UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FOR THE QUARTERLY PERIOD ENDED June 30, 2008
 
or

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

FOR THE TRANSITION PERIOD FROM ________ TO ________.

COMMISSION FILE NUMBER 333-61610

BRAINSTORM CELL THERAPEUTICS INC.

(Exact name of registrant as specified in its charter)
 
DELAWARE
20-8133057
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
 
110 EAST 59th STREET
NEW YORK, NY 10022
(Address of principal executive offices)

(212) 557-9000
(Registrant's telephone number)

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

Large accelerated filer  ¨            
  
Accelerated filer  ¨              
Non-accelerated filer  ¨ (Do not check if a smaller reporting company)
  
Smaller reporting company  x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x

As of August 12, 2008, the number of shares outstanding of the registrant’s common stock, $0.00005 par value per share, was 49,968,918.
 

TABLE OF CONTENTS
 
 
 
Page Number
PART I
 
 
 
 
 
Item 1. Financial Statements
 
1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
27
Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
32
Item 4. Controls and Procedures
 
32
 
 
32
PART II
 
 
 
 
 
Item 1. Legal Proceedings
 
33
Item 1A. Risk Factors
  
34
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
34
Item 4. Submission of Matters to a Vote of Security Holders
  
35
Item 5. Other Information
  
35
Item 6. Exhibits
 
35
 
 
PART I: FINANCIAL INFORMATION

SPECIAL NOTE
 
Unless otherwise specified in this quarterly report on Form 10-Q,, all references to currency, monetary values and dollars set forth herein shall mean United States (U.S.) dollars.
 
Item 1. Financial Statements.

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

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2008

IN U.S. DOLLARS IN THOUSANDS

UNAUDITED

INDEX

 
Page
Consolidated Balance Sheets
2
   
Consolidated Statements of Operations
3
 
  
Statements of Changes in Stockholders' Equity (Deficiency)
4 - 6
   
Consolidated Statements of Cash Flows
7
   
Notes to Consolidated Financial Statements
8 - 27
 
1

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

   
June 30,
  
December 31,
  
   
2008
  
2007
  
   
Unaudited
      
ASSETS
          
           
CURRENT ASSETS:
          
Cash and cash equivalents
  
$
57
  
$
86
  
Restricted cash
    
40
    
35
 
Other receivable and prepaid expenses
   
68
    
137
 
               
Total current assets
    
165
    
258
 
               
LONG-TERM INVESTMENTS:
              
Prepaid expenses
    
13
    
9
 
Severance pay fund
    
124
    
75
 
               
Total Long-term investments
    
137
    
84
 
               
PROPERTY AND EQUIPMENT, NET
   
821
    
739
 
               
DEFERRED CHARGES
    
-
    
2
 
Total assets
    
1,123
    
1,083
 
               
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
              
               
CURRENT LIABILITIES:
              
Short term credit from bank
   
27
    
-
  
Trade payables
    
709
    
838
  
Other accounts payable and accrued expenses
   
1434
    
1,049
  
Short-term convertible loan
   
166
    
396
  
Short-term loan
   
243
    
945
  
               
Total current liabilities
   
2,579
    
3,228
 
               
LONG TERM CONVERTIBLE LOANS
   
-
    
200
 
               
ACCRUED SEVERANCE PAY
   
137
    
83
 
               
Total liabilities
    
2,716
    
3,511
 
               
STOCKHOLDERS' DEFICIENCY:
              
Stock capital: (Note 7)
              
Common stock of $0.00005 par value - Authorized: 800,000,000 shares at June 30, 2008 and December 31, 2007; Issued and outstanding: 49,968,918 and 41,004,409 shares at June 30, 2008 and December 31, 2007, respectively
    
2
    
2
 
Subscription on account of shares
   
491
    
-
 
Additional paid-in capital
    
32,520
    
30,058
 
Deficit accumulated during the development stage
    
(34,606
)
  
(32,488
)
               
Total stockholders' deficiency
   
(1,593
)
  
(2,428
)
               
Total liabilities and stockholders' deficiency
  
$
1,123
  
$
1,083
  
 
The accompanying notes are an integral part of the consolidated financial statements.

2

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

   
Three months ended
June 30,
 
Six months ended
June 30,
 
Period from September 22, 2000 (inception date) through June 30,
 
 
 
2008
 
2007
 
2008
 
2007
 
2008
  
   
Unaudited
 
Unaudited
 
Unaudited
  
Operating costs and expenses:
                      
                       
Research and development
 
$
571
  
$
463
  
$
1,168
  
$
1,053
  
$
21,373
  
Less - participation by the Office of the Chief Scientist
    
288
    
57
    
295
    
57
    
635
  
                                 
Research and development, net
    
283
    
406
    
873
    
996
    
20,738
  
General and administrative
    
479
    
457
    
1,023
    
1,205
    
11,083
  
                                 
Total operating costs and expenses
    
762
    
863
    
1,896
    
2,201
    
31,821
  
                                 
Financial expenses, net
    
94
    
284
    
222
    
664
    
2,568
  
                                 
     
856
    
1,147
    
2,118
    
2,865
    
34,389
  
Taxes on income
   
-
    
6
    
-
    
11
    
53
  
                                 
Loss from continuing operations
    
856
    
1,153
    
2,118
    
2,876
    
34,442
  
Net loss from discontinued operations
   
-
    
-
    
-
    
-
    
164
  
                                 
Net loss
   
856
    
1,153
    
2,118
    
2,876
    
34,606
  
                                 
Basic and diluted net loss per share from continuing operations
  
$
0.02
  
$
0.04
  
$
0.05
  
$
0.12
        
                                 
Weighted average number of shares outstanding used in computing basic and diluted net loss per share
    
47,697,713
    
24,819,032
    
44,736,029
    
24,596,881
        
 
The accompanying notes are an integral part of the consolidated financial statements.
 
