MBOT US Equity☆

Item 1A. Risk Factors 22

Item 1B. Unresolved Staff Comments 45

Item 2. Description of Property 45

Item 3. Legal Proceedings 45

Item 4. Mine Safety Disclosures 46

PART II

Item 6. Selected Financial Data 47

Item 7A. Quantitative and Qualitative Disclosures about Market Risk 53

Item 8. Financial Statements and Supplementary Data 53

Item 9A. Controls and Procedures 54

Item 9B. Other Information 54

PART III

Item 10. Directors, Executive Officers and Corporate Governance 55

Item 11. Executive Compensation 60

Item 14. Principal Accountant Fees and Services 66

PART IV

Item 15. Exhibits and Financial Statement Schedules 67

NOTE

REGARDING REFERENCES TO OUR COMPANY

Throughout

this Form 10-K, the words “we,” “us,” “our,” the “Company” and “Microbot”

refer to Microbot Medical Inc., including our directly and indirectly wholly-owned subsidiaries and, unless the context otherwise

requires, the historical business, financial statements and operations of Microbot are of Microbot Medical Ltd., an Israeli corporation

(“Microbot Israel”) which became a wholly-owned subsidiary of the Company on November 28, 2016.

Risk

Factors 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

22.

Risks

Relating to Microbot’s Financial Position and Need for Additional Capital

Risks

Relating to the Development and Commercialization of Microbot’s Product Candidates

Risks

Relating to Microbot’s Intellectual Property

Risks

Relating to Operations in Israel

● Israel’s economy may become unstable.

Risks

Relating to Microbot’s Securities, Governance and Other Matters

● We do not expect to pay cash dividends on our common stock.

PART

I

Item

1. Description of Business.

The

Company

Microbot

is a pre-clinical medical device company specializing in the research, design and development of next generation robotic endoluminal

surgery devices targeting the minimally invasive surgery space. Microbot is primarily focused on leveraging its micro-robotic

technologies with the goal of redefining surgical robotics while improving surgical outcomes for patients.

Microbot’s

current technological platforms, ViRobTM, TipCATTM, LIBERTYTM and certain CardioSert assets,

are comprised of proprietary innovative technologies. Using the ViRob platform, Microbot is currently developing the Self Cleaning

Shunt, or SCSTM, for the treatment of hydrocephalus and Normal Pressure Hydrocephalus, or NPH. Utilizing the LIBERTY

and CardioSert platforms, Microbot is developing the first ever fully disposable robot for various endovascular interventional

procedures. In addition, the Company is focused on the development of a Multi Generation Pipeline Portfolio utilizing all of its

proprietary technologies.

Microbot

has a patent portfolio of 42 issued/allowed patents and 23 patent applications pending worldwide.

We

were incorporated on August 2, 1988 in the State of Delaware under the name Cellular Transplants, Inc. The original Certificate

of Incorporation was restated on February 14, 1992 to change our name to CytoTherapeutics, Inc. On May 24, 2000, the Certificate

of Incorporation as restated was further amended to change our name to StemCells, Inc. On November 28, 2016, C&RD Israel Ltd.,

a wholly-owned subsidiary of ours, completed its merger with 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. On November 29,

2016, our common stock began trading on the Nasdaq Capital Market under the symbol “MBOT”. Prior to the Merger, we

were a biopharmaceutical company that operated in one segment, the research, development, and commercialization of stem cell therapeutics

and related technologies. Substantially all of the material assets relating to the stem cell business were sold on November 29,

2016.

In

May 2016, we effected a 1-for-12 reverse split of our common stock, and in November 2016, we effected a 1-for-9 reverse split

of our common stock in connection with the Merger. In September 2018, we effected a 1-for-15 reverse split of our common stock.

Technological

Platforms

ViRob

The

ViRob is an autonomous crawling micro-robot which can be controlled remotely or within the body. Its miniature dimensions are

expected to allow it to navigate and crawl in different natural spaces within the human body, including blood vessels, the digestive

tract and the respiratory system as well as artificial spaces such as shunts, catheters, ports, etc. Its unique structure is expected

to give it the ability to move in tight spaces and curved passages as well as the ability to remain within the human body for

prolonged time. The SCS product was developed using the ViRob technology.

