UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

Washington,
D.C. 20549



FORM
10-K



☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF
THE SECURITIES EXCHANGE ACT OF 1934



For
the fiscal year ended December 31, 2019



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 1-38519



AgeX
Therapeutics, Inc.

(Exact
name of registrant as specified in its charter)



|Delaware                                                                               |  | 82-1436829                                                  
|-------------------------------------------------------------------------------------- |  | ------------------------------------------------------------
|(State
        or other jurisdiction of
        incorporation
        or organization) |  | (I.R.S.
        Employer
        Identification
        No.)



965
Atlantic Avenue, Suite 101

Alameda,
California 94501

(Address
of principal executive offices) (Zip Code)



Registrant’s
telephone number, including area code (510) 871-4190



Securities
registered pursuant to Section 12(b) of the Act:



|Title
    of each class                       |  | Trading
    Symbol |  | Name
    of exchange on which registered
|--------------------------------------------- |  | ------------------ |  | ----------------------------------------
|Common
    Stock, par value $0.0001 per share |  | AGE                |  | NYSE
    American                       



Securities
registered pursuant to Section 12(g) of the Act:

None



Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No
☒



Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
No ☒



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 ☒ No ☐



Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit such files). Yes ☒ No ☐



Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



|Large
    accelerated filer ☐ | Accelerated
    filer ☐        
|----------------------------- | -------------------------------
|Non-accelerated
    filer ☒   | Smaller
    reporting company ☒
|                              | Emerging
    growth company ☒  







If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided to Section 13(a) of the Exchange Act. ☒



Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒



The
approximate aggregate market value of shares of voting common stock held by non-affiliates computed by reference to the price
at which shares of common stock were last sold as of June 30, 2019 was $56.4 million. Shares held by each executive officer and
director and by each person who beneficially owns more than 5% of the outstanding common stock have been excluded in that such
persons may under certain circumstances be deemed to be affiliates. This determination of affiliate status is not necessarily
a conclusive determination for other purposes.



As
of March 16, 2020, there were outstanding 37,656,415 shares of common stock, par value $0.0001 per share.



DOCUMENTS
INCORPORATED BY REFERENCE




















AgeX
Therapeutics, Inc.



Table
of Contents



|           |              |                                                                                                               | Page
    Number
|---------- | ------------ | ------------------------------------------------------------------------------------------------------------- | ---------------
|Part I     |              |                                                                                                               |                
|           |              |                                                                                                               |                
|           | Item
    1.  | Business                                                                                                      | 4              
|           |              |                                                                                                               |                
|           | Item
    1A. | Risk Factors                                                                                                  | 27             
|           |              |                                                                                                               |                
|           | Item
    1B. | Unresolved Staff Comments                                                                                     | 58             
|           |              |                                                                                                               |                
|           | Item
    2.  | Properties                                                                                                    | 58             
|           |              |                                                                                                               |                
|           | Item
    3.  | Legal Proceedings                                                                                             | 58             
|           |              |                                                                                                               |                
|           | Item
    4.  | Mine Safety Disclosures                                                                                       | 58             
|           |              |                                                                                                               |                
|Part II    |              |                                                                                                               |                
|           |              |                                                                                                               |                
|           | Item
    5.  | Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities | 59             
|           |              |                                                                                                               |                
|           | Item
    6.  | Selected Financial Data                                                                                       | 59             
|           |              |                                                                                                               |                
|           | Item
    7.  | Management’s Discussion and Analysis of Financial Condition and Results of Operations                         | 59             
|           |              |                                                                                                               |                
|           | Item
    7A. | Quantitative and Qualitative Disclosures about Market Risk                                                    | 70             
|           |              |                                                                                                               |                
|           | Item
    8.  | Financial Statements and Supplementary Data                                                                   | 72             
|           |              |                                                                                                               |                
|           | Item
    9.  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                          | 99             
|           |              |                                                                                                               |                
|           | Item
    9A. | Controls and Procedures                                                                                       | 99             
|           |              |                                                                                                               |                
|           | Item
    9B. | Other Information                                                                                             | 99             
|           |              |                                                                                                               |                
|Part III   |              |                                                                                                               |                
|           |              |                                                                                                               |                
|           | Item
    10. | Directors, Executive Officers, and Corporate Governance                                                       | 100            
|           |              |                                                                                                               |                
|           | Item
    11. | Executive Compensation                                                                                        | 103            
|           |              |                                                                                                               |                
|           | Item
    12. | Security Ownership of Certain Beneficial Owners and Management, and Related Stockholder Matters               | 111            
|           |              |                                                                                                               |                
|           | Item
    13. | Certain Relationships and Related Transactions, and Director Independence                                     | 113            
|           |              |                                                                                                               |                
|           | Item
    14. | Principal Accounting Fees and Services                                                                        | 118            
|           |              |                                                                                                               |                
|Part IV    |              |                                                                                                               |                
|           |              |                                                                                                               |                
|           | Item
    15. | Exhibits, Financial Statement Schedules                                                                       | 119            
|           |              |                                                                                                               |                
|           | Item
    16. | Summary                                                                                                       | 121            
|           |              |                                                                                                               |                
|Signatures |              | 122                                                                                                          



2









PART
I



Certain
statements contained herein are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act
of 1995, including, but not limited to, statements pertaining to future financial and/or operating results, future growth in research,
technology, clinical development, and potential opportunities for AgeX, along with other statements about the future expectations,
beliefs, goals, plans, or prospects expressed by management constitute forward-looking statements. Any statements that are not
historical fact (including, but not limited to statements that contain words such as “will,” “believes,”
“plans,” “anticipates,” “expects,” “estimates”) should also be considered to be
forward-looking statements. Forward-looking statements involve risks and uncertainties, including, without limitation, risks inherent
in the development and/or commercialization of potential products, uncertainty in the results of clinical trials or regulatory
approvals, need and ability to obtain future capital, and maintenance of intellectual property rights. Actual results may differ
materially from the results anticipated in these forward-looking statements and as such should be evaluated together with the
many uncertainties that affect the businesses of AgeX, particularly those mentioned in the cautionary statements found in AgeX’s
filings with the Securities and Exchange Commission. AgeX disclaims any intent or obligation to update these forward-looking statements.



References
to “ AgeX,” “our” or “us” mean AgeX Therapeutics, Inc.



The
description or discussion, in this Form 10-K, of any contract or agreement is a summary only and is qualified in all respects
by reference to the full text of the applicable contract or agreement.





INDUSTRY
AND MARKET DATA



This
Annual Report (“Report”) on Form 10-K contains market data and industry forecasts that were obtained from industry
publications, third-party market research and publicly available information. These publications generally state that the information
contained therein has been obtained from sources believed to be reliable. While we believe that the information from these publications
is reliable, we have not independently verified such information.



This
Report also contains estimates and other statistical data made by independent parties and by us relating to market size and growth
and other data about our industry. We obtained the industry and market data in this Report from our own research as well as from
industry and general publications, surveys and studies conducted by third parties, some of which may not be publicly available.
Such data involves a number of assumptions and limitations and contains projections and estimates of the future performance of
the industries in which we operate that are subject to a high degree of uncertainty. We caution you not to give undue weight to
such projections, assumptions and estimates.



3







Item
1. Business



Overview
of Business



We
are a biotechnology company focused on the development and commercialization of novel therapeutics targeting human aging and degenerative
diseases. Our mission is to apply our comprehensive experience in fundamental biological processes of human aging to a broad range
of age-associated medical conditions. We believe that demand for therapeutics addressing such conditions is on the rise, commensurate
with the demographic shift of aging in the United States and many other industrialized countries.



Our
proprietary technology, based on telomerase-mediated cellular immortality and regenerative biology, allows us to utilize telomerase-expressing
regenerative pluripotent stem cell (“PSCs”) for the manufacture of cell-based therapies to regenerate tissues afflicted
with age-related chronic degenerative disease. We own or have licenses to a number of patents and patent applications used in
the generation of these product candidates, including intellectual property related to PSC-derived clonal embryonic progenitor
cell lines (PureStem® technology) and HyStem® delivery matrices. Our technology platform also includes
UniverCyteTM which uses the HLA-G gene to suppress rejection of transplanted cells and tissues to confer low immune observability
to cells. AgeX plans to use or license the use of this patented technology to produce genetically-modified master cell banks of
pluripotent stem cells that can then be differentiated into any young cell type of the human body that now express the immune
tolerogenic molecule.



Our
product candidates in the discovery stage include two cell-based therapies derived from telomerase-positive PSCs and one product
candidate derived from our proprietary induced Tissue Regeneration (iTRTM) technology. We are also sponsoring a research
program to derive neural stem cells from PSCs to treat degenerative diseases such as Huntington’s Disease. We will need
to conduct research and development work as part of our plan to develop these cell- and drug-based therapies, each targeting large
unmet needs in age-related medicine.



Additional
Information



AgeX
is incorporated in the State of Delaware. Our common shares trade on the NYSE American under the symbol “AGE.” Our
principal executive offices are located at 965 Atlantic Avenue, Suite 101, Alameda, CA 94501, and our phone number at that address
is (510) 871-4190. Our website address is www.agexinc.com. The information on, or that can be accessed through our website is
not part of this Report. We make available, free of charge through our website, our most recent annual report on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after
the reports are electronically filed with or furnished to the Securities and Exchange Commission (the “SEC”).



iTRTM,
and UniverCyteTM, are trademarks of AgeX Therapeutics, Inc. HyStem®and PureStem® are
registered trademarks of Lineage Cell Therapeutics, Inc. GeneCards®
is a registered trademark of Yeda Research and Development Co. Ltd.



Emerging
Growth Company



We
are an “emerging growth company” under the Jumpstart our Business Startups Act
of 2012 or theJOBS Act. As an emerging growth company, we may take advantage of specified reduced disclosure and other
requirements that are otherwise applicable, in general, to public companies that are not emerging growth companies. These provisions
include:



| | ● | reduced
    disclosure about our executive compensation arrangements;                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                           
| | ● | no
    non-binding stockholder advisory votes on executive compensation or golden parachute arrangements; and             
| |   |                                                                                                                           
| | ● | exemption
    from the auditor attestation requirement in the assessment of our internal control over financial reporting.



We
will remain an “emerging growth company” until the earliest of: (i) the last day of the fiscal year in which we have
total annual gross revenues of $1.07 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of
thedate of the first sale of our common equity
securities pursuant to an effective registration statement under the Securities Act of 1933, as
amended; (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt securities during the previous three
years; or (iv) the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act
of 1934, as amended.



The
JOBS Act permits an emerging growth company to take advantage of an extended transition period to comply with new or revised accounting
standards applicable to public companies. However, we have elected to comply with newly adopted or revised accounting standards
when they become applicable to public companies because our financial statements were previously consolidated with those of our
former parent company Lineage Cell Therapeutics, Inc.which is not an emerging growth
company under the JOBS Act and is therefore not permitted to delay the adoption of new or revised accounting standards that become
applicable to public companies. This election under the JOBS Act to not delay the adoption of new or revised accounting standards
is irrevocable.



4









Overview
of Our Opportunity in Age-Related Diseases



To
date, conventional pharmaceutical approaches to the chronic degenerative conditions associated with aging have provided little
benefit. Often the approaches offer merely relief from the symptoms of ageing and age-related disease, rather than targeting underlying
disease processes. We believe this is about to change through harnessing the power of new cellular and molecular technologies.
We aim to lead this coming revolution with our pioneering technologies to restore tissue and organ function. Our cell therapy
approach is focused on generating and delivering new cells to patients. Our iTR approach is focused on reversing the age of cells
already in the body, where our research team has recently converted the cells of a 114-year-old to young pluripotent stem cells
[J. Lee et al., Induced pluripotency and spontaneous reversal of cellular aging in supercentenarian donor cells, Biochemical and
Biophysical Research Communication, https://doi.org/10.1016/j.bbrc.2020.02.092].



Aging
is one of the most significant demographic trends of our time. As shown in Figure 1, the U.S. Census Bureau projects a sharp rise
in the number of Americans over 80 years of age, with an acceleration occurring between the years 2020 and 2030.









Figure
1. Projected increase in the numbers of the U.S. population over 80 years of age (U.S. Census Bureau)



This
demographic shift associated with 76 million aging baby boomers poses a significant challenge to our healthcare system and our
economy as a whole. The unsolved problem relates to the fact that chronic conditions account for about 80% of total health care
expenditures in the United States, with the elderly having a higher prevalence of chronic degenerative disease than the young.
Approximately 80% of older adults have one chronic disease, and 68% have two or more.



Our
technology platforms reflect over 25 years of research and development in cell immortality and regenerative medicine. It is designed
to address some of the largest unmet needs of an aging population by translating state-of-the-art laboratory science relating
to aging into meaningful therapeutic biologicals, drugs, and devices.



Overview
of Our Product Candidates



Our
product pipeline includes two cell-based and one drug-based therapeutic product candidates in development. It also includes currently-marketed
online database products and research products.



Our
lead cell-based therapeutic candidates in development are AGEX-BAT1 and AGEX-VASC1:



| | ● | AGEX-BAT1
    is our lead cell therapy product candidate in the discovery stage of development utilizing PSC-derived brown adipocytes for
    the treatment of certain age-related metabolic disorders such as Type II (adult-onset) diabetes.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                               
| | ● | AGEX-VASC1
    is a cell-based therapy in the discovery stage of development comprised of young regenerative vascular-forming cells. AGEX-VASC1
    may restore vascular support in aged ischemic tissues such as the ischemic heart.         



5









Our
lead drug-based therapeutic candidate in discovery is AGEX-iTR1547:



| | ● | AGEX-iTR1547
    is a drug-based formulation in the discovery stage of development intended to potentially restore regenerative potential in
    a wide array of aged tissues afflicted with degenerative disease using our proprietary iTR technology.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our
currently marketed research and database products include cGMP ES Cells (human embryonic stem or “hES”) cells produced
under current good manufacturing practices (or “cGMP”), PSC-derived cells for research, and our GeneCardsDatabase Suite:



| | ● | cGMP
    PSC lines and PSC-derived cells for research: Through our ESI BIO division, we market cGMP PSC lines as well as PSC-derived
    cells.                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                    
| | ● | GeneCardsDatabase Suite: Through our subsidiary LifeMap
    Sciences, Inc. (“LifeMap Sciences”), we currently market genomic interpretation algorithms and
    analysis tools for use by researchers at pharmaceutical and biotechnology companies and other institutions through paid subscriptions
    or on a fee-per-use basis.



Overview
of Our Technology Platforms



Our
four core technology platforms provide us with a strong foundation for successfully addressing many of the diseases of ageing
by focusing on broad therapeutic applicability and commercially scalable technologies:



1.
PureStem: AgeX’s allogeneic cell therapy platform, based on human embryonic progenitors, which are cells in state of
development between stem cells and adult cells, which we believe has the potential to solve several major challenges faced by
the cell therapy industry by generating cellular therapeutics which would:



| | ● | be
    commercialized as “off-the-shelf” products                                                             
| | - | --------------------------------------------------------------------------------------------------------------
| | ● | be
    pure and industrially scalable                                                                         
| | ● | have
    lower cost of goods per unit                                                                         
| | ● | be
    amenable to traditional pharma supply chain logistics                                                  
| | ● | have
    the potential for acceptable reimbursement prices, unlike the very expensive autologous products, and
| | ● | have
    higher clinical adoption form expected cost savings and more simplified processes.                   



In
addition, we believe PureStem cells, because they come from pluripotent cells, rather than other cells that have to be manipulated
to a pluripotent state, will have higher efficacy and safety than competitors’ cells, such as mesenchymal stem cells (MSCs),
which only survive transiently in the body and exert any short-term benefit by releasing paracrine factors. This mechanism of
action significantly limits their potential.



MSCs
neither engraft nor become specialized cells. On the other hand, cells derived from PureStem progenitors will be young, not prone
to the disadvantages associated with older cells, and are expected to become permanently engrafted in the body to deliver a true
regenerative outcome. To date, AgeX has isolated more than 200 cell types from PureStem.



2.
UniverCyteTM: AgeX’s pioneering technology to genetically modify allogeneic donor cells to become hypoimmunogenic/universal,
so they can potentially be transplanted into all patients in an off-the- shelf manner, without the normal need for human leukocyte
antigen (HLA)1 matching between donor and receipt or immunosuppression. UniverCyte utilizes a potent molecule called
HLA-G. Its only known role in nature is to prevent destruction of a semi-allogeneic fetus by the maternal immune system. Proof-of-concept
for UniverCyteTM has been established in both lab and mouse models. UniverCyte could potentially avoid immune system rejection
of transplanted cells, solving a major challenge facing the allogeneic cell therapy industry. In addition to utilizing UniverCyteTM
for its own future cell therapy products, AgeX may make UniverCyteTM available to other cell therapy companies through licensing
arrangements.



3.
HyStem®: Delivery technology to stably engraft cells or slowly release small molecules in the body for greater
safety and efficacy. The key advantages of HyStem® over competitors are: (1) higher cell retention, survival,
proliferation and engraftment; (2) biodegradability which can be fine-tuned; (3) non-immunogenicity; (4) immunosuppressive in
nature; (5) ease of usage; and (6) scalability.










1The histocompatibility complex gene group provides instructions for making a group of related proteins known as the human
leukocyte antigen (HLA) complex. The HLA complex helps the immune system distinguish the body’s own proteins from proteins made
by foreign invaders such as viruses and bacteria.



6









4.
Induced Tissue Regeneration (iTRTM): Utilizes small molecules to turn on regeneration of cells. Currently, humans
can regenerate blood cells, intestinal cells and skin cells, but this novel approach may trigger complete regeneration of cells,
and potentially organs and limbs. The premise behind iTR is that aging and in turn diseases of old age are because of two characteristics
of cells, replicative immortality and regenerative capacity, which are present in embryonic cells but which are lost at the embryonic
to fetal transition (EFT). With this loss, humans can no longer generate new cells or repair damaged cells to maintain a peak
physical condition. Prior to the EFT, injury heals by regeneration, not scarring. We discovered that cells begin expressing COX7A1
at the EFT, which may be a key inhibitor of cellular regeneration. We are working to elucidate the exact role of COX7A1 as well
as other genes involved in restricting cellular regeneration. The aim is to return an aged cell back to a youthful state, without
crossing over to pluripotency due to the risk of tumorgenicity. This would lead to cellular rejuvenation without dedifferentiation.



The
technology underlying our product development programs is based on telomerase-mediated cellular immortality and regenerative biology.
By “telomerase-mediated cellular immortality” we refer to the fact that cells that express sufficient levels of a
protein called telomerase are capable of replicating without limit. By “regenerative biology,” we refer to novel methods
to regenerate tissues afflicted with age-related chronic degenerative disease such as coronary disease, heart failure, and age-related
metabolic disorders such as those associated with Type II diabetes, osteoarthritis, or Parkinson’s disease, as well as others.
We utilize telomerase-expressing regenerative Pluripotent Stem Cells, or PSCs, for the manufacture of cell-based therapies. We
own or have licensed numerous patents and patent applications covering methods and compositions relating to this technology platform.



Business
Strategy



Each
of our four proprietary platform technologies, PureStem® for cell derivation and manufacturing, UniverCyteTM
for generation of hypoimmunogenic cells, iTRTM for reversing the age of cells already in the body and HyStem®for cell delivery, presents AgeX with a multiplicity of attractive opportunities which we may pursue. Given these platform
technologies may be highly desirable to multiple academic and biopharma companies due to their broad applicability and potentially
important clinical and commercial benefits, AgeX plans to pursue three different business models for these platforms:



| | ● | Business
    Development and Licensing (BD&L): Focused on licensing AgeX technologies to other cell therapy or biopharma companies
    to bring in early revenue streams, especially for therapies that AgeX does not presently intend to develop.                                                                                                                                                                                                                                                                                                                                       
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ● | Cellular
    Therapy: Focused on progressing cell therapies to human clinical trials. AgeX may conduct research and development of
    cell therapy product candidates through a variety of strategies, including but not limited to conducting research and development
    primarily in-house, entering into co-development and marketing arrangements with researchers or other companies in the cell
    therapy or biopharma industry, and engaging contract service providers to conduct research and development and manufacturing
    for AgeX for particular product candidates.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ● | Reverse
    Bioengineering, Inc.: Partial cellular reprogramming using our iTRTM technology may one day allow us to revert
    aged or diseased cells inside the body back to a more youthful, healthy and function state. We incorporated Reverse Bioengineering,
    Inc. (“Reverse Bio”) as an AgeX subsidiary to develop our revolutionary iTRTM platform. Reverse Bio
    will allow for a dedicated focus on iTRTM in terms of equity financing and advancing our iTRTM technology
    to proof-of-concept in an animal model as quickly as possible.                              



Each
of these models may provide particular benefits to AgeX in terms of financing and efficiency of operations. However, each alternative
has potential disadvantages as well. If AgeX out-licenses its technology it will avoid the costs and risks of research and development,
clinical trials, regulatory approval, manufacturing, and commercialization of product candidates, but the revenues AgeX would
receive from commercialization of products developed under those arrangements would likely be limited to royalties on product
sales and potentially licensing fees and milestone payments representing a relatively small portion of total product revenues.
Similarly, co-development and marketing or similar arrangements would permit AgeX to share costs and risks but would also require
AgeX to share revenues from the product candidates that may be successfully developed and commercialized. See “Risk Factors”
elsewhere in this Report for information about certain risks associated with reliance on arrangements with third parties for research,
product development, clinical trials, manufacturing, and commercializing product candidates.



We
may finance our iTR research and development through Reverse Bio. To the extent that such financing is obtained through the sale
of capital stock or other equity securities to investors or other biopharma companies by Reverse Bio, or the sale of Reverse Bio
shares held by AgeX, our equity interest in Reverse Bio and its iTR business would be diluted.



7









Background
of Human Aging



Cell
Immortality



There
is a growing consensus in the scientific community that human aging is due in large part to the aging of individual cells in the
various tissues of the body (somatic cells). In contrast, the reproductive lineage of cells (germ-line) perpetuate the human species
from generation-to-generation without limit and continue to generate new people over the millennia.



In
1961, Dr. Leonard Hayflick first reported that normal human cells in the body (unlike the germ-line) can proliferate for only
a finite number of times (typically fewer than 100 times). This phenomenon, known as the “Hayflick Limit”, “cell
mortality”, or “cellular aging”, is a normal property of somatic cells. In the 1990s, our CEO, Dr. Michael D.
West, founded a biotechnology company called Geron Corporation, where his team isolated for the first time the human gene called
“Telomerase Reverse Transcriptase” or “telomerase.” In 1998, Geron scientists in collaboration with scientists
at the University of Texas Southwestern Medical Center at Dallas, published the result that telomerase could stop the aging of
human cells, or could “immortalize” them.







Figure
2. The Germ-line/soma dichotomy wherein germ-line cells express telomerase, maintain telomere length, and exhibit replicative
immortality, while body (somatic) cells lack telomerase, showing progressive telomere shortening until they reach the Hayflick
limit.



In
1994, Dr. West’s group demonstrated through an assay for measuring telomerase activity that nearly 90% of cancer cell types
cultured in the laboratory or tumors surgically removed from patients abnormally express telomerase. This broke the then dogma
that there was no common mechanism at work in cancer. Scientists have concluded that cell mortality, while being detrimental in
old age, benefits us early in life by helping to repress cancer cell growth. Figure 2 illustrates this dichotomy wherein immortal
cells such as the germ-line cells that perpetuate the species are immortal through telomerase activity while body (somatic) cells
lack telomerase expression, and as a result show progressive telomere shortening and a finite lifespan (are mortal).



8







The
Weismann Barrier



Early
in the evolution of life, primitive unicellular and even multicellular organisms may have lacked programmed aging as a result
of the potential of their cells having the potential for both replicative immortality and regeneration. However, in more complex
animals such as mammals, somatic cells lose not only replicative immortality, but after most organ systems are formed during embryonic
development, they also lose full regenerative potential. This repression of both telomerase-mediated cell immortality and regeneration
potential is called the “Weismann Barrier” (see Figure 3).







Figure
3. The Weismann Barrier coincides with the loss of both replicative immortality and regeneration. Levels of expression of the
gene COX7A1 provide a useful marker of the loss of regenerative potential.



PSCs
represent the earliest stages of human development and are the first normal human cells cultured in the laboratory that display
both telomerase-mediated replicative immortality and regenerative potential. Therefore, our scientists utilized these cells as
well as the primitive regenerative cells derived from them, called “PureStem®” cell lines, in research
where they were compared to diverse adult cells on the mortal side of the Weismann barrier to uncover the mechanisms regulating
the loss of regenerative potential. Artificial intelligence algorithms were used to parse millions of gene expression data points
and the results were published in late 2017. Figure 3 shows the Weismann Barrier
and the associated rise of a gene expression marker of the non-regenerative state designated COX7A1. This proprietary marker,
along with other insights obtained from the research, provides us with a window into this biology and a means of screening for
agents capable of restoring a regenerative state to old nonregenerative cells. It is anticipated that such agents may not only
reset the pattern of gene expression in adult cells back to that their regenerative counterparts but may also induce tissue regeneration
when applied in vivo in the context of age-related degenerative disease. Since the previously mentioned 2017 publication
described the re-emergence of the regenerative phenotype in the majority of cancer cell lines, the discoveries may open
the door to potentially important diagnostic and therapeutic implications as well.



9







Pluripotent
Stem Cells (PSCs)









Figure
4. Pluripotent Stem Cells (PSCs) possess both telomerase-mediated replicative immortality and regenerative potential, capable
of producing all human cell types.



In
an effort to utilize telomerase-mediated immortality and regenerative biology in the development of novel therapeutics, in the
mid-1990s, Dr. West, organized a collaboration with Drs. James Thomson, John Gearhart, and Roger Pedersen that led to the first
isolation of PSCs. In contrast to other types of cells, PSCs are unique by at least two important criteria. The first criterion
relates to the ability of pluripotent cells to proliferate, or make more copies of themselves, indefinitely, that is to say, they
are “immortal”. The second relates to the ability of PSCs to differentiate into any of the hundreds of specialized
cell types in the body. This replicative immortality of PSCs facilitates the industrial scalability of product. We believe that
many of these cell types have potential for regenerating function in tissues damaged by degenerative diseases when transplanted.
A small sampling of these cell types is shown in Figure 4. Unlike PSCs, adult stem cells typically have severely-reduced scale-up
potential (are mortal unlike immortal PSCs), and have passed the Weismann Barrier, and are therefore limited in their ability
to regenerate normal tissue when transplanted in vivo. Therefore, we believe that PSC-based cellular therapeutics
have significant competitive advantages over cell-based therapeutics being developed by many adult stem cell companies.



10







Our
Technology Platforms



PureStem®Technology



Regulatory
approval of cell- and tissue-based products require high standards of quality control. In the case of stem cell-derived products,
there is a high standard for insuring the known identity, purity, and reproducibility of the cells to be administered. PSCs provide
certain advantages over adult stem cell products when used in the manufacture of cell-based therapeutics for the treatment of
age-related disease. These advantages include:



| | ● | The
    replicative immortality of the PSCs which facilitates the indefinite scale-up of PSC master cell banks for the manufacture
    of uniform product, as well as an immortal substrate for targeted genetic modifications.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                
| | ● | Since
    most PSCs maintain long and stable telomere lengths, the replicative capacity of derived differentiated cell types is typically
    longer (younger) than adult or even fetal-derived cells.                         
| |   |                                                                                                                                                                                                                                
| | ● | Using
    PureStem® technology, it is possible to clonally expand hundreds of purified, identified, and reproducibly
    scalable cell types that retain regenerative potential (have not passed the regeneration limit).      



PureStem®technology is based on the observation that embryonic anlagen of many tissues in the human body are naturally comprised
of highly proliferative cells with relatively long telomere length. Therefore, it is possible to generate clonal lineages of these
cells in vitro. Cells derived from adult tissues commonly permanently cease to divide after a certain number of doublings,
a condition known as senescence. In addition, adult and even fetal tissues largely contain differentiated cells often with limited
or no capacity of replication in vitro. As a result, the clonal expansion of human embryonic progenitor cell types allows
not only a novel and more facile point of scalability but also generates populations of cells that are multipotent instead of
pluripotent, and therefore markedly easier to define identity, purity, and potency.



We
have studied the fate of over 200 diverse PureStem cell lines in thousands of differentiation conditions. This was accomplished
by thawing individual cryopreserved PureStem cell lines, culturing them in the laboratory, and then exposing the cells to factors
that differentiate cells such as protein growth and differentiation factors, hormones, and small molecules implicated in causing
cells to change from one type of cell into another (differentiation). Using individual cells from the over 200 diverse PureStem
cell lines previously isolated and cryopreserved, we treated the diverse cells with thousands of differentiation conditions, prepared
RNA, and determined the gene expression pattern of the cells using gene expression microarrays. These experiments have shown that
the PureStem cell lines display site-specific markers that identify not only the type of cells, but also where in the body the
cells would normally reside. Therefore, in the example of cartilage cells, it was possible to produce diverse types of cartilage
in this manner. We have licensed from our former parent company Lineage Cell Therapeutics, Inc. (“Lineage”) PureStem
applications outside of orthopedics, medical aesthetics, and certain ophthalmological applications.



We
have chosen two PureStem applications for our initial product development based on unmet medical need along with other factors.
The first product candidates are Brown Adipose Tissue (BAT) cells for the treatment of metabolic disorders such as obesity or
Type II diabetes, and vascular endothelial progenitors for the treatment of age-related ischemic disease such as that leading
to myocardial ischemia and infarction. These cells will be formulated in a delivery matrix designated HyStem® to
promote viability of the graft as well as to localize the cells to the intended site in the body. See “—Overview”
and “—Our Target Market.”



11









HyStem®Delivery Technology



HyStem®is a patented biomaterial that mimics the extracellular matrix that is the structural network of macromolecules surrounding
cells in the body. The extracellular matrix is essential for normal cellular function and survival of transplanted cells. Many
tissue engineering and regenerative cell-based therapies are expected to benefit from the delivery of therapeutic cells in a matrix
for precise localized delivery and survival. HyStem is a unique hydrogel that has been shown to support cellular attachment in
vivo. Current research at medical institutions has shown that HyStem is compatible with a wide variety of cells and tissue
types including those of the brain, bone, skin, cartilage, vascular system and heart. The technology underlying HyStem hydrogels
was developed at the University of Utah and was been exclusively licensed to Lineage for human therapeutic applications and sublicensed
to AgeX for certain fields. The HyStem technology is based on a unique thiol cross-linking chemistry to prepare hyaluronan-based
matrices as hydrogels. Since the first published report in 2002, there have been numerous academic scientific publications supporting
the biocompatibility of thiol cross-linked hyaluronan-based matrices and their applications as medical devices and in cell culture,
tissue engineering, and animal models of cell-based therapies.









Figure
5. AgeX plans to utilize the HyStem technology for the delivery of cell-based therapeutics.



Due
to the unique cross-linking chemistry, HyStem matrices have the ability to be safely combined with living cells and subsequently
injected or applied locally as a hydrogel which allows the gel to conform to the three-dimensional contour of a tissue. Building
upon this platform, we initially plan to use HyStem for cell-based therapy.



The
building blocks for HyStem hydrogels may vary with the application but typically include combinations of hyaluronan, gelatin,
or heparin, each of which has been thiol-modified. Hydrogels are formed by cross-linking mixtures of these thiolated macromolecules
with polyethylene glycol diacrylate (PEGDA). The rate of gelation and the hydrogel stiffness can be controlled by varying the
amount of cross-linker. An important attribute of HyStem hydrogels is their large water content, over 98%. As a result, these
hydrogels have a high permeability for oxygen, nutrients, and other water-soluble metabolites.



UniverCyteTM



Our
UniverCyteTM technology uses a proprietary, novel, modified form of HLA-G and is intended to permit donor cells
to be transplanted into patients without donor-patient tissue matching and without administering immunosuppressant medication.
Immunosuppressive drugs can reduce patient resistance to infectious diseases and cancers as well as cause organ and other toxicities.
Reducing or eliminating the need for immunosuppressants after cell transplantation by use of hypoimmunogenic cells may make therapies
universally available. We plan to use or license the use of this patented technology to produce genetically-modified master cell
banks of pluripotent stem cells that can then be differentiated into any young cell type of the human body that now express the
immune tolerogenic molecule.



12









We
have entered into a research collaboration with a Japanese biopharma company to evaluate the expression of HLA-G on induced pluripotent
stem cells (iPS cells) and the ability of those UniverCyte-modified iPS cells to evade immune responses and to differentiate into
somatic cells. We will have rights to use any improvements to our UniverCyteTM technology developed through the
research and may negotiate commercial licensing arrangements granting our collaborator rights to use UniverCyteTM
to produce cellular products for therapeutic and commercial purposes.



Products
and Product Candidates



Our
Therapeutic Product Candidates



AGEX-BAT1
- Brown Adipose Tissue (BAT) Progenitors



Brown
Adipose Tissue (BAT) is abundant early in life but lost precipitously with age. This tissue is believed to generate heat through
expression of a gene called UCP1.In addition, the high levels of glucose and lipid uptake by the tissue is believed to
balance metabolism in young people. In contrast, central obesity and Type II diabetes has been correlated with low levels of BAT.







Figure
6. Human tissue-derived BAT cells (left) stained red for the presence of UCP1 show a minority of cells being true BAT cells. PureStem-derived
AGEX-BAT1 cells are uniformly UCP1 positive.



The
demonstration in published literature in the public domain that the transplantation of BAT from young mice to obese diabetic mice
resulted in weight loss and increased insulin sensitivity has led to a search for a source of industrially-scalable clinical grade
BAT cells as well as an appropriate matrix for lipotransfer. There currently is no FDA-approved matrix for cell transplantation.
However, Lineage has completed a pivotal clinical trial of HyStem being developed as a replacement for whole adipose tissue in
cell-assisted lipotransfer procedures. Therefore, we believe HyStem can be used for the delivery of BAT cells produced using PureStem
technology. As shown in Figure 6, the AGEX-BAT1progenitors strongly express the BAT marker UCP1 when induced to differentiate
and show a relatively high degree of purity compared to human tissue-derived BAT.



AgeX
is currently optimizing process development for the initiation of preclinical development of the use of AGEX-BAT1.



13







AGEX-VASC1
- Vascular Progenitors



PureStemtechnology can also yield highly purified embryonic vascular components. As shown below, select clonal lines express markers
such as VE-Cadherin (CDH5) and PECAM1, as well as VWF and other markers of venous, arterial, and lymphatic endothelium. Flow cytometry
shows purity indistinguishable from 100%.



In
addition to vascular endothelial cells, we have characterized vascular smooth muscle cell progenitors. This makes it possible
for us to construct two of the key cellular components of arterial vessels, such as those compromised in coronary artery disease.









Figure
7. PureStem-derived vascular endothelial cell lines are capable of regenerating young vasculature (bottom left) and appear to
have essentially 100% purity by FACs analysis.



HyStem
hydrogels have been successfully used as a cell delivery matrix for endothelial progenitor cells to re-establish vasculature in
hind limb ischemia models. Therefore, AgeX is currently optimizing process development for planned animal preclinical testing
of AgeX-VASC1 formulated in HyStem for delivery into ischemic heart tissue to regenerate collateral circulation.



AGEX-iTR1547
— Induced Tissue Regeneration (iTRTM)



Leveraging
our assets in pluripotency and bioinformatics, we have performed research manipulating cellular immortality and regenerative biology
in human cells. In 2010, Lineage demonstrated the reversal of the developmental aging of human cells using transcriptional reprogramming
technology. In 2017, we published certain markers of the Weismann barrier, and the high prevalence of a reversion back before
the Weismann barrier in diverse cancer cell types cultured in vitro.



We
extended this research to determine whether reprogramming can be modified to only reverse the aging of cells back before the Weismann
Barrier, not back to pluripotency or transforming the cells into malignant counterparts. We have utilized for example the gene
COX7A1 as a marker of cells that have lost regenerative potential (crossed the Weismann Barrier).



14







As
shown in Figure 8, our proprietary formulation AGEX-iTR1547 has demonstrated initial capability of reducing the expression of
the marker gene COX7A1back to before the Weismann Barrier without reverting the cells to pluripotency. When implemented
in vivo, this partial reprogramming, or iTR, would be expected to induce tissue regeneration, and when combined with telomerase,
could modulate both cellular immortality and regenerative biology for therapeutic effect. We are performing research to optimize
AGEX-iTR1547 in order to initiate preclinical studies of the agent on the scarless regeneration of the heart during congestive
heart failure.









Figure
8. PSCs such as ES Cells and PureStem EP Cells display a regenerative capacity like cells that have not cross the Weismann Barrier.
During pre- and post-natal development, skin cells become increasingly incapable of scarless regeneration as reflected in increasing
COX7A1 expression. iPS cell reprograming reverts cells back to pluripotency, while AgeX-iTR1547 reverts cells back only
to a point prior to the Weismann Barrier (regenerative state).



Status
and Development Plan



The
product candidates we are developing are in the discovery stage of development. Prior to filing an Investigational New Drug (IND)
application for the initiation of clinical trials of our initial product candidates, AGEX-BAT1, AGEX-VASC1, and AGEX-ITR1547,
we will need to complete discovery-level research for the qualification of reagents used in the manufacture of the product, complete
the standard operating procedures to be used (SOPs), complete the methods and documentation for characterization of the product,
produce and test the genetic modifications in the master cell banks of the pluripotent stem cells under current Good Manufacturing
Practices (cGMP) in order to produce product that will not illicit immune rejection following transplantation. In addition, we
will be required to expand the numbers of the pluripotent stem cell master cell banks for future use, as well as produce working
cell banks from which the product will be manufactured for clinical trials, produce the relevant product under cGMP conditions,
expand the number of relevant cells and cryopreserve them under cGMP conditions. In addition, we will be required to design the
pre-clinical studies including the study endpoints, perform biosafety testing and release the first clinical batch based on preliminary
characterization results, and complete full product characterization. Biosafety testing will necessarily include pilot testing
in animals such as (NOD/SCID) mice, dosing spiking studies at early and later endpoints, tumorgenicity and biodistribution studies
to determine whether the cells form undesired tumors or migrate to inappropriate sites respectively in the animal. Lastly, we
will need to define the clinical trial and regulatory strategy and hold Pre-Pre-IND and Pre-IND meetings with the Food and Drug
Administration (FDA), as well as successfully submit an IND to the FDA and receive clearance to begin trials. Thereafter, we will
need to demonstrate safety and efficacy of the product in human clinical trials in Phase I and II trials, and continued safety
and efficacy for achieving the desired endpoint in Phase III trials, potentially then leading to product registration. See “Risk
Factors — Risks Related to Our Business Operations” for discussion of risks relating to our preclinical development
and clinical trials. These include, but are not limited to, failure to successfully complete the aforementioned studies due to
the failure of the product, processes, or skills of our employees, unforeseen delays in the development process, failure to raise
requisite financing, or failure to receive permission from the FDA to advance product development.



15







Because
our product candidates are still in the discovery stage, our choice of product candidates and development plans are subject to
change based on a variety of factors. We may determine to abandon the development of one or more of our product candidates, or
we may prioritize the development of one or more product candidates, or we may select or acquire and prioritize the development
of new product candidates. Our choice and prioritization of product candidates for development will be influenced by a variety
of factors, including but not limited to:



| | ● | Results
    of our laboratory research and any animal and clinical trials that we may conduct;                                                                                                                                                                                                                                                                                                                                                 
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ● | Our
    analysis of third-party competitive and alternative technology that may lead us to conclude that our product candidates or
    technologies may be non-competitive or obsolete;                                                                                                                                                                                                                                                        
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ● | Our
    analysis of market demand and market prices for the products we plan to develop could lead us to conclude that market conditions
    are not favorable for receiving an adequate return on our investment in product development and commercialization;                                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ● | The
    amount of capital that we will have for our development programs and our projected costs for those programs;                                                                                                                                                                                                                                                                                                                           
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ● | The
    issuance of patents to third parties that might block our use of the same or similar technology to develop a product candidate;
    and                                                                                                                                                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ● | The
    views of the FDA and comparable foreign regulatory agencies on the pre-clinical product characterization studies required
    to file an IND in order to initiate human clinical testing of a therapeutic product candidate or to attain marketing approval
    for that product candidate, or to obtain an investigational device exemption for clinical trials, or clearance for a 510(k)
    application to market a medical device.



Other
Products



Neural
Stem Cells



During
January 2020 we began a research collaboration under a Sponsored Research Agreement with the University of California at Irvine
(UCI) using our PureStem technology to derive neural stem cells, with the goal of developing cellular therapies to treat neurological
disorders and diseases. The collaboration’s initial work is expected to take approximately one year. The primary goal of
the research will be to develop a robust method of deriving neural stem cells from PSCs in sufficient quantity and with sufficient
purity and identity for use in cell based therapy. The initial focus will be on Huntington’s disease, while other potential
targets may include Parkinson’s, Alzheimer’s, and stroke. UCI has already accumulated safety and efficacy animal data
that may support an IND submission to the FDA as early as 2021 for the commencement of clinical trials to treat Huntington’s
disease.



The
collaboration includes an opportunity for us to organize a company to be jointly owned with UCI and certain researchers to pursue
clinical development and commercialization of cell therapies derived using licensed inventions arising from the research program,
as well as certain patent pending technology for neural stem cell derivation, and certain technical data to support IND submissions.



Online
Database Products



We,
through our subsidiaries LifeMap Sciences and LifeMap Sciences Ltd, which are collectively referred to as LifeMap Sciences, conduct
operations in the U.S. and Israel to commercialize the GeneCards Database Suite, which includes the relational databases GeneCards®and MalaCardsTM licensed from the Yeda Research and Development Company
Ltd. (“Yeda”), the technology transfer company of theWeizmann Institute
of Science in Rehovot, Israel. The GeneCards Database Suite had approximately 3.5 million unique users in 2017 from diverse academic
and commercial institutions. LifeMap Sciences obtains revenues from advertising as well as subscriptions from commercial entities.
LifeMap Sciences also is building a product designated TGexTM, which provides reports generated by the GeneCards knowledgebase
intended for use by health care institutions and containing condensed information on particular genomic profiles of patients.



ESI
BIO Research Products



We,
through our ESI BIO research product division, market a number of products related to pluripotent stem cells including, research-grade
as well as cGMP-grade human PSC lines. We plan to contract with third parties where the third parties to allow them to utilize
cGMP PSCl lines in defined fields of application in exchange for certain compensation including the payment of royalties to us
if they are successful in developing and commercializing a product.



16









Subsidiaries



As
of and for the year ended December 31, 2019, AgeX consolidated the following subsidiaries:



|Subsidiary              |  | Field
    of Business                                                                                                                                                                                                                                             |  | AgeX
    Ownership |  | Country
|----------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ |  | -------
|ReCyte
    Therapeutics |  | Early
    stage pre-clinical research and development involved in stem cell-derived endothelial and cardiovascular related progenitor
    cells for the treatment of vascular disorders, ischemic conditions and brown adipocytes for type-2 diabetes and obesity |  | 94.8%              |  | USA    
|                        |  |                                                                                                                                                                                                                                                                   |  |                    |  |        
|LifeMap
    Sciences(1) |  | Biomedical,
    gene and disease databases and tools                                                                                                                                                                                                              |  | 81.7%              |  | USA    



|(1) | LifeMap
    Sciences includes LifeMap Sciences, Inc. and its wholly-owned subsidiary LifeMap Sciences, Ltd. an Israeli company.
|--- | -------------------------------------------------------------------------------------------------------------------------------



All
material intercompany accounts and transactions between AgeX and its subsidiaries have been eliminated in consolidation.



Manufacturing



Our
success will depend in part on our ability to manufacture high quality cells, matrices, and small molecules. Unlike drug manufacturing,
this quality needs to be performed at the beginning of the process of using PSCs. Therefore, we have acquired from Lineage cGMP-compatible
stem cell lines. We have constructed a cGMP laboratory suitable for manufacturing cell lines and our cell based product candidates.
We will require additional personnel and contracted services to comply with quality manufacturing processes and controls.



Facilities



Our
offices and research laboratory are located in approximately 23,911 square feet of space in a building in an office and research
park at 965 Atlantic Avenue, Alameda, California.



Commercialization
Plan



With
the exception of our research product sales which generate a trivial amount of revenues, we currently have no commercialized or
marketed products such as FDA-approved drugs in our portfolio. As a result, we have not yet assembled an infrastructure for sales
and marketing. At the point in time, if ever, that our product candidates approach clearance or approval, we plan to develop a
commercial plan that may initially include strategic marketing partnerships.



Intellectual
Property



Patents
and Trade Secrets



We
rely primarily on patents and contractual obligations with employees and third parties to protect our proprietary rights. We have
sought, and intend to continue to seek, appropriate patent protection for important and strategic components of our proprietary
technologies by filing patent applications in the U.S. and certain foreign countries. There are no assurances that any of our
intellectual property rights will guarantee protection or market exclusivity for our products and product candidates. We also
use license agreements both to access technologies developed by other companies and universities and to convey certain intellectual
property rights to others. Our financial success will be dependent, in part, on our ability to obtain commercially valuable patent
claims, to protect and enforce our intellectual property rights, and to operate without infringing upon the proprietary rights
of others if we are unable to obtain enabling licenses.



The
patents for our core programs are summarized below.



17







AGEX-BAT1



Brown
Adipose Tissue (BAT) Progenitor Cells: The pending patent applications related to BAT progenitor cells, which are owned by
AgeX, include U.S. and international patent applications. The applications are directed to the differentiation of pluripotent
stem cells (including hES cells) into progenitor cell types capable of making the cellular components of brown fat. The patents
also describe culture and purification methods. The approximate expiration dates of the BAT patents, if issued, will range from
2034 to 2036. The AGEX-BAT1 product may also rely on the HyStem patents, which are described in detail below under the heading
“HyStem® Technology”.



AGEX-VASC1



Vascular
Progenitors: The pending patent application pertaining to purified vascular progenitor cells and embryonic vascular components
are owned by AgeX or an AgeX subsidiary or licensed from Lineage. The patents include U.S. patent applications and are directed
to methods to enhance vascular tube networks, compositions of pericyte progenitor cells, compositions of exosomes containing angiogenic
molecules, compositions of vascular and lymphatic cells, and methods to culture and purify the cells or components thereof. The
approximate expiration dates of the vascular progenitor patents, if issued, range from 2032 to 2038. We plan to file an international
patent application claiming priority from a pending US provisional application by the filing deadline, which could lead to a patent
that if issued would expire in 2039. The AGEX-VASC1 product may also rely on the HyStem patents, which are described in detail
below, under the heading “HyStem® Technology”.



AGEX-iTR1547



Induced
Tissue Regeneration (iTRTM): The pending patent applications related to the iTR programs, which are owned by AgeX,
include applications pending, for example, in the United States, Australia, Canada, China, Europe, Japan and a pending international
patent application. These patent applications are directed to compositions and methods for healing damaged tissue using the iTR
treatment methods. The patent applications are also directed to treatment methods by regenerating aging tissue by modulating genes
involved in tissue regeneration, including reprogramming cells and tissues back to a regenerative state. The approximate expiration
dates of the iTR patents, if issued, will range from 2034 to 2039.



Other
AGEX Licensed and Sublicensed Patents



PureStem®Progenitor Cells: The patents and pending applications related to our PureStem® technology include patents
and applications in the United States, Canada, Europe and Australia. These patents are directed to methods for generating diverse
isolated progenitor cell lines which generally do not express COX7A1 and combinations of other methods for employing pluripotent
stem cell lines suitable for clinical use. The pending applications are directed to clonally purified human embryonic progenitor
cell lines and methods for reproducible, large scale production of clonally purified human embryonic progenitor cells, compositions
and methods for generating diverse cell types, and assays useful in identifying hES cell lines and pluripotent cells resulting
from the transcriptional reprogramming of somatic cells that have embryonic telomere length. The approximate expiration date of
the PureStem® issued patents is 2031 and the approximate date of expiration of the pending patents, if issued,
will range from 2029 to 2032.



The
PureStem® patent portfolio includes patents and pending applications licensed from Advanced Cell Technology, Inc.,
which later became Ocata Therapeutics, Inc. (“Ocata”). The Ocata issued patents cover methods for reprogramming animal
differentiated somatic cells to undifferentiated cells and methods for producing differentiated progenitor cells using morula-derived
or inner cell mass cells from a blastocyst and expire from approximately 2020 to 2026. The Ocata pending applications relate to
methods for the derivation of cells that have a reduced differentiation potential using PSCs, methods for reprogramming animal
differentiated somatic cells to undifferentiated cells and methods for producing differentiated progenitor cells using morula-derived
or inner cell mass cells from a blastocyst. The Ocata pending patents, if issued, will expire between 2020 and 2026.



HyStem®Technology: AgeX has a sublicense to the HyStem technology from Lineage and the technology was originally developed
by the University of Utah Research Foundation with patents issued in the United States, Canada, Switzerland, Germany, Spain, France,
UK, Ireland, Italy, Luxembourg, Monaco, Japan, Australia, and South Africa. The patents have claims covering compositions, pharmaceutical
compositions with living cells methods of crosslinking, methods of making, methods of administering the compositions, and the
use of the synthetic extracellular matrix in both research and clinical applications. The expiration dates of the HyStem®patents range from 2023 to 2027.



18







ESI
Human Embryonic Stem Cell (hES) Cell Lines: AgeX licenses rights to the ES Cell International Pte. Ltd. patent portfolio
with patents issued in the United States, Australia, Israel, UK, Singapore, Japan, and applications pending in the US and Europe.
The patents are directed to methods for the differentiation of or enhancing the differentiation of stem cells into cardiomyocytes,
neural cells, and pancreatic endoderm cells, compositions of pancreatic progenitor cells, methods of promoting the attachment,
survival and/or proliferation of substantially undifferentiated stem cells in culture, methods for identifying and selecting cardiomyocytes,
methods of freezing stem cells or progenitor cells, methods for identifying cardiogenic factors, compositions and methods for
modulating spontaneous differentiation of a stem cell, methods of modulating the differentiation of undifferentiated, pluripotent
human embryonic stem cells in culture, isolated endodermal progenitor cells, methods for transducing human embryonic stem cells,
cell culture systems. The pending applications are directed to methods for the differentiation of hES cells into the three cell
lineages, including for example cardiomyocytes, skeletal muscle cells, vascular endothelial cells, and pancreatic endoderm cells,
as well as, various culture and purification methods and compositions and methods of treatment. The ESI issued patents will expire
from 2019 to 2027, and the approximate date of expiration of the pending patents, if issued, will range from 2022 to 2027.



UniverCyte
(HLA-G) Technology: In August 2018, we acquired from Escape Therapeutics patents and patent applications related to HLA-G-modified
cells and methods of generating allogeneic cells with reduced risk of being rejected by patients regardless of the HLA class I
haplotype. The patents and pending application related to our HLA-G modified cells technology include patents issued in the United
States, Australia and Japan and applications are pending in the United States, Australia, Canada, China, Europe, Japan, Korea,
and Singapore. The patents are directed to cells which are genetically modified to express a Human Leukocyte Antigen-G (HLA-G)
and have reduced immunogenicity and improved immunosuppression, and nucleic acid compositions useful for generating the genetically
modified cells. The pending applications are directed to compositions and methods for generating cells which are genetically modified
to express HLA-G having reduced immunogenicity and improved immunosuppression, nucleic acid compositions useful for generating
the genetically modified cells, and methods of producing artificial tissues using the genetically modified cells. The approximate
expiration date of the UniverCyteTM (HLA-G) issued patents is 2033 and the approximate date of expiration of the pending
patents, if issued, will also be 2033. We intend to use the UniverCyteTM technology in the development of our two lead product
candidates, AGEX-BAT1 and AGEX-VASC1 for the treatment of Type II diabetes and cardiovascular aging, respectively. In addition,
we may seek to license out or form collaborations for the use of our UniverCyteTM technology.



General
Risks Related to Obtaining and Enforcing Patent Protection



There
is a risk that any patent applications that we file and any patents that we hold or later obtain could be challenged by third
parties and be declared invalid or infringing on third-party claims. Litigation, interferences, oppositions, inter partes reviews
or other proceedings are, have been and may in the future be necessary in some instances to determine the validity and scope of
certain of our proprietary rights, and in other instances to determine the validity, scope or non-infringement of certain patent
rights claimed by third parties to be pertinent to the manufacture, use or sale of our products. We may also face challenges to
our patent and regulatory protections covering our products by third parties, including manufacturers of generics and biosimilars
that may choose to launch or attempt to launch their products before the expiration of our patent or regulatory exclusivity. Litigation,
interference, oppositions, inter partes reviews, administrative challenges or other similar types of proceedings are unpredictable
and may be protracted, expensive and distracting to management. The outcome of such proceedings could adversely affect the validity
and scope of our patent or other proprietary rights, hinder our ability to manufacture and market our products, require us to
seek a license for the infringed product or technology or result in the assessment of significant monetary damages against us
that may exceed any amounts that we may accrue on our financial statements as a reserve for contingent liabilities. An adverse
determination in a judicial or administrative proceeding or a failure to obtain necessary licenses could prevent us from manufacturing
or selling our products. Furthermore, payments under any licenses that we are able to obtain would reduce our profits derived
from the covered products and services.



The
enforcement of patent rights often requires litigation against third-party infringers, and such litigation can be costly to pursue.
Even if we succeed in having new patents issued or in defending any challenge to issued patents, there is no assurance that our
patents will be comprehensive enough to provide us with meaningful patent protection against our competitors.



In
addition to relying on patents, we rely on trade secrets, know-how, and continuing technological advancement to maintain our competitive
position. We have entered into intellectual property, invention, and non-disclosure agreements with our employees, and it is our
practice to enter into confidentiality agreements with our consultants. There can be no assurance, however, that these measures
will prevent the unauthorized disclosure or use of our trade secrets and know-how, or that others may not independently develop
similar trade secrets and know-how or obtain access to our trade secrets, know-how, or proprietary technology.



