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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 September 30, 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 x   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 November 9, 2011, the number of shares outstanding of the registrant’s common stock, $0.00005 par value per share, was 125,719,309.

 
 

 
 
TABLE OF CONTENTS
 
 
Page
Number
PART I
3
   
Item 1. Financial Statements
3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
35
Item 3. Quantitative and Qualitative Disclosures About Market Risk
40
Item 4. Controls and Procedures
40
   
PART II
41
   
Item 1. Legal Proceedings
41
Item 1A. Risk Factors
41
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
41
Item 6. Exhibits
41
  
 
 

 
 
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, 2011

UNAUDITED

U.S. DOLLARS IN THOUSANDS
 
 
 
3

 

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

CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2011


UNAUDITED

U.S. DOLLARS IN THOUSANDS



INDEX


 
Page
   
   
Consolidated Balance Sheets
5
   
Consolidated Statements of Operations
6
   
Statements of Changes in Stockholders' Equity (Deficiency)
7 – 15
   
Consolidated Statements of Cash Flows
16
   
Notes to Consolidated Financial Statements
17 - 34
 
 
4

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

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

   
September 30,
   
December 31,
 
   
2 0 11
   
2 0 10
 
   
Unaudited
   
Audited
 
ASSETS
           
             
Current Assets:
           
Cash and cash equivalents
  $ 2,390     $ 93  
Accounts receivable
    369       427  
Prepaid expenses
    38       59  
Total current assets
    2,797       579  
                 
Long-Term Investments:
               
Prepaid expenses
    9       1  
Severance pay fund
    98       90  
Total long-term investments
    107       91  
                 
Property And Equipment, Net
    341       419  
                 
                 
Total assets
  $ 3,245     $ 1,089  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
               
                 
Current Liabilities:
               
Trade payables
  $ 159     $ 307  
Accrued expenses
    555       508  
Other accounts payable
    94       471  
Short-term convertible note
      -     137  
Total current liabilities
    808       1,423  
                 
Accrued Severance Pay
    101       125  
                 
Total liabilities
    909       1,548  
                 
Stockholders' Equity (Deficiency):
               
Stock capital: (Note 8)
    6       5  
Common stock of $0.00005 par value - Authorized: 800,000,000 shares at September 30, 2011 and December 31, 2010; Issued and outstanding: 125,619,309  and 95,832,978 shares at September 30, 2011 and December 31,2010 respectively.
               
Additional paid-in-capital
    44,986       39,696  
Deficit accumulated during the development stage
    (42,656 )     (40,160 )
Total stockholders' equity (deficiency)
    2,336       (459 )
                 
                 
Total liabilities and stockholders' equity (deficiency)
  $ 3,245     $ 1,089  
                 
 
The accompanying notes are an integral part of the consolidated financial statements.
 
 
5

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

CONSOLIDATED STATEMENTS OF OPERATIONS
  U.S. dollars in thousands
  (Except share data)
   
Nine months
ended September 30
   
Three months
ended September 30
   
Period from September 22, 2000 (inception date) through September 30,
 
   
2 0 11
   
2 0 10
   
2 0 1 1
   
2 0 10
   
2 0 1 1
 
   
Unaudited
   
Unaudited
   
Unaudited
 
                               
Operating costs and expenses:
                             
                               
Research and development, net
  $ 1,032     $ 958     $ 176     $ 371     $ 23,762  
General and administrative
    1,459       902       564       264       16,257  
                                         
Total operating costs and expenses
    2,491       1,860       740       635       40,019  
                                         
Financial expenses (income), net
    132       49       (46 )     45       2,528  
Other income
    132       -       -       -       132  
                                         
Operating loss
    2,491       1,909       694       680       42,415  
                                         
Taxes on income
    5       24       -       24       77  
                                         
Loss from continuing operations
    2,496       1,933       694       704       42,492  
                                         
Net loss from discontinued operations
    -       -       -       -       164  
                                         
Net loss
  $ 2,496     $ 1,933     $ 694     $ 704       42,656  
                                         
Basic and diluted net loss per share from continuing operations
  $ 0.02     $ 0.02     $ 0.01     $ 0.01          
                                         
Weighted average number of shares outstanding used in computing basic and diluted net loss per share
    118,106,658       87,592,831       124,596,807       91,606,177          
                                         
 
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
 
   
Common stock
   
Additional paid-in
   
Deferred
Stock - based
   
during the development
   
stockholders' 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
 
 
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
 
   
Common stock
   
Additional paid-in
   
Deferred
Stock - based
   
during the development
   
stockholders' 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
 
 
 
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
 
   
Common stock
   
Additional paid-in
   
Deferred
Stock - based
   
during the development
   
stockholders' 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 )

* 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)

                     
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 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
 
 
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, 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 )
                                                 
 
* 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, 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
 
 
12

 
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, 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
 
 
13

 
 
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, 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.

 
14

 

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
    590,870       -       246       -       -       246  
Stock-based compensation related to stock and options granted to directors and employees
    1,400,040       -       786       -       -       786  
Conversion of convertible note
    755,594       -       140       -       -       140  
Exercise of options
    1,432,061       -       228       -       -       228  
Exercise of warrants
    946,834       -       265       -       -       265  
Issuance of shares for private placement
    14,160,933       1       3,601                       3,602  
Issuance of shares on account of previously subscribed shares (See also Note 8B.1.f)
    10,499,999       -       24       -       -       24  
Net loss
    -       -       -       -       (2,496 )     (2,496 )
                                                 
Balance as of September 30, 2011
    125,619,309     $ 6     $ 44,986     $ -     $ (42,656 )   $ 2,336  
                                                 
* Represents an amount less than $1.
 
The accompanying notes are an integral part of the consolidated financial statement

 
15

 

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

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

 
   
Nine months
ended September 30
   
Period from
September 22, 2000
(inception date) through September 30,
 
   
2 0 1 1
   
2 0 1 0
   
2 0 1 1
 
   
Unaudited
   
Unaudited
 
Cash flows from operating activities:
                 
Net loss
  $ (2,496 )   $ (1,933 )   $ (42,656 )
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
    116       126       964  
Severance pay, net
    (32 )     11       3  
Accrued interest on loans
    3       -       451  
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
    246       111       21,283  
Stock-based compensation related to options granted to employees
    786       254       6,472  
Decrease (increase) in accounts receivable and prepaid expensed
    79       (26 )     (407
Increase (decrease) in trade payables
    (148 )     (70 )     632  
Increase (decrease)  in accrued expenses and other accounts payable
    (306 )     4       1,155  
Erosion of restricted cash
    -       -       (6 )
Net cash used in continuing operating activities
    (1,752 )     (1,523 )     (10,876 )
Net cash used in discontinued operating activities
    -       -       (23 )
Total net cash used in operating activities
    (1,752 )     (1,523 )   $ (10,899 )
Cash flows from investing activities:
                       
Purchase of property and equipment
    (38 )     (2 )     (1,123 )
Restricted cash
    -       -       6  
Investment in lease deposit
    (8 )     -       (9 )
Net cash used in continuing investing activities
    (46 )     (2 )     (1,126 )
Net cash used in discontinued investing activities
    -       -       (16 )
Total net cash used in investing activities
    (46 )     (2 )     (1,142 )
                         
Cash flows from financing activities:
                       
Proceeds from issuance of Common stock, net
    3,602       2,175       12,319  
Proceeds from loans, notes and issuance of warrants, net
    -       -       2,061  
Credit from bank
    -       (5 )     -  
Proceeds from exercise of warrants and options
    493       103       609  
Repayment of short-term loans
    -       -       (601 )
Net cash provided by continuing financing activities
    4,095       2,273       14,388  
Net cash provided by discontinued financing activities
    -       -       43   
Total net cash provided by financing activities
    4,095       2,273       14,431   
Increase in cash and cash equivalents
    2,297       748       2,390  
Cash and cash equivalents at the beginning of the period
    93       1       -  
Cash and cash equivalents at end of the period
  $ 2,390     $ 749     $ 2,390  
                         
Non-cash financing activities:
                       
Conversion of convertible loan and convertible note to shares Conversion of trade payable to Common Stock $ 84    
140
      324          
Conversion of other accounts payable to Common Stock     24                  

 
16

 
 
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.) (The "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 certain stem cell technology (see Note 4). 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.
 
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 ASC 360-10 (formerly "SFAS" 144), "Accounting for the Impairment or Disposal of Long-Lived Assets".
 
 
D.
On October 25, 2004, the Company formed a wholly-owned subsidiary in Israel, Brainstorm Cell Therapeutics Ltd. ("BCT").

 
E.
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.

 
F.
On September 17, 2006, the Company's Board determined to change the Company's fiscal year-end from March 31 to December 31.
 
 
G.
On December 2006, the Company changed its state of incorporation from Washington to Delaware.
 
 
H.
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, "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.
 
On February 23, 2011, the Company submitted, to the MOH, all the required documents. Following approval of the Israel Ministry of Health (MOH), a Phase I/II clinical study for ALS patients using the Company’s autologous NurOwn™ stem cell therapy was initiated in June 2011.
 
 
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).
 
 
17

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

Notes to the financial statements