8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 23, 2019 (August 7, 2019)

BIOLIFE SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-36362	94-3076866
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

3303 Monte Villa Parkway,

Bothell, WA 98021

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (425) 402-1400

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

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

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

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

EXPLANATORY NOTE

This Amendment No. 1 on Form 8-K/A (this “Form 8-K/A”) to our Current Report on Form 8-K filed with the Securities and Exchange Commission on August 13, 2019 (the “Original Form 8-K”) is being filed to amend Item 9.01 to the Original Form 8-K to include certain financial statements related to BioLife Solutions, Inc.’s (the “Company”) acquisition of 100% of the capital shares of SAVSU Technologies, Inc. (“SAVSU”) as reported on the Original Form 8-K. Except as set forth herein, no modifications have been made to the information contained in the Original Form 8-K.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

The audited financial statements of SAVSU as of and for the fiscal year ended December 31, 2018 and the unaudited financial statements of SAVSU as of and for the fiscal quarter six months ended June 30, 2019 are filed as Exhibit 99.1 and 99.2, respectively, and are incorporated by reference herein.

(b) Pro Forma Financial Information.

The unaudited pro forma combined statement of operations of the Company relating to the acquisition of the capital shares of SAVSU as of and for the fiscal year ended December 31, 2018 and the statement of operations and balance sheet for the fiscal quarter six months ended June 30, 2019 are filed as Exhibit 99.3 and incorporated by reference herein.

(d) Exhibits.

Exhibit No.	Description
23.1	Consent of Peterson Sullivan LLP
99.1	The audited financial statements of SAVSU as of and for the fiscal year ended December 31, 2018.
99.2	The unaudited financial statements of SAVSU as of and for the fiscal quarter six months ended June 30, 2019.
99.3	The unaudited pro forma combined statement of operations of the Company relating to the acquisition of the capital shares of SAVSU as of and for the fiscal year ended December 31, 2018 and the statement of operations and balance sheet for the second quarter ended June 30, 2019.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Biolife Solutions, Inc.
Date: October 23, 2019	By:	/s/ Roderick de Greef
		Name: Roderick de Greef Title: Chief Financial Officer

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT AUDITOR

We consent to the incorporation by reference into Registration Statement Nos. 333-222433, 333-208912, and 333-233912 on Form S-3, Registration Statement Nos. 333-222437, 333-205101, and 333-189551 on Form S-8, and Registration Statement No. 333-194697 on Post-Effective Amendment No. 1 to Form S-1 on Form S-3 of our report dated October 23, 2019, relating to our audit of the financial statements of SAVSU Technologies, Inc. for the years ended December 31, 2018 and 2017, which is included in this Form 8-K/A of BioLife Solutions, Inc. dated October 23, 2019.

/S/ PETERSON SULLIVAN LLP

Seattle, Washington

October 23, 2019

EX-99.1

Exhibit 99.1

SAVSU TECHNOLOGIES, INC.

FINANCIAL STATEMENTS

DECEMBER 31, 2018

C O N T E N T S

	Page
INDEPENDENT AUDITORS' REPORT	1 and 2
FINANCIAL STATEMENTS
BALANCE SHEETS	3
STATEMENTS OF OPERATIONS	4
STATEMENTS OF EQUITY	5
STATEMENTS OF CASH FLOWS	6
NOTES TO FINANCIAL STATEMENTS	7 - 13

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders

SAVSU Technologies, Inc.

We have audited the accompanying financial statements of SAVSU Technologies, Inc., which comprise the balance sheets as of December 31, 2018 and 2017, and the related statements of operations, equity, and cash flows for the years then ended, and the related notes to the financial statements.

Management's Responsibilities for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

1

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of SAVSU Technologies, Inc. as of December 31, 2018 and 2017, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States.

Other Matter – Subsequent Event

As discussed in Note 1 to the financial statements, in August 2019, BioLife Solutions, Inc. ("BioLife") acquired the remaining ownership interest of SAVSU Technologies, Inc. and SAVSU Technologies, Inc. is now a wholly owned subsidiary of BioLife. Our opinion is not modified with respect to that matter.

/S/ PETERSON SULLIVAN LLP

Seattle, Washington

October 23, 2019

2

SAVSU TECHNOLOGIES, INC.

BALANCE SHEETS

December 31, 2018 and 2017

	2018			2017
ASSETS
Current Assets
Cash	$	3,896,002		$	8,409
Accounts receivable		190,775			4,667
Prepaid expenses and other current assets		177,362			22,639
Total current assets		4,264,139			35,715
Assets Held for Lease, net		1,470,436			301,068
Property and Equipment, net		520,552			135,604
Intangible Assets, net		2,189,669			2,521,845
Total assets	$	8,444,796		$	2,994,232
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	142,365		$	43,576
Due to related parties		755,813			150,103
Total current liabilities		898,178			193,679
Equity
Preferred stock, $0.0001 par value; 5,000 shares authorized no shares issued or outstanding
Common stock, $0.001 par value; 45,000 shares authorized; 15,496 and no shares issued and outstanding at December 31, 2018 and 2017, respectively		15
Additional paid-in capital		16,286,342
Accumulated deficit		(8,739,739	)
Members' equity					2,800,553
Total equity		7,546,618			2,800,553
Total liabilities and equity	$	8,444,796		$	2,994,232

See Notes to Financial Statements

3

SAVSU TECHNOLOGIES, INC.

STATEMENTS OF OPERATIONS

For the Years Ended December 31, 2018 and 2017

	2018			2017
Revenue	$	288,264		$	36,245
Cost of revenue		543,973			518,680
Gross margin		(255,709	)		(482,435	)
Operating Expenses
Research and development		669,694			792,539
General and administrative		764,015			801,959
Sales and marketing		330,613			412,752
Total operating expenses		1,764,322			2,007,250
Net loss	$	(2,020,031	)	$	(2,489,685	)

See Notes to Financial Statements

4

SAVSU TECHNOLOGIES, INC.

