SEC Form 10-Q filed by Orgenesis Inc.

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period Ended September 30, 2024

 

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: 001-38416

 

ORGENESIS INC.

(Exact name of registrant as specified in its charter)

 

Nevada		98-0583166
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

20271 Goldenrod Lane

Germantown, MD 20876

(Address of principal executive offices) (Zip Code)

 

(480) 659-6404

(Registrant’s telephone number, including area code)

 

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

 

Title of each class		Trading symbols(s)		Name of each exchange on which registered
Common Stock		ORGS		*

 

* On October 17, 2024, the Nasdaq Stock Market (“Nasdaq”) notified Orgenesis Inc. (the “Company”) that it plans to file a notification of removal from listing (Form 25) with the Securities and Exchange Commission (the “SEC”) to delist the Company’s common stock from Nasdaq upon the completion of all applicable procedures. After the Form 25 is filed by Nasdaq, the delisting will become effective 10 days later. The deregistration of the Company’s common stock under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), will occur 90 days following the filing of the Form 25, or such shorter period as the SEC may determine. Upon deregistration of the Company’s common stock under Section 12(b) of the Exchange Act, the Company’s common stock will remain registered under Section 12(g) of the Exchange Act. The Company’s common stock began trading on the OTCQX operated by the OTC Markets Group, Inc. beginning on October 21, 2024.

 

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 and post 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 new or revised financial accounting standards provided pursuant 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 ☒

 

As of November 13, 2024, there were 5,169,248 shares of registrant’s common stock outstanding.

 

 

 

ORGENESIS INC.

FORM 10-Q

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

 

TABLE OF CONTENTS

 

		Page
PART I - FINANCIAL INFORMATION		3
ITEM 1	Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023	3
	Condensed Consolidated Statements of Loss and Comprehensive Loss for the Three and Nine Months Ended September 30, 2024 and 2023	5
	Condensed Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2024 and 2023	6
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023	10
	Notes to Condensed Consolidated Financial Statements	11
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	40
ITEM 4.	Controls and Procedures	41
PART II - OTHER INFORMATION		42
ITEM 1.	Legal Proceedings	42
ITEM 1A.	Risk Factors	42
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
ITEM 3.	Defaults Upon Senior Securities	45
ITEM 4.	Mine Safety Disclosures	45
ITEM 5.	Other Information	45
ITEM 6.	Exhibits	46
SIGNATURES		47

 

 

PART I –FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

ORGENESIS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollars in thousands)

(Unaudited)

 

		September 30, 2024				December 31, 2023
		As of
		September 30, 2024				December 31, 2023
Assets
CURRENT ASSETS:
Cash and cash equivalents		$	204			$	837
Restricted cash			918				642
Accounts receivable, net of credit losses of $14,397 as of September 30, 2024 ($0 as of December 31, 2023)			161				88
Prepaid expenses and other receivables			1,236				2,017
Receivable from related parties			-				458
Inventory			-				34
Total current assets		$	2,519			$	4,076
NON-CURRENT ASSETS:
Deposits		$	55			$	38
Investments to associates			8				8
Property, plant and equipment, net			14,901				1,475
Intangible assets, net			8,528				7,375
Operating lease right-of-use assets			2,121				351
Goodwill			1,211				1,211
Other assets			344				18
Total non-current assets			27,168				10,476
TOTAL ASSETS		$	29,687			$	14,552

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

ORGENESIS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)

(U.S. Dollars, in thousands, except share and per share amounts)

(Unaudited)

 

		As of
		September 30, 2024				December 31, 2023
Liabilities net of (Capital Deficiency)
CURRENT LIABILITIES:
Accounts payable		$	11,338			$	6,451
Accounts payable related Parties			2,699				133
Accounts payable			2,699				133
Advance payments from Germfree (See note 11a)			6,720				-
Accrued expenses and other payables			2,690				2,218
Income tax payable			784				740
Employees and related payables			1,853				1,079
Other payable related parties			-				52
Advance payments on account of grant			2,771				2,180
Short-term loans			4,905				650
Current maturities of finance leases			46				18
Current maturities of operating leases			277				216
Short-term and current maturities of convertible loans			1,966				2,670
TOTAL CURRENT LIABILITIES		$	36,049			$	16,407
LONG-TERM LIABILITIES:
Non-current operating leases		$	1,839			$	96
Loans payable			2,828				-
Convertible loans			5,435				18,967
Retirement benefits obligation			101				-
Finance leases			1				4
Contingent consideration (see note 4)			4,906				-
Other long-term liabilities			2,456				61
TOTAL LONG-TERM LIABILITIES		$	17,566			$	19,128
TOTAL LIABILITIES		$	53,615			$	35,535
CAPITAL DEFICIENCY:
Common stock of $0.0001 par value: Authorized at September 30, 2024 and December 31, 2023: 14,583,333 shares; Issued at September 30, 2024 and December 31, 2023: 4,799,323 and 3,216,363 shares, respectively; Outstanding at September 30, 2024 and December 31, 2023: 4,770,666 and 3,187,706 shares, respectively		$	5			$	3
Additional paid-in capital			181,991				156,837
Accumulated other comprehensive income			(215	)			65
Treasury stock 28,656 shares as of September 30, 2024 and December 31, 2023			(1,266	)			(1,266	)
Accumulated deficit			(204,411	)			(176,622	)
Equity attributable to Orgenesis Inc.		$	(23,896	)		$	(20,983	)
Non-controlling interest			(32	)			-
TOTAL CAPITAL DEFICIENCY		$	(23,928	)		$	(20,983	)
TOTAL LIABILITIES AND CAPITAL DEFICIENCY		$	29,687			$	14,552

 

*The above share information has been adjusted to reflect the reverse stock split as discussed in Note 1.

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

ORGENESIS INC.

CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(U.S. Dollars in thousands, except share and loss per share amounts)

(Unaudited)

 

			September 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
		Three Months Ended								Nine Months Ended
		September 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
Revenues		$	347			$	110			$	734			$	365
Cost of revenues			585				139				1,615				6,093
Gross loss			(238	)			(29	)			(881	)			(5,728	)
Cost of development services and research and development expenses			4,523				808				8,382				7,616
Amortization of intangible assets			196				153				575				568
Change in Contingent consideration			81				-				263				-
Selling, general and administrative expenses including credit losses of $ 2,725 for the nine months ended September 30, 2024 and $0 for the three months ended September 30, 2024 and $24,367 for the nine months ended September 30, 2023 and $0 for the three months ended September 30, 2023			2,664				1,245				10,781				32,989
Impairment expenses on Property, plant and equipment			692				-				692				-
Operating loss			8,394				2,235				21,574				46,901
Loss from deconsolidation of OBI and Octomera (see note 4)			-				-				66				5,343
Other income (expense), net			122				(2	)			114				(4	)
Credit loss on convertible loan receivable			-				-				-				2,688
Loss from extinguishment in connection with convertible loan			-				-				141				283
Financial expenses, net			718				545				2,385				1,918
Convertible loans induced conversion expenses			-				-				4,304				-
Share in net loss profit of associated companies			-				553				-				552
Loss before income taxes			9,234				3,331				28,584				57,681
Tax expenses			32				394				53				614
Net loss			9,266				3,725				28,637				58,295
Net loss attributable to non-controlling interests (including redeemable)			(146	)			-				(848	)			(9,557	)
Net loss attributable to Orgenesis Inc.		$	9,120			$	3,725			$	27,789			$	48,738
Loss per share:
Basic and diluted		$	1.93			$	0.12			$	7.06			$	1.70
Weighted average number of shares used in computation of Basic and Diluted loss per share:
Basic and diluted			4,715,229				3,002,259				3,938,419				2,868,078
Comprehensive loss:
Net loss		$	9,266			$	3,725			$	28,637			$	58,295
Other comprehensive loss (income) - translation adjustments			517				(9	)			280				43
Release of translation adjustment due to deconsolidation of Octomera			-				-				-				(384	)
Comprehensive loss			9,783				3,716				28,917				57,954
Comprehensive loss attributed to non-controlling interests			(146	)			-				(848	)			(9,557	)
Comprehensive loss attributed to Orgenesis Inc.		$	9,637			$	3,716			$	28,069			$	48,397

 

*The above share information has been adjusted to reflect the reverse stock split as discussed in Note 1.

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

ORGENESIS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(U.S. Dollars in thousands, except share amounts)

(Unaudited)

 

		Number				Par Value				Additional Paid-in Capital				Accumulated Other Comprehensive Income (Loss)				Treasury Shares				Accumulated Deficit				Equity Attributed to Orgenesis Inc.				Non- Controlling Interest				Total
		Common Stock
		Number				Par Value				Addi-tional Paid-in Capital				Accumu-lated Other Compre-hensive Income (Loss)				Treasury Shares				Accumu-lated Deficit				Equity Attri-buted to Orgenesis Inc.				Non- Contro- lling Interest				Total
Balance at January 1, 2024			3,187,588			$	3			$	156,837			$	65			$	(1,266	)		$	(176,622	)		$	(20,983	)		$	-			$	(20,983	)
Changes during the nine months ended September 30, 2024:
Stock-based compensation			-				-				304				-				-				-				304				-				304
RSUs vested			9,949				-*				-				-				-				-				-*				-				-*
Exercise of options			25,519				-*				13				-				-				-				13				-				13
Issuance of shares to service providers			116,400				-				1,506				-				-				-				1,506				-				1,506
Exchange of convertible loans for equity			1,182,913				1				20,310				-				-				-				20,311				-				20,311
Issuance of warrants with respect to loans (see note7)			-								745				-				-				-				745				-				745
Extinguishment in connection with convertible loan restructuring			-				-				141				-				-				-				141				-				141
Issuance of shares and warrants			242,272				-*				2,496				-				-				-				2,496				-				2,496
NCI arising from Octomera reconsolidation			-				-				-				-				-				-				-				408				408
Transaction with NCI (see note11b)			-				-				(408	)			-				-				-				(408	)			408				-
Issuance of shares due to exercise of warrants			6,026				1				47				-				-				-				48				-				48
Comprehensive loss for the period			-				-				-				(280	)			-				(27,789	)			(28,069	)			(848	)			(28,917	)
Balance at September 30, 2024			4,770,667			$	5			$	181,991			$	(215	)		$	(1,266	)		$	(204,411	)		$	(23,896	)		$	(32	)		$	(23,928	)

 

*	Represents an amount lower than $1 thousand.
**	All share amounts have been retroactively adjusted to reflect a 1-for-10 reverse share split (Note 1)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

ORGENESIS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(U.S. Dollars in thousands, except share amounts)

(Unaudited)

 

		Common Stock
		Number				Par Value				Addi- tional Paid-in Capital				Accumulated Other Compre- hensive Income (Loss)				Treasury Shares				Accumu- lated Deficit				Equity Attri- buted to Orgenesis Inc.				Non- Contro- lling Interest				Total
Balance at January 1, 2023			2,554,455			$	3			$	150,355			$	(270	)		$	(1,266	)		$	(121,261	)		$	27,561			$	1,510			$	29,071
Changes during the nine months ended September 30, 2023:
Stock-based compensation			-				-				387				-				-				-				387				-				387
Issuance of shares and warrants net of issuance costs			394,739				-*				4,341				-				-				-				4,341				-				4,341
Issuance of shares due to exercise of warrants			97,368				-*				-				-				-				-				-				-				-
Issuance of warrants with respect to convertible loans			-				-				449				-				-				-				449				-				449
Extinguishment in connection with convertible loan restructuring			-				-				287				-				-				-				287				-				287
Deconsolidation of Octomera			-				-				9,406				384				-				-				9,790				(1,360	)			8,430
Adjustment to redemption value of redeemable non-controlling interest			-				-				(9,406	)			-				-				-				(9,406	)			-				(9,406	)
Comprehensive loss for the period			-				-				-				(43	)			-				(48,738	)			(48,781	)			(150	)			(48,931	)
Balance at September 30, 2023			3,046,562			$	3			$	155,819			$	71			$	(1,266	)		$	(169,999	)		$	(15,372	)		$	-			$	(15,372	)

 

*	Represents an amount lower than $1 thousand.
**	All share amounts have been retroactively adjusted to reflect a 1-for-10 reverse share split (Note 1)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

ORGENESIS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(U.S. Dollars in thousands, except share amounts)

(Unaudited)

 

		Common Stock
		Number				Par Value				Addi-tional Paid-in Capital				Accumu-lated Other Compre-hensive Income (loss)				Treasury Shares				Accumu-lated Deficit				Equity Attri-buted to Orgenesis Inc.				Non- Contro-lling Interest				Total
Balance at July 1, 2024			4,692,473			$	5			$	180,752			$	302			$	(1,266	)		$	(195,291	)		$	(15,498	)		$	(294	)		$	(15,792	)
Changes during the three months ended September 30, 2024:
Stock-based compensation			-				-				89				-				-				-				89				-				89
RSUs vested			1,649				-*				-				-				-				-				-				-				-
Exercise of options			23,019				-*				-*				-				-				-				-*				-				-*
Issuance of shares to service providers			50,000				-*				816				-				-				-				816				-				816
Issuance of warrants with respect to loans (see note 7)			-				-				714				-				-				-				714				-				714
Transaction with NCI (see note 11b)			-				-				(408	)			-				-				-				(408	)			408				-
Issuance of shares due to exercise of warrants			3,526				-*				28				-				-				-				28				-				28
Comprehensive loss for the period			-				-				-				(517	)			-				(9,120	)			(9,637	)			(146	)			(9,783	)
Balance at September 30, 2024			4,770,667			$	5			$	181,991			$	(215	)		$	(1,266	)		$	(204,411	)		$	(23,896	)		$	(32	)		$	(23,928	)

 

*	Represents an amount lower than $1 thousand.
**	All share amounts have been retroactively adjusted to reflect a 1-for-10 reverse share split (Note 1)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

ORGENESIS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(U.S. Dollars in thousands, except share amounts)

(Unaudited)

 

		Common Stock
		Number				Par Value				Addi-tional Paid-in Capital				Accumulated Other Compre-hensive Income				Treasury Shares				Accumu-lated Deficit				Equity Attri-buted to Orgenesis Inc.				Non- Contro-lling Interest				Total
Balance at July 1, 2023			2,846,562			$	3			$	154,743			$	62			$	(1,266	)		$	(166,274	)		$	(12,732	)		$	-			$	(12,732	)
Balance			2,846,562			$	3			$	154,743			$	62			$	(1,266	)		$	(166,274	)		$	(12,732	)		$	-			$	(12,732	)
Changes during the three months ended September 30, 2023:
Stock-based compensation to employees and directors			-				-				76				-				-				-				76				-				76
Stock-based compensation			-				-				76				-				-				-				76				-				76
Issuance of shares			200,000				-*				1,000				-				-				-				1,000				-				1,000
Comprehensive income (loss) for the period			-				-				-				9				-				(3,725	)			(3,716	)			-				(3,716	)
Balance at September 30, 2023			3,046,562			$	3			$	155,819			$	71			$	(1,266	)		$	(169,999	)		$	(15,372	)		$	-			$	(15,372	)
Balance			3,046,562			$	3			$	155,819			$	71			$	(1,266	)		$	(169,999	)		$	(15,372	)		$	-			$	(15,372	)

