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EX-32.1 - BRAINSTORM CELL THERAPEUTICS INC.v222233_ex32-1.htm
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EX-32.2 - BRAINSTORM CELL THERAPEUTICS INC.v222233_ex32-2.htm
EX-31.1 - BRAINSTORM CELL THERAPEUTICS INC.v222233_ex31-1.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2011

¨ TRANSITION REPORT PURSUANT TO 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
(I.R.S. Employer
incorporation or organization)
Identification No.)

605 Third Avenue, 34th Floor
New York, NY 10158
(Address of principal executive offices)

(212) 557-7200
(Registrant's telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

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 ¨

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  ¨
 
Accelerated filer  ¨
Non-accelerated filer  ¨ (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 ¨ No x
 
As of May 9, 2011, the number of shares outstanding of the registrant’s common stock, $0.00005 par value per share, was 120,459,641.
 
 
 

 
 
TABLE OF CONTENTS
 
   
Page Number
PART I
   
     
Item 1. Financial Statements
    2
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
  30
Item 3. Quantitative and Qualitative Disclosures About Market Risk
    34
Item 4. Controls and Procedures
    35
     
PART II
   
     
Item 1. Legal Proceedings
    36
Item 1A. Risk Factors
    36
Item 5. Other Information
    36
Item 6. Exhibits
    36
 
 
 

 
 
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 MARCH 31, 2011

UNAUDITED

U.S. DOLLARS IN THOUSANDS

 
2

 

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY
(A development stage company)

CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2011

UNAUDITED

U.S. DOLLARS IN THOUSANDS

INDEX

   
Page
     
Consolidated Balance Sheets
 
4
     
Consolidated Statements of Operations
 
5
     
Statements of Changes in Stockholders' Equity (Deficiency)
 
6 – 12
     
Consolidated Statements of Cash Flows
 
13
     
Notes to Consolidated Financial Statements
 
14 - 29
 
 
3

 

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY
(A development stage company)

CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
(Except share data)

   
March 31,
   
December 31,
 
   
2011
   
2010
 
   
Unaudited
   
Audited
 
ASSETS
           
             
Current Assets:
           
Cash and cash equivalents
  $ 3,664     $ 93  
Accounts other receivable and prepaid expenses
    221       486  
Total current assets
    3,885       579  
                 
Long-Term Investments:
               
Prepaid expenses
    -       1  
Severance pay fund
    100       90  
Total long-term investments
    100       91  
                 
Property and Equipment, Net
    418       419  
                 
Total assets
  $ 4,403     $ 1,089  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
               
                 
Current Liabilities:
               
Trade payables
  $ 401     $ 307  
Other accounts payable and accrued expenses
    1,209       979  
Short-term convertible note
    -       137  
Total current liabilities
    1,610       1,423  
                 
Accrued Severance Pay
    127       125  
                 
Total liabilities
    1,737       1,548  
                 
Commitments And Contingencies Stockholders' Equity (Deficiency):
               
Stock capital: (Note 8)
    6       5  
Common stock of $0.00005 par value - Authorized: 800,000,000 shares at March 31, 2011 and December 31, 2010; Issued and outstanding: 121,034,291 and 95,832,978 shares at March 31, 2011 and December 31, 2010, respectively.
               
Additional paid-in-capital
    43,525       39,696  
Deficit accumulated during the development stage
    (40,865 )     (40,160 )
Total stockholders' equity (deficiency)
    2,666       (459 )
                 
Total liabilities and stockholders' equity
  $ 4,403     $ 1,089  

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

 
4

 

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY
(A development stage company)

CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands
(Except share data)

   
Three months
   
Period from
September 22,
2000 (inception
date) through
 
   
ended March 31,
   
March 31,
 
   
2011
   
2010
   
2011
 
   
Unaudited
   
Unaudited
 
                   
Operating costs and expenses:
                 
                   
Research and development, net
  $ 270     $ 239     $ 23,000  
General and administrative
    258       370       15,056  
                         
Total operating costs and expenses
    528       609       38,056  
                         
Financial income expenses, net
    177       6       2,573  
                         
Operating loss
    705       615       40,629  
                         
Taxes on income
    -       -       72  
                         
Loss from continuing operations
    705       615       40,701  
                         
Net loss from discontinued operations
    -       -       164  
                         
Net loss
    705       615       40,865  
                         
Basic and diluted net loss per share from continuing operations
  $ 0.01     $ 0.01          
                         
Weighted average number of shares outstanding used in computing basic and diluted net loss per share
    108,895,199       81,560,155          

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

 
5

 

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY
(A development stage company)

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

 
6

 

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY
(A development stage company)

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.

