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. (with its subsidiaries if the context so provides, the “Company,” “we”, “us”
or “our”) 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.
It
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 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 transaction, 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
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.
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 three-month period ended March 31, 2020, are not necessarily indicative of the results that may be expected for
the year ended December 31, 2020.
Risk
Factors:
To
date, the Company has not generated revenues from its operations. As of March 31, 2020, the Company had unrestricted cash and
cash equivalent balance of approximately $29,661, which management believes is sufficient to fund its operations for more than
12 months from the date of issuance of these financial statements and sufficient to fund its operations necessary to continue
development activities of its current proposed products.
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 for more than 12 months, the Company may nevertheless
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.
An
epidemic of the coronavirus disease (“COVID-19”) is ongoing throughout the world. As the outbreak is still evolving,
much of its ultimate impact remains unknown. As of this filing, it is impossible to predict the effect and outcome of the global
spread of COVID-19. COVID-19 may cause significant delays and disruptions to our clinical trials and our interactions with the
FDA. If the patients involved with our clinical trials become infected with COVID-19, we may have more adverse events and deaths
in our clinical trials as a result. We may also face difficulties enrolling patients in our clinical trials if the patient populations
that are eligible for our clinical trials are impacted by COVID-19. Additionally, if our clinical trial patients are unable to
travel to our clinical trial sites as a result of quarantines or other restrictions resulting from COVID-19, we may experience
higher drop-out rates or delays in our clinical trials, and some patients may not be able to comply with clinical trial protocols
if quarantines impede patient movement or interrupt healthcare services, which could impact the Company’s ability to determine
the efficacy or safety of its devices. Site initiation and patient enrollment may also be delayed due to prioritization of hospital
resources toward the COVID-19 outbreak.
Additionally,
travel restrictions have been implemented with respect to certain countries in an effort to contain COVID-19, and several countries
have expanded screenings of travelers. As travel restrictions are increasingly implemented and extended to other countries, the
Company and its contract research organizations may be unable to visit its clinical trial sites and monitor the data from its
clinical trials on timely basis. The Company’s employees may also face travel restrictions, which would impact its business.
Furthermore, some of the Company’s manufacturers and suppliers are in Europe and may be impacted by port closures and other
restrictions resulting from the coronavirus outbreak, which may disrupt the Company’s supply chain or limit its ability
to obtain sufficient materials for our products.
The
ultimate impact of the COVID-19 outbreak or a similar health epidemic is highly uncertain and subject to change, and the Company
cannot presently predict the scope and severity of any potential business shutdowns or disruptions, but if the Company or any
of the third parties with whom the Company’s engages, including the suppliers, clinical trial sites, contract research organizations,
regulators, including the FDA health care providers and other third parties with whom the Company conducts business, were to experience
shutdowns or other business disruptions, the Company’s ability to conduct our business and operations could be materially
and negatively impacted, which could prevent or delay the Company from obtaining approval for its devices.
MICROBOT
MEDICAL INC.
Notes
to Interim Consolidated Financial Statements
U.S.
dollars in thousands
(Except
share and per share data)
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant
Accounting Policies
The
significant accounting policies followed in the preparation of these unaudited interim condensed consolidated financial statements
are identical to those applied in the preparation of the latest annual audited financial statements with the exception of the
following:
MICROBOT
MEDICAL INC.
Notes
to Interim Consolidated Financial Statements
U.S.
dollars in thousands
(Except
share and per share data)
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
June 2016, FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses – Measurement of Credit Losses
on Financial Instruments”, which introduces a model based on expected losses to estimate credit losses for most financial
assets and certain other instruments. In addition, for available-for-sale debt securities with unrealized losses, the losses will
be recognized as allowances rather than reductions in the amortized cost of the securities. The ASU is effective for the Company
in the first quarter of 2020, with early adoption permitted. The Company does not expect that this standard will have a material
effect on the Company’s consolidated financial statements.
