As
filed with the Securities and Exchange Commission on March 7, 2017








UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

WASHINGTON,
DC 20549



FORM
20-F



ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For
the fiscal year ended December 31, 2016



Commission
File No.:  001-37600



NANO
DIMENSION LTD.

(Exact
name of registrant as specified in its charter)



Translation
of registrant’s name into English: Not applicable



|State
    of Israel                                 |  | 2
        Ilan Ramon
        Ness
        Ziona
        7403635
        Israel
|--------------------------------------------------- |  | ------------------------------------------------------------------------------
|(Jurisdiction
    of incorporation or organization) |  | (Address
    of principal executive offices)                                  



Amit
Dror

Chief
Executive Officer

+972-073-7509142

amit@nano-di.com

2
Ilan Ramon

Ness
Ziona

7403635
Israel

(Name,
Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)



Securities
registered or to be registered pursuant to Section 12(b) of the Act:



|Title
        of each class:
        American
        Depository Shares each representing 5
        Ordinary
        Shares, par value NIS 0.10 per share(1)
        Ordinary
        Shares, par value NIS 0.10 per share(2) |  | Name
        of each exchange on which registered or to be registered:
        NASDAQ
        Capital Market
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------



|(1) | Evidenced
    by American Depositary Receipts.                                                 
|--- | -----------------------------------------------------------------------------------------------
|    |                                                                                                
|(2) | Not
    for trading, but only in connection with the listing of the American Depositary Shares.



Securities
registered or to be registered pursuant to Section 12(g) of the Act: None



Securities
for which there is a reporting obligation pursuant to Section 15(d) of the Act: None



Indicate
the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered
by the annual report.



50,142,804
Ordinary Shares, par value NIS 0.10 per share













Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.



Yes
☐                   No ☒



If
this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant
to Section 13 or 15(d) of the Exchange Act of 1934.



Yes
☐                   No ☒



Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.



Yes
☒                   No ☐



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months.



Yes
☐                   No ☐



Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer.



Large
accelerated filer ☐	                      Accelerated
filer ☐	                    Non-accelerated
filer ☒



Indicate
by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing.



U.S.
GAAP ☐



International
Financial Reporting Standards as issued by the International Accounting Standards Board  ☒



Other
☐



If
“Other” has been checked in response to the previous question, indicate by check mark which financial statement item
the registrant has elected to follow.



☐
Item 17                 ☐ Item 18



If
this is an annual report, indicate by check mark whether the registrant is a shell company.



Yes
☐                   No ☒


















TABLE
OF CONTENTS



|                                                     |                                                              | Page
|---------------------------------------------------- | ------------------------------------------------------------ | ----
|INTRODUCTION                                         | 1                                                           
|CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS | 1                                                           
|                                                     |                                                              |     
|PART I                                              
|                                                     |                                                              |     
|ITEM 1.                                              | IDENTITY OF DIRECTORS,
    SENIOR MANAGEMENT AND ADVISERS.   | 3   
|ITEM 2.                                              | OFFER STATISTICS AND
    EXPECTED TIMETABLE.                 | 3   
|ITEM 3.                                              | KEY INFORMATION.                                             | 3   
|A.                                                   | Selected Financial
    Data.                                 | 3   
|B.                                                   | Capitalization and
    Indebtedness.                         | 5   
|C.                                                   | Reasons for the Offer
    and Use of Proceeds.               | 5   
|D.                                                   | Risk Factors.                                                | 5   
|ITEM 4.                                              | INFORMATION ON THE
    COMPANY.                              | 23  
|A.                                                   | History and Development
    of the Company.                  | 23  
|B.                                                   | Business Overview.                                           | 24  
|C.                                                   | Organizational Structure.                                    | 34  
|D.                                                   | Property, Plants and
    Equipment.                          | 34  
|ITEM 4A.                                             | UNRESOLVED STAFF COMMENTS.                                   | 35  
|ITEM 5.                                              | OPERATING AND FINANCIAL
    REVIEW AND PROSPECTS.            | 35  
|A.                                                   | Operating Results.                                           | 35  
|B.                                                   | Liquidity and Capital
    Resources.                         | 40  
|E.                                                   | Off-Balance Sheet
    Arrangements.                          | 43  
|F.                                                   | Tabular Disclosure
    of Contractual Obligations.           | 43  
|ITEM 6.                                              | DIRECTORS, SENIOR
    MANAGEMENT AND EMPLOYEES.              | 44  
|A.                                                   | Directors and Senior
    Management.                         | 44  
|B.                                                   | Compensation.                                                | 47  
|C.                                                   | Board Practices.                                             | 48  
|D.                                                   | Employees.                                                   | 59  
|E.                                                   | Share Ownership.                                             | 59  
|ITEM 7.                                              | MAJOR SHAREHOLDERS
    AND RELATED PARTY TRANSACTIONS.       | 61  
|A.                                                   | Major Shareholders.                                          | 61  
|B.                                                   | Related Party Transactions.                                  | 62  
|C.                                                   | Interests of Experts
    and Counsel.                        | 64  
|ITEM 8.                                              | FINANCIAL INFORMATION.                                       | 64  
|A.                                                   | Consolidated Statements
    and Other Financial Information. | 64  
|B.                                                   | Significant Changes.                                         | 65  















|ITEM
    9.   | THE
    OFFER AND LISTING.                                                        | 65
|------------- | --------------------------------------------------------------------------------- | --
|A.            | Offer
    and Listing Details.                                                    | 65
|B.            | Plan
    of Distribution.                                                         | 66
|C.            | Markets.                                                                          | 66
|D.            | Selling
    Shareholders.                                                         | 66
|E.            | Dilution.                                                                         | 66
|F.            | Expenses
    of the Issue.                                                        | 66
|ITEM
    10.  | ADDITIONAL
    INFORMATION.                                                       | 67
|A.            | Share
    Capital.                                                                | 67
|B.            | Articles
    of Association.                                                      | 67
|C.            | Material
    Contracts.                                                           | 70
|D.            | Exchange
    Controls.                                                            | 70
|E.            | Taxation.                                                                         | 71
|F.            | Dividends
    and Paying Agents.                                                  | 79
|G.            | Statement
    by Experts.                                                         | 79
|H.            | Documents
    on Display.                                                         | 79
|I.            | Subsidiary
    Information.                                                       | 80
|ITEM
    11.  | QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.                   | 80
|ITEM
    12.  | DESCRIPTION
    OF SECURITIES OTHER THAN EQUITY SECURITIES.                       | 81
|A.            | Debt
    Securities.                                                              | 81
|B.            | Warrants
    and rights.                                                          | 81
|C.            | Other
    Securities.                                                             | 81
|D.            | American
    Depositary Shares.                                                   | 81
|              |                                                                                   |   
|PART II      
|             
|ITEM
    13.  | DEFAULTS,
    DIVIDEND ARREARAGES AND DELINQUENCIES.                              | 82
|ITEM
    14.  | MATERIAL
    MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS. | 82
|ITEM
    15.  | CONTROLS
    AND PROCEDURES.                                                      | 82
|ITEM
    16A. | AUDIT
    COMMITTEE FINANCIAL EXPERT.                                             | 83
|ITEM
    16B. | CODE
    OF ETHICS.                                                               | 83
|ITEM
    16C. | PRINCIPAL
    ACCOUNTANT FEES AND SERVICES.                                       | 83
|ITEM
    16D. | EXEMPTIONS
    FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.                   | 84
|ITEM
    16E. | PURCHASES
    OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.       | 84
|ITEM
    16F. | CHANGE
    IN REGISTRANT’S CERTIFYING ACCOUNTANT.                                 | 84
|ITEM
    16G. | CORPORATE
    GOVERNANCE.                                                         | 84
|ITEM
    16H. | MINE
    SAFETY DISCLOSURE.                                                       | 86
|              |                                                                                   |   
|PART III     
|             
|ITEM
    17.  | FINANCIAL
    STATEMENTS.                                                         | 87
|ITEM
    18.  | FINANCIAL
    STATEMENTS.                                                         | 87
|ITEM
    19.  | EXHIBITS.                                                                         | 87
|SIGNATURES    | 88                                                                               















INTRODUCTION



We
are a development-stage company engaged in the development of a three-dimensional (3D) printer that prints electronic circuit
boards, also known as printed circuit boards (PCBs), and ink materials and products based on nano-technology. Our Dragonfly 2020
3D printer currently in development uses our proprietary ink and integrated software to quickly create fully functioning PCB prototypes.
Our 3D printer builds PCBs by depositing multiple layers of “ink” material, one on top of another. We enhance the
ability of electrical engineers, designers and manufacturers to conceptualize, test and develop PCBs in a shortened development
cycle bypassing common prototyping bottlenecks.



We
were incorporated under the laws of the State of Israel in December 1960. Our Ordinary Shares, or Ordinary Shares, are listed
on the Tel Aviv Stock Exchange, or TASE, under the symbol “NNDM.” On March 7, 2016, our American Depositary Shares,
or ADSs, each representing five of our Ordinary Shares, commenced trading on the NASDAQ Capital Market under the symbol “NNDM”.



Unless
otherwise indicated, all references to the “Company,” “we,” “our” and “Nano Dimension”
refer to Nano Dimension Ltd. and its subsidiary, Nano Dimension Technologies Ltd., an Israeli corporation.



References
to “U.S. dollars” and “$” are to currency of the United States of America, and references to “NIS”
are to New Israeli Shekels. References to “Ordinary Shares” are to our Ordinary Shares, par value of NIS 0.1 per share.
We report financial information under International Financial Reporting Standards, or IFRS, as issued by the International Accounting
Standards Board and none of the financial statements were prepared in accordance with generally accepted accounting principles
in the United States. Unless otherwise indicated, U.S. dollar convenience translations of NIS amounts presented in this annual
report on Form 20-F for the year ended on December 31, 2016 are translated using the rate of NIS 3.845 to $1.00, the exchange
rate reported by the Bank of Israel on December 31, 2016, U.S. dollar convenience translations of NIS amounts presented in this
annual report on Form 20-F for the year ended on December 31,2015 are translated using the rate of NIS 3.902 to $1.00, the exchange
rate reported by the Bank of Israel on December 31, 2015, and U.S. dollar convenience translations of NIS amounts presented in
this annual report on Form 20-F for the year ended on December 31, 2014 are translated using the rate of NIS 3.889 to $1.00, the
exchange rate reported by the Bank of Israel on December 31, 2014.



CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS



Certain
information included or incorporated by reference in this annual report on Form 20-F may be deemed to be “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Forward-looking
statements are often characterized by the use of forward-looking terminology such as “may,” “will,” “expect,”
“anticipate,” “estimate,” “continue,” “believe,” “should,” “intend,”
“project” or other similar words, but are not the only way these statements are identified.



These
forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies, statements
that contain projections of results of operations or of financial condition, expected capital needs and expenses, statements relating
to the research, development, completion and use of our products, and all statements (other than statements of historical facts)
that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the
future.





1







Forward-looking
statements are not guarantees of future performance and are subject to risks and uncertainties. We have based these forward-looking
statements on assumptions and assessments made by our management in light of their experience and their perception of historical
trends, current conditions, expected future developments and other factors they believe to be appropriate.



Important
factors that could cause actual results, developments and business decisions to differ materially from those anticipated in these
forward-looking statements include, among other things:



| | ● | the overall global
    economic environment;                                                                                                                                                                                                
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                             
| | ● | 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;                                                                                                                                                                                                                    
| |   |                                                                                                                                                                                                                                             
| | ● | litigation; 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 on Form 20-F generally.



Readers
are urged to carefully review and consider the various disclosures made throughout this annual report on Form 20-F which are designed
to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations
and prospects.



You
should not put undue reliance on any forward-looking statements. Any forward-looking statements in this annual report on Form
20-F are made as of the date hereof, and we undertake no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as required by law.



In
addition, the section of this annual report on Form 20-F entitled “Item 4. Information on the Company” contains information
obtained from independent industry sources and other sources that we have not independently verified.





2







PART
I



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



Not
applicable.



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



Not
applicable.



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



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





The
selected consolidated financial data for the fiscal years set forth in the table below have been derived from our consolidated
financial statements and notes thereto. We derived the selected data under the captions “Consolidated Statement of Profit
or Loss and Other Comprehensive Income Data” for the years ended December 31, 2016, 2015 and 2014, and “Consolidated
Statement of Financial Position Data” as of December 31, 2016 and 2015 from the audited consolidated financial statements
included elsewhere in this Annual Report. We derived the selected data under the captions “Consolidated Statement of Profit
or Loss and Other Comprehensive Income Data” for the years ended December 31, 2013 and “Consolidated Statement
of Financial Position Data” as of December 31, 2014 and 2013 from audited financial statements that are not included in this
Annual Report on Form 20-F. The selected financial data should be read in conjunction with our consolidated financial statements,
and are qualified entirely by reference to such consolidated financial statements. Other financial and operating data contains
unaudited information that is not derived from our financial statements.



(in
thousands except per share data)





|                                                                                                                                  |  | Year Ended December 31, |       |  | Year Ended December 31,     | 
|--------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ----- |  | --------------------------- | 
|                                                                                                                                  |  | 2013                    |       |  | 2014                        | 
|                                                                                                                                  |  | NIS                     |       |  | USD-Convenience Translation | 
|Consolidated Statements of Profit or Loss and Other Comprehensive Income Data:                                                    |  |                         |       |  |                             | 
|Revenues                                                                                                                          |  |                         | -     |  |                             | 
|Cost of revenues                                                                                                                  |  |                         | -     |  |                             | 
|Cost of revenues- amortization of intangible                                                                                      |  |                         | -     |  |                             | 
|Gross loss                                                                                                                        |  |                         | -     |  |                             | 
|Research and development expenses, net                                                                                            |  |                         | 806   |  |                             | 
|General and administrative expenses                                                                                               |  |                         | 134   |  |                             | 
|Other income                                                                                                                      |  |                         | 40    |  |                             | 
|Operating loss                                                                                                                    |  |                         | 900   |  |                             | 
|Listing expenses                                                                                                                  |  |                         | -     |  |                             | 
|Finance expenses (income), net                                                                                                    |  |                         | 34    |  |                             | 
|Total Comprehensive loss                                                                                                          |  |                         | 934   |  |                             | 
|                                                                                                                                  |  |                         |       |  |                             | 
|Basic and diluted loss per Ordinary Share                                                                                         |  |                         | 0.25  |  |                             | 
|Weighted average of number of Ordinary Shares used in the calculation of the basic and diluted loss per Ordinary Share- thousands |  |                         | 3,684 |  |                             | 



(in
thousands)



|                                                   |  | As
of December 31, |      |   | As of 
December 31,          | 
|-------------------------------------------------- |  | ------------------ | ---- | - | ---------------------------- | 
|                                                   |  | 2013               |      |   | 2014                         | 
|                                                   |  | NIS                |      |   | USD-Convenience
 Translation | 
|Consolidated Statement of Financial Position Data: |  |                    |      |   |                              | 
|Cash and cash equivalents                          |  |                    | 5    |   |                              | 
|Total assets                                       |  |                    | 51   |   |                              | 
|Total non-current liabilities                      |  |                    | -    |   |                              | 
|Accumulated loss                                   |  |                    | 964  |   |                              | 
|Total equity (deficit)                             |  |                    | (188 | ) |                              | 



3









Other
financial and operating data (unaudited):



|                |  | Year Ended December 31, |        
|--------------- |  | ----------------------- | -------
|                |  | 2016                    |        
|                |  | (NIS thousands)         |        
|EBITDA          |  |                         | (32,642
|Adjusted EBITDA |  |                         | (24,857



EBITDA
is a non-IFRS measure and is defined as earnings before financial expense (income), income tax, depreciation and amortization,
disposal of property plant and equipment, and other income (expenses), net. We believe that EBITDA, as described above, should
be considered in evaluating the company’s operations. EBITDA facilitates operating performance comparisons from period to
period and company to company by backing out potential differences caused by variations in capital structures (affecting financial
expenses (income), net), and the age and depreciation charges and amortization of fixed and intangible assets, respectively (affecting
relative depreciation and amortization expense, respectively) and EBITDA is useful to an investor in evaluating our operating
performance because they are widely used by investors, securities analysts and other interested parties to measure a company’s
operating performance without regard to one-time costs associated with non-recurring events and without regard to non-cash items.



Adjusted
EBITDA is a non-IFRS measure and is defined as earnings before financial expense (income), income tax, depreciation and amortization,
disposal of property plant and equipment, other income (expenses), net and share based payments. We believe that Adjusted EBITDA,
as described above, should be considered in evaluating the company’s operations. Adjusted EBITDA facilitates operating performance
comparisons from period to period and company to company by backing out potential differences caused by variations in capital
structures (affecting financial expenses (income), net), and the age and depreciation charges and amortization of fixed and intangible
assets, respectively (affecting relative depreciation and amortization expense, respectively) and Adjusted EBITDA is useful to
an investor in evaluating our operating performance because they are widely used by investors, securities analysts and other interested
parties to measure a company’s operating performance without regard to one-time costs associated with non-recurring events
and without regard to non-cash items, such as expenses related to share based payments.



The
following is a reconciliation of net loss to EBITDA and adjusted EBITDA:





|                                                                        |  | Year Ended December 31, |        
|----------------------------------------------------------------------- |  | ----------------------- | -------
|                                                                        |  | 2016                    |        
|                                                                        |  | (NIS thousands)         |        
|Net loss                                                                |  |                         | 34,470 
|Financing income, net                                                   |  |                         | 144    
|Depreciation, amortization and disposal of property plant and equipment |  |                         | (1,972 
|EBITDA                                                                  |  |                         | (32,642
|Share based payments                                                    |  |                         | (7,785 
|Adjusted EBITDA                                                         |  |                         | (24,857







4







EXCHANGE
RATE INFORMATION



The
following table sets forth information regarding the exchange rates of U.S. dollars per NIS for the periods indicated. Average
rates are calculated by using the daily representative rates as reported by the Bank of Israel on the last day of each month during
the periods presented.





|                        |  | NIS per U.S. dollars |      
|----------------------- |  | -------------------- | -----
|Year Ended December 31, |  | High                 |      
|2016                    |  |                      | 3.983
|2015                    |  |                      | 4.053
|2014                    |  |                      | 3.994
|2013                    |  |                      | 3.791
|2012                    |  |                      | 4.084









The
following table sets forth the high and low daily representative rates for the NIS as reported by the Bank of Israel for each
of the prior six months.





|               |  | NIS per U.S. dollars |      
|-------------- |  | -------------------- | -----
|Month          |  | High                 |      
|February 2017  |  | 3.768                |      
|January 2017   |  | 3.860                |      
|December 2016  |  |                      | 3.867
|November 2016  |  |                      | 3.876
|October 2016   |  |                      | 3.856
|September 2016 |  |                      | 3.786



|B. | Capitalization
    and Indebtedness
|-- | -----------------------------------



Not
applicable.



|C. | Reasons for the
    Offer and Use of Proceeds
|-- | ---------------------------------------------



Not
applicable.



|D. | Risk Factors
|-- | ------------



You
should carefully consider the risks described below, together with all of the other information in this annual report on Form
20-F. The risks described below are not the only risks facing us. Additional risks and uncertainties not currently known to us
or that we currently deem to be immaterial may also materially and adversely affect our business operations. If any of these risks
actually occurs, our business and financial condition could suffer and the price of our ADSs could decline.



Risks
Related to Our Financial Condition and Capital Requirements



We
are a development-stage company and have a limited operating history on which to assess the prospects for our business, have incurred
significant losses since the date of inception of Nano Dimension Technologies Ltd., and anticipate that we will continue to incur
significant losses until we are able to successfully commercialize our products.





5







From
March 7, 2014, until August 25, 2014, we were a “shell corporation” and did not have any business activity, excluding
administrative management. On August 25, 2014, we closed a merger transaction, or the Merger, with Nano Dimension Technologies
Ltd., or the Subsidiary, whereby we acquired 100% of the share capital of the Subsidiary. Since the date of the Merger, we have
been operating as a development-stage company and have a limited operating history on which to assess the prospects for our business,
have incurred significant losses, and anticipate that we will continue to incur significant losses for the foreseeable future.



Since
the date of inception of the Subsidiary, and as of December 31, 2016, we have incurred net losses of approximately NIS 71 million
(approximately $18.4 million).



Since
the date of the Merger, we have devoted substantially all of our financial resources to develop our products. To date, we have
generated insignificant revenues from the sale and lease of our products as a part of our beta plan. Since the Merger, we have
financed our operations primarily through the issuance of equity securities. The amount of our future net losses and our ability
to finance our operations will depend, in part, on completing the development of our products, the rate of our future expenditures
and our ability to obtain funding through the issuance of our securities, strategic collaborations or grants. We expect to continue
to incur significant losses until we are able to successfully commercialize our products. We anticipate that our expenses will
increase substantially if and as we:



| | ● | continue the development
    of our products;
| | - | ---------------------------------------------



| | ● | establish a sales,
    marketing, and distribution infrastructure to commercialize our products;
| | - | ------------------------------------------------------------------------------------------------



| | ● | seek
    to identify, assess, acquire, license, and/or develop other products and subsequent generations of our current products;
| | - | ---------------------------------------------------------------------------------------------------------------------------------



| | ● | seek to maintain,
    protect, and expand our intellectual property portfolio;
| | - | ------------------------------------------------------------------------------



| | ● | seek to attract and
    retain skilled personnel; and
| | - | -----------------------------------------------------



| | ● | create
    additional infrastructure to support our operations as a public company and our product development and planned future commercialization
    efforts.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



We
have generated insignificant revenues from the sale of our current products and may never be profitable.



We
have not yet commercialized any of our products and have generated insignificant revenues since the date of the Merger. Our ability
to generate significant revenues and achieve profitability depends on our ability to successfully complete the development of,
and to commercialize, our products. Our ability to generate future revenue from product sales depends heavily on our success in
many areas, including but not limited to:



| | ● | completing development
    of our products;
| | - | -------------------------------------------



| | ● | establishing
    and maintaining supply and manufacturing relationships with third parties that can provide adequate (in amount and quality)
    products to support market demand for our products;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | launching and commercializing
    products, either directly or with a collaborator or distributor;
| | - | --------------------------------------------------------------------------------------------------



| | ● | addressing any competing
    technological and market developments;
| | - | -------------------------------------------------------------------



| | ● | identifying, assessing,
    acquiring and/or developing new products;
| | - | ---------------------------------------------------------------------



| | ● | negotiating favorable
    terms in any collaboration, licensing or other arrangements into which we may enter;
| | - | --------------------------------------------------------------------------------------------------------------



| | ● | maintaining,
    protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------



| | ● | attracting, hiring
    and retaining qualified personnel.
| | - | ---------------------------------------------------------





6







We
expect that we will need to raise substantial additional funding before we can expect to become profitable from sales of our products.
This additional financing may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed
may force us to delay, limit or terminate our product development efforts or other operations.



We
expect that we will require additional capital to commercialize our products. In addition, our operating plans may change as a
result of many factors that may currently be unknown to us, and we may need to seek additional funds sooner than planned. Our
future funding requirements will depend on many factors, including but not limited to:



| | ● | the scope, rate of
    progress, results and cost of product development, and other related activities;
| | - | -------------------------------------------------------------------------------------------------------



| | ● | the cost of manufacturing  and
    establishing commercial supplies, of our products;
| | - | -------------------------------------------------------------------------------------



| | ● | the cost and timing
    of establishing sales, marketing, and distribution capabilities; and
| | - | --------------------------------------------------------------------------------------------



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





Any
additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability
to develop and commercialize our products. In addition, we cannot guarantee that future financing will be available in sufficient
amounts or on terms acceptable to us, if at all. Moreover, the terms of any financing may adversely affect the holdings or the
rights of our stockholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such
issuance, may cause the market price of our Ordinary Shares or ADSs to decline. The incurrence of indebtedness could result in
increased fixed payment obligations, and we may be required to agree to certain restrictive covenants, such as limitations on
our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and
other operating restrictions that could adversely impact our ability to conduct our business. We could also be required to seek
funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable, and
we may be required to relinquish rights to some of our technologies or products or otherwise agree to terms unfavorable to us,
any of which may have a material adverse effect on our business, operating results and prospects. Even if we believe that we have
sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable
or if we have specific strategic considerations.



If
we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or more
of our research or development programs or the commercialization of any products or be unable to expand our operations or otherwise
capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results
of operations.



Raising
additional capital would cause dilution to our existing shareholders, and may affect the rights of existing shareholders.



We
may seek additional capital through a combination of private and public equity offerings, debt financings and collaborations and
strategic and licensing arrangements. To the extent that we raise additional capital through the issuance of equity or convertible
debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely
affect your rights as a holder of our ADSs.





7







Risks
Related to Our Business and Industry



Our
future success depends in part on our ability to retain our executive officers and to attract, retain and motivate other qualified
personnel.



We
are highly dependent on Amit Dror, our Chief Executive Officer, Simon Anthony-Fried, our Chief Marketing Officer, Sharon Fima,
our Chief Technology Officer and Dagi Shahar Ben-Noon, our Chief Operating Officer. The loss of their services without a proper
replacement may adversely impact the achievement of our objectives. Messrs. Dror, Fried, Ben-Noon and Fima may leave our employment
at any time subject to contractual notice periods, as applicable. Recruiting and retaining other qualified employees, consultants,
and advisors for our business, including scientific and technical personnel, will also be critical to our success. There is currently
a shortage of skilled personnel in our industry, which is likely to continue. As a result, competition for skilled personnel is
intense and the turnover rate can be high. We may not be able to attract and retain personnel on acceptable terms given the competition
in the industry in which we operate. The inability to recruit and retain qualified personnel, or the loss of the services of our
executive officers, without proper replacement, may impede the progress of our development and commercialization objectives.



We
depend entirely on the success of our current products in development, and we may not be able to successfully introduce these
products and commercialize them.



We
have invested almost all of our efforts and financial resources in the research and development of our products in development.
As a result, our business is entirely dependent on our ability to complete the development of, and to successfully commercialize,
our Dragonfly 2020 3D printer and ink products. The process to the development and commercialization is long, complex, costly
and uncertain of outcome. Recently, we initiated a beta program and have delivered beta versions of our 3D printer to six partners
that use the printer and provide feedback to us. In addition, we have had more than 3,500 entities join our waitlist for information
about our DragonFly 2020 3D printer. Nevertheless, we cannot assure you that any beta partner arrangements or any of these inquiries
will lead to actual sales of our products.



We
may not be able to introduce products acceptable to customers and we may not be able to improve the technology used in our current
systems in response to changing technology and end-user needs.



The
markets in which we operate are subject to rapid and substantial innovation and technological change, mainly driven by technological
advances and end-user requirements and preferences, as well as the emergence of new standards and practices. Even if we are able
to complete the development of our Dragonfly 2020 3D printer, our ability to compete in the 3D printing and PCB markets will depend,
in large part, on our future success in enhancing our existing products and developing new 3D printing systems that will address
the increasingly sophisticated and varied needs of prospective end-users, and respond to technological advances and industry standards
and practices on a cost-effective and timely basis or otherwise gain market acceptance.



Even
if we successfully introduce our existing products in development, it is likely that new systems and technologies that we develop
will eventually supplant our existing systems or that our competitors will create systems that will replace our systems. As a
result, any of our products may be rendered obsolete or uneconomical by our or others’ technological advances.



We
rely on highly-skilled technical personnel and if we are unable to attract, retain or motivate key personnel or hire qualified
personnel, we may not be able to grow or our business may contract, which would have a material adverse effect on our results
of operations and financial condition.



Our
performance is largely dependent on the talents and efforts of highly-skilled individuals, particularly our printing-system engineers,
nanotech chemists, electrical engineers, software engineers, mechanical engineers and computer professionals. Our future success
depends on our continuing ability to identify, hire, develop, motivate and retain highly-skilled personnel and, if we are unable
to hire and train a sufficient number of qualified employees for any reason, we may not be able to implement our current initiatives
or grow, or our business may contract and we may lose market share. Moreover, certain of our competitors or other technology businesses
may seek to hire our employees. There is no assurance that any equity or other incentives that we grant to our employees will
be adequate to attract, retain and motivate employees in the future. If we do not succeed in attracting, retaining and motivating
highly qualified personnel, our business will suffer.





8







We
may not be able to successfully manage our planned growth and expansion.



We
expect to continue to make investments in our Dragonfly 2020 3D printer in development and our related ink products. We expect
that our annual operating expenses will continue to increase as we invest in sales and marketing, research and development, manufacturing
and production infrastructure, and develop customer service and support resources for future customers. Our failure to expand
operational and financial systems timely or efficiently could result in operating inefficiencies, which could increase our costs
and expenses more than we had planned and prevent us from successfully executing our business plan. We may not be able to offset
the costs of operation expansion by leveraging the economies of scale from our growth in negotiations with our suppliers and contract
manufacturers. Additionally, if we increase our operating expenses in anticipation of the growth of our business and this growth
does not meet our expectations, our financial results will be negatively impacted.



If
our business grows, we will have to manage additional product design projects, materials procurement processes, and sales efforts
and marketing for an increasing number of products, as well as expand the number and scope of our relationships with suppliers,
distributors and end customers. If we fail to manage these additional responsibilities and relationships successfully, we may
incur significant costs, which may negatively impact our operating results. Additionally, in our efforts to be first to market
with new products with innovative functionality and features, we may devote significant research and development resources to
products and product features for which a market does not develop quickly, or at all. If we are not able to predict market trends
accurately, we may not benefit from such research and development activities, and our results of operations may suffer.



As
our future development and commercialization plans and strategies develop, we expect to need additional managerial, operational,
sales, marketing, financial and legal personnel. Our management may need to divert a disproportionate amount of its attention
away from our day-to-day activities and devote a substantial amount of time to managing these growth activities. We may not be
able to effectively manage the expansion of our operations, which may result in weaknesses in our infrastructure, operational
mistakes, loss of business opportunities, failure to deliver and timely deliver our products to customers, loss of employees and
reduced productivity among remaining employees. Our expected growth could require significant capital expenditures and may divert
financial resources from other projects, such as the development of additional new products. If our management is unable to effectively
manage our growth, our expenses may increase more than expected, our ability to generate and/or grow revenue could be reduced,
and we may not be able to implement our business strategy.



Our
operating results and financial condition may fluctuate.



Even
if we are successful in introducing our products to the market, the operating results and financial condition of our company may
fluctuate from quarter to quarter and year to year and are likely to continue to vary due to a number of factors, many of which
will not be within our control. If our operating results do not meet the guidance that we provide to the market place or the expectations
of securities analysts or investors, the market price of our Ordinary Shares will likely decline. Fluctuations in our operating
results and financial condition may be due to a number of factors, including those listed below and those identified throughout
this “Risk Factors” section:



| | ● | the
    degree of market acceptance of our products and services;
| | - | -----------------------------------------------------------------



| | ● | the
    mix of products and services that we sell during any period;
| | - | --------------------------------------------------------------------



| | ● | long
    sales cycles;
| | - | ----------------------



| | ● | changes
    in the amount that that we spend to develop, acquire or license new products, consumables, technologies or businesses;
| | - | ----------------------------------------------------------------------------------------------------------------------------------



| | ● | changes
    in the amounts that we spend to promote our products and services;
| | - | ------------------------------------------------------------------------------





9







| | ● | changes
    in the cost of satisfying our warranty obligations and servicing our installed base of systems;
| | - | -----------------------------------------------------------------------------------------------------------



| | ● | delays
    between our expenditures to develop and market new or enhanced systems and consumables and the generation of sales from those
    products;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | development
    of new competitive products and services by others;
| | - | -------------------------------------------------------------------



| | ● | difficulty
    in predicting sales patterns and reorder rates that may result from a multi-tier distribution strategy associated with new
    product categories;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | litigation
    or threats of litigation, including intellectual property claims by third parties;
| | - | -------------------------------------------------------------------------------------------------



| | ● | changes
    in accounting rules and tax laws;
| | - | ---------------------------------------------



| | ● | the
    geographic distribution of our sales;
| | - | ---------------------------------------------



| | ● | our
    responses to price competition;
| | - | ---------------------------------------



| | ● | general
    economic and industry conditions that affect end-user demand and end-user levels of product design and manufacturing;
| | - | ---------------------------------------------------------------------------------------------------------------------------------



| | ● | changes
    in interest rates that affect returns on our cash balances and short-term investments;
| | - | --------------------------------------------------------------------------------------------------



| | ● | changes
    in dollar-shekel exchange rates that affect the value of our net assets, future revenues and expenditures from and/or relating
    to our activities carried out in those currencies; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | the
    level of research and development activities by our company.
| | - | --------------------------------------------------------------------



Due
to all of the foregoing factors, and the other risks discussed in this annual report on Form 20-F, you should not rely on quarter-to-quarter
comparisons of our operating results as an indicator of our future performance.



The
markets in which we participate are competitive. Even if we are successful in completing the development of our Dragonfly 2020
3D printer, our failure to compete successfully could cause any future revenues and the demand for our products not to materialize
or to decline over time.



