##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    September 30, 2009ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file
    number: 1-34105
 SeraCare Life Sciences,
    Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware

33-0056054(State or other jurisdiction
    of incorporation or organization)

(I.R.S. Employer
    Identification No.)37 Birch Street
    Milford, Massachusetts(Address of principal
    executive offices)

01757(Zip
    Code)   Registrants telephone number, including area code:
 (508) 244-6400
  Securities registered pursuant to Section 12(b) of the
    Exchange Act:
  Common stock, $.001 Par Value Per Share(Title of Class)

The NASDAQ Capital Market(Name of exchange on which registered)   Securities registered pursuant to Section 12(g) of the
    Exchange Act:
    None
  o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  Large accelerated filer o

Accelerated filer o

Non-accelerated filerþ

Smaller reporting company o(Do not check if a smaller reporting
    company)   Rule 12b-2 o þ
  þ o
      Form 10-K.




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##### 





TABLE OF
    CONTENTS
   
 PART IItem 1.

Business


1Item 1A.

Risk Factors


10Item 1B.

Unresolved Staff Comments


21Item 2.

Properties


21Item 3.

Legal Proceedings


22Item 4.

Submission of Matters to a Vote of Security
    Holders


22PART IIItem 5.

Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


22Item 6.

Selected Financial Data


25Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


26Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


38Item 8.

Financial Statements and Supplementary Data


38Item 9.

Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


38Item 9A(T).

Controls and Procedures


39Item 9B.

Other Information


40PART IIIItem 10.

Directors and Executive Officers of the
    Registrant


40Item 11.

Executive Compensation


40Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


40Item 13.

Certain Relationships and Related Transactions
    and Director Independence


40Item 14.

Principal Accounting Fees and Services


40PART IVItem 15.

Exhibits, Financial Statement Schedules


41Signatures


44Index to Financial Statements


F-1Ex-10.1.1 Employment Agreement - Susan L.N. VogtEx-10.1.2 Letter Agreement - Susan L.N. VogtEx-10.1.3 Employment Agreement - Gregory A. GouldEx-10.1.4 Letter Agreement - Gregory A. GouldEx-10.1.8 Letter Agreement - Ronald R. DillingEx-10.1.10 Letter Agreement - Katheryn E. SheaEx-10.1.12 Letter Agreement - William J. SmutnyEx-10.2.1 Amended and Restated 2001 Stock Incentive PlanEx-10.3.4 SeraCare Life Sciences, Inc. Fiscal 2010 Director Compensation ProgramEx-10.18 Amendment of Solicitation/Modification of Contract dated as of September 18, 2009Ex-10.19 Amendment of Solicitation/Modification of Contract dated as of September 23, 2009Ex-23.1 Consent of Mayer Hoffman McCann P.C.Ex-31.1 Sarbanes-Oxley Act Section 302 Certification of Susan L.N. VogtEx-31.2 Sarbanes-Oxley Act Section 302 Certification of Gregory A. GouldEx-32.1 Sarbanes-Oxley Act Section 906 Certification of Susan L.N. Vogt and Gregory A. Gould




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PART I



CAUTIONARY
    NOTE REGARDING FORWARD-LOOKING STATEMENTS  We caution you that this document contains disclosures that
    are forward-looking statements within the meaning of the Private
    Securities Litigation Reform Act of 1995 about SeraCare Life
    Sciences, Inc. (SeraCare or the
    Company). All statements regarding our expected
    future financial position, results of operations, cash flows,
    dividends, financing plans, business strategy, budget, 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 in Item 1A. Many of these
    factors are beyond our ability to control or predict.
  Item 1.
    BUSINESS  Overview
    of the Company
  state-of-the-art
  in vitro
  state-of-the-art
  Company
    History
    
    Reagents and bioprocessing products of BioMedical Resources,
    Inc. and Simply Diagnostics, Inc. in 2003;
    Human clinical specimens and their accompanying medical
    information from Genomics Collaborative, Inc. (GCI)
    in 2004, some assets of which were then sold in March 2007; 1




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
    Control and panel products as well as biobanking and contract
    research services of the BBI Diagnostics and BBI Biotech
    Research Laboratories divisions of Boston Biomedica, Inc. in
    2004; and
    Diagnostic manufacturing facilities and some of the product
    lines in the areas of molecular diagnostic reagents, diagnostic
    intermediates and plasma substitutes of the Celliance division
    of Serologicals Corporation in 2006.    Emergence
    from Bankruptcy
    
    Hired a new management team;
    Reorganized operations, closed the California and Pennsylvania
    facilities and relocated those operations and the Company
    headquarters to Massachusetts and consolidated all of our
    Massachusetts operations into a 60,000 square-foot
    state-of-the
    art manufacturing and research facility in Milford,
    Massachusetts which houses all current manufacturing operations
    and our corporate headquarters (See Item 2 
    Properties);
    Sold an unprofitable business line (See Item 1 
    Business-Discontinued Operations);
    Completed a rebranding strategy which reflects the new strategic
    and business direction of the Company and re-launched our
    corporate website which includes our on-line catalog (See
    Item 7  Managements Discussion and
    Analysis of Financial Condition and Results of
    Operations  Comparison of years ended
    September 30, 2008 and 2007  Impairment of
    Assets);
    Commenced trading on NASDAQ on June 23, 2008 under the
    symbol SRLS (See Item 5  Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities);
    Generated $4.0 million in operating cash flow during fiscal
    2009; and
    Became profitable during the third and fourth quarters of fiscal
    2009.  Our
    Strategy
    
    Repositioning SeraCare from being a distributor with low margins
    to a value added partner focusing on customers and products with
    higher margins;
    Accelerating growth through expansion opportunities in high
    growth/high value market segments organically and through
    acquisitions and product licensing agreements;
    Achieving operating income leverage through growth, cost
    reduction and operating efficiencies; and
    Re-shaping our portfolio to focus on differentiated products and
    services that enhance our competitive position.  Industry
    Overview
   2




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Competitive
    Advantages
  state-of-the-art
    
    Broad product portfolio.  SeraCare offers a
    comprehensive portfolio of biological materials and services for
    diagnostic and biopharmaceutical applications. The breadth of
    our product portfolio enhances our ability to establish and
    maintain relationships with both large and small companies.
    These relationships lead to additional opportunities to develop
    new products and provide scientific, manufacturing and
    biobanking services, and thus to position ourselves as the
    one stop shop for many of these companies
    biological products and service needs.
    Expertise and experience.  We continue to
    explore innovative solutions to meet the needs of evolving
    technology. SeraCare scientists developed and manufactured the
    first and for many years the only Food and Drug Administration
    (FDA) licensed confirmatory test for HIV and
    produced the first commercially available seroconversion panels
    for HIV, hepatitis B virus (HBV), HCV and West Nile
    Virus (WNV). These panels are important tools for
    studying early infection and the human immune response.
    SeraCares biobanking and repository services have set the
    standard in this expanding field. The Company continues to
    innovate, developing a new product line of genetic controls that
    include controls for diagnostic testing of warfarin sensitivity
    and controls for thrombophilia testing which were recently
    launched.
    Extensive quality assurance programs.  Our
    customers often require vendor pre-approval and certification to
    purchase biological materials and often perform audits of vendor
    facilities with extensive review of quality documentation.
    SeraCare is a vendor-approved supplier to many large
    pharmaceutical and IVD companies, and these relationships
    provide access to sell additional products and services. To
    build on these relationships, SeraCare continues to develop and
    maintain its quality assurance programs. All of our facilities
    have International Organization for Standardization
    (ISO) 13485 and 9001 certifications. SeraCares
    manufacturing facilities operate under the FDAs current
    Good Manufacturing Practices (cGMP) and its research
    facilities operate under Good Laboratory Practices
    (GLP).
    Comprehensive manufacturing
    capabilities.  SeraCare has fully integrated its
    manufacturing capabilities, which allows us to control our
    processes from acquisition of raw materials to shipment of
    finished products. Our fluid processing capabilities range from
    a few milliliters to hundreds of liters, all managed with the
    same attention to quality. In addition to our own branded
    products, the Company can rapidly manufacture customized
    products that meet a wide range of specifications. Customers
    purchase products and services from us instead of sourcing them
    internally largely because these products involve processing
    plasma or other biological fluids, or require complex
    manufacturing processes, 3




