What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-09-18 compared with 2023-09-12 · 584 added, 726 removed, 604 unchanged (68% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

FINANCIAL STATEMENTS

AND SUPPLEMENTARY DATA.

AND ITS SUBSIDIARIES CONSOLIDATED

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DOLLARS IN THOUSANDS

Report of Independent Registered Public Accounting Firm (PCAOB ID 1309 ) F-2 - F-3

Consolidated Balance Sheets F-4 - F-5

Report of Independent Registered Public Accounting Firm (PCAOB ID 1309 ) F-2

Consolidated Balance Sheets F-3

Consolidated Statements of Operations F-5

Statements of Changes in Shareholders’ Equity F-7 - F-8

Statements of Changes in Shareholders’ Equity F-6

Consolidated Statements of Cash Flows F-8

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

of Independent Registered Public Accounting Firm

Notes to Consolidated Financial Statements F-9

Report of Independent Registered Public Accounting

To the Board of Directors and Shareholders of Pluri Inc.

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and its subsidiaries (the “Company”) as of June 30, 2024 and 2023, and the related consolidated

statements of operations, of changes in shareholders’ equity and of cash flows for the years then ended, including the related notes

(collectively referred to as the “consolidated financial statements”).

statements of operations, of changes in shareholders’ equity and of cash flows for the years then ended, including the related

notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements

present fairly, in all material respects, the financial position of the Company as of June 30, 2023 and 2022, and the results of its operations

and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

present fairly, in all material respects, the financial position of the Company as of June 30, 2024 and 2023, and the results of its

operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States

Basis for Opinion

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financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

Those standards require that we plan and perform the audits to obtain

reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

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Accordingly, we express no such opinion.

Our audits included performing procedures to assess

the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures

Our audits included performing procedures to

assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

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consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by

management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made

by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide

a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from

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

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

challenging, subjective, or complex judgments.

We determined there are no critical audit matters.

Critical Audit Matter

The critical audit matter communicated below is

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

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

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

The communication of critical audit matters does not alter

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

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

Liquidity and capital resources

As discussed in Note 1c to the consolidated financial

statements, management believes that its cash and cash equivalent, restricted cash, and short-term bank deposit as of June 30, 2024, are

sufficient to satisfy the Company’s capital needs for at least twelve months from the date of the issuance of these consolidated financial

The Company has been funded primarily through offerings of the Company’s securities and borrowings.

Management expects

that the Company will incur additional losses as it continues to focus its resources on advancing research and development activities

as well as commercial operations, which will result in negative cash flows from operating activities.

In case that the Company is unable

to obtain the required level of financing, operations may need to be scaled down or discontinued.

The principal considerations for our determination

that performing procedures related to liquidity and capital resources is a critical audit matter are the estimation and execution uncertainty

regarding the Company’s future cash flows and management’s judgments and assumptions in estimating these cash flows to conclude

the Company would have sufficient liquidity to fund its operations for at least the next twelve months.

This in turn led to a high degree

of auditor subjectivity and judgment to evaluate the audit evidence supporting the liquidity conclusions.

Addressing the matter involved performing procedures

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

Our audit procedures included,

among others, testing the reasonableness of the forecasted revenue, operating expenses, and uses and sources of cash used in management’s

assessment of whether the Company has sufficient liquidity to fund its operations for at least the next twelve months.

We assessed the

appropriateness of the forecast assumptions by comparing prior period forecasts to actual results, comparing forecasted revenue to signed

agreements and other references, inquiring of management regarding the process and related controls and investigating mitigating actions

to manage cash flows to meet the Company’s budget.

/s/ Kesselman & Kesselman

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Operating lease liability

Loan from the European Investment Bank (“EIB”)

Loan from the European Investment Bank, or EIB

Total long-term liabilities

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Common shares, $ 0.00001 par value per share:

300,000,000 shares issued and outstanding:

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

60,000,000 shares issued and outstanding:

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

37,500,000 as of June 30, 2024 and 2023;

issued and outstanding:

5,408,212 and 5,155,687 shares as of June 30, 2024 and 2023, respectively

Additional paid-in capital

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(*) Less than $1

(**) See note 1d regarding reverse share split

The accompanying notes are an integral part of the consolidated

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Research and development expenses

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

participation by the NIAID, the IIA, Horizon Europe and other parties

Research and development expenses, net

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

(**) See note 1d regarding reverse share split

The accompanying notes are an integral part of the consolidated

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Balance as of July 1, 2022

$ ( 371,263 )

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

Establishment of Ever After Foods Ltd.

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

Issuance of common shares and warrants related to the December 2022 Private Placement, net of issuance costs of $ 445

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

Expiration of warrants in Ever After Foods (note 1e)

Balance as of June 30, 2023

$ ( 399,584 )

(*) Less than $1

(**) See note 1d regarding reverse share split

The accompanying notes are an integral part of the consolidated

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

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

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

Expiration of warrants in Ever After (note 1d)

Issuance of common shares under a sales agreement with A.G.P, net of issuance costs of $ 162 (see note 9(1))

Issuance of Ever After Foods’ shares to non-controlling interests (note 1f)

Round-up of shares due to reverse share split effectuated on April 1, 2024 (see Note 1d)

Balance as of June 30, 2024

(*) Less than $1

See note 1d regarding reverse share split

The accompanying notes are an integral part of the consolidated

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Decrease in other accounts payable and accrued expenses

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

Increase in interest receivable on short-term deposits

Decrease (increase) in operating lease right-of-use asset and liability, net

Decrease (increase) in interest receivable on short-term deposits

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

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

Increase in long-term interest payable and exchange rate differences related to the EIB loan, net

Accrued severance pay, net

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Purchase of property and equipment

Proceeds from withdrawal of short-term deposits

Proceeds from withdrawal of short-term deposits, net

Net cash provided by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

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

Proceeds related to investment in subsidiary by non-controlling interest

Issuance of common shares, net of issuance costs

Issuance of Ever After Foods’ shares to non-controlling interests

Net cash provided by financing activities

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

Decrease in cash, cash equivalents and restricted cash

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

Increase (decrease) in cash, cash equivalents, restricted cash and restricted bank deposits

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

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

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Purchase of property and equipment on credit

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

Lease liabilities arising from obtaining right-of-use assets

The accompanying notes are an integral part of the consolidated

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Dollars in thousands (except share and per share amounts)

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

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

The Company also changed its symbol on the Nasdaq

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

was incorporated on May 11, 2001.

(formally known as Pluristem Therapeutics Inc.), a Nevada corporation, was incorporated on May 11, 2001.

Pluri Inc.’s common shares trade on the Nasdaq Capital Market and Tel-Aviv Stock Exchange under the symbol “PLUR”.

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.”

The Company is a bio-technology

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

The Company has developed a unique

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

cell manufacturing facility.

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

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

and biologics.

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

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

(formerly known as Pluristem Ltd.) or the Subsidiary, which is incorporated under the laws of the State of Israel.

In January 2020, the Subsidiary established a wholly owned German Subsidiary, Pluristem GmbH, or the German Subsidiary which is incorporated under the laws of Germany.

In January 2022, the Subsidiary established a new subsidiary, Ever After Foods Ltd., or Ever After Foods formerly known as Plurinuva Ltd.

Ever After Foods 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, or Tnuva.

In March 2024, the Subsidiary established a new wholly owned subsidiary, Coffeesai Ltd., or Coffeesai which is incorporated under the laws of Israel, to develop cultivated coffee.

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

The Company is a bio-technology company with an advanced cell-based

technology platform, which operates in one operating segment.

The Company has developed a unique three-dimensional 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 and agricultural technology or agtech and launched a Contract Development

and Manufacturing Organization or CDMO business and plans to utilize its technology in 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.

The Company has incurred an accumulated deficit of approximately $ 420,472 and incurred recurring operating losses and negative cash flows from operating activities since inception.