TipCAT

The

TipCAT is a disposable self-propelled locomotive device that is specially designed to advance in tubular anatomies. The TipCAT

is a mechanism comprising a series of interconnected balloons at the device’s tip that provides the TipCAT with its forward

locomotion capability. The device can self-propel within natural tubular lumens such as the blood vessels, respiratory and the

urinary and GI tracts. A single channel of air/fluid supply sequentially inflates and deflates a series of balloons creating an

inchworm like forward motion. The TipCAT maintains a standard working channel for treatments. Unlike standard access devices such

as guidewires, catheters for vascular access and endoscopes, the TipCAT does not need to be pushed into the patient’s lumen

using external pressure; rather, it will gently advance itself through the organ’s anatomy. As a result, the TipCAT is designed

to be able to reach every part of the lumen under examination regardless of the topography, be less operator dependent, and greatly

reduce the likelihood of damage to lumen structure. The TipCAT thus offers functionality features equivalent to modern tubular

access devices, along with advantages associated with its physiologically adapted self-propelling mechanism, flexibility, and

design.

CardioSert

Technology

On

April 8, 2018, Microbot acquired a patent-protected technology from CardioSert Ltd., a privately-held medical device company

based in Israel that was part of a technological incubator supported by the Israel Innovation Authorities. The CardioSert technology

contemplates a combination of a guidewire and microcatheter, technologies that are broadly used for surgery within a tubular organ

or structure such as a blood vessel or duct. The CardioSert technology features a unique guidewire delivery system with steering

and stiffness control capabilities which when developed is expected to give the physician the ability to control the tip curvature,

to adjust tip load to varying degrees of stiffness in a gradually continuous manner. The CardioSert technology was originally

developed to support interventional cardiologists in crossing chronic total occlusions (CTO) during percutaneous coronary intervention

(PCI) procedures and has the potential to be used in other spaces and applications, such as peripheral intervention, and neurosurgery.

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 robotic 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

“One & Done” capabilities, which would be based in part on the CardioSert platform or possibly other

guidewire/microcatheter technologies.

LIBERTY

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. In addition,

when combined with CardioSert technology or possibly other guidewire/microcatheter technologies, it is being designed to

streamline Cath-lab procedures with our proprietary “One & Done” tool that combines guidewire and microcatheter

into a single device. With control over tip curvature and stiffness for maneuverability and access – and without the need

for constant tool exchanges – the “One & Done” feature, when integrated into the LIBERTY device,

may drastically reduce procedure time and costs while enhancing the operator experience.

On

August 17, 2020, Microbot announced the successful conclusion of its feasibility animal study using the LIBERTY robotic 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.

We

are continuously exploring and evaluating additional innovative guidewire/microcatheter technologies to be integrated and combined

with the LIBERTY robotic platform.

Recent

Developments

On

January 14, 2021, Microbot announced the successful completion of an additional feasibility animal study using the LIBERTY robotic

system. The study end points included navigating to a clot, crossing the clot, deploying a stent retriever, and manually retrieving

an arterial clot in a live pig. All the end points were met with no intraoperative adverse events. This and earlier animal feasibility

studies support Microbot’s assertion that LIBERTY will potentially allow physicians to safely and easily conduct catheter-based

peripheral and neurovascular procedures remotely, avoiding radiation exposure, physical strain and the risk of cross contamination.

On

January 21, 2021, Microbot announced the continued enhancement of its thought leadership capabilities with the addition of several

new Scientific Advisory Board members:

On

January 27, 2021, Microbot announced the completion of successful discussions with the U.S. Food and Drug Administration, or FDA,

for the SCSTM. After review of Microbot’s existing pre-clinical data, the FDA’s feedback will allow Microbot

to apply for a limited clinical investigation known as an Early Feasibility Study, or EFS. Microbot expects to continue to work

with the FDA towards finalizing the SCSTM design, and to incorporate their feedback prior to submitting the Investigational

Device Exemption, or IDE, to seek authorization to begin the EFS clinical trial. While there can be no assurance that the FDA

will approve the EFS study, the agency’s recent feedback indicates that the agency will be receptive to allowing a first-in-human

study to proceed based on existing data. After completing the EFS, Microbot would then seek FDA input on the device design as

finalized through the EFS process in a subsequent IDE filing for approval of a clinical study proposal. Consequently, the timeline

for the First-in-Human clinical trial under the EFS is expected to commence following IDE approval, estimated in the third quarter

of 2022.

