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 [X].

As of OctoberJuly 16, 2017,2018, there were 121,779,25214,569,359 shares of registrant’s common stock outstanding.

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ORGENESIS INC.
FORM 10-Q
FOR THE THREE AND NINESIX MONTHS ENDED AUGUSTMAY 31, 2018 AND 2017AND 2016

TABLE OF CONTENTS

23

PART I – UNAUDITED FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ORGENESIS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. Dollars in Thousands)
(Unaudited)

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

3

ORGENESIS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. Dollars in Thousands)
(Unaudited)

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

4

ORGENESIS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Cont’d)
(U.S. Dollars in Thousands)
(Unaudited)

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

5

ORGENESIS INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(U.S. Dollars in thousands, except share and loss per share amounts)
(Unaudited)

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

56

ORGENESIS INC.
CONDENSEDCONSOLIDATEDSTATEMENTS OFCHANGES INEQUITY
(U.S.Dollars inthousands, except shareamounts)
(Unaudited)

*Including outstanding contingent shares.represent an amount lower than $ 1 thousand

Theaccompanying notes are anintegral part of these condensedconsolidatedfinancialstatements.

6

ORGENESIS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. Dollars in thousands)
(Unaudited)

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

7

ORGENESIS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. Dollars in thousands)
(Unaudited)

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

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ORGENESIS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and NineSix Months Ended AugustMay 31, 20172018 and August 31, 20162017

NOTE 1 - GENERAL AND BASIS OF PRESENTATION

Orgenesis Inc., a Nevada corporation, is a biopharmaceuticalservice and research company in the field of regenerative medicine industry with expertise and experience ina focus on cell therapy development and manufacturing specializing in cell therapy development for advanced medicinal products serving the regenerative medicine industry.

products. In addition, the Company is focused on developing a novel and proprietary cell therapy trans-differentiation technologies for the treatment of diabetes. The consolidated financial statements include the accounts of Orgenesis Inc., its subsidiaries MaSTherCell S.A (“MaSTherCell S.A.”), its Belgian-based subsidiary and a contract development and manufacturing organization, or CDMO, specialized in cell therapy technologydevelopment and manufacturing for advanced medicinal products; Orgenesis SPRL (the “Belgian Subsidiary”), a Belgian-based subsidiary which is engaged in development and manufacturing activities, together with clinical development studies in Europe, Orgenesis Maryland Inc. (the “U.S. Subsidiary”), a Maryland corporation, and Orgenesis Ltd., an Israeli corporation, (the “Israeli Subsidiary”).

The Company’s goal is to industrialize cell therapy for fast, safe and cost-effective production in order to provide rapid therapies for any market around the world through a world-wide network of CDMOs joint venture partners. The Company’s trans-differentiation technologies for treating diabetes, which will be referred to as the cellular therapy (“CT”) business, is based on the research work of Prof. Sarah Ferber, the Company's Chief Science Officer and a researcher attechnology licensed by Tel Hashomer Medical Research (“THM”), a leading medical hospital and research center in Israel, who established a proof of concept to the Israeli Subsidiary that demonstrates the capacity to induce a shift in the developmental fate of cells from the liver and transdifferentiatingtrans-differentiating (converting) them into “pancreatic beta cell-like” insulin-producing cells.

            The combination of proprietary cell therapy trans-differentiation technologies forOn March 14, 2016, the treatment of diabetesCompany and CureCell Co., Ltd. (“CureCell”) entered into a revenue-generatingJoint Venture Agreement (the “CureCell JVA”) pursuant to which the parties are collaborating in the contract development and manufacturing service business providesof cell therapy products in Korea. As to the Company exercise of the "call option" to which it was entitled under the CureCell JVA agreement see note 10(12).

On May 10, 2016, the Company and Atvio Biotech Ltd., (“Atvio”) entered into a Joint Venture Agreement (the “Atvio JVA”) pursuant to which the parties agreed to collaborate in the contract development and manufacturing of cell and virus therapy products in the field of regenerative medicine in Israel. As to the Company exercise of the "call option" to which it was entitled under the Atvio JVA agreement see note 10(12).

