the extent of 33,333 shares on each of the first two anniversary dates of the date of grant and 33,334 shares on the third anniversary date of the grant.  

The following table provides information related to outstanding equity awards for each of the Named Executive Officers as of December 31, 2006:

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

	OPTION AWARDS					STOCK AWARDS
			Equity Incentive Plan Awards:					Equity Incentive Plan Awards:	Equity Incentive Plan Awards:
Name (a)	Number of Securities Underlying Unexercised Options (#) Exercisable (b)	Number of Securities Underlying Unexercised Options (#) Unexercisable (c)	Number of Securities Underlying Unexercised Unearned Options (#) (d)	Option Exercise Price ($) (e)	Option Expiration Date (f)	Number of Shares or Units of Stock That Have Not Vested (#) (g)	Market Value of Shares or Units of Stock That Have Not Vested ($) (h)	Number of Unearned Shares, units or Other Rights That Have Not Vested (#) (i)	Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (j)
Michael Rice	-	1,500,000	-	0.07	8/7/2016 (1)	-	-	-	-
John G. Baust	200,000	-	-	0.25	8/7/2011 (2)	-	-	-	-
John G. Baust	200,000	200,000	-	0.25	7/1/2012 (2)	-	-	-	-
John G. Baust	291,666	708,334	-	0.08	9/28/2015 (2)	-	-	-	-
Matthew Snyder	-	100,000	-	0.07	10/17/2016 (3)	-	-	-	-

(1)

This award vests 500,000 shares on each of 8/7/2007, 8/7/2008, and 8/7/2009

(2)

Dr. Baust’s employment was terminated on January 8, 2007 and he has until April 8, 2007 to exercise his vested options.

(3)

This award vests 33,333 shares on each of 10/17/2007 and 10/17,/2008 and 33,334 shares on 10/17/2009

Compensation of Directors

Beginning in 2006, outside directors are compensated $1,500 per meeting for attending board meetings and $750 per meeting for telephonic board meetings.  A total of $36,000 in director compensation was recorded during the year ended December 31, 2006.

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The following table sets forth compensation paid to outside directors during the fiscal year ended December 31, 2006:

DIRECTOR COMPENSATION

Name  (a)	Fees Earned or Paid in Cash ($)  (b)	Stock Awards ($)  (c)	Option Awards ($) (d)	Non-Equity Incentive Plan Compensation ($) (e)	Non-Qualified Deferred Compensation Earnings ($) (f)	All Other Compensation ($) (g)	Total ($) (j)
Howard Breslow (1)	9,000	-	-	-	-	-	9,000
Thomas Girschweiler	8,250	-	65,902	-	-	86,700	160,852
Roderick de Greef (2)	8,250	-	5,044	-	-	10,920	24,212
Raymond Cohen (3)	8,250	-	9,619	-	-	-	17,869

(1)

As of December 31, 2006, Mr. Breslow owned the following options and warrants, all of which were exercisable:  options to purchase 399,000 shares of Common Stock and warrants to purchase 2,078,910 shares of Common Stock.

(2)

As of December 31, 2006, Mr. de Greef owned the following options and warrants, all of which were exercisable:  options to purchase 250,000 shares of Common Stock and warrants to purchase 1,250,000 shares of Common Stock.

(3)

As of December 31, 2006, Mr. Cohen owned the following options:  options to purchase 500,000 shares of Common Stock, of which 125,000 were exercisable at December 31, 2006.

The option award compensation in the table above for Raymond Cohen was a result of options to purchase 500,000 shares of Common Stock granted in May 2006 in conjunction with his joining the Board of Directors.  

The option award compensation in the table above for Thomas Girschweiler was the result of the exercise of fully vested option and warrant awards, granted in previous years, to purchase 2,890,000 shares, which options and warrants repriced to $0.04 per share during 2006.   The other compensation amount for Mr. Girschweiler represents the excess of the fair market value of the shares acquired when the repriced options were exercised over the reduced exercise price thereof.  The option award compensation in the table above for Roderick de Greef was the result of the repricing of fully vested option and warrant awards, granted in previous years, to purchase 364,000 shares which were repriced to $0.04 per share and exercised during 2006.  The other compensation amount for Mr. de Greef represents the excess of the fair market value of the shares acquired when the repriced options were exercised over the reduced exercise price thereof.  See “Private Placements” under Item 5 for further information on the options and warrants repriced during 2006.

Howard S. Breslow, a director of the Company, is a member of Breslow & Walker, LLP, general counsel to the Company.  Mr. Breslow currently owns 53,600 shares of Common Stock of the Company and holds options to purchase an aggregate of 2,477,910 additional shares pursuant to stock options and warrants issued to him and/or affiliates.  During the period ended December 2006, Breslow & Walker, LLP billed the Company approximately $65,000 for legal fees.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of March 26, 2007, certain information regarding the beneficial ownership of Common Stock by (i) each stockholder known by the Company to be the beneficial owner of more than 5% of the outstanding shares thereof; (ii) each director of the Company; (iii) each Named Executive Officer of the Company; and (iv) all of the Company’s current directors and executive officers as a group.  

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Name and Address of Beneficial Owner	Common Stock (1)	Percentage of Class
Michael Rice (Officer and Director) c/o BioLife Solutions, Inc. 171 Front Street Owego, NY 13850	-	-
Matthew Snyder (Officer) c/o BioLife Solutions, Inc. 171 Front Street Owego, NY 13850	-	-
John G. Baust c/o CPSI 2 Court Street Owego, NY 13827	4,411,221 (2)	6.4%
Howard S. Breslow, Esq. (Director) c/o Breslow & Walker, LLP 767 Third Avenue New York, NY 10017	2,531,510 (3)	3.7%
Roderick de Greef (Director) c/o BioLife Solutions, Inc. 171 Front Street Owego, NY 13827	5,149,163 (4)	7.5%
Walter Villiger c/o BioLife Solutions, Inc. 171 Front Street Owego, NY 13827	18,823,415 (5)	27.4%
Thomas Girschweiler (Director)  c/o BioLife Solutions, Inc.  171 Front Street  Owego, NY 13827	13,989,886 (6)	20.3%
Beskivest Chart LTD Goodmans Bay Center West Bay Street & Sea View Drive Nassau, Bahamas	7,255,026 (7)	10.6%
Raymond Cohen (Director) c/o BioLife Solutions, Inc. 171 Front Street Owego, NY 13827	125,000 (8)	0.2%
All officers and directors as a group (six persons)	21,795,559	31.7%

_____________________________________________________________

(1)

Shares of Common Stock subject to options and warrants currently exercisable or exercisable within 60 days of December 31, 2006 are deemed outstanding for computing the number of shares and the percentage of the outstanding shares held by a person holding such options or warrants, but are not deemed outstanding for computing the percentage of any other person.  Except as indicated by footnote, and subject to community property laws where applicable, the Company believes that the persons named in the table have sole voting and investment power with respect to all shares shown as beneficially owned by them.

(2)

Includes 712,499 shares of Common Stock issuable upon the exercise of outstanding stock options under the Company’s 1998 Stock Option Plan and 3,698,722 common shares.

(3)

Includes 399,000 shares of Common Stock issuable upon the exercise of outstanding stock options under the Company’s 1988 and 1998 Stock Option Plans, 2,078,910 shares of Common Stock issuable upon the exercise of outstanding warrants owned of record by Breslow & Walker, LLP

24

(1,358,910) and B & W Investments (720,000), both of which are entities in which Mr. Breslow is a partner, and 53,600 common shares.

(4)

Includes 250,000 shares of Common Stock issuable upon the exercise of outstanding stock options under the Company’s 1998 Stock Option Plan, 1,250,000 shares of Common Stock issuable upon the exercise of outstanding warrants, and 3,649,163 common shares.

(5)

Includes 18,823,415 common shares.

(6)

Includes 13,989,886 common shares.

(7)

Includes 7,255,026 common shares.

(8)

Includes 125,000 shares of Common Stock issuable upon the exercise of outstanding stock options under the Company’s 1998 Stock Option Plan.

Securities Authorized for Issuance under Equity Compensation Plan

Plan category	Number of securities to be issued upon exercise of outstanding options (in thousands)	Weighted average exercise price of outstanding options	Number of securities remaining  available for future issuance (in thousands)
Equity compensation plans approved by security holders	5,439	$.15	1,989
Equity compensation plans not approved by security holders	4,244	$.46	-
Total	9,683	$.28	1,989

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Howard S. Breslow, a director of the Company, is a member of Breslow & Walker, LLP, general counsel to the Company.  Mr. Breslow currently owns 53,600 shares of Common Stock of the Company and holds options to purchase an aggregate of 2,477,910 additional shares pursuant to stock options and warrants issued to him and/or affiliates.  The Company incurred approximately $65,000 in legal fees during the year ended December 31, 2006 for services provided by Breslow & Walker, LLP.  At December 31, 2006, accounts payable includes $8,066 due to Breslow & Walker, LLP.

On March 15, 2004, the Company entered into three year Research Agreement with Cell Preservation Services, Inc. (“CPSI”) to outsource to CPSI all of the Company’s research that was funded through SBIR grants.  CPSI is owned by a former employee of BioLife and who is also the son of the former Chief Executive Officer of the Company.  The Research Agreement established a format pursuant to which CPSI (a) took over the processing of existing applications of SBIR grants applied for by BioLife, (b) applied for additional SBIR grants for future research projects, (c) performed a substantial portion of the principal work to be done, in terms of (i) time spent, and (ii) research, in connection with existing and future projects, and (d) utilized BioLife personnel as consultants with respect to the research.  In conjunction therewith BioLife granted to CPSI a non-exclusive, royalty free license (with no right to sublicense) to use BioLife’s technol ogy soley for the purpose of conducting the research in connection with the projects.  Pursuant to the Research Agreement BioLife provides CPSI with (a) facilities in which to conduct the research including basic research equipment and office equipment, and (b) management services.  During the year ended December 31, 2005, the Company recognized $109,714 and $60,342 for facilities and management services, respectively.  No facilities or management fees were received during 2006.  At December 31, 2006 and 2005, the Company was due $0 and $1,321 from CPSI, respectively.  On January 8, 2007, the Company sent a written notice to CPSI that the Company has elected not to renew the Research Agreement, which expired on March 14, 2007.

Effective January 8, 2004, the Company entered into a non-cancelable operating lease for its corporate and manufacturing facilities in Owego, New York that expires in February 2007.  During 2006, the lease was extended through February 2008.  The lease requires payments of $6,200 per month.  The building is partially owned by the Company’s former CEO who was an employee and officer of the Company during 2006, and the Company’s former Director, Research and Development, who was an employee of the Company during 2006.  

See item 5 regarding loans to the Company in February 2007 by two affiliates of the Company.

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PART V

ITEM 13.  EXHIBITS, LISTS AND REPORTS ON FORM 8-K

(a)

The following documents are filed as part of this report:

(1)

 Financial Statements

The financial statements filed as part of this report begin on page F-1.

 (2)

Exhibits   

Exhibit

Number

 Document

 3.1

Certificate of Incorporation, as amended. (1)

3.2

By-Laws, and amendment, dated March 19, 1990, thereto. (1)

 4.1

Specimen of Common Stock Certificate. (1)

10.1

Stock Option Plan, dated July 7, 1988, and amendment, dated July 19, 1989. (1)

10.2

1998 Stock Option Plan (2)  

10.3

Employment Agreement dated July 26, 2006 between the Company and Michael Rice*

10.4

Employment Agreement dated July 1, 2002 between the Company and John G. Baust (3)

10.5

Employment Agreement dated October 17, 2006 between the Company and Matthew Snyder*

10.6

Incubator License Agreement, dated the first day of March 1999, between BioLife Technologies, Inc. (name subsequently changed to BioLife Solutions, Inc.) and The Research Foundation of the State University of New York, and extensions thereto, dated February 23, 2000 and February 7, 2001 relating to the incubator space at the State University of New York at Binghamton. (4)

10.7

Asset Purchase Agreement dated May 26, 2002 (5)

10.8

Research Agreement dated March 15, 2004 between the Company and CPSI (6)

31*

       Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32*

       Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

⁽¹⁾

Incorporated by reference to the Company’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2000.  

⁽²⁾

Incorporated by reference to the Company’s Definitive Proxy Statement for the special meeting of stockholders held on December 16, 1998.   

⁽³⁾

Incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2000.  

⁽⁴⁾

Incorporated by reference to the Company’s quarterly report on Form 10-QSB for the quarter ended September 30, 2002.  

⁽⁵⁾

           Incorporated by reference to the Company’s current report on Form 8-K filed July 10, 2002.

