BRAINSTORM CELL THERAPEUTICS INC (Form: 10QSB, Received: 08/20/2007 16:22:58)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-QSB

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

FOR THE QUARTERLY PERIOD ENDED June 30, 2007

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	(I.R.S. Employer
incorporation or organization)	Identification No.)

110 EAST 59th STREET

NEW YORK, NY 10022

(Address of principal executive offices)

(212) 557-9000

(Registrant's telephone number)

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

As of August 15, 2007, the number of shares outstanding of the Registrant's Common Stock, $0.00005 par value per share, was 32,904,762.

Transitional Small Business Disclosure Format (Check one): Yes o No x .

TABLE OF CONTENTS

		Page Number
PART I

Item 1. Financial Statements		4
Item 2. Plan of Operation		27
Item 3. Controls and Procedures		37

PART II

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		37
Item 5. Other Information		37
Item 6. Exhibits		37

PART I: FINANCIAL INFORMATION

SPECIAL NOTE

Unless otherwise specified in this report, all references to currency, monetary values and dollars set forth herein shall mean United States (U.S.) dollars.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains numerous statements, descriptions, forecasts and projections, regarding Brainstorm Cell Therapeutics Inc. and its potential future business operations and performance. These statements, descriptions, forecasts and projections constitute “forward-looking statements,” and as such involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance and achievements to be materially different from any results, levels of activity, performance and achievements expressed or implied by any such “forward-looking statements.” Some of these are described under “Risk Factors” in this report and in our report on Form 10-KSB for the transition period ended December 31, 2006. In some cases you can identify such “forward-looking statements” by the use of words like “may,” “will,” “should,” “could,” “expects,” “hopes,” “anticipates,” “believes,” “intends,” “plans,” “estimates,” “predicts,” “likely,” “potential,” or “continue” or the negative of any of these terms or similar words. These “forward-looking statements” are based on certain assumptions that we have made as of the date hereof. To the extent these assumptions are not valid, the associated “forward-looking statements” and projections will not be correct. Although we believe that the expectations reflected in these “forward-looking statements” are reasonable, we cannot guarantee any future results, levels of activity, performance or achievements. It is routine for our internal projections and expectations to change as the year or each quarter in the year progresses, and therefore it should be clearly understood that the internal projections and beliefs upon which we base our expectations may change prior to the end of each quarter or the year. Although these expectations may change, we may not inform you if they do and we undertake no obligation to do so. We caution investors that our business and financial performance are subject to substantial risks and uncertainties. In evaluating our business, prospective investors should carefully consider the information set forth under the caption “Risk Factors” in addition to the other information set forth herein and elsewhere in our other public filings with the Securities and Exchange Commission.

Item 1. Financial Statements.

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY

(A development stage Company)

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2007

IN U.S. DOLLARS IN THOUSANDS

UNAUDITED

INDEX

	Page

Consolidated Balance Sheets		5

Consolidated Statements of Operations		6

Statements of Changes in Stockholders' Equity (Deficiency)		7 - 8

Consolidated Statements of Cash Flows		9

Notes to Consolidated Financial Statements		10 - 26

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY

(A development stage company)

CONSOLIDATED BALANCE SHEETS

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

	June 30,			December 31
	2007			2006
	Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	4		$	60
Restricted cash		32			32
Accounts receivable and prepaid expenses		87			42

Total current assets		123			134

LONG-TERM INVESTMENTS:
Prepaid expenses		8			8
Severance pay fund		45			38

		53			46

PROPERTY AND EQUIPMENT, NET		482			491

OTHER ASSETS, NET		20			52

Total assets	$	678		$	723

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES:
Trade payables	$	681		$	721
Other accounts payable and accrued expenses		1,111			651
Short-term convertible loans		1,650			937
Short-term loan		206			189

Total current liabilities		3,648			2,498

ACCRUED SEVERANCE PAY		54			41

Total liabilities	$	3,702		$	2,539

STOCKHOLDERS' DEFICIENCY:
Stock capital: (Note 7)
Common stock of $ 0.00005 par value - Authorized: 800,000,000 shares at June 30, 2007 and December 31, 2006; Issued and outstanding: 25,302,066 and 24,201,812 shares at June 30, 2007 and December 31, 2006, respectively		1			1
Additional paid-in capital		26,095			24,427
Deficit accumulated during the development stage		(29,120	)		(26,244	)

Total stockholders' deficiency		(3,024	)		(1,816	)

Total liabilities and stockholders' deficiency	$	678		$	723

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

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY

(A development stage company)

CONSOLIDATED STATEMENTS OF OPERATIONS

In U.S. dollars in thousands (except share data)

	Six months ended June 30,					Period from September 22, 2000 (inception date) through June 30,
	2007		2006			2007
	Unaudited					Unaudited

Operating costs and expenses:

Research and development	$	618	$	443		$	2,934
Research and development expenses (income) related to stocks, warrants and options granted to employees and service providers		378		(537	)		16,001
General and administrative		339		352			2,230
General and administrative expenses related to stocks, warrants and options granted to employees and service providers		866		1,217			6,045

Total operating costs and expenses		2,201		1,475			27,210

Financial expenses, net		664		64			1,681

		2,865		1,539			28,891
Taxes on income		11		16			65

Loss from continuing operations		2,876		1,555			28,956
Net loss from discontinued operations		-		-			164

Net loss	$	2,876	$	1,555		$	29,120

Basic and diluted net loss per share from continuing operations	$	0.12	$	0.07

Weighted average number of shares outstanding used in computing basic and diluted net loss per share		24,596,881		22,909,615

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

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY

(A development stage company)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)

In U.S. dollars in thousands (except share data)

	Common stock
	Number			Amount			Additonal paid-in capital		Deferred stock-based compensation			Deficit accumulated during the development stage			Total stockholders' equity(deficiency)

Balance as of September 22, 2000 (date of inception)		-		$	-		$	-	$	-		$	-		$	-

Stock issued on September 22, 2000 for cash at $ 0.00188 per stock		8,500,000			1			15		-			-			16
Stock issued on March 31, 2001 for cash at $ 0.0375 per stock		1,600,000			-			60		-			-			60
Contribution of capital		-			-			8		-			-			8
Net loss		-			-			-		-			(17	)		(17	)

Balance as of March 31, 2001		10,100,000			1			83		-			(17	)		67

Contribution of capital		-			-			11		-			-			11
Net loss		-			-			-		-			(26	)		(26	)

Balance as of March 31, 2002		10,100,000			1			94		-			(43	)		52

Contribution of capital		-			-			15		-			-			15
Net loss		-			-			-		-			(47	)		(47	)

Balance as of March 31, 2003		10,100,000			1			109		-			(90	)		20

2-for-1 stock split		10,100,000			-			-		-			-			-
Stock issued on August 31, 2003 to purchase mineral option at $ 0.065 per stock		100,000						6		-			-			6
Cancellation of stocks granted to Company's President		(10,062,000	)		(1	)		1		-			-			-
Contribution of capital		-			-			15		-			-			15
Net loss		-			-			-		-			(73	)		(73	)

Balance as of March 31, 2004		10,238,000			-			131		-			(163	)		(32	)

Stock issued on June 24, 2004 for private placement at $ 0.01 per stock, net of $ 25,000 issuance expenses (Note 7c(1)(a))		8,510,000			1			60		-			-			61
Contribution of capital (Note 7b)		-			-			7		-			-			7
Stock issued in 2004 for private placement at $ 0.75 per unit (Note 7c(1)(a))		1,894,808						1,418		-			-			1,418
Cancellation of stocks 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 stocks and options granted to employees (Note 7c(2))		-			-			-		584			-			584
Compensation related to stocks and options granted to service providers (Note 7c(3)(c))		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

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

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY

(A development stage company)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)

In U.S. dollars in thousands (except share data)

	Common stock
	Number	Amount		Additional paid-in capital			Deferred stock-based compensation			Deficit accumulated during the development stage			Total stockholders' equity (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 stock (Note 7c(1)(d))	186,875			149			-			-			149
Stock issued on July 27, 2005 for private placement at $ 0.6 per stock (Note 7c(1)(e))	165,000			99			-			-			99
Stock issued on September 30, 2005 for private placement at $0.8 per share(Note 7c(1)(f))	312,500			225			-			-			225
Stock issued on December 07, 2005 for private placement at $0.8 per share (Note 7c(1)(f))	187,500			135			-			-			135
Forfeiture of options granted to employees	-	-		(3,363	)		3,363			-			-
Deferred stock-based compensation related to stocks and options granted to directors and employees	200,000			486			(486	)		-			-
Amortization of deferred stock-based compensation related to options and stocks granted to employees and directors (Note 7c(2))	-	-		51			1,123			-			1,174
Stock-based compensation related to options and stocks granted to service providers (Note 7c(3)(c))	934,904			662			-			-			662
Reclassification due to application of 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 FAS 123(R)	-	-		(1,395	)		1,395			-			-
Stock-based compensation related to stocks and options granted to directors and employees	200,000			1,168			-			-			1,168
Reclassification due to application of EITF 00-19	-	-		7,191			-			-			7,191
Stock-based compensation related to options and stocks granted to service providers (Note 7c)	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	)

Stock-based compensation related to options and stocks granted to service providers (Note 7b)	464,095	-		714			-			-			714
Warrants issued to convertible note holder (Note 6)	-	-		84			-			-			84
Stock-based compensation related to stocks and options granted to directors and employees	200,000	-		530			-			-			530
Beneficial conversion feature related to convertible bridge loans (Note 6)	-			252									252
Conversion of convertible loans	436,159	-		88			-			-			88
Net loss	-	-		-			-			(2,876	)		(2,876	)

Balance as of June 30, 2007 (unaudited)	25,302,066	1	$	26,095		$	-		$	(29,120	)	$	(3,024	)

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

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY

(A development stage company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

In U.S. dollars in thousands

	Six months ended June 30,						Period from September 22, 2000 (inception date) through June 30,
	2007			2006			2007
	Unaudited						Unaudited
Cash flows from operating activities:

Net loss	$	(2,876	)	$	(1,555	)	$	(29,120	)
Less - loss for the period from discontinued operations		-			-			164
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation		93			35			298
Erosion of restricted cash		-			(2	)		-
Accrued severance pay, net		6			4			9
Accrued interest on loans		104			75			184
Amortization of discount on short-term loans		502			103			1,353
Change in fair value of options and warrants		-			(795	)		(795	)
Expenses related to stocks and options granted to service providers		714			657			19,401
Amortization of deferred stock-based compensation related to options granted to employees and directors		530			738			3,455
Increase in accounts receivable and prepaid expenses		(45	)		(41	)		(86	)
Increase (decrease) in trade payables		(40	)		140			680
Increase (decrease) in other accounts payable and accrued expenses		460			(151	)		1,106

Net cash used in continuing operating activities		(552	)		(792	)		(3,351	)
Net cash used in discontinued operating activities		-			-			(23	)

Total net cash used in operating activities (Note 1g)		(552	)		(792	)		(3,374	)

Cash flows from investing activities:

Purchase of property and equipment		(39	)		(104	)		(618	)
Restricted cash		-			-			(32	)
Investment in lease deposit		-			1			(8	)

Net cash used in continuing investing activities		(39	)		(103	)		(658	)
Net cash used in discontinued investing activities		-			-			(16	)

Total net cash used in investing activities		(39	)		(103	)		(674	)

Cash flows from financing activities:

Proceeds from issuance of Common stock and warrants, net		-			-			2,087
Proceeds from loans, notes and issuance of warrants, net		535			1,098			1,922

Net cash provided by continuing financing activities		535			1,098			4,009
Net cash provided by discontinued financing activities		-			-			43

Total net cash provided by financing activities		535			1,098			4,052

Increase (decrease) in cash and cash equivalents		(56	)		203			4
Cash and cash equivalents at the beginning of the period		60			289			-

Cash and cash equivalents at end of the period	$	4		$	492		$	4

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

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In U.S. dollars in thousands (except share data)

NOTE 1:-

GENERAL

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

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 the Company's Common stock.

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 to the financial statements as of December 31, 2006). 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 has 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 SFAS 144, "Accounting for the Impairment or Disposal of Long-Lived Assets".

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.

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

On December 21 2006, the Company changed its state of incorporation from Washington to Delaware.

As of June 30, 2007, the Company had accumulated deficit of $ 29,120, working capital deficiency of $ 3,525, incurred net loss of $ 2,876 and negative cash flows from operating activities in the amount of $ 552 for the six months ended June 30, 2007. In addition, the Company has not yet generated any revenues.

These conditions raise substantial doubt as to the Company's ability to continue to operate as a going concern.

The Company's ability to continue to operate as a going concern is dependent upon additional financial support.

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.

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In U.S. dollars in thousands (except share data)

NOTE 1:-

GENERAL (Cont.)

The Company intends to raise additional capital to fund its operations. In the event the Company is unable to successfully raise capital and generate revenues, it is unlikely that the Company will have sufficient cash flows and liquidity to finance its business operations as currently contemplated and might not be able to pay its liabilities on their scheduled maturity dates.

Accordingly, the Company will likely reduce general and administrative expenses and cease or delay the development project 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.

On September 17, 2006, the Board of Directors of the Company determined to change the Company's fiscal year-end from March 31 to December 31.

NOTE 2:-

SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies applied in the annual financial statements of the Company as of December 31, 2006, 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 fully owned subsidiary as of June 30, 2007 and for the six 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 six months ended June 30, 2007 are not necessarily indicative of the results that may be expected for the year ended December 31, 2007.

NOTE 4:-

RESEARCH AND LICENSE AGREEMENT

The Company's total obligation to Ramot as of June 30, 2007, was $ 513 (see Note 8e).

NOTE 5:-

CONSULTING AGREEMENTS

The Company's total obligation to consultants as of June 30, 2007 was $ 120. (For the complete information regarding the research and license agreement, see Note 4 to the financial statements as of December 31, 2006).

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In U.S. dollars in thousands (except share data)

NOTE 6:-

SHORT-TERM CONVERTIBLE LOANS

On April 10, 2007, the Company issued a $ 25 Convertible Promissory Note to a third party. Interest on the note will accrue at the rate of 8% per annum and will be due and payable in full on April 10, 2008. The note will become immediately due and payable upon the occurrence of certain Events of Default, as defined in the note. The third party has the right at any time prior to the close of business on the Maturity Date to convert all or part of the outstanding principal and interest amount of the note into shares of the Company's Common stock (the "Common stock"). The Conversion Price, as defined in the note, will be 75% (60% upon the occurrence of an Event of Default) of the average of the last bid and ask price of the Common stock as quoted on the Over-the-Counter Bulletin Board for the five trading days prior to the Company's receipt of the third party written notice of election to convert, but in no event the conversion price be greater than $ 0.35 or more than 1,000,000 shares of Common stock be issued. The Conversion Price will be adjusted in the event of a stock dividend, subdivision, combination or stock split of the outstanding shares.

In addition, the Company granted to the shareholder warrants to purchase 25,000 of the Company's Common stock at an exercise price of $ 0.45 per stock. The warrants are fully vested and are exercisable at any time after April 10, 2007, until the second anniversary of the issue date. The fair value of the warrants amounts to $ 6.

In accordance with APB 14, the Company allocated the proceeds of convertible note issued with detachable warrants granted based on the relative fair values of the two securities at time of issuance. As a result, the Company recorded in its statement of changes in shareholders' equity an amount of $ 4, in respect to the warrants and the convertible note was recorded in the amount of $ 21.

The conversion feature, in the amount of $ 8, embedded in the note was calculated based on a conversion rate of 75%. The amount was recorded as discount on the note against additional paid-in capital and is amortized to financial expenses over the note period.

The balance as of June 30, 2007, is comprised as follows:

Note	$	21
Discount		(6	)
Accrued interest		*) -

	$	15

*) Represents an amount lower than $ 1.

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In U.S. dollars in thousands (except share data)

NOTE 6:-

SHORT-TERM CONVERTIBLE LOANS (Cont.)

On May 6, 2007, the Company issued a $ 250 Convertible Promissory Note to a third party. Interest on the note will accrue at the rate of 8% per Annum and will be due and payable in full on May 6, 2008. The note will become immediately due and payable upon the occurrence of certain Events of Default, as defined in the note. The third party has the right at any time prior to the close of business on the Maturity Date to convert all or part of the outstanding principal and interest amount of the note into shares of the Company's Common stock (the "Common stock"). The Conversion Price, as defined in the note, will be 75% (60% upon the occurrence of an Event of Default) of the average of the last bid and ask price of the Common stock as quoted on the Over-the-Counter Bulletin Board for the five trading days prior to the Company's receipt of the third party written notice of election to convert but in no event the conversion price be greater than $ 0.35 or more than 5,000,000 shares of Common stock be issued. The Conversion Price will be adjusted in the event of a stock dividend, subdivision, combination or stock split of the outstanding shares.

In addition, the Company granted to the third party warrants to purchase 250,000 shares of the Company's Common stock at an exercise price of $ 0.45 per stock. The warrants are fully vested and are exercisable at any time after May 6, 2007 until May 31, 2010. The fair value of the warrants amounts to $ 82.

In accordance with APB 14, the Company allocated the proceeds of convertible note issued with detachable warrants granted based on the relative fair values of the two securities at time of issuance. As a result the Company recorded in its statement of changes in shareholders' equity an amount of $ 46, in respect to the warrants and the convertible note was recorded in the amount of $ 204.

The conversion feature, in the amount of $ 83, embedded in the note was calculated based on a conversion rate of 75%. The amount was recorded as discount on the note against additional paid-in capital and is amortized to financial expenses over the note period.

The balance as of June 30, 2007, is comprised as follows:

Note	$	204
Discount		(71	)
Accrued interest		3

	$	136

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In U.S. dollars in thousands (except share data)

NOTE 7:-

STOCK CAPITAL

The rights of Common stock are as follows:

Shares of Common stock confer upon their holders the right to receive notice to participate and vote in general meetings 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 of the company is registered and publicly traded on the Over-the-Counter Bulletin Board service of the National Association of Securities Dealers, Inc. under the symbol BCLI.

The former president of the Company donated services valued at $ 6 and rent valued at $ 2 for the six months ended September 30, 2004. These amounts were charged to the statement of operations as part of discontinued operations and classified as additional paid in capital in the stockholders' equity.

Issuance of stocks, warrants and options:

Private placements

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).

On February 23, 2005, the Company completed a private placement round 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 four tranches which closed in October 2004, November 2004 and February 2005.

On March 21, 2005, the Company entered into lock up agreements with 29 of its stockholders with respect to 15,290,000 shares held by them .Under these lock-up agreements, these stockholders may not transfer their shares to anyone other than permitted transferees without the prior consent of the Company' Board of Directors, for the period of time as follows: (i) 85% of the shares shall be restricted from transfer for the twenty-four month period following July 8, 2004, and (ii) 15% of the shares shall be restricted from transfer for the twelve month period following July 8, 2004.

On March 26, 2005, the Company completed amended lock up agreements with five of the twenty nine stockholders mentioned above with respect to 7,810,000 shares held by them .These lock-up Agreements amend and restate the previous lock-up agreements.

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In U.S. dollars in thousands (except share data)

NOTE 7:-

STOCK CAPITAL (Cont.)

Under the amended lock-up Agreements, these stockholders may not sell or otherwise transfer their stocks to anyone other than permitted transferees without the prior written consent of the Company's Board of Directors, as follows: (i) 85% of the shares will be restricted from transfer until December 31, 2006 and (ii) 15% of the shares will be free from the transfer restrictions. All of the restrictions under the amended lock-up Agreements will automatically terminate upon the effectiveness of any registration statement filed by the Company for the benefit of Ramot.

On May 12, 2005, the Company issued to a certain investor 186,875 shares of its Common stock for total proceeds of $ 149 at a price per stock of $ 0.8.

On July 27, 2005, the Company issued to certain investors 165,000 shares of its Common stock for total proceeds of $ 99 at a price per stock of $ 0.6.

On August 11, 2005, the Company signed a private placement agreement ("PPM") with investors for the sale of up to 1,250,000 units at a price per unit of $ 0.8. 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.

Share-based compensation to employees and to directors

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.

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In U.S. dollars in thousands (except share data)

NOTE 7:-

STOCK CAPITAL (Cont.)

As of June 30, 2007, 2,161,684 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 its Common stock, at an exercise price of $ 0.75. The options are fully vested and are exercisable for a period of 10 years.

