from product sales and license fees. BioTime’s performance obligations in agreements with certain customers is to provide
a license to allow customers to make, import and sell company licensed products or methods for pre-clinical studies and commercial
use. Customers pay a combination of a license issue fee paid up front and a sales-based royalty, if any, in some cases with yearly
minimums. The transaction price is deemed to be the license issue fee stated in the contract. The license offered by BioTime is
a functional license with significant standalone functionality and provides customers with the right to use BioTime’s intellectual
property. This allows BioTime to recognize revenue on the license issue fee at a point in time at the beginning of the contract,
which is when the customer begins to have use of the license. Variable consideration related to sales-based royalties is recognized
only when (or as) the later of one or more of the following events occur: (a) a sale or usage occurs, or (b) the
performance obligation to which some, or all, of the sales-based or usage-based royalty that has been allocated and
has been satisfied or partially satisfied. Due to the contract termination clauses, BioTime does not expect to receive all
of the minimum royalty payments throughout the term of the agreements. Therefore, BioTime fully constrains recognition of the
minimum royalty payments as revenues until its customers are obligated to pay, which is generally within 60 days prior to the
beginning of each year the minimum royalty payments are due.
the three months ended March 31, 2018 and 2017, BioTime recognized $59,000 and $33,000, respectively, in royalty revenues included
in consolidated royalties from product sales and license fees.
of research products and services. Revenues from the sale of research products and services are primarily derived from the
sale of hydrogels and stem cell products for research use and are recognized when earned. Revenues from this source are immaterial
for all periods presented.
and advertisement revenues. LifeMap Sciences, a direct majority-owned subsidiary of AgeX, sells subscription-based products,
including research databases and software tools, for biomedical, gene, disease, and
stem cell research. LifeMap Sciences sells these subscriptions primarily through the internet to biotech and pharmaceutical
companies worldwide. LifeMap Sciences’ principal subscription product is the GeneCards® Suite, which
includes the GeneCards® human gene database, and the MalaCards™ human disease database.
Sciences’ performance obligations for subscriptions include a license of intellectual property related to its genetic information
packages and premium genetic information tools. The licenses for genetic information packages are deemed functional licenses that
provide customers with a “right to access” to LifeMap Sciences’ intellectual property during the subscription
period and, accordingly, revenue is recognized over a period of time, which is generally the subscription period. The license
for the premium genetic information tools is a functional license and provides the customer with a “right to use”
LifeMap Sciences’ intellectual property and, accordingly, revenue is recognized upfront at the beginning of the subscription
period. Payments are typically received at the beginning of a subscription period and revenue is recognized according to
the type of subscription sold. Amounts required to be allocated to the premium genetic information tools for immediate recognition
subscription contracts in which the subscription term commences before a payment is due, LifeMap Sciences records an accounts
receivable as the subscription is earned over time and bills the customer according to the contract terms. LifeMap Sciences continuously
monitors collections and payments from customers and maintains a provision for estimated credit losses and uncollectible accounts
based upon its historical experience and any specific customer collection issues that have been identified. Amounts determined
to be uncollectible are written off against the allowance for doubtful accounts. LifeMap Sciences has not historically provided
significant discounts, credits, concessions, or other incentives from the stated price in the contract as the prices are offered
on a fixed fee basis for the type of subscription package being purchased. LifeMap Sciences may issue refunds only if the packages
cease to be available for reasons beyond its control. In such an event, the customer will get a refund on a pro-rata basis. Using
the most likely amount method for estimating refunds under Topic 606, including historical experience, LifeMap Sciences determined
that the single most likely amount of variable consideration for refunds is immaterial as LifeMap Sciences does not expect to
pay any refunds. Both the customer and LifeMap Sciences expect the subscription packages to be available during the entire subscription
period, and LifeMap Sciences has not experienced any significant issues with the availability of the product and has not issued
any material refunds.
Sciences performance obligations for advertising are overall advertising services and represent a series of distinct services.
Contracts are typically less than a year in duration and the fees charged may include a combination of fixed and variable fees
with the variable fees tied to click throughs to the customer’s products on their website. LifeMap Sciences allocates the
variable consideration to each month the click through services occur and allocates the annual fee to the performance obligation
period of the initial term of the contract because those amounts correspond to the value provided to the customer each month.
For click-through advertising services, at the time the variable compensation is known and determinable, the service has been
rendered. Revenue is recognized at that time. The annual fee is recognized over the initial subscription period because this is
a service and the customer simultaneously receives and consumes the benefit of LifeMap Sciences’ performance.
Sciences deferred subscription revenues primarily represent subscriptions for which cash payment has been received for the subscription
term but the subscription term has not been completed as of the balance sheet date reported. For the three months ended March
31, 2018 and 2017, LifeMap Sciences recognized $239,000 and $264,000 in subscription and advertisement revenues. As of March 31,
2018, there was $330,000 included in deferred revenues in the consolidated balance sheets which is expected to be recognized as
subscription revenue over the next twelve months.