UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

(Mark One)

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

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

For the Quarterly Period Ended ~~June~~September 30, 2023

☐	~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

☐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		The Nasdaq Capital Market

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 No☒ ☒

As of ~~August 10,~~November 13, 2023, there were ~~28,466,807~~31,877,063 shares of registrant’s common stock outstanding.

EXPLANATORY NOTE

~~EXPLANATORY NOTE~~

This Amendment No. 1 to the Quarterly Report on Form 10-Q/A (this “Form 10-Q/A”) amends and restates certain items noted below in the Quarterly Report on Form 10-Q of Orgenesis Inc. (the “Company”) for the quarter ended ~~June~~September 30, 2023, as originally filed with the U.S. Securities and Exchange Commission (the “SEC”) on ~~August 10,~~November 13, 2023 (the “Original Filing”).

As previously reported in the Company’s Current Report on Form 8-K filed on April 15, 2024, in connection with its completion of its year-end reporting processes for its 2023 fiscal year, the Company identified errors in accounting for (i) revenues, equity investees, goodwill, share on loss of associated companies, and selling, general and administration expenses (ii) convertible loan receivable and credit losses related to such convertible loan.

On April 10, 2024, the Audit Committee of the Board of Directors of the Company, in consultation with management of the Company and the Company’s independent registered public accounting firm, Kesselman & Kesselman, Certified Public Accountants (Isr.), a member firm of PricewaterhouseCoopers International Limited, concluded that certain items of the Company’s previously issued unaudited condensed consolidated interim financial statements as of and for the fiscal periods ended March 31, 2023, June 30, 2023 and September 30, 2023 included in the Company’s Quarterly Reports on Form 10-Q for such periods should no longer be relied upon and that the Company needed to restate those previously issued financial statements.

See Note 2, under the caption “Restatement of Previously Issued Financial Statements”, to the Condensed Consolidated Financial Statements included in Item 1 of this Form 10-Q/A for additional information and a reconciliation of the previously reported amounts to the restated amounts.

Contemporaneously with the filing of this Form 10-Q/A, the Company is filing an amendment to its Quarterly Reports on Form 10-Q as of and for each of the periods ended March 31, 2023 and ~~September~~June 30, 2023.

Internal Control Considerations

In connection with the restatement, the Company’s management reassessed the effectiveness of its disclosure controls and procedures and internal control over financial reporting as of ~~June~~September 30, 2023. As a result of that reassessment, the Company’s management determined that its disclosure controls and procedures and internal control over financial reporting as of ~~June~~September 30, 2023 were not effective as a result of the inappropriate measurement of expected credit losses and revenues. For additional information about the nature of the Company’s material weaknesses which contributed to the financial statement restatement described herein, see Part I, Item 4 “Controls and Procedures”, in this Form 10-Q/A.

Items Amended in this Filing

This Form 10-Q/A sets forth the Original Filing, as amended, in its entirety; however, this Form 10-Q/A amends and restates the following Items of the Original Filing to the extent necessary to reflect the adjustments set forth in Note 1, under the caption “Restatement of Previously Issued Financial Statements” and to make corresponding revisions to the Company’s financial data cited elsewhere in this Form 10-Q/A.

● Part I, Item 1 - Financial Statements

● Part I, Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations

● Part I, Item 4 - Controls and Procedures

In addition, Part II, Item 6 “Exhibits” of this Form 10-Q/A is amended, as the Company’s Chief Executive Officer and Chief Financial Officer have provided new certifications dated as of the date of this filing (Exhibits 31.1, 31.2, 32.1 and 32.2), and the Company has provided its restated condensed consolidated financial statements formatted in Extensible Business Reporting Language (XBRL) in Exhibit 101.

Except as described above, no other changes have been made to the Original Filing. This Form 10-Q/A speaks as of the date of the Original Filing and does not reflect events that may have occurred after the date of the Original Filing or modify or update any disclosures that may have been affected by subsequent events. Among other things, forward-looking statements made in the Original Filing have not been revised to reflect events, results or developments that occurred or facts that became known to the Company after the date of the Original Filing, and such forward-looking statements should be read in conjunction with the Company’s filings with the SEC, including those subsequent to the filing of the Original Filing.

ORGENESIS INC.

FORM 10-Q/A

FOR THE ~~SIX~~NINE MONTHS ENDED ~~JUNE~~SEPTEMBER 30, 2023 AND 2022

TABLE OF CONTENTS

		Page

PART I - FINANCIAL INFORMATION		3

ITEM 1	Restated Financial Statements (unaudited)	3

	Condensed Consolidated Balance Sheets as of ~~June~~September 30, 2023 (As Restated) and December 31, 2022	3

	Condensed Consolidated Statements of Loss and Comprehensive Loss for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2023 (As Restated) and 2022	5

	Condensed Consolidated Statements of Changes in Equity for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2023 (As Restated) and 2022	6

	Condensed Consolidated Statements of Cash Flows for the ~~Six~~Nine Months Ended ~~June~~September 30, 2023 (As Restated) and 2022	10

	Notes to Condensed Consolidated Financial Statements ~~(As Restated)~~	11

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2429

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	3541

ITEM 4.	Controls and Procedures	3542

PART II - OTHER INFORMATION		43

ITEM 1.	Legal Proceedings	3643

ITEM 1A.	Risk Factors	3643

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3644

ITEM 3.	Defaults Upon Senior Securities	3644

ITEM 4.	Mine Safety Disclosures	3644

ITEM 5.	Other Information	3644

ITEM 6.	Exhibits	3745

SIGNATURES		3846

PART I –FINANCIAL INFORMATION

Item 1. Financial Statements

ORGENESIS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollars in thousands)

(Unaudited)

June 30, 2023
December 31, 2022

As of
June 30, 2023
December 31, 2022

(As Restated
see note 2)
Assets

CURRENT ASSETS:
Cash and cash equivalents $ 180 $ 5,311
Restricted cash 1,047 1,058
Accounts receivable, net of credit losses of 0$ as of June 30, 2023 and December 31, 2022 6 36,183
Prepaid expenses and other receivables 4,300 958
Receivables from related parties 966 -
Convertible loan receivable - 2,688
Inventory 34 120
Total current assets
6,533
46,318

NON-CURRENT ASSETS:
Deposits $ 47 $ 331
Equity investees
41
39
loans to associates 97 96
Property, plant and equipment, net 1,249 22,834
Intangible assets, net 7,681 9,694
Operating lease right-of-use assets 494 2,304
Goodwill
1,211
8,187
Deferred tax - 103
Other assets 717 1,022
Total non-current assets
11,537
44,610
TOTAL ASSETS $ 18,070 $ 90,928


	As of
	September 30, 2023 (As Restated - See note 2)		December 31, 2022
Assets

CURRENT ASSETS:
Cash and cash equivalents	$	55	$	5,311
Restricted cash		734		1,058
Accounts receivable, net of credit losses of 0$ as of September 30, 2023 and December 31, 2022		71		36,183
Prepaid expenses and other receivables		4,031		958
Receivables from related parties		1,052		-
Convertible loan receivable		-		2,688
Inventory		34		120
Total current assets		5,977		46,318

NON-CURRENT ASSETS:
Deposits	$	40	$	331
Equity investees		31		39
Loans to associates		93		96
Property, plant and equipment, net		1,503		22,834
Intangible assets, net		7,528		9,694
Operating lease right-of-use assets		431		2,304
Goodwill		1,211		8,187
Deferred tax		-		103
Other assets		716		1,022
Total non-current assets		11,553		44,610
TOTAL ASSETS	$	17,530	$	90,928

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

ORGENESIS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Cont’d)

(U.S. Dollars in thousands)

(Unaudited)

	As of
	June 30, 2023			December 31, 2022			As of
	(As Restated)						September 30, 2023 (As Restated)			December 31, 2022
Liabilities and Equity

CURRENT LIABILITIES:
Accounts payable	$	3,826		$	4,429		$	4,851		$	4,429
Accounts payable related parties		133			-			132			-
Accounts payable								132			-
Accrued expenses and other payables		2,235			2,578			2,015			2,648
Income tax payable		520			289			915			289
Employees and related payables		901			1,860			807			1,860
Other payables related parties		999			-			999			-
Advance payments on account of grant		1,481			1,578			1,376			1,578
Contract liabilities		-			70
Short-term loans								430			-
Current maturities of finance leases		18			60			17			60
Current maturities of operating leases		254			542			220			542
Short-term and current maturities of convertible loans		2,344			4,504
Current maturities of convertible loans								2,540			4,504
Total current liabilities		12,711			15,910			14,302			15,910

LONG-TERM LIABILITIES:
Non-current operating leases	$	184		$	1,728		$	140		$	1,728
Convertible loans		17,834			13,343			18,394			13,343
Retirement benefits obligation		-			163			-			163
Long-term debt and finance leases		13			95
Advance payments on account of grant		-			144
Finance leases								8			95
Other long-term liabilities		60			271			58			415
Total long-term liabilities		18,091			15,744			18,600			15,744
TOTAL LIABILITIES		30,802			31,654			32,902			31,654

REDEEMABLE NON-CONTROLLING INTEREST	$	-		$	30,203		$	-		$	30,203

EQUITY:
Common stock of $0.0001 par value: Authorized at June 30, 2023 and December 31, 2022: 145,833,334 shares; Issued at June 30, 2023 and December 31, 2022: 28,753,374 and 25,832,322 shares, respectively; Outstanding at June 30, 2023 and December 31, 2022: 28,466,807 and 25,545,755 shares, respectively		3			3
Common stock of $0.0001 par value: Authorized at September 30, 2023 and December 31, 2022: 145,833,334 shares; Issued at September 30, 2023 and December 31, 2022: 30,753,374 and 25,832,322 shares, respectively; Outstanding at September 30, 2023 and December 31, 2022: 30,466,807 and 25,545,755 shares, respectively								3			3
Additional paid-in capital		154,743			150,355			155,819			150,355
Accumulated other comprehensive (income) loss		62			(270	)
Treasury stock 286,567 shares as of June 30, 2023 and December 31, 2022		(1,266	)		(1,266	)
Accumulated other comprehensive income (loss)								71			(270	)
Treasury stock 286,567 shares as of September 30, 2023 and December 31, 2022								(1,266	)		(1,266	)
Accumulated deficit		(166,274	)		(121,261	)		(169,999	)		(121,261	)
Equity attributable to Orgenesis Inc.		(12,732	)		27,561			(15,372	)		27,561
Non-controlling interest		-			1,510			-			1,510
Total equity		(12,732	)		29,071			(15,372	)		29,071
TOTAL LIABILITIES REDEEMABLE NON-CONTROLLING INTEREST AND EQUITY	$	18,070		$	90,928		$	17,530		$	90,928

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)

	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022
	Three Months Ended						Six Months Ended
	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022			Three Months Ended						Nine Months Ended
	(As Restated)						(As Restated)						September 30, 2023 (As Restated)			September 30, 2022			September 30, 2023 (As Restated)			September 30, 2022
Revenues	$	113		$	6,699		$	255		$	13,276		$	110		$	7,841		$	365		$	21,117
Revenues from related party		-			502			-			1,137			-			147			-			1,284
Total revenues		113			7,201			255			14,413			110			7,988			365			22,401
Cost of revenues		3,232			1,063			5,954			1,777			139			983			6,093			2,760
Gross profit		(3,119	)		6,138			(5,699	)		12,636
Gross (loss) profit														(29	)		7,005			(5,728	)		19,641
Cost of development services and research and development expenses		3,527			7,838			6,808			14,489			808			3,683			7,616			18,172
Amortization of intangible assets		208			229			415			461			153			225			568			686
Selling, general and administrative expenses including credit losses of $24,367 for the six months ended June 30, 2023 and $14,878 for the three months ended June 30, 2023		18,216			2,803			31,744			5,654
Selling, general and administrative expenses including credit losses of $24,367 for the nine months ended September 30, 2023														1,245			3,104			32,989			8,758
Share in net loss of associated companies														553			274			552			1,189
Operating loss		25,070			4,732			44,666			7,968			2,788			281			47,453			9,164
Loss from deconsolidation of Octomera (see note 3)		5,343			-			5,343			-			-			-			5,343			-
Other income, net		-			(8	)		(2	)		(8	)
Other (income), loss net														(2	)		2			(4	)		(6	)
Credit loss on convertible loan receivable		-			-			2,688			-			-			-			2,688			-
Loss from extinguishment in connection with convertible loan		-			-			283			-			-			-			283			-
Financial expenses, net		692			389			1,373			602			545			1,100			1,918			1,702
Share in net loss (profit) of associated companies		(3	)		368			(1	)		915
Loss before income taxes		31,102			5,481			54,350			9,477			3,331			1,383			57,681			10,860
Tax expenses		91			11			220			12			394			25			614			37
Net loss		31,193			5,492			54,570			9,489			3,725			1,408			58,295			10,897
Net income (loss) attributable to non-controlling interests (including redeemable)		(5,650	)		(65	)		(9,557	)		(53	)
Net loss attributable to non-controlling interests (including redeemable)														-			(52	)		(9,557	)		(105	)
Net loss attributable to Orgenesis Inc.	$	25,543		$	5,427		$	45,013		$	9,436		$	3,725		$	1,356		$	48,738		$	10,792

Loss per share:
Basic and diluted	$	0.76		$	0.22		$	1.63		$	0.38		$	0.12		$	0.05		$	1.70		$	0.43
Basic	$	0.76		$	0.22		$	1.63		$	0.38

Weighted average number of shares used in computation of Basic and Diluted loss per share:
Basic and diluted		28,603,597			24,820,756			27,546,229			24,711,462			30,022,591			25,403,907			28,680,777			24,944,814
Basic		28,603,597			24,820,756			27,546,229			24,711,462

Comprehensive loss:
Net loss	$	31,193		$	5,492		$	54,570		$	9,489		$	3,725		$	1,408		$	58,295		$	10,897
Other comprehensive loss - translation adjustments		11			326			52			477
Other comprehensive (income) loss - translation adjustments														(9	)		556			43			1,033
Release of translation adjustment due to deconsolidation of Octomera		(384	)		-			(384	)		-			-			-			(384	)		-
Comprehensive loss		30,820			5,818			54,238			9,966			3,716			1,964			57,954			11,930
Comprehensive income (loss) attributed to non-controlling interests		(5,650	)		(65	)		(9,557	)		(53	)
Comprehensive loss attributed to non-controlling interests														-			(52	)		(9,557	)		(105	)
Comprehensive loss attributed to Orgenesis Inc.	$	25,170		$	5,753		$	44,681		$	9,913		$	3,716		$	1,912		$	48,397		$	11,825

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)

(As Restated)


	Common Stock																										Common Stock
	Number		Par Value		Addi-tional Paid-in Capital				Accumu-lated Other Compre-hensive Income (Loss)			Treasury Shares			Accumu-lated Deficit			Equity Attributed to Orgenesis Inc.			Non- Contro- lling Interest			Total			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, 2023		25,545,755	$	3	$	150,355		-	$	(270	)	$	(1,266	)	$	(121,261	)	$	27,561		$	1,510		$	29,071			25,545,755	$	3	$	150,355		-	$	(270	)	$	(1,266	)	$	(121,261	)	$	27,561		$	1,510		$	29,071
Changes during the six months ended June 30, 2023:
Changes during the nine months ended September 30, 2023:
Stock-based compensation to employees and directors		-		-		279				-			-			-			279			-			279			-		-		347		-		-			-			-			347			-			347
Stock-based compensation to service providers		-		-		32				-			-			-			32			-			32			-		-		40				-			-			-			40			-			40
Issuance of shares and warrants net of issuance costs		1,947,368		-*		3,341				-			-			-			3,341						3,341			3,947,368		- *		4,341				-			-			-			4,341			-			4,341
Issuance of Shares due to exercise of warrants		973,684		-*		-		-		-			-			-			-			-			-			973,684		- *		-				-			-			-			-			-			-
Issuance of warrants with respect to convertible loans		-		-		449				-			-			-			449			-			449			-		-		449				-			-			-			449			-			449
Extinguishment in connection with convertible loan restructuring		-		-		287				-			-			-			287			-			287			-		-		287				-			-			-			287			-			287
Deconsolidation of Octomera		-		-		9,406				384			-			-			9,790			(1,360	)		8,430			-		-		9,406				384			-			-			9,790			(1,360	)		8,430
Adjustment to redemption value of redeemable non-controlling interest		-		-		(9,406	)			-			-			-			(9,406	)		-			(9,406	)		-		-		(9,406	)			-			-			-			(9,406	)		-			(9,406	)
Comprehensive income (loss) for the period		-		-		-		-		(52	)		-			(45,013	)		(45,065	)		(150	)		(45,215	)		-		-		-		-		(43	)		-			(48,738	)		(48,781	)		(150	)		(48,931	)
Balance at June 30, 2023		28,466,807		3		154,743		-		62			(1,266	)		(166,274	)		(12,732	)		-			(12,732	)
Balance at September 30, 2023																												30,466,807	$	3	$	155,819		-	$	71		$	(1,266	)	$	(169,999	)	$	(15,372	)	$	-		$	(15,372	)

Represents an amount lower than ~~$1 thousand.~~$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		Addi- tional Paid-in Capital		Receipts on Account of Shares to be Allotted		Accumulated Other Compre- hensive Income (Loss)			Treasury Shares			Accumu- lated Deficit			Equity Attri- buted to Orgenesis Inc.			Non- Contro- lling Interest			Total
	Common Stock																										Common Stock
	Number		Par Value		Addi- tional Paid-in Capital		Receipts on Account of Shares to be Allotted		Accumulated Other Compre- hensive Income (Loss)			Treasury Shares			Accumu- lated Deficit			Equity Attri- buted to Orgenesis Inc.			Non- Contro- lling Interest			Total			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, 2022		24,280,799	$	3	$	145,916	$	-	$	207		$	(1,266	)	$	(106,372	)	$	38,488		$	143		$	38,631			24,280,799	$	3	$	145,916	-	$	207		$	(1,266	)	$	(106,372	)	$	38,488		$	143		$	38,631
Changes during the six months ended June 30, 2022:
Changes during the nine months ended September 30, 2022:
Stock-based compensation to employees and directors		-		-		463		-		-			-			-			463			-			463			-		-		646			-			-			-			646			-			646
Stock-based compensation to service providers		-		-		37		-		-			-			-			37			-			37			-		-		48			-			-			-			48			-			48
Exercise of options		510,017		-*		6		-		-			-			-			6			-			6			510,017		-*		6			-			-			-			6			-			6
Issuance of warrants with respect to convertible loans		-		-		397		-		-			-			-			397			-			397			-		-		574			-			-			-			574			-			574
Receipts on account of shares and warrants to be allotted		-		-		-		2,175		-			-			-			2,175			-			2,175
Issuance of shares																												724,999		-*		2,175			-			-			-			2,175			-			2,175
Issuance of shares related to acquisition of Mida		29,940		-*		100		-		-			-			-			100			-			100			29,940		-*		100			-			-			-			100			-			100
Comprehensive loss for the period		-		-		-		-		(477	)		-			(9,436	)		(9,913	)		(53	)		(9,966	)		-		-		-	-		(1,033	)		-			(10,792	)		(11,825	)		(105	)		(11,930	)
Balance at June 30, 2022		24,820,756	$	3	$	146,919	$	2,175	$	(270	)	$	(1,266	)	$	(115,808	)	$	31,753		$	90		$	31,843
Balance at September 30, 2022																												25,545,755	$	3	$	149,465	-	$	(826	)	$	(1,266	)	$	(117,164	)	$	30,212		$	38		$	30,250

Represents an amount lower than ~~$1 thousand.~~$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)

(As Restated)

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
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 April 1, 2023 27,861,543 $ 3 $ 151,020 - $ (311 ) $ (1,266 ) $ (140,731 ) $ 8,715 $ 1,274 $ 9,989
Changes during the three months ended June 30, 2023:
Stock-based compensation to employees and directors - - 136 - - - 136 - 136
Stock-based compensation to service providers - - 16 - - - 16 - 16
Issuance of shares and warrants net of issuance costs - - (100 ) - - - - (100 ) - (100 )
Issuance of Shares due to exercise of warrants 605,264 -* - - - - - - -
Deconsolidation of Octomera - - 9,406 384 - - 9,790 (1,360 ) 8,430
Adjustment to redemption value of redeemable non-controlling interest - - (5,735 ) - - - (5,735 ) - (5,735 )
Comprehensive income for the period - - - - (11 ) - (25,543 ) (25,554 ) 86    (25,468 )
Balance at June 30, 2023 28,466,807 $ 3 $ 154,743 - $ 62 $ (1,266 ) $ (166,274 ) $ (12,732 ) $ - $ (12,732 )

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, 2023 28,466,807 $ 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 - - 68 - - - 68 - 68
Stock-based compensation to service providers - - 8 - - - 8 - 8
Issuance of shares 2,000,000 -* 1,000 - - - 1,000 - 1,000
Comprehensive income (loss) for the period - - - - 9 - (3,725 ) (3,716 ) - (3,716 )
Balance at September 30, 2023 30,466,807 $ 3 $ 155,819 - $ 71 $ (1,266 ) $ (169,999 ) $ (15,372 ) $ - $ (15,372 )

* Represents an amount lower than ~~$1 thousand.~~$1.

