PLURISTEM THERAPEUTICS INC - FORM 10-Q

Attached files

file	filename
EX-31.1 - EXHIBIT 31.1 - PLURISTEM THERAPEUTICS INC	exhibit_31-1.htm
EX-4.2 - EXHIBIT 4.2 - PLURISTEM THERAPEUTICS INC	exhibit_4-2.htm
EX-32.2 - EXHIBIT 32.2 - PLURISTEM THERAPEUTICS INC	exhibit_32-2.htm
EX-32.1 - EXHIBIT 32.1 - PLURISTEM THERAPEUTICS INC	exhibit_32-1.htm
EX-31.2 - EXHIBIT 31.2 - PLURISTEM THERAPEUTICS INC	exhibit_31-2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2010

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from __________ to __________

Commission file number 001-31392

PLURISTEM THERAPEUTICS INC.

(Exact name of registrant as specified in its charter)

Nevada	98-0351734
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

MATAM Advanced Technology Park, Building No. 20, Haifa, Israel 31905

(Address of principal executive offices)

+972-74-710-7171

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registration was required to submit and post such files).

Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

	Large accelerated filer o	Accelerated filer o
	Non-accelerated filer o	Smaller reporting company x
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

State the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: 41,324,035 common shares issued as of February 1, 2011.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2010

(unaudited)

PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2010

U.S. DOLLARS IN THOUSANDS

(Unaudited)

INDEX

	Page

Consolidated Balance Sheets	F-2 - F-3

Consolidated Statements of Operations	F-4

Statements of changes in Stockholders’ Equity (Deficiency)	F-5 - F-16

Consolidated Statements of Cash Flows	F-17 - F-19

Notes to Consolidated Financial Statements	F-20 - F-37

PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

U.S. Dollars in thousands

	December 31, 2010		June 30, 2010
	Unaudited		Audited
ASSETS

CURRENT ASSETS:

Cash and cash equivalents	$	4,739	$	1,583
Short term bank deposit		-		913
Prepaid expenses		56		41
Accounts receivable from the Office of the Chief Scientist		361		706
Other accounts receivable		375		362
Total current assets		5,531		3,605

LONG-TERM ASSETS:

Long-term deposits and restricted deposits		176		168
Severance pay fund		359		294
Property and equipment, net		1,816		1,555
Total long-term assets		2,351		2,017

Total assets	$	7,882	$	5,622

The accompanying notes are an integral part of the consolidated financial statements.

F - 2

PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

U.S. Dollars in thousands

	December 31, 2010			June 30, 2010
	Unaudited			Audited
LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES

Trade payables	$	926		$	791
Accrued expenses		85			118
Other accounts payable		468			372
Total current liabilities		1,479			1,281

LONG-TERM LIABILITIES

Accrued severance pay		420			360
		420			360

STOCKHOLDERS’ EQUITY

Share capital:
Common stock $0.00001 par value:
Authorized: 100,000,000 shares Issued: 26,489,904 shares as of December 31, 2010, 21,458,707 shares as of June 30, 2010. Outstanding: 26,489,904 shares as of December 31, 2010, 20,888,781 shares as of June 30, 2010.		-	(*)		-	(*)
Additional paid-in capital		50,598			44,086
Accumulated deficit during the development stage		(44,615	)		(40,105	)
		5,983			3,981

	$	7,882		$	5,622

(*)	Less than $1.

The accompanying notes are an integral part of the consolidated financial statements.

F - 3

PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

U.S. Dollars in thousands (except share and per share data)

	Six months ended December 31,						Three months ended December 31,						Period from May 11, 2001 (Inception) through December 31,
	2010			2009			2010			2009			2010

Research and development expenses	$	3,687		$	2,803		$	2,186		$	1,447		$	26,967
Less participation by the Office of the Chief Scientist		(1,111	)		(989	)		(608	)		(500	)		(6,183	)
Research and development expenses, net		2,576			1,814			1,578			947			20,784
General and administrative expenses		2,002			1,645			1,246			875			22,513
Know how write-off		-			-			-			-			2,474

