Annual Report for Fiscal Year Ending June 30, 2026 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the notes thereto contained elsewhere in this Annual Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in any forward-looking statement because of various factors, including those described in the sections titled "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" in this Annual Report.

We are a biotechnology company leveraging our proprietary 3D cell expansion platform, which is supported by an in-house, industrial-scale cell manufacturing facility and operates in accordance with GMP standards on a self-declared basis. Our platform is designed to enable scalable, cost-efficient and reproducible expansion of human, plant and animal cells and supports cell-based products, services, therapeutics and related technologies across two primary application areas: (i) Human Health and Longevity and (ii) Foodtech and Bio-Farming.

Our operations are 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, as described in detail under Item 1. "Business".

RESULTS OF OPERATIONS - YEAR ENDED JUNE 30, 2026 COMPARED TO YEAR ENDED JUNE 30, 2025

Revenues

Revenues for the year ended June 30, 2026 were $1,016,000, compared to $1,336,000 for the year ended June 30, 2025. The revenues for the years ended June 30, 2026 and 2025, were primarily generated from services provided to CDMO clients for process and product development as well as additional revenues from POC collaborations in the FoodTech field. The decrease in revenues was primarily driven by a lower volume of project activity as compared to the corresponding period in fiscal year 2025.

Cost of Revenues

Cost of revenues for the year ended June 30, 2026 were $563,000, compared to $682,000 for the year ended June 30, 2025. Cost of revenues includes manufacturing costs related to our CDMO and FoodTech fields, which primary consist of materials, personnel-related and overhead costs. The decrease in cost of revenues was primarily driven by a lower volume of project activity as compared to the corresponding period in fiscal year 2025, resulting in reduced materials usage, personnel costs and allocated overhead.

Research and Development, Net

R&D, net (costs less participation by the IIA, Horizon Europe and the NIAID) increased by 17% from $12,851,000 for the year ended June 30, 2025, to $15,092,000 for the year ended June 30, 2026. The increase was mainly attributable to (1) an increase in salaries and related expenses due to foreign exchange differences and the addition of new employees following the acquisition of our subsidiary, Kokomodo, partially offset by headcount reductions as part of the implementation of a cost-reduction plan, (2) an increase in lease expenses of our facilities mainly due to Ever After Foods' new operating facility, and (3) an increase in share-based compensation expenses related to Ever After Foods's options granted to an Ever After Foods's employee, partially offset by (4) a decrease in participation by NIAID and (5) a decrease in R&D expenses following POC activities in our subsidiaries.

General and Administrative

General and administrative expenses increased by 3% from $9,979,000 for the year ended June 30, 2025, to $10,299,000 for the year ended June 30, 2026. The increase was mainly attributable to (1) an increase in share-based compensation expenses related to restricted shares ("RS"), which were granted during the reporting period to consultants, as well as restricted stock units ("RSUs") and options granted to our Chief Executive Officer ("CEO") in recognition of the achievement of certain performance objectives and other accomplishments during fiscal year 2025, and to Ever After Foods's options granted to an Ever After Foods's employee; and (2) an increase in salaries and related expenses primarily due to foreign exchange differences and the addition of new employees following the acquisition of our subsidiary, Kokomodo, partially offset by (3) a reduction in our CEO's salary, whereby he waived 25% of his salary from July through December 2025, and 30% of his salary between January and February 2026, as well as the implementation of a cost-reduction plan, which included a reduction in headcount, and (4) a decrease in expenses related to corporate activities, such as professional services expenses.

Other Financial Income (expenses), Net

Other financial income (expenses), net, increased from $206,000 in financial expenses for the year ended June 30, 2025 to $476,000 in financial income for the year ended June 30, 2026. The change was mainly attributable to (1) exchange rate differences expenses related to the EIB Loan following fluctuation between the U.S. dollar against the Euro, and (2) an increase in income derived from hedging transactions, partially offset by (3) a decrease from change in fair value of warrant, pre-funded warrant and Kokomodo's simple agreement for future equity ("SAFE") liabilities, (4) a decrease in interest income from deposits, due to lower deposit balances following withdrawals, and (5) a decrease due to exchange rate expenses on a lease liability and on deposits due to the strength of the New Israeli Shekel ("NIS"), against the U.S. Dollar.