 

*	Represents an amount lower than $1 thousand.
**	All share amounts have been retroactively adjusted to reflect a 1-for-10 reverse share split (Note 1)

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

ORGENESIS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. Dollars in thousands)

(Unaudited)

 

		September 30, 2024				September 30, 2023
		Nine Months Ended
		September 30, 2024				September 30, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(28,637	)		$	(58,295	)
Adjustments required to reconcile net loss to net cash used in operating activities:
Stock-based compensation			2,555				387
Convertible loans induced conversion expenses			4,304				-
Capital loss, net			134				-
Loss from deconsolidation of OBI and Octomera			66				5,343
Share in income of associated companies, net			-				552
Depreciation and amortization expenses			1,625				1,366
Credit loss on convertible loan receivable			-				2,688
Credit loss related to OBI			2,049				-
Impairment expenses			692				-
Effect of exchange differences on inter-company balances			1,672				106
Net changes in operating leases			41				(82	)
Change in Contingent consideration			263				-
Interest expenses accrued on loans and convertible loans			1,366				880
Loss from extinguishment in connection with convertible loan restructuring			141				283
Changes in operating assets and liabilities:
Accounts receivable			9				30,079
Prepaid expenses and other accounts receivable			1,341				(1,598	)
Inventory			34				(389	)
Other assets			(4	)			10
Change in related parties, net			2				-
Accounts payable			(1,951	)			3,925
Accrued expenses and other payables			(846	)			266
Employee and related payables			168				135
Deferred taxes, net			(2	)			9
Net cash used in operating activities		$	(14,978	)		$	(14,335	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment			(263	)			(2,096	)
Investment in Octomera			-				(543	)
Cash acquired from acquisition of Octomera			139				-
Impact to cash resulting from deconsolidation of OBI			(5	)			-
Impact to cash resulting from deconsolidation of Octomera			-				(973	)
Investment in long-term deposits			202				(33	)
Net cash used in investing activities		$	73			$	(3,645	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of shares and warrants			2,556				4,341
Proceeds from issuance of convertible loans			75				5,660
Proceeds from transaction with redeemable non-controlling interest that do not acquire control of a subsidiary			-				5,000
Repayment of convertible loans and convertible bonds			-				(3,000	)
Repayment of short and long-term debt			(251	)			(33	)
Proceeds from issuance of loans payable			4,670				425
Grant received in respect of third party			790				-
Receipt from Germfree (see note 11a)			6,720				-
Net cash provided by financing activities		$	14,560			$	12,393
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		$	(345	)		$	(5,587	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH			(12	)			7
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD			1,479				6,369
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD		$	1,122			$	789
SUPPLEMENTAL NON-CASH FINANCING AND INVESTING ACTIVITIES
Exchange of convertible loans for equity			16,007				-
Right-of-use assets obtained in exchange for new operation lease liabilities		$	405			$	752
Increase in accounts payable related to purchase of property, plant and equipment		$	-			$	14
Extinguishment in connection with convertible loan restructuring		$	-			$	287
CASH PAID DURING THE PERIOD FOR:
Interest		$	4			$	785

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

ORGENESIS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 and 2023

(U.S. Dollars in thousands, except share and loss per share amounts)

(Unaudited)

 

NOTE 1 – DESCRIPTION OF BUSINESS

 

a. General

 

Orgenesis Inc. (the “Company”) is a global biotech company working to unlock the potential of Cell and Gene Therapies (“CGTs”) in an affordable and accessible format. CGTs can be centered on autologous (using the patient’s own cells) or allogenic (using master banked donor cells) and are part of a class of medicines referred to as advanced therapy medicinal products (“ATMPs”). The Company is mostly focused on the development of autologous therapies that can be manufactured under processes and systems that are developed for each therapy using a closed and automated approach that is validated for compliant production near the patient for treatment of the patient at the point of care (“POCare”).

 

As of the date of this report, the Company operates two segments:

 

	●	The “Octomera” segment which includes the Company’s POCare Services that are performed in decentralized hubs which provide harmonized and standardized services to customers (“POCare Centers”). The Company’s subsidiary, Octomera LLC, holds all of the Octomera segment activities.
	●	The “Therapies” segment which includes therapy related activities.

 

On January 29, 2024, the Company and Metalmark Capital Partners (“Metalmark” or “MM”) entered into a Unit Purchase Agreement (the “MM UPA”), pursuant to which the Company acquired all of the preferred units of Octomera LLC (“Octomera”) previously owned by MM (the “MM Acquisition”), and effective that date, reconsolidated Octomera into its accounts. The Company currently owns 100% of the equity interests of Octomera. The Company had previously, from June 30, 2023 (“date of deconsolidation”), deconsolidated Octomera from its consolidated financial statements and had recorded its equity interest in Octomera as an equity method investment.

 

These consolidated financial statements include the accounts of Orgenesis Inc. and its subsidiaries.

 

On September 20, 2024, the Company implemented a 1-for-10 reverse stock split (the “Reverse Split”) of its authorized and outstanding shares of Common Stock. All share and per share amounts in these financial statements have been retroactively adjusted to reflect the reverse split as if it had been effected prior to the earliest financial statement period included herein. Following the Reverse Split, the number of authorized shares of common stock that the Company is authorized to issue from time to time is 14,583,333 shares.

 

The Company’s common stock, par value $0.0001 per share (the “Common Stock”), is traded on the OTCQX under the symbol “ORGS.” On September 27, 2023, the Company received a notice from the Listing Qualifications Staff (“Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) stating that the bid price of the Common Stock had closed at less than $1.00 per share over the previous 30 consecutive business days, and, as a result, did not comply with Listing Rule 5550(a)(2) (the “Bid Price Rule”). On April 17, 2024, the Company received a notice (the “Notice”) from the Staff in which it determined that in accordance with Listing Rule 5810(c)(2)(A), the Staff stated that it could not accept a plan to regain compliance and the Staff stated that the Company’s securities would be delisted from The Nasdaq Capital Market unless the Company timely requested a hearing before a Nasdaq Hearings Panel (the “Panel”) to address the deficiencies and present a plan to regain compliance. As permitted by the Notice, the Company timely requested a hearing before the Panel, which request stayed any further delisting action by the Staff pending the ultimate outcome of the hearing and the expiration of any extension that may be granted by the Panel. On June 6, 2024, the Company met with the Panel regarding the Company’s potential delisting from The Nasdaq Stock Market as a result of its violation of the Bid Price Rule and non-compliance with the equity requirement in Listing Rule 5550(b)(1) (the “Equity Rule”) or any of the alternative requirements in Listing Rule 5550(b). On June 8, 2024, the Company received the Panel’s decision which granted the Company until October 14, 2024 to regain compliance with the Bid Price and Equity Rules. On October 17, 2024, Nasdaq notified the Company that the Panel had determined to delist the Company’s Common Stock and that trading of the Company’s Common Stock will be suspended at the open of trading on October 21, 2024. In connection with the Nasdaq delisting notice, Nasdaq will complete the delisting by filing a Form 25 Notification of Delisting with the U.S. Securities and Exchange Commission (the “SEC”) after applicable appeal periods have lapsed. The Company’s Common Stock began trading under “ORGS” on the OTCQX with the open of the markets on October 21, 2024.

 

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As used in this report and unless otherwise indicated, the term “Company” refers to Orgenesis Inc. and its Subsidiaries. Unless otherwise specified, all amounts are expressed in United States Dollars.

 

b. Liquidity

 

Through September 30, 2024, the Company had an accumulated deficit of $204,411 and for the nine months ended September 30, 2024 incurred negative operating cashflows of $14,978. The Company’s activities have been funded by generating revenue, through offerings of its securities, and through proceeds from loans. There is no assurance that the Company’s business will generate sustainable positive cash flows to fund its activities.

 

The Company will need to use mitigating actions such as seeking additional financing, refinancing, or amending the terms of existing loans, or postponing expenses that are not based on firm commitments. In order to fund its operations until such time that the Company can generate sustainable positive cash flows, the Company will need to raise additional funds. For the nine months ended September 30, 2024 and as of the date of this report, the Company has assessed its financial condition and concluded that based on current and projected cash resources and commitments, as well as other factors mentioned above, there is substantial doubt about its ability to continue as a going concern. The Company is planning to raise additional capital to continue its operations and to repay its outstanding loans when they become due, as well as to explore additional avenues to increase revenues and reduce or delay expenditures. In May 2024, the Company entered into debt exchange agreements with three convertible debt holders pursuant to which a total of $16,007 of outstanding principal and accrued interest were exchanged for the right to receive an aggregate of 1,577,694 shares of Common Stock. The Company may also exchange some of its other outstanding loans and accounts payable for securities of the Company. There can be no assurance that the Company will be able to raise additional capital on acceptable terms, or at all, or be able to exchange its outstanding loans and accounts payable for securities of the Company.

 

The Company’s Common Stock was delisted from the Nasdaq Capital Market and now trades on the OTCQX. Such delisting and trading on the OTCQX may make it more difficult to raise additional capital.

 

The estimation and execution uncertainty regarding the Company’s future cash flows and management’s judgments and assumptions in estimating these cash flows is a significant estimate. Those assumptions include reasonableness of the forecasted revenue, operating expenses, and uses and sources of cash.

 

NOTE 2 - BASIS OF PRESENTATION

 

a. Basis of presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements. In the opinion of management, the financial statements reflect all normal and recurring adjustments necessary to fairly state the financial position and results of operations of the Company. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission (“SEC”) on April 15, 2024. The year-end balance sheet data was derived from the audited consolidated financial statements as of December 31, 2023, but not all disclosures required by generally accepted accounting principles in the United States (“U.S. GAAP”) are included in this Quarterly Report on Form 10-Q.

 

12

 

b. Significant accounting policies

 

The accounting policies adopted are consistent with those of the previous financial year except as described below:

 

Use of Estimates in the Preparation of Financial Statements

 

The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires us to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, equity, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, judgments and methodologies. The Company bases its estimates on historical experience and on various other assumptions that it believes are reasonable, the results of which form the basis for making judgments about the carrying values of assets, liabilities and equity, the amount of revenues and expenses, determination of loss on deconsolidation, valuation of investments, purchase price allocations, goodwill impairment, and assessment of credit losses and purchase price allocation including contingent consideration. Actual results could differ from those estimates.

 

Recently issued accounting pronouncements, not yet adopted

 

Improvements to Public Business Entity’s Expenses Disclosures

 

In November 2024, the FASB issued ASU No. 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The ASU improves the disclosures about a public business entity’s expenses and provides more detailed information about the types of expenses in commonly presented expense captions. The amendments require that at each interim and annual reporting period an entity will, inter alia, disclose amounts of purchases of inventory, employee compensation, depreciation and amortization included in each relevant expense caption (such as cost of sales, SG&A and research and development). The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating this ASU to determine its impact on the Company’s disclosures.

 

Improvements to Reportable Segments Disclosures

 

In November 2023, the FASB issued ASU 2023-07 “Segment Reporting–Improvements to Reportable Segments Disclosures (Topic 280)” to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in this ASU (1) require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss; (2) require that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition; (3) require that a public entity provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Topic 280 in interim periods; (4) clarify that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures; and (5) require that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure or measures of segment profit or loss in assessing segment performance and deciding how to allocate resources. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and should be applied retrospectively to all periods presented. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of these amendments on its consolidated financial statements.

 

Improvements to Income Tax Disclosures

 

In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740)–Improvements to Income Tax Disclosures” to enhance the transparency and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information. The amendments in this ASU require that public entities, on an annual basis, disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. This ASU also requires that all entities disclose, on an annual basis, (1) the amount of income taxes paid disaggregated by federal, state, and foreign taxes, (2) the amount of income taxes paid disaggregated by individual jurisdictions in which income taxes paid is equal to or greater than five percent of total income taxes paid, (3) income or loss from continuing operations before income tax expense or benefit disaggregated between domestic and foreign, and (4) income tax expense or benefit from continuing operations disaggregated by federal, state, and foreign. The amendments in this ASU are effective for annual periods beginning after December 15, 2024, and should be applied on a prospective basis with the option to apply retrospectively. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the impact of the adoption of these amendments on its consolidated financial statements.

 

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NOTE 3 – SEGMENT INFORMATION

 

Segment data for the nine months ended September 30, 2024 is as follows:

SCHEDULE OF SEGMENT REPORTING 

		Octomera				Therapies				Eliminations				Consolidated
		(in thousands)
Revenues		$	322			$	435			$	(23	)		$	734
Cost of revenues*			(1,292	)			(521	)			710				(1,103	)
Gross profit			(970	)			(86	)			687				(369	)
Cost of development services and research and development expenses*			(4,542	)			(4,079	)			699				(7,922	)
Operating expenses*			(1,226	)			(9,012	)			(728	)			(10,966	)
Impairment expenses **			-				(692	)			-				(692	)
Loss from deconsolidation			-				-				(66	)			(66	)
Other income			(126	)			12				-				(114	)
Depreciation and amortization			(1,171	)			(581	)			127				(1,625	)
Loss from extinguishment in connection with convertible loan			-				(141	)			-				(141	)
Credit losses on convertible loan receivable
Financial income (expenses), net			(756	)			(1,752	)			123				(2,385	)
Convertible loans induced conversion expenses			-				(4,304	)			-				(4,304	)
Share in net income of associated companies
Income (loss) before income taxes		$	(8,791	)		$	(20,635	)		$	842			$	(28,584	)

 

*	Excluding Depreciation, amortization expenses
**	Relates to impairment expenses on certain property, plant and equipment.

 

Segment data for the nine months ended September 30, 2023 is as follows:

 

		Octomera				Therapies				Eliminations				Consolidated
		(in thousands)
Revenues		$	44			$	350			$	(29	)		$	365
Cost of revenues*			(6,959	)			(531	)			1,874				(5,616	)
Gross profit			(6,915	)			(181	)			1,845				(5,251	)
Cost of development services and research and development expenses*			(6,828	)			(2,830	)			2,327				(7,331	)
Operating expenses*			(31,921	)			(4,962	)			3,930				(32,953	)
Loss from deconsolidation of Octomera			-				-				(5,343	)			(5,343	)
Other income, net			2				2								4
Depreciation and amortization			(1,294	)			(589	)			517				(1,366	)
Loss from extinguishment in connection with convertible loan			-				(283	)			-				(283	)
Credit losses on convertible loan receivable			-				(2,688	)			-				(2,688	)
Financial (expenses) income, net			(587	)			(1,425	)			94				(1,918	)
Share in net income of associated companies			-				(10	)			(542	)			(552	)
Loss before income taxes		$	(47,543	)		$	(12,966	)		$	2,828			$	(57,681	)

 

*	Excluding Depreciation, amortization expenses

 

14

 

Segment data for the three months ended September 30, 2024 is as follows:

 

		Octomera				Therapies				Eliminations				Consolidated
		(in thousands)
Revenues		$	272			$	75			$	-			$	347
Cost of revenues*			(245	)			(192	)			-				(437	)
Gross profit			27				(117	)			-				(90	)
Cost of development services and research and development expenses*			(1,291	)			(3,048	)			2				(4,337	)
Operating expenses*			(680	)			(1,975	)			(82	)			(2,737	)
Impairment expenses**			-				(692	)			-				(692	)
Other income			(126	)			4				-				(122	)
Depreciation and amortization			(301	)			(194	)			(43	)			(538	)
Financial expenses, net			(202	)			(515	)			(1	)			(718	)
Loss before income taxes		$	(2,573	)			(6,537	)			(124	)			(9,234	)

 

*	Excluding Depreciation, amortization expenses
**	Relates to impairment expenses on certain property, plant and equipment.