26

⁽⁶⁾

Incorporated by reference to the Company’s annual report on Form 10-KSB for the year ended December 31, 2003.

*Filed herewith

(b)

Reports on Form 8-K

(1)

During the final quarter of the period covered by this statement, the Company filed one 8-K with respect to an employment agreement with the Vice President, Sales and Marketing.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

During 2006, Aronson & Company acted as the independent auditors for the Company.  The following table sets forth the aggregate fees billed by Aronson & Company for audit and review services rendered in connection with the financial statements and reports for the years ending December 31, 2006 and December 31, 2005 and for other services rendered during the years ending December 31, 2006 and December 31, 2005 on behalf of the Company:

	December 31,
	2006	2005
Audit fees	$   96,570	$78,315
Tax fees	7,250	7,616
All other fees	-	1,350
Total	$ 103,820	$87,281

The Board of Directors pre-approves all audit and non-audit services to be performed by the Company's independent auditors.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		BIOLIFE SOLUTIONS, INC.
April 2, 2007
	B y:	/s/ Michael Rice
		Michael Rice
		Chief Executive
		Officer and Chief
		Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

	B y:	/s/ Michael Rice
April 2, 2007		Michael Rice
		Director

	B y:	/s/ Roderick de Greef
April 2, 2007		Roderick de Greef
		Director

	B y:	/s/ Howard S. Breslow
April 2, 2007		Howard S. Breslow
		Director

	B y:	/s/ Thomas Girschweiler
April 2, 2007		Thomas Girschweiler
		Director

	B y:	/s/ Raymond Cohen
April 2, 2007		Raymond Cohen
		Director

	B y:	/s/ Andrew Hinson
April 2, 2007		Andrew Hinson
		Director

28

EX-10

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (the "Agreement") dated July __ 2006 by and between Biolife Solutions, Inc., a Delaware corporation (the "Company") and Michael Rice (the "Executive").

In consideration of the premises and mutual covenants herein and for other good and valuable consideration, the parties agree as follows:

 1.

Term of Employment; Executive Representation.

a.

The Company hereby employs the Executive in accordance with the terms and conditions set forth in this Agreement.  Executive's employment shall commence on August 7, 2006 (the "Effective Date").  Executive's initial term of employment shall be for a period of one year from and including the Effective Date (the "Initial Term"); provided, however, that this Agreement shall automatically renew for successive one (1) year periods in the event either party does not send the other a "termination notice" not less than ninety (90) prior to the expiry of the Initial Term, and in subsequent years, prior to the expiry of any such successive annual period.  Executive and the Company agree and acknowledge that Executive's employment with the Company may be terminated at any time, with or without cause, by the Company or Executive, upon written notice in accordance with Section 7 of this Agreement.

b.

Executive hereby represents to the Company that the execution and delivery of this Agreement by Executive and the performance by Executive of the Executive's duties hereunder shall not constitute a breach of, or otherwise contravene, the terms of any new statute, law, regulation, employment agreement or other agreement or policy to which Executive is a party or otherwise bound.

 2.

Position.

a.

While employed hereunder, Executive's title and position shall be President and Chief Executive Officer of the Company ("CEO").  In such position, Executive shall have such duties and authority as shall be determined from time to time by the Company's Board of Directors (the "Board").  The Board also will nominate Executive as Director to sit on the Board for the duration of Executive's employment.

b.

While employed hereunder, Executive will devote Executive's full business time and best efforts to the performance of Executive's duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise which would conflict with the rendition of such services either directly or indirectly, without the prior written consent of the CEO; provided that 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 CEO, from appointment to any additional directorships or trusteeships, or (3) serve 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 8 of this Agreement.

 3.

Base Salary and Bonus.  While employed hereunder, the Company shall pay Executive a base salary (the   "Base Salary") at the annual rate of $200,000, payable in regular installments in accordance with the   Company's usual payment practices.  Executive shall be entitled to such increases in Executive's Base   Salary, if any, as may be determined from time to time in the sole discretion of the Board, which shall be   consistent with industry standards.  Executive will be eligible for quarterly bonus payments equal to   $25,000 per calendar quarter based on the achievement of certain key objectives which will be determined   by the Board and communicated to the Executive in writing within 60 days of the date of this Agreement.

 4.

Executive Benefits.  The Company shall provide Executive the following during the term of his

employment hereunder:

a.

Coverage under all employee pension and welfare benefit programs, plans and practices in accordance with the terms thereof, which the Company generally makes available to its executives.

b.

To the extent Executive continues to receive health care coverage from his former employer, AMI Semiconductor, Inc., pursuant to COBRA, Company agrees to promptly reimburse Executive for any monthly premium costs incurred by Executive.  If and when COBRA extended healthcare coverage is no longer available to Executive, for whatever reason, Executive shall be covered under the Company's health benefit program, and to the extent Executive incurs prescription drug expenses in excess of those covered by the Company's health benefit program, the Company will reimburse Executive for those costs.

c.

Paid vacation of four (4) weeks each calendar year, which shall be the maximum number of weeks Executive may accrue at any time, and which shall be taken at such times as are consistent with Executive's responsibilities hereunder.

 5.

Business Expenses.  Executive shall be reimbursed for the reasonable expenses in carrying out his duties   and responsibilities under this Agreement, including, without limitation, expenses for travel and similar   items related to such duties and responsibilities, upon submission of vouchers therefore with backup data.

 6.

Equity Interest in Company.  As of the Effective Date, Executive will be granted stock options to purchase   1,500,000 shares of the Company's Common Stock, under the terms set forth in the Option Agreement   attached thereto as Exhibit B (the "Option Agreement").

 7.

Termination.  The Executive's employment hereunder may be terminated by either party at any time and   for any reason; provided that, except as otherwise set forth in this Section 7, the terminating party will be   required to give the other party at least 90 days advance written notice of such termination (unless the   other party waives its right to receive such 90-day notice).  Notwithstanding any other provision of this   Agreement, the provisions of this Section 7 shall exclusively govern Executive's rights upon termination   of employment with the Company and its affiliates.

a.

By the Company for Cause; By the Executive Without Good Reason.

(i)

The Executive's employment hereunder may be terminated by the Company for Cause (as defined below) at any time or by Executive without Good Reason after 90 days prior written notice (unless the Company waives such notice requirement or a portion thereof).

(ii)

For purposes of this Agreement, "Cause" shall mean:

(A)

Executive's failure substantially to perform his duties under this Agreement (other than as a result of total or partial incapacity due to physical or mental illness) after 30 days prior written notice by the Company to Executive specifying either the acts (or lack of action) constitution such failure to perform.  Notwithstanding the foregoing, such notice and opportunity to cure shall not be required in the event of any consequent failure by Executive to perform his employment duties hereunder, and the Company shall have the right to terminate the Executive immediately upon the occurrence thereof.

(B)

dishonesty in the performance of Executive's duties hereunder,

(C)

An act or acts on Executive's part constituting (a) a felony under the laws of the United States or any state thereof, or (b) a misdemeanor involving moral turpitude,

(D)

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, or

(E)

Executive's breach of the provisions of Section 8 of this Agreement.

(iii)

If Executive's employment is terminated during the term of this Agreement by the Company for Cause or by Executive without Good Reason, Executive shall be entitled to receive:

(A)

the Base Salary through the date of termination;

(B)

reimbursement for any unreimbursed business expenses properly incurred by Executive in accordance with Company policy prior to the date of Executive's termination; and

(C)

such Employee Benefits, if any, as to which Executive may be entitled under the employee benefit plans of the Company through the date of termination (the amounts described in clauses (A) through (C) hereof being referred to as the "Accrued Rights"), except healthcare benefits which would extend through the end of the month.

Following such termination of Executive's employment by the Company for Cause or by Executive without Good Reason, except as set forth in this Section 7.a, Executive shall have no further rights to any compensation or any other benefits under this Agreement.

b.

Disability or Death.

(i)

The Executive's employment hereunder shall terminate automatically upon Executive's death or, at the option of the Company, if Executive becomes physically or mentally incapacitated and is therefore unable for a period of forty five (45) consecutive days or for an aggregate of seventy five (75) days in any six (6) month consecutive month period to effectively perform Executive's duties (such incapacity is hereinafter referred to as "Disability").

(ii)

Upon termination of Executive's employment during the term of this Agreement for either Disability or Death, Executive or Executive's estate (as the case may be) shall be entitled to receive the Accrued Rights and a prorated portion of the current quarter's bonus amount.

Following the termination of Executive's employment hereunder due to death or Disability, except as set forth in this Section 7.b, Executive shall have no further rights to any compensation or any other benefits under this Agreement.

c.

By the Company Without Cause or Resignation by Executive for Good Reason.

(i)

The Executive's employment hereunder may be terminated by the Company without Cause or by Executive's resignation for Good Reason.

(ii)

For purposes of this Agreement, "Good Reason" shall mean:

(A)

within thirty (30) days following the occurrence of a "change in control" of the Company (as defined below);

(B)

within thirty (30) days if, without Executive's express written consent, the Company materially changes Executive's position, duties, responsibilities, or status as in effect at the time of the execution of this Agreement;

(C)

a failure by the Company to comply with any material provision of this Agreement, which has not been cured within thirty (30) days after notice of such non-compliance has been given by Executive to the Company, including but not limited to (1) a failure by the Company to pay Executive any currently earned base salary and bonus amounts, a failure by the Company to reimburse Executive for any incurred Business Expenses and/or COBRA insurance premiums, a reduction by the Company in Executive's base salary as in effect on the date hereof or as the same may be increased from time to time during the term of this Agreement (other than as a result of a general

salary reduction affecting substantially all Company employees); (2) any failure by the Company to obtain the assumption of this Agreement by any successor or assign of the Company; or (3) any failure by the COmpany to provide medical and disability insurance as discussed above;

(iii)

if Executive's employment is terminated during the term of this Agreement by the Company without Cause (other than by reason of death or Disability) or if Executive resigns during the term of this Agreement for Good Reason, Executive shall be entitled to receive:

(A)

the Accrued Rights;

(B)

a prorated portion of the current quarter's bonus amount;

(C)

subject to Executive's continued compliance with the provisions of Section 8 of this Agreement, continued payment of the Base Salary (1) one year after the date of such termination, or (2) in the event of a change of control, continued payment of Base Salary until eighteen months (18) after the effective date of the change of control event; and

(D)

In the event of a change of control, accelerated vesting of any remaining unvested stock options pursuant to the terms the Option Agreement attached hereto as Exhibit B.

(iv)

A "change in control" of the Company shall be deemed to have occurred if:

(A)

There shall be consummated (1) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company's Common Stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Company's Common Stock immediately prior to the merger have the same proportionate ownership of at least 50% of common stock of the surviving corporation immediately after the merger, or (2) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company;

(B)

The stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company;

(C)

Any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 50% or more of the Company's outstanding Common Stock.

d.

Notice of Termination.  Any purported termination of employment by the Company or by Executive (other than due to Executive's death) shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 9(h) hereof.  For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated.

 8.

Executive's Covenants Not To Disclose Confidential Information and Trade Secrets.

a.

At any time during or after Executive's employment with the Company, Executive shall not, without the prior written consent of the Company, use, divulge, disclose or make accessible to any other person, firm, partnership, corporation or other entity any Confidential Information (as hereinafter defined) pertaining to the business of the Company or any of its subsidiaries, except (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.  For purposes of this Section 8(a), "Confidential Information" shall mean non-public information concerning the financial data, strategic business plans, intellectual property and other non-public, proprietary and confidential information of the Company as in existence as of the date of Executive's termination of employment that, in any case, is not otherwise available to the public (other than by Executive's breach of the terms hereof).  Confidential Information shall not include information which at the time of disclosure was already known to Executive as evidenced by written records of Executive.  Executive agrees that all confidential information described in this Paragraph of this Agreement is and constitutes trade secret information and is the exclusive property of the Company.

b.

During the period of his employment hereunder and for twenty-four (24) months thereafter, Executive agrees that, without the prior written consent of the Company, he shall not, on his own behalf or on behalf of any person, film or company, directly or indirectly, (i), in any city, town or county in which the Company conducts or does any business, render services to any other business or business entity which is engaged directly or indirectly in any line of business in which the Company is engaged at the time of termination of Executive's employment hereunder, or (ii) solicit, interfere with, induce or attempt to induce, or offer employment to any person who has been employed by the Company at any time during the twelve (12) months immediately preceding such solicitation, or directly or indirectly solicit, interfere with, induce or attempt to induce any customer of the Company to reduce, withdraw, or withhold business from the Co mpany.

c.