In
August 2018, the FASB issued ASU 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements”, which
will improve the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard
removes, modifies, and adds certain disclosure requirements, and is effective for the Company beginning on January 1, 2020. The
Company does not expect that this standard will have a material effect on the Company’s consolidated financial statements.
In
December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes” which eliminates the need
for an organization to analyze whether the following apply in a given period: (1) exception to the incremental approach for intraperiod
tax allocation; (2) exceptions to accounting for basis differences when there are ownership changes in foreign investments; and
(3) exceptions in interim period income tax accounting for year-to-date losses that exceed anticipated losses. The ASU also is
designed to improve financial statement preparers’ application of income tax-related guidance and simplify GAAP for (1)
franchise taxes that are partially based on income, (2) transactions with a government that result in a step-up in the tax basis
of goodwill, (3) separate financial statements of legal entities that are not subject to tax, and (4) enacted changes in tax laws
in interim periods.
MICROBOT
MEDICAL INC.
Notes
to Interim Consolidated Financial Statements
U.S.
dollars in thousands
(Except
share and per share data)
NOTE
3 - LEASES
On
January 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”) using the modified retrospective
approach for all lease arrangements at the beginning period of adoption. Leases existing for the reporting period beginning January
1, 2019 are presented under ASU 2016-02. The Company leases office space and vehicles under operating leases.
We
determine if an arrangement is a lease at inception. Operating lease assets are presented as operating lease right-of-use (“ROU”)
assets, and corresponding operating lease liabilities are presented within accrued expenses and other current liabilities (current
portions), and as operating lease liabilities (long-term portions), on our consolidated balance sheet.
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. Our leases do not provide an implicit interest rate. We calculate the incremental borrowing
rate to reflect the interest rate that we 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 consider our 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. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will
exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.
We
have lease agreements with lease and non-lease components, which we account for as a single lease component. Some of our leases
contain variable lease payments, which are expensed as incurred unless those payments are based on an index or rate. Variable
lease payments based on an index or rate are initially measured using the index or rate in effect at lease commencement and included
in the measurement of the lease liability; thereafter, changes to lease payments due to rate or index updates are recorded as
rent expense in the period incurred. We have 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 our ROU assets and lease liabilities was not material. Our
lease agreements do not contain any material residual value guarantees or material restrictive covenants. In addition, we do not
have any related party leases and our sublease transactions are de minimis.
MICROBOT
MEDICAL INC.
Notes
to Interim Consolidated Financial Statements
U.S.
dollars in thousands
(Except
share and per share data)
As
of March 31, 2020, the Company’s ROU assets and lease liabilities for operating leases totaled $916 and $869, respectively.
Supplemental
cash flow information related to operating leases was as follows:
|
|
As
of
March 31, 2020
|
|
|
|
|
|
Cash
payments for operating leases
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|
$
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27
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Undiscounted
maturities of operating lease payments as March 31, 2020 are summarized as follows:
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|
Operating
Leases
|
|
|
|
|
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2020
(Remainder of the year)
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|
$
|
182
|
|
2021
|
|
|
228
|
|
2022
|
|
|
174
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|
2023
|
|
|
168
|
|
2024
|
|
|
170
|
|
2025
|
|
|
150
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|
Total
future lease payments
|
|
|
1,072
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|
Less
imputed interest
|
|
|
(203
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)
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Total
lease liability balance
|
|
$
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869
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|
Leases
recorded on the balance sheet consist of the following:
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|
As
of
March 31, 2020
|
|
Assets
|
|
|
|
|
Operating
lease right of use asset
|
|
$
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916
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Operating
lease - current
|
|
|
176
|
|
Operating
lease - non-current
|
|
|
693
|
|
|
|
$
|
869
|
|
|
|
As
of
March 31, 2020
|
|
|
|
|
|
Operating
leases weighted average remaining lease term (in years)
|
|
|
2.75
|
|
Operating
leases weighted average discount rate
|
|
|
9
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%
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MICROBOT
MEDICAL INC.
