Attached files
file | filename |
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EX-31.2 - BRAINSTORM CELL THERAPEUTICS INC. | v166440_ex31-2.htm |
EX-31.1 - BRAINSTORM CELL THERAPEUTICS INC. | v166440_ex31-1.htm |
EX-32.2 - BRAINSTORM CELL THERAPEUTICS INC. | v166440_ex32-2.htm |
EX-32.1 - BRAINSTORM CELL THERAPEUTICS INC. | v166440_ex32-1.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 September 30, 2009
o
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
Transition Period from ________ to ________.
Commission
File Number 333-61610
BRAINSTORM
CELL THERAPEUTICS INC.
(Exact
name of registrant as specified in its charter)
Delaware
|
20-8133057
|
|
(State or other jurisdiction
of
incorporation or
organization)
|
(I.R.S. Employer
Identification
No.)
|
110 East
59th Street
New York,
NY 10022
(Address
of principal executive offices)
(212)
557-9000
(Registrant's
telephone number, including area code)
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
registrant was required to submit and post such files).
Yes ¨ No ¨
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
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer o
|
Accelerated
filer o
|
|
Non-accelerated filer o (Do not check if a smaller reporting company) |
Smaller
reporting company x
|
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
As of
November 10, 2009, the number of shares issued and outstanding of the
registrant’s common stock, $0.00005 par value per share,
was 71,950,814.
TABLE OF
CONTENTS
Page
Number
|
||
PART
I
|
1
|
|
Item
1. Financial Statements
|
1
|
|
Item
2. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
33
|
|
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
|
38
|
|
Item
4. Controls and Procedures
|
38
|
|
PART
II
|
39
|
|
Item
1. Legal Proceedings
|
39
|
|
Item
1A. Risk Factors
|
40
|
|
Item
5. Other Information
|
40
|
|
Item
6. Exhibits
|
40
|
PART
I: FINANCIAL INFORMATION
SPECIAL
NOTE
Unless
otherwise specified in this quarterly report on Form 10-Q, all references to
currency, monetary values and dollars set forth herein shall mean United States
(U.S.) dollars.
Item
1. Financial Statements.
BRAINSTORM
CELL THERAPEUTICS INC. AND SUBSIDIARY
(A
development stage company)
CONSOLIDATED
FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2009
UNAUDITED
U.S.
DOLLARS IN THOUSANDS
1
BRAINSTORM
CELL THERAPEUTICS INC. AND SUBSIDIARY
(A
development stage company)
CONSOLIDATED
FINANCIAL STATEMENTS
AS
OF SEPTEMBER 30, 2009
UNAUDITED
U.S.
DOLLARS IN THOUSANDS
INDEX
Page
|
|
Consolidated
Balance Sheets
|
3
|
|
|
Consolidated
Statements of Operations
|
4
|
|
|
Statements
of Changes in Stockholders' Equity (Deficiency)
|
5 -
9
|
|
|
Consolidated
Statements of Cash Flows
|
10 -
11
|
|
|
Notes
to Consolidated Financial Statements
|
12
- 32
|
2
BRAINSTORM
CELL THERAPEUTICS INC. AND SUBSIDIARY
(A
development stage company)
UNAUDITED
CONSOLIDATED
BALANCE SHEETS
U.S.
dollars in thousands (except share data)
September
30,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
Unaudited
|
Audited
|
|||||||
ASSETS
|
||||||||
CURRENT
ASSETS:
|
||||||||
Cash
and cash equivalents
|
$ | 2 | $ | 2 | ||||
Restricted
cash
|
- | 36 | ||||||
Accounts
receivable and prepaid expenses
|
93 | 21 | ||||||
Total
current assets
|
95 | 59 | ||||||
LONG-TERM
INVESTMENTS:
|
||||||||
Prepaid
expenses
|
7 | 11 | ||||||
Severance
pay fund
|
79 | 62 | ||||||
Total
long-term investments
|
86 | 73 | ||||||
PROPERTY
AND EQUIPMENT, NET
|
624 | 743 | ||||||
Total
assets
|
$ | 805 | $ | 875 | ||||
LIABILITIES
AND STOCKHOLDERS' DEFICIENCY
|
||||||||
CURRENT
LIABILITIES:
|
||||||||
Short
term Credit from bank
|
$ | 78 | $ | 72 | ||||
Trade
payables
|
777 | 744 | ||||||
Other
accounts payable and accrued expenses
|
2,231 | 1,672 | ||||||
Short-term
convertible loans
|
186 | 172 | ||||||
Short-term
loans
|
- | 199 | ||||||
Total
current liabilities
|
3,272 | 2,859 | ||||||
ACCRUED
SEVERANCE PAY
|
101 | 92 | ||||||
Total
liabilities
|
3,373 | 2,951 | ||||||
COMMITMENTS
AND CONTINGENCIES
|
||||||||
STOCKHOLDERS'
DEFICIENCY:
|
||||||||
Stock
capital: (Note 7)
|
||||||||
Common
stock of $0.00005 par value - Authorized: 800,000,000 shares as of
September 30, 2009 and December 31, 2008; Issued and outstanding:
60,505,702 and 55,241,418 shares as of September 30, 2009
and December 31, 2008, respectively.
|
3 | 3 | ||||||
Additional
paid-in-capital
|
35,067 | 33,881 | ||||||
Deficit
accumulated during the development stage
|
(37,638 | ) | (35,960 | ) | ||||
Total
stockholders' deficiency
|
(2,568 | ) | (2,076 | ) | ||||
Total
liabilities and stockholders' deficiency
|
$ | 805 | $ | 875 | ||||
The
accompanying notes are an integral part of the consolidated financial
statements.
3
BRAINSTORM
CELL THERAPEUTICS INC. AND SUBSIDIARY
(A
development stage company)
UNAUDITED
CONSOLIDATED
STATEMENTS OF OPERATIONS
U.S.
dollars in thousands (except share data)
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
Period
from September 22, 2000 (inception date) through
September
30,
|
||||||||||||||||||
2009
|
2008
|
2009
|
2008
|
2009
|
||||||||||||||||
Unaudited
|
Unaudited
|
Unaudited
|
||||||||||||||||||
Operating
costs and expenses:
|
||||||||||||||||||||
Research
and development, net
|
$ | 275 | $ | 292 | $ | 774 | $ | 1,165 | $ | 22,278 | ||||||||||
General
and administrative
|
318 | 405 | 883 | 1,428 | 12,572 | |||||||||||||||
Total
operating costs and expenses
|
593 | 697 | 1,657 | 2,593 | 34,850 | |||||||||||||||
Financial
expenses (income), net
|
28 | 31 | 21 | 253 | 2,571 | |||||||||||||||
621 | 728 | 1,678 | 2,846 | 37,421 | ||||||||||||||||
Taxes
on income
|
- | - | - | - | 53 | |||||||||||||||
Loss
from continuing operations
|
621 | 728 | 1,678 | 2,846 | 37,474 | |||||||||||||||
Net
loss from discontinued operations
|
- | - | - | - | 164 | |||||||||||||||
Net
loss
|
$ | 621 | $ | 728 | $ | 1,678 | $ | 2,846 | $ | 37,638 | ||||||||||
Basic
and diluted net loss per share from continuing operations
|
$ | 0.01 | $ | 0.01 | $ | 0.03 | $ | 0.06 | ||||||||||||
Weighted
average number of shares outstanding used in computing basic and diluted
net loss per share
|
60,390,796 | 51,354,951 | 58,327,655 | 46,958,440 | ||||||||||||||||
The
accompanying notes are an integral part of the consolidated financial
statements
4
BRAINSTORM
CELL THERAPEUTICS INC. AND SUBSIDIARY
(A
development stage company)
UNAUDITED
STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
U.S.
