Pluri Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. PLURI INC. AND ITS SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS As of June 30, 2025 U.S. DOLLARS IN THOUSANDS INDEX Page Report of Independent Registered Public Accounting Firm (PCAOB ID 1309 ) F-2 Consolidated Balance Sheets F-4 Consolidated Statements of Operations F-6 Statements of Changes in Shareholders’ Equity (Deficit) F-7 Consolidated Statements of Cash Flows F-9 Notes to Consolidated Financial Statements F-10 F- 1 Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Pluri Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Pluri Inc. and its subsidiaries (the “Company”) as of June 30, 2025 and 2024, 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”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2025 and 2024, and the results of its operations and its cash flows for each of the years then ended in conformity with accounting principles generally accepted in the United States of America. Substantial Doubt about the Company’s Ability to Continue as a Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1c to the consolidated financial statements, the Company has incurred recurring losses and negative cash flows from operating activities and has an accumulated deficit as of June 30, 2025 and the loan received from European Investment Bank (“EIB”) is due on June 1, 2026. These circumstances raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1c. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. 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. 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. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in 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 The critical audit matters communicated below 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. 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Liquidity and capital resources As discussed in Note 1c to the consolidated financial statements, management believes that its cash and cash equivalents, restricted cash, and short-term bank deposits as of June 30, 2025, are not sufficient to meet its operating obligations for at least twelve months from the date of the issuance of these consolidated financial statements. The Company has been funded primarily through offerings of the Company’s securities and borrowing. 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 addition, the loan received from the European Investment Bank (“EIB”) is due on June 1, 2026. In case the Company is unable to obtain the required level of financing and to restructuring its EIB loan, 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 not have sufficient liquidity to fund its operations for at least twelve months. This in turn led to a high degree of auditor subjectivity and judgment to evaluate the audit evidence supporting the liquidity conclusions. F- 2 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 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 forecasts. Valuation of intangible assets - Kokomodo Transaction As discussed in Note 1d to the consolidated financial statements, on April 28, 2025, the Company completed the acquisition of Kokomodo Ltd. (“Kokomodo”) for a total consideration of $4,639 thousand. The acquisition was accounted for using the acquisition method of accounting. This resulted in $2,823 thousand of intangible assets recorded on the date of acquisition. Fair value is estimated using a multi-period excess earnings method under the income approach. Management’s cash flow projections for the intangible assets included significant judgments and assumptions relating to revenue growth rates and a discount rate . The principal considerations for our determination that performing procedures relating to the valuation of the intangible assets acquired in the Kokomodo transaction is a critical audit matter are (i) the significant judgment by management when determining the fair value estimate of the intangible assets; (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to the revenue growth rates and discount rate; and (iii) the audit effort involved using professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others, (i) understanding management’s process for determining the fair value estimate; (ii) evaluating the appropriateness of the multi-period excess earnings method under the income approach used by management; (iii) testing the completeness and accuracy of underlying data used in the model; and (iv) evaluating the reasonableness of the significant assumptions used by management related to the revenue growth rates and discount rate. Evaluating management’s assumptions related to the revenue growth rates and discount rate involved evaluating whether the assumptions used by management were reasonable considering the consistency with external market and industry data. Professionals with specialized skills and knowledge were used to assist in evaluating (i) the appropriateness of the multi-period excess earnings method and (ii) the reasonableness of the discount rate assumption. /s/ Kesselman & Kesselman Certified Public Accountants (Isr.) A member firm of PricewaterhouseCoopers International Limited Haifa, Israel September 17, 2025 We have served as the Company’s auditor since 2021. F- 3 PLURI INC. AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEETS U.S. Dollars in thousands (except share and per share data) June 30, Note 2025 2024 ASSETS CURRENT ASSETS: Cash and cash equivalents 2d $ 5,895 $ 6,783 Short-term bank deposits 2e 14,718 23,202 Restricted cash 2f 422 254 Customer receivables 236 34 Prepaid expenses and other current assets 3 824 834 Total current assets 22,095 31,107 LONG-TERM ASSETS: Restricted bank deposits 2g 879 634 Severance pay fund 610 470 Property and equipment, net 4 1,823 688 Intangible assets, net 5 2,793 - Goodwill 6 3,136 - Operating lease right-of-use asset 8 6,900 6,558 Other long-term assets 447 70 Total long-term assets 16,588 8,420 Total assets $ 38,683 $ 39,527 The accompanying notes are an integral part of the consolidated financial statements. F- 4 PLURI INC. AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEETS U.S. Dollars in thousands (except share and per share data) June 30, Note 2025 2024 LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) CURRENT LIABILITIES Trade payables $ 866 $ 964 Accrued expenses 1,178 1,223 Operating lease liability 8 659 559 Accrued vacation and recuperation 859 702 Advances from customers 2h 148 43 Loan from the European Investment Bank, or EIB 9 27,289 - Other accounts payable 7 1,329 963 Total current liabilities 32,328 4,454 LONG-TERM LIABILITIES Accrued severance pay 703 605 Operating lease liability 8 6,102 5,026 Deferred tax liabilities 15 415 - Loan from EIB 9 - 24,027 Total long-term liabilities 7,220 29,658 COMMITMENTS AND CONTINGENCIES 10 SHAREHOLDERS’ EQUITY (DEFICIT) Share capital: 11 Common shares, $ 0.00001 par value per share: authorized: 37,500,000 as of June 30, 2025 and 2024; issued and outstanding: 7,893,767 and 5,408,212 shares as of June 30, 2025 and 2024, respectively * * Additional paid-in capital 436,213 420,568 Accumulated deficit ( 443,055 ) ( 420,472 ) Total shareholders’ (deficit) equity ( 6,842 ) 96 Non-controlling interests 5,977 5,319 Total equity (deficit) ( 865 ) 5,415 Total liabilities and equity $ 38,683 $ 39,527 (*) Less than $1 The accompanying notes are an integral part of the consolidated financial statements. F- 5 PLURI INC. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS U.S. Dollars in thousands (except share and per share data) Year ended June 30, Note 2025 2024 Revenues 2h $ 1,336 $ 326 Cost of revenues ( 682 ) ( 4 ) Gross profit 654 322 Operating expenses: Research and development expenses $ ( 14,004 ) $ ( 13,780 ) Less: participation by the NIAID, the IIA and Horizon Europe (defined below) 1,153 1,334 Research and development expenses, net 2n ( 12,851 ) ( 12,446 ) General and administrative expenses ( 9,979 ) ( 10,034 ) Operating loss ( 22,176 ) ( 22,158 ) Financial income (expenses), net ( 206 ) 1,680 Interest expense ( 873 ) ( 866 ) Total financial income (expenses), net 12 ( 1,079 ) 814 Loss before taxes $ ( 23,255 ) $ ( 21,344 ) Tax benefit 5 - Net loss $ ( 23,250 ) $ ( 21,344 ) Net loss attributed to non-controlling interests ( 667 ) ( 456 ) Net loss attributed to shareholders ( 22,583 ) ( 20,888 ) Loss per share: Basic and diluted loss per share $ ( 3.56 ) $ ( 3.99 ) Weighted average number of shares used in computing basic and diluted loss per share 6,336,993 5,240,249 The accompanying notes are an integral part of the consolidated financial statements. F- 6 PLURI INC. AND ITS SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY 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 (note 11(2)) 141,960 (* ) 1,973 - 1,973 645 2,618 Issuance of common shares under a sales