3

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

               
Deficit accumulated
  
Total
  
       
Additional
  
Deferred
  
during the
  
stockholders'
  
   
Common stock
  
paid-in
  
stock-based
  
development
  
equity
  
   
Number
  
Amount
  
Capital
 
compensation
  
stage
  
(deficiency)
  
Balance as of September 22, 2000 (date of inception)
  
- 
  
-
  
- 
  
- 
  
- 
  
- 
  
                           
Shares issued on September 22, 2000 for cash at $0.00188 per share
    
8,500,000
   
1
    
16
   
-
   
-
   
17
 
Shares issued on March 31, 2001 for cash at $0.0375 per share
    
1,600,000
   
*
   
60
   
-
   
-
   
60
 
Contribution of capital
   
-
   
-
    
8
   
-
   
-
   
8
 
Net loss
    
-
   
-
    
-
   
-
   
(17
)
  
(17
)
                                       
Balance as of March 31, 2001
    
10,100,000
   
1
    
84
   
-
   
(17
)
  
68
 
                                       
Contribution of capital
   
-
   
-
    
11
   
-
   
-
   
11
 
Net loss
    
-
   
-
    
-
   
-
   
(26
)
  
(26
)
                                       
Balance as of March 31, 2002
    
10,100,000
   
1
    
95
   
-
   
(43
)
  
53
 
                                       
Contribution of capital
    
-
   
-
    
15
   
-
   
-
   
15
 
Net loss
    
-
   
-
    
-
   
-
   
(47
)
  
(47
)
                                       
Balance as of March 31, 2003
    
10,100,000
   
1
    
110
   
-
   
(90
)
  
21
 
                                       
2-for-1 stock split
    
10,100,000
   
*
   
-
   
-
   
-
   
-
 
Shares issued on August 31, 2003 to purchase mineral option at $0.065 per share
    
100,000
   
*
   
6
   
-
   
-
   
6
 
Cancellation of shares granted to Company's President
    
(10,062,000
)
  
*
   
* -
   
-
   
-
   
-
 
Contribution of capital
    
-
   
-
    
15
   
-
   
-
   
15
 
Net loss
    
-
   
-
    
-
   
-
   
(73
)
  
(73
)
                                       
Balance as of March 31, 2004
    
10,238,000
   
1
    
131
   
-
   
(163
)
  
(31
)
                                       
Shares issued on June 24, 2004 for private placement at $0.01 per share, net of $25,000 issuance expenses
   
8,510,000
   
*
   
60
   
-
   
-
   
60
 
Contribution capital
   
-
   
-
    
7
   
-
   
-
   
7
 
Shares issued in 2004 for private placement at $0.75 per unit
   
1,894,808
   
*
   
1,418
   
-
   
-
   
1,418
 
Cancellation of shares granted to service providers
   
(1,800,000
)
  
*
         
-
   
-
   
-
 
Deferred stock-based compensation related to options granted to employees
   
-
   
-
    
5,979
   
(5,979
)
  
-
   
-
 
Amortization of deferred stock-based compensation related to shares and options granted to employees
   
-
   
-
    
-
   
584
   
-
   
584
 
Compensation related to shares and options granted to service providers
   
2,025,000
   
*
   
17,506
   
-
   
-
   
17,506
 
Net loss
    
-
   
-
    
-
   
-
   
(18,840
)
  
(18,840
)
Balance as of March 31, 2005
    
20,867,808
   
1
   
25,101
   
(5,395
)
  
(19,003
)
  
704
 

*    Represents an amount less than $1.
 
The accompanying notes are an integral part of the consolidated financial statements.

4

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
U.S. dollars in thousands (except share data) 
                                
                  
  
 
Deficit accumulated
 
Total
 
 
 
  
 
  
 
Additional
 
Deferred
 
during the
 
stockholders'
 
 
 
Common stock 
 
paid-in
 
stock-based
 
development
 
equity
 
 
 
Number
 
Amount
 
Capital
 
compensation
 
stage
 
(deficiency)
  
Balance as of March 31, 2005
    
20,867,808
   
1
    
25,101
   
(5,395
)
  
(19,003
)
  
704
 
                                       
Shares issued on May 12, 2005 for private placement at $0.8 per share
   
186,875
    
*
   
149
   
-
   
-
   
149
 
Shares issued on July 27, 2005 for private placement at $0.6 per share
   
165,000
    
*
   
99
   
-
   
-
   
99
 
Shares issued on September 30, 2005 for private placement at $0.8 per share
   
312,500
    
*
   
225
   
-
   
-
   
225
 
Shares issued on December 7, 2005 for private placement at $0.8 per share
   
187,500
    
*
   
135
   
-
   
-
   
135
 
Forfeiture of options granted to employees
    
-
    
-
    
(3,363
)
  
3,363
   
-
   
-
 
Deferred stock-based compensation related to shares and options granted to directors and employees
    
200,000
    
*
   
486
   
(486
)
  
-
   
-
 
Amortization of deferred stock-based compensation related to options and shares granted to employees and directors
   
