| Related Party Transactions | 4. Related Party Transactions Related Party Payables to BioTime Since
inception, ReCyte Therapeutics, LifeMap Sciences and LifeMap Solutions, former subsidiaries of BioTime, had accumulated related
party payables due to BioTime, mainly comprised of working capital advances and Use Fees under the Shared Facilities Agreement
described below. BioTime generally did not historically charge interest on Use Fee payable and only commenced charging interest
for working capital advances in 2017, which was insignificant for the applicable periods presented. Prior
to January 1, 2017, the aggregate related party payables due to BioTime for these working capital advances and Use Fees amounted
to $23.2 million, which was comprised of total $12.9 million owed by LifeMap Sciences and its then subsidiary LifeMap Solutions,
and $10.3 million owed by ReCyte Therapeutics, included in current liabilities on the consolidated balance sheets. On
June 6, 2017, in contemplation of capitalizing AgeX and to further incentivize new investors to invest in AgeX as discussed below,
BioTime agreed to settle or cancel these related party payable balances with the subsidiaries as follows:
● For settlement of related party payables owed by LifeMap Sciences and LifeMap Solutions, (i) LifeMap issued to additional shares of LifeMap common stock, (ii) LifeMap Sciences canceled or terminated certain license agreements with BioTime and transferred other intangible assets to BioTime, and (iii) BioTime obtained a direct 100% ownership interest in LifeMap Solutions (the “LifeMap Sciences Settlement”). The LifeMap Sciences Settlement was done between entities under common control and the changes in ownership interests did not result in a change of control under GAAP, therefore the gain from the transaction was recorded in equity in accordance with ASC 805-50 and ASC 810-10-45-23. Accordingly, as a result of the LifeMap Sciences Settlement, AgeX recorded $13.4 million as additional paid-in capital from BioTime, which was primarily comprised of (i) settlement of the $8.8 million related party payable by LifeMap Sciences described above and in Note 1, (ii) a $4.4 million net gain on the transfer of LifeMap Solutions to BioTime on June 6, 2017, principally related to the transfer of a related party payable by LifeMap Solutions to BioTime as of that date, and (iii) a $0.2 million proportional equity transfer, at carrying value, from noncontrolling interest to the equity of AgeX, included in the consolidated statements of stockholders’ equity for the year ended December 31, 2017.
● BioTime agreed to cancel approximately $11.2 million of related party payable by ReCyte Therapeutics due to BioTime, resulting in the reclassification of the related party payable to additional paid-in capital from BioTime included in the consolidated statements of stockholders’ equity for the year ended December 31, 2017. Since there was no change in ownership percentage in ReCyte Therapeutics held by BioTime or AgeX, there was no impact to noncontrolling interest for this transaction. On
August 17, 2017, BioTime contributed its ownership in LifeMap Sciences, ReCyte Therapeutics and other assets to AgeX in exchange
for 28.8 million shares of AgeX common stock as further discussed below and in Note 5. Asset Contribution
Agreement On
August 17, 2017, AgeX received its initial assets and cash from BioTime and certain investors. BioTime contributed certain assets
and cash to AgeX in exchange for 28,800,000 shares of AgeX common stock (see Note 5) pursuant to the Asset Contribution Agreement.
BioTime and AgeX also entered into a License Agreement pursuant to which BioTime licensed or sublicensed to AgeX, and AgeX granted
to BioTime an option to license back, certain patent rights. Concurrently with the acquisition of assets from BioTime under the
Asset Contribution Agreement, AgeX sold 4,950,000 shares of its common stock for $10.0 million in cash primarily to investors other
than BioTime, which included $1.2 million from the Chairman of BioTime’s Board of Directors and $32,000 from BioTime. At
the close of the financing, BioTime owned 85.4% of the issued and outstanding shares of AgeX common stock. Assets
Contributed: Pursuant
to the Asset Contribution Agreement, BioTime contributed to AgeX the following assets:
● Intellectual property and proprietary technology, including certain patents and patent applications and know-how that comprised BioTime’s “iTR” and adipose brown fat tissue technology;
● Approximately 95% of the outstanding shares of ReCyte Therapeutics common stock, which constituted all of the shares BioTime held prior to the contribution;
● Approximately 82% of the outstanding shares of LifeMap Sciences common stock, which constituted all of the shares BioTime held prior to the contribution;
● Approximately 44% of the outstanding shares of Ascendance, which constituted all of the shares BioTime held prior to the contribution.