agreement with A.G.P./Alliance Global Partners, or A.G.P., net of issuance costs of $ 162 (see note 11(1)) 42,729 (* ) 91 - 91 - 91 Issuance of Ever After Foods’ (defined below) shares to non-controlling interests (note 11(1) - - 5,565 - 5,565 3,185 8,750 Round-up of shares due to reverse share split effectuated on April 1, 2024 (see note 11(1)) 67,836 (* ) (* ) - - - - Net loss - - - ( 20,888 ) ( 20,888 ) ( 456 ) ( 21,344 ) Balance as of June 30, 2024 5,408,212 $ (* ) $ 420,568 $ ( 420,472 ) $ 96 $ 5,319 $ 5,415 (*) Less than $1 The accompanying notes are an integral part of the consolidated financial statements. F- 7 PLURI INC. AND ITS SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT) U.S. Dollars in thousands (except share and per share data) Shareholders’ Equity (Deficit) Common Shares Additional Paid-in Accumulated Total Shareholders’ Equity Non- controlling Total Shares Amount Capital Deficit (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 (note 11(2)) 342,388 (*) 1,982 - 1,982 161 2,143 Issuance of common shares and warrants related to February 2025 offering, net of issuance costs of $ 420 (see note 11(1)) 1,167,028 (*) 3,873 - 3,873 - 3,873 Common Warrants and Pre-Funded Warrants (defined below) reclassification to equity - - 5,151 - 5,151 - 5,151 Issuance of common shares related to Kokomodo Transaction (defined below), net of issuance costs of $ 47 (note 1d) 976,139 (*) 4,639 - 4,639 1,164 5,803 Net loss - - - ( 22,583 ) ( 22,583 ) ( 667 ) ( 23,250 ) Balance as of June 30, 2025 7,893,767 $ (*) $ 436,213 $ ( 443,055 ) $ ( 6,842 ) $ 5,977 $ ( 865 ) (*) Less than $1 The accompanying notes are an integral part of the consolidated financial statements. F- 8 PLURI INC. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. Dollars in thousands (except share and per share amounts) Year ended June 30 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 23,250 ) $ ( 21,344 ) Adjustments to reconcile loss to net cash used in operating activities: Depreciation and amortization 316 253 Share-based compensation to employees, directors and non-employee consultants 2,143 2,618 Decrease in fair value of warrant and pre-funded warrant liability ( 556 ) - Decrease (increase) in customer receivable ( 202 ) 76 Decrease (increase) in prepaid expenses and other current assets and other long-term assets 1 ( 44 ) Decrease in trade payables ( 235 ) ( 778 ) Increase (decrease) in other accounts payable, accrued vacation and recuperation, deferred tax liabilities and accrued expenses 377 ( 287 ) Increase in advances from customers 105 36 Increase in operating lease right-of-use asset and liability, net 834 285 Decrease (increase) in interest receivable on short-term deposits 91 438 Effect of exchange rate changes on cash, cash equivalents, deposits and restricted cash ( 1,055 ) 253 Increase in short-term interest payable and exchange rate differences related to the EIB loan, net 3,262 497 Decrease in accrued severance pay, net ( 42 ) ( 24 ) Net cash used for operating activities $ ( 18,211 ) $ ( 18,021 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment $ ( 1,618 ) $ ( 323 ) Proceeds from short-term deposits, net 9,271 10,907 Cash related to Kokomodo Transaction (defined below) 373 - Net cash provided by investing activities $ 8,026 $ 10,584 CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common shares, pre-funded warrants and warrants, net of issuance costs $ 9,580 $ 91 Issuance costs related to issuance of shares in Kokomodo Transaction (defined below) ( 47 ) - Issuance of Ever After Foods’ shares to non-controlling interests - 8,750 Net cash provided by financing activities $ 9,533 $ 8,841 EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS AND RESTRICTED CASH 177 11 Increase (decrease) in cash, cash equivalents, restricted cash and restricted bank deposits ( 475 ) 1,415 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 $ 7,196 $ 7,671 Reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheets: Cash and cash equivalents 5,895 6,783 Restricted cash 422 254 Long-term restricted bank deposits 879 634 Total cash, cash equivalents, restricted cash and restricted bank deposits $ 7,196 $ 7,671 (a) Supplemental disclosure of non-cash activities: Purchase of property and equipment on credit $ 90 $ 4 Kokomodo Transaction (defined below) $ 4,686 - Lease liabilities arising from obtaining right-of-use assets $ 1,080 $ 82 The accompanying notes are an integral part of the consolidated financial statements. F- 9 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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, or the German Subsidiary, incorporated under the laws of Germany. In January 2022, the Subsidiary established another subsidiary, Ever After Foods Ltd., hereinafter referred to as Ever After Foods, which is incorporated under the laws of the State of Israel. This establishment of Ever After Foods 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., herein referred to as Coffeesai, incorporated under the laws of Israel, with the purpose of developing cultivated coffee. In April 2025, Pluri and the Subsidiary completed the acquisition of 79 % of the equity in, Kokomodo Ltd. (formerly known as Nibble Cacao Ltd.), hereinafter referred to as Kokomodo, which was incorporated under the laws of the State of Israel in January 2024, with the purpose of developing cultivated cacao production. Pluri, together with the Subsidiary, the German Subsidiary, Ever After Foods, Coffeesai and Kokomodo are herein referred to as the Company or Pluri. The Subsidiary, the German Subsidiary, Ever After Foods, Coffeesai and Kokomodo are collectively herein 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 cell manufacturing facility operated in accordance with Good Manufacturing Practice, or GMP, standards, currently on a self-declared basis. Pluri currently applies its this technology across the fields of regenerative medicine, food technology, and agricultural technology, or AgTech. In addition, Pluri has launched a Contract Development and Manufacturing Organization, or 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. The Company has incurred an accumulated deficit of approximately $ 443,055 and incurred recurring operating losses and negative cash flows from operating activities since inception. As of June 30, 2025, the Company’s total shareholders’ deficit amounted to $ 6,842 . During the year ended June 30, 2025, the Company incurred losses of $ 23,250 and its negative cash flow from operating activities was $ 18,211 . The Company will be required to identify additional liquidity resources in the near term in order to support the commercialization of its products and maintain its research and development activities. As of June 30, 2025, the Company’s cash balances (cash and cash equivalents, short-term bank deposits, restricted cash and restricted bank deposits) totaled to $ 21,914 . The Company is addressing its liquidity issues by implementing initiatives to allow the continuation of its activities. The Company’s current operating plan includes various assumptions concerning the level and timing of cash outflows for operating activities and capital expenditures. The Company’s ability to successfully carry out its business plan is primarily dependent upon its ability to (1) obtain sufficient additional capital, (2) enter licensing or other commercial, partnerships and collaboration agreements, (3) provide CDMO services to clients (4) finalize discussions with the EIB regarding loan restructuring, as detailed below, and (5) receive other sources of funding, including non-dilutive sources such as grants. There is no assurance, however, that the Company will be successful in obtaining an adequate level of financing needed for the long-term development and commercialization of its products, or any financing at all. In the case the Company is unable to obtain the required level of financing, operations may need to be scaled down or discontinued. F- 10 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 1: - GENERAL (CONT.) According to management estimates, the Company does not have sufficient resources to meet its operating obligations for at least twelve months from the issuance date of these consolidated financial statements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The audited consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets or liabilities that might be necessary should the Company be unable to continue as a going concern. On April 30, 2020, the German Subsidiary entered 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 EIB 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 engaged in advanced discussions with the EIB regarding a potential restructuring of the EIB Loan terms which are currently focused on the new terms of the EIB Loan, including an extension of the current maturity date