The accompanying notes are an integral part of these condensed consolidated financial statements.
8

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
Receipts on Account of Shares to be Allotted
Accumulated
Other
Compre-hensive
Income (loss)
Treasury Shares
Accumu-lated
Deficit

Equity
Attri-buted
to
Orgenesis
Inc.

Non-
Contro-lling
Interest
Total
Balance at
April 1, 2022 24,820,756 $ 3 $ 146,290 $ - $ 56 $ (1,266 ) $ (110,381 ) $ 34,702 $ 155 $ 34,857
Changes during the three months ended June 30, 2022:
Stock-based compensation to employees and directors - - 220 - - - - 220 - 220
Stock-based compensation to service providers - - 12 - - - - 12 - 12
Issuance of warrants with
respect to convertible loans - - 397 - - - - 397 - 397
Receipts on account of shares and warrants to be allotted - - - 2,175 - - - 2,175 - 2,175
Comprehensive loss for the period - - - - (326 ) - (5,427 ) (5,753 ) (65 ) (5,818 )
Balance at June 30, 2022 24,820,756 $ 3 $ 146,919 $ 2,175 $ (270 ) $ (1,266 ) $ (115,808 ) $ 31,753 $ 90 $ 31,843

Common Stock
Number
Par
Value

Addi-tional
Paid-in
Capital
Receipts on Account of Shares to be Allotted
Accumulated
Other
Compre-hensive
Loss
Treasury Shares
Accumu-lated
Deficit

Equity
Attri-buted
to
Orgenesis
Inc.

Non-
Contro-lling
Interest
Total
Balance at
July 1, 2022 24,820,756 $ 3 $ 146,919 $ 2,175 $ (270 ) $ (1,266 ) $ (115,808 ) $ 31,753 $ 90 $ 31,843
Balance 24,820,756 $ 3 $ 146,919 $ 2,175 $ (270 ) $ (1,266 ) $ (115,808 ) $ 31,753 $ 90 $ 31,843
Changes during the three months ended September 30, 2022:
Stock-based compensation to employees and directors - - 183 - - - - 183 - 183
Stock-based compensation to service providers - - 11 - - - - 11 - 11
Issuance of warrants with respect to convertible loans - - 177 - - - - 177 - 177
Issuance of shares 724,999 -* 2,175 (2,175 ) - - - - - -
Comprehensive loss for the period - - - - (556 ) - (1,356 ) (1,912 ) (52 ) (1,964 )
Comprehensive income (loss) for the period - - - - (556 ) - (1,356 ) (1,912 ) (52 ) (1,964 )
Balance at September 30, 2022 25,545,755 $ 3 $ 149,465 $ - $ (826 ) $ (1,266 ) $ (117,164 ) $ 30,212 $ 38 $ 30,250
Balance 25,545,755 $ 3 $ 149,465 $ - $ (826 ) $ (1,266 ) $ (117,164 ) $ 30,212 $ 38 $ 30,250

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

9
ORGENESIS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. Dollars in thousands)
(Unaudited)

Nine Months Ended

September 30, 2023
(As Restated)
September 30, 2022

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ (58,295 ) $ (10,897 )
Adjustments required to reconcile net loss to net cash used in operating activities:
Stock-based compensation 387 694
Capital gain, net - (5 )
Loss from deconsolidation of Octomera 5,343 -
Share in losses of associated companies, net 552 1,189
Depreciation and amortization expenses 1,366 1,463
Credit loss on convertible loan receivable 2,688 -
Effect of exchange differences on inter-company balances 106 353
Net changes in operating leases (82 ) (58 )
Interest expenses accrued on loans and convertible loans 880 764
Loss from extinguishment in connection with convertible loan restructuring 283 -
Changes in operating assets and liabilities:
Accounts receivable 30,079 (8,838 )
Prepaid expenses and other accounts
receivable (1,598 ) 308
Inventory (389 ) 10
Other assets 10 17
Accounts payable 3,925 (1,574 )
Accrued expenses and other payables 266 2,379
Employee and related payables 135 32
Deferred taxes liability 9 -
Net cash used in operating activities $ (14,335 ) $ (14,163 )

CASH FLOWS FROM INVESTING ACTIVITIES:
Repayment of convertible loan to related party partners - 538
Increase in loan to associates entities - (2,578 )
Repayment of loan granted - 782
Sale of property and equipment - 71
Purchase of property, plant and equipment (2,096 ) (6,971 )
Cash acquired from acquisition of Mida - 702
Impact to cash resulting from deconsolidation (see note 3) (973 ) -
Investment in Octomera (see note 3) (543 ) -
Investment in long-term deposits (33 ) (2 )
Net cash used in investing activities $ (3,645 ) $ (7,458 )

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of shares due to exercise of options and warrants (net of transaction costs) 4,341 2,181
Proceeds from issuance of convertible loans 5,660 19,150
Proceeds from transaction with redeemable non-controlling interest that do not acquire control of a subsidiary, see note 3 5,000 -
Repayment of convertible loans and convertible bonds (3,000 ) (2,300 )
Repayment of short and long-term debt (33 ) (20 )
Proceeds from issuance of loans payable 425
Grant received in respect of third party - 1,413
Transfer of the grant received to third party - (329 )
Net cash provided by financing activities $ 12,393 $ 20,095

NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH $ (5,587 ) $ (1,526 )
EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH 7 19

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD 6,369 5,974

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD $ 789 $ 4,467

SUPPLEMENTAL NON-CASH FINANCING AND INVESTING ACTIVITIES
Right-of-use assets obtained in exchange for new operation lease liabilities $ 752 $ 432
Increase (decrease) in accounts payable related to purchase of property, plant and equipment $ 14 $ (368 )
Issuance of common stocks for the acquisition of Mida $ - $ 100
Extinguishment in connection with convertible loan restructuring $ 287 $ -

CASH PAID DURING THE YEAR FOR:
Interest $ 785 $ 458
June 30, 2023
June 30, 2022

Six Months Ended
June 30, 2023
June 30, 2022

(As Restated)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (54,570 ) $ (9,489 )
Adjustments required to reconcile net loss to net cash used in operating activities:
Stock-based compensation 311 500
Capital gain, net - (5 )
Loss from deconsolidation of Octomera 5,343 -
Share in losses (income) of associated companies, net (1 ) 915
Depreciation and amortization expenses 1,175 975
Credit loss on convertible loan receivable 2,688 -
Effect of exchange differences on inter-company balances 214 142
Net changes in operating leases (67 ) (33 )
Interest expenses accrued on loans and convertible loans 300 495
Loss from extinguishment in connection with convertible loan restructuring 283 -
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 30,144 (3,724 )
Decrease (increase) in inventory (389 ) 4
Decrease in other assets 4 17
Decrease (increase) in prepaid expenses and other accounts   receivable (1,857 ) 435
Increase (decrease) in accounts payable 2,891 (923 )
Increase in accrued expenses and other payables 245 1,171
Increase in employee and related payables 227 135
Increase in contract liabilities 36 10
Change in advance payments and receivables on account of grant, net (140 ) 169
Change in deferred taxes, net 9 -
Net cash used in operating activities $ (13,154 ) $ (9,206 )

CASH FLOWS FROM INVESTING ACTIVITIES:
Repayment of convertible loan to related party partners - 138
Increase in loan to associates entities - (2,197 )
Repayment of loan granted - 782
Sale of property and equipment - 68
Purchase of property, plant and equipment (1,796 ) (4,352 )
Cash acquired from acquisition of Mida - 702
Impact to cash resulting from deconsolidation (see note 3) (973 ) -
Investment in long-term deposits (33 ) (4 )
Net cash used in investing activities $ (2,802 ) $ (4,863 )

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of shares and warrants (in 2022 due to exercise of options) net of transaction costs 3,341 6
Proceeds from issuance of convertible loans 5,485 9,150
Proceeds from transaction with redeemable non-controlling interest that do not acquire control of a subsidiary, see note 3 5,000 -
Proceeds from receipts on account of shares and warrants to be allotted - 2,175
Repayment of convertible loans and convertible bonds (3,000 ) (416 )
Repayment of short and long-term debt (30 ) (9 )
Net cash provided by financing activities $ 10,796 $ 10,906

NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH $ (5,160 ) $ (3,163 )
EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH 18 (51 )

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD 6,369 5,974

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD $ 1,227 $ 2,760

SUPPLEMENTAL NON-CASH FINANCING AND INVESTING ACTIVITIES
Right-of-use assets obtained in exchange for new operation lease liabilities $ 753 $ -
Increase (decrease) in accounts payable related to purchase of property, plant and equipment $ 14 $ (354 )
Issuance of common stocks for the acquisition of Mida $ - $ 100
Extinguishment in connection with convertible loan restructuring $ 287 $ -

CASH PAID DURING THE YEAR FOR:
Interest 785 67
The accompanying notes are an integral part of these condensed consolidated financial statements.

10

ORGENESIS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and 2022
(U.S. Dollars in thousands, except share amounts)
(Unaudited)

NOTE 1 – DESCRIPTION OF BUSINESS

a.~~General~~
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 ~~or ATMPs.~~(“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 ~~or POCare.~~(“POCare”).

In connection with the investment by an affiliate of Metalmark Capital Partners (“Metalmark” or ~~“MM)~~“MM”) in the Company’s subsidiary Octomera LLC (formerly Morgenesis ~~LLC~~LLC) (“~~Morgenesis”~~Octomera” or “Morgenesis”) in November 2022 (“the Metalmark Investment”), the Company separated its operations into two operating segments: the operations of ~~Morgenesis LLC~~Octomera (the “Morgenesis” or “Octomera” segment) and therapies related activities (the “Therapies” segment).

On June 30, 2023, in connection with an additional ~~$1 million~~$1,000 investment in ~~Morgenesis,~~Octomera, the Company and MM entered into Amendment No. 1 to the Second Amended and Restated Limited Liability Company Agreement (the “LLC Agreement Amendment”) to change the name of Morgenesis to “Octomera LLC” and to amend Morgenesis’ board composition. Pursuant to the LLC Agreement Amendment, the board of managers of Octomera (the “Octomera Board”) will be comprised of five managers, two of which will be appointed by the Company, one of which will be an industry expert appointed by MM, and two of which will be appointed by MM. The change was effective immediately. ~~However, as~~As a result of the amendment to the composition of the Octomera Board pursuant to the LLC Agreement Amendment described above, the Company deconsolidated Octomera from its consolidated financial statements as of June 30, 2023 (“~~effective~~ date of deconsolidation”) and recorded its equity interest in Octomera as an equity method investment, see note 33.

The Company currently owns approximately 75% of Octomera LLC.

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

The Company’s common stock, par value $0.0001 per share (the “Common Stock”), is listed and traded on the Nasdaq Capital Market under the symbol “ORGS.” The Company must satisfy Nasdaq’s continued listing requirements, including, among other things, a minimum closing bid price requirement of $1.00 per share for 30 consecutive business days. Because the Company’s share has traded for 30 consecutive business days below the $1.00 minimum closing bid price requirement, Nasdaq has sent a deficiency notice to the Company, which was received on September 27, 2023, advising that it has been afforded a “compliance period” of 180 calendar days to regain compliance with the applicable requirements.

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~~
b. Liquidity

Through ~~June~~September 30, 2023, the Company had an accumulated deficit of $~~166~~169,999 ~~million.~~. For the ~~six~~nine months ended ~~June~~September 30, 2023, the Company incurred negative cash flows from operating activities of $~~13.2~~14,335 ~~million.~~. The Company’s activities have recently been funded primarily by ~~generating revenue,~~ offerings of ~~the Company’s~~its equity securities, loans, and convertible loans. There is no assurance that the Company’s business will generate sustainable positive cash flows to fund its business operations.

11
If there are further reductions in revenues or increases in operating costs for facilities expansion, research and development, commercial and clinical activity or decreases in revenues from customers, the Company will need to use mitigating actions such as to seek additional financing or postpone expenses that are not based on firm commitments. In addition, in order to fund the Company’s operations until such time that the Company can generate sustainable positive cash flows, the Company ~~may~~will need to raise additional funds.

11
~~Current~~The Company expects its current and projected cash resources and commitments ~~as well as~~will not be sufficient to meet the ~~other factors mentioned above, raise~~Company’s obligations for the next 12 months, raising a substantial doubt about the Company’s ability to continue as a going ~~concern to meet the Company’s current operations for the next 12 months.~~concern. Management plans include raising additional capital to fund the Company’s operations and to repay the Company’s outstanding loans when they become due, as well as exploring additional avenues to increase revenue and reduce capital expenditures. See note 1 a. The Company’s ability to fund the completion of its ongoing and planned activities may be substantially dependent upon whether the Company can obtain sufficient funding at acceptable terms. If the Company is unable to raise sufficient additional capital or meet revenue targets, it may have to ~~curtail~~reduce or eliminate certain ~~activities.~~activities and reduce its headcount.

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~~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, 2022, as filed with the Securities and Exchange Commission (“SEC”) on March 22, 2023. The year-end balance sheet data was derived from the audited consolidated financial statements as of December 31, 2022, 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.
Restatement of Previously Issued Financial Statements

Subsequent to the issuance of the condensed consolidated financial statements as of and for the quarter ended ~~June~~September 30, 2023 included in the Form 10-Q originally filed with the Securities and Exchange Commission (the “SEC”) on ~~August 10,~~November 13, 2023 (the “Original Filing”), the Company identified a correction required to be made in its historical condensed consolidated financial statements and related disclosures as of and for the three and ~~six~~nine months ended ~~June~~September 30, 2023. The correction relates to the accounting treatment of i) revenues, equity investees, goodwill, share on loss of associated companies, and selling, general and administration expenses (ii) convertible loan receivable and credit ~~losses~~loss related to such convertible loan recorded during the three and ~~six~~nine months ended ~~June~~September 30, 2023. In the Company’s Original Filing, the Company overstated revenues as a result of inappropriate accounting for revenue recognition where, due to insufficient evidence of the collectability, it was not probable that the Company will collect substantially all of the consideration to which it is entitled in exchange for the services that it transferred to the customer. Account receivable and convertible loan were also restated due to inappropriate accounting for estimated credit losses.
12

The tables below set forth the condensed consolidated financial statements, including as reported, the impacts resulting from the restatement and the as restated amounts for the quarterly period ended ~~June~~September 30, 2023 (in thousands, except per share amounts):
~~Schedule of Restatement Items to Prior Period Financial Statements~~SCHEDULE OF RESTATEMENT ITEMS TO PRIOR PERIOD FINANCIAL STATEMENTS
As Originally Reported Adjustments As Restated
June 30, 2023 September 30, 2023
As Originally Reported Adjustments As Restated As Originally Reported Adjustments As Restated
(In thousands) (In thousands)
Convertible loan receivable $ 2,762 $ (2,762 ) $ - $ 2,799 $ (2,799 ) $ -
Total Current Assets 9,295 (2,762 ) 6,533 8,776 (2,799 ) 5,977
Equity investees 31,484 (31,443 ) 41 22,509 (22,478 ) 31
Goodwill 3,703 (2,492 ) 1,211 3,703 (2,492 ) 1,211
Total non-current assets 45,472 (33,935 ) 11,537 36,523 (24,970 ) 11,553
Total Assets 54,767 (36,697 ) 18,070 45,299 (27,769 ) 17,530
Accumulated deficit (129,577 ) (36,697 ) (166,274 ) (142,230 ) (27,769 ) (169,999 )
Equity attributable to Orgenesis Inc. 23,965 (36,697 ) (12,732 ) 12,397 (27,769 ) (15,372 )
Total Equity 23,965 (36,697 ) (12,732 ) 12,397 (27,769 ) (15,372 )
Total Liabilities, redeemable Non-Controlling Interest and Equity 54,767 (36,697 ) 18,070 45,299 (27,769 ) 17,530

As Originally Reported Adjustments As Restated
Six months ended June 30, 2023 Nine months ended September 30, 2023
As Originally Reported Adjustments As Restated As Originally Reported Adjustments As Restated
(In thousands) (In thousands)
Revenue $ 14,019 $ (13,764 ) $ 255 $ 14,129 $ (13,764 ) $ 365
Total revenues 14,019 (13,764 ) 255 14,129 (13,764 ) 365
Gross (loss) profit 8,065 (13,764 ) (5,699 ) 8,036 (13,764 ) (5,728 )
Selling, general and administrative expenses 7,376 24,368 31,744 8,621 24,368 32,989
Share in net loss of associated companies 9,517 (8,965 ) 552
Operating loss 6,534 38,132 44,666 18,286 29,167 47,453
Loss (profit) from deconsolidation of Octomera (411 ) 5,754 5,343 (411 ) 5,754 5,343
Credit losses on convertible loan receivable - 2,688 2,688
Credit loss on convertible loan receivable - 2,688 2,688
Financial expenses, net 1,299 74 1,373 1,807 111 1,918
Loss before income taxes 7,702 46,648 54,350 19,961 37,720 57,681
Net loss 7,922 46,648 54,570 20,575 37,720 58,295
Net income (loss) attributable to non-controlling interests (including redeemable) 394 (9,951 ) (9,557 ) 394 (9,951 ) (9,557 )
Net loss attributable to Orgenesis Inc. 7,984 36,697 45,013 20,969 27,769 48,738
Loss per share:
Basic and diluted 0.30 1.33 1.63 0.75 0.95 1.70
Comprehensive loss:
Net loss 7,922 46,648 54,570 20,575 37,720 58,295
Comprehensive loss 7,590 46,648 54,238 20,234 37,720 57,954
Comprehensive income (loss) attributed to non-controlling interests 394 (9,951 ) (9,557 ) 394 (9,951 ) (9,557 )
Comprehensive loss attributed to Orgenesis Inc. 7,984 36,697 44,681 20,628 27,769 48,397
Six months ended June 30, 2023
As Originally Reported Adjustments As Restated
(In thousands)
Cash Flow from Operating Activities:
Net loss $ (7,922 ) $ (46,648 ) $ (54,570 )
Loss (profit) from deconsolidation of Octomera (411 ) 5,754 5,343
Credit losses on convertible loan receivable - 2,688 2,688
Effect of exchange differences on inter-company balances
237

(23
)
214

Interest expenses accrued on loans and convertible loans 226 74 300
Decrease (increase) in accounts receivable (8,011 ) 38,155 30,144
13
Nine months ended September 30, 2023
As Originally Reported Adjustments As Restated
(In thousands)
Cash Flow from Operating Activities:
Net loss $ (20,575 ) $ (37,720 ) $ (58,295 )
Loss (profit) from deconsolidation of Octomera (411 ) 5,754 5,343
Share in net loss of associated companies 9,517 (8,965 ) 552
Credit loss on convertible loan receivable - 2,688 2,688
Effect of exchange differences on inter-company balances 129 (23 ) 106
Interest expenses accrued on loans and convertible loans 769 111 880
Decrease (increase) in accounts receivable (8,076 ) 38,155 30,079

b. Significant ~~Accounting Policies~~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, goodwill impairment, and assessment of credit losses. Actual results could differ from those ~~estimates~~estimates..