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

 
7

 

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY
(A development stage company)

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 ASC 815-40-25 (formerly EITF 00-19)
    -       -       (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 ASC 718-10 (formerly SFAS 123(R))
    -       -       (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 ASC 815-40-25 (formerly EITF 00-19)
    -       -       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.

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

 
8

 

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY
(A development stage company)

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
   
Capital
   
compensation
   
stage
   
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.

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

 
9

 

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY
(A development stage company)

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'
equity
 
   
Number
   
Amount
   
           capital           
   
compensation
   
stage
   
(deficiency)
 
                                     
Balance as of December 31, 2008
    55,241,418     $ 3     $ 33,881     $ -     $ (35,960 )   $ (2,076 )
                                                 
Stock-based compensation related to options and stock granted to service providers
    5,284,284       (* )     775       -       -       775  
Stock-based compensation related to stock and options granted to directors and employees
    -       -       409       -       -       409  
Conversion of convertible loans
    2,500,000       (* )     200       -       -       200  
Exercise of warrants
    3,366,783       (* )     -       -       -       -  
Stock issued for amendment of private placement
    9,916,667       1       -       -       -       1  
Subscription of shares
    -       -       729       -       -       729  
Net loss
    -       -       -       -     $ (1,781 )     (1,781 )
Balance as of December 31, 2009
    76,309,152     $ 4     $ 35,994     $ -     $ (37,741 )   $ (1,743 )

* Represents an amount less than $1.

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

 
10

 

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY
(A development stage company)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
U.S. dollars in thousands
(Except share data)

                     
Deficit
       
                     
accumulated
   
Total
 
   
Common stock
   
Additional
paid-in
   
Deferred 
Stock - based
   
during the
development
   
stockholders'
equity
 
   
Number
   
Amount
   
capital
   
compensation
   
stage
   
(deficiency)
 
Balance as of December 31, 2009
    76,309,152     $ 4     $ 35,994       -     $ (37,741 )   $ (1,743 )
Stock-based compensation related to options and stock granted to service providers
    443,333       * -       96       -       -       96  
Stock-based compensation related to stock and options granted to directors and employees
    466,667       * -       388       -       -       388  
Stock issued for amendment of private placement
    7,250,000       1       1,750       -       -       1,751  
Conversion of convertible note
    402,385       * -       135       -       -       135  
Conversion of convertible loans
    1,016,109       * -       189       -       -       189  
Issuance of shares
    2,475,000               400                       400  
Exercise of options
    1,540,885       * -       77       -       -       77  
Exercise of warrants
    3,929,446       * -       11       -       -       11  
Subscription of shares for private placement at $0.12 per unit
                    455       -       -       455  
Conversion of trade payable to stock
                    201                       201  
Issuance of shares on account of previously subscribed shares
    2,000,001       * -       -       -       -       -  
Net loss
    -       -       -       -       (2,419 )     (2,419 )
                                                 
Balance as of December 31, 2010
    95,832,978     $ 5     $ 39,696     $ -     $ (40,160 )   $ (459 )

* Represents an amount less than $1.

