SEC Filing - Lineage Cell Therapeutics, Inc.

View:

                                    FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

(Mark One)

          |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2000

                                       OR

          |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

For the transition period from                        to
                               ----------------------    ----------------------

Commission file number 1-12830

                                  BioTime, Inc.
             (Exact name of registrant as specified in its charter)

          California                                 94-3127919
(State or other jurisdiction                       (IRS Employer
of incorporation or organization)                 Identification No.)

                                935 Pardee Street
                           Berkeley, California 94710
                    (Address of principal executive offices)

                                 (510) 845-9535
              (Registrant's telephone number, including area code)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No__


                      APPLICABLE ONLY TO CORPORATE ISSUERS:

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest  practicable  date.  11,342,786 common
shares, no par value, as of November 13, 2000.



                                        1





                          PART 1--FINANCIAL INFORMATION

         Statements  made in this  Report  that  are not  historical  facts  may
constitute   forward-looking   statements   that  are   subject   to  risks  and
uncertainties  that could cause actual results to differ  materially  from those
discussed.  Such risks and  uncertainties  include  but are not limited to those
discussed in this report under Item 1 of the Notes to Financial Statements,  and
in BioTime's  Annual Report on Form 10-K filed with the  Securities and Exchange
Commission.  Words such as "expects," "may," "will,"  "anticipates,"  "intends,"
"plans,"  "believes,"  "seeks,"  "estimates," and similar  expressions  identify
forward-looking statements.

Item 1. Financial Statements
                                  BIOTIME, INC,
                          (A Development Stage Company)

                            CONDENSED BALANCE SHEETS
                                   (Unaudited)

                                                                                  September 30,      December 31,
      ASSETS                                                                          2000               1999
                                                                                 ---------------   ----------------
                                                                                          
CURRENT ASSETS
Cash and cash equivalents                                                        $     2,020,624   $      5,292,806
Prepaid expenses and other current assets                                                 37,574            107,285
                                                                                 ---------------   ----------------
Total current assets                                                                   2,058,198          5,400,091

EQUIPMENT, Net of accumulated depreciation of $332,777and $276,647                       245,924            268,653
DEPOSITS AND OTHER ASSETS                                                                  9,900              9,900
                                                                                 ---------------   ----------------
TOTAL ASSETS                                                                     $     2,314,022   $      5,678,644
                                                                                 ===============   ================

        LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable and accrued liabilities                                         $       113,915   $        595,512

COMMITMENTS
SHAREHOLDERS' EQUITY:
Preferred Shares, no par value, undesignated as to Series,
 authorized 1,000,000 shares; none outstanding
Common Shares, no par value, authorized 40,000,000 shares; issued
 and outstanding 11,342,059 and 10,891,031                                            28,192,018         27,200,380
Contributed Capital                                                                       93,972             93,972
Deficit accumulated during development stage                                         (26,085,883)       (22,211,220)
                                                                                 ---------------   ----------------
Total shareholders' equity                                                             2,200,107          5,083,132
                                                                                 ---------------   ----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                       $     2,314,022   $      5,678,644
                                                                                 ===============   ================

See notes to financial statements.


                                        2





                                  BIOTIME, INC.
                          (A Development Stage Company)

                       CONDENSED STATEMENTS OF OPERATIONS
                                   (Unaudited)



                                               Three Months Ended                  Nine Months Ended        Period from Inception
                                                 September 30,                       September 30,         (November 30, 1990) to
                                            2000               1999             2000             1999         September 30, 2000
                                      ----------------   ---------------- ----------------- ----------------  ------------------
                                                                                            
REVENUE:
License fee                           $      --          $      --        $       --        $     1,037,500   $    2,500,000
                                      ----------------   ---------------- ----------------- ----------------  ----------------

EXPENSES:

Research and development                     (847,035)        (1,957,094)       (2,687,112)      (3,769,100)      (19,269,621)
General and administrative                   (438,654)          (383,913)       (1,362,835)      (1,496,865)      (11,049,289)
                                      ----------------   ---------------- ----------------- ----------------  ----------------
Total expenses                             (1,285,689)        (2,341,007)       (4,049,947)      (5,265,965)      (30,318,910)
                                      ----------------   ---------------- ----------------- ----------------  ----------------

INTEREST AND OTHER INCOME:                     60,734             86,419           175,284          196,344         1,757,858
                                      ----------------   ---------------- ----------------- ----------------  ----------------

NET LOSS                              $    (1,224,955)   $    (2,254,588) $     (3,874,663) $    (4,032,121)  $   (26,061,052)
                                      ================   ================ ================= ================  ================
BASIC AND DILUTED LOSS PER
SHARE                                 $         (0.11)   $         (0.21) $          (0.35) $         (0.38)
                                      ================   ================ ================= ================

COMMON AND EQUIVALENT
SHARES USED IN
COMPUTING PER SHARE
AMOUNTS:
BASIC AND DILUTED                          10,914,073         10,823,754        10,899,426       10,626,433
                                      ================   ================ ================= ================

See notes to financial statements.




