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What changed in BIOLIFE SOLUTIONS INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of BIOLIFE SOLUTIONS INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+302 added−311 removedSource: 10-K (2024-02-29) vs 10-K (2023-03-31)

Top changes in BIOLIFE SOLUTIONS INC's 2023 10-K

302 paragraphs added · 311 removed · 212 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

54 edited+20 added−17 removed21 unchanged
Biggest changeOur products are designed to increase our customers’ product yield and functionality, and we are committed to supporting our customers with strong customer service and expertise in the clinical applications of our products. 7 Table of Contents Business Operations Research and development Our research and development activities are focused on evaluating new, potentially disruptive technologies, which may be applicable throughout the cell and gene therapy manufacturing workflow.
Biggest changeBusiness Operations Research and development Our research and development activities are focused on evaluating new, potentially disruptive technologies which may add value throughout the cell and gene therapy manufacturing and delivery workflow. We routinely assess and analyze the strengths and weaknesses of competitive and adjacent products, and are engaged in business development discussions on an ongoing basis.
Limited stability is especially critical in the CGT field, where harvested cells and tissues will lose viability over time, if not maintained appropriately at normothermic body temperature (37ºC) or stored in a hypothermic state in an effective preservation medium. Chilling (hypothermia) is used to reduce metabolism and delay degradation of harvested cells and tissues.
Limited stability is especially critical in the CGT field, where harvested cells and tissues will lose viability over time if not maintained appropriately at normothermic body temperature (37ºC) or stored in a hypothermic or cryogenic state in an effective preservation medium. Chilling (hypothermia) is used to reduce metabolism and delay degradation of harvested cells and tissues.
Our products are designed to increase our customers’ product yield and we are committed to supporting our customers with strong customer service and applications expertise. We leverage our numerous relationships with the leading cell and gene therapy companies that use our expanded product portfolio of bioproduction tools and services to cross-sell our other parts of the portfolio.
Our products are designed to increase our customers’ product yield and we are committed to supporting our customers with strong customer service and applications expertise. We leverage our numerous relationships with leading cell and gene therapy companies that use our expanded offering of bioproduction tools and services to cross-sell other parts of the portfolio.
The results of independent testing demonstrate that our biopreservation media products significantly extend shelf-life and improve cell and tissue post-thaw viability and function. Our products have demonstrated improved biopreservation outcomes, including greatly extended shelf-life and post-thaw viability, across a broad array of cell and tissue types.
The results of independent testing demonstrate that our biopreservation media products significantly extend shelf-life and improve cell and tissue post-thaw viability and function. Our products have demonstrated improved biopreservation outcomes, including greatly extended shelf-life and post-thaw viability and yield across a broad array of cell and tissue types.
Our technology can provide our CGT customers with significant shelf-life extension of biologic source material and final cell products and can also greatly improve post-preservation cell and tissue viability and function. Our biopreservation media are serum-free, protein-free, fully defined, and manufactured under current Good Manufacturing Practices (cGMP). We strive to source wherever possible, the highest available grade, multi-compendium raw materials.
Our technology can provide our CGT customers with significant shelf-life extension of biologic source material and final cell products, and can also greatly improve post-preservation cell and tissue viability and function. Our biopreservation media are serum-free, protein-free, fully defined, and manufactured under current Good Manufacturing Practices ("cGMP"). We strive to source wherever possible the highest available grade, Multi-compendial raw materials.
Sexton's bioproduction tools portfolio includes human platelet lysates for cell expansion, which reduces risk and improves downstream performance over fetal bovine serum, human serum, and other chemically defined media, CellSeal® closed system vials that are purpose-built rigid containers used in CGT that can be filled manually or with high throughput systems, and automated cell processing machines that bring multiple processes traditionally performed by manual techniques under a higher level of control to protect therapies from loss or contamination.
Sexton's bioproduction tools portfolio includes human platelet lysates for cell expansion, which reduces risk and improves 6 Table of Contents downstream performance over fetal bovine serum, human serum, and other chemically defined media, CellSeal ® closed system vials that are purpose-built rigid containers used in CGT that can be filled manually or with high throughput systems, and automated cell processing machines that bring multiple processes traditionally performed by manual techniques under a higher level of control to protect therapies from loss or contamination.
The laws of some foreign countries in which we may sell our products do not protect our proprietary rights to the same extent as do the laws of the United States.
The laws of some foreign countries in which we sell our products do not protect our proprietary rights to the same extent as do the laws of the United States.
We estimate that annual revenue from each customer commercial application in which our products are used could range from $500,000 to $2.0 million, if such application is approved and our customer commences large scale commercial manufacturing of the biologic-based therapy. Human platelet lysate media, cryogenic vials and automated cell-processing fill machines In September 2021, we acquired Sexton Biotechnologies, Inc.
We estimate that annual revenue from each customer commercial application in which our products are used could range from $0.5 million to $2.0 million if such application is approved and our customer commences large scale commercial manufacturing of the biologic-based therapy. Human platelet lysate media, cryogenic vials and automated cell-processing fill machines In September 2021, we acquired Sexton Biotechnologies, Inc.
A group of isothermal, standard, and carousel LN2 freezers in our freezers and thaw systems product line is currently regulated as Class 2 medical devices in the EU. 9 Table of Contents Intellectual property The following table lists our granted and pending patents.
A group of isothermal, standard, and carousel LN2 freezers in our freezers and thaw systems product line is currently regulated as Class 2 medical devices in the EU. Intellectual property The following table lists our granted and pending patents.
This storage equipment includes upright freezer racks, chest freezer racks, liquid nitrogen freezer racks, canisters/cassettes and frames as well as laboratory boxes and dividers. Due to our onsite design and manufacturing capability, racks and canisters can be customized to address customers’ varying requirements.
This storage equipment includes upright freezer racks, chest freezer racks, liquid nitrogen freezer racks, canisters/cassettes and frames, as well as laboratory boxes and dividers. Due to our onsite design and manufacturing capabilities, racks and canisters can be customized to address customers’ varying requirements.
Over the last several years, we have built a strong reputation as a trusted supplier of critical tools used in cell and gene therapy manufacturing and the broader biopharma market. We believe that our relationships and reputation could enable us to drive incremental revenue growth through the sale of additional products to a captive customer base.
Over the last several years, we have built a strong reputation as a trusted supplier of critical tools used in cell and gene therapy and biopharma manufacturing. We believe that our relationships and reputation could enable us to drive further incremental revenue growth through the sale of additional products to a captive customer base.
All of our cGMP products are serum-free, protein-free and are formulated and filled using aseptic processing. We strive to use USP/Multicompendial grade or the highest quality available synthetic components. All of these features benefit prospective customers by facilitating the qualification process required to incorporate our products into their regulatory filings.
All of our cGMP products are serum-free, protein-free and are formulated and filled using aseptic processing. We strive to use USP/Multi-compendial grade or the highest quality available synthetic components. All of these features benefit prospective customers by facilitating the qualification process required to incorporate our products into their regulatory filings.
For our Sexton vials and media, we estimate that annual revenue from each customer commercial application in which these products are used could also range from $500,000 to $2.0 million, if such application is approved and our customer commences large scale commercial manufacturing of the biologic-based therapy.
For our Sexton vials and media, we estimate that annual revenue from each customer commercial application in which these products are used could also range from $0.5 million to $2.0 million, if such application is approved and our customer commences large scale commercial manufacturing of the biologic-based therapy.
The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov . 10 Table of Contents
The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov . 12 Table of Contents
Complementary products portfolio Expanding Participation in Customers ’ Workflow Our strategy We are focused on the development, production, and commercialization of differentiated, best-in-class products and services that facilitate the manufacturing, delivery, and storage of cell and gene therapies and biologic materials.
Complementary products portfolio Expanding Participation in Customers ’ Workflow 8 Table of Contents Our strategy We are focused on the development, production, and commercialization of differentiated, best-in-class products and services that facilitate the manufacturing, delivery, and storage of cell and gene therapies and biologic materials.
For certain components in which we do not have a secondary supplier, we estimate that it would take up to six months to find and qualify a second source. Order quantities and lead times for externally sourced components are based on our forecasts, which are derived from historical demand and anticipated future demand.
For certain components without a secondary supplier, we estimate that it would take up to six months to find and qualify a second source. Order quantities and lead times for externally sourced components are based on our forecasts, which are derived from historical demand and anticipated future demand.
SciSafe operates six cGMP compliant storage facilities in the United States and one state-of-the-art facility in the Netherlands, which is registered with the European Regulatory body in Netherlands (IGJ) for Good Distribution of Active Pharmaceutical Ingredients.
SciSafe operates five cGMP compliant storage facilities in the United States and one facility in the Netherlands, which is registered with the European Regulatory body in Netherlands (IGJ) for Good Distribution of Active Pharmaceutical Ingredients.
To date, we have not experienced significant difficulties in obtaining raw materials for the manufacture of our LN2 freezers freezer and related accessories. Our ThawSTAR automated, water-free thawing products are produced by a CMO based in the United States.
We are reliant on certain critical suppliers for some components. To date, we have not experienced significant difficulties in obtaining raw materials for the manufacture of our LN2 freezers and related accessories. Our ThawSTAR automated, water-free thawing products are produced by a CMO based in the United States.
We cannot be certain that the research, development and commercialization efforts of our competitors will not render any of our existing or potential products obsolete. Human capital We view our employees and our culture as key to our success. As of December 31, 2022, we had 466 full time employees and 1 part-time employee.
We cannot be certain that the research, development and commercialization efforts of our competitors will not render any of our existing or potential products obsolete. 11 Table of Contents Human capital We view our employees and our culture as key to our success. As of December 31, 2023, we had 409 full time employees and 5 part-time employees.
Storage and cold chain services – Production of our evo cold chain management hardware products is performed by external CMOs and by personnel in our Albuquerque, New Mexico facility. During the year-ended December 31, 2022, we began to transition our operations from the Albuquerque, New Mexico facility to our facility in Bruce Township, Michigan.
Biostorage services – Production of our evo cold chain management hardware products is performed by external CMOs and by personnel in our Bruce Township, Michigan facility. As of the year-ended December 31, 2023, we fully transitioned our manufacturing operations from Albuquerque, New Mexico to our facility in Bruce Township, Michigan.
To accommodate customer requirements, we offer customizable features including wide bodied and extended height models. Our high-capacity controlled rate freezers (“HCFR”) are designed for large volume storage with customizable freezing programs and the ability to monitor conditions in real time. To accompany the offerings of cryogenic freezer equipment, we supply equipment for storing critically important biological materials.
Our high-capacity controlled rate freezers (“HCFR”) are designed for large volume storage with customizable freezing programs and the ability to monitor conditions in real time. 7 Table of Contents To accompany the offerings of cryogenic freezer equipment, we supply equipment for storing critically important biological materials.
We believe this CMO has the skills, experience and capacity needed to meet our quality standards and demand expectations for the product line. We estimate that it would take up to six months to find and qualify an alternative CMO.
We believe this CMO has the skills, experience and capacity needed to meet our quality standards and demand expectations for the product line. We estimate that it would take up to six months to find and qualify an alternative CMO. To date, we have not experienced significant difficulties in obtaining our automated thaw products from our CMO.
The evo Dry Vapor Shipper (“DVS”) is specifically marketed for use with cell and gene therapies. The evo DVS has an improved form factor and ergonomics over the traditional dewar, including extended thermal performance, reduced liquid nitrogen recharge time, improved payload extractors, and ability to maintain temperature for longer periods if tilted on its side.
The evo Dry Vapor Shipper (“DVS”) is specifically marketed for use with cell and gene therapies. The evo DVS has several design improvements over traditional competing shipping containers, providing benefits such as extended thermal performance, reduced liquid nitrogen recharge time, improved payload extractors, and the ability to maintain temperature for longer periods if the shipper is tilted on its side.
We believe we are well positioned to address many of the manufacturing difficulties in the process of producing cell and gene therapies. The bioproduction process Our various products and services currently integrate into several steps in our customers’ bioproduction workflow process for cell and gene therapies. See the diagram below for an illustration of this process and our product roles.
We believe we are well positioned to address many of the unique manufacturing challenges in the process of delivering cell and gene therapies. The bioproduction process Our various products and services currently integrate into several steps in our customers’ bioproduction workflow process for cell and gene therapies.
Our evo platform consists of rentable cloud-connected shippers that include technologies enabling tracking software to provide real-time information on geolocation, payload temperature, ambient temperature, tilt of shipper, humidity, altitude, and real-time alerts when a shipper has been opened. Our internally developed evo.is software allows customers to customize alert notifications both in data measurements and user requirements.
Our cloud-connected shipping containers and evo.is cloud app allows biologic products to be traced and tracked in real time. Our evo platform consists of rentable cloud-connected shippers that include technologies enabling tracking software to provide customizable, real-time information on geolocation, payload temperature, ambient temperature, tilt of shipper, humidity, altitude, and alerts when a shipper has been opened.
However, subjecting biologic material to hypothermic environments induces damaging molecular stress and structural changes. Although cooling successfully reduces metabolism (i.e., lowers demand for energy), various levels of cellular damage and death occur when using suboptimal methods.
However, subjecting biologic material to hypothermic or cryogenic environments and subsequently rewarming them may also induce damaging molecular stress and structural changes. Although cooling successfully reduces metabolism (i.e., lowers demand for energy), various levels of cellular damage and death occur when using suboptimal methods. Biopreservation media can mitigate the damage from exposure to hypothermic or cryogenic temperatures and subsequent rewarming.
We are not required to sponsor formal prospective, controlled clinical trials in order to establish safety and efficacy. However, to support our current and prospective clinical customers, we manufacture and release our products in compliance with cGMP and other relevant quality standards.
However, to support our current and prospective clinical customers, we manufacture and release our products in compliance with cGMP and other relevant quality standards.
Issued Patents Patents Applied For Registered Trademarks Cell processing 58 9 37 Freezers and thaw systems 85 66 24 Storage and cold chain services 11 24 9 Total 154 99 70 Competition Our bioproduction products and services compete on the basis of value proposition, performance, quality, cost effectiveness, and application suitability with numerous established technologies.
Issued Patents Patents Applied For Registered Trademarks Cell processing 56 16 41 Freezers and thaw systems 85 71 25 Biostorage services 13 33 6 Total 154 120 72 Competition Our bioproduction products and services compete on the basis of value proposition, performance, quality, cost effectiveness, and application suitability with numerous established technologies.
We now offer products that integrate into the critical steps of preservation, thawing, fixed storage, and transportable storage under controlled conditions.
See the diagram below for an illustration of this process and our product roles. We now offer products that integrate into the critical steps of preservation, thawing, and both fixed and transportable storage under controlled conditions.
Users can configure these freezers to achieve temperatures between -20°C and -86°C. The portfolio was designed to be environmentally friendly and energy efficient, using as little as 2.8 kWh/day at temperatures of -80°C. The freezers do not use compressor-based or cascade refrigeration systems.
The portfolio was designed to be environmentally friendly and energy efficient, using as little as 2.8 kWh/day at temperatures of -80°C. The freezers do not use compressor-based or cascade refrigeration systems. Instead, they use patented free-piston Stirling engine technology that uses fewer moving parts.
We operate six storage facilities in the USA and one facility in the Netherlands. Cloud connected “ smart ” shipping containers We are a leading developer and supplier of next generation cold chain management tools for cell and gene therapies. Our cloud-connected shipping containers and evo.is cloud app allows biologic products to be traced and tracked in real time.
