Microbot Medical Inc.
Annual Report 2018

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 Form 10-K (Mark One) [X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the fiscal year ended December 31, 2018 [ ]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: 000-19871 MICROBOT MEDICAL INC.(Exact name of registrant as specified in its charter) Delaware 94-3078125(State or Other Jurisdiction ofIncorporation or Organization) (I.R.S. EmployerIdentification No.) 25 Recreation Park Drive, Unit 108Hingham, MA 02043(Address including zip code of registrant’s Principal Executive Offices) (781) 875-3605(Registrant’s Telephone Number, Including Area Code) Securities registered under Section 12(b) of the Act: Title of each class Name of each exchange on which registeredCommon Stock, Par value $0.01 NASDAQ Capital Market Securities registered under Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X] Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X] 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 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant has submitted electronically every Interactive Data file required to be submitted pursuant to Rule 405 ofRegulation S-T (§232.405 of this chapter) during the preceding 12 months/(or for such shorter period that the registrant was required to submit such files).Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and willnot be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or anemerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and “emerging growth company”in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ]Non-accelerated filer [X]Smaller reporting company [X] Emerging Growth Company [ ] If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which thecommon equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recentlycompleted second fiscal quarter: approximately $25,919,740 Common stock outstanding as of March 28, 2019: 4,307,580 shares  INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS This report contains forward-looking statements. Forward-looking statements are projections in respect of future events or our future financialperformance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “intends”, “expects”, “will”, “plans”,“anticipates”, “believes”, “estimates”, “predicts”, “potential”, or “continue” or the negative of these terms or other comparable terminology. Thesestatements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks listed under the section entitled“Risk Factors” commencing on page 13 of this report, which may cause our or our industry’s actual results, levels of activity or performance to bematerially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements. Table of Contents Page PART I Item 1.Business1Item 1A.Risk Factors13Item 1B.Unresolved Staff Comments28Item 2.Properties28Item 3.Legal Proceedings28Item 4.Mine Safety Disclosures29 PART II Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities30Item 6.Selected Financial Data31Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations31Item 7A.Quantitative and Qualitative Disclosures about Market Risk35Item 8.Financial Statements and Supplementary Data35Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure35Item 9A.Controls and Procedures36Item 9B.Other Information36 PART III Item 10.Directors, Executive Officers and Corporate Governance36Item 11.Executive Compensation40Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters43Item 13.Certain Relationships and Related Transactions, and Director Independence44Item 14.Principal Accountant Fees and Services44 PART IV Item 15.Exhibits and Financial Statement Schedules45 NOTE REGARDING REFERENCES TO OUR COMPANY Throughout this Form 10-K, the words “we,” “us,” “our,” the “Company” and “Microbot” refer to Microbot Medical Inc., including our directly andindirectly wholly-owned subsidiaries and, unless the context otherwise requires, the historical business, financial statements and operations of Microbot areof Microbot Medical Ltd., an Israeli corporation (“Microbot Israel”) which became a wholly-owned subsidiary of the Company on November 28, 2016.“StemCells” or “StemCells, Inc.” refers to the Company prior to its merger transaction with Microbot Israel. i  PART I Item 1. Description of Business. The Company Microbot is a pre-clinical medical device company specializing in the research, design and development of next generation robotic endoluminal surgerydevices targeting the minimally invasive surgery space. Microbot is primarily focused on leveraging its micro-robotic technologies with the goal ofimproving surgical outcomes for patients. Microbot’s current technological platforms, ViRobTM, CardioSertTM and TipCATTM, are comprised of proprietary innovative technologies. Using theViRob platform, Microbot is currently developing its first product candidate: the Self Cleaning Shunt, or SCSTM, for the treatment of hydrocephalus andNormal Pressure Hydrocephalus, or NPH. Although the SCS utilizes one of our platforms, we are focused on the development of a Multi Generation PipelinePortfolio utilizing all three of our proprietary technologies. Microbot has a patent portfolio of 30 issued/allowed patents and 21 patent applications pending worldwide. We were incorporated on August 2, 1988 in the State of Delaware under the name Cellular Transplants, Inc. The original Certificate of Incorporation wasrestated on February 14, 1992 to change our name to CytoTherapeutics, Inc. On May 24, 2000, the Certificate of Incorporation as restated was furtheramended to change our name to StemCells, Inc. On November 28, 2016, C&RD Israel Ltd., a wholly-owned subsidiary of ours, completed its merger with andinto Microbot Medical Ltd., or Microbot Israel, an Israeli corporation that then owned our assets and operated our current business, with Microbot Israelsurviving as a wholly-owned subsidiary of ours. We refer to this transaction as the Merger. On November 28, 2016, in connection with the Merger, wechanged our name from “StemCells, Inc.” to Microbot Medical Inc., and each outstanding share of Microbot Israel capital stock was converted into the rightto receive shares of our common stock. In addition, all outstanding options to purchase the ordinary shares of Microbot Israel were assumed by us andconverted into options to purchase shares of the common stock of Microbot Medical Inc. On November 29, 2016, our common stock began trading on theNasdaq Capital Market under the symbol “MBOT”. Prior to the Merger, we were a biopharmaceutical company that operated in one segment, the research,development, and commercialization of stem cell therapeutics and related technologies. Substantially all of the material assets relating to the stem cellbusiness were sold on November 29, 2016. In May 2016, we effected a 1-for-12 reverse split of our common stock, and in November 2016, we effected a 1-for-9 reverse split of our common stock inconnection with the Merger. In September 2018, we effected a 1-for-15 reverse split of our common stock. The share and per share information described inthis Annual Report on Form 10-K that occurred prior to these reverse splits have been adjusted to give retrospective effect to the reverse splits. Technological Platforms ViRob The ViRob is an autonomous crawling micro-robot which can be controlled remotely or within the body. Its miniature dimensions are expected to allow it tonavigate and crawl in different natural spaces within the human body, including blood vessels, the digestive tract and the respiratory system as well asartificial spaces such as shunts, catheters, ports, etc. Its unique structure is expected to give it the ability to move in tight spaces and curved passages as wellas the ability to remain within the human body for prolonged time. The SCS product was developed using the ViRob technology. CardioSert On May 25, 2018, Microbot acquired a patent-protected technology from CardioSert Ltd., a privately-held medical device company based in Israel. TheCardioSert technology contemplates a combination of a guidewire and microcatheter, technologies that are broadly used for surgery within a tubular organ orstructure such as a blood vessel or duct. The CardioSert technology features a unique guidewire delivery system with steering and stiffness controlcapabilities which when developed is expected to give the physician the ability to control the tip curvature, to adjust tip load to varying degrees of stiffnessin a gradually continuous manner. The CardioSert technology was originally developed to support interventional cardiologists in crossing chronic totalocclusions (CTO) during percutaneous coronary intervention (PCI) procedures and has the potential to be used in other spaces and applications, such asperipheral intervention, and neurosurgery. CardioSert was part of a technological incubator supported by the Israel Innovation Authorities (formerly knownas the Office of the Chief Scientist, or OCS), and a device based on the technology has successfully completed pre-clinical testing. 1  TipCAT The TipCAT is a disposable self-propelled locomotive device that is specially designed to advance in tubular anatomies. The TipCAT is a mechanismcomprising a series of interconnected balloons at the device’s tip that provides the TipCAT with its forward locomotion capability. The device can self-propel within natural tubular lumens such as the blood vessels, respiratory and the urinary and GI tracts. A single channel of air/fluid supply sequentiallyinflates and deflates a series of balloons creating an inchworm like forward motion. The TipCAT maintains a standard working channel for treatments. Unlikestandard access devices such as guidewires, catheters for vascular access and endoscopes, the TipCAT does not need to be pushed into the patient’s lumenusing external pressure; rather, it will gently advance itself through the organ’s anatomy. As a result, the TipCAT is designed to be able to reach every part ofthe lumen under examination regardless of the topography, be less operator dependent, and greatly reduce the likelihood of damage to lumen structure. TheTipCAT thus offers functionality features equivalent to modern tubular access devices, along with advantages associated with its physiologically adaptedself-propelling mechanism, flexibility, and design. Industry Overview CSF Management Hydrocephalus is a medical condition in which there is an abnormal accumulation of cerebrospinal fluid, or CSF, in the brain that can cause increasedintracranial pressure. It is estimated that one in every 500 babies are born with hydrocephalus, and over 1,000,000 people in the United States currently livewith hydrocephalus. Symptoms of hydrocephalus vary with age, disease progression and individual tolerance to the condition, but they can include convulsion, tunnel vision,mental disability or dementia-like symptoms and even death. NPH is a type of hydrocephalus that usually occurs in older adults. NPH is generally treated asdistinct from other types of hydrocephalus because it develops slowly over time. In NPH, the drainage of CSF is blocked gradually and the excess fluid buildsup slowly. This slow accumulation means that the fluid pressure may not be as high as in other types of hydrocephalus. It is estimated that more than 700,000Americans have NPH, but less than 20% receive an appropriate diagnosis. Hydrocephalus is most often treated by the surgical insertion of a shunt system. The shunt system diverts the flow of CSF from the brain’s ventricles (or thelumbar subarachnoid space) to another part of the body where the fluid can be more readily absorbed. Hydrocephalus shunt designs have changed little sincetheir introduction in the 1950s. A shunt system typically consists of three parts: the distal tubing or shunt (a flexible and sturdy plastic tube), the ventricularcatheter (the proximal catheter), and a valve. The end of the shunt system with the proximal catheter is placed in the ventricles (within the CSF) and the distalcatheter is placed in the site of the body where the CSF can be drained. A valve is located along the shunt to maintain and regulate the rate of CSF flow.Current systems can be created from separate components or bought as complete units. The treatment of hydrocephalus with existing shunt systems often includes complications. For example, approximately 50% of shunts used in the pediatricpopulation fail within two years of placement and repeated neurosurgical operations are often required. Ventricular catheter blockage, or occlusion, is by farthe most frequent event that results in shunt failure. Shunt occlusion occurs when there is a partial or complete blockage of the shunt that causes it to functionintermittently or not at all. Such a shunt blockage can be caused by the accumulation of blood cells, tissue, or bacteria in any part of the shunt system. In theevent of shunt occlusion, CSF begins to accumulate in the brain or lumbar region again and the symptoms of untreated hydrocephalus can reappear until ashunt replacement surgery is performed. Although several companies are active in the field of hydrocephalus treatment and the manufacturing of shunt systems and shunt components, Microbotbelieves that the majority of those companies are focusing on the development of valves. The development of a “smart shunt” – a shunt that could providedata to the physician on patient conditions and shunt function with sensor-based controls, or correct the high failure rate of existing shunt systems – is for themost part at an academic and conceptual level only. Reports of smart shunt technologies are typically focused on a subset of components with remainingfactors left unspecified, such as hardware, control algorithms or power management. Microbot does not believe that a smart shunt that can prevent functionalfailures has been developed to date. Because of the limited innovation in this area, Microbot believes an opportunity exists to provide patients suffering fromhydrocephalus or NPH with a more effective instrument for treating their condition. An alternative, short-term solution to hydrocephalus is the implantation of an External Ventricular Drainage, or EVD, an implanted device used inneurosurgery for the short-term treatment and monitoring of elevated intracranial pressure when the normal flow of CSF inside the brain is obstructed. If afterusing an EVD, the underlying hydrocephalus does not eventually resolve, the EVD may then be converted to a cerebral shunt, a fully internalized, long-termtreatment for hydrocephalus. EVDs are also used in other instances when the normal flow of CSF inside the brain is obstructed, such as a result of head trauma, intracerebral hemorrhage,brain tumors and infection. The EVD serves to divert excess fluids from the brain and allows for the monitoring of intracranial pressure. An EVD must beplaced in a center with full neurosurgical capabilities because immediate neurosurgical intervention may be needed if a complication of EVD placement,such as bleeding, is encountered. EVD is one of the most commonly used and most important life-saving procedures in the neurologic ICU, with more than200,000 neuro-intensive patients requiring EVD insertions annually. Similar to shunts, EVDs are also prone to occlusion, mostly due to cellular debris, such as blood clots and/or tissue fragments. Studies have shown thatapproximately 1-7% of EVDs require replacement secondary to occlusion. Current solutions for EVD occlusion include irrigation and replacement, which webelieve may be ineffective (in the case of irrigation) or costly (in the case of replacement) and in either case, put the patient at risk of unintended side effects.Microbot believes that with its portfolio of technologies, and its initial pre-clinical results, it is well-positioned to explore and expand its offerings as analternative solution for EVD occlusion. 2  Minimally Invasive Endovascular Neurosurgery Minimally Invasive Surgery, or MIS, refers to surgical procedures performed through tiny incisions instead of a single large opening. Because the incisionsare small, patients tend to have quicker recovery times and experience less trauma than with conventional surgery. The global MIS market is expected toexceed $50 billion by 2019, with a CAGR of over 20% through 2023. MIS involves three major category of devices: surgical, monitoring and visualization,and endoscopy. The market for surgical devices, including ablation, electrosurgery and medical robotic systems, accounts for the largest share of revenue andis also expected to show the highest rate of growth. As a subset of MIS, endovascular neurosurgery refers to surgeries performed by using devices that pass through the blood vessels to diagnose and treatneurological diseases and conditions such as stroke, arteriovenous malformations, aneurysms and atherosclerosis, rather than using open surgery. The global neurovascular device market was valued at $1.62 billion in 2015 and is expected to reach a value of $2.92 billion by 2024, growing at a CAGR of6.5%. Increases in the geriatric population and a rise in the number of patients suffering from neurovascular disorders, implementation of advancedtechnological platforms, and favorable reimbursement policies across established markets are expected to drive this market’s growth. On the other hand, thehigh cost of the endovascular devices and scarcity of neurovascular surgeons may impede such growth. Stroke is a devastating condition, affecting 33 million people worldwide every year. In the United States alone, there are nearly 800,000 instances of strokeyearly, with about three in four being first-time strokes. This number is expected to increase to one million annually in 2021. Stroke is the fifth leading causeof death in the United States and is a leading cause of long-term disability, with related care costs estimated at $70 billion annually. Mechanical thrombectomy has only been approved as a first-line treatment for ischemic stroke since 2016. Prior to such approval, chemical thrombolysisusing tissue plasminogen activators was the only first-line treatment available, limiting the therapeutic window for ischemic stroke patients to as little as 3-4hours from the onset of symptoms. With mechanical thrombectomy, treatment can be started within 6-24 hours of the time the patient was last known to bewell. The US mechanical thrombectomy market is projected to grow at a CAGR of 23.9% between 2014-2020, to reach a value over $350 million. According to the Brain Aneurysm Foundation, an estimated 6 million people in the United States have an unruptured brain aneurysm, or 1 in 50 people. Theannual rate of rupture is approximately 8 – 10 per 100,000 people, or about 30,000 people in the United States annually. Embolic coiling is the establishedgold-standard treatment for aneurysms, and the most established product line in the neurovascular market – it is a strong but relatively stagnant market,projected to grow at a CAGR of 1.7% between 2014-2020, to reach a value of over $800 million. New devices that improve treatment of complex aneurysms,such as embolization-enabling stents, bifurcations stents, flow-diversion stents, liquid embolics and intrasaccular devices, are expected to boost marketgrowth. The major companies in the field of neurovascular devices include Stryker Corporation, Medtronic Plc., Cerenovus (Johnson & Johnson), TerumoCorporation and Penumbra, Inc. Neurovascular access devices are the means for delivering neurovascular treatment tools and devices from an opening in thefemoral or radial arteries into the brain vasculature. Such access devices include sheaths, guidewires and microcatheters. Wires and catheters account for18.6% of the overall neurovascular market. Navigating and placing access devices through tortuous and highly delicate brain arteries is a complex procedure that requires high-level surgical skills withspecialist training. In many procedures, surgeons exchange numerous access devices before reaching the target and applying the therapeutic agent or device,increasing the risk of adverse events and the exposure of both patient and physician to radiation. Adverse events, such as perforation of brain arteries or therelease of embolies from a thrombus or atherosclerotic lesion can have devastating or even fatal results. Microbot believes that with its portfolio of technologies specifically CardioSert and TipCAT, it is well-positioned to explore and develop such technologiesas neurovascular access devices, with a focus on improving the ease and access and enhancing the safety of endovascular neurosurgery. Our Product Pipeline Self-Cleaning Shunt The SCS device is designed to act as the ventricular catheter portion of a CSF shunt system that is used to relieve hydrocephalus and NPH. It is designed towork as an alternative to any ventricular catheter options currently on the market and to connect to all existing shunt system valves currently on the market;therefore, the successful commercialization of the SCS is not dependent on any single shunt system. Initially, Microbot expects the SCS device to be anaftermarket purchase that would be deployed to modify existing products by the end user. Microbot believes that the use of its SCS device will be able toreduce, and potentially eliminate, shunt occlusions, and by doing so, Microbot believes its SCS has the potential to become the gold standard ventricularshunt in the treatment of hydrocephalus and NPH. 3  The SCS device embeds an internal robotic cleaning mechanism in the lumen, or inside space, of the ventricular catheter which prevents cell accumulationand tissue ingrowth into the catheter. The SCS device consists of a silicone tube with a perforated titanium tip, which connects to a standard shunt valve at itsdistal end. The internal cleaning mechanism is embedded in the lumen of the titanium tip. Once activated, the cleaning mechanism keeps tissue from enteringthe catheter perforations while maintaining the CSF flow in the ventricular catheter. The internal cleaning mechanism of the SCS device is activated by means of an induced magnetic field, which is currently designed to be externallygenerated by the patient through a user-friendly headset that transmits the magnetic field at a pre-determined frequency and operating sequence protocol. Themagnetic field that is created by the headset is then captured by a flexible coil and circuit board that is placed just under the patient’s scalp in the locationwhere the valve is located. The circuit board assembly converts the magnetic field into the power necessary to activate the cleaning mechanism within theproximal part of the ventricular catheter. Microbot has completed the development of an SCS prototype and is currently continuing the safety testing, general proof of concept testing andperformance testing for the device, which Microbot began in mid-2013. In May 2018, Microbot announced the results of two pre-clinical studies assessingthe SCS, an in-vitro study and a small animal study. The in-vitro study, which was performed at Wayne State University by Dr. Carolyn Harris, supports theSCS’s potential as a viable technology for preventing occlusion in shunts used to treat hydrocephalus. The animal study designed to assess the safety profileof the SCS, which was performed by James Patterson McAllister, PhD, a Professor of Neurosurgery at Washington University School of Medicine in St. Louis,met the primary goal to determine the safety of the SCS device that aims to prevent obstruction in CSF catheters. Since the completion of these initial studies,Microbot has commenced a follow-up study to further evaluate the safety and to investigate the efficacy of the SCS. The follow-up study is also beingconducted by leading hydrocephalus experts at Washington University and Wayne State University. The study will include a larger sample size compared tothe initial studies and the primary and secondary endpoints will seek to validate the safety and efficacy of the SCS that will be activated in both in-vitro (lab)and in-vivo (animal) models. Microbot plans to use the findings for initial regulatory submissions in the United States, Europe and other jurisdictions,although upon the completion of animal studies, Microbot may conduct clinical trials if they are requested by the FDA or if Microbot decides that the datafrom such trials would improve the marketability of the product candidate. In conjunction with initiating this follow-up study, Microbot also contracted with Envigo CRS Israel, a leading provider of non-clinical contract researchservices, to conduct an in-vitro study designed to evaluate the operational performance of the SCS. The Envigo study used human brain glioblastoma cells inorder to assess the performance of the SCS in a test system with accelerated cell growth, accumulation, and obstruction rates. The performance of a constantlyactivated (always-on) SCS to prevent shunt occlusion in the laboratory study was compared with a non-operating SCS after 30 days, and the results werecaptured with photographs shared by Microbot in a press release issued on January 14, 2019. While significant cell growth and accumulation was seen in thecell cultures with a non-operating SCS, the shunt openings within the cells seeded with a constantly operating SCS remained clear, with little to no cellattachment on the robotic brush (ViRob) and on the opening where the robotic brush (ViRob) operates after 30 days of cell culturing and growth. We believethis experiment validates the operational effectiveness of the SCS to prevent shunt occlusion and provides additional data to support the device’s proof ofconcept. We believe the in-vitro laboratory study further confirms that the SCS has the ability to operate after cells have accumulated on the catheter holesand the robotic brush (ViRob) and to potentially disintegrate existing occlusions formed on the robotic brush (ViRob) and on the opening where the roboticbrush (ViRob) operates, based on the results from a third test group in which cells were allowed to grow for 4 weeks and then exposed to an activated SCSdevice. The images captured by Envigo and Microbot demonstrate that the cleaning mechanism of the SCS is powerful enough to clear accumulated cells atblocked pores, as significant improvements were observed in the degree of shunt obstruction after only a short period of time following activation of the SCS. Microbot believes that the animal study results of its first generation SCS device should be available during the second half of 2019 and we expect to submitthat data to the FDA as part of a pre-submission meeting request. The proposed indication for use of the SCS device would be for the treatment ofhydrocephalus and/or NPH as a component of a shunt system when draining or shunting of CSF is indicated. It continues to be possible that the FDA couldrequire us to conduct a human clinical study to support the safety and efficacy of the SCS and that such clinical data would need to be part of the futureregulatory submission to authorize marketing of the medical device in the U.S. Microbot may also conduct clinical trials for the SCS in other countries where such trials are necessary for Microbot to sell its SCS device in such country’smarket, although it has no current plans to do so. TipCAT A TipCAT prototype was shown to self-propel and self-navigate in curved plastic pipes and curved ex-vivo colon. In addition, in its first feasibility study, theprototype device was tested in a live animal experiment and successfully self-propelled through segments of the animal’s colon, with no post-proceduraldamage. All tests were conducted at AMIT (Alfred Mann Institute of Technology at the Technion), prior to the licensing of TipCAT by Microbot. 4  Currently, Microbot is not pursuing the development of the TipCAT as a colonoscopy tool due to its focus on the endovascular neurosurgery space, and assuch it is currently exploring the use of the TipCAT for minimally invasive endovascular neurosurgical applications to complement its other technologies. CardioSert CardioSert was part of a technological incubator supported by the Israel Innovation Authorities (formerly known as the Office of the Chief Scientist, or OCS),and a device based on the technology has successfully completed pre-clinical testing. Although the CardioSert technology was originally developed tosupport interventional cardiologists in crossing chronic total occlusions (CTO) during percutaneous coronary intervention (PCI) procedures, it has thepotential to be used in other spaces and applications, such as neurosurgery which Microbot will be focusing on. Strategy Microbot’s goal is to generate sales of its products, once they have received regulatory approval, by establishing SCS and TipCAT devices as the standard-of-care in the eyes of doctors, surgeons, patients and medical facilities, as well as getting the support of payors and insurance companies. Microbot believes thatit can achieve this objective by working with hospitals to demonstrate the key benefits of its products. Microbot’s strategy includes the following keyelements: ●Continue to refine existing product candidates and develop additional micro-robotic solutions. As Microbot prepares to bring its initial productcandidates through pre-clinical and clinical trials, if necessary, and eventually to market, it continues to focus on improving its product candidatesto respond to clinical data and patient and physician feedback. Microbot also expects to continue to innovate in the micro-robotics field bycontinuing to find ways of using its technology to solve unmet needs, with the overarching goal of providing a safer, more effective and moreefficient surgical environment for patients and physicians. ●Establish and leverage relationships with key institutions and leading clinicians. Microbot intends to develop relationships with a relatively smallnumber of hospitals and clinics through its clinical stage. Microbot’s objective will be to maintain clinical focus with such hospitals and clinics soas to establish the SCS, as well as other future products, as the standard of care in such institutions for their respective procedures. Microbot alsoexpects to identify key clinicians with hydrocephalus specialties with the expectation that such clinical focus will accelerate the adoption of itscandidate products. ●Continuously invest in research and development. Microbot’s most significant expense has historically been research and development, andMicrobot expects that this will continue in the foreseeable future, including expenses it expects to incur to improve on its prototype products inorder to respond to clinical data, to develop additional applications using its technologies and to develop future product candidates. ●Explore partnerships for the introduction of Microbot’s products. Microbot intends to focus its marketing and sales efforts initially on pursuingcollaborations with global medical device companies that have established sales and distribution networks. Microbot will seek to entercollaborations and partnerships with strategic players that offer synergies with Microbot’s product candidates and expertise. ●Seek additional IP and technologies to complement and strengthen Microbot’s current IP portfolio. Microbot intends to continue exploring newtechnologies, IP and know-how to add to its current portfolio and to allow Microbot to enter new spaces and strengthen its overall product portfolio. SCS Opportunities The SCS is designed to prevent shunt occlusions in hydrocephalus and NPH patients who have undergone or are undergoing the surgical insertion of a shuntsystem. For purposes of its marketing strategy, Microbot has split the market for shunt systems into two sub-markets: ●Primary shunt placement; and ●Shunt replacement. Microbot’s SCS device is universal (meaning that it is designed to be attachable to any valve on the market); therefore, Microbot’s initial go-to-marketstrategy is the development of strategic partnerships with leading global medical device companies with ready sales and distribution channels. Outside of astrategic partnership, it is most likely that Microbot’s SCS product will be initially used in shunt replacement surgeries to replace occluded ventricularcatheters. Accordingly, Microbot intends to establish key hospital and clinic relationships that will allow it to diffuse the technology among experts andother stakeholders. Microbot is also planning to apply for the SCS device to be covered under the current reimbursement codes in the United States for use inhydrocephalus and NPH shunt procedures. TipCAT Opportunities Microbot is currently exploring the use of the TipCAT for minimally invasive endovascular neurosurgical applications. CardioSert OpportunitiesMicrobot is currently exploring the use of the CardioSert for minimally invasive endovascular neurosurgical applications. Competition SCS Competitive Landscape Several academic research groups, such as at the New Jersey Institute of Technology, are currently researching sensing and obstruction-resistant catheterdesigns, and the Smart Sensors and Integrated Microsystems (SSIM) Program at Wayne State University has publicized that it is engaging in smart shuntdevelopment activity. However, based on its knowledge of the patented technologies, Microbot believes that these technologies are still early in the researchand development cycle. The SCS also faces non-direct competition from Aqueduct Neurosciences, Inc., which is developing a non-shunt, electro-mechanicaltechnology platform to control the draining of cerebrospinal fluid. 5  Microbot does not expect its SCS device to directly compete against shunt systems currently available in the market. The SCS device is designed to replace acomponent of existing shunt systems and is expected to be an aftermarket purchase that would be used to modify existing products by the end user. However,there can be no assurance that Microbot’s product candidate will be accepted by the shunt market as an alternative component. TipCAT Competitive Landscape Microbot is currently exploring the use of the TipCAT for minimally invasive endovascular neurosurgical applications and has not at this time completed itsevaluation of the competitive landscape for such uses. Some of Microbot’s competitors currently have significantly greater resources than Microbot does; have established relationships with healthcareprofessionals, customers and third-party payors; and have long-term contracts with group purchasing organizations in the United States. In addition, many ofMicrobot’s competitors have established distributor networks, greater resources for product development, sales and marketing, additional lines of productsand the ability to offer financial incentives such as rebates, bundled products or discounts on other product lines that Microbot cannot provide. Microbot’s products could also be rendered obsolete or uneconomical by technological advances developed in the future by existing or new competitors. Intellectual Property General The SCS and TipCAT are based on technological platforms licensed from The Technion Research and Development Foundation Ltd., or TRDF, as furtherdiscussed below. Microbot plans to develop other micro-robotic solutions through internal research and development, to strengthen its intellectual propertyposition, and to continue exploring strategic collaborations and accretive acquisition opportunities. Microbot currently holds an intellectual propertyportfolio of 31 issued/allowed patents and 20 patent applications. Microbot relies or intends to rely on intellectual property licensed or developed, including patents, trade secrets, trademarks, technical innovations, laws ofunfair competition and various licensing agreements, to provide its future growth, to build its competitive position and to protect its technology. AsMicrobot continues to expand its intellectual property portfolio, it is critical for Microbot to continue to invest in filing patent applications to protect itstechnology, inventions, and improvements. Microbot requires its employees and consultants to execute confidentiality agreements in connection with their employment or consulting relationships withMicrobot. Microbot also requires its employees and consultants who work on its product candidates to agree to disclose and assign to Microbot allinventions conceived during the term of their service, while using Microbot property, or which relate to Microbot’s business. Patent applications in the United States and in foreign countries are maintained in secrecy for a period of time after filing, which results in a delay betweenthe filing date of the patent applications and the time when they are published. Patents issued and patent applications filed relating to medical devices arenumerous, and there can be no assurance that current and potential competitors and other third parties have not filed or in the future will not file applicationsfor, or have not received or in the future will not receive, patents or obtain additional proprietary rights relating to product candidates, products, devices orprocesses used or proposed to be used by Microbot. Microbot believes that the technologies it employs in its products and systems do not infringe the validclaims of any third-party patents. There can be no assurance, however, that third parties will not seek to assert that Microbot devices and systems infringetheir patents or seek to expand their patent claims to cover aspects of Microbot’s products and systems. The medical device industry in general has been characterized by substantial litigation regarding patents and other intellectual property rights. Any suchclaims, regardless of their merit, could be time-consuming and expensive to respond to and could divert Microbot’s technical and management personnel.Microbot may be involved in litigation to defend against claims of infringement by other patent holders, to enforce patents issued to Microbot, or to protectMicrobot’s trade secrets. If any relevant claims of third-party patents are upheld as valid and enforceable in any litigation or administrative proceeding,Microbot could be prevented from practicing the subject matter claimed in such patents, or would be required to obtain licenses from the patent owners ofeach such patent, or to redesign Microbot’s products, devices or processes to avoid infringement. There can be no assurance that such licenses would beavailable or, if available, would be available on terms acceptable to Microbot or that Microbot would be successful in any attempt to redesign products orprocesses to avoid infringement. Accordingly, an adverse determination in a judicial or administrative proceeding or failure to obtain necessary licenses,could potentially prevent Microbot from manufacturing and selling its products. 