                                        3



                                  BIOTIME, INC.
                          (A Development Stage Company)

                       STATEMENTS OF SHAREHOLDERS' EQUITY





                                            Series A Convertible
                                             Preferred Shares            Common Shares                             Deficit
                                           ---------------------   -----------------------                      Accumulated
                                           Number of                 Number                 Contributed           During
                                            Shares      Amount     of Shares      Amount      Capital        Development Stage
                                           ---------   ---------   -----------   ----------  -----------    --------------------
                                                                                       
BALANCE, November 30, 1990
 (date of inception)                          --          --          --           --          --                --

NOVEMBER 1990:
 Common shares issued for cash                                     1,312,758    $    263

DECEMBER 1990:
 Common shares issued for
 stock of a separate entity at fair value                          1,050,210     137,400
 Contributed equipment at appraised
 value                                                                                       $ 16,425
 Contributed cash                                                                              77,547

MAY 1991:
 Common shares issued for cash
 less offering costs                                                 101,175      54,463
 Common shares issued for stock
 of a separate entity at fair value                                  100,020      60,000

JULY 1991:
 Common shares issued for
 services performed                                                   30,000      18,000

AUGUST-DECEMBER 1991
 Preferred shares issued for
 cash less offering costs of $125,700      360,000    $474,300

MARCH 1992:
 Common shares issued for
 cash less offering costs of $1,015,873                            2,173,500    4,780,127
 Preferred shares converted
 into common shares                       (360,000)   (474,300)      360,000      474,300
 Dividends declared and paid
 on preferred shares                                                                                            $(24,831)

MARCH  1994:
 Common shares issued for cash less
 offering  costs of  $865,826                                      2,805,600    3,927,074

JANUARY-JUNE 1995:
Common shares repurchased
 with cash                                                          (253,800)    (190,029)

JULY 1995-JUNE 1996:
Common shares issued for cash                                        608,697    1,229,670
Common shares repurchased with cash                                  (18,600)     (12,693)
Common shares warrants and options
 granted for services                                                             356,000

NET LOSS                                                                                                       (8,064,471)
                                           ---------   ---------   ----------   ----------   ----------      --------------
BALANCE AT JUNE 30, 1996                      --       $  --      $8,269,560    10,834,575     $93,972       $ (8,089,302)


See notes to financial statements.                                                                       (Continued)



                                       4






                                  BIOTIME, INC.
                          (A Development Stage Company)

                       STATEMENTS OF SHAREHOLDERS' EQUITY



                                           Series A Convertible
(Continued)                                  Preferred Shares           Common Shares                            Deficit
                                           --------------------    ------------------------                    Accumulated
                                           Number of                Number of               Contributed           During
                                            Shares     Amount        Shares       Amount      Capital       Development Stage
                                           ---------  ---------    -----------  ----------   ----------     -----------------
                                                                                       
JULY 1996-JUNE 1997:
 Common shares issued for cash less
 offering costs of $170,597                                           849,327     5,491,583
 Common shares issued for cash
 (exercise of options and warrants)                                   490,689     1,194,488
 Common shares warrants and options
 granted for service                                                                105,000

JULY 1997-JUNE 1998:
Common shares issued for cash
(exercise of options)                                                 337,500       887,690
Common shares warrants and options
granted for service                                                                  38,050
Common shares issued for services                                         500         6,250

JULY 1998-DECEMBER 1998:
Common shares issued for cash
(exercise of options and warrants)                                     84,000       395,730
Common shares options granted for services                                           50,000
Common shares issued for
 services                                                               1,500        18,750

NET LOSS                                                                                                        (2,094,478)
                                           ---------  ---------    ----------   -----------  ---------      ----------------
BALANCE AT DECEMBER 31, 1998                  --          --       10,033,076    19,022,116     93,972         (16,731,336)

Common shares issued for cash (less
 offering costs of $128,024)                                          751,654     7,200,602
Common shares issued for cash and
 exchange for 2,491 common shares which
 were canceled (exercise of options)                                   65,509       199,810
Common shares issued for services                                         792         9,900
Common shares warrant donated (Note 4)                                              552,000
Common shares issued for cash (exercise
 of warrant)                                                           40,000        20,000
Options granted for services                                                        195,952

NET LOSS                                                                                                        (5,479,884)
                                           ---------  ---------    ----------   ------------ ---------      ----------------
BALANCE AT DECEMBER 31, 1999                   --         --       10,891,031    27,200,380    93,972          (22,211,220)

Common Shares issued for services -
  unaudited                                                            16,934       149,799
Exercise of Options - unaudited                                        45,000        45,000
Exercise of Warrants (less issuance
  cost of $36,176) - unaudited                                        389,094       714,774
Options granted for services -
  unaudited                                                                          82,065
NET LOSS - unaudited                                                                                            (3,874,663)
                                           ---------  ---------    ----------   ------------ ---------      ----------------
BALANCE AT SEPTEMBER 30, 2000-unaudited       --      $   --       11,342,059   $28,192,018   $ 93,972       $ (26,085,883)
                                           =========  =========    ==========   ============ =========      ================

See notes to financial statements.                                                                        (Concluded)



                                        6





                                                        BIOTIME, INC.
                                                (A Development Stage Company)

                                             CONDENSED STATEMENTS OF CASH FLOWS
                                                         (Unaudited)




                                                               Nine Months Ended                 Period from Inception
                                                                  September 30,                   (November 30, 1990)
                                                           2000                   1999           to September 30, 2000
                                                        -------------         ---------------    -------------------
                                                                                        
OPERATING ACTIVITIES:
Net loss                                               $ (3,874,663)         $  (4,032,121)        $  (26,085,883)
Adjustments to reconcile net loss to net
 cash used in operating activities:
Deferred Revenue                                                  -               (187,500)            (1,000,000)
 Depreciation                                                56,130                 41,727                332,777
Cost of Donation - warrants                                       -                552,000                552,000
Cost of Services - options and warrants                     231,864                163,120              1,029,766
Supply Reserves                                                   -                      -                200,000
 Changes in operating assets and liabilities:
  Research and development supplies on hand                       -                      -               (200,000)
  Prepaid expenses and other current
   assets                                                    69,711                 43,406                (37,574)
  Deposits and other assets                                       -                 50,800                 (9,900)
  Accounts payable                                         (481,597)               250,361                113,915
  License fee receivables                                         -                      -                      -
  Deferred revenue                                                -                                     1,000,000
                                                        ------------           ------------           ------------
Net cash used in operating activities                    (3,998,555)            (3,118,207)           (24,080,068)
                                                        ------------           ------------           ------------