 

Segment data for the three months ended September 30, 2023 is as follows:

 

		Octomera				Therapies				Eliminations				Consolidated
		(in thousands)
Revenues		$	29			$	110			$	(29	)		$	110
Cost of revenues*			(1,875	)			(133	)			1,874				(134	)
Gross profit			(1,846	)			(23	)			1,845				(24	)
Cost of development services and research and development expenses*			(2,327	)			(779	)			2,327				(779	)
Operating expenses*			(3,931	)			(1,240	)			3,930				(1,241	)
Other income			-				2				-				2
Depreciation and amortization			(515	)			(193	)			517				(191	)
Financial (expenses) income, net			(92	)			(546	)			93				(545	)
Share in net income of associated companies			-				(11	)			(542	)			(553	)
Loss before income taxes		$	(8,711	)		$	(2,790	)		$	8,170			$	(3,331	)

 

*	Excluding Depreciation, amortization expenses

 

NOTE 4 – RECONSOLIDATION OF OCTOMERA LLC

 

Pursuant to the MM UPA signed on January 29, 2024, the Company and MM agreed to the following:

 

1.

Consideration:

 

	●	Royalty Payments: If Octomera and its subsidiaries generate Net Revenue during the three-year period 2025-2027, then the Company will pay 5% of Net Revenues to MM pursuant to the MM UPA.
	●	Milestone Payments: If the Company sells Octomera within ten years from the date of the Closing at a price that is more than $40 million excluding consideration for certain Excluded Assets as per the UPA, the Company shall pay MM 5% of the net proceeds.

 

	2.	MM’s designated members of the Board of Managers of Octomera resigned and the Company amended the Second Amended and Restated Limited Liability Company Agreement of Octomera (the “Octomera LLC Agreement”) to be a single member agreement reflecting the transactions consummated under the UPA, such that MM no longer (i) is a member of Octomera or a party to the Octomera LLC Agreement, or (ii) has a right to appoint members of the board of managers of Octomera.
	3.	10 secured promissory notes between Orgenesis Maryland LLC and MM, reflecting an aggregate outstanding principal amount of $2,600 (the “Notes”), were amended to, among other things, extend the maturity thereof to January 29, 2034 and to terminate the security interest granted by Orgenesis Maryland LLC in favor of MM that secured the obligations under the Notes.

 

15

 

Fair Value of Consideration Transferred

 

Accounting guidance provides that the allocation of the purchase price may be adjusted for up to one year from the date of the acquisition to the extent that additional information is obtained about the facts and circumstances that existed as of the acquisition date. The primary area of the purchase price allocation that is not yet finalized is related to intangible assets, property, plant and equipment, and certain other assets and tax matters and the related impact on goodwill.

 

In evaluating the fair value of the Octomera Equity Investment under the income approach, the Company used a discounted cash flow model of the business, adjusted to the Company’s share in the investment. Key assumptions used to determine the estimated fair value included: (a) internal cash flows forecasts for 5 years following the assessment date, including expected revenue growth, costs to produce, operating profit margins and estimated capital needs; (b) an estimated terminal value using a terminal year long-term future growth determined based on the growth prospects of the reporting units; and (c) a discount rate which reflects the weighted average cost of capital adjusted for the relevant risk associated with the Company’s reporting unit operations and the uncertainty inherent in the Company’s internally developed forecasts. The allocation of the purchase price to the net assets acquired and liabilities assumed resulted in the recognition of other intangible assets, net, which comprised of technology. The useful life of the technology for amortization purposes was determined by considering the period of expected cash flows generated by the assets used to measure the fair value of the intangible assets, adjusted as appropriate for the entity-specific factors including legal, regulatory, contractual, competitive, economic, or other factors that may limit the useful life of intangible assets.

 

The following table summarizes the allocation of purchase price to the fair values of the assets acquired and liabilities assumed as of the Transaction date:

SCHEDULE OF PURCHASE PRICE  TO THE FAIR VALUES OF THE ASSETS ACQUIRED AND LIABILITIES ASSUMED 

		(in thousands)
Total Contingent consideration to MM for royalty and milestone payments		$	4,643
Total assets acquired:
Cash and cash equivalents		$	139
Property, plants and equipment, net			17,852
Other Assets			3,478
Total assets		$	21,469
Total liabilities assumed:
Total current liabilities		$	(12,518	)
Total long-term liabilities			(5,628	)
Total liabilities		$	(18,146	)
Know how Technology			1,728
Total Net Assets		$	5,051
Fair-Value of Non-controlling interests			(408	)
Total liability to MM		$	4,643

 

The allocation of the purchase price to the net assets acquired and liabilities assumed resulted in the recognition of an intangible asset know-how of $1,728 and a liability to MM in the amount of $4,643. The know-how has a useful life of 10 years. The useful life of the intangible asset for amortization purposes was determined considering the period of expected cash flows generated by the assets used to measure the fair value of the intangible asset adjusted as appropriate for the entity-specific factors, including legal, regulatory, contractual, competitive, economic or other factors that may limit the useful life of intangible assets.

 

16

 

Key inputs for the fair values valuation are summarized below.

SCHEDULE OF KEY INPUTS FOR THE FAIR VALUES VALUATION 

Key Valuation Inputs		Jan 29, 2024
Discount rate			40	%
Risk-free interest rate			4.4	%
Average 5 years revenue growth			50	%
Measurement input			50	%

 

The Company incurred transaction costs of approximately $50 and $0 during the nine and three months ended September 30, 2024 respectively, which were included in general and administrative expenses in the condensed consolidated statements of operations.

 

The revenues and net loss of Octomera from January 1, 2024 until the reconsolidation date were $23 and $1,244 respectively.

 

Fair value assumptions used in accounting for contingent consideration

 

On January 29, 2024, in connection with the PPA study of Octomera LLC, the Company recognized a contingent consideration to pay MM based on two components:

 

1. Royalties based on revenues in 2025, 2026 and 2027, and;
2. An earnout amount, which is dependent on a future triggering event being either an IPO or exit.

 

The estimated fair value of the contingent consideration is based on management’s assessment of whether, and at what level, the financial metrics will be achieved, and the present value factors associated with the timing of the payments. This fair value measurement is based on significant unobservable inputs in the market and thus represents a Level 3 fair value measurement and used the Monte Carlo pricing model to calculate the fair value, which was $4,643 as of January 29, 2024. As of September 30, 2024, the fair value was $4,906. Changes in the fair value of contingent consideration are recorded in operating expenses. The total revaluation expense for the period ended September 30, 2024 was $ 263.

 

Key inputs for the simulation are summarized below.

SCHEDULE OF KEY INPUTS 

Key Valuation Inputs		Jan 29, 2024				September 30, 2024
Standard Deviation			13.5	%			13.6	%
Risk-free interest rate			4.4	%			4.2	%
Possible trigger event examination			Year 10				Year 9.5
Average 5 years revenue growth			50	%			50	%
Trigger events			30	%			30	%
EV/EBIT Multiple			11.1				11.1

 

*	Based on a Monte Carlo simulation analysis of 30,000 iterations

 

Deconsolidation of Orgenesis Biotech Israel Limited (“OBI”)

 

On February 14, 2024, following a claim for payment by employees of OBI, a fully owned subsidiary of Octomera of past salaries due, the district court in Haifa, Israel appointed a trustee to run the affairs of OBI. As a result of this appointment, effective February 14, 2024, the Company no longer controls OBI and has ceased to consolidate the results of OBI into its consolidated results. The Company recognized a loss as a result of the deconsolidation of $66. The Company does not currently believe that rehabilitation is possible and purchased certain OBI equipment.

 

The Company recorded $2,699 being what it owes to OBI under Accounts payable related Parties on the balance sheet of September 30, 2024.

 

17

 

The following table summarizes the deconsolidated assets and liabilities as of February 14, 2024:

SCHEDULE OF DECONSOLIDATE ASSETS AND LIABILITIES 

Total assets acquired:
Cash and cash equivalents		$	4
Property, plants and equipment, net			2,884
Other Assets			1,422
Total assets		$	4,310
Total liabilities assumed:		$	4,244
Total Net Assets deconsolidated		$	66
Loss from deconsolidation of OBI		$	66

 

NOTE 5 – EQUITY

 

Private Placement Offering

 

On March 3, 2024, the Company entered into a Securities Purchase Agreement with certain accredited investors, pursuant to which the Company agreed to issue and sell, in a private placement, 227,272 shares of Common Stock at a purchase price of $10.3 per share, Warrants to purchase up to 227,272 shares of Common Stock at an exercise price of $15.0 per share, and further Warrants to purchase up to 227,272 shares of Common Stock at an exercise price of $20.0 per share, all such Warrants exercisable immediately and expiring five years from their date of issuance. The Company received gross proceeds of approximately $2.3 million before deducting related offering expenses. The Offering closed on March 5, 2024.

 

On May 10, 2024, the Company entered into a Securities Purchase Agreement with certain accredited investors, pursuant to which the Company agreed to issue and sell, in a private placement, 15,000 shares of the Company’s Common Stock at a purchase price of $10.3 per share, Warrants to purchase up to 15,000 shares of Common Stock at an exercise price of $15.0 per share, and further Warrants to purchase up to 15,000 shares of Common Stock at an exercise price of $20.0 per share, all such Warrants exercisable immediately and expiring five years from their date of issuance. The Company received gross proceeds of approximately $154 before deducting related offering expenses. The Offering closed on May 10, 2024.

 

NOTE 6 – CONVERTIBLE LOANS

 

The table below summarizes the Company’s outstanding convertible loans as of September 30, 2024.

SCHEDULE OF LONG TERM CONVERTIBLE NOTES 

Principal Amount				Issuance Date				Current Interest Rate				Current Maturity				Current Conversion Price of loan into equity
at Issuance				(Year)				%				(Year)				$
$	100				2019				8	%			2024				10.3
	100				2020				8	%			2024				10.3
	1,150				2022				6	%			*2023				45.0
	5,000				2023				8	%			2026				24.6
$	6,350

 

*

Was not repaid by September 30, 2024.

 

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The table below summarizes the Company’s outstanding convertible loans as of December 31, 2023.

 

Principal				Issuance Date				Current Interest Rate				Current Maturity				Current Conversion Price of loan into equity
Amount				(Year)				%				(Year)				$				Note
Convertible Loans Outstanding as of December 31, 2023
$	750				2018				10	%			2026				25.0
	1,500				2019				10	%			2026				25.0
	100				2019				8	%			2024				70.0
	5,000				2019				10	%			2026				25.0
	100				2020				8	%			2024				70.0
	5,000				2022				10	%			2026				25.0
	1,150				2022				6	%			**2023				45.0
	5,000				2023				8	%			2026				24.6
	735				2023				8	%			2024				08.5
$	19,335

 

**

Was not yet paid by December 31, 2023.

 

Debt Exchange Agreements

 

On May 21, 2024, the Company entered into debt exchange agreements with three convertible debt holders pursuant to which a total of $16,007 of outstanding principal and accrued interest was exchanged for the right to receive an aggregate of 1,577,695 shares of Common Stock of the Company. A total of 1,182,919 shares of Common Stock have been issued pursuant to the debt exchange agreements as of September 30, 2024. The Company reduced the exchange price from $25.0 to $10.3 per share for a total of $14,784 of outstanding principal. As a result, the Company recorded an induced conversion expense equal to the fair value of the incremental consideration, amounting to $4,304.

 

Additional notes related to changes in convertible loans terms that occurred in 2024

 

In January 2024, the Company and lender agreed to extend the maturity date of the loan amount to December 31, 2026. In consideration for such extension, the Company issued to the lender warrants to purchase 84,000 shares of Common Stock at an exercise price of $8.5 per share. Based on its analysis, the Company concluded that this change in terms should be accounted for as an extinguishment. The loan amount was included in the debt exchange agreement.

 

NOTE 7 –LOANS

 

The table below summarizes the Company’s outstanding long-term loans as of September 30, 2024 and December 31, 2023, respectively:

 

SCHEDULE OF LONG TERM LOANS

Principal Amount				Interest Rate				Year of Maturity				September 30, 2024				December31, 2023
(in thousands)				%								(in thousands)
$	2,600				10				2034			$	2,828			$	-

 

See note 4.

 

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The table below summarizes the Company’s outstanding short-term loans as of September 30, 2024 and December 31, 2023, respectively:

 

SCHEDULE OF SHORT TERM LOANS

Currency		Interest Rate				September 30, 2024				December 31, 2023
		%				(in thousands)
USD			8			$	287			$	258
USD			10				4,603				61
USD			(*)8				-				(**)331
Euro			8				15				-
						$	4,905			$	650

 

(*)

Weighted average interest.

 

(**)

The terms of the loan were amended on January 1, 2024. Under the new terms, the loan became convertible into shares of Common Stock and the lender agreed to extend the maturity date to December 31, 2024. In consideration for such extension, the Company issued to the lender warrants to purchase 36,000 shares of the Company’s Common Stock at a price of $8.5 per share and granted lender the right to convert any part of the outstanding balance of the loan into Common Stock of the Company at the conversion rate of $8.5 per share. Based on its analysis, the Company concluded that this change in terms should be accounted for as a modification. This loan was converted as per the debt exchange agreement. See note 6.

 

During October 2024, the Company entered into short term loan agreements with certain parties for a total of $790. The loans bear 10% annual interest, and the loan holders were issued warrants to purchase a total of 767,089 shares of Common Stock of the Company at a price of $1.03 per share. In addition, during October 2024, the Company agreed with certain short term loan holders to extend the maturity date of loans in the amount of $2,300. The Company reduced the warrant exercise price for 526,187 warrants held by such loan holders to $1.03.

 

The table below summarizes the Company’s warrants granted to loan holders for the period ended September 30, 2024.