We
aim to compete for customers with a wide variety of manufacturers that create PCBs. Our principal current competition consists
of companies that produce prototype PCBs by traditional reductive manufacturing means, which include etching, pressing and drilling.
Many of these companies have extensive track records and relationships within the electronics industry. While we are not aware
of any other company that currently offers an in-house 3D printer that is capable of printing multi-layer PCBs, there are a large
number of companies engaged in additive manufacturing and 3D printing solutions.



Many
of our current and potential competitors have longer operating histories and more extensive name recognition than we have and
may also have greater financial, marketing, manufacturing, distribution and other resources than we have. Current and future competitors
may be able to respond more quickly to new or emerging technologies and changes in end-user demands and to devote greater resources
to the development, promotion and sale of their products than we can. Our current and potential competitors may develop and market
new technologies that render our existing or future products obsolete, unmarketable or less competitive (whether from a price
perspective or otherwise). We cannot assure you that we will be able to maintain a competitive position or to compete successfully
against current and future sources of competition.





10







Defects
in products could give rise to product returns or product liability, warranty or other claims that could result in material expenses,
diversion of management time and attention, and damage to our reputation.



Even
if we are successful in introducing our products to the market, our products may contain undetected defects or errors that, despite
testing, are not discovered until after a product has been used. This could result in delayed market acceptance of those products,
claims from distributors, end-users or others, increased end-user service and support costs and warranty claims, damage to our
reputation and business, or significant costs to correct the defect or error. We may from time to time become subject to warranty
or product liability claims that could lead to significant expenses as we need to compensate affected end-users for costs incurred
related to product quality issues.



This
risk of product liability claims may also be greater due to the use of certain hazardous chemicals used in the manufacture of
certain of our products. In addition, we may be subject to claims that our 3D printers have been, or may be, used to create parts
that are not in compliance with legal requirements.



Any
claim brought against us, regardless of its merit, could result in material expense, diversion of management time and attention,
and damage to our reputation, and could cause us to fail to retain or attract customers. Currently, we maintain minimal product
liability insurance. Our product liability insurance is subject to significant deductibles and there is no guarantee that such
insurance will be available or adequate to protect against all such claims. Costs or payments made in connection with warranty
and product liability claims and product recalls or other claims could materially affect our financial condition and results of
operations.



If
our relationships with suppliers for our products and services, especially with single source suppliers of components of our products,
were to terminate or our manufacturing arrangements were to be disrupted, our business could be interrupted.



We
purchase component parts and raw materials that are used in our Dragonfly 2020 3D printer and ink products from third-party suppliers,
some of whom may compete with us. While there are several potential suppliers of most of these component parts and raw materials
that we use, we currently choose to use only one or a limited number of suppliers for several of these components and materials.
Our reliance on a single or limited number of vendors involves a number of risks, including:



| | ● | potential shortages
    of some key components;
| | - | -----------------------------------------------



| | ● | product
    performance shortfalls, if traceable to particular product components, since the supplier of the faulty component cannot readily
    be replaced;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | discontinuation of
    a product on which we rely;
| | - | --------------------------------------------------



| | ● | potential insolvency
    of these vendors; and
| | - | ----------------------------------------------



| | ● | reduced control over
    delivery schedules, manufacturing capabilities, quality and costs.
| | - | -------------------------------------------------------------------------------------------



In
addition, we require any new supplier to become “qualified” pursuant to our internal procedures. The qualification
process involves evaluations of varying durations, which may cause production delays if we were required to qualify a new supplier
unexpectedly. We generally assemble our systems and parts based on our internal forecasts and the availability of raw materials,
assemblies, components and finished goods that are supplied to us by third parties, which are subject to various lead times. If
certain suppliers were to decide to discontinue production of an assembly, component or raw material that we use, the unanticipated
change in the availability of supplies, or unanticipated supply limitations, could cause delays in, or loss of, sales, increased
production or related costs and consequently reduced margins, and damage to our reputation. If we were unable to find a suitable
supplier for a particular component, material or compound, we could be required to modify our existing products or the end-parts
that we offer to accommodate substitute components, material or compounds.





11







Discontinuation
of operations at our manufacturing sites could prevent us from timely filling customer orders and could lead to unforeseen costs
for us.



We
plan to assemble and test the systems that we sell, and produce consumables for our systems, at single facilities in various locations
that are specifically dedicated to separate categories of systems and consumables. Because of our reliance on all of these production
facilities, a disruption at any of those facilities could materially damage our ability to supply 3D printers, other systems or
consumable materials to the marketplace in a timely manner. Depending on the cause of the disruption, we could also incur significant
costs to remedy the disruption and resume product shipments. Such disruptions may be caused by, among other factors, earthquakes,
fire, flood and other natural disasters. Accordingly, any such disruption could result in a material adverse effect on our revenue,
results of operations and earnings, and could also potentially damage our reputation.



Our
planned international operations will expose us to additional market and operational risks, and failure to manage these risks
may adversely affect our business and operating results.



We
expect to derive a substantial percentage of our sales from international markets. Accordingly, we will face significant operational
risks from doing business internationally, including:



| | ● | fluctuations in foreign
    currency exchange rates;
| | - | ----------------------------------------------------



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



| | ● | potentially greater
    difficulties in collecting accounts receivable;
| | - | -----------------------------------------------------------------------



| | ● | potentially adverse
    tax consequences;
| | - | -----------------------------------------



| | ● | reduced
    protection of intellectual property rights in certain countries, particularly in Asia and South America;
| | - | --------------------------------------------------------------------------------------------------------------------



| | ● | difficulties in staffing
    and managing foreign operations;
| | - | -------------------------------------------------------------



| | ● | laws and business
    practices favoring local competition;
| | - | -----------------------------------------------------------



| | ● | costs and difficulties
    of customizing products for foreign countries;
| | - | -------------------------------------------------------------------------



| | ● | compliance
    with a wide variety of complex foreign laws, treaties and regulations;
| | - | -------------------------------------------------------------------------------------



| | ● | tariffs,
    trade barriers and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign
    markets; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | being
    subject to the laws, regulations and the court systems of many jurisdictions.
| | - | ---------------------------------------------------------------------------------------



Our
failure to manage the market and operational risks associated with our international operations effectively could limit the future
growth of our business and adversely affect our operating results.



Significant
disruptions of our information technology systems or breaches of our data security could adversely affect our business.



A
significant invasion, interruption, destruction or breakdown of our information technology systems and/or infrastructure by persons
with authorized or unauthorized access could negatively impact our business and operations. We could also experience business
interruption, information theft and/or reputational damage from cyber-attacks, which may compromise our systems and lead to data
leakage either internally or at our third party providers. Our systems have been, and are expected to continue to be, the target
of malware and other cyber-attacks. Although we have invested in measures to reduce these risks, we cannot assure you that these
measures will be successful in preventing compromise and/or disruption of our information technology systems and related data.





12







Under
applicable employment laws, we may not be able to enforce covenants not to compete and therefore may be unable to prevent our
competitors from benefiting from the expertise of some of our former employees.



We
generally enter into non-competition agreements with our employees. These agreements prohibit our employees from competing directly
with us or working for our competitors or clients for a limited period after they cease working for us. We may be unable to enforce
these agreements under the laws of the jurisdictions in which our employees work and it may be difficult for us to restrict our
competitors from benefiting from the expertise that our former employees or consultants developed while working for us. For example,
Israeli courts have required employers seeking to enforce non-compete undertakings of a former employee to demonstrate that the
competitive activities of the former employee will harm one of a limited number of material interests of the employer that have
been recognized by the courts, such as the secrecy of a company’s confidential commercial information or the protection
of its intellectual property. If we cannot demonstrate that such interests will be harmed, we may be unable to prevent our competitors
from benefiting from the expertise of our former employees or consultants and our ability to remain competitive may be diminished.



We
are subject to environmental laws due to the import and export of our products, which could subject us to compliance costs and/or
potential liability in the event of non-compliance.



The
export of our products internationally from our production facilities subjects us to environmental laws and regulations concerning
the import and export of chemicals and hazardous substances such as the U.S. Toxic Substances Control Act, or TSCA, and the Registration,
Evaluation, Authorization and Restriction of Chemical Substances, or REACH. These laws and regulations require the testing and
registration of some chemicals that we ship along with, or that form a part of, our systems and other products. If we fail to
comply with these or similar laws and regulations, we may be required to make significant expenditures to reformulate the chemicals
that we use in our products and materials or incur costs to register such chemicals to gain and/or regain compliance. Additionally,
we could be subject to significant fines or other civil and criminal penalties should we not achieve such compliance.



Risks
Related to Our Intellectual Property



If
we are unable to obtain and maintain effective patent rights for our products, we may not be able to compete effectively in our
markets. If we are unable to protect the confidentiality of our trade secrets or know-how, such proprietary information may be
used by others to compete against us.



Since
October 2014, we have sought patent protection for certain of our products, systems, designs and methods. Our success depends
in large part on our ability to obtain, maintain, monitor and enforce patent and other intellectual property protection in the
United States and in other countries with respect to our proprietary technology and new products.



We
have sought to protect our proprietary position by filing patent applications in the United States and in other countries, with
respect to our novel technologies and products, which are important to our business. Patent prosecution is uncertain, expensive
and time consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable
cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of our research and development
output before it is too late to obtain patent protection.



We have a growing portfolio
of eighteen provisional and non-provisional pending patent applications with the U.S. Patent and Trademark Office, or USPTO, and
the World Intellectual Property Organization, or WIPO, filed under the Paris Convention Treaty, or PCT, and three for which we
have issued U.S. patents. We cannot offer any assurances about which, if any, patent applications will issue, the breadth of any
such patent or whether any issued patents will be found invalid and unenforceable or will be threatened by third parties. Any
successful opposition to these patents or any other patents owned by or licensed to us after patent issuance could deprive us
of rights necessary for the successful commercialization of any new products that we may develop.







13







We
have three patents and their continuations and foreign counterparts licensed exclusively from the Hebrew University covering some
of our underlying core technology. To the extent the licensed patents are found to be invalid or unenforceable, we may be limited
in our ability to compete and market our products. The terms of our license with Hebrew University leave full control of any and
all enforcement of the licensed patents with Hebrew University. If Hebrew University elects to not enforce any or all of the licensed
patents it could significantly undercut the value of any of our products, which would materially adversely affect our future revenue,
financial condition and results of operations. Moreover, fluctuating currency rates may create inconsistencies in the royalty
payments we have under the license.



Further,
there is no assurance that all potentially relevant prior art relating to our patent applications has been found, which can invalidate
a patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully issue, and even if
such patents cover our products, third parties may challenge their validity, enforceability, or scope, which may result in such
patents being narrowed, found unenforceable or invalidated. Furthermore, even if they are unchallenged, our patent applications
and any future patents may not adequately protect our intellectual property, provide exclusivity for our new products, or prevent
others from designing around our claims. Any of these outcomes could impair our ability to prevent competition from third parties,
which may have an adverse impact on our business.



If
we cannot obtain and maintain effective patent rights for our products, we may not be able to compete effectively, and our business
and results of operations would be harmed.



If
we are unable to maintain effective proprietary rights for our products, we may not be able to compete effectively in our markets.



In
addition to the protection afforded by any patents currently owned and that may be granted, historically, we have relied on trade
secret protection and confidentiality agreements to protect proprietary know-how that is not patentable or that we elect not to
patent, processes that are not easily known, knowable or easily ascertainable, and for which patent infringement is difficult
to monitor and enforce and any other elements of our product candidate discovery and development processes that involve proprietary
know-how, information or technology that is not covered by patents. However, trade secrets can be difficult to protect. We seek
to protect our proprietary technology and processes, in part, by entering into confidentiality agreements with our employees,
consultants, scientific advisors, and contractors. We also seek to preserve the integrity and confidentiality of our data, trade
secrets and intellectual property by maintaining physical security of our premises and physical and electronic security of our
information technology systems. Agreements or security measures may be breached, and we may not have adequate remedies for any
breach. In addition, our trade secrets and intellectual property may otherwise become known or be independently discovered by
competitors.



We
cannot provide any assurances that our trade secrets and other confidential proprietary information will not be disclosed in violation
of our confidentiality agreements or that competitors will not otherwise gain access to our trade secrets or independently develop
substantially equivalent information and techniques. Also, misappropriation or unauthorized and unavoidable disclosure of our
trade secrets and intellectual property could impair our competitive position and may have a material adverse effect on our business.
Additionally, if the steps taken to maintain our trade secrets and intellectual property are deemed inadequate, we may have insufficient
recourse against third parties for misappropriating any trade secret.



Intellectual
property rights of third parties could adversely affect our ability to commercialize our products, and we might be required to
litigate or obtain licenses from third parties in order to develop or market our product candidates. Such litigation or licenses
could be costly or not available on commercially reasonable terms.



It
is inherently difficult to conclusively assess our freedom to operate without infringing on third party rights. Our competitive
position may be adversely affected if existing patents or patents resulting from patent applications issued to third parties or
other third party intellectual property rights are held to cover our products or elements thereof, or our manufacturing or uses
relevant to our development plans. In such cases, we may not be in a position to develop or commercialize products or our product
candidates unless we successfully pursue litigation to nullify or invalidate the third party intellectual property right concerned,
or enter into a license agreement with the intellectual property right holder, if available on commercially reasonable terms.
There may also be pending patent applications that if they result in issued patents, could be alleged to be infringed by our new
products. If such an infringement claim should be brought and be successful, we may be required to pay substantial damages, be
forced to abandon our new products or seek a license from any patent holders. No assurances can be given that a license will be
available on commercially reasonable terms, if at all.





14







It
is also possible that we have failed to identify relevant third party patents or applications. For example, U.S. patent applications
filed before November 29, 2000 and certain U.S. patent applications filed after that date that will not be filed outside the United
States remain confidential until patents issue. Patent applications in the United States and elsewhere are published approximately
18 months after the earliest filing for which priority is claimed, with such earliest filing date being commonly referred to as
the priority date. Therefore, patent applications covering our new products or platform technology could have been filed by others
without our knowledge. Additionally, pending patent applications which have been published can, subject to certain limitations,
be later amended in a manner that could cover our platform technologies, our new products or the use of our new products. Third
party intellectual property right holders may also actively bring infringement claims against us. We cannot guarantee that we
will be able to successfully settle or otherwise resolve such infringement claims. If we are unable to successfully settle future
claims on terms acceptable to us, we may be required to engage in or continue costly, unpredictable and time-consuming litigation
and may be prevented from or experience substantial delays in pursuing the development of and/or marketing our new products. If
we fail in any such dispute, in addition to being forced to pay damages, we may be temporarily or permanently prohibited from
commercializing our new products that are held to be infringing. We might, if possible, also be forced to redesign our new products
so that we no longer infringe the third party intellectual property rights. Any of these events, even if we were ultimately to
prevail, could require us to divert substantial financial and management resources that we would otherwise be able to devote to
our business.



Third-party
claims of intellectual property infringement may prevent or delay our development and commercialization efforts.



Our
commercial success depends in part on our avoiding infringement of the patents and proprietary rights of third parties. Numerous
U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which
we are developing new products. As our industries expand and more patents are issued, the risk increases that our products may
be subject to claims of infringement of the patent rights of third parties.



Third
parties may assert that we are employing their proprietary technology without authorization. There may be third-party patents
or patent applications with claims to materials, designs or methods of manufacture related to the use or manufacture of our products.
There may be currently pending patent applications that may later result in issued patents that our products may infringe. In
addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents.



If
any third-party patents were held by a court of competent jurisdiction to cover aspects of our formulations, processes for designs,
or methods of use, the holders of any such patents may be able to block our ability to develop and commercialize the applicable
product candidate unless we obtain a license or until such patent expires or is finally determined to be invalid or unenforceable.
In either case, such a license may not be available on commercially reasonable terms or at all.



Parties
making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further
develop and commercialize one or more of our products. Defense of these claims, regardless of their merit, would involve substantial
litigation expense and would be a substantial diversion of employee resources from our business. In the event of a successful
claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for
willful infringement, pay royalties, redesign our infringing products or obtain one or more licenses from third parties, which
may be impossible or require substantial time and monetary expenditure.





15







Patent
policy and rule changes could increase the uncertainties and costs surrounding the prosecution of our patent applications and
the enforcement or defense of any issued patents.



Changes
in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value
of any patents that may issue from our patent applications, or narrow the scope of our patent protection. The laws of foreign
countries may not protect our rights to the same extent as the laws of the United States. Publications of discoveries in the scientific
literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically
not published until 18 months after filing, or in some cases not at all. We therefore cannot be certain that we were the first
to file the invention claimed in our owned and licensed patent or pending applications, or that we or our licensor were the first
to file for patent protection of such inventions. Assuming all other requirements for patentability are met, in the United States
prior to March 15, 2013, the first to make the claimed invention without undue delay in filing, is entitled to the patent, while
outside the United States, the first to file a patent application is entitled to the patent. After March 15, 2013, under the Leahy-Smith
America Invents Act, or the Leahy-Smith Act, enacted on September 16, 2011, the United States has moved to a first to file system.
The Leahy-Smith Act also includes a number of significant changes that affect the way patent applications will be prosecuted and
may also affect patent litigation. In general, the Leahy-Smith Act and its implementation could increase the uncertainties and
costs surrounding the prosecution of our patent applications and the enforcement or defense of any issued patents, all of which
could have a material adverse effect on our business and financial condition.



We
may be involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming, and unsuccessful.



Competitors
may infringe our intellectual property. If we were to initiate legal proceedings against a third party to enforce a patent covering
one of our new products, the defendant could counterclaim that the patent covering our product candidate is invalid and/or unenforceable.
In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace.
Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of
novelty, obviousness, or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected
with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution.
Under the Leahy-Smith Act, the validity of U.S. patents may also be challenged in post-grant proceedings before the USPTO. The
outcome following legal assertions of invalidity and unenforceability is unpredictable.



Derivation
proceedings initiated by third parties or brought by us may be necessary to determine the priority of inventions and/or their
scope with respect to our patent or patent applications or those of our licensors. An unfavorable outcome could require us to
cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed
if the prevailing party does not offer us a license on commercially reasonable terms. Our defense of litigation or interference
proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees.
In addition, the uncertainties associated with litigation could have a material adverse effect on our ability to raise the funds
necessary to continue our clinical trials, continue our research programs, license necessary technology from third parties, or
enter into development partnerships that would help us bring our new products to market.



Furthermore,
because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that
some of our confidential information could be compromised by disclosure during this type of litigation. There could also be public
announcements of the results of hearings, motions, or other interim proceedings or developments. If securities analysts or investors
perceive these results to be negative, it could have a material adverse effect on the price of our Ordinary Shares.





16







We
have been subject, and may in the future be subject to further claims that our employees, consultants, or independent contractors
have wrongfully or unavoidably used or disclosed confidential information of third parties or that our employees have wrongfully
used or disclosed alleged trade secrets of their former employers.



On March 19, 2015, a claim
was filed in the District Court in Tel Aviv-Jaffa by XJet Ltd., or XJet, seeking damages in the amount of NIS 20,000,000 against
us, our officers, directors, shareholders several employees and the Subsidiary. XJet has alleged that one or more of our officers
and/or employees previously employed by XJet misappropriated commercial secrets and technology that were developed by XJet in
the field of 3-D printing and sought an injunction on the use of such trade secrets and proprietary technology. In May 2015, we
filed a statement of defense, within which we denied the allegations attributed to us in the lawsuit.



On
May 2, 2016, XJet filed a motion to amend pleadings, a motion for a temporary injunction and a motion for a protective order.
XJet has alleged, inter alia, that the invention described in our U.S. patent application No. 9,227,444, that covers alignment
assembly, kits and methods related to calibration of print heads, was invented by XJet and was kept by them as a trade secret
before it was misappropriated, and therefore the patent should be transferred to XJet. We filed our responses to the three motions
on May 22, 2016, and rejected all of XJet’s motions and allegations.



On
May 30, 2016, a pre-trial hearing took place. During the hearing, the parties agreed to turn to mediation proceedings for the
purpose of resolving the dispute amicably. On September 29, 2016, a mediation meeting took place and the parties are currently
engaged in settlement discussions.



If
the court grants XJet’s requested injunction, we may be required to make certain modifications to our 3D printer which could
cause delays in the development and commercialization of our 3D printer.



In
addition, we employ individuals who were previously employed at our competitors or potential competitors. We try to ensure that
our employees, consultants, and independent contractors do not use the proprietary information or know-how of others in their
work for us, but we may nevertheless be subject to claims that we or our employees, consultants, or independent contractors have
inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information,
of any of our employees’ former employers or other third parties. Litigation may result and be necessary to defend against
these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual
property rights or personnel, which could adversely impact our business. Even if we are successful in defending against such claims,
litigation could result in substantial costs and be a distraction to management and other employees.



We
may be subject to claims challenging the inventorship of our intellectual property.



We
may be subject to claims that former employees, collaborators or other third parties have an interest in, or right to compensation,
with respect to our current patent and patent applications, future patents or other intellectual property as an inventor or co-inventor.
For example, we may have inventorship disputes arise from conflicting obligations of consultants or others who are involved in
developing our products. Litigation may be necessary to defend against these and other claims challenging inventorship or claiming
the right to compensation. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable
intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome
could have a material adverse effect on our business. Even if we are successful in defending against such claims, litigation could
result in substantial costs and be a distraction to management and other employees.



We
may not be able to protect our intellectual property rights throughout the world.



Filing,
prosecuting, and defending patents on products, as well as monitoring their infringement in all countries throughout the world
would be prohibitively expensive, and our intellectual property rights in some countries can be less extensive than those in the
United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent
as federal and state laws in the United States.



Competitors
may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and may also
export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that
in the United States. These products may compete with our products. Future patents or other intellectual property rights may not
be effective or sufficient to prevent them from competing.





17







Many
companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade
secrets, and other intellectual property protection, which could make it difficult for us to stop the marketing of competing products
in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions, whether or
not successful, could result in substantial costs and divert our efforts and attention from other aspects of our business, could
put our future patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing
and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages
or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to monitor and enforce our intellectual
property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property
that we develop or license.



Risks
Related to the Ownership of Our ADSs or Ordinary Shares



Sales
of a substantial number of our ADSs or Ordinary Shares or ADSs in the public market by our existing shareholders could cause our
share price to fall.



Sales
of a substantial number of our ADSs or Ordinary Shares in the public market, or the perception that these sales might occur, could
depress the market price of our ADSs or Ordinary Shares and could impair our ability to raise capital through the sale of additional
equity securities. We are unable to predict the effect that sales may have on the prevailing market price of our ADSs or Ordinary
Shares.



Our
principal shareholders, officers and directors beneficially own over 34% of our outstanding Ordinary Shares. They will therefore
be able to exert significant control over matters submitted to our shareholders for approval.



As of March 3, 2017, our
principal shareholders, officers and directors beneficially own approximately 34% of our Ordinary Shares. This significant concentration
of share ownership may adversely affect the trading price for our Ordinary Shares because investors often perceive disadvantages
in owning shares in companies with controlling shareholders. As a result, these shareholders, if they acted together, could significantly
influence or even unilaterally approve matters requiring approval by our shareholders, including the election of directors and
the approval of mergers or other business combination transactions. The interests of these shareholders may not always coincide
with our interests or the interests of other shareholders.



The
JOBS Act will allow us to postpone the date by which we must comply with some of the laws and regulations intended to protect
investors and to reduce the amount of information we provide in our reports filed with the SEC, which could undermine investor
confidence in our company and adversely affect the market price of our ADSs or Ordinary Shares.



For
so long as we remain an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or
the JOBS Act, we intend to take advantage of certain exemptions from various requirements that are applicable to public companies
that are not “emerging growth companies” including:



| | ● | the
    provisions of the Sarbanes-Oxley Act requiring that our independent registered public accounting firm provide an attestation
    report on the effectiveness of our internal control over financial reporting;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Section
    107 of the JOBS Act, which provides that an “emerging growth company” can take advantage of the extended transition
    period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with
    new or revised accounting standards. This means that an “emerging growth company” can delay the adoption of certain
    accounting standards until those standards would otherwise apply to private companies. We are electing to delay such adoption
    of new or revised accounting standards. As a result of this adoption, our financial statements may not be comparable to companies
    that comply with the public company effective date; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | any
    rules that may be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement
    to the auditor’s report on the financial statements.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



18







We
intend to take advantage of these exemptions until we are no longer an “emerging growth company.” We will remain an
emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the date
of our first sale of common equity securities pursuant to an effective registration statement under the Securities Act, (b) in
which we have total annual gross revenue of at least $1.0 billion, or (c) in which we are deemed to be a large accelerated filer,
which means the market value of our Ordinary Shares that is held by non-affiliates exceeds $700 million as of the prior June 30,
and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.



We
cannot predict if investors will find our ADSs or Ordinary Shares less attractive because we may rely on these exemptions. If
some investors find our ADSs or Ordinary Shares less attractive as a result, there may be a less active trading market for our
ADSs or Ordinary Shares, and our market prices may be more volatile and may decline.



As
a “foreign private issuer” we are permitted, and intend, to follow certain home country corporate governance practices
instead of otherwise applicable SEC and NASDAQ requirements, which may result in less protection than is accorded to investors
under rules applicable to domestic U.S. issuers.



Our
status as a foreign private issuer also exempts us from compliance with certain SEC laws and regulations and certain regulations
of the NASDAQ Stock Market, including the proxy rules, the short-swing profits recapture rules, and certain governance requirements
such as independent director oversight of the nomination of directors and executive compensation. In addition, we will not be
required under the Exchange Act of 1934, as amended, or the Exchange Act, to file current reports and financial statements with
the SEC as frequently or as promptly as U.S. domestic companies whose securities are registered under the Exchange Act and we
will generally be exempt from filing quarterly reports with the SEC. Also, although a recent amendment to the Israeli Companies
Law, or the Companies Law, will require us to disclose the annual compensation of our five most highly compensated senior officers
on an individual basis (rather than on an aggregate basis, as was permitted under the Companies Law for Israeli public companies
listed overseas, such as in the United States, prior to such amendment), this disclosure will not be as extensive as that required
of a U.S. domestic issuer. For example, it currently appears as if the disclosure required under Israeli law would be limited
to compensation paid in the immediately preceding year without any requirement to disclose option exercises and vested stock options,
pension benefits or potential payments upon termination or a change of control. Furthermore, as a foreign private issuer, we are
also not subject to the requirements of Regulation FD (Fair Disclosure) promulgated under the Exchange Act.



These
exemptions and leniencies will reduce the frequency and scope of information and protections to which you are entitled as an investor.



We
may be a “passive foreign investment company”, or PFIC, for U.S. federal income tax purposes in the current taxable
year or may become one in any subsequent taxable year. There generally would be negative tax consequences for U.S. taxpayers that
are holders of our ADSs or Ordinary Shares if we are or were to become a PFIC.



Based
on the projected composition of our income and valuation of our assets, we do not expect to be a PFIC for 2016, and we do
not expect to become a PFIC in the future, although there can be no assurance in this regard. The determination of whether we
are a PFIC is made on an annual basis and will depend on the composition of our income and assets from time to time. We will
be treated as a PFIC for U.S. federal income tax purposes in any taxable year in which either (1) at least 75% of our gross
income is “passive income” or (2) on average at least 50% of our assets by value produce passive income or are
held for the production of passive income. Passive income for this purpose generally includes, among other things, certain
dividends, interest, royalties, rents and gains from commodities and securities transactions and from the sale or exchange of
property that gives rise to passive income. Passive income also includes amounts derived by reason of the temporary
investment of funds, including those raised in a public offering. In determining whether a non-U.S. corporation is a PFIC, a
proportionate share of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25%
interest (by value) is taken into account. The tests for determining PFIC status are applied annually, and it is difficult to
make accurate projections of future income and assets which are relevant to this determination. In addition, our PFIC status
may depend in part on the market value of our ADSs or Ordinary Shares. Accordingly, there can be no assurance that we
currently are not or will not become a PFIC in the future. If we are a PFIC in any taxable year during which a U.S. taxpayer
holds our ADSs or Ordinary Shares, such U.S. taxpayer would be subject to certain adverse U.S. federal income tax rules. In
particular, if the U.S. taxpayer did not make an election to treat us as a “qualified electing fund,” or QEF, or
make a “mark-to-market” election, then “excess distributions” to the U.S. taxpayer, and any gain
realized on the sale or other disposition of our ADSs or Ordinary Shares by the U.S. taxpayer: (1) would be allocated
ratably over the U.S. taxpayer’s holding period for the ADSs or Ordinary Shares; (2) the amount allocated to the
current taxable year and any period prior to the first day of the first taxable year in which we were a PFIC would be taxed
as ordinary income; and (3) the amount allocated to each of the other taxable years would be subject to tax at the highest
rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral
benefit would be imposed with respect to the resulting tax attributable to each such other taxable year. In addition, if the
U.S. Internal Revenue Service, or the IRS, determines that we are a PFIC for a year with respect to which we have determined
that we were not a PFIC, it may be too late for a U.S. taxpayer to make a timely QEF or mark-to-market election. U.S.
taxpayers that have held our ADSs or Ordinary Shares during a period when we were a PFIC will be subject to the foregoing
rules, even if we cease to be a PFIC in subsequent years, subject to exceptions for U.S. taxpayer who made a timely QEF or
mark-to-market election. A U.S. taxpayer can make a QEF election by completing the relevant portions of and filing IRS Form
8621 in accordance with the instructions thereto. We do not intend to notify U.S. taxpayers that hold our ADSs or Ordinary
Shares if we believe we will be treated as a PFIC for any taxable year in order to enable U.S. taxpayers to consider whether
to make a QEF election. In addition, we do not intend to furnish such U.S. taxpayers annually with information needed in
order to complete IRS Form 8621 and to make and maintain a valid QEF election for any year in which we or any of our
subsidiaries are a PFIC. U.S. taxpayers that hold our ADSs or Ordinary Shares are strongly urged to consult their tax
advisors about the PFIC rules, including tax return filing requirements and the eligibility, manner, and consequences to them
of making a QEF or mark-to-market election with respect to our ADSs or Ordinary Shares in the event that we are a PFIC. See
“Item 10.E. Taxation — U.S. Federal Income Tax Considerations — Passive Foreign Investment
Companies” for additional information.





19







We
may be subject to securities litigation, which is expensive and could divert management attention.



In
the past, companies that have experienced volatility in the market price of their stock have been subject to securities class
action litigation. We may be the target of this type of litigation in the future. Litigation of this type could result in substantial
costs and diversion of management’s attention and resources, which could seriously hurt our business. Any adverse determination
in litigation could also subject us to significant liabilities.



If
securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or
if they adversely change their recommendations or publish negative reports regarding our business or our shares, our share price
and trading volume could decline.



The
trading market for our ADSs or Ordinary Shares will be influenced by the research and reports that industry or securities analysts
may publish about us, our business, our market or our competitors. We do not have any control over these analysts and we cannot
provide any assurance that analysts will cover us or provide favorable coverage. If any of the analysts who may cover us adversely
change their recommendation regarding our shares, or provide more favorable relative recommendations about our competitors, our
share price would likely decline. If any analyst who may cover us were to cease coverage of our company or fail to regularly publish
reports on us, we could lose visibility in the financial markets, which in turn could cause our share price or trading volume
to decline.



Risks
Related to Israeli Law and Our Operations in Israel



Our
operations are subject to currency and interest rate fluctuations.



We
incur expenses in U.S. dollars and NIS, but our financial statements are denominated in NIS and presented in NIS and have a convenience
translation to U.S. dollars. NIS is our functional currency. The NIS is the currency that represents the principal economic environment
in which we operate. As a result, we are affected by foreign currency exchange fluctuations through both translation risk and
transaction risk. As a result, we are exposed to the risk that the NIS may appreciate relative to the dollar, or, if the NIS instead
devalues relative to the dollar, that the inflation rate in Israel may exceed such rate of devaluation of the NIS, or that the
timing of such devaluation may lag behind inflation in Israel. In any such event, the dollar cost of our operations in Israel
would increase and our dollar-denominated results of operations would be adversely affected.





20







Provisions
of Israeli law and our amended and restated articles of association may delay, prevent or otherwise impede a merger with, or an
acquisition of, our company, which could prevent a change of control, even when the terms of such a transaction are favorable
to us and our shareholders.