STATEMENTS OF EQUITY

For the Years Ended December 31, 2018 and 2017

	Preferred Stock				Common Stock				Additional
	Number				Number				Paid-In		Accumulated			Members'			Total
	of Shares		Amount		of Shares		Amount		Capital		Deficit			Equity			Equity
Balances as of December 31, 2016			$	-			$	-	$	-	$	-		$	3,152,203		$	3,152,203
Capital contribution by member - conversion of intercompany payable to member to equity															2,138,035			2,138,035
Net loss															(2,489,685	)		(2,489,685	)
Balances as of December 31, 2017															2,800,553			2,800,553
Capital contribution by member - conversion of intercompany payable to member to equity															150,103			150,103
Conversion of SAVSU from limited liability company to a corporation						10,775		11		9,670,353		(6,719,708	)		(2,950,656	)		-
Common stock issued for cash						4,105		4		5,999,996								6,000,000
Common stock issued in exchange for reduction of intercompany payable to shareholder						616		-		615,993								615,993
Net loss												(2,020,031	)					(2,020,031	)
Balances as of December 31, 2018		-	$	-		15,496	$	15	$	16,286,342	$	(8,739,739	)	$	-		$	7,546,618

See Notes to Financial Statements

5

SAVSU TECHNOLOGIES, INC.

STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2018 and 2017

	2018			2017
Cash Flows From Operating Activities
Net loss	$	(2,020,031	)	$	(2,489,685	)
Adjustments to reconcile net loss to net cash flows used in operating activities
Depreciation of property and equipment		24,360			16,692
Depreciation of assets held of lease		49,309
Amortization of intangible assets		370,644			8,887
Changes in operating assets and liabilities
Accounts receivable		(186,108	)		(750	)
Assets held for lease		(1,218,677	)		198,317
Prepaid expenses and other current assets		(154,723	)		(17,844	)
Accounts payable		32,687			29,199
Net cash flows used in operating activities		(3,102,539	)		(2,255,184	)
Cash Flows From Investing Activities
Purchases of intangible assets		(38,468	)		(28,406	)
Purchases of property and equipment		(343,206	)
Net cash flows used in investing activities		(381,674	)		(28,406	)
Cash Flows From Financing Activities
Proceeds from issuance of common stock		6,000,000
Advances from related parties, net of repayments		1,371,806			2,288,138
Net cash flows provided by financing activities		7,371,806			2,288,138
Net change in cash and cash equivalents		3,887,593			4,548
Cash and Cash Equivalents, beginning of year		8,409			3,861
Cash and Cash Equivalents, end of year	$	3,896,002		$	8,409
Noncash Investing and Financing Activities
Capital contribution by member - conversion of intercompany payable to member to equity	$	150,103		$	2,138,035
Common stock issued in exchange for reduction of intercompany payable to shareholder	$	615,993		$	-
Purchase of property and equipment not paid for during the year (included in liabilities at year-end)	$	66,102		$	-

See Notes to Financial Statements

6

NOTES TO FINANCIAL STATEMENTS

Note 1. Nature of Operations and Significant Accounting Policies

Nature of Operations

SAVSU Technologies, Inc. (“the Company”) is a designer and manufacturer of innovative high-performance cloud-connected passive storage and transport containers and enabling cold chain cloud applications for temperature-sensitive biologics and pharmaceuticals. The Company’s mission is to improve global health by greatly reducing the waste and risks associated with the improper freezing and overheating of thermal-sensitive medicines and biologics. The Company has developed proprietary state-of-the-art technology to ultimately lower costs and improve delivery of these most essential materials.

Through December 31, 2018, the Company was owned by SAVSU Origin LLC and BioLife Solutions, Inc. (“BioLife”). In August 2019, BioLife acquired all of SAVSU Origin LLC’s ownership interest in the Company and took control of the Company. The Company is now a wholly owned subsidiary of BioLife.

The Company was originally organized as a limited liability company (“LLC”). On May 15, 2018, the Company converted from an LLC to a corporation.

Basis of Presentation

These financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States.

Use of Estimates

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

Cash and Cash Equivalents

The Company considers highly liquid short-term investments with original maturities from the date of purchase of three months or less to be cash equivalents. There were no cash equivalents at December 31, 2018 or 2017. From time to time, the Company has cash balances in excess of federally insured limits.

Accounts Receivable

Accounts receivable are stated at their net realizable amount and consist of amounts due from customers.
The Company uses the allowance method for recognizing bad debts. When an account is deemed uncollectible, it is written off against the allowance. The Company generally does not charge interest or require collateral for its receivables.

7

At December 31, 2018, amounts due from four customers comprised 98% of net accounts receivable.

Assets Held for Lease

Assets held for lease consist primarily of storage and transport containers (shippers) and their related components and other tangible goods included in the cold chain system leased to customers. The Company purchases the various components and builds the shippers for use in the cold chain system. Similar to inventory, assets held for lease are initially stated at the lower of cost or net realizable value until placed in service. Once a shipper has been placed in service, which is typically when it is leased to a customer, it is depreciated using the straight-line method over its estimated useful life of three years and assessed for impairment.

Property and Equipment

Property and equipment is recorded at cost and is depreciated using the straight-line method over the estimated useful lives of the related assets. Amortization of leasehold improvements is computed using the straight-line method over the useful life of the asset or the expected term of the lease, whichever is shorter. Maintenance and repairs are charged to expense as incurred.

Intangible Assets

Intangible assets consist of costs incurred in developing patents and costs incurred in developing software used for internal purposes. The Company initially records intangible assets at their fair value on the date of acquisition for acquired intangibles or cost if related to patent or software development and, once placed in service, amortizes them using the straight-line method over the estimated useful lives of the assets, ranging from 5 to 15 years.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount to the future net cash flows that the assets are expected to generate. If said assets are considered to be impaired, the impairment that would be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. There have been no such impairments of long-lived assets to date.

Revenue Recognition

The Company generates revenue primarily from the leasing of cold chain systems, which are typically cloud-connected shippers with enabling cold chain cloud applications, to customers pursuant to lease arrangements entered into with the customer, and sales of components and consumables. Revenue from the leasing of cold chain systems is recognized ratably over the lease term. Revenue from the sales of components and consumables is recognized when title and risk of loss pass to customers which is generally upon either shipment of product or receipt by the customer, depending on the specific shipment terms. The majority of revenue recognized during the years ended December 31, 2018 and 2017 was from leases of cold chain systems. Shipping and handling costs are classified as part of cost of goods sold in the statements of operations.

Revenue from two customers accounted for 72% of total revenue during the year ended December 31, 2018.

8

Cost of Revenue

Cost of revenue consists primarily of depreciation and amortization of assets held for lease and internal use software, fabrication and machine support services, and other costs related to maintaining assets held for lease.

Research and Development and Software Development Costs

Costs incurred in research and development activities are generally expensed as incurred. 

