3.	Acquisition of Astero Bio Corporation

April 1, 2019,

the acquisition date, BioLife completed the acquisition of all the outstanding shares of Astero Bio Corporation (“Astero”), pursuant to the terms of a Stock Purchase Agreement by and among BioLife and Astero.

Astero’s ThawSTAR product line is comprised of a family of automated thawing devices for frozen cell and gene therapies packaged in cryovials and cryobags. The products improve the quality of administration of high-value, temperature-sensitive biologic therapies to patients by standardizing the thawing process and reducing the risks of contamination and overheating, which are inherent with the use of traditional water baths.

Consideration transferred

The Astero Acquisition was accounted for as a purchase of a business under FASB ASC Topic

805,

“Business Combinations”. The Astero Acquisition was funded through payment of approximately

$12.5

million in cash and under the terms of the share purchase agreement, Astero shareholders are eligible to receive up to an additional

$8.5

million in cash over the next

three

years based on attainment of specific revenue targets (“contingent consideration”). Under the acquisition method of accounting, the assets acquired and liabilities assumed from Astero were recorded as of the acquisition date, at their respective fair values, and consolidated with those of BioLife. The fair value of the contingent consideration of

$1.9

million was determined using the option pricing model based on the most recent guidance from the Appraisal Foundation. The fair value of the net tangible assets acquired is estimated to be approximately

$324,000,

the fair value of the intangible assets acquired is estimated to be approximately

$4.6

million, and the residual goodwill is estimated to be approximately

$9.5

million. The fair value estimates required critical estimates, including, but

not

limited to, future expected cash flows, revenue and expense projections, discount rates, revenue volatility, and royalty rates. BioLife believes these estimates to be reasonable. Actual results

may

differ from these estimates.

Total consideration recorded for the acquisition of Astero is as follows (amounts in thousands):

Cash consideration	$	12,521
Contingent consideration		1,931
Working capital adjustment		(71	)
Total consideration transferred	$	14,381

Transaction costs related to the acquisition are expensed as incurred and are

not

included in the calculation of consideration transferred. The Company incurred

$39,000

and

$247,000

in transaction costs for the

three

- and

six

-month periods ended

June 30, 2019,

respectively.

Fair Value of Net Assets Acquired

The table below represents the purchase price allocation to the net assets acquired based on their estimated fair values (amounts in thousands). We

may

make appropriate adjustments to the fair value measurements of the intangible assets and contingent consideration and residual goodwill, if any, as additional information is received prior to the completion of the measurement period, which is up to

one

year from the acquisition date. Such amounts were estimated using the most recent financial statements from Astero as of

March 31, 2019.

Cash and cash equivalents	$	12
Accounts receivable		154
Inventory		456
Customer relationships		160
Tradenames		470
Developed technology		3,920
Goodwill		9,524
Other assets		100
Accounts Payable		(251	)
Other liabilities		(164	)
Fair value of net assets acquired	$	14,381

The fair value of Astero’s identifiable intangible assets and estimated useful lives have been preliminary estimated as follows (amounts in thousands):

	Estimated Fair Value		Estimated Useful Life (Years)
Customer relationships	$	160			4
Tradenames		470			9
Developed technologies		3,920		5	–	9
Total identifiable intangible assets	$	4,550

Fair value measurement methodologies used to calculate the value of any asset can be broadly classified into

one

three

approaches, referred to as the cost, market and income approaches. In any fair value measurement analysis, all

three

approaches must be considered, and the approach or approaches deemed most relevant will then be selected for use in the fair value measurement of that asset. The fair value of identifiable intangible assets was determined by

third

-party appraisal primarily using variations of the “income approach,” which is based on the present value of the future after-tax cash flows attributable to each identifiable intangible asset. The fair value of inventories was determined using both the “cost approach” and the “market approach”.

Some of the more significant assumptions inherent in the development of intangible asset fair values, from the perspective of a market participant, include, but are

not

limited to (i) the amount and timing of projected future cash flows (including revenue and expenses), (ii) the discount rate selected to measure the risks inherent in the future cash flows, (iii) the assessment of the asset’s life cycle, and (iv) the competitive trends impacting the asset.

Acquired Goodwill

The goodwill of

$9.5

million represents future economic benefits expected to arise from synergies from combining operations and commercial organizations to increase market presence and the extension of existing customer relationships. Substantially all of the goodwill recorded is

not

expected to be deductible for income tax purposes.

Revenue, Net Income and Pro Forma Presentation

The Company recorded revenue from Astero of

$374,000

and a net loss of

$542,000

in its consolidated statements of operations for the

three

and

six

months ended

June 30, 2019.

The Company has included the operating results of Astero in its consolidated statements of operations since the

April 1, 2019

acquisition date. The following pro forma financial information presents the combined results of operations of BioLife and Astero as if the acquisition had occurred on

January 1, 2018

after giving effect to certain pro forma adjustments. The pro forma adjustments reflected herein include only those adjustments that are directly attributable to the Astero Acquisition, factually supportable and have a recurring impact. These pro forma adjustments for the

six

months ended

June 30, 2019

and

2018

include a

$104,000

and

$208,000

net increase in amortization expense, respectively, to record amortization expense for the

$4.6

million of acquired identifiable intangible assets, adjustments to stock-based compensation of

$108,000

and

$216,000,

respectively and

$47,000

and

$94,000,

respectively for salary increases related to employment agreements signed in conjunction with the acquisition. In addition, acquisition-related transaction costs of

$247,000

and a

$103,000

purchase accounting adjustment to record inventory at net realizable value were excluded from pro forma net income for the

six

months ended

June 30, 2019.

The pro forma financial information does

not

reflect any adjustments for anticipated expense savings resulting from the acquisition and is

not

necessarily indicative of the operating results that would have actually occurred had the transaction been consummated on

January 1, 2018

or of future results:

	Six Months Ended June 30,
(In thousands)	2019		2018
Total revenue	$	12,681	$	9,016
Net income attributable to common stockholders	$	801	$	258
Earnings per share:
Basic	$	0.04	$	0.02
Diluted	$	0.03	$	0.01