Biolife Solutions Inc – ‘ARS’ for 12/31/04

On:  Wednesday, 8/31/05, at 2:55pm ET   ·   Effective:  8/31/05   ·   For:  12/31/04   ·   Accession #:  930413-5-6312   ·   File #:  0-18170

in

this entire Filing. an “Entity” Search.

Show

Documents searched

and

each “hit”. the 1st “hit”.

↓↑Hints

Annual Report to Security Holders
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: ARS         Annual Report to Security Holders                     24    136K 

Document Table of Contents

ARS
1st Page of 24
TOC
↑Top
Previous
Next
↓Bottom
Just 1st
 
[BIOLIFE SOLUTIONS LOGO]

 BIOLIFE SOLUTIONS, INC.

 ANNUAL REPORT
2004

ARS
2nd Page of 24
TOC
1st
Previous
Next
↓Bottom
Just 2nd
 TABLE OF CONTENTS

SHAREHOLDERS' LETTER.......................................................    1
SELECTED FINANCIAL DATA....................................................    3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND                 
RESULTS OF OPERATIONS......................................................    4
INDEPENDENT AUDITORS' REPORT...............................................    7
FINANCIAL STATEMENTS.......................................................    8
CORPORATE INFORMATION......................................................   22

ARS
3rd Page of 24
TOC
1st
Previous
Next
↓Bottom
Just 3rd
                                                        [BIOLIFE SOLUTIONS LOGO]

TO OUR SHAREHOLDERS                                                             

BioLife has experienced notable  developments that hold the promise of placing a
secure  foundation under the Company in support of a profitable  future.  One of
our  critical  milestones  was  detailed  in our May  2005  announcement  of the
Exclusive Private Label Agreement with VWR International,  Inc. In addition,  we
continue to ramp sales upward, diversify our markets and establish a significant
presence in the emerging Cell Therapy - Regenerative Medicine arena.            

Before  addressing our future, I believe you will find it of value to understand
the course the  Company  (formerly  Cryomedical  Sciences,  Inc.  ("CMSI"))  has
followed since  divestiture of its  cryosurgical  device assets in the summer of
2002  with  the  intent  of   developing  a  sole  focus  on  its   preservation
solutions-based technology.                                                     

Following the  divestiture,  the Company had to sue the purchaser to realize the
balance of the  purchase  price valued at  approximately  $1.88  million.  Thus,
BioLife  entered  2003  with  $67,000  cash on hand and  residual  CMSI  debt of
approximately  $500,000.  While our lawsuit  progressed rather rapidly,  BioLife
faced a serious cash flow issue.  We began the year without  sufficient  cash on
hand to  maintain  the  business.  While a  number  of our  principal  investors
generously  provided bridge funds for an additional quarter in anticipation of a
favorable court decision,  the legal process extended when Endocare appealed the
court's verdict in our favor.                                                   

We faced two options at that point - either tighten our belts in anticipation of
a near term settlement or re-finance the Company. The employees chose the former
and worked through a six-month  period during which neither  payroll was met nor
employee expenses  reimbursed for five of those six months. I mention this point
as it  reflects on the level of  dedication  of our staff,  their  belief in our
technology  and their  commitment  to the  Company's  success.  Even with  these
sacrifices,  by late autumn the legal appeal process continued, and we proceeded
with an employee/investor structured Series G preferred stock financing.        

With the addition of the  settlement  funds of $1.88  million  received in March
2004,  BioLife was able to clear itself of all critical debt and was  positioned
to move forward with  building a successful  company based on its novel cell and
tissue  preservation  solutions.  To set the stage for this growth,  BioLife, in
2003,  developed  dozens  of  accounts,  entered  into  supply  and  development
agreements that provided a revenue base moving forward,  registered with the FDA
as a Class 2 medical device manufacturer,  established an internal manufacturing
capability,  launched a series of  national  training  workshops  that served to
accelerate the exposure of our  technology,  and had our products  included in a
number of FDA approved cell  therapy-based  IND's. The Company was successful in
moving the sales of  Hypothermosol(R)  from  $26,000 in 2002 to $147,000 in 2003
and to $316,000 in 2004.  Our  product  sales in Q2 2005 were the highest  ever.
These numbers, while moving in the right direction,  are modest and only provide
a base from which we plan to grow.                                              

In the spring of 2004,  BioLife moved its  headquarters  and  manufacturing to a
newly remodeled facility.  Previously, the Company was housed in incubator space
on the campus of Binghamton University (SUNY).                                  

With the establishment of a GMP-compliant  manufacturing  facility,  the Company
was positioned to aggressively  pursue both strategic  relationships  and expand
out technology into diverse clinical and                                        

1 

ARS
4th Page of 24
TOC
1st
Previous
Next
↓Bottom
Just 4th
non-clinical  markets.  Our  partnership  with VWR  International  provides  for
minimal  sales of $7.4 MM over  five-years  in  non-clinical  markets for VWR to
maintain  exclusivity with the Company.  The Company will manufacture under this
dual-labeling  agreement,  share the non-clinical markets with VWR International
while retaining exclusivity in the clinical  marketplace.  VWR has approximately
1400 sales staff in North America and Europe. We are working together closely to
structure formal product launches on both continents and have begun shipments of
product to Europe.                                                              

In  addition,  we have  established  a direct  client base of nearly two hundred
accounts,  have our  products  included  in numerous  FDA  approved  INDs,  have
received  FDA  permission  to label our  products  "For  Human  Cell and  Tissue
Preservation,"  and continue to expand our patent portfolio.  With regard to the
latter,  the Company was issued a "methods and  composition"  patent by the U.S.
Patent  Office on July 26, 2005 which should  provide an important  extension of
protection  for  our   proprietary   molecular   biological-based   preservation
technology.                                                                     

I am confident that the Company has the necessary  technological  and managerial
assets  necessary to sustain and grow the business and to establish  marketplace
dominance.                                                                      

John G. Baust                                                                   
President  & CEO                                                                

--------------------------------------------------------------------------------
"Safe Harbor"  statement under the Private  Securities  Litigation Reform Act of
1995. The statements  which are not  historical  facts  contained in this Annual
Report are  forward-looking  statements  that involve  risks and  uncertainties,
including,  but not  limited to the  Company's  relative  success in  increasing
product sales and reducing expenses.  Additional risks and uncertainties include
variances in the demand for the  Company's  products due to customer,  industry,
and  technological  developments,  as well as  variances in the costs to produce
such products.  Such statements are made in reliance upon safe harbor provisions
of the Private  Securities  Litigation  Reform Act of 1995. The 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 of Financial
Condition and Results of Operations." 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 forward-looking statements.                                 
--------------------------------------------------------------------------------

2 

ARS
5th Page of 24
TOC
1st
Previous
Next
↓Bottom
Just 5th
                                                        [BIOLIFE SOLUTIONS LOGO]

 SELECTED FINANCIAL DATA

The following  tables summarize  certain  financial data which should be read in
conjunction with the report of the Company's  independent  auditors and the more
detailed  financial  statements  and the notes  thereto  which appear  elsewhere
herein.                                                                         

STATEMENT OF OPERATIONS DATA:                                                   

                                                        [Enlarge/Download Table]

                                                                          Year ended December 31,                              
                                            -----------------------------------------------------------------------------------
                                                2004              2003              2002             2001              2000    
                                                ----              ----              ----             ----              ----    