Interest Expenses

Interest expenses increased from $873,000 for the year ended June 30, 2025, to $932,000 for the year ended June 30, 2026. Interest expenses related to our outstanding balance of the EIB Loan and all changes are attributable solely to currency rate differences of the Euro compared to the U.S. dollar.

Net Loss

Net loss increased from $23,250,000 for the year ended June 30, 2025, to $25,369,000 for the year ended June 30, 2026. The increase in net loss was mainly due to an increase in R&D expenses, net, and increased general and administrative expenses, as mentioned above.

We had a net loss attributed to our non-controlling interest of $1,548,000 for the year ended June 30, 2026, and $667,000 for the year ended June 30, 2025 with respect to Ever After Foods and Kokomodo.

Loss per share for the year ended June 30, 2026, was $2.44, compared to $3.56 loss per share for the year ended June 30, 2025. The decrease in the loss per share was due primarily to an increase in our weighted average number of shares outstanding which reflects the issuance of additional shares in the First Offering and the Second Offering (as defined below, see "Liquidity and Capital Resources" Section), the issuance of additional shares upon the vesting of RSUs and RS issued to directors, employees and consultants and exercise of pre-funded warrants, partially offset by an increase in the loss for the year.

Liquidity and Capital Resources

As of June 30, 2026, our total current assets were $8,730,000 and our total current liabilities were $32,719,000. On June 30, 2026, we had a working capital deficit of $23,989,000 and an accumulated deficit of $466,876,000.

As of June 30, 2025, our total current assets were $22,095,000 and our total current liabilities were $32,328,000. On June 30, 2025, we had a working capital deficit of $10,233,000 and an accumulated deficit of $443,055,000.

Our cash, cash equivalents, restricted cash and short-term bank deposits as of June 30, 2026, amounted to $7,833,000, which reflects a decrease of $13,202,000 from the $21,035,000 reported as of June 30, 2025. Our bank deposits and restricted bank deposits as of June 30, 2026, amounted to $5,293,000, which reflects a decrease of $10,304,000 from the $15,597,000 as of June 30, 2025. The cash, cash equivalents, restricted cash, bank deposits and restricted bank deposits decreased for the reasons presented below.

Net cash used for operating activities increased to $19,588,000 for the year ended June 30, 2026, from $18,211,000 in the prior year, primarily due to an increase in exchange rate, an increase in salaries following the acquisition of our subsidiary, Kokomodo, and a decrease in grants received from the IIA and NIAID contract funding, partially offset by a reduction in payments to suppliers, subcontractors, professional service providers and consultants, an increase in cash generated from services provided to CDMO clients for process and product development, and income from fees in the biopharming sector.

Investing activities provided cash in the amount of $9,903,000 for the year ended June 30, 2026, compared to cash provided in the amount of $8,026,000 for the year ended June 30, 2025. Cash provided by investing activities in the year ended June 30, 2026, consisted primarily of proceeds from short-term deposits, net of $10,518,000 and $18,000 related to proceeds from sale of property and equipment, partially offset by payments of $633,000 related to investments in property. Cash provided by investing activities in the year ended June 30, 2025, consisted primarily of proceeds from short-term deposits, net of $9,271,000 and cash related to the Kokomodo Transaction (as defined below) of $373, partially offset by payments of $1,618,000 related to investments in property and equipment.

Financing Activities

Financing activities provided cash in the amount of $7,038,000 during the year ended June 30, 2026, and $9,533,000 during the year ended June 30, 2025. The financing activities during the year ended June 30, 2026 were related to net proceeds received from the issuances of common shares and warrants, net of issuance costs related to the First Offering (as defined below), the Second Offering (as defined below), the Advance Subscription Agreement (as defined below) and the Sales Agreement (as defined below) with A.G.P (as defined below), as well as, proceeds related to the SAFE Agreements (as defined below). The financing activities during the year ended June 30, 2025 related primarily to net proceeds received from the 2025 Offering (as defined below) and the 2025 Second Offering (as defined below).