-
    
-
    
51
   
1,123
   
-
   
1,174
 
Stock-based compensation related to options and shares granted to service providers
   
934,904
    
*
   
662
   
-
   
-
   
662
 
Reclassification due to application of EITF 00-19
   
-
    
-
    
(7,906
)
              
(7,906
)
Beneficial conversion feature related to a convertible bridge loan
   
-
    
-
    
164
   
-
   
-
   
164
 
Net loss
    
-
    
-
    
-
   
-
   
(3,317
)
  
(3,317
)
                                       
Balance as of March 31, 2006
    
22,854,587
    
1
    
15,803
   
(1,395
)
  
(22,320
)
  
(7,911
)
 
                                      
Elimination of deferred stock compensation due to implementation of SFAS 123(R)
    
-
    
-
    
(1,395
)
  
1,395
   
-
   
-
 
Stock-based compensation related to shares and options granted to directors and employees)
    
200,000
    
*
   
1,168
   
-
   
-
   
1,168
 
Reclassification due to application of EITF 00-19
   
-
    
-
    
7,191
   
-
   
-
   
7,191
 
Stock-based compensation related to options and shares granted to service providers
   
1,147,225
    
*
   
453
   
-
   
-
   
453
 
Warrants issued to convertible note holder
   
-
    
-
    
11
   
-
   
-
   
11
 
Warrants issued to loan holder
   
-
    
-
    
110
   
-
   
-
   
110
 
Beneficial conversion feature related to convertible bridge loans
   
-
    
-
    
1,086
   
-
   
-
   
1,086
 
Net loss
    
-
    
-
    
-
   
-
   
(3,924
)
  
(3,924
)
                                       
Balance as of December 31, 2006
    
24,201,812
    
1
    
24,427
   
-
   
(26,244
)
  
(1,816
)
 
*    Represents an amount less than $1.
 
The accompanying notes are an integral part of the consolidated financial statements.

5

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

   
 
 
Additional
 
 
 
 
 
 
 
 
 
 
 
paid-in
 
 
 
Deficit
     
       
Capital and
     
accumulated
  
Total
  
       
Subscription
  
Deferred
  
during the
  
stockholders'
  
   
Common stock
  
of
 
stock-based
  
development
  
equity
  
   
Number
  
Amount
  
shares
  
compensation
  
stage
  
(deficiency)
  
Balance as of December 31, 2006
    
24,201,812
    
1
    
24,427
   
-
   
(26,244
)
  
(1,816
)
                                       
Stock-based compensation related to options and shares granted to service providers
   
544,095
   
*
   
1,446
   
-
    
-
    
1,446
 
Warrants issued to convertible note holder
   
-
   
-
    
109
   
-
    
-
    
109
 
Stock-based compensation related to shares and options granted to directors and employees
   
200,000
   
*
   
1,232
   
-
    
-
    
1,232
 
Beneficial conversion feature related to convertible loans
   
-
   
-
    
407
   
-
    
-
    
407
 
Conversion of convertible loans
    
725,881
   
*
   
224
   
-
    
-
    
224
 
Exercise of warrants
    
3,832,621
   
*
   
214
   
-
    
-
    
214
 
Shares issued for private placement at $0.1818 per unit, net of finder's fee
   
11,500,000
   
1
    
1,999
   
-
    
-
    
2,000
 
Net loss
    
-
   
-
    
-
   
-
    
(6,244
)
  
(6,244
)
                                       
Balance as of December 31, 2007
    
41,004,409
    
2
    
30,058
   
-
    
(32,488
)
  
(2,428
)
                                       
Stock-based compensation related to options and stock granted to service providers
   
90,000
    
*
    
84
    
-
    
-
    
84
  
Stock-based compensation related to stock and options granted to directors and employees
    
-
    
*
   
349
    
-
    
-
    
349
  
Conversion of convertible loans
   
3,644,610
    
*
    
1,276
    
-
    
-
    
1,276
  
Exercise of warrants
   
900,000
    
*
   
-
    
-
    
-
    
-
  
Exercise of options
    
17,399
    
*
   
3
    
-
    
-
    
3
  
Subscription of shares
               
491
    
-
    
-
    
491
  
Shares issued for private placement at $0.1818 per unit, net of finder's fee
    
4,312,500
          
750
    
-
    
-
    
750
  
Net loss
                            
(2,118
)
  
(2,118
)
                                       
Balance as of June 30, 2008 (unaudited)
    
49,968,918
    
2
    
33,011
    
-
    
(34,606
)
  
(1,593
)

*    Represents an amount less than $1.

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

6

CONSOLIDATED STATEMENTS OF CASH FLOWS
In U.S. dollars in thousands

   
Six months ended
June 30,
 
Period from September 22, 2000 (inception date) through June 30,
 
 
 
2008
 
2007
 
2008
 
 
 
Unaudited
 
Unaudited
  
Cash flows from operating activities:
              
Net loss
  
$
(2,118
)
$
(2,876
)
$
(34,606
)
Less - loss for the period from discontinued operations
    
-
    
-
    
164
  
Adjustments to reconcile net loss to net cash used in operating activities:
                    
Depreciation and amortization of deferred charges
    
73
    
93
    
439
  
Erosion of restricted cash
    
(5
)
  
-
    
(11
)
Accrued severance pay, net
    
6
    
6
    
13
  
Accrued interest on loans
    
101
    
104
    
417
  
Amortization of discount on short-term loans
    
42
    
502
    
1,865
  
Change in fair value of options and warrants
    
-
    
-
    
(795
)
Expenses related to shares and options granted to service providers
   
84
    
714
    
20,216
  
Amortization of deferred stock-based compensation related to options granted to employees and directors
    