of the EIB Loan. However, there is no certainty as to the outcome of these discussions. As of June 30, 2025, the linked principal and interest accrued balance was $ 27,289 and is presented among short-term liabilities (see note 9). d. Kokomodo Transaction On January 23, 2025, the Company entered into a binding term sheet, or the Term Sheet for the purchase of certain shares representing approximately 79 % of the equity of Kokomodo, an Israeli company, for an aggregate purchase price of $ 4,500 (on Term Sheet date), payable in common shares of the Company set in an amount equal to 976,139 common shares, or the Consideration Shares. Following the execution of the Term Sheet, on March 13, 2025, Pluri Inc. and the Subsidiary, or collectively, the Purchaser, entered into a Share Purchase Agreement, or the Share Purchase Agreement, effective as of March 12, 2025, with Chutzpah Holdings Limited, or Chutzpah, a company wholly owned by Mr. Alejandro Weinstein and Plantae Bioscience Ltd., or Plantae, a corporation controlled by Mr. Weinstein, or 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 79 % of the equity of Kokomodo, or the Purchased Shares, and (ii) transfer, assign and convey in favor of the Purchaser a convertible loan, pursuant to an assignment and assumption agreement, reflecting a principal aggregate amount of $ 500 which together with the Purchased Shares, the Purchased Interests and such transactions are herein referred to as the “Kokomodo Transaction”. As of January 23, 2025, the Consideration Shares 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 (defined below) entered into on January 23, 2025, between the Company and a company wholly owned beneficially by Mr. Weinstein. On April 28, 2025, the Company announced the completion of the Kokomodo Transaction, acquiring approximately 79 % of the equity in Kokomodo, for an aggregate purchase price of $ 4,639 , net of issuance costs of $ 47 , payable in 976,139 common shares of the Company. As a result, the Company’s capital consideration is $ 5,803 , of which $ 1,164 is attributed to non-controlling interests. The Company accounted for the transaction in accordance with Accounting Standard Codification, or ASC, 805, “Business Combinations”. F- 11 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 1: - GENERAL (CONT.) The financial results of Kokomodo Transaction are included in the Company’s consolidated financial statements from the relevant acquisition date. The results from the acquisition individually and in the aggregate were not material to the Company’s consolidated financial statements. Pro forma financial information has not been presented because the acquisition had an immaterial impact on the Company’s consolidated statement of operations. The Company preliminarily recorded $ 2,823 of identifiable intangible assets based on their estimated fair values, and $ 3,136 of residual goodwill, from the acquisition. The intangible assets acquired are divided into two identified assets: (1) cocoa cell growth and application platform, and (2) the ability to develop additional applications. The estimated useful life of the cocoa cell growth and application platform and the ability to develop additional applications is fifteen years and six years , respectively (see note 5). The following table summarizes the purchase price allocation to the fair value of the assets acquired and liabilities assumed as of April 28,2025: Cash and Cash equivalents $ 373 Other current assets 13 Property and equipment, net 72 Intangible assets 2,823 Total assets acquired $ 3,281 Trade payables $ 51 Other accounts payable 96 Deferred tax liabilities 420 Total liabilities assumed $ 567 Total assets acquired and liabilities assumed, net 2,714 Goodwill 3,136 Non-controlling interest ( 1,164 ) Total purchase price (*) $ 4,686 (*) Issuance costs related to Kokomodo Transaction amounted to $ 47 . Following are details of the purchase consideration allocated to acquired intangible assets: Fair value Amortization period (Years) Cocoa cell growth and application platform $ 2,685 15 Ability to develop additional applications (*) 138 6 Total intangible assets $ 2,823 (*) Not yet amortized. F- 12 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The consolidated financial statements have been prepared in accordance with the United States Generally Accepted Accounting Principles, or U.S. GAAP. a. 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. Estimates are primarily used for, but not limited to, percentage of completion in revenue recognition, allocation of the purchase consideration in the connection with Kokomodo Transaction, impairment of goodwill and intangible assets, valuation of share-based compensation and forfeiture rate, valuation of warrants and determining the valuation and terms of leases. These estimates, judgments and assumptions can affect the amounts reported in the financial statements and accompanying notes, and actual results could differ from those estimates. b. Functional currency The U.S. dollar is the primary currency of the economic environment in which the Company and the Subsidiaries operate. Thus, the U.S. dollar is the Company’s functional and reporting currency. Accordingly, non-dollar denominated transactions and balances have been re-measured into the functional currency in accordance with 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. c. Principles of consolidation The consolidated financial statements include the accounts of the Company and its Subsidiaries. NCIs in subsidiaries represent the equity in Ever After Foods and Kokomodo not attributable, directly or indirectly, to the Company. NCIs are presented in equity separately from the equity attributable to the shareholders of the Company. Profit or loss are attributed to the Company and to NCIs. 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 NCIs as transactions with its equity owners. Accordingly, for sales or purchases of shares to or from non-controlling interests, the difference between any consideration received or paid and the portion sold or acquired of the carrying value of the net assets of the subsidiary is recorded in equity. Intercompany transactions and balances have been eliminated upon consolidation. d. Cash and cash equivalents Cash equivalents are short-term highly liquid investments that are readily convertible to cash with maturities of three months or less at the date acquired. e. Short-term bank deposit Bank deposits with original maturities of more than three months but less than one year are presented as part of short-term bank deposit. Deposits are presented at their cost which approximates market values including accrued interest. Interest on deposits is recorded as financial income. F- 13 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES (CONT.) f. Restricted cash Restricted cash is cash used to secure the Company’s credit line and derivative and hedging transactions. The restricted cash is presented at cost which approximates market values including accrued interest. g. Long-term restricted bank deposits Long-term restricted bank deposits with maturities of more than one year used to secure operating lease agreement are presented at cost which approximates market values including accrued interest. h. Revenue Recognition The Company recognizes revenue in accordance with ASC 606, “Revenue from Contracts with Customers”, and all the related amendments, when a performance obligation is a promise to provide a distinct service or a series of distinct services. Services that are not distinct are bundled with other services in the contract until a bundle of services that are distinct are created. A service promised to a customer is distinct if the customer can benefit from the service either on its own or together with other resources that are readily available to the customer and the entity’s promise to transfer the service to the customer is separately identifiable from other promises in the contract. Revenues are recognized when the control of the performance of the obligations are transferred to the customer, in an amount that reflects the consideration to which the Company expects to be entitled, excluding sales taxes. The Company determines revenue recognition through the following five 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; and ● recognition of revenue when, or as, the Company satisfies a performance obligation. The Company derives its revenues mainly from services provided to CDMO clients and revenues related to a POC, collaboration with a leading international agriculture corporation in the AgTech field. As such, the Company contracts with its customers, may contain the following main performance obligations: (i) training cell manufacturing staff for GMP, and of non-GMP; (ii) quality assurance and quality control tests; (iii) performing