Microbot Medical Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 –GENERAL

A. Description of business:

Microbot Medical Inc. (the “Company”) is a medical device company specializing in the research, design and development of next generation robotic endoluminal surgery devices targeting the minimally invasive surgery space. The Company is primarily focused on leveraging its robotic technologies with the goal of redefining surgical robotics while improving surgical outcomes for patients.

Using the Company’s LIBERTY® technological platform, the Company has developed the first-ever fully disposable robot for various endovascular interventional procedures. The LIBERTY® Endovascular Robotic Surgical System is designed to maneuver guidewires and over-the-wire devices (such as microcatheters) within the body’s vasculature. It is intended for the remote delivery and manipulation of guidewires and catheters, and remote manipulation of guide catheters to facilitate navigation to anatomical targets, with the current intention to focus on the peripheral vasculature market. It is designed to eliminate the need for extensive capital equipment requiring dedicated Cath-lab rooms as well as dedicated staff.

The Company and its subsidiary are sometimes collectively referred to as the “Company” as the context may require.

B. Risk Factors:

Through December 31, 2025, the Company has not recognized any revenues, and cannot make any assurances of generating significant revenues in the future.

As of December 31, 2025, the Company had cash equivalents and marketable securities balance of approximately $78,592, excluding restricted cash. The Company expects to incur significant losses for the foreseeable future as it conducts marketing activities for its current product and continues its research and development of any other future product candidates and all other work necessary to obtain regulatory clearances or approvals for its products or product candidates. Notwithstanding these conditions, the Company’s management has concluded that the available funds as of the balance sheet date are sufficient to fund the Company’s operations for more than twelve months from issuance date of these consolidated financial statements.

The Company will seek to raise additional funds through future issuances of either debt and/or equity securities and possibly additional grants from the Israeli Innovation Authority and other government institutions in order to fund further growth and expansion of the Company. 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.

NOTE 1 –GENERAL

B. Risk Factors:

Middle East Conflict

The ongoing risks of operating in Israel have been exacerbated as a result of the October 7, 2023 surprise attack by hostile forces from Gaza, which led to Israeli military operation at first in Gaza, then in Lebanon, Syria, Yemen and Iran. These include security and economic risks, risks relating to the Company’s ability to sell or buy internationally, risk of economic instability, risk of exchange rate fluctuation negatively affecting operating costs, and the risk of employees leaving to perform military service. These military operations and related activities are on-going as of the filing date of these consolidated financial statements.

Subsequent to the reporting period, on February 28, 2026, a military operation referred to as “Epic-Fury” commenced with a large-scale attack on Iran carried out in coordination with the United States. In response, Iran launched a counterattack that included the firing of ballistic missiles and unmanned aerial vehicles toward military and civilian targets in Israel. Additionally, Hezbollah, a terrorist organization in Lebanon, joined the attacks against Israel and Israel has started military operations in Lebanon.

As a result, a special state of emergency was declared in Israel, which included, among other things, the closure of Israel’s airspace, restrictions on public gatherings, temporary closures and/or reduced operating hours of businesses, and the mobilization of military reservists, which have resulted in reduced economic activity.

The Company has considered various ongoing risks relating to these and other military operation and related matters, including:

The Company closely monitors how these and other military operation and related activities could adversely affect its anticipated milestones and its Israel-based activities to support future commercial, clinical and regulatory milestones, including the Company’s ability to import materials that are required to construct the LIBERTY® devices and to ship them outside of Israel. As of the filing date of these consolidated financial statements, the Company has determined that there have not been any materially adverse effects on its business or operations.

NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies applied in the preparation of the financial statements are as follows:

A. Basis of presentation:

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”).

B. Financial statement in U.S. dollars:

The functional currency of the Company is the U.S. dollar (“dollar”) since the dollar is the currency of the primary economic environment in which the Company has operated and expects to continue to operate in the foreseeable future.

Transactions and balances denominated in dollars are presented at their original amounts. Transactions and balances denominated in foreign currencies have been re-measured to dollars in accordance with the provisions of Accounting Standards Codification (“ASC”) 830-10, “Foreign Currency Translation”.

All transaction gains and losses from re-measurement of monetary balance sheet items denominated in non-dollar currencies are reflected in the statements of comprehensive loss as financial income or expenses, as appropriate.

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.

D. Principles of consolidation:

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. Inter-company balances and transactions have been eliminated in consolidation.

E. Cash and cash equivalents:

Cash and cash equivalents consist of cash and demand deposits in banks, and other short-term liquid investments (primarily interest-bearing time deposits) with original maturities of three months or less at the date of purchase.

F. Restricted cash:

Restricted cash serves as collateral for the Company’s lease agreements and are classified as either current or long-term depending on when the anticipated use of these funds will be required.

G. Long-term deposit:

Long-term deposit represents cash advances paid to a vendor as security for the performance of the Company’s payment obligations. The Company does not expect these deposits to be utilized in the normal course of business.

H. Fair value of financial instruments:

The carrying values of cash and cash equivalents, prepaid expenses and other current assets, accounts payable and accrued liabilities are stated at their carrying value, which approximates fair value due to the short-term maturity of these instruments.

The Company measures the fair value of certain of its financial instruments (such as marketable securities) on a recurring basis. The method of determining the fair value of marketable securities is discussed in Note 4 below.

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.

I. Concentrations of credit risk:

Financial instruments which potentially subject the Company to credit risk consist primarily of cash and cash equivalents and marketable securities. The Company holds these investments in highly rated financial institutions. These amounts at times may exceed federally insured limits. The Company has not experienced any credit losses in such accounts and does not believe it is exposed to any significant credit risk on these funds. The Company has no off-balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option contracts, or other hedging arrangements.