Notes
to Interim Consolidated Financial Statements
U.S.
dollars in thousands
(Except
share and per share data)
NOTE
4 - COMMITMENTS AND CONTINGENCIES
Government
Grants:
Microbot
Israel obtained from the Israeli Innovation Authority (“IIA”) grants for participation in research and development
for the years 2013 through March 31, 2020 in the total amount of approximately $1,500 and, in return, Microbot Israel
is obligated to pay royalties amounting to 3%-3.5% of its future sales up to the amount of the grant. The grant is linked to the
exchange rate of the dollar to the New Israeli Shekel and 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 partial consideration for the license, Microbot
Israel shall pay TRDF royalties on net sales (between 1.5%-3%) and on sublicense income as detailed in the agreement.
Contract
Research Agreements:
Agreement
with Washington University
On
January 27, 2017, the Company entered into a Contract Research Agreement (the “Research Agreement”) with The Washington
University (“Washington U.”), pursuant to which the parties are collaborating to determine the effectiveness of the
Company’s self-cleaning shunt.
The
study in Washington U. includes several phases. The first phase (initial research) was completed. An agreement on the second phase
was entered in September 2018 with total expected costs of approximately $248. As of March 31, 2020, this study is still on going
and will be extended to continue until March 15, 2021. Pursuant to the Research Agreement, all rights, title and interest in the
data, information and results obtained or arrived at by Washington U. in the performance of its services under the Research Agreement,
as well as any patentable inventions obtained or arrived at in the performance of such services, will be jointly owned by the
Company and Washington U., and each will have full right to practice and grant licenses in joint inventions. Additionally, Washington
U. granted to the Company: (a) a non-exclusive, worldwide, royalty-free, fully paid-up, perpetual and irrevocable license to use
and practice patentable inventions (other than joint inventions and improvements to Washington U.’s animal models) obtained
or arrived at by Washington U. in the provision of its services under the Research Agreement (“University Inventions”)
with respect to the self-cleaning shunt; and (b) an exclusive option to obtain an exclusive worldwide license in University Inventions,
on terms to be negotiated between the parties.
Agreement
with Wayne State University
On
September 12, 2016, the Company entered into a research agreement (the “WSU Agreement”) with Wayne State University
(“WSU”), pursuant to which the parties are collaborating to determine the efficacy of the Company’s self-cleaning
shunt.
The
study in WSU includes several phases. The first phase (initial research) was completed. An agreement on the second phase was entered
in April 2018 with total expected costs of approximately $130. In July 2018 the contract was updated to include phase 2.1 (preliminary
phase to phase 2) with total expected costs of approximately $213. Pursuant to the WSU Agreement, WSU shall own all data generated
by the research and the Company shall have unrestricted free right to use and disclose all the results, information and material
generated from the WSU Agreement.
MICROBOT
MEDICAL INC.
Notes
to Interim Consolidated Financial Statements
U.S.
dollars in thousands
(Except
share and per share data)
Rights
to inventions, improvements or discoveries, whether or not patentable or copyrightable made solely by the employees of the Company
in the course of performance of the workplan agreed upon between the Company and WSU shall belong to the Company.
Rights
to inventions, improvements or discoveries, whether or not patentable or copyrightable made solely by the employees of WSU in
the course of performance of the workplan agreed upon between the Company and WSU shall belong to WSU. WSU shall grant the Company
with a worldwide non-exclusive, perpetual, royalty-free license to university inventions to use and practice patentable inventions.
Rights
to inventions, improvements or discoveries, whether or not patentable or copyrightable made by at least one employee of WSU and
one employee of the Company in the course of performance of the workplan agreed upon between the Company and WSU shall belong
to WSU and the Company jointly. Both the Company and WSU will be free to use and license to others the rights of joint inventions
for any and all purposes without consultation or obligation to the other party. WSU granted the Company a first option to negotiate
an exclusive license to use and practice WSU inventions and its interest in the joint inventions as detailed in the WSU Agreement.