Israeli
corporate law regulates mergers, requires tender offers for acquisitions of shares above specified thresholds, requires special
approvals for transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant
to such types of transactions. For example, a merger may not be consummated unless at least 50 days have passed from the date
on which a merger proposal is filed by each merging company with the Israel Registrar of Companies and at least 30 days have passed
from the date on which the shareholders of both merging companies have approved the merger. In addition, a majority of each class
of securities of the target company must approve a merger. Moreover, a tender offer for all of a company’s issued and outstanding
shares can only be completed if the acquirer receives positive responses from the holders of at least 95% of the issued share
capital. Completion of the tender offer also requires approval of a majority of the offerees that do not have a personal interest
in the tender offer, unless, following consummation of the tender offer, the acquirer would hold at least 98% of the company’s
outstanding shares. Furthermore, the shareholders, including those who indicated their acceptance of the tender offer, may, at
any time within six months following the completion of the tender offer, claim that the consideration for the acquisition of the
shares does not reflect their fair market value, and petition an Israeli court to alter the consideration for the acquisition
accordingly, unless the acquirer stipulated in its tender offer that a shareholder that accepts the offer may not seek such appraisal
rights, and the acquirer or the company published all required information with respect to the tender offer prior to the tender
offer’s response date.



Israeli
tax considerations also may make potential transactions unappealing to us or to our shareholders whose country of residence
does not have a tax treaty with Israel exempting such shareholders from Israeli tax. See “Item 10.E. Taxation —
Israeli Tax Considerations and Government Programs” for additional information.



Our
amended and restated articles of association also contain provisions that could delay or prevent changes in control or changes
in our management without the consent of our board of directors. These provisions include the following:



| | ● | no
    cumulative voting in the election of directors, which limits the ability of minority shareholders to elect director candidates;
    and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------



| | ● | the
    exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors
    or the resignation, death or removal of a director, which prevents shareholders from being able to fill vacancies on our board
    of directors.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



It
may be difficult to enforce a judgment of a United States court against us and our officers and directors and the Israeli experts
named in this prospectus in Israel or the United States, to assert United States securities laws claims in Israel or to serve
process on our officers and directors and these experts.



We
were incorporated in Israel. Most of our executive officers and directors reside outside of the United States, and all of our
assets and most of the assets of these persons are located outside of the United States. Therefore, a judgment obtained against
us, or any of these persons, including a judgment based on the civil liability provisions of the U.S. federal securities laws,
may not be collectible in the United States and may not necessarily be enforced by an Israeli court. It also may be difficult
to affect service of process on these persons in the United States or to assert U.S. securities law claims in original actions
instituted in Israel. Additionally, it may be difficult for an investor, or any other person or entity, to initiate an action
with respect to United States securities laws in Israel. Israeli courts may refuse to hear a claim based on an alleged violation
of United States securities laws reasoning that Israel is not the most appropriate forum in which to bring such a claim. In addition,
even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not United States law is applicable to
the claim. If United States law is found to be applicable, the content of applicable United States law must be proven as a fact
by expert witnesses, which can be a time consuming and costly process. Certain matters of procedure will also be governed by Israeli
law. There is little binding case law in Israel that addresses the matters described above. As a result of the difficulty associated
with enforcing a judgment against us in Israel, you may not be able to collect any damages awarded by either a United States or
foreign court.





21







Our
headquarters and other significant operations are located in Israel, and, therefore, our results may be adversely affected by
political, economic and military instability in Israel.



Our
executive offices are located in Israel. In addition, all of our officers and directors are residents of Israel. Accordingly,
political, economic and military conditions in Israel may directly affect our business. Since the establishment of the State of
Israel in 1948, a number of armed conflicts have taken place between Israel and its neighboring countries. Any hostilities involving
Israel or the interruption or curtailment of trade between Israel and its trading partners could adversely affect our operations
and results of operations. During November 2012 and July 2014, Israel was engaged in an armed conflict with a militia group and
political party which controls the Gaza Strip. In addition, recent political uprisings and conflicts in various countries in the
Middle East, including Egypt and Syria, are affecting the political stability of those countries. It is not clear how this instability
will develop and how it will affect the political and security situation in the Middle East. This instability has raised concerns
regarding security in the region and the potential for armed conflict. In addition, it is widely believed that Iran, which has
previously threatened to attack Israel, has been stepping up its efforts to achieve nuclear capability. Iran is also believed
to have a strong influence among extremist groups in the region, such as Hamas in Gaza and Hezbollah in Lebanon. Additionally,
the Islamic State of Iraq and Levant, or ISIL, a violent jihadist group, is involved in hostilities in Iraq and Syria and has
been growing in influence. Although ISIL’s activities have not directly affected the political and economic conditions in
Israel, ISIL’s stated purpose is to take control of the Middle East, including Israel. The tension between Israel and Iran
and/or these groups may escalate in the future and turn violent, which could affect the Israeli economy in general and us in particular.
Any potential future conflict could also include such missile strikes against other parts of Israel, including our offices and
facilities. Any armed conflicts, terrorist activities or political instability in the region could adversely affect business conditions,
could harm our results of operations and could make it more difficult for us to raise capital. Parties with whom we do business
may sometimes decline to travel to Israel during periods of heightened unrest or tension, forcing us to make alternative arrangements
when necessary in order to meet our business partners face to face. In addition, the political and security situation in Israel
may result in parties with whom we have agreements involving performance in Israel claiming that they are not obligated to perform
their commitments under those agreements pursuant to force majeure provisions in such agreements.



Our
commercial insurance does not cover losses that may occur as a result of an event associated with the security situation in the
Middle East. Although the Israeli government has in the past covered the reinstatement value of certain damages that were caused
by terrorist attacks or acts of war, we cannot assure you that this government coverage will be maintained or, if maintained,
will be sufficient to compensate us fully for damages incurred. Any losses or damages incurred by us could have a material adverse
effect on our business. Any armed conflicts or political instability in the region would likely negatively affect business conditions
generally and could harm our results of operations.



Further,
in the past, the State of Israel and Israeli companies have been subjected to economic boycotts. Several countries still restrict
business with the State of Israel and with Israeli companies. These restrictive laws and policies may have an adverse impact on
our operating results, financial conditions or the expansion of our business.



Your
rights and responsibilities as a shareholder will be governed by Israeli law, which differs in some material respects from the
rights and responsibilities of shareholders of U.S. companies.



The
rights and responsibilities of the holders of our ADSs or Ordinary Shares are governed by our amended and restated articles
of association and by Israeli law. These rights and responsibilities differ in some material respects from the rights and
responsibilities of shareholders in typical U.S.-based corporations. In particular, a shareholder of an Israeli company has
certain duties to act in good faith and fairness toward the company and other shareholders and to refrain from abusing its
power in the company. See “Item 6.C. Board Practices — Duties of Shareholders” for additional information.
There is limited case law available to assist us in understanding the nature of this duty or the implications of these
provisions. These provisions may be interpreted to impose additional obligations on holders of our ADSs or Ordinary Shares
that are not typically imposed on shareholders of U.S. corporations.





22







We
received Israeli government grants for certain of our research and development activities. The terms of those grants may require
us to pay royalties and to satisfy specified conditions in order to manufacture products and transfer technologies outside of
Israel. We may be required to pay penalties in addition to repayment of the grants.



Our
research and development efforts have been financed in part through royalty-bearing grants in an aggregate amount of approximately
NIS 3,686,000 (approximately $959,000) that we received from Israel’s Innovation Authority (formerly known as the Office of the
Chief Scientist), or the IIA, as of December 31, 2016. With respect to the royalty-bearing grants we are committed to pay royalties
at a rate of 3% to 5% on sales proceeds from our products that were developed under IIA programs up to the total amount of grants
received, linked to the U.S. dollar and bearing interest at an annual rate of LIBOR applicable to U.S. dollar deposits. Regardless
of any royalty payment, we are further required to comply with the requirements of the Israeli Encouragement of Industrial Research
and Development Law, 5744-1984, as amended, and related regulations, or the Research Law, with respect to those past grants. When
a company develops know-how, technology or products using IIA grants, the terms of these grants and the Research Law restrict
the transfer of such know-how, and the transfer of manufacturing or manufacturing rights of such products, technologies or know-how
outside of Israel, without the prior approval of the IIA. Therefore, the discretionary approval of an IIA committee would be required
for any transfer to third parties inside or outside of Israel of know-how or manufacturing or manufacturing rights related to
those aspects of such technologies. We may not receive those approvals. Furthermore, the IIA may impose certain conditions on
any arrangement under which it permits us to transfer technology or development out of Israel.



The
transfer of IIA-supported technology or know-how outside of Israel may involve the payment of significant amounts, depending upon
the value of the transferred technology or know-how, our research and development expenses, the amount of IIA support, the time
of completion of the IIA-supported research project and other factors. These restrictions and requirements for payment may impair
our ability to sell or otherwise transfer our technology assets outside of Israel or to outsource or transfer development or manufacturing
activities with respect to any product or technology outside of Israel. Furthermore, the consideration available to our shareholders
in a transaction involving the transfer outside of Israel of technology or know-how developed with IIA funding (such as a merger
or similar transaction) may be reduced by any amounts that we are required to pay to the IIA.



Our
operations may be disrupted as a result of the obligation of management or key personnel to perform military service.



Our
employees and consultants in Israel, including members of our senior management, may be obligated to perform one month, and in
some cases longer periods, of military reserve duty until they reach the age of 40 (or older, for citizens who hold certain positions
in the Israeli armed forces reserves) and, in the event of a military conflict, may be called to active duty. In response to increases
in terrorist activity, there have been periods of significant call-ups of military reservists. It is possible that there will
be similar large-scale military reserve duty call-ups in the future. Our operations could be disrupted by the absence of a significant
number of our officers, directors, employees and consultants. Such disruption could materially adversely affect our business and
operations.



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



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



Our
legal and commercial name is Nano Dimension Ltd. We were incorporated in the State of Israel in December 1960, and are subject
to the Companies Law. We were incorporated under the name Polgat Woolen Industries Kiryat Gat Ltd. On December 30, 1981, our name
was changed to Polgat Industries Ltd. On January 1, 1995, our name was changed to Polgat Ltd., and on October 28, 2007, our name
was changed to ZBI Ltd. In 1977, we became a public company in Israel and our shares were listed for trade on the TASE, and on
October 29, 2014, we changed our name to Nano Dimension Ltd. Our Ordinary Shares are currently traded on the TASE under the symbol
NNDM. Our ADSs representing our Ordinary Shares currently trade in the United States on the NASDAQ Capital Market under the symbol
“NNDM”.





23







We
are a development-stage company. From March 7, 2014, until August 25, 2014, we were a “shell corporation” and did
not have any business activity, excluding administrative management. On August 25, 2014, we closed the Merger with the Subsidiary,
whereby we acquired 100% of the share capital of the Subsidiary. The Subsidiary was incorporated in the State of Israel in July
2012. The Merger resulted in a change of control whereby the management of the Company was replaced by the management of the Subsidiary.
Furthermore, as a result of the Merger, the four shareholders of the Subsidiary received an aggregate amount of approximately
37.4% of the issued Ordinary Shares of the Company, as of the date thereof.



Our
registered office and principal place of business is located at 2 Ilan Ramon St., Ness Ziona 7403635, Israel. Our telephone number
in Israel is +972 -73-7509142.



Our
website address is www.nano-di.com. The information contained on our website or available through our website is not incorporated
by reference into and should not be considered a part of this annual report on Form 20-F, and the reference to our website in
this annual report on Form 20-F is an inactive textual reference only. Zysman, Aharoni,
Gayer and Sullivan & Worcester LLP is our agent in the United States, and its address is 1633 Broadway, New York, NY 10019.



We
are an emerging growth company, as defined in Section 2(a) of the Securities Act, as implemented under the JOBS Act. As such,
we are eligible to, and intend to, take advantage of certain exemptions from various reporting requirements applicable to other
public companies that are not emerging growth companies including but not limited to not being required to comply with the auditor
attestation requirements of the SEC rules under Section 404 of the Sarbanes-Oxley Act. We could remain an emerging growth company
until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the date of our first sale of
common equity securities pursuant to an effective registration statement under the Securities Act, (b) in which we have total
annual gross revenue of at least $1.0 billion, or (c) in which we are deemed to be a large accelerated filer, which means the
market value of our Ordinary Shares that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the
date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.



We
are a foreign private issuer as defined by the rules under the Securities Act and the Exchange Act. Our status as a foreign private
issuer also exempts us from compliance with certain laws and regulations of the SEC and certain regulations of the NASDAQ Stock
Market, including the proxy rules, the short-swing profits recapture rules, and certain governance requirements such as independent
director oversight of the nomination of directors and executive compensation. In addition, we will not be required to file annual,
quarterly and current reports and financial statements with the SEC as frequently or as promptly as U.S. domestic companies registered
under the Exchange Act.



Our
capital expenditures for 2016, 2015 and 2014 amounted to NIS 18,333,000 (approximately $4,768,000), NIS 10,078,000 (approximately
$2,582,000) and NIS 1,131,000 (approximately $291,000), respectively. These expenditures were primarily for purchases of fixed
assets, investment in restricted bank deposits and development expenditures capitalized as intangible assets. Our purchases of
fixed assets primarily include leasehold improvements, computers, and equipment used for the development of our products, and
we financed these expenditures primarily from cash on hand.



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



We
are a development-stage company engaged in the development of a three-dimensional (3D) printer that prints electronic circuit
boards, also known as printed circuit boards (PCBs), and ink materials and products based on nano-technology. Our Dragonfly 2020
3D printer currently in development uses our proprietary ink and integrated software to quickly create fully functioning PCB prototypes.
Our Dragonfly 2020 3D printer builds PCBs by depositing multiple layers of “ink” material, one on top of another.
We enhance the ability of electrical engineers, designers and manufacturers to conceptualize, test and develop PCBs in a shortened
development cycle bypassing common prototyping bottlenecks.



24









A
PCB is the central component, or infrastructure, of any electronic product, and therefore is an essential component for the entire
electronics industry. On top of a PCB, various electronic components, such as resistors, suppliers and transformers are installed,
all of which are prepared and organized based on a predetermined plan, intended to ensure the operation of a given system. Traditionally,
PCBs are developed through a back-and-forth process that involves design trial and error and third-party manufacturer outsourcing.
We believe that the traditional process for developing complex and advanced electronics is outdated and in need of a modern technological
solution.



Until
now, 3D printing technology has been unable to offer a solution for the professional PCB prototype market, mainly because of the
complexity of printing multiple layers of electrically conductive and dielectric materials with high resolution that is suitable
for the professional electronics industry. However, at Nano Dimension, we have advanced 3D printing and inkjet technology with
our groundbreaking nano-technology, with the goal of bringing the science of PCB production up to speed with the high-tech electronic
industry.



Our
Dragonfly 2020 3D printer in development uses liquid nano-conductive and dielectric inks that are designed specifically to print
sophisticated PCBs. We believe that our Dragonfly 2020 3D printer will obviate the reliance on third-party manufacturers during
the development stages of PCBs, and allow a wide range of companies engaged in product development the luxury of an office-friendly,
in-house 3D PCB printer. Our Dragonfly 2020 3D printer is designed to allow users to easily customize their own PCBs (including
multi-layer PCBs) based on a user-specific design plan.



In
April 2015, we presented an alpha-version of our 3D printer to a limited number of potential customers and key industry leaders
in order to showcase our 3D printer and to receive preliminary feedback. In July 2015, we began collaborations with several Fortune
100 and key Israeli companies, including Israel Aerospace Industries, for testing of the beta version of our 3D Printer.



In
the second half of 2016, we began leasing our DragonFly 2020 3D printer to beta customers as a part of our beta plan. Our beta
program involves the delivery of our DragonFly 2020 3D printers to leading companies and partners world-wide. The beta customers
are pioneers of additive manufacturing technology’s entry into the world of electronics. Beta customers will qualify the DragonFly
2020 technology and use it, amongst other possibilities, to speed up their product development times. In return, we receive valuable
feedback for product development and other considerations, including payment. Beta customers are expected to sign lease agreements
for our printer covering a period of 6 to 18 months. Beta customers are expected to pay up to $100,000 per printer during the
lease period, depending on the terms of each agreement.



Prior
to commercialization, and as a part of our beta plan, we intend to perform quality assurance tests and further beta tests in collaboration
with additional beta partners. In 2017 we plan to deliver several tens of printers to beta and commercial clients. In the second
half of 2017, we expect to end our beta plan, and to start the commercial sales of our Dragonfly 2020 3D printer and proprietary
ink products.



Industry
Overview



3D
Printing



3D
printing in general is a process of making a three-dimensional solid object from a digital model. 3D printing is achieved using
an additive process, where successive layers of material are laid down in different shapes.



3D
printing is also considered distinct from traditional machining techniques, which mostly rely on the removal of material by methods
such as cutting or drilling (subtractive processes). Our Dragonfly 2020 3D printer uses at least two types of ink (i.e., conductive
and dielectric) in order to lay down successive layers that literally build a ready-to-use PCB. The printer receives digital files
as input and converts them into print jobs in order to build the multi-layer PCB. No cutting or drilling is required in the process
of 3D printing of a multi-layer PCB with our Dragonfly 2020 3D Printer.





25







Printed
Circuit Boards (PCB)







A
conventional PCB is a board containing a pattern of conducting material, such as copper, which becomes an electrical circuit when
electrical components are attached to it. It is the basic platform used to interconnect electronic components and can be found
in most electronic products, including computers and computer peripherals, communications equipment, cellular phones, high-end
consumer electronics, automotive and aeronautical components and medical and industrial equipment. Conventional PCBs are more
product-specific than other electronic components because generally they are unique for a specific electronic device or appliance.
Conventional PCBs can be classified as single-sided, double-sided and multi-layer boards.



A
multi-layer electronic circuit contains two or more different conductive layers, while an older single-layer circuit contains
only one layer of conductors. In the past, in inexpensive circuits, there were single or dual layer circuits. Advanced circuits,
which are required for modern products (such as mobile phones, computer cards and more), contain advanced multi-layer circuits
with a much larger number of layers. Modern electronics have become more complex and often contain thousands of connections between
various components of the same electronic circuit. In order to enable this complexity in a limited area and to prevent electronic
short circuits, the connections are divided into a number of layers that are connected within the same multi-layer electronic
circuit. Our Dragonfly 2020 3D printer is designed to efficiently print prototype PCBs that conform to the requirements of modern
and complex electronics.



The
main issue with the traditional process of PCB prototype development is the outsource manufacturing delay. Modern and advanced
PCBs are complex and are often comprised of more than ten layers. As a general rule, the time for manufacturing depends on the
complexity and number of layers that a PCB contains. Consequently the time it takes to receive an advanced PCB prototype from
a third party manufacturer may reach several weeks. While the life cycle of modern products is shortening, the need for rapid
prototyping increases. Our Dragonfly 2020 3D printer offers a solution to the pain of a slow time-to-market turnaround of advanced
PCB prototypes, and enables the developers of PCBs the freedom to innovate and painlessly employ an efficient process of trial-and-error
on a day to day basis.



Another
issue with the traditional process of PCB prototyping is confidentiality. The usage of outsource services in order to produce
a PCB prototype forces the developer to share PCB design files of a future product months before the product is expected to reach
the market. Our Dragonfly 2020 3D printer is intended to be an in-house solution to this issue.



Market
Opportunity



As
the pioneer in 3D PCB printing, we are not able to rely on specific market references, and therefore we estimate market potential
by looking at more general market references such as PCB sales and software licenses for PCB design. For example, the number of
software licenses for PCB design may be indicative of the number of electrical engineers that engage in PCB design and creation.
We believe that many of these users could benefit from the use of an in-house 3D PCB printer. Furthermore, we perceive that the
electronic design automation, or EDA, PCB software industry is strong. According to IHS Electronics360, PCB and multi-chip-module
revenue increased 20.3% in the second quarter of 2014 compared to the second quarter of 2013, primarily as a result of an increase
in sales of $178.4 million.



We
believe that users of EDA are ultimately focused on production, rather than on-screen design, and the expectation is that users
of such tools all require a prototyping solution. We further believe that 3D printing offers them the fastest, most convenient
way to do this.



According
to Research and Markets, the global PCB manufacturing market is expected to increase its market size from around $62.3 billion
in 2013 to around $74.3 billion in 2018, growing at a compound annual growth rate (CAGR) of 3.6%. The market volume is also expected
to increase to 32 billion units and 3.92 million tons by 2018, growing at a rate of 3.8% and 5%, respectively.





26







According
to our estimates, and based on several reports dated from 2004 to 2014, there are approximately one million existing users of
software that design and plan electronic circuits, and this is a reference basis for the potential quantity of users with a need
for a 3D printer to print prototypes of advanced electronic circuits. While several of these reports are from many years ago,
our own perception is that the PCB design and manufacturing industries are growing at rates that have surpassed prediction.



The
chart below gives an indication of the size of the PCB specific software market, and illustrates that it is both large and growing.







Strategy



Our
strategic objective is to develop and commercialize technologies to enable 3D printing of electronics, including a 3D printer
for multi-layer PCBs and related ink products. By creating our own installed-base of printers that require our own dedicated inks
– we wish to establish a “razor / razor-blade” business model in which our customers buy the printer first and
then continue to purchase the dedicated inks over time.



We
plan to market our products and services worldwide, primarily to companies that develop products with electronic components, including
companies in the communications, computer, consumer electronics, semiconductor, defense, aerospace, medical and transportation
industries.



We
intend to further advance our breakthrough technologies and commercialization efforts. To achieve these objectives, we plan to:



| | ● | Complete
    the development of our 3D printer. Based on the successful testing of our alpha-version 3D printer and feedback from select
    customers, in the second half of 2016, we began leasing our DragonFly 2020 3D printer to beta customers as a part of our beta
    plan. Our beta program involves the delivery of our DragonFly 2020 3D printers to leading companies and partners world-wide.
    Prior to commercialization, as a part of our beta plan, we intend to perform quality assurance tests and further beta tests
    in collaboration with additional beta partners. In the second half of 2017, we expect to end our beta plan, and to start the
    commercial sales of our Dragonfly 2020 3D printer and proprietary ink products.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





27







| | ● | Exploit
    our Dragonfly 2020 3D printer as the ultimate solution for PCB prototype development. We believe that our 3D printer in
    development has significant and potentially disruptive market potential.                                                                                                                                                                                                
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ● | Capitalize
    on our nano-conductive technology products. We plan to exploit our conductive nano-silver ink as a supplemental product
    to our 3D printers and as a stand-alone product for other purposes such as touch-screens, radiofrequency identification (RFID),
    photovoltaics (PV) and other applications that may require silver ink with suitable qualities for advanced printing.             
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ● | Market
    and explore other uses for our nano-epoxy ink. We plan to exploit our nano-epoxy dielectric ink as a supplemental product
    to our 3D printers (as a dielectric material). We are also exploring the potential of our nano-epoxy dielectric ink as a unique
    stand-alone product that provides mechanical strength, adhesiveness and high thermal resistance with a wide range of applicability.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ● | Advance
    our commercialization efforts and infrastructure. Upon the conclusion of the development of our products and the transition
    to the production process, we intend to turn to the potential customers, directly and/or through third-party distributors,
    and offer our products as a solution which provides for efficient production of prototype PCBs.                                      



Products



Nano
Dimension’s products currently consist of two main product lines – our Dragonfly 2020 3D printer and proprietary ink
products.



Dragonfly
2020 3D PCB Printer

.





Our
Dragonfly 2020 3D printer in development is the first 3D printer that we are aware of that is customized specifically to print
multi-layered PCBs for advanced electronics. The Dragonfly is designed to allow users the ability to print ready-to-use, professional,
multi-layered PCB prototypes in-house, within hours. Our 3D printer is designed to print electronic conductors and dielectric
(non-conductive) layers based on a user’s specific design plan.



Our
Dragonfly 2020 3D printer includes our dedicated and proprietary print-job editing software, which enables smooth and seamless
usage for our customers. Our software is not intended to be a replacement for PCB design software, but rather conveniently allows
our customers to continue to design their PCBs with their preferred PCB design software. After the user has concluded the PCB
design, the files are simply sent to the 3D printer in Gerber (.gbr) format with a user-friendly interface, similar to the usage
of commonplace inkjet and laser printers. Our proprietary software employs traditional methods of 3D printing by virtually converting
print jobs (the PCB) into a large number of thin slices, which are then printed one on top of the other.





28







In
July 2016, we completed the development of the initial version of our software package, which will be integrated in our DragonFly
2020 3D printer. The software package, called ’Switch’, enables preparation of production files of printed electronic
circuits using the DragonFly 2020 3D printer. The software supports customary formats in the electronics industry such as Gerber
files, as well as VIA and DRILL files. The ’Switch’ software presents a unique interface that displays Gerber files
and an accurate and detailed description of the PCB’s structure, which facilitates a highly precise conversion to a 3D file
format.



Additionally,
and depending on the sales channel employed, we will offer different levels of product warranty and after-sales service. We anticipate
that channel partners, such as established distributors will typically be key to providing support and warranty services to the
wider market. In instances where deeper and more strategic relationships are at stake, we intend to provide dedicated account
management, both in terms of support and servicing, which may be fee or subscription-based. We plan to support and train a select
number of experienced channel partners with the capabilities to ensure that end customers are satisfied with our products and
any after-sales service and support that we may offer in the future.



We
have completed alpha and beta versions of our 3D printer. In April 2015, we presented an alpha-version of our 3D printer to a
limited number of potential customers and key industry leaders in order to showcase our 3D printer and to receive preliminary
feedback. We perceived the feedback as positive and quickly moved on to develop a beta version for more vigorous testing.



In
July 2015, we began collaborations with several Fortune 100 and key Israeli companies, including Israel Aerospace Industries for
testing of the beta version of our 3D Printer. Collaborations currently entail customers providing us with their PCB design files,
and then we quickly provide the PCBs to the customer for testing. The feedback received from the customers is used to refine and
improve the printer. In the second half of 2016, we began leasing our DragonFly 2020 3D printer to beta customers as a part of
our beta plan. Our beta program involves the delivery of our DragonFly 2020 3D printers to leading companies and partners world-wide.
Prior to commercialization, as a part of our beta plan, we intend to perform quality assurance tests and further beta tests in
collaboration with additional beta partners. In the second half of 2017, we expect to end our beta plan, and to start the commercial
sales of our Dragonfly 2020 3D printer and proprietary ink products.



Our
Dragonfly 2020 3D printer in development has multiple advantages, including:



| | ● | Production
    of in-house prototypes. Our Dragonfly 2020 3D printer offers its users an efficient, quick, available, accessible and
    immediate solution for prototype production of PCBs. Currently, electronics companies and others engaged in the development
    of products based on PCBs are forced to rely on service suppliers that manufacture PCBs through a complex and inefficient
    process.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Turn-around
of multi-layered advanced PCBs can often take weeks and involves significant costs. Also, for electronics in development, several
cycles of prototyping are often necessary until the specs of the final PCB are created. This means that a developer of a new electronic
product may have to repeat the process of going through a service supplier several times during lab testing – which may
increase cost and slow the momentum of product development.



Our
Dragonfly 2020 3D printer obviates the reliance on external service suppliers and provides electronics companies and others the
luxury of an office-friendly 3D printer in their in-house research laboratory with the ability to print prototypes of PCBs as
required for electronic device development – all during a relatively short period of time.



| | ● | Information
    security and professional secrecy. Contracting with external service suppliers (outsourcing) in order to create prototypes
    of PCBs during early stages of the development process of novel electronic devices may unnecessarily compromise the security
    of sensitive and confidential information. Currently, however, there is hardly a practical solution. Our Dragonfly 2020 3D
    printer is the ideal answer.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Industry
    first. We believe that we are a pioneer in our industry. We are not aware of any other company in the global electronics
    market that currently offers a 3D inkjet printer that prints professional multi-layered PCBs.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





29







Supplementary
Products



Conductive
Ink



We
have developed a uniquely formulated nano-conductive ink for use in our 3D printers. Using advanced nanotechnology, we have developed
a liquid ink that contains nanoparticles of conductive materials such as silver and copper. Nanoparticles are particles between
1 and 100 nanometers in size. By employing this technology, we were able to create a liquid ink that maintains its transport properties
and electric conductivity. The liquid properties of our nano-conductive ink allow us to take advantage of inkjet printing technology
for fast and efficient 3D printing of PCBs.



Our
wet-chemistry approach to making silver nano-particles starts with a raw material compound containing silver which may be acquired
from a number of chemical suppliers. The patented process, licensed from the Hebrew University, is highly efficient and very clean.
We can reliably extract 10 to 100 nano-meter sized particles of pure silver. We are able to control the size, shape and dispersion
of the silver nano-particles in accordance with specific printing requirements. We can also formulate inks for a variety of substrates
and printing profiles.



In
addition, in July 2016, we filed a patent application with the USPTO for the development of a new nanometric conductive ink, which
is based on a unique synthesis. The new nanoparticle synthesis further minimizes the size of the silver nanoparticles particles
in our ink products. The new process achieves silver nanoparticles as small as 4 nanometers. We believe that accurate control
of nanoparticles’ size and surface properties will allow for improved performance of our DragonFly 2020 3D printer. The
innovative ink enables lower melting temperatures and more complete sintering (fusing of particles into solid conductive trace),
leading to an even higher level of conductivity. The innovative ink has the potential to accelerate printing speeds and save ink
for the 3D printing of electronics.



Dielectric
Ink



Our
proprietary dielectric ink is a unique ink that contains dielectric and dielectric materials that are not electrically conductive.
The use of non-conductive ink is crucial in the production of multi-layer circuit boards, as the conducting layers that are placed
on top of each other must be separated by dielectric layers. Our internally developed, proprietary dielectric ink is a unique
one-part-epoxy material. The dielectric ink can withstand high temperature (e.g., five hundred degrees Fahrenheit and more) without
distorting its shape, which is a necessary requirement for professional PCBs.



Both
our nano-conductive and dielectric ink products have completed development stages and we have begun to manufacture these products
in-house. We plan to commercialize these ink products as a supplementary product to our 3D printers and as separate and independent
products. Based on our proprietary technology, our ink products may be adjusted specifically for additional uses.



To
date, we have delivered beta versions of our 3D printer to six partners that use the printer and provide feedback to us. In addition,
we have had more than 3,500 entities join our waitlist for information about our DragonFly 2020 3D printer. Nevertheless, we cannot
assure you that any beta partner arrangements or any of these inquiries will lead to actual sales of our products.



Intellectual
Property



We
seek patent protection as well as other effective intellectual property rights for our products and technologies in the United
States and internationally. Our policy is to pursue, maintain and defend intellectual property rights developed internally and
to protect the technology, inventions and improvements that are commercially important to the development of our business. We
have also in-licensed two patents and their foreign counterparts and one patent application from an academic institution.





30







As
more fully detailed below, we have a growing portfolio of eighteen provisional and non-provisional patent applications with the
USPTO, and the WIPO filed under the PCT, and three patents for which we have issued US Patents. A provisional patent application
is a preliminary application that establishes a priority date for the patenting process for the invention concerned and provide
certain provisional patent rights.





In
October 2014, we submitted a provisional patent application for our dielectric ink. The application is directed to compositions,
methods and articles of manufacture containing and fabricated using those compositions and methods.



In
November 2014, we submitted a provisional patent application covering our unique method for printing multi-layer and two-sided
PCBs, which includes printing interlayer connections, also known as vias. The application covers methods of manufacture and PCBs
produced using these methods.



In
February 2015, we submitted a non-provisional patent application for a unique ink recycling and cooling system for three-dimensional
print-heads. The application is directed to devices and systems and their use in the 3D printing process of PCBs. In October 2015,
the USPTO issued a notice of allowance for the application.



In
March 2015, we submitted a non-provisional patent application directed to an innovative system for aligning inkjet print-heads,
which improves drop placement accuracy (“drop-on-drop”). This capability is key in various print head module applications
such as PCBs. In August 2015, the USPTO issued a notice of allowance for the application, opening the pathway to accelerated examination
in several of our main markets with a favorable presumption for allowance.



In
May 2015, we submitted two provisional patent applications; the first covering our unique methods, programs and libraries for
the efficient printing of insulating portions and embedded conductive leads of PCBs using inkjet printing based on converted computer-aided
design and drafting and computer-aided manufacturing data packages, resulting in substantial savings in materials and time; and
the second covering devices, systems and methods for removing purged ink from an inkjet print head without contacting the aperture
plate with liquid or other mechanical means.



In
July 2015, we submitted a provisional patent application covering methods for the patterning of transparent films with trace patterns
that are sufficiently thin as to achieve high transparency and low haze at minimal pitch and high trace density, and articles
of manufacture fabricated using these methods.



In
November 2015, we submitted a provisional patent application for a proprietary copper ink that is used in the printing of electronic
conductors. The copper nanoparticle-based ink provides improved oxidation resistance, resulting in an innovative breakthrough
that offers the ability to print copper with industrial 3D digital printers.



In
December 2015, we submitted a provisional patent application for printing of 3D models, which includes electronic conductors.
The sintering process of a printed metal conductor, which is the process of compacting and forming a solid mass of material by
heat, energy and/or pressure without melting it to the point of liquefaction, within a 3D printed polymer allows for
complex connectors to be 3D printed and also makes it possible to 3D print molded connectors directly onto electronic circuits.





