| Share Capital | NOTE 5 - SHARE CAPITAL Each share of the Series A
Convertible Preferred Stock, par value $0.01 per share, issued by the Company in December 2016 and in May 2017 (the “Series
A Convertible Preferred Stock”), is convertible, at the option of the holder, into 67 shares of Common Stock (1,000 shares
of Common Stock before the Reverse Split), and confer upon the holder dividend rights on an as converted basis. Exercise of Warrants On March 2017, an institutional
holder exercised, in a cashless transaction, 52 warrants (768 warrants before the Reverse Split) and 24 shares (359 shares before
the Reverse Split) of Common Stock were issued in connection therewith. Share Capital Developments The authorized capital stock
consists of 221,000,000 shares of capital stock, which consists of 220,000,000 shares of Common Stock and 1,000,000 shares of undesignated
preferred stock, par value $0.01 (the “Preferred Stock”). As of March 31, 2018, the Company had 2,837,863 shares (42,120,127
shares before the Reverse Split) of Common Stock issued and outstanding, and 2,464 shares of Series A Convertible Preferred Stock
issued and outstanding. On December 27, 2016, the
Company exchanged 655,962 shares (9,735,925 shares before the Reverse Split) or rights to acquire shares of its Common Stock, for
9,736 shares of a newly designated class of Series A Convertible Preferred Stock. On January 5, 2017, the Company
entered into a definitive securities purchase agreement with an institutional investor (the “Purchaser”) for the purchase
and sale of an aggregate of 47,163 shares (700,000 shares before the Reverse Split) of Common Stock in a registered direct offering
for $74 per share ($5.00 per share before the Reverse Split) or gross proceeds of $3,500. The Company paid the placement agent
a fee of $210 plus reimbursement of out-of-pocket expenses, as well as other offering-related expenses. On June 5, 2017, the Company
entered into a Securities Purchase Agreement with certain institutional investors (the “Investors”) providing for the
issuance and sale by the Company to the Investors of an aggregate of 252,658 shares (3,750,000 shares before the Reverse Split)
of Common Stock, at a purchase price per share of $40 ($2.70 before the Reverse Split). The gross proceeds to the Company was $10,125
before deducting placement agent fees and offering expenses of $922. Employee Stock Option Grant In September 2014, Microbot
Israel’s board of directors approved a grant of 26,906 stock options (403,592 stock options before the Reverse Split) (77,846
stock options as retroactively adjusted to reflect the Merger) to its CEO, through MEDX Venture Group LLC. Each option was exercisable
into an ordinary share, at an exercise price of $12 ($0.8 before the Reverse Split) ($4.2 as retroactively adjusted to reflect
the Merger). The stock options were fully vested at the date of grant. On May 2, 2016, Microbot Israel’s
board of directors approved a grant of 33,333 stock options (500,000 stock options before the Reverse Split) (96,482 as retroactively
adjusted to reflect the Merger) to certain of its employees and directors. Each stock option was exercisable into an ordinary share,
NIS 0.001 par value, of Microbot Israel, at an exercise price equal to the ordinary share’s par value. The stock options
were fully vested at the date of grant. As a result, the Company recognized compensation expenses in the amount of $675 included
in general and administrative expenses. As the exercise price of the stock options is nominal, Microbot Israel estimated the fair
value of the options as equal to the Company’s share price of $20.25 ($1.35 before the Reverse Split) ($7.05 as retroactively
adjusted to reflect the Merger) at the date of grant. On September 12, 2017, the
Company adopted the 2017 Equity Incentive Plan (the “Plan”), which Plan authorizes, among other things, the grant of
options to purchase shares of Common Stock to directors, officers and employees of the Company and to other individuals. On September 14, 2017, the
board of directors approved a grant of stock options to purchase an aggregate of up to 120,848 shares (1,812,712 shares before
the Reverse Split) of Common Stock to Mr. Harel Gadot, the Company’s Chairman of the Board, President and CEO, at an exercise
price per share of $15.75 ($1.05 before the Reverse Split). The stock options vest over a period of 3-5 years as outlined in the
option agreements. As a result, the Company recognized compensation expenses in the amount of $460 and $0 included in general and
administrative expenses for the nine months ended September 30, 2018 and 2017 respectively. On September 14, 2017, the
board of directors approved a grant of stock options to purchase an aggregate of up to 72,508 shares (1,087,627 shares before the
