8.	Stock-Based Compensation

Stock Compensation Plans

Our stock-based compensation programs are long-term retention programs that are intended to attract, retain and provide incentives for talented employees, officers and directors, and to align stockholder and employee interests. We have the following stock-based compensation plans and programs:

During 1998, we adopted the 1998 Stock Option Plan (the “1998 Plan”). An aggregate of 285,714 shares of common stock were reserved for issuance upon the exercise of options granted under the 1998 Plan. In September 2005, the shareholders approved an increase in the number of shares available for issuance to 714,285 shares. The 1998 Plan expired on August 31, 2008. The options are exercisable for up to ten years from the grant date. As of December 31, 2017, there were outstanding options to purchase 7,142 share of Company common stock under the 1998 Plan.

Subsequent to the expiration of the 1998 Plan, the Company issued, outside of the 1998 Plan, non-incentive stock options for an aggregate of 1,243,584 shares of Company common stock. Of this amount, 665,105 remain outstanding at December 31, 2017.

During 2013, we adopted the 2013 Performance Incentive Plan (the “2013 Plan”), which allows us to grant options or restricted stock units to all employees, including executive officers, outside consultants and non-employee directors. An aggregate of 3.1 million shares of common stock were initially reserved for issuance upon the exercise of options granted under the 2013 Plan. In May 2017, the shareholders approved an increase in the number of shares available for issuance to 4.1 million shares. Option vesting periods are generally four years for the 2013 Plan. Options granted under this plan generally expire ten years from the effective date of grant. As of December 31, 2017, there were outstanding options to purchase 2,717,762 shares of Company common stock and 237,926 unvested restricted stock awards outstanding under the 2013 Plan.

Issuance of Shares

When options and warrants are exercised, it is the Company’s policy to issue new shares.

Stock Option Activity

Service Vesting-Based Stock Options

The following is a summary of service vesting-based stock option activity under our stock option plans for 2017 and 2016, and the status of service vesting-based stock options outstanding at December 31, 2017 and 2016:

	Year Ended				Year Ended
	December 31, 2017				December 31, 2016
			Wtd. Avg.				Wtd. Avg.
			Exercise				Exercise
	Shares		Price		Shares		Price
Outstanding at beginning of year		2,513,861	$	1.78		2,555,263	$	1.80
Granted		155,000		2.93		739,000		1.80
Exercised		(131,427)		1.17		(103,308)		1.22
Forfeited		(52,932)		3.45		(469,856)		2.15
Expired - vested		(94,490)		1.78		(207,238)		1.50
Outstanding at end of year		2,390,012	$	1.85		2,513,861	$	1.78

Stock options exercisable at year end		1,583,585	$	1.72		1,329,392	$	1.66

We recognized stock compensation expense of $611,705 and $612,440 related to service vesting-based options during the year ended December 31, 2017 and 2016, respectively. Weighted average fair value of service vesting-based options granted was $1.91 and $1.26 per share for the years ended December 31, 2017 and 2016, respectively.

During the year ended December 31, 2017, service vesting-based options covering 131,427 shares of common stock with a total intrinsic value of $91,817 were exercised. During the year ended December 31, 2016, service vesting-based options covering 103,308 shares of common stock with a total intrinsic value of $51,302 were exercised.

As of December 31, 2017, there was $9,936,441 of aggregate intrinsic value of outstanding service vesting-based stock options, including $6,793,545 of aggregate intrinsic value of exercisable service vesting-based stock options. Intrinsic value is the total pretax intrinsic value for all “in-the-money” options (i.e., the difference between the Company’s closing stock price on the last trading day of 2017 and the exercise price, multiplied by the number of shares) that would have been received by the option holders had all option holders exercised their options as of December 31, 2017. This amount will change based on the fair market value of the Company’s stock.

The following table summarizes information about service vesting-based stock options outstanding at December 31, 2017:

Range of Exercise Prices		Number Outstanding at December 31, 2017		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price
$	0.49-$1.00		17,855		1.17	$	0.60
$	1.01-$1.50		645,108		2.75	$	1.23
$	1.51-$2.50		1,632,408		7.56	$	1.93
$	2.51-$8.60		94,641		7.89	$	4.94
			2,390,012		6.22	$	1.85

The weighted average remaining contractual life of exercisable service vesting-based options at December 31, 2017, is 5.6 years. Total unrecognized compensation cost of service vesting-based stock options at December 31, 2017 of $1,174,003 is expected to be recognized over a weighted average period of 2.2 years.

Performance-based Stock Options

The Company’s Board of Directors implemented a Management Performance Bonus Plan for 2017. Based on achieving varying levels of specified revenue for the year ending December 31, 2017, up to 1,000,000 options to purchase shares of the Company’s common stock may be vested. The options have an exercise price of $1.64, and if revenue levels are met, vest 50% on the release of the Company’s audited financial statements for 2017, and 50% one year thereafter. If the minimum performance targets are not achieved, no options will vest. On February 27, 2018, the Company’s Board of Directors determined that, subject to the completion of the 2017 audit, the specified revenue target had been achieved. Accordingly, 999,997 options to purchase shares of the Company’s common stock will vest as follows: 50% of the options vested on March 8, 2018 and the remaining 50% will vest on March 8, 2019.

We recognized stock compensation expense of $509,005 related to performance-based options during the year ended December 31, 2017. Weighted average fair value of performance-based options granted was $1.02 per share for the year ended December 31, 2017. As of December 31, 2017, there was $4,359,987 of aggregate intrinsic value of outstanding performance-based stock options. The weighted average remaining contractual life of performance-based options at December 31, 2017, is 4.0 years. Total unrecognized compensation cost of performance-based stock options at December 31, 2017 of $509,000 is expected to be recognized over a weighted average period of 1.0 years.

Restricted Stock

The following is a summary of unvested restricted stock activity for 2017 and 2016, and the status of unvested restricted stock outstanding at December 31, 2017 and 2016:

	Year Ended				Year Ended
	December 31, 2017				December 31, 2016
			Wtd. Avg.				Wtd. Avg.
			Grant Date				Grant Date
	Shares		Fair Value		Shares		Fair Value
Outstanding at beginning of year		98,439	$	1.90		––	$	––
Granted		207,350		1.76		200,000		1.90
Vested		(51,563)		1.90		(84,894)		1.90
Forfeited		(16,300)		1.76		(16,667)		1.90
Non-vested at end of year		237,926	$	1.79		98,439	$	1.90

The aggregate fair value of the awards granted during the years ended December 31, 2017 and 2016 was $364,936 and $380,000, respectively, which represents the market value of BioLife common stock on the date that the restricted stock awards were granted. The aggregate fair value of the restricted stock awards that vested during the years ended December 31, 2017 and 2016 was $154,219 and $156,564, respectively.

We recognized stock compensation expense of $149,494 and $164,554 related to restricted stock awards during the years ended December 31, 2017 and 2016, respectively. As of December 31, 2017, there was $344,279 in unrecognized compensation costs related to restricted stock awards. We expect to recognize those costs over 2.6 years.

We recorded total stock compensation expense for the years ended December 31, 2017 and 2016, as follows:

	Year Ended December 31,
	2017		2016
Research and development costs	$	236,972	$	151,849
Sales and marketing costs		230,461		176,878
General and administrative costs		638,346		426,035
Cost of product sales		164,424		2,794
Joint venture restructuring charges		––		19,438
Total	$	1,270,203	$	776,994