6  Microbot’s issued U.S. patents, which cover Microbot’s product candidates, will expire between 2026 and 2033, not including any patent term adjustmentsthat may be available. Issued patents outside of the United States directed to Microbot’s product candidates will expire between 2026 and 2032. License Agreement with the Technion In June 2012, Microbot entered into a license agreement with TRDF, the technology transfer subsidiary of The Technion Institute of Technology, pursuant towhich it obtained an exclusive, worldwide, royalty-bearing, sub-licensable license to certain patents and inventions relating to the SCS and TipCATtechnology platforms invented by Professor Moshe Shoham, a director of and advisor to the Company, and in certain circumstances other TRDF-relatedpersons. Pursuant to the terms of the license agreement, in order to maintain the license with respect to each platform, Microbot must use commerciallyreasonable efforts to develop products covered by the license, including meeting certain agreed upon development milestones. The milestones for SCSinclude commencing initial studies in humans by December 2019. The milestones for TipCAT include commencing initial studies in humans, if needed, byDecember 2019 and commencing a full clinical trial, if necessary, by December 2020. Failure to meet any development milestone will give TRDF the right toterminate the license with respect to the technology underlying the missed milestone. Although Microbot expects to meet the milestone requirements, TRDFhas demonstrated flexibility with respect to amending the terms of the license to extend the milestone dates. As partial consideration for the grant of the licenses under the agreement, Microbot issued a number of shares to TRDF equal to 3% of its issued andoutstanding shares at such time on a fully diluted basis. Such shares were initially subject to antidilution protections but are no longer subject to adjustment.In addition, as partial consideration for the licenses granted, Microbot agreed to pay TRDF royalties of between 1.5% and 3.0% of net sales of productscovered by the licenses, subject to certain reductions, and certain percentages of amounts received by Microbot in the event of sublicensing. In the case of termination of the license by Microbot without cause or by TRDF for cause, TRDF has the right to receive a non-exclusive license fromMicrobot with respect to improvements to the licensed technologies made by Microbot. In such cases, TRDF would pay a royalty of 10% of the incomereceived by TRDF in connection its sublicensing of such patent right and related intellectual property. If the license from TRDF were to be terminated withrespect with either of the technology platforms underlying the SCS or the TipCAT, Microbot would no longer be able to continue its development of therelated product candidate. However, Microbot believes that its current intellectual property portfolio, and its ongoing efforts to expand into other micro-robotic surgical technologies, will give it the flexibility to shift its resources towards developing and commercializing related products. Research and Development Microbot’s research and development programs are generally pursued by engineers and scientists employed by Microbot in its offices in Israel on a full-timebasis or as consultants, or through partnerships with industry leaders in manufacturing and design and researchers in academia. Microbot is also working withsubcontractors in developing specific components of its technologies. The primary objectives of Microbot’s research and development efforts are to continue to introduce incremental enhancements to the capabilities of itscandidate products and to advance the development of proposed products. Microbot has received funds from the Israeli Innovation Authority (formerly known as the Office of the Chief Scientist in Israel), for research anddevelopment activities. Microbot received a grant from the Israeli Innovation Authority in 2012, which grant reimbursed Microbot for 50% of its researchand development expenses, up to $764,466. This first grant from the Israeli Innovation Authority ended in 2014. After the expiration of the first grant,Microbot received approval for an additional grant from the Israeli Innovation Authority which reimbursed Microbot for 50% of its research anddevelopment expenses for the period from May 1, 2014 through September 30, 2015, up to $924,166. After the expiration of the second grant, Microbotreceived an approval for a third grant from the Israeli Innovation Authority which reimbursed Microbot for 50% of its research and development expenses forthe period from May 1, 2016 through April 30, 2017, up to $1,026,050. In November 2017, Microbot was awarded an additional non-dilutive grant of up to 2,610,000 Israeli New Shekels (approximately $735,000) from the IsraelInnovation Authority, of which up to 2,198,000 NIS are at a reimbursement rate of 40% and up to 412,000 NIS are at a reimbursement rate of 30%. The grantprovided additional sources that were utilized by Microbot for the continued development of the SCS for the treatment of hydrocephalus and NormalPressure Hydrocephalus. The grant funds were used for or applied towards a number of research and development expenses, such as employees’ salaries,research and development expenses (including materials, as well as professional and consulting fees). The recoveries are recognized in the correspondingperiod when such expenses are incurred. For this grant, we received from the IIA a total of 991,008 NIS. The last installment of this reimbursement wasreceived by Microbot in December 2018. No additional payments are expected from this grant. With respect to such grants from the IIA, Microbot iscommitted to pay royalties, as, if and when it successfully commercializes the SCS and generates revenue from sales of the SCS, at a rate of between 3% to3.5% on sales proceeds up to the total amount of grants received, linked to the dollar, plus interest at an annual rate of USD LIBOR. Under the terms of thegrants and applicable law, Microbot is restricted from transferring any technologies, know-how, manufacturing or manufacturing rights developed using thegrant outside of Israel without the prior approval of the Israel Innovation Authority. Microbot has no obligation to repay the grant, if the SCS project fails, isunsuccessful or aborted before any sales are generated. The financial risk is assumed completely by the IIA. 7  Microbot expects to continue to access government funding in the future. For the fiscal year ended December 31, 2018, Microbot incurred research and development expenses of approximately $2,515,000 compared to research anddevelopment expenses of approximately $1,100,000 for the fiscal year ended December 31, 2017. Microbot has already made plans to develop a second version of its SCS device that will have an embedded controller and battery, initially to support itsanimal trials. This alternative design will allow the cleaning mechanism to be automatically activated, without the need for the patient’s involvement in theactivation process. Microbot has completed the development of an SCS prototype and is currently completing the safety testing, general proof of concept testing andperformance testing for the device, which Microbot began in mid-2013. In May 2018, Microbot announced the results of two pre-clinical studies assessingthe SCS, an in-vitro study and a small animal study. The in-vitro study, which was performed at Wayne State University by Dr. Carolyn Harris, supports theSCS’s potential as a viable technology for preventing occlusion in shunts used to treat hydrocephalus. The animal study designed to assess the safety profileof the SCS, which was performed by James Patterson McAllister, PhD, a Professor of Neurosurgery at Washington University School of Medicine in St. Louis,met the primary goal to determine the safety of the SCS device that aims to prevent obstruction in CSF catheters. Since the completion of these initial studies,Microbot has commenced a follow-up study to further evaluate the safety and to investigate the efficacy of the SCS. The follow-up study is also beingconducted by leading hydrocephalus experts at Washington University and Wayne State University. The study will include a larger sample size compared tothe initial studies and the primary and secondary endpoints will seek to validate the safety and efficacy of the SCS that will be activated in both in-vitro (lab)and in-vivo (animal) models. Microbot plans to use the findings for initial regulatory submissions in the United States, Europe and other jurisdictions,although upon the completion of animal studies, Microbot may conduct clinical trials if they are requested by the FDA or if Microbot decides that the datafrom such trials would improve the marketability of the product candidate. In conjunction with initiating this follow-up study, Microbot also contracted with Envigo CRS Israel, a leading provider of non-clinical contract researchservices, to conduct an in-vitro study designed to evaluate the operational performance of the SCS. The Envigo study used human brain glioblastoma cells inorder to assess the performance of the SCS in a test system with accelerated cell growth, accumulation, and obstruction rates. The performance of a constantlyactivated (always-on) SCS to prevent shunt occlusion in the laboratory study was compared with a non-operating SCS after 30 days, and the results werecaptured with photographs shared by Microbot in a press release issued on January 14, 2019. While significant cell growth and accumulation was seen in thecell cultures with a non-operating SCS, the shunt openings within the cells seeded with a constantly operating SCS remained clear, with little to no cellattachment on the robotic brush (ViRob) and on the opening where the robotic brush (ViRob) operates after 30 days of cell culturing and growth. We believethis experiment validates the operational effectiveness of the SCS to prevent shunt occlusion and provides additional data to support the device’s proof ofconcept. We believe the in-vitro laboratory study further confirms that the SCS has the ability to operate after cells have accumulated on the catheter holesand the robotic brush (ViRob) and to potentially disintegrate existing occlusions formed on the robotic brush (ViRob) and on the opening where the roboticbrush (ViRob) operates, based on the results from a third test group in which cells were allowed to grow for 4 weeks and then exposed to an activated SCSdevice. The images captured by Envigo and Microbot demonstrate that the cleaning mechanism of the SCS is powerful enough to clear accumulated cells atblocked pores, as significant improvements were observed in the degree of shunt obstruction after only a short period of time following activation of the SCS. Microbot believes that the animal study results of its first generation SCS device should be available during the second half of 2019 and we expect to submitthat data to the FDA as part of a pre-submission meeting request. The proposed indication for use of the SCS device would be for the treatment ofhydrocephalus as a component of a shunt system when draining or shunting of CSF is indicated. It continues to be possible that the FDA could require us toconduct a human clinical study to support the safety and efficacy of the SCS and that such clinical data would need to be part of the future regulatorysubmission to authorize marketing of the medical device in the U.S. Manufacturing Microbot does not have any manufacturing facilities or manufacturing personnel. Microbot currently relies, and expects to continue to rely, on third partiesfor the manufacturing of its product candidates for preclinical and clinical testing, as well as for commercial manufacturing if its product candidates receivemarketing approval. Commercialization Microbot has not yet established a sales, marketing or product distribution infrastructure for its product candidates, which are still in development stages.Microbot plans to access the U.S. markets for hydrocephalus and NPH with its initial device offerings through strategic partnerships but may develop its ownfocused, specialized sales force or distribution channels once it has several commercialized products in its portfolio. Microbot has not yet developed acommercial strategy outside of the United States. 8  Government Regulation General Microbot’s medical technology products and operations are subject to extensive regulation in the United States and other countries. Most notably, ifMicrobot seeks to sell its products in the United States, its products will be subject to the Federal Food, Drug, and Cosmetic Act (FDCA) as implemented andenforced by the U.S. Food and Drug Administration (FDA). The FDA regulates the development, bench and clinical testing, manufacturing, labeling, storage,record-keeping, promotion, marketing, sales, distribution and post-market support and reporting of medical devices in the United States to ensure thatmedical products distributed domestically are safe and effective for their intended uses. Regulatory policy affecting its products can change at any time. Advertising and promotion of medical devices in the United States, in addition to being regulated by the FDA, are also regulated by the Federal TradeCommission and by state regulatory and enforcement authorities. Recently, promotional activities for FDA-regulated products of other companies have beenthe subject of enforcement action brought under healthcare reimbursement laws and consumer protection statutes. In addition, under the federal Lanham Actand similar state laws, competitors and others can initiate litigation relating to advertising claims. Foreign countries where Microbot wishes to sell its products may require similar or more onerous approvals to manufacture or market its products.Government agencies in those countries also enforce laws and regulations that govern the development, testing, manufacturing, labeling, advertising,marketing and distribution, and market surveillance of medical device products. These regulatory requirements can change rapidly with relatively shortnotice. Other regulations Microbot encounters in the United States and in other jurisdictions are the regulations that are common to all businesses, such asemployment legislation, implied warranty laws, and environmental, health and safety standards, to the extent applicable. In the future, Microbot will alsoencounter industry-specific government regulations that would govern its products, if and when they are developed for commercial use. U.S. Regulation The FDA governs the following activities that Microbot performs, will perform, upon the clearance or approval of its product candidates, or that areperformed on its behalf, to ensure that medical products distributed domestically or exported internationally are safe and effective for their intended uses: ●product design, and development; ●product safety, testing, labeling and storage; ●record keeping procedures; and ●product marketing. There are numerous FDA regulatory requirements governing the approval or clearance and subsequent commercial marketing of Microbot’s products. Theseinclude: ●the timely submission of product listing and establishment registration information, along with associated establishment user fees; ●continued compliance with the Quality System Regulation, or QSR, which require specification developers and manufacturers, including third-partymanufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of themanufacturing process; ●labeling regulations and FDA prohibitions against the promotion of products for uncleared, unapproved or off-label use or indication; ●clearance or approval of product modifications that could significantly affect the safety or effectiveness of the device or that would constitute amajor change in intended use; ●Medical Device Reporting regulations (MDR), which require that manufacturers keep detailed records of investigations or complaints against theirdevices and to report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that wouldlikely cause or contribute to a death or serious injury if it were to recur; ●adequate use of the Corrective and Preventive Actions process to identify and correct or prevent significant systemic failures of products orprocesses or in trends which suggest same; ●post-approval restrictions or conditions, including post-approval study commitments; ●post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness datafor the device; and ●notices of correction or removal and recall regulations. 9  Unless an exemption applies, before Microbot can commercially distribute medical devices in the United States, Microbot must obtain, depending on theclassification of the device, either prior 510(k) clearance, 510(k) de-novo clearance or premarket approval (PMA), from the FDA. The FDA classifies medicaldevices into one of three classes based on the degree of risk associated with each medical device and the extent of regulatory controls needed to ensure thedevice’s safety and effectiveness: ●Class I devices, which are low risk and subject to only general controls (e.g., registration and listing, medical device labeling compliance, MDRs,Quality System Regulations, and prohibitions against adulteration and misbranding) and, in some cases, to the 510(k) premarket clearancerequirements; ●Class II devices, which are moderate risk and generally require 510(k) or 510(k) de-novo premarket clearance before they may be commerciallymarketed in the United States as well as general controls and potentially special controls like performance standards or specific labelingrequirements; and ●Class III devices, which are devices deemed by the FDA to pose the greatest risk, such as life-sustaining, life-supporting or implantable devices, ordevices deemed not substantially equivalent to a predicate device. Class III devices generally require the submission and approval of a PMAsupported by clinical trial data. Microbot expect the medical products in its pipeline currently to be classified as Class II. Class II devices are those for which general controls alone areinsufficient to provide reasonable assurance of safety and effectiveness and there is sufficient information to establish special controls. Special controls caninclude performance standards, post-market surveillance, patient histories and FDA guidance documents. Premarket review and clearance by the FDA forthese devices is generally accomplished through the 510(k) or 510(k) de-novo premarket notification process. As part of the 510(k) or 510(k) de-novonotification process, FDA may require the following: ●Development of comprehensive product description and indications for use; ●Comprehensive review of predicate devices and development of data supporting the new product’s substantial equivalence to one or more predicatedevices; and ●If appropriate and required, certain types of clinical trials (IDE submission and approval may be required for conducting a clinical trial in the US). Clinical trials involve use of the medical device on human subjects under the supervision of qualified investigators in accordance with current Good ClinicalPractices (GCPs), including the requirement that all research subjects provide informed consent for their participation in the clinical study. A written protocolwith predefined end points, an appropriate sample size and pre-determined patient inclusion and exclusion criteria, is required before initiating andconducting a clinical trial. All clinical investigations of devices to determine safety and effectiveness must be conducted in accordance with the FDA’sInvestigational device Exemption, or IDE, regulations that among other things, govern investigational device labeling, prohibit promotion of theinvestigational device, and specify recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators. If the device presentsa “significant risk,” as defined by the FDA, the agency requires the device sponsor to submit an IDE application, which must become effective prior tocommencing human clinical trials. The IDE will automatically become effective 30 days after receipt by the FDA, unless the FDA denies the application ornotifies the company that the investigation is on hold and may not begin. If the FDA determines that there are deficiencies or other concerns with an IDE thatrequires modification, the FDA may permit a clinical trial to proceed under a conditional approval. In addition, the study must be approved by, andconducted under the oversight of, an Institutional Review Board (IRB) for each clinical site. If the device presents a non-significant risk to the patient, asponsor may begin the clinical trial after obtaining approval for the trial by one or more IRBs without separate approval from the FDA, but it must still followabbreviated IDE requirements, such as monitoring the investigation, ensuring that the investigators obtain informed consent, and labeling and record-keeping requirements. 510(k) clearance typically involves the following: ●Assuming successful completion of all required testing, a detailed 510(k) premarket notification or 510(k) de-novo is submitted to the FDArequesting clearance to market the product. The notification includes all relevant data from pertinent preclinical and clinical trials, together withdetailed information relating to the product’s manufacturing controls and proposed labeling, and other relevant documentation. ●A 510(k) clearance letter from the FDA will authorize commercial marketing of the device for one or more specific indications for use. ●After 510(k) clearance, Microbot will be required to comply with a number of post-clearance requirements, including, but not limited to, MedicalDevice Reporting and complaint handling, and, if applicable, reporting of corrective actions. Also, quality control and manufacturing proceduresmust continue to conform to QSRs. The FDA periodically inspects manufacturing facilities to assess compliance with QSRs, which impose extensiveprocedural, substantive, and record keeping requirements on medical device manufacturers. In addition, changes to the manufacturing process arestrictly regulated, and, depending on the change, validation activities may need to be performed. Accordingly, manufacturers must continue toexpend time, money and effort in the area of production and quality control to maintain compliance with QSRs and other types of regulatorycontrols. 10  After a device receives 510(k) clearance from FDA, any modification that could significantly affect its safety or effectiveness, or that would constitute a majorchange in its intended use or technological characteristics, requires a new 510(k) clearance or could require a PMA. The FDA requires each manufacturer tomake the determination of whether a modification requires a new 510(k) notification or PMA in the first instance, but the FDA can review any such decision.If the FDA disagrees with a manufacturer’s decision not to seek a new 510(k) clearance or PMA for a particular change, the FDA may retroactively require themanufacturer to seek 510(k) clearance or PMA. The FDA can also require the manufacturer to cease U.S. marketing and/or recall the modified device untiladditional 510(k) clearance or PMA approval is obtained. The FDA and the Federal Trade Commission, or FTC, will also regulate the advertising claims of Microbot’s products to ensure that the claims Microbotmakes are consistent with its regulatory clearances, that there is scientific data to substantiate the claims and that product advertising is neither false normisleading. To obtain 510(k) clearance, Microbot must submit a notification to the FDA demonstrating that its proposed device is substantially equivalent to a predicatedevice (i.e., a device that was in commercial distribution before May 28, 1976, a device that has been reclassified from Class III to Class I or Class II, or a510(k)-cleared device). The FDA’s 510(k) clearance process generally takes from three to 12 months from the date the application is submitted but also cantake significantly longer. If the FDA determines that the device or its intended use is not substantially equivalent to a predicate device, the device isautomatically placed into Class III, requiring the submission of a PMA. There is no guarantee that the FDA will grant Microbot 510(k) clearance for its pipeline medical device products, and failure to obtain the necessaryclearances for its products would adversely affect Microbot’s ability to grow its business. Delays in receipt or failure to receive the necessary clearances, orthe failure to comply with existing or future regulatory requirements, could reduce its business prospects. Devices that cannot be cleared through the 510(k) process due to lack of a predicate device but would be considered low or moderate risk may be eligible forthe 510(k) de-novo process. In 1997, the Food and Drug Administration Modernization Act, or FDAMA added the de novo classification pathway nowcodified in section 513(f)(2) of the FD&C Act. This law established an alternate pathway to classify new devices into Class I or II that had automatically beenplaced in Class III after receiving a Not Substantially Equivalent, or NSE, determination in response to a 510(k) submission. Through this regulatory process,a sponsor who receives an NSE determination may, within 30 days of receipt, request FDA to make a risk-based classification of the device through what iscalled a “de novo request.” In 2012, section 513(f)(2) of the FD&C Act was amended by section 607 of the Food and Drug Administration Safety andInnovation Act (FDASIA), in order to provide a second option for de novo classification. Under this second pathway, a sponsor who determines that there isno legally marketed device upon which to base a determination of substantial equivalence can submit a de novo request to FDA without first submitting a510(k). In the event that Microbot receives a Not Substantially Equivalent determination for either of its device candidates in response to a 510(k) submission, theMicrobot device may still be eligible for the 510(k) de-novo classification process. Devices that cannot be cleared through the 510(k) or 510(k) de-novo classification process require the submission of a PMA. The PMA process is much moretime consuming and demanding than the 510(k) notification process. A PMA must be supported by extensive data, including but not limited to data obtainedfrom preclinical and/or clinical studies and data relating to manufacturing and labeling, to demonstrate to the FDA’s satisfaction the safety and effectivenessof the device. After a PMA application is submitted, the FDA’s in-depth review of the information generally takes between one and three years and may takesignificantly longer. If the FDA does not grant 510(k) clearance to its products, there is no guarantee that Microbot will submit a PMA or that if Microbotdoes, that the FDA would grant a PMA approval of Microbot’s products, either of which would adversely affect Microbot’s business. Microbot is currently evaluating whether it is appropriate for it to seek 510(k) clearance, given the technological features of the SCS device and the FDA’srecent announcements about enhancing the 510(k) process to further ensure safety and efficacy. However, the Company believes that given the similaritiesbetween the SCS and some cleared predicate devices, there is a reasonable likelihood that a de novo application might be acceptable to the FDA. Foreign Regulation In addition to regulations in the United States, Microbot will be subject to a variety of foreign regulations governing clinical trials, marketing authorizationand commercial sales and distribution of its products in foreign countries. The approval process varies from country to country, and the time may be longer orshorter than that required for FDA approval or clearance. The requirements governing the conduct of clinical trials, product licensing, pricing andreimbursement vary greatly from country to country. International sales of medical devices are subject to foreign governmental regulations which vary substantially from country to country. Whether or notMicrobot obtains FDA approval or clearance for its products, Microbot will be required to make new regulatory submissions to the comparable regulatoryauthorities of foreign countries before Microbot can commence clinical trials or marketing of the product in such countries. The time required to obtaincertification or approval by a foreign country may be longer or shorter than that required for FDA clearance or approval, and the requirements may differ.Below are summaries of the regulatory systems for medical devices in Europe and Israel, where Microbot currently anticipates marketing its products.However, its products may also be marketed in other countries that have different systems or minimal requirements for medical devices. 11  Europe. The primary regulatory body in Europe is the European Union, or E.U., which consists of 28 member states and has a coordinated system for theauthorization of medical devices. The E.U. has adopted legislation, in the form of directives to be implemented in each member state, concerning the regulation of medical devices within theEuropean Union. The directives include, among others, the Medical Device Directive, or MDD, that establishes certain requirements with which medicaldevices must comply before they can be commercialized in the European Economic Area, or EEA (which comprises the member states of the E.U. plusNorway, Liechtenstein and Iceland). Under the MDD, medical devices are classified into four Classes, I, IIa, IIb, and III, with Class I being the lowest risk andClass III being the highest risk. However, the E.U. authorities, including the European Commission, do not have direct regulatory over medical devicemanufacturers under the MDD. Rather, the MDD directs E.U. Member States to implement laws and regulations consistent with the provisions set forth in thedirective. Under the MDD, to demonstrate compliance of a medical device with the essential requirements, manufacturers must undergo a conformity assessmentprocedure, which varies according to the type of medical device and its classification. An accredited body known as a “Notified Body”, which is an entitydesignated by an E.U. Member State (or competent authority) to perform conformity assessments, will typically audit and examine the manufacturer’s qualitysystem for the production, quality, design and final inspection of the medical devices and review a Technical File containing technical documents regardingthe device, including but limited to, detailed device description, manufacturing information, preclinical and clinical tests, risk analysis, compliance withessential requirements, etc., before issuing a certification demonstrating compliance with the essential requirements. Medical devices that comply with theessential requirements are entitled to bear the Conformité Européene, or CE Mark. Medical devices properly bearing the CE Mark may be commerciallydistributed throughout the EEA. Under the MDD, notified bodies are also charged with performing periodic inspections to verify that a manufacturer’squality system, particularly the production and quality controls, is adequately executed and maintained. In addition, the MDD requires all medical device manufacturers to inform the competent authorities of their respective Member States of the address(es) ofany business facilities and descriptions of any certified medical device products. The MDD also requires manufacturers to file vigilance reports in the event adevice malfunction, deterioration in performance, or inadequate instructions or labeling results in, or could lead to, death or serious harm to a patient. In September 2012, the European Commission published proposals for the revision of the EU regulatory framework for medical devices. The proposal wouldreplace the MDD with a new regulation, the Medical Devices Regulation, or MDR. Unlike the MDD that must be implemented into national laws, theMedical Devices Regulation would be directly applicable in all EEA member states and so is intended to eliminate current national differences in regulationof medical devices. E.U. lawmakers published a revised draft of the proposed MDR in June 2016, which continues to be discussed within the Council of theEuropean Union and the European Parliament. Final formal adoption is expected both by the European Council and the European Parliament during the second quarter of 2017. If finally adopted, the MDRis expected to become applicable three years thereafter. The adoption of the MDR may, however, be materially delayed due to disagreements about specificportions of the regulation, as well as the implementation process. In its current form it would, among other things, impose additional reporting requirementson manufacturers of high risk medical devices, impose an obligation on manufacturers to appoint a “qualified person” responsible for regulatory compliance,and provide for more strict clinical evidence requirements. These new rules and procedures will likely result in increased regulatory oversight of all medicaldevices marketed in the E.U., and this may, in turn, increase the costs, time and requirements that need to be met in order to place a medical devices on theEEA market. Microbot intends to apply for the CE Mark for each of its medical device products. There is no guarantee that Microbot will be granted a CE Mark for all orany of its pipeline products and failure to obtain the CE Mark would adversely affect its ability to grow its business. Israel. Israel’s Medical Devices Law generally requires the registration of all medical products with the Ministry of Health, or MOH, Registrar as aprecondition for production and distribution in Israel. Special exemptions may apply under limited circumstances and for purposes such as the provision ofessential medical treatment, research and development of the medical device, and personal use, among others. Registration of medical devices requires the submission of an application to the Ministry of Health Medical Institutions and Devices Licensing Department,or AMAR. An application for the registration of a medical device includes the following: ●Name and address of the manufacturer, and of the importer as applicable; ●Description of the intended use of the medical device and of its medical indications; ●Technical details of the medical device and of its components, and in the event that the device or the components are not new, information shouldbe provided on the date or renovation; 12  ●Certificate attesting to the safety of the device, issued by a competent authority of one of the following countries: Australia, Canada, EuropeanCommunity (EC), Member States (MSs), Israel, Japan, or the United States; ●Information on any risk which may be associated with the use of the device (including precautionary measures to be taken); ●Instructions for use of the device in Hebrew; the MOH may allow the instructions to be in English for certain devices; ●Details of the standards to which the device complies; ●Description of the technical and maintenance services, including periodic checks and inspections; and ●Declaration, as appropriate: of the local manufacturer/importer, and of the foreign manufacturer. If the application includes a certificate issued by a competent authority of one of the following “recognized” countries: Australia, Canada, EuropeanCommunity (CE) Member States (MSs), Japan, or the United States, the registration process is generally expedited, but could still take 6-9 months forapproval. If such certificate is not available, the registration process will take significantly longer and a license is rarely issued. Furthermore, the MOH willdetermine what type of testing is needed. In general, in the case of Israeli manufactured devices that are not registered or authorized in any “recognized”country, the application requires presentation of a risk analysis, a clinical evaluation, a summary of the clinical trials, and expert opinions regarding thedevice’s safety and effectiveness. Additional requirements may apply during the registration period, including follow-up reviews, to improve the quality andsafety of the devices. According to regulations issued by Israel’s Minister of Health in June 2013, a decision on a request to register a medical device must be delivered by AMARwithin 120 days from the date of the request, although this rarely occurs. The current rules for the registration of medical devices do not provide for anexpedited approval process. Once granted by the MOH, a license (marketing authorization) for a medical device is valid for five years from the date of registration of the device, exceptfor implants with a life-supporting function, for which the validity is for only two years from the date of registration. Furthermore, the holder of the license,the Israeli Registration Holder, or IRH, must do the following to maintain its license: ●Reside and maintain a place of business in Israel and serve as the regulatory representative. ●Respond to questions from AMAR concerning the registered products. ●Report adverse events to AMAR. ●Renew the registration on time to keep the market approval active. ●Comply with post-marketing requirements, including reporting of adverse and unexpected events occurring in Israel or in other countries where thedevice is in use. Getting a device listed on Israel’s four major Sick Funds (health insurance entities) is also necessary in order for Israeli hospitals and health care providers toorder such products. Microbot intends to apply for a license from the MOH for each of its medical devices. There is no guarantee that Microbot will be granted licenses for itspipeline products and failure to obtain such licenses would adversely affect its ability to grow its business. Employees Microbot’s Chief Executive Officer, President and Chairman, Harel Gadot, along with one full-time employee, are based in Microbot’s U.S. office located inHingham, Massachusetts. Additionally, Microbot currently has 8 full-time employees and 1 part time employee based in its office located in Caesarea, Israel.These employees oversee day-to-day operations of the Company supporting management and leading engineering, manufacturing, intellectual property andadministration functions of the Company. As required, Microbot also engages consultants to provide services to the Company, including regulatory, legaland corporate services. Microbot has no unionized employees. Microbot currently plans to hire an additional 4-6 full-time employees within the next 12 months subject to the availability of funds, whose principalresponsibilities will be the support of its operational, research and development, regulatory and clinical development activities. Item 1A. Risk Factors This Annual Report on Form 10-K contains forward-looking statements that involve risks and uncertainties. Our business, operating results, financialperformance, and share price may be materially adversely affected by a number of factors, including but not limited to the following risk factors, any one ofwhich could cause actual results to vary materially from anticipated results or from those expressed in any forward-looking statements made by us in thisAnnual Report on Form 10-K or in other reports, press releases or other statements issued from time to time. Additional factors that may cause such adifference are set forth elsewhere in this Annual Report on Form 10-K. Forward-looking statements speak only as of the date of this report. We do notundertake any obligation to publicly update any forward-looking statements. 