Sales Agreement

On February 13, 2024, we entered into a sales agreement (the "Sales Agreement") with A.G.P./Alliance Global Partners ("A.G.P"), as agent, pursuant to which we may issue and sell our common shares having an aggregate offering price of up to $10 million, from time to time through A.G.P. As of September 10, 2026, we have sold an aggregate of 354,029 common shares pursuant to the Sales Agreement at a weighted average price of $2.80 per share.

We have an effective Form S-3 registration statement (File No. 333-273347), filed under the Securities Act of 1933, as amended, with the SEC using a "shelf" registration process. Under this shelf registration process, we may, from time to time, sell our common shares, preferred stock and warrants to purchase common shares, and of two or more of such securities, in one or more offerings for an aggregate initial offering price of $200 million (including amounts sold under the Sales Agreement).

Securities Purchase Agreements and Share Purchase Agreement

On January 23, 2025, we entered into the Securities Purchase Agreement with a company wholly owned by Mr. Alexandre Weinstein (the "Investor") relating to a private placement offering (the "2025 Offering") of: (i) 1,383,948 of our common shares, par value $0.00001 per share, (ii) pre-funded warrants (the "Pre-Funded Warrants"), to purchase up to 26,030 common shares, and (iii) warrants (the "Common Warrants"), to purchase up to 84,599 common shares. On April 25, 2025, we entered into an amendment to the Securities Purchase Agreement, pursuant to which we 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. The 2025 Offering price per share and accompanying warrant was $4.61. The Pre-Funded Warrants have an exercise price of $0.00001 per share, are exercisable at any time following the receipt of certain approvals from our shareholders, which is required by the applicable rules of the Nasdaq Capital Market, and until exercised in full. The Common Warrants have an exercise price of $5.568 per share, are exercisable following the receipt of approval from our shareholders, and will be exercisable for three years following the date of receipt of such approval. Such approval for the exercise of Pre-Funded Warrants and Common Warrants was sought and obtained at our 2025 Annual Meeting 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 approval from our shareholders was obtained. The Securities Purchase Agreement contains customary representations and warranties and agreements of the Company and the Investor and customary indemnification rights and obligations of the parties. On October 23, 2025, 1,002,169 Pre-Funded Warrants were exercised into 1,002,169 common shares of the Company, at a nominal exercise price of $0.00001 per share. The gross proceeds from the 2025 Offering were $6.5 million and we intend to use the proceeds from the 2025 Offering for working capital and general corporate purposes. The 2025 Offering closed on February 5, 2025, following the satisfaction of customary closing conditions. Pursuant to the terms of the Securities Purchase Agreement, we appointed Mr. Weinstein to our Board, effective February 5, 2025, and agreed to recommend his election to our shareholders provided that he continues to hold at least 10% of our issued and outstanding common shares.

On February 3, 2025, we entered into a Securities Purchase Agreement with Merchant Adventure Fund L.P., an existing investor of the Company, relating to a private placement offering, (the "2025 Second Offering"), of: (i) 759,219 of our common shares, par value $0.00001 per share, and (ii) warrants, to purchase up to 45,553 common shares. The 2025 Second Offering price per share and accompanying warrant is $4.61. The 2025 Second Offering warrants have an exercise price of $5.568 per share and a term of three years commencing on the date of issuance. On March 19, 2025, the 2025 Second Offering closed, and the Company received gross proceeds in the amount of $3.5 million, which it intends to use for working capital and general corporate purposes.

On March 13, 2025, we entered into a Share Purchase Agreement effective as of March 12, 2025 (the "Share Purchase Agreement"), with Chutzpah, a company wholly owned by Mr. Alexandre Weinstein, and Plantae, a corporation controlled by Mr. Weinstein (collectively, the "Seller"), pursuant to the terms of a term sheet entered into on January 23, 2025.Pursuant to the Share Purchase Agreement, on April 28, 2025, the Seller (i) sold to us 400,000 ordinary shares and 175,000 preferred seed-1 shares (the "Purchased Interest"), representing approximately 79% of the equity of Kokomodo, and (ii) transferred, assigned and conveyed in favor of the Kokomodo Purchaser a convertible loan, pursuant to the Assignment Agreement, reflecting a principal aggregate amount of $0.5 million, such transactions are collectively referred herein as the "Kokomodo Transaction". In consideration of the sale, transfer and conveyance of the Purchased Interest, we paid the Seller an aggregate purchase price of $4.5 million, which was paid in 976,139 of our common shares. On April 28, 2025, we completed the Kokomodo Transaction. Kokomodo continues to operate as an independent company and is majority-owned by our wholly owned subsidiary, Pluri Biotech.