INVESTING ACTIVITIES:
Sale of investments                                               -                      -                197,400
Purchase of short-term investments                                -                      -             (9,946,203)
Redemption of short-term investments                              -                      -              9,946,203
Purchase of equipment and furniture                         (33,402)              (125,228)              (562,277)
                                                        ------------           ------------           ------------
Net cash used in investing activities                       (33,402)              (125,228)              (364,877)
                                                        ------------           ------------           ------------

FINANCING ACTIVITIES:
Issuance of preferred shares for cash                             -                      -                600,000
Preferred shares placement costs                                  -                      -              (125,700)
Issuance of common shares for cash                                -              7,328,626             23,701,732
Common shares placement costs                               (36,177)              (128,024)            (2,216,497)
Net proceeds from exercise of common share options
and warrants                                                795,952                215,850              4,656,040
Contributed capital - cash                                        -                      -                 77,547
Dividends paid on preferred shares                                -                      -               (24,831)
Repurchase Common Shares                                          -                      -              (202,722)
                                                        ------------           ------------           ------------
Net cash provided by financing activities                   759,775              7,416,452             26,465,569
                                                        ------------           ------------           ------------
INCREASE (DECREASE) IN CASH AND CASH                     (3,272,182)             4,173,017              2,020,624
EQUIVALENTS

CASH AND CASH EQUIVALENTS:
At beginning of period                                    5,292,806              2,429,014                     --
                                                        -----------           ------------           ------------
At end of period                                        $ 2,020,624           $  6,602,031           $  2,020,624
                                                        ===========           ============           ============

                                                                                                              (Continued)


                                        7





                                                   BIOTIME, INC.
                                           (A Development Stage Company)

                                        CONDENSED STATEMENTS OF CASH FLOWS
                                                    (Unaudited)





                                                            Nine Months Ended              Period from Inception
                                                              September 30,                 (November 30, 1990)
                                                         2000             1999             to September 30, 2000
                                                       ------------    ------------        ---------------------
                                                                                    
NONCASH FINANCING AND
 INVESTING ACTIVITIES:

 Receipt of contributed equipment                                                               $    16,425
 Issuance of common shares
  in exchange for shares of
  common stock of Cryomedical
  Sciences, Inc. in a stock-for-stock
  transaction                                                                                   $   197,400
Granting of options and warrants for services          $  82,065      $   138,498               $   845,067
Issuance of common shares in exchange for services     $ 149,799            9,900               $   192,199
Granting of warrant for donation                                      $   552,000               $   552,000


See notes to financial statements.                                                               (Concluded)


                                        8





                                  BIOTIME, INC.
                          (A Development Stage Company)


                          NOTES TO FINANCIAL STATEMENTS


1.       GENERAL AND DEVELOPMENT STAGE ENTERPRISE

         General - BioTime,  Inc. (the Company) was organized  November 30, 1990
         as a California corporation.  The Company is a biomedical organization,
         currently in the  development  stage,  which is engaged in the research
         and development of synthetic plasma expanders,  blood volume substitute
         solutions, and organ preservation solutions, for use in surgery, trauma
         care, organ transplant procedures, and other areas of medicine.

         The  balance  sheet  as  of  September  30,  2000,  the  statements  of
         operations  for the three  months and nine months ended  September  30,
         2000 and 1999 and the period  from  inception  (November  30,  1990) to
         September 30, 2000, the statement of shareholders'  equity for the nine
         month period ended September 30, 2000, and the statements of cash flows
         for the nine months  ended  September  30, 2000 and 1999 and the period
         from  inception  (November  30, 1990) to  September  30, 2000 have been
         prepared by the Company  without  audit.  In the opinion of management,
         all  adjustments  (consisting  only of  normal  recurring  adjustments)
         necessary  to  present  fairly  the  financial  position,   results  of
         operations,  shareholders'  equity and cash flows at September 30, 2000
         and for all periods  presented  have been made. The balance sheet as of
         December  31,  1999 is derived  from the  Company's  audited  financial
         statements as of that date.  The results of  operations  for the period
         ended  September  30,  2000  are  not  necessarily  indicative  of  the
         operating results anticipated for the full year.

         Certain  information  and  footnote  disclosures  normally  included in
         financial  statements  prepared in accordance  with generally  accepted
         accounting  principles  have been  condensed or omitted as permitted by
         regulations  of  the  Securities  and  Exchange   Commission.   Certain
         previously  furnished  amounts have been  reclassified  to conform with
         presentations  made during the current  periods.  It is suggested  that
         these interim  condensed  financial  statements be read in  conjunction
         with the annual audited financial statements and notes thereto included
         in the Company's Form 10-K for the year ended December 31, 1999.

         Certain  Significant  Risks  and  Uncertainties  - The  preparation  of
         financial  statements in conformity with generally accepted  accounting
         principles  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  financial
         statements and the reported amounts of revenues and expenses during the
         reporting period.  Such management  estimates include certain accruals.
         Actual results could differ from those estimates.

         The Company's operations are subject to a number of factors that can
         affect its operating
                                        9





         results  and  financial  condition.  Such  factors  include but are not
         limited  to the  following:  the  results  of  clinical  trials  of the
         Company's products;  the Company's ability to obtain United States Food
         and Drug  Administration and foreign regulatory  approval to market its
         products;  competition  from  products  manufactured  and sold or being
         developed  by other  companies;  the price of and  demand  for  Company
         products;  the Company's ability to obtain additional financing and the
         terms of any such financing that may be obtained; the Company's ability
         to negotiate  favorable  licensing or other manufacturing and marketing
         agreements for its products;  the  availability of ingredients  used in
         the Company's  products;  and the availability of reimbursement for the
         cost of the Company's  products (and related treatment) from government
         health administration authorities, private health coverage insurers and
         other organizations.

