Related Party Transactions

Revolving Credit Agreement

March 6, 2017,

Cesca entered into the Credit Agreement with Boyalife Investment Fund II, Inc., which later merged into Boyalife Asset Holding II, Inc. (the “Lender”). The Lender is a wholly owned subsidiary of Boyalife Group Inc. The Credit Agreement and subsequent amendments, grants to the Company the right to borrow up to

$10,000,000

from Lender (the “Loan”) at any time prior to

March 6, 2022 (

the “Maturity Date”). The Company has drawn down a total of

$7,200,000

as of

June 30, 2018.

The Credit Agreement and the Convertible Promissory Note issued thereunder (the “Note”) provide that the principal and all accrued but unpaid interest under the Loan will be due and payable on the Maturity Date, with payments of interest-only due on the last day of each calendar year. The Loan bears interest at

22%

per annum, simple interest. The Note can be prepaid in whole or in part by the Company at any time without penalty.

The Credit Agreement and Note were amended on

April 16, 2018.

The First Amended and Restated Credit Agreement (“the Amended Credit Agreement”) contained the following provisions:

●

The Lender was granted the right to convert, at any time, outstanding principal and accrued but unpaid interest under the Credit Agreement into shares of Common Stock at a conversion price equal to

$1.61

per share, subject to customary adjustments for stock splits, reverse stock splits, and the like (the “Fixed Conversion Price”). Notwithstanding the foregoing, if the Note is converted after the Maturity Date, the conversion price of the Note will be the lower of the Fixed Conversion Price or an amount equal to

90%

of the average volume-weighted average price of Common Stock during the

trading days immediately prior to the Maturity Date. Prior to the

April 2018

amendment, the principal and accrued interest was convertible by the Lender only upon maturity of the obligation.

●

If the Company after

April 16, 2018

issues shares of Common Stock, or is deemed to issue shares of Common Stock, prior to the full payment or conversion of the Note for a price per share lower than the Fixed Conversion Price then in effect, the Fixed Conversion Price will be reduced to the price per share paid in the future issuance, with certain customary exceptions for equity plan issuances and issuances pursuant to certain strategic transactions.

●

The Company has been granted the right to defer payment of the

$657,000

interest payment that was originally due on

December 31, 2017

until

December 31, 2018,

or if earlier, the date on which the Company completes a debt or equity financing transaction resulting in gross proceeds of

$5.0

million or more.

May 7, 2018,

the Company entered into an Amendment

No.

to the Amended Credit Agreement with Boyalife Asset Holding II, Inc. The Amendment

No.

amends the Company’s revolving line of credit facility by adding a provision securing it with a security interest in the Company’s shares of common stock of ThermoGenesis Corp.

May 18, 2018,

the Company completed a public offering of its Common Stock for a purchase price of

$0.60

per unit. This offering lowered the effective Fixed Conversion Price from

$1.61

$0.60.

The Maturity Date of the Amended Credit Agreement is subject to acceleration at the option of the Lender upon customary events of default, which include a breach of the Loan documents, termination of operations, or bankruptcy. The Lender’s obligation to make advances under the Loan is subject to the Company’s representations and warranties in the Amended Credit Agreement continuing to be true at all times and there being

continuing event of default under the Note.

default has occurred through the date of filing.

The Company accounted for the Amended Credit Agreement as a loan modification. As discussed in Note

The Company has adopted ASU

2017

“

Accounting for Certain Financial Instruments with Down Round Features”.

The Company performed an analysis of the Amended Credit Agreement, including the adoption of ASU

2017

in the analysis. It determined that the embedded conversion option contained within the Amended Credit Agreement does

not

require bifurcation and should

not

be classified as a derivative liability. Additionally, it was concluded that the conversion option does

not

contain a beneficial conversion feature. As of

June 30, 2018,

the lowered Fixed Conversion Price of

$0.60

was

not

“in the money”. Consequently,

separate entry or adjustment is recorded for the embedded conversion option as of

June 30, 2018.

The Company recorded interest expense of

$382,000

and

$742,000

during the

three

and

six

months ended

June 30, 2018,

and

$103,000

and

$122,000

for the

three

and

six

months ended

June 30, 2017,

respectively, and had an interest payable balance of

$742,000

and

$657,000

June 30, 2018

and

December 31, 2017,

respectively.

Distributor Agreement

August 21, 2017,

ThermoGenesis entered into an International Distributor Agreement with Boyalife W.S.N. Under the terms of the agreement, Boyalife W.S.N. was granted the exclusive right, subject to existing distributors and customers (if any), to develop, sell to, and service a customer base for ThermoGenesis’ AXP

(AutoXpress

) System and BioArchive

System in the People’s Republic of China (excluding Hong Kong and Taiwan), Singapore, Indonesia, and the Philippines (the “Territories”). Boyalife W.S.N. is an affiliate of our Chief Executive Officer and Chairman of our Board of Directors, and Boyalife (Hong Kong) Limited, our largest stockholder. Boyalife W.S.N.’s rights under the agreement include the exclusive right to distribute AXP

Disposable Blood Processing Sets and use rights to the AutoXpress

System, BioArchive System and other accessories used for the processing of stem cells from cord blood in the Territories. Boyalife W.S.N. is also appointed as the exclusive service provider to provide repairs and preventative maintenance to ThermoGenesis products in the Territories.

The term of the agreement is for

three

years with ThermoGenesis having the right to renew the agreement for successive

two

-year periods at its option. However, ThermoGenesis has the right to terminate the agreement early if Boyalife W.S.N. fails to meet specified minimum purchase requirements.

Revenues

During the

three

and

six

months ended

June 30, 2018,

the Company recorded

$43,000

and

$269,000

and

for the

three

and

six

months ended

June 30 2017

respectively, of revenues from Boyalife related to the aforementioned distributor agreement.

Bill Payment Arrangement

The Company entered into a bill payment arrangement whereby Boyalife Group Ltd. (Payor), the Company’s largest shareholder, agreed to pay the Company’s legal expenses payable to the Company’s attorney related to certain litigation involving SynGen (the “Bill Payment Arrangement”), although the Company remains jointly and severally liable for the payment of such legal fees. The terms of the Bill Payment Arrangement provided that the Company will reimburse Payor for any and all amounts paid by Payor in connection with the Bill Payment Arrangement under certain specified events. There is

interest payable on outstanding balance of related party payable. This litigation was terminated as part of the SynGen acquisition agreement. Invoices totaling

$606,000

had previously been paid by Payor. The Company reimbursed the Payor for the full outstanding amount of

$606,000

during the quarter ended

June 30, 2018.