MICROBOT
MEDICAL INC.
Interim
Consolidated Balance Sheets
U.S.
dollars in thousands
(Except
share and per share data)
|
|
|
|
As of June 30,
|
|
|
As of December 31,
|
|
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
(unaudited)
|
|
|
(audited)
|
|
|
|
|
|
(in thousands)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
4,879
|
|
|
$
|
5,238
|
|
Short term investments
|
|
3
|
|
|
2,503
|
|
|
|
-
|
|
Restricted cash
|
|
5
|
|
|
4,250
|
|
|
|
25
|
|
Prepaid expenses and other assets
|
|
|
|
|
217
|
|
|
|
568
|
|
Total current assets
|
|
|
|
|
11,849
|
|
|
|
5,831
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
|
|
234
|
|
|
|
259
|
|
Operating right-of-use assets
|
|
4
|
|
|
492
|
|
|
|
-
|
|
Total assets
|
|
|
|
$
|
12,575
|
|
|
$
|
6,090
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts payables
|
|
|
|
$
|
179
|
|
|
$
|
630
|
|
Other accrued liabilities
|
|
5
|
|
|
3,477
|
|
|
|
3,375
|
|
Lease liabilities
|
|
4
|
|
|
304
|
|
|
|
-
|
|
Accrued liabilities
|
|
|
|
|
446
|
|
|
|
755
|
|
Total current liabilities
|
|
|
|
|
4,406
|
|
|
|
4,760
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities:
|
|
|
|
|
|
|
|
|
|
|
Long-term lease liabilities
|
|
4
|
|
|
188
|
|
|
|
-
|
|
Total liabilities
|
|
|
|
|
4,594
|
|
|
|
4,760
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock; $0.01 par value; 220,000,000 shares authorized as of June 30, 2019 and December
31, 2018 4,307,666 and 3,012,343 shares issued and outstanding as of June 30, 2019 and December 31, 2018
|
|
6
|
|
|
43
|
|
|
|
31
|
|
Additional paid-in capital(*)
|
|
6
|
|
|
42,680
|
|
|
|
32,538
|
|
Treasury shares
|
|
5
|
|
|
(3,375
|
)
|
|
|
(3,375
|
)
|
Accumulated deficit
|
|
|
|
|
(31,367
|
)
|
|
|
(27,864
|
)
|
Total stockholders’ equity
|
|
|
|
|
7,981
|
|
|
|
1,330
|
|
Total liabilities and stockholders’ equity
|
|
|
|
$
|
12,575
|
|
|
$
|
6,090
|
|
(*)
The Company adopted ASU 2017-11 using the full retrospective approach. Refer to Note 6 for further information.
The
accompanying notes are an integral part of these interim consolidated financial statements.
MICROBOT
MEDICAL INC.
Interim
Consolidated Statements of Operations
U.S.
dollars in thousands
(Except
share and per share data)
|
|
For the Three Months
Ended June 30,
|
|
|
For the Six Months
Ended June 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Research and development
|
|
$
|
741
|
|
|
$
|
747
|
|
|
$
|
1,364
|
|
|
$
|
1,243
|
|
General and administrative
|
|
|
804
|
|
|
|
1,145
|
|
|
|
2,097
|
|
|
|
2,164
|
|
Operating loss
|
|
|
(1,545
|
)
|
|
|
(1,892
|
)
|
|
|
(3,461
|
)
|
|
|
(3,407
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing income (expenses), net
|
|
|
3
|
|
|
|
(2
|
)
|
|
|
(42
|
)
|
|
|
31
|
|
Net loss
|
|
$
|
(1,542
|
)
|
|
$
|
(1,894
|
)
|
|
$
|
(3,503
|
)
|
|
$
|
(3,376
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per share
|
|
$
|
(0.36
|
)
|
|
$
|
(0.66
|
)
|
|
$
|
(0.83
|
)
|
|
$
|
(1.20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average common shares outstanding
|
|
|
4,307,666
|
|
|
|
2,855,428
|
|
|
|
4,197,566
|
|
|
|
2,809,754
|
|
(*)
|
June
30, 2018 share data represents the number of shares adjusted to retroactively reflect
the 1:15 reverse stock split effected on September 4, 2018. Refer to Note 1 for further
information.
|
The
accompanying notes are an integral part of these interim consolidated financial statements.
MICROBOT
MEDICAL INC.
Interim
Consolidated Statements of Comprehensive Loss
U.S.
dollars in thousands
(Except
share and per share data)
|
|
For the Three Months
Ended June 30,
|
|
|
For the Six Months
Ended June 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,542
|
)
|
|
$
|
(1,894
|
)
|
|
$
|
(3,503
|
)
|
|
$
|
(3,376
|
)
|
Other comprehensive loss (income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized loss (gain) on available for sale
securities
|
|
|
*
|
|
|
|
-
|
|
|
|
*
|
|
|
|
-
|
|
Comprehensive loss
|
|
$
|
(1,542
|
)
|
|
$
|
(1,894
|
)
|
|
$
|
(3,503
|
)
|
|
$
|
(3,376
|
)
|
(*)
Represents amount less than 1 thousand.
The
accompanying notes are an integral part of these interim consolidated financial statements.
MICROBOT
MEDICAL INC.
Interim
Consolidated Statements of Shareholder’s Equity
U.S.
