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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): February 17, 2017

BioTime, Inc.
(Exact name of registrant as specified in its charter)
 
California
1-12830
94-3127919
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)

1010 Atlantic Avenue
Suite 102
Alameda, California 94501
(Address of principal executive offices)

(510) 521-3390
(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Forward-Looking Statements

Any statements that are not historical fact (including, but not limited to statements that contain words such as “may, “will,” “believes,” “plans,” “intends,” “anticipates,” “expects,” “estimates”) should also be considered to be forward-looking statements. Additional factors that could cause actual results to differ materially from the results anticipated in these forward-looking statements are contained in BioTime’s periodic reports filed with the SEC under the heading “Risk Factors” and other filings that BioTime may make with the Securities and Exchange Commission. Undue reliance should not be placed on these forward-looking statements which speak only as of the date they are made, and the facts and assumptions underlying these statements may change. Except as required by law, BioTime disclaims any intent or obligation to update these forward-looking statements.

References in this Report to “BioTime,” “we” or “us” refer to BioTime, Inc.

Section 2 - Financial Information

Item 2.01
Completion of Acquisition or Disposition of Assets

On February 17, 2017, certain investors in our subsidiary OncoCyte Corporation (“OncoCyte”) exercised 625,000 warrants to purchase OncoCyte common stock at an exercise price of $3.25 per warrant for total exercise cash proceeds to OncoCyte of $2.0 million (the “Warrant exercise”). These warrants had been issued as part of OncoCyte’s financing that was completed on August 29, 2016, during which OncoCyte sold an aggregate of 3,246,153 immediately separable units of one share of OncoCyte common stock and one warrant to purchase one share of OncoCyte common stock. In order to induce the investors to complete this Warrant exercise and, in conjunction with the Warrant exercise, OncoCyte issued new warrants to those investors. One investor received 212,500 warrants with an exercise price of $3.25 per warrant share while the other investors received 200,000 warrants with an exercise price of $5.50 per warrant share (the “New Warrants”).  The New Warrants are exercisable at any time for five years from February 17, 2017.

Broadwood Partners, L.P. exercised 425,000 warrants in the Warrant exercise and was issued 425,000 shares of OncoCyte common stock and 212,500 New Warrants.  Neal C. Bradsher, a director of BioTime, is the President, of Broadwood Capital, Inc., the investment adviser of Broadwood Partners, L.P. Broadwood Partners, L.P. beneficially owns more than 5% of the outstanding common shares of BioTime and OncoCyte.

As a result of the issuance of 625,000 shares of OncoCyte common stock in the Warrant exercise, as of February 17, 2017, BioTime owns less than 50% of the outstanding shares of OncoCyte common stock. Because BioTime’s ownership percentage in OncoCyte has decreased to below 50%, BioTime no longer has a controlling financial interest in OncoCyte and will deconsolidate OncoCyte’s financial statements and results of operations from BioTime’s consolidated financial statements (the “OncoCyte Deconsolidation”), effective February 17, 2017, in accordance with Accounting Standards Codification, or ASC, 810-10-40-4(c), Consolidation.  Beginning on February 17, 2017, we will account for the retained noncontrolling investment in OncoCyte under the equity method of accounting and plan to elect the fair value option under ASC 825-10, Financial Instruments, with subsequent changes in the fair value of the investment recognized in our consolidated statements of operations.

We have included as exhibits to this Report the unaudited pro forma condensed combined balance sheet as of September 30, 2016, derived from our latest unaudited condensed consolidated balance sheet filed in our Quarterly Report on Form 10-Q, and unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2016 and for the year ended December 31, 2015.  The unaudited pro forma condensed combined balance sheet as of September 30, 2016 gives effect to the OncoCyte Deconsolidation as if the OncoCyte Deconsolidation had occurred on September 30, 2016.  Effective May 13, 2016, BioTime deconsolidated the financial statements of Asterias Biotherapeutics, Inc. (“Asterias”).  The unaudited pro forma statements of operations give effect to the OncoCyte Deconsolidation and the deconsolidation of Asterias (the “Asterias Deconsolidation”) as if both deconsolidations had occurred on January 1, 2015.
 
