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Item 8. Financial Statements and Supplementary Data

2023-09-12 compared with 2022-09-21 · 697 added, 565 removed, 633 unchanged (67% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

AND ITS SUBSIDIARIES CONSOLIDATED

FINANCIAL STATEMENTS

and Supplementary Data.

financial statements are stated in thousands United States dollars and are prepared in accordance with U.S.

following audited consolidated financial statements are filed as part of this Annual Report:

of Independent Registered Public Accounting Firm, dated September 21, 2022

Consolidated Balance Sheets

Consolidated Statements of Operations

Statements of Changes in Equity

Consolidated Statements of Cash Flows

Notes to the Consolidated Financial Statements

AND ITS SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS

of June 30, 2022

As of June 30, 2023

DOLLARS IN THOUSANDS

5 unchanged sentences

Notes to Consolidated Financial Statements F-10 - F-37

Report of Independent Registered Public Accounting

of Independent Registered Public Accounting Firm

To the board of directors and shareholders of Pluri Inc.

35 unchanged sentences

Critical Audit Matters

The critical audit matter communicated below is

a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated

to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and

(ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter

in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit

matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

& Kesselman, Building 25, MATAM, P.O BOX 15084 Haifa, 3190500, Israel,

+972 -4- 8605000, Fax:

+972 -4- 8605001, www.pwc.com/il

Establishment of Plurinuva

As described in Note 1d to the consolidated

financial statements, on February 24, 2022, the Company established Plurinuva together with Tnuva for the purpose of developing

cultured meat products.

Tnuva invested in Plurinuva $7.5 million for ordinary shares and warrants to purchase ordinary shares.

The principal considerations for our determination that performing procedures relating to the establishment of Plurinuva is a

critical audit matter are (i) the audit efforts to determine such a transaction was properly accounted for by the Company;

(ii) involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures

and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures

included, among others, reading the agreements, public filings and the Company's minutes from meetings of the Board of Directors.

executive officers, key members and legal counsel of the Company, and the Audit Committee regarding the transaction.

We researched accounting

alternatives to evaluate the Company's accounting approach.

We involved a valuation professional, with specialized skills and knowledge,

who assisted in evaluating the valuation methodology which was included in the accounting analysis for the transaction.

We analyzed the

impacts of the transaction on the Company's financial statements.

In addition, we evaluated the overall sufficiency of audit evidence

obtained over the establishment of Plurinuva.

Critical audit matters are matters arising from

the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee

and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially

challenging, subjective, or complex judgments.

We determined there are no critical audit matters.

/s/ Kesselman & Kesselman

Certified Public Accountants (lsr.)

A member firm of PricewaterhouseCoopers International Limited

A member firm of PricewaterhouseCoopers International

Haifa, Israel

September 12, 2023

We have served as the Company's auditor since

Kesselman & Kesselman,

Building 25, MATAM, P.O BOX 15084 Haifa, 3190500, Israel,

+972 -4- 8605000, Fax:

+972 -4- 8605001, www.pwc.com/il

We have served as the Company’s auditor

AND ITS SUBSIDIARIES

BALANCE SHEETS

Dollars in thousands (except share and per

CONSOLIDATED BALANCE SHEETS

Dollars in thousands (except share and per share data)

CURRENT ASSETS:

Cash and cash

Cash and cash equivalents

Short-term bank deposits

Restricted cash

expenses and other current assets

Total current

Prepaid expenses and other current assets

Total current assets

LONG-TERM ASSETS:

Long-term bank deposits

Restricted bank deposits

Severance pay fund

Property and equipment,

Operating lease right-of-use

long-term assets

Total long-term

The accompanying

notes are an integral part of the consolidated financial statements.

Property and equipment, net

Operating lease right-of-use asset

Other long-term assets

Total long-term assets

The accompanying notes are an integral part of the consolidated

financial statements.

AND ITS SUBSIDIARIES

BALANCE SHEETS

Dollars in thousands (except share and per

CONSOLIDATED BALANCE SHEETS

Dollars in thousands (except share and per share data)

LIABILITIES AND SHAREHOLDERS’ EQUITY

16 unchanged sentences

300,000,000 shares issued and outstanding:

32,507,491 shares as of June 30, 2022;

41,245,495 shares as of June 30, 2023 and authorized:

60,000,000 shares issued and outstanding:

32,507,491 shares as of June 30, 2022

5 unchanged sentences

(*) Less than $1

The accompanying

notes are an integral part of the consolidated financial statements

The accompanying notes are an integral part of the consolidated

financial statements.

AND ITS SUBSIDIARIES

2 unchanged sentences

Year ended June 30,

Cost of revenues

Operating expenses:

Research and development expenses

participation by the Israel Innovation Authority, Horizon 2020 and other parties

participation by the Israel Innovation Authority, Horizon 2020, Horizon Europe and other parties

Research and development expenses, net

1 unchanged sentence

Operating loss

Financial income, net

Financial income (expenses), net

Interest expense

Total financial income, net

Total financial income (expenses), net

Net loss attributed to non-controlling interests

3 unchanged sentences

Weighted average number of shares used in computing basic and diluted loss per share

accompanying notes are an integral part of the consolidated financial statements.

The accompanying notes are an integral part of the consolidated

financial statements.

AND ITS SUBSIDIARIES

OF CHANGES IN SHAREHOLDERS’ EQUITY

Dollars in thousands (except share and per

Additional Paid-in

Total Shareholders’

STATEMENTS OF CHANGES IN SHAREHOLDERS’

Dollars in thousands (except share and per share data)

Shareholders’ Equity

Common Shares

Shareholders’

Balance as of July 1, 2021

$ ( 280,156 )

Share-based compensation to employees, directors and non-employee consultants

Issuance of common shares under Open Market Sales Agreement, net of issuance costs of $ 380 (Note 9(1)a)

Issuance of common shares related to February 2021 registered direct offering net of issuance costs of $ 1,923 (Note 9(1)c)

Exercise of options by employees and non-employee consultants

Exercise of warrants by investors (Note 9(1)b)

Share-based compensation to employees, directors, and non-employee consultants (note 9(2))

Establishment of Ever After Foods Ltd.

(“Ever After”) and non-controlling interest in Ever After (note 1d)

Balance as of June 30, 2022

$ ( 330,021 )

The accompanying

notes are an integral part of the consolidated financial statements .

(*) Less than $1

The accompanying notes are an integral part of the consolidated

financial statements .

AND ITS SUBSIDIARIES

OF CHANGES IN SHAREHOLDERS’ EQUITY

Dollars in thousands (except share and per

STATEMENTS OF CHANGES IN SHAREHOLDERS’

Dollars in thousands (except share and per share data)

Shareholders’ Equity

Common Shares

Additional Paid-in

Total Shareholders’

Non-controlling

Shareholders’

Balance as of July 1, 2022

$ ( 330,021 )

Share-based compensation to employees, directors, and non-employee consultants (note 9(2))

Establishment of Plurinuva and non-controlling interest in Plurinuva (Notes 1d).

Issuance of common shares and warrants, net of issuance costs of $ 445

Modification of warrants to non-controlling interests (note 1d)

Expiration of warrants in Ever After (note 1d)

Balance as of June 30, 2023

$ ( 371,263 )

(*) Less than $1

The accompanying

notes are an integral part of the consolidated financial statements.

The accompanying notes are an integral part of the consolidated

financial statements.

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Dollars in thousands

ended June 30

CONSOLIDATED STATEMENTS OF CASH

Dollars in thousands (except share and per share amounts)

Year ended June 30

CASH FLOWS FROM OPERATING ACTIVITIES:

to reconcile loss to net cash used in operating activities:

compensation to employees, directors and non-employee consultants

in prepaid expenses and other current assets and other long-term assets

Adjustments to reconcile loss to net cash used in operating activities:

Share-based compensation to employees, directors and non-employee consultants

Decrease in prepaid expenses and other current assets and other long-term assets

Decrease in trade payables

1 unchanged sentence

Decrease in operating lease right-of-use asset and liability

in interest receivable on short-term deposits

of exchange rate changes on cash, cash equivalents, deposits and restricted cash

term interest payable pursuant to EIB loan

severance pay, net

cash used for operating activities

FLOWS FROM INVESTING ACTIVITIES:

of property and equipment

Increase in interest receivable on short-term deposits

Effect of exchange rate changes on cash, cash equivalents, deposits and restricted cash

Long-term interest payable and exchange rate differences relate to the EIB loan

Accrued severance pay, net

Net cash used for operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment

Proceeds from withdrawal of short-term deposits

Investment in long-term deposits

cash provided by (used for) investing activities

FLOWS FROM FINANCING ACTIVITIES:

related to issuance of common shares, net of issuance costs

related to exercise of warrants

related to investment in subsidiary by non-controlling interest

from EIB loan

cash provided by financing activities

OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS and restricted cash

Net cash provided by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds related to issuance of common shares and warrants, net of issuance costs of $445

Proceeds related to investment in subsidiary by non-controlling interest

Net cash provided by financing activities

EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS and restricted cash

Decrease in cash, cash equivalents and restricted cash

cash equivalents and restricted cash at the beginning of the period

cash equivalents, restricted cash and restricted bank deposits at the end of the period

Cash, cash equivalents and restricted cash at the beginning of the period

Cash, cash equivalents, restricted cash and restricted bank deposits at the end of the period

Reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheets:

3 unchanged sentences

Total cash, cash equivalents, restricted cash and restricted bank deposits

The accompanying

notes are an integral part of the consolidated financial statements.

(a) Supplemental disclosure of non-cash activities:

Purchase of property and equipment on credit

Supplemental non-cash information related to lease liabilities arising from obtaining ROU assets

The accompanying notes are an integral part of the consolidated

financial statements.