19







Our
Licensing Arrangements



License
Agreement with Lineage: iTR, PureStem®and Telomere Length



Concurrently
with the contribution of assets to us by Lineage under an Asset Contribution and Separation Agreement, we entered into a License
Agreement with Lineage pursuant to which Lineage has licensed to us, 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 Lineage fields of orthopedic, ophthalmic,
and medical aesthetic uses (the “Lineage Exclusive Field”). In addition, Lineage retains an option right, on terms
to be negotiated, to license iTR patents in research, development, manufacturing and commercialization of treatments based on
iTR in the Lineage Exclusive Field. The licensed patents and know-how relate generally to (a) Lineage’s PureStem®human embryonic progenitor cell lines, and (b) telomere length and DNA quality control analysis in pluripotent stem cells.



The
Lineage patent rights licensed to us are exclusive and worldwide except for existing third-party licenses, and for medical products,
devices, and services related to tendon. We additionally received an option to license certain Lineage retained rights outside
of orthopedic indications unless a license grant would compete with a Lineage program or products in the Lineage Exclusive Field.



The
License Agreement contains customary provisions pertaining to patent maintenance, enforcement, and defense and related cost allocations,
insurance, indemnification, and termination of the license in the event of a breach or default by a party, or the bankruptcy or
other insolvency event with respect to a party.



Additional
License and Sublicense Agreements



Lineage
and certain Lineage subsidiaries also entered into agreements pursuant to which they have licensed or sublicense to us, on a non-exclusive,
world-wide, royalty bearing basis, certain additional patents and patent rights and know-how relating to Lineage HyStem®hydrogel technology, human embryonic progenitor cell technology, and human pluripotent stem cell lines and technology for
use outside the Lineage Exclusive Fields, or in the case of certain sublicense rights, fields previously licensed to third parties.



Hydrogel
Patent License and Sublicense



Lineage
has granted to us a sublicense of certain patents licensed to Lineage by the University of Utah Research Foundation (the “Utah
Sublicense”), and has granted to us a direct license of certain patents held by Lineage (the “HyStem License”),
related to HyStem® hydrogel technology for use outside of the Lineage Exclusive Field for products that include
cells and that are covered by certain other patents contributed, licensed, or sublicensed to us by Lineage. We may only develop,
sell, and otherwise commercialize a product under the Utah Sublicense and HyStem License if we spend at least a low seven figure
amount on research with respect to the product. Lineage will agree to provide us with a reasonable amount of the hydrogel product
for the purpose of our research for we will pay Lineage’s cost of manufacturing and supplying the hydrogel.



The
Utah Sublicense and the HyStem License will not permit sublicensing and will be non-exclusive for medical products, devices, and
services related to human tendon, and will be exclusive for all other licensed fields. The Utah Sublicense and HyStem License
will expire upon the latest expiration date of a sublicensed or licensed patent, unless terminated earlier pursuant to the respective
agreements. We will pay Lineage a royalty, in an amount not exceeding 10 percent, on “net sales” as defined in the
Utah Sublicense and HyStem License. Commencing June 30, 2019, and for each 12-month period thereafter, we will pay Lineage a minimum
royalty in the low five figures regardless of the actual amount of net sales for the applicable period.



The
foregoing description of the HyStem License and the Utah Sublicense is qualified in its entirety by reference to the HyStem License
Agreement and the Utah Sublicense Agreement, copies of which are filed as Exhibits to our Registration Statement on Form 10 and
are incorporated herein by reference.



Sublicense
of Certain Progenitor Patents



Lineage
has granted to us a sublicense of certain patents licensed to Lineage that pertain to the derivation of human embryonic progenitor
cell lines. The sublicense will permit us to use the sublicensed patents for the treatment, palliation, diagnosis, or prevention
of any disease, disorder or health condition outside of the Lineage Exclusive Field. The sublicense expires the later of July
10, 2028 or the latest expiration date of a sublicensed patent, unless terminated earlier pursuant to the terms of the sublicense.



20







We
will pay Lineage a royalty on “net sales,” as defined in the sublicense agreement, until the royalty payments to Lineage’s
licensor by Lineage total $1.2 million and thereafter will pay to Lineage a low single digit royalty on its own net sales and
a low double digit royalty on sublicensing consideration.



If
we grant a sublicense to use the patents, we will pay Lineage a portion of any consideration received for a sublicense, including
but not limited to, upfront payments and milestones, and non-cash exchanges or considerations, but not payments for developing
a product, service or process. If we become obligated to pay royalties to one or more affiliates of Lineage for the use of patent
rights related to this sublicense and as a result, the royalties payable to Lineage with respect to royalties under the sublicense
plus the royalties payable to the affiliates would exceed a designated amount of net sales, the royalties due to Lineage may be
reduced but not less than the designated amount. In addition, we will pay to Lineage a royalty on “net sales,” as
defined in the sublicense agreement, by the sublicensee. If we become obligated to pay royalties to one or more affiliates of
Lineage for the use of patent rights related to this sublicense and as a result, the royalties payable to Lineage with respect
to sales by a sublicensee plus the royalties payable to the affiliates would exceed a designated amount of net sales, the royalty
due on net sales by the sublicensee may be reduced but not less than the designated amount.



The
sublicense agreement includes reciprocal cross-licenses between Lineage and us with respect to any new patents that may be issued
based on the use of the sublicensed patents. Any such license to Lineage will be exclusive in the Lineage Exclusive Field and
nonexclusive in all other licensed fields. Any such license from Lineage to us will be for use outside the Lineage Exclusive Field
and for medical products or services involving tendon. Each license will be for a term of 10 years.



The
foregoing description of the sublicense agreement is qualified in its entirety by reference to the sublicense agreement, a copy
of which is filed as an exhibit to our Registration Statement on Form 10 and is incorporated herein by reference.



ESI
License



Lineage’s
subsidiary ES Cell International Pte, or ESI, has granted to us non-exclusive rights to certain ESI patents and human pluripotent
stem cell lines, or ESI Cell Lines, for use outside of the Lineage Exclusive Field and outside certain other fields for which
ESI has previously granted licenses. We will pay ESI a royalty, in an amount not exceeding 10 percent, on “net sales,”
as defined in the license agreement. If we become obligated to pay royalties to one or more third party or to Lineage for the
use of patent rights related to this license and as a result the royalties payable to ESI with respect to this license agreement
plus the royalties payable to such third party or Lineage would exceed a designated amount of net sales, the royalty due on net
sales by the sublicensee may be reduced. The patent license expires upon the latest expiration date of a licensed patent, unless
terminated earlier pursuant to the terms of the license. All other rights under the license are terminable by either party under
the conditions specified in the license.



If
we grant rights to any third party to use ESI Cell Lines derived under cGMP, we will pay ESI a share of all consideration that
we receive as consideration for the grant of those rights, including all cash and non-cash consideration but not royalties. We
are not permitted to grant sublicenses to the licensed ESI patents but may sublicense the use of ESI Cell Lines.



The
foregoing description of the ESI License Agreement is qualified in its entirety by reference to the ESI License Agreement, a copy
of which is filed as an exhibit to our Registration Statement on Form 10 and is incorporated herein by reference.



Competition



The
biotechnology industry is highly competitive and characterized by rapid change (even disruptive advances) that challenge the ability
of any one company to maintain leadership. Therefore, we face competition on multiple fronts, including from other biotechnology
companies, large pharmaceutical companies, academic institutions and government research entities. We believe the competitive
advantages of our technology platform and resulting product candidates arise from the large market opportunities addressed by
our product candidates, their anticipated safety profile, the expected cost of manufacture of off-the-shelf products, our intellectual
property, as well the fundamental and widespread role of cell aging and regeneration in human age-related degenerative disease.



There
are numerous biotechnology companies developing therapeutics for human aging, with each company often focusing on a specific molecular
pathway within cells. For example, ResTORbio, Inc. is developing modulators of the mechanistic
target of rapamycin (mTOR) pathway to treat immunological and cardiovascular disorders. Calico Life Sciences LLC is a Google-founded
research and development company aimed at identifying molecular pathways that control animal lifespan and translating these insights
into novel therapeutics designed to increase human healthspan. Calico has not disclosed its lead product development plans.
Unity Biotechnology, Inc. focuses on cellular senescence, in particular, the use of agents that can target senescent cells for
selective ablation (senolysis). Unity’s stated targeted age-related diseases include osteoarthritis as well as other ophthalmological
and pulmonary diseases.



21









Our
therapeutic product candidates in development are likely to face competition from a large number of companies and technological
strategies including therapeutics intended to address our lead indications, including:



| | ● | Type
    II diabetes: current standard of care treatments (though not necessarily focused on the root cause of the disease) include
    dieting and exercise programs to reduce weight, or pharmacological interventions with a wide array of medications, including:
    Metformin (Glucophage, Glumetza, or others); (DiaBeta, Glynase), glipizide (Glucotrol)
    and glimepiride (Amaryl); Meglitinides(repaglinide (Prandin) and nateglinide (Starlix)); Thiazolidinediones (rosiglitazone
    (Avandia) and pioglitazone (Actos)); DPP-4 (sitagliptin (Januvia), saxagliptin (Onglyza) and linagliptin (Tradjenta)); GLP-1
    receptor agonists (exenatide (Byetta) and liraglutide (Victoza)); SGLT2 inhibitors (canagliflozin (Invokana) and dapagliflozin
    (Farxiga)); and insulin therapy (Insulin glulisine (Apidra), Insulin lispro (Humalog), Insulin asgpart (Novolog), Insulin
    glargine (Lantus), Insulin detemir (Levemir), Insulin isophane (Humulin N, Novolin N)).                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ● | Vascular
    ischemiam, including myocardial ischemia: current standard of care treatments including dieting, lowered intake of cholesterol,
    daily aspirin as a blood thinner; pharmacological agents including but not limited to nitrates as vasodilators (nitroglycerin
    sublingual tablet (Nitrostat), nitroglycerin transdermal ointment (Nitro-Bid), and isosorbide mononitrate and dinitrate (Isordil,
    Isordil Titradose, Dilatrate-SR)); beta blockers (atenolol (Tenormin), metoprolol (Lopressor, Toprol XL), and nadolol (Corgard));
    calcium channel blockers (amlodipine (Norvasc), amlodipine and atorvastatin (Caduet), amlodipine and benazepril (Lotrel),
    diltiazem (Cardizem), felodipine (Cardene, Cardene SR), and verapamil (Calan); cholesterol-lowering medications such as statins
    atorvastatin (Lipitor), rosuvastatin (Crestor), and simvastatin (Zocor); Angiotensin-converting enzyme (ACE) inhibitors (Ranolazine
    (Ranexa), benazepril (Lotensin), and lisinopril (Prinivil, Zestril, Qbrelis); and surgical procedures to increase circulation
    including but not limited to angioplasty and stenting, coronary artery bypass surgery, and enhanced external counterpulsation.



Many
of our competitors have greater financial, collaborative, technical, regulatory, and human resources as well as products more
advanced in development than our product pipeline, including products already marketed for our target indications. As a result,
these competitors may have great success in obtaining regulatory approvals, reimbursement, or market acceptance. Our competitors,
may have greater success in attracting qualified personnel, recruiting clinical trial sites, or in establishing strategic partnerships
with larger pharmaceutical companies to fund large late-stage clinical trials or product marketing. In addition, our future business
could be limited should our competitors commercialize products demonstrated to be more effective, safer, or less expensive than
our comparable products.



Government
Regulation and Product Approval



Government
authorities at the federal, state, and local level, and in other countries, extensively regulate among other things, the development,
testing, manufacture, quality, approval, safety, efficacy, distribution, labeling, packaging, storage, record keeping, marketing,
import/export, and promotion of drugs, biologics, and medical devices. Authorities also heavily regulate many of these activities
for human cells, tissues, and cellular and tissue-based products (“HCT/Ps”).



FDA
and Foreign Regulation of Therapeutic Products



The
FDA and foreign regulatory authorities will regulate our proposed products as drugs, biologicals, or medical devices, depending
upon such factors as: the use to which the product will be put, the chemical composition of the product, and the interaction of
the product with the human body. In the United States, the FDA regulates drugs and biologicals under the Federal Food, Drug and
Cosmetic Act (“FDCA”), the Public Health Service Act (“PHSA”), and implementing regulations. In addition,
establishments that manufacture human cells, tissues, and cellular and tissue-based products are subject to additional registration
and listing requirements, including current good tissue practice regulations. To the extent AgeX develops cellular and tissue-based
products or therapies, its products will be subject to review by the FDA staff in its Center for Biologics Evaluation and Research
(“CBER”) Office of Cellular, Tissue, and Gene Therapies. In some instances, AgeX’s clinical study protocol for
a cell therapy product must be reviewed by the National Institute of Health through its Recombinant DNA Advisory Committee.



Any
human drug and biological products that we may develop for testing, marketing, or use in the United States will be subject to
rigorous FDA review and approval procedures. After testing in animals to evaluate the potential efficacy and safety of the product
candidate, an investigational new drug (“IND”) submission must be made to the FDA to obtain authorization for human
testing. Extensive clinical testing, which is generally done in three phases, must then be undertaken at a hospital or medical
center to demonstrate optimal use, safety, and efficacy of each product in humans. Each clinical study is conducted under the
auspices of an independent Institutional Review Board (“IRB”). The IRB will consider, among other things, ethical
factors, the safety of human subjects, and the possible liability of the institution.



22









Clinical
trials are generally conducted in three “phases.” Phase I clinical trials are conducted in a small number of healthy
volunteers or volunteers with the target disease or condition to assess safety. Phase II clinical trials are conducted with groups
of patients afflicted with the target disease or condition in order to determine preliminary efficacy, optimal dosages and expanded
evidence of safety. In some cases, an initial trial is conducted in diseased patients to assess both preliminary efficacy and
preliminary safety, in which case it is referred to as a Phase I/II trial. Phase III trials are large-scale, multi-center, comparative
trials and are conducted with patients afflicted with the target disease or condition in order to provide enough data to demonstrate
the efficacy and safety required by the FDA. The FDA closely monitors the progress of each of the three phases of clinical testing
and may, at its discretion, re-evaluate, alter, suspend, or terminate the clinical trial based upon the data which have been accumulated
to that point and its assessment of the risk/benefit ratio to the intended patient population. All adverse events must be reported
to the FDA. Monitoring of all aspects of the study to minimize risks is a continuing process. The time and expense required to
perform this clinical testing can far exceed the time and expense of the research and development initially required to create
the product.



No
action can be taken to market any therapeutic product in the U.S. until an appropriate New Drug Application (“NDA”)
or Biologics License Application (“BLA”) has been approved by the FDA. Submission of the application is no guarantee
that the FDA will find it complete and accept it for filing. If an application is accepted for filing, following the FDA’s
review, the FDA may grant marketing approval, request additional information, or deny the application if it determines that the
application does not provide an adequate basis for approval. FDA regulations also restrict the export of therapeutic products
for clinical use prior to FDA approval. To date, the FDA has not granted marketing approval to any pluripotent stem-based therapeutic
products and it is possible that the FDA or foreign regulatory agencies may subject our product candidates to additional or more
stringent review than drugs or biologicals derived from other technologies.



The
FDA offers several programs to expedite development of products that treat serious or life-threatening illnesses and that provide
meaningful therapeutic benefits to patients over existing treatments. A product may be eligible for breakthrough therapy designation
if it treats a serious or life-threatening disease or condition and preliminary clinical evidence indicates it may demonstrate
substantial improvement over existing therapies on one or more clinically significant endpoints. In 2017, FDA established a new
regenerative medicine advanced therapy (“RMAT”) designation as part of its implementation of the 21st Century Cures
Act. An RMAT is defined as a cell therapy, therapeutic tissue engineering product, human cell and tissue product, or any combination
product using such therapies or products, with limited exceptions that is intended to treat, modify, reverse, or cure a serious
or life-threatening disease or condition; and preliminary clinical evidence indicates that it has the potential to address unmet
medical needs for such a disease or condition. RMAT designation provides potential benefits that include more frequent meetings
with FDA to discuss the development plan for the product candidate and eligibility for rolling review and priority review. Products
granted RMAT designation may also be eligible for accelerated approval on the basis of a surrogate or intermediate endpoint reasonably
likely to predict long-term clinical benefit, or reliance upon data obtained from a meaningful number of sites, including through
expansion to additional sites. Once approved, when appropriate, the FDA can permit fulfillment of post-approval requirements under
accelerated approval through the submission of clinical evidence, clinical studies, patient registries, or other sources of real
world evidence such as electronic health records; through the collection of larger confirmatory datasets; or through post-approval
monitoring of all patients treated with the therapy prior to approval.



Some
of our future products may be eligible for RMAT designation. There is no assurance that the FDA will grant breakthrough therapy,
accelerated approval or RMAT status to any of our product candidates.



In
addition to regulations in the United States, we are subject to a variety of foreign regulations governing clinical trials and
commercial sales and distribution of our products. Whether or not we obtain FDA approval for a drug candidate, we must obtain
approval by the comparable regulatory authorities of foreign countries or economic areas, such as the European Union, before we
can commence clinical trials or market products in those countries or areas. The approval process and requirements governing the
conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from place to place, and the time may be
longer or shorter than that required for FDA approval.



Combination
Products



If
we develop any products that are used with medical devices, they may be considered combination products, which are defined by
the FDA to include products comprised of two or more regulated components or parts such as a biologic and a device. For example,
we may use HyStem® hydrogels to administer one or more pluripotent stem cell-based therapy products. When regulated
independently, biologics and devices each have their own regulatory requirements. However, regulatory requirements for a combination
product comprised of a biologic administered with a delivery device can be more complex, because in addition to the individual
regulatory requirements for each component, additional combination product regulatory requirements may apply.



23







510(k)
Medical Devices & Notification



Product
marketing in the U.S. for most Class II and limited Class I devices typically follows a 510(k) pathway. To obtain 510(k) clearance,
a manufacturer must submit a premarket notification demonstrating that the proposed device is substantially equivalent to a legally
marketed device, referred to as the predicate device. A predicate device may be a previously 510(k) cleared device or a device
that was in commercial distribution before May 28, 1976 for which the FDA has not yet called for submission of PMA applications,
or a product classification created by FDA when it granted de novo authorization. The manufacturer must show that the proposed
device has the same intended use as the predicate device, and it either has the same technological characteristics, or it is shown
to be equally safe and effective and does not raise different questions of safety and effectiveness as compared to the predicate
device.



There
are three types of 510(k)s: traditional; special, for devices that are modified and the modification needs a new 510(k) but the
modification does not affect the intended use or alter the fundamental scientific technology of the device; and abbreviated, for
devices that conform to a recognized standard. The special and abbreviated 510(k)s are intended to streamline review. The FDA
intends to process special 510(k)s within 30 days of receipt and abbreviated 510(k)s within 90 days of receipt. Though statutorily
required to clear a traditional 510(k) within 90 days of receipt, the clearance pathway for traditional 510(k)s can take substantially
longer.



After
a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would
constitute a major change in its intended use, requires a new 510(k) clearance or could require a PMA approval. The FDA requires
each manufacturer to make this determination in the first instance, but the FDA can review any such decision. If the FDA disagrees
with a manufacturer’s decision not to seek a new 510(k) clearance, the agency may retroactively require the manufacturer
to seek 510(k) clearance or PMA approval. The FDA also can require the manufacturer to cease marketing and/or recall the modified
device until 510(k) clearance or PMA approval is obtained.



Post-Approval
Matters



Even
after initial FDA approval has been obtained, further studies may be required to provide additional data on safety or to gain
approval for the use of a product as a treatment for clinical indications other than those initially targeted. Data resulting
from these clinical trials may result in expansions or restrictions to the labeled indications for which a product has already
been approved.



FDA
Regulation of Manufacturing



The
FDA regulates the manufacturing process of pharmaceutical products, human tissue and cell products, and medical devices, requiring
that they be produced in compliance with cGMP. The FDA regulates and inspects equipment, facilities, laboratories, and processes
used in the manufacturing and testing of products prior to providing approval to market products. If after receiving approval
from the FDA, a material change is made to manufacturing equipment or to the location or manufacturing process, additional regulatory
review may be required. The FDA also conducts regular, periodic visits to re-inspect the equipment, facilities, laboratories and
processes of manufacturers following an initial approval. If, as a result of those inspections, the FDA determines that that equipment,
facilities, laboratories or processes do not comply with applicable FDA regulations and conditions of product approval, the FDA
may seek civil, criminal or administrative sanctions and/or remedies against the manufacturer, including suspension of manufacturing
operations. Issues pertaining to manufacturing equipment, facilities or processes may also delay the approval of new products
undergoing FDA review.



Federal
Funding of Research



Effective
July 7, 2009, the National Institutes of Health (“NIH”) adopted guidelines on the use of hES cells in federally funded
research, consistent with President Obama’s Executive Order which rescinded President Bush’s Executive Orders that
permitted federal funding of research on hES cells using only the limited number of hES cell lines. The central focus of the guidelines
is to assure that hES cells used in federally funded research are derived from human embryos that were created for reproductive
purposes, are no longer needed for this purpose, and are voluntarily donated for research purposes with the informed written consent
of the donors. Those hES cells that were derived from embryos created for research purposes rather than reproductive purposes,
and other hES cells that were not derived in compliance with the guidelines, are not eligible for use in federally funded research.



California
State Regulations



The
state of California has adopted legislation and regulations that require institutions that conduct stem cell research to notify,
and in certain cases obtain approval from, a Stem Cell Research Oversight Committee (“SCRO Committee”) before conducting
the research. Under certain California regulations, all hES cell lines that will be used in our research must be acceptably derived.
California regulations further require certain records to be maintained with respect to stem cell research and the materials used.
AgeX programs that involve the use of stem cells will be reviewed by a SCRO Committee to confirm compliance with federal and state
guidelines. The hES cell lines that we use are all on the NIH registry of lines that have been reviewed and meet standards for
federal funding grants.



24









Health
Insurance Portability and Accountability Act



Under
the Health Insurance Portability and Accountability Act (“HIPAA”), the Department of Health and Human Services (“HHS”)
has issued regulations to protect the privacy and security of protected health information used or disclosed by health care providers.
HIPAA also regulates standardization of data content, codes, and formats used in health care transactions and standardization
of identifiers for health plans and providers. Penalties for violations of HIPAA regulations include civil and criminal penalties.



The
requirements under these regulations may periodically change and could have an effect on our business operations if compliance
becomes substantially more costly than under current requirements. New laws governing privacy may also be adopted in the future.
We can provide no assurance that we will remain in compliance with diverse privacy requirements in all of the jurisdictions in
which we do business. Failure to comply with privacy requirements could result in civil or criminal penalties, which could have
a materially adverse effect on our business.



Federal
and State Fraud and Abuse Laws



We
are also subject to various laws pertaining to healthcare “fraud and abuse,” including anti-kickback laws and false
claims laws. Anti-kickback laws make it illegal to solicit, offer, receive or pay any remuneration in exchange for or to induce
the referral of business, including the purchase or prescription of a particular drug that is reimbursed by a state or federal
program. False claims laws prohibit knowingly and willingly presenting or causing to be presented for payment to third-party payers
(including Medicare and Medicaid) any claims for reimbursed drugs or services that are false or fraudulent, claims for items or
services not provided as claimed or claims for medically unnecessary items or services. Violations of fraud and abuse laws may
be punishable by criminal and/or civil sanctions, including fines and civil monetary penalties, as well as by the possibility
of exclusion from federal healthcare programs (including Medicare and Medicaid). Liability under the false claims laws may also
arise when a violation of certain laws or regulations related to the underlying products (e.g., violations regarding improper
promotional activity or unlawful payments) contributes to the submission of a false claim.



Additionally,
the U.S. Foreign Corrupt Practices Act (“FCPA”) prohibits U.S. corporations and their representatives from offering,
promising, authorizing or making payments to any foreign government official, government staff member, political party or political
candidate in an attempt to obtain or retain business abroad. The scope of the FCPA includes interactions with certain healthcare
professionals in many countries. Other countries have enacted similar anti-corruption laws and/or regulations.



Healthcare
Reform



In
the United States and foreign jurisdictions, there have been a number of legislative and regulatory changes to the healthcare
system that could affect our future results of operations. There have been and continue to be a number of initiatives at the United
States federal and state levels that seek to reduce healthcare costs.



In
particular, the Affordable Care Act (“ACA”) has had, and is expected to continue to have, a significant impact on
the healthcare industry. The ACA was designed to expand coverage for the uninsured while at the same time containing overall healthcare
costs. Substantial new provisions affecting compliance have also been enacted, which may require us to modify our business practices
with healthcare providers and entities, and a significant number of provisions are not yet, or have only recently become, effective.



Since
its enactment, there have been judicial and Congressional challenges to certain aspects of the ACA, as well as efforts by the
current administration to repeal or replace certain aspects of the ACA. For example, since January 2017, the President has signed
two Executive Orders and other directives designed to delay, circumvent, or loosen certain requirements mandated by the ACA. Concurrently,
Congress has considered legislation that would repeal or repeal and replace all or part of the ACA. While Congress has not passed
comprehensive repeal legislation, two bills affecting the implementation of certain taxes under the ACA were signed into law.
The Tax Cuts and Jobs Act of 2017, or the Tax Act, includes a provision repealing, effective January 1, 2019, the tax-based shared
responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part
of a year that is commonly referred to as the “individual mandate.” Additionally, on January 22, 2018, the President
signed a continuing resolution on appropriations for fiscal year 2018 that delayed the implementation of certain ACA-mandated
fees, including the so-called “Cadillac” tax on certain high cost employer-sponsored insurance plans, the annual fee
imposed on certain health insurance providers based on market share, and the medical device excise tax on non-exempt medical devices.
Further, the Bipartisan Budget Act of 2018, or the BBA, among other things, amends the ACA, effective January 1, 2019, to close
the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole,” and increase from 50% to 70%
the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in the Medicare Part D program. There
may be additional challenges and amendments to the ACA in the future. The ACA is likely to continue the downward pressure on pharmaceutical
pricing and may also increase our regulatory burdens and operating costs.



25









Further,
there has been heightened government scrutiny over the manner in which manufacturers set prices for their marketed pharmaceutical
products. Such scrutiny has resulted in several recent Congressional inquiries and proposed and enacted federal and state legislation
designed to, among other things, bring more transparency to pharmaceutical product pricing, review the relationship between pricing
and manufacturer patient programs, and reform government program reimbursement methodologies for products. At the federal level,
the current administration’s budget proposal for fiscal year 2019 contains further drug price control measures that could
be enacted during the 2019 budget process or in other future legislation, including, for example, measures to permit Medicare
Part D plans to negotiate the price of certain drugs under Medicare Part B, to allow some states to negotiate drug prices under
Medicaid, and to eliminate cost sharing for generic drugs for low-income patients. Additionally, on May 11, 2018, President Trump
laid out his administration’s “Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs” to reduce the
cost of prescription drugs while preserving innovation and cures. The Department of Health and Human Services has already started
the process of soliciting feedback on some of these measures and, at the same, is immediately implementing others under its existing
authority. Although some of these and other proposals will require authorization through additional legislation to become effective,
Congress and the Trump administration have each indicated that it will continue to seek new legislative and/or administrative
measures to control drug costs. At the state level, legislatures have become increasingly aggressive in passing legislation and
implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement
constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in
some cases, designed to encourage importation from other countries and bulk purchasing.



It
is uncertain whether and how future legislation, whether domestic or foreign, could affect prospects for our product candidates
or what actions foreign, federal, state, or private payors for health care treatment and services may take in response to any
such health care reform proposals or legislation. Adoption of price controls and other cost-containment measures, and adoption
of more restrictive policies in jurisdictions with existing controls and measures reforms may prevent or limit our ability to
generate revenue, attain profitability or commercialize our product candidates.



Moreover,
the Drug Supply Chain Security Act imposes new obligations on manufacturers of pharmaceutical products, among others, related
to product tracking and tracing, which is being phased in over several years beginning in 2015. Among the requirements of this
new legislation, manufacturers will be required to provide certain information regarding the drug product to individuals and entities
to which product ownership is transferred, label drug product with a product identifier, and keep certain records regarding the
drug product. The transfer of information to subsequent product owners by manufacturers will eventually be required to be done
electronically. Manufacturers will also be required to verify that purchasers of the manufacturers’ products are appropriately
licensed. Further, under this new legislation, manufacturers will have drug product investigation, quarantine, disposition, and
notification responsibilities related to counterfeit, diverted, stolen, and intentionally adulterated products, as well as products
that are the subject of fraudulent transactions or which are otherwise unfit for distribution such that they would be reasonably
likely to result in serious health consequences or death.



Reimbursement



Medicare,
Medicaid, and Third-Party Reimbursement Programs



Sales
of the therapeutic products and medical devices that we and our subsidiaries may develop will depend, in part, on the extent to
which the costs of those products will be covered by third-party payors, such as government health programs, commercial insurance,
and managed healthcare organizations.



The
containment of healthcare costs has become a priority of federal and state governments and the prices of drugs have been a focus
in this effort. In the United States, the federal and many state governments have adopted or proposed initiatives relating to
Medicaid and other health programs that may limit reimbursement or increase rebates that providers are required to pay to the
state. In addition to government regulation, managed care organizations in the United States, which include medical insurance
companies, medical plan administrators, health-maintenance organizations, hospital and physician alliances and pharmacy benefit
managers, continue to put pressure on the price and usage of healthcare products. Managed care organizations and third-party payers
seek to contain healthcare expenditures, and their purchasing strength has been increasing due to their consolidation into fewer,
larger organizations and a growing number of enrolled patients. Adoption of price controls, cost-containment measures, and more
restrictive policies in jurisdictions with existing controls and measures, could further limit our net revenue and results. If
third-party payors do not consider the products we develop to be cost-effective compared to other therapies, they may not cover
our products as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow us to sell our
products on a profitable basis.



Efforts
by government agencies and state legislatures in the United States could affect us and our industry. The ACA increased many of
the mandatory discounts and rebates and imposed a new Branded Prescription Pharmaceutical Manufacturers and Importers fee payable
by manufacturers. The new U.S. presidential administration has identified repealing and replacing the ACA as a priority. The timing
and method of the full or partial repeal or amendment of the ACA or the adoption of new healthcare legislation remains uncertain,
but impending changes will likely impact the number of patient lives covered, the quality of the insurance, Medicaid eligibility
and the level of patient protections provided.



Other
legislative and regulatory actions that would have a significant impact include: changes to how the Medicare program covers and
reimburses current and future drugs, changes in the Federal payment rate or new rebate requirements for covered drugs and policies
for payment in Medicare or Medicaid; and changes to coverage and payment for biosimilars, including the current Medicare biosimilar
coverage and payment policies intended to encourage biosimilar adoption, or other policies that provide easier substitution or
reimbursement advantages.



We
face similar issues outside of the United States. In some non-U.S. jurisdictions, the proposed pricing for a drug must be approved
before it may be lawfully marketed. The requirements governing drug pricing vary widely from country to country. For example,
the EU provides options for its member states to restrict the range of medicinal products for which their national health insurance
systems provide reimbursement and to control the prices of medicinal products for human use. A member state may approve a specific
price for aa medicinal product, or it may instead adopt a system of direct or indirect controls on the profitability of placing
a medicinal product on the market. There can be no assurance that any country that has price controls or reimbursement limitations
for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products. Historically,
products launched in the EU do not follow price structures of the United States and generally tend to be significantly lower.



Employees



As
of December 31, 2019, we employed 17 persons on a full-time basis, of which seven employees hold Ph.D.’s in one or more
fields of science.



26







Item
1A. Risk Factors



Our
business is subject to various risks, including those described below. You should consider the following risk factors, together
with all of the other information included in this Report, which could materially adversely affect our proposed operations, our
business prospects, and financial condition, and the value of an investment in our business. There may be other factors that are
not mentioned here or of which we are not presently aware that could also affect our business operations and prospects.



Risks
Related to Our Business Operations



We
need additional financing to execute our operating plan and continue to operate as a going concern.



As
required under Accounting Standards Update 2014-15, Presentation of Financial Statements-Going Concern (ASC 205-40), we
have the responsibility to evaluate whether conditions and/or events raise substantial doubt about our ability to meet our future
financial obligations as they become due within one year after the date the financial statements are issued. Based on our most
recent projected cash flows, we believe that our cash and cash equivalents, even with the New Loan Agreement from Juvenescence
described in Note 9 to our consolidated financial statements included elsewhere in this Report, 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 and the report of our independent registered
public accountants accompanying our audited financial statements in this Report contains a qualification to such effect. Because
we will continue to experience net operating losses, our ability to continue as a going concern is subject to our ability to obtain
necessary capital from outside sources, including obtaining additional capital from the sale of our equity securities or assets,
obtaining additional loans from financial institutions or investors, and entering into collaborative research and development
arrangements or licensing some or all of our patents and know-how to third parties while retaining a royalty and other contingent
payment rights related to the development and commercialization of products covered by the licenses. Any such collaborative research
and development or licensing arrangements may generate significantly less revenue for us than we would receive if we were to successfully
develop and market products on our own, or if we were to enter into such arrangements when our technologies and product candidates
are at a later stage of development. Our continued net operating losses and the risks associated with the development of our product
candidates and technologies will increase the difficulty in obtaining such capital, and there can be no assurances that we will
be able to obtain such capital on favorable terms or at all. If we are unable to raise capital when needed, we may be forced to
delay, reduce or eliminate our research and development activities, or ultimately not be able to continue as a going concern.



Our New Loan Agreement with Juvenescence
does not assure that we will be able to borrow more than $500,000 and all of the loans under the New Loan Agreement will become
collateralized by our assets and those of most of our subsidiaries if we make more than two draws of funds under the New Loan
Agreement.



Under the terms of
the New Loan Agreement with Juvenescence described in Note 9 to our consolidated financial statements included elsewhere in this
Report, we will initially borrow $500,000 as an unsecured loan. Although the New Loan Agreement provides that Juvenescence may
lend us up to $8 million, loans in excess of the initial $500,000 are subject to Juvenescence’s discretion and Juvenescence
will require that we implement a plan prior to April 30, 2020 to reduce our spending on employee salaries and consulting fees
and pay no bonuses for 2019 in order to borrow more than the initial $500,000, meaning that there is no assurance that we will
be able to borrow more than the initial $500,000. Further, if we make more than two draws of funds (generally borrowing more than
$1,000,000 through the two initial draws) under the New Loan Agreement, all of our borrowings under the New Loan Agreement will
become collateralized by all of our assets and those of our subsidiaries ReCyte Therapeutics and Reverse Bio (the “Guarantor
Subsidiaries”) under the terms of a Security and Pledge Agreement. This means that if an Event of Default, as defined in
the New Loan Agreement, or other default under the Security and Pledge Agreement, were to occur after we make more than two draws
of funds, Juvenescence could foreclose on its security interest and sell our assets and those of our Guarantor Subsidiaries to
satisfy the unpaid principal balance of those loans plus costs incurred in connection with the Event of Default and the foreclosure
and sale of the assets. As a result, we and our Guarantor Subsidiaries could lose some or all of our respective assets, leaving
few if any assets available for the operation of our business or the business of our subsidiaries, or for sale for the benefit
of our stockholders through a winding up of our affairs and liquidation of our assets.



If we borrow more than $500,000 under
the New Loan Agreement with Juvenescence we will have to substantially restructure our plans and operations.



Although Juvenescence
will retain discretion whether to fund all but the initial $500,000 draw request, as a condition to borrowing more than $500,000
under the New Loan Agreement AgeX must implement a plan during April 2020 to reduce spending on employee salaries and consulting
fees (the “Restructuring Plan”) to a degree that will result in large staff reductions which may be coupled with salary
reductions for certain employees who agree to a pay reduction in order to remain employed. Management believes that implementing
such a Restructuring Plan would likely require the elimination of certain management and administrative personnel and most of
its research personnel, which in turn would mean that AgeX would cease development of some or all of its product candidates or
technologies unless research and development work could be contracted out to third party service providers within the newly imposed
budgetary constraints. Accordingly, borrowing more than $500,000 under the New Loan Agreement could have a significant impact
on AgeX’s pursuit of the development of the product candidates and technologies described under “Business” in
this Report.



The terms of our New Loan Agreement
with Juvenescence could make it more difficult for us to raise additional capital from other sources.



The New Loan Agreement
with Juvenescence, among other matters: (a) requires AgeX and the Guarantor Subsidiaries to grant Juvenescence a security interest
and lien on substantially all of our respective assets if AgeX makes more than two draws of funds (generally meaning if AgeX borrows
more than $1,000,000); (b) requires AgeX to issue additional common stock purchase warrants to Juvenescence; (c) requires AgeX
to implement a Restructuring Plan during April 2020 to reduce spending on employee salaries and consulting fees in order to make
a second draw of funds (although Juvenescence will retain discretion whether to fund the draw request); and (d) prohibits AgeX
and the Guarantor Subsidiaries from borrowing funds from other lenders or engaging in certain secured transactions without the
consent of Juvenescence, unless we repay all amounts owed to Juvenescence under the New Loan Agreement and the $2 million we borrowed
under the August 2019 Loan Facility Agreement discussed in Note 4 to our consolidated financial statements. The requirement that
we implement a plan during April 2020 to reduce our spending on employee salaries and consulting fees would necessitate staffing
reductions that would require a substantial curtailment of our operations, including our research and development efforts. Accordingly,
the terms of the New Loan Agreement could require AgeX to make significant changes to its operations and research and development
plans, which could make AgeX less attractive to new equity investors and could impair our ability to finance our operations or
the operations of our Guarantor Subsidiaries from sources other than Juvenescence.



27











Raising additional capital may cause
dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.



Until such time, if
ever, as we can generate substantial revenue, we may finance our cash needs through a combination of equity offerings, debt financings,
strategic alliances and licensing arrangements. We do not currently have any committed external source of funds other than the
right to borrow $500,000 under the New Loan Agreement. We will need to seek additional capital regardless of market conditions
and the terms of any financings that may be available to us.



To the extent that
we raise additional capital through the sale of equity or convertible debt securities, or debt coupled with warrants or other
equity securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other
preferences that adversely affect your rights as a common stockholder. We will need to issue shares of common stock and common
stock purchase warrants to Juvenescence in connection with borrowings under the New Loan Agreement, which to the extent issued
will dilute the interests of our other stockholders. Debt financing and preferred equity 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. If we raise additional funds through collaborations, strategic alliances or
marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights to our
technologies, future revenue streams or product candidates or grant licenses on terms that may not be favorable to us. If we are
unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or
terminate our product development or future commercialization efforts or grant rights to develop and market product candidates
that we would otherwise prefer to develop and market ourselves.



We are a discovery-stage development
company and have incurred operating losses since our inception. We anticipate that we will incur continued losses for the foreseeable
future, and we do not know if we will ever attain profitability.



We are a discovery-stage
therapeutics company with a limited operating history. Since our inception in August 2017, we have incurred operating losses and
negative cash flows and we expect to continue to incur losses and negative cash flow in the future. Our operating losses were
$12.6 million and $11.2 million for the years ended December 31, 2019 and 2018, respectively, and we had an accumulated deficit
of approximately $86.2 million as of December 31, 2019. We have devoted most of our financial resources to research and development,
including our preclinical development activities.



We expect to continue
to incur significant additional operating losses for the foreseeable future if we seek to advance product candidates through preclinical
and clinical development conduct clinical trials, seek regulatory approval and, if we receive FDA approval, commercialize our
product candidates. Furthermore, the costs of advancing product candidates into each succeeding clinical phase tend to increase
substantially over time. The total costs to advance any of our product candidates to marketing approval in even a single jurisdiction
would be substantial. Because of the numerous risks and uncertainties associated with development of cell-based and drug-based
therapeutics, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to
begin generating revenue from the commercialization of products (other than through our LifeMap Sciences subsidiary) or achieve
or maintain profitability.



Our ability to successfully
develop, commercialize and license our products and generate product revenue is subject to substantial additional risks and uncertainties.
Each of our programs and product candidates will require additional preclinical and clinical development, potential regulatory
approval in multiple jurisdictions, securing manufacturing supply, capacity and expertise, building of a commercial organization,
substantial investment and significant marketing efforts before we generate any operating income from product sales. As a result,
we expect to continue to incur net losses and negative cash flows for the foreseeable future. These net losses and negative cash
flows have had, and will continue to have, an adverse effect on our stockholders’ equity and working capital. The amount
of our future net losses will depend, in part, on the rate of future growth of our expenses, our ability raise the capital needed
to continue our operations, and our ability to generate revenues. If we are unable to develop and commercialize one or more of
our product candidates either alone or with collaborators, or if revenues from any product candidate that receives marketing approval
are insufficient, we will not achieve profitability. Even if we do achieve profitability, we may not be able to sustain or increase
profitability. If we are unable to achieve and then maintain profitability, the value of our equity securities will be materially
and adversely affected.



28









We
have not tested any of our product candidates in clinical trials. Success in early development and preclinical studies or clinical
trials may not be indicative of results obtained in later preclinical studies and clinical trials.



Our
product candidates have never been evaluated in human clinical trials, and we may experience unexpected or adverse results in
the future. We will be required to demonstrate through adequate and well-controlled clinical trials that our product candidates
are safe and effective, with a favorable benefit-risk profile, for use in their target indications before we can seek regulatory
approvals for their commercial sale. Any positive results that have been observed for product candidates similar to ours in preclinical
animal models may not be predictive of future clinical trials in humans. Our product candidates may also fail to show the desired
safety and efficacy in later stages of clinical development even if they successfully advance through initial clinical trials.
Further, some or all of our cell-based therapies under development may require the genetic modification of the pluripotent master
cell banks such that the resulting cells can escape immune rejection by the intended patient. There is no certainty that said
genetic modification will provide a long-term solution to transplant rejection, or that said modified cells will not cause unanticipated
health risks to the patient that could delay or even halt the development of the products.



Many
companies in the biotechnology industry have suffered significant setbacks in late-stage clinical trials after achieving positive
results in early-stage development and there is a high failure rate for product candidates proceeding through clinical trials.
Data obtained from preclinical and clinical activities are subject to varying interpretations, which may delay, limit or prevent
regulatory approval. Even if we demonstrate statistical significance, regulatory agencies may not accept the use of the historical
control. Regulatory delays or rejections may be encountered as a result of many factors, including changes in regulatory policy
during the period of product development. We cannot be certain that we will not face similar setbacks.



We
do not currently have any products on the market and have not yet generated any substantial revenues from operations.



We
were established and began operations in 2017. Our operations to date have been limited to the preliminary financing and staffing
of our company, developing our technology and identifying and developing our product candidates. We have not yet demonstrated
an ability to successfully commence or complete any clinical trials, including large-scale, pivotal clinical trials, obtain marketing
approval, manufacture a research or commercial scale product, or arrange for a third party to do so on our behalf, or conduct
sales and marketing activities necessary for successful product commercialization. Typically, it takes about six to ten years
to develop a new drug from the time it enters Phase 1 clinical trials to when it is approved for treating patients, but in many
cases it may take longer. Consequently, predictions about our future success or viability may not be as accurate as they could
be if we had a longer operating history or a history of successfully developing and commercializing genetic medicine products.
In addition, as a business with a limited operating history, we may encounter unforeseen expenses, difficulties, complications,
delays and other known and unknown factors. We will eventually need to transition from a company with a research focus to a company
capable of supporting commercial activities. We may not be successful in such a transition.



We
need to successfully develop and market or license therapeutic products or technologies in order to earn revenues in sufficient
amounts to meet our operating expenses. Without significant product sales or licensing fee revenues, we will not be able to operate
at a profit, and we will not be able to cover our operating expenses without raising additional capital. Should we be able to
successfully develop and market any therapeutic products we may not be able to receive reimbursement for them from payers, such
as health insurance companies, health maintenance organizations and Medicare, or any reimbursement that we receive may be lower
than we anticipate.



29









Our
choice of product candidates and our development plans for our product candidates are subject to change based on a variety of
factors, and if we abandon development of a product candidate we may not be able to develop or acquire a replacement product candidate.





We
may determine to abandon the development of one or more of our product candidates, or we may change the prioritization of the
development of certain product candidates, or we may select or acquire and prioritize the development of new product candidates.
Our choice and prioritization of product candidates for development will be influenced by a variety of factors, including but
not limited to:



| | ● | the amount of capital
    that we will have for our development programs and our projected costs for those programs;                                                                                                                                           
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                
| | ● | competitors may
    develop alternatives that render our potential product candidates obsolete or less attractive;                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                
| | ● | potential product
    candidates we develop may nevertheless be covered by third parties’ patents or other exclusive rights;                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                
| | ● | potential product
    candidates may, on further study, be shown to have harmful side effects, toxicities or other characteristics that indicate
    that they are unlikely to be products that will receive marketing approval and achieve market acceptance; 
| |   |                                                                                                                                                                                                                                                                
| | ● | potential product
    candidates may not be effective in treating their targeted diseases;                                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                
| | ● | our analysis of
    market demand and market prices for the products we plan to develop could lead us to conclude that market conditions are not
    favorable for receiving an adequate return on our investment in product development and commercialization;
| |   |                                                                                                                                                                                                                                                                
| | ● | a potential product
    candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; or                                                                                                                           
| |   |                                                                                                                                                                                                                                                                
| | ● | the regulatory pathway
    for a potential product candidate is too complex and difficult to navigate successfully or economically.                                                                                                                            



We
may expend our limited resources to pursue one or more particular product candidates or indications and fail to capitalize on
product candidates or indications that may be more profitable or for which there is a greater likelihood of success.



Because
we have limited financial and managerial resources, we focus on research programs and product candidates that we identify for
specific indications. As a result, we may forego or delay pursuit of opportunities with other product candidates or for other
indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to timely
capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development
programs and product candidates for specific indications may not yield any commercially viable products. If we do not accurately
evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that
product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous
for us to retain sole development and commercialization rights to such product candidate.











If we do not implement the Restructuring
Plan, we will need to expand our organization if we are able to raise sufficient capital to do so, and we may experience difficulties
in managing this growth, which could disrupt our operations.







As of December 31,
2019, we had 21 employees. If we determine not to implement the Restructuring Plan and are able to obtain sufficient capital to expand our organization, we may have difficulty identifying, hiring and integrating new personnel. Future growth would impose
significant additional responsibilities on our management, including the need to identify, recruit, maintain, motivate and integrate
additional employees, consultants and contractors. Also, our management may need to divert a disproportionate amount of its attention
away from our day-to-day activities and devote a substantial amount of time to managing these growth activities. We may not be
able to effectively manage the expansion of our operations, which may result in weaknesses in our infrastructure, give rise to
operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees. Any
growth of administrative resources could require significant capital expenditures and may divert financial resources from other
projects, such as the development of product candidates. If our management is unable to effectively manage our growth, our expenses
may increase more than expected, our ability to generate and/or grow revenues could be reduced, and we may not be able to implement
our business strategy. Our future financial performance and our ability to commercialize our product candidates and compete effectively
will depend, in part, on our ability to effectively manage any future growth.





Many
of the biotechnology companies that we compete against for qualified personnel and consultants have greater financial and other
resources, different risk profiles and a longer history in the industry than we do. If we are unable to continue to attract and
retain high-quality personnel and consultants, the rate and success at which we can discover and develop product candidates and
operate our business will be limited.







The
commercial success of any of our current or future product candidates will depend upon the degree of market acceptance by physicians,
patients, third-party payors, and others in the medical community.



Even
with approvals from the FDA and comparable foreign regulatory authorities, the commercial success of our products will depend
in part on the health care providers, patients, and third-party payors accepting our product candidates as medically useful, cost-effective,
and safe. Any product that we bring to the market may not gain market acceptance by physicians, patients, third-party payors and
other health care providers. The clinical development, commercialization, and marketing of cell therapies are at an early-stage,
substantially research-oriented, and financially speculative. To date, very few companies have been successful in their efforts
to develop and commercialize cell therapies. In general, cell therapies may be susceptible to various risks, including undesirable
and unintended side effects, unintended immune system responses, inadequate therapeutic efficacy, potentially prohibitive costs
or other characteristics that may prevent or limit their approval or commercial use. Furthermore, the number of people who may
use cell- or tissue-based therapies is difficult to forecast with accuracy. Our future success is dependent on the establishment
of a large global market for cell therapies and our ability to capture a share of this market with our product candidates.



30









Even
if we successfully develop and obtain regulatory approval for our product candidates, the market may not understand or accept
them. Our product candidates represent novel treatments and are expected to compete with a number of more conventional products
and therapies manufactured and marketed by others, including major pharmaceutical and biotechnology companies. The degree of market
acceptance of any of our products will depend on a number of factors, including without limitation:



| | ● | the
    efficacy of the product as demonstrated in clinical studies and potential advantages over competing treatments;                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                      
| | ● | the
    prevalence and severity of the disease and any side effects;                                                                                                                                                 
| |   |                                                                                                                                                                                                                      
| | ● | the
    clinical indications for which approval is granted, including any limitations or warnings contained in a product’s approved
    labeling;                                                                    
| |   |                                                                                                                                                                                                                      
| | ● | the
    convenience and ease of administration;                                                                                                                                                                      
| |   |                                                                                                                                                                                                                      
| | ● | the
    cost of treatment, particular as additive to existing treatments;                                                                                                                                            
| |   |                                                                                                                                                                                                                      
| | ● | the
    willingness of the patients and physicians to accept and use these therapies and the perception of efficacy and safety of
    our approved products by such parties;                                         
| |   |                                                                                                                                                                                                                      
| | ● | the
    marketing, sales and distribution support for the products;                                                                                                                                                  
| |   |                                                                                                                                                                                                                      
| | ● | the
    publicity and ethical, social and legal concerns regarding the use of embryonic stem cells for our products or competing products
    and treatments; and                                                    
| |   |                                                                                                                                                                                                                      
| | ● | government
    regulations restricting or prohibiting our research or manufacturing processes for stem cells due to ethical, social and legal
    concerns regarding their use in medical research and treatment; and
| |   |                                                                                                                                                                                                                      
| | ● | the
    pricing and availability of third-party insurance coverage and reimbursement.                                                                                                                                



Even
if a product displays a favorable efficacy and safety profile upon approval, market acceptance of the product will initially remain
uncertain. Efforts to educate the medical community and third-party payors on the benefits of the products may require significant
investment and resources and may never be successful. If our products fail to achieve an adequate level of acceptance by physicians,
patients, third-party payors, and other health care providers, we will not be able to generate sufficient revenue to become or
remain profitable.



If
the market opportunities for our product candidates are smaller than we believe they are, we may not meet our revenue expectations
and, even assuming approval of a product candidate, our business may suffer.



Our
projections of the number of potential users of our product candidates in the markets we are attempting to address are based on
our beliefs and estimates and include several key assumptions based on our industry knowledge, industry publications, third-party
research reports and other surveys. You should bear in mind the following:



| | ● | Our
    estimates have been derived from a variety of sources, including publications and scientific literature or market research
    estimating the total number of patients and currently approved or used therapies, as well as certain assumptions regarding
    the potential size of the market assuming broad regulatory approval or potential usage by physicians beyond the approved label,
    any of which may prove to be incorrect.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ● | The
    scope of approval and potential use may be significantly narrower, and the number of patients may turn out to be lower than
    expected.                                                                                                                                                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ● | Competitive
    products or approaches may be approved or come into use by medical providers and the potentially addressable patient population
    for each of our product candidates may be limited or may not be amenable to treatment with our product candidates, and new
    patients may become increasingly difficult to identify or gain access to, any which could adversely affect our results of
    operations and our business.    



31









If
the actual market for any of our product candidates is smaller than we expect, our revenue may be limited and it may be more difficult
for us to achieve or maintain profitability.



We
will face risks related to the manufacture of medical products for any product candidates that we develop.



The
manufacture of medical products, and in particular biologics, is complex and requires significant expertise and capital investment,
including the development of advanced manufacturing techniques and process controls, none of which we presently have. Unless we
are able to raise the capital required to construct our own manufacturing facilities and are able to develop the expertise to
manage and operate a manufacturing facility of our own, we may need to rely on third-party manufacturers to manufacture any products
that we develop. There is no assurance that we will be able to identify manufacturers on acceptable terms or at all. Regardless
of whether we do our own manufacturing or rely on third parties to manufacture products for us, we will face all risks related
to the manufacture of therapeutic products for use in medicine including the following risks:



| | ● | We
    or any third-party manufacturers might be unable to timely formulate and manufacture our products or produce the quantity
    and quality required to meet our clinical and commercial needs, if any.                                                                                                                                                                                                                         
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ● | We
    or any third-party manufacturers may not be able to execute our manufacturing procedures appropriately.                                                                                                                                                                                                                                                                                                                       
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ● | Any
    third-party manufacturers we engage may not perform as agreed or may not remain in the contract manufacturing business for
    the time required to supply our clinical trials or to successfully produce, store and distribute our products on a commercial
    scale.                                                                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ● | We
    or any third-party manufacturers will be subject to ongoing periodic unannounced inspection by the United States Food and
    Drug Administration, or FDA, and corresponding state agencies to ensure strict compliance with cGMP and other government regulations
    and corresponding foreign standards. We will not have control over third-party manufacturers’ compliance with applicable
    regulations and standards.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ● | We
    may not own, or may have to share, the intellectual property rights to any improvements made by our third-party manufacturers
    in the manufacturing process for our product candidates.                                                                                                                                                                                                                                    
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ● | Third-party
    manufacturers could breach or terminate their agreements with us.                                                                                                                                                                                                                                                                                                                                                    
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ● | We
    or third-party manufacturers may experience manufacturing difficulties due to resource constraints or as a result of labor
    disputes or unstable political environments.                                                                                                                                                                                                                                                   



In
addition, we may rely on third parties to perform release testing on our product candidates prior to delivery to patients. If
these tests are not appropriately conducted and test data are not reliable, patients could be put at risk of serious harm which
could result in product liability suits.



If
we or any third-party manufacturers that we may engage were to encounter any of these difficulties, our ability to provide our
product candidates to patients in clinical trials or to the medical marketplace would be jeopardized. Any delay or interruption
in the supply of clinical trial supplies could delay the completion of clinical trials, increase the costs associated with maintaining
clinical trial programs and, depending upon the period of delay, could require us to either commence new clinical trials at additional
expense or terminate clinical trials completely.



The
regulatory authorities also may, at any time following approval of a product for sale, audit our manufacturing facilities or those
of our third-party contractors. If any such inspection or audit identifies a failure to comply with applicable regulations or
if a violation of our product specifications or applicable regulations occurs independent of such an inspection or audit, we or
the relevant regulatory authority may require remedial measures that may be costly and/or time-consuming for us or a third party
to implement and that may include the temporary or permanent suspension of a clinical study or commercial sales or the temporary
or permanent closure of a facility. Any such remedial measures imposed upon us or third parties with whom we contract could materially
harm our business.



