Pluri Inc. 10-Q

Item 1. Financial Statements PLURI INC. AND ITS SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2024 U.S. DOLLARS IN THOUSANDS (Unaudited) INDEX Page Interim Condensed Consolidated Balance Sheets (Unaudited) 2 Interim Condensed Consolidated Statements of Operations (Unaudited) 4 Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity (Deficit) (Unaudited) 5 Interim Condensed Consolidated Statements of Cash Flows (Unaudited) 7 Notes to Interim Condensed Consolidated Financial Statements (Unaudited) 8 1 PLURI INC. AND ITS SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) U.S. Dollars in thousands (except share and per share data) Note December 31, 2024 June 30, 2024 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 7,229 $ 6,783 Short-term bank deposits 14,084 23,202 Restricted cash 261 254 Customer receivables 140 34 Prepaid expenses and other current assets 656 834 Total current assets 22,370 31,107 LONG-TERM ASSETS: Restricted bank deposits 800 634 Severance pay fund 527 470 Property and equipment, net 911 688 Operating lease right-of-use asset 6,236 6,558 Other long-term assets 17 70 Total long-term assets 8,491 8,420 Total assets $ 30,861 $ 39,527 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 2 PLURI INC. AND ITS SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) U.S. Dollars in thousands (except share and per share data) Note December 31, 2024 June 30, 2024 LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) CURRENT LIABILITIES Trade payables $ 1,165 $ 964 Accrued expenses 841 1,223 Operating lease liability 595 559 Accrued vacation and recuperation 730 702 Other accounts payable 1,109 1,006 Total current liabilities 4,440 4,454 LONG-TERM LIABILITIES Accrued severance pay 637 605 Operating lease liability 4,903 5,026 Loan from the European Investment Bank, or EIB 4 23,798 24,027 Total long-term liabilities 29,338 29,658 COMMITMENTS AND CONTINGENCIES 3 SHAREHOLDERS’ EQUITY (DEFICIT) Share capital: 5 Common shares, $ 0.00001 par value per share: Authorized: 37,500,000 as of December 31, 2024, and June 30, 2024; Issued and outstanding: 5,565,449 and 5,408,212 shares as of December 31, 2024, and June 30, 2024, respectively * * Additional paid-in capital 421,282 420,568 Accumulated deficit ( 429,310 ) ( 420,472 ) Total shareholders’ equity (deficit) ( 8,028 ) 96 Non-controlling interests 5,111 5,319 Total equity (deficit) ( 2,917 ) 5,415 Total liabilities and equity $ 30,861 $ 39,527 (*) Less than $1 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 PLURI INC. AND ITS SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) U.S. Dollars in thousands (except share and per share data) Six months ended December 31 Three months ended December 31, Note 2024 2023 2024 2023 Revenues $ 511 $ 159 $ 185 $ 105 Cost of revenues ( 200 ) - ( 74 ) - Gross profit 311 159 111 105 Operating expenses: Research and development expenses $ ( 6,562 ) $ ( 6,704 ) $ ( 3,170 ) $ ( 3,338 ) Less: participation by the National Institute of Allergy and Infectious Diseases, or NIAID, the Israeli Innovation Authority, or IIA, Horizon Europe and other parties 748 747 245 374 Research and development expenses, net ( 5,814 ) ( 5,957 ) ( 2,925 ) ( 2,964 ) General and administrative expenses ( 4,652 ) ( 4,792 ) ( 2,143 ) ( 2,354 ) Operating loss ( 10,155 ) ( 10,590 ) ( 4,957 ) ( 5,213 ) Other financial income, net 6 1,437 928 2,058 435 Interest expenses ( 428 ) ( 430 ) ( 211 ) ( 216 ) Total financial income, net 1,009 498 1,847 219 Net loss $ ( 9,146 ) $ ( 10,092 ) $ ( 3,110 ) $ ( 4,994 ) Net loss attributed to non-controlling interest $ ( 308 ) $ ( 226 ) $ ( 154 ) $ ( 89 ) Net loss attributed to shareholders $ ( 8,838 ) $ ( 9,866 ) $ ( 2,956 ) $ ( 4,905 ) Loss per share: Basic and diluted net loss per share $ ( 1.61 ) $ ( 1.92 ) $ ( 0.53 ) $ ( 0.96 ) Weighted average number of shares used in computing basic and diluted net loss per share (**) 5,505,915 5,178,555 5,552,931 5,190,853 (**) See note 5(1) regarding reverse share split The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 PLURI INC. AND ITS SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT) (UNAUDITED) U.S. Dollars in thousands (except share and per share data) Shareholders’ Equity Common Shares Additional Paid-in Accumulated Total Shareholders’ Non- controlling Total Shares (**) Amount Capital Deficit Equity Interests Equity