Pluri Inc. 10-Q

Item 1. Financial Statements. PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS As of September 30, 2021 (Unaudited ) PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS As of September 30, 2021 U.S. DOLLARS IN THOUSANDS (Unaudited) INDEX Page Interim Condensed Consolidated Balance Sheets 1-2 Interim Condensed Consolidated Statements of Operations 3 Interim Condensed Consolidated Statements of Changes in Shareholders' Equity 4-5 Interim Condensed Consolidated Statements of Cash Flows 6-7 Notes to Interim Condensed Consolidated Financial Statements 8 -14 i PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) U.S. Dollars in thousands (except share and per share data) Note September 30, 2021 June 30, 2021 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 14,611 $ 31,241 Short-term bank deposits 46,060 33,709 Restricted cash 607 597 Prepaid expenses and other current assets 1,548 1,824 Total current assets 62,826 67,371 LONG-TERM ASSETS: Long-term deposits 18,483 23,269 Severance pay fund 683 664 Property and equipment, net 1,176 1,499 Operating lease right-of-use asset 573 728 Other long-term assets 6 7 Total long-term assets 20,921 26,167 Total assets $ 83,747 $ 93,538 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 1 PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) U.S. Dollars in thousands (except share and per share data) Note September 30, 2021 June 30, 2021 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES Trade payables $ 2,303 $ 2,526 Accrued expenses 5,258 5,941 Operating lease liability 401 634 Accrued vacation and recuperation 983 1,203 Other accounts payable 1,420 1,213 Total current liabilities 10,365 11,517 LONG-TERM LIABILITIES Accrued severance pay 937 920 Operating lease liability 94 100 Loan from the European Investment Bank (EIB) 4 23,444 23,850 Total long-term liabilities 24,475 24,870 COMMITMENTS AND CONTINGENCIES 3 SHAREHOLDERS’ EQUITY Share capital: 5 Common shares $ 0.00001 par value per share: Authorized: 60,000,000 shares Issued and outstanding: 32,096,927 shares as of September 30, 2021, 31,957,782 shares as of June 30, 2021 * * Additional paid-in capital 390,360 387,172 Accumulated deficit ( 341,453 ) ( 330,021 ) Total shareholders' equity 48,907 57,151 Total liabilities and shareholders' equity $ 83,747 $ 93,538 (*) Less than $1 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 2 PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) U.S. Dollars in thousands (except share and per share data) Three months ended September 30, 2021 2020 Operating expenses: Research and development expenses $ ( 6,391 ) $ ( 6,203 ) Less: participation by the Israeli Innovation Authority (IIA), Horizon 2020 and other parties 38 265 Research and development expenses, net ( 6,353 ) ( 5,938 ) General and administrative expenses ( 5,088 ) ( 2,799 ) Operating loss ( 11,441 ) ( 8,737 ) Financial income 263 301 Financial expenses ( 254 ) ( 53 ) Financial income, net 9 248 Net loss $ ( 11,432 ) $ ( 8,489 ) Loss per share: Basic and diluted net loss per share $ ( 0.36 ) $ ( 0.33 ) Weighted average number of shares used in computing basic and diluted net loss per share 32,000,789 25,535,593 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) U.S. Dollars in thousands (except share and per share data) Common Shares Additional Paid-in Accumulated Total Shareholders’ Shares Amount Capital Deficit Equity Balance as of July 1, 2020 25,492,713 $ (* ) $ 336,257 $ ( 280,156 ) $ 56,101 Share-based compensation to employees, directors and non-employee consultants 73,741 (* ) 1,036 - 1,036 Exercise of warrants 42,857 (* ) 300 - 300 Exercise of options by non-employee consultants 3,500 (* ) - - - Net loss - - - ( 8,489 ) ( 8,489 ) Balance as of September 30, 2020 25,612,811 $ (* ) $ 337,593 $ ( 288,645 ) $ 48,948 (*) Less than $1 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) U.S. Dollars in thousands (except share and per share data) Common Shares Additional Paid-in Accumulated Total Shareholders’ Shares Amount Capital Deficit Equity Balance as of July 1, 2021 31,957,782 $ (* ) $ 387,172 $ ( 330,021 ) $ 57,151 Share-based compensation to employees, directors, and non-employee consultants 139,145 (* ) 3,188 - 3,188 Net loss - - - ( 11,432 ) ( 11,432 ) Balance as of September 30, 2021 32,096,927 $ (* ) $ 390,360 $ ( 341,453 ) $ 48,907 (*) Less than $1 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) U.S. Dollars in thousands Three months ended September 30, 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 11,432 ) $ ( 8,489 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 337 347 Share-based compensation to employees, directors and non-employee consultants 3,188 1,036 Decrease in prepaid expenses and other current assets and other long-term assets 277 407 Decrease