NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2019

(Unaudited)

NOTE 1 - DESCRIPTION OF BUSINESS

a. General

Orgenesis Inc., a Nevada corporation (the "Company"), is a biotechnology company specializing in the development, manufacturing and provision of services in the cell and gene therapy industry.  The Company operates through two independent business platforms: (i) a point-of-care ("POCare") cell therapy ("POC") platform and (ii) a Contract Development and Manufacturing Organization ("CDMO") platform, which provides contract manufacturing and development services for biopharmaceutical companies (the "CDMO Business").  Through the POC platform, the Company's aim is to further the development of Advanced Therapy Medicinal Products ("ATMPs") through collaborations and in-licensing with other pre-clinical and clinical-stage biopharmaceutical companies and research and healthcare institutes to bring such ATMPs to patients.  The Company out-licenses these ATMPs through regional partners to whom the Company also provides regulatory services, pre-clinical studies, intellectual property services, and co-development services (collectively "POC development services") to support their activity in order to reach patients in a point-of-care hospital setting.  Currently, the Company's POC development services constitute the entirety of the Company's revenue in the POC platform.  Through the CDMO platform, the Company is focused on providing contract manufacturing and development services for biopharmaceutical companies.

Activities in the POC platform include a multitude of cell therapies, including autoimmune, oncologic, neurologic and metabolic diseases and other indications.  The Company plans to provide POC development services to its joint venture ("JV") regional partners, pharmaceutical and biotech companies as well as research institutions and hospitals that have cell therapies in clinical development.  The Company believes that each of these customers and collaborations represents a revenue and growth opportunity upon regulatory approval.  Furthermore, the Company's trans-differentiation technology demonstrates the capacity to induce a shift in the developmental fate of cells from the liver or other tissues and transdifferentiating them into "pancreatic beta cell-like" Autologous Insulin Producing ("AIP") cells for patients with Type 1 Diabetes, acute pancreatitis and other insulin deficient diseases.  This technology, which has yet to be proven in human clinical trials, has shown in pre-clinical animal models that the human derived AIP cells produce insulin in a glucose-sensitive manner.  This trans-differentiation technology is licensed by Orgenesis Ltd. (the "Israeli Subsidiary") and is based on the work of Prof. Sarah Ferber, the Company's Chief Science Officer and a researcher at Tel Hashomer Medical Research Infrastructure and Services Ltd.  in Israel.  The development plan calls for conducting additional pre-clinical safety and efficacy studies with respect to diabetes and other potential indications prior to initiating human clinical trials.

The Company conducts the POC platform through its wholly-owned subsidiaries.  The subsidiaries are as follows:

• United States: Orgenesis Maryland Inc. (the "U.S. Subsidiary") is the center of activity in North America currently focused on technology licensing, therapeutic collaborations and preparation for U.S. clinical trials.

• European Union: Orgenesis Belgium SRL (which changed its name and statutory designation in August 2019 from Orgenesis SPRL) (the "Belgian Subsidiary") is the center of activity in Europe currently focused on process development and preparation of European clinical trials.

• Israel:  Orgenesis Ltd. (the "Israeli Subsidiary") is a research and technology center, as well as a provider of regulatory, clinical and pre-clinical services.

The CDMO platform operates through (i) majority-owned Masthercell Global (which currently consists of the following two subsidiaries: MaSTherCell S.A. in Belgium ("MaSTherCell"), and Masthercell U.S., LLC  in the United States ("Masthercell U.S.") (collectively, the " Masthercell Global Subsidiaries")), (ii) wholly-owned Atvio Biotech Ltd. in Israel ("Atvio"), and 94.12% owned CureCell Co., Ltd. in South Korea ("CureCell").  Each of these subsidiaries has unique know-how and expertise for manufacturing in a multitude of cell types.

On August 7, 2019, the Company, Masthercell Global and GPP-II Masthercell, LLC, a Delaware limited liability company ("GPP-II"), (the "Parties") entered into a Transfer Agreement (the "Transfer Agreement").  As a result of the Transfer Agreement, Masthercell Global transferred all of its equity interests  of Atvio and CureCell to Orgenesis Inc in exchange for one dollar ($1.00).  The Transfer Agreement also contains agreements made with respect to certain intercompany loans. The Company accounted for the Transfer Agreement as a transaction with non-controlling interest.

In addition, the Parties agreed that (i) the Company and its subsidiaries shall cease all use or engagement of any employees of Masthercell Global or any of its subsidiaries, (ii) Masthercell Global may use the services of Atvio or South Korea Sub for certain subcontracting services on terms and at prices mutually agreed between the Company and Masthercell Global, and (iii) if the Company determines that it needs manufacturing services of the type offered by MaSTherCell and/or Masthercell U.S., Masthercell Global (on behalf of MaSTherCell and Masthercell U.S., as applicable) and the Company shall use good faith efforts to negotiate and execute a contract that contemplates MaSTherCell or Masthercell U.S., as applicable, providing such manufacturing services to the Company; provided, that such contract shall be on terms and at prices (in accordance with standard fair market rates) that are mutually agreed between the Company and Masthercell Global at the time any such contract is executed, (iv)  the Management Services Agreement between the Company and Masthercell Global, dated June 28, 2018, will terminate on June 28, 2020.

The Company operates its CDMO and POC platforms as two separate business segments.

These condensed consolidated financial statements include the accounts of Orgenesis Inc. and its subsidiaries, including the U.S. Subsidiary, the Belgian Subsidiary, the Israeli Subsidiary, Masthercell Global and its subsidiaries, Atvio and CureCell.

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

b. Change in Fiscal Year End

On October 22, 2018, the Board of Directors of the Company approved a change in the Company's fiscal year end from November 30 to December 31 of each year.  This change to the calendar year reporting cycle became effective on January 1, 2019.

As permitted under SEC rules, prior-period financial statements have not been recast as management believes (i) the nine months ended September 30, 2019 are comparable to the nine months ended August 31, 2018 and (ii) recasting prior-period results is not practicable or cost justified.

c. Liquidity

As of September 30, 2019, the Company has accumulated losses of approximately $83.2 million.  Although the Company is showing positive revenues and gross profit trends on the CDMO platform, the Company expects to incur further losses in the POC platform. In order to increase manufacturing capacity, Masthercell Global has signed contracts to expand its facilities in the United States and Europe (see note 5). As of September 30, 2019, the Company has negative working capital of $3,590 thousand. In October 2019, the Company entered into a Private Placement Subscription Agreement and Convertible Credit Line Agreement granting the Company access to an aggregate $5 million credit line, of which $2 million has already been advanced (see note 9).