During the period from November 2025 through June 2026, Kokomodo entered into a series of SAFE agreements with various investors for an aggregate amount of $714,000 (the "SAFE Agreements"). Pursuant to the terms of the SAFE Agreements, in the event of an Equity Financing, which is defined in the SAFE Agreements as a capital raising transaction or series of transactions, pursuant to which (i) Kokomodo issues and sells a new series of preferred shares of Kokomodo at a fixed pre-money valuation; and (ii) at least 25% of the amount of the capital raised is not attributed to the SAFE Investors (as defined in the SAFE Agreements), then the investment will be automatically converted into the number of most senior preferred shares of Kokomodo, equal to the purchase amount divided by either: (1) the price per share equal to a Valuation Cap (as defined in the SAFE Agreements) divided by Kokomodo Capitalization (as defined in the SAFE Agreements), or (2) the price per preferred share sold in the Equity Financing discounted by 20%. The SAFE Agreements were classified as long-term liability, accounted at fair value, with remeasurement at each reporting period.

On August 12, 2026, Ever After Foods entered into a share purchase agreement to acquire Fishway BV, a Belgium-based biotechnology company engaged in development-stage research relating to aquatic cell biology, cell lines and animal-component-free media for potential use in the cultivated protein industry. The Fishway Acquisition is intended to support Ever After Foods' strategy by expanding complementary research capabilities and establishing a corporate presence in Europe. The Fishway Acquisition closed on August 18, 2026, and following its completion, our indirect ownership interest in Ever After Foods, held through Pluri Biotech, was reduced to approximately 58%, reflecting dilution to all Ever After Foods' shareholders in connection with the Fishway Acquisition.

In connection with the Fishway Acquisition, Ever After Foods and certain of the holders of certain securities of Fishway BV entered into a SAFE agreement for an aggregate amount of $2,000. Pursuant to the terms of the SAFE agreement, in the event of an Equity Financing, as defined in the applicable SAFE agreement as a capital raising transaction or series of transactions, pursuant to which (i) Ever After Foods issues and sells a new series of preferred shares or ordinary shares of Ever After Foods at a fixed pre-money valuation; and (ii) at least $6,000 of the amount of the capital raised is not attributed to the SAFE Investors (as defined in the SAFE agreements), the investment will be automatically converted into the number of most senior preferred shares or ordinary shares of Ever After Foods, equal to the purchase amount divided by either: (1) the price per share equal to a Valuation Cap (as defined in the SAFE agreement) divided by Ever After Foods Capitalization (as defined in the SAFE agreement), or (2) the price per preferred share sold in the Equity Financing discounted by 10%.

On December 8, 2025, we entered into a Securities Purchase Agreement (the "First Securities Purchase Agreement") with Chutzpah Holdings LP (the "Purchaser"), a limited partnership beneficially owned by Mr. Weinstein, relating to a private placement offering (the "First Offering") of: (i) 625,000 common shares of the Company, and (ii) warrants (the "First Common Warrants") to purchase up to 625,000 common shares. The combined purchase price for each common share and accompanying First Common Warrant was $4.00. The First Common Warrants were exercisable immediately at an exercise price of $4.25 per share and are exercisable until June 30, 2026. The First Common Warrants contain customary anti-dilution provisions and are subject to a 35% beneficial ownership limitation. On December 30, 2025, the First Offering closed and the Company received gross proceeds in the amount of $2.5 million, which it is using for working capital and general corporate purposes.