dollars in thousands (except share data)
Deficit
accumulated
|
Total
|
|||||||||||||||||||||||
Additional
|
Deferred
|
during
the
|
stockholders'
|
|||||||||||||||||||||
Common
stock
|
paid-in
|
stock-based
|
development
|
equity
|
||||||||||||||||||||
Number
|
Amount
|
capital
|
compensation
|
stage
|
(deficiency)
|
|||||||||||||||||||
Balance
as of September 22, 2000 (date of inception)
|
- | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||
|
||||||||||||||||||||||||
Stock
issued on September 22, 2000 for cash at $0.00188 per
share
|
8,500,000 | 1 | 16 | - | - | 17 | ||||||||||||||||||
Stock
issued on March 31, 2001 for cash at $0.0375 per share
|
1,600,000 | * - | 60 | - | - | 60 | ||||||||||||||||||
Contribution
of capital
|
- | - | 8 | - | - | 8 | ||||||||||||||||||
Net
loss
|
- | - | - | - | (17 | ) | (17 | ) | ||||||||||||||||
|
||||||||||||||||||||||||
Balance
as of March 31, 2001
|
10,100,000 | 1 | 84 | - | (17 | ) | 68 | |||||||||||||||||
|
||||||||||||||||||||||||
Contribution
of capital
|
- | - | 11 | - | - | 11 | ||||||||||||||||||
Net
loss
|
- | - | - | - | (26 | ) | (26 | ) | ||||||||||||||||
|
||||||||||||||||||||||||
Balance
as of March 31, 2002
|
10,100,000 | 1 | 95 | - | (43 | ) | 53 | |||||||||||||||||
|
||||||||||||||||||||||||
Contribution
of capital
|
- | - | 15 | - | - | 15 | ||||||||||||||||||
Net
loss
|
- | - | - | - | (47 | ) | (47 | ) | ||||||||||||||||
|
||||||||||||||||||||||||
Balance
as of March 31, 2003
|
10,100,000 | 1 | 110 | - | (90 | ) | 21 | |||||||||||||||||
|
||||||||||||||||||||||||
2-for-1
stock split
|
10,100,000 | * - | - | - | - | - | ||||||||||||||||||
Stock
issued on August 31, 2003 to purchase mineral option at $0.065 per
share
|
100,000 | * - | 6 | - | - | 6 | ||||||||||||||||||
Cancellation
of shares granted to Company's President
|
(10,062,000 | ) | * - | * - | - | - | - | |||||||||||||||||
Contribution
of capital
|
- | * - | 15 | - | - | 15 | ||||||||||||||||||
Net
loss
|
- | - | - | - | (73 | ) | (73 | ) | ||||||||||||||||
Balance
as of March 31, 2004
|
10,238,000 | $ | 1 | $ | 131 | $ | - | $ | (163 | ) | $ | (31 | ) |
*
Represents an amount less than $1.
5
BRAINSTORM
CELL THERAPEUTICS INC. AND SUBSIDIARY
(A
development stage company)
UNAUDITED
STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
U.S.
dollars in thousands (except share data)
Deficit
accumulated
|
Total
|
|||||||||||||||||||||||
Additional
|
Deferred
|
during
the
|
stockholders'
|
|||||||||||||||||||||
Common
stock
|
paid-in
|
stock-based
|
development
|
equity
|
||||||||||||||||||||
Number
|
Amount
|
capital
|
compensation
|
stage
|
(deficiency)
|
|||||||||||||||||||
Balance
as of March 31, 2004
|
10,238,000 | $ | 1 | $ | 131 | $ | - | $ | (163 | ) | $ | (31 | ) | |||||||||||
Stock
issued on June 24, 2004 for private placement at $0.01 per share, net of
$25,000 issuance expenses
|
8,510,000 | * - | 60 | - | - | 60 | ||||||||||||||||||
Contribution
capital
|
- | - | 7 | - | - | 7 | ||||||||||||||||||
Stock
issued in 2004 for private placement at $0.75 per unit
|
1,894,808 | * - | 1,418 | - | - | 1,418 | ||||||||||||||||||
Cancellation
of shares granted to service providers
|
(1,800,000 | ) | * - | - | - | - | ||||||||||||||||||
Deferred
stock-based compensation related to options granted to
employees
|
- | - | 5,979 | (5,979 | ) | - | - | |||||||||||||||||
Amortization
of deferred stock-based compensation related to shares and options granted
to employees
|
- | - | - | 584 | - | 584 | ||||||||||||||||||
Compensation
related to shares and options granted to service providers
|
2,025,000 | * - | 17,506 | - | - | 17,506 | ||||||||||||||||||
Net
loss
|
- | - | - | - | (18,840 | ) | (18,840 | ) | ||||||||||||||||
Balance
as of March 31, 2005
|
20,867,808 | $ | 1 | $ | 25,101 | $ | (5,395 | ) | $ | (19,003 | ) | $ | 704 |
*
Represents an amount less than $1.
6
BRAINSTORM
CELL THERAPEUTICS INC. AND SUBSIDIARY
(A
development stage company)
UNAUDITED
STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
U.S.
dollars in thousands (except share data)
Deficit
accumulated
|
Total
|
|||||||||||||||||||||||
Additional
|
Deferred
|
during
the
|
stockholders'
|
|||||||||||||||||||||
Common
stock
|
paid-in
|
stock-based
|
development
|
equity
|
||||||||||||||||||||
Number
|
Amount
|
capital
|
compensation
|
stage
|
(deficiency)
|
|||||||||||||||||||
Balance
as of March 31, 2005
|
20,867,808 | $ | 1 | $ | 25,101 | $ | (5,395 | ) | $ | (19,003 | ) | $ | 704 | |||||||||||
|
||||||||||||||||||||||||
Stock
issued on May 12, 2005 for private placement at $0.8 per
share
|
186,875 | * - | 149 | - | - | 149 | ||||||||||||||||||
Stock
issued on July 27, 2005 for private placement at $0.6 per
share
|
165,000 | * - | 99 | - | - | 99 | ||||||||||||||||||
Stock
issued on September 30, 2005 for private placement at $0.8 per
share
|
312,500 | * - | 225 | - | - | 225 | ||||||||||||||||||
Stock
issued on December 7, 2005 for private placement at $0.8 per
share
|
187,500 | * - | 135 | - | - | 135 | ||||||||||||||||||
Forfeiture
of options granted to employees
|
- | - | (3,363 | ) | 3,363 | - | - | |||||||||||||||||
Deferred
stock-based compensation related to shares and options granted to
directors and employees
|
200,000 | * - | 486 | (486 | ) | - | - | |||||||||||||||||
Amortization
of deferred stock-based compensation related to options and shares granted
to employees and directors
|
- | - | 51 | 1,123 | - | 1,174 | ||||||||||||||||||
Stock-based
compensation related to options and shares granted to service
providers
|
934,904 | * - | 662 | - | - | 662 | ||||||||||||||||||
Reclassification
due to application of EITF
00-19 (ASC 815-40-25)
|
- | - | (7,906 | ) | (7,906 | ) | ||||||||||||||||||
Beneficial
conversion feature related to a convertible bridge loan
|
- | - | 164 | - | - | 164 | ||||||||||||||||||
Net
loss
|
- | - | - | - | (3,317 | ) | (3,317 | ) | ||||||||||||||||
|
||||||||||||||||||||||||
Balance
as of March 31, 2006
|
22,854,587 | $ | 1 | $ | 15,803 | $ | (1,395 | ) | $ | (22,320 | ) | $ | (7,911 | ) | ||||||||||
|
||||||||||||||||||||||||
Elimination
of deferred stock compensation due to implementation of SFAS 123(R) (ASC
718-10)
|
- | - | (1,395 | ) | 1,395 | - | - | |||||||||||||||||
Stock-based
compensation related to shares and options granted to directors and
employees
|
200,000 | * - | 1,168 | - | - | 1,168 | ||||||||||||||||||
Reclassification
due to application of EITF
00-19 (ASC 815-40-25)
|
- | - | 7,191 | - | - | 7,191 | ||||||||||||||||||
Stock-based
compensation related to options and shares granted to service
providers
|
1,147,225 | - | 453 | - | - | 453 | ||||||||||||||||||
Warrants
issued to convertible note holder
|
- | - | 11 | - | - | 11 | ||||||||||||||||||
Warrants
issued to loan holder
|
- | - | 110 | - | - | 110 | ||||||||||||||||||
Beneficial
conversion feature related to convertible bridge loans
|
- | - | 1,086 | - | - | 1,086 | ||||||||||||||||||
Net
loss
|
- | - | - | - | (3,924 | ) | (3,924 | ) | ||||||||||||||||
|
||||||||||||||||||||||||
Balance
as of December 31, 2006
|
24,201,812 | $ | 1 | $ | 24,427 | $ | - | $ | (26,244 | ) | $ | (1,816 | ) |
*
Represents an amount less than $1.