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

 
11

 

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY
(A development stage company)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
U.S. dollars in thousands
(except share data)

                     
Deficit
       
                     
accumulated
   
Total
 
   
Common stock
   
Additional
paid-in
   
Deferred 
Stock - based
   
during the
development
   
stockholders'
equity
 
   
Number
   
Amount
   
capital
   
compensation
   
stage
   
(deficiency)
 
                                     
Balance as of December 31, 2010
    95,832,978     $ 5     $ 39,696     $ -     $ (40,160 )   $ (459 )
                                                 
Stock-based compensation related to options and stock granted to service providers
    -       -       (20 )     -       -       (20 )
Stock-based compensation related to stock and options granted to directors and employees
    -       -       27       -       -       27  
Stock issued for private placement
    833,333       -       250       -       -       250  
Conversion of convertible note
    445,617       -       137       -       -       137  
Exercise of options , net
    94,764       -       55       -       -       55  
Stock issued for private placement
    13,327,600       1       3,356       -       -       3,357  
Issuance of shares on account of previously
subscribed shares (See also Note 7B.1.f)
    10,499,999       -       24       -       -       24  
Net loss
    -       -       -       -       (705 )     (705 )
                                                 
Balance as of March 31, 2011
    121,034,291     $ 6       43,525     $ -     $ (40,865 )   $ 2,666  

* Represents an amount less than $1.

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

 
12

 

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY
(A development stage company)

CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
(except share data)

   
Three months
ended March 31,
   
Period from
September 22,
2000 
(inception date)
through March 31,
 
   
2011
   
2010
   
2011
 
   
Unaudited
   
Unaudited
 
Cash flows from operating activities:
                 
Net loss
  $ (705 )   $ (615 )   $ (40,865 )
Less - loss for the period from discontinued operations
    -       -       164  
Adjustments to reconcile net loss to net cash used in operating activities:
                    698  
Depreciation and amortization of deferred charges
    38       42       188  
Severance pay, net
    (8 )     12       27  
Accrued interest on loans
    -       -       448  
Amortization of discount on short-term loans
    -       -       1,864  
Change in fair value of options and warrants
    -       -       (795 )
Expenses related to shares and options granted to service providers
    (20 )     87       21,017  
Stock-based compensation granted to employees
    27       96       5,713  
Decrease (increase) in other accounts receivable and prepaid expenses
    265       (65 )     (221 )
Increase (decrease) in trade payables
    94       (61 )     874  
Increase (decrease) in other accounts payable and accrued expenses
    254       (94 )     1,715  
Erosion of restricted cash
    -       -       (6 )
Net cash used in continuing operating activities
    (55 )     (598 )     (9,179 )
Net cash used in discontinued operating activities
    -       -       (23 )
Total net cash used in operating activities
    (55 )     (598 )     (9,202 )
                         
Cash flows from investing activities:
                       
Purchase of property and equipment
    (37 )     (4 )     (1,122 )
Restricted cash
    -       -       6  
Investment in lease deposit
    1       -       -  
Net cash used in continuing investing activities
    (36 )     (4 )     (1,116 )
Net cash used in discontinued investing activities
    -       -       (16 )
Total net cash used in investing activities
    (36 )     (4 )     (1,132 )
                         
Cash flows from financing activities:
                       
Proceeds from issuance of Common stock, net
    3,607       1,800       12,324  
Proceeds from loans, notes and issuance of warrants, net
    -       -       2,061  
Credit from bank
    -       (37 )     -  
Proceeds from exercise of warrants and options
    55       53       171  
Repayment of short-term loans
    -       -       (601 )
Net cash provided by continuing financing activities
    3,662       1,816       13,955  
Net cash provided by discontinued financing activities
    -       -       43  
Total net cash provided by financing activities
    3,662       1,816       13,998  
Increase in cash and cash equivalents
    3,571       1,214       3,664  
Cash and cash equivalents at the beginning of the period
    93       1       -  
Cash and cash equivalents at end of the period
    3,664       1,215       3,664  
                         
Non-cash financing activities:
                       
Conversion of convertible loan and convertible note to shares                         
Conversion of trade payable to Common Stock $84
    137       324          
Conversion of other accounts payable to Common Stock
    24                  

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

 
13

 
 
BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY
(A development stage company)

Notes to the financial statements

NOTE 1    -  GENERAL
 
 
A.
Brainstorm Cell Therapeutics Inc. (formerly: Golden Hand Resources Inc.) ("Company") was incorporated in the State of Washington on September 22, 2000.