On June 28, 2018, the Company and a newly formed Delaware subsidiary of the Company which is engaged in the contract manufacturing for cell therapy companies (CDMO) ("Masthercell Global") entered into a series of definitive strategic agreements intended to finance, strengthen and expand Orgenesis' CDMO business, which included entry into a Stock Purchase Agreement (the "SPA") with unique capabilities.an affiliate of Great Point Partners, LLC, a manager of private equity funds focused on growing small to medium sized heath care companies ("Great Point"), pursuant to which such Great Point affiliate purchased 378,000 shares of newly designated Series A Preferred Stock of Masthercell Global (the "Masthercell Global Preferred Stock"), representing 37.8% of the issued and outstanding share capital of Masthercell Global, for cash consideration to be paid into Masthercell Global of up to $25 million, subject to certain adjustments. See Note 10(12).

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

On November 16, 2017, the Company implemented a reverse stock split of its outstanding shares of common stock at a ratio of 1-for-12 shares. The reverse stock split has been reflected in these condensed consolidated financial statements.

On March 13, 2018, the Company's common stock began to be quoted and traded on the Nasdaq Capital Market under the symbol “ORGS.”

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As of May 31, 2018, the Company accumulated losses of approximately $52.3 million. Although the Company is showing positive revenue and gross profit trends in its CDMO division, the Company expects to incur further losses in the CT division.

To date, the Company has been funding operations primarily from the proceeds from private placements of the Company’s convertible debt and equity securities and from revenues generated by MaSTherCell S.A. From December 1, 2017 through May 31, 2018, the Company received, through MaSTherCell S.A., proceeds of approximately $5.7 million in revenues and accounts receivable from customers, and $11.7 million from the private placement to accredited investors of the Company's equity and equity linked securities and convertible loans, out of which $2.5 million are from the institutional investor with whom the Company entered into definitive agreements in January 2017 for the private placement of units of the Company's securities for aggregate subscription proceeds of $16 million. The subscription proceeds are payable on a periodic basis through August 2018. In addition, from June 1, 2018 through July 16, 2018, the Company raised $7.8 million from the private placement to assignees of the investor referred to above of unsubscribed units under such investor’s subscription agreement, the exercise of warrants by an investor, and received, through Masthercell Global, $10.3 million as part of Great Point investment and proceeds of approximately $2.1 million in accounts receivable from customers of MaSTherCell S.A. See also note 10, Subsequent Events.

Basis of Presentation

These unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. GAAP, pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial statements. Accordingly, they do not contain all information and notes required by U.S. GAAP for annual financial statements. In the opinion of management, the unaudited condensed consolidated interim financial statements reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of the Company’s consolidated financial position as of AugustMay 31, 2017,2018, and the consolidated statements of comprehensive loss for the three and ninesix months ended AugustMay 31, 20172018 and 2016,2017, and the changes in equity and cash flows for the nine monthssix-month period ended AugustMay 31, 20172018 and 2016.2017. The interim results are not necessarily indicative of the results to be expected for the year ending November 30, 2017.2018. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended November 30, 2016.2017.

Going Concern

            The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As of August 31, 2017, the Company, had accumulated losses of approximately $41 million and expects to incur further losses in the development of its business. Presently, the Company does not have sufficient cash to meet its requirements in the following twelve months. These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company’s continuation as a going concern is dependent on its ability to obtain additional financing as may be required and ultimately to attain profitability. In the event that the remaining subscription proceeds from a private placement with an institutional investor referred to below, in the aggregate amount of $12 million (out of total committed amount $16 million) will not be paid periodically through August 2018, then the Company will need to raise significant funds in order to continue to meet its liquidity needs, realize its business plan and maintain operations. The Company’s current cash balance is not sufficient to support its operations as presently conducted or permit it to take advantage of business opportunities that may arise. Management of the Company is continuing its efforts to generate sustainable profits from its CDMO business and to secure funds through equity and/or debt instruments for its operations and business opportunities investments.