Litigation:
Litigation
Resulting from 2017 Financing
In
February 2020, the Company lost its appeal of an adverse judgment
in the lawsuit captioned Sabby Healthcare Master Fund Ltd. and Sabby Volatility Warrant Master Fund Ltd., Plaintiffs, against
Microbot Medical Inc., Defendant, in the Supreme Court of the State of New York, County of New York (Index No. 654581/2017). As
a result, the Securities Purchase Agreement (the “SPA”) related to the Company’s June 8, 2017 equity financing
(the “Financing”) was rescinded as it related to Sabby Healthcare Master Fund Ltd. and Sabby Volatility Warrant Master
Fund Ltd. (“Sabby”), and the Company paid approximately $3,700 to Sabby in return for the 83,333 (post-stock split)
shares of common stock Sabby purchased pursuant to the SPA. Soon after, 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 (the “Court”)
(Index No. 651182/2020). The complaint alleges, among other things, that the Company breached multiple representations and warranties
contained in the SPA, 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
filed a Motion to Dismiss on March 16, 2020, which Motion is pending before the Court.
Alliance
Litigation
On
April 28, 2019, the Company brought an action against Alliance Investment Management, Ltd. (“Alliance”) 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 to disgorge
short swing profits realized from purchases and sales of the Company’s securities within a period of less than six months,
executed while Alliance reported beneficial ownership of more than 10% of the Company’s outstanding common stock and statutory
“insider” status for purposes of the statute. The case is Microbot Medical Inc. v. Alliance Investment Management,
Ltd., No. 19-cv-3782-GBD (SDNY). The amount of profits the Company is seeking to divest is estimated to be approximately $468.
On
August 21, 2019, Alliance filed an answer to the action, claiming that an unnamed Alliance client was the “beneficial owner”
of the shares reportedly held and traded by Alliance. On October 18, 21, and 28, 2019, Joseph Mona (“Mona”) filed
Section 16(a) and Schedule 13G reports, which are substantially similar to the reports previously filed by Alliance. On October
28, 2019, Alliance filed a motion for summary judgment requesting that the Court dismiss the claims against Alliance in view of
Mona’s SEC filings, which Alliance asserted revealed Mona as the client referenced in Alliance’s answer.
MICROBOT
MEDICAL INC.
Notes
to Interim Consolidated Financial Statements
U.S.
dollars in thousands
(Except
share and per share data)
On
November 7, 2019, U.S. Magistrate Judge Robert W. Lehrburger ordered Alliance to produce relevant trading records, to enable the
Company to determine whether to proceed against Alliance and/or Mona. Following Alliance’s production of Mona’s Microbot
trading records, the Company filed a Second Amended Complaint on November 18, 2019, seeking to compel Alliance and/or Mona to
disgorge profits realized from the trades they each separately reported. The Company continued to oppose Alliance’s Motion
for Summary Judgment given Alliance’s refusal to confirm that the trades reported by Alliance referred exclusively to the
trades executed in Mona’s account—and did not refer to duplicative trading executed by Alliance. Alliance’s
Motion for Summary Judgment is pending.
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.
Mona admits to engaging in the reported short swing trading of the Company’s stock while a 10% beneficial owner and statutory
16(b) insider of the Company, but alleges that he was induced to buy the stock by various company misrepresentations. Mona claims
a net loss on trading the Company’s stock of approximately $151.
On
March 6, 2020 the Company filed a motion for judgment on its 16(b) claim against Mona, together with a motion to dismiss Mona’s
10(b) counterclaim. Such motion was fully briefed as of April 26, 2020 and is pending. All parties are currently scheduled
to appear in court on July 21, 2020.
Agreement
with CardioSert Ltd.
On
January 4, 2018, Microbot Israel entered into an agreement with CardioSert Ltd. (“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.
