BRAINSTORM CELL THERAPEUTICS INC. (Form: 10-Q, Received: 10/17/2017 09:03:59)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission File Number 001-36641

BRAINSTORM CELL THERAPEUTICS INC.

(Exact name of registrant as specified in its charter)

Delaware	20-7273918
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

3 University Plaza Drive, Suite 320
Hackensack, NJ	07601
(Address of principal executive offices)	(Zip Code)

(201) 488-0460

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer ¨

Non-accelerated filer ¨ (Do not check if a smaller reporting company)	Smaller reporting company x

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of October 13, 2017, the number of shares outstanding of the registrant’s Common Stock, $0.00005 par value per share, was 18,842,726.

TABLE OF CONTENTS

	Page Number
PART I

Item 1. Financial Statements	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3. Quantitative and Qualitative Disclosures About Market Risk	30
Item 4. Controls and Procedures	30

PART II	31

Item 1. Legal Proceedings	31
Item 1A. Risk Factors	31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 5. Other Information	31
Item 6. Exhibits	31

SIGNATURES	31

EXHIBIT INDEX	32

Item 1. Financial Statements

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2017

U.S. DOLLARS IN THOUSANDS

(Except share data and exercise prices)

(UNAUDITED)

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2017

U.S. DOLLARS IN THOUSANDS

(Except share data and exercise prices)

(UNAUDITED)

INDEX

	Page

Interim Condensed Consolidated Balance Sheets		5

Interim Condensed Consolidated Statements of Operations		6

Interim Condensed Statements of Changes in Stockholders' Equity		7-8

Interim Condensed Consolidated Statements of Cash Flows		9-10

Notes to Interim Condensed Consolidated Financial Statements		11-23

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

(Except share data)

	September 30,			December 31,
	2017			2016
	U.S. $ in thousands
	Unaudited			Audited

ASSETS

Current Assets:
Cash and cash equivalents	$	2,464		$	547
Short-term deposit (Note 4)		8,083			9,443
Account receivable		318			306
Prepaid expenses and other current assets		86			148
Total current assets		10,951			10,444

Long-Term Assets:
Prepaid expenses and other long-term assets		26			25
Property and Equipment, Net		358			297
Total Long-Term Assets		384			322

Total assets	$	11,335		$	10,766

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Accounts payables	$	275		$	345
Accrued expenses		204			152
Deferred grant income (Note 5)		5,250			-
Other accounts payable		411			367
Total current liabilities		6,140			864

Stockholders' Equity:
Stock capital: (Note 6)		11			11
Common stock of $0.00005 par value - Authorized: 100,000,000 shares at September 30, 2017 and December 31, 2016 respectively; Issued and outstanding: 18,842,726 and 18,687,987 shares at September 30, 2017 and December 31, 2016 respectively.
Additional paid-in-capital		85,535			85,014
Accumulated deficit		(80,351	)		(75,123	)
Total stockholders' equity		5,195			9,902

Total liabilities and stockholders' equity	$	11,335		$	10,766

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

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

U.S. dollars in thousands

(Except share data)

	Nine months ended						Three months ended
	September 30,						September 30,
	2017			2016			2017			2016
	Unaudited						Unaudited

Operating expenses:

Research and development, net	$	2,544		$	1,927		$	1,168		$	790
General and administrative		2,693			2,506			1,224			848

Operating loss		(5,237	)		(4,433	)		(2,392	)		(1,638	)

Financial expense (income), net		(9	)		(75	)		11			(32	)

Net loss	$	(5,228	)	$	(4,358	)	$	(2,403	)	$	(1,606	)

Basic and diluted net profit (loss) per share	$	(0.28	)	$	(0.23	)	$	(0.13	)	$	(0.09	)

Weighted average number of shares outstanding used in computing basic and diluted net loss per share		18,737,307			18,654,826			18,783,997			18,656,615

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

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

INTERIM CONDENSED STATEMENTS OF CHANGES IN EQUITY (AUDITED)

U.S. dollars in thousands

(Except share data)

	Common stock				Additional paid-in		Accumulated			Total stockholders'
	Number		Amount		capital		deficit			equity

Balance as of January 1, 2016		18,643,288	$	11	$	84,258	$	(70,141	)	$	14,128

Stock-based compensation related to warrants and stock granted to service providers		36,033		(*)		121		-			121
Stock-based compensation related to stock and options granted to directors and employees		8,666		-		635		-			635
Net loss		-		-		-		(4,982	)		(4,982	)

Balance as of December 31, 2016		18,687,987	$	11	$	85,014	$	(75,123	)	$	9,902

* Represents an amount less than $1.

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

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

INTERIM CONDENSED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)

U.S. dollars in thousands

(Except share data)

	Common stock				Additional paid-in		Accumulated			Total stockholders'
	Number		Amount		capital		deficit			equity

Balance as of January 1, 2017		18,687,987	$	11	$	85,014	$	(75,123	)	$	9,902

Stock-based compensation related to stock and options granted to directors and employees		105,301		(*)		398		-			398
Stock-based compensation related to warrants and stock granted to service providers		4,327		(*)		18					18
Exercise of options		11,777		(*)		30					30
Exercise of warrants		33,334		(*)		75					75
Net loss		-		-		-		(5,228	)		(5,228	)

Balance as of September 30, 2017		18,842,726	$	11	$	85,535	$	(80,351	)	$	5,195

* Represents an amount less than $1.

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

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

U.S. dollars in thousands

	Nine months ended						Three months ended
	September 30,						September 30,
	2017			2016			2017			2016

Cash flows from operating activities:

Net loss	$	(5,228	)	$	(4,358	)	$	(2,403	)	$	(1,606	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		57			55			23			17
Expenses related to shares and options granted to service providers		18			121			18			90
Amortization of deferred stock-based compensation related to options granted to employees and directors		398			636			215			171
Decrease (increase) in accounts receivable and prepaid expenses		50			641			561			1,140
Increase (decrease) in trade payables		(70	)		(817	)		48			(3	)
Deferred grant income		5,250			-			5,250			-
Increase (decrease) in other accounts payable and accrued expenses		96			(940	)		131			(84	)
Total net cash provided by (used in) operating activities	$	571		$	(4,662	)	$	3,843		$	(275	)

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

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

U.S. dollars in thousands

	Nine months ended						Three months ended
	September 30,						September 30,
	2017			2016			2017			2016

Cash flows from investing activities:
Purchase of property and equipment		(118	)		(96	)		(86	)		(11	)
Changes in short-term deposit		1,360			5,289			(7,150	)		299
Investment in lease deposit		(1	)		(4	)		(2	)		(2	)

Total net cash provided by (used in) investing activities	$	1,241		$	5,189		$	(7,238	)	$	286

Cash flows from financing activities:
Proceeds from exercise of options		105			-			75			-

Total net cash provided by financing activities	$	105		$	-		$	75		$	-

Increase (decrease) in cash and cash equivalents		1,917			527			(3,320	)		11
Cash and cash equivalents at the beginning of the period	$	547		$	428			5,784			944

Cash and cash equivalents at end of the period	$	2,464		$	955		$	2,464		$	955

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

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

U.S. dollars in thousands

(Except share data and exercise prices)

Notes to the Interim Condensed Consolidated Financial Statements

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. The Company currently holds two wholly owned subsidiaries; Brainstorm Cell Therapeutics Ltd. ("BCT"), an Israeli Company which currently conducts all of the research and development activities of the Company, and Brainstorm Cell Therapeutics UK Ltd. (“Brainstorm UK”). Brainstorm UK acts on behalf of the parent Company in the EU. Brainstorm UK is currently inactive. The Common Stock is publicly traded on the NASDAQ Capital Market under the symbol “BCLI”.

The Company, through BCT, holds rights to commercialize certain stem cell technology developed by Ramot of Tel Aviv University Ltd. ("Ramot") (see Note 3). Using this technology the Company has been developing novel adult stem cell therapies for debilitating neurodegenerative disorders such as Amytrophic Lateral Scelorosis (ALS, also known as Lou Gherig Disease), Multiple Sclerosis (MS) and Parkinson’s disease. The Company developed a proprietary process, called NurOwn, for the propagation of Mesenchymal Stem Cells and their differentiation into neurotrophic factor secreting cells. These cells are then transplanted at or near the site of damage, offering the hope of more effectively treating neurodegenerative diseases. The process is currently autologous, or self-transplanted.

NurOwn is in clinical development for the treatment of ALS. The Company has completed two single dose clinical trials of NurOwn in Israel, a Phase 1/2 trial with 12 patients and a Phase 2a trial with additional 12 patients. In July 2016 the Company announced the results of its Phase 2 trial which was conducted in three major medical centers in the US. This single dose trial included 48 patients randomized in a 3:1 ratio to receive NuOwn or placebo. Future development of NurOwn for ALS will require additional clinical trials typically required to provide an adequate basis for regulatory approval and product labeling. These additional trials will include the administration of repeated doses to ALS patients enrolled in these trials.

On September 15, 2014 the Company completed a reverse stock split of the Company’s shares of Common Stock by a ratio 1-for-15. The Company adjusted all ordinary shares, options, warrants, per share data and exercise prices included in these financial statements for all periods presented to reflect the reverse stock split. On August 26, 2015 the shareholders of the Company approved a reduction of the number of authorized shares of Common Stock of the Company from 800,000,000 to 100,000,000.

GOING CONCERN:

To date the Company has not generated revenues from its activities and has incurred substantial operating losses. Management expects the Company to continue to generate substantial operating losses and to continue to fund its operations primarily through utilization of its current financial resources and through additional raises of capital.

Such conditions raise substantial doubts about the Company's ability to continue as a going concern. Management’s plan includes raising funds from outside potential investors. However, there is no assurance such funding will be available to the Company or that it will be obtained on terms favorable to the Company or will provide the Company with sufficient funds to meet its objectives. 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 SUBSIDIARIES

U.S. dollars in thousands

(Except share data and exercise prices)

Notes to the Interim Condensed Consolidated Financial Statements

NOTE 2 -

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Unaudited Interim Financial Statements

The accompanying unaudited interim condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission Regulation S-X. 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 considered necessary for a fair presentation have been included (consisting only of normal recurring adjustments except as otherwise discussed). For further information, reference is made to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

Operating results for the three months ended September 30, 2017, are not necessarily indicative of the results that may be expected for the year ended December 31, 2017.

Significant Accounting Policies

Non royalty bearing Grants from the California Institute for Regenerative Medicine (CIRM) for funding research and development projects are recognized at the time the Company is entitled to such grants, on the basis of the costs incurred and applied as a deduction from research and development expenses.

The other significant accounting policies followed in the preparation of these unaudited interim condensed consolidated financial statements are identical to those applied in the preparation of the latest annual financial statements.

Recent Accounting Standards

In May 2014, the Financial Accounting Standards Board issued a new standard to achieve a consistent application of revenue recognition within the U.S., resulting in a single revenue model to be applied by reporting companies under U.S. generally accepted accounting principles. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new standard is effective for us beginning in the first quarter of 2018; early adoption is prohibited. The new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. As the Company has not incurred revenues to date, it is unable to determine to expected impact of the new standard on its consolidated financial statements.

In January 2016, the FASB issued an amended standard requiring change to recognition and measurement of certain financial assets and liabilities. The standard primarily affects equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. This standard is effective beginning in the first quarter of 2018. Certain provisions allow for early adoption. The Company do not expect that the adoption of this standard will have a significant impact on the financial position or results of operations.

In February 2016, the FASB issued a new lease accounting standard requiring that the Company recognize lease assets and liabilities on the balance sheet. This standard is effective beginning in the first quarter of 2019; early adoption is permitted. The Company has not yet determined the impact of the new standard on its consolidated financial statements.