349
    
530
    
4,507
  
Decrease (increase) in accounts receivable and prepaid expenses
   
69
    
(45
)
  
(67
)
Increase (decrease) in trade payables
   
(129)
    
(40
)
  
709
  
Increase in other accounts payable and accrued expenses
    
385
    
460
    
1,430
  
Net cash used in continuing operating activities
    
(1,143
)
  
(552
)
  
(5,719
)
Net cash used in discontinued operating activities
    
-
    
-
    
(23
)
Total net cash used in operating activities
   
(1,143
)
  
(552
)
  
(5,742
)
                     
Cash flows from investing activities:
                    
Purchase of property and equipment
    
(153
)
  
(39
)
  
(1,079
)
Restricted cash
    
-
    
-
    
(29
)
Investment in lease deposit
    
(4
)
  
-
    
(13
)
                     
Net cash used in continuing investing activities
    
(157
)
  
(39
)
  
(1,121
)
Net cash used in discontinued investing activities
    
-
    
-
    
(16
)
Total net cash used in investing activities
    
(157
)
  
(39
)
  
(1,137
)
                     
Cash flows from financing activities:
                    
Proceeds from issuance of common stock and warrants
   
1,241
    
-
    
5,329
  
Proceeds from loans, notes and issuance of warrants net
    
-
    
535
    
2,061
  
Credit from the bank
   
27
    
-
    
26
  
Repayment of loans
   
-
    
-
    
(551
)
Proceeds from exercise of warrants and options
   
3
    
-
    
28
  
Net cash provided by continuing financing activities
    
1,271
    
535
    
6,893
  
Net cash provided by discontinued financing activities
    
-
    
-
    
43
  
Total net cash provided by financing activities
    
1,271
    
535
    
6,936
  
                     
Increase (decrease) in cash and cash equivalents
    
(29
)
  
(56
)
  
57
  
Cash and cash equivalents at the beginning of the period
    
86
    
60
    
-
  
Cash and cash equivalents at end of the period
    
57
  
$
4
    
57
  

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

7
 
NOTE 1:-
GENERAL

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

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

 
c.
On July 8, 2004, the Company entered into a licensing agreement with Ramot of Tel Aviv University Ltd. ("Ramot"), an Israeli corporation, to acquire certain stem cell technology. Subsequent to this agreement, the Company decided to focus on the development of novel cell therapies for neurodegenerative diseases, particularly, Parkinson's disease, based on the acquired technology and research to be conducted and funded by the Company.

Following the licensing agreement dated July 8, 2004, the management of the Company has decided to abandon all old activities related to the sale of the digital data recorder product. The discontinuation of this activity was accounted for under the provision of Statement of Financial Accounting Standards(”SFAS”) No  144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (“SFAS No. 144”).

 
d.
On November 22, 2004, the Company changed its name from Golden Hand Resources Inc. to Brainstorm Cell Therapeutics Inc. to better reflect its new line of business in the development of novel cell therapies for neurodegenerative diseases.

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

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

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

 
h.
Since its inception, the Company has devoted substantially most of its efforts to research and development, recruiting management and technical staff, acquiring assets and raising capital. In addition, the Company has not generated revenues. Accordingly, the Company is considered to be in the development stage, as defined in SFAS No. 7, "Accounting and reporting by development Stage Enterprises" ("SFAS No. 7").
 
8
 
   
As of June 30, 2008, the Company had an accumulated deficit of $34,606, working capital deficiency of $1,414, incurred net loss of $2,118 and negative cash flows from operating activities in the amount of $1,143 for the six months ended June 30, 2008. In addition, the Company has not yet generated any revenues.

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

NOTE 1:-
GENERAL (Cont.)

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

These financial statements do not include any adjustments relating to the recoverability and classification of assets carrying amounts or the amount and classification of liabilities that may be required should the Company be unable to continue as a going concern.

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

NOTE 2:-
SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies applied in the annual financial statements of the Company as of December 31, 2007 are applied consistently in these financial statements.

NOTE 3:-
UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

The accompanying unaudited interim financial statements have been prepared in a condensed format and include the consolidated financial operations of the Company and its fully owned subsidiary as of June 30, 2008 and for the six months then ended, in accordance with accounting principles generally accepted in the United States relating to the preparation of financial statements for interim periods. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2008 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2008.
 
9
 
NOTE 4:-
RESEARCH AND LICENSE AGREEMENT

On July 26, 2007, the Company entered into a Second Amended and Restated Research and License Agreement with Ramot. On August 1, 2007, the Company obtained a waiver and release from Ramot pursuant to which Ramot agreed to an amended payment schedule regarding the Company’s payment obligations under the amended license agreement, dated March 30, 2006, and waived all claims against the Company resulting from the Company's previous defaults and non-payment under the original and first amended license agreement. The payments described in the waiver and release covered all payment obligations that were past due and not yet due pursuant to the original license agreement. The waiver and release amends and restates the original payment schedule under the license agreement as follows:
 
10
 
NOTE 4:-
RESEARCH AND LICENSE AGREEMENT (Cont.)

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

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

Payment date
  
Amount
  
August 4, 2008
    
60
 
November 20, 2008
    
150
 
February 20, 2009
    
170
 

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

The company paid to Ramot the first three payments total of $400 but has not made yet the last two payments. As a result, the Company is in breach of the new agreement with Ramot and Ramot may terminate the research and license agreement. The Company is negotiating with Ramot to postpone the payments.
 