To date, the Company has been funding operations primarily from proceeds raised from private placements of the Company's equity securities, issuance of equity-linked convertible debt and from operating cash flows generated from the POC and CDMO platforms.  From January 1, 2019 through September 30, 2019, the Company received $7.5 million from convertible loans and $6.6 million from Great Point Partners, LLC. In addition, from October 1, 2019 through November 7, 2019, the Company received $2 million from convertible loans (see note 9).  In May 2019, the Company agreed to enter into a convertible loan with an investor for an aggregate amount of $5 million.  As of the date of the filing of this Quarterly Report on Form 10-Q, the loan had not yet been received by the Company. (See Note 4).

Based on its current cash resources and commitments, the Company believes it will be able to maintain its current planned development activities and expected level of expenditures for at least 12 months from the date of the issuance of the financial statements, although no assurance can be given that it will not need additional funds prior to such time. Also, if there are further increases in operating costs in general and administrative expenses for facilities expansion, research and development, commercial and clinical activity or decreases in revenues from customers, the Company will need to seek additional financing. In addition, additional funds will be necessary to finance some of the collaborations listed in Note 5. 

d.  Basis of Presentation

These unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. GAAP, pursuant to the rules and regulations of the SEC for interim financial statements.  Accordingly, they do not contain all information and notes required by U.S. GAAP for annual financial statements.  In the opinion of management, the unaudited condensed consolidated interim financial statements reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of the Company's consolidated financial position as of September 30, 2019, and the consolidated statements of comprehensive loss and the changes in equity for the three and nine months ended September 30, 2019, and cash flows for the nine-month period ended September 30, 2019.  The interim results are not necessarily indicative of the results to be expected for the year ending December 31, 2019.  These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended November 30, 2018.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

The accounting policies adopted are generally consistent with those of the previous financial year except for new policies adopted in the current year as described below.

Recently Issued Accounting Pronouncements- adopted by the Company

ASC 606 - Revenue from Contracts with Customers

On December 1, 2018, the Company adopted the new accounting standard ASC 606, Revenue from Contracts with Customers and the related amendments ("New Revenue Standard") to all contracts, using the modified retrospective method.  The cumulative effect of initially applying the new revenue standard was immaterial.

Revenue Recognition Prior to the Adoption of the New Revenue Standard

Refer to Note 2 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended November 30, 2018, for a summary of our significant accounting policies.

Revenue Recognition Following the Adoption of the New Revenue Standard

The Company's agreements are primarily service contracts that range in duration from a few months to one year.  The Company recognizes revenue when control of these services is transferred to the customer for an amount, referred to as the transaction price, which reflects the consideration to which the Company is expected to be entitled in exchange for those goods or services.

A contract with a customer exists only when:

• the parties to the contract have approved it and are committed to perform their respective obligations;
• the Company can identify each party's rights regarding the distinct goods or services to be transferred ("performance obligations");
• the Company can determine the transaction price for the goods or services to be transferred; and

• the contract has commercial substance and it is probable that the Company will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.

For the majority of its contracts, the Company receives non-refundable upfront payments.  The Company does not adjust the promised amount of consideration for the effects of a significant financing component since the Company expects, at contract inception, that the period between the time of transfer of the promised goods or services to the customer and the time the customer pays for these goods or services to be generally one year or less.  The Company's credit terms to customers are in average between thirty and ninety days.

The Company does not disclose the value of unsatisfied performance obligations for contracts with original expected duration of one year or less.

Nature of Revenue Streams

The Company operates through two platforms: (i) a point-of-care ("POCare") cell therapy platform ("POC") and (ii) a Contract Development and Manufacturing Organization ("CDMO") platform.  Through its CDMO platform, the Company is focused on providing contract manufacturing and development services for biopharmaceutical companies.  As of the second quarter of 2019, the Company commenced its POC development services.

The Company has three main revenue streams from its CDMO platform: cell process development services, tech transfer services, and upon success, cell manufacturing services.

Cell Process Development Services

Revenue recognized under contracts for cell process development services may, in some contracts, represent multiple performance obligations (where promises to the customers are distinct) in circumstances in which the work packages and milestones are not interrelated or the customer is able to complete the services performed independently or by using competitors of the Company.  In other contracts when the above circumstances are not met, the promises are not considered distinct and the contract represents one performance obligation.  All performance obligations are satisfied over time, as there is no alternative use to the services it performs, since, in nature, those services are unique to the customer, which retain the ownership of the intellectual property created through the process.  Additionally, due to the non-refundable upfront payment the customer pays, together with the payment term and cancellation fine, it has a right to payment (which include a reasonable margin), at all times, for work completed to date, which is enforceable by law.

 For arrangements that include multiple performance obligations, the transaction price is allocated to the identified performance obligations based on their relative standalone selling prices.  For these contracts, the standalone selling prices are based on the Company's normal pricing practices when sold separately with consideration of market conditions and other factors, including customer demographics and geographic location.

The Company measures the revenue to be recognized over time on a contract by contract basis, determining the use of either a cost-based input method or output method, depending on whichever best depicts the transfer of control over the life of the performance obligation.

Tech Transfer Services

Revenue recognized under contracts for tech transfer services are considered a single performance obligation, as all work packages (including data collection, GMP documentation, validation runs) and milestones are interrelated.  Additionally, the customer is unable to complete services of work performed independently or by using competitors of the Company.  Revenue is recognized over time using a cost-based based input method where progress on the performance obligation is measured by the proportion of actual costs incurred to the total costs expected to complete the contract.

Cell Manufacturing Services

Revenues from cell manufacturing services represent a single performance obligation which is recognized over time.  The progress towards completion will continue to be measured on an output measure based on direct measurement of the value transferred to the customer (units produced).

POC Development Services

Revenue recognized under contracts for POC development services may, in some contracts, represent multiple performance obligations (where promises to the customers are distinct) in circumstances in which the work packages are not interrelated or the customer is able to complete the services performed independently or by using competitors of the Company.