 

SCHEDULE OF WARRANTS GRANTED

Date of issuance		Reason for issuance		Number of warrants				Weighted Average Exercise price				Warrant vesting (subject to continued service provided to Company)		Expiration date
April 07, 2024		Loan Agreement			15,625			$	8			Immediate		October 06, 2024
April 05, 2024		Loan Agreement			21,875			$	8			Immediate		October 04, 2024
August 21, 2024		Loan Agreement			24,272			$	10.3			Immediate		August 20, 2029
August 21, 2024		Loan Agreement			97,088			$	10.3			Immediate		August 20, 2029
September 06, 2024		Loan Agreement			24,272			$	10.3			Immediate		September 05, 2025
September 10, 2024		Loan Agreement			1,942			$	10.3			Immediate		September 09, 2025
September 09, 2024		Loan Agreement			24,272			$	10.3			Immediate		September 08, 2029
September 17, 2024		Loan Agreement			24,272			$	10.3			Immediate		September 16, 2029
September 30, 2024		Loan Agreement			14,563			$	10.3			Immediate		September 29, 2025
Total					248,181			$	10.0

 

20

 

NOTE 8 – STOCK-BASED COMPENSATION

 

a.

Options Granted to Employees

 

The table below summarizes the terms of options for the purchase of shares in the Company granted to employees during the period from January 1, 2024 to September 30, 2024:

 SCHEDULE OF EMPLOYEE STOCK OWNERSHIP PLAN DISCLOSURES 

No. of Options Granted

Exercise Price

Vesting Period

Fair Value at Grant (in thousands)

Expiration Period

Employees

126,912

$5.0-$10.3

41,100 quarterly over a period of two years, 20,000 quarterly over a period of four years, 1,250 annually over a period of three years and 64,563 immediate

$

655

10 years

 

The fair valuation of these option grants is based on the following assumptions:

 

SCHEDULE OF STOCK OPTIONS ACTIVITY

		During the Period from January 1, 2024 to September 30, 2024
Value of one common share			$4.9-$10.3
Dividend yield			0	%
Expected stock price volatility			79%-110	%
Risk free interest rate			3.86%-4.49	%
Expected term (years)			2.50-6.06

 

b.

Restricted Stock Units (“RSUs”) Granted to Employees

 

Below is a table summarizing all the RSUs grants to employees during the period from January 1, 2024 to September 30, 2024:

 

SCHEDULE OF RESTRICTED STOCK UNITS GRANTED

		No. of Options Granted				Vesting Period		Fair Value at Grant (in thousands)
Employees			8,250			5,000 Immediate and 3,250 quarterly over a period of two years		$	44

 

21

 

c.

Shares and warrants issued to advisors.

 

Below is a table summarizing the shares and warrants grants to advisers during the period from January 1, 2024 to September 30, 2024:

SCHEDULE OF SHARES AND WARRANTS GRANTS TO ADVISORS 

Date of issue of share or warrant

Reason for issue of share or warrant

Consideration

Exercise price of warrants

Warrant vesting (subject to continued service provided to Company)

Warrant expiry date

March 7, 2024

Strategic advisor agreement

50,000 shares of Common Stock and warrants to purchase 50,000 shares of Common Stock

$

10.3

One third on March 7, 2024, one third on June 5, 2024, and one third on September 3, 2024.

March 6, 2029

April 18, 2024

Strategic advisor agreement

Warrants to purchase 50,000 shares of Common Stock

$

10.3

One third on April 18, 2024, one third on July 18, 2024, and one third on October 18, 2024.

April 17, 2029

April 23, 2024

Strategic advisor agreement

Warrants to purchase 50,000 shares of Common Stock

$

10.3

One third on April 16, 2024, one third on July 16, 2024, and one third on October 16, 2024.

April 22, 2029

May 22, 2024

Strategic advisor agreement

Warrants to purchase 47,500 shares of Common Stock

$

10.3

One third on May 21, 2024, one third on August 21, 2024, and one third on November 21, 2024.

May 21, 2029

July 14, 2024

Strategic advisor agreement

Warrants to purchase 20,000 shares of Common Stock

$

10.3

One third on July 14, 2024, one third on October 14, 2024, and one third on January 14, 2024.

July 13, 2029

September 5, 2024

Strategic advisor agreement

50,000 shares of Common

$

10.3

 

		No. of Warrants Granted				Vesting Period		Fair Value at Grant (in thousands)
Warrants			217,500			Over a period of nine months		$	646
Shares			50,000			N/A		$	350

 

The fair valuation of these shares grants is based on the market value of the share at the date of grant.

 

The fair valuation of these warrants grants is based on the following assumptions:

SCHEDULE OF WARRANTS GRANTS ASSUMPTIONS 

		During the Period from January 1, 2024 to September 30, 2024
Value of one common share			$5.1-$8.4
Dividend yield			0	%
Expected stock price volatility			87%-91	%
Risk free interest rate			4.07%-4.68	%
Expected term (years)			5

 

22

 

NOTE 9 – LOSS PER SHARE

 

The following table sets forth the calculation of basic and diluted loss per share for the period indicated:

SCHEDULE OF BASIC AND DILUTED LOSS PER SHARE 

		September 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
		Three Months Ended								Nine Months Ended
		September 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
		(in thousands, except per share data)
Basic and diluted:
Net loss attributable to Orgenesis Inc.		$	9,120			$	3,725			$	27,789			$	48,738
Weighted average number of common shares outstanding			4,715,229				3,002,259				3,938,419				2,868,078
Net loss per share		$	1.93			$	0.12			$	7.06			$	1.70

 

For the nine months ended September 30, 2024 and September 30, 2023, all outstanding convertible notes, options and warrants have been excluded from the calculation of the diluted net loss per share since their effect was anti-dilutive.

 

Diluted loss per share excludes 1,613,665 shares underlying outstanding options and warrants and 247,895 shares issuable upon conversion of convertible loans for the nine months ended September 30, 2024, because the effect of their inclusion in the computation would be antidilutive. Diluted loss per share excludes 1,825,724 shares underlying outstanding options and warrants and 247,895 shares issuable upon conversion of convertible loans for the three months ended September 30, 2024, because the effect of their inclusion in the computation would be antidilutive.

 

Diluted loss per share excludes 768,004 shares underlying outstanding options and warrants and 713,902 shares upon conversion of convertible loans for the nine months ended September 30, 2023, because the effect of their inclusion in the computation would be antidilutive. Diluted loss per share excludes 796,348 shares underlying outstanding options and warrants and 721,335 shares issuable conversion of convertible loans for the three months ended September 30, 2023, because the effect of their inclusion in the computation would be antidilutive.

 

NOTE 10 – REVENUES

 

Disaggregation of Revenue

 

The following table disaggregates the Company’s revenues by major revenue streams:

 

SCHEDULE OF DISAGGREGATION OF REVENUE

		September 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
		Three Months Ended								Nine Months Ended
		September 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
		(in thousands)
Revenue stream:
Cell process development services and hospital services		$	347			$	110			$	734			$	365
Total		$	347			$	110			$	734			$	365

 

23

 

A breakdown of the revenues per customer constituted at least 10% of revenues is as follows:

 

SCHEDULE OF BREAKDOWN OF REVENUES PER CUSTOMER

		September 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
		Three Months Ended								Nine Months Ended
		September 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
		(in thousands)
Revenue earned:
Customer A (United States)		$	265			$	-			$	265			$	130
Customer B (United States)		$	-			$	-			$	300			$	-
Revenue earned		$	-			$	-			$	300			$	-

 

Contract Assets and Liabilities

 

Contract assets are mainly comprised of trade receivables net of allowance for doubtful debts, which includes amounts billed and currently due from customers.

 

The activity for trade receivables is comprised of:

 

SCHEDULE OF ACTIVITY FOR TRADE RECEIVABLES

		September 30, 2024				September 30, 2023
		Nine Months Ended
		September 30, 2024				September 30, 2023
		(in thousands)
Balance as of beginning of period		$	88			$	36,183
Reconsolidation (deconsolidation) of Octomera			82				(5,985	)
Additions			458				403
Collections			(981	)			(6,090	)
Allowances for credit losses			512				(24,388	)
Exchange rate differences			2				(52	)
Balance as of end of period		$	161			$	71

 

The activity for contract liabilities is comprised of:

 

SCHEDULE OF ACTIVITY FOR CONTRACT LIABILITIES

		September 30, 2024				September 30, 2023
		Nine Months Ended
		September 30, 2024				September 30, 2023
		(in thousands)
Balance as of beginning of period		$	200			$	70
Deconsolidation of Octomera			110				(106	)
Deconsolidation of OBI			(60	)			-
Deconsolidation			(60	)			-
Additions			160				156
Realizations			(279	)			-
Balance as of end of period		$	131			$	120

 

NOTE 11 – OTHER SIGNIFICANT TRANSACTIONS AND AGREEMENTS DURING THE NINE MONTHS ENDED SEPTEMBER 30, 2024

 

a.

Asset Purchase and Strategic Collaboration Agreement.

 

On April 5, 2024, the Company entered into an Asset Purchase and Strategic Collaboration Agreement (the “Purchase Agreement”) with Griffin Fund 3 BIDCO, Inc., (“Germfree”), for the sale by the Company of five Orgenesis Mobile Processing Units and Labs (“OMPULs”) to Germfree, which will be incorporated into Germfree’s lease fleet and leased back to the Company or to third-party lessees designated by the Company. Pursuant to the Purchase Agreement, and subject to the terms and conditions set forth therein, in consideration for the purchase of the OMPULs, the Orgenesis Quality Management Systems Framework (“OQMSF”) and related intellectual property rights, Germfree is to pay an aggregate purchase price of $8,340 subject to adjustment through a verification mechanism set forth in the Purchase Agreement. Pursuant to the Purchase Agreement, Germfree has paid the Company $6,720 as of September 30, 2024, which has been recorded under current liabilities.

 

On November 5, 2024, Germfree notified the Company of its intention not to lease any OMPULS back to the Company. Germfree confirmed that it has satisfied its obligations to the Company under the Purchase Agreement, and the Company therefore does not expect to receive any further payments thereunder. The Company and Germfree plan to resolve any outstanding issues together.

 

24

 

b.

Asset Purchase Agreement with Broaden.

 

On July 10, 2024, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Broaden Bioscience and Technology Corp. (“Broaden”) for the purchase by the Company of the following assets (the “Assets”): The process and algorithms developed by Broaden for processing CAR-T, RACE CAR-T and all oncology products that will enable the Company to develop and sell treatments to third parties, which include Broaden’s rights, title and interests in and to all intellectual property, including, but not limited to, patents, patent applications, know-how, materials, licenses, permits and approvals related thereto. Pursuant to the Purchase Agreement, in consideration for the purchase of the Assets, the Company will pay Broaden an amount equal to the value of the Assets established with the assistance of a third party valuation firm not to exceed $11,000 (the “Consideration”), less a debt adjustment relating to $10,767 owed to the Company by Broaden for work performed and invoiced (but fully impaired in the Company’s financial statements) between August 2022 and May 2023 (the “Debt”), as detailed in the Purchase Agreement. The Consideration that exceeds the Debt will be payable at the election of the Company in shares of the Company’s common stock at a price of $30.0 per share or 10% above the market price at such time it is paid, whichever is higher, or a note with amortization in 24 months from the date of the Purchase Agreement, including prepayment provisions. The Company accounted for the Purchase agreement by recording the difference between the Consideration and Debt as research and development expenses, and the consideration that exceeds the debt was recorded in other long term liabilities.

 

Asset Purchase Agreement with Theracell.

 

On July 12, 2024, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Theracell Advanced Biotechnology S.A, Theracell Advanced Biotechnology LTD and IDNA Genomics Public Limited (collectively, “Theracell”) for the purchase by the Company of the following assets (the “Assets”) owned by Theracell:

 

	●	50% of the outstanding ownership rights and equity interests in Theracell Laboratories IKE (“Theracell IKE”) not currently owned by the Company so that the Company shall own 100% of the outstanding equity interests of Theracell IKE; and
	●	Certain products (the “Products”), which include: (i) the manufacturing processes, algorithms, work instructions, test methods, standard operating procedures and specifications for producing Tumor Infiltrating Lymphocytes (“TILs”) that meet current Good Manufacturing Practice (cGMP) requirements that will enable the Company to potentially use this product as a platform for treating a wide variety of solid tumors; (ii) a 3rd generation GMP lentivirus production process, which is part of a therapy manufacturing process that will enable the Company to potentially treat Beta Thalassemia therapies; (iii) an oncolytic virus cell carrier platform which will enable the Company to potentially develop treatments for an array of cancers; (iv) a process for the potential treatment of mesenchymal stem cells for kidney disorders; (v) a process for controlled isolation of regenerative EVs derived from mesenchymal stem cells for the potential treatment of kidney disorders; and (vi) bioxome encapsulated APIs for improved transdermal delivery and bioavailability for the potential treatment of atopic dermatitis/wound healing; including Theracell’s rights, title and interests in and to all intellectual property, including, but not limited to, patents, patent applications, know-how, materials, licenses, permits and approvals relating to Products as further described in the Purchase Agreement.

 

Pursuant to the Purchase Agreement, in consideration for the purchase of the Assets, the Company will pay Theracell an aggregate purchase price of $13,000 (the “Consideration”), which is equal to the value of the Assets established with the assistance of a third-party valuation firm, less a debt adjustment in the amount of $10,324 which was owed (but fully impaired in the Company’s financial statements) by Theracell to the Company (the “Debt”). The aggregate Consideration will be paid by the Company as follows: (i) $400 will be paid to Theracell within 60 days after signing of the Purchase Agreement, (ii) $250 will be paid to Theracell within one year after signing of the Purchase Agreement, and (iii) the remaining amount (less any Debt) will be paid to Theracell in four equal annual payments beginning on December 30, 2025 and ending on December 30, 2028. As of the date of this quarterly report on Form 10-Q, the Company had paid Theracell $243. The Company accounted for the Purchase agreement by recording the difference between the Consideration and Debt as research and development expenses, and the consideration that exceeds the debt was recorded in short term or other long-term liabilities as appropriate.

 

25

 

Material Definitive Agreement

 

On August 9, 2024, the Company and Harley Street Healthcare Group (London) Plc Ltd. (“HSHG”) entered into a Strategic Partnership Agreement (the “Agreement”) pursuant to which the Company and HSHG agreed to form a joint venture to collaborate in the clinical development and commercialization of wellness and longevity-related services, including personalized preventative care and regenerative therapies, which are to be offered on a subscription basis by HSHG in line with a planned offering of “Health & Wellness as a Service” initially within the territory of the United Kingdom, the UAE, MENA, Canada, ASEAN, the Balkans, Africa, Latam and the Indian Subcontinent (the “Territory”). Pursuant to the Agreement, any new joint venture entity to be formed (the “JV”) will initially be owned 49% by the Company and 51% by HSHG. Thereafter, ownership of the JV entity will be based on each party’s respective contributions, and control of the board of the JV entity will be based upon such percentage contributions. Until the parties mutually agree to form the new JV entity, HSHG and the Company shall each carry out the respective tasks assigned to them for the implementation of the project in accordance with the Agreement and the applicable work plan thereunder.