The Company capitalizes certain development costs incurred in connection with the development of various software applications that are not planned to be sold, leased, or otherwise marketed to customers, but are planned to provide services to customers and, thus, the software is considered developed for internal use. Costs incurred in the preliminary stages of development are expensed as incurred. Once a software application has reached the application development stage, internal and external costs, if direct and incremental, are capitalized until the software application is substantially complete and ready for its intended use. Capitalization ceases upon completion of substantial testing. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable that the expenditure will result in additional functionality; that is, modifications that enable the software to perform tasks that it previously was incapable of performing. The capitalization and ongoing assessment of recoverability of development costs requires considerable judgments and estimates by management with respect to certain external factors including, but not limited to, technological and economic feasibility and estimated economic life. It is at least reasonably possible that these estimates could change in the near term, and the effect of any change could be material.

Advertising

Advertising costs are expensed as incurred. Advertising expense for the years ended December 31, 2018 and 2017, was $13,822 and $37,421, respectively, which is included in sales and marketing expenses in the statements of operations.

Income Taxes

Prior to May 15, 2018, the Company was organized as an LLC and thus was treated as a partnership for income tax purposes. Earnings or losses of the Company while an LLC were included in the income tax returns of the members; accordingly, while an LLC, no income taxes were incurred by the Company.

After May 15, 2018, the Company is organized as a C corporation and thus subject to income taxes. For financial statement purposes, as a C corporation, the Company accounts for income taxes under an asset and liability approach that requires recognition of deferred tax assets and liabilities for expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. The Company establishes a valuation allowance to the extent that it is more likely than not that deferred tax assets will not be utilized against future taxable income.

The Company evaluates its uncertain income tax positions and may record a liability for any unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in an income tax return. No liability has been recorded for uncertain tax positions or related interest or penalties at December 31, 2018 or 2017.

9

Note 2. Assets Held for Lease

Assets held for lease consist of the following at December 31:

	2018			2017
Shippers placed in service	$	178,440		$	-
Accumulated depreciation		(34,696	)
		143,744			-
Shippers and related components in production		1,326,692			301,068
	$	1,470,436		$	301,068

Shippers and related components in production include shippers complete and ready to be deployed and placed in service upon a customer order, shippers in the process of being assembled, and components available to build shippers.

Note 3. Property and Equipment

Property and equipment consist of the following at December 31:

	2018			2017
Leasehold improvements	$	294,122		$	-
Office furniture		62,390			44,227
Machinery and equipment		232,144			135,121
Vehicles		17,465			17,465
		606,121			196,813
Accumulated depreciation		(85,569	)		(61,209	)
	$	520,552		$	135,604

10

Note 4. Intangible Assets

Intangible assets consist of the following at December 31:

	Weighted-Average
	Remaining
	Useful Life	2018			2017
Internal use software	4.3 years	$	2,397,360		$	2,397,360
Patents	11.9 years		191,066			152,598
			2,588,426			2,549,958
Accumulated amortization			(398,757	)		(28,113	)
		$	2,189,669		$	2,521,845

Estimated future amortization expense for intangible assets is as follows for years ending December 31:

2019	$	492,210
2020		492,210
2021		492,210
2022		492,210
2023		132,606
Thereafter		88,223
	$	2,189,669

Note 5. Income Taxes

For the year ended December 31, 2017, as the Company was an LLC and thus earnings or losses of the Company were included in the income tax returns of the members; accordingly, no provision for income taxes is included in the financial statements for the year ended December 31, 2017. For the year ended December 31, 2018, the Company did not have any taxable income; therefore, no income tax liability or expense has been recorded in these financial statements. The difference between the taxes at the statutory federal tax rate and no tax provision recorded is primarily due to the full valuation
allowance against the Company's net deferred tax asset. The net deferred tax asset at December 31, 2018, amounts to approximately $425,000 and is primarily composed of a tax net operating loss carryforward. The Company has provided a full valuation allowance against the net deferred tax asset, which increased by approximately $425,000 during the year ended December 31, 2018.

At December 31, 2018, the Company has a net operating loss carryforward of approximately $2.0 million which can be carried forward indefinitely. If not used, the net operating losses may be subject to limitation under Internal Revenue Code Section 382 should there be a greater than 50% ownership change as determined under the regulations.

11

Note 6. Operating Leases

During the years ended December 31, 2018 and 2017, the Company leased its office and production facility in Albuquerque, New Mexico under a lease agreement that expired February 28, 2018. The Company continued to lease the facility on a month-to-month basis through the end of 2018.

In December 2018, the Company entered into a lease with a related party (an entity affiliated with an owner of the Company) for new office and production facility space in Albuquerque, New Mexico. The lease requires monthly payments of $8,690 and the term of the lease continues until December 31, 2021, with two options to extend the term of the lease, each of which is for an additional period of three years. Future minimum rental payments for this lease is as follows for years ending December 31:

2019	$	104,280
2020		104,280
2021		104,280
	$	312,840

Rent expense for the years ended December 31, 2018 and 2017, was $33,289 and $13,057, respectively.

Note 7. Related Party Transactions

In addition to the lease discussed in Note 6, related party transactions for the years ended December 31, 2018 and 2017, consisted of the following:

● Companies related to SAVSU Origin LLC by ownership paid certain expenses on behalf of the Company and provided cash advances during the years ended December 31, 2018 and 2017. Amounts owed to these companies at December 31, 2018, are $755,813, which is included in due to related parties in the balance sheet. There was no amount owed to these companies at December 31, 2017, as the companies decided to consider the balance owed to them a capital contribution to the Company. The capital contribution during the year ended December 31, 2017, amounted to $2,138,035.

● A company related to SAVSU Origin LLC provided accounting services to the Company during the years ended December 31, 2018 and 2017. The Company incurred expense of $36,000 related to these services in each of the years ended December 31, 2018 and 2017.

● During the year ended December 31, 2017, BioLife provided certain sales and marketing services to the Company on a monthly basis. The Company incurred expense of $120,000 related to these services during the year ended December 31, 2017. The Company owed BioLife $150,103 at December 31, 2017, which is included in due to related parties in the balance sheet. During the year ended December 31, 2018, BioLife decided to consider the balance owed to them of $150,103 a capital contribution to the Company.

