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to the VIE. If we, or any of our related parties that have a variable interest in the VIE, individually lack the necessary power and benefits criteria, but the related party group as a
whole has the necessary power and benefits, we determine which of the related party group members is most closely associated with the VIE and consider that party to be the primary beneficiary.
of December 31, 2013, we consolidated two VIEs, BioLife Dallas and Sixeva. On January 30, 2014, we disposed of BioLife Dallas and, as a result, as of
December 31, 2014, we consolidated only Sixeva as a VIE. In April 2015, we acquired 100% of the equity of Sixeva and, accordingly, as of September 30, 2015, Sixeva is a consolidated
wholly-owned subsidiary, and we no longer consolidate any VIEs.
In connection with the restricted stock issuance to Dr. Kaspar, we agreed to indemnify Dr. Kaspar for any taxes,
interest, fines, penalties or other costs and expenses that the consultant may incur in connection with the restricted stock grant In connection with the preparation of our consolidated financial
statements for the year ended December 31, 2014, we determined that the per share fair value of our common stock on January 28, 2014, the grant date, was $2.09 and the aggregate fair
value of the restricted share grant was $3.5 million. Due to the indemnity obligation, we will ultimately be required reimburse Dr. Kaspar for the taxes he will pay on this income.
Additionally, we intend to gross-up the payment for the tax that will be payable by Dr. Kaspar on the indemnity payment. As a result, we have accrued $4.1 million at December 31,
2014, representing our best estimate of the ultimate tax indemnification and gross-up payment to be made to Dr. Kaspar. We expect this payment will be made in early 2016.
Utilization of Net Operating Loss Carryforwards
As of December 31, 2014 and September 30, 2015, we had federal net operating loss, or NOL, carryforwards of
$9.0 million and $20.6 million, respectively, which may be available to offset future income tax liabilities and expire at various dates through 2034.
the provisions of the Internal Revenue Code of 1986, as amended, or the Code, the NOL carryforwards are subject to review and possible adjustment by the Internal Revenue Service
and state tax authorities. NOL carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a
three-year period in excess of 50%, as defined under Sections 382 and 383 of the Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can
be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on our value immediately prior to the ownership change. Subsequent
ownership changes may further affect the limitation in future years. We have completed several financings since our inception, which may have resulted in a change in control as defined by
Sections 382 and 383 of the Code, or could result in a change in control in the future. If we experience such an ownership change in connection with this offering, previous offerings, or future
offerings, the tax benefits related to the NOL carryforwards may be further limited or lost.
account for income taxes in accordance with FASB ASC Topic 740, Income Taxes, which provides for deferred taxes using an asset and
liability approach. We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax
assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. Valuation allowances are provided if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not