----

| UNITED STATES SECURITIES |
|--------------------------|
| AND EXCHANGE COMMISSION  |
| WASHINGTON, DC 20549     |

| ☐ | Registration Statement Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934 |
|---------|------------------------------------------------------------------------------------------------|

| ☒ | Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
|---------|--------------------------------------------------------------------------------------|

| ☐ | Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
|---------|------------------------------------------------------------------------------------------|

| ☐ | Shell Company Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
|---------|---------------------------------------------------------------------------------------------|

|                                                   |
|--------------------------------------------------------|
| MAZOR ROBOTICS LTD.                                    |
| (Exact name of registrant as specified in its charter) |
|                                            |   |                                     |
|-------------------------------------------------|--------|------------------------------------------|
| State of Israel                                 |   | 5 Shacham Street                         |
| (Jurisdiction of incorporation or organization) |   | North Industrial Park, Caesarea          |
|                                            |   | 3088900 Israel                           |
|                                            |   | (Address of principal executive offices) |
|                                             |   |                                               |
|--------------------------------------------------|--------|----------------------------------------------------|
| Title of each class:                             |   | Name of each exchange on which registered or to be |
| American Depository Shares each representing 2   |   | registered:                                        |
| Ordinary Shares, par value NIS 0.01 per share(1) |   | NASDAQ Global Market                               |
| Ordinary Shares, par value NIS 0.01 per share(2) |   |                                               |

| (1) | Evidenced by American Depositary Receipts. |
|-----|--------------------------------------------|

| (2) | Not for trading, but only in connection with the listing of the American Depositary Shares. |
|-----|---------------------------------------------------------------------------------------------|

----

|                            |                      |                          |                            |
|---------------------------------|---------------------------|-------------------------------|---------------------------------|
| Large accelerated filer ☐ | Accelerated filer ☒ | Non-accelerated filer ☐ | Emerging growth company ☒ |

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|                                                 |                                                           |   |   |
|------------------------------------------------------|----------------------------------------------------------------|--------|--------|
|                                                 |                                                           |   | Page   |
| INTRODUCTION                                         |                                                           | 5      |
| CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS |                                                           | 5      |
|                                                 |                                                           |   |   |
| DEFINITION OF CERTAIN TERMS                          |                                                           | 6      |
|                                                 |                                                           |   |   |
| PART I                                               |                                                           | 7      |
|                                                 |                                                           |   |   |
| ITEM 1.                                              | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS.         |   | 7      |
| ITEM 2.                                              | OFFER STATISTICS AND EXPECTED TIMETABLE.                       |   | 7      |
| ITEM 3.                                              | KEY INFORMATION.                                               |   | 8      |
| A.                                                   | Selected Financial Data.                                  |   | 8      |
| B.                                                   | Capitalization and Indebtedness.                          |   | 9      |
| C.                                                   | Reasons for the Offer and Use of Proceeds.                |   | 9      |
| D.                                                   | Risk Factors.                                             |   | 9      |
| ITEM 4.                                              | INFORMATION ON THE COMPANY.                                    |   | 47     |
| A.                                                   | History and Development of the Company.                   |   | 47     |
| B.                                                   | Business Overview.                                        |   | 47     |
| C.                                                   | Organizational Structure.                                 |   | 74     |
| D.                                                   | Property, Plants and Equipment.                           |   | 75     |
| ITEM 4A.                                             | UNRESOLVED STAFF COMMENTS.                                     |   | 75     |
| ITEM 5.                                              | OPERATING AND FINANCIAL REVIEW AND PROSPECTS.                  |   | 75     |
| A.                                                   | Operating Results.                                        |   | 75     |
| B.                                                   | Liquidity and Capital Resources.                          |   | 84     |
| C.                                                   | Research and Development, Patents and Licenses, Etc.      |   | 86     |
| D.                                                   | Trend Information.                                        |   | 86     |
| E.                                                   | Off-Balance Sheet Arrangements.                           |   | 87     |
| F.                                                   | Tabular Disclosure of Contractual Obligations.            |   | 88     |
| ITEM 6.                                              | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.                    |   | 88     |
| A.                                                   | Directors and Senior Management.                          |   | 88     |
| B.                                                   | Compensation.                                             |   | 91     |
| C.                                                   | Board Practices.                                          |   | 93     |
| D.                                                   | Employees.                                                |   | 106    |
| E.                                                   | Share Ownership.                                          |   | 107    |
| ITEM 7.                                              | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.             |   | 110    |
| A.                                                   | Major Shareholders.                                       |   | 110    |
| B.                                                   | Related Party Transactions.                               |   | 111    |
| C.                                                   | Interests of Experts and Counsel.                         |   | 111    |
| ITEM 8.                                              | FINANCIAL INFORMATION.                                         |   | 111    |
| A.                                                   | Consolidated Statements and Other Financial Information.  |   | 111    |
| B.                                                   | Significant Changes.                                      |   | 112    |
| ITEM 9.                                              | THE OFFER AND LISTING.                                         |   | 113    |
| A.                                                   | Offer and Listing Details.                                |   | 113    |
| B.                                                   | Plan of Distribution.                                     |   | 114    |
| C.                                                   | Markets.                                                  |   | 114    |
| D.                                                   | Selling Shareholders.                                     |   | 114    |
| E.                                                   | Dilution.                                                 |   | 114    |
| F.                                                   | Expenses of the Issue.                                    |   | 114    |
| ITEM 10.                                             | ADDITIONAL INFORMATION.                                        |   | 115    |
| A.                                                   | Share Capital.                                            |   | 115    |
| B.                                                   | Memorandum and Articles of Association.                   |   | 115    |
| C.                                                   | Material Contracts.                                       |   | 115    |
| D.                                                   | Exchange Controls.                                        |   | 116    |

----

| E.         | Taxation.                                                                |   | 116    |
|------------|-------------------------------------------------------------------------------|--------|--------|
| F.         | Dividends and Paying Agents.                                             |   | 127    |
| G.         | Statement by Experts.                                                    |   | 127    |
| H.         | Documents on Display.                                                    |   | 128    |
| I.         | Subsidiary Information.                                                  |   | 128    |
| ITEM 11.   | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.                   |   | 128    |
| ITEM 12.   | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES.                       |   | 130    |
| A.         | Debt Securities.                                                         |   | 130    |
| B.         | Warrants and Rights.                                                     |   | 130    |
| C.         | Other Securities.                                                        |   | 130    |
| D.         | American Depositary Shares.                                              |   | 130    |
|       |                                                                          |   |   |
| PART II    |                                                                          | 131    |
|       |                                                                          |   |   |
| ITEM 13.   | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.                              |   | 131    |
| ITEM 14.   | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS. |   | 131    |
| ITEM 15.   | CONTROLS AND PROCEDURES.                                                      |   | 131    |
| ITEM 16A.  | AUDIT COMMITTEE FINANCIAL EXPERTS.                                            |   | 132    |
| ITEM 16B.  | CODE OF ETHICS.                                                               |   | 132    |
| ITEM 16C.  | PRINCIPAL ACCOUNTANT FEES AND SERVICES.                                       |   | 132    |
| ITEM 16D.  | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.                   |   | 133    |
| ITEM 16E.  | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.       |   | 133    |
| ITEM 16F.  | CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT.                                 |   | 133    |
| ITEM 16G.  | CORPORATE GOVERNANCE.                                                         |   | 133    |
| ITEM 16H.  | MINE SAFETY DISCLOSURE.                                                       |   | 135    |
|       |                                                                          |   |   |
| PART III   |                                                                          | 135    |
|       |                                                                          |   |   |
| ITEM 17.   | FINANCIAL STATEMENTS.                                                         |   | 135    |
| ITEM 18.   | FINANCIAL STATEMENTS.                                                         |   | 135    |
| ITEM 19.   | EXHIBITS.                                                                     |   | 136    |
|       |                                                                          |   |   |
| SIGNATURES |                                                                          | 138    |

----

----

|  | ● | the outcomes of the agreements  with Medtronic plc and its affiliates; |
|--|---------|-----------------------------------------------------------------------------|

|  | ● | our ability to promote the new Mazor X System; |
|--|---------|------------------------------------------------|

|  | ● | the impact of competition and new technologies; |
|--|---------|-------------------------------------------------|

|  | ● | general market, political and economic conditions in the countries in which we operate; |
|--|---------|-----------------------------------------------------------------------------------------|

|  | ● | projected capital expenditures and liquidity; |
|--|---------|-----------------------------------------------|

|  | ● | changes in our strategy; |
|--|---------|--------------------------|

|  | ● | government regulations and approvals; |
|--|---------|---------------------------------------|

|  | ● | changes in customers' budgeting priorities; |
|--|---------|---------------------------------------------|

|  | ● | litigation and regulatory proceedings; and |
|--|---------|--------------------------------------------|

|  | ● | the overall global economic environment; and |
|--|---------|----------------------------------------------|

|  | ● | those factors referred to in "Item 3. Key Information - D. Risk Factors", "Item 4. Information on the Company," and "Item 5. Operating and Financial Review and Prospects", as well as in this annual report generally. |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | "Mazor Robotics", "Mazor," the "Company", the "registrant", "us", "we" and "our" refer to Mazor Robotics Ltd., an Israeli company, and, unless the context indicates otherwise, the Subsidiaries; |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | "ADSs" are to our American Depositary Shares, each representing two of our Ordinary Shares; |
|--|---------|---------------------------------------------------------------------------------------------|

|  | ● | "Companies Law" are to Israel's Companies Law, 5759-1999, as amended; |
|--|---------|-----------------------------------------------------------------------|

|  | ● | "Dollars", "U.S. dollars", "U.S. $" and "$" are to United States Dollars; |
|--|---------|---------------------------------------------------------------------------|

|  | ● | "Exchange Act" are to the United States Securities Exchange Act of 1934, as amended; |
|--|---------|--------------------------------------------------------------------------------------|

----

|  | ● | "FDA" are to the United States Food and Drug Administration; |
|--|---------|--------------------------------------------------------------|

|  | ● | "IRS" are to the United States Internal Revenue Service; |
|--|---------|----------------------------------------------------------|

|  | ● | "NASDAQ" are to the NASDAQ Global Market; |
|--|---------|-------------------------------------------|

|  | ● | "IIA" are to The Israel Innovation Authority, formerly known as the Office of the Chief Scientist of the Ministry of Economy ("OCS"); |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | "Ordinary Shares", "our shares" and similar expressions refer to our ordinary shares, par value NIS 0.01 per share; |
|--|---------|---------------------------------------------------------------------------------------------------------------------|

|  | ● | "SEC" are to the United States Securities and Exchange Commission; |
|--|---------|--------------------------------------------------------------------|

|  | ● | "Securities Act" are to the United States Securities Act of 1933, as amended; |
|--|---------|-------------------------------------------------------------------------------|

|  | ● | "Shekels" and "NIS" are to New Israel Shekels, the Israeli currency; |
|--|---------|----------------------------------------------------------------------|

|  | ● | "Subsidiaries" are to the U.S. Subsidiary and to Mazor Robotics Pte Ltd., a Singapore company, and a wholly owned subsidiary of Mazor; |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | "TASE" are to the Tel Aviv Stock Exchange; and |
|--|---------|------------------------------------------------|

|  | ● | "U.S. Subsidiary" are to Mazor Robotics, Inc., a Delaware corporation, and a wholly owned subsidiary of Mazor. |
|--|---------|----------------------------------------------------------------------------------------------------------------|

| ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
|---------|-------------------------------------------------------|

| ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE |
|---------|-----------------------------------------|

----

| ITEM 3. | KEY INFORMATION |
|---------|-----------------|

| A. | Selected Financial Data |
|----|-------------------------|

|                                                                                          |   |                     |    |   |   |   |    |   |   |   |    |   |   |   |    |
|-----------------------------------------------------------------------------------------------|--------|--------------------------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|
| (in thousands except net loss per share data)                                                 |   |                     |    |   |   |   |    |   |   |   |    |   |   |
|                                                                                          |   | Years Ended December 31, |    |
|                                                                                          |   | 2016                     |    |   | 2015   |   |    | 2014   |   |   | 2013    |   |   | 2012   |    |
| Statement of Income Data                                                                      |   |                     |    |   |   |   |    |   |   |   |    |   |   |   |    |
| Revenues                                                                                 |   | $                        | 36,379  |   |   | $      | 26,096  |   |   | $      | 21,208  |   |   | $      | 19,983  |   |   | $ | 12,175 |   |
| Cost of sales                                                                            |   | $                        | 10,330  |   |   | $      | 5,827   |   |   | $      | 4,396   |   |   | $      | 4,280   |   |   | $ | 2,893 |   |
| Gross profit                                                                             |   | $                        | 26,049  |   |   | $      | 20,269  |   |   | $      | 16,812  |   |   | $      | 15,703  |   |   | $ | 9,282 |   |
| Operating costs and expenses:                                                                 |   |                     |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| Research and development expenses, net (1)                                                    |   | $                        | 5,736   |   |   | $      | 6,324   |   |   | $      | 5,776   |   |   | $      | 4,174   |   |   | $ | 2,760 |   |
| Selling and marketing expenses                                                                |   | $                        | 33,637  |   |   | $      | 24,947  |   |   | $      | 21,352  |   |   | $      | 15,692  |   |   | $ | 8,887 |   |
| General and administrative expenses                                                           |   | $                        | 5,697   |   |   | $      | 4,305   |   |   | $      | 4,392   |   |   | $      | 2,766   |   |   | $ | 1,845 |   |
| Total operating costs and expenses                                                            |   | $                        | 45,070  |   |   | $      | 35,576  |   |   | $      | 31,520  |   |   | $      | 22,632  |   |   | $ | 13,492 |   |
| Operating loss                                                                           |   | $                        | (19,021 | )      |   | $      | (15,307 | )      |   | $      | (14,708 | )      |   | $      | (6,929  | ) |   | $ | (4,210 | ) |
| Net loss                                                                                      |   | $                        | (18,668 | )      |   | $      | (15,385 | )      |   | $      | (15,272 | )      |   | $      | (20,529 | ) |   | $ | (7,064 | ) |
| Loss per share – Basic and diluted                                                      |   | $                        | (0.42   | )      |   | $      | (0.36   | )      |   | $      | (0.37   | )      |   | $      | (0.57   | ) |   | $ | (0.29 | ) |
| Weighted average number of ordinary shares used to calculate basic and diluted loss per share |   |                     | 44,881  |   |   |   | 42,284  |   |   |   | 41,808  |   |   |   | 35,781  |   |   |   | 24,011 |   |

| (1) | Net of development costs capitalized to intangible assets, in the amount of $2,332 thousand for 2016. |
|-----|-------------------------------------------------------------------------------------------------------|

----

|                                  |   |               |     |   |   |   |     |   |   |   |    |   |   |   |    |
|---------------------------------------|--------|--------------------|----------|--------|--------|--------|----------|--------|--------|--------|---------|--------|--------|--------|---------|
| (in thousands)                        |   | As of December 31, |     |
|                                  |   | 2016               |     |   | 2015   |   |     | 2014   |   |   | 2013    |   |   | 2012   |    |
| Statement of Financial Position Data: |   |               |     |   |   |   |     |   |   |   |    |   |   |   |    |
| Cash and cash equivalents        |   | $                  | 14,954   |   |   | $      | 13,519   |   |   | $      | 22,255  |   |   | $      | 19,803  |   |   | $ | 12,797 |   |
| Short-term investments           |   | $                  | 37,862   |   |   | $      | 21,687   |   |   | $      | 24,507  |   |   | $      | 45,014  |   |   | $ | 4,156 |   |
| Long-term investments            |   | $                  | 9,017    |   |   | $      | 5,023    |   |   | $      | 5,473   |   |   | $      | — |   |   | $ | — |   |
| Total assets                     |   | $                  | 82,725   |   |   | $      | 50,970   |   |   | $      | 60,686  |   |   | $      | 70,889  |   |   | $ | 21,334 |   |
| Total non-current liabilities    |   | $                  | 325      |   |   | $      | 299      |   |   | $      | 278     |   |   | $      | 332     |   |   | $ | 4,490 |   |
| Accumulated loss                 |   | $                  | (121,860 | )      |   | $      | (103,192 | )      |   | $      | (87,807 | )      |   | $      | (72,535 | ) |   | $ | (52,006 | ) |
| Total equity                     |   | $                  | 64,889   |   |   | $      | 42,400   |   |   | $      | 54,267  |   |   | $      | 64,093  |   |   | $ | 12,820 |   |

----

----

|  | ● | significantly greater name recognition; |
|--|---------|-----------------------------------------|

|  | ● | longer operating histories; |
|--|---------|-----------------------------|

|  | ● | established exclusive relationships with healthcare professionals, customers and third-party payors; |
|--|---------|------------------------------------------------------------------------------------------------------|

|  | ● | established distribution networks; |
|--|---------|------------------------------------|

|  | ● | a more compelling technology with greater clinical value; |
|--|---------|-----------------------------------------------------------|

|  | ● | competitive pricing; |
|--|---------|----------------------|

|  | ● | additional lines of products and the ability to offer rebates or bundle products to offer higher discounts or incentives to gain a competitive advantage; |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | greater experience in conducting research and development, manufacturing, clinical trials, obtaining regulatory clearance for products and marketing approved products; and |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | greater financial and human resources for product development, sales and marketing and patent litigation. |
|--|---------|-----------------------------------------------------------------------------------------------------------|

----

----

|  | ● | the revenue generated by sales of our current and future products; |
|--|---------|--------------------------------------------------------------------|

|  | ● | our ability to manage our inventory; |
|--|---------|--------------------------------------|

|  | ● | the expenses we incur in selling and marketing our products and supporting our growth; |
|--|---------|----------------------------------------------------------------------------------------|

|  | ● | the costs and timing of regulatory clearance or approvals for new products or upgrades or changes to our current products; |
|--|---------|----------------------------------------------------------------------------------------------------------------------------|

|  | ● | the rate of progress, cost, and success or failure of on-going development activities; |
|--|---------|----------------------------------------------------------------------------------------|

|  | ● | the emergence of competing or complementary technological developments; |
|--|---------|-------------------------------------------------------------------------|

|  | ● | the costs of filing, prosecuting, defending and enforcing any patent or license claims and other intellectual property rights, or participating in litigation related activities; |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | the terms and timing of any collaborative, licensing, or other arrangements that we may establish; |
|--|---------|----------------------------------------------------------------------------------------------------|

|  | ● | the acquisition of businesses, products and technologies; and |
|--|---------|---------------------------------------------------------------|

|  | ● | general economic conditions and interest rates, including the continuing weak conditions. |
|--|---------|-------------------------------------------------------------------------------------------|

----

|  | ● | our suppliers may encounter financial hardships as a result of unfavorable economic and market conditions unrelated to our demand for components, which could inhibit their ability to fulfill our orders and meet our requirements; |
|--|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | suppliers may fail to comply with regulatory requirements, be subject to lengthy compliance, validation or qualification periods, or make errors in manufacturing components that could negatively affect the efficacy or safety of our products or cause delays in supplying of our products to our customers; |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | newly identified suppliers may not qualify under the stringent regulatory standards to which our business is subject; |
|--|---------|-----------------------------------------------------------------------------------------------------------------------|

|  | ● | we or our suppliers may not be able to respond to unanticipated changes in customer orders, and if orders do not match forecasts, we or our suppliers may have excess or inadequate inventory of materials and components; |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | we may be subject to price fluctuations due to a lack of long-term supply arrangements for key components; |
|--|---------|------------------------------------------------------------------------------------------------------------|

|  | ● | we may experience delays in delivery by our suppliers due to changes in demand from us or their other customers; |
|--|---------|------------------------------------------------------------------------------------------------------------------|

|  | ● | we or our suppliers may lose access to critical services and components, resulting in an interruption in the manufacture, assembly and shipment of our systems; |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | our suppliers may be subject to allegations by other parties of misappropriation of proprietary information in connection with their supply of products to us, which could inhibit their ability to fulfill our orders and meet our requirements; |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | fluctuations in demand for products that our suppliers manufacture for others may affect their ability or willingness to deliver components to us in a timely manner; |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | our suppliers may wish to discontinue supplying components or services to us (e.g., for risk management reasons); and |
|--|---------|-----------------------------------------------------------------------------------------------------------------------|

|  | ● | we may not be able to find new or alternative components or reconfigure our system and manufacturing processes in a timely manner if the necessary components become unavailable. |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | ● | our ability to recruit, train and retain adequate numbers of qualified sales and marketing personnel; |
|--|---------|-------------------------------------------------------------------------------------------------------|

|  | ● | the ability of sales personnel to obtain access to surgeons and persuade adequate numbers of hospitals to purchase our products; |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------|

|  | ● | the uncertainty involved with the future of the relationship with Medtronic, the profile and structure of our team might change and for a period of transition; |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | costs associated with hiring, maintaining and expanding a sales and marketing organization; and |
|--|---------|-------------------------------------------------------------------------------------------------|

|  | ● | government scrutiny with respect to promotional activities in the healthcare industry both domestically and abroad. |
|--|---------|---------------------------------------------------------------------------------------------------------------------|

----

|  | ● | managing production yields; |
|--|---------|-----------------------------|

|  | ● | maintaining quality control and assurance; |
|--|---------|--------------------------------------------|

|  | ● | providing component and service availability; |
|--|---------|-----------------------------------------------|

|  | ● | managing subcontractors; |
|--|---------|--------------------------|

|  | ● | hiring and retaining qualified personnel; and |
|--|---------|-----------------------------------------------|

|  | ● | complying with state, federal and foreign regulations. |
|--|---------|--------------------------------------------------------|

----

|  | ● | delays in shipments due, for example, to natural disasters or labor disturbances; |
|--|---------|-----------------------------------------------------------------------------------|

|  | ● | delays or unexpected difficulties in the manufacturing processes of our suppliers or in our assembly process; |
|--|---------|---------------------------------------------------------------------------------------------------------------|

|  | ● | timing of the announcement, introduction and delivery of new products or product upgrades by us and by our competitors; |
|--|---------|-------------------------------------------------------------------------------------------------------------------------|

|  | ● | timing and level of expenditures associated with expansion of sales and marketing activities and our overall operations; |
|--|---------|--------------------------------------------------------------------------------------------------------------------------|

|  | ● | changes in third-party coverage and reimbursement, changes in government regulation, or a change in a customer's financial condition or ability to obtain financing; and |
|--|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | hospitals' tendency to group purchases at the beginning of their budgetary cycle, which is different among hospitals. |
|--|---------|-----------------------------------------------------------------------------------------------------------------------|

----

|  | ● | loss of revenue; |
|--|---------|------------------|

|  | ● | delay in market acceptance of our products; |
|--|---------|---------------------------------------------|

|  | ● | damage to our reputation; |
|--|---------|---------------------------|

|  | ● | additional regulatory filings; |
|--|---------|--------------------------------|

|  | ● | product recalls; |
|--|---------|------------------|

|  | ● | increased service or warranty costs; and |
|--|---------|------------------------------------------|

|  | ● | product liability claims relating to the software defects. |
|--|---------|------------------------------------------------------------|

----

----

----

|  | ● | the identification of suitable acquisition candidates can be difficult, time consuming and costly; |
|--|---------|----------------------------------------------------------------------------------------------------|

|  | ● | integrating any acquisitions that we make into our operations is difficult, time consuming, and expensive, and may involve new regulatory requirements; and |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | future acquisitions could result in potentially dilutive issuances of equity securities or the incurrence of debt, contingent liabilities or expenses, or other charges such as amortization of intangible assets, any of which could harm our business and materially adversely affect our financial results or cause a reduction in the price of our Ordinary Shares. |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | implementing appropriate operational and financial systems and controls; |
|--|---------|--------------------------------------------------------------------------|

|  | ● | expanding manufacturing and assembly capacity and increasing production; |
|--|---------|--------------------------------------------------------------------------|

|  | ● | developing our sales and marketing infrastructure and capabilities; |
|--|---------|---------------------------------------------------------------------|

|  | ● | identifying, attracting and retaining qualified personnel in our areas of activity; |
|--|---------|-------------------------------------------------------------------------------------|

|  | ● | hiring, training, managing and supervising our personnel; and |
|--|---------|---------------------------------------------------------------|

|  | ● | continuous compliance with regulatory and quality assurance requirements. |
|--|---------|---------------------------------------------------------------------------|

----

|  | ● | approval of product submissions with healthcare systems outside the United States; |
|--|---------|------------------------------------------------------------------------------------|

|  | ● | gathering the clinical data that may be required for product submissions with healthcare systems outside the United States; |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------|

|  | ● | import restrictions and controls and other government regulation relating to technology; |
|--|---------|------------------------------------------------------------------------------------------|

|  | ● | pricing pressures that we may experience internationally; |
|--|---------|-----------------------------------------------------------|

|  | ● | the availability and level of reimbursement within prevailing foreign healthcare payment systems; |
|--|---------|---------------------------------------------------------------------------------------------------|

|  | ● | compliance with existing and changing applicable foreign regulatory laws and requirements, including but not limited to the European Medical Device Directive (Council Directive 93/42/EEC), the U.S. Foreign Corrupt Practices Act of 1977, or FCPA, Section 291A of the Israel Penal Code (prohibiting bribery of foreign government officials) as well as the domestic implementation of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions in all applicable countries; |
|--|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | foreign laws and business practices favoring local companies; |
|--|---------|---------------------------------------------------------------|

|  | ● | longer payment cycles; and |
|--|---------|----------------------------|

|  | ● | shipping delays. |
|--|---------|------------------|

----

----

----

----

|  | ● | design, development and manufacturing; |
|--|---------|----------------------------------------|

|  | ● | testing, labeling and storage; |
|--|---------|--------------------------------|

|  | ● | clinical trials; |
|--|---------|------------------|

|  | ● | product safety; |
|--|---------|-----------------|

|  | ● | marketing, sales and distribution; |
|--|---------|------------------------------------|

|  | ● | premarket clearance or approval; |
|--|---------|----------------------------------|

|  | ● | record keeping procedures; |
|--|---------|----------------------------|

|  | ● | advertising and promotions; |
|--|---------|-----------------------------|

|  | ● | recalls and field corrective actions; |
|--|---------|---------------------------------------|

|  | ● | post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; and |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | product import and export. |
|--|---------|----------------------------|