8

            The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. There can be no assurance that management will be successful in implementing its business plan or that the successful implementation of its business plan will actually improve the Company’s operating results. If the Company is unable to raise the necessary capital, the Company may have to cease curtail or reduce operations.

            The Company has been funding its operations primarily from the proceeds from private placements of the Company’s convertible debt and equity securities and from revenues generated by MaSTherCell. From December 2016 through August 2017, the Company received, through MaSTherCell, proceeds of approximately $6.1 million in revenues and accounts receivable from customers and $9 million from the private placement to accredited investors of its equity and equity linked securities and convertible loans, out of which $3.5 are million from the institutional investor definitive agreements in January 2017 for the private placement of units of the Company’s securities for aggregate subscription proceeds to the Company of $16 million. The subscription proceeds are payable on a periodic basis through August 2018. In addition, from September 1, 2017 through October 16, 2017, the Company raised an additional $1.1 million from the proceeds of the private placement to certain accredited investors of its equity and equity linked securities and Company received, through MaSTherCell, proceeds of approximately $1 million in accounts receivable from its customers.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies adopted are consistent with those of the previous financial year.year, except as noted below regarding the adoption of new accounting pronouncements.

Recently Issued Accounting Pronouncements- adopted by the Company

1)     In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a Consensus of the FASB Emerging Issues Task Force) (“ASU 2016-18”), which requires entities to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for annual reporting periods (including interim periods within those annual reporting periods) beginning after December 15, 2017. The Company adopted this standard in the three months ended May 31, 2018. The Company did not have restricted cash in the previously presented period. Therefore, there is no impact for the new adoption on previously reported periods.

2)     In July 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-11, "Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480; Derivatives and Hedging (Topic 815)", ("ASU 2017-11"). This update was issued to address complexities in accounting for certain equity-linked financial instruments containing down round features. The amendment changes the classification analysis of these financial instruments (or embedded features) so that equity classification is no longer precluded. The amendments in ASU 2017-11 are effective for annual reporting periods beginning after December 15, 2018, including interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company elected to early adopt the standard effective September 1, 2017, retrospectively. Following is the results of the adoption on the Company’s condensed consolidated financial statements previously reported:

10

Shareholders’ Equity

StatementofComprehensive Loss

NOTE 3 - SEGMENT INFORMATION

The Chief Executive Officer ("CEO") is the Company’s chief operating decision-maker ("CODM").

Based on the Company's organizational structure, its business activities and information reviewed by the CODM for the purposes of allocating resources and assessing performance, management has determined that there are two operating segments.

CDMO

The CDMO activity is comprised of a specialization in cell therapy development for advanced therapeutic products and is comprised of two types of services to its customers: (i) process and assay development services and (ii) cGMP contract manufacturing services. The CDMO activities include the operations of MaSTherCell.

CTBCT Business

The Cellular TherapyCT Business (“CTB”) activity is based on theour technology licensed by the Israeli Subsidiary, that demonstrates the capacity to induce a shift in the developmental fate of cells from the liver and differentiating (converting) them into “pancreatic beta cell-like” insulin producing cells for patients with Type 1 Diabetes. This segment is comprised of all entities aside from MaSTherCell.

The Company assessesCODM does not review assets by segment, therefore the performance based on a measure of "Adjusted EBIT" (earnings before financial expenses and tax, and excluding share-based compensation expenses and non-recurring income or expenses). The measure of assets has not been disclosed for each segment.

911

Reconciliation of segment performance to loss for the three months ended May 31, 2018:

Segment data for the ninesix months ended AugustMay 31, 20172018 is as follows:

* Excluding $1,389 thousand stock based compensation included in financial expenses.The Company's revenues consist of: $5,019 from services and $1,604 from goods sold.