dollars in thousands
(Except
share and per share data)
|
|
Series A Shares
|
|
|
Common Stock (***)
|
|
|
Additional Paid-In Capital (2)
|
|
|
Treasury Shares (1)
|
|
|
Accumulated Other Comprehensive Loss
|
|
|
Accumulated Deficit (2)
|
|
|
Total
Stockholders’ Equity
|
|
|
Temporary Equity (**)
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Amount
|
|
|
Amount
|
|
|
Amount
|
|
|
Amount
|
|
|
Amount
|
|
|
Amount
|
|
Balances, December 31, 2017
|
|
|
4,001
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
27
|
|
|
$
|
30,569
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(20,604
|
)
|
|
$
|
9,992
|
|
|
$
|
500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
822
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
822
|
|
|
|
-
|
|
Exercise of options
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Shares issued as consideration-vendors
|
|
|
-
|
|
|
|
-
|
|
|
|
6,738
|
|
|
|
1
|
|
|
|
73
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
74
|
|
|
|
-
|
|
Conversion of preferred A shares to common stock
|
|
|
(3,000
|
)
|
|
|
-
|
|
|
|
202,126
|
|
|
|
2
|
|
|
|
(2
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,376
|
)
|
|
|
(3,376
|
)
|
|
|
-
|
|
Balances, June 30, 2018
|
|
|
1,001
|
|
|
$
|
-
|
|
|
|
2,945,677
|
|
|
$
|
30
|
|
|
$
|
31,462
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(23,980
|
)
|
|
$
|
7,512
|
|
|
$
|
500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, March 31, 2018
|
|
|
2,464
|
|
|
$
|
-
|
|
|
|
2,837,883
|
|
|
$
|
28
|
|
|
$
|
30,984
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(22,086
|
)
|
|
$
|
8,926
|
|
|
$
|
500
|
|
Shares issued as consideration-vendors
|
|
|
-
|
|
|
|
-
|
|
|
|
6,738
|
|
|
|
1
|
|
|
|
73
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
74
|
|
|
|
-
|
|
Share-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
406
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
406
|
|
|
|
-
|
|
Conversion of preferred A shares to common stock
|
|
|
(1,463
|
)
|
|
|
-
|
|
|
|
101,056
|
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,894
|
)
|
|
|
(1,894
|
)
|
|
|
-
|
|
Balances, June 30, 2018
|
|
|
1,001
|
|
|
$
|
-
|
|
|
|
2,945,677
|
|
|
$
|
30
|
|
|
$
|
31,462
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(23,980
|
)
|
|
$
|
7,512
|
|
|
$
|
500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, December 31, 2018
|
|
|
-
|
|
|
$
|
-
|
|
|
|
3,012,343
|
|
|
$
|
31
|
|
|
$
|
32,538
|
|
|
$
|
(3,375
|
)
|
|
$
|
-
|
|
|
$
|
(27,864
|
)
|
|
$
|
1,330
|
|
|
$
|
-
|
|
Issuance of common stock and warrants net of issuance expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
1,295,323
|
|
|
|
12
|
|
|
|
9,532
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,544
|
|
|
|
-
|
|
Share-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
610
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
610
|
|
|
|
-
|
|
Unrealized loss on marketable debt security
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(*
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,503
|
)
|
|
|
(3,503
|
)
|
|
|
-
|
|
Balances, June 30, 2019
|
|
|
-
|
|
|
$
|
-
|
|
|
|
4,307,666
|
|
|
$
|
43
|
|
|
$
|
42,680
|
|
|
$
|
(3,375
|
)
|
|
$
|
-
|
|
|
$
|
(31,367
|
)
|
|
$
|
7,981
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, March 31, 2019
|
|
|
-
|
|
|
$
|
-
|
|
|
|
4,307,666
|
|
|
$
|
43
|
|
|
$
|
42,385
|
|
|
$
|
(3,375
|
)
|
|
$
|
-
|
|
|
$
|
(29,825
|
)
|
|
$
|
9,228
|
|
|
$
|
-
|
|
Issuance of common stock and warrants net of issuance expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Share-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
295
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
295
|
|
|
|
-
|
|
Unrealized loss on marketable debt security
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(*
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,542
|
)
|
|
|
(1,542
|
)
|
|
|
-
|
|
Balances, June 30, 2019
|
|
|
-
|
|
|
$
|
-
|
|
|
|
4,307,666
|
|
|
$
|
43
|
|
|
$
|
42,680
|
|
|
$
|
(3,375
|
)
|
|
$
|
-
|
|
|
$
|
(31,367
|
)
|
|
$
|
7,981
|
|
|
$
|
-
|
|
(1)
Refer to Note 4 for further information
(2)
Refer to Note 5 for further information
(*)
Less than 1
(**)
Includes 721,107 common stock classified as temporary equity as of December 31, 2017.
(***)
Share data as of December 31, 2017, March 31, 2018, and June 30, 2018 and for the periods then ended represent the number of shares
adjusted to retroactively reflect the 1:15 reverse stock split effected on September 4, 2018. Refer to Note 1 for further information.
The
accompanying notes are an integral part of these interim consolidated financial statements.
MICROBOT
MEDICAL INC.
Interim
Consolidated Statements of Cash Flows
U.S.
dollars in thousands
|
|
For
the Six Months Ended June 30,
|
|
|
|
2019
|
|
|
2018
|
|
Operating
activities:
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(3,503
|
)
|
|
$
|
(3,376
|
)
|
Adjustments
to reconcile net loss to net cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
25
|
|
|
|
23
|
|
Share-based
compensation expense
|
|
|
610
|
|
|
|
896
|
|
Vacation
|
|
|
28
|
|
|
|
-
|
|
Amortization
of discount (premium) on marketable debt securities
|
|
|
(7
|
)
|
|
|
-
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
333
|
|
|
|
(138
|
)
|
Other
payables and accrued liabilities
|
|
|
(686
|
)
|
|
|
52
|
|
Net
cash flows from operating activities
|
|
|
(3,200
|
)
|
|
|
(2,543
|
)
|
Investing
activities:
|
|
|
|
|
|
|
|
|
Purchase
of property and equipment
|
|
|
-
|
|
|
|
(224
|
)
|
Purchase
of marketable debt securities
|
|
|
(2,496
|
)
|
|
|
-
|
|
Net
cash flows from investing activities
|
|
|
(2,496
|
)
|
|
|
(224
|
)
|
Financing
activities:
|
|
|
|
|
|
|
|
|
Issuance
of common stock and warrants, net of issuance costs
|
|
|
9,562
|
|
|
|
-
|
|
Net
cash flows from financing activities
|
|
|
9,562
|
|
|
|
-
|
|
Increase
(decrease) in cash, cash equivalents and restricted cash
|
|
|
3,866
|
|
|
|
(2,767
|
)
|
Cash,
cash equivalents and restricted cash, beginning
|
|
|
5,263
|
|
|
|
10,814
|
|
Cash,
cash equivalents and restricted cash, ending
|
|
$
|
9,129
|
|
|
$
|
8,047
|
|
|
|
|
|
|
|
|
|
|
Non-cash
investing and financing activities:
|
|
|
|
|
|
|
|
|
Conversion
of Series A Convertible Preferred Stock into common stock
|
|
$
|
-
|
|
|
$
|
30
|
|
|
|
|
|
|
|
|
|
|
Recognition
of right-of-use asset and lease liability upon adoption of ASU 2016-02
|
|
$
|
630
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
received from interest
|
|
$
|
21
|
|
|
$
|
-
|
|
Cash
paid for taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these interim consolidated financial statements.
MICROBOT
MEDICAL INC.
NOTES
TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands
(Except
share and per share data)
|
A.
|
Description
of business:
|
|
|
|
|
|
Microbot
Medical Inc. (the “Company”) is a pre-clinical medical device company specializing in the research, design and
development of next generation micro-robotics assisted medical technologies targeting the minimally invasive surgery space.
The Company is primarily focused on leveraging its micro-robotic technologies with the goal of 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 Merger, the Company changed its name from StemCells, Inc. to Microbot
Medical Inc. On November 29, 2016, the Company’s common stock began trading on the Nasdaq Capital Market under the symbol
“MBOT”.
|
|
|
|
|
|
Prior
to the Merger, the Company was a biopharmaceutical company that conducted research, development, and commercialization of
stem cell therapeutics and related technologies. The sale of substantially all material assets relating to the stem cell business
were completed on November 29, 2016.
|
|
|
|
|
|
The
Company and its subsidiaries are collectively referred to as the “Company”. “StemCells” or “StemCells,
Inc.” refers to the Company prior to the Merger.
|
|
|
|
|
B.
|
Risk
Factors:
|
|
|
|
|
|
To
date, the Company has not generated revenues from its operations. As of June 30, 2019, the Company had unrestricted cash and
cash equivalent balance of approximately $7,382, 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. The Company plans to continue to fund its current operations as well as other development activities relating to additional
product candidates, 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.
|
|
|
|
|
C.
|
Use
of estimates:
|
|
|
|
|
|
The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions pertaining
to transactions and matters whose ultimate effect on the financial statements cannot precisely be determined at the time of
financial statements preparation. Although these estimates are based on management’s best judgment, actual results may
differ from these estimates.
|
MICROBOT
MEDICAL INC.