in trade payables ( 222 ) ( 187 ) Increase (decrease) in other accounts payable, accrued expenses, accrued vacation and recuperation and other current liabilities ( 696 ) 880 Decrease in operating lease right-of-use asset and liability, net ( 84 ) ( 80 ) Increase in interest receivable on short-term deposits ( 267 ) ( 52 ) Linkage differences and interest on long-term deposits, restricted bank deposits and EIB loan ( 116 ) ( 1 ) Long term interest payable pursuant to EIB loan 228 - Accrued severance pay, net ( 2 ) ( 2 ) Net cash used for operating activities $ ( 8,789 ) $ ( 6,141 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment $ ( 15 ) $ ( 77 ) Proceeds from withdrawal of (investment in) short-term deposits ( 12,084 ) 3,754 Withdrawal of long-term deposits 4,859 522 Net cash provided (used) by investing activities $ ( 7,240 ) $ 4,199 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 6 PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) U.S. Dollars in thousands Three months ended September 30, 2021 2020 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds related to exercise of warrants - $ 300 Net cash provided by financing activities $ - $ 300 EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS ( 591 ) - Decrease in cash, cash equivalents and restricted cash ( 16,620 ) ( 1,642 ) Cash, cash equivalents and restricted cash at the beginning of the period 31,838 9,229 Cash, cash equivalents and restricted cash at the end of the period $ 15,218 $ 7,587 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 7 PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 1:-GENERAL a. Pluristem Therapeutics Inc., a Nevada corporation (“Pluristem Therapeutics”), was incorporated on May 11, 2001. Pluristem Therapeutics has a wholly owned subsidiary, Pluristem Ltd. (the “Subsidiary”), which is incorporated under the laws of the State of Israel. In January 2020, the Subsidiary established a wholly owned subsidiary, Pluristem GmbH (the “German Subsidiary” ) which is incorporated under the laws of Germany. Pluristem Therapeutics, the Subsidiary and the German Subsidiary are referred to as the “Company” or “Pluristem.” The Subsidiary and the German Subsidiary are referred to as the “Subsidiaries.” Pluristem Therapeutics’ common shares are traded on the Nasdaq Global Market and on the Tel-Aviv Stock Exchange under the symbol “PSTI”. b. The Company is a bio-technology company focused in the field of regenerative medicine and operates in one business segment. The Company is developing placenta-based cell therapy product candidates for the treatment of muscle trauma, hematological disorders, radiation damage and inflammation. The Company has incurred an accumulated deficit of approximately $ 341,453 and incurred recurring operating losses and negative cash flows from operating activities since inception. As of September 30, 2021, the Company’s total shareholders’ equity amounted to $ 48,907 . During the three-month period ended September 30, 2021, the Company incurred losses of $ 11,432 and its negative cash flow from operating activities was $ 8,789 . As of September 30, 2021, the Company’s cash position (cash and cash equivalents, short-term bank deposits and long-term bank deposits) totaled approximately $ 79,154 . The Company plans to continue to finance its operations from its current resources , by entering into licensing or other commercial agreements, from grants to support its research and development activities, from sales of its equity securities, as well as the potential additional draw down of funds from the Finance Agreement (as defined in Note 4) executed with the European Investment Bank (the “EIB”), assuming applicable milestones will be achieved. Management believes that its current resources, together with its existing operating plan, are sufficient for the Company to meet its obligations as they come due at least for a period of twelve months from the date of the issuance of these interim condensed consolidated financial statements. There are no assurances, however, that the Company will be able to obtain an adequate level of financial resources that are required for the long-term development and commercialization of its product candidates. NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES a. Unaudited Interim Financial Information The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair statement have been included (consisting only of normal recurring adjustments). For further information, reference is made to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2021. The year-end balance sheet data was derived from the audited consolidated financial statements as of June 30, 2021, but not all disclosures required by U.S. GAAP are included. Operating results for the three-month period ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending June 30, 2022. 