Back to GetFilings.com

Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 10 - Q

For the quarterly period ended December 31, 2002

For the transition period from ________________________ to _______________________

Commission file number   0-33045

Registrant’s Telephone Number:  (760) 806-8922

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

As of January 31, 2003, the issuer had 7,436,078 shares of its common stock, issued and outstanding.

Table of Contents

SeraCare Life Sciences, Inc.
Table of Contents

2

Table of Contents

SeraCare Life Sciences, Inc.
Statements of Income
(unaudited)

See accompanying notes to financial statements.

3

Table of Contents

SeraCare Life Sciences, Inc.
Balance Sheets

See accompanying notes to financial statements.

4

Table of Contents

SeraCare Life Sciences, Inc.
Statements of Cash Flows
(Unaudited)

See accompanying notes to financial statements.

5

Table of Contents

SeraCare Life Sciences, Inc.
Notes to Financial Statements
(Unaudited)

1.     Basis of Presentation

The information contained herein has been prepared in accordance with instructions for Form 10-Q and Article 10 of Regulation S-X. The information as of December 31, 2002 and for the three months ended December 31, 2002 and 2001 are unaudited. In the opinion of management, the accompanying unaudited financial statements contain all adjustments (consisting only of normal and recurring accruals) necessary to present fairly the financial position of SeraCare Life Sciences, Inc. (the “Company” or “we”) as of December 31, 2002 and 2001 and the results of its operations and cash flows for the three months ended December 31, 2002 and 2001.  These results have been determined on the basis of accounting principles generally accepted in the United States of America and practices applied consistently with those used in the preparation of the audited financial statements for the fiscal year ended September 30, 2002 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission.

The results of operations for the three months ended December 31, 2002 are not necessarily indicative of the results to be expected for any other period or for the entire current fiscal year.

Certain information and footnote disclosures normally included in financial statements presented in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in accordance with the applicable rules to Form 10-Q.  The accompanying financial statements should be read in conjunction with our audited financial statements and notes thereto for the fiscal year ended September 30, 2002.

Certain amounts in the prior period financial statements have been reclassified to conform with current period classifications.

2.     Earnings Per Share

Basic net income per common share is computed based on the weighted average number of common shares outstanding during the period. Diluted net income per common share is computed based on the weighted average number of common shares outstanding during the period increased by the effect of dilutive stock options and warrants, using the treasury stock method. Basic earnings per common share for the three months ended December 31, 2002 and 2001 have been calculated based upon the weighted average number of shares outstanding during the periods, which totaled 7,374,078 shares in both periods.  Diluted earnings per common share reflects the incremental effects of 974,691 potentially dilutive options and warrants for the three months ended December 31, 2002 and 763,996 potentially dilutive options and warrants for the three months ended December 31, 2001 , which resulted in fully diluted weighted average shares of 8,348,769 for the three months ended December 31, 2002 and 8,138,074 for the three months ended December 31, 2001.

3.     Income Taxes

The realization of deferred tax assets is dependent upon our ability to generate taxable income in future years. As realization cannot be assured management believes it is more likely than not that the deferred tax asset will not be realized and therefore, has recorded a valuation allowance for the total balance as of December 31, 2002 and September 30, 2002. For the three month period ended December 31, 2002 we accrued tax at a 9.9% rate.  This represents an accrual of $79,196 for Federal alternative minimum tax and California state tax due to a two year state imposed moratorium on the use of a California net operating loss carryforward. The income tax expense of $22,631 for the three month period ended December 31, 2001, represents an accrual for Federal and California state alternative minimum tax.  At December 31, 2002 we have Federal and California state net operating loss carryforwards of approximately $3,000,000 and $3,600,000, respectively.

6

Table of Contents

4.     Commitments and Contingencies

There are no material pending legal proceedings to which we are a party, other than routine litigation occurring in the normal course of our operations.