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unique or isolated facilities, specialized test requirements to
    meet specifications and enhanced quality control procedures.
    SeraCare can safely and efficiently manufacture high quality
    products that incorporate cultured cells or viruses, reduce
    infectivity, involve high volume processing of DNA samples or
    isolation of specific cells from human blood.  
    Extensive raw material sourcing capabilities and
    relationships.  Many products we develop and
    manufacture require raw materials such as human plasma or human
    tissue samples. We have established relationships with plasma
    center operators, blood banks, hospitals, clinical laboratories
    and physicians that facilitate continued access to these
    necessary biological materials. Through an innovative outreach
    program (idonateplasma.com), we recruit plasma donors who have
    rare antibodies or DNA variations to provide these plasma
    components for specialized products. SeraCare protects the
    privacy of its donors and adheres to all federal and local
    regulations.  Principal
    Business Segments
  in vitro
    Diagnostic &
    Biopharmaceutical Products
    Controls
    and Panels
     4




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Reagents
    and Bioprocessing Products
        BioServices
  Biobanking
  state-of-the-art
 5




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Contract
    Research
  in vitro
  Product
    Development
        Suppliers
    Sales and
    Distribution
   6




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Customers
      Discontinued
    Operations
    Domestic
    and Foreign Sales
      Licensing
    Arrangements
   7




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Intellectual
    Property
      Regulatory
    Environment
  Regulation
    of Health Care Industry
    Regulation
    of Products
          Regulation
    of Laboratory Operations
   8




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Environmental
    Occupational
    Safety and Health Administration (OSHA)
    State
    Governments
    Competitors
    Diagnostic & Biopharmaceutical
    Products:
  BioServices:
  Employees
    Chapter 11
    Reorganization
  Form 10-K
 9




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debtor-in-possession
    Available
    Information
  (508) 244-6400. Form 10-K. Form 10-K Form 10-K, Form 10-Q, Form 8-K
  Item 1A.
    RISK
    FACTORS    RISKS
    RELATED TO OUR BUSINESS
  Quarterly
    revenue and operating results may fluctuate in future periods,
    and the Company may fail to meet investor
    expectations.
   10




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
    changes in demand for the Companys products and services,
    and the ability to obtain the required resources to satisfy
    customer demand on a cost-effective basis or even to attain the
    required resources at all;
    ability to develop, introduce, market and gain market acceptance
    of new products or services in a timely manner;
    ability to manage inventories, accounts receivable and cash
    flows;
    ability to control costs; and
    overall market conditions.    Our
    operating results could deteriorate if we fail to maintain
    proper inventory levels.
    
    the need to maintain significant inventory of materials that are
    in limited supply;
    the unpredictable demand for products; and
    customer requests for quick delivery schedules.    We may
    need additional capital.
     11




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We
    depend on contracts with government agencies, which if
    terminated or reduced, would have a material adverse effect on
    our business.
    We
    derive a substantial amount of our revenue from a limited number
    of customers.
    An
    interruption in the supply of diagnostic and therapeutic
    products at competitive prices that we purchase from third
    parties could cause a decline in our revenue.
    We may
    be unable to realize our growth strategy if we cannot identify
    suitable acquisition opportunities in the future or if we cannot
    integrate acquired businesses or technologies into our
    business.
   12




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and/or
    
    successfully managing and assimilating the operations,
    facilities and technology of the acquired businesses;
    maintaining and increasing the customer base for the acquired
    products;
    demonstrating to customers and suppliers that the acquisitions
    will not result in adverse changes in service standards or
    business focus;
    minimizing the diversion of management attention from ongoing
    business concerns;
    maintaining employee morale and retaining key employees,
    integrating cultures and management structures and accurately
    forecasting employee benefit costs;
    consolidating our management information, inventory, accounting
    and other systems;
    our ability to assess accurately the value, strengths,
    weaknesses, contingent and other liabilities and potential
    profitability of acquisition candidates;
    the potential loss of key personnel of an acquired business;
    our ability to integrate acquired businesses and to achieve
    identified financial and operating synergies anticipated to
    result from an acquisition;
    increased pressure on our staff and on our operating
    systems; and
    unanticipated changes in business and economic conditions
    affecting an acquired business.    Our
    success depends in large part upon the continued services of our
    senior executives and other key employees, including certain
    sales, consulting and technical personnel.
   13




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We may
    face additional expenses and cash funding needs pending the sale
    of our manufacturing facility in West Bridgewater,
    Massachusetts.
    Lack
    of early success with our pharmaceutical and biotechnology
    customers can shut us out of future business with those
    customers.
    Our
    profits will likely decline if we are unable to pass price
    increases on to customers or obtain necessary raw materials at
    their current prices.
    Our
    failure to improve our product offerings and develop and
    introduce new products may negatively impact our
    business.
   14




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We are
    subject to the risks associated with international
    sales.
    
    political and economic instability;
    export controls;
    changes in legal and regulatory requirements;
    United States and foreign government policy changes affecting
    the markets for our products; and
    changes in tax laws and tariffs.      If we
    fail to maintain adequate quality standards for our products and
    services, our business may be adversely affected and our
    reputation harmed.
    Our
    principal shareholders may exert significant influence on
    us.
    We
    heavily rely on air cargo carriers and other third party package
    delivery services, and a significant disruption in these
    services or significant increases in prices may disrupt our
    ability to import or export materials, increase our costs and
    lower our profitability.
   15




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We
    have limited manufacturing capabilities, and if our
    manufacturing capabilities are insufficient to produce an
    adequate supply of products at appropriate quality levels, our
    growth could be limited and our business could be
    harmed.
    The
    cost of compliance or failure to comply with the Sarbanes-Oxley
    Act of 2002 may adversely affect our
    business.
    Our
    inability to protect our intellectual property rights could
    prevent us from selling our products and hinder our financial
    performance.
    Product
    liability claims could have a material adverse effect on our
    reputation, business, results of operations and financial
    condition.
   16




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Foreign
    restrictions on importation and exportation of blood
    derivatives.
    A
    disaster at our facilities could substantially impact our
    business.
  back-up
  Our
    financial condition could suffer if we experience unanticipated
    costs or enforcement action as a result of the Department of
    Justice investigation and other lawsuits.
    RISKS
    RELATED TO OUR INDUSTRY
  Reduced
    demand due to economic downturn in overall market.
   17




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The
    industries and market segments in which we operate are highly
    competitive, and we may not be able to compete effectively with
    larger companies with greater financial resources than we
    have.
        We are
    subject to significant regulation by the government and other
    regulatory authorities.
      Failure
    to comply with environmental, health and safety laws and
    regulations, including the federal Occupational Safety and
    Health Administration Act, may result in fines and penalties and
    loss of licensure, and have a material adverse effect upon the
    Companys business.
   18




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follow-up,
  and/or
  Changes
    in demand for plasma-derived products and the availability of
    donated plasma could affect profitability.
    We are
    subject to governmental reforms and the adequacy of
    reimbursement.
   19




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RISKS
    RELATED TO OUR STOCK
  Our
    stock could be delisted if our stock price falls below
    $1.00.
    Our
    stock price could be volatile.
    We may
    issue preferred stock in the future.
    Anti-takeover
    effects of certain charter and bylaw provisions.
    
    eliminate cumulative voting rights;
    authorize the issuance of blank check preferred
    stock having such designations, rights and preferences as may be
    determined from time to time by the Board of Directors, without
    any vote or further action by our shareholders; and
    eliminate the right of shareholders to act by written consent.  Lack
    of dividend payments.
   20