         Development  Stage Enterprise - Since  inception,  the Company has been
         engaged in research and  development  activities in connection with the
         development  of synthetic  plasma  expanders,  blood volume  substitute
         solutions  and organ  preservation  products.  The  Company has limited
         operating  revenues and has incurred  operating  losses of  $26,061,052
         from inception to September 30, 2000. The successful  completion of the
         Company's  product  development  program  and,  ultimately,   achieving
         profitable   operations  is  dependent  upon  future  events  including
         maintaining   adequate  capital  to  finance  its  future   development
         activities, obtaining regulatory approvals for the products it develops
         and  achieving  a level of revenues  adequate to support the  Company's
         cost structure.


2.       RECENTLY ISSUED ACCOUNTING STANDARDS

         In June 1998, the Financial Accounting Standards Board issued Statement
         of Accounting Standards No. 133, "Accounting for Derivative Instruments
         and Hedging  Activities,"  (SFAS 133) which establishes  accounting and
         reporting   standards  for  derivative   instruments  and  for  hedging
         activities.  SFAS 133 requires that entities  recognize all derivatives
         as either assets or liabilities  and measure those  instruments at fair
         value.  The Company is currently  assessing the effect that adoption of
         this  statement  will have.  However,  based on progress  to date,  the
         Company  does not  expect  adoption  to have a  material  impact on the
         Company's financial position,  results of operations or cash flows. The
         Company is currently required to adopt SFAS 133 in the first quarter of
         the fiscal year ending December 31, 2001.

         In December 1999 the Securities and Exchange  Commission (SEC) released
         Staff  Accounting  Bulletin No. 101 "Revenue  Recognition  in Financial
         Statements"  which summarizes  certain of the staff's views in applying
         generally  accepted  accounting  principles to revenue  recognition  in
         financial statements.  In addition, on October 13, 2000, the SEC issued
         a Frequently  Asked  Questions  ("FAQ")  document  which  clarified and
         elaborated on the SEC Staff's views regarding revenue recognition.  The
         Company  will adopt this  statement  in the fourth  quarter of its year
         ending  December  31,  2000.  Management  does not expect any  material
         impact as a result of adopting the guidelines of this standard.


                                       10





         In  March  2000,  the  Financial   Accounting  Standards  Board  issued
         Interpretation  No. 44, Accounting for Certain  Transactions  Involving
         Stock Compensation (FIN 44), that clarifies guidance for certain issues
         related to the application of APB Opinion No. 25,  Accounting for Stock
         Issued to employees (APB 25).  Management  does not believe that FIN 44
         will have a material impact on accounting for future instruments.


3.       LICENSE AGREEMENT

         In April 1997, BioTime and Abbott Laboratories  ("Abbott") entered into
         an Exclusive  License  Agreement (the "License  Agreement") under which
         BioTime granted to Abbott an exclusive  license to manufacture and sell
         BioTime's  proprietary blood plasma volume expander solution Hextend in
         the United States and Canada for certain therapeutic uses.

         Under the License Agreement,  Abbott has paid the Company $2,500,000 of
         license  fees based upon  achievement  of specified  milestones.  Up to
         $37,500,000  of  additional  license  fees will be  payable  based upon
         annual  net sales of  Hextend at the rate of 10% of annual net sales if
         annual  net sales  exceed  $30,000,000  or 5% if  annual  net sales are
         between $15,000,000 and $30,000,000. Abbott's obligation to pay license
         fees on sales of Hextend  will expire on the earlier of January 1, 2007
         or, on a country by country basis, when all patents  protecting Hextend
         in the  applicable  country  expire or any third party obtains  certain
         regulatory  approvals  to market a generic  equivalent  product in that
         country.

         In addition to the license fees,  Abbott will pay the Company a royalty
         on annual net sales of  Hextend.  The  royalty  rate will be 5% plus an
         additional  .22% for each  increment of $1,000,000 of annual net sales,
         up to a  maximum  royalty  rate  of  36%.  Abbott's  obligation  to pay
         royalties  on sales of  Hextend  will  expire in the  United  States or
         Canada when all patents  protecting  Hextend in the applicable  country
         expire and any third party  obtains  certain  regulatory  approvals  to
         market a generic equivalent product in that country.

         The Company will  recognize  such  revenues in the quarter in which the
         sales  report is  received,  rather than the quarter in which the sales
         took place,  as the Company does not have  sufficient  sales history to
         accurately predict quarterly sales.  Revenues for the nine months ended
         September 30, 2000 include royalties on sales made by Abbott during the
         three months  ended June 30,  2000.  Royalties on sales made during the
         third  quarter of 2000 will not be  recognized by the Company until the
         fourth quarter of fiscal year 2000.  Royalties on sales made during the
         quarter  ended June 30, 2000 and the third  quarter of fiscal 2000 were
         not material to BioTime's financial results.

         Abbott has agreed  that the  Company  may  convert  Abbott's  exclusive
         license  to a non-  exclusive  license  or may  terminate  the  license
         outright if certain minimum sales and royalty  payments are not met. In
         order  to  terminate  the  license   outright,   BioTime  would  pay  a
         termination  fee in an amount ranging from the milestone  payments made
         by Abbott to an  amount  equal to three  times  prior  year net  sales,
         depending upon when termination  occurs.  Management  believes that the
         probability  of  payments  of any  termination  fee by the  Company  is
         remote.

                                       11





4.       SHAREHOLDERS' EQUITY

         The Board of  Directors  of the Company  adopted the 1992 Stock  Option
         Plan (the "Plan") during  September  1992. The Plan was approved by the
         shareholders  at the 1992 Annual Meeting of Shareholders on December 1,
         1992.  Under the Plan, as amended,  the Company has reserved  1,800,000
         common shares for issuance under options  granted to eligible  persons.
         No options may be granted  under the Plan more than ten years after the
         date the Plan was  adopted  by the Board of  Directors,  and no options
         granted  under the Plan may be exercised  after the  expiration  of ten
         years from the date of grant.