Operating loss		(4,578	)		(3,459	)		(2,824	)		(1,822	)		(45,771	)

Financial expenses (income), net		(68	)		(11	)		(3	)		9			(1,156	)

Net loss for the period	$	(4,510	)	$	(3,448	)	$	(2,821	)	$	(1,831	)	$	(44,615	)

Loss per share:
Basic and diluted net loss per share	$	(0.20	)	$	(0.22	)	$	(0.11	)	$	(0.10	)

Weighted average number of shares used in computing basic and diluted net loss per share		22,954,736			15,984,227			24,897,022			17,449,256

The accompanying notes are an integral part of the consolidated financial statements.

F - 4

PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

(A Development Stage Company)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)

U.S. Dollars in thousands (except share and per share data)

	Common Stock						Additional Paid-in			Receipts on Account of		Deficit Accumulated During the Development			Total Stockholders’ Equity
	Shares			Amount			Capital			Common Stock		Stage			(Deficiency)

Issuance of common stock on July 9, 2001		175,500		$	(*	)	$	3		$	-	$	-		$	3
Balance as of June 30, 2001		175,500			(*	)		3			-		-			3
Net loss		-			-			-			-		(78	)		(78	)
Balance as of June 30, 2002		175,500			(*	)		3			-		(78	)		(75	)
Issuance of common stock on October 14, 2002, net of issuance expenses of $17		70,665			(*	)		83			-		-			83
Forgiveness of debt		-			-			12			-		-			12
Stock cancelled on March 19, 2003		(136,500	)		(*	)		(*	)		-		-			-
Receipts on account of stock and warrants, net of finders and legal fees of $56		-			-			-			933		-			933
Net loss		-			-			-			-		(463	)		(463	)
Balance as of June 30, 2003		109,665		$	(*	)	$	98		$	933	$	(541	)	$	490

(*)	Less than $1.

The accompanying notes are an integral part of the consolidated financial statements.

F - 5

PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

(A Development Stage Company)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)

U.S. Dollars in thousands (except share and per share data)

	Common Stock					Additional Paid-in		Receipts on Account of Common			Deficit Accumulated During the Development			Total Stockholders’ Equity
	Shares		Amount			Capital		Stock			Stage			(Deficiency)

Balance as of July 1, 2003		109,665	$	(*	)	$	98	$	933		$	(541	)	$	490
Issuance of common stock on July 16, 2003, net of issuance expenses of $70		3,628		(*	)		1,236		(933	)		-			303
Issuance of common stock on January 20, 2004		15,000		(*	)		-		-			-			(*	)
Issuance of warrants on January 20, 2004 for finder’s fee		-		-			192		-			-			192
Common stock granted to consultants on February 11, 2004		5,000		(*	)		800		-			-			800
Stock based compensation related to warrants granted to consultants on December 31, 2003		-		-			358		-			-			358
Exercise of warrants on April 19, 2004		1,500		(*	)		225		-			-			225
Net loss for the year		-		-			-		-			(2,011	)		(2,011	)
Balance as of June 30, 2004		134,793	$	(*	)	$	2,909	$	-		$	(2,552	)	$	357

(*)	Less than $1.

The accompanying notes are an integral part of the consolidated financial statements.

F - 6

PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

(A Development Stage Company)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)

U.S. Dollars in thousands (except share and per share data)

	Common Stock					Additional Paid-in		Deficit Accumulated During the Development			Total Stockholders’ Equity
	Shares		Amount			Capital		Stage			(Deficiency)

Balance as of July 1, 2004		134,793	$	(*	)	$	2,909	$	(2,552	)	$	357
Stock-based compensation related to warrants granted to consultants on September 30, 2004		-		-			162		-			162
Issuance of common stock and warrants on November 30, 2004 related to the October 2004 Agreement net of issuance costs of $29		16,250		(*	)		296		-			296
Issuance of common stock and warrants on January 26, 2005 related to the October 2004 Agreement net of issuance costs of $5		21,500		(*	)		425		-			425
Issuance of common stock and warrants on January 31, 2005 related to the January 31, 2005 Agreement		35,000		(*	)		-		-			(*	)
Issuance of common stock and options on February 15, 2005 to former director of the Company		250		(*	)		14		-			14
Issuance of common stock and warrants on February 16, 2005 related to the January 31, 2005 Agreement		25,000		(*	)		-		-			(*	)

(*)	Less than $1.