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Our
    shareholders ability to sell shares of the Companys
    stock may be limited.
    Additional
    risk factors
    
    our ability to maintain favorable supplier agreements and
    relationships with major customers and suppliers;
    the loss of any significant customers or reduced orders from
    significant customers;
    our ability to maintain and expand our customer base;
    increased competition for donors, which may affect our ability
    to attract and retain qualified donors;
    our ability to meet future customer demand for plasma
    products; and
    changes in industry trends, customer specifications and demand,
    market demand in general and potential foreign restrictions of
    the importation of our products.  Item 1B.
    UNRESOLVED
    STAFF COMMENTS    Item 2.
    PROPERTIES    Approximate FloorLocation

Facility Use

Industry Segment

Owned or Leased

Space in Sq. Ft.Milford, MA

Manufacturing, warehouse and office

Diagnostic & Biopharmaceutical Products

Leased


60,000Gaithersburg, MD

Manufacturing, repository, laboratory and office

BioServices

Leased


36,000Frederick, MD

Repository

BioServices

Leased


65,000West Bridgewater, MA

Held for Sale



Owned


32,000  21




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Item 3.
    LEGAL
    PROCEEDINGS  Department
    of Justice
    Item 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   PART II  Item 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES    2009 Quarter Ended

High


LowSeptember 30, 2009

$
2.53


$
1.05June 30, 2009

$
1.26


$
0.38March 31, 2009

$
1.50


$
0.36December 31, 2008

$
2.75


$
1.06   2008 Quarter Ended

High


LowSeptember 30, 2008

$
5.19


$
2.30June 30, 2008

$
4.90


$
3.85March 31, 2008

$
6.00


$
4.05December 31, 2007

$
6.35


$
5.30   Holders
    Dividends
   22




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Securities
    Authorized for Issuance under Equity Compensation
    Plans
    Number of SecuritiesRemaining Available forNumber of Securities





Future Issuance Underto be Issued Upon


Weighted Average


Equity Compensation PlansExercise of


Exercise Price of


(Excluding SecuritiesPlan Category

Outstanding Options


Outstanding Options ($)


Reflected in First Column)Equity compensation plans approved by security holders:Amended and Restated 2001 Stock Incentive Plan


1,527,792


$
5.41



6,8042009 Equity Incentive Plan


0



N/A



1,458,878Equity compensation not pursuant to the Plan


700,000
(1)

$
5.93



N/ATotal


2,227,792


$
5.57



1,465,682     (1)
    
    450,000 options were issued to Ms. Vogt on August 25,
    2006 at an exercise price of $6.00 per share and 250,000 options
    were issued to Mr. Gould on October 3, 2006 at an
    exercise price of $5.80 per share. 23




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Stock
    Performance Graph
    COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN* Among
    SeraCare Life Sciences, Inc., The NASDAQ Composite Index and The
    NASDAQ Biotechnology Index
  
   9/30/04
  September 30,2004



2005



2006



2007



2008



2009SeraCare Life Sciences, Inc.



100.00




142.08




46.40




46.00




23.92




19.60NASDAQ Composite



100.00




113.65




120.81




144.35




109.35




112.92NASDAQ Biotechnology



100.00




123.54




125.89




139.50




136.10




135.27   Recent
    Sales of Unregistered Securities
   24




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Item 6.
    SELECTED
    FINANCIAL DATA    Year Ended September 30,2009


2008


2007


2006


2005In thousands, except for per share dataSTATEMENT OF OPERATIONS DATA:Revenue

$
44,434


$
48,967


$
47,304


$
49,176


$
50,300Cost of revenue


28,990



33,945



33,930



32,552



50,784Gross profit (loss)


15,444



15,022



13,374



16,624



(484
)Research and development expense


1,122



1,776



566



496



410Selling, general and administrative expenses


13,714



16,119



14,527



13,308



11,958Impairment of assets and loss related to assets held for sale


15,741



7,987



5,220







Reorganization items






1,314



5,224



9,408



Operating (loss) income


(15,133
)


(12,174
)


(12,163
)


(6,588
)


(12,852
)Interest expense


(380
)


(386
)


(697
)


(2,114
)


(1,762
)Interest expense to related parties










(313
)


(493
)


(490
)Other income (expense), net


183



221



194



286



(96
)(Loss) income before income taxes


(15,330
)


(12,339
)


(12,979
)


(8,909
)


(15,200
)Income tax (benefit) expense


49



(376
)


76



(31
)


(513
)Net (loss) income from continuing operations


(15,379
)


(11,963
)


(13,055
)


(8,878
)


(14,687
)Loss from discontinued operations, net of income tax










(110
)


(15,400
)


(6,410
)Net (loss) income

$
(15,379
)

$
(11,963
)

$
(13,165
)

$
(24,278
)

$
(21,097
)(LOSS) INCOME PER COMMON SHARE:Basic net (loss) income per common share:Continuing operations

$
(0.83
)

$
(0.64
)

$
(0.82
)

$
(0.64
)

$
(1.32
)Discontinued operations










(0.01
)


(1.10
)


(0.58
)Net (loss) income

$
(0.83
)

$
(0.64
)

$
(0.83
)

$
(1.74
)

$
(1.90
)Diluted net (loss) income per common share:Continuing operations

$
(0.83
)

$
(0.64
)

$
(0.82
)

$
(0.64
)

$
(1.32
)Discontinued operations










(0.01
)


(1.10
)


(0.58
)Net (loss) income

$
(0.83
)

$
(0.64
)

$
(0.83
)

$
(1.74
)

$
(1.90
)   As of September 30,2009


2008


2007


2006


2005In thousandsSELECTED BALANCE SHEET DATA:Working capital

$
17,644


$
14,330


$
20,084


$
7,777


$
30,978Total assets

$
34,464


$
51,097


$
58,440


$
71,108


$
96,112Long-term obligations(1)

$
1,195


$
61


$
2,111


$
5,718


$
17,865Stockholders equity

$
26,194


$
40,410


$
50,524


$
41,566


$
64,586     (1)
    
    Includes debt, notes payable to related parties and capital
    leases. 25




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Item 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  This Managements Discussion and Analysis of Financial
    Condition and Results of Operations should be read together with
    the financial statements, related notes and other financial
    information included elsewhere in this Annual Report on
    Form 10-K.
  Business
    Overview
  state-of-the-art
  in vitro
  state-of-the-art
   26




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Results
    of Operations
    Year Ended September 30,2009


2008


2007%


%


%STATEMENT OF OPERATIONS DATA:Revenue


100.0



100.0



100.0Cost of revenue


65.2



69.3



71.7Gross profit


34.8



30.7



28.3Research and development expense


2.5



3.6



1.2Selling, general and administrative expenses


30.9



32.9



30.7Impairment of assets and loss related to assets held for sale


35.4



16.3



11.0Reorganization items






2.8



11.1Operating loss


(34.0
)


(24.9
)


(25.7
)Interest expense


(0.9
)


(0.8
)


(1.5
)Interest expense to related parties










(0.6
)Other income, net


0.4



0.5



0.4Loss before income taxes


(34.5
)


(25.2
)


(27.4
)Income tax (benefit) expense


0.1



(0.8
)


0.2Net loss from continuing operations


(34.6
)


(24.4
)


(27.6
)Loss from discontinued operations, net of income tax










(0.2
)Net loss


(34.6
)


(24.4
)


(27.8
)   Comparison
    of years ended September 30, 2009 and September 30,
    2008
  Revenue
    September 30,


September 30,


Percent2009


2008


changeDiagnostic & Biopharmaceutical Products

$
32.8


$
35.0



(6
)%BioServices


11.6



14.0



(17
)%Total revenue

$
44.4


$
49.0



(9
)%      27




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##### Table of Contents



Gross
    Profit
    Research
    and Development Expense
    Selling,
    General and Administrative Expenses
    Impairment
    of Assets
   28




---



##### Table of Contents



Loss
    Related to Assets Held for Sale
    Reorganization
    Items
    Operating
    Loss
    Interest
    Expense and Other Income
    Income
    Tax (Benefit) Expense
    Net
    Loss and Net Loss Per Share
   29




---



##### Table of Contents



Comparison
    of years ended September 30, 2008 and September 30,
    2007
  Revenue
    September 30,


September 30,


Percent2008


2007


changeDiagnostic & Biopharmaceutical Products

$
35.0


$
35.0



0
%BioServices


14.0



12.3



14
%Total revenue

$
49.0


$
47.3



4
%     Gross
    Profit
    Research
    and Development Expense
    Selling,
    General and Administrative Expenses
   30




