Pluri Inc. 10-Q

Item 1. Financial Statements PLURI INC. AND ITS SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS As of March 31, 2025 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 March 31, 2025 June 30, 2024 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 8,499 $ 6,783 Short-term bank deposits 17,774 23,202 Restricted cash 407 254 Customer receivables 178 34 Prepaid expenses and other current assets 597 834 Total current assets 27,455 31,107 LONG-TERM ASSETS: Restricted bank deposits 786 634 Severance pay fund 514 470 Property and equipment, net 1,590 688 Operating lease right-of-use asset 7,034 6,558 Other long-term assets 28 70 Total long-term assets 9,952 8,420 Total assets $ 37,407 $ 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 March 31, 2025 June 30, 2024 LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) CURRENT LIABILITIES Trade payables $ 930 $ 964 Accrued expenses 1,579 1,223 Operating lease liability 599 559 Accrued vacation and recuperation 756 702 Warrant liability 263 - Advances from customers 333 43 Other accounts payable 1,245 963 Total current liabilities 5,705 4,454 LONG-TERM LIABILITIES Accrued severance pay 631 605 Operating lease liability 5,640 5,026 Loan from the European Investment Bank (“EIB”) 4 24,948 24,027 Total long-term liabilities 31,219 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 March 31, 2025, and June 30, 2024; Issued and outstanding: 7,775,443 and 5,408,212 shares as of March 31, 2025, and June 30, 2024, respectively * * Additional paid-in capital 430,983 420,568 Accumulated deficit ( 435,457 ) ( 420,472 ) Total shareholders’ equity (deficit) ( 4,474 ) 96 Non-controlling interests 4,957 5,319 Total equity 483 5,415 Total liabilities and equity $ 37,407 $ 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) Nine months ended March 31, Three months ended March 31, Note 2025 2024 2025 2024 Revenues $ 938 $ 230 $ 427 $ 71 Cost of revenues ( 491 ) - ( 291 ) - Gross profit 447 230 136 71 Operating expenses: Research and development expenses $ ( 9,797 ) $ ( 10,066 ) $ ( 3,235 ) $ ( 3,362 ) Less: participation by the National Institute of Allergy and Infectious Diseases (“NIAID”), the Israeli Innovation Authority (“IIA”), Horizon Europe 940 1,015 192 268 Research and development expenses, net ( 8,857 ) ( 9,051 ) ( 3,043 ) ( 3,094 ) General and administrative expenses ( 7,145 ) ( 7,303 ) ( 2,493 ) ( 2,511 ) Operating loss ( 15,555 ) ( 16,124 ) ( 5,400 ) ( 5,534 ) Other financial income (expenses), net 7 714 1,290 ( 723 ) 362 Interest expenses ( 640 ) ( 648 ) ( 212 ) ( 218 ) Total financial income (expenses), net 74 642 ( 935 ) 144 Net loss $ ( 15,481 ) $ ( 15,482 ) $ ( 6,335 ) $ ( 5,390 ) Net loss attributed to non-controlling interest $ ( 496 ) $ ( 323 ) $ ( 188 ) $ ( 97 ) Net loss attributed to shareholders $ ( 14,985 ) $ ( 15,159 ) $ ( 6,147 ) $ ( 5,293 ) Loss per share: Basic and diluted net loss per share $ ( 2.56 ) $ ( 2.92 ) $ ( 0.94 ) $ ( 1.01 ) Weighted average number of shares used in computing basic and diluted net loss per share 5,857,743 5,193,808 6,563,555 5,221,162 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 (Deficit) Additional Total Non- Common Shares Paid-in Accumulated Shareholders’ controlling Total Shares Amount Capital Deficit Equity (Deficit) 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 73,050 (* ) 1,448 - 1,448 579 2,027 Net loss - - - ( 15,159 ) ( 15,159 ) ( 323 ) ( 15,482 ) Balance as of March 31, 2024 5,228,737 $ (* ) $ 414,387 $ ( 414,743 ) $ ( 356 ) $ 2,201 $ 1,845 Shareholders’ Equity (Deficit) Additional Total Non- Common Shares Paid-in Accumulated Shareholders’ controlling Total Shares Amount Capital Deficit Equity (Deficit) Interests Equity Balance as of January 1, 2024 5,210,003 $ (* ) $ 413,849 $ ( 409,450 ) $ 4.399 $ 2,218 $ 6,617 Share-based compensation to employees, directors, and non-employee consultants 18,734 (* ) 538 - 538 80 618 Net loss - - - ( 5,293 ) ( 5,293 ) ( 97 ) ( 5,390 ) Balance as of March 31, 2024 5,228,737 $ (* ) $ 414,387 $ ( 414,743 ) $ ( 356 ) $ 2,201 $ 1,845 (*) Less than $1 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) Additional Total Non- Common Shares Paid-in Accumulated Shareholders’ 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 224,064 (* ) 1,171 - 1,171 134 1,305 Issuance of common shares and warrants, net of issuance costs of $ 476 2,143,167 (* ) 9,244 - 9,244 - 9,244 Net loss - - - ( 14,985 ) ( 14,985 ) ( 496 ) ( 15,481 ) Balance as of March 31, 2025 7,775,443 $ (* ) $ 430,983 $ ( 435,457 ) $ ( 4,474 ) $ 4,957 $ 483 Shareholders’ Equity (Deficit) Additional Total Non- Common Shares Paid-in Accumulated Shareholders’ controlling Total Shares Amount Capital Deficit Equity (Deficit) Interests Equity Balance as of January 1, 2025 5,565,449 (* ) $ 421,282 $ ( 429,310 ) $ ( 8,028 ) $ 5,111 $ ( 2,917 ) Share-based compensation to employees, directors, and