Filed pursuant to Rule 424(b)(3)
Registration
Statement No. 333-276487
PROSPECTUS
1,769,966
Shares of Common Stock
This
prospectus relates to the sale or other disposition from time to time of up to 1,769,966 shares of our common stock, $0.01 par value
per share, representing shares issuable upon the exercise of outstanding preferred investment options held by the selling stockholders
named in this prospectus, including their transferees, pledgees, donees or successors. We are not selling any shares of common stock
under this prospectus and will not receive any of the proceeds from the sale of shares of common stock by the selling stockholders.
The
selling stockholders may sell or otherwise dispose of the shares of common stock covered by this prospectus in a number of different
ways and at varying prices. We provide more information about how the selling stockholders may sell or otherwise dispose of their shares
of common stock in the section entitled “Plan of Distribution” beginning on page 66. The selling stockholders will pay all
brokerage fees and commissions and similar expenses. We will pay all expenses (except brokerage fees and commissions and similar expenses)
relating to the registration of the shares with the Securities and Exchange Commission. No underwriter or other person has been engaged
to facilitate the sale of shares of our common stock in this offering.
Our
common stock is listed on the Nasdaq Capital Market under the ticker symbol “MBOT.” On January 24, 2024, the last
reported closing price of our common stock on the Nasdaq Capital Market was $1.28.
Investing
in our common stock involves a high degree of risk. You should review carefully the risks and uncertainties described under the heading
“Risk Factors” beginning on page 11 of this prospectus, and under similar headings in any amendments or supplements to this
prospectus.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The
date of this prospectus is January 25, 2024.
Table
of Contents
ABOUT
THIS PROSPECTUS
You
should rely only on the information that we have provided in this prospectus and any prospectus supplement
that we may authorize to be provided to you. We have not, and the selling stockholders have not, authorized anyone to provide you with
different information. No dealer, salesperson or other person is authorized to give any information or to represent anything not contained
in this prospectus or any prospectus supplement that we may authorize to be provided to you. If anyone provides you with different or
inconsistent information, you should not rely on it. You should assume that the information in this prospectus and any prospectus supplement
is accurate only as of the date on the cover of the document, regardless of the time of delivery of this prospectus or any prospectus supplement
or any sale of a security. Our business, financial condition, results of operations and prospects may have changed since those dates.
We
urge you to carefully read this prospectus and any prospectus supplement, together with the information as described under the heading “Where You Can Find More Information.”
Unless
the context indicates otherwise, as used in this prospectus, the terms “we,” “us,” “our,” the “Company”
and “Microbot” refer to Microbot Medical Inc., including our directly and indirectly wholly owned subsidiary. Unless the
context otherwise requires, the historical business, financial statements and operations of Microbot include Microbot Medical Ltd., an
Israeli corporation (“Microbot Israel”) which became a wholly-owned subsidiary of the Company on November 28, 2016.
We
own or have rights to various U.S. federal trademark registrations and applications, and unregistered trademarks and servicemarks, including
LIBERTY®. All other trade names, trademarks and service marks appearing in this prospectus are the property of their respective
owners. We have assumed that the reader understands that all such terms are source-indicating. Accordingly, such terms, when first mentioned
in this prospectus, appear with the trade name, trademark or service mark notice and then throughout the remainder of this prospectus
without trade name, trademark or service mark notices for convenience only and should not be construed as being used in a descriptive
or generic sense.
RISK
FACTOR SUMMARY
The
following is a summary of the principal risks that could adversely affect our business, operations, and financial results. A more thorough
discussion of these and other risks are listed under the section entitled “Risk Factors” commencing on page 11.
Risks
Relating to Microbot’s Financial Position and Need for Additional Capital
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There
is substantial doubt regarding on our ability to continue as a going concern. |
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We
are subject to litigation, which may divert management’s attention and, in the event
of an adverse judgment or settlement for some or all of the $6,750,000 being litigated, will
have a material adverse effect on our financial condition and our ability to continue our
operations. |
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Microbot
has had no revenue and has incurred significant operating losses since inception and is expected
to continue to incur significant operating losses for the foreseeable future. The Company
may never become profitable or, if achieved, be able to sustain profitability. |
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Microbot
has a limited operating history outside of being a research and development-stage company, which may make it difficult to evaluate
the prospects for the Company’s future viability. |
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Microbot
will need additional funding. If Microbot is unable to raise capital when needed, it could be forced to delay, reduce or eliminate
its product development programs or commercialization efforts. |
Risks
Relating to the Development and Commercialization of Microbot’s Product Candidates
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Unsuccessful
animal studies, clinical trials or procedures relating to product candidates under development could have a material adverse effect
on Microbot’s prospects. |
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Microbot’s
business depends heavily on the success of its sole lead product candidate, the LIBERTY® Endovascular Robotic
Surgical System. If Microbot is unable to commercialize the LIBERTY® Endovascular Robotic Surgical System, or experiences significant delays in doing so, Microbot’s
business will be materially harmed. |
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The
results of Microbot’s research and development efforts are uncertain and there can be no assurance of the commercial success
of Microbot’s product candidates. |
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Microbot’s
ability to expand its technology platforms for other uses may be limited. |
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At
this time, Microbot does not know the extent of the clinical trial that the FDA will require it to submit in support of its future
marketing applications for its LIBERTY® Endovascular Robotic Surgical System product candidate, which creates uncertainty for Microbot as well as the possibility of increased
product development costs and time to market. |
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Microbot’s technology acquired
from CardioSert and part of its One & DoneTM feature is subject to a buy-back
clause which, if triggered, could cause us to lose rights to the technology. |
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Microbot
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 product candidates, if such
trials become necessary. |
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Our
research and development program is dependent on the availability of certain components from suppliers, the delay in delivery of
which could materially adversely affect our ongoing development and ability to manufacture and package devices in the timeframes
currently expected. |
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If
the commercial opportunity for the LIBERTY® Endovascular Robotic Surgical System and any other commercial products that may be developed by Microbot is smaller than Microbot
anticipates, Microbot’s future revenue from the LIBERTY® Endovascular Robotic Surgical System and such other products will be adversely affected and Microbot’s
business will suffer. |
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Customers
will be unlikely to buy the LIBERTY® Endovascular Robotic Surgical System or any other product candidates unless Microbot can demonstrate that they can be produced for
sale to consumers at attractive prices. |
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Microbot
has relied on, and intends to continue to rely on, third-party manufacturers to produce its product candidates. |
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If
Microbot’s product candidates are not considered to be a safe and effective alternative to existing technologies, Microbot
will not be commercially successful. |
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Microbot
may be subject to penalties and may be precluded from marketing its product candidates if Microbot fails to comply with extensive
governmental regulations. |
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If
Microbot is not able to both obtain and maintain adequate levels of third-party reimbursement for procedures involving its product
candidates after they are approved for marketing and launched commercially, it would have a material adverse effect on Microbot’s
business. |
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Clinical
outcome studies for the LIBERTY® Endovascular Robotic Surgical System may not provide sufficient data to make Microbot’s product candidates the standard of care. |
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Microbot
products may in the future be subject to mandatory product recalls that could harm its reputation, business and financial results. |
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If
Microbot’s future commercialized products cause or contribute to a death or a serious injury, Microbot will be subject to Medical
Device Reporting regulations, which can result in voluntary corrective actions or agency enforcement actions. |
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Microbot
could be exposed to significant liability claims if Microbot is unable to obtain insurance at acceptable costs and adequate levels
or otherwise protect itself against potential product liability claims. |
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If
Microbot fails to retain certain of its key personnel and attract and retain additional qualified personnel, Microbot might not be
able to pursue its growth strategy effectively. |
Risks
Relating to International Business
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If
Microbot fails to obtain regulatory clearances in other countries for its product candidates under development, Microbot will not
be able to commercialize these product candidates in those countries. |
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Microbot
operations in international markets involve inherent risks that Microbot may not be able to control. |
Risks
Relating to Microbot’s Intellectual Property
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Microbot
may not meet its product candidates’ development and commercialization objectives in a timely manner or at all. |
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Intellectual
property litigation and infringement claims could cause Microbot to incur significant expenses or prevent Microbot from selling certain
of its product candidates. |
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If
Microbot or TRDF are unable to protect the patents or other proprietary rights relating to Microbot’s product candidates, or
if Microbot infringes on the patents or other proprietary rights of others, Microbot’s competitiveness and business prospects
may be materially damaged. |
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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 in Microbot’s payment of significant
monetary damages or impact offerings in its product portfolios. |
Risks
Relating to Operations in Israel
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Existing
and historical risks relating to our operations in Israel are being exacerbated by the current military actions and operations, and
related activities, that commenced with the surprise attack on the State of Israel on October 7, 2023. |
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Microbot
has facilities located in Israel, and therefore, political conditions in Israel may affect Microbot’s operations and results. |
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Political
relations could limit Microbot’s ability to sell or buy internationally. |
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Israel’s
economy may become unstable. |
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Exchange
rate fluctuations between the U.S. dollar and the NIS currencies may negatively affect Microbot’s operating costs. |
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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 a significant impact on future corporate decisions. |
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Some
of Microbot’s employees are obligated to perform military reserve duty in Israel. |
General
Risks
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The
issuance of shares upon exercise of outstanding warrants and options could cause immediate and substantial dilution to existing stockholders. |
PROSPECTUS
SUMMARY
This
summary highlights certain information about us and this offering contained elsewhere in this prospectus. Because it is only a summary,
it does not contain all of the information that you should consider before investing in shares of our securities and it is qualified
in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus. Before
you decide to invest in our securities, you should read the entire prospectus carefully, including “Risk Factors” beginning
on page 11, and the consolidated financial statements and related notes and the other information included in this prospectus.
Overview
Microbot
is a pre-clinical medical device company specializing in the research, design and development of next generation robotic endoluminal
surgery devices targeting the minimally invasive surgery space. Microbot is primarily focused on leveraging its robotic technologies
with the goal of redefining surgical robotics while improving surgical outcomes for patients.
Using
our LIBERTY® Endovascular Robotic Surgical System, we are developing the first ever fully disposable robot for
various endovascular interventional procedures.
Recent
Developments
Settlement of Lawsuit
As of January 26, 2024 (the “Effective
Date”), we entered into a Settlement Agreement and Release with Empery Asset Master Ltd., Empery Tax Efficient, LP, Empery Tax
Efficient III, LP and Hudson Bay Master Fund Ltd. (collectively, “Plaintiffs”), which resolved and settled the lawsuit captioned
Empery Asset Master Ltd., Empery Tax Efficient, LP, Empery Tax Efficient II, LP, Hudson Bay Master Fund Ltd., Plaintiffs, against
Microbot Medical Inc., Defendant, in the Supreme Court of the State of New York, County of New York (Index No. 651182/2020), pursuant
to which the Plaintiffs alleged, among other things, that we breached multiple representations and warranties contained in the Securities
Purchase Agreement related to our June 8, 2017 equity financing, and fraudulently induced the Plaintiffs into signing the Securities
Purchase Agreement. The complaint sought rescission of the Securities Purchase Agreement and return of the Plaintiffs’ $6.75 million
purchase price with respect to the 2017 financing.
Pursuant to the Settlement Agreement, we agreed
to pay the Plaintiffs $2,154,000 (the “Total Settlement Amount”), consisting of a cash payment covered by our insurance carrier
of $1,100,000 and 1,005,965 shares of restricted common stock which represent the whole number of restricted shares of our common stock
calculated pursuant to the following formula: $1,054,000/[closing price of common stock on the Effective Date * 0.825]. Additionally,
the Plaintiffs and the Company each agreed to fully release the other from all claims arising out of the 2017 financing, the Securities
Purchase Agreement and/or the allegations and claims asserted in the lawsuit, subject to customary carve-outs.
We also agreed, pursuant to a Registration Rights
Agreement, to file a registration statement on Form S-1 or Form S-3 covering the resale of the 1,005,965 shares, within 30 calendar days
following the Effective Date, and to use reasonable best efforts to have such registration statement declared effective by the Securities
and Exchange Commission within 60 days (or, in the event of a “full review” by the Securities and Exchange Commission, within
90 days) following the Effective Date. We shall be required to make cash payments to the Plaintiffs in the event we fail to register
the shares and keep the registration statement effective pursuant to the terms of the Registration Rights Agreement, and if we fail to
remove the restrictions on the shares pursuant to the terms of the Settlement Agreement.
Within three business days of the Plaintiffs’
receipt of the Total Settlement Amount, the Plaintiffs will file a stipulation discontinuing the Lawsuit with prejudice.
Preferred
Investment Option Inducement Transaction
General
The
Company entered into a Preferred Investment Option Exercise and Inducement Letter on December 29, 2023 (the “Inducement Letter”)
with certain selling stockholders (the “Stockholders”), the registered holders of existing (i) Series A preferred investment
options to purchase shares of the Company’s Common Stock at an exercise price of $2.20 per share, issued on October 25, 2022, as
amended on May 24, 2023, (ii) Series C preferred investment options to purchase shares of the Company’s Common Stock at an exercise
price of $2.075 per share, issued on June 6, 2023, and (iii) Series D preferred investment options to purchase shares of the Company’s
Common Stock at an exercise price of $3.19 per share issued on June 26, 2023 (the “Existing Investment Options”), pursuant
to which, at the closing on January 3, 2024 the Stockholders exercised for cash their Existing Investment Options to purchase
an aggregate of 1,685,682 shares of the Company’s Common Stock, at a reduced exercised price of $1.62 per share, in consideration
for the Company’s issuance of new preferred investment option (the “Inducement Investment Option”)
to purchase up to an aggregate of 1,685,682 shares of the Company’s Common Stock at an exercise price of $1.50 per share. The Inducement
Investment Options are immediately exercisable from the date of issuance until 5.5 years following the date of issuance. No other
changes to the Existing Investment Options were made. We received gross proceeds from the transaction of approximately $2.73 million.
The
Company engaged H.C. Wainwright & Co., LLC (“Wainwright”) to act as its exclusive placement agent in connection with
the transactions contemplated by the Inducement Letter pursuant to an engagement letter, dated October 24, 2023 (the “Engagement
Letter”) and paid Wainwright a cash fee equal to 7.0% of the gross proceeds received from the exercise of the Existing Investment
Options as well as a management fee equal to 1.0% of the gross proceeds from the exercise of the Existing Investment Options. The Company
also paid Wainwright $60,000 for non-accountable expenses, and $15,950 for clearing fees. The Company also agreed to issue to Wainwright
or its designees preferred investment options (the “Placement Agent Investment Options,” and such shares of common stock
issuable thereunder, the “Placement Agent Investment Option Shares”) to purchase up to 84,284 shares of common stock which
have the same terms as the Inducement Investment Options except for an exercise price equal to $2.025 per share. Further, pursuant to
the Engagement Letter, Wainwright has a right of first refusal to act as sole book-running manager, sole underwriter or sole placement
agent with respect to any public offering or private placement of equity, equity-linked or debt securities using an underwriter or placement
agent occurring during the twelve-month period ending January 3, 2025.
In
the Inducement Letter, the Company agreed not to effect or agree to effect any variable rate transaction (as defined in the Inducement
Letter) until the six month anniversary of January 3, 2024 (subject to certain exceptions).
Inducement
Investment Option Terms
Each
Inducement Investment Option has an exercise price equal to $1.50 per share. The Inducement Investment Options are immediately exercisable
from the date of issuance until five and one-half years following the date of issuance. The exercise price and number of shares of common
stock issuable upon exercise is subject to appropriate adjustment in the event of stock dividends, stock splits, subsequent rights offerings,
pro rate distributions, reorganizations, a Fundamental Transaction (as defined in the Inducement Investment Options) or similar events
affecting our common stock and the exercise price.
The
Inducement Investment Options are exercisable, at the option of each holder, in whole or in part, by delivering to the Company a duly
executed exercise notice accompanied by payment in full for the number of shares of our common stock purchased upon such exercise (except
in the case of a cashless exercise as discussed below). A holder (together with its affiliates) may not exercise any portion of such
holder’s Inducement Investment Options to the extent that the holder would own more than 4.99% (or, 9.99% at the election of the
holder prior to issuance) of the outstanding common stock immediately after exercise, except that upon at least 61 days’ prior
notice from the holder to the Company, the holder may increase the amount of ownership of outstanding stock after exercising the holder’s
Inducement Investment Options up to 9.99% of the number of shares of the Company’s common stock outstanding immediately after giving
effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Inducement Investment Options.
If,
at the time a holder exercises its Inducement Investment Options, a registration statement registering the resale of the Inducement Investment
Option Shares by the holder under the Securities Act of 1933, as amended, is not then effective or available, then in lieu of making
the cash payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise price, the holder may
elect instead to receive upon such exercise (either in whole or in part) the net number of shares of common stock determined according
to a formula set forth in the Inducement Investment Options.
Except
as otherwise provided in the Inducement Investment Options or by virtue of the holder’s ownership of shares of our common stock,
such holder of Inducement Investment Options does not have the rights or privileges of a holder of our common stock, including any voting
rights, until such holder exercises such holder’s Inducement Investment Options. The Inducement Investment Options provide that
the holders of the Inducement Investment Options have the right to participate in distributions or dividends paid on the Company’s
shares of common stock.
If
at any time the Inducement Investment Options are outstanding, the Company, either directly or indirectly, in one or more related transactions
effects a Fundamental Transaction (as defined in the Inducement Investment Options), a holder of Inducement Investment Options will be
entitled to receive, upon exercise of the Inducement Investment Options, the kind and amount of securities, cash or other property that
such holder would have received had they exercised the Inducement Investment Options immediately prior to the Fundamental Transaction.
As an alternative, and at the Holder’s option in the event of a Fundamental Transaction, exercisable at any time concurrently with,
or within 30 days after, the consummation of the Fundamental Transaction (or, if later, the date of the public announcement of the applicable
fundamental transaction), the Company shall purchase the unexercised portion of the Inducement Investment Option from the holder by paying
to the holder an amount of cash equal to the Black Scholes Value (as defined in the Inducement Investment Option) of the remaining unexercised
portion of the Inducement Investment Option on the date of the consummation of such Fundamental Transaction.
Appointment
of Dr. Juan Diaz-Cartelle as CMO
On
December 1, 2023, Dr. Juan Diaz-Cartelle commenced as our new Chief Medical Officer. As CMO, Dr. Diaz-Cartelle will lead the development
and execution of the clinical strategy of the Company, including its planned clinical trials for the LIBERTY Endovascular Robotic Surgical
System in the U.S., our medical affairs activity, and will be an integral part of the team leading our regulatory process with the FDA
and commercial efforts.
Core-Business
Focus Program
On
May 15, 2023, the Board of Directors of the Company authorized, and the Company commenced, a core-business focus program while the Company
seeks to raise additional capital to continue development of the LIBERTY® Endovascular Robotic Surgical System. This core-business focus program includes
the cessation of research and development activities not related to the LIBERTY® Endovascular Robotic Surgical System, including terminating the Company’s agreement with
CardioSert for that technology, and returning intellectual property relating to the SCS (ViRob) and TipCat to Technion Research and Development
Foundation.
Cost
Reduction Plan
In
addition to the core-business focus program described above, the Board of Directors of the Company authorized, and the Company commenced,
a cost reduction plan while the Company seeks to raise additional capital to continue development of the LIBERTY Endovascular Robotic
Surgical System.
In
May and June 2023 and in January 2024, we raised sufficient capital that, together with the savings from the cost reduction plan, has
enabled us to continue our operations through approximately June 2024, including completion of the V&V study, perform the GLP study
and submit the IDE to the US Food & Drug Administration. We also, as of November 1, 2023, recommenced paying Rachel Vaknin,
our CFO, and Simon Sharon, our CTO and General Manager, their regular salaries and benefits that were previously reduced as a result
of the cost reduction plan, and as of January 1, 2024, recommenced paying Harel Gadot, our CEO, and the independent directors
of our Board their regular salaries and benefits, or fees as the case may be, that were previously reduced as a result of the cost reduction
plan. We continue to seek new sources of capital to stabilize our finances and provide operating runway subsequent to June 2024. In the
event the Company is not successful in raising additional capital by June 2024, or if the results of the V&V study and first-in-human
trials are not promising, the Company may be forced to take more drastic actions to conserve capital or shut down operations entirely.
First-In-Human
Clinical Cases
On January 29,
2024, we submitted an Investigational Device Exemption (IDE) application with the U.S.
Food and Drug Administration, in order to commence its pivotal clinical trial in humans. After initially considering potential
First-In-Human cases in Brazil, by engaging with interventional radiologist Prof. Francisco Cesar Carnevale from University of Sao Paulo
Medical School Hospital, we determined that first-in-human clinical trials in Brazil have similar requirements as in the United States.
Furthermore, we are still in the process of evaluating the potential of utilizing Greece as an option to carry our First-In Human Cases.
However, although we believe Brazil and Greece remain strategically important for commercialization of our LIBERTY®
Endovascular Robotic Surgical System, we decided not to pursue First-In-Human trials or cases
outside of the United States at this time to avoid conflict with our FDA submission process.
Israel-Hamas
War
On
October 7, 2023, the State of Israel, where the Company’s research and development and other operations are primarily based, suffered
a surprise attack by hostile forces from Gaza, which led to the declaration by Israel of the “Iron Swords” military operation.
This military operation and related activities are on-going as of the date of this prospectus.
The
Company has considered various ongoing risks relating to the military operation and related matters, including:
| ● | That
some of the Company’s Israeli subcontractors, vendors, suppliers and other companies
in which the Company relies, are currently only partially active, as instructed by the relevant
authorities; and |
| ● | A
slowdown in the number of international flights in and out of Israel. |
The
Company is closely monitoring how the military operation and related activities could adversely effect its anticipated milestones and
its Israel-based activities to support future clinical and regulatory milestones, including the Company’s ability to import materials
that are required to construct the Company’s devices and to ship them outside of Israel. As of the date of this prospectus, the
Company has determined that there have not been any materially adverse effects on its business or operations, but it continues to monitor
the situation, as any future escalation or change could result in a material adverse effect on the ability of the Company’s Israeli
office to support the Company’s clinical and regulatory activities. The Company does not have any specific contingency plans in
the event of any such escalation or change.
Technological
Platforms
LIBERTY®
On
January 13, 2020, Microbot unveiled what it believes is the world’s first fully disposable robotic system for use in endovascular
interventional procedures, such as cardiovascular, peripheral and neurovascular. The LIBERTY® Endovascular Robotic
Surgical System features a unique compact design with the capability to be operated remotely, reduce radiation exposure and physical
strain to the physician, reduce the risk of cross contamination, as well as the potential to eliminate the use of multiple consumables
when used with its NovaCross platform or possibly other guidewire/microcatheter technologies.
The
LIBERTY® Endovascular Robotic Surgical System
is designed to maneuver guidewires and over-the-wire devices (such as microcatheters) within the body’s vasculature. It eliminates
the need for extensive capital equipment requiring dedicated Cath-lab rooms as well as dedicated staff.
We
believe addressable markets for the LIBERTY® Endovascular Robotic Surgical System are the Interventional Cardiology,
Interventional Radiology and Interventional Neuroradiology markets.
The
unique characteristics of the LIBERTY® Endovascular Robotic Surgical System – compact, mobile, disposable
and remotely controlled - open the opportunity of expanding telerobotic interventions to patients with limited access to life-saving
procedures, such as mechanical thrombectomy in ischemic stroke.
The
LIBERTY® Endovascular Robotic Surgical System
is being designed to have the following attributes:
| ● | Compact
size - Eliminates the need for large capital equipment in dedicated cath-lab rooms with dedicated
staff. |
| ● | Fully
disposable - To our knowledge, the first and only fully disposable, robotic system for endovascular
procedures. |
| ● | One
& Done® – Can be made compatible with Microbot’s NitiLoop’s NovaCross
products or possibly other guidewire/microcatheter technologies, that combines guidewire
and microcatheter into a single device. |
| ● | State
of the art maneuverability - Provides linear and rotational control of its guidewire,
as well as linear and rotational control of a guide catheter, and the linear motion
for an additional “over the wire” device. |
| ● | Compatibility
with a wide range of commercially-available guidewires, microcatheters and guide-catheters. |
| ● | Enhanced
operator safety and comfort – Aims to reduce exposure to ionizing radiation and the
need for heavy lead vests otherwise to be worn during procedures, as well as reducing the
exposure to Hospital Acquired Infections (HAI). |
| ● | Ease
of use - The intuitive remote controls aims to simplify advanced procedures while
shortening the physician’s learning curve. |
| ● | Telemedicine
compatible - Capable of supporting tele-catheterization, carried out remotely by highly trained
specialists. |
On
August 17, 2020, Microbot announced the successful conclusion of its feasibility animal study using the LIBERTY® Endovascular
Robotic Surgical System. The study met all of its end points with no intraoperative adverse events, which supports Microbot’s
objectives to allow physicians to conduct a catheter-based procedure from outside the catheterization laboratory (cath-lab), avoiding
radiation exposure, physical strain and the risk of cross contamination. The study was performed by two leading physicians in the neuro
vascular and peripheral vascular intervention spaces, and the results demonstrated robust navigation capabilities, intuitive usability
and accurate deployment of embolic agents, most of which was conducted remotely from the cath-lab’s control room.
On
December 22, 2021, we entered into a strategic collaboration agreement for technology co-development with Stryker Corporation, acting
through its Neurovascular Division. Pursuant to the agreement, the collaborative development program between Stryker and us aims to integrate
certain of Stryker’s instruments with the LIBERTY® Endovascular Robotic Surgical System to address certain neurovascular
procedures. The activities contemplated by the Agreement shall be specified in one or more development plans derived from the terms and
conditions set forth in the Agreement. The parties conducted discussions in the past to define the development plan, but as of the date of this prospectus
no specific action plan was developed and are considering next steps.
In
December 2021, we achieved design freeze of the LIBERTY® Endovascular Robotic Surgical System.
In
the first quarter of 2022, we filed our pre-submission package for the LIBERTY® Endovascular Robotic Surgical System
with the FDA, addressing the regulatory pathway for the LIBERTY Endovascular Robotic Surgical System. On July 22, 2022, the
Company completed a pre-submission process with the FDA regarding the LIBERTY device. Formal feedback from the FDA included a recommendation
to perform a clinical study and a human factors validation study, to support clearance through the 510(k) notification process.
In
September and October 2022, the Company conducted an animal study at an FDA accredited European-based MedTech research laboratory, which
was performed by a team of seasoned Key Opinion Leaders (KOLs) in the endovascular space, using porcine model. During the animal study,
the physicians conducted 63 navigations to the targeted sites using the investigational LIBERTY Endovascular Robotic Surgical System
and performed an equal number of procedures manually. The LIBERTY Endovascular Robotic Surgical System received positive feedback
from participating physicians, and there were no observable immediate intraoperative adverse events, or harm, to the test subjects. The
report from the animal study, which included histopathology data (the microscopic examination of tissue to study the manifestations of
disease), exhibited equivocal results which were identified as related to unusual physiological animal responses in both manual and robotic
test groups.
On
May 3, 2023, we announced that the LIBERTY® Endovascular Robotic Surgical System has surpassed its 100th catheterization
during multiple pre-clinical studies, with a 95% success rate of reaching pre-determined vascular targets, such as distal branches of
hepatic, gastric, splenic, mesenteric, renal and hypogastric arteries. Moreover, all of the procedures were completed without notable
signs of intraoperative injury.
On
June 29, 2023, we announced the successful completion of a two-day pivotal pre-clinical study held by leading key opinion leaders
at a New York-based research lab, where they performed dozens of catheterizations, including the utilization of the LIBERTY®
Endovascular Robotic Surgical System’s remote operation capabilities, to pre-determined vascular targets, with a 100%
success rate of reaching the intended target with no observable on-site complications.
In October 2023,
we announced the successful initial outcomes from our pivotal pre-clinical study with the LIBERTY Endovascular Robotic Surgical System.
The pivotal study was conducted by three leading interventional radiologists that utilized the LIBERTY Endovascular Robotic Surgical
System to reach a total of 48 animal targets. A total of 6 LIBERTY Systems were used in the study. All 6 LIBERTY®
Endovascular Robotic Surgical Systems performed flawlessly, with 100% usability and technical
success. No acute adverse events or complications were visually observed intra-operative. In December 2023, we announced that the final
histopathology and lab report supplements our previous findings, and that the results of the study will support our IDE submission to
the FDA to commence human clinical study. On January 29, 2024, the Company submitted an Investigational Device Exemption (IDE)
application with the U.S. Food and Drug Administration, in order to commence its pivotal clinical trial in humans.
In January 2024, we added a US-based Clinical Research Associate, as we continue to establish infrastructure for clinical trial execution.
On
October 24 2023, we announced that we received confirmation for the commencement of the process to support our future CE Mark approval,
and to ultimately allow us to market the LIBERTY® Endovascular Robotic Surgical System in Europe as well as other
regions who accept the CE Mark. According to the confirmation, we will commence audits for ISO 13485 certification to ensure compliance
with the Quality Management System (QMS) requirements of the EU Medical Devices Regulation (MDR 2017/745), during the first half of 2024.
We had previously taken the first step to advance our European program by engaging with a leading Notified Body, who recently confirmed
dates for conducting the required audits.
NovaCrossTM
On
October 6, 2022, we purchased substantially all of the assets, including intellectual property, devices, components and product related
materials of Nitiloop Ltd., an Israeli limited liability company. The assets include intellectual property and technology in the field
of intraluminal revascularization devices with anchoring mechanism and integrated microcatheter, and the products or potential products
incorporating the technology owned by Nitiloop and designated by Nitiloop as “NovaCross”, “NovaCross Xtreme”
and “NovaCross BTK” and any enhancements, modifications and improvements. This technology is also expected to be incorporated
in our One & Done feature.
Other
Technologies and Platforms
During
the second and third quarters of 2023, as a result of our core-business focus program and our cost reduction plan, we ceased research
and development activities relating to the technology we acquired from CardioSert, and with respect to our SCS and TipCat platforms.
As a result, we terminated the Company’s agreement with CardioSert for that technology, and returned intellectual property relating
to the SCS (ViRob) and TipCat to Technion Research and Development Foundation.
Corporate
Information
Our
Company was incorporated on August 2, 1988 in the State of Delaware under the name Cellular Transplants, Inc. The original Certificate
of Incorporation was restated on February 14, 1992 to change the name of the Company to CytoTherapeutics, Inc. On May 24, 2000, the Certificate
of Incorporation as restated was further amended to change the name of the Company to StemCells, Inc. On November 28, 2016, C&RD
Israel Ltd., a wholly-owned subsidiary the Company, completed its merger with and into Microbot Medical Ltd., or Microbot Israel, an
Israeli corporation that then owned our assets and operated our current business, with Microbot Israel surviving as a wholly-owned subsidiary
of ours. We refer to this transaction as the Merger. On November 28, 2016, in connection with the Merger, we changed our name from “StemCells,
Inc.” to Microbot Medical Inc., and each outstanding share of Microbot Israel capital stock was converted into the right to receive
shares of our common stock. In addition, all outstanding options to purchase the ordinary shares of Microbot Israel were assumed by us
and converted into options to purchase shares of the common stock of Microbot Medical Inc. 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 cell business were sold on November 29, 2016. On November 29, 2016, our
common stock began trading on the Nasdaq Capital Market under the symbol “MBOT”.
Our
principal executive offices are located at 288 Grove Street, Suite 388, Braintree, MA 02184. Microbot also has an executive office at
6 Hayozma Street, Yoqneam, P.O.B. 242, Israel 2069204. Our telephone number is (781) 875-3605. We maintain an Internet website at www.microbotmedical.com.
The information contained on, connected to or that can be accessed via our website is not part of this prospectus. We have included our
website address in this prospectus as an inactive textual reference only and not as an active hyperlink.
Our
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports filed or
furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, are available free
of charge through the investor relations page of our internet website as soon as reasonably practicable after we electronically file
such material with, or furnish it to, the SEC.
THE
OFFERING
This
prospectus relates to the resale by the selling stockholders identified in this prospectus of up to 1,769,966 shares of our common stock,
as follows:
| ● | 1,685,682
shares of our common stock issuable upon the exercise of outstanding series E preferred investment
options expiring in July 2029, at an exercise price per share of $1.50; |
| ● | 84,284
shares of our common stock issuable upon the exercise of outstanding preferred investment
options expiring in July 2029, at an exercise price per share of $2.025. |
Common stock offered by the selling stockholders
| |
| 1,769,966
shares | |
Common stock outstanding before the offering (1) | |
| 13,392,999
shares | |
Common stock to be outstanding after the offering (2) | |
| 15,162,965
shares | |
Nasdaq Capital Market Symbol | |
| MBOT | |
(1)
|
Based
on the number of shares outstanding as of January 24, 2024. |
(2)
|
Assumes
the exercise of all of the 1,769,966 options held by the selling stockholders, the underlying shares of which are being registered
pursuant to the registration statement of which this prospectus forms a part. Does not include the exercise of any other options
or warrants that may be outstanding or issuable. |
Use
of Proceeds
The
1,769,966 shares of common stock issuable upon the exercise of currently outstanding preferred investment options, in each case that
are being offered for resale by the selling stockholders will be sold for the accounts of the selling stockholders named in this prospectus.
As a result, all proceeds from the sales of the such shares of common stock offered for resale hereby will go to the selling stockholders
and we will not receive any proceeds from the resale of those shares of common stock by the selling stockholders.
We
may receive up to a total of approximately $2.7 million in gross proceeds if all of the 1,769,966 preferred investment options are exercised
by the selling stockholders for cash. However, as we are unable to predict the timing or amount of potential exercises of the options,
we have not allocated any proceeds of such exercises to any particular purpose. Accordingly, all such proceeds, if any would be allocated
to working capital. Pursuant to conditions set forth in the options, the options are exercisable under certain circumstances on a cashless
basis, and should a selling stockholder elect to exercise on a cashless basis we will not receive any proceeds from the sale of common
stock issued upon the cashless exercise of the option.
We
will incur all costs associated with this registration statement and prospectus.
Dividend
Policy
We
have never paid dividends on our capital stock and do not anticipate paying any dividends for the foreseeable future.
Risk
Factors
Investing
in our common stock involves a high degree of risk. Please read the information contained under the heading “Risk Factors”
beginning on page 11 of this prospectus.
RISK
FACTORS
This
prospectus contain forward-looking statements that involve risks and uncertainties.
Our business, operating results, financial performance, and share price may be materially adversely affected by a number of factors,
including but not limited to the following risk factors, any one of which could cause actual results to vary materially from anticipated
results or from those expressed in any forward-looking statements made by us in this prospectus or in other reports, press releases or
other statements issued from time to time. Additional factors that may cause such a difference are set forth elsewhere in this prospectus. Forward-looking statements speak only as of the date of this report.
We do not undertake any obligation to publicly update any forward-looking statements.
Risks
Relating to Microbot’s Financial Position and Need for Additional Capital
There
is substantial doubt regarding our ability to continue as a going concern.
As
stated elsewhere in this prospectus, we have not generated any revenues, have sustained losses and have accumulated a significant deficit
since our inception. Also, we estimate that our cash resources are only sufficient to fund our operations for approximately five
months from the date of this prospectus, or through approximately June 2024.
As a result, our continued existence is dependent upon our ability to obtain additional debt or equity financing and to ultimately become
a commercially viable organization. As of September 30, 2023, the Company had unrestricted cash, cash equivalents and marketable securities
of approximately $8,153,000, excluding restricted cash. This does not include the approximately $2.43 million in net proceeds we received
in our warrant reset transaction that closed on January 3, 2024.
We
will need to raise additional capital to fund our
operations and continue to support our planned development and commercialization activities. There can be no assurance that the additional
necessary debt or equity financing will be available, or will be available on terms acceptable to us, in which case we may be unable
to meet our obligations or fully implement our business plan, if at all, beyond such five month period. Additionally, should we
be unable to realize our assets and discharge our liabilities in the normal course of business, the net realizable value of our assets
may be materially less than the amounts recorded in our financial statements. As a result of the foregoing and our current cash position,
these conditions raise substantial doubt about Microbot’s ability to continue as a going concern beyond approximately the next
five months, which could adversely affect our ability to raise capital, expand our business and develop our planned products.
We
are subject to litigation, which may divert management’s attention and, in the event of an adverse judgment or settlement for some
or all of the $6,750,000 being litigated, have a material adverse effect on our financial condition and our ability to continue our operations.
We
are the defendant in a lawsuit captioned Empery Asset Master Ltd., Empery Tax Efficient, LP, Empery Tax Efficient II, LP, Hudson Bay
Master Fund Ltd., Plaintiffs, against Microbot Medical Inc., Defendant, in the Supreme Court of the State of New York, County of New
York (Index No. 651182/2020). The complaint alleged, among other things, that we breached multiple representations and warranties contained
in the Securities Purchase Agreement (the “SPA”) related to our June 8, 2017 equity financing (the “Financing”),
of which the Plaintiffs participated. The complaint seeks rescission of the SPA and return of the Plaintiffs’ $6.75 million purchase
price with respect to the Financing.
Management
is unable to assess the likelihood that we would be successful in any trial with respect to the SPA or the Financing, having previously
lost another lawsuit with respect to the Financing. Accordingly, no assurance can be given that if we go to trial and ultimately lose,
or if we decide to settle at any time, such an adverse outcome would not be material to our consolidated financial position. Additionally,
in any such case, we will likely be required to use available cash, or the proceeds from future offerings, towards the rescission or
settlement, that we otherwise would have used to build our business and develop our technologies into commercial products. In such event,
we would be required to raise additional capital sooner than we otherwise would, of which we can give no assurance of success, or delay,
curtail or cease the commercialization of some or all of our product candidates.
