What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-09-12 compared with 2022-09-21 · 276 added, 288 removed, 32 unchanged (95% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

We are a biotechnology company with an advanced cell-based technology

We have developed a unique three-dimensional, or 3D, technology platform for cell expansion with an industrial scale in-house

GMP cell manufacturing facility.

We are utilizing our technology in the field of regenerative medicine and food tech and plan to utilize

it in other industries and verticals that have a need for our mass scale and cost-effective cell expansion platform.

We use our advanced cell-based

technology platform in the field of regenerative medicine to develop placenta-based cell therapy product candidates for the treatment

of inflammatory, muscle injuries and hematologic conditions.

Our PLX cells are adherent stromal cells that are expanded using our 3D platform.

Our PLX cells can be administered to patients off-the-shelf, without blood or tissue matching or additional manipulation prior to administration.

PLX cells are believed to release a range of therapeutic proteins in response to the patient’s condition.

Our operations are focused on the research, development and manufacturing

of cells and cell-based products, conducting clinical studies and the business development of cell therapeutics and cell-based technologies,

such as our recent collaboration with Tnuva Food Industries – Agricultural Cooperative in Israel Ltd., through its fully owned subsidiary,

Tnuva, to use our technology to establish a cultivated food platform.

We expect to demonstrate a

real-world impact and value from our cell-based technology platform, our current PLX pipeline and from other cell-based product candidates

that may be developed based on our platform.

Our business model for commercialization and revenue generation includes, but is not limited

to, licensing deals, joint ventures, partnerships, joint development agreements and direct sale of our products.

We are now completing a multinational

Phase III clinical study in muscle recovery following surgery for hip fracture, with sites in the United States, Europe and Israel.

the last year, we have completed a Phase II clinical study in Acute Respiratory Distress Syndrome, or ARDS, associated with COVID-19 and

a Phase I clinical study for incomplete recovery following bone marrow transplantation.

Additional areas of focus for clinical development

include an investigator-led Phase I/II Chronic Graft versus Host Disease, or cGVHD, study in Israel, and an Acute Radiation Syndrome,

or ARS, program under the U.S.

Food and Drug Administration, or FDA, animal rule.

We believe that each of these indications represents

a severe unmet medical need.

We were incorporated in Nevada on May 11, 2001.

owned subsidiary, Pluri Biotech Ltd., or the Subsidiary, previously named Pluristem Ltd., which is incorporated under the laws of the

State of Israel.

In January 2020, the Subsidiary established a wholly owned subsidiary, Pluristem GmbH, which is incorporated under the

laws of Germany.

In January 2022, the Subsidiary established an additional subsidiary, Plurinuva Ltd., or Plurinuva, which is incorporated

under the laws of Israel, which followed the execution of the collaboration agreement with Tnuva .

On July 26, 2022, we completed

our legal entity name change from Pluristem Therapeutics Inc.

to Pluri Inc., by merging a wholly-owned

subsidiary with and into the Company, with us being the surviving corporation.

The name change reflects a broader strategy of leveraging

our 3D cell expansion technology to develop innovative cell-based products that can be harnessed for a range of fields beyond medicine,

providing solutions for various areas of life.

Effective July 26, 2022, our Nasdaq ticker symbol was changed to “PLUR.”

RESULTS OF OPERATIONS – YEAR ENDED JUNE 30, 2022 COMPARED

TO YEAR ENDED JUNE 30, 2021.

Revenues for the year ended

June 30, 2022 were $234,000, compared to no revenues for the year ended June 30, 2021.

The revenues in the year ended June 30, 2022 were

related to the revenue derived from our license agreement with Takeda and the sale of our PLX cells for research use.

Research and Development, Net

We are a biotechnology company

with an advanced cell-based technology platform.

We have developed a unique 3D technology platform for cell expansion with an industrial

scale in-house GMP cell manufacturing facility.

We are utilizing our technology in the field of regenerative medicine and food tech and

plan to utilize it in other industries and verticals that have a need for our mass scale and cost-effective cell expansion platform.

use our advanced cell-based technology platform in the field of regenerative medicine to develop placenta-based cell therapy product

candidates for the treatment of inflammatory, muscle injuries and hematologic conditions.

Our PLX cells are adherent stromal cells that

are expanded using our 3D platform.

Our PLX cells can be administered to patients off-the-shelf, without blood or tissue matching

or additional manipulation prior to administration.

PLX cells are believed to release a range of therapeutic proteins in response to

the patient’s condition.

Our operations are focused

on the research, development and manufacturing of cells and cell-based products, conducting clinical studies and the business development

of cell therapeutics and cell-based technologies, such as our collaboration with Tnuva to use our technology to establish a cultivated

food platform, as well as the collaboration agreement we signed in 2022 with a leading European manufacturer of APIs to use our expansion

technology, which aims to revolutionize the production of biologics by enabling a cost-effective, sustainable and cruelty-free ingredient.