NOTES
TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands
(Except
share and per share data)
|
D.
|
Reverse
Stock Split
|
|
|
|
|
|
On
September 4, 2018, the Company filed a Certificate of Amendment to its Restated Certificate of Incorporation with the Secretary
of State of the State of Delaware to affect a one-for-15 reverse stock split of the Company’s common stock (the “Reverse
Split”). As a result of the Reverse Split, every 15 shares of the Company’s old common stock were converted into
one share of the Company’s new common stock. Fractional shares resulting from the Reverse Split were rounded up to the
nearest whole number. The Reverse Split automatically and proportionately adjusted, based on the one-for-fifteen split ratio,
all issued and outstanding shares of the Company’s common stock, as well as common stock underlying convertible preferred
stock, stock options, warrants and other derivative securities outstanding at the time of the effectiveness of the Reverse
Split. The exercise price on outstanding equity based-grants was proportionately increased, while the number of shares available
under the Company’s equity-based plans was also proportionately reduced. Share and per share data (except par value)
for the periods presented reflect the effects of the Reverse Split. References to numbers of shares of common stock and per
share data in the accompanying financial statements and notes thereto for periods ended prior to September 4, 2018 have been
adjusted to reflect the Reverse Split on a retroactive basis.
|
NOTE
2
|
-
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
|
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 and six months periods ended June 30, 2019, are not necessarily indicative of the results that
may be expected for the year ended December 31, 2019.
|
|
|
|
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:
|
|
|
|
Short-term
Investments
|
|
|
|
The
Company began investing excess cash in short-term investments during the first quarter of 2019.
|
|
|
|
Marketable
debt securities are considered to be available for sale and are carried at fair value. Unrealized gains and losses net of
tax, if any, are reported as a separate component of shareholders’ equity. The cost of marketable debt securities classified
as available for sale is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and
accretion are included in interest income. Realized gains and losses and declines in value judged to be other than temporary,
if any, are also included in other income, net. Interest on securities classified as available for sale is included in interest
income. The cost of securities sold is based on the specific identification method.
|
|
|
|
Management
evaluates whether available-for-sale securities are other-than-temporarily impaired (OTTI) on a quarterly basis. Debt securities
with unrealized losses are considered OTTI if the Company intends to sell the security or if it is more likely than not that
the Company will be required to sell such security prior to any anticipated recovery. If management determines that a security
is OTTI under these circumstances, the impairment recognized in earnings is measured as the entire difference between the
amortized cost and the then-current fair value. During the three and six-months ended June 30, 2019, no investment OTTI losses
were realized.
|
MICROBOT
MEDICAL INC.
NOTES
TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands
(Except
share and per share data)
|
Fair
value of financial instruments:
|
|
|
|
The
carrying values of cash and cash equivalents, other receivable and other accounts payable and accrued liabilities approximate
their fair value due to the short-term maturity of these instruments.
|
|
|
|
The
Company measures the fair value of certain of its financial instruments (marketable debt security) on a recurring basis.
|
|
|
|
A
fair value hierarchy is used to rank the quality and reliability of the information used to determine fair values. Financial
assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:
|
|
|
|
Level
1
- Quoted prices (unadjusted) in active markets for identical assets and liabilities.
|
|
|
|
Level
2
- Inputs other than Level 1 that are observable, either directly or indirectly, such as unadjusted quoted prices for
similar assets and liabilities, unadjusted quoted prices in the markets that are not active, or other inputs that are observable
or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
|
|
|
Level
3
- Unobservable inputs that are supported by little or no market activity and that are significant to the fair value
of the assets or liabilities.
|
|
|
|
Leases
|
|
|
|
In
February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842). This
ASU requires entities that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations
created by leases with lease terms of more than 12 months. The Company adopted this ASU effective January 1, 2019 using the
modified retrospective application, applying the new standard to leases in place as of the adoption date. Prior periods have
not been adjusted.
|
|
|
|
Arrangements
that are determined to be leases at inception are recognized as long-term right-of-use assets (“ROU”) and lease
liabilities in the condensed consolidated balance sheet at lease commencement. Operating lease ROU assets and operating lease
liabilities are recognized based on the present value of the future fixed lease payments over the lease term at commencement
date. As most of the Company’s leases do not provide an implicit rate, the Company applies its incremental borrowing
rate based on the economic environment at commencement date in determining the present value of future payments. Lease terms
may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.
Lease expense for operating leases or payments are recognized on a straight-line basis over the lease term.
|
|
|
|
Warrants
|
|
|
|
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 Accounting
Standards Update (“ASU”) 2017-11, which includes Part I “Accounting for Certain Financial Instruments with
Down Round Features” and Part II “Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial
Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-Controlling Interests with a Scope Exception”,
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. As a result of the adoption of ASU 2017-11, the Company’s warrants were
reclassified from liabilities to shareholders’ equity.
|
MICROBOT
MEDICAL INC.
NOTES
TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands
(Except
share and per share data)
|
The
cumulative effect of adoption of ASU 2017-11 resulted as follows:
|
|
|
For the
Six Months ended
June 30, 2018
|
|
|
For the
year ended
December 31, 2018
|
|
|
|
|
|
|
|
|
Derivative warrant liability
|
|
$
|
(14
|
)
|
|
$
|
(8
|
)
|
Additional paid-in capital
|
|
$
|
-
|
|
|
$
|
28
|
|
Accumulated deficit
|
|
$
|
14
|
|
|
$
|
20
|
|
|
Refer
to Note 6 for further information regarding the outstanding warrants as of June 30, 2019.
|
|
|
|
Recent
Accounting Standards:
|
|
|
|
In
June 2016, the FASB issued ASU 2016-13 “Financial Instruments – Credit Losses” to improve information on
credit losses for financial assets and net investment in leases that are not accounted for at fair value through net income.
This ASU replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses.
This ASU is effective for the Company in the first quarter of 2020, with early adoption permitted. The Company does not expect
that this ASU 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. This ASU
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 ASU will have a material effect on the Company’s consolidated financial statements.
|
NOTE
3
|
-
|
SHORT-TERM
INVESTMENTS
|
|
|
The
following tables summarize the Company’s marketable debt securities as of June 30, 2019 and December 31, 2018:
|
|
|
As of June 30, 2019
|
|
|
|
Amortized Cost
|
|
|
Unrealized gains
|
|
|
Realized
gains
|
|
|
Fair value
|
|
US Treasury Bond
|
|
$
|
2,503
|
|
|
$
|
(*
|
)
|
|
$
|
-
|
|
|
$
|
2,503
|
|
|
|
|
As of December 31, 2018
|
|
|
|
|
Amortized Cost
|
|
|
|
Unrealized gains
|
|
|
|
Realized gains
|
|
|
|
Fair value
|
|
US Treasury Bond
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
(*)
Less than 1.
|
|
The
Company’s financial asset is measured at fair value on a recurring basis by level within the fair value hierarchy. The
Company’s marketable security is classified as Level 1. Other than the marketable debt security, the Company doesn’t
have any other financial assets or financial liabilities marked to market at fair value.
|
|
|
|
|
|
The
contractual maturity of the marketable security is one year.
|
MICROBOT
MEDICAL INC.
NOTES
TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands
(Except
share and per share data)
|
|
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. At June
30, 2019, the Company’s ROU assets and lease liabilities for operating leases totaled $492 and $492, respectively. The
impact of adopting the new lease standard was not material to the Company’s condensed consolidated statement of operations
for the periods presented.
|
|
|
|
|
|
Supplemental
cash flow information related to operating leases was as follows (unaudited):
|
|
|
Six Months Ended
June 30, 2019
|
|
Cash payments for operating leases
|
|
$
|
156
|
|
|
|
As
of June 30, 2019, our operating leases had a weighted average remaining lease term of 2 years and a weighted average discount
rate of 7%. Future lease payments under operating leases as of June 30, 2019 were as follows:
|
|
|
Operating Leases
|
|
Remainder of 2019
|
|
$
|
156
|
|
2020
|
|
|
284
|
|
2021
|
|
|
77
|
|
Total future lease payments
|
|
|
517
|
|
Less imputed interest
|
|
|
(25
|
)
|
Total lease liability balance
|
|
$
|
492
|
|
NOTE
5
|
-
|
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 June 30, 2019 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.
|
MICROBOT
MEDICAL INC.
NOTES
TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands
(Except
share and per share data)
|
|
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 June 30, 2019, his study is still
on going and will be extended to continue until March 1, 2020.
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.
|
|
|
|
|
|
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.
|
MICROBOT
MEDICAL INC.
NOTES
TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands
(Except
share and per share data)
|
|
Litigation:
|
|
|
|
|
|
Sabby Litigation
|
|
|
|
|
|
The
Company is named as the defendant in a lawsuit (the “Matter”), captioned Sabby Healthcare Master Fund Ltd. and
Sabby Volatility Warrant Master Fund Ltd., Plaintiffs, against Microbot Medical Inc., Defendant, in the Supreme Court of the
State of New York, County of New York (the “Court”) (Index No. 654581/2017). The complaint alleged, among other
things, that the Company breached multiple representations and warranties contained in the Securities Purchase Agreement (the
“SPA”) related to the Company’s June 8, 2017 equity financing (the “Financing”) of which the
Plaintiffs participated. The complaint sought rescission of the SPA and return of the Plaintiffs’ $3,375 purchase
price with respect to the Financing, and damages in an amount to be determined at trial but alleged to exceed $1,000.
A trial was held on February 11, 2019. On February 28, 2019, the Court issued a Decision and Order After Trial to rescind
the SPA. The rescission would require the Plaintiffs to transfer back to the Company the shares they purchased in the Financing,
and for the Company to return to Plaintiffs their purchase price of $3,375. On March 27, 2019, the Company filed a
Notice of Appeal and an Undertaking to stay execution of the judgment pending appeal.
|
|
|
|
|
|
In
accordance with New York law, in order to move forward with the appeal and to stay the lower court’s judgment, the Company
placed approximately $4,200 in escrow with a surety bonding agent on March 26, 2019 in accordance with provisions set forth
in the judgment from the Matter, which represents the judgment amount, plus interest and the fee to the bonding company. Accordingly,
the Company recorded additional expenses of $101 with respect to interest from the judgement date and up until June 30, 2019.
|
|
|
|
|
|
Tolling
and Standstill Agreement
|
|
|
|
|
|
On
April 4, 2018, Microbot entered into a Tolling and Standstill Agreement with Empery Asset Master, Ltd., Empery Tax Efficient
LP, Empery Tax Efficient II LP, and Hudson Bay Master Fund, Ltd., the other investors in the Financing (“Other Investors”).
Pursuant to the Tolling Agreement, among other things, (a) the Other Investors agree not to bring any claims against Microbot
arising out of the Matter, (b) the parties agree that if Microbot reaches an agreement to settle the claims asserted by the
Sabby Funds in the above suit, Microbot will provide the same settlement terms on a pro rata basis to the Other Investors,
and the Other Investors will either accept same or waive all of their claims and (c) the parties froze in time the rights
and privileges of each party as of the effective date of the Tolling Agreement, until (i) an agreement to settle the suit
is executed; (ii) a judgment in the suit is obtained; or (iii) the suit is otherwise dismissed with prejudice.
|
|
|
|
|
|
No
provision has been recorded with respect to the Tolling Agreement since no settlement was reached with respect to the Matter.
|
|
|
|
|
|
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 by Alliance from purchases and sales of the Company’s securities within a period
of less than six months, while Alliance was a beneficial owner of more than 10% of the Company’s outstanding common
stock and a statutory “insider” for purposes of the statute. The case is Microbot Medical Inc. v. Alliance Investment
Management, Ltd., No. 19-cv-3782-GBD (SDNY).
|
|
|
|
|
|
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.
|
MICROBOT
MEDICAL INC.
NOTES
TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands
(Except
share and per share data)
|
|
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 approximately $11, covering up to 60 consulting hours per month.
|
|
|
|
|
|
Yehezkel
(Hezi) Himelfarb Resignation:
|
|
|
|
|
|
Effective
as of February 1, 2019, Yehezkel (Hezi) Himelfarb, a member of the Board of Directors of the Company, and the Company’s
Chief Operating Officer, resigned from all positions with the Company. Effective as of February 1, 2019, Mr. Himelfarb also
resigned from his position as General Manager of Microbot Medical Ltd., a wholly owned subsidiary of the Company. As a result
of Mr. Himelfarb providing certain post-resignation transition services to the Company and the terms of his employment agreement,
Mr. Himelfarb continued to be paid his full salary and certain benefits for six months after resignation.
|
|
|
Each
share of the Series A Convertible Preferred Stock, par value $0.01 per share, issued by the Company in December 2016 and in
May 2017 (the “Series A Convertible Preferred Stock”), was convertible, at the option of the holder, into 67 shares
of common stock (1,000 shares of common stock before the Reverse Split), and conferred upon the holder dividend rights on
an as converted basis. On December 12, 2018, the Company filed a Certificate of Elimination with respect to its Series A Convertible
Preferred Stock and as of June 30, 2019, the Company did not have any Series A Convertible Preferred Stock issued or outstanding.
|
|
|
|
|
|
See
Note 5 – “Commitments and Contingencies-Agreement with CardioSert Ltd.,” with respect to the issuance of
6,738 shares of the Company’s common stock
|
|
|
|
|
|
Share
Capital Developments:
|
|
|
|
|
|
The
authorized capital stock consists of 221,000,000 shares of capital stock, which consists of 220,000,000 shares of common par
value $0.01 (the “Preferred Stock”). As of June 30, 2019, the Company had 4,307,666 shares of common stock issued
and outstanding.
|
|
|
|
|
|
On
December 27, 2016, the Company exchanged 655,962 shares (9,735,925 shares before the Reverse Split) or rights to acquire shares
of its common stock, for 9,736 shares of a newly designated class of Series A Convertible Preferred Stock.
|
|
|
|
|
|
On
January 5, 2017, the Company entered into a definitive securities purchase agreement with an institutional investor (the “Purchaser”)
for the purchase and sale of an aggregate of 47,163 shares (700,000 shares before the Reverse Split) of common stock in a
registered direct offering for $74.00 per share ($5.00 per share before the Reverse Split) or gross proceeds of $3,500. The
Company paid the placement agent a fee of $210 plus reimbursement of out-of-pocket expenses, as well as other offering-related
expenses.
|
|
|
|
|
|
On
June 5, 2017, the Company entered into a Securities Purchase Agreement with certain institutional investors (the “Investors”)
providing for the issuance and sale by the Company to the Investors of an aggregate of 252,652 shares (3,750,000 shares before
the Reverse Split) of common stock, at a purchase price per share of $40.50 ($2.70 before the Reverse Split). The gross proceeds
to the Company was $10,125 before deducting placement agent fees and offering expenses of $922. See Note 4 – “Commitments
and Contingencies-Litigation” with respect to certain rescission rights awarded to two affiliated Investors.
|
|
|
|
|
|
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. The
closing of the offering took place on January 15, 2019. The pre-funded warrants were exercised in full in January 2019.
|
MICROBOT
MEDICAL INC.
