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, 2021. 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, 2021.



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 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, LIBERTY® and
CardioSert, are comprised of proprietary innovative technologies. Using the
ViRob platform, Microbot is developing the Self Cleaning Shunt 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.



Technological Platforms



LIBERTY®



On January 13, 2020, Microbot unveiled what it believes is the world's first
fully disposable robotic system for use in endovascular interventional
procedures, such as cardiovascular, peripheral and neurovascular. The LIBERTY
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.



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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 may be 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 -when integrated into the LIBERTY device, the 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.

In December 2021, we achieved design freeze of the LIBERTY device.





On December 22, 2021, we entered into a strategic collaboration agreement for
technology co-development with Stryker Corporation, acting through its
Neurovascular Division. Pursuant to the agreement, the collaborative development
program between Stryker and us aims to integrate certain of Stryker's
instruments with our LIBERTY Robotic System to address certain neurovascular
procedures. The activities contemplated by the Agreement shall be specified in
one or more development plans derived from the terms and conditions set forth in
the Agreement.



On March 31, 2022, the Company filed its pre-submission package for the LIBERTY
Robotic System with the U.S. Food and Drug Administration ("FDA"), addressing
the regulatory pathway for the LIBERTY Robotic System. The Company expects to
meet with the FDA following a normal review process to discuss the
pre-submission and ensure the testing protocols and regulatory pathway are
aligned with the FDA to obtain clearance for LIBERTY.



On July 22, 2022, the Company completed a pre-submission process with the FDA
regarding the LIBERTY device. Formal feedback from the FDA included a
recommendation to perform a clinical study and a human factors validation study,
to support clearance through the 510(k) notification process.

We are continuously exploring and evaluating additional innovative guidewire/microcatheter technologies to be integrated and combined with the LIBERTY robotic platform.

We are continuing our feasibility animal trials with respect to the LIBERTY device.





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.



In December 2021, we achieved electrical and mechanical design freeze for the
implant of the SCS. In preparation for the IDE submission to the U.S. Food and
Drug Administration for our planned Early Feasibility Study, we have determined
that we need further clinical input, and we are seeking collaboration with key
opinion leaders in the U.S. to serve as primary investigators to conduct the EFS
study. In parallel, we are continuing development of the SCS to the extent
feasible without such clinical input, and we are continuing to evaluate the SCS
project based on clinical feedback received.



Pursuant to an amendment to the License Agreement between Microbot and Technion
Research and Development Foundation, both parties agreed to extend the next
development milestone for the SCS project, which includes the First In Human
milestone, until December 2024.



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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. 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 applications to complement its other
technologies.

Pursuant to an amendment to the License Agreement between Microbot and the Technion, both parties agreed to continue to maintain the TipCat assets, which are still in a discovery phase, until December 2023.

One & DoneTM (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. Our
CardioSert tool is now trademarked as "One & DoneTM".



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 salaries and benefits, 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, maintains and expands its
patent portfolio and maintains compliance with exchange listing and SEC
requirements. Microbot expects these potential increases will likely include
management costs, legal fees, accounting fees, directors' and officers'
liability insurance premiums and expenses associated with investor relations.



Income Taxes



Microbot has incurred net losses and has not recorded any income tax benefits
for the losses. It is still in its development stage and has not yet generated
revenues, therefore, it is more likely than not that sufficient taxable income
will not be available for the tax losses to be fully utilized in the future.



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Critical Accounting Policies and Significant Judgments and Estimates


Management's discussion and analysis of Microbot's financial condition and
results of operations are based on its consolidated financial statements, which
have been prepared in accordance with U.S. generally accepted accounting
principles, or GAAP. The preparation of these consolidated financial statements
requires Microbot to make estimates and judgments that affect the reported
amounts of assets, liabilities, and expenses and the disclosure of contingent
assets and liabilities at the date of the consolidated financial statements.
Microbot bases its estimates on historical experience, known trends and events,
and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying value of assets and liabilities that are not readily apparent from
other sources. Actual results may differ materially from these estimates under
different assumptions or conditions.