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During the year ended June 30, 2024, the Company incurred losses of $ 21,344 and its negative cash flow from operating activities was $ 18,021 .

As of June 30, 2023, the Company’s

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

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

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

The Company’s

management believes that its current resources together with its existing operating plan, are sufficient for the Company to meet its obligations

as they come due at least for a period of twelve months from the date of the issuance of these consolidated financial statements.

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

is no assurance, however, that the Company will be able to obtain an adequate level of financial resources that are required for the long-term

development and commercialization of its products.

On January 5, 2022, the Subsidiary

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

After, with the purpose of developing cultivated meat products.

Ever After received exclusive, global, royalty bearing licensing rights

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

Tnuva invested $ 7,500 in

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

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

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

period of twelve months following the Closing Date.

As of June 30, 2024, the Company’s cash balances (cash and cash equivalents, short-term bank deposits, restricted cash and restricted bank deposits) totaled to $ 30,873 .

The Company plans to continue to finance its operations from its current resources, by entering into licensing or other commercial, partnerships 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.

During 2023 and 2024, the Company also implemented a cost reduction and efficiency plan.

There is no assurance, however, that the Company will be able to obtain an adequate level of financial resources that are required for the long-term development and commercialization of its products.

In the case the Company is unable to obtain the required level of financing, operations may need to be scaled down or discontinued.

On April 30, 2020, the German Subsidiary entered into a finance contract or the Finance Contract with the EIB, pursuant to which the German Subsidiary obtained loan in an amount of € 20 million, or the Loan.

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 June 30, 2024, the linked principal and interest accrued balance was of $ 24,027 and is presented among long-term liabilities (see note 7).

AND ITS SUBSIDIARIES

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- GENERAL (CONT.)

T he first warrant (the “First

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

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

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

round with a non-affiliated investor.

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

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

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

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

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

of the First Warrant.

Reverse share split

In March 2024, the Company’s Board of Directors, or the Board, approved a 1-for-8 reverse share split of the Company’s (a) authorized common shares;

and (b) issued and outstanding common shares.

The reverse share split became effective on April 1, 2024.

All common shares, options, warrants and securities convertible or exercisable into common shares, as well as loss per share, have been adjusted to give retroactive effect to this reverse share split for all periods presented.

An additional 67,836 common shares were included in the Company’s issued and outstanding shares as a result of rounding-up fractional shares into whole shares as a result of the reverse share split.

On January 5, 2022, the Subsidiary entered into a Joint Venture Agreement with Tnuva pursuant to which the Subsidiary and Tnuva established Ever After Foods, with the purpose of developing cultivated meat products.

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

Tnuva invested $ 7,500 in Ever After Foods and received 187,500 of Ever After Foods’s ordinary shares, representing 15.79 % of the Ever After Foods share capital as of February 24, 2022, or the Closing Date.

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

The first warrant, or the First Warrant issued to Tnuva permitted Tnuva to purchase up to 125,000 ordinary shares of Ever After Foods at an exercise price of $ 40.00 per share and had a term commencing as described in the agreement.

In addition, on the six month anniversary of the Closing Date, and provided that the First Warrant had not expired, Ever After Foods agreed to issue a second warrant, or the Second Warrant and together with the First Warrant, or the Warrants) to Tnuva which permitted Tnuva to purchase up to a number of ordinary shares of Ever After Foods , or the then most senior securities issued by Ever After Foods , in consideration for such amount equal to 200 % of the remaining balance of the aggregate purchase price of the First Warrant, provided that Tnuva exercised at least 62,500 ordinary shares at a price per share of $ 40.00 , or $ 2,500 in the aggregate, of the First Warrant.

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

The Second Warrant had a term commencing on

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

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

with a non-affiliated investor.

The Second Warrant had a term commencing as described in the agreement.

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

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

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

On January 5, 2022, the Company determined the fair value of the ordinary shares and the Warrants utilizing a Monte Carlo simulation model (Level 3 classification), which incorporates various assumptions including expected share price volatility, risk-free interest rate, and the expected date of a qualifying event.

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

Risk-free interest rate

Expected stock price volatility

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

Expected share price volatility

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

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

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

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

All other terms remained unchanged.

Following the Amendment, the Company recalculated the fair value of

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

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

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

Risk-free interest rate

Expected stock price volatility

The Company estimated the volatility

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

The additional fair value

determined was $ 385 .

AND ITS SUBSIDIARIES

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- GENERAL (CONT.)

On November 22, 2022, the warrants

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

On February 26, 2022, the Subsidiary

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

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

consulting agreements with the Company.

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

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

allocated shares.

Following the Amendment, the Company recalculated the fair value of the warrants utilizing the same Monte Carlo simulation model (Level 3 classification) before and after the Amendment Date, which incorporates various assumptions including expected share price volatility, risk-free interest rate, and the expected date of a qualifying event.

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

Risk-free interest rate

Expected share price volatility

The Company estimated the volatility

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

The additional fair

value determined was $ 385 .

On November 22, 2022, the warrants in Ever After Foods expired unexercised and $ 1,014 were classified from NCI to additional paid-in capital.

On June 12, 2024, Ever After Foods entered into a share purchase agreement with the Subsidiary, Tnuva and other investors.

Ever After Foods agreed to issue and sell, ordinary shares in a private placement offering, for aggregate gross proceeds of $ 10,000 .

As part of the offering, the Subsidiary invested $ 1,250 .

As a result, the Company’s capital consideration is $ 8,750 , of which $ 3,185 is attributed to non-controlling interests .

Following the closing of the offering, the Company continued to own approximately 69 % of Ever After Foods’ shares .

- SIGNIFICANT ACCOUNTING POLICIES

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The consolidated financial statements

have been prepared in accordance with United States generally accepted accounting principles (“U.S.

have been prepared in accordance with the United States Generally Accepted Accounting Principles, or U.S.

Use of estimates

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Accordingly, non-dollar denominated transactions and balances have been re-measured into the functional currency

in accordance with Accounting Standards Codification (“ASC”) 830, “Foreign Currency Matters”.

All transaction

gains and losses from the re-measured monetary balance sheet items are reflected in the consolidated statements of operations as financial

income or expenses, as appropriate.

in accordance with Accounting Standards Codification, or ASC, 830, “Foreign Currency Matters”.

All transaction gains and losses

from the re-measured monetary balance sheet items are reflected in the consolidated statements of operations as financial income or expenses,

as appropriate.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

- SIGNIFICANT ACCOUNTING POLICIES (CONT.)

Principles of consolidation

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

not attributable, directly or indirectly, to the Company.

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

attributable to the shareholders of the Company.

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

the Company and to non-controlling interests.

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

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

Foods not attributable, directly or indirectly, to the Company.

Non-controlling interests are presented in equity separately from the

equity attributable to the shareholders of the Company.

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

to the Company and to non-controlling interests.

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

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

The Company treats transactions with

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transactions and balances have been eliminated upon consolidation.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

- SIGNIFICANT ACCOUNTING POLICIES (CONT.)

Cash and cash equivalents

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Interest on deposits is recorded as financial income.

Restricted cash and short-term bank deposits

Restricted cash used to secure the

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

The restricted cash and short-term bank deposits

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

Restricted cash

Restricted cash is cash used to secure

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

The restricted cash is presented at cost which

approximates market values including accrued interest.

Long-term restricted bank deposits

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including accrued interest.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

- SIGNIFICANT ACCOUNTING POLICIES (CONT.)

Revenue Recognition

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(i) the parties to the contract have approved it and are committed to perform their respective obligations, (ii) the Company can

identify each party’s rights regarding the distinct goods or services to be transferred (“performance obligations”),

(iii) the Company can determine the transaction price for the goods or services to be transferred, (iv) the contract has commercial substance

and (v) it is probable that the Company will collect the consideration to which it will be entitled in exchange for the goods or services

identify each party’s rights regarding the distinct goods or services to be transferred, or the Performance Obligations, (iii) the

Company can determine the transaction price for the goods or services to be transferred, (iv) the contract has commercial substance and

(v) it is probable that the Company will collect the consideration to which it will be entitled in exchange for the goods or services

that will be transferred to the customer.