The results and proceeds of Executive's services hereunder, including, without limitation, any works or authorship results from Executive's services during Executive's employment with the Company and/or any of the Company's affiliates and any works in progress, will be works-made-for hire and the Company will be deemed the sole owner throughout the universe of any and all rights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developed, with the right to use the same in perpetuity in any manner the Company determines in its sole discretion without any further payment to Executive whatsoever.  If, for any reason, any of such results and proceeds will not legally be a work-for-hire and/or there are any rights which do not accrue to the Company under the preceding sentence, then Executive hereby irrevocably assigns and agrees to assign any and all of Executive's right, title and interest thereto, including, without limitation, any and all copyrights, patents, trade secrets, trademarks and/or other rights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developed, to the Company, and the Company will have the right to use the same in perpetuity throughout the universe in any manner the Company determines without any further payment to Executive whatsoever.  Executive will, from time to time as may be requested by the Company, (i) during the term of Executive's employment without further consideration, and (ii) thereafter at Executive's then current rate of compensation, do any and all things which the Company may deem useful or desirable to establish or document the Company's exclusive ownership of any and all rights in any such results and proceeds, including, without limitation, the execution or appropriate copyright and/or patent application or assignments.  To the extent Executive has any rights in the results and proceeds of Executive's services that cannot be assigned in the manner described above, Executive unconditionally and irrevocably waives the enforcement of such rights.  This subsection is subject to and will not be deemed to limit, restrict, or constitute any waiver by the Company of any rights of ownership to which the Company may be entitled by operation of law by virtue of the Company being Executive's employer.  This Section does not apply to any invention for which no equipment, supplies, facilities or Confidential Information was used, which does not (i) relate to the business of the Company; (ii) relate to the Company's actual or demonstrable anticipated research or development or (iii) result from any work performed by Executive for the Company.

d.

Executive and the Company agree that the covenants outlined in this Section 8 are reasonable covenants under the circumstances, and further agree that if in the opinion of any court of competent jurisdiction any such restraint is not reasonable in any respect, such court shall have the right, power and authority to excise or modify such provision or provisions of this Section as to the court shall appear not reasonable and to enforce the remainder of the covenants as so amended.  Executive agrees that any breach of the covenants contained in this Section 8 would irreparably injure the Company.

e.

In the event that the Company defaults on its payment obligations to the Executive set forth in this Agreement, and such default continues for a period of thirty (30) days following written notice to the Company of such default, then at such time, the non-competition and non-solicitation provisions set forth in this Section 8 shall terminate and shall not be enforceable by the Company; provided, that the confidentiality provisions shall not terminate and shall remain in full force and effect.

 9.

Specific Performance.  Executive acknowledges and agrees that the Company's remedies at law for a   breach or threatened breach of any of the provisions of Section 8 would be inadequate and, in recognition   of this fact, Executive agrees that, in the event of such a breach or threatened breach, in addition to any   remedies at law, the Company, without posting any bond, shall be entitled to cease making any payments   or providing any benefit otherwise required by this Agreement and obtain equitable relief in the form of   specific performance, temporary restraining order, temporary or permanent injunction or any other   equitable remedy which may then be available.

 10.

Arbitration.

a.

Executive agrees that any dispute or controversy arising out of, relating to, or in connection with this Agreement, or the interpretation, validity, construction, performance, breach, or termination thereof, shall be settled by binding arbitration to be held in Tioga County, NY, in accordance with the National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association (the "Rules").  The arbitrator may grant injunctions or other relief in such dispute or controversy.  The decision of this arbitrator will be final, conclusive and binding on the parties to the arbitration.  Judgment may be entered on the arbitrator's decision in any court having jurisdiction.

b.

The arbitrator(s) will apply Delaware state law to the merits of any dispute or claim, without reference to rules of conflicts of law.  Executive hereby consents to the personal jurisdiction of the state and federal courts located in New York for any action or proceeding arising from or relating to this Agreement or relating to any arbitration in which the parties are participants.

c.

EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES ARBITRATION.  EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EXECUTIVE AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PEFORMANCE, BREACH OR TERMINATION TEREOF TO BINDING ARBITRATION, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EXECUTIVE'S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP.

 11.

Miscellaneous.

a.

Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to conflicts of laws principles thereof.

b.

Entire Agreement/Amendments. This Agreement contains the entire understanding of the parties with respect to the employment of Executive by the Company.  There are no restrictions, agreements, promises, warranties, covenants or undertakings between the parties with respect to the subject matter herein other than those expressly set forth herein.  This Agreement may not be altered, modified, or amended except by written instrument signed by the parties hereto.  This Agreement supersedes all prior agreements and understandings (including verbal agreements) between Executive and the Company and/or its affiliates regarding the terms and conditions of Executive's employment with the Company and/or its affiliates (collectively, the "Prior Agreements").

c.

No Waiver.  The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party's rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

d.

Severability.  In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the

remaining provisions of this Agreement shall not be affected thereby.

e.

Assignment.  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 or the Parent.  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.

f.

Mitigation.  Executive shall not be required to mitigate damages or the amounts of any salary continuation payments provided for under this Agreement by seeking other employment or otherwise, nor shall the amount of any payments provided for under this Agreement be reduced by any compensation earned by Executive as the results of employment by another employer or self-employment after the date of termination.

g.

Successors; Binding Agreement.  This Agreement shall inure to the benefit of and be binding upon personal or legal representatives, executors, administrators, successors, heirs, distributes, devises and legatees.

h.

Notice.  For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

If to the Company:

Biolife Solutions, Inc.

171 Front Street

Owego, NY 13827-1520

Attention: Chief Executive Officer

Fax: 607-687-4484

If to Executive:

Michael Rice

19917 164th Avenue NE

Woodinville, WA 98072

Fax: (425) 984-9505

i.

Withholding Taxes.  The Company may withhold from any amounts payable under this Agreement such Federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.

j.

Counterparts.  This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

k.

Survival.  The provisions of Sections 7.1(iii), 7.b(ii), 7.e(iii), 8, 9, 10, and 11a, f and k shall survive the termination or expiration of this Agreement.

{Signatures on Next Page}

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the Effective Date.

"Company"

BioLife Solutions, Inc

By:  /s/ Roderick de Greef

Name:  Roderick de Greef

Its:  Director

"Executive"

/s/ Michael Rice

Michael Rice

Exhibit A

(Permitted Activities)

EXHIBIT B

(Stock Option Agreement)

BIOLIFE SOLUTIONS, INC.

STOCK OPTION AGREEMENT

(for use with 1998 Stock Option Plan)

To:  Michael Rice

We are pleased to inform you that by the determination of the Board of Directors of BioLife Solutions, Inc. (the "Company"), a non-incentive stock option to purchase 1,500,000 shares of the common stock, par value $.001 per share, of the Company (the "Common Stock"), at the price of $0.07 per share, was granted to you on the 7th day of August, 2006 (the "Grant Date").  The grant was made pursuant to the Company's 1998 Stock Option Plan (the "Plan"), a copy of which is attached as Exhibit A.

This option is specifically subject to all the terms and conditions of the Plan with the same force and effect as if fully set forth in this Option.  In the event of any inconsistency or misunderstanding with respect to the terms of this Option, as compared with the provisions of the Plan, the provisions of the Plan shall control and prevail.

1.

Acceptance of Option Agreement

Your execution of this Option Agreement will indicate your acceptance of and your willingness to be bound by its terms; it imposes no obligation upon you to purchase any of the shares subject to the option.  Your obligation to purchase shares can arise only upon your exercise of the option in the manner set forth in paragraph 3 hereof.

2.

Time of Exercise; Vesting

Except as otherwise provided in this Agreement, the option granted to you hereunder shall be exercisable through August 6, 2016.  This options expires 5:00 P.M. New York time on August 6, 2016 (the "Expiration Date") whether or not it has been duly exercised, unless sooner terminated as provided in Paragraphs 6, 7 and 8 hereof.  This Option shall vest to the extent of 500,000 shares on August 7, 2007 (the "First Vesting Date") and 500,000 shares on each of the next two (2) anniversary dates of the First Vesting Date (a total of 1,500,000 shares of Common Stock issuable upon the exercise of such options).

3.

Method of Exercise

This option shall be exercisable by written notice signed by you and delivered to the Company at its principal executive offices, attention of the Chairman of the Board of the Company, signifying your election to exercise the option, and accompanied by payment in full of the purchase price of the shares being purchased.  Payment may be made in

cash; a certified check to the order of the Company; delivery to the Company of shares of Common Stock having a fair market value equal to the purchase price; irrevocable instructions to a broker to sell shares of Common Stock to be issued upon exercise of the option and to deliver to the Company the amount of sales proceeds necessary to pay such purchase price and to deliver to the Company the amount of sales proceeds necessary to pay such purchase price and to deliver the remaining cash proceeds, less commissions and brokerage fees, to the optionee; any combination of such methods of payment; or such other means as determined by the Board of Directors (or Committee, as defined in the Plan), in its sole discretion on the date of exercise, to be consistent with the purpose of the Plan.  The notice must state the number of shares of Common Stock as to which your option is being exercised and must contain, unless indicated to the contra ry by the Company, a representation and acknowledgment by you (in a form acceptable to the Company) that, among other things and to the extent required, such shares are being acquired by you for investment and not with a view to their distribution or resale, that the shares are not registered under the Securities Act of 1933, as amended (the "Act"), that the Company is not obligated to register the shares, that the shares may have to be held indefinitely unless registered for resale under the Act or an exemption from the registration requirements is available and that the Company may place a legend on the certificate evidencing the shares reflecting the fact that they were acquired for investment and cannot be sold or transferred unless registered under the Act or unless counsel to the Company is satisfied that the circumstances of the proposed transfer do not require such registration.

If notice of the exercise of this option is given by a person or persons other than you, the Company may require, as a condition to the exercise of the option, the submission to the Company of appropriate proof of the right of such person or persons to exercise the option.

4.

Issuance of Certificates Upon Exercise of Option

Certificates representing the shares of the Common Stock for which payment is made upon exercise of this option shall be issued as soon as practicable.  The Company, however, shall not be required to issue or delivery a certificate for any shares until it has complied with all requirements of the Act, the Securities Exchange Act of 1934, any stock exchange on which the Company's Common Stock may then be listed and all applicate state laws in connection with the issuance or sale of such shares or the listing of such shares on said exchange.  The Company undertakes to use its good faith efforts to comply with or satisfy all such applicable requirements.  Until the issuance of the certificate for such shares, you or such other person as maybe entitled to exercise the option granted hereby, shall have none of the rights of a stockholder with respect to the shares subject to the option.

5.

Nature of Shares Issuable Upon Exercise of Option

In the event the Company fails to register the shares underlying the option, the shares of Common Stock issuable upon exercise of this option will be unregistered and must be held indefinitely unless they are subsequently registered under the act or an exemption from such registration, such as embodied in Rule 144, is available.  Rule 144 under the Act permits, upon compliance with certain conditions, sales in limited amounts of shares of publicly held companies which are current in the filing of various required reports with the Securities and Exchange Commission, which shares have been beneficially owned and fully paid for at least one year.  You are advised to inquire of the appropriate officer of the Company at any time that you may wish to sell any shares obtained from the exercise of this option.

6.

Termination of Employment

If your employment with the Company (or a subsidiary thereof) terminates without cause and other than by reason of death or disability, you may exercise this option within three months after the date of such termination to the extent this option was exercisable on the date of termination (or such longer period as the Board of Directors (or Committee) may decide on a case by case basis); provided, however, that such exercise occurs on or prior to the Expiration Date.  If your employment with the Company (or a subsidiary thereof) terminates for cause and other than by reason of death or disability, this option shall terminate forthwith and automatically.

7.

Retirement or Disability

If your employment with the Company (or a subsidiary thereof) is terminated by reason of your disability, you may exercise this option within one year from the date of termination to the extent this option was exercisable on the date of termination; provided, however, that such exercise occurs on or prior to Expiration Date.

8.

Death

If you die while employed by the Company (or a subsidiary thereof), or die within three months after termination of your employment without cause or within one year from the date of termination due to disability, this option may be exercised by the person or persons to whom your rights under the option are transferred by will or by the laws or descent and distribution within three months from the date of your death to the extent this option was exercisable on the date of your death, but in no event later than the Expiration Date.

9.

Non-Trasnferability of Option

This option shall not be transferable or assignable except by will or the laws of descent and distribution, and may be exercised during your lifetime only by you.

10.

Rights as a Stockholder

You shall have no rights of a stockholder with respect to any shares covered by this option until the date of issuance of a stock certificate for such shares.

11.