----

|  | ● | warning letters; |
|--|---------|------------------|

|  | ● | fines; |
|--|---------|--------|

|  | ● | injunctions; |
|--|---------|--------------|

|  | ● | civil penalties; |
|--|---------|------------------|

|  | ● | termination of distribution; |
|--|---------|------------------------------|

|  | ● | recalls or seizures of products; |
|--|---------|----------------------------------|

|  | ● | delays in the introduction of products into the market; |
|--|---------|---------------------------------------------------------|

|  | ● | total or partial suspension of production; |
|--|---------|--------------------------------------------|

|  | ● | refusal to grant future clearances or approvals; |
|--|---------|--------------------------------------------------|

|  | ● | withdrawals or suspensions of current clearances or approvals, resulting in prohibitions on sales of our products; and |
|--|---------|------------------------------------------------------------------------------------------------------------------------|

|  | ● | in the most serious cases, criminal penalties. |
|--|---------|------------------------------------------------|

----

|  | ● | untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; |
|--|---------|---------------------------------------------------------------------------------------------|

|  | ● | customer notifications, refunds, detention or seizure of our products; |
|--|---------|------------------------------------------------------------------------|

|  | ● | refusing or delaying requests for 510(k) marketing clearance or PMA approvals of new products or modified products; |
|--|---------|---------------------------------------------------------------------------------------------------------------------|

|  | ● | withdrawing 510(k) marketing clearances that have already been granted, or PMA approvals which we may receive in the future; |
|--|---------|------------------------------------------------------------------------------------------------------------------------------|

|  | ● | refusing to provide Certificates for Foreign Government; |
|--|---------|----------------------------------------------------------|

|  | ● | refusing to grant export approval for our products; or |
|--|---------|--------------------------------------------------------|

|  | ● | pursuing criminal prosecution. |
|--|---------|--------------------------------|

----

|  | ● | untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; |
|--|---------|---------------------------------------------------------------------------------------------|

|  | ● | customer notifications or repair, replacement, refunds, detention or seizure of our products; |
|--|---------|-----------------------------------------------------------------------------------------------|

|  | ● | operating restrictions or partial suspension or total shutdown of production; |
|--|---------|-------------------------------------------------------------------------------|

|  | ● | refusing or delaying requests for 510(k) marketing clearance or PMA approvals of new products or modified products; |
|--|---------|---------------------------------------------------------------------------------------------------------------------|

|  | ● | withdrawing 510(k) marketing clearances that have already been granted, or PMA approvals that we may receive in the future; |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------|

|  | ● | refusing to provide Certificates for Foreign Government; |
|--|---------|----------------------------------------------------------|

|  | ● | refusing to grant export approval for our products; or |
|--|---------|--------------------------------------------------------|

|  | ● | pursuing criminal prosecution. |
|--|---------|--------------------------------|

----

----

----

----

----

----

----

----

----

|  | ● | announcements of technological innovations or new products by us or others; |
|--|---------|-----------------------------------------------------------------------------|

|  | ● | announcements by us of significant acquisitions, strategic partnerships, in-licensing, out-licensing, joint ventures or capital commitments; |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | expiration or terminations of licenses, research contracts or other collaboration agreements; |
|--|---------|-----------------------------------------------------------------------------------------------|

|  | ● | public concern as to the safety of our equipment we sell; |
|--|---------|-----------------------------------------------------------|

|  | ● | general market conditions; |
|--|---------|----------------------------|

|  | ● | the volatility of market prices for shares of medical devices companies generally; |
|--|---------|------------------------------------------------------------------------------------|

|  | ● | success or failure of research and development projects; |
|--|---------|----------------------------------------------------------|

|  | ● | departure of key personnel; |
|--|---------|-----------------------------|

|  | ● | developments concerning intellectual property rights; |
|--|---------|-------------------------------------------------------|

|  | ● | developments concerning regulatory approvals; |
|--|---------|-----------------------------------------------|

|  | ● | developments concerning standard-of-care in spine surgeries; |
|--|---------|--------------------------------------------------------------|

|  | ● | variations in our and our competitors' results of operations; |
|--|---------|---------------------------------------------------------------|

|  | ● | changes in revenues, gross profits and earnings announced by the Company; |
|--|---------|---------------------------------------------------------------------------|

|  | ● | changes in estimates or recommendations by securities analysts, if our Ordinary Shares or the ADSs are covered by analysts; |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------|

|  | ● | changes in government regulations or patent decisions; and |
|--|---------|------------------------------------------------------------|

|  | ● | general market conditions and other factors, including factors unrelated to our operating performance. |
|--|---------|--------------------------------------------------------------------------------------------------------|

----

----

|  | ● | the revenue generated by sales of our current and future products; |
|--|---------|--------------------------------------------------------------------|

|  | ● | our ability to manage our inventory; |
|--|---------|--------------------------------------|

|  | ● | the expenses we incur in selling and marketing our products and supporting our growth; |
|--|---------|----------------------------------------------------------------------------------------|

|  | ● | the costs and timing of regulatory clearance or approvals for new products or upgrades or changes to our current products; |
|--|---------|----------------------------------------------------------------------------------------------------------------------------|

|  | ● | the rate of progress, cost, and success or failure of on-going development activities; |
|--|---------|----------------------------------------------------------------------------------------|

|  | ● | the emergence of competing or complementary technological developments; |
|--|---------|-------------------------------------------------------------------------|

|  | ● | the costs of filing, prosecuting, defending and enforcing any patent or license claims and other intellectual property rights, or participating in litigation related activities; |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | the terms and timing of any collaborative, licensing, or other arrangements that we may establish; |
|--|---------|----------------------------------------------------------------------------------------------------|

|  | ● | the acquisition of businesses, products and technologies; and |
|--|---------|---------------------------------------------------------------|

|  | ● | general economic conditions and interest rates, including the continuing weak conditions. |
|--|---------|-------------------------------------------------------------------------------------------|

----

----

----

| ITEM 4. | INFORMATION ON THE COMPANY |
|---------|----------------------------|

| A. | History and Development of the Company |
|----|----------------------------------------|

----

| B. | Business Overview |
|----|-------------------|

----

----

|  | ● | Degenerative disc disease describes the most common type of spine disorder which primarily results from repetitive stresses experienced during the normal aging process. Disc degeneration occurs as the outer layer starts to shear and the inner cores of intervertebral discs lose elasticity and shrink. Over time, these changes can cause the discs to lose their normal height and shock-absorbing characteristics, which leads to back pain and reduced flexibility. Herniated discs are a common form of degenerative disc disease. |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Lumbar stenosis is a condition whereby either the spinal canal or vertebral foramen becomes narrowed in the lower back impinging the nerves in the lumbar spine. This condition is often caused by the degenerative processes in the spine and the resulting compression can lead to back and leg pain. If the narrowing is substantial, it causes compression of the nerves and the painful symptoms of lumbar spinal stenosis. |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Spine deformity is a term used to describe any variation in the natural curvature of the spine. Natural curves help the upper body maintain proper balance and alignment over the pelvis. Common forms of deformity include scoliosis, which is a lateral or side-to-side curvature of the spine, and kyphosis, which is an abnormal concave curvature leading to a rounded (humped) back. |
|--|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Vertebral compression fractures are fractures of the vertebrae that result in the collapse of the vertebral body. These fractures, which can be very painful to the patient, are often the result of osteoporosis, which causes the vertebrae to weaken and become brittle, or spine tumors, but can also result from trauma. |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Primary spine tumors are relatively rare. Benign tumors are typically removed surgically while malignant tumors are more difficult to treat and are often metastases which originate from tumors in other organs. |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | ● | restricted or even no line-of-sight at the anatomical site; |
|--|---------|-------------------------------------------------------------|

|  | ● | cumbersome handling of surgical instruments, limiting the procedure; |
|--|---------|----------------------------------------------------------------------|

|  | ● | dependence on two-dimensional imaging for three-dimensional surroundings; and |
|--|---------|-------------------------------------------------------------------------------|

|  | ● | intra-operative exposure to radiation. |
|--|---------|----------------------------------------|

|  | ● | increased procedure-related blood loss, pain and scarring at the incision site; |
|--|---------|---------------------------------------------------------------------------------|

|  | ● | increased likelihood of complications, such as infections; |
|--|---------|------------------------------------------------------------|

|  | ● | slower recovery times and longer post-operative hospital stays; and |
|--|---------|---------------------------------------------------------------------|

|  | ● | undesirable aesthetic outcomes. |
|--|---------|---------------------------------|

----

|  | ● | precision in lesion localization; |
|--|---------|-----------------------------------|

|  | ● | reduced risk of damage to adjacent vital structures; |
|--|---------|------------------------------------------------------|

|  | ● | enhanced ability to execute the surgical plan; and |
|--|---------|----------------------------------------------------|

|  | ● | allowing for less invasive surgical approaches. |
|--|---------|-------------------------------------------------|

----

----

|  | ● | Continue to commercialize our Surgical Guidance Systems globally. We continue to focus on commercializing our Surgical Guidance Systems by expanding our sales and marketing infrastructure through internal resources and externally through arrangements, such as through the Medtronic Agreements. We have a presence in more than 150 hospitals in 14 countries, including over 100 Surgical Guidance Systems installed in the United States. Within the United States alone the addressable market includes over 2,000 hospitals and surgical centers, creating significant opportunity for us to expand our presence and accelerate our revenue growth.  |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Drive utilization of our installed base of our Surgical Guidance Systems. Following the initial installation of our Surgical Guidance Systems at a given hospital, we take steps to expand the number of surgeons who use our system and work with the hospitals and their surgeons to promote patient education on the benefits of our Surgical Guidance systems. Increased usage of our installed Surgical Guidance Systems through surgeon education and training accelerates our recurring revenues through increased sales of our disposable products. We also intend to include in our product offerings end-to-end solutions that address more steps in Spine surgical procedures. This is expected to increase our portfolio of disposable and ancillary product offerings and to promote the use of our Surgical Guidance Systems. |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Demonstrate the clinical and financial value proposition of our Surgical Guidance systems. Following our overall penetration strategy, we installed systems at leading academic centers and entered new U.S. metropolitan area markets. We intend to collaborate with leading surgeons and early-adopting hospitals to build additional data that supports the clinical and financial benefits of our Surgical Guidance systems. We intend to demonstrate that using our Surgical Guidance systems promotes and differentiates surgeons and hospitals as leaders for the treatment of spine disorders, while demonstrating to hospitals the financial benefits of our Surgical Guidance systems. |
|--|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | ● | Invest in research and development. We will continue to make significant investments in research and development including investments to upgrade the hardware and software components of our Surgical Guidance Systems and to develop additional applications using our proprietary technologies and to develop future products. In addition, as part of the Medtronic Agreements we intend to collaborate with Medtronic to further develop additional innovative solutions with our Mazor X system in combination with Medtronic product offerings for spine applications. |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Explore new ways to accelerate adoption of our products. We intend to achieve this by striving for partnerships with strategic players and to gain the benefits associated with the synergy between Mazor and potential partners. |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Explore new ways to utilize our core knowledge and intellectual property to enter new applications. We intend to achieve this by our continued effort of our research and development team and potentially with synergy between Mazor and potential partners in areas out of spine surgery. |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Mazor X Guidance system including the following key components: |
|--|--------|-----------------------------------------------------------------|

|  | o | A precision Surgical Arm - The Surgical Arm comprises a set of links, joints and motors. With its unique design and innovative structure, the device has six joints, each with its own range of motion enabling the arm to reach a wide variety of trajectories.  The Surgical Arm is controlled by the Mazor X Workstation computer and a Central Control Unit. Arm movement is as a result of the surgical plan (described below) and is monitored in a closed loop controlling process. |
|--|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | o | An integrated 3D camera with spatial tracking – The Mazor X-Eye camera provides positioning verification and enables tracking functionality. The surgeon activates the tracking features using on-screen controls. |
|--|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | o | A surgeon control panel in the sterile area – The surgeon's screen is a table-type LCD mounted on a movable screen arm located at the top of the surgical system. Use of this multi-touch screen provides the surgeon with a close and convenient method of interaction with the system. Information displayed on the surgeon's screen and Workstation monitor is dynamically updated in real-time, simultaneously. |
|--|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Mazor X Workstation running sophisticated software and algorithms and including a large touch screen serving as a surgeon control panel, hardware components and storage for the Guidance System when not in use. The Workstation is the main console from which the user interacts with the Mazor X system. The Workstation is a compact, fully-portable unit that facilitates easy mounting of the Surgical Arm onto an operating room table in preparation for an operation. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Specialized applications that will run on the Mazor X platform (under development). |
|--|--------|-------------------------------------------------------------------------------------|

|  | · | Mazor X Spine Disposables. Mazor X disposable kits are designed to easily adapt the surgical arm to a multitude of surgical applications and for the different mounting platforms utilized by the surgeon. |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Mazor X Spine Accessories. Mazor X accessories include trays of reusable surgical tools. |
|--|--------|------------------------------------------------------------------------------------------|

----

|   | ● | 3DPlanning |
|--------|---------|------------|

|  | ● | Pre-Op Analytics – 3D Planning is performed using cutting-edge anatomy recognition and vertebral segmentation algorithms for surgical visualization based on a patient's images. The resulting Surgical Plan includes implant and trajectory placement planning.  The Surgical Plan may be created prior to the surgery or during the surgery using Scan & Plan. |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                               |                        |
|-------------------------------|------------------------|
| Automated Anatomy Recognition | Vertebral Segmentation |

|  | · | Scan & Plan– Utilizes 3D intra-operative imaging systems, such as a Medtronic O-Arm system, to perform a patient scan that is then used to create the surgical plan instead of a pre-op CT. Scan & Plan is especially useful in trauma cases or when a pre-op CT is not available. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Intra Operative  Procedure steps: |
|--|--------|----------------------------------------|

|  | o | Import the Pre-Op Analytics plan into the Mazor X Workstation |
|--|---|---------------------------------------------------------------|

|  | o | Attachment of Hardware - The mounting platform is rigidly attached to the patient's spine or skull to ensure that maximum accuracy is maintained throughout the surgical procedure, even if patient movement occurs |
|--|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | o | Perform a 3Define Scan – This reconstructs the 3D volume to assess the working area for the surgeon |
|--|---|-----------------------------------------------------------------------------------------------------------|

|  | o | 3D synchronization - To execute the surgical plan, it is necessary to match the CT-based plan with the patient's spine and the mounting platform through CT-to-fluoro registration. The mounting platform's spatial location is marked by a proprietary 3D Marker which is attached to it. Two fluoroscopic images of the 3D marker and the spine are taken (anterior-posterior and oblique views). Mazor X  software then automatically matches the vertebrae seen in the fluoroscopic images to those in the pre-operative CT. This automatic registration process is critical for the software to identify the location of the mounting platform relative to the patient's spine. It allows the software to calculate the motion necessary for the RBT Device. The accuracy of the 3D synchronization process is confirmed by the surgeon after visual verification for each vertebra |
|--|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  |  |  |
|--|--|--|

|  | o | Intra-operative verification - Before instrumenting, the Mazor X Eye camera provides intra-op verification of the surgical arm trajectory and position  |
|--|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | o | Intra-operative guidance for surgical execution- Utilizes precision mechanics and the surgical arm to guide tools and implants at the right trajectory and position according to the surgical plan in the surgical field. |
|--|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | o | Perform surgical procedure |
|--|---|----------------------------|

|  | · | Mazor X Align software – An advanced application that will run on the Mazor X platform. X Align will use advanced measurement and visualization tools to create a simulation of the overall spinal alignment before surgery. Mazor X Align leverages the Mazor technology experience with tools for placement and trajectory planning, for predictable planning of the entire spine alignment. |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Specialized applications (under development) |
|--|--------|----------------------------------------------|

|  | o | ArcAid – The ArcAid custom bends rods on-site for personalized patient spinal correction. ArcAid bends according to a personalized rod bending blueprint, derived from the Mazor X-align, to provide the best fit to the desired corrected spinal alignment. |
|--|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | o | Co-development applications with Medtronic – Mazor and Medtronic have defined a joint 2017 roadmap for co-development whose goals include integration of Medtronic's implant and imaging technology for Mazor X compatibility. |
|--|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | ● | pre-operative planning; |
|--|---------|-------------------------|

|  | ● | attachment of hardware; |
|--|---------|-------------------------|

|  | ● | 3D synchronization; and |
|--|---------|-------------------------|

|  | ● | surgical execution. |
|--|---------|---------------------|

|   |   |   |
|--------|--------|--------|

----

|   |   |   |
|--------|--------|--------|

----

|  | ● | pre-operative planning; |
|--|---------|-------------------------|

|  | ● | attachment of hardware; |
|--|---------|-------------------------|

|  | ● | synchronization; and |
|--|---------|----------------------|

|  | ● | surgical execution. |
|--|---------|---------------------|

----

----

----

|  | ● | Actively target hospitals with a significant spine practice. We believe that successful adoption depends on the routine implementation of Surgical Guidance systems into the surgeon's and facility's routine operations. Such facilities also provide the potential to sell systems into additional practices. |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Facilitate independent clinical research by surgeons. We collaborate with surgeons to conduct research on the implementation, clinical outcomes, radiation exposure and other variables which are inherent to, or derived from, the adoption and utilization of Surgical Guidance Systems in a surgical spine program. |
|--|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Encourage medical facilities to embark on a marketing program that would promote and publicize their Surgical Guidance System-based spine program. We work with hospitals and help them to educate surgeons, referring physicians and patients regarding the clinical benefits that Surgical Guidance Systems provide. This increased patient awareness in the community regarding such benefits has the potential to improve quality of care for patients undergoing procedures using our products. |
|--|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Training and Education. We train and educate through a variety of activities such as observing Surgical Guidance Systems cases, participating in bio-skills workshops to provide prospective customers with hands-on experience by operating on a cadaver using the Surgical Guidance Systems system and participating in peer-to-peer interactions. We also offer comprehensive and advanced training to our surgeons and operating room staff. |
|--|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|  | · | Marketing activities – Medtronic is committed to actively marketing the Mazor X system. Mazor and Medtronic are working on joint efforts to create market awareness of the Mazor X System. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Sales Activities – In the first phase of the agreement, Medtronic's sales team is responsible for generating awareness for and interest in the Mazor X System for Spine applications. This involves bringing surgeons to labs and generating qualified leads, before providing the leads to Mazor's capital sales team to close the sales. If triggered, in the second phase of the agreement Medtronic would assume responsibility for global distribution of the Mazor X System for spine applications. |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Co-development activities – Mazor and Medtronic will co-develop synergistic products and applications for spine surgery. This activity has already commenced. |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Revenue sharing – Mazor will pay a lead sharing fee to Medtronic for Qualified leads Medtronic delivers to Mazor. Medtronic will pay a synergy fee to Mazor for every case where a Mazor X system is used in association with Medtronic implants. Under certain circumstances, Medtronic will pay a synergy fee to Mazor regarding Renaissance usage with Medtronic implants. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | the safety and efficacy of the procedure and product offerings, as documented through published studies and other clinical reports; |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | product benefits, including the ability to offer spine surgeons a complete solution for posterior spinal procedures; |
|--|---------|----------------------------------------------------------------------------------------------------------------------|

----

|  | ● | the cost of product offerings and their clinical value within the economics of the procedure they are used in; |
|--|---------|----------------------------------------------------------------------------------------------------------------|

|  | ● | the strength of acceptance and adoption by spine surgeons and hospitals; |
|--|---------|--------------------------------------------------------------------------|

|  | ● | the ability to deliver new product offerings and enhanced technology to expand or improve upon existing applications through continued research and development; |
|--|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | the quality of training, services and clinical support provided to surgeons and hospitals; |
|--|---------|--------------------------------------------------------------------------------------------|

|  | ● | the ability to provide proprietary products protected by strong intellectual property rights; and |
|--|---------|---------------------------------------------------------------------------------------------------|

|  | ● | the ability to offer products that are intuitive and easy to learn and use. |
|--|---------|-----------------------------------------------------------------------------|

----

|  | ● | product design, preclinical and clinical development and manufacture; |
|--|---------|-----------------------------------------------------------------------|

|  | ● | product premarket clearance and approval; |
|--|---------|-------------------------------------------|

|  | ● | product safety, testing, labeling, advertising, promotion and storage; |
|--|---------|------------------------------------------------------------------------|

|  | ● | record keeping procedures; |
|--|---------|----------------------------|

|  | ● | product marketing, sales and distribution; |
|--|---------|--------------------------------------------|

|  | ● | quality system requirements; |
|--|---------|------------------------------|

|  | ● | recalls and field safety corrective actions; |
|--|---------|----------------------------------------------|

|  | ● | post-market approval studies; |
|--|---------|-------------------------------|

|  | ● | product import and export; and |
|--|---------|--------------------------------|

|  | ● | post-marketing surveillance, complaint handling, medical device reporting, reporting of deaths, serious injuries or device malfunctions and repair or recall of products. |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

|  | ● | product listing and establishment registration; |
|--|---------|-------------------------------------------------|

|  | ● | QSR, which requires manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all phases of the design and manufacturing process; |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | labeling regulations and FDA prohibitions against the promotion of products for uncleared, unapproved or off-label use or indication; |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | clearance or approval of product modifications that could significantly affect safety or efficacy or that would constitute a major change in intended use of one of our cleared devices; |
|--|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | post-approval restrictions or conditions, including post-approval study commitments; |
|--|---------|--------------------------------------------------------------------------------------|

|  | ● | post-market surveillance regulations, including MDR requirements, which require that we report to the FDA any incident in which our products may have caused or contributed to a death or serious injury or in which our product malfunctioned and, if the malfunction were to recur, would likely cause or contribute to death or serious injury; |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | the FDA's recall authority, whereby it can ask, or under certain conditions order, device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | notices of corrections or removals. |
|--|---------|-------------------------------------|

----

|  | ● | warning letters, untitled letters fines, injunctions, consent decrees and civil penalties; |
|--|---------|--------------------------------------------------------------------------------------------|

|  | ● | customer notifications or repair, replacement, refunds, recall, administrative detention or seizure of our products; |
|--|---------|----------------------------------------------------------------------------------------------------------------------|

|  | ● | operating restrictions or partial suspension or total shutdown of production; |
|--|---------|-------------------------------------------------------------------------------|

|  | ● | refusing or delaying requests for 510(k) marketing clearance or PMA approvals of new products or modified products; |
|--|---------|---------------------------------------------------------------------------------------------------------------------|

|  | ● | withdrawing 510(k) marketing clearances or PMA approvals that have already been granted; |
|--|---------|------------------------------------------------------------------------------------------|

|  | ● | refusal to grant export approval for our products; or |
|--|---------|-------------------------------------------------------|

|  | ● | criminal prosecution. |
|--|---------|-----------------------|

----

----

----

----

----

----

| C. | Organizational Structure |
|----|--------------------------|

----

| D. | Property, Plant and Equipment |
|----|-------------------------------|

| ITEM 4A. | UNRESOLVED STAFF COMMENTS |
|----------|---------------------------|

| ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
|---------|----------------------------------------------|

| A. | Operating Results |
|----|-------------------|

|  | ● | a significant increase of our installed base globally, with over 140 systems, including over 90 systems installed in the United States, as of December 31, 2016. During the year ended December 31, 2016, we received record orders for 62 systems, including in the United States, 30 Mazor X systems – of which, 15 systems were ordered by Medtronic, 17 Renaissance systems, and 4 Mazor X trade-in orders from customers that previously purchased Renaissance. In the international market we received orders for 11 systems from our distribution partners in Australia, China, Thailand, Italy and Germany. |
|--|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | ● | retain high utilization rates, as the annual average number of procedures for U.S. installed systems in use for more than 12 months was 80 procedures per system. |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | signing a Lead Sharing and Distribution Agreement and Share Purchase Agreement with Medtronic, following which we received a purchase order for 15 Mazor X Systems, as mentioned above. |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | issuing 1,958,684 ADRs (equivalent of 3,917,368 ordinary shares, NIS 0.01 par value) for total consideration of $31.9 million, as part of the Share Purchase Agreement with Medtronic. |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | commercially launching the Mazor X system on October 26, 2016 at the North American Spine Society (NASS) annual meeting. |
|--|---------|--------------------------------------------------------------------------------------------------------------------------|

----

|  | ● | sales to end customers - Upon the completion of installation of the system, training of at least one surgeon, which typically occurs prior to or concurrent with the system installation, and customer acceptance, if required. |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | sales to distributors - Upon delivery to the distributor, provided that the significant risks and rewards of ownership of the system are transferred to the distributor upon delivery, the distributor has no right of return, receipt of the consideration is probable and not dependent on the distributor's ability to collect from the end customer, the commitment to carry out installation and training for the end customer lies with the distributor and that the distributor has been authorized to perform the installation and training for the end customers. If the above conditions are not met, we recognize revenue at the time of fulfillment of the conditions for recognition of revenue from the end customer. |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | in sales to end customers - Upon delivery. |
|--|---------|--------------------------------------------|

|  | ● | in sales to distributors - Upon delivery to the distributor, provided that the significant risks and rewards of ownership of the components are transferred to the distributor upon delivery, the distributor has no right of return and that the receipt of the consideration is probable and not dependent on the distributor's ability to collect from the end customer. |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | it is probable that the delivery will be made; |
|--|---------|------------------------------------------------|

|  | ● | the item is on hand, identified and ready for delivery to the customer at the time the sale is recognized; |
|--|---------|------------------------------------------------------------------------------------------------------------|

|  | ● | the customer specifically acknowledges the deferred delivery instructions, and |
|--|---------|--------------------------------------------------------------------------------|

|  | ● | the usual payment terms apply. |
|--|---------|--------------------------------|

----

----

|                |   |  For the Year Ended December 31, |   |
|---------------------|--------|---------------------------------------|--------|
|                |   | 2016                                  |   |   | 2015 |   |
| United States       |   | $                                     | 30,716 |   |   | 84 | % |   | $ | 20,271 |   |   | 78 | % |
| International       |   | $                                     | 5,663  |   |   | 16 | % |   | $ | 5,825 |   |   | 22 | % |
| Total               |   | $                                     | 36,379 |   |   | 100 | % |   | $ | 26,096 |   |   | 100 | % |
|                |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|                |   |                                  | 2016   |   |   |   | 2015 |   |
| Systems             |   | $                                     | 19,624 |   |   | 54 | % |   | $ | 13,373 |   |   | 51 | % |
| Sale of disposables |   | $                                     | 10,295 |   |   | 28 | % |   | $ | 7,648 |   |   | 29 | % |
| Services and other  |   | $                                     | 6,460  |   |   | 18 | % |   | $ | 5,075 |   |   | 20 | % |
| Total               |   | $                                     | 36,379 |   |   | 100 | % |   | $ | 26,096 |   |   | 100 | % |