Balance as of July 1, 2023 5,155,687 $ (* ) $ 412,939 $ ( 399,584 ) $ 13,355 $ 1,945 $ 15,300 Share-based compensation to employees, directors, and non-employee consultants 54,316 (* ) 910 - 910 499 1,409 Net loss - - - ( 9,866 ) ( 9,866 ) ( 226 ) ( 10,092 ) Balance as of December 31, 2023 5,210,003 $ (* ) $ 413,849 $ ( 409,450 ) $ 4,399 $ 2,218 $ 6,617 Shareholders’ Equity Common Shares Additional Paid-in Accumulated Total Shareholders’ Non- controlling Total Shares (**) Amount Capital Deficit Equity Interests Equity Balance as of October 1, 2023 5,181,066 $ (* ) $ 413,446 $ ( 404,545 ) $ 8,901 $ 2,137 $ 11,038 Share-based compensation to employees, directors, and non-employee consultants 28,937 (* ) 403 - 403 170 573 Net loss - - - ( 4,905 ) ( 4,905 ) ( 89 ) ( 4,994 ) Balance as of December 31, 2023 5,210,003 $ (* ) $ 413,849 $ ( 409,450 ) $ 4,399 $ 2,218 $ 6,617 (*) Less than $1 (**) See note 5(1) regarding reverse share split The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 PLURI INC. AND ITS SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT) (UNAUDITED) U.S. Dollars in thousands (except share and per share data) Shareholders’ Equity (Deficit) Common Shares Additional Paid-in Accumulated Total Shareholders’ Non- controlling Total Shares Amount Capital Deficit Equity (Deficit) Interests Equity Balance as of July 1, 2024 5,408,212 $ (* ) $ 420,568 $ ( 420,472 ) $ 96 $ 5,319 $ 5,415 Share-based compensation to employees, directors, and non-employee consultants 157,237 (* ) 714 - 714 100 814 Net loss - - - ( 8,838 ) ( 8,838 ) ( 308 ) ( 9,146 ) Balance as of December 31, 2024 5,565,449 $ (* ) $ 421,282 $ ( 429,310 ) $ ( 8,028 ) $ 5,111 $ ( 2,917 ) Shareholders’ Equity (Deficit) Common Shares Additional Paid-in Accumulated Total Shareholders’ Non- controlling Total Shares Amount Capital Deficit Equity (Deficit) Interests Equity Balance as of October 1, 2024 5,507,304 $ (* ) $ 421,071 $ ( 426,354 ) $ ( 5,283 ) $ 5,220 $ ( 63 ) Share-based compensation to employees, directors, and non-employee consultants 58,145 (* ) 211 - 211 45 256 Net loss - - - ( 2,956 ) ( 2,956 ) ( 154 ) ( 3,110 ) Balance as of December 31, 2024 5,565,449 $ (* ) $ 421,282 $ ( 429,310 ) $ ( 8,028 ) $ 5,111 $ ( 2,917 ) (*) Less than $1 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 6 PLURI INC. AND ITS SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) Six months ended December 31, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 9,146 ) $ ( 10,092 ) Adjustments to reconcile loss to net cash used in operating activities: Depreciation 133 131 Share-based compensation to employees, directors and non-employee consultants 814 1,409 Decrease (increase) in customer receivable ( 106 ) 94 Decrease (increase) in prepaid expenses and other current assets and other long-term assets 231 ( 393 ) Increase (decrease) in trade payables 164 ( 713 ) Decrease in other accounts payable, accrued vacation and recuperation and accrued expenses ( 251 ) ( 410 ) Decrease (increase) in operating lease right-of-use asset and liability, net 235 ( 25 ) Increase in interest receivable on short-term deposits ( 71 ) 3 Effect of exchange rate changes on cash, cash equivalents, deposits and restricted cash ( 441 ) ( 373 ) Increase (decrease) in long-term interest payable and exchange rate differences related to the EIB loan, net ( 229 ) 869 Accrued severance pay, net ( 25 ) ( 6 ) Net cash used for operating activities $ ( 8,692 ) $ ( 9,506 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment $ ( 320 ) $ ( 224 ) Proceeds from withdrawal of short-term deposits, net 9,550 9,945 Net cash provided by investing activities $ 9,230 $ 9,721 EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS and restricted cash 81 15 Increase in cash, cash equivalents, restricted cash and restricted bank deposits 619 230 Cash, cash equivalents, restricted cash and restricted bank deposits at the beginning of the period 7,671 6,256 Cash, cash equivalents, restricted cash and restricted bank deposits at the end of the period $ 8,290 $ 6,486 Reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheets: Cash and cash equivalents 7,229 5,468 Restricted cash 261 373 Long-term restricted bank deposits 800 645 Total cash, cash equivalents, restricted cash and restricted bank deposits $ 8,290 $ 6,486 (a) Supplemental disclosure of non-cash activities: Purchase of property and equipment