J. Property and equipment:

Property and equipment are presented at cost, less accumulated depreciation. Depreciation is calculated based on the straight-line method over the estimated useful lives of the assets, at the following annual rates:

The Company assesses property and equipment impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If such circumstances are determined to exist, an estimate of undiscounted future cash flows produced by the property and equipment assets, or the appropriate grouping of assets, is compared to the carrying value to determine whether impairment exists. If an asset is determined to be impaired, the loss is measured based on the difference between the asset’s estimated fair value and its carrying value. For property and equipment assets, the estimate of fair value is typically based on a discounted cash flow model. As of December 31, 2025 and 2024, no impairment charges were recorded.

K. Liabilities due to termination of employment agreements:

Under Israeli employment laws, employees of Microbot Israel are included under Article 14 of the Severance Compensation Act, 1963 (“Article 14”). According to Article 14, these employees are entitled to monthly deposits made by Microbot Israel on their behalf with insurance companies. Payments in accordance with Article 14 release Microbot Israel from any future severance payments (under the Israeli Severance Compensation Act, 1963) with respect of those employees. The aforementioned deposits are not recorded as an asset in the Company’s balance sheets.

As for the U.S. employees, the Company has certain defined contribution plans, including a 401(k)-retirement plan in the U.S., whereby contributions made by eligible employees are matched by the Company with certain limitations.

L. Common stock warrants:

The Company accounts for warrants issued to investors as either equity-classified or liability-classified instruments, based on an assessment of the warrant’s specific terms and the applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) ASC 480 and FASB ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, or meet all of the requirements for equity classification under FASB ASC 815, including whether the warrants are indexed to the Company’s own shares of common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

M. Basic and diluted net loss per share:

Basic net loss per share is calculated by dividing net loss attributable to common stock shareholders by the weighted average number of shares of common stock outstanding during the year without consideration of potentially dilutive securities. For purposes of the diluted net loss per share attributable to common shareholders calculation, stock options and warrants are considered to be common stock equivalents. All common stock equivalents, as detailed in Notes 2P, 11H and 11I, have been excluded from the calculation of the diluted loss per share for the years ended December 31, 2025 and 2024, as their effect would be anti-dilutive. Therefore, basic and diluted net loss per share were the same for both years presented. In the calculation of the basic and diluted net loss, the Company included warrants that would be exercised for no or little consideration and are exercisable with no contingencies.

N. Research and development expenses, net:

Research and development expenses are charged to the statement of comprehensive loss as incurred. Grants for funding of approved research and development projects and others are recognized at the time the Company is entitled to such grants, on the basis of the costs incurred and applied as a deduction from the research and development expenses. See Note 2U below. Reimbursement of expenses for research and development projects is recognized as the costs are incurred and is netted against research and development expenses in the statement of comprehensive loss. Research and development reimbursements of $0, and $83 were offset against research and development costs in the years ended December 31, 2025 and 2024, respectively

O. Sales, general and administrative expenses:

Sales, general and administrative expenses are charged to the statement of comprehensive loss as incurred.

P. Share-based compensation:

The Company applies ASC 718-10, “Share-Based Payment” (“ASC 718-10”), which requires the measurement and recognition of compensation expenses for all share-based payment awards made to employees and directors including stock options under the Company’s stock plans based on estimated fair values.

ASC 718-10 requires companies to estimate the fair value of stock options using an option-pricing model, which is recognized as an expense over the requisite service periods in the Company’s statement of comprehensive loss, based on a straight-line method. The Company recognizes compensation cost for an equity classified award with only service conditions that has a graded vesting schedule on a straight-line basis over the requisite service period for the entire award, provided that the cumulative amount of compensation cost recognized at any date at least equals the portion of the grant date fair value of such award that is vested at that date.

The Company recognizes the expense for an equity classified awards subject to performance-based milestone vesting over the remaining service period when management determines that achievement of the milestone is probable. Management evaluates when the achievement of a performance-based milestone is probable based on the expected satisfaction of the performance conditions at each reporting date. If no explicit service period is determined, the Company estimates the implicit service period based on the timing the employee is expected to achieve the related performance condition.

When no future services are required to be performed by the grantee in exchange for an award of equity instruments, and if such award does not contain a performance condition, the cost of the award is expensed on the grant date.

The Company estimates the fair value of stock options granted as share-based payment awards using a Black-Scholes options pricing model. The option-pricing model requires a number of assumptions, of which the most significant are expected volatility and the expected option term (the time from the grant date until the options are exercised or expire). Expected volatility is estimated based on the standard deviation of the Company’s closing prices according to the expected life (SAB107) for each of the grants. The Company has historically not paid dividends and has no foreseeable plans to issue dividends. The risk-free interest rate is based on the yield from governmental zero-coupon bonds with an equivalent term.

For stock options that qualify as “plain-vanilla,” the expected term is calculated using the simplified method. For stock options that do not qualify as “plain-vanilla”, the Company’s management estimated that the expected stock option term is the contractual term of the options.

Changes in the determination of each of the inputs can affect the fair value of the stock options granted and the results of operations of the Company.

Q. Income taxes:

The Company provides for income taxes using the asset and liability approach. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of December 31, 2025, and 2024, the Company had a full valuation allowance against deferred tax assets due to the uncertainty as to whether the Company’s deferred tax assets will ever be realized in future periods.

R. Marketable securities:

The Company invests in equity securities. Equity securities consist of a mutual fund. The Company records these investments in the consolidated balance sheet at fair value. Unrealized gains or losses for the equity security are reflected in the statements of comprehensive loss as financial income or expenses, as appropriate. The Company classifies its investments as current based on the nature of the investments and their availability for use in current operations.