Microbot
has had no revenue and has incurred significant operating losses since inception and is expected to continue to incur significant operating
losses for 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
continues its preclinical and clinical development programs for its existing product candidates, primarily the LIBERTY® Endovascular
Robotic Surgical System; its research and development of any other future product candidates; and all other work necessary to obtain
regulatory clearances or approvals for its product candidates in the United States and other markets. 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 the LIBERTY® Endovascular Robotic Surgical System or other future product
candidates are approved or cleared for commercial distribution, engaging in appropriate sales and marketing activities that, together
with anticipated general and administrative expenses, will likely result in Microbot 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 commercialize
the LIBERTY® Endovascular Robotic Surgical System or other future product candidates. Microbot does not currently
have the required approvals or clearances to market or test in humans the LIBERTY® Endovascular Robotic Surgical System
or any other future product candidates and Microbot may never receive them. Microbot does not anticipate generating significant revenues
until it can successfully develop, commercialize and sell products derived from its product pipeline, of which Microbot 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 it will achieve profitability, if ever. Failure to become and remain profitable would depress the value of the Company and could
impair its ability to raise capital, which may force the Company to curtail or discontinue its research and development programs and/or
day-to-day operations. Furthermore, there can be no assurance that profitability, if achieved, can be sustained on an ongoing basis.
Microbot
has a limited operating history outside of being a research and development-stage company, 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
and prospects of Microbot must be considered in the light of the potential problems, delays, uncertainties and complications that may
be encountered in connection with a newly established business. The risks include, but are not limited to, the possibility that Microbot
will not be able to develop functional and scalable products, or that although functional and scalable, its products will not be economical
to market; that its competitors hold proprietary rights that may preclude Microbot from marketing such products; that its competitors
market a superior or equivalent product; that Microbot is not able to upgrade and enhance its technologies and products to accommodate
new features and expanded service offerings; or the failure to receive necessary regulatory clearances or approvals for its products.
To successfully introduce and market its products at a profit, Microbot must establish brand name recognition and competitive advantages
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 its
technologies, developing and securing its technologies, raising capital, developing regulatory and reimbursement strategies for its product
candidates, preparing for pre-clinical and clinical trials of product candidates from time to time and, most recently, commencing pre-commercialization
planning for the LIBERTY® Endovascular Robotic Surgical System. Microbot has not yet demonstrated its ability to
successfully complete development of any product candidate, obtain marketing clearance or approval, manufacture a commercial-scale product
or arrange for a third party to do so on its behalf, or conduct sales and marketing activities necessary for successful product commercialization.
Consequently, any predictions made about Microbot’s future success or viability may not be as accurate as they could be if Microbot
had a longer operating history.
Microbot
will need additional funding. If Microbot is unable to raise capital when needed, it could be forced to delay, reduce or eliminate its
product development programs or commercialization efforts.
To
date, Microbot has funded its operations primarily through offerings of debt and equity securities and grants. Microbot does not know
when, or if, it will generate any revenue, but does not expect to generate significant revenue unless and until it obtains regulatory
clearance or approval of and commercializes one of its current or future product candidates. It is anticipated that the Company will
continue to incur losses for the foreseeable future, and that losses will increase as it continues the development of, and seeks regulatory
review of, its product candidates, and begins to commercialize any approved or cleared products following a successful regulatory review.
Microbot
expects the research and development expenses of the Company to continue to increase substantially in future periods as it conducts pre-clinical
studies in large animals and potentially clinical trials for the LIBERTY® Endovascular Robotic Surgical System,
and especially if it initiates additional research programs for future product candidates. This is the case even with the recent suspension
and termination of the research and development programs relating to the SCS device, One & Done and other programs. In addition,
if the Company obtains marketing clearance or approval for any of its product candidates, it expects to incur significant commercialization
expenses related to product manufacturing, marketing and sales. Microbot may also require additional funds for operations if it loses
its current lawsuit with Empery and Hudson Bay, discussed in great detail elsewhere in this prospectus. Furthermore, Microbot incurs substantial costs associated with operating as a public company in the
United States. Accordingly, the Company may need to obtain substantial additional funding in connection with its continuing operations
through its projected profitability, of which it can give no assurance of success. If the Company is unable to raise capital when needed
or on attractive terms, it could be forced to delay, reduce or eliminate its research and development programs or any future commercialization
efforts.
The
Company intends to continue to opportunistically strengthen its balance sheet by raising additional funds through equity offerings, including
possibly through its existing but currently suspended At-the-Market offering, or otherwise in order to meet expected future liquidity
needs, including the introduction of the LIBERTY® Endovascular Robotic Surgical System. 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 Empery and Hudson Bay; |
|
|
|
|
● |
the
costs, design, duration and any potential delays of the clinical trials that could be conducted at the FDA’s request using
Microbot’s product candidates; |
|
|
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|
● |
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; |
|
|
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|
● |
the
costs to secure or establish sales, marketing and commercial manufacturing capabilities or arrangements with third parties regarding
same; |
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|
● |
the
Company’s need and ability to hire additional management and scientific and medical personnel; and |
|
|
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|
● |
the
costs to operate as a public company in the United States. |
Risks
Relating to the Development and Commercialization of Microbot’s Product Candidates
Unsuccessful
animal studies, clinical trials or procedures relating to product candidates under development could have a material adverse effect on
Microbot’s prospects.
The
regulatory approval process for new products and new indications for existing products requires extensive data and procedures, including
the development of regulatory and quality standards and, potentially, certain clinical studies. Unfavorable or inconsistent data from
current or future clinical trials or other studies conducted by Microbot or third parties, or perceptions regarding such data, could
adversely affect Microbot’s ability to obtain necessary device clearance or approval and the market’s view of Microbot’s
future prospects.
Failure
to successfully complete the studies or trials in a timely and cost-effective manner could have a material adverse effect on Microbot’s
prospects with respect to the LIBERTY® Endovascular Robotic Surgical System or other product candidates. 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 be completed in a timely or cost-effective manner or result in a commercially viable product. Clinical trials or studies
may experience significant setbacks even if earlier preclinical or animal studies have shown promising results. Furthermore, preliminary
results from clinical trials may be contradicted by subsequent clinical analysis. Results from clinical trials may also not be supported
by actual long-term studies or clinical experience. If preliminary clinical results are later 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
face unacceptable health risks. The FDA may disagree with our interpretation of the data from our clinical trials, or may find the clinical
trial design, conduct or results inadequate to demonstrate safety and effectiveness of the product candidate. The FDA may also require
additional pre-clinical studies or clinical trials which could further delay approval of our product candidates.
Microbot’s
business depends heavily on the success of its sole lead product candidate, the LIBERTY® Endovascular Robotic Surgical
System. If Microbot is unable to commercialize the LIBERTY® Endovascular Robotic Surgical System, or experiences
significant delays in doing so, Microbot’s business will be materially harmed.
Generally,
after all necessary clinical and performance data supporting the safety and effectiveness of the LIBERTY® Endovascular
Robotic Surgical System, or any other product candidate, are collected, Microbot must still obtain FDA clearance or approval to market
the system and those regulatory processes can take several months to several years to be completed. Therefore, Microbot’s
ability to generate product revenues will not occur for at least the next few years, if at all, and will depend heavily on the successful
commercialization of the LIBERTY® Endovascular Robotic Surgical System, or any of our other product candidates
from time to time. The success of commercializing any of our product candidates, include the LIBERTY® Endovascular
Robotic Surgical System, will depend on a number of factors, including the following:
|
● |
our
ability to obtain additional capital; |
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|
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successful
completion of animal studies and, if necessary, human clinical trials and the collection of sufficient data to demonstrate that the
device is safe and effective for its intended use; |
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receipt
of marketing approvals or clearances from the FDA and other applicable regulatory authorities; |
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establishing
commercial manufacturing arrangements with one or more third parties; |
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obtaining
and maintaining patent and trade secret protections; |
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protecting
Microbot’s rights in its intellectual property portfolio; |
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establishing
sales, marketing and distribution capabilities; |
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generating
commercial sales, if and when approved, whether alone or in collaboration with other entities; |
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acceptance
of our product candidates, if and when commercially launched, by the medical community, patients and third-party payors; |
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effectively
competing with existing and competitive products on the market and any new competing products that may enter the market; and |
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maintaining
quality and an acceptable safety profile of our products following clearance or approval. |
We
recently suspended our research and development programs for all of our product candidates and platforms other than the LIBERTY®
Endovascular Robotic Surgical System as a result of, among other things, some of the above factors, and our short and medium
term success is no longer tied to multiple product candidates but rather just the LIBERTY device. 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 successfully commercialize
the LIBERTY® Endovascular Robotic Surgical System or any other product candidate, which would materially harm its
business.
The
results of Microbot’s research and development efforts are uncertain and there can be no assurance of the commercial success of
Microbot’s product candidates.
Microbot
believes that its success will depend in part on its ability to expand its product offerings and continue to improve its existing product
candidates in response to changing technologies, customer demands and competitive pressures. As such, Microbot expects to continue dedicating
significant resources in research and development. The product candidates and services being developed by Microbot may not be technologically
successful. In addition, the length of Microbot’s product candidates and service development cycle may be greater than Microbot
originally expected.
Microbot’s
ability to expand its technology platforms for other uses may be limited.
Microbot
has decided to focus on expanding all of its technology platforms for use in segments of the endovascular, cardiovascular and neurosurgery
markets. Microbot’s ability to expand its technology platforms for use in such markets will be limited by its ability to develop
and/or refine the necessary technology, obtain the necessary regulatory approvals for their use on humans, and the marketing of its products
and otherwise obtaining market acceptance of its product in the United States and in other countries.
At
this time, Microbot does not know the extent of the clinical trial that the FDA will require it to submit in support of its future marketing
applications for the LIBERTY® Endovascular Robotic Surgical System, which creates uncertainty for Microbot as well
as the possibility of increased product development costs and time to market.
Microbot
has identified a predicate device for the LIBERTY® Endovascular Robotic Surgical System, which it intended to use
in its 510(k) application. However, there is no guarantee that the FDA will agree with the Company’s determination or that the
FDA would accept the predicate device that Microbot intends to submit in its 510(k). The FDA also may request additional data in response
to a 510(k) or require Microbot to conduct further testing or compile more data in support of its 510(k). It is unclear at this time
whether and how various activities initiated or announced by the FDA to modernize the U.S. medical device regulatory system could affect
the marketing pathway or timeline for our product candidate, given their nature.
The
FDA requires clinical data to be submitted as part of the LIBERTY® Endovascular Robotic Surgical System marketing
submission, any type of clinical study performed in humans will require the investment of substantial expense, professional resources
and time. In order to conduct a clinical investigation involving human subjects for the purpose of demonstrating the safety and effectiveness
of a medical device, a company must, among other things, apply for and obtain Institutional Review Board, or IRB, approval of the proposed
investigation. In addition, the sponsor of the investigation must also submit and obtain FDA approval of an Investigational Device 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
any new devices Microbot intends to market in the United States in the future. Moreover, the timing of the commencement, continuation
and completion of any future clinical trial may be subject to significant delays attributable to various causes, including scheduling
conflicts with participating clinicians and clinical institutions, difficulties in identifying and enrolling patients 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
trial at 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 LIBERTY® Endovascular Robotic
Surgical System or any other product candidate would significantly increase the costs associated with developing and commercializing
the product and delay the timing of U.S. regulatory authorization. The current uncertainty regarding near-term medical device regulatory
changes by the FDA could further affect our development plans for the LIBERTY® Endovascular Robotic Surgical System
or any other product candidate, depending on their nature, scope and applicability. Microbot and its business, financial condition
and operating results could be materially and adversely affected as a result of any such costs, delays or uncertainty.
Microbot’s
technology acquired from CardioSert and part of its One & DoneTM feature is subject to a buy-back clause which, if triggered,
could cause us to lose rights to the technology.
Pursuant
to the agreement with CardioSert we entered into in January 2018 to acquire its technology, we are required to meet certain commercialization
deadlines or CardioSert may terminate the agreement and buy back the technology for $1.00, subject to certain limited exceptions. One
of the exceptions in the agreement is if “The First Commercial Sale does not occur within 50 months of the Effective Date”
of the contract. 50 months have expired in 2022 and Microbot did not meet the commercialization deadlines.
Our
failure to meet the applicable commercialization deadline could therefore result in the sale back of the technology to CardioSert. In
addition, as a result of our recently enacted core-business focus program and cost reduction plan, we terminated the January 2018 agreement
with CardioSert effective as of August 17, 2023, which could result in the technology being re-acquired by Cardiosert Ltd. for nominal
consideration. Although we have not yet been notified of any such election, and any such sale would materially adversely affect our ability
to develop and commercialize, or materially delay the development and commercialization of, our One & Done feature, as, if and when
we restart that feature with our Nitiloop technology.
Microbot
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 product candidates, 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. Microbot will depend upon its ability and/or the ability of future collaborators, contract research organizations, clinical
trial sites and investigators to successfully design, initiate, conduct and 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 could significantly delay or materially impair Microbot’s ability to complete those clinical trials and/or obtain regulatory
clearance or approval of its product candidates and, consequently, could delay or materially impair its ability to generate revenues
from the commercialization of those products.
Our
research and development program is dependent on the availability of certain components from suppliers, the delay in delivery of which
could materially adversely affect our ongoing development and ability to manufacture and package devices in the timeframes currently
expected.
Our
research and development program is dependent on the availability of the component parts that we use to manufacture our LIBERTY®
Endovascular Robotic Surgical System and packaging. Our business, therefore, could be adversely impacted by factors affecting
our suppliers (such as the lack of employees due to military actions, a work stoppage or strike by our suppliers’ employees or
the failure of our suppliers to provide materials of the requisite quality).
As a result of the Israel-Hamas
war, we are currently experiencing delays in the supply for certain components from Israeli-based vendors. We cannot determine with any
certainty as to whether these shortages will continue and if so, for how long. Consequently, our operational and development timeline
could be adversely affected if we were unable to obtain these components from our suppliers in the quantities or based on the timeline
we require. Although we believe in most cases that we could identify alternative suppliers, we can give no assurance that our research
and development timelines will not be delayed while we identify and retain replacement suppliers. Accordingly, any material delay in
delivery of any component parts or packaging could materially adversely affect our ability to obtain FDA approval and otherwise meet
our expected timeframes.
If
the commercial opportunity for the LIBERTY® Endovascular Robotic Surgical System and any other commercial products
that may be developed by Microbot is smaller than Microbot anticipates, Microbot’s future revenue from the LIBERTY®
Endovascular Robotic Surgical System 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 profitability and growth. It is difficult to predict the penetration, future growth rate or size of the market for Microbot’s
product candidate.
The
commercial success of the LIBERTY® Endovascular Robotic Surgical System or any other product candidates will require
broad acceptance of the devices by the doctors and other medical professionals who specialize in the procedures targeted by each device,
a limited number of whom may be able to influence device selection and purchasing decisions. If Microbot’s technologies are not
broadly accepted and perceived as having significant advantages over existing medical devices, then it will not meet its business objectives.
Such perceptions are likely to be based on a determination by medical facilities and physicians that Microbot’s product candidates
are safe and effective, are cost-effective in comparison to existing devices, and represent acceptable methods of treatment. Microbot
cannot assure that it will be able to establish the relationships and arrangements with medical facilities and physicians necessary to
support the market uptake of its product candidates. In addition, its competitors may develop new technologies for the same markets Microbot
is targeting that are more attractive to medical facilities and physicians. If doctors and other medical professionals do not consider
Microbot product candidates to be suitable for application in the procedures we are targeting 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 LIBERTY® Endovascular Robotic Surgical System or any other product candidates 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 LIBERTY® Endovascular Robotic Surgical System
and first generation versions of other current and former product candidates. Consequently, Microbot has no experience in manufacturing
its product candidates, and intends to manufacture its product candidates through third-party manufacturers. Microbot can offer no assurance
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 its manufacturing partners are successful in developing such manufacturing capability and quality processes,
including the assurance of GMP-compliant device manufacturing, there can be no assurance that Microbot can timely meet its product commercialization
schedule or the production and delivery requirements of potential customers. A failure to develop such manufacturing processes and capabilities
could have a material adverse effect on Microbot’s business and financial results.
The
proposed price of Microbot’s product candidates, once approved for sale, will be dependent on material and other manufacturing
costs. Microbot cannot offer any assurances that its manufacturing partner will be able manufacture its product candidates at a competitive
price or that achieving cost reductions will 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 it expects 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 future commercial products itself, including:
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limitations
on supply availability resulting from capacity, internal operational problems or scheduling constraints of third parties; |
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potential
regulatory non-compliance or other violations by the third-party manufacturer that could result in quality assurance; |
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the
possible breach of manufacturing agreements by third parties because of various factors beyond Microbot’s control; and |
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the
possible termination or non-renewal of manufacturing agreements by third parties for various reasons beyond Microbot’s control,
at a time that is costly 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 own manufacturing capabilities, which could delay or impair Microbot’s ability to obtain regulatory clearance or approval for
its product candidates and could substantially increase its costs or deplete profit margins, if any. If Microbot does find replacement
manufacturers, Microbot may not be able to enter into agreements with them on terms and conditions favorable to it and there could be
a substantial delay before new facilities could be qualified and registered with 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 commercially successful.
The
LIBERTY® Endovascular Robotic Surgical System and our other product candidates 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 regarding efficacy, safety and clinical
outcomes associated with the use of the LIBERTY® Endovascular Robotic Surgical System or our other product candidates.
Any data that is generated in the future may not be positive or may not support the product candidates’ regulatory dossiers, which
would negatively affect market acceptance and the rate at which its product candidates are adopted. Equally important will be physicians’
perceptions of the safety of Microbot’s product candidates because Microbot’s technologies are relatively new. 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 become widely adopted.
Market
acceptance of Microbot’s product candidates will also be affected by other factors, including Microbot’s ability to convince
key opinion leaders to provide recommendations regarding its product candidates; convince distributors that its technologies are attractive
alternatives to existing and competing technologies; supply and service sufficient quantities of products directly or through marketing
alliances; and price products competitively in light of the current macroeconomic environment, which is increasingly price sensitive.
Microbot
may be subject to penalties and may be precluded from marketing its product candidates if Microbot fails to comply with extensive governmental
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-novo premarket submission to the FDA. However, the FDA has not made any determination about whether Microbot’s medical product
candidates are Class II medical devices and may disagree with that classification. If the FDA determines that Microbot’s product
candidates should be reclassified as Class III medical devices, Microbot could be precluded from marketing the devices for clinical use
within the United States for months, years or longer, depending on the specifics of the change in classification. Reclassification of
any of Microbot’s product candidates as Class III medical devices could significantly increase Microbot’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
regulatory requirements significantly increase Microbot’s production costs, which may prevent Microbot from offering products within
the price range and in quantities necessary to meet market demands. If Microbot or one of its third-party manufacturers changes an approved
manufacturing process, the FDA may need to review the process before it may be used. Failure to comply with applicable pre-market and
post-market regulatory requirements could subject Microbot to enforcement actions, including warning letters, fines, injunctions and
civil penalties, recall or seizure of its products, operating restrictions, partial suspension or 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 they are 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
agencies worldwide, private insurance companies, and managed care organizations. The manner and level of reimbursement in any given case
may depend on the site of care, the procedure(s) performed, the final patient diagnosis, the device(s) utilized, available budget, or
a combination of these factors, and coverage and payment levels are determined at each payor’s discretion. The coverage policies
and reimbursement levels of these third-party payors may impact the decisions 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 Microbot products 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 bill various third-party payors, such as the Centers for Medicare & Medicaid Services, or CMS, which administers the Medicare
program through Medicare Administrative Contractors, and other government health care programs and private insurance plans, for the healthcare
products and services provided to their patients. The process involved in applying for coverage and incremental reimbursement from CMS
is lengthy and expensive. Moreover, many private payors look to CMS in setting their reimbursement policies and amounts. If CMS or other
agencies limit coverage for procedures utilizing Microbot’s products or decrease or limit reimbursement payments for doctors and
hospitals utilizing Microbot’s products, this may affect coverage and reimbursement determinations 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 absorb the 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 which medical institutions would consider insurers’ payment levels adequate to cover the cost
of its products. Failure by hospitals and surgeons to receive an amount that they consider to be adequate reimbursement for procedures
in which Microbot products are used could deter them from purchasing Microbot products 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 are approved. 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 of payment bundling initiatives, and other such methods that shift medical cost
risk to providers) that may potentially impact coverage and/or payment levels for 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.
Clinical
outcome studies for the LIBERTY® Endovascular Robotic Surgical System may not provide sufficient data to make such
product candidates the standard of care.
Microbot’s
business plan with respect to the LIBERTY® Endovascular Robotic Surgical System relies on the broad adoption by
surgeons of the products for their respective planned applications.
Clinical
studies may not show an advantage in LIBERTY based procedures in a timely manner, or at all, and outcome studies have not been designed
at this time, and may be too large and too costly for Microbot to conduct. Both situations could prevent broad adoption of the LIBERTY®
Endovascular Robotic Surgical System 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
material deficiencies 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 be based on an FDA finding that there is a reasonable probability that the device would cause serious injury
or death, although in most cases this mandatory recall authority is not used because manufacturers typically initiate a voluntary recall
when a device violation is discovered. In addition, foreign governmental 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 by Microbot or one of its distributors
could occur as a result of component failures, manufacturing errors, design or labeling defects or other deficiencies and issues. Recalls
of any Microbot products would divert managerial and financial resources and have an adverse effect on Microbot’s financial condition
and results of operations, and any future recall announcements could harm Microbot’s reputation with customers and negatively affect
its sales. In addition, the FDA could take enforcement action, including any of the following sanctions for failing to timely report
a recall to the FDA:
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untitled
letters, warning letters, fines, injunctions, consent decrees and civil penalties; |
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detention
or seizure of Microbot products; |
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operating
restrictions or partial suspension or total shutdown of production; |
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refusing
or delaying requests for 510(k) clearance or premarket approval of new products or modified products; |
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withdrawing
510(k) clearances or other types of regulatory authorizations -that have already been granted; |
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refusing
to grant export approval for Microbot products; or |
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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 Reporting regulations, 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
or contributed 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 to death or serious injury. In addition, all manufacturers placing medical devices in European Union markets are
legally bound to report any serious or potentially 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
Device Reporting (MDR) regulations. Any adverse event involving a Microbot product could result in future voluntary corrective actions,
such as product actions or customer notifications, or agency actions, such as inspection, mandatory recall or other enforcement action.
Any corrective action, whether voluntary or involuntary, 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
otherwise protect 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 is expensive and may not be available on acceptable terms, if at all. A successful product liability claim or product
recall could inhibit or prevent the successful commercialization of Microbot’s products, cause a significant financial burden on
Microbot, or both, which in any case could have a material adverse effect on Microbot’s business and financial condition.
If
Microbot fails to retain certain of its key personnel and attract and retain additional qualified personnel, Microbot might not be able
to pursue its growth strategy effectively.
Microbot
is dependent on its senior management, in particular Harel Gadot, Microbot’s Chairman, President and Chief Executive Officer, and
Simon Sharon, its General Manager and Chief Technology Officer. Although Microbot believes that its relationship with members of its
senior management is positive, there can be no assurance that the services of any of these individuals will continue to be available
to Microbot in the future. In particular, as part of our cost reduction program, we reduced all executive officers’ salaries by
between 30-50%. Although the salaries of all executives have been reinstated we can give no assurance that any of our executives will
remain with our company in light of such reductions. 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 for the succession of senior management, when necessary. Competition for qualified
personnel in the medical device industry is intense and finding and retaining qualified personnel with experience in the industry is
very difficult. Microbot believes that there are only a limited number of individuals with the requisite skills to serve in key positions
at Microbot, particularly in Israel, and it competes for key personnel with other medical equipment and technology companies, 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 to commercialize 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 such countries.
In
Europe, these regulations, including the requirements for approvals, clearance or grant of Conformité Européenne, or CE,
Certificates of Conformity and the time required for regulatory review, vary from country to country. Failure to obtain regulatory approval,
clearance or CE Certificates of Conformity (or equivalent) 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. The time required to obtain approval or CE Certificate of Conformity
in other countries might differ from that required to obtain FDA clearance. The regulatory approval or CE marking process in other countries
may include all of the risks detailed above regarding FDA clearance in the United States. Regulatory approval or the CE marking of a
product candidate in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval
or a CE Certificate of Conformity in one country may negatively impact the regulatory process in others. Failure to obtain regulatory
approval or a CE Certificate of Conformity in other countries or any delay or setback in obtaining such approval could have the same
adverse effects described above regarding FDA clearance in the United States.
Although
we engaged with a leading notified body to secure a CE Mark for sales of the LIBERTY® Endovascular Robotic Surgical
System in Europe, it is not yet certain as to when we will secure the CE Mark, and we cannot be certain that we will be successful
in complying with the requirements of the CE Certificate of Conformity and receiving a CE Mark for the LIBERTY® Endovascular
Robotic Surgical System or other product 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
the submission of an application to the Ministry of Health Medical Institutions and Devices Licensing Department, or AMAR. If the application
includes a certificate issued by a competent authority of a “recognized” country, which includes Australia, Canada, the European
Community Member States, Japan or the United States, the registration process is expedited, but is generally still expected to take 6
to 9 months for approval. If certification from a recognized country is not available, the registration process takes significantly longer
and a license is rarely issued under such circumstances, as the MOH may require the presentation of significant additional clinical data.
Once granted, a license (marketing authorization) for a medical device is valid for five years from the date 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 successful in 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 or may not be able to control, including:
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adverse
macroeconomic conditions affecting geographies where Microbot intends to do business; |
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closing
of international borders, including as a result of biohazards or pandemics; |
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foreign
currency exchange rates; |
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political
or social unrest or economic instability in a specific country or region; |
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higher
costs of doing business in certain foreign countries; |
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infringement
claims on foreign patents, copyrights or trademark rights; |
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difficulties
in staffing and managing operations across disparate geographic areas; |
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difficulties
associated with enforcing agreements and intellectual property rights through foreign legal systems; |
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trade
protection measures and other regulatory requirements, which affect Microbot’s ability to import or export its product candidates
from or to various countries; |
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adverse
tax consequences; |
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unexpected
changes in legal and regulatory requirements; |
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military
conflict, terrorist activities, natural disasters and medical epidemics; and |
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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 to counter 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 significant portion 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 in the future use financial instruments, such as forward foreign currency contracts,
in its management of foreign currency exposure. These contracts would primarily 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 loss in the event of non-performance by
the counterparties of these contracts. In addition, these financial instruments may not adequately manage Microbot’s foreign currency
exposure. Microbot’s results of operations could be adversely affected if Microbot is unable to successfully manage currency fluctuations
in the future.
Risks
Relating to Microbot’s Intellectual Property
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
toward developing 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 delayed and potential purchasers of its initial commercialized products may decline to purchase such
products or may opt to pursue alternative products, which would materially harm its business.
Intellectual
property litigation and infringement claims could cause Microbot to incur significant expenses or prevent Microbot from selling certain
of its product candidates.
The
medical device industry is characterized by extensive intellectual property litigation. From time to time, Microbot might be the subject
of claims by third parties of potential infringement or misappropriation. Regardless of outcome, such claims are expensive to defend
and divert the time and effort of Microbot’s management and operating personnel from other business issues. A successful claim
or claims of patent or other intellectual property infringement against Microbot could result in its payment of significant monetary
damages and/or royalty payments or negatively impact its ability to sell current or future products 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 on the 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 remaining TRDF licensed patents that relate to the LIBERTY technology, 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 any pending 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 the patent rights granted will provide competitive advantages to Microbot. Microbot’s competitors have developed and may
continue to develop and obtain patents 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.
Adverse
outcomes in current or future legal disputes regarding patent and other intellectual property rights could result in the loss of Microbot’s
intellectual property rights, subject Microbot to significant liabilities to third parties, require Microbot to seek licenses from third
parties on terms that may not be reasonable or favorable to Microbot, prevent Microbot from manufacturing, importing or selling its product
candidates, or compel Microbot to redesign its product 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’s business, 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 remaining licensed patents
from TRDF. However, there may be situations in which Microbot will not have control over the prosecution, maintenance or enforcement
of the patents that Microbot licenses, or may not have sufficient ability to consult and input into the patent prosecution and maintenance
process with respect to such patents. If Microbot does not control the patent prosecution and maintenance process with respect to the
remaining TRDF licensed patents, TRDF may elect to do so but may fail to take the steps that are necessary 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
staff and consultants with the knowledge and technical competence to advance its technology and productivity goals. To protect Microbot’s
trade secrets and proprietary information, Microbot has entered into confidentiality agreements with its employees, as well as with consultants
and other parties. If these agreements 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 in Microbot’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 maintain adequate intellectual property protection, it may not be able to prevent third parties from using its proprietary technologies
or may lose access to technologies critical to our product candidates. Also, Microbot currently pending or future patent applications
may not result in issued patents, and issued patents 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 proprietary technologies or may lose access to technologies critical to its product candidates in other countries.
Risks
Relating to Operations in Israel
Existing
and historical risks relating to our operations in Israel are being exacerbated by the current military actions and operations, and related
activities, that commenced with the surprise attack on the State of Israel on October 7, 2023.
The
ongoing risks of operating in Israel are being exacerbated as a result of the October 7, 2023 surprise attack by hostile forces from
Gaza, which led to the declaration by Israel of the “Iron Swords” military operation. These include security and economic
risks, risks relating to our ability to sell or buy internationally, risk of economic instability, risk of exchange rate fluctuation
negatively affecting operating costs, and the risk of employees leaving to perform military service. This military operation and related
activities are on-going as of the date of this prospectus.
The
Company has considered various ongoing risks relating
to the military operation and related matters, including:
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That
some of the Company’s Israeli subcontractors, vendors, suppliers and other companies in which the Company relies, are currently
only partially active, as instructed by the relevant authorities; and |
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A
slowdown in the number of international flights in and out of Israel. |
The
Company is closely monitoring how the military operation and related activities could adversely effect its anticipated milestones and
its Israel-based activities to support future clinical and regulatory milestones, including the Company’s ability to import materials
that are required to construct the Company’s devices and to ship them outside of Israel. As of the date of this prospectus, the
Company has determined that there have not been any materially adverse effects on its business or operations, but it continues to monitor
the situation, as any future escalation or change could result in a material adverse effect on the ability of the Company’s Israeli
office to support the Company’s clinical and regulatory activities. The Company does not have any specific contingency plans in
the event of any such escalation or change.
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, one of its seven directors, its General Manager and Chief Technology Officer and its Chief
Financial Officer, as well as substantially all of its research and development team and non-management employees, are residents of Israel.
Accordingly, political, economic and military conditions in Israel will directly or indirectly affect Microbot’s operations and
results. Most recently, for example, the current political situation in Israel where the ruling parties are attempting to implement laws
that essentially allow the parliament to enact laws that are preemptively immune to judicial review could adversely affect our business
and results of operations. In addition, 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 of hostility, varying in degree and intensity has led to security and economic
problems for Israel. For a number of years there have been continuing hostilities between Israel and the Palestinians. This includes
hostilities with the Islamic movement Hamas in the Gaza Strip, which have adversely affected the peace process and at times resulted
in armed conflicts. Such hostilities have negatively influenced Israel’s economy as well as impaired Israel’s relationships
with several other countries. Israel also faces threats from Hezbollah militants in Lebanon, from ISIS and rebel forces in Syria, from
the government of Iran and other potential threats from additional countries in the region. Moreover, some of Israel’s neighboring
countries have recently undergone or are undergoing significant 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
and organizations continue to participate in a boycott of Israeli firms and others doing business with Israel, with Israeli companies
or with Israeli-owned companies operating in other countries. Foreign government defense export policies towards Israel could also make
it more difficult for us to obtain the export authorizations necessary for Microbot’s activities. Also, over the past several years
there have been calls in the United States, Europe and elsewhere to reduce trade with Israel. There can be no assurance that restrictive
laws, policies or practices directed towards Israel or Israeli businesses will not have an adverse 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, military conflicts 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 of Israeli banks to companies considered to be in an affiliated group. The Israeli government
has periodically changed its policies in these areas. Reoccurrence of previous destabilizing factors could make it more difficult for
Microbot to operate its business and could adversely affect its business.
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 inflation rate 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, the U.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. As Microbot does not hedge against its position in NIS, a change in the value of the NIS compared to the U.S.
dollar could increase Microbot’s research and development expenses, labor costs and general and administrative expenses, and as
a result, have a negative impact on Microbot’s financial condition.
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 a significant 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
its technologies and product candidates. If Microbot fails to comply with the conditions applicable to this program, it may be required
to pay additional penalties or make refunds and may be denied future benefits. From time to time, the government of Israel has discussed
reducing or eliminating the benefits available 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
bearing grants in an aggregate amount of approximately $1,656,000 through September 30, 2023. This amount includes payment of approximately
$156,000 which is a portion of additional grant approved from the Israeli Innovation Authority in the amount of approximately NIS 1.62
million, to further finance the development of the Company’s manufacturing process of the LIBERTY Endovascular Robotic Surgical
System. Furthermore the Company received approval for a grant from the Ministry of Economy of the State of Israel in the amount of
approximately NIS 300,000, to further finance the marketing activities of the LIBERTY Endovascular Robotic Surgical System in
the US market. In addition, as a result of our 2018 agreement with CardioSert and our 2022 agreement with Nitiloop, we took over the
liability to repay CardioSert’s and Nitiloop’s IIA grants in the aggregate amount of approximately $530,000 and $925,000,
respectively.
With
respect to such grants Microbot is committed to pay royalties at 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 Industrial Research 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 from transferring
any technologies, know-how, manufacturing or manufacturing rights developed using Israeli Innovation Authority grants outside of Israel
without the prior approval of Israeli Innovation Authority. Therefore, if aspects of its technologies are deemed to have been developed
with Israeli Innovation Authority funding, the discretionary approval of an Israeli Innovation Authority committee would be required
for any transfer to third parties outside of Israel of the technologies, know-how, manufacturing or manufacturing rights related to such
aspects. Furthermore, the Israeli Innovation Authority may impose certain conditions on any arrangement under which it permits Microbot
to transfer technology or development outside of Israel or may not grant such approvals 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, the number of years since the funding and other factors. These restrictions and requirements for payment
may impair Microbot’s ability to sell its technology assets 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 developed with Israeli Innovation Authority funding outside
of Israel (such as through a merger or other similar transaction) may be reduced by any amounts that Microbot 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 be called 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 judgment obtained 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 be collectible 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 in the 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 other
person 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 of U.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 a claim, 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. law often involves the testimony of expert witnesses, which
can be a time consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding
case law in Israel that addresses the matters described above. As a result of the difficulty associated with enforcing a judgment against
Microbot in Israel, it may be impossible to collect any damages awarded by either a U.S. or foreign court.
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 our common 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 continued listing 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 applicable listing 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. Failure to again meet applicable Nasdaq continued listing standards could
result in a delisting of our common stock. A delisting of our common stock from The Nasdaq Capital 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 stock could be conducted only in the over-the-counter market or on an electronic bulletin board established for unlisted
securities such as the OTC Marketplace. In such event, it could become more difficult to dispose of, or obtain accurate price quotations
for, our common stock, and there would likely 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 the future. 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
board of 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 provisions
include a classified board of directors. In addition, because the Company is incorporated in Delaware, it is governed by the provisions
of Section 203 of the DGCL, which prohibits stockholders owning in excess of 15% of outstanding voting stock from merging or combining
with the Company. Although the Company believes these provisions collectively will provide for an opportunity to receive higher bids
by requiring potential acquirers to negotiate with the Company’s board of directors, they would apply even if the offer may be
considered beneficial by some stockholders. In addition, these provisions may frustrate or prevent any attempts by the Company’s
stockholders to replace or remove then current management by making it more difficult for stockholders to replace members of the board
of directors, which is responsible for appointing members of management.
General
Risks
Raising
additional capital may cause dilution to the Company’s investors, restrict its operations or require it to relinquish rights to
its technologies or product 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 equity offerings, including possibly through its existing but currently suspended At-the-Market offering, 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 stockholders
will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of holder
of the Company’s common stock. Debt financing, if available, may involve agreements that include covenants limiting or restricting
the Company’s ability to take specific actions, such as incurring additional debt, making capital expenditures, declaring dividends
or other distributions, selling or licensing intellectual property rights, 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. If the 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 would otherwise prefer to develop and market itself.
Microbot
operates in a competitive industry and if its competitors have products that are marketed more effectively or develop products, treatments
or procedures that are similar, more advanced, safer or more effective, its commercial opportunities will be reduced or eliminated, which
would materially harm its business.
Our
competitors may develop products, treatments or procedures that directly compete with our products and potential products and which are
similar, more advanced, 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 LIBERTY®
Endovascular Robotic Surgical System and other products that it is seeking to develop or commercialize with respect 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
which would have a material adverse effect on Microbot’s business. Microbot’s commercial opportunities could also be reduced
or eliminated if its competitors develop and commercialize products, treatments or procedures quicker, that are safer, more effective,
are more convenient or are less expensive than the LIBERTY® Endovascular Robotic Surgical System or any product
that Microbot may develop. Many of Microbot’s potential competitors have significantly greater financial resources and expertise
in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing
approved products than Microbot may have. Mergers and acquisitions in the medical device industry market may result in even more resources
being concentrated among a smaller number of Microbot’s potential competitors.