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##### Table of Contents



Impairment
    of Assets
    Reorganization
    Items
    Operating
    Loss
    Interest
    Expense and Other Income
    Income
    Tax (Benefit) Expense
    Net
    Loss from Continuing Operations
    Loss
    from Discontinued Operations
   31




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##### Table of Contents



Net
    Loss and Net Loss Per Share
    Liquidity
    and Capital Resources
  Cash
    Flows
    September 30,2009


2008


2007Net cash provided by (used in) operating activities

$
4.0


$
(2.6
)

$
(10.6
)Net cash (used in) provided by investing activities


(0.1
)


(3.8
)


1.5Net cash (used in) provided by financing activities


(0.7
)


(0.2
)


5.1Net increase (decrease) in cash and cash equivalents

$
3.2


$
(6.6
)

$
(4.0
)         Operating
    Cash Flows
   32




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##### Table of Contents



Investing
    Cash Flows
    Financing
    Cash Flows
    Off-Balance
    Sheet Arrangements
    Debt
  and/or
   33




---



##### Table of Contents



Critical
    Accounting Policies and Estimates
    Revenue Recognition. Revenue
    Recognition in Financial Statements
  
    evidence of an arrangement exists;
    delivery or performance has occurred;
    prices are fixed or determinable; and
    collection of the resulting receivable is reasonably assured.      Inventory valuation.
   34




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##### Table of Contents



Valuation of Long-Lived and Intangible Assets and
    Goodwill. non-amortizable
    
    significant underperformance related to historical or expected
    projected future operating results; or
    significant changes or developments in strategy or operations
    which affect our long-lived assets.      Contingencies and Litigation Reserves.
  
    interpretation of contractual rights and obligations;
    the status of government regulatory initiatives, interpretations
    and investigations;
    the status of settlement negotiations;
    prior experience with similar types of claims;
    whether there is available insurance; and
    advice of counsel.  Stock-Based Compensation.
 35




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##### Table of Contents



Simplified Method for Estimating the Expected
    Term
  Accounting for Income Taxes.
    Recent
    Accounting Pronouncements
     36




---



##### Table of Contents



mark-to-market
    
    acquisition costs will be generally expensed as incurred;
    noncontrolling interests will be valued at fair value at the
    acquisition date;
    acquired contingent liabilities will be recorded at fair value
    at the acquisition date and subsequently measured at either the
    higher of such amount or the amount determined under existing
    guidance for non-acquired contingencies;
    in-process research and development will be recorded at fair
    value as an indefinite-lived intangible asset at the acquisition
    date until the completion or abandonment of the associated
    research and development efforts;
    restructuring costs associated with a business combination will
    be generally expensed subsequent to the acquisition
    date; and
    changes in deferred tax asset valuation allowances and income
    tax uncertainties after the acquisition date generally will
    affect income tax expense.     37




---



##### Table of Contents



Contractual
    Obligations and Commitments
    Payments Due by PeriodContractual Obligations

Total


Less Than 1 Year


1-3 Years


3-5 Years


More Than 5 YearsLong-term debt obligations(1)

$
1,544


$
349


$
1,195


$



$
Interest payments(2)


151



118



33







Operating lease obligations


19,869



2,418



5,177



5,468



6,806Purchase obligations


697



640



57







TOTAL

$
22,261


$
3,525


$
6,462


$
5,468


$
6,806     (1)
    
    Long-term debt obligations include capital leases.
    $1.4 million relates to the Commerce Bank &
    Trust Mortgage Note which is due on February 28, 2011
    while the remaining $0.1 million relates to capital leases.(2)
    
    Interest payment amounts include unused line fees owed to GE
    Capital under the Credit and Security Agreement.  Item 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Interest Rate and Market Risk.
  Foreign Currency Exchange Risk.
    Item 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  Form 10-K page F-1.
  Item 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE   38




---



##### Table of Contents



Item 9A(T).
    CONTROLS
    AND PROCEDURES  (a)
    Disclosure
    Controls and Procedures  Rule 13a-15(b) Regulation S-K
  Form 10-K
  (b)
    Managements
    Report on Internal Control Over Financial Reporting  Rule 13a-15(f) 15d-15(f)
  
    Pertain to the maintenance of records that in reasonable detail
    accurately and fairly reflect the transactions and dispositions
    of the assets of the company;
    Provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with generally accepted accounting principles, and
    that receipts and expenditures of the company are being made
    only in accordance with authorizations of management and
    directors of the company; and
    Provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of the
    companys assets that could have a material effect on the
    financial statements.       39




---



##### Table of Contents



(c)
    Changes
    in Internal Control  Rule 13a-15(d) Form 10-K
  Item 9B.
    OTHER
    INFORMATION   PART III  Item 10.
    DIRECTORS
    AND EXECUTIVE OFFICERS OF THE REGISTRANT    Item 11.
    EXECUTIVE
    COMPENSATION    Item 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    Item 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
    INDEPENDENCE    Item 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES   40




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##### Table of Contents



PART IV  Item 15.
    EXHIBITS,
    FINANCIAL STATEMENT SCHEDULES  Exhibit



Incorporated by Reference

FiledNumber

Exhibit Description

Form

Date

Number

Herewith2.1

Asset Purchase Agreement, dated March 29, 2007, between
    SeraCare Life Sciences, Inc. and BioServe Biotechnologies
    Limited.

8-K

3/29/07


10
.12.2

First Amended Joint Plan of Reorganization of the Debtor and Ad
    Hoc Equity Committee, as Modified.

8-K

2/23/07


2
.12.3

Order on Confirmation of First Amended Joint Plan of
    Reorganization of the Debtor and The Ad Hoc Equity Committee, as
    Modified.

8-K

2/23/07


2
.22.4

Merger Agreement between SeraCare Life Sciences, Inc. and
    Reorganized SeraCare, dated May 17, 2007.

8-K

5/17/07


2
.33.1

Certificate of Incorporation.

8-A

5/17/07


3
.13.2

Amended and Restated Bylaws.

8-K

9/3/08


3
.14.1

Form of SeraCare Life Sciences, Inc. common stock certificate.

8-A

5/17/07


4
.110.1.1

Employment Agreement, as amended and restated November 18,
    2009, between SeraCare Life Sciences, Inc. and Susan L.N. Vogt.*









X10.1.2

Letter Agreement Re: Modification of Award, dated
    October 30, 2009, between SeraCare Life Sciences, Inc. and
    Susan L.N. Vogt.*









X10.1.3

Employment Agreement, as amended and restated November 18,
    2009, between SeraCare Life Sciences, Inc. and Gregory A. Gould.*









X10.1.4

Letter Agreement Re: Modification of Award, dated
    October 30, 2009, between SeraCare Life Sciences, Inc. and
    Gregory A. Gould.*









X10.1.5

Employment Agreement, dated February 1, 2008, between
    SeraCare Life Sciences, Inc. and Ronald R. Dilling.*

8-K

2/1/08


10
.110.1.6

Amendment dated December 31, 2008 to the Employment
    Agreement dated February 1, 2008, between SeraCare Life
    Sciences, Inc. and Ronald R. Dilling.*

8-K

4/2/09


10
.310.1.7

Amendment dated March 30, 2009 to the Employment Agreement
    dated February 1, 2008 and amended December 31, 2008,
    between SeraCare Life Sciences, Inc. and Ronald R. Dilling.*

8-K

4/2/09


10
.410.1.8

Letter Agreement Re: Modification of Award, dated
    October 30, 2009, between SeraCare Life Sciences, Inc. and
    Ronald R. Dilling.*









X10.1.9

Offer Letter, dated September 1, 2004, between SeraCare
    Life Sciences, Inc. and Katheryn E. Shea.*

S-1

6/19/08


10
.1.410.1.10

Letter Agreement Re: Modification of Award, dated
    October 30, 2009, between SeraCare Life Sciences, Inc. and
    Katheryn E. Shea.*