On

February 4, 2021, Microbot announced that it has received official notification from the Japan Patent Office (JPO) that it intends

to grant Microbot a patent for its ‘One & Done’ guidewire technology for use with endoluminal interventions. Japan

is the second jurisdiction to grant a patent for the ‘One & Done’ guidewire technology and further protects the

novel technology Microbot is currently developing.

Industry

Overview

CSF

Management

Hydrocephalus

is a medical condition in which there is an abnormal accumulation of cerebrospinal fluid, or CSF, in the brain that can cause

increased intracranial pressure. It is estimated that one in every 500 babies are born with hydrocephalus, and over 1,000,000

people in the United States currently live with hydrocephalus.

Symptoms

of hydrocephalus vary with age, disease progression and individual tolerance to the condition, but they can include convulsion,

tunnel vision, mental disability or dementia-like symptoms and even death. NPH is a type of hydrocephalus that usually occurs

in older adults. NPH is generally treated as distinct from other types of hydrocephalus because it develops slowly over time.

In NPH, the drainage of CSF is blocked gradually and the excess fluid builds up slowly. This slow accumulation means that the

fluid pressure may not be as high as in other types of hydrocephalus. It is estimated that more than 700,000 Americans have NPH,

but less than 20% receive an appropriate diagnosis.

Hydrocephalus

is most often treated by the surgical insertion of a shunt system. The shunt system diverts the flow of CSF from the brain’s

ventricles (or the lumbar subarachnoid space) to another part of the body where the fluid can be more readily absorbed. Hydrocephalus

shunt designs have changed little since their introduction in the 1950s. A shunt system typically consists of three parts: the

distal tubing or shunt (a flexible and sturdy plastic tube), the ventricular catheter (the proximal catheter), and a valve. The

end of the shunt system with the proximal catheter is placed in the ventricles (within the CSF) and the distal catheter is placed

in the site of the body where the CSF can be drained. A valve is located along the shunt to maintain and regulate the rate of

CSF flow. Current systems can be created from separate components or bought as complete units.

The

treatment of hydrocephalus with existing shunt systems often includes complications. For example, approximately 50% of shunts

used in the pediatric population fail within two years of placement and repeated neurosurgical operations are often required.

Ventricular catheter blockage, or occlusion, is by far the most frequent event that results in shunt failure. Shunt occlusion

occurs when there is a partial or complete blockage of the shunt that causes it to function intermittently or not at all. Such

a shunt blockage can be caused by the accumulation of blood cells, tissue, or bacteria in any part of the shunt system. In the

event of shunt occlusion, CSF begins to accumulate in the brain or lumbar region again and the symptoms of untreated hydrocephalus

can reappear until a shunt replacement surgery is performed.

Although

several companies are active in the field of hydrocephalus treatment and the manufacturing of shunt systems and shunt components,

Microbot believes that the majority of those companies are focusing on the development of valves. The development of a “smart

shunt” – a shunt that could provide data to the physician on patient conditions and shunt function with sensor-based

controls, or correct the high failure rate of existing shunt systems – is for the most part at an academic and conceptual

level only. Reports of smart shunt technologies are typically focused on a subset of components with remaining factors left unspecified,

such as hardware, control algorithms or power management. Microbot does not believe that a smart shunt that can prevent functional

failures has been developed to date. Because of the limited innovation in this area, Microbot believes an opportunity exists to

provide patients suffering from hydrocephalus or NPH with a more effective instrument for treating their condition.