                          Segment dataReconciliation of segment performance to loss for the ninesix months ended AugustMay 31, 2016 is as follows:2018:

Segment data for the three months ended AugustMay 31, 2018 is as follows:

* The Company's revenues consist of: $2,993 from services and $994 from goods sold.

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Segment data for the six months ended May 31, 2017 is as follows:

* Excluding $275 thousand stock based compensation included in financial income.The Company's revenues consist of: $3,585 from services and $565 from goods sold.

10Reconciliation of segment performance to loss for the six months ended May 31, 2017:

13

Segment data for the three months ended AugustMay 31, 20162017 is as follows:

* The Company's revenues consist of: $2,202 from services and $96 from goods sold.

Reconciliation of segment performance to loss for the three months ended May 31, 2017:

Geographic, Product and Customer Information

Substantially all the Company's revenues and long-lived assets are located in Belgium through its controlled subsidiary, MaSTherCell. Manufacturing activities show a significant increase ofNet revenues in line with the company Business Plan. It reflects market recognition in CDMO business expertise and the adequacy of the Company strategy.

     Revenues from single customers from the CDMO segment that exceed 10% of total net revenues are:

CDMO business has substantially diversified revenues by source signing contracts with leading Biotech companies in their respective cell-based therapy field and strengthened its revenue base over the last three quarters.  In January 2017, MaSTherCell entered into a service agreement with Les Laboratoires Servier (“Servier”) for the development of its CAR-T cell therapy manufacturing platform and in June 2017, MaSTherCell entered into a service agreement with CRISPR  Therapeutics AG  (“CRISPR”) for the development and manufacturing of allogeneic cell therapies.14

NOTE 4 – CONVERTIBLE LOAN AGREEMENTS

(a)      On January 12, 2017, the Company repaid the outstanding principal amount and accrued interest in the amount of $51 thousand on convertible loans that were issued during September 2016. The transaction had no material impact on the comprehensive loss for the period.

11

(b)        During the ninesix months ended AugustMay 31, 2017,2018, the Company entered into several unsecured convertible noteloan agreements with accredited or offshore investors for an aggregate amount of $3.95 million.$720 thousand. The loans bear an annual interest rate of 6% and mature in six months or two years from the closing date, of issuance, unless earlier converted earlier.subject to the terms defined in the agreements.

The notesloans provide that the entire principal amount under the notes and accrued interest automatically convert into units as in the agreement upon the earlier to occura Unit, consisting of anyone share of the following: (i) the closingCommon Stock and one three-year warrant exercisable into an additional share of an offering of equity securities of the Company with gross proceeds to the Company greater than $10 million (ii) the trading of the Company’s common stock par value $0.0001at a per share (the “Common Stock”) on the over-the counter market or an exchange at a weighted averageexercise price of at least $0.52 (adjusted for$6.24, upon certain capital events such as stock splits) for fifty (50) consecutive trading days, or (iii)conditions, including the listing of the Company’s Common Stockshares on a U.S. National Exchange.exchange. In addition, the Company issued to certain investors 40,064 three-year warrant to purchase up to an additional one share of the Company’s Common Stock at a per share exercise price of $6.24.

Since the closing price of the Company’sCompany's publicly traded stock is greater than the effective conversion price on the closing date, the conversion feature is considered "beneficial" to the holders and equal to $2.24 million. The difference is treated as issued equity and reduces the carrying value of the host debt; the discount is accreted as deemed interest on the debt.

            The transaction costs were approximately $405 thousand, out of which $129 thousand was the fair value of warrants for the purchase of 434,436 shares of Common Stock granted to three holders as a success fee, exercisable at $0.52 per share for three years. The fair value of those warrants as of the date of grant was evaluated using the Black-Scholes valuation model.