Our state-of-the-art monitoring systems allow customers real time tracking of the storage temperatures of their materials throughout the logistics process. We operate five storage facilities in the USA and one facility in the Netherlands. Cloud connected “ smart ” shipping containers We are a leading developer and supplier of next generation cold chain management tools for cell and gene therapies.
Our products Our bioproduction tools and services are comprised of three revenue lines that contain seven main offerings: ● Cell processing ○ Biopreservation media ○ Human platelet lysate media (“hPL”), cryogenic vials, and automated cell-processing fill machines ● Freezers and thaw systems ○ Ultra-low temperature freezers ○ Cryogenic freezers and accessories ○ Automated thawing devices ● Storage and cold chain services ○ Biological and pharmaceutical material storage ○ Cloud connected “smart” shipping containers Cell processing Biopreservation media Our proprietary biopreservation media products, HypoThermosol ® FRS and CryoStor ® , are formulated to mitigate preservation-induced, delayed-onset cell damage and death, which result when cells and tissues are subjected to reduced temperatures.
Our products Our bioproduction tools and services are comprised of three revenue lines that contain seven main offerings: • Cell processing ◦ Biopreservation media ◦ Human platelet lysate media (“hPL”), cryogenic vials, and automated cell-processing fill machines • Freezers and thaw systems ◦ Ultra-low temperature freezers ◦ Cryogenic freezers and accessories ◦ Automated thawing devices • Biostorage services ◦ Biological and pharmaceutical material storage and transport ◦ Cloud-connected “smart” shipping containers Subsequent to the second quarter of 2023, we began to seek divestment of our Global Cooling, Inc.
According to the Alliance for Regenerative Medicine (“ARM”), “2023 State of the Industry Report” there were over 2,220 ongoing clinical trials utilizing regenerative medicine at the end of Q4 2022, with an 11% growth in CGT development companies throughout 2022. ARM also reported there were over $12.6 billion in total global financings in the regenerative market raised in 2022.
According to the Alliance for Regenerative Medicine (“ARM”), “2024 State of the Industry Briefing” there were approximately 1,900 ongoing clinical trials utilizing regenerative medicine at year-end 2023, with continued growth in CGT development companies throughout 2023. ARM also reported there was approximately $12 billion invested in the regenerative medicine market in 2023.
Traditional biopreservation media range from simple “balanced salt” (electrolyte) formulations to complex mixtures of electrolytes, energy substrates such as sugars, osmotic buffering agents and antibiotics.
Traditional biopreservation media range from simple “balanced salt” (electrolyte) formulations to complex mixtures of electrolytes, energy substrates such as sugars, osmotic buffering agents, and antibiotics. The resulting limited stability from the use of these traditional biopreservation media formulations is a significant shortcoming that our optimized proprietary products address with great success.
One facility in the United States is certified to the ISO 20387:2018 standard and all facilities, both in the United States and the Netherlands, are certified to the ISO 9001:2015 standard. We rely on outside suppliers for the build out of our cold-storage chambers and stand-alone freezers.
One facility in the United States is certified to the ISO 20387:2018 standard, and all facilities, both in the United States and the Netherlands, are certified to the ISO 9001:2015 standard.
We practice continuous improvement based on routine internal audits as well as external feedback and audits performed by our partners and customers. In addition, we maintain a business continuity management system that focuses on key areas such as contingency planning, security stocks and off-site storage of raw materials and finished goods to ensure continuous supply of our products.
In addition, we maintain a business continuity management system that focuses on key areas such as contingency planning, safety stocks and off-site storage of raw materials and finished goods to ensure continuous supply of our products. Freezers and thaw systems – Ultra-low temperature (“ULT”) freezers are produced in our facilities in Athens, Ohio.
Our CryoStor formulations incorporate multiple permeating and non-permeating cryoprotectant agents which allow for multiple mechanisms of protection and reduces the dependence on a single cryoprotectant. We believe that our products offer significant advantages over in-house formulations, or commercial “generic” preservation media, including, time savings, improved quality of components, more rigorous quality control release testing, cost effectiveness, and improved preservation efficacy.
We believe that our products offer significant advantages over in-house ("home brew") formulations or commercial “generic” biopreservation media. These advantages include time savings, more consistent and higher quality of components, more rigorous quality control release testing, cost effectiveness, and improved preservation efficacy.
Automated thawing devices The ThawSTAR ® line includes automated vial and cryobag thawing products that control the heat and timing of the thawing process of biologic material. Our customizable, automated, water-free thawing products use algorithmic programmed heating plates to consistently bring biologic material from a frozen state to a liquid state in a controlled and consistent manner.
Our customizable, automated, water-free thawing products use algorithmic programmed heating plates to consistently bring biologic material from a frozen state to a liquid state in a controlled and consistent manner, helping reduce damage during the temperature transition while delivering critical process consistency across cell batches.
In 2022, 2021, and 2020, sales to third-party distributors accounted for 50%, 46%, and 45% of our revenue, respectively. During the years ended December 31, 2022 and 2021, we derived approximately 18% and 17% of our revenue from the same customer, respectively. During the year ended December 31, 2020, we derived approximately 13% of our revenue from a different customer.
During the years ended December 31, 2023, 2022, and 2021, we derived approximately 16% , 18%, and 17% of our revenue from the same customer, respectively.
The FDA predicts up to fourteen cell and gene therapy regulatory decisions to be made during 2023. 6 Table of Contents These technologies change the way physicians treat patients. The manufacturing, distribution and the delivery process is significantly different from many other types of medicines and therapies.
In addition, ARM predicts up to 17 US and EU cell and gene therapy regulatory approvals may be granted during 2024. The technologies developed within the CGT market change the ways physicians treat patients. The manufacturing, distribution and the delivery process of these therapies is significantly different from many other types of treatments.
Due to COVID-19, we have experienced increased lead times in acquiring external stand-alone freezers, which we use to store customers’ biologic materials. Product regulatory status Our products are not subject to any specific United States Food and Drug Administration (“FDA”) or other international marketing regulations for drugs, devices, or biologics.
Product regulatory status Our products are not subject to any specific United States Food and Drug Administration (“FDA”) or other international marketing regulations for drugs, devices, or biologics. We are not required to sponsor formal prospective, controlled clinical trials in order to establish safety and efficacy.
We have a diversified portfolio of tools and services that focuses on biopreservation, cell processing, frozen biologic storage products and services, cold-chain transportation, and thawing of biologic materials. We have in-house expertise in cryobiology and continue to capitalize on opportunities to maximize the value of our product platform for our extensive customer base through both organic growth innovations and acquisitions.
We have a diversified portfolio of tools and services that focuses on biopreservation, cell processing, frozen biologic storage products and services, cold-chain logistics, and thawing of biologic materials.
Competing biopreservation media products are often formulated with simple isotonic media cocktails, animal serum, potentially a single sugar or human protein.
Competing biopreservation media products are often formulated with isotonic media cocktails, animal serum, and potentially a single sugar or human protein. A key differentiator of our proprietary HypoThermosol FRS and CryoStor formulations is the engineered optimization of the key ionic component concentrations for low-temperature environments.
We estimate our cell processing products have been incorporated in nearly 700 customer clinical applications, including numerous chimeric antigen receptor (CAR) T cell and other cell types. Stability (i.e. shelf-life) and functional recovery are crucial aspects of academic research and clinical practice in the biopreservation of biologic-based source material, intermediate derivatives, and isolated/derived/expanded cellular products and therapies.
Our US FDA Type II Master File applicable to our biopreservation products has been cross referenced over 690 times by our customers, and we believe our cell processing products are utilized in several hundred active clinical trials worldwide. 5 Table of Contents Stability (i.e. shelf-life) and functional recovery are crucial aspects of academic research and clinical practice in the biopreservation of biologic-based source material, intermediate derivatives, and isolated/derived/expanded cellular products and therapies.
The limited stability, which results from the use of these traditional biopreservation media formulations, is a significant shortcoming that our optimized proprietary products address with great success. 4 Table of Contents Our scientific research activities over the last 20+ years enabled a detailed understanding of the molecular basis for the hypothermic and cryogenic (low-temperature induced) damage/destruction of cells through apoptosis and necrosis.
Our scientific research activities over the last 20+ years enabled a detailed understanding of the molecular basis for the hypothermic and cryogenic (low-temperature induced) damage/destruction of cells through apoptosis and necrosis. This research led directly to the development of our HypoThermosol FRS and CryoStor technologies.
Freezers and thaw systems Ultra-low temperature freezers In May 2021, we acquired Global Cooling, Inc. (“Global Cooling”), a manufacturer of class defining ultra-low temperature freezers. Global Cooling carries a portfolio of freezers that range in size from portable units to stationary upright freezers to accommodate a wide variety of use cases.
Freezers and thaw systems Ultra-low temperature freezers Our portfolio of ultra-low temperature freezers range in size from portable units to stationary upright freezers, accommodating a wide variety of use cases. Users can configure these freezers to achieve temperatures between -20°C and -86°C.
Our Isothermal LN2 freezers are constructed with a patented system which stores liquid nitrogen in a jacketed space in the walls of the freezer. This dry storage method eliminates liquid nitrogen contact with stored specimens, reduces the risk of cross-contamination, and provides increased user safety in a laboratory setting.
Cryogenic freezers and accessories Our line of cryogenic freezers offer leading design and manufacture of state-of-the-art liquid nitrogen laboratory freezers, cryogenic equipment and accessories. Our Isothermal LN2 freezers are constructed with a patented system which stores liquid nitrogen in a jacketed space in the walls of the freezer.
In addition to providing storage services, SciSafe provides cold chain logistics that ensures materials are kept at target temperatures from the moment that the materials leave the customer’s premises to their ultimate return. State-of-the-art monitoring systems employed by SciSafe allow for customers to monitor the storage temperatures of their materials throughout the entire logistics chain.
Biostorage services Biological and pharmaceutical storage and transport We are a premier provider of biological and pharmaceutical storage and cold chain logistics. These services ensure that materials are kept at controlled, target temperatures from the moment they leave the customer’s premises to their ultimate return.
The following table represents the Company’s total revenue by geographic area (based on the location of the customer): Year Ended December 31, Revenue by customers ’ geographic locations 2022 2021 2020 United States 72 % 78 % 73 % Canada 17 % 7 % 13 % Europe, Middle East, Africa (EMEA) 7 % 14 % 12 % Other 4 % 1 % 2 % Total revenue 100 % 100 % 100 % Manufacturing Cell processing – We maintain and operate two independent cGMP clean room production suites for manufacturing sterile biopreservation media products in Bothell, Washington.
The following table represents the Company’s total revenue by geographic area (based on the location of the customer): Years Ended December 31, Revenue by customers’ geographic locations (1) 2023 2022 2021 United States (2) 80 % 79 % 85 % Europe, Middle East, Africa (EMEA) 16 % 16 % 11 % Other 4 % 5 % 4 % Total revenue 100 % 100 % 100 % (1) During the year ended December 31, 2023, the Company updated its methodology for determining the country of origin for its sales.
Our employees are not covered by any collective bargaining agreement. We consider relations with our employees to be good. Since the beginning of the COVID-19 pandemic, the health and safety of our employees has remained a priority.
Our employees are not covered by any collective bargaining agreement. We consider relations with our employees to be good. Since March 2020, we have operated with a flexible work environment in which positions not essential to being on-site may embrace hybrid ways of working.
Over time, we have expanded our sales team and anticipate adding additional sales personnel. Our technical applications engineers and customer care support teams have extensive experience with the products and services that we offer. Our products are also marketed and distributed by STEMCELL Technologies, MilliporeSigma, VWR, part of Avantor, Thermo Fisher and several other regional distributors under non-exclusive agreements.
Our products are also marketed and distributed by STEMCELL Technologies, MilliporeSigma, VWR, Avantor, Thermo Fisher, and several other regional distributors under non-exclusive agreements. In 2023, 2022, and 2021, sales to third-party distributors accounted for 49%, 50%, and 46% of our revenue, respectively.
Sales and marketing We market and sell our products through direct sales and third-party distribution. We have significantly expanded our global commercial organization from 18 team members in 2020 to 58 team members as of December 31, 2022. We have experienced field-based sales employees who market our growing product portfolio on a direct basis.
We have experienced field-based sales employees who market our growing product portfolio on a direct basis. Our technical applications engineers and customer care support teams have extensive experience providing support both prior and subsequent to the sale of products.
Lead times for components may vary depending on the size of the order, specific supplier requirements and current market demand for the materials and parts. Due to COVID-19, we have seen increased lead times for certain raw materials, particularly personal protective equipment used in our clean rooms and certain form factors of bottles and vials used in our finished products.
Lead times for components may vary depending on the size of the order, specific supplier requirements, and current market demand for the materials and parts. We practice continuous improvement based on routine internal audits through our own monitoring of process outputs, external feedback, and audits performed by our partners and customers.
A key differentiator of our proprietary HypoThermosol FRS and CryoStor formulation is the engineered optimization of the key ionic component concentrations for low temperature environments, as opposed to normothermic body temperature around 37°C, as found in culture media or saline-based isotonic formulas. Competing cryopreservation freeze media is often comprised of a single permeating cryoprotectant such as dimethyl sulfoxide (“DMSO”).
This is in contrast to media optimized for normothermic body temperature (around 37°C), as found in culture media or saline-based isotonic formulas.
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This research led directly to the development of our HypoThermosol FRS and CryoStor technologies.
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We have in-house expertise in cryobiology and the broader CGT workflow, and continue to evaluate opportunities to maximize the value of our product platforms for our extensive customer base through organic growth innovations, partnerships, and acquisitions.
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Instead, they use patented free-piston Stirling engine technology that uses fewer moving parts. 5 Table of Contents Cryogenic freezers and accessories Our line of cryogenic freezers offer leading design and manufacture of state-of-the-art liquid nitrogen laboratory freezers, cryogenic equipment and accessories.
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(“GCI”) and Custom Biogenic Systems (“CBS”) freezer product lines (the “Freezer Business”) from our current product portfolio. For additional information regarding our ongoing initiative to divest the Freezer Business, see “Item 1A. Risk Factors” of this Annual Report for additional details.
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This helps reduce damage during the temperature transition. The ThawSTAR products can also reduce risk of contamination versus using a traditional water bath. Storage and cold chain services Biological and pharmaceutical storage In October 2020, we acquired SciSafe Holdings, Inc. (“SciSafe”), a premier provider of biological and pharmaceutical storage.
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Cell processing Biopreservation media Our proprietary biopreservation media products, HypoThermosol ® FRS and CryoStor ® Freeze Media, are formulated to mitigate preservation-induced, delayed-onset cell damage and death which result when cells and tissues are subjected to reduced temperatures.
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We utilize couriers who already have established logistic channels and distribution centers. Our strategy greatly reduces the cash need to build out specialized facilities around the world. Our partnerships with several white glove couriers allow us to scale our sales and marketing effort by leveraging their salesforce.
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While competing cryopreservation freeze media is often comprised of a single permeating cryoprotectant such as dimethyl sulfoxide (“DMSO”), our CryoStor formulations incorporate multiple permeating and non-permeating cryoprotectant agents, which allows for multiple mechanisms of protection and reduces the dependence on a single cryoprotectant.
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Our courier partnerships market our evo platform to their existing cell and gene therapy customers as a cost effective and innovative solution. We also market directly to our existing and prospective customers who can utilize the evo platform through our courier partnerships. Our market opportunity The CGT market has been rapidly expanding, treating diseases once thought incurable.
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We partner with couriers with established logistic channels and distribution centers. This strategy greatly reduces the time and resource requirements associated with establishing our own logistics services, such as acquiring and maintaining fleets of delivery vehicles and building specialized facilities around the world.
Removed
We routinely assess and analyze the strengths and weaknesses of competitive products and are typically engaged in business development discussions on an ongoing basis. We strive to continue to introduce differentiated and high-quality products that address specific difficulties in manufacturing, delivery and storage of biologic material.
Added
Partnerships with multiple white glove couriers allow us to scale our sales and marketing efforts by leveraging couriers' existing channel relationships, as well as the ongoing efforts of their sales and service teams. Courier partners provide promotional efforts by marketing our evo platform to their existing cell and gene therapy customers as a cost-effective and innovative solution.
Removed
To date, we have not experienced significant difficulties in obtaining raw materials for the manufacture of our biopreservation media products. 8 Table of Contents Freezers and thaw systems – Ultra-low temperature (“ULT”) freezers are produced in our facilities in Athens, Ohio and Bruce Township, Michigan and by a contract manufacturing organization (“CMO”) based in Ohio.
Added
This dry storage method eliminates liquid nitrogen contact with stored specimens, reducing the risk of cross-contamination and providing increased user safety in a laboratory setting by limiting liquid nitrogen contact injuries. To accommodate customer requirements, we offer customizable features, including wide bodied and extended height models.
Removed
As of December 31, 2022, we were transitioning manufacturing operations for this product line to in-house production and anticipate completion within the year ended December 31, 2023. To date, we have not experienced significant difficulties in obtaining our ULT freezer products from our CMO.
Added
Automated thawing devices The ThawSTAR ® line includes thawing products that control the temperature and timing of the thawing process of biologic material.
Removed
During the year ended December 31, 2021, we experienced difficulties in obtaining sheet metal and electrical components incorporating semiconductor chips for the manufacture of our ULT freezer products. During the year ended December 31, 2022, supply chain bottlenecks were mitigated through the diversification of suppliers, resulting in improved pricing from the year ended December 31, 2021.
Added
Use of ThawSTAR products can also reduce risk of contamination versus using a traditional water bath. Our market opportunity The CGT market has been rapidly expanding, treating diseases once thought incurable.
Removed
We were still experiencing constraints in supply for semiconductor chips as of December 31, 2022. Though our costs to obtain semiconductor components normalized throughout the year, we were still experiencing constraints in obtaining electrical component parts. These constraints are expected to improve through diversification of our semiconductor supply chain partnerships.
Added
Our products are designed to increase our customers’ product yield and functionality while reducing their risk, and we are committed to supporting our customers with strong service in addition to scientific and technical expertise in the applications of our products.
Removed
The majority of our isothermal LN2 freezers and related accessories are manufactured in our facility in Bruce Township, Michigan. We are reliant on certain critical suppliers for some components. Due to COVID-19, we have seen increased lead times for certain raw materials and components from our suppliers as well as increased costs on certain raw materials.
Added
We strive to continue to anticipate customer needs in providing enabling technologies in the CGT space. Sales and marketing We market and sell our products through direct sales and third-party distribution. We have expanded our global commercial organization over time to continue building relationships within the broader CGT market.
Removed
We believe this CMO has the skills, experience and capacity needed to meet our quality standards and demand expectations for the product line. Due to COVID-19, we have seen increased lead times from our CMO due to increased lead times from our CMO’s suppliers.
Added
Sales are now recorded by shipping country rather than billing country. The Company updated the methodology retrospectively, adjusting the prior year presentation for all regions presented. (2) The line item presented above previously bifurcated sales between the United States and Canada.
Removed
We estimate that it would take up to six months to find and qualify an alternative CMO. To date, we have not experienced significant difficulties in obtaining our automated thaw products from our CMO.
Added
Due to the updated methodology for determining the country of origin for sales, it was noted that Canada no longer was a material location to 9 Table of Contents separately disclose.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAny acquisition involves numerous risks and operational, financial, and managerial challenges, including the following, any of which could adversely affect our business, financial condition, or results of operations: ● difficulties in integrating new operations, technologies, products, and personnel; ● problems maintaining uniform procedures, controls, and policies with respect to our financial accounting systems; ● lack of synergies or the inability to realize expected synergies and cost-savings; ● difficulties in managing geographically dispersed operations, including risks associated with entering foreign markets in which we have no or limited prior experience; ● underperformance of any acquired technology, product, or business relative to our expectations and the price we paid, such as the underperformance of products acquired from Global Cooling; ● negative near-term impacts on financial results after an acquisition, including acquisition-related earnings charges, such as the negative cash flows resulting from our acquisition of Global Cooling; ● the potential loss of key employees, customers, and strategic partners of acquired companies; ● claims by terminated employees and shareholders of acquired companies or other third parties related to the transaction; ● the assumption or incurrence of additional debt obligations or expenses, or use of substantial portions of our cash; ● the issuance of equity securities to finance or as consideration for any acquisitions that dilute the ownership of our stockholders (which in the case of certain of our prior acquisitions were significant); ● the issuance of equity securities to finance or as consideration for any acquisitions may not be an option if the price of our common stock is low or volatile which could preclude us from completing any such acquisitions; ● diversion of management’s attention and company resources from existing operations of the business; ● inconsistencies in standards, controls, procedures, and policies; ● the impairment of intangible assets as a result of technological advancements, or worse-than-expected performance of acquired companies; ● assumption of, or exposure to, historical liabilities of the acquired business, including unknown contingent or similar liabilities, including product liability, that are difficult to identify or accurately quantify; and ● risks associated with acquiring intellectual property, including potential disputes regarding acquired companies’ intellectual property.
Biggest changeAny acquisition involves numerous risks and operational, financial, and managerial challenges, including the following, any of which could adversely affect our business, financial condition, or results of operations: • difficulties in integrating new operations, technologies, products, and personnel; • problems maintaining uniform procedures, controls, and policies with respect to our financial accounting systems; • lack of synergies or the inability to realize expected synergies and cost-savings; • difficulties in managing geographically dispersed operations, including risks associated with entering foreign markets in which we have no or limited prior experience; • underperformance of any acquired technology, product, or business relative to our expectations and the price we paid; • negative near-term impacts on financial results after an acquisition, including acquisition-related earnings charges; • the potential loss of key employees, customers, and strategic partners of acquired companies; • claims by terminated employees and shareholders of acquired companies or other third parties related to the transaction; • the assumption or incurrence of additional debt obligations or expenses, or use of substantial portions of our cash; • diversion of management’s attention and company resources from existing operations of the business; • inconsistencies in standards, controls, procedures, and policies; • cash expenses and non-cash accounting charges incurred in connection with acquisitions, including unanticipated costs associated with the amortization of intangible assets; • the impairment of intangible assets as a result of technological advancements, or worse-than-expected performance of acquired companies; 14 Table of Contents • assumption of, or exposure to, historical liabilities of the acquired business, including unknown contingent or similar liabilities, including product liability, that are difficult to identify or accurately quantify; and • risks associated with acquiring intellectual property, including potential disputes regarding acquired companies’ intellectual property.
We are and may become the subject of various claims, litigation or investigations which could have a material adverse effect on our business, financial condition, results of operations or price of our common stock.
We are and may become the subject of various claims, litigation or investigations which could have a material adverse effect on our business, financial condition, or results of operations or the price of our common stock.
While we are not currently subject to FDA or other regulatory approvals on substantially all of our products, if we become subject to regulatory requirements, the manufacture and sale of our products may be delayed or prevented, or we may become subject to increased expenses. None of our products are subject to FDA.
While we are not currently subject to FDA or other regulatory approvals on substantially all of our products, if our products become subject to regulatory requirements, the manufacture and sale of our products may be delayed or prevented, or we may become subject to increased expenses. None of our products are subject to FDA regulation.
These include, among others, the extent of harm to public health, including the duration of the pandemic, any potential subsequent waves of COVID-19 infection, the emergence of new variants of COVID-19, some of which may be more transmissible or virulent than the initial strain, and the availability and distribution of effective vaccines and medical treatments, further disruption to the manufacturing of and demand for our products, our ability to effectively manage inventory levels and adjust our production schedules to align with demand, impairments and other charges, the impact of the global business and economic environment on liquidity and the availability of capital, the costs incurred to keep our employees safe while maintaining continued operations, and our ability to effectively motivate and retain the necessary workforce.
Such impacts of the COVID-19 pandemic include, among others, the extent of harm to public health, including the duration of the pandemic, any potential subsequent waves of COVID-19 infection, the emergence of new variants of COVID-19, some of which may be more transmissible or virulent than the initial strain, and the availability and distribution of effective vaccines and medical treatments, further disruption to the manufacturing of and demand for our products, our ability to effectively manage inventory levels and adjust our production schedules to align with demand, impairments and other charges, the impact of the global business and economic environment on liquidity and the availability of capital, the costs incurred to keep our employees safe while maintaining continued operations, and our ability to effectively motivate and retain the necessary workforce.
Our stock price and trading volume and the market prices and trading volume of many publicly traded companies, including emerging companies in the life sciences industry, have been, and can be expected to be, highly volatile.
Our stock price and trading volume and the market prices and trading volume of many publicly traded companies, including companies in the life sciences industry, have been, and can be expected to be, highly volatile.
Furthermore, there is no guarantee that we will be successful in defending ourselves in pending or future litigation or similar matters under various laws. Any judgments or settlements in any pending litigation or future claims, litigation or investigation could have a material adverse effect on our business, financial condition, results of operations and price of our common stock.
Furthermore, there is no guarantee that we will be successful in defending ourselves in pending or future litigation or similar matters under various laws. Any judgments or settlements in any pending litigation or future claims, litigation or investigation could have a material adverse effect on our business, financial condition, or results of operations or the price of our common stock.
Our ability to adequately manufacture and supply our products in a timely matter is dependent on the uninterrupted and efficient operation of our facilities and those of third parties producing raw materials and supplies upon which we rely in our manufacturing.
Our ability to adequately manufacture and supply our products in a timely matter is dependent on the uninterrupted and efficient operation of our facilities and those of third parties manufacturing certain of our products or producing raw materials and supplies upon which we rely in our manufacturing.
In addition, confidentiality agreements with our employees, consultants, customers, and key vendors may not prevent the unauthorized disclosure or use of our technology. It is possible that these agreements will be breached or that they will not be enforceable in every instance, and that we will not have adequate remedies for any such breach.
In addition, confidentiality 19 Table of Contents agreements with our employees, consultants, customers, and key vendors may not prevent the unauthorized disclosure or use of our technology. It is possible that these agreements will be breached or that they will not be enforceable in every instance, and that we will not have adequate remedies for any such breach.
Computer viruses and other malware can be distributed and has and could in the future infiltrate our systems or those of our associated third parties. In addition, denial of service or other attacks could be launched against us for a variety of purposes, including to interfere with our services or create a diversion for other malicious activities.
Computer viruses and other malware can be distributed and have infiltrated, and could in the future infiltrate, our systems or those of our associated third parties. In addition, denial of service or other attacks could be launched against us for a variety of purposes, including to interfere with our services or create a diversion for other malicious activities.
Efforts by governments and other third-party payors to contain or reduce the costs of healthcare through various means may limit our commercial opportunities and adversely affect our operating results and result in a decrease in the price of our common stock or limit our ability to raise capital.
Efforts by governments and 15 Table of Contents other third-party payors to contain or reduce the costs of healthcare through various means may limit our commercial opportunities and adversely affect our operating results and result in a decrease in the price of our common stock or limit our ability to raise capital.
In addition, the patent positions of life science industry companies are highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved. As a result, the validity and enforceability of our patents cannot be predicted with certainty.
In addition, the patent positions of life science industry companies are 18 Table of Contents highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved. As a result, the validity and enforceability of our patents cannot be predicted with certainty.
Any such requirements could delay or prevent the sale of our products or may subject us to additional expenses. 14 Table of Contents Our business may be subject to product liability claims or product recalls, which could be expensive and could result in a diversion of management ’ s attention.
Any such requirements could delay or prevent the sale of our products or may subject us to additional expenses. Our business may be subject to product liability claims or product recalls, which could be expensive and could result in a diversion of management ’ s attention.
Any claims asserted against us or our management, regardless of merit or eventual outcome, could harm our reputation and have an adverse impact on our relationship with our clients, distribution partners and other third-parties and could lead to additional related claims.
Any claims asserted against us or our management, regardless of merit or eventual outcome, could harm our reputation, distract our management and have an adverse impact on our relationship with our existing or prospective clients, distribution partners and other third-parties and could lead to additional related claims.
In particular, we are not required to sponsor formal prospective, controlled clinical-trials to establish safety and efficacy. A group of isothermal, standard, and carousel LN2 freezers in our freezers and thaw systems product line is currently regulated as Class 2 medical devices in the EU. Additionally, we comply with cGMP requirements.
In particular, we are not required to sponsor formal prospective, controlled clinical-trials to establish safety and efficacy. A group of isothermal, standard, and carousel LN2 freezers in our freezers and thaw systems product line is currently regulated as Class 2 medical devices in the EU. Additionally, we comply with cGMP requirements and other relevant quality standards.
Further, in the future, if we cannot conclude that we have effective internal control over our financial reporting, or if our independent registered public accounting firm is unable to provide an unqualified opinion regarding the effectiveness of our internal control over financial reporting, investors could lose confidence in the reliability of our financial statements, which could lead to a decline in our stock price.
Further, in the future, if we cannot conclude that we have effective internal control over financial reporting or disclosure controls and procedures, or if our independent registered public accounting firm is unable to provide an unqualified opinion regarding the effectiveness of our internal control over financial reporting, investors could lose confidence in the reliability of our financial statements, which could lead to a decline in our stock price.
We cannot provide assurance that the contractual requirements related to security and privacy that we impose on our service providers who have access to customer data will be followed or will be adequate to prevent the unauthorized use or disclosure of data.
We cannot provide assurance that the contractual requirements related to security and privacy that we impose on our service providers who have access to our data, including customer information, will be followed or will be adequate to prevent the unauthorized use or disclosure of such data.
The manufacture of our products may be impacted by: ● availability or contamination of raw materials and components used in the manufacturing process, particularly those for which we have no other source or supplier; ● the ongoing capacity of our facilities; ● our ability to comply with new regulatory requirements, including our ability to comply with cGMP; ● inclement weather and natural disasters; ● changes in forecasts of future demand for product components; ● potential facility contamination by microorganisms or viruses; ● updating of manufacturing specifications; ● product quality success rates and yields; and ● global viruses and pandemics, including COVID-19.
The manufacture of our products may be impacted by: • availability or contamination of raw materials and components used in the manufacturing process, particularly those for which we have no other source or supplier; • the ongoing capacity of our facilities and those of our outside manufacturers; • our and our outside manufacturers’ ability to comply with existing and new regulatory requirements, including cGMP; • inclement weather and natural disasters; • changes in forecasts of future demand for product components; • potential facility contamination by microorganisms or viruses; • updating of manufacturing specifications; • product quality success rates and yields; • labor strike; and • global viruses and pandemics, including COVID-19.
Undiscovered risks may result in us incurring financial liabilities, which could be material and have a negative impact on our business operations. 12 Table of Contents We may engage in future acquisitions or other strategic transactions which may require us to seek additional financing or financial commitments, increase our expenses and/or present significant distractions to our management.