An

alternative, short-term solution to hydrocephalus is the implantation of an External Ventricular Drainage, or EVD, an implanted

device used in neurosurgery for the short-term treatment and monitoring of elevated intracranial pressure when the normal flow

of CSF inside the brain is obstructed. If after using an EVD, the underlying hydrocephalus does not eventually resolve, the EVD

may then be replaced with a cerebral shunt, a fully internalized, long-term treatment for hydrocephalus.

EVDs

are also used in other instances when the normal flow of CSF inside the brain is obstructed, such as a result of head trauma,

intracerebral hemorrhage, brain tumors and infection. The EVD serves to divert excess fluids from the brain and allows for the

monitoring of intracranial pressure. An EVD must be placed in a center with full neurosurgical capabilities because immediate

neurosurgical intervention may be needed if a complication of EVD placement, such as bleeding, is encountered. EVD is one of the

most commonly used and most important life-saving procedures in the neurologic ICU, with more than 200,000 neuro-intensive patients

requiring EVD insertions annually.

Similar

to shunts, EVDs are also prone to occlusion, mostly due to cellular debris, such as blood clots and/or tissue fragments. Studies

have shown that approximately 1-7% of EVDs require replacement secondary to occlusion. Current solutions for EVD occlusion include

irrigation and replacement, which we believe may be ineffective (in the case of irrigation) or costly (in the case of replacement)

and in either case, put the patient at risk of unintended side effects. Microbot believes that with its portfolio of technologies,

and its initial pre-clinical results, it is well-positioned to explore and expand its offerings as an alternative solution for

EVD occlusion.

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 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 capital expenditures.

Navigating

and placing access devices through tortuous and highly delicate brain arteries is a complex procedure that requires high-level

surgical skills with specialist training. In many procedures, surgeons exchange numerous access devices before reaching the target

and applying the therapeutic agent or device, increasing the risk of adverse events and the exposure of both patient and physician

to radiation. Adverse events, such as perforation of brain arteries or the release of embolies from a thrombus or atherosclerotic

lesion can have devastating or even fatal results.

Microbot

believes that with its portfolio of CardioSert and LIBERTY technologies, it is well-positioned to explore and develop such

technologies as neurovascular access devices, with a focus on improving the ease and access and enhancing the safety of endovascular

interventions.

Our

Product Pipeline

Self-Cleaning

Shunt

The

SCS device is designed to act as the ventricular catheter portion of a CSF shunt system that is used to treat hydrocephalus and

NPH. It is designed to work as an alternative to any ventricular catheter options currently on the market and to connect to all

existing shunt system valves currently on the market; therefore, the successful commercialization of the SCS is not dependent

on any single shunt system. Initially, Microbot expects the SCS device to be an aftermarket purchase that would be deployed to

modify existing products by the end user. Microbot believes that the use of its SCS device will be able to reduce, and potentially

eliminate, shunt occlusions, and by doing so, Microbot believes its SCS has the potential to become the gold standard ventricular

shunt in the treatment of hydrocephalus and NPH.

The

SCS device embeds an internal robotic cleaning mechanism in the lumen, or inside space, of the ventricular catheter which prevents

cell accumulation and tissue ingrowth into the catheter. The SCS device consists of a silicone tube with a perforated titanium

tip, which connects to a standard shunt valve at its distal end. The internal cleaning mechanism is embedded in the lumen of the

titanium tip. Once activated, the cleaning mechanism keeps tissue from entering the catheter perforations while maintaining the

CSF flow in the ventricular catheter.

The

internal cleaning mechanism of the SCS device is activated by means of an induced magnetic field, which is currently designed

to be externally generated by the patient through a user-friendly headset that transmits the magnetic field at a pre-determined

frequency and operating sequence protocol. The magnetic field that is created by the headset is then captured by a flexible coil

and circuit board that is placed just under the patient’s scalp in the location where the valve is located. The circuit

board assembly converts the magnetic field into the power necessary to activate the cleaning mechanism within the proximal part

of the ventricular catheter.