                                                                                                                               
Net sales ................................  $   626,709       $   605,511       $   848,791      $ 1,344,016       $ 1,189,505 
Net income (loss) ........................     (743,162)       (1,824,368)          215,876       (4,410,257)       (2,771,927)
Net income (loss) per share ..............        (0.06)            (0.15)             0.02            (0.36)            (0.28)
Basic and diluted weighted average common                                                                                      
  shares used to compute net income (loss)                                                                                     
  per share ..............................   12,413,209        12,413,209        12,413,209       12,413,209         9,921,056 

BALANCE SHEET DATA:                                                             

                                                        [Enlarge/Download Table]

                                                                                     December 31,                              
                                            -----------------------------------------------------------------------------------
                                                2004              2003              2002             2001              2000    
                                                ----              ----              ----             ----              ----    

                                                                                                                               
Total assets............................... $   833,269       $ 2,963,911       $   313,846      $ 1,776,590       $ 3,988,819 
Total liabilities..........................     220,310         1,607,790           868,097        1,465,824           360,265 
Working capital............................     483,955         1,233,123          (711,965)        (614,626)        2,666,295 
Stockholders' equity.......................     612,959         1,356,121          (554,251)         310,766         3,628,554 

3 

ARS
6th Page of 24
TOC
1st
Previous
Next
↓Bottom
Just 6th
 BIOLIFE SOLUTIONS, INC.
 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS                                                           

GENERAL                                                                         

         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.                                                                     

         BioLife has pioneered the next  generation  of  preservation  solutions
designed to maintain  the  viability  and health of cellular  matter and tissues
during freezing,  transportation and storage. Based on the Company's 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  products  that  ensure  the
biological viability of mammalian cell and tissue material during transportation
and storage.  The Company  believes that the  HypoThermosol(R),  GelStor(TM) and
CryoStor(TM)  products it is selling  today are a  significant  step  forward in
meeting these needs.                                                            

         The  Company's  line of  preservation  solutions is composed of complex
synthetic,  aqueous solutions  containing,  in part, minerals and other elements
found in human  blood,  which are  necessary  to  maintain  fluids and  chemical
balances  throughout  the  body at near  freezing  temperatures.  The  solutions
preserve cells and tissue in low temperature  environments  for extended periods
after  removal  of the cells  through  minimally  invasive  biopsy  or  surgical
extraction,  as well as in shipping the propagated  material for the application
of cell or gene therapy or tissue engineering. BioLife has entered into research
agreements with several emerging biotechnology companies engaged in the research
and  commercialization  of cell and gene  therapy  technology  and has  received
several government research grants in partnership with academic  institutions to
conduct  basic  research,  which  could  lead to  further  commercialization  of
technology to preserve human cells, tissues and organs.                         

         The Company  currently markets its  HypoThermosol(R),  CryoStor(TM) and
GelStor(TM)  lines of solutions to  companies  and labs engaged in  pre-clinical
research, and to academic institutions.                                         

YEAR ENDED  DECEMBER  31,  2004  COMPARED TO THE YEAR ENDED DECEMBER 31, 2003   

         Revenue for the year ended December 31, 2004  increased  $21,198 or 4%,
to $626,709,  compared to $605,511 for the year ended  December 31, 2003.  Grant
revenue  for the year ended  December  31,  2004  totaled  $38,936,  compared to
$309,359 for the year ended  December 31, 2003.  This decrease was the result of
the transition of grant related activities to Cell Preservation  Services,  Inc.
(CPSI) per a research agreement pursuant to which the Company outsourced to CPSI
all BioLife research funded through SBIR grants.  Consulting revenue declined as
a result of scheduled completion of contracts.  In addition,  the Company earned
$64,822 and $117,858 in management fees and facilities fees, respectively,  as a
result  of the  research  agreement  with  CPSI  (See  Note  9 to the  Financial
Statements)  in 2004.  The shift of the  Company's  focus toward  product  sales
resulted in a 115% increase in product sales over 2003.                         

         For the year ended December 31, 2004, the cost of product sales totaled
$163,979 as compared to $109,387 for the year ended  December 31, 2003. In 2003,
the Company had more idle capacity  resulting in a change in the gross margin on
product sales from 25% to 48%.                                                  

         Expenses  relating  to  research  and  development  for the year  ended
December 31, 2004 decreased to $29,087,  compared to $659,309 for the year ended
December 31, 2003.  The  decrease in research  and  development  expense was due
primarily  to the shift in focus away from  grant  related  research  activities
toward  product sales.  The research  agreement with CPSI enabled the Company to
eliminate most expenses related to research and development as well as shift the
focus toward product sales.                                                     

         For the year ended  December  31,  2004,  sales and  marketing  expense
increased $45,415, or 22%, to $253,106,  compared to $207,691 for the year ended
December  31,  2003.  The  increase  in sales and  marketing  expense was due to
additional sales  commissions  earned with the increase in product sales in 2004
as well as an increase in advertising expenses in 2004 in the amount of $19,769.

         For the year  ended  December  31,  2004,  general  and  administrative
expense decreased $181,638,  or 18% to $838,961,  compared to $1,020,599 for the
year ended December 31, 2003. This decrease was due to several                  

4 

ARS
7th Page of 24
TOC
1st
Previous
Next
↓Bottom
Just 7th
                                                        [BIOLIFE SOLUTIONS LOGO]

factors including a decrease in legal fees of $47,675, or 29%, from 2003 as most
legal  expenses  pertaining  to the  Endocare  lawsuit  were  incurred  in 2003.
Accounting and consulting  fees decreased  substantially  in 2004 as the Company
hired a full time Controller to replace previously outsourced consultants.      

         For the year ended  December 31,  2004,  operating  expenses  decreased
$711,853,  or 36% to  $1,285,133,  compared  to  $1,996,986  for the year  ended
December 31, 2003.  The Company  reported a net loss of $(743,162)  for the year
ended  December 31, 2004,  compared to a net loss of  $(1,303,368)  for the year
ended  December 31,  2003.  While  revenue for the year ended  December 31, 2004
increased $21,198 from the year ended December 31, 2003, the Company was able to
reduce operating expenses significantly resulting in a net loss of $(743,162) in
2004 compared to a net loss of  $(1,303,368) in 2003. This was due in large part
to the  reduction in research and  development  related  expenses as the Company
shifted its focus away from grant related  research  activities  toward  product
sales.  The research  agreement  with CPSI enabled the Company to eliminate most
expenses related to research and development.                                   

         At December  31,  2004,  the Company had cash and cash  equivalents  of
$531,684,  compared to cash and cash  equivalents  of  $787,904 at December  31,
2003.  At  December  31,  2004,  the Company  had a working  capital  surplus of
$483,955, compared to a working capital surplus $1,233,123 at December 31, 2003.

LIQUIDITY AND CAPITAL RESOURCES                                                 

         During  2004,  our second full year of product  sales,  we financed our
operations  from the  proceeds  from the  settlement  with  Endocare  as well as
proceeds from product sales, consulting fees, and management and facilities fees
earned.  Proceeds from the legal  settlement  totaled  $1,887,474.  Cash used by
financing  activities  totaled  $705,224  during the year and was  comprised  of
principal  payments on notes  payable.  As of December 31, 2004, we had cash and
cash equivalents of $531,684 and total assets of $833,268.                      