X10.1.11

Offer Letter, dated September 29, 2006, between SeraCare
    Life Sciences, Inc. and William J. Smutny.*

S-1

6/19/08


10
.1.510.1.12

Letter Agreement Re: Modification of Award, dated
    October 30, 2009, between SeraCare Life Sciences, Inc. and
    William J. Smutny.*









X10.2.1

Amended and Restated 2001 Stock Incentive Plan, as amended.*









X10.2.2

2009 Equity Incentive Plan.*

S-8

3/13/09


4
.110.2.3

Form of Nonqualified Stock Option Agreement.*

8-K

5/21/07


99
.210.2.4

Form of Incentive Stock Option Agreement.*

8-K

5/21/07


99
.3 41




---



##### Table of Contents



Exhibit



Incorporated by Reference

FiledNumber

Exhibit Description

Form

Date

Number

Herewith10.3.1

SeraCare Life Sciences, Inc. Fiscal 2009 Director
    Compensation Program*

10-K

12/8/08


10
.310.3.2

Amendment No. 1 to the Fiscal 2009 Director
    Compensation Program.*

10-Q

5/12/09


10
.510.3.3

Amendment No. 2 to the Fiscal 2009 Director
    Compensation Program.*

10-Q

8/11/09


10
.110.3.4

SeraCare Life Sciences, Inc. Fiscal 2010 Director
    Compensation Program.*









X10.4

SeraCare Life Sciences, Inc. Management Incentive Program.*

10-K

1/31/08


10
.410.5

Award/Contract, dated September 30, 2005, by and between
    SeraCare Life Sciences, Inc. d/b/a SeraCare BioServices and the
    National Cancer Institute.

8-K

10/6/05


10
.110.6

Contract No. HHSN272200700060C among Office of
    Acquisitions, DEA, National Institute of Allergy and Infections
    Diseases, National Institute of Health, DHHS and SeraCare Life
    Sciences, Inc. dated September 30, 2007.

8-K

10/3/07


10
.110.7

Lease Agreement dated as of October 1, 2007 by and between
    Birchwood Fortune  SPVEF, LLC and SeraCare Life
    Sciences, Inc.

8-K

10/4/07


10
.110.8

Lease Agreement dated as of May 16, 1997 by and between
    BBI-Biotech Research Laboratories, Inc. and B.F. Saul Real
    Estate Investment Trust.

10-K

1/31/08


10
.810.8.1

First Amendment to the Lease Agreement dated October 14,
    1997 by and between BBI-Biotech Research Laboratories, Inc. and
    B.F. Saul Real Estate Investment Trust.

10-K

1/31/08


10
.8.110.8.2

Second Amendment to the Lease Agreement dated December 9,
    1997 by and between BBI-Biotech Research Laboratories, Inc. and
    B.F. Saul Real Estate Investment Trust.

10-K

1/31/08


10
.8.210.8.3

Third Amendment to the Lease Agreement dated June 14, 2007
    by and between SeraCare Life Sciences, Inc. and B.F. Saul Real
    Estate Investment Trust.

10-K

1/31/08


10
.8.310.8.4

Landlords Lien Subordination Agreement dated July 9,
    2007 by and between Saul Holdings Limited Partnership and
    Merrill Lynch Business Financial Services, Inc.

10-K

1/31/08


10
.8.410.9

Credit and Security Agreement, dated as of June 4, 2007,
    between SeraCare Life Sciences, Inc. and Merrill Lynch Capital
    (now GE Capital) as a lender and the Administrative Agent,
    excluding the annexes, exhibits, riders and schedules thereto.

8-K

6/11/07


10
.110.10

Assumption and Modification Agreement, dated as of
    September 14, 2004, between SeraCare Life Sciences, Inc.
    and Commerce Bank & Trust Company.

8-K

9/16/04


10
.310.11

Guaranty, dated as of September 14, 2004, made by SeraCare
    Life Sciences, Inc. in favor of Commerce Bank &
    Trust Company.

8-K

9/16/04


10
.410.12

Loan Agreement, dated March 31, 2000, between Boston
    Biomedica, Inc. and Commerce Bank &
    Trust Company.

8-K

9/16/04


10
.510.13

Allonge to Loan Agreement, dated August 15, 2002, between
    Boston Biomedica, Inc. and Commerce Bank &
    Trust Company.

8-K

9/16/04


10
.610.14

Agreement, dated March 27, 2003, between Boston Biomedica,
    Inc. and Commerce Bank & Trust Company.

8-K

9/16/04


10
.710.15

$2,900,000 Note, dated March 31, 2000, issued by Boston
    Biomedica, Inc. and payable to the order of Commerce
    Bank & Trust Company.

8-K

9/16/04


10
.8 42




---



##### Table of Contents



Exhibit



Incorporated by Reference

FiledNumber

Exhibit Description

Form

Date

Number

Herewith10.16

Mortgage and Security Agreement, dated March 31, 2000,
    granted by Boston Biomedica, Inc. to Commerce Bank &
    Trust Company.

8-K

9/16/04


10
.910.17

Amendment to Promissory Note, Loan Agreement, Mortgage and Loan
    Documents and Assumption and Loan Modification Agreement, dated
    July 31, 2009, by and between Commerce Bank &
    Trust Company and SeraCare Life Sciences, Inc.

8-K

8/3/09


10
.110.18

Amendment of Solicitation/Modification of Contract dated as of
    September 18, 2009, by and between the National Institutes
    of Health and SeraCare Life Sciences, Inc.









X10.19

Amendment of Solicitation/Modification of Contract dated as of
    September 23, 2009, by and between the National Institutes
    of Health and SeraCare Life Sciences, Inc.









X14.1

Code of Ethics for Chief Executive Officer and Senior Financial
    Officers.

8-K

5/21/07


99
.423.1

Consent of Mayer Hoffman McCann P.C.









X31.1

Sarbanes-Oxley Act Section 302 Certification of Susan L.N.
    Vogt.









X31.2

Sarbanes-Oxley Act Section 302 Certification of Gregory A.
    Gould.









X32.1

Sarbanes-Oxley Act Section 906 Certification of Susan L.N.
    Vogt and Gregory A. Gould.









X       *
    
    Indicates management contract or compensatory plan or
    arrangement.
    
    In accordance with the terms of the Assumption and Modification
    Agreement, dated as of September 14, 2004, between SeraCare
    Life Sciences, Inc. and Commerce Bank &
    Trust Company, SeraCare Life Sciences, Inc. agreed to
    assume certain of the obligations of Boston Biomedica, Inc. 43




---



##### Table of Contents



SIGNATURES      
        Signature

Title

Date/s/  Susan
    L.N. VogtSusan
    L.N. Vogt

President and Chief Executive Officer Director (Principal
    Executive Officer)

November 19, 2009/s/  Gregory
    A. GouldGregory
    A. Gould

Chief Financial Officer, Treasurer and Secretary (Principal
    Financial and Accounting Officer)

November 19, 2009/s/  Eugene
    I. DavisEugene
    I. Davis

Chairman

November 19, 2009/s/  Samuel
    D. AndersonSamuel
    D. Anderson

Director

November 19, 2009/s/  Harold
    S. BlueHarold
    S. Blue

Director

November 19, 2009/s/  Sarah
    L. MurphySarah
    L. Murphy

Director

November 19, 2009/s/  Jill
    TillmanJill
    Tillman

Director

November 19, 2009  44




---



##### 



SERACARE
    LIFE SCIENCES, INC.
  INDEX
    TO FINANCIAL STATEMENTS
   
 Report of Independent Registered Public
    Accounting Firm


F-2Financial StatementsBalance Sheets, As of September 30, 2009 and
    2008


F-3Statements of Operations, Years Ended
    September 30, 2009, 2008 and 2007


F-4Statements of Stockholders Equity, Years
    Ended September 30, 2009, 2008 and 2007


F-5Statements of Cash Flows, Years Ended
    September 30, 2009, 2008 and 2007


F-6Notes to Financial Statements


F-7   F-1




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM          
    F-2




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  BALANCE
    SHEETS
  As of September 30,2009


