Neuralstem, Inc. (NYSE: CUR; Germantown, MD; hereafter, "Neuralstem" or "the Company") is a

biopharmaceutical company that is utilizing its proprietary human neural stem cell technology to create a

comprehensive platform for the treatment of central nervous system diseases. The Company was founded

in 1997 and currently has laboratory and office space in Germantown, Maryland and laboratory facilities

in San Diego, California and in the People's Republic of China.

Use the attached financial statements, selected notes to the financial statements, and excerpts from the

Management Discussion & Analysis section from Neuralstem's 10-K for the year ended December 31,

2014 to answer the following questions. (You will not need to supplement with outside sources of

company data in order to answer the questions.)

Part I: Background

1. (a) Have the Company's revenues increased or decreased over the period 2012-2014?

(b) What was the primary source of the Company's revenues for 2014?

(c) What dollar value of revenue did the company record from the sale or commercialization of its

products in 2014?

2. (a) What was the primary source of cash during 2014?

(b) Explain why the Company might need a high level of cash and short-term investments leading

into the next fiscal year (and potentially into the foreseeable future)?

Part II: Spotlight on Long-term Operational Assets:

3. (a) What is the approximate age (on average) of the Company's "property and equipment?"

(b) Is that relatively new or relatively old compared to the expected life of the property and

equipment? Explain.

4. Assume that the Company purchased its additional Property and Equipment with cash. Write the

journal entry that the Company would have used to record the purchase of Property and Equipment

in 2014.

5. (a) The Company engages in significant research and development activities. What account on its

Balance Sheet is currently affected the most by those research and development activities?

Explain.

(b) The Company follows U.S. GAAP. If the Company instead followed IFRS, would its long-term

assets likely be higher, lower, or the same as currently reported? Explain.

EXCERPTS FROM NEURALSTEM, INC.'S 10-K FOR THE YEAR ENDED DECEMBER 31, 2014

I TEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

Our Management's Discussion and Analysis of Financial Condition and Results of Operations or MD&A, is provided in addition to the

accompanying financial statements and notes to assist readers in understanding our results of operations, financial condition and cash

flows. Our MD&A is organized as follows:

Executive Overview - Overview discussion of our business in order to provide context for the remainder of MD&A.

Trends & Outlook - Discussion of what we view as the overall trends affecting our business and the strategy for 2015.

Critical Accounting Policies- Accounting policies that we believe are important to understanding the assumptions and judgments

incorporated in our reported financial results and forecasts.

Results of Operations- Analysis of our financial results comparing [the year ended December 31, 2014 to the comparable period

of 2013].

Liquidity and Capital Resources- Analysis of cash flows and discussion of our financial condition and future liquidity needs.

Executive Overview

We are focused on the development and commercialization of treatments based on human neuronal stem cells and the development and

commercialization of treatments using small molecule compounds. We are headquartered in Germantown, Maryland and have a whollyowned

subsidiary in China.

We have developed and maintain a portfolio of patents and patent applications that form the proprietary base for our research and

development efforts. We own or exclusively license ninety-five (95) U.S. or foreign issued patents and fifty-one (51) U.S. and foreign

patent applications in the field of regenerative medicine, related to our stem cell technologies as well as our small molecule compounds.

At times, including in the third quarter 2012 and the first quarter of 2013, we have licensed the use of our intellectual property to third

parties.

All of our research efforts to date are at the pre-clinical or clinical stage of development. We are focused on leveraging our key assets,

including our intellectual property, our scientific team and our facilities, to advance our technologies. In addition, we are pursuing

strategic collaborations with members of academia and industry.

We have not derived any revenue or cash flows from the sale or commercialization of our products. In the past, we have derived limited

revenue from the licensing of certain intellectual property to third parties and from consulting fees. As a result, we have incurred annual

operating losses since inception and expect to continue to incur substantial operating losses in the future. Therefore, we are dependent

upon external financing and revenue from collaborative research arrangements with sponsors to finance our operations. We have no

such collaborative research arrangements at this time and there can be no assurance that such financing or partnering revenue will be

available when needed or on terms acceptable to us.

Before we can derive revenue or cash inflows from the commercialization of any of our proposed product candidates, we will need to:

(i) conduct substantial testing of our proposed products, (ii) undertake pre-clinical and clinical testing for specific disease indications;

and (iii), obtain required regulatory approvals. These steps are risky, expensive and time consuming.