 
B.
On May 21, 2004, the former major stockholders of the Company entered into a purchase agreement with a group of private investors, who purchased from the former major stockholders 6,880,000 shares of the then issued and outstanding 10,238,000 shares of Common Stock.

 
C.
On July 8, 2004, the Company entered into a licensing agreement with Ramot of Tel Aviv University Ltd. ("Ramot"), an Israeli corporation, to acquire a license 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 disease, based on the acquired technology and research to be conducted and funded by the Company.

 
D.
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. The Company owns all operational property and equipment.

 
E.
On October 25, 2004, the Company formed a wholly-owned subsidiary in Israel, Brainstorm Cell Therapeutics Ltd. ("BCT").

 
F.
On September 17, 2006, the Company's changed its fiscal year-end from March 31 to December 31.

 
G.
In December 2006, the Company changed its state of incorporation from Washington to Delaware.

 
H.
Since inception, the Company has devoted substantially all 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, "Accounting and reporting by development Stage Enterprises" ASC 915-10 (formerly "SFAS" 7).

 
I.
In October 2010, the Israeli Ministry of Health granted clearance for a Phase I/II clinical trial using the Company’s autologous NurOwn™ stem cell therapy in patients with ALS, subject to some additional process specifications as well as completion of the sterility validation study for tests performed. This clearance is a significant milestone for the Company and may expedite further fundraisings.

On February 23, 2011, the Company submitted to the MOH the sterility validation study report, as required in the clearance granted by the MOH to the Company in October 2010, for a Phase I/II clinical trial using the Company’s autologous NurOwn™ stem cell therapy in patients with ALS.

 
J.
In February 2011, the U.S. Food and Drug Administration (FDA) granted orphan drug designation to the Company’s NurOwn™ autologous adult stem cell product candidate for the treatment of amyotrophic lateral sclerosis (ALS).
 
 
14

 
 
BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY
(A development stage company)
 
Notes to the financial statements

NOTE 1    -  GENERAL (Cont.)
 
GOING CONCERN

As reflected in the accompanying financial statements, the Company’s operations for the three months ended on March 31, 2011, resulted in a net loss of $705. The Company’s balance sheet reflects accumulated deficit of $40,865. These conditions, together with the fact that the Company is a development stage and have no revenues nor that revenues are expected in the near future, 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.

As a result of the past difficulty, to raise sufficient funds, to support all of the Company’s projects, the Company decided to reduce its activity and focus only on the effort to commence clinical trials in ALS amyotrophic lateral sclerosis (ALS) in 2011. During the first quarter of 2010, the Company entered into an agreement with Hadassah Medical Centre to conduct clinical trials in up to 26 ALS patients in 2011.

In February 2011, the Company raised approximately $3.8 million from institutional and private investors. However, there can be no assurance that additional funds will be available on terms acceptable to the Company, or at all.

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, 2010 are applied consistently in these financial statements.
 
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 wholly-owned subsidiary as of March 31, 2011 and for the three 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 three months ended March 31, 2011, may not necessarily be indicative of the results that may be expected for the year ended December 31, 2011.
 
NOTE 4   -   RESEARCH AND LICENSE AGREEMENT

The Company has a Research and License Agreement, as amended and restated, with Ramot. 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 Research and License Agreement and waived all claims against the Company resulting from the Company's previous defaults and non-payment under the Research and License Agreement. The waiver and release amended and restated the original payment schedule under the original agreement providing for payments during the initial research period and additional payments for any extended research period.
 
 
15

 
 
BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY
(A development stage company)

Notes to the financial statements
 
NOTE 4  -    RESEARCH AND LICENSE AGREEMENT (Cont.)
 
As of December 24, 2009, the Company had paid to Ramot $400 but did not make payments totaling $240 for the initial research period and payments totaling $380 for the extended research period.

On December 24, 2009, the Company and Ramot entered into a settlement agreement which amended the Research and License Agreement, as amended and restated pursuant to which, among other things, the following matters were agreed upon:

 
a)
Ramot released the Company from its obligation to fund the extended research period in the total amount of $1,140. Therefore, the Company reversed an expense in 2009, equal to $760, from its research and development expenses that were previously expensed.

 
b)
Past due amounts of $240 for the initial research period plus interest of $32 owed by the Company to Ramot were converted into 1,120,000 shares of Common Stock on December 30, 2009. Ramot was required to deposit the shares with a broker and only sell the shares in the open market after 185 days from the issuance date.

 
c)
In the event that the total proceeds generated by sales of the shares on December 31, 2010, together with the March 31, 2010 payment, are less than $240 on or prior to December 31, 2010, then on such date the Company would be required to pay to Ramot the difference between the proceeds that Ramot has received from sales of the shares up to such date together with the September Payment (if any) that has been transferred to Ramot up to such date, and $240.  Related compensation in the amount of $51 was recorded as research and development expenses.

In January 2011, Ramot exercised additional 167,530 Common Stock of the Company, for $35, which finalized the sale of the 1,120,000 Common Stock of the Company granted to Ramot for $235. In February 2011, the Company paid the remaining $5 and finalized the balance due to Ramot according to the settlement agreement between the parties dated December 24, 2009.

NOTE 5   -   CONSULTING AGREEMENTS

 
A.
On July 8, 2004, the Company entered into consulting agreements with each of Prof. Eldad Melamed and Dr. Daniel Offen (together, the "Consultants"), under which the Consultants 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 agreements were issued to the Consultants effective as of November 4, 2004. Each of the warrants was exercisable for a seven-year period beginning on November 4, 2005. As of September 2010, all the above warrants had been exercised.

 
B.
On December 16, 2010, the Company granted to the consultants 1,100,000 shares of the Company's Common Stock for services rendered through December 31, 2010. Related compensation in the amount of $220 is recorded as research and development expense.

 
C.
As of March 31, 2011, the Company had a total liability of $212 for services rendered by the Consultants under the abovementioned agreements.
 
 
16

 
 
BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY
(A development stage company)

Notes to the financial statements
 
NOTE 6   -   SHORT-TERM CONVERTIBLE NOTE

On December 13, 2009, the Company issued a $135 Convertible Promissory Note to its legal advisor for $217 in legal fees accrued through October 31, 2009. Interest on the Note accrued at the rate of 4%. The legal advisor had the right at any time to convert all or part of the outstanding principal and interest amount of the note into shares of Common Stock based on the five day average closing stock price prior to conversion election.

The difference between the amount the Company owed to the legal advisor and the principal of the Convertible Promissory Note in the amount of $82 was deducted from general and administrative expenses. Since the outcome of the issuance of the shares was to relieve the debtor from its obligation, based on guidance in ASC 860-10 and ASC 450-20 Extinguishment of Liabilities” the Company derecognized the liability with the difference recognized in earnings.

On February 19, 2010, the Company's legal advisor converted the entire accrued principal and interest of a $135 Convertible Promissory Note into 402,385 shares of Common Stock.
 
On September 15, 2010, the Company issued a $135 Convertible Promissory Note to its legal advisor for certain legal fees accrued through December 31, 2010. Interest on the Note was at the annual rate of 4%. The legal advisor had the right at any time to convert all or part of the outstanding principal and interest amount of the note into shares of Common Stock based on the five day average closing stock price prior to conversion election.

On February 18, 2011, the legal advisor converted the entire accrued principal and interest into 445,617 shares of Common Stock.
 
NOTE 7   -   SHORT-TERM LOANS

In March 2007, the Company issued a $150 convertible note to a lender, with an annual interest rate of 8% for the first year, with an increase up to 10% after the first year. On January 27, 2010, the lender converted the entire accrued principal and interest of $189 into 1,016,109 shares of Common Stock of the Company.

Since the outcome of the issuance of the shares was to relieve the debtor from its obligation, based on guidance in ASC 860-10 and ASC 450-20 Extinguishment of Liabilities” the Company derecognized the liability with the difference recognized in earnings.
 
NOTE 8   -   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 annual and special meetings of the 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 registered and publicly traded on the Over-the-Counter Bulletin Board service of the FINRA, under the symbol BCLI.
 