AND ITS SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per

share amounts)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

Effective July 26, 2022, Pluri Inc., a Nevada

corporation (“Pluri”), changed its name from Pluristem Therapeutics Inc.

corporation (“Pluri Inc.”), changed its name from Pluristem Therapeutics Inc.

The Company also changed its symbol on the Nasdaq

Global Market and Tel-Aviv Stock Exchange from “PSTI” to “PLUR”.

Pluri was incorporated on May 11, 2001.

was incorporated on May 11, 2001.

has a wholly owned subsidiary, Pluri-Biotech Ltd.

3 unchanged sentences

Subsidiary”) which is incorporated under the laws of Germany.

In January 2022, the Subsidiary established a subsidiary, Plurinuva

(“Plurinuva”), which is incorporated under the laws of Israel, which followed the execution of the collaboration agreement

with Tnuva Food Industries – Agricultural Cooperative in Israel Ltd.

(through its fully owned subsidiary, Tnuva Food-Tech Incubator

(2019), Limited Partnership (“Tnuva”)).

Pluri, the Subsidiary, the German Subsidiary and Plurinuva are referred to as the

“Company” or “Pluri.” The Subsidiary, the German Subsidiary and Plurinuva are referred to as the “Subsidiaries.”

The Company is a bio-technology company with an advanced cell-based technology platform, which operates in one business segment.

The Company has developed a unique three-dimensional (“3D”) technology platform for cell expansion with an industrial scale in-house Good Manufacturing Practice cell manufacturing facility.

Pluri currently uses its technology in the field of regenerative medicine and food tech and plans to utilize it in other industries and verticals that have a need for mass scale and cost-effective cell expansion platform such as agri-tech and biologics.

Pluri is focused on the research, development and manufacturing of cell-based products, conducting clinical studies and the business development of cell therapeutics and cell-based technologies providing potential solutions for various fields.

has incurred an accumulated deficit of approximately $ 371,263 and incurred recurring operating losses and negative cash flows from

operating activities since inception.

In January 2022, the Subsidiary established a new subsidiary, Ever

After Foods Ltd.

(“Ever After”) formerly known as Plurinuva Ltd..

Ever After is incorporated under the laws of Israel, which

followed the execution of the collaboration agreement with Tnuva Food Industries – Agricultural Cooperative in Israel Ltd., through

its fully owned subsidiary, Tnuva Food-Tech Incubator (2019), Limited Partnership (“Tnuva”).

Pluri Inc., the Subsidiary, the

German Subsidiary and Ever After are referred to as the “Company” or “Pluri.” The Subsidiary, the German Subsidiary

and Ever After are referred to as the “Subsidiaries.”

The Company is a bio-technology

company with an advanced cell-based technology platform, which operates in one operating segment.

The Company has developed a unique

three-dimensional (“3D”) technology platform for cell expansion with an industrial scale in-house Good Manufacturing Practice

cell manufacturing facility.

Pluri currently uses its technology in the field of regenerative medicine and food tech and plans to utilize

it in other industries and verticals that have a need for a mass scale and cost-effective cell expansion platform such as cellular agriculture

and biologics.

Pluri is focused on the research, development and manufacturing of cell-based products and the business development of

cell therapeutics and cell-based technologies providing potential solutions for various industries.

The Company has incurred an accumulated deficit of approximately $ 399,584 and incurred recurring operating losses and negative cash flows from operating activities since inception.

As of June 30, 2023, the Company’s total shareholders’ equity amounted to $ 13,355 .

1 unchanged sentence

As of June 30, 2023, the Company’s

cash position (cash and cash equivalents, short-term bank deposits, long-term bank deposits, restricted cash and restricted bank deposits)

totaled $ 56,657 .

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, and from sales of its equity securities and from

the proceeds received from the loan previously provided by the European Investment Bank (the “EIB”, see also note 7).

Company’s 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 consolidated financial

There is no assurance, 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 products.

On January 5, 2022, the Subsidiary entered into definitive agreements (the “Agreements”) with Tnuva pursuant to which the Subsidiary and Tnuva established Plurinuva, with the purpose of developing cultured meat products.

Plurinuva received exclusive, global, royalty bearing licensing rights to use Pluri’s proprietary technology, intellectual property and knowhow in the field of cultured meat.

Tnuva invested $ 7,500 in Plurinuva and received 187,500 of Plurinuva’s ordinary shares, representing 15.79 % of the Plurinuva share capital as of February 24, 2022 (the “Closing Date”).

In addition, Tnuva received Warrants to invest up to an additional $ 7,500 over a period of twelve months following the Closing Date.

cash position (cash and cash equivalents, short-term bank deposits, restricted cash and restricted bank deposits) totaled $ 41,067 .

Company plans to continue to finance its operations from its current resources, by entering into licensing or other commercial and collaboration

agreements, from grants to support its research and development activities and from sales of its equity securities.

The Company’s

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 consolidated financial statements.

2022 and 2023, the Company also implemented a cost reduction and efficiency plan to align with the change in its business strategy.

is no assurance, 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 products.

On January 5, 2022, the Subsidiary

entered into definitive agreements (the “Agreements”) with Tnuva pursuant to which the Subsidiary and Tnuva established Ever

After, with the purpose of developing cultivated meat products.

Ever After received exclusive, global, royalty bearing licensing rights

to use Pluri’s proprietary technology, intellectual property and knowhow in the field of cultivated meat.

Tnuva invested $ 7,500 in

Ever After and received 187,500 of Ever After’s ordinary shares, representing 15.79 % of the Ever After share capital as of

February 24, 2022 (the “Closing Date”).

In addition, Tnuva received warrants to invest up to an additional $ 7,500 over a

period of twelve months following the Closing Date.

AND ITS SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per

share amounts)

Warrant issued to Tnuva permits Tnuva to purchase up to 125,000 ordinary shares of Plurinuva at an exercise price of $ 40.00 per

share, and has a term commencing on the Closing Date and ending at the earlier of (i) six months from the Closing Date, (ii) immediately

prior to and subject to the consummation of an initial public offering or acquisition of Plurinuva or (iii) the consummation of a financing

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

- GENERAL (CONT.)

T he first warrant (the “First

Warrant”) issued to Tnuva permitted Tnuva to purchase up to 125,000 ordinary shares of Ever After at an exercise price of $ 40.00

per share, and had a term commencing on the Closing Date and ended at the earlier of (i) six months from the Closing Date, (ii) immediately

prior to and subject to the consummation of an initial public offering or acquisition of Ever After or (iii) the consummation of a financing

round with a non-affiliated investor.

In addition, on the six month anniversary of the Closing Date, and provided that the First Warrant

has not expired, Plurinuva agreed to issue a Second Warrant to Tnuva which will permit Tnuva to purchase up to a number of ordinary shares

of Plurinuva, or the then most senior securities issued by Plurinuva, in consideration for such amount equal to 200 % of the remaining

balance of the aggregate purchase price of the First Warrant, provided that Tnuva exercises at least 62,500 ordinary shares

at a price per share of $ 40.00 , or $ 2,500 in the aggregate, of the First Warrant.

The Second Warrant’s exercise price per share

equals $ 76.00 .

The Second Warrant has a term commencing on the six month anniversary of the Closing Date and ending at the earlier of

(i) six months from its issuance, (ii) immediately prior to and subject to the consummation of an initial public offering or acquisition

of Plurinuva or (iii) the consummation of a financing round with a non-affiliated investor.

allocated the total consideration of $ 7,500 received in an amount equal to $ 6,718 for the

ordinary shares and $ 782 for the Warrants.

determined the fair value of the ordinary shares and the warrants utilizing a Monte Carlo simulation model (Level 3 classification), which

incorporates various assumptions including expected stock price volatility, risk-free interest rate, and the expected date of a qualifying

The Company estimated the volatility of the ordinary shares of Plurinuva based on data from similar companies operating in the

food tech field.

assumptions used in the Monte Carlo simulation model are as follows:

had not expired, Ever After agreed to issue a second warrant (the “Second Warrant” and together with the First Warrant, the

“Warrants”) to Tnuva which permitted Tnuva to purchase up to a number of ordinary shares of Ever After, or the then most senior

securities issued by Ever After, in consideration for such amount equal to 200 % of the remaining balance of the aggregate purchase price

of the First Warrant, provided that Tnuva exercised at least 62,500 ordinary shares at a price per share of $ 40.00 , or $ 2,500 in the aggregate,

of the First Warrant.

The Second Warrant’s exercise price per share equaled $ 76.00 .

The Second Warrant had a term commencing on

the six month anniversary of the Closing Date and ended at the earlier of (i) six months from its issuance, (ii) immediately prior to

and subject to the consummation of an initial public offering or acquisition of Ever After or (iii) the consummation of a financing round

with a non-affiliated investor.

The Company allocated the total consideration of $ 7,500 received in an amount equal to $ 6,718 for the ordinary shares and $ 782 for the Warrants.

The Company determined the fair value of the ordinary shares and the Warrants utilizing a Monte Carlo simulation model (Level 3 classification), which incorporates various assumptions including expected stock price volatility, risk-free interest rate, and the expected date of a qualifying event.

The Company estimated the volatility of the ordinary shares of Ever After based on data from similar companies operating in the food tech field.

Risk-free interest rate

Expected stock price volatility

The consideration

allocated to the shares issued was divided between the non-controlling interests (“NCI”) and the Company’s shareholders

as this transaction is a transaction with the NCI.

The consideration

allocated to the warrants was recognized against the NCI.