32







Additionally,
if supply from one approved manufacturer is interrupted, there could be a significant disruption in commercial supply. The regulatory
agencies may also require additional studies if a new manufacturer is relied upon for commercial production. Switching manufacturers
may involve substantial costs and is likely to result in a delay in our desired clinical and commercial timelines.



Further,
our product candidates are manufactured by starting with established master cell banks of human embryonic cells and other cells
that are cryopreserved. We will be required to expand the numbers of the pluripotent stem cell master cell banks for future use,
as well as produce working cell banks from which the product will be manufactured for clinical trials, produce the relevant product
under cGMP conditions, expand the number of relevant cells and cryopreserve them under cGMP conditions. We may not be able to
expand the numbers of the pluripotent stem cell master cell banks to provide sufficient cells for clinical trial or for commercial
scale production. We may not be able to manufacture product that meets release criteria due to sterility, identity or potency
issues. We may not have access or be able to make the reagents necessary to manufacture the cells and we may not have access to
an adequate supply channels to transport and distribute the products. There are also risks that the cells may be destroyed by
interruption in their cryopreservation by means of natural disasters such as earthquakes, power outages, or other unexpected events,
or the cells may be determined to be unacceptable as a source of human cellular therapies for reasons we cannot envision. We cannot
assure you that any stability or other issues relating to the manufacture of any of our product candidates or products will not
occur in the future. If any of our master cell banks are lost or destroyed, including due to systems failure in the cryopreservation
processes, our planned clinical trials would be severely delayed, and we would incur significant costs associated with obtaining
new supply of cell banks. Accordingly, failures or difficulties faced at any level of our supply chain could adversely affect
our business and delay or impede the development and commercialization of any of our product candidates or products and could
have an adverse effect on our business, prospects, financial condition and results of operations.



Any
therapies that we may develop may compete with other product candidates and products for access to manufacturing facilities. There
are a limited number of manufacturers that operate under cGMP regulations and that might be capable of manufacturing cell-based
products for us. Any performance failure on the part of our existing or future manufacturers could delay clinical development
or marketing approval.



Each
of these risks could delay our clinical trials, any approval of our product candidates by the FDA, or the commercialization of
our product candidates, and could result in higher costs or deprive us of potential product revenue.



Any
cell-based products that receive regulatory approval may be difficult and expensive to manufacture on a commercial scale.



Pluripotent
stem cell and progenitor cell derived therapeutic cells have only been produced on a small scale and not in quantities and at
levels of purity and viability that will be needed for wide scale commercialization. If we are successful in developing products
that consist of cells or compounds derived from pluripotent stem cells or progenitor cells, we will need to develop processes
and technology for the commercial production of those products. Pluripotent stem cell or progenitor cell based products are likely
to be more expensive to manufacture on a commercial scale than most other drugs on the market today. The high cost of manufacturing
a product will require that we charge our customers a high price for the product in order to cover our costs and earn a profit.
If the price of our products is too high, hospitals and physicians may be reluctant to purchase our products and we may not be
able to sell our products in sufficient volumes to recover our costs or to earn a profit.



If
we fail to meet our obligations under license agreements, we may lose our rights to key technologies on which our business depends.



Our
business will depend on several critical technologies that we have licensed or sublicensed from Lineage or certain Lineage subsidiaries.
The license and sublicense agreements impose obligations on us, including payment obligations and obligations to pursue development
and commercialization of products and technologies under the licensed patents or technology. If the licensor or sublicensor believes
that we have failed to meet our obligations under a license or sublicense agreement, they could seek to limit or terminate our
license rights, which could lead to costly and time-consuming litigation and, potentially, our loss of the licensed rights. In
addition, certain of our licensing counterparties may terminate our license rights without cause, including Yeda in connection
with the relational databases in-licensed by LifeMap Sciences. During the period of any such litigation our ability to carry out
the development and commercialization of potential new products or technologies, and our ability to raise any capital that we
might then need, could be significantly and negatively affected. If our license rights were restricted or ultimately lost, we
would not be able to continue to use the licensed or sublicensed technology in our business.







Our
future success depends on our ability to retain our key personnel and to attract, retain and motivate qualified personnel.



Our
industry has experienced a high rate of turnover of management personnel in recent years. We are highly dependent on the development,
regulatory, commercialization and business development expertise of Michael West, Ph.D., our Chief Executive Officer, as well
as the other principal members of our management, scientific and clinical teams. Although we have employment agreements with our
executive officers, these agreements do not prevent them from terminating their employment with us at any time. In addition, because
we will rely on Juvenescence to provide the services of certain administrative and management personnel, we will not have the
benefit of the full time and effort of those Juvenescence employees in the management and development of our business. We could
lose the services of members of management team through the implementation of the Restructuring Plan.



33









If
we lose one or more of our executive officers or key employees, our ability to implement our business strategy successfully could
be seriously harmed. Furthermore, replacing executive officers and key employees may be difficult and may take an extended period
of time because of the limited number of individuals in our industry with the breadth of skills and experience required to develop,
gain regulatory approval of and commercialize product candidates successfully. Competition to hire from this limited pool is intense,
and we may be unable to hire, train, retain or motivate these additional key personnel on acceptable terms given the competition
among numerous pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring
of scientific and clinical personnel from universities and research institutions. In addition, we rely on consultants and advisors,
including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy.
Our consultants and advisors may be engaged by entities other than us and may have commitments under consulting or advisory contracts
with other entities that may limit their availability to us. If we are unable to continue to attract and retain high quality personnel,
our ability to develop and commercialize product candidates will be limited.



Our
business and operations could suffer in the event of system failures.



Despite
the implementation of security measures, our internal computer systems and those of our contractors and consultants are vulnerable
to damage from computer viruses, unauthorized access, natural disasters including earthquakes and tsunamis, terrorism, war, and
telecommunication and electrical failures. Some of our data related to the development of our product candidates resides on Lineage’s
computer servers and will be subject to the same risks described above. Further, while we are working to transfer our data from
Lineage’s servers to our own servers, there is a risk that data could be lost or corrupted while in the process of being
transferred, or could otherwise not be transferred to us. A loss of or damage to our data, a disruption in access to our data,
or inappropriate disclosure of confidential or proprietary information, could disrupt our operations, delay or otherwise adversely
affect the development of our product candidates, significantly increase our costs, or result in delays in any future regulatory
filings we may make.



In
addition, our product candidates are manufactured by starting with cells that are stored in a cryopreserved master cell bank.
While we believe we have adequate backup should any cell bank be lost in a catastrophic event, it is possible that we or our third-party
suppliers and manufacturers could lose multiple cell banks and have our manufacturing severely impacted by the need to replace
the cell banks. See “—We will face risks related to the manufacture of medical products for any product candidates
that we develop.” We cannot assure you that any stability or other issues relating to the manufacture of any of our product
candidates or products will not occur in the future. Any delay or interruption in the supply of clinical trial supplies could
delay the completion of planned clinical trials, increase the costs associated with maintaining clinical trial programs and, depending
upon the period of delay, require us to commence new clinical trials at additional expense or terminate clinical trials completely.
Any adverse developments affecting clinical or commercial manufacturing of our product candidates or products may result in shipment
delays, inventory shortages, lot failures, product withdrawals or recalls or other interruptions in the supply of our product
candidates or products. Accordingly, failures or difficulties faced at any level of our supply chain could adversely affect our
business and delay or impede the development and commercialization of any of our product candidates or products and could have
an adverse effect on our business, prospects, financial condition and results of operations.



Security
breaches and other disruptions could compromise our information and expose us to liability, and could cause our business and reputation
to suffer.



In
the ordinary course of business, we collect and store sensitive data, including intellectual property, our proprietary business
information and that of the licensors and licensees of the patents and other intellectual property we use, and personally identifiable
information of employees and consultants. The secure processing, maintenance, and transmission of this information is critical
to our operations and business strategy. Despite our security measures, our information technology and infrastructure may be vulnerable
to attacks by hackers or breached due to employee error, malfeasance, or other disruptions. Any such breach could compromise our
networks and the information stored there could be accessed, publicly disclosed, lost, or stolen. Any such access, disclosure,
theft, or other loss of information could result in legal claims or proceedings or liability under laws that protect the privacy
of personal information, and could disrupt our operations and damage our reputation. Even if we do not incur an interruption of
or our operations, fines, penalties, or financial liability to third parties from a security breach, we could suffer a loss of
confidence in our services, which could adversely affect our business and competitive position.



34









Failure
of our internal control over financial reporting could harm our business and financial results.



Our
management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control
over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting
for external purposes in accordance with accounting principles generally accepted in the U.S. Internal control over financial
reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable
assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance
that receipts and expenditures of our assets are made in accordance with management authorization; and providing reasonable assurance
that unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements
would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting
is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.
Because we are an emerging growth company and a smaller reporting issuer, we are exempt from the requirement of having our internal
controls over financial reporting audited by our independent registered public accountants, which means that material weaknesses
or significant deficiencies in our internal controls that might be detected by an audit may not be detected and remedied. If we
are successful in developing new medical products and technologies, the commercialization of those products and technologies will
place significant additional pressure on our system of internal control over financial reporting. Any failure to maintain an effective
system of internal control over financial reporting could limit our ability to report our financial results accurately and timely
or to detect and prevent fraud. See “—Risks Pertaining to Our Common Stock—Our accounting and other management
systems and resources may not be adequately prepared to meet the financial reporting and other requirements to which we will be
subject, and failure to achieve and maintain effective internal controls could have a material adverse effect on our business
and the price of our common stock.”



The
outbreak of the corona virus COVID 19 could adversely affect our operations.



The
outbreak of the corona virus COVID 19 could disrupt our operations due to absenteeism by ill employees or employees who elect
not to come to work due to the illness affecting other employees 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.



Supplies
of chemical reagents and other supplies used in our laboratory could be disrupted if the manufacturers experience absenteeism
due to illness of their employees or due to quarantines. Absenteeism due to corona virus illness could also impact companies that
the manufacturers use to ship reagents or other supplies to us. Employee absenteeism or supply disruptions could impair our ability
to conduct our day to day business. Similar disruptions could be experienced by third parties performing research and development
work cooperatively with us or for us under contracts, which would also adversely affect our ability to make progress in our research
and development programs. We cannot presently predict the extent to which the virus may impact our operations.



The
anticipated economic consequences of the COVID-19 pandemic have adversely impacted financial markets, resulting in high share
price volatility, reduced market liquidity, and substantial declines in the market prices of the shares of most publicly traded
companies, including shares of AgeX common stock. Volatile or declining markets for equities could adversely affect our ability
to raise capital when needed through the sale of shares of common stock or other equity securities. While these market conditions
persist when we need to raise capital, and if we are able to sell shares of our common stock under then prevailing market conditions,
we might have to accept lower prices for our shares and issue a larger number of shares than might have been the case under better
market conditions, resulting in significant dilution of the interests of our shareholders.



Recent
changes in U.S. federal income tax law may have an adverse effect on our cash flows, results of operations or financial condition.



On
December 22, 2017, the United States enacted major federal tax reform legislation, Public Law No. 115-97, commonly referred to
as the 2017 Tax Cuts and Jobs Act (“2017 Tax Act”), which enacted a broad range of changes to the Internal Revenue
Code. Changes to taxes on corporations impacted by the 2017 Tax Act include, but not limited to, changing the U.S. federal tax
rate on corporations to a 21 percent flat tax rate, eliminating the corporate alternative minimum tax (“AMT”), imposing
additional limitations on the deductibility of interest and net operating losses, allowing any net operating loss (“NOLs”)
generated in tax years ending after December 31, 2017 to be carried forward indefinitely and generally repealing NOL carrybacks,
reducing the maximum deduction for NOL carryforwards arising in tax years beginning after 2017 to a percentage of the taxpayer’s
taxable income, and allowing for additional expensing of certain capital expenditures. The 2017 Tax Act also puts into effect
a number of changes impacting operations outside of the United States including, but not limited to, the imposition of a one-time
tax “deemed repatriation” on accumulated offshore earnings not previously subject to U.S. tax, and shifts the U.S
taxation of multinational corporations from a worldwide system of taxation to a territorial system. Notwithstanding the reduction
in the corporate income tax rate, the overall impact of the new federal tax law is uncertain and our business and financial condition
could be adversely affected. In addition, it is uncertain if and to what extent various states will conform to the newly enacted
federal tax law.



35









We
are subject to laws and regulations governing corruption, which will require us to develop, maintain, and implement costly compliance
programs.



We
must comply with a wide range of laws and regulations to prevent corruption, bribery, and other unethical business practices,
including the Foreign Corrupt Practices Act or FCPA, anti-bribery and anti-corruption laws in other countries, particularly China
where our subsidiary LifeMap Sciences does business, including business with hospitals. The creation and implementation of international
business practices compliance programs is costly and such programs are difficult to enforce, particularly where reliance on third
parties is required.



Anti-bribery
laws prohibit us, our employees, and some of our agents or representatives from offering or providing any personal benefit to
covered government officials to influence their performance of their duties or induce them to serve interests other than the missions
of the public organizations in which they serve. Certain commercial bribery rules also prohibit offering or providing any personal
benefit to employees and representatives of commercial companies to influence their performance of their duties or induce them
to serve interests other than their employers. The FCPA also obligates companies whose securities are listed in the U.S. to comply
with certain accounting provisions requiring us to maintain books and records that accurately and fairly reflect all transactions
of the corporation, including international subsidiaries, and devise and maintain an adequate system of internal accounting controls
for international operations. The anti-bribery provisions of the FCPA are enforced primarily by the United States Department of
Justice. The SEC is involved with enforcement of the books and records provisions of the FCPA.



Compliance
with these anti-bribery laws is expensive and difficult, particularly in countries in which corruption is a recognized problem.
In addition, the anti-bribery laws present particular challenges in the medical industry because in many countries including China,
hospitals are state-owned or operated by the government, and doctors and other hospital employees are considered foreign government
officials. Furthermore, in certain countries (China in particular), hospitals and clinics are permitted to sell pharmaceuticals
to their patients and are primary or significant distributors of pharmaceuticals. Certain payments to hospitals in connection
with clinical studies, procurement of pharmaceuticals and other work have been deemed to be improper payments to government officials
that have led to vigorous anti-bribery law enforcement actions and heavy fines in multiple jurisdictions, particularly in the
U.S. and China.



It
is not always possible to identify and deter violations, and the precautions we take to detect and prevent this activity may not
be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other
actions or lawsuits stemming from a failure to be in compliance with such laws or regulations.



In
the medical industry, corrupt practices include, among others, acceptance of kickbacks, bribes or other illegal gains or benefits
by the hospitals and medical practitioners from manufacturers of pharmaceutical or other products, distributors or their third
party agents in connection with the prescription of certain pharmaceuticals or sale of products. If our employees, affiliates,
distributors or third party marketing firms violate these laws or otherwise engage in illegal practices with respect to their
sales or marketing of our products or other activities involving our products, we could be required to pay damages or heavy fines
by multiple jurisdictions where we operate, which could materially and adversely affect our financial condition and results of
operations. The Chinese government has also sponsored anti-corruption campaigns from time to time, which could have a chilling
effect on any future marketing efforts by us to new hospital customers. There have been recent occurrences in which certain hospitals
have denied access to sales representatives from pharmaceutical companies because the hospitals wanted to avoid the perception
of corruption. If this attitude becomes widespread among our potential customers, our ability to promote our products to hospitals
may be adversely affected.



As
we and our subsidiaries expand operations in China and other jurisdictions internationally, we will need to increase the scope
of our compliance programs to address the risks relating to the potential for violations of the FCPA and other anti-bribery and
anti-corruption laws. Our compliance programs will need to include policies addressing not only the FCPA, but also the provisions
of a variety of anti-bribery and anti-corruption laws in multiple foreign jurisdictions, including China, provisions relating
to books and records that apply to us as a public company, and include effective training for our personnel throughout our organization.
The creation and implementation of anti-corruption compliance programs is costly and such programs are difficult to enforce, particularly
where reliance on third parties is required. Violation of the FCPA and other anti-corruption laws can result in significant administrative
and criminal penalties for us and our employees, including substantial fines, suspension or debarment from government contracting,
prison sentences, or even the death penalty in extremely serious cases in certain countries. The SEC also may suspend or bar us
from trading securities on U.S. exchanges for violation of the FCPA’s accounting provisions. Even if we are not ultimately
punished by government authorities, the costs of investigation and review, distraction of our personnel, legal defense costs,
and harm to our reputation could be substantial and could limit our profitability or our ability to develop or commercialize our
product candidates. In addition, if any of our competitors are not subject to the FCPA, they may engage in practices that will
lead to their receipt of preferential treatment from foreign hospitals and enable them to secure business from foreign hospitals
in ways that are unavailable to us.



36









Risks
Related to Our Industry



We
face significant competition in an environment of rapid technological change and the possibility that our competitors may achieve
regulatory approval before us or develop therapies that are more advanced or effective than ours, which may harm our business
and financial condition, and our ability to successfully market or commercialize our product candidates.



The
biotechnology and pharmaceutical industries are characterized by rapidly changing technologies, competition and a strong emphasis
on intellectual property. We may face competition from other companies focused on therapeutics for age-related disease, which
is a highly competitive environment. There are numerous biotechnology companies developing therapeutics for human aging, with
each company often focusing on a specific molecular pathway within cells. For example, ResTORbio, Inc. is developing modulators
of the mechanistic target of rapamycin (mTOR) pathway to treat immunological and cardiovascular disorders. Calico Life Sciences
LLC is a Google-founded research and development company aimed at identifying molecular pathways that control animal lifespan
and translating these insights into novel therapeutics designed to increase human healthspan. Unity Biotechnology, Inc. focuses
on cellular senescence, in particular, the use of agents that can target senescent cells for selective ablation (senolysis). Unity’s
stated targeted age-related diseases include osteoarthritis as well as other ophthalmological and pulmonary diseases. Our therapeutic
products in development are likely to face competition from a large number of companies and technological strategies including
therapeutics intended to address our lead indications. See “Business – Competition.”



We
may also face competition from large and specialty pharmaceutical and biotechnology companies, academic research institutions,
government agencies and public and private research institutions. Many of our current or potential competitors, either alone or
with their collaboration partners, have significantly greater financial resources and expertise in research and development, manufacturing,
preclinical testing, conducting clinical trials, obtaining regulatory approvals, and marketing approved products than we do. Mergers
and acquisitions in the pharmaceutical, biotechnology, and gene therapy industries may result in even more resources being concentrated
among a smaller number of our competitors. Smaller or early-stage companies may also prove to be significant competitors, particularly
through collaborative arrangements with large and established companies. These competitors also compete with us in recruiting
and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for
clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. Our commercial opportunity
could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer
or less severe side effects, are more convenient, or are less expensive than any products that we may develop or that would render
any products that we may develop obsolete or non-competitive. Our competitors also may obtain FDA or other regulatory approval
for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong
market position before we are able to enter the market. In particular, the Ministry of Labor Health and Welfare in Japan may grant
SAKIGAKE designation to a competing product candidate, which is designed to provide for faster review and approval for any such
product candidate as compared to the conventional process. If any competing product candidate receives SAKIGAKE designation in
Japan, it may be commercialized more quickly in Japan than any of our product candidates. Additionally, technologies developed
by our competitors may render our potential product candidates uneconomic or obsolete, and we may not be successful in marketing
any product candidates we may develop against competitors.



Any
product candidates for which we intend to seek approval as biologic products may face competition sooner than anticipated.



The
Patient Protection and Affordable Care Act, signed into law on March 23, 2010 (“ACA”), includes a subtitle called
the Biologics Price Competition and Innovation Act of 2009, or BPCIA, which created an abbreviated approval pathway for biological
products that are biosimilar to or interchangeable with an FDA-licensed reference biological product. Under the BPCIA, an application
for a biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first
licensed by the FDA. In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from
the date on which the reference product was first licensed. During this 12-year period of exclusivity, another company may still
market a competing version of the reference product if the FDA approves a full BLA for the competing product containing the sponsor’s
own pre-clinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency
of their product. The law is complex and is still being interpreted and implemented by the FDA. As a result, its ultimate impact,
implementation, and meaning are subject to uncertainty. While it is uncertain when such processes intended to implement BPCIA
may be fully adopted by the FDA, any such processes could have a material adverse effect on the future commercial prospects for
our biological products.







There
is a risk that any of our product candidates approved as a biological product under a BLA would not qualify for the 12-year period
of exclusivity or that this exclusivity could be shortened due to congressional action or otherwise, or that the FDA will not
consider our product candidates to be reference products for competing products, potentially creating the opportunity for generic
competition sooner than anticipated. Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have
also been the subject of recent litigation. Moreover, the extent to which a biosimilar, once approved, will be substituted for
any one of our reference products in a way that is similar to traditional generic substitution for non-biological products is
not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing.



37









The
regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time consuming and inherently unpredictable,
and if we are ultimately unable to obtain regulatory approval for our product candidates, our business will be substantially harmed.



The
time required to obtain approval by the FDA and comparable foreign authorities is unpredictable but typically takes many years
following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory
authorities. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may
change during the course of a product candidate’s clinical development and may vary among jurisdictions. We have not obtained
regulatory approval for any product candidate and it is possible that any other product candidates we may seek to develop in the
future will ever obtain regulatory approval. Neither we nor any future collaborator is permitted to market any of our product
candidates in the United States until we receive regulatory approval of a biologic license application, or BLA, from the FDA.
It is possible that the FDA may refuse to accept for substantive review any BLAs that we submit for our product candidates or
may conclude after review of our data that our application is insufficient to obtain marketing approval of our product candidates.



Prior
to obtaining approval to commercialize a product candidate in the United States or abroad, we or our collaborators must demonstrate
with substantial evidence from well-controlled clinical trials, and to the satisfaction of the FDA or foreign regulatory agencies,
that such product candidates are safe and effective for their intended uses. Results from nonclinical studies and clinical trials
can be interpreted in different ways. Even if we believe the nonclinical or clinical data for our product candidates are promising,
such data may not be sufficient to support approval by the FDA and other regulatory authorities. The FDA may also require us to
conduct additional preclinical studies or clinical trials for our product candidates either prior to or post-approval, or it may
object to elements of our clinical development program. Depending on the extent of these or any other FDA-required studies, approval
of any BLA or application that we submit may be delayed by several years or may require us to expend significantly more resources
than we have available.



Any
therapeutic products that we and our subsidiaries may develop cannot be sold until the FDA and corresponding foreign regulatory
authorities approve the products for medical use. The need to obtain regulatory approval to market a new product means that:



| | ● | We
    will have to conduct expensive and time-consuming clinical trials of new products. The full cost of conducting and completing
    clinical trials necessary to obtain FDA and foreign regulatory approval of a new product cannot be presently determined but
    could exceed our financial resources.                                                                 
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                
| | ● | Clinical
    trials and the regulatory approval process for a pharmaceutical or cell-based product can take several years to complete.
    As a result, we will incur the expense and delay inherent in seeking FDA and foreign regulatory approval of new products,
    even if the results of clinical trials are favorable.                                                 
| |   |                                                                                                                                                                                                                                                                                                                                                                                
| | ● | Data
    obtained from preclinical and clinical studies is susceptible to varying interpretations and regulatory changes that could
    delay, limit, or prevent regulatory agency approvals.                                                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                                                                                                                                
| | ● | Because
    the therapeutic products we plan to develop with pluripotent stem cell technology or progenitor cell technology involve the
    application of new technologies and approaches to medicine, the FDA or foreign regulatory agencies may subject those products
    to additional or more stringent review than drugs or biologicals derived from other technologies.
| |   |                                                                                                                                                                                                                                                                                                                                                                                
| | ● | A
    product that is approved may be subject to restrictions on use.                                                                                                                                                                                                                                                                                                          
| |   |                                                                                                                                                                                                                                                                                                                                                                                
| | ● | The
    FDA can recall or withdraw approval of a product, if it deems necessary.                                                                                                                                                                                                                                                                                               
| |   |                                                                                                                                                                                                                                                                                                                                                                                
| | ● | We
    will face similar regulatory issues in foreign countries.                                                                                                                                                                                                                                                                                                               







Approval
of our product candidates may be delayed or refused for many reasons, including the following:



| | ● | the
    FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials;                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                              
| | ● | we
    may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that our product
    candidates are safe and effective for any of their proposed indications;
| |   |                                                                                                                                                                                                              
| | ● | the
    results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory
    authorities for approval;                                     



38









| | ● | we
    may be unable to demonstrate that our product candidates’ clinical and other benefits outweigh their safety risks;                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                          
| | ● | the
    FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical programs or
    clinical trials;                                                                                                                  
| |   |                                                                                                                                                                                                                                                                          
| | ● | the
    data collected from clinical trials of our product candidates may not be sufficient to support the submission of a BLA or
    other comparable submission in foreign jurisdictions or to obtain regulatory approval in the United States or elsewhere;           
| |   |                                                                                                                                                                                                                                                                          
| | ● | the
    facilities of the third-party manufacturers with which we contract may not be adequate to support approval of our product
    candidates (for example, regulatory approval of cell- and tissue-based products require high standards of quality control);
    and
| |   |                                                                                                                                                                                                                                                                          
| | ● | the
    approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner
    rendering our clinical data insufficient for approval.                                                                         



Of
the large number of potential products in development, only a small percentage successfully complete the FDA or foreign regulatory
approval processes and are commercialized. The lengthy approval process as well as the unpredictability of future clinical trial
results may result in our failing to obtain regulatory approval to market our product candidates, which would significantly harm
our business, results of operations and prospects.



Ethical,
social and legal concerns about research regarding stem cells, could result in regulations restricting or prohibiting the processes
we may use. Federal and state agencies, congressional committees and foreign governments have expressed interest in further regulating
biotechnology. More restrictive regulations or claims that our products are unsafe or pose a hazard could prevent us from commercializing
any products. New government requirements may be established that could delay or prevent regulatory approval of our product candidates
under development. It is impossible to predict whether legislative changes will be enacted, regulations, policies or guidance
changed, or interpretations by agencies or courts changed, or what the impact of such changes, if any, may be.



Regulatory
requirements governing gene and cell therapy products have changed frequently and may continue to change in the future. The FDA
has established the Office of Tissues and Advanced Therapies within its Center for Biologics Evaluation and Research, or CBER,
to consolidate the review of gene therapy and related products, and has established the Cellular, Tissue and Gene Therapies Advisory
Committee to advise the CBER in its review. Gene therapy clinical trials conducted at institutions that receive funding for recombinant
DNA research from the NIH, also are potentially subject to review by the NIH Office of Science Policy’s Recombinant DNA
Advisory Committee, or the RAC, in limited circumstances. Although the FDA decides whether individual gene therapy protocols may
proceed, the RAC public review process, if undertaken, can delay the initiation of a clinical trial, even if the FDA has reviewed
the trial design and details and authorized its initiation. Conversely, the FDA can put an investigational new drug application,
or IND, on clinical hold even if the RAC has provided a favorable review or an exemption from in-depth, public review. If we were
to engage an NIH-funded institution, to conduct a clinical trial, that institution’s institutional biosafety committee,
or IBC, as well as its institutional review board, or IRB, would need to review the proposed clinical trial to assess the safety
of the trial and may determine that RAC review is needed. In addition, adverse developments in clinical trials of gene therapy
products conducted by others may cause the FDA or other oversight bodies to change the requirements for approval of any of our
product candidates. Similarly, foreign regulatory authorities may issue new guidelines concerning the development and marketing
authorization for gene therapy medicinal products and require that we comply with these new guidelines.







Some
of our future products may be viewed by the FDA as combination products and the review of combination products is often more complex
and more time consuming than the review of other types of products.



Our
future products may be regulated by the FDA as combination products. For a combination product, the FDA must determine which center
or centers within the FDA will review the product candidate and under what legal authority the product candidate will be reviewed.
The process of obtaining FDA marketing clearance or approval is lengthy, expensive, and uncertain, and we cannot be sure that
any of our combination products, or any other products, will be cleared or approved in a timely fashion, or at all. In addition,
the review of combination products is often more complex and more time consuming than the review of a product candidate under
the jurisdiction of only one center within the FDA. We cannot be sure that the FDA will not select to have our combination products
reviewed and regulated by only one FDA center and/or different legal authority, in which case the path to regulatory approval
would be different and could be more lengthy and costly. If the FDA does not approve or clear our products in a timely fashion,
or at all, our business and financial condition will be adversely affected.





39







If
we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise
adversely affected.



The
timely completion of clinical trials in accordance with their protocols depends, among other things, on our ability to enroll
a sufficient number of patients who remain in the study until its conclusion. We may encounter delays in enrolling, or be unable
to enroll, a sufficient number of patients to complete any of our clinical trials, and even once enrolled we may be unable to
retain a sufficient number of patients to complete any of our trials. The enrollment of patients depends on many factors, including:



| | ● | the
    patient eligibility criteria defined in the protocol;                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                        
| | ● | the
    size of the patient population required for analysis of the trial’s primary endpoints;                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                        
| | ● | the
    proximity of patients to study sites;                                                                                                                                                                                                          
| |   |                                                                                                                                                                                                                                                        
| | ● | the
    design of the trial;                                                                                                                                                                                                                           
| |   |                                                                                                                                                                                                                                                        
| | ● | our
    ability to recruit clinical trial investigators with the appropriate competencies and experience;                                                                                                                                              
| |   |                                                                                                                                                                                                                                                        
| | ● | clinicians’
    and patients’ perceptions as to the potential advantages of the product candidate being studied in relation to other
    available therapies, including any new products that may be approved for the indications we are investigating;
| |   |                                                                                                                                                                                                                                                        
| | ● | our
    ability to obtain and maintain patient consents; and                                                                                                                                                                                           
| |   |                                                                                                                                                                                                                                                        
| | ● | the
    risk that patients enrolled in clinical trials will drop out of the trials before completion.                                                                                                                                                  



In
addition, our clinical trials will compete with other clinical trials for product candidates that are in the same therapeutic
areas as our product candidates, and this competition will reduce the number and types of patients available to us, because some
patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by one of our competitors.
Since the number of qualified clinical investigators is limited, we expect to conduct some of our clinical trials at the same
clinical trial sites that some of our competitors use, which will reduce the number of patients who are available for our clinical
trials in such clinical trial site.



Delays
or failures in planned patient enrollment or retention may result in increased costs, program delays or both, which could have
a harmful effect on our ability to develop our product candidates or could render further development impossible.



Even
if we obtain FDA approval for any of our product candidates in the United States, we may never obtain approval for or commercialize
it in any other jurisdiction, which would limit our ability to realize its full market potential.



In
order to market any products in any particular jurisdiction, we must establish and comply with numerous and varying regulatory
requirements on a country-by-country basis regarding safety and efficacy. Approval by the FDA in the United States does not ensure
approval by regulatory authorities in other countries or jurisdictions. However, the failure to obtain approval in one jurisdiction
may negatively impact our ability to obtain approval elsewhere. In addition, clinical trials conducted in one country may not
be accepted by regulatory authorities in other countries, and regulatory approval in one country does not guarantee regulatory
approval in any other country.



Approval
processes vary among countries and can involve additional product testing and validation and additional administrative review
periods. Seeking foreign regulatory approval could result in difficulties and increased costs for us and require additional preclinical
studies or clinical trials which could be costly and time consuming. Regulatory requirements can vary widely from country to country
and could delay or prevent the introduction of our products in those countries. We do not have any product candidates approved
for sale in any jurisdiction, including in international markets, and we do not have experience in obtaining regulatory approval
in international markets. If we fail to comply with regulatory requirements in international markets or to obtain and maintain
required approvals, or if regulatory approvals in international markets are delayed, our target market will be reduced and our
ability to realize the full market potential of any product we develop will be unrealized.



40









Clinical
studies are costly, time consuming and inherently risky, and we may fail to demonstrate safety and efficacy to the satisfaction
of applicable regulatory authorities



Clinical
development is expensive, time consuming and involves significant risk. We cannot guarantee that any clinical studies will be
conducted as planned or completed on schedule, if at all. A failure of one or more clinical studies can occur at any stage of
development. Events that may prevent successful or timely completion of clinical development include but are not limited to:



| | ● | inability
    to generate satisfactory preclinical, toxicology, or other in vivo or in vitro data to support the initiation
    or continuation of clinical studies necessary for product approval;                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                     
| | ● | delays
    in reaching agreement on acceptable terms with clinical research organizations or CROs and clinical study sites, the terms
    of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical study sites;
| |   |                                                                                                                                                                                                                                                                     
| | ● | delays
    in obtaining required Institutional Review Board, or IRB, approval at each clinical study site;                                                                                                                                                          
| |   |                                                                                                                                                                                                                                                                     
| | ● | failure
    to permit the conduct of a study by regulatory authorities, after review of an investigational new drug, or IND, or equivalent
    foreign application or amendment;                                                                                    
| |   |                                                                                                                                                                                                                                                                     
| | ● | delays
    in recruiting qualified patients in our clinical studies;                                                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                     
| | ● | failure
    by clinical sites or our CROs or other third parties to adhere to clinical study requirements or report complete findings;                                                                                                                              
| |   |                                                                                                                                                                                                                                                                     
| | ● | failure
    to perform the clinical studies in accordance with the FDA’s good clinical practices requirements, or applicable foreign
    regulatory guidelines;                                                                                                     
| |   |                                                                                                                                                                                                                                                                     
| | ● | patients
    dropping out of our clinical studies;                                                                                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                     
| | ● | occurrence
    of adverse events associated with our product candidates;                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                     
| | ● | inability
    to use clinical trial results from foreign jurisdictions in support of U.S. regulatory approval;                                                                                                                                                      
| |   |                                                                                                                                                                                                                                                                     
| | ● | changes
    in regulatory requirements and guidance that require amending or submitting new clinical protocols;                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                     
| | ● | the
    cost of clinical studies of our product candidates;                                                                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                     
| | ● | negative
    or inconclusive results from our clinical trials which may result in our deciding, or regulators requiring us, to conduct
    additional clinical studies or abandon development programs for a product candidate; and                                 
| |   |                                                                                                                                                                                                                                                                     
| | ● | delays
    in reaching agreement on acceptable terms with third-party manufacturers, or delays in the manufacture of sufficient quantities
    of our product candidates for use in clinical studies.                                                               



Any
inability to successfully complete clinical development and obtain regulatory approval could result in additional costs to us
or impair our ability to generate revenue. Clinical study delays could also shorten any periods during which our products have
patent protection and may allow competitors to develop and bring products to market before we do and may harm our business and
results of operations.



Even
if we receive regulatory approval of our product candidates, we will be subject to ongoing regulatory obligations and continued
regulatory review, which may result in significant additional expense, and we may be subject to penalties if we fail to comply
with regulatory requirements or experience unanticipated problems with our product candidates.



Any
product candidate for which we obtain marketing approval, along with the manufacturing processes, post-approval clinical data,
labeling, packaging, distribution, adverse event reporting, storage, recordkeeping, export, import, advertising and promotional
activities for such product, among other things, will be subject to extensive and ongoing requirements of and review by the FDA
and other regulatory authorities. These requirements include submissions of safety and other post-marketing information and reports,
establishment registration and drug listing requirements, continued compliance with cGMP requirements relating to manufacturing,
quality control, quality assurance and corresponding maintenance of records and documents, requirements regarding the distribution
of samples to physicians and recordkeeping and Good Clinical Practice, or GCP, requirements for any clinical trials that we conduct
post-approval.







The
FDA closely regulates the post-approval marketing and promotion of genetic medicines to ensure they are marketed only for the
approved indications and in accordance with the provisions of the approved labeling. The FDA imposes stringent restrictions on
manufacturers’ communications regarding off-label use and if we market our products for uses beyond their approved indications,
we may be subject to enforcement action for off-label marketing. Violations of the U.S. federal Food, Drug, and Cosmetic Act,
or FDCA, relating to the promotion of prescription drugs may lead to FDA enforcement actions and investigations alleging violations
of federal and state health care fraud and abuse laws, as well as state consumer protection laws.



41









In
addition, later discovery of previously unknown adverse events or other problems with our products, manufacturers or manufacturing
processes, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing
processes, or failure to comply with regulatory requirements, may yield various results, including:



| | ● | restrictions
    on manufacturing such products;                                                   
| | - | ---------------------------------------------------------------------------------------------------
| |   |                                                                                                    
| | ● | restrictions
    on the labeling or marketing of a product;                                        
| |   |                                                                                                    
| | ● | restrictions
    on product distribution or use;                                                   
| |   |                                                                                                    
| | ● | requirements
    to conduct post-marketing studies or clinical trials;                             
| |   |                                                                                                    
| | ● | warning
    letters or holds on clinical trials;                                                   
| |   |                                                                                                    
| | ● | withdrawal
    of the products from the market;                                                    
| |   |                                                                                                    
| | ● | refusal
    to approve pending applications or supplements to approved applications that we submit;
| |   |                                                                                                    
| | ● | recall
    of products;                                                                            
| |   |                                                                                                    
| | ● | fines,
    restitution or disgorgement of profits or revenues;                                     
| |   |                                                                                                    
| | ● | suspension
    or withdrawal of marketing approvals;                                               
| |   |                                                                                                    
| | ● | refusal
    to permit the import or export of our products;                                        
| |   |                                                                                                    
| | ● | product
    seizure or detention; or                                                               
| |   |                                                                                                    
| | ● | injunctions
    or the imposition of civil or criminal penalties.                                  



The
FDA’s policies may change, and additional government regulations may be enacted that could prevent, limit or delay regulatory
approval of any of our product candidates. For example, in December 2016, the 21st Century Cures Act, or Cures Act, was signed
into law. The Cures Act, among other things, is intended to modernize the regulation of drugs and biologics and spur innovation,
but its ultimate implementation is unclear. If we are slow or unable to adapt to changes in existing requirements or the adoption
of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that
we may have obtained which would adversely affect our business, prospects and ability to achieve or sustain profitability.



We
also cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative
or executive action, either in the United States or abroad. For example, certain policies of the Trump administration may impact
our business and industry. Namely, the Trump administration has taken several executive actions, including the issuance of a number
of Executive Orders, that could impose significant burdens on, or otherwise materially delay, FDA’s ability to engage in
routine regulatory and oversight activities such as implementing statutes through rulemaking, issuance of guidance, and review
and approval of marketing applications. Notably, on January 30, 2017, President Trump issued an Executive Order, applicable to
all executive agencies, including the FDA, that requires that for each notice of proposed rulemaking or final regulation to be
issued in fiscal year 2017, the agency shall identify at least two existing regulations to be repealed, unless prohibited by law.
These requirements are referred to as the “two-for-one” provisions. This Executive Order includes a budget neutrality
provision that requires the total incremental cost of all new regulations in the 2017 fiscal year, including repealed regulations,
to be no greater than zero, except in limited circumstances. For fiscal years 2018 and beyond, the Executive Order requires agencies
to identify regulations to offset any incremental cost of a new regulation and approximate the total costs or savings associated
with each new regulation or repealed regulation. In interim guidance issued by the Office of Information and Regulatory Affairs
within the Office of Management and Budget on February 2, 2017, the Trump administration indicates that the “two-for-one”
provisions may apply not only to agency regulations, but also to significant agency guidance documents. Further, on February 24,
2017, President Trump issued an Executive Order requiring each agency to designate a regulatory reform officer and create a regulatory
reform task force to evaluate existing regulations and make recommendations regarding their repeal, replacement or modification.
It is difficult to predict how these requirements will be implemented, and the extent to which they will impact the FDA’s
ability to exercise its regulatory authority. If these executive actions impose constraints on FDA’s ability to engage in
oversight and implementation activities in the normal course, our business may be negatively impacted.



42









Our
product candidates may cause serious adverse events or undesirable side effects or have other properties which may delay or prevent
their regulatory approval, limit the commercial profile of an approved label, or, result in significant negative consequences
following marketing approval, if any.



Serious
adverse events or undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt,
delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the
FDA or other comparable foreign authorities. Results of our clinical trials could reveal a high and unacceptable severity and
prevalence of side effects, toxicities or unexpected characteristics, including death.



For
example, there have been significant adverse side effects in cell therapy treatments in the past, including reported cases of
certain cancers. In addition to side effects that may be caused by our product candidates, the conditioning, administration process
or related procedures also can cause adverse side effects, including compromise of a patient’s immune system. If unacceptable
side effects arise in the development of our product candidates, we, the FDA, the IRBs at the institutions in which our studies
are conducted or Data Safety Monitoring Board, or DSMB, could suspend or terminate our clinical trials or the FDA or comparable
foreign regulatory authorities could order us to cease clinical trials or deny approval of our product candidates for any or all
targeted indications. Treatment-related side effects could also affect patient recruitment or the ability of enrolled patients
to complete the trial or result in potential product liability claims. In addition, these side effects may not be appropriately
recognized or managed by the treating medical staff. We expect to have to train medical personnel using our product candidates
to understand the side effect profiles for our clinical trials and upon any commercialization of any of our product candidates.
Inadequate training in recognizing or managing the potential side effects of our product candidates could result in patient injury
or death. Any of these occurrences may harm our business, financial condition and prospects significantly.



If
any of our product candidates receives marketing approval, and we or others later identify undesirable side effects caused by
any such product, including during any long-term follow-up observation period recommended or required for patients who receive
treatment using our products, a number of potentially significant negative consequences could result, including:



| | ● | regulatory
    authorities may withdraw approvals of such product;                                                                                                                             
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                
| | ● | we
    may be required to recall a product or change the way such product is administered to patients;                                                                                         
| |   |                                                                                                                                                                                                
| | ● | additional
    restrictions may be imposed on the marketing of the particular product or the manufacturing processes for the product;                                                          
| |   |                                                                                                                                                                                                
| | ● | regulatory
    authorities may require additional warnings on the label, such as a “black box” warning or contraindication;                                                                    
| |   |                                                                                                                                                                                                
| | ● | we
    may be required to implement a Risk Evaluation and Mitigation Strategy, or REMS, or create a medication guide outlining the
    risks of such side effects for distribution to patients;
| |   |                                                                                                                                                                                                
| | ● | the
    product could become less competitive;                                                                                                                                                 
| |   |                                                                                                                                                                                                
| | ● | we
    could be sued and held liable for harm caused to patients; and                                                                                                                          
| |   |                                                                                                                                                                                                
| | ● | our
    reputation may suffer.                                                                                                                                                                 
| |   |                                                                                                                                                                                                

Any
of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved,
and could significantly harm our business, results of operations and prospects.



43







We
face potential product liability, and, if successful claims are brought against us, we may incur substantial liability and costs.
If the use or misuse of our product candidates harm patients or is perceived to harm patients even when such harm is unrelated
to our product candidates, our regulatory approvals could be revoked or could otherwise be negatively impacted, and we could be
subject to costly and damaging product liability claims.



The
use or misuse of any product candidates in clinical trials and the sale of any products for which we obtain marketing approval
exposes us to the risk of product liability claims. Product liability claims might be brought against us by consumers, healthcare
providers, pharmaceutical companies, or others selling or otherwise coming into contact with our products. There is a risk that
our product candidates may induce adverse events. If we cannot successfully defend against product liability claims, we could
incur substantial liability and costs. In addition, regardless of merit or eventual outcome, product liability claims may result
in:



| | ● | impairment
    of our business reputation;                                              
| | - | ----------------------------------------------------------------------------------------
| |   |                                                                                         
| | ● | initiation
    of investigations by regulators;                                         
| |   |                                                                                         
| | ● | withdrawal
    of clinical trial participants;                                          
| |   |                                                                                         
| | ● | costs
    due to related litigation;                                                    
| |   |                                                                                         
| | ● | distraction
    of management’s attention from our primary business;                    
| |   |                                                                                         
| | ● | substantial
    monetary awards to patients or other claimants;                         
| |   |                                                                                         
| | ● | the
    inability to commercialize our product candidates;                              
| |   |                                                                                         
| | ● | product
    recalls, withdrawals or labeling, and marketing or promotional restrictions;
| |   |                                                                                         
| | ● | loss
    of revenue; and                                                                
| |   |                                                                                         
| | ● | decreased
    demand for our product candidates, if approved for commercial sale.       



We
may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due
to liability. If and when we commence clinical trials or obtain marketing approval for any product candidates, we intend to increase
our insurance coverage to include clinical use or the sale of commercial products, as applicable; however, we may be unable to
obtain product liability insurance on commercially reasonable terms or in adequate amounts. On occasion, large judgments have
been awarded in class action lawsuits based on drugs or medical treatments that had unanticipated adverse effects. A successful
product liability claim or series of claims brought against us could cause our stock price to decline and, if judgments exceed
our insurance coverage, could adversely affect our results of operations and business.



Our
insurance policies are expensive and protect us only from some business risks, which leaves us exposed to significant uninsured
liabilities.



We
do not carry insurance for all categories of risk that our business may encounter. Some of the policies we currently maintain
include general liability, employment practices liability, property, auto, workers’ compensation, umbrella, and directors’
and officers’ insurance.



Any
additional product liability insurance coverage we acquire in the future, may not be sufficient to reimburse us for any expenses
or losses we may suffer. Moreover, insurance coverage is becoming increasingly expensive and, in the future, we may not be able
to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to liability. If
we obtain marketing approval for any of our product candidates, we intend to acquire insurance coverage to include the sale of
commercial products; however, we may be unable to obtain product liability insurance on commercially reasonable terms or in adequate
amounts. A successful product liability claim or series of claims brought against us could cause our share price to decline and,
if judgments exceed our insurance coverage, could adversely affect our results of operations and business, including preventing
or limiting the commercialization of any product candidates we develop.



As
a public company, it can be difficult and expensive for us to obtain director and officer liability insurance, and we may be required
to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a
result, it may be more difficult for us to attract and retain qualified people to serve on our Board of Directors, our board committees
or as executive officers. We do not know, however, if we will be able to maintain existing insurance with adequate levels of coverage.
Any significant uninsured liability may require us to pay substantial amounts, which would adversely affect our cash position
and results of operations.



44









Our
employees and independent contractors, including principal investigators, CROs, consultants, vendors, and any third parties we
may engage in connection with development and commercialization may engage in misconduct or other improper activities, including
noncompliance with regulatory standards and requirements, which could have a material adverse effect on our business.



Misconduct
by our employees and independent contractors, including principal investigators, contract research organizations, or CROs, consultants,
vendors, and any third parties we may engage in connection with development and commercialization, could include intentional,
reckless or negligent conduct or unauthorized activities that violate: (i) the laws and regulations of the FDA, EMA rules and
regulations and other similar regulatory requirements, including those laws that require the reporting of true, complete and accurate
information to such authorities; (ii) manufacturing standards; (iii) data privacy, security, fraud and abuse and other healthcare
laws and regulations; or (iv) laws that require the reporting of true, complete and accurate financial information and data. Specifically,
sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to
prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit
a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business
arrangements. Activities subject to these laws could also involve the improper use or misrepresentation of information obtained
in the course of clinical trials, creation of fraudulent data in pre-clinical studies or clinical trials or illegal misappropriation
of drug product, which could result in regulatory sanctions and cause serious harm to our reputation. It is not always possible
to identify and deter misconduct by employees and other third parties, and the precautions we take to detect and prevent this
activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations
or other actions or lawsuits stemming from a failure to comply with such laws or regulations. Additionally, we are subject to
the risk that a person or government could allege such fraud or other misconduct, even if none occurred. If any such actions are
instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant
impact on our business and results of operations, including the imposition of significant civil, criminal and administrative penalties,
damages, monetary fines, disgorgements, possible exclusion from participation in Medicare, Medicaid, other U.S. federal healthcare
programs or healthcare programs in other jurisdictions, individual imprisonment, other sanctions, contractual damages, reputational
harm, diminished profits and future earnings, and curtailment of our operations.



Government-imposed
bans or restrictions and religious, moral, and ethical concerns about the use of human embryonic stem cells could prevent us from
developing and successfully marketing stem cell products.



Government-imposed
bans or restrictions on the use of embryos or human embryonic stem cells (“hES cells”), in research and development
in the United States and abroad could generally constrain stem cell research, thereby limiting the market and demand for our products.



California
law requires that stem cell research be conducted under the oversight of a SCRO Committee. Many kinds of stem cell research, including
the derivation of new hES cell lines, may only be conducted in California with the prior written approval of the SCRO Committee.
A SCRO Committee could prohibit or impose restrictions on the research that we plan to do. An adverse decision by a SCRO Committee,
or their imposition of restrictions on a research program could adversely affect our ability to enter into co-development or licensing
arrangements for the development of a product candidate.



The
use of hES cells may give rise to religious, moral, and ethical issues. These considerations could lead to more restrictive government
regulations or could generally constrain stem cell research, thereby limiting the market and demand for our products.



Adverse
publicity regarding cell-based therapies could impact our business.



Adverse
publicity due to the ethical and social controversies surrounding the use of embryonic stem cells or any adverse reported side
effects from any stem cell or other cell therapy clinical trials or to the failure of such trials to demonstrate that these therapies
are efficacious could materially and adversely affect our ability to raise capital, conduct and complete clinical trials and achieve
market acceptance of such products, if approved. For example, research institutions, including those who may be our collaborators,
may from time to time publish findings or studies regarding the human genome (such as the Human Genome Project) that adversely
implicate our product candidates, including findings of cancer dependencies in cell lines used in our cell-based therapies.



45









The
price and sale of any products that we may develop may be limited by health insurance coverage and government regulation.



Success
in selling our pharmaceutical and cell-based products and medical devices may depend in part on the extent to which health insurance
companies, HMOs, and government health administration authorities such as Medicare and Medicaid will pay for the cost of the products
and related treatment. Until we introduce a new product into the medical marketplace, we will not know with certainty whether
adequate health insurance, HMO, and government coverage will be available to permit the product to be sold at a price high enough
for us to generate a profit. In some foreign countries, pricing or profitability of health care products is subject to government
control, which may result in low prices for our products. In the United States, there have been a number of federal and state
proposals to implement similar government controls, and new proposals are likely to be made in the future. We cannot be sure that
coverage and reimbursement in the United States, the EU or elsewhere will be available for our product candidates or any product
that we may develop, and any reimbursement that may become available may be decreased or eliminated in the future.



Third-party
payors increasingly are challenging prices charged for pharmaceutical products and services, and many third-party payors may refuse
to provide coverage and reimbursement for particular drugs or biologics when an equivalent generic drug, biosimilar or a less
expensive therapy is available. It is possible that a third-party payor may consider our product candidates as substitutable and
only offer to reimburse patients for the less expensive product. Even if we show improved efficacy or improved convenience of
administration with our product candidates, pricing of existing third-party therapeutics may limit the amount we will be able
to charge for our product candidates. These payors may deny or revoke the reimbursement status of a given product or establish
prices for new or existing marketed products at levels that are too low to enable us to realize an appropriate return on our investment
in our product candidates. If reimbursement is not available or is available only at limited levels, we may not be able to successfully
commercialize our product candidates and may not be able to obtain a satisfactory financial return on our product candidates.



There
is significant uncertainty related to the insurance coverage and reimbursement of newly-approved products. In the United States,
third-party payors, including private and governmental payors, such as the Medicare and Medicaid programs, play an important role
in determining the extent to which new drugs and biologics will be covered. The Medicare and Medicaid programs increasingly are
used as models in the United States for how private payors and other governmental payors develop their coverage and reimbursement
policies for drugs and biologics. Some third-party payors may require pre-approval of coverage for new or innovative devices or
drug therapies before they will reimburse healthcare providers who use such therapies. We cannot predict at this time what third-party
payors will decide with respect to the coverage and reimbursement for our product candidates.



No
uniform policy for coverage and reimbursement for products exists among third-party payors in the United States. Therefore, coverage
and reimbursement for products can differ significantly from payor to payor. As a result, the coverage determination process is
often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our product
candidates to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or
obtained in the first instance. Furthermore, rules and regulations regarding reimbursement change frequently, in some cases on
short notice, and we believe that changes in these rules and regulations are likely.



Outside
the United States, international operations are generally subject to extensive governmental price controls and other market regulations,
and we believe the increasing emphasis on cost-containment initiatives in Europe and other countries have and will continue to
put pressure on the pricing and usage of our product candidates. In many countries, the prices of medical products are subject
to varying price control mechanisms as part of national health systems. Other countries allow companies to fix their own prices
for medical products but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation
could restrict the amount that we are able to charge for our product candidates. Accordingly, in markets outside the United States,
the reimbursement for our product candidates may be reduced compared with the United States and may be insufficient to generate
commercially-reasonable revenue and profits.



Moreover,
increasing efforts by governmental and third-party payors in the United States and abroad to cap or reduce healthcare costs may
cause such organizations to limit both coverage and the level of reimbursement for newly approved products and, as a result, they
may not cover or provide adequate payment for our product candidates. While it is not possible to predict or model the insurance
landscape at the time any of our product candidates may receive regulatory approval, we expect to experience pricing pressures
in connection with the sale of our product candidates due to the trend toward managed health care, the increasing influence of
health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly
prescription drugs and biologics and surgical procedures and other treatments, has become intense. As a result, increasingly high
barriers are being erected to the entry of new products.



46









Enacted
and future healthcare legislation, including the ACA, may increase the difficulty and cost for us to obtain marketing approval
of and commercialize our product candidates and may affect the prices we may set.