         Under the Plan,  options to  purchase  common  shares may be granted to
         employees,  directors and certain  consultants  at prices not less than
         the fair market value at date of grant for incentive  stock options and
         not less than 85% of fair market value for other stock  options.  These
         options  expire  five to ten  years  from the date of grant  and may be
         fully  exercisable  immediately,  or may be exercisable  according to a
         schedule  or  conditions  specified  by the Board of  Directors  or the
         Option  Committee.  As of  September  30,  2000,  504,500  shares  were
         available  for future  grants  under the Option  Plan;  and  options to
         purchase  461,000  had been  granted and were  outstanding  at exercise
         prices  ranging  from  $1.00  to  $18.25.  Of the  options  granted  to
         consultants,  options  to  purchase  60,000  common  shares  vest  upon
         achievement  of certain  milestones.  The  Company is  amortizing  into
         compensation  the  estimated  fair value of such  options  ($354,791 at
         September  30,  2000),  subject  to  remeasurement  at the  end of each
         reporting period,  over the period estimated to achieve such milestones
         (one to two years).  Compensation  expense  recognized on these options
         during the nine  months  ended  September  30,  2000 was  approximately
         $30,066 and was recorded as research and development expense.

         During  April 1998,  the  Company  entered  into a  financial  advisory
         services  agreement with Greenbelt Corp. The agreement  provided for an
         initial  payment of $90,000  followed by an advisory fee of $15,000 per
         month  that was paid  quarterly.  On  August  11,  2000,  the  Board of
         Directors approved the renewal of this agreement for a period of twelve
         months  ending  March  31,  2001,  but  instead  of  cash  compensation
         Greenbelt  Corp.  will receive  30,000 common shares in four  quarterly
         installments   of  7,500  shares  each.  The  value  of  the  quarterly
         installments  will be recognized in the quarter they are earned.  Under
         the agreement,  upon the request of Greenbelt  Corp.,  the Company will
         file a registration statement to register the shares for public sale.



5.       NET INCOME PER SHARE

         Basic earnings  (loss) per share  excludes  dilution and is computed by
         dividing  net income  (loss) by the weighted  average  number of common
         shares outstanding during the period. Diluted earnings (loss) per share
         reflects the potential  dilution from  securities  and other  contracts
         which are  exercisable  or  convertible  into  common  shares.  Diluted
         earnings (loss) per share for the three months ended September 30, 2000
         and the nine months  ended  September  30, 2000 exclude any effect from
         such securities as their inclusion would be antidilutive. As a

                                       12





         result,  there is no difference between basic and diluted  calculations
         of loss per share for all periods presented.



Item 2.     Management's Discussion and Analysis of Financial Condition and
            Results of Operations.


                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

         Since its  inception  in November  1990,  the Company has been  engaged
primarily  in  research  and  development  activities.  The  Company has not yet
generated  significant  operating  revenues,  and as of  September  30, 2000 the
Company had incurred a cumulative net loss of $26,061,052. The Company's ability
to generate substantial operating revenue depends upon its success in developing
and marketing or licensing its plasma  volume  expanders and organ  preservation
solutions and technology for medical use.

         Most of the  Company's  research  and  development  efforts  have  been
devoted to the development of the Company's first three blood volume replacement
products:  Hextend,  PentaLyte,  and HetaCool. By testing and bringing all three
products to the market,  BioTime can increase its market share by providing  the
medical community with solutions to match patients' needs.

         The Company's first product,  Hextend(R), is a physiologically balanced
blood plasma volume expander, for the treatment of hypovolemia. Hypovolemia is a
condition  often  associated  with blood  loss  during  surgery or from  injury.
Hextend maintains circulatory system fluid volume and oncotic pressure and keeps
vital organs perfused during surgery.  Hextend, approved for large-volume use in
major  surgery,   is  the  only  blood  plasma  volume  expander  that  contains
hetastarch,  buffer,  multiple electrolytes and glucose.  Hextend is designed to
compete  with and to replace  flawed  older  products  such as albumin and other
colloid  solutions,  as well as  crystalloid  solutions,  that have been used to
maintain  fluid  volume  and blood  pressure  during  surgery.  Hextend  is also
completely  sterile to avoid risk of infection.  BioTime  estimates that Hextend
has now been  successfully  used to treat more than 25,000  patients  undergoing
surgery.  Physicians who have used Hextend in surgery have reported good results
and a number of benefits,  including reduced hospital stays in certain cases and
a noticeable  reduction in edema due to a reduced use of crystalloid  solutions.
Health insurance  reimbursements and HMO coverage generally include  the cost of
Hextend used in surgical procedures.

         Hextend is being sold in the United States by Abbott Laboratories under
an exclusive license from the Company. Abbott also has the right to sell Hextend
in Canada,  where an application for marketing approval is pending.  BioTime has
retained all rights to  manufacture,  sell or license Hextend and other products
in all other countries. Abbott also has a right to obtain licenses to

                                       13





manufacture  and sell other BioTime  products.  See Note 3 of Notes to Financial
Statements   for  more   information   about  the  license   granted  to  Abbott
Laboratories.

         Under its License Agreement with the Company,  Abbott will report sales
of Hextend and pay the Company the  royalties and license fees due on account of
such sales within 90 days after the end of each  calendar  quarter.  The Company
will  recognize  such  revenues  in the  quarter  in which the  sales  report is
received,  rather than the quarter in which the sales took place.  Revenues  for
the three months  ended  September  30, 2000 include  royalties on sales made by
Abbott  during the three  months  ended June 30,  2000.  Royalties on sales made
during the third quarter of 2000 will not be recognized by the Company until the
fourth  quarter of fiscal  year  2000.  Hextend  sales are still in the  ramp-up
phase,  and  royalties on sales made during the three months ended June 30, 2000
and during the  three  months  ended  September  30,  2000 were not  material to
BioTime's  financial results.  Total royalties earned on sales of Hextend during
the current fiscal year will be reported in the Company's annual report on Form
10-K.