on credit $ 41 $ 80 Lease liabilities arising from obtaining right-of-use assets $ 32 $ 78 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 7 PLURI INC. AND ITS SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 1: - GENERAL a. Pluri Inc. (formally known as Pluristem Therapeutics Inc.), a Nevada corporation, was incorporated on May 11, 2001. Pluri Inc.’s common shares trade on the Nasdaq Capital Market and Tel-Aviv Stock Exchange under the symbol “PLUR”. Pluri Inc. has a wholly owned subsidiary, Pluri-Biotech Ltd. (formerly known as Pluristem Ltd.), 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 Co-Operative 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.” b. The Company is a bio-technology company with an advanced cell-based technology platform, which operates in one operating segment. The Company has developed a unique three-dimensional 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 technology and agricultural technology 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. c. The Company has incurred an accumulated deficit of approximately $ 429,310 and incurred recurring operating losses and negative cash flows from operating activities since inception. As of December 31, 2024, the Company’s total shareholders’ deficit amounted to $ 8,028 . During the six-month period ended December 31, 2024, the Company incurred losses of $ 9,146 and its negative cash flow from operating activities was $ 8,692 . As of December 31, 2024, the Company’s cash balances (cash and cash equivalents, short-term bank deposits, restricted cash and restricted bank deposits) totaled $ 22,374 . 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 (see note 7). 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 interim unaudited condensed consolidated financial statements. During 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 a loan in an amount of € 20 million, or the Loan. The amount received is due on June 1, 2026 and bears an annual interest of 4 % to be paid with the principal of the Loan. The Company is currently in discussions with the EIB regarding a potential restructuring of the terms of the loan, however there is no certainty that such restructuring will be achieved. As of December 31, 2024, the linked principal and interest accrued balance was of $ 23,798 and is presented among long-term liabilities (see note 4). 8 PLURI INC. AND ITS SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES a. Unaudited Interim Financial Information The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair statement have been included (consisting only of normal recurring adjustments). For further information, reference is made to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024. The year-end balance sheet data was derived from the audited consolidated financial statements as of June 30, 2024, but not all disclosures required by GAAP are included. Operating results for the six-month period ended December 31, 2024, are not necessarily indicative of the results that may be expected for the year ending June 30, 2025. b. Significant Accounting Policies The significant accounting policies followed in the preparation of these interim unaudited condensed consolidated financial statements are identical to those applied in the preparation of the latest annual financial statements. c. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates, judgments and assumptions that are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. d. Fair value of financial instruments The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, restricted cash, short-term bank deposits and restricted bank deposits and other current assets, trade payable and other accounts payable and accrued expenses, approximate their fair value because of their generally short-term maturities. The Company measures its derivative instruments at fair value under Accounting Standards Codification, or ASC 820; “Fair Value Measurements and Disclosures”, 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 measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: Level  1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities; Level  2 - Inputs other than Level 1 that are observable for the asset or liability, either directly or indirectly; and Level  3 - Unobservable inputs for the asset or liability. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company categorized each of its fair value measurements in one of these three levels of hierarchy. The Company measures its liability pursuant to the Finance Contract based on the aggregate outstanding amount of the combined principal and accrued interest thereunder. As of December 31, 2024, the Company does not reflect its liability for future royalty payments pursuant to the Finance Contract with the EIB since the royalty payments are to be paid as a percentage of the Company’s future consolidated revenues, pro-rated to the amount disbursed, beginning in fiscal year 2024 and until fiscal year 2030 (see note 4). 9 PLURI INC. AND ITS SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES (CONT.) e. Recently issued accounting pronouncements, not yet adopted ASU No. 2023-07 - “Segment Reporting (Topic 280): Improvements to reportable segment disclosures”, or ASU 2023-07: In November 2023, the Financial Accounting Standards Board, or FASB, issued ASU 2023-07. This guidance expands public entities’ segment disclosures primarily by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and are included within each reported measure of segment profit or loss, an amount and description of its composition of other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The guidance is effective for the fiscal year beginning after December 15, 2023, and interim periods within the fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements disclosures. ASU No. 2023-09 - “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, or ASU 2023-09: In December 2023, the FASB issued ASU 2023-09. This guidance is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 address investors’ requests for enhanced income tax information primarily through changes to the tax rate reconciliation and regarding income tax paid both in the United States and in foreign jurisdictions. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, on a prospective basis. Early adoption and retroactive application are permitted. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements disclosures. ASU 2024-03 - “Income Statement: Reporting Comprehensive Income - Expense Disaggregation Disclosures”, or ASU 2024-03: In November 2024, the FASB issued ASU 2024-03 - which requires more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation, amortization, and depletion), which are included in certain expense captions presented on the face of the income statement, as well as disclosures about selling expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements disclosures. 10 PLURI INC. AND ITS SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 3: - COMMITMENTS AND CONTINGENCIES a. As of December 31, 2024, an amount of $ 1,061 of cash and deposits was pledged by the Subsidiary and Ever After Foods to secure its credit line, lease agreement, derivative and hedging and bank guarantees. b. 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. dollar-linked grant is repaid. The Company’s obligation to pay these royalties is contingent on its actual sale of such products and services. In the absence of such sales, no payment is required. The outstanding balance of the grants will be subject to interest at a rate equal to the 12-month Secured Overnight Financing Rate, or SOFR (before January 1, 2024, to the 12-month London Interbank Offered Rate, or LIBOR) applicable to U.S. dollar deposits that is published on the first business day of each calendar year. Following the full repayment of the grant, there is no further liability for royalties. As of December 31, 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. c. In April 2017, the Company was awarded a Smart Money grant of approximately $ 229 from Israel’s Ministry of Economy and Industry to facilitate certain marketing and business development activities with respect to its advanced cell therapy products in the Chinese market, including Hong Kong. The Israeli government granted the Company budget resources that are intended to be used to advance the Company’s product candidate towards marketing in the China-Hong Kong markets. The Company will also receive support from Israel’s trade representatives stationed in China, including Hong Kong, along with experts appointed by the Smart Money program. 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 August 4, 2022, the grant from this Smart Money program received was approximately $ 180 and the program has ended. To date, no royalties were paid or accrued. d. 