● $100,000 in cash; and
● Certain other assets and contracts, including BioTime research and development departments and personnel related to the AgeX research and development programs. Assumption
of Liabilities: AgeX
agreed to assume all third-party obligations and liabilities related to the assets contributed and contracts assigned to AgeX or
the operation of the AgeX related business. Other
Matters: The
Asset Contribution Agreement also sets forth other terms that govern certain aspects of BioTime’s ongoing relationship with
AgeX if in the future BioTime distributes its AgeX shares to BioTime shareholders. License
Agreement Concurrently
with the contribution of assets to AgeX under the Asset Contribution Agreement, BioTime and AgeX entered into a License Agreement
pursuant to which BioTime has licensed to AgeX, with rights to sublicense, certain intellectual property, including patents and
patent applications and know-how for use in the development, manufacture and commercialization of products or services for the
prevention, treatment, amelioration, diagnosis or monitoring of all human and non-human animal diseases and conditions except for
the field of medical products, devices and services for the reserved BioTime fields of orthopedic, ophthalmic and medical aesthetic
uses. In addition, BioTime retained an option right to license, on terms to be negotiated, iTR patents in research, development,
manufacturing and commercialization of treatments in the reserved BioTime fields. The licensed patents and know-how relate generally
to (a) BioTime’s PureStem ® The
BioTime patent rights licensed to AgeX are exclusive and worldwide except for existing third-party licenses, and for medical products,
devices, and services related to tendons. AgeX additionally received an option to license certain BioTime retained patent rights
outside of orthopedic indications unless a license grant would compete with a BioTime program or products in the retained BioTime
field. The Asset Contribution
Agreement and other transactions discussed above were completed between entities under common control. Accordingly, the contributed
assets and liabilities are recorded at historical carrying values, with the resulting gain recorded in AgeX’s additional
paid-in capital included in the consolidated statements of stockholders’ equity for the year ended December 31, 2017, in
accordance with ASC 805-50 . Allocated Expenses from BioTime Consistent with
the principles of carve-out financial statements and presentation discussed in Note 1, certain expenses have been allocated by
BioTime and included in the AgeX consolidated statements of operations and consolidated statements of stockholders’ equity
(deficit) as contribution by BioTime for the periods presented. Research and development
expenses shown below include allocations from BioTime primarily attributable to certain former BioTime general research and development
departments contributed to AgeX. Such expenses were primarily comprised of personnel expenses and related expenses, including stock-based
compensation, and other outside expenses relevant to the nature of the research projects being conducted that were contributed
to AgeX pursuant to the Asset Contribution Agreement discussed above. General and administrative
expenses shown below include allocations from certain BioTime general and administrative expenses, including allocated stock-based
compensation, for carve-out presentation purposes of the AgeX consolidated statements of operations. These allocations are principally
based on the historical general and administrative functions and expenses relevant to BioTime and the AgeX subsidiaries that operated
prior to and after AgeX formation during the periods presented Management considers
the allocation methodologies used to allocate expenses as reasonable and appropriate based on historical BioTime expenses attributable
to AgeX and its operations for purposes of the standalone, carve-out financial statements included herein. The expenses reflected
in the consolidated financial statements may not be indicative of expenses that will be incurred by AgeX as an independent, publicly
traded company and should not be relied upon as an indicator of AgeX’s future results Allocated expenses
from BioTime, net of allocations from AgeX to BioTime, included in the consolidated statements of operations were as follows (in
thousands):
Year Ended December 31,
2018 2017
Research and development $ (5 ) $ 1,310
General and administrative 476 1,294
Total allocated expenses from BioTime $ 471 $ 2,604 Shared Facilities and Service Agreement On August 17, 2017,
AgeX and BioTime executed the Shared Facilities Agreement. Under the terms of the Shared Facilities Agreement, BioTime will allow
AgeX to use its premises and equipment located at Alameda, California for the purpose of conducting business. BioTime will also
provide accounting, billing, bookkeeping, payroll, treasury, payment of accounts payable, and other similar administrative services
to AgeX. BioTime may also provide the services of attorneys, accountants, and other professionals who may also provide professional
services to BioTime and its other subsidiaries. BioTime may also provide AgeX with the services of its laboratory and research
personnel, including BioTime employees and contractors, for the performance of research and development work for AgeX at the premises. BioTime charges
AgeX a “Use Fee” for services received and usage of facilities, equipment, and supplies. For each billing period, BioTime
prorates and allocates as a Use Fee costs incurred, as applicable, to AgeX. Such costs generally include: services of BioTime employees,
consultants, and contractors; equipment use, insurance, lease expense, fees for services of accountants, lawyers, and other professionals;
software; supplies; and utilities. Allocation depends on key cost drivers including actual documented use, square footage of facilities
used, time spent, costs incurred by or for AgeX, or upon proportionate usage by BioTime and AgeX, as reasonably estimated by BioTime.