         Because  Hextend is a surgical  product,  sales will be  determined  by
anesthesiologists,  surgeons  practicing a variety of specialties,  and hospital
pharmacists.  Abbott's  marketing  strategy  is  designed  to reach this  target
customer base through  sales calls and an  advertising  campaign  focused on the
physiological  basis of using a  plasma-like  substance  to  replace  lost blood
volume and the ability of Hextend to support  vital  physiological  processes at
high volume use.

         As part of the marketing program,  Abbott and the Company are financing
a number of medical studies comparing patient outcomes and costs of treatment of
patients  receiving Hextend compared to other products during surgery.  As these
studies are completed,  the results will be presented at medical conferences and
articles will be written for  publication  in medical  journals.  In response to
positive  findings from these studies and physician  satisfaction from Hextend's
clinical use, Abbott  Laboratories  has intensified  its marketing  effort.  The
Company  is also  aware of  independent  studies  that are  being  conducted  by
physicians  and hospitals,  who may publish their findings in medical  journals.
The outcome of the planned  medical studies and timing of the publication of the
results  could have an effect on the growth of demand for  Hextend  and sales by
Abbott. Upcoming major medical conferences at which Hextend will be featured are
the  54th   Postgraduate   Assembly   of  the  New   York   State   Society   of
Anesthesiologists,  and the American Society of Hospital Pharmacists, both to be
held in December 2000, and the Society for Clinical Care Medicine to be held in
February 2001.

     Abbott is also  working with  hospitals  to have Hextend  added to hospital
formularies,  and has  obtained or is seeking  formulary  committee  approval at
several  hundred  hospitals.  Inclusion  on hospital  formularies  is  important
because it enables  physicians  to obtain  Hextend  without  the need to special
order it.  Obtaining  formulary  approval  generally  takes  several  months and
requires diligent efforts by the sales force who not only provide Hextend to the
hospital but also can provide the formulary committee with necessary information
showing  that  the  product  is  safe  and  effective.   To  facilitate  product
acceptance,  substantial quantities of Hextend were introduced into hospitals at
no charge.  While this may cause a delay in revenues from product  sales,  it is
often  effective in obtaining  market  penetration.  The Company expects Hextend
sales to grow as the number of hospital  formularies  that have approved Hextend
increases, and as surgeons and

                                       14





anaesthesiologists  become more  familiar with the benefits that can be attained
for their patients by using Hextend in the operating room.

         Abbott has concentrated on establishing  Hextend as the standard plasma
volume expander at prominent  teaching  hospitals and leading  medical  centers,
such  as  Duke  University   Medical  Center  in  Durham,   North  Carolina  and
Columbia-Presbyterian  Medical  Center in New York, New York which have switched
to Hextend from 6% hetastarch in saline.

         The  Company  has  completed  a Phase I  clinical  trial  of  PentaLyte
involving a small number of subjects and is  presently  compiling  the test data
for submission to the FDA.  BioTime plans to test PentaLyte for the treatment of
hypovolemia in surgery. PentaLyte contains a lower molecular weight hydroxyethyl
starch than Hextend, and is more quickly metabolized.  PentaLyte is designed for
use when short lasting volume expansion is desirable.

         The Company is also continuing to develop solutions for low temperature
surgery. A number of physicians have reported using Hextend to treat hypovolemia
under mild hypothermic  conditions during cardiac surgery.  Additional surgeries
have been performed at deeper  hypothermic  temperatures.  In one case, a cancer
patient was operated on under deep hypothermic conditions in which the heart was
arrested and most of the blood replaced with Hextend.  Once a sufficient  amount
of data from successful low temperature  surgery has been compiled,  the Company
plans to seek  permission  to use  Hextend as a complete  replacement  for blood
under  near-freezing  conditions.  BioTime currently plans to market Hextend for
complete blood volume  replacement at very low temperatures under the registered
trade mark "HetaCool(R)" after FDA approval is obtained.

         In order to commence  clinical  trials for  regulatory  approval of new
products or new  therapeutic  uses of  products,  it will be  necessary  for the
Company to prepare and file with the FDA an Investigational New Drug Application
("IND")  or an  amendment  to expand a previous  filing.  Filings  with  foreign
regulatory  agencies will be required to commence clinical trials overseas.  The
Company  intends to enter  global  markets  through  licensing  agreements  with
overseas pharmaceutical companies. By licensing its products abroad, the Company
will avoid the capital  costs and delays  inherent in acquiring or  establishing
its  own   pharmaceutical   manufacturing   facilities   and   establishing   an
international  marketing organization.  A number of pharmaceutical  companies in
Europe, Asia and other markets around the world have expressed their interest in
obtaining licenses to manufacture and market the Company's products. The Company
is  continuing  to meet with  representatives  of  interested  companies  and is
approaching  agreement to license its products in certain parts of the world. In
addition,  the Company is discussing an arrangement  with a leading  producer of
the hydroxyethyl starch used in Hextend through which the Company would obtain a
source of supply of that  ingredient  and  assistance in regulatory  matters for
approval of Hextend for the European market.

         The Company is also pursuing a global clinical trial strategy, the goal
of which is to permit the Company to obtain regulatory approval for its products
as quickly and economically as practicable. For example, the United States Phase
III clinical trials of Hextend  involved 120 patients and were completed in less
than 12 months.  Although regulatory  requirements vary from country to country,
the Company may be able to file applications for foreign regulatory  approval of
its products

                                       15





based upon the  results of the United  States  clinical  trials.  The  Company's
application to market Hextend in Canada has been found  acceptable for review as
a New Drug Submission by the Canadian Health  Protection  Branch (HPB),  and the
Company is now awaiting  completion of HPB's review of that application.  During
the third  quarter,  the Company filed its first  application  for approval in a
European Union member nation,  Sweden.  Regulatory  approvals for countries that
are members of the European Union may be obtained  through a mutual  recognition
process. If approvals can be obtained in the requisite number of member nations,
then the Company would be permitted to market Hextend in all 16 member nations.