 

Pursuant to the Agreement, HSHG agreed to invest (by the end of December 2024 for phase I) $5,000 in the Company’s shares of common stock at a purchase price equal to the greater of (i) $10.3 per share (subject to adjustment for stock splits, consolidations and similar transactions) or (ii) a 5% premium to the Nasdaq official closing price of the common stock of the Company at the time of HSHG’s investment. Upon receipt by the Company of the $5,000 investment set forth above, HSHG will receive 485,437 three-year warrants to purchase 485,437 shares of the Company’s common stock at an exercise price equal to the greater of (i) $10.3 per share (subject to adjustment for stock splits, consolidations and similar transactions) or (ii) a 10% premium to the Nasdaq official closing price of the Company’s common stock. In addition, HSHG will have the option to provide up to $5,000 of additional funding for phase II, to be invested by December 31, 2025 in the Company’s shares of common stock under the same terms (the “Option”). The Option shall expire on the one-year anniversary of the date which the Company receives the original investment from HSHG (the “Effective Date”). In addition, following the Effective Date, HSHG will have the option to nominate a representative board member to join the Company’s board of directors, subject to the Company obtaining the proper corporate approvals and the applicable rules and regulations of the Nasdaq Stock Market.

 

The Company shall contribute to the JV its intellectual property rights in the form of a license agreement to be entered into by the parties, which will require that HSHG shall be solely responsible for payment of all costs of the manufacturing, distributing, marketing and/or selling of the Company’s products within the Territory. In addition, the Company shall provide the know-how and tech transfer of the Company’s products, and will support the JV and HSHG in the implementation of one or more products in the Territory, including implementing the relevant Company quality management system, all as specified and detailed in the applicable work plan and the relevant master services agreement. The Company will have the option to nominate a representative board member to join the JV and HSHG’s board of directors, subject to HSHG obtaining the proper approval for adding a board member.

 

In addition, each of the parties may provide additional funding in an amount to be mutually agreed by the parties, to cover the operations costs of the project in accordance with the applicable work plan. Such additional investment may be in the form of an equity investment for shares in the JV entity, a convertible loan, and/or procured services (the “Additional Investment”), if required (as determined by the Parties) upon mutual agreement in order to continue the activities of the applicable project(s). The valuation of the JV/any jointly controlled entities for the purposes of such Additional Investment will be mutually agreed by the parties or determined with the assistance of an independent third-party expert to be mutually selected by the parties. Any Additional Investment by either party may result in a dilution of the other party’s participating interest.

 

The Company and HSHG shall have the right to purchase all of HSHG’s or the Company’s interest in the JV subject to all rules and regulations to which it is then subject, including without limitation, the rules of any U.S. national securities exchange (“ORGS Buy-Out”). In the event that the ORGS Buy-Out is implemented, then, for the purposes of the ORGS Buy-Out, the JV’s valuation shall be determined by an independent third-party expert to be mutually selected by the parties.

 

26

 

As of September 30, 2024 the JV entity had not been incorporated. As of the date of this quarterly report on Form 10-Q, no funds had yet been received from HSHG.

 

NOTE 12 – LEGAL PROCEEDINGS

 

On January 18, 2022, a complaint (the “Complaint”) was filed in the Tel Aviv District Court (the “Court”) against the Company, Orgenesis Ltd (“the Israeli Subsidiary”), Prof. Sarah Ferber, Vered Caplan and Dr. Efrat Asa Kunik (collectively, the “defendants”) by plaintiffs the State of Israel, as the owner of Chaim Sheba Medical Center at Tel Hashomer (“Sheba”), and Tel Hashomer Medical Research, Infrastructure and Services Ltd. (collectively, the “plaintiffs”). In the Complaint, the plaintiffs are seeking that the Court issue a declaratory remedy whereby the defendants are required to pay royalties to the plaintiffs at the rate of 7% of the sales and 24% of any and all revenues in consideration for sublicenses related to any product, service or process that contain know-how and technology of Sheba and any and all know-how and technology either developed or supervised by Prof. Ferber in the field of cell therapy, including in the category of the point-of-care platform and any and all services and products in relation to the defendants’ CDMO activity. In addition, the plaintiffs seek that the defendants provide financial statements and pay NIS 10,000 to the plaintiffs due to the royalty provisions of the license agreement, dated February 2, 2012, between the Israeli subsidiary and Tel Hashomer Medical Research, Infrastructure and Services Ltd. (the “License Agreement”). The Complaint alleges that the Company and the Israeli subsidiary used know-how and technology of Sheba and know-how and technology either developed or supervised by Prof. Ferber while employed by Sheba in the field of cell therapy, including in the category of the point-of-care platform and the services and products in relation to the defendants’ CDMO activity and are entitled to the payment of certain royalties pursuant to the terms of the License Agreement. The defendants have filed their statements of defense responding to this Complaint, the Plaintiffs filed their response and the parties are now conducting disclosure proceedings in accordance with Israel’s civil regulations. In accordance with Israel’s civil regulations, the parties considered alternative means to resolve at least some of the disputes and have consented to engage the services of a mutually agreeable mediator. The mediation is currently taking place. According to management’s estimation, since a loss is not considered probable, no provision was made in the financial statements.

 

On September 6, 2023, a claim (the “Claim”) was filed in the Tel Aviv District Court (the “Court”) against the Company, the Israeli Subsidiary, Octomera LLC, Orgenesis Biotech Israel Ltd, Theracell Laboratories Private Company and Vered Caplan (collectively, the “defendants”) by Ehud Almon (Plaintiff) for certain finders’ fees and / or royalties related to sales made by an Octomera subsidiary to a Greek entity in the amount of $896 and also for other means of compensation. The Israeli Subsidiary and Vered Caplan filed their statement of defense on January 28, 2024 claiming, inter alia, that the Plaintiff did not serve as a broker, but rather served as the Greek entity’s representative and as such he is not entitled to compensation of any kind from the defendants. It was also clarified that the defendants did not enter into a finder’s agreement with the Plaintiff. Additionally, the Israeli subsidiary and Vered Caplan claimed that the Plaintiff concealed material information from the court, including the signed partnership agreement between the Greek entity’s owner and the Plaintiff, as well as certain criminal charges brought against him in Greece. On February 22, 2024, the Plaintiff filed a request for service of process to deliver the Claim to the Company and the other defendants incorporated outside of Israel. This request was denied on the same day. An appeal filed by the Plaintiff on the aforementioned decision was denied. On May 27, 2024, the Plaintiff filed a new request for service of process to deliver the Claim to the Company and the other defendants incorporated outside of Israel. On May 28, 2024 the request was accepted. The court ruled that the Claim be delivered via courier to the Company and Octomera LLC, and delivered in accordance with the Hague Convention to Theracell Laboratories. After requesting a continuance, on September 18, 2024, the Plaintiff filed an update that the Claim was delivered to the Company and Octomera LLC on August 16, 2024. On the same day, the Claimant also filed a motion, petitioning that the Claim will be delivered to Theracell Laboratories via the Company or via Vered Caplan, in order to minimize the costs of translating and delivering the Claim to Greece. On October 7, 2024 Vered Caplan filed her opposition to the abovementioned motion, claiming that there is no legal basis for the Claimant’s request, especially since the ruling regarding the service of process was made per the Plaintiff’s request. On October 10, 2024 the Company filed its opposition to the request, on the same basis, mentioning, inter alia, that the claim itself has no connection to Israel and that the Israeli courts are not the appropriate forum for the Plaintiff’s claims. Ruling on the abovementioned motion is pending. According to management’s estimation, since the likelihood of the Plaintiff winning the case is less than fifty percent, no provision was made in the financial statements.

 

On October 26, 2023, a complaint was filed in the Supreme Court of the State of New York by plaintiffs Southern Israel Bridging Fund Two LP and Mr. Amir Hasidim, against the Company, seeking the payment of $1,150 together with interest in the amount of 6%. In the Complaint plaintiffs alleged the amount provided to the Company was based on a Convertible Loan Agreement dated May 17, 2022, which provided for a loan amount of $5,000. Notwithstanding the Convertible Loan Agreement, on August 21, 2023, Company sent the plaintiffs an offset notice in light of the plaintiffs’ breach of obligations under the Convertible Loan Agreement and the damages caused to the Company as a result of said breach. The Company counter sued as well, seeking damages for Plaintiff’s breach of contract, fraud and harassment. Accordingly, the Company disputes whether it owes plaintiffs the amount sought in the Complaint.

 

27

 

On November 1, 2023, a claim (the “Claim”) was filed in the Tel Aviv District Court (the “Court”) against the Company, the Israeli Subsidiary, and Vered Caplan (collectively, the “Defendants”) by Fidelity Venture Capital Ltd. and Dror Atzmon (together – the “Plaintiffs”). The claim is based on two agreements the Company entered into with the Plaintiffs on November 2, 2016: (a) an unsecured convertible note agreements for an aggregate amount of NIS 1 million ($280). The loan bears a monthly interest rate of 2% and will mature on May 1, 2017, unless converted earlier and (b) a consultation agreement which awarded the Plaintiffs 80 thousand warrants. The exercise price of the warrants and conversion price were fixed at $5.2 per share (pre-reverse stock split implemented by the Company in November 2017). On April 27, 2017, and November 2, 2017, the Company entered into extension agreements through November 2, 2017 and May 2, 2018, respectively, in connection with the convertible note agreements. In March 2018, the Plaintiffs submitted a notice of their intention to convert into shares the Company’s common stock, the principal amount of the loan, and accrued interest of approximately $383 outstanding. In addition, the Plaintiffs exercised all the warrants awarded in the consultation agreement. In light of the reverse stock split which took place in November 2017, the Company disagreed with the plaintiffs’ calculations regarding the number of issuable shares of Common Stock. The Company responded to the notice and rejected these contentions in their entirety. In April 2018, the Company terminated the agreements based on several claims, including mistake, intentional misrepresentation and bad faith. Therefore, the Company deposited the shares in total amount of 10,798 issued under those agreements and the principal amount and accrued interest of the loan in an escrow account. The deposit of the principal amount and accrued interest presented as restricted cash in the balance sheet as of December 31, 2023. Based on the calculation difference, in their Claim, the Plaintiffs request damages in the amount of NIS 40,140, and the issuance of 1,186,960 shares of the Company. The Defendants filed their statement of defense on April 15, 2024, in which they raised, among others, the aforementioned claims and additional procedural and substantial claims, including laches. The parties have agreed to start mediation proceeding in connection with the Claim. According to management’s estimation, since the likelihood of the Plaintiffs winning the case is less than fifty percent, no provision was made in the financial statements.

 

On July 11, 2024 the Israeli subsidiary reached a settlement agreement regarding unpaid rentals sanctioned by the Tel Aviv Magistrate’s court pursuant to which the subsidiary will pay the amount of NIS 427,000 (approximately $114) including VAT to the lessor of leased premises no later than September 30, 2024, which includes a grace period for late payments. As of the date of this quarterly report on Form 10-Q, the Company had paid all of the settlement amount less $12, and the lessor agreed to defer payment of the $12 to December 28, 2024. In the event that the Company fails to meet all of its obligations under the settlement agreement, the Company may be liable to pay an additional NIS 211,000 (approximately $57) over and above the amount still due, in respect of claims for unpaid rentals made by the lessor.

 

Except as described above, the Company is not involved in any pending material legal proceedings.

 

NOTE 13 – SUBSEQUENT EVENTS

 

On November 8, 2024, the two Belgian subsidiaries of the Company, viz. Orgenesis Belgium SRL and Orgenesis Services SRL (“the Belgian subsidiaries”), petitioned the Liège Business Court in Belgium for allowing their judicial reorganization pursuant to Article XX.41 of the Belgian Code of Economic Law. The petition follows the current inability of the Belgian subsidiaries to pay employee payroll expenses and accounts payable. The Company has requested a 6-month reorganization period. The Liège Business Court has agreed to consider the petition, and the next hearing will take place on November 22, 2024.

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

(U.S. Dollars in thousands, except share and loss per share amounts)

 

Forward-Looking Statements

 

The following discussion should be read in conjunction with the financial statements and related notes contained elsewhere in this Quarterly Report, as well as our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2024. Certain statements made in this discussion are “forward-looking statements” within the meaning of 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by the Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used herein, the words “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “future,” “intend,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks relating to the Company’s business, industry, and the Company’s operations and results of operations. Other factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Part II, Item 1A. “Risk Factors” and elsewhere in this Quarterly Report. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

 

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments, and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments, and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report.

 

Unless otherwise indicated or the context requires otherwise, the words “we,” “us,” “our,” the “Company,” “our Company” or “Orgenesis” refer to Orgenesis Inc., a Nevada corporation, and our majority or wholly-owned subsidiaries, Orgenesis Korea Co. Ltd. (the “Korean Subsidiary”); Orgenesis Belgium SRL, a Belgian-based entity (the “Belgian Subsidiary”); Orgenesis Services SRL, a Belgian-based entity (“Orgenesis Services SRL”); Orgenesis Ltd., an Israeli corporation (the “Israeli Subsidiary”); Orgenesis Maryland LLC, a Maryland limited liability company (the “Maryland Subsidiary”); Orgenesis Switzerland Sarl, (the “Swiss Subsidiary”); Orgenesis Biotech Israel Ltd. (“OBI”); Koligo Therapeutics Inc., a Kentucky corporation (“Koligo”); Tissue Genesis International LLC (“Tissue Genesis”) a Texas limited liability company; Orgenesis Germany GmbH (the “German Subsidiary”); Orgenesis CA, Inc. (the “California Subsidiary”); Mida Biotech BV (the “Dutch Subsidiary”); Orgenesis Australia PTY LTD (the “Australian Subsidiary”); Orgenesis Italy SRL (the “Italian Subsidiary”), Theracell Laboratories Private Company (“Theracell Laboratories”), a Greek company, Orgenesis Austria GmbH, an Austrian company; ORGS POC CA Inc, a Delaware company; and Octomera LLC, a Delaware limited liability company.

 

 

Business Overview

 

We are a global biotech company working to unlock the potential of CGTs in an affordable and accessible format. CGTs can be centered on autologous (using the patient’s own cells) or allogenic (using master banked donor cells) and are part of a class of medicines referred to as advanced therapy medicinal products, or ATMPs. We are mostly focused on autologous therapies that can be manufactured under processes and systems that are developed for each therapy using a closed and automated approach that is validated for compliant production near the patient for treatment of the patient at the point of care, or POCare. This approach has the potential to overcome the limitations of traditional commercial manufacturing methods that do not translate well to commercial production of advanced therapies due to their cost prohibitive nature and complex logistics to deliver such treatments to patients (ultimately limiting the number of patients that can have access to, or can afford, these therapies).

 

To achieve these goals, we have developed a collaborative worldwide network of research institutes and hospitals who are engaged in the POCare model, or our POCare Network, and a pipeline of licensed POCare advanced therapies that can be processed and produced under such closed and automated processes and systems, or POCare Therapies. We are developing our pipeline of advanced therapies with the goal of entering into out-licensing agreements for these therapies.

 

We have two operating segments – our POCare Services and our therapeutic development operations. We conduct our core POCare operations through our wholly-owned subsidiary Octomera LLC which was a consolidated subsidiary of ours until June 30, 2023 and which became a consolidated subsidiary again effective January 29, 2024 when we entered into a unit purchase agreement pursuant to which we acquired all of the equity interests of Octomera LLC.