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13 “Financial Instruments—Credit Losses—Measurement of Credit Losses on Financial Instruments.” This guidance replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance is effective for Smaller Reporting Companies (SRCs, as defined by the SEC) for the fiscal year beginning on January 1, 2023, including interim periods within that year. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08 “Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”, which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers. The guidance results in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree. The guidance is to be applied prospectively to acquisitions that occur on or after the effective date. The guidance is currently effective for fiscal years that began after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, including in interim periods, for any financial statements that have not yet been issued. The adoption of this guidance ~~did~~ not have a material impact on the Company’s consolidated financial statements.
1214
Recently issued accounting pronouncements, not yet adopted
On August 23, the FASB issued guidance requiring a joint venture to initially measure all contributions received upon its formation at fair value. This accounting will largely be consistent with ASC 805, Business Combinations, although there are some specific exceptions. Before the ASU, there was no authoritative guidance in US GAAP that addressed how a joint venture should recognize contributions received. As a result, there has been diversity in practice, with some joint ventures accounting for contributions received at carry over basis and others at fair value. This new guidance is intended to reduce diversity in practice and provide users of the joint venture’s financial statements with more decision-useful information. It may also reduce the amount of basis differences that an investor in a joint venture needs to track. The new guidance should be applied prospectively and is effective for all newly-formed joint venture entities with a formation date on or after January 1, 2025, with early adoption permitted. The adoption of this guidance will not have a material impact on the Company’s consolidated financial statements.

Reclassifications

Certain reclassifications have been made to the prior year’s financial statements to conform to the current year presentation. These reclassifications had no net effect on previously reported results of operations.

NOTE 3 – REDEEMABLE NON-CONTROLLING INTEREST AND DECONSOLIDATION

~~Metalmark Investment~~Additional Investments in Octomera LLC

~~On May 5,~~During 2023, the Company and MM entered into ~~Amendment No. 1~~various amendments to the Unit Purchase Agreement, dated November 4, 2022 (the “UPA”). Pursuant to ~~Amendment No 1,~~such amendments, MM or the Company as the case may be, agreed to pay $~~5,000,000~~ ~~in cash~~certain amounts in exchange for~~500,000~~ Class A Preferred Units of ~~Morgenesis~~Octomera to support the continued expansion of Orgenesis’ POCare Services (the “Subsequent Investment”)~~. The~~, all as detailed in the table below. In the case of MM investments, the investment amount of the First Future Investment (as defined in the UPA) was reduced by the amount of the Subsequent Investment.
SCHEDULE OF ADDITIONAL INVESTMENTS
Date Investing party Amendment # Amount Class A Preferred units obtained
May 5, 2023 MM 1 $ 5,000 500,000
June 30, 2023 MM 2 $ 1,000 100,000
August 22, 2023 MM 3 $ 100 10,000
August 29, 2023 Company 4 $ 543 54,310
September 6, 2023 MM 5 $ 100 10,000
September 13, 2023 MM 6 $ 150 15,000
September 28, 2023 MM 7 $ 150 15,000
October 12, 2023 Company 8 $ 117 11,700
~~On June 30,~~During October 2023, ~~the Company~~MM loaned an Octomera subsidiary $700. The loan bears annual interest of 10% and ~~MM entered into Amendment No. 2 (the “Amendment”) to the UPA (“Amendment No. 2”). Pursuant to Amendment No. 2, MM agreed to pay $1,000,000~~ ~~in cash in exchange~~is due for repayment during April 2024.
~~100,000~~
15
Class A Preferred Units of Octomera to support the continued expansion of Orgenesis’ POCare Services. The investment amount of the First Future Investment (as defined in the UPA) was further reduced by the amount of this additional investment.

As a result of the deconsolidation (see note 1a), the Company recorded a net loss of $5,343 ~~thousand,~~, representing the difference between the fair value of the retained interest in Octomera and the net assets deconsolidated in the transaction as follows:
SCHEDULE OF FAIR VALUE OF RETAINED EARNINGS
(in thousands)
(As Restated)
Fair value of the retained interest in Octomera $ -
Net assets deconsolidated 4,959
Release of translation adjustment 384
Net loss $ 5,343

The change in board composition does not constitute a strategic shift from the Company’s perspective and therefore the Company did not treat the deconsolidation as a discontinued operation.

Following the Amendment No. 2, the Company ~~accounts~~accounted for its investment in Octomera according to the equity method in accordance with ASC Topic 323, as it has retained the ability to exercise significant influence but does not control the entity. The Company thus recognized an equity method investment in a total amount of $0~~million~~ comprised of the assumed fair value of the Octomera shares held by the Company. Following the deconsolidation, the Company recognized related ~~parties~~party balances that are disclosed on the face of the Company’s balance sheet.
13

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 represents the deconsolidated amounts from the Company’s Balance Sheet at the date of deconsolidation (As Restated):
SCHEDULE OF NET ASSETS DECONSOLIDATED
(in thousands)
ASSETS:
~~ASSETS:~~
Cash and cash equivalents ~~973~~
~~Other current assets~~ ~~9,087~~
~~Non-current assets~~ ~~31,935~~
~~TOTAL ASSETS~~ ~~41,995~~
~~LIABILITIES:~~
~~Current liabilities~~ ~~6,566~~
~~Long-term liabilities~~ ~~2,313~~
~~TOTAL LIABILITIES~~ ~~8,879~~
~~REDEEMABLE NON-CONTROLLING INTEREST~~ ~~26,797~~
973
~~NON-CONTROLLING INTEREST~~Other current assets
~~1,360~~
9,087
Non-current assets 31,935
TOTAL ASSETS 41,995

LIABILITIES:
Current liabilities 6,566
Long-term liabilities 2,313
TOTAL LIABILITIES 8,879
REDEEMABLE NON-CONTROLLING INTEREST 26,797
NON-CONTROLLING INTEREST 1,360
NET ASSETS DECONSOLIDATED (4,959 )
16
NOTE 4 – EQUITY-METHOD INVESTMENTS
As of September 30, 2023, and December 31, 2022, the balances of our equity-method investments were $31 and $39, respectively, and are as follows:
Octomera LLC
The Company currently owns approximately 75% of Octomera LLC.
As of September 30, 2023, the balance of our equity-method investment related to Octomera was approximately $0. Through September 30, 2023, the Company’s share in Octomera’s net loss was $543K.
Our equity-method investment in Octomera is considered a significant investee. The following table presents summarized results of operations for the three months since the date of deconsolidation:
SUMMARY OF RESULTS OF OPERATIONS

Three-Months Ended
(As Restated)

(in thousands)
Total revenue $ 29
Gross loss $ 2,198
Net loss $ 8,721

NOTE 45 – SEGMENT INFORMATION

The ~~Morgenesis~~Octomera operations segment ~~which has been renamed to the Octomera segment following the change of name of Morgenesis LLC to Octomera LLC~~ includes mainly POCare Services, while the ~~therapies related~~Therapies segment includes the Company’s therapeutic development operations. The segment information includes all the results of the Octomera segment up to the effective date of deconsolidation.

Because the Company conducted all its operations as one segment prior to the Metalmark Investment, the above changes were reflected through retroactive revision of prior period segment information based on the subsidiaries that were transferred to Octomera. Certain activities of these subsidiaries have changed after they were transferred to the Octomera operations segment.

The Company’s Chief Executive Officer (“CEO”), who is the chief operating decision maker (“CODM”), reviews financial information prepared on a consolidated basis, accompanied by disaggregated information about revenues and contributed profit by the two identified reportable segments to make decisions about resources to be allocated to the segments and assess their performance.

The Company does not review assets by segment. Therefore, the measure of assets has not been disclosed for each segment.

1417

Segment data for the ~~six~~nine months ended ~~June~~September 30, 2023 (As Restated) is as follows:
SCHEDULE OF SEGMENT REPORTING
Octomera Therapies Eliminations Consolidated
(in thousands) Octomera Therapies Eliminations Consolidated
Revenues $ 15 $ 240 $ - $ 255 $ 44 350 $ (29 ) $ 365
Revenues from related party - - - - - - - -
Total revenues 255 365
Cost of revenues* (5,084 ) (398 ) - (5,482 ) (6,959 ) (531 ) 1,874 (5,616 )
Gross profit (5,069 ) (158 )           - (5,227 ) (6,915 ) (181 ) 1,845 (5,251 )
Cost of development services and research and development expenses* (4,501 ) (2,051 ) - (6,552 ) (6,828 ) (2,830 ) 2,327 (7,331 )
Operating expenses* (27,990 ) (3,722 ) - (31,712 ) (31,921 ) (4,962 ) 3,930 (32,953 )
Share in net loss of associated companies - (10 ) (542 ) (552 )
Loss from deconsolidation of Octomera
- - (5,343 ) (5,343 ) - - (5,343 ) (5,343 )
Other income, net 2 - - 2 2 2 - 4
Depreciation and amortization (779 ) (396 ) - (1,175 ) (1,294 ) (589 ) 517 (1,366 )
Credit loss on convertible loan receivable - (2,688 ) - (2,688 )
Loss from extinguishment in connection with convertible loan - (283 ) - (283 ) - (283 ) - (283 )
Credit losses on convertible loan receivable - (2,688 ) - (2,688 )
Financial Expenses, net (495 ) (879 ) 1 (1,373 ) (587 ) (1,425 ) 94 (1,918 )
Share in net income of associated companies - 1 - 1
Loss before income taxes $ (38,832 ) $ (10,176 ) $ (5,342 ) $ (54,350 )
Income (loss) before income taxes $ (47,543 ) $ (12,966 ) $ 2,828 $ (57,681 )

* Excluding Depreciation and amortization expenses

Segment data for the ~~six~~nine months ended ~~June~~September 30, 2022 is as follows:

Octomera Therapies Eliminations Consolidated
(in thousands) Octomera Therapies Eliminations Consolidated
Revenues $ 12,949 3,862 $ (3,535 ) $ 13,276 $ 20,705 5,908 $ (5,496 ) $ 21,117
Revenues from related party 1,137 - - 1,137 1,284 - - 1,284
Total revenues 14,086 3,862 (3,535 ) 14,413 21,989 5,908 (5,496 ) 22,401
Cost of revenues* (1,324 ) (640 ) 356 (1,608 ) (1,988 ) (857 ) 356 (2,489 )
Gross profit 12,762 3,222 (3,179 ) 12,805 20,001 5,051 (5,140 ) 19,912
Cost of development services and research and development expenses* (6,772 ) (10,028 ) 2,635 (14,165 ) (10,791 ) (11,209 ) 4,297 (17,703 )
Operating expenses* (1,437 ) (4,740 ) 544 (5,633 ) (2,822 ) (6,742 ) 843 (8,721 )
Share in net income of associated companies (222 ) (967 ) - (1,189 )
Other income, net 3 5 - 8 2 4 - 6
Depreciation and amortization (397 ) (578 ) - (975 ) (685 ) (778 ) - (1,463 )
Financial income (expenses), net (1,251 ) 649 - (602 )
Share in net loss of associated companies - (915 ) - (915 )
Financial Expenses, net (2,087 ) 385 - (1,702 )
Income (loss) before income taxes $ 2,908 $ (12,385 ) $ - $ (9,477 ) $ 3,396 $ (14,256 ) $ - $ (10,860 )

* Excluding Depreciation and amortization expenses
Segment data for the three months ended ~~June~~September 30, 2023 (As Restated) is as follows:

Octomera Therapies Eliminations Consolidated
(in thousands) Octomera Therapies Eliminations Consolidated
Revenues $ 3 $ 110 $           - $ 113 $ 29 $ 110 $ (29 ) $ 110
Revenues from related party - - - - - - - -
Total revenues 113 110
Cost of revenues* (2,776 ) (220 ) - (2,996 ) (1,875 ) (133 ) 1,874 (134 )
Gross profit (2,773 ) (110 ) - (2,883 ) (1,846 ) (23 ) 1,845 (24 )
Cost of development services and research and development expenses* (2,420 ) (975 ) - (3,395 ) (2,327 ) (779 ) 2,327 (779 )
Operating expenses* (16,787 ) (1,408 ) - (18,195 ) (3,931 ) (1,240 ) 3,930 (1,241 )
Loss from deconsolidation of Octomera
- - (5,343 ) (5,343 )
Share in net loss of associated companies - (11 ) (542 ) (553 )
Other income - 2 - 2
Depreciation and amortization (394 ) (203 ) - (597 ) (515 ) (193 ) 517 (191 )
Financial expenses, net (229 ) (464 ) 1 (692 )
Share in net income of associated companies - 3 - 3
Loss before income taxes $ (22,603 ) $ (3,157 ) $ (5,342 ) $ (31,102 )
Financial Expenses, net (92 ) (546 ) 93 (545 )
Income (loss) before income taxes $ (8,711 ) $ (2,790 ) $ 8,170 $ (3,331 )

* Excluding Depreciation, amortization expenses

1518

Segment data for the three months ended ~~June~~September 30, 2022 is as follows:

Octomera Therapies Eliminations Consolidated
(in thousands) Octomera Therapies Eliminations Consolidated
Revenues $ 6,606 1,920 $ (1,827 ) $ 6,699 $ 7,756 2,046 $ (1,961 ) $ 7,841
Revenues from related party 502 - - 502 147 - - 147
Total revenues 7,108 1,920 (1,827 ) 7,201 7,903 2,046 (1,961 ) 7,988
Cost of revenues* (974 ) (351 ) 356 (969 ) (664 ) (217 ) - (881 )
Gross profit 6,134 1,569 (1,471 ) 6,232 7,239 1,829 (1,961 ) 7,107
Cost of development services and research and development expenses* (3,296 ) (5,583 ) 1,207 (7,672 ) (4,019 ) (1,181 ) 1,662 (3,538 )
Operating expenses* (728 ) (2,327 ) 264 (2,791 ) (1,385 ) (2,002 ) 299 (3,088 )
Other income, net 3 5 - 8
Share in net income of associated companies (222 ) (52 ) - (274 )
Other income (loss), net (1 ) (1 ) - (2 )
Depreciation and amortization (207 ) (294 ) - (501 ) (288 ) (200 ) - (488 )
Financial Expenses, net (700 ) 311 - (389 ) (836 ) (264 ) - (1,100 )
Share in net loss of associated companies (1 ) (367 ) - (368 )
Income (loss) before income taxes $ 1,205 $ (6,686 ) $ - $ (5,481 ) $ 488 $ (1,871 ) $ - $ (1,383 )

* Excluding Depreciation, amortization expenses

NOTE 56 – EQUITY

On February 23, 2023, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional and accredited investors (the “Purchaser”) relating to the issuance and sale of 1,947,368 shares (the “Shares”) of common stock, par value $0.0001 per share (the “Common Stock”), and warrants to purchase up to 973,684 shares of Common Stock (the “Warrants”) at a purchase price of $1.90 per share of Common Stock and accompanying Warrants in a registered direct offering (the “Offering”). The Offering closed on February 27, 2023 (the “Closing Date”).

The Warrants have an exercise price of $1.90 per share, are exercisable immediately and will expire five years following the date of ~~issuance~~issuance.. The Warrants have an alternate cashless exercise option (beginning on or after the earlier of (a) the thirty-day anniversary of the date of the Purchase Agreement and (b) the date on which the aggregate composite trading volume of Common Stock following the public announcement of the pricing terms exceeds 13,600,000 shares), to receive an aggregate number of shares equal to the product of (x) the aggregate number of shares of Common Stock that would be issuable upon a cash exercise and (y) 1.0. The aggregate gross proceeds to the Company from the Offering ~~was~~were $~~3.7~~3,700 ~~million,~~, before deducting placement agent cash fees equal to 7.0% of the gross proceeds received and other expenses from the Offering payable by the Company. The Company intends to use the net proceeds from the Offering for working capital and general corporate purposes, including the Company’s therapy related ~~activities~~activities..

As of ~~June~~September 30, 2023, all of the warrants were exercised using the alternate cashless exercise option described above.

1619
On August 31, 2023, the Company entered into a Securities Purchase Agreement with a certain accredited investor, pursuant to which the Company agreed to issue and sell, in a private placement (the “Offering”), 2,000,000 shares of the Company’s common stock, par value $0.0001 per share, at a purchase price of $0.50 per share. The Company received proceeds of $1,000. The Offering closed on August 31, 2023.
NOTE 7 –LOANS
On July 25, 2023, one of the Company’s subsidiaries received a loan from an offshore investor in the amount of $175. The loan bears 8% annual interest and is repayable on January 1, 2024.
On August 15, 2023, the Company received a loan from an investor in the amount of $250. The loan bears 8% annual interest and is repayable on January 1, 2024.
During October 2023, the Company’s subsidiaries received loans in the amount of $140. The loans bear interest at annual interest rates ranging from 0% to 10%, and are repayable between November 30, 2023 and January 1, 2024.
NOTE 68 – CONVERTIBLE LOANS
Convertible loans outstanding as of ~~June~~September 30, 2023 and December 31, 2022 are as follows:
SCHEDULE OF LONG TERM CONVERTIBLE NOTES
Principal Amount Principal Amount Issuance Date Current Interest Rate Current
Maturity Current Exercise Price Principal Amount
Issuance Date
(Year)
Current Interest Rate %
Current
Maturity
(Year)
Current Conversion Price $
(in thousands) (Year) % (Year) $
Convertible Loans Outstanding as of June 30, 2023
Convertible Loans Outstanding as of September 30, 2023 Convertible Loans Outstanding as of September 30, 2023
$ 750 2018 10 % 2026 2.50 750 2018 10 % 2026 2.50
1,500 2019 10 % 2026 7.00 1,500 2019 10 % 2026 7.00
100 2019 8 % 2023 2.50 100 2019 8 % 2023 2.50
5,000 2019 10 % 2026 2.50 5,000 2019 10 % 2026 2.50
100 2020 8 % 2023 7.00 100 2020 8 % 2023 7.00
5,000 2022 10 % 2026 2.50 5,000 2022 10 % 2026 2.50
1,150 2022 6 % 2023 4.50 1,150 ** 2022 6 % 2023 4.50
5,000 2023 8 % 2026 2.46 5,000 2023 8 % 2026 2.46
485 2023 8 % 2024 -* 660 2023 8 % 2024 - *
$ 19,085 19,260

* See Koligo convertible loan agreement below.
** See note 13.