On March 25, 2026, we entered into an additional Securities Purchase Agreement (the "Second Securities Purchase Agreement"), effective as of March 24, 2026, with Chutzpah Holdings LP (the "Second Offering"), of: (i) 625,000 common shares of the Company, and (ii) warrants (the "Second Common Warrants"), to purchase up to 625,000 common shares. The Second Offering price per share and accompanying Second Common Warrant was $4.00. The Second Common Warrants have an exercise price of $4.25 per share and are exercisable commencing on their issuance date and until the expiration of the eighteen-month anniversary following the closing of the Second Offering. The Second Common Warrants contain customary anti-dilution provisions and are subject to a 35% beneficial ownership limitation. The Second Offering closed in two installments: 50% closed on March 31, 2026, and the remaining 50% closed on April 21, 2026, each generating gross proceeds of $1.25 million. The Second Common Warrants were issued in two installments in connection with the two closings of the Second Offering, with 50% of the Second Common Warrants issued on March 31, 2026, and the remaining 50% issued on April 21, 2026, and each installment is exercisable from its respective issuance date until the eighteen-month anniversary of such issuance date. The proceeds are intended for working capital and general corporate purposes.

On June 14, 2026, we entered into an Advance Subscription Agreement (the "Advance Subscription Agreement"), with the Purchaser. Pursuant to the Advance Subscription Agreement, the Purchaser agreed to pay the Company an advance amount of $1,250,000 (the "Advance Amount"), which was received on June 16, 2026, and will be used for working capital and general corporate purposes.

Under the Advance Subscription Agreement, the parties contemplated that the Purchaser would participate in a future financing approved by the Board and consummated on or before August 14, 2026, which date was subsequently extended by the Board to October 14, 2026 (the "New Offering"), and that, subject to the terms of such New Offering and applicable laws, the Advance Amount will be credited against the purchase price payable by the Purchaser for securities to be purchased in such New Offering. The Advance Subscription Agreement provides that the Company will not be obligated to issue any securities to the Purchaser to the extent that such issuance would not comply with applicable laws, Nasdaq rules, the Company's organizational documents, the number of shares then authorized and available for issuance, or the scope of any shareholder approvals then in effect. If the New Offering is not consummated on or before October 14, 2026, or if all or any portion of the Advance Amount cannot be applied toward the purchase of securities by the Purchaser in the New Offering, the unapplied amount will instead be applied toward the purchase by the Purchaser of securities of the Company on terms approved by the Board, subject to applicable laws, Nasdaq rules, the Company's organizational documents, the number of shares then authorized and available for issuance, and any required shareholder approvals then in effect. The terms of the New Offering will be negotiated by the parties and approved in accordance with the Company's corporate approval process, including the approval of the Board.

On August 26, 2026, we entered into a securities purchase agreement (the "August SPA") with a certain institutional investor (the "Sole Investor") pursuant to which we sold and issued in a registered direct offering (the "Registered Direct Offering") an aggregate of (i) 1,200,000 of our common shares and (ii) pre-funded warrants to purchase up to 1,028,940 of our common shares. Each common share was offered and sold at an offering price of $1.50 before deducting placement agent fees and other offering expenses, and each pre-funded warrant was offered and sold at an offering price of $1.49999 which is equal to the offering price per share less the $0.00001 exercise price of each pre-funded warrant, before deducting placement agent fees and other offering expenses. Each pre-funded warrant has an initial exercise price per share of $0.00001, subject to certain adjustments. The pre-funded warrants are exercisable immediately and may be exercised at any time until all of the pre-funded warrants are exercised in full.

Additionally, pursuant to the August SPA, we issued to the Sole Investor, in a concurrent private placement (collectively with the Registered Direct Offering, the "August Offering"), common purchase warrants to purchase one common share for each share or pre-funded warrant purchased in the Registered Direct Offering for an aggregate of 2,228,940 common shares. The common warrants will be initially exercisable six (6) months following their issuance and will be exercisable for a period of five (5) years from the initial exercise date. The exercise price of the common warrants is $1.65 per share. The August Offering closed on August 28, 2026, and the Company received gross proceeds in the amount of $3.3 million, which it intends to use for corporate development, general purposes and working capital.

Management and Board Compensation Measures

In July 2025, our CEO agreed to forgo 25% of his gross monthly salary, in the aggregate amount of NIS 148,500 for a period of six months commencing July 2025.

On October 15, 2025, the Board approved a grant of equity awards to our CEO, in recognition of the achievement of certain performance objectives and other accomplishments during fiscal year 2025. The approved equity awards consisted of (i) 39,050 RSUs which were fully vested at the time of grant, and (ii) options to purchase 39,050 common shares of the Company which were fully vested at the time of grant and exercisable for a period of three years at an exercise price of $5.00 per share. As the performance objectives for fiscal year 2025 were satisfied through share-based awards rather than cash compensation, the provision previously recorded in the amount of approximately $41,000, was reversed.