         During  the  year  ended  December  31,  2004,  net  cash  provided  by
operations was $515,104 as compared to net cash used by operating  activities of
$(854,228) for the year ended December 31, 2003. This was due in large part from
receipt in 2004 of the legal settlement  receivable of $1,871,945.  In addition,
the Company  realized a net loss of $(743,162) in 2004 as compared to a net loss
of  $(1,303,368)  in 2003.  Accounts  receivable  (net)  increased to $75,337 at
December  31, 2004 from  $34,851 at December  31,  2003.  This  increase was due
primarily to the increase in product sales during 2004. Inventories increased to
$94,319 at December  31, 2004 from  $39,805 at December  31, 2003 as the Company
began to utilize the new production  facility to support the increase in product
sales in 2004.  Accounts payable decreased from $563,359 at December 31, 2003 to
$85,037 at  December  31,  2004 as the  Company  was able to pay off much of the
outstanding  debt upon receipt of the Endocare  settlement.  Similarly,  accrued
expenses and accrued  salaries  declined as liabilities  were paid down from the
receipt of the Endocare settlement.                                             

         Net cash used in investing activities totaled $(65,800) during the year
ended December 31, 2004,  which resulted from purchase of property and equipment
to support the new manufacturing facility. Net cash used in investing activities
totaled  $(11,219)  during the year  ended  December  31,  2003  resulting  from
purchase of property and equipment during the year.                             

         Net cash used by financing  activities  totaled $(705,524) for the year
ended December 31, 2004, and resulted from principal  payments on notes payable.
Net cash provided by financing  activities totaled $1,586,233 for the year ended
December  31, 2003.  In 2003,  net cash was provided by issuance of notes in the
amount of $400,000 and issuance of preferred stock and warrants in the amount of
$1,226,533.  Principal  payments  on  existing  notes  during  the year  totaled
$40,300.                                                                        

         During 2004, although the Company experienced a growth in product sales
of 115% from 2003, the Company was not able to support its operating  activities
through  sales of its  products  or  contracted  revenue  sources.  As a result,
operations  were funded  primarily  with  proceeds  from the  settlement  of the
Endocare  lawsuit.  The Company  maintains  no line of credit or bank notes.  In
February 2004, the Company  collected  proceeds in the amount of $1,887,474 from
its settlement of the Endocare  lawsuit.  With these  proceeds,  the Company was
able to pay all  outstanding  note  obligations as well as pay off a majority of
the accrued liabilities.                                                        

         Strategies for 2005 and beyond include procuring  multiyear  agreements
with  manufacturing  and  distributing  companies  in  an  effort  to  establish
additional  revenue  streams.  In February 2004,  the Company  announced that it
signed a multi-year supply agreement with Pittsboro, NC-based Hepatotech Inc., a
privately-held  manufacturer and distributor of hepatocytes (liver cells). Under
the terms of the  agreement,  BioLife  will sell  Hepatotech  its  off-the-shelf
HypoThermosol(R) and CryoStor(TM) preservation solutions to support Hepatotech's
cell  harvest and shipment  services.  The  agreement  with  Hepatotech  further
expands the sales opportunities for BioLife's technology.                       

5 

ARS
8th Page of 24
TOC
1st
Previous
Next
↓Bottom
Just 8th
         In February  2004, the Company  entered into a research  agreement with
Ann  Arbor,  MI-based  Aastrom  Biosciences,  Inc.,  a company  specializing  in
developing, manufacturing, and marketing tissue repair cells. Under the terms of
the  agreement,  Aastrom  will  provide  BioLife  with  cartilage  biopsies  and
materials  derived  therefrom as are  necessary to conduct the Research  Program
with the goal of providing solution formulations to Aastrom.                    

         The Company believes it has sufficient funds to continue  operations in
the near term. However, it 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.                                 

6 

ARS
9th Page of 24
TOC
1st
Previous
Next
↓Bottom
Just 9th
                                                        [BIOLIFE SOLUTIONS LOGO]

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,  2004  and  2003,  and  the  related   Statements  of  Operations,
Comprehensive  Income (Loss),  Stockholders'  Equity (Deficiency) 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  audits 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, 2004 and 2003, 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.                                    

[ARONSON & COMPANY SIG]                                                         

Rockville, Maryland                                                             
February 4, 2005                                                                

7 

ARS
10th Page of 24
TOC
1st
Previous
Next
↓Bottom
Just 10th
 BIOLIFE SOLUTIONS, INC.
BALANCE SHEETS

                                                        [Enlarge/Download Table]

                                                                       December 31,   December 31, 
                                                                           2004           2003     
                                                                       ------------   ------------ 
                                                                                                   
ASSETS                                                                                             
Current assets                                                                                     
    Cash and cash equivalents                                          $    531,684   $    787,904 
    Accounts receivables, trade, net of allowance for doubtful                                     
       accounts of $13,500 at December 31, 2004                              75,337         34,851 
    Legal settlement receivable                                                  --      1,871,945 
    Inventories                                                              94,319         39,805 
    Loan financing costs, net of accumulated amortization of $440,937                              
       and $334,529 at December 31, 2004 and 2003, respectively                  --        106,408 
    Prepaid expenses and other current assets                                 2,925             -- 
                                                                       ------------   ------------ 
        Total current assets                                                704,265      2,840,913 
                                                                       ------------   ------------ 

Property and equipment                                                                             
    Leasehold improvements                                                   39,283             -- 
    Furniture and computer equipment                                         39,760         36,486 
    Manufacturing and other equipment                                       207,075        183,830 
                                                                       ------------   ------------ 
Total                                                                       286,118        220,316 
    Less: Accumulated depreciation and amortization                        (157,114)       (97,318)
                                                                       ------------   ------------ 
Net property and equipment                                                  129,004        122,998 
                                                                       ------------   ------------ 

Total assets                                                           $    833,269   $  2,963,911 
                                                                       ============   ============ 

LIABILITIES AND STOCKHOLDERS' EQUITY                                                               
Current liabilities                                                                                
    Accounts payable                                                   $     57,010   $    495,963 
    Accounts payable - related parties                                       28,027         67,396 
    Accrued expenses                                                         12,426         83,422 
    Accrued salaries                                                        122,847        255,485 

    Notes payable - related parties                                              --        650,000 
    Notes payable - other                                                        --         55,524 
                                                                       ------------   ------------ 
        Total current liabilities                                           220,310      1,607,790 
                                                                       ------------   ------------ 

Commitments and contingencies                                                                      

Stockholders' equity                                                                               
    Series F convertible preferred stock, $.001 par value; 12,000                                  
       shares authorized, 12,000 shares issued and outstanding                   12             12 
    Series G convertible preferred stock, $.001 par value; 80                                      
       shares authorized, 55 shares issued and outstanding                       --             -- 
    Common stock, $0.001 par value; 25,000,000                                                     
       shares authorized, 12,413,209 shares issued and outstanding           12,413         12,413 
    Additional paid-in capital                                           40,663,172     40,663,172 
    Accumulated deficit                                                 (40,062,638)   (39,319,476)
                                                                       ------------   ------------ 

Total stockholders' equity                                                  612,959      1,356,121 
                                                                       ------------   ------------ 

Total liabilities and stockholders' equity                             $    833,269   $  2,963,911 
                                                                       ============   ============ 

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

8 

ARS
11th Page of 24
TOC
1st
Previous
Next
↓Bottom
Just 11th
                                                        [BIOLIFE SOLUTIONS LOGO]

 BIOLIFE SOLUTIONS, INC.
STATEMENTS OF OPERATIONS

                                                        [Enlarge/Download Table]

                                                                 Years Ended           
                                                                 December 31,          
                                                        ------------------------------ 
                                                            2004              2003     
                                                            ----              ----     
                                                                                       
Revenue                                                                                
   Product sales                                        $    315,818      $    146,792 
   Grant revenue                                              38,936           309,359 
   Consulting revenue                                         86,000           149,360 
   Management fees, related party                             64,822                -- 
   Facilities fees, related party                            117,858                -- 
   Other                                                       3,275                -- 
                                                        ------------      ------------ 
Total revenue                                                626,709           605,511 
                                                        ------------      ------------ 