NOTES
TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands
(Except
share and per share data)
|
|
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.
The closing of the offering took place on January 17, 2019.
|
|
|
|
|
|
On
January 23, 2019 the Company entered into a Securities Purchase Agreement with accredited institutional investors providing
for the issuance and sale by the Company to the purchasers of an aggregate of 250,000 shares of the Company’s common
stock, at a purchase price per share of $9.875. The gross proceeds to the Company were approximately $2,470. The closing
of the offering took place on January 25, 2019.
|
|
|
|
|
|
Employee
Stock Option Grants:
|
|
|
|
|
|
In
September 2014, Microbot Israel’s board of directors approved a grant of 26,906 stock options (403,592 stock options
before the Reverse Split) (77,846 stock options as retroactively adjusted to reflect the Merger) to its CEO, through MEDX
Venture Group LLC. Each option was exercisable into an ordinary share, at an exercise price of $12.00 ($0.80 before the Reverse
Split) ($4.20 as retroactively adjusted to reflect the Merger). The stock options were fully vested at the date of grant.
|
|
|
|
|
|
On
May 2, 2016, Microbot Israel’s board of directors approved a grant of 33,333 stock options (500,000 stock options before
the Reverse Split) (96,482 as retroactively adjusted to reflect the Merger) to certain of its employees and directors. Each
stock option was exercisable into an ordinary share, NIS 0.001 par value, of Microbot Israel, at an exercise price equal to
the ordinary share’s par value. The stock options were fully vested at the date of grant. As the exercise price of the
stock options is nominal, Microbot Israel estimated the fair value of the options as equal to the Company’s share price
of $20.25 ($1.35 before the Reverse Split) ($7.05 as retroactively adjusted to reflect the Merger) at the date of grant.
|
|
|
|
|
|
On
September 12, 2017, the Company adopted the 2017 Equity Incentive Plan (the “Plan”), which Plan authorizes, among
other things, the grant of options to purchase shares of common stock to directors, officers and employees of the Company
and to other individuals.
|
|
|
|
|
|
On
September 14, 2017, the board of directors approved a grant of stock options to purchase an aggregate of up to 120,848 shares
(1,812,712 shares before the Reverse Split) of common stock to Mr. Harel Gadot, the Company’s Chairman of the Board,
President and CEO, at an exercise price per share of $15.75 ($1.05 before the Reverse Split). The stock options vest over
a period of 3-5 years as outlined in the option agreements. As a result, the Company recognized compensation expenses for
the three months ended June 30, 2019 and 2018 in total amount of $120 and $120 respectively and for the six months
ended June 30, 2019 and 2018 in total amount of $240 and $339 respectively included in general and administrative expenses.
|
|
|
|
|
|
On
September 14, 2017, the board of directors approved a grant of stock options to purchase an aggregate of up to 72,508 shares
(1,087,627 shares before the Reverse Split) of common stock to Mr. Hezi Himelfarb, the Company’s General Manager, COO
and a member of the Board, at an exercise price per share of $19.35 ($1.29 before the Reverse Split). The grant was subject
to the Israeli Tax Authority’s approval of the plan which occurred on October 14, 2017. In accordance with the option
agreement, the options vest for period of 3 years starting from the grand date. As a result, the Company recognized compensation
expenses for the three months ended June 30, 2019 and 2018 in total amount of $107 and $123, respectively and
for the six months ended June 30, 2019 and 2018 in total amount of $214 and $231, respectively included in research
and development.
|
|
|
|
|
|
On
December 6, 2017, the board of directors approved a grant of 12,698 stock options (190,475 stock options before the Reverse
Split) to purchase an aggregate of up to 12,698 shares of common stock to certain of its directors, at an exercise price per
share of $15.75 ($1.05 before the Reverse Split). The stock options vest over a period of 3 years as outlined in the option
agreements. As a result, the Company recognized compensation expenses for the three months ended June 30, 2019 and
2018 in total amount of $13 and $26 respectively and for the six months ended June 30, 2019 and 2018 in total amount
of $27 and $41 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)
|
|
On
December 28, 2017, the board of directors approved a grant of 66,036 stock options (990,543 stock options before the Reverse
Split) to purchase an aggregate of up to 66,036 shares of common stock to certain of its employees, at an exercise price per
share of $15.3 ($1.02 before the Reverse Split). The stock options vest over a period of 3 years as outlined in the option
agreements. As a result, the Company recognized compensation expenses for the three months ended June 30, 2019 and
2018 in total amount of $40 and $139, respectively and for the six months ended June 30, 2019 and 2018 in total
amount of $79 and $211, respectively included in research and development expenses
|
|
|
|
|
|
On
November 2017, certain employees and consultant exercised 31,453 options (471,794 options before the Reverse Split) to 31,453
ordinary shares at exercise price of 0.001 NIS.
|
|
|
|
|
|
In
February 2018, an employee exercised options to purchase 2,487 shares (37,300 shares before the Reverse Split) of common stock
at an exercise price of $0.001 per share.
|
|
|
|
|
|
On
August 13, 2018, the board of directors approved a grant of stock options to purchase an aggregate of up to 10,000 shares
(150,000 shares before the Reverse Split) of common stock to a non-executive officer, at an exercise price per share
of $9 ($0.6 before the Reverse Split). The grant was subject to the Israeli Tax Authority’s approval of the plan which
occurred on October 14, 2017. In accordance with the option agreement, the options vest for period of 3 years starting from
the grand date. As a result, the Company recognized compensation expenses for the three months ended June 30, 2019
and 2018 in total amount of $6 and $0 respectively and for the six months ended June 30, 2019 and 2018 in total amount
of $18 and $0 respectively included in research and development expenses
|
|
|
|
|
|
On
January 21, 2019, the board of directors approved a grant of 11,630 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 for the three
months ended June 30, 2019 and 2018 in total amount of $7 and $0 respectively and for the six months ended June 30,
2019 and 2018 in total amount of $30 and $0 respectively included in general and administrative expenses
|
|
|
|
|
|
A
summary of the Company’s option activity related to options to employees and directors, and related information is as
follows:
|
|
|
For the six months
ended June 30, 2019
|
|
|
|
Number of stock options
|
|
|
Weighted average exercise price
|
|
|
Aggregate intrinsic value
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at beginning of period
|
|
|
398,308
|
|
|
$
|
11.50
|
|
|
$
|
108
|
|
Granted
|
|
|
11,630
|
|
|
|
8.6
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Cancelled
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Outstanding at end of period
|
|
|
409,938
|
|
|
$
|
11.38
|
|
|
$
|
403
|
|
Vested at end of period
|
|
|
283,181
|
|
|
$
|
9.39
|
|
|
$
|
403
|
|
MICROBOT
MEDICAL INC.