As of June 30, 2008 the Company's obligation to Ramot, is in the amount of $525.

NOTE 5:-
CONSULTING AGREEMENTS

 
a.
On July 8, 2004, the Company entered into two consulting agreements with Prof. Eldad Melamed and Dr. Daniel Offen (together, the "Consultants"), upon which the Consultants shall provide the Company scientific and medical consulting services in consideration for a monthly payment of $6 each. In addition, the Company granted each of the Consultants, a fully vested warrant to purchase 1,097,215 shares of Common Stock at an exercise price of $0.01 per share. The warrants issued pursuant to the agreement were issued to the Consultants effective as of November 4, 2004. Each of the warrants is exercisable for a seven-year period beginning on November 4, 2005.
 
11
 
 
b.
As of June 30, 2008, the Company had a total obligation of $154 for services rendered by the Consultants.
 
NOTE 6:-
SHORT-TERM LOANS
 
On April 13, 2008, the Company entered into a new agreement with a lender that amended and restated the previous agreement dated September 10,2007 pursuant to which the lender agreed to partially defer and partially convert to the Company’s common stock the payment of $1,250 owed by the Company to the lender based on the payment agreement between the two parties.

Pursuant to the new agreement, the Company agreed to issue 2,857,142 shares of common stock to the lender in lieu of the repayment of $1,000 of the Debt and to pay $250 of the Debt in accordance with the following schedule:
 
Payment Date
  
Amount
  
May 30, 2008
    
50
  
July 31, 2008
    
50
  
September 30, 2008
    
50
  
December 31, 2008
    
50
  
February 28, 2009
    
50
  

The May 30, 2008 payment was made on July 3, 2008. The Company has not made the July 31, 2008 payment.

In addition, on May 13, 2008 the Company issued 2,857,142 shares of common stock to the lender.

The lender agreed that upon payment of the foregoing amounts in accordance with the foregoing schedule and the receipt of the stock grant, all of the Company’s outstanding obligations owed to the lender under the notes will be satisfied in full. The lender also waived any breach or default that may have arisen prior to the date of the new agreement from the failure of the Company to make payments to the lender under any of the past agreements.

Since the outcome of the issuance of the shares was to relieve the debtor from its obligation , based on paragraph 16a of FASB No 140 “accounting for transfer and servicing of financial assets and extinguishment of liabilities “ the company derecognized the liability with the difference recognition in earning.
 
12
 
 
NOTE 7:-
CAPITAL STOCK

 
a.
The rights of common stock are as follows:

Shares of common stock confer upon their holders the right to receive notice to participate and vote in general meetings of the Company, the right to a share in the excess of assets upon liquidation of the Company and the right to receive dividends, if declared.

The common stock of the Company is registered and publicly traded on the Over-the-Counter Bulletin Board service of the National Association of Securities Dealers, Inc. under the symbol BCLI.

 
b.
Issuance of shares of common stock , warrants and options:

 
1.
Private placements
 
a)  On June 24, 2004, the Company issued to investors 8,510,000 shares of common stock for total proceeds of $60 (net of $25 issuance expenses).
 
b)  On February 23, 2005, the Company completed a private placement round for sale of 1,894,808 units for total proceeds of $1,418. Each unit consists of one share of common stock and a three year warrant to purchase one share of common stock at $2.50 per share. This private placement was consummated in four tranches which closed in October 2004, November 2004 and February 2005.

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

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

 
e)
On August 11, 2005, the Company signed a private placement agreement with investors for the sale of up to 1,250,000 units at a price per unit of $0.8. Each unit consists of one share of common stock and one warrant to purchase one share of common stock at $1.00 per share. The warrants are exercisable for a period of three years from issuance. On March 31, 2005, the Company sold 312,500 units for total net proceeds of $225. On December 7, 2005, the Company sold 187,500 units for total net proceeds of $135.

13
 
f)
On July 2, 2007 the Company entered into an investment agreement, pursuant to which the Company agreed to sell up to 27,500,000 shares of the Company's common stock, for an aggregate subscription price of up to $5 million and warrants to purchase up to 30,250,000 shares of common stock. Separate closings of the purchase and sale of the shares and the warrants shall take place as follows:
 
Purchase date
  
Purchase price
 
Number of subscription shares
 
Number of warrant shares
  
August 30, 2007
  
$
1,250 (includes $250 paid as a convertible loan)
 
  
6,875,000
    
7,562,500
  
November 15, 2007
  
$
750
    
4,125,000
    
4,537,500
  
February 15, 2008
  
$
750
    
4,125,000
    
4,537,500
 
May 15, 2008
  
$
750
    
4,125,000
    
4,537,500
 
July 30, 2008
  
$
750
    
4,125,000
    
4,537,500
 
November 15, 2008
  
$
750
    
4,125,000
    
4,537,500
 

At each closing date, the Company shall deliver to the investor the number of shares and warrants, subject to customary closing conditions and the delivery of funds, described above. The warrants shall have the following exercise prices: (i) the first 10,083,333 warrants will have an exercise price of $0.20 per share; (ii) the next 10,083,333 warrants will have an exercise price of $0.29 per share; and (iii) the final 10,083,334 warrants will have an exercise price of $0.36 per share. All warrants will expire on November 5, 2011.
 
As of June 30, 2008, the investor completed payments of the first three installments and $491 of the fourth installment and the Company issued to the investor and its designee an aggregate of 15,125,000 shares of common stock and a warrant to purchase 10,083,333 shares of the company's common stock at an exercise price of $0.20 per share and a warrant to purchase 6,554,167 shares of common stock at an exercise price of $0.29 per share. The warrants may be exercised at any time and expire on November 5, 2011.

On August 13 the investor completed the payment of the fourth installment of $750 and the Company shall issue to the investor 4,125,000 shares of common stock, a warrant to purchase 3,529,166 shares of common stock at an exercise price of $0.29 per share and a warrant to purchase 1,083,334 shares of common stock at an exercise price of $0.36 per share. The warrants may be exercised at any time and expire on November 5, 2011.
 
14
 
In addition, the Company agreed to issue an aggregate of 1,250,000 shares of common stock to a related party as an introduction fee for the investment. The shares shall be issued pro rata to the funds received from the investor.
 
As of June 30, 2008, 687,500 shares of common stock had been issued as an introduction fee.

 
2.
Share-based compensation to employees and directors

 
a)
Options to employees and directors:

On November 25, 2004, the Company's stockholders approved the 2004 Global Stock Option Plan and the Israeli Appendix thereto (which applies solely to participants who are residents of Israel) and on March 28, 2005, the Company's stockholders approved the 2005 U.S. Stock Option and Incentive Plan, and the reservation of 9,143,462 shares of common stock for issuance in the aggregate under these stock option plans.

Each option granted under the plans is exercisable until the earlier of ten years from the date of grant of the option or the expiration dates of the respective option plans. The 2004 and 2005 option plans will expire on November 25, 2014 and March 28, 2015, respectively. The exercise price of the options granted under the plans may not be less than the nominal value of the shares into which such options are exercised. The options vest primarily over three or four years. Any options that are canceled or forfeited before expiration become available for future grants.

On June 5, 2008, the Company's stockholders approved to amend and restate the Company’s 2004 Global Share Option Plan and 2005 U.S. Stock Option and Incentive Plan to increase the number of shares of common stock available for issuance in the aggregate under these stock option plans by 5,000,000 shares.
 
As of June 30, 2008, 5,151,684 share of common stock are available for future option grants.
 
On May 27, 2005, the Company granted to one of its directors an option to purchase 100,000 shares of its common stock, at an exercise price of $0.75 per share. The option is fully vested and is exercisable for a period of 10 years.

15
 
On February 6, 2006, the Company entered into an amendment to the Company's option agreement with Mr. David Stolick, the Company's Chief Financial Officer. The amendment changes the exercise price of the option to purchase 400,000 shares of common stock granted to him on February 13, 2005 to $0.15 per share from $0.75 per share.
16
 
NOTE 7:-
CAPITAL STOCK (Cont.)

On May 2, 2006, the Company granted to one of its directors an option to purchase 100,000 shares of its common stock, at an exercise price of $0.15 per share. The option is fully vested and is exercisable for a period of 10 years. The compensation related to the option, in the amount of $48 was recorded as general and administrative expenses

On June 22, 2006, the Company entered into an amendment to the Company's option agreement with two of its employees. The amendment changes the exercise price of option to purchase 270,000 shares of common stock granted to them to $0.15 per share from $0.75 per share. The excess of the fair value resulting from the modification amounts to $2 is recorded as general and administration expense over the remaining vesting period of the option.

On September 17, 2006, the Company entered into an amendment to the Company's option agreement with one of its directors. The amendment changes the exercise price of an option to purchase 100,000 shares of common stock granted to her to $0.15 per share from $0.75 per share.

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

On July 1, 2007, the Company granted to one of its directors an option to purchase 100,000 shares of its common stock, at an exercise price of $0.15 per share. The option is fully vested and is exercisable for a period of 10 years. The compensation related to the option in the amount of $38 was recorded as general and administrative expenses. On October 22, 2007 the Company and the director agreed to cancel and relinquish the option which was granted on July 1 ,2007

On July 16, 2007, the Company granted to one of its directors an option to purchase 100,000 shares of its common stock, at an exercise price of $0.15 per share. The option is fully vested and is exercisable for a period of 10 years. The compensation related to the option in the amount of $75 was recorded as general and administrative expenses.
 
17
 
On August 27, 2007, the Company granted to one of its directors an option to purchase 100,000 shares of its common stock, at an exercise price of $0.15 per share. The option is fully vested and is exercisable for a period of 10 years. The compensation related to the option in the amount of $84 was recorded as general and administrative expenses.
 
NOTE 7:-
CAPITAL STOCK (Cont.)

On October 23, 2007, the Company granted to its CEO an option to purchase 1,000,000 shares of common stock at an exercise price of $0.87 per share. The option vests with respect to 1/6 of the option on each six month anniversary and expires after 10 years. The total compensation related to the option is $733, which is amortized over the vesting period as a general and administrative expense. An amount of $167 was recorded as general and administrative expense from the grant date until June 30, 2008.

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

   
Six months ended
June 30, 2008
 
 
 
Amount of options
 
Weighted average exercise price
 
 
 
 
 
$
  
Outstanding at beginning of the period
    
5,280,760
  
$
0.372
  
Granted
    
170,000
   
0.49
  
Exercised
   
(17,399
)
  
0.15
  
               
Outstanding at end of period
    
5,433,361
 
$
0.377
  
               
Vested and expected-to-vest options at end of the period
    
3,604,066
  
$
0.241
  

Compensation expenses recorded by the Company in respect to its stock based employee and directors' compensation award in accordance with SFAS-123(R) for the six months ended June 30, 2008, amounted to $349.
 