On
April 10, 2018, Microbot delivered an Exercise Notice to CardioSert Ltd., notifying it that Microbot 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 (100,000 shares of common stock before the Reverse Split) 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. 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 NIS 40,000 (or approximately US$11.50, based on an exchange rate of NIS3.47 to the dollar) covering up to 60 consulting hours
per month.
Compensation
to Harel Gadot
On
February 25, 2020, the Company made the following changes to the compensation of Harel Gadot, the Company’s CEO, President
and Chairman:
|
●
|
Mr.
Gadot’s annual base salary was increased from $360 to $450, retroactive to January 1, 2020.
|
|
|
|
|
●
|
Mr.
Gadot’s annual bonus pursuant to his Employment Agreement with the Company was increased from 40% of his annual salary
to 60% of his annual salary, based on achieving certain milestones, commencing 2020.
|
In addition,
Mr. Gadot received a one-time special bonus equal to 60% of his newly-approved annual base salary. Mr. Gadot was also awarded
non-qualified options to purchase 166,666 shares of Company common stock at an exercise price per share of $9.64, which vest in
full on the one-year anniversary of the date of grant and expire on the ten-year anniversary (See note 5).
MICROBOT
MEDICAL INC.
Notes
to Interim Consolidated Financial Statements
U.S.
dollars in thousands
(Except
share and per share data)
NOTE
5 - SHARE CAPITAL
Share
Capital Developments:
As
of March 31, 2020, the Company had 7,103,260 shares of common stock issued and outstanding.
On
January 14, 2019, the Company entered into a Securities Purchase Agreement with an accredited institutional investor providing
for the issuance and sale by the Company to the purchaser of an aggregate of (i) 330,000 shares of the Company’s common
stock, at a purchase price per share of $6.50 and (ii) 125,323 pre-funded warrants each to purchase one share of common stock,
at a purchase price per Pre-Funded Warrant of $6.49. The gross proceeds to the Company were approximately $3,000 before deducting
placement agent fees and other offering expenses of approximately $688. The closing of the offering took place on January 15,
2019. The pre-funded warrants were exercised in full in January 2019. As part of the offering the company issued to the underwriter
22,767 warrants for 3.5 years with an exercise price of $8.125 for total value of $165.
On
January 15, 2019, the Company entered into a Securities Purchase Agreement with certain accredited institutional investors providing
for the issuance and sale by the Company to the purchasers of an aggregate of 590,000 shares of the Company’s common stock,
at a purchase price per share of $10.00. The gross proceeds to the Company were approximately $5,900 before deducting placement
agent fees and other offering expenses of approximately $720. The closing of the offering took place on January 17, 2019. As part
of the offering the company issued to the underwriter 29,500 warrants for 3.5 years with exercise price of $12.50 for total value
of $221.
On
January 23, 2019 the Company entered into a Securities Purchase Agreement with accredited institutional investors providing for
the issuance and sale by the Company to the purchasers of an aggregate of 250,000 shares of the Company’s common stock,
at a purchase price per share of $9.875. The investors also purchased warrants to purchase an aggregate of up to 250,000 shares
of the Company’s common stock, at a purchase price per warrant of $0.125. The warrants were exercisable for 1 year and had
an exercise price of $10.00 per share, for a total value of $2,019. The gross proceeds to the Company from the sale of the shares
and warrants were approximately $2,500 before deducting placement agent fees and other offering expenses of approximately $370.
The closing of the offering took place on January 25, 2019. As part of the offering the company issued to the underwriter 12,500
warrants for 1 year with an exercise price of $12.50 for total value of $99.
On
December 25, 2019 the Company entered into a Securities Purchase Agreement with accredited institutional investors providing for
the issuance and sale by the Company to the purchasers of an aggregate of 912,858 shares of the Company’s common stock,
at a purchase price per share of $10.50. The gross proceeds to the Company were approximately $9,585 before deducting placement
agent fees and other offering expenses of approximately $1,090. The closing of the offering took place on December 27, 2019. As
part of the offering the Company issued to the underwriter 45,643 warrants for 3.5 years with an exercise price of $13.125 for
total value of $371.