The accompanying notes are an integral part of the consolidated financial statements.

F - 7

PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

(A Development Stage Company)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)

U.S. Dollars in thousands (except share and per share data)

	Common Stock					Additional Paid-in			Deficit Accumulated During the Development		Total Stockholders’ Equity
	Shares		Amount			Capital			Stage		(Deficiency)

Issuance of warrants on February 16, 2005 for finder fee related to the January 31, 2005 Agreement		-		-			144			-		144
Issuance of common stock and warrants on March 3, 2005 related to the January 24, 2005 Agreement net of issuance costs of $24		60,000		(*	)		1,176			-		1,176
Issuance of common stock on March 3, 2005 for finder fee related to the January 24, 2005 Agreement		9,225		(*	)		(*	)		-		-
Issuance of common stock and warrants on March 3, 2005 related to the October 2004 Agreement net of issuance costs of $6		3,750		(*	)		69			-		69
Issuance of common stock and warrants to the Chief Executive Officer on March 23, 2005		12,000		(*	)		696			-		696
Issuance of common stock on March 23, 2005 related to the October 2004 Agreement		1,000		(*	)		20			-		20

(*)	Less than $1.

The accompanying notes are an integral part of the consolidated financial statements.

F - 8

PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

(A Development Stage Company)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)

U.S. Dollars in thousands (except share and per share data)

	Common Stock					Additional Paid-in			Deficit Accumulated During the Development			Total Stockholders’ Equity
	Shares		Amount			Capital			Stage			(Deficiency)

Classification of a liability in respect of warrants to additional paid in capital, net of issuance costs of $ 178		-		-			542			-			542
Net loss for the year		-		-			-			(2,098	)		(2,098	)
Balance as of June 30, 2005		318,768		(*	)		6,453			(4,650	)		1,803
Exercise of warrants on November 28, 2005 to finders related to the January 24, 2005 agreement		400		(*	)		-			-			-
Exercise of warrants on January 25 ,2006 to finders related to the January 25, 2005 Agreement		50		(*	)		-			-			-
Reclassification of warrants from equity to liabilities due to application of ASC 815-40		-		-			(8	)		-			(8	)
Net loss for the year		-		-			-			(2,439	)		(2,439	)
Balance as of June 30, 2006		319,218	$	(*	)	$	6,445		$	(7,089	)	$	(644	)

(*)	Less than $1.

The accompanying notes are an integral part of the consolidated financial statements.

F - 9

PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

(A Development Stage Company)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)

U.S. Dollars in thousands (except share and per share data)

	Common Stock					Additional Paid-in			Receipts on Account of Common		Accumulated Other Comprehensive		Deficit Accumulated During the Development			Total Stockholders’
	Shares		Amount			Capital			Stock		Loss		Stage			Equity

Balance as of July 1, 2006		319,218	$	(*	)	$	6,445		$	-	$	-	$	(7,089	)	$	(644	)
Conversion of convertible debenture, net of issuance costs of $440		1,019,815		(*	)		1,787			-		-		-			1,787
Classification of a liability in respect of warrants		-		-			360			-		-		-			360
Classification of deferred issuance expenses		-		-			(379	)		-		-		-			(379	)
Classification of a liability in respect of options granted to non-employees consultants		-		-			116			-		-		-			116
Compensation related to options granted to employees and directors		-		-			2,386			-		-		-			2,386
Compensation related to options granted to non-employee consultants		-		-			938			-		-		-			938
Exercise of warrants related to the April 3, 2006 agreement net of issuance costs of $114		75,692		(*	)		1,022			-		-		-			1,022

(*)	Less than $1.

The accompanying notes are an integral part of the consolidated financial statements.