For arrangements that include multiple performance obligations, the transaction price is allocated to the identified performance obligations based on their relative standalone selling prices.

The Company measures the revenue to be recognized over time on a contract by contract basis based on a cost-based input method which best depicts the transfer of control over the life of the performance obligation.

Significant Judgement and Estimates

The cost-based and output methods of revenue recognition require the Company to make estimates of costs to complete its projects and the percentage of completeness on an ongoing basis.  Significant judgment is required to evaluate assumptions related to these estimates.  The effect of revisions to estimates related to the transaction price (including variable consideration relating to reimbursement on a cost-plus basis on certain expenses) or costs to complete a project are recorded in the period in which the estimate is revised.

Practical Expedients

As part of ASC 606, the Company has adopted several practical expedients including the Company's determination that it need not adjust the promised amount of consideration for the effects of a significant financing component since the Company expects, at contract inception, that the period between when the Company transfers a promised service to the customer and when the customer pays for that service will be one year or less.

Reimbursed Expenses

The Company includes reimbursed expenses in revenues and costs of revenue as the Company is primarily responsible for fulfilling the promise to provide the specified service, including the integration of the related services into a combined output to the customer, which are inseparable from the integrated service.  These costs include such items as consumable, reagents, transportation and travel expenses, over which the Company has discretion in establishing prices.

Change Orders

Changes in the scope of work are common and can result in a change in transaction price, equipment used and payment terms.  Change orders are evaluated on a contract-by-contract basis to determine if they should be accounted for as a new contract or as part of the existing contract.  Generally, services from change orders are not distinct from the original performance obligation.  As a result, the effect that the contract modification has on the contract revenue, and measure of progress, is recognized as an adjustment to revenue when they occur.

Costs of Revenue

Costs of revenue include (i) compensation and benefits for billable employees and personnel involved in production, data management and delivery, and the costs of acquiring and processing data for the Company's information offerings; (ii) costs of staff directly involved with delivering services offerings and engagements; (iii) consumables used for the services; and (iv) other expenses directly related to service contracts such as courier fees, laboratory supplies, professional services and travel expenses.

The activity for contract liabilities is comprised of:

ASU 2018-07 Stock based Compensation

In June 2018, the FASB issued ASU 2018-07, "Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting."  This guidance simplifies the accounting for non-employee share-based payment transactions.  The amendments specify that ASC 718 applies to all share-based payment transactions in which a grantor acquires goods and services to be used or consumed in a grantor's own operations by issuing share-based payment awards.  The standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.  Early adoption is permitted, but no earlier than an entity's adoption date of Topic 606, "Revenue from Contracts with Customers."  This standard, adopted as of January 1, 2019, had no material impact on the Company's consolidated financial statements for the nine months ended September 30, 2019.

ASC 842 - Leases

In February 2016, the FASB issued ASU 2016-02, "Leases", on the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors).  ASC 842 supersedes the previous leases standard, ASC 840, "Leases."  The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee.  This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively.  A lessee is also required to record a right-of-use ("ROU") asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification.

In July 2018, the FASB issued amendments in ASU 2018-11, which provide another transition method in addition to the existing transition method, by allowing entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, and to not apply the new guidance in the comparative periods they present in the financial statements.  The guidance is effective for the interim and annual periods beginning on or after December 15, 2018.  The Company has elected to apply the standard retrospectively at the beginning of the period of adoption through a cumulative-effect adjustment.

The Company adopted the new leases standard as of January 1, 2019 using the transition method that provides for a cumulative-effect adjustment to retained earnings upon adoption.  The consolidated financial statements for the nine months ended September 30, 2019 are presented under the new standard, while the comparative period and transition period presented are not adjusted and continue to be reported in accordance with the historical accounting policy.  For more information, see Note 8.

Recently issued accounting pronouncements, not yet adopted

In June 2016, the FASB issued ASU 2016-13 "Financial Instruments-Credit Losses-Measurement of Credit Losses on Financial Instruments." This guidance replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance will be effective for Smaller Reporting Companies (SRCs, as defined by the SEC) for the fiscal year beginning on January 1, 2023, including interim periods within that year. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements.

In November 2018, the FASB issued ASU 2018-18 "Collaborative Arrangements (Topic 808)-Clarifying the interaction between Topic 808 and Topic 606." The amendments provide guidance on whether certain transactions between collaborative arrangement participants should be accounted for as revenue under ASC 606. It also specifically (i) addresses when the participant should be considered a customer in the context of a unit of account, (ii) adds unit-of-account guidance in ASC 808 to align with guidance in ASC 606 and (iii) precludes presenting revenue from a collaborative arrangement together with revenue recognized under ASC 606 if the collaborative arrangement participant is not a customer. The guidance will be effective for fiscal years beginning after December 15, 2019. Early adoption is permitted and should be applied retrospectively. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements.

In January 2017, FASB issued Accounting Standards Update (ASU) 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which eliminated the calculation of implied goodwill fair value. Instead, companies will record an impairment charge based on the excess of a reporting unit's carrying amount of goodwill over its fair value. This guidance simplifies the accounting as compared to prior GAAP. The guidance is effective for fiscal years beginning after December 15, 2019. The Company does not expect the implementation of this new pronouncement to have a material impact on its consolidated financial statements

NOTE 3 - SEGMENT INFORMATION

The Chief Executive Officer ("CEO") is the Company's chief operating decision-maker ("CODM").  Management has determined that there are two operating segments, based on the Company's organizational structure, its business activities and information reviewed by the CODM for the purposes of allocating resources and assessing performance.

POC Platform

Through the POC platform, the Company is focused on (i) the development of proprietary cell and gene therapies, including its autologous trans-differentiation technology, (ii) therapeutic collaborations and licensing with other pre-clinical and clinical-stage biopharmaceutical companies and research and healthcare institutes and (iii) regulatory services, pre-clinical studies, intellectual property services, and co-development services ("POC development services").  Currently, the Company's POC development services constitute the entirety of the Company's revenue in the POC platform.

