BRAINSTORM CELL THERAPEUTICS INC.

NOTE 1 - GENERAL

The Company’s common stock, $0.00005 par value per share (the “Common Stock”) is publicly traded on the OTCQB Market under the symbol “BCLI”.

On January 15, 2025, the Staff notified us in writing that we failed to regain compliance with the MVLS Requirement by January 14, 2025. As such, we had until January 22, 2025 to request an appeal of Nasdaq’s determination to delist, or our common stock would be delisted from The Nasdaq Capital Market at the opening of business on January 24, 2025. We promptly submitted our request to appeal Nasdaq’s determination on January 21, 2025, and on that same day, we received formal written notice from the Staff that the Nasdaq Hearing Panel (the “Panel”) would consider our appeal at an oral hearing on February 25, 2025, and that to the extent permitted by Nasdaq Listing Rules, the delisting action referenced in the Staff’s determination letter was stayed, pending a final written decision by the Panel. Subsequently, we presented our compliance plan (the “Plan”) to the Panel at the oral hearing on February 25, 2025.

Our Plan includes, among other items, satisfying a $2.5 million minimum stockholders’ equity requirement under Nasdaq Listing Rule 5550 in lieu of the MVLS Requirement and conducting certain capital raising activities to attain such $2.5 million of stockholders’ equity.

On March 25, 2025, we received a letter setting forth the determination of the Panel granting the Company’s request for an extension (the “Extension”) to regain compliance with certain continued Nasdaq listing requirements through the Company’s requested extension date of June 30, 2025 (the “Extension Date”).

NOTE 1-** GENERAL (Cont.):**

On July 17, 2025, the Company announced that it has received a delisting notification from The Nasdaq Stock Market LLC, informing the company that its common stock will be delisted from the Nasdaq Capital Market. Trading of BrainStorm’s common stock on Nasdaq was suspended at the open of trading on July 18, 2025. The delisting is a result of the company’s non-compliance with Nasdaq Listing Rule 5550(b)(1), pertaining to its minimum shareholder equity requirement.

The Company’s shares started trading on the OTCQB Venture Market under the same symbol, BCLI, beginning at the open of trading on July 18, 2025.

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, as mentioned above, 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. The condensed interim 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.

NOTE 2 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

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 GAAP 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 fiscal year ended December 31, 2024.

Operating results for the nine months ended September 30, 2025, are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

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.

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed financial statements.

The preparation of financial statements in conformity with GAAP 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 - LEASES

As of September 30, 2025, and December 31, 2024, total right-of-use assets was approximately $334 and $807 and the operating lease liabilities for remaining long term lease was approximately $326 and $720, respectively. In the nine months ended September 30, 2025 and in the year ended December 31, 2024, the Company recognized approximately $522 and $324, respectively, in total lease costs. Variable lease costs for these periods were immaterial.

Supplemental cash flow and total lease cost information was as follows:

As of September 30, 2025, the Company’s operating leases had a weighted average remaining lease term of 1 year and a weighted average discount rate of 7.50%. Future lease payments under operating leases as of September 30, 2025 were as follows:

NOTE 4 - WARRANTS LIABILITY

In July 2023, the Company issued 270,270 shares of Common Stock and 270,270 private placement warrants (“July 2023 warrants”) to purchase shares of Common Stock. The gross proceeds from this transaction were approximately $7.5 million. The Common Warrants contain provisions regarding settlement in the event of a fundamental transaction that calculate the fair value of the warrants using a prespecified volatility assumption that was not consistent with the input used to value the warrants at issuance which causes the warrants to be classified as liabilities. The Common Warrants will be measured at fair value at inception and in subsequent reporting periods with changes in fair value recognized as financial income or expense as change in fair value of warrant liabilities in the period of change in the condensed consolidated statements of comprehensive loss. July 2023 warrants are classified as Level 3 financial instruments in the fair value hierarchy (refer to Note 6,Fair Value Measurement).

Prior to the exercising of the July 2023 warrants on March 31, 2025, the warrants were recorded at a fair value of $268, including a decrease of $179 for the three-month period ended March 31, 2025. As of March 31, 2025, the July 2023 warrants were outstanding with fair values of $268. The fair value of the warrant liability for the three-month period ended March 31, 2025 decreased by $179. The change has been recognized as loss on change in fair value of derivatives in the Company’s Consolidated Statements of Comprehensive Loss. The warrants were part of the March 31, 2025 warrant inducement agreement and as of June 30, 2025 no warrant liability exists.