Microbot

has completed the development of an SCS prototype and is currently continuing the safety testing, general proof of concept testing

and performance testing for the device, which Microbot began in mid-2013. In May 2018, Microbot announced the results of two pre-clinical

studies assessing the SCS, an in-vitro study and a small animal study. The in-vitro study, which was performed at Wayne State

University by Dr. Carolyn Harris, supports the SCS’s potential as a viable technology for preventing occlusion in shunts

used to treat hydrocephalus. The first stage animal study designed to assess the safety profile of the SCS, which was performed

by James Patterson McAllister, PhD, a Professor of Neurosurgery at Washington University School of Medicine in St. Louis, met

the primary goal to determine the safety of the SCS device that aims to prevent obstruction in CSF catheters. Following the completion

of the first stage initial studies, Microbot commenced a follow-up study to further evaluate the safety of the SCS. The follow-up

study was also conducted by leading hydrocephalus experts at Washington University. The study, included a larger sample size compared

to the initial studies and the primary and secondary endpoints were to validate the safety of the activated SCS in-vivo (animal)

models. In that in-vivo study the major finding was that the SCS system is as safe to use as currently marketed devices. The study

also mentions, that in the animal model, contact of the shunt with the choroid plexus is impossible to avoid and that it may lead

to shunt obstruction due to hemorrhage of this highly vascular structure

In

parallel with the in-vivo study, Microbot also contracted with Envigo CRS Israel, a leading provider of non-clinical contract

research services, to conduct an in-vitro study designed to evaluate the operational performance of the SCS. Human brain glioblastoma

cells were used in order to assess performance of the SCSTM in a test system with accelerated cell growth, accumulation

and obstruction rates. In 2018, Microbot and Envigo conducted an in-vitro trial that its final conclusion was:

While

significant cell growth and accumulation were seen in the non-operating SCSTM group after 30 days, the shunt openings remained

clear in the constantly operating SCSTM group, with little to no cell attachment on the robotic cleaning mechanism (the ViRobTM

system) and on the shunt openings.

The

SCSTM was further validated in a broader follow-up in-vitro study which commenced in July 2019 and concluded on August 14,

2019 and clearly demonstrated that the SCSTM prevented shunt occlusions under the parameters of that study. This follow-up

study was also conducted by Envigo CRS Israel using Human brain glioblastoma cells Specifically, the study demonstrated:

To

further investigate the efficacy of the SCSTM, Microbot conducted a follow-up in-vitro study at Wayne State University.

The study included a larger sample size compared to the initial study and the primary and secondary end points aimed to validate

the efficacy of the SCS in comparison to commercially available devices. After careful analysis of the results the final conclusion

was that the data from this study did not reveal statistically significant differences between the study’s groups.

Microbot

used the findings of the second stage of the animal study combined with additional experimental data that was acquired in the

past year for initial regulatory FDA pre-submissions.

On

January 27, 2021, we announced the completion of successful discussions with the FDA, for the SCSTM. After review

of Microbot existing pre-clinical data, the FDA’s feedback will allow us to apply for the EFS (Early Feasibility Study)

without further animal studies.

We

expect to continue to work with the FDA towards finalizing the SCSTM design, and to incorporate their feedback

prior to submitting the IDE to seek authorization to begin the EFS clinical trial. While there can be no assurance that the FDA

will approve the EFS study, the agency’s recent feedback indicates that the agency will be receptive to allowing a first-in-human

study to proceed based on existing data. After completing the EFS, we would then seek FDA input on the device design as finalized

through the EFS process in a subsequent IDE filing for approval of a clinical study proposal. Consequently, the timeline for the

First-in-Human clinical trial under the EFS is expected to commence in the third quarter of 2022.

In

spite of the above, there is still a possibility that Microbot may conduct clinical trials if they are requested by the FDA or

if Microbot decides that the data from such trials would improve the marketability of the product candidate.

The

proposed indication for use of the SCSTM device would be for the treatment of hydrocephalus and/or NPH as a component of

commercially available shunt systems. It continues to be possible that the FDA could require us to conduct a human clinical study

to support the safety and efficacy of the SCS and that such clinical data would need to be part of the future regulatory submission

to authorize marketing of the medical device in the U.S.