In
the United States, the EU and other jurisdictions, there have been, and we expect there will continue to be, a number of legislative
and regulatory changes and proposed changes to the healthcare system that could affect our future results of operations. As a
result of the adoption of the ACA in the United States, substantial changes have been made to the system for paying for healthcare
in the United States. Certain provisions related to cost-savings and reimbursement measures could adversely affect our future
financial performance. For example, among the provisions of the ACA, those of greatest importance to the biopharmaceutical industry
includes the following:



| | ● | an
    annual, non-deductible fee payable by any entity that manufactures or imports certain branded prescription drugs and biologic
    agents (other than those designated as orphan drugs), which is apportioned among these entities according to their market
    share in certain government healthcare programs;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                        
| | ● | new
    requirements to report certain financial arrangements with physicians and teaching hospitals, including reporting “transfers
    of value” made or distributed to prescribers and other healthcare providers and reporting investment interests held
    by physicians and their immediate family members;     
| |   |                                                                                                                                                                                                                                                                                                                        
| | ● | a
    new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that
    are inhaled, infused, instilled, implanted or injected;                                                                                                                          
| |   |                                                                                                                                                                                                                                                                                                                        
| | ● | expansion
    of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain
    individuals with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s
    Medicaid rebate liability;                    
| |   |                                                                                                                                                                                                                                                                                                                        
| | ● | a
    licensure framework for follow on biologic products;                                                                                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                        
| | ● | a
    new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness
    research, along with funding for such research; and                                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                                        
| | ● | establishment
    of a Center for Medicare Innovation at the Centers for Medicare & Medicaid Services, or CMS, to test innovative payment
    and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.                                                   



Since
its enactment, some of the provisions of the ACA have yet to be fully implemented, while certain provisions have been subject
to judicial, congressional, and executive challenges. As a result, there have been delays in the implementation of, and action
taken to repeal or replace, certain aspects of the ACA. The U.S. Supreme Court has upheld certain key aspects of the legislation,
including a tax-based shared responsibility payment imposed on certain individuals who fail to maintain qualifying health coverage
for all or part of a year, which is commonly known as the requirement that all individuals maintain health insurance coverage
or pay a penalty, referred to as the “individual mandate.” However, as a result of tax reform legislation passed in
December 2017, the individual mandate has been eliminated effective January 1, 2019. According to the Congressional Budget Office,
the repeal of the individual mandate will cause 13 million fewer Americans to be insured in 2027 and premiums in insurance markets
may rise.



Since
January 2017, President Trump has signed two Executive Orders designed to delay the implementation of certain provisions of the
ACA or otherwise circumvent some of the requirements for health insurance mandated by the ACA. One Executive Order directs federal
agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions from, or delay the implementation
of any provision of the ACA that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health
insurers, or manufacturers of pharmaceuticals or medical devices. The Order requires that for each notice of proposed rulemaking
or final regulation to be issued in fiscal year 2017, the applicable agency shall identify at least two existing regulations to
be repealed, unless prohibited by law. These requirements are referred to as the “two-for-one” provisions. This Executive
Order includes a budget neutrality provision that requires the total incremental cost of all new regulations in the 2017 fiscal
year, including repealed regulations, to be no greater than zero, except in limited circumstances. For fiscal years 2018 and beyond,
the Executive Order requires agencies to identify regulations to offset any incremental cost of a new regulation and approximate
the total costs or savings associated with each new regulation or repealed regulation. In interim guidance issued by the Office
of Information and Regulatory Affairs within the Office of Management and Budget on February 2, 2017, the Trump administration
indicates that the “two-for-one” provisions may apply not only to agency regulations, but also to significant agency
guidance documents.



The
second Executive Order terminates the cost-sharing subsidies that reimburse insurers under the ACA. Several state Attorneys General
filed suit to stop the administration from terminating the subsidies, but their request for a restraining order was denied by
a federal judge in California on October 25, 2017. The loss of the cost share reduction payments is expected to increase premiums
on certain policies issued by qualified health plans under the ACA. In addition, the Centers for Medicare & Medicaid Services,
or CMS, has recently proposed regulations that would give states greater flexibility in setting benchmarks for insurers in the
individual and small group marketplaces, which may have the effect of relaxing the essential health benefits required under the
ACA for plans sold through such marketplaces. Litigation and legislation over the ACA are likely to continue, with unpredictable
and uncertain results. We continue to evaluate the effect that the ACA and its possible repeal and replacement has on our business.







Further,
on February 24, 2017, President Trump issued an Executive Order requiring each agency to designate a regulatory reform officer
and create a regulatory reform task force to evaluate existing regulations and make recommendations regarding their repeal, replacement
or modification. It is difficult to predict how these requirements will be implemented, and the extent to which they will impact
the FDA’s ability to exercise its regulatory authority.





47







In
addition, other legislative changes have been proposed and adopted in the United States since the ACA was enacted. In August 2011,
the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. A Joint Select Committee
on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through
2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government
programs. This includes aggregate reductions of Medicare payments to providers of 2% per fiscal year. These reductions went into
effect in April 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2025 unless additional
action is taken by Congress. In January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other
things, further reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment
centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to
five years. These new laws or any other similar laws introduced in the future may result in additional reductions in Medicare
and other health care funding, which could negatively affect our customers and accordingly, our financial operations.



The
costs of prescription pharmaceuticals in the United States has also been the subject of considerable debate, and members of Congress
and the Trump Administration have indicated that each will address such costs through new legislative and administrative measures.
To date, there have been several recent U.S. congressional inquiries and proposed state and federal legislation designed to, among
other things, improve transparency in drug pricing, review the relationship between pricing and manufacturer patient programs,
reduce the costs of drugs under Medicare, and reform government program reimbursement methodologies for drug products. The pricing
of prescription pharmaceuticals is also subject to governmental control outside the United States. In these other countries, pricing
negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product. To
obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost
effectiveness of our product candidates to other available therapies. If reimbursement of our products is unavailable or limited
in scope or amount, or if pricing is set at unsatisfactory levels, our ability to generate revenues and become profitable could
be impaired.



Legislative
and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for
approved products. In addition, there have been several recent Congressional inquiries and proposed bills designed to, among other
things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce
the cost of drugs under Medicare and reform government program reimbursement methodologies for drugs. We cannot be sure whether
additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or
what the impact of such changes on the marketing approvals of our product candidates, if any, may be. In addition, increased scrutiny
by the U.S. Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject
us to more stringent labeling and post-marketing testing and other requirements.



Moreover,
payment methodologies may be subject to changes in healthcare legislation and regulatory initiatives. For example, CMS may develop
new payment and delivery models, such as bundled payment models. In addition, recently there has been heightened governmental
scrutiny over the manner in which manufacturers set prices for their marketed products. We expect that additional U.S. federal
healthcare reform measures will be adopted in the future, any of which could limit the amounts that the U.S. federal government
will pay for healthcare products and services, which could result in reduced demand for our product candidates or additional pricing
pressures.



Individual
states in the United States have also become increasingly aggressive in passing legislation and implementing regulations designed
to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions
on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation
from other countries and bulk purchasing. Legally-mandated price controls on payment amounts by third-party payors or other restrictions
could harm our business, results of operations, financial condition and prospects. In addition, regional healthcare authorities
and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers
will be included in their prescription drug and other healthcare programs. This could reduce the ultimate demand for our product
candidates or put pressure on our product pricing.



In
the EU, similar political, economic and regulatory developments may affect our ability to profitably commercialize our product
candidates, if approved. In addition to continuing pressure on prices and cost containment measures, legislative developments
at the EU or member state level may result in significant additional requirements or obstacles that may increase our operating
costs. The delivery of healthcare in the EU, including the establishment and operation of health services and the pricing and
reimbursement of medicines, is almost exclusively a matter for national, rather than EU, law and policy. National governments
and health service providers have different priorities and approaches to the delivery of health care and the pricing and reimbursement
of products in that context. In general, however, the healthcare budgetary constraints in most EU member states have resulted
in restrictions on the pricing and reimbursement of medicines by relevant health service providers. Coupled with ever-increasing
EU and national regulatory burdens on those wishing to develop and market products, this could prevent or delay marketing approval
of our product candidates, restrict or regulate post-approval activities and affect our ability to commercialize our product candidates,
if approved.



48









In
markets outside of the United States and EU, reimbursement and healthcare payment systems vary significantly by country, and many
countries have instituted price ceilings on specific products and therapies.



We
cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative
action in the United States, the EU or any other jurisdiction. If we or any third parties we may engage are slow or unable to
adapt to changes in existing requirements or the adoption of new requirements or policies, or if we or such third parties are
not able to maintain regulatory compliance, our product candidates may lose any regulatory approval that may have been obtained
and we may not achieve or sustain profitability.



If
we fail to comply with the extensive legal and regulatory requirements affecting the health care industry, we could face increased
costs, penalties and a loss of business.



Our
activities, and the activities of any collaborators, distributors and other third-party providers that we may engage in the future,
will be subject to extensive government regulation and oversight both in the U.S. and in foreign jurisdictions. The FDA and comparable
agencies in other jurisdictions will directly regulate many of our most critical business activities, including the conduct of
preclinical and clinical studies, product manufacturing, advertising and promotion, product distribution, adverse event reporting,
and product risk management. Our interactions in the U.S. or abroad with physicians and other health care providers that prescribe
or purchase our products will also be subject to government regulation designed to prevent fraud and abuse in the sale and use
of the products and place greater restrictions on the marketing practices of health care companies. Health care companies such
as ours are facing heightened scrutiny of their relationships with health care providers from anti-corruption enforcement officials.
In addition, health care companies such as ours have been the target of lawsuits and investigations alleging violations of government
regulation, including claims asserting submission of incorrect pricing information, impermissible off-label promotion of pharmaceutical
products, payments intended to influence the referral of health care business, submission of false claims for government reimbursement,
antitrust violations, and violations related to environmental matters. Risks relating to compliance with laws and regulations
may be heightened if we operate globally.



Regulations
governing the health care industry are subject to change, with possibly retroactive effect, including:



| | ● | new
    laws, regulations or judicial decisions, or new interpretations of existing laws, regulations or decisions, related to health
    care availability, pricing or marketing practices, compliance with wage and hour laws and other employment practices, method
    of delivery, payment for health care products and services, compliance with health information and data privacy and security
    laws and regulations, tracking and reporting payments and other transfers of value made to physicians and teaching hospitals,
    extensive anti-bribery and anti-corruption prohibitions, product serialization and labeling requirements and used product
    take-back requirements;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ● | changes
    in the FDA and foreign regulatory approval processes that may delay or prevent the approval of new products and result in
    lost market opportunity;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ● | requirements
    that provide for increased transparency of clinical trial results and quality data, such as the EMA’s clinical transparency
    policy, which could impact our ability to protect trade secrets and competitively-sensitive information contained in approval
    applications or could be misinterpreted leading to reputational damage, misperception, or legal action which could harm our
    business; and                                                                                                                                                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ● | changes
    in FDA and foreign regulations that may require additional safety monitoring, labeling changes, restrictions on product distribution
    or use, or other measures after the introduction of our products to market, which could increase our costs of doing business,
    adversely affect the future permitted uses of approved products, or otherwise adversely affect the market for our products.                                                                                                                                                                                                                                                                                 



Violations
of governmental regulation may be punishable by criminal and civil sanctions against us, including fines and civil monetary penalties
and exclusion from participation in government programs, including Medicare and Medicaid, as well as sanctions against executives
overseeing our business. In addition to penalties for violation of laws and regulations, we could be required to repay amounts
we received from government payors or pay additional rebates and interest if we are found to have miscalculated the pricing information
we have submitted to the government. We cannot ensure that our compliance controls, policies and procedures will in every instance
protect us from acts committed by our employees, collaborators, partners or third-party providers that would violate the laws
or regulations of the jurisdictions in which we operate. Whether or not we have complied with the law, an investigation into alleged
unlawful conduct could increase our expenses, damage our reputation, divert management time and attention, and adversely affect
our business.



49









We
may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws, and health information
privacy and security laws, and if we are unable to comply with such laws, we could face substantial penalties.



If
we obtain FDA approval for any of our product candidates or technologies and begin commercializing those products or technologies
in the United States, our operations may be subject to various federal and state fraud and abuse laws, including, without limitation,
the federal Anti-Kickback Statute, the federal False Claims Act, and physician sunshine laws and regulations. These laws may impact,
among other things, our proposed sales, marketing, and education programs. In addition, we may be subject to patient privacy regulation
by both the federal government and the states in which we conduct our business. The laws that may affect our ability to operate
include:



| | ● | the
    federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving,
    offering or paying remuneration, directly or indirectly, to induce, or in return for, the purchase or recommendation of an
    item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs;                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ● | federal
    civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities
    from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors
    that are false or fraudulent;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ● | the
    federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created new federal criminal statutes
    that prohibit executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare
    matters;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ● | HIPAA,
    as amended by the Health Information Technology and Clinical Health Act, or HITECH, and implementing regulations, which impose
    certain requirements relating to the privacy, security, and transmission of individually identifiable health information;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ● | the
    Physician Payments Sunshine Act which requires manufacturers of drugs, devices, biologics, and medical supplies to report
    annually to the U.S. Department of Health and Human Services information related to payments and other transfers of value
    to physicians, other healthcare providers, and teaching hospitals, and ownership and investment interests held by physicians
    and other healthcare providers and their immediate family members and applicable group purchasing organizations;                                                                                                                                                                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ● | the
    FDCA, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ● | the
    U.S. Public Health Service Act, which prohibits, among other things, the introduction into interstate commerce of a biological
    product unless a biologics license is in effect for that product; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ● | state
    law equivalents of each of the above federal laws, such as anti-kickback and false claims laws that may apply to items or
    services reimbursed by any third-party payors, including commercial insurers; state laws that require pharmaceutical companies
    to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated
    by the federal government, or that otherwise restrict payments that may be made to healthcare providers and other potential
    referral sources; state laws that require drug manufacturers to report information related to payments and other transfers
    of value to physicians and other healthcare providers or marketing expenditures; and state laws governing the privacy and
    security of health information in certain circumstances.



Because
of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some
of our business activities could be subject to challenge under one or more of such laws. In addition, recent health care reform
legislation has strengthened these laws. Further, state laws differ from each other and from federal law in significant ways,
thus complicating compliance efforts.



If
our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply,
we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from participation in government
health care programs, such as Medicare and Medicaid, imprisonment, and the curtailment or restructuring of our operations, any
of which could adversely affect our ability to operate our business and our results of operations.



50









Risks
Related to our Dependence on Third Parties



We
may become dependent on future collaborations to develop and commercialize our product candidates and to provide the regulatory
compliance, sales, marketing, and distribution capabilities required for the success of our business.



We
may enter into various kinds of collaborative research and development and product marketing agreements to develop and commercialize
our products. The expected future milestone payments and cost reimbursements from collaboration agreements could provide an important
source of financing for our research and development programs, thereby facilitating the application of our technology to the development
and commercialization of our products, but there are risks associated with entering into collaboration arrangements.



The
process of establishing and maintaining collaborative relationships is difficult, time-consuming and involves significant uncertainty,
such as:



| | ● | a
    collaboration partner may shift its priorities and resources away from our product candidates due to a change in business
    strategies, or a merger, acquisition, sale or downsizing;                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                 
| | ● | a
    collaboration partner may seek to renegotiate or terminate their relationships with us due to unsatisfactory clinical results,
    manufacturing issues, a change in business strategy, a change of control or other reasons;                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                                                 
| | ● | a
    collaboration partner may cease development in therapeutic areas which are the subject of our strategic collaboration;                                                                                                                                                                                                                    
| |   |                                                                                                                                                                                                                                                                                                                                                 
| | ● | a
    collaboration partner may not devote sufficient capital or resources towards our product candidates;                                                                                                                                                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                                                                 
| | ● | a
    collaboration partner may change the success criteria for a product candidate thereby delaying or ceasing development of such
    candidate;                                                                                                                                                                                              
| |   |                                                                                                                                                                                                                                                                                                                                                 
| | ● | a
    significant delay in initiation of certain development activities by a collaboration partner will also delay payment of milestones
    tied to such activities, thereby impacting our ability to fund our own activities;                                                                                                                 
| |   |                                                                                                                                                                                                                                                                                                                                                 
| | ● | a
    collaboration partner could develop a product that competes, either directly or indirectly, with our product candidate;                                                                                                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                                                                 
| | ● | a
    collaboration partner with commercialization obligations may not commit sufficient financial or human resources to the marketing,
    distribution or sale of a product;                                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                                                                                                 
| | ● | a
    collaboration partner with manufacturing responsibilities may encounter regulatory, resource or quality issues and be unable
    to meet demand requirements;                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                                                 
| | ● | a
    collaboration partner may terminate a strategic alliance;                                                                                                                                                                                                                                                                                 
| |   |                                                                                                                                                                                                                                                                                                                                                 
| | ● | a
    dispute may arise between us and a partner concerning the research, development or commercialization of a product candidate
    resulting in a delay in milestones, royalty payments or termination of an alliance and possibly resulting in costly litigation
    or arbitration which may divert management attention and resources; and
| |   |                                                                                                                                                                                                                                                                                                                                                 
| | ● | a
    partner may use our products or technology in such a way as to invite litigation from a third party.                                                                                                                                                                                                                                      



There
is a risk that a collaboration partner might fail to perform its obligations under the collaborative arrangements or may be slow
in performing its obligations. In addition, a collaboration partner may experience financial difficulties at any time that could
prevent it from having available funds to contribute to the collaboration. If a collaboration partner fails to conduct its product
development, commercialization, regulatory compliance, sales and marketing or distribution activities successfully and in a timely
manner, or if it terminates or materially modifies its agreements with us, the development and commercialization of one or more
product candidates could be delayed, curtailed, or terminated because we may not have sufficient financial resources or capabilities
to continue such development and commercialization on our own.







We
have no marketing, sales, or distribution resources for the commercialization of any products or technologies that we might successfully
develop.



We
do not have any infrastructure for the sales, marketing or distribution of our products, and the cost of establishing and maintaining
such an organization may exceed the cost-effectiveness of doing so. There are significant expenses and risks involved with establishing
our own sales, marketing and distribution capabilities, including our ability to hire, retain and appropriately incentivize qualified
individuals, generate sufficient sales leads, provide adequate training to sales and marketing personnel, and effectively manage
a geographically dispersed sales and marketing team. Any failure or delay in the development of our internal sales, marketing
and distribution capabilities could delay any product launch, which would adversely impact the commercialization of any approved
product candidate.





51







If
we market products through arrangements with third parties, we may pay sales commissions to sales representatives or we may sell
or consign products to distributors at wholesale prices. As a result, our gross profit from product sales may be lower than it
would be if we were to sell our products directly to end users at retail prices through our own sales force. There can be no assurance
we will able to negotiate distribution or sales agreements with third parties on favorable terms to justify our investment in
our products or achieve sufficient revenues to support our operations.



If
we are unable to build our own sales force or negotiate a collaborative relationship for the commercialization of our product
candidates, we may be forced to delay the potential commercialization of such candidates or reduce the scope of our sales or marketing
activities for them. If we elect to increase our expenditures to fund commercialization activities ourselves, we will need to
obtain additional capital, which may not be available to us on acceptable terms, or at all. We could enter into arrangements with
collaborative partners at an earlier stage than otherwise would be ideal and we may be required to relinquish rights to our product
candidates or otherwise agree to terms unfavorable to us, any of which may have an adverse effect on our business, operating results
and prospects.



If
we are unable to establish adequate sales, marketing and distribution capabilities, either on our own or in collaboration with
third parties, we will not be successful in commercializing our product candidates and may not become profitable and may incur
significant additional losses. We will be competing with many companies that currently have extensive and well-funded marketing
and sales operations. Without an internal team or the support of a third party to perform marketing and sales functions, we may
be unable to compete successfully against these more established companies.



We
do not have the ability to independently conduct clinical trials required to obtain regulatory approvals for our product candidates
and intend to rely on third parties to conduct, supervise and monitor our clinical trials.



We
will need to rely on third parties, such as contract research organizations, data management companies, contract clinical research
associates, medical institutions, clinical investigators and contract laboratories to conduct any clinical trials that we may
undertake for our product candidates. We may also rely on third parties to assist with our preclinical development of product
candidates.



If
we outsource clinical trials, we may be unable to directly control the timing, conduct and expense of our clinical trials. However,
we will remain responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol, legal,
regulatory and scientific standards and our reliance on the CROs does not relieve us of our regulatory responsibilities.



We
and our third-party contractors will be required to comply with the GLPs and GCPs, which are regulations and guidelines enforced
by the FDA and are also required by the Competent Authorities of the Member States of the European Economic Area and comparable
foreign regulatory authorities in the form of International Conference on Harmonization guidelines for any of our product candidates
that are in preclinical and clinical development. The Regulatory authorities enforce GCPs through periodic inspections of trial
sponsors, principal investigators and clinical trial sites. If we or our third-party contractors fail to comply with GCPs, the
clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities
may require us to perform additional clinical trials before approving our marketing applications. We cannot assure you that upon
inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials comply with
GCP regulations. In addition, our clinical trials must be conducted with product produced under cGMP regulations. Accordingly,
if our third-party contractors fail to comply with these regulations or fail to recruit a sufficient number of subjects, we may
be required to repeat clinical trials, which would delay the regulatory approval process.



Our
third-party contractors will not be our employees, and we will not control whether or not they devote sufficient time and resources
to our future clinical and nonclinical programs. These third-party contractors may also have relationships with other commercial
entities, including our competitors, for whom they may also be conducting clinical trials, or other product development activities
which could harm our competitive position. We face the risk of potential unauthorized disclosure or misappropriation of our intellectual
property by third-party contractors, which may reduce our trade secret protection and allow our potential competitors to access
and exploit our proprietary technology. If our third-party contractors do not successfully carry out their contractual duties
or obligations, fail to meet expected deadlines, or if the quality or accuracy of the clinical data they obtain is compromised
due to the failure to adhere to our clinical protocols or regulatory requirements or for any other reasons, our clinical trials
may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize
any product candidate that we develop. As a result, our financial results and the commercial prospects for any product candidate
that we develop would be harmed, our costs could increase, and our ability to generate revenues could be delayed.







If
our relationship with any third-party contractors terminate, we may not be able to enter into arrangements with alternative third-party
contractors or do so on commercially reasonable terms. Switching or adding additional third-party contractors involves substantial
cost and requires management time and focus. In addition, there is a natural transition period when a new third party commences
work. As a result, delays occur, which can materially impact our ability to meet our desired clinical development timelines. Though
we intend to carefully manage our relationships with our third-party contractors, there can be no assurance that we will not encounter
challenges or delays in the future or that these delays or challenges will not have an adverse impact on our business, financial
condition and prospects.





52







Risks
Related to Intellectual Property



If
we are unable to obtain and enforce patents and to protect our trade secrets, others could use our technology to compete with
us, which could limit opportunities for us to generate revenues by licensing our technology and selling our products.



| | ● | Our
    success will depend in part on our ability to obtain and enforce patents and maintain trade secrets in the United States and
    in other countries. If we are unsuccessful in obtaining and enforcing patents, our competitors could use our technology and
    create products or technologies that compete with our products and technologies, without paying license fees or royalties
    to us.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                              
| | ● | The
    preparation, filing, and prosecution of patent applications can be costly and time consuming. Our limited financial resources
    may not permit us to pursue patent protection of all of our technology and products throughout the world.                                                                                                                                                          
| |   |                                                                                                                                                                                                                                                                                                                                                                                                              
| | ● | Even
    if we are able to obtain issued patents covering our technology or products, we may have to incur substantial legal fees and
    other expenses to enforce our patent rights in order to protect our technology and products from infringing uses. We may not
    have the financial resources to finance the litigation required to preserve our patent and trade secret rights.                   



There
is no certainty that our pending or future patent applications will result in the issuance of patents.



We
acquired rights to patent applications for technology that Lineage has developed, and we may file additional new patent applications
in the future seeking patent protection for new technology or products that we develop ourselves or jointly with others. However,
there is no assurance that any of our licensed patent applications, or any patent applications that we may file in the future
in the United States or abroad, will result in the issuance of patents.



The
process of applying for and obtaining patents can be expensive and slow.



| | ● | The
    preparation and filing of patent applications, and the maintenance of patents that are issued, may require substantial time
    and money.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ● | A
    patent interference proceeding may be instituted with the U.S. Patent and Trademark Office (the “USPTO”) when
    more than one person files a patent application covering the same technology, or if someone wishes to challenge the validity
    of an issued patent. At the completion of the interference proceeding, the USPTO will determine which competing applicant
    is entitled to the patent, or whether an issued patent is valid. Patent interference proceedings are complex, highly contested
    legal proceedings, and the USPTO’s decision is subject to appeal. This means that if an interference proceeding arises
    with respect to any of our patent applications, we may experience significant expenses and delay in obtaining a patent, and
    if the outcome of the proceeding is unfavorable to us, the patent could be issued to a competitor rather than to us.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ● | A
    derivation proceeding may be instituted by the USPTO or an inventor alleging that a patent or application was derived from
    the work of another inventor.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ● | Post
    Grant Review under the new America Invents Act will make available opposition-like proceedings in the United States. As with
    the USPTO interference proceedings, Post Grant Review proceedings will be very expensive to contest and can result in significant
    delays in obtaining patent protection or can result in a denial of a patent application.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ● | Oppositions
    to the issuance of patents may be filed under European patent law and the patent laws of certain other countries. As with
    USPTO interference proceedings, these foreign proceedings can be very expensive to contest and can result in significant delays
    in obtaining a patent or can result in a denial of a patent application.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               







Intellectual
property we may develop using grants received from the federal government are subject to rights maintained by the government.



Research
and development we perform that is funded by grants from the federal government, and any intellectual property that we create
using those grants, is subject to the rights maintained by the federal government.





53







Our
patents may not protect our technologies or products from competition.



| | ● | We
    might not be able to obtain any patents beyond those we already own or have licensed or sublicensed, and any patents that
    we do obtain might not be comprehensive enough to provide us with meaningful patent protection.                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ● | There
    will always be a risk that our competitors might be able to successfully challenge the validity or enforceability of any patent
    issued to us.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ● | In
    addition to interference proceedings, the USPTO can reexamine issued patents at the request of a third party. Our patents
    may be subject to inter partes review (replacing the reexamination proceeding), a proceeding in which a third party can challenge
    the validity of one of our patents to have the patent invalidated. This means that patents owned or licensed by us may be
    subject to reexamination and may be lost if the outcome of the reexamination is unfavorable to us.                                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ● | The
    patents to which we have licenses to, including the licenses to HyStem are broadly licensed to other companies and in some
    instances, in overlapping fields of use. Asterias Biotherapeutics, Inc. (“Asterias”), a wholly-owned subsidiary
    of Lineage, has a non-exclusive license to HyStem patents in certain fields of use that overlap with the AgeX sublicensed
    fields of use. Asterias and AgeX may create competing products. In addition, AgeX, through our subsidiary ReCyte Therapeutics,
    is a sublicensee under a cross-license between Lineage and Asterias, which creates another potential risk of Asterias and
    AgeX creating competing products.



We
may not be able to enforce our intellectual property rights throughout the world.



Filing,
prosecuting and defending patents, if issued, on our technology and product candidates in all countries throughout the world would
be prohibitively expensive. The requirements for patentability may differ in certain countries, particularly in developing countries.
Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products
and, further, may export otherwise infringing products to territories where we may obtain patent protection, but where patent
enforcement is not as strong as that in the United States. The products offered by foreign competitors may compete with our products
in jurisdictions where we do not have any issued or licensed patents or where any future patent claims or other intellectual property
rights may not be effective or sufficient to prevent them from competing with us.



Moreover,
our ability to protect and enforce our intellectual property rights may be adversely affected by unforeseen changes in foreign
intellectual property laws. Additionally, laws of some countries outside of the United States and Europe do not afford intellectual
property protection to the same extent as the laws of the United States and Europe. Many companies have encountered significant
problems in protecting and defending intellectual property rights in certain foreign jurisdictions. The legal systems of some
countries, including India, China and certain developing countries, do not favor the enforcement of patents and other intellectual
property rights. This could make it difficult for us to stop the infringement of our patents or the misappropriation of our other
intellectual property rights. For example, many foreign countries have compulsory licensing laws under which a patent owner must
grant licenses to third parties. Consequently, we may not be able to prevent third parties from practicing our inventions in certain
countries outside the United States and Europe. Competitors may use our technologies in jurisdictions where we have not obtained
patent protection to develop their own products and, further, may export otherwise infringing products to territories where we
have patent protection, if our ability to enforce our patents to stop infringing activities is inadequate. These products may
compete with our products, and our patents, if issued, or other intellectual property rights may not be effective or sufficient
to prevent them from competing.



Proceedings
to enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert
our efforts and resources from other aspects of our business. Furthermore, while we intend to protect our intellectual property
rights in major markets, we cannot ensure that we will be able to initiate or maintain similar efforts in all jurisdictions in
which we may wish to market products or license our patented technologies. Accordingly, our efforts to protect our intellectual
property rights in such countries may be inadequate.



54







We
may be subject to patent infringement claims that could be costly to defend, which may limit our ability to use disputed technologies,
and which could prevent us from pursuing research and development or commercialization of some of our technologies or products,
require us to pay licensing fees to have freedom to operate and/or result in monetary damages or other liability for us.



The
success of our business depends significantly on our ability to operate without infringing patents and other proprietary rights
of others. If the technology that we use infringes a patent held by others, we could be sued for monetary damages by the patent
holder or its licensee, or we could be prevented from continuing research, development, and commercialization of technologies
and products that rely on that technology, unless we are able to obtain a license to use the patent. The cost and availability
of a license to a patent cannot be predicted, and the likelihood of obtaining a license at an acceptable cost would be lower if
the patent holder or any of its licensees is using the patent to develop or market a technology or product with which our technologies
or products would compete. If we could not obtain a necessary license, we would need to develop or obtain rights to alternative
technologies, which could prove costly and could cause delays in developing our technologies or products, or we could be forced
to discontinue the development or marketing of any technologies and products that were developed using the technology covered
by the patent.



Risks
Related to Our Relationship with Juvenescence



Our
Chief Financial Officer and Chief Operating Officer are not fulltime AgeX employees.



Our
Chief Financial Officer is providing services to us on a part-time basis as a consultant. Because he is not a full-time employee,
we may compete for his time and attention with other companies for whom he may provide services. Our Chief Operating Officer is
an employee of Juvenescence and is expected to devote 85% of his time to our affairs and the balance of his time to the affairs
of Juvenescence and accordingly we may compete with Juvenescence for his time and attention.



Conflicts
of interest may arise from our relationship with Juvenescence, which owns a significant percentage of our common stock and is
a significant creditor and will be able to substantially influence us and exert control over matters subject to stockholder approval
and the election of directors.



As
of March 16, 2020, Juvenescence beneficially owned approximately 43.6% of the voting power of our outstanding common stock, which
will be enable them to substantially influence us and exert control through this ownership position. For example, Juvenescence
will be able to exert control over or substantially influence elections of directors, approval of our equity incentive plans,
amendments to our organizational documents, or approval of any merger, amalgamation, sale of assets or other major corporate transaction.
Juvenescence has controlling stakes and minority investments in several other companies engaged in various aspects of the aging
industry, which companies may propose collaborations with AgeX. Juvenescence has also loaned AgeX $2 million and has agreed to
provide additional loans subject to certain conditions under the New Loan Agreement as described in Note 9
to the financial statements included in this Report. Juvenescence's interests may not always coincide with our corporate interests
or the interests of other stockholders, and it may exercise its voting and other rights, including rights as a creditor, in a
manner with which other stockholders may not agree or that may not be in the best interests of AgeX or stockholders other than
Juvenescence. So long as Juvenescence continues to own a significant amount of our equity and remains a significant creditor,
it will continue to be able to strongly influence and effectively control our decisions. While the directors elected by Juvenescence
will be obligated to act in accordance with their fiduciary duty, they may have equity or other interests in Juvenescence and,
accordingly, their interests may be aligned with Juvenescence's interests, which may not always coincide with our corporate interests
or the interests of our other stockholders.



Risks
Pertaining to Our Common Stock



There
is a limited history to the public trading of our common stock and there is no assurance that a market for our common stock will
be sustained.



Public
trading of our common stock on the NYSE American began on November 29, 2018. Accordingly, there is only a limited history of the
public trading of our common stock and there can be no assurance that an active market for our common stock will be sustained.



We
cannot predict the prices at which our common stock may trade. The market price of our common stock may fluctuate significantly,
depending upon many factors, some of which may be beyond our control, including, but not limited to:



| | ● | a
    shift in our investor base;                                      
| | - | -----------------------------------------------------------------------
| |   |                                                                        
| | ● | our
    quarterly or annual earnings, or those of comparable companies;
| |   |                                                                        
| | ● | actual
    or anticipated fluctuations in our operating results;       





55







| | ● | our
    ability to obtain financing as needed;                                                      
| | - | ----------------------------------------------------------------------------------------------------
| |   |                                                                                                     
| | ● | changes
    in laws and regulations affecting our business;                                         
| |   |                                                                                                     
| | ● | changes
    in accounting standards, policies, guidance, interpretations or principles;             
| |   |                                                                                                     
| | ● | announcements
    by us or our competitors of significant investments, acquisitions or dispositions;
| |   |                                                                                                     
| | ● | the
    failure of securities analysts to cover our common stock;                                   
| |   |                                                                                                     
| | ● | changes
    in earnings estimates by securities analysts or our ability to meet those estimates;    
| |   |                                                                                                     
| | ● | the
    operating performance and stock price of comparable companies;                              
| |   |                                                                                                     
| | ● | overall
    market fluctuations; and                                                                
| |   |                                                                                                     
| | ● | general
    economic conditions and other external factors.                                         



Because
we are engaged in the development of pharmaceutical and cell therapy products, the price of shares of our common stock may rise
and fall rapidly.



The
price of our common stock may rise rapidly in response to certain events, such as the commencement of clinical trials of an experimental
new therapy, even though the outcome of those trials and the likelihood of ultimate FDA approval of a therapeutic product remain
uncertain. Similarly, prices of our common stock may fall rapidly in response to certain events such as unfavorable results of
clinical trials or a delay or failure to obtain FDA approval. Further, the failure of our earnings to meet analysts’ expectations
could result in a significant rapid decline in the market price of our common stock



Because
we do not pay dividends, our stock may not be a suitable investment for anyone who needs to earn dividend income.



We
do not have current plans to pay any cash dividends on our common stock. The declaration, amount and payment of any future dividends
on shares of common stock will be at the sole discretion of our Board of Directors. Our Board of Directors may take into account
general and economic conditions, our financial condition and results of operations, our available cash and current and anticipated
cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and implications on the payment of dividends
by us to our stockholders or by our subsidiaries to us and such other factors as our Board of Directors may deem relevant. For
the foreseeable future we anticipate that any earnings generated in our business will be used to finance the growth of our business
and will not be paid out as dividends to our stockholders. This means that our stock may not be a suitable investment for anyone
who needs to earn income from their investments.



Securities
analysts may not initiate coverage or continue to cover our common stock, and this may have a negative impact on the market price
of our shares.



The
market price and liquidity of our common stock will depend, in part, on the research and reports that securities analysts publish
about our business and our common stock. We do not have any control over these analysts. There is no guarantee that securities
analysts will cover our common stock. If securities analysts do not cover our common stock, the lack of research coverage may
adversely affect the market price of those shares. If securities analysts do cover our shares, they could issue reports or recommendations
that are unfavorable to the price of our shares, and they could downgrade a previously favorable report or recommendation, and
in either case our share price could decline as a result of the report. If one or more of these analysts ceases to cover our shares
or fails to publish regular reports on our business, we could lose visibility in the financial markets, which could cause our
share price or trading volume to decline.



You
may experience dilution of your ownership interests if we issue additional shares of common stock or preferred stock.



In
the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership
interests of our present stockholders. We are currently authorized to issue an aggregate of 105,000,000 shares of capital stock
consisting of 100,000,000 shares of common stock and 5,000,000 “blank check” shares of preferred stock. As of March
16, 2020, there were 37,656,415 shares of common stock issued and outstanding, and 2,895,979 shares of common stock reserved for
issuance upon the exercise of outstanding stock options or other stock-based awards under our 2017 Equity Incentive Plan. No shares
of preferred stock are presently outstanding. Under the terms of the New Loan Agreement, we will issue shares of common stock
and common stock purchase warrants to Juvenescence. The total number of shares of common stock that we will issue to Juvenescence
will depend on whether Juvenescence elects to exercise its right to convert the principal amount of outstanding loans under the
New Loan Agreement into shares of our common stock and the market price of our common stock if a conversion takes place. The total
number of warrants that we will issue to Juvenescence will depend on the amount of funds we borrow under the New Loan Agreement
and the market price of our common stock. See Note 9 to our consolidated financial statements included elsewhere in this Report.



56









We
may issue additional common stock or other securities that are convertible into or exercisable for common stock in order to raise
additional capital, or in connection with hiring or retaining employees or consultants, or in connection with future acquisitions
of licenses to technology or medical products or for other business purposes. The future issuance of any additional shares of
common stock or other securities may create downward pressure on the trading price of our common stock.



We
may also issue preferred stock having rights, preferences, and privileges senior to the rights of our common stock with respect
to dividends, rights to share in distributions of our assets if we liquidate our company, or voting rights. Any preferred stock
may also be convertible into common stock on terms that would be dilutive to holders of common stock.



We
may finance a portion of our operations by organizing subsidiaries and selling shares of capital stock in those subsidiaries to
private investors. Sales of subsidiary shares would reduce our ownership interest in the subsidiaries, and correspondingly dilute
our shareholder’s ownership interests in our consolidated enterprise. Our subsidiaries could also have their own stock option
plans and the exercise of subsidiary stock options or the sale of restricted stock under those plans would also reduce our ownership
interest in the subsidiaries, with a resulting dilutive effect on the ownership interest of our shareholders in our consolidated
enterprise. Subsidiaries might also issue preferred stock having rights, preferences, and privileges senior to the rights of the
subsidiary common stock we hold with respect to dividends, rights to share in distributions of our assets if the subsidiary is
liquidated, or voting rights. Any subsidiary preferred stock may also be convertible into common stock on terms that would be
dilutive to us as a holder of subsidiary common stock.



Unless
our common stock continues to be listed on a national securities exchange it will become subject to the so-called “penny
stock” rules that impose restrictive sales practice requirements.



If
we are unable to maintain the listing of our common stock on the NYSE American or another national securities exchange, our common
stock could become subject to the so-called “penny stock” rules if the shares have a market value of less than $5.00
per share. The SEC has adopted regulations that define a penny stock to include any stock that has a market price of less than
$5.00 per share, subject to certain exceptions, including an exception for stock traded on a national securities exchange. The
SEC regulations impose restrictive sales practice requirements on broker-dealers who sell penny stocks to persons other than established
customers and accredited investors. An accredited investor generally is a person whose individual annual income exceeded $200,000,
or whose joint annual income with a spouse exceeded $300,000 during the past two years and who expects their annual income to
exceed the applicable level during the current year, or a person with net worth in excess of $1.0 million, not including the value
of the investor’s principal residence and excluding mortgage debt secured by the investor’s principal residence up
to the estimated fair market value of the home, except that any mortgage debt incurred by the investor within 60 days prior to
the date of the transaction shall not be excluded from the determination of the investor’s net worth unless the mortgage
debt was incurred to acquire the residence. For transactions covered by this rule, the broker-dealer must make a special suitability
determination for the purchaser and must have received the purchaser’s written consent to the transaction prior to sale.
This means that if we are unable maintain the listing of our common stock on a national securities exchange, the ability of stockholders
to sell their AgeX common stock in the secondary market could be adversely affected.



If
a transaction involving a penny stock is not exempt from the SEC’s rule, a broker-dealer must deliver a disclosure schedule
relating to the penny stock market to each investor prior to a transaction. The broker-dealer also must disclose the commissions
payable to both the broker-dealer and its registered representative, current quotations for the penny stock, and, if the broker-dealer
is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market.
Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the customer’s
account and information on the limited market in penny stocks.



We
are an “emerging growth company,” and may elect to comply with reduced public company reporting requirements applicable
to emerging growth companies, which could make our common stock less attractive to investors.



We
are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from
various reporting requirements that are applicable to other public companies that are not “emerging growth companies”
including reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions
from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute
payments not previously approved. We cannot predict if investors will find our common stock less attractive because we may rely
on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market
for our common stock and our stock price may be more volatile. We may take advantage of these reporting exemptions until we are
no longer an “emerging growth company.” We will remain an “emerging growth company” until the earliest
of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.07 billion or more; (ii) the last day
of the fiscal year following the fifth anniversary of the date of the first sale of our common equity securities pursuant to an
effective registration statement under the Securities Act; (iii) the date on which we have issued more than $1.0 billion in nonconvertible
debt during the previous three years; or (iv) the date on which we are deemed to be a “large accelerated filer” under
the Exchange Act.



57









We
could be subject to securities class action litigation.



In
the past, securities class action litigation has often been brought against a company following a decline in the market price
of its securities. This risk is especially relevant for us because biopharmaceutical companies have experienced significant stock
price volatility in recent years. If we face such litigation, it could result in substantial costs and a diversion of management’s
attention and resources, which could harm our business.



Provisions
in our certificate of incorporation and bylaws and under Delaware law could make an acquisition of our company, which may be beneficial
to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.



Provisions
in our certificate of incorporation and our bylaws may discourage, delay or prevent a merger, acquisition or other change in control
of our company that stockholders may consider favorable, including transactions in which you might otherwise receive a premium
for your shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of
our common stock, thereby depressing the market price of our common stock. In addition, because our Board of Directors is responsible
for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders
to replace or remove our current management by making it more difficult for stockholders to replace members of our Board of Directors.
Among other things, these provisions include those establishing:



| | ● | no
    cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;                                                                                                                                                                          
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                 
| | ● | the
    ability of our Board of Directors to authorize the issuance of shares of preferred stock and to determine the terms of those
    shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute
    the ownership of a hostile acquirer; and
| |   |                                                                                                                                                                                                                                                                                                                 
| | ● | the
    ability of our Board of Directors to alter our bylaws without obtaining stockholder approval.                                                                                                                                                                                                           



Moreover,
because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the General Corporation Law of the
State of Delaware, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining
with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding
voting stock, unless the merger or combination is approved in a prescribed manner.



Item
1B. Unresolved Staff Comments



None.



Item
2. Properties



Our
office and laboratory facilities comprise approximately 23,911 square feet of subleased space in an office and research park at
965 Atlantic Avenue, Alameda, California. We have constructed a cGMP laboratory in this space for the manufacture of our cell
lines and cell based product candidates. The sublease term will expire on December 31, 2020.



Item
3. Legal Proceedings



From
time to time, we may be involved in routine litigation incidental to the conduct of our business. We are not presently involved
in any material litigation or proceedings, and to our knowledge no such litigation or proceedings are contemplated.



Item
4. Mine Safety Disclosures



Not
applicable.



58









PART
II



Item
5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities



Our
common stock has been traded on the NYSE American under the symbol “AGE” since November 29, 2018.



As
of March 2, 2020, we had 261 holders of record of our common stock. This number does not include stockholders whose shares of
AgeX common stock are held in “street name” in accounts with securities broker-dealers or other financial institutions
or fiduciaries.



The
following table shows certain information concerning the stock options outstanding and available for issuance under all of our
compensation plans and agreements as of December 31, 2019 (in thousands, except weighted average exercise price):



|Plan
    Category                                    |  | Number
                                         of Shares to
                                         be Issued upon Exercise
                                         of Outstanding Options,
                                         Warrants, and
                                         Rights |       |  | Weighted
                                         Average Exercise
                                         Price of the
                                         Outstanding Options,
                                         Warrants, and
                                         Rights |   |      | Number
                                         of Shares Remaining
                                         Available for
                                         Future Issuance under
                                         Equity Compensation
                                         Plans | 
|---------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|AgeX
    Stock Option Plans Approved by Stockholders |  |                                                                                                                                                                                                                                                                                                       | 2,895 |  |                                                                                                                                                                                                                                                                                               | $ | 2.69 |                                                                                                                                                                                                                                                                                                       | 



Additional
information concerning our 2017 Equity Incentive Plan and the stock options may be found in Note 6 to the Financial Statements.



Item
6. Selected Financial Data



Not
applicable.



Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations



The
following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide information
necessary to understand our audited consolidated financial statements for the years ended December 31, 2019 and 2018, and highlight
certain other information which, in the opinion of management, will enhance a reader’s understanding of our financial condition,
changes in financial condition and results of operations. These historical financial statements may not be indicative of our future
performance. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains a number
of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and
risks described throughout this filing, particularly in “Risk Factors.”



Emerging
Growth Company Status



The
Jumpstart our Business Startups Act of 2012 (“JOBS Act”) permits an “emerging growth company” such as
AgeX to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public
companies. However, we elected to comply with newly adopted or revised accounting standards when they become applicable to public
companies because our financial statements were consolidated with those of Lineage, which is not an emerging growth company under
the JOBS Act and is therefore not permitted to delay the adoption of new or revised accounting standards that become applicable
to public companies. This election under the JOBS Act to not delay the adoption of new or revised accounting standards is irrevocable.



59









Overview



We
are a biotechnology company focused on the development and commercialization of novel therapeutics targeting human aging and degenerative
diseases. Our initial discovery and preclinical programs focus on utilizing brown adipose tissue in targeting diabetes, obesity,
and heart disease; and induced tissue regeneration in utilizing the human body’s own abilities to scarlessly regenerate
tissues damaged from age or trauma. We may also pursue other early-stage pre-clinical programs.



Since
inception, our operations have focused on building our technology platform, identifying potential product candidates, establishing
and protecting our intellectual property and raising capital. Our revenues have been principally derived from subscription and
advertising revenue from LifeMap Sciences’ online databases based upon applicable subscription or advertising periods. We
do not have any products approved for sale and have not generated any revenue from product sales.



Since
inception, we have incurred significant operating losses and we will need to obtain additional financing in order to continue
our operations, including our research and development programs. See “Liquidity and Capital Resources” for a discussion
of our available capital resources and our need for financing. Our operating losses were $12.6 million and $11.2 million, for
the years ended December 31, 2019 and 2018, respectively. As of December 31, 2019, we had an accumulated deficit of $86.2 million.
We expect to continue to incur significant expenses and operating losses for the foreseeable future.





Critical Accounting Policies



The preparation of financial
statements in conformity with accounting principles generally accepted in the United States (“GAAP”), requires management
to make estimates and assumptions that affect the reported amounts in our consolidated financial statements and related notes.
Our significant accounting policies are described in Note 2 to our consolidated financial statements included elsewhere in this
Report. We have identified below our critical accounting policies and estimates that we believe require the greatest amount of
judgment. On an ongoing basis, we evaluate our estimates that are subject to significant judgment including those related to going
concern assessment of consolidated financial statements, allocations and adjustments necessary for carve-out basis of presentation,
including the separate return method for income taxes, useful lives associated with long-lived assets, including evaluation of
asset impairment, allowances for uncollectible accounts receivables, loss contingencies, deferred income taxes and tax reserves,
including valuation allowances related to deferred income taxes, and assumptions used to value stock-based awards, or other equity
instruments. Actual results could differ materially from those estimates. On an ongoing basis, we evaluate our estimates compared
to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities.
To the extent that there are material differences between our estimates and our actual results, our future consolidated financial
statement presentation, financial condition, results of operations and cash flows will be affected.



We believe the assumptions
and estimates associated with the following have the greatest potential impact on our consolidated financial statements.



Principles of consolidation
– AgeX’s consolidated financial statements include the accounts of its subsidiaries and certain research and development
departments, including former Lineage personnel, transferred from Lineage to AgeX in connection with the Asset Contribution Agreement
described in Note 4 to our consolidated financial statements. AgeX consolidated its direct and indirect wholly-owned or majority-owned
subsidiaries because AgeX has the ability to control their operating and financial decisions and policies through its ownership,
and the noncontrolling interest is reflected as a separate element of stockholders’ equity on AgeX’s consolidated balance
sheets.





60









As
of, and for the year ended, December 31, 2019, AgeX consolidated ReCyte Therapeutics, LifeMap
Sciences, Inc. (“LifeMap Sciences”), and LifeMap Sciences, Ltd. (Israel) and included the historical expenses of certain
former Lineage research and development departments (see Note 4 to our consolidated financial statements).



Going
concern assessment –We assess going concern uncertainty for our consolidated financial statements to determine if we
have sufficient cash and cash equivalents on hand and working capital to operate for a period of at least one year from the date
our consolidated financial statements are issued or are available to be issued, which is referred to as the “look-forward
period” as defined by FASB’s ASU No. 2014-15. As part of this assessment, based on conditions that are known and reasonably
knowable to us, we consider various scenarios, forecasts, projections, and estimates, and we make certain key assumptions, including
the timing and nature of projected cash expenditures or programs, among other factors, and our ability to delay or curtail those
expenditures or programs within the look-forward period in accordance with ASU No. 2014-15, if necessary.



Related
party transactions – Shared Facilities and Services Agreement -As more fully described in Note 4 to our consolidated
financial statements included elsewhere in this Report, Lineage provided us with the use
of Lineage facilities and services under a Shared Facilities and Services Agreement (the “Shared Facilities Agreement”).
Accordingly, Lineage allocated expenses such as salaries and payroll related expenses incurred and paid on our behalf based on
the amount of time that particular employees devote to AgeX affairs. Other expenses such as legal, accounting and financial reporting,
marketing, and travel expenses were allocated to us to the extent that those expenses were incurred by or on behalf of AgeX. Lineage
also allocated certain overhead expenses such as rent and utilities, property taxes, insurance, laboratory expenses and supplies,
telecommunications and other indirect expenses. These allocations were made based upon activity-based allocation drivers such
as time spent, percentage of square feet of office or laboratory space used, headcount and percentage of personnel devoted to
our operations or management. Management evaluated the appropriateness of the allocations on a periodic basis and believes that
this basis for allocation was reasonable. The Shared Facilities Agreement terminated on September 30, 2019 and Lineage will not
be providing us with further services or use of its facilities.



Related
party transactions - allocated expenses from Lineage –Consistent with the principles of carve-out financial statements
and presentation discussed in Note 2 to our consolidated financial statements, certain expenses were allocated by Lineage and
included in our consolidated statements of operations and consolidated statements of stockholders’ equity as a contribution
by Lineage. Research and development expenses include allocations from Lineage primarily attributable to certain former Lineage
research departments contributed to us. Those expenses are primarily comprised of former Lineage personnel and related expenses,
including stock-based compensation, and other outside expenses relevant to the nature of the research projects that were contributed
to us pursuant to the Asset Contribution Agreement discussed in Note 4 to our consolidated financial statements included elsewhere
in this Report. Management considers the allocation methodologies used to allocate expenses as reasonable and appropriate based
on historical Lineage expenses attributable to us and our operations for purposes of the standalone, carve-out consolidated financial
statements included elsewhere in this Report. The expenses reflected in the consolidated financial statements may not be indicative
of expenses that we will incur in the future.



Research
and development –Research and development expenses include both direct expenses incurred by us or our subsidiaries
and indirect overhead costs allocated by Lineage that benefited or supported our research and development functions. Direct research
and development expenses consist primarily of personnel costs and related benefits, including stock-based compensation, amortization
of intangible assets, outside consultants and suppliers, and license fees paid to third parties to acquire patents or licenses
to use patents and other technology. Direct research and development expenses also include allocations for carve-out presentation
purposes from certain former Lineage research departments discussed above under Related party transactions - allocated expenses
from Lineage. Indirect research and development expenses include overhead expenses allocated to us by Lineage discussed under
Related party transactions - Shared Facilities and Services Agreement above. Research and development costs are expensed
as incurred. Research and development expenses incurred and reimbursed by grants from third parties or governmental agencies,
including service revenues from co-development projects with customers, if any and as applicable, approximate the respective revenues
recognized in the consolidated statements of operations.



General
and administrative – General and administrative expenses include both direct expenses incurred by us and indirect overhead
costs allocated by Lineage that benefited or supported our general and administrative functions. Direct general and administrative
expenses consist primarily of compensation and related benefits, including stock-based compensation, for executive and corporate
personnel, and professional and consulting fees. Direct general and administrative expenses also include allocations for carve-out
presentation purposes discussed above under Related party transactions - allocated expenses from Lineage. Indirect general
and administrative expenses include overhead expenses allocated to us by Lineage discussed under Related party transactions
- Shared Facilities and Services Agreement above.



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Income
taxes –For Federal and California purposes, AgeX’s activity through August 30, 2018 was included in Lineage’s
federal consolidated and California combined tax returns. For those periods, the income tax provision was prepared in accordance
with ASC 740, Income Taxes,using the separate return method to determine
the tax provision of AgeX for carve-out presentation purposes of its consolidated financial statements. The separate return method,
amongst other things, requires that the amount of current and deferred tax expense for a group that files a consolidated income
tax return be allocated among the members of that group as if each group member were a separate taxpayer. As a result, the provision
for income taxes has been presented as if AgeX had filed a separate federal consolidated tax return and a California combined
tax return for the periods presented. In using the separate return method, the sum of the amounts allocated to the members of
the income tax return group may not equal the consolidated amount. If tax attributes recorded in the carve-out consolidated financial
statements are materially different from the actual tax attributes pertaining to us or our legal entities and our subsidiaries,
or to Lineage and its subsidiaries, those differences are identified and disclosed in Note 7 to our consolidated financial statements
included elsewhere in the Report. Accordingly, depending on our future legal structure and related tax elections that may be taken
by us, our effective tax rate in future years could vary materially from our historical effective tax rates. The historical deferred
tax assets, including the operating losses and credit carryforwards generated by certain research and development departments
that operated within Lineage and were transferred to us on August 17, 2017, have been presented as our tax attributes consistent
with the principles of the separate return method described above.



As
of December 31, 2019, the deferred tax assets and liabilities presented in Note 7 included elsewhere in this Report, including
net operating loss carryforwards and research and development credits, represent the tax attributes of AgeX and its subsidiaries.
However, the net operating losses and research and development credits generated before August 17, 2017 with respect to Lineage
research departments that were transferred to us on that date will remain as tax attributes of Lineage.



In
general, net operating losses and other tax credit carryforwards generated by legal entities in a consolidated federal tax group
or a combined state tax group, collectively “the tax group”, are available to other members of the tax group depending
on the nature of the transaction that a member may enter into while still in the tax group. However, under the Tax Matters Agreement
between Lineage and AgeX entered into on August 17, 2017, any use of a member’s net operating loss and other tax credit
carryforwards by the other member is subject to reimbursement by the benefiting member for the actual tax benefit realized. Since
the August 30, 2018 deconsolidation of AgeX and to date, neither Lineage nor AgeX has used the tax attributes of the other.



Weaccount for income taxes in accordance with ASC
740, which prescribes the use of the asset and liability method, whereby deferred tax asset or liability account balances are
calculated at the balance sheet date using current tax laws and enacted rates in effect. Valuation allowances are established
when necessary to reduce deferred tax assets when it is more likely than not that a portion or all of the deferred tax assets
will not be realized. Our judgments, estimates and projections regarding future taxable income may change over time due to changes,
among other factors, in market conditions, changes in tax laws, and tax planning strategies. If our assumptions and consequently
our estimates change in the future, the valuation allowance may be increased or decreased, which may have a material impact on
our consolidated financial statements.