In the pharmaceutical area,

we have focused on several indications utilizing our product candidates, including, but not limited to, muscle recovery following surgery

for hip fracture, incomplete recovery following bone marrow transplantation CLI Chronic Graft versus Host Disease and a potential treatment

Some of these studies have been completed while others are still ongoing.

We believe that each of these indications is a severe

unmet medical need.

In July 2023, we announced

that we signed a three year $4.2 million contract with the NIAID, which is part of the NIH.

Pluri will collaborate with the U.S.

of Defense’s Armed Forces Radiobiology Research Institute, or AFRRI, and the Uniformed Services University of Health Sciences, or

USUHS, in Maryland, U.S.A., to further advance the development of its PLX-R18 cell therapy as a potential novel treatment for H-ARS, a

deadly disease that can result from nuclear disasters and radiation exposure.

In the food tech field, we

established a new venture with Tnuva, Ever After Foods .

Ever After Foods is developing cultivated meat products based on Pluri’s

platform 3D cell expansion technology.

OF OPERATIONS – YEAR ENDED JUNE 30, 2023 COMPARED TO YEAR ENDED JUNE 30, 2022.

for the year ended June 30, 2023 were $287,000, compared to $234,000 for the year ended June 30, 2022.

The revenues in the year ended

June 30, 2023 were mainly related to our API Collaboration and the revenues in the year ended June 30, 2022 were related to the revenue

derived from our license agreement with Takeda and the sale of our PLX cells for research use.

and Development, Net

Research and development,

net (costs less participation and grants by the IIA, Horizon 2020 and other parties) decreased by 19% from $30,066,000 for the year ended

June 30, 2021, to $24,377,000 for the year ended June 30, 2022.

The decrease is mainly attributed to a decrease

in clinical study expenses following the termination of our CLI study, end of enrollment of our Phase II studies of ARDS associated with

COVID-19, and end of enrollment in our Phase III hip study , as well as a decrease in share-based

compensation expenses related to restricted share units, or RSUs, granted to employees and consultants.

The decrease was partially offset

by an increase in materials purchased to support our manufacturing plans, increased payroll expenses related to payroll adjustments and

exchange rate fluctuations, and an increase in building lease costs following the extension of our lease contract.

General and Administrative

net (costs less participation and grants by the IIA, Horizon 2020, Horizon Europe and other parties) decreased by 35% from $24,377,000

for the year ended June 30, 2022, to $15,745,000 for the year ended June 30, 2023.

The decrease is mainly attributed to:

(1) a decrease

in clinical studies expenses following the completion of our CLI and ARDS associated with COVID-19 studies and the end of enrollment of

our muscle regeneration following hip fracture study in November 2021, (2) a decrease in material purchases in accordance with our manufacturing

needs and plans, (3) a decrease in salaries and related expenses as part of our efficiency cost-reduction plan , specifically a reduction

of 22 research and development, or R&D, employees in Pluri Biotech Ltd.

(108 on June 30, 2023, compared to 130 on June 30, 2022),

(4) a decrease in share-based compensation expenses and (5) higher participation by the European Union with respect to the Horizon 2020

grants, which relate to our CLI and muscle regeneration following hip fracture studies.

and Administrative

General and administrative

expenses decreased by 32% from $17,450,000 for the year ended June 30, 2022, to $11,779,000 for the year ended June 30, 2023.

decrease is mainly attributed to a decrease in share-based compensation expenses related to market based vesting conditioned RSUs granted

to our CEO and Chairman, partially offset by an increase in share-based compensation expenses related to the allocation of shares

of Plurinuva to our CEO, CFO and Chairman pursuant to their employment or consulting agreement (see also notes 1e and 9b1 to the consolidated

financial statements included elsewhere in this Annual Report) and increased payroll expenses related to new employees, payroll adjustments

and exchange rate fluctuations.

Total Financial Income, Net

Financial income, net decreased from $758,000 for the year ended June

30, 2021 to $219,000 for the year ended June 30, 2022.

This decrease is mainly attributable to an

increase in interest expenses related to the EIB loan provided to us in June 2021 pursuant to the EIB Finance Agreement and losses

from hedging transactions due to strength of the U.S Dollar against the Euro, partially offset by

exchange rate income on lease liability due to the strength of the U.S Dollar against the NIS and exchange rates adjustments relating

to the EIB loan.

Net loss decreased from $49,865,000

for the year ended June 30, 2021 to $41,374,000 for the year ended June 30, 2022.

The decrease was

mainly due to a decrease in research and development expenses , net, and a decrease in general

and administrative expenses for the reasons mentioned above.

We had a net loss attributed

to our non-controlling interest in Plurinuva for the year ended June 30, 2022 of $132,000.

is mainly attributed to a decrease in share-based compensation expenses related to market based vesting conditioned restricted stock units,

or RSUs, granted to our CEO and Chairman, a decrease in share-based compensation expenses related to the allocation of shares of

Ever After Foods to our CEO, Chief Financial Officer, or CFO, and Chairman of our Board pursuant to their employment or consulting agreements,

employee terminations and RSU expense amortization over time (see also notes 1e and 9c to the consolidated financial statements included

elsewhere in this Annual Report).