F - 10

PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

(A Development Stage Company)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)

U.S. Dollars in thousands (except share and per share data)

	Common Stock					Additional Paid-in			Receipts on Account of Common		Accumulated Other Comprehensive			Deficit Accumulated During the Development			Total Stockholders’			Total Comprehensive
	Shares		Amount			Capital			Stock		Loss			Stage			Equity			Loss

Cashless exercise of warrants related to the April 3, 2006 agreement		46,674		(*	)		(*	)		-		-			-			-
Issuance of common stock on May and June 2007 related to the May 14, 2007 agreement, net of issuance costs of $64		3,126,177		(*	)		7,751			-		-			-			7,751
Receipts on account of shares		-		-			-			368		-			-			368
Cashless exercise of warrants related to the May 14, 2007 issuance		366,534		(*	)		(*	)		-		-			-			-
Issuance of warrants to investors related to the May 14, 2007 agreement		-		-			651			-		-			-			651
Unrealized loss on available for sale securities		-		-			-			-		(30	)		-			(30	)	$	(30	)
Net loss for the year		-		-			-			-		-			(8,429	)		(8,429	)		(8,429	)
Balance as of June 30, 2007		4,954,110	$	(*	)	$	21,077		$	368	$	(30	)	$	(15,518	)	$	5,897			-
Total comprehensive loss																				$	(8,459	)

(*)	Less than $1.

The accompanying notes are an integral part of the consolidated financial statements.

F - 11

PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

(A Development Stage Company)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)

U.S. Dollars in thousands (except share and per share data)

	Common Stock					Additional Paid-in			Receipts on Account of Common			Accumulated Other Comprehensive			Deficit Accumulated During the Development			Total Stockholders’			Total Comprehensive
	Shares		Amount			Capital			Stock			Loss			Stage			Equity			Loss

Balance as of July 1, 2007		4,954,110	$	(*	)	$	21,077		$	368		$	(30	)	$	(15,518	)	$	5,897
Issuance of common stock related to investors relation agreements		69,500		(*	)		275			-			-			-			275
Issuance of common stock in July 2007 - June 2008 related to the May 14, 2007 Agreement		908,408		(*	)		2,246			(368	)		-			-			1,878
Cashless exercise of warrants related to the May 14, 2007 Agreement		1,009,697		(*	)		(*	)		-			-			-			-
Compensation related to options granted to employees and directors		-		-			4,204			-			-			-			4,204
Compensation related to options granted to non–employees consultants		-		-			543			-			-			-			543
Realized loss on available for sale securities		-		-			-			-			30			-			30		$	30
Net loss for the year		-		-			-			-			-			(10,498	)		(10,498	)		(10,498	)
Balance as of June 30, 2008		6,941,715	$	(*	)	$	28,345		$	-		$	-		$	(26,016	)	$	2,329
Total comprehensive loss																					$	(10,468	)

(*)	Less than $1.

The accompanying notes are an integral part of the consolidated financial statements.

F - 12

PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

(A Development Stage Company)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)

U.S. Dollars in thousands (except share and per share data)

	Common Stock					Additional Paid-in		Deficit Accumulated During the Development			Total Stockholders’
	Shares		Amount			Capital		Stage			Equity

Balance as of July 1, 2008		6,941,715	$	(*	)	$	28,345	$	(26,016	)	$	2,329
Issuance of common stock related to investor relations agreements		171,389		(*	)		133		-			133
Issuance of common stock and warrants related to the August 6, 2008 agreement, net of issuance costs of $125		1,391,304		(*	)		1,475		-			1,475
Issuance of common stock and warrants related to the September 2008 agreement, net of issuance costs of $62		900,000		(*	)		973		-			973
Issuance of common stock and warrants in November 2008 -January 2009, net of issuance costs of $39		1,746,575		(*	)		660		-			660
Issuance of common stock and warrants related to the January 20, 2009 agreement, net of issuance costs of $5		216,818		(*	)		90		-			90
Issuance of common stock and warrants related to the January 29, 2009 agreement, net of issuance costs of $90		969,826		(*	)		1,035		-			1,035
Issuance of common stock and warrants related to the May 5, 2009 agreement, net of issuance costs of $104		888,406		(*	)		1,229		-			1,229
Compensation related to options granted to employees and directors		-		-			1,315		-			1,315
Compensation related to options and warrants granted to non–employee consultants		-		-			97		-			97
Compensation related to restricted stock granted to employees and directors		427,228		(*	)		642		-			642

(*)	Less than $1.