engineering runs and clinical batches; (iv) protocol development; and (v) evaluation and analysis of results. The Company evaluates each performance obligation to determine if it is satisfied at a point in time or over time. For contracts that contain multiple performance obligations, the Company allocates the transaction price to each performance obligation based on the relative standalone selling price, or SSP, for each performance obligation. The Company uses judgment in determining the SSP for its performance obligations. To determine SSP, the Company maximizes the use of observable standalone sales and observable data, where available. Revenue from services provided is recognized over time when the control of the services promised to a customer is transferred to the customer. The Company recognizes revenue from such contracts over time, using the percentage of completion accounting method. The Company recognizes revenue as the work is performed, based on a ratio between labor effort incurred to date compared to the total estimated labor effort for the contract. Incurred labor effort represents work performed that corresponds with, and thereby best depicts, the transfer of control of the services to the customer. Determining the projected labor costs requires understanding the project-specific circumstances, including the specific terms and conditions of each contract, changes to the project schedule, and complexity of the project. Revenue is recognized net of any taxes collected from customers which are subsequently remitted to governmental entities (e.g., sales tax and other indirect taxes). Amounts are billed as work progresses in accordance with agreed-upon contractual terms, or upon achievement of contractual milestones. The Company applies the practical expedient and does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised services to the customer will be one year or less. F- 14 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES (CONT.) For each contract which includes prepayment terms, the Company evaluates whether the contract includes a significant financing component. The Company’s contracts with customer prepayment terms do not include a significant financing component because the primary purpose of such contracts is not to receive financing from the customers. Advances from customers The Company records advances from customers when cash payments from customers are received in advance of the Company’s performance obligations to provide services. As of June 30, 2025 and 2024, the Company received upfront payments of a total of $ 148 and $ 43 , respectively, from customers which are expected to be recognized as revenue once the service has been performed. The Company expects to satisfy the majority of its performance obligations associated with advances from customers within one year or less. The Company elected the short-term contract practical expedient for the remaining performance obligations, as the Company’s contracts have an original expected duration of less than one year. During the year ended June 30, 2025 and 2024, the Company recognized $ 43 and $ 7 that were included in the advances from customers balance on June 30, 2024 and 2023, respectively. i. Cost of revenues Cost of revenues is comprised of manufacturing costs related to the Company’s CDMO and AgTech businesses, which primarily consist of materials, personnel-related and overhead costs. j. Property and equipment Property and equipment are stated at cost, net of accumulated depreciation and impairments. Depreciation is calculated by the straight-line method over the estimated useful lives of the assets, at the following annual rates: % Laboratory equipment 10 - 40 Computers and peripheral equipment 33 Office furniture and equipment 15 Leasehold improvements 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. k. Impairment of long-lived assets The Company’s long-lived assets are reviewed for impairment in accordance with ASC 360, “Property, Plant and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset (asset group) may not be recoverable. The recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets (asset group) to the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. During fiscal years 2025 and 2024, no impairment losses were recorded. F- 15 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES (CONT.) l. Goodwill and intangible assets Goodwill represents the excess of the purchase price over the fair value of net identifiable assets acquired. Under ASC 350, “Intangible - Goodwill and Other”, or ASC 350, goodwill is not amortized but rather is subject to an annual impairment test. ASC 350 allows an entity to first assess qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. If the qualitative assessment does not result in a more likely than not indication of impairment, no further impairment testing is required. If the Company elects not to use this option, or if the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the Company prepares a quantitative analysis to determine whether the carrying value of a reporting unit exceeds its estimated fair value. If the carrying value of a reporting unit would exceed its estimated fair value, the Company would have recognized an impairment of goodwill for the amount of this excess (see notes 5 and 6). m. Share-based compensation The Company accounts for share-based compensation in accordance with ASC 718, “Compensation-Share Compensation”, or ASC 718, which 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’, officers’ and consultants share-based payment awards classified as equity awards, such as restricted share units, or RSUs, and restricted shares, or RS, using the grant-date fair value. 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 cost for an award with service conditions that has a graded vesting schedule using the accelerated method based on the multiple-option award approach. The fair value of service-based share option grants is estimated on the grant date using a Black-Scholes option-pricing model and compensation expenses related to share options, RS and RSUs grants are recognized on a graded vesting schedule over the vesting period. The expected term represents the period that service-based share option grants are expected to be outstanding. When establishing the expected term assumption, the Company utilizes the simplified method. n. Research and development expenses, royalty bearing grants and non-royalty bearing grants Research and development expenses include costs directly attributable to the conduct of research and development programs, including the cost of salaries, taxes and other employee benefits, share-based compensation expenses, subcontractors and materials used for research and development activities, including clinical trials, manufacturing costs and professional services. All costs associated with research and development are expensed as incurred. Grants received from the Israel Innovation 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 10b). During fiscal years 2025 and 2024, the Company also received (in cash) non-royalty bearing grants from the European Union research and development consortiums, under 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 and Placental Mucosal Associated Invariant T, or MAIT, in the aggregate amount of approximately $ 1,613 and $ 1,113 , for the years ended June 30, 2025 and 2024, respectively. The 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. F- 16 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES (CONT.) Research and development expenses, net for the years ended June 30, 2025 and 2024 include participation in research and development expenses in the amount of approximately $ 1,153 and $ 1,334 , respectively. o. Loss per share Basic and diluted loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the year, including equity classified pre-funded warrants and unexercised vested options with no par value exercise price. All outstanding share options, unvested RSUs, RS, pre-funded warrants 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. p. Income taxes 1. Deferred taxes Income taxes are computed using the asset and liability method. Under ASC 740, “Income Taxes”, or ASC 740, the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is recognized to the extent that it is more likely than not that the deferred taxes will not be realized in the foreseeable future. 