On February 6, 2006, the Company entered into an amendment to the Company's option agreement with Mr. David Stolick, the Company's Chief Financial Officer. The amendment changes the exercise price of the 400,000 options granted to him on March 29, 2005 to $ 0.15 per share from $ 0.75 per share.

On May 2, 2006, the Company granted to one of its directors an option to purchase 100,000 shares of its Common stock, at an exercise price of $ 0.15. The options are fully vested and are exercisable for a period of 10 years.

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 to $ 0.15 per share from $ 0.75 per share. The excess of the fair value resulting from the modification amounts to $ 2 is recorded as general and administration 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 them to $ 0.15 per share from $ 0.75 per share.

On March 21, 2007, the Company granted to one of its directors an option to purchase 100,000 shares of its Common stock, at an exercise price of $ 0.15. The option is fully vested and is exercisable for a period of 10 years. The Compensation related to the options in the amount of $ 43 was recorded as general and administrative expenses.

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In U.S. dollars in thousands (except share data)

NOTE 7:-

STOCK CAPITAL (Cont.)

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

	Six months ended June 30, 2007
	Amount of options		Weighted average exercise price
			$

Outstanding at beginning of the period		2,850,760	$	0.188
Granted		890,000		0.434
forfeited		-		-

Outstanding at end of period		3,740,760	$	0.247

Vested and expected-to-vest options at end of period		2,534,381	$	0.178

Compensation expenses recorded by the Company in respect to its stock based employee compensation award in accordance with SFAS-123(R) for the six months ended June 30, 2007, amounted to $ 530.

Restricted shares to directors:

On May 27, 2005, 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 on the shares shall lapse in three annual and equal portions commencing with the grant date.

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.

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In U.S. dollars in thousands (except share data)

NOTE 7:- STOCK CAPITAL (Cont.)

On April 20, 2007, based on 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 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 as of six months ended June 30, 2007.

Stocks and warrants to service providers and investors:

The Company accounts for stock option and warrant grants issued to non-employees using the guidance of SFAS No. 123(R), "Accounting for Stock-Based Compensation" and EITTF No. 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 the 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.

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In U.S. dollars in thousands (except share data)

NOTE 7:-

STOCK CAPITAL (Cont.)

Warrants:

Issuance date	Number of warrants		Exercise price		Warrants exercisable		Exercisable through

November 2004		12,800,845	$	0.01		12,800,845		November 2010
December 2004		1,800,000	$	0.00005		1,800,000		December 2014

		14,600,845				14,600,845

February 2005, see c(1)		1,894,808	$	2.5		1,894,808		February 2008
May 2005		47,500	$	1.62		47,500		May 2010
June 2005		30,000	$	0.75		30,000		June 2010
August 2005		70,000	$	0.15		70,000		August 2008
September 2005		3,000	$	0.15		3,000		September 2008
September 2005		36,000	$	0.75		21,929		September 2010
September - December 2005		500,000	$	1		500,000		September - December 2008
December 2005		20,000	$	0.15		20,000		December 2008
December 2005		457,163	$	0.15		235,053		July 2010

		17,659,316				17,423,135

February 2006		230,000	$	0.65		76,666		February 2008
February 2006		40,000	$	1.5		40,000		February 2011
February 2006		8,000	$	0.15		8,000		February 2011
February 2006		189,000	$	0. 5		189,000		February 2009
May 2006		50,000	$	0.0005		50,000		May 2016
May -December 2006		48,000	$	0.35		48,000		May - December 2011
May -December 2006		48,000	$	0.75		48,000		May - December 2011
May 2006		200,000	$	1		200,000		May 2011
June 2006		24,000	$	0.15		24,000		June 2011
May 2006		19,355	$	0.15		19,355		May 2011
October 2006		630,000	$	0.3		630,000		October 2009
December 2006		200,000	$	0.45		200,000		December 2008

		19,345,671				18,956,156

March 2007		200,000	$	0.47		200,000		March 2012
March 2007		500,000	$	0.47		46,119		March 2017
March 2007		50,000	$	0.15		50,000		March 2010
March 2007		15,000	$	0.15		0		February 2012
February 2007		50,000	$	0.45		50,000		February 2009
March 2007		225,000	$	0.45		225,000		March 2009
March 2007		50,000	$	0.45		50,000		March 2010
April 2007		33,300	$	0.45		33,300		April 2009
May 2007		250,000	$	0.45		250,000		May 2010

		20,718,971				19,860,575

The fair value of warrants which became vested during the six months period ended June 30, 2007, amounted to $ 296.

During the period from September 27, 2000 (inception) through June 30, 2007, no warrants, granted to service providers, were exercised or forfeited.

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In U.S. dollars in thousands (except share data)

NOTE 7:-

STOCK CAPITAL (Cont.)

The fair value for the warrants to service providers was estimated on the date of grant using Black-Scholes option pricing model, with the following weighted-average assumptions for the six months ended June 30, 2007, weighted average volatility of 115%, risk-free interest rates of 4.61% dividend yields of 0% and a weighted average life of the options of 7 years.

Stocks:

On June 1 and June 4, 2004, the Company issued 40,000 and 150,000 shares of Common stock, respectively for filing, legal and due-diligence services completed over a 12-month period with respect to a private placement. Compensation expenses related to filing services, totaling $ 26, are amortized over a 12-month period. Compensation expenses related to legal services, totaling $ 105 were recorded as equity issuance cost and did not affect the statement of operations.

On July 1 and September 22, 2004, the Company issued 20,000 and 15,000 shares of Common stock to a former director for financial services for the first and second quarters of 2004, respectively. Compensation expenses of $ 39 were recorded as general and administrative expenses.

On February 10, 2005, the Company signed an agreement with one of its service providers according to which the Company issued the service provider 100,000 shares of restricted stock at a purchase price of $ 0.00005 par value under the U.S Stock Option and Incentive Plan of the Company. The restricted shares are subject to the Company's right to repurchase them within one year of the grant date as follows: (i) in the event that service provider breaches his obligations under the agreement, the Company shall have the right to repurchase the restricted shares at a purchase price equal to par value; and (ii) in the event that the service provider has not breached his obligations under the agreement, the Company shall have the right to repurchase the restricted shares at a purchase price equal to the then fair market value of the restricted shares.

In March and April 2005, the Company signed an agreement with four members of its Scientific Advisory Board according to which the Company issued to the members of the Scientific Advisory Board 400,000 shares of restricted stock at a purchase price of $ 0.00005 par value under the U.S. Stock Option and Incentive Plan (100,000 each). The restricted shares will be subject to the Company's right to repurchase them if the grantees cease to be members of the Company's Advisory Board for any reason. The restrictions on the shares shall lapse in three annual and equal portions commencing with the grant date.

In July 2005, the Company issued to its legal advisors 50,000 shares of Common stock for legal services for 12 months. The compensation related to the stocks in the amount of $ 38 was recorded as general and administrative expenses.

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In U.S. dollars in thousands (except share data)

NOTE 7:-

STOCK CAPITAL (Cont.)

In January 2006, the Company issued to two service providers 350,000 restricted shares of Common stock at a purchase price of $ 0.00005 par value under the U.S Stock Option and Incentive Plan of the Company. The restricted shares are subject to the Company's right to repurchase them within 12 months of the grant date as follows: (i) in the event that the service providers breach their obligations under the agreement, the Company shall have the right to repurchase the restricted shares at a purchase price equal to the par value; and (ii) in the event that the service providers have not breached their obligations under the service agreements the Company shall have the right to repurchase the restricted shares at a purchase price equal to the fair market value of the restricted shares. The compensation related to the restricted shares in the amount of $ 23 was recorded as general and administrative expenses.

On March 6, 2006, the Company issued to its legal advisor 34,904 shares of the Company’s Common stock. The shares are in lieu of $ 19 payable to the legal advisor. Related compensation, in the amount of $ 19 was recorded as general and administrative expenses.

On April 13, 2006, the Company issued to service providers 60,000 shares of the Company’s Common stock at a purchase price of $ 0.00005 par value under the U.S Stock Option and Incentive Plan of the Company. Related compensation in the amount of $ 26 was recorded as general and administrative expenses.

On May 9, 2006, the Company issued to its legal advisor 65,374 shares of the Company's Common stock in lieu of legal services. Related compensation in the amount of $ 33 was recorded as general and administrative expenses.

On June 7, 2006, the Company issued 50,000 shares of the Company’s Common stock for filing services for 12 months. Related compensation in the amount of $ 25 was recorded as general and administrative expenses.

On May 5, 2006, the Company issued 200,000 shares of the Company’s Common stock to its finance consultant for his services. Related compensation in the amount of $ 102 was recorded as general and administrative expenses.

On August 14, 2006, the Company issued 200,000 shares of the Company’s Common stock to a service provider. Related compensation in the amount of $ 68 was recorded as general and administrative expenses.

On August 17, 2006, the Company issued 100,000 shares of the Company’s Common stock to a service provider. Related compensation in the amount of $ 35 was recorded as general and administrative expenses.

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In U.S. dollars in thousands (except share data)

NOTE 7:-

STOCK CAPITAL (Cont.)

On September 17, 2006, the Company issued to its legal advisor 231,851 shares of the Company's Common stock. The stocks are in lieu of $ 63 payable to the legal advisor.

During April 1 and September 30, 2006, the Company issued to its business development advisor, based on the agreement, 240,000 shares of the Company's Common stock. Related compensation in the amount of $ 74 was recorded as general and administrative expenses.

On January 3, 2007, the Company issued to its legal advisor 176,327 shares of the Company's Common stock. The stocks are in lieu of $ 45 payable to the legal advisor. Related compensation in the amount of $ 49 was recorded as general and administrative expenses.

On April 12, 2007, the Company issued to its filing and printing service providers 80,000 shares. The shares issued in lieu of $ 15 payable to the service provider. Compensation of $ 30 was recorded as general and administrative expenses.

In addition, the Company is obligated to issue the filing and printing service providers additional shares, in the event that the total value of the shares hereby issued (as quoted on the Over-the-Counter Bulletin Board or such other exchange where the Common stock is quoted or listed) is less than $20, on March 20, 2008. In no event shall the Company issue more than 30,000 additional shares to the service providers.

As a result, the Company recorded a liability in the amount of $20.

On April 12, 2007, the Company issued to its legal advisor 108,511 shares of the Company's Common stock. The stocks are in lieu of $ 29 payable to the legal advisor. Related compensation in the amount of $ 40 was recorded as general and administrative expenses.

On May 18, 2007, the Company issued to its legal advisor 99,257 shares of the Company's Common stock. The stocks are in lieu of $ 33, payable to the legal advisor. Related compensation in the amount of $ 33 was recorded as general and administrative expenses

Pursuant to the terms of a $50 Convertible Promissory Note, issued on February 5, 2007, to a certain shareholder, the Company received a written notice on May 28, 2007 from the shareholder to convert the entire accrued principal and interest amount of the convertible note into shares of the Company’s Common stock. As a result, the Company issued 210,812 shares of the Company’s Common stock to the shareholder.

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In U.S. dollars in thousands (except share data)

NOTE 7:-

STOCK CAPITAL (Cont.)

Pursuant to the terms of a $50 Convertible Promissory Note, issued on March 14, 2007, to a third party, the Company received a written notice on June 27, 2007 from the shareholder to convert the entire accrued principal and interest amount of the convertible note into shares of the Company’s Common stock. As a result, the Company issued 225,346 shares of the Company’s Common stock to the shareholder.

A summary of the Company's stocks award activity related to stocks issued to service providers, and related information is as follows:

	Six months ended June 30, 2007
	Amount of shares		Weighted average issue price
			$

Outstanding at beginning of the period		2,307,129		0.97
Issued		464,095		0.33

Outstanding at end of period		2,771,224		0.86

Stock-based compensation recorded by the Company in respect of stocks and warrants granted to service providers amounted to $ 734 for the six months ended June 30, 2007.

NOTE 8 :-

SUBSEQUENT EVENTS

On July 3, 2007, the Company issued a $ 30 Convertible Promissory Note to a shareholder. Interest on the Note will accrue at the rate of 8% per annum and will be due and payable in full on July 3, 2008. The Note will become immediately due and payable upon the occurrence of certain Events of Default, as defined in the Note. The third party has the right at any time prior to the close of business on the Maturity Date to convert all or part of the outstanding principal and interest amount of the Note into shares of the Company's Common stock (the "Common stock"). The Conversion Price, as defined in the Note, will be 75% (60% upon an event of default) of the average of the last bid and ask price of the Common stock as quoted on the Over-the-Counter Bulletin Board for the five trading days prior to the Company's receipt of the third party written notice of election to convert but in no event the conversion price be greater than $ 0.35 or more than 1,000,000 shares of Common stock be issued. The Conversion Price will be adjusted in the event of a stock dividend, subdivision, combination or stock split of the outstanding shares.

In addition, the Company granted to shareholder warrants to purchase 30,000 shares of the Company's Common stock at an exercise price of $ 0.45 per stock. The warrants are fully vested and are exercisable at any time after July 3, 2007, until the second anniversary of the issue date.

The Company agreed to pay finder's fee of $ 3.

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In U.S. dollars in thousands (except share data)

NOTE 8 :-

SUBSEQUENT EVENTS (Cont.)

On July 3, 2007, the Company issued a $ 100 Convertible Promissory Note to a third party. Interest on the Note will accrue at the rate of 8% per annum and will be due and payable in full on July 3, 2008. The Note will become immediately due and payable upon the occurrence of certain Events of Default, as defined in the Note. The third party has the right at any time prior to the close of business on the Maturity Date to convert all or part of the outstanding principal and interest amount of the Note into shares of the Company's Common stock (the "Common stock"). The Conversion Price, as defined in the Note, will be 75% of the average of the last bid and ask price of the Common stock as quoted on the Over-the-Counter Bulletin Board for the five trading days prior to the Company's receipt of the third party written notice of election to convert but in no event the conversion price be greater than $ 0.35 or more than 2,000,000 shares of Common stock be issued. The Conversion Price will be adjusted in the event of a stock dividend, subdivision, combination or stock split of the outstanding shares.

In addition, the Company granted to the third party warrants to purchase 100,000 shares of the Company's Common stock at an exercise price of $ 0.45 per stock. The warrants are fully vested and are exercisable at any time after July 3, 2007 until the third anniversary of the issue date.

The Company agreed to pay finder's fee of $ 10.

On July 1, 2007, the Company’s board of directors reached the following resolutions:

Issuance of 380,000 shares of Common stock of the Company to certain service providers.

Issuance of 1,250,000 shares to service provider as a finder fee for introduction to investor (see Note 8d).

Granting of options to purchase 750,000 shares of Common stock of the Company, to its consultants and employees at an exercise price of $ 0.39. The options shall be vested in equal portions in 36 months from the day of grant and be exercisable for a period of 10 years.

Grant of options to purchase 100,000 shares of Common stock of the Company to one of its directors at an exercise price of $ 0.15. The options shall be fully vested from the grant date and be exercisable for a period of 10 years.

Issuance of 200,000 restricted shares to two of the Company’s directors.

Confirming the investment agreement with new investor for up to 5 millions dollar (see Note 8d).

Appointment of Chaim Lebovits as the president of the Company.

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In U.S. dollars in thousands (except share data)

NOTE 8 :-

SUBSEQUENT EVENTS (Cont.)

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 the Company’s Common stock, for an aggregate subscription price of up to $5.0 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	$1,250,000 (includes $250,000 that paid as a convertible loan (Note 6b))	6,875,000	7,562,500
November 15, 2007	$750,000	4,125,000	4,537,500
February 15, 2008	$750,000	4,125,000	4,537,500
May 15, 2008	$750,000	4,125,000	4,537,500
July 30, 2008	$750,000	4,125,000	4,537,500
November 15, 2008	$750,000	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 will have an exercise price of $ 0.20 per stock; (ii) the next 10,083,333 warrants will have an exercise price of $ 0.29 per stock; and (iii) the final 10,083,334 Warrants issued will have an exercise price of $ 0.36 per stock. Each warrant issued pursuant to the Subscription Agreement will expire on November 5, 2011.

Upon the first payment, on August 30 ,2007, the investor will surrender to the Company the form of promissory note and warrants issued to the Investor on May 6, 2007 (Note 6b) , whereupon such promissory note and warrants will be deemed null and void.

In connection with the Agreement, the Company agreed to issue, upon the first closing date, as a finder's fee, 1,250,000 shares of Common stock of the Company to a third party.

On August 20, 2007, the investor paid $1,000,000 as an advance for the first payment, and the Company issued to the investor an aggregate of 6,875,000 shares of common stock and a warrant to purchase 7,562,500 shares of the Company's common stock at an excercise price of $0.20 per share. The warrant may be exercised at any time and expires on November 5, 2011.

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARY

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In U.S. dollars in thousands (except share data)

NOTE 8 :-

SUBSEQUENT EVENTS (Cont.)

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 payment obligations under the amended 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 and first amended license agreement. The payments described in the waiver and release cover all of payment obligations that were past due and not yet due pursuant to the original license agreement. The waiver and release amends and restates the original payment schedule under the license agreement as follows:

Payment date	Amount

September 5, 2007		100,000
November 20, 2007		150,000
February 20, 2008		150,000
May 20, 2008		150,000
August 4, 2008		90,000

In addition, in the event that the "research period", as defined in the license agreement, is extended for an additional three year period in accordance with the terms of the 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		60,000
November 20, 2008		150,000
February 20, 2009		170,000

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, will be reinstated.

In addition, on August 1, 2007, the Company entered into the Second Amended and Restated Registration Rights Agreement with Ramot. According to the Second Amended and Restated Registration Rights Agreement, Ramot waived their demand for registration rights, according to the amended registration rights agreement dated March 31, 2006, and instead agreed to piggyback registration rights in the event that the Company files a registration statement (subject to customary exceptions).

Item 2. Plan of Operation.

Company Overview

Brainstorm Cell Therapeutics Inc. (“Brainstorm” or the “Company”) is an emerging company developing stem cell therapeutic products based on breakthrough technologies enabling the in vitro differentiation of bone marrow stem cells to neural-like cells. We aim to become a leader in adult stem cell transplantation for neurodegenerative diseases. Our focus is on utilizing the patient’s own bone marrow stem cells to generate neuron-like cells that may provide an effective treatment initially for Parkinson’s disease (PD) and ALS, and thereafter for Multiple Sclerosis and other neurodegenerative disorders.

Recent Developments

New President and Board Member

On July 2, 2007, Chaim Lebovits was appointed the President of the Company.

On July 16, 2007, the Board of Directors of the Company increased the size of the Board to four members and elected Mr. Moshe Lion to the Board.

New Advisory Board

In August 2007, we established an Advisory Board comprised of world class business leaders. The Advisory Board is still in development, and we are working to add additional qualified members.

Research Developments

On February 8, 2007 in laboratories at the University of Navarra, Pamplona, Spain, Prof. Jose Obeso transplanted the subject, a healthy monkey, with our human bone marrow derived mesenchymal stem cells. The stem cells had been induced to differentiate into neurotrophic factor-producing cells, according to the protocol developed at our laboratories in Israel. The monkey was treated daily with cyclosporine to prevent rejection of the human originating cells by its immune system, and was monitored for a variety of parameters for a period of three months. Throughout this phase, the monkey appeared well and in good health, with a usual appetite, and with no apparent change in physical and behavioral parameters. Blood tests, an MRI of the monkey's brain and an autopsy examination of the internal organs were also found to be normal.

Additionally, brain tissues from the monkey were examined by Prof. Jeffrey Kordower (Rush University, Chicago, USA). A few human originating cells were detected in sections of the monkey's brain by staining the sections with an antibody, which can distinguish between the monkey's own brain cells and the human transplanted cells. The human transplanted cells were surrounded by macrophages, which may indicate a reaction of the monkey's immune system to the transplanted human cells and their initial rejection. Our approach would involve autologous transplantation (i.e., the use of the patient's own bone marrow-derived stem cells). With this strategy, no rejection is expected and there will be no need to suppress the immune system by medications that often cause severe side effects.

Two additional normal monkeys recently underwent transplantation in Pamplona with our human stem cells. The monkeys will also be monitored for a period of three months for collection of additional data; so far, the monkeys are in good health.