non-employee consultants 66,827 (* ) 457 - 457 34 491 Issuance of common shares and warrants, net of issuance costs of $ 476 2,143,167 (* ) 9, 244 - 9, 244 - 9, 244 Net loss - - - ( 6,147 ) ( 6,147 ) ( 188 ) ( 6,335 ) Balance as of March 31, 2025 7,775,443 $ (* ) $ 430,983 $ ( 435,457 ) $ ( 4,474 ) $ 4,957 $ 483 (*) 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) Nine months ended March 31, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 15,481 ) $ ( 15,482 ) Adjustments to reconcile loss to net cash used in operating activities: Depreciation 205 192 Share-based compensation to employees, directors and non-employee consultants 1,305 2,027 Decrease in fair value of warrant liability ( 17 ) - Increase in customer receivable ( 144 ) - Decrease (increase) in prepaid expenses and other current assets and other long-term assets 279 ( 124 ) Decrease in trade payables ( 244 ) ( 742 ) Increase (decrease) in other accounts payable, accrued vacation and recuperation and accrued expenses 248 ( 455 ) Increase in advances from customers 290 94 Decrease in operating lease right-of-use asset and liability, net 178 125 Decrease (increase) in interest receivable on short-term deposits ( 145 ) 218 Effect of exchange rate changes on cash, cash equivalents, deposits and restricted cash ( 372 ) ( 89 ) Increase in long-term interest payable and exchange rate differences related to the EIB loan, net 921 535 Decrease in accrued severance pay, net ( 18 ) ( 7 ) Net cash used for operating activities $ ( 12,995 ) $ ( 13,708 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment $ ( 897 ) $ ( 313 ) Proceeds from short-term deposits, net 5,895 15,702 Net cash provided by investing activities $ 4,998 $ 15,389 CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common shares, pre-funded warrants and warrants, net of issuance costs 9,968 - Net cash provided by financing activities $ 9,968 $ - EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS and restricted cash 50 54 Increase in cash, cash equivalents, restricted cash and restricted bank deposits 2,021 1,735 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 $ 9,692 $ 7,991 Reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheets: Cash and cash equivalents 8,499 7,081 Restricted cash 407 273 Long-term restricted bank deposits 786 637 Total cash, cash equivalents, restricted cash and restricted bank deposits $ 9,692 $ 7,991 (a) Supplemental disclosure of non-cash activities: Purchase of property and equipment on credit $ 214 $ 34 Accrued expenses related to issuance of common shares, pre-funded warrants and warrants 444 100 Lease liabilities arising from obtaining right-of-use assets $ 1,014 $ 82 1,672 216 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 Pluristem Ltd.), hereinafter referred to as 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 (the “German Subsidiary”), incorporated under the laws of Germany. In January 2022, the Subsidiary established another subsidiary, Ever After Foods Ltd. (formerly known as Plurinuva Ltd.), hereinafter referred to as “Ever After Foods”, which is incorporated under the laws of the State of Israel. This followed the execution of a collaboration agreement with Tnuva Food Industries – Agricultural Co-Operative in Israel Ltd., through its fully owned subsidiary, Tnuva Food-Tech Incubator (2019), Limited Partnership, hereinafter referred to as “Tnuva.” In March 2024, the Subsidiary established another wholly owned subsidiary, Coffeesai Ltd. (“Coffeesai”), incorporated under the laws of Israel, with the purpose of developing cultivated coffee. Collectively, 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, Ever After Foods, and Coffeesai are collectively referred to as the “Subsidiaries.” b. Pluri is a bio-technology company with an advanced cell-based technology platform, which operates in one operating segment. Pluri has developed a unique three-dimensional cell expansion platform, supported by an in-house, industrial-scale Good Manufacturing Practice (“GMP”) cell manufacturing facility. Pluri currently applies this technology across the fields of regenerative medicine, food technology, and agricultural technology. In addition, Pluri has launched a Contract Development and Manufacturing Organization (“CDMO”) business and intends to expand the application of its platform to other industries and business sectors requiring scalable and cost-efficient cell expansion solutions. Pluri is dedicated to the research, development, and manufacturing of cell-based products, as well as the commercialization of cell therapeutics and related technologies aimed at delivering innovative solutions across a range of industries. c. Pluri has incurred an accumulated deficit of approximately $ 435,457 and incurred recurring operating losses and negative cash flows from operating activities since inception. As of March 31, 2025, the