(c)        During the nine months ended August 31, 2017, the Company entered into several unsecured convertible note agreements with accredited or offshore investors for an aggregate amount of $0.8 million. The notes have 0% or 6% interest rate and are scheduled to mature between nine months and one year unless converted earlier. At any time, all or a portion of the outstanding principal amount and accrued but unpaid interest thereon may be converted at the Holder’s option into shares of the Company common stock at a price of $0.52 per share. The Company also issued to the investors three-year warrants to purchase up to 1,746,063 shares of the Company’s Common Stock at a per share exercise price of $0.52.

            Since the closing price of the Company’s publicly traded stock is greater than the effective conversion price on the measurement date, the conversion feature is considered "beneficial" to the holders and equal to $81$193 thousand. The difference is treated as issued equity and reduces the carrying value of the host debt; the discount is accreted as deemed interest on the debt.

(d)        On January 23, 2017, the Company and a Non-U.S. institutional investor, entered into an agreement pursuant to which the investor advanced to the Company $400,000 at per annum rate of 6% and with a maturity date of April 23, 2017.

The transaction costs for the convertible notes received during the three months ended May 31, 2018 were approximately $71$89 thousand, out of which $35$31 thousand as stock basedare stock-based compensation due to issuance of 76,923 warrants and 32,051 shares. The fair value(See also Note 7(b)). Through May 31, 2018, $650 thousand in principal amount out of those warrants asthese convertible loans were converted into units of the dateCompany's securities. See additional information in Note 4b.

(b)      During the six months ended May 31, 2018, holders of grant was evaluated by using the Black-Scholes valuation model.

            Theapproximately $8.4 million in principal amount and accrued interest were repaid by the Company on March 7, 2017of convertible loans ("converted amounts") with maturity dates between June 2018 and January 2020 converted these outstanding amounts, in accordance with the terms of the agreement, the Company issued to the investor 650,000 restricted sharesspecified in such loans, into units of the Company’s Common Stock. The fair value of the shares as of March 7, 2017, was $494 thousand and was recorded as financial expenses.

(e)        In January 2017 MaSTherCell repaid all but one of its bondholders (originally issued on September 14, 2014), and the aggregate payment amounted to $1.7 million (€1.5 million). On January 17, 2017, the remaining bondholder agreed to extend the duration of his Convertible bond until March 21, 2017. In consideration for the extension, the Company issued to the bondholder warrants to purchase 102,822 shares of the Company’s Common Stock, exercisable over a three-year periodsecurities at a deemed per share exercise priceunit conversion rate of $0.52. The fair value of those warrants as of the date of grant was $20 thousand using the Black-Scholes valuation model.

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            On March 20, 2017, the remaining bondholder agreed to convert his convertible bonds into 488,182 shares of the Company’s Common Stock.

            The Company returned to treasury from the escrow arrangement entered into in March 2015 in connection$6.24, with the MaSTherCell acquisition a total of 3,157,716 consideration, in accordance with the terms of the MaSTherCell acquisition agreement. These shares have been retired and cancelled.

(f)        On February 27, 2017, the Company and Admiral Ventures Inc. (“Admiral”) entered into an agreement resolving the payment of amounts owed to Admiral. Under the terms of the settlement agreement, Admiral extended the maturity date to June 30, 2018. The Company agreed to pay to Admiral, on or before March 1, 2017, between $0.3 million and $1.5 million. Further, beginning April 2017, the Company agreed to make a monthly payment of $125 thousand on account of remaining unpaid balance, and also agreed to remit 25% of all amounts received from equity financing raised above $1 million and 20% of such amounts above $500 thousand on account of amounts owed. The Company accounted for the above changes as a modification of the old debt.

            On March 1 and July 17, 2017, the Company repaid $1.5 million and $125 thousand on account of the principal amount of the loan and accrued interest, respectively. As of August 31, 2017, the Company was in arrears in its payment obligations under such agreement. See also Note 10(c).