Reverse Split) of Common Stock to Mr. Hezi Himelfarb, the company’s General Manager, COO and a member of the Board, at an
exercise price per share of $19.35 ($1.29 before the Reverse Split). The grant was subject to the Israeli Tax Authority’s
approval of the plan which occurred on October 14, 2017. In accordance with the option agreement, the options vest for period of
3 years starting from the grand date As a result, the Company recognized compensation expenses in the amount of $329 and $0 included
in general and administrative expenses for the nine months ended September 30, 2018 and 2017 respectively. On December 6, 2017, the board
of directors approved a grant of 12,698 stock options (190,475 stock options before the Reverse Split) to purchase an aggregate
of up to 12,698 shares of Common Stock to certain of its directors, at an exercise price per share of $15.75 ($1.05 before the
Reverse Split). The stock options vest over a period of 3 years as outlined in the option agreements. As a result, the Company
recognized compensation expenses in the amount of $55 and $0 included in general and administrative expenses for the nine months
ended September 30, 2018 and 2017 respectively. On December 28, 2017, the
board of directors approved a grant of 66,036 stock options (990,543 stock options before the Reverse Split) to purchase an aggregate
of up to 66,036 shares of Common Stock to certain of its employees, at an exercise price per share of $15.3 ($1.02 before the Reverse
Split). The stock options vest over a period of 3 years as outlined in the option agreements. As a result, the Company recognized
compensation expenses in the amount of $273 and $0 included in general and administrative expenses and research and development
expenses for the nine months ended September 30, 2018 and 2017 respectively. On November 2017, certain
employees and consultant exercised 31,453 options (471,794 options before the Reverse Split) to 31,453 ordinary shares at exercise
price of 0.001 NIS. In February 2018, an employee
exercised options to purchase 2,487 shares (37,300 shares of common stock before the Reverse Split) at an exercise price of $0.001
per share On August 13, 2018, the board
of directors approved a grant of stock options to purchase an aggregate of up to 10,000 shares (150,000 shares before the Reverse
Split) of Common Stock to Mr. Simon Sharon, the company’s CTO, at an exercise price per share of $9 ($0.6 before the Reverse
Split). The grant was subject to the Israeli Tax Authority’s approval of the plan which occurred on October 14, 2017. In
accordance with the option agreement, the options vest for period of 3 years starting from the grand date As a result, the Company
recognized compensation expenses in the amount of $22 and $0 included in general and administrative expenses for the nine months
ended September 30, 2018 and 2017 respectively. A summary of the Company’s
option activity related to options to employees and directors, and related information is as follows:
For the nine months ended September 30, 2018
Number of stock options Weighted average exercise price
Aggregate intrinsic value
Outstanding at beginning of period 414,965 $ 11.70 $ 1,859
Granted 10,000 9 -
Exercised (2,487) - -
Cancelled - - -
Outstanding at end of period 422,478 $ 11.70 $ 729
Vested and expected-to-vest at end of period 228,758 $ 7.80 $ 729
For the year ended December 31, 2017(*)
Number of stock options Weighted average exercise price Aggregate intrinsic value
Outstanding at beginning of period 174,328 $ 1.95 $ 3,739
Granted 272,090 16.50 -
Exercised (31,453) - -
Cancelled - - -
Outstanding at end of period 414,965 $ 11.70 $ 1,859
Vested and expected-to-vest at end of period 142,875 $ 1.95 $ 1,375
(*) December 31, 2017 options data represents the number of shares adjusted to retroactively reflect the 1:15 Reverse Split effected on September 4, 2018. The aggregate intrinsic value
in the table above represents the total intrinsic value (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 September 30, 2018 and December
31, 2017 respectively. The stock options outstanding
as of September 30, 2018 and December 31, 2017, separated by exercise prices, are as follows:
Exercise price $ Stock options outstanding as of September 30, 2018 Stock options outstanding as of December 31, 2017(**) Weighted average remaining contractual life – years as of September 30, 2018 Weighted average remaining contractual life – years as of December 31, 2017(**) Stock options exercisable as of September 30, 2018 Stock options exercisable as of December 31, 2017(**)
4.20 77,846 77,846 7.25 8.00 77,846 77,846
15.75 133,546 133,546 9.00 9.75 46,117 -
9.00 10,000 - 10.00 - - -
19.35 72,508 72,508 9.00 9.75 23,565 -
15.30 66,036 66,036 9.25 10.00 18,688 -
(*) 62,542 65,029 8.00 8.75 62,542 65,029
422,478 414,965 8.55 9.3 228,758 142,875
(*) Less than $0.01.