On December 4, 2025, in order to ensure the Company's financial stability, the Board approved, at the recommendation of the Company's management, (i) a 30% gross monthly salary reduction in the aggregate amount of NIS 59,400 to Mr. Yanay, our CEO, applicable to the months of January 2026 and February 2026, (ii) a 20% gross monthly salary reduction in the aggregate amount of NIS 33,000 to Mrs. Zalts, our Chief Financial Officer ("CFO"), applicable to the months of December 2025, January 2026 and February 2026, and (iii) a 20% monthly fee reduction to the fees that are paid to the Company's directors applicable to the months of December 2025 through February 2026.

On December 4, 2025, the Board approved a grant of 10,248 RSUs, in aggregate, to the CEO and CFO and an aggregate of 2,885 RSUs to Board members in lieu of cash compensation under the Company's 2019 Equity Compensation Plan, with all RSUs vesting in equal monthly installments over three months. These grants were made to support the Company's cost-management initiatives and to align leadership incentives with long-term performance objectives.

Effective January 4, 2026, Mr. Zami Aberman, our former Chairman of the Board's consultancy agreement with the Company terminated, following which Mr. Aberman was entitled to receive compensation in accordance with the Company's Directors Compensation policy.

On August 20, 2026, the Board approved a grant of 211,569 RSUs, in aggregate, to certain Board members, including the Chairman of the Board, under the Company's Amended 2016 Equity Compensation Plan and 2019 Equity Compensation Plans, with all RSUs vesting over three years as follows: 50% of RSUs will vest quarterly during the first year from grant date, 25% of RSUs will vest quarterly during the second year from the date of grant, and 25% of RSUs will vest quarterly during the third year from the date of grant.

Finance Agreement with the EIB

In April 2020, we and our subsidiaries, Pluri Biotech and Pluristem GmbH, entered into a finance agreement with EIB, providing for the EIB Loan, a non-dilutive funding of up to €50 million, payable in three tranches. In June 2021, we received the first tranche in the amount of €20 million, which represents the only amount disbursed under the EIB finance agreement, as the initial funding period expired on December 31, 2022, and no additional funds are made available thereunder.

The €20 million loan bears annual interest at a rate of 4% and was repayable on June 1, 2026, with interest payable together with the principal. As of June 30, 2026, accrued interest amounted to approximately €4.1 million. In addition to the interest, the EIB is entitled to royalty payments, pro-rated to the amount disbursed from the EIB Loan, on the Company's consolidated revenues from fiscal year 2024 through fiscal year 2030, at rates of up to 2.3% on consolidated revenues below $350 million, 1.2% on consolidated revenues between $350 million and $500 million, and 0.2% on consolidated revenues exceeding $500 million. As of June 30, 2026, accrued royalties amounted to $9 thousand. On April 21, 2026, we received a notice from the EIB that the EIB is reserving its rights under the finance agreement while discussions with the EIB regarding potential resolution of the EIB Loan remain ongoing. On May 28, 2026, the EIB confirmed to the Company that while the parties remain engaged in constructive discussions, and without prejudice to any of the EIB's rights and remedies, no enforcement action was contemplated by the EIB.

On August 17, 2026, we were notified by the EIB that its relevant committee had approved, subject to certain conditions, a proposed sale of the EIB Loan not involving the Company as purchaser, on terms agreed with a third-party purchaser, who may be a related party. The completion of such sale remains subject to, among other things, execution of definitive legal documentation and completion of the EIB's review process and other conditions. If the proposed sale is completed, the Company intends to seek to reach an arrangement with the purchaser regarding the settlement of the purchased loan, which may include the conversion of all or a portion of the outstanding loan amount into equity of the Company. Any such arrangement would be subject to negotiation with the purchaser and the receipt of all required corporate and other approvals. Until the proposed sale is finalized and any subsequent arrangement with the purchaser is agreed and approved, there can be no assurance that the EIB will continue to refrain from exercising remedies available to it under the finance agreement, that any sale of the EIB Loan will be completed, that any settlement or conversion arrangement will be entered into or consummated, or as to the timing, structure, accounting treatment or financial statement impact of any such transaction.