NOTE 5 – COMMITMENTS

Grants

            In April 2016, the Belgian Subsidiary received the formal approval from the Walloon Region, Belgium (Service Public of Wallonia, DGO6) (“DGO6”) for a budgeted €1.3 million ($1.5 million) support program for CTB activity. The financial support is awarded to the Belgian subsidiary Orgenesis as a recoverable advance payment at 55% of budgeted costs, or for a total of €0.7 million thousand ($0.8 million). The grant will be paid over the project period. On December 19, 2016, the Belgian Subsidiary received a first payment of €359 thousand ($374 thousand).

            On October 8, 2016, the Belgian subsidiary received the formal approval from the DGO6 for an additional budget of €12.3 million ($12.8 million) support program for the GMP production of AIP cells for two clinical trials that will be performed in Germany and Belgium. The project will be held during a period of three years commencing January 1, 2017. The financial support is awarded to the Belgium subsidiary at 55% of budgeted costs, a total of €6.8 million ($7 million). The grant will be paid over the project period. On December 19, 2016, the Belgian Subsidiary received a first payment of €1.7 million ($1.8 million).

NOTE 6 – EQUITY

Financings

            1)        During the nine months ended August 31, 2017, the Company entered into definitive agreements with accredited and other qualified investors relating to a private placement (the “Private Placement”) ofeach unit comprised of: (i) 1,286,944 sharesone (1) share of the Company’s Common Stock and (ii) one warrant, exercisable for a period of three year warrants to purchase up toyears from the date of issuance, for an additional 1,286,944 sharesshare of the Company’s Common Stock, at a per share exercise price of $0.52$6.24. As a result of these conversions, the holders are entitled to 1,341,134 shares of Common Stock and $0.65 respectively. The purchased securities were issued pursuant to subscription agreements between the Company and the purchasersthree-year warrants for aggregate proceeds to the Companyan additional 1,341,134 shares of $699 thousand.common stock at a per share exercise price of $6.24.

The Company allocated the proceeds from the Private Placementconverted amounts based on the fair value of the warrants and the shares. The table below presents the fair valueconverted amounts of the instruments issuedproceeds as of the closing dates and the allocation of the proceeds:date:

13The fair value of these warrants determined using a Black-Scholes Model based on the following assumptions:

These loans had beneficial conversion features ("BCF"), therefore the Company recognized the unamortized BCF as of the conversion date as interest expenses.

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            2)(c)      In March 2018, a former Israel-based consultant exercised warrants issued in November 2016 to purchase shares of the Company’s Common Stock. A related party of such consultant submitted at the same time notice of its intention to convert into shares of the Company’s common stock the principal amount and accrued interest of approximately $382 thousand outstanding under a loan originally advanced to the Company in November 2016. The exercise price in the warrants and conversion price were fixed at $0.52 per share (pre-reverse stock split implemented by the Company in November 2017). There is a significant disagreement between the Company and these two entities as to the number of shares of Common Stock issuable to these entities, and they contend that the number of shares of Common Stock issuable to them should not take into account the reverse stock split. The Company rejects these contentions in their entirety and, based on the advice of specially retained counsel, believes that these claims are without legal merit and not made in good faith. The Company intends to vigorously defend its interests and pursue other avenues of legal address. Through its counsel, the Company has advised these entities that unless they withdraw their request within a specified period, the Company will cancel the above referenced agreements and these parties’ right to receive any shares of the Company’s Common Stock. In April 2018, the Company withdrew the aforementioned agreements and deposited the principle amount and accrued interest of the loan in an escrow account presented as restricted shares in the balance sheet as of May 31, 2018.

NOTE 5 – COMMITMENTS

"MSA" with Adva Biotechnology Ltd.

On January 28, 2018, the Company and Adva Biotechnology Ltd. (“Adva”), entered into a Master Services Agreement (“MSA”), under which the Company and/or its affiliates are to provide certain services relating to development of products to Adva, as may be agreed between the parties from time to time. Under the MSA, the Company undertook to provide Adva with in kind funding in the form of materials and services having an aggregate value of $749,900 at the Company’s own cost in accordance with a project schedule and related mutually acceptable project budget. The Company entered into agreement with Atvio Biotech Ltd, its Israeli-based joint venture, to fulfill its obligations pursuant this MSA. In March 2018, the Company incurred a total expense of $82 thousand.

