Summary of Significant Accounting Policies

Revenue Recognition

Revenues from the sale of

the Company’s products and services are recognized when persuasive evidence of an arrangement exists, delivery has occurred (or services have been rendered), the price is fixed or determinable, and collectability is reasonably assured. The Company generally ships products F.O.B. shipping point. There is

conditional evaluation on any product sold and recognized as revenue. Amounts billed in excess of revenue recognized are recorded as deferred revenue on the balance sheet.

There is

right of return provided for distributors

or customers. For sales of products made to distributors, the Company considers a number of factors in determining whether revenue is recognized upon transfer of title to the distributor, or when payment is received. These factors include, but are

not

limited to, whether the payment terms offered to the distributor are considered to be non-standard, the distributor history of adhering to the terms of its contractual arrangements with the Company, the level of inventories maintained by the distributor, whether the Company has a pattern of granting concessions for the benefit of the distributor, and whether there are other conditions that

may

indicate that the sale to the distributor is

not

substantive. The Company currently recognizes revenue primarily on the sell-in method with its distributors.

Revenue arrangements with multiple deliverables are divided into units of accounting if certain criteria are met, including whether the deliverable item(s) has (have) value to the customer on a stand-alone basis. Revenue for each unit of accounting is recognized as the unit of accounting is delivered. Arrangement consideration is allocated to each unit of accounting based upon the relative estimated selling prices of the separate units of accounting contained within an arrangement containing multiple deliverables. Estimated selling prices are determined using vendor specific objective evidence of value (

“VSOE”), when available, or an estimate of selling price when VSOE is

not

available for a given unit of accounting. Significant inputs for the estimates of the selling price of separate units of accounting include market and pricing trends and a customer’s geographic location. The Company accounts for training and installation, and service agreements and the collection, processing and testing of the umbilical cord blood and the storage as separate units of accounting.

Service revenue generated from contracts for providing maintenance of equipment is amortized over the life of the agreement.

Revenue generated from storage contracts is deferred and recorded ratably over the life of the agreement, up to

years.

All other service revenue is recognized at the time the service is completed.

Revenues are net of normal discounts. Shipping and handling fees billed to customers are included in net revenues, while the related costs are included in cost of revenues.

Fair Value

Measurements

In accordance with ASC

820,

“

Fair Value Measurements and Disclosures

,” fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date.

The guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs

that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability. The guidance establishes

three

levels of inputs that

may

be used to measure fair value:

Level

Quoted market prices in active markets for identical assets or liabilities.

Level

Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level

Unobservable inputs reflecting the reporting entity

’s own assumptions.

The carrying values of cash and cash equivalents, accounts receivabl

e and accounts payable approximate fair value due to their short duration. The fair value of the Company’s derivative obligation liability is classified as Level

within the fair value hierarchy since the valuation model of the derivative obligation is based on unobservable inputs.

Segment Reporting

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”), or decision making group, whose function is to allocate resources to and assess the performance of the operating

segments. The Company has identified its chief executive officer and chief operating officer as the CODM. In determining its reportable segments, the Company considered the markets and the products or services provided to those markets.

The Company has

two

reportable business segments:

●

he Clinical Development Division, is devel

ing autologous (utilizing the patient’s own cells) stem cell-based

therapeutics

that address significant unmet medical needs for applications within the

vascular, cardiology and orthopedic

markets.

●

he Device Division, engages in the development and commercialization of automated technologies for c

ell-based t

herapeutics

and bio-processing. The device division is operated through the Company’s ThermoGenesis subsidiary.

Net Loss per Share

Net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding. The calculation

of the basic and diluted earnings per share is the same for all periods presented, as the effect of the potential common stock equivalents is anti-dilutive due to the Company’s net loss position for all periods presented. Anti-dilutive securities consisted of the following at

September 30:

	2017		2016
Vested Series A warrants		404,412		404,412
Unvested Series A warrants (1)		698,529		698,529
Warrants – other		3,725,782		3,725,782
Stock options		420,185		270,016
Restricted stock units		9,163		161,170
Total		5,258,071		5,259,909

(

)

The unvested Series A warrants were subject to vesting based upon the amount of funds actually received

by the Company in the

second

close of the

August 2015

financing which never occurred. The warrants will remain outstanding but unvested until they expire in

February 2021

Recently

Adopted Accounting Standards

March 2016,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2016

09,

“

Compensation - Stock Compensation (Topic

718

): Improvements to Employee Share-Based Payment Accounting”.

ASU

2016

simplifies several aspects of the accounting for share-based payment award transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The Company adopted ASU

2016

effective

July 1, 2017.

The Company has elected to continue its current policy of estimating forfeitures rather than recognizing forfeitures when they occur. Adoption of the new standard did

not

have a material impact on the financial statements of the Company.

July 2015,

the FASB issued ASU

No.

2015

11,

“

Inventory: Simplifying the Measurement of Inventory

”, that requires inventory

not

measured using either the last in,

first

out (“LIFO”) or the retail inventory method to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal and transportation. The Company adopted ASU

2015

effective

July 1, 2017.

Adoption of the new standard did

not

have a material impact on the financial statements of the Company.

Recently Issued Accounting

Standards

May 2014,

the FASB issued ASU

2014

09,

“

Revenue from Contracts with Customers (Topic

606

)

” (“ASU

2014

09”

). ASU

2014

supersedes the revenue recognition requirements in ASC Topic

605,

“Revenue Recognition” and some cost guidance included in ASC Subtopic

605

35,

Revenue Recognition

- Construction-Type and Production-Type Contracts

.” The core principle of ASU

2014

is that revenue is recognized when the transfer of goods or services to customers occurs in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. ASU

2014

requires the disclosure of sufficient information to enable readers of the Company’s financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. ASU

2014

also requires disclosure of information regarding significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. ASU

2014

provides

two

methods of retrospective application. The

first

method would require the Company to apply ASU

2014

to each prior reporting period presented. The

second

method would require the Company to retrospectively apply ASU

2014

with the cumulative effect recognized at the date of initial application. ASU

2014

will be effective for the Company beginning in fiscal

2018

as a result of ASU

2015

14,

Revenue from Contracts with Customers (Topic

606

): Deferral of the Effective Date

," which was issued by the FASB in

August 2015

and extended the original effective date by

one

year. The Company is currently evaluating the impact of adopting the available methodologies of ASU

2014

and

2015

upon its financial statements in future reporting periods. The Company is also in the process of evaluating the new standard against its existing accounting policies, including the timing of revenue recognition, and its contracts with customers to determine the effect the guidance will have on its financial statements and what changes to systems and controls

may

be warranted.