Convertible Loans Outstanding as of December 31, 2022 Convertible Loans Outstanding as of December 31, 2022 Convertible Loans Outstanding as of December 31, 2022

$ 750 2018 2 % 2023 7.00 750 2018 2 % 2023 7.00
1,600 2019 8 % 2024 7.00 1,600 2019 8 % 2024 7.00
5,000 2019 6 % 2023 7.00 5,000 2019 6 % 2023 7.00
100 2020 8 % 2023 7.00 100 2020 8 % 2023 7.00
8,000 2022 10 % 2024 2.5 8,000 2022 10 % 2024 2.50
1,150 2022 6 % 2023 4.5 1,150 2022 6 % 2023 4.50
$ 16,600 16,600
20

Convertible Loans Entered into in 2023

On January 10, 2023 (the “Effective Date”), the Company entered into the following agreements: (i) a convertible loan agreement (the “NewTech Convertible Loan Agreement”) with NewTech Investment Holdings, LLC (the “NewTech Lender”), pursuant to which the NewTech Lender loaned the Company $~~4,000,000~~4,000 (the “NewTech Loan Amount”), and (ii) a convertible loan agreement (the “Malik Convertible Loan Agreement”, together with the NewTech Convertible Loan Agreement, the “Convertible Loan Agreements”) with Ariel Malik (the “Malik Lender”, together with the NewTech Lender, the “Lenders”), pursuant to which the Malik Lender loaned the Company $~~1,000,000~~1,000 (the “Malik Loan Amount”, together with the NewTech Loan Amount, the “Loan Amount”).

The terms of the NewTech Convertible Loan Agreement and the Malik Loan Agreement are identical. Interest is calculated at 8% per annum (based on a 365-day year); provided, that if an Event of Default (as defined in the Convertible Loan Agreements) has occurred and is continuing, the Outstanding Amount (as defined herein) will be calculated at 15.0% per annum. The Loan Amount and all accrued but unpaid interest thereon (collectively, the “Outstanding Amount”) shall either (i) be repaid in cash or (ii) convert to shares of common stock, par value $0.0001 per share (“Common Stock”), of the Company on the third anniversary of the Effective Date (the “Maturity Date”). The Maturity Date may be extended by the Lender upon the written consent of the Lender. The Outstanding Amount may be prepaid by the Company in whole or in part at any time with the prior approval of the Lender.

At any time prior to or on the Maturity Date, any Lender may provide the Company with written notice to convert all or part of the Outstanding Amount into shares of our Common Stock equal to the quotient obtained by dividing (x) the Outstanding Amount by (y) a price equal to $2.464 per share (subject to adjustment for certain capital events, such as stock splits) (the “Conversion Price”).

17
The Convertible Loan Agreements contain customary affirmative and negative covenants, including a minimum share reserve, transactions with affiliates, and restrictions on the incurrence of additional debt. Each Lender’s obligation to fund its respective Loan Amount is subject to customary closing conditions and deliverables.
Under the terms of the Convertible Loan Agreements, the Company ~~will use~~used the proceeds from the Loan Amount to (i) redeem the loan amount from the previously disclosed Convertible Loan Agreement, dated as of May 19, 2022 between Orgenesis and Ricky Steven Neumann, as amended by the previously disclosed certain Convertible Loan Extension Agreement, dated as of October 23, 2022, by and between Orgenesis and Ricky Steven Neumann, and (ii) for general corporate purposes. Pursuant to the terms, the Company repaid said loan upon receipt of the Loan Amount. ~~The use of proceeds from any Additional Loan Amount (as defined in the Convertible Loan Agreements) will be to redeem existing indebtedness; provided, that $3,000,000~~ ~~of the Additional Loan Amount may be used for general corporate purposes.~~

In connection with such loan, the Company agreed to issue the NewTech Lender warrants representing the right to purchase 405,844 shares of Common Stock, at an exercise price of $2.50 per share and the Malik Lender warrants representing the right to purchase 101,461 shares of Common Stock, at an exercise price of $2.50 per share. Such Warrants will be exercisable at any time beginning six months and one day after closing and ending 36 months after the closing date.

Koligo Convertible Loan

On March 27, 2023, the Company’s subsidiary Koligo Therapeutics Inc. (“Borrower”), entered into a convertible loan agreement (the “Convertible Loan Agreement”) with Yehuda Nir (the “Lender,” and together with the Borrower, the “Parties”), pursuant to which the Lender agreed to loan the Borrower up to $~~5,000,000~~5,000 (the “Loan Amount”). Interest is calculated at 8% per annum (based on a 365-day year) and is payable, along with the principal, on or before January 1, 2024 (the “Maturity Date”). The Maturity Date may be extended by the Lender in the Lender’s sole and absolute discretion and any such extension(s) shall be in writing signed by the Parties. The Loan Amount may be prepaid by the Borrower in whole or in part at any time with the prior written approval of the Lender.

If prior to December 31, 2023, the Borrower issues equity securities (“Equity Securities”) in a transaction or series of related transactions resulting in aggregate gross proceeds to the Borrower of at least ~~$5,000,000~~$5,000 (excluding conversion of the Loan Amount) (a “Qualified Financing”), then the outstanding principal amount of the Loan Amount, and any and all accrued but unpaid interest thereon (collectively, the “Outstanding Amount”), will automatically convert into such Equity Securities issued pursuant to the Qualified Financing at a price per share equal to fifty percent (50%) of the price per share paid for each share of the Equity Securities purchased for cash by the investors in the Qualified Financing (the “Mandatory Conversion”). The per share price for the Mandatory Conversion shall be calculated on a fully diluted basis (including equity underlying all outstanding options, warrants, and other convertible securities, but excluding the Equity Securities issuable upon the Mandatory Conversion).
21

The Parties agreed that the Lender shall have the option to assign $~~1,500,000~~1,500 of the Loan Amount due to the Lender under that certain convertible loan agreement between the Lender and the Company dated April 21, 2022, as amended, (collectively the “Original Loan”), to the Borrower (the “Loan Assignment”). The terms of the Loan Assignment will be the same as under the Original Loan, including a maturity date of January 31, 2026 and an annual interest rate of 10%. The Loan Assignment will be subject to the Mandatory Conversion as described above. As of the date of the issue of these financial statements, said assignment ~~did~~has not ~~occur.~~occurred.

Under the terms of the Koligo Convertible Loan Agreement, the Borrower agreed to use the Loan Amount to fund working capital and ongoing operations and for no other purposes unless the Lender agrees in writing. As of ~~June~~September 30, 2023, Koligo received $~~485~~660 ~~thousand~~ under the Koligo Convertible Loan ~~Agreement,~~Agreement.
On September 29, 2023, Borrower entered into another convertible loan agreement (the “Sai Convertible Loan Agreement”) with Sai Traders (the “Lender,” and ~~in July 2023 received~~together with the Borrower, the “Parties”), pursuant to which the Lender agreed to loan the Borrower up to $25,000 (the “Sai Convertible Loan”). The Sai Convertible Loan shall consist of an Initial Installment of $1,500 (“Initial Installment”), and at the election of the Borrower thereafter while the Sai Convertible Loan remains outstanding, Borrower may issue up to an additional $~~175~~23,500 ~~thousand.~~(“Subsequent Installments”). The Sai Convertible loan bears transaction costs of 8%. Interest is calculated at 10% per annum (based on a 365-day year) of all outstanding principal borrowings and is payable, along with the principal (collectively the “Outstanding Amount”), on or before December 1, 2027 (the “Maturity Date”). The Loan Amount may be prepaid by the Borrower in whole or in part at any time without penalty.

18
Under the terms of the Sai Convertible Loan Agreement, at the option of the Lender at the Maturity Date or any time prior, the Outstanding Amount may be convertible, in whole or in part, into the number of shares of Common Stock of the Company equal to the quotient obtained by dividing (x) the Outstanding Amount by (y) the Conversion Price. The “Initial Installment Conversion Price” for the Outstanding Amount relating to the Initial Installment shall be a price per share of Common Stock equal to $2.50. The “Subsequent Installment Conversion Price” for the Outstanding Amount relating to the Subsequent Installment(s) shall be a price per share of Common Stock equal to $3.50. Lender agrees that it shall not deliver a notice of conversion that upon effect results in the holder to beneficially own more than 19.99% of the then outstanding shares of Company’s Common Stock. Lender may elect to, instead of the conversion of the Outstanding Amount into Common shares of Company, convert the entire Outstanding Amount into the securities of Borrower pursuant to a the first issuance of equity of the Borrower under which the Borrower raises at least $5,000 in gross proceeds (“Qualified Financing”) at a price per share equal to 75% of the price per share paid for each share of the equity securities purchased for cash by the investors in such a Qualified Financing. In the event of the Borrower being listed on a public securities exchange, Lender shall have the option to convert the Outstanding Amount at a 25% premium to the volume weighted average price of the Borrower’s equity over the preceding five (5) days as reported by Bloomberg (“5-Day VWAP”), provided that any such conversion shall not result in the Lender to beneficially own more than 19.99% of the then beneficial shares of the Borrower. In the event of an acquisition of the Borrower (“Acquisition”), prior to the closing of such acquisition, Lender shall have the option to convert the Outstanding Amount into equity securities of the Borrower at a price equivalent to seventy five percent (75%) of the price paid by such buyer to acquire the Borrower.
As of September 30, 2023, and as of the date of this report, the Initial Installment was not received, and was therefore not reflected in the Consolidated Balance sheet of September 30, 2023.
Extension of Existing Loan Agreements

On January 12, 2023, the Company entered into (i) a Convertible Credit Line and Unsecured Convertible Note Extension #2 Agreement with Yosef Dotan (the “Dotan Extension Agreement”), (ii) a Convertible Credit Line Extension Agreement with Aharon Lukach (the “Lukach Extension Agreement”) and (iii) a Convertible Loans and Unsecured Convertible Notes Extension #2 Agreement with Yehuda Nir (the “Nir Extension Agreement”), each which extended the maturity date of the convertible loans under their respective loan agreements (as described below) to January 31, 2026. The aggregate principal amount of loans extended was $1212,000 ~~million~~ and the interest rate on the extended loans varied between 2% and 10%. In consideration for the extensions, (i) the interest rate on such principal amount of such loans was increased to 10% per annum commencing on February 1, 2023 (except for the Nir Convertible Loan Agreement dated as of April 12, 2022, which already had a 10% per annum interest rate), (ii) the conversion price of the loans was reduced from $7.00 to $2.50 (except for the Nir Convertible Loan Agreement dated as of April 12, 2022, which already had a $2.50 conversion price), (iii) the exercise price of the warrants issuable upon conversion of the 2% Notes and the Nir Convertible Loan Agreement dated as of May 17, 2019 was reduced to $2.50 per share and the term of such warrants was extended to January 31, 2026.

22
The Dotan Extension Agreement related to a Convertible Credit Line Agreement dated as of October 3, 2019, as amended, of which $~~750,000~~750 principal amount plus interest is outstanding as of September 30, 2023, and 2% Notes purchased from the Company on November 3, 2018, of which $~~250,000~~ 250principal amount plus interest is outstanding. Based on its analysis, the Company concluded that the change in terms referred to Convertible Credit Line Agreement and the 2% Notes should be accounted for as a modification and an extinguishment respectively.

The Lukach Extension Agreement related to a Convertible Credit Line Agreement dated as of October 3, 2019, as amended, of which $~~750,000~~750 principal amount plus interest is ~~outstanding.~~outstanding as of September 30, 2023. Based on its analysis, the Company concluded that the change in terms referred to above should be accounted for as a modification.

The Nir Extension Agreement related to 2% Notes purchased from the Company on November 3, 2018, as amended, of which $~~500,000~~500 principal amount plus interest is outstanding as of September 30, 2023, a Convertible Loan Agreement dated as of May 17, 2019, of which $~~5,000,000~~5,000 principal amount plus interest is outstanding, and a Convertible Loan Agreement dated as of April 12, 2022, as amended, of which $~~5,000,000~~5,000 principal amount plus interest is outstanding. Based on its analysis, the Company concluded that the change in terms referred to the 2% Notes and Convertible Loan Agreement should be accounted for as an extinguishment and a modification respectively.

NOTE 79 – 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, 2023 to ~~June~~September 30, 2023:

SCHEDULE OF STOCK OPTIONS GRANTED

No. of
Options
Granted
Exercise Price Vesting Period
Fair Value at Grant
(in thousands)

Expiration
Period

Employees 53,500 $ 1.36 Quarterly over a period of two years $ 46 10 years

No. of
Options
Granted
Exercise Price Vesting Period
Fair Value at Grant

Expiration
Period

Employees 253,500 $ 0.74 Quarterly over a period of two years $ 128 10 years

The fair valuation of these option grants is based on the following assumptions:
SCHEDULE OF STOCK OPTIONS, VALUATION ASSUMPTIONS
During the Period from January 1, 2023 to June 30, 2023
Value of one common share $ 1.36
Dividend yield 0 %
Expected stock price volatility 70 %
Risk free interest rate 3.91 %
Expected term (years) 5.56
During the
Period from
January 1, 2023 to
September 30, 2023
Value of one common share $ 0.58-$1.36
Dividend yield 0 %
Expected stock price volatility 70%-78 %
Risk free interest rate 3.91%-4.28 %
Expected term (years) 5.56-6.06

19
b. Options Granted to Non-Employees

The table below summarizes all the options for the purchase of shares in the Company granted to consultants and service providers during the period from January 1, 2023 to ~~June~~September 30, 2023:

SCHEDULE OF STOCK OPTIONS GRANTED

No. of Options
Granted

Exercise Price Vesting Period
Fair Value at Grant
(in thousands)

Expiration
Period
Non-employees 8,335 $ 1.36 Annually over a period of five years $ 9 10 years

No. of Options
Granted
Exercise Price Vesting Period
Fair Value at Grant
Expiration Period
Non-employees 8,335 $ 1.36 Annually over a period of five years $ 9 10 years

23
The fair valuation of these option grants is based on the following assumptions:
SCHEDULE OF STOCK OPTIONS, VALUATION ASSUMPTIONS
During the Period from January 1, 2023 to June 30, 2023
During the
Period from
January 1, 2023 to
September 30, 2023

Value of one common share $ 1.36 $ 1.36
Dividend yield 0 % 0 %
Expected stock price volatility 80 % 80 %
Risk free interest rate 4.07 % 4.07 %
Expected term (years) 10 10

NOTE 810 – 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
June 30, 2023 June 30,
2022 June 30, 2023 June 30,
2022
Three Months Ended Six Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022
June 30, 2023 June 30,
2022 June 30, 2023 June 30,
2022 Three Months Ended Nine Months Ended
(in thousands, except per share data) September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022
Basic and diluted:
Net loss attributable to Orgenesis Inc.
$
25,543 $ 5,427 $ 45,013 $ 9,436 $ 3,725 $ 1,356 $ 48,738 $ 10,792
Adjustment of redeemable non-controlling interest to redemption amount (3,671 ) -
-
-
Net loss attributable to Orgenesis Inc. for loss per share $ 21,872 $ 5,427 $ 45,013 $ 9,436
Weighted average number of common shares outstanding 28,603,597 24,820,756 27,546,229 24,711,462 30,022,591 25,403,907 28,680,777 24,944,814
Net loss per share $ 0.76 $ 0.22 $ 1.63 $ 0.38 $ 0.12 $ 0.05 $ 1.70 $ 0.43

For the ~~six~~nine months ended ~~June~~September 30, 2023 and ~~June~~September 30, 2022, 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 does not include ~~7,673,798~~7,680,038 shares underlying outstanding options and warrants and ~~7,101,236~~7,139,018 shares upon conversion of convertible loans for the ~~six~~nine months ended ~~June~~September 30, ~~2022,~~2023, because the effect of their inclusion in the computation would be antidilutive. Diluted loss per share does not include ~~7,916,597~~7,963,476 shares underlying outstanding options and warrants and ~~5,184,127~~7,213,348 shares upon conversion of convertible loans for the three months ended ~~June~~September 30, 2023, because the effect of their inclusion in the computation would be antidilutive.

Diluted loss per share does not include ~~6,205,193~~6,481,221 shares underlying outstanding options and warrants and ~~2,152,298~~2,327,590 shares upon conversion of convertible loans for the ~~six~~nine months ended ~~June~~September 30, 2022, because the effect of their inclusion in the computation would be antidilutive. Diluted loss per share does not include ~~6,327,171~~7,040,592 shares underlying outstanding options and warrants and ~~2,668,011~~3,118,868 shares upon conversion of convertible loans for the three months ended ~~June~~September 30, 2022, because the effect of their inclusion in the computation would be antidilutive.