Operating expenses                                                                     
   Product sales                                             163,979           109,387 
   Research and development                                   29,087           659,309 
   Sales and marketing                                       253,106           207,691 
   General and administrative                                838,961         1,020,599 
                                                        ------------      ------------ 
Total expenses                                             1,285,133         1,996,986 
                                                        ------------      ------------ 

Operating loss                                              (658,424)       (1,391,475)
                                                        ------------      ------------ 

Other income (expense)                                                                 
   Legal settlement income                                        --           214,672 
   Interest income                                            27,103           128,202 
   Interest expense - related parties                       (117,241)         (257,667)
   Interest expense - other                                       --              (300)
   Other income                                                5,400             3,200 
                                                        ------------      ------------ 
Total other income (expense)                                 (84,738)           88,107 
                                                        ------------      ------------ 

Loss from operations before provision for income taxes      (743,162)       (1,303,368)
Provision for income taxes                                        --                -- 
                                                        ------------      ------------ 

Net Loss                                                    (743,162)       (1,303,368)
Series G preferred stock deemed dividend                          --           521,000 
                                                        ------------      ------------ 
Net loss attributable to holders of common stock        $   (743,162)     $ (1,824,368)
                                                        ============      ============ 

Total basic and diluted net loss per common share                                      
   attributable to holders of common stock:             $      (0.06)     $      (0.15)
                                                        ============      ============ 

Basic and diluted weighted average common shares used                                  
   to compute net loss per share                          12,413,209        12,413,209 
                                                        ============      ============ 

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

9 

ARS
12th Page of 24
TOC
1st
Previous
Next
↓Bottom
Just 12th
 BIOLIFE SOLUTIONS, INC.
 STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

                                                                [Download Table]

                                                              Years Ended          
                                                              December 31,         
                                                      ---------------------------- 
                                                          2004             2003    
                                                          ----             ----    

                                                                                   
Net loss                                              $  (743,162)     $(1,303,368)
                                                      -----------      ----------- 
Recovery of previously recognized unrealized loss on                               
   marketable securities                                       --        1,434,263 
                                                      -----------      ----------- 

Total other comprehensive income                               --        1,434,263 
                                                      -----------      ----------- 

Cash - end of year                                    $  (743,162)     $   130,895 
                                                      ===========      =========== 

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

10

ARS
13th Page of 24
TOC
1st
Previous
Next
↓Bottom
Just 13th
                                                        [BIOLIFE SOLUTIONS LOGO]

 BIOLIFE SOLUTIONS, INC.
 STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)

                                                        [Enlarge/Download Table]

                        Convertible                                                                                          
                       Series F and G                                                            Accumulated       Total     
                       Preferred Stock       Common Stock        Additional                         other       stockholders'
                      ---------------------------------------      paid-in      Accumulated     comprehensive      equity    
                       Shares   Amount    Shares      Amount       capital        deficit            loss       (deficiency) 
-----------------------------------------------------------------------------------------------------------------------------

                                                                                                                             
Balance,               12,000    $12    12,413,209    $12,413    $38,362,695    $(37,495,108)    $(1,434,263)    $  (554,251)
January 1, 2003                                                                                                              

Issuance of                --     --            --         --         47,589              --              --          47,589 
  warrants for                                                                                                               
  professional                                                                                                               
  services                                                                                                                   

Issuance of                --     --            --         --        286,308              --              --         286,308 
  warrants for loan                                                                                                          
  financing costs                                                                                                            

Issuance of                --     --            --         --         90,922              --              --          90,922 
  warrants in lieu                                                                                                           
  of cash                                                                                                                    
  compensation                                                                                                               

Issuance of                55     --            --         --      1,354,658              --              --       1,354,658 
  convertible                                                                                                                
  Series G pref                                                                                                              
  stock                                                                                                                      

Deemed dividend on         --     --            --         --        521,000        (521,000)             --              -- 
  Series G pref                                                                                                              
  stock                                                                                                                      

Disposal of                --     --            --         --             --              --       1,434,263       1,434,263 
  marketable                                                                                                                 
  securities                                                                                                                 

Net loss                   --     --            --         --             --      (1,303,368)             --      (1,303,368)
-----------------------------------------------------------------------------------------------------------------------------
Balance,                                                                                                                     
December 31, 2003      12,055     12    12,413,209     12,413     40,663,172     (39,319,476)             --     $ 1,356,121 

Net loss                   --     --            --         --             --        (743,162              --        (743,162)
-----------------------------------------------------------------------------------------------------------------------------
Balance,                                                                                                                     
December 31, 2004      12,055    $12    12,413,209    $12,413    $40,663,172    $(40,062,638)    $        --     $   612,959 
=============================================================================================================================

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

11

ARS
14th Page of 24
TOC
1st
Previous
Next
↓Bottom
Just 14th
 BIOLIFE SOLUTIONS, INC.
STATEMENTS OF CASH FLOWS

                                                        [Enlarge/Download Table]

                                                                                Years Ended          
                                                                                December 31,         
                                                                        ---------------------------- 
                                                                            2004             2003    
                                                                            ----             ----    
                                                                                                     
Cash flows from operating activiies:                                                                 
     Net loss                                                           $  (743,162)     $(1,303,368)
Adjustments to reconcile net loss to net cash provided (used) by                                     
     operating activities                                                                            
     Depreciation                                                            59,796           45,935 
     Amortization of loan financing costs                                   106,408          205,653 
     Disposal of marketable securities                                           --        1,434,263 
     Issuance of warrants and options for compensation, consulting and                               
         professional services                                                   --          138,511 
Change in operating assets and liabilities:                                                          
     (Increase) decrease in                                                                          
         Accounts receivable, trade                                         (40,487)           9,815 
         Legal settlement receivable                                      1,871,945       (1,871,945)
         Inventories                                                        (54,514)         (39,805)
         Prepaid expenses and other current assets                           (2,925)          18,595 
     Increase (decrease) in                                                                          
         Accounts payable                                                  (438,953)         328,429 
         Accounts payable - related parties                                 (39,369)          63,264 
         Accrued expenses                                                   (70,996)         (22,379)
         Accrued salaries                                                  (132,639)         138,804 
                                                                        -----------      ----------- 

Net cash used by operating activities                                       515,104         (854,228)
                                                                        -----------      ----------- 

Cash flows from investing activities                                                                 
     Purchase of property and equipment                                     (65,800)         (11,219)
                                                                        -----------      ----------- 
Net cash provided (used) by investing activities                            (65,800)         (11,219)
                                                                        -----------      ----------- 

Cash flows from financing activities                                                                 
     Proceeds from notes payable                                                 --          400,000 
     Principal payments on notes payable                                   (705,524)         (40,300)
     Issuance of preferred stock and warrants                                    --        1,226,533 
                                                                        -----------      ----------- 
Net cash provided (used) by financing activities                           (705,524)       1,586,233 
                                                                        -----------      ----------- 

Net (decrease) increase in cash                                         $  (256,220)     $   720,786 
Cash - beginning of year                                                    787,904           67,118 
                                                                        -----------      ----------- 
Cash - end of year                                                      $   531,684      $   787,904 
                                                                        ===========      =========== 

Supplemental cash flow information                                                                   
     Actual cash payments for:                                                                       
         Interest - related parties                                     $    81,598      $        -- 
                                                                        ===========      =========== 
         Interest - other                                               $        --      $       300 
                                                                        ===========      =========== 

Noncash investing and financing activities                                                           
     Warrants issued for payment of loan financing costs                $        --      $   286,308 
                                                                        ===========      =========== 
     Series G convertible preferred stock issued for accrued salaries   $        --      $   128,125 
                                                                        ===========      =========== 

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

12

ARS
15th Page of 24
TOC
1st
Previous
Next
↓Bottom
Just 15th
                                                        [BIOLIFE SOLUTIONS LOGO]

 BIOLIFE SOLUTIONS, INC.
 NOTES TO FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES                       

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.  BioLife (a)  provides  contract-based  services for the
development of cryopreservation solutions and processes, and (b), based upon its
patented  HypoThermosol(R)  platform  technology,   develops,  manufactures  and
markets  proprietary   cryopreservation  solutions  that  markedly  improve  the
biological processing and preservation of cells and tissues.                    