Non-dilutive grants

Israel Innovation Authority (IIA)

According to the IIA grant terms, we are required to pay royalties at a rate of 3% on sales of products and services derived from technology developed using this and other IIA grants until 100% of the dollar-linked grants amount plus interest are repaid. In the absence of such sales, no payment is required. Through June 30, 2026, total grants obtained from the IIA aggregated to approximately $28.2 million and total royalties paid and accrued amounted to $179 thousand.

The IIA may impose certain conditions on any arrangement under which the IIA permits the Company to transfer technology or development out of Israel or outsource manufacturing out of Israel. While the grant is given to the Company over a certain period of time (usually a year), the requirements and restrictions under the Israeli Law for the Encouragement of Industrial Research and Development, 1984 continue and do not have a set expiration period, except for the royalties, which requirement to pay them expires after payment in full

In June 2020, we announced that we were selected as a member of the CRISPR-IL consortium, a group funded by the IIA. CRISPR-IL brings together the leading experts in life science and computer science from academia, medicine, and industry, to develop AI based end-to-end genome-editing solutions. These next-generation, multi-species genome editing products for human, plant, and animal DNA, have applications in the pharmaceutical, agriculture, and aquaculture industries. CRISPR-IL is funded by the IIA with a total budget of approximately $10 million of which, an amount of approximately $480 thousand was a direct grant allocated to us, for the initial period of 18 months. During October 2021, we received approval for an additional grant of approximately $583 thousand from the IIA pursuant to the CRISPR-IL consortium program, for an additional period of eighteen months. During January 2023, we received approval for an extension of an additional 2 months to finish the program until June 30, 2023. The CRISPR-IL consortium program does not include any obligation to pay royalties.

Through June 30, 2026, we received total grants of approximately $1 million in cash from the IIA pursuant to the CRISPR-IL consortium program, and we do not expect to receive any additional funds.

On October 28, 2024, we announced that the IIA will fund our collaboration with BIRAD, to support the continued development of MAIT cells for the treatment of solid tumors. As part of this collaboration, novel Chimeric Switch Receptors, developed by Professor Cohen, head of laboratory of tumor immunology and immunotherapy at Bar-Ilan University, will be integrated into our CAR-MAIT cell therapy platform to enhance tumor specificity and therapeutic efficacy. The collaboration leverages our proprietary MAIT cell technology alongside BIRAD's expertise in engineering clinically optimized T-cell modification vectors. The IIA has committed to funding the collaboration for an initial term of one year, with an option to extend it for an additional year. During October 2025, we received an approval for an additional month to finish the program by November 30, 2025. The total approved budget for the first year was NIS 549,067 (approximately $164,000). On March 4, 2026, we received an approval from the IIA for a second year of funding. The total approved budget for the second year amounts to NIS 597,572 (approximately $178,000).

EU grants - Horizon 2020 and Horizon Europe

In September 2022, we announced that a €7.5 million non-dilutive grant from the European Union's Horizon program was awarded to the PROTO, an international collaboration led by Charité. The goal of the PROTO project is to utilize our PLX-PAD cells in a Phase I/II study for the treatment of mild to moderate knee osteoarthritis.

An amount of approximately €500,000 (approximately $540,000) is a direct grant that will be allocated to us. As of September 10, 2026, we have received a payment of approximately $449,000 in cash as part of the PROTO program.

In June 2025, the clinical study was approved by the PEI. The study is conducted at Charité together with an international consortium and under the leadership of Professor Tobias Winkler, Principal Investigator, at the Berlin Institute of Health Center of Regenerative Therapies, Julius Wolff Institute and Center for Musculoskeletal Surgery.

In November 2025, we entered into an agreement with Charité governing the execution of the Phase I study of PLX-PAD for the treatment of mild to moderate knee osteoarthritis, including provisions relating to the allocation of rights in potential joint inventions arising from the study and the licensing of study results not subject to industrial property rights, if any.

In April 2026, Kokomodo participated as a consortium member in the COCO-AI project, a Horizon Europe-funded initiative focused on advancing AI-enabled plant cell culture technologies for sustainable cocoa production. An amount of approximately €553,000 (approximately $630,000) is expected to be allocated to Kokomodo. As of September 10, 2026, Kokomodo received payment of approximately $225,000 in cash as part of the COCO-AI project.