2. Uncertainty in income taxes The Company accounts for uncertain tax positions in accordance with the provisions of 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. q. Concentration of credit risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, restricted cash, short-term bank deposits, long-term restricted bank deposits and customers receivables. The majority of the Company’s financial instruments listed above 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. Deposits in the United States may be in excess of insured limits and are not insured in other jurisdictions. Generally, these deposits may be redeemed upon demand and therefore bear minimal risk. The Company invests its surplus cash in cash deposits in financial institutions and has established guidelines, approved by the Company’s Investment Committee, relating to diversification and maturities to maintain safety and liquidity of the investments. F- 17 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES (CONT.) r. Severance pay The majority of the Company’s 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 been paid. For the Company’s Chief Executive Officer , or the CEO, whose agreement is not subject to Section 14 of the Severance Pay Law, the 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. The deposited funds may be withdrawn only upon the fulfillment of the obligation pursuant to the Severance Pay Law or labor agreements. The value of the deposited funds is 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, 2025 and 2024 were $ 663 and $ 632 , respectively. s. Derivative financial instruments The Company accounts for derivatives and hedging based on ASC 815, “Derivatives and hedging”, as amended and related interpretations, or ASC 815, which 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 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 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 (expenses), net”. The Company measured the fair value of the contracts in accordance with ASC 820, “Fair Value Measurement”, or ASC 820. Foreign currency derivative contracts are classified within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments. The net income (losses) from derivatives instruments recognized in “Financial income (expenses), net” during the years ended June 30, 2025 and 2024 were $ 251 and $ 148 , respectively (see note 12). F- 18 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES (CONT.) t. Leases Operating leases are included in operating 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 twelve months are not recorded on the balance sheets. Lease terms will include options to extend or terminate the lease when it is reasonably certain that the Company will either exercise or not exercise the option to renew or terminate the lease. u. 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 fair value because of their generally short-term maturities. The Company measures its derivative instruments at fair value under 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 (see note 9). The Company measures its liability for Pre-Funded Warrants and Common Warrants (defined below) at fair value using Level 3 unobservable inputs, in accordance with the fair value hierarchy defined in ASC 820 (see note 2v and 11). F- 19 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES (CONT.) v. Common Warrants and Pre-funded Warrants The Company accounts for warrants and pre-funded warrants based on ASC 480, “Distinguishing Liabilities from Equity”, or ASC 480, as either equity-classified or liability-classified instruments based on an assessment of the warrants and pre-funded warrant’s specific terms and applicable authoritative guidance. The assessment considers whether the warrants and pre-funded warrants are freestanding financial instruments, meet the definition of a liability under ASC 480, and meet all of the requirements for equity classification, including whether the warrants and pre-funded warrants are indexed to the Company’s own common stock and whether the warrants and pre-funded warrants holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among all other classification conditions pursuant to ASC 815-40. This assessment is conducted at the time of the warrants and pre-funded warrants issuance and in any change in circumstances that could affect the classification. Warrants and pre-funded warrants that meet all the criteria for equity classification, are required to be recorded as a component of additional paid-in capital. Warrants that do not meet all the criteria for equity classification, are required to be recorded as liabilities at their initial fair value on the date of issuance and remeasured to fair value at each balance sheet date thereafter. During year ended June 30, 2025, the liability-classified Common Warrants and Pre-Funded Warrants (defined below) were recorded under liabilities. As of June 30, 2025, these instruments were reclassified to equity, following the removal of the 19.99 % beneficial ownership limitation upon obtaining the Shareholder Approval (defined below). The Shareholder Approval was obtained at the Company’s annual meeting of shareholders held on June 30, 2025. Changes in the estimated fair value of the Common Warrants and Pre-Funded Warrants are recognized in “Financial expenses, net” in the consolidated statements of operations (see also note 11). w. New Accounting Pronouncements i. Recently adopted accounting pronouncements ASU No. 2023-07 - “Segment Reporting–Improvements to Reportable Segments Disclosures (Topic 280)”, or ASU 2023-07: In November 2023, the Financial Accounting Standards Board, or FASB issued ASU 2023-07, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in this ASU (1) require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker, or the CODM, and included within each reported measure of segment profit or loss; (2) require that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition; (3) require that a public entity provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Topic 280 in interim periods; (4) clarify that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures; and (5) require that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure or measures of segment profit or loss in assessing segment performance and deciding how to allocate resources. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and should be applied retrospectively to all periods presented. The Company’s CODM, the CEO, reviews the Company’s operating results on an aggregate basis and manages the Company’s operations as a single operating segment. The CODM uses consolidated net loss to assets performance and utilizes this information in allocating resources and in assessing performance by monitoring budget versus actual results (see also note 13). F- 20 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 2: - SIGNIFICANT ACCOUNTING POLICIES (CONT.) ii. Recently issued accounting pronouncements, not yet adopted 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, 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 is 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. ASU No. 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 ASU 2024-03, 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. ASU No. 2025-05- “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets”, or ASU 2025-05: In July 2025, the FASB issued ASU 2025-05. This amendment introduces a practical expedient for the application of the current expected credit loss model to current accounts receivable and contract assets. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements disclosures. x. Comprehensive loss For all periods presented, net loss is the same as comprehensive loss as there are no comprehensive income items. y. Loss contingencies The Company records accruals for loss contingencies to the extent that it concludes their occurrence is probable and that the related liabilities are estimable. As of June 30, 2025 and 2024, the Company has not recorded any accruals in this regard. NOTE 3: - PREPAID EXPENSES AND OTHER CURRENT ASSETS June 30, 2025 2024 Prepaid expenses $ 235 $ 222 Value Added Tax, or VAT, receivable 290 135 Accounts receivable from NIAID 84 210 Accounts receivable from the IIA 104 257 Derivative financial instruments 103 8 Other receivables 8 2 Total $ 824 $ 834 F- 21 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 4: - PROPERTY AND EQUIPMENT, NET June 30, 2025 2024 Cost: Laboratory equipment $ 8,126 $ 7,166 Computers and peripheral equipment 1,800 1,775 Office furniture and equipment 711 682 Leasehold improvements 9,172 8,765 Total cost 19,809 18,388 Accumulated depreciation: Laboratory equipment 6,794 6,615 Computers and peripheral equipment 1,725 1,638 Office furniture and equipment 684 682 Leasehold improvements 8,783 8,765 Total accumulated depreciation 17,986 17,700 Property and equipment, net $ 1,823 $ 688 Depreciation expenses amounted to $ 286 and $ 253 for the years ended June 30, 2025 and 2024, respectively. During the year ended June 30, 2025, the Company made an advance payment in the amount of $ 420 related to property, plant and equipment, which was classified as other long-term assets as of the balance sheet date. All of the Company’s property and equipment