         In addition to developing clinical trial programs, the Company plans to
continue to provide  funding  for its  laboratory  testing  programs at selected
universities,  medical  schools  and  hospitals  for the  purpose of  developing
additional uses of Hextend, PentaLyte, HetaCool, and other new products, but the
amount of research that will be conducted at those institutions will depend upon
the Company's  financial status.  Because the Company's research and development
expenses, clinical trial expenses, and production and marketing expenses will be
charged against earnings for financial  reporting  purposes,  management expects
that losses from  operations  will  continue to be incurred for the  foreseeable
future.

Hextend(R) and  PentaLyte(R)  are registered  trademarks,  and HetaCool(TM) is a
trademark, of BioTime.

Results of Operations

Revenues

         From  inception  (November  30, 1990) through  September 30, 2000,  the
Company  recognized  $2,500,000  of license fee  revenues.  For the three months
ended  September 30, 2000,  and September 30, 1999, no license fee revenue based
on milestones or product sales was earned or recognized.  All license fees based
upon  milestones  under the Abbott  License  Agreement  were earned during prior
periods.  For the nine months ended  September  30,2000,  no license fee revenue
based on  product  sales was earned or  recognized.  For the nine  months  ended
September 30, 1999, the Company  recognized  revenues of $1,037,500,  as certain
license fee milestones were achieved.  See Note 3 to the accompanying  financial
statements.

Operating Expenses

         From  inception  (November  30, 1990) through  September 30, 2000,  the
Company  incurred  $19,269,621 of research and development  expenses,  including
salaries,  supplies and other related  expense items.  Research and  development
expenses were $847,035 for the three months ended  September 30, 2000,  compared
to $1,957,094  for the three months ended  September 30, 1999. The difference is
attributable to a decrease in compensation  expense  recognized for the value of
certain consultants' options, and completion of a European clinical trial in the
third quarter 1999.  Research and development  expenses  decreased to $2,687,112
for the nine months ended  September  30,  2000,  from  $3,769,100  for the nine
months ended  September  30, 1999.  Research and  development  expenses  include
laboratory  study  expenses,   European   clinical  trial  expenses,   salaries,
preparation of additional

                                       16





regulatory  applications  in the United  States  and  Europe,  manufacturing  of
solution for trials,  and  consultants'  fees.  It is expected that research and
development expenses will increase as the Company commences new clinical studies
of its products in the United States and Europe.

         From  inception  (November  30, 1990) through  September 30, 2000,  the
Company incurred $11,049,289 of general and administrative expenses. General and
administrative  expenses were $438,654 for the three months ended  September 30,
2000,  compared to $383,913 for the three months ended  September 30, 1999.  The
increase is attributable to an increase in compensation  expense  recognized for
the value of certain consultants' shares issued for services.  See Note 4 to the
accompanying financial statements. General and administrative expenses decreased
to $1,362,835 for the nine months ended  September 30, 2000, from $1,496,865 for
the nine months ended September 30, 1999. The decrease is primarily attributable
to a reduction in personnel costs.  General and administrative  expenses include
salaries, consultants' fees, and general operating expenses.

Interest and Other Income

         From  inception  (November  30, 1990) through  September 30, 2000,  the
Company generated  $1,757,858 of interest and other income. For the three months
ended  September 30, 2000, the Company  generated  $60,734 of interest and other
income,  compared to $86,419 for the three months ended  September 30, 1999. The
interest and other income generated  decreased to $175,284,  for the nine months
ended  September 30, 2000, from $196,344 for the nine months ended September 30,
1999.  The decrease in interest and other  income in 2000 is  attributable  to a
decrease  in  interest  earned  on cash and  cash  equivalents,  which  was only
partially offset by royalties earned on product sales.


Liquidity and Capital Resources

         Since  inception,  the Company has  primarily  financed its  operations
through the sale of equity  securities and licensing  fees, and at September 30,
2000 the Company had cash and cash equivalents of approximately $2,000,000.  The
Company  expects  that  its  cash on hand  will be  sufficient  to  finance  its
operations for  approximately  the next ten months,  but it will have to curtail
the pace of its product development efforts and other operations unless its cash
resources increase through a growth in revenues or additional equity investment.
Accordingly,  additional funds are required for the successful completion of the
Company's  product  development   activities.   The  Company  has  not  received
significant royalties and licensing fees from the sale of Hextend.  Although the
Company will continue to seek licensing fees from  pharmaceutical  companies for
licenses to manufacture and market the Company's  products abroad,  it is likely
that additional  sales of equity or debt securities will be required to meet the
Company's  short-term capital needs. Sales of additional equity securities could
result  in the  dilution  of  the  interests  of  present  shareholders.  During
September 2000 the Company received $750,951.42 through the exercise of warrants
to purchase  389,094 common shares by Greenbelt  Corp,  and $45,000  through the
exercise  of stock  options  by  Ronald S.  Barkin,  President  of the  Company.
Greenbelt  Corp.  has  informed  the  Company  that it  intends to  exercise  an
additional  77,818  warrants at $1.93 each before  December 31, 2000, and 77,818
warrants at $2.35  before March 31, 2001,  subject to market  conditions.  These
investments  will  increase  the  Company's  cash  position by  $150,190.28  and
$182,874.18  in the  last  quarter  of  2000  and  the  first  quarter  of  2001
respectively.

