Orgenesis Inc. [ORGS] Filings

10-Q 1 form10-q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the Quarterly Period Ended June 30, 2024

☐	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 ☒

As of August 8, 2024, there were 46,925,906 shares of registrant’s common stock outstanding.

ORGENESIS INC.

FORM 10-Q

FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

TABLE OF CONTENTS

		Page

PART I - FINANCIAL INFORMATION		3

ITEM 1	Financial Statements (unaudited)	3

	Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	3

	Condensed Consolidated Statements of Loss and Comprehensive Loss for the Three and Six Months Ended June 30, 2024 and 2023	5

	Condensed Consolidated Statements of Changes in Equity for the Three and Six Months Ended June 30, 2024 and 2023	6

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023	10

	Notes to Condensed Consolidated Financial Statements	11

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	36

ITEM 4.	Controls and Procedures	36

PART II - OTHER INFORMATION		37

ITEM 1.	Legal Proceedings	37

ITEM 1A.	Risk Factors	37

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40

ITEM 3.	Defaults Upon Senior Securities	40

ITEM 4.	Mine Safety Disclosures	40

ITEM 5.	Other Information	40

ITEM 6.	Exhibits	41

SIGNATURES		42

PART I –FINANCIAL INFORMATION

Item 1. Financial Statements

ORGENESIS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollars in thousands)

(Unaudited)

	June 30, 2024		December 31, 2023
	As of
	June 30, 2024		December 31, 2023
Assets

CURRENT ASSETS:

Cash and cash equivalents	$	77	$	837
Restricted cash		1,079		642
Accounts receivable, net of credit losses of $29,234 as of June 30, 2024 ($0 as of December 31, 2023)		240		88
Prepaid expenses and other receivables		952		2,017
Receivable from related parties		-		458
Inventory		-		34
Total current assets		2,348		4,076

NON-CURRENT ASSETS:

Deposits	$	249	$	38
Investments to associates		8		8
Property, plant and equipment, net		15,901		1,475
Intangible assets, net		8,724		7,375
Operating lease right-of-use assets		1,805		351
Goodwill		1,211		1,211
Other assets		331		18
Total non-current assets		28,229		10,476
TOTAL ASSETS	$	30,577	$	14,552

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

ORGENESIS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)

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

(Unaudited)

	As of
	June 30, 2024			December 31, 2023
Liabilities net of (Capital Deficiency)

CURRENT LIABILITIES:
Accounts payable	$	10,717		$	6,451
Accounts payable related Parties		2,696			133
Accounts payable		2,696			133
Advance payments from Germfree (See note 11a)		6,720			-
Accrued expenses and other payables		2,789			2,218
Income tax payable		767			740
Employees and related payables		1,634			1,079
Other payable related parties		-			52
Advance payments on account of grant		2,733			2,180
Short-term loans		1,186			650
Current maturities of finance leases		62			18
Current maturities of operating leases		465			216
Short-term and current maturities of convertible loans		1,931			2,670
TOTAL CURRENT LIABILITIES		31,700			16,407

LONG-TERM LIABILITIES:
Non-current operating leases	$	1,318		$	96
Loans payable		2,762			-
Convertible loans		5,296			18,967
Retirement benefits obligation		96			-
Finance leases		1			4
Contingent consideration (see note 4)		4,825			-
Other long-term liabilities		371			61
TOTAL LONG-TERM LIABILITIES		14,669			19,128
TOTAL LIABILITIES		46,369			35,535

CAPITAL DEFICIENCY:
Common stock of $0.0001 par value: Authorized at June 30, 2024 and December 31, 2023: 145,833,334 shares; Issued at June 30, 2024 and December 31, 2023: 47,212,473 and 32,163,630 shares, respectively; Outstanding at June 30, 2024 and December 31, 2023: 46,925,906 and 31,877,063 shares, respectively	$	5		$	3
Additional paid-in capital		180,752			156,837
Accumulated other comprehensive income		302			65
Treasury stock 286,567 shares as of June 30, 2024 and December 31, 2023		(1,266	)		(1,266	)
Accumulated deficit		(195,291	)		(176,622	)
Equity attributable to Orgenesis Inc.		(15,498	)		(20,983	)
Non-controlling interest		(294	)		-
TOTAL CAPITAL DEFICIENCY		(15,792	)		(20,983	)
TOTAL LIABILITIES AND CAPITAL DEFICIENCY	$	30,577		$	14,552