----

|                                |   | For the Year Ended December 31, |   |                         |   |   |
|-------------------------------------|--------|---------------------------------|--------|------------------------------|--------|--------|
|                                |   |                            |   | Increase (decrease)  in |   |
|                                |   | 2016                            |   |                         | 2015   |   |   | Dollars |   |   | % |   |
|                                |   | (in thousands)                  |   |                         |   |   |
| Research and development, net  |   | $                               | 5,736  |                         |   | $      | 6,324 |   |   |   | (588 | ) |   |   | (9 | ) |
| Selling and marketing          |   | $                               | 33,637 |                         |   | $      | 24,947 |   |   |   | 8,690 |   |   |   | 35 |   |
| General and administrative     |   | $                               | 5,697  |                         |   | $      | 4,305 |   |   |   | 1,392 |   |   |   | 32 |   |
| Total operating expenses       |   | $                               | 45,070 |                         |   | $      | 35,576 |   |   |   | 9,494 |   |   |   | 27 |   |

----

|                      |   | For the Year Ended December 31, |   |
|---------------------------|--------|---------------------------------|--------|
|                      |   |                            | 2015   |   |   |   | 2014 |   |
| United States        |   | $                               | 20,271 |   |   |   | 78 | % |   | $ | 15,486 |   |   |   | 73 | % |
| International        |   | $                               | 5,825  |   |   |   | 22 | % |   | $ | 5,722 |   |   |   | 27 | % |
| Total                |   | $                               | 26,096 |   |   |   | 100 | % |   | $ | 21,208 |   |   |   | 100 | % |
|                      |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                      |   |                            | 2015   |   |   |   | 2014 |   |
| Systems              |   | $                               | 13,373 |   |   |   | 51 | % |   | $ | 12,040 |   |   |   | 57 | % |
| Sale of disposables  |   | $                               | 7,648  |   |   |   | 29 | % |   | $ | 4,916 |   |   |   | 23 | % |
| Services and other   |   | $                               | 5,075  |   |   |   | 20 | % |   | $ | 4,252 |   |   |   | 20 | % |
| Total                |   | $                               | 26,096 |   |   |   | 100 | % |   | $ | 21,208 |   |   |   | 100 | % |

----

|                             |   | For the Year Ended December 31, |   |                   |   |   |   |    |   |
|----------------------------------|--------|---------------------------------|--------|------------------------|--------|--------|--------|---------|--------|
|                             |   |                            |   | Increase (decrease) in |   |
|                             |   | 2015                            |   |                   | 2014   |   |   | Dollars |   |   | % |   |
|                             |   | (in thousands)                  |   |                   |   |   |
| Research and development    |   | $                               | 6,324  |                   |   | $      | 5,776  |    |   |   | 548 |   |   |   | 9 |   |
| Selling and marketing       |   | $                               | 24,947 |                   |   | $      | 21,352 |    |   |   | 3,595 |   |   |   | 17 |   |
| General and administrative  |   | $                               | 4,305  |                   |   | $      | 4,392  |    |   |   | (87 | ) |   |   | (2 | ) |
| Total operating expenses    |   | $                               | 35,576 |                   |   | $      | 31,520 |    |   |   | 4,056 |   |   |   | 13 |   |

----

----

| B. | Liquidity and Capital Resources |
|----|---------------------------------|

----

|  | ● | our ability to manage our inventory; |
|--|---------|--------------------------------------|

----

|  | ● | the expenses we incur in selling and marketing our products and supporting our growth; |
|--|---------|----------------------------------------------------------------------------------------|

|  | ● | the costs and timing of regulatory clearance or approvals for new products or upgrades or changes to our current products; |
|--|---------|----------------------------------------------------------------------------------------------------------------------------|

|  | ● | the rate of progress, cost, and success or failure of on-going development activities; |
|--|---------|----------------------------------------------------------------------------------------|

|  | ● | the emergence of competing or complementary technological developments; |
|--|---------|-------------------------------------------------------------------------|

|  | ● | the costs of filing, prosecuting, defending and enforcing any patent or license claims and other intellectual property rights, or participating in litigation related activities; |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | the terms and timing of any collaborative, licensing, or other arrangements that we may establish; |
|--|---------|----------------------------------------------------------------------------------------------------|

|  | ● | the acquisition of businesses, products and technologies; and |
|--|---------|---------------------------------------------------------------|

| C. | Research and Development, Patents and Licenses, Etc. |
|----|------------------------------------------------------|

| D. | Trend Information |
|----|-------------------|

----

| E. | Off-Balance Sheet Arrangements |
|----|--------------------------------|

----

| F. | Tabular Disclosure of Contractual Obligations |
|----|-----------------------------------------------|

| (in thousands)                             |   | Payment Due by Period |   |
|--------------------------------------------|--------|-----------------------|--------|
|                                       |   | Total                 |   |   | Less than 1 year |   |   | 1-3 years |   |   | 3-5 years |   |   | more than 5 years |   |
| Contractual Obligations                    |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Premises leasing obligations          |   | $                     | 2,942  |   |   | $ | 903 |   |   | $ | 1,196 |   |   | $ | 843 |   |   | $ | - |   |
| Car leasing obligations               |   | $                     | 572    |   |   | $ | 282 |   |   | $ | 290 |   |   | $ | - |   |   | $ | - |   |
| Purchase commitments and obligations  |   | $                     | 5,590  |   |   | $ | 5,590 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Total                                 |   | $                     | 9,104  |   |   | $ | 6,775 |   |   | $ | 1,486 |   |   | $ | 843 |   |   | $ | - |   |

| ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
|---------|--------------------------------------------|

| A. | Directors and Senior Management |
|----|---------------------------------|

|                                                                                                         |   |   |   |                                                                 |
|--------------------------------------------------------------------------------------------------------------|--------|--------|--------|----------------------------------------------------------------------|
| Name                                                                                                         |   | Age    |   | Position                                                             |
|                                                                                                         |   |   |   |                                                                 |
| Jonathan Adereth                                                                                             |   | 70     |   | Chairman of the Board of Directors                                   |
|                                                                                                         |   |   |   |                                                                 |
| Ori Hadomi                                                                                                   |   | 49     |   | Director and Chief Executive Officer                                 |
|                                                                                                         |   |   |   |                                                                 |
| Gil Bianco                                                                                                   |   | 65     |   | External Director                                                    |
|                                                                                                         |   |   |   |                                                                 |
| Yuval Yanai                                                                                                  |   | 64     |   | External Director                                                    |
|                                                                                                         |   |   |   |                                                                 |
| Sarit Soccary Ben-Yochanan                                                                                   |   | 44     |   | Director                                                             |
|                                                                                                         |   |   |   |                                                                 |
| Michael Berman                                                                                               |   | 59     |   | Director                                                             |
|                                                                                                         |   |   |   |                                                                 |
| The following table lists the names, ages and positions of our senior management as of as of April 27, 2017: |
|                                                                                                         |   |   |   |                                                                 |
| Name                                                                                                         |   | Age    |   | Position                                                             |
|                                                                                                         |   |   |   |                                                                 |
| Sharon Levita                                                                                                |   | 49     |   | Chief Financial Officer, Corporate Secretary                         |
|                                                                                                         |   |   |   |                                                                 |
| Moshe Shoham                                                                                                 |   | 65     |   | Chief Technology Officer                                             |
|                                                                                                         |   |   |   |                                                                 |
| Eliyahu Zehavi                                                                                               |   | 62     |   | Executive Vice President, Research & Development            |
|                                                                                                         |   |   |   |                                                                 |
| Inbal Azar                                                                                                   |   | 46     |   | Vice President, Quality Assurance & Regulatory Affairs           |
|                                                                                                         |   |   |   |                                                                 |
| Doron Dinstein                                                                                               |   | 46     |   | Chief Medical Officer                                                |
|                                                                                                         |   |   |   |                                                                 |
| Anat Kaphan                                                                                                  |   | 47     |   | Vice President, Product                                              |
|                                                                                                         |   |   |   |                                                                 |
| Christopher Prentice                                                                                         |   | 46     |   | Chief Executive Officer, Mazor Robotics Inc. & Commercial Leader |

----

----

----

|                                               |   | Salary, director fees and related benefits |    |   | Share-based compensation |   |    | Total  |   |
|----------------------------------------------------|--------|--------------------------------------------|---------|--------|--------------------------|--------|---------|--------|--------|
| Directors                                          |   |                                       |    |   |                     |   |    |   |   |
|                                               |   |                                       |    |   |                     |   |    |   |   |
| Jonathan Adereth                              |   | $                                          | 117,124 |   |                     | $      | 81,801  |   |   | $ | 198,925 |   |
|                                               |   |                                       |    |   |                     |   |    |   |   |   |   |   |
| Compensation to directors not employed by us  |   | $                                          | 159,269 |   |                     | $      | 194,619 |   |   | $ | 353,888 |   |

----

|                       |   |                                |    |   |                    |   |    |                                |   |   |                      |   |   |   |    |
|----------------------------|--------|-------------------------------------|---------|--------|-------------------------|--------|---------|-------------------------------------|--------|--------|---------------------------|--------|--------|--------|---------|
|                       |   | Annual Compensation                 |    |
| Executive Officer          |   | Base Salary andRelated Benefits (1) |    |   |    Bonus |   |    | Retirementand OtherSimilar Benefits |   |   | Share Based Compensation* |   |   | Total  |    |
|                       |   |                                |    |   |                    |   |    |                                |   |   |                      |   |   |   |    |
| Ori Hadomi            |   | $                                   | 392,792 |   |                    | $      | 359,319 |                                |   | $      | 1,950                     |   |   | $      | 709,804 |   |   | $ | 1,463,865 |   |
|                       |   |                                |    |   |                    |   |    |                                |   |   |                      |   |   |   |    |   |   |   |   |   |
| Eliyahu Zehavi        |   | $                                   | 294,771 |   |                    | $      | 111,441 |                                |   | $      | 22,062                    |   |   | $      | 189,950 |   |   | $ | 618,224 |   |
|                       |   |                                |    |   |                    |   |    |                                |   |   |                      |   |   |   |    |   |   |   |   |   |
| Christopher Prentice  |   | $                                   | 298,788 |   |                    | $      | 75,500  |                                |   | $      | 10,600                    |   |   | $      | 222,133 |   |   | $ | 607,021 |   |
|                       |   |                                |    |   |                    |   |    |                                |   |   |                      |   |   |   |    |   |   |   |   |   |
| Sharon Levita         |   | $                                   | 287,077 |   |                    | $      | 109,358 |                                |   | $      | 12,682                    |   |   | $      | 189,950 |   |   | $ | 599,067 |   |
|                       |   |                                |    |   |                    |   |    |                                |   |   |                      |   |   |   |    |   |   |   |   |   |
| Anat Kaphan                |   | $                                   | 262,889 |   |                    | $      | 19,138  |                                |   | $      | 16,956                    |   |   | $      | 194,125 |   |   | $ | 493,108 |   |

----

----

|  | ● | the director holds an academic degree in one of these areas: economics, business administration, accounting, law or public administration; |
|--|---------|--------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | the director holds an academic degree or has other higher education, all in the main business sector of the company or in a relevant area for the board position; or |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | ● | the director has at least five years' experience in one or more of the following (or a combined five years' experience in at least two or more of these): (a) senior management position in a corporation of significant business scope; (b) senior public office or senior position in the public sector; or (c) senior position in the main business sector of the company. |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | accounting issues and accounting control issues characteristic to the segment in which the company operates and to companies of the size and complexity of the company; |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | the functions of the external auditor and the obligations imposed on such auditor; and |
|--|---------|----------------------------------------------------------------------------------------|

|  | ● | preparation of financial reports and their approval in accordance with the Companies Law and the securities law. |
|--|---------|------------------------------------------------------------------------------------------------------------------|

|  | ● | an employment relationship; |
|--|---------|-----------------------------|

|  | ● | a business or professional relationship maintained on a regular basis; |
|--|---------|------------------------------------------------------------------------|

|  | ● | control; and |
|--|---------|--------------|

|  | ● | service as an office holder, excluding service as a director of a private company prior to the first offering of its shares to the public if such director was appointed as a director of the private company in order to serve as an external director following the initial public offering. |
|--|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | ● | at least a majority of the shares held by shareholders who are not controlling shareholders and do not have personal interest in the appointment (excluding a personal interest that did not result from the shareholder's relationship with the controlling shareholder) have voted in favor of the proposal (shares held by abstaining shareholders shall not be considered); or |
|--|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | the total number of shares of such shareholders voted against the election of the external director does not exceed 2% of the aggregate voting rights of our company. |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i) | his or her service for each such additional term is recommended by one or more shareholders holding at least one percent of the company's voting rights and is approved at a shareholders meeting by a disinterested majority, where the total number of shares held by non-controlling, disinterested shareholders voting for such reelection exceeds two percent of the aggregate voting rights in the company and such external director is not an interested shareholder or a competitor or relative of such shareholder, at the time of appointment, and is not affiliated with or related to an interested shareholder or competitor, at the time of appointment or the two years prior to the date of appointment. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (ii) | his or her service for each such additional term is recommended by the board of directors and is approved at a shareholders meeting by the same disinterested majority required for the initial election of an external director (as described above).  |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iii) | the external director offered his or her service for each such additional term and was approved in accordance with the provisions of section (i) above. |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | information on the advisability of a given action brought for his approval or performed by him by virtue of his position; and |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------|

|  | ● | all other important information pertaining to these actions. |
|--|---------|--------------------------------------------------------------|

|  | ● | refrain from any conflict of interest between the performance of his duties in the company and his performance of his other duties or personal affairs; |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | refrain from any action that constitutes competition with the company's business; |
|--|---------|-----------------------------------------------------------------------------------|

|  | ● | refrain from exploiting any business opportunity of the company to receive a personal gain for himself or others; and |
|--|---------|-----------------------------------------------------------------------------------------------------------------------|

----

|  | ● | disclose to the company any information or documents relating to the company's affairs which the office holder has received due to his position as an office holder. |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | the office holder acts in good faith and the act or its approval does not cause harm to the company; and |
|--|---------|----------------------------------------------------------------------------------------------------------|

|  | ● | the office holder disclosed the nature of his or her interest in the transaction (including any significant fact or document) to the company at a reasonable time before the company's approval of such matter. |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | the office holder's relatives; or |
|--|---------|-----------------------------------|

|  | ● | any corporation in which the office holder or his or her relatives holds 5% or more of the shares or voting rights, serves as a director or general manager or has the right to appoint at least one director or the general manager. |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | not in the ordinary course of business; |
|--|---------|-----------------------------------------|

|  | ● | not on market terms; or |
|--|---------|-------------------------|

|  | ● | that is likely to have a material effect on the company's profitability, assets or liabilities. |
|--|---------|-------------------------------------------------------------------------------------------------|

----

|  | ● | at least a majority of the shares held by shareholders who have no personal interest in the transaction and are voting at the meeting must be voted in favor of approving the transaction, excluding abstentions; or |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | the shares voted by shareholders who have no personal interest in the transaction who vote against the transaction represent no more than 2% of the voting rights in the company. |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | amendment of the articles of association; |
|--|---------|-------------------------------------------|

|  | ● | increase in the company's authorized share capital; |
|--|---------|-----------------------------------------------------|

|  | ● | merger; and |
|--|---------|-------------|

|  | ● | the approval of related party transactions and acts of office holders that require shareholder approval. |
|--|---------|----------------------------------------------------------------------------------------------------------|

----

----

|  | · | determining whether there are deficiencies in the business management practices of our company, including in consultation with our internal auditor or the independent auditor, and making recommendations to the board of directors to improve such practices. If the audit committee determines that such a deficiency is material it shall hold at least one meeting concerning such deficiency in the presence of the internal auditor without the presence of office holders who are not members of the audit committee; |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | determining whether certain actions of office holders in breach of their fiduciary duties are material or not and whether certain transactions with office holders or in which office holders have a personal interest are extraordinary or ordinary for their approval under the Companies Law. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | determining whether transaction with controlling shareholders, even if they are not extraordinary, the duty to employ a competitive process concerning thereto, to be supervised by the audit committee or whoever it will appoint in accordance with criteria determined by it. The audit committee may determine such criteria one a year in advance for the whole year. |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | determining whether to approve certain related party transactions (including transactions in which an office holder has a personal interest and whether such transaction is extraordinary or material under Companies Law) (see "Approval of Related Party Transactions under Israeli law"); |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | determining the approval process of non-negligible transactions. For the matter "non-negligible transactions" shall mean transactions with controlling shareholders which the audit committee had defined as not extraordinary and not negligible. The audit committee may determine such criteria one a year in advance for the whole year. |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | where the board of directors approves the work plan of the internal auditor, to examine such working plan before its submission to the board of directors and proposing amendments thereto; |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | examining our internal controls and internal auditor's performance, including whether the internal auditor has sufficient resources and tools to dispose of its responsibilities; |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | examining the scope of our auditor's work and compensation and submitting a recommendation with respect thereto to our board of directors or shareholders, depending on which of them is considering the appointment of our auditor; and |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | establishing procedures for the handling of employees' complaints as to the management of our business and the protection to be provided to such employees. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|  | ● | the knowledge, skills, expertise and accomplishments of the relevant director or executive; |
|--|---------|---------------------------------------------------------------------------------------------|

|  | ● | the director's or executive's roles and responsibilities and prior compensation agreements with him or her; |
|--|---------|-------------------------------------------------------------------------------------------------------------|

|  | ● | the relationship between the terms offered and the average and median compensation of the other employees of the company, including those employed through manpower companies; |
|--|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | the impact of disparities in salary upon work relationships in the company; |
|--|---------|-----------------------------------------------------------------------------|

|  | ● | the possibility of reducing variable compensation at the discretion of the board of directors; and the possibility of setting a limit on the exercise value of non-cash variable compensation; and |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | as to severance compensation, the period of service of the director or executive, the terms of his or her compensation during such service period, the company's performance during that period of service, the person's contribution towards the company's achievement of its goals and the maximization of its profits, and the circumstances under which the person is leaving the company. |
|--|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | the link between variable compensation and long-term performance and measurable criteria; |
|--|---------|-------------------------------------------------------------------------------------------|

|  | ● | the relationship between variable and fixed compensation, and the ceiling for the value of variable compensation; |
|--|---------|-------------------------------------------------------------------------------------------------------------------|

|  | ● | the conditions under which a director or executive would be required to repay compensation paid to him or her if it was later shown that the data upon which such compensation was based was inaccurate and was required to be restated in the company's financial statements; |
|--|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | the minimum holding or vesting period for variable, equity-based compensation; and |
|--|---------|------------------------------------------------------------------------------------|

|  | ● | maximum limits for severance compensation. |
|--|---------|--------------------------------------------|

----

|  | ● | recommending whether a compensation policy should continue in effect, if the then-current policy has a term of greater than three years (approval of either a new compensation policy or the continuation of an existing compensation policy must in any case occur every three years); |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | recommending to the board of directors periodic updates to the compensation policy; |
|--|---------|-------------------------------------------------------------------------------------|

|  | ● | assessing implementation of the compensation policy; and |
|--|---------|----------------------------------------------------------|

|  | ● | determining whether the compensation terms of the chief executive officer of the company need not be brought to approval of the shareholders. |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | a breach of his or her duty of care to the company or to another person; |
|--|---------|--------------------------------------------------------------------------|

|  | ● | a breach of his or her duty of loyalty to the company, provided that the office holder acted in good faith and had reasonable cause to assume that his or her act would not prejudice the company's interests; and |
|--|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | a financial liability imposed upon him or her in favor of another person concerning an act performed by such office holder in his or her capacity as an officer holder. |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | ● | a financial liability imposed on him or her in favor of another person by any judgment concerning an act performed in his or her capacity as an office holder; |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | reasonable litigation expenses, including attorneys' fe/es, expended by the office holder or charged to him or her by a court relating to an act performed in his or her capacity as an office holder, in connection with: (1) proceedings that the company institutes, or that another person institutes on the company's behalf, against him or her; (2) a criminal charge of which he or she was acquitted; or (3) a criminal charge for which he or she was convicted for a criminal offense that does not require proof of criminal thought; and |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | reasonable litigation expenses, including attorneys' fees, expended by the office holder as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (1) no indictment (as defined in the Companies Law) was filed against such office holder as a result of such investigation or proceeding; and (2) no financial liability as a substitute for the criminal proceeding (as defined in the Companies Law) was imposed upon him or her as a result of such investigation or proceeding, or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent. |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | to categories of events that the board of directors determines are likely to occur in light of the operations of the company at the time that the undertaking to indemnify is made; and |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | in amount or criterion determined by the board of directors, at the time of the giving of such undertaking to indemnify, to be reasonable under the circumstances. |
|--|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| D. | Employees. |
|----|------------|

|                                         |   |               |   |   |   |   |   |   |   |
|----------------------------------------------|--------|--------------------|--------|--------|--------|--------|--------|--------|--------|
|                                         |   | As of December 31, |   |
|                                         |   | 2016               |   |   | 2015   |   |   | 2014   |   |
| Numbers of employees by category of activity |   |               |   |   |   |   |   |   |   |
| Management and administrative           |   |               | 28     |   |   |   | 24     |   |   |   | 21 |   |
| Research and development                |   |               | 37     |   |   |   | 27     |   |   |   | 26 |   |
| Operations                              |   |               | 21     |   |   |   | 17     |   |   |   | 16 |   |
| Sales and marketing                     |   |               | 118    |   |   |   | 86     |   |   |   | 79 |   |
| Total workforce                         |   |               | 204    |   |   |   | 154    |   |   |   | 142 |   |
| Numbers of employees by geographic location  |   |               |   |   |   |   |   |   |   |   |   |   |
| Israel                                  |   |               | 91     |   |   |   | 74     |   |   |   | 67 |   |
| United States                                |   |               | 112    |   |   |   | 79     |   |   |   | 74 |   |
| Other                                   |   |               | 1      |   |   |   | 1      |   |   |   | 1 |   |
| Total workforce                         |   |               | 204    |   |   |   | 154    |   |   |   | 142 |   |