CDMO Platform

The CDMO platform is comprised of a specialization in cell manufacturing and development and includes two types of services to its customers: (i) manufacturing and development services and (ii) current good manufacturing practice ("cGMP") contract manufacturing services.  The CDMO platform operates (i) through Masthercell Global, which currently consists of MaSTherCell in Belgium and Masthercell U.S. in the United States, and (ii) through subsidiaries Atvio in Israel and CureCell in South Korea, each having unique know-how and expertise for manufacturing in a multitude of cell types.

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

Segment data for the nine months ended September 30, 2019 is as follows:

Reconciliation of segment performance to loss for the nine months ended September 30, 2019:

Segment data for the nine months ended August 31, 2018 is as follows:

Reconciliation of segment performance to loss for the nine months ended August 31, 2018:

Segment data for the three months ended September 30, 2019 is as follows:

Reconciliation of segment performance to loss for the three months ended September 30, 2019:

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

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

NOTE 4 - CONVERTIBLE LOANS

On April 10, 2019, the Company entered into a convertible loan agreement with an offshore investor for an aggregate amount of $500 thousand into the U.S. Subsidiary.  The investor, at its option, may convert the outstanding principal amount and accrued interest under this note into shares and three-year warrants to purchase shares of the Company's common stock at a per share exercise price of $7.00; or into shares of the U.S. Subsidiary at a valuation of the U.S. Subsidiary of $50 million.

On May 17, 2019, the Company entered into a private placement subscription agreement with an investor for $5 million.  The lender shall be entitled, at any time prior to or no later than the maturity date, to convert the outstanding amount, into units of (1) shares of common stock of the Company at a conversion price per share equal to $7.00 and (2) warrants to purchase an equal number of additional shares of the Company's common stock at a price of $7.00 per share.

On June 10, 2019, the Company entered into private placement subscription agreements with investors for an aggregate amount of $2 million. The lenders shall be entitled, at any time prior to or no later than the maturity date, to convert the outstanding amount, into units of (1) shares of common stock of the Company at a conversion price per share equal to $7.00 and (2) warrants to purchase an equal number of additional shares of the Company's common stock at a price of $7.00 per share.

In May 2019, the Company had agreed to enter into a 6% convertible loan agreement with an investor for an aggregate amount of $5 million.  The lender shall be entitled, at any time prior to or no later than the maturity date, to convert the outstanding amount, into units of (1) shares of stock of the Company at a conversion price per share equal to $7.00 and (2) warrants to purchase an equal number of additional shares of the Company's common stock at a price of $7.00 per share.  As of the date of the filing of this Quarterly Report on Form 10-Q, the loan had not yet been received by the Company.

NOTE 5 - COLLABORATIONS, LICENSE AGREEMENTS AND COMMITMENTS

Consolidation of CDMO Entities and Strategic Funding

As described in Note 10 to the financial statements as of November 30, 2018, in June 2018, the Company, Masthercell Global, and Great Point Partners, LLC ("Great Point"), and certain of Great Point's affiliates, entered into a series of definitive strategic agreements intended to finance, strengthen and expand Orgenesis' CDMO business.  An initial cash payment of $11.8 million of the consideration was remitted in June 2018 by GPP-II ($1.5 million of the initial capital contributed to Masthercell Global was used to reimburse the investors for their fees and expenses incurred in conjunction with this transaction (net payment of $10.3 million)), with a follow up payment of $6.6 million to be made in each of years 2018 and 2019, or for an aggregate of $13.2 million, if certain conditions are met.  Masthercell Global achieved the specified targets in 2018 and as such, Masthercell Global received the first payment of $6.6 million on January 16, 2019.

HekaBio K.K

As described in Note 10 to the financial statements as of November 30, 2018, on July 10, 2018, the Company and HekaBio K.K.  ("HB"), a corporation organized under the laws of Japan, entered into a Joint Venture Agreement (the "HB JVA") and established the joint venture entity Orgenesis K.K., pursuant to which the parties will collaborate in the clinical development and commercialization of regeneration and cell and gene therapeutic products (hereinafter, the "Products") in Japan (the "Project").

Effective January 1, 2019, the Company entered into a master service agreement with Orgenesis K.K. whereby the Company, subject to mutually agreed timing and definition of the scope of services, will provide, regulatory services, pre-clinical studies and intellectual property services, as well as POC services and co-development services to Orgenesis K.K.

Apart from the above, there was no material activity with respect to the HB JVA during the nine months ended September 30, 2019.

Image Securities Ltd (a Related Party).

As described in Note 10 to the financial statements as of November 30, 2018, on July 11, 2018, the Company and Image Securities Ltd., a corporation with its registered office in Grand Cayman, Grand Cayman Islands ("India Partner") entered into a Joint Venture Agreement (the "India JVA") pursuant to which the parties will form a joint venture entity ("Indian JV Entity") to collaborate in the development and commercialization of cell therapy products in India (the "Cell Therapy Products").  The India Partner will collaborate with a network of healthcare facilities and a healthcare infrastructure as well as financial partners to advance the development and commercialization of the Cell Therapy Products.  During February 2019, the Company transferred a further $1 million to the India Partner.  As of September 30, 2019, the Company had advanced $2 million in total to the India Partner, reflected in the Company's balance sheet as a loan to a related party under non-current assets (held under escrow).

Effective January 1, 2019, the Company entered into a master service agreement for the provision of certain POC services. Payments of $1.5 million for these POC services were received during 2019 and were recognized as income received in advance on the Company's balance sheet, of which $1,245 thousand was recognized as income during the nine months ended September 30, 2019. Prior to the establishment of the JV Entity, all activities are being carried out by the India Partner.

Apart from the above, there was no material activity with respect to the Indian JV Entity during the nine months ended September 30, 2019.

Collaboration Agreement with Tarus Therapeutics, Inc.