31







In
March 2016, we submitted a provisional patent application for 3D printing of electrically shielded conductive traces. The patent
presents an innovative solution for the phenomenon of electric power loss in PCBs that are primarily used in the communication
industry. By selectively depositing our conductive ink, one can build a shield along the entire length of the conductor at a minimal
distance. This prevents leakage and loss of electric power and is similar to the current practice of using shielded cables with
the PCB externally. 3D printing allows the shielded cables to be embedded.



In
April 2016, we submitted a provisional patent application for the simultaneous curing and sintering of two types of ink (conductive
metal ink and insulator ink) to be used for 3D printing of electronic circuits. The technology behind this patent application
has the potential to reduce the number of critical systems in a printer and thus allows for a significant reduction in the production
costs of the printer, increased printing speed, system miniaturization and increased overall system reliability.



In
July 2016, we submitted a provisional patent application for the development of a new nanometric conductive ink, which is based
on a unique synthesis. The new nanoparticle synthesis further minimizes the size of the silver nanoparticles particles in the
company’s ink products. The new process achieves silver nanoparticles as small as 4 nanometers.



In
August 2016, we submitted a provisional patent application with the USPTO for the 3D printing of various cells. The application
covers a number of aspects relating to 3D printing of human tissues and organs by using various cells and inkjet technology. The
patent application concerns converting MRI and CT scans and resulting images in order to create a 3D structure of organs, to be
printed in a 3D printer adapted to biological materials. Moreover, the patent application discloses the biological structure of
the tissue or organ, enabled by the use of a 3D bioprinter and bioink materials. The application also discloses the use of a proprietary
software with an algorithm that analyzes the 3D structure of the tissue or organ. This analysis converts the 3D structure into
two-dimensional slices, a process required for 3D printing of the final structure.



In
January 2017, we submitted a provisional patent application for 3D printed series of multi-layered rigid PCBs, connected through
printed flexible conductive connections. This process provides a solution to traditional production limitations in the electronics
industry, such as continuous transfer of conductors between circuits, loose contacts, size of connections between the circuits,
as well as fabrication of multi-layered flexible material. We believe that this technology will enable the bending of the
PCB so that it can be combined with curved and complex geometrical products.



In
January 2017, we submitted a provisional patent application for 3D printed electrical circuits, in which embedded electrical
components are to be placed as an integral part of the printing process. We believe that this development is significant for a
wide range of industry sectors such as defense, space, consumer products, telecommunications and more.



In
addition to patent applications, in September 2014, we entered into an exclusive license agreement with the Yissum Research Development
Company of the Hebrew University of Jerusalem, Ltd., or Yissum, for three patents and patent applications that cover the unique
method of manufacturing our consumable nano-conductive ink for the 3D printing of electronic circuits. The agreement was amended
and restated in April 2015. Pursuant to the license agreement, we will be required to pay Yissum low to mid-single digit percentage
royalties on sales of our conductive ink. The exclusive license agreement is in effect for the longer of remaining usable life
of the patents and patent applications, or 15 years from the first commercial sale of a product relating to the licensed technology
in such country.



Competition



Many
companies providing 3D printing services concentrate their efforts on printing prototypes in resin polymers or other plastics.
We differentiate ourselves from these companies by focusing on the niche market of in-house PCB printing using a combination of
nano-conductive and dielectric inks, and to that extent we consider ourselves a pioneer in our industry. However, it may be possible
for more developed 3D printing companies to adapt their products to print PCBs. Accordingly, our competitors may include other
companies providing 3D printing services with substantial customer bases and working history. Older, well-established companies
providing 3D printing and rapid prototyping services with records of success currently attract customers. There can be no assurance
that we can maintain a competitive position against current or future competitors, particularly those with greater financial,
marketing, service, technical and other resources. Our failure to maintain a competitive position within the market could have
a material adverse effect on our business, financial condition and results of operations.



We
also compete with companies that use traditional prototype development of PCBs and customized manufacturing technologies, and
expect future competition to arise from the development of new technologies or techniques.





32







To
the best of our knowledge, our 3D inkjet printer is the first and only one of its kind, and as of the date of this annual report
on Form 20-F, there are no three-dimensional ink injection printers that print multi-layer electronic circuits for the purposes
of in-house PCB prototype development. However, there are many companies worldwide that manufacture PCBs.



In
the United States and globally, we face many competitors that specialize in contract electronic manufacturing, and specifically
the manufacturing of prototype PCBs. We estimate that there are approximately 1,800 companies in the United States that manufacture
or provide PCBs on a per-order basis.



Research
and Development



As
of the date hereof, we have completed the development of our proprietary nano-conductive ink products and have commenced manufacturing
in our in-house laboratory.



Also,
we have completed the development of the alpha version of our 3D printer, and on April 14, 2015, we introduced the alpha version
publicly. In August 2015, we introduced our beta 3D printer to a number of customers, and in the second half of 2016, we initiated
our beta plan and delivered printers to customers. We anticipate that we will complete the development of a commercial product
and will begin commercial sales in the second half of 2017.



From
time to time we may also explore the application of our technology to additional areas within 3D printing and other industries.
In May 2016, we successfully lab-tested a proof of concept 3D bioprinter for the printing of stem cells. The feasibility study
confirmed that the combined know-how and technologies of the companies enabled printing of viable stem cells using an adapted
3D printer. In October 2016, we announced that we intend to form a new subsidiary and will transition our bio-printing activities
to the new entity, and that our current capital will not be used for the bio-printing activities. Through the subsidiary, we intend
to target end stage renal disease (kidney failure), and create a platform for 3D bio-printing of cells and connective tissues
to form biological structures that function as human kidneys.



In
September 2016, we conducted a successful test for 3D printing of conductive traces onto a treated fabric in collaboration with
a leading European functional textiles company. The test was carried out using our unique silver nanoparticle conductive ink and
our DragonFly 2020 3D Printer platform. During the test, conductors were printed in several patterns in order to perform functionality
tests, including conductivity, elasticity, rubbing, etc. The results demonstrated that the printed silver conductors had high
enough elasticity to match the properties of the fabric.



In
January 2017, we successfully 3D printed a series of multi-layered rigid PCBs, connected through printed flexible conductive connections.
This process provides a solution to traditional production limitations in the electronics industry, such as continuous transfer
of conductors between circuits, loose contacts, size of connections between the circuits as well as fabrication of multi-layered
flexible material.



In
January 2017, we successfully 3D printed electrical circuits, in which we embedded electrical components, through placement, as
an integral part of the printing process. We filed a patent application with the USPTO for this unique development.



In
February 2017, we received a budget from MEIMAD committee of the IIA which will be used to finance a project to develop 3D printing
of advanced ceramic materials in inkjet technology. The total approved budget for this project is NIS 1.4 million (approximately
$372,000), of which the IIA will finance 50%. The terms of the grant provide that we will be required to pay royalties on future
sales of any funded technology up to the full grant amount.



For
the years ended December 31, 2016, 2015 and 2014, we incurred NIS 15,606,000 (approximately $4,059,000), NIS 11,153,000 (approximately
$2,858,000) and NIS 3,339,000 (approximately $858,000), respectively, of research and development expense. Our research and development
expenses for the year ended December 31, 2016 do not include expenses in an amount of NIS 16,273,000 (approximately $4,232,000)
that were capitalized as an intangible asset.





33







Grants
from Israel’s Innovation Authority



Our
research and development efforts are financed in part through royalty-bearing grants from the IIA. As of December 31, 2016, we
have received the aggregate amount of NIS 3,686,000 (approximately $959,000) from the IIA for the development of our 3D printer
and nano-inks. With respect to such grants we are committed to pay certain royalties up to the total grant amount. Regardless
of any royalty payment, we are further required to comply with the requirements of the Research Law, with respect to those past
grants. When a company develops know-how, technology or products using IIA grants, the terms of these grants and the Research
Law restrict the transfer of such know-how, and the transfer of manufacturing or manufacturing rights of such products, technologies
or know-how outside of Israel, without the prior approval of the IIA. We do not believe that these requirements will materially
restrict us in any way.



Production
and Manufacturing



We
purchase the raw materials required for the production of our products, including components of 3D printers and materials to produce
our nano inks products. To date, all of our printers, including the alpha and beta versions of our DragonFly 2020 3D printer,
have been manufactured in-house. We have entered into a non-exclusive agreement with a global manufacturer that will serve as
our primary manufacturer and supplier for our commercial 3D printers. Pursuant to the agreement, we are not obligated to make
any minimum purchases and prices will be agreed upon between us from time to time and based on specific purchase orders. The extent
of this and any other engagement with third party manufacturers will be managed to match production volumes.



With
respect to our ink products, we intend to keep full control of the value chain, from research and development through self-manufacturing
and global sales. In September 2016, we initiated a production facility to support the commercialization and production of our
proprietary nano conductive ink and dielectric ink. We believe that the size and capacity of this facility, located in the same
building as our offices, will be sufficient to support our future commercialization activities.



Sales
and Marketing



In
the second half of 2016, we started our beta plan, in which we lease our DragonFly 2020 3D printers to select beta customers. Simultaneously,
we have begun creating a commercial infrastructure to effectively support the scaling up of commercial sales of our products.
Furthermore, as part of our preparations for sales, we have also increased our marketing, sales, and customer-support teams. In
March 2016, we signed an agreement to collaborate with FATHOM, an industry-leading advanced manufacturer, distributer and service
provider with expertise in 3D printing, to introduce the DragonFly 2020 3D Printer to the Silicon Valley and the greater west
coast of the United States. Where appropriate, we may elect in the future to utilize additional strategic partners, distributors,
or contract sales forces to assist in the commercialization of our products. We anticipate that commercial sales of our Dragonfly
2020 3D printer and nano conductive and dielectric ink products will simultaneously occur in the second half of 2017.



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



We
currently have one wholly owned subsidiary: Nano Dimension Technologies Ltd., which is incorporated in the State of Israel.



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



Our
offices, research and development facility and in-house laboratory are located at our headquarters at 2 Ilan Ramon, Ness Ziona
74036, Israel, where we currently occupy approximately 25,833 square feet. Following a recent expansion, we lease our headquarters
under two separate leases. The first lease, which accounts for approximately half of our office space, ends on August 30, 2017,
while the second lease ends on December 31, 2018. The total monthly rent payment is currently NIS 123,700 (approximately $32,172).





34







Additionally,
in September 2016, we initiated a production facility for our unique nano-ink products. The facility is located in the same building
as our headquarters. The facility occupies approximately 8,600 square feet. The lease for our production facility will end on
August 31, 2021, and we have an option to extend the lease for an additional 60 months. Our monthly rent payment is NIS 44,000
(approximately $11,443).



We
consider that our current office space is sufficient to meet our anticipated needs for the foreseeable future and is suitable
for the conduct of our business.



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



None.



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



MANAGEMENT’S
DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS



The
following discussion and analysis should be read in conjunction with our financial statements and related notes included elsewhere
in this annual report on Form 20-F. This discussion and other parts of this annual report on Form 20-F contain forward-looking
statements based upon current expectations that involve risks and uncertainties. Our actual results and the timing of selected
events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including
those set forth under “Risk Factors” and elsewhere in this annual report in Form 20-F. We report financial information
under IFRS as issued by the International Accounting Standards Board and none of the financial statements were prepared in accordance
with generally accepted accounting principles in the United States. Unless otherwise indicated, U.S. dollar convenience translations
of NIS amounts presented in this annual report on Form 20-F for the period ended on December 31, 2016 are translated using the
rate of NIS 3.845 to $1.00, the exchange rate reported by the Bank of Israel on December 31, 2016, and U.S. dollar convenience
translations of NIS amounts presented in this annual report on Form 20-F for the period ended on December 31, 2015 are translated
using the rate of NIS 3.902 to $1.00, the exchange rate reported by the Bank of Israel on December 31, 2015, and U.S. dollar convenience
translations of NIS amounts presented in this annual report on Form 20-F for the period ended on December 31, 2014 are translated
using the rate of NIS 3.889 to $1.00, the exchange rate reported by the Bank of Israel on December 31, 2014.



Overview



To
date, we have generated insignificant revenues from the sale and lease of our products. In the second half of 2017, we intend to
end our beta plan and to start commercial sales of our 3D printer and ink products. As of December 31, 2016, we had an accumulated
deficit of NIS 70,604,000 (approximately $18,363,000). Our financing activities are described below under “Liquidity and
Capital Resources.” We currently estimate that we have the necessary capital in order to complete the development of our
3D printer and to bring to market the commercial product. Based on our expectations as of December 31, 2016, our anticipated cash
required in order to bring our commercial 3D printer to market are approximately $8,000,000.



|5.A | Operating
Results
|--- | -----------------



Operating
Expenses



Our
current operating expenses consist of two components – research and development expenses, and general and administrative
expenses.





35







Research
and Development Expenses, net



Our
research and development expenses consist primarily of salaries and related personnel expenses, subcontractor expenses, patent
registration fees, rental fees, materials, and other related research and development expenses.



The
following table discloses the breakdown of research and development expenses:



|                                                     |  | Year ended December 31, |      
|---------------------------------------------------- |  | ----------------------- | -----
|                                                     |  | 2014                    |      
|                                                     |  | NIS                     |      
|(in thousands)                                       |  |                         |      
|Payroll                                              |  |                         | 1,565
|Subcontractors                                       |  |                         | 1,290
|Patent registration                                  |  |                         | 117  
|Materials                                            |  |                         | 292  
|Rental fees and maintenance                          |  |                         | 166  
|Depreciation                                         |  |                         | 30   
|Other expenses                                       |  |                         | 67   
|Development expenses recognized as Intangible Assets |  |                         | -    
|Grants                                               |  |                         | (188 
|                                                     |  |                         | 3,339



Subcontractor
expenses include expenses for development consultants and service providers, which are not employees. The services provided by
these consultants and service providers include, but are not limited to, chemistry consulting, software and electronics subcontractors
and consulting and chip processing consulting.



Our
development expenses are presented net of government grants and net of development expenses that were capitalized as intangible
assets. We expect that our research and development expenses will slightly increase as we continue to develop our products.



General
and Administrative Expenses



General
and administrative expenses consist primarily of salaries, professional service fees, director fees, office expenses, taxes and
fees, and other general and administrative expenses.



The
following table discloses the breakdown of general and administrative expenses:



|                      |  | Year ended December 31, |      
|--------------------- |  | ----------------------- | -----
|                      |  | 2014                    |      
|                      |  | NIS                     |      
|(in thousands)        |  |                         |      
|Payroll               |  |                         | 491  
|Professional services |  |                         | 525  
|Director pay          |  |                         | 192  
|Office expense        |  |                         | 37   
|Fees                  |  |                         | 70   
|Travels               |  |                         | -    
|Other expenses        |  |                         | 111  
|Total                 |  |                         | 1,426





36







Comparison
of the year ended December 31, 2016 to the year ended December 31, 2015 to the year ended December 31, 2014



Results
of Operations



|                                                |  | December 31,          |        |  | December 31,                                  | 
|----------------------------------------------- |  | --------------------- | ------ |  | --------------------------------------------- | 
|                                                |  | 2014                  |        |  | 2015                                          | 
|                                                |  | (in thousands of NIS) |        |  | (in thousands of USD-convenience translation) | 
|Revenues                                        |  |                       | -      |  |                                               | 
|Cost of revenues                                |  |                       | -      |  |                                               | 
|Cost of revenues- amortization of intangible    |  |                       | -      |  |                                               | 
|Gross loss                                      |  |                       | -      |  |                                               | 
|Research and development expenses, net          |  |                       | 3,339  |  |                                               | 
|General and administrative expenses             |  |                       | 1,426  |  |                                               | 
|Other income                                    |  |                       | 62     |  |                                               | 
|Operating loss                                  |  |                       | 4,703  |  |                                               | 
|Listing expenses                                |  |                       | 9,358  |  |                                               | 
|Finance expense (income), net                   |  |                       | 117    |  |                                               | 
|Total comprehensive loss                        |  |                       | 14,178 |  |                                               | 
|Loss attributable to holders of Ordinary Shares |  |                       | 14,178 |  |                                               | 



Revenues



Our
revenues for the year ended December 31, 2016 amounted to NIS 175,000 (approximately $46,000). Our revenues are derived from lease
of our printers to beta customers, and from ink deliveries to those clients. We did not have revenues in prior years.



Cost
of Revenues



Our cost of revenues
for the year ended December 31, 2016 amounted to NIS 740,000 (approximately $193,000). Cost of revenues consist of NIS 72,000
(approximately $19,000) and an additional NIS 668,000 (approximately $174,000) in respect of amortization of intangible assets.
We did not have cost of revenues in prior years. In the fourth quarter of 2016, we began to amortize the intangible asset arising
from capitalization of development expenses. The estimated useful lives of the capitalized development costs for the current period
is 10 years.



Gross
Loss



Our
gross loss for the year ended December 31, 2016 amounted to NIS 565,000 (approximately $147,000). We did not have gross loss in
prior years.



Research
and Development Expenses, net



Our
research and development expenses for the year ended December 31, 2016 amounted to NIS 15,606,000 (approximately $4,059,000),
representing an increase of NIS 4,453,000 (approximately $1,158,000) or 39.9%, compared to NIS 11,153,000 (approximately $2,858,000),
for the year ended December 31, 2015. The increase was primarily attributable to an increase of NIS 10,321,000 (approximately
$2,684,000) in salaries and related personnel expenses, reflecting an increase in the number of employees (as of the year ended
2015, we had 34 research and development employees, and as of the year ended 2016, we had 75 research and development employees),
and an increase of NIS 3,820,000 (approximately $993,000) in materials expenses, due to accelerating our research and development
activities.





37







Our
research and development expenses for the year ended December 31, 2016 are presented net of government grants in the amount of
NIS 840,000 (approximately $218,000) and net of development expenses recognized as intangible assets in the amount of NIS 16,273,000
(approximately $4,232,000).



Our
research and development expenses for the year ended December 31, 2015 amounted to NIS 11,153,000 (approximately $2,858,000),
representing an increase of NIS 7,814,000 (approximately $2,000,000), or 234%, compared to NIS 3,339,000 (approximately $858,000)
for the year ended December 31, 2014. The increase was primarily attributable to an increase of NIS 9,703,000 (approximately $2,486,000)
in salaries and related personnel expenses, reflecting an increase in the number of employees (as of the year ended 2014, we had
five research and development employees, and as of the year ended 2015, we had 34 research and development employees), and an increase
of NIS 6,406,000 (approximately $1,641,000) in subcontractor expenses, due to accelerating our research and development activities.



Our
research and development expenses for the year ended December 31, 2015 are presented net of government grants in the amount of
NIS 383,000 (approximately $98,000) and net of development expenses recognized as intangible assets in the amount of NIS 11,463,000
(approximately $2,938,000).



General
and Administrative Expenses



Our
general and administrative expenses totaled NIS 18,443,000 (approximately $4,797,000) for the year ended December 31, 2016, an
increase of NIS 7,214,000 (approximately ($1,876,000), or 64.2%, compared to NIS 11,229,000 (approximately $2,878,000) for the
year ended December 31, 2015. The increase resulted primarily from an increase of NIS 2,821,000 (approximately $734,000) in salaries
and related personnel expenses, reflecting an increase in the number of employees (as of the year ended 2015, we had six general
and administrative employees, and as of the year ended 2016, we had 13 general and administrative employees), and an increase of
NIS 2,395,000 (approximately $623,000) in professional services expenses for accounting, legal, bookkeeping, and investor relations
activities.



Our
general and administrative expenses totaled NIS, 11,229,000 (approximately $2,878,000) for the year ended December 31, 2015, an
increase of NIS 9,803,000 (approximately $2,512,000), or 687%, compared to NIS 1,426,000 (approximately $367,000) for the year
ended December 31, 2014. The increase resulted primarily from an increase of payroll in an amount of NIS 2,717,000 (approximately
$696,000), reflecting an increase in the number of employees (as of the year ended 2014, we had two general and administrative
employees, and as of the year ended 2015, we had six general and administrative employees), and an increase of NIS 4,000,000 (approximately
$1,025,000) in professional services expenses for accounting, legal, bookkeeping, transfer agents and facilities, which increased
in 2015 due to the process of listing our ADSs on the OTCQX and the Nasdaq Capital Market.



Operating
Loss



As
a result of the foregoing, our operating loss for the year ended December 31, 2016 was NIS 34,614,000 (approximately $9,003,000),
as compared to an operating loss of NIS 22,376,000 (approximately $5,735,000) for the year ended December 31, 2015, an increase
of NIS 12,238,000 (approximately $3,183,000), or 54.7%.



As
a result of the foregoing, our operating loss for the year ended December 31, 2015 was NIS 22,376,000 (approximately $5,735,000),
as compared to an operating loss of NIS 4,703,000 (approximately $1,209,000) for the year ended December 31, 2014, an increase
of NIS 17,673,000 (approximately $4,526,000), or 376%.



Finance
Expense and Income



Finance
expense and income mainly consist of bank fees and other transactional costs, changes in the fair value of certain price adjustment
mechanisms that were provided to investors who participated in certain fund raising rounds, and exchange rate differences.





38







We
recognized net financial income of NIS 144,000 (approximately $38,000) for the year ended December 31, 2016, compared to net financial
expense of NIS 1,384,000 (approximately $355,000) for the year ended December 31, 2015. The decrease is primarily due to a decrease
in finance income related to revaluation of derivative instruments, resulting from changes during 2015 in the fair value of certain
price adjustment mechanisms that were provided to investors who participated in certain fund raising rounds.



We
recognized net financial income of NIS 1,384,000 (approximately $355,000) for the year ended December 31, 2015, compared to net
financial expense of NIS 117,000 (approximately $30,000) for the year ended December 31, 2014. The increase is primarily due to
an income of approximately NIS 1,434,000 (approximately $368,000) for the year ended December 31, 2015 in respect to changes in
the fair value of certain price adjustment mechanisms that were provided to investors who participated in certain fund raising
rounds.



Total
Comprehensive Loss



As
a result of the foregoing, our loss for the year ended December 31, 2016 was NIS 34,470,000 (approximately $8,965,000), as compared
to NIS 20,992,000 (approximately $5,380,000) for the year ended December 31, 2015 an increase of NIS 13,478,000 (approximately
$3,505,000), or 64.2%.



As
a result of the foregoing, our loss for the year ended December 31, 2015 was NIS 20,992,000 (approximately $5,380,000), as compared
to NIS 14,178,000 (approximately $3,645,000) for the year ended December 31, 2014, an increase of NIS 6,814,000 (approximately
$1,735,000), or 48%.



Critical
Accounting Policies and Estimate



We
describe our significant accounting policies more fully in Note 2 to our financial statements for the year ended December 31,
2016, included elsewhere in this annual report on Form 20-F. We believe that the accounting policies below are critical in order
to fully understand and evaluate our financial condition and results of operations.



We
prepare our financial statements in accordance with IFRS as issued by the International Accounting Standards Board. At the time
of the preparation of the financial statements, our management is required to use estimates, evaluations, and assumptions which
affect the application of the accounting policy and the amounts reported for assets, obligations, income, and expenses. Any estimates
and assumptions are continually reviewed. The changes to the accounting estimates are credited during the period in which the
change to the estimate is made.



Contingent
Liabilities



The
evaluations of provisions and contingent liabilities are based on our best professional judgment, taking into consideration the
stage of the proceedings, as well as cumulative legal experience in the various topics. Whereas the results of the lawsuits shall
be determined by the courts, these results may differ from these evaluations.



Intangible
Assets



In
August 2015, we started recognizing intangible assets arising from internal development. The capitalization is the outcome of
meeting all the criteria in IAS 38 Intangible Assets, which are (i) development costs can be measured reliably, (ii) the
product or process is technically and commercially feasible, (iii) future economic benefits are probable, and (iv) we have the
intention and sufficient resources to complete development and to use or sell the asset. Development expenses in the period until
August 1, 2015 were expensed as incurred. During the fourth quarter of 2016, we started delivering our products to beta customers
and as such, we started to amortize the intangible assets arising from capitalization of development expenses. In subsequent periods,
capitalized development expenditure is measured at cost less accumulated amortization and accumulated impairment losses. The estimated
useful lives of the capitalized development costs for the current period is 10 years.



Stock-Based
Compensation



Employees
and other service providers of the Company may receive benefits by way of share-based compensation settled with company options
and warrants exercised for Ordinary Shares. The cost of transactions with employees settled with capital instruments is measured
based on the fair value of the capital instruments on the granting date. The fair value is determined using an accepted options
pricing model. The model is based on share price, grant date and on assumptions regarding expected volatility, expected lifespan,
expected dividend, and a no risk interest rate.





39







The
cost of the transactions settled with capital instruments is recognized in profit or loss together with a corresponding increase
in the equity over the period in which the performance and/or service takes place, and ending on the date on which the relevant
employees are entitled to the benefits, or the Vesting Period. The aggregate expense recognized for transactions settled with
capital instruments at the end of each reporting date and until the Vesting Period reflects the degree to which the Vesting Period
has expired and our best estimate regarding the number of warrants that have ultimately vested. The expense or income in profit
or loss reflects the change of the aggregate expense recognized as of the end of the reported period.



We
selected the Black-Scholes-Merton (Black-Scholes), and  the binomial model, as our option pricing models to estimate the fair
value of our options awards. The option-pricing model requires a number of assumptions:



Expected
dividend yield - The expected dividend yield assumption is based on our historical experience and expectation of no future
dividend payouts. We have historically not paid cash dividends and have no foreseeable plans to pay cash dividends in the future.



Volatility
-Since the Company’s shares started trading on a stock exchange market only in August 2014 (before that date the Company
was under a different name and was involved in a different activity), quoted prices data of our Ordinary Shares is limited. In
case of insufficient historical data for a company, the expected volatility is based on similar companies’ stock volatility.



Risk
free interest rate- The risk free interest rate is based on the yield of governmental bonds with equivalent terms.



Estimated
term - An option’s estimated term is the estimated amount of time the holder will hold the option before the exercise,
based on the expiration date of the option and, in some cases, such as for employees, an assumption regarding exercise before
the expiration date.



Share
price - The share price is determined according to the last known closing price of our Ordinary Shares at the grant date.



|5.B | Liquidity
    and Capital Resources
|--- | -----------------------------------



Overview



From
August 2014 through December 31, 2016, we have funded our operations principally with NIS 106,600,000 (approximately $27,724,000)
from the issuance of Ordinary Shares and warrants. As of December 31 2016, we had NIS 47,599,000 (approximately $12,379,000) in
cash and cash equivalents.



The
table below presents our cash flows:





|                                          |  | Year ended December 31, |       
|----------------------------------------- |  | ----------------------- | ------
|                                          |  | 2014                    |       
|                                          |  | (in thousands of NIS)   |       
|Operating activities                      |  |                         | (3,468
|                                          |  |                         |       
|Investing activities                      |  |                         | (1,131
|                                          |  |                         |       
|Financing activities                      |  |                         | 5,400 
|                                          |  |                         |       
|Net increase in cash and cash equivalents |  |                         | 801   





40







Operating
Activities



Net
cash used in operating activities of NIS 22,737,000 (approximately $5,914,000) during the year ended December 31, 2016 was primarily
used for payment of NIS 20,556,000 (approximately $5,346,000) in salaries and related personnel expenses. The remaining amount
was for other expenses.



Net
cash used in operating activities of NIS 12,989,000 (approximately $3,330,000) during the year ended December 31, 2015 was primarily
used for payment of NIS 7,152,000 (approximately $1,833,000) in salaries and related personnel expenses. The remaining amount
was for other expenses.



Net
cash used in operating activities of NIS 3,468,000 (approximately $891,000) during the year ended December 31, 2014 was primarily
used for payment of NIS 2,056,000 (approximately $528,000) in salaries and related personnel expenses, and NIS 1,290,000 (approximately
$332,000) for subcontractors expenses. The remaining amount was for other expenses.



Investing
Activities



Net cash used in investing
activities of NIS 17,496,000 (approximately $4,550,000) during 2016 primarily reflects development expenditure capitalized as
intangible assets and investments of our cash in fixed assets.



Net
cash used in investing activities of NIS 10,078,000 (approximately $2,582,000) during 2015 primarily reflects development expenditure
capitalized as intangible assets and investments of our cash in fixed assets.



Net
cash used in investing activities of NIS 1,131,000 (approximately $291,000) during 2014 primarily reflects investments of our
cash in fixed assets.



Financing
Activities



Net cash provided by financing
activities in the year ended December 31, 2016 consisted of NIS 53,475,000 (approximately $13,908,000) of net proceeds, mainly
from the issuance of Ordinary Shares and warrants.





Net cash provided by financing
activities in the year ended December 31, 2015 consisted of NIS 56,364,000 (approximately $14,445,000) of net proceeds, mainly
from the issuance of Ordinary Shares and warrants.





Net
cash provided by financing activities in the year ended December 31, 2014 consisted of NIS 5,400,000 (approximately $1,388,000)
of net proceeds, mainly from issuance of Ordinary Shares and warrants.





41







In
August 2014, we issued an aggregate of 5,935,875 Ordinary Shares pursuant to a private placement at a price per share of approximately
$0.24, and an aggregate of 6,931,303 Ordinary Shares pursuant to a merger agreement. The net proceeds received from this issuance
were approximately NIS 4,732,000 (approximately $1,216,000).



In
January 2015, we issued an aggregate of 1,508,572 Ordinary Shares pursuant to a private placement, at a price of NIS 1.40 (approximately
$0.3539) per share. In addition, we issued warrants to purchase up to 1,508,572 Ordinary Shares, 50% of which have an exercise
price of NIS 1.75 (approximately $0.4424) per share, and 50% of which have an exercise price of NIS 2.25 (approximately $0.5688)
per share. These warrants will expire as follows: (i) warrants to purchase 754,286 Ordinary Shares will expire 18 months from
the date of issuance, and (ii) warrants to purchase 754,286 Ordinary Shares will expire 36 months from the date of issuance.



As
an extension to this private placement, in April 2015, we issued an aggregate of 285,715 Ordinary Shares to Eli Yoresh, one of
our directors, and Itschak Shrem, our Chairman, at a price per share of NIS 1.40 (approximately $0.3539). In addition, we issued
warrants to purchase up to 285,715 Ordinary Shares, 50% of which at an exercise price of NIS 1.75 (approximately $0.4424) per
share, and 50% of which at an exercise price of NIS 2.25 (approximately $0.5688) per share. These warrants will expire as follows:
(i) warrants to purchase 142,858 of our Ordinary Shares will expire 18 months from the date of issuance, and (ii) warrants to
purchase 142,857 of our Ordinary Shares will expire 36 months from the date of issuance.



In
March 2015, we issued an aggregate of 3,956,545 Ordinary Shares pursuant to a private placement, at a price of NIS 1.65 (approximately
$0.4075) per share.



In
July 2015, we issued an aggregate of 7,671,089 Ordinary Shares pursuant to a private placement, at a price of NIS 5.50 (approximately
$1.4451) per share. In addition, we issued warrants to purchase up to 3,835,546 Ordinary Shares with an exercise price of NIS
9.00 (approximately $2.3647) per share. These warrants will expire 24 months from the date of issuance.



In
December 2015, we issued, as an extension to the issuance in July 2015, an aggregate of 1,552,877 Ordinary Shares pursuant to
a private placement, at a price of NIS 5.50 (approximately $1.4451) per share. In addition, we issued warrants to purchase up
to 776,440 Ordinary Shares with an exercise price of NIS 9.00 (approximately $2.3647) per share. These warrants will expire 24
months from the date of issuance.



In
September 2016, we completed a public offering of 2,125,275 ADSs (representing 10,626,375 Ordinary Shares) at a price of $6.50
per ADS, and net proceeds to us from the sale of the shares was approximately $12,055,000.



Current
Outlook



We
have financed our operations to date primarily through proceeds from issuance of our Ordinary Shares. We have incurred losses
and generated negative cash flows from operations since 2012. To date, we have generated insignificant revenues from the sale
and lease of our products. In the second half of 2017, we intend to end our beta plan and to start commercial sales of our 3D printer
and ink products.



We
expect that our existing cash and cash equivalents will be sufficient to fund our current operations until at least the end of
2017; however, we expect that we will require additional capital to support the mass production of our products.