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 . e. In October 2024, Ever After Foods signed a facility operating lease agreement with a lessor. The lease period, which has not yet begun, is expected for a term of five years . In addition, Ever After Foods has the option to terminate the lease after a period of 36 months and to extend the term of the lease for an additional period of five years , or the Extension Option. The average monthly lease payment for the first five years is approximately NIS 50,192 or $ 14 , which is linked to the consumer price index. The monthly lease payments will increase by 5 % in the event that Ever After Foods exercises its Extension Option. f. As to potential royalties to the EIB, see note 4. 11 PLURI INC. AND ITS SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 4: - LOAN FROM THE EIB On April 30, 2020, the German Subsidiary entered into the Finance Contract with the EIB, pursuant to which the German Subsidiary can obtain a loan in the amount of up to € 50 million, subject to certain milestones being reached, receivable in three tranches, with the first tranche consisting of € 20 million, second tranche consisting of € 18 million and third tranche consisting of € 12 million for a period of 36 months from the signing of the Finance Contract. The tranches were treated independently, each with its own interest rate and maturity period. The annual interest rate is 4 % (consisting of a 4 % deferred interest rate payable upon maturity); for the first tranche, 4 % (consisting of a 1 % fixed interest rate and a 3 % deferred interest rate payable upon maturity) for the second tranche and 3 % (consisting of a 1 % fixed interest rate and a 2 % deferred interest rate payable upon maturity) for the third tranche. In addition to any interest payable on the loan, the EIB is entitled to receive royalties from future revenues for a period of seven years starting at the beginning of fiscal year 2024 and continuing up to and including its fiscal year 2030 in an amount equal to between 0.2 % to 2.3 % of the Company’s consolidated revenues, pro-rated to the amount disbursed from the Loan. As of December 31, 2024, Pluri had an accrued royalty in the amount of $ 5 . 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. As of December 31, 2024, the linked principal balance in the amount of $ 20,819 and the interest accrued in the amount of $ 2,979 are presented among long-term liabilities. Since the project period ended on December 31, 2022, the Company does not expect to receive additional funds pursuant to the Finance Contract. The Finance Contract also contains certain limitations such as the use of proceeds received from the EIB, limitations related to disposal of assets, substantive changes in the nature of the Company’s business, changes in holding structure, distributions of future potential dividends and engaging with other banks and financing entities for other loans. 12 PLURI INC. AND ITS SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 5: - SHAREHOLDERS’ EQUITY (1) 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. As a result of rounding-up fractional shares into whole shares as a result of the reverse share split, an additional 67,836 common shares were included in the Company’s issued and outstanding shares. (2) Pursuant to a registration statement on Form S-3 (File No. 333-273347), declared effective by the U.S Securities and Exchange Commission on September 21, 2023, on February 13, 2024 the Company entered into an Open Market Sales Agreement, or Sales Agreement, with A.G.P./Alliance Global Partners, or 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. As of December 31, 2024, the Company sold 42,729 common shares under the Sales Agreement at an average price of $ 5.93 per share. (3) Share options and restricted share units, or RSUs to employees, directors and consultants: a. Options to non-employee consultants: A summary of the share options granted to non-employee consultants under its equity incentive plans, or the Plans, by Pluri Inc. and its Subsidiary is as follows: Six months ended December 31, 2024 Number Weighted average exercise price Weighted average remaining contractual terms (in years) Aggregate intrinsic value price Share options outstanding at the beginning of the period 17,475 $ 5.80 4.87 $ 42 Share options outstanding at end of the period 17,475 $ 5.80 4.37 $ 19 Share options exercisable at the end of the period 8,100 $ 7.41 4.74 $ 19 Share options unvested 9,375 $ 4.40 4.05 $ - Share options vested and expected to vest at the end of the period 17,475 $ 5.80 4.37 $ 19 Unamortized compensation expenses related to options granted to non-employee consultants by Pluri Inc. and its Subsidiary are approximately $ 11 to be recognized by the end of March 2027. 