Company’s total shareholders’ deficit amounted to $ 4,474 . During the nine-month period ended March 31, 2025, the Company incurred losses of $ 15,481 and its negative cash flow from operating activities was $ 12,995 . As of March 31, 2025, the Company’s cash balances (cash and cash equivalents, short-term bank deposits, restricted cash and restricted bank deposits) totaled $ 27,466 . The Company plans to continue to finance its operations from its current resources, by entering licensing or other commercial, partnerships and collaboration agreements, by providing CDMO services to clients, as well as from receipt of grants and entry into contracts to support its research and development activities and from sales of its equity securities (see notes 5 and 7). The Company’s management believes that its current resources, combined with its current 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. In 2024, the Company also implemented a cost reduction and operational efficiency plan to further support its financial sustainability. As part of its ongoing financial management, the Company regularly monitors actual results against its budget, evaluates its cash position and business priorities, and considers adjustments to its spending and operations as needed, in response to changes in available resources and operating conditions. 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. If the Company is unable to obtain the required level of financing, operations may need to be scaled down or discontinued. While management believes that the existing resources of the Company will be sufficient for the twelve months following the issuance of these financial statements, additional funding will likely be necessary to support operations beyond that period. On April 30, 2020, the German Subsidiary entered a finance contract (the “Finance Contract”), with the EIB, pursuant to which the German Subsidiary obtained a loan in an amount of € 20 million (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 advanced discussions with the EIB regarding a potential restructuring of the terms of the Loan. Such discussions are currently focused on the new terms of the Loan, including an extension of the current maturity date of the Loan. The Company is expecting to finalize such discussion by the end of June 2025; however, there is no certainty that such restructuring will be achieved on the expected timeline or at all. As of March 31, 2025, the linked principal and interest accrued balance was $ 24,948 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 (“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 nine-month period ended March 31, 2025, 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” (“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 input used in the valuation methodologies in measuring fair value: Level  1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities; 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.) d. Fair value of financial instruments (Cont.) 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 March 31, 2025, the Company had an accrued royalty in the amount of $ 9 , which 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). The Company measures its liability for pre-funded warrants and common warrants at fair value using Level 3 unobservable inputs, in accordance with the fair value hierarchy defined in ASC 820 (see note 5). As of the issuance date, the fair value of the pre-funded warrants was estimated at $ 115 . The fair value calculated is based on the fair value of the share price of $ 4.40 . As of March 31, 2025, the pre-funded warrants were remeasured, the fair value of the pre-funded warrants was estimated at $ 112 . The fair value calculated is based on the fair value of the share price of $ 4.30 . As of the issuance date of the common warrants, the fair value of the common warrants was estimated at $ 165 . The valuation was based on a Black-Scholes model, using an expected volatility of 72.91 %, a risk-free rate of 4.19 %, a contractual term of 3 years, an expected dividend yield of 0 % and a share price at the issuance date of $ 4.40 . As of March 31, 2025, the common warrants were remeasured, the fair value of the common warrants was estimated at $ 151 . The valuation was based on a Black-Scholes model, using an expected volatility of 71.85 %, a risk-free rate of 3.89 %, a contractual term of 2.83 years, an expected dividend yield of 0 % and a share price at the issuance date of $ 4.30 . The pre-funded warrants and the common warrants are classified as current liabilities on the Condensed Consolidated Balance Sheet. The Company recorded other financial income (expenses), net during the three and nine months ended March 31, 2025, in the amount of $ 17 , in connection with the revaluation of these warrants to their fair value. 