 On February 27, 2019, the Company and Tarus Therapeutics Inc., a Delaware corporation, ("Tarus") entered into a Collaboration Agreement (the "Tarus Agreement") for the collaboration in the funding, development and commercialization of certain technologies, products and patents of Tarus in the areas of therapeutics for cancer and other diseases in the field of cell therapies and their combination with checkpoint inhibitors comprised of Adenosine Receptor Antagonists.  Under the terms of the Tarus Agreement and subject to final due diligence and approved financing of the Company, the Company and/or one or more qualified investors (the "Investors") shall advance to Tarus a convertible loan in an amount of not less than $1,750 thousand and up to $3,000 thousand (the "Loan Agreement").  As of the date of the filing of this Quarterly Report on Form 10-Q, the loan agreements have not been concluded, nor has any financing been made to Tarus.  As part of such Loan Agreement, and subject to approval by the board of directors of the Company, the Investors shall have the right, within two years of the date of the Loan Agreement, to convert the outstanding convertible loan into either (i) shares of Tarus at a price per share based on a pre- money valuation of $12,500 thousand or (ii) shares of the Company's common stock at a price per share set in accordance with an approved financing of the Company, with such terms as approved by the Company in its sole discretion.  Further, as part of the Loan Agreement, the Company shall advance to Tarus up to $500 thousand within fourteen days of execution of the Loan Agreement.  Subject to the closing of the Loan Agreement, the Company and/or the Investors shall have an option, exercisable by sending written notice to Tarus at any time through the second anniversary of the closing of the Loan Agreement, to invest additional funds in an amount of up to $1,250 thousand and not less than $500 thousand in Tarus.  The Company will also have the right to appoint and/or replace one member of board of directors of Tarus.  Upon and subject to the execution of a definitive development and manufacturing agreement between the Company and Tarus ("Manufacturing and Supply Agreement"), the Company, or one or more of its affiliates, shall manufacture and supply to Tarus licensees, assignees of interest all requirements for all cell therapy elements of any combination therapy incorporating the technology of Tarus.  Following the conclusion of the clinical development stage of each product emanating from the technology of Tarus, the cell therapy component of any such product borne out of the technology of Tarus shall be exclusively supplied by the Company under the Manufacturing and Supply Agreement.  If the Company and Tarus fail to sign such Manufacturing and Supply Agreement for any given Tarus product, Tarus shall pay the Company an amount equal to four percent of gross revenues derived by Tarus from such Tarus products.

Apart from the above, there was no activity in the Tarus collaboration.

Theracell Advanced Biotechnology

On February 14, 2019, the Company and Theracell Advanced Biotechnology ("Theracell"), a corporation organized under the laws of Greece, entered into a Joint Venture Agreement (the "Greek JVA") pursuant to which the parties will collaborate in the clinical development and commercialization of the Company's products (hereinafter, the "Company Products") in Greece, Turkey, Cyprus and Balkan countries (the "Territory") and the clinical development and commercialization of Theracell's products (hereinafter, the "Theracell Products") worldwide (the "Project").  The parties intend to pursue the Project through a joint venture ("JV") by forming a JV entity (the "Greek JV Entity").  Until the Greek JV Entity is formed, all JV activities are being carried out by Theracell.  The Company by itself, or together with a designee, will hold a 50% participating interest in the Greek JV Entity, with the remaining 50% participating interest being held by Theracell or its affiliate following the parties' contributions to the Greek JV Entity as set forth under the Greek JVA.  The Greek JV Entity will have a steering committee that will act as the board of directors of the Greek JV Entity and shall be composed of a total of five members, with two members appointed by each party and one industry expert.

Under the Greek JVA, each party shall be responsible for providing up to $10 million in funding, of which $5 million shall be provided in the form of in-kind contributions.  Each party shall also have the right to invest up to an additional $10 million, if such financing is determined to be necessary by the steering committee of the Greek JV Entity or if a party wishes to maintain its pro rata participating interest upon a future financing round in the Greek JV Entity ("Additional Investment").  The terms of such Additional Investment, if any, will be on terms mutually agreeable to the parties, provided that the minimum pre-money valuation for any such Additional Investment shall be at least $20 million.  Any Additional Investment by a Party may lead to dilution of the other Party's participating interest unless such other party provides the requisite investment to maintain its participating percentage within two (2) years of such Additional Investment.

Under the Greek JVA, the Company can require Theracell to sell to the Company its entire participating interest in the Greek JV Entity in consideration for the issuance of the Company's Common Stock based on an agreed upon formula for determining the Greek JV Entity's valuation, which shall be the higher of (i) $20 million, (ii) two times the revenues of the Greek JV Entity, (iii) four times the EBITDA of the Greek JV Entity or (iv) the valuation of the Greek JV Entity in its last Additional Investment round. If the parties decide to sell the Greek JV Entity, they will mutually agree upon the terms of such sale.

Under the Greek JVA, the Company shall, subject to fulfilment of Theracell's obligations under the Greek JVA, grant the Greek JV Entity an exclusive license to certain intellectual property of the Company as may be required for the Greek JV Entity to develop and commercialize the Company Products in the Territory.  In consideration for such license, the Greek JV Entity shall pay the Company, royalties at the rate of 15% of the Greek JV Entity's net sales of Company Products in the Territory.

In addition, under the Greek JVA, Theracell shall, subject to fulfillment of the Company's obligations under the Greek JVA, grant the Greek JV Entity an exclusive license to certain intellectual property of Theracell as may be required for the Greek JV Entity to develop and commercialize the Theracell Products globally.  In consideration of such license, the Greek JV Entity shall pay Theracell, in addition to other payments, royalties at the rate of 15% of the Greek JV Entity's worldwide net sales of Theracell Products.

Any new intellectual property discovered in connection with the development undertaken by the Greek JV Entity shall belong to the Greek JV Entity and such intellectual property will be licensed to the Company on a non-exclusive, worldwide (other than the Territory, as defined in the Greek JVA), royalty free basis.

On February 14, 2019, the Company entered into a master service agreement with Theracell whereby the Company, subject to mutually agreed timing and definition of the scope of services, will provide regulatory services, pre-clinical studies, intellectual property services, GMP process translation services and co-development services to Theracell during 2019.  During the 9-month period ended September 30, 2019, the Company recognized POC development service revenue in the amount of $729 thousand.

During 2019, the Company has transferred $372 thousand to Theracell.  Prior to the establishment of the JV Entity, all activities were being carried out by Theracell.

Apart from the above, there was no material activity under the Greek JVA

First Choice International Company, Inc.