8 PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (CONT.) b. Significant Accounting Policies The significant accounting policies followed in the preparation of these unaudited interim condensed consolidated financial statements are identical to those applied in the preparation of the latest annual financial statements. c. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates, judgments and assumptions that are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. d. Fair value of financial instruments The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, short-term and restricted bank deposits, accounts receivable and other current assets, trade payable and other accounts payable, accrued expenses and other liabilities, approximate fair value because of their generally short-term maturities. The Company measures its derivative instruments at fair value under Accounting Standards Codification (“ASC”), “Fair Value Measurements and Disclosures” (“ASC 820”). Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - Inputs other than Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3 - Unobservable inputs for the asset or liability. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company categorized each of its fair value measurements in one of these three levels of hierarchy. The Company measures its liability pursuant to the Finance Agreement with the EIB based on the aggregate outstanding amount of the combined principal and accrued interest. The Company does not reflect its liability for future royalty payments pursuant to the Finance Agreement with the EIB since the royalty payments are to be paid as a percentage of the Company’s future consolidated revenues, pro-rated to the amount disbursed, beginning in the fiscal year 2024 and continuing up to and including its fiscal year 2030, which cannot be measured at this time. 9 PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (CONT.) e. Recently Issued Accounting Pronouncements ASU No. 2016-13 - “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”): In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans, and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. The guidance also requires increased disclosures. The amendments contained in ASU 2016-13 were originally effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years for the Company. In November 2019, the FASB issued ASU No. 2019-10, which delayed the effective date of ASU 2016-13 for smaller reporting companies (as defined by the U.S. Securities and Exchange Commission, “SRC”) to fiscal years beginning after December 15, 2022, including interim periods. Early adoption is permitted. The Company meets the definition of a SRC and is adopting the deferral period for ASU 2016-13. The guidance requires a modified retrospective transition approach through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The Company is currently evaluating the impact of the adoption of ASU 2016-13 on its consolidated financial statements but does not expect that the adoption of this standard will have a material impact on its consolidated financial statements. NOTE 3: - COMMITMENTS AND CONTINGENCIES a. As of September 30, 2021, an amount of $ 607 of cash and deposits was pledged by the Subsidiary to secure its credit line and bank guarantees. b. Under the Law for the Encouragement of Industrial Research and Development, 1984, (the “Research Law”), research and development programs that meet specified criteria and are approved by the IIA are eligible for grants of up to 50 % of the project’s expenditures, as determined by the research committee, in exchange for the payment of royalties from the sale of products developed under the program. Regulations under the Research Law generally provide for the payment of royalties to the IIA of 3 % on sales of products and services derived from a technology developed using these grants until 100 % of the dollar-linked grant is repaid. The Company’s obligation to pay these royalties is contingent on its actual sale of such products and services. In the absence of such sales, no payment is required. Outstanding balance of the grants will be subject to interest at a rate equal to the 12 month LIBOR applicable to dollar deposits that is published on the first business day of each calendar year. Following the full repayment of the grant, there is no further liability for royalties. Through September 30, 2021, total grants from the IIA obtained aggregated to approximately $ 27,743 and total royalties paid and accrued amounted to $ 169 . As of September 30, 2021, the Company’s contingent liability in respect to royalties to the IIA amounted to $ 27,574 , not including LIBOR interest as described above. 