|
7
BRAINSTORM
CELL THERAPEUTICS INC. AND SUBSIDIARY
(A
development stage company)
UNAUDITED
STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
U.S.
dollars in thousands (except share data)
Deficit
accumulated
|
Total
|
|||||||||||||||||||||||
Additional
|
Deferred
|
during
the
|
stockholders'
|
|||||||||||||||||||||
Common
stock
|
paid-in
|
stock-based
|
development
|
equity
|
||||||||||||||||||||
Number
|
Amount
|
Capital
|
compensation
|
stage
|
(deficiency)
|
|||||||||||||||||||
Balance
as of December 31, 2006
|
24,201,812 | $ | 1 | $ | 24,427 | $ | - | $ | (26,244 | ) | $ | (1,816 | ) | |||||||||||
|
||||||||||||||||||||||||
Stock-based
compensation related to options and shares granted to service
providers
|
544,095 | 1,446 | - | - | 1,446 | |||||||||||||||||||
Warrants
issued to convertible note holder
|
- | - | 109 | - | - | 109 | ||||||||||||||||||
Stock-based
compensation related to shares and options granted to directors and
employees
|
200,000 | * - | 1,232 | - | - | 1,232 | ||||||||||||||||||
Beneficial
conversion feature related to convertible loans
|
- | - | 407 | - | - | 407 | ||||||||||||||||||
Conversion
of convertible loans
|
725,881 | * - | 224 | - | - | 224 | ||||||||||||||||||
Exercise
of warrants
|
3,832,621 | * - | 214 | - | - | 214 | ||||||||||||||||||
Stock
issued for private placement at $0.1818 per unit, net of finder's
fee
|
11,500,000 | 1 | 1,999 | - | - | 2,000 | ||||||||||||||||||
Net
loss
|
- | - | - | - | (6,244 | ) | (6,244 | ) | ||||||||||||||||
|
||||||||||||||||||||||||
Balance
as of December 31, 2007
|
41,004,409 | $ | 2 | $ | 30,058 | $ | - | $ | (32,488 | ) | $ | (2,428 | ) | |||||||||||
|
||||||||||||||||||||||||
Stock-based
compensation related to options and stock granted to service
providers
|
90,000 | - | 33 | - | - | 33 | ||||||||||||||||||
Stock-based
compensation related to stock and options granted to directors and
employees
|
- | 731 | - | - | 731 | |||||||||||||||||||
Conversion
of convertible loans
|
3,644,610 | * - | 1,276 | - | - | 1,276 | ||||||||||||||||||
Exercise
of warrants
|
1,860,000 | * - | - | - | - | - | ||||||||||||||||||
Exercise
of options
|
17,399 | * - | 3 | - | - | 3 | ||||||||||||||||||
Stock
issued for private placement at $0.1818 per unit, net of finder's
fee
|
8,625,000 | 1 | 1,499 | - | - | 1,500 | ||||||||||||||||||
Subscription
of shares for private placement at $0.1818 per
unit
|
- | - | 281 | - | - | 281 | ||||||||||||||||||
Net
loss
|
- | - | - | - | (3,472 | ) | (3,472 | ) | ||||||||||||||||
Balance
as of December 31, 2008
|
55,241,418 | $ | 3 | $ | 33,881 | $ | - | $ | (35,960 | ) | $ | (2,076 | ) | |||||||||||
|
*
Represents an amount less than $1.
8
BRAINSTORM
CELL THERAPEUTICS INC. AND SUBSIDIARY
(A
development stage company)
UNAUDITED
STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
U.S.
dollars in thousands (except share data)
Common
stock
|
Additional
paid-in
|
Deferred
stock-based
|
Deficit
accumulated
during
the
development
|
Total
stockholders'
|
||||||||||||||||||||
Number
|
Amount
|
capital
|
compensation
|
stage
|
(deficiency)
|
|||||||||||||||||||
Balance
as of December 31, 2008
|
55,241,418 | $ | 3 | $ | 33,881 | $ | - | $ | (35,960 | ) | $ | (2,076 | ) | |||||||||||
|
||||||||||||||||||||||||
Conversion
of convertible loans
|
2,500,000 | * - | 200 | - | - | 200 | ||||||||||||||||||
Stock-based
compensation related to options and stock granted to service
providers
|
2,764,284 | * - | 270 | - | - | 270 | ||||||||||||||||||
Stock-based
compensation related to stock and options granted to directors and
employees
|
- | - | 293 | - | - | 293 | ||||||||||||||||||
Subscription
of shares for private placement
|
423 | 423 | ||||||||||||||||||||||
Net
loss
|
- | - | - | - | (1,678 | ) | (1,678 | ) | ||||||||||||||||
Balance
as of September 30, 2009
|
60,505,702 | $ | 3 | $ | 35,067 | $ | - | $ | (37,638 | ) | $ | (2,568 | ) |
*
Represents an amount less than $1.
The
accompanying notes are an integral part of the consolidated financial
statements.
