Pluri Inc. 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2023 ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from __________ to __________ Commission file number 001-31392 PLURI INC. (Exact name of registrant as specified in its charter) Nevada 98-0351734 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) MATAM Advanced Technology Park , Building No. 5 , Haifa , Israel 3508409 (Address of principal executive offices) (Zip Code) Registrant’s telephone number 011-972-74-7108600 Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol Name of each exchange on which registered Common Shares, par value $0.00001 PLUR The Nasdaq Capital Market Securities registered pursuant to Section 12(g) of the Act: None. (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registration was required to submit files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ State the number of shares outstanding of each of the issuer’s classes of common shares as of the latest practicable date: 41,480,172 common shares issued and outstanding as of February 12, 2024. PART I - FINANCIAL INFORMATION Item 1. Financial Statements. PLURI INC. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2023 U.S. DOLLARS IN THOUSANDS (Unaudited) INDEX Page Interim Condensed Consolidated Balance Sheets 1-2 Interim Condensed Consolidated Statements of Operations 3 Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity 4-5 Interim Condensed Consolidated Statements of Cash Flows 6-7 Notes to Interim Condensed Consolidated Financial Statements 8-17 i PLURI INC. INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) U.S. Dollars in thousands (except share and per share data) Note December 31, 2023 June 30, 2023 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 5,468 $ 5,360 Short-term bank deposits 25,152 34,811 Restricted cash 373 269 Prepaid expenses and other current assets 1,259 969 Total current assets 32,252 41,409 LONG-TERM ASSETS: Restricted bank deposits 645 627 Severance pay fund 460 439 Property and equipment, net 788 688 Operating lease right-of-use asset 7,340 7,633 Long-term deposit and other long-term assets 79 1 Total long-term assets 9,312 9,388 Total assets $ 41,564 $ 50,797 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 1 PLURI INC. INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) U.S. Dollars in thousands (except share and per share data) Note December 31, 2023 June 30, 2023 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES Trade payables $ 1,104 $ 1,812 Accrued expenses 1,012 1,209 Operating lease liability 654 627 Accrued vacation and recuperation 779 873 Other accounts payable 981 1,100 Total current liabilities 4,530 5,621 LONG-TERM LIABILITIES Accrued severance pay 613 598 Operating lease liability 5,403 5,748 Loan from the European Investment Bank (“EIB”) 4 24,401 23,530 Total long-term liabilities 30,417 29,876 COMMITMENTS AND CONTINGENCIES 3 SHAREHOLDERS’ EQUITY Share capital: 5 Common shares, $ 0.00001 par value per share: Authorized: 300,000,000 as of December 31, 2023, and June 30, 2023; Issued and outstanding: 41,680,023 and 41,245,495 shares as of December 31, 2023, and June 30, 2023, respectively * * Additional paid-in capital 413,849 412,939 Accumulated deficit ( 409,450 ) ( 399,584 ) Total shareholders’ equity 4,399 13,355 Non-controlling interests 2,218 1,945 Total equity 6,617 15,300 Total liabilities and equity $ 41,564 $ 50,797 (*) Less than $1 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 2 PLURI INC. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) U.S. Dollars in thousands (except share and per share data) Six months ended December 31 Three months ended December 31, 2023 2022 2023 2022 Revenues $ 159 $ 89 $ 105 $ 2 Operating expenses: Research and development expenses $ ( 6,704 ) $ ( 9,079 ) $ ( 3,338 ) $ ( 4,575 ) Less: participation by the National Institute of Allergy and Infectious Diseases (“NIAID”), the Israeli Innovation Authority (“IIA”), Horizon Europe and other parties 747 1,023 374 790 Research and development expenses, net ( 5,957 ) ( 8,056 ) ( 2,964 ) ( 3,785 ) General and administrative expenses ( 4,792 ) ( 5,635 ) ( 2,354 ) ( 2,896 ) Operating loss ( 10,590 ) ( 13,602 ) ( 5,213 ) ( 6,679 ) Interest expenses ( 430 ) ( 406 ) ( 216 ) ( 212 ) Other financial income (expenses), net 928 ( 515 ) 435 ( 1,363 ) Total financial income (expenses), net 498 ( 921 ) 219 ( 1,575 ) Net loss $ ( 10,092 ) $ ( 14,523 ) $ ( 4,994 ) $ ( 8,254 ) Net loss attributed to non-controlling interest $ ( 226 ) $ ( 285 ) $ ( 89 ) $ ( 137 ) Net loss attributed to shareholders $ ( 9,866 ) $ ( 14,238 ) $ ( 4,905 ) $ ( 8,117 ) Loss per share: Basic and diluted net loss per share $ ( 0.24 ) $ ( 0.44 ) $ ( 0.12 ) $ ( 0.24 ) Weighted average number of shares used in computing basic and diluted net loss per share 41,428,439 32,878,434 41,526,817 33,194,622 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 PLURI INC. INTERIM CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED) U.S. Dollars in thousands (except share and per share data) Shareholders’ Equity Common Shares Additional Paid-in Accumulated Total Shareholders’ Non-controlling Total Shares Amount Capital Deficit Equity Interests Equity Balance as of July 1, 2022 32,507,491 $ (* ) $ 401,302 $ ( 371,263 ) $ 30,039 $ 2,147 $ 32,186 Share-based compensation to employees, directors, and non-employee consultants 233,539 (* ) 1,355 - 1,355 542 1,897 Issuance of common shares and warrants related to December 2022 private placement, net of issuance costs of $ 361 5,550,121 (* ) 5,406 5,406 5,406 Modification of warrants to non-controlling interests - - ( 385 ) - ( 385 ) 385 - Expiration of warrants in Ever After - - 1,014 - 1,014 ( 1,014 ) - Net loss - - - ( 14,238 ) ( 14,238 ) ( 285 ) ( 14,523 ) Balance as of December 31, 2022 38,291,151 $ (* ) $ 408,692 $ ( 385,501 ) $ 23,191 $ 1,775 $ 24,966 Shareholders’ Equity Common Shares Additional Paid-in Accumulated Total Shareholders’ Non-controlling Total Shares Amount Capital Deficit Equity Interests Equity Balance as of October 1, 2022 32,634,662 $ (* ) $ 401,576 $ ( 377,384 ) $ 24,192 $ 2,709 $ 26,901 Share-based compensation to employees, directors, and non-employee consultants 106,368 (* ) 696 - 696 217 913 Issuance of common shares and warrants related to December 2022 private placement, net of issuance costs of $ 361 5,550,121 (* ) 5,406 - 5,406 - 5,406 Expiration of warrants in Ever After - - 1,014 - 1,014 ( 1,014 ) - Net loss - - - ( 8,117 ) ( 8,117 ) ( 137 ) ( 8,254 ) Balance as of December 31, 2022 38,291,151 $ (* ) $ 408,692 $ ( 385,501 ) $ 23,191 $ 1,775 $ 24,966 (*) Less than $1 4 PLURI INC. INTERIM CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED) U.S. Dollars in thousands (except share and per share data) Shareholders’ Equity Common Shares Additional Paid-in Accumulated Total Shareholders’ Non- controlling Total Shares Amount Capital Deficit Equity Interests Equity Balance as of July 1, 2023 41,245,495 $ (* ) $ 412,939 $ ( 399,584 ) $ 13,355 $ 1,945 $ 15,300 Share-based compensation to employees, directors, and non-employee consultants 434,528 (* ) 910 - 910 499 1,409 Net loss - - - ( 9,866 ) ( 9,866 ) ( 226 ) ( 10,092 ) Balance as of December 31, 2023 41,680,023 $ (* ) $ 413,849 $ ( 409,450 ) $ 4,399 $ 2,218 $ 6,617 Shareholders’ Equity Common Shares Additional Paid-in Accumulated Total Shareholders’ Non- controlling Total Shares Amount Capital Deficit Equity Interests Equity Balance as of October 1, 2023 41,448,521 $ (* ) $ 413,446 $ ( 404,545 ) $ 8,901 $ 2,137 $ 11,038 Share-based compensation to employees, directors, and non-employee consultants 231,502 (* ) 403 - 403 170 573 Net loss - - - ( 4,905 ) ( 4,905 ) ( 89 ) ( 4,994 ) Balance as of December 31, 2023 41,680,023 $ (* ) $ 413,849 $ ( 409,450 ) $ 4,399 $ 2,218 $ 6,617 (*) Less than $1 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 PLURI INC. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) U.S. Dollars in thousands (except share and per share data) Six months ended December 31, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 10,092 ) $ ( 14,523 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 131 197 Share-based compensation to employees, directors and non-employee consultants 1,409 1,897 Increase in prepaid expenses, other current assets and other long-term assets ( 299 ) ( 500 ) Decrease in trade payables ( 713 ) ( 517 ) Decrease in other accounts payable and accrued expenses ( 410 ) ( 1,290 ) Increase (decrease) in operating lease right-of-use asset and liability, net ( 25 ) 113 Decrease (increase) in interest receivable on deposits 3 ( 388 ) Effect of exchange rate changes on cash, cash equivalents, deposits and restricted cash ( 373 ) 111 Linkage differences and interest on long-term deposits ( 2 ) - Long term interest payable and exchange rate differences relate to EIB loan 871 997 Accrued severance pay, net ( 6 ) 14 Net cash used for operating activities $ ( 9,506 ) $ ( 13,889 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment $ ( 224 ) $ ( 141 ) Proceeds from short-term deposits, net 10,012 7,203 Investment in long-term deposits ( 67 ) - Net cash provided by investing activities $ 9,721 $ 7,062 CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common shares and warrants, net of issuance costs - 5,693 Net cash provided by financing activities $ - $ 5,693 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 6 PLURI INC. INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) U.S. Dollars in thousands (except share and per share data) Six months ended December 31, 2023 2022 EFFECT OF EXCHANGE RATE ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH $ 15 $ ( 111 ) Increase (decrease) in cash, cash equivalents and restricted cash 230 ( 1,245 ) Cash, cash equivalents and restricted cash at the beginning of the period 6,256 11,413 Cash, cash equivalents and restricted cash at the end of the period $ 6,486 $ 10,168 Reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheets: Cash and cash equivalents 5,468 8,818 Restricted cash 373 753 Long-term restricted bank deposits 645 597 Total cash, cash equivalents, restricted cash and restricted bank deposits $ 6,486 $ 10,168 (a) Supplemental disclosure of non-cash activities: Purchase of property and equipment on credit $ 80 $ 15 Accrued expenses related to issuance of common shares and warrants - 287 Supplemental non-cash information related to lease liabilities arising from obtaining right-of-use assets $ 78 $ - The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 7 PLURI INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 1: - GENERAL a. Pluri Inc. (formally known as Pluristem Therapeutics Inc.), a Nevada corporation, was incorporated on May 11, 2001. Pluri Inc.’s common shares trade on Nasdaq Capital Market and Tel Aviv Stock Exchange under the symbol “PLUR”. Pluri Inc. has a wholly owned subsidiary, Pluri-Biotech Ltd. (formerly known as Pluristem Ltd.) (the “Subsidiary”), which is incorporated under the laws of the State of Israel. In January 2020, the Subsidiary established a wholly owned subsidiary, Pluristem GmbH (the “German Subsidiary”) which is incorporated under the laws of Germany. 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.” b. 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, food tech, cellular agriculture and recently launched Contract Development and Manufacturing Organization, or CDMO activities and plans to utilize it in other industries and verticals that have a need for a mass scale and cost-effective cell expansion platform. 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. c. The Company has incurred an accumulated deficit of approximately $ 409,450 and incurred recurring operating losses and negative cash flows from operating activities since inception. As of December 31, 2023, the Company’s total shareholders’ equity amounted to $ 4,399 . During the six-month period ended December 31, 2023, the Company incurred losses of $ 9,866 and its negative cash flow from operating activities was $ 9,506 . As of December 31, 2023, the Company’s cash position (cash and cash equivalents, short-term bank deposits, restricted cash and restricted bank deposits) totaled $ 31,638 . The Company plans to continue to finance its operations from its current resources, by entering into licensing or other commercial, and collaboration agreements, by providing CDMO services to clients, from grants and contracts 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. There is no assurance, however, that the Company will be able to obtain the adequate level of financial resources that are required for the long-term development and commercialization of its products. 8 PLURI INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES a. Unaudited Interim Financial Information The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair statement have been included (consisting only of normal recurring adjustments). For further information, reference is made to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2023. The year-end balance sheet data was derived from the audited consolidated financial statements as of June 30, 2023, but not all disclosures required by GAAP are included. Operating results for the six-month period ended December 31, 2023, are not necessarily indicative of the results that may be expected for the year ending June 30, 2024. b. Significant Accounting Policies The significant accounting policies followed in the preparation of these interim unaudited condensed consolidated financial statements are identical to those applied in the preparation of the latest annual financial statements. c. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates, judgments and assumptions that are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. 9 PLURI INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES (CONT.) d. Fair value of financial instruments The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, restricted cash, short-term bank deposits, long-term bank deposit and restricted bank deposits and other current assets, trade payable and other accounts payable and accrued expenses, approximate their fair value because of their generally short-term maturities. The Company measures its derivative instruments at fair value under Accounting Standards Codification (“ASC”), “Fair Value Measurements and Disclosures” (“ASC 820”). Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: Level  1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities; Level  2 - Inputs other than Level 1 that are observable for the asset or liability, either directly or indirectly; and Level  3 - Unobservable inputs for the asset or liability. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company categorized each of its fair value measurements in one of these three levels of hierarchy. 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”). During June 2021, Pluri received € 20 million under 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. The Company 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. As of December 31, 2023, the Company does not reflect its liability for future royalty payments pursuant to the Finance Contract with the EIB since the accrual liability pertaining to royalties to EIB is immaterial (see also note 4). 10 PLURI INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES (CONT.) e. New Accounting Pronouncements i. Recently adopted accounting pronouncements ASU No. 2016-13 - “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”): In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-13, 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 results in the earlier recognition of allowances for losses. The guidance also requires increased disclosures. The amendments contained in ASU 2016-13 were originally effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years for the Company. In November 2019, the FASB issued ASU No. 2019-10, which delayed the effective date of ASU 2016-13 for smaller reporting companies (as defined by the U.S. Securities and Exchange Commission rules (“SEC”)) to fiscal years beginning after December 15, 2022, including interim periods. The guidance requires a modified retrospective transition approach through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The Company meets the definition of an SRC and adopted the new accounting standard effective July 1, 2023. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. ii. Recently issued accounting pronouncements, not yet adopted ASU No. 2023-07 - “Segment Reporting (Topic 280): Improvements to reportable segment disclosures” (“ASU 2023-07”): In November 2023, the FASB issued ASU 2023-07 “Segment Reporting: Improvements to Reportable Segment Disclosures”. This guidance expands public entities’ segment disclosures primarily by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition of other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The guidance is effective for the fiscal year beginning after December 15, 2023, and interim periods within the fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements disclosures. 11 PLURI INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES (CONT.) ASU No. 2023-09 - “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”): In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. This guidance is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and regarding income tax paid both in the U.S. and foreign jurisdictions. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 on a prospective basis. Early adoption and retroactive application are permitted. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements disclosures. NOTE 3: - COMMITMENTS AND CONTINGENCIES a. As of December 31, 2023, an amount of $ 1,018 of cash and deposits was pledged by the Subsidiary for bank guarantees related to its facility operating lease agreement and to secure its credit line for hedging transactions. b. Under the Law for the Encouragement of Industrial Research and Development, 1984, (the “Research Law”), research and development programs that meet specified criteria and are approved by the IIA are eligible for grants of up to 50 % of the project’s expenditures, as determined by the research committee, in exchange for the payment of royalties from the sale of products developed under the program. Regulations under the Research Law generally provide for the payment of royalties to the IIA of 3 % on sales of products and services derived from a technology developed using these grants until 100 % of the 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. The outstanding balance of the grants will be subject to interest at a rate equal to the 12-month LIBOR (from January 1, 2024, to the 12-month SOFR) 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 December 31, 2023, the Company’s contingent liability in respect to royalties to the IIA amounted to $ 27,669 , not including LIBOR (from January 1, 2024, SOFR) interest as described above. 12 PLURI INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 3: - COMMITMENTS AND CONTINGENCIES (CONT.) c. 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 . d. As to royalties to the EIB, see note 4. NOTE 4: - LOAN FROM THE EIB On April 30, 2020, the German Subsidiary entered into a 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, for a period of 36 months from the signing of the Finance Contract. During June 2021, Pluri received € 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. As of December 31, 2023, the linked principal balance in the amount of $ 22,121 and the interest accrued in the amount of $ 2,280 are presented among long-term liabilities. Since the project period ended on December 31, 2022, the Company does not expect to receive additional funds pursuant to the Finance Contract. In addition to interest payable on the Loan, the EIB is entitled to receive royalties from 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. As of December 31, 2023, the accrual liability pertaining to royalties to EIB is immaterial. The Finance Contract also contains certain limitations such as the use of proceeds received from the EIB, limitations related 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. 13 PLURI INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 5: - SHAREHOLDERS’ EQUITY 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, or the 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 . The Warrants sold in the December 2022 Private Placement will be exercisable upon the later of six months from their issuance date, or until the Company increases its authorized shares. As of December 31, 2022, the Company issued 5,550,121 common shares and warrants that relate to the December 2022 Private Placement and received $ 5,800 as of that date. As of December 2022, $ 361 was recorded as issuance expenses that relate to the December 2022 Private Placement. As of February 13, 2023, 7,015,900 common shares and warrants sold in the December 2022 Private Placement were issued for aggregate gross proceeds of $ 7,300 . During the fiscal year 2023, the Company issued a total of 8,155,900 common shares and warrants, all of which were related to the December 2022 private placement. As of March 30, 2023, the Company received $ 8,024 , net of $ 445 recorded as issuance expenses . On August 31, 2023, and as amended and restated as of October 9, 2023, Ever After entered into a Simple Agreement for Future Equity (the “SAFE Agreement”) with an investor. Pursuant to the terms of the SAFE Agreement, Ever After will receive an aggregate amount of $ 2,500 (the “SAFE Amount”). As of December 31, 2023, the SAFE Agreement had been terminated and the SAFE Amount was not received. a. Options to consultants: A summary of the share options to non-employee consultants under equity incentive plans of Pluri Inc. is as follows: Six months ended December 31, 2023 Number Weighted Average Exercise Price Weighted Average Remaining Contractual Terms (in years) Aggregate Intrinsic Value Price Share options outstanding at the beginning of the period 64,795 $ 0.93 6.24 $ 29 Share options outstanding and exercisable at the end of the period 64,795 $ 0.93 5.74 $ 21 14 PLURI INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 5: - SHAREHOLDERS’ EQUITY (CONT.) Compensation expenses recorded in general and administrative expenses related to options granted to consultants for the six months ended December 31, 2023 and 2022 were $ 1 and $ 6 , respectively. Compensation expenses recorded in general and administrative expenses related to options granted to consultants for the three months ended December 31, 2022 were $ 6 . There were no compensation expenses recorded in general and administrative expenses related to options granted to consultants for the three months ended December 31, 2023. b. Options to the Chief Executive Officer and Director: A summary of the share options granted to the Chief Executive Officer and Director under equity incentive plans of Pluri Inc. is as follows: Six months ended December 31, 2023 Number Weighted Average Exercise Price Weighted Average Remaining Contractual Terms (in years) Share options outstanding at the beginning of the period 1,834,821 $ 1.90 3.47 Options granted 100,000 0.76 7.16 Share options outstanding at the end of the period 1,934,821 $ 1.85 7.54 Share options exercisable at the end of the period 1,859,821 $ 1.89 2.77 Share options unvested 75,000 $ 0.76 7.54 Share options vested and expected to vest at the end of the period 1,934,821 $ 1.85 7.54 As of December 31, 2023, the aggregate intrinsic value of these options was $ 0 . Compensation expenses recorded in general and administrative expenses related to options granted to the Chief Executive Officer and a director for the six months ended December 31, 2023, were $ 213 . There were no compensation expenses recorded in general and administrative expenses related to options granted to the Chief Executive Officer and directors for the six months ended December 31, 2022. Compensation expenses recorded in general and administrative expenses related to options granted to the Chief Executive Officer and a director for the three months ended December 31, 2023, were $ 94 . There were no compensation expenses recorded in general and administrative expenses related to options granted to the Chief Executive Officer and directors for the three months ended December 31, 2022. 