The matters addressed in this Item 2 that are not historical information
constitute "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, including statements about any of the following: any projections of
earnings, revenue, cash, effective tax rate, use of net operating losses, or any
other financial items; the plans, strategies and objectives of management for
future operations or prospects for achieving such plans, and any statements of
assumptions underlying any of the foregoing. Any statements contained herein
that are not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the foregoing, the words "believes," "anticipates,"
"plans," "expects," "seeks," "estimates," and similar expressions are intended
to identify forward-looking statements. While AgeX may elect to update
forward-looking statements in the future, it specifically disclaims any
obligation to do so, even if the AgeX estimates change and readers should not
rely on those forward-looking statements as representing AgeX views as of any
date subsequent to the date of the filing of this Quarterly Report. Although we
believe that the expectations reflected in these forward-looking statements are
reasonable, such statements are inherently subject to risks and AgeX can give no
assurances that its expectations will prove to be correct. Actual results could
differ materially from those described in this report because of numerous
factors, many of which are beyond the control of AgeX. A number of important
factors could cause the results of the company to differ materially from those
indicated by such forward-looking statements, including those detailed under the
heading "Risk Factors" in this Form 10-Q, our Form 10-K for the year ended
December 31, 2020, and our other reports filed with the SEC from time to time.



The following discussion should be read in conjunction with AgeX's condensed
consolidated interim financial statements and the related notes provided under
"Item 1- Financial Statements" above.

Critical Accounting Policies





This Management's Discussion and Analysis of Financial Condition and Results of
Operations discusses and analyzes data in our unaudited condensed consolidated
interim financial statements, which we have prepared in accordance with U.S.
generally accepted accounting principles. Preparation of the financial
statements requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenue and expenses, and related
disclosure of contingent assets and liabilities. Management bases its estimates
on historical experience and on various other assumptions that it believes to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Senior management has discussed the
development, selection and disclosure of these estimates with the Audit
Committee of our Board of Directors. Actual conditions may differ from our
assumptions and actual results may differ from our estimates.



An accounting policy is deemed critical if it requires an accounting estimate to
be made based on assumptions about matters that are highly uncertain at the time
the estimate is made, if different estimates reasonably could have been used, or
if changes in the estimate are reasonably likely to occur, that could materially
impact the financial statements. Management believes that there have been no
significant changes during the six months ended June 30, 2021 to the items that
we disclosed as our critical accounting policies and estimates in Management's
Discussion and Analysis of Financial Condition and Results of Operations in our
Annual Report on Form 10-K for the year ended December 31, 2020, except as
disclosed in Note 2 of our condensed consolidated interim financial statements
included elsewhere in this Report.



Impact of COVID-19 pandemic



The recent global outbreak of the coronavirus COVID-19, and the various attempts
throughout the world to contain it, have created significant volatility,
uncertainty and disruption. In response to government directives and guidelines,
health care advisories and employee and other concerns, we have altered certain
aspects of our operations. A number of our employees have had to work remotely
from home and those on site have had to follow our social distance guidelines,
which could impact their productivity. COVID-19 could also disrupt our
operations due to absenteeism by infected or ill members of management or other
employees, or absenteeism by members of management and other employees who
cannot effectively work remotely but who elect not to come to work due to the
illness affecting others in our office or laboratory facilities, or due to
quarantines. COVID-19 illness could also impact members of our Board of
Directors resulting in absenteeism from meetings of the directors or committees
of directors, and making it more difficult to convene the quorums of the full
Board of Directors or its committees needed to conduct meetings for the
management of our affairs.



We have a Sponsored Research Agreement with the University of California at
Irvine (UCI) for the use of our PureStem technology to derive neural stem cells,
with the goal of developing cellular therapies to treat neurological disorders
and diseases. The pace of work on the research project was slowed by COVID-19
safety procedures, but we expect the initial work to be concluded during 2022.