Our
business strategy in part relies on identifying, acquiring and developing complementary technologies and products, which entails risks
which could negatively affect our business, operations and financial condition.
We
have in the past and may again in the future 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; |
| ● | Lack
of funding to properly and adequately develop and commercialize the technologies acquired; |
| ● | 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 as acquisitions, mergers and combinations within our industry. The purchase price for possible acquisitions could be paid in cash,
through the issuance of common 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 the timing, likelihood or business effect of any possible transaction. For example, we could begin negotiations that
we subsequently decide to suspend or terminate for a variety of reasons. Similarly, we could acquire a technology or asset, and later
determine that such technology or asset no longer fits in our business strategy or goals. However, opportunities may arise from time
to time that we will evaluate. Any transactions that we consummate would involve risks and uncertainties to us. These risks could cause
the failure of any anticipated benefits of an acquisition to be realized, which could have a material adverse effect on our business,
financial condition, results of operations and prospects.
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. |
In
addition, the securities market has from time to time experienced significant price and volume fluctuations that are not related to the
operating performance 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 of such securities may ultimately convert and sell the full amount issuable on conversion.
USE
OF PROCEEDS
The
1,769,966 shares of common stock issuable upon the exercise of outstanding options that are being offered for resale by the selling stockholders
will be sold for the accounts of the selling stockholders named in this prospectus. As a result, all proceeds from the sales of such
shares of common stock offered for resale hereby will go to the selling stockholders and we will not receive any proceeds from the resale
of those shares of common stock by the selling stockholders.
We
may receive up to a total of approximately $2.7 million in gross proceeds if all of the options are exercised by the selling stockholders
for cash. However, as we are unable to predict the timing or amount of potential exercises of the options, we have not allocated any
proceeds of such exercises to any particular purpose. Accordingly, all such proceeds, if any would be allocated to working capital. Pursuant
to conditions set forth in the options, the options are exercisable under certain circumstances on a cashless basis, and should a selling
stockholder elect to exercise on a cashless basis we will not receive any proceeds from the sale of common stock issued upon the cashless
exercise of the option.
We
will incur all costs associated with this registration statement and prospectus.
MARKET
FOR COMMON STOCK
Our
common stock is listed on the NASDAQ Capital Market under the symbol “MBOT” since November 29, 2016. Prior to that, our common
stock was traded under the symbol “STEM.”
As
of January 24, 2024, there were approximately 97 holders of record of our common stock, and the closing price of our common stock
as reported on the NASDAQ Capital Market was $1.28.
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. The payment of dividends on our common stock will depend on earnings, financial condition, debt covenants in place, and other
business and economic factors affecting 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 a return on a stockholders’ investment will only occur if our stock price appreciates.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and any prospectus supplement
contain certain statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The words “believe,”
“may,” “will,” “estimate,” “continue,” “anticipate,” “intend,”
“expect,” “could,” “would,” “project,” “plan,” “potentially,”
“likely,” and similar expressions and variations thereof are intended to identify forward-looking statements, but are not
the exclusive means of identifying such statements. Those statements appear in this prospectus, particularly in the sections titled “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and include statements regarding the intent, belief or
current expectations of our management that are subject to known and unknown risks, uncertainties and assumptions. You are cautioned
that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual
results may differ materially from those projected in the forward-looking statements as a result of various factors.
Because
forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should
not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking
statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements.
Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the SEC, we
do not plan to publicly update or revise any forward-looking statements contained herein after we distribute this prospectus, whether
as a result of any new information, future events or otherwise.
In
addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These
statements are based upon information available to us as of the date of such statements, and although we believe such information forms
a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate
that we have conducted a thorough inquiry into, or review of, all potentially available relevant information. These statements are inherently
uncertain and investors are cautioned not to unduly rely upon these statements.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The
following discussion should be read in conjunction with our audited and unaudited financial statements and related notes included elsewhere
in this prospectus.
Overview
Microbot
is a pre-clinical medical device company specializing in the research, design and development of next generation robotic endoluminal
surgery devices targeting the minimally invasive surgery space. Microbot is primarily focused on leveraging its robotic technologies
with the goal of redefining surgical robotics while improving surgical outcomes for patients.
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
engineering personnel, prototype materials and research studies, obtaining and maintaining Microbot’s patent portfolio, net of
government grants. Microbot expenses its research and development costs as incurred.
General
and Administrative Expenses
General
and administrative expenses consist primarily of the costs associated with management salaries and benefits, professional fees for accounting,
auditing, consulting and legal services, and allocated overhead expenses.
Microbot
has cut its general and administrative expenses in May 2023 as a result of its core-business focus program and cost reduction program;
however, Microbot expects that its general and administrative expenses may increase in the future as it incurs expenses relating to its
operating activities, maintains and expands its patent portfolio and maintain compliance with exchange listing and public company 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 generated revenues, 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
Management’s
discussion and analysis of Microbot’s financial condition and results of operations are based on its consolidated financial statements,
which have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of these consolidated
financial statements requires Microbot to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses
and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Microbot bases its estimates
on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily 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 consolidated financial statements,
Microbot believes the following accounting policies are the most critical for fully understanding and evaluating its consolidated financial
condition and results of operations.
Contingencies
Management
records and discloses legal contingencies in accordance with ASC Topic 450 Contingencies. Accordingly, Management will recognize
a liability for a legal contingency when it is both probable that a liability has been incurred and the amount of the loss can be reasonably
estimated. The Company monitors the stage of progress of its litigation matters in each reporting period in order to determine if any
adjustments are required.
Fair Value of Financial
Instruments
The Company measures
the fair value of certain of its financial instruments 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 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 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 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 or liabilities.
Results of Operations
Comparison of Three and Nine Months Ended
September 30, 2023 and 2022
The following table sets forth the key components
of Microbot’s results of operations for the three and nine month periods ended September 30, 2023 and 2022 (in thousands):
| |
Three Months Ended September
30, | | |
| | |
Nine Months Ended September
30, | | |
| |
| |
2023 | | |
2022 | | |
Change | | |
2023 | | |
2022 | | |
Change | |
Research and development expenses, net | |
$ | (1,612 | ) | |
$ | (1,953 | ) | |
$ | 341 | | |
$ | (4,594 | ) | |
$ | (5,852 | ) | |
$ | 1,258 | |
General and administrative expenses | |
| (932 | ) | |
| (1,521 | ) | |
| 589 | | |
| (3,193 | ) | |
| (4,361 | ) | |
| 1,168 | |
Financing income, net | |
| 98 | | |
| 6 | | |
| 92 | | |
| 201 | | |
| 43 | | |
| 158 | |
Research and Development Expenses. The
decrease in research and development expenses for both periods presented was primarily due to the Company’s cost reduction plan
(the “Plan”), which commenced in the second quarter of 2023. The Plan involved cutting expenses by implementing employee
terminations, reducing management salaries, and eliminating bonus accruals. Furthermore, the Company has also reduced costs by decreasing
expenses related to subcontractors, advisory board members, and patents. Additionally, in comparison to the same period in 2022, the
Company incurred expenses in 2022 due to the development of the SCS technology, whereas in 2023, low expenses were recorded for that
project as it was suspended in October 2022 and thereafter terminated.
General and Administrative Expenses. The
decrease in general and administrative expenses for the periods presented was primarily due to lower D&O insurance premiums in 2023
and execution of the Plan, which among other things, involved cutting expenses by implementing employee terminations, reducing management
salaries, eliminating bonus accruals and pausing independent directors’ payments. Additionally, during the three and nine months
ended September 30, 2023, the Company recorded lower share -based compensation expenses compared to the comparable period in 2022, due
to older options becoming fully vested.
Financing Income, net. The increase in
financing income net for the three and nine-month periods presented was primarily due to interest income, which has increased in 2023
due to overall rise in market interest rates earned on the Company’s marketable securities, as well as unrealized gains from marketable
securities, also due to rising interest rates.
Comparison of Years
Ended December 31, 2022 and 2021
The following table sets
forth the key components of Microbot’s results of operations for the years ended December 31, 2022 and 2021 (in thousands):
| |
For
the Years Ended December
31, | | |
| |
| |
2022 | | |
2021 | | |
Change | |
Research and development expenses | |
$ | (7,736 | ) | |
$ | (6,153 | ) | |
$ | (1,583 | ) |
General and administrative expenses | |
| (5,545 | ) | |
| (5,204 | ) | |
| (341 | ) |
Financing income, net | |
| 118 | | |
| 44 | | |
| 74 | |
Capital loss | |
| (5 | ) | |
| - | | |
| (5 | ) |
Research and Development
Expenses. Microbot’s research and development expenses were approximately $7,736,000 for the year ended December 31, 2022,
compared to approximately $6,153,000 for the same period in 2021. The increase in research and development expenses of approximately
$1,583,000 in 2022 as compared to 2021 was primarily due to increased salaries and recruitment of employees, professional services and
material expenses relating to the LIBERTY project, minimally offset by savings resulting from the suspension of our SCS research program.
Microbot expects its research and development expenses to continue to increase over time as Microbot advances its development programs
and begins pre-clinical and preparations for clinical trials for the LIBERTY.
General and Administrative
Expenses. General and administrative expenses were approximately $5,545,000 for the year ended December 31, 2022, compared to approximately
$5,204,000 for the same period in 2021. The increase in general and administrative expenses of approximately $341,000 in 2022 as compared
to 2021 was primarily due to increased salaries, share-based compensation, and travel of $777,000, partially offset by a decrease of
$436,000 in government fees and professional services. Microbot believes its general and administrative expenses may increase over time
as it advances its programs, requiring additional investments in headcount, facilities and other general and administrative operating
activities to support its growth, and as it continues to incur expenses associated with public-company compliance.
Financing Income.
Financing income was approximately $118,000 for the year ended December 31, 2022, consisting of, income from interest, net totaling $54,000
and an exchange rate gain of $64,000, compared to approximately $44,000 for the year ended December 31, 2021, which consisted mainly
of the reversal of $131,000 of other liability stemming from our 2016 merger with StemCells, offset by exchange rate expenses of $87,000.
Capital loss was approximately
$5,000 for the year ended December 31, 2022, relating to assets disposal related to SCS suspension, compared to $0 of capital loss for
the year ended December 31, 2021.
Liquidity and Capital Resources
Microbot has incurred
losses since inception and negative cash flows from operating activities for all periods presented. As of September 30, 2023, Microbot
had a net working capital of approximately $6,916,000, consisting primarily of cash and cash equivalents and marketable securities. This
compares to net working capital of approximately $6,745,000 as of December 31, 2022. Microbot anticipates that it will continue to incur
net losses for the foreseeable future as it continues research and development efforts of its primary product candidate and continues
to incur costs associated with being a public company.
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 September 30, 2023, Microbot has raised cash proceeds of approximately $66,560,000 and incurred a
total cumulative loss of approximately $76,347,000. Microbot returned $3,375,000 (before interest) to an investor as a result of an
adverse outcome in a litigation that concluded in the first quarter of 2020 and is now subject to an additional lawsuit seeking the
return of an additional $6,750,000 of such proceeds. We have completed the discovery stages and court-ordered mediation and are
awaiting a trial date, and though management has been defending its position that no return of capital is warranted, we cannot
predict what the eventual outcome will be, whether as a result of a court’s judgment or a prior settlement. We believe that
the uncertainty relating the outcome of this litigation could adversely affect our ability to raise capital.
Microbot Israel obtained
from the Israeli Innovation Authority (“IIA”) grants for participation in research and development for the years 2013 through
September 30, 2023 in the total amount of approximately $1,656,000. This amount includes advance payment in the third quarter of 2023
of approximately $156,000, which is a portion of additional grants from the IIA in the amount of approximately NIS 1,620,000, which based
on an exchange rate on September 30, 2023 of NIS 1.00 = $0.2614, would be approximately $423,000, to further finance the development
of our manufacturing process of the LIBERTY robotic surgical system. On January 4, 2018, Microbot Israel entered into an agreement with
CardioSert to acquire certain of its patent-protected technology. CardioSert received grants from the IIA in the aggregate amount of
approximately $530,000 and Microbot Israel took over the liability to repay such grants, which remains Microbot Israel’s responsibility
for so long as it owns the CardioSert assets. On October 6, 2022, Microbot Israel entered into an agreement with Nitiloop Ltd. to acquire
substantially all of its assets. Nitiloop received grants from the IIA in the aggregate amount of approximately $925,000 and Microbot
Israel took over the liability to repay such grants.
Microbot Israel is obligated
to pay royalties amounting to 3%-5% of its future sales up to the amount of the grants. The grants are linked to the exchange rate of
the dollar to the New Israeli Shekel and bears interest at an annual rate of USD LIBOR. Under the terms of the grants and applicable
law, Microbot is restricted from transferring any technologies, know-how, manufacturing or manufacturing rights developed using the grant
outside of Israel without the prior approval of the Israel Innovation Authority. Microbot has no obligation to repay the grants, if the
applicable project fails, is unsuccessful or aborted before any sales are generated. The financial risk is assumed completely by the
IIA.
On March 2, 2023, the
Company announced that it received approval for a grant from the Ministry of Economy in the amount of approximately NIS 300,000, which
based on an exchange rate on such date of NIS 1.00 = $0.27457, would be approximately $82,000, to further finance the marketing activities
of the LIBERTY Robotic System in the US market. On November 1, 2023, we received NIS 109,474 (approximately US$27,000) of such amount.
In relation to the Ministry
of Economy grant, the Company is obligated to pay royalties amounting to between 3%-5% of future sales of the LIBERTY product up to the
grant amount plus interest.
To date, we have not
generated revenues from our operations. As of September 30, 2023, we had unrestricted cash, cash equivalents and marketable
securities of approximately $8,153,000, excluding restricted cash. We also raised approximately $2.73 million in gross proceeds from
our January 2024 Preferred Investment Option Inducement Transaction, which as a result of such transaction, management believes we have
sufficient funds for our operations for approximately five months from the date of this prospectus, or through approximately June
of 2024. However, in the event we are unsuccessful in our current litigation discussed above, pursuant to which certain investors
are seeking the return of $6,750,000 in proceeds we received from them in a 2017 stock offering, we will not have funds to continue
our operation. As a result of the foregoing and our current cash position, these conditions raise substantial doubt about
Microbot’s ability to continue as a going concern beyond approximately the next five months (or earlier in the event of an
adverse judgment or settlement in the litigation), which could adversely affect our ability to raise capital, expand our business
and develop our planned products.
During the second fiscal
quarter of 2023, Microbot commenced a core-business focus program and a cost reduction plan while it seeks to raise sufficient additional
capital to continue development of the LIBERTY robotic system. In May and June 2023, Microbot raised aggregate gross proceeds of approximately
$7.56 million, before fees and expenses of approximately $1.1 million, from investors, to continue to fund its operations and research
and development activities, and will need additional funds to continue the FDA approval process for the Liberty device. We also raised approximately $2.73 million in gross proceeds from our January 2024 Preferred Investment Option
Inducement Transaction. To the extent available, Microbot intends to raise capital through future public and private issuances of debt and/or
equity securities. The capital raises from issuances of convertible debt and equity securities could result in additional dilution to
Microbot’s shareholders. In addition, to the extent Microbot determines to incur additional indebtedness, Microbot’s incurrence
of additional debt could result in debt service obligations and operating and financing covenants that would restrict its operations.
Microbot can provide no assurance that financing will be available in the amounts it needs, at the times it needs it or on terms acceptable
to it, if at all.
As a result of the foregoing,
we are unable to fully implement our business plan without raising additional capital, if at all, and these conditions raise substantial
doubt about Microbot’s ability to continue as a going concern. The accompanying consolidated interim financial statements do not
include any adjustments to reflect the possible future effects on recoverability and reclassification of assets or the amounts and classification
of liabilities that may result from the outcome of this uncertainty.
Cash Flows
The following table provides
a summary of the net cash flow activity for each of the periods presented (in thousands):
| |
Years Ended December 31, | | |
Nine Months Ended September 30, | |
| |
2022 | | |
2021 | | |
2023 | | |
2022 | |
Net cash flows used in operating activities | |
$ | (11,549 | ) | |
$ | (9,354 | ) | |
$ | (6,712 | ) | |
$ | (9,086 | ) |
Net cash flows (used in) provided by investing activities | |
| (3,836 | ) | |
| 3,200 | | |
| (984 | ) | |
| (83 | ) |
Net cash flows provided by financing activities | |
| 4,324 | | |
| - | | |
| 6,558 | | |
| - | |
Decrease in cash, cash equivalents and restricted cash | |
$ | (11,061 | ) | |
$ | (6,154 | ) | |
$ | (1,138 | ) | |
$ | (9,169 | ) |
Net cash flows used in
operating activities for the nine months ended September 30, 2023 were approximately $6,712,000, calculated by adjusting our net loss
from operations by approximately $874,000 in the aggregate. Cash used in operating activities for the nine months ended September 30,
2022 was approximately $9,086,000, similarly adjusted by approximately $1,084,000. The decrease in net cash flows used in operating activities
was mainly due to the reduction in operating expenses from implementation of the Plan and the closure of our SCS research and development
program.
Cash used in operating
activities for the year ended December 31, 2022 was approximately $11,549,000, compared to $9,354,000 in 2021. The increase was primarily
from higher net losses in 2022, mostly related to increase in research and development relating to LIBERTY.
Net cash flows used in
investing activities for the nine months ended September 30, 2023 were approximately $984,000, resulting mainly from purchase of property
and equipment, proceeds from sales of a marketable securities and proceeds from maturities of marketable securities off set by purchases
of marketable securities compared to net cash flows used in investing activities in the prior comparable period as a result of purchase
of property and equipment in the amount of $83,000.
Net cash flows from investing activities increased
in 2022 compared to 2021 primarily from the net purchases of marketable securities in 2022.
Net cash flows from financing
activities for the nine months ended September 30, 2023 were approximately $6,558,000, resulting from net proceeds received due to the
issuance of common stock, and other securities in a series of offerings in May and June 2023.
Net cash flows from financing
activities increased in 2022 to approximately $4,324,000 due to the issuance of common stock and warrants to an institutional investor
in October 2022. The Company did not raise capital in 2021.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
Interest Rate Risk
Microbot’s cash
and cash equivalents as of December 31, 2023 consisted of readily available checking and money market funds. Microbot’s primary
exposure 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 on Microbot’s financial condition and/or results of operations. Microbot does not believe
that its cash or cash equivalents have significant risk of default or illiquidity. While Microbot believes its cash and cash equivalents
do not contain excessive risk, Microbot cannot provide absolute assurance that in the future its investments will not be subject to adverse
changes in market value. In addition, Microbot maintains significant amounts of cash and cash equivalents 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 is
conducted, 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 the future
use financial instruments, such as forward foreign currency contracts, in its management of foreign currency exposure. These contracts
would primarily require 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. Our results 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 research and development expenses. Microbot does not believe that inflation and changing prices had a significant
impact on its results of operations for any periods presented herein, but may have a significant, adverse impact in 2024.
BUSINESS
Overview
Microbot
is a pre-clinical medical device company specializing in the research, design and development of next generation robotic endoluminal
surgery devices targeting the minimally invasive surgery space. Microbot is primarily focused on leveraging its robotic technologies
with the goal of redefining surgical robotics while improving surgical outcomes for patients.
Using
our LIBERTY® Endovascular Robotic Surgical System, we are developing the first ever fully disposable robot for various
endovascular interventional procedures.
Technological
Platforms
LIBERTY®
Endovascular Robotic Surgical System
On
January 13, 2020, Microbot unveiled what it believes is the world’s first fully disposable robotic system for use in endovascular
interventional procedures, such as cardiovascular, peripheral and neurovascular. The LIBERTY® Endovascular Robotic
Surgical System features a unique compact design with the capability to be operated remotely, reduce radiation exposure and physical
strain to the physician, reduce the risk of cross contamination, as well as the potential to eliminate the use of multiple consumables
when used with its NovaCross platform or possibly other guidewire/microcatheter technologies.
The
LIBERTY® Endovascular Robotic Surgical System
is designed to maneuver guidewires and over-the-wire devices (such as microcatheters) within the body’s vasculature. It eliminates
the need for extensive capital equipment requiring dedicated Cath-lab rooms as well as dedicated staff.
We
believe the addressable markets for the LIBERTY® Endovascular Robotic Surgical System are the Interventional
Cardiology, Interventional Radiology and Interventional Neuroradiology markets.
The
unique characteristics of LIBERTY – compact, mobile, disposable and remotely controlled - open the opportunity of expanding telerobotic
interventions to patients with limited access to life-saving procedures, such as mechanical thrombectomy in ischemic stroke.
LIBERTY
is being designed to have the following attributes:
| ● | Compact
size - Eliminates the need for large capital equipment in dedicated cath-lab rooms with dedicated
staff. |
| ● | Fully
disposable - To our knowledge, the first and only fully disposable, robotic system for endovascular
procedures. |
| ● | One
& Done® – Can be made compatible with Microbot’s NitiLoop’s NovaCross
products or possibly other guidewire/microcatheter technologies, that combines guidewire
and microcatheter into a single device. |
| ● | State
of the art maneuverability - Provides linear and rotational control of its guidewire,
as well as linear and rotational control of a guide catheter, and the linear motion for an
additional “over the wire” device. |
| ● | Compatibility
with a wide range of commercially-available guidewires, microcatheters and guide-catheters. |
| ● | Enhanced
operator safety and comfort – Aims to reduce exposure to ionizing radiation and the
need for heavy lead vests otherwise to be worn during procedures, as well as reducing the
exposure to Hospital Acquired Infections (HAI). |
| ● | Ease
of use - Its intuitive remote controls aims to simplify advanced procedures while
shortening the physician’s learning curve. |
| ● | Telemedicine
compatible - Capable of supporting tele-catheterization, carried out remotely by highly trained
specialists. |
On
August 17, 2020, Microbot announced the successful conclusion of its feasibility animal study using the LIBERTY® Endovascular
Robotic Surgical System. The study met all of its end points with no intraoperative adverse events, which supports Microbot’s
objectives to allow physicians to conduct a catheter-based procedure from outside the catheterization laboratory (cath-lab), avoiding
radiation exposure, physical strain and the risk of cross contamination. The study was performed by two leading physicians in the neuro
vascular and peripheral vascular intervention spaces, and the results demonstrated robust navigation capabilities, intuitive usability
and accurate deployment of embolic agents, most of which was conducted remotely from the cath-lab’s control room.
On
December 22, 2021, we entered into a strategic collaboration agreement for technology co-development with Stryker Corporation, acting
through its Neurovascular Division. Pursuant to the agreement, the collaborative development program between Stryker and us aims to integrate
certain of Stryker’s instruments with our LIBERTY Endovascular Robotic Surgical System to address certain neurovascular procedures.
The activities contemplated by the Agreement shall be specified in one or more development plans derived from the terms and conditions
set forth in the Agreement. The parties conducted discussions in the past to define the development plan, but as of the date of this prospectus
no specific action plan was developed.
In
December 2021, we achieved design freeze of the LIBERTY® Endovascular Robotic Surgical System.
In
the first quarter of 2022, we filed our pre-submission package for the LIBERTY Endovascular Robotic Surgical System with the FDA,
addressing the regulatory pathway for the LIBERTY Endovascular Robotic Surgical System. On July 22, 2022, the Company completed
a pre-submission process with the FDA regarding the LIBERTY® Endovascular Robotic Surgical System. Formal feedback
from the FDA included a recommendation to perform a clinical study and a human factors validation study, to support clearance through
the 510(k) notification process.
In
September and October 2022, the Company conducted an animal study at an FDA accredited European-based MedTech research laboratory, which
was performed by a team of seasoned Key Opinion Leaders (KOLs) in the endovascular space, using porcine model. During the animal study,
the physicians conducted 63 navigations to the targeted sites using the investigational LIBERTY Endovascular Robotic Surgical System
and performed an equal number of procedures manually. The LIBERTY Endovascular Robotic Surgical System received positive feedback
from participating physicians, and there were no observable immediate intraoperative adverse events, or harm, to the test subjects. The
report from the animal study, which included histopathology data (the microscopic examination of tissue to study the manifestations of
disease), exhibited equivocal results which were identified as related to unusual physiological animal responses in both manual and robotic
test groups.
On
May 3, 2023, we announced that the LIBERTY® Endovascular Robotic Surgical System has surpassed its 100th catheterization
during multiple pre-clinical studies, with a 95% success rate of reaching pre-determined vascular targets, such as distal branches of
hepatic, gastric, splenic, mesenteric, renal and hypogastric arteries. Moreover, all of the procedures were completed without notable
signs of intraoperative injury.
On
June 29, 2023, we announced the successful completion of a two-day pre-clinical study held by leading key opinion leaders at a New York-based
research lab, where they performed dozens of catheterizations, including the utilization of the LIBERTY Endovascular Robotic Surgical
System’s remote operation capabilities, to pre-determined vascular targets, with a 100% success rate of reaching the intended target
with no observable on-site complications.
In October 2023,
we announced the successful initial outcomes from our pivotal pre-clinical study with the LIBERTY Endovascular Robotic Surgical System.
The pivotal study was conducted by three leading interventional radiologists that utilized the LIBERTY Endovascular Robotic Surgical
System to reach a total of 48 animal targets. A total of 6 LIBERTY® Endovascular
Robotic Surgical Systems were used in the study. All 6 LIBERTY® Endovascular
Robotic Surgical Systems performed flawlessly, with 100% usability and technical success. No acute adverse events or complications were
visually observed intra-operative. In December 2023, we announced that the final histopathology and lab report supplements our previous
findings, and that the results of the study will support our IDE submission to the FDA to commence human clinical study. On January
29, 2024, the Company submitted an Investigational Device Exemption (IDE) application with the U.S. Food and Drug Administration,
in order to commence its pivotal clinical trial in humans. In January 2024, we added a US-based Clinical Research Associate,
as we continue to establish infrastructure for clinical trial execution.
On
October 24 2023, we announced that we received confirmation for the commencement of the process to support our future CE Mark approval,
and to ultimately allow us to market the LIBERTY® Endovascular Robotic Surgical System in Europe as well as other
regions who accept the CE Mark. According to the confirmation, we will commence audits for ISO 13485 certification to ensure compliance
with the Quality Management System (QMS) requirements of the EU Medical Devices Regulation (MDR 2017/745), during the first half of 2024.
We had previously taken the first step to advance our European program by engaging with a leading Notified Body, who recently confirmed
dates for conducting the required audits.
NovaCrossTM
On
October 6, 2022, we purchased substantially all of the assets, including intellectual property, devices, components and product related
materials of Nitiloop Ltd., an Israeli limited liability company. The assets include intellectual property and technology in the field
of intraluminal revascularization devices with anchoring mechanism and integrated microcatheter, and the products or potential products
incorporating the technology owned by Nitiloop and designated by Nitiloop as “NovaCross”, “NovaCross Xtreme”
and “NovaCross BTK” and any enhancements, modifications and improvements. This technology is also expected to be incorporated
in our One & Done feature.
Other
Technologies and Platforms
During
the second and third quarters of 2023, as a result of our core-business focus program and our cost reduction plan, we ceased research
and development activities relating to the technology we acquired from CardioSert, and with respect to our SCS and TipCat platforms.
As a result, we terminated the Company’s agreement with CardioSert for that technology, and returned intellectual property relating
to the SCS (ViRob) and TipCat to Technion Research and Development Foundation.
Recent
Developments
Preferred
Investment Option Inducement Transaction
The
Company entered into a Preferred Investment Option Exercise and Inducement Letter on December 29, 2023 (the “Inducement Letter”)
with certain selling stockholders (the “Stockholders”), the registered holders of existing (i) Series A preferred investment
options to purchase shares of the Company’s Common Stock at an exercise price of $2.20 per share, issued on October 25, 2022, as
amended on May 24, 2023, (ii) Series C preferred investment options to purchase shares of the Company’s Common Stock at an exercise
price of $2.075 per share, issued on June 6, 2023, and (iii) Series D preferred investment options to purchase shares of the Company’s
Common Stock at an exercise price of $3.19 per share issued on June 26, 2023 (the “Existing Investment Options”), pursuant
to which the Stockholders agreed to exercise for cash their Existing Investment Options to purchase an aggregate of 1,685,682 shares
of the Company’s Common Stock, at a reduced exercised price of $1.62 per share, in consideration for the Company’s agreement
to issue new preferred investment option (the “Inducement Investment Option”) to purchase up to an aggregate of 1,685,682
shares of the Company’s Common Stock at an exercise price of $1.50 per share. The Inducement Investment Options will be immediately
exercisable from the date of issuance until five and one-half (5.5) years following the date of issuance. No other changes to the Existing
Investment Options were made.
Core-Business
Focus Program
On
May 15, 2023, the Board of Directors of the Company authorized, and the Company commenced, a core-business focus program while the Company
seeks to raise additional capital to continue development of the LIBERTY® Endovascular Robotic Surgical System.
This core-business focus program includes the cessation of research and development activities not related to the LIBERTY®
Endovascular Robotic Surgical System, including terminating the Company’s agreement with CardioSert for that technology,
and returning intellectual property relating to the SCS (ViRob) and TipCat to Technion Research and Development Foundation.
Cost
Reduction Plan
In
addition to the core-business focus program described above, the Board of Directors of the Company authorized, and the Company commenced,
a cost reduction plan while the Company seeks to raise additional capital to continue development of the LIBERTY® Endovascular
Robotic Surgical System.
In
May and June 2023 and in January 2024, we raised sufficient capital that, together with the savings from the cost reduction plan, has
enabled us to continue our operations through approximately June 2024, including completion of the V&V study, perform the GLP study
and submit the IDE to the US Food & Drug Administration. We also, as of November 1, 2023, recommenced paying Rachel Vaknin,
our CFO, and Simon Sharon, our CTO and General Manager, their regular salaries and benefits that were previously reduced as a result
of the cost reduction plan, and as of January 1, 2024, recommenced paying Harel Gadot, our CEO, and the independent directors
of our Board their regular salaries and benefits, or fees as the case may be, that were previously reduced as a result of the cost reduction
plan. We continue to seek new sources of capital to stabilize our finances and provide operating runway subsequent to June 2024. In the
event the Company is not successful in raising additional capital by June 2024, or if the results of the V&V study and first-in-human
trials are not promising, the Company may be forced to take more drastic actions to conserve capital or shut down operations entirely.
First-In-Human
Clinical Cases
On January 29,
2024, we submitted an Investigational Device Exemption (IDE) application with the U.S.
Food and Drug Administration, in order to commence its pivotal clinical trial in humans. After initially considering potential
First-In-Human cases in Brazil, by engaging with interventional radiologist Prof. Francisco Cesar Carnevale from University of Sao Paulo
Medical School Hospital, we determined that first-in-human clinical trials in Brazil have similar requirements as in the United States.
Furthermore, we are still in the process of evaluating the potential of utilizing Greece as an option to carry our First-In Human Cases.
However, although we believe Brazil and Greece remain strategically important for commercialization of the LIBERTY®
Endovascular Robotic Surgical System, we decided not to pursue First-In-Human trials or cases
outside of the United States at this time to avoid conflict with our FDA submission process.
Israel-Hamas
War
On
October 7, 2023, the State of Israel, where the Company’s research and development and other operations are primarily based, suffered
a surprise attack by hostile forces from Gaza, which led to the declaration by Israel of the “Iron Swords” military operation.
This military operation and related activities are on-going as of the date of this prospectus.
The
Company has considered various ongoing risks relating to the military operation and related matters, including:
| ● | That
some of the Company’s Israeli subcontractors, vendors, suppliers and other companies
in which the Company relies, are currently only partially active, as instructed by the relevant
authorities; and |
| ● | A
slowdown in the number of international flights in and out of Israel. |
The
Company is closely monitoring how the military operation and related activities could adversely effect its anticipated milestones and
its Israel-based activities to support future clinical and regulatory milestones, including the Company’s ability to import materials
that are required to construct the Company’s devices and to ship them outside of Israel. As of the date of this prospectus, the
Company has determined that there have not been any materially adverse effects on its business or operations, but it continues to monitor
the situation, as any future escalation or change could result in a material adverse effect on the ability of the Company’s Israeli
office to support the Company’s clinical and regulatory activities. The Company does not have any specific contingency plans in
the event of any such escalation or change.
Industry Overview
Minimally Invasive Robot-Assisted Endovascular
Interventions
Minimally Invasive Surgery, or MIS, refers to
surgical procedures performed through tiny incisions instead of a single large opening. Because the incisions are small, patients tend
to have quicker recovery times and experience less trauma than with conventional surgery. The global MIS surgery is expected to grow
from $24 billion in 2020 to $42 billion in 2026, representing a CAGR of 9.85%. MIS involves three major categories 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 and is also expected to show the highest rate of growth. According to the Society
of Robotic Surgery, the US market growth in endoluminal robotic surgery is projected to be 15-25% by 2025.
Vascular disease is the most common precursor
to ischemic heart disease and stroke, which are two of the leading causes of death worldwide. Advances in endovascular intervention in
recent years have transformed patient survival rates and post-surgical quality of life. It is estimated that more than three million
percutaneous coronary interventions (PCI) and over two million of peripheral vascular interventions are performed annually worldwide.
The incidence of stroke in the US alone is estimated at 900,000 cases annually. Compared to open surgery, it has the advantages of faster
recovery, reduced need for general anesthesia, reduced blood loss and significantly lower mortality. However, the current practice of
endovascular procedures, which virtually has remained unchanged since the introduction of Intervention four decades ago, is limited by
a number of factors, including physical strain and exposure to X-Ray radiation of the operator, and involves complex maneuvering of intervention
tools, such as guidewires and catheters, to reach target areas in the vasculature. Despite recent advancements in technology and devices,
manual procedures are still highly dependent on the technical skills and training of the operator, what makes the access to expert medical
centers and advanced emergent treatments, such as endovascular thrombectomy for acute ischemic stroke, geographically limited. In addition,
we believe that demand for physicians continues to grow faster than supply.
Endovascular robotic systems are aimed to increase
the stability and precision of guidewires and catheters, protecting the physicians from ionizing radiation and physical strain by removing
them from the radiation source, helping in closing shortages of skilled physicians and skill gaps and enable tele-interventions (e.g.
the Hub & Spoke hospital model).
Today, there are only a few commercially
available robotic systems for endovascular interventions. We believe these systems have major drawbacks, such as limited
maneuverability, the requirement to exchange and use multiple expensive surgical tools, being cumbersome to set-up and operate, and
requiring significant up-front capital expenditures.
Microbot
believes that with its portfolio of the LIBERTY® Endovascular Robotic Surgical System, coupled with its own NovaCross
products and other off-the-shelf products, it is well-positioned to deliver a value-added endovascular robotic system, with a focus on
improving the ease and access and enhancing the safety of endovascular interventions.
Strategy
Microbot’s
goal is to generate sales of its products, once they have received regulatory approval, by establishing the LIBERTY® Endovascular
Robotic Surgical System as the standard-of-care in the eyes of medical practitioners, patients and medical facilities, as well as
getting the support of payors and insurance companies. Microbot believes that it can achieve this objective by working with health
care providers and systems to demonstrate the key benefits of its products. Microbot’s strategy includes the following key
elements:
● |
Continue
to refine existing product candidates and develop additional surgical robotic solutions. As Microbot prepares to bring its
initial product through the support of pre-clinical and clinical trials, it continues gathering patients, patient and clinical data,
and patient and physician feedback post-market. Microbot also expects to continue to innovate in the surgical robotics field by
continuing to find ways of using its core technology to solve unmet needs, with the overarching goal of providing a safer, more
effective and more efficient surgical environment for patients and physicians. |
● |
Establish
and leverage relationships with key institutions and leading clinicians. Microbot’s objective will be to maintain clinical
focus with leading hospitals and clinics so as to establish LIBERTY, as well as possibly other future products, as the standard of
care in such institutions for their respective procedures. Microbot also expects to identify Key Opinion Leaders (KOLs) with the relevant specialties
(for instance interventional radiology) with the expectation that such clinical focus will accelerate the adoption of its candidate
products. |
● |
Continuously
invest in research and development. Microbot’s most significant expense has historically been research and development,
and Microbot expects to continue investing in research and development activities, including expenses it expects to incur to improve on its
prototype products in order 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. In parallel to its efforts to establish direct sales and
marketing capabilities, Microbot intends to continue its efforts on pursuing collaborations with global
medical device companies that have established sales and distribution networks. Microbot will seek to enter collaborations 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 new technologies, IP and know-how to add to its current portfolio through licensing, mergers and/or acquisitions and to
allow Microbot to enter new spaces and strengthen its overall product portfolio. |
Competition
LIBERTY
Competitive Landscape
We
believe the main competitor to the LIBERTY system is the CorPath GRX vascular robotics system by Corindus Vascular Robotics, a
Siemens Healthineers company. To our knowledge, CorPath GRX system is FDA-approved and CE-marked for percutaneous coronary and
vascular procedures, is CE-marked for neurovascular interventions and is pending FDA approval for neurovascular interventions.
Another competitor is Robocath (CE Marked for PCI only). We believe these systems have drawbacks, such as limited maneuverability,
the requirement to exchange and use multiple expensive surgical tools, being cumbersome to set-up and operate, and requiring
significant upfront capital expenditures. We
also expect that we could be competing with other technologies that are in different stages of development, including pre-clinical and without CE/FDA
approvals, such as LN Robotics and Endoways, of which additional competitive data will be required to better explore their respective positioning in the competitive
landscape.