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 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” (“ASU 2023-07”): In November 2023, the Financial Accounting Standards Board (the “FASB”) issued ASU 2023-07. This guidance expands public entities’ segment disclosures primarily by requiring disclosures 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” (“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” (“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. 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 3: - COMMITMENTS AND CONTINGENCIES a. As of March 31, 2025, an amount of $ 1,193 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 (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 (“SOFR”) (before January 1, 2024, to the 12-month London Interbank Offered Rate (“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 March 31, 2025, 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 by Israel’s Ministry of Economy and Industry to support marketing and business development activities with respect to its advanced cell therapy products in the Chinese market, including Hong Kong. Such Smart Money grant was intended to be used to advance the Company’s product candidate towards marketing in the China-Hong Kong markets. As part of the Smart Money program, the Company also received support from Israel’s trade representatives in China and Hong Kong, as well as from experts appointed by the Smart Money program. Under the terms of the Smart Money grant, the Company will repay royalties of 5 % of the Company’s revenues generated in the region for a five-year period, beginning the year in which the Company will not be entitled to reimbursements of expenses under such Smart Money 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 the 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 (“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 (“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 began on March 1, 2025, for a term of five years until February 28, 2030. 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 (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. 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 4: - LOAN FROM THE EIB On April 30, 2020, the German Subsidiary entered the Finance Contract with the EIB, pursuant to which it may obtain a loan of up to € 50 million, subject to the achievement of certain milestones. Such loan is structured to be disbursed in three tranches over a 36-month period from the date of the agreement: the first tranche of € 20 million, the second tranche of € 18 million, and the third tranche of € 12 million. 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. The royalty amount ranges from 0.2 % to 2.3 % of the Company’s consolidated revenues and is pro-rated to the amount disbursed under the loan. As of March 31, 2025, Pluri had an accrued royalty in the amount of $ 9 . During June 2021, Pluri received the first tranche in an amount of € 20 million of the Finance Contract. The repayment of the received tranche is due on June 1, 2026 , and bears an annual interest of 4 %, to be paid with the principal of the Loan. As of March 31, 2025, the linked principal balance in the amount of $ 21,635 , and the interest accrued in the amount of $ 3,313 , are presented among long-term liabilities. Since the 36-month period of the Finance Contract has ended, 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. 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 (1) Reverse share split In March 2024, the Company’s Board of Directors, (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 into or exercisable into for common shares, as well as loss per share, have been retrospectively 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 (the “Sales Agreement”), with A.G.P./Alliance Global Partners (“A.G.P.”), which provides that upon the terms and subject to the conditions and limitations set forth 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 March 31, 2025, the Company sold 42,729 common shares under the Sales Agreement at an average price of $ 5.93 per share. (3) On January 23, 2025, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”), with a company wholly owned by Mr. Alejandro Weinstein (“Mr. Weinstein” or the “Investor”), relating to a private placement offering ( the “Offering”) of: (i) 1,383,948 common shares of the Company, (ii) pre-funded warrants (the “Pre-Funded Warrants”), to purchase up to 26,030 common shares, and (iii) warrants (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 (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 the 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, as well as customary indemnification rights and obligations of the parties. Under the terms of the Securities Purchase Agreement, the Company appointed Mr. Weinstein, to 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 $ 6,500 , net of $ 476 of issuance expenses ($ 444 