(**) December 31, 2017 options data represents the number of shares adjusted to retroactively reflect the 1:15 Reverse Split effected on September 4, 2018. Compensation expense recorded
by the Company in respect of its stock-based employee compensation awards in accordance with ASC 718-10 for the nine-month ended
September 30, 2018 and 2017 was $ 1,139 and $196, respectively. The fair value of the stock
options is estimated at the date of grant using Black-Scholes options pricing model with the following weighted-average assumptions:
Nine months ended September 30, 2018 Year ended December 31, 2017
Expected volatility 99.4% 122.5%
Risk-free interest 2.39% 1.64%
Dividend yield 0% 0%
Expected life of up to (years) 5.24 6.25 Shares issued to service
provider In connection with the Merger,
the Company issued an aggregate of 525,706 restricted shares (7,802,639 restricted shares before the Reverse Split) of its Common
Stock to certain advisors. The fair value of the award of approximately $10,000 was estimated based on the share price of the Common
Stock of $19.2 ($1.28 before the Reverse Split) as of the date of grant. The portion of the expense in excess of the cash and other
current assets acquired in the Merger, in the amount of $7,300 was included in general and administrative expenses in the Statements
of Comprehensive Loss. During 2017, the Company issued
an aggregate of 8,085 nonrefundable shares (120,000 nonrefundable shares before the Reverse Split) of Common Stock to a consultant
as part of investor relations services. The Company recorded expenses of approximately $225 with respect to the issuance of these
shares included in general and administrative expenses On May 24, 2018 the Company
issued an aggregate of 6,738 nonrefundable shares (100,000 nonrefundable shares before the Reverse Split) of Common Stock to CardioSert
as part of certain patent acquisition. The Company recorded expenses of approximately $74 with respect to the issuance of these
shares included in research and development expenses. Securities Exchange Agreement
with Alpha Capital On December 16, 2016, the
Company entered into a Securities Exchange Agreement with Alpha Capital, pursuant to which Alpha Capital exchanged 655,967 shares
(9,736,000 shares before the Reverse Split) of common stock or rights to acquire shares of the common stock held by it, for 9,736
shares of a newly designated class of Series A Convertible Preferred Stock, par value $0.01 per share (the “Preferred Stock”).