2
Item 9.01
Financial Statements and Exhibits

(a)
Pro Forma Financial Information

Unaudited Pro Forma Condensed Combined Balance Sheet as at September 30, 2016

Unaudited Pro Forma Condensed Combined Statements of Operations for the Nine Months Ended September 30, 2016

Unaudited Pro Forma Condensed Combined Statements of Operations for the Year-Ended December 31, 2015

Notes to Unaudited Pro Forma Condensed Combined Financial Information.

(b)
Exhibits
 
Exhibit Number
Description
 
99.1
Pro Forma Financial Statements
 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
BIOTIME, INC.
     
Date:  February 21, 2017
By
/s/ Russell Skibsted
  
   
Chief Financial Officer
 
Exhibit Number
Description
 
Pro Forma Financial Statements
 
 
3
Exhibit 99.1

BIOTIME, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 2016
(IN THOUSANDS)

   
BioTime, Inc.
Consolidated, as
Reported
    
Pro Forma
Adjustments
for OncoCyte
  
Notes
  
Pro Forma
  
ASSETS
                    
CURRENT ASSETS
                    
Cash and cash equivalents
  
$
30,451
    
$
(12,674
)
(a)
  
$
17,777
  
Available for sale securities
    
903
      
-
        
903
  
Trade accounts and grants receivable, net
    
1,604
      
-
        
1,604
  
Accounts receivable from OncoCyte     -       2,256   (a)     2,256  
Landlord receivable
    
115
      
-
        
115
  
Prepaid expenses and other current assets
    
2,079
      
(191
)
(a)
    
1,888
  
Total current assets
    
35,152
                
24,543
  
                           
Equity method investment in OncoCyte, at fair value
    
-
      
71,170
  
(b)
    
71,170
  
Deferred tax assets
    
-
      
-
  
(c)
    
-
  
Property, plant and equipment, net and construction in progress
    
4,726
      
(475
)
(a)
    
4,251
  
Deferred license fees
    
145
      
-
        
145
  
Deposits and other long-term assets
    
1,011
      
(54
)
(a)
    
957
  
Equity method investment in Asterias Biotherapeutics, Inc., at fair value
    
92,210
      
-
        
92,210
  
Equity method investment in Ascendance Biotechnology, Inc.
    
3,482
      
-
        
3,482
  
Intangible assets, net
    
10,848
      
(1,049
)
(a)
    
9,799
  
TOTAL ASSETS
  
$
147,574
                
$
206,557
  
                           
LIABILITIES AND SHAREHOLDERS' EQUITY
                          
CURRENT LIABILITIES
                          
Accounts payable and accrued liabilities
  
$
7,176
    
$
(1,539
)
(a)
  
$
5,637
  
Capital lease liability, current portion
    
173
      
(173
)
(a)
    
-
  
Promissory notes, current portion
    
95
      
-
        
95
  
Related party convertible debt, net of discount, current
    
357
      
-
        
357
  
Deferred license and subscription revenue, current portion
    
537
      
-
        
537
  
Total current liabilities
    
8,338
                
6,626
  
                           
LONG-TERM LIABILITIES
                          
Deferred revenues, net of current portion
    
385
      
-
        
385
  
Deferred rent liabilities, net of current portion
    
46
      
-
        
46
  
Lease liability
    
1,348
      
-
        
1,348
  
Related party convertible debt, net of discount
    
954
      
-
        
954
  
Promissory notes, net of current portion, and other liabilities
    
262
      
(211
)
(a)
    
51
  
Deferred tax liability related to the OncoCyte Deconsolidation
    
-
      
12,671
  
(c)
    
12,671
  
TOTAL LIABILITIES
    
11,333
                
22,081
  
                           
Commitments and contingencies
                          
                           
SHAREHOLDERS' EQUITY
                          
Preferred shares, no par value, 2,000 shares authorized; none issued and outstanding
    
-
      
-
        
-
  
Common shares, no par value, 150,000 shares authorized; 103,392 shares issued and 102,772 shares outstanding actual; 103,392 shares issued and outstanding pro forma, as of September 30, 2016
    
313,506
      
(474
)
(a)
    
313,032
  
Accumulated other comprehensive loss
    
(690
)
    
-
        
(690
)
Accumulated deficit
    
(190,534
)
    
55,823
  
(e)
    