TipCAT

A

TipCAT prototype was shown to self-propel and self-navigate in curved plastic pipes and curved ex-vivo colon. In addition, in

its first feasibility study, the prototype device was tested in a live animal experiment and successfully self-propelled through

segments of the animal’s colon, with no post-procedural damage. All tests were conducted at AMIT (Alfred Mann Institute

of Technology at the Technion), prior to the licensing of TipCAT by Microbot.

Currently,

Microbot is not pursuing the development of the TipCAT as a colonoscopy tool due to its focus on the neurosurgical and endovascular

intervention spaces, and as such it is currently exploring the use of the TipCAT for minimally invasive neurosurgical and endovascular

applications to complement its other technologies.

LIBERTY

The

LIBERTY robotic 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 “One & Done” capabilities, which would be based in

part on the CardioSert platform or possibly other guidewire/microcatheter technologies. LIBERTY is being designed to have

the following attributes:

We

are continuing our feasibility animal trials with respect to the LIBERTY device, with a planned pre-submission to the FDA

as early as the fourth quarter of 2021, with submission to the FDA planned in the fourth quarter of 2022.

Strategy

Microbot’s

goal is to generate sales of its products, once they have received regulatory approval, by establishing SCS, LIBERTY and

additional devices from its technological platforms, as the standard-of-care in the eyes of doctors, surgeons, patients and medical

facilities, as well as getting the support of payors and insurance companies. Microbot believes that it can achieve this objective

by working with hospitals to demonstrate the key benefits of its products. Microbot’s strategy includes the following key

elements:

SCS

Opportunities

The

SCS is designed to prevent shunt occlusions in hydrocephalus and NPH patients who have undergone or are undergoing the surgical

insertion of a shunt system. For purposes of its marketing strategy, Microbot has split the market for shunt systems into two

sub-markets:

● Primary shunt placement; and

● Shunt replacement.

Microbot’s

SCS device is universal (meaning that it is designed to be attachable to any valve on the market); therefore, Microbot’s

initial go-to-market strategy is the development of strategic partnerships with leading global medical device companies with ready

sales and distribution channels. Outside of a strategic partnership, it is most likely that Microbot’s SCS product will

be initially used in shunt replacement surgeries to replace occluded ventricular catheters. Accordingly, Microbot intends to establish

key hospital and clinic relationships that will allow it to diffuse the technology among experts and other stakeholders. Microbot

is also planning to apply for the SCS device to be covered under the current reimbursement codes in the United States for use

in hydrocephalus and NPH shunt procedures.

TipCAT

Opportunities

Microbot

is currently exploring the use of the TipCAT for minimally invasive neurological and endovascular applications.

CardioSert

Technology Opportunities

Microbot

is currently exploring the integration of the CardioSert technology into the LIBERTY endovascular robotic system for a

range of potential applications in the cardiovascular, peripheral vascular and neurovascular spaces.

LIBERTY

Opportunities

The

LIBERTY endovascular robotic system is being designed to remotely maneuvering guidewires, microcatheters and over-the-wire

devices within the body’s vasculature. The device is being designed to be the size of a personal device and to be fully

disposable and affordable. We are aiming LIBERTY to be capable of supporting whole-endovascular procedures by providing

“One & Done” solutions which would be based in part on CardioSert’s proprietary technology or possibly

other guidewire/microcatheter technologies. With control over tip curvature and stiffness for maneuverability and access –

and without the need for constant tool exchanges – the “One & Done” feature, when integrated into the

system, is expected to drastically reduce the procedure time and costs, while enhancing the operator experience. We believe

LIBERTY’s addressable markets 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.

Competition

SCS

Competitive Landscape

Several

academic research groups, such as at the New Jersey Institute of Technology, are currently researching sensing and obstruction-resistant

catheter designs, and the Smart Sensors and Integrated Microsystems (SSIM) Program at Wayne State University has publicized that

it is engaging in smart shunt development activity. However, based in part on its knowledge of the patented technologies, Microbot

believes that these technologies are still early in the research and development cycle. Although we believe the SCS may face direct

competition from Anuncia Inc., a spin-off of Alycone Lifesciences Inc., which received a CE Mark and FDA 510k clearance for the

Alivio ReFlowTM Ventricular System for the treatment of hydrocephalus, the commercialization status of the device is not

clear. The SCS also faces non-direct competition from Aqueduct Neurosciences, Inc., which we believe is developing a non-shunt,

electro-mechanical technology platform to control the draining of cerebrospinal fluid, and from Cerevasc Inc., which is developing

the eShuntTM System that aims to eliminate the need for passing a rigid catheter through cerebral cortex and subcortical

white matter.