NOTES
TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands
(Except
share and per share data)
|
|
For the Year ended December 31, 2018
|
|
|
|
Number of stock options
|
|
|
Weighted average exercise price
|
|
|
Aggregate intrinsic value
|
|
Outstanding at beginning of period
|
|
|
414,965
|
|
|
$
|
11.70
|
|
|
$
|
1,859
|
|
Granted
|
|
|
10,000
|
|
|
|
9.00
|
|
|
|
-
|
|
Exercised
|
|
|
(2,487
|
)
|
|
|
-
|
|
|
|
-
|
|
Cancelled
|
|
|
(24,170
|
)
|
|
|
-
|
|
|
|
-
|
|
Outstanding at end of period
|
|
|
398,308
|
|
|
$
|
11.50
|
|
|
$
|
108
|
|
Vested at end of period
|
|
|
245,010
|
|
|
$
|
8.45
|
|
|
$
|
108
|
|
|
|
The
aggregate intrinsic value in the table above represents the total intrinsic value, which 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 June 30, 2019 and December 31, 2018 respectively.
|
|
|
|
|
|
The
stock options outstanding as of June 30, 2019 and December 31, 2018, summarized by exercise prices, are as follows:
|
|
|
|
Stock options outstanding as of June 30, 2019
|
|
|
Stock options outstanding as of December 31, 2018
|
|
|
Weighted average remaining contractual life – years as of June 30, 2019
|
|
|
Weighted average remaining contractual life – years as of December 31, 2018
|
|
|
Stock options exercisable as of
June 30, 2019
|
|
|
Stock options exercisable as of
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.20
|
|
|
|
77,846
|
|
|
|
77,846
|
|
|
|
6.50
|
|
|
|
7.00
|
|
|
|
77,846
|
|
|
|
77,846
|
|
|
15.75
|
|
|
|
133,546
|
|
|
|
133,546
|
|
|
|
8.25
|
|
|
|
8.75
|
|
|
|
69,022
|
|
|
|
53,752
|
|
|
8.60
|
|
|
|
11,630
|
|
|
|
-
|
|
|
|
9.50
|
|
|
|
-
|
|
|
|
3,775
|
|
|
|
-
|
|
|
9.00
|
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
9.25
|
|
|
|
9.75
|
|
|
|
3,250
|
|
|
|
-
|
|
|
19.35
|
|
|
|
72,508
|
|
|
|
72,508
|
|
|
|
8.25
|
|
|
|
8.75
|
|
|
|
39,880
|
|
|
|
29,003
|
|
|
15.30
|
|
|
|
41,866
|
|
|
|
41,866
|
|
|
|
8.50
|
|
|
|
9.00
|
|
|
|
26,866
|
|
|
|
21,867
|
|
|
(*)
|
|
|
|
62,542
|
|
|
|
62,542
|
|
|
|
7.25
|
|
|
|
7.75
|
|
|
|
62,542
|
|
|
|
62,542
|
|
|
|
|
|
|
409,938
|
|
|
|
398,308
|
|
|
|
6.50
|
|
|
|
7.00
|
|
|
|
283,181
|
|
|
|
245,010
|
|
|
(*)
|
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 six months ended June 30, 2019 and 2018 was $610 and $822, respectively, and for the three months ended June 30, 2019 and 2018 was $295 and $406, respectively.
|
MICROBOT
MEDICAL INC.
NOTES
TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands
(Except
share and per share data)
|
|
The
fair value of the stock options is estimated at the date of grant using the Black-Scholes options pricing model with the following
weighted-average assumptions:
|
|
|
Six Months ended
June 30, 2019
|
|
|
Year ended
December 31, 2018
|
|
|
|
|
|
|
|
|
Expected volatility
|
|
|
144.4
|
%
|
|
|
99.4
|
%
|
Risk-free interest
|
|
|
1.64
|
%
|
|
|
2.39
|
%
|
Dividend yield
|
|
|
0
|
%
|
|
|
0
|
%
|
Expected life of up to (years)
|
|
|
6.37
|
|
|
|
5.24
|
|
|
|
Shares
issued to service provider
|
|
|
|
|
|
On
May 24, 2018 the Company issued an aggregate of 6,738 nonrefundable shares (100,000 nonrefundable shares before the Reverse
Split) of common stock to CardioSert as part of certain patent acquisition. The Company recorded expenses of approximately
$74 with respect to the issuance of these shares included in research and development expenses.
|
|
|
|
|
|
Warrants
|
|
|
|
|
|
The
remaining outstanding warrants and terms as of June 30, 2019 and December 31, 2018 are as follows:
|
Issuance date
|
|
Outstanding as of December 31, 2018
|
|
|
Outstanding as of June 30, 2019
|
|
|
Exercise Price
|
|
|
Exercisable as of June 30, 2019
|
|
|
Exercisable Through
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A (2013)
|
|
|
181
|
|
|
|
181
|
|
|
$
|
2,754
|
|
|
|
181
|
|
|
April 2023
|
Series A (2015)
|
|
|
676
|
|
|
|
676
|
|
|
$
|
1,377
|
|
|
|
676
|
|
|
April 2020
|
Series B (2016)
|
|
|
2,741
|
|
|
|
2,741
|
|
|
$
|
40.5
|
|
|
|
2,741
|
|
|
March 2022
|
|
|
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.
|
|
|
|
|
|
Repurchase
of Shares
|
|
|
|
|
|
The
Company had intended to enter into a definitive agreement with up to three Israeli shareholders, some of whom are directors
of the Company, that were former shareholders of Microbot Israel, pursuant to which the Company would repurchase, at a discount
on the fair value of the share at the date of repurchase, up to $500 of common stock held by them, in the aggregate, if and
to the extent such shareholders are unable to sell enough of their shares to cover certain of their Israeli tax liabilities
resulting from the Merger. Such repurchase(s), if any, would occur only after the two-year anniversary of the Merger. The
transaction would have been subject to negotiating final terms and entering into definitive agreements with such shareholders.
|
|
|
The
Company evaluated whether an embedded derivative that requires bifurcation exists within such shares that may be subject to
repurchase. The Company concluded the fair value of such derivative instrument would be nominal and, in any case, would represent
an asset to the Company as (a) the settlement requires acquiring the shares at a discount on the fair market value of the
share at the time of re purchase and in no circumstances the acquisition price will be higher than approximately one dollar
per share (representing 25% discount on the fair market value of the share at the merger closing date) and (b) it is assumed
that the selling shareholders would use such right as last resort as such repurchase at a discount on the fair market value
of such shares results in a loss to be incurred by the selling shareholders.
|
|
|
|
|
|
In
accordance with ASC 480-10-S99-3A (formerly EITF D-98), the Company classified the maximum amount it may be required to pay
in the event the repurchase right is exercised ($500) as temporary equity.
|
|
|
|
|
|
As
of December 31, 2018, the Company determined that no obligation remained to enter into any such definitive agreement as the
two-year anniversary of the Merger was in November 2018 and therefore there was no liability for the Company to repurchase
any shares from the three Israeli shareholders.
