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You could try something simple like a counter. Give it a max of 2 and increment it when you die.
The counter would probably be best placed in the scene and incremented with a wireless transmitter & receiver.
Once you die twice the counter output activates the end game.
Display remaining lives using a calculator with port A having a value of 2 minus the counters current count connected to port B. Connect the calculator output to a number displayer.
Hope this points you in the right direction.