In consideration for and subject to the fulfillment by the Company of such in-kind funding commitment, Adva agreed that upon completion of the development of the products, the Company and/or its affiliates and Adva shall enter into a supply agreement pursuant to which for a period of eight (8) years following execution of such supply agreement, the Company and/or its affiliates (as applicable) is entitled (on a non-exclusive basis) to purchase the products from Adva at a specified discount pricing from their then standard pricing . The Company and/or its affiliates were also granted a non-exclusive worldwide right to distribute such products, directly or through any of their respective contract development and manufacturing organization (CDMO) service centers during such term. The MSA shall remain in effect for 10 years unless earlier terminated in accordance with its terms.

Grants

On December 18, 2017, MaSTherCell, as coordinator of the “Icone” project with a consortium of private and public searchers, received the approval of a new grant from the Walloon Region with a direct financial support of Euro 1 million ($1.2 million) in program for development of iPS-derived Cortical Neurons. The program started in 2017 for a 4-year period until 2021. After 2 years, project partners will make a decision continue the program upon pre-defined scientific milestone achievements. During the six months ended May 31, 2018, MaSTherCell received an advance payment of Euro 0.6 million ($0.7 million).

16

NOTE 6 – EQUITY

Financings

1)      In January 2017, the Company entered into definitive agreements with an institutional investor for the private placement of 30,769,2312,564,115 units of the Company’s securities for aggregate subscription proceeds to the Company of $16 million at $0.52$6.24 price per unit. Each unit is comprised of one share of the Company’s Common Stock and a warrant, exercisable over a three-years period from the date of issuance, to purchase one additional share of Common Stock at a per share exercise price of $0.52.$6.24. The subscription proceeds are payable on a periodic basis through AugustSeptember 2018. Each periodic payment of subscription proceeds will be evidenced by the Company’s standard securities subscription agreement.

During the ninesix months ended AugustMay 31, 20172018 the investor remitted to the Company $3.5$2.5 million, in consideration of which, the investor is entitled to 6,730,767400,643 shares of the Company’s Common Stock and three-year warrants to purchase up to an additional 6,730,767400,643 shares of the Company’s Common Stock at a per share exercise price of $0.52 $6.24.

The Company allocated the proceeds based on the fair value of the warrants and the shares. The table below presents the allocation of the proceeds as of the closing date:

            AsThe fair value of August 31, 2017, 1,923,076 shares have not been issued thereforethese warrants determined using a Black-Scholes Model based on the Company recorded $624 thousand net of transaction costs in Receipts on Account of Shares to be Allotted.following assumptions:

In connection therewith,with certain installments of the investment, the Company undertook to pay a fee of 5%, resulting in the payment of $175$25 thousand (classified as Additional Paid-in Capital in the statement of equity) and the issuance of 336,5384,006 restricted shares of Common Stock. The fair value of the shares as of the date of grant was $145$29 thousand using the share price on the date of grant.

Through May 31, 2018 the Company has received a total of $8,000 thousand out of the committed $16,000 thousand subscription proceeds. See also note 10(9).

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2)      During the six months ended May 31, 2018, the Company entered into definitive agreements with accredited and other qualified investors relating to a private placement of 1,237,649 units. Each unit is comprised of (i) one share of the Company’s common stock and (ii) three-year warrant to purchase up to an additional one share of the Company’s Common Stock at a per share exercise price of $6.24, for aggregate proceeds to the Company of approximately $7.7 million.

The Company allocated the proceeds based on the fair value of the warrants and the shares. The table below presents the allocation of the proceeds as of the closing date:

In connection with $2.8 million out of these private placements, the Company undertook to pay a fee of 8%, resulting in the payment of $224 thousand and the issuance of 21,630 three-year warrants to purchase each up to an additional one share of the Company’s Common Stock exercisable at $6.24 to $12.39 per share. The fair value of the warrants as of the date of grant was $125 thousand using a Black Scholes option pricing model.