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of Operations.
|
Forward
Looking Statements
The
following discussion should be read in conjunction with our unaudited financial statements and related notes included in Item
1, “Financial Statements,” of this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the
fiscal year ended December 31, 2018. Certain information contained in this MD&A includes “forward-looking statements.”
Statements which are not historical reflect our current expectations and projections about our future results, performance, liquidity,
financial condition and results of operations, prospects and opportunities and are based upon information currently available
to us and our management and their interpretation of what is believed to be significant factors affecting our existing and proposed
business, including many assumptions regarding future events. Actual results, performance, liquidity, financial condition and
results of operations, prospects and opportunities could differ materially and perhaps substantially from those expressed in,
or implied by, these forward-looking statements as a result of various risks, uncertainties and other factors, including those
risks described in detail in the section entitled “Risk Factors” of our Annual Report on Form 10-K for the year ended
December 31, 2018.
Forward-looking
statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable
by use of the words “may,” “should,” “would,” “will,” “could,” “scheduled,”
“expect,” “anticipate,” “estimate,” “believe,” “intend,” “seek,”
or “project” or the negative of these words or other variations on these words or comparable terminology.
In
light of these risks and uncertainties, and especially given the nature of our existing and proposed business, there can be no
assurance that the forward-looking statements contained in this section and elsewhere in this Quarterly Report on Form 10-Q will
in fact occur. Potential investors should not place undue reliance on any forward-looking statements. Except as expressly required
by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as
a result of new information, future events, changed circumstances or any other reason.
Overview
Microbot
Medical Inc. 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 improving surgical outcomes for patients.
Microbot’s
current technological platforms, ViRob
TM
, CardioSert
TM
and TipCAT
TM
, are comprised of proprietary
innovative technologies. Using the ViRob platform, Microbot is currently developing its first product candidate: the Self Cleaning
Shunt, or SCS
TM
, for the treatment of hydrocephalus and Normal Pressure Hydrocephalus, or NPH. Although the SCS utilizes
one of our platforms, we are focused on the development of a Multi Generation Pipeline Portfolio utilizing all three of our proprietary
technologies.
Microbot
has a patent portfolio of 32 issued/allowed patents and 19 patent applications pending worldwide.
Technological
Platforms
ViRob
The
ViRob is an autonomous crawling micro-robot which can be controlled remotely or within the body. Its miniature dimensions are
expected to allow it 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.
CardioSert
On
May 25, 2018, Microbot acquired a patent-protected technology from CardioSert Ltd., a privately-held medical device company based
in Israel. 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. CardioSert was part of a technological incubator supported by the Israel Innovation
Authorities (formerly known as the Office of the Chief Scientist, or OCS), and a device based on the technology has successfully
completed pre-clinical testing.
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. Microbot is no longer pursuing the development of the TipCAT as a colonoscopy tool but is currently exploring the use
of the TipCAT for minimally invasive endovascular neurosurgical applications.
Financial
Operations Overview
Research
and Development Expenses
Research
and development expenses consist primarily of salaries and related expenses and overhead for Microbot’s research, development
and engineering personnel, prototype materials and research studies, obtaining and maintaining Microbot’s patent portfolio.
Microbot expenses its research and development costs as incurred.
General
and Administrative Expenses
General
and administrative expenses consist primarily of the costs associated with management costs, salaries, professional fees for accounting,
auditing, consulting and legal services, and allocated overhead expenses.
Microbot
expects that its general and administrative expenses may increase in the future as it expands its operating activities, the cost
of being a public company and maintaining compliance with exchange listing and SEC requirements. These additional costs include
management costs, legal fees, accounting fees, directors’ and officers’ liability insurance premiums and expenses
associated with investor relations.
Income
Taxes
Microbot
has incurred net losses and has not recorded any income tax benefits for the losses. It is still in its development stage and
has not yet generated revenues, therefore, it is more likely than not that sufficient taxable income will not be available for
the tax losses to be fully utilized in the future.
Critical
Accounting Policies and Significant Judgments and Estimates
Microbot’s
management’s discussion and analysis of its financial condition and results of operations are based on its financial statements,
which have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of these financial
statements requires Microbot to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses
and the disclosure of contingent assets and liabilities at the date of the financial statements. On an ongoing basis, Microbot
evaluates its estimates and judgments, including those related to accrued research and development expenses. Microbot bases its
estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities
that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions
or conditions.
While
Microbot’s significant accounting policies are described in more detail in the notes to its financial statements, Microbot
believes the following accounting policies are the most critical for fully understanding and evaluating its financial condition
and results of operations.
Fair
Value of Financial Instruments
The
Company measures the fair value of certain of its financial instruments (such as the derivative warrant liabilities) on a recurring
basis.
A
fair value hierarchy is used to rank the quality and reliability of the information used to determine fair values. Financial assets
and liabilities carried at fair value will be classified and disclosed in one of the following three categories:
|
●
|
Level
1 - Quoted prices (unadjusted) in active markets for identical assets and liabilities.
|
|
|
|
|
●
|
Level
2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as unadjusted quoted prices for similar
assets and liabilities, unadjusted quoted prices in the markets that are not active, or other inputs that are observable or
can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
|
|
|
|
●
|
Level
3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the
assets or liabilities.
|
Foreign
Currency Translation
Microbot’s
functional currency is the U.S. dollars, and its reporting currency is the U.S. dollar.
Government
Grant and Input Tax Credit Recoveries
Microbot
from time to time has received, and may in the future continue to receive, grants from the Israeli Innovation Authority to cover
eligible company expenditures. These are presented as other income in the statement of operations and comprehensive loss as the
grant funds are used for or applied towards a number of Microbot’s operating expenses, such as salaries and benefits, research
and development and professional and consulting fees. The recoveries are recognized in the corresponding period when such expenses
are incurred.
Research
and Development Expenses
Microbot
recognizes research and development expenses as incurred, typically estimated based on an evaluation of the progress to completion
of specific tasks using data such as clinical site activations, manufacturing steps completed, or information provided by vendors
on their actual costs incurred. Microbot determines the estimates by reviewing contracts, vendor agreements and purchase orders,
and through discussions with internal clinical personnel and external service providers as to the progress or stage of completion
of trials or services and the agreed-upon fee to be paid for such services. These estimates are made as of each balance sheet
date based on facts and circumstances known to Microbot at that time. If the actual timing of the performance of services or the
level of effort varies from the estimate, Microbot will adjust the estimate accordingly. Nonrefundable advance payments for goods
and services, including fees for process development or manufacturing and distribution of clinical supplies that will be used
in future research and development activities, are capitalized as prepaid expenses and recognized as expense in the period that
the related goods are consumed or services are performed.
Microbot
may pay fees to third-parties for manufacturing and other services that are based on contractual milestones that may result in
uneven payment flows. There may be instances in which payments made to vendors will exceed the level of services provided and
result in a prepayment of the research and development expense.