These decreases were partially offset by an increase in share-based compensation expenses related to

the amount of RSUs and options granted to our CEO.

Financial Income (Expense), Net

financial income (expenses), net decreased from $219,000 in financial income for the year ended 2022 to $1,641,000 in financial expenses

for the year ended June 30, 2023.

This decrease is mainly attributable to (1) expenses relating to exchange rate differences related to

the EIB loan provided to us in June 2021 pursuant to EIB Finance Agreement (as a result of the strength of the Euro against the U.S.

which increased by 5% in 2023 compared to 2022 where it decreased by 7%), and (2) a decrease due to exchange rate expenses on a lease

liability due to the strength of the U.S Dollar against the NIS which resulted in an expense of $690,000.

The decrease in financial income

(expense) was partially offset by an increase related to interest income from bank deposits.

Loss for the Year

loss decreased from $41,374,000 for the year ended June 30, 2022 to $28,887,000 for the year ended June 30, 2023.

The decrease was mainly

due to a decrease in R&D expenses, net, and a decrease in general and administrative expenses for the reasons mentioned above.

had a net loss attributed to our non-controlling interest in Ever After Foods for the year ended June 30, 2023 of $566,000.

Loss per share for the year

1 unchanged sentence

The change in the loss per share

was mainly as a result of a decrease in the loss for the year, partially offset by an increase in our weighted average number of shares

due to the issuance of additional shares during Fiscal Year 2022.

The increase in weighted average

common shares outstanding reflects the issuance of additional shares upon settlement of RSUs issued to directors, employees and consultants.

Liquidity and Capital Resources

As of June 30, 2022, our total

current assets were $57,747,000 and our total current liabilities were $6,829,000.

On June 30, 2022, we had a working capital surplus

of $50,918,000 and an accumulated deficit of $371,263,000.

As of June 30, 2021, our total

current assets were $67,371,000 and our total current liabilities were $11,517,000.

On June 30, 2021, we had a working capital surplus

of $55,854,000 and an accumulated deficit of $330,021,000.

Our cash and cash equivalents and restricted cash as of June 30, 2022,

amounted to $10,779,000, which reflects a decrease of $21,059,000 from the $31,838,000 reported as of June 30, 2021.

Our bank deposits

as of June 30, 2022, amounted to $45,244,000 compared to $56,978,000 as of June 30, 2021.

Our cash equivalents and restricted cash decreased

in the year ended June 30, 2022 for the reasons presented below.

Our cash used in operating activities was $36,501,000 during the year

ended June 30, 2022, and $30,910,000 during the year ended June 30, 2021.

Cash used in operating activities in the year ended June 30,

2022, and in the year ended on June 30, 2021 primarily consisted of payments to subcontractors, suppliers, and professional services providers

related to our ongoing clinical studies and payments of salaries to our employees, offset by participation of the IIA, Horizon 2020 or

other third parties.

Cash provided by investing activities was $11,783,000 during the year

ended June 30, 2022, as opposed to cash used for investing activities of $7,265,000 during the year ended June 30, 2021.

Cash provided

by investing activities in the year ended June 30, 2022 consisted primarily of the withdrawal of $23,269,000 of long-term deposits, partially

offset by cash investment in short-term deposits of $11,206,000 and payments of $280,000 related to investments in property and equipment.

Cash used for investing activities in the year ended June 30, 2021, consisted primarily of cash

used for investment in long-term deposits of $10,953,000 and payments of $373,000 related to investments in property and equipment, partially

offset by the withdrawal of $4,061,000 of short-term deposits.

was mainly as a result of a decrease in the loss for the year, and by an increase in our weighted average number of shares due to the

issuance of additional shares during fiscal year 2023.

increase in weighted average common shares outstanding reflects the issuance of additional shares pursuant to a private placement offering

we conducted in December 2022, or the December 2022 Private Placement, and the issuance of additional shares upon the vesting of RSUs

issued to directors, employees and consultants.

and Capital Resources

of June 30, 2023, our total current assets were $41,409,000 and our total current liabilities were $5,621,000.

On June 30, 2023, we had

a working capital surplus of $35,788,000 and an accumulated deficit of $399,584,000.

of June 30, 2022, our total current assets were $57,747,000 and our total current liabilities were $6,829,000.

On June 30, 2022, we had

a working capital surplus of $50,918,000 and an accumulated deficit of $371,263,000.

Our cash, cash equivalents

and restricted cash as of June 30, 2023, amounted to $5,629,000, which reflects a decrease of $5,150,000 from the $10,779,000 reported

as of June 30, 2022.

Our bank deposits as of June 30, 2023, amounted to $34,811,000 compared to $45,244,000 as of June 30, 2022.

equivalents and restricted cash decreased in the year ended June 30, 2023, for the reasons presented below.