18
 
NOTE 7:-
CAPITAL STOCK (Cont.)

 
b)
Restricted shares to directors:

On May 27, 2005, the Company issued to two of its directors 200,000 restricted shares of common stock (100,000 each). The restricted shares are subject to the Company's right to repurchase them at a purchase price of par value ($0.00005). The restrictions on the shares shall lapse in three annual and equal portions commencing with the grant date.

On May 2, 2006, the Company issued to two of its directors 200,000 restricted shares of common stock (100,000 each). The restricted shares are subject to the Company's right to repurchase them at a purchase price of par value ($0.00005). The restrictions on the shares shall lapse in three annual and equal portions commencing with the grant date. The compensation related to the sharess issued amounted to $104, which will be amortized over the vesting period as general and administrative expenses.
 
On April 20, 2007, based on a board resolution dated March 21, 2007, the Company issued to its director 100,000 restricted shares of common stock. The restricted shares are subject to the Company's right to repurchase them at a purchase price of par value ($0.00005). The restrictions on the shares shall lapse in three annual and equal portions commencing with the grant date. The compensation related to the shares issued amounted to $47, which will be amortized over the vesting period as general and administrative expenses.
 
In addition, on April 20, 2007, based on a board resolution dated March 21, 2007, the Company issued to another director 100,000 restricted shares of common stock. The restricted shares are not subject to any right to repurchase, and the compensation related to the shares issued amounted to $47 was recorded as prepaid general and administrative expenses in the three months ended March 31, 2007.

 
3.
Shares of common stock and warrants to service providers and investors:

The Company accounts for stock option and warrant grants issued to non-employees using the guidance of SFAS No. 123(R), "Accounting for Stock-Based Compensation" and EITF No. 96-18: "Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services," whereby the fair value of such option and warrant grants is determined using the Black-Scholes options pricing model at the earlier of the date at which the non-employee's performance is completed or a performance commitment is reached.
 
19

NOTE 7:-
CAPITAL STOCK (Cont.)
     
 
a)
Warrants:
 
Issuance date
  
Number of warrants issued
 
Exercised
 
Forfeited
 
Outstanding
 
Exercise
price
 
Warrants
exercisable
 
Exercisable
through
  
November 2004
   
12,800,845
    
2,181,925
          
10,618,920
  
$
0.01
    
10,618,920
    
November 2012
  
December 2004
   
1,800,000
    
1,800,000
          
-
  
$
0.00005
    
—
    
-
  
                                             
     
14,600,845
    
3,981,925
          
10,618,920
          
10,618,920
        
                                             
February 2005
    
1,894,808
          
1,894,808
    
-
  
$
2.5
   
-
        
May 2005
   
47,500
                
47,500
  
$
1.62
    
47,500
    
May 2010
  
June 2005
   
30,000
                
30,000
  
$
0.75
    
30,000
    
June 2010
 
August 2005
    
70,000
                
70,000
  
$
0.15
    
70,000
    
August 2008
  
September 2005
   
3,000
    
3,000
          
-
  
$
0.15
    
-
    
-
  
September 2005
    
36,000
                
36,000
  
$
0.75
    
33,000
    
September 2010
  
September-December 2005
   
500,000
                
500,000
  
$
1
    
500,000
    
September - December 2008
  
December 2005
    
20,000
    
20,000
          
-
  
$
0.15
    
-
    
-
  
December 2005
   
457,163
                
457,163
  
$
0.15
    
380,969
    
July 2010
  
                                             
     
17,659,316
    
4,004,925
    
1,894,808
    
11,759,583
          
11,680,389
        
                                             
February 2006
   
230,000
                
230,000
  
$
0.65
    
153,333
    
February 2016
  
February 2006
    
40,000
                
40,000
  
$
1.5
    
40,000
    
February 2011
  
February 2006
    
8,000
                
8,000
  
$
0.15
    
8,000
    
February 2011
  
February 2006
    
189,000
    
97,696
    
91,304
    
-
  
$
0. 5
    
-
    
-
  
May 2006
    
50,000
                
50,000
  
$
0.0005
    
50,000
    
May 2016
  
May -December 2006
    
48,000
                
48,000
  
$
0.35
    
48,000
    
May - December 2011
  
May -December 2006
    
48,000
                
48,000
  
$
0.75
    
48,000
    
May - December 2011
  
May 2006
    
200,000
                
200,000
  
$
1
    
200,000
    
May 2011
  
June 2006
    
24,000
                
24,000
  
$
0.15
    
24,000
    
June 2011
  
May 2006
    
19,355
                
19,355
  
$
0.15
    
19,355
    
May 2011
  
October 2006
    
630,000
    
630,000
          
-
  
$
0.3
    
-
    
-
  
December 2006
    
200,000
                
200,000
  
$
0.45
    
200,000
    
December 2008
  
                                             
     