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

U.S. dollars in thousands

(Except share data and exercise prices)

Notes to the Interim Condensed Consolidated Financial Statements

NOTE 2 -

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Cont.):

Recent Accounting Standards (Cont.):

In June 2016, the FASB issued a new standard requiring measurement and recognition of expected credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. This standard is effective for us in the first quarter of 2020; early adoption is permitted beginning in the first quarter of 2019 and we are evaluating whether we will early adopt. It is required to be applied on a modified-retrospective approach with certain elements being adopted prospectively. The Company does not expect that the adoption of this standard will have a significant impact on the financial position or results of operations.

In May 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-09, “Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting,” which clarifies when a change to terms or conditions of a share-based payment award must be accounted for as a modification. The new guidance requires modification accounting if the vesting condition, fair value or the award classification is not the same both before and after a change to the terms and conditions of the award. The new guidance is effective on a prospective basis beginning on January 1, 2018 and early adoption is permitted. The Company does not expect the adoption of this standard to have an impact on its consolidated financial statements.

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

NOTE 3 -

RESEARCH AND LICENSE AGREEMENT

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

The Company is to pay Ramot royalties on Net Sales on a Licensed Product by Licensed Product and jurisdiction by jurisdiction basis as follows:

So long as the making, producing, manufacturing, using, marketing, selling, importing or exporting of such Licensed Product is covered by a Valid Claim or is covered by Orphan Drug Status in such jurisdiction – 5% of all Net Sales.

In the event the making, producing, manufacturing, using, marketing, selling, importing or exporting of such Licensed Product is not covered by a Valid Claim and not covered by Orphan Drug status in such jurisdiction – 3% of all Net Sales until the expiration of 15 years from the date of the First Commercial Sale of such Licensed Product in such jurisdiction.

NOTE 4 -

SHORT TERM INVESTMENTS

Short term investments on September 30, 2017 and December 31, 2016 include bank deposits bearing annual interest rates varying from 0.15% to 1.90%, with maturities of up to 10 and 5 months as of September 30, 2017 and December 31, 2016.

NOTE 5 -

DEFERRED GRANT INCOME

In July 2017 the Company received an award in the amount of $15,912 from the California Institute of Regenerative Medicine (CIRM) to support the pivotal Phase 3 study of NurOwn®, for the treatment of amyotrophic lateral sclerosis (ALS). The award provided for a $5,250 project initial payment, which was received during the third quarter of 2017, and up to $15,912 in future milestone payments (inclusive of the project initial payment). The award does not bear a royalty payment commitment nor is the award otherwise refundable.

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

U.S. dollars in thousands

(Except share data and exercise prices)

Notes to the Interim Condensed Consolidated Financial Statements

NOTE 6 -

STOCK CAPITAL

The rights of Common Stock are as follows:

Holders of Common Stock have 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 is publicly traded on the NASDAQ Capital Market under the symbol BCLI.

Issuance of shares, warrants and options:

Private placements and public offering:

In July 2007, the Company entered into an investment agreement, that was amended in August 2009 with ACCBT Corp. a company under the control of the Company’s current Chief Executive Officer, according to which for an aggregate consideration of approximately $5 million the Company issued 2,777,777 shares of Common Stock and a warrant to purchase 672,222 shares of Common Stock at an exercise price of $3 per share and a warrant to purchase 1,344,444 shares of common stock at an exercise price of $4.35 per share. The warrants are exercisable, through November 5, 2017.

Our current Chief Executive Officer has served as the President of the Company since July 2007 and in addition has as Chief Executive Officer from August 2013 until June 2014. On September 28, 2015 he was reappointed and currently serves as Chief Executive Officer of the Company.

On September 28, 2015 the Company granted to its Chief Executive Officer an option to purchase 369,619 shares of Common Stock at an exercise price of $2.45 per share. The option vested over 12 months until fully vested on August 28, 2016.

On July 26, 2017, the Company granted to its Chief Executive Officer 31,185 shares of restricted common stock, which vests as to twenty-five percent (25%) of the award on each of the first, second, third and fourth anniversary of the date of grant, provided grantee remains continuously employed by the Company from the date of grant through each applicable vesting date, and is subject to accelerated vesting upon a Change of Control (as defined in an agreement with grantee) of the Company. In the event of grantee’s termination of employment, any portion of the grant that is not yet vested (after taking into account any accelerated vesting) shall automatically be immediately forfeited to the Company, without the payment of any consideration to grantee.

On July 26, 2017, the Company granted to its Chief Executive Officer an option to purchase up to 41,580 shares of Common Stock at an exercise price per share of $4.81. The option is fully vested and exercisable as of the date of grant and shall remain exercisable until the 2nd anniversary of the date of grant, regardless of whether grantee remains employed by the Company.

In February 2010, the Company issued to three investors an aggregate 399,999 shares of Common Stock and warrants to purchase an aggregate of 199,998 shares of Common Stock with an exercise price of $7.50 per share for aggregate proceeds of $1.5 million.

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

U.S. dollars in thousands

(Except share data and exercise prices)

Notes to the Interim Condensed Consolidated Financial Statements

NOTE 6 -

STOCK CAPITAL (Cont.):

B. Issuance of shares, warrants and options: (Cont.):

Private placements and public offering: (Cont.):

On July 17, 2012, the Company raised a $5.7 million of gross proceeds through a public offering (“2012 Public Offering”) of its common stock and warrants to purchase common stock. The Company issued a total of 1,321,265 shares of common stock ($4.35 per share), and thirty month warrants to purchase 990,949 shares of Common Stock at an exercise price of $4.35 per share. After deducting closing costs and fees, the Company received net proceeds of approximately $4.9 million. The Company paid to the placement agent, a cash fee and a corporate finance fee equal to 7% of the gross proceeds of the offering. In addition, the Company issued to the placement agent a two year warrant to purchase up to 32,931 shares of Common Stock, with an exercise price equal to $5.22.

On February 7, 2013, the Company issued 55,556 units to a private investor for total proceeds of $250. Each unit consisted of one share of Common Stock and a warrant to purchase one share of Common Stock at $7.5 per share exercisable for 32 months. On October 7, 2015 the warrants were cancelled.

On August 16, 2013, the Company raised $4 million, gross, through a registered public offering (“2013 Public Offering”) of its Common Stock and the issuance of warrants to purchase Common Stock . The Company issued a total of 1,568,628 Common Stock, ($2.55 per share) and three year warrants to purchase 1,176,471 shares of Common Stock, at an exercise price of $3.75 per share (the “2013 Warrants”). The Warrants also included, subject to certain exceptions, full ratchet anti-dilution protection in the event of the issuance of any Common Stock, securities convertible into common stock, or certain other issuances at a price below the then-current exercise price of the Warrants, which would result in an adjustment to the exercise price of the Warrants. After deducting closing costs and fees, the Company received net proceeds of approximately $ 3.3 million. In accordance with the provisions of ASC 815 (formerly FAS 133) the proceeds related to the warrants at the amount of $829 were recorded to liabilities at the fair value of such warrants as of the date of issuance, and the proceeds related to common stocks of 2,496 were recorded to equity.

On April 25, 2014, the Company entered into agreements with some of holders of the 2013 Warrants to exchange warrants to purchase an aggregate of 777,471 shares of Company common stock for an aggregate of 388,735 unregistered shares of Common Stock.

On May 27, 2014 the Company entered into agreements with certain warrant holders to redeem “2013 warrants” to purchase 333,235 shares of Company common stock, in consideration for approximately $600 payable in cash ($1.80 per Warrant).

In May 2014, certain holders of 2013 Warrants which did not participate in the redemption and whose 2013 Warrants will therefore remained outstanding waived the anti-dilution provisions of their 2013 Warrants.

In July 2014, the Company agreed to adjust the exercise price of the remaining “2013 Warrants” to $0.525 per share.

On January 6, 2015, the remaining “2013 Warrants” holders that did not provide a waiver of their anti-dilution rights, exercised their warrants. Therefore, the liability related to the 2013 Warrants has been cancelled.

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

U.S. dollars in thousands

(Except share data and exercise prices)

Notes to the Interim Condensed Consolidated Financial Statements

NOTE 6 -

STOCK CAPITAL (Cont.):

B. Issuance of shares, warrants and options: (Cont.):

Private placements and public offering: (Cont.):

On June 13, 2014, the Company raised gross proceeds of $10.5 million through a private placement of the Company’s Common Stock and warrants purchase Common Stock. The Company issued 2.8 million shares of Common Stock at a price per share of $3.75 and three year warrants to purchase up to 2.8 million shares of Common Stock at an exercise price of $5.22 per share.

Pursuant to a Warrant Exercise Agreement, dated January 8, 2015, holders of the Company’s warrants (issued in June 2014) to purchase an aggregate of 2,546,667 shares of the Company’s Common Stock at an exercise price of $5.22 per share, agreed to exercise their 2014 Warrants in full and the Company agreed to issue new warrants to the holders to purchase up to an aggregate of approximately 3.8 million unregistered shares of Common Stock at an exercise price of $6.50 per share. The $6.50 warrants expire in June 2018. Gross proceeds from the exercise of the warrants was approximately $13.3 million. In connection with the Exercise Agreement, the Company agreed to pay to the Placement Agency a cash fee equal to 6.0% of the Exercise Proceeds, as well as fees and expenses of the Placement Agency of $20. In addition, the Company issued the Placement Agency a warrant to purchase 38,000 shares of Common Stock upon substantially the same terms as the New Warrants. Net of fees and related expenses the proceeds from the warrant exercise amounted to approximately $12.4 million.

Since its inception the Company has raised approximately $46.6M, net in cash in consideration for issuances of common stock and warrants in private placements and public offerings as well as proceeds from warrants exercises.

Share-based compensation to employees and to 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 609,564 shares of Common Stock for issuance in the aggregate under these stock plans.

In June 2008, June 2011 and in June 2012, the Company's stockholders approved increases in the number of shares of common stock available for issuance under these stock option plans by 333,333, 333,333 and 600,000 shares, respectively

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 expired on November 25, 2014 and March 28, 2015, respectively.

On August 14, 2014, the Company's stockholders approved the 2014 Global Share Option Plan and the Israeli Appendix thereto (which applies solely to participants who are residents of Israel) and the 2014 Stock Incentive Plan.

A total 600,000 shares of Common Stock were reserved for issuance in the aggregate under these stock plans.

On June 21, 2016 the Company’s stockholders approved an amendment to the Plans which increased the shared pool of shares of common stock available for issuance under the Plans by 1,600,000, from 600,000 to 2,200,000.

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

U.S. dollars in thousands

(Except share data and exercise prices)

Notes to the Interim Condensed Consolidated Financial Statements

NOTE 6 -

STOCK CAPITAL (Cont.):

Issuance of shares, warrants and options: (Cont.):

Share-based compensation to employees and to directors: (Cont.):

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

On December 16, 2010, the Company granted to two of its directors fully vested options to purchase an aggregate of 26,667 shares of Common Stock at an exercise price of $2.25 per share.

On August 22, 2011, the Company entered into an agreement one of its directors pursuant to which the Company granted the director 61,558 restricted shares of Common Stock of the Company. The shares vested through August 22, 2014. In addition, the Company is paying the director $15 per quarter his services. On May 3, 2015 the Company granted to the director 60,000 shares of restricted Common Stock. The shares were vested in three installments through August 22, 2017.

On August 1, 2012, the Company granted to three of its directors options to purchase an aggregate of 30,667 shares of Common Stock of the Company, at $2.25 per share.

On April 19, 2013, the Company granted to three of its directors options to purchase an aggregate of 30,667 shares of Common Stock of the Company at $2.25 per share. In addition the Company issued to two of its directors and four of its Advisory Board members a total of 50,667 restricted shares of Common Stock. The Options and restricted shares vested over 12 months.

On June 6, 2014, the Company granted its Chief Operating Officer a fully vested option to purchase 33,333 shares of the Company’s common stock. The exercise price of the grant was $2.70 per share.