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through the following steps:

identification of the contract with a customer;

identification of the performance obligations in the contract;

determination of the transaction price;

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

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

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

- SIGNIFICANT ACCOUNTING POLICIES (CONT.)

● identification

of the contract with a customer;

● identification

of the Performance Obligations in the contract;

● determination

of the transaction price;

of the transaction price to the Performance Obligations in the contract;

● recognition

of revenue when, or as, the Company satisfies a Performance Obligation.

Property and equipment

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

Repairs and maintenance expenditures,

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

Repairs and maintenance expenditures, which are not considered improvements

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

Impairment of long-lived assets

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During fiscal years 2024 and 2023, no impairment losses were recorded.

Share-based compensation

The Company accounts for share-based

compensation in accordance with ASC 718, “Compensation-Share Compensation” (“ASC 718”).

ASC 718 requires companies

to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model.

The Company estimates the

fair value of share options granted using the Black-Scholes option-pricing model.

The Company accounts for employees’ share-based

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

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

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

AND ITS SUBSIDIARIES

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- SIGNIFICANT ACCOUNTING POLICIES (CONT.)

Share-based compensation

The Company accounts for share-based

compensation in accordance with ASC 718, “Compensation-Share Compensation”, or ASC 718.

ASC 718 requires companies to estimate

the fair value of equity-based payment awards on the date of grant using an option-pricing model.

The Company estimates the fair value

of share options granted using the Black-Scholes option-pricing model.

The Company accounts for employees’ share-based payment awards

classified as equity awards, such as restricted share units, or RSUs, using the grant-date fair value method.

The fair value of share-based

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

The Company estimates

forfeitures based on historical experience and anticipated future conditions.

The Company recognized compensation

6 unchanged sentences

and RSUs grants are recognized on a graded vesting schedule over the vesting period.

For RSUs containing a market condition, the market

conditions are required to be considered when calculating the grant date fair value.

ASC 718 requires selection of a valuation technique

that best fits the circumstances of an award.

In order to reflect the substantive characteristics of the market condition RSU award, a

Monte Carlo simulation valuation model was used to calculate the grant date fair value of such RSUs.

Expense for a market condition RSU

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

All RSUs to employees and directors

1 unchanged sentence

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

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

using the Monte Carlo model.

date of grant.

The fair value of all RSUs was determined

1 unchanged sentence

The weighted average grant date fair value of

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

Research and development expenses,

royalty bearing grants and non-royalty bearing grants

RSU granted during fiscal years 2024 and 2023 was $ 4.32 and $ 7.92 per share, respectively.

The fair value of the service-based

share option grants was estimated on the grant date using a Black-Scholes option-pricing model.

The weighted average grant date fair value

of option granted during fiscal years 2024 and 2023 was $ 3.85 and $ 3.65 per option, respectively.

The fair value of each option was estimated

as of the date of grant using the Black-Scholes option-pricing model using the following assumptions:

Underlying value of common shares ($)

Exercise price ($)

Expected volatility (%)

86.40 - 86.48

Expected terms of the option (years)

Risk-free interest rate (%)

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Dollars in thousands (except share and per share amounts)

- SIGNIFICANT ACCOUNTING POLICIES (CONT.)

Research and development expenses, royalty bearing grants and non-royalty bearing grants

Research and development expenses include

4 unchanged sentences

Grants received from the Israel Innovation

Authority (the “IIA”) are recognized when the grant becomes receivable, provided there was reasonable assurance that the Company

will comply with the conditions attached to the grant and there was reasonable assurance the grant will be received.

Authority, or the IIA, are recognized when the grant becomes receivable, provided there was reasonable assurance that the Company will

comply with the conditions attached to the grant and there was reasonable assurance the grant will be received.

The grant is deducted

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

Clinical study expenses are charged

to research and development expenses as incurred.

The Company accrues expenses resulting from obligations under contracts with clinical

research organizations (“CROs”).

The financial terms of these contracts are subject to negotiations, which vary from contract

to contract and may result in payment flows that do not match the periods over which materials or services are provided.

The Company’s

objective is to reflect the appropriate study expense in the consolidated financial statements by matching the appropriate expenses with

the period in which services and efforts are expended.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Dollars in thousands (except share and per share amounts)

- SIGNIFICANT ACCOUNTING POLICIES (CONT.)

During fiscal years 2024 and 2023,

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

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

years ended June 30, 2023 and 2022, respectively.

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

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

The CRISPR-IL consortium is a group

funded by the IIA, comprised of leading experts in life science and computer science from academia, medicine, and industry, in order to

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

Horizon 2020, Horizon Europe, U.S.

National Institute of Allergy and Infectious Diseases, or the NIAID, and from the IIA, under the CRISPR-IL

consortium, in the aggregate amount of approximately $ 1,113 and $ 2,426 , for the years ended June 30, 2024 and 2023, respectively.

non-royalty bearing grants for funding the projects are recognized at the time the Company is entitled to each such grant based on the

related costs incurred and recorded as a deduction from research and development expenses.

Research and development expenses,

4 unchanged sentences

computed by dividing losses by the weighted average number of common shares outstanding during the year, including unexercised vested

options with a par value price.

All outstanding share options, unvested RSUs and warrants have been excluded from the calculation of the

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

The total number of shares

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

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

options with no par value exercise price.

All outstanding share options, unvested RSUs and warrants have been excluded from the calculation

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

The total number

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

anti-dilutive effect was 1,635,190 and 1,768,948 for the years ended June 30, 2024 and 2023, respectively.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Dollars in thousands (except share and per share amounts)

- SIGNIFICANT ACCOUNTING POLICIES (CONT.)

Deferred taxes

6 unchanged sentences

Uncertainty in income taxes

The Company follows a two-step approach

in recognizing and measuring uncertain tax positions.

The first step is to evaluate the tax position for recognition by determining if

the available evidence indicates that it is more likely than not that the position will be sustained based on technical merits.

threshold is met, the second step is to measure the tax position as the largest amount that has more than a 50 % likelihood of being realized

upon ultimate settlement.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Dollars in thousands (except share and per share amounts)

- SIGNIFICANT ACCOUNTING POLICIES (CONT.)

The Company accounts for uncertain

tax positions in accordance with the provisions of ASC 740, “Income Taxes”, or ASC 740.

Accounting guidance addresses the

determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial

statements, under which a Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that

the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

Concentration of credit risk

3 unchanged sentences

The majority of the Company’s

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

Shekel (“NIS”) and U.S.

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

Israeli Shekel, or NIS, and U.S.

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

7 unchanged sentences

The majority of the Company’s

agreements with employees in Israel are subject to Section 14 of the Israeli Severance Pay Law, 1963 (“Severance Pay Law”).

The Company’s contributions for severance pay have replaced its severance obligation.

Upon contribution of the full amount of the

employee’s monthly salary for each year of employment, no additional obligation exists regarding the matter of severance pay and

no additional payments are made by the Company to the employee.

Further, the related obligation and amounts deposited on behalf of the

employee for such obligation are not stated on the balance sheet, as the Company is legally released from the obligation to employees

once the deposit amounts have been paid.

For some employees, for whom their

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

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

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

The Company’s liability

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

The value of these policies

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

agreements with employees in Israel are subject to Section 14 of the Israeli Severance Pay Law, 1963, or the Severance Pay Law.

The Company’s

contributions for severance pay have replaced its severance obligation.

Upon contribution of the full amount of the employee’s monthly

salary for each year of employment, no additional obligation exists regarding the matter of severance pay and no additional payments are

made by the Company to the employee.