Microbot

does not expect its SCS device to directly compete against shunt systems currently available in the market. The SCS device is

designed to replace a component of existing shunt systems and is expected to be an aftermarket purchase that would be used to

modify existing products by the end user. However, there can be no assurance that Microbot’s product candidate will be accepted

by the shunt market as an alternative component.

TipCAT

Competitive Landscape

Microbot

has not at this time completed its evaluation of the current competitive landscape in the endovascular space for potential uses

of the TipCAT.

CardioSert

Technology Competitive Landscape

Competition

includes moveable-core guidewires from companies such as Boston Scientific and Rapid Medical, and steerable and deflectable sheaths

and catheters from companies such as Bendit Technologies and Merit Medical. To our knowledge, the CardioSert device is the only

device that combines an inner moveable guidewire and an outer microcatheter, with the ability to control the shape and stiffness

of the distal tip in a continuous, gradual manner, and intends to compete on that basis.

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 Helathineers company. The CorPath GRX system has FDA approvals for percutaneous coronary interventions (PCI) and peripheral

vascular interventions (PVI) and is pending an approval for neurovascular interventions. Other competitors include Robocath (CE

Marked for PCI only) and Hansen Medical (a J&J Company with FDA approval for PVI). 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 capital expenditures. We further believe that these systems have captured a marginal

market share to date.

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, many 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

SCS and TipCAT are based on technological platforms licensed from The Technion Research and Development Foundation Ltd., or TRDF,

as further discussed below. The LIBERTY platform core technology is co-owned by Microbot and TRDF. The CardioSert device

is based on technologies acquired by Microbot. Microbot plans to develop other micro-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 42 patents issued/allowed and

23 patent applications pending worldwide. It also has registered trademarks in Israel and Europe relating to its LIBERTY

platform, and also has trademark applications pending in Israel, US, Europe and China relating to its proprietary Microbot

Medical tradename and logo.

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 2026 and 2033, 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 2026 and 2036.

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. Pursuant to the terms of the license agreement,

in order to maintain the license with respect to each platform, Microbot must use commercially reasonable efforts to develop products

covered by the license, including meeting certain agreed upon development milestones. The milestones for both SCS and TipCAT include

commencing first in human clinical trials by December 2021. Failure to meet any development milestone will give TRDF the right

to terminate the license with respect to the technology underlying the missed milestone.

As

partial consideration for the grant of the licenses under the agreement, Microbot issued a number of shares to TRDF equal to 3%

of its issued and outstanding shares at such time on a fully diluted basis. Such shares were initially subject to antidilution

protections but are no longer subject to adjustment. In addition, as partial consideration for the licenses granted, Microbot

agreed to pay TRDF royalties of between 1.5% and 3.0% of net sales of products covered by the licenses, subject to certain reductions,

and certain percentages of amounts received by Microbot in the event of sublicensing.

In

the case of termination of the license by Microbot without cause or by TRDF for cause, TRDF has the right to receive a non-exclusive

license from Microbot with respect to improvements to the licensed technologies made by Microbot. In such cases, TRDF would pay

a royalty of 10% of the income received by TRDF in connection its sublicensing of such patent right and related intellectual property.

If the license from TRDF were to be terminated with respect with either of the technology platforms underlying the SCS or the

TipCAT, Microbot would no longer be able to continue its development of the related product candidate. However, Microbot believes

that its current intellectual property portfolio, and its ongoing efforts to expand into other micro-robotic surgical technologies,

will give it the flexibility to shift its resources towards developing and commercializing related products.