23, 2022, Plurinuva and Tnuva executed an amendment to the warrant agreement, extending the exercise period of the First Warrant from

six months to nine months from the Closing Date.

The consideration allocated to the shares issued was divided between the non-controlling interests (“NCI”) and the Company’s shareholders as this transaction is a transaction with the NCI.

The consideration allocated to the Warrants was recognized against the NCI.

On August 23, 2022, (“Amendment Date”), Ever After and Tnuva executed an amendment to the warrant agreement (“Amendment”), extending the exercise period of the First Warrant from six months to nine months from the Closing Date.

All other terms remained unchanged.

On February 26, 2022, the Subsidiary allocated

a total of 45,936 of its shares in Plurinuva, which constitute approximately 3.87 % of Plurinuva’s ordinary shares, to

its Chairman, Chief Executive Officer and Chief Financial Officer, pursuant to the terms of their respective employment and/or consulting

agreements with the Company.

Following such allocations, the Company holds 80.34 % of the outstanding equity in Plurinuva.

the Company recognized compensation expenses in the amount of $ 1,646 representing the fair value of the respective allocated shares.

Based on the Company’s current assessment, the Company does not expect material impact on its operations due to the worldwide spread of COVID-19.

However, The Company may experience delays if the pandemic worsens and continues for an extended period of time and it is continuing to assess the effect on its operations by monitoring the spread of COVID-19 and the actions implemented by governments to combat the virus throughout the world.

Following the Amendment, the Company recalculated the fair value of

the warrants utilizing the same Monte Carlo simulation model (Level 3 classification) before and after the Amendment Date, which incorporates

various assumptions including expected stock price volatility, risk-free interest rate, and the expected date of a qualifying event.

The main assumptions used in the Monte Carlo simulation model are as follows:

Risk-free interest rate

Expected stock price volatility

The Company estimated the volatility

of the ordinary shares of Ever After based on data from similar companies operating in the food tech field.

The additional fair value

determined was $ 385 .

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

- GENERAL (CONT.)

On November 22, 2022, the warrants

in Ever After expired unexercised and $ 1,014 were classified from NCI to additional paid-in capital.

On February 26, 2022, the Subsidiary

allocated a total of 45,936 of its shares in Ever After, which constitute approximately 3.87 % of Ever After’s ordinary

shares, to its Chairman, Chief Executive Officer and Chief Financial Officer, pursuant to the terms of their respective employment and/or

consulting agreements with the Company.

Following such allocations, the Company holds 80.34 % of the outstanding equity in Ever After.

As a result, the Company recognized compensation expenses in the amount of $ 1,646 representing the fair value of the respective

allocated shares.

- SIGNIFICANT ACCOUNTING POLICIES

7 unchanged sentences

Estimates are primarily used for, but not limited to, valuation

of share-based compensation, valuation of warrants, determining the valuation and terms of leases.

of share-based compensation, valuation of warrants and determining the valuation and terms of leases.

These estimates, judgments and assumptions

can affect the amounts reported in the financial statements and accompanying notes, and actual results could differ from those estimates.

AND ITS SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per

share amounts)

- SIGNIFICANT ACCOUNTING POLICIES (CONT.)

Functional currency

1 unchanged sentence

of the economic environment in which the Company and the Subsidiaries operate.

Thus, the U.S dollar is the Company’s functional

Thus, the U.S.

dollar is the Company’s functional

and reporting currency.

7 unchanged sentences

include the accounts of the Company and its Subsidiaries.

Non-controlling

interests in subsidiaries represent the equity in subsidiaries not attributable, directly or indirectly, to the Company.

Non-controlling

interests are presented in equity separately from the equity attributable to the shareholders of the Company.

Profit or loss and components

of other comprehensive income or loss are attributed to the Company and to non-controlling interests.

Losses are attributed to non-controlling

interests even if they result in a negative balance of non-controlling interests in the consolidated statements of operations.

The Company treats

transactions with non-controlling interests as transactions with its equity owners.

Accordingly, for sales or purchases of shares to or

from non-controlling interests, the difference between any consideration received or paid and the portion sold or acquired of the carrying

value of the net assets of the subsidiary is recorded in equity.

Non-controlling interests in subsidiaries represent the equity in Ever After

not attributable, directly or indirectly, to the Company.

Non-controlling interests are presented in equity separately from the equity

attributable to the shareholders of the Company.

Profit or loss and components of other comprehensive income or loss are attributed to

the Company and to non-controlling interests.

Losses are attributed to non-controlling interests even if they result in a negative balance

of non-controlling interests in the consolidated statements of operations.

The Company treats transactions with

non-controlling interests as transactions with its equity owners.

Accordingly, for sales or purchases of shares to or from non-controlling

interests, the difference between any consideration received or paid and the portion sold or acquired of the carrying value of the net

assets of the subsidiary is recorded in equity.

transactions and balances have been eliminated upon consolidation.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

- SIGNIFICANT ACCOUNTING POLICIES (CONT.)

Cash and cash equivalents

equivalents are short-term highly liquid investments that are readily convertible to cash with maturities of three months or less at

the date acquired.

Cash equivalents are short-term highly

liquid investments that are readily convertible to cash with maturities of three months or less at the date acquired.

Short-term bank deposit

deposits with original maturities of more than three months but less than one year are presented as part of short-term investments.

are presented at their cost which approximates market values including accrued interest.

Interest on deposits is recorded as financial

Bank deposits with original maturities

of more than three months but less than one year are presented as part of short-term investments.

Deposits are presented at their cost

which approximates market values including accrued interest.

Interest on deposits is recorded as financial income.

Restricted cash and short-term bank deposits

cash used to secure derivative and hedging transactions and the Company’s credit line.

The restricted cash and short-term bank

deposits are presented at cost which approximates market values including accrued interest.

Restricted cash used to secure the

Company’s credit line, derivative and hedging transactions and lease agreement.

The restricted cash and short-term bank deposits

are presented at cost which approximates market values including accrued interest.

Long-term restricted bank deposits

restricted bank deposits with maturities of more than one year used to secure operating lease agreement are presented at cost which approximates

market values including accrued interest.

AND ITS SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per

share amounts)

- SIGNIFICANT ACCOUNTING POLICIES (CONT.)

Long-term restricted bank deposits

with maturities of more than one year used to secure operating lease agreement are presented at cost which approximates market values

including accrued interest.

Revenue Recognition

7 unchanged sentences

of the promised goods or the performance of the obligations are transferred to the customer, in an amount that reflects the consideration

to which the Company expects to be entitled to, excluding sales taxes.

to which the Company expects to be entitled, excluding sales taxes.

The Company determines revenue recognition

through the following steps:

● identification of the contract

with a customer;

● identification of the performance

obligations in the contract;

● determination of the transaction

● allocation of the transaction

price to the performance obligations in the contract;

● recognition of revenue when, or as, the Company satisfies

a performance obligation.

identification of the contract with a customer;

identification of the performance obligations in the contract;

determination of the transaction price;

allocation of the transaction price to the performance obligations in the contract;

recognition of revenue when, or as, the Company satisfies a performance obligation.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

- SIGNIFICANT ACCOUNTING POLICIES (CONT.)

Property and equipment

8 unchanged sentences

The shorter of the expected useful life or the term of the lease.

Repairs and maintenance expenditures, which are not considered improvements

and do not extend the useful life of property and equipment, are expensed as incurred.

Repairs and maintenance expenditures,

which are not considered improvements and do not extend the useful life of property and equipment, are expensed as incurred.

Impairment of long-lived assets

2 unchanged sentences

indicate that the carrying amount of an asset may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison

of the carrying amount of the assets to the future undiscounted cash flows expected to be generated by the assets.

If such assets are

considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds

the fair value of the assets.

During fiscal years 2022 and 2021, no triggering events were identified, and no impairment losses were recorded.

The recoverability of assets to be held and used is measured by

a comparison of the carrying amount of the assets to the future undiscounted cash flows expected to be generated by the assets.

assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets

exceeds the fair value of the assets.

During fiscal years 2023 and 2022, no impairment losses were recorded.

Share-based compensation

6 unchanged sentences

The Company accounts for employees’ share-based

payment awards classified as equity awards (restricted shares (“RS”) or restricted share units (“RSUs”)) using

the grant-date fair value method.

The fair value of share-based payment transactions is recognized as an expense over the requisite service

period, net of estimated forfeitures.

payment awards classified as equity awards (restricted share units (“RSUs”)) using the grant-date fair value method.

value of share-based payment transactions is recognized as an expense over the requisite service period, net of estimated forfeitures.

The Company estimates forfeitures based on historical experience and anticipated future conditions.

19 unchanged sentences

is recognized over the derived service period as determined through the Monte Carlo simulation model.

All RS and RSUs to employees and directors

All RSUs to employees and directors

granted during fiscal 2023 and 2022, were granted for no consideration.

2 unchanged sentences

using the Monte Carlo model.

The fair value of all RS and RSUs was

determined based on the close trading price of the Company’s shares known at the grant date.

The weighted average grant date fair

value of RS and RSUs granted during fiscal years 2022 and 2021, was $ 2.87 and $ 9.76 per share, respectively.

Research and development expenses, royalty bearing grants

and non-royalty bearing grants

The fair value of all RSUs was determined

based on the closing trading price of the Company’s shares known at the grant date.

The weighted average grant date fair value of

RSUs granted during fiscal years 2023 and 2022, was $ 0.99 and $ 2.87 per share, respectively.

Research and development expenses,

royalty bearing grants and non-royalty bearing grants

Research and development expenses include

2 unchanged sentences

clinical trials, manufacturing costs and professional services.

All costs associated with research and developments are expensed as incurred.

All costs associated with research and development are expensed as incurred.

