Pluri Inc. 10-Q

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