U.S. dollars
in thousands
Notes to the Interim
Condensed Consolidated Financial Statements
NOTE
1 - GENERAL
|
A.
|
Brainstorm Cell Therapeutics Inc. (formerly: Golden Hand Resources Inc. - the “Company”)
was incorporated in the State of Washington on September 22, 2000. 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”.
|
|
B.
|
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.
|
|
C.
|
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.
|
|
D.
|
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
|
A.
|
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 March 31, 2017, are not necessarily indicative of the results that may be expected for the year
ended December 31, 2017.
|
B.
|
Significant Accounting Policies
|
The
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.
|
C.
|
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 changes 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 we 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 have 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.):
|
C.
|
Recent Accounting Standards (Cont.):
|
In March 2016, the FASB issued
an accounting standard update aimed at simplifying the accounting for share-based payment transactions. Included in the update
are modifications to the accounting for income taxes upon vesting or settlement of awards, employer tax withholding on shared-based
compensation, forfeitures, and financial statement presentation of excess tax benefits. This standard is effective beginning in
the first quarter of 2017; early adoption is permitted. 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 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.
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:
|
a)
|
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.
|
|
b)
|
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 March 31, 2017 and December 31, 2016 include bank deposits bearing annual interest rates varying from 0.15%
to 1.48%, with maturities of up to 1 and 6 months as of March 31, 2017 and December 31, 2016.
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 5 - STOCK
CAPITAL
|
A.
|
The rights of Common Stock are as follows:
|
Holders of Common
Stock have the right to receive notice to participate and vote in 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.
|
B.
|
Issuance of shares, warrants and options:
|
|
1.
|
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.
|
|
In February 2010, the Company issued 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.
|
|
|
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.
|
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 5
- STOCK CAPITAL (Cont.):
|
B.
|
Issuance of shares, warrants and options: (Cont.):
|
|
1.
|
Private placements and public offering: (Cont.):
|
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 5 -
STOCK CAPITAL (Cont.):
|
B.
|
Issuance of shares, warrants and options: (Cont.):
|
|
1.
|
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.
|
2.
|
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 5 - STOCK
CAPITAL (Cont.):
|
B.
|
Issuance of shares, warrants and options: (Cont.):
|
|
2.
|
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.
From
2005 through 2009, the Company granted its directors options to purchase an aggregate of 53,333 shares of Common Stock of the Company
at an exercise price of $2.25 per share. The options are fully vested and will expire 10 years from the date of issuance.
On
April 13, 2010, the Company, Abraham Israeli and Hadasit Medical Research Services and Development Ltd. (“Hadasit”)
entered into an Agreement (as amended, the “Hadasit Agreement”) pursuant to which Prof. Israeli agreed, during the
term of the Hadasit Agreement, to serve as (i) the Company’s Clinical Trials Advisor and (ii) a member of the Company’s
Board of Directors.
Accordingly, the Company granted
to Prof. Israeli in each of April 2010, June 2011, April 2012 and April 2013, an option to purchase 11,111 shares of Common Stock
at an exercise price equal to $0.00075 per share.
In addition, the Company granted
Hadasit, in each of April 2010, June 2011, April 2012, and April 2013, a warrant to purchase 2,222 shares of Common Stock at an
exercise price equal to $0.00075 per share.
In addition, on April 13, 2014,
pursuant to the Hadasit Agreement, and pursuant to the December 2013 letter from the Company to Prof. Israeli, the Company issued
to Prof. Israeli, an option to purchase 20,000 shares of its Common Stock at an exercise price of $0.00075 per share.
On
April 25, 2014 the Agreement among the Company, Prof. Abraham Israeli and Hadasit was terminated. As a result of the termination,
Prof. Israeli and Hadasit will no longer receive annual grants to purchase shares of Common Stock, and any outstanding and unvested
grants made pursuant to the Agreement ceased to vest. The grants were valid until and exercisable only on or before October 25,
2014.
In
October 2014, Prof Israeli exercised his option to purchase 44,444 shares of Common Stock of the Company, and Hadasit exercised
its warrants to purchase 8,889 shares of Common Stock of the Company.
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 a director 60,000 shares of restricted Common Stock. The shares will vest in three installments
through August 22, 2017.
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 5 - STOCK
CAPITAL (Cont.):
|
B.
|
Issuance of shares, warrants and options: (Cont.):
|
|
2.
|
Share-based compensation to employees and to directors: (Cont.):
|
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) will be forfeited
and that the vested potion of the option (to purchase 126,667 shares) will terminate on September 30, 2016.
On August 15, 2014, 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
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.
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 will 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
is 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.
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 5 - STOCK
CAPITAL (Cont.):
|
B.
|
Issuance of shares, warrants and options: (Cont.):
|
|
2.
|
Share-based compensation to employees and to directors: (Cont.):
|
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 vest 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 vest 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 will vest 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.
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.
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 5 - STOCK
CAPITAL (Cont.):
|
B.
|
Issuance of shares, warrants and options: (Cont.)
|
|
2.
|
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 three months ended
March 31, 2017
|
|
|
|
Amount of
options
|
|
|
Weighted
average
exercise
price
|
|
|
Aggregate
intrinsic
value
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at beginning of period
|
|
|
874,841
|
|
|
|
2.1258
|
|
|
|
|
|
Granted
|
|
|
54,514
|
|
|
|
3.7605
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Cancelled
|
|
|
(38,446
|
)
|
|
|
3.6160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at end of period
|
|
|
890,909
|
|
|
|
2.1615
|
|
|
|
1,860,623
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and expected-to-vest at end of period
|
|
|
873,242
|
|
|
|
2.1901
|
|
|
|
1,798,789
|
|
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 March 31, 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
three months ended March 31, 2017 and 2016 amounted to $126 and $203, respectively.
|
3.
|
Shares and warrants to investors and service providers:
|
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.
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 5 -
STOCK CAPITAL (Cont.):
|
B.
|
Issuance of shares, warrants and options: (Cont.)
|
|
3.
|
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
|
|
|
|
-
|
|
|
|
100,220
|
|
|
|
80,000
|
|
|
|
2.25
- 7.05
|
|
|
|
80,000
|
|
|
|
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
|
|
|
|
253,333
|
|
|
|
Jun-17
|
|
Jun 2014
|
|
|
84,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
84,000
|
|
|
|
4.5
|
|
|
|
84,000
|
|
|
|
Jun-17
|
|
Jan 2015
|
|
|
3,858,201
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,858,201
|
|
|
|
6.5
|
|
|
|
3,858,201
|
|
|
|
Jun-18
|
|
|
|
|
14,246,831
|
|
|
|
4,489,973
|
|
|
|
3,437,988
|
|
|
|
6,318,868
|
|
|
|
|
|
|
|
6,318,868
|
|
|
|
|
|
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 5 - STOCK CAPITAL
(Cont.):
|
B.
|
Issuance of shares, warrants and options: (Cont.):
|
|
3.
|
Shares and warrants to service
providers: (Cont.):
|
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 September 22, 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.
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 5 - STOCK CAPITAL
(Cont.):
|
B.
|
Issuance of shares, warrants and options: (Cont.):
|
|
4.
|
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:
|
|
Three months ended
March 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Research and development
|
|
$
|
55
|
|
|
$
|
3
|
|
General and administrative
|
|
|
71
|
|
|
|
231
|
|
Total stock-based compensation expense
|
|
$
|
126
|
|
|
$
|
234
|
|