NOTE 5 – STOCK CAPITAL

The rights of Common Stock are as follows:

Holders of the 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 OTCQB Venture Market, a U.S. trading platform operated by OTC Markets Group. under the symbol “BCLI”. On September 30, 2024 the Company effected the Reverse Stock Split of the Company’s Common Stock at theone-for-fifteen ratio, such that every fifteen shares of Common Stock were consolidated into one share. As a result, all share amounts were adjusted retroactively for all periods presented in these financial statements.

Private placements and public offerings:

At-the-market (ATM) Offering:

On August 9, 2021, the Company entered into an Amended and Restated Distribution Agreement (the “New Distribution Agreement”) with the Agents (as defined in the New Distribution Agreement) pursuant to which the Company may sell from time to time, through the Agents, shares of Common Stock (the “Shares”), having an aggregate offering price of up to $100,000,000 (the “August 9, 2021 ATM”). Sales under the August 9, 2021 ATM are to be made by any method permitted by law that is deemed to be an “at the market” offering as defined in Rule 415 promulgated under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), including, without limitation, sales made directly on The Nasdaq Capital Market, on any other existing trading market for the Shares, through a market maker or as otherwise agreed by the Company and the Agents. In connection with the New Distribution Agreement, the Company terminated the previous Distribution Agreement and the September 25, 2020, ATM. During the nine months ended September 30, 2025, the Company has sold 2,567,940 shares of Common Stock for gross proceeds of approximately $4,472 under the August 9, 2021, ATM. The issuance costs for the ATM are approximately $134 and the net proceeds are $4,347. As discussed in Note 1 above, the Company’s common stock has been delisted from the Nasdaq and now trades on the OTCQB Venture Market. Accordingly, the August 9, 2021 ATM may no longer be available for use by the Company.

Securities Purchase Agreement:

On July 17, 2023, the Company entered into a Securities Purchase Agreement with the purchaser named therein, pursuant to which the Company agreed to sell, in the Offering, an aggregate of 270,270 shares of Common Stock, together with accompanying warrants (the “Common Warrants”) to purchase 270,270 shares of Common Stock, at a purchase price of $27.75 per share and accompanying warrants for gross proceeds to the Company of approximately $7,500, before deducting fees payable to the placement agent and other estimated offering expenses payable by the Company. The Offering closed on July 19, 2023. The Common Warrants are immediately exercisable, expire five years following the date of issuance and have an exercise price of $30.00 per share. Please refer to Note 4.

On June 27, 2024, the Company entered into a Securities Purchase Agreement with the purchaser, pursuant to which the Company agreed to sell, (i) an aggregate of 527,918 registered shares of the Company’s Common Stock, (ii) registered pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 212,823 shares of Common Stock and (iii) unregistered warrants to purchase up to 1,111,111 shares of Common Stock, at a purchase price of $5.4 per share of Common Stock and accompanying Common Warrant, or $5.399 per Pre-Funded Warrant and accompanying Common Warrant. The Offering of the Securities yielded gross proceeds to the Company of approximately $4,000, before deducting fees payable to the placement agent and other estimated offering expenses payable by the Company. The issuance costs for the ATM are approximately $356 and the net proceeds are $3,644. The Offering closed on June 28, 2024. The Warrants will be exercisablesix months after the issuance date, will expire five years following the date of issuance and have an exercise price of $5.868 per share. Each Pre-Funded Warrant is immediately exercisable forone share of Common Stock (the “Pre-Funded Warrant Shares”) at an exercise price of $0.00005 per share and will remain exercisable until the Pre-Funded Warrants are exercised in full.

NOTE 5 – STOCK CAPITAL (Cont.):

Inducement Agreement:

On March 31, 2025, the Company entered into an inducement offer (the “Warrant Inducement Agreement”) with a certain accredited and institutional holder (the “Holder”) to exercise existing warrants to purchase up to 1,381,383 shares of the Company’s common stock comprised of warrants to purchase 270,271 shares of the Company’s common stock issued on July 19, 2023 (the “2023 Existing Warrants”), and warrants to purchase 1,111,112 shares of the Company’s common stock issued on June 28, 2024 (the “2024 Existing Warrants”, and together with the 2024 Existing Warrants, the “Existing Warrants”). Pursuant to the Warrant Inducement Agreement, the Holder, upon exercise, will receive a new unregistered warrant to purchase shares of the Company’s common stock (the “New Warrant”) pursuant to Section 4(a)(2) of the Securities Act, to purchase up to equal to 200% of the number of Warrant Shares issued pursuant to the exercise of Existing Warrants pursuant to the Agreement (the “New Warrant Shares”), raising approximately 1.64 million and subject to stockholder approval and certain adjustments. On March 31, 2025, the Company issued 724,000 shares. The remaining balance of 657,383 shares was issued through May 6, 2025.