● The Company sold additional shares of common stock to the existing owners, BioLife and SAVSU Origin LLC, during the year ended December 31, 2018. BioLife received 4,105 shares of common stock for cash proceeds of $6 million and SAVSU Origin LLC received 616 shares of common stock in exchange for the reduction of amounts owed to them amounting to $615,993.

12

Note 8. Subsequent Events

Subsequent events have been evaluated through the date these financial statements were available to be issued, which was October 23, 2019. Subsequent to year-end, amounts due to related parties in the amount of $391,580 were considered a capital contribution and the Company no longer has an obligation to pay that amount.

13

EX-99.2

Exhibit 99.2

SAVSU TECHNOLOGIES, INC.

FINANCIAL STATEMENTS

JUNE 30, 2019

C O N T E N T S

Page

FINANCIAL STATEMENTS
BALANCE SHEET (UNAUDITED)	2
STATEMENTS OF OPERATIONS (UNAUDITED)	3
STATEMENTS OF EQUITY (UNADUITED)	4
STATEMENTS OF CASH FLOWS (UNAUDITED)	5
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)	6 - 12

1

SAVSU TECHNOLOGIES, INC.

BALANCE SHEET

June 30, 2019

(Unaudited)

ASSETS
Current Assets
Cash	$	1,943,059
Accounts receivable		592,915
Prepaid expenses and other current assets		22,458
Total current assets		2,558,432
Assets Held for Lease, net		2,072,200
Property and Equipment, net		543,367
Operating lease right-of-use asset		240,022
Intangible Assets, net		1,958,034
Total assets	$	7,372,055
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses	$	75,791
Due to related parties		506,790
Operating lease liability, current portion		91,369
Total current liabilities		673,950
Long-term Operating Lease Liability		148,653
Total liabilities		822,603
Shareholders' Equity
Preferred stock, $0.0001 par value; 5,000 shares authorized no shares issued or outstanding
Common stock, $0.001 par value; 45,000 shares authorized; 15,496 shares issued and outstanding		15
Additional paid-in capital		16,677,922
Accumulated deficit		(10,128,485	)
Total shareholders' equity		6,549,452
Total liabilities and shareholders' equity	$	7,372,055

See Notes to Financial Statements

2

SAVSU TECHNOLOGIES, INC.

STATEMENTS OF OPERATIONS

For the Six Months Ended June 30, 2019 and 2018

(Unaudited)

	2019			2018
Revenue	$	441,639		$	95,810
Cost of revenue		716,625			231,974
Gross margin		(274,986	)		(136,164	)
Operating Expenses
Research and development		496,840			240,377
General and administrative		350,076			392,953
Sales and marketing		266,844			85,273
Total operating expenses		1,113,760			718,603
Net loss	$	(1,388,746	)	$	(854,767	)

See Notes to Financial Statements

3

SAVSU TECHNOLOGIES, INC.

STATEMENTS OF EQUITY

For the Six Months Ended June 30, 2019 and 2018

(Unaudited)

	Preferred Stock			Common Stock				Additional
	Number			Number				Paid-In		Accumulated			Total
	of Shares	Amount		of Shares		Amount		Capital		Deficit			Equity
Balances as of December 31, 2018		$	-		15,496	$	15	$	16,286,342	$	(8,739,739	)	$	7,546,618
Capital contribution by owners - conversion of intercompany payable to owners to equity									391,580					391,580
Net loss											(1,388,746	)		(1,388,746	)
Balances as of June 30, 2019		$	-		15,496	$	15	$	16,677,922	$	(10,128,485	)	$	6,549,452

	Preferred Stock			Common Stock				Additional
	Number			Number				Paid-In		Accumulated			Members'			Total
	of Shares	Amount		of Shares		Amount		Capital		Deficit			Equity			Equity
Balances as of December 31, 2017		$	-			$	-	$	-	$	-		$	2,800,553		$	2,800,553
Capital contribution by member - conversion of intercompany payable to member to equity							-							150,103			150,103
Conversion of SAVSU from limited liability company to a corporation					10,775		11		9,670,353		(6,719,708	)		(2,950,656	)		-
Common stock issued for cash					1,000		1		999,999								1,000,000
Net loss											(854,767	)					(854,767	)
Balances as of June 30, 2018		$	-		11,775	$	12	$	10,670,352	$	(7,574,475	)	$	-		$	3,095,889

See Notes to Financial Statements

4

SAVSU TECHNOLOGIES, INC.

STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30, 2019 and 2018

(Unaudited)

	2019			2018
Cash Flows From Operating Activities
Net loss	$	(1,388,746	)	$	(854,767	)
Adjustments to reconcile net loss to net cash flows used in operating activities
Depreciation of property and equipment		16,462			11,713
Depreciation of assets held of lease		64,119			20,942
Amortization of intangible assets		246,356			125,112
Changes in operating assets and liabilities
Accounts receivable		(402,140	)		(90,490	)
Assets held for lease		(665,883	)		(717,605	)
Prepaid expenses and other current assets		154,904			(135,577	)
Accounts payable		(472	)		144,337
Net cash flows used in operating activities		(1,975,400	)		(1,496,335	)
Cash Flows From Investing Activity
Purchases of intangible assets		(14,721	)		(13,733	)
Purchases of property and equipment		(105,379	)		(44,295	)
Net cash flows used in investing activities		(120,100	)		(58,028	)
Cash Flows From Financing Activities
Proceeds from issuance of common stock					1,000,000
Advances from related parties, net of repayments		142,557			1,144,512
Net cash flows provided by financing activities		142,557			2,144,512
Net change in cash and cash equivalents		(1,952,943	)		590,149
Cash and Cash Equivalents, beginning of year		3,896,002			8,409
Cash and Cash Equivalents, end of year	$	1,943,059		$	598,558
Noncash Investing and Financing Activities
Capital contribution by member - conversion of intercompany payable to member to equity	$	391,580		$	150,103

See Notes to Financial Statements

5

NOTES TO FINANCIAL STATEMENTS

Note 1. Nature of Operations and Significant Accounting Policies

Nature of Operations

SAVSU Technologies, Inc. (“the Company”) is a designer and manufacturer of innovative high-performance cloud-connected passive storage and transport containers and enabling cold chain cloud applications for temperature-sensitive biologics and pharmaceuticals. The Company’s mission is to improve global health by greatly reducing the waste and risks associated with the improper freezing and overheating of thermal-sensitive medicines and biologics. The Company has developed proprietary state-of-the-art technology to ultimately lower costs and improve delivery of these most essential materials.