9
BRAINSTORM
CELL THERAPEUTICS INC. AND SUBSIDIARY
(A
development stage company)
CONSOLIDATED
STATEMENTS OF CASH FLOWS
U.S.
dollars in thousands
Nine
months
ended
September 30,
|
Period
from September 22, 2000 (inception date) through
September
30,
|
|||||||||||
2009
|
2008
|
2009
|
||||||||||
Unaudited
|
Unaudited
|
|||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
loss
|
$ | (1,678 | ) | $ | (2,846 | ) | $ | (37,638 | ) | |||
Less
- loss for the period from discontinued operations
|
- | - | 164 | |||||||||
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||||||
Depreciation
and amortization of deferred charges
|
120 | 113 | 638 | |||||||||
Erosion
of restricted cash
|
35 | (5 | ) | 29 | ||||||||
Accrued
severance pay, net
|
(8 | ) | 20 | 22 | ||||||||
Accrued
interest on loans
|
14 | 108 | 444 | |||||||||
Amortization
of discount on short-term loans
|
- | 42 | 1,865 | |||||||||
Change
in fair value of options and warrants
|
- | - | (795 | ) | ||||||||
Expenses
related to stocks and options granted to service providers
|
270 | 97 | 20,436 | |||||||||
Amortization
of deferred stock-based compensation related to options granted to
employees and directors
|
293 | 478 | 5,182 | |||||||||
Decrease
(increase) in accounts receivable and prepaid expenses
|
(71 | ) | 49 | (93 | ) | |||||||
Increase
(decrease) in trade payables
|
33 | (101 | ) | 777 | ||||||||
Increase
in other accounts payable and accrued expenses
|
559 | 456 | 2,225 | |||||||||
Net
cash used in continuing operating activities
|
(433 | ) | ( 1,589 | ) | (6,744 | ) | ||||||
Net
cash used in discontinued operating activities
|
- | - | (23 | ) | ||||||||
Total
net cash used in operating activities
|
(433 | ) | (1,589 | ) | (6,767 | ) | ||||||
|
||||||||||||
Cash flows from
investing activities:
|
||||||||||||
Purchase
of property and equipment
|
- | (154 | ) | (1,080 | ) | |||||||
Restricted
cash
|
- | - | (29 | ) | ||||||||
Investment
in lease deposit
|
4 | (4 | ) | (7 | ) | |||||||
Net
cash used in continuing investing activities
|
4 | (158 | ) | (1,116 | ) | |||||||
Net
cash used in discontinued investing activities
|
- | - | (16 | ) | ||||||||
Total
net cash provided by (used in) investing activities
|
$ | 4 | $ | (158 | ) | $ | (1,132 | ) | ||||
The
accompanying notes are an integral part of the consolidated financial
statements.
10
BRAINSTORM
CELL THERAPEUTICS INC. AND SUBSIDIARY
(A
development stage company)
CONSOLIDATED
STATEMENTS OF CASH FLOWS
U.S.
dollars in thousands
Nine
months
ended
September 30,
|
Period
from September 22, 2000 (inception date) through
September
30,
|
|||||||||||
2009
|
2008
|
2009
|
||||||||||
Unaudited
|
Unaudited
|
|||||||||||
Cash flows from
financing activities:
|
||||||||||||
Proceeds
from issuance of common stock and warrants
|
$ | 423 | $ | 1,634 | $ | 6,292 | ||||||
Proceeds
from loans, notes and issuance of warrants net
|
- | - | 2,061 | |||||||||
Change
in credit from bank
|
6 | 95 | 78 | |||||||||
Repayment
of loans
|
- | (50 | ) | (601 | ) | |||||||
Proceeds
from exercise of warrants and options
|
- | 3 | 28 | |||||||||
Net
cash provided by continuing financing activities
|
429 | 1,682 | 7,858 | |||||||||
Net
cash provided by discontinued financing activities
|
- | - | 43 | |||||||||
Total
net cash provided by financing activities
|
429 | 1,682 | 7,901 | |||||||||
|
||||||||||||
Increase
(decrease) in cash and cash equivalents
|
- | (65 | ) | 2 | ||||||||
Cash
and cash equivalents at the beginning of the period
|
2 | 86 | - | |||||||||
Cash
and cash equivalents at end of the period
|
$ | 2 | $ | 21 | $ | 2 | ||||||
The
accompanying notes are an integral part of the consolidated financial
statements.
11
BRAINSTORM
CELL THERAPEUTICS INC. AND SUBSIDIARY
(A
development stage company)
NOTE 1 -
GENERAL
A.
|
On
July 8, 2004, the Company entered into a licensing agreement with Ramot of
Tel Aviv University Ltd. ("Ramot"), an Israeli corporation, to acquire
certain stem cell technology (see Note 3). Subsequent to this agreement,
the Company decided to focus on the development of novel cell therapies
for neurodegenerative diseases, particularly Parkinson's and ALS disease,
based on the acquired technology and research to be conducted and funded
by the Company.
|
Following
the licensing agreement dated July 8, 2004, the management of the Company
decided to abandon all old activities related to the sale of the digital data
recorder product. The discontinuation of this activity was accounted for under
the provision of Statement of Financial Accounting Standard ("SFAS") 144 (ASC
360-10), "Accounting for the Impairment or Disposal of Long-Lived
Assets".
B.
|
On
October 25, 2004, the Company formed a wholly-owned subsidiary in Israel,
Brainstorm Cell Therapeutics Ltd.
("BCT").
|
C.
|
On
November 22, 2004, the Company changed its name from Golden Hand Resources
Inc. to Brainstorm Cell Therapeutics Inc. to better reflect its new line
of business in the development of novel cell therapies for
neurodegenerative diseases. BCT owns all operational property and
equipment.
|
D.
|
In
December 2006, the Company changed its state of incorporation from
Washington to Delaware.
|
E.
|
On
September 17, 2006, the Company changed its fiscal year-end from March 31
to December 31.
|
F.
|
Since
its inception, the Company has devoted substantially most of its efforts
to research and development, recruiting management and technical staff,
acquiring assets and raising capital. In addition, the Company has not
generated revenues. Accordingly, the Company is considered to be in the
development stage, as defined in Statement of Financial Accounting
Standards No. 7 (ASC 915-10), "Accounting and reporting by development
Stage Enterprises" ("SFAS
No. 7").
|
GOING
CONCERN
As
reflected in the accompanying financial statements, the Company’s operations for
the nine months ended on September 30, 2009, resulted in a net loss of $1,678
and the Company’s balance sheet reflects a net stockholders’ deficiency of
$2,568, accumulated deficit of $37,638 and working capital deficiency of $3,177.
These conditions raise substantial doubt about the Company's ability to continue
to operate as a going concern. The Company’s ability to continue operating as a
“going concern” is dependent on several factors, among them is its ability to
raise sufficient additional working capital. Management’s plans in this regard
include, among others, raising additional cash from current and potential
stockholders and lenders.
12
BRAINSTORM
CELL THERAPEUTICS INC. AND SUBSIDIARY
(A
development stage company)
NOTE 1 -
GENERAL
(Cont.)
GOING
CONCERN (Cont.)
Accordingly,
as a result of the current economic situation and the difficulty to raise
immediate fund to support all of the Company’s projects, the Company decided to
reduce its activity and downsize it workforce and focus only on the effort to
reach clinical trials in ALS in 2010.
The
Company also reduced its general and administrative expenses and stopped some
development projects until it is able to obtain sufficient financing. There can
be no assurance that sufficient revenues will be generated and that additional
funds will be available on terms acceptable to the Company, or at
all.
The
Company depends on Ramot to conduct its research and development activities. As
discussed in Note 4, the Company did not make a certain payment in 2008 to
Ramot. As a result, the Company did not meet the payment schedule according to
the agreement with Ramot and Ramot is entitled to terminate the research and
license agreement.
These
financial statements do not include any adjustments relating to the
recoverability and classification of assets carrying amounts or the amount and
classification of liabilities that may be required should the Company be unable
to continue as a going concern.
NOTE
2 - SIGNIFICANT ACCOUNTING POLICIES
The
significant accounting policies applied in the annual financial statements of
the Company as of December 31, 2008, are applied consistently in these financial
statements.
Initial
Adoption of New Standards
FSP
FAS 157-4 (ASC 820)
In April
2009, the FASB issued an amendment to ASC 820 FASB staff position 157-4,
“Determining Fair Value When the Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions that are Not
Orderly” (“ASC 820-10-65“). This amendment applies to all assets and liabilities
within the scope of accounting pronouncements that require or permit fair value
measurements, except as discussed in ASC 820-15-2. The amendment is effective
for interim and annual reporting periods ending after June 15, 2009, and shall
be applied prospectively. ASC 820-10-65 relates to determining fair values when
there is no active market or where the price inputs being used represent
distressed sales. It reaffirms the objective of fair value measurement, as
stated in ASC 820 to reflect how much an asset would be sold for in an orderly
transaction (as opposed to a distressed or forced transaction) at the date of
the financial statements under current market conditions. Specifically, it
reaffirms the need to use judgment to ascertain if a formerly active market has
become inactive and in determining fair values when markets have become
inactive.
13
BRAINSTORM
CELL THERAPEUTICS INC. AND SUBSIDIARY
(A
development stage company)
NOTE 2 -
SIGNIFICANT
ACCOUNTING POLICIES (Cont.)
Initial Adoption of New Standards
(Cont.)
The
amendment provides guidance on (1) estimating the fair value of an asset or
liability (financial and nonfinancial) when the volume and level of activity for
the asset or liability have significantly decreased and (2) identifying
transactions that are not orderly. The adoption of this standard did not have
any impact on the consolidated results of operations or financial position of
the Company.
SFAS
165 (ASC 855)
In May
2009, the FASB issued ASC 855 (SFAS No. 165), “Subsequent Events”. ASC 855
establishes general standards of accounting for, and disclosure of, events that
occur after the balance sheet date but before financial statements are issued or
are available to be issued. In particular, this statement sets forth:
(1) the period after the balance sheet date during which management of a
reporting entity should evaluate events or transactions that may occur for
potential recognition or disclosure in the financial statements, (2) the
circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements and (3) the
disclosures that an entity should make about events or transactions that
occurred after the balance sheet date. ASC 855 is effective for the
interim or annual financial periods ending after June 15, 2009. The
adoption of this standard did not have any impact on the consolidated
results of operations or financial position of the Company.
FSP
FAS 115-2 and FAS 124-2 (ASC 320-10-65)
In April
2009 the FASB issued ASC 320-10-65 (FASB staff position 115-2 and 124-2),
“Recognition and Presentation of Other-Than-Temporary Impairments” (“OTTI”) for
investment in debt securities. This ASC applies to all entities and is effective
for interim and annual reporting periods ending after June 15, 2009, with early
adoption permitted for periods ending after March 15, 2009.
Under the
ASC, the primary change to the OTTI model for debt securities is the change in
focus from an entity’s intent and ability to hold a security until recovery.
Instead, an OTTI is triggered if (1) an entity has the intent to sell the
security, (2) it is more likely than not that it will be required to sell the
security before recovery, or (3) it does not expect to recover the entire
amortized cost basis of the security. In addition, the ASC changes the
presentation of an OTTI in the income statement if the only reason for
recognition is a credit loss (i.e., the entity does not expect to recover its
entire amortized cost basis). That is, if the entity has the intent to sell the
security or it is more likely than not that it will be required to sell the
security, the entire impairment (amortized cost basis over fair value) will be
recognized in earnings.
However,
if the entity does not intend to sell the security and it is not more likely
than not that the entity will be required to sell the security, but the security
has suffered a credit loss, then the impairment charge will be separated into
the credit loss component, which is recorded in earnings, and the remainder of
the impairment charge, which is recorded in other comprehensive income. The
adoption of this standard did not have any impact on the consolidated
results of operations or financial position of the Company.
14
BRAINSTORM
CELL THERAPEUTICS INC. AND SUBSIDIARY
(A
development stage company)
NOTE 2 -
SIGNIFICANT
ACCOUNTING POLICIES (Cont.)
Recently
Issued Accounting Standards
SFAS
166 (ASC 860)
In June
2009 the FASB issued ASC 860 (SFAS No.166) “Accounting for Transfers of
Financial Assets”. ASC 860 is a revision to Statement ASC 860-10
(Statement No. 140), “Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities”, and will require more information about
transfers of financial assets, including securitization transactions, and
continued exposure to the risks related to transferred financial assets. It
eliminates the concept of a “qualifying special-purpose entity,” changes the
requirements for derecognizing financial assets, and requires additional
disclosures. ASC 860 enhances information reported to users of financial
statements by providing greater transparency about transfers of financial assets
and a company’s continuing involvement in transferred financial assets. ASC 860
will be effective at the start of a company’s first fiscal year beginning after
November 15, 2009. The adoption of this standard is not expected to have a
material impact on the Company's consolidated financial
statements.
SFAS
167 (ASC 810)
In June
2009 the FASB issued ASC 810 (formerly SFAS No. 167) “Amendments to ASC 810-10
(formerly FASB Interpretation No. 46(R))”, which changes the way entities
account for securitizations and special-purpose entities. ASC 810 is a revision to ASC
810-10, “Consolidation of Variable Interest Entities”, and changes how a company
determines when an entity that is insufficiently capitalized or is not
controlled through voting (or similar rights) should be consolidated. The
determination of whether a company is required to consolidate an entity is based
on, among other things, an entity’s purpose and design and a company’s ability
to direct the activities of the entity that most significantly impact the
entity’s economic performance. ASC 810 will require a company to provide
additional disclosures about its involvement with variable interest entities and
any significant changes in risk exposure due to that involvement. A
company will be required to disclose how its involvement with a variable
interest entity affects the company’s financial statements. ASC
810 will be effective at the start of a company’s first fiscal year
beginning after November 15, 2009. The adoption of this standard is not expected
to have material impact on the Company’s consolidated financial
statements.
SFAS
168 (ASC 105)
In June
2009, the FASB issued ASC 105 (SFAS No.168), “The FASB Accounting Standards
Codification’ and the Hierarchy of Generally Accepted Accounting Principles”.
ASC 105 establishes the “FASB Accounting Standards Codification”
(“Codification”), and was officially launched on July 1, 2009, for the purpose
of serving as the source of authoritative U.S. generally accepted accounting
principles (“GAAP”) recognized by the FASB to be applied by nongovernmental
entities. Rules and interpretive releases of the Securities and Exchange
Commission (“SEC”) under authority of federal securities laws are also sources
of authoritative
15
BRAINSTORM
CELL THERAPEUTICS INC. AND SUBSIDIARY
(A
development stage company)
NOTE 2 -
SIGNIFICANT
ACCOUNTING POLICIES (Cont.)
Recently Issued
Accounting Standards (Cont.)
U.S. GAAP
for SEC registrants. The subsequent issuances of new standards will be in the
form of Accounting Standards Updates that will be included in the Codification.
In general, the Codification is not expected to change U.S. GAAP. All other
accounting literature excluded from the Codification will be considered non-
authoritative. ASC 105 is effective for financial statements issued for interim
and annual periods ending after September 15, 2009. Effective September 30,
2009, all references made to GAAP in our consolidated financial statements
include the new Codification numbering system along with original
references.