BioTime, at its discretion, has the right to charge AgeX a 5% markup on such allocated costs and BioTime has charged this markup
since the August 17, 2017 inception of the Shared Facilities Agreement with AgeX. The allocated cost of BioTime employees and contractors
who provide services is based upon records maintained of the number of hours or percentage of time of such personnel devoted to
the performance of services. The Use Fee is determined
and invoiced to AgeX on a monthly basis for each calendar month of each calendar year. If the Shared Facilities Agreement terminates
prior to the last day of a billing period, the Use Fee will be determined for the number of days in the billing period elapsed
prior to the termination of the Shared Facilities Agreement. Each invoice will be payable in full by AgeX within 30 days after
receipt. Any invoice, or portion thereof, not paid in full when due will bear interest at the rate of 15% per annum until paid,
unless the failure to make a payment is due to any inaction or delay in making a payment by BioTime employees from AgeX funds available
for such purpose, rather than from the unavailability of sufficient funds legally available for payment or from an act, omission,
or delay by any employee or agent of AgeX. To date BioTime has not charged AgeX any interest. In addition to the
Use Fees, AgeX will reimburse BioTime for any out of pocket costs incurred by BioTime for the purchase of office supplies, laboratory
supplies, and other goods and materials and services for the account or use of AgeX, provided that invoices documenting such costs
are delivered to AgeX with each invoice for the Use Fee. Furthermore, BioTime will have no obligation to purchase or acquire any
office supplies or other goods and materials or any services for AgeX, and if any such supplies, goods, materials or services are
obtained for AgeX, BioTime may arrange for the suppliers thereof to invoice AgeX directly. The Shared Facilities
Agreement will remain in effect from year to year, unless either party gives the other party written six months’ notice to
terminate, which BioTime may not give to AgeX prior to September 1, 2020, or unless the agreement is otherwise terminated under
another provision of the agreement. In
aggregate, BioTime charged such Use Fees to AgeX and subsidiaries as follows :
Year Ended December 31,
2018 2017
Research and development $ 1,278 $ 1,065
General and administrative 400 615
Total Use Fees $ 1,678 $ 1,680 As
of December 31, 2018, and 2017, AgeX had $34,000 and $210,000, respectively, in related party payables to BioTime, included in
current liabilities on the consolidated balance sheets. Transactions
with Juvenescence Since October 2018,
AgeX’s Chief Operating Officer (“COO”), who is also an employee of Juvenescence, is devoting a majority of his
time to AgeX’s operations for which AgeX reimburses Juvenescence for his services on an agreed upon fixed annual amount of
$272,000. As of December 31, 2018, AgeX had approximately $48,000 payable to Juvenescence
for COO services rendered included in related party payables on the consolidated balance sheets. Transactions
with Ascendance. On
March 21, 2018, AgeX and Ascendance entered into an Asset Purchase Agreement (the “Asset Agreement”) in which AgeX
purchased for $800,000 in cash certain assets consisting in value primarily of in-process research and development assets related
to stem cell derived cardiomyocytes (heart muscle cells) to be developed by AgeX. The transaction was considered an asset acquisition
rather than a business combination in accordance with ASC 805-50. The $800,000 purchase price was expensed on the acquisition date
as acquired in-process research and development in accordance with as
those assets have no alternative future uses. Disposition
of ownership interest in Ascendance On
March 23, 2018, Ascendance was acquired by a third party in a merger through which AgeX received approximately $3.2 million in
cash for its shares of Ascendance common stock. AgeX recognized a $3.2 million gain as a sale of its equity method investment in
Ascendance, which is included in other income and expenses, net, for the year ended December 31, 2018. At the close of the merger,
$955,000 of cash that otherwise would have been payable to the Ascendance stockholders was deposited into an escrow account where
it may be held for a term of up to fifteen months. Funds held in the escrow account may be paid to the acquirer to cover indemnity
payments and other obligations that may arise after the merger. After the expiration of the term of the escrow, any funds remaining
in the escrow account will be disbursed, on a pro-rata basis, to the former Ascendance stockholders. As of December 31, 2018, no
amounts have been recorded in the AgeX consolidated financial statements for any funds held in the escrow account. Sale of
warrants by AgeX In
February 2018, AgeX sold Warrants to certain investors, including to ee Notes 5 and 9) |