Further, the related obligation and amounts deposited on behalf of the employee for such obligation

are not stated on the balance sheet, as the Company is legally released from the obligation to employees once the deposit amounts have

For Yaky Yanay, the Company’s

Chief Executive Officer, or the CEO, whose agreement is not subject to Section 14 of the Severance Pay Law, the Subsidiary’s liability

for severance pay is calculated pursuant to Severance Pay Law, based on the most recent salary of the employee multiplied by the number

of years of employment, as of the balance sheet date.

The CEO is entitled to one month’s salary for each year of employment or a

portion thereof.

The Company’s liability to the CEO is fully provided by monthly deposits with insurance policies and by an accrual.

The value of these policies is recorded as an asset in the Company’s balance sheet.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Dollars in thousands (except share and per share amounts)

- SIGNIFICANT

ACCOUNTING POLICIES (CONT.)

The deposited funds may be withdrawn

2 unchanged sentences

based on the cash surrendered value of these policies, and includes immaterial profits or losses accumulated up to the balance sheet date.

Severance expenses for the years ended June 30, 2023 and 2022 were $ 732 and $ 835 , respectively.

Fair value of financial instruments

Severance expenses for all employees

including the CEO, for the years ended June 30, 2024 and 2023 were $ 632 and $ 732 , respectively.

value of financial instruments

The carrying amounts of the Company’s

2 unchanged sentences

short-term maturities.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Dollars in thousands (except share and per share amounts)

- SIGNIFICANT

ACCOUNTING POLICIES (CONT.)

The Company measures its derivative

instruments at fair value under ASC 820, “Fair Value Measurement” (“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.

instruments at fair value under ASC 820, “Fair Value Measurement”, or 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

8 unchanged sentences

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”), receivable in three

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

of 36 months from the signing of the Finance Contract.

During June 2021, Pluri received the

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

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

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

Since the project period ended on December

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

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

2 unchanged sentences

with the EIB since the royalty payments are to be paid as a percentage of the Company’s future consolidated revenues, pro-rated

to the amount disbursed, beginning in the fiscal year 2024 and continuing up to and including its fiscal year 2030, which cannot be measured

at this time.

Derivative financial instruments

to the amount disbursed, beginning in the fiscal year 2024 and continuing up to and including its fiscal year 2030.

The Company accrued

royalties for fiscal year 2024 in the amount of $ 3 (see note 7).

financial instruments

The Company accounts for derivatives

and hedging based on ASC 815, “Derivatives and hedging”, as amended and related interpretations (“ASC 815”).

815 requires the Company to recognize all derivatives on the balance sheet at fair value.

If a derivative meets the definition of a hedge

and is so designated, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against

the change in fair value of the hedged assets, liabilities, or firm commitments through earnings (for fair value hedge transactions) or

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

and hedging based on ASC 815, “Derivatives and hedging”, as amended and related interpretations, or ASC 815.

ASC 815 requires

the Company to recognize all derivatives on the balance sheet at fair value.

If a derivative does not meet the

definition of a hedging instrument, the changes in the fair value are included in earnings.

Cash flows related to Company’s

current hedging are classified as operating activities.

The Company enters into option and forward contracts in order to limit the

exposure to exchange rate fluctuation associated with expenses mainly incurred in NIS and its loan from the EIB that is linked to

Since the derivative instruments that the Company holds do not meet the definition of hedging instruments under ASC 815,

any gain or loss derived from such instruments is recognized immediately as “financial income (expenses), net”.

AND ITS SUBSIDIARIES

3 unchanged sentences

ACCOUNTING POLICIES (CONT.)

If a derivative does not meet the definition

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

Cash flows related to Company’s current hedging are classified

as operating activities.

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

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

Since the derivative instruments that the Company

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

as “financial income, net”.

The Company measured the fair value

2 unchanged sentences

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

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

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

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

and $ 372 respectively (see note 10).

As of June 30, 2024, the fair value of the derivatives instruments

is presented in “Prepaid expenses and other current assets” (see note 3) and as of June 30, 2023, there were no derivatives

The net income (losses) from derivatives instruments recognized in “Financial income (expenses), net” during

the years ended June 30, 2024 and 2023 were $ 148 and $( 157 ), respectively (see note 10).

Operating leases are included in operating

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

ROU assets represent the Company’s right to use an

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

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

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

at the lease commencement date as the rate implicit in the lease is not readily determinable.

The determination of the incremental borrowing

rate requires management judgment based on information available at lease commencement.

The operating lease ROU assets also include adjustments

for prepayments, accrued lease payments and exclude lease incentives.

Operating lease cost is recognized on a straight-line basis over

the expected lease term.

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

lease right-of-use, or ROU asset, and operating lease liability.

ROU assets represent the Company’s right to use an underlying asset

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

Operating lease ROU assets

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

In determining

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

date as the rate implicit in the lease is not readily determinable.

The determination of the incremental borrowing rate requires management

judgment based on information available at lease commencement.

The operating lease ROU assets also include adjustments for prepayments

and accrued lease payments.

Operating lease cost is recognized on a straight-line basis over the expected lease term.

Lease agreements

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

The Company accounts for an extension

8 unchanged sentences

or terminate the lease.

New Accounting Pronouncements

Recently adopted accounting pronouncements

ASU 2020-06 “Debt –

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

815 – 40)” (“ASU 2020-06”):

In August 2020, the Financial Accounting

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

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

contracts on an entity’s own equity.

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

2023, and interim periods within those fiscal years.

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

those fiscal years.

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

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

- SIGNIFICANT

ACCOUNTING POLICIES (CONT.)

ASU 2021-04-Issuer’s Accounting

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

In May 2021, the FASB issued ASU

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

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

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

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

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

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

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

or modification).

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

fiscal years.

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

or after the effective date.

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

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

2021-10-“Government

Assistance (Topic 832):

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

In November 2021, the FASB issued ASU

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

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

financial statements.

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

December 15, 2021.

The adoption of this standard did not

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

Recently issued accounting pronouncements, not yet adopted

Accounting Pronouncements

adopted accounting pronouncements

2016-13-“Financial

Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”):

In June 2016, the FASB issued

ASU 2016-13, which changes the impairment model for most financial assets and certain other instruments.

For trade and other receivables,

held-to-maturity debt securities, loans, and other instruments, entities are required to use a new forward-looking “expected loss”

model that generally result in the earlier recognition of allowances for losses.

Measurement of Credit Losses on Financial Instruments”, or ASU 2016-13:

In June 2016, the Financial Accounting

Standards Board, or the FASB, issued Accounting Standards Update, or 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.

amendments contained in ASU 2016-13 were originally effective for fiscal years beginning after December 15, 2019, including interim

periods within those fiscal years for the Company.

In November 2019, the FASB issued ASU No.

2019-10, which delayed the effective

date of ASU 2016-13 for smaller reporting companies (as defined by the U.S.

Securities and Exchange Commission rules (“SRC”))

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

Early adoption is permitted.

Company meets the definition of an SRC and is adopting the deferral period for ASU 2016-13.

The guidance requires a modified retrospective

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

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

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

Securities and Exchange Commission, or SEC, rules) to fiscal years beginning after December 15, 2022, including interim periods.

AND ITS SUBSIDIARIES

3 unchanged sentences

ACCOUNTING POLICIES (CONT.)

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.

meets the SEC definition of a smaller reporting company 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.

Recently issued accounting pronouncements, not yet adopted

2023-07 - “Segment

Reporting (Topic 280):

Improvements to reportable segment disclosures”, or ASU 2023-07:

In November 2023, the FASB issued ASU

2023-07, which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning

after December 15, 2024.

Early adoption is permitted.

The amendments should be applied retrospectively to all prior periods presented

in the financial statements.

The Company is currently evaluating the effect that ASU 2023-07 will have on its consolidated financial statements

and related disclosures.