The common stock and common stock underlying the rights to acquire common stock include all of the shares of common stock issued
or issuable to Alpha Capital pursuant to the Merger. The 655,967 shares (9,735,925 shares before the Reverse Split) of common stock
and the rights to acquire common stock were cancelled and the Company’s issued and outstanding shares of Common Stock were
reduced to 1,786,684 (26,518,315 before the Reverse Split). On May 9, 2017, the Company
entered into a Securities Exchange Agreement with Alpha Capital pursuant to which the Company agreed to issue 3,254 shares of the
Series A Convertible Preferred Stock, in exchange for the full satisfaction, termination and cancellation of the outstanding 6%
convertible promissory note of the Company in the principal amount of approximately $2,029 issued on November 28, 2016 and held
by Alpha Capital. The Series A Convertible Preferred Stock is the same series of securities as the Company’s existing Series
A Convertible Preferred Stock issued in December 2016. As a result of the extinguishment of the convertible note and issuance of
the preferred shares, the Company recorded a financial loss in the amount of $2,360 . During the year 2017, the
holder of the Series A Convertible Preferred Stock converted 8,990 shares of the Series A Convertible Preferred Stock for 605,705
shares (8,990,000 shares before the Reverse Split) of Common Stock, pursuant to the terms of conversion of the Series A Convertible
Preferred Stock. For the nine-month ended September
30, 2018, the holder of the Series A Convertible Preferred Stock converted 3,451 shares of the Series A Convertible Preferred Stock
for 232,151 shares (3,445,266 shares before the Reverse Split) of Common Stock, pursuant to the terms of conversion of the Series
A Convertible Preferred Stock. Repurchase of Shares The Company intends to enter
into a definitive agreement with up to three Israeli shareholders, one of which is a director of the Company, that were former
shareholders of Microbot Israel, pursuant to which the Company would repurchase, at a discount on the fair value of the share at
the date of repurchase, up to $500 of Common Stock held by them, in the aggregate, if and to the extent such shareholders are unable
to sell enough of their shares to cover certain of their Israeli tax liabilities resulting from the Merger. Such repurchase(s),
if any, would occur only after the two-year anniversary of the Merger. The transaction is subject to negotiating final terms and
entering into definitive agreements with such shareholders. The Company evaluated whether
an embedded derivative that requires bifurcation exists within such shares that may be subject to repurchase. The Company concluded
the fair value of such derivative instrument would be nominal and, in any case, would represent an asset to the Company as (a)
the settlement requires acquiring the shares at a discount on the fair market value of the share at the time of repurchase and
in no circumstances the acquisition price will be higher than approximately one dollar per share (representing 25% discount on
the fair market value of the share at the merger closing date) and (b) it is assumed that the selling shareholders would use such
right as last resort as such repurchase at a discount on the fair market value of such shares results in a loss to be incurred
by the selling shareholders. In accordance with ASC 480-10-S99-3A
(formerly EITF D-98), the Company classified the maximum amount it may be required to pay in the event the repurchase right is
exercised ($500) as temporary equity. | NOTE 9 - SHARE CAPITAL Each share of the Series
A Convertible Preferred Stock, par value $0.01 per share, issued by the Company in December 2016 and in May 2017 (the “Series
A Convertible Preferred Stock”), is convertible, at the option of the holder, into 67 shares ( 1,000 shares before the Reverse
Split) of Common Stock, and confer upon the holder dividend rights on an as converted basis. Exercise of Warrants On March 2017, an institutional
holder exercised, in a cashless transaction, of 52 warrants ( 768 before the Reverse Split) and 24 shares ( 359 shares before the
Reverse Split) of Common Stock were issued in connection therewith. Share capital developments: The authorized capital stock
consists of 221,000,000 shares of capital stock, which consists of 220,000,000 shares of Common Stock and 1,000,000 shares of undesignated
preferred stock, par value $0.01 (the “Preferred Stock”). As of December 31, 2017, the Company had 2,734,300 shares
(40,583,127 shares before the Reverse Split) of Common Stock issued and outstanding, and 4,001 shares of Series A Convertible Preferred
Stock issued and outstanding. On November 28, 2016, the