----

|                                                               |   | Number ofOrdinarySharesBeneficiallyOwned(1) |      |   | Percent ofClass(2) |   |
|--------------------------------------------------------------------|--------|---------------------------------------------|-----------|--------|--------------------|--------|
|                                                               |   |                                        |      |   |               |   |
| Directors                                                          |   |                                        |      |   |               |   |
|                                                               |   |                                        |      |   |               |   |
| Jonathan Adereth (3)                                          |   |                                        | 80,000    |   |               |   | * |   |
|                                                               |   |                                        |      |   |               |   |   |   |
| Ori Hadomi (4)                                                |   |                                        | 103,125   |   |               |   | * |   |
|                                                               |   |                                        |      |   |               |   |   |   |
| Gil Bianco (5)                                                |   |                                        | 36,700    |   |               |   | * |   |
|                                                               |   |                                        |      |   |               |   |   |   |
| Yuval Yanai (6)                                               |   |                                        | -         |   |               |   | - |   |
|                                                               |   |                                        |      |   |               |   |   |   |
| Sarit Soccary Ben-Yochanan (7)                                |   |                                        | 9,900     |   |               |   | * |   |
|                                                               |   |                                        |      |   |               |   |   |   |
| Michael Berman (8)                                            |   |                                        | 44,700    |   |               |   | * |   |
|                                                               |   |                                        |      |   |               |   |   |   |
| Executive Officers                                                 |   |                                        |      |   |               |   |   |   |
|                                                               |   |                                        |      |   |               |   |   |   |
| Sharon Levita (9)                                             |   |                                        | 44,557    |   |               |   | * |   |
|                                                               |   |                                        |      |   |               |   |   |   |
| Moshe Shoham (10)                                             |   |                                        | 410,037   |   |               |   | * |   |
|                                                               |   |                                        |      |   |               |   |   |   |
| Eliyahu Zehavi (11)                                           |   |                                        | 65,725    |   |               |   | * |   |
|                                                               |   |                                        |      |   |               |   |   |   |
| Doron Dinstein (12)                                           |   |                                        | 137,013   |   |               |   | * |   |
|                                                               |   |                                        |      |   |               |   |   |   |
| Christopher Prentice (13)                                     |   |                                        | 188,473   |   |               |   | * |   |
|                                                               |   |                                        |      |   |               |   |   |   |
| Anat Kaphan (14)                                                   |   |                                        | -         |   |               |   | - |   |
|                                                               |   |                                        |      |   |               |   |   |   |
| Inbal Azar (15)                                               |   |                                        | -         |   |               |   | - |   |
|                                                               |   |                                        |      |   |               |   |   |   |
| All directors and executive officers as a group (13 persons)  |   |                                        | 1,120,500 |   |               |   | 2.30 | % |

|   |   |
|--------|--------|

|  |  * | Less than 1%. |
|--|---------|---------------|

|  | (1) | Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Ordinary shares relating to options currently exercisable or exercisable within 60 days of the date of this table are deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage of any other person. Except as indicated by footnote, and subject to community property laws where applicable, the persons named in the table above have sole voting and investment power with respect to all shares shown as beneficially owned by them. |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (2) | The percentages shown are based on 48,092,933 ordinary shares issued and outstanding as of April 27, 2017 plus ordinary shares relating to options currently exercisable or exercisable within 60 days of the date of this table, which are deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage of any other person. |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | (3) | Consists of 80,000 ordinary shares issuable upon exercise of outstanding options within 60 days of April 27, 2017. The exercise price of these options is NIS 32.46 ($8.12) per share, and the options expire in November 2020. Does not include 80,000 ordinary shares issuable upon exercise of outstanding options that are not exercisable within 60 days of April 27, 2017. The exercise price of these options is NIS 45.17 ($11.29) and the options expire in October 2023. |
|--|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (4) | Consists of 103,125 ordinary shares issuable upon exercise of outstanding options within 60 days of April 27, 2017. The exercise price of these options is NIS 26.62 ($6.66) per share. These options expire in July 2021. Does not include 493,449 ordinary shares issuable upon exercise of outstanding options that are not exercisable within 60 days of April 27, 2017. The exercise price of these options ranges between NIS 22.23 ($5.56) and NIS 26.99 ($6.75) per share, and the options expire between July 2021 and May 2023. |
|--|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (5) | Consists of 36,700 ordinary shares issuable upon exercise of outstanding options within 60 days of April 27, 2017. The exercise price of these options is NIS 27.67 ($6.92) and the options expire in July 2021. Does not include 43,300 ordinary shares issuable upon exercise of outstanding options that are not exercisable within 60 days of April 27, 2017. The exercise price of these options ranges between NIS 27.67 ($6.92) and NIS 45.17 ($11.29) per share, and the options expire between July 2021 and October 2023. |
|--|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  |  (6) | Does not include 40,000 ordinary shares issuable upon exercise of outstanding options that are not exercisable within 60 days of April 27, 2017. The exercise price of these options is NIS 45.17 ($11.29) and expire in November 2023. |
|--|-----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (7) | Consists of 9,900 ordinary shares issuable upon exercise of outstanding options within 60 days of April 27, 2017. The exercise price of these options is NIS 27.67 ($6.92) and the options expire in July 2021. Does not include 43,300 ordinary shares issuable upon exercise of outstanding options that are not exercisable within 60 days of April 27, 2017. The exercise price of these options ranges between NIS 27.67 ($6.92) and NIS 45.17 ($11.29) per share, and the options expire between July 2021 and October 2023. |
|--|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (8) | Includes 8,000 shares and 36,700 ordinary shares issuable upon exercise of outstanding options within 60 days of April 27, 2017. The exercise price of these options is NIS 27.67 ($6.92) and the options expire in July 2021. Does not include 43,300 ordinary shares issuable upon exercise of outstanding options that are not exercisable within 60 days of April 27, 2017. The exercise price of these options ranges between NIS 27.67 ($6.92) and NIS 45.17 ($11.29) per share, and the options expire between July 2021 and October 2023. |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (9) | Includes 26,632 shares and 17,925 ordinary shares issuable upon exercise of outstanding options within 60 days of April 27, 2017. The exercise price of these options is NIS 26.62 ($6.66) and the options expire in July 2021. Does not include 158,720 ordinary shares issuable upon exercise of outstanding options that are not exercisable within 60 days of April 27, 2017. The exercise price of these options ranges between NIS 22.23 ($5.56) and NIS 26.99 ($6.75) and the options expire between July 2021 and May 2023. |
|--|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (10) | Includes 367,206 shares and 42,831 ordinary shares issuable upon exercise of outstanding options within 60 days of April 27, 2017. The exercise price of these options is NIS 26.62 ($6.66) and the options expire in July 2021. Does not include 84,469 ordinary shares issuable upon exercise of outstanding options that are not exercisable within 60 days of April 27, 2017. The exercise price of these options ranges between NIS 22.23 ($5.56) and NIS 26.99 ($6.75) and the options expire between July 2021 and May 2023. |
|--|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (11) | Includes 65,725 ordinary shares issuable upon exercise of outstanding options within 60 days of April 27, 2017. The exercise price of these options is NIS 26.62 ($6.66) and the options expire in July 2021. Does not include 158,720 ordinary shares issuable upon exercise of outstanding options that are not exercisable within 60 days of April 27, 2017. The exercise price of these options ranges between NIS 22.23 ($5.56) and NIS 26.99 ($6.75) and the options expire between July 2021 and May 2023. |
|--|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (12) | Includes 137,013 ordinary shares issuable upon exercise of outstanding options within 60 days of April 27, 2017, these options have an exercise price that ranges between NIS 8.29 ($2.07) and 26.62 NIS ($6.66) per share. These options expire between December 2017 and July 2021. Does not include 130,100 ordinary shares issuable upon exercise of outstanding options that are not exercisable within 60 days of April 27, 2017. The exercise price of these options ranges between NIS 22.23 ($5.56) and NIS 26.99 ($6.75) and the options expire between July 2021 and May 2023. |
|--|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (13) | Consists of 2,900 shares and 185,843 ordinary shares issuable upon exercise of outstanding options within 60 days of April 27, 2017. The exercise price of these options ranges between NIS 4.521 ($1.13) and NIS 26.86 ($6.72) per share, and the options expire between August 2019 and February 2022. Does not include 147,567 ordinary shares issuable upon exercise of outstanding options that are not exercisable within 60 days of April 27, 2017. The exercise price of these options ranges between NIS 22.23 ($5.56) and NIS 26.99 ($6.75) per share, and the options expire between July 2021 and May 2023.  |
|--|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (14) | Does not include 175,000 ordinary shares issuable upon exercise of outstanding options that are not exercisable within 60 days of April 27, 2017. The exercise price of these options ranges between NIS 22.23 ($5.56) and NIS 26.99 ($6.75) and expire between July 2022 and May 2023. |
|--|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (15) | Does not include 30,000 ordinary shares issuable upon exercise of outstanding options that are not exercisable within 60 days of April 27, 2017. The exercise price of these options is NIS 37.47 ($9.37) and expire in July 2023. |
|--|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| Plan            |   | TotalOrdinarySharesReservedfor Option Grants |       |   | AggregateNumber ofOptions Exercised |   |      | SharesAvailablefor Future Grants |   |   | AggregateNumber ofOptions Outstanding |   |   | WeightedAverageExercisePrice of Options |      |
|-----------------|--------|----------------------------------------------|------------|--------|-------------------------------------|--------|-----------|----------------------------------|--------|--------|---------------------------------------|--------|--------|-----------------------------------------|-----------|
|            |   |                                         |       |   |                                |   |      |                             |   |   |                                  |   |   |                                    |      |
| 2003 plan  |   |                                         | 3,000,000  |   |                                |   | 1,834,961 |                             |   |   | —                               |   |   |                                    | 78,500    |   |   | $ | 2.04 |   |
| 2011 plan  |   |                                         | 9,262,529  |   |                                |   | 1,610,101 |                             |   |   | 1,062,487                             |   |   |                                    | 6,589,941 |   |   | $ | 6.50 |   |
|            |   |                                         | 12,262,529 |   |                                |   | 3,445,062 |                             |   |   | 1,062,487                             |   |   |                                    | 6,668,441 |   |   | $ | 6.45 |   |

| A. | Major Shareholders |
|----|--------------------|

| Name                                                    |   | Number ofOrdinarySharesBeneficiallyOwned(1) |      |   | Percent of Class(2) |   |
|---------------------------------------------------------|--------|---------------------------------------------|-----------|--------|---------------------|--------|
| Larry Feinberg (3)                                 |   |                                        | 4,942,756 |   |                |   | 10.28 | % |
|                                                    |   |                                        |      |   |                |   |   |   |
| Jack Schuler (4)                                   |   |                                        | 2,811,615 |   |                |   | 5.85 | % |
|                                                    |   |                                        |      |   |                |   |   |   |
| Migdal Insurance & Financial Holdings LTD (5)  |   |                                        | 2,996,893 |   |                |   | 6.23 | % |
|                                                    |   |                                        |      |   |                |   |   |   |
| Medtronic plc (6)                                  |   |                                        | 3,917,368 |   |                |   | 8.15 | % |

----

| (1) | Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Ordinary shares relating to options currently exercisable or exercisable within 60 days of the date of this table are deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage of any other person. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2) | The percentages shown are based on 48,092,933 ordinary shares issued and outstanding as of April 27, 2017. |
|----|------------------------------------------------------------------------------------------------------------|

| (3) | Based solely on a Schedule 13D/A filed with the SEC on April 25, 2017, and which reflects holdings as of April 20, 2017. Mr. Feinberg may be deemed to beneficially own 4,942,756 ordinary shares due to his relationship with Oracle Associates, LLC, Oracle Partners, LP, Oracle Institutional Partners, LP, Oracle Ten Master, LP, Oracle Investment Management, Inc., Oracle Investment Management, Inc. Employees’ Retirement Plan and The Feinberg Family Foundation. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (4) | Based solely on data held by the Company at the date of issuing Mr. Schuler ordinary shares. |
|-----|----------------------------------------------------------------------------------------------|

| (5) | Based solely on a Schedule 13G filed with the SEC on January 26, 2017, and which reflects holdings as of December 31, 2016. |
|-----|-----------------------------------------------------------------------------------------------------------------------------|

| (6) | Based solely on a Schedule 13G filed with the SEC on August 22, 2016, and which reflects holdings as of August 11, 2016. |
|-----|--------------------------------------------------------------------------------------------------------------------------|

| B. | Related Party Transactions |
|----|----------------------------|

| C. | Interests of Experts and Counsel |
|----|----------------------------------|

| A. | Consolidated Statements and Other Financial Information. |
|----|----------------------------------------------------------|

----

|                                    |   |                            |   |   |   |   |   |   |   |
|-----------------------------------------|--------|---------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                    |   | For the year ended December 31, |   |
|                                    |   | 2016                            |   |   | 2015   |   |   | 2014   |   |
| Total export sales*                |   | $                               | 36,165 |   |   | $      | 25,859 |   |   | $ | 20,766 |   |
| as a percentage of total revenues  |   |                            | 99     | %      |   |   | 99     | %      |   |   | 98 | % |

| B. | Significant Changes |
|----|---------------------|

----

| A. | Offer and Listing Details |
|----|---------------------------|

|                                         |   | NISPrice PerOrdinaryShare High |   |   | Low    |   |   | U.S.$Price PerOrdinaryShare High |   |   | Low    |   |
|----------------------------------------------|--------|--------------------------------|--------|--------|--------|--------|--------|----------------------------------|--------|--------|--------|--------|
|                                         |   |                           |   |   |   |   |   |                             |   |   |   |   |
| Annual:                                      |   |                           |   |   |   |   |   |                             |   |   |   |   |
|                                         |   |                           |   |   |   |   |   |                             |   |   |   |   |
| 2017 (through April 26, 2017)           |   |                           | 66.49  |   |   |   | 40.07  |                             |   |   | 18.06  |   |   |   | 10.59 |   |
| 2016                                    |   |                           | 46.42  |   |   |   | 16.88  |                             |   |   | 12.26  |   |   |   | 4.34 |   |
| 2015                                    |   |                           | 28.21  |   |   |   | 16.40  |                             |   |   | 7.38   |   |   |   | 4.25 |   |
| 2014                                    |   |                           | 44.92  |   |   |   | 18.66  |                             |   |   | 12.87  |   |   |   | 4.83 |   |
| 2013                                    |   |                           | 40.10  |   |   |   | 8.28   |                             |   |   | 11.26  |   |   |   | 2.21 |   |
| 2012                                    |   |                           | 9.00   |   |   |   | 3.46   |                             |   |   | 2.38   |   |   |   | 0.88 |   |
|                                         |   |                           |   |   |   |   |   |                             |   |   |   |   |   |   |   |   |
| Quarterly:                                   |   |                           |   |   |   |   |   |                             |   |   |   |   |   |   |   |   |
|                                         |   |                           |   |   |   |   |   |                             |   |   |   |   |   |   |   |   |
| Second Quarter 2017 (through April 26, 2017) |   |                           | 66.49  |   |   |   | 51.15  |                             |   |   | 18.06  |   |   |   | 14.02 |   |
| First Quarter 2017                           |   |                           | 53.49  |   |   |   | 40.07  |                             |   |   | 14.80  |   |   |   | 10.59 |   |
| Fourth Quarter 2016                     |   |                           | 46.42  |   |   |   | 39.50  |                             |   |   | 12.24  |   |   |   | 10.28 |   |
| Third Quarter 2016                      |   |                           | 46.08  |   |   |   | 35.48  |                             |   |   | 12.26  |   |   |   | 9.23 |   |
| Second Quarter 2016                     |   |                           | 35.91  |   |   |   | 20.08  |                             |   |   | 9.31   |   |   |   | 5.33 |   |
| First Quarter 2016                      |   |                           | 23.14  |   |   |   | 16.88  |                             |   |   | 6.05   |   |   |   | 4.34 |   |
| Fourth Quarter 2015                     |   |                           | 23.80  |   |   |   | 16.40  |                             |   |   | 6.17   |   |   |   | 4.25 |   |
| Third Quarter 2015                      |   |                           | 28.21  |   |   |   | 21.30  |                             |   |   | 7.38   |   |   |   | 5.43 |   |
| Second Quarter 2015                     |   |                           | 26.99  |   |   |   | 21.67  |                             |   |   | 7.16   |   |   |   | 5.50 |   |
| First Quarter 2015                      |   |                           | 25.48  |   |   |   | 20.06  |                             |   |   | 6.40   |   |   |   | 5.06 |   |
|                                         |   |                           |   |   |   |   |   |                             |   |   |   |   |   |   |   |   |
| Most Recent Six Months:                      |   |                           |   |   |   |   |   |                             |   |   |   |   |   |   |   |   |
|                                         |   |                           | 66.49  |   |   |   | 51.15  |                             |   |   | 18.06  |   |   |   | 14.02 |   |
| April 2017 (through April 26, 2017)          |   |                           | 53.49  |   |   |   | 41.32  |                             |   |   | 14.80  |   |   |   | 11.29 |   |
| March 2017                                   |   |                           | 44.50  |   |   |   | 43.01  |                             |   |   | 12.07  |   |   |   | 11.70 |   |
| February 2017                           |   |                           | 43.58  |   |   |   | 40.76  |                             |   |   | 11.63  |   |   |   | 10.88 |   |
| January 2017                            |   |                           | 47.18  |   |   |   | 40.07  |                             |   |   | 12.25  |   |   |   | 10.59 |   |
| December 2016                           |   |                           | 44.80  |   |   |   | 40.35  |                             |   |   | 11.69  |   |   |   | 10.46 |   |
| November 2016                           |   |                           | 45.10  |   |   |   | 39.50  |                             |   |   | 11.75  |   |   |   | 10.28 |   |
| October 2016                            |   |                           | 46.42  |   |   |   | 42.58  |                             |   |   | 12.24  |   |   |   | 11.22 |   |

----

|                                               |   |                |   |   |   |   |
|----------------------------------------------------|--------|---------------------|--------|--------|--------|--------|
|                                               |   | U.S.$Price Per ADSs |   |
|                                               |   | High                |   |   | Low    |   |
|                                               |   |                |   |   |   |   |
| Annual:                                            |   |                |   |   |   |   |
| 2017 (through April 26, 2017)                 |   |                | 35.68  |   |   |   | 20.83 |   |
| 2016                                          |   |                | 25.89  |   |   |   | 8.79 |   |
| 2015                                          |   |                | 14.90  |   |   |   | 8.86 |   |
| 2014                                          |   |                | 25.34  |   |   |   | 9.90 |   |
| 2013 (since May 28, 2013)                     |   |                | 21.85  |   |   |   | 10.40 |   |
|                                               |   |                |   |   |   |   |   |   |
| Quarterly:                                         |   |                |   |   |   |   |   |   |
| Second Quarter 2017 (through April 26, 2017)  |   |                | 35.68  |   |   |   | 27.82 |   |
| First Quarter 2017                            |   |                | 29.87  |   |   |   | 20.83 |   |
| Fourth Quarter 2016                           |   |                | 25.89  |   |   |   | 20.34 |   |
| Third Quarter 2016                            |   |                | 25.87  |   |   |   | 18.32 |   |
| Second Quarter 2016                           |   |                | 19.14  |   |   |   | 10.10 |   |
| First Quarter 2016                            |   |                | 11.42  |   |   |   | 8.79 |   |
| Fourth Quarter 2015                           |   |                | 12.08  |   |   |   | 8.86 |   |
| Third Quarter 2015                            |   |                | 14.90  |   |   |   | 10.66 |   |
| Second Quarter 2015                           |   |                | 14.72  |   |   |   | 11.23 |   |
| First Quarter 2015                                 |   |                | 12.74  |   |   |   | 10.16 |   |
|                                               |   |                |   |   |   |   |   |   |
| Most Recent Six Months:                            |   |                |   |   |   |   |   |   |
| April 2017 (through April 26, 2017)           |   |                | 35.68  |   |   |   | 27.82 |   |
| March 2017                                    |   |                | 29.87  |   |   |   | 22.47 |   |
| February 2017                                 |   |                | 23.69  |   |   |   | 21.52 |   |
| January 2017                                  |   |                | 24.59  |   |   |   | 20.83 |   |
| December 2016                                 |   |                | 23.26  |   |   |   | 20.72 |   |
| November 2016                                 |   |                | 23.44  |   |   |   | 20.34 |   |
| October 2016                                       |   |                | 25.89  |   |   |   | 21.83 |   |

----

|  | · | Marketing activities – Medtronic is committed to actively marketing the Mazor X system. Mazor and Medtronic are working on joint efforts to create market awareness of the Mazor X System. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Sales Activities – In the first phase of the agreement, Medtronic's sales team is responsible for generating awareness for and interest in the Mazor X System for Spine applications. This involves bringing surgeons to labs and generating qualified leads, before providing the leads to Mazor's capital sales team to close the sales. If triggered, in the second phase of the agreement Medtronic would assume responsibility for global distribution of the Mazor X System for spine applications. |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Co-development activities – Mazor and Medtronic will co-develop synergistic products and applications for spine surgery. This activity has already commenced. |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Revenue sharing – Mazor will pay a lead sharing fee to Medtronic for Qualified leads Medtronic delivers to Mazor. Medtronic will pay a synergy fee to Mazor for every case where a Mazor X system is used in association with Medtronic implants. Under certain circumstances, Medtronic will pay a synergy fee to Mazor regarding Renaissance usage with Medtronic implants. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

----

|                                   |   |                                        |   |
|----------------------------------------|--------|---------------------------------------------|--------|
| Manufacturing Volume Outside of Israel |   | Royalties tothe IIA as aPercentage of Grant |   |
|                                   |   |                                        |   |
| Up to 50%                         |   |                                        | 120    | % |
| between 50% and 90%               |   |                                        | 150    | % |
| 90% and more                      |   |                                        | 300    | % |

----

----

|  | ● | amortization of purchases of know-how and patents over an eight-year period for tax purposes; |
|--|---------|-----------------------------------------------------------------------------------------------|

|  | ● | deductions over a three-year period of expenses involved with the issuance and listing of shares on a stock market; and |
|--|---------|-------------------------------------------------------------------------------------------------------------------------|

|  | ● | the right to elect, under specified conditions, to file a consolidated tax return with additional related Israeli Industrial Companies. |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

|  | ● | 75% or more of our gross income (including our pro rata share of gross income for any company, in which we are considered to own 25% or more of the shares by value), in a taxable year is passive; or |
|--|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | At least 50% of our assets, averaged over the year and generally determined based upon fair market value (including our pro rata share of the assets of any company in which we are considered to own 25% or more of the shares by value) are held for the production of, or produce, passive income. |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| F. | Dividends and Paying Agents |
|----|-----------------------------|

|  | Not applicable. |
|--|-----------------|

| G. | Statement by Experts |
|----|----------------------|

----

| H. | Documents on Display |
|----|----------------------|

| I. | Subsidiary Information. |
|----|-------------------------|

| ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
|----------|------------------------------------------------------------|

----

|                   |   | Position as ofDecember31, 2016 |   |
|------------------------|--------|--------------------------------|--------|
|                   |   | (U.S. $ in thousands)          |   |
| Current Assets:        |   |                           |   |
| Shekels           |   |                           | 3,593  |   |
| Euros             |   |                           | 927    |   |
| Total             |   |                           | 4,520  |   |
|                   |   |                           |   |   |
| Long term Assets:      |   |                           |   |   |
| Shekels           |   |                           | 93     |   |
| Total             |   |                           | 93     |   |
|                   |   |                           |   |   |
| Current Liabilities:   |   |                           |   |   |
| Shekels           |   |                           | 4,291  |   |
| Euros             |   |                           | 157    |   |
| Total             |   |                           | 4,448  |   |
|                   |   |                           |   |   |
| Long term Liabilities: |   |                           |   |   |
| Shekels           |   |                           | -      |   |
| Total             |   |                           | -      |   |

----

| A. | Debt Securities. |
|----|------------------|

| B. | Warrants and rights. |
|----|----------------------|

| C. | Other Securities. |
|----|-------------------|

| D. | American Depositary Shares |
|----|----------------------------|

|                                                                                                                                                                                        |   |    |                                                                                                                                              |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------|
| Persons depositing or withdrawing shares or ADS holders must pay:                                                                                                                           |   | For:    |                                                                                                                                              |
|                                                                                                                                                                                        |   |    |                                                                                                                                              |
| $5.00 (or less) per 100 ADSs (or portion of 100 ADSs).                                                                                                                                      |   | ● | Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property.                                        |
|                                                                                                                                                                                        |   |    |                                                                                                                                              |
|                                                                                                                                                                                        |   | ● | Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates.                                                |
|                                                                                                                                                                                        |   |    |                                                                                                                                              |
| $.05 (or less) per ADS.                                                                                                                                                                     |   | ● | Any cash distribution to ADS holders.                                                                                                             |
|                                                                                                                                                                                        |   |    |                                                                                                                                              |
| A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of ADSs.                                  |   | ● | Distribution of securities distributed to holders of deposited securities which are distributed by the depositary to ADS holders.                 |
|                                                                                                                                                                                        |   |    |                                                                                                                                              |
| $.05 (or less) per ADSs per calendar year.                                                                                                                                                  |   | ● | Depositary services.                                                                                                                              |
|                                                                                                                                                                                        |   |    |                                                                                                                                              |
| Registration or transfer fees.                                                                                                                                                              |   | ● | Transfer and registration of shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw shares. |
|                                                                                                                                                                                        |   |    |                                                                                                                                              |
| Expenses of the depositary.                                                                                                                                                                 |   | ● | Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement).                                                      |
|                                                                                                                                                                                        |   |    |                                                                                                                                              |
|                                                                                                                                                                                        |   | ● | Converting foreign currency to U.S. dollars.                                                                                                      |
|                                                                                                                                                                                        |   |    |                                                                                                                                              |
| Taxes and other governmental charges the depositary or the custodian have to pay on any ADS or share underlying an ADS, for example, stock transfer taxes, stamp duty or withholding taxes. |   | ● | As necessary.                                                                                                                                     |
|                                                                                                                                                                                        |   |    |                                                                                                                                              |
| Any charges incurred by the depositary or its agents for servicing the deposited securities.                                                                                                |   | ● | As necessary.                                                                                                                                     |

----

| ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
|----------|-------------------------------------------------|

| ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
|----------|------------------------------------------------------------------------------|

| ITEM 15. | CONTROLS AND PROCEDURES |
|----------|-------------------------|

| (a) | Evaluation of Disclosure Controls and Procedures |
|-----|--------------------------------------------------|

| (b) | Management's Annual Report on Internal Control over Financial Reporting |
|-----|-------------------------------------------------------------------------|

----

| (c) | Attestation Report of the Registered Public Accounting Firm |
|-----|-------------------------------------------------------------|

| (d) | Changes in Internal Control over Financial Reporting |
|-----|------------------------------------------------------|

| (e) | Limitations on Effectiveness of Controls and Procedures |
|-----|---------------------------------------------------------|

| ITEM 16A. | AUDIT COMMITTEE FINANCIAL EXPERT |
|-----------|----------------------------------|

| ITEM 16B. | CODE OF ETHICS |
|-----------|----------------|

| ITEM 16C. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
|-----------|----------------------------------------|

|                 |   |           |   |   |   |   |
|----------------------|--------|----------------|--------|--------|--------|--------|
|                 |   | 2016           |   |   | 2015   |   |
|                 |   | (In Thousands) |   |
|                 |   |           |   |
| Audit Fees (1)  |   | $              | 171    |   |   | $      | 176 |   |
| Audit-Related Fees   |   | $              | -      |   |   | $      | - |   |
| Tax Fees (2)         |   | $              | 14     |   |   | $      | 13 |   |
| All Other Fees       |   | $              | 10     |   |   | $      | - |   |
| Total           |   | $              | 195    |   |   | $      | 189 |   |

| (1) | Includes audit fee for registration statements and related prospectuses. |
|-----|--------------------------------------------------------------------------|

| (2) | Includes fees for professional services rendered by our auditors for tax compliance and tax advice on actual or contemplated transactions. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------|