2023-09 - “Income

Taxes (Topic 740):

Improvements to Income Tax Disclosures”, or ASU 2023-09:

In December 2023, the FASB issued ASU

2023-09, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective

tax rate reconciliation, and modifies other income tax-related disclosures.

ASU 2023-09 will be effective for fiscal years beginning after

December 15, 2024, and allows adoption on a prospective basis, with a retrospective option.

The Company is in the process of assessing

the impacts and method of its adoption.

The Company is currently evaluating the effect that ASU 2023-09 will have on its consolidated

financial statements and related disclosures.

Comprehensive loss

1 unchanged sentence

is the same as comprehensive loss as there are no comprehensive income items.

Loss contingencies

contingencies

The Company records accruals for loss

1 unchanged sentence

30, 2024 and 2023, the Company has not recorded any accruals in this regard.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

- PREPAID EXPENSES AND OTHER CURRENT ASSETS

Accounts receivable from the Horizon 2020 grants

Accounts receivable from NIAID

Prepaid expenses

17 unchanged sentences

and $ 362 for the years ended June 30, 2024 and 2023, respectively.

Most of the Company’s property

All of the Company’s property

and equipment is located in Israel.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Dollars in thousands (except share and per share amounts)

- OTHER ACCOUNTS PAYABLE

Deferred income from grants

Grants received in advance

Accrued payroll

Derivatives instruments

Advances from customers

Payroll institutions

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL

Dollars in thousands (except share and per share amounts)

Towards the termination of the previous

1 unchanged sentence

lessor, which extended the lease period to December 2026.

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

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

The Company reflected the Extension Option

during the evaluation of the lease liability and ROU asset.

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

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

In addition, the Company

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

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

and operating lease liabilities:

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

the Extension Option, for an additional period of five years until December 2031.

The Company reflected the Extension Option during the

evaluation of the lease liability and ROU asset.

The monthly lease payments are approximately NIS 292,000 ($ 78 ) which are linked to the

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

In addition, the Company has operating

leases for vehicles that expire through fiscal year 2026.

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

lease liabilities:

Operating ROU assets

2 unchanged sentences

Total operating lease liabilities

Maturities of operating lease liabilities

as of June 30, 2023 are as follows:

Maturities of operating lease

liabilities as of June 30, 2024 are as follows:

2029 and thereafter

1 unchanged sentence

Present value of lease liabilities

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

- LEASES (CONT.)

All of the leased facilities are located

All of the leased facilities

are located in Israel.

The components of lease expense and

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

supplemental cash flow information related to leases for the years ended June 30, 2024 and 2023 are as follows:

Year ended June 30,

4 unchanged sentences

Cash paid for amounts included in the measurement of lease liabilities

* The operating lease payments are

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

year ended June 30, 2022.

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

As of June 30, 2024, the weighted average

5 unchanged sentences

For vehicles, the lease period is usually

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

- LOAN FROM THE EIB

3 unchanged sentences

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

The tranches will be treated independently,

The tranches were treated independently,

each with its own interest rate and maturity period.

3 unchanged sentences

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

In addition to any interest payable

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

year 2024 and continuing up to and including its fiscal year 2030 in an amount equal to between 0.2 % to 2.3 % of the Company’s consolidated

revenues, pro-rated to the amount disbursed from the Loan.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

- LOAN FROM THE EIB (CONT.)

In addition to any interest payable on the Loan, the EIB

is entitled to receive royalties from future revenues for a period of seven years starting at the beginning of fiscal year 2024 and continuing

up to and including its fiscal year 2030 in an amount equal to between 0.2 % to 2.3 % of the Company’s consolidated revenues, pro-rated

to the amount disbursed from the Loan.

As of June 30, 2024, Pluri had an accrued royalty in the amount of $ 3 .

During June 2021, Pluri received the

8 unchanged sentences

The Finance Contract also contains

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

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

other banks and financing entities for other loans.

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.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

- COMMITMENTS AND CONTINGENCIES

As of June 30, 2024, an amount of $ 888 of cash and deposits was pledged by the Subsidiary to secure its credit line, lease agreement and bank guarantees.

Under the Law for the Encouragement of Industrial Research and Development, 1984, (the “Research Law”), research and development programs that meet specified criteria and are approved by the IIA are eligible for grants of up to 50 % of the project’s expenditures, as determined by the research committee, in exchange for the payment of royalties from the sale of products developed under the program.

Under the Law for the Encouragement of Industrial Research and Development, 1984, or 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.

2 unchanged sentences

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 applicable to U.S.

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 secured overnight financing rate, or 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 June 30, 2023, the Company’s contingent liability in respect to royalties to the IIA amounted to $ 27,565 , not including LIBOR interest as described above.

As of June 30, 2024, the Company’s contingent liability in respect to royalties to the IIA amounted to $ 27,565 , not including LIBOR (from January 1, 2024, SOFR) interest as described above.

In April 2017, the Company was awarded a Smart Money grant of approximately $ 229 from Israel’s Ministry of Economy and Industry to facilitate certain marketing and business development activities with respect to its advanced cell therapy products in the Chinese market, including Hong Kong.

2 unchanged sentences

As part of the program, the Company will repay royalties of 5 % from the Company’s revenues in the region for a five-year period, beginning the year in which the Company will not be entitled to reimbursement of expenses under the program and will be spread for a period of up to 5 years or until the amount of the grant is fully paid.

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

In September 2017, the Company signed an agreement with the Tel-Aviv Sourasky Medical Center (Ichilov Hospital) to conduct a Phase I/II trial of PLX-PAD cell therapy for the treatment of Steroid-Refractory Chronic Graft-Versus-Host-Disease (“cGVHD”).

As part of the agreement with Ichilov Hospital, the Company will pay royalties of 1 % from its net sales of the PLX-PAD product relating to cGVHD, with a maximum aggregate royalty amount of approximately $ 500 .

During the year ended June 30, 2023, the grant from this Smart Money program received in the amount of approximately $ 180 and the program has ended.

No royalties were paid or accrued.

In September 2017, the Company signed an agreement with the Tel-Aviv

Sourasky Medical Center, or 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, or GVHD.

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 GVHD, with a maximum aggregate royalty amount of approximately $ 500 .

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

AND ITS SUBSIDIARIES

1 unchanged sentence

Dollars in thousands (except share and per share amounts)

- COMMITMENTS AND CONTINGENCIES (CONT.)

In June 2018 the Company was awarded a marketing grant of approximately $ 52 under the “Shalav” program of the Israeli Ministry of Economy and Industry.

The grant is intended to facilitate certain marketing and business development activities with respect to the Company’s advanced cell therapy products in the U.S.

As part of the program, the Company will repay royalties of 3 %, but only with respect to the Company’s revenues in the U.S.

market in excess of $ 250 of its revenues in fiscal year 2018, upon the earlier of the five year period beginning the year in which the Company will not be entitled to reimbursement of expenses under the program and/or until the amount of the grant, which is linked to the consumer price index, is fully paid.

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

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

- SHAREHOLDERS’ EQUITY

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

(1) a) On May 1, 2023, the Company increased its authorized common shares from 7,500,000 to 37,500,000 with a par value of $ 0.00001 per share.

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

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

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

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

No preferred shares have been issued.

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

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

purchase up to 8,155,900 common shares.

On December 13, 2022, the Company executed securities purchase agreements to sell, at a purchase

price of $ 1.03 per share, up to 5,579,883 common shares and warrants to purchase up to 5,579,833 common shares, with an exercise price

of $ 1.03 per share and a term of three years.

On December 14, 2022, the Company executed securities purchase agreements to sell, at a

purchase price of $ 1.05 per share, up to 2,068,517 common shares and warrants to purchase up to 2,068,517 common shares, with an exercise

price of $ 1.05 per share and a term of three years.

On December 15, 2022, the Company executed securities purchase agreements to sell,

at a purchase price of $ 1.06 per share, up to 237,500 common shares and warrants to purchase up to 237,500 common shares, with an exercise

price of $ 1.06 per share and a term of three years.