of the issuance expenses were not paid in cash and were included in accrued expenses). An amount of $ 280 was allocated to the issuance of the Pre-Funded Warrants and the Common Warrants, while the remaining balance of $ 9,244 was allocated to the issuance of common shares. The Pre-Funded Warrants and the Common Warrants are classified as current liabilities on the Condensed Consolidated Balance Sheet, as they are subject to Shareholder Approval (see note 2d.) As of the issuance date, the fair values of the Pre-Funded Warrants and the Common Warrants were estimated at $ 115 and $ 165 , respectively. The fair value of the Pre-Funded Warrants was calculated based on the fair value of the share price of $ 4.40 and the fair value of the Common Warrants was based on a Black-Scholes model, using an expected volatility of 72.91 %, a risk-free rate of 4.19 %, a contractual term of 3 years, an expected dividend yield of 0 % and a share price at the issuance date of $ 4.40 . On April 25, 2025, subsequent to the balance sheet date, the Company entered into an amendment to the previously executed Securities Purchase Agreement (see note 7). 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.) (4) On January 23, 2025, the Company entered into a binding term sheet (the “Term Sheet”) for the purchase of certain shares representing approximately 71 % of the equity of Kokomodo Ltd. (on a fully diluted basis), an Israeli company, for an aggregate purchase price of $ 4,500 , payable in common shares of the Company. Following the execution of the Term Sheet, on March 13, 2025, the Company and the Subsidiary (collectively, the “Purchaser”), entered into a Share Purchase Agreement (the “Share Purchase Agreement”), effective as of March 12, 2025, with Chutzpah Holdings Limited, a company wholly owned by Mr. Weinstein and Plantae Bioscience Ltd., a corporation controlled by Mr. Weinstein (collectively, the “Seller”). The Share Purchase Agreement was entered into in accordance with the terms and conditions set forth in the Term Sheet for the consummation of the Kokomodo Transaction (as defined below), pursuant to which the Seller agreed to (i) sell to the Purchaser 400,000 ordinary shares and 175,000 preferred seed-1 shares, representing approximately 71% of the equity of Kokomodo (on a fully diluted basis) (the “Purchased Shares”), and (ii) transfer, assign and convey in favor of the Purchaser a convertible loan, pursuant to an assignment and assumption agreement (the “Assignment Agreement”), reflecting a principal aggregate amount of $ 500 (together with the Purchased Shares, the “Purchased Interests” and such transactions are referred to as the “Kokomodo Transaction”). In consideration for the sale, transfer and conveyance of the Purchased Interests, the Company agreed to pay the Seller an aggregate purchase price of $ 4,500 , payable in common shares of the Company set in an amount equal to 976,139 common shares (the “Consideration Shares”), which as of January 23, 2025, represented 12.14 % of the Company’s issued and outstanding share capital on a fully diluted basis after the deemed issuance of the Consideration Shares (but excluding any securities issuable in connection with a Securities Purchase Agreement entered into on January 23, 2025, between the Company and a company wholly owned beneficially by Mr. Weinstein). The Company also executed leak-out agreements (the “Leak-Out Agreement”), pursuant to which the Seller agreed to sell, dispose or otherwise transfer the Consideration Shares on the Nasdaq Capital Market or the Tel Aviv Stock Exchange, subject to certain limitations and restrictions for a period commencing on the date of closing of the Kokomodo Transaction and ending on the earlier of (i) 36 months, (ii) the time when the Seller holder holds less than 10 % of the outstanding shares of the Company or (iii) the occurrence of a breach of the Company’s commitment to register the Consideration Shares under the Securities Act of 1933, as amended. On April 28, 2025, subsequent to the balance sheet date, the Company announced the completion of the Kokomodo Transaction, subject to the issuance of the Consideration Shares (see note 7). (5) On February 3, 2025, the Company entered into an additional securities purchase agreement with Merchant Adventure Fund L.P., an existing investor, of the Company, relating to a private placement offering (the “Second Offering”), of (i) 759,219 of the Company’s common shares, and (ii) warrants to purchase up to 45,553 common shares, which are classified as equity. 