13 PLURI INC. AND ITS SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 5: - SHAREHOLDERS’ EQUITY (CONT.) b. Options to the Chief Executive Officer, or CEO, and Director: A summary of the share options granted to the CEO and director under the Plans by Pluri Inc. and its Subsidiary is as follows: Six months ended December 31, 2024 Number Weighted average exercise price Weighted average remaining contractual terms (in years) Share options outstanding at the beginning of the period 240,291 $ 14.82 2.42 Share options outstanding at the end of the period 240,291 $ 14.82 1.91 Share options vested and exercisable at the end of the period 240,291 $ 14.82 1.91 As of December 31, 2024, the aggregate intrinsic value of these options was $ 0 . c. 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 six-month period ended December 31, 2024: Six months ended December 31, 2024 Number Unvested at the beginning of the period 353,134 Granted 48,653 Forfeited ( 13,938 ) Vested ( 143,243 ) Unvested at the end of the period 244,606 Expected to vest after the end of the period 223,496 The fair value of all RSUs was determined based on the closing trading price of the Company’s shares known at the grant date. The weighted average grant date fair value of RSUs granted during the six-month period ended December 31, 2024 granted to employees and directors was $ 5.20 per share. Unamortized compensation expenses related to RSUs granted to employees and directors by Pluri Inc. and its Subsidiary are approximately $ 439 to be recognized by the end of September 2027. 14 PLURI INC. AND ITS SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 5: - SHAREHOLDERS’ EQUITY (CONT.) d. RSUs and restricted shares, or RS to consultants: The following table summarizes the activity related to unvested RSUs and RS granted to non-employee consultants by Pluri Inc. and its Subsidiary for the six-month period ended December 31, 2024: Six months ended December 31, 2024 Number Unvested at the beginning of the period 4,802 Granted 12,138 Vested ( 13,994 ) Unvested at the end of the period 2,946 The fair value of all RSUs was determined based on the closing trading price of the Company’s shares known at the grant date. The weighted average grant date fair value of RSUs granted during the six-month period ended December 31, 2024 granted to non-employee consultants was $ 5.47 per share. Unamortized compensation expenses related to RSUs and RS granted consultants by Pluri Inc. and its Subsidiary are approximately $ 6 to be recognized by the end of June 2025. Compensation expenses related to RSUs granted by Pluri Inc. and its Subsidiary were recorded as follows: Six months ended December 31, Three months ended December 31, 2024 2023 2024 2023 Research and development expenses $ 136 $ 62 $ 48 $ 31 General and administrative expenses 570 634 159 278 $ 706 $ 696 $ 207 $ 309 15 PLURI INC. AND ITS SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 5: - SHAREHOLDERS’ EQUITY (CONT.) (4) Nasdaq Deficiency Letter: On November 25, 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. On January 6, 2025, the Company submitted a plan to regain compliance, or the Compliance Plan. Based on the Compliance Plan, Nasdaq has determined to grant the Company an extension of time to regain compliance with the Shareholders’ Equity Requirement until May 24, 2025. 