Corporate Actions - The company implemented a 1-for-10 reverse stock split on September 20, 2024, retroactively adjusting all share and per share amounts in the financial statements [306]. - A 1-for-10 reverse stock split was implemented, adjusting the number of authorized shares to 14,583,333 [333]. - The company acquired 100% of the equity interests of Octomera on January 29, 2024, through a Unit Purchase Agreement, previously deconsolidated from financial statements [322]. - The company entered into an Asset Purchase Agreement with Broaden Bioscience for assets valued at up to $11,000,000, with a debt adjustment of $10,767,000 [331]. - An Asset Purchase Agreement with Theracell was established for an aggregate purchase price of $13,000,000, with a debt adjustment of $10,324,000 [332]. - An Asset Purchase and Strategic Collaboration Agreement with Germfree was signed on April 5, 2024, for the sale of five OMPULs for an aggregate purchase price of $8,340, with $6,720 paid as of December 31, 2024 [326]. Financial Performance - Revenues for the year ended December 31, 2024, were $1,035,000, representing a 95% increase from $530,000 in 2023 [336]. - The company reported an operating loss of $39,768,000 for 2024, compared to a loss of $53,636,000 in 2023 [336]. - Net loss for the year ended December 31, 2024 was $49,013, an improvement from a net loss of $64,918 in 2023 [355]. - The share in net loss of associated company decreased by 99% to $8,000 in 2024 from $734,000 in 2023 [344]. - The company incurred a loss from extinguishment of $5,422,000 in 2024, compared to $283,000 in 2023 [347]. - Financial expenses, net for the year ended December 31, 2024 were $4,508, representing an increase of 80% compared to $2,499 for 2023, primarily due to interest on new loan agreements [349]. - Convertible loans induced conversion expenses for 2024 were $4,304, compared to $0 for 2023, attributed to a charge from a debt equity conversion [350]. - Impairment expenses for 2024 were $18,338, significantly higher than $699 in 2023, due to impairments of goodwill, property, plant and equipment, and intangible assets [351]. - Tax expense for 2024 was $97, a decrease of 79% from $473 in 2023, mainly due to changes in tax treatment of research and experimentation expenditures [352]. Cost Management - Cost of revenues decreased by 69% to $1,928,000 in 2024 from $6,255,000 in 2023, primarily due to reduced costs in the Octomera segment [339]. - Total expenses for selling, general, and administrative costs decreased by 58% to $14,822,000 in 2024 from $35,134,000 in 2023 [341]. - The cost of development services and research and development expenses decreased by 9% to $9,622,000 in 2024 from $10,623,000 in 2023 [340]. Strategic Initiatives - The company plans to out-license therapies for market approval in preferred geographical regions, aiming to lower overall development costs [318]. - The company is expanding its pipeline of innovative therapies designed to optimize production platforms, targeting significantly lower production costs [313]. - The company is developing advanced therapies with the goal of entering into out-licensing agreements, addressing high costs associated with unique production facilities [315]. - The company is focused on partnerships with hospitals and research centers to supply products and develop therapies, leveraging its decentralized cell processing platform [311]. Financial Position - Current assets decreased by $3,315 from December 31, 2023 to December 31, 2024, primarily due to declines in cash and cash equivalents, prepaid expenses, and receivables [353]. - Current liabilities increased by $10,513 between December 31, 2023 and December 31, 2024, mainly due to increases in accounts payable and accrued expenses [354]. - As of December 31, 2024, the company had an accumulated deficit of $224,787 and cash and cash equivalents of approximately $0.1 million, raising substantial doubt about its ability to continue as a going concern [361]. - The company plans to raise additional capital to fund operations and repay outstanding loans, while exploring avenues to increase revenue and reduce capital expenditures [363]. Revenue Recognition - Revenue from POCare Cell processing is recognized either over time or at a point in time, with progress measured based on units produced [384]. - Revenue from hospital supplies is recognized when products and services are received by the customer [383]. Credit Losses - The company has adopted the Current Expected Credit Losses (CECL) standard effective January 1, 2023, to estimate losses from customer payment defaults [386]. - The allowance for estimated credit losses considers historical collection experience and current and future economic conditions [387]. - The company has not experienced significant credit losses in cash and cash equivalents, bank deposits, and certain receivables held with highly rated financial institutions [385].

Core Insights - Okogen Inc. has acquired the global intellectual property portfolio and development assets for ranpirnase from Orgenesis Inc., enhancing its lead ophthalmic program and laying the groundwork for expansion into additional antiviral indications [1][7]. Company Overview - Okogen Inc. is a biotechnology company focused on developing antiviral therapeutics targeting ocular infections, respiratory viruses, and emerging infectious diseases. Its lead candidate, OKG-0303, is aimed at treating acute infectious conjunctivitis [4]. Ranpirnase Details - Ranpirnase is a ribonuclease enzyme that disrupts viral replication by degrading intracellular RNA, creating a bottleneck in viral protein production. This mechanism offers a differentiated approach to antiviral development, potentially reducing resistance seen with traditional antivirals. Ranpirnase has been evaluated in clinical trials with over 1,000 patients, providing substantial safety and translational data for further development [5]. Development Strategy - The company is prioritizing the rapid advancement of its ranpirnase program, OKG-0303, which addresses a fragmented treatment landscape for acute infectious conjunctivitis. Okogen is also exploring ranpirnase as a potential antiviral countermeasure against high-consequence pathogens like Marburg and Sudan viruses, while conducting parallel research on respiratory viruses such as influenza and RSV [7].