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 Second Offering closed on March 19, 2025, and the gross proceeds to the Company were $ 3,500 . (6) Share options and restricted share units (“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 (the “Plans”), by Pluri Inc. and its Subsidiary is as follows: Nine months ended March 31, 2025 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 forfeited ( 6,251 ) 4.40 - - Share options outstanding at end of the period 11,224 $ 6.57 4.30 $ 19 Share options vested and exercisable at the end of the period 11,224 $ 6.57 4.30 $ 19 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.) b. Options to the Chief Executive Officer (“CEO”), and to Former Director: A summary of the share options granted to the CEO and to a former director under the Plans by Pluri Inc. and its Subsidiary is as follows: Nine months ended March 31, 2025 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 1.67 Share options vested and exercisable at the end of the period 240,291 $ 14.82 1.67 As of March 31, 2025, 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 nine-month period ended March 31, 2025: Nine months ended March 31, 2025 Number Unvested at the beginning of the period 353,134 Granted 601,541 Forfeited ( 27,532 ) Vested ( 202,884 ) Unvested at the end of the period 724,259 Expected to vest after the end of the period 668,660 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 nine-month period ended March 31, 2025, granted to employees and directors was $ 4.46 per share. Unamortized compensation expenses related to RSUs granted to employees and directors by Pluri Inc. and its Subsidiary are approximately $ 2,219 to be recognized by the end of February 2028. 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 5: - SHAREHOLDERS’ EQUITY (CONT.) d. RSUs and restricted shares (“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 nine-month period ended March 31, 2025: Nine months ended March 31, 2025 Number Unvested at the beginning of the period 4,802 Granted 34,762 Vested ( 21,180 ) Unvested at the end of the period 18,384 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 nine-month period ended March 31, 2025, granted to non-employee consultants was $ 4.74 per share. Unamortized compensation expenses related to RSUs, and RS granted consultants by Pluri Inc. and its Subsidiary are approximately $ 52 to be recognized by the end of February 2028. Compensation expenses related to RSUs granted by Pluri Inc. and its Subsidiary were recorded as follows: Nine months ended March 31, Three months ended March 31, 2025 2024 2025 2024 Research and development expenses $ 267 $ 172 $ 131 $ 110 General and administrative expenses 902 1,048 332 414 $ 1,169 $ 1,220 $ 463 $ 524 17 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.) (7) Nasdaq Deficiency Letter: On November 25, 2024, the Company received a deficiency letter (the “Nasdaq Letter”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”), notifying the Company that it was not in compliance with Nasdaq Listing Rule 5550(b)(1). This rule requires listed companies to maintain a minimum of $ 2,500 in shareholders’ equity for continued listing on The Nasdaq Capital Market (the “Shareholders’ Equity Requirement”). The Company was also not compliant with either of the alternative continued listing standards: a 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 (the “Compliance Plan”). Based on the Compliance Plan, Nasdaq granted the Company an extension until May 24, 2025, to regain compliance with the Shareholders’ Equity Requirement. On May 7, 2025, subsequent to the balance sheet date, the Company received a letter from Nasdaq, determining that the Company has regained compliance with Listing Rule 5550(b)(2), due to the fact that for the 10 consecutive business days from April 22, 2025 through May 6, 2025, the market value of the Company’s listed securities was $ 35,000 or greater, satisfying the requirement under Rule 5550(b)(2). Accordingly, the Company has regained compliance with the Shareholders’ Equity Requirement and remains in good standing on the Nasdaq Capital Market. NOTE 6: - TOTAL FINANCIAL INCOME (EXPENSES), NET Nine months ended March 31, Three months ended March 31, 2025 2024 2025 2024 Foreign currency translation differences, net $ ( 183 ) $ 59 $ ( 945 ) $ 127 Interest income on deposits and restricted bank deposits 832 1,099 260 307 Change in fair value of warrant and pre-funded warrant liabilities 17 - 17 - Income (expenses) from hedging derivatives 48 132 ( 55 ) ( 72 ) Other Financial income (expenses), net 714 1,290 ( 723 ) 362 EIB loan interest expenses ( 640 ) ( 648 ) ( 212 ) ( 218 ) $ 74 $ 642 $ ( 935 ) $ 144 18 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 April 25, 2025, the Company entered into an amendment to the Securities Purchase Agreement (see note 5(3)), pursuant to which the Company and the Investor agreed to exchange 976,139 of the common shares for additional Pre-Funded Warrants to purchase up to 976,139 common shares. On April 28, 2025, the Company announced the completion of the Kokomodo Transaction, acquiring approximately 71 % of the equity in Kokomodo, subject to the issuance of the Consideration Shares. 19