2008ASSETSCurrent assetsCash and cash equivalents

$
6,169,396


$
2,945,866Accounts receivable, less allowance for doubtful accounts of
    $195,000 and $170,000 as of September 30, 2009 and 2008,
    respectively


7,179,946



6,540,069Taxes receivable


257,405



488,847Inventory


8,706,937



12,153,891Prepaid expenses and other current assets


155,533



664,406Total current assets


22,469,217



22,793,079Property and equipment, net


5,941,589



6,218,242Assets held for sale


1,264,330



1,914,330Goodwill


4,284,979



19,376,078Other intangible assets






181,985Other assets


504,006



612,841Total assets

$
34,464,121


$
51,096,555LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable

$
1,320,259


$
2,766,790Accrued expenses


3,155,666



3,658,983Current portion of long-term debt


349,329



2,037,396Total current liabilities


4,825,254



8,463,169Long-term debt


1,194,979



61,038Other liabilities


2,249,950



2,162,123Total liabilities


8,270,183



10,686,330Commitments and contingenciesStockholders equityPreferred stock  $.001 par value,
    5,000,000 shares authorized, no shares issued or
    outstanding as of September 30, 2009 and 2008






Common stock  $.001 par value,
    35,000,000 shares authorized, 18,652,982 and
    18,565,580 shares issued and outstanding as of
    September 30, 2009 and 2008, respectively


18,653



18,566Additional paid-in capital


102,748,387



101,585,566Retained earnings


(76,573,102
)


(61,193,907
)Total stockholders equity


26,193,938



40,410,225Total liabilities and stockholders equity

$
34,464,121


$
51,096,555    F-3




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  STATEMENTS
    OF OPERATIONS
  Year Ended September 30,2009


2008


2007Revenue

$
44,434,171


$
48,966,648


$
47,303,595Cost of revenue


28,989,764



33,944,392



33,929,232Gross profit


15,444,407



15,022,256



13,374,363Research and development expense


1,122,077



1,776,462



566,634Selling, general and administrative expenses


13,714,119



16,118,864



14,526,718Impairment of goodwill


15,091,099



7,986,481



Impairment of intangible assets










5,220,000Loss related to assets held for sale


650,000







Reorganization items






1,314,013



5,223,896Operating loss


(15,132,888
)


(12,173,564
)


(12,162,885
)Interest expense


(380,128
)


(385,797
)


(697,787
)Interest expense to related parties










(312,862
)Other income, net


183,256



220,531



194,062Loss before income taxes


(15,329,760
)


(12,338,830
)


(12,979,472
)Income tax (benefit) expense


49,435



(375,781
)


75,971Net loss from continuing operations


(15,379,195
)


(11,963,049
)


(13,055,443
)Loss from discontinued operations, net of income tax










(109,438
)Net loss

$
(15,379,195
)

$
(11,963,049
)

$
(13,164,881
)Loss per common shareBasic and diluted net loss per common shareContinuing operations

$
(0.83
)

$
(0.64
)

$
(0.82
)Discontinued operations










(0.01
)Net loss

$
(0.83
)

$
(0.64
)

$
(0.83
)Weighted average shares outstandingBasic and diluted


18,598,844



18,562,350



15,876,236    F-4




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##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  STATEMENTS
    OF STOCKHOLDERS EQUITY
  Additional


RetainedCommon Stock


Paid-in


Earnings


TotalShares


Amount


Capital


(deficit)


AmountBalance, September 30, 2006


14,282,948


$
66,884,081


$
10,747,911


$
(36,065,977
)

$
41,566,015Net loss














(13,164,881
)


(13,164,881
)Exercise of options


25,000



148,250











148,250Change in par value due to Delaware corporation merger, par $.001






(67,018,023
)


67,018,023







Rights Offering of common stock


4,250,000



4,250



20,183,250







20,187,500Rights Offering of common stock, cost










(610,729
)






(610,729
)Stock-based compensation expense










2,398,339







2,398,339Balance, September 30, 2007


18,557,948



18,558



99,736,794



(49,230,858
)


50,524,494Net loss














(11,963,049
)


(11,963,049
)Stock issued under stock plan


7,632



8



39,945







39,953Stock-based compensation expense










1,808,827







1,808,827Balance, September 30, 2008


18,565,580



18,566



101,585,566



(61,193,907
)


40,410,225Net loss














(15,379,195
)


(15,379,195
)Stock issued under stock plan


87,402



87



96,407







96,494Stock-based compensation expense










1,066,414







1,066,414Balance, September 30, 2009


18,652,982


$
18,653


$
102,748,387


$
(76,573,102
)

$
26,193,938    F-5




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  STATEMENTS
    OF CASH FLOWS
  Year Ended September 30,2009


2008


2007Cash flows from operating activities:Net loss

$
(15,379,195
)

$
(11,963,049
)

$
(13,164,881
)Adjustments to reconcile net loss to cash (used in) operating
    activities:Depreciation and amortization


1,264,378



1,313,978



1,389,087Amortization of deferred financing expenses


182,560



179,875



59,959Bad debt expense


53,424



17,766



95,299Write-down of inventory


790,490



2,935,510



699,139Impairment of trade name










5,220,000Impairment of goodwill


15,091,099



7,986,481



Loss related to assets held for sale


650,000







Loss on disposal of property and equipment


12,063



33,278



Gain on disposition of certain assets of Genomics Collaborative
    division


(176,162
)






(791,661
)Stock-based compensation


1,162,908



1,848,780



2,398,339(Increase) decrease from changes, net of effects from
    acquisitions:Accounts receivable


(693,301
)


32,767



1,684,391Taxes receivable


231,442



1,237,539



75,541Inventory


2,656,464



(7,772,886
)


(2,277,818
)Prepaid expenses and other current assets


25,607



213,459



1,463,608Other assets


(48,225
)


101,507



105,747Increase (decrease) from changes, net of effects from
    acquisitions:Accounts payable


(1,446,531
)


565,534



657,934Prepetition liabilities






(198,612
)


(8,910,001
)Accrued expenses and other liabilities


(415,490
)


853,564



640,684Net cash provided by (used in) operating activities


3,961,531



(2,614,509
)


(10,654,633
)Cash flows from investing activities:Purchases of property and equipment


(721,159
)


(4,969,608
)


(492,001
)Proceeds from landlord for leasehold improvements


483,266



1,206,738



Proceeds from the disposition of certain assets of Genomics
    Collaborative division


176,162







2,000,000Proceeds from the disposal of property and equipment


12,000







15,000Net cash (used in) provided by investing activities


(49,731
)


(3,762,870
)


1,522,999Cash flows from financing activities:Repayments of long-term debt


(662,770
)


(200,705
)


(10,590,578
)Repayment of related party debt










(3,500,000
)Proceeds from revolving credit facility


19,700,000







Repayments of revolving credit facility


(19,700,000
)






Deferred financing expenses


(25,500
)






(539,627
)Funding received from Rights Offering, net of issue costs










19,576,771Proceeds from exercise of options, warrants and ESPP transactions










148,250Net cash (used in) provided by financing activities


(688,270
)


(200,705
)


5,094,816Net increase (decrease) in cash and cash equivalents


3,223,530



(6,578,084
)


(4,036,818
)Cash and cash equivalents,beginning of year


2,945,866



9,523,950



13,560,768Cash and cash equivalents,end of year

$
6,169,396


$
2,945,866


$
9,523,950Supplemental disclosure of cash flow information:(a) Cash paid for:Interest

$
199,897


$
211,188


$
1,859,600Federal income taxes

$



$



$
18,763State income taxes

$
67,884


$
31,357


$
2,636(b) Cash received for:Federal income taxes

$
230,552


$
1,550,658


$
State income taxes

$
6,690


$
90,562


$
20,169(c) Non-cash items disclosure:Deferred Rent

$



$
544,560


$
Stock issued for Director and Officer services

$
96,494


$
39,953


$
Capital lease agreements

$
108,644


$



$
80,000    F-6




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  NOTES TO
    FINANCIAL STATEMENTS
  1.
    Background  (a)
    Background
    and Organization  in vitro
  state-of-the-art
  (b)
    Reorganization    2.
    Summary
    of Significant Accounting Policies  Use of Estimates in the Preparation of Financial
    Statements.
 F-7