Double U Master Fund

In July 2007, we entered into a letter agreement with Double U Master Fund L.P. pursuant to which we agreed to issue to Double U an aggregate of 630,000 shares of common stock upon exercise of a common stock purchase warrant dated as of October 3, 2006 held by Double U. In lieu of paying the purchase price for the shares in cash, Double U agreed to waive the repayment of the promissory note we issued to Double U on February 1, 2006 in the principal amount of $189,000, except for accrued interest of $17,340. Upon payment of the accrued interest and issuance of the 630,000 shares to Double U, all of our obligations owed to Double U under the February 1, 2006 note and the common stock purchase warrant were satisfied in full.

Second Amended License Agreement with Ramot at Tel Aviv University Ltd.

We entered into a Second Amended and Restated Research and License Agreement with Ramot at Tel Aviv University Ltd. on July 26, 2007. Like the original license agreement with Ramot, the amended license agreement imposes on us development and commercialization obligations, milestone and royalty payment obligations and other obligations. As of June 30, 2007, we owed Ramot an aggregate of $513,249 in overdue payments and patent fees under the original license agreement with Ramot. On August 1, 2007, we obtained a waiver and release from Ramot pursuant to which Ramot agreed to an amended payment schedule regarding our payment obligations under the amended license agreement and waived all claims against us resulting from our previous breaches, defaults and non-payment under the original license agreement. The payments described in the waiver and release cover all of our payment obligations (including interest) that were past due and not yet due pursuant to the original license agreement. The waiver and release amends and restates the original payment schedule under the license agreement as follows:

Payment Date	Amount
September 5, 2007	$	100,000
November 20, 2007	$	150,000
February 20, 2008	$	150,000
May 20, 2008	$	150,000
August 4, 2008	$	90,000

In addition, in the event that the “research period”, as defined in the license agreement, is extended for an additional three year period in accordance with the terms of the license agreement, then we must make the following payments to Ramot during the first year of the extended research period:

Payment Date		Amount
August 4, 2008	$	60,000
November 20, 2008	$	150,000
February 20, 2009	$	170,000

If we fail to make a payment to Ramot on any required payment date, and we do not cure the default within seven business days of notice of the default, all claims of Ramot against us which were waived and released by the waiver and release will be reinstated.

In addition, on August 1, 2007, we entered into the Second Amended and Restated Registration Rights Agreement with Ramot. The amended Registration Rights Agreement provides Ramot with demand and piggyback registration rights whereby if we propose to register any of our common stock under the Securities Act of 1933, as amended, for sale for our own account including for the account of any of our shareholders or for ACCBT Corp.’s account in connection with the public offering of such common stock, then Ramot may request that the we file, or include within a registration statement to be filed, the shares of common stock underlying the warrants held by Ramot.

Investment Agreement with ACCBT Corp.

On July 2, 2007, we entered into a subscription agreement with ACCBT Corp., a company under the control of Mr. Chaim Lebovits, our newly appointed President, pursuant to which we agreed to sell (i) up to 27,500,000 shares of our common stock for an aggregate subscription price of up to $5.0 million, and (ii) for no additional consideration, warrants to purchase up to 30,250,000 shares of our common stock. Subject to certain closing conditions, separate closings of the purchase and sale of the shares and the warrants are scheduled to take place from August 30, 2007 through November 15, 2008. The warrants will have the following exercise prices: (i) the first 10,083,333 warrants will have an exercise price of $0.20; (ii) the next 10,083,333 warrants will have an exercise price of $0.29; and (iii) the final 10,083,334 warrants will have an exercise price of $0.36. Because of our recent resolution and restructuring of the amounts owed by us to Ramot under the Ramot license agreement, ACCBT elected to accelerate the date of the first closing under the subscription agreement from August 30, 2007 to August 10, 2007. Therefore, on August 20, 2007, we received an aggregate of $1,000,000 from ACCBT, and we will issue to ACCBT an aggregate of 6,875,000 shares of common stock and a warrant to purchase an aggregate of 7,562,500 shares of common stock.

As a condition to each closing under the subscription agreement, the market price per share of our common stock may not be 10% less than the bid price per share under the subscription agreement on any trading day between 30 and 10 days prior to any given closing date. If at any time prior to the first closing date we issue shares of common stock or others securities convertible into, exercisable or exchangeable for common stock, then the number of shares to be issued to ACCBT under the subscription agreement and the price per share will be adjusted so that ACCBT will have the right to purchase up to 52.35% of our equity on a fully diluted as converted basis (assuming ACCBT purchases all of the shares and exercises in full all of the warrants subject to the subscription agreement) and 50.02% of the issued and outstanding shares of our common stock (assuming ACCBT invests the full $5.0 million).

Pursuant to the subscription agreement, ACCBT and certain other security holders of the Company holding at least 31% of the issued and outstanding shares of our common stock entered into a Security Holders Agreement. The security holders party to the Security Holders Agreement agreed, upon the payment by ACCBT of its first $1.0 million under the subscription agreement, to vote all of their shares such that ACCBT’s nominees to our Board of Directors will constitute a minimum of 40% of the Board of Directors, and, upon the payment by ACCBT of its second $1.0 million, to vote all of their shares such that ACCBT’s nominees will constitute a minimum of 50.1% of the Board of Directors. However, if ACCBT stops making payments after the first closing date such that ACCBT pays us less than $4.0 million, ACCBT will be entitled to appoint only 40% of the members of our Board of Directors.

The security holders party to the Security Holders Agreement also agreed, for so long as ACCBT holds at least 5% of the issued and outstanding shares of our common stock, not to vote any of their shares to approve the following matters, without the written consent of ACCBT: (i) any change in our certificate of incorporation or bylaws, or alteration of our capital structure; (ii) the declaration or payment of a dividend or the making of any distributions; (iii) the taking of any steps to liquidate, dissolve, wind-up or otherwise terminate our corporate existence; or (iv) the entering into any transaction the effect of which would place control of our business in the hands of an arm’s length third party.

In connection with the subscription agreement, we agreed to issue, upon the first closing date, as a finder’s fee, 1,250,000 shares of our common stock to Tayside Trading Ltd. or its registered assigns.

Transfer of Warrant from Ramot at Tel Aviv University Ltd. to ACCBT Corp.

Pursuant to the terms of a Warrant Purchase Agreement, dated August 2, 2007, between Ramot at Tel Aviv University Ltd. and ACCBT Corp., Ramot has agreed to transfer and sell to ACCBT (or to certain parties that may be designated by ACCBT), a warrant to purchase an aggregate of 3,181,925 shares of our common stock for an aggregate purchase price of $636,385. The warrant is exercisable at any time for an exercise price per share equal to $0.01. The warrant will expire on November 4, 2010. The closing of the transfer and sale of the warrant from Ramot to ACCBT is expected to take place on August 31, 2007.

Accrued Interest Owed to Zegal & Ross Capital

We owe an aggregate of $80,000 to Zegal & Ross Capital and Mark Zegal under various outstanding promissory notes issued by us to Zegal & Ross Capital and Mark Zegal. In August 2007, Zegal & Ross Capital and Mr. Zegal each agreed to waive the payment by us of all accrued interest under the outstanding promissory notes, which accrued interest was $5,800 as of August 1, 2007.

Adult Stem Cell Therapy

Our activities are within the stem cell therapy field. Stem cells are non-specialized cells with a potential for both self-renewal and differentiation into cell types with a specialized function, such as muscle, blood or brain cells. The cells have the ability to undergo asymmetric division such that one of the two daughter cells retains the properties of the stem cell, while the other begins to differentiate into a more specialized cell type. Stem cells are therefore central to normal human growth and development, and also are a potential source of new cells for the regeneration of diseased and damaged tissue. Stem cell therapy aims to restore diseased tissue function by the replacement and/or addition of healthy cells by stem cell transplants.

Currently, two principal platforms for cell therapy products are being explored: (i) embryonic stem cells ("ESC"), isolated from the inner mass of a few days old embryo; and (ii) adult stem cells, sourced from bone marrow, cord blood and various organs. Although ESCs are the easiest to grow and differentiate, their use in human therapy is limited by safety concerns associated with their tendency to develop Teratomas (a form of tumor) and their potential to elicit an immune reaction. In addition, ESC has generated much political and ethical debate due to their origin in early human embryos.

Cell therapy using adult stem cells does not suffer from the same concerns. Bone marrow is the tissue where differentiation of stem cells into blood cells (haematopoiesis) occurs. In addition, it harbors stem cells capable of differentiation into mesenchymal (muscle, bone, fat and other) tissues. Such mesenchymal stem cells have also been shown capable of differentiating into nerve, skin and other cells. In fact, bone marrow transplants have been safely and successfully performed for many years, primarily for treating leukemia, immune deficiency diseases, severe blood cell diseases, lymphoma and multiple myeloma. Moreover, bone marrow may be obtained through a simple procedure of aspiration, from the patient himself, enabling autologous cell therapy, thus obviating the need for donor matching, circumventing immune rejection and other immunological mismatch risks, as well as avoiding the need for immunosuppressive therapy. Thus, we believe bone marrow, in particular autologous bone marrow, capable of in vitro growth and multipotential differentiation, presents a preferable source of therapeutic stem cells.

Parkinson's Disease ("PD")

Background

PD is a chronic, progressive disorder, affecting certain nerve cells, which reside in the Substantia Nigra of the brain and which produce dopamine, a neurotransmitter that directs and controls movement. In PD, these dopamine-producing nerve cells break down, causing dopamine levels to drop below the threshold levels and resulting in brain signals directing movement to become abnormal. The cause of the disease is unknown.

Over four million people suffer from PD in the western world, of whom about 1.5 million are in the United States. In over 85% of cases, PD occurs in people over the age of 65. Thus, prevalence is increasing in line with the general aging of the population. We believe the markets for pharmaceutical treatments for PD have a combined value of approximately $4 billion per year. However, these costs are dwarfed when compared to the total economic burden of the disease, which has been estimated by the National Institute of Neurological Disease (NINDS) to exceed $26 billion annually in the U.S. alone, including costs of medical treatment, caring, facilities and other services, as well as loss of productivity of both patients and caregivers.

Description

The classic symptoms of PD are shaking (tremor), stiff muscles (rigidity) and slow movement (bradykinesia). A person with fully developed PD may also have a stooped posture, a blank stare or fixed facial expression, speech problems and difficulties with balance or walking. Although highly debilitating, the disease is not life threatening and an average patient's life span is approximately 15 years.

Current Treatments

Current drug therapy for PD primarily comprises dopamine replacement, either directly (levodopa), with dopamine mimetics or by inhibition of its breakdown. Thus, the current drugs focus on treating the symptoms of the disease and do not presume to provide a cure.

Levodopa, which remains the standard and most potent PD medication available, has a propensity to cause serious motor response complications (MRCs) with long-term use. Moreover, effective drug dosage often requires gradual increase, leading to more adverse side effects and eventual resistance to their therapeutic action. This greatly limits patient benefit. Therefore, physicians and researchers are continuously seeking levodopa-sparing strategies in patients with early-stage disease to delay the need for levodopa, as well as in patients with late stage disease who no longer respond to therapy.

Prescription drugs to treat PD currently generate sales of over $1 billion and the market is expected to grow to approximately $2.3 billion by 2010, driven by the increase in size of the elderly population and the introduction of new PD therapies that carry a higher price tag than the generic levodopa.

Another method for treating PD is Deep Brain Stimulation (DBS), which consists of transplanting electrodes deep into the brain to provide permanent electrical stimulation to specific areas of the brain and to cause a delay in the activity in those areas. However, DBS is problematic as it often causes uncontrollable and severe side effects such as bleeding in the brain, infection and depression. In addition, like drug therapy, DBS focuses on treating the symptoms of PD and does not provide a cure.

There is a greatly unsatisfied need for novel approaches towards management of PD. These include development of neurotrophic agents for neuroprotection and/or neurorestoration, controlling levodopa-induced adverse side effects, developing compounds targeting nondopaminergic systems (e.g., glutamate antagonists) controlling the motor dysfunction such as gait, freezing, and postural imbalance, treating and delaying the onset of disease-related dementia and providing simplified dosing regimens.

In addition to the symptomatic drug development approaches, there is an intense effort to develop cell and gene therapeutic "curative" approaches to restore the neural function in patients with PD, by (i) replacing the dysfunctional cells with dopamine producing cell transplant, or by (ii) providing growth factors and proteins, such as glial derived neurotrophic factor (GDNF), that can maintain or preserve the patient's remaining dopaminergic cells, protecting them from further degeneration. Preclinical evaluation of cell therapeutic approaches based on transplantation of dopaminergic neurons differentiated in vitro from ESC, have been successful in ameliorating the parkinsonian behavior of animal models, as has direct gene therapy with vectors harboring the GDNF gene. However, these approaches are limited, in the first case, by the safety and ethical considerations associated with use of ESC, and, in the second case, by the safety risks inherent to gene therapy.

In fact, PD is the first neurodegenerative disease for which cell transplantation has been attempted in humans, first with adrenal medullary cells and, later, with tissue grafts from fetal brain. About 300 such fetal transplants have already been performed and some benefits have been observed, mainly in younger patients. However, this approach is not only impractical but greatly limited by the ethical issues influencing the availability of human fetuses. The above considerations have led to intensive efforts to define and develop appropriate cells from adult stem cells.

Amyotrophic Lateral Sclerosis ("ALS")

ALS, often referred to as "Lou Gehrig's disease," is a progressive neurodegenerative disease that affects nerve cells in the brain and the spinal cord. Motor neurons reach from the brain to the spinal cord and from the spinal cord to the muscles throughout the body. The progressive degeneration of the motor neurons in ALS eventually leads to death. As motor neurons degenerate, they can no longer send impulses to the muscle fibers that normally result in muscle movement. With voluntary muscle action progressively affected, patients in the later stages of the disease may become completely paralyzed. However, in most cases, mental faculties are not affected.

Approximately 5,600 people in the U.S. are diagnosed with ALS each year. It is estimated that as many as 30,000 Americans may have the disease at any given time, with 100,000 across the western world. Consequently, the total estimated cost of treating ALS patients in the United States is approximately $1.25 billion per year and $3 billion per year in the western world.

Description

Early symptoms of ALS often include increasing muscle weakness or stiffness, especially involving the arms and legs, speech, swallowing or breathing.

ALS is most often found in the 40 to 70 year age group, where it is actually quite common, with the same incidence as Multiple Sclerosis (MS). There appear to be more MS sufferers because MS patients tend to live much longer, some for 30 years or more. The life expectancy of an ALS patient averages about two to five years from the time of diagnosis. However, up to 10% of ALS patients will survive more than ten years.

Current Treatment

The physician bases medication decisions on the patient's symptoms and the stage of the disease. Some medications used for ALS patients include:

o Riluzole - the only medication approved by the FDA to slow the progress of ALS. While it does not reverse ALS, riluzole has been shown to reduce nerve damage. Riluzole may extend the time before a patient needs a ventilator (a machine to help breathe) and may prolong the patient's life by several months;

o Baclofen or Diazepam - these medications may be used to control muscle spasms, stiffness or tightening (spasticity) that interfere with daily activities; and

o Trihexyphenidyl or Amitriptyline - these medications may help patients who have excess saliva or secretions, and emotional changes.

Other medications may be prescribed to help reduce such symptoms as fatigue, pain, sleep disturbances, constipation, and excess saliva and phlegm.

Our Approach

We intend to focus our efforts to develop cell therapeutic treatments for PD based on the expansion of human mesenchymal stem cells from adult bone marrow and their differentiation into neuron like cells, such as neurons that produce dopamine and astrocytes (glial cells) that produce neurotrophic factors (NTF) including GDNF, BDNF, NGF and IGF-1. Our aim is to provide neural stem cell transplants that (i) "replace" damaged dopaminergic nerve cells and diseased tissue by augmentation with healthy dopamine producing cells; and (ii) maintain, preserve and restore the damaged and remaining dopaminergic cells in the patient's brain, protecting them from further degeneration.

The research team led by Prof. Melamed and Dr. Offen has achieved expansion of human bone marrow mesenchymal stem cells and their differentiation into both types of brain cells, neurons and astrocytes, each having therapeutic potential, as follows:

NurOwn TM program 1 - DA neuron-like cells - human bone marrow derived dopamine producing neural cells for restorative treatment in PD. Human bone marrow mesenchymal stem cells were isolated and expanded. Subsequent differentiation of the cell cultures in a proprietary differentiation medium generated cells with neuronal-like morphology and showing protein markers specific to neuronal cells. Moreover, the in vitro differentiated cells were shown to express enzymes and proteins required for dopamine metabolism, particularly the enzyme tyrosine hydroxylase. Most importantly, the cells produce and release dopamine in vitro. Further research consisting of implanting these cells in an animal model of PD (6-OHDA induced lesions), showed the differentiated cells exhibit long-term engraftment, survival and function in vivo. Most importantly, such implantation resulted in marked attenuation of their symptoms, essentially reversing their Parkinsonian movements.

NurOwn TM program 2 - Astrocyte-like cells - human bone marrow derived NTF producing astrocyte for treatment of PD, ALS and spinal cord injury. In vitro differentiation of the expanded human bone marrow derived mesenchymal stem cells in a special proprietary medium and generated cells with astrocyte-like morphology that expressed astrocyte specific markers. Moreover, the in vitro differentiated cells were shown to express and secrete GDNF, as other NTF, into the growth medium. GDNF is a protein, previously shown to protect, preserve and even restore neurons, particularly dopaminergic cells in PD, but also neuron function in other neurodegenerative pathologies such as ALS and Huntington's. Unfortunately, therapeutic application of GDNF is hampered by its poor brain penetration and stability. Attempting to infuse the protein directly to the brain is impractical and the alternative, using GDNF gene therapy, suffers from the limitations and risks of using viral vectors. Our preliminary results show that our astrocyte-like cells, when transplanted into PD rats with a 6-OHDA lesion, show significant efficacy. Within weeks of the transplantation, there was an improvement of more than 50% in the animals' characteristic disease symptoms.

We intend to optimize the proprietary processes for transformation of human bone marrow expanded mesenchymal stem cells into differentiated cells that produce dopamine and/or NTF for implantation to PD and ALS patients. The optimization and process development will be conducted in an effort to comply with FDA guidelines for Good Tissue Practice (GTP) and Good Manufacturing Practice (GMP). Once the optimization of the process is completed, we intend to evaluate the safety and efficacy of our various cell transplants in animal models, (separately and in combination). Based on the results in animals we intend to use the differentiated cell products for conducting clinical trials to assess the efficacy of the cell therapies in PD and ALS patients.

Our technology is based on the NurOwn TM products - an autologous cell therapeutic modality, comprising the extraction of the patient bone marrow, processed into the appropriate neuronal cells and re-implanted into the patient's brain. This approach is taken in order to increase patient safety and minimize any chance of immune reaction or cell rejection.

We believe that the therapeutic modality will comprise the following:

o Bone marrow aspiration from patient;

o Isolating and expanding the mesenchymal stem cells;

o Differentiating the expanded stem cells into neuronal-like dopamine producing cells and/or astrocytes-like NTF producing cells; and

o Implantation of the differentiated cells into patient from whom the bone marrow was extracted.

Business Strategy

Our efforts are currently focused on the development of the technology to convert the process from the lab stage to the clinical stage, with the following main objectives:

o Developing the cell differentiation process according to health regulation guidelines;

o Demonstrating safety and efficacy, first in animals and then in patients; and

o Setting up centralized facilities to provide NurOwn TM therapeutic products and services for transplantation in patients.

We intend to enter into strategic partnerships as we progress towards advanced clinical development and commercialization with companies responsible for advanced clinical development and commercialization. This approach is intended to generate an early inflow of up-front and milestone payments and to enhance our capacities in regulatory and clinical infrastructure while minimizing expenditure and risk.

Intellectual Property

We have filed the following patent and trademark applications:

o The NurOwn TM technology for differentiation of dopamine producing neuron-like cells is covered by PCT patent application number PCT/IL03/00972 filed on November 17, 2003.

o The NurOwn TM technology for differentiating astrocyte-like cells is covered by PCT patent application number PCT/IL2006/000699 filed on June 18, 2006.

o The NurOwn TM technology for generating oligodendrocyte-like cells treatment of medical conditions of the CNS is covered by PCT patent application number PCT/IL2006/001410 filed on December 7, 2006.

o We have filed for a trademark on NurOwn TM .

Assuming we can successfully complete our additional necessary financings, our primary objectives over the next twelve (12) months will be:

To define and optimize our NurOwnTM technology in human bone marrow cells, in order to prepare the final production process for clinical studies in accordance with health authorities’ guidelines. To reach this goal we intend to optimize methods for the stem cell growth and differentiation in specialized growth media, as well as methods for freezing, thawing, storing and transporting of the expanded mesenchymal stem cells, as well as the differentiated neuronal cells;

·	To verify the robustness and the reproducibility of the process;

·	To further repeat the process using bone marrow from Parkinson’s patients;

·	To conduct large efficacy studies in animal models of PD (such as mice and rats) in order to further evaluate the engraftment, survival and efficacy of our astrocyte-like cell in these models;

·	To finish conducting safety and efficacy studies in primates-monkeys;

·	To conduct a full tumorgenicity study in animals;

·	To generate process SOPs, protocols and reports for the file submission;

·	To finalize analytical methodology and product specifications to be used as release criteria of the final cell product for clinical trials in humans;

·	To set up a quality control system for the processing of our cells; and

·	To write up clinical protocols for phase I & II clinical studies, and start the clinical trials.

All of these activities will be coordinated with a view towards the execution of clinical trials of the astrocyte-like differentiated cell implants in humans. We intend to crystallize our development plans with the assistance of our scientific advisory board members and external regulatory consultants who are experts in the FDA cell therapy regulation guidelines.

In addition, we intend to identify and evaluate in-licensing opportunities for development of innovative technologies utilizing cell and gene therapy for diabetes, cardiac disease and other indications.

Cash Requirements

At June 30, 2007, we had $123,000 in total current assets and $3,648,000 in total current liabilities and on August 9, 2007, we had approximately $93,000 in cash. On August 20, 2007, the Company received $1,000,000 from ACCBT Corp. If ACCBT Corp. chooses to continue funding the Company as set forth in the Subscription Agreement, then we expect that we will receive five installments of $750,000 every quarter through November 2008. We will need to raise additional funds through public or private debt or equity financings to meet our anticipated expenses for the coming years so that we can execute our business plan and conduct clinical trials in PD and ALS patients. Although we have been seeking such additional funds, no commitments to provide additional funds have been made by management, other shareholders or third parties.

In order to execute our plan of operation for the next several years we will need to raise additional financing.

In the past, we have received loans from various investors. In connection with such loans, we have issued convertible notes. As of August 14, 2007, we owed certain investors approximately $1.1 million in overdue payments under certain convertible notes. We are currently in discussions with such investors to obtain a deferral of these payments until we raise additional capital.

Our other material cash needs for the next 12 months will include employee salaries and benefits, facility lease, capital equipment expenses and construction of facilities for animals we plan to use in our research and development and trials , legal and audit fees, patent prosecution fees, consulting fees, payments for outsourcing of certain animal experiments and, possibly, upfront payments for in-licensing opportunities and payment for clinical trials in Europe or the U.S.

Research and Development

Our research and development efforts have focused on improving growth conditions and developing tools to evaluate the differentiation of bone marrow stem cells into neural-like cells, suitable for transplantation as a restorative therapy for neurodegenerative diseases. Some highlights achieved in this research include:

·	Improving the bone marrow stem cells expansion prior to differentiation;

·	Evaluation of methodologies for cryo-preservation of the expanded bone marrow cells prior to differentiation;

·	Characterization of the propagated mesenchymal stem according to established CD-markers;

·	Determination of timing and growth conditions for the differentiation process;

·	Development of molecular tools and cell surface markers to evaluate cell differentiation;

·	Demonstrating that the bone marrow derived differentiated cells do produce and secrete several neuron-specific markers;

·	Transplantation of the bone marrow derived neural-like cells in the striatum of model animals resulting in long-term engraftment; and

·	Parkinson’s model animals transplanted with the bone marrow derived neural-like cells show significant improvement in their rotational behavior.

For the twelve months ending June 30, 2008, we estimate that our research and development costs will be approximately $4 million excluding compensation expenses related to options and warrants. We intend to spend our research and development costs on the development of our core NurOwn™ technology by developing the cell differentiation process according to FDA and/or EMEA guidelines and to finish the primate clinical trials in Spain. We also plan to construct a facility for animals we plan to use in our research and development and trials. We also intend to fund and finance collaborations with medical centers and strategic partners for future clinical trials.

General and Administrative Expenses

If we can successfully complete our financings, for the twelve months ending June 30, 2008, we estimate that our general and administrative expenses will be approximately $1 million excluding compensation expenses related to options, warrants and shares. These general and administrative expenses will include, among others, salaries, legal and audit expenses, business development, investor and public relations, Sarbanes-Oxley compliance expenses and office maintenance.

We do not expect to generate any revenues in the twelve-month period ending June 30, 2008.

In management's opinion, we need to achieve the following events or milestones in the next twelve months in order for us to conduct clinical trials for our NurOwn™ dopamine or astrocyte-like producing cell differentiation process as planned within the next several years:

·	Complete preclinical studies in rodents to confirm safety and efficacy;

·	Complete preclinical studies to confirm safety in monkeys;

·	Conduct full safety study of the final cell product for PD;

·	Write up clinical protocols for Phase I & II clinical studies; and

·	Raise additional equity or debt financing or a combination of equity and debt financing in addition to the $5,000,000 from ACCBT Corp. that we expect to receive under the recent subscription agreement.

Employees

We currently have eleven scientific and administrative employees. We expect to increase our staff significantly in the coming months in order to reach our goals.

Off Balance Sheet Arrangements

We have no off balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.

Risk Factors

Any investment in our common stock involves a high degree of risk. You should consider carefully the risks described below, together with the other information contained in this report. If any of the following events actually occurs, our business, financial condition and results of operations may suffer materially. As a result, the market price of our common stock could decline, and you could lose all or part of your investment in our common stock.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in “Risk Factors” in our report on Form 10-KSB for the transition period ended December 31, 2006, which could materially affect our business, financial condition or future results. The risks described in our transition report on Form 10-KSB are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. The risk factors below were disclosed in our annual report on Form 10-KSB and have been updated to provide information as of June 30, 2007.

Our business in the foreseeable future will be based on technology licensed from Ramot and if this license were to be terminated for any reason, including failure to pay the required research funding or royalties, we would need to change our business strategy and we may be forced to cease our operations. We entered into a Second Amended and Restated Research and License Agreement with Ramot on July 31, 2007 (the “Amended Agreement”). The Amended Agreement imposes on us development and commercialization obligations, milestone and royalty payment obligations and other obligations.

As of June 30, 2007, we owed Ramot an aggregate of $513,000 in overdue payments and patent fees under our original license agreement with Ramot. On August 1, 2007, we obtained a waiver and release from Ramot pursuant to which Ramot agreed to an amended payment schedule regarding our payment obligations under the Amended Agreement and waived all claims against us resulting from our previous breaches and non-payment under the original license agreement. The payments described in the waiver and release cover all of our payment obligations (including interest) that were past due and not yet due pursuant to the original license agreement. The waiver and release provides that we are obligated to pay Ramot fees ranging from $90,000 to $150,000 on a quarterly basis from September 2007 until August 2008, and, if certain research milestones are met, we are obligated to make payments to Ramot ranging from $60,000 to $170,000 on a quarterly basis from August 2008 until February 2009. If we fail to pay the amounts owed to Ramot in accordance with the new payment schedule, Ramot may have the right to terminate the license and all claims waived by Ramot pursuant to the waiver and release may be reinstated. If Ramot elects to terminate our license, we would need to change our business strategy and we may be forced to cease our operations.

In addition, on August 1, 2007, we entered into a Second Amended and Restated Registration Rights Agreement with Ramot relating to warrants to purchase shares of our common stock at a purchase price of $0.01 per share issued to Ramot in connection with the original Ramot agreement. The Registration Rights Agreement extends the date by which the shares underlying the warrants are to be registered by us for resale to no later than within 30 days after the earlier of (i) the Company registering shares of its common stock for issuance by the Company, or (ii) the date on which shares of common stock held by ACCBT Corp. are registered for resale.

Our company has a history of losses and we expect to incur losses for the foreseeable future. We had no revenues for the fiscal years ended March 31, 2005 or March 31, 2006 or for the transition period from April 1, 2006 to December 31, 2006 or for the six months ended June 30, 2007. As a development stage company, we are in the early stages of executing against our business plan. Our ability to operate successfully is materially uncertain and our operations are subject to significant risks inherent in a developing business enterprise. Most notably, we do not expect that any therapies resulting from our or our collaborators’ research and development efforts will be commercially available for a significant number of years, if at all. We also do not expect to generate revenues from strategic partnerships or otherwise for at least the next 12 months, and likely longer. Furthermore, we expect to incur substantial and increasing operating losses for the next several years as we increase our spending to execute our development programs. These losses are expected to have an adverse impact on our working capital, total assets and stockholders’ equity, and we may never achieve profitability.

However, in the last month, we have made significant progress and improvements to our financial condition. For example, on July 2, 2007, we entered into a subscription agreement with ACCBT Corp., a company under the control of Mr. Chaim Lebovits, our newly appointed President, pursuant to which we agreed to sell (i) up to 27,500,000 shares of our common stock for an aggregate subscription price of up to $5.0 million, and (ii) for no additional consideration, warrants to purchase up to 30,250,000 shares of our common stock. Subject to certain closing conditions, separate closings of the purchase and sale of the shares and the warrants are scheduled to take place from August 30, 2007 through November 15, 2008. The warrants will have the following exercise prices: (i) the first 10,083,333 warrants will have an exercise price of $0.20; (ii) the next 10,083,333 warrants will have an exercise price of $0.29; and (iii) the final 10,083,334 warrants will have an exercise price of $0.36. Because of our recent resolution and restructuring of the amounts owed by us to Ramot under the Ramot license agreement, ACCBT elected to accelerate the date of the first closing under the subscription agreement from August 30, 2007 to August 20, 2007. Therefore, on August 20, 2007, we received an aggregate of $1,000,000 from ACCBT and in exchange we issued to ACCBT an aggregate of 6,875,000 shares of common stock and a warrant to purchase an aggregate of 7,562,500 shares of common stock.

Moreover, in July 2007, we entered into a letter agreement with Double U Master Fund L.P. pursuant to which we agreed to issue to Double U an aggregate of 630,000 shares of common stock upon exercise of a common stock purchase warrant dated as of October 3, 2006 held by Double U. In lieu of paying the purchase price for the shares in cash, Double U agreed to waive the repayment of the promissory note we issued to Double U on February 1, 2006 in the principal amount of $189,000, except for accrued interest of $17,340. Upon payment of the accrued interest and issuance of the 630,000 shares to Double U, all of our obligations owed to Double U under the February 1, 2006 note and the common stock purchase warrant were satisfied in full.

In addition, the restructuring of our obligations to Ramot eliminated significant risks that were faced by the Company.

In order to execute our business plan, we will need to raise additional capital. If we are unable to raise additional capital on favorable terms and in a timely manner, we will not be able to execute our business plan and we could be forced to restrict or cease our operations. We will need to raise additional funds to meet our anticipated expenses so that we can execute our business plan. We expect to incur substantial and increasing net losses for the foreseeable future as we increase our spending to execute our development programs. Our auditors have expressed in their audit report that there is substantial doubt regarding our ability to continue as a going concern.

If we satisfy the closing conditions contained in the subscription agreement with ACCBT, then we expect to issue and sell additional shares and warrants to ACCBT through November 2008 for aggregate consideration of up to $5,000,000. However, if we do not satisfy the closing conditions contained in the subscription agreement, and if ACCBT does not elect to purchase additional shares and warrants, we will need to seek additional financings to allow us to execute our business plan. Even if ACCBT purchases all of the shares and warrants under the subscription agreement, we will still need to secure additional funds to effect our plan of operations. We may not be able to raise additional funds on favorable terms, or at all. If we are unable to obtain additional funds on favorable terms and in a timely fashion, we will be unable to execute our business plan and we will be forced to restrict or cease our operations.

Assuming we raise additional funds through the issuance of equity, equity-related or debt securities, these securities may have rights, preferences or privileges (including registrations rights) senior to those of the rights of our common stock and our stockholders will experience additional dilution.

Your percentage ownership will be diluted by future offerings of our securities, upon the conversion of outstanding convertible promissory notes into shares of common stock and by options, warrants or shares we grant to management, employees, directors and consultants. If we issue all of the shares and warrants to ACCBT Corp. as provided for in the subscription agreement, it will have a significant dilutive effect on your percentage ownership in the Company. In addition, in order to meet our financing needs described above, we may issue additional significant amounts of our common stock and warrants to purchase shares of our common stock. The precise terms of any future financings will be determined by us and potential investors and such future financings may also significantly dilute your percentage ownership in the Company.

In November 2004 and February 2005, our Board of Directors adopted and ratified the 2004 Global Share Option Plan and the 2005 U.S. Stock Option Plan and Incentive Plan (the “Global Plan” and “U.S. Plan” respectively and the “Plans” together), and further approved the reservation of 9,143,462 shares of our common stock for issuance under the Plans (the “Shares”). Our shareholders approved the Plans and the issuance of the Shares in a special meeting of shareholders that was held on March 28, 2005. We have made and intend to make further option grants under the Plans or otherwise issue warrants or shares of our common stock to individuals under the Plans. For example, as of August 3, 2007:

·	under our Global Plan, we have granted and not canceled a total of 5,251,778 options with various exercise prices and expiration dates, to officers, directors, services providers, consultants and employees.

·	under our U.S. Plan we have issued an additional 1,730,000 shares of restricted stock and options for grants to Scientific Advisory Board members, service providers, consultants and directors.

Such issuances will, if and when made (and if options or warrants are subsequently exercised), dilute your percentage ownership in the Company.

As of August 3, 2007, we have issued convertible notes that have not yet been converted in an aggregate principal amount of $1,930,000 to various investors. Each holder of a convertible note may choose to convert all or part of the outstanding principal and interest amount of such holder’s note into shares of our common stock on or prior to the maturity date of the respective note. The maximum number of shares, in the aggregate, that are issuable pursuant to outstanding convertible notes is 83,400,000.

As of August 3, 2007, we have issued 6,329,066 shares to investors, directors, service providers and consultants. When we register the shares or those underlying convertible securities for which we have undertaken to register, they can be sold in the public market. In addition, the shares that we will not register will become eligible for sale into the public market subject to and in accordance with applicable SEC rules and regulations, which provide exemptions from registration requirements. If any of the holders of these shares or convertible securities, or any of our existing stockholders, sell a large number of shares of our common stock, or the public market perceives that existing stockholders might sell shares of our common stock, the market price of our common stock could decline significantly.

Item 3. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our President and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on this evaluation, our President and Chief Financial Officer concluded that our disclosure controls and procedures are effective, as of the end of the period covered by this report, to ensure that information required to be disclosed by us in the reports we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that the information required to be disclosed by us in such reports is accumulated and communicated to our management, including our President and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter to which this report relates that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II: OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On May 6, 2007, we issued a warrant to purchase 250,000 shares of common stock at an exercise price of $0.45 per share to ACCBT Corp.

On July 3, 2007, we issued a warrant to purchase 30,000 shares of common stock at an exercise price of $0.45 per share to Yehoshua Rabinowitz.

On July 3, 2007, we issued a warrant to purchase 100,000 shares of common stock at an exercise price of $0.45 per share to Meir Rosenbaum.

On August 10, 2007, we issued an aggregate of 630,000 shares of common stock to Double U Fund for a purchase price of $0.30 per share upon exercise of a warrant.

On August 10, 2007, we issued an aggregate of 97,696 shares to Double U Fund upon cashless exercise of a warrant.

On August 10, 2007, we issued 6,875,000 shares of common stock to ACCBT Corp. for an aggregate purchase price of $1,250,000, of which $250,000 was paid upon conversion by ACCBT Corp. of the $250,000 8% Convertible Promissory Note dated May 6, 2007.

On August 10, 2007, we issued a warrant to purchase 7,562,500 shares of common stock at an exercise price of $0.20 per share to ACCBT Corp.

These transactions did not involve any underwriters, underwriting discounts or commissions and we believe that this transaction was exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(2) thereof and Regulation D promulgated thereunder. The Company plans to use any proceeds from such securities issuances or warrant exercises for general corporate and working capital purposes.

Item 5. Other Information

During the quarters ended April 30, 2007 and June 30, 2007, we made no material changes to the procedures by which shareholders may recommend nominees to our Board of Directors, as described in our most recent proxy statement.

Item 6. Exhibits.

The Exhibits listed in the Exhibit Index immediately preceding such Exhibits are filed with or incorporated by reference in this report.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BRAINSTORM CELL THERAPEUTICS INC.

August 20, 2007	By:	/s/ Chaim Lebovits
		Name: Chaim Lebovits Title: President (Principal Executive Officer)

August 20, 2007	By:	/s/ David Stolick
		Name: David Stolick Title: Chief Financial Officer (Principal Financial and Accounting Officer)

EXHIBIT INDEX

Exhibit Number		Description

10.1		Subscription Agreement, dated July 2, 2007, by and between the Company and ACCBT Corp. is incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on July 5, 2007 (File No. 333-61610).

10.2		Form of Common Stock Purchase Warrant to be issued by the Company to ACCBT Corp. is incorporated herein by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on July 5, 2007 (File No. 333-61610).

10.3		Form of Registration Rights Agreement to be entered into by the Company and ACCBT Corp. is incorporated herein by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed on July 5, 2007 (File No. 333-61610).

10.4		Second Amended and Restated Research and License Agreement, dated July 31, 2007, by and between the Company and Ramot at Tel Aviv University Ltd.

10.5		Second Amended and Restated Registration Rights Agreement, dated August 1, 2007, by and between the Company and Ramot at Tel Aviv University Ltd.

10.6		Waiver and Release, dated August 1, 2007, executed by Ramot at Tel Aviv University Ltd. in favor of the Company.

10.7		8% Convertible Promissory Note, dated May 6, 2007, in the principal amount of $250,000 issued by the Company to ACCBT Corp. is incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on May 10, 2007 (File No. 333-61610).

10.8		Common Stock Purchase Warrant, dated May 6, 2007, issued by the Company to ACCBT Corp. is incorporated herein by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on May 10, 2007 (File No. 333-61610).

31.1		Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 10.4

SECOND AMENDED AND RESTATED RESEARCH AND LICENSE AGREEMENT

This Second Amended and Restated Research and License Agreement is entered into as of this 26 ^th day of July, 2007, by and between Brainstorm Cell Therapeutics Inc., a company formed under the laws of the State of Delaware, having a place of business at 1350 Avenue of the Americas New York, NY 10019 (“Licensee”) and Ramot at Tel Aviv University Ltd., a company formed under the laws of Israel, having a place of business at Tel Aviv University in Ramat-Aviv, Tel Aviv 61392, Israel (“Ramot”) , for the purpose of amending and replacing the Research and License Agreement between the parties dated March 30, 2006 (the "First Amended and Restated Research and License Agreement"), which replaced the previous Research and License Agreement between the parties dated July 12, 2004 (the “Original Agreement ”) .

WHEREAS, Tel Aviv University (“TAU”) owns exclusive rights to certain technology developed by Professor Eldad Melamed, Dr. Daniel Offen, Yossef Levy and Dr. Pnina Green at the Felsenstein Medical Research Center of Tel Aviv University relating to processes for the transformation of bone marrow and cord blood stem cells into neuron-like and glial-like cells; and

WHEREAS, pursuant to agreement between TAU and Ramot, all rights, title and interest in and to any and all inventions and other results arrived at by scientists of TAU are owned solely and exclusively by Ramot; and

WHEREAS, pursuant to the Original Agreement, Licensee funds research at TAU through Ramot for the purpose of furthering research related to processes for the transformation of bone marrow and cord blood stem cells into neuron-like and glial-like cells; and

WHEREAS, pursuant to the Original Agreement, Licensee has obtained a license from Ramot with respect to such technology and the results of such research, in order to develop, obtain regulatory approval for and commercialize products based on such technology and the results of such funded research;

WHEREAS, the parties wish to amend some of the terms of the Original Agreement and of the First Amended and Restated Research and License Agreement; and

WHEREAS, in order to give effect to such wish, the parties agree to amend and replace the First Amended and Restated Research and License Agreement with this Agreement, such that the terms of this Agreement shall be deemed to apply as of July 12, 2004 (the “Effective Date”);

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:

1. Definitions.

Whenever used in this Agreement with an initial capital letter, the terms defined in this Section 1, whether used in the singular or the plural, shall have the meanings specified below.