The accompanying notes are an integral part of the consolidated financial statements.

F - 13

PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

(A Development Stage Company)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)

U.S. Dollars in thousands (except share and per share data)

	Common Stock					Additional Paid-in		Deficit Accumulated During the Development			Total Stockholders’
	Shares		Amount			Capital		Stage			Equity

Compensation related to restricted stock granted to non–employee consultants		23,625		(*	)		52		-			52
Net loss for the period		-		-			-		(6,636	)		(6,636	)
Balance as of June 30, 2009		13,676,886	$	(*	)	$	36,046	$	(32,652	)	$	3,394

(*)	Less than $1.

The accompanying notes are an integral part of the consolidated financial statements.

F - 14

PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

(A Development Stage Company)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)

U.S. Dollars in thousands (except share and per share data)

	Common Stock					Additional Paid-in		Deficit Accumulated During the Development			Total Stockholders’
	Shares		Amount			Capital		Stage			Equity

Balance as of July 1, 2009		13,676,886	$	(*	)	$	36,046	$	(32,652	)	$	3,394
Issuance of common stock and warrants related to November 2008 through January 2009 agreements (on July 2009)		1,058,708		(*	)		794		-			794
Issuance of common stock and warrants related to October 2009 agreements, net of issuance costs of $242		2,702,822		(*	)		2,785		-			2,785
Issuance of common stock and warrants related to April 2010 agreements, net of issuance costs of $54		2,393,329		(*	)		2,627		-			2,627
Issuance of common stock related to investor relations agreements		1,929		(*	)		13		-			13
Exercise of options by employee		3,747		(*	)		2		-			2
Compensation related to options granted to employees and directors		-		-			211		-			211
Compensation related to options and warrants granted to non–employee consultants		-		-			161		-			161
Compensation related to restricted stock and restricted stock units granted to employees and directors		981,586		(*	)		1,357		-			1,357
Compensation related to restricted stock and restricted stock units granted to non–employee consultants		69,774		(*	)		90		-			90
Net loss for the period		-		-			-		(7,453	)		(7,453	)
Balance as of June 30, 2010		20,888,781	$	(*	)	$	44,086	$	(40,105	)	$	3,981

(*)	Less than $1.

The accompanying notes are an integral part of the consolidated financial statements.

F - 15

PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

(A Development Stage Company)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY) (UNAUDITED)

U.S. Dollars in thousands (except share and per share data)

	Common Stock					Additional Paid-in		Deficit Accumulated During the Development			Total Stockholders’
	Shares		Amount			Capital		Stage			Equity

Balance as of July 1, 2010		20,888,781	$	(*	)	$	44,086	$	(40,105	)	$	3,981
Issuance of common stock and warrants related to October 2010 agreements, net of issuance costs of $244		4,375,000		(*	)		5,006		-			5,006
Exercise of options by employee		5,000		(*	)		5		-			5
Receipts on account of exercise of warrants		-		(*	)		12		-			12
Issuance of common stock related to investor relations agreements		60,000		(*	)		78					78
Compensation related to options granted to employees and directors		-		-			7		-			7
Compensation related to options and warrants granted to non–employee consultants		-		-			18		-			18
Compensation related to restricted stock and restricted stock units granted to employees and directors		1,070,752		(*	)		1,238		-			1,238
Compensation related to restricted stock and restricted stock units granted to non–employee consultants		90,371		(*	)		148		-			148
Net loss for the period		-		-			-		(4,510	)		(4,510	)
Balance as of December 31, 2010		26,489,904	$	(*	)	$	50,598	$	(44,615	)	$	5,983

(*)	Less than $1.

The accompanying notes are an integral part of the consolidated financial statements.

