3.	Deconsolidation of Asterias

On May 13, 2016, Asterias completed the sale of 5,147,059 shares of its common stock and warrants to purchase 2,959,559 shares of its common stock, through an underwritten public offering (the “Asterias Offering”). BioTime did not participate in the Asterias Offering. Asterias received approximately $16.2 million in net proceeds from the Asterias Offering, after deduction of underwriting discounts, commissions and other expenses of the Asterias Offering.

As a result of the sale of Asterias common stock in the Asterias Offering and the issuance of 708,333 shares of Asterias common stock upon the exercise of certain stock options by a former Asterias executive, as of May 13, 2016, BioTime’s percentage ownership of the outstanding common stock of Asterias declined to 48.8%. On May 13, 2016, BioTime’s experienced a loss of control of Asterias under generally accepted accounting principles (see Note 1). Accordingly, BioTime has deconsolidated Asterias’ financial statements and results of operations from BioTime (the “Deconsolidation”), effective May 13, 2016, in accordance with ASC, 810-10-40-4(c), Consolidation. Beginning on May 13, 2016, BioTime is accounting for the retained noncontrolling investment in Asterias under the equity method of accounting and has elected the fair value option under ASC 825-10, Financial Instruments.

BioTime continues to hold 21.7 million shares of Asterias common stock, or approximately 49% of Asterias outstanding common stock as of June 30, 2016.

In connection with the Deconsolidation and in accordance with ASC 810-10-40-5, BioTime recorded a gain on deconsolidation of $49.0 million during the quarter ended June 30, 2016 included in other income and expense, net, in the consolidated statements of operations.