Revenues. In applying the provisions of Topic 606, BioTime has determined that government grants are out of the scope of Topic
606 because the government entities do not meet the definition of a “customer”, as defined by Topic 606, as there
is not considered to be a transfer of control of good or services to the government entities funding the grant. BioTime has, and
will continue to, account for grants received to perform research and development services in accordance with ASC 730-20, Research
and Development Arrangements, which requires an assessment, at the inception of the grant, of whether the grant is a liability
or a contract to perform research and development services for others. If BioTime or a subsidiary receiving the grant is obligated
to repay the grant funds to the grantor regardless of the outcome of the research and development activities, then BioTime is
required to estimate and recognize that liability. Alternatively, if BioTime or a subsidiary receiving the grant is not required
to repay, or if it is required to repay the grant funds only if the research and development activities are successful, then the
grant agreement is accounted for as a contract to perform research and development services for others, in which case, grant revenue
is recognized when the related research and development expenses are incurred (see Note 13).
grant revenues represent grant funds received from the governmental funding agencies for which the allowable expenses have not
yet been incurred as of the balance sheet date reported.
with Multiple Performance Obligations. BioTime’s contracts with customers may include multiple performance obligations.
For such arrangements, BioTime allocates revenue to each performance obligation based on its relative standalone selling price.
BioTime generally determines or estimates standalone selling prices based on the prices charged, or that would be charged, to
customers for that product or service. As of, and for the three months ended, March 31, 2018, BioTime did not have significant
arrangements with multiple performance obligations.
of ASU 2016-01, Financial Instruments–Overall: Recognition and Measurement of Financial Assets and Financial Liabilities.
Changes to the current GAAP model under ASU 2016-01 primarily affects the accounting for
equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial
instruments. In addition, ASU 2016-01 clarified guidance related to the valuation allowance assessment when recognizing deferred
tax assets resulting from unrealized losses on available-for-sale debt securities. The accounting for other financial instruments,
such as loans, investments in debt securities, and financial liabilities is largely unchanged. The more significant amendments
are to equity investments in unconsolidated entities. In accordance with ASU No. 2016-01, all equity investments in unconsolidated
entities (other than those accounted for using the equity method of accounting) will generally be measured at fair value through
earnings. There will no longer be an available-for-sale classification (changes in fair value reported in other comprehensive
income) for equity securities with readily determinable fair values.
further discussed above under the marketable
equity securities in foreign investments policy,
BioTime adopted ASU 2016-01 on January 1, 2018.
Issued Accounting Pronouncements Not Yet Adopted – The recently issued accounting pronouncements applicable to BioTime
that are not yet effective should be read in conjunction with the recently issued accounting pronouncements, as applicable and
disclosed in BioTime’s Annual Report on Form 10-K for the year ended December 31, 2017.
Deconsolidation of OncoCyte
February 17, 2017, OncoCyte issued 625,000 shares of OncoCyte common stock to certain investors who exercised OncoCyte stock purchase
warrants. As a result of this exercise and the issuance of the shares of OncoCyte common stock, beginning on February 17, 2017,
BioTime owned less than 50% of the OncoCyte outstanding common stock and experienced a loss of control of the OncoCyte subsidiary.
Under GAAP, loss of control of a subsidiary is deemed to have occurred when, among other things, a parent company owns less than
a majority of the outstanding common stock of the subsidiary, lacks a controlling financial interest in the subsidiary, and is
unable to unilaterally control the subsidiary through other means such as having the ability or being able to obtain the ability
to elect a majority of the subsidiary’s Board of Directors. BioTime determined that all of these loss of control factors
were present with respect to OncoCyte on February 17, 2017. Accordingly, BioTime has deconsolidated OncoCyte’s financial
statements and results of operations from BioTime, effective February 17, 2017, in accordance with ASC, 810-10-40-4(c), Consolidation,
referred to as the “OncoCyte Deconsolidation.”
on February 17, 2017, BioTime is accounting for its retained noncontrolling investment in OncoCyte under the equity method of
accounting and has elected the fair value option under ASC 825-10, Financial Instruments (see Note 4). In
connection with the OncoCyte Deconsolidation and in accordance with ASC 810-10-40-5, BioTime recorded a gain on deconsolidation
of $71.7 million during the three months ended March 31, 2017, included in other
income and expenses, net, in the condensed consolidated statements of operations.