In
addition, our operating plans may change as a result of many factors that may currently be unknown to us, and we may need to seek
additional funds sooner than planned. Our future capital requirements will depend on many factors, including:



| | ● | the
    progress and costs of our research and development activities;                    
| | - | ------------------------------------------------------------------------------------------
| |   |                                                                                           
| | ● | the
    progress in the launch of the commercial version of our DragonFly 2020 3D printer;





42







| | ● | the
    costs of manufacturing our 3D printer and ink products;                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                    
| | ● | the
    costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights;                                                
| |   |                                                                                                                                                                    
| | ● | the
    potential costs of contracting with third parties to provide marketing and distribution services for us or for building such
    capacities internally; and
| |   |                                                                                                                                                                    
| | ● | the
    magnitude of our general and administrative expenses.                                                                                                      



Until
we can generate significant recurring revenues, we expect to satisfy our future cash needs through debt or equity financing. We
cannot be certain that additional funding will be available to us on acceptable terms, if at all. If funds are not available,
we may be required to delay, reduce the scope of, or eliminate research or development plans for, or commercialization efforts
with respect to our products. This may raise substantial doubts about our ability to continue as a going concern.



|5.E | Off-Balance Sheet
    Arrangements
|--- | ----------------------------------



We
currently do not have any off-balance sheet arrangements.



|5.E | Tabular Disclosure
    of Contractual Obligations
|--- | -------------------------------------------------



The
following table summarizes our significant contractual obligations at December 31, 2016:



|                                              |  | Total                                                   |       |  | Less than 1 year |  |       | 1-3 years |  |  | 4-5 years |  |  | More than 5 years | 
|--------------------------------------------- |  | ------------------------------------------------------- | ----- |  | ---------------- |  | ----- | --------- |  |  | --------- |  |  | ----------------- | 
|                                              |  | (in thousands of U.S. dollars- convenience translation) |      
|Facility                                      |  | $                                                       | 769   |  |                  |  | 451   |           |  |  | 318       |  |  |                   | 
|Motor vehicles                                |  |                                                         | 276   |  |                  |  | 156   |           |  |  | 120       |  |  |                   | 
|Suppliers and service providers               |  |                                                         | 1,499 |  |                  |  | 1,449 |           |  |  | 50        |  |  |                   | 
|Liability in respect of government grants (*) |  |                                                         | 796   |  |                  |  | 167   |           |  |  | 629       |  |  |                   | 



(*)
The contractual obligation in respect of government grants presented above is based on our estimation regarding expected revenues,
thus there is no certainty that the liability will be settled in 1-3 years as stated above.





43







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



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



The
following table sets forth information regarding our executive officers, key employees and directors as of March 1, 2017:



|Name                               |  | Age |  | Position                              
|---------------------------------- |  | --- |  | --------------------------------------
|                                   |  |     |  |                                       
|Itschak Shrem                      |  | 69  |  | Chairman of the Board
    of Directors
|                                   |  |     |  |                                       
|Amit Dror                          |  | 40  |  | Chief Executive Officer,
    Director 
|                                   |  |     |  |                                       
|Yael Sandler                       |  | 30  |  | Chief Financial Officer               
|                                   |  |     |  |                                       
|Simon Anthony-Fried                |  | 43  |  | Chief Marketing Officer,
    Director 
|                                   |  |     |  |                                       
|Sharon Fima                        |  | 41  |  | Chief Technology Officer,
    Director
|                                   |  |     |  |                                       
|Dagi Shahar Ben-Noon               |  | 40  |  | Chief Operating Officer,
    Director 
|                                   |  |     |  |                                       
|Ofir Baharav (3)                   |  | 48  |  | Director                              
|                                   |  |     |  |                                       
|Irit Ben-Ami (1) (2)
    (3) (4)   |  | 55  |  | Director                              
|                                   |  |     |  |                                       
|Roni Kleinfeld (1)
    (2) (3) (4) |  | 60  |  | Director                              
|                                   |  |     |  |                                       
|Abraham Nahmias (3)                |  | 61  |  | Director                              
|                                   |  |     |  |                                       
|Zvi Yemini (1) (2)
    (3)         |  | 66  |  | Director                              
|                                   |  |     |  |                                       
|Yoel Yogev (3)                     |  | 64  |  | Director                              
|                                   |  |     |  |                                       
|Eli Yoresh (3)                     |  | 46  |  | Director                              



|(1) | Member
    of our Audit Committee.                      
|--- | --------------------------------------------------------
|(2) | Member of our Compensation
    Committee.               
|(3) | Indicates independent
    director under NASDAQ rules.  
|(4) | Indicates external
    director under the Companies Law.



Itschak
Shrem, Chairman of the Board of Directors



Mr.
Itschak Shrem has served on our board of directors as Chairman since April 2014. Mr. Shrem has more than 40 years of experience
in financial markets and venture capital. He has been the Managing Director of Yaad Consulting 1995 Ltd. since 1995. In 1993,
Mr. Shrem founded Pitango Venture Capital Fund (formerly, Polaris) and served as a Partner of Pitango Funds I, II and III. In
1991, Mr. Shrem founded Dovrat Shrem Ltd, an investment banking, management and technology company. Prior to that, he spent 15
years at Clal Israel Ltd., where he served in various capacities, including Chief Operating Officer and was responsible for capital
markets and insurance businesses. Mr. Shrem has been the Chairman of the Board of BreedIT Corp. since December 31, 2013. He has
been a Director of Eden Spring Ltd. since October 2010. Mr. Shrem served as a Director of Globe Oil Exploration Limited until
2016. He served on the boards of a number of high-profile public institutions, including the Tel-Aviv Sourasky Medical Center,
and the Weizman Institute. From 1991 to 2010, Mr. Shrem served as the Chairman of Leader Holdings and Investments Ltd. and Polar
Communications Ltd., both TASE-listed companies engaged in investment banking and venture capital. Since 2004, Mr. Shrem has served
as the Chairman of Sphera Funds Management Ltd. He served as a Director of Ormat Industries Ltd. from 2012 to 2015. He served
as a Director of Retalix Ltd. from January 2008 to 2012. Mr. Shrem holds a B.A in Economics and Accounting from Bar-Ilan University
and an M.B.A. from Tel-Aviv University, Israel.





44







Amit
Dror, Chief Executive Officer, Director



Mr.
Amit Drorhas served as our Chief Executive Officer and director since August 2014. Mr. Dror co-founded Eternegy Ltd. in 2010
and served as its Chief Executive Officer and a director from 2010 to 2013. Mr. Dror also co-founded the Milk & Honey Distillery
Ltd. in 2012. He developed vast experience in project, account and sales management across a range of roles at ECI Telecom Ltd.,
Comverse Technology, Inc., Eternegy Ltd. and Milk & Honey Distillery Ltd. Mr. Dror has a background that covers technology
management, software, business development, fundraising and complex project execution. Mr. Dror is a Merage Institute Graduate.



Yael
Sandler, Chief Financial Officer



Ms.
Yael Sandler has served as our Chief Financial Officer since June 2015. From 2014 until 2015, Ms. Sandler served as the Group
Controller of RealMatch Ltd. From 2011 through December 2014, Ms. Sandler held various positions at Somekh-Chaikin (KPMG Israel),
where she gained valuable experience working with public companies and companies pursuing initial public offerings. Ms. Sandler
completed the professional course of the Israeli Navy in 2005 and served as a submarine simulator instructor and commander until
2007. Ms. Sandler is a Certified Public Accountant in Israel. Ms. Sandler earned a B.A. with honors in Accounting and Economics
from the Hebrew University of Jerusalem and a M.B.T with honors from the College of Management in Rishon LeZion.



Simon
Anthony-Fried, Chief Business Officer, Director



Mr.
Simon Fried has served as our Chief Business Officer and a director since August 2014. Mr. Fried was a co-founder of Diesse
Solutions Ltd., a project management, risk and marketing consultancy, and served as its Chief Executive Officer from 2004 to 2014.
He has worked as a risk management and corporate governance consultant to the Financial Services Authority in the United Kingdom
and as a senior strategy consultant at Monitor Company, a Boston based boutique strategy consulting firm. Mr. Fried has a background
that covers marketing and sales strategy, management, business development, financial services regulation, fundraising and c-suite
consulting. Mr. Fried has worked extensively on global projects in both the B2B and B2C markets driving significant strategic
change to global marketing organizations. He also currently serves as a director of the Milk & Honey Distillery Ltd. Mr. Fried
holds a B.Sc. in Experimental Psychology from University College London, an M.Sc. in Judgment and Risk from Oxford University
and an M.B.A. from SDA Bocconi in Milan.



Sharon
Fima, Chief Technology Officer, Director



Mr.
Sharon Fima has served as our Chief Technology Officer and a director since August 2014. Mr. Fima is a print technology development
expert with many years in advanced R&D management positions. Including digital printing technology, inkjet technology, 3D
printer production and nano-silver ink development. His past positions include advanced research and development management at
HP Indigo as the Integration Team Manager from 1999 to 2008, and in Xjet as the Production Manager from 2008 to 2009 and as an
Integration R&D Manager from 2009 to 2013.



Dagi
Shahar Ben-Noon, Chief Operating Officer, Director



Mr.
Dagi Shahar Ben-Noon has served as its Chief Operating Officer and a director since August 2014. Mr. Ben-Noon is a mechanical
engineer with extensive experience designing equipment for military and civilian applications. His areas of expertise include
plastics, medical devices, communications systems, print technology and more. Mr. Ben-Noon has significant experience with product
progress from the development stage through mass production. He was employed at Rotel Product Engineering Ltd. as a Mechanical
Designer from 2005 to 2006, at Polycad Industries (1989) Ltd. as an R&D Engineer from 2006 to 2008 and at Silynex Communications
Inc. as an R&D Mechanical Team Leader from 2008 to 2012. Mr. Ben-Noon holds a B.Sc. Mechanical Engineering from the Ben-Gurion
University.



Ofir
Baharav, Director



Mr.
Ofir Baharav has served on our board of directors since November 2015. Mr. Baharav is currently a partner in Stratus Venture
Group, and has served in a range of senior roles in the 3D printing industry. From April 2014, until December 2015, Mr. Baharav
served as the Vice President of Product Portfolio for Stratasys Ltd. In 2005, Mr. Baharav co-founded XJet Ltd. and served as its
Chief Executive Officer from April 2007 until November 2013. Mr. Baharav is named on over 10 software and hardware patents and
holds an M.B.A. from the Warwick Business School in Coventry, England.





45









Irit
Ben-Ami, External Director



Ms.
Irit Ben-Ami has served on our board of directors as an external director since November 2012. Ms. Ben-Ami is a member of
the Institute of Certified Public Accountants in Israel as well as of the Israel Bar Association. Ms. Ben-Ami founded the law
office of Pitaro-Ben Ami in 2007 and was a partner there until 2009. Ms. Ben-Ami currently serves as member of the board of directors
of several public companies, including the Hagag Group Real Estate Entrepreneurship Ltd. (TASE: HGG) since 2011, Netz United States
HY Ltd. (TASE: NEZU) since 2012, BiondVax Pharmaceuticals Ltd. (NASDAQ: BVXV; TASE: BNDX) since 2008, Medivie Therapeutic Ltd.
(TASE:MDVI) since 2014, and Together Startup Network Ltd. (TASE:TGTR) since 2016. Ms. Ben-Ami holds a Bachelor’s degree (cum laude)
in Law (LL.B.) from Sha’arei Mishpat College, a B.A. (with honors) in Economics and Accounting from Haifa University and
an M.A. in Health Systems Management (M.H.A.) from Ben Gurion University, and was engaged in the past in academic aspects of labor
law and corporate law as a practitioner at Bar Ilan University, Ben Gurion University and at the Sha’arei Mishpat College.



Roni
Kleinfeld, External Director



Mr.
Roni Kleinfeldhas served on our board of directors as an external director since November 2012. He has over 25 year experience
as a chief executive officer in public and private companies. He was the CEO of Maariv Holdings Ltd. from 1993 to 2002, the CEO
of Hed Artzi Records Ltd. from 2002 to 2007, the CEO of Maariv- Modiin Publishing House Ltd. from 2007 to 2010, and the CEO of
OMI Ltd. from 2010 to 2011. Mr. Kleinfeld has also served as director of many companies over the past ten years, including: Excite
Ltd. from April 2007 to April 2011, Makpel Ltd. from July 2007 to March 2010, Elbit Imaging Ltd. (NASDAQ: EMITF) since May 2010,
Elran Ltd. since July 2010, Dancher Ltd. from April 2012 to January 2014, Mendelson Ltd. since 2012, White Smoke Ltd. since June
2012, Edri – El Ltd. since July 2015 and Cofix Group Ltd. since April 2015. Mr. Kleinfeld has a B.A. in economics from the
Hebrew University in Jerusalem.



Abraham
Nahmias, Director



Mr.
Abraham Nahmias has served on our board of directors since August 2014. Mr. Nahmias has been a managing partner of the Nahmias-Grinberg
C.P.A (Isr.) since 1985. Mr. Nahmias currently serves as a director in the following companies: Orad Ltd. (since 2012), Allium
Medical Solutions Ltd. (since 2014) and Cellect Biomed Ltd. (since July 2014). Mr. Nahmias has a B.A. in Economy and Accountancy
from the Tel Aviv University, and is a certified public accountant in Israel.



Zvi
Yemini, Independent Director



Mr.
Zvi Yeminihas served on our board as an independent director since January 2015. Mr. Yemini founded ZAG Industries Ltd.,
in 1987 and served as its Chief Executive Officer until 2000, and as its chairman until 2006. Mr. Yemini has over 25 years of
industry experience. He also co-founded Hydro Industries Ltd. in 2002 and served as its Chairman of the Board of Directors from
2002 to 2011. Since 2011, Mr. Yemini has also served as the Chairman of the Board of Directors of Shenkar Design College. From
2002 through December 2015, Mr. Yemini served as the Chairman of the Board of Directors of the Tel-Aviv Trade Fairs & Convention
Center. Mr. Yemini holds a B.A in Industrial Engineering from the Technion Israel Institute of Technology and an Executive M.B.A.
from Tel Aviv University and a M.A. in Marketing from Baruch College in New York.



Yoel
Yogev, Director



Mr.
Yoel Yogev has served on our board of director since March 2014. Mr. Yogev has been the Chairman and Chief Executive Officer
of El-Gev Electronics Ltd. since 1987. Mr. Yogev has served as the Chief Executive Officer of BreedIT Corp. since October 2013.
Mr. Yogev has served as the Chairman of the board of directors of BreedIT Ltd. from January 2014 until August 2015. Mr. Yogev
earned a B.Sc. in Electrical Engineering from the Technion Israel Institute of Technology.





46







Eli
Yoresh, Director



Mr.
Eli Yoresh has served on our board since April 2014. Mr. Yoresh is a seasoned executive with over 15 years of executive and
financial management experience, mainly, with companies from the financial, technology and industrial sectors. Since October 2010,
Mr. Yoresh has served as a director and Chief Financial Officer at Foresight Autonomous Holdings Ltd. (TASE:FRST), and since September
20, 2013 as a director at Proteologics Ltd. (TASE:PRTL). Mr. Yoresh served as the Chief Executive Officer of Tomcar Global Holdings
Ltd., a global manufacturer of off-road vehicles, from 2005 to 2008. Mr. Yoresh served as a director at Greenstone Industries
Ltd. (TASE: GRTN) from January 2013 to June 2015, and as the Chairman of both Gefen Biomed investments Ltd. (TASE: GEFEN) from
April 2013 to July 2015 and Zmicha Investment House Ltd. (TASE: TZMI-M) from February 2013 to July 2015. He holds a B.A. in Business
Administration from the College of Management in Israel and an M.A. in Law from Bar-Ilan University in Israel. Mr. Yoresh is a
Certified Public Accountant in Israel.



Family
Relationships



There
are no family relationships between any members of our executive management and our directors.



Arrangements
for Election of Directors and Members of Management



With
the exception of our director, Abraham Nahmais, who was appointed by Michael Ilan, one of our shareholders, there are no arrangements
or understandings with major shareholders, customers, suppliers or others pursuant to which any of our executive management or
our directors were selected. See “Item 7.B. Related Party Transactions” for additional information.



|B. | Compensation
|-- | ------------



Compensation



The
following table presents in the aggregate all compensation we paid to all of our directors and senior management as a group for
the year ended December 31, 2016. The table does not include any amounts we paid to reimburse any of such persons for costs incurred
in providing us with services during this period.



All
amounts reported in the tables below reflect the cost to the Company, in thousands of U.S. Dollars, for the year ended December
31, 2016. Amounts paid in NIS are translated into U.S. dollars at the rate of NIS 3.845 = U.S.$1.00, based on the average representative
rate of exchange between the NIS and the U.S. dollar as reported by the Bank of Israel in the year ended December 31, 2016.



|                                                                         |  | Salary and Related Benefits, including Pension, Retirement and Other Similar Benefits |         |  | Share Based Compensation |  
|------------------------------------------------------------------------ |  | ------------------------------------------------------------------------------------- | ------- |  | ------------------------ | -
|All directors and senior management as a group, consisting of 13 persons |  | $                                                                                     | 975,000 |  |                          | $



In
accordance with the Companies Law, the table below reflects the compensation granted to our five most highly compensated officers
during or with respect to the year ended December 31, 2016.





47







Annual
Compensation- in thousands of USD- convenience translation



|Executive Officer    |  | Salary andRelatedBenefits, including Pension, Retirement and Other Similar Benefits |     |  | Share Based Compensation |   |     | Total | 
|-------------------- |  | ----------------------------------------------------------------------------------- | --- |  | ------------------------ | - | --- | ----- | 
|                     |  |                                                                                     |     |  |                          |   |     |       | 
|Amit Dror            |  | $                                                                                   | 178 |  |                          | $ | 150 |       | 
|                     |  |                                                                                     |     |  |                          |   |     |       | 
|Sharon Fima          |  | $                                                                                   | 196 |  |                          | $ | 150 |       | 
|                     |  |                                                                                     |     |  |                          |   |     |       | 
|Simon Anthony-Fried  |  | $                                                                                   | 177 |  |                          | $ | 150 |       | 
|                     |  |                                                                                     |     |  |                          |   |     |       | 
|Dagi Shahar Ben-Noon |  | $                                                                                   | 177 |  |                          | $ | 150 |       | 
|                     |  |                                                                                     |     |  |                          |   |     |       | 
|Itschak Shrem        |  | $                                                                                   | 93  |  |                          | $ | 172 |       | 



Employment
Agreements with Executive Officers



We
have entered into written employment agreements with each of our executive officers. All of these agreements contain customary
provisions regarding noncompetition, confidentiality of information and assignment of inventions. However, the enforceability
of the noncompetition provisions may be limited under applicable law. In addition, we have entered into agreements with each executive
officer and director pursuant to which we have agreed to indemnify each of them up to a certain amount and to the extent that
these liabilities are not covered by directors and officers insurance. Members of our senior management are eligible for bonuses
each year. The bonuses are payable upon meeting objectives and targets that are set by our chief executive officer and approved
annually by our board of directors that also set the bonus targets for our chief executive officer.



For
a description of the terms of our options and option plans, see “Item 6.E. Share Ownership”below.



Directors’
Service Contracts



Other
than with respect to our directors that are also executive officers, we do not have written agreements with any director providing
for benefits upon the termination of his employment with our company.



|C. | Board
    Practices
|-- | -------------------



Introduction



Our
board of directors presently consists of twelve members, including at least two external directors required to be appointed under
the Companies Law. We believe that Ms. Ben-Ami and Messrs. Baharav, Kleinfeld, Nahmias, Yemini, Yogev and Yoresh are “independent”
for purposes of NASDAQ Stock Market rules. Our amended and restated articles of association provide that the number of board of
directors’ members (including external directors) shall be set by the general meeting of the shareholders provided that it will
consist of not less than three and not more than twelve members. Pursuant to the Companies Law, the management of our business
is vested in our board of directors. Our board of directors may exercise all powers and may take all actions that are not specifically
granted to our shareholders or to management. Our executive officers are responsible for our day-to-day management and have individual
responsibilities established by our board of directors. Our Chief Executive Officer is appointed by, and serves at the discretion
of, our board of directors, subject to the employment agreement that we have entered into with him. All other executive officers
are appointed by our Chief Executive Officer. Their terms of employment are subject to the approval of the board of directors’
compensation committee and of the board of directors, and if such terms of employment are not consistent with our compensation
policy, then such terms require the approval of our shareholders, and are subject to the terms of any applicable employment agreements
that we may enter into with them.





48







Each
director, except external directors, will hold office until the annual general meeting of our shareholders for the year in which
his or her term expires, unless he or she is removed by a majority vote of our shareholders at a general meeting of our shareholders
or upon the occurrence of certain events, in accordance with the Companies Law and our amended and restated articles of association.



In
addition, our amended and restated articles of association allow our board of directors to appoint directors to fill vacancies
on our board of directors or in addition to the acting directors (subject to the limitation on the number of directors), until
the next annual general meeting or special general meeting in which directors may be appointed or terminated. External directors
may be elected for up to two additional three-year terms after their initial three-year term under the circumstances described
below, with certain exceptions as described in “External Directors” below. External directors may be removed from
office only under the limited circumstances set forth in the Companies Law. See “External Directors” below.



Under
the Companies Law, nominations for directors may be made by any shareholder holding at least one percent of our outstanding voting
power. However, any such shareholder may make such a nomination only if a written notice of such shareholder’s intent to
make such nomination has been given to our board of directors. Any such notice must include certain information, the consent of
the proposed director nominee(s) to serve as our director(s) if elected and a declaration signed by the nominee(s) declaring that
there is no limitation under the Companies Law preventing their election and that all of the information that is required to be
provided to us in connection with such election under the Companies Law has been provided.



Under
the Companies Law, our board of directors must determine the minimum number of directors who are required to have accounting and
financial expertise. In determining the number of directors required to have such expertise, our board of directors must consider,
among other things, the type and size of the company and the scope and complexity of its operations. Our board of directors has
determined that the minimum number of directors of our company who are required to have accounting and financial expertise is
two.



The
board of directors may elect one director to serve as the chairman of the board of directors to preside at the meetings of the
board of directors, and may also remove that director as chairman. Pursuant to the Companies Law, neither the chief executive
officer nor any of his or her relatives is permitted to serve as the chairman of the board of directors, and a company may not
vest the chairman or any of his or her relatives with the chief executive officer’s authorities. In addition, a person who
reports, directly or indirectly, to the chief executive officer may not serve as the chairman of the board of directors; the chairman
may not be vested with authorities of a person who reports, directly or indirectly, to the chief executive officer; and the chairman
may not serve in any other position in the company or a controlled company, but he or she may serve as a director or chairman
of a controlled company. However, the Companies Law permits a company’s shareholders to determine, for a period not exceeding
three years from each such determination, that the chairman or his or her relative may serve as chief executive officer or be
vested with the chief executive officer’s authorities, and that the chief executive officer or his or her relative may serve
as chairman or be vested with the chairman’s authorities. Such determination of a company’s shareholders requires
either: (1) the approval of at least two-thirds of the shares of those shareholders present and voting on the matter (other than
controlling shareholders and those having a personal interest in the determination); or (2) that the total number of shares opposing
such determination does not exceed 2% of the total voting power in the company. Currently, we have a separate chairman and chief
executive officer.



The
board of directors may, subject to the provisions of the Companies Law, delegate any or all of its powers to committees of the
board, and it may, from time to time, revoke such delegation or alter the composition of any such committees, subject to certain
limitations. Unless otherwise expressly provided by the board of directors, the committees shall not be empowered to further delegate
such powers. The composition and duties of our audit committee, financial statement examination committee and compensation committee
are described below.



The
board of directors oversees how management monitors compliance with our risk management policies and procedures, and reviews the
adequacy of the risk management framework in relation to the risks faced by us. The board of directors is assisted in its oversight
role by an internal auditor. The internal auditor undertakes both regular and ad hoc reviews of risk management controls and procedures,
the results of which are reported to our audit committee.





49







External
Directors



Under
the Companies Law, an Israeli company whose shares have been offered to the public or whose shares are listed for trading on a
stock exchange in or outside of Israel is required to appoint at least two external directors to serve on its board of directors.
External directors must meet stringent standards of independence. Our external directors are Irit Ben-Ami and Roni Kleinfeld.



According
to regulations promulgated under the Companies law, at least one of the external directors is required to have “financial
and accounting expertise,” unless another member of the audit committee, who is an independent director under the NASDAQ
Stock Market rules, has “financial and accounting expertise,” and the other external director or directors are required
to have “professional expertise”. An external director may not be appointed to an additional term unless: (1) such
director has “accounting and financial expertise;” or (2) he or she has “professional expertise,” and
on the date of appointment for another term there is another external director who has “accounting and financial expertise”
and the number of “accounting and financial experts” on the board of directors is at least equal to the minimum number
determined appropriate by the board of directors. We have determined that both Roni Kleinfeld and Irit Ben-Ami have accounting
and financial expertise.



A
director has “professional expertise” if he or she holds an academic degree in certain fields or has at least five
years of experience in certain senior positions.



External
directors are elected by a majority vote at a shareholders’ meeting, so long as either:



| | ● | 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.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
Companies Law provides for an initial three-year term for an external director. Thereafter, an external director may be reelected
by shareholders to serve in that capacity for up to two additional three-year terms, with certain exceptions as explained below,
provided that:



|(1) | 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. An “Interested shareholder or a competitor
    ” is a shareholder who recommended the appointment for each such additional term or a substantial shareholder, if at
    the time of appointment, it, its controlling shareholder or a company controlled by any of them, has business relations with
    the company or any of them are competitors of the company;
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|    |                                                                                                                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | 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); or
|    |                                                                                                                                                                                                                                                                  
|(3) | the
    external director offered his or her service for each such additional term and was approved in accordance with the provisions
    of section (1) above.                                                                                                  





50







The
term of office for external directors for Israeli companies traded on certain foreign stock exchanges, including the NASDAQ Stock
Market, may be extended indefinitely in increments of additional three-year terms, in each case provided that the audit committee
and the board of directors of the company confirm that, in light of the external director’s expertise and special contribution
to the work of the board of directors and its committees, the reelection for such additional period(s) is beneficial to the company,
and provided that the external director is reelected subject to the same shareholder vote requirements as if elected for the first
time (as described above). Prior to the approval of the reelection of the external director at a general shareholders meeting,
the company’s shareholders must be informed of the term previously served by him or her and of the reasons why the board
of directors and audit committee recommended the extension of his or her term.



External
directors may be removed only by the same special majority of shareholders required for their election or by a court, and in both
cases only if the external directors cease to meet the statutory qualifications for their appointment or if they violate their
duty of loyalty to our company. In the event of a vacancy created by an external director which causes the company to have fewer
than two external directors, the board of directors is required under the Companies Law to call a shareholders meeting as soon
as possible to appoint such number of new external directors in order that the company thereafter has two external directors.



External
directors may be compensated only in accordance with regulations adopted under the Companies Law.



Fiduciary
Duties of Office Holders



The
Companies Law imposes a duty of care and a duty of loyalty on all office holders of a company.



The
duty of care requires an office holder to act with the level of skill with which a reasonable office holder in the same position
would have acted under the same circumstances. The duty of care of an office holder includes a duty to use reasonable means to
obtain:



| | ● | 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.                                                                 



The
duty of loyalty of an office holder requires an office holder to act in good faith and for the benefit of the company, and includes
a duty to:



| | ● | 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.





51







Approval
of Related Party Transactions under Israeli Law



General



Under
the Companies Law, we may approve an action by an office holder from which the office holder would otherwise have to refrain,
as described above, if:



| | ● | 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.



Disclosure
of Personal Interests of an Office Holder



The
Companies Law requires that an office holder disclose to the company, promptly, and, in any event, not later than the board meeting
at which the transaction is first discussed, any direct or indirect personal interest that he or she may have and all related
material information known to him or her relating to any existing or proposed transaction by the company. If the transaction is
an extraordinary transaction, the office holder must also disclose any personal interest held by:



| | ● | 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.



Under
the Companies Law, an extraordinary transaction is a transaction:



| | ● | 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.



The
Companies Law does not specify to whom within us nor the manner in which required disclosures are to be made. We require our office
holders to make such disclosures to our board of directors.



Under
the Companies Law, once an office holder complies with the above disclosure requirement, the board of directors may approve a
transaction between the company and an office holder, or a third party in which an office holder has a personal interest, unless
the articles of association provide otherwise and provided that the transaction is not detrimental to the company’s interest.
If the transaction is an extraordinary transaction, first the audit committee and then the board of directors, in that order,
must approve the transaction. Under specific circumstances, shareholder approval may also be required. A director who has a personal
interest in an extraordinary transaction, which is considered at a meeting of the board of directors or the audit committee, may
not be present at this meeting or vote on this matter, unless a majority of the board of directors or the audit committee, as
the case may be, has a personal interest. If a majority of the board of directors has a personal interest, then shareholder approval
is generally also required.



Under
the Companies Law, all arrangements as to compensation of office holders require approval of the compensation committee and board
of directors, and compensation of office holders who are directors must be also approved, subject to certain exceptions, by the
shareholders, in that order.





52







Disclosure
of Personal Interests of a Controlling Shareholder



Under
the Companies Law, the disclosure requirements that apply to an office holder also apply to a controlling shareholder of a public
company. Extraordinary transactions with a controlling shareholder or in which a controlling shareholder has a personal interest,
including a private placement in which a controlling shareholder has a personal interest, as well as transactions for the provision
of services whether directly or indirectly by a controlling shareholder or his or her relative, or a company such controlling
shareholder controls, and transactions concerning the terms of engagement of a controlling shareholder or a controlling shareholder’s
relative, whether as an office holder or an employee, require the approval of the audit committee or the compensation committee,
as the case may be, the board of directors and a majority of the shares voted by the shareholders of the company participating
and voting on the matter in a shareholders’ meeting. In addition, the shareholder approval must fulfill one of the following
requirements:



| | ● | 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.                                   



In
addition, any extraordinary transaction with a controlling shareholder or in which a controlling shareholder has a personal interest
with a term of more than three years requires the abovementioned approval every three years; however, such transactions not involving
the receipt of services or compensation can be approved for a longer term, provided that the audit committee determines that such
longer term is reasonable under the circumstances.



The
Companies Law requires that every shareholder that participates, in person, by proxy or by voting instrument, in a vote regarding
a transaction with a controlling shareholder, must indicate in advance or in the ballot whether or not that shareholder has a
personal interest in the vote in question. Failure to so indicate will result in the invalidation of that shareholder’s
vote.



The
term “controlling shareholder” is defined in the Companies Law as a shareholder with the ability to direct the activities
of the company, other than by virtue of being an office holder. A shareholder is presumed to be a controlling shareholder if the
shareholder holds 50% or more of the voting rights in a company or has the right to appoint the majority of the directors of the
company or its general manager.



Duties
of Shareholders



Under
the Companies Law, a shareholder has a duty to refrain from abusing its power in the company and to act in good faith and in an
acceptable manner in exercising its rights and performing its obligations to the company and other shareholders, including, among
other things, voting at general meetings of shareholders on the following matters:



| | ● | 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.



A
shareholder also has a general duty to refrain from oppressing other shareholders.



The
remedies generally available upon a breach of contract will also apply to a breach of the above mentioned duties, and in the event
of oppression of other shareholders, additional remedies are available to the injured shareholder.



In
addition, any controlling shareholder, any shareholder that knows that its vote can determine the outcome of a shareholder vote
and any shareholder that, under a company’s articles of association, has the power to appoint or prevent the appointment
of an office holder, or has another power with respect to a company, is under a duty to act with fairness towards the company.
The Companies Law does not describe the substance of this duty except to state that the remedies generally available upon a breach
of contract will also apply in the event of a breach of the duty to act with fairness, taking the shareholder’s position
in the company into account.





53







Committees
of the Board of Directors



Our
board of directors has established three standing committees, the audit committee, the compensation committee and the Financial
Statement Examination Committee.



Audit
Committee



Under
the Companies Law, we are required to appoint an audit committee. The audit committee must be comprised of at least three
directors, including all of the external directors (one of whom must serve as chair of the committee). The audit committee may
not include the chairman of the board; a controlling shareholder of the company or a relative of a controlling shareholder; a
director employed by or providing services on a regular basis to the company, to a controlling shareholder or to an entity controlled
by a controlling shareholder; or a director who derives most of his or her income from a controlling shareholder.



In
addition, under the Companies Law, a majority of the members of the audit committee of a publicly-traded company must
be unaffiliated directors. In general, an “unaffiliated director” under the Companies Law is defined as either
(i) an external director, or (ii) an individual who has not served as a director of the company for a period exceeding nine consecutive
years and who meets the qualifications for being appointed as an external director, except that he or she need not meet the requirement
for accounting and financial expertise or professional qualifications.



Our
audit committee, acting pursuant to a written charter, is comprised of Mr. Roni Kleinfeld, Ms. Irit Ben-Ami, and Mr. Zvi Yemini.



Our
audit committee acts as a committee for review of our financial statements as required under the Companies Law, and in such capacity
oversees and monitors our accounting; financial reporting processes and controls; audits of the financial statements; compliance
with legal and regulatory requirements as they relate to financial statements or accounting matters; the independent registered
public accounting firm’s qualifications, independence and performance; and provides the board of directors with reports
on the foregoing.



Under
the Companies Law, our audit committee is responsible for:



|(i)    | determining
    whether there are deficiencies in the business management practices of our company, and making recommendations to the board
    of directors to improve such practices;                                                                                                                                   
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                           
|(iv)   | 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 “Item 7.B.
    Approval of Related Party     Transactions under Israeli law”);
|       |                                                                                                                                                                                                                                                                                                                           
|(vii)  | examining
    our internal controls and internal auditor’s performance, including whether the internal auditor has sufficient resources
    and tools to dispose of its responsibilities;                                                                                                                                 
|       |                                                                                                                                                                                                                                                                                                                           
|(viii) | 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                                                                          
|       |                                                                                                                                                                                                                                                                                                                           
|(ix)   | establishing
    procedures for the handling of employees’ complaints as to the management of our business and the protection to be provided
    to such employees.                                                                                                                                                       



Our
audit committee may not conduct any discussions or approve any actions requiring its approval (see “Item 7.B.
Approval of Related Party Transactions under Israeli law”), unless at the time of the approval a majority of the
committee’s members are present, which majority consists of unaffiliated directors including at least one external
director.