Core Insights - Orgenesis' CD19 CAR-T therapy, ORG-101, demonstrated a complete response (CR) of 82% in adults and 93% in pediatric patients, with low incidence rates of severe Cytokine Release Syndrome (CRS) at 2% and 6% respectively [1][2] - Harley Street Healthcare Group plans to establish a Global Cancer Initiative to democratize advanced therapies and support further clinical development in collaboration with Orgenesis [1][6] Efficacy and Safety Data - The study revealed a complete response (CR) of 82% in adult patients and 93% in pediatric patients, with severe CRS incidence at 2% for adults and 6% for pediatric patients, indicating a favorable safety profile for ORG-101 compared to existing treatments [2] - CRS is a significant safety concern in conventional CAR-T therapies, and the low incidence in this study suggests a potential advantage for ORG-101 [2] Production and Cost Efficiency - Orgenesis is utilizing a GMP-Validated Platform for CAR-T therapy, which is adapted to a decentralized production model aimed at expediting capacity setup, enhancing production efficiency, and reducing treatment costs [3] - The decentralized approach is positioned as a cost-effective alternative to traditional CAR-T therapies produced in centralized facilities [4] Clinical Development Plans - The company is preparing to initiate a Phase 1/2 clinical multicenter study for ORG-101, starting at the General University Hospital of Patras in Greece, supported by an Enterprise Greece Grant [5] - Meetings have been held with regulatory bodies including the FDA, Israeli MOH, and the Paul-Ehrlich-Institute in Germany regarding ORG-101 [5] Strategic Vision - The CEO of Orgenesis emphasized the importance of combining positive clinical results with a decentralized production strategy to improve access and reduce costs for patients [6] - The Chief Visionary Officer of Harley Street Healthcare Group highlighted the initiative's goal to make cancer therapies more affordable and accessible globally, focusing on partnerships and biobanking [6]

Core Insights - Orgenesis Inc. has entered a strategic partnership with Harley Street Healthcare Group to enhance the development and commercialization of wellness and longevity therapies aimed at reducing lifestyle-related illnesses [1][5] Partnership Details - A joint venture (JV) will be established, with Orgenesis holding 49% and HSHG holding 51% [2] - The JV will focus on innovative health and wellness services, including personalized preventative care and regenerative therapies, under a "Health-Wellness-as-a-Service" (HWAAS) model [2] Product Launch Plans - The JV plans to introduce a range of wellness and longevity products by the end of 2024, including immune cell banking, aging therapies, preventative illness screening, and stem cell regenerative therapies [3] - Initial rollout will target regions such as the UK, UAE, MENA, Canada, ASEAN, the Balkans, Africa, Latin America, and the Indian subcontinent [3] Investment Commitment - HSHG has committed to invest up to $10 million over three years into Orgenesis and the joint venture [4] Leadership Perspectives - The CEO of Orgenesis highlighted the partnership as a significant milestone in expanding the company's presence in the global wellness market, aiming to redefine patient care and longevity [5] - The Founder of HSHG expressed enthusiasm for the collaboration, emphasizing a shared vision of enhancing health outcomes through innovative therapies [5] Company Background - Orgenesis is a global biotech company focused on unlocking the potential of cell and gene therapies since 2012, with a decentralized approach to processing introduced in 2020 [7] - The company aims to advance its therapies toward commercialization while partnering with industry stakeholders for broader access and better outcomes [7]

Core Viewpoint - Orgenesis Inc. is advancing its decentralized platform for cell and gene therapies (CGT) through its subsidiary Octomera, aiming to improve healthcare access and outcomes while reducing costs and production time [2][3]. Business Update - The company regained 100% ownership of Octomera, enhancing control over its operations and supporting the development of its proprietary therapeutic pipeline, including immune-oncology products [2]. - Orgenesis has formed a strategic partnership with Germfree to co-market its decentralized services, which will help accelerate the go-to-market strategy for its Orgenesis Mobile Processing Units and Labs (OMPULs) [3]. - The company has secured over $50 million in potential future grant funding to support its development activities, bolstered by the partnership with Germfree [3]. Financial Overview - For Q1 2024, Orgenesis reported revenue of $141,000, a slight decrease from $142,000 in Q1 2023 [11]. - The gross loss for the quarter was $351,000, significantly improved from a gross loss of $2.58 million in the same period last year [11]. - The net loss attributable to Orgenesis Inc. was $9.77 million, compared to a net loss of $19.47 million in Q1 2023 [12]. Investment and Shareholder Actions - The company received approximately $2.5 million in investments from accredited investors, including healthcare professionals [3]. - On May 21, 2024, shareholders agreed to exchange about $16 million of debt for 15.8 million shares of common stock, subject to Nasdaq compliance [3].

Core Insights - Orgenesis Inc. is advancing the commercialization of its decentralized platform through its subsidiary Octomera, which includes the deployment of Orgenesis Mobile Processing Units and Labs (OMPULs) to improve access to cell and gene therapies (CGT) [2][3] - The company regained full ownership of Octomera, enhancing its control over the subsidiary and supporting the development of its proprietary therapeutic pipeline, particularly in immune-oncology [2] - A strategic partnership with Germfree aims to co-market Orgenesis' decentralized services, leveraging Germfree's global network to accelerate market entry and focus on therapeutic development [3] Financial Performance - For Q1 2024, Orgenesis reported revenue of $141,000, a slight decrease from $142,000 in Q1 2023 [11] - The cost of revenues significantly decreased to $492,000 from $2.72 million in the same period last year, resulting in a gross loss of $351,000 compared to a gross loss of $2.58 million in Q1 2023 [11] - The operating loss for Q1 2024 was $8.93 million, down from $19.6 million in Q1 2023, indicating improved operational efficiency [11] Funding and Investments - The company secured approximately $2.5 million in investments from accredited investors, including healthcare professionals, during March and April 2024 [3] - Orgenesis has been awarded over $50 million in potential future grant funding to support its development activities, which will aid in advancing its therapeutic pipeline [3] Ownership and Shareholder Actions - On May 21, 2024, shareholders agreed to exchange approximately $16 million of debt for 15.8 million shares of common stock, demonstrating strong support for the company's strategic direction [3]

Financial Performance - Revenues for the three months ended March 31, 2024, were $141, a decrease of 1% compared to $142 for the same period in 2023[101] - Gross profit improved to a loss of $351, compared to a loss of $2,580 in the same quarter of 2023[100] - Operating loss for the quarter was $8,930, down from $19,596 in the prior year, indicating a reduction of approximately 54%[100] - Net loss for the three months ended March 31, 2024, was $10,005, compared to a net loss of $23,377 for the same period in 2023, representing a decrease of about 57%[100] - Net loss for Q1 2024 was $10,005, compared to a net loss of $23,377 in Q1 2023, indicating improved financial performance[114] Cost Management - Cost of revenues significantly decreased to $492 from $2,722 in the prior year, reflecting a reduction of approximately 82%[102] - Cost of revenues for Q1 2024 decreased by 82% to $492, compared to $2,722 in Q1 2023, primarily due to reduced activities in the Octomera segment[104] - Research and development expenses for Q1 2024 were $2,370, down 28% from $3,281 in Q1 2023, attributed to reduced activities in the Octomera segment[105] - Selling, general and administrative expenses for Q1 2024 were $6,056, a decrease of 55% from $13,528 in Q1 2023, mainly due to reduced salaries and legal fees[108] Asset and Liability Changes - Current assets decreased by $2,120 from December 31, 2023, to March 31, 2024, primarily due to a decline in cash and cash equivalents[112] - Current liabilities increased by $12,624 during the same period, mainly due to the reconsolidation of