10 PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 3: - COMMITMENTS AND CONTINGENCIES (CONT.) c. The Company has been awarded a marketing grant under the “Smart Money” program of the Israeli Ministry of Economy and Industry. The program’s aim is to assist companies to extend their activities in international markets. The goal market that was chosen was Japan. The Israeli government granted the Company budget resources that are intended to be used to advance the Company’s product candidate towards marketing in Japan and for regulatory activities there. As part of the program, the Company will repay royalties of 5 % from the Company’s income in Japan during five years, starting the year in which the Company will not be entitled to reimbursement of expenses under the program and will be spread over a period of up to 5 years or until the amount of the grant is fully paid . As of September 30, 2021, total grants obtained under this Smart Money program amounted to approximately $ 112 . As of September 30, 2021, the Company’s contingent liability with respect to royalties for this “Smart Money” program was $ 112 and no royalties were paid or accrued. d. The Company was awarded an additional Smart Money grant of approximately $ 229 from Israel’s Ministry of Economy and Industry to facilitate certain marketing and business development activities with respect to its advanced cell therapy products in the Chinese market, including Hong Kong. The Israeli government granted the Company budget resources that are intended to be used to advance the Company’s product candidate towards marketing in the China-Hong Kong markets. The Company will also receive close support from Israel’s trade representatives stationed in China, including Hong Kong, along with experts appointed by the Smart Money program. As part of the program, the Company will repay royalties of 5 % from the Company’s revenues in the region for a five-year period, beginning the year in which the Company will not be entitled to reimbursement of expenses under the program and will be spread over a period of up to 5 years or until the amount of the grant is fully paid . As of September 30, 2021, the aggregate amount of grant obtained from this Smart Money program was approximately $ 168 . As of September 30, 2021, the Company’s contingent liability with respect to royalties for this “Smart Money” program is $ 168 and no royalties were paid or accrued. e. In September 2017, the Company signed an agreement with the Tel-Aviv Sourasky Medical Center (Ichilov Hospital) to conduct a Phase I/II trial of PLX-PAD cell therapy for the treatment of Steroid-Refractory Chronic Graft-Versus-Host-Disease (“cGvHD”). As part of the agreement with the Tel-Aviv Sourasky Medical Center (Ichilov Hospital), the Company will pay royalties of 1 % from its net sales of the PLX-PAD product relating to cGvHD, with a maximum aggregate royalty amount of approximately $ 250 . f. The Company was awarded a marketing grant of approximately $ 52 under the “Shalav” program of the Israeli Ministry of Economy and Industry. The grant is intended to facilitate certain marketing and business development activities with respect to the Company’s advanced cell therapy products in the U.S. market. As part of the program, the Company will repay royalties of 3 %, but only with respect to the Company’s revenues in the U.S. market in excess of $ 250 of its revenues in fiscal year 2018, upon the earlier of the five year period beginning the year in which the Company will not be entitled to reimbursement of expenses under the program and/or until the amount of the grant, which is linked to the Consumer Price Index, is fully paid. 11 PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 3: - COMMITMENTS AND CONTINGENCIES (CONT.) As of September 30, 2021, total grants obtained under the “Shalav” program amounted to approximately $ 52 . As of September 30, 2021, the Company’s contingent liability with respect to royalties for this “Shalav” program was $ 52 and no royalties were paid or accrued. NOTE 4: - LOAN FROM THE EIB On April 30, 2020, Pluristem entered into a finance agreement (the “Finance Agreement”) with the EIB, pursuant to which Pluristem, through the German Subsidiary can obtain a loan in the amount of up to € 50 million, subject to certain milestones being reached (the “ Loan”), payable in three tranches, with the first tranche consisting of € 20 million, the second of € 18 million and the third of € 12 million for a period of 36 months from the signing of the Finance Agreement. The tranches will be treated independently, each with its own interest rate and maturity period. The interest rate is 4 % in the aggregate (consisting of a 0 % fixed interest rate and a 4 % deferred interest rate payable upon maturity, respectively) per year