54







NASDAQ
Stock Market Requirements for Audit Committee



Under
the NASDAQ Stock Market rules, we are required to maintain an audit committee consisting of at least three members, all of whom
are independent and are financially literate and one of whom has accounting or related financial management expertise.



As
noted above, the members of our audit committee include Mr. Roni Kleinfeld and Ms. Irit Ben-Ami who are external directors, and
Mr. Zvi Yemini who is an independent director, each of whom is “independent,” as such term is defined in under NASDAQ
Stock Market rules. Mr. Kleinfeld serves as the chairman of our audit committee. All members of our audit committee meet the requirements
for financial literacy under the NASDAQ Stock Market rules. Our board of directors has determined that each member of our audit
committee is an audit committee financial expert as defined by the SEC rules and has the requisite financial experience as defined
by the NASDAQ Stock Market rules.



Financial
Statement Examination Committee



Under
the Companies Law, the board of directors of a public company in Israel must appoint a financial statement examination committee,
which consists of members with accounting and financial expertise or the ability to read and understand financial statements.
According to a resolution of our board of directors, the audit committee has been assigned the responsibilities and duties of
a financial statements examination committee, as permitted under relevant regulations promulgated under the Companies Law. From
time to time as necessary and required to approve our financial statements, the audit committee holds separate meetings, prior
to the scheduled meetings of the entire board of directors regarding financial statement approval. The function of a financial
statements examination committee is to discuss and provide recommendations to its board of directors (including the report of
any deficiency found) with respect to the following issues: (1) estimations and assessments made in connection with the preparation
of financial statements; (2) internal controls related to the financial statements; (3) completeness and propriety of the disclosure
in the financial statements; (4) the accounting policies adopted and the accounting treatments implemented in material matters
of the company; and (5) value evaluations, including the assumptions and assessments on which evaluations are based and the supporting
data in the financial statements. Our independent registered public accounting firm and our internal auditor are invited to attend
all meetings of the audit committee when it is acting in the role of the financial statements examination committee.



Compensation
Committee



Under
the Companies Law, the board of directors of any public company must establish a compensation committee. The compensation committee
must be comprised of at least three directors, including all of the external directors, who must constitute a majority of the
members of the compensation committee. However, subject to certain exceptions, Israeli companies whose securities are traded on
stock exchanges such as the NASDAQ Stock Market, and who do not have a shareholder holding 25% or more of the company’s
share capital, do not have to meet this majority requirement; provided, however, that the compensation committee meets other Companies
Law composition requirements, as well as the requirements of the jurisdiction where the company’s securities are traded.
Each compensation committee member that is not an external director must be a director whose compensation does not exceed an amount
that may be paid to an external director. The compensation committee is subject to the same Companies Law restrictions as the
audit committee as to (a) who may not be a member of the committee and (b) who may not be present during committee deliberations
as described above.



Our
compensation committee is acting pursuant to a written charter, and consists of Mr. Roni Kleinfeld, Ms. Irit Ben-Ami and Mr. Zvi
Yemini , each of whom is “independent,” as such term is defined under the NASDAQ Stock Market rules. Our compensation
committee complies with the provisions of the Companies Law, the regulations promulgated thereunder, and our amended and restated
articles of association, on all aspects referring to its independence, authorities and practice. Our compensation committee follows
home country practice as opposed to complying with the compensation committee membership and charter requirements prescribed under
the NASDAQ Stock Market rules.



Our
compensation committee reviews and recommends to our board of directors: (1) the annual base compensation of our executive officers
and directors; (2) annual incentive bonus, including the specific goals and amount; (3) equity compensation; (4) employment agreements,
severance arrangements, and change in control agreements/provisions; (5) retirement grants and/or retirement bonuses; and (6)
any other benefits, compensation, compensation policies or arrangements.





55







The
duties of the compensation committee include the recommendation to the company’s board of directors of a policy regarding
the terms of engagement of office holders, to which we refer as a compensation policy. That policy must be adopted by the company’s
board of directors, after considering the recommendations of the compensation committee. The compensation policy is then brought
for approval by our shareholders. On July 8, 2015, our shareholders approved our compensation policy.



The
compensation policy must serve as the basis for decisions concerning the financial terms of employment or engagement of executive
officers and directors, including exculpation, insurance, indemnification or any monetary payment or obligation of payment in
respect of employment or engagement. The compensation policy must relate to certain factors, including advancement of the company’s
objectives, the company’s business and its long-term strategy, and creation of appropriate incentives for executives. It
must also consider, among other things, the company’s risk management, size and the nature of its operations. The compensation
policy must furthermore consider the following additional factors:



| | ● | 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
compensation policy must also include the following principles:



| | ● | 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.                                                                                                                                                                                                                                            



The
compensation policy must also consider appropriate incentives from a long-term perspective and maximum limits for severance compensation.





56







The
compensation committee is responsible for (1) recommending the compensation policy to a company’s board of directors for
its approval (and subsequent approval by our shareholders) and (2) duties related to the compensation policy and to the compensation
of a company’s office holders as well as functions previously fulfilled by a company’s audit committee with respect
to matters related to approval of the terms of engagement of office holders, including:



| | ● | 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.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------



Internal
Auditor



Under
the Companies Law, the board of directors must also appoint an internal auditor nominated by the audit committee. Our internal
auditor is Daniel Spira. The role of the internal auditor is to examine whether a company’s actions comply with the law
and proper business procedure. The internal auditor may not be an interested party or office holder, or a relative of any interested
party or office holder, and may not be a member of the company’s independent accounting firm or its representative. The
Companies Law defines an interested party as a holder of 5% or more of the shares or voting rights of a company, any person or
entity that has the right to nominate or appoint at least one director or the general manager of the company or any person who
serves as a director or as the general manager of a company. Our internal auditor is not our employee, but the managing partner
of a firm which specializes in internal auditing.



Remuneration
of Directors



Under
the Companies Law, remuneration of directors is subject to the approval of the compensation committee (until recently of the audit
committee), thereafter by the board of directors and thereafter by the general meeting of the shareholders. In case the remuneration
of the directors is in accordance with regulation applicable to remuneration of the external directors then such remuneration
shall be exempt from the approval of the general meeting.



Insurance



Under
the Companies Law, a company may obtain insurance for any of its office holders for:



| | ● | 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.                                           



We
currently have directors’ and officers’ liability insurance, providing total coverage of $15,000,000 for the benefit
of all of our directors and officers, in respect of which we paid a twelve-month premium of approximately $73,080, which expires
on October 3, 2017.





57







On
November 3, and November 7, 2016, respectively, our compensation committee and board of directors approved our purchase of a professional
liability insurance policy for our current and future directors and officers, who may be appointed from time to time. As required
by the Companies Law, this matter was submitted to a vote, and approved by our shareholders on December 26, 2016. The approved
terms allow us to obtain insurance with an annual premium that may not exceed a total of $100,000, and maximum coverage up to
$30 million.



Indemnification



The
Companies Law provides that a company may indemnify an office holder against:



| | ● | 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’ 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; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | reasonable
    litigation expenses, including attorneys’ fees, 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.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our
amended and restated articles of association allow us to indemnify our office holders up to a certain amount. The Companies Law
also permits a company to undertake in advance to indemnify an office holder, provided that if such indemnification relates to
financial liability imposed on him or her, as described above, then the undertaking should be limited:



| | ● | 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.                     



We
have entered into indemnification agreements with all of our directors and with certain members of our senior management. Each
such indemnification agreement provides the office holder with indemnification permitted under applicable law and up to a certain
amount, and to the extent that these liabilities are not covered by directors and officers insurance.



Exculpation



Under
the Companies Law, an Israeli company may not exculpate an office holder from liability for a breach of his or her duty of loyalty,
but may exculpate in advance an office holder from his or her liability to the company, in whole or in part, for a breach of his
or her duty of care (other than in relation to distributions). Our amended and restated articles of association provide that we
may exculpate any office holder from liability to us to the fullest extent permitted by law. Under the indemnification agreements,
we exculpate and release our office holders from any and all liability to us related to any breach by them of their duty of care
to us to the fullest extent permitted by law.





58







Limitations



The
Companies Law provides that we may not exculpate or indemnify an office holder nor enter into an insurance contract that would
provide coverage for any liability incurred as a result of any of the following: (1) a breach by the office holder of his or her
duty of loyalty unless (in the case of indemnity or insurance only, but not exculpation) the office holder acted in good faith
and had a reasonable basis to believe that the act would not prejudice us; (2) a breach by the office holder of his or her duty
of care if the breach was carried out intentionally or recklessly (as opposed to merely negligently); (3) any action taken with
the intent to derive an illegal personal benefit; or (4) any fine levied against the office holder.



The
foregoing descriptions summarize the material aspects and practices of our board of directors. For additional details, we also
refer you to the full text of the Companies Law, as well as of our amended and restated articles of association, which are exhibits
to this annual report on Form 20-F and are incorporated herein by reference.



There
are no service contracts between us or our Subsidiary, on the one hand, and our directors in their capacity as directors, on the
other hand, providing for benefits upon termination of service.



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



As
of December 31, 2016, we have four senior management, full-time employees, who also serve as directors in our Company: Mr. Amit
Dror who serves as the chief executive officer of the Company, Mr. Simon Anthony-Fried who serves as the Chief Marketing Officer,
Mr. Sharon Fima who serves as the Chief Technology Officer, and Mr. Dagi Shahar Ben-Noon who serves as the Chief Operating Officer.
In addition, we have 65 full-time employees and 16 part-time employees, all located in Israel.



|E. | Share
    Ownership.
|-- | --------------------



The
following table lists as of March 3, 2017, the number of our shares beneficially owned by each of our directors, our executive
officers and our directors and executive officers as a group:





|                                                             |  | Number of Ordinary Shares Beneficially Owned (1) |            |      | Percent of Class (2) | 
|------------------------------------------------------------ |  | ------------------------------------------------ | ---------- | ---- | -------------------- | 
|Executive Officers and Directors                             |  |                                                  |            |      |                      | 
|                                                             |  |                                                  |            |      |                      | 
|Itschak Shrem                                                |  |                                                  | 1,753,499  | (3)  |                      | 
|                                                             |  |                                                  |            |      |                      | 
|Amit Dror                                                    |  |                                                  | 2,551,631  | (4)  |                      | 
|                                                             |  |                                                  |            |      |                      | 
|Simon Anthony-Fried                                          |  |                                                  | 2,546,629  | (4)  |                      | 
|                                                             |  |                                                  |            |      |                      | 
|Sharon Fima                                                  |  |                                                  | 2,546,625  | (4)  |                      | 
|                                                             |  |                                                  |            |      |                      | 
|Dagi Shahar Ben-Noon                                         |  |                                                  | 2,546,626  | (4)  |                      | 
|                                                             |  |                                                  |            |      |                      | 
|Yael Sandler                                                 |  |                                                  | 80,000     | (5)  |                      | 
|                                                             |  |                                                  |            |      |                      | 
|Additional Directors                                         |  |                                                  |            |      |                      | 
|                                                             |  |                                                  |            |      |                      | 
|Irit Ben-Ami                                                 |  |                                                  | 60,000     | (6)  |                      | 
|                                                             |  |                                                  |            |      |                      | 
|Ofir Baharav                                                 |  |                                                  | 104,167    | (7)  |                      | 
|                                                             |  |                                                  |            |      |                      | 
|Roni Kleinfeld                                               |  |                                                  | 60,000     | (6)  |                      | 
|                                                             |  |                                                  |            |      |                      | 
|Abraham Nahmias                                              |  |                                                  | 70,000     | (8)  |                      | 
|                                                             |  |                                                  |            |      |                      | 
|Zvi Yemini                                                   |  |                                                  | 774,286    | (9)  |                      | 
|                                                             |  |                                                  |            |      |                      | 
|Yoel Yogev                                                   |  |                                                  | 974,286    | (10) |                      | 
|                                                             |  |                                                  |            |      |                      | 
|Eli Yoresh                                                   |  |                                                  | 340,797    | (11) |                      | 
|                                                             |  |                                                  |            |      |                      | 
|All directors and executive officers as a group (13 persons) |  |                                                  | 14,408,546 |      |                      | 



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





59









|(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 49,739,234 Ordinary Shares issued and outstanding as of March 3, 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)  | Includes warrants currently exercisable to purchase: (i) 107,143 Ordinary Shares at an exercise price of NIS 2.25 per share, (ii) 370,878 Ordinary Shares at an exercise price of NIS 1.75 per share; and (iii) 20,000 Ordinary Shares at an exercise price of NIS 9.00 per share. In addition, options to purchase 233,335 Ordinary Shares at an exercise price of NIS 5.50 per share.                                                                                                                                                                                                                                                                                                   
|(4)  | Includes options to purchase 233,335 Ordinary Shares at an exercise price of NIS 5.50 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(5)  | Includes options to purchase 80,000 Ordinary Shares at an exercise price of NIS 1.65 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(6)  | Includes options to purchase 60,000 Ordinary Shares at an exercise price of NIS 5.50 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(7)  | Includes options to purchase 104,167 Ordinary Shares at an exercise price of NIS 9.00 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(8)  | Includes options to purchase 70,000 Ordinary Shares at an exercise price of NIS 5.50 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(9)  | Includes warrants to purchase 178,571 Ordinary Shares at an exercise price of NIS 2.25 per share. In addition, includes options to purchase 60,000 Ordinary Shares at an exercise price of NIS 5.50 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(10) | Includes warrants to purchase 107,143 Ordinary Shares at an exercise price of NIS 2.25 per share, and 30,000 of which are exercisable at an exercise price of NIS 9.00 per share. In addition, includes options to purchase 70,000 Ordinary Shares at an exercise price of NIS 5.50 per share.                                                                                                                                                                                                                                                                                                                                                                                            
|(11) | Includes warrants to purchase 35,715 Ordinary Shares at an exercise price of NIS 2.25 per share. In addition, includes options to purchase 70,000 Ordinary Shares at an exercise price of NIS 5.50 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             



Stock
Option Plans



2015
Stock Option Plan



We
maintain one equity incentive plan – our 2015 Stock Option Plan, or the 2015 Plan. As of March 3, 2017, the number of Ordinary
Shares reserved for the exercise of options granted under the plan was 2,459,035. In addition, options to purchase 5,540,965 Ordinary
Shares were issued and outstanding. Of such outstanding options, options to purchase 2,682,558 Ordinary Shares were vested as
of that date, 981,670 with an exercise price of NIS 1.65 (approximately $0.43) per share, 1,330,010 with an exercise price of
NIS 5.50 (approximately $1.43) per share and 370,878 with an exercise price of NIS 1.75 (approximately $0.46) per share.





60







Our
2015 Plan was adopted by our board of directors in February 2015, and expires on February 2025. Our employees, directors, officer,
consultants, advisors, suppliers and any other person or entity whose services are considered valuable to us are eligible to participate
in this plan.



Our
2015 Plan is administered by our board of directors, regarding the granting of options and the terms of option grants, including
exercise price, method of payment, vesting schedule, acceleration of vesting and the other matters necessary in the administration
of these plan. Eligible Israeli employees, officers and directors, would qualify for provisions of Section 102(b)(2) of the Israeli
Income Tax Ordinance, or the Tax Ordinance. Pursuant to such Section 102(b)(2), qualifying options and shares issued upon exercise
of such options are held in trust and registered in the name of a trustee selected by the board of directors. The trustee may
not release these options or shares to the holders thereof for two years from the date of the registration of the options in the
name of the trustee. Under Section 102, any tax payable by an employee from the grant or exercise of the options is deferred until
the transfer of the options or ordinary shares by the trustee to the employee or upon the sale of the options or ordinary shares,
and gains may qualify to be taxed as capital gains at a rate equal to 25%, subject to compliance with specified conditions. Our
Israeli non-employee service providers and controlling shareholders may only be granted options under Section 3(9) of the Tax
Ordinance, which does not provide for similar tax benefits. The 2015 Plan also permits the grant to Israeli grantees of options
that do not qualify under Section 102(b)(2).



Upon
termination of employment for any other reason, other than in the event of death, disability, all unvested options will expire
and all vested options will generally be exercisable for 6 months following termination, or such other period as determined by
the plan administrator, subject to the terms of the 2015 Plan and the governing option agreement.



Upon
termination of employment due to death or disability, all the vested options at the time of termination will be exercisable for
12 months, or such other period as determined by the plan administrator, subject to the terms of the 2015 Plan and the governing
option agreement.



|ITEM
    7. | MAJOR
    SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
|----------- | -----------------------------------------------------



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



The
following table presents as of March 3, 2017 (unless otherwise noted below), the beneficial ownership of our Ordinary Shares by
each person who is known by us to be the beneficial owner of 5% or more of our outstanding Ordinary Shares (to whom we refer as
our Major Shareholders). The data presented is based on information provided to us by the Major Shareholders or disclosed in public
regulatory filings.



Except
where otherwise indicated, and except pursuant to community property laws, we believe, based on information furnished by such
owners, that the beneficial owners of the shares listed below have sole investment and voting power with respect to, and the sole
right to receive the economic benefit of ownership of, such shares. The shareholders listed below do not have any different voting
rights from any of our other shareholders. We know of no arrangements that would, at a subsequent date, result in a change of
control of our Company.





61









|Name                                             |  | Number of Ordinary Shares Beneficially Owned(1) |           |  | Percent of Class(2) | 
|------------------------------------------------ |  | ----------------------------------------------- | --------- |  | ------------------- | 
|                                                 |  |                                                 |           |  |                     | 
|Amit Dror (3) (5)                                |  |                                                 | 2,551,631 |  |                     | 
|                                                 |  |                                                 |           |  |                     | 
|Sharon Fima (3) (5)                              |  |                                                 | 2,546,625 |  |                     | 
|                                                 |  |                                                 |           |  |                     | 
|Dagi Shahar Ben-Noon (3) (5)                     |  |                                                 | 2,546,626 |  |                     | 
|                                                 |  |                                                 |           |  |                     | 
|Simon Anthony-Fried (3) (5)                      |  |                                                 | 2,546,629 |  |                     | 
|                                                 |  |                                                 |           |  |                     | 
|Michael Ilan Management and Investments Ltd. (4) |  |                                                 | 3,432,490 |  |                     | 





|(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 49,739,234 Ordinary Shares issued and outstanding as of March 3, 2017.                                                                                                                                                                                                                                                                                                                                                                            
|(3) | Includes options to purchase 233,335 Ordinary Shares at an exercise price of NIS 5.50 per share.                                                                                                                                                                                                                                                                                                                                                                                     
|(4) | Includes warrants to purchase 352,091 Ordinary Shares that are currently exercisable at an exercise price of NIS 9.00 (approximately $2.3647) per share. Based on information publically available from the Israeli Registrar of Companies, this entity is under control of, and affiliated with Mr. Michael Ilan of 6 Stricker St., Tel Aviv-Yafo, 6200608.                                                                                                                         
|(5) | Amit Dror, Sharon Fima, Dagi Shahar Ben-Noon and Simon Anthony-Fried are parties to a shareholders voting agreement, pursuant to which the parties have agreed to vote together all of their voting securities. The figures in the table above include only the shares owned by each shareholder individually. In the aggregate, these shareholders hold approximately 20% of the voting power of the Company. See “Item 7.B. Related Party Transactions” for additional information.



Changes
in Percentage Ownership by Major Shareholders



On
August 25, 2014, we entered into the Merger with the Subsidiary, whereby we acquired 100% of the share capital of the Subsidiary.
As a result of the Merger, the four shareholders of the Subsidiary received an aggregate amount of approximately 37.4% our issued
and outstanding Ordinary Shares, as of the date thereof.



For
a detailed description of the Merger, see “Item 7.B. Related Party Transactions – Merger Agreement and Private Placement
Agreements.”



Record
Holders



Based
upon a review of the information provided to us by our transfer agent and custodian bank in the United States, as of March 1,
2017, there were a total of 4 holders of record of our shares, of which 1 record holder holding 4 shares, or approximately 0.00001%
of our outstanding shares had a registered address in the United States, and the remaining 3 holders had registered addresses
in Israel. These numbers are not representative of the number of beneficial holders of our shares nor is it representative of
where such beneficial holders reside, since many of these shares were held of record by brokers or other nominees.



The
Company is not controlled by another corporation, by any foreign government or by any natural or legal persons except as
set forth herein, and here are no arrangements known to the Company which would result in a change in control of the Company
at a subsequent date. See “Item 7.B. Related Party Transactions – Shareholders Agreement” for
information regarding a voting agreement among certain of our shareholders.



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



Employment
Agreements



We
have entered into written employment agreements with each of our executive officers. All of these agreements contain customary
provisions regarding noncompetition, confidentiality of information and assignment of inventions. However, the enforceability
of the noncompetition provisions may be limited under applicable law. In addition, we have entered into agreements with each executive
officer and director pursuant to which we have agreed to indemnify each of them up to a certain amount and to the extent that
these liabilities are not covered by directors and officers insurance.





62







Options



Since
our inception we have granted options to purchase our Ordinary Shares to our officers and certain of our directors. Such option
agreements may contain acceleration provisions upon certain merger, acquisition, or change of control transactions. We describe
our option plans under “Share Ownership—Stock Option Plans.” If the relationship between us and an executive
officer or a director is terminated, except for cause (as defined in the various option plan agreements), options that are vested
will generally remain exercisable for 90 days after such termination.



Merger
Agreement and Private Placement Agreements



On
August 25, 2014, as part of a merger with our Subsidiary, we entered into a merger agreement and several private placement agreements
whereby we issued an aggregate of 12,867,178 Ordinary Shares divided as follows: an aggregate of 6,931,301 shares were allocated
to the then current shareholders of the Company at a price per share of NIS 0.81767 (approximately an $0.2308); and an aggregate
of 5,935,875 Ordinary Shares were issued to various investors, including to Messrs. Shrem, Yoresh, Yogev and Ilan, at a price
per share of NIS 0.8655 (approximately an $0.2443). In addition, we granted four of our executive officers options to purchase
4,322,329 Ordinary Shares of the Company, which are exercisable at a price per share of NIS 0.8655 (approximately $0.2443).



As
part of the foregoing merger agreement and investment, we entered into a private placement agreement with Michael Ilan, pursuant
to which Mr. Ilan was provided with the right to appoint one member to our board of directors and a preemptive right with respect
to any future issuance of our securities pursuant to a private placement of our Ordinary Shares.



Private
Placement of Ordinary Shares



On
January 13, 2015, we issued an aggregate of 1,508,572 Ordinary Shares pursuant to a private placement, at a price per share of
NIS 1.40 (approximately $0.35). In addition, we issued warrants to purchase up to 1,508,572 Ordinary Shares, 50% of which at an
exercise price of NIS 1.75 (approximately $0.44) per share, and 50% of which at an exercise price of NIS 2.25 (approximately $0.57)
per share. These warrants will expire as follows: (i) warrants to purchase 754,286 of our Ordinary Shares will expire 18 months
from the date of issuance, and (ii) warrants to purchase 754,286 of our Ordinary Shares will expire 36 months from the date of
issuance.



As
an extension to this private placement, on April 15, 2015, we issued an aggregate of 285,715 Ordinary Shares to Eli Yoresh, one
of the Company’s directors, and Itschak Shrem, the Company’s Chairman, at a price per share of NIS 1.40 (approximately $0.35).
In addition, we issued warrants to purchase up to 285,715 Ordinary Shares, 50% of which at an exercise price of NIS 1.75 (approximately
$0.44) per share, and 50% of which at an exercise price of NIS 2.25 (approximately $0.57) per share. These warrants will expire
as follows: (i) warrants to purchase 142,858 of our Ordinary Shares will expire 18 months from the date of issuance, and (ii)
warrants to purchase 142,857 of our Ordinary Shares will expire 36 months from the date of issuance.



Shareholders
Agreement



Four
of our shareholders, who also serve as officers and directors of our Company, Amit Dror, Simon Anthony Fried, Sharon Fima and
Dagi Shahar Ben-Noon, have entered to a shareholders voting agreement. Pursuant to the agreement, the parties have agreed to vote
together all of their voting securities, except with respect to certain votes concerning the respective parties thereof. Also,
pursuant to the agreement, each party has a right of first refusal and co-sale rights with respect to any disposition of securities
by any party thereto, subject to certain standard exceptions.





63







Shareholders
Loans



During
2012, 2013 and 2014, we received an aggregate of NIS 175,000 (approximately $45,000) in interest free loans from certain directors,
officers and shareholders, including Amit Dror, Simon Anthony Fried, Sharon Fima and Dagi Shahar Ben-Noon. In May 2015, all of
these loans were repaid in full.



Public
Offering of Securities



In
September 2016, we entered into an underwriting agreement with National Securities Corporation, as representative of the underwriters
named therein, for a firm commitment public offering of ADSs. The price to the public was $6.50 per ADS and aggregate gross proceeds
of the offering were approximately $13.8 million. Itschak Shrem, the Chairman of our Board of Directors purchased approximately
$200,000 of ADSs in the offering from the underwriters at the public offering price. The underwriters received the same underwriting
discounts and commissions on the ADSs purchased by Mr. Shrem as they did on the other ADSs sold in the offering.



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



Not
applicable.



|ITEM
    8. | FINANCIAL
    INFORMATION.
|----------- | --------------------------



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



See
“Item 18. Financial Statements.”



Legal
Proceedings



From
time to time, we are involved in various routine legal proceedings incidental to the ordinary course of our business. We do not
believe that the outcomes of these legal proceedings have had in the recent past, or will have (with respect to any pending proceedings),
significant effects on our financial position or profitability.



On March 19, 2015, a claim
was filed in the District Court in Tel Aviv-Jaffa by XJet Ltd., or XJet, seeking damages in the amount of NIS 20,000,000 against
us, our officers, directors, shareholders several employees and the Subsidiary, or the Defendants. XJet has alleged that one or
more of our officers and/or employees previously employed by XJet misappropriated commercial secrets and technology that were
developed by XJet in the field of 3-D printing and sought an injunction on the use of such trade secrets and proprietary technology.
In May 2015, we filed a statement of defense, within which we denied the allegations attributed to us in the lawsuit.



On
May 2, 2016, XJet filed a motion to amend pleadings, a motion for a temporary injunction and a motion for a protective order.
XJet has alleged, inter alia, that the invention described in our U.S. patent application No. 9,227,444, that covers alignment
assembly, kits and methods related to calibration of print heads, was invented by XJet and was kept by them as a trade secret
before it was misappropriated, and therefore the patent should be transferred to XJet. We filed our responses to the three motions
on May 22, 2016, and rejected all of XJet’s motions and allegations.



On
May 30, 2016, a pre-trial hearing took place. During the hearing, the parties agreed to turn to mediation proceedings for the
purpose of resolving the dispute amicably. On September 29, 2016, a mediation meeting took place and the parties are currently
engaged in settlement discussions.



If
the court grants XJet’s requested remedies, we may be required to make certain modifications to our 3D printer which could
cause delays in the development and commercialization of our 3D printer. However, we believe that any possible injunction, if
granted, would have no effect on the sales of our proprietary ink products.





64







Dividends



We
have never declared or paid any cash dividends on our Ordinary Shares and do not anticipate paying any cash dividends in the foreseeable
future. Payment of cash dividends, if any, in the future will be at the discretion of our board of directors and will depend on
then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements,
business prospects and other factors our board of directors may deem relevant.



Payment
of dividends may be subject to Israeli withholding taxes. See “Item 10.E. Taxation”, for additional information.



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



No
significant change, other than as otherwise described in this annual report on Form 20-F, has occurred in our operations since
the date of our consolidated financial statements included in this annual report on Form 20-F.



|ITEM
    9. | THE
    OFFER AND LISTING
|----------- | -------------------------



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



Our
Ordinary Shares have been trading on the TASE under the symbol “NNDM” since 1977. Our ADSs commenced trading on the
OTCQB and OTCQX under the symbol “NNDMY” on July 29, 2015, and September 17, 2015, respectively. On March 7, 2016,
our ADSs, each of which represents five of our Ordinary Shares, commenced trading on the NASDAQ Capital Market under the symbol
“NNDM.”



The
following table sets forth, for the periods indicated, the reported high and low closing sale prices of our Ordinary Shares on
the TASE in NIS and U.S. dollars. U.S. dollar per Ordinary Share amounts are calculated using the U.S. dollar representative rate
of exchange on the date to which the high or low market price is applicable, as reported by the Bank of Israel.





|                                           |  | NIS       |       |  |     |  |       | U.S.$     |  |  |       | 
|------------------------------------------ |  | --------- | ----- |  | --- |  | ----- | --------- |  |  | ----- | 
|                                           |  | Price Per |       |  |     |  |       | Price Per |  |  |       | 
|                                           |  | Ordinary  |       |  |     |  |       | Ordinary  |  |  |       | 
|                                           |  | Share     |       |  |     |  |       | Share     |  |  |       | 
|                                           |  | High      |       |  | Low |  |       | High      |  |  | Low   | 
|                                           |  |           |       |  |     |  |       |           |  |  |       | 
|Annual:                                    |  |           |       |  |     |  |       |           |  |  |       | 
|2016                                       |  |           | 651.7 |  |     |  | 447   |           |  |  | 169.6 | 
|2015                                       |  |           | 798.5 |  |     |  | 151.4 |           |  |  | 207.3 | 
|2014                                       |  |           | 505   |  |     |  | 80.5  |           |  |  | 145.4 | 
|2013                                       |  |           | 125.8 |  |     |  | 80.6  |           |  |  | 34.2  | 
|2012                                       |  |           | 135.5 |  |     |  | 88.1  |           |  |  | 34.7  | 
|2011                                       |  |           | 312.4 |  |     |  | 113.2 |           |  |  | 88    | 
|                                           |  |           |       |  |     |  |       |           |  |  |       | 
|Quarterly:                                 |  |           |       |  |     |  |       |           |  |  |       | 
|First Quarter 2017 (through March 3, 2017) |  |           | 520.0 |  |     |  | 425   |           |  |  | 138.7 | 
|Fourth Quarter 2016                        |  |           | 563.8 |  |     |  | 447   |           |  |  | 149.2 | 
|Third Quarter 2016                         |  |           | 639   |  |     |  | 507.6 |           |  |  | 168.8 | 
|Second Quarter 2016                        |  |           | 624.1 |  |     |  | 498   |           |  |  | 164.2 | 
|First Quarter 2016                         |  |           | 651.7 |  |     |  | 449.3 |           |  |  | 169.6 | 
|Fourth Quarter 2015                        |  |           | 731.4 |  |     |  | 581.7 |           |  |  | 188.5 | 
|Third Quarter 2015                         |  |           | 737   |  |     |  | 540   |           |  |  | 195.2 | 
|Second Quarter 2015                        |  |           | 798.5 |  |     |  | 263.3 |           |  |  | 207.3 | 
|First Quarter 2015                         |  |           | 341.4 |  |     |  | 151.4 |           |  |  | 86.7  | 
|                                           |  |           |       |  |     |  |       |           |  |  |       | 
|Most Recent Six Months:                    |  |           |       |  |     |  |       |           |  |  |       | 
|February 2017                              |  |           | 520.0 |  |     |  | 448.2 |           |  |  | 138.7 | 
|January 2017                               |  |           | 484.7 |  |     |  | 425   |           |  |  | 125.9 | 
|December 2016                              |  |           | 481.9 |  |     |  | 447   |           |  |  | 126.3 | 
|November 2016                              |  |           | 518.6 |  |     |  | 470   |           |  |  | 135.5 | 
|October 2016                               |  |           | 563.8 |  |     |  | 518.9 |           |  |  | 149.2 | 
|September 2016                             |  |           | 639.0 |  |     |  | 518.1 |           |  |  | 168.8 | 





65







The
following table sets forth, for the periods indicated, the reported high and low closing sale prices of our ADSs on the NASDAQ
Capital Market, OTCQX and OTCQB, as applicable, in U.S. dollars.





|                                          |  | U.S.$     |       |  |     | 
|----------------------------------------- |  | --------- | ----- |  | --- | 
|                                          |  | Price Per |       |  |     | 
|                                          |  | ADS       |       |  |     | 
|                                          |  | High      |       |  | Low | 
|Annual:                                   |  |           |       |  |     | 
|2016                                      |  |           | 8.89  |  |     | 
|2015                                      |  |           | 10.00 |  |     | 
|Quarterly:                                |  |           |       |  |     | 
|First Quarter 2017(through March 3, 2017) |  |           | 6.85  |  |     | 
|Fourth Quarter 2016                       |  |           | 7.43  |  |     | 
|Third Quarter 2016                        |  |           | 8.61  |  |     | 
|Second Quarter 2016                       |  |           | 8.34  |  |     | 
|First Quarter 2016                        |  |           | 8.89  |  |     | 
|Fourth Quarter 2015                       |  |           | 9.50  |  |     | 
|Third Quarter 2015 (from July 29, 2015)   |  |           | 10.00 |  |     | 
|Most Recent Six Months:                   |  |           |       |  |     | 
|February 2017                             |  |           | 6.23  |  |     | 
|January 2017                              |  |           | 6.85  |  |     | 
|December 2016                             |  |           | 6.33  |  |     | 
|November 2016                             |  |           | 6.67  |  |     | 
|October 2016                              |  |           | 7.43  |  |     | 
|September 2016                            |  |           | 8.61  |  |     | 



|B. | Plan
    of Distribution
|-- | ------------------------



Not
applicable.



|C. | Markets
|-- | -------



Our
Ordinary Shares are listed on the TASE. Our ADSs are listed on the NASDAQ Capital Market.



|D. | Selling
    Shareholders
|-- | ------------------------



Not
applicable.



|E. | Dilution
|-- | --------



Not
applicable.



|F. | Expenses
    of the Issue
|-- | -------------------------



Not
applicable.