2024
NOTE 911 – REVENUES

Disaggregation of Revenue

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

SCHEDULE OF DISAGGREGATION OF REVENUE
June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022
Three Months Ended Six Months Ended
June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022
September 30, 2023
(As Restated)
September 30, 2022
September 30, 2023
(As Restated)
September 30, 2022
(As Restated) (As Restated) Three Months Ended Nine Months Ended
(in thousands)
September 30, 2023
(As Restated)
September 30, 2022
September 30, 2023
(As Restated)
September 30, 2022
Revenue stream:

POC development services $ - $ 6,274 $ - $ 12,598 $ - $ 1,118 $ - $ 13,716
Cell process development services and hospital services
113
511
255
1,399 110 4,438 365 5,837
POC cell processing - 416 - 416 - 2,432 - 2,848
Total $
113
$ 7,201 $ 255 $ 14,413 $ 110 $ 7,988 $ 365 $ 22,401

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

SCHEDULE OF BREAKDOWN OF REVENUES PER CUSTOMER
June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022
Three Months Ended Six Months Ended
June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022
September 30, 2023
(As Restated)
September 30, 2022
September 30, 2023
(As Restated)
September 30, 2022
(As Restated) (As Restated) Three Months Ended Nine Months Ended
(in thousands)
September 30, 2023
(As Restated)
September 30, 2022
September 30, 2023
(As Restated)
September 30, 2022
Revenue earned:

Customer A (United States) $ 65 $ - $ 130 $ - $ - $ - $ 130 $ -
Customer B (United States) $ 45 $ - $ 45 $ - $ 45 $ - $ 90 $ -
Customer C (United States) $ - $ - $ 65 $ - $ 65 $ - $ 130 $ -
Customer D (United States) $ - $ 2,502 $ - $ 3,729
Customer E (Greece) $ - $ 1,996 $ - $ 2,656
Customer D (Greece) $ - $ 3,401 $ - $ 6,058
Customer E (United States) $ - $ 669 $ - $ 4,398
Customer F (Korea) $ - $ 742 $ - $ 3,425 $ - $ 283 $ - $ 3,708
Customer G (United Arab Emirates) $ - $ 1,187 $ - $ 2,254 $ - $ 1,254 $ - $ 3,508
Revenue earned $ - $ 1,187 $ - $ 2,254 $ - $ 1,254 $ - $ 3,508

Contract Assets and Liabilities

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

The activity for trade receivables is comprised of:

SCHEDULE OF ACTIVITY FOR TRADE RECEIVABLES
June 30, 2023 June 30, 2022
Six Months Ended
June 30, 2023 June 30, 2022
September 30, 2023
(As Restated)
September 30, 2022
(As Restated) Nine Months Ended
(in thousands)
September 30, 2023
(As Restated)
September 30, 2022
Balance as of beginning of period $ 36,183 $ 15,245 $ 36,183 $ 15,245
Elimination of acquisition receivables - (1,337 ) - (1,337 )
Additions
293
13,953 403 21,367
Collections (6,045 ) (8,892 ) (6,090 ) (11,187 )
Allowances for credit losses (24,388 ) - (24,388 ) -
Exchange rate differences (52 ) (183 ) (52 ) (344 )
Deconsolidation of Octomera (5,985 ) - (5,985 ) -
Balance as of end of period $ 6 $ 18,786 $ 71 $ 23,744

25
* The activity of the related party included in the trade receivables activity above is comprised of:

21
June 30, 2023 June 30, 2022
Six Months Ended September 30, 2022
June 30, 2023 June 30, 2022 Nine Months Ended
(in thousands) September 30, 2022
Balance as of beginning of period $ - $ 1,972 $ 1,972
Additions - 1,137 1,284
Collections - (1,070 ) (1,070 )
Balance as of end of period $ - $ 2,039 $ 2,186

The activity for contract liabilities is comprised of:

SCHEDULE OF ACTIVITY FOR CONTRACT LIABILITIES
June 30, 2023 June 30, 2022
Six Months Ended
September 30, 2023
(As Restated)
September 30, 2022
June 30, 2023 June 30, 2022 Nine Months Ended
(in thousands)
September 30, 2023
(As Restated)
September 30, 2022
Balance as of beginning of period $ 70 $ 59 $ 70 $ 59
Additions 36 11 156 11
Deconsolidation of Octomera (106 ) - (106 ) -
Balance as of end of period $ - $ 70 $ 120 $ 70

NOTE 1012 – OTHER SIGNIFICANT TRANSACTIONS AND AGREEMENTS DURING THE ~~SIX~~NINE MONTHS ENDED ~~JUNE~~SEPTEMBER 30, 2023

In January 2023, the Company entered into updated joint venture (JV) agreements (JVAs) with Theracell Advanced Biotechnology SA, Broaden Bioscience and Technology Corp, Image Securities FZC, Cure Therapeutics, and Med Centre for Gene and Cell Therapy FZ-LLC and assigned certain rights and obligations under its JVAs to Texas Advanced Therapies LLC, a Delaware Limited Liability company (“Texas AT”) not related to the Company. Texas AT will receive the Company’s option to require the incorporation of the JV ~~Entity,~~entity, Company’s share in the JV Entity, if and when the latter are incorporated, an option to invest additional funding in the JV Entity, and board and veto rights on certain critical decisions in the JV Entity. The Company has retained the call option to acquire the JV partner’s share in the JVE, to receive a royalty and a right to conclude the Manufacturing and Service Agreement with the JV entity. Pursuant to the JVAs, the Company will no longer be entitled to the additional share of fifteen percent of the JVE’s GAAP profit after tax granted as per the previous version of the JVAs. The Company also has no further obligation to provide any additional funding to the JV entities. As of ~~June~~September 30, 2023, no JV entities were incorporated pursuant to the JVAs.
On July 25, 2023, the Company and Mircod LLC (“Mircod”) entered into a settlement and release agreement pursuant to which they agreed to terminate the joint venture and loan agreement between themselves. Also, pursuant to the agreement, Mircod agreed to deliver all the related deliverables to the Company, and the Company agreed to pay Mircod consideration in the amount of $1,000, of which half will be paid in cash, and one half in Orgenesis shares, upon receipt of the deliverables. As of September 30, 2023, Mircod invoiced the Company $300 in respect of deliverables that it claims were delivered and this amount is included in accounts payable.
On July 25, 2023, the Company, a Sub-licensee, and the equity interest owner of that Sub-licensee (“Sub-licensee Owner”), entered into agreements whereby:
1) the Company sub-licensed certain of its therapies to Sub-licensee in return for royalties on future sales and payments upon the successful completion of certain milestones;
2) subject to the fulfilment certain conditions and milestones, none of which have been fulfilled to date, the Sub-licensee Owner granted the Company a call option to purchase his interests in Sub-licensee at a valuation to be determined by a third-party valuation firm of not less than $8,000 unless agreed otherwise by the parties to the option; and
3) subject to the fulfilment of certain conditions and milestones, none of which have been fulfilled to date, the Sub-licensee Owner was granted a put option to cause the Company to purchase his equity interest in Sub-licensee at a valuation to be determined by a third-party valuation firm of not less than $8,000 unless agreed otherwise by the parties to the option.
The Company has received $120 from Sub-licensee as an advance on account of future license fees. No milestones have been completed to date.
26
On September 14, 2023, the Company informed Yeda Research and Development Company Limited of its intention to terminate the license and research agreement entered into during 2022. The termination will take effect on November 13, 2023.

NOTE 1113 – LEGAL PROCEEDINGS

On January 18, 2022, a complaint (the “Complaint”) was filed in the Tel Aviv District Court (the “Court”) against the Company, ~~and~~ Orgenesis ~~Limited,~~ LTD (“the ~~Company’s Israeli subsidiary (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 1010,000 ~~million~~ 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. Since a material loss is not considered probable, no provision was made in the financial statements.
22
It has been brought to the Company’s attention, that, 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 Claim has yet to be legally delivered to the defendants. Since a material loss is not considered probable, 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%. The said amount is based on a Convertible Loan Agreement dated May 17, 2022, which provided for a loan amount of $5,000 under which the Company was only allowed to borrow $1,150 from the plaintiffs. 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. Accordingly, the Company disputes whether it owes plaintiffs the amount sought in the Complaint.
NOTE 1214 – SUBSEQUENT EVENTS

~~On July 6,~~Recent developments
The Company conducts certain of its operations in the State of Israel and some of our business and operations may be affected by economic, political, geopolitical and military conditions in Israel. In October 2023, ~~Neil Reithinger informed~~Hamas terrorists infiltrated Israel’s southern border from the ~~Company~~Gaza Strip and conducted a series of ~~his decision~~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 ~~resign as Chief Financial Officer, Treasurer~~their continued rocket and ~~Secretary~~terror attacks. Moreover, the clash between Israel and Hezbollah in Lebanon, may escalate in the future into a greater regional conflict. The current war military operations may affect certain of the ~~Company~~Company’s activities, business and operations although it is currently not possible to ~~pursue other opportunities. Mr. Reithinger will remain with the Company until he completes his transition of duties through September 1, 2023.~~predict such effect.
27
Registered Direct Offering

On ~~July 6,~~November 8, 2023, the Company ~~appointed Elliot Maltz as its Chief Financial Officer, effective September 1, 2023.~~entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an institutional investor named therein (the “Investor”), pursuant to which the Company agreed to issue and sell, in a registered direct offering by the Company directly to the Investor (the “Offering”), (i) 1,410,256 shares (the “Shares”) of common stock, par value $0.0001 per share, of the Company (“Common Stock”), and (ii) warrants exercisable for 1,410,256 shares of Common Stock (the “Warrants” and, together with the Shares, the “Securities”). The combined offering price for each Share and accompanying Warrant was $0.78. The Warrants will be exercisable immediately following the date of issuance and may be exercised for a period of five years from the initial exercisability date at an exercise price of $0.78 per share. The exercise prices and numbers of shares of Common Stock issuable upon exercise of the Warrants will be subject to adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting the Company’s Common Stock.
The Offering closed on November 9, 2023, and the Company received net proceeds of approximately $943 after deducting placement agent’s fees and estimated offering expenses payable by the Company.
Equity Line of Credit

On ~~July 11,~~November 8, 2023, ~~Efrat Assa Kunik informed~~ the Company also agreed to enter into an Equity Line of ~~her decision~~Credit Agreement (the “ELOC Agreement”) with the Investor pursuant to ~~resign as Chief Development Officer~~which the Company may sell and issue to the Investor, and the Investor is obligated to purchase from the Company, up to $25,000 of its Common Stock, from time to time over a 24-month period, provided that certain conditions are met. In connection with the ELOC Agreement, the Company agreed that it shall be prohibited from entering into any variable, reset, or otherwise adjustable equity or equity-linked transactions during the term of the ELOC Agreement. The Company also agreed to ~~pursue other opportunities.~~issue to the Investor warrants exercisable for 750,000 shares of Common Stock at an exercise price of $0.01 per share if the ELOC Agreement is not closed by February 6, 2024.

28
~~On July 25, 2023, the Israeli Subsidiary received a loan from an offshore investor in the amount of $175~~ ~~thousand. The loan bears~~ 8~~% annual interest and is repayable on~~ ~~January 1, 2024~~.

On July 25, 2023, the Company and Mircod LLC (“Mircod”) entered into a settlement and release agreement pursuant to which they agreed to terminate the joint venture and loan agreement between themselves. Mircod agreed to deliver all the related deliverables to the Company, and the Company agreed to pay Mircod consideration in the amount of $1 ~~million, of which half will be paid in cash, and one half in Orgenesis shares, upon receipt of the deliverables.~~
~~On July 25, 2023, the Company, a Sub-licensee, and the equity interest owner of that Sub-licensee (“Sub-licensee Owner”), entered into agreements whereby:~~
1) ~~the Company sub-licensed certain of its therapies to Sublicensee in return for royalties on future sales and payments upon the successful completion of certain milestones;~~
2) subject to the fulfilment certain conditions and milestones, the Sub-licensee Owner granted the Company a call option to purchase his interests in Sub-licensee at a valuation to be determined by a third-party valuation firm of not less than $8 million unless agreed otherwise by the parties to the option; and
3)
subject to the fulfilment of certain conditions and milestones, the Sub-licensee Owner was granted a put option to cause the Company to purchase his equity interest in Sub-licensee at a valuation to be determined by a third-party valuation firm of not less than $8 ~~million unless agreed otherwise by the parties to the option.~~
23
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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, 2022, as filed with the Securities and Exchange Commission (the “SEC”) on March 22, 2023. 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 or subsidiaries of Octomera LLC (whose name was changed on June 30, 2023, from Morgenesis LLC), 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 (formerly Orgenesis Maryland Inc.), a Maryland limited liability company (the “U.S. 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”) which was purchased in 2022; 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,~~Inc., a Delaware company incorporated in 2023; and Octomera LLC, a Delaware limited liability company (“Morgenesis” or “Octomera”).
2429
This Item has been revised for the effects of the restatement, as discussed in Note 2, Basis of Presentation, of the financial statements included elsewhere in this Quarterly Report on Form 10-Q/A.
Corporate 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 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, 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~~ultimately limiting the number of patients that can have access to, or can afford, these ~~therapies).~~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 and with the goal of entering into out-licensing agreements for these therapies. Our cellular therapies, though defined as drug products, conceptually differ from other drug modalities in that they are based on reprogramming of cells sourced from the patient or from a donor. In most cases, they are individually produced per patient in a highly sterile and controlled environment, and their efficacy is optimized when administered a short time following production as fresh product.

To advance the execution of our goal of bringing such therapies to market, we have designed and built our POCare Platform - a scalable infrastructure of technology and services that ensures a central quality system, replicability and standardization of infrastructure and equipment, and centralized monitoring and data management. The platform is constructed on POCare Centers that serve as hubs that locally implement our quality system, Good Manufacturing Practices, training procedures, quality control testing, incoming supply of materials and oversee the actual production in the Orgenesis Mobile Processing Units & Labs, or OMPULs.

In connection with the investment by an affiliate of Metalmark Capital Partners (“Metalmark” or “MM”) in November 2022, we separated our operations into two operating segments: the operations of ~~Morgenesis~~Octomera LLC (the “Morgenesis” segment which we have renamed to the “Octomera” segment following the change of name of Morgenesis LLC to Octomera LLC) and therapies related activities (the “Therapies” segment). Prior to that, we conducted all our operations as one single segment. The Octomera segment includes mainly POCare Services and ~~include~~includes the results of the subsidiaries transferred to Octomera and all of the operations of Octomera LLC. The Therapies segment includes our therapeutic development operations. The segment information presented in note 3 to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q reflects the results of the subsidiaries that were transferred to Octomera.

On June 30, 2023, in connection with an additional $1 million investment in Octomera, we and MM entered into Amendment No. 1 to the Second Amended and Restated Limited Liability Company Agreement (the “LLC Agreement Amendment”) to change the name of Morgenesis to “Octomera LLC” and to amend Octomera’s board composition. Pursuant to the LLC Agreement Amendment, the board of managers of Octomera (the “Octomera Board”) will be comprised of five managers, two of which will be appointed by us, one of which will be an industry expert appointed by MM, and two of which will be appointed by MM. However, as a result of the amendment to the composition of the Octomera Board pursuant to the LLC Agreement Amendment described above, we deconsolidated Octomera from our consolidated financial statements as of June 30, 2023 (the “effective date of deconsolidation”) and recorded our equity interest in Octomera as an equity method investment.

We currently own approximately 75% of Octomera LLC.

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Therapies segment (POCare Therapies)
While the biotech industry struggles to determine the best way to lower 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 all the new tools (new generations of industrial viruses, big data analysis for genetic and molecular data) and technologies (CRISPR, mRNA, etc.) available, ~~(often~~often at a low ~~cost)~~cost, to perform advanced research in small labs. Most new therapies arise from academic institutes or small spinouts from such institutes. Though such research efforts may manage to progress into a clinical stage, utilizing lab based or hospital-based production solutions they 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. Further 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 institutes hope to ~~out- license~~out-license their therapeutic products to large biotech companies or spin-out new companies and raise large fundraising rounds. However, in many cases 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. We collaborate with academic institutions and entities that have been spun out from such institutions. We are in close contact with researchers who are experts in the field of the drug and also partners with leading hospitals and research institutes. Based on such collaborations, we enter into in-licensing agreements with relevant institutions for promising therapies with the aim of adapting them to a point-of-care setting through regional or strategic biological partnerships. Based on the results of the collaboration, we are then able to out-license our own therapeutic developments, as well as those therapies developed from in-licensing agreements to out-licensing partners at preferred geographical regions.

The ability to produce these products at low cost allows for an expedited development process, and the partnership with hospitals around the globe enables joint grants and lower cost of clinical development. The POCare Therapies division reviews many therapies available for out licensing and select the ones which they believe have the highest market potential, can benefit the most from a point of care approach and have the highest chance of clinical success. It assesses such issues by utilizing its global POCare Network and its internal knowhow 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~~point-of-care approach through regional partnerships, and to out-license the products for market approval in preferred geographical regions. This approach lowers overall development cost, through minimizing pre-clinical development costs incurred by us, and through receiving of the additional funding from grants and/or payments by regional partners.

Our therapies development subsidiaries are:

● Koligo Therapeutics, Inc., a Kentucky corporation, which is a regenerative medicine company, specializing in developing personalized cell therapies. It is currently focused on commercializing its metabolic pipeline via the POCare Network throughout the United States and in international markets.
● Orgenesis CA, Inc. a Delaware corporation, which is currently focused on development of technologies and therapies in California.
● Orgenesis Belgium SRL which is currently focused on product development. Since its incorporation, the subsidiary has been awarded grants in excess of ~~18 million~~18,000 Euro from the Walloon region for several projects (DGO6 grants).
● Orgenesis Switzerland Sarl, which is currently focused on providing group management services.
●
●
MIDA Biotech BV, which is currently focused on research and development activities, was granted a ~~4 million~~4,000 Euro grant under the European Innovation Council Pathfinder Challenge Program which supports cutting-edge science and technology. The grant is for technologies enabling the production of autologous induced pluripotent stem cells (iPSCs) using microfluidic technologies and artificial intelligence (AI).

Orgenesis Italy SRL which is currently focused on R&D activities.
● Orgenesis Ltd., an Israeli subsidiary which is focused on R&D and a provider of R&D management services for out licenced products. Israel asis a hub for biotech research and pioneers in this field.
● Orgenesis Austria GmbH, an Austrian subsidiary, which is focused on R&D activities.

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Octomera segment (mainly POCare Services)

Octomera LLC (“Octomera” or “Morgenesis”) is responsible for most of our POCare services platform. The POCare Services platform is utilized by parties such as biotech companies and hospitals for the supply of their products. Octomera’s services include adapting the process to the platform and supplying the products, or POCare Services. These are services for third party companies and for CGTs that are not necessarily based on our POCare Therapies. 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 design 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; and
● Contract Research Organization services for clinical trials.

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 with the intention of providing 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.

POCare Services Operations Subsidiaries

We conduct our core POCare operations through Octomera (of which we currently own approximately 75%) and which was a consolidated subsidiary of the Company until June 30, 2023. The Octomera subsidiaries which are all wholly owned except as otherwise stated below (collectively, the “Subsidiaries”) include:

● Orgenesis Maryland LLC, which is the center of POCare Services activity in North America and is currently focused on setting up and providing POCare Services and cell-processing services to the POCare Network.
● Tissue Genesis International LLC, a Texas limited liability company currently focused on development of our technologies and therapies.
● Orgenesis Services SRL, which is currently focused on expanding our POCare Network in Belgium.
● Orgenesis Germany GmbH, which is currently focused on providing CRO services to the POCare Network.
● Orgenesis Korea Co. Ltd., which is a provider of cell-processing and pre-clinical services in Korea. Octomera owns 94.12% of the Korean Subsidiary.
● Orgenesis Biotech Israel Ltd., which is a provider of process development and cell-processing services in Israel.
● Orgenesis Australia PTY LTD, which was transferred to Octomera in January 2023 and is currently focused on the development of our POC Network in Australia.
● Theracell Laboratories private company (“Theracell Labs”), a Greek company currently focused on expanding our POCare Network.
● ORGS POC CA Inc, incorporated in 2023, which is currently focussed on expanding our POCare Network in California.
During 2023, we and MM invested $660 thousand and $6.5 million respectively into Octomera in exchange for Octomera preferred shares.