Adjustments upon Changes in Capitalization

If at any time after the date of grant of this option, the Company shall, by stock dividend, stock split, combination, reclassification or exchange, or through merger or consolidation, or otherwise, change its shares of Common Stock into a different number, kind or class of shares or other securities or property, or if any distribution is made to shareholders other than a cash dividend, then the number of shares covered by this option and the price of each such share shall be proportionately adjusted for any such change by the Board of Directors, whose determination shall be final, binding and conclusive.  In the event of a liquidation of the Company, or a merger, acquisition, reorganization, or consolidation of the Company with any other corporation in which the Company is not the surviving corporation or the Company becomes a wholly-owned subsidiary of another corporation, any unexercised options granted hereby shall be deemed canceled unle ss the surviving corporation in any such merger, acquisition, reorganization or consolidation elects to assume the option granted hereby or to issue substitute options in place thereof; provided, however, that, notwithstanding the foregoing, if the option granted hereby would otherwise be canceled in accordance with the foregoing, notwithstanding any other provision of the 1998 Stock Option Plan (as it may be amended from time to time) or this Agreement limiting or restricting the exercisability of this option, you shall have the right, exercisable during a 10-day period immediately prior to such liquidation, acquisition, reorganization, merger or consolidation, to exercise this option in whole or in part, provided, however that any option exercise that would be prohibited but for this provision shall be effective only upon such liquidation, or the closing of such acquisition, merger or consolidation.  In the event any distribution consists of Common Stock held by the Company in any subsidiary, then on the record date for such distribution you shall be entitled to receive options to purchase such number of shares of such common stock as is equal to the number of shares of common stock you would have received had you exercised all of your options under this Plan (vested and unvested) and owned the Common Stock in the Company underlying such options, which options in the subsidiary shall be vested or shall vest to the same extent as your options in the Company, and, generally, shall contain such provisions as to put you in the same equitable position you were in prior to the distribution, including an allocation of the exercise price for th e options issued under this Plan to both such options and the options in the subsidiary.  Any fraction of a share resulting from the foregoing adjustments shall be eliminated and the price per share of the remaining shares subject to this option adjusted accordingly.

BIOLIFE SOLUTIONS, INC.

By: /s/ Roderick de Greef

       Authorized Signature

AGREED TO AND ACCEPTED, as of

the 7th day of August, 2006

/s/ Michael Rice

MICHAEL RICE

EXHIBIT A

BIOLIFE SOLUTIONS, INC.

1998 STOCK OPTION PLAN

(as amended through September 28, 2005)

1.

Purpose of Plan. The purpose of this 1998 Stock Option Plan (the "Plan") is to further the growth and development of BioLife Solutions, Inc. (the "Company") by encouraging and enabling employees, officers, and directors of, and consultants and advisors to, the Company to obtain a proprietary interest in the Company through the ownership of stock (thereby providing such persons with an added incentive to continue in the employ or service of the Company and to stimulate their efforts in promoting the growth, efficiency, and profitability of the Company), and affording the Company a means of attracting to its service persons of outstanding quality.

2.

Shares of Stock Subject to the Plan.  Subject to the provisions of Section 12 hereof, an aggregate of (10,000,000) shares of the common stock, par value $.001 per share, of the Company ("Common Stock") shall be reserved for issuance upon the exercise of options which may be granted from time to time in accordance with the Plan.  As the Board of Directors of the Company ("Board of Directors") shall from time to time determine, such shares may be, in whole or in part, authorized but unissued shares or issued shares which have been reacquired by the Company.  If, for any reason, an option shall lapse, expire, or terminate without having been exercised in full, the unpurchased shares underlying such option shall (unless the Plan shall have been terminated) again be available for issuance pursuant to the Plan.

3.

Administration.

(a)

The Board of Directors shall administer the Plan and, subject to the provisions of the Plan, shall have authority to determine and designate from time to time those persons eligible for a grant of options under the Plan, those persons to whom options are to be granted, the purchase price of the shares covered by each option, the time or times at which options shall be granted, and the manner in which said options are exercisable.  In making such determination, the Board of Directors may take into account the nature of the services rendered by the respective persons, their present and potential contributions to the Company's success, and such other factors as the Board of Directors in its sole discretion shall deem relevant.  Subject to the express provisions of the Plan, the Board of Directors also shall have authority to interpret the Plan, to prescribe, amend, and rescind rules and regulations relating to the Plan, to determine the ter ms and provisions of the instruments by which options shall be evidenced (which shall not be inconsistent with the terms of the Plan), and to make all other determinations necessary or advisable for the administration of the Plan, all of which determinations shall be final, binding, and conclusive.

(b)

The Board of Directors may, at its discretion, in accordance with the provisions of the Company's By-Laws, appoint from among its members a Stock Option or Compensation Committee (the "Committee").  The Committee shall be composed of two or more directors and shall have and may exercise any and all of the powers relating to the administration of the Plan and the grant of options hereunder as are set forth above in Section 3(a), as the Board of Directors shall confer and delegate.  The Board of Directors shall have the power at any time to fill vacancies in, to change the membership of, or to discharge, the Committee.  The Committee shall select one of its members as its Chairman and shall hold its meetings at such time and at such places as it shall deem advisable.  A majority of the Committee shall constitute a quorum and such majority shall determine its action.  The Committee shall keep minutes of its proceedi ngs and shall report the same to the Board of Directors at the meeting next succeeding.  No director or member of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any option granted thereunder.

4.

Persons To Whom Shares May Be Granted.

(a)

Options may be granted to persons who are, at the time of the grant, employees (including part-time employees), officers, and directors of, or consultants or advisors to, the Company or any subsidiary corporation (as defined in Section 425 of the Internal Revenue Code of 1986, as amended (the "Code"), a "Subsidiary") as the Board of Directors (or Committee) shall select from time to time from among those nominated by the Board of Directors (or Committee).  For the purposes of the Plan, options only may be granted to those consultants and advisors who shall render bona fide services to the Company and such services must not be in connection with the offer or sale of securities in a capital raising transaction. Subject to the provisions hereinafter set forth, options granted under the Plan shall be designated either (i) "Incentive Stock Options" (which term, as used herein, shall mean options intended to be "i ncentive stock options" within the meaning of Section 422 of the Code) or (ii) "Non-Incentive Stock Options" (which term, as used herein, shall mean

options not intended to be incentive stock options" within the meaning of Section 422 of the Code).  Each options granted to a person who is solely a director of, or consultant or advisor to, the Company or a Subsidiary on the date of the grant shall be designated a Non-Incentive Stock Option.

(b)

The Board of Directors (or Committee) may grant, at any time, new options to a person who has previously received options, whether such prior options are still outstanding, have previously been exercised in whole or in part, have expired, or are canceled in connection with the issuance of new options.  The purchase price of the new options may be established by the Board of Directors (or Committee) without regard to the existing option price.

5.

Option Price.

(a)

The purchase price of the Common Stock underlying each option shall be determined by the Board of Directors (or Committee), which determination shall be final, binding, and conclusive; provided, however, in no event shall the purchase price of Incentive Stock Options be less than 100% (110% in the case of optionees who own more than 10% of the total combined voting power of all classes of stock of the Company) of the fair market value of the Common Stock on the date the option is granted.  In determining such fair market value, the Board of Directors (or Committee) shall consider (i) the last sale price of the Common Stock on the date on which the option is granted or, if no such reported sale takes place on such day, the last reported bid price on such day, on NASDAQ or on the principal national securities exchange on which the Common Stock is admitted to trading or listed, or (ii) if not listed or admitted to trading on NASDAQ or a national securities exchange, the closing bid price as quoted by the National Quotation Bureau or a recognized dealer in the Common Stock on the date of grant.  If the Common Stock is not publicly traded at the time an option is granted, the Board of Directors (or Committee) shall deem fair market value to be the fair value of the Common Stock after taking into account appropriate factors which may be relevant under applicable federal tax laws and Internal Revenue rules and regulations.  For purposes of the Plan, the date of grant of an option shall be the date specified by the Board of Directors (or Committee) at the time it grants such option; provided, however, such date shall not be prior to the date on which the Board of Directors (or Committee) acts to approve the grant.

(b)

The aggregate fair market value (determined at the time the Incentive Stock Options are granted) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by an employee during any calendar year shall not exceed $100,000.  Non-Incentive Stock Options shall not be subject to the limitations of this paragraph 5(b).

6.

Exericse of Options.

(a)

The number of shares which are issued pursuant to the exercise of an option shall be charged against the maximum limitations on shares set forth in Section 2 hereof.

(b)

The exercise of an option shall be made contingent upon receipt by the Company from the holder thereof of (i) if deemed necessary by the Company, a written representation and acknowledgment that (1) at the time of such exercise it is the holder's then present intention to acquire the option shares for investment and not with a view to distribution or resale thereof, (2) the holder knows that the Company is not obligated to register the option shares and that the option shares may have to be held indefinitely unless an exemption from the registration requirements of the Securities Act of 1933, as amended (the "Act"), is available or the COmpany has registered the shares underlying the options, and (3) the Company may place a legend on the certificate(s) evidencing the option shares reflecting the fact that they were acquired for investment and cannot be sold or transferred unless registered under the Act, and (ii) payment in full of the p urchase price of the shares being purchased.  Payment may be made in cash; by certified check payable to the order of the Company in the amount of such purchase price; by delivery to the Company of shares of Common Stock having a fair market value equal to such purchase price; by irrevocable instructions to a broker to sell shares of Common Stock to be issued upon exercise of the option and to deliver to the Company the amount of sales proceeds necessary to pay such purchase price and to deliver the remaining cash proceeds, less commissions and brokerage fees, to the optionee, or by any combination of such methods of payment.

7.

Term of Options.  The period during which each option granted hereunder shall be exercisable shall be determined by the Board of Directors (or Committee); provided, however, no option shall be exercisable for a period exceeding ten (10) years from the date such option is granted.

8.

Non-Transferability of Options.  No option granted pursuant to the Plan shall be subject to anticipation, sale, assignment, pledge, encumbrance, or charge, or shall be otherwise transferable except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order (as defined by the Code or Title I of the Employee

Retirement Income Security Act or the rules thereunder), and an option shall be exercisable during the lifetime of the holder thereof only by such holder.

9.

Termination of Services.  If an employee, officer, or director to whom an option has been granted under the Plan shall cease to be an employee, officer, or director of the Company or a Subsidiary by reason of a termination of such relationship without cause and other than by reason of death or disability, such holder may exercise such option at any time prior to the expiration date of the options or within three months (or such longer period as the Board of Directors (or Committee) may decide on a case by case basis) after the date of termination, whichever is earlier, but only to the extent the holder had the right to exercise such option on the date of termination.  If an employee, officer, of director of the Company or a Subsidiary by reason of a termination of such relationship for cause and other than by reason of death or disability, such options shall terminate, lapse, and expire forthwith and automatically.  So long a s the holder of an option shall continue to be in the employ, or continue to be a director, of the Company or one or more of its Subsidiaries, such holder's option shall not be affected by any change of duties or position.  Absence on leave approved by the employing corporation shall not be considered an interruption of employment for any purpose under the Plan.  The granting of an option in any one year shall not give the holder of the option any rights to similar grants in future years or any right to be retained in the employ or service of the Company or any of its Subsidiaries or interfere in any way with the right of the Company or any such Subsidiary to terminate such holder's employment or services at any time.  Notwithstanding the foregoing, no option may be exercised after ten years from the date of its grant.

10.

Disability of Holder of Option.  If any employee, officer, or director to whom an option has been granted under the Plan shall cease to be an employee, officer, or director of the Company or a Subsidiary by reason of disability, such holder may exercise such option at any time prior to the expiration date of the option or within one year after the date of termination for such reason, whichever is earlier, but only to the extent the holder had the right to exercise such option on the date of termination.  Notwithstanding the foregoing, no option may be exercised after ten years from the date of its grant.  For the purposes of the Plan, "disability" shall mean "permanent and total disability" as defined in Section 22(e)(3) of the Code.

11.

Death of Holder of Option.  If any employee, officer, or director to whom an option has been granted under the Plan shall cease to be an employee, officer, or director of the Company or a Subsidiary by reason of death, or such holder of an option shall die within three months after termination, or in the case of the death of an advisor or consultant to whom an option has been granted under the Plan, the option may be exercised by the person or persons to whom the optionee's rights under the option are transferred by will or by the laws or descent and distribution at any time prior to the expiration date of the option or, in the case of an employee, officer, or director, within three months from the date of death, whichever is earlier, but only to the extent the holder of the option had the right to exercise such option on the date of such termination.  Notwithstanding the foregoing, no option may be exercised after ten years from the date of its grant.

12.

Adjustments Upon Changes in Capitalization.