Our cash used in operating

activities was $22,857,000 during the year ended June 30, 2023, and $36,501,000 during the year ended June 30, 2022.

The decrease in cash

used in operating activities is mainly attributed to a decrease in net loss following the completion of certain clinical trials and the

implementation of our cost reduction and efficiency plan that we initiated to align with the change in our business strategy.

in operating activities in year ended June 30, 2023 and June 30, 2022 consisted primarily of payments of fees to our suppliers, subcontractors,

professional services providers and consultants, and payments of salaries to our employees, partially offset by grants from the IIA, the

EU’s Horizon 2020, Horizon Europe and 2022 programs, Israel’s Ministry of Economy and other research grants.

Cash provided by investing

activities was $9,698,000 during the year ended June 30, 2023, as opposed to cash provided for investing activities of $11,783,000 during

the year ended June 30, 2022.

Cash provided by investing activities in the year ended June 30, 2023 consisted primarily of the withdrawal

of $9,960,000 of short-term deposits, partially offset by payments of $262,000 related to investments in property and equipment.

provided by investing activities in the year ended June 30, 2022, consisted primarily of a withdrawal of $12,063,000 of short-term deposits

partially offset by payments of $280,000 related to investments in property and equipment.

Financing activities provided

cash in the amount of $8,024,000 during the year ended June 30, 2023, and $7,500,000 during the year ended June 30, 2022.

The cash provided

in the year ended June 30, 2022, from financing activities is related to net proceeds of $7,500,000

received from an investment by Tnuva in Plurinuva .

The cash provided in the year ended

June 30, 2021 from financing activities is related to:

(1) net proceeds of $36,589,000 from our registered direct offering which closed

in February 2021 and common share issuances made under the Open Market Sale Agreement SM , or the ATM Agreement, that we entered

into with Jefferies LLC, or Jefferies, on July 16, 2020, (2) proceeds of $24,449,000 received from the EIB pursuant to the EIB Finance

Agreement, and (3) net proceeds of $364,000 from the exercise of outstanding warrants.

The financing

activities during the year ended June 30, 2023 related to issuances of common shares and warrants, net of issuance costs, in the December

2022 Private Placement.

The financing activities during year ended June 30, 2022 were related to proceeds of $7,500,000 we received from

Tnuva as an investment in Ever After Foods.

December 13, 2022, and December 27, 2022, we entered into a series of securities purchase agreements with several purchasers for an aggregate

of 8,155,900 common shares and warrants, or the Warrants, to purchase up to 8,155,900 common shares.

On December 13, 2022, we executed

securities purchase agreements to sell, at a purchase price of $1.03 per share, up to 5,579,883 common shares and Warrants to purchase

up to 5,579,833 common shares, with an exercise price of $1.03 per share and a term of three years.

On December 14, 2022, we executed

securities purchase agreements to sell, at a purchase price of $1.05 per share, up to 2,068,517 common shares and Warrants to purchase

up to 2,068,517 common shares, with an exercise price of $1.05 per share and a term of three years.

On December 15, 2022, we executed

securities purchase agreements to sell, at a purchase price of $1.06 per share, up to 237,500 common shares and Warrants to purchase up

to 237,500 common shares, with an exercise price of $1.06 per share and a term of three years.

On December 19, 2022, we executed a securities

purchase agreement to sell, at a purchase price of $1.09 per share, up to 135,000 common shares and Warrants to purchase up to 135,000

common shares, with an exercise price of $1.09 per share and a term of three years.

On December 27, 2022, we executed a securities purchase

agreement to sell, at a purchase price of $1.12 per share, up to 135,000 common shares and Warrants to purchase up to 135,000 common shares,

with an exercise price of $1.12 per share and a term of three years.

The Warrants sold in the December 2022 Private Placement will be

exercisable within six months from their issuance date.

As of June 30, 2023, the Company issued 8,155,900 common shares and Warrants that

relate to the December 2022 Private Placement and received $8,024,000 as of that date net of $445 from issuance expenses.

addition, the purchasers in the December 2022 Private Placement agreed to execute proxies permitting our CEO and CFO to vote the securities

purchased in the December 2022 Private Placement in favor of any shareholder vote relating to a future increase of our authorized shares.

Pursuant to the securities purchase agreements executed with the purchasers, we agreed to hold a meeting of shareholders within 200 days

of the execution of the securities purchase agreements for the purpose of increasing our authorized shares.

April 27, 2023, our shareholders approved an amendment to our articles of incorporation to increase the number of authorized common shares

from 60,000,000 shares to 300,000,000 shares and such increase was effectuated on May 1, 2023, when the Company filed its amendment to

its articles of incorporation reflecting such increase.

As such, the Warrants became exercisable 6 months from the date of their issuance.

December 14, 2022, Yaky Yanay, our CEO, agreed to forgo, starting January 1, 2023, $375,000 of his annual cash salary for the next twelve

months in return for equity grants, issuable under our existing equity compensation plans.