In

addition to the licensed SCS and TipCAT technologies, 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 a process is being conducted for establishing 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

has obtained grants from the Israeli Innovation Authority (“IIA”) for participation in research and development activities

since 2013 through 2020. During this time, Microbot has received grant revenues of approximately $1,500,000. In return, Microbot

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 USD LIBOR per annum.

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 grant, if the SCS project fails, is unsuccessful or aborted before any sales are generated.

The financial risk is assumed completely by the IIA.

Microbot

expects to continue to access government funding in the future.

For

the fiscal year ended December 31, 2020, Microbot incurred research and development expenses of approximately $3,396,000 compared

to research and development expenses of approximately $3,048,000 for the fiscal year ended December 31, 2019.

SCS

Microbot

has already made plans to develop a second version of its SCS device that will have an embedded controller and battery, initially

to support its animal trials. This alternative design will allow the cleaning mechanism to be automatically activated, without

the need for the patient’s involvement in the activation process.

Microbot

has completed the development of an SCS prototype and is currently continuing the safety testing, general proof of concept testing

and performance testing for the device, which Microbot began in mid-2013. In May 2018, Microbot previously announced the results

of two pre-clinical studies assessing the SCS, an in-vitro study and a small animal study. The in-vitro study, which was performed

at Wayne State University, supports the SCS’s potential as a viable technology for preventing occlusion in shunts used to

treat hydrocephalus. The animal study designed to assess the safety profile of the SCS, which was performed at Washington University

School of Medicine in St. Louis, met the primary goal to determine the safety of the SCS device that aims to prevent obstruction

in CSF catheters. Since the completion of these initial studies, Microbot conducted a follow-up study to further evaluate the

safety of the SCS. The follow-up study was also conducted by leading hydrocephalus experts at Washington University and Wayne

State University. The study included a larger sample size compared to the initial studies and the primary and secondary endpoints

seek to validate the safety and efficacy of the SCS that will be activated in both in-vitro (lab) and in-vivo (animal) models.

In that in-vivo study, the major finding was that the SCS system is as safe to use as currently marketed devices.

In

conjunction with conducting the follow-up study, Microbot also contracted with Envigo CRS Israel, to conduct an in-vitro study

designed to evaluate the operational performance of the SCS. The first Envigo study that was conducted in 2018 used human brain

glioblastoma cells to assess the performance of the SCS in a test system with accelerated cell growth, accumulation, and obstruction

rates. The performance of a constantly activated (always-on) SCS to prevent shunt occlusion in the laboratory study was compared

with a non-operating SCS after 30 days, and the results were captured with photographs shared by Microbot in a press release issued

on January 14, 2019. While significant cell growth and accumulation was seen in the cell cultures with a non-operating SCS, the

shunt openings within the cells seeded with a constantly operating SCS remained clear, with little to no cell attachment on the

robotic brush (ViRob) and on the opening where the robotic brush (ViRob) operates after 30 days of cell culturing and growth.

We believe this experiment validates the operational effectiveness of the SCS to prevent shunt occlusion and provides additional

data to support the device’s proof of concept. We believe the in-vitro laboratory study further confirms that the SCS has

the ability to operate after cells have accumulated on the catheter holes and the robotic brush (ViRob) and to potentially disintegrate

existing occlusions formed on the robotic brush (ViRob) and on the opening where the robotic brush (ViRob) operates, based on

the results from a third test group in which cells were allowed to grow for four weeks and then exposed to an activated SCS device.

We believe the images captured by Envigo and Microbot demonstrate that the cleaning mechanism of the SCS is powerful enough to

clear accumulated cells at blocked pores, as significant improvements were observed in the degree of shunt obstruction after only

a short period of time following activation of the SCS.

The

SCSTM was further validated in a broader follow-up in-vitro lab study which commenced in July 2019 and concluded on August

14, 2019 and clearly demonstrated the device prevented shunt occlusion under the parameters of that study. This follow-up study

was also conducted by Envigo CRS Israel. Human brain glioblastoma cells were used in order to assess performance of the SCSTM

in a test system with accelerated cell growth rate, accumulation and obstruction rates. Specifically, the study demonstrated: