Share-based Compensation

Service Vesting-Based Stock Options

The following is a summary of service vesting based stock option activity for the

three

month period ended

March 31, 2019,

and the status of stock options outstanding at

March 31, 2019:

	Three Month Period Ended
	March 31, 2019
				Weighted Avg.
				Exercise
	Options			Price
Outstanding at beginning of year		2,043,402		$	1.91
Granted		—		$	N/A
Exercised		(99,697	)	$	1.61
Forfeited		(3,438	)	$	5.69
Expired		—		$	N/A
Outstanding at March 31, 2019		1,940,267		$	1.92

Stock options exercisable at March 31, 2019		1,657,436		$	1.89

We recognized stock compensation expense of

$144,000

and

$153,000

related to service vesting-based options during the

three

month periods ending

March 31, 2019

and

2018,

respectively. As of

March 31, 2019,

there was

$31.0

million of aggregate intrinsic value of outstanding service vesting-based stock options, including

$26.5

million 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 the quarter 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 on

March 31, 2019.

This amount will change based on the fair market value of the Company’s stock. During the quarters ended

March 31, 2019

and

2018

intrinsic value of service vesting-based awards exercised was

$1.4

million and

$270,000,

respectively. The weighted average remaining contractual life of service vesting-based options outstanding and exercisable at

March 31, 2019

5.4

years and

5.3

years, respectively. Total unrecognized compensation cost of service vesting-based stock options at

March 31, 2019

$374,000

is expected to be recognized over a weighted average period of

1.4

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 ended

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 for

2017

were met, would vest

50%

on the release of the Company’s audited financial statements for

2017,

and

50%

one

year thereafter. If the minimum performance targets were

not

achieved,

options would 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 vest as follows:

50%

of the options vested on

March 8, 2018

and the remaining

50%

vested on

March 8, 2019.

We recognized stock compensation expense of

none

and

$125,000

related to performance-based options during the

three

month periods ending

March 31, 2019

and

2018,

respectively. As of

March 31, 2019,

there was

$15.7

million of aggregate intrinsic value of outstanding and exercisable performance-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 the quarter 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 on

March 31, 2019.

This amount will change based on the fair market value of the Company’s stock. During the quarters ended

March 31, 2019

and

2018

there were

performance-based options exercised. The weighted average remaining contractual life of performance-based options outstanding and exercisable at

March 31, 2019,

2.7

years. There is

unrecognized compensation cost of performance-based stock options at

March 31, 2019.

There were

964,997

performance-based stock options outstanding at the beginning and ending of the

three

month period ending

March 31, 2019.

There were

stock options granted to employees and non-employee directors in the

three

month periods ended

March 31, 2019

and

2018.

Restricted Stock

Service vesting-based

restricted stock

The following is a summary of service vesting-based restricted stock activity for the

three

month period ended

March 31, 2019,

and the status of unvested service vesting-based restricted stock outstanding at

March 31, 2019:

	Three Month Period Ended
	March 31, 2019
	Number of Restricted Shares			Grant-Date Fair Value
Unvested outstanding at beginning of year		279,919		$	5.00
Granted		146,614		$	17.84
Vested		(64,992	)	$	4.47
Forfeited		(8,418	)	$	6.66
Unvested outstanding at March 31, 2019		353,123		$	10.39

The aggregate fair value of the service vesting-based awards granted during the

three

months ended

March 31, 2019

and

2018

was

$2.6

million and

$1.0

million, 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 service vesting-based restricted stock awards that vested was

$853,000

and

$307,000

for the

three

months ended

March 31, 2019

and

March 31, 2018,

respectively.

We recognized stock compensation expense of

$255,000

and

$95,000

related to service vesting-based restricted stock awards for the

three

months ended

March 31, 2019

and

March 31, 2018,

respectively. As of

March 31, 2019,

there was

$3.5

million in unrecognized compensation costs related to service vesting-based restricted stock awards. We expect to recognize those costs over

3.6

years.

Performance

-based

restricted stock

2019,

we engaged an independent executive compensation firm, FW Cook, to review current compensation practices and make updated recommendations to the Compensation Committee and the full Board of Directors. With consideration to the recommendations of FW Cook, including an evaluation of the compensation practices of a like-situated peer group of public life science companies, our Compensation Committee recommended and our Board of Directors approved a compensation program which included apportioning a portion of management’s equity compensation to performance-based restricted stock awards. Specifically, our executive officers were granted service-based restricted stock awards (

94,247

shares of restricted stock in the aggregate vesting over

four

years) and performance-based restricted stock awards (

94,247

shares of restricted stock in the aggregate). The performance-based restricted stock awards will vest as to between

and

200%

of the number of restricted shares granted to each recipient based on our total shareholder return during the period beginning on

January 1, 2019

through

December 31, 2020

as compared to the total shareholder return of

of our peers (such peers having been determined by our Compensation Committee with assistance of FW Cook immediately prior to the grant date). The

94,247

performance-based restricted stock awards will be awarded if we are in the

50th

percentile of total shareholder return versus the peer group. The maximum number of performance-based restricted stock awards that

may

be granted (

188,494

shares in the aggregate) will be awarded if we are in the

80th

percentile of total shareholder return versus the peer group and

units will be awarded for less than

30th

percentile of total shareholder return versus the peer group.

During the

three

month period ended

March 31, 2019,

we assumed

94,247

performance-based restricted stock awards will be awarded with a grant-date fair value of

$17.84.

The aggregate fair value of the performance-based restricted stock awards was

$1.7

million. We recognized stock compensation expense of

$207,000

for the

three

months ended

March 31, 2019.

As of

March 31, 2019,

there was

$1.5

million in unrecognized non-cash compensation costs related to performance-based restricted stock awards. We expect to recognize those costs over

1.8

years.

We recorded total stock compensation expense for the

three

month periods ended

March 31, 2019

and

2018,

as follows:

	Three Month Period Ended
	March 31,
(I n thousands)	2019		2018
Research and development costs	$	80	$	65
Sales and marketing costs		166		69
General and administrative costs		328		191
Cost of product sales		32		48
Total	$	606	$	373