Through June 30, 2019, the Company was owned by SAVSU Origin LLC and BioLife Solutions, Inc. (“BioLife”). In August 2019, BioLife acquired all of SAVSU Origin LLC’s ownership interest in the Company and took control of the Company. The Company is now a wholly-owned subsidiary of BioLife.

The Company was originally organized as a limited liability company (“LLC”). On May 15, 2018, the Company converted from a LLC to a corporation.

Basis of Presentation

These financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States.

Adoption of New Accounting Standards

On January 1, 2019, the Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers and other related ASUs (FASB ASC Topic 606) using the modified retrospective approach applied to those contracts in effect as of January 1, 2019. Under this transition method, results for reporting periods beginning after January 1, 2019, are presented under the new standard, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historical accounting policies under FASB ASC Topic 605, Revenue Recognition. Adoption of the new standard did not have an impact on the amounts reported in the Company’s financial statements and there were no other significant changes impacting the timing or measurement of the Company’s revenue.

On January 1, 2019, the Company adopted FASB ASU 2016-02, Leases: Topic 842 and related ASUs (FASB ASC Topic 842). The new standard is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use (“ROU”) assets and corresponding lease liabilities on the Balance Sheet. Under the new guidance, leases will continue to be classified as either finance or operating, with classification affecting the pattern of expense recognition in the Statements of Operations. Lessor accounting is largely unchanged under FASB ASC Topic 842.

6

The Company adopted FASB ASC Topic 842 using the additional transition option for the modified retrospective method and did not restate comparative periods. Under this transition method, results for reporting periods beginning after January 1, 2019, are presented under the new standard, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historical accounting policies under FASB ASC Topic 840, Leases. The Company elected the package of practical expedients, which permits it to retain prior conclusions about lease identification, lease classification and initial direct costs for leases that commenced before January 1, 2019. The new standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption for all leases that qualify. The Company also elected the practical expedient to combine lease and non-lease components for all of its leases other than net lease real estate leases. The adoption of this standard resulted in the recording of operating lease right-of-use assets and short-term and long-term lease liabilities of approximately $285,000 as of January 1, 2019. Adoption of FASB ASC Topic 842 did not have a material impact on the Company’s net earnings and had no impact on cash flows.

Use of Estimates

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

Cash and Cash Equivalents

The Company considers highly liquid short-term investments with original maturities from the date of purchase of three months or less to be cash equivalents. There were no cash equivalents at June 30, 2019. From time to time, the Company has cash balances in excess of federally insured limits.

Accounts Receivable

Accounts receivable are stated at their net realizable amount and consist of amounts due from customers.
The Company uses the allowance method for recognizing bad debts. When an account is deemed uncollectible, it is written off against the allowance. The Company generally does not charge interest or require collateral for its receivables.

At June 30, 2019, amounts due from two customers comprised 92% of net accounts receivable.

Assets Held for Lease

Assets held for lease consist primarily of storage and transport containers (shippers) and their related components and other tangible goods included in the cold chain system leased to customers. The Company purchases the various components and builds the shippers for use in the cold chain system. Similar to inventory, assets held for lease are initially stated at the lower of cost or net realizable value until placed in service. Once a shipper has been placed in service, which is typically when it is leased to a customer, it is depreciated using the straight-line method over its estimated useful life of three years and assessed for impairment.

Property and Equipment

Property and equipment is recorded at cost and is depreciated using the straight-line method over the estimated useful lives of the related assets. Amortization of leasehold improvements is computed using the straight-line method over the useful life of the asset or the expected term of the lease, whichever is shorter. Maintenance and repairs are charged to expense as incurred.

7

Intangible Assets

Intangible assets consist of costs incurred in developing patents and costs incurred in developing software used for internal purposes. The Company initially records intangible assets at their fair value on the date of acquisition for acquired intangibles or cost if related to patent or software development and, once placed in service, amortizes them using the straight-line method over the estimated useful lives of the assets, ranging from 5 to 15 years.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount to the future net cash flows that the assets are expected to generate. If said assets are considered to be impaired, the impairment that would be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. There have been no such impairments of long-lived assets to date.

Revenue Recognition

To determine revenue recognition for contractual arrangements that the Company determines are within the scope of FASB ASC Topic 606, the Company performs the following five steps: (i) identify each contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies the relevant performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. The Company generates revenue within the scope of FASB ASC Topic 606 related to the sale of components and consumables. The Company generally recognizes revenue from sale of components and consumables and developmental and consulting arrangements when it transfers control to customers as the contracts typically have a single performance obligation (transfer of control generally occurs upon either shipment of product or receipt by the customer, depending on the specific shipment terms). Shipping and handling costs are classified as part of cost of revenue in the statements of operations.

The Company also generates revenue from the leasing of cold chain systems, which are typically cloud-connected shippers with enabling cold chain cloud applications, to customers pursuant to lease arrangements entered into with the customer. Revenue from the leasing of cold chain systems is not within the scope of FASB ASC Topic 606 as it is within the scope of FASB ASC Topic 842. Revenue from these leasing arrangements is recognized ratably over the lease term.

The majority of revenue recognized during the six months ended June 30, 2019 and 2018 was from leases of cold chain systems. Revenue from two customers accounted for 96% and 88% of total revenue during the six months ended June 30, 2019 and 2018, respectively.

Cost of Revenue

Cost of revenue consists primarily of depreciation and amortization of assets held for lease and internal use software, fabrication and machine support services, and other costs related to maintaining and retiring assets held for lease.

8

Research and Development and Software Development Costs

Costs incurred in research and development activities are generally expensed as incurred. 

The Company capitalizes certain development costs incurred in connection with the development of various software applications that are not planned to be sold, leased, or otherwise marketed to customers, but are planned to provide services to customers and, thus, the software is considered developed for internal use. Costs incurred in the preliminary stages of development are expensed as incurred. Once a software application has reached the application development stage, internal and external costs, if direct and incremental, are capitalized until the software application is substantially complete and ready for its intended use. Capitalization ceases upon completion of substantial testing. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable that the expenditure will result in additional functionality; that is, modifications that enable the software to perform tasks that it previously was incapable of performing. The capitalization and ongoing assessment of recoverability of development costs requires considerable judgments and estimates by management with respect to certain external factors including, but not limited to, technological and economic feasibility and estimated economic life. It is at least reasonably possible that these estimates could change in the near term, and the effect of any change could be material.

Advertising

Advertising costs are expensed as incurred. Advertising expense for the six months ended June 30, 2019 and 2018, was $5,730 and $10,812, respectively, which is included in sales and marketing expenses in the statements of operations.

Income Taxes

Prior to May 15, 2018, the Company was organized as an LLC and thus was treated as a partnership for income tax purposes. Earnings or losses of the Company while an LLC were included in the income tax returns of the members; accordingly, while an LLC, no income taxes were incurred by the Company.

After May 15, 2018, the Company is organized as a C corporation and thus subject to income taxes. For financial statement purposes, as a C corporation, the Company accounts for income taxes under an asset and liability approach that requires recognition of deferred tax assets and liabilities for expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. The Company establishes a valuation allowance to the extent that it is more likely than not that deferred tax assets will not be utilized against future taxable income.

The Company evaluates its uncertain income tax positions and may record a liability for any unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in an income tax return. No liability has been recorded for uncertain tax positions or related interest or penalties at June 30, 2019.

9

Note 2. Assets Held for Lease

Assets held for lease consist of the following at June 30, 2019:

Shippers placed in service	$	473,851
Accumulated depreciation		(66,085	)
		407,766
Shippers and related components in production		1,664,434
	$	2,072,200

Shippers and related components in production include shippers complete and ready to be deployed and placed in service upon a customer order, shippers in the process of being assembled, and components available to build shippers.

Note 3. Property and Equipment

Property and equipment consists of the following at June 30, 2019:

Leasehold improvements	$	316,554
Office furniture		62,390
Machinery and equipment		248,989
Vehicles		17,465
		645,398
Accumulated depreciation		(102,031	)
	$	543,367

Note 4. Intangible Assets

Intangible assets consist of the following at June 30, 2019:

				Remaining
				Useful Life
Internal use software	$	2,397,360		3.8 years
Patents		205,788		11.4 years
		2,603,148
Accumulated amortization		(645,114	)
	$	1,958,034

10

Estimated future amortization expense for intangible assets is as follows for years ending December 31:

2019 (less than one year)	$	245,854
2020		493,191
2021		493,191
2022		493,191
2023		133,587
Thereafter		99,020
	$	1,958,034

Note 5. Income Taxes

For the six months ended June 30, 2019 and 2018, the Company did not have any taxable income; therefore, no income tax liability or expense has been recorded in these financial statements. The difference between the taxes at the statutory federal tax rate and no tax provision recorded is primarily due to the full valuation
allowance against the Company's net deferred tax asset. The net deferred tax asset at June 30, 2019, amounts to approximately $715,000 and is primarily composed of a tax net operating loss carryforward. The Company has provided a full valuation allowance against the net deferred tax asset, which increased by approximately $290,000 during the six months ended June 30, 2019.

At June 30, 2019, the Company has a net operating loss carryforward of approximately $3.4 million which can be carried forward indefinitely. If not used, the net operating losses may be subject to limitation under Internal Revenue Code Section 382 should there be a greater than 50% ownership change as determined under the regulations.

Note 6. Operating Lease

In December 2018, the Company entered into a lease with a related party (an entity affiliated with an owner of the Company) for new office and production facility space in Albuquerque, New Mexico. The lease requires monthly payments of $8,690 and the term of the lease continues until December 31, 2021, with two options to extend the term of the lease, each of which is for an additional period of three years. The Company has not included these extension options in its ROU assets or lease liabilities as it is reasonably certain it will not enter into the renewal option in their current terms. The Company used a discount rate of 6.5% to determine its operating lease liabilities. The remaining term of the operating lease is 2.5 years. The operating lease costs and cash paid in the six months ended June 30, 2019, was approximately $50,000.

As of June 30, 2019, maturities of operating lease liabilities are as follows:

2019 (less than one year)	$	52,140
2020		104,280
2021		104,280
Total lease payments		260,700
Less: Interest		(20,678	)
Present value of lease liabilities	$	240,022

11

Note 7. Related Party Transactions

In addition to the lease discussed in Note 6, related party transactions for the six months ended June 30, 2019 and 2018, consisted of the following:

● Companies related to SAVSU Origin LLC by ownership paid certain expenses on behalf of the Company and provided cash advances during the six months ended June 30, 2019 and 2018. Amounts owed to these companies at June 30, 2019, are $506,790, which is included in due to related parties in the balance sheet. During the six months ended June 30, 2019, the companies decided to consider $391,580 of the balance owed to them a capital contribution to the Company.

● A company related to SAVSU Origin LLC provided accounting services to the Company during the six months ended June 30, 2019 and 2018. The Company incurred expense of $18,000 related to these services in each of the six months ended June 30, 2019 and 2018.

● The Company owed BioLife $150,103 at December 31, 2017. During the six months ended June 30, 2018, BioLife decided to consider the balance owed to them of $150,103 a capital contribution to the Company.

● The Company sold additional shares of common stock to BioLife during the six months ended June 30, 2018, for cash proceeds of $1 million.

Note 8. Subsequent Events

Subsequent events have been evaluated through the date these financial statements were available to be issued, which was October 23, 2019. Subsequent to June 30, 2019, the Company became wholly-owned by BioLife as discussed in Note 1.

12

EX-99.3

Exhibit 99.3

BioLife Solutions, Inc.

Unaudited Pro Forma Condensed Combined Balance Sheets

June 30, 2019

(In thousands)

