1.	Organization and Business Overview

General – BioTime, Inc. is a clinical-stage biotechnology company focused on developing and commercializing novel therapies developed from its two therapeutic, proprietary platform technologies: its pluripotent cell technology and its three dimensional cell delivery matrix technology. Currently, BioTime and its subsidiaries and affiliates have five such therapies in human clinical trials (Renevia^®, OpRegen^®, AST-OPC1, AST-VAC1 and AST-VAC 2), including one that is in a pivotal study in Europe from which data are expected in the second quarter of 2017.

BioTime believes that it and its subsidiaries and affiliates have the world’s premier collection of pluripotent cell assets. Pluripotent cells, which are capable of becoming any of the cell types of the human body, have potential applications in many areas of medicine with large unmet patient needs, including various age-related degenerative diseases and degenerative conditions for which there are presently no cures. Unlike pharmaceuticals that require a molecular target, therapeutic strategies based on the use of pluripotent cells are generally aimed at regenerating or replacing affected cells and tissues, and therefore may have broader applicability than pharmaceutical products.

BioTime’s pluripotent cell technology is complemented by its HyStem^® hydrogel technology for the delivery and engraftment of cells, whether derived from pluripotent cells or the patient’s own somatic cells, at the desired location. This technology has potential therapeutic applications as a volumizer in cosmetic procedures, and to provide a matrix for the administration of therapeutic cells or biologics to a patient. HyStem^® is the underlying technology for BioTime’s Renevia^® product currently undergoing a pivotal clinical trial for the treatment of HIV-related lipoatrophy. HyStem^® hydrogels use naturally-occurring components such as hyaluronan and collagen with a proprietary cross-linker to mimic the natural environment that cells experience in the body, called the “extracellular matrix,” to create three-dimensional tissue.

In order to efficiently advance product candidates through the clinical trial process, BioTime historically created operating subsidiaries and affiliates for each program and product line. Management believes this approach fostered efficient use of resources and reduced shareholder dilution, especially during the early stages of development for therapeutic and non-therapeutic product lines, as compared to strategies commonly deployed by other companies in the biotechnology industry. As a result, BioTime with its subsidiaries and affiliates, has developed multiple clinical-stage products and operating businesses, rather than being dependent on a single product program.

More recently, as many of its programs are maturing, BioTime has focused on simplifying its business, focusing on therapeutic development programs and increasing transparency. Simplification of BioTime’s corporate structure and operations is important as it helps the company focus on its high-priority activities, especially candidates in human clinical development. Simplification also helps BioTime communicate more effectively to prospective investors, analysts and partners. Two of BioTime’s subsidiaries, Asterias Biotherapeutics, Inc. (NYSE MKT: AST) and OncoCyte Corporation (NYSE MKT: OCX), have evolved into publicly traded companies with shares traded on the NYSE MKT.

As further discussed in Notes 3 and 4, effective May 13, 2016, BioTime deconsolidated Asterias Biotherapeutics, Inc. (“Asterias”) financial statements and results of operations due to the decrease in BioTime’s percentage ownership in Asterias from 57.1% to 48.7% as a result of Asterias’ public offering of its common stock to raise capital for its operations. On May 13, 2016, BioTime experienced a loss of control of Asterias under accounting principles generally accepted in the United States (“GAAP”). Loss of control is deemed to have occurred when, among other things, a parent company owns less than a majority of the outstanding common stock in the subsidiary, lacks a controlling financial interest in the subsidiary and, is unable to unilaterally control the subsidiary through other means such as having or being able to obtain the power to elect a majority of the subsidiary’s Board of Directors based solely on contractual rights or ownership of shares holding a majority of the voting power of the subsidiary’s voting securities. All of these loss of control factors were present for BioTime as of May 13, 2016. Accordingly, since May 13, 2016, BioTime has accounted for Asterias using the equity method of accounting at fair value (see Notes 3 and 4). BioTime’s consolidated financial statements present the operating results of all of its wholly-owned and majority-owned subsidiaries that it consolidates as required under GAAP. Although beginning on May 13, 2016, Asterias’ financial statements and results will no longer be part of BioTime’s consolidated financial statements and results, the market value of Asterias common stock held by BioTime will be reflected on BioTime’s consolidated balance sheet and changes in the market value of those shares will be reflected in BioTime’s consolidated statements of operations, allowing BioTime shareholders to evaluate the value of the Asterias portion of BioTime’s business. BioTime believes that deconsolidating and separating Asterias’ financial statements and results from BioTime helped investors more easily understand BioTime’s consolidated financial statements.

BioTime, its subsidiaries, Asterias and its affiliate, now have five therapeutic product candidates in the human clinical trial stage of development and one cancer diagnostic near commercial launch as follows:

BioTime’s Renevia^®, a potential treatment for HIV related facial lipoatrophy, is currently in a pivotal clinical trial in Europe to assess its efficacy in restoring normal skin contours in patients whose subcutaneous fat, or adipose tissue, has been lost due to antiviral drug treatment for HIV. Renevia^® consists of BioTime’s proprietary cell-transplantation delivery matrix (HyStem^®) combined with the patient’s own adipose cells.

BioTime’s majority-owned subsidiary, Cell Cure Neurosciences, Ltd., is developing OpRegen^®, a potential therapy derived from pluripotent cells for the treatment of the dry form of age-related macular degeneration. OpRegen^® is currently in a Phase I/IIa clinical trial.

Asterias has three clinical stage programs based on proprietary cell therapy platforms:

AST-OPC1 is a therapy derived from pluripotent cells that is currently in a Phase I/IIa clinical trial for spinal cord injuries;

AST-VAC1 is a patient-specific cancer immunotherapy being evaluated by Asterias in Acute Myeloid Leukemia (AML); and

AST-VAC 2 is a non-patient-specific cancer immunotherapy for which the initiation of a Phase I/IIa clinical trial is planned for the first quarter of 2017.

OncoCyte Corporation is developing diagnostic tests for use in detecting a variety of cancers and is presently completing the analysis of human blood samples to validate the sensitivity and specificity of its lung cancer diagnostic test.