The
guidance also prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement
of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not
sustainable upon examination by taxing authorities. We recognize accrued interest and penalties related to unrecognized tax benefits
as income tax expense. No amounts were accrued for the payment of interest and penalties as of December 31, 2019 and 2018. We
do not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months. We are
currently unaware of any tax issues under review.



On
December 22, 2017, the United States enacted major federal tax reform legislation, Public Law No. 115-97, commonly referred to
as the 2017 Tax Cuts and Jobs Act (“2017 Tax Act”), which enacted a broad range of changes to the Internal Revenue
Code. Changes to taxes on corporations impacted by the 2017 Tax Act include, but not limited to, lowering the U.S. federal tax
rates to a 21 percent flat tax rate, eliminating the corporate alternative minimum tax (“AMT”), imposing additional
limitations on the deductibility of interest and net operating losses, allowing any net operating loss (“NOLs”) generated
in tax years ending after December 31, 2017 to be carried forward indefinitely and generally repealing carrybacks, reducing the
maximum deduction for NOL carryforwards arising in tax years beginning after 2017 to a percentage of the taxpayer’s taxable
income, and allowing for additional expensing of certain capital expenditures. The 2017 Tax Act also puts into effect a number
of changes impacting operations outside of the United States including, but not limited to, the imposition of a one-time tax “deemed
repatriation” on accumulated offshore earnings not previously subject to U.S. tax, and shifts the U.S taxation of multinational
corporations from a worldwide system of taxation to a territorial system. ASC 740 requires the effects of changes in tax rates
and laws on deferred tax balances (including the effects of the one-time transition tax) to be recognized in the period in which
the legislation is enacted.



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On
December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to provide guidance for companies
that are not able to complete their accounting for the income tax effects of the 2017 Tax Act in the period of enactment. SAB
118 allows us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. We
applied the guidance in SAB 118 when accounting for the enactment-date effects of the 2017 Tax Act during the year ended December
31, 2018. As of December 31, 2018, we completed the accounting for all the enactment-date income tax effects of the 2017 Tax Act
as further discussed in Note 7 to our consolidated financial statements included elsewhere in this Report.



Stock-based
compensation – We recognize compensation expense related to employee stock option grants and other equity based awards,
if any, in accordance with FASB ASC 718, Compensation – Stock Compensation (“ASC 718”).



We
use the Black-Scholes option pricing model for estimating the fair value of options granted under our 2017 Equity Incentive Plan
(the “Plan”). The fair value of each restricted stock or restricted stock unit grant, if any, is determined based
on the value of the common stock granted or sold. We have elected to treat stock-based awards with time-based service conditions
as a single award and recognize stock-based compensation on a straight-line basis over the requisite service period.



Compensation
expense for non-employee stock-based awards is recognized in accordance with ASC 718. Stock option awards issued to non-employees,
principally consultants or outside contractors, as applicable, are accounted for at fair value using the Black-Scholes option
pricing model. Management believes that the fair value of the stock options can more reliably be measured than the fair value
of services received. We record compensation expense based on the then-current fair values of the stock options at the grant date
in accordance with ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based
Payment Accounting, which simplifies the accounting for non-employee share-based payment transactions. We adopted ASU 2018-07
on January 1, 2019. As we had one stock option grant issued to a nonemployee as of the adoption date and one additional stock
option grant during 2019 to the same nonemployee, the application of the new standard did not have a material impact on our consolidated
financial statements. Compensation expense for non-employee grants is recorded on a straight-line basis in the consolidated statements
of operations.



The
Black-Scholes option pricing model requires us to make certain assumptions including the fair value of the underlying common stock,
the expected term, the expected volatility, the risk-free interest rate and the dividend yield.



The
fair value of the shares of common stock underlying the stock options has historically been determined by our Board of Directors.
Because there was no public market for our common stock prior to November 29, 2018, our Board of Directors determined the fair
value of the common stock at the time of the grant of options prior to that date by considering a number of objective and subjective
factors including contemporaneous sales of our common stock to investors, valuation of comparable companies, operating and financial
performance and general and industry-specific economic outlook, amongst other factors. The fair value was determined in accordance
with applicable elements of the practice aid issued by the American Institute of Certified Public Accountants titled Valuation
of Privately Held Company Equity Securities Issued as Compensation. Since our common stock began publicly trading on the NYSE
American, the fair value of our common stock underlying stock options has been valued based on prevailing market prices.



The
expected term of employee stock options represents the weighted-average period that the stock options are expected to remain outstanding.
We estimate the expected term of options granted based upon the “simplified method” provided under Staff Accounting
Bulletin, Topic 14, or SAB Topic 14.



Because
our common stock had no publicly traded history prior to November 29, 2018, for the year ended December 31, 2019 and 2018, we
estimated the expected volatility using our own stock price volatility to the extent applicable or a combination of our stock
price volatility and the stock price volatility of peer companies, for a period equal to the expected term of the options. The
peer companies used include selected public companies within the biotechnology industry with comparable characteristics to AgeX,
including similarity in size, lines of business, market capitalization, revenue and financial leverage.



The
risk-free interest rate assumption is based upon observed interest rates on the United States government securities appropriate
for the expected term of our stock options.



The
dividend yield assumption is based on our history and expectation of dividend payouts. We have never declared or paid any cash
dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future.



All
excess tax benefits and tax deficiencies from stock-based compensation awards accounted for under ASC 718 are recognized as an
income tax benefit or expense, respectively, in the consolidated statements of operations. An excess income tax benefit arises
when the tax deduction of a share-based award for income tax purposes exceeds the compensation cost recognized for financial reporting
purposes, and a tax deficiency arises when the compensation cost exceeds the tax deduction.



63









Stock-based
compensation expense for the years ended December 31, 2019 and 2018 consists of stock-based compensation under the AgeX 2017 Equity
Incentive Plan, and stock-based compensation of AgeX’s subsidiaries that have their own stock option plans.



Certain
of our consolidated subsidiaries have their own share-based compensation plans. For share-based compensation awards granted by
those privately-held consolidated subsidiaries under their respective equity plans, we determine the fair value of the options
granted under those plans using similar methodologies and assumptions we used for our stock options discussed above.



Although
the fair value of stock options is determined in accordance with FASB guidance, changes in the assumptions and allocations can
materially affect the estimated value and therefore the amount of compensation expense recognized in the consolidated financial
statements.



Long-lived
intangible assets – Long-lived intangible assets, consisting primarily of acquired patents, acquired in-process research
and development (“IPR&D”) with alternative future uses, patent applications, and licenses to use certain patents,
are stated at acquired cost, less accumulated amortization. Amortization expense is computed using the straight-line method over
the estimated useful lives of the assets, generally over 10 years.



Impairment
of long-lived assets – Long-lived assets, including long-lived intangible assets, are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. If an impairment
indicator is present, we evaluate recoverability by a comparison of the carrying amount of the assets to future undiscounted net
cash flows expected to be generated by the assets. If the assets are impaired, the impairment recognized is measured by the amount
by which the carrying amount exceeds the estimated fair value of the assets. Through December 31, 2019, there have been no such
impairment losses.



Revenue
recognition –During the first quarter of 2018, we adopted FASB ASU 2014-09, Revenues from Contracts with Customers
(Topic 606), which created a single, principle-based revenue recognition model that supersedes and replaces nearly all existing
U.S. GAAP revenue recognition guidance. We adopted ASU 2014-09 using the modified retrospective transition method applied to those
contracts which were not completed as of the adoption date. Results for reporting periods beginning on January 1, 2018 and thereafter
are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our
historical revenue recognition accounting under Topic 605.



We
recognize revenue in a manner that depicts the transfer of control of a product or a service to a customer and reflects the amount
of the consideration it expects to receive in exchange for such product or service. In doing so, We follow a five-step approach:
(i) identify the contract with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction
price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when (or as) the customer
obtains control of the product or service. We consider the terms of a contract and all relevant facts and circumstances when applying
the revenue recognition standard. We apply the revenue recognition standard, including the use of any practical expedients, consistently
to contracts with similar characteristics and in similar circumstances.



On
January 1, 2018, the impact of the adoption and application of Topic 606 was immaterial, and no cumulative effect adjustment was
made as of that date. In the applicable paragraphs below, we have summarized our revenue recognition policies for various revenue
sources in accordance with Topic 606.



Subscription
and advertisement revenues. LifeMap Sciences sells subscription-based products, including research databases and software
tools, for biomedical, gene, and disease research. LifeMap Sciences sells these subscriptions primarily through the internet to
biotech and pharmaceutical companies worldwide. LifeMap Sciences’ principal subscription product is the GeneCards®Suite, which includes the GeneCards® human gene database, and the MalaCardsTM human disease database.



LifeMap
Sciences’ performance obligations for subscriptions include a license of intellectual property related to its genetic information
packages and premium genetic information tools. These licenses are deemed functional licenses that provide customers with a “right
to access” to LifeMap Sciences’ intellectual property during the subscription period and, accordingly, revenue is
recognized over a period of time, which is generally the subscription period. Payments are typically received at the beginning
of a subscription period and revenue is recognized according to the type of subscription sold.







For
subscription contracts in which the subscription term commences before a payment is due, LifeMap Sciences records an accounts
receivable as the subscription is earned over time and bills the customer according to the contract terms. LifeMap Sciences continuously
monitors collections and payments from customers and maintains a provision for estimated credit losses and uncollectible accounts
based upon its historical experience and any specific customer collection issues that have been identified. Amounts determined
to be uncollectible are written off against the allowance for doubtful accounts. LifeMap Sciences has not historically provided
significant discounts, credits, concessions, or other incentives from the stated price in the contract as the prices are offered
on a fixed fee basis for the type of subscription package being purchased. LifeMap Sciences may issue refunds only if the packages
cease to be available for reasons beyond its control. In such an event, the customer will get a refund on a pro-rata basis. Both
the customer and LifeMap Sciences expect the subscription packages to be available during the entire subscription period, and
LifeMap Sciences has not experienced any significant issues with the availability of the product and has not issued any material
refunds. Using the most likely amount method for estimating refunds under Topic 606, including historical experience, LifeMap
Sciences determined that the single most likely amount of variable consideration for refunds is immaterial as LifeMap Sciences
does not expect to pay any refunds.





64







LifeMap
Sciences’ performance obligations for advertising are overall advertising services and represent a series of distinct services.
Contracts are typically less than a year in duration and the fees charged may include a combination of fixed and variable fees
with the variable fees tied to click throughs to the customer’s products on their website. LifeMap Sciences allocates the
variable consideration to each month the click through services occur and allocates the annual fee to the performance obligation
period of the initial term of the contract because those amounts correspond to the value provided to the customer each month.
For click-through advertising services, at the time the variable compensation is known and determinable, the service has been
rendered. Revenue is recognized at that time. The annual fee is recognized over the initial subscription period because this is
a service and the customers simultaneously receive and consume during the period of the subscription.



LifeMap
Sciences’ deferred subscription revenues primarily represent subscriptions for which cash payment has been received for
the subscription term, but the subscription term has not been completed as of the balance sheet date reported. For the years ended
December 31, 2019 and 2018, LifeMap Sciences recognized $1.3 million and $1.2 million, respectively, in subscription and advertisement
revenues. As of December 31, 2019, there was $0.3 million included in deferred revenues in the consolidated balance sheets which
is expected to be recognized as subscription revenue over the next twelve months.



LifeMap
Sciences has licensed from third parties the databases and software it commercializes and has a contractual obligation to pay
royalties to the licensor on subscriptions sold. These costs are included in cost of sales on the consolidated statements of operations
when the cash is received and the royalty obligation is incurred as the royalty payments do not qualify for capitalization of
costs to fulfill a contract under ASC 340-40, Other Assets and Deferred Costs - Contracts with Customers.



Grant
revenues. In applying the provisions of Topic 606, we have determined that government grants are out of the scope of Topic
606 because the government entities do not meet the definition of a “customer”, as defined by Topic 606, as there
is not considered to be a transfer of control of good or services to the government entities funding the grant. We account for
grants received to perform research and development services in accordance with ASC 730-20, Research and Development Arrangements,
which requires an assessment, at the inception of the grant, of whether the grant is a liability or a contract to perform research
and development services for others. If we or a subsidiary receiving the grant is obligated to repay the grant funds to the grantor
regardless of the outcome of the research and development activities, then we are required to estimate and recognize that liability.
Alternatively, if we or a subsidiary receiving the grant is not required to repay, or if it is required to repay the grant funds
only if the research and development activities are successful, then the grant agreement is accounted for as a contract to perform
research and development services for others, in which case, grant revenue is recognized when the related research and development
expenses are incurred.



In
September 2018, we were awarded a grant of up to approximately $225,000 from the National Institutes of Health (NIH). The
NIH grant provides funding for continued development of our technologies for treating osteoporosis. The grant funds will be made
available by the NIH as allowable expenses are incurred. For the years ended December 31, 2019 and 2018, we incurred approximately
$180,000 and $20,000, respectively, of allowable expenses under the NIH grant and recognized a corresponding amount of
grant revenues.



Arrangements
with multiple performance obligations. Future contracts with customers may include multiple performance obligations. For such
arrangements, we will allocate revenue to each performance obligation based on its relative standalone selling price. We generally
determines or estimates standalone selling prices based on the prices charged, or that would be charged, to customers for that
product or service. As of and for the year ended December 31, 2019, we did not have significant arrangements with multiple performance
obligations.



65









Financial
Operations Overview



To
date, our revenues have been principally derived
from subscription and advertising revenues from LifeMap Sciences’ online databases based upon applicable subscription or
advertising periods. We do not have any products approved for sale and have not generated any revenue from commercialized product
sales, and we do not expect to generate any revenue from product sales for the foreseeable future.



Our
operating expenses consist of research and development expenses primarily from our pre-clinical programs and general and administrative
expenses. If we determine to borrow more than $500,000 under the New Loan Agreement with Juvenescence, we will be required to
implement a Restructuring Plan during April 2020 to reduce spending on employee salaries and consulting fees to a degree that
will result in large staff reductions which may be coupled with salary reductions for certain employees who agree to a pay reduction
in order to remain employed. Management believes that implementing such a Restructuring Plan would likely require the elimination
a portion of our management and administrative personnel and most of our research personnel, which in turn would mean that we
would cease development of some or all of our product candidates or technologies unless research and development work could be
contracted out to third party service providers within the newly imposed budgetary constraints. Accordingly, the historical amounts
of revenues and expense presented and discussed in this Report are likely not going to be indicative of revenues and expenses
during future periods.



Results
of Operations



Comparison
of Years Ended December 31, 2019 and 2018



Revenues
and Cost of Sales



The
amounts in the table below show our consolidated revenues by source and cost of sales for the years ended December 31, 2019 and
2018 (in thousands).



|                                      |  | Year Ended December 31, |       |   | $ Increase/ |   |       | % Increase | 
|------------------------------------- |  | ----------------------- | ----- | - | ----------- | - | ----- | ---------- | 
|                                      |  | 2019                    |       |   | 2018        |   |       | (Decrease) | 
|Subscription and advertising revenues |  | $                       | 1,332 |   |             | $ | 1,227 |            | 
|Grant revenues                        |  |                         | 180   |   |             |   | 20    |            | 
|Other revenues                        |  |                         | 216   |   |             |   | 149   |            | 
|Total revenues                        |  |                         | 1,728 |   |             |   | 1,396 |            | 
|Cost of sales                         |  |                         | (244  | ) |             |   | (364  | )          | 
|Gross profit                          |  | $                       | 1,484 |   |             | $ | 1,032 |            | 



*
Not meaningful.



Our
revenues were primarily generated by LifeMap Sciences, as subscription and advertising revenues from its GeneCards®online
database. Subscription and advertising revenues amounted to $1.3 million and $1.2 million for the years ended December 31, 2019
and 2018.



We
recognized income of approximately $180,000during 2019 and approximately
$20,000 during 2018 from agrant from the NIH.Other revenues of $216,000
and $149,000 for the years ended December 31, 2019 and 2018, respectively, were generated entirely from non-recurring services
associated with LifeMap Sciences’ online database business primarily related to its GeneCards®.



Cost
of sales for theyear ended December 31, 2019
as compared to 2018 decreased primarily due to decrease royalty payments made or incurred
by LifeMap Sciences due to a change in the applicable royalty fee terms from a percentage of net collections from customers to
a fixed annual fee effective January 1, 2019.



66







Operating
Expenses



The
following table shows our consolidated operating expenses for the years ended December 31, 2019 and 2018 (in thousands).



|                                             |  | Year Ended December 31, |       |  | $ Increase/ |   |       | % Increase/ | 
|-------------------------------------------- |  | ----------------------- | ----- |  | ----------- | - | ----- | ----------- | 
|                                             |  | 2019                    |       |  | 2018        |   |       | (Decrease)  | 
|Research and development expenses            |  | $                       | 5,904 |  |             | $ | 5,830 |             | 
|Acquired in-process research and development |  |                         | -     |  |             |   | 800   |             | 
|General and administrative expenses          |  |                         | 8,139 |  |             |   | 5,647 |             | 



|* | Not
                                         meaningful.
|- | --------------------------------------------------------



Research
and development expenses



Research
and development expenses and acquired IPR&D decreased by $0.7 million to $5.9 million in 2019 as compared to $6.6 million
in 2018. The decrease was primarily attributable to the non-recurrence of in-process research and development expense of $0.8
million that was incurred during March 2018 in connection with the purchase of certain assets from Ascendance Biotechnology, Inc.
(“Ascendance”) primarily related to stem cell derived cardiomyocytes (heart muscle cells) to be developed by us. Additionally,
consulting, outside research and services allocable to research and development expenses decreased by $0.3 million, and shared
services from Lineage decreased by $0.5 million with the termination of the Shared Facilities Agreement on September 30, 2019.
These decreases were offset to some extent by increases of $0.3 million in rent and facilities related expenses allocable to research
and development, $0.3 million in laboratory expense and supplies, $0.2 million in personnel and related expenses allocable to
research and development, and $0.1 million in amortization and depreciation expenses.



The
following table shows the amounts and percentages of our total research and development expenses, including acquired in-process
research and development incurred during 2018, allocated to our primary research and development programs, during the years ended
December 31, 2019 and 2018, respectively (amounts in thousands).



|                                                           |  |         |                                                                                                                                                                              |  | Year Ended December 31, |  
|---------------------------------------------------------- |  | ------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | -
|                                                           |  |         |                                                                                                                                                                              |  | Amount(1)               |  
|Company                                                    |  | Program |                                                                                                                                                                              |  | 2019                    |  
|                                                           |  |         |                                                                                                                                                                              |  |                         |  
|AgeX including ReCyte Therapeutics                         |  |         | PureStem®progenitor cell lines, brown adipose fat, iTR technology, and pre-clinical cardiovascular
                                         therapy research and development |  |                         | $
|                                                           |  |         |                                                                                                                                                                              |  |                         |  
|AgeX                                                       |  |         | Acquired
                                         in-process research and development                                                                                        |  |                         |  
|                                                           |  |         |                                                                                                                                                                              |  |                         |  
|LifeMap
    Sciences (2)                                   |  |         | Biomedical,
                                         gene, and disease databases and tools                                                                                   |  |                         |  
|Total research and development expenses and acquired IPR&D |  |         |                                                                                                                                                                              |  |                         | $



|(1) | Amount
                                         includes research and development expenses incurred both directly by us or the named
                                         subsidiary and indirect overhead costs allocated by Lineage that benefit or support our
                                         research and development programs. See Notes 2 and 4 to our consolidated financial statements
                                         included elsewhere in this Report.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(2) | See
                                         Notes 2 and 4 to our consolidated financial statements included elsewhere in this Report.                                                                                                                                                                                                                                                                                                                                                  



67







General
and administrative expenses



The
following table shows the amount and percentages of our consolidated general and administrative expenses incurred during the years
ended December 31, 2019 and 2018, respectively (amounts in thousands).



|                                          |  | Year Ended December 31, |      
|----------------------------------------- |  | ----------------------- | -----
|                                          |  | Amount
    (1)          |      
|Company                                   |  | 2019                    |      
|AgeX including ReCyte Therapeutics        |  | $                       | 7,305
|LifeMap
    Sciences (2)                  |  |                         | 834  
|Total general and administrative expenses |  | $                       | 8,139



|(1) | Amount
                                         includes both direct expenses incurred by us or the named subsidiary and indirect overhead
                                         costs allocated by Lineage that benefit or support our general and administrative functions.
                                         See Notes 2 and 4 to our consolidated financial statements included in this Report.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                              
|(2) | See
                                         Notes 2 and 4 to our consolidated financial statements included in this Report.                                                                                                                                                                                                                                                                                 



General
and administrative expenses for the year ended December 31, 2019 increased by $2.5 million to $8.1 million as compared
to $5.6 million in 2018. This increase was primarily attributable to the following: $1.0 million in professional fees for consulting
and accounting services; $0.8 million in insurance premiums; $0.5 million of noncash stock-based compensation expense;  $0.2 million in license and patent related expenses;
$0.2 million in general office, rent and facilities related expenses; $0.1 million in rent and facilities related expenses allocable
to general and administrative; and $0.1 million in director fees. These increases were offset to some extent by decreases of $0.2
million in investor and public relations related expenses and $0.2 million in shared services from Lineage with the termination
of the Shared Facilities Agreement on September 30, 2019.



Other
income, net



Other
income, net, in 2019 and 2018 consist primarily of net foreign currency transaction gains and losses recognized by LifeMap Sciences
for intercompany payables and receivables denominated in currency other than United States dollars, gain on disposition of assets,
and interest income and interest expense, net.



Gain
on sale of equity method investment in Ascendance



On
March 23, 2018, Ascendance, a company in which we held shares of common stock accounted for on the equity method, was acquired
by a third party in a merger and we received $3.2 million in cash for our Ascendance common stock. We recognized a gain on sale
for the same amount included in other income, net, during the year ended December 31, 2018. We recognized an additional $354,000
on sale of our Ascendance common stock for the year ended December 31, 2019 when we received a final payment for our Ascendance
common stock during 2019.



Income
taxes



For
Federal and California purposes, our activity through August 30, 2018 was included in Lineage’s federal consolidated and
California combined tax returns. For the year ended December 31, 2019, the provision for income taxes has been presented on a
separate federal consolidated tax return and a California combined tax return using the separate return method, as we will file
separately from Lineage for periods after August 30, 2018, the date in which Lineage deconsolidated AgeX as discussed in Note
7 to our consolidated financial statements included elsewhere in this Report.



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, 2018, we included an immaterial amount of GILTI in U.S.
gross income related to LifeMap Sciences, Ltd., which was fully offset by current year operating losses. For the year ended December
31, 2019, our foreign income inclusion was less than the deemed return on tangible assets, therefore no GILTI was included in
income for 2019. 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.



68







For
the year ended December 31, 2019, we experienced a domestic loss from continuing operations but generated foreign income attributable
primarily to foreign currency transaction gains for those periods. This income was principally related to the remeasurement of
the U.S. dollar denominated intercompany advances payable by LifeMap Sciences, Ltd. to LifeMap Sciences, Inc., for which a foreign
income tax provision of $148,000 was recorded for the year ended December 31, 2019. Due to losses incurred for 2019, we did not
record a domestic provision or benefit for income taxes for the year ended December 31, 2019.



As
of December 31, 2019, we had net operating loss carryforwards of approximately $42.0 million for U.S. federal income tax purposes.
Of this amount, $10.1 million is attributable to LifeMap Sciences, which includes $3.6 million in NOLs generated while it was
included in the consolidated Lineage tax group and would be available to offset income of AgeX in the future. The remaining LifeMap
Sciences NOLs of $6.5 million are attributable to NOLs generated for the tax years during which LifeMap Sciences filed a separate
federal income tax return and, accordingly, those NOLs are available only to LifeMap Sciences’ taxable income within AgeX
in future years. In general, NOLs and other tax credit carryforwards generated by legal entities in a consolidated federal tax
group are available to other members of the tax group depending on the nature of the transaction that a member may enter into
while still in the consolidated federal tax group. However, under the Tax Matters Agreement between Lineage and AgeX, any use
of a member’s NOLs and other tax credit carryforwards by the other member is subject to reimbursement by the benefiting
member for the actual tax benefit realized. Since the August 30, 2018 deconsolidation of AgeX, and to date, neither Lineage nor
AgeX has used the tax attributes of the other.



As
of December 31, 2019, we had net operating losses of approximately $36.1 million for California purposes. As we and our subsidiaries
have been included in the combined California tax return with Lineage, up to the date of deconsolidation on August 30, 2018, those
state net operating losses will remain with AgeX.



Federal
net operating losses generated on or prior to December 31, 2017, expire in varying amounts between 2028 and 2037, while federal
net operating losses generated after December 31, 2017, carryforward indefinitely. The state net operating losses expire in varying
amounts between 2028 and 2039.



As
of December 31, 2019, AgeX had research and development tax credit carryforwards for federal and state tax purposes of $1.1 million
and $957,000, respectively. Although this LifeMap Sciences credit has been included as part of the AgeX credit carryforwards,
LifeMap Sciences filed a separate federal income tax return prior to January 1, 2018 and its prior research credit carryforwards
may not be used to offset federal taxable income of AgeX. As AgeX and its subsidiaries were included in the California combined
return with Lineage, these credits noted above will remain with AgeX. The federal tax credits expire between 2028 and 2039, while
the state tax credits have no expiration date.



A
valuation allowance is provided when it is more likely than not that some or all of the deferred tax assets will not be realized.
We established a full valuation allowance for all 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 $86.2 million as of December 31, 2019. We expect
to continue to incur operating losses and negative cash flows.



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. Some of these adjustments entail the deferral of certain work
on the development of our product candidates and technologies, which is likely to delay our progress in those research and development
efforts. However, notwithstanding those adjustments, based on our most recent projected cash flows, our cash and cash equivalents
and potential additional loans that may become available to us from Juvenescence under the Secured Convertible Facility Agreement
(the “New Loan Agreement”) discussed in Note 9 to our consolidated financial statements included elsewhere in this
Report, 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 4 and 9 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. If we are unable to raise capital promptly when needed, we would be forced to delay, reduce or eliminate our operations,
including our research and development programs.



While we expect to
borrow an initial $500,000 under the New Loan Agreement, all additional loans to us from Juvenescence under the New Loan Agreement
are subject to Juvenescence's discretion, and accordingly there is no assurance that we will be able to borrow additional funds
under the New Loan Agreement when we need funding for our operations. The New Loan Agreement prohibits us and our subsidiaries
ReCyte Therapeutics and Reverse Bio from borrowing funds or engaging in certain other transactions without the consent of Juvenescence
unless we repay all amounts owed to Juvenescence under the New Loan Agreement and the $2 million we owe under the August 2019
Loan Facility Agreement discussed in Note 4 to our consolidated financial statements. The implementation of a Restructuring Plan
under the terms of the New Loan Agreement could require AgeX to make significant changes to its operations and research and development
plans. The New Loan Agreement also requires AgeX and the Guarantor Subsidiaries to grant Juvenescence a security interest and
lien on substantially all of our respective assets if AgeX makes more than two draws of funds (generally meaning if AgeX borrows
more than $1,000,000). These factors and the impact of dilution through the issuance of shares of our common stock and warrants
under other provisions of the New 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 under the New Loan Agreement. We do not have any other committed sources of funds for additional financing.



To the extent that
we are able to raise additional capital from sources other than the New Loan Agreement, such as 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. The New Loan Agreement requires us to issue shares
of our common stock and common stock purchase warrants to Juvenescence in total amounts that will vary depending on the amount
of funds we borrow, the market price of our common stock, and in the case of issuances of common stock, whether Juvenescence elects
to convert any portion of the outstanding loan balance into common stock. See “Risk Factors” and Note 9 to our consolidated
financial statements. 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.



69







Cash
used in operating activities



For
the year ended December 31, 2019, our total research and development expenses were $5.9 million and our general and administrative
expenditures were $8.1 million. Net loss attributable to us for the year ended December 31, 2019 amounted to $12.2
million. Net cash used in operating activities during this period amounted to $10.2 million. The difference between the net loss
attributable to us and net cash used in operating activities during the year ended December 31, 2019 was primarily attributable
to the following noncash items: $1.9 million in stock-based compensation expense, $1.0 million in depreciation and amortization,
and $0.1 million foreign currency remeasurement. These non-cash amounts were partially offset by $0.6 million in insurance premium
liability, $0.4 million we received as a final payment for our Ascendance common stock sold in 2018, and $0.2 million in net loss
attributable to noncontrolling interest. Changes in working capital also provided $0.1 million from operating activities.



Cash
used in investing activities



During
the year ended December 31, 2019, net cash used in investing activities was $0.4 million, which was attributable to $0.7 million
paid for the purchase of equipment, construction at our new office and laboratory facility, and a security deposit under the lease
of our new office and research facility, offset by a $0.4 final payment received for the sale of our Ascendance common stock in
2018.



Cash
provided by financing activities



During
the year ended December 31, 2019, net cash provided by financing activities amounted to $6.3 million, which was attributable to
$4.5 million of proceeds received from the exercise of warrants to purchase 1,800,000 shares of AgeX common stock, and $1.8 million
drawn from the $2.0 million loan facility provided by Juvenescence.



Off-Balance
Sheet Arrangements



As
of December 31, 2019, we did not have any off-balance sheet arrangements, as defined in Item 303(a) (4) (ii) of SEC Regulation
S-K.



Item
7A. Quantitative and Qualitative Disclosures about Market Risk



Not
applicable.



70









REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



Stockholders
and Board of Directors

AgeX
Therapeutics, Inc.

Alameda,
California



Opinion
on the Financial Statements



We
have audited the accompanying consolidated balance sheets of AgeX Therapeutics, Inc. (the “Company”) as of December
31, 2019 and 2018, the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash
flows for each of the two years in the period ended December 31, 2019, and the related notes (collectively referred to as the
“consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all
material respects, the financial position of the Company at December 31, 2019 and 2018, and the results of its operations and
its cash flows for each of the two years in the period ended December 31, 2019, in conformity with accounting principles
generally accepted in the United States of America.



Going
Concern Uncertainty



The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.
As discussed in Note 1, the Company has had recurring losses and negative operating cash flows since inception, an accumulated
deficit at December 31, 2019, and insufficient cash and cash equivalents and loan proceeds at December 31, 2019 to fund operations
for twelve months from the date of issuance. All of these matters raise substantial doubt about the Company’s ability to
continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated
financial statements do not include any adjustments that might result from the outcome of this uncertainty.



Basis
for Opinion



These
consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered
with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.



We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether
due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over
financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting
but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.



Our
audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.



/s/
OUM & CO. LLP



San
Francisco, California

March
30, 2020

We
have served as the Company’s auditor since 2017.





71







Item
8. Financial Statements and Supplementary Data



AGEX
THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED
BALANCE SHEETS

(In
thousands, except par value amounts)



|                                                                                                                                                           |  | December 31, |        
|---------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | -------
|                                                                                                                                                           |  | 2019         |        
|ASSETS                                                                                                                                                     |  |              |        
|CURRENT ASSETS                                                                                                                                             |  |              |        
|Cash and cash equivalents                                                                                                                                  |  | $            | 2,352  
|Accounts and grants receivable, net                                                                                                                        |  |              | 363    
|Prepaid expenses and other current assets                                                                                                                  |  |              | 1,339  
|Total current assets                                                                                                                                       |  |              | 4,054  
|                                                                                                                                                           |  |              |        
|Property and equipment, net                                                                                                                                |  |              | 1,126  
|Deposits and other long-term assets                                                                                                                        |  |              | 111    
|Intangible assets, net                                                                                                                                     |  |              | 2,151  
|TOTAL ASSETS                                                                                                                                               |  | $            | 7,442  
|                                                                                                                                                           |  |              |        
|LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                       |  |              |        
|CURRENT LIABILITIES                                                                                                                                        |  |              |        
|Accounts payable and accrued liabilities                                                                                                                   |  | $            | 1,582  
|Related party payables, net                                                                                                                                |  |              | 64     
|Deferred revenues                                                                                                                                          |  |              | 283    
|Right-of-use lease liability                                                                                                                               |  |              | 428    
|Insurance premium liability and other current liabilities                                                                                                  |  |              | 940    
|Total current liabilities                                                                                                                                  |  |              | 3,297  
|                                                                                                                                                           |  |              |        
|Loan due to Juvenescence, net of debt issuance cost                                                                                                        |  |              | 1,528  
|TOTAL LIABILITIES                                                                                                                                          |  |              | 4,825  
|                                                                                                                                                           |  |              |        
|Commitments and contingencies (Note 8)                                                                                                                     |  |              |        
|                                                                                                                                                           |  |              |        
|STOCKHOLDERS’ EQUITY                                                                                                                                       |  |              |        
|Preferred stock, $0.0001 par value, authorized 5,000 shares; none issued and outstanding as of December 31, 2019 and 2018                                  |  |              | -      
|Common stock, $0.0001 par value, 100,000 shares authorized; 37,649 and 35,830 shares issued and outstanding as of December 31, 2019 and 2018, respectively |  |              | 4      
|Additional paid-in capital                                                                                                                                 |  |              | 88,353 
|Accumulated other comprehensive income (loss)                                                                                                              |  |              | 69     
|Accumulated deficit                                                                                                                                        |  |              | (86,208
|AgeX Therapeutics, Inc. stockholders’ equity                                                                                                               |  |              | 2,218  
|Noncontrolling interest                                                                                                                                    |  |              | 399    
|Total stockholders’ equity                                                                                                                                 |  |              | 2,617  
|TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                 |  | $            | 7,442  



See
accompanying notes to the consolidated financial statements.



72







AGEX
THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED
STATEMENTS OF OPERATIONS

(In
thousands, except per share data)



|                                                       |  | Year Ended December 31, |        
|------------------------------------------------------ |  | ----------------------- | -------
|                                                       |  | 2019                    |        
|REVENUES:                                              |  |                         |        
|Subscription and advertisement revenues                |  | $                       | 1,332  
|Grant revenues                                         |  |                         | 180    
|Other revenues                                         |  |                         | 216    
|Total revenues                                         |  |                         | 1,728  
|                                                       |  |                         |        
|Cost of sales                                          |  |                         | (244   
|                                                       |  |                         |        
|Gross profit                                           |  |                         | 1,484  
|                                                       |  |                         |        
|OPERATING EXPENSES:                                    |  |                         |        
|Research and development                               |  |                         | 5,904  
|Acquired in-process research and development           |  |                         | -      
|General and administrative                             |  |                         | 8,139  
|Total operating expenses                               |  |                         | 14,043 
|                                                       |  |                         |        
|Loss from operations                                   |  |                         | (12,559
|                                                       |  |                         |        
|OTHER INCOME, NET:                                     |  |                         |        
|Interest income, net                                   |  |                         | 29     
|Gain on sale of equity method investment in Ascendance |  |                         | -      
|Other income, net                                      |  |                         | 294    
|Total other income, net                                |  |                         | 323    
|                                                       |  |                         |        
|NET LOSS BEFORE INCOME TAXES                           |  |                         | (12,236
|Income tax provision                                   |  |                         | (148   
|                                                       |  |                         |        
|NET LOSS                                               |  |                         | (12,384
|Net loss attributable to noncontrolling interest       |  |                         | 230    
|                                                       |  |                         |        
|NET LOSS ATTRIBUTABLE TO AGEX                          |  | $                       | (12,154
|                                                       |  |                         |        
|NET LOSS PER COMMON SHARE:                             |  |                         |        
|BASIC AND DILUTED                                      |  | $                       | (0.33  
|WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:  |  |                         |        
|BASIC AND DILUTED                                      |  |                         | 37,271 



See
accompanying notes to the consolidated financial statements.



73







AGEX
THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS

(In
thousands)



|                                                                 |  | Year Ended December 31, |        
|---------------------------------------------------------------- |  | ----------------------- | -------
|                                                                 |  | 2019                    |        
|NET LOSS                                                         |  | $                       | (12,384
|Other comprehensive income/(expense), net of tax:                |  |                         |        
|Foreign currency translation adjustments                         |  |                         | 71     
|COMPREHENSIVE
LOSS                                               |  |                         | (12,313
|Less: Comprehensive loss attributable to noncontrolling interest |  |                         | 230    
|COMPREHENSIVE
LOSS ATTRIBUTABLE TO AGEX COMMON STOCKHOLDERS      |  | $                       | (12,083



See
accompanying notes to the consolidated financial statements.



74







AGEX
THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY

(In
thousands)



|                                                                      |  | Common
    Stock                                          |        |  | Additional |   |   |                 |  |   |                     |  |  | Accumulated Other       |         |   | Total                       |  
|--------------------------------------------------------------------- |  | --------------------------------------------------------- | ------ |  | ---------- | - | - | --------------- |  | - | ------------------- |  |  | ----------------------- | ------- | - | --------------------------- | -
|                                                                      |  | Number
                                         of Shares |        |  | Par Value  |   |   | Paid-In Capital |  |   | Accumulated Deficit |  |  | Noncontrolling Interest |         |   | Comprehensive Income/(Loss) |  
|BALANCE AT DECEMBER 31, 2017                                          |  |                                                           | 33,750 |  |            | $ | 3 |                 |  | $ | 73,761              |  |  | $                       | (66,552 | ) |                             | $
|Issuance of shares                                                    |  |                                                           | 2,000  |  |            |   | 1 |                 |  |   | 4,999               |  |  |                         | -       |   |                             |  
|Issuance of shares to acquire in-process research
    and development |  |                                                           | 80     |  |            |   | - |                 |  |   | 240                 |  |  |                         | -       |   |                             |  
|Sale of warrants                                                      |  |                                                           | -      |  |            |   | - |                 |  |   | 1,000               |  |  |                         | -       |   |                             |  
|Stock-based compensation                                              |  |                                                           | -      |  |            |   | - |                 |  |   | 1,285               |  |  |                         | -       |   |                             |  
|Stock-based compensation allocated from Lineage                       |  |                                                           | -      |  |            |   | - |                 |  |   | 184                 |  |  |                         | -       |   |                             |  
|Stock-based compensation in subsidiaries                              |  |                                                           | -      |  |            |   | - |                 |  |   | -                   |  |  |                         | -       |   |                             |  
|Transactions with noncontrolling interests                            |  |                                                           | -      |  |            |   | - |                 |  |   | 30                  |  |  |                         | -       |   |                             |  
|Foreign currency translation adjustment                               |  |                                                           | -      |  |            |   | - |                 |  |   | -                   |  |  |                         | -       |   |                             |  
|Net loss                                                              |  |                                                           | -      |  |            |   | - |                 |  |   | -                   |  |  |                         | (7,502  | ) |                             |  
|BALANCE AT DECEMBER 31, 2018                                          |  |                                                           | 35,830 |  |            | $ | 4 |                 |  | $ | 81,499              |  |  | $                       | (74,054 | ) |                             | $
|Issuance of common stock from exercise of warrants                    |  |                                                           | 1,800  |  |            |   | - |                 |  |   | 4,500               |  |  |                         | -       |   |                             |  
|Issuance of common stock to Juvenescence                              |  |                                                           | 19     |  |            |   | - |                 |  |   | 56                  |  |  |                         | -       |   |                             |  
|Issuance of warrants to Juvenescence                                  |  |                                                           | -      |  |            |   | - |                 |  |   | 236                 |  |  |                         | -       |   |                             |  
|Stock-based compensation                                              |  |                                                           | -      |  |            |   | - |                 |  |   | 1,907               |  |  |                         | -       |   |                             |  
|Lapse of subsidiary options                                           |  |                                                           | -      |  |            |   | - |                 |  |   | 155                 |  |  |                         | -       |   |                             |  
|Foreign currency translation adjustment                               |  |                                                           | -      |  |            |   | - |                 |  |   | -                   |  |  |                         | -       |   |                             |  
|Net loss                                                              |  |                                                           | -      |  |            |   | - |                 |  |   | -                   |  |  |                         | (12,154 | ) |                             |  
|BALANCE AT DECEMBER 31, 2019                                          |  |                                                           | 37,649 |  |            | $ | 4 |                 |  | $ | 88,353              |  |  | $                       | (86,208 | ) |                             | $



See
accompanying notes to the consolidated financial statements.



75







AGEX
THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED
STATEMENTS OF CASH FLOWS

(In
thousands)



|                                                                                                 |  | Year Ended December 31, |        
|------------------------------------------------------------------------------------------------ |  | ----------------------- | -------
|                                                                                                 |  | 2019                    |        
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                            |  |                         |        
|Net loss attributable to AgeX                                                                    |  | $                       | (12,154
|Net loss attributable to noncontrolling interest                                                 |  |                         | (230   
|Adjustments to reconcile net loss attributable to AgeX to net cash used in operating activities: |  |                         |        
|Gain on sale of equity method investment in Ascendance                                           |  |                         | (354   
|Acquired in-process research and development                                                     |  |                         | -      
|Depreciation expense                                                                             |  |                         | 91     
|Amortization of intangible assets                                                                |  |                         | 558    
|Amortization of right-of-use asset                                                               |  |                         | 302    
|Amortization of debt issuance cost                                                               |  |                         | 54     
|Stock-based compensation                                                                         |  |                         | 1,907  
|Stock-based compensation allocated from Lineage                                                  |  |                         | -      
|Subsidiary stock-based compensation                                                              |  |                         | -      
|Foreign currency remeasurement gain (loss) and other                                             |  |                         | 76     
|Changes in operating assets and liabilities:                                                     |  |                         |        
|Accounts receivable and other receivables                                                        |  |                         | (232   
|Prepaid expenses and other current assets                                                        |  |                         | 473    
|Accounts payable and accrued liabilities                                                         |  |                         | 169    
|Related party payables                                                                           |  |                         | (68    
|Insurance premium liability                                                                      |  |                         | (599   
|Deferred revenues                                                                                |  |                         | (34    
|Other current liabilities                                                                        |  |                         | (119   
|Net cash used in operating activities                                                            |  |                         | (10,160
|                                                                                                 |  |                         |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                            |  |                         |        
|Proceeds from the sale of equity method investment in Ascendance                                 |  |                         | 354    
|Purchase of in-process research and development                                                  |  |                         | -      
|Security deposit (paid) received and other, net                                                  |  |                         | (74    
|Purchase of equipment and other                                                                  |  |                         | (641   
|Net cash (used in) provided by investing activities                                              |  |                         | (361   
|                                                                                                 |  |                         |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                            |  |                         |        
|Proceeds from issuance of common stock                                                           |  |                         | -      
|Proceeds from sale of warrants                                                                   |  |                         | -      
|Proceeds from exercise of warrants                                                               |  |                         | 4,500  
|Draw down on loan facility from Juvenescence                                                     |  |                         | 1,800  
|Repayment of financing liability                                                                 |  |                         | (35    
|Net cash provided by financing activities                                                        |  |                         | 6,265  
|                                                                                                 |  |                         |        
|Effect of exchange rate changes on cash, cash equivalents, and restricted cash                   |  |                         | 1      
|                                                                                                 |  |                         |        
|NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH                                       |  |                         | (4,255 
|CASH, CASH EQUIVALENTS AND RESTRICTED CASH:                                                      |  |                         |        
|Beginning of year                                                                                |  |                         | 6,707  
|End of year                                                                                      |  | $                       | 2,452  
|                                                                                                 |  |                         |        
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                                |  |                         |        
|Cash paid during the year for interest                                                           |  | $                       | 12     
|                                                                                                 |  |                         |        
|SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING AND INVESTING ACTIVITIES:                             |  |                         |        
|Issuance of common stock to Juvenescence (Note 4)                                                |  | $                       | 56     
|Issuance of warrants to Juvenescence (Note 4)                                                    |  | $                       | 236    
|Issuance of common stock for acquired in-process research and development                        |  | $                       | -      



See
accompanying notes to the consolidated financial statements.



76







AGEX
THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS



1.
Organization, Basis of Presentation and Liquidity



AgeX
Therapeutics, Inc. (“AgeX”) was incorporated in January 2017 in the state of Delaware as a subsidiary of Lineage Cell
Therapeutics, Inc. (“Lineage,” formerly known as BioTime, Inc.), a publicly traded, clinical-stage biotechnology company.



AgeX
is a biotechnology company focused on the development and commercialization of novel therapeutics targeting human aging and degenerative
diseases. AgeX’s initial discovery and pre-clinical programs focus on utilizing brown adipose tissue (“brown fat”)
in targeting diabetes, obesity, and heart disease; and induced tissue regeneration (“iTR”) in utilizing the human
body’s own abilities to scarlessly regenerate tissue damaged from age or trauma. AgeX may also pursue other early-stage
pre-clinical programs. AgeX is an “emerging growth company” as defined in the Jumpstart our Business Startups Act
of 2012.



Lineage’s
sale of significant ownership interest in AgeX to Juvenescence – On August 30, 2018, Lineage consummated the sale of
14,400,000 shares of common stock of AgeX owned by Lineage to Juvenescence Limited (“Juvenescence”). Prior to the
transaction, Juvenescence owned 5.6% of AgeX’s issued and outstanding common stock. Upon completion of the transaction,
Lineage’s ownership in AgeX was reduced from 80.4% to 40.2% of AgeX’s issued and outstanding shares of common stock,
and Juvenescence’s ownership in AgeX was increased from 5.6% to 45.8% of AgeX’s issued and outstanding shares of common
stock. AgeX did not receive any proceeds from the transaction. As a result of that transaction, AgeX ceased to be a subsidiary
of Lineage because Lineage experienced a “loss of control” of a subsidiary, as defined by generally accepted accounting
principles in the U.S. (“GAAP”). Loss of control is deemed to have occurred when, among other things, a parent company
owns less than a majority of the outstanding common stock in the subsidiary, lacks a controlling financial interest in the subsidiary
and, is unable to unilaterally control the subsidiary through other means such as having, or being able to obtain, the power to
elect a majority of the subsidiary’s Board of Directors based solely on contractual rights or ownership of shares holding
a majority of the voting power of the subsidiary’s voting securities. All of these loss-of-control factors were present
with respect to Lineage’s ownership interest in AgeX as of August 30, 2018. Accordingly, Lineage deconsolidated AgeX’s
consolidated financial statements and results from its consolidated financial statements and results beginning on August 30, 2018.



On
November 28, 2018 (the “Distribution Date”), Lineage distributed to its shareholders, on a pro rata basis, 12,697,028
shares of the AgeX common stock it then held (the “Distribution”). Immediately after the Distribution, Lineage retained
1,718,972 shares of AgeX common stock, representing approximately 4.8% of the common stock then issued and outstanding. Following
the Distribution, AgeX common stock began publicly trading on the NYSE American under the symbol “AGE” (see Notes
4, 7 and 9).



Going
Concern and Liquidity –Since inception, AgeX has financed its operations through contributions and advances from its
former parent company, Lineage, the sale of its common stock and warrants, exercises of warrants (see Notes 4 and 5), a loan facility
from Juvenescence, and research grants. Lineage provided AgeX with the use of Lineage facilities and services under a Shared Facilities
and Services Agreement (the “Shared Facilities Agreement”) through September 30, 2019, as described in Note 4. AgeX
has incurred operating losses and negative cash flows since inception and had an accumulated deficit of $86.2 million as
of December 31, 2019. AgeX expects to continue to incur operating losses and negative cash flows.



AgeX
has made certain adjustments to its operating plans and budgets to reduce its projected cash expenditures in order to extend the
period over which it can continue its operations with its available cash resources. Some of these adjustments will entail the
deferral of certain work on the development of AgeX’s product candidates and technologies, which is likely to delay progress
in those research and development efforts. Notwithstanding those adjustments, based on AgeX’s most recent projected
cash flows AgeX believes that its cash and cash equivalents of $2.4 million as of December 31, 2019 and the remaining $0.2 million
that AgeX subsequently drew under the loan facility from Juvenescence discussed in Note 4, plus the loan facility by Juvenescence
to advance up to $8.0 million to AgeX for operating capital discussed in Note 9, would not be sufficient to satisfy AgeX’s
anticipated operating and other funding requirements for the next twelve months from the issuance of these consolidated financial
statements. These conditions raise substantial doubt about AgeX’s ability to continue as a going concern. AgeX will need
to obtain substantial additional funding in connection with its continuing operations after that date. If AgeX is unable to raise
capital when needed, AgeX would be forced to further delay, reduce or eliminate its research and development
programs.



Basis
of presentation – For periods prior to August 30, 2018, Lineage consolidated the results of AgeX and AgeX’s subsidiaries
into Lineage’s consolidated results based on Lineage’s ability to control AgeX’s operating and financial decisions
and policies through the majority ownership of AgeX common stock throughout the periods presented. As discussed above, beginning
on August 30, 2018, Lineage deconsolidated AgeX’s consolidated financial statements and results from its consolidated financial
statements and results.



77







The
consolidated financial statements of AgeX are presented in accordance with U.S. generally accepted accounting principles (“GAAP”).



Through
September 30, 2019, to the extent AgeX did not have its own employees or facilities for its operations, Lineage or Lineage commonly
controlled and consolidated subsidiaries provided certain employees for administrative or operational services, including laboratory
space and administrative facilities, as necessary, for the benefit of AgeX, under the Shared Facilities Agreement. Lineage allocated
expenses such as salaries and payroll related expenses incurred and paid on behalf of AgeX based on the amount of time that particular
employees devoted to AgeX affairs. Other expenses such as legal, accounting and financial reporting, marketing, and travel expenses
were allocated to AgeX to the extent that those expenses were incurred by or on behalf of AgeX. Lineage also allocated certain
overhead expenses such as rent and utilities, property taxes, insurance, laboratory expenses and supplies, telecommunications
and other indirect expenses. These allocations were made based upon activity-based allocation drivers such as time spent, percentage
of square feet of office or laboratory space used, headcount and percentage of personnel devoted to AgeX’s operations or
management. Management evaluated the appropriateness of the allocations on a periodic basis and believes that this basis for allocation
was reasonable. AgeX terminated the Shared Facilities Agreement effective September 30, 2019.



Principles
of consolidation – AgeX’s consolidated financial statements include the accounts of its subsidiaries and certain
research and development departments, including former Lineage personnel, transferred from Lineage to AgeX in connection with
the Asset Contribution Agreement (see Note 4). AgeX consolidated its direct and indirect wholly-owned or majority-owned subsidiaries
because AgeX has the ability to control their operating and financial decisions and policies through its ownership, and the noncontrolling
interest is reflected as a separate element of stockholders’ equity on AgeX’s consolidated balance sheets.



As
of and for the years ended December 31, 2019 and 2018, AgeX consolidated ReCyte Therapeutics, Inc. (“ReCyte Therapeutics”),
LifeMap Sciences, Inc. (“LifeMap Sciences”), and LifeMap Sciences, Ltd. (Israel) and included the historical expenses
of certain former Lineage research and development departments (see Note 4).



As
of and for the year ended December 31, 2019, AgeX consolidated the following subsidiaries:



|Subsidiary              |  | Field
    of Business                                                                                                                                                                                            |  | AgeX
    Ownership |  | Country
|----------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ |  | -------
|ReCyte
    Therapeutics |  | Early
    stage pre-clinical research and development involved in stem cell-derived endothelial and cardiovascular related progenitor
    cells for the treatment of vascular disorders, and ischemic conditions |  | 94.8%              |  | USA    
|                        |  |                                                                                                                                                                                                                  |  |                    |  |        
|LifeMap
    Sciences(1) |  | Biomedical,
    gene and disease databases and tools                                                                                                                                                             |  | 81.7%              |  | USA    



|(1) | LifeMap
                                         Sciences includes LifeMap Sciences, Inc. and its wholly-owned subsidiary LifeMap Sciences,
                                         Ltd. an Israeli company.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



All
material intercompany accounts and transactions between AgeX and its subsidiaries have been eliminated in consolidation.



Use
of estimates –The preparation of consolidated financial statements in conformity with GAAP 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period
with consideration given to materiality. Significant estimates and assumptions which are subject to significant judgment include
those related to going concern assessment of consolidated financial statements, allocations and adjustments necessary for carve-out
basis of presentation, including the separate return method for income taxes, useful lives associated with long-lived assets,
including evaluation of asset impairment, allowances for uncollectible accounts receivables, loss contingencies, deferred income
taxes and tax reserves, including valuation allowances related to deferred income taxes, and assumptions used to value stock-based
awards or other equity instruments. Actual results could differ materially from those estimates. To the extent there are material
differences between the estimates and actual results, AgeX’s future results of operations will be affected.



Reclassifications– A reclassification was made from amounts included in accounts payable and accrued liabilities to related party payables,
net, on the consolidated balance sheet and from the prepaid expenses and other current assets related to insurance premium liabilities
on the consolidated statement of cash flows as of December 31, 2018 to conform and be comparable to the presentation on the consolidated
balance sheet and consolidated statement of cash flows as of December 31, 2019. The reclassifications had no effect on net earnings
or cash flows as previously reported.



78







2.
Summary of Significant Accounting Policies



Going
concern assessment –AgeX assesses going concern uncertainty for its consolidated financial statements to determine
if AgeX has sufficient cash and cash equivalents on hand and working capital to operate for a period of at least one year from
the date the consolidated financial statements are issued or are available to be issued, which is referred to as the “look-forward
period” as defined by Financial Accounting Standard Board’s (“FASB”) ASU No. 2014-15. As part of this
assessment, based on conditions that are known and reasonably knowable to AgeX, AgeX will consider various scenarios, forecasts,
projections, and estimates, and AgeX will make certain key assumptions, including the timing and nature of projected cash expenditures
or programs, and its ability to delay or curtail those expenditures or programs, if necessary, among other factors. Based on this
assessment, as necessary or applicable, AgeX makes certain assumptions concerning its ability to curtail or delay research and
development programs and expenditures within the look-forward period in accordance with ASU No. 2014-15.



Cash
and cash equivalents – AgeX considers all highly liquid investments purchased with an original maturity of three months
or less to be cash equivalents. As of December 31, 2019 and 2018, AgeX’s cash balances totaled $2.4 million and $6.7 million,
respectively, and consist entirely of bank account deposits and amounts held in money market funds.