The New Warrants will have an exercise price of $1.19 per share, will be exercisable on or after the date that approval is obtained from the Company’s stockholders (the “Stockholder Approval Date”) and will expire on thefive-year anniversary of the Stockholder Approval Date. The exercise price and the number of New Warrant Shares issuable upon exercise of each New Warrant are subject to appropriate adjustments in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the Company’s common stock.

Capital Raised Since Inception:

Since its inception and as of June 30, 2025, the Company has raised approximately $185,000 gross in cash in consideration for issuances of Common Stock and warrants in private placements and public offerings as well as proceeds from warrants exercises.

Stock Plans:

On September 16, 2024, the Company held its 2024 Annual Meeting of Stockholders (the “2024 Annual Meeting”), and the stockholders of the Company approved Amendment No. 4 to the 2014 U.S. Plan, as amended, and Amendment No. 4 to the 2014 Global Option Plan, as amended (collectively, the “Amendments to the 2014 Plans”). The Amendments to the 2014 Plans amend each of the U.S. Plan, as amended, and 2014 Global Option Plan, as amended, respectively (collectively, the “Original 2014 Plans”) to (i) increase the shared pool of shares of the Common Stock available for issuance under the Company’s Original 2014 Plans by 533,333 shares of Common Stock (on a post-Reverse Stock Split basis), resulting in a shared pool of 906,666 shares of Common Stock (on a post-Reverse Stock Split basis), and (ii) extend the term of each of the Original 2014 Plans by an additionalten years. This extension applies solely to future grants and does not affect any grants made under the original terms.

On June 25, 2025, the Company held its 2025 Annual Meeting of Stockholders. The stockholders of the Company approved amendments to the Company’s 2014 Stock Incentive Plan and the Company’s 2014 Global Share Option Plan (collectively, the “2014 Plans”) to increase the shared pool of shares available for issuance under the 2014 Plans by 2,000,000 shares from 906,666 shares to 2,906,666 shares.

The 2014 Plans now have a shared pool of 2,906,666 shares of Common Stock available for issuance. As of June 30, 2025,1,931,433 shares were available for future issuances under the 2014 Plans. The exercise price of the options granted under the 2014 Plans may not be less than the nominal value of the shares into which such options are exercised. Any options under the 2014 Plans that are canceled or forfeited before expiration become available for future grants. The Governance, Nominating and Compensation Committee (the “GNC Committee”) of the Board of Directors of the Company (the “Board”) administers the Company’s stock incentive compensation and equity-based plans.

NOTE 5 – STOCK CAPITAL (Cont.):

Share-based compensation to employees and to directors:

Under the 2014 Plans, the Company may award stock options to certain employees, officers, directors, and/or service providers. The stock options vest in accordance with such conditions and restrictions determined by the GNC Committee.

Stock options:

The Company did not grant stock options during the nine months ended September 30, 2025.

A summary of the Company’s option activity related to options to employees and directors, and related information as of September 30, 2025, is as follows:

• Represents Employee Stock Options only (not including RSUs).

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the fair market value of the Company’s shares on September 30, 2025, 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.

As of September 30, 2025, there was $69 of total unrecognized compensation cost related to non-vested options under the Plan. The cost is expected to be recognized over a weighted average period of 1.28 years. Compensation expense recorded by the Company in respect of its stock-based employees and directors compensation awards in accordance with ASC 718-10 for the nine months ended September 30, 2025 and 2024 amounted to $46 and $224, respectively.

NOTE 5 – STOCK CAPITAL (Cont.):

Restricted Stock:

The Company awards stock and restricted stock to certain employees, officers, directors, and/or service providers. The restricted stock vests in accordance with such conditions and restrictions determined by the GNC Committee. These conditions and restrictions may include the achievement of certain performance goals and/or continued employment with the Company through a specified restricted period. The purchase price (if any) of shares of restricted stock is determined by the GNC Committee. If the performance goals and other restrictions are not attained, the grantee will automatically forfeit their unvested awards of restricted stock to the Company. Compensation expense for restricted stock is based on fair market value at the grant date.