Undiscovered risks may result in us incurring financial liabilities, which could be material and have a negative impact on our business operations. We may engage in future acquisitions or other strategic transactions which may require us to seek additional financing or financial commitments, increase our expenses and/or present significant distractions to our management.
We can give no assurance that the measures we have taken and plan to take in the future will remediate the material weaknesses identified or that any additional material weaknesses or restatements of our financial statements will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of those controls.
We can give no assurance that the measures we have taken and plan to take in the future will remediate the material weaknesses identified or that any additional material weaknesses or restatements of our financial statements will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or disclosure controls and procedures.
We will be able to protect our proprietary rights from unauthorized use by third-parties only to the extent that our proprietary technologies and products are covered by valid and enforceable patents or are effectively maintained as trade secrets. 15 Table of Contents We intend to apply for additional patents covering both our technologies and products, as we deem appropriate.
We will be able to protect our proprietary rights from unauthorized use by third-parties only to the extent that our proprietary technologies and products are covered by valid and enforceable patents or are effectively maintained as trade secrets. We intend to apply for additional patents covering both our technologies and products, as we deem appropriate.
Our ability to use net operating loss and tax credit carryforwards and certain built-in losses to reduce future tax payments is limited by provisions of the Internal Revenue Code, and it is possible that certain transactions or a combination of certain transactions may result in material additional limitations on our ability to use our net operating loss and tax credit carryforwards.
Risks related to accounting matters Our ability to use net operating loss and tax credit carryforwards and certain built-in losses to reduce future tax payments is limited by provisions of the Internal Revenue Code, and it is possible that certain transactions or a combination of certain transactions may result in material additional limitations on our ability to use our net operating loss and tax credit carryforwards.
In conducting our business, we process, transmit and store sensitive business information and personal information about our customers, vendors, and other parties. This information may include account access credentials, credit and debit card numbers, bank account numbers, social security numbers, driver’s license numbers, names and addresses and other types of sensitive business or personal information.
In conducting our business, we process, transmit and store sensitive, proprietary and confidential information about our employees, customers, vendors, and other parties, including business and personal information. This information may include account access credentials, credit and debit card numbers, bank account numbers, social security numbers, driver’s license numbers, names and addresses and other types of sensitive business or personal information.
We rely on outside suppliers for all our manufacturing supplies, parts and components. There can be no assurance that, in the future, our current or alternative sources for manufacturing supplies will be able to meet all our demands on a timely basis.
We rely on outside suppliers, including several single-source suppliers, for all our manufacturing supplies, parts and components. There can be no assurance that, in the future, our current or alternative sources for manufacturing supplies will be able to meet all our demands on a timely basis.
Our defensive measures in the past, have not, and in the future, may not, prevent downtime, unauthorized access, or use of sensitive data. Further, while we select our third-party service providers carefully, and we seek to ensure that our customers adequately protect their systems and data, we do not control their actions and are not able to oversee their processes.
Our defensive measures in the past have not, and in the future, may not, prevent downtime, unauthorized access, or use of sensitive data. Further, while we select our associated third parties carefully, and we seek to ensure that our customers adequately protect their systems and data, we do not control their actions and are not able to oversee their processes.
We could also be subject to liability for claims relating to misuse of personal information, such as violation of data privacy laws.
We could also be subject to liability for claims relating to the loss or misuse of personal information, such as violation of data privacy laws.
Plaintiffs often seek recovery of very large or indeterminate amounts, including punitive damages. The magnitude of the potential losses relating to these lawsuits may remain unknown for substantial periods of time and the cost to defend against any such litigation may be significant.
Plaintiffs often seek recovery of very large or indeterminate amounts, including punitive damages. The magnitude of the potential losses relating to these lawsuits may remain unknown for substantial periods of time and the cost to defend against any such litigation, whether or not we are found liable, may be significant.
We expect that the result of these acquisitions will make it more difficult to predict our revenue and operating results from period-to-period and that, as a result, comparisons of our results of operations are not currently and will not be for the foreseeable future a good indicator of our future performance.
We expect that the result of these acquisitions and subsequent operational decisions regarding the businesses acquired will make it more difficult to predict our revenue and operating results from period-to-period and that, as a result, comparisons of our results of operations are not currently and will not be for the foreseeable future a good indicator of our future performance.
In the future, if our products experience, or are perceived to experience, a material defect or error, this could result in loss or delay of revenues, delayed market acceptance, damaged reputation, diversion of development resources, legal claims, increased insurance costs or increased service and warranty costs, any of which could harm our business.
In the future, if our products experience, or are perceived to experience, a material defect or error, this could result in loss or delay of revenues, delayed or reduced market acceptance, damage to our reputation, diversion of development resources, legal claims, increased insurance costs or increased service and warranty costs, any of which could harm our business, financial condition or results of operations.
A catastrophic event that results in the destruction or disruption of our data centers or our critical business or information technology systems would severely affect our ability to conduct normal business operations and, as a result, our operating results would be adversely affected.
A catastrophic event that results in the destruction or disruption of our data centers or our critical business or information technology systems would severely affect our ability to conduct normal business operations and, as a result, our operating results would be adversely affected. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Even after any underlying concerns or problems are resolved, any lingering concerns in our target market regarding our technology or any manufacturing defects or performance errors in our products could continue to result in lost revenue, delayed market acceptance, damaged reputation, increased service and warranty costs and claims against us. We face significant competition.
Even after any underlying concerns or problems are resolved, any lingering concerns in our target market regarding our technology or any manufacturing defects or performance errors in our products could continue to result in lost revenue, delayed or reduced market acceptance, damage to our reputation, increased service and warranty costs and claims against us.
The life sciences industry is highly competitive. We anticipate that we will continue to face increased competition as existing companies may choose to develop new or improved products and as new companies could enter the market with new technologies, any of which could compete with our product or even render our products obsolete.
We anticipate that we will continue to face increased competition as existing companies may choose to develop new or improved products and as new companies enter the market with new technologies, any of which could compete with our products or even render our products obsolete.
Further, the inability of some of our customers to consummate anticipated purchases of our products due to changes in end-user demand, and other unpredictable factors that may affect customer ordering patterns could lead to significant reductions in net product revenue which could harm our business.
Further, the inability of some of our customers to consummate anticipated purchases of our products due to changes in end-user demand, and other unpredictable factors that may affect customer ordering patterns could lead to significant reductions in net product revenue which could harm our business. We expect our operating results to fluctuate significantly from period to period.
Risks related to our financial condition Despite our increasingly diversified customer base, we have historically depended on a limited number of customers and products in a limited number of market sectors; if we lose any of these large customers or if there are problems in those market sectors, our net product revenue and operating results could decline significantly.
Risks related to our financial condition Despite our increasingly diversified customer base, we depend on a limited number of customers and products in a limited number of market sectors. If we lose any of these large customers or if there are disruptions in the sales of these products, our net product revenue and operating results could decline significantly.
The efforts of governmental and third-party payors to contain or reduce the costs of healthcare may adversely affect the business and financial condition of pharmaceutical and biotechnology companies, including ours.
The efforts of governmental and third-party payors to contain or reduce the costs of healthcare and, more generally, to reform the U.S. healthcare system may adversely affect the business and financial condition of pharmaceutical and biotechnology companies, including ours.
Further, if we fail to remedy these deficiencies (or any other future deficiencies) or maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties or shareholder litigation.
Further, if we fail to remedy these deficiencies (or any other future deficiencies) or maintain the adequacy of our internal control over financial reporting and disclosure controls and procedures, we could be subject to regulatory scrutiny, civil or criminal penalties or shareholder litigation.
Obtaining financing through the issuance or sale of additional equity and/or debt securities, if possible, may not be at favorable terms and may result in additional dilution to our current stockholders.
Obtaining financing through the issuance or sale of additional equity and/or debt securities, if possible, may not be at favorable terms and may result in additional dilution to our current stockholders (which in the case of certain of our prior acquisitions were significant).
Sales of a substantial number of shares of our common stock or other securities in the public markets, or the perception that these sales may occur, could cause the market price of our common stock or other securities to decline and could materially impair our ability to raise capital through the sale of additional securities.
In addition, sales of a substantial number of shares of our common stock or other securities in the public markets (including an issuance by us of additional securities in a public offering or private placement), or the perception that these sales may occur, could cause the market price of our common stock or other securities to decline and could materially impair our ability to raise capital through the sale of additional securities.
There can be no assurance that our competitors will not succeed in developing or marketing technologies and products that are more effective or commercially attractive than any that are being developed or marketed by us, or that such competitors will not succeed in obtaining regulatory approval, or introducing or commercializing any such products, prior to us.
Our competitors may succeed in developing or marketing technologies and products that are more effective or commercially attractive than any that are being developed or marketed by us, or may succeed in obtaining regulatory approval, or introducing or commercializing any such products, prior to us.
In addition, the successful integration of acquired businesses requires significant efforts and expense across all operational areas, including sales and marketing, research and development, manufacturing, finance, legal, and information technologies. There can be no assurance that any of the acquisitions we may make will be successful or will be, or will remain, profitable.
In addition, the successful integration of acquired businesses requires significant efforts and expense across all operational areas, including sales and marketing, research and development, manufacturing, finance, legal, and information technologies. Our acquisitions we may not be successful or may not be, or remain, profitable.
The future market price and trading volume of our common stock could be significantly impacted by numerous factors, including, but not limited to: ● Future sales of our common stock or other fundraising events; ● Sales of our common stock by existing shareholders; ● Changes in our capital structure, including stock splits or reverse stock splits; ● Announcements of technological innovations for new commercial products by our present or potential competitors; ● Developments concerning proprietary rights; ● Adverse results in our field or with clinical tests of our products in customer applications; ● Adverse litigation; ● Unfavorable legislation or regulatory decisions; ● Public concerns regarding our products; ● Variations in quarterly operating results; ● General trends in the health care industry; ● Global viruses, epidemics, and pandemics, including COVID-19 ● Other factors outside of our control, including significant market fluctuations. 18 Table of Contents A significant percentage of our outstanding common stock is held by one stockholder, and this stockholder therefore has significant influence on us and our corporate actions.
The future market price and trading volume of our common stock could be significantly impacted by numerous factors, including, but not limited to: • Future sales of our common stock or other capital raising events by us; • Sales of our common stock by existing shareholders; • Changes in our capital structure, including stock splits or reverse stock splits; • Changes in our product offerings and business structure through acquisitions or divestitures; • Announcements of technological innovations for new commercial products by our present or potential competitors; • Developments concerning proprietary rights; • Adverse results in our field or with clinical tests of our products in customer applications; • Adverse litigation; • Unfavorable legislation or regulatory decisions; • Public concerns regarding our products; • Variations in quarterly operating results; • General trends in the health care industry; • Global viruses, epidemics, and pandemics, including COVID-19; and • Other factors outside of our control, including significant market fluctuations.
Our highest trading day volume was 3,276,000 shares traded and the lowest trading day volume was 138,800 shares traded. We may continue to incur substantial increases or decreases in our stock price and volume in the foreseeable future.
Our highest trading day volume was 2,242,100 shares traded and the lowest trading day volume was 138,500 shares traded. We may continue to incur substantial increases or decreases in our stock price and volume in the foreseeable future.
Such developments could have a material adverse effect on our business, financial condition and results of operations. Also, even if we can compete successfully, there can be no assurance that we can continue do so in a profitable manner. We are dependent on outside suppliers for all our manufacturing supplies.
Such developments could have a material adverse effect on our business, financial condition and results of operations. Also, even if we can compete successfully, we may not continue do so in a profitable manner. We depend on outside suppliers for all our manufacturing supplies, parts and components.
In connection with the accounting for our completed acquisitions in recent years, we recorded a significant amount of intangible assets, including developed technology, in-process research and development, and customer relationships relating to the acquired product lines, and goodwill.
In connection with the accounting for our completed acquisitions in recent years, we recorded a significant amount of intangible assets, including developed technology, in-process research and development, and customer relationships relating to the acquired product lines, and goodwill. As of December 31, 2023, the net carrying value of our goodwill and other intangible assets totaled $245.9 million.
If our products do not perform as expected or the reliability of the technology on which our products are based is questioned, we could experience lost revenue, delayed or reduced market acceptance of our products, increased costs, and damage to our reputation. Our success depends on the market’s confidence that we can provide reliable, high-quality products to our customers.
If our products or the products of our competitors do not perform as expected or the reliability of the technology on which our products are based is questioned, we could experience lost revenue, delayed or reduced market acceptance of our products, increased costs, and damage to our reputation.
Threats to our systems and our associated third parties’ systems can derive and have derived from human error, fraud or malice on the part of employees or third parties, or may result from accidental technological failure.
Threats to our systems and our associated third parties’ systems can derive and have derived from human error, fraud or malice on the part of employees or third parties, or may result from accidental technological failure, including as a result of natural disasters, power failures or other events beyond our control.
As of December 31, 2022, based on our review of public filings and the Company’s records, one of our existing stockholders, Casdin Capital, LLC (“Casdin”), owned 7,566,292 shares of our common stock, representing 18% of the issued and outstanding shares of common stock.
As of December 31, 2023, based on our review of public filings and the Company’s records, one of our existing stockholders, Casdin Capital, LLC (“Casdin”), owned 8,707,165 shares of our common stock, representing 19.3% of the issued and outstanding shares of common stock.
Failure to comply with reporting requirements could also subject us to sanctions and/or investigations by the SEC, the NASDAQ Stock Market or other regulatory authorities. Risks related to COVID-19 and other disruptive events Our financial condition and results of operations may be adversely affected by the COVID-19 pandemic.
Failure to comply with reporting requirements could also subject us to sanctions and/or investigations by the SEC, The NASDAQ Stock Market LLC or other regulatory authorities. Risks related to disruptive events Public health crises, such as the COVID-19 pandemic, have adversely affected, and could in the future adversely affect, our business, financial condition. results of operations and cash flows.
In addition, without the consent of this stockholder where a stockholder vote may be necessary, we could be prevented from entering into transactions that could be beneficial to us.
In addition, without the consent of this stockholder where a stockholder vote may be necessary, we could be prevented from entering into transactions that could be beneficial to us. We do not anticipate declaring any cash dividends on our common stock.
Accordingly, we could experience product liability losses in the future and incur significant costs to defend these claims. In addition, if any of our products are, or are alleged to be, defective, we may voluntarily participate, or be required by applicable regulators, to participate in a recall of that product if the defect or the alleged defect relates to safety.
In addition, if any of our products are, or are alleged to be, defective, we may voluntarily participate, or be required by applicable regulators, to participate in a recall of that product if the defect or the alleged defect relates to safety.
Specifically, in both the United States and some foreign jurisdictions, there have been a number of legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to sell our products profitably.
Specifically, in both the United States and some foreign jurisdictions, there have been a number of legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to sell our products profitably, including by limiting the prices we are able to charge for our products, the amounts of reimbursement available for our products or the acceptance and availability of our products.
No other customer accounted for more than 10% of revenue in the years ended December 31, 2022, 2021 and 2020. In the years ended December 31, 2022, 2021, and 2020, we derived approximately 36%, 33%, and 60% of our revenue from CryoStor products, respectively.
During the years ended December 31, 2023, 2022, and 2021, we derived approximately 16%, 18%, and 17% of our revenue from the same customer, respectively. No other customer accounted for more than 10% of revenue in the years ended December 31, 2023, 2022 and 2021.
If our quarterly operating results fail to meet investor expectations, the price of our common stock may decline. Risks related to our acquisition strategy If intangible assets and goodwill that we recorded in connection with our acquisitions become impaired, we may have to take significant charges against earnings.