is located in Israel. NOTE 5: - INTANGIBLE ASSETS, NET June 30, 2025 Cost: Cocoa cell growth and application platform $ 2,685 Ability to develop additional applications 138 Total cost 2,823 Accumulated amortization: Cocoa cell growth and application platform 30 Ability to develop additional applications - Total accumulated amortization 30 Intangible assets, net $ 2,793 Amortization expenses amounted to $ 30 for the year ended June 30, 2025 (see also note 1d). During fiscal year 2025, no impairment losses were recorded. F- 22 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 6: - GOODWILL The Company preliminarily recorded goodwill in the amount of $ 3,136 , from Kokomodo Transaction. The Company conducts its annual impairment test of goodwill once a year. The Company determined that no adjustment to the carrying value of goodwill of its reporting unit was required. As of June 30, 2025, the Company determined that no events occurred, or circumstances changed from April 28, 2025, through June 30, 2025, that would more likely than not reduce the fair value of the reporting unit below it carrying amount. NOTE 7: - OTHER ACCOUNTS PAYABLE June 30, 2025 2024 Accrued payroll $ 581 $ 467 Payroll institutions 541 415 Grants received in advance $ 193 $ 81 Other accounts payable 14 - Total $ 1,329 $ 963 NOTE 8: - LEASES Towards the termination of the previous facility operating lease agreement, the Company signed, in December 2021, an addendum to its facility operating lease agreement with the lessor, which extended the lease period to December 2026. 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 (or $ 80 ), 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 2028. 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 or to extend the term of the lease for an additional period of five years, or the Extension Option. The average monthly lease payment, including the Extension Option, is approximately NIS 55,000 (or $ 15 ), 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. Below is a summary of the Company’s operating ROU assets and operating lease liabilities: June 30, 2025 2024 Operating ROU assets $ 6,900 $ 6,558 Operating lease liabilities, current 659 559 Operating lease liabilities long-term 6,102 5,026 Total operating lease liabilities $ 6,761 $ 5,585 F- 23 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 8: - LEASES (CONT.) Maturities of operating lease liabilities as of June 30, 2025 are as follows: June 30, 2025 2026 $ 1,389 2027 1,385 2028 1,428 2029 1,349 2030 and thereafter 4,084 Total undiscounted lease payments $ 9,635 Less: interest ( 2,874 ) Present value of lease liabilities $ 6,761 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, 2025 and 2024 are as follows: Year ended June 30, 2025 2024 Components of lease expense Fixed payments and variable payments that depend on an index or rate $ 1,321 $ 1,250 Sublease income $ 30 $ 50 Supplemental cash flow information Cash paid for amounts included in the measurement of lease liabilities $ 1,224 $ 1,178 As of June 30, 2025, the weighted average remaining lease term is 6.4 years, and the weighted average discount rate is 9 %. As of June 30, 2024, the weighted average remaining lease term is 7.4 years, and the weighted average discount rate is 9 %. The discount rate was determined based on the estimated collateralized borrowing rate of the Company, adjusted to the specific lease term and location of each lease. For vehicles, the lease period is usually 3 years. As of June 30, 2025, the remaining lease term for Ever After Foods is 9.7 years, and the discount rate is 14 %. The discount rate was determined based on the estimated collateralized borrowing rate of the Company, adjusted to the specific lease term and location of each lease. F- 24 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 9: - 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 EIB 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 EIB 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 amounts range 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 June 30, 2025 and 2024, the Company had an accrued royalty in the amount of $ 12 and $ 3 , respectively. 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 EIB Loan. As of June 30, 2025, the linked principal balance in the amount of $ 23,459 and the interest accrued in the amount of $ 3,830 are presented among short-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. The Company is engaged in advanced discussions with the EIB regarding a potential restructuring of the terms of the EIB Loan terms, which are currently focused on the new terms of the EIB Loan, including an extension of the current maturity date of the EIB Loan. However, there is no certainty as to the outcome of these discussions. F- 25 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 10: - COMMITMENTS AND CONTINGENCIES a. As of June 30, 2025, an amount of $ 1,301 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 June 30, 2025, the Company’s contingent liability in respect to royalties to the IIA amounted to $ 28,055 , not including SOFR (before January 1, 2024, LIBOR) 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, 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. As to potential royalties to the EIB, see note 9. F- 26 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 11: - SHAREHOLDERS’ EQUITY (1) a) 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. 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. b) On February 13, 2024 the Company entered into an At-The-Market Sales Agreement, or the Sales Agreement, with 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 June 30, 2025, the Company sold 42,729 common shares under the Sales Agreement at an average price of $ 5.93 per share. c) On June 12, 2024, Ever After Foods entered into a share purchase agreement with the Subsidiary, Tnuva and other investors, pursuant to which 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 such 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 such offering, the Company continued to own approximately 69 % of Ever After Foods’ shares. d) On January 23, 2025, the Company entered into a Securities Purchase Agreement, or the Securities Purchase Agreement, with a company wholly owned by Mr. 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 was $ 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, and are exercisable at any time following the receipt of Shareholder Approval until three years following the date of the receipt of the Shareholder Approval. The Shareholder Approval was obtained at the Company’s annual meeting of shareholders held on June 30, 2025. The Pre-Funded Warrants and Common Warrants contain customary anti-dilution provisions and were subject to a 19.99 % beneficial ownership limitation until the Shareholder Approval was 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. F- 27 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 11: - SHAREHOLDERS’ EQUITY (CONT.) The Offering closed on February 5, 2025, and the gross proceeds to the Company were $ 6,500 , net of $ 420 of issuance expenses. The Pre-Funded Warrants and the Common Warrants were classified as liabilities on the issuance date, as they were subject to Shareholder Approval (see note 2v). 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, the Company entered into an amendment to the Securities Purchase Agreement, 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, or the Additional Pre-Funded Warrants. The Additional Pre-Funded Warrants classified as liabilities on the amendment date, as they were subject to Shareholder Approval (see note 2v). As of April 25, 2025, the amendment to the Securities Purchase Agreement date, the fair values of the Additional Pre-Funded Warrants were estimated at $ 5,427 . The fair value of the Additional Pre-Funded Warrants was calculated based on the fair value of the share price of $ 5.56 . As of June 30, 2025, the fair values of the Pre-Funded Warrants, the Additional Pre-Funded Warrants and the Common Warrants were estimated at $ 129 , $ 4,832 and $ 190 , respectively. The fair value of the Pre-Funded Warrants and the Additional Pre-Funded Warrants were calculated based on the fair value of the share price of $ 4.95 and the fair value of the Common Warrants was based on a Black-Scholes model, using an expected volatility of 76.38 %, a risk-free rate of 3.70 %, a contractual term of 2.58 years, an expected dividend yield of 0 % and a share price of $ 4.95 . As of June 30, 2025, the Pre-Funded Warrants, the Additional Pre-Funded Warrants and the Common Warrants in a total amount of $ 5,151 were classified as equity, upon obtaining the Shareholder Approval. e) 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, 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, which are classified as equity, or the Second Offering Warrants. 