On June 9, 2014, the Company’s former Chief Executive Officer was granted a stock option for the purchase of 380,000 shares of the Company’s common stock, vesting over four years, with an exercise price of $4.5 per share. On November 10, 2015 the Company and the former CEO agreed that the unvested portion of the option as of October 30, 2015 (to purchase 253,333 shares) would be forfeited and that the vested potion of the option (to purchase 126,667 shares) would terminate on September 30, 2016.

On August 15, 2014, the Company issued to two of its directors and four of its Advisory Board members an aggregate of 50,667 restricted shares of Common Stock. The shares vested over 12 months.

On October 31, 2014, the Company granted to four of its directors options to purchase an aggregate of 70,666 shares of Common Stock of the Company, at $0.75 per share. The options vest over 12 months.

On June 1, 2015, the Company granted to a director fully vested options to purchase an aggregate of 6,667 shares of Common Stock of the Company, at $0.75 per share.

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

U.S. dollars in thousands

(Except share data and exercise prices)

Notes to the Interim Condensed Consolidated Financial Statements

NOTE 6 -

STOCK CAPITAL (Cont.):

Issuance of shares, warrants and options: (Cont.):

Share-based compensation to employees and to directors: (Cont.):

On July 30, 2015 the Company’s newly appointed Chief Financial Officer was granted an option to purchase 165,000 shares of Common Stock at an exercise price of $3.17 per share. The option would vest over 3 years. Effective December 1, 2015 the Company and the Chief Financial Officer agreed to amend the option agreement. Pursuant to the amendment, 82,500 shares were cancelled. The 82,500 remaining shares continued to vest and become exercisable in accordance with the terms of the grant: 20,625 shares vested and became exercisable on July 30, 2016 and 2.08333% of the 82,500 shares were scheduled to vest and become exercisable on each monthly anniversary date starting on August 30, 2016 through the fourth anniversary of the grant, so that the 82,500 shares would become fully vested and exercisable on July 30, 2019. On November 9, 2016, the Company’s Chief Financial Officer notified the Company that he was terminating his part time employment with the Company effective at the end of business on November 14, 2016. The option ceased to vest on November 14, 2016 and the right to exercise the option was terminated February 14, 2017.

On August 27, 2015 the Company granted to four of its seven directors options to purchase an aggregate of 70,665 shares of Common Stock at an exercise price of $0.75 per share, and granted to two of its directors an aggregate of 17,332 restricted shares of Common Stock. The options and restricted shares of Common Stock vested over 12 months until fully vested on August 27, 2016.

On September 28, 2015 the Company granted to its newly appointed Chief Executive Officer an option to purchase 369,619 shares of Common Stock at an exercise price of $2.45 per share. The option vested over 12 months until fully vested on August 28, 2016.

On July 14, 2016 the Company granted to four of its seven directors options to purchase an aggregate of 70,665 shares of Common Stock at an exercise price of $0.75 per share, and on September 26, 2016 granted 8,666 restricted share of Common Stock to one director and on March 28, 2017 granted 8,666 restricted shares of Common Stock to another director. The options and restricted shares of Common Stock vested over 12 months until fully vested on June 22, 2017.

On February 26, 2017 the Company granted a stock option to a director to purchase up to 6,667 shares of Common Stock at an exercise price of $0.75 per share. The option was fully vested and exercisable on the date of grant.

On February 26, 2017 the Company granted a director 3,012 shares of restricted common stock. The grant vests in 12 consecutive, equal monthly installments commencing on the one month anniversary of the date of grant, until fully vested on the first anniversary of the date of grant, provided grantee remains a director of the Company on each such vesting date.

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

U.S. dollars in thousands

(Except share data and exercise prices)

Notes to the Interim Condensed Consolidated Financial Statements

NOTE 6 -

STOCK CAPITAL (Cont.):

Issuance of shares, warrants and options: (Cont.)

Share-based compensation to employees and to directors: (Cont.)

On March 6, 2017, the Company granted to its newly appointed Chief Operating Officer 35,885 shares of restricted common stock, which vests as to twenty-five percent (25%) of the award on each of the first, second, third and fourth anniversary of the date of grant, provided grantee remains continuously employed by the Company from the date of grant through each applicable vesting date, and is subject to accelerated vesting upon a Change of Control (as defined in an agreement with grantee) of the Company. In the event of grantee’s termination of employment, any portion of the grant that is not yet vested (after taking into account any accelerated vesting) shall automatically be immediately forfeited to the Company, without the payment of any consideration to grantee.

On March 6, 2017, the Company granted to its newly appointed Chief Operating Officer an option to purchase up to 47,847 shares of Common Stock at an exercise price per share of $4.18. The option is fully vested and exercisable as of the date of grant and shall remain exercisable until the 2nd anniversary of the date of grant, regardless of whether grantee remains employed by the Company.

On July 13, 2017, the Company granted a stock option to a director to purchase up to 12,000 shares of Common Stock of the Company. The option is fully vested and exercisable on the date of grant.

On July 13, 2017, the Company granted an aggregate of 16,629 shares of Common Stock of the Company to three officers of the Company.

On August 17, 2017, the Company granted to a newly appointed VP of Patient Advocacy and Government Affairs 9,924 shares of restricted common stock, which vests on each of the first, second, third and fourth anniversary of the date of grant, provided that grantee remains continuously employed by the Company from the date of grant through each applicable vesting date.

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

U.S. dollars in thousands

(Except share data and exercise prices)

Notes to the Interim Condensed Consolidated Financial Statements

NOTE 6 -

STOCK CAPITAL (Cont.):

Issuance of shares, warrants and options: (Cont.)

Share-based compensation to employees and to directors: (Cont.)

The Company accounts for shares and warrant grants issued to non-employees using the guidance of ASC 505-50, "Equity-Based Payments to Non-Employees" (EITTF 96-18, "Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling, Goods or Services"), whereby the fair value of such option and warrant grants is determined using a Black-Scholes options pricing model at the earlier of the date at which the non-employee's performance is completed or a performance commitment is reached.

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

	For the nine months ended September 30, 2017
	Amount of options			Weighted average exercise price		Aggregate intrinsic value
					$		$

Outstanding at beginning of period		874,841			2.1258
Granted		108,094			3.8300
Exercised		(11,777	)		2.5401
Cancelled		(44,446	)		3.9175

Outstanding at end of period		926,712			2.2334		1,748,327

Vested and expected-to-vest at end of period		926,712			2.2334		1,748,327

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the fair market value of the Company’s shares on September 30, 2017 and the exercise price, multiplied by the number of in-the-money options on those dates) that would have been received by the option holders had all option holders exercised their options on those dates.

Compensation expense recorded by the Company in respect of its stock-based employee compensation awards in accordance with ASC 718-10 for the nine months ended September 30, 2017 and 2016 amounted to $416 and $667, respectively.

Shares and warrants to investors and service providers:

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

U.S. dollars in thousands

(Except share data and exercise prices)

Notes to the Interim Condensed Consolidated Financial Statements

NOTE 6 -

STOCK CAPITAL (Cont.):

Issuance of shares, warrants and options: (Cont.)

Shares and warrants to investors and service providers: (Cont.)

(a)

Warrants to investors and service providers:

The fair value for the warrants to service providers was estimated on the measurement date determined using a Black-Scholes option pricing model, with the following weighted-average assumptions for the year ended December 31, 2010; weighted average volatility of 140%, risk free interest rates of 2.39%-3.14%, dividend yields of 0% and a weighted average life of the options of 5-5.5 and 1-9 years. There were no grants to service providers since 2010.

Issuance date	Number of warrants issued		Exercised		Forfeited		Outstanding		Exercise Price $		Warrants exercisable		Exercisable through
Nov-Dec 2004		973,390		959,734		13,656		-		0.00075 - 0.15		-		-
Feb-Dec 2005		203,898		32,011		171,887		-		2.25 - 37.5		-		-
Feb-Dec 2006		112,424		48,513		63,911		-		0.075 – 22.5		-		-
Mar-Nov 2007		180,220		33,334		133,553		13,333		2.25		13,333		Oct 2017
Nov 2008		6,667		-		-		6,667		2.25		6,667		Sep-18
Apr-Oct 2009		26,667		6,667		-		20,000		1.005 – 1.5		20,000		Apr 2019– Oct 2019
Aug 2007- Jan 2011		2,016,667		-		-		2,016,667		3 - 4.35		2,016,667		Nov-17
Jan 2010		83,333		-		83,333		-		7.5		-		-
Feb 2010		8,333		8,333		-		-		0.15		-		-
Feb 2010		200,000		-		200,000		-		7.5		-		-
Feb 2010		100,000		100,000		-		-		0.015		-		-
Feb 2011		42,735		-		42,735		-		5.85		-		-
Feb 2011		427,167		63,122		364,044		-		4.2		-		-
Feb 2011		854,333		-		854,333		-		7.5		-		-
Jul 2012		32,931		-		32,931		-		5.22		-		-
Jul 2012		990,949		687,037		303,911		-		4.35		-		-
Feb 2013		55,556		-		55,556		-		7.5		-		-
April 2010-2014		12,889		8,889		4,000		-		0.00075		-		-
Aug 2013		1,147,471		-		1,147,471		-		3.75		-		-
Aug 2013		29,000		29,000		-		-		0.525		-		-
Jun 2014		2,800,000		2,546,667		253,333		-		5.22		-		-
Jun 2014		84,000		-		84,000		-		4.5		-
Jan 2015		3,858,201		-		-		3,858,201		6.5		3,858,201		Jun-18
		14,246,831		4,523,307		3,808,654		5,914,868				5,914,868

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

U.S. dollars in thousands

(Except share data and exercise prices)

Notes to the Interim Condensed Consolidated Financial Statements

NOTE 6 -

STOCK CAPITAL (Cont.):

Issuance of shares, warrants and options: (Cont.):

Shares and warrants to service providers: (Cont.):

(b)

On December 30, 2009, the Company issued to Ramot 74,667 shares of Common Stock (See Note 3).

On December 31, 2011, the Company issued to Hadasit warrants to purchase up to 100,000 restricted shares of Common Stock at an exercise price of $0.015 per share, exercisable for a period of 5 years. The warrants vested over the course of the trials and were exercised in 2015.

On January 16, 2013, the Company granted an aggregate of 14,400 shares of Common Stock of the Company to two consultants, for services rendered through December 31, 2012. Related compensation expense in the amount of $54 was recorded as research and development expense.

On February 4, 2013, the Company issued 8,408 shares of Common Stock to an investor, according to a settlement agreement, for the correction of the conversion rate of a $200 convertible loan. The convertible loan was issued in 2006 and converted in 2010.

On March 11, 2013, the Company granted to its legal advisor 12,913 shares of Common Stock for 2013 legal services. The related compensation expense in the amount of $44.5 was recorded as general and administrative expense.

On November 13, 2013, the Company approved a grant of 30,000 shares of Common Stock to the Consultants, for services rendered during January 1, 2013 through September 30, 2013 (the “2013 Shares”). On March 24, 2014, the Company approved grants of an aggregate of 6,000 shares of Common Stock to the Consultants for services rendered in 2014, and issued such shares together with the 2013 Shares.

On March 11, 2013, the Company granted to two of its service providers an aggregate of 26,667 shares of Common Stock. The shares were issued as compensation for public relations services. The related compensation expense in the amount of $92 was recorded as general and administrative expense.

On July 28, 2014, the Company granted to its legal advisor 10,752 shares of Common Stock for 2014 legal services. The related compensation expense in the amount of $50 was recorded as general and administrative expense.

On April 29, 2015, the Company approved grants of an aggregate of 27,411 shares of Common Stock to the Consultants for services rendered in 2014. The related compensation expense was recorded as research and development expense.

On January 2, 2016, the Company granted to its legal advisor 10,752 shares of Common Stock for 2015 legal services. The related compensation expense of $31 was recorded as general and administrative expense.