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, 2024			June 30, 2023			June 30, 2024			June 30, 2023
		Three Months Ended						Six Months Ended
		June 30, 2024			June 30, 2023			June 30, 2024			June 30, 2023

Revenues	$	246		$	113		$	387		$	255
Cost of revenues		538			3,232			1,030			5,954
Gross profit		(292	)		(3,119	)		(643	)		(5,699	)
Cost of development services and research and development expenses		1,489			3,527			3,859			6,808
Amortization of intangible assets		226			208			379			415
Change in Contingent consideration		182			-			182			-
Selling, general and administrative expenses including credit losses of $2,725 for the six months ended June 30, 2024 and $(500) for the three months ended June 30, 2024 and $24,367 for the six months ended June 30, 2023 and $14,878 for the three months ended June 30, 2023		2,061			18,216			8,117			31,744
Operating loss		4,250			25,070			13,180			44,666
Loss from deconsolidation of OBI and Octomera (see note 4)		-			5,343			66			5,343
Other income, net		(8	)		-			(8	)		(2	)
Credit loss on convertible loan receivable		-			-			-			2,688
Loss from extinguishment in connection with convertible loan		-			-			141			283
Financial expenses, net		815			692			1,667			1,373
Convertible loans induced conversion expenses		4,304			-			4,304			-
Share in net loss profit of associated companies		-			(3	)		-			(1	)
Loss before income taxes		9,361			31,102			19,350			54,350
Tax expenses		5			91			21			220
Net loss		9,366			31,193			19,371			54,570
Net loss attributable to non-controlling interests (including redeemable)		(462	)		(5,650	)		(702	)		(9,557	)
Net loss attributable to Orgenesis Inc.	$	8,904		$	25,543		$	18,669		$	45,013
Loss per share:
Basic and diluted	$	0.23		$	0.76		$	0.52		$	1.63

Weighted average number of shares used in computation of Basic and Diluted loss per share:
Basic and diluted		38,860,727			28,603,597			35,979,567			27,546,229

Comprehensive loss:
Net loss	$	9,366		$	31,193		$	19,371		$	54,570
Other comprehensive loss (income) - translation adjustments		(176	)		11			(237	)		52
Release of translation adjustment due to deconsolidation of Octomera		-			(384	)		-			(384	)
Comprehensive loss		9,190			30,820			19,134			54,238
Comprehensive loss attributed to non-controlling interests		(462	)		(5,650	)		(702	)		(9,557	)
Comprehensive loss attributed to Orgenesis Inc.	$	8,728		$	25,170		$	18,432		$	44,681

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

ORGENESIS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

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

(Unaudited)

	Number		Par Value		Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)		Treasury Shares			Accumulated Deficit			Equity Attributed to Orgenesis Inc.			Non- Controlling Interest			Total
	Common Stock
	Number		Par Value		Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)		Treasury Shares			Accumulated Deficit			Equity Attributed to Orgenesis Inc.			Non- Controlling Interest			Total
Balance at January 1, 2024		31,877,063	$	3	$	156,837	-	$	65	$	(1,266	)	$	(176,622	)	$	(20,983	)	$	-		$	(20,983	)
Changes during the six months ended June 30, 2024:
Stock-based compensation		-		-		215			-		-			-			215			-			215
RSUs vested		82,996		-*		(*)			-		-			-			(*)			-			(*)
Exercise of options		25,000		-*		13	-		-		-			-			13			-			13
Issuance of shares to service providers		664,000		-*		690			-		-			-			690			-			690
Exchange of convertible loans for equity		11,829,128		1		20,310			-		-			-			20,311			-			20,311
Issuance of warrants with respect to convertible loans		-		-		31			-		-			-			31			-			31
Issuance of shares and warrants		2,422,719		-*		2,496			-		-			-			2,496			-			2,496
NCI arising from Octomera reconsolidation		-		-		-			-		-			-			-			408			408
Issuance of shares due to exercise of warrants		25,000		-*		19			-		-			-			20			-			20
Extinguishment in connection with convertible loan restructuring		-				141			-		-			-			141			-			141
Comprehensive income (loss) for the period		-		-		-			237		-			(18,669	)		(18,432	)		(702	)		(19,134	)
Balance at June 30, 2024		46,925,906	$	5	$	180,752	-	$	302	$	(1,266	)	$	(195,291	)	$	(15,498	)	$	(294	)	$	(15,792	)

Represents an amount lower than $1 thousand.