----

| ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
|-----------|------------------------------------------------------------|

| ITEM 16E. | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
|-----------|------------------------------------------------------------------------|

| ITEM 16F. | CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT |
|-----------|----------------------------------------------|

| ITEM 16G. | CORPORATE GOVERNANCE |
|-----------|----------------------|

|  | ● | Distribution of periodic reports to shareholders; proxy solicitation. As opposed to the Listing Rules of the NASDAQ Stock Market, which require listed issuers to make such reports available to shareholders in one of a number of specific manners, Israeli law does not require us to distribute periodic reports directly to shareholders, and the generally accepted business practice in Israel is not to distribute such reports to shareholders but to make such reports available through a public website. In addition to making such reports available on a public website, we currently make our audited financial statements available to our shareholders at our offices and will only mail such reports to shareholders upon request. As a foreign private issuer, we are generally exempt from the SEC's proxy solicitation rules. |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Quorum. While the Listing Rules of the NASDAQ Stock Market require that the quorum for purposes of any meeting of the holders of a listed company's common voting stock, as specified in the company's bylaws, be no less than 33% (1/3) of the company's outstanding common voting stock, under Israeli law, a company is entitled to determine in its articles of association the number of shareholders and percentage of holdings required for a quorum at a shareholders meeting. Our Articles of Association provide that a quorum of two or more shareholders holding at least 25% of the voting rights in person or by proxy is required for commencement of business at a general meeting. However, the quorum set forth in our Articles of Association with respect to an adjourned meeting consists of any number of shareholders present in person or by proxy. |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Nomination of our directors. With the exception of our external directors and directors elected by our board of directors, our directors are elected by an annual meeting of our shareholders to hold office until the next annual meeting following one year from his or her election. See "Management—Board Practices" The nominations for directors, which are presented to our shareholders by our board of directors, are generally made by the board of directors itself, in accordance with the provisions of our amended and restated articles of association and the Companies Law. Nominations need not be made by a nominating committee of our board of directors consisting solely of independent directors, as required under the Listing Rules of the NASDAQ Stock Market. |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Compensation of officers. Israeli law and our amended and restated articles of association do not require that the independent members of our board of directors (or a compensation committee composed solely of independent members of our board of directors) determine an executive officer's compensation, as is generally required under the Listing Rules of the NASDAQ Stock Market with respect to the CEO and all other executive officers. |
|--|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | ● | Independent directors. Israeli law does not require that a majority of the directors serving on our board of directors be "independent," as defined under NASDAQ Listing Rule 5605(a)(2), and rather requires we have at least two external directors who meet the requirements of the Companies Law, as described above under "Management—Board Practices—External Directors." We are required, however, to ensure that all members of our Audit Committee are "independent" under the applicable NASDAQ and SEC criteria for independence (as we cannot exempt ourselves from compliance with that SEC independence requirement, despite our status as a foreign private issuer), and we must also ensure that a majority of the members of our Audit Committee are "unaffiliated directors" as defined in the Companies Law. Furthermore, Israeli law does not require, nor do our independent directors conduct, regularly scheduled meetings at which only they are present, which the NASDAQ Listing Rules otherwise require. |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ● | Shareholder approval. We will seek shareholder approval for all corporate actions requiring such approval under the requirements of the Companies Law, rather than seeking approval for corporation actions in accordance with NASDAQ Listing Rule 5635. In particular, under this NASDAQ rule, shareholder approval is generally required for: (i) an acquisition of shares/assets of another company that involves the issuance of 20% or more of the acquirer's shares or voting rights or if a director, officer or 5% shareholder has greater than a 5% interest in the target company or the consideration to be received; (ii) the issuance of shares leading to a change of control; (iii) adoption/amendment of equity compensation arrangements (although under the provisions of the Companies Law there is no requirement for shareholders' approval for the adoption/amendment of the equity compensation plan); and (iv) issuances of 20% or more of the shares or voting rights (including securities convertible into, or exercisable for, equity) of a listed company via a private placement (and/or via sales by directors/officers/5% shareholders) if such equity is issued (or sold) at below the greater of the book or market value of shares. By contrast, under the Companies Law, shareholder approval is required for, among other things: (i) transactions with directors concerning the terms of their service or indemnification, exemption and insurance for their service (or for any other position that they may hold at a company), for which approvals of the compensation committee, board of directors and shareholders are all required, (ii) extraordinary transactions with controlling shareholders of publicly held companies, which require the special approval described below under "Approval of Related Party Transactions under Israeli Law - Disclosure of personal interests of controlling shareholders", and (iii) terms of employment or other engagement of the controlling shareholder of us or such controlling shareholder's relative, which require the special approval described above, under "Approval of Related Party Transactions under Israeli Law - Disclosure of personal interests of controlling shareholders". In addition, under the Companies Law, a merger requires approval of the shareholders of each of the merging companies. |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | ● | Approval of Related Party Transactions. All related party transactions are approved in accordance with the requirements and procedures for approval of interested party acts and transactions, set forth in sections 268 to 275 of the Companies Law, and the regulations promulgated thereunder, which require the approval of the audit committee, or the compensation committee, as the case may be, the board of directors and shareholders, as may be applicable, for specified transactions, rather than approval by the audit committee or other independent body of our board of directors as required under the Listing Rules of the NASDAQ Stock Market. |
|--|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ITEM 16H. | MINE SAFETY DISCLOSURE |
|-----------|------------------------|

| ITEM 17. | FINANCIAL STATEMENTS |
|----------|----------------------|

| ITEM 18. | FINANCIAL STATEMENTS |
|----------|----------------------|

----

----

----

| Contents                                                |               |
|---------------------------------------------------------|--------------------|
|                                                    |               |
|                                                    | Page               |
|                                                    |               |
| Report of Independent Registered Public Accounting Firm | F - 2              |
|                                                    |               |
| Consolidated Financial Statements                       |               |
|                                                    |               |
| Consolidated Statements of Financial Position           | F - 3 - F - 4      |
|                                                    |               |
| Consolidated Income Statements                          | F - 5         |
|                                                    |               |
| Consolidated Statements of Changes in Equity            | F - 6              |
|                                                    |               |
| Consolidated Statements of Cash Flows                   | F - 7              |
|                                                    |               |
| Notes to the Consolidated Financial Statements          | F - 8 -F - 41 |

----

----

----

|                        |   |    |   |   | 2016          |   |   | 2015          |   |
|-----------------------------|--------|---------|--------|--------|---------------|--------|--------|---------------|--------|
|                        |   | Note    |   |   | USD thousands |   |   | USD thousands |   |
| Assets                      |   |    |   |   |          |   |   |          |   |
|                        |   |    |   |   |          |   |   |          |   |
| Cash and cash equivalents   |   | 4       |   |   |          | 14,954 |   |          |   | 13,519 |   |
| Short-term investments      |   | 5       |   |   |          | 37,862 |   |          |   | 21,687 |   |
| Trade receivables           |   |    |   |   |          | 8,225  |   |          |   | 5,002 |   |
| Other current assets        |   | 6       |   |   |          | 1,728  |   |          |   | 1,420 |   |
| Inventory                   |   | 7       |   |   |          | 4,715  |   |          |   | 2,777 |   |
|                        |   |    |   |   |          |   |   |          |   |   |   |
| Total current assets        |   |    |   |   |          | 67,484 |   |          |   | 44,405 |   |
|                        |   |    |   |   |          |   |   |          |   |   |   |
| Long-term investments       |   | 5       |   |   |          | 9,017  |   |          |   | 5,023 |   |
| Property and equipment, net |   | 8       |   |   |          | 3,615  |   |          |   | 1,432 |   |
| Intangible assets, net      |   | 9       |   |   |          | 2,258  |   |          |   | - |   |
| Other non-current assets    |   | 12D,13B |        |   |          | 351    |   |          |   | 110 |   |
|                        |   |    |   |   |          |   |   |          |   |   |   |
| Total non-current assets    |   |    |   |   |          | 15,241 |   |          |   | 6,565 |   |
|                        |   |    |   |   |          |   |   |          |   |   |   |
| Total assets                |   |    |   |   |          | 82,725 |   |          |   | 50,970 |   |

----

----

|                                                 |   |   |   |   | 2016          |   |     | 2015          |   |
|------------------------------------------------------|--------|--------|--------|--------|---------------|--------|----------|---------------|--------|
|                                                 |   | Note   |   |   | USD thousands |   |     | USD thousands |   |
| Liabilities                                          |   |   |   |   |          |   |     |          |   |
|                                                 |   |   |   |   |          |   |     |          |   |
| Trade payables                                       |   |   |   |   |          | 5,018  |     |          |   | 2,219 |   |
| Deferred revenue                                     |   |   | 10A    |        |          |   | 4,031    |          |   |   | 1,221 |   |
| Other current liabilities                            |   |   | B10    |   |          |   | 8,462    |          |   |   | 4,831 |   |
|                                                 |   |   |   |   |          |   |     |          |   |   |   |   |
| Total current liabilities                            |   |   |   |   |          |   | 17,511   |          |   |   | 8,271 |   |
|                                                 |   |   |   |   |          |   |     |          |   |   |   |   |
| Non-current liabilities - Employee benefits          |   |   | 11     |   |          |   | 325      |          |   |   | 299 |   |
|                                                 |   |   |   |   |          |   |     |          |   |   |   |   |
| Total liabilities                                    |   |   |   |   |          |   | 17,836   |          |   |   | 8,570 |   |
|                                                 |   |   |   |   |          |   |     |          |   |   |   |   |
| Equity                                               |   |   | 22     |   |          |   |     |          |   |   |   |   |
| Share capital                                        |   |   |   |   |          |   | 124      |          |   |   | 110 |   |
| Share premium                                        |   |   |   |   |          |   | 174,647  |          |   |   | 136,107 |   |
| Amounts allocated to share options                   |   |   |   |   |          |   | -        |          |   |   | 77 |   |
| Capital reserve for share-based payment transactions |   |   |   |   |          |   | 9,859    |          |   |   | 7,179 |   |
| Foreign currency translation reserve                 |   |   |   |   |          |   | 2,119    |          |   |   | 2,119 |   |
| Accumulated loss                                     |   |   |   |   |          |   | (121,860 | )             |   |   | (103,192 | ) |
|                                                 |   |   |   |   |          |   |     |          |   |   |   |   |
| Total equity                                         |   |   |   |   |          |   | 64,889   |          |   |   | 42,400 |   |
|                                                 |   |   |   |   |          |   |     |          |   |   |   |   |
| Total liabilities and equity                         |   |   |   |   |          |   | 82,725   |          |   |   | 50,970 |   |

| /s/ Jonathan Adereth               |   | /s/ Ori Hadomi |   | /s/ Sharon Levita |
|------------------------------------|--------|----------------|--------|-------------------|
| Chairman of the Board of Directors |   | CEO            |   | CFO               |

----

----

|                                         |   |   |   |   | 2016          |   |    | 2015          |   |   | 2014          |   |
|----------------------------------------------|--------|--------|--------|--------|---------------|--------|---------|---------------|--------|--------|---------------|--------|
|                                         |   | Note   |   |   | USD thousands |   |    | USD thousands |   |   | USD thousands |   |
| Revenues                                     |   |   | 14     |   |          |   | 36,379  |          |   |   | 26,096        |   |   |   | 21,208 |   |
| Cost of sales                                |   |   | 16     |   |          |   | 10,330  |          |   |   | 5,827         |   |   |   | 4,396 |   |
|                                         |   |   |   |   |          |   |    |          |   |   |          |   |   |   |   |   |
| Gross profit                                 |   |   |   |   |          |   | 26,049  |          |   |   | 20,269        |   |   |   | 16,812 |   |
|                                         |   |   |   |   |          |   |    |          |   |   |          |   |   |   |   |   |
|  Research and development expenses, net |   |   | 17     |   |          |   | 5,736   |          |   |   | 6,324         |   |   |   | 5,776 |   |
|  Selling and marketing expenses         |   |   | 18     |   |          |   | 33,637  |          |   |   | 24,947        |   |   |   | 21,352 |   |
|  General and administrative expenses    |   |   | 19     |   |          |   | 5,697   |          |   |   | 4,305         |   |   |   | 4,392 |   |
|                                         |   |   |   |   |          |   |    |          |   |   |          |   |   |   |   |   |
| Operating loss                               |   |   |   |   |          |   | (19,021 | )             |   |   | (15,307       | )      |   |   | (14,708 | ) |
|                                         |   |   |   |   |          |   |    |          |   |   |          |   |   |   |   |   |
|  Financing income                       |   |   | 20     |   |          |   | 438     |          |   |   | 272           |   |   |   | 134 |   |
|  Financing expenses                     |   |   | 20     |   |          |   | (41     | )             |   |   | (137          | )      |   |   | (553 | ) |
|                                         |   |   |   |   |          |   |    |          |   |   |          |   |   |   |   |   |
| Financing income (expenses), net             |   |   |   |   |          |   | 397     |          |   |   | 135           |   |   |   | (419 | ) |
|                                         |   |   |   |   |          |   |    |          |   |   |          |   |   |   |   |   |
| Loss before taxes on income                  |   |   |   |   |          |   | (18,624 | )             |   |   | (15,172       | )      |   |   | (15,127 | ) |
|                                         |   |   |   |   |          |   |    |          |   |   |          |   |   |   |   |   |
|  Income tax expense                     |   |   | 12     |   |          |   | 44      |          |   |   | 213           |   |   |   | 145 |   |
|                                         |   |   |   |   |          |   |    |          |   |   |          |   |   |   |   |   |
| Net loss                                     |   |   |   |   |          |   | (18,668 | )             |   |   | (15,385       | )      |   |   | (15,272 | ) |

| Net loss per share                        |   |   |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted loss per share (in USD) |   |   | 24     |   |   |   | (0.42  | )      |   |   | (0.36  | )      |   |   | (0.37 | ) |

----

----

|                                |   |          |   |   |    |   |    |      |   |   | Capital      |   |   |        |   |   |        |   |   |   |   |
|-------------------------------------|--------|---------------|--------|--------|---------|--------|---------|-----------|--------|--------|--------------|--------|--------|-------------|--------|--------|-------------|--------|--------|--------|--------|
|                                |   |          |   |   |    |   |    | Amounts   |   |   | reserve for  |   |   | Foreign     |   |   |        |   |   |   |   |
|                                |   |          |   |   |    |   |    | allocated |   |   | share-based  |   |   | currency    |   |   |        |   |   |   |   |
|                                |   | Share         |   |   | Share   |   |    | to share  |   |   | payment      |   |   | translation |   |   | Accumulated |   |   | Total  |   |
|                                |   | Capital       |   |   | premium |   |    | options   |   |   | transactions |   |   | reserve     |   |   | loss        |   |   | Equity |   |
|                                |   | USD thousands |   |
| For the year ended                  |   |          |   |   |    |   |    |      |   |   |         |   |   |        |   |   |        |   |   |   |   |
| December 31, 2016                   |   |          |   |   |    |   |    |      |   |   |         |   |   |        |   |   |        |   |   |   |   |
|                                |   |          |   |   |    |   |    |      |   |   |         |   |   |        |   |   |        |   |   |   |   |
| Balance as of                       |   |          |   |   |    |   |    |      |   |   |         |   |   |        |   |   |        |   |   |   |   |
|  January 1, 2016               |   |          | 110    |   |    |   | 136,107 |      |   |   | 77           |   |   |        | 7,179  |   |        |   | 2,119  |   |   |   | (103,192 | ) |   |   | 42,400 |   |
| Loss for the year                   |   |          | -      |   |    |   | -       |      |   |   | -            |   |   |        | -      |   |        |   | -      |   |   |   | (18,668 | ) |   |   | (18,668 | ) |
| Issuance of shares, see note 22C(2) |   |          | 11     |   |    |   | 31,386  |      |   |   | -            |   |   |        | -      |   |        |   | -      |   |   |   | - |   |   |   | 31,397 |   |
| Exercise of share options           |   |          | 3      |   |    |   | 6,549   |      |   |   | -            |   |   |        | (2,142 | )      |        |   | -      |   |   |   | - |   |   |   | 4,410 |   |
| Exercise of warrants                |   |          | -      |   |    |   | 558     |      |   |   | (77          | )      |   |        | -      |   |        |   | -      |   |   |   | - |   |   |   | 481 |   |
| Expiration of share options         |   |          | -      |   |    |   | 47      |      |   |   | -            |   |   |        | (47    | )      |        |   | -      |   |   |   | - |   |   |   | - |   |
| Share-based payments                |   |          | -      |   |    |   | -       |      |   |   | -            |   |   |        | 4,869  |   |        |   | -      |   |   |   | - |   |   |   | 4,869 |   |
| Balance as of                       |   |          |   |   |    |   |    |      |   |   |         |   |   |        |   |   |        |   |   |   |   |   |   |   |   |   |   |   |
|  December 31, 2016             |   |          | 124    |   |    |   | 174,647 |      |   |   | -            |   |   |        | 9,859  |   |        |   | 2,119  |   |   |   | (121,860 | ) |   |   | 64,889 |   |
|                                |   |          |   |   |    |   |    |      |   |   |         |   |   |        |   |   |        |   |   |   |   |   |   |   |   |   |   |   |
| For the year ended                  |   |          |   |   |    |   |    |      |   |   |         |   |   |        |   |   |        |   |   |   |   |   |   |   |   |   |   |   |
|  December 31, 2015             |   |          |   |   |    |   |    |      |   |   |         |   |   |        |   |   |        |   |   |   |   |   |   |   |   |   |   |   |
|                                |   |          |   |   |    |   |    |      |   |   |         |   |   |        |   |   |        |   |   |   |   |   |   |   |   |   |   |   |
| Balance as of                       |   |          |   |   |    |   |    |      |   |   |         |   |   |        |   |   |        |   |   |   |   |   |   |   |   |   |   |   |
|  January 1, 2015               |   |          | 110    |   |    |   | 135,182 |      |   |   | 77           |   |   |        | 4,586  |   |        |   | 2,119  |   |   |   | (87,807 | ) |   |   | 54,267 |   |
| Loss for the year                   |   |          | -      |   |    |   | -       |      |   |   | -            |   |   |        | -      |   |        |   | -      |   |   |   | (15,385 | ) |   |   | (15,385 | ) |
| Exercise of share options           |   |          | *-     |   |    |   | 904     |      |   |   | -            |   |   |        | (477   | )      |        |   | -      |   |   |   | - |   |   |   | 427 |   |
| Expiration of share options         |   |          | -      |   |    |   | 21      |      |   |   | -            |   |   |        | (21    | )      |        |   | -      |   |   |   | - |   |   |   | - |   |
| Share-based payments                |   |          | -      |   |    |   | -       |      |   |   | -            |   |   |        | 3,091  |   |        |   | -      |   |   |   | - |   |   |   | 3,091 |   |
| Balance as of                       |   |          |   |   |    |   |    |      |   |   |         |   |   |        |   |   |        |   |   |   |   |   |   |   |   |   |   |   |
|  December 31, 2015             |   |          | 110    |   |    |   | 136,107 |      |   |   | 77           |   |   |        | 7,179  |   |        |   | 2,119  |   |   |   | (103,192 | ) |   |   | 42,400 |   |
|                                |   |          |   |   |    |   |    |      |   |   |         |   |   |        |   |   |        |   |   |   |   |   |   |   |   |   |   |   |
| For the year ended                  |   |          |   |   |    |   |    |      |   |   |         |   |   |        |   |   |        |   |   |   |   |   |   |   |   |   |   |   |
|  December 31, 2014             |   |          |   |   |    |   |    |      |   |   |         |   |   |        |   |   |        |   |   |   |   |   |   |   |   |   |   |   |
|                                |   |          |   |   |    |   |    |      |   |   |         |   |   |        |   |   |        |   |   |   |   |   |   |   |   |   |   |   |
| Balance as of                       |   |          |   |   |    |   |    |      |   |   |         |   |   |        |   |   |        |   |   |   |   |   |   |   |   |   |   |   |
|  January 1, 2014               |   |          | 106    |   |    |   | 130,472 |      |   |   | 77           |   |   |        | 3,854  |   |        |   | 2,119  |   |   |   | (72,535 | ) |   |   | 64,093 |   |
| Loss for the year                   |   |          | -      |   |    |   | -       |      |   |   | -            |   |   |        | -      |   |        |   | -      |   |   |   | (15,272 | ) |   |   | (15,272 | ) |
| Exercise of share options           |   |          | 4      |   |    |   | 4,635   |      |   |   | -            |   |   |        | (1,350 | )      |        |   | -      |   |   |   | - |   |   |   | 3,289 |   |
| Expiration of share options         |   |          | -      |   |    |   | 75      |      |   |   | -            |   |   |        | (75    | )      |        |   | -      |   |   |   | - |   |   |   | - |   |
| Share-based payments                |   |          | -      |   |    |   | -       |      |   |   | -            |   |   |        | 2,157  |   |        |   | -      |   |   |   | - |   |   |   | 2,157 |   |
| Balance as of                       |   |          |   |   |    |   |    |      |   |   |         |   |   |        |   |   |        |   |   |   |   |   |   |   |   |   |   |   |
|  December 31, 2014             |   |          | 110    |   |    |   | 135,182 |      |   |   | 77           |   |   |        | 4,586  |   |        |   | 2,119  |   |   |   | (87,807 | ) |   |   | 54,267 |   |

----

----

|                                                    |   | 2016          |    |   | 2015          |   |    | 2014          |   |
|---------------------------------------------------------|--------|---------------|---------|--------|---------------|--------|---------|---------------|--------|
|                                                         |   | USD thousands |    |   | USD thousands |   |    | USD thousands |   |
| Cash flows from operating activities                    |   |          |    |   |          |   |    |          |   |   |   |   |
| Loss for the year                                       |   |          | (18,668 | )      |          |   | (15,385 | )             |   |   | (15,272 | ) |
| Adjustments:                                            |   |          |    |   |          |   |    |          |   |   |   |   |
| Depreciation and amortization                           |   |          | 822     |   |          |   | 527     |          |   |   | 540 |   |
| Financing (income) expenses, net                        |   |          | (275    | )      |          |   | (207    | )             |   |   | 278 |   |
| Gain on sale of property and equipment                  |   |          | (6      | )      |          |   | -       |          |   |   | - |   |
| Share-based expenses                                    |   |          | 4,439   |   |          |   | 3,091   |          |   |   | 2,157 |   |
| Income tax expense                                      |   |          | 44      |   |          |   | 213     |          |   |   | 145 |   |
|                                                    |   |          | 5,024   |   |          |   | 3,624   |          |   |   | 3,120 |   |
|                                                    |   |          |    |   |          |   |    |          |   |   |   |   |
| Change in inventory                                     |   |          | (1,938  | )      |          |   | 273     |          |   |   | (980 | ) |
| Change in trade and other accounts receivable           |   |          | (3,512  | )      |          |   | (2,408  | )             |   |   | (1,296 | ) |
| Change in prepaid lease fees                            |   |          | (20     | )      |          |   | 6       |          |   |   | (1 | ) |
| Change in trade and other accounts payable              |   |          | 8,723   |   |          |   | 2,217   |          |   |   | 138 |   |
| Change in employee benefits                             |   |          | 26      |   |          |   | 21      |          |   |   | (33 | ) |
|                                                    |   |          | 3,279   |   |          |   | 109     |          |   |   | (2,172 | ) |
|                                                    |   |          |    |   |          |   |    |          |   |   |   |   |
| Interest received                                       |   |          | 301     |   |          |   | 194     |          |   |   | 85 |   |
| Income tax paid                                         |   |          | (38     | )      |          |   | (114    | )             |   |   | (51 | ) |
|                                                    |   |          | 263     |   |          |   | 80      |          |   |   | 34 |   |
|                                                    |   |          |    |   |          |   |    |          |   |   |   |   |
| Net cash used in operating activities                   |   |          | (10,102 | )      |          |   | (11,572 | )             |   |   | (14,290 | ) |
|                                                    |   |          |    |   |          |   |    |          |   |   |   |   |
| Cash flows from investing activities                    |   |          |    |   |          |   |    |          |   |   |   |   |
| Proceeds from (purchase of) short-term investments, net |   |          | (11,094 | )      |          |   | 9,816   |          |   |   | 22,271 |   |
| Purchase of long-term investments                       |   |          | (9,823  | )      |          |   | (7,538  | )             |   |   | (7,237 | ) |
| Proceeds from sale of long-term investments             |   |          | 748     |   |          |   | 992     |          |   |   | - |   |
| Capitalization of development costs                     |   |          | (1,902  | )      |          |   | -       |          |   |   | - |   |
| Purchase of property and equipment                      |   |          | (2,361  | )      |          |   | (702    | )             |   |   | (503 | ) |
|                                                    |   |          |    |   |          |   |    |          |   |   |   |   |
| Net cash provided by (used in) investing activities     |   |          | (24,432 | )      |          |   | 2,568   |          |   |   | 14,531 |   |
|                                                    |   |          |    |   |          |   |    |          |   |   |   |   |
| Cash flows from financing activities                    |   |          |    |   |          |   |    |          |   |   |   |   |
| Proceeds from issuance of ADR's, net                    |   |          | 31,416  |   |          |   | -       |          |   |   | (294 | ) |
| Proceeds from exercise of share options by              |   |          |    |   |          |   |    |          |   |   |   |   |
|   employees and service providers             |   |          | 4,100   |   |          |   | 370     |          |   |   | 3,042 |   |
| Proceeds from exercise of warrants by investors         |   |          | 481     |   |          |   | -       |          |   |   | - |   |
| Repayment of loans to the Chief Scientist               |   |          | -       |   |          |   | -       |          |   |   | (324 | ) |
|                                                    |   |          |    |   |          |   |    |          |   |   |   |   |
| Net cash provided by financing activities               |   |          | 35,997  |   |          |   | 370     |          |   |   | 2,424 |   |
|                                                    |   |          |    |   |          |   |    |          |   |   |   |   |
| Net (decrease) increase in cash and cash equivalents    |   |          | 1,463   |   |          |   | (8,634  | )             |   |   | 2,665 |   |
|                                                    |   |          |    |   |          |   |    |          |   |   |   |   |
| Cash and cash equivalents at the beginning of the year  |   |          | 13,519  |   |          |   | 22,255  |          |   |   | 19,803 |   |
| Effect of exchange rate differences on                  |   |          |    |   |          |   |    |          |   |   |   |   |
|  cash and cash equivalents                         |   |          | (28     | )      |          |   | (102    | )             |   |   | (213 | ) |
|                                                    |   |          |    |   |          |   |    |          |   |   |   |   |
| Cash and cash equivalents at the end of the year        |   |          | 14,954  |   |          |   | 13,519  |          |   |   | 22,255 |   |
|                                                    |   |          |    |   |          |   |    |          |   |   |   |   |
| Supplementary cash flows information:                   |   |          |    |   |          |   |    |          |   |   |   |   |
| Transfer of inventory to property and equipment         |   |          | -       |   |          |   | -       |          |   |   | 410 |   |
| Purchase of property and equipment on credit            |   |          | (566    | )      |          |   | -       |          |   |   | - |   |
| Issuance costs on credit                                |   |          | (19     | )      |          |   | -       |          |   |   | - |   |

----

----

| A. | Mazor Robotics Ltd. (the “Company”) is an Israeli company incorporated in Israel. The address of the Company’s registered office is 5 Shacham St., Northern Industrial Park, Caesarea, Israel. These consolidated financial statements as of and for the year ended December 31, 2016 comprise the Company and its wholly owned subsidiaries incorporated in the United States (U.S.) and Singapore, Mazor Robotics Inc. and Mazor Robotics Pte. Ltd., respectively (together referred to as the “Group”). The Group is a leading innovator in spine surgery and has pioneered surgical guidance systems and complementary products in the spine and brain surgical markets that provide a safer surgical environment for patients, surgeons and operating room staff.  The Group engages in the development, production and marketing of innovative medical devices for supporting surgical procedures in the field of orthopedics and neurosurgery. The Group operates in the field of image guided surgery (also known as computer assisted surgery) that enables the use of surgical instruments with high precision and minimal invasiveness and that simplifies complex surgical procedures. Since August 2007, the ordinary shares of the Company have been registered for trade on the Tel Aviv Stock Exchange. On May 28, 2013, the Company’s American Depositary Shares ("ADSs"), each of which represents 2 ordinary shares of the Company, represented by American Depositary Receipts ("ADRs"), were registered for trade on the  NASDAQ Capital Market and are currently traded on the NASDAQ Global Market. |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| B. | Definitions |
|----|-------------|

|  | (1) | The Company - Mazor Robotics Ltd. |
|--|-----|-----------------------------------|

|  | (2) | The Group - Mazor Robotics Ltd. and its subsidiaries. |
|--|-----|-------------------------------------------------------|

|  | (3) | Subsidiary - A company, the financial statements of which are fully consolidated, directly or indirectly, with the financial statements of the Company. |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (4) | Related party - Within its meaning in IAS 24, "Related Party Disclosures". |
|--|-----|----------------------------------------------------------------------------|

|  | (5) | IIA - The Israel Innovation Authority, formerly known as the Office of the Chief Scientist of the Ministry of Economy ("OCS"). |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------|

| C. | Material events in the reporting period |
|----|-----------------------------------------|