Results
of Operations
Comparison
of Three and Six Months Ended June 30, 2019 and 2018
The
following table sets forth the key components of Microbot’s results of operations for the three and six-month periods ended
June 30, 2019 and 2018 (in thousands):
|
|
Three months ended June 30,
|
|
|
Increase/
|
|
|
Six months ended
June 30,
|
|
|
Increase/
|
|
|
|
2019
|
|
|
2018(*)
|
|
|
(Decrease)
|
|
|
2019
|
|
|
2018(*)
|
|
|
(Decrease)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses, net
|
|
$
|
741
|
|
|
$
|
747
|
|
|
$
|
(6
|
)
|
|
$
|
1,364
|
|
|
$
|
1,243
|
|
|
$
|
121
|
|
General and administrative expenses
|
|
|
804
|
|
|
|
1,145
|
|
|
|
(341
|
)
|
|
|
2,097
|
|
|
|
2,164
|
|
|
|
(67
|
)
|
Financing income (expenses), net
|
|
|
3
|
|
|
|
(2
|
)
|
|
|
5
|
|
|
|
(42
|
)
|
|
|
31
|
|
|
|
(73
|
)
|
(*)
The Company adopted ASU 2017-11 using the full retrospective approach.
Research
and Development Expenses
. Microbot’s research and development expenses were approximately $741,000 and $1,364,000
for the three and six months ended June 30, 2019, compared to approximately $747,000 and $1,243,000 for the same period in
2018. Microbot expects its research and development expected to increase over time as it advances its development programs
and begins pre-clinical and clinical trials for SCS and other platforms.
General
and Administrative Expenses
. General and administrative expenses were approximately $804,000 and $2,097,000 for the three
and six months ended June 30, 2019, compared to approximately $1,145,000 and $2,164,000 for the same period in 2018.
The
decrease in general and administrative expenses of approximately $
341,000
for the
three months period ended in June 30, 2019 was primarily due to a decrease in legal expenses relating to the Sabby
litigation. Microbot believes its general and administrative expenses may increase over time as it advances its programs, increases
its headcount and operating activities and incurs expenses associated with being a public company.
Financing
Expenses
. Financing income (expenses) were approximately $3,000 and $(42,000) for the three and six months ended June
30, 2019, compared to $(2,000) and $31,000 for the same period in 2018. The decrease in financial income
for
the six months ended June 30, 2019
was primarily due to the extra amount of cash that the Company deposited in escrow relating
to the appeal of the Sabby litigation, thus lowering the amount of cash earning interest.
Liquidity
and Capital Resources
Microbot has incurred losses since inception and negative cash flows from operating activities for the three
and six months ended June 30, 2019 and the fiscal year ended December 31, 2018. As of June 30, 2019, Microbot had a net working
capital of approximately $7,443,000 consisting primarily of cash and cash equivalents and short-term investment. This compares
to net working capital of $1,071,000 as of December 31, 2018. Microbot anticipates that it
will continue to incur net losses for the foreseeable future as it continues research and development efforts of its product candidates,
hires additional staff, including clinical, scientific, operational, financial and management personnel, and incurs costs associated
with being a public company.
Microbot
has funded its operations through the issuance of capital stock, grants from the Israeli Innovation Authority, and convertible
debt.
Since inception (November 2010) through June 30, 2019, Microbot has raised gross cash
proceeds of approximately $27,500,000 and incurred a total cumulative loss of approximately $31,367,000.
In
January 2019, the Company entered into a series of Securities
Purchase Agreements with accredited institutional investors providing for the issuance and sale by the Company to
the purchasers of an aggregate of 1,295,323 shares of the Company’s common stock and related securities,
for aggregate gross proceeds to the Company of approximately $11.37 million.
Microbot
has been awarded non-dilutive grants from the IIA. The grants provide additional sources to be utilized by Microbot for the continued
development of the Self-Cleaning Shunt for the treatment of hydrocephalus and Normal Pressure Hydrocephalus. The grant funds may
be used for or applied towards several research and development expenses, such as employees’ salaries, research and development
expenses (including materials), as well as professional and consulting fees. The recoveries are recognized in the corresponding
period when such expenses are incurred. With respect to such grant, Microbot is committed to pay royalties, as, if and when it
successfully commercializes the SCS and generates revenue from sales of the SCS, at a rate of between 3% to 3.5% on sales proceeds
up to the total amount of grants received, linked to the dollar, plus interest at an annual rate of USD LIBOR. Under the terms
of the grant 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 IIA. 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.
The
total amount Microbot has received from the IIA since inception is approximately $1,524,000.
Microbot
is currently appealing an adverse judgment against it in its litigation with Sabby Healthcare Master Fund Ltd. and its affiliates.
As a result of the appeal, the Company placed approximately $4.2 million (including estimated interest and fees) in escrow
with a surety bonding agent pending the appeal.
Microbot
believes that its net cash will be sufficient to fund its operations for at least 12 months and fund operations necessary to continue
development activities of the SCS.
Microbot
plans to continue to fund its research and development and other operating expenses, other development activities relating to
additional product candidates, and the associated losses from operations, through future issuances of debt and/or equity securities
and possibly additional grants from the Israeli Innovation Authority. The capital raises from equity or equity-linked securities
could result in additional dilution to Microbot’s shareholders. In addition, to the extent Microbot determines to incur
additional indebtedness, Microbot’s incurrence of additional debt could result in debt service obligations and operating
and financing covenants that would restrict its operations. Microbot can provide no assurance that financing will be available
in the amounts it needs or on terms acceptable to it, if at all. If Microbot is not able to secure adequate additional working
capital when it becomes needed, it may be required to make reductions in spending, extend payment terms with suppliers, liquidate
assets where possible and/or suspend or curtail planned research programs. Any of these actions could materially harm Microbot’s
business.
Cash
Flows
The
following table provides a summary of the net cash flow activity for each of the periods set forth below (in thousands):
|
|
Six months ended June 30,
|
|
|
|
2019
|
|
|
2018
|
|
Net cash used in operating activities
|
|
$
|
(3,200
|
)
|
|
$
|
(2,543
|
)
|
Net cash used in investing activities
|
|
|
(2,496
|
)
|
|
|
(224
|
)
|
Net cash provided by financing activities
|
|
|
9,562
|
|
|
|
-
|
|
Net increase (decrease) in cash and cash equivalents and restricted cash
|
|
$
|
3,866
|
|
|
$
|
(2,767
|
)
|
Comparison
of the Six Months Ended June 30, 2019 and 2018
Cash
used in operating activities for the six months ended June 30, 2019 was approximately $3,200,000, calculated by adjusting net
loss from operations by approximately $303,000 to eliminate non-cash and expense items not involving cash flows such as depreciation
as well as other changes in assets and liabilities resulting in non-cash adjustments in the income statement. Cash used in operating
activities for the six months ended June 30, 2018 was approximately $2,543,000, similarly adjusted by approximately $833,000.
Net
cash used in investing activities for the six months ended June 30, 2019 was approximately $2,496,000, consisting of the purchase
of a marketable debt security, compared to the purchase of approximately $224,000 of property and equipment for the six
months ended June 30, 2018.
Net
cash provided by financing activities of approximately $9,562,000 for the six months ended June 30, 2019 consisted of issuance
of common stock and warrants, net of issuance costs.
Off-Balance
Sheet Arrangements
Microbot
has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.