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Developments During the ~~Six~~Nine Months Ended ~~June~~September 30, 2023

In January 2023, we entered into updated joint venture (JV) agreements (the “JVAs”) with Theracell Advanced Biotechnology SA, Broaden Bioscience and Technology Corp, Image Securities FZC, Cure Therapeutics, and Med Centre for Gene and Cell Therapy FZ-LLC and assigned certain rights and obligations under its JVAs to Texas Advanced Therapies LLC, a Delaware Limited Liability company (“Texas AT”) not related to us. Texas AT will receive our option to require the incorporation of the JV Entity, our share in the JV Entity if and when the latter are incorporated, an option to invest additional funding in the JV Entity, and board and veto rights on certain critical decisions in the JV Entity. We have retained the call option to acquire the JV partner’s share in the JVE, to receive a royalty and a right to conclude the Manufacturing and Service Agreement with the JV entity. We have no further obligation to provide any additional funding to the JV entities. As of September 30, 2023, no JV entities were incorporated as per the JVAs.
On January 10, 2023 (“Effective ~~date”~~Date”), we entered into convertible loan agreements (the “CLAs”) with lenders pursuant to which we received convertible loans totaling $5 million. Interest on the CLAs is calculated at 8% per annum (based on a 365-day year); provided, that if an Event of Default (as defined in the Convertible Loan Agreements) has occurred and is continuing, the Outstanding Amount (as defined herein) will be calculated at 15.0% per annum. The Loan Amount and all accrued but unpaid interest thereon (collectively, the “Outstanding Amount”) shall either (i) be repaid in cash or (ii) convert to shares of our common stock, par value $0.0001 per share (“Common Stock”), on the third anniversary of the Effective Date (the “Maturity Date”). At any time prior to or on the Maturity Date, Lender may provide us with written notice to convert all or part of the Outstanding Amount into shares of our Common Stock equal to the quotient obtained by dividing (x) the Outstanding Amount by (y) a price equal to $2.464 per share (subject to adjustment for certain capital events, such as stock splits) (the “Conversion Price”).
27

Under the terms of the CLAs, we may use the proceeds from the Loan Amount to (i) redeem the loan amount from the previously disclosed Convertible Loan Agreement, dated as of May 19, 2022 between Orgenesis and Ricky Steven Neumann, as amended by the previously disclosed certain Convertible Loan Extension Agreement, dated as of October 23, 2022, by and between Orgenesis and Ricky Steven Neumann, and (ii) for general corporate purposes. Pursuant to the terms, we repaid said loan upon receipt of the Loan Amount. In connection with the CLAs, we agreed to issue Lender warrants representing the right to purchase 507,305 shares of our Common Stock, at an exercise price of $2.50 per share.

On February 23, 2023, we entered into a securities purchase agreement with certain institutional and accredited investors relating to the issuance and sale of 1,947,368 shares of common stock, par value $0.0001 per share and warrants to purchase up to 973,684 shares of Common Stock at a purchase price of $1.90 per share of Common Stock and accompanying Warrants in a registered direct offering. The offering closed on February 27, 2023 and the Company received approximately $3.7 million, before deducting the placement agent’s cash fee equal to 7% of the proceeds. The Company intends to use the net proceeds from the Offering for working capital and general corporate purposes, including the Company’s therapy related activities. The offering was made pursuant to an effective registration statement on Form S-3 (Registration Statement No. 333-254806), as previously filed with and declared effective by the Securities and Exchange Commission (the “SEC”) on April 7, 2021, a base prospectus included as part of the registration statement, and a final prospectus supplement filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended.

On March 27, 2023, our subsidiary Koligo Therapeutics Inc. (“Borrower”), entered into a convertible loan agreement (the “Convertible Loan Agreement”) with Yehuda Nir (the “Lender,”), pursuant to which the Lender agreed to loan the Borrower up to ~~$5,000,000~~$5 million (the “Loan Amount”). Interest is calculated at 8% per annum (based on a 365-day year) and is payable, along with the principal, on or before January 1, 2024.

If prior to December 31, 2023, the Borrower issues equity securities (“Equity Securities”) in a transaction or series of related transactions resulting in aggregate gross proceeds to the Borrower of at least ~~$5,000,000~~$5,000 (excluding conversion of the Loan Amount) (a “Qualified Financing”), then the outstanding principal amount of the Loan Amount, and any and all accrued but unpaid interest thereon, will automatically convert into such Equity Securities issued pursuant to the Qualified Financing at a price per share equal to fifty percent (50%) of the price per share paid for each share of the Equity Securities purchased for cash by the investors in the Qualified Financing.

As of ~~June~~September 30, 2023, we borrowed ~~$485~~$660 thousand pursuant to the Convertible Loan Agreement.
33
On July 25, 2023, our Israeli Subsidiary received a loan from an offshore investor in the amount of $175 thousand. The loan bears 8% annual interest and is repayable on January 1, 2024.
On August 15, 2023, we received a loan from an investor in the amount of $250 thousand. The loan bears 8% annual interest and is repayable on January 1, 2024.
On August 31, 2023, we entered into a Securities Purchase Agreement with a certain accredited investor, pursuant to which we agreed to issue and ~~borrowed an additional $175 thousand~~sell, in ~~July~~a private placement (the “Offering”), 2,000,000 shares of our common stock, par value $0.0001 per share, at a purchase price of $0.50 per share. We received gross proceeds of $1 million before deducting related offering expenses. The Offering closed on August 31, 2023.

~~In January~~On September 29, 2023, weBorrower entered into ~~updated joint venture (JV) agreements~~another convertible loan agreement (the ~~“JVAs”~~“Sai Convertible Loan Agreement”) with ~~Theracell Advanced Biotechnology SA, Broaden Bioscience~~Sai Traders (the “Lender,” and ~~Technology Corp, Image Securities FZC, Cure Therapeutics,~~together with the Borrower, the “Parties”), pursuant to which the Lender agreed to loan the Borrower up to $25 million (the “Sai Convertible Loan”). The Sai Convertible Loan shall consist of an Initial Installment of $1.5 million (“Initial Installment”), and ~~Med Centre~~at the election of the Borrower thereafter while the Sai Convertible Loan remains outstanding, Borrower may issue up to an additional $23.5 million (“Subsequent Installments”). The Sai Convertible loan bears transaction costs of 8%. Interest is calculated at 10% per annum (based on a 365-day year) of all outstanding principal borrowings and is payable, along with the principal (collectively the “Outstanding Amount”), on or before December 1, 2027 (the “Maturity Date”). The Loan Amount may be prepaid by the Borrower in whole or in part at any time without penalty.
Under the terms of the Sai Convertible Loan Agreement, at the option of the Lender at the Maturity Date or any time prior, the Outstanding Amount may be convertible, in whole or in part, into the number of shares of Common Stock of the Company equal to the quotient obtained by dividing (x) the Outstanding Amount by (y) the Conversion Price. The “Initial Installment Conversion Price” for ~~Gene and Cell Therapy FZ-LLC and assigned certain rights and obligations~~the Outstanding Amount relating to the Initial Installment shall be a price per share of Common Stock equal to $2.50. The “Subsequent Installment Conversion Price” for the Outstanding Amount relating to the Subsequent Installment(s) shall be a price per share of Common Stock equal to $3.50. Lender agrees that it shall not deliver a notice of conversion that upon effect results in the holder to beneficially own more than 19.99% of the then outstanding shares of Company’s Common Stock. Lender may elect to, instead of the conversion of the Outstanding Amount into Common shares of Company, convert the entire Outstanding Amount into the securities of Borrower pursuant to a the first issuance of equity of the Borrower under ~~its JVAs~~which the Borrower raises at least $5 million in gross proceeds (“Qualified Financing”) at a price per share equal to ~~Texas Advanced Therapies LLC,~~75% of the price per share paid for each share of the equity securities purchased for cash by the investors in such a ~~Delaware Limited Liability company (“Texas AT”) not related to us. Texas AT will receive our~~Qualified Financing. In the event of the Borrower being listed on a public securities exchange, Lender shall have the option to ~~require~~convert the ~~incorporation~~Outstanding Amount at a 25% premium to the volume weighted average price of the ~~JV Entity, our share~~Borrower’s equity over the preceding five (5) days as reported by Bloomberg (“5-Day VWAP”), provided that any such conversion shall not result in the ~~JV Entity if and when~~Lender to beneficially own more than 19.99% of the ~~latter are incorporated,~~then beneficial shares of the Borrower. In the event of an acquisition of the Borrower (“Acquisition”), prior to the closing of such acquisition, Lender shall have the option to ~~invest additional funding in~~convert the ~~JV Entity, and board and veto rights on certain critical decisions in~~Outstanding Amount into equity securities of the ~~JV Entity. We have retained~~Borrower at a price equivalent to seventy five percent (75%) of the ~~call option~~price paid by such buyer to acquire the ~~JV partner’s share~~Borrower.
As of September 30, 2023 and the date of this report, the Initial Installment was not received, and was therefore not reflected in the ~~JVE, to receive a royalty~~Consolidated Balance sheet of September 30, 2023.
During October 2023, certain of our subsidiaries borrowed an aggregate of $140 thousand at annual interest rates varying between 0% and ~~a right to conclude the Manufacturing and Service Agreement with the JV entity. We have no further obligation to provide any additional funding to the JV entities. As of June~~10%. The loans are repayable between November 30, 2023 ~~no JV entities were incorporated as per the JVAs.~~and January 1, 2024.

Results of Operations

The results of our operations include all of the results of Octomera LLC and its subsidiaries (the Octomera segment) up to the effective date of deconsolidation.

2834
Comparison of the Three Months Ended ~~June~~September 30, 2023 to the Three Months Ended ~~June~~September 30, 2022.

The following table presents our results of operations for the three months ended ~~June~~September 30, 2023 and ~~2022:~~2022 (dollars in thousands in the table and discussion thereafter):

Three-Months Ended

June 30, 2023
(As Restated)
June 30, 2022 Three-Months Ended
(in thousands)
September 30, 2023
(As Restated)
September 30, 2022
Revenues $ 113 $ 6,699 $ 110 $ 7,841
Revenues from related party - 502 - 147
Total revenues 113 7,201 110 7,988
Cost of revenues 3,232 1,063 139 983
Gross profit (3,119 ) 6,138 (29 ) 7,005
Cost of development services and research and development expenses 3,527 7,838 808 3,683
Amortization of intangible assets 208 229 153 225
Selling, general and administrative expenses included credit losses $14,878 for the three months ended June 30, 2023 18,216 2,803
Selling, general and administrative expenses 1,245 3,104
Share in net loss of associated company 553 274
Operating loss 25,070 4,732 2,788 281
Loss from deconsolidation of Octomera
5,343
-
Other income, net - (8 ) (2 ) 2
Financial expenses, net 692 389 - 1,100
Share in net loss of associated company (3 ) 368
Loss before income taxes 31,102 5,481 - 1,383
Tax expense 91 11 3,331 25
Net loss $ 31,193 $ 5,492 $ 394 $ 1,408

Revenues

During the three months ended ~~June~~September 30, 2023, we recognized revenue in the amount of ~~$113 thousand,~~$110, as compared to ~~$7,201~~$7,988 during the three months ended ~~June~~September 30, 2022, representing a decrease of ~~98%~~99%. This was attributable to the deconsolidation of Octomera as of June 30, 2023. The majority of our revenues were from Octomera.
~~During~~In addition, during the 3 months ended ~~June~~September 30, 2023 ~~we entered into new agreements with certain customers. We~~Octomera completed certain performance obligations under ~~the~~revenue agreements but did not recognize any revenue because revenue recognition conditions under ASC606 were not all met.

Expenses

Cost of Revenues
Three-Months Ended
June 30,
2023 June 30,
2022
(in thousands)
Salaries and related expenses $ 1,091 $ 486
Stock-based compensation 1 13
Professional fees and consulting services 1,071 21
Raw materials 482 71
Depreciation expenses, net 236 94
Other expenses 351 378
Total $ 3,232 $ 1,063

29
Three-Months Ended
September 30, 2023 September 30, 2022
Salaries and related expenses $ 94 $ 386
Stock-based compensation 1 1
Professional fees and consulting services 4 244
Raw materials 5 117
Depreciation expenses, net 5 102
Other expenses 30 133
Total $ 139 $ 983

Cost of revenues for the three months ended ~~June~~September 30, 2023 were ~~$3,232 thousand,~~$139, as compared to ~~$1,063 thousand~~$983 for the three months ended September 30, 2022, representing a decrease of 86%. This was attributable to the deconsolidation of Octomera at June 30, 2023. The majority of our cost of revenues are from Octomera.
35
In the Octomera segment, cost of revenues for the three months ended September 30, 2023 were $1,875 as compared to $664 for the three months ended September 30, 2022, representing an increase of ~~204%~~182%. The increase was due to increased costs, ~~in the Octomera segment,~~ including additional salaries, professional fees, raw materials and depreciation expenses incurred mainly related to higher costs of revenues of process development and POC cell ~~processing, the revenues of which increased.~~processing.

Cost of Development Services and Research and Development Expenses

Three-Months Ended
June 30,
2023 June 30,
2022 Three-Months Ended
(in thousands) September 30, 2023 September 30, 2022
Salaries and related expenses $ 1,856 $ 2,576 $ 669 $ 2,377
Stock-based compensation 79 138 24 117
Subcontracting, professional and consulting services 805 1,657 (38 ) 357
Lab expenses 128 636 22 221
Depreciation expenses, net 132 166 29 146
Other research and development expenses 587 2,665 171 485
Less – grant (60 ) - (69 ) (20 )
Total $ 3,527 $ 7,838 $ 808 $ 3,683

Cost of development services and research and development for the three months ended ~~June~~September 30, 2023 were ~~$3,527 thousand,~~$808, as compared to ~~$7,838 thousand~~$3,683 for the three months ended ~~June~~September 30, 2022, representing a decrease of ~~55%~~78%. ~~The changes contributing~~This was mainly attributable to the ~~decrease during the quarter were attributable to:~~
~~● a decrease~~deconsolidation of ~~$720 thousand~~Octomera at June 30, 2023. Cost of development services and research and development declined in ~~salaries and related expenses mainly in~~both the Octomera ~~segment where~~and Therapies segments because costs that were related to POC development services were no longer required due to the conclusion of the POC development revenue ~~contracts;~~
~~● a decrease of $852 thousand in~~contracts, and our decision to reduce subcontracting, professional and consulting service fees, ~~resulting from our heavily investing in subcontracting, professional~~ and ~~consulting service fees in previous years and the reduction of such expenditures this year; and~~
~~● a decrease of $2,078 thousand on other research and development expenses mainly as a result of our decision to reduce~~ other research and development expenses.

Selling, General and Administrative Expenses

Three-Months Ended
June 30,
2023 June 30,
2022
(As Restated)
(in thousands)
Salaries and related expenses $ 1,088 $ 925
Stock-based compensation 71 81
Accounting and legal fees 794 1,009
Professional fees 525 244
Rent and related expenses 48 56
Business development 151 130
Depreciation expenses, net 21 12
Other general and administrative expenses
15,518
346
Total $
18,216
$ 2,803
30
Three-Months Ended

September 30, 2023
(As Restated)
September 30, 2022
Salaries and related expenses $ 259 $ 764
Stock-based compensation 53 76
Accounting and legal fees 460 1,436
Professional fees 134 146
Rent and related expenses 13 60
Business development 60 114
Depreciation expenses, net 4 15
Other general and administrative expenses 262 493
Total $ 1,245 $ 3,104

Selling, general and administrative expenses for the three months ended ~~June~~September 30, 2023 were ~~$18,216 thousand,~~$1,245, as compared to ~~$2,803 thousand~~$3,104 for the three months ended ~~June~~September 30, 2022, representing ~~an increase~~a decrease of ~~550%~~60%. The ~~increase~~decrease in selling, general and administrative expenses in the three months ended ~~June~~September 30, ~~2022~~2023 compared to the three months ended ~~June~~September 30, ~~2021~~2022 is primarily attributable to the deconsolidation of Octomera as of June 30, 2023.
In the Octomera segment, selling, general and administrative expense (excluding depreciation) for the three months ended September 30, 2023 were $3,931 as compared to $1,385 for the three months ended September 30, 2022, representing an increase of 184%. The increase was mainly as a result of an increase in ~~salaries and related expenses and~~an allowance for credit losses.
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Share in Net Loss of Associated Company
Share in net loss of associated company for the three months ended September 30, 2023 was $ 553 , ~~professional fees~~as compared to $274 for the three months ended September 30, 2022, representing a increase of 102%. The increase in share in net loss of associated company in the ~~Octomera segment due~~three months ended September 30, 2023 compared to the ~~ramp up of activity, an increase in other general and administrative expenses due~~three months ended September 30, 2022 is primarily attributable to ~~an increased provision for~~ credit losses in the ~~Octomera segment, offset by~~period resulting from higher than previously expected credit losses related to a ~~decline~~group of customers that are significantly overdue in ~~accounting and legal fees.~~Octomera.

Financial Expenses, net

Three-Months Ended
June 30,
2023 June 30,
2022 Three-Months Ended
(in thousands) September 30, 2023 September 30, 2022
Interest expense on convertible loans and loans $ 597 $ 239 $ 611 $ 589
Foreign exchange loss, net 94 149
Other expenses 2 1
Foreign exchange loss (income), net (69 ) 512
Other expenses (income) 2 (1 )
Total $
693
$ 389 $ 544 $ 1,100

Financial expenses, net for the three months ended ~~June~~September 30, 2023 were ~~$693 thousand,~~$544, as compared to ~~$389 thousand~~$1,100 for the three months ended ~~June~~September 30, 2022, representing ~~an increase~~a decrease of ~~78%~~51%. The ~~increase~~decrease was mainly due to ~~interest expenses on convertible loans.~~foreign exchange losses incurred in the three months ended September 30, 2022 in the Octomera segment.

Comparison of the ~~Six~~Nine Months Ended ~~June~~September 30, 2023 to the ~~Six~~Nine Months Ended ~~June~~September 30, 2022.

The following table presents our results of operations for the ~~six~~nine months ended ~~June~~September 30, 2023 and ~~2022:~~2022 (dollars in thousands in the table and discussion thereafter):

Six Months Ended

June 30, 2023
(As Restated)
June 30, 2022 Nine Months Ended
(in thousands)
September 30, 2023
(As Restated)
September 30, 2022
Revenues $ 255 $ 13,276 $ 365 $ 21,117
Revenues from related party - 1,137 - 1,284
Total revenue 255 14,413 365 22,401
Cost of revenues 5,954 1,777 6,093 2,760
Gross profit (5,699 ) 12,636 (5,728 ) 19,641
Cost of development services and research and development expenses 6,808 14,489 7,616 18,172
Amortization of intangible assets 415 461 568 686
Selling, general and administrative expenses included credit losses of $24,367 for the six months ended June 30, 2023 31,744 5,654
Selling, general and administrative expenses included credit losses of $24,367 for the nine months ended September 30, 2023 32,989 8,758
Share in net loss of associated company 552 1,189
Operating loss 44,666 7,968 47,453 9,164
Other income, net (2 ) (8 ) (4 ) (6 )
Loss from deconsolidation of Octomera
5,343

-
5,343 -
Credit loss on convertible loan receivable 2,688
Loss from extinguishment in connection with convertible loan 283 - 283 -
Credit loss on convertible loan 2,688 -
Financial expenses, net 1,373 602 1,918 1,702
Share in net loss (profit) of associated company (1 ) 915
Loss before income taxes 54,350 9,477 57,681 10,860
Tax expense 220 12 614 37
Net loss $ 54,570 $ 9,489 $ 58,295 $ 10,897

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Revenues

Our revenues for the ~~six~~nine months ended ~~June~~September 30, 2023 were ~~$255 thousand,~~$365, as compared to ~~$14,413 thousand~~$22,401 for the ~~six~~nine months ended ~~June~~September 30, 2022, representing a decrease of 98%..This was attributable to the deconsolidation of Octomera at June 30, 2023. The majority of our revenues were from Octomera and were included in our revenues until the date of deconsolidation.