5.     Segment Information and Significant Customers

The Statement of Financial Accounting Standards (SFAS) No. 131, “Disclosure about Segments of an Enterprise and Related Information”, requires the reporting of information about operating segments in annual financial statements and requires selected information in interim financial reports.  Selected financial information is reported below for the three months ended December 31, 2002 and 2001.

Operating income is defined as income before income taxes, interest, special charges and other non-operating income and expenses.  “Corporate and other” includes general and administrative corporate expenses other than those directly attributable to an operating segment.  We had no inter-segment sales during the three months ended December 31, 2002 and 2001.

During the quarter ended December 31, 2002, approximately 40% of net sales were to two customers. One of these customers represented 30% and the other represented less than 10% of accounts receivable at December 31, 2002. A third customer represented 16% of accounts receivable at December 31, 2002. During the quarter ended December 31, 2001 approximately 56% of net sales were to two customers. On September 30, 2002, one customer represented 28% of accounts receivable.

6.     New Accounting Pronouncements

In December 2002, the Financial Accounting Standards Board (FASB) issued SFAS No. 148 “Accounting for Stock-Based Compensation - Transition and Disclosure, an amendment of FASB Statement No. 123.” SFAS No. 148 amends SFAS No. 123, “Accounting for Stock-Based Compensation,” to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The provisions of SFAS No. 148 are effective for fiscal years ending after December 15, 2002 and the interim disclosure provisions are effective for interim periods beginning after December 15, 2002. We currently plan to continue to apply the intrinsic-value based method to account for stock options, and will comply with the interim disclosure provisions beginning with our quarter ending March 31, 2003.

7

Table of Contents

In November 2002, the FASB issued Interpretation (FIN) No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN No. 45 requires companies to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. Guarantees in existence at December 31, 2002 are grand-fathered for the purposes of recognition and would only need to be disclosed. We plan to adopt the initial recognition and measurement provisions of FIN No. 45 for guarantees issued or modified after December 31, 2002. We do not expect the adoption of FIN No. 45 to have a material effect on our  financial position or results of operations.

7.     Related Party Relationships and Transactions

We are a party to an agreement with Biomat USA, Inc. which sets forth the terms and conditions pursuant to which Biomat USA, Inc. will supply us with certain plasma products until January 2006 at prices which will be agreed upon on an annual basis.  Under this agreement, Biomat USA, Inc. will also provide plasmapheresis services on donors referred by us, including collecting, testing and delivering the plasma to us.  The plasma products provided by Biomat USA, Inc. to us under this agreement are subject to minimum quality specifications set forth in the agreement and are subject to specifications for delivery, storage and handling of the plasma in accordance with applicable laws, industry standards and good manufacturing practices.

We are also party to an agreement with Instituto Grifols, S.A. (a subsidiary of Probitas Pharma S.A.), under which Instituto Grifols supplies us with Human Serum Albumin, which we  then distribute to various biotech companies. Under this agreement, Instituto Grifols, S.A. also supplies us with Human Albumin for use in diagnostic products. We obtain a substantial portion of our revenue and operating margin from sales of products incorporating the Human Albumin supplied to us by Instituto Grifols under this agreement. The agreement was amended in 2001 to extend its term until March 31, 2006. In connection with an agreement for the supply of Human Serum Albumin that we entered into with one of our significant customers we also amended the terms of our agreement with Instituto Grifols to conform certain aspects of the agreement with this customer contract.

Probitas Pharma S.A. currently holds a five year warrant to purchase 563,347 shares of our common stock.  On September 25, 2001, Probitas Pharma S.A. acquired Biomat USA, Inc., our former parent. We purchased from Biomat USA during the three month period ended December 31, 2002, human blood plasma and services totaling $937,683 and for the three month period ended December 31, 2001 human blood plasma and services totaling $19,523.  We purchased plasma products from other subsidiaries of Probitas Pharma S.A. totaling $1,677,484 during the three month period ended December 31, 2002 and $1,788,600 during the three month period ended December 31, 2001.

Mr. Barry D. Plost is currently Chairman of our Board of Directors.  Mr. Plost is also President of Biomat USA, Inc. and serves as a director of Probitas Pharma S.A.