In May  2002,  Cryomedical  implemented  a  restructuring  and  recapitalization
program  designed  to shift its focus away from  cryosurgery  toward  addressing
preservation 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.  (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 sybol,
"BLFS" on the OTCBB.  Subsequent to the merger,  the Company  ceased to have any
subsidiaries.                                                                   

In 2001, the Company was awarded a research grant from the National Institute of
Health (the "NIH") for $804,014,  titled,  "Apoptosis  Intervention  in Cell and
Organ  Preservation."  Portions of the funds from this grant were  recognized in
2002 and 2003,  matching  research related to this grant carried out in 2002 and
2003,  respectively.  Furthermore,  the Company was awarded a grant from NIH for
$100,000,  titled  "Pro/Anti-Apoptotic  Grant."  Portions of the funds from this
grant were recognized in 2002 and 2003,  matching research related to this grant
carried out in 2002 and 2003,  respectively.  In September 2003, the Company was
awarded  a  research  grant  from  the  NIH  for  $177,000,   titled   "Improved
Preservation  of  Suspended  Cells."  Portions of the funds from this grant were
recognized in 2003 and 2004, matching research related to this grant carried out
in 2003 and 2004. Total grant revenue recognized during the years ended December
31, 2004 and 2003 totaled $38,936 and $309,359, respectively.                   

During the first quarter of 2004, the Company  discontinued  applying for grants
and now  provides  services  to a  related  entity  that has  become  the  grant
recipient. (See Note 9)                                                         

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  are  stated at the lower of cost or  market.  Cost is
determined using the first-in, first-out ("FIFO") method.                       

ACCOUNTS  RECEIVABLE:  Generally,  the Company has 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.                                                          

LOAN  FINANCING  COSTS:  Loan financing  costs are amortized on a  straight-line
basis over the 12-month life of the related debt (See Note 6).                  

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.                                                              

13

ARS
16th Page of 24
TOC
1st
Previous
Next
↓Bottom
Just 16th
REVENUE RECOGNITION: Revenue from sales of products is recognized at the time of
shipment.  The Company recognizes revenue on cost plus fixed fee basis for grant
funds received from various government agencies in the same period that expenses
relating to the grants are incurred by the Company.  Expenses  related to grants
are  included  in  research  and  development  expenses.  Consulting  revenue is
recognized at the  completion of milestones  and/or  according to specific terms
within  individual  agreements.  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.                                            

ADVERTISING:  Advertising costs are expensed as incurred and totaled $19,769 for
the year ended  December 31, 2004.  No  advertising  costs were incurred for the
year ended December 31, 2003.                                                   

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.                                                                      

STOCK-BASED  COMPENSATION:  Statement of Financial Accounting Standards No. 123,
"Accounting  for Stock-Based  Compensation"  ("SFAS 123"),  allows  companies to
account for stock-based  compensation  either under the provision of SFAS 123 or
under the provision of Accounting  Principles Board Opinion No. 25,  "Accounting
for Stock Issued to Employees" ("APB 25"), as amended by FASB Interpretation No.
44,  "Accounting  for  Certain  Transaction  Involving  Stock  Compensation  (an
Interpretation of APB Opinion No. 25)," but requires pro forma disclosure in the
footnotes to the financial  statements as if the measurement  provisions of SFAS
123 had been  adopted.  The Company  has elected to account for its  stock-based
compensation  in accordance  with the  provision of APB 25. The following  table
illustrates the effect on loss  attributable to holders of common stock and loss
per share if the Company had applied the fair value  recognition  provisions  of
SFAS 123:                                                                       

                                        2004            2003
                                        ------------    ------------
Loss attributable to holders of                                                 
common stock                                $(743,162)     $(1,824,368)   
Compensation expense based on fair                                              
value, net of related tax effects              98,568          107,684    
--------------------------------------------------------------------------      
PRO FORMA LOSS                                                                  
ATTRIBUTABLE TO HOLDERS OF                                                
OF COMMON STOCK                             $(841,730)     $(1,932,052)   
==========================================================================      
Basic and diluted net loss per                                                  
share attributable to holders of common                                   
stock as reported                           $   (0.06)     $     (0.15)   
==========================================================================      
Pro forma                                   $   (0.07)     $     (0.16)   
==========================================================================      

Stock  options  and  warrants  granted to  non-employees  are  accounted  for in
accordance with SFAS 123 and the Emerging Issues Task Force Consensus No. 96-18,
"ACCOUNTING FOR EQUITY  INSTRUMENTS  THAT ARE ISSUED TO OTHER THAN EMPLOYEES FOR
ACQUIRING,  OR IN CONJUNCTION  WITH SELLING,  GOODS OR SERVICES," which requires
the value of the  options  to be  periodically  re-measured  as they vest over a
performance period.                                                             

The fair value of each option/warrant  granted is estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted-average
assumptions  used for  grants  in 2003:  expected  volatility  of 63%;  expected
dividend yield of 0%; risk-free interest rate of 4.5% and expected lives of five
to ten years, as applicable. No options or warrants were granted in 2004.       

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, 2004 and 2003 this is the
Company's only business segment.                                                

14

ARS
17th Page of 24
TOC
1st
Previous
Next
↓Bottom
Just 17th
                                                        [BIOLIFE SOLUTIONS LOGO]

RECLASSIFICATIONS:   Certain  reclassifications  have  been  made  in  the  2003
financial statements to conform to the 2004 presentation.                       

RECENT  PRONOUNCEMENTS:  In November  2004, the Financial  Accounting  Standards
Board (FASB) issued SFAS No. 151,  "Inventory  Costs." This Statement amends the
guidance  in ARB  No.  43,  Chapter  4,  "Inventory  Pricing,"  to  clarify  the
accounting  for abnormal  amounts of idle facility  expense,  freight,  handling
costs, and wasted material (spoilage). In addition, this statement requires that
allocation of fixed  production  overhead to the costs of conversion be based on
the  normal  capacity  of the  production  facilities.  The  provisions  of this
statement  will be  effective  for the  Company  beginning  with its fiscal year
ending 2006.  The adoption of this standard is not expected to have any material
impact on the Company's financial position, results of operations or cash flows.

In December  2004,  the FASB issued  SFAS No. 152,  "Accounting  for Real Estate
Time-Sharing  Transactions."  This  statement  will not have any  effect  on the
Company's financial positions, results of operations or cash flows.             