for the first tranche, 4 % in the aggregate (consisting of a 1 % fixed interest rate and a 3 % deferred interest rate payable upon maturity, respectively) per year for the second tranche and 3 % (consisting of a 1 % fixed interest rate and a 2 % deferred interest rate payable upon maturity, respectively) per year for the third tranche. In addition to any interest payable on the Loan, the EIB is entitled to receive royalties from future revenues, if any, of Pluristem for a period of seven years starting in 2024, in an amount equal to between 0.2 % to 2.3 % of the Company’s consolidated revenues, pro-rated to the amount disbursed from the Loan to Pluristem beginning in the fiscal year 2024 and continuing up to and including its fiscal year 2030. During June 2021, Pluristem received the first tranche in an amount of $ 24,449 (€ 20 million) of the Finance Agreement. The amount received is due on June 1, 2026 and bears annual interest of 4 % to be paid with the principal of the Loan. As of September 30, 2021, the linked principal balance in the amount of $ 23,140 and the interest accrued in the amount of $ 304 are presented as part of the Loan as long term liabilities. NOTE 5: - SHAREHOLDERS’ EQUITY a. Pursuant to a shelf registration on Form S-3 declared effective by the SEC on July 23, 2020, in July 2020 the Company entered into an Open Market Sale Agreement (“ATM Agreement”) with Jefferies LLC (“Jefferies”), which provides that, upon the terms and subject to the conditions and limitations in the ATM Agreement, the Company may elect, from time to time, to offer and sell common shares having an aggregate offering price of up to $ 75,000 through Jefferies acting as sales agent. During the year ended June 30, 2021, the Company sold 1,045,097 common shares under the ATM Agreement at an average price of $ 8.50 per share for aggregate net proceeds of approximately $ 8,506 , net of issuance expenses of $ 380 . There were no sales under the ATM Agreement during the three months ended September 30, 2021. 12 PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 5: - SHAREHOLDERS’ EQUITY (CONT.) b. Options to consultants: A summary of the options to non-employee consultants under the Company’s 2005 and 2016 equity incentive plans is as follows: Three months ended September 30, 2021 Number Weighted Average Exercise Price Weighted Average Remaining Contractual Terms (in years) Aggregate Intrinsic Value Price Options outstanding at the beginning of the period 39,836 $ - - - Options forfeited ( 91 ) $ - Options outstanding at the end of the period 39,745 $ - 6.75 $ 153 Options exercisable at the end of the period 36,620 $ - 6.71 $ 145 Options unvested 3,125 $ - 7.22 $ 8 Options vested and expected to vest 39,745 $ - 6.75 $ 153 Compensation expenses recorded in the in general and administration expenses related to options granted to consultants for the three months ended September 30, 2021 and 2020 were $ 2 and $ 3 , respectfully. c. Restricted Shares units (“RSUs”) to employees, directors and consultants: 1. RSUs to employees and directors: The following table summarizes the activity related to RSUs granted to employees and directors under the Company’s 2005, 2016 and 2019 equity incentive plans for the three-month period ended September 30, 2021: Three months ended September 30, 2021 2020 Number Unvested at the beginning of the period 2,404,415 415,194 Granted 40,000 2,220,000 Forfeited ( 23,609 ) ( 4,875 ) Vested ( 118,520 ) ( 73,116 ) Unvested at the end of the period 2,302,286 2,557,203 Expected to vest after the end of the period 2,261,117 2,539,848 13 PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 5: - SHAREHOLDERS’ EQUITY (CONT.) c. RSUs to employees, directors and consultants (cont.): Compensation expenses related to RSUs granted to employees and directors were recorded as follows: Three months ended September 30, 2021 2020 Research and development expenses $ 209 $ 92 General and administrative expenses 2,907 822 $ 3,116 $ 914 Unamortized compensation expenses related to RSUs granted to employees and directors is approximately $ 7,055 to be recognized by the end of March 2025. 2. RSUs to consultants: The following table summarizes the activity related to unvested RSUs granted to consultants under the Company’s 2005, 2016 and 2019 equity incentive plans for the three-month period ended September 30, 2021 and 2020: Three months ended September 30, 2021 2020 Number Unvested at the beginning of the period 76,249 6,250 Granted - 85,000 Vested ( 20,625 ) ( 625 ) Unvested at the end of the period 55,624 90,625 Compensation expenses related to RSUs granted to consultants were recorded as follows: Three months ended September 30, 2021 2020 Research and development expenses $ 32 $ 103 General and administrative expenses 38 16 $ 70 $ 119 14