3.	Business Combinations

August 8, 2019,

we closed the acquisition of SAVSU pursuant to a Share Exchange Agreement. Pursuant to the Share Exchange Agreement, SAVSU Origin, LLC (“the Seller”) agreed to transfer to the us and we agreed to acquire from the Seller

8,616

shares of common stock of SAVSU, representing the remaining

56%

of the outstanding shares of SAVSU that we did

not

previously own, in exchange for

1,100,000

shares of BioLife common stock. As a result of the acquisition, SAVSU became a wholly-owned subsidiary on

August 8, 2019,

the acquisition date.

Please see footnote

to our consolidated financial statements included in our

-Q for the quarter ended

June 30, 2019

for information related to our Astero business combination.

Consideration transferred

The SAVSU acquisition was accounted for as a purchase of a business under FASB ASC Topic

805,

“Business Combinations”. The acquisition of

56%

of SAVSU was funded through a transfer of

1,100,000

shares of BioLife common stock, which had a fair value of

$18.12

per share or

$19.9

million at time of closing. The total value of

100%

of SAVSU consisting of the fair value of the stock issued and the fair value of our existing investment in SAVSU was

$35.8

million at time of closing. Prior to the acquisition, we accounted for our investment of SAVSU using the equity method of accounting which resulted in a recorded book value of

$5.8

million at the acquisition date. We remeasured to fair value the equity interest in SAVSU held immediately before the business combination. The fair value of our equity interest was determined to be

$15.9

million on our existing

44%

ownership based on the fair value of shares transferred at the time of acquisition for the

56%

we did

not

previously own. As a result, we recorded a non-operating gain of

$10.1

million.

Under the acquisition method of accounting, the assets acquired and liabilities assumed from SAVSU were recorded as of the acquisition date, at their respective fair values, and consolidated with those of BioLife. The fair value of the net tangible assets acquired is estimated to be approximately

$4.6

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

$12.4

million, and the residual goodwill is estimated to be approximately

$18.8

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 SAVSU is as follows (amounts in thousands):

Stock consideration for 55.6% equity interest purchased

19,932

This stock consideration plus the fair value of our existing equity investment in SAVSU of

$15.9

million results in the total purchase price for accounting purposes of

$35.8

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

not

included in the calculation of consideration transferred. The Company incurred

116,000

in transaction costs in each of the

three

and

nine

months ended

September 30, 2019.

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 residual goodwill, if any, as additional information is received including finalization of

third

-party valuations 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 SAVSU as of

August 7, 2019.

Cash and cash equivalents	$	1,251
Accounts receivable, net		741
Prepaid expenses and other current assets		33
Property, plant and equipment		704
Operating lease right-of-use asset		232
Assets held for lease		2,575
Customer relationships		80
Tradenames		1,320
Developed technology		11,000
Goodwill		18,826
Accounts Payable		(77	)
Other liabilities		(836	)
Fair value of net assets acquired	$	35,849

The fair value of SAVSU’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	$	80			6
Tradenames		1,320			9
Developed technologies		11,000		7	–	8
Total identifiable intangible assets	$	12,400

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 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 assets held for rent and property, plant and equipment 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.

These preliminary estimates of fair value and estimated useful lives

may

be different from the amounts included in the final acquisition accounting, and the difference could have a material impact on the accompanying unaudited pro forma condensed combined financial statements.

Acquired Goodwill

The goodwill of

$18.8

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 SAVSU of

211,000

and a net loss of

676,000

in its consolidated statements of operations for the

three

and

nine

months ended

September 30, 2019.

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

August 8, 2019

acquisition date. The following pro forma financial information presents the combined results of operations of BioLife, SAVSU and recently acquired AsteroBio on

April 1, 2019,

as if the acquisitions 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 SAVSU and Astero acquisitions, factually supportable and have a recurring impact. These pro forma adjustments for the

nine

months ended

September 30, 2019

and

2018

include a

$1.0

million and

$1.5

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

$17.0

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

$147,000

and

$396,000,

respectively, and

$116,000

and

$210,000,

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

$538,000

and a

$155,000

purchase accounting adjustment to record inventory at net realizable value and the

$10.1

million gain on acquisition of SAVSU were excluded from pro forma net income for the

nine

months ended

September 30, 2019.

The pro forma financial information does

not

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

not

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

January 1, 2018

or of future results. Dilutive earnings per share has been omitted as common stock equivalents are anti-dilutive due to the Company’s pro forma net losses:

(Unaudited)	Nine Months Ended September 30,
(In thousands)	2019			2018
Total revenue	$	19,941		$	14,861
Net loss attributable to common stockholders	$	(1,322	)	$	(1,495	)
Earnings/(loss) per share:
Basic	$	(0.07	)	$	(0.10	)