Concentrations
of credit risk – Financial instruments that potentially subject AgeX to significant concentrations of credit risk consist
primarily of cash and cash equivalents. AgeX limits the amount of credit exposure of cash balances by maintaining its accounts
in high credit quality financial institutions. Cash equivalent deposits with financial institutions may occasionally exceed the
limits of insurance on bank deposits; however, AgeX has not experienced any losses on such accounts.



Fair
value measurements – Fair value is defined as the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair
value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value (ASC 820-10-50),
Fair Value Measurements and Disclosures:



| | ● | Level
    1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active
    markets.                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                
| | ● | Level
    2 – Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, and
    inputs that are observable for the assets or liabilities, either directly or indirectly, for substantially the full term of
    the financial instruments.
| |   |                                                                                                                                                                                                                                                                                                
| | ● | Level
    3 – Inputs to the valuation methodology are unobservable; that reflect management’s own assumptions about the
    assumptions market participants would make and significant to the fair value.                                                                                      



In
determining fair value, AgeX utilizes valuation techniques that maximize the use of observable inputs and minimize the use of
unobservable inputs to the extent possible, and also considers counterparty credit risk in its assessment of fair value. For the
periods presented, AgeX has no financial assets or liabilities recorded at fair value on a recurring basis, except for cash and
cash equivalents primarily consisting of money market funds. These assets are measured at fair value using the period-end quoted
market prices as a Level 1 input.



The
carrying amounts of accounts receivable, net, prepaid expenses and other current assets, related party amounts due to affiliates,
accounts payable, accrued liabilities and other current liabilities approximate fair values because of the short-term nature of
these items.



Accounts
receivable, net –AgeX establishes an allowance for doubtful accounts based on the evaluation of the collectability
of its receivables after considering a variety of factors, including the length of time receivables are past due, significant
events that may impair the customer’s ability to pay, such as a bankruptcy filing or deterioration in the customer’s
operating results or financial position, and historical experience. If circumstances related to customers change, estimates of
the recoverability of receivables would be further adjusted. For subscription contracts in which the subscription term commences
before a payment is due, LifeMap Sciences records an accounts receivable as the subscription is earned over time and bills the
customer according to the contract terms. LifeMap Sciences continuously monitors collections and payments from customers and maintains
a provision for estimated credit losses and uncollectible accounts based upon its historical experience and any specific customer
collection issues that have been identified. Amounts determined to be uncollectible are written off against the allowance for
doubtful accounts. Accounts receivable, net, include allowance for doubtful accounts of approximately $321,000 as of December
31, 2019 and 2018, for those amounts deemed uncollectible by AgeX or LifeMap Sciences.



79







Equipment
and furniture, net – Equipment and furniture is stated at cost and is being depreciated using the straight-line method
over their estimated useful lives ranging from 3 to 10 years. Maintenance and repairs are expensed as incurred whereas significant
renewals and betterments are capitalized. When assets are retired or otherwise disposed of, the cost and the related accumulated
depreciation are removed from the respective accounts and any resulting gain or loss is reflected in AgeX’s results of operations.



Long-lived
intangible assets – Long-lived intangible assets, consisting primarily of acquired patents, patent applications, and
licenses to use certain patents, including acquired in-process research and development (“IPR&D”) with alternative
future uses, are stated at acquired cost, less accumulated amortization (see Note 3). Amortization expense is computed using the
straight-line method over the estimated useful lives of the assets, generally over 10 years.



Impairment
of long-lived assets – Long-lived assets, including long-lived intangible assets, are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. If an impairment
indicator is present, AgeX evaluates recoverability by a comparison of the carrying amount of the assets to future undiscounted
net cash flows expected to be generated by the assets. If the assets are impaired, the impairment recognized is measured by the
amount by which the carrying amount exceeds the estimated fair value of the assets. Through 2019, there have been no impairment
losses.



Transactions
with noncontrolling interests of subsidiaries –AgeX accounts for a change in ownership interests in its subsidiaries
that does not result in a change of control of the subsidiary under the provisions of ASC 810-10-45-23, Consolidation –
Other Presentation Matters,which prescribes the accounting for changes in ownership interest that do not result in a change
in control of the subsidiary, as defined by GAAP, before and after the transaction. Under this guidance, changes in a controlling
stockholder’s ownership interest that do not result in a change of control, as defined by GAAP, in the subsidiary are accounted
for as equity transactions. Accordingly, if the controlling stockholder retains control, no gain or loss is recognized in the
statements of operations of the controlling stockholder. Similarly, the controlling stockholder will not record any additional
acquisition adjustments to reflect its subsequent purchases of additional shares in the subsidiary if there is no change of control.
Only a proportional and immediate transfer of carrying value between the controlling and the noncontrolling stockholders occurs
based on the respective ownership percentages.



Research
and development –Research and development expenses include both direct expenses incurred by AgeX or its subsidiaries
and indirect overhead costs allocated by Lineage that benefit or support AgeX’s research and development functions. Direct
research and development expenses consist primarily of personnel costs and related benefits, including stock-based compensation,
amortization of intangible assets, outside consultants and suppliers, and license fees paid to third parties to acquire patents
or licenses to use patents and other technology. Indirect research and development expenses allocated by Lineage to AgeX under
the Shared Facilities Agreement (see Note 4), were primarily based on headcount or space occupied, as applicable, and included
laboratory supplies, laboratory expenses, rent and utilities, common area maintenance, telecommunications, property taxes and
insurance. Research and development expenses incurred and reimbursed by grants from third parties or governmental agencies, including
service revenues from co-development projects with customers, if any and as applicable, approximate the respective revenues recognized
in the consolidated statements of operations.



General
and administrative – General and administrative expenses include both direct expenses incurred by AgeX and indirect
overhead costs allocated by Lineage that benefit or support AgeX’s general and administrative functions. Direct general
and administrative expenses consist primarily of compensation and related benefits, including stock-based compensation, for executive
and corporate personnel, and professional and consulting fees. Indirect general and administrative expenses allocated by Lineage
to AgeX under the Shared Facilities Agreement (see Note 4) were primarily based on headcount or space occupied, as applicable,
and included costs for financial reporting and compliance, rent and utilities, common area maintenance, telecommunications, property
taxes and insurance.



Foreign
currency translation and other comprehensive income or loss, foreign currency transaction gains and losses –In countries
in which AgeX operates where the functional currency is other than the U.S. dollar, assets and liabilities are translated using
published exchange rates in effect at the consolidated balance sheet date. Revenues and expenses and cash flows are translated
using an approximate weighted average exchange rate for the period. Resulting foreign currency translation adjustments are recorded
as other comprehensive income or loss, net of tax, in the consolidated statements of comprehensive income or loss and included
as a component of accumulated other comprehensive income or loss on the consolidated balance sheets. Foreign currency translation
adjustments are immaterial for all periods presented.



For
transactions denominated in other than the functional currency of AgeX or its subsidiaries, AgeX recognizes transaction gains
and losses in the consolidated statements of operations and classifies the gain or loss based on the nature of the item that generated
it. The majority of AgeX’s foreign currency transaction gains and losses were generated by LifeMap Sciences Ltd.’s
intercompany payable due to LifeMap Sciences,Inc., which are U.S. dollar-denominated, while LifeMap Sciences Ltd.’s
functional currency is the Israeli New Shekel (“NIS”). Accordingly, foreign currency remeasurement gains and losses
related to this intercompany payable are included in other income, net.



80







Income
taxes –For Federal and California purposes, AgeX’s activity through August 30, 2018 was included in Lineage’s
federal consolidated and California combined tax returns. For this period, the income tax provision was prepared in accordance
with ASC 740, Income Taxes, using the separate return method to determine the tax provision of AgeX for carve-out presentation
purposes of its consolidated financial statements. The separate return method, among other items, requires that the amount of
current and deferred tax expense for a group that files a consolidated income tax return be allocated among the members of that
group as if each group member were a separate taxpayer. As a result, the provision for income taxes has been presented as if AgeX
had filed a separate federal consolidated tax return and a California combined tax return for those periods. In using the separate
return method, the sum of the amounts allocated to the members of the income tax return group may not equal the consolidated amount.
If tax attributes recorded in the carve-out consolidated financial statements are materially different from the actual tax attributes
pertaining to the legal entities of AgeX and its subsidiaries, or to Lineage and its subsidiaries, those differences are identified
and disclosed in Note 7. Accordingly, depending on the future legal structure of AgeX and related tax elections that may be taken
by AgeX, the effective tax rate of AgeX in future years could vary materially from its historical effective tax rates. The historical
deferred tax assets, including the operating losses and credit carryforwards generated by certain research and development departments
that operated within Lineage and were transferred to AgeX on August 17, 2017 (Note 4), have been presented as tax attributes of
AgeX consistent with the principles of the separate return method described above. As of December 31, 2019, the deferred tax assets
and liabilities presented in Note 7, including net operating loss carryforwards and research and development credits, represent
the tax attributes of the AgeX and its subsidiaries.



However,
the net operating losses and research and development credits generated before August 17, 2017, the contribution date to AgeX,
will remain as tax attributes of Lineage (see Note 7). In general, net operating losses and other tax credit carryforwards generated
by legal entities in a consolidated federal tax group or a combined state tax group, collectively “the tax group”,
are available to other members of the tax group depending on the nature of the transaction that a member may enter into while
still in the tax group. However, under the Tax Matters Agreement between Lineage and AgeX entered into on August 17, 2017, any
use of a member’s net operating loss and other tax credit carryforwards by the other member is subject to reimbursement
by the benefiting member for the actual tax benefit realized. Since the August 30, 2018 deconsolidation of AgeX and to date, neither
Lineage nor AgeX has used the tax attributes of the other.



AgeX
accounts for income taxes in accordance with ASC 740, which prescribes the use of the asset and liability method, whereby deferred
tax asset or liability account balances are calculated at the balance sheet date using current tax laws and enacted rates in effect.
Valuation allowances are established when necessary to reduce deferred tax assets when it is more likely than not that a portion
or all of the deferred tax assets will not be realized. AgeX’s judgments, estimates and projections regarding future taxable
income may change over time due to changes, among other factors, in market conditions, changes in tax laws, and tax planning strategies.
If AgeX’s assumptions and consequently its estimates change in the future, the valuation allowance may be increased or decreased,
which may have a material impact on AgeX’s consolidated financial statements.



The
guidance also prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement
of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not
sustainable upon examination by taxing authorities. AgeX recognizes accrued interest and penalties related to unrecognized tax
benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of December 31, 2019 and
2018. AgeX does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
AgeX is currently unaware of any tax issues under review.



On
December 22, 2017, the United States enacted major federal tax reform legislation, Public Law No. 115-97, commonly referred to
as the 2017 Tax Cuts and Jobs Act (“2017 Tax Act”), which enacted a broad range of changes to the Internal Revenue
Code. Changes to taxes on corporations impacted by the 2017 Tax Act include, but not limited to, lowering the U.S. federal tax
rates to a 21% flat tax rate, eliminating the corporate alternative minimum tax (“AMT”), imposing additional limitations
on the deductibility of interest and net operating losses, allowing any net operating loss (“NOLs”) generated in tax
years ending after December 31, 2017 to be carried forward indefinitely and generally repealing carrybacks, reducing the maximum
deduction for NOL carryforwards arising in tax years beginning after 2017 to a percentage of the taxpayer’s taxable income,
and allowing for additional expensing of certain capital expenditures. The 2017 Tax Act also puts into effect a number of changes
impacting operations outside of the United States including, but not limited to, the imposition of a one-time tax “deemed
repatriation” on accumulated offshore earnings not previously subject to U.S. tax, and shifts the U.S taxation of multinational
corporations from a worldwide system of taxation to a territorial system. ASC 740 requires the effects of changes in tax rates
and laws on deferred tax balances (including the effects of the one-time transition tax) to be recognized in the period in which
the legislation is enacted (see Note 7).



81







On
December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to provide guidance for companies
that are not able to complete their accounting for the income tax effects of the 2017 Tax Act in the period of enactment. SAB
118 allows AgeX to record provisional amounts during a measurement period not to extend beyond one year of the enactment date
(see Note 7). AgeX applied the guidance in SAB 118 when accounting for the enactment-date effects of the 2017 Tax Act during the
year ended December 31, 2018. As of December 31, 2018, AgeX completed its accounting for all the enactment-date income tax effects
of the 2017 Tax Act further discussed in Note 7.



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 by the company’s pre-GILTI
U.S. income. For 2018, AgeX included an immaterial amount of GILTI in U.S. gross income related to LifeMap Sciences, Ltd., which
was fully offset by current year operating losses. For the year ended December 31, 2019, our foreign income inclusion was less
than the deemed return on tangible assets, therefore no GILTI was included in income for 2019. 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. AgeX has elected to account for GILTI as a current period expense when incurred.



Stock-based
compensation – AgeX recognizes compensation expense related to employee option grants and restricted stock grants, if
any, in accordance with FASB ASC 718, Compensation – Stock Compensation (“ASC 718”).



AgeX
estimates the fair value of employee stock-based payment awards on the grant-date and recognizes the resulting fair value, net
of estimated forfeitures for grants prior to 2017, over the requisite service period. Upon adoption of Accounting Standards Update
(“ASU”) 2016-09 on January 1, 2017 as further discussed below, forfeitures are accounted for as they occur instead
of based on the number of awards that were expected to vest prior to adoption of ASU 2016-09.



AgeX
uses the Black-Scholes option pricing model for estimating the fair value of options granted under AgeX’s 2017 Equity Incentive
Plan (the “Plan”). The fair value of each restricted stock grant, if any, is determined based on the value of the
common stock granted or sold. AgeX has elected to treat stock-based payment awards with time-based service conditions as a single
award and recognizes stock-based compensation on a straight-line basis over the requisite service period.



Compensation
expense for non-employee stock-based awards is recognized in accordance with ASC 718 (see Recently adopted accounting pronouncements
below). Stock option awards issued to non-employees, principally consultants or outside contractors, as applicable, are accounted
for at fair value using the Black-Scholes option pricing model. Management believes that the fair value of the stock options can
more reliably be measured than the fair value of services received. AgeX records compensation expense based on the then-current
fair values of the stock options at the grant date. Compensation expense for non-employee grants is recorded on a straight-line
basis in the consolidated statements of operations.



The
Black-Scholes option pricing model requires AgeX to make certain assumptions including the fair value of the underlying common
stock, the expected term, the expected volatility, the risk-free interest rate and the dividend yield (see Note 6).



The
fair value of the shares of common stock underlying the stock options has historically been determined by the Board of Directors.
Because there was no public market for AgeX’s common stock prior to November 29, 2018, the Board of Directors determined
the fair value of the common stock at the time of the grant of options prior to that date by considering a number of objective
and subjective factors including contemporaneous sales of common stock to investors, valuation of comparable companies, operating
and financial performance and general and industry-specific economic outlook, amongst other factors. The fair value was determined
in accordance with applicable elements of the practice aid issued by the American Institute of Certified Public Accountants titled
Valuation of Privately Held Company Equity Securities Issued as Compensation. Since our common stock began publicly trading
on the NYSE American, the fair value of our common stock underlying stock options has been valued based on prevailing market prices.



The
expected term of employee stock options represents the weighted-average period that the stock options are expected to remain outstanding.
AgeX estimates the expected term of options granted using the “simplified method” provided under Staff Accounting
Bulletin, Topic 14, or SAB Topic 14.



Because
AgeX’s common stock had no publicly traded history prior to November 29, 2018, for the years ended December 31, 2019 and
2018, AgeX estimated the expected volatility using its own stock price volatility to the extent applicable or a combination of
its stock price volatility and the stock price volatility of peer companies, for a period equal to the expected term of the options.
The peer companies used include selected public companies within the biotechnology industry with comparable characteristics to
AgeX, including similarity in size, lines of business, market capitalization, revenue and financial leverage.



82







The
risk-free interest rate assumption is based upon observed interest rates on the United States government securities appropriate
for the expected term of AgeX’s stock options.



The
dividend yield assumption is based on AgeX’s history and expectation of dividend payouts. AgeX has never declared or paid
any cash dividends on its common stock, and AgeX does not anticipate paying any cash dividends in the foreseeable future.



All
excess tax benefits and tax deficiencies from stock-based compensation awards accounted for under ASC 718 are recognized as an
income tax benefit or expense, respectively, in the consolidated statements of operations. An excess income tax benefit arises
when the tax deduction of a share-based award for income tax purposes exceeds the compensation cost recognized for financial reporting
purposes and, a tax deficiency arises when the compensation cost exceeds the tax deduction.



Stock-based
compensation expense for the years ended December 31, 2019 and 2018 consists of stock-based compensation under the AgeX 2017 Equity
Incentive Plan (Note 6) and stock-based compensation of AgeX’s subsidiaries that have their own stock option plans.



As
discussed above, certain of AgeX’s consolidated subsidiaries have their own share-based compensation plans. For share-based
compensation awards granted by those privately-held consolidated subsidiaries under their respective equity plans, AgeX determines
the fair value of the options granted under those plans using similar methodologies and assumptions AgeX used for its stock options
discussed above.



Although
the fair value of stock options is determined in accordance with FASB guidance, changes in the assumptions and allocations can
materially affect the estimated value and therefore the amount of compensation expense recognized in the consolidated financial
statements.



Segments
– AgeX’s executive management team, as a group, represents the entity’s chief operating decision makers.
To date, AgeX’s executive management team has viewed AgeX’s operations as one segment that includes the research and
development of regenerative medicine technologies targeting the diseases of aging and metabolic disorders, oncology, and neurological
diseases and disorders, blood and vascular system diseases and disorders, and pluripotent cell technologies. As a result, the
financial information disclosed materially represents all of the financial information related to AgeX’s sole operating
segment.



Basic
and diluted net loss per share attributable to common stockholders – Basic loss per share is calculated by dividing
net loss attributable to AgeX common stockholders by the weighted average number of shares of common stock outstanding, net of
unvested restricted stock or restricted stock units, subject to repurchase by AgeX, if any, during the period. Diluted loss per
share is calculated by dividing the net income attributable to AgeX common stockholders, if any, by the weighted average number
of shares of common stock outstanding, adjusted for the effects of potentially dilutive common stock issuable under outstanding
stock options, warrants, and restricted stock units, using the treasury-stock method, and convertible preferred stock, if any,
using the if-converted method, and treasury stock held by subsidiaries, if any.



For
the years ended December 31, 2019 and 2018, because AgeX reported a net loss attributable to common stockholders, all potentially
dilutive common stock, comprised of stock options, restricted stock units and warrants, is antidilutive.



The
following weighted average common stock equivalents were excluded from the computation of diluted net loss per share of common
stock for the periods presented because including them would have been antidilutive (in thousands):



|                       |  | Year Ended December 31, |      
|---------------------- |  | ----------------------- | -----
|                       |  | 2019                    |      
|Stock options          |  |                         | 2,735
|Warrants               |  |                         | 58   
|Restricted stock units |  |                         | 41   



Revenue
recognition



During
the first quarter of 2018, AgeX adopted FASB ASU 2014-09, Revenues from Contracts with Customers (Topic 606), which created
a single, principle-based revenue recognition model that supersedes and replaces nearly all existing U.S. GAAP revenue recognition
guidance. AgeX adopted ASU 2014-09 using the modified retrospective transition method applied to those contracts which were not
completed as of the adoption date. Results for reporting periods beginning on January 1, 2018 and thereafter are presented under
Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with AgeX’s historical
revenue recognition accounting under Topic 605. AgeX’s largest source of revenue is currently sourced from subscription
and advertising revenues generated by its majority-owned subsidiary, LifeMap Sciences.



83







AgeX
recognizes revenue in a manner that depicts the transfer of control of a product or a service to a customer and reflects the amount
of the consideration it expects to receive in exchange for such product or service. In doing so, AgeX follows a five-step approach:
(i) identify the contract with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction
price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when (or as) the customer
obtains control of the product or service. AgeX considers the terms of a contract and all relevant facts and circumstances when
applying the revenue recognition standard. AgeX applies the revenue recognition standard, including the use of any practical expedients,
consistently to contracts with similar characteristics and in similar circumstances.



On
January 1, 2018, the impact of the adoption and application of Topic 606 was immaterial, and no cumulative effect adjustment was
made as of that date. In the applicable paragraphs below, AgeX has summarized its revenue recognition policies for its various
revenue sources in accordance with Topic 606.



Revenue
recognition by source and geography. Revenues are recognized when control of the promised goods or services is transferred
to customers, or in the case of governmental entities funding a grant, when allowable expenses are incurred, in an amount that
reflects the consideration AgeX or a subsidiary, depending on which company has the customer or the grant, expects to be entitled
to in exchange for those goods or services.



The
following table presents AgeX’s consolidated revenues disaggregated by source (in thousands).



|                                        |  | Year Ended December 31, |      
|--------------------------------------- |  | ----------------------- | -----
|REVENUES:                               |  | 2019                    |      
|Subscription and advertisement revenues |  | $                       | 1,332
|Service and other revenues              |  |                         | 216  
|Grant revenues                          |  |                         | 180  
|Total revenues                          |  | $                       | 1,728



The
following table presents consolidated revenues (in thousands), disaggregated by geography, based on the billing addresses of customers.



|               |  | Year Ended December 31, |      
|-------------- |  | ----------------------- | -----
|REVENUES:      |  | 2019                    |      
|United States  |  | $                       | 986  
|Foreign        |  |                         | 742  
|Total revenues |  | $                       | 1,728



Subscription
and advertisement revenues – LifeMap Sciences sells subscription-based products, including research databases and software
tools, for biomedical, gene, and disease research. LifeMap Sciences sells these subscriptions primarily through the internet to
biotech and pharmaceutical companies worldwide. LifeMap Sciences’ principal subscription product is the GeneCards®Suite, which includes the GeneCards® human gene database, and the MalaCardsTM human disease database.



LifeMap
Sciences’ performance obligations for subscriptions include a license of intellectual property related to its genetic information
packages and premium genetic information tools. These licenses are deemed functional licenses that provide customers with a “right
to access” to LifeMap Sciences’ intellectual property during the subscription period and, accordingly, revenue is
recognized over a period of time, which is generally the subscription period. Payments are typically received at the beginning
of a subscription period and revenue is recognized according to the type of subscription sold.



For
subscription contracts in which the subscription term commences before a payment is due, LifeMap Sciences records an accounts
receivable as the subscription is earned over time and bills the customer according to the contract terms. LifeMap Sciences continuously
monitors collections and payments from customers and maintains a provision for estimated credit losses and uncollectible accounts
based upon its historical experience and any specific customer collection issues that have been identified. Amounts determined
to be uncollectible are written off against the allowance for doubtful accounts. LifeMap Sciences has not historically provided
significant discounts, credits, concessions, or other incentives from the stated price in the contract as the prices are offered
on a fixed fee basis for the type of subscription package being purchased. LifeMap Sciences may issue refunds only if the packages
cease to be available for reasons beyond its control. In such an event, the customer will get a refund on a pro-rata basis. Both
the customer and LifeMap Sciences expect the subscription packages to be available during the entire subscription period, and
LifeMap Sciences has not experienced any significant issues with the availability of the product and has not issued any material
refunds. Using the most likely amount method for estimating refunds under Topic 606, including historical experience, LifeMap
Sciences determined that the single most likely amount of variable consideration for refunds is immaterial as LifeMap Sciences
does not expect to pay any refunds.



84







LifeMap
Sciences’ performance obligations for advertising are overall advertising services and represent a series of distinct services.
Contracts are typically less than a year in duration and the fees charged may include a combination of fixed and variable fees
with the variable fees tied to click throughs to the customer’s products on their website. LifeMap Sciences allocates the
variable consideration to each month the click through services occur and allocates the annual fee to the performance obligation
period of the initial term of the contract because those amounts correspond to the value provided to the customer each month.
For click-through advertising services, at the time the variable compensation is known and determinable, the service has been
rendered. Revenue is recognized at that time. The annual fee is recognized over the initial subscription period because this is
a service and the customers simultaneously receive and consume during the period of the subscription.



LifeMap
Sciences’ deferred subscription revenues primarily represent subscriptions for which cash payment has been received for
the subscription term, but the subscription term has not been completed as of the balance sheet date reported. For the years ended
December 31, 2019 and 2018, LifeMap Sciences recognized $1.3 million and $1.2 million, respectively, in subscription and advertisement
revenues. As of December 31, 2019, there was $0.3 million included in deferred revenues in the consolidated balance sheets which
is expected to be recognized as subscription revenue over the next twelve months.



LifeMap
Sciences has licensed from third parties the databases and software it commercializes and has a contractual obligation to pay
royalties to the licensor on subscriptions sold. These costs are included in cost of sales on the consolidated statements of operations
when the cash is received and the royalty obligation is incurred as the royalty payments do not qualify for capitalization of
costs to fulfill a contract under ASC 340-40, Other Assets and Deferred Costs - Contracts with Customers.



Grant
revenues – In applying the provisions of Topic 606, AgeX has determined that government grants are out of the scope
of Topic 606 because the government entities do not meet the definition of a “customer”, as defined by Topic 606,
as there is not considered to be a transfer of control of good or services to the government entities funding the grant. AgeX
accounts for grants received to perform research and development services in accordance with ASC 730-20, Research and Development
Arrangements, which requires an assessment, at the inception of the grant, of whether the grant is a liability or a contract
to perform research and development services for others. If AgeX or a subsidiary receiving the grant is obligated to repay the
grant funds to the grantor regardless of the outcome of the research and development activities, then AgeX is required to estimate
and recognize that liability. Alternatively, if AgeX or a subsidiary receiving the grant is not required to repay, or if it is
required to repay the grant funds only if the research and development activities are successful, then the grant agreement is
accounted for as a contract to perform research and development services for others, in which case, grant revenue is recognized
when the related research and development expenses are incurred.



In
September 2018, AgeX was awarded a grant of up to approximately $225,000 from the National Institutes of Health (NIH). The NIH
grant provides funding for continued development of AgeX technologies for treating osteoporosis. The grant funds will be made
available by the NIH as allowable expenses are incurred. For the years ended December 31, 2019 and 2018, AgeX incurred approximately
$180,000 and $20,000, respectively, of allowable expenses under the NIH grant and recognized a corresponding amount of grant revenues.



On
April 5, 2018, ReCyte Therapeutics was awarded a grant of up to approximately $386,000 from the NIH. The NIH grant provides funding
for continued development of ReCyte Therapeutics’ technologies for treating stroke. The grant funds will be made available
by the NIH to ReCyte Therapeutics as allowable expenses are incurred. As of December 31, 2019, no allowable expenses were incurred
under the NIH grant.



Arrangements
with multiple performance obligations. AgeX’s contracts with customers may include multiple performance obligations.
For such arrangements, AgeX allocates revenue to each performance obligation based on its relative standalone selling price. AgeX
generally determines or estimates standalone selling prices based on the prices charged, or that would be charged, to customers
for that product or service. As of and for the year ended December 31, 2019, AgeX did not have significant arrangements with multiple
performance obligations.



Recently
adopted accounting pronouncements



Leases.On January 1, 2019, AgeX adopted ASU 2016-02, Leases(Topic 842, “ASC 842”) and its subsequent amendments
affecting AgeX: (i) ASU 2018-10, Codification Improvements to Topic 842, Leases, and (ii) ASU 2018-11, Leases (Topic
842): Targeted improvements, using the modified retrospective method.



85







AgeX
management determines if an arrangement is a lease at inception. Leases are classified as either financing or operating, with
classification affecting the pattern of expense recognition in the consolidated statements of operations. When determining whether
a lease is a financing lease or an operating lease, ASC 842 does not specifically define criteria to determine “major part
of remaining economic life of the underlying asset” and “substantially all of the fair value of the underlying asset.”
For lease classification determination, AgeX continues to use (i) 75% or greater to determine whether the lease term is a major
part of the remaining economic life of the underlying asset and (ii) 90% or greater to determine whether the present value of
the sum of lease payments is substantially all of the fair value of the underlying asset. Under the available practical expedients,
and as applicable, AgeX accounts for the lease and non-lease components as a single lease component. AgeX recognizes right-of-use
(“ROU”) assets and lease liabilities for leases with terms greater than twelve months in the  consolidated
balance sheet.



ROU
assets represent an entity’s right to use an underlying asset during the lease term and lease liabilities represent an entity’s
obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement
date based on the present value of lease payments over the lease term. If the lease agreement does not provide an implicit rate
in the contract, an entity uses its incremental borrowing rate based on the information available at commencement date in determining
the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives.
The lease terms may include options to extend or terminate the lease when it is reasonably certain that the entity will exercise
that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.



Upon
adoption of ASC 842 and based on the practical expedients available under that standard, AgeX did not reassess any expired or
existing contracts, reassess the lease classification for any expired or existing leases and reassess initial direct costs for
exiting leases. AgeX also elected not to capitalize leases that have terms of twelve months or less.



The
adoption of ASC 842 had no impact on AgeX’s consolidated balance sheet as of January 1, 2019, as AgeX did not have operating
leases as of December 31, 2018 (see Note 8). AgeX’s sublease of its current office and laboratory facility, which commenced
on April 2, 2019, is subject to ASC 842. AgeX recognized its lease as a right-of-use asset included in property and equipment,
net (see Note 3) and operating lease liability on its balance sheet in accordance with ASC 842 as of December 31, 2019 (see Note
8). During 2019, AgeX as a sublessor subleased portions of its office and laboratory space to certain unaffiliated third parties.
These subleases are not subject to ASC 842.



Stock-based
compensation.In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to
Nonemployee Share-Based Payment Accounting, which simplifies the accounting for non-employee share-based payment transactions.
The new standard expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from
non-employees. ASU 2018-07 is effective for fiscal years beginning after December 15, 2018 (including interim periods within that
fiscal year). AgeX adopted ASU 2018-07 on January 1, 2019. As AgeX had one stock option grant issued to a nonemployee as of the
adoption date and one additional stock option grant during 2019 to the same nonemployee, the application of the new standard did
not have a material impact on its consolidated financial statements.



Recently
issued accounting pronouncements not yet adopted



The
following accounting standard, which is not yet effective, is presently being evaluated by AgeX to determine the impact that it
might have on its consolidated financial statements.



In
December 2019, the FASB issued ASU 2019-02, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which
modifies ASC 740 to simplify the accounting for income taxes. The new standard removes certain exceptions for recognizing deferred
taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. The new standard also
adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes
to members of a consolidated group. ASU 2019-02 is effective for fiscal year, and interim periods within those fiscal years, beginning
after December 15, 2020, with early adoption permitted. AgeX does not anticipate that the adoption of the new standard will have
a material impact on its consolidated financial statements.



In
August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure
Requirements for Fair Value Measurement, which modifies certain disclosure requirements for reporting fair value measurements.
ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. AgeX
adopted this standard effective January 1, 2020 which did not have a material impact on its consolidated financial statements.



86







3.
Selected Balance Sheet Components



Property
and equipment, net



At
December 31, 2019 and 2018, property and equipment was comprised of the following (in thousands):



|                                          |  | December 31, |      
|----------------------------------------- |  | ------------ | -----
|                                          |  | 2019         |      
|Equipment, furniture and fixtures         |  | $            | 954  
|Right-of-use assets(1)                    |  |              | 726  
|Accumulated depreciation and amortization |  |              | (554 
|Property and equipment, net               |  | $            | 1,126



|(1) | AgeX
    adopted ASC 842 on January 1, 2019. For additional information on this standard and right-of-use assets and liabilities see
    Notes 2 and 8.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------



Depreciation
and amortization expense amounted to $393,000 and $58,000 for the years ended December 31, 2019 and 2018, respectively.



Intangible
assets, net



Intangible
assets, net are primarily comprised of acquired licenses and other rights by LifeMap Sciences from a third party for certain databases
it commercializes, which includes the GeneCards® human gene database, and the MalaCardsTM human disease database.
These databases are available primarily through the internet and sold as subscriptions or on a fee per use basis for use by researchers
at pharmaceutical and biotechnology companies and other institutions.



On
August 13, 2018, AgeX entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Escape Therapeutics,
Inc. (“Escape”) pursuant to which AgeX acquired certain patents and patent applications related primarily to methods
of modifying cells and tissues and certain pluripotent stem cell lines so as to reduce their risk of being rejected when transplanted.
This technology is called “UniverCyteTM”. AgeX paid Escape $1,072,436 in cash and issued 80,000 shares of AgeX
common stock, with an approximate value of $240,000, for aggregate acquisition cost of $1.3 million for the UniverCyteTM
assets. The Purchase Agreement was considered an asset acquisition rather than a business combination in accordance with ASC 805-50,
Business Combinations.



ASC
730-10-25(c), Research and Development – Intangible Assets Purchased from Others, provides guidance for acquisition
and capitalization of the cost of intangible assets purchased from others in an asset acquisition that have alternative future
uses in other research and development projects. These intangible assets are referred to as acquired in-process research and development
with alternative future uses and are accounted for as intangible assets and amortized to research and development over their useful
life. Acquired IPR&D in an asset acquisition that does not have any alternative future uses is expensed under the same guidance.
As an initial focus, AgeX intends to use the UniverCyteTM technology in the development of its two lead products, AGEX-BAT1
and AGEX-VASC1 for the treatment of Type II diabetes and cardiovascular aging, respectively. Accordingly, AgeX recorded the UniverCyteTM
technology acquired from Escape as IPR&D intangible assets with alternative future uses in accordance with ASC 730-10-25(c)
and is amortizing those assets to research and development expense over their estimated 10 year useful life.



Pursuant
to the Purchase Agreement, if AgeX does not expend a certain level of funds toward the research and development of pluripotent
stem cell or progenitor cell products and processes utilizing the acquired patents and the development or improvement of the acquired
patents, AgeX will pay Escape additional amounts and the royalty rate for net sales of products, processes and services will be
tripled until total expenditures reach the required threshold. The aggregate cash payments AgeX may make to Escape for not reaching
the predetermined level of expenses can be up to $1.0 million. AgeX has met the research and development expenditure threshold
for 2019 and accordingly, no amounts have been accrued as of December 31, 2019 for this provision of the Purchase Agreement.



In
addition to the purchase price, AgeX will pay Escape a royalty of less than 1% on net sales of products, processes and services
under the acquired patents, if the assets are commercialized. Additional shares of AgeX common stock totaling up to $4.3 million
of market value will also be issued to Escape upon the attainment of development and regulatory approval milestones by AgeX for
each product covered by the acquired patents. Contingent consideration in an asset acquisition is generally recorded when probable
and estimable in accordance with ASC 450, Contingencies. Accordingly, none of the milestone payments have been accrued
since the attainment of any milestone in the Purchase Agreement was not probable as of December 31, 2019.



87







Escape
has agreed to indemnify AgeX from certain liabilities. The Purchase Agreement contains representations, warranties and agreements
customary for a transaction of this nature.



AgeX
has also agreed to engage Escape’s chief executive officer as a consultant for a period of up to three years to assist AgeX
in utilizing the acquired patents. AgeX pays $200,000 per year in consulting fees as services are performed included in research
and development expenses.



At
December 31, 2019 and 2018, intangible assets, primarily consisting of acquired in-process research and development and patents,
and accumulated amortization were as follows (in thousands):



|                         |  | December 31, |       
|------------------------ |  | ------------ | ------
|                         |  | 2019         |       
|Intangible assets        |  | $            | 5,586 
|Accumulated amortization |  |              | (3,435
|Intangible assets, net   |  | $            | 2,151 



Amortization
expense amounted to $558,000 and $477,000 for the years ended December 31, 2019 and 2018, respectively.



Accounts
payable and accrued liabilities



At
December 31, 2019 and 2018, accounts payable and accrued liabilities were comprised of the following (in thousands):



|                                         |  | December 31, |      
|---------------------------------------- |  | ------------ | -----
|                                         |  | 2019         |      
|Accounts payable                         |  | $            | 420  
|Accrued compensation                     |  |              | 263  
|Accrued vendors and other expenses       |  |              | 899  
|Accounts payable and accrued liabilities |  | $            | 1,582



4.
Related Party Transactions



Shared
Facilities and Service Agreement



On
August 17, 2017, AgeX and Lineage executed the Shared Facilities Agreement. The Shared Facilities Agreement was terminated by
AgeX effective September 30, 2019. Under the terms of the Shared Facilities Agreement, Lineage agreed to permit AgeX to use Lineage’s
Alameda, California office and laboratory facilities and certain equipment for the purpose of conducting business. Lineage also
provided accounting, billing, bookkeeping, payroll, treasury, payment of accounts payable, and other administrative services to
AgeX.



Lineage
charged AgeX a “Use Fee” for services received and usage of facilities, equipment, and supplies. For each billing
period, Lineage prorated and allocated costs incurred as a Use Fee to AgeX. Such costs generally included services of Lineage
employees, consultants, and contractors; equipment use, insurance, lease expense, fees for services of accountants, lawyers, and
other professionals; software; supplies; and utilities. Allocation depended 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 Lineage and AgeX,
as reasonably estimated by Lineage. Lineage charged AgeX a 5% markup on such allocated costs under the terms of the Shared Facilities
Agreement. The allocated cost of Lineage employees and contractors who provided services was 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 was determined
and invoiced to AgeX on a monthly basis for each calendar month of each calendar year. In addition to the Use Fees, AgeX reimbursed
Lineage for any out of pocket costs incurred by Lineage for the purchase of office supplies, laboratory supplies, and other goods
and materials and services for the account or use of AgeX.



The
Shared Facilities Agreement was not considered a lease under the provisions of ASC 842 discussed in Note 2, because, among other
factors, a significant part of the Shared Facilities Agreement is a contract for services, not a tangible asset, and is cancelable
by either party without penalty.



88







In
aggregate, Lineage charged such Use Fees to AgeX and subsidiaries as follows (in thousands):



|                           |  | Year Ended December 31, |    
|-------------------------- |  | ----------------------- | ---
|                           |  | 2019                    |    
|Research and development   |  | $                       | 701
|General and administrative |  |                         | 239
|Total Use Fees             |  | $                       | 940



AgeX
has accounted for payables to an affiliate, net of receivables from that affiliate, if any, for shared services and other transactions
that AgeX has entered into with that affiliate. AgeX recorded those payables and receivables on a net basis where AgeX and the
affiliate intended to exercise a right of offset of the payable and the receivable and to settle the balances net by having the
party that owes the other party pay the net balance owed. AgeX has treated Lineage and Juvenescence as affiliates for this purpose.



As
of December 31, 2019, and 2018, AgeX had ($7,000) and $34,000, respectively, in related party (receivables from)/payables to Lineage,
included in related party payables, net on the consolidated balance sheets.



Transactions
with Juvenescence



On
August 13, 2019, AgeX and Juvenescence entered into a Loan Facility Agreement (the “Loan Agreement”) pursuant to which
Juvenescence has provided to AgeX a $2.0 million line of credit for a period of 18 months. Through December 31, 2019, AgeX drew
$1.8 million of the line of credit. AgeX may not draw down funds after the Repayment Date in February 2021 or if an “Event
of Default” under the Loan Agreement has occurred and is continuing and AgeX may not draw down more than $700,000 during
any 30 day period.



In
lieu of accrued interest, AgeX issued to Juvenescence 19,000 shares of AgeX common stock, with an approximate value of $56,000,
concurrently with the first draw down of funds under the Loan Agreement. However, if AgeX fails to repay the loan when due, interest
at the rate of 10% per annum, compounded daily, will accrue on the unpaid balance from the date the payment was due.



In
lieu of repayment of funds borrowed, AgeX or Juvenescence may convert the loan balance (including principal and accrued interest,
if any) into AgeX common stock or “units” if AgeX consummates a “Qualified Offering” which means a sale
of common stock (or common stock paired with warrants or other convertible securities in “units”) in which the gross
sale proceeds are at least $7.5 million.



Events
of Default under the Loan Agreement include: (i) AgeX fails to pay any amount in the manner and at the time provided in the Loan
Agreement and the failure to pay is not remedied within 10 business days; (ii) AgeX fails to perform any of its obligations under
the Loan Agreement and if the failure can be remedied it is not remedied to the satisfaction of Juvenescence within 10 business
days after notice to AgeX; (iii) other indebtedness for money borrowed in excess of $100,000 becomes due and payable or can be
declared due and payable prior to its due date or if indebtedness for money borrowed in excess of $25,000 is not paid when due;
(iv) AgeX stops payment of its debts generally or discontinues its business or becomes unable to pay its debts as they become
due or enters into any arrangement with creditors generally, (v) AgeX becoming insolvent or in liquidation or administration or
other insolvency procedures, or a receiver, trustee or similar officer is appointed in respect of all or any part of its assets
and such appointment continues undischarged or unstayed for sixty days, (vi) it becomes illegal for AgeX to perform its obligations
under the Loan Agreement or any governmental permit, license, consent, exemption or similar requirement for AgeX to perform its
obligations under the Loan Agreement or to carry out its business is not obtained or ceases to remain in effect; (vii) the issuance
or levy of any judgment, writ, warrant of attachment or execution or similar process against all or any material part of the property
or assets of AgeX if such process is not released, vacated or fully bonded within sixty calendar days after its issue or levy;
(viii) any injunction, order or judgement of any court is entered or issued which in the opinion of Juvenescence materially and
adversely affects the ability of AgeX to carry out its business or to pay amounts owed to Juvenescence under the Loan Agreement,
and (ix) there is a change in AgeX’s financial condition that in the opinion of Juvenescence materially and adversely affects,
or is likely to so affect, its ability to perform any of its obligations under the Loan Agreement.



As
consideration for the line of credit under the Loan Agreement, AgeX issued to Juvenescence warrants to purchase 150,000 shares
of AgeX common stock. The exercise price of the warrants is $2.60 per share, which was the volume weighted average price on the
NYSE American (VWAP) of AgeX common stock over the twenty trading days prior to the date the warrants were issued. The warrants
will expire at 5:00 p.m. New York time three years after the date of issue. The number of shares issuable upon exercise of the
warrants and the exercise price per share are subject to adjustment upon the occurrence of certain events such as a stock split
or reverse split or combination of the common stock, stock dividend, recapitalization or reclassification of the common stock,
and similar events. The estimated value of these warrants was $236,000 which was determined in accordance with the Black-Scholes
option pricing model with inputs as specified in the relevant warrant agreement.



89







AgeX
has entered into a Registration Rights Agreement to use commercially reasonable efforts to register the 19,000 shares issuable
under the Loan Agreement and the 150,000 warrants and underlying shares for resale under the Securities Act of 1933, as amended
(the “Securities Act”), upon request of Juvenescence if Form S-3 is available to AgeX. Juvenescence will also have
“piggy-back” registration rights if AgeX files a registration statement for the sale of shares for itself or other
stockholders. AgeX will bear the expenses of the registration statement but not underwriting or broker’s commissions related
to the sale of warrants or shares. AgeX and Juvenescence will indemnify each other from certain liabilities in connection the
registration, offer, and sale of securities under a registration statement, including liabilities arising under the Securities
Act.



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. AgeX reimburses Juvenescence for his services on an agreed-upon fixed annual
amount of approximately $280,000. As of December 31, 2019, AgeX had approximately $71,000 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 Biotechnology, Inc. (“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 ASC 730-10-25(c)
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, 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 on a pro rata basis based on share ownership was
deposited into an escrow account where it was held through the term of the escrow, which expired in June 2019. The funds were
held in the escrow account to cover certain potential indemnity payments and other obligations that might arise after the merger.
During 2019, the escrow funds were paid to the former Ascendance shareholders and AgeX received $354,000 as its pro rata share
of the funds, as additional proceeds from the sale of the Ascendance investment included in other income, net, for the year ended
December 31, 2019.



Sale
and exercise of warrants by AgeX



In
February 2018, AgeX sold warrants, as described in Note 5, to certain investors, including to Alfred D. Kingsley, who was at the
time AgeX’s Executive Chairman and the Chairman of Lineage’s Board of Directors. On March 18, 2019, Mr. Kingsley purchased
a total of 248,600 shares of AgeX common stock through the exercise of his warrants at an exercise price of $2.50 per share and
paid a total purchase price of $621,500.



5.
Stockholders’ Equity



Preferred
Stock



AgeX
is authorized to issue up to 5,000,000 shares of $0.0001 par value preferred stock. To date, no preferred shares are issued and
outstanding.



Common
Stock



AgeX
has 100,000,000 shares of $0.0001 par value common stock authorized. The holders of AgeX’s common stock are entitled to
receive ratably dividends when, as, and if declared by the Board of Directors out of funds legally available. Upon liquidation,
dissolution, or winding up, the holders of AgeX common stock are entitled to receive ratably the net assets available after the
payment of all debts and other liabilities and subject to the prior rights of AgeX outstanding preferred shares, if any.



90







The
holders of common stock are entitled to one vote for each share held on all matters submitted to a vote of AgeX stockholders.
The holders of common stock have no preemptive, subscription, or redemption rights. The outstanding shares of common stock are
fully paid and non-assessable.



On
August 17, 2017, AgeX received its initial assets and cash from Lineage and certain investors. Lineage contributed certain assets
and cash to AgeX in exchange for 28,800,000 shares of AgeX common stock pursuant to the Asset Contribution Agreement discussed
in Note 4. As discussed in Note 2, these 28,800,000 shares of AgeX common stock have been reflected as outstanding as of the earliest
reporting period presented. Concurrently with the acquisition of assets from Lineage 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 Lineage (see Note 4).



The
AgeX shares were offered and sold without registration under the Securities Act of 1933, as amended (the “Securities Act”),
in reliance on exemptions from registration under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D and Regulation
S thereunder. AgeX has agreed to use commercially reasonable efforts to register the shares of AgeX common stock issued to the
AgeX investors for sale under the Securities Act.



See
Note 4 for Related Party Transactions with Lineage that impacted AgeX’s consolidated statements of stockholders’ equity
for the years ended December 31, 2019 and 2018.



On
June 7, 2018, AgeX sold 2.0 million shares of common stock for $2.50 per share to Juvenescence for aggregate cash proceeds to
AgeX of $5.0 million.



On
August 13, 2018, AgeX issued 80,000 shares with an approximate value of $240,000 as part of the consideration paid to Escape for
the asset acquisition discussed in Note 3.



As
of December 31, 2019 and December 31, 2018, there were 37,649,000 and 35,830,000 shares of AgeX common stock issued and outstanding,
respectively.



Sale
of Warrants by AgeX



On
February 28, 2018, AgeX sold Warrants to purchase 1,473,600 shares of AgeX common stock for $0.50 per Warrant for aggregate cash
proceeds to AgeX of $736,800, which included $124,300 from Alfred D. Kingsley, AgeX’s then Executive Chairman and the Chairman
of Lineage’s Board of Directors. On July 10, 2018, AgeX sold additional Warrants to purchase 526,400 shares of common stock
for $0.50 per warrant for aggregate net cash proceeds to AgeX of $263,200. The Warrants were exercisable at $2.50 per share. On
March 18, 2019, holders of the Warrants purchased a total of 1,800,000 shares of AgeX common stock through the exercise of Warrants
at an exercise price of $2.50 per share, for total proceeds to AgeX of $4.5 million. Any unexercised Warrants expired on that
date.



On
August 13, 2019, in lieu of accrued interest under the Loan Agreement, AgeX issued to Juvenescence 19,000 shares of AgeX common
stock concurrently with the first draw down of funds. Furthermore, as consideration for the line of credit under the Loan Agreement,
AgeX issued to Juvenescence warrants to purchase 150,000 shares of AgeX common stock. See Note 4.



6.
Stock-based Compensation



Equity
Incentive Plan



Under
the 2017 Equity Incentive Plan (the “Plan”), AgeX reserved 4,000,000 shares of common stock for the grant of stock
options or the sale of restricted stock (“Restricted Stock”) or for the settlement of hypothetical units issued with
reference to common stock (“Restricted Stock Units”). AgeX may also grant stock appreciation rights (“SARs”)
under the Plan. The Plan also permits AgeX to issue such other securities as its Board of Directors (the “Board”)
or the Compensation Committee (the “Committee”) administering the Plan may determine. Awards of stock options, Restricted
Stock, SARs, and Restricted Stock Units (“Awards”) may be granted under the Plan to AgeX employees, directors, and
consultants.



Awards
may vest and thereby become exercisable or have restrictions on forfeiture lapse on the date of grant or in periodic installments
or upon the attainment of performance goals, or upon the occurrence of specified events.



91







No
person shall be granted, during any one year period, options to purchase, or SARs with respect to, more than 1,000,000 shares
in the aggregate, or any Awards of Restricted Stock or Restricted Stock Units with respect to more than 500,000 shares in the
aggregate. If an Award is to be settled in cash, the number of shares on which the Award is based shall not count toward the individual
share limit.



No
Awards may be granted under the Plan more than ten years after the date upon which the Plan was adopted by the Board, and no options
or SARS granted under the Plan may be exercised after the expiration of ten years from the date of grant.



Stock
Options



Options
granted under the Plan may be either “incentive stock options” within the meaning of Section 422(b) of the Internal
Revenue Code of 1986, as amended (the “Code”), or “non-qualified” stock options that do not qualify incentive
stock options. Incentive stock options may be granted only to AgeX employees and employees of subsidiaries. The exercise price
of stock options granted under the Plan must be equal to the fair market of AgeX common stock on the date the option is granted.
In the case of an optionee who, at the time of grant, owns more than 10% of the combined voting power of all classes of AgeX stock,
the exercise price of any incentive stock option must be at least 110% of the fair market value of the common stock on the grant
date, and the term of the option may be no longer than five years. The aggregate fair market value of common stock (determined
as of the grant date of the option) with respect to which incentive stock options become exercisable for the first time by an
optionee in any calendar year may not exceed $100,000.



The
exercise price of an option may be payable in cash or in common stock having a fair market value equal to the exercise price,
or in a combination of cash and common stock, or other legal consideration for the issuance of stock as the Board or Committee
may approve.



Generally,
options will be exercisable only while the optionee remains an employee, director or consultant, or during a specific period thereafter,
but in the case of the termination of an employee, director, or consultant’s services due to death or disability, the period
for exercising a vested option shall be extended to the earlier of 12 months after termination or the expiration date of the option.



Restricted
Stock and Restricted Stock Units



In
lieu of granting options, AgeX may enter into purchase agreements with employees under which they may purchase or otherwise acquire
Restricted Stock or Restricted Stock Units subject to such vesting, transfer, and repurchase terms, and other restrictions. The
price at which Restricted Stock may be issued or sold will be not less than 100% of fair market value. Employees or consultants,
but not executive officers or directors, who purchase Restricted Stock may be permitted to pay for their shares by delivering
a promissory note or an installment payment agreement that may be secured by a pledge of their Restricted Stock. Restricted Stock
may also be issued for services actually performed by the recipient prior to the issuance of the Restricted Stock. Unvested Restricted
Stock for which AgeX has not received payment may be forfeited, or AgeX may have the right to repurchase unvested shares upon
the occurrence of specified events, such as termination of employment.



Subject
to the restrictions set with respect to the particular Award, a recipient of Restricted Stock generally shall have the rights
and privileges of a stockholder, including the right to vote the Restricted Stock and the right to receive dividends; provided
that, any cash dividends and stock dividends with respect to the Restricted Stock shall be withheld for the recipient’s
account, and interest may be credited on the amount of the cash dividends withheld. The cash dividends or stock dividends so withheld
and attributable to any particular share of Restricted Stock (and earnings thereon, if applicable) shall be distributed to the
recipient in cash or, at the discretion of the Board or Committee, in shares of common stock having a fair market value equal
to the amount of such dividends, if applicable, upon the release of restrictions on the Restricted Stock and, if the Restricted
Stock is forfeited, the recipient shall have no right to the dividends.



The
terms and conditions of a grant of Restricted Stock Units shall be determined by the Board or Committee. No shares of common stock
shall be issued at the time a Restricted Stock Unit is granted. A recipient of Restricted Stock Units shall have no voting rights
with respect to the Restricted Stock Units. Upon the expiration of the restrictions applicable to a Restricted Stock Unit, AgeX
will either issue to the recipient, without charge, one share of common stock per Restricted Stock Unit or cash in an amount equal
to the fair market value of one share of common stock.



At
the discretion of the Board or Committee, each Restricted Stock Unit (representing one share of common stock) may be credited
with cash and stock dividends paid in respect of one share (“Dividend Equivalents”). Dividend Equivalents shall be
withheld for the recipient’s account, and interest may be credited on the amount of cash Dividend Equivalents withheld.
Dividend Equivalents credited to a recipient’s account and attributable to any particular Restricted Stock Unit (and earnings
thereon, if applicable) shall be distributed in cash or in shares of common stock having a fair market value equal to the amount
of the Dividend Equivalents and earnings, if applicable, upon settlement of the Restricted Stock Unit. If a Restricted Stock Unit
is forfeited, the recipient shall have no right to the related Dividend Equivalents.



92







SARs



An
SAR is the right to receive, upon exercise, an amount payable in cash or shares, or a combination of shares and cash, equal to
the number of shares subject to the SAR that is being exercised, multiplied by the excess of (a) the fair market value of a common
stock on the date the SAR is exercised, over (b) the exercise price specified in the SAR Award agreement. SARs may be granted
either as free standing SARs or in tandem with options. No SAR may be exercised later than 10 years after the date of grant.



The
exercise price of an SAR shall not be less than 100% of the fair market value of one share of common stock on the date of grant.
An SAR granted in conjunction with an option shall have the same exercise price as the related option, shall be transferable only
upon the same terms and conditions as the related option, and shall be exercisable only to the same extent as the related option;
provided, however, that the SAR by its terms shall be exercisable only when the fair market value per share exceeds the exercise
price per share of the SAR or related option. Upon any exercise of an SAR granted in tandem with an option, the number of shares
for which the related option shall be exercisable shall be reduced by the number of shares for which the SAR has been exercised.
The number of shares for which an SAR issued in tandem with an option shall be exercisable shall be reduced by the number of shares
for which the related option has been exercised.