In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets
- an amendment of APB Opinion No. 29." This statement  amended APB Opinion 29 to
eliminate the exception for non-monetary  exchanges of similar productive assets
and replaces it with a general  exception for exchanges of  non-monetary  assets
that do not have commercial  substance.  A non-monetary  exchange has commercial
substance  if the  future  cash  flows of the  entity  are  expected  to  change
significantly as a result of the exchange.  The adoption of this standard is not
expected  to have any  material  impact  on the  Company's  financial  position,
results of operations or cash flows.                                            

In December 2004, the FASB issued SFAS 123 (revised 2004) "Share-Based Payment."
This  statement   requires  that  the  cost   resulting  from  all   share-based
transactions be recorded in the financial statements.  The statement establishes
fair value as the measurement  objective in accounting for  share-based  payment
arrangements.  The  statement  replaces  SFAS 123  "Accounting  for  Stock-Based
Compensation"  and supersedes APB Opinion No. 25 "Accounting for Stock Issued to
Employees".  The  provisions of this statement will be effective for the Company
beginning  with its year  ending  December  31,  2006.  Refer to the stock based
compensation  information  presented  earlier in this note for discussion of the
methodology.  The impact cannot be determined as the pronouncement  only applies
to grants made in 2006 and later.                                               

NOTE 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.                                                 

On February  25,  2004,  the  Company  settled its  lawsuit  with  Endocare  and
collected $1,887,474 in damages, including interest and legal fees reimbursement
(See Note 3). This  settlement  improved the Company's cash position and enabled
it to pay many of its  outstanding  liabilities.  The  Company  has  focused  on
generating  product  sales  in 2004 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. The Company may need to
raise additional  capital.  Furthermore,  any additional equity financing may be
dilutive  to  stockholders,  and  debt  financing,  if  available,  may  involve
restrictive  covenants.  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 curtail 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.                               

NOTE 3 -  SALE OF CRYOSURGICAL ASSETS                                           

On June 25, 2002 the Company completed the sale of its cryosurgery  product line
and related intellectual property assets to Irvine,  California-based  Endocare,
Inc. In the  transaction,  which was  originally  announced on May 29, 2002, the
Company  transferred  ownership  of  all  of its  cryosurgical  installed  base,
inventory, and related intellectual property, in exchange for $2,200,000 in cash
and 120,022 shares of restricted  Endocare common stock.  Subsequent to closing,
the Company initiated legal proceedings  against Endocare,  Inc., arising out of
Endocare's failure to register the 120,022 shares of its stock (the "Stock"). In
the lawsuit, the Company claimed damages of $1,648,935,  comprising the proceeds
that could have been realized had Endocare properly  registered the Stock within
the time  frame set forth in the  Registration  Rights  Agreement  entered  into
between the                                                                     

15

ARS
18th Page of 24
TOC
1st
Previous
Next
↓Bottom
Just 18th
parties.  Endocare  filed an answer and  counterclaim,  seeking  damages of over
$5,000,000 as a result of various  alleged  breaches by the Company of the Asset
Purchase Agreement entered into between the parties.  Trial in this matter began
on March 31, 2003 and concluded on April 3, 2003. On October 10, 2003, the Court
issued a Final  Order and  Judgment  in favor of the  Company  in the  amount of
$1,648,935  plus  prejudgment  interest.  On  February  25,  2004,  the  Company
collected $1,887,474 from Endocare for damages, interest, and legal fees.       

NOTE 4 -  INVENTORIES                                                           

Inventories consist of the following at December 31, 2004 and 2003:             

2004        2003                
-------     -------                 

Raw materials         $46,340     $20,309                                       
Finished goods         47,979      19,496                                       
------------------------------------------                                      
TOTAL                 $94,319     $39,805                                       
==========================================                                      

NOTE 5 - LEGAL SETTLEMENT RECEIVABLE                                            

The Company  classifies its  marketable  securities as  "available-for-sale"  as
defined under  Financial  Accounting  Standard No. 115,  "Accounting for Certain
Investments in Debt and Equity  Securities." At December 31, 2002, the Company's
marketable  securities consisted of 120,022 shares of Endocare restricted common
stock that were received in connection with the sale of Cryosurgical assets (See
Note 3). Pursuant to the terms of the sale,  Endocare was required to have filed
a  registration  statement  with  the SEC  covering  the sale of the  shares  by
September 22, 2002, thereby removing the restriction. The registration statement
was never filed.  As a result,  the Company  engaged in litigation in connection
with such  failure to file the  registration  statement  (See Note 3). Given the
lack  of  marketability  due to the  restriction,  the  uncertainty  of  pending
litigation  against  Endocare and the  significant  decline of Endocare's  stock
price,  the Company  considered the value of the securities to have  temporarily
declined at December 31, 2002, and recorded an unrealized  loss of $1,434,263 in
the  Statement  of  Comprehensive  Loss for the year then ended.  On October 10,
2003, the Company was awarded  $1,648,935 plus accrued  interest and the ability
to petition the Court for its  reasonable  legal fees. On February 25, 2004, the
Company  settled all of its claims against  Endocare,  including legal fees, and
collected $1,887,474 from Endocare for damages,  legal fees, and interest though
the date of settlement.  In addition, the Company surrendered the 120,022 shares
back to Endocare.  Accordingly,  at December 31,  2003,  the Company  recorded a
receivable  for  $1,871,945  for  the  settlement  and the  previously  recorded
unrealized loss of $1,434,263 was removed from other comprehensive loss.        

NOTE 6 - NOTES PAYABLE                                                          

At December 31, 2004 and 2003, notes payable consisted of the following:        

                                                   2004         2003
                                                   --------     --------

NOTES PAYABLE - RELATED PARTIES:                                                
Note payable to stockholder, unsecured, bearing                                 
interest at 10%,  due April 2004. The note                                
granted a warrant to the payee to purchase                                
1,000,000 shares of common stock at $0.25 per                             
share (subsequently changed to $0.08), as                                 
additional consideration for the loan (See                                
Note 8)                                             $     --     $250,000 

Note payable to stockholder, unsecured, bearing                                 
interest at 10%, due March 2004. The note                                 
granted a warrant to the payee to purchase                                
500,000 shares of common stock at $0.08 per                               
share, as additional consideration for the loan                           
(See Note 8)                                              --      100,000 

Note payable to stockholder, unsecured, bearing                                 
interest at 10%, due May 2004. The note                                   
granted a warrant to the payee to purchase                                
500,000 shares of common stock at $0.08 per                               
share, as additional consideration for the loan                           
(See Note 8)                                              --      100,000 

Note payable to stockholder, unsecured, bearing                                 
interest at 10%, due May 2004. The note                                   
granted a warrant to the payee to purchase                                
250,000 shares of common stock at $0.08 per                               
share, as additional consideration for the loan                           
(See Note 8)                                              --       50,000 

Note payable to stockholder, unsecured, bearing                                 
interest at 10%, due May 2004. The note                                   
granted a warrant to the payee to purchase                                
750,00 shares of common stock at $0.08 per                                
share, as additional consideration for the loan                           
(See Note 8)                                              --      150,000 
----------------------------------------------------------------------------    
TOTAL NOTES PAYABLE                                                             
  - RELATED PARTIES                                      --      650,000

NOTES PAYABLE - OTHER:                                                          
Note payable to equipment vendor, unsecured,                                    
noninterest bearing, payable in monthly                                   
installments of $10,000, due October 2003                                 
The Company is currently in default on the                                
note                                                      --       55,524 
----------------------------------------------------------------------------    
TOTAL NOTES PAYABLE                                    $     --     $705,524    
============================================================================    

16

ARS
19th Page of 24
TOC
1st
Previous
Next
↓Bottom
Just 19th
                                                        [BIOLIFE SOLUTIONS LOGO]

NOTE 7 -  INCOME TAXES                                                          

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

                                           2004           2003
                                          ---------      ---------

