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EX-31.1 - EXHIBIT 31.1 - PLURISTEM THERAPEUTICS INCexhibit_31-1.htm
EX-4.2 - EXHIBIT 4.2 - PLURISTEM THERAPEUTICS INCexhibit_4-2.htm
EX-32.2 - EXHIBIT 32.2 - PLURISTEM THERAPEUTICS INCexhibit_32-2.htm
EX-32.1 - EXHIBIT 32.1 - PLURISTEM THERAPEUTICS INCexhibit_32-1.htm
EX-31.2 - EXHIBIT 31.2 - PLURISTEM THERAPEUTICS INCexhibit_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)
 
 
2

 
 
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
 
 
 
 

 
 
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
 
a.
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".
 
b.
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.
 
c.
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
 
A.
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
 
a.
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