Grants received from the Israel Innovation

3 unchanged sentences

from the research and development expenses as the applicable costs are incurred (see also note 8b).

Research and development expenses,

net for the year ended June 30, 2022 and 2021 include participation in research and development expenses in the amount of approximately

$ 228 and $ 467 , respectively.

Clinical study expenses are charged

to research and development expense as incurred.

The Company accrues for expenses resulting from obligations under contracts with clinical

to research and development expenses as incurred.

The Company accrues expenses resulting from obligations under contracts with clinical

research organizations (“CROs”).

4 unchanged sentences

the period in which services and efforts are expended.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Dollars in thousands (except share and per share amounts)

- SIGNIFICANT ACCOUNTING POLICIES (CONT.)

During fiscal years 2023 and 2022,

the Company also received non-royalty bearing grants from the European Union research and development consortiums, under Horizon

2020, and from the IIA, under the CRISPR-IL consortium, in the amount of approximately $ 293 and $ 566 , for the year ended June 30, 2022

and 2021, respectively.

The non-royalty bearing grants for funding the projects are recognized at the time the Company is entitled to

each such grant on the basis of the related costs incurred and recorded as a deduction from research and development expenses.

the Company also received (in cash) non-royalty bearing grants from the European Union research and development consortiums, under

Horizon 2020, Horizon Europe and from the IIA, under the CRISPR-IL consortium, in the amount of approximately $ 2,426 and $ 293 , for the

years ended June 30, 2023 and 2022, respectively.

The non-royalty bearing grants for funding the projects are recognized at the time the

Company is entitled to each such grant on the basis of the related costs incurred and recorded as a deduction from research and development

The CRISPR-IL consortium is a group

1 unchanged sentence

develop AI based end-to-end genome-editing solutions.

Research and development expenses,

net for the years ended June 30, 2023 and 2022 include participation in research and development expenses in the amount of approximately

$ 1,668 and $ 228 , respectively.

Loss per share

4 unchanged sentences

diluted loss per common share because all such securities are anti-dilutive for each of the periods presented.

The total weighted average

number of shares related to the outstanding options, warrants and RSUs excluded from the calculations of diluted net loss per share due

to their anti-dilutive effect was 5,247,803 and 5,700,994 for the years ended June 30, 2022, and 2021, respectively.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Dollars in thousands (except share and per share amounts)

- SIGNIFICANT

ACCOUNTING POLICIES (CONT.)

The total number of shares

related to the outstanding options, warrants and RSUs excluded from the calculations of diluted net loss per share due to their anti-dilutive

effect was 14,151,578 and 5,247,803 for the years ended June 30, 2023, and 2022, respectively.

Deferred taxes

12 unchanged sentences

upon ultimate settlement.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Dollars in thousands (except share and per share amounts)

- SIGNIFICANT ACCOUNTING POLICIES (CONT.)

Concentration of credit risk

Financial instruments that potentially

subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, restricted cash, short-term deposits,

long-term deposits and restricted bank deposits.

subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, restricted cash, short-term bank

deposits, long-term restricted bank deposits.

The majority of the Company’s

cash and cash equivalents, restricted cash, short-term and long-term deposits are mainly invested in dollar, EURO and NIS deposits of

major banks in Israel and in the United States.

Deposits in the United States may be in excess of insured limits and are not insured in

other jurisdictions.

Generally, these deposits may be redeemed upon demand and therefore bear minimal risk.

The Company invests its surplus

cash in cash deposits in financial institutions and has established guidelines, approved by the Company’s Investment Committee,

relating to diversification and maturities to maintain safety and liquidity of the investments.

cash and cash equivalents, restricted cash, short-term bank deposits and long-term restricted deposits are mainly invested in New Israeli

Shekel (“NIS”) and U.S.

dollar deposits of major banks in Israel and in the United States.

Deposits in the United States may

be in excess of insured limits and are not insured in other jurisdictions.

Generally, these deposits may be redeemed upon demand and therefore

bear minimal risk.

The Company invests its surplus cash in cash deposits in financial institutions and has established guidelines, approved

by the Company’s Investment Committee, relating to diversification and maturities to maintain safety and liquidity of the investments.

Severance pay

8 unchanged sentences

once the deposit amounts have been paid.

For some employees, for whom their agreement is not

subject to Section 14 of the Severance Pay Law, the Subsidiary’s liability for severance pay is calculated pursuant to Israeli Severance

Pay Law, based on the most recent salary of the employees multiplied by the number of years of employment, as of the balance sheet date.

For some employees, for whom their

agreement is not subject to Section 14 of the Severance Pay Law, the Subsidiary’s liability for severance pay is calculated pursuant

to Severance Pay Law, based on the most recent salary of the employees multiplied by the number of years of employment, as of the balance

Employees are entitled to one month’s salary for each year of employment or a portion thereof.

The Company’s liability for

all of its employees is fully provided by monthly deposits with insurance policies and by an accrual.

The value of these policies is recorded

as an asset in the Company’s balance sheet.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Dollars in thousands (except share and per share amounts)

- SIGNIFICANT

ACCOUNTING POLICIES (CONT.)

The Company’s liability

for all of its employees is fully provided by monthly deposits with insurance policies and by an accrual.

The value of these policies

is recorded as an asset in the Company’s balance sheet.

The deposited funds may be withdrawn

5 unchanged sentences

The carrying amounts of the Company’s

financial instruments, including cash and cash equivalents, restricted cash, short-term and restricted bank deposits, accounts receivable

and other current assets, trade payable and other accounts payable and accrued expenses, approximate fair value because of their generally

financial instruments, including cash and cash equivalents, restricted cash, short-term bank deposits and restricted bank deposits and

other current assets, trade payable and other accounts payable and accrued expenses, approximate fair value because of their generally

short-term maturities.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Dollars in thousands (except share and per share amounts)

- SIGNIFICANT

ACCOUNTING POLICIES (CONT.)

The Company measures its derivative

12 unchanged sentences

categorized each of its fair value measurements in one of these three levels of hierarchy.

On April 30, 2020, the Company, through

the German Subsidiary, entered into a finance contract (the “Finance Contract”) with the EIB, pursuant to which 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, second of € 18 million and third of € 12 million

for a period of 36 months from the signing of the Finance Contract.

The Company measures its liability

pursuant to the Finance Contract (see also note 7) 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 Contract 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.

On April 30, 2020, the German Subsidiary

entered into a finance contract (the “Finance Contract”) with the EIB, pursuant to which the German Subsidiary can obtain

a loan in the amount of up to € 50 million, subject to certain milestones being reached (the “Loan”), receivable in three

tranches, with the first tranche consisting of € 20 million, second of € 18 million and third of € 12 million for a period

of 36 months from the signing of the Finance Contract.

During June 2021, Pluri received the

first tranche in an amount of € 20 million of the Finance Contract.

The amount received is due on June 1, 2026 and bears annual interest

of 4 % to be paid with the principal of the Loan.

Since the project period ended on December

31, 2022, the Company does not expect to receive additional funds pursuant to the Finance Contract.

measures its liability pursuant to the Finance Contract with the EIB based on the aggregate outstanding amount of the combined principal

and accrued interest thereunder.

The Company does not reflect its liability for future royalty payments pursuant to the Finance Contract

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.

Derivative financial instruments

6 unchanged sentences

recognized in other comprehensive income (loss) until the hedged item is recognized in earnings (for cash flow hedge transactions).

If a derivative does not meet the definition

of a hedge, the changes in the fair value are included in earnings.

Cash flows related to Company’s current hedging are classified

as operating activities.

The Company enters into option contracts in order to limit the exposure to exchange rate fluctuation associated

with expenses mainly incurred in New Israeli Shekels (“NIS”) and its loan from the EIB that is linked to the Euro.

derivative instruments that the Company holds do not meet the definition of hedging instruments under ASC 815, any gain or loss derived

from such instruments is recognized immediately as “financial income, net”.

AND ITS SUBSIDIARIES

3 unchanged sentences

ACCOUNTING POLICIES (CONT.)

If a derivative does not meet the definition

of a hedge, the changes in the fair value are included in earnings.

Cash flows related to Company’s current hedging are classified

as operating activities.

The Company enters into option contracts in order to limit the exposure to exchange rate fluctuation associated

with expenses mainly incurred in NIS and its loan from the EIB that is linked to the Euro.

Since the derivative instruments that the Company

holds do not meet the definition of hedging instruments under ASC 815, any gain or loss derived from such instruments is recognized immediately

as “financial income, net”.

The Company measured the fair value

2 unchanged sentences

are based on quoted prices and market observable data of similar instruments.

As of June 30, 2022, the fair value of the options contracts

is presented in “Other accounts payable” (see note 5) and as of June 30, 2021, the fair value of the options contracts is

presented in “Other current assets” (see note 3).

The net gains (losses) recognized in “Financial income, net”

during the year ended June 30, 2022 and 2021 were ($ 373 ) and $ 35 respectively (see note 10).

As of June 30, 2023, there were no derivatives instruments

and as of June 30, 2022, the fair value of the derivatives instruments is presented in “Other accounts payable” (see note

The net losses recognized in “Financial income (expenses), net” during the years ended June 30, 2023 and 2022 were $ 157

and $ 372 respectively (see note 10).

Operating leases are included in operating

lease right-of-use (“ROU”) asset, and operating lease liability.

ROU assets represent Company’s right to use an underlying

asset for the lease term and lease liabilities represent obligation to make lease payments arising from the lease.

Operating lease ROU

assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

ROU assets represent the Company’s right to use an

underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease.

lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease

In determining the present value of lease payments, the Company uses the incremental borrowing rate based on the information available

6 unchanged sentences

the expected lease term.