Trends & Outlook

We generated no revenues from the sale of our proposed therapies for any of the years presented. We are mainly focused on successfully

managing our current clinical trials related to our stem cell technology and small molecule compounds. We are also pursuing pre-clinical

studies on other central nervous system indications in preparation for additional clinical trials.

In the first quarter of 2013 and the third quarter of 2012, we licensed the use of certain of our intellectual property to third parties. During

the years ended December 31, 2014, 2013 and 2012, we recognized approximately $19,000, $110,000 and $173,000 of revenue,

respectively, related to up-front payments and ongoing fees under these licenses.

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On a long-term basis, we anticipate that our revenue will be derived primarily from licensing fees and sales of our cell based therapy

and small molecule compounds. Because we are at such an early stage in the clinical trials process, we are not yet able to accurately

predict when we will have a product ready for commercialization, if ever.

Research and Development Expenses

Our research and development expenses consist primarily of contractor and personnel expenses associated with clinical trials and

regulatory submissions; costs associated with preclinical activities such as proof of principle for new indications; toxicology studies;

costs associated with cell processing and process development; facilities-related costs and supplies. Clinical trial expenses include

payments to research organizations, contract manufacturers, clinical trial sites, consultants and laboratories for testing clinical samples.

We focus on the development of treatment candidates with potential uses in multiple indications, and use employee and infrastructure

resources across several projects. Accordingly, many of our costs are not attributable to a specifically identified product and we do not

account for internal research and development costs on a project-by-project basis.

For a further description of these clinical trials, see the section of this report entitled "Clinical Programs" contained in Item 1.

We expect that research and development expenses, which include expenses related to our ongoing clinical trials, will increase in the

future, as funding allows and we proceed into our anticipated Phase II trials. To the extent that it is practical, we will continue to

outsource much of our efforts, including product manufacture, proof of principle and pre-clinical testing, toxicology, tumorigenicity,

dosing rationale, and development of clinical protocol and IND applications. This approach allows us to use the best expertise available

for each task and permits staging new research projects to fit available cash resources.

We have formed a wholly owned subsidiary in the People's Republic of China. We anticipate that this subsidiary will primarily: (i)

conduct pre-clinical research with regard to proposed stem cells therapies, and (ii) oversee our approved future clinical trials in China,

including the current trial to treat motor deficits due to ischemic stroke. Through December 31, 2014 this subsidiary has incurred

expenses of approximately $500,000.

General and Administrative Expenses

General and administrative expenses are primarily comprised of salaries, benefits and other costs associated with our operations

including, finance, human resources, information technology, public relations, legal fees, facilities and other external general and

administrative services.

Critical Accounting Policies

Our consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of these financial statements

requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.

Note 2 of the Notes to Consolidated Financial Statements included elsewhere herein describes the significant accounting policies used

in the preparation of the financial statements. Certain of these significant accounting policies are considered to be critical accounting

policies, as defined below.

A critical accounting policy is defined as one that is both material to the presentation of our financial statements and requires

management to make difficult, subjective or complex judgments that could have a material effect on our financial condition and results

of operations. Specifically, critical accounting estimates have the following attributes: (1) we are required to make assumptions about

matters that are highly uncertain at the time of the estimate; and (2) different estimates we could reasonably have used, or changes in

the estimate that are reasonably likely to occur, would have a material effect on our financial condition or results of operations.

Estimates and assumptions about future events and their effects cannot be determined with certainty. We base our estimates on historical

experience and on various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may

change as new events occur, as additional information is obtained and as our operating environment changes. These changes have

historically been minor and have been included in the financial statements as soon as they became known. Based on a critical assessment

of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management

believes that our financial statements are fairly stated in accordance with U.S. GAAP, and present a meaningful presentation of our

financial condition and results of operations. We believe the following critical accounting policies reflect our more significant estimates

and assumptions used in the preparation of our consolidated financial statements:

Use of Estimates - Our financial statements prepared in accordance with U.S. GAAP require us to make estimates and

assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of

revenues and expenses during the reporting period. Specifically, we have estimated the expected economic life and value of our patent

technology, our net operating loss carryforward and related valuation allowance for tax purposes and our stock -based compensation

expenses related to employees, directors, consultants and investment banks. Actual results could differ from those estimates.