On July 14, 2016, the Company granted of an aggregate of 25,281 shares of Common Stock to two consultants for services rendered in 2015. The related compensation expense was recorded as research and development expense.

On August 17, 2017, the Company granted to a consultant 4,327 fully vested shares of restricted common stock. The restriction expires in eight (8) equal consecutive quarterly installments (starting November 17, 2017) until fully vested on the second anniversary of the date of grant.

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

U.S. dollars in thousands

(Except share data and exercise prices)

Notes to the Interim Condensed Consolidated Financial Statements

NOTE 6 -

STOCK CAPITAL (Cont.):

Issuance of shares, warrants and options: (Cont.):

Stock Based Compensation Expense

The total stock-based compensation expense, related to shares, options and warrants granted to employees, directors and service providers was comprised, at each period, as follows:

	Nine months ended				Three months ended
	September 30,				September 30,
	2017		2016		2017		2016
	Unaudited				Unaudited

Research and development		145		6		70		1
General and administrative		271		661		163		170
Total stock-based compensation expense		416		667		233		171

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report contains numerous statements, descriptions, forecasts and projections, regarding Brainstorm Cell Therapeutics Inc. (together with its consolidated subsidiaries, the “Company,” “Brainstorm,” “we,” “us” or “our”) and its potential future business operations and performance, including financial results for the most recent fiscal quarter, statements regarding the market potential for treatment of neurodegenerative disorders such as ALS, the sufficiency of our existing capital resources for continuing operations in 2017 and beyond, the safety and clinical effectiveness of our NurOwn® technology, our clinical trials of NurOwn® and its related clinical development, and our ability to develop collaborations and partnerships to support our business plan. 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,” “projects,” “targets,” “goals,” “estimates,” “predicts,” “likely,” “potential,” or “continue” or the negative of any of these terms or similar words. 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.” These risks and uncertainties include, but are not limited to our need to raise additional capital, our ability to continue as a going concern, regulatory approval of our NurOwn® treatment candidate, the success of our product development programs and research, regulatory and personnel issues, development of a global market for our services, the ability to secure and maintain research institutions to conduct our clinical trials, the ability to generate significant revenue, the ability of our NurOwn® treatment candidate to achieve broad acceptance as a treatment option for ALS or other neurodegenerative diseases, our ability to manufacture and commercialize our NurOwn® treatment candidate, obtaining patents that provide meaningful protection, our ability to protect our intellectual property from infringement by third parties, heath reform legislation, demand for our services, currency exchange rates and product liability claims and litigation, and other factors described under “Risk Factors” in this report and in our annual report on Form 10-K for the fiscal year ended December 31, 2016. 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, except as required by applicable securities laws and regulations. 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 this report and in our annual report on Form 10-K for the fiscal year ended December 31, 2016, in addition to the other information set forth herein and elsewhere in our other public filings with the Securities and Exchange Commission.

Company Overview

Brainstorm Cell Therapeutics Inc. is an integrated biotechnology company actively engaged in the development and commercialization of innovative adult stem cell therapies for the treatment of debilitating neurodegenerative disorders that have no or limited treatment options, thus representing a unique opportunity to address unmet medical needs. These include Amyotrophic Lateral Sclerosis (“ALS”, also known as Motor Neuron Disease (MND) or Lou Gehrig’s disease), Multiple Sclerosis (“MS”), and Parkinson’s disease (“PD”), among others. NurOwn® is our proprietary process for the propagation of adult bone marrow-derived Mesenchymal Stem Cells (“MSC”), their differentiation into neurotrophic factor (“NTF”) secreting cells (“MSC-NTF”), and transplantation at, or close to, the site of damage.

Evidence to date from published animal and human studies suggests that NurOwn Ò offers the potential for more effective treatment of neurodegenerative diseases, relative to existing therapies, through unique neuroprotective and immunomodulatory effects. Groundbreaking ALS CSF biomarker work has demonstrated a strongly correlated increase in neurotrophic factors and a reduction in inflammatory biomarkers (MCP-1 and SDF-1) in NurOwn Ò -treated, and not in placebo treated, participants. This is a clear indicator of the mechanism by which this technology acts in ALS, and in related neurodegenerative diseases.

Our core technology was invented by Professor (Prof.) Daniel Offen of the Felsenstein Medical Research Center, Tel Aviv University, and the late Prof. Eldad Melamed, former head of Neurology of the Rabin Medical Center and former member of the Scientific Committee of the Michael J. Fox Foundation for Parkinson’s Research. Our wholly-owned Israeli subsidiary, Brainstorm Cell Therapeutics Ltd. (“Israeli Subsidiary”), holds rights to commercialize the technology through a licensing agreement with Ramot (“Ramot”), the technology transfer company of Tel Aviv University, Israel. We currently employ 19 employees in Israel and 3 in the United States.

Our Proprietary Technology

Facilitated by NurOwn® technology, the differentiated MSC-NTF cells are capable of releasing several highly disease relevant neurotrophic factors, including Glial-derived neurotrophic factor (“GDNF”), Brain-derived neurotrophic factor (“BDNF”), Vascular endothelial growth factor (“VEGF”) and Hepatocyte growth factor (“HGF”), all critical for the growth, survival and differentiation of developing neurons. GDNF is one of the most potent factors involved in the protection and survival of peripheral neurons. VEGF and HGF have been reported to have important protective effects on neurons and other non-neuronal glial cells in ALS as well as other neurodegenerative diseases. The effects of neurotrophic factors on neurons may include:

	·	Protection of existing motor neurons;
	·	Promotion of motor neuron growth; and
	·	Re-establishment of functional nerve-muscle interaction.

In addition to the consistent and important release of neurotrophic factors, NurOwn Ò demonstrates consistent in vitro modification of the immune response ( immunomodulation) and in vivo modulation of CSF biomarkers. Neuroinflammation is an important cause of disease progression in neurodegenerative diseases, including ALS. The proprietary NurOwn Ò process results in significant measurable differences from undifferentiated MSCs, including: enhanced release of neurotrophic factors; release of neurotrophic factors that are very low or not expressed by MSCs; and a unique micro-RNA profile that may regulate growth and development of neurons (neurogenesis), VEGF and neuroinflammation. In preclinical studies, NurOwn Ò was found to be more effective than MSC in treating Autism, Parkinson’s disease, Huntington’s disease and multiple sclerosis. The combination of enhanced NTF release and neuromodulation may be an optimal approach to restore function and reduce ongoing CNS tissue damage in neurodegenerative disease.

NurOwn Ò treatment is a multi-step process (see table below) beginning with harvesting of undifferentiated stem cells from the patient’s own bone marrow, and concluding with transplantation of the resulting differentiated, neurotrophic factor-secreting mesenchymal stem cells (MSC-NTF) back into the patient – intrathecally (injection into the cerebrospinal fluid) by standard lumbar puncture and/or intramuscularly. This unique technology is the first-of-its-kind for the treatment of neurodegenerative diseases.

The NurOwn® Transplantation Process

	·	Bone marrow aspiration from patient;
	·	Isolation and propagation of the patient’s mesenchymal stem cells;
	·	Differentiation of the mesenchymal stem cells into neurotrophic-factor secreting (MSC-NTF) cells; and
	·	Autologous transplantation into the same patient’s spinal cord fluid.

Our proprietary technology process is conducted in full compliance with current Good Manufacturing Practice (“cGMP”). It is licensed to and developed by our Israeli Subsidiary.

Advances of NurOwn Ò Beyond Current Therapies - Patient Benefits

Given that NurOwn®’s approach involves transplantation of the stem cells derived from the same patient (autologous), there is no risk of rejection and no need for treatment with immunosuppressive agents, which can cause severe and/or long-term side effects. In addition, the use of adult stem cells precludes the controversy associated with the use of embryonic stem cells in some countries.

MSC can be cryopreserved and, as required, can be subsequently differentiated into NurOwn®, and demonstrate product characteristics like NurOwn ^® cells derived from fresh MSC of the same patient/donor. This will allow the Company to provide repeated doses of autologous NurOwn® from a single bone marrow aspirate in its upcoming multi-dose clinical trial and will avoid the need for patients to undergo repeated bone marrow aspiration.

The ALS Program

Phase 1/2 and Phase 2a studies

The clinical development program for NurOwn® in ALS has been granted Fast Track designation by the U.S. Food and Drug Administration (“FDA”) for this indication, and has been granted Orphan Status in both the United States and in Europe.

We have completed two clinical trials of NurOwn® in patients with ALS at Hadassah Medical Center (“Hadassah”), with Prof. Dimitrios Karussis as Principal Investigator (PI):

	1.	A Phase 1/2 safety and efficacy study of NurOwn® in ALS patients administered either intramuscularly or intrathecally, was initiated in June 2011 after receiving approval from the Israeli Ministry of Health (“MoH”). The trial results, which were presented by Prof. Karussis at the American Academy of Neurology Annual Meeting on March 2013, demonstrated the safety of NurOwn® as well as signs of ALS patient functional improvement, as measured by the ALS Functional Rating Score (“ALSFRS-R”) and improved breathing, as measured by the Forced Vital Capacity (“FVC”).

A Phase 2a combined treatment (by intramuscular and intrathecal administration), dose-escalating trial, approved by the Israeli MoH in January 2013, was also conducted at Hadassah, and by September 27, 2013, we announced that 12 patients had successfully completed treatment. On December 10, 2013 Prof. Karussis presented some of the preliminary findings from this trial at the 24th International Symposium on ALS/MND in Milan, Italy, followed in June 2014 by the interim results of the trial, at the Joint Congress of European Neurology in Istanbul, Turkey. The last follow-up visits in this study occurred in September 2014. On January 5, 2015, the Company presented final topline data from this study in a press release and an investor conference call. The results of this study confirmed the safety profile observed in the earlier Phase 1/2 trial, with the clear majority of adverse events being low-grade and transient. There were two deaths and two serious adverse events, all of which were deemed by the investigators to be unrelated to treatment. Subjects in this study showed a meaningful reduction in the rate of disease progression for the three and six months after treatment, compared to the three months prior to treatment. This confirmed the safety of intrathecal administration of NurOwn Ò in ALS.

In January 2016, the Company announced the publication of a paper in the January 2016 edition of JAMA Neurology based on the results of the first in man Phase 1/2 and Phase 2a studies and Phase 2 dose escalation study with NurOwn® in ALS. The data provide indication of clinically meaningful benefit as reflected by a slower rate of ALS disease progression following NurOwn Ò treatment, a positive trend on two ALS disease biomarkers, including rate of decline of muscle volume and electrical muscle function. This was the first published clinical data with NurOwn Ò , or any treatment, to achieve a neuroprotective effect in ALS and potentially modify the course of disease.

In April 2016, the Company presented the combined results of the Phase 1/2 and Phase 2a NurOwn® clinical studies in ALS at the ISRASTEM 2016 and 6th Israel Stem Cell Society (ISCS) joint annual meeting which took place in Tel Aviv, Israel.

The US Phase 2 Multicenter Double-Blind Placebo Controlled Clinical Study for ALS Patients

In December 2013, the Company submitted an Investigational New Drug (“IND”) application to the FDA for NurOwn® in ALS, and on April 28, 2014, we initiated an FDA-approved randomized, double-blind, placebo controlled multi-center U.S. Phase 2 clinical trial evaluating NurOwn® in ALS patients. The trial was conducted at the Massachusetts General Hospital (PIs - Drs. Merit Cudkowicz and James Berry) in Boston, Massachusetts, at the University of Massachusetts Memorial Hospital (PI - Dr. Robert Brown) in Worcester, Massachusetts, and at the Mayo Clinic (PI - Drs. Anthony Windebank and Nathan Staff) in Rochester, Minnesota. For this study, NurOwn® was manufactured at the Connell and O’Reilly Cell Manipulation Core Facility at the Dana Farber Cancer Institute in Boston, Massachusetts, and at the Human Cellular Therapy Lab at the Mayo Clinic. In the study, 48 patients were randomized 3:1 to receive NurOwn® or placebo.

