{"url_path":"/sec/bcli/10-q/2026/item-1","section_key":"item-1","section_title":"Item 1 Legal Proceedings.**","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1137883/0001104659-26-062648-index.html","accession_number":"0001104659-26-062648","cik":"0001137883","ticker":"BCLI","issuer_name":"BRAINSTORM CELL THERAPEUTICS INC.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1137883/0001104659-26-062648-index.html","primary_entity_key":"0001137883","primary_entity_name":"BRAINSTORM CELL THERAPEUTICS INC."},"word_count":1075,"has_tables":true,"body_markdown":"**Item 1. Legal Proceedings.**\n\nFrom time to time, we may become involved in litigation relating to claims arising out of operations in the normal course of business, which we consider routine and incidental to our business.\n\nBetween November 1, 2023 and April 12, 2024, five lawsuits were filed in the U.S. District Court for the Southern District of New York by purported shareholders of the Company.\n\n38\n\n[Table of Contents](#TOC)\n\nOn November 1, 2023, a purported shareholder of the Company filed a putative securities class action complaint against the Company and certain of its officers, captioned Sporn v. Brainstorm Cell Therapeutics Inc., et al., Case No. 1:23-cv-09630 (the “Securities Complaint”), in the United States District Court for the Southern District of New York (the “Securities Action”). The Lead Plaintiff filed an Amended Complaint on April 1, 2024; the Amended Complaint adds a former officer as an individual defendant. The Amended Complaint in the Securities Action alleges violations of Sections 10(b) of the Securities and Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder against all defendants and control person violations of Section 20(a) against the individual defendants, relating to NurOwn® for the treatment of ALS, the Company’s submissions to and communications with the FDA in support of the approval of NurOwn® for the treatment of ALS, and the prospects of future approval of NurOwn® by the FDA. The Securities Action seeks, among other things, damages in connection with an allegedly inflated stock price between February 18, 2020 and September 27, 2023, as well as attorneys’ fees and costs.\n\nOn September 15, 2025, the Court issued an opinion and order granting in part and denying in part the motion to dismiss the Amended Complaint. The Court dismissed the Section 10(b) claims that were based on statements regarding biomarker data, statements of opinion regarding the interpretation of clinical trial results, and statements regarding the likelihood of FDA approval. The Court also dismissed the insider trading claims brought against one of the individual defendants. The Court found, however, that the Amended Complaint adequately pleaded claims with respect to certain statements regarding the FDA’s views on the design of the NurOwn clinical trial; whether a particular subgroup analysis in that trial was “prespecified”; whether the FDA agreed that the results in the trial could be explained by “floor effects”; and the safety profile of NurOwn. The Section 20(a) control person liability claims survive dependent on those Section 10(b) claims. The parties are currently in discovery; fact discovery closes on December 18, 2026. On May 4, 2026, Plaintiffs filed a motion for class certification; Defendants’ opposition is due by August 3, 2026, and Plaintiffs’ reply is due by September 17, 2026.\n\nOn February 14, 2024, February 15, 2024, March 21, 2024, and April 12, 2024, four purported shareholders of the Company filed derivative action complaints against the Company as nominal defendant and certain of its officers, current and former directors, and members of its scientific advisory board, captioned Porteous v. Lebovits, et al., Case No. 1:24-cv-01095; Andrev v. Lebovits, et al., Case No. 1:24-cv-1101; Holtzman v. Lebovits, et al., Case No. 1:24-cv-02139; and Hamby v. Lebovits, et al., Case No. 1:24-cv-02811 (the “Derivative Complaints”) in the United States District Court for the Southern District of New York (the “Derivative Actions”). On April 25, 2024, the Court consolidated the Derivative Actions into a consolidated action captioned In Re Brainstorm Cell Therapeutics, Inc. Derivative Litigation, Case No. 1:24-cv-01095-DEH (the “Consolidated Derivative Action”), and appointed Co-Lead Counsel. Following the filing of Defendants’ Answer to the Amended Complaint in the securities class action on November 26, 2025, the stay of the Consolidated Derivative Action was lifted. However, the parties subsequently agreed to continue the stay of the Consolidated Derivative Action through June 26, 2026. Plaintiffs have not yet filed a consolidated complaint; the Derivative Actions, brought on behalf of the Company, each assert state law claims for breach of fiduciary duty and unjust enrichment against the individual defendants. The complaints in Holtzman and Hamby also assert state law claims against the individual defendants for abuse of control, gross mismanagement, corporate waste, a claim against the individual defendants for violations of Section 14(a) of the Securities and Exchange Act of 1934, as amended, and a claim against two officer defendants for contribution under Sections 10(b) and 21D of the Exchange Act. The Derivative Complaints allege that the individual defendants breached their fiduciary duties and duties under the Exchange Act in connection with the Company’s internal controls relating to, as with the allegations in the Securities Complaint, NurOwn® for the treatment of ALS, the Company’s submissions to and communications with the FDA in support of the approval of NurOwn® for the treatment of ALS, and the prospects of future approval of NurOwn® by the FDA; their actions or omissions could not have been a good faith exercise of prudent business. The Derivative Actions seek, among other things, monetary damages and disgorgement of performance-based compensation granted in connection with an allegedly inflated stock price between August 15, 2022 and September 27, 2023, as well as attorneys’ fees and costs.\n\nOn December 31, 2025, a purported shareholder of the Company filed a complaint pursuant to 8 Del. C. § 220 in the Delaware Court of Chancery, captioned Roth v. BrainStorm Cell Therapeutics, Case No. 2025-1507, seeking inspection of certain books, records, and documents of the Company. The matter is currently being held in abeyance.\n\nThe Company intends to vigorously defend against these lawsuits. On November 22, 2024, 3D Communications, LLC filed a lawsuit against the Company in the U.S. District Court for the District of Delaware, captioned *3D Communications, LLC v. Brainstorm Cell Therapeutics, Inc.*, Case No. 1:24-cv-01286. The Complaint asserts a claim for breach of contract and alleges that 3D Communications, LLC provided certain consulting and other services to the Company pursuant to a master services agreement and statement of work, and that the Company has not timely paid the corresponding invoices. The Company has filed an Answer to the Complaint. The Court entered a scheduling order, which has subsequently been amended. Under the amended scheduling order, fact discovery is scheduled to\n\n39\n\n[Table of Contents](#TOC)\n\nclose on May 15, 2026, with depositions of Company representatives to be taken in May 2026. 3D Communications, LLC seeks monetary damages relating to the master services agreement and statement of work, as well as attorneys’ fees and costs.\n\nThe Company intends to vigorously defend against these lawsuits.\n\n​"}