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

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 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. As of

December 31, 2019,

there were outstanding options to purchase

2.1

million shares of Company common stock and

553,000

unvested restricted stock awards outstanding under the

2013

Plan.

The Company also issued, outside any approved compensation plans, non-incentive stock options. As of

December 31, 2019,

there were

188,000

such options outstanding which were fully vested prior to

2018.

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 for

2019

and

2018,

and the status of service vesting-based stock options outstanding at

December

31,

2019

and

2018:

	Year Ended					Year Ended
	December 31, 2019					December 31, 2018
				Wtd. Avg.					Wtd. Avg.
				Exercise					Exercise
	Shares			Price		Shares			Price
Outstanding at beginning of year		2,043,402		$	1.91		2,390,012		$	1.85
Granted	––			––		––			––
Exercised		(469,510	)		1.72		(330,983	)		1.36
Forfeited		(3,437	)		5.69		(15,627	)		4.34
Expired - vested	––			––		––			––
Outstanding at end of year		1,570,455		$	1.96		2,043,402		$	1.91

Stock options exercisable at year end		1,465,599		$	1.94		1,661,999		$	1.87

We recognized stock compensation expense related to performance-based options of

$370,000

and

$509,000

during the year ended

December 31, 2018.

None

was recognized in the year ended

December 31, 2019

and

2018.

As of

December 31, 2019,

there was

$22.3

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

$20.9

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 year 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

December 31, 2019.

This amount will change based on the fair market value of the Company’s stock. Intrinsic value of service vesting-based awards exercised during the years ended

December 31, 2019

and

2018

was

$7.1

million and

$3.8

million, respectively. There were

service based-vesting options granted during the years ended

December 31, 2019

and

2018.

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

December 31, 2019

5.0

years and

5.4

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

December 31, 2019

$148,000

is expected to be recognized over a weighted average period of

1.1

years.

The following table summarizes information about service vesting-based stock options outstanding at

December

31,

2019:

Range of Exercise Prices			Number Outstanding at December 31, 2019		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price
$0.49	-	1.00		3,571		1.91	$	0.49
$1.01	-	1.50		175,199		1.32	$	1.24
$1.51	-	2.50		1,328,367		5.46	$	1.94
$2.51	-	8.60		63,318		5.71	$	4.42
				1,570,455		5.00	$	1.96

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 for

2017

were met. If the minimum performance targets are

not

achieved,

options will vest. On

February 27, 2018,

the Company’s Board of Directors determined that the specified revenue target had been achieved. Accordingly,

999,997

options to purchase shares of the Company’s common stock vested in

2017

and

2018.

The following is a summary of performance-based stock option activity under our stock option plans for

2019

and

2018,

and the status of performance-based stock options outstanding at

December 31, 2019

and

2018:

	Year Ended					Year Ended
	December 31, 2019					December 31, 2018
				Wtd. Avg.					Wtd. Avg.
				Exercise					Exercise
	Shares			Price		Shares			Price
Outstanding at beginning of year		964,997		$	1.64		999,997		$	1.64
Granted	––			––		––			––
Exercised		(227,500	)		1.64		(35,000	)		1.64
Outstanding at end of year		737,497		$	1.64		964,997		$	1.64

Stock options exercisable at year end		737,497		$	1.64		465,001		$	1.64

We recognized stock compensation expense related to performance-based options of

$509,000

during the year ended

December 31, 2018.

None

was recognized in the year ended

December 31, 2019.

As of

December 31, 2019,

there was

$10.7

million of aggregate intrinsic value 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

December 31, 2019.

This amount will change based on the fair market value of the Company’s stock. Intrinsic value of performance-based awards exercised during the years ending

December 31, 2019

and

2018

was

$3.7

million and

$285,000,

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

December 31, 2019,

2.0

years.

There were

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

December 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 year ended

December 31, 2019

and

2018,

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

December 31, 2019

and

2018:

	Year Ended					Year Ended
	December 31, 2019					December 31, 2018
				Wtd. Avg.					Wtd. Avg.
				Grant Date					Grant Date
	Shares			Fair Value		Shares			Fair Value
Outstanding at beginning of year		279,919		$	5.00		237,926		$	1.79
Granted		309, 218			17.15		181,268			7.02
Vested		(125,818	)		4.57		(116,647	)		1.81
Forfeited		(33,920	)		12.88		(22,628	)		3.95
Non-vested at end of year		429,399		$	13.25		279,919		$	5.00

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

December 31, 2019

and

2018

was

$5.3

million and

$1.3

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 awards that vested during the years ended

December 31, 2019

and

2018

was

$1.9

million and

$1.1

million, respectively.

We recognized stock compensation expense of

$1.2

million and

$413,000

related to service vesting-based awards during the years ended

December 31, 2019

and

2018,

respectively. As of

December 31, 2019,

there was

$4.9

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

3.3

years.

Market-based restricted stock

February 25, 2019

the Company granted

94,247

shares and on

April 1, 2019

granted

29,604

shares of market-based stock to its executives in the form of restricted stock. The shares granted contain a market condition based on Total Shareholder Return (“TSR”). The TSR market condition measures the Company’s performance against a peer group. The market-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. The fair value of this award was determined using a Monte Carlo simulation with the following assumptions: a historical volatility of

69%,

dividend yield and a risk-free interest rate of

2.5%.

The historical volatility was based on the most recent

-year period for the Company and correlated with the components of the peer group. The stock price projection for the Company and the components of the peer group assumes a

dividend yield. This is mathematically equivalent to reinvesting dividends in the issuing entity over the performance period. The risk-free interest is based on the yield on the U.S. Treasury Strips as of the Measurement Date with a maturity consistent with the

-year term associated with the market condition of the award. The fair value of this award will be expensed on a straight-line basis over the grant date to the vesting date of

December 31, 2020.

For the period ended

December 31, 2019,

the aggregate grant date fair value of the market-based restricted stock awards was

$3.3

million. We recognized stock compensation expense of

$1.5

million for the year ended

December 31, 2019

related to market-based restricted stock awards. As of

December 31, 2019,

there was

$1.8

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

year.

Total Stock Compensation Expense

We recorded total stock compensation expense for the years ended

December 31, 2019

and

2018,

as follows:

	Year Ended December 31,
(In thousands)	2019		2018
Research and development costs	$	571	$	260
Sales and marketing costs		711		269
General and administrative costs		1,584		809
Cost of product revenue		177		181
Total	$	3,043	$	1,519