While Microbot's significant accounting policies are described in more detail in
the notes to its consolidated financial statements, Microbot believes the
following accounting policies are the most critical for fully understanding and
evaluating its consolidated financial condition and results of operations.




Contingencies




Management records and discloses legal contingencies in accordance with ASC
Topic 450 Contingencies. A provision is recorded when it is both probable that a
liability has been incurred and the amount of the loss can be reasonably
estimated. The Company monitors the stage of progress of its litigation matters
to determine if any adjustments are required.

Fair Value of Financial Instruments

The Company measures the fair value of certain of its financial instruments on a recurring basis.

A fair value hierarchy is used to rank the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets and liabilities.


Level 2 - Inputs other than Level 1 that are observable, either directly or
indirectly, such as unadjusted quoted prices for similar assets and liabilities,
unadjusted quoted prices in the markets that are not active, or other inputs
that are observable or can be corroborated by observable market data for
substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.





Results of Operations

Comparison of Three and Six Months Ended June 30, 2022 and 2021





The following table sets forth the key components of Microbot's results of
operations for the three and six month periods ended June 30, 2022 and 2021 (in
thousands):



                                          Three months ended June 30,                         Six months ended June 30,
                                           2022                 2021          Change          2022                2021           Change

Research and development expenses $ (2,193 ) $ (1,389 )

$ (804 ) $ (3,899 ) $ (2,508 ) $ (1,391 ) General and administrative expenses

           (1,370 )             (1,087 )      (283 )          (2,840 )            (2,360 )       (480 )
Financing income (expenses), net                  50                  (35 )

       85                37                 (31 )         68




Research and Development Expenses. Microbot's research and development expenses
were approximately $2,193,000 and $3,899,000 for the three and six months ended
June 30, 2022, respectively, compared to approximately $1,389,000 and $2,508,000
for the comparable periods in 2021. The increase in research and development
expenses for the periods presented was primarily due to increases in payroll due
to new hires and salary increases, as well as increases relating to the initial
preparations to transfer the LIBERTY device from R&D to production. Microbot
expects its research and development expenses to continue to increase over time
as Microbot advances its development programs and begins pre-clinical and
clinical trials for its LIBERTY device and possibly other product candidates.



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General and Administrative Expenses. General and administrative expenses were
approximately $1,370,000 and $2,840,000 for the three and six months ended June
30, 2022, respectively, compared to approximately $1,087,000 and $2,360,000 for
the comparable periods in 2021. The increase in general and administrative
expenses for the periods presented was primarily due to increases in payroll due
to new hires and salary increases, increases in share-based compensation
expense, D&O insurance premiums and travel expenses, which have resumed as
Covid-related lockdowns have been lifted. These increases were partially offset
by decreases in legal and consultant fees expenses. Microbot believes its
general and administrative expenses may increase over time as it advances its
programs, increases its headcount and operating activities and incurs increasing
expenses associated with being a public company.



Financing Income (Expenses), net. Financing income was approximately $50,000 and
$37,000 for the three and six months ended June 30, 2022, respectively, compared
to financing expense of approximately $35,000 and $31,000 for the comparable
periods in 2021. The increase in financial income for the periods presented was
primarily due to an increase in the exchange rate between the U.S. Dollar and
NIS offset by financial expenses related to leasing liabilities.

Liquidity and Capital Resources





Microbot has incurred losses since inception and negative cash flows from
operating activities for all periods presented. As of June 30, 2022, Microbot
had a net working capital of approximately $7,925,000, consisting primarily of
cash and cash equivalents and marketable securities. This compares to net
working capital of approximately $13,895,000 as of December 31, 2021. Microbot
anticipates that it will continue to incur net losses for the foreseeable future
as it continues research and development efforts of its primary product
candidates, hires additional staff, including clinical, scientific, operational,
financial and management personnel, and continues to incur costs associated

with
being a public company.