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Revenue Recognition. Revenue Recognition in Financial
    Statements
  
    evidence of an arrangement exists;
    delivery or performance has occurred;
    prices are fixed or determinable; and
    collection of the resulting receivable is reasonably assured.    Returns.
  Shipping and Handling Costs.
  Advertising.
  Cash and Cash Equivalents.
  Fair Value of Financial Instruments.
  Accounts Receivable.
 F-8




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Year Ended September 30,2009


2008


2007Balance at beginning of the year

$
170,000


$
175,000


$
216,941Bad debt expense


53,424



17,766



95,299Write-offs


(28,424
)


(22,766
)


(137,240
)Balance at end of the year

$
195,000


$
170,000


$
175,000   Inventory Valuation.
    Long-Lived Assets.
    Building and improvements

10 to 30 yearsFurniture and equipment

7 yearsComputer equipment and software

3 yearsLeasehold improvements

Shorter of the life of the improvement or the remaining term of
    the lease  F-9




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Deferred Tax Asset.
  Contingencies and Litigation Reserves.
  
    interpretation of contractual rights and obligations;
    the status of government regulatory initiatives, interpretations
    and investigations;
    the status of settlement negotiations;
    prior experience with similar types of claims;
    whether there is available insurance; and
    advice of counsel.  Purchase Price Allocations for
    Acquisitions.
  Goodwill and Other Intangible Assets. non-amortizable non-amortizable non-amortizable
    Income taxes.
 F-10




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      Earnings Per Share.
  Deferred Financing Costs.
  Stock-Based Compensation.
    Simplified Method for Estimating the Expected
    Term
 F-11




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Recent
    Accounting Pronouncements
      mark-to-market
    
    acquisition costs will be generally expensed as incurred;
    noncontrolling interests will be valued at fair value at the
    acquisition date;
    acquired contingent liabilities will be recorded at fair value
    at the acquisition date and subsequently measured at either the
    higher of such amount or the amount determined under existing
    guidance for non-acquired contingencies; F-12




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   
    in-process research and development will be recorded at fair
    value as an indefinite-lived intangible asset at the acquisition
    date until the completion or abandonment of the associated
    research and development efforts;
    restructuring costs associated with a business combination will
    be generally expensed subsequent to the acquisition
    date; and
    changes in deferred tax asset valuation allowances and income
    tax uncertainties after the acquisition date generally will
    affect income tax expense.      3.
    Reorganization  debtor-in-possession
   F-13




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      4.
    Inventory    At September 30,2009


2008Raw materials and supplies

$
1,623,148


$
2,177,933Work-in process


813,874



1,494,030Finished goods


9,059,860



11,985,479Gross inventory


11,496,882



15,657,442Reserve for obsolete inventory


(2,789,945
)


(3,503,551
)Net inventory

$
8,706,937


$
12,153,891   5.
    Property
    and Equipment    At September 30,2009


2008Furniture and equipment

$
3,475,427


$
3,103,237Computer equipment and software


856,175



644,195Construction in progress


100,695



727,692Leasehold improvements


5,711,793



4,919,59610,144,090



9,394,720Less: accumulated depreciation and amortization


(4,202,501
)


(3,176,478
)Property and equipment, net

$
5,941,589


$
6,218,242     6.
    Asset
    Held For Sale   F-14




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   7.
    Goodwill        Balance as of September 30, 2006

$
27,362,559Goodwill adjustments during year


Balance as of September 30, 2007


27,362,559Goodwill impairment Diagnostics & Biopharmaceutical
    Products


(7,986,481
)Balance as of September 30, 2008


19,376,078Goodwill impairment Diagnostics & Biopharmaceutical
    Products


(15,091,099
)Balance as of September 30, 2009

$
4,284,979   8.
    Intangibles  September 30,
    2009
  Estimateduseful life


Gross cost


Accumulated


Net intangible(years)


intangible asset


amortization


assetDeveloped product technology


5


$
150,000


$
150,000


$
Customer relationships


4-5



1,090,000



1,090,000



$
1,240,000


$
1,240,000


$
  F-15




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  September 30,
    2008
  Estimateduseful life


Gross cost


Accumulated


Net intangible(years)


intangible asset


amortization


assetDeveloped product technology


5


$
150,000


$
120,000


$
30,000Customer relationships


4-5



1,090,000



938,015



151,985$
1,240,000


$
1,058,015


$
181,985     9.
    Long-Term
    Debt    At September 30,2009


2008Real property mortgage note

$
1,400,000


$
1,940,448Capital leases


144,308



157,986Total debt


1,544,308



2,098,434Less current portion


(349,329
)


(2,037,396
)Total long-term debt

$
1,194,979


$
61,038   GE
    Capital Credit and Security Agreement
    and/or
 F-16




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Real
    Property Mortgage Note
        Brown
    Brothers Harriman/Union Bank of California, N.A. Revolving/Term
    Credit and Security Agreement
    Subordinated
    Notes
  four-and-one-half-year
 F-17




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Aggregate
    Maturities
    Real PropertyMortgage Note


Capital Leases


Total2010

$
281,562


$
67,767


$
349,3292011


1,118,438



54,565



1,173,0032012






21,976



21,976$
1,400,000


$
144,308


$
1,544,308   10.
    Commitments
    and Contingencies    Department
    of Justice
    Purchase
    Commitments and Suppliers
    30-45 days.
  Risks
    and Uncertainties, Significant Customers and Sales
    Commitments
   F-18




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
          Year Ended September 30,2009


2008


2007United States

$
35,564,548


$
41,247,822


$
37,143,056Europe


6,431,786



5,603,150



8,190,674Asia


1,413,744



1,312,085



998,169Other


1,024,093



803,591



971,696Total

$
44,434,171


$
48,966,648


$
47,303,595       11.
    Leases   F-19




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
          Capital Leases


Operating Leases


Total LeasesFiscal years ended September 30,2010

$
77,593


$
2,418,531


$
2,496,1242011


58,958



2,553,739



2,612,6972012


22,689



2,622,987



2,645,6762013






2,691,708



2,691,7082014






2,775,787



2,775,787Thereafter






6,806,347



6,806,347Total minimum lease payments


159,240


$
19,869,099


$
20,028,339Less: amounts representing interest


(14,932
)Present value of future minimum capital lease payments

$
144,308    F-20




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   12.
    Income
    Taxes    Year Ended September 30,2009


2008


2007Current provision (credit):Federal

$
(29,207
)

$
(237,580
)

$
18,763State


78,642



(138,201
)


57,208Total current provision (credit)


49,435



(375,781
)


75,971Deferred tax provision (benefit):Federal


(4,143,135
)


(3,289,869
)


(4,662,418
)State


(3,054,990
)


2,227,234



(1,325,667
)Total deferred provision (credit)


(7,198,125
)


(1,062,635
)


(5,988,085
)Total provision (credit)


(7,148,690
)


(1,438,416
)


(5,912,114
)(Decrease) increase in valuation allowance


7,198,125



1,062,635



5,988,085Total income tax (benefit)expense

$
49,435


$
(375,781
)

$
75,971     Year Ended September 30,2009


2008


2007Computed provision for taxes


34.0
%


34.0
%


34.0
%State taxes


3.7
%


(1.5
)%


(0.3
)%General business credits



%



%


3.7
%Other, net


(0.1
)%


(9.9
)%


(3.5
)%Change in valuation allowance


(38.0
)%


(19.5
)%


(34.5
)%Total provision, net of valuation allowance


(0.4
)%


3.1
%


(0.6
)%   As of September 30,2009


2008


2007Net operating loss carryforwards:Federal

$
44,843,000


$
39,243,000


$
45,300,000State

$
40,805,000


$
48,836,000


$
49,100,000   As of September 30,2009


2008


2007Deferred tax assets

$
33,618,773


$
26,420,648


$
26,381,601Less: valuation allowances


(33,618,773
)


(26,420,648
)