NOTE 3 -
UNAUDITED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
The
accompanying unaudited interim financial statements have been prepared in a
condensed format and include the consolidated financial operations of the
Company and its fully owned subsidiary as of September 30, 2009 and for the nine
months then ended, in accordance with accounting principles generally accepted
in the United States relating to the preparation of financial statements for
interim periods. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the nine months ended September 30, 2009,
are not necessarily indicative of the results that may be expected for the year
ended December 31, 2009.
NOTE
4 - RESEARCH AND LICENSE AGREEMENT
A.
|
On
July 26, 2007, the Company entered into a Second Amended and Restated
Research and License Agreement with Ramot. On August 1, 2007, the Company
obtained a waiver and release from Ramot pursuant to which Ramot agreed to
an amended payment schedule regarding the Company's payment obligations
under the Amended Research and License Agreement, dated March 30, 2006,
and waived all claims against the Company resulting from the Company's
previous defaults and non-payment under the original agreement and the
Amended Research and License Agreement. The payments described in the
waiver and release covered all payment obligations that were past due and
not yet due pursuant to the original agreement. The waiver and release
amends and restates the original payment schedule under the original
agreement as follows:
|
Payment
date
|
Amount
|
|||
September
5, 2007
|
100 | |||
November
20, 2007
|
150 | |||
February
20, 2008
|
150 | |||
May
20, 2008
|
150 | |||
August
4, 2008
|
90 |
16
BRAINSTORM
CELL THERAPEUTICS INC. AND SUBSIDIARY
(A
development stage company)
NOTE
4 - RESEARCH AND LICENSE AGREEMENT (Cont.)
In
addition, in the event that the "research period," as defined in the Amended
Research and License Agreement, is extended for an additional three year period
in accordance with the terms of the Amended Research and License Agreement, then
the Company is obligated to the following payments to Ramot during the first
year of the extended research period:
Payment
date
|
Amount
|
|||
August
4, 2008
|
60 | |||
November
20, 2008
|
150 | |||
February
20, 2009
|
170 |
If the
Company fails to make a payment to Ramot on any required payment date, and the
Company does not cure the default within seven business days of notice of the
default, all claims of Ramot against the Company, which were waived and released
by the waiver and release, may be reinstated.
As of
November 13, 2009, the Company paid to Ramot the first three payments totaling
$400 but has not made the last two payments of $240 and for the extended
research period. As a result, the Company is in breach of the new agreement with
Ramot and Ramot may terminate the research and license agreement.
On
January 29, 2009, the Company received a breach warning from Ramot and the
parties are currently negotiating an amendment to postpone the
payments.
B.
|
The
Company's total current obligation to Ramot as of September 30, 2009 is in
the amount of $1,057. The amount includes $760 for the extended research
period that the Company is currently negotiating with
Ramot.
|
NOTE
5 - CONSULTING AGREEMENTS
A.
|
On
July 8, 2004, the Company entered into two consulting agreements with
Prof. Eldad Melamed and Dr. Daniel Offen (together, the "Consultants"),
upon which the Consultants shall provide the Company scientific and
medical consulting services in consideration for a monthly payment of $6
each. In addition, the Company granted each of the Consultants a fully
vested warrant to purchase 1,097,215 shares of Common Stock at an exercise
price of $0.01 per share. The warrants issued pursuant to the agreement
were issued to the Consultants effective as of November 4, 2004. Each of
the warrants is exercisable for a seven-year period beginning on November
4, 2005.
|
B.
|
As
of September 30, 2009, the Company has a total obligation of $334 for
services rendered by the
Consultants.
|
17
BRAINSTORM
CELL THERAPEUTICS INC. AND SUBSIDIARY
(A
development stage company)
NOTE
6 - SHORT-TERM LOANS
On April
13, 2008, the Company entered into a new agreement with a lender which the
lender agreed to partially defer and partially convert to the Company’s common
stock the payment of $1,250 owed by the Company to the lender based on the
payment agreement between the two parties.
Pursuant
to the new agreement, the Company agreed to pay $250 of the Debt in accordance
with the following schedule:
Payment
date
|
Amount
|
|||
May
30, 2008
|
50 | |||
July
31, 2008
|
50 | |||
September
30, 2008
|
50 | |||
December
31, 2008
|
50 | |||
February
28, 2009
|
50 |
In
addition, the Company issued 2,857,142 shares of common stock to the lender in
lieu of the repayment of $1,000 of the Debt.
The
lender agreed that upon payment of the foregoing amounts in accordance with the
foregoing schedule and the receipt of the stock grant, all of the Company’s
outstanding obligations owed to the lender under the notes will be satisfied in
full. The lender also waived any breach or default that may have arisen prior to
the date of the new agreement from the failure of the Company to make payments
to the lender under any of past agreements.
The
Company paid to the lender the first payment and on April 6, 2009 the Company
and the lender agreed to convert the entire remaining debt of $200 to 2,500,000
restricted shares of common stock.
Since the
outcome of the issuance of the shares was to relieve the debtor from its
obligation, based on guidance in FASB No 140 (ASC 860-10) “Accounting for
Transfer and Servicing of Financial Assets and Extinguishment of Liabilities“
the Company derecognized the liability with the difference recognized
in earning.
18
BRAINSTORM
CELL THERAPEUTICS INC. AND SUBSIDIARY
(A
development stage company)
NOTE
7 - STOCK CAPITAL
A.
|
The
rights of Common Stock are as
follows:
|
Holders
of Common Stock have the right to receive notice to participate and vote in
meetings of stockholders of the Company, the right to a share in the excess of
assets upon liquidation of the Company and the right to receive dividends, if
declared.
The
Common Stock is publicly traded on the Over-the-Counter Bulletin Board service
of the National Association of Securities Dealers, Inc. under the symbol
BCLI.
B.
|
Issuance
of shares, warrants and
options:
|
1.
|
Private
placements:
|
a)
|
On
June 24, 2004, the Company issued to investors 8,510,000 shares of Common
Stock for total proceeds of $60 (net of $25 issuance
expenses).
|
b)
|
On
February 23, 2005, the Company completed a private placement for sale of
1,894,808 units for total proceeds of $1,418. Each unit consists of one
share of Common Stock and a three-year warrant to purchase one share of
Common Stock at $2.50 per share. This private placement was consummated in
three tranches which closed in October 2004, November 2004 and February
2005.
|
c)
|
On
May 12, 2005, the Company issued to an investor 186,875 shares of Common
Stock for total proceeds of $149 at a price of $0.8 per
share.
|
d)
|
On
July 27, 2005, the Company issued to investors 165,000 shares of Common
Stock for total proceeds of $99 at a price of $0.6 per
share.
|
e)
|
On
August 11, 2005, the Company signed a private placement agreement with
investors for the sale of up to 1,250,000 units at a price of $0.8 per
unit. Each unit consists of one share of Common Stock and one warrant to
purchase one share of Common Stock at $1.00 per share. The warrants are
exercisable for a period of three years from issuance. On September 30,
2005, the Company sold 312,500 units for total net proceeds of $225. On
December 7, 2005, the Company sold 187,500 units for total net proceeds of
$135.
|
19
BRAINSTORM
CELL THERAPEUTICS INC. AND SUBSIDIARY
(A
development stage company)
NOTE
7 - STOCK CAPITAL (Cont.)
|
B.
|
Issuance
of shares, warrants and options:
(Cont.)
|
|
1.
|
Private
placements: (Cont.)