On December 19, 2022, the Company executed a securities purchase agreement to sell,

at a purchase price of $ 1.09 per share, up to 135,000 common shares and warrants to purchase up to 135,000 common shares, with an exercise

price of $ 1.09 per share and a term of three years.

On December 27, 2022, the Company executed a securities purchase agreement to sell,

at a purchase price of $ 1.12 per share, up to 135,000 common shares and warrants to purchase up to 135,000 common shares, with an exercise

price of $ 1.12 per share and a term of three years (see also item e).

The warrants sold in the December 2022 private placement will be

exercisable six months from their issuance date.

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

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

b) Between December 13, 2022 and December 27, 2022, the Company entered into the December 2022 Private Placement, a series of securities purchase agreements with several purchasers for an aggregate of 1,019,488 common shares and warrants to purchase up to 1,019,488 common shares.

On December 13, 2022, the Company executed securities purchase agreements to sell, at a purchase price of $ 8.24 per share, up to 697,485 common shares and warrants to purchase up to 697,485 common shares, with an exercise price of $ 8.24 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 $ 8.40 per share, up to 258,565 common shares and warrants to purchase up to 258,565 common shares, with an exercise price of $ 8.40 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 $ 8.48 per share, up to 29,688 common shares and warrants to purchase up to 29,688 common shares, with an exercise price of $ 8.48 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 $ 8.72 per share, up to 16,875 common shares and warrants to purchase up to 16,875 common shares, with an exercise price of $ 8.72 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 $ 8.96 per share, up to 16,875 common shares and warrants to purchase up to 16,875 common shares, with an exercise price of $ 8.96 per share and a term of three years .

The warrants sold in the December 2022 Private Placement are exercisable upon the later of six months from their issuance date, or from the date the Company increased its authorized shares.

The Company issued 1,019,488 common shares and warrants to purchase up to 1,019,488 common shares that relate to the December 2022 Private Placement and received $ 8,024 as of that date net of $ 445 of issuance expenses.

c) Pursuant to a shelf registration on Form S-3 declared effective by the SEC on September 21, 2023, on February 13, 2024 the Company entered into a Sales Agreement with A.G.P., which provides that, upon the terms and subject to the conditions and limitations in the Sales Agreement, the Company may elect, from time to time, to offer and sell common shares having an aggregate offering price of up to $ 10,000 through A.G.P.

acting as sales agent.

During April 2024, the Company sold 42,729 common shares under the Sales Agreement at an average price of $ 5.93 per share.

d) On August 31, 2023, and as amended and restated as of October 9, 2023, Ever After Foods entered into a Simple Agreement for Future Equity, or the SAFE Agreement, with an investor.

Pursuant to the terms of the SAFE Agreement, Ever After Foods will receive an aggregate amount of $ 2,500 , or the SAFE Amount.

On December 12, 2023, the SAFE Agreement had been terminated and the SAFE Amount was not received.

On June 12, 2024, Ever After Foods entered into a share purchase agreement with the Subsidiary, Tnuva and other investors (see note 1f).

AND ITS SUBSIDIARIES

4 unchanged sentences

The Company adopted the 2016 Equity

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

Compensation Plan, or the 2016 Plan, and the 2019 Equity Compensation Plan, or together, the Plans.

Under the Plans, share options, restricted

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

directors, employees and consultants of the Subsidiary.

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

employees and consultants of the Subsidiary.

As of June 30, 2024, 642,650 common

shares are available for future grants under the Plans.

Options to consultants:

Options to non-employee consultants:

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

2 unchanged sentences

Year ended June 30, 2023

exercise price

(**) Weighted

exercise price Weighted

(in years) Aggregate

Share options outstanding at beginning of period 11,381 $ 10.56 7.05 44

Share options granted

Share options forfeited ( 3,281 ) $ 18.32 -

4 unchanged sentences

Year ended June 30, 2024

exercise price

(**) Weighted

exercise price Weighted

(in years) Aggregate

Share options outstanding at beginning of period 8,100 $ 7.44 6.24 29

Share options forfeited

Share options granted 9,375 $ 4.40 4.56 13

Share options outstanding at end of the period 17,475 $ 5.80 4.87 $ 42

2 unchanged sentences

Share options vested and expected to vest at the end of the period 17,475 $ 5.80 4.87 $ 42

(**) See note 1d regarding reverse share split

AND ITS SUBSIDIARIES

2 unchanged sentences

- SHAREHOLDERS’ EQUITY (CONT.)

Compensation expenses related to share

options granted by Pluri Inc.

and its Subsidiary to consultants were recorded as follows:

Compensation expenses recorded in general

and administrative expenses related to options granted to non-employee consultants by Pluri and its Subsidiary for the years ended June

30, 2024 and 2023 were $ 9 and $ 6 , respectively.

Unamortized compensation expenses related

to options granted to non-employee consultants by Pluri and its Subsidiary are approximately $ 20 to be recognized by the end of March

Options to CEO and directors:

A summary of the share options granted to CEO and directors

under the Plans by Pluri Inc.

and its Subsidiary is as follows:

Year ended June 30, 2023

General and administrative expenses

Options to employees:

A summary of the share options granted to employees under

the Plans by the Subsidiary is as follows:

exercise price

(**) Weighted

exercise price Weighted

Share options outstanding at the beginning of the period -

4 unchanged sentences

Share options vested and expected to vest at the end of the period 229,353 $ 15.20 3.47

Year ended June 30, 2024

(**) Weighted

exercise price Weighted

Share options outstanding at the beginning of the period 229,353 $ 15.20 3.47

Share options granted 12,500 $ 6.08 6.73

Share options forfeited ( 1,562 ) $ 6.08 -

Share options outstanding at the end of the period 240,291 $ 14.82 2.42

Share options vested and exercisable at the end of the period 240,291 $ 14.82 2.42

See note 1d regarding reverse share split

As of June 30, 2024, the aggregate

1 unchanged sentence

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

- SHAREHOLDERS’ EQUITY (CONT.)

On December 14, 2022, Yaky Yanay,

the Company’s Chief Executive Officer, agreed to forgo, starting January 1, 2023, $ 375,000 of his annual cash salary for the next

twelve months in return for equity grants, issuable under the Company’s existing equity compensation plans.

In that regard, the

Company granted Mr.

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

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

All of these options were granted

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

On December 14, 2022, Yaky Yanay, the

Company’s CEO, agreed to forgo, starting January 1, 2023, $ 375,000 of his annual cash salary for the next twelve months in return

for equity grants, issuable under the Company’s existing equity compensation plans.

In that regard, the Company granted Mr.

(i) 41,853 RSUs, vesting ratably each month (see also item c), and (ii) options to purchase 41,853 common shares, vesting ratably each

month, with a term of 3 years, at an exercise price of $ 8.96 per share.

All of these options were granted in December 2022 and will expire

three years from the last vesting date.

In addition, the Board also agreed

5 unchanged sentences

50% vesting on December 31, 2023.

All options were granted in January 2023 and will expire three years from the later of the last vesting

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

Compensation expenses recorded in

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

30, 2023 were $ 568 .

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

to employees for the year ended June 30, 2022.

Unamortized compensation expenses

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

RSUs to employees and directors:

The following table summarizes the activity

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

All options were granted in January 2023 and will expire three years after the last vesting date.

Compensation expenses recorded in general

and administrative expenses related to options granted to CEO and directors by Pluri Inc.

and its Subsidiary for the years ended June

30, 2023 and 2022:

30, 2024 and 2023 were $ 220 and $ 568 , respectively.