~~During~~In addition, during the 69 months ended ~~June~~September 30, 2023 ~~we entered into new agreements with certain customers. We~~Octomera completed certain performance obligations under ~~the~~revenue agreements but did not recognize any revenue because revenue recognition conditions under ASC606 were not all met.
Expenses

Cost of Revenues

Six Months Ended
June 30,
2023 June 30,
2022 Nine Months Ended
(in thousands) September 30, 2023 September 30, 2022
Salaries and related expenses $ 2,204 $ 815 $ 2,298 $ 1,201
Stock-based compensation 3 26 4 27
Professional fees and consulting services 1,878 43 1,882 287
Raw materials 710 101 715 218
Depreciation expenses, net 472 169 477 271
Other expenses 687 623 717 756
Total $ 5,954 $ 1,777 $ 6,093 $ 2,760

Cost of revenues for the ~~six~~nine months ended ~~June~~September 30, 2023 were ~~$5,954 thousand,~~$6,093, as compared to ~~$1,777 thousand~~$2,760 for the ~~six~~nine months ended ~~June~~September 30, 2022, representing an increase of ~~235%~~121%. The increase was due to increased costs including additional salaries, professional fees, raw materials and depreciation expenses incurred as a result of increased process development and cell processing revenues mainly in the Octomera ~~segment.~~segment, which were incurred mainly until the date of deconsolidation.

Cost of Development Services and Research and Development Expenses

Six Months Ended
June 30,
2023 June 30,
2022 Nine Months Ended
(in thousands) September 30, 2023 September 30, 2022
Salaries and related expenses $ 3,484 $ 5,425 $ 4,153 $ 7,802
Stock-based compensation 163 297 187 414
Subcontracting, professional and consulting services 1,601 3,383 1,563 3,740
Lab expenses 304 1,218 326 1,439
Depreciation expenses, net 256 324 285 470
Other research and development expenses 1,141 3,842 1,312 4,327
Less – grant (141 ) - (210 ) (20 )
Total $ 6,808 $ 14,489 $ 7,616 $ 18,172

Cost of development services and research and development for the ~~six~~nine months ended ~~June~~September 30, 2023 were ~~$6,808 thousand,~~$7,616, as compared to ~~$14,489 thousand~~$18,172 for the ~~six~~nine months ended ~~June~~September 30, 2022, representing a decrease of ~~53%~~58%. The ~~increase~~decrease was mainly attributable ~~to:~~
~~● a decrease~~to the deconsolidation of ~~$1,941 thousand in salaries and related expenses mainly in~~ the Octomera segment ~~where costs that were related~~at June 30, 2023, and our decision to ~~POC development services were no longer required due to the conclusion of the POC development revenue contracts; and~~
32
~~● a decrease of $5,397 thousand in subcontracting, professional and consulting service fees, lab expenses, and other research and development expenses, resulting from our heavily~~reduce investing in subcontracting, professional and consulting service fees ~~in previous years~~ and ~~the reduction of such expenditures~~other research and development expenses this year.

38
Selling, General and Administrative Expenses

Six Months Ended
June 30, 2023 (As Restated) June 30, 2022 Nine Months Ended
(in thousands)
September 30, 2023
(As Restated)
September 30, 2022
Salaries and related expenses $ 2,261 $ 1,825 $ 2,520 $ 2,589
Stock-based compensation 144 175 197 251
Accounting and legal fees 2,344 1,919 2,804 3,355
Professional fees 886 504 1,020 650
Rent and related expenses 114 110 127 170
Business development 361 251 421 365
Depreciation expenses, net 32 21 36 36
Other general and administrative expenses 25,602 849 25,864 1,342
Total $ 31,744 $ 5,654 $ 32,989 $ 8,758

Selling, general and administrative expenses for the ~~six~~nine months ended ~~June~~September 30, 2023 were ~~$31,744 thousand,~~$32,989, as compared to ~~$5,654 thousand~~$8,758 for the ~~six~~nine months ended ~~June~~September 30, 2022, representing an increase of ~~461%~~277%. The increase was mainly as a result of allowances for credit losses in the Octomera segment.
In the Octomera segment, selling, general and administrative expense (excluding depreciation) for the nine months ended September 30, 2023 were $6,828 as compared to $2,822 for the nine months ended September 30, 2022, representing an increase of 37%. The increase was mainly as a result of increases in salaries and related expenses, ~~and~~ professional fees as a result of ramped up activities, and an increase in ~~the Octomera segment, other~~Other general and administrative expenses as a result ~~an increased provision~~of allowances for credit losses.
Share in Net Loss of Associated Company
Share in net loss of associated company for the nine months ended September 30, 2023 was $ 552 , as compared to $1,189 for the three months ended September 30, 2022, representing a increase of 54%. The increase in Share in net loss of associated company in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 is primarily attributable to credit losses in the ~~Octomera segment, and accounting and legal fees incurred as~~three months ended September 30, 2023 resulting from higher than previously expected credit losses related to a ~~result~~group of ~~investment activities.~~customers that are significantly overdue in Octomera.

Credit ~~Loss~~loss on convertible loan receivable

Six Months Ended
June 30,
2023 (As Restated) June 30,
2022
(in thousands)
Credit loss on convertible loans $ 2,688 $ -
Nine Months Ended

September 30, 2023
(As Restated)
September 30, 2022
(in thousands)
Credit loss on convertible loans receivable $ 2,688 $ 0

Credit losses for the ~~six~~nine months ended ~~June~~September 30, 2023 were $2,688 compared to $0 for the three months ended ~~June~~September 30, 2022. This was attributable to a provision created for a ~~possible~~ credit loss on a loan.

39
Financial Expenses, net

Six Months Ended
June 30,
2023 June 30,
2022 Nine Months Ended
(in thousands) September 30, 2023 September 30, 2022
Interest expense on convertible loans and loans $ 1,129 $ 364 $ 1,740 $ 953
Foreign exchange loss, net 242 231 173 743
Other expenses (income) 3 7 5 6
Total $ 1,374 $ 602 $ 1,918 $ 1,702

Financial expenses, net for the ~~six~~nine months ended ~~June~~September 30, 2023 were ~~$1,374 thousand,~~$1,918, as compared to ~~$602 thousand~~$1,702 for the ~~six~~nine months ended ~~June~~September 30, 2022, representing an increase of ~~128%~~13%. ~~The increase was mainly as a result of increased interest expenses on convertible loans.~~

Working Capital

As of
June 30,
2023
December 31,
2022

(As Restated)
(in thousands)
Current assets $ 6,533 $ 46,318
Current liabilities 12,711 15,910
Working capital $ (6,178 ) $ 30,408
(dollars in thousands)

33
As of

September 30, 2023
(As Restated)
December 31, 2022
Current assets $ 5,977 $ 46,318
Current liabilities 14,302 15,910
Working capital $ (8,325 ) $ 30,408

Current assets decreased by ~~$39,785 thousand~~$40,341 between December 31, 2022 and ~~June~~September 30, 2023 due mainly to the deconsolidation of Octomera. The majority of cash and cash equivalents, restricted cash, and accounts receivable at December 31, 2022 were part of Octomera. Prepaid expenses and other receivables increased by $3,073 from December 31, 2022 to September 30, 2023 mainly as a result of prepayments in development contracts. Receivables from related parties in the amount of $1,052 are receivables from Octomera ~~subsidiary.~~subsidiaries, that were consolidated at December 31, 2022 and not at September 30, 2023. See also above: “Credit loss on convertible loans” regarding the decrease in Convertible loan receivable.

Current liabilities decreased by ~~$3,199 thousand~~$1,608 between December 31, 2022 and ~~June~~September 30, 2023 primarily as a result of the deconsolidation of Octomera. Accounts payable not related to Octomera increased as a result of a shortage of funds. Other payables related parties in the amount of $132 are payables to Octomera ~~subsidiary.~~subsidiaries, that were consolidated at December 31, 2022 and not at September 30, 2023. Short-term and current maturities of convertible loans increased by $430 for representing an increase of $430 mainly as a result new loans taken.

Liquidity and Financial Condition

Six Months Ended
June 30,
2023 June 30,
2022
(As Restated)
(in thousands)

Net loss $ (54,570 ) $ (9,489 )

Net cash used in operating activities (13,154 ) (9,206 )
Net cash used in investing activities (2,802 ) (4,863 )
Net cash provided by financing activities 10,796 10,906
Decrease in cash and cash equivalents $ (5,160 ) $ (3,163 )
(dollars in thousands)
Nine Months Ended

September 30, 2023
(As Restated)
September 30, 2022

Net loss $ (58,295 ) $ (10,897 )

Net cash used in operating activities (14,335 ) (14,163 )
Net cash used in investing activities (3,645 ) (7,458 )
Net cash provided by financing activities 12,393 20,095
Decrease in cash and cash equivalents $ (5,587 ) $ (1,526 )
40

During the ~~six~~nine months ended ~~June~~September 30, 2023, we funded our operations from existing funds, and equity and loan financings.

Net cash used in operating activities for the ~~six~~nine months ended ~~June~~September 30, 2023 was approximately ~~$13.2 million,~~$14,335, as compared to net cash used in operating activities of approximately ~~$9.2 million~~$14,163 for the ~~six~~nine months ended ~~June~~September 30, 2022. This is mainly attributable ~~to the increased net loss for the period.~~to:
● An increase in the Net Loss for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022, for the reasons explained above.
● The deconsolidation of Octomera. The majority of accounts receivable and inventory as at December 31, 2023 were part of Octomera.
● An increase in prepaid expenses and other accounts receivable in the amount of $3,073 mainly as a result of prepayments of development contracts.
● An increase in accounts payable not related to Octomera, as a result of our not having sufficient funds to pay vendors.

Net cash used in investing activities for the ~~six~~nine months ended ~~June~~September 30, 2023 was approximately ~~$2.8 million,~~$3,645, as compared to net cash used in investing activities of approximately ~~$4.9 million~~$7,458 for the ~~six~~nine months ended ~~June~~September 30, 2022. The decrease was mainly due to loans granted to associated entities last year ~~and~~not granted this year, reduced investments in ~~OMPULs.~~OMPULs, and the deconsolidation of Octomera.

Net cash provided by financing activities for the ~~six~~nine months ended ~~June~~September 30, ~~2022~~2023 was approximately ~~$10.8 million,~~$12,393, as compared to net cash provided by financing activities of approximately ~~$10.9 million~~$20,095 for the ~~six~~nine months ended ~~June~~September 30, 2022. During the ~~six~~nine months ended ~~June~~September 30, 2023 we raised equity investments in the net amount of ~~$3.3 million~~$4,341 (see Note 4), raised proceeds from loans in the amount of ~~$5.5 million~~$5,660 (see Note 5), raised proceeds from MM in the amount of ~~$5 million~~$5,000 see note 3 and repaid convertible loans in the amount of ~~$3 million~~$3,000 (see Note 5).

Liquidity & Capital Resources Outlook
Our activities have recently been funded primarily by ~~generating revenue, proceeds from convertible loan agreements, and through~~ offerings of our ~~securities.~~equity securities, loans, and convertible loans. There is no assurance that our business will generate sustainable positive cash flows to fund our business operations.

If there are further reductions in revenues or increases in operating costs for facilities expansion, research and development, commercial and clinical activity or decreases in revenues from customers, we will need to use mitigating actions such as to seek additional financing ~~refinance or amend the terms of existing convertible loans~~ or postpone expenses that are not based on firm commitments. In addition, in order to fund our operations until such time that we can generate sustainable positive cash flows, we will need to raise additional funds.

~~Our~~We expect that our current and projected cash resources and commitments ~~as well as other factors mentioned above, raise~~will not be sufficient to meet our obligations for the next 12 months, raising a substantial doubt about our ability to continue as a going concern. ~~We are planning to raise~~Our management plans include raising additional capital to ~~continue~~fund our operations and to repay our outstanding loans when they become due, as well as ~~to explore~~exploring additional avenues to increase ~~revenues~~revenue and reduce capital expenditures. ~~There~~Our ability to fund the completion of our ongoing and planned activities may be substantially dependent upon whether we can ~~be no assurance that~~obtain sufficient funding at acceptable terms. If we ~~will be able~~are unable to raise sufficient additional capital ~~on acceptable terms,~~ or ~~at all.~~meet revenue targets, we may have to reduce or eliminate certain activities and reduce our headcount.
34

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.
41

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.

OurOur 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 to accomplish their objectives at the reasonable assurance level due to the material weakness in our internal control over financial reporting described below. Such material weakness contributed to the restatement of our financial statements as described in this Amendment No. 1 to our Quarterly Report on Form 10-Q/A for the three and ~~six~~nine months ended ~~June~~September 30, 2023, Amendment No. 1 to our Quarterly Report on Form 10-Q/A for the three months ended March 31, 2023 and in Amendment No. 1 to our Quarterly Report on Form 10-Q/A for the three and ~~nine~~six months ended ~~September~~June 30, 2023. As restated, our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q/A were prepared in accordance with U.S. GAAP, and our management has concluded that such restated consolidated financial statements present fairly, in all material respects, our financial position, results of operations and cash flows for the periods disclosed in conformity with U.S. GAAP.

Management has determined that the Company had the following material weakness in its internal control over financial reporting:
We did not perform appropriate credit loss analyses related to our internal control over financial reporting in the accounting for whether we will collect substantially all the consideration as it relates to revenues as well as our estimated credit losses in the three and ~~six~~nine months ended ~~June~~September 30, 2023. As a result, we identified a deficiency in the operating effectiveness of our internal control over financial reporting related to our accounting for revenues and credit losses in the three and ~~six~~nine months ended ~~June~~September 30, 2023, which resulted in the restatement of the Company’s unaudited condensed consolidated financial statements for the three and ~~six~~nine months ended ~~June~~September 30, 2023 which was effected through the Company’s filing of this Amendment.

This material weakness contributed to material misstatements in our consolidated financial statements for the period presented, which have been corrected and restated herein. Accordingly, management has concluded that this control deficiency constitutes a material weakness.
Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended ~~June~~September 30, 2023 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

3542
PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Information regarding legal proceedings is available in Note 1113 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, 2022, as filed with the SEC on March 22, 2023, 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. ~~There~~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, 2022. The Company’s business, operating results and financial condition could be adversely affected due to any of those risks.
We may fail to comply with the continued listing requirements of the Nasdaq Capital Market, such that our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.
Our common stock is listed for trading on the Nasdaq Capital Market. We must satisfy Nasdaq’s continued listing requirements, including, among other things, a minimum closing bid price requirement of $1.00 per share for 30 consecutive business days (the “Minimum Bid Price Requirement”). If a company trades for 30 consecutive business days below the $1.00 minimum closing bid price requirement, Nasdaq will send a deficiency notice to the company advising that it has been afforded a “compliance period” of 180 calendar days to regain compliance with the applicable requirements. We received such notice on September 27, 2023 and thus risk delisting unless we are able to regain compliance in a timely fashion.
In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have a grace period of 180 calendar days, or until March 25, 2024, to regain compliance with the Minimum Bid Price Requirement. Compliance can be achieved automatically and without further action if the closing bid price of our stock is at or above $1.00 for a minimum of 10 consecutive business days at any time during the 180-day compliance period, in which case Nasdaq will notify us of our compliance and the matter will be closed. If, however, we do not achieve compliance with the Minimum Bid Price Requirement by March 25, 2024, we may be eligible for additional time to comply. In order to be eligible for such additional time, we will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the Minimum Bid Price Requirement, and must notify Nasdaq in writing of our intention to cure the deficiency during the second compliance period. There can be no assurance that we will regain compliance with the Minimum Bid Price Requirement, that we will maintain compliant with other Nasdaq listing requirements or that we will be granted a second compliance period.
A delisting of our common stock from Nasdaq could materially reduce the liquidity of our common stock and result in a corresponding material reduction in the price of our common stock. In addition, delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, employees and fewer business development opportunities.
43
We conduct certain of our operations in Israel. Conditions in Israel, including the recent attack by Hamas and other terrorist organizations from the Gaza Strip 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.
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 Force (the “IDF”), the national military of Israel, is a conscripted military service, subject to certain exceptions. Several of our employees are subject to military service in the IDF and have been, or may be, called to serve. 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.
It is currently not possible to predict the duration or severity of the ongoing conflict or its effects on our business, operations and financial conditions. The ongoing conflict is rapidly evolving and developing, and could disrupt certain of our business and operations, among others.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

Item 5. Other Information

None.

3644

Item 6. Exhibits

Exhibits required by Item 601 of Regulation S-K

No. Description
(10) Material Contracts
10.1 ~~Amendment No. 1 to Unit~~Securities Purchase Agreement, dated ~~as of May 5,~~August 31, 2023, by and among ~~Orgenesis Inc., Morgenesis LLC~~the Company and ~~MM OS Holdings, L.P.~~a certain investor (incorporated by reference to an exhibit to our current report on Form 8-K, filed on ~~May 10,~~September 1, 2023).
10.2 ~~Amendment No. 2 to Unit Purchase~~Convertible Loan Agreement dated ~~as of June 30,~~September 29, 2023, by and among ~~Orgenesis Inc., Morgenesis LLC~~the Borrower and ~~MM OS Holdings, L.P,~~Sai Traders (incorporated by reference to an exhibit to our current report on Form 8-K, filed on ~~July 7,~~October 5, 2023).
~~10.3~~ Amendment No. 1 to Second Amended and Restated Limited Liability Company Agreement of Morgenesis LLC, (incorporated by reference to an exhibit to our current report on Form 8-K, filed on July 7, 2023).
(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 XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

* Filed herewith.