66







|ITEM
    10. | ADDITIONAL
    INFORMATION
|------------ | --------------------------



|A. | Share
    Capital
|-- | -----------------



Not
applicable.



|B. | Memorandum
    and Articles of Association
|-- | ------------------------------------------



Our
registration number with the Israeli Registrar of Companies is 52-002910-9.



Purposes
and Objects of the Company



Our
purpose is set forth in Section 8 of our amended and restated articles of association and includes every lawful purpose.



The
Powers of the Directors



Our
board of directors shall direct our policy and shall supervise the performance of our chief executive officer and his actions.
Our board of directors may exercise all powers that are not required under the Companies Law or under our amended and restated
articles of association to be exercised or taken by our shareholders.



Rights
Attached to Shares



Our
Ordinary Shares shall confer upon the holders thereof:



| | ● | equal
    right to attend and to vote at all of our general meetings, whether regular or special, with each Ordinary Share entitling
    the holder thereof, which attend the meeting and participate at the voting, either in person or by a proxy or by a written
    ballot, to one vote;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | equal
    right to participate in distribution of dividends, if any, whether payable in cash or in bonus shares, in distribution of
    assets or in any other distribution, on a per share pro rata basis; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | equal
    right to participate, upon our dissolution, in the distribution of our assets legally available for distribution, on a per
    share pro rata basis.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------



Election
of Directors



Pursuant
to our amended and restated articles of association, our directors are elected at an annual general meeting and/or a special meeting
of our shareholders and serve on the board of directors until the next annual general meeting (except for external directors)
or until they resign or until they cease to act as board members pursuant to the provisions of our amended and restated articles
of association or any applicable law, upon the earlier. In addition, our amended and restated articles of association allow our
Board of Directors to appoint directors to fill vacancies and/or as an addition to the Board of Directors (subject to the maximum
number of directors) to serve until the next annual general meeting or earlier if required by our amended and restated articles
of association or applicable law, upon the earlier. External directors are elected for an initial term of three years and may
be removed from office pursuant to the terms of the Companies Law. See “Item 6.C. Board Practices – External Directors.”



Annual
and Special Meetings



Under
the Israeli law, we are required to hold an annual general meeting of our shareholders once every calendar year, at such time
and place which shall be determined by our Board of Directors, that must be no later than 15 months after the date of the previous
annual general meeting. All meetings other than the annual general meeting of shareholders are referred to as special general
meetings. Our Board of Directors may call special meetings whenever it sees fit and upon the written request of: (a) any two of
our directors or such number of directors equal to one quarter of the directors present at such a meeting; and/or (b) one or more
shareholders holding, in the aggregate, 5% of our outstanding voting power.





67







Resolutions
regarding the following matters must be passed at a general meeting of our shareholders:



| | ● | amendments
    to our amended and restated articles of association;
| | - | -------------------------------------------------------------------



| | ● | the
    exercise of our Board of Director’s powers if our Board of Directors is unable to exercise its powers;
| | - | --------------------------------------------------------------------------------------------------------------



| | ● | appointment
    or termination of our auditors;
| | - | -----------------------------------------------



| | ● | appointment
    of directors, including external directors;
| | - | -----------------------------------------------------------



| | ● | approval
    of acts and transactions requiring general meeting approval pursuant to the provisions of the Companies Law and any other
    applicable law;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | increases
    or reductions of our authorized share capital; and
| | - | ----------------------------------------------------------------



| | ● | a
    merger (as such term is defined in the Companies Law).
| | - | ------------------------------------------------------------



Notices



The
Companies Law requires that a notice of any annual or special shareholders meeting be provided at least 21 days prior to the meeting,
and if the agenda of the meeting includes the appointment or removal of directors, the approval of transactions with office holders
or interested or related parties, or an approval of a merger, notice must be provided at least 35 days prior to the meeting.



Quorum





As
permitted under the Companies Law, the quorum required for our general meetings consists of at least two shareholders present
in person, by proxy or written ballot, who hold or represent between them at least 25% of the total outstanding voting rights
(instead of 33 1/3% of the issued share capital required under the NASDAQ Listing Rules). If within half an hour of the time appointed
for the general meeting a quorum is not present, the general meeting shall stand adjourned the same day of the following week,
at the same hour and in the same place, or to such other date, time and place as prescribed in the notice to the shareholders
and in such adjourned meeting, if no quorum is present within half an hour of the time arranged, any number of shareholders participating
in the meeting, shall constitute a quorum.



If
a general meeting was summoned following the request of a shareholder, then a quorum required in an adjourned general meeting,
shall consist of at least one or more shareholders, which holds and represents at least 5% of the company’s issued and outstanding
share capital and at least 1% of the company voting rights, or one or more shareholder, which holds at least 5% of the Company’s
voting rights.



Adoption
of Resolutions



Our
amended and restated articles of association provide that all resolutions of our shareholders require a simple majority vote,
unless otherwise required under the Companies Law or our amended and restated articles of association. A shareholder may vote
in a general meeting in person, by proxy or by a written ballot.



Changing
Rights Attached to Shares



Unless
otherwise provided by the terms of the shares and subject to any applicable law, in order to change the rights attached to any
class of shares, such change must be adopted by the board of directors and at a general meeting of the affected class or by a
written consent of all the shareholders of the affected class.





68







The
enlargement of an existing class of shares or the issuance of additional shares thereof, shall not be deemed to modify the rights
attached to the previously issued shares of such class or of any other class, unless otherwise provided by the terms of the shares.



Limitations
on the Right to Own Securities in Our Company



There
are no limitations on the right to own our securities.



Provisions
Restricting Change in Control of Our Company



There
are no specific provisions of our amended and restated articles of association that would have an effect of delaying, deferring
or preventing a change in control of the Company or that would operate only with respect to a merger, acquisition or corporate
restructuring involving us (or our Subsidiary). However, as described below, certain provisions of the Companies Law may have
such effect.



The
Companies Law includes provisions that allow a merger transaction and requires that each company that is a party to the merger
have the transaction approved by its board of directors and a vote of the majority of its shares. For purposes of the shareholder
vote of each party, unless a court rules otherwise, the merger will not be deemed approved if shares representing a majority of
the voting power present at the shareholders meeting and which are not held by the other party to the merger (or by any person
who holds 25% or more of the voting power or the right to appoint 25% or more of the directors of the other party) vote against
the merger. Upon the request of a creditor of either party to the proposed merger, the court may delay or prevent the merger if
it concludes that there exists a reasonable concern that as a result of the merger the surviving company will be unable to satisfy
the obligations of any of the parties to the merger. In addition, a merger may not be completed unless at least (1) 50 days have
passed from the time that the requisite proposals for approval of the merger were filed with the Israeli Registrar of Companies
by each merging company and (2) 30 days have passed since the merger was approved by the shareholders of each merging company.



The
Companies Law also provides that an acquisition of shares in a public company must be made by means of a “special” tender
offer if as a result of the acquisition (1) the purchaser would become a 25% or greater shareholder of the company, unless there
is already another 25% or greater shareholder of the company or (2) the purchaser would become a 45% or greater shareholder of
the company, unless there is already a 45% or greater shareholder of the company. These requirements do not apply if, in general,
the acquisition (1) was made in a private placement that received shareholder approval, (2) was from a 25% or greater shareholder
of the company which resulted in the acquirer becoming a 25% or greater shareholder of the company, or (3) was from a 45% or greater
shareholder of the company which resulted in the acquirer becoming a 45% or greater shareholder of the company. A “special”
tender offer must be extended to all shareholders, but the offeror is not required to purchase more than 5% of the company’s
outstanding shares, regardless of how many shares are tendered by shareholders. In general, the tender offer may be consummated
only if (1) at least 5% of the company’s outstanding shares will be acquired by the offeror and (2) the number of shares
tendered in the offer exceeds the number of shares whose holders objected to the offer.



If,
as a result of an acquisition of shares, the acquirer will hold more than 90% of a company’s outstanding shares, the acquisition
must be made by means of a tender offer for all of the outstanding shares. In general, if less than 5% of the outstanding shares
are not tendered in the tender offer and more than half of the offerees who have no personal interest in the offer tendered their
shares, all the shares that the acquirer offered to purchase will be transferred to it. Shareholders may request appraisal rights
in connection with a full tender offer for a period of six months following the consummation of the tender offer, but the acquirer
is entitled to stipulate that tendering shareholders will forfeit such appraisal rights.



Lastly,
Israeli tax law treats some acquisitions, such as stock-for-stock exchanges between an Israeli company and a foreign company,
less favorably than U.S. tax laws. For example, Israeli tax law may, under certain circumstances, subject a shareholder who exchanges
his Ordinary Shares for shares in another corporation to taxation prior to the sale of the shares received in such stock-for-stock
swap.





69







Changes
in Our Capital



The
general meeting may, by a simple majority vote of the shareholders attending the general meeting:



| | ● | increase
    our registered share capital by the creation of new shares from the existing class or a new class, as determined by the general
    meeting;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | cancel
    any registered share capital which have not been taken or agreed to be taken by any person;
| | - | ------------------------------------------------------------------------------------------------------



| | ● | consolidate
    and divide all or any of our share capital into shares of larger nominal value than our existing shares;
| | - | ------------------------------------------------------------------------------------------------------------------------



| | ● | subdivide
    our existing shares or any of them, our share capital or any of it, into shares of smaller nominal value than is fixed;
| | - | -------------------------------------------------------------------------------------------------------------------------------------



| | ● | reduce
    our share capital and any fund reserved for capital redemption in any manner, and with and subject to any incident authorized,
    and consent required, by the Companies Law; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | reduce
    shares from our issued and outstanding share capital, in such manner that those shares shall be cancelled and the nominal
    par value paid for those shares will be registered on our books as capital fund, which shall be deemed as a premium paid on
    those shares which shall remain in our issued and outstanding share capital.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|C. | Material
    Contracts
|-- | ----------------------



Except
as set forth below, we have not entered into any material contract within the two years prior to the date of this annual report
on Form 20-F, other than contracts entered into in the ordinary course of business, or as otherwise described herein in “Item
4.A. History and Development of the Company” above, “Item 4.B. Business Overview” above, or “Item 7.A.
Major Shareholders” above.



On
August 25, 2014, we entered into a merger transaction with our Subsidiary, whereby we acquired 100% of the share capital of the
Subsidiary. Pursuant to the merger agreement, we issued an aggregate of 12,867,178 Ordinary Shares divided as follows: an aggregate
of 6,931,301 shares were allocated to the then current shareholders of the Company at a price per share of NIS 0.81767 (approximately
$0.2308); and an aggregate of 5,935,875 Ordinary Shares were issued to various investors, at a price per share of NIS 0.8655 (approximately
$0.2443). In addition, we granted four of our executive officers options to purchase 4,322,329 Ordinary Shares of the Company,
which are exercisable at a price per share of NIS 0.8655 (approximately $0.2443).



In
September 2014, we entered into an exclusive license agreement with Yissum, for three patents and patent applications that cover
the unique method of manufacturing our consumable nano-conductive ink for the 3D printing of electronic circuits. The agreement
was amended and restated in April 2015. Pursuant to the amended license agreement, we will be required to pay Yissum royalties
at the rate of approximately 3% of the total sales of the conductive ink. The exclusive license agreement is in effect for the
longer of remaining usable life of the patents and patent applications, or 15 years.



|D. | Exchange
    Controls
|-- | ---------------------



There
are currently no Israeli currency control restrictions on payments of dividends or other distributions with respect to our Ordinary
Shares or the proceeds from the sale of the shares, except for the obligation of Israeli residents to file reports with the Bank
of Israel regarding certain transactions. However, legislation remains in effect pursuant to which currency controls can be imposed
by administrative action at any time.



The
ownership or voting of our Ordinary Shares by non-residents of Israel, except with respect to citizens of countries that are in
a state of war with Israel, is not restricted in any way by our memorandum of association or amended and restated articles of
association or by the laws of the State of Israel.





70







|E. | Taxation.
|-- | ---------



Israeli
Tax Considerations and Government Programs



The
following is a description of the material Israeli income tax consequences of the ownership of our Ordinary Shares. The following
also contains a description of material relevant provisions of the current Israeli income tax structure applicable to companies
in Israel, with reference to its effect on us. To the extent that the discussion is based on new tax legislation which has not
been subject to judicial or administrative interpretation, there can be no assurance that the tax authorities will accept the
views expressed in the discussion in question. The discussion is not intended, and should not be taken, as legal or professional
tax advice and is not exhaustive of all possible tax considerations.



The
following description is not intended to constitute a complete analysis of all tax consequences relating to the ownership or disposition
of our Ordinary Shares and ADSs. Shareholders should consult their own tax advisors concerning the tax consequences of their particular
situation, as well as any tax consequences that may arise under the laws of any state, local, foreign or other taxing jurisdiction.



General
Corporate Tax Structure in Israel



Israeli
companies are generally subject to corporate tax. As of January 2016, the corporate tax rate was 25%. As of January 1, 2017, the
corporate tax rate was reduced to 24% and as of January 1, 2018, the corporate tax rate will be further reduced to 23%. However,
the effective tax rate payable by a company that derives income from a Preferred Enterprise (as discussed below) may be considerably
less. Capital gains derived by an Israeli company are generally subject to the prevailing corporate tax rate.



Law
for the Encouragement of Industry (Taxes), 5729-1969



The
Law for the Encouragement of Industry (Taxes), 5729-1969, generally referred to as the Industry Encouragement Law, provides several
tax benefits for “Industrial Companies.”



The
Industry Encouragement Law defines an “Industrial Company” as an Israeli resident-company, of which 90% or more of
its income in any tax year, other than income from defense loans, is derived from an “Industrial Enterprise” owned
by it. An “Industrial Enterprise” is defined as an enterprise whose principal activity in a given tax year is industrial
production.



The
following corporate tax benefits, among others, are available to Industrial Companies:



| | ● | amortization
    of the cost of purchased a patent, rights to use a patent, and know-how, which are used for the development or advancement
    of the company, over an eight-year period, commencing on the year in which such rights were first exercised;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | under
    limited conditions, an election to file consolidated tax returns with related Israeli Industrial Companies; and
| | - | -------------------------------------------------------------------------------------------------------------------------



| | ● | expenses
    related to a public offering are deductible in equal amounts over three years.
| | - | -------------------------------------------------------------------------------------------



Eligibility
for benefits under the Industry Encouragement Law is not contingent upon approval of any governmental authority.



Tax
Benefits and Grants for Research and Development



Under
the R&D Law research and development programs which meet specified criteria and are approved by the IIA are eligible for grants
of up to 50% of the project’s expenditure, as determined by the research committee, in exchange for the payment of royalties
from the revenues generated from the sale of products and related services developed, in whole or in part pursuant to, or as a
result of, a research and development program funded by the IIA. The royalties are generally at a range of 3.0% to 5.0% of revenues
until the entire IIA grant is repaid, together with an annual interest generally equal to the 12 month London Interbank Offered
Rate applicable to dollar deposits that is published on the first business day of each calendar year.





71







The
terms of the R&D Law also require that the manufacture of products developed with government grants be performed in Israel.
The transfer of manufacturing activity outside Israel may be subject to the prior approval of the IIA. Under the regulations of
the R&D Law, assuming we receive approval from the IIA to manufacture our IIA funded products outside Israel, we may be required
to pay increased royalties. The increase in royalties depends upon the manufacturing volume that is performed outside of Israel
as follows:



|Manufacturing Volume Outside of Israel |  | Royalties to the Chief Scientist as  a Percentage of Grant |    
|-------------------------------------- |  | ---------------------------------------------------------- | ---
|                                       |  |                                                            |    
|Up to 50%                              |  |                                                            | 120
|between 50% and 90%                    |  |                                                            | 150
|90% and more                           |  |                                                            | 300



If
the manufacturing is performed outside of Israel by us, the rate of royalties payable by us on revenues from the sale of products
manufactured outside of Israel will increase by 1% over the regular rates. If the manufacturing is performed outside of Israel
by a third party, the rate of royalties payable by us on those revenues will be equal to the ratio obtained by dividing the amount
of the grants received from the Office of the Chief Scientist and our total investment in the project that was funded by these
grants. The transfer of no more than 10% of the manufacturing capacity in the aggregate outside of Israel is exempt under the
R&D Law from obtaining the prior approval of the IIA. A company requesting funds from the IIA also has the option of declaring
in its IIA grant application an intention to perform part of its manufacturing outside Israel, thus avoiding the need to obtain
additional approval. On January 6, 2011, the R&D Law was amended to clarify that the potential increased royalties specified
in the table above will apply even in those cases where the IIA approval for transfer of manufacturing outside of Israel is not
required, namely when the volume of the transferred manufacturing capacity is less than 10% of total capacity or when the company
received an advance approval to manufacture abroad in the framework of its IIA grant application.



The
know-how developed within the framework of the Chief Scientist plan may not be transferred to third parties outside Israel without
the prior approval of a governmental committee charted under the R&D Law. The approval, however, is not required for the export
of any products developed using grants received from the Chief Scientist. The IIA approval to transfer know-how created, in whole
or in part, in connection with an IIA-funded project to third party outside Israel where the transferring company remains an operating
Israeli entity is subject to payment of a redemption fee to the IIA calculated according to a formula provided under the R&D
Law that is based, in general, on the ratio between the aggregate IIA grants to the company’s aggregate investments in the
project that was funded by these IIA grants, multiplied by the transaction consideration. The transfer of such know-how to a party
outside Israel where the transferring company ceases to exist as an Israeli entity is subject to a redemption fee formula that
is based, in general, on the ratio between the aggregate IIA grants to the total financial investments in the company, multiplied
by the transaction consideration. According to the January 2011 amendment, the redemption fee in case of transfer of know-how
to a party outside Israel will be based on the ratio between the aggregate IIA grants received by the company and the company’s
aggregate R&D expenses, multiplied by the transaction consideration. According to regulations promulgated following the 2011
amendment, the maximum amount payable to the IIA in case of transfer of know how outside Israel shall not exceed 6 times the value
of the grants received plus interest, and in the event that the receiver of the grants ceases to be an Israeli corporation such
payment shall not exceed 6 times the value of the grants received plus interest, with a possibility to reduce such payment to
up to 3 times the value of the grants received plus interest if the R&D activity remains in Israel for a period of three years
after payment to the IIA.





72







Transfer
of know-how within Israel is subject to an undertaking of the recipient Israeli entity to comply with the provisions of the R&D
Law and related regulations, including the restrictions on the transfer of know-how and the obligation to pay royalties, as further
described in the R&D Law and related regulations.



These
restrictions may impair our ability to outsource manufacturing, engage in change of control transactions or otherwise transfer
our know-how outside Israel and may require us to obtain the approval or the IIA for certain actions and transactions and pay
additional royalties to the IIA. In particular, any change of control and any change of ownership of our Ordinary Shares that
would make a non-Israeli citizen or resident an “interested party,” as defined in the R&D Law, requires a prior
written notice to the IIA in addition to any payment that may be required of us for transfer of manufacturing or know-how outside
Israel. If we fail to comply with the R&D Law, we may be subject to criminal charges.



Tax
Benefits for Research and Development



Israeli
tax law allows, under certain conditions, a tax deduction for expenditures, including capital expenditures, for the year in which
they are incurred. Expenditures are deemed related to scientific research and development projects, if:



| | ● | The
    expenditures are approved by the relevant Israeli government ministry, determined by the field of research;
| | - | -------------------------------------------------------------------------------------------------------------------



| | ● | The
    research and development must be for the promotion of the company; and
| | - | ------------------------------------------------------------------------------



| | ● | The
    research and development is carried out by or on behalf of the company seeking such tax deduction.
| | - | ----------------------------------------------------------------------------------------------------------



The
amount of such deductible expenses is reduced by the sum of any funds received through government grants for the finance of such
scientific research and development projects. No deduction under these research and development deduction rules is allowed if
such deduction is related to an expense invested in an asset depreciable under the general depreciation rules of the income Tax
Ordinance, 1961. Expenditures not so approved are deductible in equal amounts over three years.



From
time to time we may apply the Office of the Chief Scientist for approval to allow a tax deduction for all research and development
expenses during the year incurred. There can be no assurance that such application will be accepted.



Law
for the Encouragement of Capital Investments, 5719-1959



The
Law for the Encouragement of Capital Investments, 5719-1959, generally referred to as the Investment Law, provides certain incentives
for capital investments in production facilities (or other eligible assets).



Tax
Benefits





The Investment Law grants tax
benefits for income generated by a “Preferred Company” through its “Preferred Enterprise” (as such terms
are defined in the Investment Law) The definition of a Preferred Company includes a company incorporated in Israel that is not
fully owned by a governmental entity, and that has, among other things, Preferred Enterprise status and is controlled and managed
from Israel. A Preferred Company is entitled to a reduced corporate tax rate of 16% with respect to its income derived by its
Preferred Enterprise, unless the Preferred Enterprise is located in a specified development zone, in which case the rate will
be 7.5% as of January 1, 2017.



Dividends
paid out of income attributed to a Preferred Enterprise are generally subject to withholding tax at source at the rate of 20%
or such lower rate as may be provided in an applicable tax treaty. However, if such dividends are paid to an Israeli company,
no tax is required to be withheld.





73







Taxation
of our Shareholders



Capital
Gains Taxes Applicable to Non-Israeli Resident Shareholders. A non-Israeli resident who derives capital gains from the sale of
shares in an Israeli resident company will be exempt from Israeli tax so long as the shares were not held through a permanent
establishment that the non-resident maintains in Israel. However, non-Israeli corporations will not be entitled to the foregoing
exemption if Israeli residents: (i) have a controlling interest of 25% or more in such non-Israeli corporation or (ii) are the
beneficiaries of, or are entitled to, 25% or more of the revenues or profits of such non-Israeli corporation, whether directly
or indirectly.



Additionally,
a sale of securities by a non-Israeli resident may be exempt from Israeli capital gains tax under the provisions of an applicable
tax treaty. For example, under Convention Between the Government of the United States of America and the Government of the State
of Israel with respect to Taxes on Income, as amended (the “United States-Israel Tax Treaty), the sale, exchange or other
disposition of shares by a shareholder who is a United States resident (for purposes of the treaty) holding the shares as a capital
asset and is entitled to claim the benefits afforded to such a resident by the U.S.-Israel Tax Treaty (a “Treaty U.S. Resident”)
is generally exempt from Israeli capital gains tax unless: (i) the capital gain arising from such sale, exchange or disposition
is attributed to real estate located in Israel; (ii) the capital gain arising from such sale, exchange or disposition is attributed
to royalties; (iii) the capital gain arising from the such sale, exchange or disposition is attributed to a permanent establishment
in Israel, under certain terms; (iv) such Treaty U.S. Resident holds, directly or indirectly, shares representing 10% or more
of the voting capital during any part of the 12-month period preceding the disposition, subject to certain conditions; or (v)
such Treaty U.S. Resident is an individual and was present in Israel for 183 days or more during the relevant taxable year.



In
some instances where our shareholders may be liable for Israeli tax on the sale of their ordinary shares, the payment of the consideration
may be subject to the withholding of Israeli tax at source. Shareholders may be required to demonstrate that they are exempt from
tax on their capital gains in order to avoid withholding at source at the time of sale.



Taxation
of Non-Israeli Shareholders on Receipt of Dividends. Non-Israeli residents are generally subject to Israeli income tax on the
receipt of dividends paid on our Ordinary Shares at the rate of 25%, which tax will be withheld at source, unless relief is provided
in a treaty between Israel and the shareholder’s country of residence. With respect to a person who is a “substantial
shareholder” at the time of receiving the dividend or on any time during the preceding twelve months, the applicable tax
rate is 30%. A “substantial shareholder” is generally a person who alone or together with such person’s relative
or another person who collaborates with such person on a permanent basis, holds, directly or indirectly, at least 10% of any of
the “means of control” of the corporation. “Means of control” generally include the right to vote, receive
profits, nominate a director or an executive officer, receive assets upon liquidation, or order someone who holds any of the aforesaid
rights how to act, regardless of the source of such right. However, a distribution of dividends to non-Israeli residents is subject
to withholding tax at source at a rate of 20% if the dividend is distributed from income attributed to a Preferred Enterprise,
unless a reduced tax rate is provided under an applicable tax treaty. For example, under the United States-Israel Tax Treaty,
the maximum rate of tax withheld at source in Israel on dividends paid to a holder of our Ordinary Shares who is a Treaty U.S.
Resident is 25%. However, generally, the maximum rate of withholding tax on dividends, not generated by a Preferred Enterprise,
that are paid to a United States corporation holding 10% or more of the outstanding voting capital throughout the tax year in
which the dividend is distributed as well as during the previous tax year, is 12.5%, provided that not more than 25% of the gross
income for such preceding year consists of certain types of dividends and interest. Notwithstanding the foregoing, dividends distributed
from income attributed to an Preferred Enterprise are not entitled to such reduction under the tax treaty but are subject to a
withholding tax rate of 15% for a shareholder that is a U.S. corporation, provided that the condition related to our gross income
for the previous year (as set forth in the previous sentence) is met. If the dividend is attributable partly to income derived
from a Preferred Enterprise, and partly to other sources of income, the withholding rate will be a blended rate reflecting the
relative portions of the two types of income. We cannot assure you that we will designate the profits that we may distribute in
a way that will reduce shareholders’ tax liability.





74







U.S.
Tax Considerations



U.S.
Federal Income Tax Considerations



THE
FOLLOWING SUMMARY IS INCLUDED HEREIN FOR GENERAL INFORMATION AND IS NOT INTENDED TO BE, AND SHOULD NOT BE CONSIDERED TO BE, LEGAL
OR TAX ADVICE. EACH U.S. HOLDER SHOULD CONSULT WITH HIS OR HER OWN TAX ADVISOR AS TO THE PARTICULAR U.S. FEDERAL INCOME TAX CONSEQUENCES
OF THE PURCHASE, OWNERSHIP AND SALE OF ORDINARY SHARES AND AMERICAN DEPOSITORY SHARES, INCLUDING THE EFFECTS OF APPLICABLE STATE,
LOCAL, FOREIGN OR OTHER TAX LAWS AND POSSIBLE CHANGES IN THE TAX LAWS.



Subject
to the limitations described in the next paragraph, the following discussion summarizes the material U.S. federal income tax consequences
to a “U.S. Holder” arising from the purchase, ownership and sale of the Ordinary Shares and ADSs. For this purpose,
a “U.S. Holder” is a holder of Ordinary Shares or ADSs that is: (1) an individual citizen or resident of the United
States, including an alien individual who is a lawful permanent resident of the United States or meets the substantial presence
residency test under U.S. federal income tax laws; (2) a corporation (or other entity treated as a corporation for U.S. federal
income tax purposes) or a partnership (other than a partnership that is not treated as a U.S. person under any applicable U.S.
Treasury Regulations) created or organized in or under the laws of the United States or the District of Columbia or any political
subdivision thereof; (3) an estate, the income of which is subject to U.S. federal income tax, regardless of source; (4) a trust
if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more
U.S. persons have authority to control all substantial decisions of the trust; (5) a trust that has a valid election in effect
to be treated as a U.S. person to the extent provided in U.S. Treasury regulations; or (6) any person otherwise subject to U.S.
federal income tax on a net income basis in respect of the Ordinary Shares or ADSs, if such status as a U.S. Holder is not overridden
pursuant to the provisions of an applicable tax treaty.



This
summary is for general information purposes only and does not purport to be a comprehensive description of all of the U.S. federal
income tax considerations that may be relevant to a decision to purchase or hold our Ordinary Shares or ADSs. This summary generally
considers only U.S. Holders that will own our Ordinary Shares or ADSs as capital assets. Except to the limited extent discussed
below, this summary does not consider the U.S. federal tax consequences to a person that is not a U.S. Holder, nor does it describe
the rules applicable to determine a taxpayer’s status as a U.S. Holder. This summary is based on the provisions of the Internal
Revenue Code of 1986, as amended, or the Code, final, temporary and proposed U.S. Treasury Regulations promulgated thereunder,
administrative and judicial interpretations thereof, and the U.S./Israel Income Tax Treaty, all as in effect as of the date hereof
and all of which are subject to change, possibly on a retroactive basis, and all of which are open to differing interpretations.
We will not seek a ruling from the U.S. Internal Revenue Service, or the IRS, with regard to the U.S. federal income tax treatment
of an investment in our Ordinary Shares or ADSs by U.S. Holders and, therefore, can provide no assurances that the IRS will agree
with the conclusions set forth below.



This
discussion does not address all of the aspects of U.S. federal income taxation that may be relevant to a particular U.S. holder
based on such holder’s particular circumstances and in particular does not discuss any estate, gift, generation-skipping,
transfer, state, local or foreign tax considerations. In addition, this discussion does not address the U.S. federal income tax
treatment of a U.S. Holder who is: (1) a bank, life insurance company, regulated investment company, or other financial institution
or “financial services entity”; (2) a broker or dealer in securities or foreign currency; (3) a person who acquired
our Ordinary Shares or ADSs in connection with employment or other performance of services; (4) a U.S. Holder that is subject
to the U.S. alternative minimum tax; (5) a U.S. Holder that holds our Ordinary Shares or ADSs as a hedge or as part of a hedging,
straddle, conversion or constructive sale transaction or other risk-reduction transaction for U.S. federal income tax purposes;
(6) a tax-exempt entity; (7) real estate investment trusts; (8) a U.S. Holder that expatriates out of the United States or a former
long-term resident of the United States; or (9) a person having a functional currency other than the U.S. dollar. This discussion
does not address the U.S. federal income tax treatment of a U.S. Holder that owns, directly or constructively, at any time, Ordinary
Shares or ADSs representing 10% or more of our voting power. Additionally, the U.S. federal income tax treatment of persons who
hold Ordinary Shares or ADSs through a partnership or other pass-through entity are not considered.



Each
prospective investor is advised to consult his or her own tax adviser for the specific U.S. federal and state income tax consequences
to that investor of purchasing, holding or disposing of our Ordinary Shares or ADSs, including the effects of applicable state,
local, foreign or other tax laws and possible changes in the tax laws.





75







Taxation
of Dividends Paid on Ordinary Shares or ADSs



We
do not intend to pay dividends in the foreseeable future. In the event that we do pay dividends, and subject to the discussion
under the heading “Passive Foreign Investment Companies” below, a U.S. Holder will be required to include in gross
income as ordinary income the amount of any distribution paid on Ordinary Shares or ADSs (including the amount of any Israeli
tax withheld on the date of the distribution), to the extent that such distribution does not exceed our current and accumulated
earnings and profits, as determined for U.S. federal income tax purposes. The amount of a distribution which exceeds our earnings
and profits will be treated first as a non-taxable return of capital, reducing the U.S. Holder’s tax basis for the Ordinary
Shares to the extent thereof, and then capital gain. Corporate holders generally will not be allowed a deduction for dividends
received. For non-corporate U.S. holders, to the extent that their total adjusted income does not exceed applicable thresholds,
the maximum federal income tax rate for “qualified dividend income” and long-term capital gains is generally 15%.
For those non-corporate U.S. holders whose total adjusted income exceeds such income thresholds, the maximum federal income tax
rate for “qualified dividend income” and long term capital gains is generally 20%. For this purpose, “qualified
dividend income” means, inter alia, dividends received from a “qualified foreign corporation.” A “qualified
foreign corporation” is a corporation that is entitled to the benefits of a comprehensive tax treaty with the United States
which includes an exchange of information program. The IRS has stated that the Israel/U.S. Tax Treaty satisfies this requirement
and we believe we are eligible for the benefits of that treaty.