----

----

| C. | Material events in the reporting period (cont'd) |
|----|--------------------------------------------------|

| A. | Statement of compliance |
|----|-------------------------|

| B. | Reporting and functional currency |
|----|-----------------------------------|

| C. | Basis of measurement |
|----|----------------------|

----

----

| D. | Use of estimates and judgments |
|----|--------------------------------|

| E. | New standards and interpretations not yet adopted |
|----|---------------------------------------------------|

|  | (1) | IFRS 16, Leases ("IFRS 16") |
|--|-----|-----------------------------|

----

----

| E. | New standards and interpretations not yet adopted (cont'd) |
|----|------------------------------------------------------------|

|  | (1) | IFRS 16, Leases ("IFRS 16") (cont'd) |
|--|-----|--------------------------------------|

|  | (2) | IFRS 15, Revenue from Contracts with Customers ("IFRS 15") |
|--|-----|------------------------------------------------------------|

|  | (3) | IFRS 9 (2014), Financial Instruments ("IFRS 9 (2014)") |
|--|-----|--------------------------------------------------------|

----

----

| E. | New standards and interpretations not yet adopted (cont'd) |
|----|------------------------------------------------------------|

|  | (4) | Amendment to IAS 12, Income Taxes: Recognition of Deferred Tax Assets for Unrealised Losses |
|--|-----|---------------------------------------------------------------------------------------------|

| A. | Basis of consolidation |
|----|------------------------|

|  | (1) | Subsidiaries |
|--|-----|--------------|

|  | (2) | Transactions eliminated on consolidation |
|--|-----|------------------------------------------|

| B. | Foreign currency transactions |
|----|-------------------------------|

----

----

| C. | Financial instruments |
|----|-----------------------|

|  | (1) | Non-derivative financial assets |
|--|-----|---------------------------------|

|  | (2) | Non-derivative financial liabilities |
|--|-----|--------------------------------------|

----

----

| C. | Financial instruments (cont'd) |
|----|--------------------------------|

|  | (3) | CPI-linked assets and liabilities that are not measured at fair value |
|--|-----|-----------------------------------------------------------------------|

|  | (4) | Share capital |
|--|-----|---------------|

|  | (5) | Share options |
|--|-----|---------------|

| D. | Property and Equipment |
|----|------------------------|

|  | (1) | Recognition and measurement |
|--|-----|-----------------------------|

|  | (2) | Subsequent costs |
|--|-----|------------------|

|  | (3) | Depreciation |
|--|-----|--------------|

| Computers and equipment        | 3 years                                           |
|--------------------------------|---------------------------------------------------|
| Machinery and equipment        | 3-10 years                                        |
| Motor Vehicles                 | 7 years                                           |
| Office furniture and equipment | 6-17 years                                        |
| Leasehold improvements         | The shorter of the lease term and the useful life |

----

----

| D. | Property and Equipment (cont'd) |
|----|---------------------------------|

|  | (1) | Depreciation (cont'd) |
|--|-----|-----------------------|

| E. | Intangible assets |
|----|-------------------|

|  | (1) | Research and development |
|--|-----|--------------------------|

|  | · | development costs can be measured reliably; |
|--|--------|---------------------------------------------|

|  | · | the product or process is technically and commercially feasible; |
|--|--------|------------------------------------------------------------------|

|  | · | future economic benefits are probable; and |
|--|--------|--------------------------------------------|

|  | · | the Group intends to and has sufficient resources to complete development and to use or sell the asset. |
|--|--------|---------------------------------------------------------------------------------------------------------|

|  | (2) | Subsequent expenditure |
|--|-----|------------------------|

|  | (3) | Amortization |
|--|-----|--------------|

----

----

| F. | Inventory |
|----|-----------|

| G. | Impairment |
|----|------------|

|  | (1) | Non-derivative financial assets |
|--|-----|---------------------------------|

|  | • | Default by a debtor; |
|--|---------|----------------------|

|  | • | Indications that a debtor or issuer will enter bankruptcy; |
|--|---------|------------------------------------------------------------|

|  | • | Observable data indicating a measurable decrease in the cash flow expected from a group of financial assets. |
|--|---------|--------------------------------------------------------------------------------------------------------------|

|  |  (2) | Non-financial assets |
|--|-----------|----------------------|

----

----

| H. | Employee benefits |
|----|-------------------|

|  | (1) | Post-employment benefits |
|--|-----|--------------------------|

|  | (2) | Short-term benefits |
|--|-----|---------------------|

|  |  (3) | Share-based payment transactions |
|--|-----------|----------------------------------|

| I. | Provisions |
|----|------------|

| J. | Revenue Recognition |
|----|---------------------|

|  | · | The significant risks and rewards of ownership of the goods have been transferred to the customer; |
|--|--------|----------------------------------------------------------------------------------------------------|

|  | · | It is probable that the economic benefits associated with the transaction will flow to the Group; |
|--|--------|---------------------------------------------------------------------------------------------------|

|  | · | The costs incurred or to be incurred in respect of the transaction can be measured reliably; |
|--|--------|----------------------------------------------------------------------------------------------|

|  | · | The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; and |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | The amount of revenue can be measured reliably. |
|--|--------|-------------------------------------------------|

----

----

| J. | Revenue Recognition (cont'd) |
|----|------------------------------|

|  | · | Surgical guidance systems ("Systems"); |
|--|--------|----------------------------------------|

|  | · | disposable components and accessories; and |
|--|--------|--------------------------------------------|

|  | · | warranty and maintenance services related to the systems sold, which includes replacement parts, software updates, preventive maintenance and on-call support as detailed in the agreement. |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Sales to end customers - Upon the completion of installation of the System, training of at least one surgeon, which typically occurs prior to or concurrent with the System installation, and customer acceptance, if required. |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Sales to distributors - Upon delivery to the distributor, provided that the significant risks and rewards of ownership of the system are transferred to the distributor upon delivery, the distributor has no right of return, receipt of the consideration is probable and not dependent on the distributor's ability to collect from the end customer, the commitment to carry out installation and training for the end customer lies with the distributor and that the distributor has been authorized to perform the installation and training for the end customers. If the above conditions are not met, the Group recognizes revenue at the time of fulfillment of the conditions for recognition of revenue from the end customer. |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (i) | It is probable that the delivery will be made; |
|--|-----|------------------------------------------------|

|  | (ii) | The item is on hand, identified and ready for delivery to the customer at the time the sale is recognized; |
|--|------|------------------------------------------------------------------------------------------------------------|

|  | (iii) | The customer specifically acknowledges the deferred delivery instructions, and |
|--|-------|--------------------------------------------------------------------------------|

|  | (iv) | The usual payment terms apply. |
|--|------|--------------------------------|

----

----

| J. | Revenue Recognition (cont'd) |
|----|------------------------------|

|  | · | In sales to end customers - Upon delivery. |
|--|--------|--------------------------------------------|

|  | · | In sales to distributors - Upon delivery to the distributor, provided that the significant risks and rewards of ownership of the components are transferred to the distributor upon delivery, the distributor has no right of return and that the receipt of the consideration is probable and not dependent on the distributor's ability to collect from the end customer. |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| L. | Financing income and expenses |
|----|-------------------------------|

| M. | Taxes on income |
|----|-----------------|

| N. | Loss per share |
|----|----------------|

----

----

| O. | Comprehensive income |
|----|----------------------|

|                                                   |   | December 31   |   |
|--------------------------------------------------------|--------|---------------|--------|
|                                                   |   | 2016          |   |   | 2015 |   |
|                                                   |   | USD thousands |   |   | USD thousands |   |
| Current balances in banks                              |   |          | 14,784 |   |   |   | 10,972 |   |
| Deposits held at financial institutions, with original |   |          |   |   |   |   |   |   |
|  maturity periods of up to three months           |   |          | 170    |   |   |   | 2,547 |   |
|                                                   |   |          |   |   |   |   |   |   |
|                                                   |   |          | 14,954 |   |   |   | 13,519 |   |

|                                            |   | December 31   |      |
|-------------------------------------------------|--------|---------------|-----------|
|                                            |   | 2016          |      |   | 2015 |   |
|                                            |   | USD thousands |      |   | USD thousands |   |
| Short-term investments                          |   |          |      |   |   |   |
| Deposits held at financial institutions, in USD |   |          | (*)37,849 |   |   |   | 21,674 |   |
|                                            |   |          |      |   |   |   |   |   |
| Investments in marketable securities            |   |          |      |   |   |   |   |   |
| Mutual funds                                    |   |          | 13        |   |   |   | 13 |   |
|                                            |   |          | 37,862    |   |   |   | 21,687 |   |
| Long-term investments                           |   |          |      |   |   |   |   |   |
| Deposits held at financial institutions, in USD |   |          | 9,017     |   |   |   | 5,023 |   |

|                  |   | December 31   |   |
|-----------------------|--------|---------------|--------|
|                  |   | 2016          |   |   | 2015 |   |
|                  |   | USD thousands |   |   | USD thousands |   |
|                  |   |          |   |   |   |   |
| Institutions          |   |          | 1,127  |   |   |   | 656 |   |
| Prepaid expenses      |   |          | 254    |   |   |   | 476 |   |
| Interest receivable   |   |          | 171    |   |   |   | 125 |   |
| Advances to suppliers |   |          | 1      |   |   |   | 102 |   |
| Other receivables     |   |          | 175    |   |   |   | 61 |   |
|                  |   |          |   |   |   |   |   |   |
|                  |   |          | 1,728  |   |   |   | 1,420 |   |

----

----

|                          |   | December 31   |   |
|-------------------------------|--------|---------------|--------|
|                          |   | 2016          |   |   | 2015 |   |
|                          |   | USD thousands |   |   | USD thousands |   |
| Raw materials and spare parts |   |          | 1,634  |   |   |   | 970 |   |
| Work in progress              |   |          | 232    |   |   |   | 277 |   |
| Finished goods                |   |          | 2,849  |   |   |   | 1,530 |   |
|                          |   |          |   |   |   |   |   |   |
|                          |   |          | 4,715  |   |   |   | 2,777 |   |

|                            |   |          |   |   |      |   |   | Office    |   |   |         |   |   |      |   |   |   |   |
|---------------------------------|--------|---------------|--------|--------|-----------|--------|--------|-----------|--------|--------|--------------|--------|--------|-----------|--------|--------|--------|--------|
|                            |   |          |   |   | Machinery |   |   | furniture |   |   |         |   |   | Computers |   |   |   |   |
|                            |   | Motor         |   |   | and       |   |   | and       |   |   | Leasehold    |   |   | and       |   |   |   |   |
|                            |   | vehicles      |   |   | equipment |   |   | equipment |   |   | improvements |   |   | equipment |   |   | Total  |   |
|                            |   | USD thousands |   |
| Cost                            |   |          |   |   |      |   |   |      |   |   |         |   |   |      |   |   |   |   |
| Balance as of January 1, 2016   |   |          | 33     |   |      |   | 1,880  |      |   |   | 193          |   |   |      | 301    |   |   |   | 1,236 |   |   |   | 3,643 |   |
| Additions                       |   |          | -      |   |      |   | 1,765  |      |   |   | 31           |   |   |      | 828    |   |   |   | 313 |   |   |   | 2,937 |   |
| Disposals                       |   |          | (33    | )      |      |   | (32    | )         |   |   | (10          | )      |   |      | (309   | )      |   |   | (54 | ) |   |   | (438 | ) |
|                            |   |          |   |   |      |   |   |      |   |   |         |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Balance as of December 31, 2016 |   |          | -      |   |      |   | 3,613  |      |   |   | 214          |   |   |      | 820    |   |   |   | 1,495 |   |   |   | 6,142 |   |
|                            |   |          |   |   |      |   |   |      |   |   |         |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Balance as of January 1, 2015   |   |          | 33     |   |      |   | 1,366  |      |   |   | 178          |   |   |      | 261    |   |   |   | 1,146 |   |   |   | 2,984 |   |
| Additions                       |   |          | -      |   |      |   | 514    |      |   |   | 15           |   |   |      | 40     |   |   |   | 133 |   |   |   | 702 |   |
| Disposals                       |   |          | -      |   |      |   | -      |      |   |   | -            |   |   |      | -      |   |   |   | (43 | ) |   |   | (43 | ) |
|                            |   |          |   |   |      |   |   |      |   |   |         |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Balance as of December 31, 2015 |   |          | 33     |   |      |   | 1,880  |      |   |   | 193          |   |   |      | 301    |   |   |   | 1,236 |   |   |   | 3,643 |   |
|                            |   |          |   |   |      |   |   |      |   |   |         |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Depreciation                    |   |          |   |   |      |   |   |      |   |   |         |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Balance as of January 1, 2016   |   |          | 26     |   |      |   | 954    |      |   |   | 64           |   |   |      | 188    |   |   |   | 979 |   |   |   | 2,211 |   |
| Depreciation for the year       |   |          | 3      |   |      |   | 423    |      |   |   | 13           |   |   |      | 124    |   |   |   | 185 |   |   |   | 748 |   |
| Disposals                       |   |          | (29    | )      |      |   | (32    | )         |   |   | (10          | )      |   |      | (309   | )      |   |   | (52 | ) |   |   | (432 | ) |
|                            |   |          |   |   |      |   |   |      |   |   |         |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Balance as of December 31, 2016 |   |          | -      |   |      |   | 1,345  |      |   |   | 67           |   |   |      | 3      |   |   |   | 1,112 |   |   |   | 2,527 |   |
|                            |   |          |   |   |      |   |   |      |   |   |         |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Balance as of January 1, 2015   |   |          | 21     |   |      |   | 673    |      |   |   | 52           |   |   |      | 149    |   |   |   | 832 |   |   |   | 1,727 |   |
| Depreciation for the year       |   |          | 5      |   |      |   | 281    |      |   |   | 12           |   |   |      | 39     |   |   |   | 190 |   |   |   | 527 |   |
| Disposals                       |   |          | -      |   |      |   | -      |      |   |   | -            |   |   |      | -      |   |   |   | (43 | ) |   |   | (43 | ) |
|                            |   |          |   |   |      |   |   |      |   |   |         |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Balance as of December 31, 2015 |   |          | 26     |   |      |   | 954    |      |   |   | 64           |   |   |      | 188    |   |   |   | 979 |   |   |   | 2,211 |   |
|                            |   |          |   |   |      |   |   |      |   |   |         |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Carrying amount                 |   |          |   |   |      |   |   |      |   |   |         |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Balance as of January 1, 2015   |   |          | 12     |   |      |   | 693    |      |   |   | 125          |   |   |      | 112    |   |   |   | 315 |   |   |   | 1,257 |   |
| Balance as of December 31, 2015 |   |          | 7      |   |      |   | 926    |      |   |   | 129          |   |   |      | 113    |   |   |   | 257 |   |   |   | 1,432 |   |
| Balance as of December 31, 2016 |   |          | -      |   |      |   | 2,268  |      |   |   | 147          |   |   |      | 817    |   |   |   | 383 |   |   |   | 3,615 |   |

----

----

|                                                                     |   | Capitalized development costs |   |
|--------------------------------------------------------------------------|--------|-------------------------------|--------|
|                                                                     |   | USD thousands                 |   |
| Cost                                                                     |   |                          |   |
| Balance as of January 1, 2015 and December 31, 2015                      |   |                          | -      |   |
| Capitalization of development costs for the year ended December 31, 2016 |   |                          | 2,332  |   |
| Balance as of December 31, 2016                                          |   |                          | 2,332  |   |
|                                                                     |   |                          |   |   |
| Amortization (recognized as part of cost of goods sold)                  |   |                          |   |   |
| Balance as of January 1, 2015 and December 31, 2015                      |   |                          | -      |   |
| Amortization for the year ended December 31, 2016                        |   |                          | 74     |   |
|                                                                     |   |                          |   |   |
| Balance as of December 31, 2016                                          |   |                          | 74     |   |
|                                                                     |   |                          |   |   |
| Carrying amount                                                          |   |                          |   |   |
| December 31, 2015                                                        |   |                          | -      |   |
| December 31, 2016                                                        |   |                          | 2,258  |   |

| A. | Deferred income |
|----|-----------------|

|                                                               |   | December 31   |   |
|--------------------------------------------------------------------|--------|---------------|--------|
|                                                               |   | 2016          |   |   | 2015 |   |
|                                                               |   | USD thousands |   |   | USD thousands |   |
| Deferred income relating to warranty and installations commitments |   |          | 2,197  |   |   |   | 1,221 |   |
| Deferred income relating to trade-in systems                       |   |          | 1,834  |   |   |   | - |   |
|                                                               |   |          |   |   |   |   |   |   |
|                                                               |   |          | 4,031  |   |   |   | 1,221 |   |

| B. | Other current liabilities |
|----|---------------------------|

|                           |   | December 31   |   |
|--------------------------------|--------|---------------|--------|
|                           |   | 2016          |   |   | 2015 |   |
|                           |   | USD thousands |   |   | USD thousands |   |
| Salary and related liabilities |   |          | 4,905  |   |   |   | 3,161 |   |
| Accrued expenses               |   |          | 3,029  |   |   |   | 1,283 |   |
| Institutions                   |   |          | 300    |   |   |   | 155 |   |
| Tax provision                  |   |          | 8      |   |   |   | 111 |   |
| Hedging transactions           |   |          | -      |   |   |   | 4 |   |
| Related parties*               |   |          | 45     |   |   |   | 35 |   |
| Other                          |   |          | 175    |   |   |   | 82 |   |
|                           |   |          |   |   |   |   |   |   |
|                           |   |          | 8,462  |   |   |   | 4,831 |   |

| * | See Note 21 - Related Parties, for additional information regarding transactions and balances with related parties. |
|---|---------------------------------------------------------------------------------------------------------------------|

----

----

|                                       |   | For the year ended December 31 |   |
|--------------------------------------------|--------|--------------------------------|--------|
|                                       |   | 2016                           |   |   | 2015 |   |   | 2014 |   |
|                                       |   | USD thousands                  |   |   | USD thousands |   |   | USD thousands |   |
| Amount recognized as expense in respect of |   |                           |   |   |   |   |   |   |   |
|  defined contribution plan            |   |                           | 368    |   |   |   | 243 |   |   |   | 229 |   |

| A. | Details regarding the tax environment of the Group |
|----|----------------------------------------------------|

|  | (1) | Corporate tax rate |
|--|-----|--------------------|

| (a) | Presented hereunder are the Israeli tax rates in the years 2014-2016: |
|-----|-----------------------------------------------------------------------|

|  | (b) | On January 4, 2016 the Knesset plenum passed the Law for the Amendment of the Income Tax Ordinance (Amendment 216) - 2016, by which, inter alia, the corporate tax rate would be reduced by 1.5% to a rate of 25% as from January 1, 2016. |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  |  | Furthermore, on December 22, 2016 the Knesset plenum passed the Economic Efficiency Law (Legislative Amendments for Achieving Budget Objectives in the Years 2017 and 2018) - 2016, by which, inter alia, the corporate tax rate would be reduced from 25% to 23% in two steps. The first step will be to a rate of 24% as from January 2017 and the second step will be to a rate of 23% as from January 2018. |
|--|--|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (2) | Benefits under the Israeli Law for the Encouragement of Capital Investments - 1959 (hereinafter - "the Law") |
|--|-----|--------------------------------------------------------------------------------------------------------------|

|  | (a) | In April 2004, the Company was granted "Approved Enterprise" status in accordance with the Law with respect to a plan to construct a plant in Caesarea, Israel for the manufacture of systems for assisting and guiding complex surgical procedures. In February 2007, the aforementioned approved enterprise status was revoked at the request of the Company, and in respect of an expansion of its plant in the Caesarea industrial park it was granted "Beneficiary Enterprise" status per the definition of this term in the Law. In accordance with this status, the Company will be entitled to the tax benefits provided by the Law with respect to income of the beneficiary enterprise from productive activity. Income of the beneficiary enterprise from productive activity will be exempt from tax for two years from the year in which the Company first has taxable income, and will be subject to tax of 10%-25% in the following 5 years, provided that 12 years have not passed from the beginning of the year of election. In the event of a dividend distribution from income that is exempt from company tax, as aforementioned, the Company will be required to pay tax of 25% on that income. In 2013, the Company notified the tax authorities that 2012 tax year is the year of election. |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| A. | Details regarding the tax environment of the Group (cont'd) |
|----|-------------------------------------------------------------|

|  | (2) | Benefits under the Israeli Law for the Encouragement of Capital Investments - 1959 (hereinafter - "the Law") (cont'd) |
|--|-----|-----------------------------------------------------------------------------------------------------------------------|

|  | (b) | On December 29, 2010, the Knesset approved the Economic Policy Law for 2011-2012, which includes an amendment to the Law for the Encouragement of Capital Investments - 1959 (hereinafter - "the Amendment"). The Amendment is effective from January 1, 2011 and its provisions apply to preferred income derived or accrued in 2011 and thereafter by a preferred company, per the definition of these terms in the Amendment. |
|--|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (3) | Benefits under the Law for the Encouragement of Industry (Taxes) |
|--|-----|----------------------------------------------------------------------------------------------------------|

|  | (a) | Higher rates of depreciation. |
|--|-----|-------------------------------|

|  | (b) | Amortization in three equal annual portions of issuance expenses when registering shares for trading as from the date the shares of the company were registered. |
|--|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (c) | An 8-year period of amortization for patents and know-how serving in the development of the enterprise. |
|--|-----|---------------------------------------------------------------------------------------------------------|

|  | (d) | The possibility of submitting consolidated tax returns by companies in the same line of business. |
|--|-----|---------------------------------------------------------------------------------------------------|

----

----

| A. | Details regarding the tax environment of the Group (cont'd) |
|----|-------------------------------------------------------------|

|  | (4) | Measurement of taxable income under the Income Tax (Inflationary Adjustments) Law, 1985 |
|--|-----|-----------------------------------------------------------------------------------------|

|  | (5) | Taxation of the subsidiary in the U.S. |
|--|-----|----------------------------------------|

| B. | Composition of income tax expense |
|----|-----------------------------------|

|                            |   | For the year ended December 31 |   |
|---------------------------------|--------|--------------------------------|--------|
|                            |   | 2016                           |   |   | 2015 |   |   | 2014 |   |
|                            |   | USD thousands                  |   |   | USD thousands |   |   | USD thousands |   |
| Current tax expense             |   |                           |   |   |   |   |   |   |   |
| Current tax                     |   |                           | 265    |   |   |   | 97 |   |   |   | 194 |   |
|                            |   |                           |   |   |   |   |   |   |   |   |   |   |
| Deferred tax expense (income)   |   |                           |   |   |   |   |   |   |   |   |   |   |
| Changes in deferred tax assets\ |   |                           |   |   |   |   |   |   |   |   |   |   |
| liabilities in subsidiary       |   |                           | (221   | ) |   |   | 116 |   |   |   | (49 | ) |
| Total tax expense               |   |                           | 44     |   |   |   | 213 |   |   |   | 145 |   |

| C. | Reconciliation between the theoretical tax on the pre-tax profit and the tax expense |
|----|--------------------------------------------------------------------------------------|

|                                                 |   | For the year ended December 31 |    |
|------------------------------------------------------|--------|--------------------------------|---------|
|                                                 |   | 2016                           |    |   | 2015 |   |   | 2014 |   |
|                                                 |   | USD thousands                  |    |   | USD thousands |   |   | USD thousands |   |
| Loss before taxes on income                          |   |                           | (18,624 | ) |   |   | (15,172 | ) |   |   | (15,127 | ) |
| Primary tax rate of the Company                      |   |                           | 25      | % |   |   | 26.5 | % |   |   | 26.5 | % |
|                                                 |   |                           |    |   |   |   |   |   |   |   |   |   |
| Tax calculated according to the Company's            |   |                           |    |   |   |   |   |   |   |   |   |   |
|  primary tax rate                               |   |                           | (4,656  | ) |   |   | (4,021 | ) |   |   | (4,009 | ) |
|                                                 |   |                           |    |   |   |   |   |   |   |   |   |   |
| Changes to tax  in respect of:                  |   |                           |    |   |   |   |   |   |   |   |   |   |
| Different tax rate of foreign subsidiaries           |   |                           | 94      |   |   |   | 54 |   |   |   | 20 |   |
| Non-deductible expenses                              |   |                           | 1,179   |   |   |   | 875 |   |   |   | 615 |   |
| Difference between the measurement basis of          |   |                           |    |   |   |   |   |   |   |   |   |   |
|  the Company's results for tax purposes and the |   |                           |    |   |   |   |   |   |   |   |   |   |
|  measurement basis of the Company's results in  |   |                           |    |   |   |   |   |   |   |   |   |   |
|  the financial statements (see A(4) above)      |   |                           | -       |   |   |   | - |   |   |   | 1,905 |   |
| Tax losses and benefits for which deferred           |   |                           |    |   |   |   |   |   |   |   |   |   |
|  tax assets were not created                    |   |                           | 3,583   |   |   |   | 3,290 |   |   |   | 1,578 |   |
| Other differences                                    |   |                           | (156    | ) |   |   | 15 |   |   |   | 36 |   |
|                                                 |   |                           |    |   |   |   |   |   |   |   |   |   |
| Income tax expense                                   |   |                           | 44      |   |   |   | 213 |   |   |   | 145 |   |