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”. NOTE 6: - TOTAL FINANCIAL INCOME, NET Six months ended December 31, Three months ended December 31, 2024 2023 2024 2023 Foreign currency translation differences, net $ 762 $ ( 68 ) $ 1,754 $ ( 128 ) Interest income on deposits and restricted bank deposits 572 792 251 356 Income from hedging derivatives 103 204 53 207 Other Financial income, net 1,437 928 2,058 435 EIB loan interest expenses ( 428 ) ( 430 ) ( 211 ) ( 216 ) $ 1,009 $ 498 $ 1,847 $ 219 16 PLURI INC. AND ITS SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) U.S. Dollars in thousands (except share and per share amounts) NOTE 7: - SUBSEQUENT EVENTS On January 23, 2025, the Company entered into a Securities Purchase Agreement, or the Securities Purchase Agreement, with Mr. Alejandro Weinstein, or the Investor, relating to a private placement offering, or the Offering, of: (i) 1,383,948 common shares of the Company, (ii) pre-funded warrants, or the Pre-Funded Warrants, to purchase up to 26,030 common shares, and (iii) warrants, or the Common Warrants, to purchase up to 84,599 common shares. The Offering price per share and accompanying warrant is $ 4.61 . The Pre-Funded Warrants have an exercise price of $ 0.0001 per share, are exercisable at any time following the receipt of certain approvals from the Company’s shareholders, or the Shareholder Approval, and until exercised in full. The Common Warrants have an exercise price of $ 5.568 per share, which will not be exercisable until the Company receives Shareholder Approval and will be exercisable for three years following the date of receipt of the Shareholder Approval. The Pre-Funded Warrants and Common Warrants contain customary anti-dilution provisions and are subject to a 19.99 % beneficial ownership limitation until the Shareholder Approval is obtained. The Securities Purchase Agreement contains customary representations and warranties and agreements of the Company and the Investor and customary indemnification rights and obligations of the parties. Under the terms of the Securities Purchase Agreement, the Company appointed Mr. Weinstein, to the Board of Directors of the Company, or the Board, effective upon the closing of the Offering, and agreed to continue to recommend his election to its shareholders provided the Investor continues to hold at least 10 % of the Company’s issued and outstanding Common Shares. The Offering closed on February 5, 2025, and the gross proceeds to the Company were $ 6.5 million. Concurrently with the Offering, on January 23, 2025, the Company and the Investor entered into a binding term sheet, or the Term Sheet, for the purchase of certain shares representing approximately 71 % (on a fully diluted basis) of Kokomodo Ltd., or Kokomodo, for an aggregate purchase price of $ 4.5 million, payable in common shares, or the Kokomodo Transaction. The Kokomodo Transaction will be subject to, among other conditions, the approval by the Company’s shareholders. The Kokomodo Transaction is expected to close during the second quarter of 2025, (calendar year) following the approval of the Company’s shareholders. As of the date of this report, there is no guarantee when or if the Kokomodo Transaction will be completed. Pursuant to the Term Sheet, in case that the Kokomodo Transaction does not close, for any reason other than due to Investor’s failure to perform its material undertakings and/or covenants as agreed under the definitive agreement, or due to any due diligence finding which the we are not currently aware of and that is likely to result in liabilities to us exceeding $ 0.5 million, then we shall: (a) purchase a certain portion of Investor’s shares in Kokomodo for a purchase amount of $ 1 million (based on a $ 6 million pre-money valuation of Kokomodo, calculated prior to the investment described in (b)), and (b) invest an additional $ 0.5 million in Kokomodo under a under a Simple Agreement for Future Equity, or SAFE, providing a 20 % discount of the price per share set in connection with a trigger event for conversion of the SAFE into equity of Kokomodo and a pre-money valuation cap of $ 5.5 million in connection with such round. On February 3, 2025, the Company entered into an additional securities purchase agreement, or the Additional Securities Purchase Agreement, with Merchant Adventure Fund L.P., an existing investor, of the Company, relating to a private placement offering, or the Second Offering, of: (i) 759,219 of the Company’s common shares, and (ii) warrants to purchase up to 45,553 common shares. The Second Offering price per share and accompanying warrant is $ 4.61 . The Second Offering warrants have an exercise price of $ 5.568 per share and a term of three years , commencing on the date of issuance. The gross proceeds to the Company from the Second Offering are expected to be approximately $ 3.5 million. 17