BRAINSTORM CELL THERAPEUTICS INC.

Current report

Our business may be impacted by macroeconomic conditions, including fears concerning inflation, rising interest rates and volatile market conditions (including as a result of recently announced tariffs or other policy changes by the current U.S. administration), and other uncertainties beyond our control.

Current report

Our ability to effectively run our business could be adversely affected by general conditions in the global economy and in the financial services industry. Various macroeconomic factors could adversely affect our business, including fears concerning the banking sector, changes in inflation, interest rates and overall economic conditions and uncertainties (including as a result of recently announced tariffs or other policy changes by the current U.S. administration). Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. A severe or prolonged economic downturn could result in a variety of risks, including our ability to raise additional funding on a timely basis or on acceptable terms. A weak or declining economy could also impact third parties upon whom we depend to run our business. Although we assess our banking relationships as we believe necessary or appropriate, our access to funding sources in amounts adequate to finance or capitalize our current and projected future business operations could be significantly impaired by factors that affect us, the financial institutions with which we have arrangements directly, or the financial services industry or economy in general. Moreover, significant political, trade, regulatory developments, and other circumstances beyond our control, could have a material adverse effect on our financial condition or results of operations. Changes in U.S. federal policy that affect the geopolitical landscape could give rise to circumstances outside our control that could have negative impacts on our business operations. For example, in April 2025, the U.S. imposed substantial tariffs on most countries throughout the world. Historically, tariffs have led to increased political and trade tensions. In response to tariffs, other countries have implemented retaliatory tariffs on U.S. goods. Political tensions as a result of trade policies could reduce trade volume, investment, technological exchange and other economic activities between major international economies, resulting in a material adverse effect on global economic conditions and the stability of global financial markets. Any changes in political, trade, regulatory, and economic conditions, including U.S. trade policies, could have a material adverse effect on our financial condition or results of operations.

Current report

We Have Incurred Unsecured Indebtedness That Could Adversely Affect Our Financial Condition and Results of Operations.

Current report

Between November 2024 and March 2025, we entered into several unsecured short-term loan agreements with third-party lenders in an aggregate principal amount of approximately $1.2 million to finance our working capital. As of the date of this report, we have repaid approximately $300,000 of the principal amount, and approximately $900,000 in principal remains outstanding. While the proceeds of these loans provide us with additional working capital, the incurrence of indebtedness increases our financial obligations and requires us to dedicate a portion of our cash resources to the payment of principal and interest. Our ability to make payments on this indebtedness will depend on our future financial performance, which is subject to various risks and uncertainties, including those discussed elsewhere in this report. If we are unable to secure sufficient cash flows to service our debt obligations, our business, financial condition, and results of operations could be adversely affected.

Current report

We have identified a material weakness in our system of internal controls pursuant to Section 404 of the Sarbanes-Oxley Act of 2002. If we fail to fully remediate this material weakness, or if we experience additional material weaknesses in the future or otherwise fail to maintain effective internal control over financial reporting in the future, we may not be able to accurately or timely report our financial condition or results of operations.

Current report

Our management identified a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement in our annual or interim financial statements will not be prevented or detected and corrected on a timely basis. Our management has concluded that, because of this material weakness, our internal control over financial reporting was not effective as of March 31, 2025. These operational deficiencies related to the Company’s reviews and approvals of the execution of certain short term loan agreements. As a result of the material weakness, the Company’s management, under the supervision of the Audit Committee and with the participation of the Company’s Chief Executive Officer and interim Chief Financial Officer, concluded that the Company’s internal control over financial reporting was not effective as of March 31, 2025.

Current report

The Company has developed and adopted a remediation plan to address the identified material weakness, and as part of the remediation plan, has adopted a short-term loan approval policy. Any actions we have taken or may take to remediate the identified material weakness are subject to continued management review supported by testing, as well as oversight by the Audit Committee. We cannot assure you that the measures we have taken to date, and are continuing to implement, will be sufficient to remediate the material weaknesses we have identified or avoid potential future material weaknesses. If the steps we take do not correct the material weaknesses in a timely manner, the accuracy and timing of our financial reporting could be materially adversely affected and we will be unable to conclude that we maintain effective internal control over financial reporting. For more information relating to the Company’s internal control over financial reporting, the material weakness that existed as of March 31, 2025 and the remediation activities undertaken by us, see Part I, Item 4, “Controls and Procedures” of this Quarterly Report on Form 10-Q.