----

----

| D. | Deferred tax assets and liabilities |
|----|-------------------------------------|

|  | (1) | The Company has recognized deferred tax assets and liabilities in respect of the following items: |
|--|-----|---------------------------------------------------------------------------------------------------|

|                                       |   | December 31   |   |
|--------------------------------------------|--------|---------------|--------|
|                                       |   | 2016          |   |   | 2015 |   |
|                                       |   | USD thousands |   |   | USD thousands |   |
| Property and equipment                     |   |          | (102   | ) |   |   | (101 | ) |
| Tax losses and other temporary differences |   |          | 360    |   |   |   | 138 |   |
| Deferred tax assets                        |   |          | 258    |   |   |   | 37 |   |

|  | (2) | Unrecognized deferred tax assets |
|--|-----|----------------------------------|

|                                  |   | December 31   |   |
|---------------------------------------|--------|---------------|--------|
|                                  |   | 2016          |   |   | 2015 |   |
|                                  |   | USD thousands |   |   | USD thousands |   |
| Deductible temporary differences, net |   |          | 5,034  |   |   |   | 6,112 |   |
| Capital tax losses                    |   |          | 7,486  |   |   |   | 7,375 |   |
| Operating tax losses                  |   |          | 92,089 |   |   |   | 76,178 |   |

|  E. | Carry-forward losses |
|----------|----------------------|

| F. | Tax assessments |
|----|-----------------|

----

----

| A. | The Company and the U.S. subsidiary have operating lease agreements with respect to the buildings they use. The agreements of the Company will end in December 2017 and June 2021 and the agreement of the U.S. subsidiary will end in April 2018, respectively. The Company provided a promissory note in the amount of USD 15 thousand and deposited as a lien USD 274 thousand as security for the building lease. |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | December 31, 2016 |   |
|--------|--------|-------------------|--------|
|   |   | USD thousands     |   |
| 2017   |   |              | 903    |   |
| 2018   |   |              | 634    |   |
| 2019   |   |              | 562    |   |
| 2020   |   |              | 562    |   |
| 2021   |   |              | 281    |   |
|   |   |              | 2,942  |   |

| B. | The Company leases motor vehicles under operating lease agreements for a period of 32 to 36 months. With regards to these agreements, the Company has deposited amounts as security for the future rent payments. As of the reporting date the balance of prepaid expenses on account of the lease of motor vehicles is USD 93 thousand. The deposits are linked to the CPI and do not bear interest. The minimum annual payments according to the agreements are as follows: |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | December 31, 2016 |   |
|--------|--------|-------------------|--------|
|   |   | USD thousands     |   |
| 2017   |   |              | 282    |   |
| 2018   |   |              | 199    |   |
| 2019   |   |              | 91     |   |
|   |   |              | 572    |   |

| C. | In January 2012, the Company entered into a distribution agreement with Mazor Robotics GmbH (hereinafter: "Mazor Germany"). According to the agreement, the Company will grant to Mazor Germany exclusive distribution rights in Germany, Austria and Switzerland (the "Territory") with respect to various products of the Company, and limited service also in other European countries according to the needs of the Company, and will also pay a monthly fee to support penetration cost to the Territory. The monthly fee will be agreed  by both parties in advanced each calendar year. The monthly fee will be paid 3 months in advance each calendar month. The Company granted to Mazor Germany the right to use the name "Mazor", and this right will expire on the last date of a binding agreement. The intellectual property will at all times continue to be the property of the Company. The agreement will continue until terminated by either party with 180 days written notice. During the 180 day advance notice the Company will continue to pay the monthly fee as agreed. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| D. | As of December 31, 2016, the Company has purchase obligations in the amount of USD 5,590 thousand (as of December 31, 2015: USD 2,468 thousand) which mainly represent outstanding purchase commitments for inventory components and R&D materials ordered in the normal course of business. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                 |   | For the year ended December 31 |   |
|----------------------|--------|--------------------------------|--------|
|                 |   | 2016                           |   |   | 2015 |   |   | 2014 |   |
|                 |   | USD thousands                  |   |   | USD thousands |   |   | USD thousands |   |
| Sales of systems     |   |                           | 19,624 |   |   |   | 13,373 |   |   |   | 12,040 |   |
| Sales of disposables |   |                           | 10,295 |   |   |   | 7,648 |   |   |   | 4,916 |   |
| Services and other   |   |                           | 6,460  |   |   |   | 5,075 |   |   |   | 4,252 |   |
|                 |   |                           |   |   |   |   |   |   |   |   |   |   |
|                 |   |                           | 36,379 |   |   |   | 26,096 |   |   |   | 21,208 |   |

| A. | Information about reportable segments |
|----|---------------------------------------|

| B. | Entity level disclosures |
|----|--------------------------|

|  | (1) | Major Customers |
|--|-----|-----------------|

|  | (2) | Information on products and services |
|--|-----|--------------------------------------|

|  | (3) | Information on geographical areas |
|--|-----|-----------------------------------|

|           |   | For the year ended December 31, 2016 |   |
|----------------|--------|--------------------------------------|--------|
|           |   | U.S.A.                               |   |   | International |   |   | Total |   |
|           |   | USD in thousands                     |   |
| Total revenues |   |                                 | 30,716 |   |   |   | 5,663 |   |   |   | 36,379 |   |

|           |   | For the year ended December 31, 2015 |   |
|----------------|--------|--------------------------------------|--------|
|           |   | U.S.A.                               |   |   | International |   |   | Total |   |
|           |   | USD in thousands                     |   |
| Total revenues |   |                                 | 20,271 |   |   |   | 5,825 |   |   |   | 26,096 |   |

|           |   | For the year ended December 31, 2014 |   |
|----------------|--------|--------------------------------------|--------|
|           |   | U.S.A.                               |   |   | International |   |   | Total |   |
|           |   | USD in thousands                     |   |
| Total revenues |   |                                 | 15,486 |   |   |   | 5,722 |   |   |   | 21,208 |   |

----

----

|                                 |   | For the year ended December 31 |   |
|--------------------------------------|--------|--------------------------------|--------|
|                                 |   | 2016                           |   |   | 2015 |   |   | 2014 |   |
|                                 |   | USD thousands                  |   |   | USD thousands |   |   | USD thousands |   |
| Materials and subcontractors         |   |                           | 7,503  |   |   |   | 3,669 |   |   |   | 2,616 |   |
| Salaries, wages and related expenses |   |                           | 1,474  |   |   |   | 1,264 |   |   |   | 1,061 |   |
| Depreciation and amortization        |   |                           | 418    |   |   |   | 193 |   |   |   | 189 |   |
| Other manufacturing expenses         |   |                           | 935    |   |   |   | 701 |   |   |   | 530 |   |
|                                 |   |                           |   |   |   |   |   |   |   |   |   |   |
| Total cost of sales                  |   |                           | 10,330 |   |   |   | 5,827 |   |   |   | 4,396 |   |

|                                    |   | For the year ended December 31 |   |
|-----------------------------------------|--------|--------------------------------|--------|
|                                    |   | 2016                           |   |   | 2015 |   |   | 2014 |   |
|                                    |   | USD thousands                  |   |   | USD thousands |   |   | USD thousands |   |
| Materials and subcontractors            |   |                           | 2,444  |   |   |   | 2,690 |   |   |   | 2,358 |   |
| Salaries, wages and related expenses    |   |                           | 4,167  |   |   |   | 2,875 |   |   |   | 2,630 |   |
| Depreciation                            |   |                           | 97     |   |   |   | 45 |   |   |   | 94 |   |
| Patent registration expenses            |   |                           | 208    |   |   |   | 106 |   |   |   | 139 |   |
| Overhead                                |   |                           | 539    |   |   |   | 355 |   |   |   | 309 |   |
| Other research and development expenses |   |                           | 613    |   |   |   | 253 |   |   |   | 246 |   |
|                                    |   |                           | 8,068  |   |   |   | 6,324 |   |   |   | 5,776 |   |
|                                    |   |                           |   |   |   |   |   |   |   |   |   |   |
| Less: capitalized cost                  |   |                           | (2,332 | ) |   |   | - |   |   |   | - |   |
|                                    |   |                           |   |   |   |   |   |   |   |   |   |   |
| Total research and development expenses |   |                           | 5,736  |   |   |   | 6,324 |   |   |   | 5,776 |   |

|                                        |   | For the year ended December 31 |   |
|---------------------------------------------|--------|--------------------------------|--------|
|                                        |   | 2016                           |   |   | 2015 |   |   | 2014 |   |
|                                        |   | USD thousands                  |   |   | USD thousands |   |   | USD thousands |   |
| Salaries, wages and related expenses        |   |                           | 22,270 |   |   |   | (*)16,143 |   |   |   | 12,952 |   |
| Consultation                                |   |                           | 2,439  |   |   |   | (*)1,834 |   |   |   | 1,659 |   |
| Advertising, demonstrations and exhibitions |   |                           | 3,243  |   |   |   | 2,546 |   |   |   | 2,579 |   |
| Travel expenses                             |   |                           | 3,814  |   |   |   | (*)2,696 |   |   |   | 2,412 |   |
| Depreciation                                |   |                           | 259    |   |   |   | 213 |   |   |   | 199 |   |
| Excise tax                                  |   |                           | -      |   |   |   | 308 |   |   |   | 238 |   |
| Overhead                                    |   |                           | 919    |   |   |   | 707 |   |   |   | 675 |   |
| Other selling and marketing expenses        |   |                           | 693    |   |   |   | (*)500 |   |   |   | 638 |   |
|                                        |   |                           |   |   |   |   |   |   |   |   |   |   |
| Total selling and marketing expenses        |   |                           | 33,637 |   |   |   | 24,947 |   |   |   | 21,352 |   |

----

----

|                                           |   | For the year ended December 31 |   |
|-------------------------------------------|--------|--------------------------------|--------|
|                                           |   | 2016                           |   |   | 2015 |   |   | 2014 |   |
|                                           |   | USD thousands                  |   |   | USD thousands |   |   | USD thousands |   |
| Salaries, wages and related expenses      |   |                           | 3,525  |   |   |   | 2,395 |   |   |   | 2,183 |   |
| Professional services                     |   |                           | 1,510  |   |   |   | 1,271 |   |   |   | 1,274 |   |
| Travel expenses                           |   |                           | 192    |   |   |   | 214 |   |   |   | 155 |   |
| Overhead                                  |   |                           | 203    |   |   |   | 133 |   |   |   | 125 |   |
| Other general and administrative expenses |   |                           | 267    |   |   |   | 292 |   |   |   | 655 |   |
|                                      |   |                           |   |   |   |   |   |   |   |   |   |   |
| Total general and administrative expenses |   |                           | 5,697  |   |   |   | 4,305 |   |   |   | 4,392 |   |

|                                            |   | For the year ended December 31 |   |
|-------------------------------------------------|--------|--------------------------------|--------|
|                                            |   | 2016                           |   |   | 2015 |   |   | 2014 |   |
|                                            |   | USD thousands                  |   |   | USD thousands |   |   | USD thousands |   |
| Interest income and net change in fair value of |   |                           |   |   |   |   |   |   |   |
|  financial assets held-for-trading         |   |                           | 399    |   |   |   | 269 |   |   |   | 134 |   |
| Hedging transactions                            |   |                           | 39     |   |   |   | 3 |   |   |   | - |   |
|                                            |   |                           |   |   |   |   |   |   |   |   |   |   |
| Financing income recognized in profit or loss   |   |                           | 438    |   |   |   | 272 |   |   |   | 134 |   |
|                                            |   |                           |   |   |   |   |   |   |   |   |   |   |
| Net expenses from change in exchange rates      |   |                           | (10    | ) |   |   | (113 | ) |   |   | (107 | ) |
| Financing expenses on liabilities to the IIA    |   |                           | -      |   |   |   | - |   |   |   | (15 | ) |
| Hedging transactions                            |   |                           | -      |   |   |   | - |   |   |   | (408 | ) |
| Other financing expenses                        |   |                           | (31    | ) |   |   | (24 | ) |   |   | (23 | ) |
|                                            |   |                           |   |   |   |   |   |   |   |   |   |   |
| Financing expenses recognized in profit or loss |   |                           | (41    | ) |   |   | (137 | ) |   |   | (553 | ) |
|                                            |   |                           |   |   |   |   |   |   |   |   |   |   |
| Net financing income (expenses)                 |   |                           | 397    |   |   |   | 135 |   |   |   | (419 | ) |

| A. | Key management personnel compensation (including directors) |
|----|-------------------------------------------------------------|

|                      |   | For the year ended December 31 |   |
|----------------------|--------|--------------------------------|--------|
|                      |   | 2016                           |   |   | 2015 |   |   | 2014 |   |
|                      |   | Number                         |   |   | USD |   |   | Number of |   |   | USD |   |   | Number |   |   | USD |   |
|                      |   | of people                      |   |   | thousands |   |   | people |   |   | thousands |   |   | of people |   |   | thousands |   |
| Employee benefits    |   |                           | 9      |   |   |   | 3,012 |   |   |   | 9 |   |   |   | 2,092 |   |   |   | 7 |   |   |   | 2,020 |   |
| Share-based payments |   |                           | 9      |   |   |   | 1,865 |   |   |   | 9 |   |   |   | 1,285 |   |   |   | 7 |   |   |   | 501 |   |
|                 |   |                           |   |   |   |   | 4,877 |   |   |   |   |   |   |   | 3,377 |   |   |   |   |   |   |   | 2,521 |   |

----

----

| A. | Key management personnel compensation (including directors) (cont'd) |
|----|----------------------------------------------------------------------|

|                          |   | For the year ended December 31 |   |
|-------------------------------|--------|--------------------------------|--------|
|                          |   | 2016                           |   |   | 2015 |   |   | 2014 |   |
|                          |   | Number                         |   |   | USD |   |   | Number of |   |   | USD |   |   | Number |   |   | USD |   |
|                          |   | of people                      |   |   | thousands |   |   | people |   |   | thousands |   |   | of people |   |   | thousands |   |
| Total compensation            |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  to directors employed   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  by the Company*         |   |                           | 1      |   |   |   | 199 |   |   |   | 1 |   |   |   | 187 |   |   |   | 1 |   |   |   | 314 |   |
| Compensation to               |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  independent directors** |   |                           | 5      |   |   |   | 354 |   |   |   | 4 |   |   |   | 423 |   |   |   | 4 |   |   |   | 305 |   |

|  | * | Including share-based payments in the amount of USD 82 thousand, USD 78 thousand and USD 196 thousand in 2016, 2015 and 2014, respectively. |
|--|---|---------------------------------------------------------------------------------------------------------------------------------------------|

|  | ** | Including share-based payments in the amount of USD 194 thousand, USD 287 thousand and USD 166 thousand in 2016, 2015 and 2014, respectively. |
|--|----|-----------------------------------------------------------------------------------------------------------------------------------------------|

| B. | Engagements between the Company and related parties |
|----|-----------------------------------------------------|

|  | (1) | On January 22, 2014, the Company's shareholders approved, based on the recommendations of the Company's compensation committee and board of directors, an amendment to the employment terms of the Company's CEO, so that his re-adjustment payment shall be extended from four monthly payments to six monthly payments in the event that the CEO will resign subsequent to a change of control in the Company and it shall be extended from six monthly payments to nine monthly payments in the event that the CEO will be terminated subsequent to a change of control in the Company. |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (2) | On July 22, 2014, the Company's shareholders approved an amendment to the employment terms of the CEO, based on the compensation committee and the Board of Directors recommendation, such that the CEO salary, effective April 1, 2014, has been updated to NIS 70 thousand (USD 18 thousand) per month. |
|--|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (3) | On July 22, 2014, the Company's shareholders approved additional share-based compensation to one of the directors. On the same date, the terms for granting share-based compensation to three directors were met – For further details, see Note 23(C). |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (4) | On October 22, 2014, October 8, 2015 and July 19, 2016, the Company's general meeting of shareholders approved additional share-based compensation to the CEO – For further details, see Note 23(C). |
|--|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| B. | Engagements between the Company and related parties (cont'd) |
|----|--------------------------------------------------------------|

|  | (5) | On July 19, 2016, the Company’s shareholders approved an amendment to the employment terms of the CEO, based on the compensation committee and the Board of Directors recommendation, such that the CEO salary, effective March 1, 2016, has been updated to NIS 80 thousand (USD 20 thousand) per month. On the same date, the Company’s shareholders approved the grant of a bonus in the sum of NIS 900,000 to the CEO, in light of his contribution to the Company's successful completion of a private placement of the Company's ADSs and the execution of an Exclusive Lead Sharing and Distribution Agreement in May 2016, as further discussed in Note 1(C). |
|--|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (6) | On November 28, 2016, the Company's shareholders approved share-based compensation to all of the directors - For further details see Note 23(C). |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------------------------|

| A. | Share capital |
|----|---------------|

|                                               |   | December 31               |   |
|----------------------------------------------------|--------|---------------------------|--------|
|                                               |   | Number of Ordinary shares |   |
|                                               |   | 2016                      |   |   | 2015 |   |
|                                               |   | Thousands of shares of    |   |
|                                               |   | NIS 0.01 par value        |   |
| Issued and paid-in share capital as of January 1   |   |                      | 42,352 |   |   |   | 42,133 |   |
| Issuance of share capital to investors             |   |                      | 3,917  |   |   |   | - |   |
| Exercise of warrants by investors                  |   |                      | 134    |   |   |   | - |   |
| Exercise of share options by employees             |   |                      | 1,216  |   |   |   | 219 |   |
|                                               |   |                      |   |   |   |   |   |   |
| Issued and paid-in share capital as of December 31 |   |                      | 47,619 |   |   |   | 42,352 |   |
| Authorized share capital                           |   |                      | 75,000 |   |   |   | 75,000 |   |

| B. | Warrants held by investors |
|----|----------------------------|

|                                            |   | December 31             |   |
|-------------------------------------------------|--------|-------------------------|--------|
|                                            |   | Number of options       |   |
|                                            |   | 2016                    |   |   | 2015 |   |
|                                            |   | Thousands of options of |   |
|                                            |   | NIS 0.01 par value      |   |
| Number of outstanding options as of January 1   |   |                    | 134    |   |   |   | 134 |   |
| Exercised during the period                     |   |                    | (134   | ) |   |   | - |   |
|                                            |   |                    |   |   |   |   |   |   |
| Number of outstanding options as of December 31 |   |                    | -      |   |   |   | 134 |   |

| C. | Issuances of share capital |
|----|----------------------------|

|  | (1) | Private placement - 2011 |
|--|-----|--------------------------|

|  | (1) | The Phoenix Insurance Company Ltd., for itself and for other companies of the Phoenix Group (together Phoenix), on the basis of an internal distribution agreed to by the parties, 2,000,000 ordinary shares of the Company with a par value of NIS 0.01, and 800,000 non-marketable options that will not be listed for trading and are exercisable into 800,000 ordinary shares of the Company with a par value of NIS 0.01 over a period of five years from the date of their allotment at an exercise price of NIS 14 (approximately USD 3.88) per option. |
|--|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|  | (1) | Private placement – 2011 (cont'd) |
|--|-----|-----------------------------------------|

|  | (2) | Leader Issuances (1993) Ltd. 421,053 ordinary shares of the Company with a par value of NIS 0.01, and 168,421 non-marketable options that will not be listed for trading and are exercisable into 168,421 ordinary shares of the Company with a par value of NIS 0.01 over a period of five years from the date of closing at an exercise price of NIS 14 (approximately USD 3.88) per option. |
|--|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (2) | Private issuance - 2016 |
|--|-----|-------------------------|

----

----

| A. | Grant of share options to employees and directors of the Company |
|----|------------------------------------------------------------------|

| B. | As of December 31, 2016, the Company has 2 stock option plans for employees, directors, consultants and other service providers of the Group (the "2003 Plan" and the "2011 Plan"). No further grants may be made under the 2003 Plan. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| C. | The number and weighted average exercise prices of share options are as follows: |
|----|----------------------------------------------------------------------------------|

|                           |   | Weighted   |   |   |      |   |       |            |   |   |      |   |   | Weighted   |      |   |      |   |
|---------------------------|--------|------------|--------|--------|-----------|--------|------------|-----------------|--------|--------|-----------|--------|--------|------------|-----------|--------|-----------|--------|
|                           |   | average    |   |   |      |   |       | Weighted        |   |   |      |   |   | average    |      |   |      |   |
|                           |   | exercise   |   |   | Number of |   |       | average         |   |   | Number of |   |   | exercise   |      |   | Number of |   |
|                           |   | price*     |   |   | options   |   |       | exercise price* |   |   | options   |   |   | price*     |      |   | options   |   |
|                           |   | 2016       |   |   | 2016      |   |       | 2015            |   |   | 2015      |   |   | 2014       |      |   | 2014      |   |
|                           |   | US dollars |   |   |      |   |       | US dollars      |   |   |      |   |   | US dollars |      |   |      |   |
|                      |   |       |   |   |      |   |       |            |   |   |      |   |   |       |      |   |      |   |
| Balance at January 1      |   |       | 5.43   |   |      |   | 5,531,623  |            |   |   | 5.43      |   |   |       | 4,540,158 |   |      |   | 2.77 |   |   |   | 3,715,613 |   |
| Forfeited during the year |   |       | 6.83   |   |      |   | (235,718   | )               |   |   | 7.09      |   |   |       | (364,408  | )      |      |   | 4.75 |   |   |   | (250,935 | ) |
| Exercised during the year |   |       | 3.59   |   |      |   | (1,216,115 | )               |   |   | 1.70      |   |   |       | (218,277  | )      |      |   | 2.31 |   |   |   | (1,313,170 | ) |
| Granted during the year   |   |       | 7.04   |   |      |   | 2,588,651  |            |   |   | 6.76      |   |   |       | 1,574,150 |   |      |   | 7.96 |   |   |   | 2,388,650 |   |
|                      |   |       |   |   |      |   |       |            |   |   |      |   |   |       |      |   |      |   |   |   |   |   |   |   |
| Outstanding at            |   |       |   |   |      |   |       |            |   |   |      |   |   |       |      |   |      |   |   |   |   |   |   |   |
| December 31               |   |       | 6.45   |   |      |   | 6,668,441  |            |   |   | 5.43      |   |   |       | 5,531,623 |   |      |   | 5.43 |   |   |   | 4,540,158 |   |
|                      |   |       |   |   |      |   |       |            |   |   |      |   |   |       |      |   |      |   |   |   |   |   |   |   |
| Exercisable at            |   |       |   |   |      |   |       |            |   |   |      |   |   |       |      |   |      |   |   |   |   |   |   |   |
|  December 31         |   |       | 5.19   |   |      |   | 1,882,267  |            |   |   | 2.91      |   |   |       | 1,949,459 |   |      |   | 2.65 |   |   |   | 1,640,803 |   |