Lease agreements with a noncancelable term of less than 12 months are not recorded on the balance sheets.

Lease agreements with a non-cancelable term of less than 12 months are not recorded on the balance sheets.

The Company accounts for an extension

of a lease term that was not part of the original lease as a modification.

As a result, the Company reallocate contract consideration

between the lease and non-lease components, reassess lease classification, and remeasure the lease liability and right-of-use asset prospectively.

Assumptions such as the discount rate, fair value of the underlying asset, and variable rents based on a rate or index will be updated

as of the modification date.

Lease terms will include options to extend or terminate

the lease when it is reasonably certain that the Company will either exercise or not exercise the option to renew or terminate the lease.

Recently Issued Accounting

Pronouncements not yet adopted

As a result, the Company reallocates contract consideration

between the lease and non-lease components, reassesses lease classification, and remeasures the lease liability and right-of-use asset

prospectively.

Assumptions such as the discount rate, fair value of the underlying asset, and variable rents based on a rate or index

will be updated as of the modification date.

Lease terms will include options to

extend or terminate the lease when it is reasonably certain that the Company will either exercise or not exercise the option to renew

or terminate the lease.

New Accounting Pronouncements

Recently adopted accounting pronouncements

ASU 2020-06 “Debt –

Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic

815 – 40)” (“ASU 2020-06”):

In August 2020, the Financial Accounting

Standards (the “FASB”) issued Accounting Standards Update (“ASU”) 2020-06, which provides guidance simplifying

the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and

contracts on an entity’s own equity.

The amendments to this guidance are effective for fiscal years beginning after December 15,

2023, and interim periods within those fiscal years.

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within

those fiscal years.

The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

- SIGNIFICANT

ACCOUNTING POLICIES (CONT.)

ASU 2021-04-Issuer’s Accounting

for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”):

In May 2021, the FASB issued ASU

2021-04, which provides guidance as to how an issuer should account for a modification of the terms or conditions or an exchange

of a freestanding equity-classified written call option (i.e., a warrant) that remains equity classified after modification or exchange

as an exchange of the original instrument for a new instrument.

An issuer should measure the effect of a modification or exchange as the

difference between the fair value of the modified or exchanged warrant and the fair value of that warrant immediately before modification

or exchange and then apply a recognition model that comprises four categories of transactions and the corresponding accounting treatment

for each category (equity issuance, debt origination, debt modification, and modifications unrelated to equity issuance and debt origination

or modification).

ASU 2021-04 is effective for fiscal years beginning after December 15, 2021, including interim periods within those

fiscal years.

An entity should apply the guidance provided in ASU 2021-04 prospectively to modifications or exchanges occurring on

or after the effective date.

The Company has adopted ASU 2021-04, which has had an impact on the modification of the warrants to the non-controlling

interest in Ever After (see also note 1c).

2021-10-“Government

Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance” (“ASU 2021-10”):

In November 2021, the FASB issued ASU

2021-10, which requires annual disclosures that increase the transparency of transactions involving government grants, including (1) the

types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity’s

financial statements.

The amendments in this update were effective for financial statements issued for annual periods beginning after

December 15, 2021.

The adoption of this standard did not

have a material impact on the Company’s consolidated financial statements.

Recently issued accounting pronouncements, not yet adopted

2016-13-“Financial

1 unchanged sentence

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.

In June 2016, the FASB issued

ASU 2016-13, which 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 are required to use a new forward-looking “expected loss”

model that generally 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.

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 rules (“SRC”)) to fiscal years

beginning after December 15, 2022, including interim periods.

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 rules (“SRC”))

to fiscal years beginning after December 15, 2022, including interim periods.

Early adoption is permitted.

2 unchanged sentences

transition approach through a cumulative- effect adjustment to retained earnings as of the beginning of the period of adoption.

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.

In November 2021, the FASB issued ASU

2021-10 “Government Assistance (Topic 832)”, which requires annual disclosures that increase the transparency of transactions

involving government grants, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the

effect of those transactions on an entity’s financial statements.

The amendments in this update are effective for financial statements

issued for annual periods beginning after December 15, 2021.

The Company does not expect that the

adoption of this standard will have a material impact on its consolidated financial statements.

does not expect that the adoption of this standard will have a material impact on its consolidated financial statements.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

- SIGNIFICANT

ACCOUNTING POLICIES (CONT.)

Comprehensive loss

2 unchanged sentences

Loss contingencies

The Company may become involved, from

time to time, in various lawsuits and legal proceedings which arise in the ordinary course of business.

The Company records accruals for

loss contingencies to the extent that it concludes their occurrence is probable and that the related liabilities are estimable.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Dollars in thousands (except share and per share amounts)

The Company records accruals for loss

contingencies to the extent that it concludes their occurrence is probable and that the related liabilities are estimable.

30, 2023 and 2022, the Company has not recorded any accruals in this regard.

- PREPAID EXPENSES AND OTHER CURRENT ASSETS

1 unchanged sentence

Prepaid expenses

Value Added Tax (VAT) receivables

Accounts receivable from the Ministry of Economy and Industry

Derivatives instruments

Value Added Tax receivable

Accounts receivable from the IIA

Customer receivable

Other receivables

19 unchanged sentences

- OTHER ACCOUNTS PAYABLE

Deferred income from the Horizon 2020 grant and CRISPR-IL

Deferred income from grants

Accrued payroll

2 unchanged sentences

Towards the termination of the previous

facility operating lease agreement, the Company signed, in December 2021,an addendum to its facility operating lease agreement (the “Addendum”)

with the lessor, which extended the lease period to December 2026.

In addition the Company has the option to extend the term of the lease

(the “Extension Option”) for an additional period of five years until December 2031.

facility operating lease agreement, the Company signed, in December 2021, an addendum to its facility operating lease agreement with the

lessor, which extended the lease period to December 2026.

In addition, the Company has the option to extend the term of the lease (the

“Extension Option”) for an additional period of five years until December 2031.

The Company reflected the Extension Option

during the evaluation of the lease liability and right-of-use asset.

The monthly lease payments are approximately NIS 291,000 or $ 94 which

are linked to the consumer price index and will increase by 10 % in the event the Company exercises its Extension Option.

the Company has operating leases for vehicles that expire through fiscal year 2025.

Below is a summary of the Company’s operating

right-of-use assets and operating lease liabilities:

Operating right-of-use assets

during the evaluation of the lease liability and ROU asset.

The monthly lease payments are approximately NIS 292,000 ($ 83 ) which are linked

to the consumer price index and will increase by 10 % in the event the Company exercises its Extension Option.

In addition, the Company

has operating leases for vehicles that expire through fiscal year 2026.

Below is a summary of the Company’s operating ROU assets

and operating lease liabilities:

Operating ROU assets

Operating lease liabilities, current

10 unchanged sentences

- LEASES (CONT.)

The components of lease expense and supplemental cash flow

information related to leases for the year ended June 30, 2022 are as follows:

All of the leased facilities are located

The components of lease expense and

supplemental cash flow information related to leases for the years ended June 30, 2023 and June 30, 2022 are as follows:

Year ended June 30,

Components of lease expense

Operating lease payments linked to index, net *

Fixed payments and variable payments that depend on an index or rate*

Sublease income

1 unchanged sentence

Cash paid for amounts included in the measurement of lease liabilities

Supplemental non-cash information related to lease liabilities arising from obtaining ROU assets

operating lease payments are linked to the consumer price index and are presented net after elimination of deferred participation payments

in amount of $ 124 and $ 248 for the year ended June 30, 2022 and 2021 respectively.

* The operating lease payments are

linked to the consumer price index and are presented net after elimination of deferred participation payments in amount of $ 124 for the

year ended June 30, 2022.

There were no deferred participation payments for the year ended June 30, 2023.

As of June 30, 2023, the weighted average

remaining lease term is 8.1 years, and the weighted average discount rate is 9 percent.

The discount rate was determined based on the

estimated collateralized borrowing rate of the Company, adjusted to the specific lease term and location of each lease.

As of June 30, 2022, the weighted average remaining

lease term is 9.1 years, and the weighted average discount rate is 9 percent.

The discount rate was determined based on the estimated

collateralized borrowing rate of the Company, adjusted to the specific lease term and location of each lease.

For vehicles, the lease period is usually

1 unchanged sentence

On April 30, 2020, the German Subsidiary

entered into the Finance Contract with the EIB, pursuant to which the German Subsidiary can obtain the Loan in the amount of up to € 50

million, subject to certain milestones being reached, payable in three tranches, with the first tranche consisting of € 20 million,

entered into the Finance Contract with the EIB, pursuant to which the German Subsidiary can obtain a loan in the amount of up to € 50

million, subject to certain milestones being reached, receivable in three tranches, with the first tranche consisting of € 20 million,

second of € 18 million and third of € 12 million for a period of 36 months from the signing of the Finance Contract.

1 unchanged sentence

each with its own interest rate and maturity period.

The annual interest rate is 4 % (consisting of a 0 % fixed interest rate and a 4 % deferred

interest rate payable upon maturity,) for the first tranche, 4 % (consisting of a 1 % fixed interest rate and a 3 % deferred interest rate

payable upon maturity) for the second tranche and 3 % (consisting of a 1 % fixed interest rate and a 2 % deferred interest rate payable upon

maturity) for the third tranche.

In addition to any interest

payable on the Loan, the EIB is entitled to receive royalties from future revenues for a period of seven years starting at the

beginning of fiscal year 2024 and continuing up to and including its fiscal year 2030 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.