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 . f) As to Kokomodo Transaction, see note 1d. F- 28 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 11: - SHAREHOLDERS’ EQUITY (CONT.) (2) Share options and RSUs to employees, directors and consultants: The Company adopted the 2016 Equity Compensation Plan, or the 2016 Plan, and the 2019 Equity Compensation Plan, or together, the Plans. Under the Plans, share options, 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, 2025, 831,062 common shares are available for future grants under the Plans. a. Options to non-employee consultants: A summary of the share options granted to non-employee consultants under the Plans by Pluri Inc. and its Subsidiary is as follows: Year ended June 30, 2024 Number Weighted average exercise price Weighted average remaining contractual terms (in years) Aggregate intrinsic value price Share options outstanding at beginning of period 8,100 $ 7.44 6.24 29 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 Share options exercisable at the end of the period 8,100 $ 7.41 5.24 $ 29 Share options unvested 9,375 $ 4.40 4.56 13 Share options vested and expected to vest at the end of the period 17,475 $ 5.80 4.87 $ 42 Year ended June 30, 2025 Number Weighted average exercise price Weighted average remaining contractual terms (in years) Aggregate intrinsic value price Share options outstanding at beginning of period 17,475 $ 5.80 4.87 $ 42 Share options forfeited ( 6,720 ) $ 5.10 - - Share options outstanding and exercisable at end of the period 10,755 $ 6.23 4.23 $ 24 Share options vested and expected to vest at the end of the period 10,755 $ 6.23 4.23 $ 24 Compensation expenses recorded in general and administrative expenses related to options granted to non-employee consultants by Pluri Inc. and its Subsidiary for the years ended June 30, 2025 and 2024 were $ 2 and $ 9 , respectively. F- 29 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 11: - SHAREHOLDERS’ EQUITY (CONT.) b. Options to CEO and to Former Directors: A summary of the share options granted to CEO and to a former directors under the Plans by Pluri Inc. and its Subsidiary is as follows: Year ended June 30, 2024 Number Weighted average exercise price Weighted average remaining contractual terms (in years) 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 Year ended June 30, 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 1.42 Share options vested and exercisable at the end of the period 240,291 $ 14.82 1.42 As of June 30, 2025, the aggregate intrinsic value of these options was $ 0 . 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 share options granted during fiscal year 2024 was $ 3.85 per option. No share options were granted during fiscal year 2025. 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: 2024 Underlying value of common shares ($) 4.40 - 6.08 Exercise price ($) 4.40 - 6.08 Expected historical volatility (%) 78.44 Expected terms of the option (years) 5 - 7 Risk-free interest rate (%) 4.04 - 4.13 F- 30 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 11: - SHAREHOLDERS’ EQUITY (CONT.) On December 14, 2022, 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 to the CEO (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 to grant the CEO options to purchase 187,500 common shares, with a term of 3 years, with the following terms: (i) options to purchase 62,500 common shares at an exercise price of $12.48 per share, 50% vesting on June 30, 2023 and 50% vesting on December 31, 2023, (ii) options to purchase 62,500 common shares at an exercise price of $16.64 per share, 50% vesting on June 30, 2023 and 50% vesting on December 31, 2023, and (iii) options to purchase 62,500 common shares at an exercise price of $20.80 per share, 50% vesting on June 30, 2023 and 50% vesting on December 31, 2023. All options were granted in January 2023 and will expire three years 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, 2025 and 2024 were $ 0 and $ 220 , respectively. 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 years ended June 30, 2025 and 2024: Year ended June 30, 2025 2024 Number Unvested at the beginning of period 353,134 207,199 Granted 618,515 395,327 Forfeited ( 29,018 ) ( 132,400 ) Vested ( 307,868 ) ( 116,992 ) Unvested at the end of the period 634,763 353,134 Expected to vest after the end of period 583,844 319,533 Unamortized compensation expenses related to RSUs granted to employees and directors by Pluri Inc. and its Subsidiary are approximately $ 1,547 to be recognized by the end of June 2028. d. 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, 2025 and 2024: Year ended June 30, 2025 2024 Number Unvested at the beginning of period 4,802 2,500 Granted 54,269 27,270 Vested ( 34,520 ) ( 24,968 ) Unvested at the end of the period 24,551 4,802 Expected to vest after the end of period 24,551 4,802 F- 31 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 11: - SHAREHOLDERS’ EQUITY (CONT.) Unamortized compensation expenses related to RSUs and RS granted to consultants by Pluri Inc. and its Subsidiary are approximately $ 81 to be recognized by the end of February 2028. All RSUs and RS to employees, directors and consultants granted during fiscal 2025 and 2024 were granted for no consideration. Therefore, their fair value was equal to the share price at the date of grant. The fair value of all RSUs and RS were 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 RSU and RS granted during fiscal years 2025 and 2024 was $ 4.49 and $ 4.40 per share, respectively. Total compensation expenses related to RSUs and RS granted by Pluri Inc. and its Subsidiary were recorded as follows: Year ended June 30, 2025 2024 Research and development expenses $ 463 $ 316 General and administrative expenses 1,517 1,428 $ 1,980 $ 1,744 General and administrative expenses include compensation expenses for the year ended June 30, 2025 and 2024, in the amount of $ 0 and $ 58 , respectively, were related to 41,853 RSUs granted to the CEO, due each month (see also item b). F- 32 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 11: - SHAREHOLDERS’ EQUITY (CONT.) e. Summary of the Company’s warrants, pre-funded warrants and options: June 30, 2025 Warrants / Pre-Funded Warrants / Options Weighted average exercise price per share Options, pre-funded warrants and warrants for common shares Options, pre-funded warrants and warrants exercisable for common shares Weighted average remaining contractual terms (in years) Warrants: $ 8.24 697,485 697,485 0.55 $ 8.40 258,565 258,565 0.51 $ 8.48 29,688 29,688 0.47 $ 8.72 16,875 16,875 0.49 $ 8.96 16,875 16,875 0.50 $ 5.57 84,599 84,599 3.00 $ 5.57 45,553 45,553 2.72 Total warrants 1,149,640 1,149,640 Pre-Funded Warrants: $ - 1,002,169 1,002,169 3.00 Total pre-funded warrants 1,002,169 1,002,169 Options: $ 6.23 10,755 10,755 4.23 $ 8.96 41,853 41,853 1.04 $ 12.48 62,500 62,500 1.25 $ 16.64 62,500 62,500 1.25 $ 20.80 62,500 62,500 1.25 $ 6.08 10,938 10,938 5.73 Total options 251,046 251,046 Total Warrants, Pre-Funded Warrants and Options 2,402,855 2,402,855 This summary does not include 659,314 RSUs and RS that are not vested as of June 30, 2025. (3) 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 listed companies to maintain a minimum of $ 2,500 in shareholders’ equity for continued listing on The Nasdaq Capital Market. 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, or the Compliance Plan. Based on the Compliance Plan, Nasdaq granted the Company an extension until May 24, 2025, to regain compliance. F- 33 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 11: - SHAREHOLDERS’ EQUITY (CONT.) On May 7, 2025, 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 and remains in good standing on the Nasdaq Capital Market. NOTE 12: - TOTAL FINANCIAL INCOME (EXPENSES), NET Year ended June 30, 2025 2024 Foreign currency translation differences, net $ ( 2,157 ) $ 126 Interest income on deposits and restricted bank deposits 1,144 1,406 Change in fair value of warrant and pre-funded warrant liabilities 556 - Income from hedging derivatives 251 148 Financial income (expenses), net ( 206 ) 1,680 EIB loan interest expenses ( 873 ) ( 866 ) $ ( 1,079 ) $ 814 NOTE 13: - SEGMENT REPORTING Segment Information Following the adoption of ASU 2023-07, the Company is required to disclose significant segment expenses that are regularly provided to the CODM. As a single reportable segment entity, the Company’s segment performance measure is consolidated net loss. The Company’s CODM does not regularly review asset information by segments and, therefore, the Company does not report asset information by segment. Significant segment expenses are presented in the Company’s consolidated statements of operations. The following table presents the significant segment expenses and other segment items regularly reviewed