Federal taxes (benefit) at statutory rate        $(252,675)     $(443,145)      
State income taxes (benefit), net of federal                                    
expense/benefit                                 (36,787)       (60,216)   
Expiration of net of operating loss                                             
carryforwards                                   183,758             --    
Expiration of tax credits                           20,000             --       
Change in valuation allowance                       83,424        523,537       
Other                                                2,280        (20,176)      
-------------------------------------------------------------------------       

PROVISION FOR INCOME TAXES, NET                  $      --      $      --       
=========================================================================       

The  components of the deferred tax asset at December 31, 2004 and 2003,  are as
follows:                                                                        

Net operating loss carryforwards               $14,043,789    $13,972,330       
Tax credits                                        697,000        717,000       
Accrued Compensation                                44,137         19,026       
-------------------------------------------------------------------------       
Total                                           14,784,926     14,708,356       

Deferred tax liabilities, depreciation              (2,884)        (9,738)      

Less: Valuation allowance                      (14,782,042)   (14,698,618)      
-------------------------------------------------------------------------       

NET DEFERRED TAX ASSET                         $        --    $        --       
=========================================================================       

The Company provides a valuation  allowance for deferred tax assets when, in its
opinion, 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, 2004:                  

           R&D
Year of        Net Operating        Tax                         
Expiration          Losses         Credits                        
--------------   --------------  --------------                       
2005             1,747,000          42,000                  
2006             2,523,000          88,000                  
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               655,000              --                  
-----------------------------------------------                       
TOTAL             $36,056,000       $ 697,000                     
===============================================                       

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.                                                                        

NOTE 8 -  STOCKHOLDERS' EQUITY                                                  

The Company has granted  options and warrants to consultants and others who have
provided  services to the  Company at an exercise  price per share not less than
the market price of the common  stock on the date of grant.  The  expiration  of
such  options  and  warrants  range from one to ten years with  various  vesting
arrangements.                                                                   

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                                      

17

ARS
20th Page of 24
TOC
1st
Previous
Next
↓Bottom
Just 20th
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.                                                                        

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

Dividends - Series F preferred  stockholders  are 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 is based upon the
market value of the common stock on the date such  dividends  are  declared.  No
dividends were declared or paid during 2004 and 2003 on the preferred stock. The
Series F preferred 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,  2004 and 2003  dividends  in  arrears  on the
cumulative preferred stock were $390,000 and $270,000, respectively.            

Conversion  Rights - Each Series F preferred share is 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 shall automatically be converted into common stock at 400 shares
of common stock for each share of preferred stock.                              

Voting  Rights - The  Series F  preferred  stock has 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 is required.                                        

Senior  Ranking  - The  Company  may  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  are  equal in their
seniority.                                                                      

Liquidation  Preference  - In the  event  of any  liquidation,  dissolution,  or
winding up of the Company,  the Series F preferred  stockholders are 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 has
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.              

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

Dividends - Series G preferred  stockholders  are 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 is based upon the average market value of the common stock for
the  thirty  calendar  days  immediately  prior to the date such  dividends  are
declared.  No dividends  have been declared or paid on the preferred  stock.  At
December  31, 2004 and 2003  dividends  in arrears on the  cumulative  preferred
stock were $113,821 and $10,462, respectively.                                  

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

18

ARS
21st Page of 24
TOC
1st
Previous
Next
↓Bottom
Just 21st
                                                        [BIOLIFE SOLUTIONS LOGO]

Voting  Rights - The  Series G  preferred  stock has 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 merger),  the
affirmative vote of the holders of at least two thirds of the outstanding shares
of Series G preferred stock is required.                                        

Senior  Ranking  - The  Company  may  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  are  equal in their
seniority.                                                                      

Liquidation  Preference  - In the  event  of any  liquidation,  dissolution,  or
winding up of the Company,  the Series G preferred  stockholders are 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.  The Company recorded additional paid-in capital
of $47,589 and $139,677,  respectively,  to reflect the fair market value of the
warrants issued and recorded a corresponding  expense in the Company's Statement
of Operations.                                                                  

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.
The Company recorded  additional paid in capital of $211,713 to reflect the fair
market  value of the  warrants  issued.  In  addition,  as a  consideration  for
receiving a one-year extension for a note payable  originally  maturing in March
2003,  the Company  reduced the exercise  price of the warrant,  issued with the
note in March 2002, from $0.25 to $0.08. The Company recorded additional paid in
capital of $74,595 to reflect  the fair  market  value of the change in exercise
price of the warrant.                                                           

In August 2003, the Company  issued six separate  five-year  warrants  valued at
$90,922 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,
2004 and 2003:                                                                  

                            Year Ended                Year Ended
                             December 31, 2004         December 31, 2003
                              -----------------------   ----------------------
                                           Wgtd. Avg.               Wgtd. Avg.
                                           Exercise                 Exercise
                              Shares        Price       Shares       Price
------------------------------------------------------------------------------- 
Outstanding at beginning                                                        
of year                     27,268,858     $ 0.20      6,484,000     $0.61
Granted                                --         --     20,784,858     $0.08   
Cancelled                          (2,000)    $(2.00)            --        --   
-------------------------------------------              ----------             
Outstanding at end                                                              
of year                     27,266,858     $ 0.20     27,268,858     $0.20
===========================================              ==========             
Warrants exercisable at                                                         
year end                    27,266,858     $ 0.20     27,268,858     $0.20
===========================================              ==========             

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.  During 2004, the Board of Directors
approved an increase in the number of shares available for issuance to 7,500,000
shares.  The increase is subject to  shareholder  approval at the  shareholder's
meeting to be held in 2005.  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.                          

19

ARS
22nd Page of 24
TOC
1st
Previous
Next
↓Bottom
Just 22nd
The following is a summary of stock option activity under the plans for 2004 and
2003, and the status of stock options  outstanding and available under the plans
at December 31, 2004 and 2003:                                                  

                              Year Ended                Year Ended
                               December 31, 2004         December 31, 2003
                               -----------------------   -----------------------
                                            Wgtd. Avg.               Avg.  Wgtd.
                                           Exercise                 Exercise
                              Shares       Price        Shares       Price
                               -------------------------------------------------
Outstanding at beginning       4,176,000     $  0.49     4,216,000     $ 0.49   
of year                                                                 
Granted                               --          --            --         --   
Cancelled                        (20,000)     (10.63)      (40,000)     (1.25)  
--------------------------------------------------------------------------------
Outstanding at end of year     4,156,000     $  0.44     4,176,000     $ 0.49   
================================================================================

Stock options exercisable                                                       
 at year end                2,906,000     $  0.52     2,376,000     $ 0.66
================================================================================

The following table summarizes  information  about stock options  outstanding at
December 31, 2004:                                                              

              Weighted
            Number               Average          Weighted
Range of          Outstanding           Remaining         Average         
Exercise          at December          Contractual        Exercise        
Prices            31, 2004                Life            Price         
------------------------------------------------------------------------        

$0.25             3,400,000               7.05            $0.25         
1.25               741,000               3.91             1.25        
2.50                15,000               2.11             2.50        
------------------------------------------------------------------------        

         4,156,000               6.47            $0.44
========================================================================        

The Company has  25,000,000  shares of  authorized  common stock at December 31,
2004 and 2003, of which 12,413,209 shares are issued.  During 2003, the Board of
Directors  approved an  increase in the  authorized  shares from  25,000,000  to
100,000,000 subject to shareholders'  approval.  At December 31, 2004, there are
53,449,421 of common stock that could be issued upon the  conversion/exercise of
stock warrants,  options and convertible  preferred  stock.  The following table
summarizes  the potential  shares to be issued upon  conversion/exercise  of the
above instruments:                                                              

Series F preferred stock                                  4,800,000             
Series G preferred stock                                 17,226,563             
Common stock options                                      4,156,000             
Common stock warrants                                    27,266,858             
-------------------------------------------------------------------             

TOTAL                                                    53,449,421             
===================================================================             

On December 27, 2004, the Board of Directors approved the granting of options to
certain  employees and  consultants for the purchase of 910,000 shares of common
stock at $.08 per share  with 50% of the  options  vesting  immediately  and the
balance vesting in 12 months. The options are subject to shareholder approval of
increasing the Company's authorized stock as noted above.                       