In February 2015, the Company announced that the Data Safety Monitoring Board (“DSMB”) for the multi-center U.S. Phase 2 clinical trial had reviewed the safety data collected through a cutoff date in January 2015, and did not find any significant lab abnormalities, adverse events or significant protocol deviations that would be cause for concern and therefore approved continuation of the trial as planned.

On August 11, 2015, the Company announced that it had completed enrollment achieving the target of 48 subjects to be enrolled in its ongoing randomized, double-blind placebo-controlled Phase 2 clinical trial of NurOwn® in ALS. The Company further announced, in November 2015, that the DSMB review of the safety data collected through a cutoff date in October 2015 for the multi-center U.S. Phase 2 clinical trial indicated that 47 of the 48 patients enrolled in the study confirmed that they experienced no treatment-related serious adverse events (SAEs). Furthermore, the DSMB did not identify any significant adverse events, lab abnormalities or significant protocol deviations that would be cause for concern.

In July 2016, the Company announced topline data from the recently completed U.S. randomized, double-blind, placebo-controlled Phase 2 Study of NurOwn® in ALS which confirmed that the study achieved its primary objective, demonstrating that NurOwn® was safe and well tolerated. NurOwn® also achieved multiple secondary efficacy endpoints, showing clear evidence of a clinically meaningful benefit. Notably, response rates were higher for NurOwn®-treated subjects compared to placebo at all time points in the study out to 24 weeks.

In October 2016, some of the Company’s topline Phase 2 ALS clinical trial results were presented by Dr. Robert Brown and Dr. James Berry, at the 15th Annual Meeting of the Northeast ALS Consortium (NEALS).

In December 2016, the Company announced that data from the Company’s Phase 2 study of NurOwn® in ALS, would be highlighted in presentations at the 27th International Symposium on ALS/MND, being held December 7-9, 2016 in Dublin, Ireland. Lead investigator, Dr. James Berry, presented new data from the Phase 2 study demonstrating that in ALS patients treated with NurOwn Ò , CSF neurotrophic factors (VEGF, HGF and LIF) showed a statistically significant increase and correlated with a statistically significant decrease in CSF inflammatory markers (MCP-1 and SDF-1) two weeks post-transplantation compared to pre-transplantation. In addition, reductions in CSF inflammatory markers at two weeks post-transplantation correlated with improvements in ALSFRS-R slope at 12 weeks post-transplantation, consistent with the proposed mechanism of action of NurOwn Ò in ALS. Dr. Berry also presented the pre-specified responder analyses from the Phase 2 trial which examined percentage improvements in post treatment of Amyotrophic Lateral Sclerosis Functional Rating Scale (ALSFRS-R) slope compared to pre-treatment slope. These analyses showed that, in the NurOwn® treated group, a greater number of patients achieved the high threshold of 100% or greater improvement in the post-treatment vs. pre-treatment slope, compared with the placebo group. Responders were defined as those in whom disease symptoms were essentially halted for the period of the treatment effect or those who achieved a positive improvement on their ALSFRS-R score. Moreover, in the pre-specified subgroup that excluded subjects whose disease was progressing slowly, this effect was even more pronounced. Dr. Berry’s presentation was posted on the Company website.

In May 2017, the Company presented data from its Phase 2 clinical study of NurOwn® in ALS at the International Society for Cellular Therapy (ISCT) annual conference in London, England and at the World Advanced Therapy and Regenerative Medicine Congress in London, England.

Phase 3 Clinical Study for ALS Patients

In October 2017, the Company announced that the first patients have been enrolled in the Phase 3 clinical trial of NurOwn® for the treatment of amyotrophic lateral sclerosis (ALS) at the Massachusetts General Hospital and UC Irvine Medical Center in California. The trial is expected to enroll approximately 200 patients and will be conducted at six leading ALS clinical sites in the U.S. The primary outcome measure will be the ALSFR-S score responder analysis. The patient population will be optimized to include the pre-specified subgroups who demonstrated superior outcomes in the NurOwn® Phase 2 ALS clinical trial. Top-line data are expected in 2019.

In January 2017, the Company announced that it had validated its cryopreservation process for NurOwn® in preparation for the upcoming Phase 3 clinical study in ALS. The validation involved a comparison of NurOwn® (MSC-NTF cells) derived from fresh mesenchymal stem cells (MSC) to those derived from cryopreserved MSC. Company scientists were successful in showing that the MSC can be stored in the vapor phase of liquid nitrogen for prolonged periods of time while maintaining their characteristics. The cryopreserved MSC can differentiate into NurOwn®, similar to the NurOwn ^® derived from fresh MSC of the same patient/donor, prior to cryopreservation. This will allow the Company to provide repeated doses of autologous NurOwn® from a single bone marrow aspirate in its upcoming multi-dose clinical trial. Cryopreservation will avoid the need for patients to undergo repeated bone marrow aspirations.

In February 2017, the Company announced that it plans to contract with City of Hope’s Center for Biomedicine and Genetics to produce clinical supplies of NurOwn® adult stem cells for the company’s planned randomized, double-blind, multi-dose Phase 3 clinical study in patients with ALS. City of Hope will support manufacturing of NurOwn® for all U.S. medical centers participating in the Phase 3 trial.

Future development of NurOwn® in ALS may require additional clinical trials, including a Phase 3 FDA-approved multi dose trial.

Patient Access Programs

In December 2016, the Company announced that it plans to apply for Hospital Exemption for NurOwn® in Israel that will allow patient access to NurOwn® as a treatment that has been granted Hospital Exemption. This recently approved pathway would permit the Company to partner with a medical center in Israel and be allowed to treat patients with NurOwn® for a fee. Hospital Exemption allows for advanced therapy medicinal products to be made available to a group of patients to be agreed upon by the Israeli Ministry of Health. It is intended to provide patients with the possibility to benefit from a custom-made, innovative, individual treatment where there is a critical unmet need and an absence of valid therapeutic alternatives. To qualify for a Hospital Exemption, several important criteria must be met including preparation according to specific quality standards (equivalent to those for a licensed product), use in a hospital and use under the exclusive responsibility of a medical practitioner.

In March 2017, the Company announced that it has signed a Memorandum of Understanding (MOU) with The Medical Research, Infrastructure, and Health Services Fund of the Tel Aviv Sourasky Medical Center (Ichilov Hospital) to explore the possibility of making NurOwn® available to Amyotrophic Lateral Sclerosis (ALS) patients under the provisions of Hospital Exemption regulation. The MOU sets forth the basic terms under which the Company and Tel Aviv Sourasky Medical Center would work together to submit the application to the Israeli MoH, and is subject to a definitive agreement. The agreement is expected to be formalized in the second half of 2017.

Funding

In June 2017, the Company announced that for the tenth consecutive year its wholly-owned subsidiary, Brainstorm Cell Therapeutics Ltd., was awarded a new grant from Israel’s Office of the Chief Scientist (OCS), in the amount of approximately $2,100,000. The Office of the Chief Scientist, is part of the Ministry of Economy Program to support innovative technologies in Israel. The funds supported the development of NurOwn ^® Phase 3 clinical program in ALS.

In July 2017, the Company announced that the California Institute for Regenerative Medicine (CIRM) has awarded Brainstorm a grant of up to $16 million to support the Company’s pivotal Phase 3 study of NurOwn®, for the treatment of amyotrophic lateral sclerosis (ALS). The award provided for a $5,250,000 project initial payment, which was received during the third quarter of 2017, and up to $15,912,000 in future milestone payments (inclusive of the project initial payment). The award does not bear a royalty payment commitment nor is the award otherwise refundable.

Intellectual Property

In October 2016, the Company announced that it has been granted United States Patent No. 9,474,787 titled “Mesenchymal Stem Cells for the Treatment of CNS Diseases. The allowed claims cover mesenchymal stem cells that secrete neurotrophic factors, including brain-derived neurotrophic factor (BDNF) and glial derived neurotrophic factor (GDNF), as well as a pharmaceutical composition comprising these factors.

Future Development Plans

In addition to its active clinical program in ALS, the Company is focusing on further in-depth molecular and functional characterization of NurOwn® and its adaptation to additional indications. The Company is reviewing the potential clinical development of NurOwn® in other neurodegenerative disorders, such as Parkinson’s disease, Huntington’s disease, and multiple sclerosis. More research is currently ongoing on developing an additional product which might be suitable for many neurodegenerative diseases.

In April 2017, the Company announced the Publication of the NurOwn® Autism Research Study, entitled “Long Term Beneficial Effect of Neurotrophic Factors-Secreting Mesenchymal Stem Cells Transplantation in the BTBR Mouse Model of Autism” (Perets N. et al. Behav Brain Res. 2017 Jul 28;331:254-260 [Apr 6. Epub ahead of print] PMID: 28392323), showing that transplantation of NurOwn® in the BTBR mice demonstrated significant long-term improvements in autistic behavior in the BTBR mice compared to MSC treated and to untreated BTBR mice.

In addition, the Company has recently improved the scale and efficiency of NurOwn® production and improved its stability, with the goal of manufacturing in central clean room facilities near the clinical trial sites, where the cells are administered to patients.

Corporate Information

We are incorporated under the laws of the State of Delaware. Our principal executive offices are located at 3 University Plaza Drive, Suite 320, Hackensack, NJ 07601, and our telephone number is (201) 488-0460. We maintain an Internet website at http://www.brainstorm-cell.com. The information on our website is not incorporated into this Quarterly Report on Form 10-Q.

Results of Operations

For the period from inception (September 22, 2000) through September 30, 2017, the Company has not earned any revenue from operations. The Company does not expect to earn revenue from operations until 2018, if ever. The Company has incurred operating costs and other expenses of approximately $2,392,000 during the three months ended September 30, 2017 compared to $1,638,000 during the three months through September 30, 2016.

Research and Development Expenses:

Research and development expenses, net for the three months ended September 30, 2017 and 2016 were $1,168,000 and $790,000, respectively, representing an increase of $378,000. This increase is due to (i) an increase of $219,000 for costs of payroll and stock-based compensation expenses; (ii) an increase of $328,000 costs for activities related to the U.S. Clinical Trial and (iii) an increase of $115,000 for other costs such as material costs, travel, rent and other activities. This increase was partially offset by an increase of $284,000 in participation of the Chief Scientist.

General and Administrative Expenses:

General and administrative expenses for the three months ended September 30, 2017 and 2016 were $1,224,000 and $848,000, respectively. The increase in general and administrative expenses of $376,000 is primarily due to an increase of $367,000 in payroll costs and an increase of $68,000 in consultants, stock-based compensation and travel costs. This increase was partially offset by a net decrease of $59,000 in rent, public relations, and other costs.

Other Income and Expenses:

Financial expense for the three months ended September 30, 2017 was $11,000 as compared to financial income of $32,000 for the three months ended September 30, 2016.

Net Loss:

Net loss for the three months ended on September 30, 2017 was $2,403,000, as compared to a net loss of $1,606,000 for the three months ended September 30, 2016. Net loss per share for the three months ended September 30, 2017 and 2016 was $0.13 and $0.09, respectively.

The weighted average number of shares of Common Stock used in computing basic and diluted net loss per share for the three months ended September 30, 2017 was 18,783,997, compared to 18,656,615for the three months ended September 30, 2016.

Liquidity and Capital Resources

The Company has financed its operations since inception primarily through public and private sales of its Common Stock and warrants and the issuance of convertible promissory notes. At September 30, 2017, the Company had net working capital of $4,811,000 including cash, cash equivalents and short-term bank deposits amounting to $10,547,000.

Net cash provided by operating activities was $3,843,000 for the three months ended September 30, 2017. Cash used for operating activities was primarily attributed to cost of rent of clean rooms and materials for clinical trials, payroll costs, rent, outside legal fee expenses and public relations expenses. Net cash used in investing activities was $7,238,000 for the three months ended September 30, 2017, representing net change in short term interest bearing bank deposits. Net cash provided by financing activities was $75,000 for the three months ended September 30, 2017 and is attributable to the exercise of stock options.