(a)

If the shares of Common Stock outstanding are changed in number, kind, or class by reason of a stock split, combination, merger, consolidation, reorganization, reclassification, exchange, or any capital adjustment, including a stock dividend, or if any distribution is made to stockholders other than a cash dividend and the Board of Directors (or Committee) deems it appropriate to make an adjustment, then (i) the aggregate number and class of shares that may be issued or transferred pursuant to Section 2, (ii) the number and class of shares which are issuable under outstanding options, and (iii) the purchase price to be paid per share under outstanding options, shall be adjusted as hereinafter provided.  In the event any distribution consists of common stock held by the Company in ant subsidiary, then each holder of options under this Plan on the record date for such distribution shall be entitled to receive options to purchase such number of shares of such common stock as is equal to the number of shares of common stock such holder would have received had such holder exercised all of such holder's options under this Plan (vested and unvested) and owned the common stock in the Company underlying such options, which options in the subsidiary shall be vested or shall vest to the same extent as such holder's options in the Company, and, generally, shall contain such provisions as to put such holder in the same equitable position such holder was in prior to the distribution, including an allocation of the exercise price for the options issued under this Plan to both such options and the options in the subsidiary.

(b)

Adjustments under this Section 12 shall be made in a proportionate and equitable manner by the Board of Directors (or Committee), whose determination as to what adjustments shall be made, and the extent thereof, shall be final, binding, and conclusive.  In the event that a fraction of a share results from the foregoing adjustment, said fraction shall be eliminated and the price per share of the remaining shares subject to the option adjusted accordingly.

(c)

In the event of a liquidation of the Company, or a merger, reorganization, or consolidation of the Company with any other corporation in which the Company is not the surviving corporation or the Company becomes a wholly-owned subsidiary of another corporation, any unexercised options theretofore granted under the Plan shall be deemed canceled unless the surviving corporation in any such merger, reorganization, or consolidation elects to assume the options under the Plan or to issue substitute options in place thereof; provided, however, if such options would otherwise be canceled in accordance with the foregoing, the optionee shall have the right, exercisable during a ten-day period immediately prior to such liquidation, merger, or consolidation, to exercise the option, in whole or in part.  The granting of an option pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reorganizations, reclas sifications, or changes of its capital or business structure or to merge, consolidate, dissolve, liquidate, or sell or transfer all or any part of its business or assets.

13.

Vesting of Rights Under Options.  Nothing contained in the Plan or in any resolution adopted or to be adopted by the Board of Directors (or Committee) or the stockholders of the Company shall constitute the vesting of any rights under any option.  The vesting of such rights shall take place only when a written agreement shall be duly executed and delivered by and on behalf of the Company to the person to whom the option shall be granted.

14.

Rights as a Stockholder.  A holder of an option shall have no rights of a stockholder with respect to any shares covered by such holder's option until the date of issuance of a stock certificate to such holder for such shares.

15.

Termination and Amendment.  The Plan was adopted by the Board of Directors on August 31, 1998, subject, with respect to the validation of Incentive Stock Options granted under the Plan, to approval of the Plan by the stockholders of the Company at the next Meeting of Stockholders or, in lieu thereof, by written consent.  If the approval of stockholders is not obtained prior to August 30 1999, any grants of Incentive Stock Options under the Plan made prior to that date will be rescinded.  The Plan shall expire at the end of the day on August 30, 2008 (except as to options outstanding on that date).  Options may be granted under the Plan prior to the date of stockholder approval of the Plan.  The Board of Directors (or Committee) may terminate or amend the Plan in any respect at any time, except that, without the approval of the stockholders obtained within 12 months before or after the Board of Directors (or Committe e) adopts a resolution authorizing any of the following actions, (a) the total number of shares that may be issued under the Plan may not be increased (except by adjustment pursuant to paragraph 12); (b) the provisions eligibility for grants of Incentive Stock Options may not be modified; (c) the provisions regarding the exercise price at which shares may be offered pursuant to Incentive Stock Options may not be modified except by adjustment pursuant to paragraph 12), and (d) the expiration date of the Plan may not be extended- Except as otherwise provided in this paragraph 15, in no event may action of the Board of Directors (or Committee) or stockholders alter or impair the rights of an optionee, without such optionee's consent, under any option previously granted to such optionee.

16. Modification, Extension and Renewal of Options.  Subject to the terms and conditions and within the limitations of the Plan, the Board of Directors (or Committee) may modify, extend, or renew outstanding options granted under the Plan, or accept the surrender of outstanding options (to the extent not theretofore exercised) and authorize the granting of new options in substitution therefor.  Notwithstanding the foregoing, no modification of an option shall, without the consent of the holder thereof, alter or impair any rights or obligations under any option theretofore granted under the Plan.

17.

Conversion of Incentive Stock Options into Non-Qualified Options.  Without the prior written consent of the holder of an Incentive Stock Option, the Board of Directors (or Committee) shall not alter the terms of such Incentive Stock Option (including the means of exercising such Incentive Stock Option) if such alteration would constitute a modification within the meaning of Section 424(h)(3) of the Code.  The Board of Directors (or Committee), at the written request or with the written consent of any optionee, may in its discretion take such actions as may be necessary to convert such optionee's Incentive Stock Options (or any installments or portions of installments thereof) that have not been exercised on the date of conversion into Non-Incentive Stock Options at any time prior to the expiration of such Incentive Stock Options, regardless of whether the optionee is an employee of the Company at the time of such conversation. &nb sp;Such actions may include, but shall not be limited to, extending the exercise period or reducing the exercise price of the appropriate installments of such Incentive Stock Options.  At the time of such conversion, the Board of Directors (or Committee) (with the consent of the optionee) may impose such conditions on the exercise of the resulting Non-Incentive Stock Options as the Board of Directors (or Committee) in its discretion may determine, provided that such conditions shall not be inconsistent with the Plan.  Nothing in the Plan shall be deemed to give any optionee the right to have such optionee's Incentive Stock Options converted into Non-Incentive Stock Options, and no such conversion shall occur until and unless the Board of Directors (or Committee) takes appropriate action.

18.

Withholding of Additional Income Taxes.  Upon the exercise of a Non-Incentive Stock Option, the transfer of a Non-Incentive Stock Option pursuant to an arm's length transaction, the making of a Disqualifying Disposition (as described in Sections 421, 422, and 424 of the Code and regulations thereunder), the vesting of transfer of restricted stock or securities acquired on the exercise of an option hereunder, or th e making of a distribution or other payment with respect to such stock or securities, the Company may withhold taxes in respect of amounts that constitute compensation includible in gross income.  The Board of Directors (or Committee) in its discretion may condition the exercise of an option, the transfer of a Non-Incentive Stock Option, or the vesting or transferability of restricted stock or securities acquired by exercising an option on the optionee's making satisfactory arrangement for such withholding.  Such ar rangement may include payment by the optionee in cash or by check of the amount of the withholding taxes or, at the discretion of the Board of Directors (or Committee), by the optionee's delivery of previously held shares of Common Stock or the withholding from the shares of Common Stock otherwise deliverable upon exercise of option shares having an aggregate fair market value equal to the amount of such withholding taxes.

19.

Indemnification.  In addition to such other rights of indemnification as they may have as members of the Board of Directors (or Committee), the members of the Board of Directors (or Committee) administering the Plan shall be indemnified by the Company against reasonable expenses, including attorneys' fees, actually and necessarily incurred in connection with the defense of any action, suit, or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any option granted thereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any action, suit, or proceeding, except in relation to matters as to which it shall be adjudged in any action, suit, or proceeding that such member is liable for negligence or misconduct in the performance of his duties, and provided that within 60 days after institution of any such action, suit, or proceeding, the member shall in writing offer the Company the opportunity, at its own expense, to handle and defend the same.

20.

Governing Law.  The validity and construction of the Plan and the instruments evidencing options shall be governed by the laws of Delaware, or the laws of any jurisdiction in which the Company or its successors in interest may be organized.

EX-10

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (the "Agreement") dated October 17, 2006 (the "Effective Date") by and between Biolife Solutions, Inc., a Delaware corporation (the "Company") and Matt Snyder (the "Executive").

In consideration of the premises and mutual covenants herein and for other good and valuable consideration, the parties agree as follows:

1.

Term of Employment: Executive Representation.

a.

Executive's employment shall commence on the Effective Date.  Executive's term of employment shall be for a period of one year from and including the Effective Date (the "Initial Term"); provided, however, that this Agreement shall automatically renew for successive one (1) year periods in the event either party does not send the other a "termination notice" ninety (90) days prior to the expiry of the Initial Term, and in subsequent years, prior to the expiry of any such successive annual period.  Executive and the Company agree and acknowledge that Executive's employment with the Company may be terminated at any time, with or without cause, by the Company or Executive, upon written notice in accordance with Section 7 of this Agreement.

b.

Executive hereby represents to the Company that the execution and delivery of this Agreement by Executive and the Company and the performance by Executive of the Executive's duties hereunder shall not constitute a breach of, or otherwise contravene, the terms of any new statute, law, regulation, employment agreement or other agreement or policy to which Executive is a party or otherwise bound.

2.

Position.

a.

While employed hereunder, Executive titles and position shall be Vice President, Sales.

b.

While employed hereunder, Executive will devote Executive's full business time and best efforts to the performance of Executive's duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise which would conflict with the rendition of such services either directly or indirectly, without the prior written consent of the CEO; provided that 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 CEO, from appointment to any additional directorships or trusteeships, or (3) serve 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 8 of this Agreement.

3.

Base Salary and Commissions.  While employed hereunder, the Company shall pay Executive a base salary (the "Base Salary") at the annual rate of $140,00, payable in regular installments in accordance with the Company's usual payment practices.  Executive shall be entitled to such increases in Executive's Base Salary, if any, as may be determined from time to time in the sole discretion of the CEO and Board of Directors, which shall be consistent with industry standards.  Executive will be eligible for sales commissions equal to 2% of net sales, payable in regular installments in accordance with the Company's usual payment practices.

4.

Executive Benefits.  The Company shall provide Executive the following during the term of his employment hereunder:

a.

Coverage under all employee pension and welfare benefit programs, plans and practices in accordance with the terms thereof, which the Parent generally makes available to its executives.

b.

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.

5.

Business Expenses.  Executive shall be reimbursed for the reasonable expenses in carrying out his duties and responsibilities under this Agreement, including, without limitation, expenses for travel and similar items related to such duties and responsibilities.

6.

Equity Interest in Company.  As of the commencement date of Executive's employment, Executive will be granted stock options to purchase 100,000 shares of the Company's Common Stock, under the terms set forth in the Option Agreement attached hereto as Exhibit B (the "Option Agreement").

7.

Termination.  The Executive's employment hereunder may be terminated by either party at any time and for any reason; provided that Executive will be required to give the Company at least 90 days advance written notice of any resignation of Executive's employment (unless the Company waives its right to receive such 90-day notice).  Notwithstanding any other provision of this Agreement, the provisions of this Section 7 shall exclusively govern Executive's rights upon termination of employment with the Company and its affiliates.

a.

By the Company for Cause; By the Executive Without Good Reason.

(i)

The Executive's employment hereunder may be terminated by the Company for Cause (as defined below) at any time or by Executive without Good reason after 90 days prior written notice (unless the Company waives such notice requirements or a portion thereof).

(ii)

For purposes of this Agreement, "Cause"shall mean:

(A)

Executive's continued failure substantially to perform Executive's duties hereunder (other than as a result of total or partial incapacity due to physical or mental illness) for a period of 10 consecutive days following notice by the Company to the Executive of such failure,

(B)

dishonesty in the performance of Executive's duties hereunder,

(C)

an act or acts on Executive's part constituting (a) a felony under the laws of the United States or any state thereof, or (b) a misdemeanor involving moral turpitude,

(D)

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, or

(E)

Executive's breach of the provisions of Section 9 of this Agreement.

(iii)

If Executive's employment is terminated by the Company for Cause or by Executive without Good Reason, Executive shall be entitled to receive:

(A)

the Base Salary through the date of termination;

(B)

reimbursement for any unreimbursed business expenses properly incurred by Executive in accordance with Company policy prior to the date of Executive's termination; and

(C)

such Employee Benefits, if any, as to which Executive may be entitled under the employee benefit plans of the Company (the amounts described in clauses (A) through (C) hereof being referred to as the "Accrued Rights").

Following such termination of Executive's employment by the Company for Cause or by Executive without Good Reason, except as set forth in this Section 7(a), Executive shall have no further rights to any compensation or any other benefits under this Agreement.

b.

Disability or Death.