Microbot has funded its operations through the issuance of capital stock, grants
from the Israeli Innovation Authority, and convertible debt. Since inception
(November 2010) through June 30, 2022, Microbot has raised net cash proceeds of
approximately $54,770,000 and incurred a total cumulative loss of approximately
$62,295,000. Microbot returned $3,375,000 (before interest) of such proceeds as
a result of an adverse outcome in a litigation that concluded in the first
quarter of 2020 and is now subject to an additional lawsuit seeking the return
of an additional $6,750,000 of such proceeds. This litigation is in the
discovery stage and we cannot project what the eventual outcome will be, though
management is vigorously defending its position that no return of capital is
warranted.



Microbot Israel obtained from the Israeli Innovation Authority ("IIA") grants
for participation in research and development for the years 2013 through June
30, 2022 in the total amount of approximately $1,500,000. On January 4, 2018,
Microbot Israel entered into an agreement with CardioSert to acquire certain of
its patent-protected technology. CardioSert received grants from the IIA in the
aggregate amount of approximately $530,000 and Microbot Israel took over the
liability to repay such grants.



Microbot Israel is obligated to pay royalties amounting to 3%-3.5% of its future
sales up to the amount of the grants. The grants are linked to the exchange rate
of the dollar to the New Israeli Shekel and bears interest at an annual rate of
USD LIBOR. Under the terms of the grants and applicable law, Microbot is
restricted from transferring any technologies, know-how, manufacturing or
manufacturing rights developed using the grant outside of Israel without the
prior approval of the Israel Innovation Authority. Microbot has no obligation to
repay the grants, if the applicable project fails, is unsuccessful or aborted
before any sales are generated. The financial risk is assumed completely by

the
IIA.



We believe that our net cash will be sufficient to fund operations necessary to
continue development activities of LIBERTY and (to the extent we are successful
in obtaining clinical input) the SCS, for approximately seven months, based on
current projected burn rate and milestones. However, in the event we are
unsuccessful in our current litigation with Empery and Hudson Bay, pursuant to
which they are seeking the return of $6,750,000 in proceeds we received from
them in a 2017 stock offering, we would have net cash for approximately 1 month.
Outcomes with respect to the regulatory process for our proposed products may
further require adjustments to our projections or require the reallocation of
funds from one or more existing projects to other projects. For instance, if we
are unsuccessful in obtaining clinical input to continue the SCS research and
development program, we may decide to reallocate funds budgeted for that program
to the LIBERTY device program.



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Microbot plans to continue to fund its research and development programs from
time to time and other operating expenses, and the associated losses from
operations, through its existing cash. Microbot intends to also raise capital
through additional, future issuances of debt and/or equity securities, including
through its existing $10 million registered At-The-Market offering and other
registered offerings under its existing Registration Statement on Form S-3 for
up to $75 million of securities, which it may draw down from time to time. These
issuances may be opportunistic and even if the Company has enough funds at such
time for operations. The capital raises from issuances of convertible debt and
equity securities could result in additional dilution to Microbot's
shareholders. In addition, to the extent Microbot determines to incur additional
indebtedness, Microbot's incurrence of additional debt could result in debt
service obligations and operating and financing covenants that would restrict
its operations. Microbot can provide no assurance that financing will be
available in the amounts it needs 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 and development programs. Any of these actions could
materially harm Microbot's business.



As a result of the foregoing, we are unable to fully implement our business plan
without raising additional capital, if at all, and these conditions raise
substantial doubt about Microbot's ability to continue as a going concern. The
accompanying consolidated interim financial statements do not include any
adjustments to reflect the possible future effects on recoverability and
reclassification of assets or the amounts and classification of liabilities that
may result from the outcome of this uncertainty.

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