S. Leases:

The Company determines if an arrangement is a lease at inception. Operating lease assets are presented as operating lease long-term right-of-use assets (“ROU”), and corresponding as lease liabilities (current portion), and as operating long-term lease liabilities, on the Company’s consolidated balance sheets.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the remaining lease payments over the lease term at commencement date. The Company’s leases do not provide an implicit interest rate. The Company calculates the incremental borrowing rate to reflect the interest rate that it would have to pay to borrow on a collateralized basis an amount equal to the lease payments in a similar economic environment over a similar term and considers the Company’s historical borrowing activities and market data in this determination. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

The Company has lease agreements with lease and non-lease components, which it accounts for as a single lease component. The Company has elected not to recognize ROU assets and lease liabilities for short-term leases that have a term of 12 months or less. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. In addition, the Company does not have any related party leases.

T. 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.

The Company carries liability insurance to mitigate its exposure to losses, including litigation losses. The Company records the estimated amount of expected insurance proceeds for litigation losses incurred as an asset (typically a receivable from the insurer) and offset to losses up to the amount of the losses incurred when the amount is determinable and approved by the insurance company.

U.Government grants:

Government grants which are received from the Israeli Ministry of Economy and Israel Innovation Authority (“IIA”) by way of participation in research and development that is conducted by Microbot Israel, are received in installments as the program progresses based on qualified research spending. Grants received are recognized when the grant becomes receivable, provided there was reasonable assurance that Microbot Israel will comply with the conditions attached to the grant and there was reasonable assurance the grant will be received.

The grants are deducted from the research and development expenses as the applicable costs are incurred. Research and development expenses, net, for the years ended December 31, 2025 and 2024, include participation in research and development expenses in the amount of approximately $496 and $149, respectively.

V. Inventory

Inventories primarily consist of raw materials, work-in-process and finished goods produced by our third-party contract manufacturer. Inventories are stated at the lower of cost, determined using the first-in, first-out (FIFO) method, or net realizable value.

Inventory costs include the purchase price of materials and other manufacturing costs, including overhead and personnel costs for employees involved in production planning.

The Company regularly evaluates its inventory for excess and obsolescence. The Company considers the expiration of sterilization dates where applicable. When the carrying value of inventory exceeds its estimated net realizable value, the Company records a write-down.

The Company considered regulatory approval of its product candidate to be uncertain and product manufactured prior to regulatory approval could not have been sold unless regulatory approval was obtained. The Company began recognizing inventory related to the manufacture of the Company’s LIBERTY® Endovascular Robotic Surgical System in October 2025, after FDA approval was granted related to Liberty. As such, the manufacturing costs incurred prior to regulatory approval were not recognized as inventory but rather were expensed as incurred as research and development expenses.

W. Segment Reporting

The Company has a single operating and reportable segment, which is the development of robotic devices for endoluminal surgery. See Note 1A for further details. The Company’s chief operating decision maker (the “CODM”), the Chief Executive Officer (“CEO”), reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing performance, and allocating resources. For further details, refer to Note 15.

X. Recently Adopted accounting pronouncements:

In December 2023, FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires disclosure of specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold. The amendment also includes other changes to improve the effectiveness of income tax disclosures, including further disaggregation of income taxes paid for individually significant jurisdictions. The Company adopted the ASU on its consolidated financial statements and disclosures. For further details, refer to Note 17.

Y. Accounting pronouncements not yet effective:

In November 2024, FASB issued Accounting Standards Update (ASU) 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), Disaggregation of Income Statement Expenses. This update aims to enhance the transparency of financial reporting by requiring public business entities (PBEs) to provide disaggregated disclosure of certain income statement expense captions into specified categories in disclosures within the footnotes to the financial statements. The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. Adoption of this ASU should be applied on a prospective basis, although retrospective application is permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures.

NOTE 3 –CASH AND CASH EQUIVALENTS AND MARKETABLE SECURITIES

The following table sets forth our cash, cash equivalents and marketable securities as of December 31, 2025 and 2024:

The unrealized gains on our marketable securities were $4 and $0 for the years ended December 31, 2025 and 2024, respectively.

NOTE 4 -FAIR VALUE MEASUREMENTS

The following table summarizes the Company’s financial assets subject to fair value measurement and the level of inputs used in such measurements as of December 31, 2025 and 2024:

The Company’s financial assets are measured at fair value on a recurring basis by level within the fair value hierarchy. The Company’s securities and money market funds are classified as Level 1. Other than that, the Company doesn’t have any other financial assets or financial liabilities marked to market at fair value as of December 31, 2025 and 2024.

NOTE 5 –INVENTORY

Inventories consisted of the following:

There have been no write-downs of inventory from the time inventory was first capitalized.

NOTE 6 –PREPAID EXPENSES AND OTHER CURRENT ASSETS

NOTE 7 -LEASES

In March 2025, the Company entered into a lease agreement for its US office for the period from March 2025 until February 2027. The monthly lease payments are approximately $2.

In July 2025, the Subsidiary entered into a lease agreement for its Israel office for the period from July 2025 until October 2029. The monthly lease payments are approximately $20. To secure the lease payments, the Company issued a bank guarantee of $56 in favor of the facility’s lessor.

Additionally, the Company has several agreements for car leases.

For the years ended December 31, 2025 and 2024, operating lease cost, which is classified as a component of research and development in the consolidated statement of comprehensive loss for all periods presented, was $256 and $215, respectively. Also for the years ended December 31, 2025 and 2024, cash paid under operating lease agreements were $212 and$219, respectively.