Mr. Jerry L. Burdick is currently our Secretary as well as a member of our Board of Directors. Mr. Burdick is also the Executive Vice President, Secretary and Chief Financial Officer of Biomat USA, Inc.

8

Table of Contents

Mr. Sam Anderson, a current Board Member, became a consultant to the Company effective April 15, 2002. We will pay Mr. Anderson a minimum annual consulting fee of $70,000.

During the quarter ended December 31, 2002, we took delivery of a computer hardware and software system from a wholly owned subsidiary of a company for which one of the Company’s directors, Dr. Bernard L. Kasten, serves as an officer. The system was purchased in an arms length transaction and is to be used as the data depository for our new BioBank product offering. The purchase price was approximately $188,000.

9

Table of Contents

CAUTIONARY  NOTE REGARDING FORWARD-LOOKING STATEMENTS

We caution you that this document contains disclosures that are forward-looking statements.  All statements regarding SeraCare Life Sciences, Inc.’s expected future financial position, results of operations, cash flows, dividends, financing plans, business strategy, budgets, projected costs or cost savings, capital expenditures, competitive positions, growth opportunities for existing products or products under development, plans and objectives of management for future operations and markets for stock are forward-looking statements.  In addition, forward-looking statements include statements in which we use words such as “expect,” “believe,” “anticipate,” “intend,” or similar expressions.  Although we believe the expectations reflected in such forward-looking statements are based on reasonable assumptions, we cannot assure you that these expectations will prove to have been correct, and actual results may differ materially from those reflected in the forward-looking statements.  Factors that could cause our actual results to differ from the expectations reflected in the forward-looking statements in this document include those set forth in “Risk Factors.”

RESULTS OF OPERATIONS

Three Months Ended December 31, 2002 compared to Three Months  Ended December  31, 2001

Sales

Sales decreased by 10%, or $633,000, to $5,794,000 for the three month period ended December 31, 2002 compared to the same period in 2001. This decrease was primarily the result of one of our larger customers ordering less than their previous purchase levels, as they are in the process of expanding their manufacturing capacity and have lowered their production levels during construction.

Gross Profit

Gross profit decreased by $213,000 or 11% for the three month period ended December 31, 2002 to $1,719,000 compared to the same period in 2001 mainly due to the decrease in sales as referenced above. Total gross profit percentage remained consistent in the period at 30% when compared to the same period in 2001, however there was a shift in segment margin which corresponds to a shift in product mix.

General and Administrative Expenses

General and administrative expenses for the three month period ended December 31, 2002 decreased by $151,000 to $932,000, a decrease of 14% compared to the same period in 2001.  This decrease was primarily the result of decreased costs including legal, professional, public relations, audit, and benefits partially offset by increases in salaries and insurance fees.

Other Income

Other income for the three month period ended December 31, 2002 totals $15,000 and consists of interest income.

10

Table of Contents

Income Tax Expense

Income tax expense increased by $48,000 for the three month period ended December 31, 2002, compared to the same period in 2001. For the three month period ended December 31, 2002, we accrued tax at a 9.9% rate. This represents an accrual of $79,000 for Federal alternative minimum tax and California state tax due to a two year state imposed moratorium on the use of a California net operating loss carryforward. The income tax expense of $23,000 for the three month period ended December 31, 2001 represents an accrual for Federal and California state alternative minimum tax.  At December 31, 2002, we had Federal net operating loss carryforwards of approximately $3,000,000 and California state net operating loss carryforwards of approximately  $3,600,000.

Net Income

As a result of the above, net income for the three month period ended December 31, 2002 was $732,000 compared to $827,000 for the same prior year period.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2002, our current assets exceeded current liabilities by $13,455,000 compared to $12,906,000 as of September 30, 2002, which translates into a current ratio as of December 31, 2002 of 5.94 to 1 compared to 5.76 to 1 as of September 30, 2002.  Total liabilities as of December 31, 2002 were $2,726,000 compared to $2,713,000 as of September 30, 2002.  The total debt to equity ratio as of December 31, 2002  was  0.15 compared to 0.16 as of September 30, 2002.