                                       17





         The amount of license fees and royalties that may be earned through the
licensing and sale of the Company's products, as well as the future availability
and terms of equity and debt financings,  is uncertain.  The  unavailability  or
inadequacy of financing or revenues to meet future capital needs could force the
Company to modify,  curtail, delay or suspend some or all aspects of its planned
operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The Company did not hold any market risk  sensitive  instruments as of September
30, 2000, December 31, 1999, or September 30, 1999.


                                       18


                          PART II - OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits.

Exhibit

Exhibit
Numbers           Description
- -------           -----------

 3.1     Articles of Incorporation, as Amended.+

 3.3     By-Laws, As Amended.#

 4.1     Specimen of Common Share Certificate.+

10.1     Lease  Agreement  dated July 1, 1994 between the Registrant and Robert
         and Norah  Brower,  relating  to  principal  executive  offices of the
         Registrant.*

10.2     Employment Agreement dated June 1, 1996 between the Company and
         Paul Segall.++

10.3     Employment Agreement dated June 1, 1996 between the Company and
         Hal Sternberg.++

10.4     Employment Agreement dated June 1, 1996 between the Company and
         Harold Waitz.++

10.5     Employment Agreement dated June 1, 1996 between the Company and
         Judith Segall.++

10.6     Employment Agreement dated June 1, 1996 between the Company and
         Victoria Bellport.++

10.7     Intellectual Property Agreement between the Company and Paul Segall.+

10.8     Intellectual Property Agreement between the Company and Hal Sternberg.+

10.9     Intellectual Property Agreement between the Company and Harold Waitz.+

10.10    Intellectual Property Agreement between the Company and Judith Segall.+

10.11    Intellectual Property Agreement between the Company and
         Victoria Bellport.+

10.12    Agreement between CMSI and BioTime Officers Releasing Employment
         Agreements, Selling Shares, and Transferring Non-Exclusive License.+

10.13    Agreement for Trans Time, Inc. to Exchange CMSI Common Stock for
         BioTime, Inc. Common Shares.+

10.14    1992 Stock Option Plan, as amended.##

10.15    Employment Agreement dated April 1, 1997 between the Company and
         Ronald S. Barkin.^


                                       19




10.16    Intellectual Property Agreement between the Company and
         Ronald S. Barkin.^

10.17    Addenda to Lease Agreement between the Company and Donn Logan.+++

10.18    Amendment to Employment Agreement between the Company and
         Paul Segall.^^

10.19    Amendment to Employment Agreement between the Company and
         Hal Sternberg.^^

10.20    Amendment to Employment Agreement between the Company and
         Harold Waitz.^^

10.21    Amendment to Employment Agreement between the Company and
         Judith Segall.^^

10.22    Amendment to Employment Agreement between the Company and
         Victoria Bellport.^^

10.23    Amendment to Employment Agreement between the Company and
         Ronald S. Barkin.^^

10.24    Exclusive License Agreement between Abbott Laboratories and
         BioTime, Inc.(Portions of this exhibit have been omitted pursuant to a
         request for confidential treatment).###

10.25    Modification of Exclusive License Agreement between Abbott Laboratories
         and BioTime, Inc.(Portions of this exhibit have been omitted pursuant
         to a request for confidential treatment).^^^

27       Financial Data Schedule**

+Incorporated  by reference to the Company's Form 10-K for the fiscal year ended
June 30, 1998.

+ Incorporated by reference to  Registration  Statement on Form S-1, File Number
33-44549 filed with the Securities and Exchange Commission on December 18, 1991,
and Amendment No. 1 and  Amendment No. 2 thereto filed with the  Securities  and
Exchange Commission on February 6, 1992 and March 7, 1992, respectively.

# Incorporated by reference to  Registration  Statement on Form S-1, File Number
33-48717 and  Post-Effective  Amendment No. 1 thereto filed with the  Securities
and Exchange Commission on June 22, 1992, and August 27, 1992, respectively.

* Incorporated by reference to the Company's Form 10-K for the fiscal year ended
June 30, 1994.

++  Incorporated  by  reference to the  Company's  Form 10-K for the fiscal year
ended June 30, 1996.

^  Incorporated  by reference to the  Company's  Form 10-Q for the quarter ended
March 31, 1997.

## Incorporated by reference to Registration  Statement on Form S-8, File Number
333-30603 filed with the Securities and Exchange Commission on July 2, 1997.


                                       20





^ ^  Incorporated  by reference to the Company's Form 10-Q for the quarter ended
March 31, 1999.

### Incorporated by reference to the Company's Form 8-K, filed April 24, 1997.

+++ Incorporated by reference to the Company's Form 10-K for the fiscal year
ended December 31, 1998.

^^^  Incorporated  by reference to the Company's Form 10-Q for the quarter ended
June 30, 1999.

** Filed herewith.


(b) Reports on Form 8-K

The Company did not file any reports of Form 8-K for the three months ended
September 30, 2000.

                                       21






                                   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, thereunto duly authorized.

                                             BIOTIME, INC.

                                            /s/ Paul Segall
Date: November 14, 2000                     ---------------------------------
                                                Paul Segall
                                                Chief Executive Officer


                                            /s/ Victoria Bellport
Date: November 14, 2000                     ---------------------------------
                                                Victoria Bellport
                                                Chief Financial Officer

                                       22

  




                     5

                             
                   3-MOS
               DEC-31-2000
                  JUL-01-2000
                    SEP-30-2000
                            2,020,624
                              0
                             0
                              0
                               0
                  2,058,198
                              578,702
                      332,777
                    2,314,022
               113,915
                                   0
                     0
                               0
                         28,192,018
                                0
      2,314,022
                                   0
                          0
                                     0
                    (1,285,689)
                          0
                          0
                  (60,734)
                  (1,224,955)
                              0
                       0
                            0
                           0
                                 0
                     (1,224,955)
                           (0.11)
                         (0.11)