Octomera[113] Financing and Investments - The company received gross proceeds of approximately $2.3 million from a private placement of 2,272,719 shares at a price of $1.03 per share[98] - On May 10, 2024, the company issued 150,000 shares at $1.03 per share, raising gross proceeds of approximately $154[121] - The company faces substantial doubt about its ability to continue as a going concern and plans to seek additional financing to fund operations[124] Strategic Developments - The company recognized a loss of $285 due to the deconsolidation of Orgenesis Biotech Israel Ltd. (OBI) following a trustee appointment[97] - On January 29, 2024, the company acquired all preferred units of Octomera, reconsolidating it into its accounts[95] - The company plans to pay 5% of net revenues generated by Octomera during 2025-2027 to Metalmark Capital Partners as part of the acquisition agreement[99] - The POCare Services segment aims to expand the number and scope of POCare Centers to provide efficient and scalable pathways for CGT therapies[88] Cash Flow Management - Net cash used in operating activities for Q1 2024 was approximately $4,441, a decrease from $7,240 in Q1 2023, reflecting improved cash flow management[115] - The company entered into an Asset Purchase Agreement with Germfree for the sale of five OMPULs for an aggregate purchase price of $8,340[120]

PART I [ITEM 1. BUSINESS](index=5&type=section&id=ITEM%201.%20BUSINESS) A global biotech company making Cell and Gene Therapies (CGTs) affordable and accessible via its Point-of-Care platform - Orgenesis Inc is a global biotech company focused on unlocking the potential of Cell and Gene Therapies (CGTs) in an affordable and accessible format, primarily through autologous therapies manufactured using a closed and automated approach at the point of care (POCare)[304](index=304&type=chunk)[307](index=307&type=chunk)[308](index=308&type=chunk) - The company has developed a POCare Platform, a scalable infrastructure of technology and services, including POCare Centers and Orgenesis Mobile Processing Units & Labs (OMPULs), to standardize and decentralize CGT production, aiming to **lower costs and simplify logistics**[350](index=350&type=chunk)[351](index=351&type=chunk)[489](index=489&type=chunk) - The business model involves in-licensing promising therapies, adapting them to a point-of-care setting through regional partnerships, and then out-licensing products for market approval in preferred geographical regions, which **minimizes pre-clinical development costs** and leverages grants[359](index=359&type=chunk)[561](index=561&type=chunk) [POCare Therapies](index=8&type=section&id=POCare%20Therapies) This segment develops a pipeline of advanced, personalized cell therapies for out-licensing in point-of-care settings - The company's pipeline includes investigational therapies and next-generation technologies, predominantly **personalized autologous cell therapies**, for cancer and other unmet clinical needs[368](index=368&type=chunk)[369](index=369&type=chunk) - Key therapeutic fields encompass cell-based immuno-oncology, cell-based drug delivery platforms, regenerative medicine, anti-viral, and autoimmune diseases[369](index=369&type=chunk) - The company collaborates with academic institutions and hospitals to in-license promising therapies, adapt them to a point-of-care approach, and out-license them for market approval in preferred geographical regions, **reducing overall development costs**[357](index=357&type=chunk)[358](index=358&type=chunk)[359](index=359&type=chunk) [POCare Services](index=15&type=section&id=POCare%20Services) This segment provides harmonized services for CGT product supply, including process development and automation - POCare Services include process development, automation adaptation, GMP-compliant incorporation into OMPULs, tech transfers, training, processing and supply of therapies, and CRO services for clinical trials[439](index=439&type=chunk) - The company is expanding its POCare Centers globally (e g, Maryland, Boston, California, Belgium, Greece, Israel, Italy, Spain, Korea) to provide efficient and scalable CGT processing, aiming to **reduce costs and accelerate patient access**[440](index=440&type=chunk)[509](index=509&type=chunk) - In 2023, significant activities included developing GMP processes for CAR-T, TILs, and MSC-based therapies, deploying OMPULs, and collaborating with **UC Davis and Johns Hopkins University** for decentralized production and analytical labs[510](index=510&type=chunk)[511](index=511&type=chunk)[512](index=512&type=chunk) [ITEM 1A. RISK FACTORS](index=31&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces substantial going concern risk, an unproven business model, and various operational and regulatory hurdles - The company's management and independent auditors have concluded there is **substantial doubt about its ability to continue as a going concern** due to recurring losses and negative cash flows from operations[33](index=33&type=chunk)[641](index=641&type=chunk)[663](index=663&type=chunk)[664](index=664&type=chunk) - The POCare business has a limited operating history and an **unproven business model**, making its prospects speculative and highly dependent on successful execution of its strategy[32](index=32&type=chunk)[640](index=640&type=chunk)[660](index=660&type=chunk)[662](index=662&type=chunk) - Significant risks include the inherent challenges of novel biopharmaceutical R&D, extensive industry regulation, potential for product liability lawsuits, reliance on third-party collaborations, and the complexity of manufacturing biologics[19](index=19&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk)[28](index=28&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[161](index=161&type=chunk)[186](index=186&type=chunk)[192](index=192&type=chunk)[478](index=478&type=chunk)[480](index=480&type=chunk)[643](index=643&type=chunk)[644](index=644&type=chunk)[645](index=645&type=chunk)[647](index=647&type=chunk)[650](index=650&type=chunk)[651](index=651&type=chunk)[655](index=655&type=chunk)[667](index=667&type=chunk)[668](index=668&type=chunk)[674](index=674&type=chunk) [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=55&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The company reports no unresolved comments from the Securities and Exchange Commission staff - The company has **no unresolved staff comments**[74](index=74&type=chunk) [ITEM 1C. CYBERSECURITY](index=55&type=section&id=ITEM%201C.%20CYBERSECURITY) The company maintains a comprehensive cybersecurity program with active board oversight and has had no material incidents - The company's board of directors **actively oversees cybersecurity risk management**, receiving annual updates and prompt information on material incidents[82](index=82&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk) - A comprehensive cybersecurity program is in place, including security monitoring, audits, vulnerability assessments, penetration testing, threat modeling, and **regular mandatory training** for employees and contractors[77](index=77&type=chunk)[78](index=78&type=chunk) - The company has **not experienced any material cybersecurity incidents** in the last three fiscal years, and related expenses were immaterial[92](index=92&type=chunk) [ITEM 2. PROPERTIES](index=58&type=section&id=ITEM%202.%20PROPERTIES) The company operates globally through various leased facilities for offices and laboratories without owning any real property - The company **does not own any real property**, operating instead through leased premises globally[102](index=102&type=chunk) - Key leased facilities include the principal office in Germantown, MD, operational production labs in Gwanggyo, Korea, development and production facilities in New Albany, IN (Koligo), and labs/offices in Bar Lev Industrial Park, Israel (Orgenesis Biotech Israel Ltd)[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) - Additional leased properties support operations in Baltimore, MD (Orgenesis Maryland LLC), Nes Ziona, Israel (Orgenesis Ltd), Leander, TX (Tissue Genesis International LLC), Leiden, Netherlands (Mida Biotech BV), Namur, Belgium (Orgenesis Belgium and Orgenesis Services SRL), and Koropi, Greece (Theracell Laboratories)[97](index=97&type=chunk)[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) [ITEM 3. LEGAL PROCEEDINGS](index=58&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) The company is not involved in any material legal proceedings, except as noted elsewhere in the report - The company is **not involved in any pending material legal proceedings**, except as described in Note 22 of Item 8[103](index=103&type=chunk)[104](index=104&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=58&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) Mine safety disclosures are not applicable to the company's operations - Mine safety disclosures are **not applicable**[105](index=105&type=chunk) PART II [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](index=58&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's common stock trades on Nasdaq, and it has never paid cash dividends, retaining earnings for development - The company's common stock is listed on the Nasdaq Capital Market under the symbol **"ORGS"** since March 13, 2018[107](index=107&type=chunk) Common Stock Information (April 12, 2024) | Metric | Value | | :--- | :--- | | Closing Price | $0.49 | | Holders of Record | 346 | | Shares Outstanding | 34,338,782 | - The company has **never paid cash dividends** and does not intend to in the foreseeable future, planning to retain all earnings for business operations and expansion[68](index=68&type=chunk)[109](index=109&type=chunk) - There were **no unregistered sales** of equity securities or issuer purchases of equity securities[110](index=110&type=chunk)[111](index=111&type=chunk) [ITEM 6. [RESERVED]](index=59&type=section&id=ITEM%206.%20%5BRESERVED%5D) This section is intentionally left blank - Item 6 is **reserved**[112](index=112&type=chunk) [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=59&type=section&id=ITEM%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) A significant revenue decrease and increased operating loss in 2023 raise substantial doubt about its going concern status - The company's operations are separated into two segments: **Octomera (POCare Services)** and **Therapies (therapeutic development)**, following the Metalmark Investment in November 2022[117](index=117&type=chunk) Key Financial Results (2023 vs. 2022, in thousands USD) | Metric | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $530 | $36,025 | -98.59% | | Gross Profit (Loss) | $(5,725) | $30,892 | -118.53% | | Operating Loss | $(53,636) | $(10,110) | +430.52% | | Net Loss | $(64,918) | $(12,169) | +433.48% | | Net Cash Used in Operations| $(14,837) | $(24,924) | -40.47% | - Total revenues **decreased by 99% in 2023**, primarily due to customer payment failures and the deconsolidation of Octomera, which accounted for almost all potential revenues[146](index=146&type=chunk) - The company has an **accumulated deficit of $176,622** and negative operating cash flows of $14,837 as of December 31, 2023, raising substantial doubt about its ability to continue as a going concern[221](index=221&type=chunk)[617](index=617&type=chunk) [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=72&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Disclosures regarding market risk are not applicable to the company - Quantitative and qualitative disclosures about market risk are **not applicable**[250](index=250&type=chunk) [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](index=72&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) Financial statements and supplementary data are included starting on page F-1 of this report - The financial statements and supplementary data are included following the 'Index to Financial Statements' on **page F-1** of this Annual Report on Form 10-K[251](index=251&type=chunk) [ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE](index=72&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) The company reports no changes in or disagreements with its accountants on financial disclosure - There have been **no changes in or disagreements with accountants** on accounting and financial disclosure[252](index=252&type=chunk) [ITEM 9A. CONTROLS AND PROCEDURES](index=72&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Disclosure controls were deemed ineffective due to a material weakness in internal control over financial reporting - As of December 31, 2023, the company's disclosure controls and procedures were **not effective** due to a material weakness in internal control over financial reporting[263](index=263&type=chunk)[267](index=267&type=chunk) - The material weakness was identified in the accounting for **revenue collectability and estimated credit losses**, which resulted in restatements of unaudited condensed consolidated financial statements for interim periods in 2023[267](index=267&type=chunk) - Management's remediation plan for 2024 includes thorough credit assessment of new customers, analysis of payment history for existing customers, and analysis of expected credit losses[268](index=268&type=chunk) [ITEM 9B. OTHER INFORMATION](index=74&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) The company has no other information to report under this item - **No other information** is reported under this item[271](index=271&type=chunk) [ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS](index=74&type=section&id=ITEM%209C.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS) No disclosures are required regarding foreign jurisdictions that prevent inspections - **No disclosures** regarding foreign jurisdictions that prevent inspections[272](index=272&type=chunk) PART III [ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE](index=74&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) The company's governance structure includes a six-member board with a majority of independent directors and key committees - The board of directors consists of six members, with a **majority being independent directors** according to Nasdaq listing standards[293](index=293&type=chunk)[294](index=294&type=chunk)[312](index=312&type=chunk) - Key executive officers include **Vered Caplan (CEO and Chairperson)** and **Victor Miller (CFO, Secretary, and Treasurer, appointed Jan 2, 2024)**[275](index=275&type=chunk)[277](index=277&type=chunk)[278](index=278&type=chunk) - The board has established an Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee, and a Research and Development Committee, all comprised of independent directors[314](index=314&type=chunk) [ITEM 11. EXECUTIVE COMPENSATION](index=79&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) Details executive and non-employee director compensation for 2023, including salaries, awards, and committee fees Summary Compensation Table (2023 vs. 2022, in USD) | Name and Principal Position | Year | Salary ($) | Option Awards ($) | All Other Compensation ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | Vered Caplan CEO | 2023 | 259,029 | 107,941 | 82,355 | 341,384 | | | 2022 | 243,868 | - | 92,100 | 443,909 | | Elliot Maltz Former CFO | 2023 | 111,667 | 81,883 | - | 193,550 | | Efrat Assa-Kunik Former CDO | 2023 | 129,633 | - | 18,690 | 148,323 | | | 2022 | 162,316 | 19,048 | 44,467 | 225,831 | - Vered Caplan's compensation includes an annual board fee and eligibility for performance remuneration, with a **lump sum payment upon certain termination events**[343](index=343&type=chunk)[344](index=344&type=chunk)[377](index=377&type=chunk)[378](index=378&type=chunk)[379](index=379&type=chunk) Non-Employee Director Compensation (2023, in USD) | Name | Fees Earned or Paid in Cash ($) | Option Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | | Guy Yachin | 100,000 | 6,067 | 106,067 | | Yaron Adler | 60,000 | 4,643 | 64,643 | | Dr. David Sidransky | 105,000 | 6,330 | 111,330 | | Ashish Nanda | 65,000 | 4,907 | 69,907 | | Mario Philips | 50,000 | 4,256 | 54,256 | - The compensation policy for non-employee directors, updated in January 2021, includes **annual cash compensation ($40,000 base, additional for Chairman/lead director and committee roles)** and annual option bonuses[393](index=393&type=chunk)[394](index=394&type=chunk) [ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS](index=86&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) Two beneficial owners hold over 5% of common stock, with directors and executives as a group owning 5.82% Security Ownership of Greater than 5% Beneficial Owners (April 15, 2024) | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent | | :--- | :--- | :--- | | Jacob Safier | 4,988,000 | 14.53% | | Yehuda Nir | 11,297,179 | 24.75% | Security Ownership of Directors and Executive Officers (April 15, 2024) | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent | | :--- | :--- | :--- | | Vered Caplan | 1,252,757 | 3.55% | | Elliot Maltz | 25,000 | <1% | | Efrat Assa Kunik | 54,167 | <1% | | Guy Yachin | 150,867 | <1% | | Dr. David Sidransky | 153,467 | <1% | | Yaron Adler | 203,721 | <1% | | Ashish Nanda | 98,400 | <1% | | Mario Philips | 60,000 | <1% | | Directors & Executive Officers as a Group (8 persons) | 1,998,379 | 5.82% | Securities Authorized for Issuance Under Existing Equity Compensation Plans (December 31, 2023) | Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options (a) | Weighted-Average Exercise Price of Outstanding Options and RSUs (b) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 2,944,865 | 3.66 | 2,046,646 | | Equity compensation plans not approved by security holders | 491,671 | 4.80 | - | | Total | 3,436,536 | 3.82 | 2,046,646 | [ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE](index=90&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) No material related-party transactions were reported, aside from standard executive and director compensation - As of December 31, 2023, there were **no material related party transactions** exceeding $120,000 or one percent of average total assets, other than executive and director compensation[452](index=452&type=chunk) - Director independence is maintained in accordance with Nasdaq listing standards, as detailed in Item 10[453](index=453&type=chunk) [ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES](index=91&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) Total fees billed to the principal accountant, PwC, decreased in 2023, with all services pre-approved by the Audit Committee - **Kesselman & Kesselman (PwC)** served as the independent registered public accounting firm for the years ended December 31, 2023 and 2022[455](index=455&type=chunk) Principal Accountant Fees (in USD) | Services | 2023 | 2022 | | :--- | :--- | :--- | | Audit Fees | $225,000 | $288,705 | | Audit-Related Fees | $42,000 | $6,405 | | Total Fees | $267,000 | $295,110 | - The Audit Committee has a policy to **pre-approve all audit and permissible non-audit services**, categorized into audit, audit-related, tax, and other fees, with a budgeting and reporting process[457](index=457&type=chunk)[458](index=458&type=chunk)[459](index=459&type=chunk)[460](index=460&type=chunk)[461](index=461&type=chunk)[462](index=462&type=chunk) PART IV [ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES](index=92&type=section&id=ITEM%2015.%20EXHIBIT%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists all financial statements and exhibits filed with or incorporated by reference into the report - Consolidated financial statements are **incorporated by reference** from Part II, Item 8 of this Annual Report on Form 10-K[466](index=466&type=chunk) - **No financial statement schedules have been filed separately** as they are either not applicable, not required, or the information is already included[467](index=467&type=chunk) - The section includes a detailed list of exhibits, such as organizational documents, various warrant forms, and numerous agreements related to financing, collaborations, and executive employment[468](index=468&type=chunk)[469](index=469&type=chunk)[470](index=470&type=chunk) [ITEM 16. FORM 10-K SUMMARY](index=92&type=section&id=ITEM%2016.%20FORM%2010-K%20SUMMARY) A Form 10-K Summary is not applicable and has been omitted - A Form 10-K Summary is **not applicable**[470](index=470&type=chunk) [SIGNATURES](index=95&type=section&id=SIGNATURES) The report is duly signed by the company's principal executive and financial officers, as well as its directors - The Annual Report on Form 10-K is signed by **Vered Caplan, Chief Executive Officer and Chairperson of the Board of Directors**, and **Victor Miller, Chief Financial Officer, Treasurer, and Secretary**, both dated April 15, 2024[473](index=473&type=chunk)[474](index=474&type=chunk) [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](index=96&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) Presents audited financial statements, with the auditor's report noting substantial doubt about the company's going concern status - The independent registered public accounting firm (Kesselman & Kesselman, PwC) issued an **unqualified opinion** on the consolidated financial statements for 2023 and 2022[477](index=477&type=chunk) - The auditor's report explicitly states a **substantial doubt about the company's ability to continue as a going concern** due to recurring losses and negative cash flows from operations[477](index=477&type=chunk)[528](index=528&type=chunk) - A critical audit matter identified was **revenue recognition and accounts receivables – collectability criteria**, due to the high degree of auditor judgment and effort required to evaluate management's assumptions[533](index=533&type=chunk)[534](index=534&type=chunk)[535](index=535&type=chunk) [CONSOLIDATED BALANCE SHEETS](index=99&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) Total assets decreased significantly in 2023, leading to a total equity deficiency of $(20,983) thousand Consolidated Balance Sheet Summary (in thousands USD) | Metric | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total Current Assets | $4,076 | $46,318 | | Total Non-Current Assets | $10,476 | $44,610 | | TOTAL ASSETS | $14,552 | $90,928 | | Total Current Liabilities | $16,407 | $15,910 | | Total Long-Term Liabilities | $19,128 | $15,744 | | TOTAL LIABILITIES | $35,535 | $31,654 | | Total Equity (Capital Deficiency) | $(20,983) | $29,071 | - Current assets **decreased by $42,242 thousand** between December 31, 2022, and December 31, 2023, mainly due to the deconsolidation of Octomera, which held the majority of cash, restricted cash, and accounts receivable[214](index=214&type=chunk) - Current liabilities **increased by $497 thousand**, driven by higher accounts payable, tax payable, and grants payable, partially offset by a decline in short-term convertible loans due to maturity date extensions[215](index=215&type=chunk) [CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (INCOME)](index=101&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20LOSS%20(INCOME)) The company reported a net loss of $64,918 thousand in 2023, a substantial increase from the prior year Consolidated Statements of Comprehensive Loss (in thousands USD) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Total Revenues | $530 | $36,025 | | Gross (Loss) Profit | $(5,725) | $30,892 | | Cost of development services and research and development expenses | $10,623 | $21,933 | | Selling, general and administrative expenses (incl. credit losses) | $35,134 | $15,589 | | Operating Loss | $(53,636) | $(10,110) | | Loss from deconsolidation of Octomera | $5,343 | - | | Net Loss | $(64,918) | $(12,169) | | Net Loss attributable to Orgenesis Inc. | $(55,361) | $(14,889) | - Total revenues **decreased by 98.59%** from $36,025 thousand in 2022 to $530 thousand in 2023[547](index=547&type=chunk) - Selling, general and administrative expenses **increased by 125%** to $35,134 thousand in 2023, largely due to $24,367 thousand in credit losses[152](index=152&type=chunk)[153](index=153&type=chunk)[547](index=547&type=chunk) [CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CAPITAL DEFICIENCY)](index=102&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20EQUITY%20(CAPITAL%20DEFICIENCY)) The company shifted from a positive equity position to a capital deficiency of $(20,983) thousand in 2023 Consolidated Statements of Changes in Equity (in thousands USD) | Metric | Balance at Jan 1, 2023 | Balance at Dec 31, 2023 | | :--- | :--- | :--- | | Common Stock | $3 | $3 | | Additional Paid-in Capital | $150,355 | $156,837 | | Accumulated Other Comprehensive Income (loss) | $(270) | $65 | | Treasury Shares | $(1,266) | $(1,266) | | Accumulated Deficit | $(121,261) | $(176,622) | | Equity Attributable to Orgenesis Inc. | $27,561 | $(20,983) | | Non-Controlling Interest | $1,510 | - | | Total Equity (Capital Deficiency) | $29,071 | $(20,983) | - The accumulated deficit **increased from $(121,261) thousand** at the beginning of 2023 to **$(176,622) thousand** by year-end[550](index=550&type=chunk) - Changes during 2023 included **$5,283 thousand from issuance of shares and warrants**, $9,406 thousand from deconsolidation of Octomera (in additional paid-in capital), and a comprehensive loss of $(55,410) thousand attributable to Orgenesis Inc[550](index=550&type=chunk) [CONSOLIDATED STATEMENTS OF CASH FLOWS](index=106&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Net cash used in operations decreased, but overall cash and equivalents declined by $(4,926) thousand in 2023 Consolidated Statements of Cash Flows (in thousands USD) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(14,837) | $(24,924) | | Net cash used in investing activities | $(3,707) | $(14,133) | | Net cash provided by financing activities | $13,618 | $39,578 | | Net change in cash and cash equivalents and restricted cash | $(4,926) | $521 | | Cash, cash equivalents and restricted cash at end of year | $1,479 | $6,369 | - Net cash used in operating activities **decreased by 40.47% in 2023**, mainly due to a lower net loss after adjustments, despite the overall increase in net loss[217](index=217&type=chunk)[607](index=607&type=chunk) - Net cash provided by financing activities **decreased by 65.59% in 2023**, with $5,283 thousand from equity investments and $5,735 thousand from convertible loans, and $5,000 thousand from MM[220](index=220&type=chunk)[607](index=607&type=chunk) [NOTES TO CONSOLIDATED FINANCIAL STATEMENTS](index=108&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Provides detailed disclosures on accounting policies, segment performance, and the company's going concern status - The company's business is focused on Cell and Gene Therapies (CGTs) through its **Octomera (POCare Services)** and **Therapies (therapeutic development)** segments[610](index=610&type=chunk)[611](index=611&type=chunk) - A **substantial doubt exists about the company's ability to continue as a going concern** due to an accumulated deficit of $176,622 thousand and negative operating cash flows, necessitating additional financing[617](index=617&type=chunk)[619](index=619&type=chunk)[620](index=620&type=chunk) - Significant accounting policies include revenue recognition (with four main streams), credit loss measurement (CECL standard adopted Jan 1, 2023), and segment reporting, with ongoing evaluation of estimates and judgments[623](index=623&type=chunk)[720](index=720&type=chunk)[724](index=724&type=chunk)[744](index=744&type=chunk)

Company Structure and Operations - The company has separated its operations into two segments: Octomera LLC (formerly Morgenesis) and Therapies, with the Octomera segment focusing on POCare Services[128]. - As of June 30, 2023, the company owns approximately 75% of Octomera LLC, which was deconsolidated from the company's financial statements[130][129]. - The company invested $836 thousand and $6.5 million into Octomera during 2023 in exchange for preferred shares[140]. - The company has developed a POCare Platform to ensure quality, replicability, and standardization in the production of advanced therapies[127]. - The POCare Therapies division is focused on adapting therapies for point-of-care settings and aims to out-license products for market approval in preferred regions[136]. - The company collaborates with academic institutions and hospitals to develop therapies, aiming to lower overall development costs through partnerships[134][135]. - The company has subsidiaries focused on expanding the POCare Network in various regions, including Belgium, Korea, and California[143]. Financial Performance - Total revenues for the three months ended September 30, 2023, were $110, a decrease of 99% compared to $7,988 for the same period in 2022, primarily due to the deconsolidation of Octomera[157][158]. - Cost of revenues for the three months ended September 30, 2023, were $139, down 86% from $983 in the same period in 2022, also attributed to the deconsolidation of Octomera[160]. - Operating loss for the three months ended September 30, 2023, was $11,753, compared to an operating loss of $281 for the same period in 2022[157]. - Net loss for the three months ended September 30, 2023, was $12,653, compared to a net loss of $1,408 for the same period in 2022[157]. - Cost of development services and research and development expenses for the three months ended September 30, 2023, were $808, a decrease of 78% from $3,683 in the same period in 2022[162]. - The Octomera segment recognized revenue of $2,704 for the three months ended September 30, 2023, down 66% from $7,903 in the same period in 2022, due to incomplete performance obligations[159]. - Total revenue for the nine months ended September 30, 2023 was $14,129, a decrease of 37% from $22,401 in the same period in 2022, mainly due to the deconsolidation of Octomera[169]. - Cost of revenues for the nine months ended September 30, 2023 was $6,093, an increase of 121% from $2,760 in the same period in 2022, driven by increased salaries, professional fees, and raw materials[171]. - Cost of development services and research and development expenses for the nine months ended September 30, 2023 was $7,616, a decrease of 58% from $18,172 in the same period in 2022, primarily due to the deconsolidation of Octomera[172]. - Net loss for the nine months ended September 30, 2023 was $20,575, compared to a net loss of $10,897 in the same period in 2022[180]. Financing and Liquidity - As of September 30, 2023, the company borrowed $660 thousand under a convertible loan agreement, with additional loans of $175 thousand and $250 thousand received in July and August 2023, respectively[149][151]. - On September 29, 2023, the company entered into a convertible loan agreement for up to $25 million, with an initial installment of $1.5 million[153]. - The company intends to use proceeds from a securities purchase agreement, which raised approximately $3.7 million, for working capital and general corporate purposes[146]. - Net cash provided by financing activities for the nine months ended September 30, 2023 was approximately $12,393, a decrease from $20,095 in the same period in 2022[182]. - Liquidity outlook indicates that the company has been primarily funded by equity securities and loans, with no assurance of generating sustainable positive cash flows[183]. - The company anticipates that current and projected cash resources will be insufficient to meet obligations for the next 12 months, raising substantial doubt about its ability to continue as a going concern[185]. - Management plans include raising additional capital to fund operations and repay outstanding loans, as well as exploring avenues to increase revenue and reduce capital expenditures[185]. - The company may need to seek additional financing or postpone non-essential expenses if revenues decline or operating costs increase[184]. - The ability to fund ongoing and planned activities is substantially dependent on obtaining sufficient funding at acceptable terms[185]. - If the company cannot raise sufficient capital or meet revenue targets, it may have to reduce or eliminate certain activities and decrease headcount[185]. Expenses and Losses - Selling, general and administrative expenses for the three months ended September 30, 2023 were $1,245, a decrease of 60% compared to $3,104 for the same period in 2022, primarily due to the deconsolidation of Octomera[163]. - Share in net loss of associated company for the three months ended September 30, 2023 was $9,518, representing an increase of 3,374% from $274 in the same period in 2022, mainly due to credit losses related to overdue customers in Octomera[165]. - Financial expenses, net for the three months ended September 30, 2023 were $508, a decrease of 54% from $1,100 in the same period in 2022, attributed to foreign exchange losses incurred in the previous year[167]. - Current assets decreased by $37,542 from $46,318 on December 31, 2022 to $8,776 on September 30, 2023, mainly due to the deconsolidation of Octomera[178]. - There are no off-balance sheet arrangements that materially affect the company's financial condition or results of operations[186].

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [ITEM 1. FINANCIAL STATEMENTS (unaudited)](index=4&type=section&id=ITEM%201%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements for the periods ended June 30, 2023 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202023%20and%20December%2031%2C%202022) The company's total assets and equity decreased significantly as of June 30, 2023, due to a subsidiary deconsolidation **Condensed Consolidated Balance Sheets (in thousands USD)** | Metric | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Assets | $54,767 | $90,928 | | Total Liabilities | $30,802 | $31,654 | | Equity Attributable to Orgenesis Inc. | $23,965 | $27,561 | - Current assets decreased by **$37,023 thousand** and current liabilities decreased by **$3,199 thousand** between December 31, 2022, and June 30, 2023, primarily due to the deconsolidation of the Octomera subsidiary[138](index=138&type=chunk) [Condensed Consolidated Statements of Loss and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Loss%20and%20Comprehensive%20Loss%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202023%20and%202022) Revenues slightly decreased while cost of revenues surged, leading to lower gross profit but a reduced net loss **Three Months Ended June 30 (in thousands USD, except per share)** | Metric | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $6,975 | $7,201 | -3% | | Cost of Revenues | $3,232 | $1,063 | +204% | | Gross Profit | $3,743 | $6,138 | -39% | | Operating Loss | $3,329 | $4,732 | -30% | | Net Loss Attributable to Orgenesis Inc. | $4,127 | $5,427 | -24% | | Basic and Diluted Loss per Share | $0.15 | $0.22 | -32% | **Six Months Ended June 30 (in thousands USD, except per share)** | Metric | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $14,019 | $14,413 | -3% | | Cost of Revenues | $5,954 | $1,777 | +235% | | Gross Profit | $8,065 | $12,636 | -36% | | Operating Loss | $6,534 | $7,968 | -18% | | Net Loss Attributable to Orgenesis Inc. | $8,316 | $9,436 | -12% | | Basic and Diluted Loss per Share | $0.30 | $0.38 | -21% | [Condensed Consolidated Statements of Changes in Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202023%20and%202022) Total equity decreased due to comprehensive loss, partially offset by share and warrant issuances **Changes in Equity Attributable to Orgenesis Inc. (in thousands USD)** | Item | January 1, 2023 | June 30, 2023 | | :--- | :--- | :--- | | Equity Attributable to Orgenesis Inc. | $27,561 | $23,965 | **Key Changes (Six Months Ended June 30, 2023)** * Stock-based compensation: $311k * Issuance of shares and warrants (net): $3,341k * Deconsolidation of Non-controlling Interests: $(1,421)k * Comprehensive loss for the period: $(8,073)k [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202023%20and%202022) Net cash used in operations increased while financing activities remained a key source of cash inflow **Cash Flow Summary (Six Months Ended June 30, in thousands USD)** | Activity | 2023 | 2022 | | :--- | :--- | :--- | | 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 | | Net change in cash, cash equivalents and restricted cash | $(5,160) | $(3,163) | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed context on business operations, accounting policies, and significant financial events [NOTE 1 – DESCRIPTION OF BUSINESS](index=13&type=section&id=NOTE%201%20%E2%80%93%20DESCRIPTION%20OF%20BUSINESS) The company focuses on POCare CGTs, recently segmented its business, and faces going concern uncertainty - Orgenesis Inc is a global biotech company focused on developing affordable and accessible autologous Cell and Gene Therapies (CGTs) for point-of-care (POCare) manufacturing[30](index=30&type=chunk) - The company separated its operations into two segments: Morgenesis (now Octomera) and Therapies, following an investment by Metalmark Capital Partners in November 2022[31](index=31&type=chunk) - Effective June 30, 2023, Orgenesis deconsolidated Octomera LLC from its financial statements due to changes in board composition, retaining approximately **75% equity interest**[32](index=32&type=chunk) - The company faces **substantial doubt about its ability to continue as a going concern**, with an accumulated deficit of **$130 million** and negative operating cash flows of **$13.2 million** for the six months ended June 30, 2023[34](index=34&type=chunk)[36](index=36&type=chunk) [NOTE 2 - BASIS OF PRESENTATION](index=14&type=section&id=NOTE%202%20-%20BASIS%20OF%20PRESENTATION) Financials are prepared under U.S. GAAP, with recent accounting standard adoptions having no material impact - The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP and are consistent with the annual consolidated financial statements[38](index=38&type=chunk) - The adoption of new accounting pronouncements, ASU 2016-13 (Credit Losses) and ASU 2021-08 (Business Combinations), **did not have a material impact** on the company's consolidated financial statements[40](index=40&type=chunk)[41](index=41&type=chunk) [NOTE 3 – REDEEMABLE NON-CONTROLLING INTEREST AND DECONSOLIDATION](index=15&type=section&id=NOTE%203%20%E2%80%93%20REDEEMABLE%20NON-CONTROLLING%20INTEREST%20AND%20DECONSOLIDATION) The company deconsolidated its Octomera subsidiary, now accounting for its interest via the equity method - Metalmark Capital Partners made additional investments of **$5 million** and **$1 million** in Octomera LLC in May and June 2023, respectively[43](index=43&type=chunk)[44](index=44&type=chunk) - As a result of board composition changes, Orgenesis deconsolidated Octomera LLC on June 30, 2023, recording a **net profit of $411 thousand** from the transaction[45](index=45&type=chunk) - The company now accounts for its approximately **75% interest** in Octomera as an equity method investment, valued at **$31.4 million**[46](index=46&type=chunk) **Deconsolidated Amounts from Balance Sheet (in thousands USD)** | Item | Amount | | :--- | :--- | | Total Assets | $77,633 | | Total Liabilities | $8,879 | | Redeemable Non-Controlling Interest | $36,203 | | Net Assets Deconsolidated | $32,551 | [NOTE 4 – SEGMENT INFORMATION](index=16&type=section&id=NOTE%204%20%E2%80%93%20SEGMENT%20INFORMATION) The company reports results for its Octomera (POCare Services) and Therapies (development) segments - The company operates in two reportable segments: Octomera (POCare Services) and Therapies (therapeutic development)[50](index=50&type=chunk) **Segment Data (Six Months Ended June 30, in thousands USD)** | Metric | Octomera (2023) | Therapies (2023) | Consolidated (2023) | Octomera (2022) | Therapies (2022) | Consolidated (2022) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenues | $13,779 | $240 | $14,019 | $14,086 | $3,862 | $14,413 | | Gross profit | $8,695 | $(158) | $8,537 | $12,762 | $3,222 | $12,805 | | Income (loss) before income taxes | $(700) | $(7,414) | $(7,702) | $2,908 | $(12,385) | $(9,477) | [NOTE 5 – EQUITY](index=19&type=section&id=NOTE%205%20%E2%80%93%20EQUITY) The company raised capital through a registered direct offering of common shares and warrants in February 2023 - In February 2023, Orgenesis completed a registered direct offering, issuing 1,947,368 common shares and warrants for 973,684 shares, raising **$3.7 million in gross proceeds**[57](index=57&type=chunk)[58](index=58&type=chunk) - All warrants, with an exercise price of $1.90 per share, were exercised using an alternate cashless exercise option by June 30, 2023[58](index=58&type=chunk)[59](index=59&type=chunk) [NOTE 6 – CONVERTIBLE LOANS](index=20&type=section&id=NOTE%206%20%E2%80%93%20CONVERTIBLE%20LOANS) The company increased its convertible loan balance through new agreements and extended existing loan maturities **Convertible Loans Outstanding (in thousands USD)** | Date | Amount | | :--- | :--- | | June 30, 2023 | $19,085 | | December 31, 2022 | $16,600 | - In January 2023, the company entered into new convertible loan agreements totaling **$5 million**, bearing 8% annual interest and convertible at $2.464 per share, maturing in three years[64](index=64&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk) - Koligo Therapeutics Inc, a subsidiary, secured a convertible loan of up to **$5 million** in March 2023, with **$485 thousand** drawn by June 30, 2023, at an 8% annual interest rate, repayable by January 1, 2024[70](index=70&type=chunk)[73](index=73&type=chunk) - In January 2023, **$12 million** in existing convertible loans were extended to January 31, 2026, with interest rates increasing to 10% (for most) and conversion prices reduced to $2.50 (for most)[75](index=75&type=chunk) [NOTE 7 – STOCK-BASED COMPENSATION](index=22&type=section&id=NOTE%207%20%E2%80%93%20STOCK-BASED%20COMPENSATION) The company granted stock options to employees and non-employees during the first half of 2023 **Options Granted (January 1, 2023 to June 30, 2023)** | Recipient | No. of Options Granted | Exercise Price | Fair Value at Grant (in thousands) | Vesting Period | Expiration Period | | :--- | :--- | :--- | :--- | :--- | :--- | | Employees | 53,500 | $1.36 | $46 | Quarterly over 2 years | 10 years | | Non-employees | 8,335 | $1.36 | $9 | Annually over 5 years | 10 years | [NOTE 8 – LOSS PER SHARE](index=23&type=section&id=NOTE%208%20%E2%80%93%20LOSS%20PER%20SHARE) Basic and diluted loss per share decreased, with potential dilutive securities excluded as anti-dilutive **Basic and Diluted Loss per Share (in USD)** | Period | 2023 | 2022 | | :--- | :--- | :--- | | Three Months Ended June 30 | $0.15 | $0.22 | | Six Months Ended June 30 | $0.30 | $0.38 | - All outstanding convertible notes, options, and warrants were **excluded from the calculation of diluted net loss per share** for both periods as their effect was anti-dilutive[81](index=81&type=chunk)[82](index=82&type=chunk) [NOTE 9 – REVENUES](index=24&type=section&id=NOTE%209%20%E2%80%93%20REVENUES) Total revenues saw a slight decline, with a significant shift in composition among revenue streams **Total Revenues (in thousands USD)** | Period | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $6,975 | $7,201 | -3% | | Six Months Ended June 30 | $14,019 | $14,413 | -3% | **Revenue Stream Changes (Six Months Ended June 30, in thousands USD)** | Revenue Stream | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | POC development services | $0 | $12,598 | -100% | | Cell development process services and hospital services | $8,488 | $1,399 | +507% | | POC cell processing | $5,531 | $416 | +1229% | - Trade receivables decreased significantly from $36,183 thousand at the beginning of the period to $6 thousand at the end of the period for H1 2023, primarily due to the deconsolidation of Octomera ($44,116 thousand)[85](index=85&type=chunk) [NOTE 10 – OTHER SIGNIFICANT TRANSACTIONS DURING THE SIX MONTHS ENDED JUNE 30, 2023](index=25&type=section&id=NOTE%2010%20%E2%80%93%20OTHER%20SIGNIFICANT%20TRANSACTIONS%20DURING%20THE%20SIX%20MONTHS%20ENDED%20JUNE%2030%2C%202023) The company updated its joint venture agreements, assigning certain rights and obligations to a third party - In January 2023, Orgenesis updated joint venture agreements (JVAs), assigning certain rights and obligations to Texas Advanced Therapies LLC[87](index=87&type=chunk) - Orgenesis retained call options to acquire JV partner shares, royalty rights, and manufacturing/service agreement rights, but is **no longer entitled to additional GAAP profit share** or obligated for further funding[87](index=87&type=chunk) [NOTE 11 – LEGAL PROCEEDINGS](index=25&type=section&id=NOTE%2011%20%E2%80%93%20LEGAL%20PROCEEDINGS) The company is a defendant in a lawsuit seeking royalties and damages, but no provision has been made - Orgenesis Inc and its Israeli subsidiary are defendants in a lawsuit filed in January 2022, seeking **7% royalties on sales** and **24% on sublicense revenues** related to Sheba Medical Center's know-how and technology, plus NIS 10 million[88](index=88&type=chunk) - **No provision has been made** in the financial statements as a material loss is not considered probable[88](index=88&type=chunk) [NOTE 12 – SUBSEQUENT EVENTS](index=26&type=section&id=NOTE%2012%20%E2%80%93%20SUBSEQUENT%20EVENTS) Key events after the reporting period include a CFO change, a new loan, a JV settlement, and licensing deals - Neil Reithinger resigned as CFO, Treasurer, and Secretary, effective September 1, 2023, and Elliot Maltz was appointed as his successor[89](index=89&type=chunk)[90](index=90&type=chunk) - The Israeli Subsidiary received a **$175 thousand loan**, and the company settled a joint venture with Mircod LLC for **$1 million consideration** (half cash, half shares)[90](index=90&type=chunk)[91](index=91&type=chunk) - Orgenesis sub-licensed certain therapies for royalties and milestone payments, and granted/received call/put options related to a sub-licensee's equity interest, valued at **not less than $8 million**[92](index=92&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial results, strategic shifts, and liquidity challenges, including a going concern warning - Orgenesis is a global biotech company focused on developing affordable and accessible autologous Cell and Gene Therapies (CGTs) through its POCare Platform and Network[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk) - Operations were separated into Octomera (POCare Services) and Therapies (therapeutic development) segments, with **Octomera deconsolidated on June 30, 2023**, while Orgenesis retained approximately **75% equity**[101](index=101&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk) - The Therapies segment focuses on in-licensing promising therapies, adapting them to POCare, and out-licensing for market approval, aiming to lower development costs and leverage regional partnerships and grants[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) - The Octomera segment provides POCare Services, including process development, automation adaptation, GMP-compliant production in OMPULs, tech transfers, training, and CRO services, through decentralized hubs[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) - Key developments in H1 2023 include receiving **$5 million in new convertible loans**, raising **$3.7 million gross** from an equity offering, Koligo Therapeutics securing a convertible loan of up to **$5 million**, and updating joint venture agreements[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk)[120](index=120&type=chunk) **Financial Performance Highlights (Three Months Ended June 30, in thousands USD)** | Metric | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $6,975 | $7,201 | -3% | | Cost of Revenues | $3,232 | $1,063 | +204% | | R&D Expenses | $3,527 | $7,838 | -55% | | SG&A Expenses | $3,337 | $2,803 | +19% | | Financial Expenses, net | $655 | $389 | +68% | **Financial Performance Highlights (Six Months Ended June 30, in thousands USD)** | Metric | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $14,019 | $14,413 | -3% | | Cost of Revenues | $5,954 | $1,777 | +235% | | R&D Expenses | $6,808 | $14,489 | -53% | | SG&A Expenses | $7,376 | $5,654 | +30% | | Financial Expenses, net | $1,299 | $602 | +116% | - Working capital decreased significantly from $30,408 thousand at December 31, 2022, to **$(3,416) thousand** at June 30, 2023, primarily due to the deconsolidation of Octomera[137](index=137&type=chunk)[138](index=138&type=chunk) - The company's current and projected cash resources raise **substantial doubt about its ability to continue as a going concern**, necessitating additional capital raises and revenue growth initiatives[145](index=145&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that disclosures about market risk are not applicable for this quarterly report - This item is not applicable[147](index=147&type=chunk) [ITEM 4. Controls and Procedures](index=38&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of the end of the quarter - Management concluded that **disclosure controls and procedures were effective** as of June 30, 2023, at a reasonable assurance level[149](index=149&type=chunk) - There were **no material changes** in internal control over financial reporting during the quarter ended June 30, 2023[150](index=150&type=chunk) [PART II - OTHER INFORMATION](index=39&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [ITEM 1. Legal Proceedings](index=39&type=section&id=ITEM%201.%20Legal%20Proceedings) This section refers to Note 11 for details on legal proceedings, confirming no other material cases exist - Information regarding legal proceedings is available in Note 11 to the condensed consolidated financial statements[153](index=153&type=chunk) - There are no other material pending legal proceedings[154](index=154&type=chunk) [ITEM 1A. Risk Factors](index=39&type=section&id=ITEM%201A.%20Risk%20Factors) This section confirms no material changes to the risk factors disclosed in the latest Annual Report on Form 10-K - Readers should refer to the "Risk Factors" section of the Annual Report on Form 10-K for the year ended December 31, 2022[155](index=155&type=chunk) - There have been **no material changes** to the risk factors contained in the Annual Report on Form 10-K[155](index=155&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities during the reporting period - None[156](index=156&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=39&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities during the reporting period - None[157](index=157&type=chunk) [ITEM 4. Mine Safety Disclosures](index=39&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) The company states that this item is not applicable to its operations - Not Applicable[158](index=158&type=chunk) [ITEM 5. Other Information](index=39&type=section&id=ITEM%205.%20Other%20Information) The company reports no other information required to be disclosed under this item - None[159](index=159&type=chunk) [ITEM 6. Exhibits](index=40&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with the report, including material contracts and required certifications - Exhibits include Amendment No 1 and No 2 to the Unit Purchase Agreement and Amendment No 1 to the Second Amended and Restated Limited Liability Company Agreement of Morgenesis LLC (now Octomera LLC)[161](index=161&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes Oxley Act of 2002 are filed[161](index=161&type=chunk) - Interactive Data Files (XBRL Instance Document and Taxonomy Extensions) are included[161](index=161&type=chunk) [SIGNATURES](index=41&type=section&id=SIGNATURES) - The report is signed by Vered Caplan, President & Chief Executive Officer, and Neil Reithinger, Chief Financial Officer, Treasurer and Secretary, on August 10, 2023[165](index=165&type=chunk)