Net cash used in operating activities during the three month period ended December 31, 2002 was $264,000 compared to net cash provided by operating activities of $896,000 during the same prior year period.  The current year period results were due primarily to increases in accounts receivable and inventory combined with a decrease in accrued expenses, partially offset by an increase in accounts payable resulting from the timing of payments for inventory. The $572,000 increase in inventory is primarily the result of increased purchases to support our new product and processes as we expand our cell culture product offerings.

Cash flows used in investing activities for the three months ended December 31, 2002 was $216,000 compared to $127,000 for the comparable prior year period.  The increased spending in property and equipment was primarily due to capital expenditures for a new computer and software system to serve as our data depository for our new BioBank product offering.

In addition, we continue to be debt free and expect to generate positive cash flows from operations for the foreseeable future.  Accordingly, management expects internally generated cash flow to be adequate for the foreseeable future, unless we initiate a material expansion or significant acquisition.

CRITICAL ACCOUNTING POLICIES

To prepare the financial statements in conformity with accounting principles generally accepted in the United States, management is required to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In particular, we provide for estimates regarding the collectability of accounts receivable, the net realizable value of our inventory, as well as our deferred tax asset valuation allowance. On an ongoing basis we evaluate our estimates based on historical experience and various other assumptions that we believe to be reasonable under the circumstances, the results of which, form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Future financial results could differ materially from current financial results based on management’s current estimates.

11

Table of Contents

Accounts receivable.    We perform ongoing credit evaluations of our customers and adjust credit limits based on payment history and the customers’ current buying habits. We monitors collections and payments from our customers and maintain a provision for estimated credit losses based on historical experience and any specific customer collection issues that have been identified.

Inventory.    Inventory is carried at the lower of cost or market. We review inventory for estimated obsolescence or unmarketable inventory and provide an amount to reduce inventory to its net realizable value based on the assumptions about future demand and market conditions. If actual market conditions are less favorable than those conditions assumed by management, additional inventory provisions may be required.

Deferred tax assets.    Deferred tax assets are recorded net of a valuation allowance. The valuation allowance reduces the carrying amounts of deferred tax assets to an amount management believes is more likely than not realizable. In making the determination projections of taxable income, past operating results and tax planning strategies are considered.

INFLATION

Management believes that inflation generally causes an increase in sales prices with an offsetting unfavorable effect on the cost of products sold and other operating expenses.  Accordingly, with the possible exception of the impact on interest rates, management believes that inflation will have no significant effect on our results of operations or financial condition.

OTHER ITEMS

We are not a party to any off-balance sheet arrangements, do not engage in trading activities involving non-exchange traded contracts, and are not a party to any transaction with persons or activities that derive benefits, except as disclosed herein, from their non-independent relationships with us.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2002, the FASB issued SFAS No. 148 “Accounting for Stock-Based Compensation - Transition and Disclosure, an amendment of FASB Statement No.123.” SFAS No. 148 amends SFAS No. 123, “Accounting for Stock-Based Compensation,” to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The provisions of SFAS 148 are effective for fiscal years ending after December 15, 2002 and the interim disclosure provisions are effective for interim periods beginning after December 15, 2002. We currently plan to continue to apply the intrinsic-value based method to account for stock options and will comply with the interim disclosure requirements beginning with our  quarter ending March 31, 2003.

12

Table of Contents

In November 2002, the FASB issued Interpretation (FIN) No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN No. 45 requires companies to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. Guarantees in existence at December 31, 2002 are grand-fathered for the purposes of recognition and would only need to be disclosed. We plan to adopt the initial recognition and measurement provisions of FIN No. 45 for guarantees issued or modified after December 31, 2002. We do not expect the adoption of FIN No. 45 to have a material effect on our  financial position or results of operations.