In that regard, we granted Mr.

Yanay (i) 334,821

RSUs, vesting ratably each month, and (ii) options to purchase 334,821 common shares, vesting ratably each month, with a term of three

years, at an exercise price of $1.12 per share.

In addition, the Board also agreed to grant Mr.

Yanay options to purchase 1,500,000 common

shares, with a term of three years, with the following terms:

(i) options to purchase 500,000 common shares at an exercise price of $1.56

per share, 50% vesting on June 30, 2023 and 50% vesting on December 31, 2023, (ii) options to purchase 500,000 common shares at an exercise

price of $2.08 per share, 50% vesting on June 30, 2023 and 50% vesting on December 31, 2023, and (iii) options to purchase 500,000 common

shares at an exercise price of $2.60 per share, 50% vesting on June 30, 2023 and 50% vesting on December 31, 2023.

All options were granted

in January 2023 and will expire three years from the later of the vesting date.

On July 16, 2020, we entered

into the ATM Agreement with Jefferies, pursuant to which we may issue and sell shares of our common shares having an aggregate offering

price of up to $75,000,000 from time to time through Jefferies.

Upon entering into the ATM Agreement, we filed a new shelf registration

statement on Form S-3, which was declared effective by the SEC on July 23, 2020.

During the year ended June 30, 2021, we sold 1,045,097

of our common shares under the ATM Agreement at an average price of $8.50 per share for aggregate net proceeds of approximately $8,506,000,

net of issuance expenses of $380,000.

During the year ended June 30, 2022, we did not sell of our

any common shares under the ATM Agreement.

In the year ended June 30,

2021, warrants to purchase up to 51,999 shares from our April 2019 firm commitment public offering were exercised by investors at an exercise

price of $7.00 per share, resulting in the issuance of 51,999 common shares for net proceeds of approximately $364,000.

During the year

ended June 30, 2022, no warrants to purchase shares were exercised.

On February 2, 2021, we entered

into a securities purchase agreement with several institutional investors, or the Investors, pursuant to which we sold, in a registered

direct offering, directly to the Investors, 4,761,905 common shares, for gross proceeds of $30,000,000.

The aggregate net proceeds were

approximately $28,077,000, net of issuance expenses of approximately $1,923,000.

In April 2020, we and our subsidiaries, Pluristem Ltd.

and Pluristem

GmbH, executed the EIB Finance Agreement for funding of up to €50 million in the aggregate, payable in three tranches.

from the EIB Finance Agreement are intended to support our research and development in the European Union to further advance our regenerative

cell therapy platform, and to bring the products in our pipeline to market.

The proceeds from the EIB Finance Agreement are expected to

be deployed in three tranches, subject to the achievement of certain clinical, regulatory and scaling up milestones.

We do not expect

to receive additional funds pursuant to the EIB Finance Agreement.

During June 2021, we received

the first tranche in the amount of €20 million pursuant to the EIB Finance Agreement.

The amount received is due to be repaid on

June 1, 2026 and bears annual interest of 4% to be paid together with the principal of the loan.

As of June 30, 2022, the interest accrued

was in the amount of €865,000.

In addition to the interest payable to the EIB, the EIB is also

entitled to royalty payments, pro-rated to the amount disbursed from the EIB loan, on our consolidated revenues beginning in the fiscal

year 2024 up to and including its fiscal year 2030, in an amount equal to up to 2.3% of our consolidated revenues below $350 million,

1.2% of our consolidated revenues between $350 million and $500 million and 0.2% of our consolidated revenues exceeding $500 million.

Non-dilutive grants

During the year ended June

30, 2022, we did not receive any cash grants from the European Union research and development consortiums relating to the Horizon 2020

program, as opposed to approximately $239,000 received in cash during the year ended June 30, 2021.

According to the IIA grant

terms, we are required to pay royalties at a rate of 3% on sales of products and services derived from technology developed using this

and other IIA grants until 100% of the dollar-linked grants amount plus interest are repaid.

In the absence of such sales, no payment

During the year ended June 30, 2022, no royalties were paid to the IIA.

30, 2022 , total grants obtained from the IIA aggregated to approximately $27,743,000 and total royalties

into an at-the market agreement, or the ATM Agreement, with Jefferies LLC, or Jefferies, pursuant to which we may issue and sell shares

of our common shares having an aggregate offering price of up to $75,000,000 from time to time through Jefferies.

Upon entering into the

ATM Agreement, we filed a new shelf registration statement on Form S-3, which was declared effective by the SEC on July 23, 2020.

21, 2022, as a result of General Instruction I.B.6 of Form S-3, and in accordance with the terms of the Sales Agreement, we reduced the

amount available to be sold under the ATM Agreement to a maximum aggregate offering price of up to $11,800,000 of our common shares from

time to time through Jefferies.

During the years ended June 30, 2022, and 2023, we did not sell of our any common shares under the ATM

On September 7, 2023, we provided

a formal notice of termination of the ATM Agreement with Jefferies, which took effect on September 8, 2023.