On June 4, 2015, we filed a shelf registration statement, effective June 10, 2015, relating to Common Stock, warrants and units that we may sell from time to time in one or more offerings, up to a total dollar amount of $100,000,000. We have not filed any supplemental prospectus defining particular terms of securities to be offered under the shelf registration statement.

Our material cash needs for the next 24 months, assuming we do not expand our clinical trials beyond the upcoming multi dose clinical trial in Israel, will include (i) costs of the clinical trial in the U.S. (ii) employee salaries, (iii) costs expected for the upcoming multi-dose clinical trial in Israel, (iv) payments to Hadassah for rent and operation of the GMP facilities, and (v) fees to our consultants and legal advisors, patents, and fees for facilities to be used in our research and development.

Over the longer term if we are not able to raise substantial additional capital, we may not be able to continue to function as a going concern and may have to cease operations or the Company will reduce its costs, including curtailing its current plan to pursue larger clinical trials in ALS and move new indications into clinical testing. We will be required to raise a substantial amount of capital in the future in order to reach profitability and to complete the commercialization of our products. Our ability to fund these future capital requirements will depend on many factors, including the following:

•

our ability to obtain funding from third parties, including any future collaborative partners;

•

the scope, rate of progress and cost of our clinical trials and other research and development programs;

•

the time and costs required to gain regulatory approvals;

•

the terms and timing of any collaborative, licensing and other arrangements that we may establish;

•

the costs of filing, prosecuting, defending and enforcing patents, patent applications, patent claims, trademarks and other intellectual property rights;

•

the effect of competition and market developments; and

•

future pre-clinical and clinical trial results.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these financial statements requires us to make judgments, estimates, and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported revenue and expenses during the reporting periods. We continually evaluate our judgments, estimates and assumptions. We base our estimates on the terms of underlying agreements, our expected course of development, historical experience and other factors we believe are reasonable based on the circumstances, the results of which form our management’s basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

There were no significant changes to our critical accounting policies during the quarter ended September 30, 2017. For information about critical accounting policies, see the discussion of critical accounting policies in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

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, revenue or expenses, results of operations, liquidity, capital expenditures, or capital resources.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

This information has been omitted as the Company qualifies as a smaller reporting company.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this quarterly report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Interim 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 Chief Executive Officer and Interim Chief Financial Officer concluded that our disclosure controls and procedures were 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 Chief Executive Officer and Interim Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal controls over financial reporting that occurred during the quarter ended September 30, 2017 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II: OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may become involved in litigation relating to claims arising out of operations in the normal course of business, which we consider routine and incidental to our business. We currently are not a party to any material legal proceedings, the adverse outcome of which, in management’s opinion, would have a material adverse effect on our business, results of operation or financial condition.

Item 1A. Risk Factors.

There have not been any material changes from the risk factors previously disclosed in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016. In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, are not the only risks we face. 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.

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

None.

Item 5. Other Information.

During the quarter ended September 30, 2017, we made no material changes to the procedures by which stockholders 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 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.

Date: October 17, 2017	By:	/s/ Alla Patlis
		Name: Alla Patlis
		Title: Interim Chief Financial Officer (Principal Financial Officer)

EXHIBIT INDEX

Exhibit
No.		Description

10.1*		Brainstorm Cell Therapeutics Inc. Third Amendment to the Second Amended and Restated Director Compensation Plan dated July 13, 2017.

10.2*		Restricted Stock Award Agreement under the Brainstorm Cell Therapeutics Inc. 2014 Global Share Option Plan, regarding July 26, 2017 grant to Chaim Lebovits.

10.3*		Second Amendment to Employment Agreement dated July 26, 2017 between the Company and Chaim Lebovits.

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

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

32.1‡		Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2‡		Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*		XBRL Instance Document

101.SCH*		XBRL Taxonomy Extension Schema Document

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

Filed herewith

‡

Furnished herewith

Exhibit 10.1

Brainstorm Cell Therapeutics Inc.

3 ^rd Amendment to the Second Amended and Restated Director Compensation Plan

(adopted July 13, 2017)

This 3 ^rd Amendment to the Second Amended and Restated Director Compensation Plan is hereby adopted by the Board of Directors (the “Board”) of Brainstorm Cell Therapeutics Inc. (the “Corporation”) and amends the Second Amended and Restated Director Compensation Plan of the Corporation dated July 9, 2014, as amended by the 1 ^st Amendment to the Second Amended and Restated Director Compensation Plan dated April 29, 2015 and the 2 ^nd Amendment to the Second Amended and Restated Director Compensation Plan dated February 26, 2017 (as amended, the “Plan”), with effect from the date of adoption by the Board, as follows:

The following new paragraph is hereby added to the end of Section 6 of the Plan:

Third Chairperson Special Award. The chairperson of the Board of Directors of the Corporation serving in such capacity on the date (the “Third Special Award Date”) of the adoption of the 3 ^rd Amendment to the Second Amended and Restated Director Compensation Plan shall automatically be granted on the Third Special Award Date, a nonqualified stock option to purchase 12,000 shares of Common Stock (subject to appropriate adjustment in the case of stock splits, reverse stock splits and the like) of the Corporation, governed by the terms and conditions of a stock option agreement substantially in a form previously approved by the Board, and subject to all the terms and conditions of the Plan and the 2014 Global Share Option Plan, at an exercise price per share of the Common Stock equal to $0.75 per share of the Common Stock on the Third Special Award Date, which option shall be fully vested and exercisable on the date of grant (the “Third Chairperson Special Award”). For the avoidance of doubt, this is a one-time award made only to the chairperson serving on the Third Special Award Date and not a recurring grant. The Third Chairperson Special Award shall be in addition to any other special award, any Chair Option Award or Chair Stock Award set forth in Section 2 above or any Annual Award, Committee Award or Committee Chairperson Award (under Sections 3, 4 or 5, respectively), to which such chairperson may be entitled.

Exhibit 10.2

BRAINSTORM CELL THERAPEUTICS INC.

2014 GLOBAL SHARE OPTION PLAN

RESTRICTED STOCK AWARD AGREEMENT

FOR SHARES GRANTED UNDER SECTION 3(i)

OF THE ISRAELI INCOME TAX ORDINANCE

Unless otherwise defined herein, capitalized terms used in this Restricted Stock Award Agreement shall have the same meanings as ascribed to them in the Brainstorm Cell Therapeutics Inc. 2014 Global Share Option Plan, including the Appendix thereto for Israel (the “ Plan ”).

This Restricted Stock Award Agreement (the “ Agreement ”) includes the Notice of Issuance attached hereto as Exhibit A (the “ Notice of Issuance ”), which is incorporated herein by reference and is made and entered into as of the Date of Grant shown in the Notice of Issuance by and between Brainstorm Cell Therapeutics Inc. (the “ Company ”) and the Participant named in the Notice of Issuance. Capitalized terms not defined in this Agreement shall have the meaning ascribed to them in the Plan.

Share Award.

The Company hereby grants to the Participant Restricted Stock (the “ Shares ”) as set forth in the Notice of Issuance, subject to the terms set forth herein, and subject to the terms and conditions of Section 3(i) of the Income Tax Ordinance (New Version) - 1961(the “ ITO ”) and the Plan, which is incorporated herein by reference. In the event of a conflict between the terms and conditions of the Plan and this Agreement, the terms and conditions of this Agreement shall prevail. However, the Notice of Issuance sets out specific terms for the Participant hereunder, and will prevail over more general terms in the Plan and/or this Agreement, if any, or in the event of a conflict between them.

Vesting.

2.1. Vesting Restrictions on Shares . Effective as of the Vesting Commencement Date (as such term is defined in the Notice of Issuance), all of the Shares owned by the Participant shall be subject to the forfeiture provisions set forth in Section ‎ 2.2 below. The forfeiture provisions set forth in Section ‎ 2.2 shall lapse in accordance with the Vesting Schedule or any special terms provided in the Notice of Issuance. To the extent that the forfeiture provisions lapse, the Shares shall no longer be subject to vesting and the Participant shall hold the Shares free and clear of the forfeiture provisions set forth herein.

2.2. Forfeiture . Notwithstanding anything herein to the contrary, in the event that the Participant ceases to be an Employee or Service Provider, for any reason or no reason, with or without cause, all of the Shares that are unvested as of the time of such cessation of status as an Employee or Service Provider (after taking into account any accelerated vesting) shall be forfeited immediately and automatically to the Company, without the payment of any consideration to the Participant, effective as of such cessation of status as an Employee or Service Provider. The Participant hereby authorizes the Company to take any actions necessary or appropriate to cancel any certificate(s) representing forfeited Shares and transfer ownership of such forfeited Shares to the Company; and if the Company or its transfer agent requires an executed stock power or similar confirmatory instrument in connection with such cancellation and transfer, the Participant shall promptly execute and deliver the same to the Company. The Participant shall have no further rights with respect to any Shares or any Accrued Dividends (as defined below) with respect to such Shares that are so forfeited. If the Participant is employed by a subsidiary of the Company, any references in this Agreement to employment with the Company shall instead be deemed to refer to employment with such subsidiary. For purposes hereof “ Accrued Dividends ” means ordinary cash dividends paid with respect to shares of Common Stock, whether paid in cash, stock or property, declared and paid by the Company.

Non-Transferability of Shares.

3.1. That portion of the Shares specified in the Notice of Issuance as being subject to forfeiture or any right or interest therein or part thereof shall not be permitted to be used to satisfy or otherwise discharge the debts, contracts or engagements of the Participant or his successors in interest and shall not be subject to disposition by transfer, alienation, anticipation, pledge, hypothecation, encumbrance, assignment or any other means, whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect; provided however, that this Section ‎ 3 shall not prevent transfers by will or by the applicable laws of descent and distribution.

3.2. The transfer of the vested Shares is limited as set forth in Section 12 of the Plan, in this Section ‎ 3 and Section ‎ 4 below.

3.3. Notwithstanding anything stated to the contrary in the Plan, Participant shall be entitled to transfer Shares subject only to the restrictions set forth in the Company's Certificate of Incorporation and By-laws and any other corporate documents of the Company, including any subsequent amendments or replacements thereto (but subject to any tax payment and withholding obligations pursuant to the Plan).

3.4. The stock certificate or book entry account reflecting the issuance of the Shares in the name of the Participant shall bear a legend or other notation upon substantially the terms: “These shares of stock are subject to forfeiture provisions and restrictions on transfer set forth in a certain Restricted Stock Agreement between the COMPANY and the registered owner of these shares (or his or her predecessor in interest), and such Agreement is available for inspection without charge at the office of the Secretary of the corporation.”

Market Stand-Off.

In connection with any underwritten public offering by the Company of its equity securities, and if requested by the underwriters of such public offering, the Participant shall be obligated not, directly or indirectly to sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of, purchase any option or other contract for the sale of, or otherwise dispose of or transfer, or agree to engage in any of the foregoing transactions with respect to, any vested Shares without the prior written consent of the Company or its underwriters. Such restriction (the “ Market Stand-Off ”) will be in effect for such period of time following the date of the final prospectus for the offering as may be required by the underwriters. In the event of the declaration of a share dividend, a spin-off, a share split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities without receipt of consideration, any new, substituted or additional securities which are by reason of such transaction distributed with respect to any Shares subject to the Market Stand-Off, or into which such Shares thereby become convertible, shall immediately be subject to the Market Stand-Off. In order to enforce the Market Stand-Off, the Company will be entitled to require the Participant to execute a form of undertaking to this effect or impose stop-transfer instructions with respect to the vested Shares until the end of the applicable stand-off period. The Company’s underwriters shall be beneficiaries of the agreement set forth in this Section ‎4.