 
17

 

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY
(A development stage company)

Notes to the financial statements
 
NOTE 8   -   STOCK CAPITAL (Cont.)
 
 
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 the 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 at a price of $0.8 per share for total proceeds of $149.

 
d)
On July 27, 2005, the Company issued to investors 165,000 shares of Common Stock at a price of $0.6 per share for total proceeds of $99.

 
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 March 31, 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.

 
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 were originally scheduled to 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)
      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  

On August 18, 2009, the Company entered into an amendment to the investment agreement with the investor providing for the following:

 
(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 than $50 starting August 1, 2009. The investor may accelerate such payments in its discretion.
 
 
18

 
 
BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY
(A development stage company)

Notes to the financial statements
 
NOTE 8   -   STOCK CAPITAL (Cont.)
 
 
B. 
Issuance of shares warrants and options: (Cont.)

 
1.
Private placements: (Cont.)

 
f)
(Cont.)

 
(b)
The exercise price of the last 10,083,334 warrants was reduced from an exercise price of $0.36 per share to $0.29 per share.

 
(c)
All warrants expire on November 5, 2013 instead of November 5, 2011.

 
(d)
The price per share of the investment agreement decreased from $0.1818 to $0.12, therefore the Company adjusted the number of Shares of Common Stock issuable pursuant the investment agreement retroactively and issued to the investor on October 28, 2009 an additional 9,916,667 shares of Common Stock for past investment.

 
(e)
The investor has 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.

On January 18, 2011, the Company and an investor signed an agreement to offset amounts due to the investor, totaling $20, against the remaining balance of the investment. The Company issued to the investor 10,499,999 shares of Common Stock and a warrant to purchase 4,539,500 shares of the Company's Common Stock at an exercise price of $0.20 per share

As of March 31, 2011, the Company issued to the investor and its designees an aggregate of 41,666,667 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 and a warrant to purchase 20,166,667 shares of common stock at an exercise price of $0.29 per share. The warrants may be exercised at any time and expire on November 5, 2013.

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 were to be issued pro rata to the funds received from the investor.

As of December 31, 2010, the introduction fee was paid in full.

 
g)
In January 2010, the Company issued 1,250,000 units to a private investor for total proceeds of $250. Each unit consists of one share of Common Stock and a two-year warrant to purchase one share of Common Stock at $0.50 per share.

 
h)
In February 2010, the Company issued 6,000,000 shares of Common Stock to three investors (2,000,000 to each investor) and warrants to purchase an aggregate of 3,000,000 shares of Common Stock (1,000,000 to each investor) with an exercise price of $0.5 for aggregate proceeds of $1,500 ($500 each) through February 17, 2012.

 
i)
On February 7, 2011, the Company issued 833,333 shares of Common Stock, at a price of $0.3 per share, and a warrant to purchase 641,026 shares of the Company's Common Stock at an exercise price of $0.39 per share for one year for total proceeds of $250.

 
19

 
 
BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY
(A development stage company)

Notes to the financial statements
 
NOTE 8   -   STOCK CAPITAL (Cont.)
 
 
B. 
Issuance of shares warrants and options: (Cont.)

 
1.
Private placements: (Cont.)

 
j)
On February 23, 2011, the Company entered into an investment agreement, pursuant to which the Company sold 12,815,000 shares of Common Stock, for an aggregate subscription price of $3.6 million and warrants to purchase up to 19,222,500 shares of Common Stock as follows: warrant to purchase 12,815,000 shares of Common Stock at $0.5 for two years, and warrants to purchase 6,407,500 shares of Common Stock at $0.28 for one year.

In addition, the Company agreed to pay 10% of the funds received for the distribution services received, out of this amount, 4% was be paid in stock and the remaining 6% in cash. Accordingly, in March 2011, the Company issued 512,600 Common Stock and paid $231 for the investment banking related to the investement.

 
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 years. Any options that are canceled or forfeited before expiration become available for future grants.

On June 5, 2008, the Company's stockholders approved an amendment and restatement of 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 March 31, 2011, 1,392,452 options are available for future grants.
On May 27, 2005, the Company granted to one of its directors an option to purchase 100,000 shares of Common Stock at an exercise price of $0.75 per share. The option is fully vested and expires after 10 years.