Risks related to our acquisition strategy If intangible assets and goodwill that we recorded in connection with our acquisitions become impaired, we may have to take significant charges against earnings.
Accordingly, although there can be no assurance that we will undertake or successfully complete any transactions of the nature described above, any transactions that we do complete could have a material adverse effect on our business, results of operations, financial condition, and prospects. Risks related to our business and operations Healthcare reform measures could adversely affect our business.
Accordingly, any transactions that we complete could have a material adverse effect on our business, results of operations, financial condition, and prospects. Risks related to our business and operations Healthcare reform measures could adversely affect our business and financial results.
Our failure to successfully address the foregoing risks may prevent us from achieving the anticipated benefits from any acquisition in a reasonable time frame, or at all. The integration of our acquisitions may result in significant accounting charges that adversely affect the announced results of our Company.
Our failure to successfully address the foregoing risks may prevent us from achieving the anticipated benefits from any acquisition in a reasonable time frame, or at all. Our recent acquisitions may result in unexpected consequences to our business and results of operations.
Our success will depend on our ability to attract and retain key personnel. In order to execute our business plan, we must attract, retain and motivate highly qualified managerial, scientific, manufacturing, and sales personnel. If we fail to attract and retain skilled scientific and sales personnel, our sales efforts will be hindered.
If we fail to obtain an alternative supplier for the components of our products, our operations could be disrupted. Our success will depend on our ability to attract and retain key personnel. In order to execute our business plan, we must attract, retain and motivate highly qualified managerial, scientific, manufacturing, and sales personnel.
In addition, we are required under the Sarbanes-Oxley Act of 2002 to report annually on our internal control over financial reporting. Any system of internal controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met.
Any system of internal controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met.
The sale of a large number of shares of our common stock or other securities also might make it more difficult for us to sell equity or equity-related securities in the future at a time and at the prices that we deem appropriate. We do not anticipate declaring any cash dividends on our common stock.
The sale of a large number of shares of our common stock or other securities also might make it more difficult for us to sell equity or equity-related securities in the future at a time and at the prices that we deem appropriate A significant percentage of our outstanding common stock is held by one stockholder, and this stockholder therefore has significant influence on us and our corporate actions.
Any future reduction or impairment of the value of intangible assets and goodwill will result in a charge against earnings, which could materially adversely affect our results of operations and shareholders’ equity in future periods. 11 Table of Contents Our acquisitions expose us to risks that could adversely affect our business, and we may not achieve the anticipated benefits of acquisitions of businesses or technologies.
Any future reduction or impairment of the value of intangible assets and goodwill will result in a charge against earnings, which could materially adversely affect our results of operations and shareholders’ equity in future periods.
Effective internal controls are necessary to provide reliable financial reports and to assist in the effective prevention of fraud. Any inability to provide reliable financial reports or prevent fraud could harm our business. We regularly review and update our internal controls, disclosure controls and procedures, and corporate governance policies.
Any inability to provide reliable financial reports or prevent fraud could harm our business. We regularly review and update our system of internal control over financial reporting, disclosure controls and procedures, and corporate governance policies. In addition, we are required under the Sarbanes-Oxley Act of 2002 to report annually on our internal control over financial reporting.
We expect our operating results to fluctuate significantly from period to period. Following our recent acquisitions, we have increased our fixed costs and now sell products having higher costs of product revenue than our biopreservation media products.
In addition, following our acquisitions from 2019 through 2021, we have increased our fixed costs and now sell products having higher costs of product revenue than our biopreservation media products.
Some of this information is also processed and stored by our third-party service providers to whom we outsource certain functions and other agents, including our customers, which we refer to collectively as our associated third parties. 17 Table of Contents We are a regular target of malicious third-party attempts, some of which have been successful, to identify and exploit system vulnerabilities, and/or penetrate or bypass our security measures, in order to gain unauthorized access to our networks and systems or those of our associated third parties.
We are a regular target of malicious third-party attempts, some of which have been successful, to identify and exploit system vulnerabilities and/or penetrate or bypass our security measures in order to gain unauthorized access to our networks and systems or those of our associated third parties.
As described in Item 9A — Controls and Procedures and elsewhere in this Form 10-K, Management identified material weaknesses in our internal control over financial reporting for the fiscal years ended December 31, 2022 and 2021. 19 Table of Contents In the course of making our assessment of the effectiveness of internal control over financial reporting as of December 31, 2022, we identified several material weaknesses.
As described in Item 9A — Controls and Procedures and elsewhere in this Form 10-K, Management identified material weaknesses in our internal control over financial reporting for the fiscal years ended December 31, 2023 and 2022. Effective internal control over financial reporting is necessary to provide reliable financial reports and to assist in the effective prevention of fraud.
As a part of our growth strategy, we have made and may continue to make selected acquisitions of complementary products and/or businesses.
Our acquisitions expose us to risks that could adversely affect our business, and we may not achieve the anticipated benefits of acquisitions of businesses or technologies. As a part of our growth strategy, we have made, and may continue to make, selected acquisitions of complementary products and/or businesses.
We currently manufacture all of our biopreservation media products, freezer products and related components. We currently outsource the manufacturing of certain thaw products, certain cold chain products, two ULT freezer models, and components of our LN2 freezers. The manufacturing of our products is difficult and complex.
We currently outsource the manufacturing of certain thaw products, certain cold chain products, two ULT freezer models, and components of our LN2 freezers. The manufacturing of our products is difficult and complex. To support our current and prospective clinical customers, we comply with, and intend to continue to comply with, cGMP in the manufacture of our products.
Likewise, if our financial statements are not filed on a timely basis as required by the SEC and the NASDAQ Stock Market, we could face severe consequences from those authorities. In either case, it could result in a material adverse effect on our business or have a negative effect on the trading price of our common stock.
If our financial statements are not accurate, investors may not have a complete understanding of our operations or may lose confidence in our reported financial information. Likewise, if our financial statements are not filed on a timely basis as required by the SEC and The NASDAQ Stock Market LLC, we could face severe consequences from those authorities.
The costs of these proceedings could be substantial, and it is possible that such efforts would be unsuccessful, resulting in a loss of our U.S. patent position with respect to such inventions. Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources.
The costs of these proceedings could be substantial, and it is possible that such efforts would be unsuccessful, resulting in a loss 20 Table of Contents of our U.S. patent position with respect to such inventions.
Furthermore, the laws of foreign countries may not protect our intellectual property rights to the same extent as the laws of the United States. 16 Table of Contents We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights and we may be unable to protect our rights to, or use of, our technology.
Enforcement of these agreements may be costly and time consuming. We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights, and we may be unable to protect our rights to, or use of, our technology.
We may be unable to offset our taxable income with losses, or our tax liability with credits, before such losses and credits expire and therefore would incur larger federal income tax liability. If we are unable to develop an effective system of internal controls, we may not be able to accurately and timely report financial results or prevent fraud.
We may be unable to offset our taxable income with losses, or our tax liability with credits, before such losses and credits expire and therefore would incur larger federal income tax liability.
Even after the COVID-19 pandemic has subsided, we may continue to experience impacts to our business as a result of its global economic impact. Natural disasters, geopolitical unrest, war, terrorism, public health issues or other catastrophic events could disrupt the supply, delivery or demand of products, which could negatively affect our operations and performance.
Natural disasters, geopolitical unrest, war, terrorism, public health issues or other catastrophic events could disrupt the supply, delivery or demand of products, which could negatively affect our operations and performance.
If we are forced to defend against these claims, whether they are with or without any merit and whether they are resolved in favor of or against us, we may face costly litigation and diversion of management’s attention and resources. As a result of these disputes, we may have to develop costly non-infringing technology, or enter into licensing agreements.
We cannot predict whether third parties will assert these claims against us, or whether those claims will harm our business. If we are forced to defend against these claims, whether they are with or without any merit and whether they are resolved in favor of or against us, we may face costly litigation and diversion of management’s attention and resources.
These agreements, if necessary, may be unavailable on terms acceptable to us, if at all, which could seriously harm our business or financial condition. Our inability to protect our systems and data from continually evolving cybersecurity risks or other technological risks, including as a result of breaches of our associated third parties, could affect our ability to conduct our business.
Our inability to protect our systems and data from continually evolving cybersecurity risks or other technological risks, including as a result of breaches of our associated third parties' information technology systems, could affect our ability to conduct our business.
Our future success depends to a significant degree upon the continued services of key scientific and technical personnel. If we do not attract and retain qualified personnel, we will not be able to achieve our growth objectives. Difficulties in manufacturing could have an adverse effect upon our expenses and our product revenues.
If we do not attract and retain qualified personnel, we will not be able to achieve our growth objectives. 16 Table of Contents Difficulties in manufacturing could have an adverse effect upon our expenses and our product revenues. We currently manufacture all of our biopreservation media products, freezer products and related components.
If we identify additional material weaknesses in our internal control over financial reporting or are unable to rectify the material weaknesses that we have identified, our ability to meet our reporting obligations and the trading price of our stock could be negatively affected.
We have identified material weaknesses in our internal control over financial reporting, and if our remediation of such material weaknesses is not effective, or if we are unable to develop and maintain an effective system of internal control over financial reporting or disclosure controls and procedures, we may not be able to accurately and timely report financial results or prevent fraud, and our ability to meet our reporting obligations and the trading price of our common stock could be negatively affected.
We believe that customers in our target markets are likely to be particularly sensitive to product defects and errors. Our reputation and the public image of our products and technologies may be impaired if our products fail to perform as expected.
Our reputation and the public image of our products and technologies may be impaired if our products or similar products of our competitors fail to perform as expected.
Additionally, during the years ended December 31, 2022 and 2021, we derived approximately 22% of our revenues in both years from our 780XLE freezers. Our principal customers may vary from period to period and such customers may not continue to purchase products from us at current levels or at all.
Our principal customers may vary from period to period and such customers may not continue to purchase products from us at current levels or at all.
Our computer systems and our associated third parties’ computer systems have been, and could be in the future, subject to breach, and our data protection measures may not prevent unauthorized access. The techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and are often difficult to detect.
The techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and are often difficult to detect.
Our common stock, traded on the NASDAQ Capital Market, may be volatile and has experienced price and volume fluctuations. For example, in the year ended December 31, 2022, the highest intra-day sale price of our common stock on NASDAQ was $38.01 per share and the lowest intra-day sale price of our common stock on NASDAQ was $10.40 per share.
For example, in the year ended December 31, 2023, the highest intra-day sale price of our common stock on NASDAQ was $26.89 per share and the lowest intra-day sale price of our common stock on NASDAQ 21 Table of Contents was $8.92 per share.
Many of our competitors are significantly larger than us and have greater financial, technical, research, marketing, sales, distribution and other resources than us.
Many of our competitors are significantly larger than us and have greater financial, technical, research, marketing, sales, distribution and other resources than us and may have longer operating histories. These companies may develop technologies that are superior alternatives to our products or may be more effective at commercializing and marketing their technologies in products.
Any failure to adequately enforce or provide these protective measures could result in liability, protracted and costly litigation, governmental intervention, and fines. Risks related to our common stock Our stock price and volume may be volatile, and purchasers of our securities could incur substantial losses.
Any failure to adequately enforce or provide these protective measures or to prevent unauthorized access to our data, including customer information could result in liability, loss of business, protracted and costly litigation, governmental intervention, fines and damage to our reputation.
In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations. We cannot predict whether third parties will assert these claims against us, or whether those claims will harm our business.
Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changePROPERTIES Our material office and manufacturing leases are detailed below: Location Square Feet Principal Use Lease Expiration Bothell, WA 45,522 Corporate headquarters, manufacturing, research and development, marketing, and administrative offices July 2031 Woodinville, WA 13,578 Warehouse January 2030 Menlo Park, CA 3,460 Research and development, and administrative offices December 2023 Albuquerque, NM 9,932 Manufacturing, research and development, and administrative offices January 2023 Bruce Township, MI 106,998 Manufacturing, research and development, and administrative offices Month to Month Athens, OH 50,000 Manufacturing, research and development, and administrative offices March 2028 Nelsonville, OH 24,114 Warehouse May 2023 Columbus, OH 1,807 Administrative offices January 2025 Indianapolis, IN 11,415 Manufacturing, research and development, and administrative offices September 2024 United States 12,500 Biological and pharmaceutical specimen storage January 2027 United States 26,600 Biological and pharmaceutical specimen storage March 2024 United States 16,153 Biological and pharmaceutical specimen storage June 2024 United States 16,800 Biological and pharmaceutical specimen storage February 2026 United States 26,800 Biological and pharmaceutical specimen storage November 2031 Netherlands 47,533 Biological and pharmaceutical specimen storage March 2026 We consider the facilities to be in a condition suitable for their current uses.
Biggest changePROPERTIES Our material office and manufacturing leases are detailed below: Location Square Feet Principal Use Lease Expiration Bothell, WA 45,522 Corporate headquarters, manufacturing, research and development, marketing, and administrative offices July 2031 Woodinville, WA 13,578 Warehouse January 2030 Albuquerque, NM 2,940 Research and development and administrative offices April 2027 Bruce Township, MI 106,998 Manufacturing, research and development, and administrative offices Month to Month Athens, OH 50,000 Manufacturing, research and development, and administrative offices March 2028 Nelsonville, OH 24,114 Warehouse June 2024 Columbus, OH 1,807 Administrative offices January 2025 Indianapolis, IN 11,415 Manufacturing, research and development, and administrative offices September 2024 United States 12,500 Biological and pharmaceutical specimen storage January 2027 United States 26,600 Biological and pharmaceutical specimen storage March 2024 United States 16,153 Biological and pharmaceutical specimen storage June 2024 United States 16,800 Biological and pharmaceutical specimen storage February 2026 United States 26,800 Biological and pharmaceutical specimen storage November 2031 Netherlands 47,533 Biological and pharmaceutical specimen storage March 2026 We consider the facilities to be in a condition suitable for their current uses.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSee Item 12 for information regarding securities authorized for issuance under our equity compensation plans. 22 Table of Contents Performance graph The following graph shows the cumulative total stockholder return on our common stock with the cumulative total return of the S&P Small Cap 600 Index and our peer group, assuming an initial investment of $100 on December 31, 2017 and the reinvestment of all dividends.
Biggest changeThe following graph shows the cumulative total stockholder return on our common stock with the cumulative total return of the S&P Small Cap 600 Index and our peer group, assuming an initial investment of $100 on December 31, 2018 and the reinvestment of all dividends. Issuer repurchases of equity securities Not applicable. ITEM 6. RESERVED Reserved.
ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market information for common stock Our common stock is traded on the NASDAQ Capital Market exchange under the ticker symbol “BLFS.” Stockholders and dividends As of March 21, 2023, there were approximately 202 holders of record of our common stock.
MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market information for common stock Our common stock is traded on the NASDAQ Stock Market under the trading symbol “BLFS.” 26 Table of Contents Stockholders and dividends As of February 22, 2024, there were approximately 256 holders of record of our common stock.