(134,711
)
Treasury stock at cost: 620 shares actual and no shares pro-forma as of September 30, 2016
    
(2,891
)
    
2,891
  
(d)
    
-
  
BioTime, Inc. shareholders' equity
    
119,391
                
177,631
  
                           
Non-controlling interest
    
16,850
      
(10,005
)
(a)
    
6,845
  
Total shareholders' equity
    
136,241
                
184,476
  
                           
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
  
$
147,574
                
$
206,557
  
 
1
BIOTIME, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016
IN THOUSANDS, EXCEPT PER SHARE DATA

   
BioTime, Inc.
Consolidated,
as Reported
    
Pro Forma
Adjustments
for Asterias (1)
    
Pro Forma
Adjustments
for
OncoCyte
  
Notes
  
Pro Forma
  
REVENUES:
                          
Grant income
  
$
3,346
    
$
(2,247
)
  
$
-
  
(f)
  
$
1,099
  
Royalties from product sales and license fees
    
463
      
(107
)
    
-
  
(f)
    
356
  
Subscription and advertisement revenues
    
700
      
-
      
-
        
700
  
Sale of research products and services
    
331
      
-
      
-
        
331
  
Total revenues
    
4,840
      
(2,354
)
    
-
        
2,486
  
Cost of sales
    
(378
)
    
53
      
-
  
(f)
    
(325
)
Gross Profit
    
4,462
      
(2,301
)
    
-
        
2,161
  
OPERATING EXPENSES:
                                  
Research and development
    
29,093
      
(8,684
)
    
(4,246
)
(g)
    
16,163
  
General and administrative
    
23,083
      
(7,561
)
    
(3,800
)
(g)
    
11,722
  
Total operating expenses
    
52,176
      
(16,245
)
    
(8,046
)
      
27,885
  
Loss from operations
    
(47,714
)
    
13,944
      
8,046
        
(25,724
)
OTHER INCOME/(EXPENSES):
                                  
Gain on equity method investment in Asterias Biotherapeutics, Inc. at fair value
    
26,532
      
-
      
-
        
26,532
  
Gain on deconsolidation of Asterias Biotherapeutics, Inc.
    
49,048
      
-
      
-
        
49,048
  
Other income/(expense), net
    
(1,505
)
    
208
      
19
  
(h)
    
(1,278
)
Total other income/(expense), net
    
74,075
      
208
      
19
        
74,302
  
INCOME BEFORE INCOME TAX BENEFIT
    
26,361
      
14,152
      
8,065
        
48,578
  
Deferred income tax benefit
    
-
      
-
      
-
        
-
  
NET INCOME
    
26,361
      
14,152
      
8,065
        
48,578
  
Net loss attributable to non-controlling interest
    
12,286
      
(5,720
)
    
(3,718
)
(j)
    
2,848
  
NET INCOME ATTRIBUTABLE TO BIOTIME, INC. COMMON SHAREHOLDERS
  
$
38,647
    
$
8,432
    
$
4,347
      
$
51,426
  
NET INCOME PER COMMON SHARE:
                                  
                                   
BASIC
  
$
0.40
                          
$
0.54
  
DILUTED
  
$
0.39
                          
$
0.52
  
WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING:
                                  
BASIC
    
95,484
                        
96,104
  
DILUTED
    
99,073
                        
99,073
  

(1)
For the period January 1, 2016 through May 12, 2016, the date immediately preceding the Asterias Deconsolidation.
 
2
BIOTIME, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2015
IN THOUSANDS, EXCEPT PER SHARE DATA

   
BioTime, Inc.
Consolidated,
as Reported
    
Pro Forma
Adjustments
for Asterias
    
Pro Forma
Adjustments
for OncoCyte
  
Notes
  
Pro Forma
  
REVENUES:
                          
Grant income
  
$
4,502
    
$
(3,007
)
  
$
-
   (f)  
$
1,495
  
Royalties from product sales and license fees
    
719
      
(535
)
    
-
  
(f)
    
184
  
Subscription and advertisement revenues
    
1,357
      
-
      
-
        
1,357
  
Sale of research products and services
    
458
      
(40
)
    
-
  
(f)
    
418
  
Total revenues
    
7,036
      
(3,582
)
    