Compensation expense recorded by the Company in respect of its stock and restricted stock awards to certain employees, officers, directors, and/or service providers for the nine months ended September 30, 2025 and September 30, 2024 amounted to $1,330 and $318, respectively.

As of September 30, 2025, there was $359 of total unrecognized compensation cost related to non-vested restricted stock under the Plan. The cost is expected to be recognized over a weighted average period of 0.75 years.

Total 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:

Treasury Stock

The Company may periodically repurchase shares of its common stock from employees for the satisfaction of their individual payroll tax withholding upon vesting of restricted stock awards in connection with the Company’s incentive plans. The Company’s repurchases of common stock are recorded at the stock price on the vesting date of the common stock. As of September 30, 2025, the Company repurchased 1,667 shares of its common stock for $116 thousands.

NOTE 6 – FAIR VALUE MEASUREMENT

The Company’s financial instruments consist of cash and cash equivalents, accounts payable and warrants.

The carrying value of cash and cash equivalents, restricted cash, accounts receivable, contract assets, contract liabilities and accounts payable are considered to be representative of their fair value due to the short maturity of these instruments.

Warrants Liabilities

The July 2023 warrants were classified as Level 3 financial instruments. The Company estimated the fair value of the July 2023 warrants using the Black-Scholes model at inception and on subsequent valuation dates. This model incorporates inputs such as the stock price of the Company, risk-free interest rate, volatility, and time to expiration. The volatility involves unobservable inputs classified as Level 3 of the fair value hierarchy. The assumptions used to determine the fair value of the July 2023 warrants prior to exercising are as follows:

As of September 30, 2025 the total balance of warrants liability is 0. See Note 5.

• Retroactively adjusted (See Note 5).

NOTE 7 – SHORT-TERM LOANS

On November 4, 2024, the Company entered into a loan agreement with a related party for a principal amount of $120,000. The loan bears interest at an annual rate of 8.5% and is required to be repaid in fullno later than December 31, 2025. The loan was repaid on May 21, 2025.

On December 15, 2024, the Company entered into a short-term loan agreement with a third-party lender for a principal amount of $180,000. The loan bears interest at an annual rate of 8.5% and is required to be repaid in fullno later than December 31, 2025. The loan was repaid on May 21, 2025.

On January 30, 2025, the Company entered into a short-term loan agreement with a third-party lender for a principal amount of $750,000. The loan bears interest at an annual rate of 11% and is required to be repaid in fullno later than August 31, 2025. The loan was repaid on May 20, 2025.

On March 6, 2025, the Company entered into a short-term loan agreement with a third-party lender for a principal amount of approximately $100,000. The outstanding principal accrues interest at an annual rate equal to the Bank of Israel’s official monetary interest rate plus 1.5%, as published on the first business day of each calendar month. The loan is required to be repaid in fullno later than March 6, 2026.

On March 13, 2025, the Company entered into a short-term loan agreement with a third-party lender for a principal amount of approximately $50,000. The maturity date of the loan was April 14, 2025. The loan was non-interest bearing and was repaid in full on April 6, 2025.

Except for transactions and balances related to loans and share-based compensation to officers and directors, the Company did not engage in any other transactions or maintain any balances with related parties or executive officers during the nine months period ended September 30, 2025.

NOTE 8 – SUBSEQUENT EVENTS

In accordance with ASC 855 “Subsequent Events” the Company evaluated subsequent events through the date the consolidated financial statements were issued. The Company concluded that no other subsequent events have occurred that would require recognition or disclosure in the consolidated financial statements.

On October 9, 2025, The Nasdaq Stock Market LLC filed with the SEC a notification of removal from listing and registration on Form 25 to effect the delisting of all shares of the Company’s common stock from Nasdaq, as well as the deregistration of the Company’s common stock under Section 12 (b) of the Securities Exchange Act of 1934, as amended. As a result, the Company’s common stock will no longer be listed on the Nasdaq.

On October 31, 2025, the Company entered into a securities purchase agreement (the “Vanquish Purchase Agreement”) with Vanquish Funding Group Inc., a Virgina corporation (“Vanquish”), pursuant to which the Company issued to Vanquish a promissory note in the principal amount of $182,400 (including $22,400 of original issue discount) and received funds of $155,000 after combined legal fees and due diligence fees of $5,000. For more information on the Vanquish Purchase Agreement, please see the Company’s Form 8 - K filed on November 6, 2025.