 On March 12, 2019, the Company and First Choice International Company, Inc., ("First Choice"), a corporation organized under the laws of Delaware, entered into a Joint Venture Agreement (the "Panama JVA") pursuant to which the parties will collaborate in the clinical development and commercialization of the Company's products (hereinafter the "Company Products") in Panama and certain other Latin American countries as agreed by the parties (the "Territory") and the clinical development and commercialization of First Choice's products (hereinafter the "First Choice Products") worldwide (other than in the Territory) (the "Project").  The parties intend to pursue the Project through a joint venture ("Panama JV") by forming a JV entity ("Panama JV Entity").  Until the Panama JV Entity is formed, all Panama JV activities will be carried out by First Choice within the Territory. Upon formation of the Panama JV Entity, the Company by itself, or together with a designee, will hold a 50% participating interest in the Panama JV Entity, with the remaining 50% participating interest being held by First Choice or its affiliate or partner.  The Panama JV Entity will have a steering committee that will act as the board of directors of the Panama JV Entity and shall be composed of five members, with two members appointed by each party and one industry expert.

Under the Panama JVA, each party shall endeavor to provide up to $5 million in funding for development, either through investment instruments or in-kind contributions within the first three (3) years of the Panama JV.  Each party shall also have the right to invest additional funds in the Panama JV Entity (which such investment(s) may also be in the form of a convertible loan), if such financing is determined to be necessary by the steering committee of the Panama JV Entity or to maintain such Party's pro-rata share of the Panama JV Entity ("Additional Investment").

In order to compensate First Choice for the Panama JV activities that First Choice has already completed prior to the Panama JVA, the Company paid First Choice $100,000.  In addition, it has issued to First Choice 375,000 shares of Common Stock and issued another 150,000 shares of Common Stock in September of 2019. These payments and the value of Common Stock issued in the amount of $2.6 million were charged to research and development expenses during the period ended September 30, 2019 under ASC 730-10-50 and ASC 20-50.

Each of the Company and First Choice shall provide strategic guidance to the Panama JV Entity and the Company shall provide hospital (management) services to the Panama JV Entity, among other POC development services as shall be set forth in a master service agreement to be negotiated in good faith and entered into by the parties.

Under the Panama JVA, the Company can require First Choice to sell to the Company its participating interest in the JV Entity in consideration for the issuance of the Company's Common Stock by dividing an agreed upon Panama JV Entity valuation by the weighted average price of the Company's Common Stock during the three (3) trading day preceding the closing of such sale.  The Panama JV Entity valuation will be the higher of (i) two times the revenues of the Panama JV Entity, (ii) four times the EBITDA of the Panama JV Entity or (iii) the valuation of the Panama JV Entity in its last Additional Investment round.  If the parties decide to sell the Panama JV Entity, they will mutually agree on the terms of such sale.

Under the Panama JVA, the Company shall, subject to fulfilment of First Choice's obligations under the Panama JVA, grant the Panama JV Entity an exclusive license to certain intellectual property of the Company as may be required for the Panama JV Entity to develop and commercialize the Company Products in the Territory, subject to minimum sales obligations. In consideration of such license, the Panama JV Entity shall pay the Company royalties at the rate of 15% of the Panama JV Entity net sales of Company Products sold in the Territory.

In addition, under the Panama JVA, First Choice shall, subject to fulfilment of the Company's obligations under the Panama JVA, grant the Panama JV Entity an exclusive license to certain intellectual property of First Choice as may be required for the Panama JV Entity to develop and commercialize the First Choice Products globally. In consideration of such license, the Panama JV Entity shall pay First Choice, royalties at the rate of 15% of the Panama JV Entity's worldwide net sales of First Choice Products.  Additionally, and for separate consideration to the Company, First Choice shall be granted a limited, non-exclusive license to certain Company owned rights relating to the Human Papilloma Virus.

Any new inventions discovered during the development with respect to the Panama JV shall belong to the Panama JV Entity and will be licensed to the Company on a non-exclusive, worldwide (other than the Territory), royalty free basis.

At the request of either party, the parties shall discuss between them in good faith the terms upon which a party may convert its participating interests in the Panama JV Entity into streaming royalties based on Panama JV Entity's revenues.

Apart from the above, there was no activity in the Panama JVA.

Cure Therapeutics Collaboration Agreement

As described in Note 10 to the financial statements as of November 30, 2018, on May 7, 2018, the Company and Cure Therapeutics entered into a collaboration agreement for the development of therapies based on liver and NK cells.  An amount of $1,101 thousand was charged during the nine months ended September 30, 2019.  As of  September 30, 2019, the development project has not been completed.  As part of the agreement, Cure Therapeutics has subcontracted development and contract manufacturing activities to CureCell.  An amount of $571 thousand was recognized during the nine months ended September 30, 2019.

KinerjaPay Corp.

On May 6, 2019 (the "Effective Date"), the Company and KinerjaPay Corp., a Delaware corporation, entered into a Joint Venture Agreement (the "Singapore JVA") pursuant to which the parties will collaborate in the clinical development and commercialization of the Company's products in Singapore and the introduction of KinerjaPay products to be offered for sale by the Company globally outside Singapore.  The parties intend to pursue the joint venture through a newly established company (hereinafter the "Singapore JV Entity"), which the Company by itself, or together with a designee, will hold a 51% participating interest therein, with the remaining 49% participating interest being held by KinerjaPay Corp.

Under the Singapore JVA, each party shall endeavor to provide the Singapore JV Entity up to $5 million within three (3) years of the Singapore JVA.  Funding may be provided in part in the form of convertible loans, in-kind contributions, including intellectual property, and services related to advancement of the Singapore JV Entity.  The Company's in-kind contribution may be in the form of 250,000 shares of the Company's restricted stock, issuable to KinerjaPay or KinerjaPay designated third party (instead of to the Singapore JV Entity) on the Effective Date and to be held in escrow by the Company to be released to KinerjaPay in return for services to be provided by KinerjaPay or KinerjaPay designated third party as will be mutually agreed between the parties.

Under the Singapore JVA, the Company can require KinerjaPay to sell to the Company its participating interest in the Singapore JV Entity in consideration for the issuance of the Company's common stock based on an agreed upon formula for determining Singapore JV Entity valuation.

Apart from the above, there was no activity in the Singapore JV Entity.