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Performance graph The following information is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A under the Exchange Act, or to the liabilities of Section 18 of the Exchange Act, and will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent we specifically incorporate it by reference into such a filing.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOther income and expenses Total other income and expenses for the years ended December 31, 2022, 2021, and 2020 were comprised of the following: Year Ended December 31, 2022 vs. 2021 2021 vs. 2020 (In thousands, except percentages) 2022 2021 2020 $ Change % Change $ Change % Change Change in fair value of warrant liability $ - $ (121 ) $ 3,601 $ 121 (100 )% $ (3,722 ) (103 )% Change in fair value of investments 697 - 1,319 697 - % (1,319 ) (100 )% Interest (expense) income, net (687 ) (485 ) 40 (202 ) 42 % (525 ) (1,313 )% Other income 704 289 - 415 144 % 289 - % Gain on acquisition of Sexton - 6,451 - (6,451 ) (100 )% 6,451 - % Total other income (expense), net $ 714 $ 6,134 $ 4,960 $ (5,420 ) (88 )% $ 1,174 24 % Change in fair value of warrant liability.
Biggest changeThe benefit recognized in the year ended December 31, 2023 relates primarily to changes in our estimated probability of achieving earnout targets set forth within the purchase agreements. 34 Table of Contents Other income and expenses Total other income and expenses for the years ended December 31, 2023, 2022, and 2021 were comprised of the following: Year Ended December 31, 2023 vs. 2022 2022 vs. 2021 (In thousands, except percentages) 2023 2022 2021 $ Change % Change $ Change % Change Change in fair value of warrant liability $ — $ — $ (121) $ — — % $ 121 (100) % Change in fair value of investments — 697 — (697) (100 %) 697 — % Interest expense, net (1,812) (687) (485) (1,125) 164 % (202) 42 % Other income 1,264 704 289 560 80 % 415 144 % Gain on settlement of Global Cooling escrow 5,115 — — 5,115 — % — — % Gain on acquisition of Sexton Biotechnologies, Inc. — — 6,451 — — % (6,451) (100 %) Total other income, net $ 4,567 $ 714 $ 6,134 $ 3,853 540 % $ (5,420) (88 %) Change in fair value of warrant liability.
As consideration for the Sexton Merger (the “Sexton Merger Consideration”), holders of common stock, preferred stock and options of Sexton, other than the Company (collectively, the “Sexton Participating Holders”), are entitled to receive an aggregate of 530,502 newly issued shares of the Company’s common stock, subject to certain post-closing adjustments, of which 477,452 shares of Common Stock were issued to the Sexton Participating Holders at the Closing, and 53,050 shares of Common Stock, or approximately 10% of the Merger consideration, were deposited into an escrow account for indemnification and post-closing purchase price adjustment purposes.
As consideration for the Sexton Merger (the “Sexton Merger Consideration”), holders of common stock, preferred stock and options of Sexton, other than the Company (collectively, the “Sexton Participating Holders”), were entitled to receive an aggregate of 530,502 newly issued shares of the Company’s common stock, subject to certain post-closing adjustments, of which 477,452 shares of Common Stock were issued to the Sexton Participating Holders at the Closing, and 53,050 shares of Common Stock, or approximately 10% of the Merger consideration, were deposited into an escrow account for indemnification and post-closing purchase price adjustment purposes.
Our current portfolio of bioproduction tools and services are comprised of three revenue lines that contain seven main offerings: (i) cell processing (including biopreservation media for the preservation of cells and tissues, human platelet lysate media for the supplementation of cell expansion, cryogenic vials and automated fill machines that provide high-quality, efficient, and precise mixes of solutions), (ii) freezers and thaw systems (including a full line of mechanical ultra-low temperature (“ULT”), isothermal, and liquid nitrogen freezers and accessories, automated thaw devices which provide controlled, consistent thawing of frozen biologics in vials and cryobags), and (iii) storage and storage services (including biological and pharmaceutical storage services, and “smart”, cloud connected devices for transporting biologic payloads).
Our current portfolio of bioproduction tools and services are comprised of three revenue lines that contain seven main offerings: (i) cell processing (including biopreservation media for the preservation of cells and tissues, human platelet lysate media for the supplementation of cell expansion, cryogenic vials and automated fill machines that provide high-quality, efficient, and precise mixes of solutions), (ii) freezers and thaw systems (including a full line of mechanical ultra-low temperature (“ULT”), isothermal, and liquid nitrogen freezers and accessories, automated thaw devices which provide controlled, consistent thawing of frozen biologics in vials and cryobags), and (iii) Biostorage services (including biological and pharmaceutical storage services and transport, and “smart”, cloud connected devices for transporting biologic payloads).
The aggregate merger consideration paid pursuant to the GCI Merger Agreement to the GCI Stockholders was 6,646,870 newly issued shares of common stock, provided, however, that the GCI Merger Consideration otherwise payable to GCI Stockholders is subject to the withholding of the GCI Escrow Shares (as defined below) and is subject to reduction for indemnification obligations.
The aggregate merger consideration paid pursuant to the GCI Merger Agreement to the GCI Stockholders was 6,646,870 newly issued shares of common stock, provided, however, that the GCI Merger Consideration otherwise payable to GCI Stockholders was subject to the withholding of the GCI Escrow Shares (as defined below) and was subject to reduction for indemnification obligations.
The Company also generates revenue from the leasing of our property, plant, and equipment, operating right-of-use assets, and evo cold chain systems to customers pursuant to service contracts or rental arrangements entered into with the customer.
The Company also generates revenue from the leasing of our property and equipment, operating right-of-use assets, and evo cold chain systems to customers pursuant to service contracts or rental arrangements entered into with the customer.
Discussions of 2020 results and year-to-year comparisons between 2021 and 2020 that are omitted in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 31, 2022.
Discussions of 2021 results and year-to-year comparisons between 2022 and 2021 that are omitted in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 31, 2023.
Based upon a review of the four sources of income identified within ASC 740, Accounting for Income Taxes , the Company determined that the Company’s recorded deferred tax liabilities as of December 31, 2022 would be a sufficient source of taxable income to realize all of its deferred tax assets except for a portion of its net operating loss carryforwards.
Based upon a review of the four sources of income identified within ASC 740, Accounting for Income Taxes , the Company determined that the Company’s recorded deferred tax liabilities as of December 31, 2023 would be a sufficient source of taxable income to realize all of its deferred tax assets except for a portion of its net operating loss carryforwards.
The quantitative assessment considers whether the carrying amount of a reporting unit exceeds its fair value, in which case an impairment charge is recorded to the extent the reporting unit’s carrying value exceeds its fair value. The Company operates as one reporting unit as of the goodwill impairment measurement date in the fourth quarter of 2022.
The quantitative assessment considers whether the carrying amount of a reporting unit exceeds its fair value, in which case an impairment charge is recorded to the extent the reporting unit’s carrying value exceeds its fair value. The Company operates as one reporting unit as of the goodwill impairment measurement date in the fourth quarter of 2023.
As a result, a full valuation allowance on its deferred tax assets was recorded as of December 31, 2022. The Company will continue to assess the realizability of its assets going forward and will adjust the valuation allowance as needed.
As a result, a full valuation allowance on its deferred tax assets was recorded as of December 31, 2023. The Company will continue to assess the realizability of its assets going forward and will adjust the valuation allowance as needed.
In the GCI Merger, all of the issued and outstanding shares of capital stock of GCI immediately prior to the filing of the Certificate of Merger with the Secretary of State of the State of Delaware (other than those properly exercising any applicable dissenter’s rights under Delaware law) were converted into the right to receive the GCI Merger Consideration (as defined below).
In the GCI Merger, all of the issued and outstanding shares of capital stock of GCI immediately prior to the filing of the Certificate of Merger with the Secretary of State of the State of Delaware (other than those properly exercising any applicable dissenter’s rights under Delaware law) were converted into the right to receive the 39 Table of Contents GCI Merger Consideration (as defined below).
The Company primarily recognizes product revenues, service revenues, and rental revenues. Product revenues are generated from the sale of biopreservation media, ThawSTAR, and freezer products. We recognize product revenue, including shipping and handling charges billed to customers, when we transfer control of our products to our customers.
The Company primarily recognizes product revenues, service revenues, and rental revenues. Product revenues are generated from the sale of biopreservation media, ThawSTAR, and freezer products. We recognize product revenue, 28 Table of Contents including shipping and handling charges billed to customers, when we transfer control of our products to our customers.
None of the Company’s contracts contained a significant financing component or variable consideration as of and during the years ended December 31, 2022, 2021, and 2020.
None of the Company’s contracts contained a significant financing component or variable consideration as of and during the years ended December 31, 2023, 2022, and 2021.
Liquidity and capital resources We believe our cash, cash equivalents, restricted cash, cash generated from operations, available-for-sale securities, and credit lines will satisfy, for at least the next twelve months from the date of this filing, our liquidity requirements, both globally and domestically, including the following: working capital needs, capital expenditures, contractual obligations, commitments, principal and interest payments on debt, and other liquidity requirements associated with our operations.
Liquidity and capital resources We believe our cash, cash equivalents, restricted cash, cash generated from operations, available-for-sale securities, and credit lines will satisfy, for at least the next twelve months from the date of this filing, our liquidity requirements, both globally and domestically, including the following: working capital needs, capital expenditures, ongoing initiative for divestiture of the Freezer Business, contractual obligations, commitments, principal and interest payments on debt, and other liquidity requirements associated with our operations.
Definite-lived intangible assets and their related estimated useful lives are reviewed at least annually to determine if any adverse conditions exist that would indicate the carrying value of these assets may not be recoverable. Indefinite-lived intangibles are carried at the initially recorded fair value less any recognized impairment.
Definite-lived intangible assets and their related estimated useful lives are reviewed at least annually to determine if any adverse conditions exist that would indicate the carrying value of these assets may not be recoverable. 29 Table of Contents Indefinite-lived intangibles are carried at the initially recorded fair value less any recognized impairment. Indefinite-lived intangibles are tested annually for impairment.
Acquisition costs Acquisition costs consist of legal, accounting, third-party valuations, and other due diligence costs related to our Global Cooling, SciSafe, and Sexton acquisitions. Change in fair value of contingent consideration Change in fair value of contingent consideration consists of changes in estimated fair value of our potential earnouts related to our SciSafe, CBS, and Astero acquisitions.
Acquisition costs Acquisition costs consist of legal, accounting, third-party valuations, and other due diligence costs related to our Global Cooling and Sexton acquisitions. Change in fair value of contingent consideration Change in fair value of contingent consideration consists of changes in estimated fair value of our potential earnouts related to our SciSafe and Custom Biogenic Systems acquisitions.
Intangible asset impairment charges Intangible asset impairment charges consist of the impairments incurred of $69.9 million and $40.5 million during the quarter ended June 30, 2022 and impairment assessment date of October 1, 2022, respectively. These impairment charges impacted both definite and indefinite-lived intangible assets acquired during the acquisition of Global Cooling.
Asset impairment charges in the year ended December 31, 2022 consist of the impairments incurred of $69.9 million and $40.5 million during the quarter ended June 30, 2022 and impairment assessment date of October 1, 2022, respectively. These impairment charges impacted both definite and indefinite-lived intangible assets acquired during the acquisition of Global Cooling and Custom Biogenic Systems.
Cost of product, rental, and service revenue as a percentage of revenue was 70%, 69%, and 43% for the years ended December 31, 2022, 2021, and 2020, respectively.
Cost of product, rental, and service revenue as a percentage of revenue was 69% and 70% for the years ended December 31, 2023 and 2022, respectively.
We believe that our $8.3 million warranty accrual as of December 31, 2022 is adequate and historically has been adequate; however, due to the inherent uncertainty in the accrual estimation process, including forecasting future warranty claims, costs associated with servicing future warranty claims, and unexpected major rework campaigns that may arise in the future, our actual warranty costs incurred may differ from our warranty accrual estimate.
We believe that our $7.9 million warranty accrual as of December 31, 2023 is adequate and historically has been adequate; however, due to the inherent uncertainty in the accrual estimation process, including forecasting future warranty claims, costs 30 Table of Contents associated with servicing future warranty claims, and unexpected major rework campaigns that may arise in the future, our actual warranty costs incurred may differ from our warranty accrual estimate.
Cost of product, rental, and service revenue in the years ended December 31, 2022, 2021, and 2020 includes $251,000, $1.1 million, and $411,000, respectively, in inventory step-up expense recorded in the purchase accounting of our Global Cooling, CBS, and AsteroBio Corporation (“Astero”) acquisitions.
Cost of product, rental, and service revenue in the years ended December 31, 2023 and 2022 includes zero and $251,000, respectively, in inventory step-up expense recorded in the purchase accounting of our Global Cooling, CBS, and AsteroBio Corporation (“Astero”) acquisitions.
The following summarizes certain of our contractual obligations as of December 31, 2022 and the effect such obligations are expected to have on our cash flows in the next fiscal year: Long-term debt, including interest These amounts represent expected cash payments, including principal and interest. Debt obligations are described in Note 13 of the Consolidated Financial Statements.
The following summarizes certain of our contractual obligations as of December 31, 2023 and the effect such obligations are expected to have on our cash flows in the next fiscal year: Long-term debt, including interest These amounts represent expected cash payments, including principal and interest.
Our effective tax rate for 2022 was lower than the U.S. statutory rate of 21% primarily due to the change in our valuation allowance. The income tax benefit recognized in the year ended December 31, 2021 primarily related to losses generated in 2021 and the recognition of the release of our valuation allowance related to the acquisition of Global Cooling.
Our effective tax rate for 2023 was lower than the U.S. statutory rate of 21% primarily due to the change in our valuation allowance. The income tax benefit recognized in the year ended December 31, 2022 primarily related to losses generated in 2022.
Actual results may differ significantly from these estimates under different assumptions, judgments, or conditions. 25 Table of Contents Revenue recognition To determine revenue recognition for contractual arrangements that we determine are within the scope of Financial Accounting Standards Board (“FASB”) Topic 606, Revenue from Contracts with Customers , we perform the following five steps: (i) identify each contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to our performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy the relevant performance obligation.
Revenue recognition To determine revenue recognition for contractual arrangements that we determine are within the scope of Financial Accounting Standards Board (“FASB”) Topic 606, Revenue from Contracts with Customers , we perform the following five steps: (i) identify each contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to our performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy the relevant performance obligation.
Reflects the changes in fair value associated with the periodic “mark-to-market” valuation of certain warrants that were issued in 2014. See Note 1: “ Organization and Significant Accounting Policies ” of our accompanying Consolidated Financial Statements “Certain Warrants which have Features that may Result in Cash Settlement” for more information. Change in fair value of investments.
Reflects the changes in fair value associated with the periodic “mark-to-market” valuation of certain warrants that were issued in 2014. See Note 1: Organization and significant accounting policies, “Certain Warrants which have Features that may Result in Cash Settlement” within the consolidated financial statements in Part II, Item 8 of this Annual Report for more information.
In the year ended December 31, 2021, our operating activities used cash of $4.6 million reflecting net loss of $8.9 million and non-cash charges totaling $6.6 million primarily related to depreciation, amortization, changes in the fair value of investments, changes in fair value of contingent consideration, deferred income tax benefit, stock-based compensation, and non-cash lease charges.
In the year ended December 31, 2022, our operating activities used cash of $8.5 million reflecting net loss of $139.8 million and non-cash charges totaling $146.2 million primarily related to impairment of intangible assets, depreciation, amortization, changes in fair value of contingent consideration, deferred income tax benefit, stock-based compensation, and non-cash lease charges.
Reflects fair value adjustments to our investment in iVexSol. Interest (expense) income, net . Interest expense incurred in the year ended December 31, 2022 related primarily to the loan obtained in September 2022 and two loans that were assumed in the acquisition of Global Cooling. We also earn interest on cash held in our money market account.