15 PLURI INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 5: - SHAREHOLDERS’ EQUITY (CONT.) c. Restricted Stock (“RS”) and Restricted Stock Units (“RSUs”) to employees, directors and consultants: 1. RSUs to employees and directors: The following table summarizes the activity related to RSUs granted to employees, directors and officers under equity incentive plans of Pluri Inc. for the six-month periods ended December 31, 2023 and 2022: Six months ended December 31, 2023 2022 Number Unvested at the beginning of the period 1,657,592 1,935,014 Granted - 334,821 Forfeited ( 1,007,165 ) ( 39,138 ) Vested ( 354,027 ) ( 212,287 ) Unvested at the end of the period 296,400 2,018,410 Expected to vest after the end of the period 285,379 1,994,118 Compensation expenses related to RSUs granted to employees, directors and officers were recorded as follows: Six months ended December 31, Three months ended December 31, 2023 2022 2023 2022 Research and development expenses $ 62 $ 117 $ 31 $ 54 General and administrative expenses 560 1,139 242 593 $ 622 $ 1,256 $ 273 $ 647 As of December 31, 2023, unamortized compensation expenses related to RSUs granted to employees, directors and officers by Pluri Inc. are approximately $ 326 , to be recognized by the end of June 2026. 16 PLURI INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 5: - SHAREHOLDERS’ EQUITY (CONT.) 2. RS and RSUs to consultants: The following table summarizes the activity related to RS and RSUs granted to consultants for the six-month periods ended December 31, 2023 and 2022: Six months ended December 31, 2023 2022 Number Unvested at the beginning of the period 20,000 41,250 Granted 60,500 - Vested ( 80,500 ) ( 21,250 ) Unvested at the end of the period - 20,000 Compensation expenses related to RS and RSUs granted to consultants by Pluri Inc. were recorded as follows: Six months ended December 31, Three months ended December 31, 2023 2022 2023 2022 Research and development expenses $ - $ 93 $ - $ 55 General and administrative expenses 74 - 36 - $ 74 $ 93 $ 36 $ 55 17 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Forward-Looking Statements This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other Federal securities laws, and is subject to the safe-harbor created by such Act and laws. Forward-looking statements may include statements regarding our goals, beliefs, strategies, objectives, plans, including product and technology developments, future financial conditions, results or projections or current expectations. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of such terms, or other variations thereon or comparable terminology. These statements are merely predictions and therefore inherently subject to known and unknown risks, uncertainties, assumptions, and other factors that may cause actual results, performance levels of activity, or our achievements, or industry results to be materially different from those contemplated by the forward-looking statements. Such forward-looking statements appear in this Item 2 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and may appear elsewhere in this Quarterly Report on Form 10-Q and include, but are not limited to, statements regarding the following: ● the expected development, time-to-market and potential benefits from our products in regenerative medicine, biologics and food technology, or food tech, as well as potentially in other industries and verticals that have a need for our mass scale and cost-effective cell expansion platform; ● our expectations of market and industry growth; ● the prospects of entering into additional license agreements, or other forms of cooperation or strategic partnerships with other companies, research organizations and medical institutions, including, without limitation Tnuva (as defined below); ● our pre-clinical and clinical study plans, including timing of initiation, scale, expansion, enrollment, results, and conclusion of trials; ● achieving regulatory approvals; ● receipt of future funding from the Israel Innovation Authority, or IIA, the European Union’s Horizon programs, the National Institutes of Health, or NIH, as well as grants from other independent third parties; ● developing capabilities for new clinical indications of placenta expanded, or PLX, cells and new products; ● our expectation to solve medicine’s unmet needs and demonstrate a real-world impact and value from our pipeline, technology platform and commercial-scale manufacturing capacity; ● the possible impacts of cybersecurity incidents on our business and operations; ● our expectations regarding our short- and long-term capital requirements; ● our outlook for the coming months and future periods, including but not limited to our expectations regarding future revenue and expenses; ● information with respect to any other plans and strategies for our business; ● changes to the Israel’s judicial system, which if pursued by the Israeli government, may negatively impact the business environment in Israel with reluctance for investments or transactions as well as lead to increased currency fluctuations, downgrades in credit rating and increased interest rates; and ● general market, political and economic conditions in the countries in which we operate including those related to recent unrest in the Middle East and armed conflict between Israel and Hamas, Hezbollah and other terrorist organizations from the Gaza Strip and Lebanon. 18 Our business and operations are subject to substantial risks, which increase the uncertainty inherent in the forward-looking statements contained in this report. In addition, historic results of scientific research and development, clinical and preclinical trials do not guarantee that the conclusions of future research and development or trials would not suggest different conclusions. Also, historic results referred to in this periodic report would be interpreted differently in light of additional research, development, clinical and preclinical trials results. Except as required by law, we undertake no obligation to release publicly the result of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Further information on potential factors that could affect our business is described under the heading “Risk Factors” in Part I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended June 30, 2023, or the 2023 Annual Report, as well as Item 1A of this Quarterly Report. Readers are also urged to carefully review and consider the various disclosures we have made in that report. As used in this Quarterly Report on Form 10-Q, the terms “we”, “us”, “our”, the “Company” and “Pluri” mean Pluri Inc. and our wholly owned subsidiaries, Pluri Biotech Ltd. and Pluristem GmbH, and our subsidiary Ever After Foods Ltd., or Ever After, unless otherwise indicated or as otherwise required by the context. Overview We are a biotechnology company with an advanced cell-based technology platform. We have developed a unique three-dimensional, or 3D, technology platform for cell expansion with an industrial scale in-house Good Manufacturing Practice, or GMP, cell manufacturing facility. We are utilizing our technology in the field of regenerative medicine,food tech, Contract Development and Manufacturing Organization, or CDMO, and agtech and plan to utilize it in industries and verticals that have a need for our mass scale and cost-effective cell expansion platform. Our operations are focused on the research, development and manufacturing of cells and cell-based products, and business development of cell therapeutics and cell-based technologies and cell-based products. Cell Therapy We use our advanced cell-based technology platform in the field of regenerative medicine to develop placenta-based cell therapy product candidates for the treatment of inflammatory, muscle injuries and hematologic conditions. Our PLX cells are adherent stromal cells that are expanded using our 3D platform. Our PLX cells can be administered to patients off-the-shelf, without blood or tissue matching or additional manipulation prior to administration. PLX cells are believed to release a range of therapeutic proteins in response to the patient’s condition. In the pharmaceutical area, we have focused on several indications utilizing our product candidates, including, but not limited to, muscle recovery following surgery for hip fracture, incomplete recovery following bone marrow transplantation, critical limb ischemia, or CLI, Chronic Graft versus Host Disease and a potential treatment for Hematopoietic Acute Radiation Syndrome, or H-ARS. Some of these studies have been completed while others are still ongoing. We believe that each of these indications is a severe unmet medical need. In July 2023, we announced that we signed a three-year $4.2 million contract with the U.S. National Institute of Allergy and Infectious Diseases, or NIAID, which is part of the NIH. Under such contract, we will collaborate with the U.S. Department of Defense’s Armed Forces Radiobiology Research Institute, or AFRRI, and the Uniformed Services University of Health Sciences, or USUHS, in Maryland, U.S.A., to further advance the development of our PLX-R18 cell therapy as a potential novel treatment for H-ARS, a deadly disease that can result from nuclear disasters and radiation exposure. 