Cash flows used in operating activities
During the six months ended June 30, 2017, our total research and development expenses were $12.8 million and our general and administrative expenditures were $9.5 million. Net income attributable to BioTime for the six months ended June 30, 2017 amounted to $37.6 million. Net cash used in operating activities during this period amounted to $17.2 million, which includes approximately $1.2 million of cash used by OncoCyte for the period from January 1, 2017 through February 16, 2017, the period during which OncoCyte’s results were consolidated with BioTime. The difference between the net income attributable to us and net cash used in operating activities during the six months ended June 30, 2017 was primarily attributable to the following noncash items: $71.7 million gain recorded on the OncoCyte Deconsolidation, $2.8 million loss attributable to non-controlling shareholders, $22.8 million unrealized loss on the Asterias shares we own due to a decline in the Asterias stock price, $5.1 million unrealized gain on the OncoCyte shares we own due to an increase in the OncoCyte stock price since the OncoCyte Deconsolidation, gain on sale of assets of $1.8 million, stock-based compensation expense of $1.9 million, $1.8 million in foreign currency remeasurement gain and other items, and depreciation and amortization expenses of $1.6 million. Changes in working capital impacted our cash used in operations by $1.4 million as a net source of cash.
Cash flows used in investing activities
During the six months ended June 30, 2017, we used $14.5 million in cash for investing activities. The primary components of this use of cash were $8.9 million resulting from the deconsolidation of OncoCyte’s cash and cash equivalents balance, $5.1 million in restricted cash equivalents in the AgeX escrow account and $0.5 million used to purchase property, plant and equipment.
Cash flows generated by financing activities
During the six months ended June 30, 2017, we generated $24 million in cash from financing activities. The primary components of the sources of cash from financing activities were $18.5 million in net proceeds from the sale of 7,453,704 common shares in an underwritten public offering, after deducting underwriting discounts, commissions and expenses related to the financing, $5.1 million in restricted cash held in an escrow account from potential AgeX Investors (See Note 13 to our condensed consolidated financial statements), $0.2 million reimbursement from our landlord on tenant improvements, and $0.3 million in related party convertible loans obtained by Cell Cure from shareholders other than BioTime.
Off-Balance Sheet Arrangements
As of June 30, 2017 and December 31, 2016, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.
Quantitative and Qualitative Disclosures about Market Risk
There have been no material changes in our qualitative and quantitative market risk since the disclosures in our Annual Report on Form 10-K for the year ended December 31, 2016, except as follows:
Equity Method Accounting for Asterias and OncoCyte shares at fair value
We account for our Asterias and OncoCyte shares using the equity method of accounting fair value option. The value of those shares is subject to changes in the stock prices. Asterias and OncoCyte common stock trade on the NYSE MKT under the ticker symbols “AST” and “OCX”, respectively. As of June 30, 2017, the 52-week high/low closing stock price per share range for Asterias was $5.65 to $2.58, and for OncoCyte was $7.70 to $3.25.
Controls and Procedures
Evaluation of Disclosure Controls and Procedures
It is management’s responsibility to establish and maintain adequate internal control over all financial reporting pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 (“Exchange Act”). Our management, including our principal executive officers and our principal financial officer, have reviewed and evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Following this review and evaluation , management collectively determined that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms; and (ii) is accumulated and communicated to management, including our chief executive officer and our chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.