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

ORGENESIS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

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

(Unaudited)

	Number		Par Value		Additional Paid-in Capital				Accumulated Other Comprehensive Income (Loss)			Treasury Shares			Accumulated Deficit			Equity Attributed to Orgenesis Inc.			Non- Controlling Interest			Total
	Common Stock
	Number		Par Value		Additional Paid-in Capital				Accumulated Other Comprehensive Income (Loss)			Treasury Shares			Accumulated Deficit			Equity Attributed to Orgenesis Inc.			Non- Controlling Interest			Total
Balance at January 1, 2023		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:
Stock-based compensation		-		-		311				-			-			-			311			-			311
Issuance of shares and warrants net of issuance costs		1,947,368		-*		3,341				-			-			-			3,341			-			3,341
Issuance of shares due to exercise of warrants		973,684		-*		-		-		-			-			-			-			-			-
Issuance of warrants with respect to convertible loans		-		-		449				-			-			-			449			-			449
Extinguishment in connection with convertible loan restructuring		-		-		287				-			-			-			287			-			287
Deconsolidation of Octomera		-		-		9,406				384			-			-			9,790			(1,360	)		8,430
Adjustment to redemption value of redeemable non-controlling interest		-		-		(9,406	)			-			-			-			(9,406	)		-			(9,406	)
Comprehensive loss for the period		-		-		-				(52	)		-			(45,013	)		(45,065	)		(150	)		(45,215	)
Balance at June 30, 2023		28,466,807	$	3	$	154,743		-	$	62		$	(1,266	)	$	(166,274	)	$	(12,732	)	$	-		$	(12,732	)

Represents an amount lower than $1 thousand.

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

ORGENESIS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

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

(Unaudited)

	Number		Par Value		Additional Paid-in Capital		Receipts on Account of Shares to be Allotted			Accumulated Other Comprehensive Income		Treasury Shares			Accumulated Deficit			Equity Attributed to Orgenesis Inc.			Non- Controlling Interest			Total
	Common Stock
	Number		Par Value		Additional Paid-in Capital		Receipts on Account of Shares to be Allotted			Accumulated Other Comprehensive Income		Treasury Shares			Accumulated Deficit			Equity Attributed to Orgenesis Inc.			Non- Controlling Interest			Total
Balance at April 1, 2024		34,338,782	$	4	$	159,650	$	155		$	126	$	(1,266	)	$	(186,386	)	$	(27,717	)	$	168		$	(27,549	)
Changes during the three months ended June 30, 2024:
Stock-based compensation		-		-		129		-			-		-			-			129			-			129
RSUs vested		82,996		-*		(*)		-			-		-			-			(*)			-			(*)
Exercise of options		25,000		-*		13		-			-		-			-			13			-			13
Issuance of shares to service providers		500,000		-*		464		-			-		-			-			464			-			464
Exchange of convertible loans for equity		11,829,128		1		20,310		-			-		-			-			20,311			-			20,311
Issuance of warrants with respect to convertible loans		-		-		31		-			-		-			-			30			-			30
Issuance of shares and receipts on account of shares and warrants to be allotted		150,000		-*		155		(155	)		-		-			-			-			-			-
Comprehensive income (loss) for the period		-		-		-		-			176		-			(8,904	)		(8,728	)		(462	)		(9,190	)
Balance at June 30, 2024		46,925,906	$	5	$	180,752	$	-		$	302	$	(1,266	)	$	(195,291	)	$	(15,498	)	$	(294	)	$	(15,792	)

Represents an amount lower than $1 thousand.