-
        
3,454
  
Cost of sales
    
(1,107
)
    
268
      
-
  
(f)
    
(839
)
Gross Profit
    
5,929
      
(3,314
)
    
-
        
2,615
  
OPERATING EXPENSES:
                                  
Research and development
    
42,604
      
(17,321
)
    
(4,527
)
(g)
    
20,756
  
General and administrative
    
29,134
      
(7,901
)
    
(4,191
)
(g)
    
17,042
  
Total operating expenses
    
71,738
      
(25,222
)
    
(8,718
)
      
37,798
  
Loss from operations
    
(65,809
)
    
21,908
      
8,718
        
(35,183
)
OTHER INCOME/(EXPENSES):
                                  
Gain on investment
    
3,694
      
-
      
-
        
3,694
  
Other income/(expenses), net
    
(535
)
    
347
      
17
  
(h)
    
(171
)
Total other income, net
    
3,159
      
347
      
17
        
3,523
  
LOSS BEFORE INCOME TAX BENEFIT
    
(62,650
)
    
22,255
      
8,735
        
(31,660
)
Deferred income tax benefit
    
4,516
      
(4,516
)
    
-
  
(i)
    
-
  
NET LOSS
    
(58,134
)
    
17,739
      
8,735
        
(31,660
)
Net loss attributable to non-controlling interest
    
11,143
      
(5,553
)
    
(2,030
)
(j)
    
3,560
  
NET LOSS ATTRIBUTABLE TO BIOTIME, INC.
    
(46,991
)
    
12,186
      
6,705
        
(28,100
)
Dividends on preferred shares
    
(415
)
    
-
      
-
        
(415
)
NET LOSS ATTRIBUTABLE TO BIOTIME, INC. COMMON SHAREHOLDERS
  
$
(47,406
)
  
$
12,186
    
$
6,705
      
$
(28,515
)
NET LOSS PER COMMON SHARE:
                                  
BASIC AND DILUTED
  
$
(0.59
)
                        
$
(0.35
)
                                   
WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING:
                                  
BASIC AND DILUTED
    
79,711
                        
80,331
  
 
3
Notes to Unaudited Pro Forma Condensed Combined Financial Information.
 
(a)
This adjustment reflects the deconsolidation of the assets and liabilities attributable to OncoCyte, including our carrying value of our noncontrolling interest in OncoCyte, as of September 30, 2016, due to a loss of control of OncoCyte that occurred on February 17, 2017 in accordance with ASC 810-10-40-4(c).

The adjustment also includes the accounts receivable BioTime has from OncoCyte, as of September 30, 2016, for shared services provided to OncoCyte, pursuant to the Shared Services and Facilities Agreement with OncoCyte, which was eliminated as an intercompany balance in consolidation by BioTime.

This adjustment also reflects the equity impact of the OncoCyte Deconsolidation, as of September 30, 2016, on certain intercompany transactions and balances previously eliminated in consolidation.

(b)
This adjustment reflects the fair value of our retained noncontrolling investment in OncoCyte on February 17, 2017.  This amount was determined by multiplying the 14.7 million shares of OncoCyte common stock we held as of February 17, 2017, by the $4.85 per share closing price of OncoCyte common stock on the NYSE: MKT on that date. We will account for our retained noncontrolling investment in OncoCyte using the equity method of accounting and plan to elect the fair value option under ASC 825-10, with subsequent changes in the fair value of our investment in OncoCyte recorded in our consolidated statements of operations included in other income and expenses, net.

(c)
The OncoCyte Deconsolidation does not create an income tax payment obligation and does not result in the use of any BioTime net operating losses.  For financial reporting purposes, this adjustment reflects an approximate $12.7 million net deferred tax liability in connection with the OncoCyte Deconsolidation, computed based on our estimated statutory tax rate of 40%, in accordance with ASC 740, Income Taxes. The net deferred tax liability also reflects the full release of the valuation allowance we have on our deferred tax assets, estimated as of September 30, 2016, since the deferred tax liability on our investment in Asterias Biotherapeutics, Inc. at fair value, combined with the estimated deferred tax liability generated by the fair value of our retained noncontrolling investment in OncoCyte, are considered to be sources of taxable income as prescribed by ASC 740-10-30-17 that will more likely than not result in the realization of our deferred tax assets, thereby reducing the need for a valuation allowance. See footnote (e).