|
|
f)
|
On
July 2, 2007, the Company entered into an investment agreement, pursuant
to which the Company agreed to sell up to 27,500,000 shares of Common
Stock, for an aggregate subscription price of up to $5 million and
warrants to purchase up to 30,250,000 shares of Common Stock. Separate
closings of the purchase and sale of the shares and the warrants shall
take place as follows:
|
Purchase
date
|
Purchase
price
|
Number
of subscription shares
|
Number
of warrant shares
|
|||
August
30, 2007
|
$1,250
(includes $250 paid as a convertible loan (Note 8i))
|
6,875,000
|
7,562,500
|
|||
November
15, 2007
|
$750
|
4,125,000
|
4,537,500
|
|||
February
15, 2008
|
$750
|
4,125,000
|
4,537,500
|
|||
May
15, 2008
|
$750
|
4,125,000
|
4,537,500
|
|||
July
30, 2008
|
$750
|
4,125,000
|
4,537,500
|
|||
November
15, 2008
|
$750
|
4,125,000
|
4,537,500
|
At each
closing date, the Company shall deliver to the investor the number of shares and
warrants, subject to customary closing conditions and the delivery of funds,
described above. The warrants shall have the following exercise prices: (i) the
first 10,083,333 warrants have an exercise price of $0.20 per share; (ii) the
next 10,083,333 warrants will have an exercise price of $0.29 per share; and
(iii) the final 10,083,334 warrants issued will have an exercise price of $0.36
per share. All warrants will expire on November 5, 2011.
As of
September 30, 2009, the investor completed payment of the first four
installments and $704 of the fifth installment and the Company issued to the
investor and its designee an aggregate of 19,250,000 shares of common stock and
a warrant to purchase 10,083,333 shares of the Company's common stock at an
exercise price of $0.20 per share, a warrant to purchase 10,083,333 shares of
common stock at an exercise price of $0.29 per share and a warrant to purchase
1,008,334 shares of common stock at an exercise price of $0.36 per
share. The warrants may be exercised at any time and expire on November 5,
2011.
In
addition, the Company agreed to issue an aggregate of 1,250,000 shares of Common
Stock to a related party as an introduction fee for the investment. The shares
shall be issued pro rata to the funds received from the investor.
As of
September 30, 2009, 875,000 shares of Common Stock had been issued as an
introduction fee.
20
BRAINSTORM
CELL THERAPEUTICS INC. AND SUBSIDIARY
(A
development stage company)
NOTE
7 - STOCK CAPITAL (Cont.)
|
B.
|
Issuance
of shares, warrants and options:
(Cont.)
|
|
1.
|
Private
placements: (Cont.)
|
|
f)
|
Cont.
|
On August
18,2009, the Company entered into an amendment to the investment agreement ("the
Amendment" ) with the investor as follows :
a.
|
The
investor shall invest the remaining amount of the original investment
agreement at price per share of $0.12 in monthly installments of not less
then $50 starting August 1, 2009.
|
b.
|
The
exercise price of the last 10,083,334 warrants will decrease from an
exercise price of $0.36 per share to $0.29 per
share.
|
c.
|
All
warrants will expire on November 5, 2013 instead of November 5,
2011.
|
d.
|
The
price per share of the investment agreement shall decreased from $0.1818
to $0.12, Therefore the Company shall adjust the number of Shares of
Common Stock issuable pursuant the investment agreement retroactively and
shall issue to the investor additional 9,916,667 Shares of Common Stock.
On October 28, 2009, the Shares of Common Stock were
issued.
|
e.
|
The
investor shall have the right to cease payments in the event that the
price per share as of the closing on five consecutive trading days shall
decrease to $0.05.
|
|
2.
|
Share-based
compensation to employees and to
directors:
|
|
a)
|
Options
to employees and directors:
|
On
November 25, 2004, the Company's stockholders approved the 2004 Global Stock
Option Plan and the Israeli Appendix thereto (which applies solely to
participants who are residents of Israel) and on March 28, 2005, the Company's
stockholders approved the 2005 U.S. Stock Option and Incentive Plan, and the
reservation of 9,143,462 shares of Common Stock for issuance in the aggregate
under these stock option plans.
Each
option granted under the plans is exercisable until the earlier of ten years
from the date of grant of the option or the expiration dates of the respective
option plans. The 2004 and 2005 options plans will expire on November 25, 2014
and March 28, 2015, respectively. The exercise price of the options granted
under the plans may not be less than the nominal value of the shares into which
such options are exercised. The options vest primarily over three or four years.
Any options that are canceled or forfeited before expiration become available
for future grants.
21
BRAINSTORM
CELL THERAPEUTICS INC. AND SUBSIDIARY
(A
development stage company)
NOTE
7 - STOCK CAPITAL (Cont.)
|
B.
|
Issuance
of shares, warrants and options:
(Cont.)
|
|
2.
|
Share-based
compensation to employees and to directors:
(Cont.)
|
|
a)
|
Options
to employees and directors: (Cont.)
|
On June 5, 2008, the Company's
stockholders approved to amend and restate the Company’s 2004 Global Share
Option Plan and 2005 U.S. Stock Option and Incentive Plan to increase the number
of shares of common stock available for issuance under these stock option plans
in the aggregate by 5,000,000 shares.
As of
September 30, 2009, 3,591,684 options are available for future
grants.
On May
27, 2005, the Company granted one of its directors an option to purchase 100,000
shares of Common Stock at an exercise price of $0.75 per share. The options are
fully vested and expire after 10 years.
On
February 6, 2006, the Company entered into an amendment to the Company's option
agreement with the Company's Chief Financial Officer. The amendment changes the
exercise price of the 400,000 options granted to him on February 13, 2005 from
$0.75 to $0.15 per share.
On May 2,
2006, the Company granted to one of its directors an option to purchase 100,000
shares of Common Stock at an exercise price of $0.15 per share. The options are
fully vested and expire after 10 years. The compensation related to the options,
in the amount of $48, was recorded as general and administrative
expense.
On June
22, 2006, the Company entered into an amendment to the Company's option
agreement with two of its employees. The amendment changes the exercise price of
270,000 options granted to them from $0.75 to $0.15 per share. The excess of the
fair value resulting from the modification, in the amount of $2, was recorded as
general and administrative expense over the remaining vesting period of the
option.
On
September 17, 2006, the Company entered into an amendment to the Company's
option agreement with one of its directors. The amendment changes the
exercise price of 100,000 options granted to the director from $0.75 to $0.15
per share.
On March
21, 2007, the Company granted to one of its directors an option to purchase
100,000 shares of Common Stock at an exercise price of $0.15 per share. The
option is fully vested and is exercisable for a period of 10 years. The
compensation related to the option, in the amount of $43, was recorded as
general and administrative expense.
22
BRAINSTORM
CELL THERAPEUTICS INC. AND SUBSIDIARY
(A
development stage company)
NOTE
7 - STOCK CAPITAL (Cont.)
|
B.
|
Issuance
of shares, warrants and options:
(Cont.)
|
|
2.
|
Share-based
compensation to employees and to directors:
(Cont.)
|
|
a)
|
Options
to employees and directors: (Cont.)
|
On July
1, 2007, the Company granted to one of its directors an option to purchase
100,000 shares of Common Stock at an exercise price of $0.15 per share. The
option is fully vested and is exercisable for a period of 10 years. The
compensation related to the option, in the amount of $38, was recorded as
general and administrative expense. On October 22, 2007, the Company and the
director agreed to cancel and relinquish all the options which were granted on
July 1, 2007.