Page 5 of 10

Long Lived Intangible Assets - Our long lived intangible assets consist of our intellectual property patents including primarily

legal fees associated with the filings and in defense of our patents. The assets are amortized on a straight-line basis over the expected

useful life which we define as ending on the expiration of the patent group. These assets are reviewed for impairment whenever events

or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. We assess this recoverability by

comparing the carrying amount of the asset to the estimated undiscounted future cash flows to be generated by the asset. If an asset is

deemed to be impaired, we estimate the impairment loss by determining the excess of the asset's carrying amount over the estimated

fair value. These determinations use assumptions that are highly subjective and include a high degree of uncertainty. During the years

ended December 31, 2014, 2013 and 2012, no significant impairment losses were recognized.

Fair Value Measurements - The carrying amounts of our short-term financial instruments, which primarily include cash and

cash equivalents, other short-term investments, accounts payable and accrued expenses, approximate their fair values due to their short

maturities. The fair value of our long-term indebtedness is estimated based on the quoted prices for the same or similar issues or on the

current rates offered to the Company for debt of the same remaining maturities. The fair values of our derivative instruments were

estimated using Level 3 unobservable inputs.

Share-Based Compensation - We account for share-based compensation at fair value; accordingly we expense the estimated fair

value of share-based awards over the requisite service period. Share-based compensation cost for stock options and warrants issued to

employees and board members is determined at the grant date using an option pricing model. Option pricing models require us to make

assumptions, including expected volatility and expected term of the options. If any of the assumptions we use in the model were to

significantly change, stock based compensation expense may be materially different. Share-based compensation cost for restricted stock

and restricted stock units issued to employees and board members is determined at the grant date based on the closing price of our

common stock on that date. The value of the award that is ultimately expected to vest is recognized as expense on a straight-line basis

over the requisite service period.

Comparison of Our Results of Operations for the Year Ended December 31, 2014 and 2013

Revenue

We did not generate any revenues from the sale of our proposed products in 2014 or 2013. During 2014 and 2013, we recognized

revenue of approximately $19,000 and $110,000, respectively related to the licensing of certain of our intellectual properties to third

parties. The revenue in 2013 included up-front fees for new licenses while the revenue recognized in 2014 consisted solely of ongoing,

annual fees.

Operating Expenses

Operating expenses for 2014 and 2013 were as follows:

Year Ended December 31, Increase (Decrease)

2014 2013 $ %

Operating Expenses

Research & development costs $ 8,134,753 $ 7,134,301 $ 1,000,452 14 %

General & administrative expenses 8,971,299 5,254,915 3,716,384 71 %

Depreciation and amortization 348,630 244,725 103,905 42 %

Total expense $ 17,454,682 $ 12,633,941 $ 4,820,741 38 %

Research and Development Expenses

Our research and development expenses consist primarily of contractor and personnel expenses associated with clinical trials and

regulatory submissions; costs associated with preclinical activities such as proof of principle for new indications; toxicology studies;

costs associated with cell processing and process development; facilities-related costs and supplies. Clinical trial expenses include

payments to research organizations, contract manufacturers, clinical trial sites, consultants and laboratories for testing clinical samples.

The increase of approximately $1,000,000 or 14% in research in development expenses was primarily attributable to a $674,000 increase

in payroll and related expense due to increased salaries and headcount, a $140,000 increase in project and lab expenses and a $112,000

increase in travel and related expense due to our clinical trial activities. These increased expenses are all related to a ramping up of our

pre-clinical and clinical trial efforts and are expected to continue into subsequent periods.

General and Administrative Expenses

General and administrative expenses are primarily comprised of salaries, benefits and other costs associated with our operations

including, finance, human resources, information technology, public relations, legal fees, facilities and other external general and

administrative services.

Page 6 of 10

The increase of approximately of approximately $3,716,000 or 71% in general and administrative expenses was primarily attributable

to a $1,953,000 increase in non-cash stock based compensation expense primarily related to a consultant achieving a performance based

milestone which resulted in a term extension of certain common stock purchase warrants, a $1,010,000 increase in legal and professional

fees related to patent, litigation and other corporate matters, a $554,00 increase in consulting fees primarily related to new business

development efforts and a $236,000 increase in payroll and related expenses due to current year headcount increases.

Depreciation and Amortization

The increase in depreciation and amortization expenses is due to additions to our patents and property and equipment.