	Historical BioLife			Historical SAVSU			Pro Forma Adjustments			Notes (1)	Pro Forma Combined
Assets
Current Assets
Cash and cash equivalents	$	19,617		$	1,943		$	—			$	21,560
Accounts receivable, net		3,832			593			—				4,425
Inventories		5,306			—			—				5,306
Prepaid expenses and other current assets		384			22			—				406
Total current assets		29,139			2,558			—				31,697
Property and equipment, net		1,318			543			—				1,861
Operating lease right-of-use assets		1,079			240			—				1,319
Assets held for lease		—			2,072			—				2,072
Intangible assets, net		4,446			1,958			10,442		(a)		16,846
Goodwill		9,524			—			18,858		(b)		28,382
Investment in SAVSU		6,100			—			(6,100	)	(c)		—
Other assets		136			—			—				136
Total assets	$	51,742		$	7,371		$	23,200			$	82,313
Liabilities and Stockholders Equity
Current liabilities
Accounts payable	$	876		$	77		$	—			$	953
Accrued expenses and other current liabilities		204			—			656		(d), (e)		860
Accrued compensation		963			—			—				963
Due to related parties		—			506			(506	)	(e)		—
Contingent consideration		371			—			—				371
Lease liability - operating, current portion		665			91			—				756
Lease liability – financing, current portion		14			—			—				14
Total current liabilities		3,093			674			150				3,917
Long-term lease liability - operating		806			148			—				954
Long-term lease liability - financing		10			—			—				10
Contingent consideration		1,560			—			—				1,560
Other long-term liabilities		7			—			—				7
Total liabilities		5,476			822			150				6,448
Shareholder’s equity
Common stock		19			—			1		(f)		20
Additional paid-in capital		116,013			16,677			3,254		(a)-(d), (f)-(h)		135,944
Accumulated deficit		(69,766	)		(10,128	)		19,795		(g),(h)		(60,099	)
Total shareholder’s equity		46,266			6,549			23,050				75,865
Total liabilities and shareholder’s equity	$	51,742		$	7,371		$	23,200			$	82,313

(1)  See Note 4 to the accompanying notes to unaudited pro forma condensed combined financial statements

BioLife Solutions, Inc.

Unaudited Pro Forma Condensed Combined Statements of Operations

For the Six Months Ended June 30, 2019

(In thousands, except share and per share data)

	Historical BioLife			Pro Forma Astero Adjusted Three Months Ended March 31, 2019			Historical SAVSU			Pro Forma Adjustments			Notes (1)	Pro Forma Combined
Revenue	$	12,471		$	210		$	441		$	—			$	13,122
Cost of product sales		3,606			69			717			24		(i)		4,416
Gross profit		8,865			141			(276	)		(24	)			8,706
Operating expenses
Research and development		1,111			532			496			722		(a),(i)		2,861
Sales and marketing		1,776			129			267			206		(a),(i)		2,378
General and administrative		4,321			260			350			(131	)	(i)		4,800
Acquisition Costs		247			—			—			(247	)	(j)		—
Total operating expenses		7,455			921			1,113			550				10,039
Operating income (loss)		1,410			(780	)		(1,389	)		(574	)			(1,333	)
Other (expenses) income, net		(145	)		—			—			448		(k)		303
Net income (loss)	$	1,265		$	(780	)	$	(1,389	)		(126	)		$	(1,030	)
Net income (loss) per share:
Basic	$	0.07												$	(0.05	)
Diluted(2)	$	0.05												$	(0.05	)
Weighted average common shares outstanding:
Basic		18,734,401									1,100,000				19,834,401
Diluted		24,439,959									1,100,000				25,539,959

(1) See Note 4 to the accompanying notes to unaudited pro forma condensed combined financial statements

(2) Common stock equivalents are excluded for the pro forma combined period since the effect is anti-dilutive due to the Company’s pro forma net losses

BioLife Solutions, Inc.

Unaudited Pro Forma Condensed Combined Statements of Operations

For the Twelve Months Ended December 31, 2018

(In thousands, except share and per share data)

	Historical BioLife			Pro Forma Astero Adjusted			Historical SAVSU			Pro Forma Adjustments			Notes (1)	Pro Forma Combined
Revenue	$	19,742		$	608		$	288		$	—			$	20,638
Cost of product sales		6,217			258			544			48				7,067
Gross profit		13,525			350			(256	)		(48	)	(i)		13,571
Operating expenses
Research and development		1,298			1,055			669			1,461		(a),(i)		4,483
Sales and marketing		2,615			460			331			413		(a),(i)		3,819
General and administrative		5,950			864			764			(263	)	(i)		7,315
Total operating expenses		9,863			2,379			1,764			1,611				15,617
Operating income (loss)		3,662			(2,029	)		(2,020	)		(1,659	)			(2,046	)
Other (expenses) income, net		(396	)		(5	)		—			672		(k)		271
Net income (loss)	$	3,266		$	(2,034	)	$	(2,020	)	$	(987	)		$	(1,775	)
Less: Preferred stock dividends and impact of redemption		(339	)		—			—			—				(339	)
Net income (loss) attributable to common stockholders	$	2,927		$	(2,034	)	$	(2,020	)	$	(987	)		$	(2,114	)
Net income (loss) per share:
Basic	$	0.18												$	(0.12	)
Diluted(2)	$	0.14												$	(0.12	)
Weighted average common shares outstanding:
Basic		16,256,465									1,100,000				17,356,465
Diluted		21,627,278									1,100,000				22,727,278

(1) See Note 4 to the accompanying notes to unaudited pro forma condensed combined financial statements

(2) Common stock equivalents are excluded for the pro forma combined period since the effect is anti-dilutive due to the Company’s pro forma net losses

BioLife Solutions, Inc.

Notes to Unaudited Pro Forma Condensed Combined Financial Statements

1. Description of the Transaction

As previously disclosed, on August 7, 2019, BioLife Solutions, Inc. (the “Company”) consummated the acquisition (the “Acquisition”) of SAVSU Technologies, Inc., a Delaware corporation (“SAVSU”), pursuant to a Share Exchange Agreement (the “Exchange Agreement”) by and among the Company, SAVSU and SAVSU Origin LLC, a Delaware limited liability company and the sole stockholder of SAVSU (“Seller”). Pursuant to the Exchange Agreement, Seller agreed to transfer to the Company and the Company agreed to acquire from the Seller 8,616 shares of common stock of SAVSU, representing the remaining 56% of the outstanding shares of SAVSU that the Company did not own, in exchange for 1,100,000 shares of common stock (the “Exchange Shares”) of the Company. The Acquisition was completed following the Company’s previously announced exercise on July 8, 2019 of its option to purchase the remaining shares of SAVSU. As a result of the Acquisition SAVSU became a wholly-owned subsidiary of the Company.

On August 8, 2019, the Company completed the Acquisition, and SAVSU became a wholly owned subsidiary of the Company. At the closing of the Acquisition, the Company paid to the Sellers 1,100,000 shares of unregistered common stock.