Pursuant to a shelf registration

on Form S-3 filed on July 20, 2023, which we intend to obtain the effectiveness of in the near term, the Company may elect, from time

to time, to offer and sell shares of common stock, preferred stock, warrants and units having an aggregate offering price of up to $200,000,000.

April 2020, we and our subsidiaries, Pluri Biotech Ltd.

and Pluristem GmbH, executed the EIB Finance Agreement for non–dilutive

funding of up to €50 million in the aggregate, payable in three tranches.

The proceeds from the EIB Finance Agreement were intended

to support our research and development in the EU to further advance our regenerative cell therapy platform, and to bring the products

in our pipeline to market.

The term of the project was three years commencing on January 1, 2020.

June 2021, we received the first tranche in the amount of €20 million pursuant to the EIB Finance Agreement.

The amount received

is due to be repaid on June 1, 2026, and bears annual interest of 4% to be paid together with the principal of the loan.

As of June 30,

2023, the interest accrued was in the amount of €1,665,000.

In addition to the interest payable, the EIB is also entitled to royalty

payments, pro-rated to the amount disbursed from the EIB loan, on our consolidated revenues beginning in the fiscal year 2024 up to and

including its fiscal year 2030, in an amount equal to up to 2.3% of our consolidated revenues below $350 million, 1.2% of our consolidated

revenues between $350 million and $500 million and 0.2% of our consolidated revenues exceeding $500 million.

As the project term ended

on December 31, 2022, we do not expect to receive additional funds pursuant to the EIB Finance Agreement.

Innovation Authority (IIA)

to the IIA grant terms, we are required to pay royalties at a rate of 3% on sales of products and services derived from technology developed

using this and other IIA grants until 100% of the dollar-linked grants amount plus interest are repaid.

In the absence of such sales,

no payment is required.

Through June 30, 2023, total grants obtained from the IIA aggregated to approximately $27,743,000 and total royalties

paid and accrued amounted to $179,000.

The IIA may impose certain

conditions on any arrangement under which the IIA permits the Company to transfer technology or development out of Israel or outsource

manufacturing out of Israel.

While the grant is given to the Company over a certain period of time (usually a year), the requirements

and restrictions under the Israeli Law for the Encouragement of Industrial Research and Development, 1984 continue and do not have a set

expiration period, except for the royalties, which requirement to pay them expires after payment in full.

In June 2020, we

announced that we were selected as a member of the CRISPR-IL consortium, a group funded by the IIA.

CRISPR-IL brings together the

leading experts in life science and computer science from academia, medicine, and industry, to develop AI based end-to-end genome-editing

IIA may impose certain conditions on any arrangement under which the IIA permits the Company to transfer technology or development out

of Israel or outsource manufacturing out of Israel.

While the grant is given to the Company over a certain period of time (usually a

year), the requirements and restrictions under the Israeli Law for the Encouragement of Industrial Research and Development, 1984 continue

and do not have a set expiration period, except for the royalties, which requirement to pay them expires after payment in full.

In June 2020, we announced

that we were selected as a member of the CRISPR-IL consortium, a group funded by the IIA.

CRISPR-IL brings together the leading experts

in life science and computer science from academia, medicine, and industry, to develop AI based end-to-end genome-editing solutions.

next-generation, multi-species genome editing products for human, plant, and animal DNA, have applications in the pharmaceutical, agriculture,

and aquaculture industries.

CRISPR-IL is funded by the IIA with a total budget of approximately $10,000,000 of which, an amount of approximately

was a direct grant allocated to us, for an initial period of 18 months.

During October 2021, we

received an approval for an additional grant of approximately $583,000 from the IIA pursuant to the CRISPR-IL consortium program, for

an additional period of eighteen months.

$480,000 was a direct grant allocated to us, for the initial period of 18 months.

During October 2021, we received an approval for an

additional grant of approximately $583,000 from the IIA pursuant to the CRISPR-IL consortium program, for an additional period of eighteen

During January 2023, we received approval for an extension of an additional 2 months to finish the program until June 30, 2023.

The CRISPR-IL consortium program does not include any obligation to pay royalties.

As of June 30, 2022 and 2021,

we received total grants of approximately $694,000 and $401,000 in cash from the IIA pursuant to the CRISPR-IL consortium program, respectively.

In July 2017, we were awarded

the Smart Money grant of approximately $229,000 from Israel’s Ministry of Economy.

The Israeli government granted us budget resources

to advance our product candidate towards marketing in China-Hong Kong markets.

The Smart Money program ended on April 2022.

30, 2022, we received total grants of approximately $179,000 in cash from Israel’s Ministry of Economy for the Smart Money program.

Through June 30, 2023, we received total grants

of approximately $774,000 in cash from the IIA pursuant to the CRISPR-IL consortium program, and we expect to receive an additional $253,000.

grants – Horizon 2020 and Horizon Europe

June 30, 2023, we received total grants of approximately $8,621,000 in cash from the EU R&D consortiums pursuant to the Horizon programs.