Outlook

We have accumulated a deficit of $466,876,000 since our inception in May 2001. We do not anticipate generating significant revenues from sales of products in the next twelve months. While we have made meaningful progress in reducing our burn rate in recent years, it is unlikely that near-term revenues will exceed our operating costs. We may need to secure additional sources of liquidity to support the commercialization of our products and technologies, as well as to sustain our ongoing R&D activities.

As of June 30, 2026, our cash balances (cash and cash equivalents, short-term bank deposits, restricted cash and restricted bank deposits) totaled to $8,851,000. We are addressing our liquidity issues by implementing initiatives to allow the continuation of our activities. Our current operating plan includes various assumptions concerning the level and timing of cash outflows for operating activities and capital expenditures, which includes a cost-reduction plan should it be unable to raise sufficient additional capital.

Our ability to successfully carry out our business plan, is primarily dependent upon our ability to (1) obtain sufficient additional capital, (2) generate revenues through commercial activities in the wellness and longevity markets, including licensing arrangements, strategics partnerships, collaboration agreements and CDMO services, (3) reach a resolution with respect to our outstanding EIB Loan, and (4) receive other sources of funding, including non-diluting sources such as grants. There is no assurance, however, that we will be successful in obtaining an adequate level of financing needed for the long-term development and commercialization of our products, or any financing at all. If we are unable to obtain the required level of financing, our operations may need to be scaled down or discontinued.

According to management estimates, we have sufficient resources to meet our operating obligations for a period of less than three months from the issuance date of our consolidated financial statements, which was September 10, 2026. These conditions raise substantial doubt about our ability to continue as a going concern.

Application of Critical Accounting Policies and Estimates

Our accounting policies are more fully described in Note 2 to our consolidated financial statements appearing in this Annual Report. We believe that the accounting policy below is critical for one to fully understand and evaluate our financial condition and results of operations.

The discussion and analysis of our financial condition and results of operations is based on our financial statements, which we prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the reported revenues and expenses during the reporting periods. We evaluate such estimates and judgments on an ongoing basis, including those described in greater detail below. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

Share-Based Compensation

Share-based compensation is considered a critical accounting policy because of the significant expenses of RSUs which were granted to our employees, directors and consultants. In fiscal year 2026, we recorded share-based compensation expenses related to options, RS and RSUs in the amount of $3,726,000.

In accordance with ASC 718, Compensation - Stock Compensation ("ASC 718"), RSUs granted to employees and directors are measured at their fair value on the grant date. All RSUs granted in fiscal years 2026 and 2025 were granted for no consideration. Therefore, their fair value was equal to the share price at the date of grant. The RSUs and RS granted in fiscal year 2026 to non-employee consultants were measured at their fair value on the grant date in accordance with ASU No. 2018-07 - "Compensation Share Compensation".

The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in our consolidated statements of operations. We have graded vesting based on the accelerated method over the requisite service period of each of the awards. The expected pre-vesting forfeiture rate affects the number of the shares. Based on our historical experience, the pre-vesting forfeiture rate per grant is 16% for the shares granted to employees and 0% for the shares granted to our directors and officers and non-employee consultants.

Goodwill

Goodwill represents the excess of the purchase price in a business combination over the fair value of the identifiable net assets acquired. Our estimates are based upon assumptions that we believe to be reasonable, but which are inherently uncertain and unpredictable. These valuations require the use of management's assumptions, which do not reflect unanticipated events and circumstances that may occur.

Goodwill is tested annually for impairment at the reporting unit level during the fourth quarter, or more frequently if events or changes in circumstances indicate that the carrying value of a reporting unit may not be recoverable. The evaluation may begin with a qualitative assessment of whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If so, a quantitative test is performed, in which fair value is estimated using a discounted cash flow method based on expected future operating results. These estimates, which primarily include future cash flows, revenue growth rates and discount rates, are based on assumptions that management believes to be reasonable. However, these assumptions are inherently uncertain, and actual results may differ materially from management's estimates. No goodwill impairment loss was recognized during fiscal year 2026.