 

Octomera segment (mainly POCare Services)

 

The POCare Services that we and our affiliated entities perform include:

 

●	Process development of therapies, process adaptation, and optimization inside the OMPULs, or “OMPULization”;
●	Adaptation of automation and closed systems to serviced therapies;
●	Incorporation of the serviced therapies compliant with GMP in the OMPULs that we designed and built;
●	Tech transfers and training of local teams for the serviced therapies at the POCare Centers;
●	Processing and supply of the therapies and required supplies under GMP conditions within our POCare Network, including required quality control testing;

 

The POCare Services are performed in decentralized hubs that provide harmonized and standardized services to customers, or POCare Centers. We are working to expand the number and scope of our POCare Centers. We believe that this provides an efficient and scalable pathway for CGT therapies to reach patients rapidly at lowered costs. Our POCare Services are designed to allow rapid capacity expansion while integrating new technologies to bring together patients, doctors and industry partners with a goal of achieving standardized, regulated clinical development and production of therapies.

 

Therapies segment (POCare Therapies)

 

While the biotech industry struggles to determine the best way to lower the cost of goods and enable CGTs to scale, the scientific community continues to advance and push the development of such therapies to new heights. Clinicians and researchers are excited by many new tools (such as new generations of industrial viruses and big data analysis for genetic and molecular data) and technologies (CRISPR, mRNA, etc.) available, often at a low cost, to perform advanced research in small labs. Most new therapies arise from research at academic institutions or at small spinouts from such institutions. Though such research efforts may manage to progress into a clinical stage, utilizing lab- or hospital-based production solutions, they generally lack the resources to continue the development of such drugs to market approval.

 

 

Historically, drug/therapeutic development has required investments of hundreds of millions of dollars to be successful. One significant cause for the high cost is that each therapy often requires unique production facilities and technologies that must be subcontracted or built. Furthermore, the cost of production during the clinical stage is extremely expensive, and the cost of the clinical trial itself is very high. Given these financial restraints, researchers and institutions hope to out-license their therapeutic products to large biotech companies or to spin out new companies and conduct large fundraising rounds. In many cases, however, they lack the resources and the capability to de-risk their therapeutic candidates enough to be attractive for such fundings or partnership.

 

Our POCare Network is an alternative to the traditional pathway of drug development. Orgenesis works closely with many such institutes and is in close contact with researchers in the field. The partnerships with leading hospitals and research institutes gives us a deep insight as to the developments in the field, as well as the market potential, the regulatory landscape and optimal clinical pathway to get these products to market.

 

The ability to produce these products at low cost allows for an expedited development process, and partnership with hospitals around the globe allows for joint grants and lower costs of clinical development. The POCare Therapies division reviews many therapies available for out-licensing and selects the ones they believe have the highest market potential and chance of clinical success and can benefit the most from a point of care approach. It assesses such issues by utilizing its global POCare Network and its internal know-how accumulated over a decade of involvement in the field.

 

The goal of this in-licensing is to quickly adapt such therapies to a point-of- care approach through regional partnerships, and to out-license the products for market approval in non-core geographical regions. This approach lowers overall development costs by minimizing our pre-clinical development costs and enabling us to receive additional funding from grants and/or payments by regional partners.

 

Significant developments during the nine-months ended September 30, 2024

 

On September 27, 2023, we received a notice from the Listing Qualifications Staff (“Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) stating that the bid price of the Common Stock had closed at less than $1.00 per share over the previous 30 consecutive business days, and, as a result, did not comply with Listing Rule 5550(a)(2) (the “Bid Price Rule”). On April 17, 2024, we received a notice (the “Notice”) from the Staff which stated that it could not accept a plan to regain compliance and the Staff stated that our securities would be delisted from The Nasdaq Capital Market unless we timely requested a hearing before a Nasdaq Hearings Panel (the “Panel”) to address the deficiencies and present a plan to regain compliance. As permitted by the Notice, we timely requested a hearing before the Panel, which request stayed any further delisting action by the Staff pending the ultimate outcome of the hearing and the expiration of any extension that may be granted by the Panel. On June 6, 2024, we met with the Panel regarding our potential delisting from The Nasdaq Stock Market as a result of our violation of the Bid Price Rule and non-compliance with the equity requirement in Listing Rule 5550(b)(1) (the “Equity Rule”) or any of the alternative requirements in Listing Rule 5550(b). On June 8, 2024, we received the Panel’s decision which granted us until October 14, 2024 to regain compliance with the Bid Price and Equity Rules. On October 17, 2024, Nasdaq notified the Company that the Panel had determined to delist the Company’s Common Stock and that trading of the Company’s Common Stock will be suspended at the open of trading on October 21, 2024. In connection with the Nasdaq delisting notice, Nasdaq will complete the delisting by filing a Form 25 Notification of Delisting with the U.S. Securities and Exchange Commission (the “SEC”) after applicable appeal periods have lapsed. The Company’s Common Stock began trading under “ORGS” on the OTCQX with the open of the markets on October 21, 2024.

 

On January 29, 2024 (“Closing” or “Transaction date” or “Reconsolidation date”), we and Metalmark Capital Partners (“MM”) entered into a Unit Purchase Agreement (the “MM UPA”), pursuant to which we acquired all of the preferred units of Octomera previously owned by MM and reconsolidated Octomera into our accounts with immediate effect (the “MM acquisition”). As consideration for the MM Acquisition, we and MM agreed to the following consideration:

 

●

Royalty Payments: If Octomera and its subsidiaries generate Net Revenue during the three-year period 2025-2027, then we will pay 5% of Net Revenues to MM pursuant to the MM UPA.

 

 

●

Milestone Payments: If we sell Octomera within ten years from the date of the Closing at a price that is more than $40 million excluding consideration for certain Excluded Assets as per the UPA, then we will pay MM 5% of the net proceeds of that sale.

 

Pursuant to the MM acquisition, MM’s designated members of the Board of Managers of Octomera resigned, and we amended the Second Amended and Restated Limited Liability Company Agreement of Octomera (the “Octomera LLC Agreement”) to be a single member agreement reflecting the MM acquisition, such that MM no longer (i) was a member of Octomera or a party to the Octomera LLC Agreement, or (ii) had the right to appoint members of the board of managers of Octomera.

 

In addition, 10 secured promissory notes between Orgenesis Maryland LLC and MM, reflecting an aggregate outstanding principal amount of $2,600 (the “Notes”), were amended to, among other things, extend the maturity thereof to January 29, 2034 and to terminate the security interest granted by Orgenesis Maryland LLC in favor of MM that secured the obligations under the Notes.

 

On February 14, 2024, following a claim for payment by employees of OBI (a fully owned subsidiary of Octomera) of past salaries due, the district court in Haifa, Israel appointed a trustee to run the affairs of OBI. As a result of this appointment, effective February 14, 2024, we no longer control OBI and have ceased to consolidate the results of OBI into our consolidated results. We recognized a loss as a result of the deconsolidation of $66. We do not currently believe that rehabilitation of OBI is possible, and we purchased certain of OBI’s equipment.

 

On March 3, 2024, we entered into a Securities Purchase Agreement with certain accredited investors, pursuant to which we agreed to issue and sell, in a private placement, 227,272 shares of our Common Stock at a purchase price of $10.3 per share, Warrants to purchase up to 227,272 shares of Common Stock at an exercise price of $15.0 per share, and Warrants to purchase up to 227,272 shares of Common Stock at an exercise price of $20.0 per share, all such Warrants exercisable immediately and expiring five years from the date of their issuance. We received gross proceeds of approximately $2,300 before deducting related offering expenses. The Offering closed on March 5, 2024.

 

On April 5, 2024, we entered into an Asset Purchase and Strategic Collaboration Agreement (the “Purchase Agreement”) with Griffin Fund 3 BIDCO, Inc. (“Germfree”), for the sale by us of five OMPULs to Germfree, which are to be incorporated into Germfree’s lease fleet and leased back to us or to third-party lessees designated by us. Pursuant to the Purchase Agreement, and subject to the terms and conditions set forth therein, in consideration for the purchase of the OMPULs, the Orgenesis Quality Management Systems Framework (“OQMSF”) and related intellectual property rights, Germfree is to pay us an aggregate purchase price of $8,340 subject to adjustment through a verification mechanism set forth in the Purchase Agreement. Pursuant to the Purchase Agreement, Germfree has paid us $6,720 as of September 30, 2024.

 

On May 10, 2024, we entered into a Securities Purchase Agreement with certain accredited investors, pursuant to which we agreed to issue and sell, in a private placement, 15,000 shares of our Common Stock at a purchase price of $10.3 per share, Warrants to purchase up to 15,000 shares of Common Stock at an exercise price of $15.0 per share, and further Warrants to purchase up to 15,000 shares of Common Stock at an exercise price of $20.0 per share, all such Warrants exercisable immediately and expiring five years from their date of issuance. We received gross proceeds of approximately $154 before deducting related offering expenses. The Offering closed on May 10, 2024.

 

On May 21, 2024 we entered into debt exchange agreements with three convertible debt holders pursuant to which a total of $16,007 of outstanding principal and accrued interest was exchanged for the right to receive an aggregate of 1,577,695 shares of common stock, par value $0.0001 per share, of our Common Stock, of which $14,860 was exchanged for shares at an exchange price of $10.3 per share of Common Stock and $1,147 was exchanged for shares at an exchange price of $8.5 per share of Common Stock.

 

On July 10, 2024, we entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Broaden Bioscience and Technology Corp. (“Broaden”) for the purchase by the Company of the following assets (the “Assets”): The process and algorithms developed by Broaden for processing CAR-T, RACE CAR-T and all oncology products that will enable us to develop and sell treatments to third parties, which include Broaden’s rights, title and interests in and to all intellectual property, including, but not limited to, patents, patent applications, know-how, materials, licenses, permits and approvals related thereto. Pursuant to the Purchase Agreement, in consideration for the purchase of the Assets, we will pay Broaden an amount equal to the value of the Assets established by a third party valuation firm not to exceed $11,000 (the “Consideration”), less a debt adjustment relating to $10,767 owed to us by Broaden for work performed and invoiced between August 2022 and May 2023 (the “Debt”), as detailed in the Purchase Agreement. The Consideration that exceeds the Debt will be payable at our election in shares of our common stock at a price of $30.0 per share or 10% above the market price at such time it is paid, whichever is higher, or a note with amortization in 24 months from the date of the Purchase Agreement, including prepayment provisions.

 

 

On July 12, 2024, we entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Theracell Advanced Biotechnology S.A, Theracell Advanced Biotechnology LTD and IDNA Genomics Public Limited (collectively, “Theracell”) for the purchase by us of the following assets (the “Assets”) owned by Theracell:

 

	●	50% of the outstanding ownership rights and equity interests in Theracell Laboratories IKE (“Theracell IKE”) not currently owned by us so that we shall own 100% of the outstanding equity interests of Theracell IKE; and
	●	Certain products (the “Products”), which include: (i) the manufacturing processes, algorithms, work instructions, test methods, standard operating procedures and specifications for producing Tumor Infiltrating Lymphocytes (“TILs”) that meet current Good Manufacturing Practice (cGMP) requirements that will enable the Company to potentially use this product as a platform for treating a wide variety of solid tumors; (ii) a 3rd generation GMP lentivirus production process, which is part of a therapy manufacturing process that will enable the Company to potentially treat Beta Thalassemia therapies; (iii) an oncolytic virus cell carrier platform which will enable the Company to potentially develop treatments for an array of cancers; (iv) a process for the potential treatment of mesenchymal stem cells for kidney disorders; (v) a process for controlled isolation of regenerative EVs derived from mesenchymal stem cells for the potential treatment of kidney disorders; and (vi) bioxome encapsulated APIs for improved transdermal delivery and bioavailability for the potential treatment of atopic dermatitis/wound healing; including Theracell’s rights, title and interests in and to all intellectual property, including, but not limited to, patents, patent applications, know-how, materials, licenses, permits and approvals relating to Products as further described in the Purchase Agreement.

 

Pursuant to the Purchase Agreement, in consideration for the purchase of the Assets, we will pay Theracell an aggregate purchase price of $13,000 (the “Consideration”), which is equal to the value of the Assets established by a third-party valuation firm, less a debt adjustment in the amount of $10,324 which was owed by Theracell to us (the “Debt”). The aggregate Consideration will be paid by us as follows: (i) $400 will be paid to Theracell within 60 days after signing of the Purchase Agreement, (ii) $250 will be paid to Theracell within one year after signing of the Purchase Agreement, and (iii) the remaining amount (less any Debt) will be paid to Theracell in four equal annual payments beginning on December 30, 2025 and ending on December 30, 2028. As of the date of this quarterly report on Form 10-Q, we had paid Theracell $243.

 

On August 9, 2024, we and Harley Street Healthcare Group (London) Plc Ltd. (“HSHG”) entered into a Strategic Partnership Agreement (the “Agreement”) pursuant to which the Company and HSHG agreed to form a joint venture to collaborate in the clinical development and commercialization of wellness and longevity-related services, including personalized preventative care and regenerative therapies, which are to be offered on a subscription basis by HSHG in line with a planned offering of “Health & Wellness as a Service” initially within the territory of the United Kingdom, the UAE, MENA, Canada, ASEAN, the Balkans, Africa, Latam and the Indian Subcontinent (the “Territory”). Pursuant to the Agreement, any new joint venture entity to be formed (the “JV”) will initially be owned 49% by us and 51% by HSHG. Thereafter, ownership of the JV entity will be based on each party’s respective contributions, and control of the board of the JV entity will be based upon such percentage contributions. Until the parties mutually agree to form the new JV entity, HSHG and we shall each carry out the respective tasks assigned to them for the implementation of the project in accordance with the Agreement and the applicable work plan thereunder.

 

Pursuant to the Agreement, HSHG agreed to invest (by the end of December 2024 for phase I) $5,000 in our shares of common stock at a purchase price equal to the greater of (i) $10.3 per share (subject to adjustment for stock splits, consolidations and similar transactions) or (ii) a 5% premium to the Nasdaq official closing price of our common stock at the time of HSHG’s investment. Upon receipt by us of the $5,000 investment set forth above, HSHG will receive 485,437 three-year warrants to purchase 485,437 shares of our common stock at an exercise price equal to the greater of (i) $10.3 per share (subject to adjustment for stock splits, consolidations and similar transactions) or (ii) a 10% premium to the Nasdaq official closing price of our common stock.

 

 

As of September 30, 2024 the JV entity had not been incorporated. As of the date of this quarterly report on Form 10-Q, no funds had yet been received from HSHG.

 

On September 20, 2024, we implemented a 1-for-10 reverse stock split (the “Reverse Split”) of our authorized and outstanding shares of Common Stock. All share and per share amounts in these financial statements have been retroactively adjusted to reflect the reverse split as if it had been effected prior to the earliest financial statement period included herein. Following the Reverse Split, the number of authorized shares of common stock that we are authorized to issue from time to time is 14,583,333 shares.

 

Results of Operations

 

Comparison of the Three Months Ended September 30, 2024 to the Three Months Ended September 30, 2023.

 

The following table presents our results of operations for the three months ended September 30, 2024 and 2023:

 

		Three-Months Ended
		September 30, 2024				September 30, 2023
		(in thousands)
Revenues		$	347			$	110
Cost of revenues			585				139
Gross profit			(238	)			(29	)
Cost of development services and research and development			4,523				808
Amortization of intangible assets			196				153
Change in Contingent consideration			81				-
Selling, general and administrative expenses			2,664				1,245
Impairment expense			692				-
Operating loss			8,394				2,235
Other expense (income), net			122				(2	)
Financial expenses, net			718				545
Share in net loss of associated company			-				553
Loss before income taxes			-				3,331
Tax expense			-				394
Net loss		$	9,234			$	3,725

 

Revenues

 

Our revenues for the three months ended September 30, 2024 were $347, as compared to $110 for the three months ended September 30, 2023, representing an increase of 215%. The increase was as a result of work completed and payments received on cell processing development and hospital services.

 

 

Expenses

 

Cost of revenue

 

		Three-Months Ended
		September 30, 2024				September 30, 2023
		(in thousands)
Salaries and related expenses		$	154			$	94
Stock-based compensation			2				1
Professional fees and consulting services			67				4
Raw materials			33				5
Depreciation expenses, net			148				5
Other expenses			181				30
Total		$	585			$	139

 

Cost of revenues for the three months ended September 30, 2024 were $585, as compared to $139 for the three months ended September 30, 2023, representing an increase of 321%. The increase was mainly attributable to Octomera segment related cost of revenues which, since the reconsolidation of Octomera, were included in our results. In the three months ended September 30, 2023, Octomera was not a consolidated subsidiary and its cost of revenues were therefore excluded from our results. Octomera segment cost of revenues declined in the three months ended September 30, 2024 compared to the three months ended September 30, 2023 particularly as a result of the deconsolidation of OBI and reduced activities at the Korean subsidiary.

 

Cost of development services and research and development expenses

 

		Three Months Ended
		September 30, 2024				September 30, 2023
		(in thousands)
Salaries and related expenses		$	1,515			$	669
Stock-based compensation			50				24
Professional fees and consulting services			729				(38	)
Lab expenses			5				22
Depreciation expenses, net			186				29
Other research and development expenses			2,121				171
Less – grant			(83	)			(69	)
Total		$	4,523			$	808

 

Cost of development services and research and development for the three months ended September 30, 2024 were $4,523, as compared to $808 for the three months ended September 30, 2023, representing an increase of 460%.

 

The increase was mainly attributable to Octomera segment related expenses, which, since the reconsolidation of Octomera, were included in our results. In the three months ended September 30, 2023, Octomera was not a consolidated subsidiary and its cost of revenues were therefore excluded from our results. In addition, professional fees and consulting services and other research and development expenses increased as a result of the Asset Purchase Agreements referred to in Note 11. Octomera segment cost of development services and research and development expenses revenues declined in the three months ended September 30, 2024 compared to the three months ended September 30, 2023 particularly as a result of the deconsolidation of OBI and reduced activities at the Korean subsidiary.

 

Selling, General and Administrative Expenses

 

		Three-Months Ended
		September 30, 2024				September 30, 2023
		(in thousands)
Salaries and related expenses		$	865			$	259
Stock-based compensation			32				53
Accounting and legal fees			690				460
Professional fees			196				134
Rent and related expenses			125				13
Business development			342				60
Depreciation expenses, net			8				4
Other general and administrative expenses			406				262
Total		$	2,664			$	1,245

 

 

Selling, general and administrative expenses for the three months ended September 30, 2024 were $2,664, as compared to $1,245 for the three months ended September 30, 2023, representing an increase of 114%. The increase was mainly attributable to Octomera segment related expenses, which, since the reconsolidation of Octomera, were included in our results. In the three months ended September 30, 2023, Octomera was not a consolidated subsidiary and its cost of revenues were therefore excluded from our results. Octomera segment cost of selling, general and administration expenses declined in the three months ended September 30, 2024 compared to the three months ended September 30, 2023 particularly as a result of the deconsolidation of OBI and reduced activities at the Korean subsidiary.

 

Financial Expenses, net

 

		Three-Months Ended
		September 30, 2024				September 30, 2023
		(in thousands)
Interest expense on convertible loans and loans		$	1,033			$	611
Foreign exchange loss, net			(300	)			(69	)
Other expenses (income)			(15	)			3
Total		$	718			$	545

 

Financial expenses, net for the three months ended September 30, 2024 were $718, as compared to $545 for the three months ended September 30, 2023, representing an increase of 32%. The increase was mainly due to finance expenses incurred on warrants issued in the three months ended September 30, 2024 granted to loan holders.

 

Comparison of the Nine Months Ended September 30, 2024 to the Nine Months Ended September 30, 2023.

 

The following table presents our results of operations for the nine months ended September 30, 2024 and 2023:

 

		Nine Months Ended
		September 30, 2024				September 30, 2023
		(in thousands)
Revenues		$	734			$	365
Cost of revenues			1,615				6,093
Gross profit			(881	)			(5,728	)
Cost of development services and research and development			8,382				7,616
Amortization of intangible assets			575				568
Change in Contingent consideration			263				-
Selling, general and administrative expenses			10,781				32,989
Impairment expense			692				-
Operating loss			21,574				46,901
Other income, net			114				(4	)
Loss from extinguishment in connection with convertible loan			141				283
Credit loss on convertible loan receivable			-				2,688
Financial expenses, net			2,385				1,918
Convertible loans induced conversion expenses			4,304				-
Share in net loss of associated company			-				552
Loss from deconsolidation of Octomera			66				5,343
Loss before income taxes			28,584				57,681
Tax expense			53				614
Net loss		$	28,637			$	58,295

 

 

Revenues

 

Our revenues for the nine months ended September 30, 2024 were $734, as compared to $365 for the nine months ended September 30, 2023, representing an increase of 101%. The increase was as a result of work completed and payments received on cell processing development and hospital services.

 

Expenses

 

Cost of revenues

 

		Nine Months Ended
		September 30, 2024				September 30, 2023
		(in thousands)
Salaries and related expenses		$	585			$	2,298
Stock-based compensation			4				4
Professional fees and consulting services			107				1,882
Raw materials			86				715
Depreciation expenses, net			512				477
Other expenses			321				717
Total		$	1,615			$	6,093

 

Cost of revenues for the nine months ended September 30, 2024 were $1,615, as compared to $6,093 for the nine months ended September 30, 2023, representing a decrease of 73%. The decrease was mainly attributable to reduced Octomera segment cost of revenues, particularly as a result of the deconsolidation of OBI and reduced activities at the Korean subsidiary.

 

Cost of development services and research and development expenses

 

		Nine Months Ended
		September 30, 2024				September 30, 2023
		(in thousands)
Salaries and related expenses		$	4,438			$	4,153
Stock-based compensation			135				187
Professional fees and consulting services			440				1,563
Lab expenses			102				326
Depreciation expenses, net			460				285
Other research and development expenses			3,062				1,312
Less – grant			(255	)			(210	)
Total		$	8,382			$	7,616

 

Cost of development services and research and development for the nine months ended September 30, 2024 were $8,382, as compared to $7,616 for the nine months ended September 30, 2023, representing an increase of 10%.

 

The increase in salaries and related expenses is mainly attributable to our accounting for Octomera segment cost of development services and research and development expenses from the reconsolidation date compared to accounting for such expenses in 2023 until the deconsolidation of Octomera. Professional fees and consulting services declined as a result of cost savings. Other research and development expenses increased mainly as a result of the Asset Purchase Agreements referred to in Note 11.

 

 

Selling, General and Administrative Expenses

 

		Nine Months Ended
		September 30, 2024				September 30, 2023
		(in thousands)
Salaries and related expenses		$	2,659			$	2,520
Stock-based compensation			160				197
Accounting and legal fees			2,385				2,804
Professional fees			(143	)			1,020
Rent and related expenses			275				127
Business development			1,227				421
Depreciation expenses, net			78				36
Other general and administrative expenses			1,415				1,497
Credit losses			2,725				24,367
Total		$	10,781			$	32,989

 

Selling, general and administrative expenses for the nine months ended September 30, 2024 were $10,781, as compared to $32,989 for the nine months ended September 30, 2023, representing a decrease of 67%.

 

The decrease was mainly as a result of a decrease in credit losses incurred in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, mainly in the Octomera segment, offset by an increase in business development expenses as a result of warrants granted to advisers.

 

Credit Loss on Convertible Loan Receivable

 

		Nine Months Ended
		September 30, 2024				September 30, 2023
		(in thousands)
Credit loss on convertible loans		$	-			$	2,688

 

Credit losses for the nine months ended September 30, 2024 were $0 compared to $2,688 for the nine months ended September 30, 2023. This was attributable to a provision created for a possible credit loss on a loan in the nine months ended September 30, 2023.

 

Financial Expenses, net

 

		Nine Months Ended
		September 30, 2024				September 30, 2023
		(in thousands)
Interest expense on convertible loans and loans		$	2,474			$	1,740
Foreign exchange loss (gain), net			(55	)			173
Other expenses (income)			(34	)			5
Total		$	2,385			$	1,918

 

 

Financial expenses, net for the nine months ended September 30, 2024 were $2,385, as compared to $1,918 for the nine months ended September 30, 2023, representing an increase of 24%. The increase was mainly due to interest on new loan agreements entered into and finance expenses incurred on warrants issued to loan holders.

 

Working Capital

 

		As of
		September 30, 2024				December 31, 2023
		(in thousands)
Current assets		$	2,519			$	4,076
Current liabilities			36,049				16,407
Working capital		$	(33,530	)		$	(12,331	)

 

Current assets decreased by $1,557 between December 31, 2023 and September 30, 2024 The decrease was mainly attributable to a decline in cash and cash equivalents, prepaid expenses, and receivables from related parties.

 

Current liabilities increased by $19,642 between December 31, 2023 and September 30, 2024 The increase was mainly attributable to:

 

	●	the reconsolidation of Octomera which included an increase in accounts payable, accrued expenses and other payables, employees and related payables, and advance payments on account of grants;
	●	the deconsolidation of OBI where we recorded an increase in accounts payable to related parties;
	●	the Germfree receipt which was recorded in current liabilities.
	●	Additional non-convertible short term loan agreements entered into.

 

The above increases were offset by a decline in current maturities of convertible loans, converted to equity.

 

Liquidity and Financial Condition

 

		Nine Months Ended
		September 30, 2024				September 30,  2023
		(in thousands)
Net loss		$	(28,637	)		$	(58,295	)
Net cash used in operating activities			(14,978	)			(14,335	)
Net cash used in investing activities			73				(3,645	)
Net cash provided by financing activities			14,560				12,393
Increase in cash and cash equivalents		$	(345	)		$	(5,587	)

 

During the nine-month ended September 30, 2024, we funded our operations from operations as well as from proceeds raised from equity and debt offerings.

 

Net cash used in operating activities for the nine months ended September 30, 2024 was approximately $14,978, as compared to net cash used in operating activities of approximately $14,335 for the nine months ended September 30, 2023.

 

The change was mainly as a result of:

 

● a net loss of $28,637 for the nine months ended September 30, 2024 compared to a net loss of $58,295 for the nine months ended September 30, 2023;

 

 

● non-cash items incurred in the nine months ended September 30, 2023 that were not incurred in the nine months ended September 30, 2024

 

Net cash provided by investing activities for the nine months ended September 30, 2024 was approximately $73, as compared to net cash used in investing activities of approximately $3,645 for the nine months ended September 30, 2023. The change was mainly as a result of a decline in purchases of property and equipment and the cash impact from the deconsolidation of Octomera which incurred in the nine months ended September 30, 2023 not incurred in the nine months ended September 30, 2024.

 

Net cash provided by financing activities for the nine months ended September 30, 2024 was approximately $14,560, as compared to net cash provided by financing activities of approximately $12,393 for the nine months ended September 30, 2023. The change was mainly attributable to proceeds raised from equity investments and warrant exercises in the amount of $2,556 in the nine months ended September 30, 2024 as compared to $4,341 in the nine months ended September 30, 2023. In addition, in the nine months ended September 30, 2024, we raised convertible loans in the amount of $75 compared to $5,660 in the nine months ended September 30, 2023, These decreases were offset by the receipt of $6,720 from Germfree and non-convertible loans received in the amount of $4,670 in the nine months ended September 30, 2024 compared to $425 received in the nine months ended September 30, 2023.

 

Liquidity & Capital Resources Outlook

 

Through September 2024, we had an accumulated deficit of $204,411 and for the nine months ended September 30, 2024 incurred negative operating cashflows of $14,978. Our activities have been funded by generating revenue, proceeds from loan agreements, and through offerings of our securities. There is no assurance that our business will generate sustainable positive cash flows to fund our operations.

 

The estimation and execution uncertainty regarding our future cash flows and management’s judgments and assumptions in estimating these cash flows is a significant estimate. Those assumptions include reasonableness of the forecasted revenue, operating expenses, and uses and sources of cash.

 

Due to our financial position, we will need to seek additional financing, refinance or amend the terms of existing convertible loans, and/or postpone expenses that are not based on firm commitments. In order to fund our operations until such time that we can generate sustainable positive cash flows, we will need to raise additional funds. As of the date of this report, we have assessed our financial condition and concluded that based on our current and projected cash resources and commitments, as well as other factors mentioned above, there is substantial doubt about our ability to continue as a going concern. We are planning to raise additional capital to continue our operations and to repay our outstanding loans when they become due, as well as to explore additional avenues to increase revenues and reduce or delay expenditures. Our failure to remain listed on Nasdaq will make it more difficult to raise additional capital. There can be no assurance that we will be able to raise additional capital on acceptable terms, or at all. Despite our ability to secure capital in the past, there can be no assurance that additional equity or debt financing will be available to us or that we may be able to secure funding from any other sources. In the event that we are not able to secure funding, we may be forced to curtail operations, delay or stop ongoing development activities, cease operations altogether,and/or file for bankruptcy.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

Not applicable.

 

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. In designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives.

 

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Based upon that evaluation and subject to the foregoing, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this Quarterly Report, the design and operation of our disclosure controls and procedures were not effective due to the material weakness in our internal control over financial reporting.

 

Management determined that we had the following material weakness in our internal control over financial reporting as of December 31, 2023:

 

We did not perform appropriate analyses related to our internal control over financial reporting in the accounting for whether it is probable we will collect substantially all the consideration to which we are entitled for revenue services provided, as well as our estimated credit losses. As of September 30, 2024, such material weakness had not been remediated.

 

Remediation Activities

 

Management’s remediation activities, which have already commenced and will continue during 2024, include the design of enhanced controls that include a thorough credit assessment of all new customers, analysis of payment history for existing customers and its impact related to the accounting for revenues, and additional controls designed to calculate the expected credit loss on the balances when there is an indication that a customer may not be pay the full receivable amount. These controls are already designed, however, management will need a number of periods in order to ensure their effectiveness.