Company filed a Certificate of Amendment to its Restated Certificate of Incorporation, as amended, with the Secretary of State
of the State of Delaware to (i) effect the Reverse Stock Split, (ii) change its name from “StemCells, Inc.” to “Microbot
Medical Inc.” and (iii) increase the number of authorized shares of the Common Stock from 200,000,000 to 220,000,000 shares
(the “Certificate of Amendment”). As a result of the Reverse
Stock Split, the number of issued and outstanding shares of the Common Stock immediately prior to the Reverse Stock Split were
reduced into a smaller number of shares, such that every nine shares of the Common Stock held by a stockholder immediately prior
to the Reverse Stock Split were combined and reclassified into one share of the Common Stock. Immediately following the
Reverse Stock Split and the Merger, there were 2,442,646 shares (36,254,240 shares before the Reverse Split) of the Common Stock
issued and outstanding, which included certain rights to receive shares of Common Stock or equivalent securities but excludes shares
underlying outstanding stock options and warrants and the Convertible Note. On December 27, 2016, the
Company exchanged 655,962 shares (9,735,925 shares before the Reverse Split) or rights to acquire shares of its Common Stock, for
9,736 shares of a newly designated class of Series A Convertible Preferred Stock. See “- Securities Exchange Agreement with
Alpha Capital” below. See also Note 6 – Securities Exchange Agreement with Alpha Capital, above. On January 5, 2017, the Company
entered into a definitive securities purchase agreement with an institutional investor (the “Purchaser”) for the purchase
and sale of an aggregate of 47,163 shares (700,000 shares before the Reverse Split) of Common Stock in a registered direct offering
for $74 ($5.00 per share before the Reverse Split) or gross proceeds of $3,500. The Company paid the placement agent a fee of $210
plus reimbursement of out-of-pocket expenses, as well as other offering-related expenses. On June 5, 2017, the Company
entered into a Securities Purchase Agreement with certain institutional investors (the “Investors”) providing for the
issuance and sale by the Company to the Investors of an aggregate of 252,658 shares (3,750,000 shares before the Reverse Split)
of Common Stock, at a purchase price per share of $40 ($2.70 per share before the Reverse Split). The gross proceeds to the Company
was $10,125,000 before deducting placement agent fees and offering expenses of $922. Employee stock option
grant: In September 2014, Microbot
Israel’s board of directors approved a grant of 26,906 (403,592 stock options before the Reverse Split) (77,846 stock options
as retroactively adjusted to reflect the Merger and the Reverse Split) to its CEO, through MEDX Venture Group LLC. Each option
was exercisable into an ordinary share, at an exercise price of $12 ($0.8 before the Reverse Split) ($4.2 as retroactively adjusted
to reflect the Merger and the Reverse Split). The stock options were fully vested at the date of grant. On May 2, 2016, Microbot
Israel’s board of directors approved a grant of 33,333 stock options (500,000 stock options before the Reverse Split) (96,482
as retroactively adjusted to reflect the Merger and the Reverse Split) to certain of its employees and directors. Each stock option
was exercisable into an ordinary share, NIS 0.001 par value, of Microbot Israel, at an exercise price equal to the ordinary share’s
par value. The stock options were fully vested at the date of grant. As a result, the Company recognized compensation expenses
in the amount of $675 included in general and administrative expenses. As the exercise price of the stock options is nominal, Microbot
Ltd estimated the fair value of the options as equal to the Company’s share price of $20.25 ($1.35 before the Reverse Split)
($7.05 as retroactively adjusted to reflect the Merger and the Reverse Split) at the date of grant. On September 12, 2017, the
Company adopted the 2017 Equity Incentive Plan (the “Plan”), which Plan authorizes, among other things, the grant of
options to purchase shares of Common Stock to directors, officers and employees of the Company and to other individuals. On September 14, 2017, the
board of directors approved a grant of stock options to purchase an aggregate of up to 120,847 shares (1,812,712 shares before
the Reverse Split) of Common Stock to Mr. Harel Gadot, the Company’s Chairman of the Board, President and CEO, at an exercise
price per share of $15.75 ($1.05 before the Reverse Split). The stock options vest over a period of 3-5 years as outlined in the