Microbot’s
existing and planned products could also be rendered obsolete or uneconomical by technological advances developed in the future by
existing or new competitors. Some of Microbot’s competitors currently have significantly greater resources than Microbot does;
have established relationships with healthcare professionals, customers and third-party payors; and have long-term contracts with
group purchasing organizations in the United States. In addition, some of Microbot’s competitors have established distributor
networks, greater resources for product development, sales and marketing, additional lines of products and the ability to offer
financial incentives such as rebates, bundled products or discounts on other product lines that Microbot cannot
provide.
Intellectual Property
General
The
LIBERTY platform core technology is co-owned by Microbot and The Technion Research and Development Foundation Ltd., or TRDF. The NovaCross®
device is based on technologies acquired by Microbot from Nitiloop Ltd. Microbot may develop
other medical-robotic solutions through internal research and development, to strengthen its intellectual property position, and to continue
exploring strategic collaborations and accretive acquisition opportunities. Microbot currently holds an intellectual property portfolio
of 12 patents issued/allowed and 41 patent applications pending worldwide. Microbot also holds 10 design patents issued/allowed
and 5 design patents pending worldwide. It also has registered trademarks in Israel, Europe, UK and the US relating to its LIBERTY platform,
and also has trademarks relating to its proprietary Microbot Medical wordmark and logo registered in Israel, Europe, and UK, and
pending in the US and China, in addition to having registered trademarks for the “One & Done” wordmark in Israel, Europe, the US, UK, and Japan. Microbot also has a registered trademark in the US for the newly acquired NovaCross
trademark.
Microbot relies or intends
to rely on intellectual property licensed or developed, including patents, trade secrets, trademarks, technical innovations, laws of
unfair competition and various licensing agreements, to provide its future growth, to build its competitive position and to protect its
technology. As Microbot continues to expand its intellectual property portfolio, it is critical for Microbot to continue to invest in
filing patent applications to protect its technology, inventions, and improvements.
Microbot requires its
employees and consultants to execute confidentiality agreements in connection with their employment or consulting relationships with
Microbot. Microbot also requires its employees and consultants who work on its product candidates to agree to disclose and assign to
Microbot all inventions 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 between
the filing date of the patent applications and the time when they are published. Patents issued and patent applications filed relating
to medical devices are numerous, 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 applications for, or have not received or in the future will not receive, patents or obtain additional
proprietary rights relating to product candidates, products, devices or processes used or proposed to be used by Microbot. Microbot believes
that the technologies it employs in its products and systems do not infringe the valid claims of any third-party patents. There can be
no assurance, however, that third parties will not seek to assert that Microbot devices and systems infringe their 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 such claims,
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 protect Microbot’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 of each such patent, or to redesign Microbot’s products,
devices or processes to avoid infringement. There can be no assurance that such licenses would be available or, if available, would be
available on terms acceptable to Microbot or that Microbot would be successful in any attempt to redesign products or processes 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.
Microbot’s issued
U.S. patents, which cover Microbot’s product candidates, will expire between 2032 and 2040, not including any patent term adjustments
that may be available. Issued patents outside of the United States directed to Microbot’s product candidates will expire between
2032 and 2040.
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 to which
it obtained an exclusive, worldwide, royalty-bearing, sub-licensable license to certain patents and inventions relating to the SCS and
TipCAT technology platforms invented by Professor Moshe Shoham, a former director of and an advisor to the Company, and in certain circumstances
other TRDF-related persons. During the second and third quarters of 2023, as a result of our core-business focus program and our cost
reduction plan, we ceased research and development activities relating to the SCS and TipCat platforms. As a result, we returned intellectual
property relating to the SCS (ViRob) and TipCat to TRDF.
In addition, the LIBERTY
platform, which was invented by employees of Microbot together with Professor Moshe Shoham of the Technion, in his capacity as a consultant
to Microbot, is co-owned by Microbot and TRDF, and the parties established the LIBERTY platform as a “Joint Invention” in
accordance with the terms of the License Agreement. Once the Joint Invention is established, Microbot will have to pay TRDF royalties
of between 1.5% and 3.0% of net sales of products covered by this Joint Invention.
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-time
basis or as consultants, or through partnerships with industry leaders in manufacturing and design and researchers in academia. Microbot
is also working with subcontractors 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 its
candidate products and to advance the development of proposed products.
Microbot Israel has received
grants from the Israeli Innovation Authority (“IIA”) for participation in research and development since 2013 through September
30, 2023 totaling approximately $1,656,000. This amount includes advance payment in the third quarter of 2023 of approximately $156,000 which
is a portion of additional grant previously approved from the IIA in the amount of approximately NIS 1.62 million, which based on an
exchange rate on September 30, 2023 of NIS 1.00 = $0.2614, would be approximately $423,000, to further finance the development of the
Company’s manufacturing process of the LIBERTY® robotic surgical system.
In addition, as a result
of the agreement with CardioSert on January 4, 2018, Microbot Israel took over the liability to repay CardioSert’s IIA grants in
the aggregate amount of approximately $530,000, which liability will remain for so long as the Company continues to own the CardioSert assets.
As a result of the agreement
with Nitiloop, on October 6, 2022, Microbot Israel took over the liability to repay Nitiloop’s IIA grants in the aggregate amount
of approximately $925,000.
In relation to the IIA
grants described above, the Company is obligated to pay royalties amounting to 3%-5% of its future sales of the products relating to
such grants.
The grants are linked
to the exchange rate of the dollar to the New Israeli Shekel and bears interest of Libor per annum.
The repayment of the
grants is contingent upon the successful completion of the Company’s research and development programs and generating sales. The
Company has no obligation to repay these grants, if the project fails, is unsuccessful or aborted or if no sales are generated. The financial
risk is assumed completely by the Government of Israel. The grants are received from the Government on a project-by-project basis.
On March 2, 2023, the
Company announced that it received approval for a grant from the Ministry of Economy of the State of Israel in the amount of approximately
NIS 300 thousand, which based on an exchange rate on such date of NIS 1.00 = $0.27457, would be approximately $82,000, to further finance
the marketing activities of the LIBERTY Robotic System in the US market.
On November 1, 2023,
the Company received NIS 109,474 (approximately US$27,000) of such amount.
In relation to the Ministry
of Economy grant, the Company is obligated to pay royalties amounting to between 3%-5% of future sales of the LIBERTY product up to the
grant amount plus interest.
Microbot expects to continue
to access government funding in the future.
For the fiscal years
ended December 31, 2022 and 2021, respectively, Microbot incurred research and development expenses of approximately $7,736,000 and $6,153,000.
Strategic collaboration
agreement with Stryker
On December 22, 2021,
the Company entered into a strategic collaboration agreement for technology co-development with Stryker Corporation, acting through its
Neurovascular Division. Pursuant to the agreement, the collaborative development program between the Company and Stryker aims to integrate
certain of Stryker’s instruments with the Company’s LIBERTY® Robotic System to address certain neurovascular procedures.
The parties conducted discussions in the past to define the development plan, but as of the date of this prospectus no specific action plan was developed.
Manufacturing
Microbot does not have
any manufacturing facilities or manufacturing personnel. Microbot currently relies, and expects to continue to rely, on third parties
for the manufacturing of its product candidates for preclinical and clinical testing, as well as for commercial manufacturing if its
product candidates receive marketing approval.
During 2022 Microbot
initiated the transfer to production by means of designing and building molds for plastic injection of parts which is a more cost-effective
method for producing high quantities compared to conventional machined production of these parts. Some molds are already operative while
others are being designed and built. We expect completing the molds during 2024.
On August 4, 2023, we signed a Turn-Key Manufacturing Agreement with a subcontractor that is suited to assemble and test our products under applicable regulatory requirements
and regulations. As of the date of this prospectus, we are working with the subcontractor to transfer the production to the subcontractor.
Commercialization
Microbot
has not yet established a sales, marketing or product distribution infrastructure for the LIBERTY® Endovascular
Robotic Surgical System or any other product candidate, which are still in development stages. Microbot plans to access the U.S.
markets with its initial device offerings through direct sales, distributors, as well as strategic partnerships. Microbot
has not yet developed a commercial strategy outside of the United States, but it most likely would utilize distributors and strategic partnerships.
Government Regulation
General
Microbot’s medical
technology products and operations are subject to extensive regulation in the United States and other countries. Most notably, if Microbot
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
and enforced 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 that medical 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 Trade
Commission and by state regulatory and enforcement authorities. Recently, promotional activities for FDA-regulated products of other
companies have been the subject of enforcement action brought under healthcare reimbursement laws and consumer protection statutes. In
addition, under the federal Lanham Act and 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 short notice.
Other
regulations Microbot encounters in the United States and in other jurisdictions are the regulations that are common to all businesses,
such as employment legislation, implied warranty laws, and environmental, health and safety standards, to the extent applicable. In the
future, Microbot will also encounter 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 are performed 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. These include:
● |
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-party
manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects
of the manufacturing 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
a major change in intended use; |
● |
Medical
Device Reporting regulations (MDR), which require that manufacturers keep detailed records of investigations or complaints against
their devices 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 would likely 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
or processes 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
data for the device; and |
● |
notices
of correction or removal and recall regulations. |
Unless an exemption applies,
before Microbot can commercially distribute medical devices in the United States, Microbot must obtain, depending on the classification
of the device, either prior 510(k) clearance, 510(k) de-novo clearance or premarket approval (PMA), from the FDA. The FDA classifies
medical devices 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 the device’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 clearance
requirements; |
● |
Class II devices, which
are moderate risk and generally require 510(k) or 510(k) de-novo premarket clearance before they may be commercially marketed in
the United States as well as general controls and potentially special controls like performance standards or specific labeling requirements;
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, or devices
deemed not substantially equivalent to a predicate device. Class III devices generally require the submission and approval of a PMA
supported by clinical trial data. |
Microbot expects the
medical products in its pipeline currently to be classified as Class II. Class II devices are those for which general controls alone
are insufficient to provide reasonable assurance of safety and effectiveness and there is sufficient information to establish special
controls. Special controls can include performance standards, post-market surveillance, patient histories and FDA guidance documents.
Premarket review and clearance by the FDA for these 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-novo notification 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 predicate devices; 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 Clinical
Practices (GCPs), including the requirement that all research subjects provide informed consent for their participation in the clinical
study. A written protocol with predefined end points, an appropriate sample size and pre-determined patient inclusion and exclusion criteria,
is required before initiating and conducting a clinical trial. All clinical investigations of devices to determine safety and effectiveness
must be conducted in accordance with the FDA’s Investigational device Exemption, or IDE, regulations that among other things, govern
investigational device labeling, prohibit promotion of the investigational device, and specify recordkeeping, reporting and monitoring
responsibilities of study sponsors and study investigators. If the device presents a “significant risk,” as defined by the
FDA, the agency requires the device sponsor to submit an IDE application, which must become effective prior to commencing human clinical
trials. The IDE will automatically become effective 30 days after receipt by the FDA, unless the FDA denies the application or notifies
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 that requires modification, the FDA may permit a clinical trial to proceed under a conditional approval. In addition, the
study must be approved by, and conducted under the oversight of, an Institutional Review Board (IRB) for each clinical site. If the device
presents a non-significant risk to the patient, a sponsor 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 follow abbreviated 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 FDA requesting clearance
to market the product. The notification includes all relevant data from pertinent preclinical and clinical trials, together with
detailed 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, Medical Device Reporting
and complaint handling, and, if applicable, reporting of corrective actions. Also, quality control and manufacturing procedures must
continue to conform to QSRs. The FDA periodically inspects manufacturing facilities to assess compliance with QSRs, which impose
extensive procedural, substantive, and record keeping requirements on medical device manufacturers. In addition, changes to the manufacturing
process are strictly regulated, and, depending on the change, validation activities may need to be performed. Accordingly, manufacturers
must continue to expend time, money and effort in the area of production and quality control to maintain compliance with QSRs and
other types of regulatory controls. |
● |
After a device receives
510(k) clearance from the FDA, any modification that could significantly affect its safety or effectiveness, or that would constitute
a major change in its intended use or technological characteristics, requires a new 510(k) clearance or could require a PMA. The
FDA requires each manufacturer to make 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 the manufacturer 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 until additional 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 Microbot
makes are consistent with its regulatory clearances, that there is scientific data to substantiate the claims and that product advertising
is neither false nor misleading. |
To obtain 510(k) clearance,
Microbot must submit a notification to the FDA demonstrating that its proposed device is substantially equivalent to a predicate device
(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 a 510(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 can take significantly longer. If the FDA determines that the device or its intended use is
not substantially equivalent to a predicate device, the device is automatically 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 necessary clearances
for its products would adversely affect Microbot’s ability to grow its business. Delays in receipt or failure to receive the necessary
clearances, or the 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 for
the 510(k) de-novo process. In 1997, the Food and Drug Administration Modernization Act, or FDAMA added the de novo classification pathway
now codified 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 been placed 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 is called 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 and Innovation Act (FDASIA), in order
to provide a second option for de novo classification. Under this second pathway, a sponsor who determines that there is no legally marketed
device upon which to base a determination of substantial equivalence can submit a de novo request to FDA without first submitting a 510(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, the Microbot
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 more time
consuming and demanding than the 510(k) notification process. A PMA must be supported by extensive data, including but not limited to
data obtained from preclinical and/or clinical studies and data relating to manufacturing and labeling, to demonstrate to the FDA’s
satisfaction the safety and effectiveness of 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 take significantly 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 Microbot does, that the FDA would grant a PMA approval
of Microbot’s products, either of which would adversely affect Microbot’s business.
Foreign Regulation
In addition to regulations
in the United States, Microbot will be subject to a variety of foreign regulations governing clinical trials, marketing authorization
and commercial sales and distribution of its products in foreign countries. The approval process varies from country to country, and
the time may be longer or shorter than that required for FDA approval or clearance. The requirements governing the conduct of clinical
trials, product licensing, pricing and reimbursement 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 not Microbot
obtains FDA approval or clearance for its products, Microbot will be required to make new regulatory submissions to the comparable regulatory
authorities of foreign countries before Microbot can commence clinical trials or marketing of the product in such countries. The time
required to obtain certification 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.
Europe. The primary
regulatory body in Europe is the European Union, or E.U., which consists of 27 member states and has a coordinated system for the authorization
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 the
European Union. The directives include, among others, the Medical Device Regulation, or MDR, that establishes certain requirements with
which medical devices must comply before they can be commercialized in the European Economic Area, or EEA (which comprises the member
states of the E.U. plus Norway, Liechtenstein and Iceland). Under the MDR, medical devices are classified into four Classes, I, IIa,
IIb, and III, with Class I being the lowest risk and Class III being the highest risk.
In order to commercialize medical devices in the
European Union, a CE Mark certificate is needed. This certification verifies that a device meets all regulatory requirements for medical
devices under the new Medical Devices Regulation (MDR 2017/745). The CE approval process in Europe is summarized below:
1. |
To obtain CE Marking certification,
comply with European Commission Regulation (EU) No. 2017/745, commonly known as the Medical Device Regulation (MDR). |
2. |
Appoint a Person Responsible
for Regulatory Compliance (PRRC). Determine classification of device - Class I (self-certified); Class I (sterile, measuring or reusable
surgical instrument); Class IIa, Class IIb, or Class III. |
3. |
For all devices, implement
a Quality Management System (QMS) in accordance with the MDR. Companies usually apply the EN ISO 13485 standard to achieve compliance.
The QMS must include Clinical Evaluation, Post-Market Surveillance (PMS) and Post Market Clinical Follow-up (PMCF) plans. Make arrangements
with suppliers about unannounced Notified Body audits. For Class I (self-certified), implement a QMS though Notified Body intervention
is not required. |
4. |
Prepare a CE Technical
Documentation or Design Dossier (Class III) providing information about the device and its intended use plus testing reports, Clinical
Evaluation Report (CER), risk management file, Instruction For Use (IFU), labeling and more. Obtain a Unique Device Identifier (UDI)
for the device. All devices, even legacy products in use for decades, will require clinical data. Most of these data should refer
to the subject device. Clinical studies are generally required for implantable and Class III devices. Existing clinical data may
be acceptable. Clinical trials in Europe must be pre-approved by a European Competent Authority. |
5. |
If the company does not
have a location in Europe, appoint an Authorized Representative (EC REP) located in the EU who is qualified to handle regulatory
issues. Place the EC REP name and address on device label. Obtain a Single Registration Number from the regulators. |
6. |
For all devices except
Class I (self-certified), the QMS and Technical Documentation or Design Dossier must be audited by a Notified Body, a third party
accredited by European authorities to audit medical device companies and products. |
7. |
For all devices except
Class I (self-certified), the company will be issued a European CE Marking Certificate for the device and an ISO 13485 certificate
for the company’s facility following successful completion of the Notified Body audit. ISO 13485 certification must be renewed
every year. CE Marking certificates are typically valid for a maximum of 5 years, but are typically reviewed during the annual surveillance
audit. |
8. |
Prepare a Declaration
of Conformity, a legally binding document prepared by the manufacturer stating that the device is in compliance with the applicable
European requirements. At this time, the CE Marking may be affixed. |
9. |
Register the device and
its Unique Device Identifier (UDI) in the EUDAMED database. UDI must be on label and associated with the regulatory documents. |
10. |
For Class I (self-certified),
annual NB audits are not required. However, CER, Technical File, and PMS activities must be kept updated. For all other classes,
the company will be audited each year by a Notified Body to ensure ongoing compliance with the MDR. Failure to pass the audit will
invalidate the CE Marking certificate. The company must perform Clinical Evaluation, PMS, and PMCF. |
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 or any
of its pipeline products and failure to obtain the CE Mark would adversely affect its ability to grow its business.
On October 24 2023, we
announced that we received confirmation for the commencement of the process to support our future CE Mark approval, and to ultimately
allow us to market the LIBERTY® Endovascular Robotic Surgical System in Europe as well as other regions who accept the
CE Mark. According to the confirmation, we will commence audits for ISO 13485 certification to ensure compliance with the Quality Management
System (QMS) requirements of the EU Medical Devices Regulation (MDR 2017/745), during the first half of 2024. We had previously taken
the first step to advance our European program by engaging with a leading Notified Body, who recently confirmed dates for conducting
the required audits.
Israel. Israel’s
Medical Devices Law generally requires the registration of all medical products with the Ministry of Health, or MOH, Registrar as a precondition
for production and distribution in Israel. Special exemptions may apply under limited circumstances and for purposes such as the provision
of essential 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 should be provided
on the date or renovation; |
● |
Certificate attesting
to the safety of the device, issued by a competent authority of one of the following countries: Australia, Canada, European Community
(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, European
Community (CE) Member States (MSs), Japan, or the United States, the registration process is generally expedited, but could still take
6-9 months for approval. If such certificate is not available, the registration process will take significantly longer and a license
is rarely issued. Furthermore, the MOH will determine 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 the device’s safety and effectiveness.
Additional requirements may apply during the registration period, including follow-up reviews, to improve the quality and safety 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 AMAR
within 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 an expedited 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, 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, 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 the device 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 to order 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 its pipeline
products and failure to obtain such licenses would adversely affect its ability to grow its business.
Legal
Proceedings - Litigation Resulting from 2017 Financing
We
were named as the defendant in a lawsuit captioned Empery Asset Master Ltd., Empery Tax Efficient, LP, Empery Tax Efficient II, LP, Hudson
Bay Master Fund Ltd., Plaintiffs, against Microbot Medical Inc., Defendant, in the Supreme Court of the State of New York, County of
New York (Index No. 651182/2020). The complaint alleges, among other things, that we breached multiple representations and warranties
contained in the SPA, of which the Plaintiffs participated, and fraudulently induced Plaintiffs into signing the Securities Purchase
Agreement (the “SPA”) related to our June 8, 2017 equity financing (the “Financing”). The complaint seeks rescission
of the SPA and return of the Plaintiffs’ $6.75 million purchase price with respect to the Financing.
As of January 26, 2024 (the “Effective
Date”), we entered into a Settlement Agreement and Release with the Plaintiffs. Pursuant to the Settlement Agreement, we agreed
to pay the Plaintiffs $2,154,000 (the “Total Settlement Amount”), consisting of a cash payment covered by our insurance carrier
of $1,100,000 and 1,005,965 shares of restricted common stock which represent the whole number of restricted shares of our common stock
calculated pursuant to the following formula: $1,054,000/[closing price of common stock on the Effective Date * 0.825]. Additionally,
the Plaintiffs and the Company each agreed to fully release the other from all claims arising out of the 2017 financing, the Securities
Purchase Agreement and/or the allegations and claims asserted in the lawsuit, subject to customary carve-outs.
We also agreed, pursuant to a Registration Rights
Agreement, to file a registration statement on Form S-1 or Form S-3 covering the resale of the 1,005,965 shares, within 30 calendar days
following the Effective Date, and to use reasonable best efforts to have such registration statement declared effective by the Securities
and Exchange Commission within 60 days (or, in the event of a “full review” by the Securities and Exchange Commission, within
90 days) following the Effective Date. We shall be required to make cash payments to the Plaintiffs in the event we fail to register
the shares and keep the registration statement effective pursuant to the terms of the Registration Rights Agreement, and if we fail to
remove the restrictions on the shares pursuant to the terms of the Settlement Agreement.
Within three business days of the Plaintiffs’ receipt of the
Total Settlement Amount, the Plaintiffs will file a stipulation discontinuing the Lawsuit with prejudice.
Description
of Property
Microbot’s
employees currently either work remotely or at leased premises in the suburbs of Boston, Massachusetts of approximately 300 square feet.
It has also retained a small leased storage facility and a mailing address in the United States. Microbot also occupies facilities in
premises of approximately 6,975 square feet at 6 Hayozma St., Yokneam, P.O.B. 242, Israel. This facility is expected to provide the space
and infrastructure necessary to accommodate its development work based on its current operating plan. Microbot does not own any real
property.
Human
Capital
Employees
As
of January 24, 2024, we have 20 employees (including full-time and hourly employees).
Microbot’s
Chief Executive Officer, President and Chairman, Harel Gadot, along with 4 full-time, are based in the United States. Additionally,
Microbot has 14 full-time employees and 1 part time employee based in its office located in Yokneam, Israel. These employees
oversee day-to-day operations of the Company and leading engineering, manufacturing, intellectual property and administration functions
of the Company. As required, Microbot also engages consultants to provide services to the Company, including regulatory, legal and corporate
services. We are subject to labor laws and regulations within our locations in the U.S. and Israel. These laws and regulations principally
concern matters such as pensions, paid annual vacation, paid sick days, length of the workday and work week, minimum wages, overtime
pay, insurance for work-related accidents, severance pay and other conditions of employment. Microbot has no unionized employees.
We
have historically been able to attract and retain top talent by creating a culture that challenges and engages our employees, offering
them opportunities to learn, grow and achieve their career goals.
Compensation,
Benefits and Wellbeing
We
provide competitive compensation for our employees We have historically offered annual bonuses and stock-based compensation for eligible
employees. As a result of our recent cost reduction plan, our executive officers and certain of our employees have taken salary reductions,
although all of them have since had their salaries reinstated. We can give no assurance that such plan will not have an adverse effect
on our ability to attract and/or retain employees or remain competitive for talent.
Leadership,
Training and Development
We
aim to provide our employees with advanced professional and development skills, so that they can perform effectively in their roles and
build their capabilities and career prospects for the future.
Diversity,
Equity and Inclusion
We
strive to encourage a diversity of views and to create an equal opportunity workplace. During the past year, we have increased the total
number of women in management positions.
BOARD
OF DIRECTORS AND MANAGEMENT
General
We
currently have seven directors serving on our Board. The following table lists the names, ages and positions of the individuals who serve
as directors of the Company, as of January 24, 2024:
Name |
|
Age |
|
Position |
Harel
Gadot |
|
52
|
|
President,
Chief Executive Officer and Chairman of the Board of Directors |
Yoseph
Bornstein(1)(3) |
|
65 |
|
Director |
Scott
Burell(1)(2) |
|
58 |
|
Director |
Martin
Madden(1)(3) |
|
63 |
|
Director |
Prattipati
Laxminarain(2) |
|
65 |
|
Director |
Aileen
Stockburger(3) |
|
61 |
|
Director |
Tal
Wenderow(2) |
|
49 |
|
Director |
(1) |
Member
of Audit Committee. |
(2) |
Member
of Corporate Governance Committee. |
(3) |
Member
of Compensation Committee. |
We
have a classified Board, with each of our directors serving a staggered three-year term. The following table shows the current composition
of the three classes of our Board:
Class
I Directors (terms scheduled to expire in 2025):
|
Harel
Gadot |
|
Martin
Madden |
|
Tal
Wenderow |
Class
II Directors (term scheduled to expire in 2026):
|
Scott
Burell |
|
Aileen
Stockburger |
Class
III Directors (term scheduled to expire in 2024):
|
Yoseph
Bornstein |
|
Prattipati
Laxminarain |
The
independent members of our Board, as determined by the Board in accordance with the existing Nasdaq Listing rules, are Messrs. Bornstein,
Burell, Madden, Laxminarain and Wenderow, and Ms. Stockburger.
Director
Biographies
Harel
Gadot, became President, Chief Executive Officer and Chairman of the Company’s Board following the consummation of the merger
of C&RD Israel Ltd, a wholly owned subsidiary of the Company, with and into Microbot Medical Ltd. (“Microbot Israel”),
with Microbot Israel surviving as a wholly owned subsidiary of the Company (the “Merger”). Mr. Gadot is a co-founder of Microbot
Israel and has served as Microbot Israel’s Chief Executive Officer since Microbot Israel was founded in November 2010. He has been
the Chairman of Microbot Israel’s board of directors since July 2014. He also served as a director until January 2024
of XACT Robotics Ltd., an Israel-based private company that recently ceased operations and is in insolvency proceedings in Israel,
and was its Chairman from August 2013 until September 2023. Mr. Gadot serves as Chairman of MEDX Xelerator L.P., a medical
device and digital health Israeli incubator, since July 2016. From December 2007 to April 2010 Mr. Gadot was a Worldwide Group Marketing
Director at Ethicon Inc., a Johnson and Johnson Company, where he was responsible for the global strategic marketing of the Company.
Mr. Gadot also held management positions, as well as leading regional strategic position for Europe, Middle-East and Africa, as well
as In Israel, while at Johnson and Johnson. Mr. Gadot served as director for ConTIPI Ltd. from August 2010 until November 2013 when ConTIPI
Ltd. was acquired by Kimberly-Clark Corporation. Mr. Gadot holds a B.Sc. in Business from 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 as Chairman of the Board and as President
and Chief Executive Officer of the Company due to his extensive experience in strategic marketing and general management in the medical
device 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 the Board of Directors since Microbot Israel was founded in November 2010. Mr. Bornstein founded Shizim Ltd., a life science
holding group in October 2000 and has served as its CEO and director since then. Mr. Bornstein is the Chairman of, and through Shizim
owns a stake in: GCP Clinical Studies Ltd., a provider of clinical research services and educational programs in Israel since January
2002; Biotis Ltd., a service company for the bio-pharmaceutical industry, since June 2000; Dolphin Medical Ltd., which supplies the medical
device industry, since April 2012, and LSA - Life Science Accelerator Ltd., since 2000. He is the Chairman of ASIS Enterprises B.B.G.
Ltd., a business development company focusing on creating business ties between Israeli and Japanese entities, since August 2007. Mr.
Bornstein is a co-founder and until January 2024 was a director of XACT Robotics, an Israel-based private company that recently
ceased operations and is in insolvency proceedings in Israel. In October 1992, Mr. Bornstein founded Pharmateam Ltd., an Israeli
company that specialized in representing international 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 United
States-Israel Science & Technology Commission (the “USISTC”) from September 2002 to February 2005 as well as a consultant
for USISTC from September 2002 to February 2005. He is also the founder of ILSI-Israel Life Science Industry Organization (who was integrated
into IATI) and ITTN-Israel Tech Transfer Organization. He founded in July 2014 ShizimXL Ltd., an international medical device innovation
center, and founded in January 2020 ShizimVS Ltd., a digital health innovation center. Mr. Bornstein is an external director in Can-fite
BioPharma Ltd. (Nasdaq:CANF). At the time of his last nomination and election in 2022, the Company believed that Mr. Bornstein was qualified
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 in November 2016. Since August 2018, Mr. Burell has been the Chief Financial
Officer and Secretary of AIVITA Biomedical, Inc., an Irvine California-based immuno-oncology company focused on the advancement of commercial
and clinical-stage programs utilizing curative and regenerative medicines. From November 2006 until its sale to Invitae Corp. (NASDAQ:
NVTA) in November 2017, he was the Chief Financial Officer, Secretary and Treasurer of CombiMatrix Corporation (NASDAQ: CBMX), a family
health-focused clinical molecular diagnostic laboratory specializing in pre-implantation genetic screening, prenatal diagnosis, miscarriage
analysis, and pediatric developmental disorders. He successfully led the split-off of CombiMatrix in 2007 from its former parent, has
led several successful public and private debt and equity financing transactions as well as CombiMatrix’s reorganization in 2010.
Prior to this, Mr. Burell had served as CombiMatrix’s Vice President of Finance since November 2001 and as its Controller from
February 2001 to November 2001. From May 1999 to first joining CombiMatrix in February 2001, Mr. Burell was the Controller for Network
Commerce, Inc. (NASDAQ: SPNW), a publicly traded technology and information infrastructure company located in Seattle. Prior to this,
Mr. Burell spent nine years with Arthur Andersen’s Audit and Business Advisory practice in Seattle. During his tenure in public
accounting, Mr. Burell worked with many clients, both public and private, in the high-tech and healthcare markets, and was involved in
numerous public offerings, spin-offs, mergers and acquisitions. Mr. Burell obtained his Washington state CPA license in 1992 and is a
certified public accountant (currently inactive). He holds Bachelor of Science degrees in Accounting and Business Finance from Central
Washington University. The Company believes Mr. Burell’s qualifications to serve on the Board include his experience 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 affiliates from 1986 to January 2017, most recently as Vice President, Research & Development of DePuy Synthes, a Johnson
& Johnson Company, from February 2016 to January 2017. Prior to that, from July 2015 to February 2016, Mr. Madden was the Vice President,
New Product Development of Johnson & Johnson Medical Devices. From January 2012 to July 2015, Mr. Madden was the Vice President,
Research & Development of Johnson & Johnson’s Global Surgery Group. During his thirty-year tenure with Johnson & Johnson’s
Medical Device organization, he was an innovator and research leader for nearly every medical device business including Cardiology, Electrophysiology,
Peripheral Vascular Surgery, General and Colorectal Surgery, Aesthetics, Orthopaedics, Sports Medicine, Spine, and Trauma. As an executive
of Johnson & Johnson, Mr. Madden served on the management boards of Johnson & Johnson’s Global Surgery Group, Ethicon,
Ethicon Endo-Surgery, DePuy-Synthes, and Cordis, with responsibility for research and development - inclusive of organic and licensed/acquired
technology. He was also Chairman of J&J’s Medical Device Research Council, with responsibility for talent strategy and technology
acceleration. Mr. Madden serves on the Board of Directors of Novocure (NASDAQ: NVCR), a global oncology company, and is an advisor to
numerous medical device start-ups. Mr. Madden holds a MBA from Columbia University, a M.S. from Carnegie Mellon University in Mechanical
Engineering, and a B.S. from the University of Dayton in Mechanical Engineering. The Company believes that Mr. Madden is qualified to
serve as a member of the Board due to his extensive experience in research and development, portfolio planning, technology assessment
and assimilation, and project management and budgeting.
Prattipati
Laxminarain, has been a director of the Company since December 6, 2017. From April 2006 through October 2017, Mr. Laxminarain served
as Worldwide 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. Laxminarain is currently the CEO of Deinde Medical Corporation, and is a Board Member of Oculogica Inc., Millar Inc.,
and GT Medical Inc. He has a degree in Mechanical Engineering from Osmania University, Hyderabad, India and an MBA from Indian Institute
of Management. The Company believes that Mr. Laxminarain is qualified as a Board member of the Company because of his extensive experience
working with medical device companies and knowledge of the industries in which the Company intends to compete.
Aileen
Stockburger was appointed by the Board on March 26, 2020 to fill a vacancy on the Board and to serve as a Class II director of the
Company, with a term commencing on April 1, 2020. Since February 2018, Ms. Stockburger has provided M&A consulting and advisory services
through Aileen Stockburger LLC. Prior to that, from 1989 through January 2018, Ms. Stockburger held various positions in Johnson &
Johnson, most recently as Vice President, Worldwide Business Development & Strategic Planning for the DePuy Synthes Group of Johnson
& Johnson, and as a member of its Worldwide Board and Group Operating Committee, from 2010-2018. In that role, she oversaw the group’s
merger and acquisition activities, including deal structuring, negotiations, contract design and review, and deal terms. Before joining
Johnson & Johnson, Ms. Stockburger spent several years at PriceWaterhouseCoopers, and earned her CPA certification. She is also the
Chair of Next Science Limited (ASX: NXS), a medical technology company headquartered in Sydney, Australia, with a primary focus in the
development and continued commercialization of its proprietary technology to reduce the impact of biofilm based infections in human health,
and Chair of Next Science’s Audit Committee. She also serve on the Audit Committee and the People, Culture and Remuneration Committee
of the Board of Directors of Next Science Limited. Ms. Stockburger received her MBA and BS from The Wharton School, University of Pennsylvania.
The Company believes that Ms. Stockburger is qualified as a Board member of the Company because of her extensive experience in strategizing,
managing and closing sizable, complex worldwide mergers and acquisitions, licensing agreements and divestitures, as well as her expertise
in business development, strategic planning and finance.
Tal
Wenderow was appointed by the Board on July 29, 2020 to fill a vacancy on the Board and to serve as a Class I director of the Company,
with a term commencing on August 1, 2020. Since September 2021, Mr. Wenderow serves as the Venture Partner at Genesis MedTech, a global
medical device company. Previously, from February 2019, Mr. Wenderow served as the President and CEO of Vocalis Health Inc., an AI healthtech
company pioneering the development of vocal biomarkers. Previously, Mr. Wenderow co-founded Corindus Vascular Robotics in 2002, which
was a New York Stock Exchange-listed company upon its acquisition by Siemens Healthineers in 2019. Mr. Wenderow held various positions
at Corindus from founder, Chief Executive Officer and director at inception, Executive Vice President Product & Business Development
to his most recent role as Executive Vice President of International & Business Development. Mr. Wenderow received a B.Sc. in Mechanical
Engineering at the Technion - Israel Institute of Technology, Haifa, Israel. The Company believes that Mr. Wenderow is qualified as a
Board member of the Company because of his extensive knowledge of the medical robotics space with specific focus on interventional procedures,
as well as his medical devices start up experience.
Board
Diversity Matrix
The
matrix below reflects our Board’s gender and racial characteristics and LGBTQ+ status, based on the self-identification of our
directors. Each of the categories listed below has the meaning as it is used in Nasdaq Rule 5605(f).
Board
Diversity Matrix (as of January 24, 2024) |
Total
Number of Directors |
|
7 |
Gender
Identity: |
|
Male |
|
Female |
|
Non-Binary |
|
Gender
Undisclosed |
Directors
|
|
6 |
|
1 |
|
0 |
|
0 |
Number
of Directors who Identify in any of the Categories Below: |
African
American or Black |
|
0 |
|
0 |
|
0 |
|
0 |
Alaskan
Native or Native American |
|
0 |
|
0 |
|
0 |
|
0 |
Asian |
|
1 |
|
0 |
|
0 |
|
0 |
Hispanic
or Latinx |
|
0 |
|
0 |
|
0 |
|
0 |
Native
Hawaiian or Pacific Islander |
|
0 |
|
0 |
|
0 |
|
0 |
White |
|
5 |
|
1 |
|
0 |
|
0 |
Two
or More Races or Ethnicities |
|
0 |
|
0 |
|
0 |
|
0 |
LGBTQ+ |
|
0 |
Did
Not Disclose Demographic Background |
|
0 |
Committees
of the Board of Directors
Presently,
the Board has three standing committees — the Audit Committee, the Compensation and Stock Option Committee (the “Compensation
Committee”), 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 has determined that Mr. Burell is an “audit committee financial expert,” as defined in SEC rules. The Audit Committee
acts pursuant to a written charter which is available through our website at www.microbotmedical.com. The Audit Committee held four meetings
during the fiscal year ended December 31, 2023.
The
primary function of the Audit Committee is to assist the Board of Directors in fulfilling its oversight responsibilities. The Audit Committee
does this primarily by reviewing the Company’s financial reports and other financial information as well as the Company’s
systems of internal controls regarding finance, accounting, legal compliance, and ethics that management and the Board of Directors have
established. The Audit Committee also assesses the Company’s auditing, accounting and financial processes more generally. The Audit
Committee recommends to the Board of Directors the appointment of a firm of independent auditors to audit the financial statements of
the Company and meets with such personnel of the Company to review the scope and the results of the annual audit, the amount of audit
fees, the company’s internal accounting controls, the Company’s financial statements contained in this proxy statement, and
other related matters.
Compensation
Committee
The
Compensation Committee is composed of Messrs. Madden (Chairman), Bornstein and Stockburger. 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 held two meetings during the fiscal year ended December 31, 2023 and acted by unanimous written consent three
times.