RISK FACTORS

You should carefully consider all the information we have included in this Quarterly Report on Form  10-Q and in the Annual Report on Form 10-K for the fiscal year ended September 30, 2002. In particular, you should carefully consider the Risk Factors described below and the additional Risk Factors discussed in the Form 10-K.  Also, please read “Cautionary Note as to Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

We May Need Additional Capital

In order to implement our growth strategy and remain competitive, we must make investments in research and development to develop new and enhanced products and continuously upgrade our process technology and manufacturing capabilities. In order to do this, we may need to obtain additional capital. Although we believe that internal cash flows from operations will be sufficient to satisfy our working capital and normal operating requirements, we may not be able to fund our planned research and development, capital investment programs and possible acquisitions without additional capital.

Our ability to raise additional capital will depend on a variety of factors, some of which may not be within our control, including investor perceptions of us, our business and the industries in which we operate, and general economic and market conditions. We cannot assure you that we will be able to enter into a credit facility or obtain additional capital on acceptable terms, or at all. If we borrow money we may become subject to restrictive covenants. We may be unable to successfully raise needed capital and the amount of net proceeds that will be available to us may not be sufficient to meet our needs. If we raise money through the issuance of equity securities, your stock ownership will be diluted. An inability to successfully raise needed capital on a timely or cost-effective basis could have a material adverse effect on our business, results of operations and financial condition.

We Make a Large Percentage of our Sales to a Limited Number of Customers

We typically sell 25% to 50% of our annual net sales to a limited number of customers.  If we were to lose any one of these customers, or if any major customer were to materially reduce its purchases of our products, our business and results of operations would be materially adversely affected. During the quarter ended December 31, 2002 approximately 40% of net sales were to two customers. During the quarter ended December 31, 2001 approximately 56% of net sales were to two customers.

13

Table of Contents

An Interruption in the Supply of Diagnostics and Therapeutic Products That We Purchase From Third Parties Could Cause a Decline in Our Sales

We purchase diagnostics products that are used in the manufacture and testing of our plasma products from third parties, such as Instituto Grifols, S.A. and other  companies. Any significant interruption in the supply of these diagnostic products could cause a decline in our plasma product sales, unless and until we are able to replace them.

We obtain a substantial portion of our therapeutic revenue and operating margin from sales of products incorporating the Human Albumin supplied to us by Instituto Grifols under this agreement. Although we have entered into an amended agreement with Instituto Grifols extending the term until March 31, 2006, there can be no guarantees that Instituto Grifols will be able to supply us with our needs or that the demand for Human Serum Albumin will continue throughout the contract period or that the amended agreement will not be terminated prior to March 31, 2006.  In connection with a recent agreement for the supply of Human Serum Albumin that we entered into with one of our significant customers we amended the terms of our agreement with Instituto Grifols to conform certain aspects of the agreement with this customer contract. The loss of this contract with Instituto Grifols or a significant increase in our purchase price would have a material adverse effect on our revenues and profitability.

We also depend on third parties such as Instituto Grifols, S.A. to provide their products on a timely and cost-effective basis and to deliver high quality products and respond to emerging industry standards and other technological changes. The failure of these parties to meet these criteria could harm our business.

Having Limited Operating History as an Independent Company Makes it Difficult to Predict Our Profitability as a Stand-Alone Company

We have limited operating history as an independent company. Our business had relied on Biomat USA, Inc. for various financial, managerial and administrative services and has been able to benefit from the earnings, financial resources, assets and cash flows of Biomat USA’s other  operations. As a result of the spin-off, Biomat USA is now only obligated to provide us with the assistance and services set forth in the Master Separation and Distribution Agreement and related documents that we entered into with Biomat USA in connection with the spin-off.

Our Stock Price is Expected to be Volatile

The market price of our common stock has been, and is expected to continue to be volatile. We believe that future announcements concerning us, our competitors, governmental regulations, litigation or unexpected losses, or the failure to meet or exceed analysts’ projections of financial performance, may cause the market price of our common stock to fluctuate substantially in the future. Sales of substantial amounts of our outstanding common stock in the public market could also materially adversely affect the market price of our common stock. These fluctuations, as well as general economic, political and market conditions, may materially adversely affect the market price of our common stock.