F - 16

PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

U.S. Dollars in thousands

	Six months ended December 31,						Period from May 11, 2001 (inception) Through December 31,
	2010			2009			2010

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss	$	(4,510	)	$	(3,448	)	$	(44,615	)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation		144			97			896
Capital loss		8			-			12
Impairment of property and equipment		-			-			54
Know-how write-off		-			-			2,474
Amortization of deferred issuance costs		-			-			604
Stock-based compensation to employees and directors		1,245			695			11,360
Stock-based compensation to non-employees consultants		219			150			2,768
Stock compensation to investor relations consultants		78			32			1,291
Know-how licensors – imputed interest		-			-			55
Salary grant in shares and warrants		-			-			711
Decrease (increase) in other accounts receivable		317			394			(475	)
Decrease (increase) in prepaid expenses		(15	)		28			34
Increase in trade payables		254			86			843
Increase in other accounts payable and accrued expenses		34			67			19
Increase in interest receivable on short-term deposit		15			-			-
Increase in accrued interest due to related parties		-			-			3
Linkage differences and interest on long-term restricted lease deposit		(3	)		2			(4	)
Change in fair value of liability in respect of warrants		-			-			(2,696	)
Fair value of warrants granted to investors		-			-			651
Amortization of discount and changes in accrued interest on convertible debentures		-			-			128
Amortization of discount and changes in accrued interest from marketable securities		-			-			(9	)
Loss from sale of investments of available-for-sale marketable securities		-			-			106
Impairment and realized loss on available-for-sale marketable securities		-			-			372
Accrued severance pay, net		(5	)		(5	)		61
Net cash used in operating activities	$	(2,219	)	$	(1,902	)	$	(25,357	)

The accompanying notes are an integral part of the consolidated financial statements.

F - 17

PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

U.S. Dollars in thousands

	Six months ended December 31,						Period from May 11, 2001 (inception) through June 30,
	2010			2009			2010

CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisition of Pluristem Ltd. (1)	$	-		$	-		$	32
Purchase of property and equipment		(560	)		(124	)		(2,554	)
Investment in short-term deposits		-			(2,500	)		(2,500	)
Repayment of short-term deposits		898			-			2,500
Proceeds from sale of property and equipment		28			-			60
Investment in long-term deposits		(12	)		(7	)		(241	)
Repayment of long-term restricted deposit		13			-			80
Purchase of available for sale marketable securities		-			-			(3,784	)
Proceeds from sale of available for sale marketable securities		-			-			3,314
Purchase of know-how		-			-			(2,062	)
Net cash provided by (used in) investing activities		367			(2,631	)		(5,155	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock and warrants, net of issuance costs	$	5,015		$	3,579		$	32,360
Exercise of warrants and options		17			2			1,041
Issuance of convertible debenture		-			-			2,584
Issuance expenses related to convertible debentures		-			-			(440	)
Repayment of know-how licensors		-			-			(300	)
Repayment of notes and loan payable to related parties		-			-			(70	)
Proceeds from notes and loan payable to related parties		-			-			78
Receipt of long-term loan		-			-			49
Repayment of long-term loan		(24	)		(4	)		(51	)
Net cash provided by financing activities		5,008			3,577			35,251

Increase (decrease) in cash and cash equivalents		3,156			(956	)		4,739
Cash and cash equivalents at the beginning of the period		1,583			2,339			-
Cash and cash equivalents at the end of the period	$	4,739		$	1,383		$	4,739

The accompanying notes are an integral part of the consolidated financial statements.

F - 18

PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

U.S. Dollars in thousands

	Six months ended December 31,				Period from May 11, 2001 (inception) through December 31,
	2010		2009		2010

(a) Supplemental disclosure of cash flow activities:
Cash paid during the period for:
Taxes paid due to non-deductible expenses	$	7	$	1	$	61
Interest paid	$	-	$	1	$	18

(b) Supplemental disclosure of non-cash activities:
Classification of liabilities and deferred issuance expenses into equity	$	-	$	-	$	97
Conversion of convertible debenture	$	-	$	-	$	2,227
Purchase of property and equipment in credit	$	73	$	43	$	73
Issuance of shares in consideration of accounts receivable	$	243	$	-	$	243

(1) Acquisition of Pluristem Ltd.