The full extent to which the COVID-19 pandemic and the various responses might
impact our business, operations and financial results will depend on numerous
evolving factors that we will not be able to accurately predict, including: the
duration and scope of the pandemic; governmental, business and individuals'
actions that have been and continue to be taken in response to the pandemic; and
the availability and cost to access COVID-19 tests, vaccines and therapies. Due
to the uncertain scope and duration of the COVID-19 pandemic and uncertain
timing of any recovery or normalization, we are currently unable to estimate the
resulting impacts on our operations and financial results. We will continue to
actively monitor the issues raised by the COVID-19 pandemic and may take further
actions that alter our operations, as may be required by federal, state, local
or foreign authorities, or that we determine are in the best interests of our
employees, any customers and stockholders. It is not clear what the potential
effects any such alterations or modifications may have on our business,
including the effects on our financial results.



22







Results of Operations



The following comparisons exclude the impact of the operations of LifeMap
Sciences which have been presented in our consolidated financial results as
discontinued operations (see Note 3 to our condensed consolidated interim
financial statements included in this Report and "Discontinued Operations" in
this "Management's Discussion and Analysis of Financial Condition and Results of
Operations" for a discussion of discontinued operations).

Comparison of Three and Six Months Ended June 30, 2021 and 2020





Revenues and Cost of Sales

The amounts in the table below show our consolidated revenues by source and cost of sales for the periods presented (unaudited and in thousands).





                   Three Months Ended
                        June 30,              $ Increase/       % Increase/
                   2021           2020        (Decrease)        (Decrease)
Grant revenues   $      11       $    36     $         (25 )           (69.4 )%
Other revenues          26             9                17                 * %
Total revenues          37            45                (8 )           (17.8 )%
Cost of sales          (13 )          (3 )              10                 * %
Gross profit     $      24       $    42     $         (18 )           (42.9 )%




                   Six Months Ended
                       June 30,             $ Increase/       % Increase/
                   2021          2020       (Decrease)        (Decrease)
Grant revenues   $     57       $  122     $         (65 )           (53.3 )%
Other revenues         36           12                24                 * %
Total revenues         93          134               (41 )           (30.6 )%
Cost of sales         (16 )         (4 )              12                 * %
Gross profit     $     77       $  130     $         (53 )           (40.8 )%

* Percentage is not meaningful.


During the three months ended June 30, 2021 and 2020, we recognized income of
approximately $11,000 and $36,000, respectively, and for the six months ended
June 30, 2021 and 2020, we recognized income of approximately $57,000 and
$122,000, respectively, from grants awarded by the NIH. We expended the full
amount available under one of the NIH grants as of March 31, 2020.



Operating Expenses



We have made certain adjustments to our operating plans and budgets to reduce
our cash expenditures in order to extend the period over which we can continue
our operations with our available cash resources. These adjustments entailed a
staff force reduction, primarily research and development personnel effective
May 1, 2020. As a result of those staff reductions we paid approximately
$105,000 in accrued payroll and unused paid time off and other benefits, and we
recognized approximately $194,800 in restructuring charges in connection with
the reduction in staffing, consisting of contractual severance.

The following table shows our consolidated operating expenses for the periods presented (unaudited and in thousands).





                                          Three Months Ended
                                               June 30,                $ Increase/       % Increase/
                                         2021             2020         (Decrease)        (Decrease)

Research and development expenses     $       481      $      935     $        (454 )           (48.6 )%
General and administrative expenses         1,748           1,475          

    273              18.5 %




                                           Six Months Ended
                                               June 30,               $ Increase/       % Increase/
                                         2021            2020

(Decrease) (Decrease) Research and development expenses $ 805 $ 2,156 $ (1,351 )

           (62.7 )%
General and administrative expenses         3,770          3,350           

   420              12.5 %

Research and development expenses





Research and development expenses decreased by approximately $0.4 million to
$0.5 million during the three months ended June 30, 2021 from $0.9 million
during the same period in 2020. The net decrease was primarily attributable to
the scaled down research and development related activities following the layoff
of 11 employees in May 2020 and shutdown of our lab facilities as of December
31, 2020 following the expiration of our lease agreement. The net decrease in
research and development expense is primarily attributable to decreases of: $0.4
million in salaries and related costs including non-cash stock-based
compensation; $0.1 million in laboratory facilities and equipment related
expenses and maintenance including laboratory supplies; and $0.1 million in
depreciation and amortization of laboratory equipment and improvements. These
decreases were offset to some extent by increase of $0.2 million in outside
research and services and related expenses allocable to research and development
expenses.