Sponsored Research and Exclusive License Agreement with Columbia University

 Effective April 2, 2019, the Company and The Trustees of Columbia University in the City of New York, a New York corporation, ("Columbia") entered into a Sponsored Research Agreement (the "SRA") whereby the Company will provide financial support for studying the utility of serological tumor marker for tumor dynamics monitoring.  Under the terms of the SRA, the Company shall pay $300 thousand per year for three years, or for a total of $900 thousand, with payments of $150 thousand due every six months.

 Effective April 2, 2019, the Company and Columbia entered into an Exclusive License Agreement (the "Columbia License Agreement") whereby Columbia granted to the Company an exclusive license to discover, develop, manufacture and sell product in the field of cancer therapy.  In consideration of the licenses granted under the Columbia License Agreement, the Company shall pay to Columbia (i) a royalty of 5% of net sales of any patented product sold and (ii) 2.5% of net sales of other products.

IRB Approval for Liver Cell Collection

On April 29, 2019, the Company received Institutional Review Board ("IRB") approval to collect liver biopsies from patients at Rambam Medical Center located in Haifa, Israel for a planned study to confirm the suitability of liver cells for personalized cell replacement therapy for patients with insulin-dependent diabetes resulting from total or partial pancreatectomy.  The liver cells are intended to be bio-banked for potential future clinical use.

The goal of the proposed study, entitled "Collection of Human Liver Biopsy and Whole Blood Samples from Type 1 Diabetes Mellitus (T1DM), Total or Partial Pancreatectomy Patients for Potential use as an Autologous Source for Insulin Producing Cells in Future Clinical Studies," is to confirm the suitability of the liver cells for personalized cell replacement therapy, as well as eligibility of patients to participate in a future clinical study, as defined by successful AIP cell production from their own liver biopsy.  The secondary objective of the study is to evaluate patients' immune response to AIPs based on the patient's blood samples and followed by subcutaneous implantation into the patients' arm which would represent the first human trial. The Company has developed a novel technology based on technology licensed from Tel Hashomer Medical Research Infrastructure and Services Ltd., utilizing liver cells as a source for AIP cells as replacement therapy for islet transplantation.

During the study, liver samples will be collected and then processed and stored in specialized, clinical grade, tissue banks for potential clinical use.  The propagated cells will be maintained in a tissue bank and are intended to be utilized in a future clinical study, in which the cells will be transdifferentiated and administered back to the patients as a potential treatment. This personalized autologous process will be performed under our POCare model in which the patient liver samples are processed, cryopreserved and potentially re-injected, all in the medical center under clinical grade/GMP level conditions.

In June, 2019, the Company received additional Institutional Review Board ("IRB") approval to collect liver biopsies from patients at a leading medical center in USA for a planned study to confirm the suitability of liver cells for personalized cell replacement therapy for patients with insulin-dependent diabetes resulting from total pancreatectomy (the granted Orphan Drug Designation indication).  The liver cells are intended to be bio-banked at the New York Blood Center, NYC for potential future clinical use. In October 2019, a liver sample from the first recruited patient was collected and processed and stored at the New York Blood Center, NYC in specialized, clinical grade, tissue banks for potential clinical use.

Joint Venture Agreement with SBH Sciences, Inc.

On May 15, 2019, the Company entered into a Joint Venture Agreement with SBH Sciences, Inc., a Massachusetts corporation, ("SBH") for the establishment of a joint venture with SBH for the purpose of collaborating in the field of gene and cell therapy development, process and services of bio-exosome therapy products and services in the areas of diabetes, liver cells and skin applications, including wound healing (the "SBH JV Agreement").  Under the terms of the SBH JV Agreement, a joint venture entity shall be formed as an LLC in the State of Delaware, with participating interests equally held by the Company and SBH (the "SBH JV Entity").  The SBH JV Agreement requires that SBH and the Company shall each contribute $250,000 to the SBH JV Entity for the purpose of carrying out the initial development activities relating to (i) a development hub for in vitro assays design, development and optimization of standard operating procedures in order to demonstrate product safety, identity, purity, content and potency for cell-based product quality control, as required by regulatory agencies and (ii) novel therapies/assays in the gene and cell therapy field.  Further to the Company's and SBH's cash contributions to the SBH JV Entity, SBH and the Company shall make an in-kind contribution toward the development activities valued at $250 thousand for (i) SBH to create and manage a certified facility, know-how related to assay development, contribution of a human cell-line bank, the provision of a fully equipped in vitro cell culture lab, the establishment and training and performance of developed assays and for (ii) the Company to identify potential business development and revenue opportunities, regulation and intellectual property consulting, assay development as required for GMP manufacturing, budget and work planning and control testing.  The board of directors of the SBH JV Entity shall be comprised of three directors with one appointed by SBH and two appointed by the Company.  All intellectual property conceived or developed resulting from the business of the SBH JV Entity, that is not SBH's or the Company's background intellectual property, shall be owned exclusively by the SBH JV Entity, although the Company shall be granted the right to exclusively license any intellectual property arriving from the development activities of the SBH JV Entity, or exclusively distribute products based thereon.

During the third quarter of 2019, the Company transferred $50 thousand to SBH.

FDA Approval for Orphan Drug Designation for AIP Cells

On June 11, 2019, the FDA granted Orphan Drug Designation for the Company's AIP cells as a cell replacement therapy for the treatment of severe hypoglycemia-prone diabetes resulting from total pancreatectomy ("TP") due to chronic pancreatitis.  The incidence of diabetes following TP is 100%, resulting in immediate and lifelong insulin-dependence with the loss of both endogenous insulin secretion and that of the counter-regulatory hormone, glucagon.  Glycemic control after TP is notoriously difficult with conventional insulin therapy due to complete insulin dependence and loss of glucagon-dependent counter-regulation.  Patients with this condition experience both severe hyperglycemic and hypoglycemic episodes.

Construction of development and production facilities in the USA

 In August 2019, Masthercell US entered into a contract for the construction and development of its 32,011 square foot production facility in Houston, Texas. The total value of the contract is $7.8 million. By September 30, 2019, $3.4 million of this contract had been incurred. The facility is expected to be completed in the first half of 2020.