Undiscounted maturities of future operating lease payments as of December 31, 2025 are summarized as follows:

The following table includes the weighted-average lease terms and discount rates for operating leases as of December 31, 2025 and 2024:

NOTE 8 -PROPERTY AND EQUIPMENT, NET

NOTE 9 -ACCRUED LIABILITIES

NOTE 10 -COMMITMENTS AND CONTINGENCIES

A. Government grants:

Microbot Israel has received grants from the IIA for participation in research and development since 2013 through December 31, 2025 totaling approximately $2,468. This includes amounts received of approximately $518, in 2025 which is a portion of an additional grant from the IIA in the amount of approximately NIS 2,153 (approximately $673) approved by the IIA on July 15, 2025, to further finance the development of the manufacturing process of the LIBERTY® Endovascular Robotic Surgical System.

In addition, as a result of the agreement with Nitiloop, on October 6, 2022, Microbot Israel took over the liability to repay Nitiloop’s IIA grants in the aggregate amount of approximately $925.

In relation to the IIA grants described above, the Company is obligated to pay royalties amounting to 3%-5% of its future sales of the products relating to such grants.

The grants are linked to the exchange rate of the dollar to the New Israeli Shekel and bears interest of SOFR per year (SOFR is a benchmark interest rate which replaced LIBOR).

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.

As of December 31, 2025, the Company received grants from the Ministry of Economy of the State of Israel in the amount of approximately $50, to further finance the marketing activities of the LIBERTY® Endovascular Robotic Surgical System in the U.S. market. In relation to the Ministry of Economy grant, the Company is obligated to pay royalties amounting to 3% of future sales of the LIBERTY® Endovascular Robotic Surgical System up to the grant amount plus interest.

B. 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 amended, the “License Agreement”) with respect to the Company’s Self-Cleaning Shunt

(SCS) project and its TipCat assets in addition to certain technology relating to the Company’s LIBERTY® Endovascular Robotic Surgical System. As partial consideration for the license, Microbot Israel shall pay TRDF royalties on net sales (between 1.5%-3.0%) and on sublicense income as detailed in the License Agreement.

In October 2022 the Company suspended the SCS project and as a result of the Company’s May 2023 implementation of its core-business focus program and cost reduction plan, the Company returned the licensed intellectual property for the TipCat back to TRDF in June 2023 and returned the licensed intellectual property for the SCS (ViRob) back to TRDF in July 2023. As a result, as of the date of these financial statements, the License Agreement is limited to the certain technology relating to the Company’s LIBERTY® Endovascular Robotic Surgical System.

NOTE 10 - COMMITMENTS AND CONTINGENCIES

C. ATM agreement:

On June 10, 2021, the Company entered into an At-the-Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co. LLC (“Wainwright”), as sales agent, in connection with an “at the market offering” under which the Company may offer and sell, from time to time in its sole discretion, shares of its common stock having an aggregate offering price of up to $10,000 at market prices or as otherwise agreed with Wainwright. The Company entered into an amendment, dated July 1, 2024, to the ATM Agreement with Wainwright dated June 10, 2021, relating to the offer and sale of shares of the Company’s common stock having an aggregate offering price of up to approximately $4,820 from time to time through Wainwright, acting as sales agent. The compensation to Wainwright for sales of the shares is a placement fee of 3.0% of the gross sales price of the shares of common stock sold pursuant to this ATM Agreement. See also Notes 11D.

D. Engagement letters with H.C. Wainwright:

In connection with registered direct and private placement offerings, the Company entered into engagement letters (the “Engagement Letters”) with Wainwright on October 3, 2022, on May 16, 2023, on October 24, 2023 and on May 29, 2024 (which was amended most recently on February 9, 2025), pursuant to which Wainwright agreed to serve as the exclusive placement agent for the issuance and sale of securities of the Company.

As compensation for such placement agent services, the Company has agreed to pay Wainwright an aggregate cash fee equal to 7.0% of the gross proceeds received by the Company from offerings contemplated by the Engagement Letters, plus in certain circumstances a management fee equal to 1.0% of the gross proceeds received by the Company from such offerings as well as other reimbursable expenses. The Company has also agreed to issue to Wainwright or its designees preferred investment options upon the closing of such offerings, equal to five (5.0%) percent of the aggregate number of such shares of common stock in such offerings, including upon exercise for cash of any warrants issued to investors in such offering. See also Note 11E below.

E. Acquisition of Nitiloop’s assets:

On October 6, 2022, Microbot Israel purchased substantially all of the assets, including intellectual property, devices, components and product related materials (the “Assets”), of Nitiloop Ltd., an Israeli limited liability company (“Nitiloop”). The Assets include intellectual property and technology in the field of intraluminal revascularization devices with anchoring mechanism and integrated microcatheter (the “Technology”) and the products or potential products incorporating the Technology owned by Nitiloop and designated by Nitiloop as “NovaCross”, “NovaCross Xtreme” and “NovaCross BTK” and any enhancements, modifications and improvements thereof (“Devices”). Microbot Israel did not assume any material liabilities of Nitiloop other than obligations Nitiloop has to the IIA and relating to certain renewal/maintenance fees for a European patent application.

In consideration for the acquisition of the Assets, Microbot Israel shall pay royalties to Nitiloop, which shall not, in the aggregate, exceed $8,000, as follows:

Royalties at a rate of 3%-5% of net revenue generated as a result of sales, license or other exploitation of the Devices; and

Royalties at a rate of 1.5% of net revenue generated from the sale, license or other exploitation of commercialization of the technology as part of an integrated product.

Based on the Company’s analysis, the Company concluded that the acquisition of the assets does not meet the definition of a business for the purpose of applying SEC Rules (S-X Rules of 3-05, 8-04 and 11-01).