by the CODM: Year ended June 30, 2025 2024 Revenues from external customers $ 1,336 $ 326 Salary expenses $ ( 12,229 ) $ ( 11,455 ) Professional services expenses ( 2,554 ) ( 2,711 ) Other segment items (1) ( 9,803 ) ( 7,504 ) Net loss $ ( 23,250 ) $ ( 21,344 ) Other segment disclosures: Depreciation and amortization expenses $ 316 $ 253 Share-based compensation expenses 2,143 2,618 Interest income 1,144 1,406 Interest expense $ 873 $ 866 (1) Other segment items primarily include cost of revenues, share-based compensation expenses, depreciation and amortization expenses, other research and development expenses, other general and administrative expenses and financial income (expenses) as reported in our consolidated statements of operations. All of the Company’s long-lived assets are located in Israel. F- 34 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 14: - BASIC AND DILUTED LOSS PER SHARE Diluted loss per share excludes 1,149,640 shares underlying outstanding warrants, 1,002,169 shares underlying outstanding pre-funded warrants (see note 11), 246,540 shares underlying outstanding options, and 659,314 shares underlying outstanding RSUs and RS for twelve months ended June 30, 2025, because the effect of their inclusion in the computation would be antidilutive. Diluted loss per share excludes 1,019,488 shares underlying outstanding warrants, 253,260 shares underlying outstanding options, and 357,936 shares underlying outstanding RSUs and RS for twelve months ended June 30, 2024, because the effect of their inclusion in the computation would be antidilutive. The table below shows the reconciliation of the number of shares in the computation of basic and diluted loss per share attributable to common shareholders: Year ended June 30, 2025 2024 Numerator: Net loss attributed to shareholders $ ( 22,583 ) $ ( 20,888 ) Denominator: Common shares outstanding used in computing net loss per share attributable to common shareholders 6,332,487 5,235,743 Unexercised vested options with no par value exercise price 4,506 4,506 Weighted average number of shares used in computing basic and diluted net loss per share attributable to common shareholders 6,336,993 5,240,249 Net loss per share attributable to common shareholders – basic and diluted $ ( 3.56 ) $ ( 3.99 ) F- 35 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 15: - TAXES ON INCOME a. Tax rates applicable to the Company: 1. Pluri: The U.S. corporate federal tax rate 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, 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 for the Company under the Tax Act, nor will there be GILTI tax due for the current year, since the Subsidiary had losses for every year to date. In January 2018, Pluri Inc. registered 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. and the Subsidiary submitted an election notice to the ITA to file a consolidated tax return in Israel commencing with the 2018 tax year. 2. The Subsidiary: Consolidated taxable income of Pluri and the Subsidiary, or the consolidated tax unit, is subject to tax at the rate of 23 % for the years ended June 30, 2025 and 2024. 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, 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 (the fiscal tax year end of the Subsidiary). The Subsidiary has not received final tax assessments since its incorporation; however the assessments of the Subsidiary are deemed final through 2020. The Law for the Encouragement of Capital Investments, 1959, or the Law (amendment No. 73): 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. 73. According to Amendment No. 73, the tax rate on preferred income from a preferred enterprise in 2017 and thereafter is 16 % (in development area A it will be 7.5 %), or Preferred Enterprise. F- 36 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 15: - TAXES ON INCOME (CONT.) According to Amendment No. 73, special tax benefits were established for technological preferred enterprise, or Technological Enterprise, starting in 2017, which are as follows: ● 6 % rate applies 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) are 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 Technological Enterprise income is taxed at the regular tax rate ( 23 % in 2025 and 2024). As of June 30, 2025, the Subsidiary’s management believes that the Subsidiary may meet the conditions mentioned above to potentially qualify as a Technological Enterprise or alternatively as a Preferred Enterprise, subject to confirmation by the relevant authorities. 3. Pluristem GmbH: The corporate tax rate applicable to the German Subsidiary is 15 %, which is derived from the German Corporation Tax Act and Solidarity surcharge of 5.5 % from the 15 % corporate tax rate. This corporate tax rate excludes trade tax, which rate depends on the municipality in which the German Subsidiary conducts its business. 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. 4. Ever After Foods and Kokomodo: Each of Ever After Foods and Kokomodo is an Israeli tax resident and are subject to corporate income tax at the rate of 23 %. b. Carryforward losses for tax purposes As of June 30, 2025, Pluri had a U.S. federal net operating loss carryforward for income tax purposes in the amount of $ 29,798 . Net operating loss carryforwards arising in taxable years prior to 2018, 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 until 2005 expired and were reduced from the total net operating loss carryforward available. Utilization of U.S. net operating losses may be subject to substantial annual limitations due to the “change in ownership” provisions of Section 382 of the U.S. Internal Revenue Code of 1986, and similar state provisions. The annual limitation may result in the expiration of net operating losses before utilization. The Subsidiary has accumulated losses, for tax purposes, as of June 30, 2025, in the amount of approximately $ 129,286 , which may be carried forward and offset against taxable business income and business capital gain in the future for an indefinite period. F- 37 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 15: - TAXES ON INCOME (CONT.) As of June 30, 2025, Pluri Inc. and the Subsidiaries consolidated accumulated losses, for tax purposes, are approximately $ 144,727 , which may be carried forward and offset against taxable business income and business capital gain in the future for an indefinite period. The German Subsidiary has accumulated losses, for tax purposes, as of June 30, 2025, in the amount of approximately $ 608 , which may be carried forward and offset against taxable business income and business capital gain in the future for an indefinite period. c. Loss before income taxes The components of loss before income taxes are as follows: Year ended June 30, 2025 2024 Consolidated loss of Pluri Inc. and the Israeli Subsidiaries $ 23,248 $ 21,339 Pluristem GmbH 7 5 $ 23,255 $ 21,344 d. 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. Significant components of the Company’s deferred tax assets are as follows: June 30, 2025 2024 Deferred tax assets: Operating loss carryforwards $ 69,558 $ 69,852 Research and development credit carryforwards 2,314 3,780 Issuance costs 72 25 Allowances and reserves 219 173 Deferred tax liability, net - Kokomodo Transaction: Cocoa cell growth and application platform ( 468 ) - Ability to develop additional applications ( 31 ) - ( 499 ) - Total deferred tax assets before valuation allowance 72,163 73,830 Valuation allowance ( 72,079 ) ( 73,830 ) Net deferred tax liability $ ( 415 ) $ - As of June 30, 2025 and 2024, the Company has provided full valuation allowances with respect to the deferred tax assets resulting from tax loss carryforwards and other temporary differences of the Israeli entities (other than Kokomodo, see note 1d), since it has a history of operating losses and due to current uncertainty concerning its ability to realize these deferred tax assets in the future. F- 38 PLURI INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands (except share and per share amounts) NOTE 15: - TAXES ON INCOME (CONT.) The Company accounts for its income tax uncertainties in accordance with ASC 740 which clarifies the accounting for uncertainties in income taxes recognized in a Company’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. As of June 30, 2025 and 2024, there were no unrecognized tax benefits that if recognized would affect the annual effective tax rate. Reconciliation of taxes at the federal statutory rate to Company’s provision for income taxes: In 2025 and 2024, the main reconciling item of the statutory tax rate of the Company ( 21 % to 23 %) to the effective tax rate ( 0 %) is tax loss carryforward and research and development credit carryforward for which a full valuation allowance was provided. F- 39 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None.