1. Organization, Basis of Presentation and Liquidity

General – BioTime is a biotechnology company focused on the field of regenerative medicine; specifically pluripotent stem cell technology. Regenerative medicine refers to therapies based on stem cell technology that are designed to rebuild cell and tissue function lost due to degenerative disease or injury. Pluripotent stem cells provide a means of manufacturing every cell type in the human body and therefore show considerable promise for the development of a number of new therapeutic products. BioTime and its subsidiaries and nonconsolidated investee are developing stem cell products for research and therapeutic use. BioTime’s primary therapeutic products are based on its HyStem^® hydrogel technology and include Renevia^® a product currently in clinical trials in Europe to facilitate cell transplantation. Asterias Biotherapeutics, Inc. (“Asterias,” NYSE MKT: AST) is developing pluripotent stem-cell based therapies in neurology and oncology, including AST-OPC1 neural cells in spinal cord injury, and AST-VAC1 and AST-VAC2, pluripotent stem cell-derived cancer vaccines. OncoCyte Corporation (“OncoCyte” NYSE MKT: OCX) is developing laboratory diagnostic tests for certain types of cancer. ES Cell International Pte Ltd. (“ESI”), a Singapore private limited company, is providing its National Institutes of Health (“NIH”) approved hES cell lines, manufactured under current good manufacturing practices (“cGMP”), to researchers focused on pre-clinical applications. OrthoCyte Corporation (“OrthoCyte”) is developing bone grafting products to treat orthopedic disorders, diseases and injuries. ReCyte Therapeutics, Inc. (“ReCyte Therapeutics”) is developing therapies to treat a variety of cardiovascular and related ischemic disorders, as well as related products for research. Cell Cure Neurosciences Ltd. (“Cell Cure Neurosciences”) is an Israel-based biotechnology company focused on developing stem cell-based therapies for retinal and neurological disorders, including the development of retinal pigment epithelial cells for the treatment of the dry form of age related macular degeneration. LifeMap Sciences, Inc. (“LifeMap Sciences”) sell subscriptions to use GeneCards^®, the leading human gene database, and other data base and genetic research software products. LifeMap Sciences’ subsidiary LifeMap Solutions, Inc. (“LifeMap Solutions”) is developing mobile health software products in partnership with the Icahn Institute for Genomics and Multiscale Biology. Ascendance Biotechnology, Inc. (“Ascendance”), recently organized company in which BioTime has an investment accounted for under the equity method (see Notes 2 and 12), develops and markets liver cell based micro assays for toxicity of drugs under development, and also is developing and marketing products for stem cell research.

BioTime has also developed Hextend^®, a blood plasma volume expander marketed by licensees in the United States and South Korea for use in surgery, emergency trauma treatment and other applications. BioTime’s operating revenues are now derived primarily from research grants, from royalties and licensing fees, and advertising from the marketing of the LifeMap Sciences database products, and from the sale of products for research.

Use of estimates - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the U.S. (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period with consideration given to materiality. Significant estimates and assumptions used include determining valuation allowances for uncollectible accounts receivables, deferred income taxes, and tax reserves, including valuation allowances for deferred tax assets, obsolete and excess inventory, evaluation of asset impairment, in determining the useful life of depreciable and definite-lived intangible assets, useful life of licensed technologies or licensed research products, valuing investments in nonconsolidated investees using the equity method, and in the variables and assumptions used to calculate and record stock-based compensation. Actual results could differ materially from those estimates.

Principles of consolidation – BioTime’s consolidated financial statements include the accounts of its subsidiaries. The following table reflects BioTime’s ownership, directly or through one or more subsidiaries, of the outstanding shares of its operating subsidiaries as of December 31, 2015.

Subsidiary	Field of Business	BioTime Ownership	Country
Asterias Biotherapeutics, Inc.	Human therapeutic products from stem cells, focused initially in the fields of neurology and oncology	57.1%	USA
Cell Cure Neurosciences Ltd.	Products to treat age-related macular degeneration	62.5%⁽¹⁾	Israel
ES Cell International Pte Ltd	Stem cell products for research, including clinical grade cell lines produced under cGMP	100%	Singapore
LifeMap Sciences, Inc.	Biomedical, gene, disease, and stem cell databases and tools	77.9%	USA
LifeMap Sciences, Ltd.	Biomedical, gene, disease, and stem cell databases and tools	(2)	Israel
LifeMap Solutions, Inc.	Mobile health software	(2)	USA
OncoCyte Corporation	Cancer diagnostics	57.7%	USA
OrthoCyte Corporation	Developing bone grafting products for orthopedic diseases and injuries	100%	USA
ReCyte Therapeutics, Inc.	Research and development involved in stem cell-derived endothelial and cardiovascular related progenitor cells for the treatment of vascular disorders, ischemic conditions and brown adipocytes for type-2 diabetes and obesity	94.8%	USA

(1)

Includes shares owned by BioTime, Asterias and ESI.

(2)

LifeMap Sciences, Ltd. and LifeMap Solutions, Inc. are wholly-owned subsidiaries of LifeMap Sciences, Inc.

All material intercompany accounts and transactions have been eliminated in consolidation. As of December 31, 2015, BioTime consolidated Asterias, ReCyte Therapeutics, OncoCyte, OrthoCyte, ESI, Cell Cure Neurosciences, BioTime Asia, Limited (“BioTime Asia”), LifeMap Sciences, LifeMap Sciences, Ltd., and LifeMap Solutions as BioTime has the ability to control their operating and financial decisions and policies through its ownership, and the non-controlling interest is reflected as a separate element of shareholders’ equity on BioTime’s consolidated balance sheets.

Liquidity – Since inception, BioTime has incurred significant operating losses and has funded its operations primarily through the issuance of equity securities, payments from research grants, royalties from product sales and sales of research products and services. At December 31, 2015, BioTime had an accumulated deficit of $229.2 million, working capital of $34.8 million and shareholders’ equity of $76.4 million. BioTime has evaluated its projected cash flows for it and its subsidiaries and believes that its cash, cash equivalents and available for sale securities of $43.0 million as of December 31, 2015. BioTime will be sufficient to fund its operations at least through December 31, 2016. However, clinical trials being conducted by BioTime’s subsidiaries, Asterias and Cell Cure Neurosciences will be funded in part with funds from grants and not from cash on hand. If either Asterias or Cell Cure Neurosciences were to lose its grant funding it may be required to delay, postpone, or cancel its clinical trials or limit the number of clinical trial sites, or otherwise reduce or curtail its operations unless it is able to obtain adequate financing from another source that could be used for its clinical trial. Also, OncoCyte will need to raise additional capital during 2016 if, based on the results of its research and development efforts, it determines to establish a CLIA certified laboratory and commence marketing its first cancer diagnostic test.