23







Research and development expenses decreased by approximately $1.4 million to
$0.8 million during the six months ended June 30, 2021 from $2.2 million during
the same period in 2020. The net decrease was primarily attributable to
decreases of: $0.8 million in salaries and related costs including non-cash
stock-based compensation; $0.5 million in laboratory facilities and equipment
related expenses and maintenance including laboratory supplies; and $0.2 million
in depreciation and amortization of laboratory equipment and improvements. These
decreases were offset to some extent by increase of $0.1 million in outside
research and services and related expenses allocable to research and development
expenses.

General and administrative expenses


General and administrative expenses for the three and six months ended June 30,
2021 compared to the same periods in 2020 have increased due to certain
non-recurring projects during 2021 offset by a decreases in facilities rent and
overhead expenses following the expiration of our office and laboratory lease
agreement on December 31, 2020. Effective January 1, 2021, we relocated our
principal offices under a one year leased space at a base monthly rent of $947
that includes office space, office furniture rental, janitorial services,
utilities and internet service.



General and administrative expenses for the three months ended June 30, 2021
increased by $0.2 million to $1.7 million as compared to $1.5 million during the
same period in 2020. The net increase is primarily attributable to increases of:
$0.1 million in patent and license maintenance related fees including annual
minimum royalties due under license agreements; $0.1 million in consulting
expenses; $0.1 million in non-cash stock-based compensation to our independent
directors; and $0.1 million in insurance expenses. These increases were offset
to some extent by decreases of: $0.1 million in personnel related expenses; and
$0.1 million in noncash stock-based compensation expense.



General and administrative expenses for the six months ended June 30, 2021
increased by $0.4 million to $3.8 million as compared to $3.4 million during the
same period in 2020. The net increase is primarily attributable to increases of:
$0.3 million in professional fees for legal services; $0.2 million in consulting
expenses; $0.2 million in patent and license maintenance related fees including
annual minimum royalties due under license agreement; $0.1 million in insurance
expenses; and $0.1 million in non-cash stock-based compensation to our
independent directors. These increases were offset to some extent by decreases
of: $0.2 million in personnel related expenses, including non-cash stock-based
compensation expense; $0.1 million in professional fees for accounting services;
$0.1 million in travel and lodging expenses, $0.1 million in general office and
facilities related expenses including telephone and online fees.



General and administrative expenses include employee and director compensation
allocated to general and administrative expenses, consulting fees other than
those paid for science-related consulting, facilities and equipment rent and
maintenance related expenses, insurance costs allocated to general and
administrative expenses, stock exchange-related costs, depreciation expense,
marketing costs, legal and accounting costs, and other miscellaneous expenses
which are allocated to general and administrative expense.



Other income (expense), net

Other income, net in 2021 consists primarily of approximately $437,000 gain recognized upon forgiveness of our PPP Loan, including accrued interest, on February 19, 2021, offset by amortization of deferred debt cost to interest expense. Other expense, net in 2020 consists primarily of amortization of deferred debt cost to interest expense.





Income taxes



Beginning in 2018, the 2017 Tax Act subjects a U.S. stockholder to tax on Global
Intangible Low Tax Income "GILTI" earned by certain foreign subsidiaries. In
general, GILTI is the excess of a U.S. shareholder's total net foreign income
over a deemed return on tangible assets. The provision further allows a
deduction of 50% of GILTI, however this deduction is limited to the company's
pre-GILTI U.S. income. For the year ended December 31, 2020, AgeX's foreign
entity operated at a book loss, however, for GILTI, US tax laws are applied to
the foreign activity, as a result there was an immaterial inclusion amount. For
the three and six months ended June 30, 2021, AgeX's foreign entity operated at
a loss, therefore no GILTI was included in income for the first six months of
2021. Current interpretations under ASC 740 state that an entity can make an
accounting policy election to either recognize deferred taxes for temporary
basis differences expected to reverse as GILTI in future years or to provide for
the tax expense related to GILTI in the year the tax is incurred as a period
expense. We have elected to account for GILTI as a current period expense when
incurred.