The annual interest rate is 4 % (consisting of a 4 % deferred interest rate payable

upon maturity);

for the first tranche, 4 % (consisting of a 1 % fixed interest rate and a 3 % deferred interest rate payable upon maturity)

for the second tranche and 3 % (consisting of a 1 % fixed interest rate and a 2 % deferred interest rate payable upon maturity) for the third

In addition to any interest payable

on the Loan, the EIB is entitled to receive royalties from future revenues for a period of seven years starting at the beginning of fiscal

year 2024 and continuing up to and including its fiscal year 2030 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.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

- LOAN FROM THE EIB (CONT.)

During June 2021, Pluri received the

3 unchanged sentences

As of June 30, 2023, the linked principal balance in the amount of $ 21,722 and the interest

accrued in the amount of $ 899 are presented among long term liabilities.

The Finance Contract also contains certain limitations such

as the use of proceeds received from the EIB, limitations relates to disposal of assets, substantive changes in the nature of the Company’s

business, changes in holding structure, distributions of future potential dividends and engaging with other banks and financing entities

for other loans.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

accrued in the amount

of $ 1,808 are presented among long-term

Since the project period ended on December 31, 2022, the Company does not expect to receive additional funds pursuant to

the Finance Contract.

The Finance Contract also contains

certain limitations such as the use of proceeds received from the EIB, limitations relate to disposal of assets, substantive changes in

the nature of the Company’s business, changes in holding structure, distributions of future potential dividends and engaging with

other banks and financing entities for other loans.

- COMMITMENTS AND CONTINGENCIES

As of June 30, 2022, an amount

of $ 1,641 of cash and deposits was pledged by the Subsidiary to secure its hedging transaction, credit line, lease agreement and bank guarantees.

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.

As of June 30, 2023, an amount of $ 896 of cash and deposits was pledged by the Subsidiary to secure its credit line, lease agreement and bank guarantees.

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 U.S.

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.

The outstanding balance of the grants will be subject to interest at a rate equal to the 12 month LIBOR applicable to U.S.

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.

As of June 30, 2022, the Company’s

contingent liability in respect to royalties to the IIA amounted to $ 27,574 , not including LIBOR interest as described above.

The Company was awarded a 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.

As of June 30, 2023, the Company’s contingent liability in respect to royalties to the IIA amounted to $ 27,565 , not including LIBOR interest as described above.

In April 2017 the Company was awarded a 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.

1 unchanged sentence

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 for a period of up to 5 years or until the amount of the grant is fully paid.

As of June 30, 2022, the grant received from this Smart Money program was approximately $ 179 , program has ended and no royalties were paid or accrued.

As of June 30, 2023, the grant received from this Smart Money program was approximately $ 180 , the program has ended, and no royalties were paid or accrued.

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 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 $ 500 .

AND ITS SUBSIDIARIES

2 unchanged sentences

- COMMITMENTS AND CONTINGENCIES (CONT.)

The Company was awarded a marketing grant of approximately $ 52 under the “Shalav” program of the Israeli Ministry of Economy and Industry.

In June 2018 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.

1 unchanged sentence

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.

As of June 30, 2022, the aggregate

amount of the grant received is approximately $ 52 and no royalties were paid or accrued.

As of June 30, 2023, the aggregate amount of the grant received is approximately $ 52 and no royalties were paid or accrued.

As to potential royalties to the EIB, see note 7.

- SHAREHOLDERS’ EQUITY

(1) The Company’s authorized common shares consist of 60,000,000 shares with a par value of $ 0.00001 per share.

(1) On May 1, 2023, the Company increased its authorized common shares from 60,000,000 to 300,000,000 with a par value of $ 0.00001 per share.

All shares have equal voting rights and are entitled to one vote per share in all matters to be voted upon by shareholders and may be issued only as fully paid and non-assessable shares.

Holders of the common shares are entitled to equal ratable rights to dividends and distributions, as may be declared by the Board of Directors out of funds legally available.

The Company’s authorized preferred shares consist of 1,000,000 preferred shares, par value $ 0.00001 per share, with series, rights, preferences, privileges and restrictions as may be designated from time to time by the Company’s Board of Directors.

Holders of the common shares are entitled to equal ratable rights to dividends and distributions, as may be declared by the Board of Directors (the “Board”) out of funds legally available.

No preferred shares have been issued.

Between December 13, 2022 and December 27, 2022, the Company entered

into a series of securities purchase agreements with several purchasers for an aggregate of 8,155,900 common shares and warrants, to

purchase up to 8,155,900 common shares.

On December 13, 2022, the Company 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, the Company 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, the Company 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, the Company 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, the Company 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 (see also item e).

The warrants sold in the December 2022 private placement will be

exercisable six months from their issuance date.

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

to the December 2022 private placement and received $ 8,024 , net of $ 445 that were recorded as issuance expenses.

AND ITS SUBSIDIARIES

2 unchanged sentences

- SHAREHOLDERS’ EQUITY (CONT.)

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 a new Open Market Sale Agreement (“ATM Agreement”) with 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 .

During the year ended June 30, 2022 the Company did not sell any common shares under the ATM Agreement.

During the year ended June 30, 2021, a total of 519,990 warrants 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 .

During the year ended June 30, 2022 no warrants were exercised.

On February 2, 2021, the Company, entered into a securities purchase

agreement, with certain institutional investors, pursuant to which the Company agreed to issue and sell, in a registered direct offering,

4,761,905 common shares for gross proceeds of $ 30,000 .

The aggregate net proceeds were approximately $ 28,077 , net of issuance costs of

(2) Share options, RS and RSUs

to employees, directors and consultants:

The Company adopted a Share Option

Plan in 2005, an Equity Incentive Plan in 2016 and an Equity Compensation Plan in 2019 (together, the “Plans”).

Under the Plans, share options, RS

and RSUs may be granted to the Company’s officers, directors, employees and consultants or the officers, directors, employees and

consultants of the Subsidiary.

Share options and RSUs to employees, directors and consultants:

The Company adopted the 2016 Equity

Compensation Plan (the “2016 Plan”) and the 2019 Equity Compensation Plan (together, the “Plans”).

Under the Plans, share options, restricted

shares (“RS”) and RSUs may be granted to the Company’s officers, directors, employees and consultants or the officers,

directors, employees and consultants of the Subsidiary.

As of June 30, 2023, 6,547,093 common

shares are available for future grants under the Plans.

to consultants:

A summary of the share options to non-employee consultants

is as follows:

ended June 30, 2021

Options to consultants:

A summary of the share options granted to non-employee consultants

under the Plans by Pluri Inc.

and its Subsidiary is as follows:

Year ended June 30, 2022

exercise price

Share options outstanding at beginning of period

Share options granted

Share options exercised

Share options forfeited

3 unchanged sentences

Share options vested and expected to vest at the end of the period

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

- SHAREHOLDERS’ EQUITY (CONT.)

Year ended June 30, 2023

exercise price

Share options outstanding at beginning of period

Share options granted

Share options exercised

Share options forfeited

3 unchanged sentences

Share options vested and expected to vest at the end of the period

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

- SHAREHOLDERS’ EQUITY (CONT.)

Compensation expenses related to share

options granted to consultants were recorded as follows:

options granted by Pluri Inc.

and its Subsidiary to consultants were recorded as follows:

Year ended June 30,

General and administrative expenses

to employees and directors:

The following table summarizes the

activity related to unvested RSUs granted to employees and directors under the Plans, for the years ended June 30, 2022 and 2021:

Options to employees:

A summary of the share options granted to employees under

the Plans by the Subsidiary is as follows:

exercise price

Share options outstanding at the beginning of the period

Share options granted

Share options outstanding at the end of the period

Share options exercisable at the end of the period

Share options unvested

Share options vested and expected to vest at the end of the period

As of June 30, 2023, the aggregate

intrinsic value of these options was $ 0 .

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

- SHAREHOLDERS’ EQUITY (CONT.)

On December 14, 2022, Yaky Yanay,

the Company’s Chief Executive Officer, 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 the Company’s existing equity compensation plans.

In that regard, the

Company granted Mr.

Yanay (i) 334,821 RSUs, vesting ratably each month (see also item c), and (ii) options to purchase 334,821 common

shares, vesting ratably each month, with a term of 3 years, at an exercise price of $ 1.12 per share.

All of these options were granted

in December 2022 and will expire three years from the last vesting date.

In addition, the Board also agreed

Yanay options to purchase 1,500,000 common shares, with a term of 3 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 last vesting

date or the date which the Company increased its authorized share capital (see also item (1)).

Compensation expenses recorded in

general and administrative expenses related to options granted by the Subsidiary to the Chief Executive Officer for the year ended June

30, 2023 were $ 568 .

There were no compensation expenses recorded in general and administration expenses related to options granted

to employees for the year ended June 30, 2022.

Unamortized compensation expenses

related to options granted to the Chief Executive Officer by the Subsidiary is approximately $ 174 to be recognized by the end of December

RSUs to employees and directors:

The following table summarizes the activity

related to unvested RSUs granted to employees and directors under the Plans by Pluri Inc.

and its Subsidiary, for the years ended June

30, 2023 and 2022:

Year ended June 30,

7 unchanged sentences

Compensation expenses related to RSUs

and common shares granted to employees and directors were recorded as follows:

and Ever After’s common shares granted to employees and directors were recorded as follows:

Year ended June 30,

2 unchanged sentences

Unamortized compensation expenses related

to RSUs granted to employees and directors is approximately $ 3,094 to be recognized by the end of June 2026.

to RSUs granted to employees and directors by Pluri and its Subsidiary is approximately $ 1,529 to be recognized by the end of June 2026.