19 PluriCDMO™ On January 8, 2024, we announced that we are launching a new business division offering cell therapy manufacturing services as a CDMO: PluriCDMO™. PluriCDMO™ offers services relating to early preclinical development, through late-stage clinical trials and commercialization, with a mission to deliver high-quality, essential therapies to patients. AgTech On January 23, 2024, we announced that we are launching cell-based coffee business activity through a new business vertical, PluriAgtech. PluriAgtech’s new cell-based coffee business activity is leveraged by Pluri’s 3D cell expansion and has been developed to address the growing global demand for sustainable, high-quality coffee at mass scale production. Food Tech On January 5, 2022, we signed definitive collaboration agreements with Tnuva Food Industries – Agricultural Cooperative in Israel Ltd., through its fully owned subsidiary, Tnuva Food-Tech Incubator (2019), Limited Partnership, or Tnuva. Under the definitive collaboration agreements, or the Joint Venture Agreement, we established a new company, Ever After, with the purpose of developing cultivated meat products of all types and kinds. Ever After is engaged in the development, manufacturing and commercialization of technology, know-how and products that will be based on licensed products relating to the field of cultivated meat. Our joint venture successfully completed proof of concept in its development of cultivated meat based on our cell-based technology platform. Ever After is also using PluriMatrix for producing cultivated meat. RESULTS OF OPERATIONS – THREE AND SIX MONTHS ENDED DECEMBER 31, 2023 COMPARED TO THREE AND SIX MONTHS ENDED DECEMBER 31, 2022. Revenues Revenues for each of the six-month and three-month periods ended December 31, 2023 were $159,000 and $105,000, respectively, as compared to $89,000 and $2,000, respectively, during the six-month and three-month periods ended December 31, 2022. Revenues for the six-month and three-month periods ended December 31, 2023 were mainly related to services provided in the field of process and product development in the CDMO and agtech field. Revenues for the six-month and three-month periods ended December 31, 2022 were mainly related to our collaboration in the biologic field. The increase in revenues is mainly attributed to implementation of our new business strategy and collaboration in various industries, specifically in the CDMO and agtech field. Research and Development Expenses, Net Research and development, or R&D, expenses, net (costs less participation by the IIA, Horizon Europe and the NIAID) for the six-month period ended December 31, 2023 decreased by 26% from $8,056,000 for the six-month period ended December 31, 2022 to $5,957,000. The decrease is mainly attributed to: (1) a decrease in clinical studies expenses following the completion of our CLI, COVID-19 and muscle regeneration following hip fracture studies, and (2) a decrease in salaries and related expenses due to the exchange rate differences related to the strength of the U.S. dollar against the NIS , reduction in head count of 8 R&D employees (100 R&D employees on December 31, 2023, compared to 108 R&D employees on December 31, 2022) and as a result of our cost reduction and efficiency plans partially offset by (3) a decrease in grants participation, specifically the completion of the Horizon 2020 program. R&D expenses, net (costs less participation by the IIA, Horizon Europe and the NIAID) for the three-month period ended December 31, 2023 decreased by 22% from $3,785,000 for the three-month period ended December 31, 2022 to $2,964,000. The decrease is mainly attributed to the same reasons described in the precedent paragraph. 20 General and Administrative Expenses General and administrative expenses for the six-month period ended December 31, 2023 decreased by 15% from $5,635,000 for the six-month period ended December 31, 2022 to $4,792,000 mainly due to: (1) a decrease in salaries and related expenses due to the exchange rate differences relates to the strength of the U.S. dollar against the NIS and as a result of our cost reduction and efficiency plan, (2) the reduction of our CEO’s salary, whereby he waived 75% of his salary and converted it to restricted stock units, or RSUs, and options, (3) a decrease in costs relates to our directors and officers insurance policy, and (4) a decrease in share-based compensation expenses related RSU expenses amortization over time. General and administrative expenses for the three-month period ended December 31, 2023 decreased by 19% from $2,896,000 for the three-month period ended December 31, 2022 to $2,354,000 mainly due to: (1) a decrease in salaries and related expenses due to the exchange rate differences relates to the strength of the U.S. dollar against the NIS and due to temporary reduction in employees’ regular working hours for a limited period, (2) the reduction of our CEO’s salary, whereby he waived 75% of his salary and converted it to RSUs and options, and (3) a decrease in share-based compensation expenses related to employee terminations and RSU expenses amortization over time. Other Financial Income (expenses), net Other financial income (expenses), net, changed from $515,000 in financial expenses for the six-month period ended December 31, 2022 to $928,000 in financial income for the six-month period ended December 31, 2023. This change is mainly attributed to exchange rate related to NIS deposits following the strength of the U.S. dollar against the NIS, from increased income related to interest on deposits, due to an increase in interest rates and income from hedging transactions. Other financial income (expenses), net, changed from $1,363,000 in financial expenses for the three-month period ended December 31, 2022 to $435,000 in financial income for the three-month period ended December 31, 2023. This change is mainly attributable to a reduction in exchange rate differences expenses related to the European Investment Bank (“EIB”) loan, a reduction in exchange rate differences expenses related to NIS deposits following the strength of the U.S. dollar against the NIS and from increased income related to interest on deposits, due to an increase in interest rates. Interest Expenses Interest expenses increased by 6% from $406,000 for the six-month period ended December 31, 2022 to interest expenses of $430,000 for the six-month period ended December 31, 2023. This increase is attributable solely to exchange rate differences of Euro versus the U.S. dollar, which relates to the EIB loan interest. Interest expenses increased by 2% from $212,000 for the three-month period ended December 31, 2022 to interest expenses of $216,000 for the three-month period ended December 31, 2023. This increase is attributable solely to exchange rate differences of Euro versus the U.S. dollar, which relates to the EIB loan interest. Net Loss Net loss for the six-month and three-month periods ended December 31, 2023 were $10,092,000 and $4,994,000, respectively, as compared to net loss of $14,523,000 and $8,254,000 for the six-month and three-month periods ended December 31, 2022. The decrease was due to a decrease in general and administrative expenses and research and development expenses, as part of our efforts to reduce costs pursuant to an efficiency plan, and due to an increase in income due to additional collaborations signed. Net loss per share attributed to shareholders for the six-month and three-month periods ended December 31, 2023 were $0.24 and $0.12, respectively, as compared to $0.44 and $0.24 for the six-month and three-month periods ended December 31, 2022. We had net loss attributed to our non-controlling interest in Ever After for the six-month and three-month periods ended December 31, 2023 of $226,000 and $89,000, respectively. 21 For the six-month and three-month periods ended December 31, 2023 and 2022, we had weighted average common shares outstanding of 41,526,817, 41,428,439 and 32,878,434, 33,194,622, respectively, which were used in the computations of net loss per share for the six-month and three-month periods. The increase in weighted average common shares outstanding reflects the issuance of additional shares pursuant to a private placement offering we conducted in December 2022, or the December 2022 Private Placement, and the issuance of additional shares upon the vesting of RSUs and RS issued to directors, employees and consultants. Liquidity and Capital Resources As of December 31, 2023, our total current assets were $32,252,000 and total current liabilities were $4,530,000. On December 31, 2023, we had a working capital surplus of $27,722,000, total equity of $6,617,000, out of which $2,218,000 is attributed to the non-controlling interest in Ever After, and an accumulated deficit of $409,450,000. Our cash and cash equivalents as of December 31, 2023 amounted to $5,468,000, compared to $8,818,000 as of December 31, 2022, and compared to $5,360,000 as of June 30, 2023. Cash balances changed in the six months ended December 31, 2023 compared to the six months ended December 2022 for the reasons presented below. Net cash used for operating activities was $9,506,000 in the six months ended December 31, 2023, compared to $13,889,000 in the six months ended December 31, 2022. The decrease is mainly attributed to a decrease in net loss following the completion of clinical trials and the implementation of our cost reduction and efficiency plan, including a temporary reduction in the scope of roles and salaries of executive officers. Cash used in operating activities in the six months ended December 31, 2023 and 2022 consisted primarily of payments to suppliers, subcontractors, professional services providers and consultants, and payments of salaries to our employees, partially offset by grants from the IIA, the Horizon Europe program, and funds received from the NIAID contract. Investing activities provided cash of $9,721,000 in the six months ended December 31, 2023, compared to cash provided of $7,062,000 for the six months ended December 31, 2022. The investing activities in the six-month period ended December 31, 2023 and December 31, 2022 consisted primarily of the withdrawal of short-term deposits, net of $10,013,000 and $7,203,000, respectively. We had no financing activities in the six months ended December 31, 2023. The cash provided in the six months ended December 31, 2022 by financing activities was related to net proceeds of $5,693,000 related to issuances of common shares and warrants, net of issuance cost that were paid in cash, in the December 2022 Private Placement. Between December 13, 2022 and December 27, 2022, we entered into a series of securities purchase agreements with several purchasers for an aggregate of 8,155,900 common shares and warrants, or the Warrants, to purchase up to 8,155,900 common shares. On December 13, 2022, we executed securities purchase agreements to sell, at a purchase price of $1.03 per share, up to 5,579,883 common shares and Warrants to purchase up to 5,579,833 common shares, with an exercise price of $1.03 per share and a term of three years. On December 14, 2022, we executed securities purchase agreements to sell, at a purchase price of $1.05 per share, up to 2,068,517 common shares and Warrants to purchase up to 2,068,517 common shares, with an exercise price of $1.05 per share and a term of three years. On December 15, 2022, we executed securities purchase agreements to sell, at a purchase price of $1.06 per share, up to 237,500 common shares and Warrants to purchase up to 237,500 common shares, with an exercise price of $1.06 per share and a term of three years. On December 19, 2022, we executed a securities purchase agreement to sell, at a purchase price of $1.09 per share, up to 135,000 common shares and Warrants to purchase up to 135,000 common shares, with an exercise price of $1.09 per share and a term of three years. On December 27, 2022, we executed a securities purchase agreement to sell, at a purchase price of $1.12 per share, up to 135,000 common shares and Warrants to purchase up to 135,000 common shares, with an exercise price of $1.12 per share and a term of three years. The Warrants sold in the December 2022 Private Placement will be exercisable upon the later of six months from their issuance date, or from the date the authorized shares increased. The Company issued 8,155,900 common shares and warrants that relate to the December 2022 Private Placement and received $8,024,000 as of that date net of $445,000 from issuance expenses. 22 On April 27, 2023, our shareholders approved an amendment to our articles of incorporation of to increase the number of authorized common shares from 60,000,000 shares to 300,000,000 shares and such increase was effectuated on May 1, 2023 when the Company filed its amendment to its articles of incorporation reflecting such increase. As such, the Warrants became exercisable on May 1, 2023. On December 14, 2022, Yaky Yanay, our 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 our existing equity compensation plans. In that regard, we granted Mr. Yanay (i) 334,821 RSUs, vesting ratably each month, and (ii) options to purchase 334,821 common shares, vesting ratably each month, with a term of 3 years, at an exercise price of $1.12 per share. In addition, the Board of Directors also agreed to grant Mr. 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 vesting date or the date which the Company increased its authorized share capital. On December 25, 2023, Yaky Yanay, our Chief Executive Officer, agreed to a reduction in the scope of his role and to a 20% reduction of his salary in the amount of 39,600 NIS for the months of January 2024 and February 2024. On January 12, 2024, Chen Franco-Yehuda, our Chief Financial Officer, agreed to a reduction in the scope of her role and to a 20% reduction of her salary in the amount of 39,000 NIS for the months of December 2023, January 2024 and February 2024. In April 2020, we and our subsidiaries, Pluri Biotech Ltd. and Pluristem GmbH, executed the EIB Finance Agreement for non–dilutive funding of up to €50 million in the aggregate, payable in three tranches. The proceeds from the EIB Finance Agreement were intended to support our research and development in the European Union to further advance our regenerative cell therapy platform, and to bring the products in our pipeline to market. The term of the project was three years commencing on January 1, 2020. During June 2021, we received the first tranche in the amount of €20 million pursuant to the EIB Finance Agreement. The amount received is due to be repaid on June 1, 2026 and bears annual interest of 4% to be paid together with the principal of the loan. As of December 31, 2023, the interest accrued was in the amount of €2,062,000. In addition to the interest payable, the EIB is also entitled to royalty payments, pro-rated to the amount disbursed from the EIB loan, on the Company’s consolidated revenues beginning in the fiscal year 2024 up to and including its fiscal year 2030, in an amount equal to up to 2.3% of the Company’s consolidated revenues below $350 million, 1.2% of the Company’s consolidated revenues between $350 million and $500 million and 0.2% of the Company’s consolidated revenues exceeding $500 million. As the project term ended