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

ORGENESIS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

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

(Unaudited)

	Number		Par Value		Additional Paid-in Capital				Accumulated Other Comprehensive Income			Treasury Shares			Accumulated Deficit			Equity Attributed to Orgenesis Inc.			Non- Controlling Interest			Total
	Common Stock
	Number		Par Value		Additional Paid-in Capital				Accumulated Other Comprehensive Income			Treasury Shares			Accumulated Deficit			Equity Attributed to Orgenesis Inc.			Non- Controlling 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		-		-		152		-		-			-			-			152			-			152
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 (loss) 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	)

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

ORGENESIS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. Dollars in thousands)

(Unaudited)

	June 30, 2024			June 30, 2023
	Six Months Ended
	June 30, 2024			June 30, 2023

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss	$	(19,371	)	$	(54,570	)
Adjustments required to reconcile net loss to net cash used in operating activities:

Stock-based compensation		936			311
Convertible loans induced conversion expenses		4,304			-
Loss from deconsolidation of OBI and Octomera		66			5,343
Share in income of associated companies, net		-			(1	)
Depreciation and amortization expenses		1,087			1,175
Credit loss on convertible loan receivable		-			2,688
Credit loss related to OBI		2,049			-
Effect of exchange differences on inter-company balances		(48	)		214
Net changes in operating leases		24			(67	)
Change in Contingent consideration		182			-
Interest expenses accrued on loans and convertible loans		1,192			300
Loss from extinguishment in connection with convertible loan restructuring		141			283

Changes in operating assets and liabilities:
Accounts receivable		(70	)		30,144
Prepaid expenses and other accounts receivable		1,592			(1,857	)
Inventory		34			(389	)
Other assets		(1	)		4
Change in related parties, net		(1	)		-
Accounts payable		(2,466	)		2,891
Accrued expenses and other payables		12			245
Employee and related payables		(8	)		123
Deferred taxes, net		(2	)		9
Net cash used in operating activities	$	(10,348	)	$	(13,154	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment		(205	)		(1,796	)
Cash acquired from acquisition of Octomera		139			-
Impact to cash resulting from deconsolidation of OBI		(5	)		-
Impact to cash resulting from deconsolidation of Octomera		-			(973	)
Investment in long-term deposits		2			(33	)
Net cash used in investing activities	$	(69	)	$	(2,802	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of shares and warrants		2,528			3,341
Proceeds from issuance of convertible loans		75			5,485
Proceeds from transaction with redeemable non-controlling interest that do not acquire control of a subsidiary		-			5,000
Repayment of convertible loans		-			(3,000	)
Repayment of short and long-term debt		(145	)		(30	)

Orgenesis Inc. [ORGS] Filings
10-Q	[2024-08-08]
10-Q	[2024-05-20]
10-K	[2024-04-15]
10-Q	[2023-11-13]
10-Q	[2023-08-10]
10-Q	[2023-05-10]
10-K	[2023-03-22]
10-Q	[2022-11-10]
10-Q	[2022-08-15]
10-Q	[2022-05-23]
10-K	[2022-03-30]
10-Q	[2021-11-04]
10-Q	[2021-08-05]
10-Q	[2021-05-06]
10-K	[2021-03-09]
10-Q	[2020-11-05]
10-Q	[2020-08-06]
10-Q	[2020-05-08]
10-K	[2020-03-09]
10-Q	[2019-11-07]
10-Q	[2019-08-08]
10-Q	[2019-05-08]
10-K	[2019-02-13]
10-Q	[2018-10-12]
10-Q	[2018-07-17]
10-Q	[2018-04-16]
10-K	[2018-02-28]
10-Q	[2017-10-16]
10-Q	[2017-07-24]
10-Q	[2017-04-19]
10-K	[2017-02-28]
10-Q	[2016-10-14]
10-Q	[2016-07-15]
10-Q	[2016-04-14]
10-K	[2016-02-29]
10-Q	[2015-10-15]
10-Q	[2015-07-15]
10-Q	[2015-04-14]
10-K	[2015-02-19]
10-Q	[2014-10-15]
10-Q	[2014-07-09]
10-Q	[2014-04-10]
10-K	[2014-02-19]
S-1	[2014-01-07]
10-Q	[2013-10-15]
10-Q	[2013-07-15]
10-Q	[2013-04-15]
10-K	[2013-02-15]
10-Q	[2012-10-15]
10-Q	[2012-06-25]
10-Q	[2012-04-20]
10-K	[2012-02-29]