General and administrative expenses

1 - Compensation expenses for the year

ended June 30, 2022, in the amount of $ 1,646 were related to 45,936 ordinary shares of Plurinuva that were allocated during

ended June 30, 2022, in the amount of $ 1,646 were related to 45,936 ordinary shares of Ever After that were allocated during

February 2022 to the Company’s Chairman, Chief Executive Officer and Chief Financial Officer, each pursuant to the terms of their

respective employment and/or consulting agreements (see note 1d).

respective employment and/or consulting agreements (see also note 1e).

2 - Market-based awards:

1 unchanged sentence

its Chairman and Chief Executive Officer an aggregate of 1,000,000 RSUs ( 500,000 each) under the Plans.

The RSUs will vest in full upon the

achievement of a milestone of the Company increasing the market capitalization of its common shares on the Nasdaq Global Market to $ 550,000

The RSUs will vest in full upon

the achievement of a milestone of the Company increasing the market capitalization of its common shares on the Nasdaq Global Market to

$ 550,000 within no more than three years from the date of grant.

7 unchanged sentences

Treasury bonds for the expiration date of the

The fair value of the market-based

award uses the assumptions noted in the following table:

The fair value of the market-based award

uses the assumptions noted in the following table:

Risk-free interest rates

4 unchanged sentences

The fair value of the market-based

awards granted on the grant date was $ 7.28 per share and the expected time for the market condition to achieve, based on the Monte Carlo

valuation model, is thirteen and a half months from the date of the grant.

For the year ended June 30, 2022 and 2021 the Company recognized

$ 2,127 and $ 5,156 of expenses included in general and administrative expenses, respectively.

Options to employees and directors:

Compensation expenses related to options

of Plurinuva granted to Plurinuva‘s employees were recorded as follows:

Year ended June 30,

Research and development expenses

General and administrative expenses

awards granted on the grant date was $ 7.28 per share and the expected time for the market condition to be achieved, based on the Monte

Carlo valuation model, is thirteen and a half months from the date of the grant.

For the year ended June 30, 2022 the Company recognized

$ 2,127 of expenses included in general and administrative expenses.

There were no expenses related to this grant for the year ended June

3 - Compensation expenses for the year

ended June 30, 2023, in the amount of $ 273 were related to 334,821 RSUs, vesting ratably each month (see also item b).

AND ITS SUBSIDIARIES

2 unchanged sentences

- SHAREHOLDERS’ EQUITY (CONT.)

to consultants:

The following table summarizes the

activity related to unvested RS and RSUs granted to non-employee consultants for the years ended June 30, 2022 and 2021:

RSUs to consultants:

The following table summarizes the activity

related to unvested RSUs granted to non-employee consultants under the Plans by the Subsidiary for the years ended June 30, 2023 and

Year ended June 30,

2 unchanged sentences

Compensation expenses related to RSUs

granted to consultants were recorded as follows:

granted to consultants by the Subsidiary were recorded as follows:

Year ended June 30,

1 unchanged sentence

General and administrative expenses

Summary of warrants and

Summary of the Company’s warrants and options:

Year ended June 30, 2023

Warrants / Options

Weighted average exercise

Total warrants

6 unchanged sentences

Dollars in thousands (except share and per share amounts)

- SHAREHOLDERS’ EQUITY (CONT.)

Nasdaq Deficiency Notice:

On April 19, 2023, the Company received a letter (the “Notice”) from The Nasdaq Stock Market (“Nasdaq”) advising that for 30 consecutive trading days preceding the date of the Notice, the bid price of the Company’s common shares had closed below the $ 1.00 per share minimum required for continued listing on the Nasdaq Global Market pursuant to Nasdaq Listing Rule 5450(a)(1) (“MBPR”).

The Notice has no effect on the listing of the Company’s common shares at this time, and the common shares continue to trade on Nasdaq under the symbol “PLUR.”

Under Nasdaq Listing Rule 5810(c)(3)(A),

if during the 180 calendar day period following the date of the Notice the closing bid price of the common shares is at or above $1.00

for a minimum of 10 consecutive business days, the Company will regain compliance with the MBPR and the Company’s common shares

will continue to be eligible for listing on Nasdaq, absent noncompliance with any other requirement for continued listing.

The compliance

period (“Compliance Period”) to comply with the MBPR will expire on October 16, 2023.

If the Company does not regain

compliance with the MBPR by the end of the Compliance Period, then under Nasdaq Listing Rule 5810(c)(3)(A)(i), the Company may

transfer to The Nasdaq Capital Market, provided that the Company meets the applicable market value of publicly held shares

requirement for continued listing as well as all other standards for initial listing of the common shares on the Nasdaq Capital

Market (other than the MBPR), and notifies Nasdaq of the Company’s intention to cure the deficiency.

Following a transfer to

The Nasdaq Capital Market, the Company may be afforded an additional 180-days to regain compliance with the MBPR.

The Company intends to monitor the

closing bid price of its common shares and may, if appropriate, consider implementing available options to regain compliance with the

MBPR under the Nasdaq Listing Rules, including initiating a reverse stock split.

- FINANCIAL INCOME (EXPENSES), NET

3 unchanged sentences

Interest income on deposits

Gain (loss) from derivatives

Financial income, net

Loss from hedging derivatives

Financial income (expenses), net

EIB loan interest expenses

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

- TAXES ON INCOME

Tax rates applicable to the

Tax rates applicable to the Company:

corporate federal tax rate

applicable to Pluri is 21 %, which is the result of the Tax Cuts and Jobs Act of 2017 (the “Tax Act”).

Such corporate tax rate

excludes state tax and local tax, if any, which rates depend on the state and city in which Pluri conducts its business.

The Tax Act provided for a

one-time transition tax on certain foreign earnings for the tax year 2017, and taxation of Global Intangible Low-Taxed Income

(“GILTI”) earned by foreign subsidiaries beginning after December 31, 2017.

The GILTI tax imposes a tax on foreign

income in excess of a deemed return on tangible assets of foreign corporations.

The Tax Act also makes certain changes to the

depreciation rules and implements new limits on the deductibility of certain executive compensation paid by Pluri All losses

generated after December 31, 2017 can only be used to offset 80 % of net income in the year they will be utilized.

Such corporate tax

rate excludes state tax and local tax, if any, which rates depend on the state and city in which Pluri conducts its business.

The Tax Act provided for a one-time

transition tax on certain foreign earnings for the tax year 2017, and taxation of Global Intangible Low-Taxed Income (“GILTI”)

earned by foreign subsidiaries beginning after December 31, 2017.

The GILTI tax imposes a tax on foreign income in excess of a deemed

return on tangible assets of foreign corporations.

The Tax Act also makes certain changes to the depreciation rules and implements new

limits on the deductibility of certain executive compensation paid by Pluri all losses generated after December 31, 2017 can only be

used to offset 80 % of net income in the year they will be utilized.

There was no one-time transition tax

for the Company under the Tax Act, nor will there be GILTI tax due for the current year, since the Subsidiary had losses for every year

In January 2018, Pluri registered as

an Israeli resident with the Israel Tax Authority (the “ITA”) and the Israeli Value Added Tax Authorities.

As a result, as

of such date, Pluri is classified as a dual resident for tax purposes both in Israel and the United States.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Dollars in thousands (except share and per share amounts)

- TAXES ON INCOME (CONT.)

In January 2018, Pluri Inc.

as an Israeli resident with the Israel Tax Authority (the “ITA”) and the Israeli Value Added Tax Authorities.

as of such date, Pluri Inc.

is classified as a dual resident for tax purposes both in Israel and the United States.

In June 2018, Pluri Inc.

and the Subsidiary

submitted an election notice to the ITA to file a consolidated tax return in Israel commencing with the 2018 tax year.

Subsidiary submitted an election notice to the ITA to file a consolidated tax return in Israel commencing with the 2018 tax year.

The Subsidiary:

Consolidated taxable income of Pluri

and the Subsidiary (the “Consolidated tax unit”) is subject to tax at the rate of 23 % in 2022 and 2021.

and the Subsidiary (the “Consolidated tax unit”) is subject to tax at the rate of 23 % for the years ended June 30, 2023 and

The consolidated tax unit is filing

its consolidated tax reports in dollars based on specific regulations of the ITA which allow, in specific circumstances, filing tax reports

in dollars (“Dollar Regulations”).

Under the Dollar Regulations, the tax liability is calculated in dollars according to certain

The tax liability, as calculated in dollars, is translated into NIS according to the exchange rate as of June 30 of each year.

its consolidated tax reports in U.S.

dollars based on specific regulations of the ITA which allow, in specific circumstances, filing

tax reports in U.S.

dollars (“Dollar Regulations”).

Under the Dollar Regulations, the tax liability is calculated in U.S.

dollars according to certain orders.

The tax liability, as calculated in dollars, is translated into NIS according to the exchange rate

as of June 30 of each year.

The Subsidiary has not received final

11 unchanged sentences

period (dependent on the level of foreign investments).

In respect of expansion programs pursuant

to Amendment No.

60 to the Law, the duration of the benefit period has been amended, such that it starts at the later of the election

year and the first year the Company earns taxable income provided that 12 years have not passed since the beginning of the election year

and for companies in National Priority Zone A - 14 years have not passed since the beginning of the election year.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Dollars in thousands (except share and per share amounts)

- TAXES ON INCOME (CONT.)

With respect to the expansion programs

pursuant to Amendment No.

60 to the Law, the duration of the benefit period has been amended, such that it starts at the later of the

election year and the first year the Company earns taxable income provided that 12 years have not passed since the beginning of the election

year and for companies in National Priority Zone A - 14 years have not passed since the beginning of the election year.