Grants

In December 2018, the Belgian subsidiary received the approval of a new grant from the Walloon Region for financial support of a maximum of Euro 317 thousand ($350 thousand in USD) in a program for the development of gene-therapy research for diabetes 1 treatment.  The program is planned to start in 2019 for a 2-year period until 2021.  In the first quarter of 2019, the Belgian subsidiary received an advance payment of grant in the amount of Euro 80 thousand ($90 thousand in USD).

In February 2019, the Israeli subsidiary and a Canadian partner received the approval of a new grant from the Canada-Israel Industrial Research and Development Foundation for financial support in a program for pre-clinical development of insulin producing cells using advanced gene delivery platforms.  In terms of the grant, the Israeli subsidiary can receive support of up to 100 Thousand Canadian Dollars ($75 Thousand in USD).  The program is planned to start in 2019 for a 2-year period until 2021.

See Note 8 regarding Lease commitments.

NOTE 6 - STOCK BASED COMPENSATION

a. Options Granted to employees

The table below summarizes the terms of options for the purchase of shares in the Company granted to employees during the period from January 1, 2019 to September 30, 2019:

The fair valuation of these option grants is based on the following assumptions:

b. Options Granted to non-employees

The table below summarizes all the options for the purchase of shares in the Company granted to consultants and service providers during the period from January 1, 2019 to September 30, 2019:

The fair valuation of these option grants is based on the following assumptions:

c. Shares and Warrants for the purchase of shares in the Company granted to non-employees

During December 2018, the Company issued to consultants 2,858 warrants, each exercisable at $7.00 per share for three years.  The fair value of those warrants as of the date of grant using the Black-Scholes valuation model was $8 thousand.

In December 2018, the Company entered into an investor relation services, marketing and related services agreement.  Under the terms of the agreement, the Company agreed to issue the consultant 10,000 shares of restricted common stock, of which the first 2,500 shares vested on the signing date, and 7,500 shares are to vest monthly over 3 months commencing January 2019.  As of September 30, 2019, 10,000 shares were fully vested.  The fair value of the shares was $51 thousand using the fair value of the shares on the vesting dates. $37 thousand was recognized during the nine months ended September 30, 2019.

In December 2018, the Company entered into a separate investor relations services, marketing and related services agreement.  Under the terms of the agreement, the Company agreed to issue the consultant 40,000 shares of restricted common stock, of which the first 6,667 shares vested on the signing date, and 33,333 shares vested monthly over five months commencing January 2019.  As of September 30, 2019, 40,000  shares were fully vested.  The fair value of the shares was $200 thousand using the fair value of the shares at the vesting dates. $163 thousand was recognized during the nine months ended September 30, 2019.

d. Options Granted to employees of Masthercell Global for the purchase of shares in Masthercell Global

The rows below summarize the terms of options granted to employees of Masthercell Global Inc. during the nine months ended September 30, 2019:

The fair valuation of these option grants is based on the following assumptions:

* Based on Masthercell Global valuation

** Based on comparable companies

For the nine months ended September 30, 2019, all outstanding convertible notes, options and warrants have been excluded from the calculation of the diluted net loss per share since their effect was anti-dilutive.  Diluted loss per share does not include 8,543,526 shares underlying outstanding options and warrants and 729,567 shares upon conversion of convertible loans for the nine months ended September 30, 2019, because the effect of their inclusion in the computation would be anti-dilutive.

NOTE 8 - LEASES

As of January 1, 2019, the Company adopted ASU No. 2016-02, "Leases (Topic 842)," which requires leases with durations greater than twelve months to be recognized on the balance sheet.  The Company adopted the standard using the modified retrospective approach with an effective date as of the beginning of our fiscal year, January 1, 2019.  The total impact of the adoption of this standard at January 1, 2019 is an increase of assets and liabilities in the amount of $2,919 thousand.  Prior year financial statements were not recast under the new standard and, therefore, those amounts are not presented below.  The Company elected the package of transition provisions available for expired or existing contracts, which allowed us to carryforward our historical assessments of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs.

The Company leases research and development facilities, equipment, offices and cars under finance and operating leases.  For leases with terms greater than 12 months, the Company record the related asset and obligation at the present value of lease payments over the term.  Many of the leases include rental escalation clauses, renewal options and/or termination options that are factored into the determination of lease payments when appropriate.

The Company's leases do not provide a readily determinable implicit rate.  Therefore, the Company estimated the incremental borrowing rate to discount the lease payments based on information available at lease commencement.

Manufacturing facilities

The Company leases space for its CDMO facilities in Belgium, Israel and the United States under operating lease agreements.  The leasing contracts are for a period of  1 - 16 years .

Research and Development facilities

The Company leases space for its research and development facilities in South Korea under an operating lease agreement.  The leasing contracts are for a period of  2 years .

Equipment

The Company leases laboratory equipment in Belgium under several finance lease agreements. The equipment is the basic material for our new production center (such as incubator, laminar flow and bio-reactor).  Each leasing contract is valid for a term of  5 years .

Offices

The Company leases space for offices in Belgium and Israel under operating leases.  The leasing contracts are valid for terms of  1 - 5 years . These contracts are considered as operational leasing and under operating lease right-of-use assets.

Cars

The Company leases cars.  Each leasing contract is valid for a term of  2 - 4 years . These contracts are considered as operational leasing and operating lease right-of-use assets.

The table below presents certain information related to lease costs and finance and operating leases during the three months ended September 30, 2019:

The table below presents supplemental cash flow information related to leases during the nine months ended September 30, 2019:

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet.

Future minimum lease payments as of November 30, 2018

Future minimum lease commitments under non-cancelable operating lease agreements are as follows:

Future minimum lease payments as of December 31, 2018

No material change in the month ended December 31, 2018.

Lease facilities in the United States

 During January 2019, Masthercell U.S. executed a lease agreement for production facilities in the United States.  Under the terms of the agreement, Masthercell U.S. leased approximately 32,011 square feet for 180 months.  Masthercell U.S. advanced $1.6 million on account of a security deposit, tenant improvement allowance and prepaid base rent.

Lease facilities in Belgium

 In March 2019, Masthercell announced plans to establish a new, state-of-the-art production site in the Gosselies Biopark in Belgium, designed to manufacture late-stage and commercially approved cell and gene therapy products.  In connection with this announcement, the Company signed a lease agreement for a 61,354 square foot building.