NOTE 10 - COMMITMENTS AND CONTINGENCIES

F. Litigation resulting from the 2017 financing:

The Company was named as the defendant in a lawsuit captioned Empery Asset Master Ltd., Empery Tax Efficient, LP, Empery Tax Efficient II, LP, Hudson Bay Master Fund Ltd., (the “Plaintiffs”), against Microbot Medical Inc., Defendant, in the Supreme Court of the State of New York, County of New York (Index No. 651182/2020) (the “Lawsuit”). 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 “2017 Financing”), of which the Plaintiffs participated, and fraudulently induced Plaintiffs into signing the SPA. The complaint sought rescission of the SPA and return of the Plaintiffs’ $6,750 purchase price with respect to the 2017 Financing.

On January 26, 2024 (the “Effective Date”), the Company entered into a settlement agreement and release with the Plaintiffs (the “Settlement Agreement”), effectively resolving the Lawsuit.

Pursuant to the Settlement Agreement, the Company paid $2,154 consisting of a cash payment of $1,100, covered by the Company’s insurance company, and 1,005,965 shares of restricted common stock which were subsequently registered for resale. Furthermore, the Company’s insurance company is responsible for covering legal expenses incurred by the Company in relation to the legal proceedings of the Lawsuit. In February 2024, the Plaintiffs filed a stipulation discontinuing the Lawsuit with prejudice.

The Company concluded the Settlement Agreement gave rise to loss contingencies in the scope of ASC Subtopic 450-20, Contingencies – Loss Contingencies, and as of December 31, 2023, the Company recorded a contingent liability, as the Company deemed it both probable and reasonably estimable.

The Company determined that the loss contingency should be recognized as non-operating losses, offset by loss recoveries received from the Company’s insurance company.

As a result of the Settlement Agreement and the insurance recovery received from the insurance company, as of December 31, 2023, the Company recorded a current liability and a current asset on its consolidated balance sheet totaling $2,211 and $1,335, respectively. Within this asset, $1,100 represents the recovery of the cash payment of the settlement amount, and $235 represents recovery of legal expenses. A net non-operating loss of $1,111 from legal settlement was reflected in the Company’s consolidated statement of comprehensive loss for the year ended December 31, 2023. In the first quarter of 2024, the Company received $1,335 from the insurance company. Additionally, during the first quarter of 2024, the Company paid the settlement amount by transferring $1,100 in cash to the Plaintiffs and issuing 1,005,965 shares of the Company’s common stock, thereby settling the liability recorded as of December 31, 2023.

G. Mona litigation:

In March 2025, an appellate court held in favor of the Company with respect to a 2019 action against Alliance Investment Management, Ltd. (“Alliance”), later amended to add Joseph Mona (“Mona”) as a defendant, in the Southern District of New York under Section 16(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), to compel Alliance and/or Mona to disgorge short swing profits realized from purchases and sales of the Company’s securities within a period of less than six months. As a result, the Company received a judgment in the amount of approximately $316, net of legal fees and expenses. The amount received was recorded as other income in the Company’s audited consolidated statements of comprehensive loss.

H. Employment-Related Matter

On June 17, 2025, the Company received a demand letter from legal counsel representing a former employee in connection with an employment-related matter. On December 3, 2025, the Company received a charge filed by the former employee with the Massachusetts Commission Against Discrimination and Equal Employment Opportunity Commission, alleging discrimination and retaliation. On January 16, 2026, the Company filed a position statement responding to same and challenging the merits of the charge in total. Based on its initial assessment, the Company believes the allegations lack merit.

I. Accrued bonuses

As of December 31, 2025, the Company recorded accrued bonuses to the CEO, executives and certain employees in the amount of $1,089, related to fiscal year 2025 (refer also to Note 18A).

NOTE 11 -SHARE CAPITAL

A. Preferred investment options inducement

On December 29, 2023, the Company entered into a preferred investment option exercise inducement offer letter with certain holders of existing (i) Series A preferred investment options to purchase 1,022,495 shares of the Company’s common stock at an exercise price of $2.20 per share, issued on October 25, 2022, as amended on May 24, 2023, (ii) Series C preferred investment options to purchase 350,878 shares of the Company’s common stock at an exercise price of $2.075 per share, issued on June 6, 2023, and (iii) Series D preferred investment options to purchase 312,309 shares of the Company’s common stock at an exercise price of $3.19 per share issued on June 26, 2023, pursuant to which the holders agreed to exercise for cash such preferred investment options to purchase an aggregate of 1,685,682 shares of the Company’s common stock, at a reduced exercised price of $1.62 per share, in consideration for the Company’s agreement to issue new series E preferred investment options having terms to purchase up to 1,685,682 shares of the Company’s common stock (the “Inducement Investment Options”). Each Inducement Investment Option has an exercise price equal to $1.50 per share, and is exercisable from the date of the issuance until five and one-half (5.5) years following the date of the issuance. The estimated fair value of the Inducement Investment Options using a Black-Scholes options pricing model is approximately $1,853. At the closing on January 3, 2024, the Company received aggregate gross proceeds of approximately $2,730 from the exercise of such preferred investment options by the holders and the sale of the Inducement Investment Options, before deducting placement agent fees and other offering expenses of approximately $333. The Company also issued to Wainwright or its designees preferred investment options to purchase up to 84,284 shares of common stock which have the same terms as the Inducement Investment Options except for an exercise price equal to $2.025 per share. The estimated fair value of the preferred investment options using a Black-Scholes options pricing model is approximately $89.