(i)

The Executive's employment hereunder shall terminate upon Executive's death and if Executive becomes physically or mentally incapacitated and is therefore unable for a period of six (6) consecutive months or for an aggregate of nine (9) months in any twenty-four (24) consecutive month period to perform Executive's duties (such incapacity is hereinafter referred to as "Disability").  Any question as to the existence of the Disability of Executive as to which Executive and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to Executive and the Company.  If Executive and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing.  The determination of Disability made in w riting to the Company and Executive shall be final and conclusive for all purposes of the Agreement.

(ii)

Upon termination of Executive's employment hereunder for either Disability or death, Executive or Executive's estate (as the case may be) shall be entitled to receive the Accrued Rights.

Following the termination of Executive's employment hereunder due to death or Disability, except as set forth in this Section 7(b), Executive shall have no further rights to any compensation or any other benefits under this Agreement.

c.

By the Company Without Cause or Resignation by Executive for Good Reason.

(i)

The Executive's employment hereunder may be terminated by the Company without Cause or by Executive's resignation for Good Reason.

(ii)

For purposes of this Agreement, "Good Reason" shall mean:

(A)

the occurrence of a "change in control" of the Company (as defined below);

(B)

without Executive's express written consent, the Company materially changes Executive's position, duties, responsibilities, or status as in effect at the time of the execution of this Agreement;

(C)

a failure by the Company to comply with any material provision of this Agreement, which has not been cured within thirty (30) days after notice of such non-compliance has been given by Executive to the Company, including but not limited to (1) a reduction by the Company in Executive's base salary as in effect on the date hereof or as the same may be increased from time to time during the term of this Agreement (other than as a result of a general salary reduction affecting substantially all Company employees); (2) any failure by the Company to obtain the assumption of this Agreement by any successor or assign of the Company;

(iii)

if Executive's employment is terminated by the Company without Cause (other than by reason of death or Disability) or if Executive resigns for Good Reason, Executive shall be entitled to receive:

(A)

the Accrued Rights;

(B)

subject to Executive's continued compliance with the provisions of Section 8 of this Agreement, continued payment of the Base Salary (1) six months after the date of such termination, or (2) in the event of a change of control, continued payment of Base Salary until twelve months after the effective date of the change of control event; and

(C)

In the event of a change of control, accelerated vesting of any remaining unvested stock options pursuant to the terms the Option Agreement attached hereto as Exhibit B.

(iv)

A "change in control" of the Company shall be deemed to have occurred if:

(A)

There shall be consummated (1) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company's Common Stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Company's Common Stock immediately prior to the merger have the same proportionate ownership of at least 50% of common stock of the surviving corporation immediately after the merger, or (2) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company;

(B)

The stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company;

(C)

Any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 50% or more of the Company's outstanding Common Stock.

d.

Notice of Termination.  Any purported termination of employment by the Company or by Executive (other than due to Executive's death) shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 9(h) hereof.  For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated.

8.

Executive's Covenants Not To Disclose Confidential Information and Trade Secrets.

a.

At any time during or after Executive's employment with the Company, Executive shall not, without the prior written consent of the Company, use, divulge, disclose or make accessible to any other person, firm, partnership, corporation or other entity any Confidential Information (as hereinafter defined) pertaining to the business of the Company or any of its subsidiaries, except (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.  For purposes of this Section 8(a), "Confidential Information" shall mean non-public information concerning the f inancial data, strategic business plans, intellectual property and other non-public, proprietary and confidential information of the Company as in existence as of the date of Executive's termination of employment that, in any case, is not otherwise available to the public (other than by Executive's breach of the terms hereof).  Executive agrees that all confidential information described in this Paragraph of this Agreement is and constitutes trade secret information and is the exclusive property of the Company.

b.

As Vice President, Sales, of the Company, Executive will acquire knowledge of Confidential Information and trade secrets.  Executive acknowledges that the Confidential Information and trade secrets which the Company has provided and will provide to him could play a significant role were he to

directly to indirectly be engaged in any business in Competition with the Company or its subsidiaries.  Executive agrees that all confidential information described in this Paragraph of this Agreement is and constitutes trade secret information, and is the exclusive property of the Company.  Executive agrees not to disclose any confidential or trade secret information of the Company to any other person during or following his employment with the Company.  Executive agrees that the unauthorized use or disclosure of any of the Company's confidential information or trade secrets obtained during or following his employment with Company constitutes misappropriation.  Executive agrees not to engage in any misappropriation at any time, whether during or following the completion of his employment with the Company.  In addition, during the period of his employment hereunder and for twenty-four (24) months thereafter, Executive agrees that, without the prior written consent of the Company, he shall not, on his own behalf or on behalf of any person, firm or company, directly or indirectly, solicit, interfere with, induce or attempt to induce, or offer employment to any person who has been employed by the Company at any time during the twelve (12) months immediately preceding such solicitation, or directly or indirectly solicit, interfere with, induce or attempt to induce any customer of the Company to reduce, withdraw, or withhold business from the Company, to the extent that Executive would use Confidential Information or trade secrets or that would otherwise constitute unfair competition.

c.

The results and proceeds of Executive's services hereunder, including, without limitation, any works or authorship results from Executive's services during Executive's employment with the Company and/or any of the Company will be deemed the sole owner throughout the universe of any and all rights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developed, with the right to use the same in perpetuity in any manner the Company determines in its sole discretion without any further payment to Executive whatsoever.  If, for any reason, any of such results and proceeds will not legally be a work-for-hire and/or there are any rights which do not accrue to the Company under the preceding sentence, then Executive hereby irrevocably assigns and agrees to assign any and all of Executive's right, title and interest thereto, including, without limitation, any and all copyrights, patents, trade secrets, trademarks and/or other rights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developed, to the Company, and the Company will have the right to use the same in perpetuity throughout the universe in any manner the Company determines without any further payment to Executive whatsoever.  Executive will, from time to time as may be requested by the Company, (i) during the term of Executive's employment without further consideration, and (ii) thereafter at Executive's then current rate of compensation, do any and all things which the Company may deem useful or desirable to establish or document the Company's exclusive ownership of any and all rights in any such results and proceeds, including, without limitation, the execution or appropriate copyright and/or patent application or assignments.  To the extent Executive has any rights in the results and proceeds of Executive's services that cannot be assigned in the manner described above, Executive unconditionally and irrevocably waives the enforcement of such rights.  This subsection is subject to and will not be deemed to limit, restrict, or constitute any waiver by the Company of any rights of ownership to which the Company may be entitled by operation of law by virtue of the COmpany being Executive's employer.  This Section does not apply to an invention that qualifies as a nonassignable invention under Section 2870 of the California Labor Code, which applies to any invention for which no equipment, supplies, facilities or Confidential Information was used, which does not (i) relate to the business of the Company; (ii) relate to the Company's actual or demonstrable anticipated research or development or (iii) result from any work performed by Executive for the Company.  This confirms that Executive has been notified of his rights under Section 2870 of the California Labor Code.

d.

Executive and the Company agree that the covenants outlined in this Section 8 are reasonable covenants under the circumstances, and further agree that if in the opinion of any court of competent jurisdiction any such restraint is not reasonable in any respect, such court shall have the right, power and authority to excise or modify such provision or provisions of this Section as to the court shall appear not reasonable and to enforce the remainder of the covenants as so amended.  Executive agrees that any breach of the covenants contained in this Section 8 would irreparably injure the Company.

9.

Specific Performance.  Executive acknowledges and agrees that the Company's remedies at law for a breach or threatened breach of any of the provisions of Section 8 would be inadequate and, in recognition of this fact, Executive agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled to cease making any payments or providing any benefit otherwise required by this Agreement and obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available.

10.

Arbitration.

a.

Executive agrees that any dispute or controversy arising out of, relating to, or in connection with this Agreement, or the interpretation, validity, construction, performance, breach, or termination thereof, shall be settled by binding arbitration to be held in Tioga County, NY, in accordance with the National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association (the "Rules").  The arbitrator may grant injunctions or other relief in such dispute or controversy.  The decision of this arbitrator will be final, conclusive and binding on the parties to the arbitration.  Judgment may be entered on the arbitrator's decision in any court having jurisdiction.

b.

The arbitrator(s) will apply New York state law to the merits of any dispute or claim, without reference to rules of conflicts of law.  Executive hereby consents to the personal jurisdiction of the state and federal courts located in New York for any action or proceeding arising from or relating to this Agreement or relating to any arbitration in which the parties are participants.

c.

EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES ARBITRATION.  EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EXECUTIVE AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PEFORMANCE, BREACH OR TERMINATION TEREOF TO BINDING ARBITRATION, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EXECUTIVE'S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP.

11.

Miscellaneous.

a.

Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of laws principles thereof.

b.

Entire Agreement/Amendments. This Agreement contains the entire understanding of the parties with respect to the employment of Executive by the Company.  There are no restrictions, agreements, promises, warranties, covenants or undertakings between the parties with respect to the subject matter herein other than those expressly set forth herein.  This Agreement may not be altered, modified, or amended except by written instrument signed by the parties hereto.  This Agreement supersedes all prior agreements and understandings (including verbal agreements) between Executive and the Company and/or its affiliates regarding the terms and conditions of Executive's employment with the COmpany and/or its affiliates (collectively, the "Prior Agreements").

c.

No Waiver.  The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party's rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

d.

Severability.  In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby.

e.

Assignment.  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 or the Parent.  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.

f.

Mitigation.  Executive shall not be required to mitigate damages or the amounts of any salary continuation payments provided for under this Agreement by seeking other employment or otherwise, nor shall the amount of any payments provided for under this Agreement be reduced by any compensation earned by Executive as the results of employment by another employer or self-employment after the date

of termination.

g.

Successors; Binding Agreement.  This Agreement shall inure to the benefit of and be binding upon personal or legal representatives, executors, administrators, successors, heirs, distributes, devises and legatees.

h.

Notice.  For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

If to the Company:

Biolife Solutions, Inc.

171 Front Street

Owego, NY 13827-1520

Attention: Chief Executive Officer

Fax: 607-687-4484

If to Executive:

Matt Snyder

18339 NE 201st Drive

Woodinville, WA 98077

i.

Withholding Taxes.  The Company may withhold from any amounts payable under this Agreement such Federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.

j.

Counterparts.  This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

{Signatures on Next Page}

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the Effective Date.

"Company"

Biolife Solutions, Inc.

By: /s/ Michael P. Rice

Name: Michael P. Rice

Its: Chief Executive Officer

"Executive"

/s/ Matt Snyder

Matt Snyder

Exhibit A

(Permitted Activities)

EXHIBIT B

(Stock Option Agreement)

BIOLIFE SOLUTIONS, INC.

STOCK OPTION AGREEMENT

(for use with 1998 Stock Option Plan)

To:

Matt Snyder

We are pleased to inform you that by the determination of the Board of Directors of BioLife Solutions, Inc. (the "Company"), a non-incentive stock option to purchase 100,000 shares of the common stock, par value $.001 per share, of the Company (the "Common Stock"), at the price of $0.07 per share, was granted to you on the 17th day of October, 2006 (the "Grant Date").  The grant was made pursuant to the Company's 1998 Stock Option Plan (the "Plan"), a copy of which is attached as Exhibit A.

This option is specifically subject to all the terms and conditions of the Plan with the same force and effect as if fully set forth in this Option.  In the event of any inconsistency or misunderstanding with respect to the terms of this Option, as compared with the provisions of the Plan, the provisions of the Plan shall control and prevail.

1.

Acceptance of Option Agreement

Your execution of this Option Agreement will indicate your acceptance of and your willingness to be bound by its terms; it imposes no obligation upon you to purchase any of the shares subject to the option.  Your obligation to purchase shares can arise only upon your exercise of the option in the manner set forth in paragraph 3 hereof.

2.

Time of Exercise; Vesting

Except as otherwise provided in this Agreement, the option granted to you hereunder shall be exercisable through October 16, 2016.  This options expires 5:00 P.M. New York time on October 16, 2016 (the "Expiration Date") whether or not it has been duly exercised, unless sooner terminated as provided in Paragraphs 6, 7 and 8 hereof.  This Option shall vest to the extent of 33,334 shares on October 17, 2007, 33,333 shares on October 17, 2008, and 33,333 shares on October 17, 2009.

3.