Change in fair value of investments. Reflects fair value adjustments to our investment in iVexSol. Interest expense, net . Interest expense incurred in the year ended December 31, 2023 related primarily to the loan obtained in September 2022 and two loans that were assumed in the acquisition of Global Cooling.
This increase was primarily driven by increased sales. We expect the cost of product, rental, and service revenue to fluctuate in future quarters based on production volumes, product mix, and the impact of any future acquisitions.
This decrease was primarily driven by decreased sales compared to the prior year. We expect the cost of product, rental, and service revenue to fluctuate in future quarters based on production volumes and product mix.
We have in-house expertise in cryobiology and continue to capitalize on opportunities to maximize the value of our product platform for our extensive customer base through both organic growth innovations and acquisitions.
We have in-house expertise in cryobiology and continue to capitalize on opportunities to maximize the value of our product platform for our extensive customer base through both organic growth innovations and acquisitions. Subsequent to the second quarter of 2023, we began to seek divestment of our Freezer Business from our current product portfolio.
Contractual obligations Our cash flows from operations are dependent on a number of factors, including fluctuations in our operating results, accounts receivable collections, inventory management, and the timing of tax and other payments. As a result, the impact of contractual obligations on our liquidity and capital resources in future periods should be analyzed in conjunction with such factors.
Contractual obligations Our cash flows from operations are dependent on a number of factors, including fluctuations in our operating results, accounts receivable collections, inventory management, and the timing of tax and other payments.
These policies require management’s most difficult, subjective, or complex judgements, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Critical accounting policies and estimates We have identified the policies and estimates below as being critical to our business operations and the understanding of our results of operations. These policies require management’s most difficult, subjective, or complex judgements, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Customers use our products to maintain the health and function of biologic material during sourcing, manufacturing, storage, and distribution.
Our products are used in basic and applied research and commercial manufacturing of biologic-based therapies. Customers use our products to maintain the health and function of biologic material during sourcing, manufacturing, storage, and distribution.
We invested $44.6 million in available-for-sale securities in addition to continued investment in capital expenditures and purchases of assets held for rent, using an additional $13.9 million. Our investing activities used $13.2 million of cash in the year ended December 31, 2021. We acquired $1.6 million in cash in the acquisitions of Global Cooling and Sexton.
We invested $44.6 million in available-for-sale securities in addition to continued investment in capital expenditures and purchases of assets held for rent, using an additional $13.9 million. Financing activities In the year ended December 31, 2023, cash provided by financing activities was $10.6 million.
The warranty accrual for the cost of a major rework campaign is primarily based on an estimate of the cost to repair each affected unit and the number of affected units expected to be repaired. 27 Table of Contents We believe that our analysis of historical warranty claim trends and knowledge of potential manufacturing and/or product design improvements or issues provide sufficient information to establish a reasonable estimate for the cost of future warranty claims at the time of sale and our warranty accruals as of the date of our Consolidated Balance Sheets.
We believe that our analysis of historical warranty claim trends and knowledge of potential manufacturing and/or product design improvements or issues provide sufficient information to establish a reasonable estimate for the cost of future warranty claims at the time of sale and our warranty accruals as of the date of our Consolidated Balance Sheets.
The GCI Merger was accounted for as a purchase of a business under FASB ASC Topic 805, Business Combinations . The fair value of the net tangible assets acquired was $740,000, the deferred tax liability acquired was $24.1 million, the fair value of the intangible assets acquired was $120.5 million, and the residual goodwill was $137.8 million.
The fair value of the net tangible assets acquired was $740,000, the deferred tax liability acquired was $24.1 million, the fair value of the intangible assets acquired was $120.5 million, and the residual goodwill was $137.8 million.
Global Cooling, Inc. acquisition On March 19, 2021, the Company entered into an Agreement and Plan of Merger (the “GCI Merger Agreement”) with BLFS Merger Subsidiary, Inc., a Delaware corporation (“GCI Merger Sub”), Global Cooling, a Delaware corporation and Albert Vierling and William Baumel, in their capacity as the representatives of the stockholders of GCI (collectively, the “GCI Seller Representative”). 24 Table of Contents On May 3, 2021, pursuant to the GCI Merger Agreement, subject to the terms and conditions set forth therein, the transactions contemplated by the GCI Merger Agreement were consummated (the “GCI Closing”), GCI Merger Sub merged with and into GCI (the “GCI Merger” and, together with other transactions contemplated by the GCI Merger Agreement, the “GCI Transactions”), with GCI continuing as the surviving corporation in the GCI Merger and a wholly owned subsidiary of the Company.
On May 3, 2021, pursuant to the GCI Merger Agreement, subject to the terms and conditions set forth therein, the transactions contemplated by the GCI Merger Agreement were consummated (the “GCI Closing”), GCI Merger Sub merged with and into GCI (the “GCI Merger” and, together with other transactions contemplated by the GCI Merger Agreement, the “GCI Transactions”), with GCI continuing as the surviving corporation in the GCI Merger and a wholly owned subsidiary of the Company.
Revenue is impacted by the relatively high degree of customer concentration, the timing of orders, the development efforts of our customers or end-users and regulatory approvals for biologics that incorporate our products, which may result in significant quarterly fluctuations.
This concentration remained relatively consistent despite significant changes in product mix, as the customer's reduction in demand for capital purchases was less pronounced than others in 2023. 32 Table of Contents Revenue is impacted by the relatively high degree of customer concentration, the timing of orders, the development efforts of our customers or end-users and regulatory approvals for biologics that incorporate our products, which may result in significant quarterly fluctuations.
Revenue Revenue for years ended December 31, 2022, 2021, and 2020 were comprised of the following: Year Ended December 31, 2022 vs. 2021 2021 vs. 2020 (In thousands, except percentages) 2022 2021 ⁽¹⁾ 2020 ⁽²⁾ $ Change % Change $ Change % Change Product revenue Freezer and thaw $ 66,682 $ 56,620 $ 13,548 $ 10,062 18 % $ 43,072 318 % Cell processing 68,509 44,965 30,946 23,544 52 % 14,019 45 % Storage and cold chain services 809 328 46 481 147 % 282 613 % Service revenue Freezer and thaw 74 - - 74 - % - - % Storage and cold chain services 15,234 9,817 1,752 5,417 55 % 8,065 460 % Rental revenue Storage and cold chain services 10,451 7,426 1,795 3,025 41 % 5,631 314 % Total revenue $ 161,759 $ 119,156 $ 48,087 $ 42,603 36 % $ 71,069 148 % (1) 2021 revenue includes product revenue related to Global Cooling from May 3, 2021 through December 31, 2021 and product revenue related to Sexton from September 1, 2021 through December 31, 2021.
Revenue Revenue for years ended December 31, 2023, 2022, and 2021 were comprised of the following: Year Ended December 31, 2023 vs. 2022 2022 vs. 2021 (In thousands, except percentages) 2023 2022 2021⁽¹⁾ $ Change % Change $ Change % Change Product revenue Freezer and thaw $ 50,622 $ 66,682 $ 56,620 $ (16,060) (24 %) $ 10,062 18 % Cell processing 65,772 68,509 44,965 (2,737) (4 %) 23,544 52 % Biostorage services 1,301 809 328 492 61 % 481 147 % Service revenue Freezer and thaw 1,024 74 — 950 1284 % 74 — % Biostorage services 16,527 15,234 9,817 1,293 8 % 5,417 55 % Rental revenue Biostorage services 8,025 10,451 7,426 (2,426) (23 %) 3,025 41 % Total revenue $ 143,271 $ 161,759 $ 119,156 $ (18,488) (11 %) $ 42,603 36 % (1) 2021 revenue includes product revenue related to Global Cooling from May 3, 2021 through December 31, 2021 and product revenue related to Sexton from September 1, 2021 through December 31, 2021.
The GCI Escrow Property will be held for a period of up to twenty-four (24) months after the GCI Closing as the sole and exclusive source of payment for any post-GCI Closing indemnification claims (other than fraud claims), unless earlier released in accordance with the terms of the GCI Escrow Agreement.
The GCI Escrow Property was held for a period of up to twenty-four (24) months after the GCI Closing as the sole and exclusive source of payment for any post-GCI Closing indemnification claims (other than fraud claims). On September 28, 2022, BioLife asserted an indemnification claim pursuant to the GCI Merger Agreement.
The NOL carryforwards are subject to an annual limitation in the event of certain cumulative changes in the ownership interest. This limits the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities.
This limits the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. Subsequent ownership changes may further affect the limitation in future years.
Absent acquisitions of additional products, product candidates, or intellectual property, we believe our current cash balances are adequate to meet our cash needs for at least the next 12 months as of the date of this filing. We expect operating expenses in the year ending December 31, 2023 to increase as we continue to expand our CGT tools business.
Absent acquisitions of additional products, product candidates, or intellectual property, we believe our current cash, cash equivalents, and available-for-sale securities balances, in addition to our cash flows from operations, are adequate to meet our cash needs for at least the next 12 months as of the date of this filing.
Our future capital requirements may include, but are not limited to, purchases of property, plant and equipment, the acquisition of additional cell and gene therapy products and technologies to complement our existing manufacturing capabilities, and continued investment in our intellectual property portfolio.
Our future capital requirements may include, but are not limited to, purchases of property and equipment, the acquisition of additional cell and gene therapy products and technologies, and continued investment in our intellectual property portfolio. 38 Table of Contents We actively evaluate various strategic transactions on an ongoing basis, including acquiring complementary products, technologies or businesses that would complement our existing portfolio.
See Note 11: Goodwill and intangible assets of our accompanying Consolidated Financial Statements for more information on the events and assessment leading to these non-cash impairment charges during the year ended December 31, 2022.
See Note 2: Impairment of property and equipment and definite-lived intangible assets within the consolidated financial statements in Part II, Item 8 of this Annual Report for more information on the events and assessment leading to these non-cash impairment charges during the years ended December 31, 2023 and 2022.
Such fluctuations are expected, but they may not be predictive of future revenue or otherwise indicative of a trend. 29 Table of Contents Costs and operating expenses Total costs and operating expenses for years ended December 31, 2022, 2021, and 2020 were comprised of the following: Year Ended December 31, 2022 vs. 2021 2021 vs. 2020 (In thousands, except percentages) 2022 2021 2020 $ Change % Change $ Change % Change Cost of product, rental, and service revenue $ 107,937 $ 82,108 $ 20,646 $ 25,829 31 % $ 61,462 298 % Research and development 14,798 11,821 6,720 2,977 25 % 5,101 76 % Sales and marketing 21,570 14,006 6,413 7,564 54 % 7,593 118 % General and administrative 47,670 33,668 15,273 14,002 42 % 18,395 120 % Intangible asset impairment charges 110,364 - - 110,364 - % - - % Intangible asset amortization 9,697 8,202 3,033 1,495 18 % 5,169 170 % Acquisition costs 18 1,636 668 (1,618 ) (99 )% 968 145 % Change in fair value of contingent consideration (4,754 ) 2,875 1,575 (7,629 ) (265 )% 1,300 83 % Total operating expenses $ 307,300 $ 154,316 $ 54,328 $ 152,984 99 % $ 99,988 184 % Cost of product, rental, and service revenue In the year ended December 31, 2022, cost of product, rental, and service revenue increased $25.8 million or 31% from the year ended December 31, 2021.
Costs and operating expenses Total costs and operating expenses for years ended December 31, 2023, 2022, and 2021 were comprised of the following: Year Ended December 31, 2023 vs. 2022 2022 vs. 2021 (In thousands, except percentages) 2023 2022 2021 $ Change % Change $ Change % Change Cost of product, rental, and service revenue $ 96,519 $ 107,937 $ 82,108 $ (11,418) (11 %) $ 25,829 31 % General and administrative 55,725 47,670 33,668 8,055 17 % 14,002 42 % Sales and marketing 24,583 21,570 14,006 3,013 14 % 7,564 54 % Research and development 18,796 14,798 11,821 3,998 27 % 2,977 25 % Asset impairment charges 15,485 110,364 — (94,879) (86 %) 110,364 - % Intangible asset amortization 5,181 9,697 8,202 (4,516) (47 %) 1,495 18 % Acquisition costs — 18 1,636 (18) (100) % (1,618) (99 %) Change in fair value of contingent consideration (2,193) (4,754) 2,875 2,561 (54) % (7,629) (265 %) Total operating expenses $ 214,096 $ 307,300 $ 154,316 $ (93,204) (30 %) $ 152,984 99 % Cost of product, rental, and service revenue In the year ended December 31, 2023, cost of product, rental, and service revenue decreased $11.4 million, or 11%, from the year ended December 31, 2022.
Lease obligations are described in Note 6 of the Consolidated Financial Statements. As of December 31, 2022, our total obligations were $18.1 million, of which $3.0 million was short-term.
Debt obligations are described in Note 13 of the Consolidated Financial statements in Part II, Item 8 of this Annual Report. As of December 31, 2023, our total obligations were $25.2 million, of which $6.8 million was short-term.
In order to acquire such assets, we may need to seek additional financing to fund these investments.
We continue to seek to acquire such potential assets that may offer us the best opportunity to create value for our shareholders. In order to acquire such assets, we may need to seek additional financing to fund these investments.
Income Tax Benefit Income tax benefit for the years ended December 31, 2022, 2021 and 2020 was as follows: Year Ended December 31, 2022 vs. 2021 2021 vs. 2020 (In thousands, except percentages) 2022 2021 2020 $ Change % Change $ Change % Change Income tax benefit $ 5,022 $ 20,118 $ 3,264 $ (15,096 ) (75 )% $ 16,854 516 % Effective tax rate 4 % 69 % 255 % The income tax benefit recognized in the year ended December 31, 2022 primarily related to losses generated in 2022.
Reflects the non-cash gain associated with our investment in Sexton due to the step-acquisition of the remaining shares of Sexton and subsequent consolidation of Sexton in our financial statements. 35 Table of Contents Income Tax (Expense) Benefit Income tax benefit for the years ended December 31, 2023, 2022, and 2021 was as follows: Year Ended December 31, 2023 vs. 2022 2022 vs. 2021 (In thousands, except percentages) 2023 2022 2021 $ Change % Change $ Change % Change Income tax (expense) benefit $ (169) $ 5,022 $ 20,118 $ (5,191) (103) % $ (15,096) (75 %) Effective tax rate — % 4 % 69 % The income tax benefit recognized in the year ended December 31, 2023 primarily related to losses generated in 2023.
Our effective tax rate for 2021 was higher than the U.S. statutory rate of 21% primarily due to windfall benefits on stock compensation, 162(m) limitations on executive compensation, and the change in our valuation allowance.
Our effective tax rate for 2022 was lower than the U.S. statutory rate of 21% primarily due to our valuation allowance.
We believe the estimated purchased customer relationships, developed technologies, trademarks, tradenames, patents, and in process research and development amounts so determined represent the fair value at the date of acquisition and do not exceed the amount a third party would pay for the assets. 26 Table of Contents Intangible assets and goodwill Intangible assets Intangible assets with a definite life are amortized over their estimated useful lives using the straight-line method and the amortization expense is recorded within intangible asset amortization in the Consolidated Statements of Operations.
We believe the estimated purchased customer relationships, developed technologies, trademarks, tradenames, and patents amounts so determined represent the fair value at the date of acquisition and do not exceed the amount a third party would pay for the assets.
On September 20, 2022, the Company, and certain of its subsidiaries, entered into a term loan agreement, which provided for up to $50 million in aggregate principal to be drawn.