We may not be able to Successfully Implement Our Growth Strategy

Our growth strategy may include acquisitions and expansion into new markets. However, our ability to successfully implement this strategy depends on a number of factors, including our access to capital, our ability to obtain applicable governmental approvals and our ability to integrate acquired businesses into our existing operations. Any problems with manufacturing or licensing of our Oceanside facility could severely curtail our sales to biologics companies. We cannot assure you that we will be successful in expanding our operations or entering new markets.

14

Table of Contents

Our growth strategy includes possible acquisitions, which involve various inherent risks, such as:

Our Business is Highly Competitive

Our products compete with those of other companies. Most of these companies have greater financial resources, research and product development capabilities and marketing organizations than we do. Competition for customers depends primarily on the ability to provide products of the quality and in the quantity required by customers. If we succeed in bringing one or more products to market, we will compete with many other companies that may have extensive and well-funded marketing and sales operations. Our failure to provide products of the quality and quantity demanded by our customers and successfully market new products could have a material adverse effect on our future business, financial condition and results of operation.

Certain of our special antibody products are derived from donors with rare antibody characteristics, resulting in increased competition for such donors. If we are unable to maintain and expand our donor base, this could have a material adverse effect on our future business, financial conditions and results of operation.

We are Subject to Significant Government Regulation

Our business is heavily regulated in the United States. In addition to the Food and Drug Administration, or FDA, which regulates, among other matters, the testing, manufacturing, storage, labeling, export, and marketing of blood products and in vitro diagnostic products, various other federal, state and local regulations also apply and can be, in some cases, more restrictive. If we fail to comply with FDA requirements, we could be subjected to civil and criminal penalties, or even required to suspend or cease operations. Failure of our plasma suppliers or customers to comply with FDA requirements could also adversely affect us. In addition, more restrictive laws, regulations or interpretations could be adopted, which could make compliance more difficult or expensive or otherwise adversely affect our business.

15

Table of Contents

ITEM 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We do not believe that we have material exposure to interest rate, foreign currency exchange rate or other relevant market risks.

Interest Rate and Market Risk

   Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio.  As of December 31, 2002 our investment portfolio consisted primarily of cash and cash equivalents, substantially all of which are invested US Government Treasury Bills.  We do not use derivative financial instruments in our investment portfolio.

Foreign Currency Exchange Risk

We do not believe we currently have material exposure to foreign currency exchange risk because contracts and sales are currently all denominated in US dollars.  We intend to assess the need to use financial instruments to hedge currency exposure if appropriate in the future.

ITEM 4.     CONTROLS AND PROCEDURES

Within the 90 days prior to the filing date of this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures. Disclosure controls and procedures are designed to ensure that information required to be disclosed in our periodic reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective. There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to the date we carried out this evaluation.

16

Table of Contents

PART II   OTHER INFORMATION

10.2 Warrant Certificate, dated September 25, 2001, by and between Henry S. Krauss and SeraCare Life Sciences, Inc.

On December 18, 2002, the Registrant filed a current report on Form 8-K reporting that it had set February 26, 2003 as the date for its annual meeting of shareholders and January 17, 2003 as the record date for determining shareholders entitled to notice of and to vote at the annual meeting.

17

Table of Contents

SIGNATURES

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

18

Table of Contents

CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT

I, Michael F. Crowley II, certify that:

     1.  I have reviewed this quarterly report on Form 10-Q of SeraCare Life Sciences, Inc.;

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

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

     4.  The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

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

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

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

a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

     6.  The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: February 13, 2003

19

Table of Contents

CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT

I, Dennis M. Mulroy, certify that:

     1.  I have reviewed this quarterly report on Form 10-Q of  SeraCare Life Sciences, Inc.;

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

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

     4.  The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

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

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

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

a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

     6.  The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: February 13, 2003

20