MICROBOT
MEDICAL INC.
Notes
to Interim Consolidated Financial Statements
U.S.
dollars in thousands
(Except
share and per share data)
On
December 27, 2019 the Company entered into a Securities Purchase Agreement with accredited institutional investors providing for
the issuance and sale by the Company to the purchasers of an aggregate of 952,383 shares of the Company’s common stock,
at a purchase price per share of $10.50. The gross proceeds to the Company were approximately $10,000 before deducting placement
agent fees and other offering expenses of approximately $1,010. The closing of the offering took place on December 30, 2019. As
part of the offering the Company issued to the underwriter 47,619 warrants for 3.5 years with an exercise price of $13.125 for
total value of $366.
On
December 30, 2019 the Company entered into a Securities Purchase Agreement with accredited institutional investors providing for
the issuance and sale by the Company to the purchasers of an aggregate of 900,901 shares of the Company’s common stock,
at a purchase price per share of $11.10. The gross proceeds to the Company were approximately $10,000 before deducting placement
agent fees and other offering expenses of approximately $1,010. The closing of the offering took place on December 31, 2019. As
part of the offering the Company issued to the underwriter 45,045 warrants for 3.5 years with an exercise price of $13.875 for
total value of $343.
Employee
Stock Option Grant
On
January 21, 2019, the board of directors approved a grant of stock options to purchase an aggregate of up to 11,630 shares of
common stock to certain of its directors, at an exercise price per share of $8.60. The stock options vest over a period of 3 years
as outlined in the option agreements. As a result, the Company recognized compensation expenses as of March 31, 2020 and 2019
in the total amount of $7 and $24, respectively, included in general and administrative expenses.
On
August 12, 2019, the board of directors approved a grant of stock options to purchase an aggregate of up to 17,503 shares of common
stock to certain of its employees, at an exercise price per share of $5.95. The stock options vest over a period of 3 years as
outlined in the option agreements. As a result, the Company recognized compensation expenses as of March 31, 2020 and 2019 in
the total amount of $11 and $0, respectively, included in general and administrative expenses.
On
October 23, 2019, the board of directors approved a grant of stock options to purchase an aggregate of up to 19,760 shares of
common stock to certain of its directors, at an exercise price per share of $5.06. The stock options vest over a period of 3 years
as outlined in the option agreements. As a result, the Company recognized compensation expenses as of March 31, 2020 and 2019
in the total amount of $7 and $0, respectively, included in general and administrative expenses.
On
February 25, 2020, the board of directors approved a grant of stock options to purchase an aggregate of up to 166,666 shares of
common stock to Mr. Harel Gadot, the Company’s Chairman of the Board, President and CEO, at an exercise price per share
of $9.64. The stock options vest in full on the one-year anniversary of the date of grant as outlined in the option agreement.
As a result, the Company recognized compensation expenses as of March 31, 2020 and 2019 in the total amount of $144 and $0, respectively,
included in general and administrative expenses.
MICROBOT
MEDICAL INC.
Notes
to Interim Consolidated Financial Statements
U.S.