On September 20, 2022, the Company, and certain of its subsidiaries, entered into a term loan agreement, which provided for up to $60 million in aggregate principal to be drawn with $30 million being available upon closing and an additional 36 Table of Contents $30 million available in three separate tranches, subject to the Company meeting revenue milestones by a certain date or at the discretion of the lender by a certain date.
Impacts of COVID-19 Our domestic and international operations have been and continue to be affected by the ongoing global pandemic of COVID-19 and the resulting volatility and uncertainty it has caused in the U.S. and international markets.
Supply chain considerations Our domestic and international supply chain operations were affected during the years ended December 31, 2021 and 2022 by the global COVID-19 pandemic and the resulting volatility and uncertainty it caused in the U.S. and international markets.
Subsequent ownership changes may further affect the limitation in future years. 28 Table of Contents Recent accounting standards update See Note 1: “ Organization and significant accounting policies – recent accounting pronouncements ,” to our Consolidated Financial Statements included in this report for more information.
Recent accounting standards update See Note 1: Organization and significant accounting policies – recent accounting pronouncements , within the consolidated financial statements in Part II, Item 8 of this Annual Report for more information.
As of December 31, 2022, the Company has an unrecognized tax benefit of $610,000 related to tax attributes being carried forward. The Company is generally subject to examination by U.S. federal and local income tax authorities for all tax years in which loss carryforward is available.
The Company is generally subject to examination by U.S. federal and local income tax authorities for all tax years in which loss carryforward is available. 31 Table of Contents As of December 31, 2023, the Company had U.S. federal net operating loss (“NOL”) carryforwards of approximately $151.9 million, which is available to reduce future taxable income.
The fair value of the contingent consideration is remeasured each reporting period, with any change in the value recorded in our Consolidated Statements of Operations as change in fair value of contingent consideration.
The fair value of the contingent consideration is remeasured each reporting period, with any change in the value recorded in our Consolidated Statements of Operations as change in fair value of contingent consideration. During the year ended December 31, 2023, all contingent consideration liabilities were written off upon assessment of the probability we would achieve certain revenue targets for earnouts.
Cash flows Year Ended December 31, 2022 vs. 2021 (In thousands) 2022 2021 $ Change % Change Operating activities $ (8,488 ) $ (4,593 ) $ (3,895 ) 85 % Investing activities (58,117 ) (13,192 ) (44,925 ) 341 % Financing activities 16,316 (2,778 ) 19,094 (687 )% Net (decrease) increase in cash and cash equivalents $ (50,289 ) $ (20,563 ) $ (29,726 ) 145 % 32 Table of Contents Operating activities In the year ended December 31, 2022, our operating activities used cash of $8.5 million reflecting net loss of $139.8 million and non-cash charges totaling $146.2 million primarily related to impairment of intangible assets, depreciation, amortization, changes in fair value of contingent consideration, deferred income tax benefit, stock-based compensation, and non-cash lease charges.
Cash flows Year Ended December 31, 2023 vs. 2022 (In thousands, except percentages) 2023 2022 $ Change % Change Operating activities $ (12,498) $ (8,488) $ (4,010) (47 %) Investing activities 17,837 (58,117) 75,954 131 % Financing activities 10,591 16,316 (5,725) (35) % Net increase (decrease) in cash and cash equivalents $ 15,930 $ (50,289) $ 66,219 132 % Operating activities In the year ended December 31, 2023, our operating activities used cash of $12.5 million reflecting net loss of $66.4 million and non-cash charges totaling $53.9 million primarily related to stock-based compensation, impairment of assets, depreciation, amortization, changes in fair value of contingent consideration, gain on settlement of Global Cooling escrow, and non-cash lease charges.
S&M expense increased $7.6 million in the year ended December 31, 2022, or 54%, compared with the year ended December 31, 2021. The increase is primarily due to $5.0 million of increased personnel expenses from cash and stock compensation.
Sales and marketing expenses During the years ended December 31, 2023, 2022, and 2021, sales and marketing expense (“S&M”) consisted primarily of personnel-related costs, stock based compensation, consulting, advertising, and travel expenses. S&M expense increased $3.0 million in the year ended December 31, 2023, or 14%, compared with the year ended December 31, 2022.
Capital expenditures and purchases of assets held for rent used $14.8 million as we continue to invest in our manufacturing and storage facilities. Financing activities In the year ended December 31, 2022, cash provided by financing activities was $16.3 million.
Capital expenditures and purchases of assets held for rent to maintain and expand the Company's operations used $11.2 million. Our investing activities used $58.1 million of cash in the year ended December 31, 2022.
R&D expense increased $3.0 million in the year ended December 31, 2022, or 25%, compared with the year ended December 31, 2021. The increase is primarily due to $2.5 million of increased personnel costs in cash and stock-based compensation expenses from the full year ownership of Global Cooling and Sexton.
R&D expense increased $4.0 million in the year ended December 31, 2023, or 27%, compared with the year ended December 31, 2022. The increase is primarily due to $2.5 million of increased stock-based compensation expenses and $1.0 million of scrapped research materials related to an adjustment in the design of a future freezer product release that rendered certain components obsolete.
As of December 31, 2022, our total obligations were $25.6 million, of which $1.8 million was short-term. 33 Table of Contents Lease obligations We have various operating and financing lease agreements for office space, warehouses, manufacturing, research equipment, machinery, and production locations as well as vehicles and other equipment.
Lease obligations We have various operating and financing lease agreements for office space, warehouses, manufacturing, research equipment, machinery, and production locations as well as vehicles and other equipment. Lease obligations are described in Note 6 of the Consolidated Financial statements in Part II, Item 8 of this Annual Report.
We develop, manufacture, and market bioproduction tools and services to the cell and gene therapy (“CGT”) industry and broader biopharma market, which are designed to improve quality and de-risk biologic manufacturing, storage, and distribution. Our products are used in basic and applied research and commercial manufacturing of biologic-based therapies.
MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Company Overview 27 Table of Contents We are a life sciences company that develops, manufactures and supplies bioproduction tools and services which are designed to improve quality and de-risk biologic manufacturing, storage, distribution, and transportation in the cell and gene therapy industry and broader biopharma market.
We expect to incur continued spending related to the research and development of new technology, expansion of our existing product lines, and expansion of our commercial capabilities for the foreseeable future, with an increased emphasis on the development of new products during the year ended December 31, 2023.
We expect operating expenses in the year ending December 31, 2024 to decrease as we continue to seek opportunities for the divestiture of our freezer product lines from our current product portfolio. We expect to incur continued spending related to the expansion of our other existing product lines and expansion of our commercial capabilities for the foreseeable future.
The increase in accrued expenses and current liabilities was offset by a $6.9 million reduction in warranty liability and $1.6 million reduction in accounts payable.
The increase in accrued expenses and current liabilities was offset by a $6.9 million reduction in warranty liability and $1.6 million reduction in accounts payable. Investing activities Our investing activities generated $17.8 million of cash in the year ended December 31, 2023. We had $29.1 million in net proceeds of available-for-sale securities to fund capital projects and operations.
In the year ended December 31, 2022, G&A expenses increased by $14.0 million, or 42%, compared with the year ended December 31, 2021. Of this increase, $7.7 million, or 55%, was driven by increased personnel expenses from cash and stock-based compensation.
General and administrative expenses During the years ended December 31, 2023, 2022, and 2021, general and administrative (“G&A”) expense consisted primarily of personnel-related expenses, stock-based compensation, professional fees, such as accounting and consulting fees, and corporate insurance. In the year ended December 31, 2023, G&A expenses increased by $8.1 million, or 17%, compared with the year ended December 31, 2022.
The Company borrowed $20 million upon closing. For additional information on terms, see Note 13: Long-term debt . On March 10, 2023, Silicon Valley Bank (“SVB”), the issuer of our term loan, was closed upon the appointment of the Federal Deposit Insurance Corporation (“FDIC”) as the receiver of SVB.
The Company borrowed $20 million upon closing. As of December 31, 2023, the Company had not drawn additional funding outlined within the Loan Agreement. For additional information on terms, see Note 13: Long-term debt within the consolidated financial statements in Part II, Item 8 of this Annual Report.
Revenue growth in the year ended December 31, 2022, as compared to the year ended December 31, 2021, was driven primarily by organic growth in our cell processing product and storage and cold chain services rental product lines, which grew by 45% and 51%, respectively.
Total Revenue decline in the year ended December 31, 2023, as compared to the year ended December 31, 2022, was driven primarily by reduced purchases of ultra-low temperature and LN2 freezers.
Revenue concentrations with one customer increased to 18% in the year ended December 31, 2022 from 17% from the same customer in the year ended December 31, 2021, primarily as a result of increased sales to a prominent international distributor.
Customers also reevaluated safety stock levels in the year ended December 31, 2023 for cell processing products, causing revenue levels to fall approximately 4% from the year ended December 31, 2022. Revenue concentrations with one customer decreased to 16% in the year ended December 31, 2023 from 18% from the same customer in the year ended December 31, 2022.
Removed
ITEM 7. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Form 10-K contains “forward-looking statements”. These forward-looking statements involve a number of risks and uncertainties. We caution readers that any forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement.
Added
For additional information regarding our ongoing initiative to divest the Freezer Business, see “Item 1A. Risk Factors” of this Annual Report for additional details. Segment reporting Management views the Company's operations and makes decisions regarding how to allocate resources as one reportable segment and one reporting unit.
Removed
These statements are based on current expectations of future events.
Added
Actual results may differ significantly from these estimates under different assumptions, judgments, or conditions.
Removed
Such statements include, but are not limited to, statements about our products, including our newly acquired products, customers, regulatory approvals, the potential utility of and market for our products and services, our ability to implement our business strategy and anticipated business and operations, in particular following our acquisitions in recent years, future financial and operational performance, our anticipated future growth strategy, including the acquisition of synergistic cell and gene therapy manufacturing tools and services or technologies, or other companies or technologies, capital requirements, intellectual property, suppliers, joint venture partners, future financial and operating results, the impact of the COVID-19 pandemic, plans, objectives, expectations and intentions, revenues, costs and expenses, interest rates, outcome of contingencies, business strategies, regulatory filings and requirements, the estimated potential size of markets, capital requirements, the terms of any capital financing agreements and other statements that are not historical facts.
Added
Intangible assets and goodwill Intangible assets Intangible assets with a definite life are amortized over their estimated useful lives using the straight-line method and the amortization expense is recorded within intangible asset amortization in the Consolidated Statements of Operations.
Removed
You can find many of these statements by looking for words like “believes”, “expects”, “anticipates”, “estimates”, “may”, “should”, “will”, “could”, “plan”, “intend”, or similar expressions in this Form 10-K. We intend that such forward-looking statements be subject to the safe harbors created thereby.
Added
The warranty accrual for the cost of a major rework campaign is primarily based on an estimate of the cost to repair each affected unit and the number of affected units expected to be repaired.
Removed
These forward-looking statements are based on the current beliefs and expectations of our management and are subject to significant risks and uncertainties. If underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results may differ materially from current expectations and projections.
Added
For additional details on the factors considered in the write-off, see Note 3: Fair value measurement within the consolidated financial statements in Part II, Item 8 of this Annual Report.
Removed
Factors that might cause such a difference include those discussed under “Risk Factors”, as well as those discussed elsewhere in the Form 10-K.
Added
As of December 31, 2023, the Company has an unrecognized tax benefit of $2.2 million related to tax attributes being carried forward.
Removed
You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Form 10-K or, in the case of documents referred to or incorporated by reference, the date of those documents.
Added
Approximately $39.2 million of NOL will expire from 2024 through 2037, and approximately $112.7 million of NOL will be carried forward indefinitely. The NOL carryforwards are subject to an annual limitation in the event of certain cumulative changes in the ownership interest.
Removed
All subsequent written or oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.
Added
The Company has seen a decrease in customer purchases of these products as customers have reacted to preserve cash and abstain from acquiring inventory due to increased interest rates across the broader CGT market.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeMonth-end exchange rates between the euro and the U.S. dollar, which have not been weighted for actual sales volume in the applicable months in the periods, were as follows: Year Ended December 31, 2022 2021 2020 High $ 1.15 $ 1.24 $ 1.23 Low $ 0.95 $ 1.12 $ 1.06 Average $ 1.05 $ 1.18 $ 1.14 The Company's exposure to foreign exchange rate fluctuations also arises from trade receivables and intercompany payables denominated in one currency in the financial statements, but receivable or payable in another currency.
Biggest changeThe Company is exposed to market risk primarily from foreign exchange rate fluctuations of the euro as compared to the U.S. dollar as the financial position and operating results of the Company's foreign operations are translated into U.S. dollars for consolidation. 40 Table of Contents Month-end exchange rates between the euro and the U.S. dollar, which have not been weighted for actual sales volume in the applicable months in the periods, were as follows: Year Ended December 31, 2023 2022 2021 High $ 1.11 $ 1.15 $ 1.24 Low $ 1.06 $ 0.95 $ 1.12 Average $ 1.08 $ 1.05 $ 1.18 The Company's exposure to foreign exchange rate fluctuations also arises from trade receivables and intercompany payables denominated in one currency in the financial statements, but receivable or payable in another currency.
The Company does not enter into foreign currency forward contracts to reduce its exposure to foreign currency rate changes on forecasted intercompany sales transactions or on intercompany foreign currency denominated balance sheet positions. Foreign currency transaction gains and losses are included in "Other income (expense)" in the Consolidated Statements of Operations.
The Company does not enter into foreign currency forward contracts to reduce its exposure to foreign currency rate changes on forecasted intercompany sales transactions or on intercompany foreign currency denominated balance sheet positions. Foreign currency transaction gains and losses are included in "Other income" in the Consolidated Statements of Operations.
For additional information about our available-for-sale securities and long-term debt, see Notes 4 and 13 to the consolidated financial statements in Part II, Item 8 of this Annual Report. 35 Table of Contents
For additional information about our available-for-sale securities and long-term debt, see Notes 4 and 13 to the Consolidated Financial statements in Part II, Item 8 of this Annual Report. 41 Table of Contents
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Foreign currency exchange risk The Company operates internationally, and thus is subject to potentially adverse movements in foreign currency exchange rates. Approximately 2% of the Company's consolidated net sales in the year ended December 31, 2022 were made in euros.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Foreign currency exchange risk The Company operates internationally, and thus is subject to potentially adverse movements in foreign currency exchange rates. Approximately 1% of the Company's consolidated net sales in the year ended December 31, 2023 were made in euros.
The effects of a hypothetical 10% appreciation in the U.S. dollar from December 31, 2022 levels against the euro are as follows (in thousands): Decrease in translation of 2022 earnings into U.S. dollars $ 85 Decrease in translation of net assets of foreign subsidiaries $ 107 Interest rate risk Our exposure to market risk for changes in interest rates relates primarily to our investments in available-for-sale securities and our long-term debt.
The effects of a hypothetical 10% appreciation in the U.S. dollar from December 31, 2023 levels against the euro are as follows (in thousands): Decrease in translation of 2023 earnings into U.S. dollars $ 150 Decrease in translation of net assets of foreign subsidiaries $ 187 Interest rate risk Our exposure to market risk for changes in interest rates relates primarily to our investments in available-for-sale securities and our long-term debt.
Removed
The Company is exposed to market risk primarily from foreign exchange rate fluctuations of the euro as compared to the U.S. dollar as the financial position and operating results of the Company's foreign operations are translated into U.S. dollars for consolidation.

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