Related Party Transactions

12 Months Ended

Dec. 31, 2016

Related Party Transactions [Abstract]

Related Party Transactions

8. Related Party Transactions

BioTime currently pays $5,050 per month for the use of approximately 900 square feet of office space in New York City, which is made available to BioTime on a month-by-month basis by one of its directors at an amount that approximates his cost.

During the year ended December 31, 2016, Cell Cure issued certain convertible promissory notes (the “Convertible Debt”) to a Cell Cure shareholder other than BioTime in the principal amount of $1,757,000. In April and November 2015, Cell Cure issued Convertible Debt to a Cell Cure shareholder other than BioTime in the principal amount of $188,000 and $66,000, respectively. In July and September 2014, Cell Cure issued Convertible Debt to two Cell Cure shareholders other than BioTime in the principal amount of $471,000. One of the Cell Cure shareholders who acquired Convertible Debt is considered a related party. The functional currency of Cell Cure is the Israeli New Shekel however the Convertible Debt is payable in United States dollars. The Convertible Debt bears a stated interest rate of 3% per annum. The total outstanding principal balance of the Convertible Debt, with accrued interest, is due and payable on various maturity dates in July and September 2017, and in February and April 2019. The outstanding principal balance of the Convertible Debt with accrued interest is convertible into Cell Cure ordinary shares at a fixed conversion price of $20.00 per share, at the election of the holder, at any time prior to maturity. Any conversion of the Convertible Debt must be settled with Cell Cure ordinary shares and not with cash. The conversion feature of the Convertible Debt issued is not accounted for as an embedded derivative under the provisions of ASC 815, Derivatives and Hedging since it is not a freestanding financial instrument and the underlying Cell Cure ordinary shares are not readily convertible into cash. Accordingly, the Convertible Debt is accounted for under ASC 470-20, Debt with Conversion and Other Options (ASC 470-20). Under ASC 470-20, BioTime determined that a beneficial conversion feature (“BCF”) was present on the issuance dates of the Convertible Debt. A conversion feature is beneficial if, on the issuance dates, the effective conversion price is less than the fair value of the issuer’s capital stock. Since the effective conversion price of $20.00 per share is less than the estimated range of fair values from $28.00 per share to $40.00 per share of Cell Cure ordinary shares on the dates the Convertible Debt was issued, a beneficial conversion feature, equal to the intrinsic value ranging from $8 per share to $20 per share, is present. In accordance with ASC 470-20-30-8, if the intrinsic value of the BCF is greater than the proceeds allocated to the convertible instrument, the amount of the discount assigned to the BCF is limited to the amount of the proceeds allocated to the convertible instrument. The BCF is recorded as an addition to equity with a corresponding debt discount on the Convertible Debt issuance date. This debt discount will be amortized to interest expense using the effective interest method over the three-year term of the debt, representing an approximate effective annual interest rate between 11% and 23%.

At December 31, 2016, the carrying value of the Convertible Debt was $1,865,000, comprised of principal and accrued interest of $2,544,000, net of unamortized debt discount of $679,000. As of December 31, 2015, the carrying value of the Convertible Debt was $324,000, comprised of principal and accrued interest of $748,000, net of unamortized debt discount of $424,000.

At December 31, 2016, total accounts receivable from affiliates from shared services amounted to $511,000.

In January 2016 and May 2016, certain BioTime board members invested in Ascendance as individual investors in Ascendance (see Note 2).