Other income (expense)

Other expense totaled approximately $5,193,000 and $7,308,000 in the years ended December 31, 2014 and 2013, respectively. Other

expense in 2014 consisted primarily of $3,110,000 related to our extension of certain common stock purchase warrants, $1,621,000 of

interest expense principally related to our long-term debt, a $446,000 loss on our debt amendment transaction and $334,000 related to

the change in fair value of the Company's warrant liabilities partially offset by $250,000 of income from a milestone payment from a

legal settlement.

Other expense in 2013 consisted primarily of a $5,017,000 expense related to the modification of certain common stock purchase

warrants, $1,394,000 of interest expense primarily related to the Company's March 2013 long-term debt and a $965,000 expense related

to the change in fair value of the Company's warrant liabilities partially offset by approximately $68,000 in interest income.

Liquidity and Capital Resources

Since our inception, we have financed our operations through the sales of our securities, issuance of long-term debt, the exercise of

investor warrants, and to a lesser degree from grants and research contracts as well as the licensing of our intellectual property to third

parties. In January 2014, we received approximately $20 million of gross proceeds from the sale or our securities pursuant to a registered

direct offering and in October 2014, we raised approximately $4 million of net proceeds in our debt amendment transaction.

We will require additional capital to conduct research and development, establish and conduct clinical and pre-clinical trials, enter into

commercial-scale manufacturing arrangements and to provide for marketing and distribution of our products. We cannot assure you that

we will be able to secure such additional financing or that the expected income will materialize. Several factors will affect our ability to

raise additional funding, including, but not limited to market conditions, interest rates and, more specifically, our progress in our

exploratory, preclinical and future clinical development programs.

Cash Flows - 2014 compared to 2013

Year Ended December 31, Increase (Decrease)

2014 2013 $ %

Cash and cash equivalents $ 12,518,980 $ 16,846,052 $ (4,327,072 ) -26 %

Short term investments 15,007,478 - 15,007,478 - %

Total cash and short term

investments $ 27,526,458 $ 16,846,052 $ 10,680,406 63 %

Net cash used in operating

activities $ (11,706,688 ) $ (10,591,617 ) $ (1,115,071 ) 11 %

Net cash used in investing

activities $ (15,563,826 ) $ (537,050 ) $ (15,026,776 ) 2798 %

Net cash provided by financing

activities $ 22,944,425 $ 20,524,702 $ 2,419,723 12 %

The increase in our cash and short term investments was primarily due to our raising approximately $19.5 million, net through the sale

of our common stock and warrants and $4.2 million, net in our debt amendment transaction partially offset by our cash used in operations.

Net Cash Used in Operating Activities

The increase in cash used in operating activities during 2014 as compared to 2013 was primarily the result of a $2,797,000 increase in

our net loss partially offset by changes in our operating assets and liabilities.

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Net Cash Used in Investing Activities

The increase in our use of cash in investing activities during 2014 as compared to 2013 was primarily due to approximately $15,007,000

of purchases, net of maturities of short term investments using the proceeds from our January 2014 registered direct offering.

Net Cash Provided by Financing Activities

In 2014 we raised approximately $19,468,000, net through the sale of our common stock and warrants, $4,213,000 from our debt

amendment transaction and $1,795,000 from exercises of stock purchase warrants. These were partially offset by $1,929,000 of principal

payments on our long-term debt and the $426,000 payment of taxes related to stock option exercises.

In 2013 we raised approximately $7,048,000, net through the sale of our common stock and warrants, $7,551,000 from the issuance of

long-term debt and $6,108,000 from exercises of stock purchase warrants.

Future Liquidity and Needs

We have incurred significant operating losses and negative cash flows since inception. We have not achieved profitability and may not

be able to realize sufficient revenue to achieve or sustain profitability in the future. We do not expect to be profitable in the next several

years, but rather expect to incur additional operating losses. We have limited liquidity and capital resources and must obtain significant

additional capital resources in order to sustain our product development efforts, for acquisition of technologies and intellectual property

rights, for preclinical and clinical testing of our anticipated products, pursuit of regulatory approvals, acquisition of capital equipment,

laboratory and office facilities, establishment of production capabilities, for general and administrative expenses and other working

capital requirements. We rely on cash balances and the proceeds from the offering of our securities, exercise of outstanding warrants

and grants to fund our operations.