3745

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:
~~By:~~
/s/ Vered Caplan
Vered Caplan
President & Chief Executive Officer
(Principal Executive Officer)
Date: April 15, 2024

/s/ Victor Miller
Victor Miller

Chief Financial Officer, Treasurer and Secretary
(Principal Financial Officer and Principal Accounting Officer)
Date: April 15, 2024

3846

	June 30, 2023			June 30, 2022
	Six Months Ended
	June 30, 2023			June 30, 2022
	(As Restated)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(54,570	)	$	(9,489	)
Adjustments required to reconcile net loss to net cash used in operating activities:
Stock-based compensation		311			500
Capital gain, net		-			(5	)
Loss from deconsolidation of Octomera		5,343			-
Share in losses (income) of associated companies, net		(1	)		915
Depreciation and amortization expenses		1,175			975
Credit loss on convertible loan receivable		2,688			-
Effect of exchange differences on inter-company balances		214			142
Net changes in operating leases		(67	)		(33	)
Interest expenses accrued on loans and convertible loans		300			495
Loss from extinguishment in connection with convertible loan restructuring		283			-
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable		30,144			(3,724	)
Decrease (increase) in inventory		(389	)		4
Decrease in other assets		4			17
Decrease (increase) in prepaid expenses and other accounts receivable		(1,857	)		435
Increase (decrease) in accounts payable		2,891			(923	)
Increase in accrued expenses and other payables		245			1,171
Increase in employee and related payables		227			135
Increase in contract liabilities		36			10
Change in advance payments and receivables on account of grant, net		(140	)		169
Change in deferred taxes, net		9			-
Net cash used in operating activities	$	(13,154	)	$	(9,206	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Repayment of convertible loan to related party partners		-			138
Increase in loan to associates entities		-			(2,197	)
Repayment of loan granted		-			782
Sale of property and equipment		-			68
Purchase of property, plant and equipment		(1,796	)		(4,352	)
Cash acquired from acquisition of Mida		-			702
Impact to cash resulting from deconsolidation (see note 3)		(973	)		-
Investment in long-term deposits		(33	)		(4	)
Net cash used in investing activities	$	(2,802	)	$	(4,863	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of shares and warrants (in 2022 due to exercise of options) net of transaction costs		3,341			6
Proceeds from issuance of convertible loans		5,485			9,150
Proceeds from transaction with redeemable non-controlling interest that do not acquire control of a subsidiary, see note 3		5,000			-
Proceeds from receipts on account of shares and warrants to be allotted		-			2,175
Repayment of convertible loans and convertible bonds		(3,000	)		(416	)
Repayment of short and long-term debt		(30	)		(9	)
Net cash provided by financing activities	$	10,796		$	10,906

NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	$	(5,160	)	$	(3,163	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH		18			(51	)

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD		6,369			5,974

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	1,227		$	2,760

SUPPLEMENTAL NON-CASH FINANCING AND INVESTING ACTIVITIES
Right-of-use assets obtained in exchange for new operation lease liabilities	$	753		$	-
Increase (decrease) in accounts payable related to purchase of property, plant and equipment	$	14		$	(354	)
Issuance of common stocks for the acquisition of Mida	$	-		$	100
Extinguishment in connection with convertible loan restructuring	$	287		$	-

CASH PAID DURING THE YEAR FOR:
Interest		785			67

										As Originally Reported			Adjustments			As Restated
	June 30, 2023									September 30, 2023
	As Originally Reported			Adjustments			As Restated			As Originally Reported			Adjustments			As Restated
	(In thousands)									(In thousands)
Convertible loan receivable	$	2,762		$	(2,762	)	$	-		$	2,799		$	(2,799	)	$	-
Total Current Assets		9,295			(2,762	)		6,533			8,776			(2,799	)		5,977
Equity investees		31,484			(31,443	)		41			22,509			(22,478	)		31
Goodwill		3,703			(2,492	)		1,211			3,703			(2,492	)		1,211
Total non-current assets		45,472			(33,935	)		11,537			36,523			(24,970	)		11,553
Total Assets		54,767			(36,697	)		18,070			45,299			(27,769	)		17,530
Accumulated deficit		(129,577	)		(36,697	)		(166,274	)		(142,230	)		(27,769	)		(169,999	)
Equity attributable to Orgenesis Inc.		23,965			(36,697	)		(12,732	)		12,397			(27,769	)		(15,372	)
Total Equity		23,965			(36,697	)		(12,732	)		12,397			(27,769	)		(15,372	)
Total Liabilities, redeemable Non-Controlling Interest and Equity		54,767			(36,697	)		18,070			45,299			(27,769	)		17,530

	Six months ended June 30, 2023
	As Originally Reported			Adjustments			As Restated
	(In thousands)
Cash Flow from Operating Activities:
Net loss	$	(7,922	)	$	(46,648	)	$	(54,570	)
Loss (profit) from deconsolidation of Octomera		(411	)		5,754			5,343
Credit losses on convertible loan receivable		-			2,688			2,688
Effect of exchange differences on inter-company balances		237			(23	)		214
Interest expenses accrued on loans and convertible loans		226			74			300
Decrease (increase) in accounts receivable		(8,011	)		38,155			30,144

	Nine months ended September 30, 2023
	As Originally Reported			Adjustments			As Restated
	(In thousands)
Cash Flow from Operating Activities:
Net loss	$	(20,575	)	$	(37,720	)	$	(58,295	)
Loss (profit) from deconsolidation of Octomera		(411	)		5,754			5,343
Share in net loss of associated companies		9,517			(8,965	)		552
Credit loss on convertible loan receivable		-			2,688			2,688
Effect of exchange differences on inter-company balances		129			(23	)		106
Interest expenses accrued on loans and convertible loans		769			111			880
Decrease (increase) in accounts receivable		(8,076	)		38,155			30,079

Date	Investing party	Amendment #		Amount		Class A Preferred units obtained
May 5, 2023	MM		1	$	5,000		500,000
June 30, 2023	MM		2	$	1,000		100,000
August 22, 2023	MM		3	$	100		10,000
August 29, 2023	Company		4	$	543		54,310
September 6, 2023	MM		5	$	100		10,000
September 13, 2023	MM		6	$	150		15,000
September 28, 2023	MM		7	$	150		15,000
October 12, 2023	Company		8	$	117		11,700

	(in thousands)
	(As Restated)
Fair value of the retained interest in Octomera	$	-
Net assets deconsolidated		4,959
Release of translation adjustment		384
Net loss	$	5,343

	(in thousands)
ASSETS:
~~ASSETS:~~
Cash and cash equivalents		~~973~~
~~Other current assets~~		~~9,087~~
~~Non-current assets~~		~~31,935~~
~~TOTAL ASSETS~~		~~41,995~~

~~LIABILITIES:~~
~~Current liabilities~~		~~6,566~~
~~Long-term liabilities~~		~~2,313~~
~~TOTAL LIABILITIES~~		~~8,879~~

~~REDEEMABLE NON-CONTROLLING INTEREST~~		~~26,797~~
		973
~~NON-CONTROLLING INTEREST~~Other current assets		~~1,360~~ 9,087
Non-current assets		31,935
TOTAL ASSETS		41,995

LIABILITIES:
Current liabilities		6,566
Long-term liabilities		2,313
TOTAL LIABILITIES		8,879
REDEEMABLE NON-CONTROLLING INTEREST		26,797
NON-CONTROLLING INTEREST		1,360
NET ASSETS DECONSOLIDATED		(4,959	)

	Three-Months Ended (As Restated)
	(in thousands)
Total revenue	$	29
Gross loss	$	2,198
Net loss	$	8,721

	Octomera			Therapies			Eliminations			Consolidated
	(in thousands)												Octomera			Therapies			Eliminations			Consolidated
Revenues	$	15		$	240		$	-		$	255		$	44			350		$	(29	)	$	365
Revenues from related party		-			-			-			-			-			-			-			-
Total revenues											255												365
Cost of revenues*		(5,084	)		(398	)		-			(5,482	)		(6,959	)		(531	)		1,874			(5,616	)
Gross profit		(5,069	)		(158	)		-			(5,227	)		(6,915	)		(181	)		1,845			(5,251	)
Cost of development services and research and development expenses*		(4,501	)		(2,051	)		-			(6,552	)		(6,828	)		(2,830	)		2,327			(7,331	)
Operating expenses*		(27,990	)		(3,722	)		-			(31,712	)		(31,921	)		(4,962	)		3,930			(32,953	)
Share in net loss of associated companies														-			(10	)		(542	)		(552	)
Loss from deconsolidation of Octomera		-			-			(5,343	)		(5,343	)		-			-			(5,343	)		(5,343	)
Other income, net		2			-			-			2			2			2			-			4
Depreciation and amortization		(779	)		(396	)		-			(1,175	)		(1,294	)		(589	)		517			(1,366	)
Credit loss on convertible loan receivable														-			(2,688	)		-			(2,688	)
Loss from extinguishment in connection with convertible loan		-			(283	)		-			(283	)		-			(283	)		-			(283	)
Credit losses on convertible loan receivable		-			(2,688	)		-			(2,688	)
Financial Expenses, net		(495	)		(879	)		1			(1,373	)		(587	)		(1,425	)		94			(1,918	)
Share in net income of associated companies		-			1			-			1
Loss before income taxes	$	(38,832	)	$	(10,176	)	$	(5,342	)	$	(54,350	)
Income (loss) before income taxes													$	(47,543	)	$	(12,966	)	$	2,828		$	(57,681	)

Principal Amount	Principal Amount	Issuance Date		Current Interest Rate			Current Maturity		Current Exercise Price		Principal Amount		Issuance Date (Year)		Current Interest Rate %			Current Maturity (Year)		Current Conversion Price $
(in thousands)		(Year)		%			(Year)		$
Convertible Loans Outstanding as of June 30, 2023
Convertible Loans Outstanding as of September 30, 2023											Convertible Loans Outstanding as of September 30, 2023
$	750		2018		10	%		2026		2.50	750			2018		10	%		2026		2.50
	1,500		2019		10	%		2026		7.00	1,500			2019		10	%		2026		7.00
	100		2019		8	%		2023		2.50	100			2019		8	%		2023		2.50
	5,000		2019		10	%		2026		2.50	5,000			2019		10	%		2026		2.50
	100		2020		8	%		2023		7.00	100			2020		8	%		2023		7.00
	5,000		2022		10	%		2026		2.50	5,000			2022		10	%		2026		2.50
	1,150		2022		6	%		2023		4.50	1,150	**		2022		6	%		2023		4.50
	5,000		2023		8	%		2026		2.46	5,000			2023		8	%		2026		2.46
	485		2023		8	%		2024		-*	660			2023		8	%		2024		-	*
$	19,085										19,260

Convertible Loans Outstanding as of December 31, 2022	Convertible Loans Outstanding as of December 31, 2022						Convertible Loans Outstanding as of December 31, 2022

$	750	2018	2	%	2023	7.00	750	2018	2	%	2023	7.00
	1,600	2019	8	%	2024	7.00	1,600	2019	8	%	2024	7.00
	5,000	2019	6	%	2023	7.00	5,000	2019	6	%	2023	7.00
	100	2020	8	%	2023	7.00	100	2020	8	%	2023	7.00
	8,000	2022	10	%	2024	2.5	8,000	2022	10	%	2024	2.50
	1,150	2022	6	%	2023	4.5	1,150	2022	6	%	2023	4.50
$	16,600						16,600

	During the Period from January 1, 2023 to June 30, 2023
Value of one common share	$	1.36
Dividend yield		0	%
Expected stock price volatility		70	%
Risk free interest rate		3.91	%
Expected term (years)		5.56

	During the Period from January 1, 2023 to September 30, 2023
Value of one common share	$	0.58-$1.36
Dividend yield		0	%
Expected stock price volatility		70%-78	%
Risk free interest rate		3.91%-4.28	%
Expected term (years)		5.56-6.06

	June 30, 2023			June 30, 2022		June 30, 2023		June 30, 2022
	Three Months Ended					Six Months Ended				September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
	June 30, 2023			June 30, 2022		June 30, 2023		June 30, 2022		Three Months Ended				Nine Months Ended
	(in thousands, except per share data)									September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Basic and diluted:
Net loss attributable to Orgenesis Inc.	$	25,543		$	5,427	$	45,013	$	9,436	$	3,725	$	1,356	$	48,738	$	10,792
Adjustment of redeemable non-controlling interest to redemption amount		(3,671	)		-		-		-
Net loss attributable to Orgenesis Inc. for loss per share	$	21,872		$	5,427	$	45,013	$	9,436
Weighted average number of common shares outstanding		28,603,597			24,820,756		27,546,229		24,711,462		30,022,591		25,403,907		28,680,777		24,944,814
Net loss per share	$	0.76		$	0.22	$	1.63	$	0.38	$	0.12	$	0.05	$	1.70	$	0.43

	1)	the Company sub-licensed certain of its therapies to Sub-licensee in return for royalties on future sales and payments upon the successful completion of certain milestones;

	2)	subject to the fulfilment certain conditions and milestones, none of which have been fulfilled to date, the Sub-licensee Owner granted the Company a call option to purchase his interests in Sub-licensee at a valuation to be determined by a third-party valuation firm of not less than $8,000 unless agreed otherwise by the parties to the option; and

	3)	subject to the fulfilment of certain conditions and milestones, none of which have been fulfilled to date, the Sub-licensee Owner was granted a put option to cause the Company to purchase his equity interest in Sub-licensee at a valuation to be determined by a third-party valuation firm of not less than $8,000 unless agreed otherwise by the parties to the option.

●	Koligo Therapeutics, Inc., a Kentucky corporation, which is a regenerative medicine company, specializing in developing personalized cell therapies. It is currently focused on commercializing its metabolic pipeline via the POCare Network throughout the United States and in international markets.

●	Orgenesis CA, Inc. a Delaware corporation, which is currently focused on development of technologies and therapies in California.

●	Orgenesis Belgium SRL which is currently focused on product development. Since its incorporation, the subsidiary has been awarded grants in excess of ~~18 million~~18,000 Euro from the Walloon region for several projects (DGO6 grants).

●	Orgenesis Switzerland Sarl, which is currently focused on providing group management services.
●
●	MIDA Biotech BV, which is currently focused on research and development activities, was granted a ~~4 million~~4,000 Euro grant under the European Innovation Council Pathfinder Challenge Program which supports cutting-edge science and technology. The grant is for technologies enabling the production of autologous induced pluripotent stem cells (iPSCs) using microfluidic technologies and artificial intelligence (AI).
	Orgenesis Italy SRL which is currently focused on R&D activities.

●	Orgenesis Ltd., an Israeli subsidiary which is focused on R&D and a provider of R&D management services for out licenced products. Israel asis a hub for biotech research and pioneers in this field.

●	Orgenesis Austria GmbH, an Austrian subsidiary, which is focused on R&D activities.

●●	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 design 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; and

●	Contract Research Organization services for clinical trials.

●	Orgenesis Maryland LLC, which is the center of POCare Services activity in North America and is currently focused on setting up and providing POCare Services and cell-processing services to the POCare Network.

●	Tissue Genesis International LLC, a Texas limited liability company currently focused on development of our technologies and therapies.

●	Orgenesis Services SRL, which is currently focused on expanding our POCare Network in Belgium.

●	Orgenesis Germany GmbH, which is currently focused on providing CRO services to the POCare Network.

●	Orgenesis Korea Co. Ltd., which is a provider of cell-processing and pre-clinical services in Korea. Octomera owns 94.12% of the Korean Subsidiary.

●	Orgenesis Biotech Israel Ltd., which is a provider of process development and cell-processing services in Israel.

●	Orgenesis Australia PTY LTD, which was transferred to Octomera in January 2023 and is currently focused on the development of our POC Network in Australia.

●	Theracell Laboratories private company (“Theracell Labs”), a Greek company currently focused on expanding our POCare Network.

●	ORGS POC CA Inc, incorporated in 2023, which is currently focussed on expanding our POCare Network in California.

	Three-Months Ended
	June 30, 2023 (As Restated)			June 30, 2022			Three-Months Ended
	(in thousands)						September 30, 2023 (As Restated)			September 30, 2022
Revenues	$	113		$	6,699		$	110		$	7,841
Revenues from related party		-			502			-			147
Total revenues		113			7,201			110			7,988
Cost of revenues		3,232			1,063			139			983
Gross profit		(3,119	)		6,138			(29	)		7,005
Cost of development services and research and development expenses		3,527			7,838			808			3,683
Amortization of intangible assets		208			229			153			225
Selling, general and administrative expenses included credit losses $14,878 for the three months ended June 30, 2023		18,216			2,803
Selling, general and administrative expenses								1,245			3,104
Share in net loss of associated company								553			274
Operating loss		25,070			4,732			2,788			281
Loss from deconsolidation of Octomera		5,343			-
Other income, net		-			(8	)		(2	)		2
Financial expenses, net		692			389			-			1,100
Share in net loss of associated company		(3	)		368
Loss before income taxes		31,102			5,481			-			1,383
Tax expense		91			11			3,331			25
Net loss	$	31,193		$	5,492		$	394		$	1,408

	Three-Months Ended
	June 30, 2023		June 30, 2022
	(in thousands)
Salaries and related expenses	$	1,091	$	486
Stock-based compensation		1		13
Professional fees and consulting services		1,071		21
Raw materials		482		71
Depreciation expenses, net		236		94
Other expenses		351		378
Total	$	3,232	$	1,063

	Six Months Ended
	June 30, 2023 (As Restated)		June 30, 2022		Nine Months Ended
	(in thousands)				September 30, 2023 (As Restated)		September 30, 2022
Salaries and related expenses	$	2,261	$	1,825	$	2,520	$	2,589
Stock-based compensation		144		175		197		251
Accounting and legal fees		2,344		1,919		2,804		3,355
Professional fees		886		504		1,020		650
Rent and related expenses		114		110		127		170
Business development		361		251		421		365
Depreciation expenses, net		32		21		36		36
Other general and administrative expenses		25,602		849		25,864		1,342
Total	$	31,744	$	5,654	$	32,989	$	8,758

	Six Months Ended
	June 30, 2023 (As Restated)		June 30, 2022
	(in thousands)
Credit loss on convertible loans	$	2,688	$	-

	As of
	June 30, 2023			December 31, 2022
	(As Restated)
	(in thousands)
Current assets	$	6,533		$	46,318
Current liabilities		12,711			15,910
Working capital	$	(6,178	)	$	30,408

●	An increase in the Net Loss for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022, for the reasons explained above.

●	The deconsolidation of Octomera. The majority of accounts receivable and inventory as at December 31, 2023 were part of Octomera.

●	An increase in prepaid expenses and other accounts receivable in the amount of $3,073 mainly as a result of prepayments of development contracts.

●	An increase in accounts payable not related to Octomera, as a result of our not having sufficient funds to pay vendors.

No.		Description
(10)		Material Contracts
10.1		~~Amendment No. 1 to Unit~~Securities Purchase Agreement, dated ~~as of May 5,~~August 31, 2023, by and among ~~Orgenesis Inc., Morgenesis LLC~~the Company and ~~MM OS Holdings, L.P.~~a certain investor (incorporated by reference to an exhibit to our current report on Form 8-K, filed on ~~May 10,~~September 1, 2023).
10.2		~~Amendment No. 2 to Unit Purchase~~Convertible Loan Agreement dated ~~as of June 30,~~September 29, 2023, by and among ~~Orgenesis Inc., Morgenesis LLC~~the Borrower and ~~MM OS Holdings, L.P,~~Sai Traders (incorporated by reference to an exhibit to our current report on Form 8-K, filed on ~~July 7,~~October 5, 2023).
~~10.3~~		Amendment No. 1 to Second Amended and Restated Limited Liability Company Agreement of Morgenesis LLC, (incorporated by reference to an exhibit to our current report on Form 8-K, filed on July 7, 2023).
(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		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

ORGENESIS INC.

By:
~~By:~~
/s/ Vered Caplan
	Vered Caplan
	President & Chief Executive Officer
	(Principal Executive Officer)
Date:	April 15, 2024

	/s/ Victor Miller
	Victor Miller
	Chief Financial Officer, Treasurer and Secretary
	(Principal Financial Officer and Principal Accounting Officer)
Date:	April 15, 2024