B. Registered direct and private placement offerings:

On June 3, 2024, the Company entered into Securities Purchase Agreements with institutional investors, pursuant to which the Company agreed to issue and sell, in a registered direct offering priced at-the-market under the rules of The Nasdaq Stock Market, an aggregate of 1,566,669 shares of the Company’s common stock, par value $0.01 per share, at an offering price of $1.50 per share, for aggregate gross proceeds of approximately $2,350 before deducting the placement agent fee and related offering expenses of approximately $328. In a concurrent private placement, the Company agreed to issue to the investors series F preferred investment options to purchase up to 3,133,338 shares of common stock at an exercise price of $1.50 per share. Each Series F preferred investment option is exercisable immediately and will expire two years from the initial exercise date.

The Company also issued to Wainwright or its designees preferred investment options to purchase up to 78,333 shares of common stock which have the same terms as investors’ preferred investment options except for an exercise price equal to $1.875 per share.

On January 6, 2025, the Company entered into Securities Purchase Agreements with institutional investors, pursuant to which the Company agreed to issue and sell, in a registered direct offering priced at-the-market under the rules of the Nasdaq Stock Market, an aggregate of 4,000,001 shares of the Company’s common stock, par value $0.01 per share, at an offering price of $1.75 per share, for aggregate gross proceeds from the offerings of approximately $7,000 before deducting the placement agent fee and related offering expenses of approximately $690. In a concurrent private placement, the Company agreed to issue to the investors series G preferred investment options to purchase up to 8,000,002 shares of common stock at an exercise price of $1.75 per share. Each Series G preferred investment option is exercisable immediately and will expire two years from the initial exercise date. The Company also issued to Wainwright or its designees preferred investment options to purchase up to 200,000 shares of common stock which have the same terms as investors’ preferred investment options except for an exercise price equal to $2.1875 per share.

On January 7, 2025, the Company entered into Securities Purchase Agreements with institutional investors, pursuant to which the Company agreed to issue and sell, in a registered direct offering priced at-the-market under the rules of the Nasdaq Stock Market, an aggregate of 3,788,550 shares of the Company’s common stock, par value $0.01 per share, at an offering price of $2.27 per share, for aggregate gross proceeds from the offerings of approximately $8,600 before deducting the placement agent fee and related offering expenses of approximately $818. In a concurrent private placement, the Company agreed to issue to the investors series H preferred investment options to purchase up to 7,577,100 shares of common stock at an exercise price of $2.10 per share. Each Series H preferred investment option is exercisable immediately and will expire two years from the initial exercise date. The Company also issued to Wainwright or its designees preferred investment options to purchase up to 189,428 shares of common stock which have the same terms as investors’ preferred investment options except for an exercise price equal to $2.8375 per share.

On February 9, 2025, the Company entered into Securities Purchase Agreements with institutional investors, pursuant to which the Company agreed to issue and sell, in a registered direct offering priced at-the-market under the rules of the Nasdaq Stock Market, an aggregate of 6,103,289 shares of the Company’s common stock, par value $0.01 per share, at an offering price of $2.13 per share, for aggregate gross proceeds from the offerings of approximately $13,000 before deducting the placement agent fee and related offering expenses of approximately $1,175. In a concurrent private placement, the Company agreed to issue to the investors series I preferred investment options to purchase up to 12,206,578 shares of common stock at an exercise price of $2.13 per share. Each Series I preferred investment option is exercisable on the later of (i) the date on which the amendment to the Company’s articles of incorporation that increases the number of authorized shares of common stock to an amount of shares of common stock sufficient for the exercise in full of the series I preferred investment options is filed and accepted with the State of Delaware law (such date, the “Authorized Share Increase Date”) and (ii) the date on which approval as may be required by the applicable rules and regulations of the Nasdaq Stock Market (or any successor entity) from the stockholders of the Company with respect to the issuance of all the series I preferred investment options and the shares of common stock issuable upon the exercise thereof, is received and deemed effective under Delaware law (the “Initial exercise date”), and will expire two years from the initial exercise date. Net cash settlements are not permitted under any event under the Securities Purchase Agreements.

The Company also issued to Wainwright or its designees preferred investment options to purchase up to 305,164 shares of common stock which have the same terms as investors’ preferred investment options except for an exercise price equal to $2.6625 per share.

On June 10, 2025, at the Company’s annual meeting of stockholders, an amendment to the Company’s articles of incorporation was approved, increasing the number of authorized shares of common stock to 120,000,000. The amendment was subsequently filed with and accepted by the State of Delaware law and became effective on that date. Refer to Note 11F.

As a result, the Series I preferred investment options to purchase up to 12,206,578 shares of common stock at an exercise price of $2.13 per share, and the placement agent preferred investment options to purchase up to 305,164 shares of common stock at an exercise price of $2.6625 per share, each of which was issued on February 11, 2025, became immediately exercisable until their two year anniversary.

C. Equity Classification:

The common stock of the Company is classified as equity under the requirements of ASC Topic 505 Equity.

Pursuant to the guidance of ASC 480 and ASC 815 the warrants were classified as equity instruments.

The Company analyzed the accounting treatment for all of the outstanding preferred investment options issued to Wainwright and all such preferred investment options are equity-classified awards.

D. At-the-market offerings:

On July 1, 2024, the Company filed with the SEC a prospectus supplement relating to the offer, issuance and sale of up to $4,820 of the Company’s shares of common stock pursuant to the ATM Agreement. During the fiscal year ended December 31, 2024, the Company issued 3,433,880 shares of the Company’s common stock pursuant to the ATM Agreement, for total gross proceeds of approximately $3,756 before deducting sales agent commissions and other offering expenses of $239.