On July
16, 2007, the Company granted to one of its directors an option to purchase
100,000 shares of Common Stock at an exercise price of $0.15 per share. The
option is fully vested and is exercisable for a period of 10 years. The
compensation related to the option, in the amount of $75, was recorded as
general and administrative expense.
On August
27, 2007, the Company granted to one of its directors an option to purchase
100,000 shares of Common Stock at an exercise price of $0.15 per share. The
option is fully vested and is exercisable for a period of 10 years. The
compensation related to the option, in the amount of $84, was recorded as
general and administrative expense.
On
October 23, 2007, the Company granted to its CEO an option to purchase 1,000,000
shares of Common Stock at an exercise price of $0.87 per share. The option vests
with respect to 1/6 of the option on each six month anniversary and expires
after 10 years. The total compensation related to the option is $733, which is
amortized over the vesting period as general and administrative
expense.
On
November 5, 2008, the Company entered into an amendment to the Company's option
to purchase 1,000,000 shares of common stock agreement with the Company's CEO.
The amendment changes the exercise price of the option from $0.87 to $0.15 per
share. The compensation related the modification of the purchase price in the
amount of $4 was recorded as general and administrative expense.
23
BRAINSTORM
CELL THERAPEUTICS INC. AND SUBSIDIARY
(A
development stage company)
NOTE
7 - STOCK CAPITAL (Cont.)
|
B.
|
Issuance
of shares, warrants and options:
(Cont.)
|
|
2.
|
Share-based
compensation to employees and to directors:
(Cont.)
|
|
a)
|
Options
to employees and directors: (Cont.)
|
On June 29, 2009, the Company granted
to its CEO and director an option to purchase 1,000,000 shares of Common Stock
at an exercise price of $0.067 per share. The option vests with respect to 1/3
of the option on each year anniversary and expires after 10 years. The total
compensation related to the option is $68, which is amortized over the vesting
period as general and administrative expense.
On June
29, 2009, the Company granted to its CFO an option to purchase 200,000 shares of
Common Stock at an exercise price of $0.067 per share. The option vests with
respect to 1/3 of the option on each year anniversary and expires after 10
years. The total compensation related to the option is $8, which is amortized
over the vesting period as general and administrative expense.
On August
31, 2009, the Company granted to two of its directors an option to purchase
100,000 shares of Common Stock at an exercise price of $0.15 per share. The
option vests with respect to 1/3 of the option on each year anniversary and
expires after 10 years. The total compensation related to the option is $32,
which is amortized over the vesting period as general and administrative
expense.
A summary
of the Company's option activity related to options to employees and directors,
and related information is as follows:
Nine
months ended
September
30,
|
Year
ended
December
31,
|
|||||||||||||||
2009
|
2008
|
|||||||||||||||
Amount
of options
|
Weighted
average exercise price
|
Amount
of options
|
Weighted
average exercise price
|
|||||||||||||
$
|
$ | |||||||||||||||
Outstanding
at beginning of period
|
5,433,361 | 0.244 | 5.280.760 | 0.372 | ||||||||||||
Granted
|
1,550,000 | 0.077 | 170,000 | 0.49 | ||||||||||||
Exercised
|
- | - | (17,399 | ) | 0.15 | |||||||||||
Forfeited
|
(120,000 | ) | 0.498 | - | - | |||||||||||
Outstanding
at end of period
|
6,863,361 | 0.20 | 5,433,361 | 0.244 | ||||||||||||
Vested
and expected-to-vest at end of period
|
4,630,375 | 0.24 | 4,324,437 | 0.238 |
24
BRAINSTORM
CELL THERAPEUTICS INC. AND SUBSIDIARY
(A
development stage company)
NOTE
7 - STOCK CAPITAL (Cont.)
|
B.
|
Issuance
of shares, warrants and options:
(Cont.)
|
|
2.
|
Share-based
compensation to employees and to directors:
(Cont.)
|
|
b)
|
Restricted
shares to directors:
|
On May 2,
2006, the Company issued to two of its directors 200,000 restricted shares of
common stock (100,000 each). The restricted shares are subject to the Company's
right to repurchase them at a purchase price of par value ($0.00005). The
restrictions of the shares shall lapse in three annual and equal portions
commencing with the grant date. The compensation related to the stocks issued
amounted to $104, which will be amortized over the vesting period as general and
administrative expenses.
On April 20, 2007, based on a board
resolution dated March 21, 2007, the Company issued to its director 100,000
restricted shares of common stock. The restricted shares are subject to the
Company's right to repurchase them at a purchase price of par value ($0.00005).
The restrictions of the shares shall lapse in three annual and equal portions
commencing with the grant date. The compensation related to the shares issued
amounted to $47, which will be amortized over the vesting period as general and
administrative expenses.
In addition, on April 20, 2007, based
on a board resolution dated March 21, 2007, the Company issued to another
director 100,000 restricted shares of common stock. The restricted shares are
not subject to any right to repurchase, and the compensation related to the
shares issued amounted to $47 was recorded as prepaid general and administrative
expenses in the three months ended March 31, 2007.
On August
27, 2008 the Company issued to its director 960,000 shares of common stock upon
a cashless exercise by a shareholder of a warrant to purchase 1,000,000 shares
of Common Stock at an exercise price of $.01 per share that was acquired by the
shareholder from Ramot. The shares were allocated to the director by the
shareholder.
|
3.
|
Shares
and warrants to service providers:
|
The
Company accounts for shares and warrant grants issued to non-employees using the
guidance of SFAS 123(R) (ASC 718-10), "Accounting for Stock-Based Compensation"
and EITF 96-18, "Accounting for Equity Instruments that are Issued to Other than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services,"
whereby the fair value of such option and warrant grants is determined using a
Black-Scholes options pricing model at the earlier of the date at which the
non-employee's performance is completed or a performance commitment is
reached.
25
BRAINSTORM
CELL THERAPEUTICS INC. AND SUBSIDIARY
(A
development stage company)
NOTE
7 - STOCK CAPITAL (Cont.)
|
B.
|
Issuance
of shares, warrants and options:
(Cont.)
|
|
3.
|
Shares
and warrants to service providers:
(Cont.)
|
|
a)
|
Warrants:
|
Issuance
date
|
Number
of
warrants
issued
|
Exercised
|
Forfeited
|
Outstanding
|
Exercise
Price
$
|
Warrants
exercisable
|
Exercisable
through
|
|||||||||||||||||||||
November
2004
|
12,800,845 | 3,141,925 | 40,000 | 9,618,920 | 0.01 | 9,618,920 |
November
2012
|
|||||||||||||||||||||
December
2004
|
1,800,000 | 1,800,000 | - | 0.00005 | -- | - | ||||||||||||||||||||||
February
2005
|
1,894,808 | 1,894,808 | - | 2.5 | - | |||||||||||||||||||||||
May
2005
|
47,500 | 47,500 | 1.62 | 47,500 |
May
2010
|
|||||||||||||||||||||||
June
2005
|
30,000 | 30,000 | 0.75 | 30,000 |
June
2010
|
|||||||||||||||||||||||
August
2005
|
70,000 | 70,000 | - | 0.15 | - | - | ||||||||||||||||||||||
September
2005
|
3,000 | 3,000 | - | 0.15 | - | - | ||||||||||||||||||||||
September
2005
|
36,000 |