Current report

On April 1, 2025, the Company issued to an accredited and institutional holder a common warrant to purchase up to 2,762,766 shares of our Common Stock pursuant to the Warrant Inducement Agreement, in a transaction relying on the exemption under Section 4(a)(2) of the Securities Act.

Current report

Evaluation of Disclosure Controls and Procedures

Current report

Our management evaluated, under the supervision of the Audit Committee and with the participation of our Chief Executive Officer and interim Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2025. Based on this evaluation, our principal executive and financial officers concluded that our disclosure controls and procedures were not effective as of that date due to a material weakness in internal control over financial reporting, as described below.

Current report

Notwithstanding this material weakness, the Company has concluded that the Company’s consolidated financial statements as of and for the three-month period ended March 31, 2025, are fairly presented in all material respects in accordance with U.S. generally accepted accounting principles, based on the nature of the identified control deficiency and the absence of any misstatements.

Current report

Material Weakness in Internal Control over Financial Reporting

Current report

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s financial statements will not be prevented or detected on a timely basis.

Current report

During the quarter ended March 31, 2025, management identified a material weakness in the Company’s short-term loans initiation, review, authorization and execution controls. Although this deficiency did not result in a misstatement of the Company’s financial statements, it created a risk that a material misstatement could have occurred and not be prevented or detected on a timely basis. Accordingly, management concluded that this deficiency constitutes a material weakness.

Current report

Remediation of Material Weakness

Current report

The Company has developed and adopted a remediation plan to address the identified material weakness. The plan establishes a defined, tiered governance structure for approval authority and sets forth clearly articulated responsibilities for the initiation, review, authorization, and execution of transactions involving this category of financial instruments, in alignment with applicable internal control standards and corporate governance principles.

Previous report

If we fail to regain compliance with the continued listing requirements of Nasdaq, our Common Stock may be delisted, and the price and liquidity of our common stock may be negatively impacted.

Previous report

On July 18, 2024, we received a letter from the Staff indicating that we have not maintained Nasdaq’s MVLS of $35 million from June 2, 2024 to July 17, 2024. Under Nasdaq’s listing rules, we have 180 calendar days from this notice, until January 14, 2025, to regain compliance with Nasdaq’s MVLS. If at any time during this compliance period the Company’s MVLS closes at $35 million or more for a minimum of ten consecutive business days, the Staff will notify the Company that it has regained compliance with the MVLS requirement. However, if the Company fails to comply with the MVLS requirement for ten consecutive business days prior to the expiration of the compliance period on January 14, 2025, then the Staff will send the Company a notice of delisting.

Previous report

If we are unsuccessful in our efforts to regain compliance with the MVLS requirement, delisting from the Nasdaq market could make trading the Common Stock more difficult for investors, potentially leading to declines in our share price and liquidity. In addition, without a Nasdaq market listing, stockholders may have difficulty obtaining a quote for the sale or purchase of the Common Stock, the sale or purchase of the Common Stock would likely be made more difficult and the trading volume and liquidity of the Common Stock could decline. Delisting from Nasdaq could also result in negative publicity, make it more difficult for us to raise additional capital through alternative financing sources on terms acceptable to us, or at all, result in potential loss of confidence by investors and employees, and result in fewer business development opportunities. We cannot assure you that the Common Stock, if delisted from Nasdaq, will be listed on another national securities exchange or quoted on an over-the counter quotation system.

Previous report

We are and could be further subject to securities class action litigation and other types of stockholder litigation.

Previous report

The stock market in general, and the Nasdaq Global Market and biotechnology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Securities class action litigation has often been instituted against companies following periods of volatility in the market price of a company’s securities. For example, in November 2023, a purported stockholder filed a lawsuit against us and certain of our officers captionedSporn v. Brainstorm Cell Therapeutics, Inc. et al. in the U.S. District Court for the Southern District of New York, and in February 2024, March 2024, and April 2024, four derivative actions were filed in the same court, consolidated and captionedIn Re Brainstorm Cell Therapeutics, Inc. Derivative Litigation (see*“Item 3. Legal Proceedings”* for a more detailed description of these matters). We could also be subject to other types of litigation, which may involve claims of breach of fiduciary duties by our directors or officers for misuse/mismanagement of company assets/resources or conflicts of interest. Any such litigation, if instituted, could result in substantial costs and a diversion of management’s attention and resources, which would harm our business, operating results, or financial condition.

Previous report

None.

Previous report

Not applicable.