The benefit period for the Subsidiary’s

3 unchanged sentences

tax exempt profits, as detailed above, the Subsidiary will become liable for taxes at the rate applicable to its profits from the Beneficiary

Enterprise in the year in which the income was earned (tax at the rate of 10-25%, dependent on the level of foreign investments) and to

a withholding tax rate of 15% (or lower, under an applicable tax treaty).

Enterprise in the year in which the income was earned (tax at the rate of 10 - 25 %, dependent on the level of foreign investments) and

to a withholding tax rate of 15 % (or lower, under an applicable tax treaty).

Accelerated depreciation:

The Subsidiary is eligible for deduction

of accelerated depreciation on buildings, machinery and equipment used by the “Beneficiary Enterprise” at a rate of 200 % (or

400 % for buildings but not more than 20 % depreciation per year) from the first year of the assets operation.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Dollars in thousands (except share and per share amounts)

- TAXES ON INCOME (CONT.)

of accelerated depreciation on buildings, machinery and equipment used by the “Beneficiary Enterprise” at a rate of 200 %

(or 400 % for buildings but not more than 20 % depreciation per year) from the first year of the asset’s operation.

Conditions for the entitlement to

1 unchanged sentence

The above-mentioned benefits are conditional

upon the fulfillment of the conditions stipulated by the Law, regulations promulgated thereunder, and the Ruling with respect to the beneficiary

Non-compliance with the conditions may cancel all or part of the benefits and refund of the amount of the benefits, including

Company’s management believes that the Subsidiary is meeting the aforementioned conditions.

upon the fulfillment of the conditions stipulated by the Law, regulations promulgated thereunder, and the Ruling with respect to the

Beneficiary Enterprise.

Non-compliance with the conditions may cancel all or part of the benefits and require the refund of the amount

of the benefits, including interest.

The Company’s management believes that the Subsidiary is meeting the aforementioned conditions.

Amendments to the Law:

12 unchanged sentences

According to Amendment No.

71, the tax rate on preferred income form

71, the tax rate on preferred income from

a preferred enterprise in 2014 and thereafter will be 16 % (in development area A it will be 9 %).

3 unchanged sentences

to tax at a rate of 20 %.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Dollars in thousands (except share and per share amounts)

- TAXES ON INCOME (CONT.)

The Subsidiary did not apply Amendment

13 unchanged sentences

The 6 % rate would apply to qualifying

Israeli companies that are part of a group with global consolidated revenue of over NIS 10 billion (approximately $ 2.9 billion).

qualifying companies with global consolidated revenue below NIS 10 billion, would be subject to a 12 % tax rate.

Israeli companies that are part of a group with global consolidated revenue of over NIS 10 billion (approximately $ 2,900,000 ).

Other qualifying

companies with global consolidated revenue below NIS 10 billion would be subject to a 12 % tax rate.

However, if the Israeli company is located

17 unchanged sentences

may still be considered as a qualified company at the discretion of the IIA.

Companies wishing to exit from the regime in the future will

not be subject to claw back of tax benefits.

The Knesset also approved a stability clause in order to encourage multinationals to invest

Companies wishing to exit from the regime in the future

will not be subject to claw back of tax benefits.

The Knesset also approved a stability clause in order to encourage multinationals to

invest in Israel.

Accordingly, companies will be able to confirm the applicability of tax incentives for a 10-year period under a pre-ruling

Further, in line with the new Organization for Economic Co-operation and Development Nexus Approach, the Israeli Finance Minister

will promulgate regulations to ensure companies are benefiting from the regime to the extent qualifying research and development expenditures

are incurred.

will promulgate regulations to ensure companies are benefiting from the regime to the extent qualifying R&D expenditures are incurred.

The regulations were set to be finalized

7 unchanged sentences

the German Subsidiary is 15 %, which is derived from the German Corporation Tax Act and Solidarity surcharge of 5.5 % from the 15 % corporate

This corporate tax rate excludes trade tax, which rate depends on the municipality in which the German Subsidiary conducts its

Trade Tax is calculated by determining the Trade Tax Base with 3.5% of the trade income and applying the tax factor which differs

according to the specific municipality in Germany and equals 455% for the municipality of Potsdam.

Plurinuva is an Israeli tax resident

This corporate tax rate excludes trade tax, which rate depends on the municipality in which the German Subsidiary conducts

its business.

Trade tax is calculated by determining the Trade Tax Base with 3.5 % of the trade income and applying the tax factor which

differs according to the specific municipality in Germany and equals 455 % for the municipality of Potsdam.

Ever After is an Israeli tax resident

and is subject to corporate income tax at the rate of 23 %.

Carryforward losses for tax

Carryforward losses for tax purposes

As of June 30, 2023, Pluri had a U.S.

1 unchanged sentence

Net operating loss carryforwards arising in

taxable years, can be carried forward and offset against taxable income for 20 years and expire between 2023 and 2038.

taxable years, can be carried forward and offset against taxable income for 20 years and thus will expire between 2022 and 2037.

Net operating

losses generated in tax years 2002 and 2003 have expired and were reduced from the total net operating loss carryforward available.

Utilization of U.S.

net operating losses

may be subject to substantial annual limitations due to the “change in ownership” provisions of the Internal Revenue Code

of 1986 and similar state provisions.

may be subject to substantial annual limitations due to the “change in ownership” provisions of the U.S.

Internal Revenue

Code of 1986 and similar state provisions.

The annual limitation may result in the expiration of net operating losses before utilization.

2 unchanged sentences

business income and business capital gain in the future for an indefinite period.

In January 2018, Pluri registered as

an Israeli resident with the ITA and the Israeli Value Added Tax Authorities.

As of June 30, 2022, Pluri and the subsidiaries consolidated

accumulated losses, for tax purposes, are approximately $ 122,375 , which may be carried forward and offset against taxable business income

and business capital gain in the future for an indefinite period.

The German Subsidiary has accumulated

losses, for tax purposes, as of June 30, 2022, in the amount of approximately $ 588 , which may be carried forward and offset against taxable

business income and business capital gain in the future for an indefinite period.

AND ITS SUBSIDIARIES

2 unchanged sentences

- TAXES ON INCOME (CONT.)

In January 2018, Pluri Inc.

as an Israeli resident with the ITA and the Israeli Value Added Tax Authorities.

As of June 30, 2023, Pluri Inc.

the Subsidiaries consolidated accumulated losses, for tax purposes, are approximately $ 188,233 , which may be carried forward and offset

against taxable business income and business capital gain in the future for an indefinite period.

The German Subsidiary has accumulated

losses, for tax purposes, as of June 30, 2023, in the amount of approximately $ 596 , which may be carried forward and offset against taxable

business income and business capital gain in the future for an indefinite period.

Loss before income taxes

2 unchanged sentences

Year ended June 30,

Consolidated loss of Pluri and the Israeli subsidiaries

Consolidated loss of Pluri Inc.

and the Israeli Subsidiaries

Pluristem GmbH

1 unchanged sentence

Deferred income taxes reflect the net

tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts

used for income tax purposes.

tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the

amounts used for income tax purposes.

Significant components of the Company’s deferred tax assets are as follows:

8 unchanged sentences

As of June 30, 2023 and 2022, the Company

has provided full valuation allowances in respect of deferred tax assets resulting from tax loss carryforwards and other temporary differences,

since it has a history of operating losses and due to current uncertainty concerning its ability to realize these deferred tax assets

in the future.

has provided full valuation allowances with respect to the deferred tax assets resulting from tax loss carryforwards and other temporary

differences, since it has a history of operating losses and due to current uncertainty concerning its ability to realize these deferred

tax assets in the future.

The Company accounts for its income

2 unchanged sentences

of a tax position taken or expected to be taken in a tax return.

As of June 30, 2022 and 2021, there

were no unrecognized tax benefits that if recognized would affect the annual effective tax rate.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Dollars in thousands (except share and per share amounts)

- TAXES ON INCOME (CONT.)

As of June 30, 2023 and 2022, there were

no unrecognized tax benefits that if recognized would affect the annual effective tax rate.

Reconciliation of taxes at the federal

statutory rate to Company’s provision for income taxes:

In 2022 and 2021, the main reconciling item of the statutory tax rate

of the Company ( 21 % to 23 %) to the effective tax rate ( 0 %) is tax loss carryforward and research and development credit carryforward for

which a full valuation allowance was provided.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

In 2023 and 2022, the main reconciling

item of the statutory tax rate of the Company ( 21 % to 23 %) to the effective tax rate ( 0 %) is tax loss carryforward and R&D credit

carryforward for which a full valuation allowance was provided.

- SUBSEQUENT EVENT.

On July 11, 2023, the Board appointed Mr.

Lorne Abony to

serve as a member of the Board, effective immediately, to hold office until the next meeting of shareholders of the Company at which

directors are being elected or as set forth in the Company’s bylaws.

As remuneration for his service as a director, Mr.

to forego an annual cash fee and, in return, received options to purchase 100,000 common shares, which shall vest quarterly over a one

year period, at an exercise price of $ 0.76 per share, under the 2016 Plan, in accordance with the terms of the 2016 Plan.

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 common shares having an aggregate offering price of up to $ 200,000 .

On August 31, 2023, Ever After entered into a Simple Agreement for

Future Equity (the “SAFE Agreement”) with an investor (the “Investor”).

Pursuant to the terms of the SAFE Agreement,

Ever After will receive an aggregate amount of $ 2,500 (the “SAFE Amount”).

In the event of a qualified equity financing,

as defined in the SAFE Agreement, the investment made pursuant to the SAFE Agreement will be automatically converted into the number of

shares of Ever After based on the lowest purchase amount multiplied by a discount price of 80 %.

CHANGES IN AND DISAGREEMENTS

WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

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 8. Financial Statements and Supplementary Data