We intend to pursue opportunities to obtain additional financing in the future through the sale of our securities and additional research

grants. We currently have two shelf registration statements that are effective. On June 19, 2014, our shelf registration statement

registering the sale of up to $100 million of our securities was declared effective by the SEC. To date, we have not sold any securities

under this shelf registration statement. On September 13, 2013, our shelf registration statement (Registration No. 333-190936)

registering the sale of up to $50 million of our securities was declared effective by the SEC. To date, through February 28, 2014 we

have sold or reserved for sale upon the exercise of outstanding warrants approximately $47.2 million of securities under this shelf

registration statement. Additionally, securities sold pursuant to our At the Market Offering Agreement (see below) are being sold

pursuant to this registration statement and accordingly, we have reserved the balance of approximately $2.8 million of securities pursuant

thereto. We anticipate conducting financing in the future based on our shelf registration statement when and if financing opportunities

arise.

In October 2013, we entered into an At the Market Offering Agreement with T.R. Winston & Company as our sales agent pursuant to

which we can sell up to $25 million of our common stock. The At the Market Offering Agreement was entered into pursuant to a

takedown from our shelf registration statement declared effective on September 13, 2013 (Registration No. 333-190936). To date

through February 28, 2015 we have sold 1,931,329 shares under such agreement at an average price per share of $3.07 resulting in gross

proceeds of approximately $5,938,000 and net proceeds of approximately $5,707,000. Future sales under our agreement are limited to

approximately $2.8 million which is the amount available under our shelf registration of which the At the Market Offering Agreement

is part of.

The source, timing and availability of any future financing will depend principally upon market conditions, interest rates and, more

specifically, our progress in our exploratory, preclinical and future clinical development programs. Funding may not be available when

needed, at all, or on terms acceptable to us. Lack of necessary funds may require us, among other things, to delay, scale back or eliminate

some or all of our research and product development programs, planned clinical trials, and/or our capital expenditures or to license our

potential products or technologies to third parties.

Contractual Obligations

As of December 31, 2014, our contractual obligations were as follows:

Contractual Obligations

Less than 1

year 1 - 3 Years 3 - 5 Years More than 5 Years Total

Operating facility leases $ 190,324 $ - $ - $ - $ 190,324

Long-term debt 1,154,151 4,914,687 3,420,420 - 9,489,258

Total contractual obligations $ 1,344,475 $ 4,914,687 $ 3,420,420 $ - $ 9,679,582

Off-balance Sheet Arrangements

None.

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Neuralstem, Inc.

Consolidated Balance Sheets

December 31,

2014 2013

ASSETS

CURRENT ASSETS

Cash and cash equivalents $ 12,518,980 $ 16,846,052

Short term investments 15,007,478 -

Trade and other receivables 225,524 10,000

Deferred financing fees, current portion 135,694 507,334

Prepaid expenses 274,106 255,733

Total current assets 28,161,782 17,619,119

Property and equipment, net 301,265 230,971

Patents, net 1,233,172 1,137,701

Deferred financing fees, net of current portion 89,143 360,848

Other assets 58,713 64,897

Total assets $ 29,844,075 $ 19,413,536

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable and accrued expenses $ 2,504,978 $ 1,196,190

Accrued bonuses 646,960 465,868

Current portion of long-term debt, net of discount 730,012 2,763,121

Derivative instruments - 1,417,527

Other current liabilities 126,745 93,426

Total current liabilities 4,008,695 5,936,132

Long-term debt, net of discount and current portion 8,056,470 4,934,210

Other long term liabilities 59,574 124,995

Total liabilities 12,124,739 10,995,337

Commitments and contingencies (Note 10)

STOCKHOLDERS' EQUITY

Preferred stock, 7,000,000 shares authorized, zero shares issued and outstanding - -

Common stock, $0.01 par value; 300 million shares authorized, 87,789,679 and

77,886,031 shares issued and outstanding in 2014 and 2013, respectively 877,897 778,860

Additional paid-in capital 167,890,220 136,058,135

Accumulated other comprehensive income 6,000 7,241

Accumulated deficit (151,054,781 ) (128,426,037 )

Total stockholders' equity 17,719,336 8,418,199

Total liabilities and stockholders' equity $ 29,844,075 $ 19,413,536

See accompanying notes to consolidated financial statements.

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Neuralstem, Inc.