RSUs to employees and directors:

The following table summarizes the

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

and its Subsidiary, for the years ended

June 30, 2024 and 2023:

Year ended June 30,

2 unchanged sentences

Expected to vest after the end of period

See note 1d regarding reverse share split

AND ITS SUBSIDIARIES

3 unchanged sentences

Compensation expenses related to RSUs

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

granted to employees and directors by Pluri Inc.

and its Subsidiary were recorded as follows:

Year ended June 30,

2 unchanged sentences

Unamortized compensation expenses related

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

to RSUs granted to employees and directors by Pluri Inc.

and its Subsidiary are approximately $ 848 to be recognized by the end of January

General and administrative expenses

1 - Compensation expenses for the year

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

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

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

2 - Market-based awards:

In September 2020, the Company granted

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

The RSUs will vest in full upon

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

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

For market-based awards, the Company

determines the grant-date fair value utilizing a Monte Carlo simulation model, which incorporates various assumptions including expected

share price volatility, risk-free interest rates, and the expected date of a qualifying event.

The Company estimates the volatility of

the common shares based on its historical share price volatility for a period of 4 years from the grant date based on the daily changes

in the share price.

The risk-free interest rate is based on the zero-coupon yield of U.S.

Treasury bonds for the expiration date of the

The fair value of the market-based award

uses the assumptions noted in the following table:

Risk-free interest rates

Dividend yield

Expected volatility

The Company recognizes compensation

expenses for the value of its market-based awards based on the results of the Monte Carlo valuation model.

The fair value of the market-based

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

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

For the year ended June 30, 2022 the Company recognized

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

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

3 - Compensation expenses for the year

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

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

- SHAREHOLDERS’ EQUITY (CONT.)

RSUs to consultants:

The following table summarizes the activity

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

include compensation expenses for the year ended June 30, 2024 and 2023, in the amount of $ 58 and $ 273 were related to 41,853 RSUs

granted to the CEO, due each month (see also item b).

RSUs and RS to consultants:

The following table summarizes the

activity related to unvested RSUs and RS granted to non-employee consultants under the Plans by Pluri Inc.

and its Subsidiary for the

years ended June 30, 2024 and 2023:

Year ended June 30,

1 unchanged sentence

Unvested at the end of the period

(**) See note 1d regarding reverse share split

Compensation expenses related to RSUs

granted to consultants by the Subsidiary were recorded as follows:

and RS granted to consultants by Pluri Inc.

and its Subsidiary were recorded as follows:

Year ended June 30,

1 unchanged sentence

General and administrative expenses

Unamortized compensation expenses related

to RSUs and RS granted consultants by Pluri Inc.

and its Subsidiary are approximately $ 21 to be recognized by the end of June 2025.

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

- SHAREHOLDERS’ EQUITY (CONT.)

Summary of the Company’s warrants and options:

Year ended June 30, 2024

Warrants / Options

Weighted average exercise

Warrants / Options Weighted average exercise

share Options and

shares (**) Options and

shares (**) Weighted

$ 8.24 697,485 697,485 1.55

$ 8.40 258,565 258,565 1.82

$ 8.48 29,688 29,688 1.47

$ 8.72 16,875 16,875 1.49

$ 8.96 16,875 16,875 1.50

Total warrants 1,019,488 1,019,488

$ 5.80 17,475 8,100 4.87

$ 8.96 41,853 41,853 2.04

$ 12.48 62,500 62,500 2.25

$ 16.64 62,500 62,500 2.25

$ 20.80 62,500 62,500 2.25

$ 6.08 10,938 10,938 6.73

Total options 257,766 248,391

Total warrants and options 1,277,254 1,267,879

This summary does not include 1,677,596 RSUs that are not

This summary does not include 357,936 RSUs and RS that are not

vested as of June 30, 2024.

(**) See note 1d regarding reverse share split

Nasdaq Deficiency Letter:

On May 28, 2024, the Company, received

a deficiency letter, or the Nasdaq Letter, from the Listing Qualifications Department of The Nasdaq Stock Market LLC, or Nasdaq, notifying

the Company that it was not in compliance with Nasdaq Listing Rule 5550(b)(1), which requires the Company to maintain a minimum of $ 2,500

in shareholders’ equity for continued listing on The Nasdaq Capital Market, or the Shareholders’ Equity Requirement, nor was

it in compliance with either of the alternative listing standards, market value of listed securities of at least $ 35,000 or net income

of $ 500 from continuing operations in the most recently completed fiscal year, or in two of the three most recently completed fiscal years.

Pursuant to the Nasdaq Letter, on July

11, 2024, and subsequent to the balance sheet date, the Company submitted a plan to regain compliance, or the Compliance Plan.

the Compliance Plan, Nasdaq granted the Company an extension of time to regain compliance with the Shareholders’ Equity Requirement

until November 24, 2024.

If the Company fails to evidence compliance by the required deadline, the Company may be subject to delisting.

At that time, the Company may appeal Staff’s determination to a Hearings Panel.

The Company intends to take all reasonable

measures available to regain compliance under the Nasdaq Listing Rules and remain listed on Nasdaq.

However, there can be no assurance

the Company will ultimately regain compliance with all applicable requirements for continued listing.

Neither the Nasdaq Letter nor the Company’s

noncompliance have an immediate effect on the listing or trading of the Company’s common shares, which will continue to trade on

The Nasdaq Capital Market under the symbol “PLUR”.

AND ITS SUBSIDIARIES

1 unchanged sentence

Dollars in thousands (except share and per share amounts)

- SHAREHOLDERS’ EQUITY (CONT.)

Nasdaq Deficiency Notice:

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

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

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

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

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

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

The compliance

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

If the Company does not regain

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

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

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

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

Following a transfer to

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

The Company intends to monitor the

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

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

- FINANCIAL INCOME (EXPENSES), NET

2 unchanged sentences

Bank and broker commissions

Interest income on deposits

Loss from hedging derivatives

Interest income on deposits and restricted bank deposits

Income (loss) from hedging derivatives

Financial income (expenses), net

EIB loan interest expenses

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

- TAXES ON INCOME

Tax rates applicable to the Company:

rates applicable to the Company:

corporate federal tax rate

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

Such corporate tax

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

applicable to Pluri is 21 %, which is the result of the Tax Cuts and Jobs Act of 2017, or the Tax Act.

Such corporate tax rate excludes

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

The Tax Act provided for a one-time

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

earned by foreign subsidiaries beginning after December 31, 2017.

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

return on tangible assets of foreign corporations.

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

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

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

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

by foreign subsidiaries beginning after December 31, 2017.

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

on tangible assets of foreign corporations.

The Tax Act also made certain changes to the depreciation rules and implemented new limits

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

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

There was no one-time transition tax

1 unchanged sentence

In January 2018, Pluri Inc.

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

as of such date, Pluri Inc.

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

as an Israeli resident with the Israel Tax Authority, or the ITA, and the Israeli Value Added Tax Authorities (the VAT registration agreed

to be canceled by the VAT authorities).

As a result, as of such date, Pluri Inc.

is classified as a dual tax resident for tax purposes

both in Israel and the United States.

In June 2018, Pluri Inc.

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

and the Subsidiary

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

AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands (except share and per share amounts)

- TAXES ON INCOME (CONT.)

The Subsidiary:

Consolidated taxable income of Pluri

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

and the Subsidiary, or the consolidated tax unit, is subject to tax at the rate of 23 % for the years ended June 30, 2024 and 2023.

The consolidated tax unit is filing

its consolidated tax reports in U.S.

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

tax reports in U.S.

dollars (“Dollar Regulations”).

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

reports in U.S.

dollars, or Dollar Regulations.

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

dollars according to certain orders.

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

as of June 30 of each year.

dollars according

to certain orders.

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

each year (the fiscal tax year end of the Subsidiary).

The Subsidiary has not received final

2 unchanged sentences

The Law for the Encouragement of

Capital Investments, 1959 (the “Law”):

The Subsidiary has programs which meet

the criteria of a “Beneficiary Enterprise”, in accordance with the Law, under the Alternative Benefit Track starting with

2007 as the election year (the “2007 Program”) and 2012 as an election year to the expansion of its “Beneficiary Enterprise”

program (the “2012 Program”).