dollars in thousands
(Except
share and per share data)
A
summary of the Company’s option activity related to options to employees and directors, and related information is as followed:
|
|
As
of March 31, 2020
|
|
|
|
Number
of stock options
|
|
|
Weighted
average exercise price
|
|
|
|
|
|
|
|
|
Outstanding
at beginning of period
|
|
|
371,360
|
|
|
$
|
11.50
|
|
Granted
|
|
|
166,666
|
|
|
|
9.64
|
|
Exercise
|
|
|
(965
|
)
|
|
|
-
|
|
Forfeited
|
|
|
-
|
|
|
|
-
|
|
Cancelled
|
|
|
-
|
|
|
|
-
|
|
Outstanding
at end of period
|
|
|
537,061
|
|
|
$
|
9.35
|
|
|
|
|
|
|
|
|
|
|
Vested
at end of period
|
|
|
285,742
|
|
|
$
|
8.70
|
|
|
|
For
the Year ended December 31, 2019
|
|
|
|
Number
of stock options
|
|
|
Weighted
average exercise price
|
|
|
|
|
|
|
|
|
Outstanding
at beginning of period
|
|
|
398,308
|
|
|
$
|
11.50
|
|
Granted
|
|
|
48,893
|
|
|
|
6.20
|
|
Forfeited
|
|
|
(28,690
|
)
|
|
|
-
|
|
Cancelled
|
|
|
(47,151
|
)
|
|
|
-
|
|
Outstanding
at end of period
|
|
|
371,360
|
|
|
$
|
9.19
|
|
|
|
|
|
|
|
|
|
|
Vested
at end of period
|
|
|
270,827
|
|
|
$
|
8.48
|
|
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 March 31, 2020 and 2019, respectively.
As
of March 31, 2020, and 2019, the aggregate intrinsic value of the outstanding options is $456 and $761 respectively, and the aggregate
intrinsic value of the exercisable options is $446 and $761, respectively.
As
of March 31, 2020, there were approximately $2,267 of total unrecognized compensation costs, net of expected forfeitures, 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 1.11 years
MICROBOT
MEDICAL INC.
Notes
to Interim Consolidated Financial Statements
U.S.
dollars in thousands
(Except
share and per share data)
The
stock options outstanding as of March 31, 2020 and December 31, 2019, summarized by exercise prices, are as follows:
Exercise
price $
|
|
|
Stock
options outstanding as of March 31, 2020
|
|
|
Stock
options outstanding as of December 31, 2019
|
|
|
Weighted
average remaining contractual life – years as of March 31, 2020
|
|
|
Weighted
average remaining contractual life – years as of December 31, 2019
|
|
|
Stock
options exercisable as of March 31, 2020
|
|
|
Stock
options exercisable as of December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.20
|
|
|
|
77,846
|
|
|
|
77,846
|
|
|
|
5.8
|
|
|
|
6.0
|
|
|
|
77,846
|
|
|
|
77,846
|
|
|
15.75
|
|
|
|
133,546
|
|
|
|
133,546
|
|
|
|
7.5
|
|
|
|
7.8
|
|
|
|
98,276
|
|
|
|
90,641
|
|
|
8.60
|
|
|
|
11,630
|
|
|
|
11,630
|
|
|
|
9.7
|
|
|
|
9.9
|
|
|
|
6,385
|
|
|
|
5,515
|
|
|
9.00
|
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
8.5
|
|
|
|
8.8
|
|
|
|
5,500
|
|
|
|
4,750
|
|
|
9.64
|
|
|
|
166,666
|
|
|
|
-
|
|
|
|
1.0
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
5.95
|
|
|
|
17,503
|
|
|
|
17,503
|
|
|
|
9.5
|
|
|
|
9.7
|
|
|
|
4375
|
|
|
|
-
|
|
|
5.06
|
|
|
|
19,760
|
|
|
|
19,760
|
|
|
|
9.6
|
|
|
|
9.8
|
|
|
|
-
|
|
|
|
-
|
|
|
15.30
|
|
|
|
38,533
|
|
|
|
38,533
|
|
|
|
7.8
|
|
|
|
8.0
|
|
|
|
31,783
|
|
|
|
29,533
|
|
|
(*)
|
|
|
|
61,577
|
|
|
|
62,542
|
|
|
|
6.5
|
|
|
|
6.8
|
|
|
|
61,577
|
|
|
|
62,542
|
|
|
|
|
|
|
537,061
|
|
|
|
371,360
|
|
|
|
7.3
|
|
|
|
8.3
|
|
|
|
285,742
|
|
|
|
270,827
|
|
(*)
Less than $0.01.
Compensation
expense recorded by the Company for its stock-based employee compensation awards in accordance with ASC 718-10 for the three months
ended March 31, 2020 and 2019 was $343 and $315, respectively.