Consolidated Statements of Operations and Comprehensive Loss

Year Ended December 31,

2014 2013 2012

Revenues $ 18,833 $ 110,000 $ 407,708

Operating expenses:

Research and development costs 8,134,753 7,134,301 6,105,984

General and administrative expenses 8,971,299 5,254,915 4,247,037

Depreciation and amortization 348,630 244,725 211,143

Total operating expenses 17,454,682 12,633,941 10,564,164

Operating loss (17,435,849 ) (12,523,941 ) (10,156,456 )

Other income (expense):

Interest income 67,651 68,000 34,154

Interest expense (1,620,776 ) (1,394,274 ) (2,699 )

Warrant modification expense (3,109,850 ) (5,017,156 ) -

Loss from change in fair value of derivative instruments (334,133 ) (965,329 ) -

Loss on debt extinguishment (445,787 ) - -

Litigation settlement 250,000 838 3,484

Total other income (expense) (5,192,895 ) (7,307,921 ) 34,939

Net loss $ (22,628,744 ) $ (19,831,862 ) $ (10,121,517 )

Net loss per share - basic and diluted $ (0.26 ) $ (0.27 ) $ (0.17 )

Weighted average common shares outstanding - basic and diluted 87,086,345 72,279,210 58,153,929

Comprehensive loss:

Net loss $ (22,628,744 ) $ (19,831,862 ) $ (10,121,517 )

Foreign currency translation adjustment (1,241 ) 7,241 -

Comprehensive loss $ (22,629,985 ) $ (19,824,621 ) $ (10,121,517 )

See accompanying notes to consolidated financial statements.

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NEURALSTEM, INC.

[SELECTED] NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 Organization and Business

Neuralstem, Inc. and its subsidiary are referred to as "Neuralstem," the "Company," "us," or "we" throughout this report. Beginning in 2013, our investment in, and the operations of, our wholly-owned and controlled subsidiary located in China are consolidated in our consolidated financial statements; previously, all investments in China were expensed as incurred. The impacts of this change were not material to any period presented.

Neuralstem is a biopharmaceutical company that is utilizing its proprietary human neural stem cell technology to create a comprehensive platform for the treatment of central nervous system diseases. The Company will commercialize this technology as a tool for use in the next generation of small-molecule drug discovery and to create cell therapy biotherapeutics to treat central nervous system diseases. The Company was founded in 1997 and currently has laboratory and office space in Germantown, Maryland and laboratory facilities in San Diego, California and in the People's Republic of China.

Inherent in the Company's business are various risks and uncertainties, including its limited operating history, the fact that Neuralstem's technologies are new and may not allow the Company or its customers to develop commercial products, regulatory requirements associated with drug development efforts and the intense competition in the genomics industry. The Company's success depends, in part, upon successfully raising additional capital, prospective product development efforts, the acceptance of the Company's proposed products by the marketplace, and approval of the Company's proposed products by various U.S. and foreign governmental agencies.

Note 6 Property and Equipment

The major classes of property and equipment consist of the following at December 31:

2014

2013

Furniture and fixtures $ 22,603 $ 21,036 Computers and office equipment 100,105 58,741 Lab equipment 661,789 497,328 784,497 577,105 Less accumulated depreciation (483,232 ) (346,134 ) Property and equipment, net $ 301,265 $ 230,971

The above includes approximately $77,000 of equipment located at our research facility in China. Property and equipment are recorded at cost and are depreciated using the straight-line method over the estimated useful lives of the respective assets. Depreciation expense for the years ended December 31, 2014, 2013 and 2012 was approximately $137,000, $126,000 and $101,000, respectively.

Note 7 Intangible Assets

The Company holds patents related to its stem cell and small molecule technologies. Patent costs are capitalized and are being amortized over the life of the patents. The weighted average remaining unamortized life of issued patents was approximately 9.8, years at December 31, 2014. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell. During the years ended December 31, 2014, 2013 and 2012, no significant impairment losses were recognized. The Company's intangible assets and accumulated amortization consisted of the following at December 31, 2014 and 2013:

2014

2013

Gross

Accumulated

Amortization

Net

Gross

Accumulated

Amortization

Net

Patent asset $ 1,822,037 $ (588,865 ) $ 1,233,172 $ 1,539,349 $ (401,648 ) $ 1,137,701

Amortization expense for the years ended December 31, 2014, 2013 and 2012 was approximately $211,000, $119,000 and $110,000, respectively.

The expected average future annual amortization expense over the next five years is approximately $139,000 based on current balances of our intangible assets.