The
Compensation Committee acts pursuant to a written charter. The Compensation Committee makes recommendations to the Board of Directors
and management 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. Laxminarain, Burell and Wenderow. Each of the members of the Corporate Governance
Committee is independent. The Corporate Governance Committee acts pursuant to a written charter which is available through our website
at www.microbotmedical.com. The Corporate Governance Committee acted by unanimous written consent one time during the fiscal year ended
December 31, 2023.
The
Corporate Governance Committee oversees nominations to the Board and considers the experience, ability and character of potential nominees
to serve as 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 Corporate Governance 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, technical expertise or personal attributes, or a combination of these, sufficient
to suggest, in the Board’s judgment, that the candidate would have the ability to help direct the affairs of the Company and enhance
the Board as a whole. The Corporate Governance Committee may identify potential candidates through any reliable means available, including
recommendations of past or current members of the Board from their knowledge of the industry and of the Company. The Corporate Governance
Committee also considers past service on the Board or on the board of directors of other publicly traded or technology focused companies.
The Corporate Governance Committee has not adopted a formulaic approach to evaluating potential nominees to the Board; it does not have
a formal policy concerning diversity, for example. Rather, the Corporate Governance Committee weighs and considers the experience, expertise,
intellect, and judgment of potential nominees irrespective of their race, gender, age, religion, or other personal characteristics. The
Corporate Governance Committee may look for nominees that can bring new skill sets or diverse business perspectives. Potential candidates
recommended by security holders will be considered as provided in the company’s “Policy Regarding Shareholder Candidates
for Nomination as a Director,” which sets forth the procedures and conditions for such recommendations. This policy is available
through our website at www.microbotmedical.com.
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,
has responsibility for the oversight of risk management. An important part of risk management is not only understanding the risks facing
the company and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for the
company. In support of this oversight function, the Board receives regular reports from our Chief Executive Officer and members of senior
management on operational, financial, legal, and regulatory issues and risks. The Audit Committee additionally is charged under its charter
with oversight of financial risk, including the company’s internal controls, and it receives regular reports from management, the
company’s internal auditors and the company’s independent auditors. The chairman of the Board and independent members of
the Board work together to provide strong, independent oversight of the company’s management and affairs through its standing committees
and, when necessary, special meetings of directors.
Executive
Officers
Following
are the name, age and other information for our executive officers. All company officers have been appointed to serve until their successors
are elected and qualified or until their earlier resignation or removal. Information regarding Harel Gadot, our Chairman, President and
Chief Executive Officer, is set forth above under “Board of Directors and Management–Director Biographies” above.
Name |
|
Age |
|
Position |
Harel
Gadot |
|
52 |
|
President,
Chief Executive Officer and Chairman of the Board of Directors |
Rachel
Vaknin |
|
45 |
|
Chief
Financial Officer |
Simon
Sharon |
|
63 |
|
Chief
Technology Officer and General Manager, Microbot Israel |
Juan
Diaz-Cartelle |
|
48 |
|
Chief
Medical Officer |
Rachel
Vaknin, has served as the Company’s Chief Financial Officer since April 2022 and before that was its VP Finance since January
2022. From September 2017 to December 2021, Ms. Vaknin served as the Chief Financial Officer at Imagry, an Israeli-American autonomous
technologies software provider. From April 2004 through December 2016, Ms. Vaknin was the FP&A Department Manager at Mellanox Technologies
Ltd., an Israeli-American multinational supplier of computer networking products acquired by Nvidia in 2020, where she was responsible,
among other things, for budget planning, budget control, building and maintaining business intelligence key performance indicators, leading
teams with respect to preparing quarterly financial statements, obtaining and managing grant monies, and Sarbanes-Oxley controls.
Simon
Sharon, has served as the Company’s Chief Technology Officer since April 2018 and as the General Manager of Microbot Israel
since April 2021. From August 2016 to March 2018, Mr. Sharon served as the Chief Technology Officer at MEDX Xelerator, an Israel-based
medical device and digital health incubator. He was also a director until January 2024 of XACT Robotics Ltd., an Israel-based
private company that recently ceased operations and is in insolvency proceedings in Israel. Mr. Harel Gadot, the Company’s
President, CEO and Chairman, is the Chairman of MEDX Xelerator. Prior to this, Mr. Sharon held the position
of Chief Operating Officer at Microbot Israel before it became a publicly traded company from February 2013 to August 2016. Prior to
joining Microbot Israel, Mr. Sharon was the Vice President of Research & Development with IceCure Medical, a TASE traded company
developing a portfolio of cryogenic ablation systems. Prior to IceCure, he held roles of increasing responsibility at Rockwell Automation-Anorad
Israel Ltd., a leading linear motor-based, precision positioning equipment manufacturer. Prior to Rockwell, Mr. Sharon was the Research
& Development Manager at Disc-O-Tech Medical Technologies Ltd., a private orthopedic venture that was acquired by Kyphon (currently
part of Medtronic), and before this was the Research & Development Manager at CI Systems, a worldwide supplier of a wide range of
electro-optical test and measurement equipment.
Dr.
Juan Diaz-Cartelle, has served as the Company’s Chief Medical Officer since December 1, 2023. As CMO, Dr. Diaz-Cartelle will
lead the development and execution of the clinical strategy of the Company, including its planned clinical trials for the LIBERTY®
Endovascular Robotic Surgical System in the U.S., the medical affairs activity, and will be an integral part of the team leading
its regulatory process with the FDA and commercial efforts. Most recently, from May 2022 to November 2023, Dr. Diaz-Cartelle served as
the Executive Medical Director at Haemonetics Corporation (NYSE: HAE), where he advised that company on new investments in the cardiovascular
space, among other responsibilities. Prior to that, from June 2008 to May 2022, Dr. Diaz-Cartelle served as the Senior Medical Director
for the Peripheral Interventional Division (Endovascular and Interventional Oncology) at Boston Scientific Corporation (NYSE: BSX), where
he played a pivotal part in the development of global clinical strategy and study oversight, supporting commercial activities and future
pipeline development. Dr. Diaz-Cartelle obtained his medical degree at the University of Navarra (Spain) and completed his specialty
as Angiologist and Vascular Surgeon at Hospital General Universitario Gregorio Maranon in Madrid (Spain).
Section
16(a) Reports
Section
16(a) of the Exchange Act requires our executive officers, directors, and persons who own more than 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, we believe that, during the fiscal year ended December 31, 2023, all Section 16(a) filing requirements applicable
to our officers, directors and greater than 10% beneficial owners have been met.
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 is posted on our website at www.microbotmedical.com. We intend to disclose any substantive amendment or waivers to this code
on our website. There were no substantive amendments or waivers to this code in 2023.
Legal
Proceedings Involving Directors
There
were no legal proceedings involving the members of the Board.
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The
following table sets forth information regarding each element of compensation that was paid or awarded to the named executive officers
of the Company for the periods indicated.
Name
and Principal Position | |
Year | | |
Salary
($) | | |
Bonus
($) | | |
Stock
Awards ($) | | |
Option
Awards ($) (1) | | |
Non-Equity
Incentive Plan Compensation ($) | | |
All
Other Compensation ($) | | |
Total
($) | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Harel
Gadot | |
| 2023 | | |
| 370,552 | | |
| 386,000 | (2) | |
| - | | |
| 470,302 | | |
| - | | |
| 13,800 | (4) | |
| 1,240,654 | |
CEO,
President & Chairman | |
| 2022 | | |
| 542,000 | | |
| 300,000 | (3) | |
| - | | |
| 971,217 | | |
| - | | |
| 13,800 | (4) | |
| 1,827,017 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Simon
Sharon | |
| 2023 | | |
| 271,662 | | |
| 87,022 | (2) | |
| - | | |
| 88,418 | | |
| | | |
| 22,828 | (5) | |
| 469,930 | |
CTO
and GM | |
| 2022 | | |
| 348,197 | | |
| 89,721 | (3) | |
| - | | |
| 65,114 | | |
| - | | |
| 23,298 | (5) | |
| 526,330 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Eyal
Morag | |
| 2023 | | |
| 314,033 | | |
| 82,878 | (2) | |
| | | |
| 101,356 | | |
| | | |
| 13,605 | (5) | |
| 511,872 | |
CMO
(6) | |
| 2022 | | |
| 401,517 | | |
| 89,164 | (3) | |
| - | | |
| 90,836 | | |
| - | | |
| 19,752 | (5) | |
| 601,269 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Rachel
Vaknin | |
| 2023 | | |
| 185,343 | | |
| 27,626 | (2) | |
| - | | |
| 76,533 | | |
| - | | |
| - | | |
| 289,502 | |
CFO | |
| 2022 | | |
| 189,384 | | |
| - | | |
| - | | |
| 45,263 | | |
| - | | |
| - | | |
| 234,647 | |
(1) |
Amounts
shown do not reflect cash compensation actually received by the named executive officer. Instead, the amounts shown are the non-cash
aggregate grant date fair values of stock option awards made during the periods presented as determined pursuant to ASC Topic 718
and excludes the effect of forfeiture assumptions. The assumptions used to calculate the fair value of stock option awards are set
forth under Note 9 to the Consolidated Financial Statements of the Company for the fiscal year ended December 31, 2022 included
in this prospectus. |
(2) |
Represents bonus for the 2022 fiscal year, which amount was actually paid in 2023. |
(3) |
Represents bonus for the 2021 fiscal
year, which amount was actually paid in 2022. |
(4) |
All
Other Compensation includes Mr. Gadot’s monthly automobile allowance. |
(5) |
All
Other Compensation includes the executive’s yearly automobile allowance. |
(6) |
On
August 29, 2023, Dr. Morag resigned from his position with the Company, effective November 29, 2023. |
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, 2023.
| |
Option
Awards | | |
Stock
Awards | |
Name | |
Number
of Securities Underlying Unexercised Options Exercisable | | |
Number
of Securities Underlying Unexercised Options Unexercisable | | |
Option
Exercise Price | | |
Option
Expiration Date | |
Number
of Shares
or
Units of Stock That Have Not
Vested | | |
Market
value of Shares of
Units of Stock That Have Not
Vested | | |
Equity
Incentive Plan Awards: Number of
Unearned Shares, Units or Other Rights That Have
Not Vested | | |
Equity
Incentive Plan Awards: Market or
Payout Value of Unearned Shares, Units or Other Rights That Have
Not Vested | |
| |
| | |
| | |
| | |
| |
| | |
| | |
| | |
| |
Harel
Gadot | |
| 77,846 | | |
| - | | |
$ | 4.20 | | |
1/01/2025 | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| 120,847 | | |
| - | | |
| 15.75 | | |
9/14/2027 | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| 166,666 | | |
| - | | |
| 9.64 | | |
2/25/2030 | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| 190,000 | | |
| - | | |
| 8.48 | | |
02/01/2031 | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| 62,500 | | |
| 37,500 | | |
| 6.48 | | |
01/26/2032 | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| 64,000 | | |
| 96,000 | | |
| 3.73 | | |
12/21/2032 | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| - | | |
| 80,000 | | |
| 2.43 | | |
08/01/2033 | |
| - | | |
| - | | |
| - | | |
| - | |
Simon
Sharon | |
| 10,000 | | |
| - | | |
| 9.00 | | |
08/13/2028 | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| 14,170 | | |
| - | | |
| 5.95 | | |
08/12/2029 | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| 15,625 | | |
| 9,375 | | |
| 6.48 | | |
01/26/2032 | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| 11,375 | | |
| 23,625 | | |
| 3.48 | | |
12/21/2032 | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| - | | |
| 17,500 | | |
| 2.43 | | |
08/01/2033 | |
| | | |
| | | |
| | | |
| | |
Rachel
Vaknin | |
| 12,500 | | |
| 7,500 | | |
| 6.48 | | |
01/26/2032 | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| 4,750 | | |
| 5,250 | | |
| 4.80 | | |
07/18/2032 | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| 5,200 | | |
| 7,800 | | |
| 3.73 | | |
12/21/2032 | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| - | | |
| 17500 | | |
| 2.43 | | |
08/01/2033 | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| |
| | | |
| | | |
| | | |
| | |
Eyal
Morag | |
| 25,000 | | |
| - | | |
| 6.16 | | |
02/29/2024 | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| 15,625 | | |
| - | | |
| 6.48 | | |
02/29/2024 | |
| - | | |
| - | | |
| - | | |
| - | |
Executive
Employment Agreements
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’s Chairman of the Board of Directors and Chief Executive Officer, on an indefinite basis subject to the termination provisions
described in the Agreement. The Gadot Agreement was amended most recently on January 26, 2022, with a subsequent annual salary increase
on December 21, 2022. Mr. Gadot’s annual base salary for 2023 was $530,450; however, as a result of the Company’s May 2023
cost reduction plan, Mr. Gadot agreed to a 50% reduction of his base salary, with reinstatement of his full base salary effective as
of January 1, 2024. The salary is reviewed on an annual basis by the Compensation Committee of the Company to determine
potential increases taking into account such performance metrics and criteria as established by Mr. Gadot and the Company.
Effective
as of January 26, 2022, Mr. Gadot shall also be entitled to receive a target annual cash bonus of up to a maximum amount of 75% of base
salary, which amount for the 2023 fiscal year has not yet been determined.
Mr.
Gadot shall be further entitled to a monthly automobile allowance and tax gross up on such allowance of $1,150. Upon execution of the
Gadot Agreement, he was granted options to purchase shares of common stock of the Company representing 5% of the issued and outstanding
shares of the Company. Since then, the Compensation Committee of the Board of Directors considers the granting to Mr. Gadot of additional
compensatory options on an annual basis. Most recently, in August 2023, the Company granted Mr. Gadot 80,000 options.
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 and payable 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) 12 months’ 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 accrued vacation days; and (v) applicable premiums (inclusive of premiums for Mr. Gadot’s dependents)
pursuant to the Consolidated Omnibus Budget Reconciliation 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 the Company. Mr. Gadot also agreed to customary terms regarding confidentiality and ownership of intellectual property.
Rachel
Vaknin Employment Agreement
The
Company entered into an employment agreement (the “Vaknin Agreement”), dated November 22, 2021, with Ms. Vaknin, amended
as of May 15, 2023 (the “Vaknin Addendum”), to serve as the Company’s Chief Financial Officer, on an indefinite
basis subject to the termination provisions described in the Vaknin Agreement. The salary is reviewed on an annual basis by the Compensation
Committee of the Company to determine potential increases taking into account such performance metrics and criteria as established by
the Company. Ms. Vaknin was to receive an annual base salary in 2023 of $170,000; however, as a result of the Company’s
May 2023 cost reduction plan and the Vaknin Addendum, Ms. Vaknin’s gross monthly salary was decreased to a gross amount of NIS
35,000 and social and fringe benefits due to Ms. Vaknin were calculated based upon the updated salary, excluding sick days and vacation
days which continued to be accumulated per her existing Agreement. The reinstatement of her full base salary was effective as of November
1, 2023.
Ms.
Vaknin shall also be entitled to receive a target annual cash bonus, based on certain milestones, of up to a maximum amount of 25% (increased
from 20% in January 2023) of her annual salary.
Ms.
Vaknin shall be further entitled to a monthly automobile allowance not to exceed NIS 1,000 per month plus expenses and applicable taxes,
and originally was granted options to purchase 20,000 shares of common stock of the Company based on vesting and other terms set forth
in the Vaknin Agreement. Since then, the Compensation Committee of the Board of Directors considers the granting to Ms. Vaknin of additional
compensatory options on an annual basis. Most recently, in August 2023, the Company granted Ms. Vaknin 17,500 options.
Pursuant
to the Vaknin Agreement, the Company shall pay an amount equal to 8.33% of Ms. Vaknin’s salary to be allocated for severance pay,
6.5% of Ms. Vaknin’s salary to be allocated for pension savings and 7.5% to be allocated to an educational fund. The Company may
have additional payment obligations for disability insurance as specified in the Vaknin Agreement.
Either
the Company or Ms. Vaknin may terminate the Vaknin Agreement at its discretion at any time by providing the other party with two months
prior written notice of termination (the “Advance Notice Period”).
The
Company may terminate the Vaknin Agreement “For Cause” (as defined in the Vaknin Agreement) at any time by written notice
without the Advance Notice Period.
The
Vaknin Agreement contains customary non-competition and non-solicit provisions pursuant to which Ms. Vaknin agrees not to compete and
solicit with the Company. Ms. Vaknin also agreed to customary terms regarding confidentiality and ownership of intellectual property.
Simon
Sharon Employment Agreement
The
Company entered into an employment agreement, dated as of March 31, 2018 and amended pursuant to a First Amendment to Employment Agreement
dated as of April 19, 2021 (as so amended, the “Sharon Agreement”), as further amended as of May 15, 2023 (the “Sharon
Addendum”), with Mr. Sharon, to serve as the Company’s Chief Technology Officer and the General Manager of Microbot Israel,
on an indefinite basis subject to the termination provisions described in the Sharon Agreement.
The
salary is reviewed on an annual basis by the Compensation Committee of the Company to determine potential increases taking into account
such performance metrics and criteria as established by the Company.
Pursuant
to the terms of the Sharon Agreement, Mr. Sharon was to have received in 2023 a combined base salary and overtime payment of NIS74,160
per month. Mr. Sharon is also entitled to receive an annual cash bonus of up to 35% of the annual combined salary and overtime payment,
based on certain performance factors established and assessed by the Compensation Committee of the Board of Directors of the Company,
which he received in full for the 2022 fiscal year. For 2023, as a result of the Company’s May 2023 cost reduction plan and the
Sharon Addendum, Mr. Sharon’s gross monthly salary was decreased to a gross amount of NIS44,496 and social and fringe benefits
due to Mr. Sharon were calculated based upon the updated salary, excluding sick days and vacation days which continued to be accumulated
per the Sharon Agreement. The reinstatement of his full base salary was effective as of November 1, 2023.
Mr.
Sharon shall be further entitled to a monthly automobile allowance plus a tax gross up to cover taxes relating to the grant of such motor
vehicle, and pursuant to the Sharon Agreement was initially granted options in 2018 to purchase 150,000 shares (pre-stock split) of common
stock of the Company. Since then, the Compensation Committee of the Board of Directors considers the granting to Mr. Sharon of additional
compensatory options on an annual basis. Most recently, in August 2023, the Company granted Mr. Sharon 17,500 options.
Pursuant
to the Sharon Agreement, the Company pays to (unless agreed otherwise by the parties) an insurance company or a pension fund, for Mr.
Sharon, an amount equal to 8.33% of the base salary and overtime payments, which shall be allocated to a fund for severance pay, and
an additional amount equal to 6.5% of the base salary and overtime payments, which shall be allocated to a provident fund or pension
plan. The Company also pays an additional sum for disability insurance to insure Mr. Sharon for up to 75% of base salary and overtime
payments, and 7.5% of each monthly payment to be allocated to an educational fund.
Either
the Company or Mr. Sharon may terminate the Sharon Agreement without cause (as defined in the Sharon Agreement) by providing the other
party with ninety days prior written notice.
The
Company may terminate the Sharon Agreement for cause at any time by written notice without any advance notice.
The
Sharon Agreement contains customary non-competition and non-solicit provisions pursuant to which Mr. Sharon agrees not to compete and
solicit with the Company. Mr. Sharon also agreed to customary terms regarding confidentiality and ownership of intellectual property.
Juan
Diaz-Cartelle Employment Agreement
We
entered into an employment agreement (the “Diaz-Cartelle Agreement”), effective as of December 1, 2023, with Dr. Diaz-Cartelle,
to serve as CMO on an indefinite basis subject to the termination provisions described in the Diaz-Cartelle Agreement. Pursuant to the
terms of the Agreement, Dr. Diaz-Cartelle shall receive an annual base salary of $350,000, which shall be reviewed on an annual basis
by the Company’s Compensation Committee, which may provide for increases as it may determine, taking into account such performance
metrics and criteria of Dr. Diaz-Cartelle and the Company in its sole discretion.
Dr.
Diaz-Cartelle shall also be entitled to receive a target annual cash bonus, based on corporate performance factors established and assessed
by the Compensation Committee, of up to a maximum amount of 30% of his annual base salary.
Dr.
Diaz-Cartelle was granted 10-year options to purchase 25,000 shares of common stock of the Company pursuant to the Company’s 2020
Omnibus Performance Award Plan, as amended, having an exercise price per share based on the closing price of the Company’s common
stock on the date of grant, and which vests in total over three years. He shall also be entitled to receive additional incentive equity
awards on an annual basis at the discretion of the Compensation Committee.
Subject
to the terms and conditions of the Agreement, either the Company or Dr. Diaz-Cartelle shall have the right to earlier terminate Dr. Diaz-Cartelle’s
employment at any time for any reason or no reason upon at least one month prior written notice.
The
Company may terminate the Agreement for “Cause” (as defined in the Diaz-Cartelle Agreement) at any time by written notice,
subject to Dr. Diaz-Cartelle’s right to cure as provided in the Diaz-Cartelle Agreement. Upon Dr. Diaz-Cartelle’s termination
of employment for Cause, or if Dr. Diaz-Cartelle shall terminate without Good Reason (as defined below), Dr. Diaz-Cartelle shall forfeit
the right to receive any and all further payments under the Diaz-Cartelle Agreement, other than the right to receive any compensation
then due and payable to him through to the date of termination.
Dr.
Diaz-Cartelle may terminate the Agreement with “Good Reason” (as defined in the Diaz-Cartelle Agreement) at any time by written
notice, subject to the Company’s right to cure as provided in the Diaz-Cartelle Agreement. In the event of the termination of Dr.
Diaz-Cartelle’s employment by the Company without Cause or upon Dr. Diaz-Cartelle’s voluntary termination of his employment
for Good Reason, (i) all amounts of base salary accrued but unpaid as of the termination date shall be paid by the Company within thirty
days following the date of termination, (ii) an amount equal to the base salary on the date of termination for a period of one month
(in the event such termination is on or prior to the one year anniversary of the Diaz-Cartelle Agreement) or two months (in the event
such termination is subsequent to the one year anniversary of the Diaz-Cartelle Agreement) shall be paid by the Company in twelve equal
monthly installments, (iii) the dollar value of unused and accrued vacation days shall be paid by the Company; and (iv) applicable premiums
(inclusive of premiums for his dependents) shall be paid by the Company pursuant to the Consolidated Omnibus Budget Reconciliation Act
of 1986, as amended, for twelve months from the date of termination for any benefits plan sponsored by the Company.
The
Company may terminate the Diaz-Cartelle Agreement as a result of any mental or physical disability or illness which results in (i) Dr.
Diaz-Cartelle being unable to substantially perform his duties for a continuous period of 150 days or for periods aggregating 180 days
within any period of 365 days or (ii) Dr. Diaz-Cartelle being subject to a permanent or indefinite inability to perform essential functions
based on the reasonable opinion of a qualified medical provider chosen in good faith by the Company. Termination will be effective on
the date designated by the Company, and Dr. Diaz-Cartelle will be paid any unpaid earned base salary, earned target bonus (if any), reimbursement
of business expenses and accrued vacation, if any, and benefits through the date of termination.
The
Diaz-Cartelle Agreement contains customary non-competition and non-solicit provisions pursuant to which Dr. Diaz-Cartelle agrees not
to compete and solicit with the Company. Dr. Diaz-Cartelle also agreed to customary terms regarding non-disparagement, confidentiality
and ownership of intellectual property.
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 Delaware General Corporation Law. The agreements generally cover expenses that a director or officer incurs or amounts
that a director or officer becomes obligated to pay 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 best interests of the Company. The agreements also
provide for the advancement of expenses to the directors and officers subject to specified conditions. There are certain exceptions to
the Company’s obligation to indemnify the directors and officers, and, with certain exceptions, with respect to proceedings that
he initiates.
Limits
on Liability and Indemnification
We
provide directors and officers insurance for our current directors and officers.
Our
certificate of incorporation eliminate the personal liability of our directors to the fullest extent permitted by law. The certificate
of incorporation further provide that the Company will indemnify its officers and directors to the fullest extent permitted by law. We
believe that this indemnification covers at least negligence 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 Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is therefore unenforceable.
Director
Compensation
The
Company adopted in January 2021 an amended compensation package for the non-management members of its Board, pursuant to which each such
Board member would receive for his or her services $35,000 per annum. Furthermore, each member of the Audit Committee of the Board receives
an additional $10,000 per annum ($20,000 if Chairman), each member of the Compensation Committee of the Board receives an additional
$7,500 per annum ($15,000 if Chairman) and each member of the Corporate Governance and Nominating Committee of the Board receives an
additional $5,000 per annum ($10,000 if Chairman). Board members are also entitled to receive equity awards. Upon joining the Board,
a member would receive an initial grant of $190,000 of stock options (calculated as the product of the exercise price on the date of
grant multiplied by the number of shares underlying the stock option award required to equal $190,000), with an additional grant of stock
options each year thereafter, to purchase such number of shares of the Company’s common stock equal to $95,000, computed on a similar
basis. As a result of the Company’s May 2023 cost reduction plan, the independent members of the Board agreed to a suspension of
their quarterly director fees, with reinstatement of such fees effective as of January 1, 2024.
The
following table summarizes cash and equity-based compensation information for our outside directors, for the year ended December 31,
2023:
Name | |
Fees earned or paid in cash | | |
Stock Awards | | |
Option Awards (1) | | |
Non-Equity Incentive Plan Compensation | | |
Nonqualified Deferred Compensation
Earnings | | |
All Other Compensation | | |
Total | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Yoseph Bornstein | |
$ | 13,125 | | |
| - | | |
$ | 64,116 | | |
| - | | |
| - | | |
| - | | |
$ | 77,241 | |
Scott Burell | |
$ | 15,000 | | |
| - | | |
$ | 64,116 | | |
| - | | |
| - | | |
| - | | |
$ | 79,116 | |
Martin Madden | |
$ | 15,000 | | |
| - | | |
$ | 64,116 | | |
| - | | |
| - | | |
| - | | |
$ | 79,116 | |
Prattipati Laxminarain | |
$ | 11,250 | | |
| - | | |
$ | 64,116 | | |
| - | | |
| - | | |
| - | | |
$ | 75,366 | |
Aileen Stockburger | |
$ | 10,625 | | |
| - | | |
$ | 67,504 | | |
| - | | |
| - | | |
| - | | |
$ | 78,129 | |
Tal Wenderow | |
$ | 10,000 | | |
| - | | |
$ | 66,819 | | |
| - | | |
| - | | |
| - | | |
$ | 76,819 | |
(1) |
Amounts
shown do not reflect cash compensation actually received by the director. Instead, the amounts shown are the non-cash aggregate grant
date fair values of stock option awards made during the period presented as determined pursuant to U.S. GAAP. The assumptions used
to calculate the fair value of stock option awards are described in Note 9 to the Consolidated Financial Statements of the Company
included in this prospectus for the fiscal year ended December 31, 2022. |
Mr.
Gadot received compensation for his services to the Company as set forth under the summary compensation table above.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Related
parties can include any of our directors or executive officers, certain of our stockholders and their immediate family members. Each
year, we prepare and require our directors and executive officers to complete Director and Officer Questionnaires identifying any transactions
with us in which the officer or director or their family members have an interest. This helps us identify potential conflicts of interest.
A conflict of interest occurs when an individual’s private 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 and employees who may have a potential or apparent conflict
of interest to immediately notify our general counsel, who serves as our compliance officer. In addition, the Corporate Governance Committee
is responsible for considering and reporting to the Board any questions of possible conflicts of interest of Board members. Our code
of ethics further requires pre-clearance before any employee, officer or director engages in any personal or business activity that may
raise concerns about conflict, potential conflict or apparent conflict of interest. Copies of our code of ethics and the Corporate Governance
Committee charter are posted on the corporate governance section of our website at www.microbotmedical.com.
There
have been no related party transactions or any other transactions or relationships required to be disclosed pursuant to Item 404 of Regulation
S-K.
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
existing compensation plans as of December 31, 2023.
| |
Number of securities to be issued
upon exercise of outstanding options, warrants and rights | | |
Weighted-average
exercise price of outstanding options, warrants and
rights | | |
Number of securities remaining available
for future issuance | |
Plan Category | |
| | | |
| | | |
| | |
Equity compensation plans approved by security holders: | |
| | | |
| | | |
| | |
2017 Equity Incentive Plan | |
| 492,133 | | |
$ | 10.48 | | |
| 131,585 | |
2020 Omnibus Performance Award Plan | |
| 1,438,806 | | |
$ | 4.19 | | |
| 581,846 | |
Equity compensation plans not approved by security holders: | |
| | | |
| | | |
| | |
Microbot Israel Employee Stock Option Plan(1) | |
| 61,577 | | |
$ | 0.01 | | |
| - | |
Stock Options (2) | |
| 77,
846 | | |
$ | 4.20 | | |
| - | |
Total | |
| 2,070,362 | | |
| | | |
| 713,431 | |
(1) |
Such
options were originally issued by Microbot Israel under its Employee Stock Option Plan, and represented the right to purchase an
aggregate of 500,000 of Microbot Israel’s ordinary shares. As of the effective time of the Merger, such options were retroactively
adjusted to reflect the Merger and now 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,
Company Group Chairman and majority equity owner, and represented the right to purchase an aggregate of 486,263 of Microbot Israel’s
ordinary shares. As of the effective time of the Merger, such options were retroactively adjusted to reflect the Merger and now represent
the right to purchase shares of our common stock. |
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table shows the number of shares of our common stock beneficially owned, as of January 24, 2024, by (i) each of our
directors and director nominees, (ii) each of our named executive officers, (iii) all of our current directors and executive officers
as a group, and (iv) all those known by us to be a beneficial owner of more than 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 December 31, 2023. We calculated
percentage ownership in accordance with the rules of the SEC. The percentage of common stock beneficially owned is based on 13,392,999
shares outstanding as of January 24, 2024. In addition, shares issuable pursuant to options or other convertible securities that
may be acquired within 60 days of January 24, 2024 are deemed to be issued and outstanding and have been treated as outstanding
in calculating and determining the beneficial ownership and percentage ownership of those persons possessing those securities, but not
for any other persons.
This
table is based on information supplied by each director, officer and principal stockholder of the Company. Except as indicated in footnotes
to this table, the Company believes that the stockholders named in this table have sole voting and investment power with respect to all
shares of Common Stock shown to be beneficially owned by them, based on information provided by such stockholders. Unless otherwise indicated,
the address for each director, executive officer and 5% or greater stockholders of the Company listed is: c/o Microbot Medical Inc.,
288 Grove Street, Suite 388, Braintree, MA 02184.
Beneficial Owner | |
Number of Shares Beneficially Owned | | |
Percentage of Common Stock Beneficially
Owned | |
Harel Gadot(1) | |
| 846,206 | | |
| 6.00 | % |
Yoseph Bornstein(2) | |
| 272,036 | | |
| 2.03 | % |
Scott Burell(3) | |
| 30,008 | | |
| * | |
Martin Madden(3) | |
| 30,008 | | |
| * | |
Prattipati Laxminarain(3) | |
| 30,008 | | |
| * | |
Aileen Stockburger(3) | |
| 24,912 | | |
| * | |
Simon Sharon(3) | |
| 60,045 | | |
| * | |
Tal Wenderow(3) | |
| 23,321 | | |
| * | |
Rachel Vaknin(3) | |
| 29,075 | | |
| * | |
Juan Diaz-Cartelle(3) | |
| – | | |
| – | |
Eyal Morag(3) | |
| 40,625 | | |
| * | |
All current directors and
executive officers as a group (10 persons)(4) | |
| 1,345,619 | | |
| 9.37 | % |
* |
Less
than 1%. |
(1) |
Includes
(i) 136,847 shares of our common stock owned by MEDX Ventures Group LLC, (ii) 77,846 shares of our common stock issuable upon the
exercise of options granted to MEDX Ventures Group LLC, and (iii) 631,513 shares of our common stock issuable upon the exercise
of options granted to Mr. Gadot. Mr. Gadot is the Chief Executive Officer, Company Group Chairman and majority equity owner of MEDX
Venture Group, LLC and thus may be deemed to share voting and investment power over the shares and options beneficially owned by
this entity. |
(2) |
Represents
(i) 242,028 shares of our common stock owned by LSA - Life Science Accelerator Ltd. and (ii) 30,008 shares of our common stock issuable
to Mr. Bornstein upon exercise of options. Based on representations and other information made or provided to the Company by Mr.
Bornstein, Mr. Bornstein is the CEO and Director of LSA - Life Science Accelerator Ltd. and of Shizim Ltd., and Mr. Bornstein is
the majority equity owner of Shizim Ltd. Shizim Ltd. is the majority equity owner of LSA - Life Science Accelerator Ltd. Accordingly,
Mr. Bornstein may be deemed to share voting and investment power over the shares beneficially owned by these entities and has an
address of 16 Irus Street, Rosh-Ha’Ayin Israel 4858022. |
(3) |
Represents
options to acquire shares of our common stock. |
(4) |
Includes
shares of our common stock issuable upon the exercise of options as set forth in footnotes (1), (2) and (3). |
DILUTION
The
common stock to be sold by the selling stockholders is common stock that is issuable upon exercise of outstanding preferred options.
To the extent the common stock underlying the preferred options are issued, there will be dilution to the ownership interests of our
existing stockholders.
SELLING
STOCKHOLDERS
The
following table set forth certain information regarding the selling stockholders and the shares of common stock beneficially owned by
them, which information is available to us as of January 24, 2024. The selling stockholders may offer the shares under this prospectus
from time to time and may elect to sell some, all or none of the shares set forth under this prospectus. However, for the purposes of
the table below, we have assumed that, after completion of the offering, none of the shares covered by this prospectus will be held by
the selling stockholders. In addition, a selling stockholder may have sold, transferred or otherwise disposed of all or a portion of
that holder’s shares of common stock since the date on which the selling stockholder provided information for this table. We have
not made independent inquiries about such transfers or dispositions. See the section entitled “Plan of Distribution” beginning
on page 66.
Beneficial
ownership is determined in accordance with Rule 13d-3(d) promulgated by the SEC under the Exchange Act. The percentage of shares beneficially
owned prior to the offering is based on 13,392,999 shares of our common stock outstanding as of January 24, 2024.
| |
Number of Shares of Common Stock Beneficially
Owned | | |
| | |
Number of Shares of Common | | |
Shares of Common Stock Beneficially
Owned After Sale of All Shares of Common Stock Pursuant to this Prospectus | |
Selling Stockholder | |
Before Any
Sale | | |
% of Class | | |
Stock Offered | | |
Number of Shares | | |
% of Class | |
Armistice Capital,
LLC(1) | |
| 1,360,517 | | |
| 9.22 | % | |
| 1,360,517 | | |
| – | | |
| – | |
Intracoastal Capital, LLC(2) | |
| 221,062 | | |
| 1.62 | % | |
| 221,062 | | |
| – | | |
| – | |
CVI Investments, Inc.(3)(4) | |
| 104,103 | | |
| * | | |
| 104,103 | | |
| – | | |
| – | |
Noam Rubenstein(4) | |
| 92,918 | (5) | |
| * | | |
| 26,549 | | |
| 66,369 | | |
| * | |
Michael Vasinkevich(4) | |
| 189,157 | (5) | |
| 1.39 | % | |
| 54,047 | | |
| 135,110 | | |
| 1.0 | % |
Craig Schwabe(4) | |
| 9,956 | (5) | |
| * | | |
| 2,845 | | |
| 7,111 | | |
| * | |
Charles Worthman(4) | |
| 2,951 | (5) | |
| * | | |
| 843 | | |
| 2,108 | | |
| * | |
TOTAL | |
| 1,980,664 | | |
| 12.88 | % | |
| 1,769,966 | | |
| 210,698 | | |
| 1.55 | % |
* |
Represents
beneficial ownership of less than one percent of the outstanding shares of our common stock. |
(1) |
Represents
options to purchase shares of our common stock. The securities are directly held by Armistice Capital Master Fund Ltd., a Cayman
Islands exempted company (the “Master Fund”), and may be deemed to be beneficially owned by: (i) Armistice Capital, LLC
(“Armistice Capital”), as the investment manager of the Master Fund; and (ii) Steven Boyd, as the Managing Member of
Armistice Capital. The options are subject to a beneficial ownership limitation of 4.99%, which such limitation restricts the
selling stockholder from exercising that portion of the options that would result in it and its affiliates owning, after
exercise, a number of shares of common stock in excess of the beneficial ownership limitation. The amounts and percentages in the
table do not give effect to the beneficial ownership limitations. The address of Armistice Capital and the Master Fund is c/o
Armistice Capital, LLC, 510 Madison Avenue, 7th Floor, New York, NY 10022. |
(2) |
Consists
of options to purchase shares of our common stock. Mitchell P. Kopin and Daniel B. Asher, each of whom are managers of Intracoastal
Capital LLC (“Intracoastal”), have shared voting control and investment discretion over the securities reported herein
that are held by Intracoastal. As a result, each of Mr. Kopin and Mr. Asher may be deemed to have beneficial ownership (as determined
under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the securities reported herein that are held by Intracoastal.
The options are subject to a beneficial ownership limitation of 4.99%, which such limitation restricts the selling stockholder from
exercising that portion of the options that would result in the selling stockholder and its affiliates owning, after exercise, a
number of shares of common stock in excess of the beneficial ownership limitation. The address of Intracoastal is 245 Palm Trail, Delray Beach, FL 33483. |
(3) |
Consists
of options to purchase shares of our common stock. Heights Capital Management, Inc., the authorized agent of CVI Investments, Inc.