Method of Exercise

This option shall be exercisable by written notice signed by you and delivered to the Company at its principal executive offices, attention of the Chairman of the Board of the Company, signifying your election to exercise the option, and accompanied by payment in full of the purchase price of the shares being purchased.  Payment may be made in cash; a certified check to the order of the Company; delivery to the Company of shares of Common Stock having a fair market value equal to the purchase price; irrevocable instructions to a broker to sell shares of Common Stock to be issued

upon exercise of the option and to deliver to the Company the amount of sales proceeds necessary to pay such purchase price and to deliver to the Company the amount of sales proceeds necessary to pay such purchase price and to deliver the remaining cash proceeds, less commissions and brokerage fees, to the optionee; any combination of such methods of payment; or such other means as determined by the Board of Directors (or Committee, as defined in the Plan), in its sole discretion on the date of exercise, to be consistent with the purpose of the Plan.  The notice must state the number of shares of Common Stock as to which your option is being exercised and must contain, unless indicated to the contrary by the Company, a representation and acknowledgment by you (in a form acceptable to the Company) that, among other things and to the extent required, such shares are being acquired by you for investment and not with a view to their distr ibution or resale, that the shares are not registered under the Securities Act of 1933, as amended (the "Act"), that the Company is not obligated to register the shares, that the shares may have to be held indefinitely unless registered for resale under the Act or an exemption from the registration requirements is available and that the Company may place a legend on the certificate evidencing the shares reflecting the fact that they were acquired for investment and cannot be sold or transferred unless registered under the Act or unless counsel to the Company is satisfied that the circumstances of the proposed transfer do not require such registration.

If notice of the exercise of this option is given by a person or persons other than you, the Company may require, as a condition to the exercise of the option, the submission to the Company of appropriate proof of the right of such person or persons to exercise the option.

4.

Issuance of Certificates Upon Exercise of Option

Certificates representing the shares of the Common Stock for which payment is made upon exercise of this option shall be issued as soon as practicable.  The Company, however, shall not be required to issue or delivery a certificate for any shares until it has complied with all requirements of the Act, the Securities Exchange Act of 1934, any stock exchange on which the Company's Common Stock may then be listed and all applicate state laws in connection with the issuance or sale of such shares or the listing of such shares on said exchange.  The Company undertakes to use its good faith efforts to comply with or satisfy all such applicable requirements.  Until the issuance of the certificate for such shares, you or such other person as maybe entitled to exercise the option granted hereby, shall have none of the rights of a stockholder with respect to the shares subject to the option.

5.

Nature of Shares Issuable Upon Exercise of Option

In the event the Company fails to register the shares underlying the option, the shares of Common Stock issuable upon exercise of this option will be unregistered and must be held indefinitely unless they are subsequently registered under the act or an exemption from such registration, such as embodied in Rule 144, is available.  Rule 144 under

the Act permits, upon compliance with certain conditions, sales in limited amounts of shares of publicly held companies which are current in the filing of various required reports with the Securities and Exchange Commission, which shares have been beneficially owned and fully paid for at least one year.  You are advised to inquire of the appropriate officer of the Company at any time that you may wish to sell any shares obtained from the exercise of this option.

6.

Termination of Employment

If your employment with the Company (or a subsidiary thereof) terminates without cause and other than by reason of death or disability, you may exercise this option within three months after the date of such termination to the extent this option was exercisable on the date of termination (or such longer period as the Board of Directors (or Committee) may decide on a case by case basis); provided, however, that such exercise occurs on or prior to the Expiration Date.  If your employment with the Company (or a subsidiary thereof) terminates for cause and other than by reason of death or disability, this option shall terminate forthwith and automatically.

7.

Retirement or Disability

If your employment with the Company (or a subsidiary thereof) is terminated by reason of your disability, you may exercise this option within one year from the date of termination to the extent this option was exercisable on the date of termination; provided, however, that such exercise occurs on or prior to Expiration Date.

8.

Death

If you die while employed by the Company (or a subsidiary thereof), or die within three months after termination of your employment without cause or within one year from the date of termination due to disability, this option may be exercised by the person or persons to whom your rights under the option are transferred by will or by the laws or descent and distribution within three months from the date of your death to the extent this option was exercisable on the date of your death, but in no event later than the Expiration Date.

9.

Non-Trasnferability of Option

This option shall not be transferable or assignable except by will or the laws of descent and distribution, and may be exercised during your lifetime only by you.

10.

Rights as a Stockholder

You shall have no rights of a stockholder with respect to any shares covered by this option until the date of issuance of a stock certificate for such shares.

11.

Adjustments upon Changes in Capitalization

If at any time after the date of grant of this option, the Company shall, by stock dividend, stock split, combination, reclassification or exchange, or through merger or consolidation, or otherwise, change its shares of Common

Stock into a different number, kind or class of shares or other securities or property, or if any distribution is made to shareholders other than a cash dividend, then the number of shares covered by this option and the price of each such share shall be proportionately adjusted for any such change by the Board of Directors, whose determination shall be final, binding and conclusive.  In the event of a liquidation of the Company, or a merger, acquisition, reorganization, or consolidation of the Company with any other corporation in which the Company is not the surviving corporation or the Company becomes a wholly-owned subsidiary of another corporation, any unexercised options granted hereby shall be deemed canceled unless the surviving corporation in any such merger, acquisition, reorganization or consolidation elects to assume the option granted hereby or to issue substitute options in place thereof; provided, however, that, notwiths tanding the foregoing, if the option granted hereby would otherwise be canceled in accordance with the foregoing, notwithstanding any other provision of the 1998 Stock Option Plan (as it may be amended from time to time) or this Agreement limiting or restricting the exercisability of this option, you shall have the right, exercisable during a 10-day period immediately prior to such liquidation, acquisition, reorganization, merger or consolidation, to exercise this option in whole or in part, provided, however that any option exercise that would be prohibited but for this provision shall be effective only upon such liquidation, or the closing of such acquisition, merger or consolidation.  In the event any distribution consists of Common Stock held by the Company in any subsidiary, then on the record date for such distribution you shall be entitled to receive options to purchase such number of shares of such common stock as is equal to the number of shares of common stock you would have received had you e xercised all of your options under this Plan (vested and unvested) and owned the Common Stock in the Company underlying such options, which options in the subsidiary shall be vested or shall vest to the same extent as your options in the Company, and, generally, shall contain such provisions as to put you in the same equitable position you were in prior to the distribution, including an allocation of the exercise price for th e options issued under this Plan to both such options and the options in the subsidiary.  Any fraction of a share resulting from the foregoing adjustments shall be eliminated and the price per share of the remaining shares subject to this option adjusted accordingly.

BIOLIFE SOLUTIONS, INC.

By: /s/ Roderick de Greef

       Authorized Signature

AGREED TO AND ACCEPTED, as of

the __ day of October, 2006

/s/ Matt Snyder

Matt Snyder

EXHIBIT A

BIOLIFE SOLUTIONS, INC.

1998 STOCK OPTION PLAN

(as amended through September 28, 2005)

1.

Purpose of Plan. The purpose of this 1998 Stock Option Plan (the "Plan") is to further the growth and development of BioLife Solutions, Inc. (the "Company") by encouraging and enabling employees, officers, and directors of, and consultants and advisors to, the Company to obtain a proprietary interest in the Company through the ownership of stock (thereby providing such persons with an added incentive to continue in the employ or service of the Company and to stimulate their efforts in promoting the growth, efficiency, and profitability of the Company), and affording the Company a means of attracting to its service persons of outstanding quality.

2.

Shares of Stock Subject to the Plan.  Subject to the provisions of Section 12 hereof, an aggregate of (10,000,000) shares of the common stock, par value $.001 per share, of the Company ("Common Stock") shall be reserved for issuance upon the exercise of options which may be granted from time to time in accordance with the Plan.  As the Board of Directors of the Company ("Board of Directors") shall from time to time determine, such shares may be, in whole or in part, authorized but unissued shares or issued shares which have been reacquired by the Company.  If, for any reason, an option shall lapse, expire, or terminate without having been exercised in full, the unpurchased shares underlying such option shall (unless the Plan shall have been terminated) again be available for issuance pursuant to the Plan.

3.

Administration.

(a)

The Board of Directors shall administer the Plan and, subject to the provisions of the Plan, shall have authority to determine and designate from time to time those persons eligible for a grant of options under the Plan, those persons to whom options are to be granted, the purchase price of the shares covered by each option, the time or times at which options shall be granted, and the manner in which said options are exercisable.  In making such determination, the Board of Directors may take into account the nature of the services rendered by the respective persons, their present and potential contributions to the Company's success, and such other factors as the Board of Directors in its sole discretion shall deem relevant.  Subject to the express provisions of the Plan, the Board of Directors also shall have authority to interpret the Plan, to prescribe, amend, and rescind rules and regulations relating to the Plan, to determine the ter ms and provisions of the instruments by which options shall be evidenced (which shall not be inconsistent with the terms of the Plan), and to make all other determinations necessary or advisable for the administration of the Plan, all of which determinations shall be final, binding, and conclusive.

(b)

The Board of Directors may, at its discretion, in accordance with the provisions of the Company's By-Laws, appoint from among its members a Stock Option or Compensation Committee (the "Committee").  The Committee shall be composed of two or more directors and shall have and may exercise any and all of the powers relating to the administration of the Plan and the grant of options hereunder as are set forth above in Section 3(a), as the Board of Directors shall confer and delegate.  The Board of Directors shall have the power at any time to fill vacancies in, to change the membership of, or to discharge, the Committee.  The Committee shall select one of its members as its Chairman and shall hold its meetings at such time and at such places as it shall deem advisable.  A majority of the Committee shall constitute a quorum and such majority shall determine its action.  The Committee shall keep minutes of its proceedi ngs and shall report the same to the Board of Directors at the meeting next succeeding.  No director or member of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any option granted thereunder.

4.

Persons To Whom Shares May Be Granted.

(a)

Options may be granted to persons who are, at the time of the grant, employees (including part-time employees), officers, and directors of, or consultants or advisors to, the Company or any subsidiary corporation (as defined in Section 425 of the Internal Revenue Code of 1986, as amended (the "Code"), a "Subsidiary") as the Board of Directors (or Committee) shall select from time to time from among those nominated by the Board of Directors (or Committee).  For the purposes of the Plan, options only may be granted to those consultants and advisors who shall render bona fide services to the Company and such services must not be in connection with the offer or sale of securities in a capital raising transaction. Subject to the provisions hereinafter set forth, options granted under the Plan shall be designated either (i) "Incentive Stock Options" (which term, as used herein, shall mean options intended to be "i ncentive stock options" within the meaning of Section 422 of the Code) or (ii) "Non-Incentive Stock Options" (which term, as used herein, shall mean

options not intended to be incentive stock options" within the meaning of Section 422 of the Code).  Each options granted to a person who is solely a director of, or consultant or advisor to, the Company or a Subsidiary on the date of the grant shall be designated a Non-Incentive Stock Option.

(b)

The Board of Directors (or Committee) may grant, at any time, new options to a person who has previously received options, whether such prior options are still outstanding, have previously been exercised in whole or in part, have expired, or are canceled in connection with the issuance of new options.  The purchase price of the new options may be established by the Board of Directors (or Committee) without regard to the existing option price.

5.

Option Price.

(a)

The purchase price of the Common Stock underlying each option shall be determined by the Board of Directors (or Committee), which determination shall be final, binding, and conclusive; provided, however, in no event shall the purchase price of Incentive Stock Options be less than 100% (110% in the case of optionees who own more than 10% of the total combined voting power of all classes of stock of the Company) of the fair market value of the Common Stock on the date the option is granted.  In determining such fair market value, the Board of Directors (or Committee) shall consider (i) the last sale price of the Common Stock on the date on which the option is granted or, if no such reported sale takes place on such day, the last reported bid price on such day, on NASDAQ or on the principal national securities exchange on which the Common Stock is admitted to trading or listed, or (ii) if not listed or admitted to trading on NASDAQ or a national securities exchange, the closing bid price as quoted by the National Quotation Bureau or a recognized dealer in the Common Stock on the date of grant.  If the Common Stock is not publicly traded at the time an option is granted, the Board of Directors (or Committee) shall deem fair market value to be the fair value of the Common Stock after taking into account appropriate factors which may be relevant under applicable federal tax laws and Internal Revenue rules and regulations.  For purposes of the Plan, the date of grant of an option shall be the date specified by the Board of Directors (or Committee) at the time it grants such option; provided, however, such date shall not be prior to the date on which the Board of Directors (or Committee) acts to approve the grant.

(b)

The aggregate fair market value (determined at the time the Incentive Stock Options are granted) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by an employee during any calendar year shall not exceed $100,000.  Non-Incentive Stock Options shall not be subject to the limitations of this paragraph 5(b).

6.

Exericse of Options.

(a)

The number of shares which are issued pursuant to the exercise of an option shall be charged against the maximum limitations on shares set forth in Section 2 hereof.