Equity
Incentive Plan Awards



A
summary of the Plan activity and related information follows (in thousands except weighted average exercise price):



|                                 |  | Shares
Available
for Grant |         |  | Number
of Options
Outstanding |  |       | Number
of RSUs
Outstanding |  |  | Weighted
Average
Exercise Price | 
|-------------------------------- |  | -------------------------- | ------- |  | ----------------------------- |  | ----- | -------------------------- |  |  | ------------------------------- | 
|January 1, 2018                  |  |                            | 2,761   |  |                               |  | 1,239 |                            |  |  | -                               | 
|Options granted                  |  |                            | (1,038) |  |                               |  | 1,038 |                            |  |  | -                               | 
|Options forfeited                |  |                            | 8       |  |                               |  | (8)   |                            |  |  | -                               | 
|Outstanding at December 31, 2018 |  |                            | 1,731   |  |                               |  | 2,269 |                            |  |  | -                               | 
|Restricted stock units granted   |  |                            | (100)   |  |                               |  | -     |                            |  |  | 50                              | 
|Options granted                  |  |                            | (677)   |  |                               |  | 677   |                            |  |  | -                               | 
|Options forfeited and cancelled  |  |                            | 100     |  |                               |  | (100) |                            |  |  | -                               | 
|December 31, 2019                |  |                            | 1,054   |  |                               |  | 2,846 |                            |  |  | 50                              | 
|Exercisable at December 31, 2019 |  |                            |         |  |                               |  | 1,630 |                            |  |  |                                 | 



There
were no exercises of stock options during the years ended December 31, 2019 and 2018. Total proceeds if all options granted and
outstanding as of December 31, 2019 were exercised would be approximately $7.8 million.



At
December 31, 2019, AgeX had approximately $2.4 million of total unrecognized compensation expense related to the Plan that will
be recognized over a weighted-average period of 2.67 years.



The
aggregate intrinsic value of options outstanding was $13,000 and options exercisable was $6,000 as of December 31, 2019.



Stock-based
Compensation Expense



AgeX
recorded stock-based compensation expense in the following categories on the accompanying consolidated statements of operations
for the years ended December 31, 2019 and 2018 (in thousands):



|                                       |  | Year Ended December 31, |      
|-------------------------------------- |  | ----------------------- | -----
|                                       |  | 2019                    |      
|Research and development               |  | $                       | 133  
|General and administrative             |  |                         | 1,774
|Total stock-based compensation expense |  | $                       | 1,907



93







The
weighted-average estimated fair value of stock options granted during the years ended December 31, 2019 and 2018 was $2.45 per
share and $1.99 per share, respectively, using the Black-Scholes option pricing model with the following weighted-average assumptions:



|                         |  | Year Ended December 31, |       
|------------------------ |  | ----------------------- | ------
|                         |  | 2019                    |       
|Expected life (in years) |  |                         | 6.01  
|Risk-free interest rates |  |                         | 1.96% 
|Volatility               |  |                         | 74.53%
|Dividend yield           |  |                         | -%    



The
determination of stock-based compensation is inherently uncertain and subjective and involves the application of valuation models
and assumptions requiring the use of judgment. If AgeX had made different assumptions, its stock-based compensation expense and
net loss for the years ended December 31, 2019 and 2018 may have been significantly different. See Note 2 for a discussion of
the factors used in determining these assumptions.



AgeX
does not recognize deferred income taxes for incentive stock option compensation expense and records a tax deduction only when
a disqualified disposition has occurred.



7.
Income Taxes



Net
loss from continuing operations before provision for income taxes are as follows:



|                                     |  | December 31, |        
|------------------------------------ |  | ------------ | -------
|                                     |  | 2019         |        
|Domestic                             |  | $            | (13,051
|Foreign                              |  |              | 815    
|Net loss before income tax provision |  | $            | (12,236



On
December 22, 2017, in response to the enactment of the 2017 Tax Act (see Note 2), the SEC staff issued SAB 118 that allows AgeX
to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. The repatriation
tax is based primarily on LifeMap Sciences Ltd., an Israeli subsidiary of LifeMap Sciences (see Note 4), accumulated foreign earnings
and profits that LifeMap Sciences previously excluded from U.S. income taxes. The federal taxable income was offset by operating
losses and resulted in no federal income tax due. AgeX applied the guidance in SAB 118 when accounting for the enactment-date
effects of the 2017 Tax Act during the year ended December 31, 2018. As of December 31, 2018, AgeX completed its accounting for
all the enactment-date income tax effects of the 2017 Tax Act discussed below.



AgeX
remeasured certain deferred tax assets and liabilities based on the enacted tax rate at which they are expected to reverse in
the future.



Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.



The
primary components of the net deferred tax assets and liabilities as of December 31, 2019 and 2018 were as follows (in thousands):



|                                              |  | December 31, |        
|--------------------------------------------- |  | ------------ | -------
|Deferred tax assets/(liabilities):            |  | 2019         |        
|Net operating loss carryforwards              |  | $            | 12,402 
|Research and development credit carryforwards |  |              | 2,069  
|Patents and fixed assets                      |  |              | 454    
|Stock-based compensation                      |  |              | 659    
|Operating lease liability                     |  |              | 428    
|Other, net                                    |  |              | 124    
|Operating lease ROU assets                    |  |              | (424   
|Valuation allowance                           |  |              | (15,712
|Total net deferred tax assets                 |  | $            | -      



A
valuation allowance is provided when it is more likely than not that all or some portion of the deferred tax assets will not be
realized. AgeX established a full valuation allowance for all periods presented due to the uncertainty of realizing future tax
benefits from its net operating loss carryforwards and other deferred tax assets.



94







Income
taxes differed from the amounts computed by applying the U.S. federal income tax rate indicated to pretax losses from operations
as a result of the following:



|                                                         |  | December 31, |      
|-------------------------------------------------------- |  | ------------ | -----
|                                                         |  | 2019         |      
|Computed tax benefit at federal statutory rate           |  |              | 21%  
|Research and development and other credits               |  |              | 1%   
|State tax benefit, net of effect on federal income taxes |  |              | 5%   
|Permanent differences                                    |  |              | -%   
|Change in valuation allowance                            |  |              | (28)%
|Foreign rate differential                                |  |              | -%   
|                                                         |  |              | (1)% 



As
of December 31, 2019, AgeX has net operating loss carryforwards of approximately $42.0 million for U.S. federal income tax purposes.
Of this amount, $10.1 million is attributable to LifeMap Sciences, which includes $3.6 million in NOLs generated while it was
included in the consolidated Lineage tax group and would be available to offset income of AgeX in the future. The remaining LifeMap
Sciences’ NOLs of $6.5 million are attributable to NOLs generated for the tax years during which LifeMap Sciences filed
a separate federal income tax return and, accordingly, those NOLs are available only to LifeMap Sciences’ taxable income
within AgeX in future years. In general, NOLs and other tax credit carryforwards generated by legal entities in a consolidated
federal tax group are available to other members of the tax group depending on the nature of the transaction that a member may
enter into while still in the consolidated federal tax group. However, under the Tax Matters Agreement between Lineage and AgeX,
any use of a member’s NOLs and other tax credit carryforwards by the other member is subject to reimbursement by the benefiting
member for the actual tax benefit realized. Since the August 30, 2018 deconsolidation of AgeX and to date, neither Lineage nor
AgeX has used the tax attributes of the other.



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. For financial reporting purposes, AgeX recognized a $3.2 million gain on the sale
of its equity method investment in Ascendance (see Note 4). The sale was a taxable transaction to AgeX generating a taxable gain
of approximately $2.2 million. AgeX had sufficient current year losses from operations to offset the entire gain resulting in
no income taxes due. At the close of the merger, $955,000 of cash that otherwise would have been payable to the Ascendance stockholders
on a pro rata basis based on share ownership was deposited into an escrow account where it was held through the term of the escrow,
which expired in June 2019. The funds were held in the escrow account to cover certain potential indemnity payments and other
obligations that might arise after the merger. During 2019, the escrow funds were paid to the former Ascendance shareholders and
AgeX received $354,000 as its pro rata share of the funds as additional proceeds from the sale of its Ascendance investment (see
Note 4) included in other income, net, for the year ended December 31, 2019. AgeX has sufficient current year losses from operations
to offset this gain resulting in no income taxes due.



As
further discussed in Note 1, on August 30, 2018, Lineage consummated the sale of 14,400,000 shares of AgeX common stock to Juvenescence.
AgeX received no proceeds from that transaction because the shares sold were owned by Lineage. Prior to the transaction, Juvenescence
owned 5.6% of AgeX’s issued and outstanding common stock. Upon completion of the transaction, Lineage’s ownership
in AgeX was reduced from 80.4% to 40.2% of AgeX’s issued and outstanding shares of common stock, and Juvenescence’s
ownership in AgeX was increased from 5.6% to 45.8% of AgeX’s issued and outstanding shares of common stock. Accordingly,
since August 31, 2018, AgeX has not been included in Lineage’s consolidated federal and state income tax returns and AgeX
has filed its own, standalone income tax returns with its subsidiaries.



As
of December 31, 2019, AgeX has net operating losses of approximately $36.1 million for California purposes. As AgeX and its subsidiaries
have been included in the combined California tax return with Lineage, up to the date of deconsolidation on August 30, 2018, those
state net operating losses will remain with AgeX. In general, NOLs and other tax credit carryforwards generated by legal entities
in a combined state tax group are available to other members of the tax group depending on the nature of the transaction that
a member may enter into while still in the combined state tax group. However, under the Tax Matters Agreement between Lineage
and AgeX, any use of a member’s NOLs and other tax credit carryforwards by the other member is subject to reimbursement
by the benefiting member for the actual tax benefit realized. Federal net operating losses generated on or prior to December 31,
2017, expire in varying amounts between 2028 and 2037, while federal net operating losses generated after December 31, 2017, carryforward
indefinitely. The state net operating losses expire in varying amounts between 2028 and 2039.



As
of December 31, 2019, AgeX has research and development tax credit carryforwards for federal and state tax purposes of $1.1 million
and $957,000, respectively. Although this LifeMap Sciences credit has been included as part of the AgeX credit carryforwards,
LifeMap Sciences filed a separate federal income tax return prior to January 1, 2018 and its prior research credit carryforwards
may not be used to offset federal taxable income of AgeX. As AgeX and its subsidiaries were included in the California combined
return with Lineage, these credits noted above will remain with AgeX. The federal tax credits expire between 2028 and 2039, while
the state tax credits have no expiration date.



95







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, 2018, we included an immaterial amount of GILTI in U.S.
gross income related to LifeMap Sciences, Ltd., which was fully offset by current year operating losses. For the year ended December
31, 2019, our foreign income inclusion was less than the deemed return on tangible assets, therefore no GILTI was included in
income for 2019. 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 year ended December 31, 2019, we experienced a domestic loss from continuing operations but generated foreign income attributable
primarily to foreign currency transaction gains for those periods. This income was principally related to the remeasurement of
the U.S. dollar denominated intercompany advances payable by LifeMap Sciences, Ltd. to LifeMap Sciences, Inc., for which a foreign
income tax provision of $148,000 was recorded for the year ended December 31, 2019. Due to losses incurred for 2019, we did not
record a domestic provision or benefit for income taxes for the year ended December 31, 2019.



Other
Income Tax Matters



Internal
Revenue Code Section 382 places a limitation (“Section 382 Limitation”) on the amount of taxable income that can be
offset by net operating loss (“NOL”) carryforwards after a change in control (generally greater than 50% change in
ownership within a three-year period) of a loss corporation. California has similar rules. Generally, after a control change,
a loss corporation cannot deduct NOL carryforwards in excess of the Section 382 Limitation. Due to these “change in ownership”
provisions, utilization of the NOL and tax credit carryforwards may be subject to an annual limitation regarding their utilization
against taxable income in future periods.



AgeX
and its subsidiaries may be subject to potential income tax examination by U.S. federal or states authorities. These potential
examinations may include inquiries regarding the timing and amount of deductions, and compliance with U.S. federal and state tax
laws. AgeX filed its first consolidated federal tax return in 2018. For AgeX subsidiaries that did operate and filed separate
tax returns prior to 2018, those entities are not subject to tax examination by major taxing authorities for tax years before
2015. However, the taxing authorities may still make adjustments to the net operating loss and credit carryforwards used in open
years by AgeX or any of its subsidiaries. Any potential examinations may include inquiries regarding the timing and amount of
deductions, and compliance with U.S. federal and state tax laws.



8.
Commitments and Contingencies



Lease
Agreement



On
April 2, 2019, the term of a sublease that AgeX entered into during March 2019 (the “AgeX Lease”) went into effect
for an office and research facility (the “New Facility”) comprising approximately 23,911 square feet of space in a
building in an office and research park at 965 Atlantic Avenue, Alameda, California that serves as AgeX’s principal offices
and research laboratory.



Base
monthly rent is $35,866.50 for the initial 12 months of the sublease term and then will increase to $36,942.50. In addition, AgeX
will pay real property taxes, insurance and operating expenses pertaining to the building in which the New Facility is located.
The AgeX Lease will expire on December 31, 2020.



AgeX
is responsible for the maintenance and repair of the New Facility, including electrical, plumbing, HVAC and other systems serving
the New Facility but excluding structural and other external portions of the building in which the New Facility is located, and
other external areas such as parking, landscaping and walkways associated with the building.



96







AgeX
will be in default under the AgeX Lease, and the sublandlord may terminate the AgeX Lease and may exercise other remedies against
AgeX for losses and damages under the AgeX Lease and applicable law, if any one or more of the following events occurs: (a) AgeX
fails to pay any rent or any other sum required to be paid for a period of ten (10) days after written notice of delinquency is
delivered by the sublandlord; provided, however, that if AgeX fails to pay rent or other sums due within ten (10) days of the
date due three or more times during any twelve month period, then any subsequent failure to pay any rent or other sum when due
shall constitute a default without the requirement of any written notice; (b) a material default by AgeX in the performance of
any other terms, covenants or conditions of the AgeX Lease where the failure continues for thirty (30) days after written notice
from the sublandlord; provided that if AgeX defaults in the performance of the same obligation three or more times in any twelve
month period and notice from the sublandlord was given in each instance, no cure period shall thereafter be applicable; (c) AgeX
becomes bankrupt or insolvent, makes an assignment for the benefit of creditors, bankruptcy or reorganization proceedings are
commenced by or against AgeX, and in the case of an involuntary proceeding are not discharged within 60 days, the appointment
of a receiver for a substantial part of AgeX’s assets, or the levy upon the sublease or AgeX’s estate in the sublease
by attachment or execution, or (d) AgeX abandons the New Facility.



AgeX
has agreed to indemnify the sublandlord against certain liabilities arising under laws pertaining to hazardous materials. The
indemnity of the sublandlord will pertain to any deposit, spill, discharge or release of hazardous materials that occurs during
the term of the AgeX Lease or from AgeX’s failure to comply with requirements of governmental authorities.



The
AgeX Lease requires AgeX to maintain certain liability and other insurance and contains customary provisions pertaining to matters
such as damage or destruction of the New Facility, taking by eminent domain or similar process, restrictions on subletting and
assignment, and other matters.



In
connection with the AgeX Lease, as of December 31, 2019 AgeX incurred $436,000 in tenant improvement expenses that it funded and
completed in November 2019. This amount is being amortized over the remaining lease term.



Subleases



During
2019, AgeX, as a sublessor, entered into sublease agreements (the “AgeX Subleases”) with unrelated parties (the “Sublessees”)
to lease approximately 11,121 square feet of space at AgeX’s New Facility. The first Sublessee will pay AgeX $3,088.50 per
month and the second Sublessee will pay AgeX $15,405.40 per month for the first twelve months of the AgeX Sublease and $16,311.60
per month for the duration of the AgeX Subleases. The AgeX Subleases which will expire on December 31, 2020. The Sublessee will
also be responsible to reimburse AgeX for Sublessees’ pro rata portion of the maintenance and repair of the New Facility,
including electrical, plumbing, HVAC and other systems serving the New Facility but excluding structural and other external portions
of the building in which the New Facility is located, and other external areas such as parking, landscaping and walkways associated
with the building.



Adoption
of ASC 842



The
tables below provide the amounts recorded in connection with the adoption of ASC 842 as of, and during, the year ended December
31, 2019, for the AgeX Lease. AgeX recorded a right-of-use asset of $726,000 and a right-of-use liability for the same amount
for the AgeX Lease in April 2019, which is considered a noncash investing activity.



The
following table presents supplemental cash flow information related to the AgeX Lease for the year ended December 31, 2019 (in
thousands):



|Cash paid for amounts included in the measurement of lease liabilities: |  |   |    
|----------------------------------------------------------------------- |  | - | ---
|Operating cash flows for operating lease                                |  | $ | 323



The
following table presents supplemental balance sheet information related to the AgeX Lease as of December 31, 2019 (in thousands,
except lease term and discount rate):



|Operating lease              |  |   |    
|---------------------------- |  | - | ---
|Right-of-use asset, net      |  | $ | 424
|                             |  |   |    
|Right-of-use lease liability |  | $ | 428



|Weighted average remaining lease term |  |  |       
|------------------------------------- |  |  | ------
|Operating lease                       |  |  | 1
year
|Weighted average discount rate        |  |  |       
|Operating lease                       |  |  | 6%    



97







The
following table presents future minimum lease commitments as of December 31, 2019 (in thousands):





|                              |  | Operating Lease
 Payments |    
|----------------------------- |  | ------------------------- | ---
|Year Ending December 31, 2020 |  | $                         | 440
|Less imputed interest         |  |                           | (12
|Total                         |  | $                         | 428



Litigation
– General



AgeX
is subject to various claims and contingencies in the ordinary course of its business, including those related to litigation,
business transactions, employee-related matters, and others. When AgeX is aware of a claim or potential claim, it assesses the
likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated,
AgeX will record a liability for the loss. If the loss is not probable or the amount of the loss cannot be reasonably estimated,
AgeX discloses the claim if the likelihood of a potential loss is reasonably possible and the amount involved could be material.
AgeX is not aware of any claims likely to have a material adverse effect on its financial condition or results of operations.



Employment
Contracts



AgeX
has entered into employment contracts with certain executive officers. Under the provisions of the contracts, AgeX may be required
to incur severance obligations for matters relating to changes in control, as defined, and involuntary terminations.



Indemnification



In
the normal course of business, AgeX may provide indemnifications of varying scope under AgeX’s agreements with other companies
or consultants, typically for AgeX’s pre-clinical programs. Pursuant to these agreements, AgeX will generally agree to indemnify,
hold harmless, and reimburse the indemnified parties for losses and expenses suffered or incurred by the indemnified parties arising
from claims of third parties in connection with AgeX’s pre-clinical programs. Indemnification provisions could also cover
third-party infringement claims with respect to patent rights, copyrights, or other intellectual property pertaining to AgeX’s
pre-clinical programs. AgeX has also agreed to indemnify the sublessor and owner of the New Facility with respect to certain matters
that may arise during the term of the AgeX Lease. The term of these indemnification obligations will generally continue in effect
after the termination or expiration of the particular research, development, services, license, or lease agreement to which they
relate. The potential future payments AgeX could be required to make under these indemnification agreements will generally not
be subject to any specified maximum amount. Historically, AgeX has not been subject to any claims or demands for indemnification.
AgeX also maintains various liability insurance policies that limit AgeX’s financial exposure. As a result, AgeX believes
the fair value of these indemnification agreements is minimal. Accordingly, AgeX has not recorded any liabilities for these agreements
as of December 31, 2019 and 2018.



9.
Subsequent Events



New
Loan Agreement



On
March 30, 2020 AgeX and Juvenescence entered into a new Secured Convertible Facility Agreement (the
“New Loan Agreement”) pursuant to which Juvenescence has agreed to provide to AgeX an $8.0 million line of credit
for a period of 18 months on substantially the same terms as the Loan Agreement described in Note 4, except that (a) all loans
to AgeX under the New Loan Agreement in excess of an initial $500,000 advance are subject to Juvenescence's discretion, (b) AgeX
may not draw more than $1 million in any single draw, (c) in lieu of accrued interest, AgeX will issue to Juvenescence 28,500
shares of AgeX common stock when AgeX has borrowed an aggregate of $3 million under the New Loan Agreement, (d) AgeX will issue
to Juvenescence warrants to purchase shares of AgeX common stock (“New Warrants”) in amounts determined by the warrant
formula described below, (e) the Repayment Date for outstanding principal balance of the loan under the New Loan Agreement will
be March 30, 2023, (f) if AgeX requests additional loans after making the first two draws of funds (which are expected to total
$1 million) under the New Loan Agreement, a Security and Pledge Agreement (the “Security Agreement”) will go into
effect granting Juvenescence a security interest in all of the assets of AgeX and Agex’s subsidiaries ReCyte Therapeutics and Reverse Bioengineering, Inc. (the “Guarantor Subsidiaries”
or each a “Guarantor Subsidiary”) (g) the Guarantor
Subsidiaries will guarantee AgeX's obligations under the New Loan Agreement if AgeX makes more than two draws of funds under the
New Loan Agreement and (h) Juvenescence has the right to convert the principal amount of outstanding loans under the New Loan
Agreement into shares of AgeX common stock at the Market Price as defined in the New Loan Agreement. Further, in addition to
the Events of Default described in Note 4, additional Events of Default will arise under the New Loan Agreement if (i) AgeX or
any of the Guarantor Subsidiaries sells, leases, licenses, consigns, transfers, or otherwise disposes of a material part of its
assets other than inventory in the ordinary course of business or certain intercompany transactions, or certain other limited
permitted transactions, unless Juvenescence approves, (ii) the security interests under the Security Agreement, if in effect,
are not valid or perfected, or AgeX or a Guarantor Subsidiary contests the validity of its obligations under the New Loan Agreement
or Security Agreement or other related agreement with Juvenescence, or there is a loss, theft, damage or destruction of a material
portion of the collateral, (iii) any representation, warranty, or other statement made by AgeX or a Guarantor Subsidiary under
the New Loan Agreement is incomplete, untrue, incorrect, or misleading, or (iv) AgeX or a Guarantor Subsidiary suspends or ceases
to carry on all or a material part of its business or threatens to do so.



Although
the New Loan Agreement provides that Juvenescence may lend us up to $8 million, all loans in excess of the initial $500,000 are
subject to Juvenescence’s discretion. Juvenescence will require that AgeX implement a plan prior to April 30, 2020 to reduce
spending on employee salaries and consulting fees and to pay no bonuses for 2019 in order to borrow more than the initial $500,000,
although such additional borrowings will remain subject to Juvenescence’s discretion.



Each
time AgeX receives an advance of funds under the New Loan Agreement, AgeX will issue to Juvenescence a number of New Warrants
equal to 50% of the number determined by dividing the amount of the advance by the applicable Market Price. The Market Price will
be the closing price per share of AgeX common stock on the NYSE American or other national securities exchange on the date of
the applicable notice from AgeX requesting a draw of funds that triggers the obligation to issue New Warrants; provided, however
that if AgeX common stock is not traded on a national securities exchange the Market Price shall be determined with reference
to closing prices quoted or bid and asked prices on the OTC Bulletin Board or similar quotation system averaged over twenty consecutive
trading days. The exercise price of the New Warrants will be the applicable Market Price. The New Warrants will expire at 5:00
p.m. New York time three years after the date of issue.



AgeX
has entered into an amendment to its Registration Rights Agreement described in Note 4 and include the 28,500 shares issuable
under the New Loan Agreement and the New Warrants and underlying shares as registrable securities under the Registration Rights
Agreement.



Covid-19 Pandemic



The outbreak of the
corona virus COVID-19 could disrupt AgeX’s operations due to employee absenteeism whether due to illness or quarantines.
Supply chains for chemical reagents and other supplies used in AgeX’s laboratory could be disrupted if the manufacturers
or shippers experience operational disruptions related to COVID-19 illness or quarantines. COVID-19 illness could also impact
members of the AgeX Board of Directors making it more difficult to convene quorums of the Board of Directors or its committees
needed to conduct meetings for the management of AgeX. We cannot presently predict the extent to which the virus may impact our
operations.



The anticipated economic
consequences of the COVID-19 pandemic have adversely impacted financial markets and could adversely affect AgeX’s ability
to raise capital when needed through the sale of shares of common stock or other equity or debt securities.





98







Item
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure



Not
applicable.



Item
9A. Controls and Procedures



Evaluation
of Disclosure Controls and Procedures



It
is management’s responsibility to establish and maintain adequate internal control over all financial reporting pursuant
to Rule 13a-15 under the Exchange Act. Our management, including our principal executive officer and our principal financial officer,
have reviewed and evaluated the effectiveness of our disclosure controls and procedures as of the end of our fourth quarter. Following
this review and evaluation, management collectively determined that our disclosure controls and procedures are effective
to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act (i) is recorded,
processed, summarized and reported within the time periods specified in SEC rules and forms; and (ii) is accumulated and communicated
to management, including our chief executive officer and our chief financial officer, as appropriate to allow timely decisions
regarding required disclosure.



This
Report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation
report of AgeX’s registered public accounting firm due to a transition period established by rules of the Securities and
Exchange Commission for newly public companies.



Changes
in Internal Control over Financial Reporting



There
were no changes in our internal control over financial reporting that occurred during the fourth quarter of our fiscal year ended
December 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.



Item
9B. Other Information



On
March 30, 2020 AgeX entered into the New Loan Agreement with Juvenescence
described in Note 9 to our consolidated financial statements included elsewhere in this Report. AgeX also entered into a Warrant
Agreement (“New Warrant Agreement”) governing the issuance of the New Warrants described in Note 9, and an amendment
to the August 2019 Registration Rights Agreement as described in Note 9. The foregoing descriptions of the New Loan Agreement,
the New Warrants, and the amendment of the Registration Rights Agreement (the “Amendment”) in Note 9 to our consolidated
financial statements are incorporated herein by reference and are qualified in all respects by full texts of the New Loan Agreement,
the New Warrant Agreement and the Amendment.



99







PART
III



Item
10. Directors, Executive Officers, and Corporate Governance



Directors



The
names and ages of our directors are:



Gregory
H. Bailey, M.D., 64, joined our Board of Directors in August 2018 and became the Chairman of our Board of Directors in October
2018. Dr. Bailey is currently the Chief Executive Officer of Juvenescence Limited, a privately held company focused on the development
of therapies for ageing and age-related diseases. Dr. Bailey is also a director of Manx Financial Group, plc, BioHaven Inc, SalvaRx
Inc and Portage Biotech. Dr. Bailey has founded and served as a director of a number of private and public companies and previously
served as a managing partner of Palantir Group, Inc., a merchant bank involved in a number of biotech company startups and financings.
Dr. Bailey practiced emergency medicine for ten years before entering finance. Dr. Bailey received his M.D. from the University
of Western Ontario. We believe that Dr. Bailey is qualified to serve on our Board based on his years of experience in medicine
and as an executive and in finance for the biotechnology industry.



Annalisa
Jenkins, M.B.B.S., F.R.C.P., 54, has served as a member of our Board of Directors since October 2018. From November 2017 until
April 2019, Dr. Jenkins served as the Chief Executive Officer of PlaqueTec Ltd., a biotechnology company focusing on coronary
artery disease treatment and prevention. Previously, Dr. Jenkins served as the Chief Executive Officer and a member of the board
of directors of Dimension Therapeutics, Inc., a biotechnology company focused on rare and metabolic diseases associated with the
liver, from September 2014 until its sale to Ultragenyx Pharmaceutical Inc. in November 2017. From October 2013 to March 2014,
Dr. Jenkins served as executive vice president, head of global research and development for Merck Serono Pharmaceuticals, a biopharmaceutical
company. Previously, from September 2011 to October 2013, she served as Merck Serono’s executive vice president, global
development and medical, and was a member of Merck Serono’s executive committee. Prior to that, Dr. Jenkins pursued a 15-year
career at Bristol-Myers Squibb Company, a biopharmaceutical company, where, from July 2009 to June 2011, she was a senior vice
president and head of global medical affairs. Dr. Jenkins is currently a committee member of the science board to the FDA, which
advises FDA leadership on complex scientific and technical issues. Dr. Jenkins serves on the board of directors of Avrobio, Inc., Oncimmune Holdings plc and a number of privately held biotechnology and life science companies.
Dr. Jenkins previously served on the board of Silence Therapeutics. Dr. Jenkins graduated with a degree in medicine from St. Bartholomew’s
Hospital in the University of London and subsequently trained in cardiovascular medicine in the UK National Health Service. Earlier
in her career, Dr. Jenkins served as a medical officer in the British Royal Navy. We believe that Dr. Jenkins is qualified to
serve on our Board based on her years of experience in medicine and as an executive in the biopharma industry.



Michael
H. May, 51, joined our Board of Directors during August 2019. Dr. May is President and Chief Executive Officer of CCRM Enterprises
and the Center for Commercialization of Regenerative Medicine or CCRM, a public-private consortium founded under Canada’s
Centres of Excellence for Commercialization and Research Program to generate sustainable health and economic benefits through
global collaboration in cell and gene therapy, and regenerative medicine. Dr. May co-founded Rimon Therapeutics Ltd., a Toronto-based
tissue engineering company developing novel medical polymers that possess drug-like activity, and served as President and Chief
Executive Officer of Rimon from 2000 to 2006, and President and Chief Operating Officer from 2006 to 2010. Dr. May serves on a
number of boards of directors and advisory committees in the field of stem cell research and regenerative medicine, including
at the International Society for Cell Therapy (ISCT) and the Alliance for Regenerative Medicine (ARM). Dr. May completed his PhD
in Chemical Engineering at the University of Toronto in 1998 as an NSERC Scholar and was awarded the Martin Walmsley Fellowship
for Technological Entrepreneurship. We believe that Dr. May is qualified to serve on our Board based on his years of experience
in tissue engineering and the fields of stem cell research and regenerative medicine.



Michael
D. West, Ph.D., 66, joined the Board of Directors during January 2017 and has served as our Chief Executive Officer since
that date. Dr. West was appointed Chief Executive Officer of Lineage Cell Therapeutics, Inc. (formerly BioTime, Inc.) during October
2007 and then served as Co-Chief Executive Officer from October 2015 until September 2018. Dr. West also served as interim President
and Chief Executive Officer of Asterias Biotherapeutics, Inc. from April 2014 to June 2014, and as Vice President of Technology
Integration of Asterias until December 2015. Dr. West served as a director of: Lineage from 2002 until September 2018; Asterias
from 2012 until September 2018; and OncoCyte Corporation from 2013 to 2016. Prior to becoming Chief Executive Officer of Lineage,
Dr. West served as Chief Executive Officer, President, and Chief Scientific Officer of Ocata Therapeutics, Inc., a company engaged
in developing human stem cell technology for use in regenerative medicine. Dr. West also founded Geron Corporation of Menlo Park,
California, and from 1990 to 1998, he was a Director and Vice-President, where he initiated and managed programs in telomerase
diagnostics, oligonucleotide-based telomerase inhibition as anti-tumor therapy, and the cloning and use of telomerase in telomerase-mediated
therapy wherein telomerase is utilized to immortalize human cells. From 1995 to 1998 he organized and managed the research between
Geron and its academic collaborators, James Thomson and John Gearhart, which led to the first isolation of human embryonic stem
and human embryonic germ cells. Dr. West received a B.S. from Rensselaer Polytechnic Institute in 1976, an M.S. in Biology from
Andrews University in 1982, and a Ph.D. from Baylor College of Medicine in 1989 concentrating on the biology of cellular aging.
Dr. West is an internationally renowned pioneer and expert in stem cell research, and we believe that he is qualified to serve
on our Board based on his years of executive experience in the fields of stem cell research and regenerative medicine.



100









Previous
Arrangement for the Designation of Directors



Pursuant
to a Shareholders Agreement between our former parent company Lineage Cell Therapeutics, Inc. (“Lineage”), formerly
known as BioTime, Inc., and our current largest stockholder Juvenescence Limited (“Juvenescence”), Lineage had the
right to designate two members of our Board of Directors and Juvenescence had the right to designate three members of our Board
of Directors. Under the Shareholders Agreement, the remaining members of the Board of Directors were to be independent of Lineage
and Juvenescence and mutually agreed to and designated by Lineage and Juvenescence. Pursuant to the Shareholders Agreement, Juvenescence
designated Gregory Bailey and Annalisa Jenkins as directors. Lineage had previously appointed Michael D. West and Michael H. Mulroy
as directors. The Shareholders Agreement is no longer in effect, having expired on November 28, 2018 (the “Distribution
Date”) when Lineage distributed to its shareholders, on a pro rata basis, 12,697,028 shares of the AgeX common stock it
then held (the “Distribution”).



Audit
Committee



We
have established an Audit Committee of the Board of Directors. The members of the Audit Committee are initially Annalisa Jenkins,
and Michael May, each of whom qualifies as being “independent” under Section 8.03(A) and 8.03(B) of the NYSE American
Company Guide and under Rule 10A-3 of the Exchange Act., John Mauldin also served as a member of the Audit Committee during 2019.
Annalisa Jenkins is the Chair of the Audit Committee. The purpose of the Audit Committee is to recommend the engagement of our
independent registered public accountants, to review their performance and the plan, scope, and results of the audit, and to review
and approve the fees we pay to our independent registered public accountants. The Audit Committee also will review our accounting
and financial reporting procedures and controls, and all transactions between us and our executive officers, directors, and stockholders
who beneficially own 5% or more of any class of our voting securities. We have adopted a written charter for our Audit Committee
which we have posted on our website at www.agexinc.com. The Board of Directors has also determined that Dr. Jenkins is
“financially sophisticated” within the meaning of the rules and regulations of the NYSE American and qualifies as
an “audit committee financial expert” as defined under applicable rules and regulations of the SEC and the NYSE American.



Code
of Ethics



We
have adopted a Code of Business Conduct and Ethics (“Code of Ethics”) that applies to our principal executive officers,
our principal financial officer and accounting officer, our other executive officers, and our directors. The purpose of the Code
of Ethics is to promote (i) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest
between personal and professional relationships; (ii) full, fair, accurate, timely, and understandable disclosure in reports and
documents that we file with or submit to the SEC and in our other public communications; (iii) compliance with applicable governmental
rules and regulations; (iv) prompt internal reporting of violations of the Code of Ethics to an appropriate person or persons
identified in the Code of Ethics; and (v) accountability for adherence to the Code of Ethics. A copy of our Code of Ethics has
been posted on our internet website and can be found at www.agex.com. We intend to disclose any future amendments to certain
provisions of our Code of Ethics, and any waivers of those provisions granted to our principal executive officers, principal financial
officer, principal accounting officer or controller or persons performing similar functions, by posting the information on our
website within four business days following the date of the amendment or waiver.



101







Executive
Officers



Our
executive officers are Michael D. West, Chief Executive Officer, Russell L. Skibsted, Chief Financial Officer, and Hal Sternberg,
Vice President of Research.



Russell
L. Skibsted,61, was appointed as our Chief Financial Officer during July 2017. Mr. Skibsted served as Chief Financial Officer
of Lineage (formerly BioTime, Inc.) from November 2015 to January 2019, and served as Chief Financial Officer of OncoCyte Corporation,
a former subsidiary of Lineage, from November 2015 until November 2017, and as Chief Financial Officer of Asterias Biotherapeutics,
Inc., a former subsidiary of Lineage, from March 2016 until November 2016. Mr. Skibsted served as Chief Financial Officer of Proove
Biosciences, Inc. from 2014 to November 2015. From 2013 to 2014 Mr. Skibsted was Managing Director and Chief Financial Officer
of RSL Ventures, where he provided financial consulting services to public and private companies in the life sciences sector.
Mr. Skibsted served as Senior Vice President, Chief Financial Officer and Secretary of Aeolus Pharmaceuticals, a publicly traded
biopharma company, from 2010 to 2013, and was Senior Vice President and Chief Business Officer of Spectrum Pharmaceuticals, a
publicly traded, biopharmaceutical company, from 2006 to 2009. Previously, from 2004 to 2006, Mr. Skibsted served as Chief Financial
Officer of Hana Biosciences, and from 2000 to 2004 he served as Chief Financial Officer and Portfolio Management Partner of Asset
Management Company, a venture capital firm. Mr. Skibsted holds a B.A. in Economics from Claremont McKenna College and an MBA from
the Stanford Graduate School of Business.



Nafees
N. Malik, MBChB, MPhil,42, was appointed as our Chief Operating Officer during October 2018. He was also appointed Head of
Cell and Gene Therapy at Juvenescence UK Ltd during October 2018. He founded and was managing director of Asklepian Consulting
Limited from June 2013 where he focused on the strategic and commercial analysis of cell and gene therapies and regenerative medicine.
Dr. Malik received his medical degree from the University of Liverpool and his Master of Philosophy degree in Bioscience Enterprise
from the University of Cambridge.



Hal
Sternberg, Ph.D.,66, was appointed Vice President of Research in August 2017. Prior to serving in that role, Dr. Sternberg
was Vice President of Research of Lineage for over 25 years and was one of Lineage co-founders. Prior to co-founding and joining
Lineage, Dr. Sternberg held various positions at the University of California at Berkeley from 1982 to 1988, where he supervised
a team of researchers studying Alzheimer’s Disease. Dr. Sternberg holds a M.S. in Chemistry and Ph.D. in Biochemistry from
the University of Maryland.



Delinquent
Section 16(a) Reports



Section
16(a) of Exchange Act, requires our directors and executive officers and persons who own more than ten percent (10%) of a registered
class of our equity securities (“Reporting Persons”) to file with the SEC initial reports of ownership and reports
of changes in ownership of our common stock and other AgeX equity securities. Officers, directors and greater than ten percent
beneficial owners are required by SEC regulations to furnish us with copies of all reports they file under Section 16(a).



To
our knowledge, based solely on our review of the copies of Forms, 3 and 4 and amendments thereto filed during the last fiscal
year, and Forms 5 and amendments thereto filed with respect to the last fiscal year, by the Reporting Persons, or written representation
from the Reporting Persons that no Form 5 was required, all Section 16(a) filing requirements applicable to our officers, directors,
and greater than ten percent beneficial owners were complied with during the fiscal year ended December 31, 2019, except that
a Form 3 was filed late by Michael H. May, a member of our Board of Directors, and a Form 4 was filed late by John F. Mauldin,
who was then a member of our Board of Directors.



102







Item
11. Executive Compensation



Emerging
Growth Company and Smaller Reporting Company



We
are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and a “smaller
reporting company” as defined in the rules and regulations of the SEC. As an emerging growth company and as a smaller reporting
company we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable, in general,
to public companies that are not emerging growth companies or smaller reporting companies. Accordingly, this Report includes reduced
disclosure about our executive compensation arrangements.



The
following table shows certain information relating to the compensation of our Chief Executive Officer and the two highest paid
individuals who were serving as executive officers at year end and in each case whose total compensation exceeded $100,000 during
2019. We refer to these individuals as our “Named Executive Officers.



Summary
Compensation Table



The
following table sets forth the compensation awarded to, earned by, or paid to our Named Executive Officers in respect of their
service to the Company for the fiscal years ended December 31, 2019 and 2018.



|Name and principal position |  | Year |      |  | Salary |   |         | Bonus |  |   | Option Awards(1) |     |  | All Other Compensation(2) |           |     | Total |  
|--------------------------- |  | ---- | ---- |  | ------ | - | ------- | ----- |  | - | ---------------- | --- |  | ------------------------- | --------- | --- | ----- | -
|Michael D. West             |  |      | 2019 |  |        | $ | 543,054 |       |  | $ | -                |     |  | $                         | 484,647   | (3) |       | $
|Chief Executive Officer     |  |      | 2018 |  |        |   | 575,433 | (4)   |  |   | 39,000           | (5) |  |                           | 1,025,497 |     |       |  
|                            |  |      |      |  |        |   |         |       |  |   |                  |     |  |                           |           |     |       |  
|Hal Sternberg               |  |      | 2019 |  |        |   | 250,374 |       |  |   | 25,000           | (6) |  |                           | 40,597    |     |       |  
|Vice President, Research    |  |      | 2018 |  |        |   | 242,665 |       |  |   | 30,000           | (6) |  |                           | 20,058    |     |       |  
|                            |  |      |      |  |        |   |         |       |  |   |                  |     |  |                           |           |     |       |  
|Nafees Malik(7)             |  |      | 2019 |  |        |   | 279,540 | (8)   |  |   | 50,000           | (8) |  |                           | 189,453   |     |       |  
|Chief Operating Officer     |  |      | 2018 |  |        |   | 58,650  | (8)   |  |   | -                |     |  |                           | 723,590   |     |       |  



|(1) | Amounts
        shown in this column do not reflect dollar amounts actually received by our Named Executive Officers. Instead, these amounts
        reflect the aggregate grant date fair value of each stock option granted, computed in accordance with the provisions of
        FASB ASC Topic 718, Compensation-Stock Compensation. We used the Black-Scholes Pricing Model to compute option
        fair values based on applicable exercise and stock prices, an expected option term, volatility assumptions, and risk-free
        interest rates. Our Named Executive Officers will only realize compensation upon exercise of the stock options and to
        the extent the trading price of our common stock is greater than the exercise price of such stock options at the time
        of exercise.
        
        One
        fourth of the options will vest upon completion of 12 full months of continuous employment measured from the date of grant,
        and the balance of the options vest in 36 equal monthly installments commencing on the first anniversary of the date of
        grant, based on the completion of each month of continuous service as an employee or director of AgeX or its subsidiaries.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(2) | Amounts
    represent 401(k) matching contributions by us for the periods presented unless described otherwise.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(3) | Dr.
    West’s equity awards in 2019 reflect the fair value of 100,000 stock options and 50,000 restricted stock units.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(4) | Pursuant
    to the Shared Facilities Agreement, Dr. West’s salary for his services as Chief Executive Officer of AgeX for the period
    January 1 through September 17, 2018 was paid by Lineage, with 80% of such amount allocated to AgeX and reimbursed to Lineage.
    Since October 15, 2018 we have compensated Dr. West directly for his services as Chief Executive Officer under the terms of
    his employment agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(5) | Pursuant
    to the Shared Facilities Agreement, Dr. West’s pro-rated bonus for his services as Chief Executive Officer of AgeX from
    January 1 through September 17, 2018 was paid by Lineage, with 80% of such amount allocated to AgeX and reimbursed to Lineage.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(6) | Amounts
    represent the discretionary annual cash bonus paid to Dr. Sternberg during the periods presented.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(7) | Dr.
    Malik has served as our Chief Operating Officer as a consultant through Juvenescence since October 2018. Dr. Malik is an employee
    of Juvenescence and has been devoting a majority of his time to AgeX’s operations for which AgeX reimburses Juvenescence
    for his services.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(8) | Amounts
    represent consulting fees and bonus payments made to Juvenescence for Dr. Malik.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      



103









Employment
Agreements and Change of Control Provisions



Michael
D. West



We
have entered into an employment agreement with our Chief Executive Officer Michael D. West, effective October 18, 2018 (the “West
Employment Agreement”). Pursuant to the West Employment Agreement, Dr. West’s annual base salary was initially set
at $525,000 and was increased by our Board of Directors to $544,687, a 3.75% increase, effective March 11, 2019. Under the West
Employment Agreement, Dr. West is eligible to earn an annual incentive cash bonus with a target of no less than 50% of annual
base salary. Actual bonus amounts will be based on Dr. West’s attainment of individual performance goals at target levels
set by the Board of Directors for the applicable calendar year. If such performance goals for the applicable year are fully achieved,
the Board of Directors may approve a bonus amount exceeding the target bonus level.



Under
the West Employment Agreement, Dr. West was initially granted options to purchase 500,000 shares of our common stock with an exercise
price of $3.00 per share, with one fourth of the options vesting following 12 full months of continuous service as an employee
of AgeX, measured from the date of grant, and the balance vesting in 36 equal monthly installments commencing on the first anniversary
of the date of grant, based upon the completion of each month of continuous service as an employee of AgeX. Such options expire
on the earliest of (1) 10 years from the date of grant, (2) three months after Dr. West ceases to provide continuous service to
us (other than due to death or disability) or (3) one year after Dr. West ceases to provide continuous service to us due to death
or disability. Dr. West received a discretionary grant of additional stock options and RSUs during 2019.



Hal
Sternberg



We
have entered into an employment agreement with our Vice President of Research Hal Sternberg (the “Sternberg Employment Agreement”).
Dr. Sternberg’s initial annual base salary from January 1 through March 4, 2018 was $235,000, and was increased by our Board
of Directors during March 2018 to $242,050 and again during March 2019 to $251,127. Dr. Sternberg may receive bonuses at the discretion
of our Board of Directors or Compensation Commitee based on Dr. Sternberg’s performance and achievement of goals or milestone
set by the Board of Directors or Compensation Committee from time to time.



Severance
and Change of Control Arrangements for Dr. West and Dr. Sternberg



Pursuant
to the West Employment Agreement and Sternberg Employment Agreement, each officer is entitled to severance benefits under certain
circumstances.



If
we terminate Dr. West’s employment without “cause” or he resigns for “good reason” at any time,
he will be entitled to (1) 12 months base salary, (2) all accrued but unpaid salary earned prior to or as of the date of termination
or resignation, (3) full payment of Dr. West’s target bonus due for such year and (4) for a period of six months, all benefits
under any health insurance plan of AgeX. In addition, if we terminate Dr. West’s employment without “cause”
or he resigns for “good reason,” (1) all of Dr. West’s outstanding equity awards that would otherwise have vested
during the 12 months following termination or resignation will become fully vested and exercisable immediately and (2) with respect
to any outstanding vested but unexercised options, the exercise period following termination or resignation will be extended to
the earlier of the (A) 12 months after termination or (B) the natural expiration date of the applicable option. If we terminate
Dr. West’s employment without “cause,” or he resigns for “good reason,” following a “Change
of Control,” (1) Dr. West will be entitled to all of the benefits and payments that he would have been entitled to if his
employment had been otherwise terminated without “cause” or if he resigned for “good reason,” as set forth
above, and (2) all of Dr. West’s unvested options and restricted stock units, if any, will become fully vested and exercisable
immediately. The severance compensation may be paid in a lump sum or, at our election, in installments consistent with the payment
of Dr. West’s salary while employed by us. In order to receive the severance benefits, Dr. West must execute a general release
of all claims against us.



104







If
we terminate Dr. Sternberg’s employment without “cause” within 12 months of employment, he will be entitled
to three months base salary. If we terminate Dr. Sternberg’s employment without “cause” after 12 months of employment,
he will be entitled to six months base salary. If we terminate Dr. Sternberg’s employment following a “Change of Control”
within 12 months of employment, he will be entitled to three months based salary and accelerated vesting of 50% of any then unvested
stock options granted. If we terminate Dr. Sternberg’s employment following a “Change in Control” after 12 months
of employment, he will receive six months base salary and vesting of 100% of any then unvested stock options granted. If Dr. Sternberg’s
employment is terminated for “cause,” due to death or disability or from Dr. Sternberg’s resignation, Dr. Sternberg
will be entitled to all accrued but unpaid salary earned prior to or as of the date of termination or resignation. The severance
compensation may be paid in a lump sum or, at our election, in installments consistent with the payment of Dr. Sternberg’s
salary while employed by us. In order to receive the severance benefits, Dr. Sternberg must execute a general release of all claims
against us and must return all our property in his possession.



“Change
of Control,” as defined in each of the West Employment Agreement and Sternberg Employment Agreement, means any one of the
following:



| | ● | the
    acquisition of our voting securities by a person or an Affiliated Group entitling the holder to elect a majority of our directors,
    except that an increase in the amount of voting securities held by a person or Affiliated Group who on the date of the Employment
    Agreement beneficially owned more than 10% of our voting securities will not be a Change of Control. In addition, an acquisition
    of voting securities by one or more persons acting as an underwriter in connection with a sale or distribution of voting securities
    will not constitute a Change of Control;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ● | the
    sale of all or substantially all of our assets; or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ● | a
    merger or consolidation in which we merge or consolidate into another corporation or entity in which our shareholders immediately
    before the merger or consolidation do not own, in the aggregate, voting securities of the surviving corporation or entity
    entitling them, in the aggregate (and without regard to whether they constitute an Affiliated Group) to elect a majority of
    the directors or persons holding similar powers of the surviving corporation or entity.                                                                                                         



A
Change of Control will not occur if all of the persons acquiring our voting securities or assets, or merging or consolidating
with us, are one or more of our direct or indirect subsidiaries or parent corporations. “Affiliated Group” means (A)
a person and one or more other persons in control of, controlled by, or under common control with, such person; and (B) two or
more persons who, by written agreement among them, act in concert to acquire voting securities entitling them to elect a majority
of our directors.



105







Equity
Awards Outstanding At December 31, 2019



The
following table summarizes certain information concerning outstanding stock options granted by us under our 2017 Equity Incentive
Plan (the “Incentive Plan”) and the stock option plans of certain of our subsidiaries and held by our Named Executive
Officers as of December 31, 2019.



|AgeX
    and Subsidiary Option and Stock Awards | 
|----------------------------------------------- | 
|Name                                            | 
|Michael D.
    West                             | 
|                                                | 
|                                                | 
|                                                | 
|                                                | 
|                                                | 
|                                                | 
|                                                | 
|                                                | 
|Hal Sternberg                                   | 
|                                                | 
|                                                | 
|Nafees Malik                                    | 
|                                                | 







| | (1) | One fourth of the options will vest upon completion of 12 full months of continuous service as an employee of AgeX or any subsidiary, measured from the date of grants March 11, 2019 and the balance of the options will vest in 36 equal monthly installments commencing on the first anniversary of the date of grant, based upon the completion of each month of continuous service as an employee of AgeX or any subsidiary.                                                                                                                                                                                             
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (2) | One fourth of the options vested on October 17, 2019, and the balance of the options will vest in 36 equal monthly installments commencing on the first anniversary of the date of grant, based upon the completion of each month of continuous service as an employee of AgeX or any subsidiary.                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (3) | One third of the options vested on August 17, 2018 and the balance of the options will vest in 24 equal monthly installments thereafter, based upon the completion of each month of continuous service as an employee or director of AgeX.                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (4) | The RSUs were granted under AgeX’s 2017 Equity Incentive Plan on March 11, 2019, at which time the closing price on the NYSE American was $4.28 per share. None of the RSUs vested during 2019. The RSUs are subject to time-based vesting over a 4 year period with the first 25% vesting on the first anniversary date and the remainder vesting in equal quarterly installment over the remaining 3 years but must be reported here at the aggregate grant date fair value, as if the RSUs were fully vested and exercisable at the date of grant. Each RSU represents a contingent right to receive one AgeX common stock.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (5) | One fourth of the options will vest vested on March 14, 2019, and the balance of the options will vest in 36 equal monthly installments commencing on the first anniversary of the date of grant, based upon the completion of each month of continuous service as an employee of AgeX or a subsidiary.                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (6) | One fourth of the options vested on November 15, 2018, and the balance of the options will vest in 36 equal monthly installments thereafter, based upon the completion of each month of continuous service as an employee or director of AgeX.                                                                                                                                                                                                                                                                                                                                                                                







106









Risk
Considerations and Recoupment Policies



The
Compensation Committee of our Board of Directors considers, in establishing and reviewing the executive compensation program,
whether the program encourages unnecessary or excessive risk taking. Most of our executive compensation arrangements include a
fixed salary that provides a steady income so that executives do not feel pressured to focus exclusively on stock price performance
or short term financial targets to the detriment of our long-term operational and strategic objectives. We supplement fixed salaries
with discretionary bonus awards based on the executive’s performance as well as the performance of AgeX. The stock options
that we have granted to our executive officers under the Incentive Plan vest over four to five years, assuring that the executives
take a long-term perspective in viewing their equity ownership. Our compensation arrangement with our Chief Financial Officer
provides a weekly fee of $1,500 plus an hourly fee for services in excess of one day per week. We have not granted stock options
to our Chief Financial Officer.



Because
we have not adopted compensation plans, or made incentive awards, based on quantified financial performance measures, we have
not adopted specific policies regarding the adjustment or recovery of awards or payments if the relevant performance measures
are restated or otherwise adjusted in a manner that would reduce the size of an award or payment. We may adopt such policies,
however, if we adopt incentive compensation plans or grant incentive bonuses based on financial performance measures or if we
are required to do by the rules of any national securities exchange or interdealer quotation system on which our common stock
or other equity securities are listed.



Equity
Incentive Plan



The
following summary of the Incentive Plan is a summary only and does not purport to include all of the terms of the Incentive Plan,
and is qualified by the full terms of the Incentive Plan. The Incentive Plan permits us to grant awards (“Awards”)
consisting of stock options, the grant or sale of restricted stock (“Restricted Stock”), the grant of stock appreciation
rights (“SARs”), and the grant of hypothetical units issued with reference to our common stock (“Restricted
Stock Units”), for up to 4,000,000 shares of our common stock. Awards may be granted under the Incentive Plan to employees,
directors, and consultants of AgeX and our subsidiaries, including also subsidiaries that we may form or acquire in the future.
The Incentive Plan will be administered by our Board of Directors (the “Board”) or by a committee authorized by our
Board (“Committee”), who will make all determinations with regard to the grant and terms of Awards, subject to the
terms of the Incentive Plan.



Awards
may vest and thereby become exercisable or have restrictions on forfeiture lapse on the date of grant or in periodic installments
or upon the attainment of performance goals, or upon the occurrence of specified events as determined by the Board or the Committee.
The Board or Committee, in its discretion, may accelerate the vesting of an Award after the date of grant.



No
person shall be granted, during any one year period, options to purchase, or SARs with respect to, more than 1,000,000 shares
in the aggregate, or any Awards of Restricted Stock or Restricted Stock Units with respect to more than 500,000 shares in the
aggregate. If an Award is to be settled in cash, the number of shares on which the Award is based shall not count toward the individual
share limit.



No
Awards may be granted under the Incentive Plan more than ten years after the date upon which the Incentive Plan was adopted by
the Board, and no options or SARS granted under the Incentive Plan may be exercised after the expiration of ten years from the
date of grant.



Stock
Options



Options
granted under the Incentive Plan may be either “incentive stock options” within the meaning of Section 422(b) of the
Internal Revenue Code of 1986, as amended, or the Code, or “non-qualified” stock options that do not qualify incentive
stock options. Incentive stock options may be granted only to employees of AgeX and its subsidiaries. The exercise price of stock
options granted under the Incentive Plan must be equal to the fair market of our common stock on the date the option is granted.
In the case of an optionee who, at the time of grant, owns more than 10% of the combined voting power of all classes of our stock,
the exercise price of any incentive stock option must be at least 110% of the fair market value of our common stock on the grant
date, and the term of the option may be no longer than five years. The aggregate fair market value of common stock (determined
as of the grant date of the option) with respect to which incentive stock options become exercisable for the first time by an
optionee in any calendar year may not exceed $100,000.



The
exercise price of an option may be payable in cash or in shares of our common stock having a fair market value equal to the exercise
price, or in a combination of cash and common stock, or other legal consideration for the issuance of stock as the Board or Committee
may approve.