Under the 2012 Program, the Subsidiary,

which was located in the “Other National Priority Zone” with respect to the year 2012, would be tax exempt in the first two

years of the benefit period and subject to tax at the reduced rate of 10 %- 25 % for a period of five to eight years for the remaining benefit

period (dependent on the level of foreign investments).

AND ITS SUBSIDIARIES

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- TAXES ON INCOME (CONT.)

With respect to the expansion programs

pursuant to Amendment No.

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

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

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

The benefit period for the Subsidiary’s

2007 Program expired in 2018 (12 years since the beginning of the election year– 2007) and the benefit period for the Subsidiary’s

2012 Program is expected to expire in 2023 (12 years since the beginning of the election year - 2012).

If a dividend is distributed out of

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

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

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

Accelerated depreciation:

The Subsidiary is eligible for deduction

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

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

Conditions for the entitlement to

the benefits:

The above-mentioned benefits are conditional

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

Beneficiary Enterprise.

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

of the benefits, including interest.

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

Amendments to the Law:

In December 2010, the “Knesset”

(Israeli Parliament) passed the Law for Economic Policy for 2011 and 2012 (Amended Legislation), 2011, which prescribes, among others,

amendments in the Law (“Amendment No.

Amendment No.

68 became effective as of January 1, 2011.

According to Amendment

68, the benefit tracks in the Law were modified and a flat tax rate became applicable to a company for all preferred income under

its status as a preferred company with a preferred enterprise.

On August 5, 2013, the Knesset issued

the Law for Changing National Priorities (Legislative Amendments for Achieving Budget Targets for 2013 and 2014), 2013 which consists

of Amendment No.

71 to the Law (“Amendment No.

Capital Investments, 1959, or the Law (amendment No.

In December 2016, the Knesset (Israeli

Parliament) issued the Law for Changing National Priorities (Legislative Amendments for Achieving Budget Targets for 2017 and 2018), 2017,

which consists of amendment No.

73 to the Law, or Amendment No.

According to Amendment No.

1 unchanged sentence

a preferred enterprise in 2017 and thereafter will be 16 % (in development area A it will be 7.5 %).

Amendment No.

71 also prescribes that

any dividends distributed to individuals or foreign residents from the preferred enterprise’s earnings as above will be subject

to tax at a rate of 20 %.

AND ITS SUBSIDIARIES

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The Subsidiary did not apply Amendment

71 with respect to the preferred enterprise status but may choose to apply Amendment No.

71 in the future.

Innovation Box Regime “Technological

Preferred Enterprise”:

In December 2016, the Knesset approved

amendments to the Law that introduce an innovation box regime (the “Innovation Box Regime”) for intellectual property (IP)-based

companies, enhance tax incentives for certain industrial companies and reduce the standard corporate tax rate and certain withholding

rates starting in 2017.

The Innovation Box Regime was tailored

by the Israeli government to a post-base erosion and profit shifting world, encouraging multinationals to consolidate IP ownership and

profits in Israel along with existing Israeli research and development (“R&D”) functions.

Tax benefits created to achieve

this goal include a reduced corporate income tax rate of 6 % on IP-based income and on capital gains from future sale of IP.

The 6 % rate would apply to qualifying

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

Other qualifying

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

However, if the Israeli company is located

in Jerusalem or in certain northern or southern parts of Israel, the tax rate is further reduced to 7.5 %.

Additionally, withholding tax

on dividends for foreign investors would be subject to a reduced rate of 4 % for all qualifying companies (unless further reduced by a

Entering the regime is not conditioned

on making additional investments in Israel, and a company could qualify if it invested at least 7 % of the last three years’ revenue

in R&D (or incurred at least NIS 75 million in R&D expenses per year) and met one of the following three conditions:

At least 20 % of its employees are

R&D employees engaged in R&D (or employs, in total, more than 200 R&D employees);

Venture capital investments in the

aggregate of NIS 8 million were previously made in the company;

Average annual growth over three

years of 25 % in sales or employees.

AND ITS SUBSIDIARIES

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Companies not meeting the above conditions

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

Companies wishing to exit from the regime in the future

will not be subject to claw back of tax benefits.

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

invest in Israel.

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

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

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

The regulations were set to be finalized

by March 31, 2017, with new amendments to the Law coming into effect after the regulations have been finalized.

According to Amendment No.

tax benefits were established for Technological Preferred Enterprise, starting in 2017, will be as follow:

● 6 % rate would apply to qualifying Israeli companies that are part of a group with global consolidated revenue of over NIS 10 billion (approximately $ 2,900,000 ).

● Other qualifying companies with global consolidated revenue below NIS 10 billion would be subject to a 12 % tax rate (in development area A it will be 7.5 %).

● Withholding tax on dividends paid to foreign entity investors (i.e., not to a private person) would be subject to a reduced rate of 4 % for all qualifying companies (unless further reduced by a treaty), subject that at least 90 % of the company is held by foreign entities (one or more).

Taxable income which is not produced

as part of “Preferred Enterprise” income will be taxed at the regular tax rate ( 23 % in 2023).

As of June 30, 2023, the Company’s

management believes that the Company meets the conditions mentioned above to be considered as a Technological Preferred Enterprise.

as part of Preferred Technological Enterprise income will be taxed at the regular tax rate ( 23 % in 2024).

As of June 30, 2024, the Subsidiary’s

management believes that the Subsidiary meets the conditions mentioned above to be considered as a Technological Enterprise.

Pluristem GmbH:

1 unchanged sentence

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

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

its business.

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

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

Ever After is an Israeli tax resident

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

Trade tax rate applicable to the German Subsidiary is 15.93 %, which is calculated by determining the Trade Tax Base with 3.5 %

of the trade income and applying the tax factor which differs according to the specific municipality in Germany and equals 455 % for the

municipality of Potsdam.

Ever After Foods:

Ever After Foods is an Israeli tax resident

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

AND ITS SUBSIDIARIES

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Carryforward losses for tax purposes

2 unchanged sentences

Net operating loss carryforwards arising in

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

Net operating

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

taxable years prior to 2018, can be carried forward and offset against taxable income for 20 years and thus will expire between 2022 and

Net operating losses generated in tax years 2002, 2003 and 2004 have expired and were reduced from the total net operating loss

carryforward available.

Utilization of U.S.

2 unchanged sentences

Internal Revenue

Code of 1986 and similar state provisions.

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

Code of 1986, Section 382 and similar state provisions.

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

The Subsidiary has accumulated losses,

1 unchanged sentence

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

AND ITS SUBSIDIARIES

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In January 2018, Pluri Inc.

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

as an Israeli resident with the ITA.

As of June 30, 2024, Pluri Inc.

11 unchanged sentences

Pluristem GmbH

AND ITS SUBSIDIARIES

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- TAXES ON INCOME (CONT.)

Deferred income taxes:

Deferred income taxes reflect the net

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

amounts used for income tax purposes.

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

used for income tax purposes.

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

15 unchanged sentences

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

AND ITS SUBSIDIARIES

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- TAXES ON INCOME (CONT.)

As of June 30, 2023 and 2022, there were

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

As of June 30, 2024 and 2023, there

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

Reconciliation of taxes at the federal

3 unchanged sentences

carryforward for which a full valuation allowance was provided.

- SUBSEQUENT EVENT.

On July 11, 2023, the Board appointed Mr.

Lorne Abony to

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

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

As remuneration for his service as a director, Mr.

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

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

Pursuant to a shelf registration on Form S-3 filed on July 20, 2023, which we intend to obtain the effectiveness of in the near term, the Company may elect, from time to time, to offer and sell common shares having an aggregate offering price of up to $ 200,000 .

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

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

Pursuant to the terms of the SAFE Agreement,

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

In the event of a qualified equity financing,

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

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

CHANGES IN AND DISAGREEMENTS

WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data