In January 2025, the Company issued 842,606 shares of the Company’s common stock pursuant to the ATM Agreement, for total gross proceeds of approximately $1,062 before deducting sales agent commissions and other offering expenses of $65. The Company is no longer selling its securities pursuant to the ATM Agreement and has not as of the filing of these financial statements entered into a new or replacement ATM agreement.

E. Exercise of Investment Options

During the year ended December 31, 2025, the Company raised approximately $33,855 in gross proceeds from the exercise of an aggregate of 18,613,585 outstanding Series E, Series F, Series G, Series H and Series I preferred investment options. As a result of these exercises, and in accordance with the Company’s engagement letters with its placement agent, as mentioned in Note 10D, the Company incurred placement agent cash fees of approximately $2,370. Additionally, the Company issued an aggregate of 930,680 placement agent options in accordance with such engagement letter.

Additionally, during the year ended December 31, 2025, the Company received gross proceeds of approximately $895 from the exercise of an aggregate of 374,167 outstanding placement agent options.

F. Increase in Authorized Share

Following the 2025 annual meeting of stockholders of the Company held on June 10, 2025, the Company filed with the State of Delaware a certificate of amendment to the Company’s restated certificate of incorporation, as amended, which increased the total number of shares of common stock authorized for issuance to 120,000,000 shares, with a corresponding increase in the total authorized shares from 61,000,000 to 121,000,000. Immediately thereafter, the Company had 121,000,000 shares of authorized stock, consisting of (i)120,000,000 shares of common stock, and (ii)1,000,000 shares of undesignated preferred stock.

G. Investment Inducement Transaction

On September 14, 2025, the Company entered into an inducement agreement (the “Letter Agreement”) with certain holders (the “Holders”) of existing (i) series F preferred investment options to purchase 207,224 shares of Company’s common stock at an exercise price of $1.50 per share, (ii) series G preferred investment options to purchase 628,571 shares of Company’s common stock at an exercise price of $1.75 per share, (iii) series H preferred investment options to purchase 4,702,612 shares of Company’s common stock at an exercise price of $2.10 per share, and (iv) series I preferred investment options to purchase 8,450,708 shares of Company’s common stock at an exercise price of $2.13 per share (collectively, the “Existing Preferred Investment Options”). Pursuant to the Letter Agreement, the Holders exercised for cash their Existing Preferred Investment Options to purchase an aggregate of 13,989,115 shares of Company’s common stock, at exercise prices ranging from $1.50 to $2.13 per share, in consideration for the Company’s agreement to issue new series J preferred investment options (the “New Preferred Investment Options”) to purchase up to an aggregate of 13,989,115 shares of Company’s common stock at an exercise price of $4.50 per share (collectively, the “Inducement Transaction”). The New Preferred Investment Options are exercisable beginning six months after issuance and will expire two years thereafter.

At the first closing of the Inducement Transaction, which occurred on September 16, 2025, certain Holders exercised Existing Preferred Investment Options to purchase up to an aggregate of 12,064,627 shares of Company’s common stock for cash and received New Preferred Investment Options to purchase up to an aggregate of 12,064,627 shares of Company’s common stock. At the second closing of the Inducement Transaction on September 29, 2025, a certain Holder exercised Existing Preferred Investment Options to purchase 600,000 shares of Company’s common stock for cash and received New Preferred Investment Options to purchase up to 600,000 shares of Company’s common stock. At the third closing of the Inducement Transaction, which occurred on October 6, 2025, certain Holders exercised Existing Preferred Investment Options to purchase up to an aggregate of 1,324,488 shares of Company’s common stock for cash and received New Preferred Investment Options to purchase up to an aggregate of 1,324,488 shares of Company’s common stock.

The Company received aggregate gross proceeds of approximately $29,286 from the exercise of the Existing Preferred Investment Options at the closings, before deducting placement agent fees and other offering expenses of approximately $2,472, of which $101 had not been paid as of December 31, 2025. Additionally, as a result of the Inducement Transaction, and in accordance with the Company’s engagement letters with its placement agent, as mentioned in Note 10D, the Company issued an aggregate of 699,456 placement agent options.

The inducement occurred concurrently with a fund raising. Pursuant to the guidance of ASC 480 and ASC 815 the warrants were classified as equity instruments before and after the warrant modification. In accordance with ASC Topic 815 guidance on equity classified warrant modifications, the incremental change in fair value of the warrants was accounted as an equity issuance cost, which was recorded to additional paid-in capital.

During the year ended December 31, 2024:

With respect to the CEO’s 2023 annual bonus, during February 2024, the Company paid 25% of the CEO’s total 2023 bonus – amounting to approximately $99, through the grant of fully vested options to purchase an aggregate of 79,567 shares of the Company’s common stock with an exercise price per share of $1.25.

In February 2025, the Company determined that 35,625 out of 132,500 performance-based options granted in February 2024 had met their milestones and been vested, while the remainder 96,875 options which did not meet their milestones had been forfeited.

On June 10, 2025, at the Company’s annual meeting of stockholders, an amendment to the Company’s 2020 Omnibus Performance Award Plan (as amended) was approved. This amendment increased the number of shares of common stock authorized and reserved for issuance under the plan by 2,591,019 shares.

During the year ended December 31, 2025, the Company granted the CEO, other executives and certain employees, and certain board members 228,000,483,875 and 70,000 options, respectively.

In August 2025, a former advisor of the Company exercised 47,218 vested options at an exercise price of NIS 0.01 per option. As a result of this exercise, the Company received total consideration of approximately $1.

The stock options vest over a period of three years as outlined in the option agreements evidencing such grants.