On February 6, 2006, the Company entered into an amendment to the Company's option agreement with the Company's former Chief Financial Officer. The amendment changed 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 option is fully vested and expires after 10 years. The compensation related to the option, in the amount of $48, was recorded as general and administrative expense.
 
 
20

 
 
BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY
(A development stage company)

Notes to the financial statements

NOTE 8   -   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 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 administration expense over the remaining vesting period of the options.

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.

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 Chief Executive Officer an option to purchase 1,000,000 shares of Common Stock at an exercise price of $0.87 per share. The option is fully vested 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 agreement with the Company's Chief Executive Officer. The amendment changes the exercise price of the option for the purchase 1,000,000 shares 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.
 
 
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BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY
(A development stage company)

Notes to the financial statements
 
NOTE 8   -   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 Chief Executive Officer 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 shares subject to the option on each anniversary of the date of grant 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 former Chief Financial Officer an option to purchase 200,000 shares of Common Stock at an exercise price of $0.067 per share. The option vested with respect to 1/3 of the shares subject to the option. In connection with the former Chief Financial Officer’s resignation, 2/3 of the above shares were cancelled and the remaining 66,667 remain exercisable through April 7, 2011.

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. Each option vests with respect to 1/3 of the shares subject to the option on each anniversary of the date of grant 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.

On December 13, 2009, 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 $21, was recorded as general and administrative expense.

On February 10, 2010, the Company granted to an employee an option to purchase 30,000 shares of Common Stock at an exercise price of $0.32 per share. The option vests with respect to 1/3 of the shares subject to the option on each anniversary of the date of grant and expires after 10 years. The total compensation related to the option is $9, which is amortized over the vesting period as research and development expense.

On April 13, 2010, the Company, Abraham Israeli and Hadasit Medical Research Services and Development Ltd. (“Hadasit”) entered into an Agreement (the “Agreement”) pursuant to which Mr. Israeli agreed, during the term of the Agreement, to serve as (i) the Company’s Clinical Trials Advisor and (ii) a member of the Company’s Board of Directors.  In consideration of the services to be provided by Mr. Israeli to the Company under the Agreement, the Company agreed to grant options annually during the term of the Agreement for the purchase of its Common Stock, as follows:

 
·
An option for the purchase of 166,666 shares of Common Stock at an exercise price equal to $0.00005 per share to Mr. Israeli; and
 
·
An option for the purchase of 33,334 shares of Common Stock at an exercise price equal to $0.00005 per share to Hadasit,
 
·
* Such options will vest and become exercisable in twelve (12) consecutive equal monthly amounts.
 
 
22

 
 
BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY
(A development stage company)

Notes to the financial statements
 
NOTE 8   -   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 January 30, 2011, the Company signed an agreement with a new COO and acting CEO. According to the employment agreement, the new COO received 450,000 options to purchase Common Stock of the Company at $0.20.

In February 2011, two employees exercised 66,667 options for $16.

 
b)
Restricted shares to directors:

A summary of the Company's option activity related to options to employees and directors, and related information is as follows:

   
For the period ended 
March 31, 2011
 
   
Amount
of
options
   
Weighted
average
exercise
price
   
Aggregate
intrinsic
value
 
         
 $
   
 $
 
                   
Outstanding at beginning of period
    6,893,024       0.183       -  
Granted
    -       -       -  
Exercised
    (222,997 )     0.15       -  
Cancelled
    (982,601 )     0.15       -  
                         
Outstanding at end of period
    5,687,426       0.184       1,045,634  
                         
Vested and expected-to-vest at end of period
    6,893,024       0.184       1,264,634  

On May 2, 2006, the Company issued to two of its directors 200,000 restricted shares of common stock (100,000 each). The restrictions on the shares have fully lapsed. The compensation related to the stocks issued amounted to $104, which was 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 a director 100,000 restricted shares of Common Stock. The restrictions on the shares have fully lapsed. The compensation related to the shares issued amounted to $47, which was amortized over the vesting period as general and administrative expenses.

 
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