13  Risks Relating to Microbot’s Financial Position and Need for Additional Capital Microbot has had no revenue and has incurred significant operating losses since inception and is expected to continue to incur significant operating lossesfor the foreseeable future. The Company may never become profitable or, if achieved, be able to sustain profitability. Microbot has incurred significant operating losses since its inception and expects to incur significant losses for the foreseeable future as Microbot continuesits preclinical and clinical development programs for its existing product candidates, SCS and TipCAT; its research and development of any other futureproduct candidates; and all other work necessary to obtain regulatory clearances or approvals for its product candidates in the United States and othermarkets. In the future, Microbot intends to continue conducting micro-robotics research and development; performing necessary animal and clinical testing;working towards medical device regulatory compliance; and, if SCS, TipCAT or other future product candidates are approved or cleared for commercialdistribution, engaging in appropriate sales and marketing activities that, together with anticipated general and administrative expenses, will likely result inMicrobot incurring further significant losses for the foreseeable future. Microbot is a development-stage medical device company and currently generates no revenue from product sales, and may never be able to commercializeSCS, TipCAT, the CardioSert technology or other future product candidates. Microbot does not currently have the required approvals or clearances to marketor test in humans SCS, TipCAT, the CardioSert technology or any other future product candidates and Microbot may never receive them. Microbot does notanticipate generating significant revenues until it can successfully develop, commercialize and sell products derived from its product pipeline, of whichMicrobot can give no assurance. Even if Microbot or any of its future development partners succeed in commercializing any of its product candidates,Microbot may never generate revenues significant enough to achieve profitability. Because of the numerous risks and uncertainties associated with its product development pipeline and strategy, Microbot cannot accurately predict when itwill achieve profitability, if ever. Failure to become and remain profitable would depress the value of the Company and could impair its ability to raisecapital, which may force the Company to curtail or discontinue its research and development programs and/or day-to-day operations. Furthermore, there canbe no assurance that profitability, if achieved, can be sustained on an ongoing basis. Microbot has a limited operating history, which may make it difficult to evaluate the prospects for the Company’s future viability. Microbot has a limited operating history upon which an evaluation of its business plan or performance and prospects can be made. The business andprospects of Microbot must be considered in the light of the potential problems, delays, uncertainties and complications that may be encountered inconnection with a newly established business. The risks include, but are not limited to, the possibility that Microbot will not be able to develop functionaland scalable products, or that although functional and scalable, its products will not be economical to market; that its competitors hold proprietary rights thatmay preclude Microbot from marketing such products; that its competitors market a superior or equivalent product; that Microbot is not able to upgrade andenhance its technologies and products to accommodate new features and expanded service offerings; or the failure to receive necessary regulatory clearancesor approvals for its products. To successfully introduce and market its products at a profit, Microbot must establish brand name recognition and competitiveadvantages for its products. There are no assurances that Microbot can successfully address these challenges. If it is unsuccessful, Microbot and its business,financial condition and operating results could be materially and adversely affected. Microbot’s operations to date have been limited to organizing the company, entering into licensing arrangements to initially obtain rights to itstechnologies, developing and securing its technologies, raising capital, developing regulatory and reimbursement strategies for its product candidates andpreparing for pre-clinical and clinical trials of the SCS and TipCAT. Microbot has not yet demonstrated its ability to successfully complete development ofany product candidate, obtain marketing clearance or approval, manufacture a commercial-scale product or arrange for a third party to do so on its behalf, orconduct sales and marketing activities necessary for successful product commercialization. Consequently, any predictions made about Microbot’s futuresuccess or viability may not be as accurate as they could be if Microbot had a longer operating history. Microbot will need substantial additional funding. If Microbot is unable to raise capital when needed, it could be forced to delay, reduce or eliminate itsproduct development programs or commercialization efforts. To date, Microbot has funded its operations primarily through offerings of debt and equity securities, grants and loans. Microbot does not know when, or if, itwill generate any revenue, but does not expect to generate significant revenue unless and until it obtains regulatory clearance or approval of andcommercializes one of its current or future product candidates. It is anticipated that the Company will continue to incur losses for the foreseeable future, andthat losses will increase as it continues the development of, and seeks regulatory review of, its product candidates, and begins to commercialize any approvedor cleared products following a successful regulatory review. 14  Microbot expects the research and development expenses of the Company to increase substantially in future periods as it conducts pre-clinical studies inlarge animals and potentially clinical trials for its product candidates, and especially if it initiates additional research programs for future product candidates,including the CardioSert technology. In addition, if the Company obtains marketing clearance or approval for any of its product candidates, it expects toincur significant commercialization expenses related to product manufacturing, marketing and sales. Furthermore, Microbot incurs substantial costsassociated with operating as a public company in the United States. Accordingly, the Company will need to obtain substantial additional funding inconnection with its continuing operations. If the Company is unable to raise capital when needed or on attractive terms, it could be forced to delay, reduce oreliminate its research and development programs or any future commercialization efforts. Microbot believes that the net cash of the Company will be sufficient to fund the Company for at least 12 months and fund operations necessary to continuedevelopment activities of the SCS. The Company may need to raise additional funds through equity offerings or otherwise in order to meet expected future liquidity needs, including theintroduction of the SCS device into the hydrocephalus and NPH market. The Company’s future capital requirements, generally, will depend on many factors,including: ●the timing and outcomes of the product candidates’ regulatory reviews, subsequent approvals or clearances, or other regulatory actions; ●the final outcome of the Company’s existing lawsuit with Sabby, discussed in greater detail elsewhere in this Annual Report on Form 10-K,including our pending appeal to overturn the court’s March 2019 decision in favor of the plaintiffs, and whether other investors in the Company’sJune 2017 equity financing will bring an action against the Company under similar legal theories; ●the costs, design, duration and any potential delays of the clinical trials that could be conducted at the FDA’s request using Microbot’s productcandidates; ●the costs of acquiring, licensing or investing in new and existing businesses, product candidates and technologies; ●the costs to maintain, expand and defend the scope of Microbot’s intellectual property portfolio; ●the costs to secure or establish sales, marketing and commercial manufacturing capabilities or arrangements with third parties regarding same; ●the Company’s need and ability to hire additional management and scientific and medical personnel; and ●the costs to operate as a public company in the United States. Raising additional capital may cause dilution to the Company’s investors, restrict its operations or require it to relinquish rights to its technologies orproduct candidates. Until such time, if ever, as the Company can generate substantial product revenues, it expects to finance its cash needs through a combination of equityofferings, licensing, collaboration or similar arrangements, grants and debt financings. The Company does not have any committed external source of funds.To the extent that the Company raises additional capital through the sale of equity or convertible debt securities, the ownership interest of its stockholderswill be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of holder of the Company’scommon stock. Debt financing, if available, may involve agreements that include covenants limiting or restricting the Company’s ability to take specificactions, such as incurring additional debt, making capital expenditures, declaring dividends or other distributions, selling or licensing intellectual propertyrights, and other operating restrictions that could adversely affect the Company’s ability to conduct its business. If the Company raises additional funds through licensing, collaboration or similar arrangements, it may have to relinquish valuable rights to its technologies,future revenue streams, research and development programs or product candidates or to grant licenses on terms that may not be favorable to the Company. Ifthe Company is unable to raise additional funds through equity or debt financings or other arrangements when needed, it may be required to delay, limit,reduce or terminate its product development or future commercialization efforts or grant rights to develop and market product candidates that it wouldotherwise prefer to develop and market itself. 15  Risks Relating to the Development and Commercialization of Microbot’s Product Candidates Microbot’s business depends heavily on the success of its lead product candidate, the SCS. If Microbot is unable to commercialize the SCS or experiencessignificant delays in doing so, Microbot’s business will be materially harmed. On January 27, 2017, Microbot entered into a research agreement with Washington University in St. Louis to develop the protocol for and to execute thenecessary animal study to determine the effectiveness of the Microbot’s SCS prototype. The initial research was completed in 2017 with a comprehensivestudy expected to be completed in 2019. Upon the completion of animal studies, Microbot may conduct clinical trials if they are requested by the FDA or ifMicrobot decides that the data from such trials would improve the marketability of the product candidate. After all necessary clinical and performance datasupporting the safety and effectiveness of SCS are collected, Microbot must still obtain FDA clearance or approval to market the device and those regulatoryprocesses can take several months to several years to be completed. Therefore, Microbot’s ability to generate product revenues will not occur for at least thenext few years, if at all, and will depend heavily on the successful commercialization of SCS in the treatment of hydrocephalus. The success ofcommercializing SCS will depend on a number of factors, including the following: ●our ability to obtain additional capital; ●successful completion of animal studies and, if necessary, human clinical trials and the collection of sufficient data to demonstrate that the device issafe and effective for its intended use; ●receipt of marketing approvals or clearances from the FDA and other applicable regulatory authorities; ●establishing commercial manufacturing arrangements with one or more third parties; ●obtaining and maintaining patent and trade secret protections; ●protecting Microbot’s rights in its intellectual property portfolio; ●establishing sales, marketing and distribution capabilities; ●generating commercial sales of SCS, if and when approved, whether alone or in collaboration with other entities; ●acceptance of SCS, if and when commercially launched, by the medical community, patients and third-party payors; ●effectively competing with existing shunt and endoscope products on the market and any new competing products that may enter the market; and ●maintaining quality and an acceptable safety profile of SCS following clearance or approval. If Microbot does not achieve one or more of these factors in a timely manner or at all, it could experience significant delays or an inability to successfullycommercialize SCS, which would materially harm its business. These risks may also apply to Microbot’s other technologies. Microbot’s ability to expand its technology platforms for other uses, including endovascular neurosurgery other than for the treatment of hydrocephalus,may be limited. After spending time working with experts in the field, Microbot has recently decided to no longer pursue the use of TipCAT in colonoscopy and has insteadcommitted to focus on expanding all of its technology platforms for use in segments of the endovascular neurosurgery market, including traumatic braininjury, to capitalize on its existing competencies in hydrocephalus and the market’s needs. Microbot’s ability to expand its technology platforms for use inthe endovascular neurosurgery market will be limited by its ability to develop and/or refine the necessary technology, obtain the necessary regulatoryapprovals for their use on humans, and the marketing of its products and otherwise obtaining market acceptance of its product in the United States and inother countries. Microbot operates in a competitive industry and if its competitors have products that are marketed more effectively or develop products, treatments orprocedures that are similar, more advanced, safer or more effective, its commercial opportunities will be reduced or eliminated, which would materiallyharm its business. Our competitors may develop products, treatments or procedures that directly compete with our products and potential products and which are similar, moreadvanced, safer or more effective than ours. The medical device industry is very competitive and subject to significant technological and practice changes.Microbot expects to face competition from many different sources with respect to the SCS and products that it is seeking to develop or commercialize withrespect to its other product candidates in the future. Competing against large established competitors with significant resources may make establishing a market for any products that it develops difficult whichwould have a material adverse effect on Microbot’s business. Microbot’s commercial opportunities could also be reduced or eliminated if its competitorsdevelop and commercialize products, treatments or procedures quicker, that are safer, more effective, are more convenient or are less expensive than the SCSor any product that Microbot may develop. Many of Microbot’s potential competitors have significantly greater financial resources and expertise in researchand development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products thanMicrobot may have. Mergers and acquisitions in the medical device industry market may result in even more resources being concentrated among a smallernumber of Microbot’s potential competitors. 16  At this time, Microbot does not know whether the FDA will require it to submit clinical data in support of its future marketing applications for its SCSproduct candidate, particularly in light of recent initiatives by the FDA to enhance and modernize its approach to medical device safety and innovation,which creates uncertainty for Microbot as well as the possibility of increased product development costs and time to market. Although Microbot has identified a predicate device for its lead product candidate, the SCS, which it intended to use in its 510(k) application, it maydetermine that a 510(k) de novo application is more appropriate for the SCS. If the Company determines to proceed with the 510(k) application and the FDAagrees with the Company’s determination, the SCS will be classified by the FDA as Class II and eligible for marketing pursuant to FDA clearance through the510(k) application. However, in light of recent initiatives by the FDA relating to safety and efficacy, there is no guarantee that the FDA will agree with theCompany’s determination or that the FDA would accept the predicate device that Microbot intends to submit in its 510(k). The FDA also may requestadditional data in response to a 510(k), or require Microbot to conduct further testing or compile more data in support of its 510(k). Such additional datacould include clinical data that must be derived from human clinical studies that are designed appropriately to address the potential questions from the FDAregarding a proposed product’s safety or effectiveness. It is unclear at this time whether and how various activities recently initiated or announced by theFDA to modernize the U.S. medical device regulatory system could affect the marketing pathway or timeline for our product candidate, given the timing andthe undeveloped nature of some of the FDA’s new medical device safety and innovation initiatives. One of the recent initiatives was announced in April2018, when the FDA Commissioner issued a statement with the release of a Medical Device Safety Action Plan. Among other key areas of the Medical DeviceSafety Action Plan, the Commissioner stated that the FDA is “exploring what further actions we can take to spur innovation towards technologies that canmake devices and their use safer. For instance, our Breakthrough Device Program that helps address unmet medical needs can be used to facilitate patientaccess to innovative new devices that have important improvements to patient safety. We’re considering developing a similar program to support thedevelopment of safer devices that do not otherwise meet the Breakthrough Program criteria, but are clearly intended to be safer than currently availabletechnologies.” This type of program may negatively affect our existing development plan for the SCS product candidate or it may benefit Microbot, but atthis time those potential impacts from recent FDA medical device initiatives are unknown and uncertain. Similarly, the FDA Commissioner announcedvarious agency goals under a Medical Innovation Access Plan in 2017. If the FDA does require clinical data to be submitted as part of the SCS marketing submission, any type of clinical study performed in humans will require theinvestment of substantial expense, professional resources and time. In order to conduct a clinical investigation involving human subjects for the purpose ofdemonstrating the safety and effectiveness of a medical device, a company must, among other things, apply for and obtain Institutional Review Board, orIRB, approval of the proposed investigation. In addition, if the clinical study involves a “significant risk” (as defined by the FDA) to human health, thesponsor of the investigation must also submit and obtain FDA approval of an Investigational Device Exemption, or IDE, application. Microbot may not beable to obtain FDA and/or IRB approval to undertake clinical trials in the United States for any new devices Microbot intends to market in the United Statesin the future. Moreover, the timing of the commencement, continuation and completion of any future clinical trial may be subject to significant delaysattributable to various causes, including scheduling conflicts with participating clinicians and clinical institutions, difficulties in identifying and enrollingpatients who meet trial eligibility criteria, failure of patients to complete the clinical trial, delay in or failure to obtain IRB approval to conduct a clinical trialat a prospective site, and shortages of supply in the investigational device. Thus, the addition of one or more mandatory clinical trials to the development timeline for the SCS would significantly increase the costs associated withdeveloping and commercializing the product and delay the timing of U.S. regulatory authorization. The current uncertainty regarding near-term medicaldevice regulatory changes by the FDA could further affect our development plans for the SCS, depending on their nature, scope and applicability. Microbotand its business, financial condition and operating results could be materially and adversely affected as a result of any such costs, delays or uncertainty. The FDA may disagree with Microbot’s determination that the SCS is a Class II device or that the chosen predicate device (or any predicate device) isappropriate for a substantial equivalence comparison to the SCS. Although the Company intended to submit a 501(k) application for its lead product candidate, the SCS, the Company is now considering that the FDA maydetermine that the SCS is a Class III device because there is no appropriate predicate device for substantial equivalence comparison, which would requireMicrobot to submit a De Novo classification request or an application for premarket approval (“PMA”). Both De Novo requests and PMA applications requireapplicants to prepare information and data about device safety and efficacy in addition to the 510(k) requirements, including a benefit-risk analysis, adiscussion of proposed general and special controls to eliminate or mitigate device risks, and additional testing data. PMA applications almost always requiredata from human clinical studies, and while De Novo requests do not require human clinical study data, in most cases, such data is necessary to demonstratethat the FDA can appropriately classify the device as Class II. 17  Any type of clinical study performed in humans will require the investment of substantial expense, professional resources and time. In order to conduct aclinical investigation involving human subjects for the purpose of demonstrating the safety and effectiveness of a medical device, a company must, amongother things, apply for and obtain Institutional Review Board, or IRB, approval of the proposed investigation. In addition, if the clinical study involves a“significant risk” (as defined by the FDA) to human health, the sponsor of the investigation must also submit and obtain FDA approval of an InvestigationalDevice Exemption, or IDE, application. Microbot may not be able to obtain FDA and/or IRB approval to undertake clinical trials in the United States for anynew devices Microbot intends to market in the United States in the future. Moreover, the timing of the commencement, continuation and completion of anyfuture clinical trial may be subject to significant delays attributable to various causes, including scheduling conflicts with participating clinicians andclinical institutions, difficulties in identifying and enrolling patients who meet trial eligibility criteria, failure of patients to complete the clinical trial, delayin or failure to obtain IRB approval to conduct a clinical trial at a prospective site, and shortages of supply in the investigational device. Thus, the additionof one or more mandatory clinical trials to the development timeline for the SCS would significantly increase the costs associated with developing andcommercializing the product and delay the timing of U.S. regulatory authorization. Furthermore, if Microbot is required to submit a De Novo request or PMA application instead of a 510(k), the FDA review process may take significantlymore time. While the FDA commits to reviewing 510(k)s in 90 days, the review period for De Novo requests and PMA applications is 150 days and 180 days,respectively. After an initial review of our De Novo request or PMA application, the FDA may request additional information or data which can significantlydelay an ultimate decision on our submission. Thus, submitting a De Novo request or PMA application for the SCS would significantly increase the costs associated with developing and commercializingthe product and delay the timing of U.S. regulatory authorization. Microbot and its business, financial condition and operating results could be materiallyand adversely affected as a result of any such costs or delays. Unsuccessful animal studies, clinical trials or procedures relating to product candidates under development could have a material adverse effect onMicrobot’s prospects. The regulatory approval process for new products and new indications for existing products requires extensive data and procedures, including thedevelopment of regulatory and quality standards and, potentially, certain clinical studies. Unfavorable or inconsistent data from current or future clinicaltrials or other studies conducted by Microbot or third parties, including the studies now being performed by The Washington University or perceptionsregarding such data, could adversely affect Microbot’s ability to obtain necessary device clearance or approval and the market’s view of Microbot’s futureprospects. Failure to successfully complete these studies in a timely and cost-effective manner could have a material adverse effect on Microbot’s prospects.Because animal trials, clinical trials and other types of scientific studies are inherently uncertain, there can be no assurance that these trials or studies will becompleted in a timely or cost-effective manner or result in a commercially viable product. Clinical trials or studies may experience significant setbacks evenif earlier preclinical or animal studies have shown promising results. Furthermore, preliminary results from clinical trials may be contradicted by subsequentclinical analysis. Results from clinical trials may also not be supported by actual long-term studies or clinical experience. If preliminary clinical results arelater contradicted, or if initial results cannot be supported by actual long-term studies or clinical experience, Microbot’s business could be adversely affected.Clinical trials also may be suspended or terminated by us, the FDA or other regulatory authorities at any time if it is believed that the trial participants faceunacceptable health risks. Microbot has no prior experience in conducting clinical trials and will depend upon the ability of third parties, including contract research organizations,collaborative academic groups, future clinical trial sites and investigators, to conduct or to assist the Company in conducting clinical trials for its productcandidates, if such trials become necessary. As a development-stage, pre-clinical company, Microbot has no prior experience in designing, initiating, conducting and monitoring human clinical trials, ifdata from such trials become necessary in order to obtain regulatory clearance or approval of our product candidates. Should the FDA or another regulatoryagency in a foreign market request clinical data to support the safety and effectiveness of Microbot’s product candidates, Microbot will depend upon itsability and/or the ability of future collaborators, contract research organizations, clinical trial sites and investigators to successfully design, initiate, conductand monitor such clinical trials. Failure by Microbot or by any of these future collaborating parties to timely and effectively initiate, conduct and monitor a future clinical trial couldsignificantly delay or materially impair Microbot’s ability to complete those clinical trials and/or obtain regulatory clearance or approval of its productcandidates and, consequently, could delay or materially impair its ability to generate revenues from the commercialization of those products. If the commercial opportunity for SCS and any other commercial products that may be developed by Microbot is smaller than Microbot anticipates,Microbot’s future revenue from SCS and such other products will be adversely affected and Microbot’s business will suffer. If the size of the commercial opportunities in any of Microbot’s target markets is smaller than it anticipates, Microbot may not be able to achieve profitabilityand growth. Microbot is developing SCS as a device for the treatment of hydrocephalus and NPH. Microbot expects its future revenues to be primarilyderived from the sales of the SCS, which has not undergone an FDA pre-market review process necessary to commercialize the product candidate in theUnited States. It is difficult to predict the penetration, future growth rate or size of the market for Microbot’s product candidate. 18  The commercial success of the SCS will require broad acceptance of the devices by the doctors and other medical professionals who specialize in theprocedures targeted by each device, a limited number of whom may be able to influence device selection and purchasing decisions. If Microbot’stechnologies are not broadly accepted and perceived as having significant advantages over existing medical devices, then it will not meet its businessobjectives. Such perceptions are likely to be based on a determination by medical facilities and physicians that Microbot’s product candidates are safe andeffective, are cost-effective in comparison to existing devices, and represent acceptable methods of treatment. Microbot cannot assure that it will be able toestablish the relationships and arrangements with medical facilities and physicians necessary to support the market uptake of its product candidates. Inaddition, its competitors may develop new technologies for the same markets Microbot is targeting that are more attractive to medical facilities andphysicians. If doctors and other medical professionals do not consider Microbot product candidates to be suitable for application in the procedures we aretargeting and an improvement over the use of existing or competing products, Microbot’s business goals will not be realized. Customers will be unlikely to buy the SCS unless Microbot can demonstrate that they can be produced for sale to consumers at attractive prices. To date, Microbot has focused primarily on research and development of the first generation versions of the SCS. Consequently, Microbot has no experiencein manufacturing its product candidates, and intends to manufacture its product candidates through third-party manufacturers. Microbot can offer noassurance that either it or its manufacturing partners will develop efficient, automated, low-cost manufacturing capabilities and processes to meet the quality,price, engineering, design and production standards or production volumes required to successfully mass produce its commercial products. Even if itsmanufacturing partners are successful in developing such manufacturing capability and quality processes, including the assurance of GMP-compliant devicemanufacturing, there can be no assurance that Microbot can timely meet its product commercialization schedule or the production and delivery requirementsof potential customers. A failure to develop such manufacturing processes and capabilities could have a material adverse effect on Microbot’s business andfinancial results. The proposed price of Microbot’s product candidates, once approved for sale, will be dependent on material and other manufacturing costs. Microbot cannotoffer any assurances that its manufacturing partner will be able manufacture its product candidates at a competitive price or that achieving cost reductionswill not cause a reduction in the performance, reliability and longevity of its product candidates. Microbot has relied on, and intends to continue to rely on, third-party manufacturers to produce its product candidates. Microbot currently relies, and expects to rely for the foreseeable future, on third-party manufacturers to produce and supply its product candidates, and itexpects to rely on third parties to manufacture the commercialized products as well, should they receive the necessary regulatory clearance or approval.Reliance on third-party manufacturers entails risks to which Microbot would not be subject if Microbot manufactured its product candidates or futurecommercial products itself, including: ●limitations on supply availability resulting from capacity, internal operational problems or scheduling constraints of third parties; ●potential regulatory non-compliance or other violations by the third-party manufacturer that could result in quality assurance issues or governmentenforcement action that has a negative effect on Microbot’s product candidates and distribution strategy; ●the possible breach of manufacturing agreements by third parties because of various factors beyond Microbot’s control; and ●the possible termination or non-renewal of manufacturing agreements by third parties for various reasons beyond Microbot’s control, at a time that iscostly or inconvenient to Microbot. If Microbot is not able to maintain its key manufacturing relationships, Microbot may fail to find replacement manufacturers or develop its ownmanufacturing capabilities, which could delay or impair Microbot’s ability to obtain regulatory clearance or approval for its product candidates and couldsubstantially increase its costs or deplete profit margins, if any. If Microbot does find replacement manufacturers, Microbot may not be able to enter intoagreements with them on terms and conditions favorable to it and there could be a substantial delay before new facilities could be qualified and registeredwith the FDA and other foreign regulatory authorities. If Microbot’s product candidates are not considered to be a safe and effective alternative to existing technologies, Microbot will not be commerciallysuccessful. The SCS and TipCAT rely on new technologies, and Microbot’s success will depend on acceptance of these technologies by the medical community as safe,clinically effective, cost effective and a preferred device as compared to products of its competitors. Microbot does not have long-term data regardingefficacy, safety and clinical outcomes associated with the use of SCS or TipCAT. Any data that is generated in the future may not be positive or may notsupport the product candidates’ regulatory dossiers, which would negatively affect market acceptance and the rate at which its product candidates areadopted. Equally important will be physicians’ perceptions of the safety of Microbot’s product candidates because Microbot’s technologies are relativelynew. If, over the long term, Microbot’s product candidates do not meet surgeons’ expectations as to safety, efficacy and ease of use, they may not becomewidely adopted. Market acceptance of Microbot’s product candidates will also be affected by other factors, including Microbot’s ability to convince key opinion leaders toprovide recommendations regarding its product candidates; convince distributors that its technologies are attractive alternatives to existing and competingtechnologies; supply and service sufficient quantities of products directly or through marketing alliances; and price products competitively in light of thecurrent macroeconomic environment, which is becoming increasingly price sensitive. 19  Microbot may be subject to penalties and may be precluded from marketing its product candidates if Microbot fails to comply with extensivegovernmental regulations. Microbot believes that its medical device product candidates will be categorized as Class II devices, which typically require a 510(k) or 510(k) de-novopremarket submission to the FDA. However, the FDA has not made any determination about whether Microbot’s medical product candidates are Class IImedical devices and may disagree with that classification. If the FDA determines that Microbot’s product candidates should be reclassified as Class IIImedical devices, Microbot could be precluded from marketing the devices for clinical use within the United States for months, years or longer, depending onthe specifics of the change in classification. Reclassification of any of Microbot’s product candidates as Class III medical devices could significantly increaseMicrobot’s regulatory costs, including the timing and expense associated with required clinical trials and other costs. The FDA and non-U.S. regulatory authorities require that Microbot product candidates be manufactured according to rigorous standards. These regulatoryrequirements significantly increase Microbot’s production costs, which may prevent Microbot from offering products within the price range and in quantitiesnecessary to meet market demands. If Microbot or one of its third-party manufacturers changes an approved manufacturing process, the FDA may need toreview the process before it may be used. Failure to comply with applicable pre-market and post-market regulatory requirements could subject Microbot toenforcement actions, including warning letters, fines, injunctions and civil penalties, recall or seizure of its products, operating restrictions, partial suspensionor total shutdown of its production, and criminal prosecution. If Microbot is not able to both obtain and maintain adequate levels of third-party reimbursement for procedures involving its product candidates after theyare approved for marketing and launched commercially, it would have a material adverse effect on Microbot’s business. Healthcare providers and related facilities are generally reimbursed for their services through payment systems managed by various governmental agenciesworldwide, private insurance companies, and managed care organizations. The manner and level of reimbursement in any given case may depend on the siteof care, the procedure(s) performed, the final patient diagnosis, the device(s) utilized, available budget, or a combination of these factors, and coverage andpayment levels are determined at each payor’s discretion. The coverage policies and reimbursement levels of these third-party payors may impact thedecisions of healthcare providers and facilities regarding which medical products they purchase and the prices they are willing to pay for those products.Microbot cannot assure you that its sales will not be impeded and its business harmed if third-party payors fail to provide reimbursement for Microbotproducts that healthcare providers view as adequate. In the United States, Microbot expects that its product candidates, once approved, will be purchased primarily by medical institutions, which then billvarious third-party payors, such as the Centers for Medicare & Medicaid Services, or CMS, which administers the Medicare program through MedicareAdministrative Contractors, and other government health care programs and private insurance plans, for the healthcare products and services provided totheir patients. The process involved in applying for coverage and incremental reimbursement from CMS is lengthy and expensive. Moreover, many privatepayors look to CMS in setting their reimbursement policies and amounts. If CMS or other agencies limit coverage for procedures utilizing Microbot’sproducts or decrease or limit reimbursement payments for doctors and hospitals utilizing Microbot’s products, this may affect coverage and reimbursementdeterminations by many private payors. If a procedure involving a medical device is not reimbursed separately by a government or private insurer, then a medical institution would have to absorbthe cost of Microbot’s products as part of the cost of the procedure in which the products are used. At this time, Microbot does not know the extent to whichmedical institutions would consider insurers’ payment levels adequate to cover the cost of its products. Failure by hospitals and surgeons to receive anamount that they consider to be adequate reimbursement for procedures in which Microbot products are used could deter them from purchasing Microbotproducts and limit sales growth for those products. Microbot has no control over payor decision-making with respect to coverage and payment levels for its medical device product candidates, once they areapproved. Additionally, Microbot expects many payors to continue to explore cost-containment strategies (e.g., comparative and cost-effectiveness analyses,so-called “pay-for-performance” programs implemented by various public government health care programs and private third-party payors, and expansion ofpayment bundling initiatives, and other such methods that shift medical cost risk to providers) that may potentially impact coverage and/or payment levelsfor Microbot’s current product candidates or products Microbot develops in the future. As Microbot’s product offerings are used across diverse healthcare settings, they will be affected to varying degrees by the different payment systems. 20  Clinical outcome studies for the SCS may not provide sufficient data to make Microbot’s product candidates the standard of care. Microbot’s business plan relies on the broad adoption by surgeons of the SCS for primary shunt placement procedures to prevent shunt occlusions. AlthoughMicrobot believes the occurrence of shunt occlusion complications is well known among physicians practicing in the relevant medical fields, SCS may beadopted for replacement shunt surgeries only. Neurosurgeons may adopt SCS for primary shunt placement procedures only upon additional clinical studieswith longer follow up periods, if at all. It may also be necessary to provide outcome studies on the preventative capabilities of the SCS in order to convincethe medical community of its safety and efficacy. Clinical studies may not show an advantage in SCS based procedures in a timely manner, or at all, andoutcome studies have not been designed at this time, and may be too large and too costly for Microbot to conduct. Both situations could prevent broadadoption of the SCS and materially impact Microbot’s business. Microbot products may in the future be subject to mandatory product recalls that could harm its reputation, business and financial results. The FDA and similar foreign governmental authorities have the authority to require the recall of commercialized products in the event of materialdeficiencies or defects in design or manufacture that could pose a risk of injury to patients. In the case of the FDA, the authority to require a recall must bebased on an FDA finding that there is a reasonable probability that the device would cause serious injury or death, although in most cases this mandatoryrecall authority is not used because manufacturers typically initiate a voluntary recall when a device violation is discovered. In addition, foreigngovernmental bodies have the authority to require the recall of Microbot products in the event of material deficiencies or defects in design or manufacture.Manufacturers may, under their own initiative, recall a product if any material deficiency in a device is found. A government-mandated or voluntary recall byMicrobot or one of its distributors could occur as a result of component failures, manufacturing errors, design or labeling defects or other deficiencies andissues. Recalls of any Microbot products would divert managerial and financial resources and have an adverse effect on Microbot’s financial condition andresults of operations, and any future recall announcements could harm Microbot’s reputation with customers and negatively affect its sales. In addition, theFDA could take enforcement action, including any of the following sanctions for failing to timely report a recall to the FDA: ●untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; ●detention or seizure of Microbot products; ●operating restrictions or partial suspension or total shutdown of production; ●refusing or delaying requests for 510(k) clearance or premarket approval of new products or modified products; ●withdrawing 510(k) clearances or other types of regulatory authorizations -that have already been granted; ●refusing to grant export approval for Microbot products; or ●criminal prosecution. If Microbot’s future commercialized products cause or contribute to a death or a serious injury, Microbot will be subject to Medical Device Reportingregulations, which can result in voluntary corrective actions or agency enforcement actions. Under FDA regulations, Microbot will be required to report to the FDA any incident in which a marketed medical device product may have caused orcontributed to a death or serious injury or in which a medical device malfunctioned and, if the malfunction were to recur, would likely cause or contribute todeath or serious injury. In addition, all manufacturers placing medical devices in European Union markets are legally bound to report any serious orpotentially serious incidents involving devices they produce or sell to the relevant authority in whose jurisdiction the incident occurred. Microbot anticipates that in the future it is likely that we may experience events that would require reporting to the FDA pursuant to the Medical DeviceReporting (MDR) regulations. Any adverse event involving a Microbot product could result in future voluntary corrective actions, such as product actions orcustomer notifications, or agency actions, such as inspection, mandatory recall or other enforcement action. Any corrective action, whether voluntary orinvoluntary, as well as defending Microbot in a lawsuit, will require the dedication of our time and capital, distract management from operating our business,and may harm our reputation and financial results. Microbot could be exposed to significant liability claims if Microbot is unable to obtain insurance at acceptable costs and adequate levels or otherwiseprotect itself against potential product liability claims. The testing, manufacture, marketing and sale of medical devices entail the inherent risk of liability claims or product recalls. Product liability insurance isexpensive and may not be available on acceptable terms, if at all. A successful product liability claim or product recall could inhibit or prevent the successfulcommercialization of Microbot’s products, cause a significant financial burden on Microbot, or both, which in any case could have a material adverse effecton Microbot’s business and financial condition. The results of Microbot’s research and development efforts are uncertain and there can be no assurance of the commercial success of Microbot’s productcandidates. Microbot believe that its success will depend in part on its ability to expand its product offerings and continue to improve its existing product candidates inresponse to changing technologies, customer demands and competitive pressures. As such, Microbot expects to continue dedicating significant resources inresearch and development. The product candidates and services being developed by Microbot may not be technologically successful. In addition, the lengthof Microbot’s product candidates and service development cycle may be greater than Microbot originally expected. 21  Our business strategy in part relies on identifying, acquiring and developing complementary technologies and products, which entails risks which couldnegatively affect our business, operations and financial condition. We may pursue other acquisitions of businesses and technologies. Acquisitions entail numerous risks, including: ●difficulties in the integration of acquired operations, services and products; ●failure to achieve expected synergies; ●diversion of management’s attention from other business concerns; ●assumption of unknown material liabilities of acquired companies; ●amortization of acquired intangible assets, which could reduce future reported earnings; ●potential loss of clients or key employees of acquired companies; and ●dilution to existing stockholders. As part of our growth strategy, we may consider, and from time to time may engage in, discussions and negotiations regarding transactions, such asacquisitions, mergers and combinations within our industry. The purchase price for possible acquisitions could be paid in cash, through the issuance ofcommon stock or other securities, borrowings or a combination of these methods. We cannot be certain that we will be able to identify, consummate and successfully integrate acquisitions, and no assurance can be given with respect to thetiming, likelihood or business effect of any possible transaction. For example, we could begin negotiations that we subsequently decide to suspend orterminate for a variety of reasons. However, opportunities may arise from time to time that we will evaluate. Any transactions that we consummate wouldinvolve risks and uncertainties to us. These risks could cause the failure of any anticipated benefits of an acquisition to be realized, which could have amaterial adverse effect on our business, financial condition, results of operations and prospects. If Microbot fails to retain certain of its key personnel and attract and retain additional qualified personnel, Microbot might not be able to pursue itsgrowth strategy effectively. Microbot is dependent on its senior management, in particular Harel Gadot, Microbot’s Chairman, President and Chief Executive Officer. Although Microbotbelieves that its relationship with members of its senior management is positive, there can be no assurance that the services of any of these individuals willcontinue to be available to Microbot in the future. Microbot’s future success will depend in part on its ability to retain its management and scientific teams,to identify, hire and retain additional qualified personnel with expertise in research and development and sales and marketing, and to effectively provide forthe succession of senior management, when necessary. Competition for qualified personnel in the medical device industry is intense and finding andretaining qualified personnel with experience in the industry is very difficult. Microbot believes that there are only a limited number of individuals with therequisite skills to serve in key positions at Microbot, particularly in Israel, and it competes for key personnel with other medical equipment and technologycompanies, as well as research institutions. Microbot does not carry, and does not intend to carry, any key man life insurance policies on any of its existing executive officers. Risks Relating to International Business If Microbot fails to obtain regulatory clearances in other countries for its product candidates under development, Microbot will not be able tocommercialize these product candidates in those countries. In order for Microbot to market its product candidates in countries other than the United States, it must comply with the safety and quality regulations in suchcountries. In Europe, these regulations, including the requirements for approvals, clearance or grant of Conformité Européenne, or CE, Certificates of Conformity andthe time required for regulatory review, vary from country to country. Failure to obtain regulatory approval, clearance or CE Certificates of Conformity (orequivalent) in any foreign country in which Microbot plans to market its product candidates may harm its ability to generate revenue and harm its business.Approval and CE marking procedures vary among countries and can involve additional product testing and additional administrative review periods. Thetime required to obtain approval or CE Certificate of Conformity in other countries might differ from that required to obtain FDA clearance. The regulatoryapproval or CE marking process in other countries may include all of the risks detailed above regarding FDA clearance in the United States. Regulatoryapproval or the CE marking of a product candidate in one country does not ensure regulatory approval in another, but a failure or delay in obtainingregulatory approval or a CE Certificate of Conformity in one country may negatively impact the regulatory process in others. Failure to obtain regulatoryapproval or a CE Certificate of Conformity in other countries or any delay or setback in obtaining such approval could have the same adverse effectsdescribed above regarding FDA clearance in the United States. 22  Microbot cannot be certain that it will be successful in complying with the requirements of the CE Certificate of Conformity and receiving a CE Mark for itsproduct candidates or in continuing to meet the requirements of the Medical Devices Directive in the European Economic Area (EEA). Israel’s Medical Devices Law generally requires the registration of all medical products with the Ministry of Health, or MOH, Registrar through thesubmission of an application to the Ministry of Health Medical Institutions and Devices Licensing Department, or AMAR. If the application includes acertificate issued by a competent authority of a “recognized” country, which includes Australia, Canada, the European Community Member States, Japan orthe United States, the registration process is expedited, but is generally still expected to take 6 to 9 months for approval. If certification from a recognizedcountry is not available, the registration process takes significantly longer and a license is rarely issued under such circumstances, as the MOH may requirethe presentation of significant additional clinical data. Once granted, a license (marketing authorization) for a medical device is valid for five years from thedate of registration of the device, except for implants with a life-supporting function, for which the validity is for only two years from the date of registration.Furthermore, the holder of the license must meet several additional requirements to maintain the license. Microbot cannot be certain that it will be successfulin applying for a license from the MOH for its product candidates. Microbot operations in international markets involve inherent risks that Microbot may not be able to control. Microbot’s business plan includes the marketing and sale of its proposed product candidates internationally, and specifically in Europe and Israel.Accordingly, Microbot’s results could be materially and adversely affected by a variety of factors relating to international business operations that it may ormay not be able to control, including: ●adverse macroeconomic conditions affecting geographies where Microbot intends to do business; ●foreign currency exchange rates; ●political or social unrest or economic instability in a specific country or region; ●higher costs of doing business in certain foreign countries; ●infringement claims on foreign patents, copyrights or trademark rights; ●difficulties in staffing and managing operations across disparate geographic areas; ●difficulties associated with enforcing agreements and intellectual property rights through foreign legal systems; ●trade protection measures and other regulatory requirements, which affect Microbot’s ability to import or export its product candidates from or tovarious countries; ●adverse tax consequences; ●unexpected changes in legal and regulatory requirements; ●military conflict, terrorist activities, natural disasters and medical epidemics; and ●Microbot’s ability to recruit and retain channel partners in foreign jurisdictions. Microbot’s financial results may be affected by fluctuations in exchange rates and Microbot’s current currency hedging strategy may not be sufficient tocounter such fluctuations. Microbot’s financial statements are denominated in U.S. dollars and the financial results of the Company are denominated in U.S. dollars, while a significantportion of Microbot’s business is conducted, and a substantial portion of its operating expenses are payable, in currencies other than the U.S. dollar.Exchange rate fluctuations may have an adverse impact on Microbot’s future revenues or expenses as presented in the financial statements. Microbot may inthe future use financial instruments, such as forward foreign currency contracts, in its management of foreign currency exposure. These contracts wouldprimarily require Microbot to purchase and sell certain foreign currencies with or for U.S. dollars at contracted rates. Microbot may be exposed to a credit lossin the event of non-performance by the counterparties of these contracts. In addition, these financial instruments may not adequately manage Microbot’sforeign currency exposure. Microbot’s results of operations could be adversely affected if Microbot is unable to successfully manage currency fluctuations inthe future. Risks Relating to Microbot’s Intellectual Property Microbot’s right to develop and commercialize its existing product candidates are subject to the terms and condition of a license granted to Microbot byTechnion Research and Development Foundation Ltd. and termination of the license with respect to one or both of the technology platforms underlyingthe product candidates would result in Microbot ceasing its development efforts for the applicable product candidate(s). Microbot entered into a license agreement with Technion Research and Development Foundation Ltd., or TRDF, in 2012 pursuant to which Microbotobtained an exclusive, worldwide, royalty-bearing, sub-licensable license to certain patents and inventions relating to the SCS and TipCAT technologyplatforms. Pursuant to the terms of the license agreement, in order to maintain the license with respect to each platform, Microbot must use commerciallyreasonable efforts to develop products covered by the license, including meeting certain agreed upon development milestones. TRDF has the option toterminate a license granted with respect a particular technology in the event Microbot fails to meet a development milestone associated with suchtechnology. Therefore, the failure to meet development milestones may lead to a complete termination of the applicable license agreement and result inMicrobot ceasing its development efforts for the applicable product candidate. The milestones for SCS include commencing initial studies in humans byDecember 2019. The milestones for TipCAT include commencing initial studies in humans by December 2019 and commencing a full clinical trial, ifnecessary, by December 2020. Failure to meet any development milestone will give TRDF the right to terminate the license with respect to the technologyunderlying the missed milestone. Although Microbot expects to meet the milestone requirements, TRDF has demonstrated flexibility with respect toamending the terms of the license to extend the milestone dates, although we can give no assurance at this time that TRDF will continue to be so flexiblewith respect to amending the terms of the license. 23  Under the license agreement, Microbot is also subject to various other obligations, including obligations with respect to payment upon the achievement ofcertain milestones and royalties on product sales. TRDF may terminate the license agreement under certain circumstances, including material breaches byMicrobot or under certain bankruptcy or insolvency events. In the case of termination of the license by Microbot without cause or by TRDF for cause, TRDFhas the right to receive a non-exclusive license from Microbot with respect to improvements to the licensed technologies made by Microbot. If TRDF were to terminate the license agreement or if Microbot was to otherwise lose the ability to exploit the licensed patents, Microbot’s competitiveadvantage could be reduced or terminated, and Microbot will likely not be able to find a source to replace the licensed technology. However, if there is any future dispute between Microbot and TRDF regarding the respective parties’ rights under the license agreement, Microbot’s ability todevelop and commercialize the SCS and TipCAT may be materially harmed. Microbot may not meet its product candidates’ development and commercialization objectives in a timely manner or at all. Microbot has established internal goals, based upon expectations with respect to its technologies, which Microbot has used to assess its progress towarddeveloping its product candidates. These goals relate to technology and design improvements as well as to dates for achieving specific development results.If the product candidates exhibit technical defects or are unable to meet cost or performance goals, Microbot’s commercialization schedule could be delayedand potential purchasers of its initial commercialized products may decline to purchase such products or may opt to pursue alternative products, which wouldmaterially harm its business. Intellectual property litigation and infringement claims could cause Microbot to incur significant expenses or prevent Microbot from selling certain of itsproduct candidates. The medical device industry is characterized by extensive intellectual property litigation. From time to time, Microbot might be the subject of claims bythird parties of potential infringement or misappropriation. Regardless of outcome, such claims are expensive to defend and divert the time and effort ofMicrobot’s management and operating personnel from other business issues. A successful claim or claims of patent or other intellectual property infringementagainst Microbot could result in its payment of significant monetary damages and/or royalty payments or negatively impact its ability to sell current or futureproducts in the affected category and could have a material adverse effect on its business, cash flows, financial condition or results of operations. If Microbot or TRDF are unable to protect the patents or other proprietary rights relating to Microbot’s product candidates, or if Microbot infringes onthe patents or other proprietary rights of others, Microbot’s competitiveness and business prospects may be materially damaged. Microbot’s success depends on its ability to protect its intellectual property (including its licensed intellectual property) and its proprietary technologies.Microbot’s commercial success depends in part on its ability to obtain and maintain patent protection and trade secret protection for its product candidates,proprietary technologies, and their uses, as well as its ability to operate without infringing upon the proprietary rights of others. Microbot currently holds, through licenses or otherwise, an intellectual property portfolio that includes U.S. and international patents and pending patents,and other patents under development. Microbot intends to continue to seek legal protection, primarily through patents, including the TRDF licensed patents,for its proprietary technology. Seeking patent protection is a lengthy and costly process, and there can be no assurance that patents will be issued from anypending applications, or that any claims allowed from existing or pending patents will be sufficiently broad or strong to protect its proprietary technology.There is also no guarantee that any patents Microbot holds, through licenses or otherwise, will not be challenged, invalidated or circumvented, or that thepatent rights granted will provide competitive advantages to Microbot. Microbot’s competitors have developed and may continue to develop and obtainpatents for technologies that are similar or superior to Microbot’s technologies. In addition, the laws of foreign jurisdictions in which Microbot develops,manufactures or sells its product candidates may not protect Microbot’s intellectual property rights to the same extent as do the laws of the United States. 24  Adverse outcomes in current or future legal disputes regarding patent and other intellectual property rights could result in the loss of Microbot’s intellectualproperty rights, subject Microbot to significant liabilities to third parties, require Microbot to seek licenses from third parties on terms that may not bereasonable or favorable to Microbot, prevent Microbot from manufacturing, importing or selling its product candidates, or compel Microbot to redesign itsproduct candidates to avoid infringing third parties’ intellectual property. As a result, Microbot may be required to incur substantial costs to prosecute,enforce or defend its intellectual property rights if they are challenged. Any of these circumstances could have a material adverse effect on Microbot’sbusiness, financial condition and resources or results of operations. Microbot has the first right, but not the obligation, to control the prosecution, maintenance or enforcement of the licensed patents from TRDF. However, theremay be situations in which Microbot will not have control over the prosecution, maintenance or enforcement of the patents that Microbot licenses, or maynot have sufficient ability to consult and input into the patent prosecution and maintenance process with respect to such patents. If Microbot does not controlthe patent prosecution and maintenance process with respect to the TRDF licensed patents, TRDF may elect to do so but may fail to take the steps that arenecessary or desirable in order to obtain, maintain and enforce the licensed patents. Microbot’s ability to develop intellectual property depends in large part on hiring, retaining and motivating highly qualified design and engineering staffand consultants with the knowledge and technical competence to advance its technology and productivity goals. To protect Microbot’s trade secrets andproprietary information, Microbot has entered into confidentiality agreements with its employees, as well as with consultants and other parties. If theseagreements prove inadequate or are breached, Microbot’s remedies may not be sufficient to cover its losses. Dependence on patent and other proprietary rights and failing to protect such rights or to be successful in litigation related to such rights may result inMicrobot’s payment of significant monetary damages or impact offerings in its product portfolios. Microbot’s long-term success largely depends on its ability to market technologically competitive product candidates. If Microbot fails to obtain or maintainadequate intellectual property protection, it may not be able to prevent third parties from using its proprietary technologies or may lose access totechnologies critical to our product candidates. Also, Microbot currently pending or future patent applications may not result in issued patents, and issuedpatents are subject to claims concerning priority, scope and other issues. Furthermore, Microbot has not filed applications for all of our patents internationally and it may not be able to prevent third parties from using its proprietarytechnologies or may lose access to technologies critical to its product candidates in other countries. Risks Relating to Operations in Israel Microbot has facilities located in Israel, and therefore, political conditions in Israel may affect Microbot’s operations and results. Microbot has facilities located in Israel. In addition, three of its seven directors (one of whom is also its Chief Operating Officer) and its Chief FinancialOfficer, are residents of Israel. Accordingly, political, economic and military conditions in Israel will directly or indirectly affect Microbot’s operations andresults. Since the establishment of the State of Israel, a number of armed conflicts have taken place between Israel and its Arab neighbors. An ongoing state ofhostility, varying in degree and intensity has led to security and economic problems for Israel. For a number of years there have been continuing hostilitiesbetween Israel and the Palestinians. This includes hostilities with the Islamic movement Hamas in the Gaza Strip, which have adversely affected the peaceprocess and at times resulted in armed conflicts. Such hostilities have negatively influenced Israel’s economy as well as impaired Israel’s relationships withseveral other countries. Israel also faces threats from Hezbollah militants in Lebanon, from ISIS and rebel forces in Syria, from the government of Iran andother potential threats from additional countries in the region. Moreover, some of Israel’s neighboring countries have recently undergone or are undergoingsignificant political changes. These political, economic and military conditions in Israel could have a material adverse effect on Microbot’s business,financial condition, results of operations and future growth. Political relations could limit Microbot’s ability to sell or buy internationally. Microbot could be adversely affected by the interruption or reduction of trade between Israel and its trading partners. Some countries, companies andorganizations continue to participate in a boycott of Israeli firms and others doing business with Israel, with Israeli companies or with Israeli-ownedcompanies operating in other countries. Foreign government defense export policies towards Israel could also make it more difficult for us to obtain theexport authorizations necessary for Microbot’s activities. Also, over the past several years there have been calls in the United States, Europe and elsewhere toreduce trade with Israel. There can be no assurance that restrictive laws, policies or practices directed towards Israel or Israeli businesses will not have anadverse impact on Microbot’s business. Israel’s economy may become unstable. From time to time, Israel’s economy may experience inflation or deflation, low foreign exchange reserves, fluctuations in world commodity prices, militaryconflicts and civil unrest. For these and other reasons, the government of Israel has intervened in the economy employing fiscal and monetary policies,import duties, foreign currency restrictions, controls of wages, prices and foreign currency exchange rates and regulations regarding the lending limits ofIsraeli banks to companies considered to be in an affiliated group. The Israeli government has periodically changed its policies in these areas. Reoccurrenceof previous destabilizing factors could make it more difficult for Microbot to operate its business and could adversely affect its business. 25  Exchange rate fluctuations between the U.S. dollar and the NIS currencies may negatively affect Microbot’s operating costs. A significant portion of Microbot’s expenses are paid in New Israeli Shekels, or NIS, but its financial statements are denominated in U.S. dollars. As a result,Microbot is exposed to the risks that the NIS may appreciate relative to the U.S. dollar, or the NIS instead devalues relative to the U.S. dollar, and the inflationrate in Israel may exceed such rate of devaluation of the NIS, or that the timing of such devaluation may lag behind inflation in Israel. In any such event, theU.S. dollar cost of Microbot’s operations in Israel would increase and Microbot’s U.S. dollar-denominated results of operations would be adversely affected.Microbot cannot predict any future trends in the rate of inflation in Israel or the rate of devaluation (if any) of the NIS against the U.S. dollar. Microbot’s primary expenses paid in NIS that are not linked to the U.S. dollar are employee expenses in Israel and lease payments on its Israeli facility. IfMicrobot is unsuccessful in hedging against its position in NIS, a change in the value of the NIS compared to the U.S. dollar could increase Microbot’sresearch and development expenses, labor costs and general and administrative expenses, and as a result, have a negative impact on Microbot’s profits. Funding and other benefits provided by Israeli government programs may be terminated or reduced in the future and the terms of such funding may have asignificant impact on future corporate decisions. Microbot participates in programs under the auspices of the Israeli Innovation Authority, for which it receives funding for the development of itstechnologies and product candidates. If Microbot fails to comply with the conditions applicable to this program, it may be required to pay additionalpenalties or make refunds and may be denied future benefits. From time to time, the government of Israel has discussed reducing or eliminating the benefitsavailable under this program, and therefore these benefits may not be available in the future at their current levels or at all. Microbot’s research and development efforts from inception until now have been financed in part through such Israeli Innovation Authority royalty bearinggrants in an aggregate amount of approximately $1,247,000 through December 31, 2018. With respect to such grants Microbot is committed to pay royaltiesat a rate of between 3% to 3.5% on sales proceeds up to the total amount of grants received, linked to the dollar, plus interest at an annual rate of USD LIBOR.In addition, as a recipient of Israeli Innovation Authority grants, Microbot must comply with the requirements of the Israeli Encouragement of IndustrialResearch and Development Law, 1984, or the R&D Law, and related regulations. Under the terms of the grants and the R&D Law, Microbot is restricted fromtransferring any technologies, know-how, manufacturing or manufacturing rights developed using Israeli Innovation Authority grants outside of Israelwithout the prior approval of Israeli Innovation Authority. Therefore, if aspects of its technologies are deemed to have been developed with Israeli InnovationAuthority funding, the discretionary approval of an Israeli Innovation Authority committee would be required for any transfer to third parties outside of Israelof the technologies, know-how, manufacturing or manufacturing rights related to such aspects. Furthermore, the Israeli Innovation Authority may imposecertain conditions on any arrangement under which it permits Microbot to transfer technology or development outside of Israel or may not grant suchapprovals at all. If approved, the transfer of Israeli Innovation Authority-supported technology or know-how outside of Israel may involve the payment of significant fees,which will depend on the value of the transferred technology or know-how, the total amount Israeli Innovation Authority funding received by Microbot, thenumber of years since the funding and other factors. These restrictions and requirements for payment may impair Microbot’s ability to sell its technologyassets outside of Israel or to outsource or transfer development or manufacturing activities with respect to any product or technology outside of Israel.Furthermore, the amount of consideration available to Microbot’s shareholders in a transaction involving the transfer of technology or know-how developedwith Israeli Innovation Authority funding outside of Israel (such as through a merger or other similar transaction) may be reduced by any amounts thatMicrobot is required to pay to the Israeli Innovation Authority. Some of Microbot’s employees and officers are obligated to perform military reserve duty in Israel. Generally, Israeli adult male citizens and permanent residents are obligated to perform annual military reserve duty up to a specified age. They also may becalled to active duty at any time under emergency circumstances, which could have a disruptive impact on Microbot’s workforce. It may be difficult to enforce a non-Israeli judgment against Microbot or its officers and directors. The operating subsidiary of the Company is incorporated in Israel. Some of Microbot’s executive officers and directors are not residents of the United States,and a substantial portion of Microbot’s assets and the assets of its executive officers and directors are located outside the United States. Therefore, a judgmentobtained against Microbot, or any of these persons, including a judgment based on the civil liability provisions of the U.S. federal securities laws, may not becollectible in the United States and may not necessarily be enforced by an Israeli court. It also may be difficult to affect service of process on these persons inthe United States or to assert U.S. securities law claims in original actions instituted in Israel. Additionally, it may be difficult for an investor, or any otherperson or entity, to initiate an action with respect to U.S. securities laws in Israel. Israeli courts may refuse to hear a claim based on an alleged violation ofU.S. securities laws reasoning that Israel is not the most appropriate forum in which to bring such a claim. In addition, even if an Israeli court agrees to hear aclaim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. lawoften involves the testimony of expert witnesses, which can be a time consuming and costly process. Certain matters of procedure will also be governed byIsraeli law. There is little binding case law in Israel that addresses the matters described above. As a result of the difficulty associated with enforcing ajudgment against Microbot in Israel, it may be impossible to collect any damages awarded by either a U.S. or foreign court. 26  Risks Relating to Microbot’s Securities, Governance and Other Matters If we fail to comply with the continued listing requirements of The Nasdaq Capital Market, our common stock may be delisted and the price of ourcommon stock and our ability to access the capital markets could be negatively impacted. Our common stock is currently listed on the Nasdaq Capital Market. In order to maintain that listing, we must satisfy minimum financial and other continuedlisting requirements and standards, including those regarding director independence and independent committee requirements, minimum stockholders’equity, minimum share price, and certain corporate governance requirements. There can be no assurances that we will be able to comply with the applicablelisting standards. In 2018, we effected a 1:15 reverse stock split to address our stock price falling below the minimum share price required by Nasdaq. Failureto meet applicable Nasdaq continued listing standards could result in a delisting of our common stock. A delisting of our common stock from The NasdaqCapital Market could materially reduce the liquidity of our common stock and result in a corresponding material reduction in the price of our common stock.In addition, delisting could harm our ability to raise capital on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors,employees and fewer business opportunities. Additionally, if we are not eligible for quotation or listing on another exchange, trading of our common stockcould be conducted only in the over-the-counter market or on an electronic bulletin board established for unlisted securities such as the Pink Sheets or theOTC Bulletin Board. In such event, it could become more difficult to dispose of, or obtain accurate price quotations for, our common stock, and there wouldlikely also be a reduction in our coverage by securities analysts and the news media, which could cause the price of our common stock to decline further. We do not expect to pay cash dividends on our common stock. We anticipate that we will retain our earnings, if any, for future growth and therefore do not anticipate paying cash dividends on our Common Stock in thefuture. Investors seeking cash dividends should not invest in our Common Stock for that purpose. Anti-takeover provisions in the Company’s charter and bylaws under Delaware law may prevent or frustrate attempts by stockholders to change the boardof directors or current management and could make a third-party acquisition of the Company difficult. Provisions in the Company’s certificate of incorporation and bylaws may delay or prevent an acquisition or a change in management. These provisionsinclude a classified board of directors. In addition, because the Company is incorporated in Delaware, it is governed by the provisions of Section 203 of theDGCL, which prohibits stockholders owning in excess of 15% of outstanding voting stock from merging or combining with the Company. Although theCompany believes these provisions collectively will provide for an opportunity to receive higher bids by requiring potential acquirors to negotiate with theCompany’s board of directors, they would apply even if the offer may be considered beneficial by some stockholders. In addition, these provisions mayfrustrate or prevent any attempts by the Company’s stockholders to replace or remove then current management by making it more difficult for stockholdersto replace members of the board of directors, which is responsible for appointing members of management. The market price for our Common Stock may be volatile. The market price for our Common Stock may be volatile and subject to wide fluctuations in response to factors including the following: ●actual or anticipated fluctuations in our quarterly or annual operating results; ●changes in financial or operational estimates or projections; ●conditions in markets generally; ●changes in the economic performance or market valuations of companies similar to ours; ●announcements by us or our competitors of new products, acquisitions, strategic partnerships, joint ventures or capital commitments; ●our intellectual property position; and ●general economic or political conditions in the United States, Israel or elsewhere. 27  In addition, the securities market has from time to time experienced significant price and volume fluctuations that are not related to the operatingperformance of particular companies. These market fluctuations may also materially and adversely affect the market price of shares of our Common Stock. The issuance of shares upon exercise of outstanding warrants and options could cause immediate and substantial dilution to existing stockholders. The issuance of shares upon exercise of warrants and options could result in substantial dilution to the interests of other stockholders since the holders ofsuch securities may ultimately convert and sell the full amount issuable on conversion. We are subject to litigation and may be subject to similar or other litigation in the future, which may divert management’s attention and have a materialadverse effect on our business, financial condition and results of operations. We were named as the defendant in a lawsuit, which we refer to as the Matter, captioned Sabby Healthcare Master Fund Ltd. and Sabby Volatility WarrantMaster Fund Ltd., Plaintiffs, against Microbot Medical Inc., Defendant, in the Supreme Court of the State of New York, County of New York (the “Court”)(Index No. 654581/2017). The complaint alleged, among other things, that we breached multiple representations and warranties contained in the SecuritiesPurchase Agreement (the “SPA”) related to our June 8, 2017 equity financing, or the Financing, of which the Plaintiffs participated. The complaint soughtrescission of the SPA and return of the Plaintiffs’ $3,375,000 purchase price with respect to the Financing, and damages in an amount to be determined attrial, but alleged to exceed $1 million. A trial was held on February 11, 2019. On February 28, 2019, the Court issued a Decision and Order After Trial torescind the SPA. The rescission would require the Plaintiffs to transfer back to us the shares they purchased in the Financing, and for us to return to Plaintiffstheir purchase price of $3.375 million. On March 27, 2019, the Company filed a Notice of Appeal and an Undertaking to stay execution of the judgmentpending appeal. However, management is unable to assess the likelihood that we would be successful in the appeal. Accordingly, no assurance can be giventhat any adverse outcome would not be material to our consolidated financial position. Additionally, in the event we lose our appeals, we will likely berequired to use the proceeds from recent offerings or available cash towards payment of damages and interest on the damages from the date of the decision tothe Plaintiffs, and to the Other Investors described below if and to the extent they bring similar lawsuits against us and prevail or if we settle the Sabbylitigation, that we otherwise would have used to build our business and develop our technologies into commercial products. In such event, we would berequired to raise additional capital sooner than we otherwise would, of which we can give no assurance of success. On April 4, 2018, we entered into a Tolling and Standstill Agreement with Empery Asset Master, Ltd., Empery Tax Efficient LP, Empery Tax Efficient II LP,and Hudson Bay Master Fund, Ltd., the other investors in the Financing, of whom we refer to as the Other Investors. Pursuant to the Tolling Agreement,among other things, (a) the Other Investors agree not to bring any claims against us arising out of the Matter, (b) the parties agree that if we reach anagreement to settle the claims asserted by the Sabby Funds in the above suit, we will provide the same settlement terms on a pro rata basis to the OtherInvestors, and the Other Investors will either accept same or waive all of their claims and (c) the parties froze in time the rights and privileges of each party asof the effective date of the Tolling Agreement, until (i) an agreement to settle the suit is executed; (ii) a judgment in the suit is obtained; or (iii) the suit isotherwise dismissed with prejudice. Item 1B. Unresolved Staff Comments Not Applicable. Item 2. Description of Property. Microbot’s principal executive office is located at 25 Recreation Drive, Unit 108, Hingham, MA 02043. Microbot also occupies facilities in premises ofapproximately 6,000 square feet at 8 Hatochen Street, 3rd Floor, Caesarea, Israel. This facility is expected to provide the space and infrastructure necessary toaccommodate its development work based on its current operating plan. Microbot does not own any real property. Item 3. Legal Proceedings. From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation issubject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm business. 28  Sabby Litigation We were named as the defendant in a lawsuit, which we refer to as the Matter, captioned Sabby Healthcare Master Fund Ltd. and Sabby Volatility WarrantMaster Fund Ltd., Plaintiffs, against Microbot Medical Inc., Defendant, in the Supreme Court of the State of New York, County of New York (the “Court”)(Index No. 654581/2017). The complaint alleged, among other things, that we breached multiple representations and warranties contained in the SecuritiesPurchase Agreement (the “SPA”) related to our June 8, 2017 equity financing, or the Financing, of which the Plaintiffs participated. The complaint soughtrescission of the SPA and return of the Plaintiffs’ $3,375,000 purchase price with respect to the Financing, and damages in an amount to be determined attrial, but alleged to exceed $1 million. A trial was held on February 11, 2019. On February 28, 2019, the Court issued a Decision and Order After Trial torescind the SPA. The rescission would require the Plaintiffs to transfer back to us the shares they purchased in the Financing, and for us to return to Plaintiffstheir purchase price of $3.375 million. On March 27, 2019, the Company filed a Notice of Appeal and an Undertaking to stay execution of the judgmentpending appeal. However, management is unable to assess the likelihood of the likelihood that we would be successful in the appeal. Accordingly, noassurance can be given that any adverse outcome would not be material to our consolidated financial position. Additionally, in the event we lose our appeals,we will likely be required to use the proceeds from recent offerings or available cash towards payment of damages and interest on the damages from the dateof the decision to the Plaintiffs, and to the Other Investors described below if and to the extent they bring similar lawsuits against us and prevail or if we settlethe Sabby litigation, that we otherwise would have used to build our business and develop our technologies into commercial products. In such event, wewould be required to raise additional capital sooner than we otherwise would, of which we can give no assurance of success. On April 4, 2018, we entered into a Tolling and Standstill Agreement with Empery Asset Master, Ltd., Empery Tax Efficient LP, Empery Tax Efficient II LP,and Hudson Bay Master Fund, Ltd., the other investors in the Financing, of whom we refer to as the Other Investors. Pursuant to the Tolling Agreement,among other things, (a) the Other Investors agree not to bring any claims against us arising out of the Matter, (b) the parties agree that if we reach anagreement to settle the claims asserted by the Sabby Funds in the above suit, we will provide the same settlement terms on a pro rata basis to the OtherInvestors, and the Other Investors will either accept same or waive all of their claims and (c) the parties froze in time the rights and privileges of each party asof the effective date of the Tolling Agreement, until (i) an agreement to settle the suit is executed; (ii) a judgment in the suit is obtained; or (iii) the suit isotherwise dismissed with prejudice. Potential Litigation Under 15 U.S.C. §78p(b) We intend to bring an action against a former shareholder for recovery of short swing profits under 15 U.S.C. §78p(b). As of the time of filing this AnnualReport on Form 10-K, we have not yet filed the complaint or initiated the action, but we intend to do so shortly after such date. Other than the foregoing, we are not currently a party in any legal proceeding or governmental regulatory proceeding nor are we currently aware of anypending or potential legal proceeding or governmental regulatory proceeding proposed to be initiated against us that would have a material adverse effect onus or our business. Item 4. Mine Safety Disclosures. Not applicable. 29  PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is listed on the NASDAQ Capital Market under the symbol “MBOT” since November 29, 2016. Prior to that, our common stock wastraded under the symbol “STEM.” The following table sets forth for the periods indicated, the high and low closing prices of our common stock on theNASDAQ Capital Market. High Low Year Ended December 31, 2019: 1st Quarter (through March 28, 2019) $19.40 $1.62 High Low Year Ended December 31, 2018: 1st Quarter $17.25 $9.97 2nd Quarter 15.29 8.69 3rd Quarter 11.55 5.47 4th Quarter 8.30 1.38 High Low Year Ended December 31, 2017: 1st Quarter $8.64 $4.41 2nd Quarter 5.43 1.42 3rd Quarter 1.5 1.00 4th Quarter 1.42 1.02 As of March 28, 2019, there were approximately 167 holders of record of our common stock, and the closing sales price of our common stock as reported onthe NASDAQ Capital Market was $7.63. Dividend Policy We have never paid cash dividends on our common stock and we do not anticipate paying cash dividends on common stock in the foreseeable future. Thepayment of dividends on our common stock will depend on earnings, financial condition, debt covenants in place, and other business and economic factorsaffecting us at such time as our Board of Directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because areturn on a stockholders’ investment will only occur if our stock price appreciates. Equity Compensation Plan Information Table The following table provides information about shares of our common stock that may be issued upon the exercise of options under all of our existingcompensation plans as of December 31, 2018. Number of securities to beissued upon exercise ofoutstanding options,warrants and rights Weighted-average exerciseprice of outstanding options,warrants and rights Number of securitiesremaining available forfuture issuance Plan Category Equity compensation plans approved by security holders2017 Equity Incentive Plan 257,920 $16.43 225,409 Equity compensation plans not approved by securityholders: Microbot Israel Employee Stock Option Plan(1) 62,542 $0.0 - Stock Options (2) 77,846 $ 4.2 - Total 398,308 225,409 (1)Such options were originally issued by Microbot Israel under its Employee Stock Option Plan, and represented the right to purchase an aggregate of500,000 of Microbot Israel’s ordinary shares. As of the effective time of the Merger, such options were retroactively adjusted to reflect the Merger andnow represent the right to purchase shares of our common stock.(2)Such options were originally issued by Microbot Israel to MEDX Ventures Group LLC, of which Mr. Gadot is the Chief Executive Officer, CompanyGroup Chairman and majority equity owner, and represented the right to purchase an aggregate of 403,592 of Microbot Israel’s ordinary shares. As of theeffective time of the Merger, such options were retroactively adjusted to reflect the Merger and now represent the right to purchase shares of our commonstock. 30  Item 6. Selected Financial Data. This item is not required for a smaller reporting company. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Forward Looking Statements Certain information contained in this MD&A includes “forward-looking statements.” Statements which are not historical reflect our current expectations andprojections about our future results, performance, liquidity, financial condition and results of operations, prospects and opportunities and are based uponinformation currently available to us and our management and their interpretation of what is believed to be significant factors affecting our existing andproposed business, including many assumptions regarding future events. Actual results, performance, liquidity, financial condition and results of operations,prospects and opportunities could differ materially and perhaps substantially from those expressed in, or implied by, these forward-looking statements as aresult of various risks, uncertainties and other factors, including those risks described in detail in the section of this Annual Report on Form 10-K entitled“Risk Factors” as well as elsewhere in this Annual Report. Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of thewords “may,” “should,” “would,” “will,” “could,” “scheduled,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “seek,” or “project” or the negative ofthese words or other variations on these words or comparable terminology. In light of these risks and uncertainties, and especially given the nature of our existing and proposed business, there can be no assurance that the forward-looking statements contained in this section and elsewhere in this Annual Report on Form 10-K will in fact occur. Potential investors should not place unduereliance on any forward-looking statements. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or reviseany forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason. Overview Microbot is a pre-clinical medical device company specializing in the research, design and development of next generation robotic endoluminal surgerydevices targeting the minimally invasive surgery space. Microbot is primarily focused on leveraging its micro-robotic technologies with the goal ofimproving surgical outcomes for patients. Microbot’s current technological platforms, ViRobTM, CardioSertTM and TipCATTM, are comprised of proprietary innovative technologies. Using theViRob platform, Microbot is currently developing its first product candidate: the Self Cleaning Shunt, or SCSTM, for the treatment of hydrocephalus andNormal Pressure Hydrocephalus, or NPH. Although the SCS utilizes one of our platforms, we are focused on the development of a Multi Generation PipelinePortfolio utilizing all three of our proprietary technologies. Microbot has a patent portfolio of 30 issued/allowed patents and 21 patent applications pending worldwide. Technological Platforms ViRob The ViRob is an autonomous crawling micro-robot which can be controlled remotely or within the body. Its miniature dimensions are expected to allow it tonavigate and crawl in different natural spaces within the human body, including blood vessels, the digestive tract and the respiratory system as well asartificial spaces such as shunts, catheters, ports, etc. Its unique structure is expected to give it the ability to move in tight spaces and curved passages as wellas the ability to remain within the human body for prolonged time. The SCS product was developed using the ViRob technology. CardioSert On May 25, 2018, Microbot acquired a patent-protected technology from CardioSert Ltd., a privately-held medical device company based in Israel. TheCardioSert technology contemplates a combination of a guidewire and microcatheter, technologies that are broadly used for surgery within a tubular organ orstructure such as a blood vessel or duct. The CardioSert technology features a unique guidewire delivery system with steering and stiffness controlcapabilities which when developed is expected to give the physician the ability to control the tip curvature, to adjust tip load to varying degrees of stiffnessin a gradually continuous manner. The CardioSert technology was originally developed to support interventional cardiologists in crossing chronic totalocclusions (CTO) during percutaneous coronary intervention (PCI) procedures and has the potential to be used in other spaces and applications, such asperipheral intervention, and neurosurgery. CardioSert was part of a technological incubator supported by the Israel Innovation Authorities (formerly knownas the Office of the Chief Scientist, or OCS), and a device based on the technology has successfully completed pre-clinical testing. 31  TipCAT The TipCAT is a disposable self-propelled locomotive device that is specially designed to advance in tubular anatomies. The TipCAT is a mechanismcomprising a series of interconnected balloons at the device’s tip that provides the TipCAT with its forward locomotion capability. The device can self-propel within natural tubular lumens such as the blood vessels, respiratory and the urinary and GI tracts. A single channel of air/fluid supply sequentiallyinflates and deflates a series of balloons creating an inchworm like forward motion. The TipCAT maintains a standard working channel for treatments. Unlikestandard access devices such as guidewires, catheters for vascular access and endoscopes, the TipCAT does not need to be pushed into the patient’s lumenusing external pressure; rather, it will gently advance itself through the organ’s anatomy. As a result, the TipCAT is designed to be able to reach every part ofthe lumen under examination regardless of the topography, be less operator dependent, and greatly reduce the likelihood of damage to lumen structure. TheTipCAT thus offers functionality features equivalent to modern tubular access devices, along with advantages associated with its physiologically adaptedself-propelling mechanism, flexibility, and design. Microbot is no longer pursuing the development of the TipCAT as a colonoscopy tool but is currentlyexploring the use of the TipCAT for minimally invasive endovascular neurosurgical applications. Financial Operations Overview Research and Development Expenses Research and development expenses consist primarily of salaries and related expenses and overhead for Microbot’s research, development and engineeringpersonnel, prototype materials and research studies, obtaining and maintaining Microbot’s patent portfolio. Microbot expenses its research and developmentcosts as incurred. General and Administrative Expenses General and administrative expenses consist primarily of the costs associated with management costs, professional fees for accounting, auditing, consultingand legal services, and allocated overhead expenses. Microbot expects that its general and administrative expenses may increase in the future as it expands its operating activities, maintains and expands itspatent portfolio and incurs additional costs associated with the Merger, the preparation of becoming a public company and maintaining compliance withexchange listing and SEC requirements. Microbot expects these potential increases will likely include management costs, legal fees, accounting fees,directors’ and officers’ liability insurance premiums and expenses associated with investor relations. Income Taxes Microbot has incurred net losses and has not recorded any income tax benefits for the losses. It is still in its development stage and has not yet generatedrevenues, therefore, it is more likely than not that sufficient taxable income will not be available for the tax losses to be fully utilized in the future. Critical Accounting Policies and Significant Judgments and Estimates Microbot’s management’s discussion and analysis of its financial condition and results of operations are based on its financial statements, which have beenprepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of these financial statements requires Microbot tomake estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities at thedate of the financial statements. On an ongoing basis, Microbot evaluates its estimates and judgments, including those related to accrued research anddevelopment expenses. Microbot bases its estimates on historical experience, known trends and events, and various other factors that are believed to bereasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are notreadily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions. While Microbot’s significant accounting policies are described in more detail in the notes to its financial statements, Microbot believes the followingaccounting policies are the most critical for fully understanding and evaluating its financial condition and results of operations. 32  Fair Value of Financial Instruments The Company measures the fair value of certain of its financial instruments (such as the derivative warrant liabilities) on a recurring basis. A fair value hierarchy is used to rank the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fairvalue will be classified and disclosed in one of the following three categories: ●Level 1 - Quoted prices (unadjusted) in active markets for identical assets and liabilities. ●Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as unadjusted quoted prices for similar assets and liabilities,unadjusted quoted prices in the markets that are not active, or other inputs that are observable or can be corroborated by observable market data forsubstantially the full term of the assets or liabilities. ●Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Foreign Currency Translation Microbot’s functional currency is the U.S. dollars, and its reporting currency is the U.S. dollar. Government Grant and Input Tax Credit Recoveries Microbot from time to time has received, and may in the future continue to receive, grants from the Israeli Innovation Authority to cover eligible companyexpenditures. These are presented as other income in the statement of operations and comprehensive loss as the grant funds are used for or applied towards anumber of Microbot’s operating expenses, such as salaries and benefits, research and development and professional and consulting fees. The recoveries arerecognized in the corresponding period when such expenses are incurred. Research and Development Expenses Microbot recognizes research and development expenses as incurred, typically estimated based on an evaluation of the progress to completion of specifictasks using data such as clinical site activations, manufacturing steps completed, or information provided by vendors on their actual costs incurred. Microbotdetermines the estimates by reviewing contracts, vendor agreements and purchase orders, and through discussions with internal clinical personnel andexternal service providers as to the progress or stage of completion of trials or services and the agreed-upon fee to be paid for such services. These estimatesare made as of each balance sheet date based on facts and circumstances known to Microbot at that time. If the actual timing of the performance of services orthe level of effort varies from the estimate, Microbot will adjust the estimate accordingly. Nonrefundable advance payments for goods and services, includingfees for process development or manufacturing and distribution of clinical supplies that will be used in future research and development activities, arecapitalized as prepaid expenses and recognized as expense in the period that the related goods are consumed or services are performed. Microbot may pay fees to third-parties for manufacturing and other services that are based on contractual milestones that may result in uneven paymentflows. There may be instances in which payments made to vendors will exceed the level of services provided and result in a prepayment of the research anddevelopment expense. Results of Operations Comparison of Years Ended December 31, 2018 and 2017 The following table sets forth the key components of Microbot’s results of operations for the years ended December 31, 2018 and 2017 (in thousands): Years Ended December 31, 2018 2017 Increase/(Decrease) Research and development expenses $2,515 $1,100 $ 1,415 General and administrative expenses 4,729 4,167 562 Financing (income) expenses, net (4) 2,322 2,326 Research and Development Expenses. Microbot’s research and development expenses were approximately $2,515,000 for the year ended December 31, 2018,compared to approximately $1,100,000 for the same period in 2017. The increase in research and development expenses of approximately $1,415,000 in2018 was primarily due to an increase in payroll, stock-based compensation, professional services and patents expenses. Microbot expects its research anddevelopment expenses to increase over time as Microbot advances its development programs and begins pre-clinical and clinical trials for the SCS. General and Administrative Expenses. General and administrative expenses were approximately $4,729,000 for the year ended December 31, 2018, comparedto approximately $4,167,000 for the same period in 2017. The substantial increase in general and administrative expenses of approximately $562,000 in2018 was primarily due to share-based compensation of $907,000, offset by lower public relations and other professional service fees. Microbot believes itsgeneral and administrative expenses may increase over time as it advances its programs, increases its headcount and operating activities and incurs expensesassociated with being a public company. 33  Financing Expenses. Financing income was approximately $4,000 for the year ended December 31, 2018, compared to expenses of approximately$2,322,000 for the same period in 2017. The net decrease in financial expenses was primarily due to revaluation and extinguishment of the convertible noteand change in fair value of derivative warrant liabilities. Liquidity and Capital Resources Microbot has incurred losses since inception and negative cash flows from operating activities for the years ended December 31, 2018 and 2017. As ofDecember 31, 2018, Microbot had a net working capital of approximately $1,071,000, consisting primarily of cash and cash equivalents. Microbotanticipates that it will continue to incur net losses for the foreseeable future as it continues research and development efforts of its product candidates, hiresadditional staff, including clinical, scientific, operational, financial and management personnel, and incurs additional costs associated with being a publiccompany. Microbot has funded its operations through the issuance of capital stock, grants from the Israeli Innovation Authority, and convertible debt. Since inception(November 2010) through December 31, 2018, Microbot has raised gross cash proceeds of approximately $18,000,000, and incurred a total cumulative lossof approximately $27,864,000. On January 14, 2019, the Company entered into a Securities Purchase Agreement with an accredited institutional investor providing for the issuance and saleby the Company to the purchaser of an aggregate of (i) 330,000 shares of the Company’s common stock, at a purchase price per share of $6.50 and (ii)125,323 pre-funded warrants each to purchase one share of common stock, at a purchase price per Pre-Funded Warrant of $6.49. The gross proceeds to theCompany were approximately $3.0 million. The closing of the offering took place on January 15, 2019. The pre-funded warrants were exercised in full inJanuary 2019. On January 15, 2019, the Company entered into a Securities Purchase Agreement with certain accredited institutional investors providing for the issuanceand sale by the Company to the purchasers of an aggregate of 590,000 shares of the Company’s common stock, at a purchase price per share of $10.00. Thegross proceeds to the Company were approximately $5.9 million. The closing of the offering took place on January 17, 2019. On January 23, 2019 the Company entered into a Securities Purchase Agreement with accredited institutional investors providing for the issuance and sale bythe Company to the purchasers of an aggregate of 250,000 shares of the Company’s common stock, at a purchase price per share of $9.875. The grossproceeds to the Company were approximately $2.47 million. The closing of the offering took place on January 25, 2019. In November 2017, Microbot was awarded an additional non-dilutive grant of up to 2,610,000 Israeli New Shekels (approximately $735,000) from the IsraelInnovation Authority. The grant provides additional sources to be utilized by Microbot for the continued development of the Self-Cleaning Shunt for thetreatment of hydrocephalus and Normal Pressure Hydrocephalus. The grant funds may be used for or applied towards a number of research and developmentexpenses, such as employees’ salaries, research and development expenses (including materials, as well as professional and consulting fees. The recoveriesare recognized in the corresponding period when such expenses are incurred. With respect to such grant, Microbot is committed to pay royalties, as, if andwhen it successfully commercializes the SCS and generates revenue from sales of the SCS, at a rate of between 3% to 3.5% on sales proceeds up to the totalamount of grants received, linked to the dollar, plus interest at an annual rate of USD LIBOR. Under the terms of the grant and applicable law, Microbot isrestricted from transferring any technologies, know-how, manufacturing or manufacturing rights developed using the grant outside of Israel without the priorapproval of the Israel Innovation Authority. Microbot has no obligation to repay the grant, if the SCS project fails, is unsuccessful or aborted before any salesare generated. The financial risk is assumed completely by the IIA. Microbot believes that its net cash will be sufficient to fund its operations for at least 12 months and fund operations necessary to continue developmentactivities of the SCS and TipCAT. Microbot plans to continue to fund its research and development and other operating expenses, other development activities relating to additional productcandidates, and the associated losses from operations, through future issuances of debt and/or equity securities and possibly additional grants from the IsraeliInnovation Authority. The capital raises from issuances of convertible debt and equity securities could result in additional dilution to Microbot’sshareholders. In addition, to the extent Microbot determines to incur additional indebtedness, Microbot’s incurrence of additional debt could result in debtservice obligations and operating and financing covenants that would restrict its operations. Microbot can provide no assurance that financing will beavailable in the amounts it needs or on terms acceptable to it, if at all. If Microbot is not able to secure adequate additional working capital when it becomesneeded, it may be required to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible and/or suspend or curtailplanned research programs. Any of these actions could materially harm Microbot’s business. 34  Cash Flows The following table provides a summary of the net cash flow activity for each of the periods set forth below (in thousands): Years ended December 31, 2018 2017 Net cash used in operating activities $(4,916) $(4,856)Net cash used in investing activities (223) (58)Net cash (used) provided by financing activities (412) 13,019 Net (decrease) increase in cash and cash equivalents $(5,551) $8,105 Comparison of the Years Ended December 31, 2018 and 2017 Cash used in operating activities for the year ended December 31, 2018 was approximately $4,916,000, calculated by adjusting net loss from operations byapproximately $2,376,000 to eliminate non-cash and expense items not involving cash flows such as depreciation and accumulated interest on convertibleloans, as well as other changes in current assets and liabilities resulting in non-cash adjustments in the income statement. Cash used in operating activities forthe year ended December 31, 2017 was approximately $4,856,000, similarly adjusted by approximately $2,733,000. Net cash used by investing activities ofapproximately $223,000 for the year ended December 31, 2018 consisted of leasehold improvement moving to new offices in Israel compared toapproximately $58,000 in the year ended December 31, 2017. Net cash used by financing activities of approximately $412,000 for the year ended December31, 2018 consisted of deferred expenses relating to issuance of common stock compared to approximately $13,019,000 in the year ended December 31, 2017. Off Balance Sheet Arrangements Microbot has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes infinancial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Interest Rate Risk Microbot’s cash and cash equivalents as of December 31, 2018 consisted of readily available checking and money market funds. Microbot’s primaryexposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates. However, because of the short-term nature of the instruments in Microbot’s portfolio, a sudden change in market interest rates would not be expected to have a material impact onMicrobot’s financial condition and/or results of operations. Microbot does not believe that its cash or cash equivalents have significant risk of default orilliquidity. While Microbot believes its cash and cash equivalents do not contain excessive risk, Microbot cannot provide absolute assurance that in thefuture its investments will not be subject to adverse changes in market value. In addition, Microbot maintains significant amounts of cash and cashequivalents at one or more financial institutions that are in excess of federally insured limits. Foreign Exchange Risks Our financial statements are denominated in U.S. dollars and financial results are denominated in U.S. dollars, while a significant portion of our business isconducted, and a substantial portion of our operating expenses are payable, in currencies other than the U.S. dollar. Exchange rate fluctuations may have an adverse impact on our future revenues, if any, or expenses as presented in the financial statements. We may in thefuture use financial instruments, such as forward foreign currency contracts, in its management of foreign currency exposure. These contracts would primarilyrequire us to purchase and sell certain foreign currencies with or for U.S. dollars at contracted rates. We may be exposed to a credit loss in the event of non-performance by the counterparties of these contracts. In addition, these financial instruments may not adequately manage our foreign currency exposure. Ourresults of operations could be adversely affected if we are unable to successfully manage currency fluctuations in the future. Effects of Inflation Inflation generally affects Microbot by increasing its clinical trial costs. Microbot does not believe that inflation and changing prices had a significantimpact on its results of operations for any periods presented herein. Item 8. Financial Statements and Supplementary Data. The consolidated financial statements and supplementary data required by this item are included in this Annual Report on Form 10-K immediately followingPart IV and are incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. 35  Item 9A. Controls and Procedures. Disclosure Controls and Procedures. We maintain a system of disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Asrequired by Rule 13a-15(b) under the Exchange Act, management of the Company, under the direction of our Chief Executive Officer and Chief FinancialOfficer, reviewed and performed an evaluation of the effectiveness of design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of December 31, 2018. Based on that review and evaluation, the Chief Executive Officer and Chief Financial Officer, alongwith the management of the Company, have determined that as of December 31, 2018, the disclosure controls and procedures were effective to providereasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed,summarized and reported within the time periods specified in the SEC’s rules and forms and were effective to provide reasonable assurance that suchinformation is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate toallow timely decisions regarding required disclosures. Management’s Annual Report on Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining effectiveinternal control over financial reporting (as defined in Rule 13a – 15(f) of the Exchange Act). There are inherent limitations to the effectiveness of anyinternal control, including the possibility of human error and the circumvention or overriding of controls. Accordingly, even effective internal controls canprovide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of internalcontrol may vary over time. We have assessed the effectiveness of our internal controls over financial reporting (as defined in Rule 13a -15(f) of the ExchangeAct) as of December 31, 2018, and have concluded that, as of December 31, 2018, our internal control over financial reporting was effective. This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.Management’s report was not subject to attestation by our registered public accounting firm pursuant to the rules of the Securities and Exchange Commissionthat permit us to provide only management’s report in this annual report. Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting, identified in connection withthe evaluation of such internal control that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect,our internal control over financial reporting. Item 9B. Other Information. None. PART III Item 10. Directors, Executive Officers, and Corporate Governance. Board of Directors We currently have six directors serving on our Board of Directors (our “Board”). The Board currently consists of Harel Gadot, Yoav Waizer, YosephBornstein, Scott Burell, Martin Madden and Prattipati Laxminarain. Messrs. Gadot, Waizer and Madden are Class I directors whose terms expire at the Company’s 2019 annual meeting of stockholders. Mr. Burell is a Class IIdirector whose term expires at the Company’s 2020 annual meeting of stockholders. Messrs. Bornstein and Laxminarain are Class III directors whose termsexpire at the Company’s 2021 annual meeting of stockholders. The following table lists the names, ages and positions of the individuals who serve as executive officers and directors of the Company, as of March 28,2019: Name Age PositionHarel Gadot 47 President, Chief Executive Officer and Chairman of the Board of DirectorsYoav Waizer 54 DirectorYoseph Bornstein 60 DirectorScott Burell 54 DirectorMartin Madden 58 DirectorPrattipati Laxminarain 61 Director 36  Harel Gadot, became President, Chief Executive Officer and Chairman of the Company’s Board following the consummation of the merger of C&RD IsraelLtd, a wholly owned subsidiary of the Company, with and into Microbot Medical Ltd. (“Microbot Israel”), with Microbot Israel surviving as a wholly ownedsubsidiary of the Company (the “Merger”). Mr. Gadot is a co-founder of Microbot Israel and has served as Microbot Israel’s Chief Executive Officer sinceMicrobot Israel was founded in November 2010. He has been the Chairman of Microbot Israel’s board of directors since July 2014. He also serves as theChairman of XACT Robotics Ltd., an Israel-based private company seeking to develop a novel platform technology for robotic needle steering in minimallyinvasive interventional procedures such as biopsies and ablations, since August 2013 and MEDX Xelerator L.P., a medical device and digital health Israeliincubator, since July 2016. From December 2007 to April 2010 Mr. Gadot was a Worldwide Group Marketing Director at Ethicon Inc., a Johnson andJohnson Company, where he was responsible for the global strategic marketing of the Company. Mr. Gadot also held management positions, as well asleading regional strategic position for Europe, Middle-East and Africa, as well as In Israel, while at Johnson and Johnson. Mr. Gadot served as director forConTIPI Ltd. from August 2010 until November 2013 when ConTIPI Ltd. was acquired by Kimberly-Clark Corporation. Mr. Gadot holds a B.Sc.in Businessfrom Siena College, Loudonville NY, and an M.B.A. from the University of Manchester, UK. The Company believes that Mr. Gadot is qualified to serve asChairman of the Board and as President and Chief Executive Officer of the Company due to his extensive experience in strategic marketing and generalmanagement in the medical device industry. Yoav Waizer, became a director of the Company following the Merger and has served as a member of the Board of Directors of Microbot Israel since May2015. Mr. Waizer provides CFO services on a part-time basis to a number of venture capital funds and companies; including to Israeli TechnologyInvestments (ITI) Fund, Next Gear Venture Partners L.P. and to Medica Venture Partners. Mr. Waizer served as CFO & COO at Cedar Fund, a venture capitalfund focuses on investing in Israel-related high-tech companies and prior to that Mr. Waizer was the CFO of Star Ventures Israel, the Israeli fund of StarVentures, a $1 billion venture capital fund investing in all stages of development within the Telecom, Enterprise S/W, Wireless and Life Sciences sectors. Mr.Waizer is currently a director of Yeda Research & Development Co. Ltd., the technology transfer arm of the Weizmann Institute of Science, and XACTRobotics Ltd., a private Israeli company developing novel platform robotic technology for use in minimally invasive procedures. Mr. Waizer was the CFO ona part-time basis of MEDX Xelerator L.P., a medical device and digital health Israeli incubator. Mr. Waizer holds Master of Business Administration inInformation Systems and B.Sc. in Accounting and Statistics, both from the Tel-Aviv University. The Company believes that Mr. Waizer is qualified to serveas a member of the Company’s board due to his extensive investment experience and extensive knowledge of the life sciences industry. Yoseph Bornstein, became a director of the Company following the Merger. Mr. Bornstein is a co-founder of Microbot Israel and has been a member of theBoard of Directors since Microbot Israel was founded in November 2010. Mr. Bornstein founded Shizim Ltd., a life science holding group in October 2000and has served as its president since then. Mr. Bornstein is the Chairman of GCP Clinical Studies Ltd., a provider of clinical research services and educationalprograms in Israel since January 2002. He is the Chairman of Biotis Ltd., a service company for the bio-pharmaceutical industry, since June 2000. In addition,he is the Chairman of Dolphin Medical Ltd., a service company for the medical device industry, since April 2012 and the Chairman of ASIS EnterprisesB.B.G. Ltd., a business August 2007. In October 1992, Mr. Bornstein founded Pharmateam Ltd., an Israeli company that specialized in representinginternational pharmaceutical companies which was sold in 2000. Mr. Bornstein is also a founder of a number of other privately held life-science companies.Mr. Bornstein served as the Biotechnology Committee Chairman of the Unites States-Israel Science & Technology Commission (the “USISTF”) fromSeptember 2002 to February 2005 as well as a consultant for USISTF from September 2002 to February 2005. He is also the founder of ILSI-Israel LifeScience Industry Organization (who was integrated into IATI) and ITTN-Israel Tech Transfer Organization. The Company believes that Mr. Bornstein isqualified to serve as a member of the Board due to his extensive experience in, and knowledge of, the life sciences industry and international business. Scott R. Burell, became a director of the Company following the Merger. Since August 1, 2018, Mr. Burell has been the Chief Financial Officer of AIVITABiomedical, Inc., a private biopharmaceutical company. From November 2006 until its sale to Invitae Corp. in November 2017, he was the Chief FinancialOfficer, Secretary and Treasurer of CombiMatrix Corporation (NASDAQ: CBMX), a family health-focused clinical molecular diagnostic laboratoryspecializing in pre-implantation genetic screening, prenatal diagnosis, miscarriage analysis, and pediatric developmental disorders. He successfully led thesplit-off of CombiMatrix in 2007 from its former parent, has led several successful public and private debt and equity financing transactions as well asCombiMatrix’s reorganization in 2010. Prior to this, Mr. Burell had served as CombiMatrix’s Vice President of Finance since November 2001 and as itsController from February 2001 to November 2001. From May 1999 to first joining CombiMatrix in February 2001, Mr. Burell was the Controller for NetworkCommerce, Inc., a publicly traded technology and information infrastructure company located in Seattle. Prior to this, Mr. Burell spent 9 years with ArthurAndersen’s Audit and Business Advisory practice in Seattle. During his tenure in public accounting, Mr. Burell worked with many clients, both public andprivate, in the high-tech and healthcare markets, and was involved in numerous public offerings, spin-offs, mergers and acquisitions. Mr. Burell is a Boardmember of Collplant Holdings, Ltd. (Nasdaq: CLGN), an Israeli -based publicly traded biotechnology company focused on regenerative medicine. Mr. Burellis also a Board member of Mer Telemanagement Solutions Ltd. (Nasdaq: MTSL), an Israeli-based publicly traded telecommunications services company. Mr.Burell obtained his Washington state CPA license in 1992 and is a certified public accountant (currently inactive). He holds Bachelor of Science degrees inAccounting and Business Finance from Central Washington University. The Company believes Mr. Burell’s qualifications to serve on the Board include hisexperience as an executive of a public life sciences company and knowledge of financial accounting in the medical technology field. Martin Madden, has been a director of the Company since February 6, 2017. Mr. Madden has held various positions at Johnson & Johnson and its affiliatesfrom 1986 to January 2017, most recently as Vice President, Research & Development of DePuy Synthes, a Johnson & Johnson Company, from February2016 to January 2017. Prior to that, from July 2015 to February 2016, Mr. Madden was the Vice President, New Product Development of Johnson & JohnsonMedical Devices. From January 2012 to July 2015, Mr. Madden was the Vice President, Research & Development of Johnson & Johnson’s Global SurgeryGroup. Mr. Madden holds a MBA from Columbia University, a M.S. from Carnegie Mellon University in Mechanical Engineering, and a B.S. from theUniversity of Dayton in Mechanical Engineering. The Company believes that Mr. Madden is qualified to serve as a member of the Board due to his extensiveexperience in research and development, portfolio planning, technology assessment and assimilation, and project management and budgeting. 37  Prattipati Laxminarain, has been a director of the Company since December 6, 2017. From April 2006 through October 2017, Mr. Laxminarain served asWorldwide President at Codman Neuro, a global neurosurgery and neurovascular company that offers a portfolio of devices for hydrocephalus management,neuro intensive care and cranial surgery and other technologies, and which was part of DePuy Synthes Companies of Johnson & Johnson. Mr. Laxminarainholds an MBA from Indian Institute of Management, Calcutta, India and a Bachelor of Engineering from Osmania University, Hyderabad, India. TheCompany believes that Mr. Laxminarain is qualified as a Board member of the Company because of his extensive experience working with medical devicecompanies and knowledge of the industries in which the Company intends to compete. Executive Officers Following are the name, age and other information for our named executive officers, as of March 28, 2019. All company officers have been appointed to serveuntil their successors are elected and qualified or until their earlier resignation or removal. Information regarding Mr. Gadot is set forth above under “–Boardof Directors.” Name Age PositionHarel Gadot 47 President, Chief Executive Officer and Chairman of the Board of DirectorsDavid Ben Naim 50 Chief Financial Officer David Ben Naim, became the Company’s part-time Chief Financial Officer following the consummation of the Merger. Mr. Ben Naim is the general managerof DBN Finance Services Ltd., a company which provides outsourcing financial services to public and private companies, since 2014, including theCompany. Through DBN Finance Services, Mr. Ben Naim has acted as the outsourced CFO for Emerald Medical Applications Corp. (OTC:MRLA), a digitalhealth startup company engaged in the development, sale and service of imaging solutions, Tempramed Inc., a private medical device company, VonetizePLC (TASE:VNTZ), an Israeli company that offers video on demand and over-the-top content services, Unet Credit Finance Services Ltd. (TASE:UNCR-M),and Todos Medical Ltd. (OTC:TOMDF), an Israeli cancer in-vitro-diagnostic company engaging in the development of a series of blood tests for the earlydetection of a variety of cancers. Prior to that, Mr. Ben Naim served as Chief Financial Officer for several companies in the biomedical and technologyindustries. From July 2012 to September 2014, Mr. Ben Naim served as Chief Financial Officer for Insuline Medical Ltd. (TASE: INSL), an Israel-basedcompany focused on improving performance of insulin treatment methods. From 2008 until 2011, Mr. Ben Naim served as Chief Financial Officer of CrowTechnologies 1977 Ltd. (OTC:CRWTF), a company that designs, develops, manufactures and sells a broad range of security and alarm systems. From 2007 to2008, Mr. Ben Naim served as Chief Financial Officer of Ilex Medical Ltd. (TASE:ILX), a leading company in the medical diagnostics field. From 2003 to2007, Mr. Ben Naim was the Corporate Controller of Tadiran Telecom Ltd. He started his career in 1998 at Deloitte & Touche where he left in 2003 as anAudit Senior Manager. Mr. Ben Naim holds a B.A. in social sciences from Open University, Israel, a CPA license from Ramat Gan College, Israel, and anM.B.A. from Ono Academic College, Israel. Committees of the Board of Directors Presently, the Board has three standing committees — the Audit Committee, the Compensation and Stock Option Committee (the “CompensationCommittee”), and the Corporate Governance and Nominating Committee (the “Corporate Governance Committee”). All members of the Audit Committee,the Compensation Committee, and the Corporate Governance Committee are, and are required by the charters of the respective committees to be,independent as determined under Nasdaq Listing rules. Audit Committee The Audit Committee is composed of Messrs. Burell, Madden and Bornstein. Each of the members of the Audit Committee is independent, and the Board hasdetermined that Mr. Burell is an “audit committee financial expert,” as defined in SEC rules. The Audit Committee acts pursuant to a written charter which isavailable through our website at www.microbotmedical.com. The primary function of the Audit Committee is to assist the Board of Directors in fulfilling its oversight responsibilities. The Audit Committee does thisprimarily by reviewing the Company’s financial reports and other financial information as well as the Company’s systems of internal controls regardingfinance, accounting, legal compliance, and ethics that management and the Board of Directors have established. The Audit Committee also assesses theCompany’s auditing, accounting and financial processes more generally. The Audit Committee recommends to the Board of Directors the appointment of afirm of independent auditors to audit the financial statements of the Company and meets with such personnel of the Company to review the scope and theresults of the annual audit, the amount of audit fees, the company’s internal accounting controls, the Company’s financial statements contained in this proxystatement, and other related matters. 38  Compensation Committee The Compensation Committee is composed of Messrs. Waizer, Madden and Bornstein. Each of the members of the Compensation Committee is independent.The Compensation Committee acts pursuant to a written charter which is available through our website at www.microbotmedical.com. The Compensation Committee acts pursuant to a written charter. The Compensation Committee makes recommendations to the Board of Directors andmanagement concerning salaries in general, determines executive compensation and approves incentive compensation for employees and consultants. Corporate Governance Committee The Corporate Governance Committee is composed of Messrs. Waizer, Laxminarain and Burell. Each of the members of the Corporate GovernanceCommittee is independent. The Corporate Governance Committee acts pursuant to a written charter which is available through our website atwww.microbotmedical.com. The Corporate Governance Committee oversees nominations to the Board and considers the experience, ability and character of potential nominees to serveas directors, as well as particular skills or knowledge that may be desirable in light of the Company’s position at any time. From time to time, the CorporateGovernance Committee may engage the services of a paid search firm to help the Corporate Governance Committee identify potential nominees to the Board.The Corporate Governance Committee and Board seek to nominate and appoint candidates to the Board who have significant business experience, technicalexpertise or personal attributes, or a combination of these, sufficient to suggest, in the Board’s judgment, that the candidate would have the ability to helpdirect the affairs of the company and enhance the Board as a whole. The Corporate Governance Committee may identify potential candidates through anyreliable means available, including recommendations of past or current members of the Board from their knowledge of the industry and of the Company. TheCorporate Governance Committee also considers past service on the Board or on the board of directors of other publicly traded or technology focusedcompanies. The Corporate Governance Committee has not adopted a formulaic approach to evaluating potential nominees to the Board; it does not have aformal policy concerning diversity, for example. Rather, the Corporate Governance Committee weighs and considers the experience, expertise, intellect, andjudgment of potential nominees irrespective of their race, gender, age, religion, or other personal characteristics. The Corporate Governance Committee maylook for nominees that can bring new skill sets or diverse business perspectives. Potential candidates recommended by security holders will be considered asprovided in the company’s “Policy Regarding Shareholder Candidates for Nomination as a Director,” which sets forth the procedures and conditions for suchrecommendations. This policy is available through our website at www.microbotmedical.com. There were no material changes to the procedures by which securityholders may recommend nominees to the Board, since the Company last provided thedisclosure in this section. Director Oversight and Qualifications While management is responsible for the day-to-day management of the risks the company faces, the Board, as a whole and through its committees, hasresponsibility for the oversight of risk management. An important part of risk management is not only understanding the risks facing the company and whatsteps management is taking to manage those risks, but also understanding what level of risk is appropriate for the company. In support of this oversightfunction, the Board receives regular reports from our Chief Executive Officer and members of senior management on operational, financial, legal, andregulatory issues and risks. The Audit Committee additionally is charged under its charter with oversight of financial risk, including the company’s internalcontrols, and it receives regular reports from management, the company’s internal auditors and the company’s independent auditors. The chairman of theBoard and independent members of the Board work together to provide strong, independent oversight of the company’s management and affairs through itsstanding committees and, when necessary, special meetings of directors. Code of Business Conduct and Ethics We have adopted a Code of Ethics and Conduct that applies to all of our directors, officers, employees, and consultants. A copy of our code of ethics isposted on our website at www.microbotmedical.com. We intend to disclose any substantive amendment or waivers to this code on our website. There were nosubstantive amendments or waivers to this code in 2018. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires our executive officers, directors, and persons who own morethan 10% of a registered class of our equity securities, to file with the SEC reports of ownership of our securities and changes in reported ownership.Executive officers, directors and greater than 10% beneficial owners are required by SEC rules to furnish us with copies of all Section 16(a) reports they file.Based solely on a review of the copies of such forms furnished to us, or written representations from the reporting persons that no Form 5 was required, webelieve that, during the fiscal year ended December 31, 2018, all Section 16(a) filing requirements applicable to our officers, directors and greater than 10%beneficial owners have been met, with the exception of Mr. Ben Naim who failed to timely file a 4 report showing 1 transaction. 39  Item 11. Executive Compensation. The following table sets forth information regarding each element of compensation that was paid or awarded to the named executive officers of the Companyfor the periods indicated. Name and Principal Position Year Salary ($) Bonus ($) StockAwards($) OptionAwards($) (1) Non-EquityIncentive PlanCompensation($) All OtherCompensation($) Total ($) Harel Gadot 2018 360,000 55,000(2) — 580,667 — 13,800(3) 1,009,467 Chief Executive 2017 389,000 158,000 — 156,219 — 15,000(3) 718,219 Officer 2016 275,000 — — — — — 275,000 Hezi Himelfarb(7) 2018 280,067 12,931(4) — 425,101 — 13,000(5) 718,101 Former Chief Operating Officer &General Manager 2017 228,653(6) 40,625 — 92,205 — (6) 361,483 2016 16,000 — — — — — 16,000 David Ben Naim 2018 70,026 — — 26,890 — — 96,916 Chief Financial 2017 66,000 — — 188 — — 66,188 Officer 2016 6,000 — — — — — 6,000 (1)Amounts shown do not reflect cash compensation actually received by the named executive officer. Instead, the amounts shown are the non-cashaggregate grant date fair values of stock option awards made during the periods presented as determined pursuant to ASC Topic 718 and excludes theeffect of forfeiture assumptions. The assumptions used to calculate the fair value of stock option awards are set forth under Note 10 to the ConsolidatedFinancial Statements of the Company included in the Company’s Form 10-K for the fiscal year ended December 31, 2017.(2)Represents the remaining portion of Mr. Gadot’s 2017 bonus, which was paid in 2018. Mr. Gadot’s bonus for the 2018 fiscal year was paid in 2019.(3)All Other Compensation includes Mr. Gadot’s monthly automobile allowance and tax gross-up.(4)Represents the remaining portion of Mr. Himelfarb’s 2017 bonus, which was paid in 2018.(5)All Other Compensation includes Mr. Himelfarb’s yearly automobile allowance.(6)The salary includes $13,000 for Mr. Himelfarb’s yearly automobile allowance.(7)Effective as of February 1, 2019, Mr. Himelfarb, a member of the Board of Directors of the Company, and the Company’s Chief Operating Officer,resigned from all positions with the Company and from his position as General Manager of Microbot Medical Ltd., a wholly-owned subsidiary of theCompany. Notwithstanding the foregoing, Mr. Himelfarb has remained to assist with the transition of his duties. Outstanding Equity Awards at Fiscal Year-End The following table presents the outstanding equity awards held by each of the named executive officers as of the end of the fiscal year ended December 31,2018. Option Awards Stock Awards Name Number of Securities Underlying Unexercised Options Exercisable Number of Securities Underlying Unexercised Options Unexercisable OptionExercise Price Option ExpirationDate Number ofShares orUnits of StockThat Have NotVested Market valueof Shares ofUnits of StockThat Have NotVested Equity IncentivePlan Awards:Number of UnearnedShares, Units orOther Rights ThatHave Not Vested Equity IncentivePlan Awards:Market or PayoutValue of UnearnedShares, Units orOther Rights ThatHave Not Vested Harel Gadot 77,846 – $4.20 9/01/2024 – – – – 48,672 72,175 15.75 9/14/2027 Hezi Himelfarb 29,003 43,505 19.35 10/15/2027 – – – – David Ben Naim 2,000 3,000 15.30 12/28/2027 – – – – Simon Sharon - 10,000 9.00 08/13/2028 – – – – 40  Harel Gadot Employment Agreement The Company entered into an employment agreement (the “Gadot Agreement”) with Harel Gadot on November 28, 2016, to serve as the Company’sChairman of the Board of Directors and Chief Executive Officer, on an indefinite basis subject to the termination provisions described in the Agreement.Pursuant to the terms of the Gadot Agreement, Mr. Gadot shall receive an annual base salary of $360,000. The salary will be reviewed on an annual basis bythe Compensation Committee of the Company to determine potential increases taking into account such performance metrics and criteria as established bythe Executive and the Company. Mr. Gadot shall also be entitled to receive a target annual cash bonus of up to a maximum amount of 40% of base salary, which maximum amount was paidfor the 2018 fiscal year. Mr. Gadot shall be further entitled to a monthly automobile allowance and tax gross up on such allowance of $1,150, and shall be granted options topurchase shares of common stock of the Company representing 5% of the issued and outstanding shares of the Company, based on vesting and other terms tobe determined by the Compensation Committee of the Board of Directors. In the event Mr. Gadot’s employment is terminated as a result of death, Mr. Gadot’s estate would be entitled to receive any earned annual salary, bonus,reimbursement of business expenses and accrued vacation, if any, that is unpaid up to the date of Mr. Gadot’s death. In the event Mr. Gadot’s employment is terminated as a result of disability, Mr. Gadot would be entitled to receive any earned annual salary, bonus,reimbursement of business expenses and accrued vacation, if any, incurred up to the date of termination. In the event Mr. Gadot’s employment is terminated by the Company for cause, Mr. Gadot would be entitled to receive any compensation then due andpayable incurred up to the date of termination. In the event Mr. Gadot’s employment is terminated by the Company without cause, he would be entitled to receive (i) any earned annual salary; (ii) 12months’ pay and full benefits, (iii) a pro rata bonus equal to the maximum target bonus for that calendar year; (iv) the dollar value of unused and accruedvacation days; and (v) applicable premiums (inclusive of premiums for Mr. Gadot’s dependents) pursuant to the Consolidated Omnibus BudgetReconciliation Act of 1986, as amended, for twelve (12) months from the date of termination for any benefits plan sponsored by the Company. In addition,100% of any unvested portion of his stock options shall immediately vest and become exercisable. The agreement contains customary non-competition and non-solicitation provisions pursuant to which Mr. Gadot agrees not to compete and solicit with theCompany. Mr. Gadot also agreed to customary terms regarding confidentiality and ownership of intellectual property. Hezi Himelfarb Employment Agreement We entered into an employment agreement (the “Himelfarb Agreement”) with Mr. Himelfarb on December 5, 2016, to serve as our Chief Operating Office andGeneral Manager, on an indefinite basis subject to the termination provisions described in the Himelfarb Agreement. Pursuant to the terms of the HimelfarbAgreement, Mr. Himelfarb shall receive a base salary of 64,000 New Israeli Shekel (NIS) per month or NIS 768,000 per year, or the equivalent ofapproximately $203,714 per annum based on an exchange rate of $.265 for NIS 1.0. Mr. Himelfarb shall be entitled to grants or payments subject to the adoption by the Company at its discretion of a bonus plan or policy. Under the Himelfarb Agreement, Mr. Himelfarb was entitled to participate in the Company’s motor vehicle program and receive a motor vehicle from theCompany’s vehicle pool. The Company shall pay an amount equal to 8.33% of Mr. Himelfarb’s salary, which shall be allocated to a fund for severance pay toMr. Himelfarb, and an additional amount equal to 6.25% of Mr. Himelfarb’s salary (6.5% as of January 1, 2017), which shall be allocated to a pension plan, inaddition to disability insurance contributions and as otherwise may be required by applicable Israeli law from time to time. The Company shall alsocontribute to an educational fund an amount equal to 7.5% of each monthly payment of Mr. Himelfarb’s full salary. Mr. Himelfarb is also entitled to optionsto purchase 1,087,627 shares of the Company’s common stock, which represents 3% of the Company’s issued and outstanding shares of common stock as ofthe closing of the Company’s merger transaction with the Subsidiary on November 28, 2016. The Himelfarb Agreement contains customary non-competition provisions pursuant to which Mr. Himelfarb agrees not to compete with the Company. Mr.Himelfarb also agreed to customary terms regarding confidentiality and ownership of intellectual property. 41  Effective as of February 1, 2019, Mr. Himelfarb, a member of the Board of Directors of the Company, and the Company’s Chief Operating Officer, resignedfrom all positions with the Company. Effective as of February 1, 2019, Mr. Himelfarb also resigned from his position as General Manager of MicrobotMedical Ltd., a wholly-owned subsidiary of the Company. Notwithstanding the foregoing, Mr. Himelfarb has remained to assist with the transition of hisduties. As a result of certain termination provisions of the Himelfarb Agreement, Mr. Himelfarb is entitled to six months of compensation as a result of suchresignation. David Ben Naim Services Agreement We entered into a services agreement (the “Services Agreement”) with DBN Finance Services effective October 31, 2016, to provide outsourced CFO services.Pursuant to the terms of the Services Agreement, DBN Finance Services will provide its services exclusively through Mr. David Ben Naim, who will serve asthe principal financial and accounting officer of Microbot Israel and the Company. Mr. Ben Naim’s engagement will continue on an indefinite basis subjectto the termination provisions described in the Agreement. Pursuant to the Agreement, the Company shall pay the Service Provider a fixed fee of NIS 22,000, or the equivalent of approximately $5,835 per month basedon an exchange rate of $.265 for NIS1.0, plus VAT per month, and the Company shall reimburse DBN Finance Services for reasonable and customary out ofpocket expenses incurred by it or Mr. Ben Naim connection with the performance of the duties under the Services Agreement. In addition, the Company shallmaintain for the benefit of Mr. Ben Naim, a Directors and Officers insurance policy, according to the Company’s policy for other directors and officers of theCompany. Both the Company and DBN Finance Services shall have the right to terminate the Agreement for any reason or without reason at any time by furnishing theother party with a 30-day notice of termination. The Company shall further be entitled to terminate the Services Agreement for “cause” without notice, inwhich case neither DBN Finance Services nor Mr. Ben Naim shall be entitled to any compensation due to such early termination. DBN Finance Services and Mr. Ben Naim agreed to customary provisions regarding confidentiality and intellectual property ownership. The ServicesAgreement also contains customary non-competition and non-solicitation provisions pursuant to which DBN Finance Services and Mr. Ben Naim agree notto compete and solicit with the Company during the term of the Agreement and for a period of twelve months following the termination of the Agreement. Indemnification Agreements The Company generally enters into indemnification agreements with each of its directors and executive officers. Pursuant to the indemnification agreements,the Company has agreed to indemnify and hold harmless these current and former directors and officers to the fullest extent permitted by the DelawareGeneral Corporation Law. The agreements generally cover expenses that a director or officer incurs or amounts that a director or officer becomes obligated topay because of any proceeding to which he is made or threatened to be made a party or participant by reason of his service as a current or former director,officer, employee or agent of the Company, provided that he acted in good faith and in a manner he reasonably believed to be in or not opposed to the bestinterests of the Company. The agreements also provide for the advancement of expenses to the directors and officers subject to specified conditions. There arecertain exceptions to the Company’s obligation to indemnify the directors and officers, and, with certain exceptions, with respect to proceedings that heinitiates. Limits on Liability and Indemnification We provide directors and officers insurance for our current directors and officers. Our certificate of incorporation eliminates the personal liability of our directors to the fullest extent permitted by law. The certificate of incorporation furtherprovides that the Company will indemnify its officers and directors to the fullest extent permitted by law. We believe that this indemnification covers at leastnegligence on the part of the indemnified parties. Insofar as indemnification for liabilities under the Securities Act may be permitted to our directors, officers,and controlling persons under the foregoing provisions or otherwise, we have been advised that in the opinion of the Securities and Exchange Commissionsuch indemnification is against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable. Director Compensation The Company adopted a compensation package for the non-management members of its Board, pursuant to which each such Board member would receive forhis services $12,000 per annum, $750 per duly called Board meeting and $250 per unanimous written consent. Furthermore, each member of the AuditCommittee of the Board receives an additional $10,000 per annum, and other committee members receive an additional $5,000 per annum. Board membersare also entitled to receive equity awards. Upon joining the Board, a member would receive an initial grant of $40,000 of stock options (calculated as theproduct of the exercise price on the date of grant multiplied by the number of shares underlying the stock option award required to equal $40,000), with anadditional grant of stock options each year thereafter, to purchase such number of shares of the Company’s common stock equal to $20,000, subject to themember of the Board having served on the Board for at least twelve continuous months, and having attended at least 80% of the Board meetings over theprior year. 42  The following table summarizes cash-based and equity compensation information for our outside directors, including annual Board and committee retainerfees and meeting attendance fees, for the year ended December 31, 2018: Name Fees earnedor paid incash StockAwards OptionAwards (1) Non-EquityIncentivePlanCompensation NonqualifiedDeferredCompensationEarnings All OtherCompensation Total Yoav Waizer $32,500 $ - $13,483 $ - $ - $ - $45,983 Yoseph Bornstein 41,250 - 13,483 - - - 54,733 Scott Burell 41,250 - 13,483 - - - 54,733 Martin Madden 41,250 - 13,483 - - - 54,733 Prattipati Laxminarain 27,500 - 13,483 - - - 40,983 (1)Amounts shown do not reflect cash compensation actually received by the director. Instead, the amounts shown are the non-cash aggregate grant date fairvalues of stock option awards made during the period presented as determined pursuant to ASC Topic 718 and excludes the effect of forfeitureassumptions. The assumptions used to calculate the fair value of stock option awards are set forth under Note 10 to the Consolidated FinancialStatements of the Company included in the Company’s Form 10-K for the fiscal year ended December 31, 2017. Messrs. Gadot and Himelfarb received compensation for their services to the Company as set forth under the summary compensation table above. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The following table shows the number of shares of our common stock beneficially owned, as of March 28, 2019, by (i) each of our directors, (ii) each of ournamed executive officers, (iii) all of our current directors and executive officers as a group, and (iv) all those known by us to be to a beneficial owner of morethan 5% of the company’s common stock. In general, “beneficial ownership” refers to shares that an individual or entity has the power to vote or dispose of,and any rights to acquire common stock that are currently exercisable or will become exercisable within 60 days of March 28, 2019. We calculatedpercentage ownership in accordance with the rules of the SEC. The percentage of common stock beneficially owned is based on 4,307,580 shares outstandingas of March 28, 2019. In addition, shares issuable pursuant to options or other convertible securities that may be acquired within 60 days of March 28, 2019are deemed to be issued and outstanding and have been treated as outstanding in calculating and determining the beneficial ownership and percentageownership of those persons possessing those securities, but not for any other persons. This table is based on information supplied by each prospective director, officer and principal stockholder of the Company. Except as indicated in footnotesto this table, the Company believes that the stockholders named in this table have sole voting and investment power with respect to all shares of CommonStock shown to be beneficially owned by them, based on information provided by such stockholders. Unless otherwise indicated, the address for eachdirector, executive officer and 5% or greater stockholders of the Company listed is: c/o Microbot Medical Inc., 25 Recreation Park Drive, Unit 108, Hingham,MA 02043. Beneficial Owner Number of SharesBeneficially Owned Percentage of CommonStock Beneficially Owned Directors and Executive Officers Harel Gadot(1) 310,066 6.98%Yoav Waizer(2) 1,788 * Yoseph Bornstein(3) 303,816 7.05%Scott Burell(2) 1,788 * Martin Madden(2) 1,788 * David Ben Naim(2) 2,375 * Prattipati Laxminarain(2) 1,788 * Yehezkel (Hezi) Himelfarb (2)(7) 34,442 * All current directors and executive officers as a group (7 persons)(4) 623,409 14.00%Five Percent Shareholders LSA - Life Science Accelerator Ltd.(3) 303,816 7.05%MEDX Ventures Group LLC(5) 254,711 5.81%Saber Holding GmbH(6) 287,134 6.67% (1)Includes 77,864 shares of our common stock issuable upon the exercise of options granted to MEDX Ventures Group and 55,355 shares of our commonstock issuable upon the exercise of options granted to Mr. Gadot. All of such shares and 77,864 options are held by MEDX Ventures Group LLC, whichis beneficially owned by Mr. Gadot. See Note 6 below.(2)Represents options to acquire shares of our common stock.(3)Based on representations and other information made or provided to the Company by Mr. Bornstein, Mr. Bornstein is the CEO and Director of LSA andof Shizim, and Mr. Bornstein is the majority equity owner of Shizim. Shizim is the majority equity owner of LSA. Accordingly, Mr. Bornstein may bedeemed to share voting and investment power over the shares beneficially owned by these entities and has an address of 16 Iris Street, Rosh-Ha’AyinIsrael 4858022. Includes 1,788 shares of our common stock issuable to Mr. Bornstein upon exercise of options.(4)Includes shares of our common stock issuable upon the exercise of options as set forth in footnotes (1), (2) and (3). Does not include Mr. Himelfarb, whoresigned effective February 1, 2019. See Note (7) below).(5)Includes 77,864 shares of our common stock issuable upon the exercise of options granted to MEDX Ventures Group. Mr. Gadot is the Chief ExecutiveOfficer, Company Group Chairman and majority equity owner of MEDX Venture Group and thus may be deemed to share voting and investment powerover the shares beneficially owned by this entity. Does not include 55,355 shares of our common stock issuable upon the exercise of options granted toMr. Gadot directly. See Note 1 above.(6)Pursuant to a Schedule 13D/A-2 filed on June 20, 2017, Mrs. Sandra Berkson owns 100% of the equity of Saber Holding GmbH. Mr. Avram Berkson andMrs. Sandra Berkson have shared power with Saber to vote or direct the vote, and to dispose or direct the disposition, of such shares. Saber’s address isKrummbaumgasse 10/20, 1020 Wein, Austria.(7)Effective as of February 1, 2019, Mr. Himelfarb, a member of the Board of Directors of the Company, and the Company’s Chief Operating Officer,resigned from all positions with the Company and from his position as General Manager of Microbot Medical Ltd., a wholly-owned subsidiary of theCompany. Notwithstanding the foregoing, Mr. Himelfarb has remained to assist with the transition of his duties. 43  Item 13. Certain Relationships and Related Transactions, and Director Independence. Related parties can include any of our directors or executive officers, certain of our stockholders and their immediate family members. Each year, we prepareand require our directors and executive officers to complete Director and Officer Questionnaires identifying any transactions with us in which the officer ordirector or their family members have an interest. This helps us identify potential conflicts of interest. A conflict of interest occurs when an individual’sprivate interest interferes, or appears to interfere, in any way with the interests of the company as a whole. Our code of ethics requires all directors, officers andemployees who may have a potential or apparent conflict of interest to immediately notify our general counsel, who serves as our compliance officer. Inaddition, the Corporate Governance Committee is responsible for considering and reporting to the Board any questions of possible conflicts of interest ofBoard members. Our code of ethics further requires pre-clearance before any employee, officer or director engages in any personal or business activity thatmay raise concerns about conflict, potential conflict or apparent conflict of interest. Copies of our code of ethics and the Corporate Governance Committeecharter are posted on the corporate governance section of our website at www.microbotmedical.com. Our wholly-owned subsidiary, Microbot Medical Ltd., entered into a license agreement with Technion Research and Development Foundation Ltd., or TRDF,in 2012 pursuant to which it obtained an exclusive, worldwide, royalty-bearing, sub-licensable license to certain patents and inventions relating to the SCSand TipCAT technology platforms. TRDF is a founder of Microbot. See “Description of Business – Intellectual Property” for a description of this agreement. Other than the above transaction, there have been no related party transactions or any other transactions o relationships required to be disclosed pursuant toItem 404 of Regulation S-K. Director Independence NASDAQ’s listing standards and the Company’s Corporate Governance Guidelines require that the Company’s Board of Directors consist of a majority ofindependent directors, as determined under the applicable NASDAQ listing rules. The independent members of our Board are Messrs. Waizer, Bornstein, Burell, Madden and Laxminarain. Item 14. Principal Accountant Fees and Services. Audit and Tax Fees The Board, upon the recommendation of the Audit Committee, has selected the independent accounting firm of Brightman Almagor Zohar & Co., a Memberof Deloitte Touche Tohmatsu Limited, to audit the accounts of the Company for the year ending December 31, 2018. The Audit Committee considered the tax compliance services provided by Brightman Almagor Zohar & Co., concluded that provision of such services iscompatible with maintaining the independence of the independent accountants, and approved the provision by Brightman Almagor Zohar & Co. of taxcompliance services with respect to the year ending December 31, 2018. 44  The Audit Committee received the following information concerning the fees of the independent accountants for the years ended December 31, 2018 and2017, has considered whether the provision of these services is compatible with independence of the independent accountants, and concluded that it is: Year Ended 12/31/18 12/31/17 Audit Fees (1) $50,000 $35,000 Audit-Related Fees – – Tax Fees $9,000 – All Other Fees (2) $17,000 – (1)Audit fees represents fees for the integrated audit of our annual consolidated financial statements and reviews of the interim consolidated financialstatements, and review of audit-related SEC filings(2)Includes fees related to issuing comfort letter and consent(s).Audit and tax fees include administrative overhead charges and reimbursement for out-of-pocket expenses. Pre-Approval Policies and Procedures The Audit Committee has adopted policies and procedures for pre-approving all services (audit and non-audit) performed by our independent auditors. Inaccordance with such policies and procedures, the Audit Committee is required to pre-approve all audit and non-audit services to be performed by theindependent auditors in order to assure that the provision of such services is in accordance with the rules and regulations of the SEC and does not impair theauditors’ independence. Under the policy, pre-approval is generally provided up to one year and any pre-approval is detailed as to the particular service orcategory of services and is subject to a specific budget. In addition, the Audit Committee may pre-approve additional services on a case-by-case basis. During2015 and through November 28, 2016, Microbot Israel did not have a standing audit committee. PART IV Item 15. Exhibits and Financial Statement Schedules (a) The following documents are filed as part of this Annual Report on Form 10-K: (1) Financial Statements: The financial statements are filed as part of this Annual Report on Form 10-K commencing on page F-1 and are hereby incorporated by reference (2) Financial Statement Schedules: The financial statement schedules are omitted as they are either not applicable or the information required is presented in the financial statements and notesthereto. (3) Exhibits: The documents set forth below are filed herewith or incorporated by reference to the location indicated. ExhibitNumber Description of Document2.1 Agreement and Plan of Merger and Reorganization, dated as of August 15, 2016, by and among StemCells, Inc., C&RD Israel Ltd. andMicrobot Medical Ltd. (incorporated by reference to the Company’s Current Report on Form 8-K filed on August 15, 2016).3.1 Restated Certificate of Incorporation of the Company (incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscalyear ended December 31, 2006 and filed on March 15, 2007).3.2 Certificate of Amendment to the Restated Certificate of Incorporation of the Company (incorporated by reference to the Company’s CurrentReport on Form 8-K filed on November 29, 2016).3.3 Certificate of Amendment to the Restated Certificate of Incorporation (incorporated by reference to the Company’s Current Report on Form8-K filed on September 4, 2018).3.4 Amended and Restated By-Laws of the Company (incorporated by reference to the Company’s Current Report on Form 8-K filed on May 3,2016).3.5 Certificate of Elimination (incorporated by reference to the Company’s Current Report on Form 8-K filed on December 12, 2018).4.1 Form of Series A Warrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on December 16, 2016). 45  4.2 Form of Series B Warrant (incorporated by reference to the Company’s Current Report on Form 8-K filed on December 16, 2016).4.3 Form of Pre-Funded Warrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on January 16, 2019)4.4 Form of Wainwright Warrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on January 16, 2019)4.5 Form of Wainwright Warrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on January 17, 2019).4.6 Form of Warrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on January 25, 2019).4.7 Form of Wainwright Warrant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on January 25, 2019).10.1 Form of Indemnification Agreement, between the Company and Each of its Directors and Officers (incorporated by reference to theCompany’s Current Report on Form 8-K filed on November 29, 2016).10.2* Employment Agreement with Harel Gadot (incorporated by reference to the Company’s Current Report on Form 8-K filed on November 29,2016).10.3* Services Agreement with DBN Finance Services Ltd. (incorporated by reference to the Company’s Current Report on Form 8-K filed onNovember 29, 2016).10.4* Employment Agreement with Yehezkel Himelfarb (incorporated by reference to the Company’s Current Report on Form 8-K filed onDecember 8, 2016).10.5 Form of Securities Purchase Agreement, dated January 5, 2017 (incorporated by reference to the Company’s Current Report on Form 8-K filedon January 5, 2017).10.6 Placement Agreement, dated January 4, 2017 (incorporated by reference to the Company’s Current Report on Form 8-K filed on January 5,2017).10.7 Asset Purchase Agreement, dated November 11, 2016, by and among StemCells, Inc., Stem Cell Sciences Holdings Limited, StemcellsCalifornia, Inc., and Boco Silicon Valley, Inc. (incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal yearended December 31, 2016 and filed on March 21, 2017).10.8 Contract Research Agreement, dated January 27, 2017, with The Washington University (incorporated by reference to the Company’s AnnualReport on Form 10-K for the fiscal year ended December 31, 2016 and filed on March 21, 2017).10.9 License Agreement, dated June 20, 2012, by and between Technion Research and Development Foundation, and Microbot Medical Ltd.(incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and filed on March21, 2017).10.10* Microbot Medical Inc. 2017 Equity Incentive Plan (incorporated by reference to the Company’s Quarterly Report on Form 10-Q for theQuarter ended September 30, 2017, filed on November 14, 2017).10.11* Cooperation and Consulting Agreement, by and between StemCells, Inc. and Ken Stratton, dated June 6, 2016 (incorporated by reference tothe Company’s Quarterly Report on Form 10-Q for the Quarter ended June 30, 2016, filed on August 15, 2016).10.12* Cooperation and Consulting Agreement, by and between StemCells, Inc. and Gregory Schiffman, dated June 6, 2016 (incorporated byreference to the Company’s Quarterly Report on Form 10-Q for the Quarter ended June 30, 2016, filed on August 15, 2016).10.13 Cooperation and Consulting Agreement, by and between StemCells, Inc. and Ian Massey, dated June 6, 2016 (incorporated by reference tothe Company’s Quarterly Report on Form 10-Q for the Quarter ended June 30, 2016, filed on August 15, 2016).10.14 Agreement, dated January 4, 2018, by and between CardioSert Ltd. and Microbot Medical Ltd. (incorporated by reference to the Company’sCurrent Report on Form 8-K filed on January 8, 2018).10.15 Tolling and Standstill Agreement, dated as of April 2, 2018, by and among (a) Schulte Roth & Zabel LLP, on behalf of Empery Asset Master,Ltd., Empery Tax Efficient LP, Empery Tax Efficient II LP, and Hudson Bay Master Fund, Ltd. and (b) Mintz, Levin, Cohn, Ferris, Glovskyand Popeo, P.C., on behalf of the Company. (incorporated by reference to the Company’s Registration Statement on Form S-1 filed onNovember 19, 2018.)10.16 Engagement Letter, dated as of October 12, 2018, by and between Microbot Medical Inc. and H.C. Wainwright & Co., LLC (incorporated byreference to the Registrant’s Current Report on Form 8-K filed on January 16, 2019)10.17 Form of Securities Purchase Agreement, dated as of January 14, 2019, by and among Microbot Medical Inc., and the Purchaser (incorporatedby reference to the Registrant’s Current Report on Form 8-K filed on January 16, 2019)10.18 Form of Securities Purchase Agreement, dated as of January 15, 2019, by and among Microbot Medical Inc., and the Purchaser (incorporatedby reference to the Registrant’s Current Report on Form 8-K filed on January 17, 2019)10.19 Form of Securities Purchase Agreement, dated as of January 23, 2019, by and among Microbot Medical Inc., and the Purchaser (incorporatedby reference to the Registrant’s Current Report on Form 8-K filed on January 25, 2019)21.1 Subsidiaries of the Company (incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December31, 2016 and filed on March 21, 2017). 31.1 Certification Pursuant to Securities Exchange Act Rule 13(a)-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(Harel Gadot, Chief Executive Officer) 31.2 Certification Pursuant to Securities Exchange Act Rule 13(a)-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(David Ben Naim, Chief Financial Officer) 32.1 Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Harel Gadot, ChiefExecutive Officer) 32.2 Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (David Ben Naim,Chief Financial Officer)101.INS XBRL Instance.101.SCH XBRL Taxonomy Extension Schema.101.CAL XBRL Taxonomy Extension Calculation.101.DEF XBRL Taxonomy Extension Definition.101.LAB XBRL Taxonomy Extension Labels.101.PRE XBRL Taxonomy Extension Presentation. * Indicates Management contract or compensatory plan or arrangement 46  SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. MICROBOT MEDICAL INC. /s/ Harel Gadot Harel Gadot President, Chief Executive Officer and ChairmanDated: March 29, 2019 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrantand in the capacities and on the dates indicated. Signature Title Date /s/ Harel Gadot Chairman, President and Chief Executive Officer March 29, 2019Harel Gadot (Principal Executive Officer) /s/ David Ben Naim Chief Financial Officer March 29, 2019David Ben Naim (Principal Financial and Accounting Officer) /s/ Yoav Waizer Director March 29, 2019Yoav Waizer /s/ Yoseph Bornstein Director March 29, 2019Yoseph Bornstein /s/ Prattipati Laxminarain Director March 29, 2019Prattipati Laxminarain /s/ Scott Burell Director March 29, 2019Scott Burell Director Martin Madden 47  MICROBOT MEDICAL INC. CONSOLIDATED FINANCIAL STATEMENTSAS OF DECEMBER 31, 2018 INDEX TO FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting FirmF-2 Consolidated Balance Sheets as of December 31, 2018, and 2017F-3 Consolidated Statements of Comprehensive Loss for the years ended December 31, 2018 and 2017F-4 Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2018 and 2017F-5 Consolidated Statements of Cash Flows for the years ended December 31, 2018 and 2017F-6 Notes to the Consolidated Financial StatementsF-7-F-23 F-1  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of Microbot Medical Inc. Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Microbot Medical Inc. and its subsidiary (the “Company”) as of December 31, 2018 and2017 and the related consolidated statements of comprehensive loss, changes in shareholders’ equity and cash flows for each of the two years in the periodended December 31, 2018, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, andthe results of its operations and its cash flows for each of the two years in the period ended December 31, 2018, in conformity with accounting principlesgenerally accepted in the United States of America. Basis for OpinionThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financialstatements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations ofthe Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, norwere we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding ofinternal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control overfinancial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, andperforming procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures inthe financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well asevaluating the overall presentation of the financial statements. We believe that our audits provides a reasonable basis for our opinion. Brightman Almagor Zohar & Co.Certified Public AccountantsMember of Deloitte Touche Tohmatsu Limited Tel Aviv, IsraelApril 1, 2019 We have served as the Company’s auditor since 2013. F-2  MICROBOT MEDICAL INC.Consolidated Balance SheetsU.S. dollars in thousands(Except share and per share data) As of December 31, Note 2018 2017ASSETS Current assets: Cash and cash equivalents $5,238 $10,787 Restricted cash 25 27 Other current assets 3 568 116 5,831 10,930 Fixed assets, net 4 259 90 Total assets $6,090 $11,020 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Trade payables $630 $78 Accrued liabilities 5 755 450 Other accrued liabilities 8 3,375 - Total current liabilities 4,760 528 Long-term liabilities: Derivative warrant liability 7 8 28 8 28 Total liabilities 4,768 556 Commitments and contingencies 8 Temporary equity: 9 Common stock of $0.01 par value; issued and outstanding: 0 and721,107 shares as of December 31, 2018 and 2017 - 500 Shareholders’ equity: Preferred stock of $0.01 par value; Authorized: 1,000,000 shares as ofDecember 31, 2018 and 2017; issued and outstanding: 0 and 4,001shares as of December 31, 2018 and 2017, respectively 9 - (*)Common stock of $0.01 par value; Authorized: 220,000,000 as ofDecember 31, 2018 and 2017; issued and outstanding (**): 3,012,343and 2,013,193 shares as of December 31, 2018, and December 31, 2017,respectively 31 27 Additional paid-in capital 32,530 30,561 Treasury shares 8 (3,375) - Accumulated deficit (27,864) (20,624) 1,322 9,964 $6,090 $11,020 (*)Less than 1(**)December 31 2017 share data represents the number of shares adjusted to retroactively reflect the 1:15 reverse stock split effected on September 4,2018. Refer to Note 1 for further information. The accompanying notes are an integral part of these consolidated financial statements. F-3  MICROBOT MEDICAL INC.Consolidated Statements of Comprehensive LossU.S. dollars in thousands(Except share and per share data) Years ended December 31, Note 2018 2017 Research and development expenses, net 11 $2,515 $1,100 General and administrative expenses 12 4,729 4,167 Operating loss 7,244 5,267 Financing (income) expenses, net 13 (4) 2,322 Net loss and comprehensive loss $7,240 $7,589 Net loss per share, basic and diluted 10 $(2.41) $(2.76) Weighted-average number of common shares outstanding, basic and diluted(*) 2,904,253 2,178,827 (*)December 31, 2017 share data represents the number of shares adjusted to retroactively reflect the 1:15 reverse stock split effected on September 4,2018. Refer to Note 1 for further information. The accompanying notes are an integral part of these consolidated financial statements. F-4  MICROBOT MEDICAL INC.Consolidated Statements of Shareholder’s EquityU.S. dollars in thousands(Except share and per share data) Preferred A Shares Common Stock (***) Additional Treasury Total Number Amount Number Amount paid-incapital shares(1) Accumulateddeficit shareholders’equity Temporaryequity (**) Balances, December 31,2016 9,736 $ (*) (**)1,788,884 $18 $14,713 $- $(13,035) $1,696 $500 Issuance of commonstock - - 299,815 3 12,699 - - 12,702 - Share-basedcompensation - - 8,085 (*) 479 - - 479 - Exercise of options - - 31,787 (*) (*) - - - - Cashless exercise ofwarrants - - 24 (*) - - - (*) - Extinguishment ofconvertible notes andissuance of preferred Ashares 3,255 (*) - - 2,676 - - 2,676 - Conversion of preferredA shares to commonstock (8,990) (*) 605,705 6 (6) - - - - Net loss - - - - - - (7,589) (7,589) - Balances, December 31,2017 4,001 (*) 2,734,300 27 30,561 - (20,624) 9,964 500 Share-basedcompensation - - - - 1,399 - - 1,399 - Exercise of options - - 2,487 (*) (*) - - - - Common shares classifiedout of temporary equity 500 - 500 (500)Shares issued asconsideration-vendor - - 6,738 1 73 - - 74 - Conversion of preferredA shares to commonstock (4,001) (*) 268,818 3 (3) - - - - Rescission of sharepurchase agreement - - - - - (3,375) - (3,375) - Net loss - - - - - - (7,240) (7,240) - Balances, December 31,2018 - $(*) **3,012,343 $31 $32,530 $(3,375) $(27,864) $1,322 $- (1) Refer to Note 8 for further information (*) Less than 1 (**) Includes 721,107 common stock classified as temporary equity as of December 31, 2017. (***) December 31, 2016 and 2017 share data represent the number of shares adjusted to retroactively reflect the 1:15 reverse stock split effected onSeptember 4, 2018. Refer to Note 1 for further information. The accompanying notes are an integral part of these consolidated financial statements. F-5  MICROBOT MEDICAL INC.Consolidated Statements of Cash FlowsU.S. dollars in thousands(Except share and per share data) Years ended December 31, 2018 2017 OPERATING ACTIVITIES Net loss $(7,240) $(7,589) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 54 21 Interest and amortization of discount on convertible notes - 237 Financing loss on debt extinguishment - 2,364 Changes in fair value of derivative warrant liability (20) (285)Shares issued as consideration-vendor 74 - Share-based compensation expense 1,399 479 Changes in assets and liabilities: Other receivables (40) (14)Other payables and accrued liabilities 463 (69) Net cash used in operating activities (5,310) (4,856) INVESTMENT ACTIVITIES Purchase of property and equipment (223) (58) Net cash used in investing activities (223) (58) FINANCING ACTIVITIES Inflows in connection with current assets and liabilities acquired in reverserecapitalization, net - 317 Deferred financing fees (18) - Issuance of common stock, net of issuance costs - 12,702 Net cash (used in) provided by financing activities (18) 13,019 (Decrease) increase in cash and cash equivalents (5,551) 8,105 Cash and cash equivalents and restricted cash at the beginning of the year 10,814 2,709 Cash and cash equivalents and restricted cash at the end of the year $5,263 $10,814 Supplemental disclosure of cash flow information:Non-cash financing transactions: Cashless exercise of warrants $(*) $(*)Rescission of share purchase agreement $3,375 $- Conversion of Series A Convertible Preferred Stock into common stock $30 $90 Extinguishment of convertible notes in exchange for Series A Convertible PreferredStock $- $2,083 Financing fees included in other payables and accrued liabilities $394 $- Temporary equity classified to permanent equity $500 $- The accompanying notes are an integral part of these consolidated financial statements. F-6  MICROBOT MEDICAL INC.Notes to the consolidated financial statementsU.S. dollars in thousands(Except share and per share data) NOTE 1 GENERAL A.Description of business Microbot Medical Inc. (the “Company”) is a pre-clinical medical device company specializing in the research, design and development of nextgeneration micro-robotics assisted medical technologies targeting the minimally invasive surgery space. The Company is primarily focused onleveraging its micro-robotic technologies with the goal of improving surgical outcomes for patients. It was incorporated on August 2, 1988 in the State of Delaware under the name Cellular Transplants, Inc. The original Certificate of Incorporationwas restated on February 14, 1992 to change the name of the Company to Cyto Therapeutics, Inc. On May 24, 2000, the Certificate of Incorporationas restated was further amended to change the name of the Company to StemCells, Inc. On November 28, 2016, the Company consummated a transaction pursuant to an Agreement and Plan of Merger, dated August 15, 2016, withMicrobot Medical Ltd., a private medical device company organized under the laws of the State of Israel (“Microbot Israel”). On the same day and inconnection with the Merger, the Company changed its name from StemCells, Inc. to Microbot Medical Inc. On November 29, 2016, the Company’scommon stock began trading on the Nasdaq Capital Market under the symbol “MBOT”. Prior to the Merger, the Company was a biopharmaceutical company that conducted research, development, and commercialization of stem celltherapeutics and related technologies. The sale of substantially all material assets relating to the stem cell business were completed on November 29,2016. The Company and its subsidiaries are collectively referred to as the “Company”. “StemCells” or “StemCells, Inc.” refers to the Company prior to theMerger. B.Risk Factors To date, the Company has not generated revenues from its operations. As of December 31, 2018, the Company had unrestricted cash and cashequivalent balance of approximately $5,238, which management believes is sufficient to fund its operations for more than 12 months from the dateof issuance of these financial statements and sufficient to fund its operations necessary to continue development activities of its current proposedproducts, after taking into consideration the sale and issuance of common stock to investors for gross proceeds of approximately $11 million in cashduring the first quarter of 2019 . Refer to Note 16 - “Subsequent Events” for further information. Due to continuing research and development activities, the Company expects to continue to incur additional losses for the foreseeable future. TheCompany plans to continue to fund its current operations as well as other development activities relating to additional product candidates, throughfuture issuances of either debt and/or equity securities and possibly additional grants from the Israeli Innovation Authority and other governmentinstitutions. The Company’s ability to raise additional capital in the equity and debt markets is dependent on a number of factors, including, but notlimited to, the market demand for the Company’s stock, which itself is subject to a number of development and business risks and uncertainties, aswell as the uncertainty that the Company would be able to raise such additional capital at a price or on terms that are favorable to the Company. C.Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions pertaining totransactions and matters whose ultimate effect on the financial statements cannot precisely be determined at the time of financial statementspreparation. Although these estimates are based on management’s best judgment, actual results may differ from these estimates. F-7  MICROBOT MEDICAL INC.Notes to the consolidated financial statementsU.S. dollars in thousands(Except share and per share data) D.Reverse Stock Split On September 4, 2018, the Company filed a Certificate of Amendment to its Restated Certificate of Incorporation with the Secretary of State of theState of Delaware to affect a one-for-15 reverse stock split of the Company’s common stock (the “Reverse Split”). As a result of the Reverse Split,every 15 shares of the Company’s old common stock were converted into one share of the Company’s new common stock. Fractional sharesresulting from the Reverse Split were rounded up to the nearest whole number. The Reverse Split automatically and proportionately adjusted, basedon the one-for-fifteen split ratio, all issued and outstanding shares of the Company’s common stock, as well as common stock underlying convertiblepreferred stock, stock options, warrants and other derivative securities outstanding at the time of the effectiveness of the Reverse Split. The exerciseprice on outstanding equity based-grants was proportionately increased, while the number of shares available under the Company’s equity-basedplans was also proportionately reduced. Share and per share data (except par value) for the periods presented reflect the effects of the Reverse Split.References to numbers of shares of common stock and per share data in the accompanying financial statements and notes thereto for periods endedprior to September 4, 2018 have been adjusted to reflect the Reverse Split on a retroactive basis. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies applied in the preparation of the financial statements are as follows: A.Basis of presentation The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“USGAAP”). B.Financial statement in U.S. dollars The functional currency of the Company is the U.S. dollar (“dollar”) since the dollar is the currency of the primary economic environment in whichthe Company has operated and expects to continue to operate in the foreseeable future. Transactions and balances denominated in dollars are presented at their original amounts. Transactions and balances denominated in foreigncurrencies have been re-measured to dollars in accordance with the provisions of ASC 830-10, “Foreign Currency Translation”. All transaction gains and losses from re-measurement of monetary balance sheet items denominated in non-dollar currencies are reflected in thestatement of operations as financial income or expenses, as appropriate. C.Cash and cash equivalents Cash and cash equivalents consist of cash and demand deposits in banks, and other short-term liquid investments (primarily interest-bearing timedeposits) with original maturities of less than three months. D.Fair value of financial instruments The carrying values of cash and cash equivalents, other receivable and other accounts payable and accrued liabilities approximate their fair valuedue to the short-term maturity of these instruments. The Company measures the fair value of certain of its financial instruments (such as the derivative warrant liabilities) on a recurring basis. Themethod of determining the fair value of derivative warrant liabilities is discussed in Note 7. A fair value hierarchy is used to rank the quality and reliability of the information used to determine fair values. Financial assets and liabilitiescarried at fair value will be classified and disclosed in one of the following three categories: Level 1 - Quoted prices (unadjusted) in active markets for identical assets and liabilities. Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as unadjusted quoted prices for similar assetsand liabilities, unadjusted quoted prices in the markets that are not active, or other inputs that are observable or can be corroborated byobservable market data for substantially the full term of the assets or liabilities. Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets orliabilities. F-8  MICROBOT MEDICAL INC.Notes to the consolidated financial statementsU.S. dollars in thousands(Except share and per share data) Concentrations of credit risk Financial instruments which potentially subject the Company to credit risk consist primarily of cash and cash equivalents. The Company holdsthese investments in highly rated financial institutions. These amounts at times may exceed federally insured limits. The Company has notexperienced any credit losses in such accounts and does not believe it is exposed to any significant credit risk on these funds. The Company has nooff-balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option contracts, or other hedging arrangements. E.Fixed assets Fixed assets are presented at costs less accumulated depreciation. Depreciation is calculated based on the straight-line method over the estimateduseful lives of the assets, at the following annual rates: % Research equipment and software 25-33 Furniture and office equipment 7 Leasehold improvements 20 F.Liabilities due to termination of employment agreements Under Israeli employment laws, employees of Microbot Israel are included under Article 14 of the Severance Compensation Act, 1963 (“Article 14”).According to Article 14, these employees are entitled to monthly deposits made by Microbot Israel on their behalf with insurance companies. Payments in accordance with Article 14 release Microbot Israel from any future severance payments (under the Israeli Severance Compensation Act,1963) with respect of those employees. The aforementioned deposits are not recorded as an asset in the Company’s balance sheet, G.Basic and diluted net loss per share Basic net loss per share is computed by dividing net loss, as adjusted to include the weighted average number of shares of common stockoutstanding during the year. Shares of common stock and preferred stock contingently issuable for little or no cash are included in basic net loss pershare on an as issued basis. Diluted net loss per share is computed by dividing net loss, as adjusted to include preferred shares dividend participation rights of preferred sharesoutstanding during the year as well as of preferred shares that would have been outstanding if all potentially dilutive preferred shares had beenissued, by the weighted average number of shares of common stock outstanding during the year, plus the number of shares of common stock thatwould have been outstanding if all potentially dilutive shares of common stock had been issued, using the treasury stock method, in accordancewith ASC 260-10 “Earnings per Share”. All outstanding stock options and warrants have been excluded from the calculation of the diluted loss per share for the years ended December 31,2018 and December 31, 2017, since all such securities have an anti-dilutive effect. The weighted average number of shares outstanding has been retroactively restated for the equivalent number of shares received by the accountingacquirer as a result of the reverse recapitalization as if these shares had been outstanding as of the beginning of the earliest period presented. H.Research and development expenses, net Research and development expenses are charged to the statement of operations as incurred. Grants for funding of approved research anddevelopment projects are recognized at the time the Company is entitled to such grants, on the basis of the costs incurred and applied as a deductionfrom the research and development expenses. I.Share-based compensation The Company applies ASC 718-10, “Share-Based Payment,” which requires the measurement and recognition of compensation expenses for allshare-based payment awards made to employees and directors including stock options under the Company’s stock plans based on estimated fairvalues. F-9  MICROBOT MEDICAL INC.Notes to the consolidated financial statementsU.S. dollars in thousands(Except share and per share data) ASC 718-10 requires companies to estimate the fair value of stock options using an option-pricing model. The value of the portion of the award thatis ultimately expected to vest is recognized as an expense over the requisite service periods in the Company’s statement of operations. The Company accounted for stock-based compensation awards to non-employees in accordance with the Financial Accounting Standards Board(“FASB”) ASC 505-50, “Equity-Based Payments to Non-Employees” (“FASB ASC 505-50”). Under FASB ASC 505-50, the Company determinesthe fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of theequity instruments issued, whichever is more reliably measurable. In June 2018, FASB issued Accounting Standards Update (“ASU”) 2018-07, “Compensation-Stock Compensation (Topic 718): Improvements toNonemployee Share-Based Payment Accounting”, which simplifies the accounting for nonemployee share-based payment transactions by aligningthe measurement and classification guidance, with certain exceptions, to that for share-based payment awards to employees. The amendmentsexpand the scope of the accounting standard for share-based payment awards to include share-based payment awards granted to non-employees inexchange for goods or services used or consumed in an entity’s own operations and supersedes the guidance related to equity-based payments tonon-employees. The Company elected to early adopt these amendments on June 1, 2018. The adoption of these amendments did not have asignificant impact on our consolidated financial statements and related disclosures. The Company estimates the fair value of stock options granted as share-based payment awards using a Black-Scholes options pricing model. Theoption-pricing model requires a number of assumptions, of which the most significant are expected volatility and the expected option term (the timefrom the grant date until the options are exercised or expire). Expected volatility is estimated based on volatility of similar companies in thetechnology sector for equity awards granted prior to the Merger and on the Company’s trading share price for equity awards granted subsequent tothe Merger. The Company has historically not paid dividends and has no foreseeable plans to issue dividends. The risk-free interest rate is based onthe yield from governmental zero-coupon bonds with an equivalent term. The expected stock option term is calculated for stock options granted toemployees and directors using the “simplified” method. Grants to non-employees are based on the contractual term. Changes in the determination ofeach of the inputs can affect the fair value of the stock options granted and the results of operations of the Company. J.Reclassification Certain prior year amounts have been reclassified to conform to the current year presentation. K.Income Taxes The Company provides for income taxes using the asset and liability approach. Deferred tax assets and liabilities are recorded based on thedifferences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected toreverse. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some orall of the deferred tax assets will not be realized. As of December 31, 2018, and 2017, the Company had a full valuation allowance against deferredtax assets. L.Recent Accounting Standards In February 2016, the FASB issued ASU 2016-02 “Leases” to increase transparency and comparability among organizations by recognizing leaseassets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. For operating leases, the ASU requires alessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, on its balance sheet. TheASU retains the current accounting for lessors and does not make significant changes to the recognition, measurement, and presentation of expensesand cash flows by a lessee. In July 2018, the FASB issued ASU No. 2018-11, “Targeted Improvements - Leases (Topic 842).” This update provides an optional transitionmethod that allows entities to elect to apply the standard prospectively at its effective date, versus recasting the prior periods presented. If elected, anentity would recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. This ASU is effectivefor the Company in the first quarter of 2019. F-10  MICROBOT MEDICAL INC.Notes to the consolidated financial statementsU.S. dollars in thousands(Except share and per share data) While the Company continues to assess all of the effects of adoption, it currently believes the most significant effects from implementing thisstandard relate to the recognition of new right-of-use (“ROU”) assets and lease liabilities on its balance sheet for real estate operating leases and carleases. Upon adoption, the Company currently expects to recognize additional ROU assets and lease liabilities of approximately $630, based on thepresent value of the remaining minimum rental payments under current leasing standards for existing operating leases. In June 2016, the FASB issued ASU 2016-13 “Financial Instruments – Credit Losses” to improve information on credit losses for financial assets andnet investment in leases that are not accounted for at fair value through net income. The ASU replaces the current incurred loss impairmentmethodology with a methodology that reflects expected credit losses. This ASU is effective for the Company in the first quarter of 2020, with earlyadoption permitted. The Company is currently evaluating the effect the adoption of this ASU will have on its consolidated financial statements. In July 2017, the FASB issued ASU 2017-11, which includes Part I “Accounting for Certain Financial Instruments with Down Round Features” andPart II “Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and CertainMandatorily Redeemable Non-Controlling Interests with a Scope Exception”. The ASU makes limited changes to the Board’s guidance onclassifying certain financial instruments as either liabilities or equity. The ASU’s objective is to improve (1) the accounting for instruments with“down-round” provisions and (2) the readability of the guidance in ASC 480 on distinguishing liabilities from equity by replacing the indefinitedeferral of certain pending content with scope exceptions. The ASU is effective for the Company in the first quarter of 2019, with early adoptionpermitted. The Company has derivative warranty liabilities as discussed in Note 7 which upon adoption of the new standard are expected to beclassified as permanent equity. In August 2018, the FASB issued ASU 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements”, which will improve theeffectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certaindisclosure requirements, and is effective for the Company beginning on January 1, 2020. The Company does not expect that this standard will havea material effect on the Company’s consolidated financial statements. NOTE 3 OTHER CURRENT ASSETS As of December 31, 2018 2017 Amounts due from government institutions $65 $35 Deferred costs related to issuance of common shares (see Note 16) 412 - Prepaid expenses and others 91 81 $568 $116 NOTE 4 FIXED ASSETS, NET As of December 31, 2018 2017 Cost: Research equipment and software $98 $76 Leasehold improvement 83 - Furniture and office equipment 210 92 391 168 Accumulated Depreciation: Research equipment and software 47 42 Leasehold improvement 12 - Furniture and office equipment 73 36 132 78 $259 $90 F-11  MICROBOT MEDICAL INC.Notes to the consolidated financial statementsU.S. dollars in thousands(Except share and per share data) NOTE 5 - ACCRUED LIABILITIES As of December 31, 2018 2017 Employee-related liabilities $67 $64 Amounts due to certain government institution 220 56 Other current liabilities 468 330 $755 $450 NOTE 6 CONVERTIBLE LOAN FROM SHAREHOLDERS Securities Exchange Agreement with Alpha Capital On December 16, 2016, the Company entered into a Securities Exchange Agreement with Alpha Capital, pursuant to which Alpha Capitalexchanged 655,967 shares (9,736,000 shares before the Reverse Split) of common stock or rights to acquire shares of the common stock held by it,for 9,736 shares of a newly designated class of Series A Convertible Preferred Stock, par value $0.01 per share (the “Preferred Stock”). The commonstock and common stock underlying the rights to acquire common stock include all of the shares of common stock issued or issuable to AlphaCapital pursuant to the Merger. The 655,967 shares (9,735,925 shares before the Reverse Split) of common stock and the rights to acquire commonstock were cancelled and the Company’s issued and outstanding shares of common Stock were reduced to 1,786,684 (26,518,315 before the ReverseSplit). On May 9, 2017, the Company entered into a Securities Exchange Agreement with Alpha Capital pursuant to which the Company agreed to issue3,255 shares of the Series A Convertible Preferred Stock, par value $0.01 per share, of the Company, in exchange for the full satisfaction, terminationand cancellation of the outstanding 6% convertible promissory note of the Company in the principal amount of approximately $2,029 issued onNovember 28, 2016 and held by Alpha Capital. As a result of the extinguishment of the convertible note and issuance of the preferred shares, theCompany recorded a financial loss in the amount of $2,360. NOTE 7 - DERIVATIVE WARRANT LIABILITIES The remaining outstanding warrants and terms as of December 31, 2018 and December 31, 2017 (split-adjusted) are as follows: (*) Issuance date Outstanding as ofDecember 31, 2017 Outstanding as ofDecember 31, 2018 Exercise Price Exercisable as ofDecember 31, 2018 ExercisableThrough Series A (2013) 3,895 - $- - October 2018Series A (2013) 183 183 $2,725 183 April 2023Series A (2015) 683 683 $1,363 683 April 2020Series A (2016) (a) 625 - $- - March 2018Series B (2016) (a) 2,770 2,770 $40 2,770 March 2022 (*)December 31, 2018 and 2017 warrant data represents the number of shares adjusted to retroactively reflect the 1:15 Reverse Split effected onSeptember 4, 2018. Refer to Note 1 for further information. a) These warrants contain a full ratchet anti-dilution price protection so that, in most situations upon the issuance of any common stock orsecurities convertible into common stock at a price below the then-existing exercise price of the outstanding warrants, the warrant exerciseprice will be reset to the lower common stock sales price. As such anti-dilution price protection does not meet the specific conditions forequity classification, the Company is required to classify the fair value of these warrants as a liability, with changes in fair value to berecorded as income (loss) due to change in fair value of warrant liability. The estimated fair value of the Company’s warrant liability atDecember 31, 2018 and December 31, 2017, was approximately $8 and $28, respectively. F-12  MICROBOT MEDICAL INC.Notes to the consolidated financial statementsU.S. dollars in thousands(Except share and per share data) As quoted prices in active markets for identical or similar warrants are not available, the Company uses directly observable inputs in the valuation ofits derivative warrant liabilities (level 3 measurement). The Company uses the Black-Scholes valuation model to estimate fair value of these warrants. In using this model, the Company makes certainassumptions about risk-free interest rates, dividend yields, volatility, expected term of the warrants and other assumptions. Risk-free interest rates arederived from the yield on U.S. Treasury debt securities. Dividend yields are based on our historical dividend payments, which have been zero todate. Volatility is estimated from the historical volatility of our common stock as traded on NASDAQ. The expected term of the warrants is based onthe time to expiration of the warrants from the date of measurement. In March 2017, an institutional holder executed a cashless exercise of 51 warrants and 24 shares of common stock were issued in connectiontherewith. The following table summarizes the changes in the valuation of the derivative warrant liabilities as of December 31, 2018 and December 31, 2017: Series A(2011) Series A(2013) Series A(2013) Series A(2015) Series A(2016) Series B(2016) Total Balances at December 31, 2017 $- $- $- $- $(*) $28 $28 Exercised - - - - - - - Expired - - - - (*) - (*) Changes in fair value - - - - - (20) (20)Balances at December 31, 2018 $- $- $- $- $- $8 $8 (*) Less than 1 The following table summarizes the observable inputs used in the valuation of the derivative warrant liabilities as of December 31, 2018 andDecember 31, 2017 (split-adjusted): As of December 31, 2018 As of December 31, 2017 Series A (2016) Series B (2016) Series A (2016) Series B (2016) Share price — $1.72 $15.10 $15.10 Exercise price — $40.00 $40.00 $40.00 Expected volatility — 181.3% 60% 119%Risk-free interest — 2.92% 1.24% 1.89%Dividend yield — — — — Expected life of up to (years) — 3.25 0.25 4.25 Activity in such liabilities measured on a recurring basis is as follows: Derivative WarrantLiabilities As of December 31, 2017 $28 Revaluation of warrants (20)As of December 31, 2018 $8 Derivative WarrantLiabilities As of December 31, 2016 $313 Revaluation of warrants (285)Exercise warrants (*) As of December 31, 2017 $28 (*) Less than 1 F-13  MICROBOT MEDICAL INC.Notes to the consolidated financial statementsU.S. dollars in thousands(Except share and per share data) In accordance with ASC-820-10-50-2(g), the Company has performed a sensitivity analysis of the derivative warrant liabilities of the Companywhich are classified as level 3 financial instruments. The Company recalculated the value of warrants by applying a +/- 5% changes to the inputvariables in the Black-Scholes model that vary overtime, namely, the volatility and the risk-free rate. A 5.0% decrease or increase in volatility wouldnot have materially changed the value of the warrants. A 5.0% decrease or increase in the risk-free rate would not have materially changed the valueof the warrants; the value of the warrants is not strongly correlated with small changes in interest rates. NOTE 8 COMMITMENTS AND CONTINGENCIES Microbot Israel obtained from the Israeli Innovation Authority (“IIA”) grants for participation in research and development for the years 2013through December 31, 2018 in the total amount of approximately $1,310 and, in return, Microbot Israel is obligated to pay royalties amounting to3%-3.5% of its future sales up to the amount of the grant. The grant is linked to the exchange rate of the dollar to the New Israeli Shekel and bearsinterest of Libor per annum. The repayment of the grants is contingent upon the successful completion of the Company’s research and development programs and generatingsales. The Company has no obligation to repay these grants, if the project fails, is unsuccessful or aborted or if no sales are generated. The financialrisk is assumed completely by the Government of Israel. The grants are received from the Government on a project-by-project basis. Microbot Israel signed an agreement with the Technion Research and Development Foundation (“TRDF”) in June 2012 by which TRDF transferredto Microbot Israel a global, exclusive, royalty-bearing license. As partial consideration for the license, Microbot Israel shall pay TRDF royalties onnet sales (between 1.5%-3%) and on sublicense income as detailed in the agreement. Lease Agreements In December 2016, the Company entered into car lease agreements, which will end on December 31, 2019. According to the lease agreement, themonthly car lease payment is approximately $2.5. In January 2018, the Company entered into an office lease agreement in the U.S., with a term ending on December 31, 2021. According to the leaseagreement, the monthly office lease payment is approximately $4. In May 2017, the Company entered into an office lease agreement in Israel effective from February 1, 2018, with a term ending on December 31,2020. According to the lease agreement, the monthly office lease payment is approximately $14. Compensation Liability The Company incurred compensation commitments of approximately $400 to a former executive that management estimates as remote that thisamount will ever be paid out and therefore is not reflected in these consolidated financial statements. Contract Research Agreements Agreement with Washington University On January 27, 2017, the Company entered into a Contract Research Agreement (the “Research Agreement”) with The Washington University(“Washington U.”), pursuant to which the parties are collaborating to determine the effectiveness of the Company’s self-cleaning shunt. The study in Washington U. includes several phases. The first phase (initial research) was completed. An agreement on the second phase was enteredinto in September 2018 with total expected costs of approximately $248.1. Pursuant to the Research Agreement, all rights, title and interest in thedata, information and results obtained or arrived at by Washington U. in the performance of its services under the Research Agreement, as well as anypatentable inventions obtained or arrived at in the performance of such services, will be jointly owned by the Company and Washington U., andeach will have full right to practice and grant licenses in joint inventions. Additionally, Washington U. granted to the Company: (a) a non-exclusive, worldwide, royalty-free, fully paid-up, perpetual and irrevocable license to use and practice patentable inventions (other than jointinventions and improvements to Washington U.’s animal models) obtained or arrived at by Washington U. in the provision of its services under theResearch Agreement (“University Inventions”) with respect to the self-cleaning shunt; and (b) an exclusive option to obtain an exclusive worldwidelicense in University Inventions, on terms to be negotiated between the parties. F-14  MICROBOT MEDICAL INC.Notes to the consolidated financial statementsU.S. dollars in thousands(Except share and per share data) Agreement with Wayne State University On September 12, 2016, the Company entered into a research agreement (the “WSU Agreement”) with Wayne State University (“WSU.”), pursuant towhich the parties are collaborating to determine the efficacy of the Company’s self-cleaning shunt. The study in WSU includes several phases. The first phase (initial research) was completed. An agreement on the second phase was entered into inApril 2018 with total expected costs of approximately $130. Pursuant to the WSU Agreement, WSU shall own all data generated by the research andthe Company shall have unrestricted free right to use and disclose all the results, information and material generated from the WSU Agreement. Rights to inventions, improvements or discoveries, whether or not patentable or copyrightable made solely by the employees of the Company in thecourse of performance of the workplan agreed upon between the Company and WSU shall belong to the Company. Rights to inventions, improvements or discoveries, whether or not patentable or copyrightable made solely by the employees of WSU in the courseof performance of the workplan agreed upon between the Company and WSU shall belong to WSU. WSU shall grant the Company with a worldwidenon-exclusive, perpetual, royalty-free license to university inventions to use and practice patentable inventions. Rights to inventions, improvements or discoveries, whether or not patentable or copyrightable made by at least one employee of WSU and oneemployee of the Company in the course of performance of the workplan agreed upon between the Company and WSU shall belong to WSU and theCompany jointly. Both the Company and WSU will be free to use and license to others the rights of joint inventions for any and all purposeswithout consultation or obligation to the other party. WSU granted the Company a first option to negotiate an exclusive license to use and practiceWSU inventions and its interest in the joint inventions as detailed in the WSU Agreement. Litigation The Company is named as the defendant in a lawsuit, captioned Sabby Healthcare Master Fund Ltd. and Sabby Volatility Warrant Master Fund Ltd.,Plaintiffs, against Microbot Medical Inc., Defendant, in the Supreme Court of the State of New York, County of New York (the “Matter”). Thecomplaint alleged, among other things, that the Company breached multiple representations and warranties contained in the Securities PurchaseAgreement (the “SPA”) related to the June 8, 2017 equity financing of the Company (the “Financing”), of which the Plaintiffs participated. Thecomplaint originally sought rescission of the SPA and return of the Plaintiffs’ $3,375 purchase price with respect to the Financing, and damages inan amount to be determined at trial, but alleged to exceed $1,000. On February 28, 2019, the Court issued its Decision and Order After Trial, finding for the Plaintiffs and ordering that the SPA be rescinded and thatthe parties be restored to the status quo ante. The rescission would require the Plaintiffs to transfer back to the Company the shares they purchased pursuant to the SPA, and the Company toreturn to the Plaintiffs their purchase price of $3,375. As such, the Company recorded a short-term liability of $3,375 with an offset to shareholders’equity as of December 31, 2018 with respect to the court’s decision. On March 27, 2019, the Company filed a Notice of Appeal and an Undertakingto stay execution of the judgment pending appeal. If the Company loses on appeal, it also has to pay interest on the judgment from the judgmentdate at a 9% per annum rate. Tolling and Standstill Agreement On April 4, 2018, the Company entered into a Tolling and Standstill Agreement (the “Tolling Agreement”) with Empery Asset Master, Ltd., EmperyTax Efficient LP, Empery Tax Efficient II LP, and Hudson Bay Master Fund, Ltd., the other investors in the Financing (the “Other Investors”).Pursuant to the Tolling Agreement, among other things, (a) the Other Investors agree not to bring any claims against the Company arising out of theMatter, (b) the parties agree that if the Company reaches an agreement to settle the claims asserted by the Sabby Funds in the above suit, theCompany will provide the same settlement terms on a pro rata basis to the Other Investors, and the Other Investors will either accept same or waiveall of their claims and (c) the parties froze in time the rights and privileges of each party as of the effective date of the Tolling Agreement, until (i) anagreement to settle the suit is executed; (ii) a judgment in the suit is obtained; or (iii) the suit is otherwise dismissed with prejudice. No provision has been recorded with respect to the Tolling Agreement since no settlement was reached with respect to the Matter. F-15  MICROBOT MEDICAL INC.Notes to the consolidated financial statementsU.S. dollars in thousands(Except share and per share data) Agreement with CardioSert Ltd. On January 4, 2018, Microbot Israel entered into an agreement with CardioSert Ltd. (“CardioSert”) to acquire certain patent-protected technologyowned by CardioSert (the “Technology”). Pursuant to the Agreement, Microbot Israel made an initial payment of $50 to CardioSert and had 90-days to elect to complete the acquisition. Atthe end of the 90-day period, at Microbot Israel’s sole option, CardioSert shall assign and transfer the Technology to Microbot Israel and MicrobotIsrael shall pay to CardioSert additional amounts and securities as determined in the agreement. On April 10, 2018, Microbot delivered an Exercise Notice to CardioSert Ltd., notifying it that Microbot elected to exercise the option to acquire theTechnology owned by CardioSert and therefore made an additional cash payment of $250 and 6,738 shares of common stock (100,000 shares ofcommon stock before the Reverse Split) estimated of $74. The agreement may be terminated by Microbot Israel at any time for convenience upon 90-days’ notice. The agreement may be terminated byCardioSert in case the first commercial sale does not occur by the third anniversary of the date of signing of the agreement except if Microbot Israelhas invested more than $2,000 in certain development stages, or the first commercial sale does not occur within 50 months. In each of the abovetermination events, or in case of breach by Microbot Israel, CardioSert shall have the right to buy back the Technology from Microbot Israel for$1.00, upon 60 days prior written notice, but only 1 year after such termination. Additionally, the agreement may be terminated by either party uponbreach of the other (subject to cure). CardioSert agreed to assist Microbot Israel in the development of the Technology for a minimum of one year, for a monthly consultation fee of NIS40,000 covering up to 60 consulting hours per month. NOTE 9 SHARE CAPITAL Each share of the Series A Convertible Preferred Stock, par value $0.01 per share, issued by the Company in December 2016 and in May 2017 (the“Series A Convertible Preferred Stock”), was convertible, at the option of the holder, into 67 shares of common stock (1,000 shares of common stockbefore the Reverse Split), and conferred upon the holder dividend rights on an as converted basis. On December 12, 2018, the Company filed aCertificate of Elimination with respect to its Series A Convertible Preferred Stock and as of December 31, 2018, the Company did not have anySeries A Convertible Preferred Stock issued or outstanding. During the year ended December 31, 2017, the holder of the Series A Convertible Preferred Stock converted 8,990 shares of the Series A ConvertiblePreferred Stock for 605,705 shares (8,990,000 shares before the Reverse Split) of common stock, pursuant to the terms of conversion of the Series AConvertible Preferred Stock. During the year ended December 31, 2018, the holder of the Series A Convertible Preferred Stock converted 4,001 shares of the Series A ConvertiblePreferred Stock for 268,818 shares (4,001,000 shares before the Reverse Split) of common stock, pursuant to the terms of conversion of the Series AConvertible Preferred Stock. As of December 31, 2018, all of the shares of Series A Convertible Preferred Stock were fully converted. See Note 8 – “Commitment s and Contingencies-Agreement with CardioSert Ltd.,” with respect to the issuance of 6,738 shares of the Company’scommon stock Exercise of Warrants On March 2017, an institutional holder exercised, in a cashless transaction, 52 warrants (768 before the split) and 24 shares (359 shares before thesplit) of common stock were issued in connection therewith. Share Capital Developments The authorized capital stock consists of 221,000,000 shares of capital stock, which consists of 220,000,000 shares of common stock and 1,000,000shares of undesignated preferred stock, par value $0.01 (the “Preferred Stock”). As of December 31, 2018, the Company had 3,012,343 shares ofcommon stock issued and outstanding and no shares of Preferred Stock issued or outstanding. On December 27, 2016, the Company exchanged 655,962 shares (9,735,925 shares before the Reverse Split) or rights to acquire shares of itscommon stock, for 9,736 shares of a newly designated class of Series A Convertible Preferred Stock. F-16  MICROBOT MEDICAL INC.Notes to the consolidated financial statementsU.S. dollars in thousands(Except share and per share data) On January 5, 2017, the Company entered into a definitive securities purchase agreement with an institutional investor (the “Purchaser”) for thepurchase and sale of an aggregate of 47,163 shares (700,000 shares before the Reverse Split) of common stock in a registered direct offering for$74.00 per share ($5.00 per share before the Reverse Split) or gross proceeds of $3,500. The Company paid the placement agent a fee of $210 plusreimbursement of out-of-pocket expenses, as well as other offering-related expenses. On June 5, 2017, the Company entered into a Securities Purchase Agreement with certain institutional investors (the “Investors”) providing for theissuance and sale by the Company to the Investors of an aggregate of 252,652 shares (3,750,000 shares before the Reverse Split) of common stock, ata purchase price per share of $40.50 ($2.70 before the Reverse Split). The gross proceeds to the Company was $10,125 before deducting placementagent fees and offering expenses of $922. See Note 8 – “Commitments and Contingencies-Litigation” with respect to certain rescission rightsawarded to two affiliated Investors. Employee Stock Option Grant In September 2014, Microbot Israel’s board of directors approved a grant of 26,906 stock options (403,592 stock options before the Reverse Split)(77,846 stock options as retroactively adjusted to reflect the Merger) to its CEO, through MEDX Venture Group LLC. Each option was exercisableinto an ordinary share, at an exercise price of $12.00 ($0.80 before the Reverse Split) ($4.20 as retroactively adjusted to reflect the Merger). Thestock options were fully vested at the date of grant. On May 2, 2016, Microbot Israel’s board of directors approved a grant of 33,333 stock options (500,000 stock options before the Reverse Split)(96,482 as retroactively adjusted to reflect the Merger) to certain of its employees and directors. Each stock option was exercisable into an ordinaryshare, NIS 0.001 par value, of Microbot Israel, at an exercise price equal to the ordinary share’s par value. The stock options were fully vested at thedate of grant. As a result, the Company recognized compensation expenses in the amount of $675 included in general and administrative expenses.As the exercise price of the stock options is nominal, Microbot Israel estimated the fair value of the options as equal to the Company’s share price of$20.25 ($1.35 before the Reverse Split) ($7.05 as retroactively adjusted to reflect the Merger) at the date of grant. On September 12, 2017, the Company adopted the 2017 Equity Incentive Plan (the “Plan”), which Plan authorizes, among other things, the grant ofoptions to purchase shares of common stock to directors, officers and employees of the Company and to other individuals. On September 14, 2017, the board of directors approved a grant of stock options to purchase an aggregate of up to 120,848 shares (1,812,712 sharesbefore the Reverse Split) of common stock to Mr. Harel Gadot, the Company’s Chairman of the Board, President and CEO, at an exercise price pershare of $15.75 ($1.05 before the Reverse Split). The stock options vest over a period of 3-5 years as outlined in the option agreements. As a result,the Company recognized compensation expenses in the amount of $581 and $156 included in general and administrative expenses for the yearended December 31, 2018 and 2017 respectively. On September 14, 2017, the board of directors approved a grant of stock options to purchase an aggregate of up to 72,508 shares (1,087,627 sharesbefore the Reverse Split) of common stock to Mr. Hezi Himelfarb, the Company’s General Manager, COO and a member of the Board, at an exerciseprice per share of $19.35 ($1.29 before the Reverse Split). The grant was subject to the Israeli Tax Authority’s approval of the plan which occurredon October 14, 2017. In accordance with the option agreement, the options vest for period of 3 years starting from the grand date As a result, theCompany recognized compensation expenses in the amount of $431 and $92 included in research and developing expenses for the year endedDecember 31, 2018 and 2017 respectively. On December 6, 2017, the board of directors approved a grant of 12,698 stock options (190,475 stock options before the Reverse Split) to purchasean aggregate of up to 12,698 shares of common stock to certain of its directors, at an exercise price per share of $15.75 ($1.05 before the ReverseSplit). The stock options vest over a period of 3 years as outlined in the option agreements. As a result, the Company recognized compensationexpenses in the amount of $67 and $5 included in general and administrative expenses for the year ended December 31, 2018 and 2017respectively. On December 28, 2017, the board of directors approved a grant of 66,036 stock options (990,543 stock options before the Reverse Split) to purchasean aggregate of up to 66,036 shares of common stock to certain of its employees, at an exercise price per share of $15.3 ($1.02 before the ReverseSplit). The stock options vest over a period of 3 years as outlined in the option agreements. As a result, the Company recognized compensationexpenses in the amount of $307 and $0 included in general and administrative expenses and research and development expenses for the year endedDecember 31, 2018 and 2017 respectively. F-17  MICROBOT MEDICAL INC.Notes to the consolidated financial statementsU.S. dollars in thousands(Except share and per share data) On November 2017, certain employees and consultant exercised 31,453 options (471,794 options before the Reverse Split) to 31,453 ordinaryshares at exercise price of 0.001 NIS. In February 2018, an employee exercised options to purchase 2,487 shares (37,300 shares before the Reverse Split) of common stock at an exerciseprice of $0.001 per share. On August 13, 2018, the board of directors approved a grant of stock options to purchase an aggregate of up to 10,000 shares (150,000 shares beforethe Reverse Split) of common stock to Mr. Simon Sharon, the company’s CTO, at an exercise price per share of $9 ($0.6 before the Reverse Split).The grant was subject to the Israeli Tax Authority’s approval of the plan which occurred on October 14, 2017. In accordance with the optionagreement, the options vest for period of 3 years starting from the grand date as a result, the Company recognized compensation expenses in theamount of $11 and $0 included in research and development expenses for the year ended December 31, 2018 and 2017 respectively. A summary of the Company’s option activity related to options to employees and directors, and related information is as follows: For the year ended December 31, 2018 Number of StockOptions Weighted AverageExercise Price Aggregate IntrinsicValue Outstanding at beginning of period 414,965 $11.70 $1,859 Granted 10,000 9 - Exercised (2,487) - - Cancelled (24,170) - - Outstanding at end of period 398,308 $11.50 $108 Vested at end of period 245,010 $8.45 $108 For the year ended December 31, 2017(*) Number of StockOptions Weighted AverageExercise Price Aggregate IntrinsicValue Outstanding at beginning of period 174,328 $1.95 $3,739 Granted 272,090 16.50 - Exercised (31,453) - - Cancelled - - - Outstanding at end of period 414,965 $11.70 $1,859 Vested at end of period 142,875 $1.95 $1,375 (*) December 31, 2018 and 2017 option data represents the number of shares adjusted to retroactively reflect the 1:15 Reverse Split effected onSeptember 4, 2018. Refer to Note 1 for further information. The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the fair market value of the commonstock and the exercise price, multiplied by the number of in-the-money stock options on those dates that would have been received by the stockoption holders had all stock option holders exercised their stock options on those dates.) as of December 31, 2018 and December 31, 2017respectively. F-18  MICROBOT MEDICAL INC.Notes to the consolidated financial statementsU.S. dollars in thousands(Except share and per share data) The stock options outstanding as of December 31, 2018 and December 31, 2017, separated by exercise prices, are as follows: Exerciseprice$ Stockoptionsoutstanding as ofDecember 31,2018 Stock optionsoutstanding as ofDecember 31,2017(**) Weighted averageremainingcontractual life –years as ofDecember 31,2018 Weighted averageremainingcontractual life –years as ofDecember 31,2017(**) Stock optionsexercisable asof December31, 2018 Stock optionsexercisable asof December31, 2017(**) 4.20 77,846 77,846 7.00 8.00 77,846 77,846 15.75 133,546 133,546 8.75 9.75 53,752 - 9.00 10,000 - 9.75 - - - 19.35 72,508 72,508 8.75 9.75 29,003 - 15.30 41,866 66,036 9.00 10.00 21,867 - (*) 62,542 65,029 7.75 8.75 62,542 65,029 398,308 414,965 7.29 9.30 245,010 142,875 (*) Less than $0.01.(**) December 31, 2018 and 2017 options data represents the number of shares adjusted to retroactively reflect the 1:15 Reverse Split effected onSeptember 4, 2018. Refer to Note 1 for further information. Compensation expense recorded by the Company in respect of its stock-based employee compensation awards in accordance with ASC 718-10 forthe year ended December 31, 2018 and 2017 was $ 1,399 and $254, respectively. The fair value of the stock options is estimated at the date of grant using Black-Scholes options pricing model with the following weighted-averageassumptions: Year ended December31, 2018 Year endedDecember 31, 2017 Expected volatility 99.4% 122.5%Risk-free interest 2.39% 1.64%Dividend yield 0% 0%Expected life of up to (years) 5.24 6.25 Shares Issued to Service Provider In connection with the Merger, the Company issued an aggregate of 525,706 restricted shares (7,802,639 restricted shares before the Reverse Split)of its common stock to certain advisors. The fair value of the award of approximately $10,000 was estimated based on the share price of the commonstock of $19.2 ($1.28 before the Reverse Split) as of the date of grant. During 2017, the Company issued an aggregate of 8,085 nonrefundable shares (120,000 nonrefundable shares before the Reverse Split) of commonstock to a consultant as part of investor relations services. The Company recorded expenses of approximately $225 with respect to the issuance ofthese shares included in general and administrative expenses. On May 24, 2018 the Company issued an aggregate of 6,738 nonrefundable shares (100,000 nonrefundable shares before the Reverse Split) ofcommon stock to CardioSert as part of certain patent acquisition. The Company recorded expenses of approximately $74 with respect to theissuance of these shares included in research and development expenses. Repurchase of Shares The Company had intended to enter into a definitive agreement with up to three Israeli shareholders, some of whom are directors of the Company,that were former shareholders of Microbot Israel, pursuant to which the Company would repurchase, at a discount on the fair value of the share at thedate of repurchase, up to $500 of common stock held by them, in the aggregate, if and to the extent such shareholders are unable to sell enough oftheir shares to cover certain of their Israeli tax liabilities resulting from the Merger. Such repurchase(s), if any, would occur only after the two-yearanniversary of the Merger. The transaction would have been subject to negotiating final terms and entering into definitive agreements with suchshareholders. F-19  MICROBOT MEDICAL INC.Notes to the consolidated financial statementsU.S. dollars in thousands(Except share and per share data) The Company evaluated whether an embedded derivative that requires bifurcation exists within such shares that may be subject to repurchase. TheCompany concluded the fair value of such derivative instrument would be nominal and, in any case, would represent an asset to the Company as (a)the settlement requires acquiring the shares at a discount on the fair market value of the share at the time of re purchase and in no circumstances theacquisition price will be higher than approximately one dollar per share (representing 25% discount on the fair market value of the share at themerger closing date) and (b) it is assumed that the selling shareholders would use such right as last resort as such repurchase at a discount on the fairmarket value of such shares results in a loss to be incurred by the selling shareholders. In accordance with ASC 480-10-S99-3A (formerly EITF D-98), the Company classified the maximum amount it may be required to pay in the eventthe repurchase right is exercised ($500) as temporary equity. As of December 31, 2018, the Company determined that no obligation remained to enter into any such definitive agreement as the two-yearanniversary of the Merger was in November 2018 and therefore there was no liability for the Company to repurchase any shares from the three Israelishareholders. NOTE 10 BASIC AND DILUTED NET LOSS PER SHARE The basic and diluted net loss per share and weighted average number of shares of common stock used in the calculation of basic and diluted netloss per share are as follows (in thousands, except share and per share data): Yearsended December 31, 2018(*) 2017(*) Net loss attributable to shareholders of the Company $7,240 $7,589 Net loss attributable to shareholders of preferred shares 254 1,582 Net loss used in the calculation of basic net loss per share $6,986 $6,007 Net loss per share $(2.41) $(2.76) Weighted average number of common shares 2,904,253 2,178,827 (*) December 31, 2018 and 2017 shares data represents the number of shares adjusted to retroactively reflect the 1:15 Reverse Split effected onSeptember 4, 2018. Refer to Note 1 for further information. As the inclusion of common stock equivalents in the calculation would be anti-dilutive for all periods presented, diluted net loss per share is thesame as basic net loss per share. NOTE 11 - RESEARCH AND DEVELOPMENT EXPENSES, NET Years ended December 31, 2018 2017 Payroll and related expenses $1,112 $634 Share-based compensation 237 1 Materials 309 266 Patents 526 66 Office and maintenance expenses 53 27 Rent 132 34 Professional services 426 174 Depreciation 25 12 Other 39 65 Less: Grants received from IIA & EC (344) (179) $2,515 $1,100 F-20  MICROBOT MEDICAL INC.Notes to the consolidated financial statementsU.S. dollars in thousands(Except share and per share data) NOTE 12 - GENERAL AND ADMINISTRATIVE EXPENSES Years ended December 31, 2018 2017 Payroll and related expenses $1,136 $1,213 Share-based compensation 1,160 253 Professional services 1,133 1,217 Travel 231 284 Marketing expenses 23 26 Office and maintenance expenses 176 121 Depreciation 29 9 Public and investor relations 339 515 Insurance 225 226 Government fees 191 251 Other 86 52 $4,729 $4,167 NOTE 13 - FINANCE EXPENSES, NET Years ended December 31, 2018 2017 (in thousands) Bank fees and interest $2 $1 Change in fair value of derivative warrant liability (20) (285)Financing loss on debt extinguishment - 2,364 Exchange rate differences 14 5 Revaluation and interest on convertible loans - 237 $(4) $2,322 NOTE 14 TRANSACTIONS AND BALANCES WITH RELATED PARTIES A. Transactions: Year endedDecember 31, 2018 2017 Payroll and related expenses $931 $851 Directors fees and insurance 400 463 Subcontracted work and consulting 0 67 $1,331 $1,381 F-21  MICROBOT MEDICAL INC.Notes to the consolidated financial statementsU.S. dollars in thousands(Except share and per share data) B. Balances: As of December 31, 2018 2017 Other accounts payable $222 $46 $222 $46 NOTE 15 TAXES ON INCOME The Company is subject to income taxes under the Israeli and U.S. tax laws: Corporate tax rates The Company’s Israeli subsidiary is subject to Israeli corporate tax rate of 25% in the year 2016, 24% in 2017 and 23% from 2018. The Company was subject to a blended U.S. tax rate (Federal as well as state corporate tax) of 35% for the year ended December 31, 2018. On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was signed into law in the United States. The Tax Act, among other provisions,introduces changes in the U.S. corporate tax rate, business related exclusions and deductions and credits, and has internationally tax consequencesfor companies that operate international. Most of the changes introduced in the Tax Act are effective beginning on January 1, 2018. The Tax Actintroduces a reduced federal tax rate of 21% from January 1, 2018 and onward. The provisions of the Tax Act did not have a material impact on theCompany. A. For the year ended December 31, 2018, the Company generated net operating losses in Israel of approximately $3,966 which may be carried forwardand offset against taxable income in the future for an indefinite period. For the year ended December 31, 2018, the Company generated net operating losses in the U.S. of approximately $3,274. Net operating losses in theUnited States are available through 2035. Utilization of U.S. net operating losses may be subject to substantial annual limitation due to the “changein ownership” provisions of the Internal Revenue Code of 1986 and similar state provisions. The annual limitation may result in the expiration ofnet operating losses before utilization. B. The Company is still in its development stage and has not yet generated revenues, therefore, it is more likely than not that sufficient taxable incomewill not be available for the tax losses to be utilized in the future. Therefore, a valuation allowance was recorded to reduce the deferred tax assets toits recoverable amounts. As of December 31, 2018 2017 Net operating loss carry-forward $495,844 $488,603 Total deferred tax assets 114,044 112,380 Valuation allowance (114,044) (112,380)Net deferred tax assets $- $- The Company has not determined whether any or all of the above net loss carryforwards will be allowed for future tax deductions, even if theCompany generates revenues. F-22  MICROBOT MEDICAL INC.Notes to the consolidated financial statementsU.S. dollars in thousands(Except share and per share data) Reconciliation of Income Taxes: The following is a reconciliation of the taxes on income assuming that all income is taxed at the ordinary statutory corporate tax rate in Israel andthe effective income tax rate: As of December 31, 2018 2017Net loss as reported in the statements of operations $7,240 $7,589 Statutory tax rate 23% 24%Income Tax under statutory tax rate 1,655 1,821 Change in valuation allowance (1,655) (1,821)Actual income tax $- $- NOTE 16 SUBSEQUENT EVENTS On January 14, 2019, the Company entered into a Securities Purchase Agreement with an accredited institutional investor providing for the issuanceand sale by the Company to the purchaser of an aggregate of (i) 330,000 shares of the Company’s common stock, at a purchase price per share of$6.50 and (ii) 125,323 pre-funded warrants each to purchase one share of common stock, at a purchase price per Pre-Funded Warrant of $6.49. Thegross proceeds to the Company were approximately $3.0 million. The closing of the offering took place on January 15, 2019. The pre-fundedwarrants were exercised in full in January 2019. On January 15, 2019, the Company entered into a Securities Purchase Agreement with certain accredited institutional investors providing for theissuance and sale by the Company to the purchasers of an aggregate of 590,000 shares of the Company’s common stock, at a purchase price per shareof $10.00. The gross proceeds to the Company were approximately $5.9 million. The closing of the offering took place on January 17, 2019. On January 21, 2019, the Company granted options to purchase 2,326 shares of the Company’s common stock to each of the non-employee directorsof the Company. On January 23, 2019 the Company entered into a Securities Purchase Agreement with accredited institutional investors providing for the issuanceand sale by the Company to the purchasers of an aggregate of 250,000 shares of the Company’s common stock, at a purchase price per share of$9.875. The gross proceeds to the Company were approximately $2.47 million. The closing of the offering took place on January 25, 2019. Effective as of February 1, 2019, Yehezkel (Hezi) Himelfarb, a member of the Board of Directors of the Company, and the Company’s ChiefOperating Officer, resigned from all positions with the Company. Effective as of February 1, 2019, Mr. Himelfarb also resigned from his position asGeneral Manager of Microbot Medical Ltd., a wholly-owned subsidiary of the Company. As a result of Mr. Himelfarb providing certain post-resignation transition services to the Company and the terms of his employment agreement, Mr. Himelfarb will continue to be paid his full salaryand certain benefits for six months after resignation. On March 1, 2019, the Company announced the decision of the New York State Supreme Court to rescind the SPA the Company entered into withtwo affiliated investors, in connection with its June 2017 Registered Direct Offering. See Note 8 – “Commitments and Contingencies-Litigation”. F-23   Exhibit 31.1 CERTIFICATION PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Harel Gadot, certify that: 1.I have reviewed this annual report on Form 10-K of Microbot Medical Inc. 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: April 1, 2019 /S/ HAREL GADOT Harel Gadot President and Chief Executive Officer (principal executive officer)   Exhibit 31.2 CERTIFICATION PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, David Ben Naim, certify that: 1.I have reviewed this annual report on Form 10-K of Microbot Medical Inc. 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: April 1, 2019 /S/ DAVID BEN NAIM David Ben Naim Chief Financial Officer (principal financial and accounting officer)   Exhibit 32.1 CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Microbot Medical Inc. (the “Company”) on Form 10-K for the fiscal year ended December 31, 2018 as filedwith the Securities and Exchange Commission on the date hereof (the “Report”), I, Harel Gadot, President and Chief Executive Officer of the Company,certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the company. /s/ HAREL GADOT Harel Gadot President and Chief Executive Officer April 1, 2019   Exhibit 32.2 CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Microbot Medical Inc. (the “Company”) on Form 10-K for the fiscal year ended December 31, 2018 as filedwith the Securities and Exchange Commission on the date hereof (the “Report”), I, David Ben Naim, Chief Financial Officer of the Company, certify,pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the company. /s/ DAVID BEN NAIM David Ben Naim Chief Financial Officer April 1, 2019  

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