For the three and six months ended June 30, 2021, AgeX experienced a domestic
loss from continuing operations and a foreign loss; therefore, no income tax
provision was recorded for the six months ended June 30, 2021.



Due to losses incurred for all periods presented, we did not record a domestic
provision or benefit for income taxes. A valuation allowance will be provided
when it is more likely than not that some portion of the deferred tax assets
will not be realized. We established a full valuation allowance for all domestic
deferred tax assets for the periods presented due to the uncertainty of
realizing future tax benefits from our net operating loss carryforwards and
other deferred tax assets.

Liquidity and Capital Resources

Operating Losses and Going Concern Considerations





We have incurred operating losses and negative cash flows since inception and
had an accumulated deficit of $101.6 million as of June 30, 2021. We expect to
continue to incur operating losses and negative cash flows.



24







We have made certain adjustments to our operating plans and budgets to reduce
our projected cash expenditures in order to extend the period over which we can
continue our operations with our available cash resources. These adjustments
entailed down-sizing of our leased office space effective January 1, 2021, a
staff force reduction during 2020, primarily impacting research and development
personnel, and the elimination of our leased laboratory facility, that will
require the deferral of certain work on the development of our product
candidates and technologies. We incurred certain expenses arising from the staff
reduction, including severance expenses as disclosed in Note 1 to our condensed
consolidated financial statements included elsewhere in this Report. However,
notwithstanding those adjustments, based on our most recent projected cash
flows, and not taking account of the scheduled maturity of loan balances under
the 2019 Loan Agreement during February 2022, our cash and cash equivalents and
potential additional loans that may become available to us from Juvenescence
under the 2019 Loan Agreement and the 2020 Loan Agreement, and the proceeds of
up to $12.1 million we may receive from the sale of additional shares of our
common stock in "at-the-market" transactions through a Sales Agreement with
Chardan Capital, LLC ("Chardan") as a sales agent, would not be sufficient to
satisfy our anticipated operating and other funding requirements for the next
twelve months from the date of filing of this Report. These factors raise
substantial doubt regarding our ability to continue as a going concern. See
Notes 5 and 11 to our consolidated financial statements included elsewhere in
this Report for additional information about our loan agreements with
Juvenescence. We will need to raise additional capital in the near term to be
able to meet our operating expenses.



As of June 30, 2021, we had borrowed a total of $11.0 million under the 2019
Loan Agreement and 2020 Loan Agreement, and we borrowed an additional $1.0
million under the 2019 Loan Agreement during July 2021. All additional loans to
us from the $2.0 million in total of credit amounts that remained available as
of July 31, 2021 under those loan agreements are subject to Juvenescence's
discretion and, accordingly, there is no assurance that we will be able to
borrow additional funds from Juvenescence when we need funding for our
operations. The 2020 Loan Agreement prohibits us and our subsidiaries ReCyte
Therapeutics and Reverse Bio from borrowing funds from other lenders or engaging
in certain other transactions without the consent of Juvenescence unless we
repay all amounts owed to Juvenescence under the 2019 Loan Agreement and 2020
Loan Agreement. Under the 2020 Loan Agreement, Juvenescence may require AgeX and
the Guarantor Subsidiaries to grant Juvenescence a security interest and lien on
substantially all of our respective assets. These factors and the impact of
potential dilution through the issuance of shares of our common stock upon the
conversion of the Juvenescence loans into AgeX common stock and the exercise of
warrants issued to Juvenescence under the 2019 Loan Agreement and 2020 Loan
Agreement could make AgeX less attractive to new equity investors and could
impair our ability to finance our operations or the operations of our
subsidiaries unless Juvenescence agrees, in its discretion, to lend us funds.



During March 2021, in connection with the disposition of our interest in LifeMap
Sciences through a cash-out merger, we received $250,000 from LifeMap Sciences
as a repayment of a portion of inter-company indebtedness from us. We received
gross proceeds of approximately $466,400 from the disposition of our interest in
LifeMap Sciences through the cash-out merger.