on December 31, 2022, we do not expect to receive additional funds pursuant to the EIB Finance Agreement. According to the IIA grant terms, we are required to pay royalties at a rate of 3% on sales of products and services derived from technology developed using this and other IIA grants until 100% of the dollar-linked grants amount plus interest are repaid. In the absence of such sales, no payment is required. Through December 31, 2023, total grants obtained from the IIA aggregated to approximately $27,848,000 and total royalties paid and accrued amounted to $179,000. In June 2020, we announced that we were selected as a member of the CRISPR-IL consortium, a group funded by the IIA. CRISPR-IL brings together the leading experts in life science and computer science from academia, medicine, and industry, to develop Artificial Intelligence, or AI, based end-to-end genome-editing solutions. These next-generation, multi-species genome editing products for human, plant, and animal DNA, have applications in the pharma, agriculture, and aquaculture industries. CRISPR-IL is funded by the IIA with a total budget of approximately $10,000,000 of which, an amount of approximately $480,000 was a direct grant allocated to us, for the initial period of 18 months. During October 2021, we received an approval for an additional grant of approximately $583,000 from the IIA pursuant to the CRISPR-IL consortium program, for an additional period of eighteen months. During January 2023, we received approval for an extension of an additional 2 months to finish the program until June 30, 2023. The CRISPR-IL consortium program does not include any obligation to pay royalties. 23 Through December 31, 2023, we received total grants of approximately $774,000 in cash from the IIA pursuant to the CRISPR-IL consortium program; no amount was received during the three months ended December 31, 2023. On September 6, 2022, we announced that a €7.5 million non-dilutive grant from the European Union’s Horizon program was awarded to Advanced PeRsOnalized Therapies for Osteoarthritis (PROTO), an international collaboration led by Charité Berlin Institute of Health Center for Regenerative Therapies. The goal of the PROTO project is to utilize our PLX-PAD cells in a Phase I/IIa study for the treatment of mild to moderate knee osteoarthritis. Final approval of the grant is subject to completion of the consortium agreement. An amount of approximately Euro 500,000 (approximately $533,745) will be a direct grant that will be allocated to us. Through December 31, 2023, we received a payment of approximately $185,000 in cash, which relates to the PROTO program. The Phase I/II study will be carried out by Charité, together with us and other members of the international consortium under the leadership of Professor Tobias Winkler, Principal Investigator, at the Berlin Institute of Health Center of Regenerative Therapies, Julius Wolff Institute and Center for Musculoskeletal Surgery. On July 11, 2023, we signed a three-year $4,200,000 contract with the NIAID, which is part of the NIH. We will collaborate with the U.S. Department of Defense’s, or DoD’s, AFRRI and USUHS to further advance the development of our PLX-R18 cell therapy as a potential novel treatment for H-ARS. H-ARS is a deadly disease that can result from nuclear disasters and radiation exposure. The period of performance of this contract will be from July 1, 2023 through June 30, 2024, which may be extended for an additional two-year period. As of December 31, 2023, we have received from the NIAID approximately $382,000 and we expect to receive an additional amount of approximately $343,000. The currency of our financial portfolio is mainly in U.S. dollars and we use options contracts and other financial instruments in order to hedge our exposures to currencies other than the U.S. dollar. For more information, please see Item 7A. - “Quantitative and Qualitative Disclosures about Market Risk” in the 2023 Annual Report. We have an effective Form S-3 registration statement (File No. 333-273347), filed under the Securities Act of 1933, as amended, with the SEC using a “shelf” registration process. Under this shelf registration process, we may, from time to time, sell our common shares, preferred stock and warrants to purchase common shares, and of two or more of such securities, in one or more offerings for an aggregate initial offering price of $200,000,000. As of February 12, 2024, no securities have been sold pursuant to our effective Form S-3 registration statement. Outlook We have accumulated a deficit of $409,450,000 since our inception in May 2001. We do not expect to generate any significant revenues from sales of products in the next twelve months. We expect to generate revenues, from collaborations and sales of licenses to use our technology or products, but in the short and medium terms these will unlikely exceed our costs of operations. We may be required to obtain additional liquidity resources in order to support the commercialization of our products and technology and maintain our research and development activities. We are continually looking for sources of funding, including non-diluting sources such as collaboration with other companies via licensing agreements, service agreements under our CDMO business, joint venture and partnerships, R&D contracts such as our agreement with the NIAID, research grants such as the IIA grants and the European Union grant, and sales of our common shares. We believe that we have sufficient cash to fund our operations for at least the next twelve months. 24 Item 4. Controls and Procedures. Evaluation of Disclosure Controls and Procedures - We maintain a system of disclosure controls and procedures that are designed for the purposes of ensuring that information required to be disclosed in our SEC reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer, or CEO, and our Chief Financial Officer, or CFO, as appropriate to allow timely decisions regarding required disclosures. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our CEO and our CFO, of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures are effective. Changes in Internal Control Over Financial Reporting - There has been no change in our internal control over financial reporting during the second quarter of fiscal year 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 25 PART II – OTHER INFORMATION Item 1A. Risk Factors. In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our 2023 Annual Report, which could materially affect our business, financial condition or future results. We could fail to maintain the listing of our common shares on the Nasdaq Global Market, which could harm the liquidity of our shares and our ability to raise capital or complete a strategic transaction. On April 19, 2023, we received a letter, or Notice, from The Nasdaq Stock Market, or Nasdaq, advising us that for 30 consecutive trading days preceding the date of the Notice, the bid price of our 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), or MBPR. The Notice had no effect on the listing of our common shares at that time, and our common shares continued to trade on Nasdaq under the symbol “PLUR.” Under Nasdaq Listing Rule 5810(c)(3)(A), if during the 180 calendar days period following the date of that Notice the closing bid price of our common shares will close at or above $1.00 for a minimum of ten (10) consecutive business days, we will regain compliance with the MBPR and our common shares will continue to be eligible for listing on Nasdaq, absent noncompliance with any other requirement for continued listing. The compliance period, or Compliance Period, to comply with the MBPR has expired on October 16, 2023. On October 17, 2023, the Company received a letter, or the Letter, from Nasdaq approving an extension of an additional 180 calendar days from the date of the Letter, or until April 15, 2024, or the Additional Compliance Period to regain compliance with the MBPR as well as approving our application to transfer our securities from The Nasdaq Global Market to The Nasdaq Capital Market starting at the opening of business on October 19, 2023. Our