2. Basis of Presentation

The accompanying unaudited pro forma condensed combined financial statements combine the historical consolidated financial statements of Biolife and those of SAVSU after giving effect to the Acquisition, using the acquisition method of accounting in accordance with Accounting Standards Codification (ASC) 805, “Business Combinations”, and applying the assumptions and adjustments described in the accompanying notes. The accompanying unaudited pro forma condensed combined financial information was prepared in accordance with Article 11 of SEC Regulation S-X. The unaudited pro forma condensed combined statements of operations combine BioLife’s operating results for the six months ended June 30, 2019 with the operating results of SAVSU for the six months ended June 30, 2019 and the unaudited pro forma operating results of our April 1, 2019 Astero acquisition for the three months ended March 31, 2019 (see our Form 8-K/A filed June 17, 2019). The unaudited pro forma condensed combined statements of operations combine BioLife’s operating results for the twelve months ended December 31, 2018, with the operating results of SAVSU and for the twelve months ended December 31, 2018 and the unaudited pro forma to operating results of Astero for the twelve months ended December 31, 2018. The unaudited pro forma condensed balance sheets combine BioLife’s balance sheet as of June 30, 2019 with the balance sheet of SAVSU as of June 30, 2019. The unaudited pro forma condensed combined statements of operations and balance sheets give effect to the Acquisition as if such acquisition had occurred at the beginning of the year. The historical consolidated financial statements have been adjusted in the pro forma condensed combined financial statements to give effect to pro forma events that are (1) directly attributable to the business combination, (2) factually supportable and (3) with respect to the pro forma condensed combined statements of operations, expected to have a continuing impact on the combined results following the business combination. The unaudited pro forma condensed combined financial information herein should be read in conjunction with the historical financial statements and the related notes thereto of BioLife which are presented in the Annual Report on Form 10-K for the year ended December 31, 2018. The unaudited pro forma condensed combined financial statements are presented for illustrative purposes only and are not necessarily indicative of the operating results that would have been achieved if the Acquisition had been consummated as of the beginning of the period presented, nor are they necessarily indicative of the future operating results of the combined company. No effect has been given in these pro forma financial statements for synergistic benefits that may be realized through the combination or costs that may be incurred in integrating operations.

3. Estimated consideration and preliminary purchase price allocation

BioLife accounted for the Acquisition as the purchase of a business under U.S. GAAP. Under the acquisition method of accounting, the assets of SAVSU will be recorded as of the acquisition date, at their fair values, and consolidated with BioLife. The preliminary fair value of the net tangible assets acquired is $4.6 million, the preliminary fair value of the identifiable intangibles is $12.4 million, and the preliminary residual goodwill is $18.9 million. The fair value estimates required critical estimates, including, but not limited to, future expected cash flows, included revenue and expense projections, discount rates, revenue volatility, and royalty rates. BioLife believes these estimates to be reasonable. Actual results may differ from these estimates.

Total consideration transferred (in thousands):

Stock consideration for 55.6% equity interest purchased	$	19,932
Working capital adjustment		(4,591	)
Total consideration transferred	$	15,341

Transaction costs related to the acquisition are expensed as incurred and are not included in the calculation of consideration transferred.

The table below represents the estimated preliminary purchase price allocation to the net assets acquired based on their estimated fair values, as well as the associated estimated useful lives of the acquired intangible assets (amounts in thousands). Such amounts were estimated using the most recent financial statements from SAVSU as of June 30, 2019 (amounts in thousands).

Cash and cash equivalents	$	1,943
Accounts receivable, net		593
Prepaid expenses and other current assets		22
Property, plant and equipment, net		543
Operating right-of-use asset		240
Assets held for lease		2,072
Customer relationships		80
Tradenames		1,320
Developed technology		11,000
Goodwill		18,858
Accounts Payable		(77	)
Other liabilities		(745	)
Fair value of net assets acquired	$	35,849

The fair value of SAVSU’s identifiable intangible assets and weighted average useful lives have been preliminary estimated as follows:

	Estimated Fair Value		Estimated Useful Life (Years)
Customer relationships	$	80			6
Tradenames		1,320			9
Acquired technologies		11,000		7	–	8
Total identifiable intangible assets	$	12,400

Fair value measurement methodologies used to calculate the value of any asset can be broadly classified into one of three approaches, referred to as the cost, market and income approaches. In any fair value measurement analysis, all three approaches must be considered, and the approach or approaches deemed most relevant will then be selected for use in the fair value measurement of that asset. The fair value of identifiable intangible assets was determined primarily using variations of the “income approach,” which is based on the present value of the future after-tax cash flows attributable to each identifiable intangible asset. The fair value of property and equipment and assets held for lease was determined using both the “cost approach” and the “market approach”.

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

These preliminary estimates of fair value and estimated useful lives may be different from the amounts included in the final acquisition accounting, and the difference could have a material impact on the accompanying unaudited pro forma condensed combined financial statements.

4. Pro Forma Adjustments

This note should be read in conjunction with Notes 1 and 2. Adjustments included in the pro forma adjustments column of the pro forma condensed combined statement of operations and the pro forma condensed combined balance sheet include the following, as indicated in the “Notes” column thereto: 

(a)	Reflects the preliminary fair value estimate of identifiable intangible assets to be acquired by Biolife of $12.4 million, with a continuing annual amortization impact of $1.5 million. The fair value calculation is preliminary and subject to change. The identifiable intangible assets include developed technology, customer relationships, and trade names. The fair value of the identifiable intangible assets is determined primarily using the “income approach,” which requires a forecast of all the expected future cash flows.
(b)	Reflects adjustments to record goodwill related to the transaction.
(c)	Reflects the elimination of the SAVSU investment account in consolidation.
(d)	Represents estimated accrued acquisition costs related to this transaction not yet incurred as of June 30, 2019.
(e)	Represents the reclassification of related party payable to accrued payables due to the change in ownership.
(f)	Represents 1,100,000 shares of common stock paid as consideration for the transaction.
(g)	Represents a $9.8 million gain related to the fair value adjustment of the SAVSU investment account recorded on our books under the equity method of accounting.
(h)	Represents the elimination of historical equity of SAVSU.
(i)	Represents stock based compensation increase of $95,000 and net salary increases of $23,000 for the twelve months ended December 31, 2018 and stock based compensation increase of $48,000 and salary increases of $12,000 for the six months ended June 30, 2019. The stock based compensation is related to time-based restricted stock units granted and net salary increases are related to executive employment agreements less the elimination of one executive position. The fair value of the awards assumes a stock price of $17.31 and will be recognized over four years.
(j)	Represents the elimination of acquisition costs as these expenses will not have a continuing impact.
(k)	Represents the elimination of loss from equity-method investment in SAVSU as these costs will not have a continuing impact.