(d)
This adjustment reflects the carrying value of our treasury stock, which represents our shares held by OncoCyte as of September 30, 2016. These shares will continue to be held by OncoCyte as outstanding BioTime common stock.

(e)
This adjustment reflects the estimated, net of tax, pro forma gain of approximately $55.8 million arising from the OncoCyte Deconsolidation on February 17, 2017, due to a loss of control of OncoCyte on that date.  This pro forma estimated, net of tax, gain was computed in accordance with ASC 810-10-40-5, as the difference between (i) the aggregate fair value of our retained noncontrolling investment in OncoCyte on February 17, 2017 and the carrying amount of our noncontrolling interest in OncoCyte as of September 30, 2016, and (ii) the carrying amount of OncoCyte’s assets and liabilities as of September 30, 2016. The actual gain on deconsolidation, including the impact of income taxes, will be determined using the fair value of our retained noncontrolling interest in OncoCyte on February 17, 2017 and, based on the actual carrying amounts of OncoCyte assets and liabilities, including the actual carrying amount of our noncontrolling interest in OncoCyte and our deferred tax assets and liabilities, as of February 17, 2017, the date of the OncoCyte Deconsolidation. We are not able to estimate the actual gain or the actual income tax impact on this gain, until we determine the actual balances of our carrying amounts, as applicable, as of February 17, 2017, which will be completed during the first quarter ending March 31, 2017. The actual gain, including related income taxes, may differ materially from the pro forma estimated, net of tax, gain shown herein.

This pro forma estimated, net of tax, gain has not been reflected in the pro forma condensed combined statements of operations because it is considered to be nonrecurring in nature.
 
4
The computation of the pro forma estimated, net of tax, gain was computed as follows (in thousands):

(i)
Retained noncontrolling investment in OncoCyte, at fair value, as of February 17, 2017
  
$
71,170
    
Carrying amount of BioTime noncontrolling interest in OncoCyte at September 30, 2016
    
10,005
    
 
 
    
81,175
  
(i)
(ii)
Carrying amount of OncoCyte assets and liabilities as of September 30, 2016:
            
Carrying amount of OncoCyte assets
    
16,860
    
Less: Carrying amount of OncoCyte liabilities
    
4,179
    
Net assets of OncoCyte as of September 30, 2016
    
12,681
  
(ii)
 
 
              
(iii)
Pro forma estimated gain on deconsolidation of OncoCyte before income taxes
    
68,494
  
(i) - (ii)
Deferred pro forma tax provision on deconsolidation of OncoCyte
    
(12,671
)
  
Pro forma estimated gain on deconsolidation of OncoCyte, net of taxes
  
$
55,823
    

(f)
This adjustment reflects the deconsolidation of revenues and cost of sales attributable to Asterias and OncoCyte, if applicable.  For Asterias, for the nine months ended September 30, 2016, the adjustment reflects the amounts related to Asterias revenues and cost of sales that were included in BioTime’s consolidated statements of operations during the period January 1, 2016 through May 12, 2016, the date immediately before the Asterias Deconsolidation.

(g)
This adjustment reflects the deconsolidation of operating expenses attributable to OncoCyte and Asterias.  For Asterias, for the nine months ended September 30, 2016, the adjustment reflects the amounts related to Asterias operating expenses that were included in BioTime’s consolidated statements of operations during the period January 1, 2016 through May 12, 2016, the date immediately before the Asterias Deconsolidation.

(h)
This adjustment reflects the deconsolidation of other income and expenses, net, attributable to Asterias and OncoCyte. For Asterias, for the nine months ended September 30, 2016, the adjustment reflects the amounts related to Asterias other income and expenses, net, that were included in BioTime’s consolidated statements of operations during the period January 1, 2016 through May 12, 2016, the date immediately before the Asterias Deconsolidation.

(i)
This adjustment reflects the estimated pro forma income tax effect of the pro-forma adjustments. The tax effect of the pro forma adjustments was calculated using our historical statutory rates in effect for the periods presented, as applicable.

(j)
This adjustment reflects the deconsolidation of the net loss attributable to noncontrolling interests of Asterias and OncoCyte.
 
 
5