 

Changes in Internal Control Over Financial Reporting

 

Except as set forth above, there have been no changes in our internal control over financial reporting during the quarter ended September 30, 2024 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

Information regarding legal proceedings is available in Note 12 to the condensed consolidated financial statements in this Report.

 

Except as described above, we are not involved in any pending material legal proceedings.

 

ITEM 1A. RISK FACTORS

 

An investment in the Company’s Common Stock involves a number of very significant risks. You should carefully consider the risk factors included in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 15, 2024, in addition to other information contained in our reports and in this quarterly report in evaluating the Company and its business before purchasing shares of our Common Stock. Except as set forth below, there have been no material changes to our risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2023. The Company’s business, operating results and financial condition could be adversely affected due to any of those risks.

 

We may be unsuccessful in raising the capital necessary to address our going concern issues, or if we are successful, it may be on terms that are highly dilutive to existing stockholders.

 

Historically, we funded our operations by raising capital from external sources, including through the sale of common stock and convertible loans. We are currently facing significant challenges to our ability to raise significant amounts of capital through the sale of common stock, including the following factors:

 

●	in general, it is difficult for development stage companies to raise capital under current market conditions;
●	the perception that we may be unable to continue as a going concern may impede our ability to attract further equity investment; and
●	our common stock was delisted from the Nasdaq Capital Market and our common stock began trading on the OTCQX on October 21, 2024. The delisting of our common stock from Nasdaq could adversely affect our ability to raise additional capital through the public or private sale of equity securities.

 

Given these factors, there can be no assurances we will be successful at raising sufficient capital to address our going concern issues. However, if we are successful, it may be on terms that are very dilutive to existing stockholders. Despite our ability to secure capital in the past, there can be no assurance that additional equity or debt financing will be available to us or that we may be able to secure funding from any other sources. In the event that we are not able to secure funding, we may be forced to curtail operations, delay or stop ongoing development activities, cease operations altogether, and/or file for bankruptcy.

 

The delisting of our common stock from Nasdaq could adversely affect our ability to raise additional capital through the public or private sale of equity securities and the ability of investors to dispose of, or obtain accurate quotations as to the market value of, our common stock.

 

Our common stock was delisted by Nasdaq and our common stock currently trades on the OTCQX market. Our lack of a listing on a national securities exchange will likely result in it being more difficult for us to raise additional capital through the public or private sale of equity securities and for investors to dispose of, or obtain accurate quotations as to the market value of, our common stock. In addition, there can be no assurance that our common stock will be able to maintain its eligibility for trading on the OTCQX or any alternative exchange or markets.

 

Unless our common stock is listed on a national securities exchange, such as the Nasdaq Capital Market, our common stock may also be subject to the regulations regarding trading in “penny stocks,” which are those securities trading for less than $5.00 per share, and that are not otherwise exempted from the definition of a penny stock under other exemptions provided for in the applicable regulations. The following is a list of the general restrictions on the sale of penny stocks:

 

●

Before the sale of penny stock by a broker-dealer to a new purchaser, the broker-dealer must determine whether the purchaser is suitable to invest in penny stocks. To make that determination, a broker-dealer must obtain, from a prospective investor, information regarding the purchaser’s financial condition, investment experience, and objectives. Subsequently, the broker-dealer must deliver to the purchaser a written statement setting forth the basis of the suitability finding and obtain the purchaser’s signature on such statement.

 

 

●	A broker-dealer must obtain from the purchaser an agreement to purchase the securities. This agreement must be obtained for every purchase until the purchaser becomes an “established customer.”
●	The Exchange Act requires that before effecting any transaction in any penny stock, a broker-dealer must provide the purchaser with a “risk disclosure document” that contains, among other things, a description of the penny stock market and how it functions, and the risks associated with such investment. These disclosure rules are applicable to both purchases and sales by investors.
●	A dealer that sells penny stock must send to the purchaser, within 10 days after the end of each calendar month, a written account statement including prescribed information relating to the security.

 

These requirements can severely limit the liquidity of securities in the secondary market because fewer brokers or dealers are likely to be willing to undertake these compliance activities. If our common stock is not listed on a national securities exchange, the rules and restrictions regarding penny stock transactions may limit an investor’s ability to sell to a third party and our trading activity in the secondary market may be reduced.

 

We conduct certain of our operations in Israel. Conditions in Israel, including the attack by Hamas on October 7, 2023 and other terrorist organizations and Israel’s war against them, may affect certain of our operations.

 

Because we conduct certain operations in the State of Israel, some of our business and operations may be affected by economic, political, geopolitical and military conditions in Israel. In October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel. Following the attack, Israel’s security cabinet declared war against Hamas and a military campaign against these terrorist organizations commenced in parallel to their continued rocket and terror attacks. Moreover, the clash between Israel and Hezbollah in Lebanon, may escalate in the future into a greater regional conflict. The intensity and duration of Israel’s current war against Hamas is difficult to predict, as are such war’s economic implications on the Company’s business and operations and on Israel’s economy in general.

 

Any hostilities involving Israel, or the interruption or curtailment of trade within Israel or between Israel and its trading partners could adversely affect certain of our operations and results of operations and could make it more difficult for us to raise capital. The conflict in Israel could also result in parties with whom we have agreements involving performance in Israel claiming that they are not obligated to perform their commitments under those agreements pursuant to force majeure provisions in such agreements. There have been travel advisories imposed relating to travel to Israel, and restriction on travel, or delays and disruptions as related to imports and exports may be imposed in the future. Additionally, certain members of our management and employees are located and reside in Israel. Shelter-in-place and work-from-home measures, government-imposed restrictions on movement and travel and other precautions taken to address the ongoing conflict may temporarily disrupt our management and employees’ ability to effectively perform their daily tasks.

 

The Israel Defense Forces (the “IDF”), the national military of Israel, is a conscripted military service, subject to certain exceptions. Certain of our R&D and finance personnel live in Israel. Certain of our employees are subject to military service in the IDF and have been called to serve, and additional employees may be called to serve in the future. It is possible that there will be further military reserve duty call-ups in the future, which may affect our business due to a shortage of skilled labor and loss of institutional knowledge, and necessary mitigation measures we may take to respond to a decrease in labor availability, such as overtime and third-party outsourcing, for example, may have unintended negative effects and adversely impact our results of operations, liquidity or cash flows. Additionally, the absence of employees of our Israeli suppliers and service providers due to their military service in the current or future wars or other armed conflicts may disrupt their operations, which in turn may adversely affect our ability to deliver or provide products and services to customers.

 

The hostilities with Hamas, Hezbollah and other organizations and countries have included and may include terror, missile and drone attacks. In the event that any of our facilities, including back-up information technology systems located in Israel, are damaged as a result of hostile actions, or hostilities otherwise disrupt our ongoing operations, our ability to deliver or provide products and services in a timely manner to meet our contractual obligations towards customers and vendors could be adversely affected. Our commercial insurance does not cover losses that may occur as a result of events associated with war and terrorism. Although the Israeli government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that this government coverage will be maintained or that it will sufficiently cover our potential damages. Any losses or damages incurred by us could have a material adverse effect on our business. Any armed conflicts or political instability in the region would likely negatively affect business conditions and could harm our results of operations.

 

 

As of the date of this Quarterly Report, our operations have not been directly negatively affected by the ongoing hostilities in the region. As a result, as of the date of this Quarterly Report, our ability to deliver or provide products and services to our customers has not been materially affected. We cannot currently assess how the ongoing hostilities will affect our business conditions and harm our results of operations in the future, given the factors and risks discussed above.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS DURING THE QUARTER

 

On April 5, 2024, the Company entered into a loan agreement with a lender. In consideration for the loan agreement, the Company agreed to issue warrants to purchase up to 21,875 shares of Common Stock at an exercise price of $8 which vested upon issuance. These warrants and the shares of Common Stock underlying such warrants were issued in reliance upon an exemption from registration afforded by Section 4(a)(2) promulgated under the Securities Act of 1933, as amended.

 

On April 7, 2024, the Company entered into a loan agreement with a lender. In consideration for the loan agreement, the Company agreed to issue warrants to purchase up to 15,625 shares of Common Stock at an exercise price of $8 which vested upon issuance. These warrants and the shares of Common Stock underlying such warrants were issued in reliance upon an exemption from registration afforded by Section 4(a)(2) promulgated under the Securities Act of 1933, as amended.

 

On July 14, 2024, the Company entered into a strategic advisor agreement with an individual relating to the provision of strategic advice and assistance to the Company for a term of 12 months. In consideration for such services, the Company agreed to issue warrants to purchase up to 20,000 shares of Common Stock at an exercise price of $10.30, which vests one third on July 14, 2024, one third on October 14, 2024, and one third on January 14, 2025. These warrants and the shares of Common Stock underlying such warrants were issued in reliance upon an exemption from registration afforded by Section 4(a)(2) promulgated under the Securities Act of 1933, as amended.

 

On August 15, 2024, the Company entered into a payment deferral agreement with a vendor relating to the deferral of payments to the vendor. In consideration for such deferral, the Company agreed to issue warrants to purchase up to 42,464 shares of Common Stock at an exercise price of $10.30, which vested upon issuance. These warrants and the shares of Common Stock underlying such warrants were issued in reliance upon an exemption from registration afforded by Section 4(a)(2) promulgated under the Securities Act of 1933, as amended.

 

On August 21, 2024, the Company entered into a loan agreement with a lender. In consideration for the loan agreement, the Company agreed to issue warrants to purchase up to 24,272 shares of Common Stock at an exercise price of $10.30 which vested upon issuance. These warrants and the shares of Common Stock underlying such warrants were issued in reliance upon an exemption from registration afforded by Section 4(a)(2) promulgated under the Securities Act of 1933, as amended.

 

On September 5, 2024, the Company entered into a strategic advisor agreement with an individual relating to the provision of strategic advice and assistance to the Company for a term of 12 months. In consideration for such services, the Company agreed to issue 50,000 shares of Common Stock. These shares of Common Stock were issued in reliance upon an exemption from registration afforded by Section 4(a)(2) promulgated under the Securities Act of 1933, as amended.

 

On September 6, 2024, the Company entered into a loan agreement with a lender. In consideration for the loan agreement, the Company agreed to issue warrants to purchase up to 24,272 shares of Common Stock at an exercise price of $10.30 which vested upon issuance. These warrants and the shares of Common Stock underlying such warrants were issued in reliance upon an exemption from registration afforded by Section 4(a)(2) promulgated under the Securities Act of 1933, as amended.

 

 

On September 9, 2024, the Company entered into a loan agreement with a lender. In consideration for the loan agreement, the Company agreed to issue warrants to purchase up to 24,272 shares of Common Stock at an exercise price of $10.30 which vested upon issuance. These warrants and the shares of Common Stock underlying such warrants were issued in reliance upon an exemption from registration afforded by Section 4(a)(2) promulgated under the Securities Act of 1933, as amended.

 

On September 10, 2024, the Company entered into a loan agreement with a lender. In consideration for the loan agreement, the Company agreed to issue warrants to purchase up to 1,942 shares of Common Stock at an exercise price of $10.30 which vested upon issuance. These warrants and the shares of Common Stock underlying such warrants were issued in reliance upon an exemption from registration afforded by Section 4(a)(2) promulgated under the Securities Act of 1933, as amended.

 

On September 17, 2024, the Company entered into a loan agreement with a lender. In consideration for the loan agreement, the Company agreed to issue warrants to purchase up to 24,272 shares of Common Stock at an exercise price of $10.30 which vested upon issuance. These warrants and the shares of Common Stock underlying such warrants were issued in reliance upon an exemption from registration afforded by Section 4(a)(2) promulgated under the Securities Act of 1933, as amended.

 

On September 21, 2024, the Company entered into a payment deferral agreement with a vendor relating to the deferral of payments to the vendor. In consideration for such deferral, the Company agreed to issue warrants to purchase up to 3,496 shares of Common Stock at an exercise price of $10.30, which vested upon issuance. These warrants and the shares of Common Stock underlying such warrants were issued in reliance upon an exemption from registration afforded by Section 4(a)(2) promulgated under the Securities Act of 1933, as amended.

 

On September 30, 2024, the Company entered into a loan agreement with a lender. In consideration for the loan agreement, the Company agreed to issue warrants to purchase up to 14,563 shares of Common Stock at an exercise price of $10.30 which vested upon issuance. These warrants and the shares of Common Stock underlying such warrants were issued in reliance upon an exemption from registration afforded by Section 4(a)(2) promulgated under the Securities Act of 1933, as amended.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not Applicable.

 

Item 5. Other Information

 

None.

 

 

Item 6. Exhibits

 

Exhibits required by Item 601 of Regulation S-K

 

No.		Description
3.1		Certificate of Change of Orgenesis Inc. dated September 20, 2024 (incorporated by reference to exhibit 3.1 to our current report on Form 8-K, filed on September 23, 2024).
(10)		Material Contracts
10.1		Loan Agreement dated July 3, 2024, by and among Koligo Therapeutics Inc. and Yehuda Nir (incorporated by reference to an exhibit to our current report on Form 8-K, filed on July 8, 2024).
10.2		Asset Purchase Agreement, dated as of July 10, 2024, between Orgenesis Inc. and Broaden Bioscience and Technology Corp. (incorporated by reference to an exhibit to our current report on Form 8-K, filed on July 12, 2024).
10.3		Asset Purchase Agreement, dated as of July 12, 2024, among Orgenesis Inc., Theracell Advanced Biotechnology S.A, Theracell Advanced Biotechnology LTD and IDNA Genomics Public Limited (incorporated by reference to an exhibit to our current report on Form 8-K, filed on July 12, 2024).
10.4		Strategic Partnership Agreement, dated as of August 9, 2024, by and between Orgenesis Inc. and Harley Street Healthcare Group (London) Plc Ltd. (incorporated by reference to an exhibit to our current report on Form 8-K, filed on August 14, 2024).
		Amended and Restated Promissory Note, dated as of August 23, 2024, by and between Orgenesis Maryland LLC, Jacob Safier and Orgenesis Inc. (incorporated by reference to an exhibit to our current report on Form 8-K, filed on August 26, 2024).
(31)		Rule 13a-14(a)/15d-14(a) Certification
31.1*		Certification Statement of the Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002
31.2*		Certification Statement of the Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002
(32)		Section 1350 Certification
32.1*		Certification Statement of the Chief Executive Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002
32.2*		Certification Statement of the Chief Financial Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002
(101)*		Interactive Data Files
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

 

* Filed herewith.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

ORGENESIS INC.
By:
/s/ Vered Caplan
Vered Caplan
President & Chief Executive Officer
(Principal Executive Officer)
Date: November 13, 2024
/s/ Victor Miller
Victor Miller
Chief Financial Officer, Treasurer and Secretary
(Principal Financial Officer and Principal Accounting Officer)
Date: November 13, 2024