The
grant date fair values of stock options granted in the years ended March 31, 2020 and 2019 were estimated using the Black-Scholes
valuation model with the following:
|
|
As
of
March 31, 2020
|
|
|
Year
ended
December 31, 2019
|
|
|
|
|
|
|
|
|
Expected
volatility
|
|
|
135.60
|
%
|
|
|
132.63%-144.4%
|
|
Risk-free
interest
|
|
|
1.20
|
%
|
|
|
1.49%-2.62%
|
|
Dividend
yield
|
|
|
0
|
%
|
|
|
0
|
%
|
Expected
life of up to (years)
|
|
|
6
|
|
|
|
5.282
|
|
MICROBOT
MEDICAL INC.
Notes
to Interim Consolidated Financial Statements
U.S.
dollars in thousands
(Except
share and per share data)
Warrants
The
remaining outstanding warrants and terms as of March 31, 2020 and December 31, 2019 are as follows:
Issuance
date
|
|
Outstanding
as of March 31, 2020
|
|
|
Outstanding
as of December 31, 2019
|
|
|
Exercise
Price
|
|
|
Exercisable
as of March 31, 2020
|
|
|
Exercisable
Through
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series
A (2013) (*)
|
|
|
183
|
|
|
|
183
|
|
|
$
|
2,754.00
|
|
|
|
183
|
|
|
April
9, 2023
|
Series
A (2015) (*)
|
|
|
683
|
|
|
|
683
|
|
|
$
|
1,377.00
|
|
|
|
683
|
|
|
April
30, 2020
|
Series
B (2016) (a)(*)
|
|
|
2,770
|
|
|
|
2,770
|
|
|
$
|
40.50
|
|
|
|
2,770
|
|
|
March
14, 2022
|
Warrant
to underwriters – 1/2019
|
|
|
22,767
|
|
|
|
22,767
|
|
|
$
|
8.13
|
|
|
|
22,767
|
|
|
July
14, 2022
|
Warrant
to underwriters – 1/2019
|
|
|
29,500
|
|
|
|
29,500
|
|
|
$
|
12.50
|
|
|
|
29,500
|
|
|
July
15, 2022
|
Warrant
to underwriters – 1/2019
|
|
|
12,500
|
|
|
|
12,500
|
|
|
$
|
12.50
|
|
|
|
12,500
|
|
|
January
15, 2020
|
Warrant
to underwriters – 12/2019
|
|
|
45,643
|
|
|
|
45,643
|
|
|
$
|
13.13
|
|
|
|
-
|
|
|
June
27, 2023
|
Warrant
to underwriters – 12/2019
|
|
|
47,619
|
|
|
|
47,619
|
|
|
$
|
13.13
|
|
|
|
-
|
|
|
June
30, 2023
|
Warrant
to underwriters – 12/2019
|
|
|
45,045
|
|
|
|
45,045
|
|
|
$
|
13.88
|
|
|
|
-
|
|
|
June
25, 2023
|
(*)
Prior to January 1, 2019, warrants with non-standard anti-dilution provisions (referred to as down round protection) were classified
as liabilities and re-measured each reporting period. On January 1, 2019, the Company adopted the provisions of ASU 2017-11, which
indicates that a down round feature no longer precludes equity classification when assessing whether an investment is indexed
to an entity’s own stock. The Company used a full retrospective approach to adoption and restated its financial statements
as of the earliest period presented. The cumulative effect of adoption of ASU 2017-11 resulted in an adjustment to accumulated
deficit as of January 1, 2018 of $20 with a corresponding adjustment to additional paid-in capital.
In
December 2019, 125,000 outstanding warrants at an exercise price per share of $10.00, were exercised on a “net exercise”
or “cashless” basis into 61,677 shares of common stock, and 125,000 outstanding warrants at an exercise price per
share of $10.00, were exercised on a “net exercise” or “cashless” basis into 50,143 shares of common stock.
All of such warrants were issued in January 2019.