| D. | Total expense recognized as salary expense for years ended December 31, 2016 are USD 4,439 thousand (USD 3,091 thousand and USD 2,157 thousand for years ended December 31, 2015 and 2014, respectively). |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| E. | The fair value of share options granted to employees, directors, consultants and other service providers is measured using the binomial model. Measurement inputs include the share price on the measurement date, the exercise price of the instrument, expected volatility (based on the historical volatility), the expected life span of the options taking in consideration certain acceleration terms, and the risk-free interest rate (based on government debentures). Service and non-market performance conditions attached to the transactions are not taken into account in determining fair value. |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|              |   |                                |   |        |      |   |    |   |    |        |   |   |      |   |   |       |      |   |     |   |        | Share price |   |   |           |   |
|-------------------|--------|-------------------------------------|--------|-------------|-----------|--------|---------|--------|---------|-------------|--------|--------|-----------|--------|--------|------------|-----------|--------|----------|--------|-------------|-------------|--------|--------|----------------|--------|
|              |   |                                |   |        |      |   |    |   |    | Contractual |   |   |      |   |   |       |      |   |     |   |        | that served |   |   | Total          |   |
|              |   |                                |   |        |      |   | Vesting |   |    | life of the |   |   |      |   |   |       |      |   | Average  |   |        | as a basis  |   |   | fair value of  |   |
|   Grant date |   |                                |   | Number of   |      |   | Period  |   |    | options     |   |   | Interest  |   |   | Expected   |      |   | exercise |   |        | for pricing |   |   | the benefit on |   |
|   DD/MM/YEAR |   | Offerees                            |   | instruments |      |   | (Years) |   |    | (Years)     |   |   | rate      |   |   | volatility |      |   | price*   |   |        | the option* |   |   | the grant date |   |
|              |   |                                |   |        |      |   |    |   |    |        |   |   | %         |   |   | %          |      |   | USD      |   |        | USD         |   |   | USD thousands  |   |
|   02/02/2014 |   | Employees                           |   |        | 64,500    |   |    |   | 1-4     |        |   |   | 7         |   |   |       | 3.31      |   |     |   | 48.55       |        |   |   | 12.54          |   |   |   | 12.54 |   |   |   | 381 |   |
| 03/04/2014        |   | Employees                           |   |        | 89,200    |   |    |   | 1-4     |        |   |   | 7         |   |   |       | 3.09      |   |     |   | 48.26       |        |   |   | 11.98          |   |   |   | 10.92 |   |   |   | 431 |   |
| 22/07/2014        |   | Directors                           |   |        | 160,000   |   |    |   | 1-3     |        |   |   | 7         |   |   |       | 2.52      |   |     |   | 48.11       |        |   |   | 8.10           |   |   |   | 7.46 |   |   |   | 543 |   |
| 31/07/2014        |   | Officers and employees              |   |        | 1,877,450 |   |    |   | 2-4     |        |   |   | 7         |   |   |       | 2.48      |   |     |   | 48.03       |        |   |   | 7.76           |   |   |   | 6.97 |   |   |   | 5,770 |   |
| 22/10/2014        |   | CEO                                 |   |        | 150,000   |   |    |   | 2-4     |        |   |   | 6.78      |   |   |       | 1.80      |   |     |   | 48.50       |        |   |   | 7.11           |   |   |   | 5.59 |   |   |   | 345 |   |
| 29/10/2014        |   | Employees                           |   |        | 47,500    |   |    |   | 2-4     |        |   |   | 7         |   |   |       | 1.94      |   |     |   | 48.09       |        |   |   | 6.07           |   |   |   | 5.64 |   |   |   | 114 |   |
| 29/01/2015        |   | Officer and consultant              |   |        | 110,000   |   |    |   | 2-4     |        |   |   | 7         |   |   |       | 1.5       |   |     |   | 48.61       |        |   |   | 5.83           |   |   |   | 5.35 |   |   |   | 268 |   |
| 15/02/2015        |   | Employees                           |   |        | 104,250   |   |    |   | 2-4     |        |   |   | 7         |   |   |       | 1.65      |   |     |   | 48.65       |        |   |   | 5.86           |   |   |   | 5.86 |   |   |   | 269 |   |
| 26/02/2015        |   | Officer                             |   |        | 100,000   |   |    |   | 1.5-3.5 |        |   |   | 7         |   |   |       | 1.44      |   |     |   | 48.69       |        |   |   | 6.28           |   |   |   | 5.82 |   |   |   | 261 |   |
| 04/05/2015        |   | Employees and consultant            |   |        | 144,500   |   |    |   | 2-4     |        |   |   | 7         |   |   |       | 1.36      |   |     |   | 48.88       |        |   |   | 6.44           |   |   |   | 6.44 |   |   |   | 440 |   |
| 15/07/2015        |   | Officers, employees and consultants |   |        | 941,900   |   |    |   | 2-4     |        |   |   | 7         |   |   |       | 2.03      |   |     |   | 48.84       |        |   |   | 7.17           |   |   |   | 7.17 |   |   |   | 3,269 |   |
| 08/10/2015        |   | CEO                                 |   |        | 60,000    |   |    |   | 2-4     |        |   |   | 6.77      |   |   |       | 1.7       |   |     |   | 49.37       |        |   |   | 7.01           |   |   |   | 5.75 |   |   |   | 153 |   |
| 29/10/2015        |   | Employees                           |   |        | 113,500   |   |    |   | 2-4     |        |   |   | 7         |   |   |       | 1.64      |   |     |   | 48.92       |        |   |   | 5.81           |   |   |   | 5.56 |   |   |   | 294 |   |
| 14/02/2016        |   | Employees and consultants           |   |        | 112,500   |   |    |   | 2-4     |        |   |   | 7         |   |   |       | 1.48      |   |     |   | 49.25       |        |   |   | 5.32           |   |   |   | 4.35 |   |   |   | 216 |   |
| 02/05/2016        |   | Employee                            |   |        | 42,500    |   |    |   | 2-4     |        |   |   | 7         |   |   |       | 1.52      |   |     |   | 48.14       |        |   |   | 6.06           |   |   |   | 6.06 |   |   |   | 120 |   |
| 10/05/2016        |   | Consultant                          |   |        | 25,000    |   |    |   | 2-4     |        |   |   | 7         |   |   |       | 1.47      |   |     |   | 48.10       |        |   |   | 5.91           |   |   |   | 5.58 |   |   |   | 68 |   |
| 18/05/2016        |   | Officers and employees              |   |        | 1,424,327 |   |    |   | 2-4     |        |   |   | 1.95-7.00 |   |   |       | 0.24-1.5  |   |     |   | 44.22-48.72 |        |   |   | 5.80           |   |   |   | 5.35 |   |   |   | 3,474 |   |
| 19/07/2016        |   | CEO                                 |   |        | 386,574   |   |    |   | 2-4     |        |   |   | 6.77      |   |   |       | 1.43      |   |     |   | 46.83       |        |   |   | 5.77           |   |   |   | 9.98 |   |   |   | 2,333 |   |
| 28/07/2016        |   | Officer, Employees and consultant   |   |        | 116,900   |   |    |   | 2-4     |        |   |   | 7         |   |   |       | 0.18-1.42 |   |     |   | 46.06-46.73 |        |   |   | 9.79           |   |   |   | 9.79 |   |   |   | 531 |   |
| 06/11/2016        |   | Employees                           |   |        | 240,850   |   |    |   | 2-4     |        |   |   | 1.48-7.00 |   |   |       | 0.22-1.64 |   |     |   | 45.94-46.63 |        |   |   | 11.57          |   |   |   | 11.06 |   |   |   | 1,209 |   |
| 28/11/2016        |   | Directors                           |   |        | 240,000   |   |    |   | 1-3     |        |   |   | 6.88-7.00 |   |   |       | 1.90-1.94 |   |     |   | 46.60-46.62 |        |   |   | 11.71          |   |   |   | 11.40 |   |   |   | 1,266 |   |

|  | * | The exercise price and share price are denominated in NIS and are re-measured using historic exchange rates. |
|--|---|--------------------------------------------------------------------------------------------------------------|

----

----

| A. | Basic loss per share |
|----|----------------------|

|  | (1) | Loss attributable to ordinary shareholders |
|--|-----|--------------------------------------------|

|              |   | For the year ended December 31 |   |
|-------------------|--------|--------------------------------|--------|
|              |   | 2016                           |   |   | 2015 |   |   | 2014 |   |
|              |   | Continuing                     |   |   | Continuing |   |   | Continuing |   |
|              |   | operations                     |   |   | operations |   |   | operations |   |
|              |   | USD thousands                  |   |   | USD thousands |   |   | USD thousands |   |
| Loss for the year |   |                           | 18,668 |   |   |   | 15,385 |   |   |   | 15,272 |   |

|                               |   | For the year ended December 31 |   |
|----------------------------------------------|--------|--------------------------------|--------|
|                                         |   | 2016                           |   |   | 2015 |   |   | 2014 |   |
|                                         |   | Thousands                      |   |   | Thousands |   |   | Thousands |   |
| Balance as of January 1                      |   |                           | 42,352 |   |   |   | 42,133 |   |   |   | 40,820 |   |
| Effect of shares issued during the year      |   |                           | 2,529  |   |   |   | 151 |   |   |   | 988 |   |
| Weighted average number of ordinary shares   |   |                           |   |   |   |   |   |   |   |   |   |   |
|  used to calculate basic loss per share |   |                           | 44,881 |   |   |   | 42,284 |   |   |   | 41,808 |   |

| B. | Diluted loss per share |
|----|------------------------|

| A. | Overview |
|----|----------|

| B. | Risk management framework |
|----|---------------------------|

----

----

| C. | Credit risk |
|----|-------------|

| D. | Liquidity risk |
|----|----------------|

| E. | Market risks |
|----|--------------|

----

----

| E. | Market risks (cont'd) |
|----|-----------------------|

|  |  (1) | Exposure to credit risk |
|--|-----------|-------------------------|

|                                   |   | December 31   |   |
|----------------------------------------|--------|---------------|--------|
|                                   |   | 2016          |   |   | 2015 |   |
|                                   |   | Carrying      |   |   | Carrying |   |
|                                   |   | amount        |   |   | Amount |   |
|                                   |   | USD thousands |   |
| Cash and cash equivalents              |   |          | 14,954 |   |   |   | 13,519 |   |
| Mutual funds                           |   |          | 13     |   |   |   | 13 |   |
| Short-term investments - bank deposits |   |          | 37,849 |   |   |   | 21,674 |   |
| Trade receivables                      |   |          | 8,225  |   |   |   | 5,002 |   |
| Other current assets                   |   |          | 171    |   |   |   | 125 |   |
| Long-term investments - bank deposits  |   |          | 9,017  |   |   |   | 5,023 |   |
|                                   |   |          |   |   |   |   |   |   |
|                                   |   |          | 70,229 |   |   |   | 45,356 |   |

|                   |   | December 31   |   |
|-------------------|--------|---------------|--------|
|                   |   | 2016          |   |   | 2015 |   |
|                   |   | USD thousands |   |
| Israel            |   |          | 29     |   |   |   | 14 |   |
| United States     |   |          | 7,503  |   |   |   | 3,884 |   |
| Asia Pacific      |   |          | 497    |   |   |   | 870 |   |
| Rest of the world |   |          | 196    |   |   |   | 234 |   |
|              |   |          |   |   |   |   |   |   |
|              |   |          | 8,225  |   |   |   | 5,002 |   |

|  | (2) | Aging of debts and impairment losses |
|--|-----|--------------------------------------|

|                     |   | December 31   |   |
|---------------------|--------|---------------|--------|
|                     |   | 2016          |   |   | 2015 |   |
|                     |   | Gross         |   |   | Impairment |   |   | Gross |   |   | Impairment |   |
|                     |   | USD thousands |   |   | USD thousands |   |
| Not past due        |   |          | 7,986  |   |   |   | - |   |   |   | 4,827 |   |   |   | - |   |
| Past due 0-30 days  |   |          | 215    |   |   |   | - |   |   |   | 175 |   |   |   | - |   |
| Past due 31-60 days |   |          | 24     |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                |   |          | 8,225  |   |   |   | - |   |   |   | 5,002 |   |   |   | - |   |

|                            |   | December 31   |   |
|----------------------------|--------|---------------|--------|
|                            |   | 2016          |   |   | 2015 |   |   | 2014 |   |
|                            |   | USD thousands |   |
| Balance as of January 1    |   |          | -      |   |   |   | - |   |   |   | (2 | ) |
| Impairment loss recognized |   |          | -      |   |   |   | - |   |   |   | (6 | ) |
| Bad debt written off       |   |          | -      |   |   |   | - |   |   |   | 8 |   |
| Balance as of December 31  |   |          | -      |   |   |   | - |   |   |   | - |   |

| B. | Liquidity risk |
|----|----------------|

----

----

| C. | Market risk |
|----|-------------|

|  |  (1) | Linkage and foreign currency risks |
|--|-----------|------------------------------------|

|                        |   | December 31, 2016   |   |
|-----------------------------|--------|---------------------|--------|
|                        |   | New Israeli Shekels |   |   |   |   |   |   |   |   |   |   |
|                        |   | Unlinked CPI        |   |   | Linked CPI |   |   | US dollar |   |   | Euro |   |   | Non - monetary |   |   | Total |   |
|                        |   | USD thousands       |   |
| Current Assets              |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents   |   |                | 2,300  |   |   |   | - |   |   |   | 11,923 |   |   |   | 731 |   |   |   | - |   |   |   | 14,954 |   |
| Short-term investments      |   |                | 287    |   |   |   | - |   |   |   | 37,575 |   |   |   | - |   |   |   | - |   |   |   | 37,862 |   |
| Trade receivables           |   |                | 29     |   |   |   | - |   |   |   | 8,000 |   |   |   | 196 |   |   |   | - |   |   |   | 8,225 |   |
| Other current assets        |   |                | 977    |   |   |   | - |   |   |   | 231 |   |   |   | - |   |   |   | 520 |   |   |   | 1,728 |   |
| Inventory                   |   |                | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4,715 |   |   |   | 4,715 |   |
| Total current assets        |   |                | 3,593  |   |   |   | - |   |   |   | 57,729 |   |   |   | 927 |   |   |   | 5,235 |   |   |   | 67,484 |   |
|                        |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other non-current assets    |   |                | -      |   |   |   | 93 |   |   |   | - |   |   |   | - |   |   |   | 258 |   |   |   | 351 |   |
| Property and equipment, net |   |                | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,615 |   |   |   | 3,615 |   |
| Intangible assets, net      |   |                | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,258 |   |   |   | 2,258 |   |
| Long-term investments       |   |                | -      |   |   |   | - |   |   |   | 9,017 |   |   |   | - |   |   |   | - |   |   |   | 9,017 |   |
| Total assets                |   |                | 3,593  |   |   |   | 93 |   |   |   | 66,746 |   |   |   | 927 |   |   |   | 11,366 |   |   |   | 82,725 |   |
|                        |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Liabilities         |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Trade payables              |   |                | 1,615  |   |   |   | - |   |   |   | 3,264 |   |   |   | 139 |   |   |   | - |   |   |   | 5,018 |   |
| Deferred revenue            |   |                | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4,031 |   |   |   | 4,031 |   |
| Other current liabilities   |   |                | 2,676  |   |   |   | - |   |   |   | 5,440 |   |   |   | 18 |   |   |   | 328 |   |   |   | 8,462 |   |
| Total current liabilities   |   |                | 4,291  |   |   |   | - |   |   |   | 8,704 |   |   |   | 157 |   |   |   | 4,359 |   |   |   | 17,511 |   |
|                        |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Employee benefits           |   |                | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 325 |   |   |   | 325 |   |
| Total liabilities           |   |                | 4,291  |   |   |   | - |   |   |   | 8,704 |   |   |   | 157 |   |   |   | 4,684 |   |   |   | 17,836 |   |
| Total balance, net          |   |                | (698   | ) |   |   | 93 |   |   |   | 58,042 |   |   |   | 770 |   |   |   | 6,682 |   |   |   | 64,889 |   |
|                        |   | December 31, 2015   |   |
|-----------------------------|--------|---------------------|--------|
|                        |   | New Israeli Shekels |   |   |   |   |   |   |   |   |   |   |
|                        |   | Unlinked CPI        |   |   | Linked CPI |   |   | US dollar |   |   | Euro |   |   | Non-monetary |   |   | Total |   |
|                        |   | USD thousands       |   |
| Current Assets              |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents   |   |                | 2,114  |   |   |   | - |   |   |   | 10,886 |   |   |   | 519 |   |   |   | - |   |   |   | 13,519 |   |
| Short-term investments      |   |                | 13     |   |   |   | - |   |   |   | 21,674 |   |   |   | - |   |   |   | - |   |   |   | 21,687 |   |
| Trade receivables           |   |                | 14     |   |   |   | - |   |   |   | 4,754 |   |   |   | 234 |   |   |   | - |   |   |   | 5,002 |   |
| Other current assets        |   |                | 528    |   |   |   | - |   |   |   | 125( | *) |   |   | - |   |   |   | 767( | *) |   |   | 1,420 |   |
| Inventory                   |   |                | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,777 |   |   |   | 2,777 |   |
| Total current assets        |   |                | 2,669  |   |   |   | - |   |   |   | 37,439 |   |   |   | 753 |   |   |   | 3,544 |   |   |   | 44,405 |   |
|                        |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Prepaid lease fees          |   |                | -      |   |   |   | 73 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 73 |   |
| Property and equipment, net |   |                | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,432 |   |   |   | 1,432 |   |
| Deferred tax asset          |   |                | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 37 |   |   |   | 37 |   |
| Long-term investments       |   |                | -      |   |   |   | - |   |   |   | 5,023 |   |   |   | - |   |   |   | - |   |   |   | 5,023 |   |
| Total assets                |   |                | 2,669  |   |   |   | 73 |   |   |   | 42,462 |   |   |   | 753 |   |   |   | 5,013 |   |   |   | 50,970 |   |
|                        |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Liabilities         |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Trade payables              |   |                | 958    |   |   |   | - |   |   |   | 1,134 |   |   |   | 127 |   |   |   | - |   |   |   | 2,219 |   |
| Deferred revenue            |   |                | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,221 |   |   |   | 1,221 |   |
| Other current liabilities   |   |                | 1,627  |   |   |   | - |   |   |   | 2,852 |   |   |   | 65 |   |   |   | 287 |   |   |   | 4,831 |   |
| Total current liabilities   |   |                | 2,585  |   |   |   | - |   |   |   | 3,986 |   |   |   | 192 |   |   |   | 1,508 |   |   |   | 8,271 |   |
|                        |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Employee benefits           |   |                | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 299 |   |   |   | 299 |   |
| Total liabilities           |   |                | 2,585  |   |   |   | - |   |   |   | 3,986 |   |   |   | 192 |   |   |   | 1,807 |   |   |   | 8,570 |   |
| Total balance, net          |   |                | 84     |   |   |   | 73 |   |   |   | 38,476 |   |   |   | 561 |   |   |   | 3,206 |   |   |   | 42,400 |   |
|  (*) Reclassified      |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

| C. | Market risk (cont'd) |
|----|----------------------|

|  | (1) | Linkage and foreign currency risks (cont'd) |
|--|-----|---------------------------------------------|

|       |   | For the year ended December 31, |   |   | For the year ended December 31,           |   |
|-----------------|--------|---------------------------------|--------|--------|-------------------------------------------|--------|
|            |   | 2016                            |   |   | 2015                                      |   |   | 2014 |   |   | 2016 |   |   | 2015 |   |   | 2014 |   |
|       |   | % of change                     |   |   | Spot price of 1 USD at the reporting date |   |
| 1 NIS           |   |                            | 1.5    |   |                                      |   | (0.3 | ) |   |   | (10.8 | ) |   |   | 0.2601 |   |   |   | 0.2563 |   |   |   | 0.2571 |   |
| 1 Euro          |   |                            | (3.4   | )      |                                      |   | (10.4 | ) |   |   | (11.8 | ) |   |   | 1.0517 |   |   |   | 1.0884 |   |   |   | 1.2149 |   |
| CPI in points * |   |                            | (0.2   | )      |                                      |   | (1.0 | ) |   |   | (0.2 | ) |   |   | 112.60 |   |   |   | 112.82 |   |   |   | 113.96 |   |

|                           |   | Currency/  |   |   | Currency/ |   |   |       |   |          |    |   |          |       |   |
|---------------------------|--------|------------|--------|--------|-----------|--------|--------|------------|--------|---------------|---------|--------|---------------|------------|--------|
|                           |   | linkage    |   |   | linkage   |   |   | Amount     |   |          | Amount  |   |          | Date of    |   |   |   |   |
|                           |   | receivable |   |   | payable   |   |   | receivable |   |          | payable |   |          | expiration |   |   | Fair value |   |
|                           |   |            |        |   |      |        |        |       |   | NIS thousands |    |   | USD thousands |       |   |   |   |   | USD thousands |   |
| December 31, 2016         |   |            |        |   |      |        |        |       |   |          |    |   |          |       |   |  |  |   |   |   |   |
|                      |   |            |        |   |      |        |        |       |   |          |    |   |          |       |   |  |  |   |   |   |   |
| Instruments not           |   |            |        |   |      |        |        |       |   |          |    |   |          |       |   |  |  |   |   |   |   |
| accounted for as hedging: |   |            |        |   |      |        |        |       |   |          |    |   |          |       |   |  |  |   |   |   |   |
| Forward                   |   |       | NIS    |   |      |   | USD    |       |   |          | 4,000   |   |          |       | (1,039 | ) |   | Jan-March 2017 |   |   |   | 2 |   |
|                      |   |            |        |   |      |        |        |       |   |          |    |   |          |       |   |   |   |   |   |   |   |   | 2 |   |
| December 31, 2015         |   |            |        |   |      |        |        |       |   |          |    |   |          |       |   |   |   |  |  |   |   |   |   |   |
|                      |   |            |        |   |      |        |        |       |   |          |    |   |          |       |   |   |   |  |  |   |   |   |   |   |
| Instruments not           |   |            |        |   |      |        |        |       |   |          |    |   |          |       |   |   |   |  |  |   |   |   |   |   |
| accounted for as hedging: |   |            |        |   |      |        |        |       |   |          |    |   |          |       |   |   |   |  |  |   |   |   |   |   |
| Forward                   |   |       | NIS    |   |      |   | USD    |       |   |          | 4,000   |   |          |       | (1,029 | ) |   | Jan-March 2016 |   |   |   | (4 | ) |
|                      |   |            |        |   |      |        |        |       |   |          |    |   |          |       |   |   |   |  |  |   |   |   | (4 | ) |

|  | (2) | Interest rate risk |
|--|-----|--------------------|

|                                                        |   | December 31   |   |
|-------------------------------------------------------------|--------|---------------|--------|
|                                                        |   | 2016          |   |   | 2015 |   |
|                                                        |   | Carrying      |   |   | Carrying |   |
|                                                        |   | amount        |   |   | amount |   |
|                                                        |   | USD thousands |   |   | USD thousands |   |
| Fixed rate instruments                                      |   |          |   |   |   |   |
|  Deposits held at financial institutions, with         |   |          |   |   |   |   |
|  original  maturity periods of up to three months |   |          | 170    |   |   |   | 2,547 |   |
| Short-term investments                                      |   |          | 37,849 |   |   |   | 21,674 |   |
| Long-term investments                                       |   |          | 9,017  |   |   |   | 5,023 |   |
|                                                        |   |          | 47,036 |   |   |   | 29,244 |   |
|                                                        |   |          |   |   |   |   |   |   |
| Variable rate instruments                                   |   |          |   |   |   |   |   |   |
| Mutual funds                                                |   |          | 13     |   |   |   | 13 |   |
|                                                        |   |          | 13     |   |   |   | 13 |   |

----

----

| D. | Fair value |
|----|------------|

|  | 1. | As of December 31, 2016 and 2015, the marketable securities in the amount of USD 13 thousand held for trading are presented at fair value through profit or loss. The fair value is determined on the basis of quoted prices (unadjusted) in active markets for identical instruments (level 1). |
|--|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 2. | As of December 31, 2016, derivative financial instruments classified as an asset in the amount of USD 2 thousand (As of December 31, 2015 - a liability of USD 4 thousand) are presented at fair value and changes recognized in the profit or loss statement. The fair value was valued utilizing market observable inputs (level 2). The fair value of these derivative financial instruments is measured based on observable market data, such as spot rate, yield curves and exchange rate volatility, as of the fair value calculation date. |
|--|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Exhibit |   | Description                                                                                                                                                                                                             |
|---------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |   |                                                                                                                                                                                                                    |
| 1.1*    |   | Articles of Association of Mazor Robotics Ltd. (unofficial English translation from Hebrew).                                                                                                                            |
|    |   |                                                                                                                                                                                                                    |
| 2.1*    |   | Form of Deposit Agreement between Mazor Robotics Ltd., The Bank of New York Mellon as Depositary, and owners and holders from time to time of ADSs issued thereunder, including the Form of American Depositary Shares. |
|    |   |                                                                                                                                                                                                                    |
| 4.1*    |   | Mazor Robotics Ltd. 2003 Stock Option Plan.                                                                                                                                                                             |
|    |   |                                                                                                                                                                                                                    |
| 4.2*    |   | Mazor Robotics Ltd. 2011 Share Option Plan.                                                                                                                                                                             |
|    |   |                                                                                                                                                                                                                    |
| 4.3*    |   | Share Purchase Agreement dated August 8, 2012, among Mazor Robotics Ltd. and the Oracle Investors.                                                                                                                      |
|    |   |                                                                                                                                                                                                                    |
| 4.4*    |   | Employment Agreement dated December 26, 2007, between Mazor Robotics Ltd. and Jonathan Adereth (unofficial English translation from Hebrew).                                                                            |
|    |   |                                                                                                                                                                                                                    |
| 4.5*    |   | Personal Employment Agreement dated April 9, 2013, between Mazor Robotics Ltd. and Ori Hadomi.                                                                                                                          |
|    |   |                                                                                                                                                                                                                    |
| 4.6*    |   | Employment Agreement dated December 12, 2007, between Mazor Robotics Ltd. and Sharon Levita (unofficial English translation from Hebrew).                                                                               |
|    |   |                                                                                                                                                                                                                    |
| 4.7*    |   | Form of Directors and Officers Indemnification Agreement.                                                                                                                                                               |
|    |   |                                                                                                                                                                                                                    |
| 4.8*    |   | Employment Agreement dated November 28, 2000, between Mazor Robotics Ltd. and Eliyahu Zehavi, including an amendment thereto dated January 2003 (unofficial English translation from Hebrew original).                  |

----

| 4.9**    |   | Employment Offer dated September 17, 2014, between Mazor Robotics Inc. and Christopher Prentice.                                                                                                                  |
|----------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |   |                                                                                                                                                                                                              |
| 4.10***  |   | Amendment to Mazor Robotics 2011 Share Option Plan                                                                                                                                                                |
|     |   |                                                                                                                                                                                                              |
| 4.11**** |   | Conversion employment agreement dated May 1, 2014 between Mazor Robotics Ltd., Mr. Jonathan Adereth and J. Adereth Marketing and Strategic Consulting Ltd. (unofficial English translation from Hebrew original). |
|     |   |                                                                                                                                                                                                              |
| 4.12     |   | Share Purchase Agreement dated May 18, 2016 between Mazor Robotics Ltd. and Covidien Group S.a.r.l                                                                                                                |
|     |   |                                                                                                                                                                                                              |
| 4.13^    |   | Exclusive Lead Sharing and Distribution Agreement dated May 18, 2016 between Mazor Robotics Ltd. and Medtronic Navigation Inc.                                                                                    |
|     |   |                                                                                                                                                                                                              |
| 4.14^    |   | Amendment # 1 to the Exclusive Lead Sharing and Distribution Agreement dated October 24, 2016 between Mazor Robotics Ltd. and Medtronic Navigation Inc.                                                           |
|     |   |                                                                                                                                                                                                              |
| 4.15^    |   | Amendment # 2 to the Exclusive Lead Sharing and Distribution Agreement dated December 22, 2016 between Mazor Robotics Ltd. and Medtronic Navigation Inc.                                                     |
|     |   |                                                                                                                                                                                                              |
| 8.1**    |   | List of Subsidiaries.                                                                                                                                                                                             |
|     |   |                                                                                                                                                                                                              |
| 12.1     |   | Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended.                                                                  |
|     |   |                                                                                                                                                                                                              |
| 12.2     |   | Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended.                                                                  |
|     |   |                                                                                                                                                                                                              |
| 13.1     |   | Certification of the Chief Executive Officer required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the U.S. Code.                                                                              |
|     |   |                                                                                                                                                                                                              |
| 13.2     |   | Certification of the Chief Financial Officer required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the U.S. Code.                                                                              |
|     |   |                                                                                                                                                                                                              |
| 15.1     |   | Consent of Somekh Chaikin, a member firm of KPMG International, independent registered public accounting firm.                                                                                                    |

----

| * | Previously filed with the Company's registration statement on Form 20-F, filed with the SEC on May 10, 2013. |
|---|--------------------------------------------------------------------------------------------------------------|

| ** | Previously filed with the Company's annual report on Form 20-F, filed with the SEC on April 29, 2015. |
|----|-------------------------------------------------------------------------------------------------------|

| *** | Previously filed with the Company's registration statement on Form S-8, filed with the SEC on May 9, 2016. |
|-----|------------------------------------------------------------------------------------------------------------|

| **** | Previously filed with the Company's annual report on Form 20-F, filed with the SEC on May 2, 2016. |
|------|----------------------------------------------------------------------------------------------------|

| ^ | Portions of this exhibit have been omitted pursuant to a request for confidential treatment. |
|---|----------------------------------------------------------------------------------------------|

----

|              |                |                    |   |
|-------------------|---------------------|-------------------------|--------|
|              | MAZOR ROBOTICS LTD. |                    |
|              |                |                    |   |
|              | By:                 | /s/ Ori Hadomi          |   |
|              |                | Ori Hadomi              |   |
|              |                | Chief Executive Officer |   |
|              |                |                    |   |
| Date: May 1, 2017 |                |                    |   |

----