(“CVI”), has discretionary authority to vote and dispose of the shares held by CVI and may be deemed to be the beneficial
owner of these shares. Martin Kobinger, in his capacity as Investment Manager of Heights Capital Management, Inc., may also be deemed
to have investment discretion and voting power over the shares held by CVI. Mr. Kobinger disclaims any such beneficial ownership
of the shares. CVI is affiliated with one or more FINRA members, none of whom are currently expected to participate in the sale pursuant
to the Registration Statement on Form S-1 of which this prospectus forms a part. The options are subject to a beneficial ownership
limitation of 4.99%, which such limitation restricts the selling stockholder from exercising that portion of the options that would
result in the selling stockholder and its affiliates owning, after exercise, a number of shares of common stock in excess of the
beneficial ownership limitation. The address of CVI is c/o Heights Capital Management, Inc., 101 California Street, Suite 3250, San Francisco, CA 94111. |
(4) |
The
selling stockholder is an affiliate of a registered broker-dealer. |
(5) |
Consists
of warrants or options to purchase shares of common stock. Each of such selling stockholders is affiliated with H.C. Wainwright &
Co., LLC, a registered broker dealer with a registered address of c/o H.C. Wainwright & Co., LLC, 430 Park Ave, 3rd Floor, New
York, NY 10022, and has sole voting and dispositive power over the securities held. The number of shares beneficially owned prior
to this offering consist of shares of common stock issuable upon exercise of placement agent warrants, which were received as compensation
for placement agent services provided by Wainwright to the Company from time to time over the last three years. Such selling stockholder
acquired the placement agent warrants in the ordinary course of business and, at the time the placement agent warrants were acquired,
the selling stockholder had no agreement or understanding, directly or indirectly, with any person to distribute such securities. |
Information
about any other selling stockholders will be included in prospectus supplements or post-effective amendments, if required. Information
about the selling stockholders may change from time to time. Any changed information with respect to which we are given notice will be
included in prospectus supplements.
Material
Relationships with the Selling Stockholders
Other
than in connection with the transactions described above and elsewhere in this prospectus, we have not had any material relationships
with the selling stockholders in the last three years.
PLAN
OF DISTRIBUTION
The
selling stockholders, which, as used herein, includes donees, pledgees, transferees or other successors-in-interest selling shares of
common stock or interests in shares of common stock received after the date of this prospectus from a selling stockholder as a gift,
pledge, partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of their
shares of common stock or interests in shares of common stock on any stock exchange, market or trading facility on which the shares are
traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices
related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices.
The
selling stockholders may use any one or more of the following methods when disposing of shares or interests therein:
| ● | ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| | |
| ● | block
trades in which the broker-dealer will attempt to sell the shares as agent, but may position
and resell a portion of the block as principal to facilitate the transaction; |
| | |
| ● | purchases
by a broker-dealer as principal and resale by the broker-dealer for its account; |
| | |
| ● | an
exchange distribution in accordance with the rules of the applicable exchange; |
| | |
| ● | privately
negotiated transactions; |
| | |
| ● | short
sales effected after the date the registration statement of which this prospectus is a part
is declared effective by the SEC; |
| | |
| ● | through
the writing or settlement of options or other hedging transactions, whether through an options
exchange or otherwise; |
| | |
| ● | broker-dealers
may agree with the selling stockholders to sell a specified number of such shares at a stipulated
price per share; |
| | |
| ● | a
combination of any such methods of sale; and |
| | |
| ● | any
other method permitted by applicable law. |
The
selling stockholders may, from time to time, pledge or grant a security interest in some or all of the shares of common stock owned by
them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares
of common stock, from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable
provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors-in-interest
as selling stockholders under this prospectus. The selling stockholders also may transfer the shares of common stock in other circumstances,
in which case the transferees, pledgees or other successors-in-interest will be the selling beneficial owners for purposes of this prospectus.
In
connection with the sale of our common stock or interests therein, the selling stockholders may enter into hedging transactions with
broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging
the positions they assume. The selling stockholders may also sell shares of our common stock short and deliver these securities to close
out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling stockholders
may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative
securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which
shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect
such transaction).
The
aggregate proceeds to the selling stockholders from the sale of the common stock offered by them will be the purchase price of the common
stock less discounts or commissions, if any. Each of the selling stockholders reserves the right to accept and, together with their agents
from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents. We will
not receive any of the proceeds from this offering. Upon any exercise of the warrants by payment of cash, however, we will receive the
exercise price of the warrants.
The
selling stockholders also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities
Act, provided that they meet the criteria and conform to the requirements of that rule.
The
selling stockholders and any underwriters, broker-dealers or agents that participate in the sale of the common stock or interests therein
may be “underwriters” within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions
or profit they earn on any resale of the shares may be underwriting discounts and commissions under the Securities Act. Selling stockholders
who are “underwriters” within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery
requirements of the Securities Act.
To
the extent required, the shares of our common stock to be sold, the names of the selling stockholders, the respective purchase prices
and public offering prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a
particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration
statement of which this prospectus is a part.
In
order to comply with the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through
registered or licensed brokers or dealers. In addition, in some states the common stock may not be sold unless it has been registered
or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.
We
have advised the selling stockholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares
in the market and to the activities of the selling stockholders and their affiliates. In addition, to the extent applicable we will make
copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling stockholders for the purpose
of satisfying the prospectus delivery requirements of the Securities Act. The selling stockholders may indemnify any broker-dealer that
participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities
Act.
We
will pay all expenses of the registration of the shares of common stock, including, without limitation, SEC filing fees and expenses
of compliance with state securities or “blue sky” laws; provided, however, that each selling stockholder will pay all underwriting
discounts and selling commissions, if any, and any related legal expenses incurred by it. We will indemnify the selling stockholders
against certain liabilities, including some liabilities under the Securities Act, arising in connection with the registration statement
of which this prospectus is a part.
DESCRIPTION
OF CAPITAL STOCK
The
following description summarizes the material terms of our capital stock as of the date of this prospectus. Because it is only a summary,
it does not contain all the information that may be important to you. For a complete description of our capital stock, you should refer
to our certificate of incorporation and our bylaws, and to the provisions of applicable Nevada law.
General
Our
authorized capital stock consists of 60,000,000 shares of common stock, par value $0.01, of which 13,392,999 shares were issued and outstanding
as of January 24, 2024 and 1,000,000 shares of preferred stock, none of which are issued and outstanding. Our preferred stock
and/or common stock may be issued from time to time without prior approval by our stockholders. Our preferred stock and/or common stock
may be issued for such consideration as may be fixed from time to time by our Board of Directors. Our Board of Directors may issue such
shares of our preferred stock in one or more series, with such voting powers, designations, preferences and rights or qualifications,
limitations or restrictions thereof as shall be stated in the resolution or resolutions.
Common
Stock
We
are authorized to issue 60,000,000 shares of common stock, $0.01 par value. Each share of common stock shall have one vote per share
for all purposes. The holders of a majority of the shares entitled to vote, present in person or represented by proxy shall constitute
a quorum at all meetings of our stockholders. Our common stock does not provide preemptive, subscription or conversion rights and there
are no redemption or sinking fund provisions or rights. Our common stock holders are not entitled to cumulative voting for election of
the Board of Directors.
Holders
of common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders and do not have cumulative
voting rights. Holders of common stock are entitled to receive proportionately any dividends as may be declared by our board of directors,
out of funds that we may legally use to pay dividends, subject to any preferential dividend rights of any outstanding series of preferred
stock or series of preferred stock that we may designate and issue in the future. All shares of common stock outstanding as of the date
of this prospectus and, upon issuance and sale, all shares of common stock that we may offer pursuant to this prospectus, will be fully
paid and nonassessable.
In
the event of our liquidation or dissolution, the holders of common stock are entitled to receive proportionately our net assets available
for distribution to stockholders after the payment of all debts and other liabilities and subject to the prior rights of any outstanding
preferred stock. Holders of common stock have no preemptive, subscription, redemption or conversion rights. There are no redemption or
sinking fund provisions applicable to the common stock.
Preferred
Stock
The
Company is authorized to issue 1,000,000 shares of preferred stock. Our Board of Directors is authorized to cause us to issue, from our
authorized but unissued shares of preferred stock, one or more series of preferred stock, to establish from time to time the number of
shares to be included in each such series, as well as to fix the designation and any preferences, conversion and other rights and limitations
of such series. These rights and limitations may include voting powers, limitations as to dividends, and qualifications and terms and
conditions of redemption of the shares of each such series. As of the date of this prospectus, no shares of our preferred stock were
outstanding or designated.
Options
As
of December 31, 2023, we had:
|
● |
2,070,362
shares of our common stock issuable upon the
exercise of outstanding stock options granted to employees, directors and consultants, with exercise prices ranging from approximately
$0.005 to $15.75 and having a weighted-average exercise price of $5.56 per share; |
|
|
|
|
● |
131,585
shares of our common stock reserved for future grant under our 2017 Equity Incentive Plan; and |
|
|
|
|
● |
581,846
shares of our common stock reserved for future
grant under our 2020 Omnibus Performance Award Plan. |
Warrants
and Preferred Investment Options
As
of January 24, 2024, we had outstanding:
| ● | 51,125
shares of our common stock issuable upon the exercise of outstanding warrants expiring in
October 2027, at an exercise price per share of $6.1125; |
| ● | 32,778
shares of our common stock issuable upon the exercise of outstanding warrants expiring in
November 2026, at an exercise price per share of $2.75; |
| ● | 60,476
shares of our common stock issuable upon the exercise of outstanding warrants expiring in
November 2026, at an exercise price per share of $2.75; |
| ● | 35,088
shares of our common stock issuable upon the exercise of outstanding warrants expiring in
November 2026, at an exercise price per share of $2.6719; |
| ● | 1,685,682
shares of our common stock issuable upon the exercise of outstanding series E preferred investment
options expiring in July 2029, at an exercise price per share of $1.50; |
| ● | 31,231
shares of our common stock issuable upon the exercise of outstanding warrants expiring in
June 2028, at an exercise price per share of $4.0625; and |
| ● | 84,284
shares of our common stock issuable upon the exercise of outstanding placement agent preferred
investment options expiring in July 2029, at an exercise price per share of $2.025. |
The common stock being registered pursuant to
the Registration Statement on Form S-1 of which this prospectus forms a part, are underlying our 1,685,682 outstanding series E preferred
investment options expiring in July 2029 and our 84,284 outstanding placement agent preferred investment options expiring in July 2029.
See “Prospectus Summary-Recent Developments-Preferred Investment Option Inducement Transaction” above, for a summary
of the terms of the series E preferred investment options and the placement agent preferred investment options.
Trading
Market
The
shares of our common stock are currently quoted on the Nasdaq Capital Market under the symbol “MBOT”.
Transfer
Agent
The
transfer agent of our common stock is Computershare Trust Company, N.A. Its address is 33 North LaSalle Street, Suite 1100, Chicago,
IL 60602.
Certain
Provisions of Delaware Law and of the Company’s Certificate of Incorporation and Bylaws
Anti-Takeover
Provisions
Delaware
Law
We
are subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law, or DGCL. Section 203 prohibits a
publicly-held Delaware corporation from engaging in a “business combination” with an “interested stockholder”
for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business
combination is, or the transaction in which the person became an interested stockholder was, approved in a prescribed manner or another
prescribed exception applies. For purposes of Section 203, a “business combination” is defined broadly to include a merger,
asset sale or other transaction resulting in a financial benefit to the interested stockholder, and, subject to certain exceptions, an
“interested stockholder” is a person who, together with his or her affiliates and associates, owns, or within three years
prior, did own, 15% or more of the corporation’s voting stock.
Staggered
Board
Our
restated certificate of incorporation and restated by-laws provide for the Board of Directors to be divided into three classes serving
staggered terms. At each annual meeting of stockholders, directors elected to succeed those directors whose terms expire are elected
for a three-year term of office. All directors elected to our classified Board of Directors will serve until the election and qualification
of their respective successors or their earlier resignation or removal. The Board of Directors is authorized to create new directorships
and to fill such positions so created and is permitted to specify the class to which any such new position is assigned. The person filling
such position would serve for the term applicable to that class. The Board of Directors (or its remaining members, even if less than
a quorum) is also empowered to fill vacancies on the Board of Directors occurring for any reason for the remainder of the term of the
class of directors in which the vacancy occurred. Members of the Board of Directors may only be removed for cause and only by the affirmative
vote of 80% of the outstanding voting stock. These provisions are likely to increase the time required for stockholders to change the
composition of the Board of Directors. For example, in general, at least two annual meetings will be necessary for stockholders to effect
a change in a majority of the members of the Board of Directors. The provision for a classified board could prevent a party who acquires
control of a majority of our outstanding common stock from obtaining control of our Board of Directors until our second annual stockholders
meeting following the date the acquirer obtains the controlling stock interest. The classified board provision could have the effect
of discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us and could increase the
likelihood that incumbent directors will retain their positions.
Advance
notice provisions for stockholder proposals
Our
restated by-laws establish an advance notice procedure for stockholder nominations of candidates for election to our Board of Directors,
as well as procedures for including proposed nominations at special meetings at which directors are to be elected. Stockholders at our
annual meeting may only consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the
direction of our board or by a stockholder who was a stockholder of record on the record date for the meeting, who is entitled to vote
at the meeting and who has given to our secretary timely written notice, in proper form, of the stockholder’s intention to bring
that business before the meeting, and who has complied with the procedures and requirements set forth in the by-laws. Although the by-laws
do not give the Board of Directors the power to approve or disapprove stockholder nominations of candidates or proposals regarding other
business to be conducted at a special or annual meeting, these by-laws may have the effect of precluding the conduct of some business
at a meeting if the proper procedures are not followed or may discourage or defer a potential acquirer from conducting a solicitation
of proxies to elect its own slate of directors or otherwise attempting to obtain control of Microbot.
Special
meetings of stockholders
Special
meetings of the stockholders may be called only by the Board of Directors, president or secretary upon the application of a majority
of the directors. Stockholders are not permitted to call a special meeting or to require our Board of Directors to call a special meeting.
No
stockholder action by written consent
Our
restated certificate of incorporation and restated by-laws do not permit our stockholders to act by written consent. As a result, any
action to be effected by our stockholders must be effected at a duly called annual or special meeting of the stockholders.
Super-majority
stockholder vote required for certain actions.
The
DGCL provides generally that the affirmative vote of a majority of the shares entitled to vote on any matter is required to amend a corporation’s
certificate of incorporation or by-laws, unless the corporation’s certificate of incorporation or by-laws, as the case may be,
requires a greater percentage. Our restated certificate of incorporation requires the affirmative vote of the holders of at least 80%
of our outstanding voting stock to amend or repeal certain provisions of our restated certificate of incorporation. This 80% stockholder
vote would be in addition to any separate class vote that might in the future be required pursuant to the terms of any preferred stock
that might then be outstanding. In addition, an 80% vote is also required for any amendment to, or repeal of, our restated by-laws by
the stockholders. Our restated by-laws may be amended or repealed by a vote of a majority of the total number of authorized directors.
Limitation
of Liability and Indemnification
Our
restated certificate of incorporation and our amended and restated bylaws provide that each person who was or is made a party or is threatened
to be made a party to or is otherwise involved (including, without limitation, as a witness) in any action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he or she is or was one of our directors or officers or
is or was serving at our request as a director, officer, or trustee of another corporation, or of a partnership, joint venture, trust
or other enterprise, including service with respect to an employee benefit plan, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer or trustee or in any other capacity while serving as a director, officer or trustee, shall
be indemnified and held harmless by us to the fullest extent authorized by the DGCL against all expense, liability and loss (including
attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered
by such.
Section
145 of the DGCL permits a corporation to indemnify any director or officer of the corporation against expenses (including attorneys’
fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with any action, suit or proceeding
brought by reason of the fact that such person is or was a director or officer of the corporation, if such person acted in good faith
and in a manner that he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect
to any criminal action or proceeding, if he or she had no reasonable cause to believe his or her conduct was unlawful. In a derivative
action (i.e., one brought by or on behalf of the corporation), indemnification may be provided only for expenses actually and reasonably
incurred by any director or officer in connection with the defense or settlement of such an action or suit if such person acted in good
faith and in a manner that he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, except that
no indemnification shall be provided if such person shall have been adjudged to be liable to the corporation, unless and only to the
extent that the Delaware Chancery Court or the court in which the action or suit was brought shall determine that such person is fairly
and reasonably entitled to indemnity for such expenses despite such adjudication of liability.
Pursuant
to Section 102(b)(7) of the DGCL, Article Ninth of our restated certificate of incorporation eliminates the liability of a director to
us or our stockholders for monetary damages for such a breach of fiduciary duty as a director, except for liabilities arising:
| ● | from
any breach of the director’s duty of loyalty to us or our stockholders; |
| ● | from
acts or omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; |
| ● | under
Section 174 of the DGCL; and |
| ● | from
any transaction from which the director derived an improper personal benefit. |
We
have entered into indemnification agreements with our directors and certain officers, in addition to the indemnification provided in
our restated certificate of incorporation and our amended and restated bylaws, and intend to enter into indemnification agreements with
any new directors and executive officers in the future. We have purchased and intend to maintain insurance on behalf of any person who
is or was a director or officer against any loss arising from any claim asserted against him or her and incurred by him or her in any
such capacity, subject to certain exclusions.
The
foregoing discussion of our restated certificate of incorporation, amended and restated bylaws, indemnification agreements, indemnity
agreement, and Delaware law is not intended to be exhaustive and is qualified in its entirety by such restated certificate of incorporation,
amended and restated bylaws, indemnification agreements, indemnity agreement, or law.
LEGAL
MATTERS
The
validity of the shares of common stock being offered by this prospectus will be passed upon for us by Ruskin Moscou Faltischek, PC, Uniondale,
New York.
EXPERTS
The
consolidated financial statements of Microbot Medical Inc. as of December 31, 2022 and 2021, and for each of the two years in the period
ended December 31, 2022, included in this Prospectus, have been audited by Brightman Almagor Zohar and Co., a Firm in the Deloitte
Global Network, an independent registered public accounting firm, as stated in their report. Such consolidated financial statements are
included in reliance upon the report of such firm given their authority as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
This
prospectus, which constitutes a part of the Registration Statement on Form S-1 that we have filed with the SEC under the Securities Act,
does not contain all of the information in the registration statement and its exhibits. For further information with respect to us and
the common stock offered by this prospectus, you should refer to the registration statement and the exhibits filed as part of that document.
Statements contained in this prospectus as to the contents of any contract or any other document referred to are not necessarily complete,
and in each instance, we refer you to the copy of the contract or other document filed as an exhibit to the registration statement. Each
of these statements is qualified in all respects by this reference.
We
are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, and file annual, quarterly and current
reports, proxy statements and other information with the SEC. You can read our SEC filings, including the registration statement, over
the Internet at the SEC’s website at http://www.sec.gov. We also maintain a website at http://www.microbotmedical.com,
at which you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or
furnished to, the SEC. The information contained in, or that can be accessed through, our website is not part of this prospectus. You
may also request a copy of these filings, at no cost, by writing or telephoning us at: 288 Grove Street, Suite 388, Braintree, MA 02184,
(781) 875-3605.
MICROBOT
MEDICAL INC.
INDEX TO FINANCIAL STATEMENTS
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Shareholders of Microbot Medical Inc.
Opinion
on the Financial Statements
We
have audited the accompanying consolidated balance sheets of Microbot Medical Inc. and its subsidiary (the “Company”) as
of December 31, 2022 and 2021 and the related consolidated statements of comprehensive loss, shareholders’ equity and cash flows,
for each of the two years in the period ended December 31, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022,
in conformity with accounting principles generally accepted in the United States of America.
Going
Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As
discussed in Note 1B to the financial statements, the Company’s financial statements include a net loss of $ 13,168 thousand for
the year ended December 31, 2022 and accumulated deficit of $ 68,761 thousand as of December 31, 2022. The Company is dependent on its
ability to obtain additional debt or equity in order to continue its operations. These conditions raise substantial doubt about its ability
to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis
for Opinion
These
consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion
on the Company’s financial statements based on our audits. 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 of the 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
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits,
we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control over financial 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, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.
Critical
Audit Matter
The
critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated
or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial
statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters
does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit
matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Commitments
and Contingencies: Litigation — Refer to Note 2P and 9 to the financial statements
Critical
Audit Matter Description
The
Company is involved in a litigation as the defendant resulting from the 2017 financing Litigation from third parties may result in a
substantial loss. An estimated loss from a loss contingency is accrued by a charge to expenses or shareholders’ equity if it is
probable that a liability has been incurred and the amount of the loss can be reasonably estimated.
The
Company concluded that the loss from the case is not probable and it cannot be reasonably estimable at this stage and no provision was
recorded as of December 31, 2022.
The
determination of litigation contingency accruals is subject to significant management judgement in assessing the likelihood of a loss
being incurred and when determining whether a reasonable estimate of the loss or range of loss can be made
Given
the inherent uncertainty of the outcome of identified litigation, auditing the valuation assertion of litigation contingency required
a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate management’s assessment
on the likelihood and magnitude of the contingent loss and whether this litigation is reasonably estimable as of December 31, 2022.
How
the Critical Audit Matter Was Addressed in the Audit
Our
audit procedures related to the potential loss contingency liability and disclosure of the litigation included the following, among others:
|
● |
We
made inquiries with management to obtain an understanding of litigation matter and status that the Company is currently undergoing. |
|
|
|
|
● |
We
obtained legal letters from the external legal counsel. |
|
|
|
|
● |
We
inquired of the external and internal legal counsels to determine the status of the case and to understand the basis for management’s
conclusion that the loss from the case is not probable and it cannot be reasonably estimable at this stage. |
|
|
|
|
● |
We
evaluated the assumptions used by management to estimate the litigation contingency likelihood and magnitude, including corroborating
these assumptions with internal and external legal counsel. |
|
|
|
|
● |
We
evaluated the Company’s litigation contingencies disclosure for consistency with our evidence obtained on the litigation matter. |
/s/ Brightman Almagor Zohar
& Co.
Brightman
Almagor Zohar & Co.
Certified
Public Accountants
A
firm in the Deloitte Global Network
Tel
Aviv, Israel
March
31, 2023
We
have served as the Company’s auditor since 2013
MICROBOT
MEDICAL INC.
Consolidated
Balance Sheets
U.S.
dollars in thousands
(Except
share and per share data)
| |
Notes | | |
2022 | | |
2021 | |
| |
| | |
As
of December 31, | |
| |
Notes | | |
2022 | | |
2021 | |
ASSETS | |
| | | |
| | | |
| | |
Current
assets: | |
| | | |
| | | |
| | |
Cash
and cash equivalents | |
| 3 | | |
$ | 2,442 | | |
$ | 13,493 | |
Marketable
securities | |
| 3,4 | | |
| 5,760 | | |
| 1,999 | |
Short-term
deposit | |
| | | |
| 3 | | |
| - | |
Restricted
cash | |
| | | |
| 77 | | |
| 87 | |
Prepaid
expenses and other current assets | |
| 5 | | |
| 532 | | |
| 300 | |
Total
current assets | |
| | | |
| 8,814 | | |
| 15,879 | |
| |
| | | |
| | | |
| | |
Property
and equipment, net | |
| 7 | | |
| 221 | | |
| 244 | |
Operating
right-of-use assets | |
| 6 | | |
| 502 | | |
| 644 | |
Total
assets | |
| | | |
$ | 9,537 | | |
$ | 16,767 | |
| |
| | | |
| | | |
| | |
LIABILITIES
AND STOCKHOLDERS’ EQUITY | |
| | | |
| | | |
| | |
Current
liabilities: | |
| | | |
| | | |
| | |
Accounts
payables | |
| | | |
$ | 116 | | |
$ | 279 | |
Lease
liabilities | |
| 6 | | |
| 283 | | |
| 278 | |
Accrued
liabilities | |
| 8 | | |
| 1,670 | | |
| 1,427 | |
Total
current liabilities | |
| | | |
| 2,069 | | |
| 1,984 | |
| |
| | | |
| | | |
| | |
Non-current
liabilities: | |
| | | |
| | | |
| | |
Long-term
lease liabilities | |
| 6 | | |
| 179 | | |
| 402 | |
Total
liabilities | |
| | | |
| 2,248 | | |
| 2,386 | |
| |
| | | |
| | | |
| | |
Commitments
and contingencies | |
| 9 | | |
| - | | |
| | |
| |
| | | |
| | | |
| | |
Stockholders’
equity: | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | |
Common
stock; $0.01 par value; 60,000,000 shares authorized as of December 31, 2022 and 2021; 7,890,628 and 7,108,133 shares issued and
outstanding as of December 31, 2022 and 2021, respectively. | |
| 10 | | |
| 80 | | |
| 72 | |
Additional
paid-in capital | |
| | | |
| 75,970 | | |
| 69,902 | |
Accumulated
deficit | |
| | | |
| (68,761 | ) | |
| (55,593 | ) |
Total
stockholders’ equity | |
| | | |
| 7,289 | | |
| 14,381 | |
Total
liabilities and stockholders’ equity | |
| | | |
$ | 9,537 | | |
$ | 16,767 | |
The
accompanying notes are an integral part of these consolidated financial statements.
MICROBOT
MEDICAL INC.
Consolidated
Statements of Comprehensive Loss
U.S.
dollars in thousands
(Except
share and per share data)
| |
2022 | | |
2021 | |
| |
For
the Years Ended December
31, | |
| |
2022 | | |
2021 | |
Research
and development | |
$ | (7,736 | ) | |
$ | (6,153 | ) |
General
and administrative | |
| (5,545 | ) | |
| (5,204 | ) |
Operating
loss | |
| (13,281 | ) | |
| (11,357 | ) |
| |
| | | |
| | |
Financing
income, net | |
| 118 | | |
| 44 | |
Capital
loss | |
| (5 | ) | |
| - | |
Net
loss | |
$ | (13,168 | ) | |
$ | (11,313 | ) |
| |
| | | |
| | |
Basic
and diluted net loss per share | |
$ | (1.81 | ) | |
$ | (1.59 | ) |
| |
| | | |
| | |
Basic
and diluted weighted average common shares outstanding | |
| 7,260,344 | | |
| 7,108,133 | |
The
accompanying notes are an integral part of these consolidated financial statements.
MICROBOT
MEDICAL INC.
Consolidated
Statements of Shareholders’ Equity
U.S.
dollars in thousands
(Except
share and per share data)
| |
Shares | | |
Amount | | |
Amount | | |
Amount | | |
Amount | |
| |
Common
Stock | | |
Additional
Paid-In Capital | | |
Accumulated
Deficit | | |
Total
Stockholders’ Equity | |
| |
Shares | | |
Amount | | |
Amount | | |
Amount | | |
Amount | |
Balances,
December 31, 2021 | |
| 7,108,133 | | |
$ | 72 | | |
$ | 69,902 | | |
$ | (55,593 | ) | |
$ | 14,381 | |
Balance | |
| 7,108,133 | | |
$ | 72 | | |
$ | 69,902 | | |
$ | (55,593 | ) | |
$ | 14,381 | |
Issuance
of common stock and warrants net of issuance costs | |
| 782,495 | | |
| 8 | | |
| 4,316 | | |
| - | | |
| 4,324 | |
Share-based
compensation | |
| - | | |
| - | | |
| 1,752 | | |
| - | | |
| 1,752 | |
Net
loss | |
| - | | |
| - | | |
| - | | |
| (13,168 | ) | |
| (13,168 | ) |
Balances,
December 31, 2022 | |
| 7,890,628 | | |
$ | 80 | | |
$ | 75,970 | | |
$ | (68,761 | ) | |
$ | 7,289 | |
Balance | |
| 7,890,628 | | |
$ | 80 | | |
$ | 75,970 | | |
$ | (68,761 | ) | |
$ | 7,289 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Balances,
December 31, 2020 | |
| 7,108,133 | | |
$ | 72 | | |
$ | 68,516 | | |
$ | (44,280 | ) | |
$ | 24,308 | |
Balance | |
| 7,108,133 | | |
$ | 72 | | |
$ | 68,516 | | |
$ | (44,280 | ) | |
$ | 24,308 | |
Share-based
compensation | |
| - | | |
| - | | |
| 1,386 | | |
| - | | |
| 1,386 | |
Net
loss | |
| - | | |
| - | | |
| - | | |
| (11,313 | ) | |
| (11,313 | ) |
Balances,
December 31, 2021 | |
| 7,108,133 | | |
$ | 72 | | |
$ | 69,902 | | |
$ | (55,593 | ) | |
$ | 14,381 | |
Balance | |
| 7,108,133 | | |
$ | 72 | | |
$ | 69,902 | | |
$ | (55,593 | ) | |
$ | 14,381 | |
The
accompanying notes are an integral part of these consolidated financial statements.
MICROBOT
MEDICAL INC.
Consolidated
Statements of Cash Flows
U.S.
dollars in thousands
| |
2022 | | |
2021 | |
| |
For
the Years Ended December 31, | |
| |
2022 | | |
2021 | |
Operating
activities: | |
| | | |
| | |
Net
loss | |
$ | (13,168 | ) | |
$ | (11,313 | ) |
Adjustments
to reconcile net loss to net cash flows used in operating activities: | |
| | | |
| | |
Depreciation
and amortization | |
| 102 | | |
| 76 | |
Unrealized
gain from marketable securities | |
| (12 | ) | |
| - | |
Loss
on disposal of property and equipment | |
| 5 | | |
| - | |
Share-based
compensation expense | |
| 1,752 | | |
| 1,386 | |
Changes
in assets and liabilities: | |
| | | |
| | |
Prepaid
expenses and other assets | |
| 13 | | |
| 177 | |
Other
payables and accrued liabilities | |
| (241 | ) | |
| 320 | |
Net
cash flows used in operating activities | |
| (11,549 | ) | |
| (9,354 | ) |
Investing
activities: | |
| | | |
| | |
Short-term
deposit | |
| (3) | | |
| - | |
Purchase
of property and equipment | |
| (84 | ) | |
| (69 | ) |
Sale of property and equipment | |
| | | |
| | |
Proceeds
from sale of investment | |
| - | | |
| 270 | |
Purchase
of marketable securities | |
| (3,749 | ) | |
| - | |
Proceeds
from sales of marketable security | |
| - | | |
| 2,999 | |
Proceeds from maturities of marketable securities | |
| | | |
| | |
Net
cash flows provided by (used in) investing activities | |
| (3,836 | ) | |
| 3,200 | |
Financing
activities: | |
| | | |
| | |
Issuance
of common stock and warrants net of issuance costs | |
| 4,324 | | |
| - | |
Net
cash flows provided by financing activities | |
| 4,324 | | |
| - | |
| |
| | | |
| | |
Decrease
in cash, cash equivalents and restricted cash | |
| (11,061 | ) | |
| (6,154 | ) |
Cash,
cash equivalents and restricted cash at beginning of period | |
| 13,580 | | |
| 19,734 | |
Cash,
cash equivalents and restricted cash at ending of period | |
$ | 2,519 | | |
$ | 13,580 | |
| |
| | | |
| | |
Supplemental
disclosure of cash flow information: | |
| | | |
| | |
| |
| | | |
| | |
Cash
received from interest | |
$ | 51 | | |
$ | 1 | |
Right-of-use
assets and lease liability | |
$ | 103 | | |
$ | 69 | |
The
accompanying notes are an integral part of these consolidated financial statements.
MICROBOT
MEDICAL INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.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 next generation micro-robotics assisted medical technologies targeting the minimally invasive surgery space. The Company is primarily
focused on leveraging its micro-robotic technologies with the goal of redefining surgical robotics while improving surgical outcomes
for patients.
The
Company incorporated on August 2, 1988 in the State of Delaware under the name Cellular Transplants, Inc. The original Certificate of
Incorporation was restated on February 14, 1992 to change the name of the Company to Cyto Therapeutics, Inc. On May 24, 2000, the Certificate
of Incorporation as 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, with Microbot
Medical Ltd., a private medical device company organized under the laws of the State of Israel (“Microbot Israel”). On the
same day and in connection with the Merger, the Company changed its name from StemCells, Inc. to Microbot Medical Inc. On November 29,
2016, the Company’s common stock began trading on the Nasdaq Capital Market under the symbol “MBOT”.
The
Company and its subsidiary are sometimes collectively referred to as the “Company” as the context may require.
To
date, the Company has not generated revenues from its operations. As of December 31, 2022, the Company had cash equivalents and marketable
securities balance of approximately $8,202 excluding encumbered cash, which management believes is sufficient to fund its operations
for additional 4 months form the date of this annual report. As of the issuance date, there is a substantial doubt as to the Company’s
ability to continue as a going concern.
MICROBOT MEDICAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
(Except share and per
share data)
Due
to continuing research and development activities, the Company expects to continue to incur additional losses for the foreseeable future.
While management of the Company believes that it has sufficient funds until August 2023, the Company will seek to raise additional funds
through future issuances of either debt and/or equity securities and possibly additional grants from the Israeli Innovation Authority
and other government institutions. The Company’s ability to raise additional capital in the equity and debt markets is dependent
on a number of factors, including, but not limited to, the market demand for the Company’s stock, which itself is subject to a
number of development and business risks and uncertainties, as well 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.
The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions pertaining to
transactions and matters whose ultimate effect on the financial statements cannot precisely be determined at the time of financial statements
preparation. Although these estimates are based on management’s best judgment, actual results may differ from these estimates.
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 (“US
GAAP”).
|
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 which the 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 foreign currencies
have been re-measured to dollars in accordance with the provisions of Accounting Standards Codification (“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
the statement of operations as financial income or expenses, as appropriate.
|
C. |
Principles
of consolidation: |
The
consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. Inter-company balances and transactions
have been eliminated in consolidation.
|
D.
|
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
time deposits) with original maturities of three months or less at the date of purchase.
Restricted
cash as of December 31, 2022 and 2021 included an $77 and $87, respectively, collateral account for the Company’s leases agreements
and credit line from the bank.
MICROBOT MEDICAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
(Except share and per
share data)
|
F. |
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
value due to the short-term maturity of these instruments.
The
Company measures the fair value of certain of its financial instruments (such as marketable securities) on a recurring basis. The method
of determining the fair value of marketable securities is discussed in Note 4.
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 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 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 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
or liabilities.
|
G. |
Concentrations
of credit risk |
Financial
instruments which potentially subject the Company to credit risk consist primarily of cash and cash equivalents and marketable securities.
The Company holds these investments in highly rated financial institutions. These amounts at times may exceed federally insured limits.
The Company has not experienced any credit losses in such accounts and does not believe it is exposed to any significant credit risk
on these funds. The Company has no off-balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option
contracts, or other hedging arrangements.
|
H.
|
Property
and equipment: |
Property
and equipment are presented at cost less accumulated depreciation. Depreciation is calculated based on the straight-line method over
the estimated useful lives of the assets, at the following annual rates:
ESTIMATED USEFUL LIVES OF PROPERTY AND EQUIPMENT
| |
% | |
| |
| |
Research equipment and software | |
| 25-33 | |
Furniture and office equipment | |
| 7 | |
Leasehold improvements | |
| Over the lease period | |
|
I.
|
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 sheets.
MICROBOT MEDICAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
(Except share and per
share data)
|
J.
|
Basic
and diluted net loss per share: |
Basic
net loss per share is calculated by dividing net loss attributable to common stock shareholders by the weighted average number of shares
of common stock outstanding during the year without consideration of potentially dilutive securities. Diluted net loss per share is calculated
by giving effect to all potentially dilutive securities outstanding for the period using the treasury share method.
All
outstanding stock options and warrants have been excluded from the calculation of the diluted loss per share for the years ended December
31, 2022 and December 31, 2021, since all such securities have an anti-dilutive effect.
|
K.
|
Research
and development expenses |
Research
and development expenses are charged to the statement of comprehensive loss as incurred. Grants for funding of approved research and
development projects are recognized at the time the Company is entitled to such grants, on the basis of the costs incurred and applied
as a deduction from the research and development expenses.
|
L.
|
Share-based
compensation: |
The
Company applies ASC 718-10, “Share-Based Payment” (“ASC 718-10”), which requires the measurement and recognition
of compensation expenses for all share-based payment awards made to employees and directors including stock options under the Company’s
stock plans based on estimated fair values.
ASC
718-10 requires companies to estimate the fair value of stock options using an option-pricing model, which is recognized as an expense
over the requisite service periods in the Company’s statement of comprehensive loss, based on a straight-line method. The Company
recognizes compensation cost for an equity classified award with only service conditions that has a graded vesting schedule on a straight-line
basis over the requisite service period for the entire award, provided that the cumulative amount of compensation cost recognized at
any date at least equals the portion of the grant date fair value of such award that is vested at that date.
The
Company accounts for shares and warrant grants issued to non-employees using the guidance of ASU No. 2018-07 “Compensation - Stock
Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” which expand the scope of Topic 718, Compensation
- Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees
for goods or services.
The
Company estimates the fair value of stock options granted as share-based payment awards using a Black-Scholes options pricing model.
The option-pricing model requires a number of assumptions, of which the most significant are expected volatility and the expected option
term (the time from the grant date until the options are exercised or expire). Expected volatility is estimated based on volatility of
similar companies in the technology sector for equity awards granted prior to the Merger and on the Company’s trading share price
for equity awards granted subsequent to the Merger. The Company has historically not paid dividends and has no foreseeable plans to issue
dividends. The risk-free interest rate is based on the yield from governmental zero-coupon bonds with an equivalent term.
The
expected stock option term is calculated for stock options granted to employees and directors using the “simplified” method.
Grants to non-employees are based on the contractual term. Changes in the determination of each of the inputs can affect the fair value
of the stock options granted and the results of operations of the Company.
MICROBOT MEDICAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
(Except share and per
share data)
The
Company provides for income taxes using the asset and liability approach. Deferred tax assets and liabilities are recorded based on the
differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences
are expected to reverse. 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 or all of the deferred tax assets will not be realized. As of December 31, 2022, and 2021, the Company
had a full valuation allowance against deferred tax assets.
|
N.
|
Marketable
securities: |
The
Company invests in various debt securities and an equity security. Debt securities consist of U.S. treasury securities. Equity security
consist of a mutual fund. The Company records these investments in the consolidated balance sheet at fair value. For all of the Company’s
debt securities, the Company elected the fair value option and thus all unrealized gains or losses for these securities are included
in financing income, net. Unrealized gains or losses for the equity security are included in financing income, net. The Company classifies
its investments as current based on the nature of the investments and their availability for use in current operations.
The
Company implements ASU 2016-02, Leases (“Topic 842”). This ASU requires entities that lease assets to recognize on the balance
sheet the assets and liabilities for the rights and obligations created by leases with lease terms of more than 12 months.
Arrangements
that are determined to be leases at inception are recognized as long-term right-of-use assets (“ROU”) and lease liabilities
in the balance sheet at lease commencement. Operating lease ROU assets and operating lease liabilities are recognized based on the present
value of the future fixed lease payments over the lease term at commencement date. As most of the Company’s leases do not provide
an implicit rate, the Company applies its incremental borrowing rate based on the economic environment at commencement date in determining
the present value of future payments. Lease terms may include options to extend or terminate the lease when it is reasonably certain
that the Company will exercise that option. Lease expense for operating leases or payments are recognized on a straight-line basis over
the lease term.
The
Company determines if an arrangement is a lease at inception. Operating lease assets are presented as operating lease ROU assets, and
corresponding as lease liabilities (current portion), and as operating long-term lease liabilities, on the Company’s consolidated
balance sheets.
Operating
lease ROU assets and operating lease liabilities are recognized based on the present value of the remaining lease payments over the lease
term at commencement date. The Company’s leases do not provide an implicit interest rate. The Company calculates the incremental
borrowing rate to reflect the interest rate that it would have to pay to borrow on a collateralized basis an amount equal to the lease
payments in a similar economic environment over a similar term and considers the Company’s historical borrowing activities and
market data in this determination. The operating lease ROU asset also includes any lease payments made and excludes lease incentives
and initial direct costs incurred. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably
certain that it will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease
term.
The
Company has lease agreements with lease and non-lease components, which it accounts for as a single lease component. The Company has
elected not to recognize ROU assets and lease liabilities for short-term leases that have a term of 12 months or less. The effect of
short-term leases on the Company’s ROU assets and lease liabilities was not material. The Company’s lease agreements do not
contain any material residual value guarantees or material restrictive covenants. In addition, the Company does not have any related
party leases and its sublease transactions are de minimis.
MICROBOT MEDICAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
(Except share and per
share data)
Management
records and discloses legal contingencies in accordance with ASC Topic 450 Contingencies. A provision is recorded when it is both probable
that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company monitors the stage of progress
of its litigation matters to determine if any adjustments are required.
Q.
Government grants
Government
grants which are received from the IIA by way of participation in research and development that is conducted by the Company, are received
in installments as the program progresses based on qualified research spending. Grants received are recognized when the grant becomes
receivable, provided there was reasonable assurance that the Company will comply with the conditions attached to the grant and there
was reasonable assurance the grant will be received.
|
R. |
Recently
issued accounting pronouncements |
From
time to time, new accounting pronouncements are issued by FASB, or other standard setting bodies and adopted by the Company as of the
specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have
a material impact on our financial position or results of operations upon adoption.
In
November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832), Disclosures by Business Entities About Government Assistance,
which requires entities to provide disclosures on material government assistance transactions for annual reporting periods. The disclosures
include information around the nature of the assistance, the related accounting policies used to account for government assistance, the
effect of government assistance on the entity’s financial statements, and any significant terms and conditions of the agreements,
including commitments and contingencies. The new standard is effective for the Company on January 1, 2022 and only impacts annual financial
statement footnote disclosures. Refer to Note 2Q above.
NOTE
3 – CASH AND CASH EQUIVALENTS AND MARKETABLE SECURITIES
The
following table sets forth our cash, cash equivalents and marketable securities as of December 31, 2022 and 2021:
SCHEDULE
OF CASH AND CASH EQUIVALENTS AND MARKETABLE SECURITIES
| |
2022 | | |
2021 | |
| |
As of December 31, | |
| |
2022 | | |
2021 | |
Cash and cash equivalents: | |
| | | |
| | |
Cash | |
$ | 1,195 | | |
$ | 13,493 | |
U.S. treasury securities | |
| 1,247 | | |
| - | |
Total cash and cash equivalents | |
$ | 2,442 | | |
$ | 13,493 | |
| |
| | | |
| | |
Marketable securities: | |
| | | |
| | |
Money market mutual funds | |
$ | 1,999 | | |
$ | 1,999 | |
U.S. treasury securities | |
| 3,761 | | |
| - | |
Total marketable securities | |
$ | 5,760 | | |
$ | 1,999 | |
| |
| | | |
| | |
Total cash and cash equivalents and marketable securities | |
$ | 8,202 | | |
$ | 15,492 | |
The
unrealized gains on our marketable securities were $12 and less than $1 for the years ended December 31, 2022 and 2021, respectively.
Treasuries
have contractual maturities of less than 12 months.
MICROBOT MEDICAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
(Except share and per
share data)
NOTE
4 - FAIR VALUE MEASUREMENTS
Fair
value measurement
The
following table summarizes the Company’s financial assets subject to fair value measurement and the level of inputs used in such
measurements as of December 31, 2022 and 2021:
SCHEDULE OF FAIR VALUE MEASUREMENT INPUTS AND VALUATION TECHNIQUES
| |
As of December 31, 2022 | |
| |
Total | | |
Level 1 | | |
Level 2 | | |
Level 3 | |
| |
| | |
| | |
| | |
| |
Cash equivalents: | |
| | |
| | |
| | |
| |
U.S. treasury securities | |
$ | 1,247 | | |
$ | 1,247 | | |
$ | - | | |
$ | - | |
| |
| | | |
| | | |
| | | |
| | |
Marketable securities: | |
| | | |
| | | |
| | | |
| | |
U.S. treasury securities | |
$ | 3,761 | | |
$ | 3,761 | | |
$ | - | | |
$ | - | |
Money market mutual funds | |
| 1,999 | | |
| 1,999 | | |
| - | | |
| - | |
| |
$ | 5,760 | | |
$ | 5,760 | | |
$ | - | | |
$ | - | |
| |
As of December 31, 2021 | |
| |
Total | | |
Level 1 | | |
Level 2 | | |
Level 3 | |
| |
| | |
| | |
| | |
| |
Cash equivalents: | |
| | | |
| | | |
| | | |
| | |
Money market funds | |
$ | - (*) | | |
$ | - (*) | | |
$ | - | | |
$ | - | |
| |
| | | |
| | | |
| | | |
| | |
Marketable securities: | |
| | | |
| | | |
| | | |
| | |
Money market mutual funds | |
$ | 1,999 | | |
$ | 1,999 | | |
$ | - | | |
$ | - | |
The
Company’s financial assets are measured at fair value on a recurring basis by level within the fair value hierarchy. The Company’s
securities and money market funds are classified as Level 1. Other than that, the Company doesn’t have any other financial assets
or financial liabilities marked to market at fair value as of December 31, 2022 and 2021.
NOTE
5 – PREPAID EXPENSES AND OTHER CURRENT ASSETS
SCHEDULE
OF PREPAID EXPENSES AND OTHER CURRENT ASSETS
| |
2022 | | |
2021 | |
| |
As of December 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Amounts due from government institutions | |
$ | 103 | | |
$ | 174 | |
Prepaid expenses | |
| 429 | | |
| 126 | |
Total prepaid expenses
and other current assets | |
$ | 532 | | |
$ | 300 | |
MICROBOT MEDICAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
(Except share and per
share data)
NOTE
6 - LEASES
In
November 2019, the Company signed a lease agreement for the period from November 2019 till October 2024. In addition, the Company received
an option to extend the lease agreement for additional 5 years.
The
monthly lease payments are approximately $16.
To
secure the lease payments the Company had issued a bank guarantee of $54 in favor of the facility’s lessor.
Supplemental
cash flow information related to operating leases was as follows:
SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO OPERATING LEASES
| |
2022 | | |
2021 | |
| |
For the Years Ended December 31, | |
| |
2022 | | |
2021 | |
Cash payments and expenses | |
$ | 344 | | |
$ | 330 | |
Undiscounted
maturities of operating lease payments as of December 31, 2022 are summarized as follows:
SCHEDULE OF MATURITIES OF LEASE LIABILITIES
| |
2022 | |
| |
As of December 31, | |
| |
2022 | |
2023 | |
$ | 312 | |
2024 | |
| 181 | |
2025 | |
| 2 | |
Total future lease payments | |
| 495 | |
Less imputed interest | |
| (33 | ) |
Total lease liability balance | |
$ | 462 | |
SCHEDULE
OF SUPPLEMENTAL INFORMATION RELATED TO LEASES
| |
As of December 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Operating leases weighted average remaining lease term (in years) | |
| 2 | | |
| 3 | |
Operating leases weighted average discount rate | |
| 9 | % | |
| 9 | % |
NOTE
7 - PROPERTY AND EQUIPMENT, NET
SUMMARY
OF PROPERTY AND EQUIPMENT, NET
| |
As of December 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Cost: | |
| | | |
| | |
Research equipment and software | |
$ | 71 | | |
$ | 68 | |
Leasehold improvement | |
| 229 | | |
| 229 | |
Furniture and office equipment | |
| 308 | | |
| 236 | |
| |
| 608 | | |
| 533 | |
Accumulated Depreciation: | |
| | | |
| | |
Research equipment and software | |
| 63 | | |
| 54 | |
Leasehold improvement | |
| 135 | | |
| 89 | |
Furniture and office equipment | |
| 189 | | |
| 146 | |
| |
| 387 | | |
| 289 | |
| |
$ | 221 | | |
$ | 244 | |
NOTE
8 - ACCRUED LIABILITIES
SUMMARY OF ACCRUED LIABILITIES
| |
2022 | | |
2021 | |
| |
As of December 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Employee-related liabilities | |
$ | 1,372 | | |
$ | 1,031 | |
Other current liabilities | |
| 298 | | |
| 396 | |
Total Accrued Liabilities | |
$ | 1,670 | | |
$ | 1,427 | |
MICROBOT MEDICAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
(Except share and per
share data)
NOTE
9 - COMMITMENTS AND CONTINGENCIES
Government
Grants:
Microbot
Israel has received grants from the Israeli Innovation Authority (“IIA”) for participation in research and development since
2013 through December 31, 2022 totaling approximately $1,500.
In
addition, as a result of the agreement with CardioSert Ltd. (“CardioSert”) on January 4, 2018, Microbot Israel took over
the liability to repay CardioSert’s IIA grants in the aggregate amount of approximately $530.
In
addition, as a result of the agreement with Nitiloop, on October 6, 2022, Microbot Israel took over the liability to repay Nitiloop’s
IIA grants in the aggregate amount of approximately $925.
In
relation to the IIA grants described above, the Company is obligated to pay royalties amounting to 3.0%-3.5% of its future sales of the
products relating to such grants.
The
grants are linked to the exchange rate of the dollar to the New Israeli Shekel and bears interest of Libor per annum.
The
repayment of the grants is contingent upon the successful completion of the Company’s research and development programs and generating
sales. The Company has no obligation to repay these grants, if the project fails, is unsuccessful or aborted or if no sales are generated.
The financial risk is assumed completely by the Government of Israel. The grants are received from the Government on a project-by-project
basis.
TRDF
Agreement:
Microbot
Israel signed an agreement with the Technion Research and Development Foundation (“TRDF”) in June 2012 by which TRDF transferred
to Microbot Israel a global, exclusive, royalty-bearing license (as amended, the License Agreement”). As partial consideration
for the license, Microbot Israel shall pay TRDF royalties on net sales (between 1.5%-3.0%) and on sublicense income as detailed in the
agreement.
Pursuant
to the License Agreement, both parties agreed to extend the next development milestone for the Company’s Self Cleaning Shunt (SCS)
project, which includes the First In Human milestone, until December 2024, and to continue to maintain the TipCat assets, which are still
in a discovery phase, until December 2023. The Company in October 2022 suspended the SCS project while it evaluates alternatives for
the SCS assets (mainly related patents), which may include seeking buyers for the assets, entering into joint ventures or licensing arrangements,
spinning off the assets into a new operating company or discontinuing the project altogether. The Company has certain obligations to
seek to develop and commercialize the SCS and the TipCat assets under the License Agreement. At the time of filing of this Annually Report
on Form 10-K, the Company has been in discussions with TRDF with respect to the suspension of the SCS project and the status of the TipCat
assets, and the Company expects that if it is unsuccessful in entering into alternative arrangements for such assets, the Company will
return the licensed assets to TRDF.
Agreement
with CardioSert Ltd.:
On
January 4, 2018, Microbot Israel entered into an agreement with CardioSert to acquire certain patent-protected technology owned 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. At the end of the 90-day period, at Microbot Israel’s sole option, CardioSert shall assign
and transfer the Technology to Microbot Israel and Microbot Israel shall pay to CardioSert additional amounts and securities as determined
in the agreement.
MICROBOT MEDICAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
(Except share and per
share data)
On
May 25, 2018, Microbot Israel, delivered an Exercise Notice to CardioSert Ltd., notifying it that Microbot Israel elected to exercise
the option to acquire the Technology owned by CardioSert and therefore made an additional cash payment of $250 and 6,738 shares of common
stock estimated at $74.
The
agreement may be terminated by Microbot Israel at any time for convenience upon 90-days’ notice. The agreement may be terminated
by CardioSert in case the first commercial sale does not occur by the third anniversary of the date of signing of the agreement except
if Microbot Israel. has invested more than $2,000 in certain development stages, or the first commercial sale does not occur within 50
months. As of December 31, 2022, the 50 months period has expired and CardioSert can buy-back the Technology at any time. As of the report
date, CardioSert has not purchased back the Technology.
In
each of the above termination 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 upon breach 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 (or approximately US$11.37, based on an exchange
rate of NIS 3.519 to the dollar) covering up to 60 consulting hours per month.
ATM
Agreement:
On
June 10, 2021, the Company entered into an At-the-Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright &
Co. LLC (“Wainwright”), as sales agent, in connection with an “at the market offering” under which the Company
may offer and sell, from time to time in its sole discretion, shares of its Common Stock having an aggregate offering price of up to
$10,000 at market prices or as otherwise agreed with Wainwright. Any shares sold under the ATM Agreement from time to time will be offered
and sold pursuant to the Company’s Registration Statement on Form S-3, which was initially filed on November 25, 2020 and which
was declared effective by the SEC on December 4, 2020, and the related prospectus as supplemented by a prospectus supplement that the
Company filed on June 10, 2021 (the “June 2021 Prospectus”). To date, we have not sold any shares of Common Stock pursuant
to the ATM Agreement, and as of October 13, 2022, the Company suspended the ATM Agreement, which remains in full force and effect, and
terminated the June 2021 Prospectus.
Acquisition
of Nitiloop’s Assets
On
October 6, 2022, Microbot Israel purchased substantially all of the assets, including intellectual property, devices, components and
product related materials (the “Assets”), of Nitiloop Ltd., an Israeli limited liability company (“Nitiloop”).
The Assets include intellectual property and technology in the field of intraluminal revascularization devices with anchoring mechanism
and integrated microcatheter (the “Technology”) and the products or potential products incorporating the Technology owned
by Nitiloop and designated by Nitiloop as “NovaCross”, “NovaCross Xtreme” and “NovaCross BTK” and
any enhancements, modifications and improvements thereof (“Devices”). Microbot Israel did not assume any material liabilities
of Nitiloop other than obligations Nitiloop has to the IIA and relating to certain renewal/maintenance fees for a European patent application.
In
consideration for the acquisition of the Assets, Microbot Israel shall pay royalties to Nitiloop, which shall not, in the aggregate,
exceed $8,000, as follows:
|
● |
Royalties
at a rate of 3% of net revenue generated as a result of sales, license or other exploitation of the Devices; and |
|
● |
Royalties
at a rate of 1.5% of net revenue generated from the sale, license or other exploitation of commercialization of the technology as
part of an integrated product. |
MICROBOT MEDICAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
(Except share and per
share data)
The
Company evaluates acquisitions of assets and other similar transactions to assess whether or not the transaction should be accounted
for as a business combination or asset acquisition by first applying a screen test to determine if substantially all of the fair
value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the
screen is met, the transaction is accounted for as an asset acquisition. If the screen is not met, further determination is required
as to whether or not the Company has acquired inputs and processes that have the ability to create outputs which would meet the
definition of a business. Significant judgment is required in the application of the screen test to determine whether an acquisition
is accounted for as business combination or an acquisition of assets. Based on the Company’s analysis, the Company concluded
that the acquisition of the assets does not meet the definition of a business for
the purpose of applying SEC Rules (S-X Rules of 3-05, 8-04 and 11-01).
Litigation:
Litigation
Resulting from 2017 Financing
The
Company was named as the defendant in a lawsuit captioned Empery Asset Master Ltd., Empery Tax Efficient, LP, Empery Tax Efficient II,
LP, Hudson Bay Master Fund Ltd., Plaintiffs, against Microbot Medical Inc., Defendant, in the Supreme Court of the State of New York,
County of New York (Index No. 651182/2020). The complaint alleges, among other things, that the Company breached multiple representations
and warranties contained in the Securities Purchase Agreement (the “SPA”) related to the Company’s June 8, 2017 equity
financing (the “Financing”), of which the Plaintiffs participated, and fraudulently induced Plaintiffs into signing the SPA.
The complaint seeks rescission of the SPA and return of the Plaintiffs’ $6,750 purchase price with respect to the Financing.
The Company is currently in the discovery phase. Management is unable to assess the likelihood that the Company will succeed at trial
with respect to the SPA or the Financing, having previously lost another lawsuit with respect to the Financing.
Alliance
Litigation
On
April 28, 2019, the Company brought an action against Alliance Investment Management, Ltd. (“Alliance”), later amended to
include Joseph Mona (“Mona”) as a defendant, in the Southern District of New York under Section 16(b) of the Securities Exchange
Act of 1934, 15 U.S.C. 78p(b), to compel Alliance and Mona to disgorge short swing profits realized from purchases and sales of the Company’s
securities within a period of less than six months. The case is Microbot Medical Inc. v. Alliance Investment Management, Ltd., No. 19-cv-3782-GBD
(SDNY). The amount of profits was estimated in the complaint to be approximately $468.
On
October 28, 2019, Alliance filed a motion for summary judgment requesting that the Court dismiss the claims against Alliance. On
February 4, 2020, Mona answered the 16(b) claim the Company asserted against him by claiming various equitable defenses and filed a
counterclaim against the Company under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder,
claiming a net loss on trading the Company’s stock of approximately $151.
On
September 17, 2020, the Court issued a Memorandum Decision & Order that, among other things, granted Alliance’s summary judgment
motion.
On
March 30, 2021, the Court issued an Order; and on March 31, 2021, the Clerk entered judgment against Mona and in favor of the
Company in the amount of approximately $485.
On April 27, 2021, Mona filed an appeal of the Court’s judgment, which is pending before the U.S. Court of Appeals for the
Second Circuit.
MICROBOT MEDICAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
(Except share and per
share data)
In
June 2021, the Magistrate issued an order permitting Mona to file an Amended Counterclaim Complaint, and rejected the Company’s
request to execute on the judgment. The Company filed a response to Mona’s amended counterclaim in July 2021, and in February 2023
filed a motion for summary judgment on Mona’s fraud claim on the basis of inability to demonstrate reliance or loss causation.
The motion is scheduled to be fully briefed and submitted on May 1, 2023.
NOTE
10 - SHARE CAPITAL
Share
Capital Developments
As
of December 31, 2022, and 2021, the Company has 7,890,628 and 7,108,133 shares of common stock issued and outstanding, respectively.
On
October 21, 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an institutional
investor (the “Investor”), pursuant to which the Company issued and sold, in a registered direct offering priced at-the-market
under the rules of The Nasdaq Stock Market (the “Registered Offering”), (i) an aggregate of 782,495 shares of Common Stock,
at an offering price of $4.89 per share and (ii) pre-funded warrants exercisable for up to 240,000 shares of Common Stock (the “Pre-Funded
Warrants”) to the Investor at an offering price of $4.8899 per Pre-Funded Warrant, for aggregate gross proceeds from the Offerings
(as defined below) of approximately $5,000 before deducting the placement agent fee (as described below) and related offering expenses.
Each
Pre-Funded Warrant represents the right to purchase one share of Common Stock at an exercise price of $0.0001 per share. The Pre-Funded
Warrants are exercisable immediately and may be exercised at any time until the Pre-Funded Warrants are exercised in full.
In
a concurrent private placement (the “Private Placement” and, together with the Registered Offering, the “Offerings”),
the Company issued to the Investor (i) Series A preferred investment options to purchase up to 1,022,495 shares of Common Stock (the
“Series A Warrants”) at an exercise price of $4.64 per share and (ii) Series B preferred investment options to purchase up
to 1,022,495 shares of Common Stock (the “Series B Warrants”) at an exercise price of $4.64 per share. Each Series A Warrant
is exercisable immediately and will expire five years from the initial exercise date. Each Series B Warrant is exercisable immediately
and will expire two years from the initial exercise date.
The
Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s
specific terms and applicable authoritative guidance in FASB ASC 480 and FASB ASC 815, “Derivatives and Hedging” (“ASC
815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition
of a liability pursuant to ASC 480, and meet all of the requirements for equity classification under FASB ASC 815, including whether
the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net
cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This
assessment is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
The
Company analyzed the accounting treatment for the Pre-funded Warrants and for the Common Warrants. The Common Stocks of the Company are
recognized as equity under the requirements of Accounting Standard Codification Topic 505 Equity (ASC 505). Based on the Company’s
analysis the Warrants were classified as equity.
On
October 3, 2022 and in connection with the Offerings, the Company entered into an engagement letter with H.C. Wainwright & Co., LLC
(“Wainwright”), pursuant to which Wainwright agreed to serve as the exclusive placement agent for the issuance and sale of
securities of the Company pursuant to the Purchase Agreement. As compensation for such placement agent services, the Company paid Wainwright
aggregate cash fees and reimbursed Wainwright for its expenses aggregating approximately $565. The Company also issued to Wainwright
or its designees warrants to purchase 51,125 shares of Common Stock (the “Wainwright Warrants”). The Wainwright Warrants
have a term of five years from the commencement of sales in the Offerings, and have an exercise price of $6.11 per share. Upon any exercise
for cash of any preferred investment options issued to investors in the offering, the Company obligate to pay 7% percent of the aggregate
gross exercise price of the warrants issued in the Offering and shall issue to Wainwright (or its designees), within five (5) business
days of the Company’s receipt of the exercise price, warrants to purchase that number of shares of common stock of the Company
equal to five (5.0%) percent of the aggregate number of such shares of common stock underlying the preferred investment options that
have been so exercised.
MICROBOT MEDICAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
(Except share and per
share data)
The
Company analyzed the accounting treatment for the Wainwright Warrants issued to Wainwright. Since the Company did not identify any features
causing liability classification of the Wainwright Warrants according to ASC 718, it concluded that the Wainwright Warrants are equity-classified
awards.
Employee
Stock Option Grants
During
the year ended December 31, 2021, the Company granted to Mr. Harel Gadot, the Company’s Chairman of the Board, President and CEO,
options to purchase an aggregate of 190,000 shares of the Company’s common stock, at an exercise price per share of $8.48. The
stock options vest over a period of 2 years as outlined in the option agreements evidencing such grants. As a result, the Company recognized
compensation expenses for the year ended December 31, 2021, in the total amount of $646.
During
the year ended December 31, 2021, the Company granted to certain employees and consultants and directors, options to purchase an aggregate
of 231,426 shares of the Company’s common stock, at an exercise price per share of $6.72 - $7.26. The stock options vest over a
period of 3 years as outlined in the option agreements evidencing such grants. As a result, the Company recognized compensation expenses
for the year ended December 31, 2021, in the total amount of $740.
During
the year ended December 31, 2022, the Company granted to Mr. Harel Gadot, the Company’s Chairman of the Board, President and CEO,
options to purchase an aggregate of 260,000 shares of the Common Stock, at an exercise price per share of $3.73-$6.48. The stock options
vest over a period of three years as outlined in the option agreements evidencing such grants.
During
the year ended December 31, 2022, the Company granted to certain employees, consultants and directors, options to purchase an aggregate
of 270,822 shares of the Common Stock, at an exercise price per share of $3.73-$6.48. The stock options vest over a period of three
years as outlined in the option agreements evidencing such grants.
A
summary of the Company’s option activity related to options to employees and directors, and related information is as follows:
SUMMARY OF STOCK OPTION ACTIVITY
| |
For the Year Ended December 31, 2022 | |
| |
Number of stock options | | |
Weighted average exercise price | |
| |
| | |
| |
Outstanding as of December 31, 2021 | |
| 997,148 | | |
$ | 8.48 | |
Granted | |
| 530,822 | | |
| 5.14 | |
Cancelled | |
| (20,833 | ) | |
| 8.16 | |
Outstanding as of December 31, 2022 | |
| 1,507,137 | | |
$ | 7.31 | |
| |
| | | |
| | |
Vested as of December 31, 2022 | |
| 899,609 | | |
$ | 8.52 | |
| |
For the Year Ended December 31, 2021 | |
| |
Number of stock options | | |
Weighted average exercise price | |
| |
| | |
| |
Outstanding as of December 31, 2020 | |
| 575,722 | | |
$ | 9.14 | |
Granted | |
| 421,426 | | |
| 7.60 | |
Outstanding as of December 31, 2021 | |
| 997,148 | | |
$ | 8.48 | |
| |
| | | |
| | |
Vested as of December 31, 2021 | |
| 568,053 | | |
$ | 9.08 | |
MICROBOT MEDICAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
(Except share and per
share data)
The
Company recognizes forfeitures of outstanding options as they occur.
The
intrinsic value is calculated as the difference between the fair market value of the common stock and the exercise price, multiplied
by the number of in-the-money stock options on those dates that would have been received by the stock option holders had all stock option
holders exercised their stock options on those dates as of December 31, 2022 and December 31, 2021, respectively.
As
of December 31, 2022, and 2021, the aggregate intrinsic value of the outstanding options is $185 and $974 respectively, and the aggregate
intrinsic value of the exercisable options is $185 and $815, respectively.
As
of December 31, 2022, there were approximately $2,036 of total unrecognized compensation costs related to unvested share-based compensation
awards granted under the Share Incentive Plan. The costs are expected to be recognized over a weighted average period of 2.039 years
The
stock options outstanding as of December 31, 2022 and December 31, 2021, summarized by exercise prices, are as follows:
SCHEDULE OF STOCK OPTIONS OUTSTANDING
Exercise price $ | |
Stock options outstanding as of December 31, 2022 | | |
Stock options outstanding as of December 31, 2021 | | |
Weighted average remaining contractual life – years as of December 31, 2022 | | |
Weighted average remaining contractual life – years as of December 31, 2021 | | |
Stock options exercisable as of December 31, 2022 | | |
Stock options exercisable as of December 31, 2021 | |
3.73 | |
| 211,000 | | |
| - | | |
| 10 | | |
| - | | |
| - | | |
| - | |
4.20 | |
| 77,846 | | |
| 77,846 | | |
| 2.0 | | |
| 3.0 | | |
| 77,846 | | |
| 77,846 | |
4.80 | |
| 32,500 | | |
| - | | |
| 9.6 | | |
| - | | |
| - | | |
| - | |
5.06 | |
| 15,808 | | |
| 15,808 | | |
| 6.8 | | |
| 7.8 | | |
| 15,808 | | |
| 11,064 | |
5.71 | |
| 99,823 | | |
| - | | |
| 9.7 | | |
| - | | |
| - | | |
| - | |
5.95 | |
| 17,503 | | |
| 17,503 | | |
| 6.6 | | |
| 7.6 | | |
| 17,503 | | |
| 13,564 | |
6.16 | |
| 31,492 | | |
| 31,492 | | |
| 7.5 | | |
| 8.5 | | |
| 26,282 | | |
| 16,834 | |
6.48 | |
| 182,500 | | |
| - | | |
| 9.1 | | |
| - | | |
| 59,312 | | |
| - | |
6.72 | |
| 117,500 | | |
| 125,000 | | |
| 8.4 | | |
| 9.4 | | |
| 64,624 | | |
| 31,249 | |
7.00 | |
| 81,426 | | |
| 81,426 | | |
| 8.8 | | |
| 9.8 | | |
| 38,676 | | |
| - | |
7.22 | |
| 11,084 | | |
| 11,084 | | |
| 7.9 | | |
| 8.9 | | |
| 7,756 | | |
| 4,432 | |
7.26 | |
| 20,000 | | |
| 25,000 | | |
| 8.8 | | |
| 9.8 | | |
| 8,000 | | |
| - | |
8.16 | |
| 4,902 | | |
| 4,902 | | |
| 7.6 | | |
| 8.6 | | |
| 3,799 | | |
| 2,328 | |
8.48 | |
| 190,000 | | |
| 190,000 | | |
| 8.1 | | |
| 9.1 | | |
| 166,250 | | |
| - | |
8.60 | |
| 9,304 | | |
| 9,304 | | |
| 6.1 | | |
| 7.1 | | |
| 9,304 | | |
| 9,304 | |
9.00 | |
| 10,000 | | |
| 10,000 | | |
| 5.6 | | |
| 6.6 | | |
| 10,000 | | |
| 10,000 | |
9.64 | |
| 166,666 | | |
| 166,666 | | |
| 7.2 | | |
| 8.2 | | |
| 166,666 | | |
| 166,666 | |
15.30 | |
| 35,199 | | |
| 38,533 | | |
| 5.0 | | |
| 6.0 | | |
| 35,199 | | |
| 38,533 | |
15.75 | |
| 131,007 | | |
| 131,007 | | |
| 4.7 | | |
| 5.7 | | |
| 131,007 | | |
| 124,656 | |
(*) - | |
| 61,577 | | |
| 61,577 | | |
| 3.3 | | |
| 4.3 | | |
| 61,577 | | |
| 61,577 | |
| |
| 1,507,137 | | |
| 997,148 | | |
| 7.6 | | |
| 7.6 | | |
| 899,609 | | |
| 568,053 | |
Compensation
expense recorded by the Company for its stock-based employee compensation awards in accordance with ASC 718-10 for the years ended December
31, 2022 and 2021 was $1,752 and $1,386, respectively.
MICROBOT MEDICAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
(Except share and per
share data)
Employee
Stock Option Grants
The
grant date fair values of stock options granted in the years ended December 31, 2022 and 2021 were estimated using the Black-Scholes
valuation model with the following:
SCHEDULE OF STOCK OPTIONS VALUATION ASSUMPTIONS
| |
For the Years Ended December 31, | |
| |
2022 | | |
2021 | |
Expected volatility | |
| 111.2%-161.7% | | |
| 118.3%-134.3% | |
Risk-free interest | |
| 1.7%- 3.7% | | |
| 0.4%-1.2% | |
Dividend yield | |
| -% | | |
| -% | |
Expected terms (years) | |
| 6.2 | | |
| 5.3 | |
Warrants
The
remaining outstanding warrants and terms as of December 31, 2022 and 2021 are as follows:
SCHEDULE OF WARRANTS OUTSTANDING
Issuance date | |
Outstanding and exercisable as of December 31, 2022 | | |
Outstanding and exercisable as of December 31, 2021 | | |
Exercise Price | | |
Exercisable Through |
Series A (2013) | |
| 183 | | |
| 183 | | |
$ | 2,754.00 | | |
April 9, 2023 |
Series B (2016) | |
| - | | |
| 2,770 | | |
$ | 40.50 | | |
March 14, 2022 |
Warrant to underwriters 1.2019 | |
| - | | |
| 8,082 | | |
$ | 8.13 | | |
July 14, 2022 |
Warrant to underwriters 1.2019 | |
| - | | |
| 29,500 | | |
$ | 12.50 | | |
July 15, 2022 |
Warrant to underwriters 12.2019 | |
| 45,643 | | |
| 45,643 | | |
$ | 13.13 | | |
June 25, 2023 |
Warrant to underwriters 12.2019 | |
| 47,619 | | |
| 47,619 | | |
$ | 13.13 | | |
June 27, 2023 |
Warrant to underwriters 12.2019 | |
| 45,045 | | |
| 45,045 | | |
$ | 13.88 | | |
June 30, 2023 |
Series A 10.2022 | |
| 1,022,495 | | |
| - | | |
$ | 4.64 | | |
October 25, 2027 |
Series B 10.2022 | |
| 1,022,495 | | |
| - | | |
$ | 4.64 | | |
October 25, 2024 |
Warrant to underwriters 10.2022 | |
| 51,125 | | |
| - | | |
$ | 6.11 | | |
October 21, 2027 |
NOTE
11 - 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
net loss per share were presented in the consolidated statements of comprehensive loss for the years ended December 31, 2022 and 2021.
Due
to the net loss to common stockholders in each of the periods presented above, diluted loss per share was computed without consideration
to potentially dilutive instruments as their inclusion would have been anti-dilutive. As of December 31, 2022 and 2021, potentially dilutive
securities excluded from the diluted loss per share calculation are as follows:
SCHEDULE
OF POTENTIALLY DILUTIVE SECURITIES EXCLUDED FROM DILUTED LOSS PER SHARE
| |
For the Years Ended December
31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Series A and B warrants 2013 and 2016 | |
| 183 | | |
| 2,953 | |
Warrant to underwriters 12.2019 | |
| 138,307 | | |
| 175,889 | |
Series A and B warrants 10.2022 | |
| 2,044,990 | | |
| - | |
Warrant to underwriters 10.2022 | |
| 51,125 | | |
| - | |
Outstanding options to purchase common stock | |
| 1,507,137 | | |
| 997,148 | |
MICROBOT MEDICAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
(Except share and per
share data)
NOTE
12 - RESEARCH AND DEVELOPMENT EXPENSES, NET
SCHEDULE OF RESEARCH AND DEVELOPMENT EXPENSES
| |
2022 | | |
2021 | |
| |
For the Years Ended December 31, | |
| |
2022 | | |
2021 | |
Payroll and related expenses | |
$ | 3,558 | | |
$ | 3,030 | |
Share-based compensation | |
| 387 | | |
| 183 | |
Professional services | |
| 2,097 | | |
| 1,532 | |
Materials | |
| 559 | | |
| 703 | |
Patents | |
| 341 | | |
| 251 | |
Rent | |
| 224 | | |
| 206 | |
Office and maintenance expenses | |
| 100 | | |
| 123 | |
Depreciation | |
| 102 | | |
| 72 | |
Other | |
| 368 | | |
| 53 | |
Research and development
expense | |
$ | 7,736 | | |
$ | 6,153 | |
NOTE
13 - GENERAL AND ADMINISTRATIVE EXPENSES
SCHEDULE OF GENERAL AND ADMINISTRATIVE EXPENSES
| |
2022 | | |
2021 | |
| |
For the Years Ended December 31, | |
| |
2022 | | |
2021 | |
Payroll and related expenses | |
$ | 1,813 | | |
$ | 1,391 | |
Government fees | |
| 35 | | |
| 170 | |
Share-based compensation | |
| 1,365 | | |
| 1,203 | |
Professional services | |
| 998 | | |
| 1,298 | |
Insurance | |
| 733 | | |
| 732 | |
Public and investor relations | |
| 220 | | |
| 203 | |
Office and maintenance expenses | |
| 120 | | |
| 108 | |
Travel | |
| 180 | | |
| 42 | |
Other | |
| 81 | | |
| 57 | |
General and administrative
expenses | |
$ | 5,545 | | |
$ | 5,204 | |
NOTE
14 - TRANSACTIONS AND BALANCES WITH RELATED PARTIES
SCHEDULE OF RELATED PARTY TRANSACTION AND BALANCES
| |
2022 | | |
2021 | |
| |
For the Years Ended December 31, | |
| |
2022 | | |
2021 | |
Transactions: | |
| | | |
| | |
Payroll and related expenses | |
$ | 2,067 | | |
$ | 1,912 | |
ESOP expenses to CEO and executive officers | |
| 1,172 | | |
| 846 | |
Board of directors fees | |
| 300 | | |
| 300 | |
ESOP expenses to directors | |
| 301 | | |
| 91 | |
Insurance for directors and executives | |
| 722 | | |
| 727 | |
Total | |
$ | 4,562 | | |
$ | 3,876 | |
| |
2022 | | |
2021 | |
| |
As of December 31, | |
| |
2022 | | |
2021 | |
Balances: | |
| | | |
| | |
Bonus to CEO and executive offices | |
| 581 | | |
| 310 | |
Board of directors fees | |
| 75 | | |
| 75 | |
Payroll and related expenses | |
| 92 | | |
| 28 | |
Total | |
$ | 748 | | |
$ | 413 | |
MICROBOT MEDICAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
(Except share and per
share data)
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 is subject to U.S. federal tax rate of 21% for the years ended December 31, 2022 and 2021.
The
Company has not been audited by the Internal Revenue Service since its incorporation.
As
of December 31, 2022 and 2021, the Company has generated accumulated net operating losses in the U.S. of approximately $502,053 and $496,950,
respectively. Net operating losses in the United States are available through 2035. Utilization of U.S. net operating losses may be subject
to substantial annual limitation due to the “change in ownership” provisions of the Internal Revenue Code of 1986 and similar
state provisions. The annual limitation may result in the expiration of net operating losses before utilization.
Microbot
Israel is subject to Israeli corporate tax rate of 23% for the years ended 2022 and 2021. Microbot Israel has not received a final tax
assessment since 2016.
As
of December 31, 2022 and 2021, Microbot Israel has generated accumulated net operating losses in Israel of approximately $34,688 and
$26,623, respectively, which may be carried forward and offset against taxable income in the future for an indefinite period.
The
Company is still in its development stage and has not yet generated revenues, therefore, it is more likely than not that sufficient taxable
income will 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 to its recoverable amounts.
SCHEDULE
OF DEFERRED TAX ASSETS AND LIABILITIES
| |
| | | |
| | |
| |
For the Years Ended December 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Net operating loss carryforwards | |
$ | 113,393 | | |
$ | 109,483 | |
Operation lease liabilities | |
| 105 | | |
| 156 | |
Accrued vacation pay | |
| 71 | | |
| 45 | |
Total deferred tax assets | |
| 113,569 | | |
| 110,684 | |
Less: valuation allowance | |
| (113,455 | ) | |
| (110,536 | ) |
Net deferred tax assets | |
| 114 | | |
| 148 | |
| |
| | | |
| | |
Operating leases, right-of-use assets | |
| (114 | ) | |
| (148 | ) |
Total deferred tax liabilities | |
| (114 | ) | |
| (148 | ) |
Total net deferred tax assets | |
$ | - | | |
$ | - | |
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 and the effective income tax rate:
SCHEDULE OF STATUTORY CORPORATE TAX RATE AND EFFECTIVE INCOME TAX RATE
| |
For the Years Ended December 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Net loss in Israel | |
$ | 8,065 | | |
$ | 6,853 | |
Net loss in U.S. | |
$ | 5,103 | | |
$ | 4,460 | |
Statutory tax rate | |
| 21%-23% | | |
| 21%-23% | |
Income Tax under statutory tax rate | |
| 2,922 | | |
| 2,513 | |
Change in valuation allowance | |
| (2,922 | ) | |
| (2,513 | ) |
Actual provision for income tax | |
$ | - | | |
$ | - | |
NOTE
16 – SUBSEQUENT EVENT
On
February 13, 2023, 240,000 pre-funded warrants were exercised to shares of Common Stock (the “Pre-Funded Warrants”) in exercise
price of $0.0001 per share.
MICROBOT
MEDICAL INC.
Interim
Consolidated Balance Sheets
U.S.
dollars in thousands
(Except
share and per share data)
| |
Notes | | |
As of
September 30,
2023 | | |
As of
December 31,
2022 | |
| |
| | |
Unaudited | | |
Audited | |
ASSETS | |
| | | |
| | | |
| | |
Current assets: | |
| | | |
| | | |
| | |
Cash and cash equivalents | |
| | | |
$ | 1,335 | | |
$ | 2,442 | |
Marketable securities | |
| 2 | | |
| 6,818 | | |
| 5,760 | |
Short-term deposit | |
| | | |
| - | | |
| 3 | |
Restricted cash | |
| | | |
| 46 | | |
| 77 | |
Prepaid expenses and other current assets | |
| | | |
| 208 | | |
| 532 | |
Total current assets | |
| | | |
| 8,407 | | |
| 8,814 | |
| |
| | | |
| | | |
| | |
Property and equipment, net | |
| | | |
| 184 | | |
| 221 | |
Operating right-of-use assets | |
| 3 | | |
| 297 | | |
| 502 | |
Total assets | |
| | | |
$ | 8,888 | | |
$ | 9,537 | |
| |
| | | |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |
| | | |
| | | |
| | |
Current liabilities: | |
| | | |
| | | |
| | |
Accounts payable | |
| | | |
$ | 238 | | |
$ | 116 | |
Lease liabilities | |
| 3 | | |
| 206 | | |
| 283 | |
Accrued liabilities | |
| | | |
| 1,047 | | |
| 1,670 | |
Total current liabilities | |
| | | |
| 1,491 | | |
| 2,069 | |
| |
| | | |
| | | |
| | |
Non-current liabilities: | |
| | | |
| | | |
| | |
Long-term lease liabilities | |
| 3 | | |
| 39 | | |
| 179 | |
Total liabilities | |
| | | |
| 1,530 | | |
| 2,248 | |
| |
| | | |
| | | |
| | |
Shareholders’ equity: | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | |
Common stock; $0.01 par value; 60,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 11,707,317 and 7,890,628 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively. | |
| | | |
| 118 | | |
| 80 | |
Additional paid-in capital | |
| | | |
| 83,587 | | |
| 75,970 | |
Accumulated deficit | |
| | | |
| (76,347 | ) | |
| (68,761 | ) |
Total shareholders’ equity | |
| | | |
| 7,358 | | |
| 7,289 | |
Total liabilities and shareholders’ equity | |
| | | |
$ | 8,888 | | |
$ | 9,537 | |
The
accompanying notes are an integral part of these consolidated financial statements.
MICROBOT
MEDICAL INC.
Interim
Consolidated Statements of Comprehensive Loss
U.S.
dollars in thousands
(Except
share and per share data)
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| |
For the Three Months Ended
September
30, | | |
For the Nine Months Ended
September 30, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| |
Unaudited | | |
Unaudited | |
Research and development, net | |
$ | (1,612 | ) | |
$ | (1,953 | ) | |
$ | (4,594 | ) | |
$ | (5,852 | ) |
General and administrative | |
| (932 | ) | |
| (1,521 | ) | |
| (3,193 | ) | |
| (4,361 | ) |
Operating loss | |
| (2,544 | ) | |
| (3,474 | ) | |
| (7,787 | ) | |
| (10,213 | ) |
| |
| | | |
| | | |
| | | |
| | |
Financing income, net | |
| 98 | | |
| 6 | | |
| 201 | | |
| 43 | |
Net loss | |
$ | (2,446 | ) | |
$ | (3,468 | ) | |
$ | (7,586 | ) | |
$ | (10,170 | ) |
| |
| | | |
| | | |
| | | |
| | |
Basic and diluted net loss per share | |
$ | (0.21 | ) | |
$ | (0.49 | ) | |
$ | (0.79 | ) | |
$ | (1.43 | ) |
Basic and diluted weighted average common shares outstanding | |
| 11,707,317 | | |
| 7,108,133 | | |
| 9,653,337 | | |
| 7,108,133 | |
The
accompanying notes are an integral part of these consolidated financial statements.
MICROBOT
MEDICAL INC.
Interim
Consolidated Statements of Shareholders’ Equity
U.S.
dollars in thousands
(Except
share and per share data)
| |
| | | |
| | | |
| | | |
| | | |
| | |
| |
Common Stock | | |
Additional Paid-In | | |
Accumulated | | |
Total Shareholders’ | |
| |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Equity | |
| |
| | |
| | |
| | |
| | |
| |
Balances, December 31, 2021 (Audited) | |
| 7,108,133 | | |
$ | 72 | | |
$ | 69,902 | | |
$ | (55,593 | ) | |
$ | 14,381 | |
Share-based compensation | |
| - | | |
| - | | |
| 429 | | |
| - | | |
| 429 | |
Net loss | |
| - | | |
| - | | |
| - | | |
| (3,189 | ) | |
| (3,189 | ) |
Balances, March 31, 2022 (Unaudited) | |
| 7,108,133 | | |
$ | 72 | | |
$ | 70,331 | | |
$ | (58,782 | ) | |
$ | 11,621 | |
Share-based compensation | |
| - | | |
| - | | |
| 432 | | |
| - | | |
| 432 | |
Net loss | |
| - | | |
| - | | |
| - | | |
| (3,513 | ) | |
| (3,513 | ) |
Balances, June 30, 2022 (Unaudited) | |
| 7,108,133 | | |
$ | 72 | | |
$ | 70,763 | | |
$ | (62,295 | ) | |
$ | 8,540 | |
Share-based compensation | |
| - | | |
| - | | |
| 461 | | |
| - | | |
| 461 | |
Net loss | |
| - | | |
| - | | |
| - | | |
| (3,468 | ) | |
| (3,468 | ) |
Balances, September 30, 2022 (Unaudited) | |
| 7,108,133 | | |
$ | 72 | | |
$ | 71,224 | | |
$ | (65,763 | ) | |
$ | 5,533 | |
| |
Common Stock | | |
Additional Paid-In | | |
Accumulated | | |
Total Shareholders’ | |
| |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Equity | |
| |
| | |
| | |
| | |
| | |
| |
Balances, December 31, 2022 (Audited) | |
| 7,890,628 | | |
$ | 80 | | |
$ | 75,970 | | |
$ | (68,761 | ) | |
$ | 7,289 | |
Share-based compensation | |
| - | | |
| - | | |
| 412 | | |
| - | | |
| 412 | |
Issuance of common stock upon exercise of warrants | |
| 240,000 | | |
| 3 | | |
| (3 | ) | |
| - | | |
| - | |
Net loss | |
| - | | |
| - | | |
| - | | |
| (2,853 | ) | |
| (2,853 | ) |
Balances, March 31, 2023 (Unaudited) | |
| 8,130,628 | | |
$ | 83 | | |
$ | 76,379 | | |
$ | (71,614 | ) | |
$ | 4,848 | |
Share-based compensation | |
| - | | |
| - | | |
| 349 | | |
| - | | |
| 349 | |
Issuance of common stock and warrants net of issuance costs (*) | |
| 3,576,689 | | |
| 35 | | |
| 6,523 | | |
| - | | |
| 6,558 | |
Net loss | |
| - | | |
| - | | |
| - | | |
| (2,287 | ) | |
| (2,287 | ) |
Balances, June 30, 2023 (Unaudited) | |
| 11,707,317 | | |
$ | 118 | | |
$ | 83,251 | | |
$ | (73,901 | ) | |
$ | 9,468 | |
Balance | |
| 11,707,317 | | |
$ | 118 | | |
$ | 83,251 | | |
$ | (73,901 | ) | |
$ | 9,468 | |
Share-based compensation | |
| - | | |
| - | | |
| 336 | | |
| - | | |
| 336 | |
Net loss | |
| - | | |
| - | | |
| - | | |
| (2,446 | ) | |
| (2,446 | ) |
Balances, September 30, 2023 (Unaudited) | |
| 11,707,317 | | |
$ | 118 | | |
$ | 83,587 | | |
$ | (76,347 | ) | |
$ | 7,358 | |
Balances | |
| 11,707,317 | | |
$ | 118 | | |
$ | 83,587 | | |
$ | (76,347 | ) | |
$ | 7,358 | |
(*) |
Net of issuance costs in the amount of $1,075. |
The
accompanying notes are an integral part of these consolidated financial statements.
MICROBOT
MEDICAL INC.
Interim
Consolidated Statements of Cash Flows
U.S.
dollars in thousands
| |
2023 | | |
2022 | |
| |
For the Nine Months Ended September 30, | |
| |
2023 | | |
2022 | |
| |
Unaudited | | |
Unaudited | |
Operating activities: | |
| | | |
| | |
Net loss | |
$ | (7,586 | ) | |
$ | (10,170 | ) |
Adjustments to reconcile net loss to net cash flows used in operating activities: | |
| | | |
| | |
Depreciation and amortization | |
| 71 | | |
| 69 | |
Interest income and unrealized gains from marketable securities, net | |
| (105 | ) | |
| - | |
Share-based compensation expense | |
| 1,097 | | |
| 1,322 | |
Changes in assets and liabilities: | |
| | | |
| | |
Prepaid expenses and other assets | |
| 549 | | |
| 350 | |
Other payables and accrued liabilities | |
| (738 | ) | |
| (657 | ) |
Net cash flows used in operating activities | |
| (6,712 | ) | |
| (9,086 | ) |
Investing activities: | |
| | | |
| | |
Purchases of property and equipment | |
| (38 | ) | |
| (83 | ) |
Sale of property and equipment | |
| 2 | | |
| | |
Purchases of marketable securities | |
| (8,379 | ) | |
| - | |
Proceeds from sales of a marketable securities | |
| 2,039 | | |
| - | |
Proceeds from maturities of marketable securities | |
| 5,389 | | |
| - | |
Short term deposit | |
| 3 | | |
| - | |
Net cash flows used in investing activities | |
| (984 | ) | |
| (83 | ) |
| |
| | | |
| | |
Financing activities: | |
| | | |
| | |
Issuance of common stock and warrants, net of issuance costs | |
| 6,558 | | |
| - | |
Net cash flows provided by financing activities | |
| 6,558 | | |
| - | |
| |
| | | |
| | |
Decrease in cash, cash equivalents and restricted cash | |
| (1,138 | ) | |
| (9,169 | ) |
Cash, cash equivalents and restricted cash at beginning of period | |
| 2,519 | | |
| 13,580 | |
Cash, cash equivalents and restricted cash at end of period | |
$ | 1,381 | | |
$ | 4,411 | |
| |
| | | |
| | |
Supplemental disclosure of cash flow information: | |
| | | |
| | |
Cash received from interest | |
$ | 100 | | |
$ | 15 | |
Right-of-use asset and lease liability | |
$ | 20 | | |
$ | 147 | |
The
accompanying notes are an integral part of these consolidated financial statements.
MICROBOT
MEDICAL INC.
Notes
to Interim Consolidated Financial Statements
U.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 next generation robotic endoluminal surgery devices targeting the minimally invasive surgery space. The Company is primarily focused
on leveraging its robotic technologies with the goal of redefining surgical robotics while improving surgical outcomes for patients.
The
Company incorporated on August 2, 1988 in the State of Delaware under the name Cellular Transplants, Inc. The original Certificate of
Incorporation was restated on February 14, 1992 to change the name of the Company to Cyto Therapeutics, Inc. On May 24, 2000, the Certificate
of Incorporation as 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, with Microbot
Medical Ltd., a private medical device company organized under the laws of the State of Israel (“Microbot Israel”). On the
same day and in connection with the Merger, the Company changed its name from StemCells, Inc. to Microbot Medical Inc. On November 29,
2016, the Company’s common stock, par value $0.01 per share (the “Common Stock”) began trading on the Nasdaq Capital
Market under the symbol “MBOT”.
The
Company and Microbot Israel, its sole subsidiary, are sometimes collectively referred to as the “Company” as the context
may require.
B.
Risk Factors
To
date, the Company has not generated revenues from its operations. As of September 30, 2023, the Company had cash equivalents and marketable
securities balance of approximately $8,153, excluding restricted cash, which management believes is sufficient to fund its operations
for five months from the filing date of this Quarterly Report on Form 10-Q. Accordingly, as of such filing date, there is a substantial
doubt as to the Company’s ability to continue as a going concern.
Due
to continuing research and development activities, the Company expects to continue to incur additional losses for the foreseeable future.
While management of the Company believes that it has sufficient funds until approximately April 2024, partially as a result of the Company’s
cost reduction program implemented in May 2023 and capital raises in May and June 2023, the Company will seek to raise additional funds
through future issuances of either debt and/or equity securities and possibly additional grants from the Israeli Innovation Authority
and other government institutions. The Company’s ability to raise additional capital in the equity and debt markets is dependent
on a number of factors, including, but not limited to, the market demand for the Company’s stock, which itself is subject to a
number of development and business risks and uncertainties, as well 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. See Note 6 for additional risk factors which have developed subsequent
to September 30, 2023.
C.
Use of estimates
The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions pertaining to
transactions and matters whose ultimate effect on the financial statements cannot precisely be determined at the time of financial statements
preparation. Although these estimates are based on management’s best judgment, actual results may differ from these estimates.
D.
Unaudited Interim Financial Statements
The
accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim
financial information and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission (“SEC”)
regulations. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In
the opinion of management, all adjustments considered necessary for a fair presentation have been included (consisting only of normal
recurring adjustments except as otherwise discussed).
Operating
results for the nine and three-month periods ended September 30, 2023, are not necessarily indicative of the results that may be expected
for the year ended December 31, 2023.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The
significant accounting policies followed in the preparation of these unaudited interim consolidated financial statements are identical
to those applied in the preparation of the latest annual audited financial statements.
Fair
value of financial instruments
The
carrying values of cash and cash equivalents, other receivables and other accounts payable and accrued liabilities approximate their
fair value due to the short-term maturity of these instruments.
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 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 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 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
or liabilities.
The
following tables summarizes the Company’s financial assets subject to fair value measurement and the level of inputs used in such
measurements as of September 30, 2023 and December 31, 2022:
SCHEDULE OF FINANCIAL ASSETS FAIR VALUE MEASUREMENT
| |
As of September 30, 2023 | |
| |
Total | | |
Level 1 | | |
Level 2 | | |
Level 3 | |
| |
| | |
| | |
| | |
| |
Marketable securities: | |
| | | |
| | | |
| | | |
| | |
U.S. treasury securities | |
$ | 6,220 | | |
$ | 6,220 | | |
$ | - | | |
$ | - | |
Money market mutual funds | |
| 598 | | |
| 598 | | |
| - | | |
| - | |
| |
$ | 6,818 | | |
$ | 6,818 | | |
$ | - | | |
$ | - | |
| |
As of December 31, 2022 | |
| |
Total | | |
Level 1 | | |
Level 2 | | |
Level 3 | |
| |
| | |
| | |
| | |
| |
Cash equivalents: | |
| | | |
| | | |
| | | |
| | |
U.S. treasury securities | |
$ | 1,247 | | |
$ | 1,247 | | |
$ | - | | |
$ | - | |
| |
| | | |
| | | |
| | | |
| | |
Marketable securities: | |
| | | |
| | | |
| | | |
| | |
U.S. treasury securities | |
$ | 3,761 | | |
$ | 3,761 | | |
$ | - | | |
$ | - | |
Money market mutual funds | |
| 1,999 | | |
| 1,999 | | |
| - | | |
| - | |
| |
$ | 5,760 | | |
$ | 5,760 | | |
$ | - | | |
$ | - | |
The
Company’s financial assets are measured at fair value on a recurring basis by level within the fair value hierarchy. The Company’s
securities and money market funds are classified as Level 1. Other than that, the Company doesn’t have any other financial assets
or financial liabilities marked to market at fair value as of September 30, 2023 and December 31, 2022.
Contingencies
Management
records and discloses legal contingencies in accordance with ASC Topic 450, Contingencies. Accordingly, management of the Company will
recognize a liability for a legal contingency when it is both probable that a liability has been incurred and the amount of the loss
can be reasonably estimated. The Company monitors the stage of progress of its litigation matters in each reporting period in order to
determine if any adjustments are required.
Recently
issued accounting pronouncements
From
time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or other standard setting bodies
and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that
are not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption.
NOTE
3 – LEASES
The
Company has lease agreements with lease and non-lease components, which it accounts for as a single lease component. The Company has
elected not to recognize ROU assets and lease liabilities for short-term leases that have a term of 12 months or less. The effect of
short-term leases on the Company’s ROU assets and lease liabilities was not material for the periods presented. The Company’s
lease agreements do not contain any material residual value guarantees or material restrictive covenants. In addition, the Company does
not have any related party leases.
Supplemental
cash flow information related to operating leases was as follows:
SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO OPERATING LEASES
| |
2023 | | |
2022 | |
| |
For the Nine Months Ended
September 30, | |
| |
2023 | | |
2022 | |
| |
| | | |
| | |
Cash payments and expenses | |
$ | 216 | | |
$ | 247 | |
Undiscounted
maturities of operating lease payments as of September 30, 2023 are summarized as follows:
SCHEDULE OF MATURITIES OF LEASE LIABILITIES
| |
| | |
2023 (Remainder of the year) | |
$ | 60 | |
2024 | |
| 182 | |
2025 | |
| 15 | |
Total future lease payments | |
| 257 | |
Less imputed interest | |
| (12 | ) |
Total lease liability balance | |
$ | 245 | |
SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES
| |
September 30, | | |
December 31, | |
| |
2023 | | |
2022 | |
| |
| | |
| |
Operating leases weighted average remaining lease term (in years) | |
| 1-2 | | |
| 2 | |
Operating leases weighted average discount rate | |
| 9 | % | |
| 9 | % |
NOTE
4 - COMMITMENTS AND CONTINGENCIES
Israeli
Innovation Authority Grants
Microbot
Israel has received grants from the Israeli Innovation Authority (“IIA”) for participation in research and development since
2013 through September 30, 2023 totaling approximately $1,656.
This amount includes advance payment in the third quarter of 2023 of approximately $156
which is a portion of additional grant previously
approved from the IIA in the amount of approximately NIS 1.62
million, which based on an exchange
rate on September 30, 2023 of NIS 1.00 = $0.2614, would be approximately $423,
to further finance the development of the Company’s manufacturing process of the LIBERTY® robotic surgical system.
In
addition, as a result of the agreement with CardioSert Ltd. (“CardioSert”) on January 4, 2018, Microbot Israel took over
the liability to repay CardioSert’s IIA grants in the aggregate amount of approximately $530, which liability will remain for so
long as the Company continues to own the CardioSert assets.
As
a result of the agreement with Nitiloop Ltd., an Israeli limited liability company (“Nitiloop”), on October 6, 2022, Microbot
Israel took over the liability to repay Nitiloop’s IIA grants in the aggregate amount of approximately $925.
In
relation to the IIA grants described above, the Company is obligated to pay royalties amounting to 3%-5% of its future sales of the products
relating to such grants.
The
grants are linked to the exchange rate of the dollar to the New Israeli Shekel and bears interest of Libor per annum.
The
repayment of the grants is contingent upon the successful completion of the Company’s research and development programs and generating
sales. The Company has no obligation to repay these grants, if the project fails, is unsuccessful or aborted or if no sales are generated.
The financial risk is assumed completely by the Government of Israel. The grants are received from the Government on a project-by-project
basis.
Approval
for Grant from Ministry of Economy
On
March 2, 2023, the Company announced that it received approval for a grant from the Ministry of Economy of the State of Israel in the
amount of approximately NIS 300 thousand, which based on an exchange rate on such date of NIS 1.00 = $0.27457, would be approximately
$82, to further finance the marketing activities of the LIBERTY Robotic System in the US market.
On November 1,
2023, the Company received NIS 109,474 (approximately US$27) of such amount.
In
relation to the Ministry of Economy grant, the Company is obligated to pay royalties amounting to between 3%-5% of future sales of the
LIBERTY product up to the grant amount plus interest.
TRDF
Agreement
Microbot
Israel signed an agreement with the Technion Research and Development Foundation (“TRDF”) in June 2012 by which TRDF transferred
to Microbot Israel a global, exclusive, royalty-bearing license (as amended, the “License Agreement”) with respect to the
Company’s Self-Cleaning Shunt (SCS) project and its TipCat assets in addition to certain technology relating to the Company’s
LIBERTY device. As partial consideration for the license, Microbot Israel shall pay TRDF royalties on net sales (between 1.5%-3.0%) and
on sublicense income as detailed in the License Agreement.
The
Company in October 2022 suspended the SCS project while it evaluated alternatives for the SCS assets (mainly related patents), including
seeking buyers for the assets, joint ventures or licensing arrangements, spinning off the assets into a new operating company or discontinuing
the project altogether, and as a result of the Company’s May 2023 implementation of its core-business focus program and cost reduction
plan, the Company returned the licensed intellectual property for the TipCat back to TRDF in June 2023, and returned the licensed intellectual
property for the SCS (ViRob) back to TRDF in July 2023.
Agreement
with CardioSert Ltd.
On
January 4, 2018, Microbot Israel entered into an agreement with CardioSert (the “CardioSert Agreement”) to acquire certain
of its patent-protected technology (the “Technology”). Pursuant to the CardioSert Agreement, Microbot Israel made aggregate
payments of $300 in cash and 6,738 shares of Common Stock estimated at $74 to complete the acquisition.
The
CardioSert Agreement may be terminated by Microbot Israel at any time for convenience upon 90-days’ notice. The CardioSert Agreement
may be terminated by CardioSert in case the first commercial sale does not occur by the third anniversary of the date of signing of the
CardioSert Agreement except if Microbot Israel has invested more than $2,000 in certain development stages, or the first commercial sale
does not occur within 50 months. As of September 30, 2023, the 50 months period has expired and CardioSert can buy-back the Technology
at any time.
In
each of the above termination 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 (dollar not in thousands), upon 60 days prior written notice, but only 1 year after such termination events.
Additionally, the CardioSert Agreement may be terminated by either party upon breach of the other (subject to cure). Until May 2023,
Microbot Israel paid CardioSert a monthly consultation fee of NIS40,000 (or approximately US$11, based on an exchange rate of NIS 3.7
to the dollar) covering up to 60 consulting hours per month, relating to the development of the Technology. As a result of its core-business
focus program and its cost reduction plan enacted in May 2023, the Company has terminated the CardioSert Agreement effective as of August
17, 2023 and ceased its research and development and commercialization efforts for the Technology, which could result in the Technology
being reacquired by CardioSert for nominal consideration.
As
of the filing date of this Quarterly Report on Form 10-Q, CardioSert has not purchased back the Technology; however, the Company is in
discussions with CardioSert with respect to post-termination matters.
ATM
Agreement
On
June 10, 2021, the Company entered into an At-the-Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright &
Co. LLC (“Wainwright”), as sales agent, in connection with an “at the market offering” under which the Company
may offer and sell, from time to time in its sole discretion, shares of its Common Stock having an aggregate offering price of up to
$10,000 at market prices or as otherwise agreed with Wainwright. Any shares sold under the ATM Agreement from time to time will be offered
and sold pursuant to the Company’s Registration Statement on Form S-3, which was initially filed on November 25, 2020 and which
was declared effective by the SEC on December 4, 2020, and the related prospectus as supplemented by a prospectus supplement that the
Company filed on June 10, 2021 (the “June 2021 Prospectus”). To date, the Company has not sold any shares of Common Stock
pursuant to the ATM Agreement, and as of October 13, 2022, the Company suspended the ATM Agreement, which otherwise remains in full force
and effect, and terminated the June 2021 Prospectus.
Engagement
Letter with H.C. Wainwright
On
May 16, 2023 and in connection with the registered direct and private placement offerings referred to in Note 5 below, the Company entered
into an engagement letter (the “Engagement Letter”) with Wainwright, pursuant to which Wainwright agreed to serve as the
exclusive placement agent for the issuance and sale of securities of the Company. As compensation for such placement agent services,
the Company has agreed to pay Wainwright an aggregate cash fee equal to 7.0% of the gross proceeds received by the Company from offerings
contemplated by the Engagement Letter, plus a management fee equal to 1.0% of the gross proceeds received by the Company from such offerings,
as well as other reimbursable expenses. The Company has also agreed to issue to Wainwright or its designees preferred investment options
upon the closing of such offerings.
Acquisition
of Nitiloop’s Assets
On
October 6, 2022, Microbot Israel purchased substantially all of the assets, including intellectual property, devices, components and
product related materials (the “Assets”), of Nitiloop Ltd., an Israeli limited liability company (“Nitiloop”).
The Assets include intellectual property and technology in the field of intraluminal revascularization devices with anchoring mechanism
and integrated microcatheter (the “Nitiloop Technology”) and the products or potential products incorporating the Nitiloop
Technology owned by Nitiloop and designated by Nitiloop as “NovaCross”, “NovaCross Xtreme” and “NovaCross
BTK” and any enhancements, modifications and improvements thereof (“Devices”). Microbot Israel did not assume any material
liabilities of Nitiloop other than obligations Nitiloop has to the IIA and relating to certain renewal/maintenance fees for a European
patent application.
In
consideration for the acquisition of the Assets, Microbot Israel shall pay royalties to Nitiloop, which shall not, in the aggregate,
exceed $8,000, as follows:
|
● |
Royalties
at a rate of 3% of net revenue generated as a result of sales, license or other exploitation of the Devices; and |
|
● |
Royalties
at a rate of 1.5% of net revenue generated from the sale, license or other exploitation of commercialization of the technology as
part of an integrated product. |
Litigation
Litigation
Resulting from the 2017 Financing
The
Company was named as the defendant in a lawsuit captioned Empery Asset Master Ltd., Empery Tax Efficient, LP, Empery Tax Efficient II,
LP, Hudson Bay Master Fund Ltd., Plaintiffs, against Microbot Medical Inc., Defendant, in the Supreme Court of the State of New York,
County of New York (Index No. 651182/2020). The complaint alleges, among other things, that the Company breached multiple representations
and warranties contained in the Securities Purchase Agreement (the “SPA”) related to the Company’s June 8, 2017 equity
financing (the “2017 Financing”), of which the Plaintiffs participated, and fraudulently induced Plaintiffs into signing
the SPA. The complaint seeks rescission of the SPA and return of the Plaintiffs’ $6,750 purchase price with respect to the 2017
Financing. The lawsuit is currently in the discovery phase, and a court-ordered mediation was completed. Management is unable to assess
the likelihood that the Company will succeed at trial, having previously lost another lawsuit with respect to the 2017 Financing.
Mona
Litigation
On
April 28, 2019, the Company brought an action against Alliance Investment Management, Ltd. (“Alliance”), later amended to
add Joseph Mona (“Mona”) as a defendant, in the Southern District of New York under Section 16(b) of the Securities Exchange
Act of 1934 (the “Exchange Act”), to compel Alliance and/or Mona to disgorge short swing profits realized from purchases
and sales of the Company’s securities within a period of less than six months. The amount of profits was estimated in the complaint to be approximately $468.
On
October 28, 2019, Alliance filed a motion for summary judgment requesting that the Court dismiss the claims against Alliance, which was
subsequently granted by the Court. On February 4, 2020, Mona answered the 16(b) claim and filed a counterclaim against the Company under
Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, claiming a net loss on trading the Company’s stock of
approximately $151.
On
March 31, 2021, the Court entered a judgment against Mona and in favor of the Company in the amount of approximately $485. Collection of the judgment was deferred pending resolution of Mona’s counterclaim.
On
August 4, 2023, the Magistrate Judge issued a Report & Recommendation, which recommended that the District Court dismiss Mona’s
Section 10(b) counterclaim in the entirety. On August 22, 2023, the District Court adopted the Report and Recommendation
in full and dismissed the Section 10(b) counterclaim in its entirety. The time for appeal has expired and the Company
is proceeding with collection efforts for the $485 judgment against Mona.
NOTE
5 - SHARE CAPITAL
Share
Capital Developments
As
of September 30, 2023 and December 31, 2022, the Company had, respectively, 11,707,317
and 7,890,628
shares of Common Stock issued and outstanding.
On
February 13, 2023, 240,000 of the Company’s outstanding pre-funded warrants were exercised into an equivalent number of shares
of Common Stock, at an exercise price of $0.0001 per share.
Employee
Stock Option Grants
During
the nine months ended September 30, 2023, the Company granted stock option awards to certain officers, directors and employees to purchase
an aggregate of 241,000 shares of the Common Stock, at a weighted average exercise price per share of $2.664 and with a vesting period
of three years.
Registered
Direct and Private Placement Offerings
On
May 22, 2023, the Company entered into a securities purchase agreement with an institutional investor, pursuant to which it agreed to
issue and sell in a registered direct offering an aggregate of 655,569 shares of Common Stock, at an offering price of $2.20 per share,
for aggregate gross proceeds of $1,442 before deducting the placement agent fee and related offering expenses of approximately $222 (the
“First May Offering”). The Company also issued to Wainwright or its designees preferred investment options to purchase 32,778
shares of Common Stock, which have a term of three and one-half years from the commencement of sales in the First May Offering, and have
an exercise price of $2.75 per share. The First May Offering was consummated on May 23, 2023.
On
May 23, 2023, the Company entered into a securities purchase agreement with an institutional investor, pursuant to which it agreed
to issue and sell in a registered direct offering (i) an aggregate of 975,000
shares of Common Stock, at an offering price of $2.20
per share and (ii) pre-funded warrants exercisable for up to 234,500
shares of the Common Stock, at an offering price of $2.1999
per pre-funded warrant, for aggregate gross proceeds of $2,661
before deducting the placement agent fee and related offering expenses of approximately $345
(the “Second May Offering”). The pre-funded warrants are exercisable immediately and may be exercised at any time until
the pre-funded warrants are exercised in full. The Company also issued to Wainwright or its designees preferred investment options
to purchase 60,476
shares of Common Stock, which have a term of three and one-half years from the closing of the Second May Offering, and have an
exercise price of $2.75 per share. The Second May Offering was consummated on May 24, 2023. All of such pre-funded warrants were
subsequently exercised in accordance with their terms at an exercise price per share of $0.0001 into an equivalent number of shares
of Common Stock.
On
June 2, 2023, the Company entered into a securities purchase agreement with institutional investors, pursuant to which it agreed to issue
and sell in a registered direct offering an aggregate of 701,756 shares of Common Stock, at an offering price of $2.1375 per share, for
aggregate gross proceeds, with the concurrent private placement described below, of $1,500 before deducting the placement agent fee and
related offering expenses of approximately $227 (the “First June Offering”). The Company also issued to Wainwright or its
designees preferred investment options to purchase 35,088 shares of its Common Stock, which have a term of five years from the commencement of sales in the First June Offering, and have an exercise
price of $2.6719 per share. The registered direct offering was consummated
on June 6, 2023. In a concurrent private placement, the Company also issued to the purchasers of shares of Common Stock in the First
June Offering, series C preferred investment options to purchase up to 350,878 shares of Common Stock. Each series C preferred investment
option is exercisable for one share of Common Stock at an exercise price of $2.075 commencing on the date of issuance and expiring five
and one-half years from the issuance date.
On
June 26, 2023, the Company entered into a securities purchase agreement with institutional investors, pursuant to which it agreed to
issue and sell in a registered direct offering an aggregate of 624,618 shares of its Common Stock, at an offering price of $3.25 per
share, for aggregate gross proceeds, with the concurrent private placement described below, of $2,030 before deducting the placement
agent fee and related offering expenses of approximately $281 (the “Second June Offering”). The Company also issued to Wainwright
or its designees preferred investment options to purchase 31,231 shares of its Common Stock, which have a term of five years from the commencement of sales in the Second June Offering, and have an exercise
price of $4.0625 per share. The registered direct offering was consummated
on June 28, 2023. In a concurrent private placement, the Company also issued to the purchasers of shares of Common Stock in the Second
June Offering, series D preferred investment options to purchase up to 312,309 shares of the Company’s Common Stock. Each series
D preferred investment option is exercisable for one share of Common Stock at an exercise price of $3.19 commencing on the date of issuance
and expiring five and one-half years from the issuance date.
Preferred
Investment Options Amendment
In
connection with the Second May Offering, the Company amended the terms of (i) the Series A preferred investment options to purchase 1,022,495
shares of its Common Stock for an exercise price of $4.64
per share which are scheduled to expire on October
25, 2027 and (ii) the Series B preferred investment options to purchase 1,022,495
shares of its Common Stock for an exercise price of $4.64
per share which were initially scheduled to expire on October
25, 2024 (the “Series B Preferred Investment Options”), in each case previously issued to the investor in October
2022 under the securities purchase agreement dated October 21, 2022 (collectively, the “Existing Preferred Investment
Options”), which investor also participated in the Second May Offering, such that effective upon the closing of the Second May
Offering, the Existing Preferred Investment Options have a reduced exercise price of $2.20
per share and the Series B Preferred Investment Options expire on October
25, 2027. These modifications to the Existing Preferred Investment Options represent issuance costs associated with the
Second May Offering. The amount of the effect of the modifications is approximately $1,230.
On June 16, 2023, the holder of the Series B Preferred Investment Options exercised all of such Series B Preferred Investment
Options pursuant to its cashless exercise provision into 385,246
shares of Common Stock.
NOTE
6 - SUBSEQUENT EVENTS
SUBSEQUENT
EVENT
On
October 7, 2023, subsequent to the reporting period, the State of Israel, where the Company’s operations are primarily based, suffered
a surprise attack by hostile forces from Gaza, which led to the declaration by Israel of the “Iron Swords” military operation.
This military operation and related activities are on-going as of the issuance date of these financial statements. Consequently:
|
● |
Some
of the Company’s Israeli subcontractors, vendors, suppliers and other companies in which the Company relies, are currently only partially active, as instructed by the relevant
authorities, which has caused delays in aspects of our development and regulatory
activities; |
|
|
|
|
● |
The
lack of international flights in and out of Israel may affect the Company’s ability to import materials that
are required to construct the Company’s devices which are required to complete development and regulatory activities; and |
|
|
|
|
● |
The
lack of international flights in and out of Israel may affect the Company’s commercial and regulatory activities. |
The
Company is currently assessing whether there are any material adverse effects on its anticipated milestones and results of
operations in the fourth quarter of 2023 and perhaps beyond due to the military operation and related matters, the extent of which
cannot be estimated at this stage.
Microbot Medical (NASDAQ:MBOT)
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から 4 2024 まで 5 2024
Microbot Medical (NASDAQ:MBOT)
過去 株価チャート
から 5 2023 まで 5 2024