A summary of the Company’s option activity related to options to employees and directors, and related information is as follows:

H. ** Employee Stock Option Grants and Exercises:**

The Company recognizes forfeitures of outstanding options as they occur.

The intrinsic value is calculated as the difference between the fair market value of the common stock and the exercise price, multiplied by the number of in-the-money stock options on those dates that would have been received by the stock option holders had all stock option holders exercised their stock options on those dates as of December 31, 2025 and 2024, respectively.

As of December 31, 2025, and 2024, the aggregate intrinsic value of the outstanding options is $726 and $75, respectively, and the aggregate intrinsic value of the exercisable options is $558 and $69, respectively.

The weighted average grant date fair value of options granted during the years ended December 31, 2025 and 2024 was $1.65 and $0.99, respectively.

As of December 31, 2025, there were approximately $1,109 of total unrecognized compensation costs related to unvested share-based compensation awards granted under the Share Incentive Plan. The costs are expected to be recognized over a weighted average period of 2 years.

The stock options outstanding as of December 31, 2025 and 2024, summarized by exercise prices, are as follows:

The grant date fair values of employee stock options granted in the years ended December 31, 2025 and 2024 were estimated using the Black-Scholes valuation model with the following:

I. Warrants:

The remaining outstanding warrants and terms as of December 31, 2025 and 2024 are as follows:

NOTE 12 -BASIC AND DILUTED NET LOSS PER SHARE

The basic and diluted net loss per share and weighted average number of shares of common stock used in the calculation of basic and diluted net loss per share were presented in the consolidated statements of comprehensive loss for the years ended December 31, 2025 and 2024.

In the calculation of the basic and diluted net loss, the Company included warrants that would be exercised for no or little consideration and are exercisable with no contingencies.

Due to the net loss to common shareholders in each of the periods presented above, diluted loss per share was computed without consideration to potentially dilutive instruments as their inclusion would have been anti-dilutive. As of December 31, 2025 and 2024, potentially dilutive securities excluded from the diluted loss per share calculation are 19,418,605 and 7,689,701, respectively.

NOTE 13 -RESEARCH AND DEVELOPMENT EXPENSES, NET

NOTE 14 –SALES, GENERAL AND ADMINISTRATIVE EXPENSES

NOTE 15 –SEGMENT REPORTING

Segment information is prepared on the same basis that the Company’s chief operating decision maker (“CODM”), the Chief Executive Officer, manages the business, makes business decisions and assesses performance. The Company hasone operating and reportable segment, which is the development of robotic devices for endoluminal surgery. See Note 1A for further details.

The CODM assesses performance for this segment and decides how to allocate resources based on net loss. The measure of segment assets is reported on the balance sheet as cash and cash equivalents and marketable securities. The chief executive officer performs the assessment of segment performance by using the reported measure of segment loss to monitor actual results.

The table below summarizes the significant expense categories regularly reviewed by the CODM for the years ended December 31, 2025 and 2024:

Long-lived assets and operating lease right-of-use assets by geographical areas were as follows:

NOTE 16 -RELATED PARTIES

There were no material related party transactions in each of the years ended December 31, 2025 and 2024 that were outside of the Company’s normal course of business.

NOTE 17 -TAXES ON INCOME

The Company is subject to U.S. federal tax rate of 21% for the years ended December 31, 2025 and 2024.

The Company has not been audited by the Internal Revenue Service since its incorporation.

As of December 31, 2025 and 2024, the Company has generated accumulated net operating losses in the U.S. of approximately $517,992 and $511,371, respectively. The Company has available carryforward net operating losses amounting to approximately $108,969 at the U.S. federal level. This consists of pre-2017 net operating losses subject to a 20-year limitation per Section 382, amounting to approximately $83,848, and post-2017 net operating losses which can be carried forward indefinitely, amounting to approximately $25,121. Utilization of U.S. net operating losses may be subject to substantial annual limitation due to the “change in ownership” provisions of the Internal Revenue Code of 1986 and similar state provisions. The annual limitation may result in the expiration of net operating losses before utilization.

Microbot Israel is subject to Israeli corporate tax rate of 23% for the year ended December 31, 2025 and 2024. Microbot Israel has not received a final tax assessment since 2020.

As of December 31, 2025 and 2024, Microbot Israel has generated accumulated net operating losses in Israel of approximately $54,074 and $47,553, respectively, which may be carried forward and offset against taxable income in the future for an indefinite period.

NOTE 17 - TAXES ON INCOME

The Company 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 utilized in the future. Therefore, a valuation allowance was recorded to reduce the deferred tax assets to its recoverable amounts.

Reconciliation of Income Taxes:

The main reconciling item between the statutory tax rate of the Company and the effective tax rate is the recognition of valuation allowance in respect of deferred taxes relating to accumulated net operating losses carried forward due to the uncertainty of the realization of such deferred taxes.

NOTE 18 –SUBSEQUENT EVENTS

In February 2026, the Company authorized and approved the CEO a total bonus amounting to approximately $556, out of which an approximate amount of $417 is related to fiscal year 2025 and $139 is a special bonus. The company also approved salary increase to the CEO.

In February 2026, the Company authorized and approved bonuses to executives and certain employees in the amount of approximately $434, related to fiscal year 2025, and approved salary increases to executives and certain employees.

Furthermore, in February and March 2026, the Company granted the CEO and executives 480,000 and 315,000 options, respectively. Additionally, the Company approved to grant 292,500 options to certain employees.

In February 2026, the Company provided an unconditional bank guarantee on amount of $800. The guarantee was provided to secure the Company’s obligations in respect of purchases made by the subcontractor that manufactures inventory for the Company. The guarantee will be exercised only in the event that the Company fails to settle its payment obligations to the subcontractor for such purchases.