option agreements. As a result, the Company recognized compensation expenses in the amount of $156 included in general and administrative
expenses for the period ended December 31, 2017. On September 14, 2017, the
board of directors approved a grant of stock options to purchase an aggregate of up to 72,508 shares (1,087,627 shares before the
Reverse Split) of Common Stock to Mr. Hezi Himelfarb, the company’s General Manager, COO and a member of the Board, at an
exercise price per share of $19.35 ($1.29 before the Reverse Split). The grant was subject to the Israeli Tax Authority’s
approval of the plan which occurred on October 14, 2017. In accordance with the option agreement, the options vest for period of
3 years starting from the grand date. As a result, the Company recognized compensation expenses in the amount of $92 included in
general and administrative expenses for the period ended December 31, 2017. On December 6, 2017, the
board of directors approved a grant of 12,698 stock options (190,475 stock options before the Reverse Split) to purchase an aggregate
of up to 12,698 shares (190,475 shares before the Reverse Split) of Common Stock to certain of its directors, at an exercise price
per share of $15.75 ($1.05 before the Reverse Split). The stock options vest over a period of 3 years as outlined in the option
agreements. As a result, the Company recognized compensation expenses in the amount of $4 included in general and administrative
expenses for the period ended December 31, 2017. On December 28, 2017, the
board of directors approved a grant of 66,036 stock options (990,543 stock options before the Reverse Split) to purchase an aggregate
of up to 66,036 shares (990,543 shares before the Reverse Split) of Common Stock to certain of its employees, at an exercise price
per share of $15.3 ($1.02 before the Reverse Split). The stock options vest over a period of 3 years as outlined in the option
agreements. As a result, the Company recognized compensation expenses in the amount of $95 included in general and administrative
expenses for the period ended December 31, 2017. On November, 2017, certain
employees and consultant exercised 31,453 options (471,794 options before the Reverse Split) to 31,453 ordinary shares (471,794
ordinary shares before the Reverse Split) at exercise price of 0.001 NIS. A summary of the Company’s
option activity related to options to employees and directors, and related information is as follows:
For the year ended December 31, 2017(**)
Number of stock options Weighted average exercise price Aggregate intrinsic value
Outstanding at beginning of period 174,328 $ 1.95 $ 3,739
Granted 272,090 16.5 -
Exercised (31,453 ) - -
Cancelled - - -
414,965 $ 11.7 $ 1,859
Outstanding at end of period 142,875 $ 1.95 $ 1,375
Vested and expected-to-vest at end of period 174,328 $ 1.95 $ 3,739
For the year ended December 31, 2016(**)
Number of stock options Weighted average exercise price Aggregate intrinsic value
Outstanding at beginning of period 77,846 $ 4.2 -
Granted 96,482 (*) -
Exercised - - -
Cancelled - - -
Outstanding at end of period 174,328 $ 1.95 $ 15,624
Vested and expected-to-vest at end of period 174,328 $ 1.95 $ 15,624 (*) Less than 1 (**) December 31 2017 and
2016 options data represents the number of shares adjusted to retroactively reflect the 1:15 Reverse Split effected on September
4, 2018. The aggregate intrinsic value
in the table above represents the total intrinsic value (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, 2017 and December
31, 2016 respectively, The stock options outstanding
as of December 31, 2017 and December 31, 2016, separated by exercise prices, are as follows:
Exercise price
Stock options outstanding as of December 31, (**)
Weighted average remaining contractual
life – years as of December 31, (**) Stock options exercisable as of December 31, (**)
$ 2017 2016 2017 2016 2017 2016
4.2 77,846 77,846 8.0 8.0 77,846 77,846
15.75 133,546 - 9.75 - - -
19.35 72,508 - 9.75 - - -
15.3 66,036 - 10 - - -
(* ) 65,029 96,482 8.75 9.5 65,029 96,482
414,965 174,328 - - 142,875 174,328 (*) Less than 1 (**) December 31 2017 and
2016 options data represents the number of shares adjusted to retroactively reflect the 1:15 Reverse Split effected on September
4, 2018. Compensation expense recorded
by the Company in respect of its stock-based employee compensation awards in accordance with ASC 718-10 for the year ended December
31, 2017 and 2016 was $ 254 and $ 675, respectively. The fair value of the stock
options is estimated at the date of grant using Black-Scholes options pricing model with the following weighted-average assumptions:
Years ended December 31,
2017 2016
Expected volatility 122.5 % 77.3 %
Risk-free interest 1.64 % 0.6 %
Dividend yield 0 % 0 %