September 6, 2022, we announced that a €7.5 million non-dilutive grant from the EU’s Horizon program was awarded to Advanced

Personalized Therapies for Osteoarthritis (PROTO), an international collaboration led by Charité Berlin Institute of Health Center

for Regenerative Therapies.

The goal of the PROTO project is to utilize our PLX-PAD cells in a Phase I/IIA study for the treatment of

mild to moderate knee osteoarthritis.

Final approval of the grant is subject to completion of the consortium agreement.

An amount of approximately

Euro 500,000 (approximately $545,000) will be a direct grant that will be allocated to us.

Through June 30, 2023, we received a payment

of approximately $185,000 in cash, which relates to the PROTO program.

The Phase I/II study will be carried out by Charité,

together with us and other members of the international consortium under the leadership of Professor Tobias Winkler, Principal Investigator,

at the Berlin Institute of Health Center of Regenerative Therapies, Julius Wolff Institute and Center for Musculoskeletal Surgery.

In August 2016, our CLI program

in the European Union was awarded a €7,600,000 non-royalty bearing grant.

The grant is part of the European Union’s Horizon

2020 program.

The Phase III study of PLX-PAD in CLI will be a collaborative project carried out by an international consortium led by

the Berlin-Brandenburg Center for Regenerative Therapies together with the Company and with participation of additional third parties.

The grant covered a significant portion of the CLI program costs.

An amount of €1,900,000 is a direct grant allocated to us, and

the Company also had cost savings resulting from grant amounts allocated to the other consortium members.

In July 2017, the consortium

amended the consortium agreement, pursuant to which the original grant allocation was amended such that we will receive an additional

direct grant of €1,177,000.

The additional direct grant was allocated to us from the total amount of the original grant.

30, 2022, we received a total of €2,615,000 (approximately $2,946,000) and we expect to receive an additional €461,000 (approximately

In September 2017, our Phase

III study of PLX-PAD cell therapy in the treatment of muscle injury following surgery for hip fracture was awarded a €7,400,000 grant,

as part of the European Union’s Horizon 2020 program.

This Phase III study was a collaborative project carried out by an international

consortium led by Charité, together with us, and with participation of additional third parties.

in the EU was awarded a €7,600,000 non-royalty bearing grant.

The grant was part of the EU’s Horizon 2020 program.

III study of PLX-PAD in CLI was a collaborative project carried out by an international consortium led by the Berlin-Brandenburg Center

for Regenerative Therapies together with the Company and with participation of additional third parties.

The grant covered a significant

portion of the project costs.

An amount of € 2,550,000 is a direct grant allocated to us for manufacturing and other costs, and we

also expect to have a direct benefit from cost savings resulting from grant amounts allocated to the other consortium members.

30, 2022, we received a total of €2,166,000 (approximately $2,540,000) and we expect to receive an additional €382,000 (approximately

portion of the CLI program costs, and the program was ended during fiscal year 2023.

Through June 30, 2023, we received a total of €3,235,000

relating to the CLI program in the EU (approximately $3,563,000).

September 2017, our Phase III study of PLX-PAD cell therapy in the treatment of muscle injury following surgery for hip fracture was

awarded a €7,400,000 grant, as part of the EU’s Horizon 2020 program.

This Phase III study was a collaborative project carried

out by an international consortium led by Charité, together with us, and with participation of additional third parties.

covered a significant portion of the project costs and the program was ended during fiscal year 2023.

Through June 30, 2023, we received

a total of €3,228,000 (approximately $3,699,000).

In October 2017, the nTRACK,

a collaborative project carried out by an international consortium led by Leitat was awarded a €6,800,000 non-royalty bearing grant.

An amount of €500,000 is a direct grant allocated to us.

We also expect to benefit from cost savings resulting from grant amounts

allocated to the other consortium members.

As of June 30, 2022, we received a total of €414,000 (approximately $473,000) and we expect

to receive an additional €73,000 (approximately $76,000).

We have accumulated a deficit

of $371,263,000 since our inception in May 2001.

We do not expect to generate any significant revenues from sales of products in the next

twelve months.

We expect to generate revenues, from the sale of licenses to use our technology or products, but in the short and medium

terms will unlikely exceed our costs of operations.

We may be required to obtain

additional liquidity resources in order to support the commercialization of our products and technology and maintain our research and

development and clinical study activities.

We are continually looking

for sources of funding, including non-diluting sources such as collaboration with other companies via licensing agreements, the IIA grants,

the European Union grant and other research grants, and sales of our common shares.

We believe that we have sufficient

cash to fund our operations for at least the next twelve months.

Application of Critical Accounting Policies and Estimates

Our significant accounting

policies are more fully described in Note 2 to our consolidated financial statements appearing in this Annual Report.