Taxes.

5.1. Any tax consequences arising from the grant or issuance of Shares, or from any other event or act (of the Company, and/or its Affiliates, and the Participant) relating to the Shares, shall be borne solely by the Participant. The Company and/or its Affiliates shall withhold taxes according to the requirements under the applicable laws, rules, and regulations, including withholding taxes at source. Furthermore, the Participant agrees to indemnify the Company and/or its Affiliates and hold them harmless against and from any and all liability for any such tax or interest or penalty thereon, including without limitation, liabilities relating to the necessity to withhold, or to have withheld, any such tax from any payment made to the Participant for which the Participant is responsible. The Company or any of its Affiliates may make such provisions and take such steps as it/they may deem necessary or appropriate for the withholding of all taxes required by law to be withheld with respect to Shares issued under the Plan and the vesting thereof, including, but not limited, to (i) deducting the amount so required to be withheld from any other amount then or thereafter payable to a Participant, including by deducting any such amount from a Participant’s salary or other amounts payable to the Participant, to the maximum extent permitted under law and/or (ii) requiring a Participant to pay to the Company or any of its Affiliates the amount so required to be withheld as a condition of the issuance, delivery, distribution or release of any Shares and/or (iii) by causing the sale of any Shares held by on behalf of the Participant to cover such liability up to the amount required to satisfy statutory withholding requirements. In addition, the Participant will be required to pay any amount, including penalties, that exceeds the tax to be withheld and transferred to the tax authorities, pursuant to applicable Israeli tax regulations.

5.2. THE PARTICIPANT IS ADVISED TO CONSULT WITH A TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF RECEIVING OR SELLING THE SHARES .

Legal Compliance.

Shares shall not be issued or delivered to the Participant unless the issuance and delivery of such Shares shall comply with applicable securities and other laws and shall be further subject to the approval of counsel for the Company with respect to such compliance. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

Adjustments upon Certain Transactions .

In the event of a Transaction, the provisions of Section 7 to the Plan will apply, unless otherwise explicitly provided in the Notice of Issuance.

Miscellaneous.

8.1. Continuance of Engagement . Participant acknowledges and agrees that the vesting of Shares pursuant to the vesting schedule hereof is earned only by continuing as a Service Provider at the will of the Company (or its Affiliate) (not through the act of being hired or being awarded the grant hereunder). Participant further acknowledges and agrees that in the event that Participant ceases to be a Service Provider, the unvested portion of his Shares shall not vest and shall be subject to forfeiture. Participant further acknowledges and agrees that this Agreement, the transactions contemplated hereunder and the vesting schedule set forth herein do not constitute an express or implied promise of continued engagement as a Service Provider for the vesting period, for any period, or at all, shall not interfere in any way with Participant's right or the right of the Company or its Affiliate to terminate Participant's relationship as a Service Provider at any time, with or without cause, and shall not constitute an express or implied promise or obligation of the Company to grant additional Awards to Participant in the future.

8.2. Governing Law . This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Israel, without giving effect to the rules respecting conflict of law.

8.3. Entire Agreement . This Agreement, together with the Notice of Issuance and the Plan, constitutes the entire agreement between the parties hereto and supersedes all prior agreements, understandings and arrangements, oral or written, between the parties hereto with respect to the subject matter hereof. No agreement or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement, the Notice of Issuance or the Plan. Except with respect to a written amendment to this Agreement between the Company and the Participant, the Participant may only rely upon the Plan and this Agreement with respect to the Participant’s rights and obligations hereunder and may not rely on any representation or statement made by the Company or its Affiliates or any of their respective officers, directors, employees or agents, whether written or oral, regarding the Participant’s participation in the Plan and any rights thereunder. Neither the Company nor any of its Affiliates guarantee the current or future value of the Shares or its performance.

8.4. Successors and Assigns . This Agreement shall be binding upon and shall inure to the benefit of the Company, its successors and assigns, and the Company shall require such successor or assign to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or assignment had taken place. The term “successors and assigns” as used herein shall include a corporation or other entity acquiring all or substantially all the assets and business of the Company (including this Agreement) whether by operation of law or otherwise.

* * *

By the signature of the Participant and the signature of the Company’s representative below, Participant and the Company agree that the Shares are granted under and governed by (i) this Agreement, (ii) the Plan (including the Appendix for Israel), a copy of which has been provided to Participant or made available for his/her review, and (iii) Section 3(i) of the Income Tax Ordinance (New Version) – 1961.

In Witness Whereof , the Company has caused this Agreement to be executed by its duly authorized officer and the Participant has executed this Agreement as of the date hereof.

Brainstorm Cell Therapeutics Inc.		Participant


By:	/s/ Alla Patlis	/s/ Chaim Lebovits
Name: Alla Patlis		Chaim Lebovits
Title: Interim Chief Financial Officer and Controller

EXHIBIT A

NOTICE OF ISSUANCE

Brainstorm Cell Therapeutics Inc.

2014 Global Share Option Plan

Lebovits, Chaim

Dear Chaim :

I am pleased to inform you that Brainstorm Cell Therapeutics Inc. (the “ Company ”) has decided to grant you an award of Restricted Stock (the " Shares "), with respect to shares of Common Stock, $0.00005 par value per share, of the Company, subject to the terms and conditions of the Brainstorm Cell Therapeutics Inc. 2014 Global Share Option Plan, including the Appendix for Israel attached thereto (the “ Plan ”) and the Restricted Stock Award Agreement (the “ Agreement ”), as follows:

Type of Award:	Section 3(i) of the Israeli Income Tax Ordinance
Total Number of Shares covered by this Grant:	31,185
Date of Grant:	July 26, 2017
Vesting Commencement Date:	July 26, 2017
Vesting Schedule:	25% of the Shares shall vest on each of the first, second, third and fourth anniversary of the Date of Grant, provided that the Participant remains continuously employed by the Company or its subsidiaries from the Date of Grant through each applicable vesting date. Any fractional number of Shares resulting from the application of the foregoing percentages shall be rounded down to the nearest whole number of Shares.
Special Terms (if any):	The Shares shall be subject to accelerated vesting upon a Change of Control of the Company and such other accelerated vesting as provided in the Employment Agreement by and between the Company and the Participant, as amended.
Purchase Price:	N/A

All capitalized terms in this Notice of Issuance shall have the meaning assigned to them in this Notice of Issuance, the Plan (including the Appendix for Israel) or the Agreement, as applicable. The terms and conditions governing your grant are set forth in the Plan (including the Appendix for Israel) and the Agreement. This award is contingent upon your execution of the Agreement.

Congratulations.

		Yours truly,

	/s/	Alla Patlis
	Alla Patlis, Interim Chief
	Financial Officer and Controller

Exhibit 10.3

Second Amendment to Employment Agreement

This Second Amendment to Employment Agreement (this “Amendment”) effective July 26, 2017 (the “Second Amendment Effective Date”) is an amendment to that certain Employment Agreement (the “Agreement”) dated as of September 28, 2015 and amended March 7, 2017, by and between Brainstorm Cell Therapeutics Ltd., a company incorporated under the laws of the State of Israel and maintaining its principal place of business at 12 Bazel St. Petach Tikva, Israel (the “Subsidiary”), Brainstorm Cell Therapeutics Inc. (the “Company”) and Chaim Lebovits (the “Employee”).

NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Subsection 3.1 to the Agreement is hereby deleted in its entirety and amended and restated as follows:

3.1 COMPENSATION APPROVED ON SECOND AMENDMENT EFFECTIVE DATE:

(a) Salary . From the Second Amendment Effective Date the Company shall pay Employee an annualized gross base salary of USD $500,000 (the “Salary”) paid in accordance with the Company’s normal payroll practices.

(b) Bonus . On and after the Second Amendment Effective Date, Employee shall be eligible to receive an annual cash bonus equal to fifty percent (50%) of Employee’s Base Salary, subject to his satisfaction of pre-established performance goals to be mutually agreed upon by the Board (or a committee thereof) and the Employee each year during the employment period. Performance shall be evaluated through a performance management framework and a bonus range based on the target bonus.

(c) Equity Grant . On the Second Amendment Effective Date and on each anniversary thereafter, the Employee shall receive a grant of restricted stock under the Company’s 2014 Global Share Option Plan (or any successor or other equity plan then maintained by the Company; the “Plan”) comprised of a number of shares of common stock of the Company with a fair market value determined based on the price of the Company’s common stock at the end of normal trading hours on the business day immediately preceding the date of grant according to Nasdaq, equal to 30% of the Employee’s Base Salary (each, an “Equity Grant”). Each Equity Grant shall be contingent upon Employee’s execution of one or more restricted stock agreements in such form and substance as may reasonably be determined by the Company. Each Equity Grant shall vest as to twenty-five percent (25%) of the award on each of the first, second, third and fourth anniversary of the date of grant, provided the Employee remains continuously employed by the Company from the date of grant through each applicable vesting date. Each Equity Grant shall be subject to accelerated vesting upon a Change of Control of the Company and such other accelerated vesting as provided in this Agreement or the Plan (and any award agreement evidencing such grant, to the extent such award agreement contains more preferential terms). In the event of the Employee’s termination of employment, the Employee shall retain his right to any vested shares (after taking into account any accelerated vesting) and any portion of the Equity Grant that is not yet vested (after taking into account such accelerated vesting) shall automatically be immediately forfeited to the Company, without the payment of any consideration to the Employee. In addition, the Employee shall be entitled to receive additional equity or equity-based awards, including stock options, as determined by the Board (or the Compensation Committee of the Board) in its sole discretion.

(d) Option Grant . On the Second Amendment Effective Date the Company shall grant the Employee an option to purchase stock of the Company (the “Option”) on shares with a fair market value (as determined based on the closing price of the Company’s common stock at the end of normal trading hours on the business day immediately preceding the Second Amendment Effective Date according to Nasdaq) of Two Hundred Thousand U.S. Dollars ($200,000) on the Second Amendment Effective Date. The Option shall be fully vested and exercisable as of the date of grant and shall remain exercisable until the 2nd anniversary of the date of grant, regardless of whether the Employee remains employed by the Company. The exercise price per share shall be equal to the fair market value on the date of grant (as determined based on the price of the Company’s common stock immediately preceding normal trading hours on the date of grant according to Nasdaq). The grant of the Option is also contingent upon Employee’s execution of one or more stock option agreements in such form and substance as may reasonably be determined by the Company.

(e) Change of Control . “Change of Control” means the first to occur of any of the following: (i) The sale, transfer, conveyance or other disposition by the Company, in one or a series of related transactions, whereby an independent third party(s) becomes the beneficial owner of a majority of the voting securities of the Company; (ii) any merger, consolidation or similar transaction involving the Company, other than a transaction in which the stockholders of the Company immediately prior to the transaction hold immediately thereafter in the same proportion as immediately prior to the transaction not less than 50% of the combined voting power of the then voting securities with respect to the election of the Board of Directors of the resulting entity; or (iii) any sale of all or substantially all of the assets of the Company. Notwithstanding the foregoing, no change in ACCBT Corp., ACC International Holdings Ltd. or their affiliates’ ownership of the Company shall be deemed a Change of Control under this Agreement, and none of the following shall, either together or alone, constitute a Change of Control: (A) the subscription for, or issuance of Company securities (whether or not constituting more than 50% of the Company’s issued and outstanding securities (unless such subscription or issuance would result in a Change of Control under clause (i) above)); (B) the issuance or exercise of Board appointment or nomination rights of any kind (whether or not relating to a majority of Board members); (C) preemptive rights to purchase securities of the Company, or the exercise of such rights; (D) the right to consent to Company corporate actions; or (E) the exercise of warrants or options.