common shares will continue to trade under the symbol “PLUR.” The Nasdaq Capital Market is a continuous trading market that operates in substantially the same manner as The Nasdaq Global Market and listed companies must meet certain financial requirements and comply with Nasdaq’s corporate governance requirements. If at any time during the Additional Compliance Period, the bid price of the common shares closes at or above $1.00 per share for a minimum of 10 consecutive trading days, Nasdaq will provide us with written confirmation of compliance with the MBPR and the matter will be closed. If we do not regain compliance within the Additional Compliance Period or do not comply with the terms of the extension, Nasdaq will provide notice that our securities will be delisted from The Nasdaq Capital Market. As of the date of this filing, our common shares are trading below $1.00 per share. If we do not regain compliance with the MBPR by the end of the Compliance Period (or the Compliance Period as may be extended), our common shares will be subject to delisting. A delisting from Nasdaq would likely result in a reduction in some or all of the following, each of which could have a material adverse effect on shareholders: ● the liquidity of our common shares; ● the market price of our common shares; ● the availability of information concerning the trading prices and volume of our common shares; ● our ability to obtain financing or complete a strategic transaction; ● the number of institutional and other investors that will consider investing in our common shares; and ● the number of market markers or broker-dealers for our common shares. We intend to monitor the closing bid price of our 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. 26 We conduct our operations in Israel. Conditions in Israel, including the armed conflict between Israel and Hamas, Hezbollah and other terrorist organizations from the Gaza Strip and Lebanon. Our offices are located in Haifa, Israel, thus, political, economic, and military conditions in Israel may directly affect our business. On October 7, 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel. Following the attack, Israel’s security cabinet declared war against Hamas and the Israeli military began to call-up reservists for active duty. At the same time, and because of the war declaration against Hamas, the clash between Israel and Hezbollah in Lebanon has escalated to an armed conflict and there is a possibility that it will turn into a greater regional conflict in the future. As of today, there is no material impact on the Company’s operations. According to the recent guidelines of the Israeli government, the Company’s offices are open and functioning as usual. However, if the war will escalate and expand further to the Northern border with Lebanon, and the Israeli government will impose additional restrictions on movement and travel, our management and employees’ ability to effectively perform their daily tasks might be temporarily disrupted, which may result in delays in some of our projects. The Company currently has the supply of raw materials needed for its regular operations. While there may be some possible delays in supply, those are currently not anticipated to be material to the Company’s operations. However, if the war continues for a significant amount of time, this situation may change. Any hostilities involving Israel, terrorist activities, political instability or violence in the region, or the interruption or curtailment of trade or transport between Israel and its trading partners could make it more difficult for us to raise capital, if needed in the future, and adversely affect our operations and results of operations and the market price of our common shares. In addition, to the extent the IIA no longer makes grants similar to those we have received in the past, it could adversely affect our financial results. Our insurance does not cover damage or losses that may occur as a result of the current war by Israel against Hamas. Although the Israeli government is currently committed to covering the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that this government coverage will be maintained or, if maintained, will be sufficient to compensate us fully for damages incurred. Any losses or damages incurred by us could have a material adverse effect on our business, financial condition, and results of operations. Further, many Israeli citizens are obligated to perform several days, and in some cases, more, of annual military reserve duty each year until they reach the age of 40 (or older for certain reservists) and, in the event of an escalated military conflict, may be called to active duty. In response to the series of attacks on civilian and military targets in October 2023, there have been significant call-ups of military reservists. As of February 12, 2024, none of our employees in military service have been called up. However, if there will be call-ups for reservists in our Company, our operations could be disrupted by such call-ups. It is currently not possible to predict the duration or severity of the ongoing conflict or its effects on our business, operations and financial condition. The ongoing conflict is rapidly evolving and developing, and could disrupt our business and operations, and adversely affect our ability to raise additional funds or sell our securities, among other impacts. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. During the second quarter of fiscal year 2024, we issued an aggregate of 60,500 restricted common shares to certain of our service providers as compensation in lieu of cash compensation owed to them for services rendered. We claimed exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), for the foregoing transactions under Section 4(a)(2) of the Securities Act. 27 Item 6. Exhibits. 3.1 Composite Copy of the Company’s Articles of Incorporation as amended on May 1, 2023 (incorporated by reference to Exhibit 3.1 of our quarterly report on Form 10-Q filed on May 9, 2023). 3.2 Amended and Restated By-laws as amended on September 10, 2020 (incorporated by reference to Exhibit 3.3 of our annual report on Form 10-K filed on September 10, 2020). 10.1* Form of Restricted Stock Unit Agreement (employees) under the 2016 Equity Compensation Plan 10.2* Form of Restricted Stock Unit Agreement (executive officers) under the 2016 Equity Compensation Plan 10.3* Form of Restricted Stock Unit Agreement (directors) under the 2016 Equity Compensation Plan 10.4* Summary of Directors’ Ongoing Compensation 10.5** Amendment to the Amended and Restated Employment Agreement, dated December 1, 2023, by and between Pluri-Biotech Ltd and Mrs. Chen Franco-Yehuda 10.6** Amendment to the Amended and Restated Employment Agreement, dated December 25, 2023, by and between Pluri-Biotech Ltd and Mr. Yaacov (Yaky) Yanay 10.7** Amendment No. 1 to Consulting Agreement with Mr. Zalman (Zami) Aberman 31.1* Rule 13a-14(a) Certification of Chief Executive Officer. 31.2* Rule 13a-14(a) Certification of Chief Financial Officer. 32.1** Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350. 32.2** Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350. 101* The following materials from our Quarterly Report on Form 10-Q for the quarter ended December 31, 2023 formatted in inline XBRL (eXtensible Business Reporting Language): (i) the Interim Condensed Consolidated Balance Sheets, (ii) the Interim Condensed Consolidated Statements of Operations, (iii) the Interim Condensed Statements of Changes in Shareholders’ Equity, (iv) the Interim Condensed Consolidated Statements of Cash Flows, and (vi) the Notes to Interim Condensed Consolidated Financial Statements, tagged as blocks of text and in detail. 104* Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). * Filed herewith. ** Furnished herewith. 28 SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PLURI INC. By: /s/ Yaky Yanay Yaky Yanay, Chief Executive Officer and President (Principal Executive Officer) Date: February 12, 2024 By: /s/ Chen Franco-Yehuda Chen Franco-Yehuda, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) Date: February 12, 2024 29