1.1. “Affiliate” shall mean, with respect to either party, any person, organization or entity controlling, controlled by or under common control with, such party. For purposes of this definition only, “control” of another person, organization or entity shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the activities, management or policies of such person, organization or entity, whether through the ownership of voting securities, by contract or otherwise. Without limiting the foregoing, control shall be presumed to exist when a person, organization or entity (i) owns or directly controls twenty percent (20%) or more of the outstanding voting stock or other ownership interest of the other organization or entity, or (ii) possesses, directly or indirectly the power to elect or appoint twenty percent (20%) or more of the members of the governing body of the organization or other entity.

1.2 " Additional Ingredient " shall mean a therapeutically active ingredient other than one developed using Ramot Technology. Unless recognized as active ingredients by the FDA (or equivalent body), drug delivery vehicles, non-therapeutic adjuvants, and excipients are hereby deemed not to be “therapeutically active ingredients”, and their presence alone shall not be deemed to create a Combined Product for purposes of this Agreement.

1.3. “Calendar Quarter” shall mean the respective periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 or December 31, for so long as this Agreement is in effect.

1.4 “Combined Product” shall mean a product or service which comprises a Licensed Product and one or more Additional Ingredients. To be a Combined Product, a Licensed Product must be sold together with Additional Ingredients as a single product and invoiced as one (1) product.

1.5 “Development Milestones” shall mean the development milestones set forth in Exhibit 1.5 hereto.

1.6 “First Commercial Sale” shall mean the first sale of a Licensed Product by Licensee, an Affiliate of Licensee or a Sublicensee to an unaffiliated third party after Regulatory Approval has been achieved in the country in which such Licensed Product is sold. Sales for test marketing, sampling and promotional uses, clinical trial purposes or compassionate or similar use shall not be considered to constitute a First Commercial Sale.

1.7. “FDA” shall mean the United States Food and Drug Administration.

1.8 “ Generic Version ” shall mean, with respect to a Licensed Product that is sold in a particular jurisdiction: any third party product or service that (i) contains or utilizes the same therapeutically active ingredient as such Licensed Product, and (ii) that is lawfully marketed, sold and/or provided in such country for the same indications as such Licensed Product, pursuant to an approved application for a license to market a generic or a duplicate version of such Licensed Product (e.g. an Abbreviated New Drug Application in the United States) in the relevant jurisdiction.

1.9. “Joint Inventions” shall mean any and all inventions made jointly by (a) one or more members of the TAU Team in the performance of the Research and (b) one or more employees or consultants of Licensee.

1.10. “Joint Patent Rights” shall mean any and all Patent Rights claiming Joint Inventions.

1.11. “Joint Technology” shall mean Joint Patent Rights and Joint Inventions.

1.12. “Licensed Product” shall mean: (i) any Product (as defined below) that is/was designed, developed, produced or manufactured with the Use of or based on or under license to the Ramot Technology and/or the Joint Technology, in whole or in part; (ii) any Product the making, producing, manufacturing, using, selling, importing or exporting of which is covered by a Valid Claim; and (iii) any service that makes use of any Licensed Product described in clause (i) and/or (ii) of this Section 1.9. In the event of a dispute between the parties as to whether a Product is a Licensed Product, the burden of proof shall be on Licensee to prove that the Product is not a Licensed Product, if Ramot shall in good faith first provide the Company with a reasonable written opinion of an independent pharmaceutical expert that such Product is a Licensed Product.

1.13. “NDA” means a New Drug Application or Product License Application (or Biologics License Application), as appropriate, and all supplements filed pursuant to the requirements of the FDA, including all documents, data and other information concerning Licensed Products that are necessary for or included in FDA approval to market a Licensed Product, or the equivalent application in any other country or jurisdiction.

1.14. “Net Sales” shall mean the gross amount billed or invoiced by or on behalf of Licensee, its Affiliates and its Sublicensees on sales of Licensed Products (whether made before or after the First Commercial Sale of the Licensed Product), less the following: (a) customary or ordinary course of business trade, quantity, patient program, prompt payment or cash discounts to the extent actually allowed and taken; (b) amounts repaid or credited by reason of rejection, return or retroactive price reduction, chargebacks, administrative fees or rebates; (c) to the extent separately stated on purchase orders, invoices, or other documents of sale, any taxes or other governmental charges levied on the production, sale, transportation, delivery, or use of a Licensed Product which is paid by or on behalf of Licensee or such Sublicensee, (d) credit or refunds for Products which are rejected or returned; (e) Out bound transportation expenses and transportation insurance premiums to the extend separately stated on the invoice; (f) delayed ship order credits; (g) credits for uncollectible amounts on previously sold Product, provided that such amounts have been written off in the books of the Company in accordance with generally accepted accounting principles as in effect in the United States from time to time "( GAAP "), and provided that such amounts are not subsequently collected ; (h) a ny other reduction or specifically identifiable amounts included in the Product's gross invoice price that should be credited for reasons substantially equivalent to those listed above, so long as not prohibited by GAAP .

(i) In any transfers of Licensed Products between Licensee or a Sublicensee to an Affiliate of Licensee or such Sublicensee other than for resale by such Affiliate, Net Sales shall be equal to the fair market value of the Licensed Products so transferred, assuming an arm’s length transaction made in the ordinary course of business, after deducting the amounts referred to in clauses (a) through (h) above, to the extent applicable; and

(ii) In the event that Licensee or a Sublicensee, or the Affiliate of Licensee or such Sublicensee, receives non-monetary consideration for any Licensed Products or in the case of transactions not at arm’s length with a non-Affiliate of Licensee or such Sublicensee, Net Sales shall be calculated based on the fair market value of such consideration or transaction, assuming an arm’s length transaction made in the ordinary course of business.

Sales of Licensed Products by Licensee or a Sublicensee to an Affiliate of Licensee or such Sublicensee, for resale by such Affiliate, shall not be deemed Net Sales and Net Sales shall be determined based on the total amount invoiced or billed by such Affiliate on resale to an independent third party purchaser.

1.15. “Orphan Drug” shall mean a Licensed Product that is protected (a) by “Orphan Drug” status under the U.S. Orphan Drug Act, (b) by a Supplementary Protection Certificate, as such term is defined in Council Regulation (EU) No. 1768/92, or (c) by a similar status granted under similar statutory provisions of another jurisdiction granting exclusive marketing rights in such jurisdiction.

1.16. “Other Research” shall have the meaning set forth in Section 5.1.

1.17. “Patent Rights” shall mean any and all (a) patents, (b) pending patent applications, including, without limitation, all provisional applications, continuations, continuations-in-part, divisions, reissues, renewals, and all patents granted thereon, and (c) all patents-of-addition, reissue patents, reexaminations and extensions or restorations by existing or future extension or restoration mechanisms, including, without limitation, supplementary protection certificates or the equivalent thereof.

1.18. “Principal Investigators” shall mean Professor Eldad Melamed and Dr. Daniel Offen, or such other principal investigator who may replace either or both of them pursuant to Section 2.

1.19. “Product” shall mean: (i) any product or service that incorporates differentiation factors and other materials which is capable of inducing bone marrow or cord blood stem cells to differentiate into neuron-like or glial-like cells that can be transplanted into patients for the treatment of neurological and ophthalmic diseases in humans; or (ii) any neuron-like or glial-like cell generated through use of a product described in clause (i) of this Section 1.16.

1.20. “Ramot Results” shall mean (a) any and all inventions, materials, methods, processes, know-how, improvements and results made, created, developed, discovered, conceived or acquired by, or on behalf of, members of the TAU Team (including, without limitation, the Principal Investigators) in the course of the performance of the Research, except Joint Inventions and/or (b) any and all inventions, materials, methods, processes, know-how and results made, created, developed, discovered or conceived by either of the Principal Investigators, either alone or together with one or more third parties, in the performance of services for, the Company, except Joint Inventions.

1.21. “Ramot Patent Rights” shall mean (i) the Patent Rights described in Exhibit 1.21(a) attached hereto, (ii) any other Patent Rights owned by Ramot which claim, and only to the extent they so claim, the invention disclosed in the Patent Rights described in Exhibit 1.21(a) and (iii) all Patent Rights owned by Ramot, to the extent they claim any of the Ramot Results. Exhibit 1.18(b) shall set forth and shall be updated from time to time to include new Ramot Patent Rights.

1.22. “Ramot Technology” shall mean the Ramot Patent Rights, the invention disclosed in Exhibit 1.21(a) and the Ramot Results.

1.23. “Regulatory Agency” shall mean the FDA or equivalent agency or government body of another country.

1.24. “Regulatory Approval” shall mean (i) approval of an NDA by the FDA permitting commercial sale of a Licensed Product or (ii) any comparable approval permitting commercial sale of a Licensed Product granted by the applicable Regulatory Agency in any other country or jurisdiction.

1.25. “Research” shall mean the research actually conducted by the TAU Team under the terms of this Agreement in accordance with the Research Plan.

1.26. “Research Plan” shall mean the research plan attached hereto as Exhibit 1.26, as amended from time to time in accordance with the provisions of this Agreement, which sets forth the research to be undertaken by the TAU Team under the direction of the Principal Investigators during the Research Period.

1.27. “Research Period” shall mean an initial term of three years commencing on the Effective Date, and in the event the TAU Team meets the milestones set forth in the Research Plan in accordance with Section 2.2.1, a total term of six years ending on June 30, 2010.

1.28. “Sublicense Receipts” shall mean any payments or other consideration that Licensee or an Affiliate receives, other than amounts received on account of Net Sales, in consideration of the sublicense or other grant of rights with respect to some or all of the rights granted to Licensee under Section 5.1, or the grant of an option to obtain a sublicense or such other rights, including without limitation license fees, milestone payments, license maintenance fees and reimbursement for research and development expenses, but excluding payments specifically committed to cover development costs to be actually incurred by Licensee in the development of Licensed Products under, and in accordance with detailed budgets and workplans included in, sublicense agreements with Sublicensees. In the event that Licensee or an Affiliate of Licensee receives non-monetary consideration for any such sublicense or other grant of rights or in the case of transactions not at arm’s length, Sublicense Receipts shall be calculated based on the fair market value of such consideration or transaction, assuming an arm’s length transaction made in the ordinary course of business. For the avoidance of doubt, “Sublicense Receipts” shall not include payments made in consideration for the issuance of equity or debt securities of the Licensee at fair market value and not as direct or indirect consideration (in whole or in part) for the sublicense, or the grant of an option to obtain a sublicense, of some or all of the rights granted Licensee under Section 5.1 .

1.29. “Sublicensee” shall mean any permitted sublicensee of all or part of the rights granted Licensee under Section 5.1, as further described in Section 5.2.

1.30. “TAU Team” shall mean the Principal Investigators and those students, scientists and technicians working under their direction at the Felsenstein Medical Research Center of Tel Aviv University on the Research.

1.31. “Third Party License” shall mean a license from an unaffiliated third party to one or more valid and enforceable patents issued in the United States or any other jurisdiction, the claims of which cover one or more functional components that is essential for the efficacy of a Licensed Product.

1.32. “Use” shall mean the use of the Ramot Technology and/or Joint Technology in any stage of the research, development, manufacture or production of a Product.

1.33. “Valid Claim” shall mean a claim of a Ramot Patent Right or Joint Patent Right so long as such claim shall not have been held invalid in a final non-appealable court judgment or patent office decision, in the relevant jurisdiction.

2. Research Project .

2.1 Performance.

2.1.1. Ramot shall cause TAU, under the direction of the Principal Investigators, to use reasonable efforts to perform the Research in accordance with the Research Plan; however, Ramot and TAU make no warranties regarding the completion of the Research or the achievement of any particular results.

2.1.2. The Research will be directed and supervised by the Principal Investigators, who shall have primary responsibility for the performance of the Research. If both of the Principal Investigators cease to supervise the Research for any reason, Ramot will so notify Licensee, and Ramot shall endeavor to find among the scientists at TAU a scientist or scientists acceptable to Licensee to continue the supervision of the Research in place of the Principal Investigators. If Ramot is unable to find such a scientist acceptable to Licensee, within sixty (60) days after such notice to Licensee, Licensee shall have the option to terminate the funding of the Research. Licensee shall promptly advise Ramot in writing if Licensee so elects. Such termination of funding shall terminate Ramot’s and TAU’s obligations pursuant to Section 2.1.1 above, but shall not terminate this Agreement or any of the other rights or obligations of the parties under this Agreement. Nothing contained in this Section 2.1.2, shall be deemed to impose an obligation on Ramot or TAU to successfully find a replacement for the Principal Investigators who is acceptable to Licensee.

2.1.3. The Principal Investigators shall provide Licensee, within thirty (30) days after the end of every six-month period during the Research Period, a written report summarizing the Ramot Results obtained during the preceding six-month period.

2.2 Funding of the Research Project.

2.2.1. Licensee shall fund the Research during the initial term of the Research Period in accordance with the schedule set forth in Exhibit 2.2.1 hereto. In addition, in the event the TAU Team meets the milestones set forth in Section (b) of Exhibit 1.23 , Licensee shall provide funding for the second phase of the Research in the total amount of US$1,140,000 during the additional 3-years term of the Research Period. The Parties shall meet no later than six months prior to completion of initial term of the Research to discuss and agree upon the research program, milestones, and payment schedule for the second phase of the Research. Any and all funding provided by the Licensee pursuant to this Section 2.2.1 shall be applied by Ramot exclusively in support of the Research, including salaries and Ramot’s standard rates of overhead in effect at such time, in accordance with the procedures established at TAU.

2.2.2. Nothing in this Agreement shall be interpreted to prohibit Ramot, TA U or the Principal Investigators from seeking and receiving funding from non-commercial sources , including government agencies and foundations, or from commercial entities for non-commercial purposes, to further support the Research or Other Research performed at TAU with the use of the Ramot Technology or the Joint Technology; provided that such funding shall not be on terms that give such entity(ies) any rights, contractual, commercial or otherwise, to any Ramot Technology or Joint Technology without the prior written consent of Licensee (subject to any non-exclusive license for governmental purposes or other governmental rights required as a condition for such non-commercial funding). Ramot shall notify Licensee upon the Principal Investigators’ or TAU’s applying for such funding, which notice shall include a copy of any notices awarding such funding.

2.2.3. Ramot shall submit the Licensee: (i) an interim written report on the progress of the Research in each 6 (six) month period during the Research Period, within 60 (sixty) days of the end of each such 6 (six) month period, and a written report summarizing the results of the Research within 60 (sixty) days of the end of the first 3 years and the additional three years of Research Period; and (ii) reports of any significant findings in the Research promptly upon such findings being made.

3. Title.

3.1. Ramot Technology. All rights, title and interest in and to the Ramot Technology, and in and to any drawings, plans, diagrams, specifications and other documents containing any of the Ramot Technology shall be owned solely and exclusively by Ramot.

3.2. Joint Technology. All rights, title and interest in and to the Joint Technology are and shall be owned jointly by Licensee and Ramot.

3.3. Determination. All determinations of inventorship under this Agreement shall be made in accordance with United States patent law. In case of dispute between Ramot and Licensee over inventorship, a mutually acceptable outside patent counsel shall make the determination of the inventor(s) by applying the standards contained in United States patent law.

4. Patent Filing, Prosecution and Maintenance.

4.1. Ramot Patent Rights. Ramot shall be responsible for the preparation, filing, prosecution, protection and maintenance of all Ramot Patent Rights, using patent counsel reasonably acceptable to Licensee. Ramot shall consult with Licensee as to the preparation, filing, prosecution, protection and maintenance of the Ramot Patent Rights reasonably prior to any deadline or action with the U.S. Patent & Trademark Office or any other patent office and shall furnish Licensee with copies of all relevant documents reasonably in advance of such consultation.

4.2. Joint Patent Rights.

4.2.1. Consultation. Ramot and Licensee shall consult each other regarding the preparation, filing and prosecution of all patent applications, and the maintenance of all patents, included within the Joint Patent Rights, including, without limitation, the content, timing and jurisdiction of the filing of such patent applications and their prosecution, and other details and overall global strategy pertaining to the procurement and maintenance of the Joint Patent Rights.

4.2.2. Filing. All Joint Patent Rights shall be filed, prosecuted and maintained by the parties through an independent patent firm or firms as shall be mutually agreed upon by Ramot and Licensee. Such counsel shall be charged with the duty to act in the best interests of each of Ramot and Licensee, taking into account their relative status as licensors/licensee under this Agreement and the parties’ intension to prepare, file, prosecute, obtain and maintain the Joint Patent Rights in a manner that will provide the maximum economic advantage and return to the parties. Such counsel shall confer with each of Ramot and Licensee and attempt to achieve a consensus in all decisions made relative to the content of applications, the prosecution of the Joint Patent Rights and the content of communications with the relevant patent agencies, prior to any communications with such agencies.

4.3. Expenses. Subject to Section 4.4 below, Licensee shall reimburse Ramot for all documented patent-related expenses incurred by Ramot pursuant to this Section 6 within thirty (30) days after Ramot invoices Licensee. In addition, in December 2004, Licensee paid Ramot a total amount of $16,908 (sixteen thousand, nine hundred and eight US Dollars) as a reimbursement for expenses incurred by Ramot prior to the execution of the Original Agreement with respect to the filing and prosecution of Ramot Patent Rights.

4.4. Abandonment. Should Licensee elect not to reimburse Ramot for the filing, prosecution or maintenance of a patent application in any country, on any invention included in the Ramot Technology or Joint Technology or to cease reimbursing Ramot for the prosecution, protection and/or maintenance of any Ramot Patent Right or Joint Patent Rights in any such country (an “Abandoned Country”), Licensee shall provide Ramot with prompt written notice of such election. Upon written receipt of such notice by Ramot, Licensee shall be released from its obligations to reimburse Ramot for the expenses incurred thereafter as to such Abandoned Country in conjunction with such Patent Rights. In such event, any license with respect to such Patent Rights will terminate with respect to such Abandoned Country, and Licensee shall have no rights whatsoever to exploit such Patent Rights in such Abandoned Country. Ramot shall then be free, without further notice or obligation to Licensee, to grant rights in and to such Patent Rights with respect to such Abandoned Country to third parties, which rights shall not include the right to offer, sell or market the resulting Licensed Product(s) in, or to export such Licensed Product(s) to, any country which is not an Abandoned Country

4.5. No Warranty. Nothing contained herein shall be deemed to be a warranty that: (a) Ramot can or will be able to obtain patents on patent applications included within the Ramot Patent Rights or on patent applications relating to the Ramot Results, or that any of the Ramot Patent Rights will afford adequate or commercially worthwhile protection, (b) the parties can or will be able to obtain patents of patent applications relating to Joint Inventions or (c) the manufacture, use or sale of any element of the Ramot Technology or Joint Technology or any Licensed Product will not infringe any patent(s) of any third party.

5. License Grant .

5.1. License. Subject to the terms and conditions set forth in this Agreement, Ramot hereby grants to Licensee an exclusive, worldwide, royalty-bearing license under the Ramot Technology and Ramot’s interest in the Joint Technology solely to research, develop, make, have made, use, offer for sale, sell, have sold, import and export Licensed Products, and to otherwise practice and exploit the Ramot Technology and Ramot's interest in the Joint Technology solely for the purpose of developing and/or commercializing Licensed Products. For purposes of this Section 5.1, the term “exclusive” means that Ramot shall not have any right to grant such licenses or rights to any third party, subject , however , to Ramot’s right to license TAU, the Principal Investigators and the other members of the TAU Team to practice or utilize such rights and licenses to conduct the Research, and subject further , to the right of employees, researchers and students of Tel Aviv University to use the Ramot Technology and the Joint Technology for academic research purposes, alone or in collaboration with third parties (“ Other Research ”). To the extent such utilization should require publication or disclosure to persons who are not a part of the TAU Team or disclosure to parties who are not employees, researchers or students of Tel Aviv University the provisions of Section 9.2 shall govern any such publication or disclosure.

5.2 Sublicense .

5.2.1. Sublicense Grant. Licensee shall be entitled, without any requirement for Ramot’s prior agreement, to grant sublicenses to third parties under the license granted pursuant to Section 5.1 on terms and conditions in compliance with and not inconsistent with the terms of this Agreement (except that the royalty rates may be higher than those set forth in this Agreement). Such sublicenses shall only be made for consideration and in bona-fide arm’s length transactions.

5.2.2. Sublicense Agreements. Sublicenses shall only be granted pursuant to written agreements, which shall be in compliance and not inconsistent with and shall be subject and subordinate to the terms and conditions of this Agreement. Such sublicense agreements shall contain, among other things, provisions to the following effect:

5.2.2.1. All provisions necessary to ensure Licensee’s ability to perform its obligations under this Agreement, including without limitation its obligations under Sections 6.1, 8.5, 8.6 and 13.4.3;

5.2.2.2. In the event of termination of the license (in whole or in part - e.g. termination in a particular country) set forth in Section 5.1 above, any existing agreements that contain a sublicense of the Ramot Technology or Ramot’s interest in Joint Inventions shall terminate to the extent of such sublicense; provided , however , that, for each Sublicensee, upon termination of the sublicense agreement with such Sublicensee, if the Sublicensee is not then in breach of its sublicense agreement with Licensee such that Licensee would have the right to terminate such sublicense, Ramot shall be obligated, at the request of such Sublicensee, to enter into a new license agreement with such Sublicensee on substantially the same terms as those contained in such sublicense agreement, provided that such terms shall be amended, if necessary, to the extent required to ensure that such Sublicense Agreement does not impose any obligations or liabilities on Ramot which are not included in this Agreement;

5.2.2.3. The Sublicensee shall be entitled to sublicense its rights under such sublicense agreement, provided that the provisions of this Section 5.2 shall apply to the grant of such sublicense; and

5.2.2.4. The sublicense agreement may not be assigned by Sublicensee without the prior written consent of Ramot , except that Sublicensee may assign the sublicense agreement to a successor in connection with the merger, consolidation, or sale of all or substantially all of its assets or that portion of its business to which the sublicense agreement relates; provided that any such assignee agrees in writing in a manner reasonably satisfactory to Ramot to be bound by the terms of such sublicense agreement. The consent and acknowledgement of satisfaction contemplated in this Section 5.2.2.4 shall not be unreasonably withheld or delayed.

5.2.3. Delivery of Sublicense Agreement. Licensee shall furnish Ramot with a fully executed copy of any such sublicense agreement, promptly after its execution.

5.2.4. Breach by Sublicensee. Any act or omission by a Sublicensee, which would have constituted a breach of this Agreement had it been an act or omission by Licensee, shall constitute a breach of this Agreement. Licensee shall indemnify Ramot for, and hold it harmless from, any and all damages or losses caused to Ramot as a result of any such breach by a Sublicensee. In the event of a breach by a Sublicensee, the cure of such breach or the termination by Licensee of the sublicense agreement with such Sublicensee within Licensee’s cure period, as set forth in Section 13.3.3.1, shall constitute a cure of Licensee’s breach under this Agreement for purposes of Section 13.3.3.1.

5.3. No Other Grant of Rights. Other than as specifically set forth in Section 5.2, Licensee and Sublicensees shall not be entitled to grant, directly or indirectly, to any person or entity any right of whatever nature (a) under, or with respect to, or permitting any use or exploitation of, any of the Ramot Technology or Joint Technology or (b) to develop, manufacture, market or sell Licensed Products.

6. Development and Commercialization.

6.1. Diligence.

6.1.1. Reasonable Efforts. Licensee shall use its reasonable efforts, and/or shall cause its Affiliates or Sublicensees to use their reasonable efforts: (i) to develop Licensed Products, (ii) to introduce Licensed Products into the commercial market and (iii) to market Licensed Products following such introduction into the market. Specifically, Licensee and/or its Affiliates and/or Sublicensees shall fulfill the following obligations:

6.1.1.1. Licensee, by itself or through Affiliates or Sublicensees, undertakes to employ its reasonable efforts, including funding consistent with such efforts, to carry out all efficacy, pharmaceutical, safety, toxicological and clinical tests, trials and studies and all other activities necessary in order to obtain Regulatory Approval for the production, use and sale of Licensed Products in each country in which Licensee, its Affiliates or Sublicensees intend to produce, use, offer to sell and sell Licensed Products and in any case, in the United States, the European Union and Japan.

6.1.1.2. During the period commencing with the receipt of Regulatory Approval in a given jurisdiction, Licensee and its Affiliate shall, and shall ensure that Sublicensees shall, use its or their reasonable efforts, including funding consistent with such efforts, to promote, market and sell Licensed Products in such jurisdiction. Licensee and/or its Affiliates and/or Sublicensees activities shall include but not be limited to:

(a) Using their reasonable efforts to establish and maintain good business relationships with hospitals, health care systems, doctors and other medical professionals in accordance with standard and customary practices;

(b) Establishing and maintaining a sales force consisting of reasonably qualified personnel to promote and market the Licensed Products;

(c) Advertising the Licensed Products in professional journals and publications and sponsoring or attending appropriate symposia, trade exhibitions and medical education programs; and

(d) Formulating and using their reasonable efforts to implement annual sales and marketing plans for the Licensed Products.

6.1.2. Milestones. Without limiting the foregoing, Licensee, by itself or through Affiliates or Sublicensees, shall meet each of the Development Milestones.

6.2. The Principal Investigators, a Licensee representative and a Ramot representative shall meet no less than once every six (6) months during the term commencing with the Effective Date and ending upon the First Commercial Sale of a Licensed Product, at locations and times to be mutually agreed upon by the parties, (i) to review the progress being made under the research and development activities conducted by Licensee relating to Licensed Products, (ii) to review the progress being made towards fulfilling the Development Milestones and (iii) to discuss intended efforts for fulfilling such milestones.

6.3. Within sixty (60) days after the end of each calendar year, Licensee shall furnish Ramot with a written report on the progress of its, its Affiliate’s and Sublicensees’ efforts during the prior year to develop and commercialize Licensed Products, including without limitation research and development efforts, efforts to obtain Regulatory Approval, marketing efforts, and sales figures. The report shall also contain a discussion of intended efforts and sales projections for the then current year.

6.4. Failure. If Licensee breaches any of its obligations pursuant to Section 6.1, unless and to the extent the failure is due solely to delay necessitated by regulatory agencies, Ramot shall notify Licensee in writing of Licensee’ failure and shall allow Licensee ninety (90) days to cure or to demonstrate that it has begun to cure its failure. Licensee’ failure to cure or demonstrate that it has begun to cure such delay to Ramot’s reasonable satisfaction within such 90-day period shall constitute a material breach of this Agreement and Ramot shall have the right to terminate this Agreement forthwith.

7. Consideration for Grant of License

7.1. Upfront Payments. The Parties confirm that Licensee has delivered to Ramot, in December 2004, an upfront license fee payment in the sum of $100,000 (one-hundred thousand US Dollars

7.2. Warrants. In addition, pursuant to the terms of the Original Agreement , effective November 4, 2004, Licensee issued to Ramot and its designees warrants to purchase an aggregate of 10,606,415 shares of our common stock at a purchase price of $.01 per share (29% of the issued and outstanding shares of our capital stock on a fully diluted and as converted basis as of November 4, 2004). The form of these warrants is attached hereto as Exhibit 7.2.

7.3. Net Sales.

7.3.1. Royalties. In addition, Licensee shall pay Ramot royalties on Net Sales on a Licensed Product-by-Licensed Product and jurisdiction-by-jurisdiction basis as follows:

7.3.1.1. So long as (a) the making, producing, manufacturing, using, marketing, selling, importing or exporting of such Licensed Product is covered by a Valid Claim or (b) the Licensed Product is covered by Orphan Drug status in such jurisdiction: an amount equal to 5% (five percent) of all Net Sales; and

7.3.1.2. In the event that (a) the making, producing, manufacturing, using, marketing, selling, importing or exporting of such Licensed Product is not covered by a Valid Claim and (b) the Licensed Product is not covered by Orphan Drug status in such jurisdiction: an amount equal to 3% (three percent) of all Net Sales until the expiration of fifteen (15) years from the date of the First Commercial Sale of such Licensed Product in such jurisdiction.

7.3.1.3 Notwithstanding the foregoing, if, in a given calendar quarter in a given country, sales of Generic Versions of a Licensed Product (or Combined Product) represent ten (10%) or more of the total combined sales of such Licensed Product (or Combined Product) and such Generic Versions in such country, the royalties payable with respect to Net Sales of such Licensed Product (or the portion of Net Sales attributed to the Licensed Product in such Combined Product pursuant to Section 7.5) in such country shall be reduced to 2.5% for such calendar quarter.

7.3.2. Third-Party Royalties. In the event that Licensee is required to make royalty payments, at fair market terms after arms’ length negotiations, pursuant to the terms of a Third Party License that Licensee is legally required to obtain in order to make use of and/or to sell Licensed Products in a particular jurisdiction (including Licensed Products that are included in a Combined Product, but not including any other ingredient of such Combined Product), Licensee may offset such third-party payments against the royalty payments that are due to Ramot pursuant to Section 7.3.1.1 (but not pursuant to Section 7.3.1.2 or 7.3.1.3) with respect to sales in such jurisdiction; provided that ,

(a) royalty payments under Section 7.3.1.1 to Ramot may not be reduced pursuant to this Section 7.3.2 unless all other parties who are entitled to receive royalties on Net Sales of Licensed Products pursuant to agreements or licenses (including Third Party Licenses) made or obtained by Licensee prior to the grant of the Third Party License in question are subject to a proportionate reduction of their royalties; and

(b) in no event, shall the royalty payments to Ramot under Section 7.3.1.1 with respect to such Licensed Product be reduced to less than an amount equal to 3% of Net Sales with respect to such Licensed Product in such jurisdiction as a result of reductions pursuant to this Section 7.3.2.

7.4. Sublicense Receipts. In addition, Licensee shall pay Ramot an amount equal to a percentage of all Sublicense Receipts as follows:

(a) 25% of Sublicense Receipts, with respect to Sublicenses granted prior to completion of Phase II Clinical Studies, and

(b) 20% of Sublicense Receipts, with respect to Sublicenses granted following completion of Phase II Clinical Studies.

7.5 Combined Products. For purposes of determining royalty payments on sales of Combined Products, “Net Sales” shall be determined by multiplying the actual Net Sales of such Combined Product during the applicable royalty reporting period and in the applicable jurisdiction, by the fraction A/(A+B) where: “A” is the average sale price of the Licensed Product contained in the Combined Product when sold separately by Licensee or its Affiliate; and “B” is the average price of the Additional Ingredients included in the Combined Product when sold separately by its supplier, in each case during the applicable royalty reporting period or if sales of both the Licensed Product and/or other Additional Ingredients did not occur in such period, then in the most recent royalty reporting period in which sales of both occurred. In the event that such average sale price cannot be determined for both the Licensed Product and all other Additional Ingredients included in the Combined Product, Net Sales for the purpose of determining royalty payments shall be calculated by multiplying the Net Sales of the Combined Products by the fraction of C/(C+D) where “C” is the fair market value of the Licensed Product and “D” is the fair market value of all other Additional Ingredients included in the Combined Product. In such event, the parties shall negotiate in good faith to arrive at a determination of the respective fair market values of the Licensed Product and all other Additional Ingredients included in the Combined Product, provided that the portion of Net Sales attributed to the Licensed Product in such event shall not be less than 50% of the relevant Net Sales.

8. Reports; Payments; Records.

8.1. First Commercial Sale. Licensee shall inform Ramot in writing of the date of First Commercial Sale with respect to each Licensed Product in each country as soon as practicable after the making of each such First Commercial Sale and shall describe such Licensed Product.

8.2. Reports and Payments.

8.2.1 Reports. Within sixty (60) days after the conclusion of each Calendar Quarter commencing with the first Calendar Quarter in which Licensee or a Sublicensee first receives Net Sales or Licensee or an Affiliate receives Sublicense Receipts, Licensee shall deliver to Ramot a report containing the following information:

(a) the number of units of Licensed Products sold by Licensee, its Affiliates and Sublicensees to independent third parties in each country for the applicable Calendar Quarter;

(b) the gross amount billed for each unit of a Licensed Product sold by Licensee, its Affiliates and Sublicensees during the applicable Calendar Quarter in each country;

(c) a calculation of Net Sales for the applicable Calendar Quarter in each country, including a listing of applicable deductions;

(d) the total amount payable to Ramot in U.S. dollars on Net Sales for the applicable Calendar Quarter, together with the exchange rates used for conversion.

If no amounts are due to Ramot for any Calendar Quarter, the report shall so state.

8.2.2. Payment for Net Sales. Within 60 days of end of each Calendar Quarter, Licensee shall remit to Ramot all amounts due with respect to Net Sales for the applicable Calendar Quarter, subject to credit for amounts paid to Ramot previously that were excessive under the definition of Net Sales herein.

8.2.3 Payment for Sublicense Receipts. In addition to the reports delivered pursuant to Section 8.2.1, Licensee shall notify Ramot in writing within fifteen (15) days of the receipt of any Sublicense Receipts. Licensee shall remit to Ramot all amounts due with respect to such Sublicense Receipts within thirty (30) of the receipt of such Sublicense Receipts by Licensee.

8.3. Payments in U.S. Dollars. All payments due under this Agreement shall be payable in United States dollars. Conversion of foreign currency to U.S. dollars shall be made at the conversion rate existing in the United States (as reported in the Wall Street Journal ) on the last working day of the applicable Calendar Quarter. Such payments shall be without deduction of exchange, collection, or other charges.

8.4. Payments in Other Currencies. If by law, regulation, or fiscal policy of a particular country, conversion into United States dollars or transfer of funds of a convertible currency to the United States is restricted or forbidden, Licensee shall give Ramot prompt written notice of such restriction, which notice shall satisfy the payment deadlines described in Section 8.2. Licensee shall pay any amounts due Ramot through whatever lawful methods Ramot reasonably designates; provided, however, that if Ramot fails to designate such payment method within thirty (30) days after Ramot is notified of the restriction, Licensee may deposit such payment in local currency to the credit of Ramot in a recognized banking institution selected by Licensee and identified by written notice to Ramot, and such deposit shall fulfill all obligations of Licensee to Ramot with respect to such payment.

8.5. Records. Licensee shall maintain, and shall cause its Affiliates and Sublicensees to maintain, complete and accurate records of Licensed Products that are made, used or sold under this Agreement, any amounts payable to Ramot in relation to such Licensed Products and all Sublicense Receipts received by Licensee and its Affiliates, which records shall contain sufficient information to permit Ramot to confirm the accuracy of any reports or notifications delivered to Ramot under Section 8.2. The relevant party shall retain such records relating to a given Calendar Quarter for at least three (3) years after the conclusion of that Calendar Quarter, during which time Ramot shall have the right, at its expense, to cause an independent, certified public accountant to inspect such records during normal business hours for the sole purpose of verifying any reports and payments delivered under this Agreement. Such accountant shall not disclose to Ramot any information other than information relating to the accuracy of reports and payments delivered under this Agreement. The parties shall reconcile any underpayment or overpayment within thirty (30) days after the accountant delivers the results of the audit. In the event that any audit performed under this Section 8.5 reveals an underpayment in excess of five percent (5%) in any calendar year, the audited party shall bear the full cost of such audit. Ramot may exercise its rights under this Section 8.5 only once every year per audited party and only with reasonable prior notice to the audited party. Licensee shall cause its Affiliates and Sublicensees to fully comply with the terms of this Section 8.5.

8.6. Audited Report. Licensee shall furnish Ramot, and shall cause its Affiliates and Sublicensees to furnish Ramot, within one hundred twenty (120) days after the end of each calendar year, commencing at the end of the calendar year of the First Commercial Sale, with a report, certified by an independent certified public accountant, relating to royalties and other payments due to Ramot pursuant to this Agreement in respect to the previous calendar year and containing the same details as those specified in Section 8.2 above in respect to the previous calendar year.

8.7. Late Payments. Any payments by Licensee that are not paid on or before the date such payments are due under this Agreement shall bear monthly interest at a simple annual interest, equal to three percent (3%) above the 30 day London Interbank Offer Rate (LIBOR) as determined for each month on the last business day of that month, assessed from the day payment was initially due until the date of payment.

8.8. Payment Method. Each payment due to Ramot under this Agreement shall be paid in U.S. currency by wire transfer of funds to Ramot’s account in accordance with written instructions provided by Ramot.

8.9. VAT; Withholding and Similar Taxes. All amounts to be paid to Ramot pursuant to this Agreement are exclusive of Value Added Tax but inclusive of all other taxes or withholding amounts. Licensee shall add value added tax, as required by law, to all such amounts. If applicable laws require that taxes be withheld from any amounts due to Ramot under this Agreement, Licensee shall (a) deduct these taxes from the remittable amount, (b) pay the taxes to the proper taxing authority, and (c) promptly deliver to Ramot a statement including the amount of tax withheld and justification therefore, and such other information as may be necessary for tax credit purposes.

9. Confidential Information

9.1 Confidentiality.

9.1.1. Confidential Information . Licensee agrees that, without the prior written consent of Ramot, in each case, during the term of this Agreement, and for five (5) years thereafter, it will keep confidential, and not disclose or use Confidential Information (as defined below) other than for the purposes of this Agreement, without the express written consent of Ramot. Licensee shall treat such Confidential Information with the same degree of confidentiality as it keeps its own confidential information, but in all events no less than a reasonable degree of confidentiality. Licensee may disclose the Confidential Information only to employees and consultants of Licensee or of its Affiliates or Sublicensees (or their Affiliates) who have a “need to know” such information in order to enable Licensee to exercise or exploit its rights and fulfill its obligations under this Agreement and are legally bound by agreements which impose confidentiality and non-use obligations comparable to those set forth in this Agreement. For purposes of this Agreement, "Confidential Information" means any proprietary scientific, technical, trade or business information relating to the subject matter of this Agreement designated as confidential or which otherwise should reasonably be construed under the circumstances as being confidential disclosed by or on behalf of Ramot, TAU, or any of their employees, researchers or students (including members of the TAU Team) to Licensee, whether in oral, written, graphic or machine-readable form, except to the extent (A) such information: (i) was known to Licensee at the time it was disclosed, other than by previous disclosure by or on behalf of Ramot, TAU or any of their employees, researchers or students, as evidenced by Licensees’ written records at the time of disclosure; (ii) is at the time of disclosure or later becomes publicly known under circumstances involving no breach of this Agreement; (iii) is lawfully and in good faith made available to Licensee by a third party who is not subject to obligations of confidentiality to Ramot or TAU with respect to such information; (iv) is independently developed by Licensee without the use of or reference to the Confidential Information, as demonstrated by documentary evidence; and (B) disclosure of such information is reasonably necessary in (i) filing or prosecuting patents and patent applications; (ii) conducting research, development and/or commercialization activities and regulatory filings for products or services; (iii) prosecuting or defending litigation; (iv) complying with applicable law, including court orders or governmental regulations ; and (v) disclosure to third parties in connection with due diligence or similar investigations by such third parties or potential investment.

9.1.2. Disclosure of Agreement . Each party may disclose the terms of this Agreement to the extent required, in the reasonable opinion of such party’s legal counsel, to comply with applicable laws.

9.1.3. Publicity. Except as expressly permitted under Section 9.1.2, no party will make any public announcement regarding this Agreement without the prior written approval of the other party. Publication of the fact of this Agreement and its subject matter shall be deemed to be approved.

9.2. Academic Publications and Third Party Collaboration. Ramot shall have the right to allow the Principal Investigators and other members of the TAU Team to publish the results of the Research, if any, in scientific publications, to present such results at scientific symposia, or to transfer such results to third parties for the purpose of conducting Other Research in collaboration with TAU, provided that the following procedure is followed:

9.2.1. Ramot shall cause the members of the TAU Team to comply with standard academic practice regarding authorship of scientific publications and recognition of contribution of other parties in any publications relating to the Research.

9.2.2 The results of the Research shall only be transferred to a third party for the purpose of conducting Other Research after such third party has executed a material transfer agreement on terms approved in advance by the Company, which shall contain appropriate protections for the rights of the Company hereunder;

9.2.3. No later than thirty (30) days prior to submission for publication of any scientific articles, abstracts or papers concerning the results of the Research, the presentation of such results at any scientific symposia, or the transfer of such results to third parties for the purpose of Other Research, Ramot shall send to Licensee a written copy of the material to be so submitted, presented, or transferred and shall allow Licensee to review such submission to determine whether the material to be publication or presentation contains subject matter for which patent protection should be sought prior to publication, presentation or transfer for the preservation of Ramot Patent Rights.

9.2.4. Licensee shall provide its written comments with respect to such publication or presentation within thirty (30) days following its receipt of such written material.

9.2.5. If Licensee, in its written comments, identifies material for which patent protection should be sought, then Ramot shall cause the publication, presentation or transfer of such material to be delayed for a further period of up to ninety (90) days from the receipt of such written comments to enable Ramot to make the necessary patent filings in accordance with Section 4.

9.2.6. After compliance with the foregoing procedures with respect to an academic, scientific or medical publication and/or public presentation, members of the TAU Team shall not have to resubmit any such information published according to this Section 9.2 for re-approval should such same information be republished or publicly disclosed in another form.

10. Enforcement of Patent Rights.

10.1. Notice. In the event either party becomes aware of any possible or actual infringement or unauthorized possession, knowledge or use of any Ramot Patent Rights (collectively, an “Infringement”), that party shall promptly notify the other party and provide it with details regarding such Infringement

10.2. Suit by Licensee. Licensee shall have the right, but not the obligation, to take action in the prosecution, prevention, or termination of any Infringement of Ramot Patent Rights. Should Licensee elect to bring suit against an infringer and Ramot is joined as party plaintiff in any such suit, Ramot shall have the right to approve the counsel selected by Licensee to represent Licensee, such approval not to be unreasonably withheld. The expenses of such suit or suits that Licensee elects to bring, including any expenses of Ramot incurred in conjunction with the prosecution of such suits or the settlement thereof, shall be paid for entirely by Licensee and Licensee shall hold Ramot free, clear and harmless from and against any and all costs of such litigation, including attorney’s fees. Licensee shall not compromise or settle such litigation without the prior written consent of Ramot, which consent shall not be unreasonably withheld or delayed. In the event Licensee exercises its right to sue pursuant to this Section 10.2, it shall first reimburse itself out of any sums recovered in such suit or in settlement thereof for all costs and expenses of every kind and character, including reasonable attorney’s fees, necessarily involved in the prosecution of any such suit. If, after such reimbursement, any funds shall remain from said recovery, then Ramot shall receive an amount equal to one-third of such funds and the remaining two-thirds of such funds shall be retained by Licensee, provided that with respect to amounts awarded for loss of sales, Ramot shall only be entitled (after such amounts shall first have been applied to cover out-of-pocket expenses of both parties) to 5% from the awarded lost Net Sales or the lost Net Sales grossed up from the loss of profit awarded by the court.

10.3. Suit by Ramot. If Licensee does not take action in the prosecution, prevention, or termination of any Infringement pursuant to Section 10.2 above, and has not commenced negotiations with the infringer for the discontinuance of said Infringement, within ninety (90) days after receipt of notice to Licensee by Ramot of the existence of an Infringement, Ramot may elect to do so. Should Ramot elect to bring suit against an infringer and Licensee is joined as party plaintiff in any such suit, Licensee shall have the right to approve the counsel selected by Ramot to represent Ramot, such approval not to be unreasonably withheld. The expenses of such suit or suits that Ramot elects to bring, including any expenses of Licensee incurred in conjunction with the prosecution of such suits or the settlement thereof, shall be paid for entirely by Ramot and Ramot shall hold Licensee free, clear and harmless from and against any and all costs of such litigation, including attorney’s fees. Ramot shall not compromise or settle such litigation without the prior written consent of Licensee, which consent shall not be unreasonably withheld or delayed. In the event Ramot exercises its right to sue pursuant to this Section 10.3, it shall first reimburse itself out of any sums recovered in such suit or in settlement thereof for all costs and expenses of every kind and character, including reasonable attorney’s fees, necessarily involved in the prosecution of any such suit. If, after such reimbursement, any funds shall remain from said recovery, then Licensee shall receive an amount equal to one-third of such funds and the remaining two-thirds of such funds shall be retained by Ramot.

10.4. Own Counsel. Each party shall always have the right to be represented by counsel of its own selection and at its own expense in any suit instituted under this Section 10 by the other party for Infringement.

10.5. Cooperation. Each party agrees to cooperate fully in any action under this Section 10 which is controlled by the other party, provided that the controlling party reimburses the cooperating party promptly for any costs and expenses incurred by the cooperating party in connection with providing such assistance.

10.6. Standing. If a party lacks standing and the other party has standing to bring any such suit, action or proceeding, then such other party shall do so at the request of and at the expense of the requesting party. If either party determines that it is necessary or desirable for another party to join any such suit, action or proceeding, the other party shall execute all papers and perform such other acts as may be reasonably required in the circumstances.

11. Warranties; Limitation of Liability.

11.1. Compliance with Law. Licensee warrants that it will comply with, and shall ensure that its Affiliates and Sublicensees comply with, all local, state, federal, and international laws and regulations relating to the development, manufacture, use, and sale of Licensed Products.

11.2. Representations by Ramot. Ramot represents that: (a) it is the owner of the Ramot Patent Rights set forth in Exhibit 1.18(a) free and clear of all liens and encumbrances; (b) it has the right to grant the licenses granted pursuant to this Agreement; (c) it has not granted any rights in or to Ramot Technology which are inconsistent with the rights granted to Licensee under this Agreement to any other party.

11.3. No Warranty.

11.3.1. N othing in this Agreement (including, without limitation, any exhibits or attachments hereto) shall be construed as a warranty on the part of Ramot that any results or inventions will be achieved in the Research or that the Ramot Technology, Joint Technology and/or any other results or inventions achieved in the Research are or will be commercially exploitable, and furthermore, Ramot makes no warranties whatsoever as to the commercial or scientific value of the Ramot Technology, Joint Technology and/or as to any results which may be achieved in the Research and/or that any patent will issue from any pending patent applications in the Ramot Patent Rights. Ramot makes no representation that use of the Ramot Technology or Joint Technology will not infringe the patent or proprietary rights of any third party.

11.3.2. Except as otherwise expressly provided in this Agreement, no party makes any warranty with respect to any technology, patents, goods, services, rights or other subject matter of this Agreement and hereby disclaims warranties of merchantability, fitness for a particular purpose and noninfringement with respect to any and all of the foregoing.

11.4. Limitation of Liability. Notwithstanding anything else in this Agreement or otherwise, Ramot shall not be liable to Licensee with respect to any subject matter of this Agreement under any contract, negligence, strict liability or other legal or equitable theory for (i) any indirect, incidental, consequential or punitive damages or lost profits or (ii) cost of procurement of substitute goods, technology or services.

12. Indemnification.

12.1 Indemnity. Licensee shall indemnify, defend, and hold harmless Ramot, TAU, the Principal Investigators, the other members of the TAU Team, their Affiliates and their respective governors, directors, officers, employees, and agents and their respective successors, heirs and assigns (the “Ramot Indemnitees”), against any liability, damage, loss, or expense (including reasonable attorneys fees and expenses of litigation) incurred by or imposed upon any of the Ramot Indemnitees in connection with any claims, suits, actions, demands or judgments (“Claims”) arising out of any theory of liability (including without limitation actions in the form of tort, warranty, or strict liability and regardless of whether such action has any factual basis) concerning the use of any Ramot Technology or Joint Technology by Licensee, or any of its Affiliates or Sublicensees, or concerning any product, process, or service that is made, used, or sold pursuant to any right or license granted by Ramot to Licensee under this Agreement (except in cases where such claims, suits, actions, demands or judgments result from a willful material breach of this Agreement, gross negligence or willful misconduct on the part of any of the Ramot Indemnitees). The foregoing indemnity shall be the exclusive remedy of the Ramot Indemnitees with respect to liability arising from any such Claims.

12.2 Procedures. If any Ramot Indemnitee receives notice of any Claim, such Ramot Indemnitee shall, as promptly as is reasonably possible, give Licensee notice of such Claim; provided, however, that failure to give such notice promptly shall only relieve Licensee of any indemnification obligation it may have hereunder to the extent such failure diminishes the ability of Licensee to respond to or to defend the Ramot Indemnitee against such Claim. Ramot and Licensee shall consult and cooperate with each other regarding the response to and the defense of any such Claim and Licensee shall, upon its acknowledgment in writing of its obligation to indemnify the Ramot Indemnitee, be entitled to and shall assume the defense or represent the interests of the Ramot Indemnitee in respect of such Claim, that shall include the right to select and direct legal counsel and other consultants to appear in proceedings on behalf of the Ramot Indemnitee and to propose, accept or reject offers of settlement, all at its sole cost; provided, however, that no such settlement shall be made without the written consent of the Ramot Indemnitee, such consent not to be unreasonably withheld. Nothing herein shall prevent the Ramot Indemnitee from retaining its own counsel and participating in its own defense at its own cost and expense.

12.3 Insurance. Commencing with the commencement of clinical trials in humans with respect to the first Licensed Product, Licensee shall maintain insurance that is reasonably adequate to insure its liability pursuant to clause 12.1 above. Such insurance shall be in reasonable amounts (but in any event not less than five million US dollars (US$5,000,000) for injuries to any one person arising out of a single occurrence and ten million US dollars (US$10,000,000) for injuries to all persons arising out of a single occurrence) and on reasonable terms in the circumstances, having regard, in particular, to the nature of the Licensed Products, and shall be subscribed for from a reputable insurance company. Licensee shall provide Ramot, upon request, with written evidence of such insurance. Licensee shall continue to maintain such insurance after the expiration or termination of this Agreement during any period in which Licensee or any Affiliate or Sublicensee continues to make, use, or sell a Licensed Product, and thereafter for a period of seven (7) years.

13. Term and Termination.

13.1. Term. The term of this Agreement shall commence on the Effective Date and, unless earlier terminated as provided in this Section 13, shall continue in full force and effect on a Licensed Product-by-Licensed Product and jurisdiction-by-jurisdiction basis until the expiration of all payment obligations pursuant to Section 7 for such Licensed Product.

13.2. Effect of Expiration. Following the expiration pursuant to Section 13.1 of this Agreement on a Licensed Product-by-Licensed Product and jurisdiction-by-jurisdiction basis (and provided the Agreement has not been earlier terminated pursuant to Section 13.3, in which case Section 13.4 shall apply): (a) Licensee shall have a fully-paid up, nonexclusive license (with the right to grant sublicenses) under the Ramot Technology solely to develop, make and have made, use, offer to sell, sell, have sold, import, export, otherwise transfer physical possession of or otherwise transfer title to such Licensed Product in such country; (b) Ramot shall be free to use the Ramot Technology to develop, make and have made, use, offer to sell, sell, have sold, import, export, otherwise transfer physical possession of or otherwise transfer title to such Licensed Product in such country and to grant others licenses under the Ramot Technology to do the same; and (c) each of the parties shall have a fully-paid up, non-exclusive, worldwide license (with the right to grant sublicenses) under the other party’s interest in the Joint Technology for any and all purposes.

13.3. Termination.

13.3.1 Termination Without Cause. Licensee may terminate this Agreement upon sixty (60) days prior written notice to Ramot, provided however, that, subject to Section 2.1.2, Licensee may not terminate its obligation to fund the Research under Section 2.2.1.

13.3.2. Termination for Default.

13.3.2.1 In the event that either party commits a material breach of its obligations under this Agreement and fails to cure that breach within thirty (30) days after receiving written notice thereof, the other party may terminate this Agreement immediately upon written notice to the party in breach. Notwithstanding the foregoing, in the event of a breach pursuant to Section 5.2.4 (i.e. a breach by a Sublicensee) that is not susceptible of cure by Licensee within the thirty (30) day period set forth above and License uses diligent good faith efforts to cure such breach, the thirty (30) day cure period shall be extended by an additional period of thirty (30) days.

13.3.3.2 In the event of an uncured material breach by Ramot as described in the foregoing paragraph, Licensee may elect not to terminate this Agreement but, instead, to sue Ramot for damages arising from such breach, provided however , that in no event will Licensee seek damages against Ramot in any such action which exceed amounts actually paid to Ramot under this Agreement.

13.3.3. Bankruptcy. Either party may terminate this Agreement upon notice to the other if the other party becomes insolvent, is adjudged bankrupt, applies for judicial or extra-judicial settlement with its creditors, makes an assignment for the benefit of its creditors, voluntarily files for bankruptcy or has a receiver or trustee (or the like) in bankruptcy appointed by reason of its insolvency, or in the event an involuntary bankruptcy action is filed against the other party and not dismissed within ninety (90) days, or if the other party becomes the subject of liquidation or dissolution proceedings or otherwise discontinues business.

13.4. Effect of Termination.

13.4.1. Termination of Rights. Upon termination by Licensee pursuant to Sections 13.3.1, 13.3.2 or 13.3.3 hereof or by Ramot pursuant to Sections 6.4, 13.3.2 or 13.3.3 hereof: (a) the rights and licenses granted to Licensee under Section 5 shall terminate; (b) all rights in and to the Ramot Technology shall revert to Ramot and Licensee, its Affiliates and Sublicensees shall not be entitled to make any further use whatsoever of the Ramot Technology nor shall Licensee, its Affiliates or Sublicensees develop, make, have made, use, offer to sell, sell, have sold, import, export, otherwise transfer physical possession of or otherwise transfer title to Licensed Products; and (c) any existing agreements that contain a sublicense of the Ramot Technology shall terminate to the extent of such sublicense; provided , however , that, for each Sublicensee, upon termination of the sublicense agreement with such Sublicensee, Ramot shall be obligated, at the request of such Sublicensee, to enter into a new license agreement with such Sublicensee on substantially the same terms as those contained in such sublicense agreement, provided that such terms shall be amended, if necessary, to the extent required to ensure that such Sublicense Agreement does not impose any obligations or liabilities on Ramot which are not included in this Agreement.

13.4.2. Accruing Obligations. Termination of this Agreement shall not relieve the parties of obligations occurring prior to such termination, including obligations to pay amounts accruing hereunder up to the date of termination.

13.4.3. Transfer of Regulatory Filings and Know How.

13.4.3.1. In the event that Ramot terminates this Agreement pursuant to Section 6.4, 13.3.2 or 13.3.3, Licensee shall promptly deliver and assign to Ramot (a) all documents and other materials filed by or on behalf of Licensee and its Affiliates with Regulatory Agencies in furtherance of applications for Regulatory Approval in the relevant country with respect to Licensed Products and (b) all intellectual property, inventions, conceptions, compositions, materials, methods, processes, data, information, records, results, studies and analyses, discovered or acquired by, or on behalf of Licensee and its Affiliates which relate directly to actual or potential Products, including without limitation Licensee’s interest in Joint Technology. Ramot and TAU shall be entitled to freely use and to grant others the right to use all such materials, documents and know-how delivered pursuant to this 13.4.3.1 without any obligations to Licensee.

13.4.3.2. In the event Licensee terminates this Agreement pursuant to Section 13.3.1, Licensee shall promptly deliver and assign to Ramot (a) all documents and other materials filed by or on behalf of Licensee and its Affiliates with Regulatory Agencies in furtherance of applications for Regulatory Approval in the relevant country with respect to Products and (b) all intellectual property, inventions, conceptions, compositions, materials, methods, processes, data, information, records, results, studies and analyses, discovered or acquired by, or on behalf of Licensee and its Affiliates which relate directly to actual or potential Licensed Products, including without limitation Licensee’s interest in Joint Technology. Ramot and TAU shall be entitled to freely use and to grant others the right to use all such materials, documents and know-how delivered pursuant to this 13.4.3.1 (the “Assigned IP”); provided that in the event Ramot grants a third party a license under or with respect to any of the Assigned IP, Ramot shall pay Licensee royalties in the amount of thirty (30%) of all Net Ramot Receipts (as defined below) actually received by Ramot in consideration for the license of such Assigned IP. All such royalties shall be paid by Ramot on a quarterly basis, within thirty days of the end of the calendar quarter in which the consideration was received. Ramot shall report to Licensee and pay the said amounts to Licensee in accordance with the procedures set forth in this Agreement with respect to Licensee’s payment and reporting obligations to Ramot as described in section 8 above, mutatis mutandis . For purposes of this Section 13.4.3.2, the following words shall have the following meanings:

(a) “Net Ramot Receipts” shall mean Ramot Receipts less Ramot Expenses.

(b) “Ramot Receipts” shall mean all amounts in cash and other consideration actually received by Ramot from the sale, transfer, assignment, lease, grant of licenses under or with respect to, or the assignment of rights in, any or all of the Assigned IP; provided that “Ramot Receipts” does not include payments specifically committed to cover future costs to be actually incurred by Ramot (including customary overhead, not exceeding 30%) in accordance with detailed budgets and research workplans included in, sponsored research or research and license agreements relating to the Assigned IP.

(c) “Ramot Expenses” shall mean all out-of-pocket expenses and professional fees, including legal fees, patent agent fees and fees paid to other experts, incurred by Ramot in connection with: (a) the filing, prosecution, maintenance or enforcement of any patent application or patent covering or included in the Assigned IP; or (b) the preparation, negotiation, execution and/or enforcement of any agreement relating to the sale, lease, license or assignment of any or all of or under the Assigned IP.

13.5. Survival. The parties’ respective rights, obligations and duties under Sections 8.5, 9, 11, 12, 13, 14.2 and 14.4, as well as any rights, obligations and duties which by their nature extend beyond the expiration or termination of this Agreement, shall survive any expiration or termination of this Agreement.

14. Miscellaneous.

14.1. Entire Agreement. This Agreement is the sole agreement with respect to the subject matter hereof and except as expressly set forth herein, supersedes all other agreements and understandings between the parties with respect to the same, including the Original Agreement and the First Amended and Restated Research and License Agreement.

14.2. Publicity Restrictions. Subject to Section 9.1.2, Licensee and its Affiliates and Sublicensees shall not use the name of Ramot, TAU, either Principal Investigator or any of their trustees, officers, faculty, researchers, students, employees, or agents, or any adaptation of such names, in any promotional material or other public announcement or disclosure relating to the subject matter of this Agreement without the prior written consent of Ramot. If Ramot does not consent to such use it shall notify Licensee within one Israeli business day of a request for approval and provide its required changes to the proposed material. If such notice is not provided within the designated time period, Ramot will be deemed to have given its approval.

14.3. Notices. Unless otherwise specifically provided, all notices required or permitted by this Agreement shall be in writing and may be delivered personally, or may be sent by facsimile or certified mail, return receipt requested, to the following addresses, unless the parties are subsequently notified of any change of address in accordance with this Section 14.3:

If to Licensee:	Brainstorm Cell Therapeutics, Inc. 1350 Avenue of the Americas New York, NY 10019 USA

	With a copy to: Tulchinsky, Stern & Co, Law Offices Abba Hillel 14 Beit Oz Ramat Gan 52506

If to Ramot:

Ramot at Tel Aviv University Ltd.

P.O. Box 39296

Tel Aviv 61392

Israel

Attn: CEO

Fax: 972-3-640-5064

Any notice shall be deemed to have been received as follows: (i) by personal delivery, upon receipt; (ii) by facsimile, one business day after transmission or dispatch; (iii) by airmail, seven (7) business days after delivery to the postal authorities by the party serving notice. If notice is sent by facsimile, a confirming copy of the same shall be sent by mail to the same address.

14.4. Governing Law and Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of Israel, without regard to the application of principles of conflicts of law, except for matters of patent law, which, other than for matters of inventorship on patents, shall be governed by the patent laws of the relevant country of the patent. The parties hereby consent to personal jurisdiction in Israel and agree that the competent court in Tel Aviv, Israel shall have sole jurisdiction over any and all matters arising from this Agreement, except that Ramot may bring suit against the Licensee in any other jurisdiction outside Israel in which the Licensee has assets or a place of business.

14.5. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties and their respective legal representatives, successors and permitted assigns.

14.6. Headings. Section and subsection headings are inserted for convenience of reference only and do not form a part of this Agreement.

14.7. Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original.

14.8. Amendment; Waiver. This Agreement may be amended, modified, superseded or canceled, and any of the terms may be waived, only by a written instrument executed by each party or, in the case of waiver, by the party waiving compliance. The delay or failure of any party at any time or times to require performance of any provisions hereof shall in no manner affect the rights at a later time to enforce the same. No waiver by either party of any condition or of the breach of any term contained in this Agreement, whether by conduct, or otherwise, in any one or more instances, shall be deemed to be, or considered as, a further or continuing waiver of any such condition or of the breach of such term or any other term of this Agreement.

14.9. No Agency or Partnership. Nothing contained in this Agreement shall give any party the right to bind another, or be deemed to constitute either parties as agents for each other or as partners with each other or any third party.

14.10. Assignment and Successors. This Agreement may not be assigned by either party without the consent of the other, which consent shall not be unreasonably withheld.

14.11. Force Majeure. Neither party will be responsible for delays resulting from causes beyond the reasonable control of such party, including without limitation fire, explosion, flood, war, strike, or riot, provided that the nonperforming party uses commercially reasonable efforts to avoid or remove such causes of nonperformance and continues performance under this Agreement with reasonable dispatch whenever such causes are removed.

14.12. Interpretation. The parties hereto acknowledge and agree that: (i) each Party and its counsel reviewed and negotiated the terms and provisions of this Agreement and have contributed to its revision; (ii) the rule of construction to the effect that any ambiguities are resolved against the drafting party shall not be employed in the interpretation of this Agreement; and (iii) the terms and provisions of this Agreement shall be construed fairly as to both parties hereto and not in favor of or against either party, regardless of which party was generally responsible for the preparation of this Agreement.

14.13. Severability. If any provision of this Agreement is or becomes invalid or is ruled invalid by any court of competent jurisdiction or is deemed unenforceable, it is the intention of the parties that the remainder of this Agreement shall not be affected.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives as of the date first written above.

Ramot at Tel Aviv University Ltd.

By: /s/ Yehuda Niv

Name: Yehuda Niv

Title: CEO

Brainstorm Cell Therapeutics, Inc.

By: /s/ Dudy Stolick

Name: Dudy Stolick

Title: CFO

By: /s/ Ze'ev Weinfeld, Ph.D.

Executive Vice President

Business Development

We, the undersigned, hereby confirm that we have read the Agreement, that its contents are acceptable to us and that we will act in accordance with its terms.

____________________________

Professor Eldad Melamed

________________________

Dr. Daniel Offen

Exhibit 10.5

SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

This AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT is made as of the 1 ^st day of August, 2007, by and among Brainstorm Cell Therapeutics Inc., a Delaware corporation (the “ Company ”), and Ramot at Tel Aviv University Ltd. (" Ramot ").

RECITALS

WHEREAS, Ramot is a holder of warrants to purchase 6,363,849 shares of Common Stock of the Company that were issued to it in connection with the Company’s entrance into a License Agreement;

WHEREAS, the Company and Ramot (as well as other warrant holders) entered into a Registration Rights Agreement, dated July 18, 2005, setting forth such registration rights and related matters (the “ Original Agreement ”); and

WHEREAS, the Company and Ramot (as well as other warrant holders) made certain amendments to the Original Agreement within the framework of an Amended and Restated Registration Agreement dated March 31, 2006 (" Second Agreement "), which amended and replaced the Original Agreement;

WHEREAS, the Company and Ramot wish to make certain amendments to Ramot's rights pursuant to the Second Agreement, and in order to give effect to such amendments, the Company and Ramot agree to amend and replace the Second Agreement (with respect to Ramot only) with this Agreement, such that the terms of this Agreement shall be deemed to apply as of July 18, 2005;

NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:

1. Registration Rights . The Company covenants and agrees as follows:

1.1 Definitions . For purposes of this Agreement:

(i) The term “ Common Stock ” means (except where the context otherwise indicates) the Common Stock of the Company, par value $0.00005 per share.

(ii) The term " Registrable Securities " means the Warrants and the Common Stock issuable upon exercise of the Warrants, provided that such securities shall cease to constitute “Registrable Securities” for purposes of this Agreement on the earlier of (x) the expiration date of the Warrants or (y) such earlier time as when (A) a registration statement with respect to the resale of such securities shall have been declared effective by the Commission and such securities shall have been sold pursuant thereto, (B) such securities shall have been sold in satisfaction of all applicable resale provisions of Rule 144 under the Securities Act, (C) all of Ramot's Registrable Securities may be resold pursuant to Rule 144(k) under the Securities Act (or any successor provision) or all of Ramot's Registrable Securities may be resold in a single ninety (90) day period under Rule 144(e)(1)(i) of the Securities Act, or (D) such securities cease to be issued and outstanding for any reason.

(iii) The term “ Commission ” shall mean the Securities and Exchange Commission.

(iv) The term “ Person ” shall mean an individual, a corporation, a partnership, a joint venture, a trust, an unincorporated organization, a limited liability company or partnership, a government and any agency or political subdivision thereof.

(v) The term “ Securities Act ” means the Securities Act of 1933, as amended.

(vi) The term “ Warrants ” shall mean the warrants to purchase an aggregate of 6,363,849 shares of Common Stock of the Company (the “ Original Warrants ”) and all warrants issued upon transfer, division or combination of, or in substitution for, the Original Warrant, or such warrants issued in respect thereof.

(vii) The term “ 1934 Act ” means the Securities Exchange Act of 1934, as amended.

1.2 Piggyback Rights on Company and/or ACCBT Corp. Registration . If (but without any obligation to do so) the Company and/or ACCBT Corp. proposes to register for sale for its own account or for the account of any shareholders of the Company other than Ramot any Common Stock under the Securities Act in connection with the public offering of such Common Stock (other than a registration relating solely to the sale of securities to participants in a Company stock plan, a registration relating to a corporate reorganization or other transaction under Rule 145 of the Securities Act, a registration on any form that does not permit secondary sales or include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities, or a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered), the Company shall, at such time, promptly give Ramot written notice of such registration. Upon the written request of Ramot, given within twenty (20) days after mailing of such notice by the Company, the Company shall, subject to the provisions of this Section 1, use all reasonable efforts to cause all of the Registrable Securities that Ramot has requested to be registered to be included in such registration under the Securities Act. In furtherance of the foregoing, the Company shall

(i) prepare and file with the Commission such amendments and post-effective amendments to the registration statement in which the Registrable Securities are to be included (the " Registration Statement ") as may be necessary to keep such Registration Statement effective; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act; and comply with the provisions of the Securities Act and the applicable rules with respect to the disposition of all securities covered by the Registration Statement during the applicable period in accordance with the intended method or methods of distribution set forth in such Registration Statement or supplement to the Prospectus;

(ii) upon the occurrence of any event that would cause the Registration Statement or the Prospectus (i) to contain an untrue statement of material fact or omit to state any material fact necessary to make the statements therein not misleading or (ii) not to be effective and usable for the resale of all or part of the Registrable Securities by Ramot, the Company shall promptly file an appropriate amendment to the Registration Statement curing such defect, and, if Commission review is required, use its best efforts to cause such amendment to be declared effective as soon as practicable;

(iii) advise Ramot promptly (i) when any Prospectus supplement or post-effective amendment has been filed, and, with respect to any successor Registration Statement or any post-effective amendment thereto, when the same has become effective, (ii) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Securities Act or of the suspension by any state securities commission of the qualification of the Registrable Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, (iv) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration Statement in order to make the statements therein not misleading, or that requires the making of any additions to or changes in the Prospectus in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Registrable Securities under state securities or "blue sky" laws, the Company shall use its best efforts to obtain the withdrawal or lifting of such order at the earliest possible time;

(iv) use its best efforts to register or qualify or cooperate with Ramot and its respective counsel in connection with the registration or qualification of the Registrable Securities under the securities or "blue sky" laws of any such jurisdictions in the United States as Ramot reasonably requests in writing, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions;

(v) furnish to Ramot copies of any Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus;

(vi) if requested by Ramot, promptly include in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as Ramot may reasonably request to have included therein, including, without limitation, information relating to the "Plan of Distribution" of the Registrable Securities; and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Company is notified of the matters to be included in such Prospectus supplement or post-effective amendment;

(vii) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering;

(viii) use its reasonable best efforts to comply with all applicable rules and regulations of the Commission; and

(ix) provide promptly to Ramot, upon request, each document filed with the Commission pursuant to the requirements of Section 13 or Section 15(d) of the Exchange Act.

(x) Right to Terminate Registration . The Company and ACCBT Corp., as the case may be, shall each have the right to terminate or withdraw any registration initiated by it under this Section 1.2 prior to the effectiveness of such registration whether or not Ramot has elected to include securities in such registration. The expenses of such withdrawn registration shall be borne by the Company in accordance with Section 1.5 hereof.

(xi) Underwriting Requirements . In connection with any offering involving an underwriting of shares of the Common Stock, the Company shall not be required under this Section 1.2 to include Ramot’s shares of Common Stock in such underwriting unless Ramot accepts the terms of the underwriting as agreed upon between the Company and the underwriters selected by the Company and enters into an underwriting agreement in customary form with such underwriter or underwriters, and then only in such quantity as the managing underwriter determine in its sole discretion will not jeopardize the success of the offering by the Company as provided in Section 1.3 below.

1.3 Deferral / Cutback Provisions .

(i) Notwithstanding any other provision of Section 1.2 relating to a registration by the Company for its own account, if the managing underwriter of the Company’s securities being offered in a public offering pursuant to such registration statement advises the Company that the amount to be sold by Persons other than the Company (including without limitation Ramot and ACCBT Corp) (collectively, “Selling Stockholders”) is greater than the amount that can be offered without adversely affecting the offering of Common Stock by the Company, the Company may, subject to the next following sentence, reduce the amount offered for the accounts of Selling Stockholders (including Ramot and ACCBT Corp., if included in the Selling Stockholders) to a number deemed advisable by such managing underwriter. The number of shares of Common Stock held by Selling Stockholders to be excluded shall be determined in the following order of priority: (1) securities held by any Persons not having any such contractual, incidental “piggyback” registration rights, (2) securities held by any Persons having contractual, incidental “piggyback” registration rights pursuant to any agreement providing similar “piggyback” registration rights to this Agreement, (3) securities held by any Persons having contractual, incidental “piggyback” registration rights pursuant to an agreement providing similar “piggyback” registration rights that expressly provides that the number of such shares of Common Stock proposed to be included in a Company-initiated registered offering shall not be reduced until after any shares of Common Stock held pursuant to contractual rights that do not expressly provide for such priority under such circumstances have been excluded from such underwriting, and (4) a portion of the Registrable Securities and securities held by ACCBT Corp. sought to be included by the holders thereof as determined pro rata based upon the aggregate number of securities proposed to be sold by such holders.

(ii) Notwithstanding any other provision of Section 1.2 relating to a registration by the Company of the Company's securities held by ACCBT Corp., if the managing underwriter of such securities being offered in a public offering pursuant to such registration statement advises ACCBT Corp that the amount to be sold by Ramot pursuant to such registration is greater than the amount that can be offered without adversely affecting the offering of Common Stock of the Company, the Company may reduce the amount offered for the accounts of Ramot and ACCBT Corp to a number deemed advisable by such managing underwriter pro rata to the aggregate number of securities proposed to be sold by ACCBT Corp and Ramot.

(iii) The Company shall not be required to effect a registration or take any actions pursuant to this Section 1 in any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, unless the Company is already subject to service in such jurisdiction and except as may be required under the Securities Act.

1.4 Information from Ramot . It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 1 with respect to the Registrable Securities of Ramot that Ramot shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be required to effect the registration of Ramot’s Registrable Securities. Failure on the part of Ramot to furnish such information to the Company within such reasonable time period as the Company shall specify in its notice to Ramot shall relieve the Company of its obligations to include any Registrable Securities held by Ramot in the registration with respect to which such notice was given.

1.5 Expenses of Registration . The Company shall bear all fees and expenses incurred in connection with registrations, filings or qualifications pursuant to this Agreement including all registration, filing and qualification fees, printers’ and accounting fees, fees and disbursements of counsel for the Company, but excluding (i) underwriting discounts and commissions and (ii) fees and disbursements of any counsel for Ramot, which shall be borne pro rata by Ramot based upon the number of Registrable Securities that are being registered.

1.6 Delay of Registration . Ramot shall not have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 1.

1.7 Indemnification . In the event any Registrable Securities are included in a registration statement under this Section 1:

(i) To the extent permitted by law, the Company will indemnify and hold harmless Ramot, the partners or officers, directors and shareholders of Ramot, legal counsel and accountants for Ramot, any underwriter (as defined in the Securities Act) for Ramot and each person, if any, who controls Ramot or underwriter within the meaning of the Securities Act or the 1934 Act, against any losses, claims, damages or liabilities (joint or several) to which they may become subject under the Securities Act, the 1934 Act or any state securities laws, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a “ Violation ”): (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the 1934 Act, any state securities laws or any rule or regulation promulgated under the Securities Act, the 1934 Act or any state securities laws; and the Company will reimburse Ramot, underwriter or controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this subsection l.7(i) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation that occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by Ramot, underwriter or controlling person; provided further, however, that the foregoing indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of Ramot or underwriter, or any person controlling Ramot or underwriter, from whom the person asserting any such losses, claims, damages or liabilities purchased shares in the offering, if a copy of the prospectus (as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of Ramot or underwriter to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the shares to such person, and if the prospectus (as so amended or supplemented) would have cured the defect giving rise to such loss, claim, damage or liability.

(ii) To the extent permitted by law, Ramot will indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the registration statement, each person, if any, who controls the Company within the meaning of the Securities Act, legal counsel and accountants for the Company, any underwriter, against any losses, claims, damages or liabilities (joint or several) to which any of the foregoing persons may become subject, under the Securities Act, the 1934 Act or any state securities laws, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by Ramot expressly for use in connection with such registration; and Ramot will reimburse any person intended to be indemnified pursuant to this subsection l.7(ii), for any legal or other expenses reasonably incurred by such person in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this subsection l.7(ii) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of Ramot (which consent shall not be unreasonably withheld), provided that in no event shall any indemnity under this subsection l.7(ii) exceed the gross proceeds from the offering received by Ramot.

(iii) Promptly after receipt by an indemnified party under this Section 1.7 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 1.7, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 1.7, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 1.7.

(iv) If the indemnification provided for in this Section 1.7 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission.

(v) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

(vi) The obligations of the Company Ramot under this Section 1.7 shall survive the completion of any offering of Registrable Securities in a registration statement under this Section 1, and otherwise.

1.8 Assignment of Registration Rights . The rights to cause the Company to register Registrable Securities pursuant to this Section 1 may be assigned (but only with all related obligations) and shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any shares of Registrable Securities), provided: (a) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned; (b) such transferee or assignee agrees in writing to be bound by and subject to the terms and conditions of this Agreement; and (c) such assignment shall be effective only if immediately following such transfer the further disposition of such securities by the transferee or assignee is restricted under the Securities Act.

1.9 No Limitations on Subsequent Registration Rights . Ramot hereby acknowledges that nothing herein shall restrict the Company in any way from entering into any agreement with any holder or prospective holder of any securities of the Company that would allow such holder or prospective holder (a) to include such securities in any registration filed under Section 1 hereof or (b) to demand registration of their securities.

1.10 “ Market Stand-Off” Agreement . Ramot hereby agrees that it will not, without the prior written consent of the underwriter, during the period commencing on the date of the final prospectus relating to a Company public offering and ending on the date specified by the Company and the managing underwriter (such period not to exceed ninety (90) days) (i) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock (whether such shares or any such securities are then owned by Ramot or are thereafter acquired) other than Registrable Securities that Ramot is entitled to have included in such public offering pursuant to Section 1.3, or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock other than Registrable Securities that Ramot is entitled to have included in such public offering pursuant to Section 1.3, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing undertaking shall only apply if identical restrictions are imposed on ACCBT Corp. The underwriters in connection with any public offering by the Company are intended third party beneficiaries of this Section 1.10 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto.

In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the Registrable Securities of Ramot (and the shares or securities of every other person subject to the foregoing restriction) until the end of such period.

1.11 Termination of Registration Rights . Ramot shall not be entitled to exercise any right provided for in this Section 1 with respect to Registrable Securities held by Ramot after the earlier of (A) a registration statement with respect to the resale of such Registrable Securities shall have been declared effective by the Commission and such securities shall have been sold pursuant thereto, (B) such Registrable Securities shall have been sold in satisfaction of all applicable resale provisions of Rule 144 under the Securities Act, (C) Ramot’s Registrable Securities may be resold pursuant to Rule 144(k) under the Securities Act (or any successor provision) or all of Ramot's Registrable Securities may be resold in a single ninety (90) day period under Rule 144(e)(1)(i) of the Securities Act, or (D) such Registrable Securities cease to be issued and outstanding for any reason.

2. Miscellaneous .

2.1 Successors and Assigns . Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any shares of Registrable Securities). Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

2.2 Governing Law . This Agreement shall be governed by and construed under the laws of the State of New York, without regard to the conflict of law principles of such state.

2.3 Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

2.4 Titles and Subtitles . The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

2.5 Notices . Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified or upon delivery by confirmed facsimile transmission, nationally recognized overnight courier service, or five days after the same shall have been deposited with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified at the address indicated for such party on the signature page hereof, or at such other address as such party may designate by ten (10) days’ advance written notice to the other parties.

2.6 Entire Agreement: Amendments and Waivers . This Agreement constitutes the full and entire understanding and agreement among the parties with regard to the subject matter hereof and thereof and replaces any previous agreements regarding the subject matters hereof, including but not limited to the Second Agreement. For the avoidance of doubt the Second Agreement shall cease to be in effect as between the Company and Ramot, but shall remain in effect as between the Company and the additional warrant holders specified therein. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the parties. Any amendment or waiver effected in accordance with this paragraph shall be binding upon the parties and each future holder of the Registrable Securities.

2.7 Severability . If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.


	COMPANY

	By:	/s/ David Stolick
		David Stolick
		Title: CFO


	ACCBT Corp. for purposes of Sections 1.3(i) and 1.3(ii)

	By:	/s/ Chaim Lebovits
		Chaim Lebovits
		Title: President

Ramot at Tel Aviv University Ltd.

/s/ Yehuda Niv
Yehuda Niv
Title: CEO


/s/ Ze’ev Weinfield Ph D.
Ze’ev Weinfield Ph D.
Title: Executive Vice President Business Development

Exhibit 10.6

August 1, 2007

Yehuda Niv, CEO

Ramot at Tel Aviv University Ltd. (" Ramot ")

Tel Aviv University, Ramat Aviv

Tel Aviv 61392

ISRAEL

Dear Mr. Niv,

Re: Waiver and Release

I write to confirm in writing our oral agreement that Brainstorm Cell Therapeutics Inc. (the " Company ") will pay its past due and future payment obligations under Exhibit 2.2.1 of the Research and License Agreement between Ramot and the Company dated March 30, 2006 to Ramot pursuant to the schedule attached hereto, and that Ramot waives and releases the Company and its subsidiary and their respective agents, employees, officers, directors and shareholders from and against all actions, causes of action, suits, debts, dues, sums of money, accounts, controversies, trespasses, damages, judgments, claims, and demands ("Claims"), whenever they arose, asserted or unasserted, which Ramot ever had or may have had prior to the date hereof, with the sole exception of Claims whose factual basis was not known or could not have reasonably been known to Ramot at the date hereof. The attached schedule replaces the previous payment schedule, which was attached to the Research and License Agreement between Ramot and the Company dated March 30, 2006 as Exhibit 2.2.1 and any waivers or amendments thereto or restatements thereof prior to and including the date hereof.

Notwithstanding the foregoing, in the event that the Company fails to make a payment to Ramot on the relevant date specified in the schedule attached hereto, and the Company fails to cure such default within 7 business days following notice of such failure by Ramot to the Company, all claims of Ramot toward the Company which would otherwise be waived or released under this Waiver and Release shall be reinstated.

Please accede to and confirm the above with your signature in the space provided below.


	Best regards,

		/s/ David Stolick
		David Stolick


/s/ Yehuda Niv
Ramot at Tel Aviv University Ltd. Name: Yehuda Niv Title: CEO

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO EXCHANGE ACT RULE 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

I, Chaim Lebovits, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Brainstorm Cell Therapeutics Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4. The small business issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and

5. The small business issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

August 20, 2007	/s/ Chaim Lebovits
	Name: Chaim Lebovits Title: President (Principal Executive Officer)

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO EXCHANGE ACT RULE 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

I, David Stolick, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Brainstorm Cell Therapeutics Inc.;

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

August 20, 2007	/s/ David Stolick
	Name: David Stolick Title: Chief Financial Officer (Principal Financial Officer)

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

In connection with the accompanying Quarterly Report on Form 10-QSB of Brainstorm Cell Therapeutics Inc. for the period ended June 30, 2007, the undersigned hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that:

(1) such Quarterly Report on Form 10-QSB for the period ended June 30, 2007 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in such Quarterly Report on Form 10-QSB for the period ended June 30, 2007 fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

August 20, 2007	/s/ Chaim Lebovits
	Name: Chaim Lebovits Title: President (Principal Executive Officer)

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(1) such Quarterly Report on Form 10-QSB for the period ended June 30, 2007 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

August 20, 2007	/s/ David Stolick
	Name: David Stolick Title: Chief Financial Officer (Principal Financial Officer)