107









Generally,
options will be exercisable only while the optionee remains an employee, director or consultant, or during a specific period thereafter
as approved by the Board or Committee, which will generally be three months, but in the case of the termination of an employee,
director, or consultant’s services due to death or disability, the period for exercising a vested option shall be extended
to the earlier of 12 months after termination or the expiration date of the option.



The
number of shares covered by the Incentive Plan, and the number of shares and the exercise price per share of each outstanding
option, shall be proportionately adjusted for any increase or decrease in the number of issued and outstanding shares of common
stock resulting from a subdivision or consolidation of shares or the payment of a stock dividend, or any other increase or decrease
in the number of issued and outstanding shares of common stock effected without receipt of consideration by us.



Restricted
Stock and Restricted Stock Units



In
lieu of granting options, we may enter into purchase agreements with employees under which they may purchase or otherwise acquire
Restricted Stock or Restricted Stock Units subject to such vesting, transfer, and repurchase terms and restrictions as the Board
or Committee may determine. We may permit employees or consultants who purchase Restricted Stock to pay for their shares by delivering
a promissory note or an installment payment agreement that may be secured by a pledge of their Restricted Stock. We may also issue
Restricted Stock for services actually performed by the recipient prior to the issuance of the Restricted Stock.



The
Board or Committee may require that Restricted Stock shall be held by us or in escrow pending the expiration or release of the
applicable restrictions. Unvested Restricted Stock for which we have not received payment may be forfeited to us, or we may have
the right to repurchase unvested shares upon the occurrence of specified events, such as termination of employment.



Subject
to the restrictions set by the Board or Committee, a recipient of Restricted Stock generally shall have the rights and privileges
of a stockholder, including the right to vote the Restricted Stock and the right to receive dividends; provided that, any cash
dividends and stock dividends with respect to the Restricted Stock shall be withheld by us for the recipient’s account,
and interest may be credited on the amount of the cash dividends withheld at a rate and subject to such terms as determined by
the Board or Committee. The cash dividends or stock dividends so withheld and attributable to any particular share of Restricted
Stock (and earnings thereon, if applicable) shall be distributed to the recipient in cash or, at the discretion of the Board or
Committee, in common stock having a fair market value equal to the amount of such dividends, if applicable, upon the release of
restrictions on the Restricted Stock and, if the Restricted Stock is forfeited, the recipient shall have no right to the dividends.



The
terms and conditions of a grant of Restricted Stock Units shall be determined by the Board or Committee. No common stock shall
be issued at the time a Restricted Stock Unit is granted, and we will not be required to set aside a fund for the payment of any
such award. A recipient of Restricted Stock Units shall have no voting rights with respect to the Restricted Stock Units. Upon
the expiration of the restrictions applicable to a Restricted Stock Unit, we will either issue to the recipient, without charge,
one share of common stock per Restricted Stock Unit or cash in an amount equal to the fair market value of one share of common
stock.



At
the discretion of the Board or Committee, each Restricted Stock Unit (representing one share of common stock) may be credited
with cash and stock dividends paid in respect of one share (“Dividend Equivalents”). Dividend Equivalents shall be
withheld by us for the recipient’s account, and interest may be credited on the amount of cash Dividend Equivalents withheld
at a rate and subject to such terms as determined by the Board or Committee. Dividend Equivalents credited to a recipient’s
account and attributable to any particular Restricted Stock Unit (and earnings thereon, if applicable) shall be distributed in
cash or, at the discretion of the Board or Committee, in common stock having a fair market value equal to the amount of the Dividend
Equivalents and earnings, if applicable, upon settlement of the Restricted Stock Unit. If a Restricted Stock Unit is forfeited,
the recipient shall have no right to the related Dividend Equivalents.



SARs



An
SAR is the right to receive, upon exercise, an amount payable in cash or shares or a combination of shares and cash, as determined
by the Board or Committee, equal to the number of shares subject to the SAR that is being exercised, multiplied by the excess
of (a) the fair market value of a share of common stock on the date the SAR is exercised, over (b) the exercise price specified
in the SAR Award agreement. SARs may be granted either as free standing SARs or in tandem with options, and with such terms and
conditions as the Board or Committee may determine. No SAR may be exercised later than 10 years after the date of grant.



The
exercise price of an SAR will be determined by the Board or Committee, but shall not be less than 100% of the fair market value
of one share of common stock on the date of grant. An SAR granted in conjunction with an option shall have the same exercise price
as the related option, shall be transferable only upon the same terms and conditions as the related option, and shall be exercisable
only to the same extent as the related option; provided, however, that the SAR by its terms shall be exercisable only when the
fair market value per share exceeds the exercise price per share of the SAR or related option. Upon any exercise of an SAR granted
in tandem with an option, the number of shares for which the related option shall be exercisable shall be reduced by the number
of shares for which the SAR has been exercised. The number of shares for which an SAR issued in tandem with an option shall be
exercisable shall be reduced by the number of shares for which the related option has been exercised.



108







Withholding



To
the extent provided by the terms of an Award Agreement or as may be approved by the AgeX Board or Committee, an optionee or recipient
of a Restricted Stock or Restricted Stock Unit Award or SAR may satisfy any federal, state or local tax withholding obligation
relating to the Award by any of the following means (in addition to our right to withhold from any compensation paid to the Award
recipient) or by a combination of such means: (a) tendering a cash payment; (b) authorizing us to withhold shares of common stock
from the shares otherwise issuable to the recipient as a result of the exercise or acquisition of shares under the Award, provided,
however, that no shares are withheld with a value exceeding the minimum amount of tax required to be withheld by law; or (c) delivering
to us previously owned and unencumbered shares of our common stock.



Changes
in Shares Under the Plan



In
the event of changes in the outstanding common stock or in our capital structure by reason of any stock or extraordinary cash
dividend, stock split, reverse stock split, an extraordinary corporate transaction such as any recapitalization, reorganization,
merger, consolidation, combination, exchange, or other relevant change in capitalization, the terms of Awards granted under the
Incentive Plan, and the maximum number of shares subject to all Awards under the Incentive Plan or with respect to which any one
person may be granted Awards during any one year period, will be equitably adjusted or substituted, as to the number, price or
kind of shares or other consideration subject to the Awards to the extent necessary to preserve the economic intent of the Awards.
In making such adjustments, the Board or Committee shall generally ensure that the adjustments will not constitute a modification,
extension or renewal of an incentive stock option within the meaning of Section 424(h)(3) of the Code, and in the case of non-qualified
options, ensure that any adjustments will not constitute a modification of such non-qualified options within the meaning of Section
409A of the Code, and that adjustments or substitutions of Awards intended to qualify as “performance-based compensation”
under Section 162(m) of the Code will not cause us to be denied a tax deduction on account of Section 162(m) of the Code.



Restrictions
on Transfers of Options



Under
the Plan, stock options may be transferred to a limited class of defined “Permitted Transferees,” such as the option
holder’s immediate family members, family trusts and family controlled companies. In addition, options may be transferred
to a securities broker/dealer to exercise the options on the option holder’s behalf as a means of the option holder obtaining
the funds needed to exercise the option, provided that the fair market value of the shares being acquired exceeded the exercise
price of the option at the close of the market on the trading day preceding the exercise date.



Repricing
Prohibition



The
Plan prohibits any modification of the purchase price or exercise price of an outstanding option or other Award if the change
would effect a “repricing’ without stockholder approval. As defined in the Plan, “repricing” means a reduction
in the exercise price of an outstanding option or SAR or cancellation of an “underwater” or “out-of-the-money”
Award in exchange for other Awards or cash. An “underwater” or “out-of-the-money” Award is defined to
mean an Award for which the exercise price is less than the “fair market value” of our common stock. The fair market
value will generally be determined by the AgeX Board, but if our common stock becomes publicly traded, the fair market value will
be the closing price of the common stock on a national securities exchange or inter-dealer quotation system on which the common
stock is traded.



Limitation
on Share Recycling



Shares
subject to an Award shall not again be made available for issuance or delivery under the Incentive Plan if those shares are (a)
shares tendered in payment of an option, (b) shares delivered or withheld by us to satisfy any tax withholding obligation, (c)
shares covered by a stock-settled SAR or other Award that were not issued upon the settlement of the Award, or (d) shares repurchased
by us using the proceeds from option exercises. Only shares subject to an Award that is cancelled or forfeited or expires prior
to exercise or realization may be regranted under the Incentive Plan.



The
foregoing description of the Incentive Plan is qualified in its entirety by reference to the Incentive Plan, a copy of which is
filed as an Exhibit to our Registration Statement on Form 10 and is incorporated herein by reference.



109







Other
Compensation Plans



We
do not have any pension plans, defined benefit plans, or non-qualified deferred compensation plans. We may make contributions
to 401(k) plan accounts for participating executive officers and other employees.



Compensation
of Directors



Directors
and members of committees of the Board of Directors who are our employees are entitled to receive compensation as employees but
are not compensated for serving as directors or attending meetings of the Board or committees of the Board. All directors are
entitled to reimbursements for their out-of-pocket expenses incurred in attending meetings of the Board or committees of the Board.



The
following table summarizes certain information concerning the compensation paid during the past fiscal year to each of the persons
who served as directors during the year ended December 31, 2019 and who were not our employees on the date the compensation was
earned.



|Name              |  | Fees Earned 
Or Paid in Cash |        |  | Option  Awards(1) |   |         | All Other
                                                                                Compensation |  |   | Total | 
|----------------- |  | ---------------------------- | ------ |  | ----------------- | - | ------- | ------------------------------------------------------------------------------------------------------ |  | - | ----- | 
|Gregory Bailey    |  | $                            | 60,000 |  |                   | $ | 270,647 |                                                                                                        |  | $ | -     | 
|Annalisa Jenkins  |  | $                            | 40,027 |  |                   | $ | 270,647 |                                                                                                        |  | $ | -     | 
|John Mauldin(2)   |  | $                            | 40,000 |  |                   | $ | 175,920 |                                                                                                        |  | $ | -     | 
|Michael May       |  | $                            | 14,288 |  |                   | $ | 22,223  |                                                                                                        |  | $ | -     | 
|Michael Mulroy(3) |  | $                            | 26,075 |  |                   | $ | 175,920 |                                                                                                        |  | $ | -     | 



| | (1) | Those
                                         of our directors who were serving on our Board of Directors on March 11, 2019 and who
                                         were not our salaried employees each received an annual award of stock options on that
                                         date entitling them to purchase common stock at a fixed price as partial compensation
                                         for serving on our Board. Dr. Bailey and Dr. Jenkins, who had not received a grant
                                         of options upon joining the Board the previous year, each received 100,000 stock options
                                         while Mr. Mauldin and Mr. Mulroy each received 65,000 stock options. Those options will
                                         vest and become exercisable in equal quarterly installments over a one-year period from
                                         the date of grant.
        
        Dr.
        May received 26,534 stock options upon his appointment as a member of our Board of Directors. on August 5, 2019. The options
        vested and became exercisable in two equal quarterly installments on September 30 and December 31, 2019.
        
        The
        dollar amounts in this column represent the aggregate fair market value of such awards determined based on the price of
        our common stock on the grant date in accordance with ASC Topic 718, Compensation-Stock Compensation (ASC Topic 718).
        See Note 13 Stock-Based Awards to our Consolidated Financial Statements included in our Annual Report on Form 10-K for
        the year ended December 31, 2019 for details as to the assumptions used to determine the fair value of the awards.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (2) | Mr.
    Mauldin resigned from our Board of Directors on March 12, 2020. On that date, 100,000 options were vested and will expire
    if not exercised within 90 days from his resignation date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (3) | Mr.
    Mulroy resigned from our Board of Directors on July 30, 2019. On that date, 32,500 unvested options were immediately forfeited
    and the remaining 67,500 vested options expired on October 28, 2019, 90 days from the resignation date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     



110







Item
12. Security Ownership of Certain Beneficial Owners and Management, and Related Stockholder Matters



Security
Ownership of Certain Beneficial Owners



The
following table sets forth information concerning beneficial ownership of our common stock, as of March 25, 2020 by each
stockholder known by us to be the beneficial owner of 5% or more of our outstanding shares of common stock. Information concerning
certain beneficial owners of more than 5% of the common shares is based upon information disclosed by such owners in their reports
on Schedule 13D or Schedule 13G. Except as otherwise noted in the notes to the table below, each person or entity identified in
the table below has sole voting and investment power with respect to the securities owned by such person or entity. Beneficial
ownership is determined in accordance with the rules of the SEC.



|Name and Address of Beneficial Owner                                                                                                                                                                            |  | Number of Shares |               |  | Percent of Total | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ------------- |  | ---------------- | 
|                                                                                                                                                                                                                |  |                  |               |  |                  | 
|Juvenescence Limited 4th Floor, Viking House Nelson Street Isle of Man IM1 2A                                                                                                                                   |  |                  | 16,569,000(1) |  |                  | 
|                                                                                                                                                                                                                |  |                  |               |  |                  | 
|Broadwood Partners, L.P. Broadwood Capital, Inc. Neal Bradsher 724 Fifth Avenue, 9th Floor New York, NY 10019                                                                                                   |  |                  | 3,003,446(2)  |  |                  | 
|                                                                                                                                                                                                                |  |                  |               |  |                  | 
|IBS Capital LLC The IBS Turnaround Fund, L.P. The IBS Turnaround Fund (QP) (A Limited Partnership) The IBS Opportunity Fund, Ltd. David A. Taft One International Place, Suite 3120 Boston, Massachusetts 02110 |  |                  | 2,711,746(3)  |  |                  | 



| | (1) | Includes
    warrants to purchase 150,000 shares of AgeX common stock. These warrants are exercisable at $2.60 per share and expire on
    August 12, 2022.                                                                                                                                                                                                                                                                                                         
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (2) | Includes
    2,997,156 shares owned by Broadwood Partners, L.P. and 6,290 shares owned by Neal Bradsher. Broadwood Capital, Inc. is the
    general partner of Broadwood Partners, L.P. Neal Bradsher is the President of Broadwood Capital, Inc. Mr. Bradsher and Broadwood
    Capital, Inc. have disclaimed beneficial ownership of the shares owned by Broadwood Partners, L.P. except to the extent of
    their respective pecuniary interests in such shares.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (3) | Includes
    830,850 shares owned by The IBS Turnaround Fund, L.P., 1,701,106 shares owned by The IBS Turnaround Fund (QP) (A Limited Partnership),
    and 179,790 shares owned by The IBS Opportunity Fund, Ltd., all of which shares are also deemed to be beneficially owned by
    IBS Capital LLC as the manager of the owners and by David Taft as President and majority owner of the manager.                                                              



111







Security
Ownership of Management



The
following table sets forth information as of March 25, 2020 concerning beneficial ownership of common shares known by us
by each member of the Board of Directors, all Named Executive Officers, and all executive officers and directors as a group. Except
as otherwise noted in the notes to the table below, each person or entity identified in the table below has sole voting and investment
power with respect to the securities owned by such person or entity. Beneficial ownership is determined in accordance with the
rules of the SEC.



|Name                                                       |  | Number of Shares |           |  | Percent | 
|---------------------------------------------------------- |  | ---------------- | --------- |  | ------- | 
|Michael D. West(1)                                         |  |                  | 856,548   |  |         | 
|Russell L. Skibsted                                        |  |                  | 935       |  |         | 
|Nafees Malik(2)                                            |  |                  | 158,958   |  |         | 
|Hal Sternberg(3)                                           |  |                  | 34,819    |  |         | 
|Gregory Bailey(4)                                          |  |                  | 100,000   |  |         | 
|Annalisa Jenkins(4)                                        |  |                  | 100,000   |  |         | 
|Michael H. May(5)                                          |  |                  | 26,534    |  |         | 
|Directors and Executive Officers as a Group (7 persons)(6) |  |                  | 1,277,794 |  |         | 



|* | Less
    than 1%
|- | ----------------



| | (1) | Includes
    832,082 shares that may be acquired upon the exercise of certain stock options that are presently exercisable or that will
    become exercisable within 60 days. Excludes 427,918 shares that may be acquired upon the exercise of certain stock options
    that are not presently exercisable and that will not become exercisable within 60 days, and 37,500 Restricted Stock Units
    that are not presently vested and will not vest within 60 days.              
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (2) | Excludes
    261,042 shares that may be acquired upon the exercise of certain stock options that are not presently exercisable and
    that will not become exercisable within 60 days.                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (3) | Includes
    34,686 shares of common stock that may be acquired upon the exercise of certain stock options that are presently exercisable
    or that will become exercisable within 60 days. Excludes 30,314 shares that may be acquired upon the exercise of certain stock
    options that are not presently exercisable and that will not become exercisable within 60 days.                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (4) | Includes
    100,000 shares that may be acquired upon the exercise of certain stock options that are presently exercisable or that will
    become exercisable within 60 days.                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (5) | Includes
    26,534 shares that may be acquired upon the exercise of certain stock options that are presently exercisable or that will
    become exercisable within 60 days.                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (6) | Includes
    1,252,260 shares that may be acquired upon the exercise of certain stock options and warrants that are presently exercisable
    or that will become exercisable within 60 days. Excludes 719,274 shares that may be acquired upon the exercise of certain
    stock options that are not presently exercisable and that will not become exercisable within 60 days and 37,500 Restricted
    Stock Units that are not presently vested and will not vest within 60 days.



112







Item
13. Certain Relationships and Related Transactions, and Director Independence



Agreements
with Lineage and its Subsidiaries



Asset
Contribution Agreement



On
August 17, 2017, we entered into an Asset Contribution and Separation Agreement (the “Asset Contribution Agreement”)
with our former parent company Lineage pursuant to which Lineage contributed certain assets and cash to us in exchange for 28,800,000
shares of our common stock. Concurrently with the acquisition of assets from Lineage, we sold 4,950,000 shares of common stock
for $10.0 million in cash primarily to investors other than Lineage, which included 600,000 shares sold to Alfred D. Kingsley,
the Chairman of Lineage’s board of directors and our former Executive Chairman, 125,000 shares sold to John Mauldin who
later became a member of our Board of Directors, and 16,000 shares sold to Lineage at the same price per share paid by other investors.
At the close of the financing, Lineage owned 85.4% of our issued and outstanding shares of common stock.



Certain
License and Sublicense Agreements



Concurrently
with the contribution of assets to us by Lineage under the Asset Contribution Agreement, we entered into a License Agreement with
Lineage pursuant to which Lineage has licensed to us, 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 Lineage fields of orthopedic, ophthalmic, and medical
aesthetic uses (the “Lineage Exclusive Field”). In addition, Lineage retains an option right, on terms to be negotiated,
to license iTR patents in research, development, manufacturing and commercialization of treatments based on iTR in the Lineage
Exclusive Field. The licensed patents and know-how relate generally to (a) PureStem®human embryonic progenitor
cell lines, and (b) telomere length and DNA quality control analysis in pluripotent stem cells. We also received an option to
license certain Lineage retained rights outside of orthopedic indications unless a license grant would compete with a Lineage
program or products in the Lineage Exclusive Field.



The
License Agreement contains customary provisions pertaining to patent maintenance, enforcement, and defense and related cost allocations,
insurance, indemnification, and termination of the license in the event of a breach or default by a party, or the bankruptcy or
other insolvency event with respect to a party.



Additional
License and Sublicense Agreements



Lineage
and certain Lineage subsidiaries also entered into agreements pursuant to which they have licensed or sublicensed to us, on a
non-exclusive, world-wide, royalty bearing basis, certain additional patents and patent rights and know-how relating to HyStem®hydrogel technology, human embryonic progenitor cell technology, and human pluripotent stem cell lines and technology
for use outside the Lineage Exclusive Fields, or in the case of certain sublicense rights, fields previously licensed to third
parties.



HyStem®Patent License and Sublicense



Lineage
has granted to us a sublicense of certain patents licensed to Lineage by the University of Utah Research Foundation (the “Utah
Sublicense”), and has granted to us a direct license of certain patents held by Lineage (the “HyStem License”),
related to HyStem® hydrogel technology for use outside of the Lineage Exclusive Field for products that
include cells and that are covered by certain other patents contributed, licensed, or sublicensed to us by Lineage. We may only
develop, sell, and otherwise commercialize a product under the Utah Sublicense and HyStem License if we spend at least a low seven
figure amount on research with respect to the product. Lineage will agree to provide us with a reasonable amount of the hydrogel
product for the purpose of our research for which we will pay Lineage’s cost of manufacturing and supplying the hydrogel.



The
Utah Sublicense and HyStem License will expire upon the latest expiration date of a sublicensed or licensed patent, unless terminated
earlier pursuant to the respective agreements. We will pay Lineage a royalty, in an amount not exceeding 10 percent, on “net
sales” as defined in the Utah Sublicense and HyStem License. Commencing June 30, 2019, and for each 12-month period thereafter,
we will pay Lineage a minimum royalty in the low five figures regardless of the actual amount of net sales for the applicable
period.



113







Sublicense
of Certain Progenitor Patents



Lineage
has granted to us a sublicense of certain patents licensed to Lineage that pertain to the derivation of human embryonic progenitor
cell lines. The sublicense will permit us to use the sublicensed patents for the treatment, palliation, diagnosis, or prevention
of any disease, disorder or health condition outside of the Lineage Exclusive Field. The sublicense expires on the later of July
10, 2028 or the latest expiration date of a sublicensed patent, unless terminated earlier pursuant to the terms of the sublicense.



We
will pay Lineage a royalty on “net sales,” as defined in the sublicense agreement, until the royalty payments to Lineage’s
licensor by Lineage total $1.2 million and thereafter will pay to Lineage a low single digit royalty on its own net sales and
a low double-digit royalty on sublicensing consideration. If we grant a sublicense to use the patents, we will pay Lineage a portion
of any consideration received for a sublicense, including but not limited to, upfront payments and milestones, and non-cash exchanges
or considerations, but not payments for developing a product, service or process. If we become obligated to pay royalties to one
or more affiliates of Lineage for the use of patent rights related to this sublicense and as a result, the royalties payable to
Lineage with respect to royalties under the sublicense plus the royalties payable to the affiliates would exceed a designated
amount of net sales, the royalties due to Lineage may be reduced but not less than the designated amount. In addition, we will
pay to Lineage a royalty on “net sales,” as defined in the sublicense agreement, by the sublicensee. If we become
obligated to pay royalties to one or more affiliates of Lineage for the use of patent rights related to this sublicense and as
a result, the royalties payable to Lineage with respect to sales by a sublicensee plus the royalties payable to the affiliates
would exceed a designated amount of net sales, the royalty due on net sales by the sublicensee may be reduced but not less than
the designated amount.



The
sublicense agreement includes reciprocal cross-licenses between Lineage and us with respect to any new patents that may be issued
based on the use of the sublicensed patents. Any such license to Lineage will be exclusive in the Lineage Exclusive Field and
nonexclusive in all other licensed fields. Any such license from Lineage to us will be for use outside the Lineage Exclusive Field
and for medical products or services involving tendon. Each license will be for a term of 10 years.



ESI
License



Lineage’s
subsidiary ES Cell International Pte (“ESI”) has granted to us non-exclusive rights to certain ESI patents and human
pluripotent stem cell lines (“ESI Cell Lines”) for use outside of the Lineage Exclusive Field and outside certain
other fields for which ESI has previously granted licenses. We will pay ESI a royalty, in an amount not exceeding 10 percent,
on “net sales,” as defined in the license agreement. If we become obligated to pay royalties to one or more third
party or to Lineage for the use of patent rights related to this license and as a result the royalties payable to ESI with respect
to this license agreement plus the royalties payable to such third party or Lineage would exceed a designated amount of net sales,
the royalty due on net sales by the sublicensee may be reduced. The patent license expires upon the latest expiration date of
a licensed patent, unless terminated earlier pursuant to the terms of the license. All other rights under the license are terminable
by either party under the conditions specified in the license.



If
we grant rights to any third party to use ESI Cell Lines derived under cGMP, we will pay ESI a share of all consideration that
we receive as consideration for the grant of those rights, including all cash and non-cash consideration but not royalties. We
are not permitted to grant sublicenses to the licensed ESI patents but may sublicense the use of ESI Cell Lines.



114







Shared
Facilities Agreement and Relationship with Lineage



On
August 17, 2017, AgeX and Lineage executed the Shared Facilities Agreement. Under the terms of the Shared Facilities Agreement,
Lineage allowed AgeX to use Lineage’s premises and equipment located in Alameda, California for the purpose of conducting
business. Lineage also provided accounting, billing, bookkeeping, payroll, treasury, payment of accounts payable, and other similar
administrative services to AgeX. We terminated the Shared Facilities Agreement effective September 30, 2019.



Lineage
charged AgeX a use fee for services received and usage of facilities, equipment, and supplies (“Use Fee”). For each
billing period, Lineage prorated and allocated to AgeX costs of services of Lineage employees, equipment, insurance, lease, professional,
software, supplies and utilities. Allocation depended 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 Lineage and AgeX, as reasonably estimated by Lineage.
Lineage charged a 5% markup on such allocated costs as permitted by the Shared Facilities Agreement. The allocated cost of Lineage
employees and contractors who provided services was 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 was determined and invoiced to AgeX on a monthly basis for each calendar month of each calendar year. In addition to the
Use Fees, AgeX reimbursed Lineage for any out of pocket costs incurred by Lineage for the purchase of office supplies, laboratory
supplies, and other goods and materials and services for the account or use of AgeX.



In
aggregate, Lineage charged such Use Fees to AgeX and subsidiaries as follows(in
thousands):



|                           |  | Year Ended December 31, |    
|-------------------------- |  | ----------------------- | ---
|                           |  | 2019                    |    
|Research and development   |  | $                       | 701
|General and administrative |  |                         | 239
|Total Use Fees             |  | $                       | 940



As
of December 31, 2019, Lineage owed AgeX approximately $7,000, while as of December 31, 2018 AgeX owed Lineage approximately $34,000
under the Shared Facilities Agreement. See Note 4. Related Party Transactions to our historical audited consolidated financial
statements included elsewhere in this Report.



Employee
Matters Agreement



We
entered into an Employee Matters Agreement with Lineage that governs the respective rights, responsibilities and obligations of
Lineage and us after the Distribution with respect to transferred employees, defined contribution plans, employee health and welfare
benefit plans, incentive plans, and other employment, compensation and benefits-related matters. The Employee Matters Agreement
provides for, among other things, the allocation and treatment of assets and liabilities arising out of incentive plans, retirement
plans and employee health and welfare benefit plans in which certain of our employees participated prior to the Distribution.



Tax
Matters Agreement



We
entered into a Tax Matters Agreement with Lineage that governs the parties’ respective rights, responsibilities and obligations
with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, allocation of tax refunds,
the control of audits and other tax proceedings and other matters regarding taxes while we were part of a consolidated group with
Lineage for income tax purposes, and after our deconsolidation from Lineage’s consolidated tax group, for any tax period
ending on or before the Distribution Date, as well as tax periods beginning before and ending after the Distribution Date.



In
general, the Tax Matters Agreement allocates taxes between Lineage and the subsidiary companies that comprise its consolidated
group or the “Lineage Group” on the one hand and AgeX and our subsidiaries or the “AgeX Group” on the
other hand. Lineage will be responsible for any U.S. federal, state and local taxes (and any related interest, penalties or audit
adjustments) for the Lineage Group, and we will be responsible for any U.S. federal, state and local taxes (and any related interest,
penalties or audit adjustments) for the AgeX Group for any periods or portions thereof beginning on or after August 31, 2017 based
on certain assumptions, including that the AgeX Group is not included in the Lineage consolidated tax returns. Lineage will also
determine the extent to which certain tax attributes attributable to the Lineage Group resulted in tax savings to the AgeX Group
and we will pay the amount of that tax savings to Lineage, or if tax attributes attributable to the AgeX Group resulted in tax
savings to the Lineage Group, Lineage will pay the amount of that tax savings to us. The Tax Matters Agreement also may provide
special rules for allocating tax liabilities resulting from the Distribution.



115









Related
Party Payables



Since
inception, our subsidiaries ReCyte Therapeutics, Inc. (“ReCyte Therapeutics”) and LifeMap Sciences, Inc. (“LifeMap
Sciences”), and a former subsidiary of LifeMap Sciences, LifeMap Solutions, Inc. (“LifeMap Solutions”), had
accumulated related party payables due to Lineage, mainly comprised of working capital advances and shared services provided under
the Shared Facilities Agreement that Lineage had performed for the benefit of, and charged to these subsidiaries. Shared services
under the Shared Facilities Agreement included both services and facilities provided by Lineage, including space for research,
laboratory and administrative offices, administrative and financial services such as human resources, general bookkeeping, payroll
and financial reporting.



Sale
of Common Stock



On
June 7, 2018, we sold 2,000,000 shares of common stock for $2.50 per share to Juvenescence for aggregate cash proceeds of $5.0
million.



Sales
of Warrants



During
2018, we sold warrants to purchase 2,000,000 shares of common stock for $0.50 per warrant for aggregate cash proceeds of $1,000,000
to certain investors. The warrants entitled the warrant holders to purchase shares of our common stock for $2.50 per share. Alfred
D. Kingsley, our former Executive Chairman, purchased warrants entitling him to purchase 248,600 shares of AgeX common stock,
and John Mauldin who later became a member of our Board of Directors purchased warrants entitling him to purchase 50,000 shares
of AgeX common stock, on the same terms as the other investors. Mr. Kingsley exercised his warrants during March 2019 and purchased
248,600 shares of common stock for $621,500.



Registration
Rights Agreement



We
have agreed to register for sale under the Securities Act of 1933, as amended (the “Securities Act”) certain shares
of common stock, including all shares held by Juvenescence, Lineage and Alfred D. Kingsley, and shares beneficially owned by John
Mauldin. We have agreed to file a registration statement, including on Form S-3 once we are eligible to use such form for offerings
on a delayed or continuous basis, covering those shares following a written request for registration from any holder or group
of holders of not less than 50% of the shares covered by the Registration Rights Agreement, but not earlier than November 28,
2019, which is the first anniversary date of the Distribution. We are obligated to pay the fees and expenses of each registered
offering under such registration rights agreement except for underwriting discounts and commissions.



Compensation
of Our Chief Operating Officer



Since
October 2018, AgeX’s Chief Operating Officer, Nafees Malik, who is an employee of Juvenescence, has been devoting a majority
of his time to AgeX’s operations for which AgeX reimburses Juvenescence for his services on an agreed upon fixed annual
rate of $272,000 from October 18, 2018 through March 10, 2019 and $283,000 from March 11, 2019 through December 31, 2019. Additionally,
Dr. Malik received a $50,000 bonus in March 2019. As of December 31, 2019 AgeX had accrued approximately $71,000 payable to Juvenescence
for Dr. Malik’s services rendered.



2019Loan Facility Agreement and Warrant Agreement



On
August 13, 2019 AgeX and Juvenescence entered into a Loan Facility Agreement (the “Loan Agreement”) pursuant to which
Juvenescence provided AgeX a $2.0 million line of credit for a period of 18 months. As of March 30, 2020, AgeX had drawn
all of the $2.0 million.



In
lieu of interest, AgeX issued to Juvenescence 19,000 shares of AgeX common stock concurrently with the first draw down of funds
under the Loan Agreement. However, if AgeX fails to repay the loan when due, interest at the rate of 10% per annum, compounded
daily, will accrue on the unpaid balance from the date the payment was due.



In
lieu of repayment of funds borrowed, AgeX or Juvenescence may convert the loan balance (including principal and accrued interest,
if any) into AgeX common stock or “units” if AgeX consummates a “Qualified Offering” which means a sale
of common stock (or common stock paired with warrants or other convertible securities in “units”) in which the gross
sale proceeds are at least $7.5 million.



116









Events
of Default under the Loan Agreement include: (i) AgeX fails to pay any amount in the manner and at the time provided in the Loan
Agreement and the failure to pay is not remedied within 10 business days; (ii) AgeX fails to perform any of its obligations under
the Loan Agreement and if the failure can be remedied it is not remedied to the satisfaction of Juvenescence within 10 business
days after notice to AgeX; (iii) other indebtedness for money borrowed in excess of $100,000 becomes due and payable or can be
declared due and payable prior to its due date or if indebtedness for money borrowed in excess of $25,000 is not paid when due;
(iv) AgeX stops payment of its debts generally or discontinues its business or becomes unable to pay its debts as they become
due or enters into any arrangement with creditors generally, (v) AgeX becomes insolvent or begins liquidation or administration
or other insolvency procedures, or a receiver, trustee or similar officer is appointed in respect of all or any part of its assets
and such appointment continues undischarged or unstayed for sixty days, (vi) it becomes illegal for AgeX to perform its obligations
under the Loan Agreement or any governmental permit, license, consent, exemption or similar requirement for AgeX to perform its
obligations under the Loan Agreement or to carry out its business is not obtained or ceases to remain in effect; (vii) the issuance
or levy of any judgment, writ, warrant of attachment or execution or similar process against all or any material part of the property
or assets of AgeX if such process is not released, vacated or fully bonded within sixty calendar days after its issue or levy;
(viii) any injunction, order or judgement of any court is entered or issued which in the opinion of Juvenescence materially and
adversely affects the ability of AgeX to carry out its business or to pay amounts owed to Juvenescence under the Loan Agreement,
and (ix) there is a change in AgeX’s financial condition that in the opinion of Juvenescence materially and adversely affects,
or is likely to so affect, its ability to perform any of its obligations under the Loan Agreement.



As
consideration for the line of credit under the Loan Agreement, AgeX issued to Juvenescence warrants to purchase 150,000 shares
of AgeX common stock. The exercise price of the warrants is $2.60 per share, which was the volume weighted average price on the
NYSE American (VWAP) of AgeX common stock over the twenty trading days prior to the date the warrants were issued. The warrants
will expire at 5:00 p.m. New York Time three years after the date of issue. The number of shares issuable upon exercise of the
warrants and the exercise price per share are subject to adjustment upon the occurrence of certain events such as a stock split
or reverse split or combination of the common stock, stock dividend, recapitalization or reclassification of the common stock,
and similar events.



AgeX
has entered into a Registration Rights Agreement to register the 19,000 shares issuable under the Loan Agreement and the 150,000
warrants and underlying shares for resale under the Securities Act, upon request of Juvenescence if Form S-3 is available to AgeX.
Juvenescence will also have “piggy-back” registration rights if AgeX files a registration statement for the sale of
shares for itself or other stockholders. AgeX will bear the expenses of the registration statement but not underwriting or broker’s
commissions related to the sale of warrants or shares. AgeX and Juvenescence will indemnify each other from certain liabilities
in connection the registration, offer, and sale of securities under a registration statement, including liabilities arising under
the Securities Act.



New
Loan Agreement and New Warrant Agreement



On
March 30, 2020 AgeX and Juvenescence entered into a the
New Loan Agreement pursuant to which Juvenescence has agreed to provide to AgeX an $8.0 million line of credit
for a period of 18 months on substantially the same terms as the Loan Agreement described in Note 4, except that (a) all loans
to AgeX under the New Loan Agreement in excess of an initial $500,000 advance are subject to Juvenescence's discretion, (b) AgeX
may not draw more than $1 million in any single draw, (c) in lieu of accrued interest, AgeX will issue to Juvenescence 28,500
shares of AgeX common stock when AgeX has borrowed an aggregate of $3 million under the New Loan Agreement, (d) AgeX will issue
to Juvenescence warrants to purchase shares of AgeX common stock (“New Warrants”) in amounts determined by the warrant
formula described below, (e) the Repayment Date for outstanding principal balance of the loan under the New Loan Agreement will
be March 30, 2023, (f) if AgeX requests additional loans after making the first two draws of funds (which are expected to total
$1 million) under the New Loan Agreement, a Security and Pledge Agreement (the “Security Agreement”) will go into
effect granting Juvenescence a security interest in all of the assets of AgeX and and Agex’s subsidiaries ReCyte Therapeutics and Reverse Bioengineering, Inc. (the “Guarantor Subsidiaries”
or each a “Guarantor Subsidiary”), (g) the Guarantor
Subsidiaries will guarantee AgeX's obligations under the New Loan Agreement if AgeX makes more than two draws of funds under the
New Loan Agreement and (h) Juvenescence has the right to convert the principal amount of outstanding loans under the New Loan
Agreement into shares of AgeX common stock at the Market Price as defined in the New Loan Agreement. Further, in addition to
the Events of Default described in Note 4, additional Events of Default will arise under the New Loan Agreement if (i) AgeX or
any of the Guarantor Subsidiaries sells, leases, licenses, consigns, transfers, or otherwise disposes of a material part of its
assets other than inventory in the ordinary course of business or certain intercompany transactions, or certain other limited
permitted transactions, unless Juvenescence approves, (ii) the security interests under the Security Agreement, if in effect,
are not valid or perfected, or AgeX or a Guarantor Subsidiary contests the validity of its obligations under the New Loan Agreement
or Security Agreement or other related agreement with Juvenescence, or there is a loss, theft, damage or destruction of a material
portion of the collateral, (iii) any representation, warranty, or other statement made by AgeX or a Guarantor Subsidiary under
the New Loan Agreement is incomplete, untrue, incorrect, or misleading, or (iv) AgeX or a Guarantor Subsidiary suspends or ceases
to carry on all or a material part of its business or threatens to do so.



Although
the New Loan Agreement provides that Juvenescence may lend us up to $8 million, all loans in excess of the initial $500,000 are
subject to Juvenescence’s discretion. Juvenescence will require that AgeX implement a plan prior to April 30, 2020 to reduce
spending on employee salaries and consulting fees and to pay no bonuses for 2019 in order to borrow more than the initial $500,000,
although such additional borrowings will remain subject to Juvenescence’s discretion.



Each
time AgeX receives an advance of funds under the New Loan Agreement, AgeX will issue to Juvenescence a number of New Warrants
equal to 50% of the number determined by dividing the amount of the advance by the applicable Market Price. The Market Price will
be the closing price per share of AgeX common stock on the NYSE American or other national securities exchange on the date of
the applicable notice from AgeX requesting a draw of funds that triggers the obligation to issue New Warrants; provided, however
that if AgeX common stock is not traded on a national securities exchange the Market Price shall be determined with reference
to closing prices quoted or bid and asked prices on the OTC Bulletin Board or similar quotation system averaged over twenty consecutive
trading days. The exercise price of the New Warrants will be the applicable Market Price. The New Warrants will expire at 5:00
p.m. New York time three years after the date of issue.



AgeX
has entered into an amendment to its Registration Rights Agreement described in Note 4 and include the 28,500 shares issuable
under the New Loan Agreement and the New Warrants and underlying shares as registrable securities under the Registration Rights
Agreement.



Director
Independence



Gregory
Bailey, Annalisa Jenkins, and Michael May qualify as “independent” in accordance with Section 803(A) of the NYSE American
Company Guide. Michael Mulroy who served as a director during 2018 and a portion of 2019, and John Mauldin who served as a director
during 2019 and from January 1 until March 12, 2020, also were independent under that standard. The members of our Audit Committee
meet the additional independence standards under Section 803(B)(2) of the NYSE American Company Guide and Rule 10A-3 under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”). The members of our Compensation Committee meet the
additional independence standards under Section 805(c)(1) of the NYSE American Company Guide. Our independent directors received
no compensation or remuneration during the last fiscal year for serving as directors except as disclosed under “CORPORATE
GOVERNANCE—Compensation of Directors.” None of the independent directors, nor any of the members of their respective
families, have participated in any transaction with us that would disqualify them as “independent” directors under
the standards described above.



Michael
D. West does not qualify as “independent” because he serves as our President and Chief Executive Officer. Gregory
Bailey does not meet the independence standard for service on the Audit Committee under Exchange Act Rule 10A-3 because he is
the Chief Executive Officer of Juvenescence Limited, which is our largest stockholder and owns approximately 44% of our issued
and outstanding shares of common stock.



117







Item
14. Principal Accounting Fees and Services



OUM
& Co., LLP (“OUM”) has served as our independent registered public accountants since October 2017, and audited
our annual financial statements for the fiscal years ended December 31, 2019 and 2018.



Audit
Fees, Audit Related Fees, Tax Fees and Other Fees



The
following table sets forth the aggregate fees billed to us during the fiscal years ended December 31, 2019 and 2018 by OUM:



|                      |  | 2019 |         |  | 2018 |  
|--------------------- |  | ---- | ------- |  | ---- | -
|Audit Fees(1)         |  | $    | 288,000 |  |      | $
|Audit Related Fees(2) |  |      | -       |  |      |  
|Total Fees(3)         |  | $    | 288,000 |  |      | $



| | (1) | Audit
    Fees consist of fees billed for professional services rendered for the audit of our annual financial statements included in
    our Registration Statement on Form 10 and services that are normally provided by our independent registered public accountants
    in connection with statutory and regulatory filings or engagements.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                 
| | (2) | Audit-Related
    Fees relate to assurance and related services that are reasonably related to the performance of the audit or review of our
    consolidated financial statements and are not reported under “Audit Fees.” This category would include fees related
    to non-routine SEC filings.                                            
| |     |                                                                                                                                                                                                                                                                                                                                                 
| | (3) | Our
    former parent company Lineage paid 80% of all audit fees incurred through November 28, 2018, the date on which Lineage distributed
    approximately 12.7 million shares of AgeX common stock owned by Lineage on a pro rata basis to eligible Lineage shareholders.                                                                    



Pre-Approval
of Audit and Permissible Non-Audit Services



Our
Audit Committee requires pre-approval of all audit and non-audit services. Other than de minimis services incidental to
audit services, non-audit services shall generally be limited to tax services such as advice and planning and financial due diligence
services. All fees for such non-audit services must be approved by the Audit Committee, except to the extent otherwise permitted
by applicable SEC regulations. The Committee may delegate to one or more designated members of the Committee the authority to
grant pre-approvals, provided such approvals are presented to the Committee at a subsequent meeting. During 2019 and 2018, 100%
of the fees paid to OUM were approved by the Audit Committee or by our Board of Directors prior to the appointment of our Audit
Committee.



118







PART
IV



Item
15. Financial Statement and Exhibits



(a)
Financial Statements.



The
following financial statements of AgeX are filed in this Report:



Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements



(b)
Exhibits.



|Exhibit
    Number |  | Exhibit
    Description                                                                                                                                                                                                                                                       
|------------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                   |  |                                                                                                                                                                                                                                                                               
|2.1                |  | Asset Purchase Agreement, dated as of August 13, 2018, by and between Escape Therapeutics, Inc. and AgeX Therapeutics, Inc. #+ (Incorporated by reference to AgeX Therapeutics, Inc.’s Form 10-12(b) A-2 filed with the Securities and Exchange Commission on August 30, 2018)
|                   |  |                                                                                                                                                                                                                                                                               
|3.1                |  | Certificate of Incorporation (Incorporated by reference to AgeX Therapeutics, Inc.’s Form 10-12(b) filed with the Securities and Exchange Commission on June 8, 2018)                                                                                                         
|                   |  |                                                                                                                                                                                                                                                                               
|3.2                |  | Bylaws (Incorporated by reference to AgeX Therapeutics, Inc.’s Form 10-12(b) filed with the Securities and Exchange Commission on June 8, 2018)                                                                                                                               
|                   |  |                                                                                                                                                                                                                                                                               
|4.1                |  | Specimen of Common Stock Certificate (Incorporated by reference to AgeX Therapeutics, Inc.’s Form 10-12(b) A-2 filed with the Securities and Exchange Commission on August 30, 2018)                                                                                          
|                   |  |                                                                                                                                                                                                                                                                               
|4.2                |  | Warrant dated August 13, 2019 (Incorporated by reference to AgeX Therapeutics, Inc. Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 14, 2019)                                                                                       
|                   |  |                                                                                                                                                                                                                                                                               
|4.3                |  | Description of Securities*                                                                                                                                                                                                                                                    
|                   |  |                                                                                                                                                                                                                                                                               
|10.1               |  | Asset Contribution and Separation Agreement, dated August 17, 2017, between Lineage Cell Therapeutics, Inc. and AgeX Therapeutics, Inc. #. (Incorporated by reference to Lineage’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017)                    
|                   |  |                                                                                                                                                                                                                                                                               
|10.2               |  | License Agreement, dated August 17, 2017, between Lineage Cell Therapeutics, Inc. and AgeX Therapeutics, Inc.# (Incorporated by reference to Lineage’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017)                                                
|                   |  |                                                                                                                                                                                                                                                                               
|10.3               |  | AgeX Therapeutics, Inc. 2017 Equity Incentive Plan (Incorporated by reference to AgeX Therapeutics, Inc.’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on January 30, 2019).                                                         
|                   |  |                                                                                                                                                                                                                                                                               
|10.4               |  | Form of AgeX Therapeutics, Inc. Employee Stock Option Agreement (Incorporated by reference to AgeX Therapeutics, Inc.’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on January 30, 2019)                                             
|                   |  |                                                                                                                                                                                                                                                                               
|10.5               |  | Form of AgeX Therapeutics, Inc. Non-Employee Director Stock Option Agreement (Incorporated by reference to AgeX Therapeutics, Inc.’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on January 30, 2019)                                
|                   |  |                                                                                                                                                                                                                                                                               
|10.6               |  | Form of AgeX Therapeutics, Inc. Restricted Stock Agreement (Incorporated by reference to AgeX Therapeutics, Inc.’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on January 30, 2019)                                                  



119









|10.7  |  | Form of AgeX Therapeutics, Inc. Restricted Stock Unit Agreement (Incorporated by reference to AgeX Therapeutics, Inc.’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on January 30, 2019)                                                                                                
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |  |                                                                                                                                                                                                                                                                                                                                  
|10.8  |  | Sublicense Agreement, dated September 26, 2017, between Lineage Cell Technology, Inc. and AgeX Therapeutics, Inc. # (Incorporated by reference to AgeX Therapeutics, Inc.’s Form 10-12(b) A-1 filed with the Securities and Exchange Commission on July 19, 2015)                                                                
|      |  |                                                                                                                                                                                                                                                                                                                                  
|10.9  |  | First Amendment, dated November 8, 2017, to License Agreement, dated August 17, 2017, between Lineage Cell Therapeutics, Inc. and AgeX Therapeutics, Inc. (Incorporated by reference to AgeX Therapeutics, Inc.’s Form 10-12(b) A-1 filed with the Securities and Exchange Commission on July 19, 2015)                          
|      |  |                                                                                                                                                                                                                                                                                                                                  
|10.10 |  | Sublicense Agreement, dated August 17, 2017, by and among OrthoCyte Corporation, Lineage Cell Therapeutics, Inc. and AgeX Therapeutics, Inc. # (Incorporated by reference to AgeX Therapeutics, Inc.’s Form 10-12(b) A-1 filed with the Securities and Exchange Commission on July 19, 2015)                                     
|      |  |                                                                                                                                                                                                                                                                                                                                  
|10.11 |  | First Amendment, dated November 8, 2017, to Sublicense Agreement, dated August 17, 2017, between OrthoCyte Corporation, Lineage Cell Therapeutics, Inc. and AgeX Therapeutics, Inc. (Incorporated by reference to AgeX Therapeutics, Inc.’s Form 10-12(b) A-1 filed with the Securities and Exchange Commission on July 19, 2015)
|      |  |                                                                                                                                                                                                                                                                                                                                  
|10.12 |  | License Agreement, dated August 17, 2017, by and between ES Cell International Ptd Ltd., Lineage Cell Therapeutics, Inc. and AgeX Therapeutics, Inc. # (Incorporated by reference to AgeX Therapeutics, Inc.’s Form 10-12(b) A-1 filed with the Securities and Exchange Commission on July 19, 2015)                             
|      |  |                                                                                                                                                                                                                                                                                                                                  
|10.13 |  | Employee Matters Agreement, dated August 17, 2017, between Lineage Cell Therapeutics, Inc. and AgeX Therapeutics, Inc. (Incorporated by reference to AgeX Therapeutics, Inc.’s Form 10-12(b) A-1 filed with the Securities and Exchange Commission on July 19, 2015)                                                             
|      |  |                                                                                                                                                                                                                                                                                                                                  
|10.14 |  | Employment Agreement, by and between AgeX Therapeutics, Inc. and Hal Sternberg, dated August 21, 2017 (Incorporated by reference to AgeX Therapeutics, Inc.’s Form 10-12(b) filed with the Securities and Exchange Commission on June 8, 2018)                                                                                   
|      |  |                                                                                                                                                                                                                                                                                                                                  
|10.15 |  | Tax Matters Agreement, dated August 17, 2017, between Lineage Cell Therapeutics, Inc. and AgeX Therapeutics, Inc. (Incorporated by reference to AgeX Therapeutics, Inc.’s Form 10-12(b) A-1 filed with the Securities and Exchange Commission on July 19, 2015)                                                                  
|      |  |                                                                                                                                                                                                                                                                                                                                  
|10.16 |  | Form of Registration Rights Agreement. (Incorporated by reference to AgeX Therapeutics, Inc.’s Form 10-12(b) A-1 filed with the Securities and Exchange Commission on July 19, 2015)                                                                                                                                             
|      |  |                                                                                                                                                                                                                                                                                                                                  
|10.17 |  | License Agreement, dated August 17, 2017, between Lineage Cell Therapeutics, Inc. and AgeX Therapeutics, Inc. # (Incorporated by reference to AgeX Therapeutics, Inc.’s Form 10-12(b) A-1 filed with the Securities and Exchange Commission on July 19, 2015)                                                                    
|      |  |                                                                                                                                                                                                                                                                                                                                  
|10.18 |  | Employment Agreement, by and between AgeX Therapeutics, Inc. and Michael D. West, dated October 18, 2018. (Incorporated by reference to AgeX Therapeutics, Inc.’s Form 10-12(b) A-3 filed with the Securities and Exchange Commission on October 22, 2018)                                                                       
|      |  |                                                                                                                                                                                                                                                                                                                                  
|10.19 |  | Compensation Agreement, dated March 1, 2019, between AgeX Therapeutics, Inc. and Russell Skibsted (Incorporated by reference to AgeX Therapeutics, Inc. Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 15, 2019)                                                                         
|      |  |                                                                                                                                                                                                                                                                                                                                  
|10.20 |  | Standard Sublease, dated for reference March 13, 2019, between AgeX Therapeutics, Inc. and InSite Vision, Inc. (Incorporated by reference to AgeX Therapeutics, Inc. Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 15, 2019)                                                            
|      |  |                                                                                                                                                                                                                                                                                                                                  
|10.21 |  | Loan Facility Agreement, dated August 13, 2019, between AgeX Therapeutics, Inc. and Juvenescence Limited (Incorporated by reference to AgeX Therapeutics, Inc. Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 14, 2019)                                                               
|      |  |                                                                                                                                                                                                                                                                                                                                  
|10.22 |  | Warrant Agreement, dated August 13, 2019, between AgeX Therapeutics, Inc. and Juvenescence Limited, including form of warrant (Incorporated by reference to AgeX Therapeutics, Inc. Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 14, 2019)                                          



120









|10.23 |  | Registration Rights Agreement, dated August 13, 2019, between AgeX Therapeutics, Inc. and Juvenescence Limited (Incorporated by reference to AgeX Therapeutics, Inc. Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 14, 2019)
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |  |                                                                                                                                                                                                                                                                         
|10.24 |  | Secured Convertible Facility Agreement, dated March 30, 2020, by and among AgeX Therapeutics, Inc., ReCyte Therapeutics, Inc., Reverse Bioengineering, Inc., and Juvenescence Limited*                                                                                  
|      |  |                                                                                                                                                                                                                                                                         
|10.25 |  | Warrant Agreement, dated March 30, 2020, between AgeX Therapeutics, Inc. and Juvenescence Limited, including form of warrant*                                                                                                                                           
|      |  |                                                                                                                                                                                                                                                                         
|10.26 |  | Amendment No. 1 to Registration Rights Agreement, dated March 30, 2020, between AgeX Therapeutics, Inc. and Juvenescence Limited*                                                                                                                                       
|      |  |                                                                                                                                                                                                                                                                         
|21.1  |  | List of Subsidiaries *                                                                                                                                                                                                                                                  
|      |  |                                                                                                                                                                                                                                                                         
|23.1  |  | Consent of OUM & Co. LLP *                                                                                                                                                                                                                                              
|      |  |                                                                                                                                                                                                                                                                         
|31    |  | Rule 13a-14(a)/15d-14(a) Certification *                                                                                                                                                                                                                                
|      |  |                                                                                                                                                                                                                                                                         
|32    |  | Section 1350 Certification *                                                                                                                                                                                                                                            



|* | Filed
    herewith.                                                                                                                                                                                                                                  
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                      
|# | Confidential
    treatment has been granted with respect to portions of this exhibit (indicated by asterisks) and those portions have been
    separately filed by Lineage Cell Therapeutics, Inc. with the Securities and Exchange Commission.      
|  |                                                                                                                                                                                                                                                      
|+ | Certain
    schedules and exhibits to this agreement have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of
    any omitted schedule and/or exhibit will be furnished to the Securities and Exchange Commission on request.



Item
16. Form 10-K Summary



None.



121









SIGNATURES



Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report
on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized on the 30th day of March 2020.



| | AGEX
    THERAPEUTICS, INC.
| | ---------------------------
| |                            
| | By:                        
| |                            
| |                            



|Signature                |  | Title                                                  |  | Date              
|------------------------ |  | ------------------------------------------------------ |  | ------------------
|                         |  |                                                        |  |                   
|/s/
    Michael D. West  |  | President
    and Chief Executive Officer and Director |  | March
    30, 2020
|MICHAEL
    D. WEST      |  | (Principal
    Executive Officer)                      |  |                   
|                         |  |                                                        |  |                   
|/s/
    Russell Skibsted |  | Chief
    Financial Officer                            |  | March
    30, 2020
|RUSSELL
    SKIBSTED     |  | (Principal
    Financial and Accounting Officer)       |  |                   
|                         |  |                                                        |  |                   
|/s/
    Gregory Bailey   |  | Director                                               |  | March
    30, 2020
|GREGORY
    BAILEY       |  |                                                        |  |                   
|                         |  |                                                        |  |                   
|/s/
    Annalisa Jenkins |  | Director                                               |  | March
    30, 2020
|ANNALISA
    JENKINS     |  |                                                        |  |                   
|                         |  |                                                        |  |                   
|/s/
    Michael H. May   |  | Director                                               |  | March
    30, 2020
|MICHAEL
    H. MAY       |  |                                                        |  |                   





122