NOTE 9 - RELATED PARTY TRANSACTIONS                                             

The  Company  incurred  $80,118 and $79,000 in legal fees during the years ended
December 31, 2004 and 2003, respectively, for services provided by a law firm in
which  Howard S.  Breslow,  a director  and  stockholder  of the  Company,  is a
partner.  For the year ended  December 31, 2003, the Company also issued 282,910
warrants  exercisable at $0.08 per share as partial  consideration  for services
rendered by the related party. At December 31, 2004 and 2003,  accounts  payable
includes $28,027 and $67,396, respectively, due to the related party.           

On March 15, 2004, the Company entered into a three year research agreement (the
"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,  who is also the son of the 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) 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  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, 2004,  the Company  recognized  $117,858 and
$64,822 for facilities and management  services,  respectively.  At December 31,
2004, the Company was due $2,290 from CPSI.                                     

In January 2004,  BioLife signed a 3 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.
Renovation of the new facility was completed in April 2004. The Company's  Chief
Executive Officer is a partial owner of Field Afar Properties, LLC.             

20

ARS
23rd Page of 24
TOC
1st
Previous
Next
↓Bottom
Just 23rd
                                                        [BIOLIFE SOLUTIONS LOGO]

See Note 8 for other related party financing transactions.                      

NOTE 10 - COMMITMENTS                                                           

LEASES: The Company leases equipment as lessee,  under operating leases expiring
on  various  dates  through  2005.  The  leases  require  monthly   payments  of
approximately $2,340.                                                           

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

Year Ending                     Office                                      
December 31     Equipment      (Note 9)       Total                         
-------------------------------------------------------                         
2005         $  14,273      $  74,400     $ 88,673                    
2006                --         74,400       74,400                    
2007                --         12,400       12,400                    
-------------------------------------------------------                         
TOTAL             $  14,273      $ 161,200     $175,473                         
=======================================================                         

Rental expense for facilities and equipment operating leases for the years ended
December 31, 2004 and 2003, totaled $86,647 and $51,014, respectively.          

EMPLOYMENT  AGREEMENT:  The Company has an employment  agreement with the CEO of
the Company which expires in June 2005, and is renewable for an additional year.
The agreement provides for certain minimum  compensation per month and incentive
bonuses  at the  discretion  of the Board of  Directors.  The  officer  received
incentive stock options to purchase shares of the Company's common stock,  which
are included in the table in Note 8.                                            

NOTE 11 - CONCENTRATION OF RISK                                                 

SIGNIFICANT CUSTOMERS:  Sales to individual customers representing more than 10%
of total revenues totaled  approximately  $396,000 and $84,000 in 2004 and 2003,
respectively.  These amounts  represent sales to three customers in 2004 and one
customer in 2003.  Of the $396,000 in 2004,  approximately  $197,000 was derived
from  management  fees,  facilities  fees,  and product sales to CPSI, a related
party (See Note 9).  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,  2004,  the  Company  recognized  $117,858  and $64,822 for
facilities and management services, respectively.                               

At December 31, 2004, three customers  accounted for  approximately 85% of total
accounts  receivable,  and at December 31, 2003,  three customers  accounted for
approximately 71% of total accounts receivable.                                 

21

ARS
Last Page of 24
TOC
1st
Previous
Next
↓Bottom
Just 24th
                                                        [BIOLIFE SOLUTIONS LOGO]

CORPORATE INFORMATION                                                           

EXECUTIVE OFFICES                                                               
171 Front Street                                                                
Owego, NY  13827                                                                

DIRECTORS AND EXECUTIVE OFFICERS                                                

John G. Baust                                                                   
President, Chief Executive Officer and Director                                 

Howard S. Breslow, Esq.                                                         
Director, Secretary                                                             

Roderick de Greef                                                               
Director                                                                        

Thomas Girschweiler                                                             
Director                                                                        

AUDITORS                                                                        

Aronson & Company                                                               
Certified Public Accountants                                                    
700 King Farm Boulevard                                                         
Rockville, MD  20850                                                            

LEGAL COUNSEL                                                                   

Breslow & Walker, LLP                                                           
767 Third Avenue                                                                
New York, NY  10017                                                             

TRANSFER AGENT                                                                  

American Stock Transfer & Trust Company                                         
59 Maiden Lane                                                                  
New York, NY  10038                                                             

STOCK LISTING                                                                   

The Common Stock trades 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.                                                      

QUARTERLY COMMON STOCK DATA                                                     
HIGH AND LOW BID                                                                

------------------------------------------------                                
FISCAL 2004               HIGH              LOW                                 
------------------------------------------------                                
1st Quarter              $0.24             $0.08                                
2nd Quarter              $0.23             $0.14                                
3rd Quarter              $0.19             $0.13                                
4th Quarter              $0.14             $0.07                                

------------------------------------------------                                
FISCAL 2003               HIGH              LOW                                 
------------------------------------------------                                
1st Quarter              $0.17             $0.11                                
2nd Quarter              $0.22             $0.11                                
3rd Quarter              $0.15             $0.08                                
4th Quarter              $0.18             $0.08                                

         The above quotations  represent prices between dealers,  do not include
retail mark-ups, markdowns, or commissions and do not necessarily reflect actual
transactions.                                                                   

         As of July 30, 2005 there were  approximately  549 holders of record of
Common Stock.  Since many shares are  registered  in street name,  the number of
beneficial owners is considerably higher.                                       

         The Company has never paid cash dividends on its Common Stock.  Payment
of dividends,  if any, will be within the  discretion of the Company's  Board of
Directors  and  will  depend,   among  other  factors,   on  earnings,   capital
requirements,  and the operating and financial  condition of the Company. At the
present time, the Company's  anticipated  capital  requirements are such that it
intends to follow a policy of  retaining  earnings,  if any, in order to finance
its business.                                                                   

FORM 10-KSB                                                                     

Copies  of the  Company's  Annual  Report  on Form  10-KSB,  as  filed  with the
Securities  and Exchange  Commission  (exclusive  of exhibits)  may be obtained,
without charge, by writing to:                                                  

BIOLIFE SOLUTIONS, INC.                                       
171 FRONT STREET                                              
OWEGO, NY  13827                                              
ATTN:  DR. JOHN G. BAUST                                      

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘ARS’ Filing		Date		First		Last			Other Filings
		8/30/08		21
		12/31/06		17					10KSB,  5
Filed on / Effective on:		8/31/05
		7/30/05		24
		7/26/05		4
		2/4/05		9
For Period End:		12/31/04		6		23			10KSB,  10KSB/A
		12/27/04		22
		3/15/04		22
		2/25/04		17		18
		12/31/03		6		23			10KSB,  NT 10-K
		10/10/03		18
		4/3/03		18
		3/31/03		18					10QSB,  NT 10-K
		1/1/03		13
		12/31/02		18					10KSB,  NT 10-K
		9/22/02		18
		6/25/02		15		17
		5/29/02		17
									List all Filings