(b)

The exercise of an option shall be made contingent upon receipt by the Company from the holder thereof of (i) if deemed necessary by the Company, a written representation and acknowledgment that (1) at the time of such exercise it is the holder's then present intention to acquire the option shares for investment and not with a view to distribution or resale thereof, (2) the holder knows that the Company is not obligated to register the option shares and that the option shares may have to be held indefinitely unless an exemption from the registration requirements of the Securities Act of 1933, as amended (the "Act"), is available or the COmpany has registered the shares underlying the options, and (3) the Company may place a legend on the certificate(s) evidencing the option shares reflecting the fact that they were acquired for investment and cannot be sold or transferred unless registered under the Act, and (ii) payment in full of the p urchase price of the shares being purchased.  Payment may be made in cash; by certified check payable to the order of the Company in the amount of such purchase price; by delivery to the Company of shares of Common Stock having a fair market value equal to such purchase price; by irrevocable instructions to a broker to sell shares of Common Stock to be issued upon exercise of the option and to deliver to the Company the amount of sales proceeds necessary to pay such purchase price and to deliver the remaining cash proceeds, less commissions and brokerage fees, to the optionee, or by any combination of such methods of payment.

7.

Term of Options.  The period during which each option granted hereunder shall be exercisable shall be determined by the Board of Directors (or Committee); provided, however, no option shall be exercisable for a period exceeding ten (10) years from the date such option is granted.

8.

Non-Transferability of Options.  No option granted pursuant to the Plan shall be subject to anticipation, sale, assignment, pledge, encumbrance, or charge, or shall be otherwise transferable except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order (as defined by the Code or Title I of the Employee Retirement Income Security Act or the rules thereunder), and an option shall be exercisable during the lifetime of the holder thereof only by such holder.

9.

Termination of Services.  If an employee, officer, or director to whom an option has been granted under the Plan shall cease to be an employee, officer, or director of the Company or a Subsidiary by reason of a termination of such relationship without cause and other than by reason of death or disability, such holder may exercise such option at any time prior to the expiration date of the options or within three months (or such longer period as the Board of Directors (or Committee) may decide on a case by case basis) after the date of termination, whichever is earlier, but only to the extent the holder had the right to exercise such option on the date of termination.  If an employee, officer, of director of the Company or a Subsidiary by reason of a termination of such relationship for cause and other than by reason of death or disability, such options shall terminate, lapse, and expire forthwith and automatically.  So long a s the holder of an option shall continue to be in the employ, or continue to be a director, of the Company or one or more of its Subsidiaries, such holder's option shall not be affected by any change of duties or position.  Absence on leave approved by the employing corporation shall not be considered an interruption of employment for any purpose under the Plan.  The granting of an option in any one year shall not give the holder of the option any rights to similar grants in future years or any right to be retained in the employ or service of the Company or any of its Subsidiaries or interfere in any way with the right of the Company or any such Subsidiary to terminate such holder's employment or services at any time.  Notwithstanding the foregoing, no option may be exercised after ten years from the date of its grant.

10.

Disability of Holder of Option.  If any employee, officer, or director to whom an option has been granted under the Plan shall cease to be an employee, officer, or director of the Company or a Subsidiary by reason of disability, such holder may exercise such option at any time prior to the expiration date of the option or within one year after the date of termination for such reason, whichever is earlier, but only to the extent the holder had the right to exercise such option on the date of termination.  Notwithstanding the foregoing, no option may be exercised after ten years from the date of its grant.  For the purposes of the Plan, "disability" shall mean "permanent and total disability" as defined in Section 22(e)(3) of the Code.

11.

Death of Holder of Option.  If any employee, officer, or director to whom an option has been granted under the Plan shall cease to be an employee, officer, or director of the Company or a Subsidiary by reason of death, or such holder of an option shall die within three months after termination, or in the case of the death of an advisor or consultant to whom an option has been granted under the Plan, the option may be exercised by the person or persons to whom the optionee's rights under the option are transferred by will or by the laws or descent and distribution at any time prior to the expiration date of the option or, in the case of an employee, officer, or director, within three months from the date of death, whichever is earlier, but only to the extent the holder of the option had the right to exercise such option on the date of such termination.  Notwithstanding the foregoing, no option may be exercised after ten years from the date of its grant.

12.

Adjustments Upon Changes in Capitalization.

(a)

If the shares of Common Stock outstanding are changed in number, kind, or class by reason of a stock split, combination, merger, consolidation, reorganization, reclassification, exchange, or any capital adjustment, including a stock dividend, or if any distribution is made to stockholders other than a cash dividend and the Board of Directors (or Committee) deems it appropriate to make an adjustment, then (i) the aggregate number and class of shares that may be issued or transferred pursuant to Section 2, (ii) the number and class of shares which are issuable under outstanding options, and (iii) the purchase price to be paid per share under outstanding options, shall be adjusted as hereinafter provided.  In the event any distribution consists of common stock held by the Company in ant subsidiary, then each holder of options under this Plan on the record date for such distribution shall be entitled to receive options to purchase such number of shares of such common stock as is equal to the number of shares of common stock such holder would have received had such holder exercised all of such holder's options under this Plan (vested and unvested) and owned the common stock in the Company underlying such options, which options in the subsidiary shall be vested or shall vest to the same extent as such holder's options in the Company, and, generally, shall contain such provisions as to put such holder in the same equitable position such holder was in prior to the distribution, including an allocation of the exercise price for the options issued under this Plan to both such options and the options in the subsidiary.

(b)

Adjustments under this Section 12 shall be made in a proportionate and equitable manner by the Board of Directors (or Committee), whose determination as to what adjustments shall be made, and the extent thereof, shall be final,

binding, and conclusive.  In the event that a fraction of a share results from the foregoing adjustment, said fraction shall be eliminated and the price per share of the remaining shares subject to the option adjusted accordingly.

(c)

In the event of a liquidation of the Company, or a merger, reorganization, or consolidation of the Company with any other corporation in which the Company is not the surviving corporation or the Company becomes a wholly-owned subsidiary of another corporation, any unexercised options theretofore granted under the Plan shall be deemed canceled unless the surviving corporation in any such merger, reorganization, or consolidation elects to assume the options under the Plan or to issue substitute options in place thereof; provided, however, if such options would otherwise be canceled in accordance with the foregoing, the optionee shall have the right, exercisable during a ten-day period immediately prior to such liquidation, merger, or consolidation, to exercise the option, in whole or in part.  The granting of an option pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reorganizations, reclas sifications, or changes of its capital or business structure or to merge, consolidate, dissolve, liquidate, or sell or transfer all or any part of its business or assets.

13.

Vesting of Rights Under Options.  Nothing contained in the Plan or in any resolution adopted or to be adopted by the Board of Directors (or Committee) or the stockholders of the Company shall constitute the vesting of any rights under any option.  The vesting of such rights shall take place only when a written agreement shall be duly executed and delivered by and on behalf of the Company to the person to whom the option shall be granted.

14.

Rights as a Stockholder.  A holder of an option shall have no rights of a stockholder with respect to any shares covered by such holder's option until the date of issuance of a stock certificate to such holder for such shares.

15.

Termination and Amendment.  The Plan was adopted by the Board of Directors on August 31, 1998, subject, with respect to the validation of Incentive Stock Options granted under the Plan, to approval of the Plan by the stockholders of the Company at the next Meeting of Stockholders or, in lieu thereof, by written consent.  If the approval of stockholders is not obtained prior to August 30 1999, any grants of Incentive Stock Options under the Plan made prior to that date will be rescinded.  The Plan shall expire at the end of the day on August 30, 2008 (except as to options outstanding on that date).  Options may be granted under the Plan prior to the date of stockholder approval of the Plan.  The Board of Directors (or Committee) may terminate or amend the Plan in any respect at any time, except that, without the approval of the stockholders obtained within 12 months before or after the Board of Directors (or Committe e) adopts a resolution authorizing any of the following actions, (a) the total number of shares that may be issued under the Plan may not be increased (except by adjustment pursuant to paragraph 12); (b) the provisions eligibility for grants of Incentive Stock Options may not be modified; (c) the provisions regarding the exercise price at which shares may be offered pursuant to Incentive Stock Options may not be modified except by adjustment pursuant to paragraph 12), and (d) the expiration date of the Plan may not be extended- Except as otherwise provided in this paragraph 15, in no event may action of the Board of Directors (or Committee) or stockholders alter or impair the rights of an optionee, without such optionee's consent, under any option previously granted to such optionee.

16. Modification, Extension and Renewal of Options.  Subject to the terms and conditions and within the limitations of the Plan, the Board of Directors (or Committee) may modify, extend, or renew outstanding options granted under the Plan, or accept the surrender of outstanding options (to the extent not theretofore exercised) and authorize the granting of new options in substitution therefor.  Notwithstanding the foregoing, no modification of an option shall, without the consent of the holder thereof, alter or impair any rights or obligations under any option theretofore granted under the Plan.

17.

Conversion of Incentive Stock Options into Non-Qualified Options.  Without the prior written consent of the holder of an Incentive Stock Option, the Board of Directors (or Committee) shall not alter the terms of such Incentive Stock Option (including the means of exercising such Incentive Stock Option) if such alteration would constitute a modification within the meaning of Section 424(h)(3) of the Code.  The Board of Directors (or Committee), at the written request or with the written consent of any optionee, may in its discretion take such actions as may be necessary to convert such optionee's Incentive Stock Options (or any installments or portions of installments thereof) that have not been exercised on the date of conversion into Non-Incentive Stock Options at any time prior to the expiration of such Incentive Stock Options, regardless of whether the optionee is an employee of the Company at the time of such conversation. &nb sp;Such actions may include, but shall not be limited to, extending the exercise period or reducing the exercise price of the appropriate installments of such Incentive Stock Options.  At the time of such conversion, the Board of Directors (or Committee) (with the consent of the optionee) may impose such conditions on the exercise of the resulting Non-Incentive Stock Options as the Board of Directors (or Committee) in its discretion may determine, provided that such conditions shall not be inconsistent with the Plan.  Nothing in the Plan shall be deemed to give any optionee the right to have such optionee's Incentive Stock Options converted into Non-Incentive Stock Options, and no such conversion shall occur until and unless the Board of Directors (or Committee) takes appropriate action.

18.

Withholding of Additional Income Taxes.  Upon the exercise of a Non-Incentive Stock Option, the transfer of a Non-Incentive Stock Option pursuant to an arm's length transaction, the making of a Disqualifying Disposition (as described in Sections 421, 422, and 424 of the Code and regulations thereunder), the vesting of transfer of restricted stock or securities acquired on the exercise of an option hereunder, or th e making of a distribution or other payment with respect to such stock or securities, the Company may withhold taxes in respect of amounts that constitute compensation includible in gross income.  The Board of Directors (or Committee) in its discretion may condition the exercise of an option, the transfer of a Non-Incentive Stock Option, or the vesting or transferability of restricted stock or securities acquired by exercising an option on the optionee's making satisfactory arrangement for such withholding.  Such ar rangement may include payment by the optionee in cash or by check of the amount of the withholding taxes or, at the discretion of the Board of Directors (or Committee), by the optionee's delivery of previously held shares of Common Stock or the withholding from the shares of Common Stock otherwise deliverable upon exercise of option shares having an aggregate fair market value equal to the amount of such withholding taxes.

19.

Indemnification.  In addition to such other rights of indemnification as they may have as members of the Board of Directors (or Committee), the members of the Board of Directors (or Committee) administering the Plan shall be indemnified by the Company against reasonable expenses, including attorneys' fees, actually and necessarily incurred in connection with the defense of any action, suit, or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any option granted thereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any action, suit, or proceeding, except in relation to matters as to which it shall be adjudged in any action, suit, or proceeding that such member is liable for negligence or misconduct in the performance of his duties, and provided that within 60 days after institution of any such action, suit, or proceeding, the member shall in writing offer the Company the opportunity, at its own expense, to handle and defend the same.

20.

Governing Law.  The validity and construction of the Plan and the instruments evidencing options shall be governed by the laws of Delaware, or the laws of any jurisdiction in which the Company or its successors in interest may be organized.

EX-31

EXHIBIT 31

CERTIFICATION

I, Michael Rice, certify that:

1.  I have reviewed this annual report on Form 10-KSB 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 small business issuer as of, and for, the periods presented in this report;

4.  I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and I have:

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

b)  Intentionally omitted;

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

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

5.  I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of small business issuer’s board of directors (or persons performing the equivalent functions):

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

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

Dated: April 2, 2007

/s/ Michael Rice

Michael Rice

Chief Executive Officer and

Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION OF PERIODIC REPORT

I, Michael Rice, Chief Executive Officer and Chief Financial Officer of BioLife Solutions, Inc. (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

1.

the Annual Report on Form 10-KSB of the Company for the year ended December 31, 2006 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

2.

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

Dated:  April 2, 2007

/s/ Michael Rice

Michael Rice

Chief Executive Officer and

Chief Financial Officer