We believe that

the accounting policies below are critical for one to fully understand and evaluate our financial condition and results of operations.

As of June 30, 2023, we received a total of €764,000 (approximately $859,000).

The nTRACK program ended during fiscal year 2023.

have accumulated a deficit of $399,584,000 since our inception in May 2001.

We do not expect to generate any significant revenues from

sales of products in the next twelve months.

We expect to generate revenues, from the sale of licenses to use our technology or products,

but in the short and medium terms will unlikely exceed our costs of operations.

may be required to obtain additional liquidity resources in order to support the commercialization of our products and technology and

maintain our research and development activities.

are continually looking for sources of funding, including collaboration with other companies via licensing agreements, joint ventures

and partnerships, and other non-dilutive sources such as our contract with NIAID and DoD, research grants such as the IIA grants and the

European Union grants, and sales of our common shares.

believe that we have sufficient cash to fund our operations for at least the next twelve months.

of Critical Accounting Policies and Estimates

Our accounting policies are

more fully described in Note 2 to our consolidated financial statements appearing in this Annual Report.

We believe that the accounting

policy below is critical for one to fully understand and evaluate our financial condition and results of operations.

The discussion and analysis

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and liabilities, as well as the reported revenues and expenses during the reporting periods.

On an ongoing basis, we evaluate such estimates

and judgments, including those described in greater detail below.

We base our estimates on historical experience and on various other

factors that we believe are reasonable under the circumstances.

We evaluate such estimates and judgments

on an ongoing basis, including those described in greater detail below.

We base our estimates on historical experience and on various

other factors that we believe are reasonable under the circumstances.

Actual results may differ from these estimates under different assumptions

1 unchanged sentence

Share-Based Compensation

Share-based compensation is

considered a critical accounting policy due to the significant expenses of RSUs which were granted to our employees, directors and consultants.

In Fiscal Year 2022, we recorded share-based compensation expenses related to options, restricted shares and RSUs in the amount of $8,909,000.

In accordance with ASC 718,

“Compensation-Stock Compensation”, or ASC 718, RSUs granted to employees and directors are measured at their fair value on

the grant date.

All RSUs granted in fiscal years 2022 and 2021 were granted for no consideration;

therefore, their fair value was equal

to the share price at the date of grant unless the RSUs include a market-based condition in which case the fair value RSUs at the date

of grant was calculated using the Monte Carlo model.

The RSUs granted in Fiscal Year 2022 to non-employee consultants were measured at

their fair value on the grant date in accordance with ASU No.

Share-based compensation is considered a critical

accounting policy due to the significant expenses of RSUs which were granted to our employees, directors and consultants.

In fiscal year

2023, we recorded share-based compensation expenses related to options, restricted shares and RSUs in the amount of $3,977,000.

In accordance with ASC 718, “Compensation-Stock

Compensation”, or ASC 718, RSUs granted to employees and directors are measured at their fair value on the grant date.

granted in fiscal years 2023 and 2022 were granted for no consideration;

therefore, their fair value was equal to the share price at the

date of grant unless the RSUs include a market-based condition in which case the fair value RSUs at the date of grant was calculated using

the Monte Carlo model.

The RSUs granted in fiscal year 2023 to non-employee consultants were measured at their fair value on the grant

date in accordance with ASU No.

2018-07 - “Compensation—Share Compensation”.

The fair value of shares of Plurinuva granted to CEO, CFO and Chairman

(see details in Item 11 below) was calculated using the Monte Carlo model, and fair value of the options of Plurinuva granted to employees

and officers were calculated using the Black Scholes model.

The fair value of shares of

Ever After Foods granted to our CEO, CFO and Chairman (see details in Item 11 below) was calculated using the Monte Carlo model, and the

fair value of the options of Ever After Foods granted to employees and officers were calculated using the Black Scholes model.

The value of the portion of

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grant is 16% for the shares granted to employees and 0% for the shares granted to our directors and officers and non-employee consultants.

Research and Development Expenses, Net

We expect our research and

development expenses to remain our primary expense in the near future as we continue to develop our product candidates.

Our research and

development expenses consist primarily of clinical study expenses, consultant and subcontractor expenses, payroll and related expenses,

lab material expenses, share-based compensation expenses, rent and maintenance expenses.

The following table provides a breakdown of the

related costs for fiscal years 2021 and 2022 (in thousands of dollars):

Year ended June 30,

Payroll and related expenses

Materials expenses

Clinical trials expenses

Depreciation expenses

Consultants and subcontractor expenses

Rent and maintenance expenses

Share-based compensation expenses

Other Research and development expenses

Total expenses

Research and development participation grants

Research and development expenses, net

We invest heavily in research

and development.

Research and development expenses, net, were our major operating expenses, representing 59% of the total operating expenses

for each of our fiscal years 2022 and 2021, respectively.

We expect that in the upcoming years our research and development expenses,

net, will continue to be our major operating expense.

Quantitative and

Qualitative Disclosures about Market Risk.

Not applicable.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis