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, 2022

☐ 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 15, 2022, there were 25,545,755 shares of registrant’s common stock outstanding

ORGENESIS INC.

FORM 10-Q

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

TABLE OF CONTENTS

		Page

PART I - FINANCIAL INFORMATION		3

ITEM 1	Financial Statements (unaudited)	3

	Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021	3

	Condensed Consolidated Statements of Loss and Comprehensive Loss for the Three and Six Months Ended June 30, 2022 and 2021	5

	Condensed Consolidated Statements of Changes in Equity for the Three and Six Months Ended June 30, 2022 and 2021	6

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021	10

	Notes to Condensed Consolidated Financial Statements	11

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	30

ITEM 4.	Controls and Procedures	30

PART II - OTHER INFORMATION		31

ITEM 1.	Legal Proceedings	31

ITEM 1A.	Risk Factors	31

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

ITEM 3.	Defaults Upon Senior Securities	31

ITEM 4.	Mine Safety Disclosures	31

ITEM 5.	Other Information	31

ITEM 6.	Exhibits	32

SIGNATURES		33

PART I –FINANCIAL INFORMATION

Item 1. Financial Statements

ORGENESIS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollars in thousands)

(Unaudited)


	As of
	June 30, 2022		December 31, 2021
Assets

CURRENT ASSETS:
Cash and cash equivalents	$	2,303	$	5,473
Restricted cash		457		501
Accounts receivable, net *		18,786		15,245
Prepaid expenses and other receivables		793		1,188
Convertible loan receivable-related party		3,012		3,064
Grants receivable		-		169
Inventory		107		118
Total current assets		25,458		25,758

NON-CURRENT ASSETS:
Deposits	$	329	$	363
Investments and loans to associates		1,750		584
Loans receivable		-		821
Property, plant and equipment, net		14,388		10,271
Intangible assets, net		11,207		11,821
Operating lease right-of-use assets		757		1,015
Goodwill		8,174		8,403
Other assets		736		805
Total non-current assets		37,341		34,083
TOTAL ASSETS	$	62,799	$	59,841

*	Including related party in the amount of $2,039 thousand and $1,972 thousand as of June 30, 2022 and as of December 31, 2021, respectively.

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, 2022			December 31, 2021
Liabilities and Equity

CURRENT LIABILITIES:
Accounts payable	$	5,203		$	5,238
Accrued expenses and other payables		1,763			485
Income tax payable		83			54
Employees and related payables		1,998			1,907
Advance payments on account of grant		1,144			1,238
Contract liabilities		70			59
Current maturities of finance leases		17			18
Current maturities of operating leases		399			481
Current maturities of convertible loans		5,568			5,885
Total current liabilities		16,245			15,365

LONG-TERM LIABILITIES:
Non-current operating leases	$	352		$	561
Convertible loans		13,943			4,854
Retirement benefits obligation		123			101
Non-current finance leases		29			41
Other long-term liabilities		264			288
Total long-term liabilities		14,711			5,845
TOTAL LIABILITIES		30,956			21,210

EQUITY:
Common stock of $0.0001 par value: Authorized at June 30, 2022 and December 31, 2021: 145,833,334 shares; Issued at June 30, 2022 and December 31, 2021: 25,107,323 and 24,567,366 shares, respectively; Outstanding at June 30, 2022 and December 31, 2021: 24,820,756 and 24,280,799 shares, respectively		3			3
Additional paid-in capital		146,919			145,916
Receipts on account of shares and warrants to be allotted		2,175			-
Accumulated other comprehensive income (loss)		(270	)		207
Treasury stock 286,567 shares as of June 30, 2022 and December 31, 2021		(1,266	)		(1,266	)
Accumulated deficit		(115,808	)		(106,372	)
Equity attributable to Orgenesis Inc.		31,753			38,488
Non-controlling interest		90			143
Total equity		31,843			38,631
TOTAL LIABILITIES AND EQUITY	$	62,799		$	59,841

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)


	Three Months Ended						Six Months Ended
	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021
Revenues	$	6,699		$	9,818		$	13,276		$	18,050
Revenues from related party		502			727			1,137			1,884
Total revenues		7,201			10,545			14,413			19,934
Cost of revenues, development services and research and development expenses		8,901			9,727			16,266			15,854
Amortization of intangible assets		229			239			461			477
Selling, general and administrative expenses		2,803			2,901			5,654			5,869
Operating loss		4,732			2,322			7,968			2,266
Other income, net		(8	)		(3	)		(8	)		(28	)
Financial expenses, net		389			406			602			639
Share in net loss of associated companies		368			-			915			15
Loss before income taxes		5,481			2,725			9,477			2,892
Tax expenses (income)		11			-			12			(2	)
Net loss		5,492			2,725			9,489			2,890
Net loss attributable to non-controlling interests		(65	)		(66	)		(53	)		(12	)
Net loss attributable to Orgenesis Inc.	$	5,427		$	2,659		$	9,436		$	2,878

Loss per share:
Basic and diluted	$	0.22		$	0.11		$	0.38		$	0.12

Weighted average number of shares used in computation of Basic and Diluted loss per share:
Basic and diluted		24,820,756			24,365,746			24,711,462			24,279,826

Comprehensive loss:
Net loss	$	5,492		$	2,725		$	9,489		$	2,890
Other comprehensive loss (income) - translation adjustments		326			(48	)		477			229
Comprehensive loss		5,818			2,677			9,966			3,119
Comprehensive loss attributed to non-controlling interests		(65	)		(66	)		(53	)		(12	)
Comprehensive loss attributed to Orgenesis Inc.	$	5,753		$	2,611		$	9,913		$	3,107

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

ORGENESIS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

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

(Unaudited)


	Common Stock						Receipts on Account of		Accumulated									Equity Attributed
	Number		Par Value		Additional Paid-in Capital		Shares to be Allotted		Other Comprehensive Income (Loss)			Treasury Shares			Accumulated Deficit			to Orgenesis Inc.			Non- Controlling Interest			Total
Balance at January 1, 2022		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:
Stock-based compensation to employees and directors		-		-		463		-		-			-			-			463			-			463
Stock-based compensation to service providers		-		-		37		-		-			-			-			37			-			37
Exercise of options		510,017		- *		6		-		-			-			-			6			-			6
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
Issuance of shares related to acquisition of Mida		29,940		-*		100		-		-			-			-			100			-			100
Comprehensive loss for the period		-		-		-		-		(477	)		-			(9,436	)		(9,913	)		(53	)		(9,966	)
Balance at June 30, 2022		24,820,756	$	3	$	146,919	$	2,175	$	(270	)	$	(1,266	)	$	(115,808	)	$	31,753		$	90		$	31,843

SEC Form 10-Q filed by Orgenesis Inc.