19,345,671
    
4,732,621
    
1,986,112
    
12,626,938
          
12,471,077
        
                                             
March 2007
    
200,000
                
200,000
  
$
0.47
    
200,000
    
March 2012
  
March 2007
    
500,000
                
500,000
  
$
0.47
    
208,333
    
March 2017
  
March 2007
    
50,000
                
50,000
  
$
0.15
    
50,000
    
March 2010
  
March 2007
    
15,000
                
15,000
  
$
0.15
    
15,000
    
February 2012
  
February 2007
    
50,000
                
50,000
  
$
0.45
    
50,000
    
February 2009
  
March 2007
    
225,000
                
225,000
  
$
0.45
    
225,000
    
March 2009
  
March 2007
    
50,000
                
50,000
  
$
0.45
    
50,000
    
March 2010
  
April 2007
    
33,300
                
33,300
  
$
0.45
    
33,300
    
April 2009
  
May 2007
    
250,000
          
250,000
    
-
  
$
0.45
    
-
    
-
  
July 2007
    
500,000
                
500,000
  
$
0.39
    
152,778
    
July 2017
  
September 2007
    
500,000
                
500,000
  
$
0.15
    
375,000
    
August 2017
  
August 2007
    
7,562,500
                
7,562,500
  
$
0.2
    
7,562,500
    
November 2011
  
July 2007
    
30,000
                
30,000
  
$
0.45
    
30,000
    
July 2009
  
July 2007
    
100,000
                
100,000
  
$
0.45
    
100,000
    
July 2010
  
October 2007
    
200,000
                
200,000
  
$
0.15
    
100,000
    
August - October 2017
  
November 2007
    
2,520,833
                
2,520,833
  
$
0.20
    
2,520,833
    
November 2011
  
November 2007
    
2,016,667
                
2,016,667
  
$
0.29
    
2,016,667
    
November 2011
  
April 2008
    
4,537,500
                
4,537,500
  
$
0.29
    
4,537,500
    
November 2011
  
                                         
 
  
     
38,686,471
   
4,732,621
    
2,236,112
    
31,717,738
          
30,697,988
        
 
20
 
NOTE 7:-
CAPITAL STOCK (Cont.)

 
b)
Shares of common stock:

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

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

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

In March and April 2005, the Company signed an agreement with four members of its Scientific Advisory Board according to which the Company issued to the members of the Scientific Advisory Board 400,000 shares of restricted stock at a purchase price of $0.00005 per share under the U.S. Stock Option and Incentive Plan (100,000 each). The restricted shares will be subject to the Company's right to repurchase them if the grantees cease to be members of the Company's Scientific Advisory Board for any reason. The restrictions on the shares shall lapse in three annual and equal portions commencing with the grant date.
 
21

NOTE 7:-
CAPITAL STOCK (Cont.)
 
In July 2005, the Company issued 50,000 shares of common stock to its legal advisors for legal services for 12 months. The compensation related to the shares in the amount of $38 was recorded as general and administrative expenses.

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

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

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

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

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

On May 5, 2006, the Company issued 200,000 shares of the Company's common stock to its finance consultant for his services. Related compensation in the amount of $102 was recorded as general and administrative expenses.
 
22

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

On August 17, 2006, the Company issued 100,000 shares of the Company's common stock to a service provider. Related compensation in the amount of $35 was recorded as general and administrative expenses.
 
23
 
NOTE 7:-
CAPITAL STOCK (Cont.)

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

On April 1 and March 31, 2006, the Company issued to its business development advisor, based on an agreement with such advisor, 240,000 shares of the Company's common stock. Related compensation in the amount of $74 was recorded as general and administrative expenses.

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

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

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

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

On May 28, 2007, the Company issued 210,812 shares of the Company's common stock to a shareholder pursuant to conversion request of the entire accrued principal and interest amount of a $50 Convertible Promissory Note issued to such shareholder on February 5, 2007.

   
On June 27, 2007, the Company issued 225,346 shares of the Company's common stock to an investor pursuant to conversion request of the entire accrued principal and interest amount of a $50 Convertible Promissory Note issued to such investor on March 14, 2007.
 
24

On September 5, 2007, the Company issued 289,722 shares of the Company’s common stock to an investor pursuant to conversion request of the entire accrued principal and interest amount of a $100 Convertible Promissory Note issued to such investor on July 3, 2007.

On October 29, 2007, the Company issued to a scientific advisory board member 80,000 shares of the company’s common stock for scientific services. Compensation of $67 was recorded as research and development expense.

25
 
NOTE 7:-
CAPITAL STOCK (Cont.)

On February 18, 2008, the Company issued 75,937 shares of the Company’s common stock to an investor pursuant to conversion request of the entire accrued principal and interest amount of a $27 Convertible Promissory Note issued to such investor on April 10, 2007.

On February 21, 2008, the Company issued 619,523 shares of the Company’s common stock to an investor pursuant to conversion request of the entire accrued principal and interest amount of a $217 Convertible Promissory Note issued to such investor on December 12, 2006.

On May 13, 2008, the Company issued 2,857,142 shares of the Company’s common stock to an investor pursuant to a payments and conversion agreement of the investor’s loans to the company (see note 6).

On May 20, 2008, the Company issued to its finance advisor 90,000 shares of the Company's common stock. The shares are for $35 payable to the finance advisor for introduction fee of past convertible loans. Related compensation in the amount of $36 was recorded as finance expenses.

On June 5, 2008, the Company issued 92,008 shares of the Company’s common stock to an investor pursuant to conversion request of the entire accrued principal and interest amount of a $32 Convertible Promissory Note issued to such investor on July 3, 2007.
 
A summary of the Company's stock award activity related to shares issued to service providers, and related information is as follows:

   
Six months ended
June 30, 2008
 
 
 
Amount of shares
 
Weighted average issue price
 
 
 
 
 
$
  
Outstanding at beginning of the period
    
2,851,224
   
0.86
  
Issued
    
90,000
   
0.40
  
               
Outstanding at end of the period