Fair value of assets acquired and
liabilities assumed at the acquisition date:

Working capital (excluding cash and cash equivalents)					$	(427	)
Long-term restricted lease deposit						19
Property and equipment						130
In-process research and development write-off						246

					$	(32	)

The accompanying notes are an integral part of the consolidated financial statements.

F - 19

PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands (except per share amounts)

NOTE 1:-GENERAL

Pluristem Therapeutics Inc., a Nevada corporation, was incorporated and commenced operations on May 11, 2001, under the name A. I. Software Inc. which was changed as of June 30, 2003 to Pluristem Life Systems Inc. On November 26, 2007, its name was changed to Pluristem Therapeutics Inc. Pluristem Therapeutics Inc. has a wholly owned subsidiary, Pluristem Ltd. (“the Subsidiary”), which is incorporated under the laws of Israel. Pluristem Therapeutics Inc. and its Subsidiary are referred to as "the Company".

The Company is devoting substantially all of its efforts towards conducting research and development of adherent stromal cells production technology and the commercialization of cell therapy products. Accordingly, the Company is considered to be in the development stage, as defined in Accounting Standards Codification TM (“ASC”) 915. In the course of such activities, the Company has sustained operating losses and expects such losses to continue in the foreseeable future. The Company has not generated any revenues or product sales and has not achieved profitable operations or positive cash flows from operations. The Company's accumulated losses during the development stage aggregated to $44,615 through December 31, 2010 and the Company incurred net loss of $4,510 and negative cash flow from operating activities in the amount of $2,219 for the six months ended December 31, 2010. There is no assurance that profitable operations, if ever achieved, could be sustained on a continuing basis.

The Company plans to continue to finance its operations with sales of equity securities and research and development grants. On February 1, 2011, the Company closed a public offering of shares and warrants in net consideration of approximately $38,000 (also see note 4(b)). In the longer term, the Company plans to finance its operations from revenues from product sales or licensing of its technology.

Since December 10, 2007, the Company’s shares of common stock have been traded on the NASDAQ Capital Market under the symbol PSTI. The shares were previously traded on the OTC Bulletin Board under the trading symbol “PLRS.OB”. On May 7, 2007, the Company’s shares also began trading on Europe’s Frankfurt Stock Exchange, under the symbol PJT.

On December 19, 2010, the Company’s shares began trading on Tel-Aviv Stock Exchange, under the symbol PLTR.

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited interim financial statements of Pluristem Therapeutics Inc., a development stage company, have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year as reported in the Company’s Annual Report on Form 10-K have been omitted.

F - 20

PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARY

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands (except per share amounts)

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES

B.	Impact of recently issued accounting standards:

In July 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2010-20 “ASU 2010-20” Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses". ASU 2010-20 is an update of Accounting Standards Codification Topic 310, Receivables. This update requires enhanced disclosures on a disaggregated basis about the nature of the credit risk inherent in the portfolio of financing receivables; how that risk is analyzed and assessed in arriving at the allowance for credit losses; and the changes and reasons for those changes in the allowance for credit losses.

The disclosures required under ASU 2010-20 as of the end of a reporting period are effective for interim and annual reporting periods ending on or after December 15, 2010. The adoption of the update does not have a material impact on the Company's financial condition or results of operations.

NOTE 3: - SHARE CAPITAL AND STOCK OPTIONS

On December 22, 2009, the Company’s authorized common stock was increased from 30,000,000 shares with a par value of $0.00001 per share to 100,000,000 shares with a par value of $0.00001 per share. All shares have equal voting rights and are entitled to one vote per share in all matters to be voted upon by stockholders. The shares have no pre-emptive, subscription, conversion or redemption rights and may be issued only as fully paid and non-assessable shares. Holders of the common stock are entitled to equal ratable rights to dividends and distributions with respect to the common stock, as may be declared by the Board of Directors out of funds legally available.

On July 1, 2008, the authorized share capital

PLURISTEM THERAPEUTICS INC - FORM 10-Q - February 9, 2011

Attached files