(25,358,013
)Net deferred tax asset










1,023,588Deferred tax liability










(1,023,588
)Net deferred tax asset

$



$



$
  F-21




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
        13.
    Related
    Party Transactions        
    Harbinger Capital Partners Master Fund I Ltd. and Harbinger
    Capital Partners Special Situations Fund L.P.
    (collectively, Harbinger), a greater than 5%
    beneficial owner of the Company, appointed two directors to the
    Companys Board of Directors pursuant to the Plan of
    Reorganization. These directors were re-elected at our annual
    stockholders meeting in February 2009. During the year
    ended September 30, 2009, Harbinger sold all of its shares.
    Black Horse Capital LP, Black Horse Capital (QP) LP, Black Horse
    Capital Offshore Ltd. (collectively, Black Horse
    Capital), a greater than 5% beneficial owner, appointed
    one director to the Companys Board of Directors pursuant
    to the Plan of Reorganization. This director was re-elected at
    our annual stockholders meeting in February 2009.
    Barry Plost and Bernard L. Kasten, two former directors, were
    parties to the Subordinated Note Agreement between the Company
    and one other note holder. There was no related party interest
    expense during the years ended September 30, 2009 or 2008.
    During the year ended September 30, 2007 the Company
    incurred related party interest expense of $0.3 million.
    The debt was paid in full with the proceeds of the Rights
    Offering and the agreement was terminated in May 2007. The
    Company therefore had no liability for these notes at
    September 30, 2009 and 2008.  14.
    Stockholders
    Equity   F-22




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
              15.
    Stock-Based
    Compensation Plans       F-23




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Options
    Granted Outside of the Plans
      Weighted-


Weighted-averageaverage


remainingNumber of


exercise


contractual term


AggregateOptions

options


price


(In years)


intrinsic valueOutstanding September 30, 2008


1,662,000


$
7.11Granted


610,392


$
1.25Exercised





$
Expired


(15,000
)

$
9.05Forfeited


(29,600
)

$
1.25Outstanding September 30, 2009


2,227,792


$
5.57



4.21


$
696,950Exercisable at September 30, 2009


1,316,270


$
7.31



4.31


$
67,130         Year Ended September 30,2009


2008


2007Cost of revenue

$
198,766


$
252,859


$
85,331Research and development expense


55,614



67,435



8,863Selling, general and administrative expenses


908,528



1,528,486



2,304,145Total stock-based compensation expense

$
1,162,908


$
1,848,780


$
2,398,339Incremental charge to earnings per shareBasic and Diluted

$
0.06


$
0.10


$
0.15  F-24




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      Year Ended September 30,2009

2008

2007Expected stock volatility

100.81-115.34%

84.17-91.74%

79.70-95.44%Weighted-average volatility

101.30%

89.05%

83.61%Risk free interest rate

1.22-1.52%

1.85-3.61%

4.55-4.79%Expected term of options (years)

2.81-3.50

2.81-3.50

2.50-6.00Expected annual dividend per share

0%

0%

0%          F-25




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    2006

$
70,7372007

$
47,6562008

$
4,6622009

$
1,064     Expected stock volatility

83.19-174.66%Risk free interest rate

4.87-5.03%Expected life of options (years)

0.41-3.21Expected annual dividend per share

0%   16.
    Earnings
    Per Share      Year Ended September 30,2009


2008


2007Numerator:Net loss from continuing operations

$
(15,379,195
)

$
(11,963,049
)

$
(13,055,443
)Loss from discontinued operations, net of income tax










(109,438
)Net loss

$
(15,379,195
)

$
(11,963,049
)

$
(13,164,881
)Denominator:Weighted average common shares outstanding


18,598,844



18,562,350



15,876,236Effect of dilutive securities:Stock options(1)










Diluted weighted average common shares outstanding


18,598,844



18,562,350



15,876,236Basic and diluted net loss per common share:Continuing operations

$
(0.83
)

$
(0.64
)

$
(0.82
)Discontinued operations










(0.01
)Net loss

$
(0.83
)

$
(0.64
)

$
(0.83
)     (1)
    
    Excluded from the calculation of diluted net income per common
    share for the years ended September 30, 2009, 2008 and 2007
    were 2,152,423, 1,748,414 and 1,656,789 shares,
    respectively, related to stock options because their effect was
    anti-dilutive. F-26




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   17.
    Segment
    Information  in vitro
      2009


2008


2007Revenue:Diagnostic & Biopharmaceutical Products

$
32,855,388


$
34,982,601


$
34,998,141BioServices


11,578,783



13,984,047



12,305,454Total revenue

$
44,434,171


$
48,966,648


$
47,303,595Gross profit:Diagnostic & Biopharmaceutical Products

$
13,289,538


$
11,643,308


$
11,554,296BioServices


2,154,869



3,378,948



1,820,067Total gross profit

$
15,444,407


$
15,022,256


$
13,374,363Identifiable assets:Diagnostic & Biopharmaceutical Products

$
17,514,921


$
35,723,683


$
37,800,281BioServices


8,598,530



8,564,597



7,715,111Total identifiable assets

$
26,113,451


$
44,288,280


$
45,515,392Depreciation:Diagnostic & Biopharmaceutical Products

$
732,546


$
740,515


$
639,651BioServices


349,847



308,959



484,932Total depreciation

$
1,082,393


$
1,049,474


$
1,124,583Capital expenditures:Diagnostic & Biopharmaceutical Products

$
559,969


$
3,954,212


$
309,706BioServices


269,834



1,015,396



182,295Total capital expenditures

$
829,803


$
4,969,608


$
492,001  F-27




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   18.
    Fair
    Value Measurements            Level 1


Level 2


Level 3


BalanceAssetsCash equivalents

$
6,169,396


$



$



$
6,169,396LiabilitiesReal property mortgage note

$



$



$
1,400,000


$
1,400,000     19.
    Discontinued
    Operations  GCI
    Disposition
   F-28




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Year Ended September 30,2009


2008


2007Revenue

$



$



$
965,938Goodwill impairment

$



$



$
Pretax losses

$



$



$
(901,099
)Income tax benefit

$



$



$
Gain on disposal

$



$



$
791,661Income tax on disposal

$



$



$
Net loss from discontinued operations

$



$



$
(109,438
)   20.
    Employee
    Benefit Plans    21.
    Subsequent
    Events    state-of-the
   F-29




---



##### Table of Contents



SERACARE
    LIFE SCIENCES, INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   22.
    Summarized
    Quarterly Financial Data (Unaudited)    For the Three Months EndedDecember 31(1)


March 31


June 30


September 30(2)


Total YearYear ended September 30, 2009:Revenue

$
9,270,619


$
10,863,948


$
11,777,786


$
12,521,818


$
44,434,171Gross profit


2,286,080



3,744,314



4,246,850



5,167,163



15,444,407Operating (loss) income


(16,791,427
)


(592,557
)


771,562



1,479,534



(15,132,888
)Net (loss) income


(16,910,523
)


(605,722
)


697,019



1,440,031



(15,379,195
)(Loss) income per common share:Basic


(0.91
)


(0.03
)


0.04



0.08



(0.83
)Diluted


(0.91
)


(0.03
)


0.04



0.08



(0.83
)Year ended September 30, 2008:Revenue

$
12,626,319


$
12,530,143


$
12,374,095


$
11,436,091


$
48,966,648Gross profit


4,098,483



4,712,954



3,631,750



2,579,069



15,022,256Operating loss


(606,710
)


(212,953
)


(1,053,164
)


(10,300,737
)


(12,173,564
)Net loss


(667,057
)


(330,651
)


(555,310
)


(10,410,031
)


(11,963,049
)Loss per common share:Basic and diluted


(0.04
)


(0.02
)


(0.03
)


(0.56
)


(0.64
)     (1)
    
    In the first quarter of fiscal 2009, SeraCare wrote-off
    $15.1 million of goodwill related to the Diagnostics and
    Biopharmaceutical Products segment.(2)
    
    In the fourth quarter of fiscal 2008, SeraCare wrote-off
    $8.0 million of goodwill related to the Diagnostics and
    Biopharmaceutical Products segment. F-30