We may sell up to $12.1 million of additional shares of common shares in "at-the-market" transactions through a Sales Agreement with Chardan. We do not have any other committed sources of funds for additional financing.





The availability of financing for AgeX may be adversely impacted by the COVID-19
pandemic which could depress national and international economies and disrupt
capital markets, supply chains, and aspects of our operations. The extent to
which the ongoing COVID-19 pandemic will ultimately impact our business, results
of operations, financial condition, or cash flows is highly uncertain and
difficult to predict because it will depend on many factors that are outside our
control. The unavailability or inadequacy of financing to meet future capital
needs could force us to modify, curtail, delay, or suspend some or all aspects
of planned operations.




To the extent that we are able to raise additional capital through the sale of
AgeX equity or convertible debt securities or the sale of equity or convertible
debt securities of any of our subsidiaries, the ownership interest of our
present stockholders will be diluted, and the terms of any securities we or our
subsidiaries issue may include liquidation or other preferences that adversely
affect the rights of our common stockholders. Additional debt financing, if
available, may involve agreements that include covenants limiting or restricting
our ability to take specific actions, such as incurring additional debt, making
capital expenditures or declaring dividends, and may involve the issuance of
convertible debt or stock purchase warrants that would dilute the equity
interests of our stockholders. If we raise funds through additional strategic
partnerships or licensing arrangements with third parties, we may have to
relinquish valuable rights to our technologies, future revenue streams, research
programs or product candidates or to grant licenses on terms that may not be
favorable to us.

Cash used in operating activities





During the six months ended June 30, 2021, our total research and development
expenses were $0.8 million and our general and administrative expenditures were
$3.8 million. Net loss attributable to us for the six months ended June 30, 2021
amounted to $4.5 million. Net cash used in operating activities from continuing
operations during this period amounted to $4.2 million. The difference between
the net loss attributable to us and net cash used in operating activities from
continuing operations during the six months ended June 30, 2021 was primarily
attributable to the following: $0.4 million gain on extinguishment of debt (PPP
Loan) in February 2021; $0.6 million payment of financed insurance premium
liability; and $0.1 million gain on the LifeMap Deconsolidation (see Note 3 to
our condensed consolidated interim financial statements included in this
Report). These amounts were offset to some extent by $0.6 million in
amortization of intangible assets and deferred debt issuance costs, $0.5 million
in stock-based compensation expense and $0.3 million net change in working
capital from operating activities.



Net cash used in operating activities from discontinued operations for the six
months ended June 30, 2021 amounted to $0.1 million. See Note 3 to our
consolidated financial statements included in this Quarterly Report on Form 10-Q
for additional information regarding the disposition and deconsolidation of
LifeMap Sciences.

Cash provided by (used in) investing activities

During the six months ended June 30, 2021, net cash provided by investing activities from continuing operations amounted to $466,000, which AgeX received in cash as its pro rata share of the Merger Consideration in the merger.





25







Net cash used in investing activities from discontinued operations of $50,000
results from the deconsolidation of LifeMap Sciences cash and cash equivalents.
See Note 3 to our consolidated financial statements included in this Report.

Cash provided by financing activities





During the six months ended June 30, 2021, net cash provided by financing
activities from continuing operations amounted to $4.2 million, which was
attributable to the $2.0 million drawn against the 2020 Loan Agreement entered
into with Juvenescence in March 2020 and $1.5 million drawn against the 2019
Loan Agreement as amended in February 2021, approximately $496,000 gross
proceeds raised from the sale of AgeX common shares through at-the-market
offerings and the collection of $250,000 partial payment of LifeMap Sciences'
indebtedness to us as a pre-requisite to the disposition of our interest in
LifeMap Sciences on March 15, 2021.

Net cash used in financing activities from discontinued operations of $250,000 relates to the partial payment of LifeMap Sciences' indebtedness to us as aforementioned. See Note 3 to our condensed consolidated interim financial statements included in this Report.

Off-Balance Sheet Arrangements

As of June 30, 2021 and December 31, 2020, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

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