NOTE 7 – STOCK BASED COMPENSATION

a. Options Granted to Employees and Directors

            On December 9, 2016,Below is a table summarizing the Companyterms of options granted to an employee during the six months ended May 31, 2018:

*      In May 2018, the compensation committee of the Company’s Board of Directors (the “Compensation Committee”) approved the option grants for MaSTherCell's employees and directors 7,300,000 options and on and June 1,under the Company’s 2017 the Company granted to the Chief Executive Officer 1,000,000 options, which are summarizedEquity Incentive Plan. The grant date on the table below:option is in June 2018.

The fair value of each stockthese option grant is estimated at the date of grant using a Black Scholes option pricing model. The volatility is based on historical volatility of the Company, by statistical analysis of the weekly share price for the last two years. The expected term is the mid-point between the vesting date and the maximum contractual term for each grant equal to the contractual life. The fair value of each option grantgrants is based on the following assumptions:

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b. OptionsBelow is a table summarizing all the options granted to consultants and service providers during the six months ended May 31, 2018:

1)     During the six months ended May 31, 2018, the Company granted to several consultants 30,174 warrants with each exercisable at $6.24 to $15.41 per share for three years as a Consultantssuccess fee with respect to the issuance of the convertible loans and part of the private placement. The fair value of those warrants as of the date of grant using the Black-Scholes valuation model was $156 thousand.

On2)     In December 9, 2016,2017, the Company entered into investors relation services, marketing and related services agreement. Under the terms of the agreement, the Company agreed to grant the consultant 100,000 shares of restricted common stock, of which the first 25,000 shares will vest after 30 days from the signing date, and 75,000 shares are to vest monthly over 15 months commencing February 2018. As of May 31, 2018, 45,000 shares are vested. The fair value of the shares was $862 thousand using the fair value of the shares at May 31, 2018, out of which $367 thousand was recognized during the three months ended May 31, 2018. The unrecognized costs will be utilized on a monthly basis until May 2019.

3)     In December 2017, the Company entered into an investor relations services, marketing and related services agreement. Under the terms of the agreement, the Company agreed to grant the consultant 95,000 shares of restricted common stock, of which the first 25,000 shares will vest after 30 days from the signing date, and 70,000 shares are to vest monthly over 14 months commencing February 2018. As of May 31, 2018, 45,000 shares vested. The fair value of the shares was $819 thousand using the fair value of the shares at May 31, 2018, out of which $367 thousand was recognized during the three months ended May 31, 2018. The unrecognized costs will be utilized on a monthly basis until April 2019.

4)     In January 2018, the Company entered into consulting agreements for the provision of professional servicesagreement with financial advisor for a period of one year. Under the terms of the agreement,agreements, the consultant was paid $20 thousand per month for three months and 19,000 units of the Company grantedsecurities. Each unit is comprised of (i) one share of the Company’s common stock and (ii) a three-year warrant to purchase up to an additional one share of the Company’s Common Stock at a consultants 200,000 options exercisable at $0.40 per share. The options are to vest quarterly over a periodshare exercise price of one year.$6.24. The fair value of those optionsthe units as of the date of grant was $68$171, out of which $62 thousand reflect the fair value of the warrants using the Black-Scholes valuation model.

5)     On July 6, 2018, as part of an amendment to a prior agreement, the Company issued to a consultant additional 6,629 units of share and warrants for the purchase of the Company’s common stock, exercisable at a per share exercise price of $6.24. See also note 10(6).

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6)     In April 2018, a U.S.-based accredited investor who held 128,077 warrants issued in November 2015, exercised their warrants into 128,077 shares of the Company’s Common Stock at a per share exercise price of $6.24, for aggregate proceeds to the Company of $799 thousand.

NOTE 8 – LOSS PER SHARE

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