Expected life of up to (years) 6.25 5.0 Shares issued to service
provider In connection with the Merger,
the Company issued an aggregate of 525,706 restricted shares (7,802,639 restricted shares before the Reverse Split) of its Common
Stock to certain advisors. The fair value of the award of approximately $10,000 was estimated based on the share price of the Common
Stock of $19.2 ($1.28 before the Reverse Split) as of the date of grant. The portion of the expense in excess of the cash and other
current assets acquired in the Merger, in the amount of $7,300 was included in general and administrative expenses in the Statements
of Comprehensive Loss. During 2017 the Company issued
an aggregate of 8, 085 nonrefundable shares (120,000 nonrefundable shares before the Reverse Split) of Common Stock to a consultant
as part of investor relations services. The Company recorded expenses of approximately $225 with respect to the issuance of these
shares included in general and administrative expenses. Securities Exchange Agreement
with Alpha Capital On December 16, 2016, the
Company entered into a Securities Exchange Agreement with Alpha Capital, pursuant to which Alpha Capital exchanged 655,967 shares
(9,736,000 shares before the Reverse Split) of common stock or rights to acquire shares of the common stock held by it, for 9,736
shares of a newly designated class of Series A Convertible Preferred Stock, par value $0.01 per share (the “Preferred Stock”).
The common stock and common stock underlying the rights to acquire common stock include all of the shares of common stock issued
or issuable to Alpha Capital pursuant to the Merger. The 655,967 shares (9,735,925 shares before the Reverse Split) of common stock
and the rights to acquire common stock were cancelled and the Company’s issued and outstanding shares of Common Stock were
reduced to 1,786,684 (26,518,315 before the Reverse Split). On May 9, 2017, the Company
entered into a Securities Exchange Agreement with Alpha Capital pursuant to which the Company agreed to issue 3,254 shares of the
Series A Convertible Preferred Stock, in exchange for the full satisfaction, termination and cancellation of the outstanding 6%
convertible promissory note of the Company in the principal amount of approximately $2,029 issued on November 28, 2016 and held
by Alpha Capital. The Series A Convertible Preferred Stock is the same series of securities as the Company’s existing Series
A Convertible Preferred Stock issued in December 2016. As a result of the extinguishment of the convertible note and issuance of
the preferred shares, the Company recorded a financial loss in the amount of $2,360 . During the year 2017, the
holder of the Series A Convertible Preferred Stock converted 8,990 shares of the Series A Convertible Preferred Stock for 605,705
shares (8,990,000 shares before the Reverse Split) of Common Stock, pursuant to the terms of conversion of the Series A Convertible
Preferred Stock. Repurchase of Shares The Company intends to enter
into a definitive agreement with up to three Israeli shareholders, some of whom are directors of the Company, that were former
shareholders of Microbot Israel, pursuant to which the Company would repurchase, at a discount on the fair value of the share at
the date of repurchase, up to $500 of Common Stock held by them, in the aggregate, if and to the extent such shareholders are unable
to sell enough of their shares to cover certain of their Israeli tax liabilities resulting from the Merger. Such repurchase(s),
if any, would occur only after the two-year anniversary of the Merger. The transaction is subject to negotiating final terms and
entering into definitive agreements with such shareholders. The Company evaluated whether
an embedded derivative that requires bifurcation exists within such shares that may be subject to repurchase. The Company concluded
the fair value of such derivative instrument would be nominal and, in any case, would represent an asset to the Company as (a)
the settlement requires acquiring the shares at a discount on the fair market value of the share at the time of re purchase and
in no circumstances the acquisition price will be higher than approximately one dollar per share (representing 25% discount on
the fair market value of the share at the merger closing date) and (b) it is assumed that the selling shareholders would use such
right as last resort as such repurchase at a discount on the fair market value of such shares results in a loss to be incurred
by the selling shareholders. In accordance with ASC 480-10-S99-3A
(formerly EITF D-98), the Company classified the maximum amount it may be required to pay in the event the repurchase right is
exercised ($500) as temporary equity. |