Section 4 of the Agreement (“TERM OF AGREEMENT”) is hereby deleted in its entirety and amended and restated as follows:

4. TERMINATION AND CONSEQUENCES .

4.1 The Employee’s Rights to Terminate . Notwithstanding any other provision of this Agreement to the contrary, the Employee may terminate this Agreement at any time, (i) for Good Reason (as defined in Section 5(g) below), or (ii) without Good Reason on (A) thirty (30) days’ prior written notice to the Company through the first anniversary of the Effective Date; (B) sixty (60) days’ prior written notice following the first anniversary of the Effective Date.

4.2 The Company’s Right to Terminate . Notwithstanding any other provision of this Agreement to the contrary, the Company may terminate this Agreement at any time during the term hereof, (i) immediately with Cause (as defined in Section 4.8 below), or (ii) on (A) thirty (30) days’ prior written notice to the Employee through the first anniversary of the Effective Date; or (B) sixty (60) days’ prior written notice following the first anniversary of the Effective Date, without Cause.

4.3 Consequences of Termination without Cause or for Good Reason . If the Company terminates this Agreement or Employee’s employment hereunder without Cause or if the Employee terminates this Agreement or his employment hereunder with Good Reason as defined in Section 4.7 hereof, the Company shall: (i) pay the Employee, as severance pay, an amount equal to six (6) months of his Base Salary (which severance pay shall increase to an amount equal to nine (9) months of his then current Base Salary if such termination occurs after the two-year anniversary of the Effective Date and to an amount equal to twelve (12) months of his then current Base Salary if such termination occurs after the third anniversary of the Effective Date; provided Employee was actively employed by the Company on such anniversary date) (assuming Employee is actively employed by the Company on such anniversary date (the “Payment Period”) payable in a lump sum payment within ninety (90) days following the termination date; and (ii) pay the Employee within thirty (30) days of the termination of his employment (or such revised payment period pursuant to Section 4.10 of this Agreement) any portion of the bonus compensation that the Employee would otherwise be entitled to receive during the Payment Period (giving Employee credit for those milestones and performance goals that Employee successfully completed through the effective termination date); (iii) immediately vest in the number of equity or equity based awards that would have vested during the following six (6) months following the effective date of termination of employment; and (iv) shall continue to provide to or pay the cost of continuation of Employee’s and his eligible dependents’ health insurance benefits contemplated under Section 3.7 hereof during the Payment Period. Should the Employee become eligible for health insurance benefits provided by a new employer during the duration of Payment Period, then the Company’s obligation to pay for or reimburse the Employee for health insurance costs will terminate when the Employee’s new health insurance benefit begins. Notwithstanding anything to the contrary, no compensation of any kind shall be payable to the Employee pursuant to this Section 4.3 unless or until Employee executes and delivers a full and general waiver and release to the Company (in favor of the Company, its successors, assigns, Board members, officers, employees, affiliates, subsidiaries, parent companies and representatives), in a form reasonably acceptable to the Company and the Employee, such waiver and release to be delivered by Employee within ten (10) days after the termination of his employment (unless applicable law requires a longer time period, in which case this date will be extended to the minimum time required by applicable law).

4.4 Consequences of Termination With Cause or Without Good Reason . If the Company terminates this Agreement or Employee’s employment hereunder with Cause or the Employee terminates this Agreement or his employment hereunder without Good Reason, then (i) Employee’s Base Salary shall be discontinued upon the termination of the Agreement or his employment hereunder, (ii) no bonus compensation, accrued or otherwise, shall be payable for the year in which the termination with Cause or without Good Reason occurs, (iii) to the extent permitted by applicable law, the Employee shall cease to be entitled to participate in any benefit plans or programs maintained by the Company, and (iv) Employee shall forfeit all rights to any unvested Company stock options if terminated by the Company for Cause and shall forfeit all rights with respect to any Company unvested restricted stock if terminated by the Company for Cause or if terminated by the Employee without Good Reason. The Employee shall be entitled to receive payment for all accrued Base Salary and benefits earned through and including the date of termination, including, but not limited to all bonus compensation earned, but not yet paid, for the year preceding the year in which such termination occurs, payment for all accrued, unused vacation, reimbursement of all business expenses incurred through the date of termination, and all vested benefits to which the employee is entitled. In addition, the Employee and his eligible dependents shall be entitled to continue all group health benefits at his or their expense, pursuant to applicable law.

4.5 Consequences of Termination for Death or Disability . If the Employee dies or is unable to perform the Employee Duties and/or any other obligations he may have hereunder because of a Disability (as defined herein) during the term of this Agreement, then the Agreement shall terminate, except that the Company shall pay within thirty (30) days of such event (or such revised payment period pursuant to Section 4.10 of this Agreement) all accrued Base Salary and any bonus compensation that the Employee would otherwise have been entitled to receive through the date that the Employee’s employment with the Company is terminated and for a period of three (3) months thereafter. In the case of a Disability, the Employee shall also receive any applicable payments and benefits pursuant to any disability plan or policy sponsored or maintained by the Company. The unvested Equity Grant shall remain outstanding in accordance with their existing terms and conditions.

4.6 Fringe Benefits . In the case of termination under Sections 4.1, 4.2, 4.3 or 4.4 above, inclusive, subject to applicable law, the Company shall discontinue any other benefits and perquisites provided under Section 3.1 above that are not otherwise provided for effective as of the date that the Company’s obligation to pay Base Salary terminates.

4.7 Definition of Good Reason . “Good Reason” means (i) a material reduction of the Employee’s Base Salary and benefits from the levels in effect immediately prior to the reduction, (ii) a material reduction of the Employee Duties and responsibilities from those in effect immediately prior to the reduction, or (iii) material breach by the Company of any provision of this Agreement after receipt of written notice thereof from the Employee and failure by the Company to cure the breach within thirty (30) days thereafter. A termination by the Employee under Sections 4.7(i), 4.7(ii) and/or 4.7(iii) will not be considered a termination for Good Reason unless within thirty (30) days of the later of the last event relied upon by the Employee to establish Good Reason or Employee’s knowledge thereof, the Employee furnishes the Company with a written statement specifying the reason or reasons why he believes he is entitled to terminate his employment for Good Reason and affords the Company at least thirty (30) days during which to remedy the cause thereof. Such thirty (30)-day notice period may run concurrently with the thirty (30)-day notice specified in Section 4.1 above. Any such termination shall not be deemed a breach of the Agreement. If the Company timely cures the condition giving rise to Good Reason for the Employee’s resignation, the notice of termination shall become null and void. If the Company does not timely cure the condition giving rise to Good Reason, the Employee’s termination of employment shall be effective as of the end of such cure period.

4.8 Definition of Cause . “Cause” means a good faith finding by the Company of: (i) gross negligence or willful misconduct by Employee in connection with the Employee Duties, (ii) Employee’s indictment for, conviction of, or entry of a plea of guilty or no contest or similar plea with respect to any felony, acts of fraud, misrepresentation, embezzlement, theft, dishonesty or breach of fiduciary duty of loyalty to the Company or any of its subsidiaries, or a material and intentional breach of Sections 5, 6, 7 or 8.2 hereof by Employee, (iii) willful or repeated failure to follow specific directives of the CEO and/or the Board (or its committees or other designees), (iv) willful failure by Employee (except where due to Disability or where performance of the Employee’s duties is prohibited by law) or refusal to perform the Employee Duties, which failure or refusal is not corrected by the Employee within ten (10) business days following receipt by the Employee of written notice from the Company of such failure or refusal, and the actions required to correct the same, to the satisfaction of the CEO, (v) misappropriation by Employee of the assets or business opportunities of the Company or its affiliates, (vi) any intentionally wrongful act or omission by the Employee that has a material adverse effect on the reputation or business of the Company or any of its subsidiaries or affiliates, (vii) a willful and/or knowing breach by Employee of any representations or warranties included in this Agreement, or (viii) Employee knowingly allowing any third party to commit any of the acts described in any of the preceding clause (v) against the Company.

4.9 Definition of Disability . “Disability” means the inability of the Employee to perform the Employee Duties pursuant to the terms of this Agreement, because of physical or mental disability where such disability shall have existed for a period of more than ninety (90) consecutive days in any two hundred and seventy (270) day period. The existence of a Disability means that the Employee cannot perform the essential functions of his position with or without reasonable accommodation. The fact of whether or not a Disability exists hereunder shall be determined by a professionally qualified medical expert reasonably chosen by the Company.

4.10 Special Payment Provision . Notwithstanding any provision in the Agreement to the contrary:

(i) This Agreement is intended to comply with the requirements of Section 409A of the Code (“Section 409A”) and regulations promulgated thereunder such that no payment provided hereunder shall be subject to an “additional tax” within the meaning of Section 409A. To the extent that any provision in this Agreement is ambiguous as to its compliance with Section 409A, the provision shall be read in such a manner so that all payments due under this Agreement shall not be subject to any additional tax. For purposes of Section 409A, each payment made under this Agreement shall be treated as a separate payment. In no event may the Employee, directly or indirectly, designate the calendar year of payment. All reimbursements provided under this Agreement shall be made or provided in accordance with the requirements of section 409A, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during the Employee’s lifetime (or during a shorter period of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred, and (iv) the right to reimbursement is not subject to liquidation or exchange for another benefit.

(ii) If payment or provision of any amount or other benefit that is a “deferral of compensation” subject to section 409A of the Code at the time otherwise specified in this Agreement or elsewhere would subject such amount of benefit to additional tax pursuant to section 409A(a)(1)(B) of the Code, and if payment or provision thereof at a later date would avoid any such additional tax, then the payment or provision thereof shall be postponed to the earliest date on which such amount or benefit can be paid or provided without incurring such additional tax. In the event this Section 11(o)(ii) requires a deferral of any payment, such payment shall be accumulated and paid in a single lump sum on such earliest date together with interest for the period of delay, compounded annually, equal to the prime rate (as published in The Wall Street Journal), and in effect as of the date of the payment should otherwise have been provided.

(iii) If any payment or benefit permitted or required under this Agreement is reasonably determined by either party to be subject for any reason to a material risk of additional tax pursuant to section 409A(a)(1)(B) of the Code, then the parties shall promptly agree in good faith on appropriate provisions to avoid such risk without materially changing the economic value of this Agreement to either party.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment effective as of the date set forth above.

The Company:
BRAINSTORM CELL THERAPEUTICS LTD.		The Employee:


By:		By:
	Name:		Chaim Lebovits
	Title:


The Parent:
BRAINSTORM CELL THERAPEUTICS INC.


By:
	Name:
	Title:

EXHIBIT 31.1

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-Q 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 registrant as of, and for, the periods presented in this report;

4. The registrant’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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant 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 registrant, 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’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

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’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 registrant’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 registrant’s internal control over financial reporting.

Date: October 17, 2017	/s/ Chaim Lebovits
	Name: Chaim Lebovits
	Title: President and Chief Executive Officer
	(Principal Executive Officer)

EXHIBIT 31.2

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, Alla Patlis, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q 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 registrant’s internal control over financial reporting.

Date: October 17, 2017	/s/ Alla Patlis
	Name: Alla Patlis
	Title: Interim Chief Financial Officer
	(Principal Financial Officer)

EXHIBIT 32.1

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-Q of Brainstorm Cell Therapeutics Inc. for the period ended September 30, 2017, 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 that:

(1) the Quarterly Report on Form 10-Q for the period ended September 30, 2017 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 the Quarterly Report on Form 10-Q for the period ended September 30, 2017 fairly presents, in all material respects, the financial condition and results of operations.

October 17, 2017	/s/ Chaim Lebovits
	Name: Chaim Lebovits
	Title: President and Chief Executive Officer
	(Principal Executive Officer)

The foregoing certification is not deemed filed with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), and is not to be incorporated by reference into any filing of Brainstorm Cell Therapeutics Inc. under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

EXHIBIT 32.2

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) the Quarterly Report on Form 10-Q for the period ended September 30, 2017 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

October 17, 2017	/s/ Alla Patlis
	Name: Alla Patlis
	Title: Interim Chief Financial Officer
	(Principal Financial Officer)