Lineage Cell Therapeutics (LCTX) 8-K Completion of Acquisition or Disposition of Assets

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

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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.

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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

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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.

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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.

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