In
addition, our dividends will be qualified dividend income if our Ordinary Shares or ADSs are readily tradable on the NASDAQ Capital
Market or another established securities market in the United States. Dividends will not qualify for the preferential rate if
we are treated, in the year the dividend is paid or in the prior year, as a PFIC. A U.S. Holder will not be entitled to the preferential
rate: (1) if the U.S. Holder has not held our Ordinary Shares or ADSs for at least 61 days of the 121 day period beginning on
the date which is 60 days before the ex-dividend date, or (2) to the extent the U.S. Holder is under an obligation to make related
payments on substantially similar property. Any days during which the U.S. Holder has diminished its risk of loss on our Ordinary
Shares or ADSs are not counted towards meeting the 61-day holding period. Finally, U.S. Holders who elect to treat the dividend
income as “investment income” pursuant to Code section 163(d)(4) will not be eligible for the preferential rate of
taxation.



The
amount of a distribution with respect to our Ordinary Shares or ADSs will be measured by the amount of the fair market value of
any property distributed, and for U.S. federal income tax purposes, the amount of any Israeli taxes withheld therefrom. Cash distributions
paid by us in NIS will be included in the income of U.S. Holders at a U.S. dollar amount based upon the spot rate of exchange
in effect on the date the dividend is includible in the income of the U.S. Holder, and U.S. Holders will have a tax basis in such
NIS for U.S. federal income tax purposes equal to such U.S. dollar value. If the U.S. Holder subsequently converts the NIS, any
subsequent gain or loss in respect of such NIS arising from exchange rate fluctuations will be U.S. source ordinary exchange gain
or loss.



Distributions
paid by us will generally be foreign source income for U.S. foreign tax credit purposes. Subject to the limitations set forth
in the Code, U.S. Holders may elect to claim a foreign tax credit against their U.S. federal income tax liability for Israeli
income tax withheld from distributions received in respect of the Ordinary Shares or ADSs. In general, these rules limit the amount
allowable as a foreign tax credit in any year to the amount of regular U.S. tax for the year attributable to foreign source taxable
income. This limitation on the use of foreign tax credits generally will not apply to an electing individual U.S. Holder whose
creditable foreign taxes during the year do not exceed $300, or $600 for joint filers, if such individual’s gross income
for the taxable year from non-U.S. sources consists solely of certain passive income. A U.S. Holder will be denied a foreign tax
credit with respect to Israeli income tax withheld from dividends received with respect to the Ordinary Shares or ADSs if such
U.S. Holder has not held the Ordinary Shares or ADSs for at least 16 days out of the 31-day period beginning on the date that
is 15 days before the ex-dividend date or to the extent that such U.S. Holder is under an obligation to make certain related payments
with respect to substantially similar or related property. Any day during which a U.S. Holder has substantially diminished his
or her risk of loss with respect to the Ordinary Shares or ADSs will not count toward meeting the 16-day holding period. A U.S.
Holder will also be denied a foreign tax credit if the U.S. Holder holds the Ordinary Shares or ADSs in an arrangement in which
the U.S. Holder’s reasonably expected economic profit is insubstantial compared to the foreign taxes expected to be paid
or accrued. The rules relating to the determination of the U.S. foreign tax credit are complex, and U.S. Holders should consult
with their own tax advisors to determine whether, and to what extent, they are entitled to such credit. U.S. Holders that do not
elect to claim a foreign tax credit may instead claim a deduction for Israeli income taxes withheld, provided such U.S. Holders
itemize their deductions.





76







Taxation
of the Disposition of Ordinary Shares or ADSs



Except
as provided under the PFIC rules described below, upon the sale, exchange or other disposition of our Ordinary Shares or ADSs,
a U.S. Holder will recognize capital gain or loss in an amount equal to the difference between such U.S. Holder’s tax basis
in the sold Ordinary Shares or ADSs and the amount realized on the disposition of such Ordinary Shares or ADSs (or its U.S. dollar
equivalent determined by reference to the spot rate of exchange on the date of disposition, if the amount realized is denominated
in a foreign currency). The gain or loss realized on the sale, exchange or other disposition of Ordinary Shares or ADSs will be
long-term capital gain or loss if the U.S. Holder has a holding period of more than one year at the time of the disposition.



In
general, gain realized by a U.S. Holder on a sale, exchange or other disposition of Ordinary Shares or ADSs will generally be
treated as U.S. source income for U.S. foreign tax credit purposes. A loss realized by a U.S. Holder on the sale, exchange or
other disposition of Ordinary Shares or ADSs is generally allocated to U.S. source income. However, U.S. Treasury Regulations
require such loss to be allocated to foreign source income to the extent specified dividends were received by the taxpayer within
the 24 month period preceding the date on which the taxpayer recognized the loss. The deductibility of a loss realized on the
sale, exchange or other disposition of Ordinary Shares or ADSs is subject to limitations.



Tax
on Net Investment Income



U.S.
Holders who are individuals, estates or trusts will generally be required to pay a 3.8% tax on their net investment income (including
dividends on and gains from the sale or other disposition of our Ordinary Shares or ADSs), or in the case of estates and trusts
on their net investment income that is not distributed. In each case, the 3.8% Medicare tax applies only to the extent the U.S.
Holder’s total adjusted income exceeds applicable thresholds.



Passive
Foreign Investment Companies



Special
U.S. federal income tax laws apply to U.S. taxpayers who own shares of a corporation that was (at any time during the U.S. taxpayer’s
holding period) a PFIC. We would be treated as a PFIC for U.S. federal income tax purposes for any tax year that either:



| | ● | 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.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



For
this purpose, passive income generally consists of dividends, interest, rents, royalties, annuities and income from certain commodities
transactions and from notional principal contracts. Cash is treated as generating passive income.



We
believe that we will not be a PFIC for the current taxable year and do not expect to become a PFIC in the foreseeable future.
The tests for determining PFIC status are applied annually, and it is difficult to make accurate projections of future income
and assets which are relevant to this determination. In addition, our PFIC status may depend in part on the market value of our
Ordinary Shares. Accordingly, there can be no assurance that we currently are not or will not become a PFIC.



If
we currently are or become a PFIC, each U.S. Holder who has not elected to treat us as a qualified electing fund by making a “QEF
election”, or who has not elected to mark the shares to market (as discussed below), would, upon receipt of certain distributions
by us and upon disposition of our Ordinary Shares or ADSs at a gain, be liable to pay U.S. federal income tax at the then prevailing
highest tax rates on ordinary income plus interest on such tax, as if the distribution or gain had been recognized ratably over
the taxpayer’s holding period for the Ordinary Shares or ADSs. In addition, when shares of a PFIC are acquired by reason of death
from a decedent that was a U.S. Holder, the tax basis of such shares would not receive a step-up to fair market value as of the
date of the decedent’s death, but instead would be equal to the decedent’s basis if lower, unless all gain were recognized
by the decedent. Indirect investments in a PFIC may also be subject to these special U.S. federal income tax rules.





77







The
PFIC rules described above would not apply to a U.S. Holder who makes a QEF election for all taxable years that such U.S. Holder
has held the Ordinary Shares or ADSs while we are a PFIC, provided that we comply with specified reporting requirements. Instead,
each U.S. Holder who has made such a QEF election is required for each taxable year that we are a PFIC to include in income such
U.S. Holder’s pro rata share of our ordinary earnings as ordinary income and such U.S. Holder’s pro rata share of
our net capital gains as long-term capital gain, regardless of whether we make any distributions of such earnings or gain. In
general, a QEF election is effective only if we make available certain required information. The QEF election is made on a shareholder-by-shareholder
basis and generally may be revoked only with the consent of the IRS. We do not intend to notify U.S. Holders if we believe we
will be treated as a PFIC for any tax year. In addition, we do not intend to furnish U.S. Holders annually with information needed
in order to complete IRS Form 8621 and to make and maintain a valid QEF election for any year in which we or any of our Subsidiaries
are a PFIC. U.S. Holders should consult with their own tax advisors regarding eligibility, manner and advisability of making a
QEF election if we are treated as a PFIC.



In
addition, the PFIC rules described above would not apply if we were a PFIC and a U.S. Holder made a mark-to-market election. A
U.S. Holder of our Ordinary Shares or ADSs which are regularly traded on a qualifying exchange, including the NASDAQ Capital Market,
can elect to mark the Ordinary Shares or ADSs to market annually, recognizing as ordinary income or loss each year an amount equal
to the difference as of the close of the taxable year between the fair market value of the Ordinary Shares or ADSs and the U.S.
Holder’s adjusted tax basis in the Ordinary Shares or ADSs. Losses are allowed only to the extent of net mark-to-market
gain previously included income by the U.S. Holder under the election for prior taxable years.



U.S.
Holders who hold our Ordinary Shares or ADSs during a period when we are a PFIC will be subject to the foregoing rules, even if
we cease to be a PFIC. U.S. Holders are strongly urged to consult their tax advisors about the PFIC rules, including tax return
filing requirements and the eligibility, manner, and consequences to them of making a QEF or mark-to-market election with respect
to our Ordinary Shares or ADSs in the event that we are a PFIC.



Tax
Consequences for Non-U.S. Holders of Ordinary Shares or ADSs



Except
as provided below, an individual, corporation, estate or trust that is not a U.S. Holder referred to below as a non-U.S. Holder,
generally will not be subject to U.S. federal income or withholding tax on the payment of dividends on, and the proceeds from
the disposition of, our Ordinary Shares or ADSs.



A
non-U.S. Holder may be subject to U.S. federal income or withholding tax on a dividend paid on our Ordinary Shares or ADSs or
the proceeds from the disposition of our Ordinary Shares or ADSs if: (1) such item is effectively connected with the conduct by
the non-U.S. Holder of a trade or business in the United States or, in the case of a non U.S. Holder that is a resident of a country
which has an income tax treaty with the United States, such item is attributable to a permanent establishment or, in the case
of gain realized by an individual non U.S. Holder, a fixed place of business in the United States; (2) in the case of a disposition
of our Ordinary Shares or ADSs, the individual non-U.S. Holder is present in the United States for 183 days or more in the taxable
year of the sale and other specified conditions are met; (3) the non U.S. Holder is subject to U.S. federal income tax pursuant
to the provisions of the U.S tax law applicable to U.S. expatriates.



In
general, non-U.S. Holders will not be subject to backup withholding with respect to the payment of dividends on our Ordinary Shares
or ADSs if payment is made through a paying agent, or office of a foreign broker outside the United States. However, if payment
is made in the United States or by a U.S. related person, non-U.S. Holders may be subject to backup withholding, unless the non-U.S.
Holder provides an applicable IRS Form W-8 (or a substantially similar form) certifying its foreign status, or otherwise establishes
an exemption. A U.S. related person for these purposes is a person with one or more current relationships with the United States.





78







The
amount of any backup withholding from a payment to a non-U.S. Holder will be allowed as a credit against such holder’s U.S.
federal income tax liability and may entitle such holder to a refund, provided that the required information is timely furnished
to the IRS.



The
HIRE Act may impose withholding taxes on some types of payments made to “foreign financial institutions” and some
other non-U.S. entities. Under the HIRE Act, the failure to comply with additional certification, information reporting and other
specified requirements could result in withholding tax being imposed on payments of dividends and sales proceeds to U.S. Holders
that own Ordinary Shares through foreign accounts or foreign intermediaries and specified non-U.S. Holders. The HIRE Act imposes
a 30% withholding tax on dividends on, and gross proceeds from the sale or other disposition of, Ordinary Shares paid from the
United States to a foreign financial institution or to a foreign nonfinancial entity, unless (1) the foreign financial institution
undertakes specified diligence and reporting obligations or (2) the foreign nonfinancial entity either certifies it does not have
any substantial U.S. owners or furnishes identifying information regarding each substantial U.S. owner. In addition, if the payee
is a foreign financial institution, it generally must enter into an agreement with the U.S. Treasury that requires, among other
things, that it undertake to identify accounts held by specified U.S. persons or U.S.-owned foreign entities, annually report
certain information about such accounts, and withhold 30% on payments to other specified account holders. U.S. Treasury Regulations
provide that such withholding will only apply to distributions paid on or after January 1, 2014, and to other “withholdable
payments” (including payments of gross proceeds from a sale or other disposition of our Ordinary Shares) made on or after
January 1, 2017. You should consult your tax advisor regarding the HIRE Act.



Information
Reporting and Withholding



A
U.S. Holder may be subject to backup withholding at a rate of 28% with respect to cash dividends and proceeds from a disposition
of Ordinary Shares or ADSs. In general, backup withholding will apply only if a U.S. Holder fails to comply with specified identification
procedures. Backup withholding will not apply with respect to payments made to designated exempt recipients, such as corporations
and tax-exempt organizations. Backup withholding is not an additional tax and may be claimed as a credit against the U.S. federal
income tax liability of a U.S. Holder, provided that the required information is timely furnished to the IRS.



Pursuant
to recently enacted legislation, a U.S. Holder with interests in “specified foreign financial assets” (including,
among other assets, our Ordinary Shares or ADSs, unless such Ordinary Shares or ADSs are held on such U.S. Holder’s behalf
through a financial institution) may be required to file an information report with the IRS if the aggregate value of all such
assets exceeds $50,000 on the last day of the taxable year or $75,000 at any time during the taxable year (or such higher dollar
amount as may be prescribed by applicable IRS guidance); and may be required to file a Report of Foreign Bank and Financial Accounts
(FBAR) if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year. You should
consult your own tax advisor as to the possible obligation to file such information report.



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



Not
applicable.



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



Not
applicable.



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



We
are subject to certain information reporting requirements of the Exchange Act, applicable to foreign private issuers and under
those requirements will file reports with the SEC. You may read and copy the annual report on Form 20-F, including the related
exhibits and schedules, and any document we file with the SEC without charge at the SEC’s public reference room at 100 F Street,
N.E., Room 1580, Washington, DC 20549. You may also obtain copies of the documents at prescribed rates by writing to the Public
Reference Section of the SEC at 100 F Street, N.E., Room 1580, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference room. The SEC also maintains an Internet website that contains reports and other information
regarding issuers that file electronically with the SEC. Our filings with the SEC will also available to the public through the
SEC’s website at www.sec.gov.





79







As
a foreign private issuer, we are exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements,
and our officers, directors and principal shareholders will be exempt from the reporting and short-swing profit recovery provisions
contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file annual, quarterly
and current reports and financial statements with the SEC as frequently or as promptly as U.S. domestic companies whose securities
are registered under the Exchange Act. However, we will file with the SEC, within 120 days after the end of each fiscal year,
or such applicable time as required by the SEC, an annual report on Form 20-F containing financial statements audited by an independent
registered public accounting firm, and may submit to the SEC, on a Form 6-K, unaudited quarterly financial information.



In
addition, since our Ordinary Shares are traded on the TASE, we have filed Hebrew language periodic and immediate reports with,
and furnish information to, the TASE and the Israel Securities Authority, or the ISA, as required under Chapter Six of the Israel
Securities Law, 1968. Copies of our filings with the ISA can be retrieved electronically through the MAGNA distribution site of
the ISA (www.magna.isa.gov.il) and the TASE website (www.maya.tase.co.il).



We
maintain a corporate website http://www.nano-di.com. Information contained on, or that can be accessed through, our website and
the other websites referenced above do not constitute a part of this annual report on Form 20-F. We have included these website
addresses in this annual report on Form 20-F solely as inactive textual references.



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



Not
applicable.



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



In
the ordinary course of our operations, we are exposed to certain market risks, primarily changes in foreign currency exchange
rates and interest rates.



Quantitative
and Qualitative Disclosure About Market Risk



We
are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our
financial position due to adverse changes in financial market prices and rates. Our current investment policy is to invest available
cash in bank deposits with banks that have a credit rating of at least A-minus. Accordingly, a substantial majority of our cash
and cash equivalents is held in deposits that bear interest. Given the current low rates of interest we receive, we will not be
adversely affected if such rates are reduced. Our market risk exposure is primarily a result of NIS/U.S. dollar exchange rates,
which is discussed in detail in the following paragraph.



Foreign
Currency Exchange Risk



Our
results of operations and cash flow are subject to fluctuations due to changes in NIS/U.S. dollar currency exchange rates. The
vast majority of our liquid assets is held in U.S. dollars, and a certain portion of our expenses is denominated in NIS. Changes
of 5% and 10% in the U.S. Dollar/NIS exchange rate would increase/decrease our loss for 2016 by 0.63% and 1.26%, respectively.
However, these historical figures may not be indicative of future exposure, as we expect that the percentage of our NIS denominated
expenses will materially decrease in the near future, therefore reducing our exposure to exchange rate fluctuations.



We
do not hedge our foreign currency exchange risk. In the future, we may enter into formal currency hedging transactions to decrease
the risk of financial exposure from fluctuations in the exchange rates of our principal operating currencies. These measures,
however, may not adequately protect us from the material adverse effects of such fluctuations.





80







|ITEM
    12. | DESCRIPTION
    OF SECURITIES OTHER THAN EQUITY SECURITIES
|------------ | ----------------------------------------------------------



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



Not
applicable.



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



Not
applicable.



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



Not
applicable.



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



Fees
and Expenses



The
following table shows the fees and expenses that a holder of our ADSs may have to pay, either directly or indirectly:



|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.
|$.05
    (or less) per ADS.                                                                                                                                                                           |  | Any
        cash distribution to ADS holders.                                                                                                                                                                                                 
|A
        fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been
        deposited for issuance of ADSs.                            |  | Distribution
    of securities distributed to holders of deposited securities (including rights) that are distributed by the depositary to
    ADS holders.                                                                                   
|$.05
    (or less) per ADS 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 has to pay on any ADSs or shares underlying ADSs, such
        as 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.                                                                                                                                                                                                                             



The
depositary collects its fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs
for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to
investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees.
The depositary may collect its annual fee for depositary services by deduction from cash distributions or by directly billing
investors or by charging the book-entry system accounts of participants acting for them. The depositary may collect any of its
fees by deduction from any cash distribution payable (or by selling a portion of securities or other property distributable) to
ADS holders that are obligated to pay those fees. The depositary may generally refuse to provide fee-attracting services until
its fees for those services are paid.



From
time to time, the depositary may make payments to us to reimburse us for costs and expenses generally arising out of establishment
and maintenance of the ADS program, waive fees and expenses for services provided to us by the depositary or share revenue from
the fees collected from ADS holders. In performing its duties under the deposit agreement, the depositary may use brokers, dealers,
foreign currency or other service providers that are owned by or affiliated with the depositary and that may earn or share fees,
spreads or commissions.





81







PART
II



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



None.



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



None.



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



(a)
Disclosure Controls and Procedures



Our
management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness
of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as
of December 31, 2016, or the Evaluation Date. Based on such evaluation, those officers have concluded that, as of the Evaluation
Date, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis,
information required to be included in periodic filings under the Exchange Act and that such information is accumulated and communicated
to management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required
disclosure.



(b)
Management’s Annual Report on Internal Control over Financial Reporting



Our
management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is
defined in Rule 13a-15(f) under the Exchange Act. Under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control
over financial reporting based principally on the framework and criteria established in Internal Control - Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission as of the end of the period covered by this
report. Based on that evaluation, our management has concluded that our internal control over financial reporting was effective
as of December 31, 2016 at providing reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally accepted accounting principles.



(c)
Attestation Report of the Registered Public Accounting Firm



This
annual report does not include an attestation report of our independent registered public accounting firm regarding internal control
over financial reporting due to an exemption for emerging growth companies provided in the JOBS Act.



(d)
Changes in Internal Control over Financial Reporting



During
the year ended December 31, 2016, there were no changes in our internal control over financial reporting that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.





82







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



Our
board of directors has determined that each member of our audit committee is an audit committee financial expert, as defined under
the rules under the Exchange Act, and is independent in accordance with applicable Exchange Act rules and Nasdaq rules.



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



We
have adopted a written code of ethics that applies to our officers and employees, including our principal executive officer, principal
financial officer, principal controller and persons performing similar functions as well as our directors. Our Code of Business
Conduct and Ethics is posted on our website at www.nano-di.com. Information contained on, or that can be accessed through, our
website does not constitute a part of this annual report on Form 20-F and is not incorporated by reference herein. If we make
any amendment to the Code of Business Conduct and Ethics or grant any waivers, including any implicit waiver, from a provision
of the code, we will disclose the nature of such amendment or waiver on our website to the extent required by the rules and regulations
of the SEC including the instructions to Item 16B of Form 20-F. We have not granted any waivers under our Code of Business Conduct
and Ethics.



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



Somekh
Chaikin, a member firm of KPMG International, has served as our principal independent registered public accounting firm for each
of the two years ended December 31, 2015 and 2016.



The
following table provides information regarding fees paid by us to Somekh Chaikin and/or other member firms of KPMG International
for all services, including audit services, for the years ended December 31, 2015 and 2016:





|                   |  | Year Ended December 31, |       
|------------------ |  | ----------------------- | ------
|                   |  | 2015                    |       
|                   |  |                         |       
|Audit fees (1)     |  | $                       | 75,000
|Audit-related fees |  |                         | -     
|Tax fees           |  |                         | -     
|All other fees     |  |                         | -     
|                   |  |                         |       
|Total              |  | $                       | 75,000





|(1) | Includes professional services rendered in connection with the audit of our annual financial statements, review of our interim financial statements, tax returns, and fees relating to our public offering of ADSs.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





83







Pre-Approval
of Auditors’ Compensation



Our
audit committee has a pre-approval policy for the engagement of our independent registered public accounting firm to perform certain
audit and non-audit services. Pursuant to this policy, which is designed to assure that such engagements do not impair the independence
of our auditors, the audit committee pre-approves annually a catalog of specific audit and non-audit services in the categories
of audit services, audit-related services and tax services that may be performed by our independent registered public accounting
firm. If a type of service, that is to be provided by our auditors, has not received such general pre-approval, it will require
specific pre-approval by our audit committee. The policy prohibits retention of the independent registered public accounting firm
to perform the prohibited non-audit functions defined in applicable SEC rules.



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



Not
applicable.



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



Not
applicable.



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



Not
applicable.



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



The
Sarbanes-Oxley Act, as well as related rules subsequently implemented by the SEC, require foreign private issuers, such as us,
to comply with various corporate governance practices. In addition, we are required to comply with the NASDAQ Stock Market rules.
Under those rules, we may elect to follow certain corporate governance practices permitted under the Companies Law in lieu of
compliance with corresponding corporate governance requirements otherwise imposed by the NASDAQ Stock Market rules for U.S. domestic
issuers.



In
accordance with Israeli law and practice and subject to the exemption set forth in Rule 5615 of the NASDAQ Stock Market rules,
we have elected to follow the provisions of the Companies Law, rather than the NASDAQ Stock Market rules, with respect to the
following requirements:



| | ● | Distribution
    of periodic reports to shareholders; proxy solicitation. As opposed to the NASDAQ Stock Market rules, 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.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





84







| | ● | Quorum.
    While the NASDAQ Stock Market rules 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 amended and restated 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 amended and restated 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 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. 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 NASDAQ Stock Market rules.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | 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 NASDAQ Stock Market rules with respect to the
    CEO and all other executive officers. Instead, compensation of executive officers is determined and approved by our compensation
    committee and our board of directors, and in certain circumstances by our shareholders, either in consistency with our office
    holder compensation policy or, in special circumstances in deviation therefrom, taking into account certain considerations
    stated in the Companies Law.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Shareholder
approval is generally required for officer compensation in the event (i) approval by our board of directors and our compensation
committee is not consistent with our office holder compensation policy, or (ii) compensation required to be approved is that of
our chief executive officer who is not a director or an executive officer who is also the controlling shareholder of our company
(including an affiliate thereof). Such shareholder approval shall require a majority vote of the shares present and voting at
a shareholders meeting, provided either (i) such majority includes a majority of the shares held by non-controlling shareholders
who do not otherwise have a personal interest in the compensation arrangement that are voted at the meeting, excluding for such
purpose any abstentions disinterested majority, or (ii) the total shares held by non-controlling and disinterested shareholders
voted against the arrangement does not exceed 2% of the voting rights in our company.



Additionally,
approval of the compensation of an executive officer who is also a director requires a simple majority vote of the shares present
and voting at a shareholders meeting, if consistent with our office holder compensation policy. Our compensation committee and
board of directors may, in special circumstances, approve the compensation of an executive officer (other than a director, a chief
executive officer or a controlling shareholder) or approve the compensation policy despite shareholders’ objection, based
on specified arguments and taking shareholders’ objection into account. Our compensation committee may further exempt an
engagement with a nominee for the position of chief executive officer, who meets the non-affiliation requirements set forth for
an external director, from requiring shareholder approval, if such engagement is consistent with our office holder compensation
policy and our compensation committee determines based on specified arguments that presentation of such engagement to shareholder
approval is likely to prevent such engagement. To the extent that any such transaction with a controlling shareholder is for a
period exceeding three years, approval is required once every three years.



A
director or executive officer may not be present when the board of directors of a company discusses or votes upon a transaction
in which he or she has a personal interest, except in case of ordinary transactions, unless the chairman of the board of directors
determines that he or she should be present to present the transaction that is subject to approval.





85







| | ● | 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 “Item 6.  C. Board Practices – External Directors.”
    Notwithstanding Israeli law, we believe that a majority of our directors are currently “independent” under the
    NASDAQ Stock Market rules. 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 Stock Market 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 Stock Market 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 shareholder 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, and (iii) terms
    of employment or other engagement of the controlling shareholder of us or such controlling shareholder’s relative, which
    require special approval. 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 transaction as set forth in the Companies Law, which requires 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 NASDAQ Stock Market rules.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



Not
applicable.





86







PART
III



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



We
have elected to provide financial statements and related information pursuant to Item 18.



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



The
consolidated financial statements and the related notes required by this Item are included in this annual report on Form 20-F
beginning on page F-1.



|ITEM
    19. | EXHIBITS.
|------------ | ---------





|Exhibit |  | Description                                                                                                                                                                                                                                                                                                                                                                                               
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                           
|1.1     |  | Amended and Restated Articles of Association of Nano Dimension Ltd., filed as Exhibit 1.1 to Form 20-F (File No. 001-37600) filed on October 20, 2015, and incorporated herein by reference.                                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                           
|2.1     |  | Amended and Restated Form of Depositary Agreement among Nano Dimension 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, filed as Exhibit 1 to the Post Effective Amendment No. 1 to Form F-6 (File No. 333-204797) filed on February 22, 2016, and incorporated herein by reference.
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                           
|4.1^    |  | Amended and Restated License Agreement, dated April 2, 2015, by and between the Company and Yissum Research Development Company of The Hebrew University of Jerusalem, Ltd., filed as Exhibit 4.1 to Form 20-F/A (File No. 001-37600) filed on February 29, 2016, and incorporated herein by reference.                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                           
|4.2     |  | Summary Translation of Merger Agreement, dated May 18, 2014, and as amended on July 9, 2014, by and between Z.B.I and Nano Dimension Technologies Ltd. (formerly, Hyrax Technologies B.F. 2012 Ltd.), filed as Exhibit 4.2 to Form 20-F (File No. 001-37600) filed on October 20, 2015, and incorporated herein by reference.                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                           
|4.3     |  | Summary Translation of Private Placement Agreement, dated July 3, 2014, between the Company and Michael Ilan Management and Investment Ltd., filed as Exhibit 4.3 to Form 20-F (File No. 001-37600) filed on October 20, 2015, and incorporated herein by reference.                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                           
|4.4     |  | Nano Dimension Ltd. 2015 Stock Option Plan, filed as Exhibit 4.4 to Form 20-F/A (File No. 001-37600) filed on February 29, 2016, and incorporated herein by reference.                                                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                           
|4.5     |  | Employment Agreement, dated October 13, 2015, between the Company and Amit Dror, filed as Exhibit 4.5 to Form 20-F (File No. 001-37600) filed on October 20, 2015, and incorporated herein by reference.                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                           
|4.6     |  | Employment Agreement, dated October 13, 2015, between the Company and Simon Fried, filed as Exhibit 4.6 to Form 20-F (File No. 001-37600) filed on October 20, 2015, and incorporated herein by reference.                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                           
|4.7     |  | Employment Agreement, dated October 14, 2015, between the Company and Sharon Fima, filed as Exhibit 4.7 Form 20-F (File No. 001-37600) filed on October 20, 2015, and incorporated herein by reference.                                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                           
|4.8     |  | Employment Agreement, dated October 14, 2015, between the Company and Dagi Ben-Noon, filed as Exhibit 4.8 to Form 20-F (File No. 001-37600) filed on October 20, 2015, and incorporated herein by reference.                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                           
|4.9     |  | Voting Agreement, dated August 5, 2014, between Simon Anthony Fried, Amit Dror, Dagi Shahar Ben-Noon and Sharon Fima, filed as Exhibit 4.9 to Form 20-F (File No. 001-37600) filed on October 20, 2015, and incorporated herein by reference.                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                           
|8.1     |  | List of Subsidiaries, filed as Exhibit 8.1 to Form 20-F (File No. 001-37600) filed on October 20, 2015, and incorporated herein by reference.                                                                                                                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                           
|12.1    |  | Certification of the Chief Executive Officer pursuant to rule 13a-14(a) of the Securities Exchange Act of 1934.                                                                                                                                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                           
|12.2    |  | Certification of the Principal Financial and Accounting Officer pursuant to rule 13a-14(a) of the Securities Exchange Act of 1934.                                                                                                                                                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                           
|13.1    |  | Certification of the Chief Executive Officer pursuant to 18 U.S.C. 1350, furnished herewith.                                                                                                                                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                           
|13.2    |  | Certification of the Principal Financial and Accounting Officer pursuant to 18 U.S.C. 1350, furnished herewith.                                                                                                                                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                           
|15.1    |  | Consent of Somekh Chaikin (Member firm of KPMG International).                                                                                                                                                                                                                                                                                                                                            



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





87







SIGNATURES



The
registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this annual report on Form 20-F filed on its behalf.



| | NANO
    DIMENSION LTD.
| | -----------------------
| |                        
| | By:                    
| |                        
| |                        
| |                        

Date:
March 7, 2017







88

































Nano-Dimension
Ltd.





Consolidated
Financial Statements as of December 31, 2016



























F-1







Table
of Contents



|                                                                         |  | Page          
|------------------------------------------------------------------------ |  | --------------
|                                                                         |  |               
|Report of Independent Registered Public Accounting Firm                  |  | F-3           
|                                                                         |  |               
|Consolidated
    Financial Statements as of December 31, 2016            |  |               
|                                                                         |  |               
|Consolidated Statements of Financial Position                            |  | F-4           
|                                                                         |  |               
|Consolidated Statements of Profit or Loss and Other Comprehensive Income |  | F-5           
|                                                                         |  |               
|Consolidated Statements of Changes in Equity                             |  | F-6
    - F-7 
|                                                                         |  |               
|Consolidated Statements of Cash Flow                                     |  | F-8           
|                                                                         |  |               
|Notes to the Consolidated Financial Statements                           |  | F-9
    - F-35





F-2







Report
of Independent Registered Public Accounting Firm



The
Board of Directors and Shareholders Nano Dimension Ltd.



We
have audited the accompanying consolidated statements of financial position of Nano Dimension Ltd. (the “Company”)
and its subsidiary as of December 31, 2015 and 2016 and the related consolidated statements of profit or loss and other comprehensive
income, changes in equity and cash flows for each of the years in the three-year period ended December 31, 2016. These consolidated
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.



We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for
our opinion.



In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of the Company and its subsidiary as of December 31, 2015 and 2016, and the results of their operations and their cash flows for
each of the years in the three-year period ended December 31, 2016, in conformity with International Financial Reporting Standards
as issued by the International Accounting Standards Board.



|/s/
    Somekh Chaikin
    Certified Public Accountants (Isr.)
    Member firm of KPMG International
    Tel-Aviv, Israel
    March 6, 2017 |  | 
|------------------------------------------------------------------------------------------------------------------------------------------- |  | 



F-3







Nano
Dimension Ltd.

Consolidated
Statements of Financial Position as at



|                                                                |  |      |  | December 31, |         |   | Convenience translation into US dollars  (Note 2S) December 31, | 
|--------------------------------------------------------------- |  | ---- |  | ------------ | ------- | - | --------------------------------------------------------------- | 
|                                                                |  | Note |  | 2015         |         |   | 2016                                                            | 
|                                                                |  |      |  | Thousand NIS |         |   | Thousand NIS                                                    | 
|                                                                |  |      |  |              |         |   |                                                                 | 
|Assets                                                          |  |      |  |              |         |   |                                                                 | 
|Cash                                                            |  | 3.A  |  |              | 33,811  |   |                                                                 | 
|Restricted deposits                                             |  | 3.B  |  |              | 500     |   |                                                                 | 
|Trade receivables                                               |  |      |  |              | -       |   |                                                                 | 
|Other receivables                                               |  | 4    |  |              | 1,030   |   |                                                                 | 
|Total current assets                                            |  |      |  |              | 35,341  |   |                                                                 | 
|                                                                |  |      |  |              |         |   |                                                                 | 
|Restricted deposits                                             |  | 3.B  |  |              | 428     |   |                                                                 | 
|Property plant and equipment, net                               |  | 5    |  |              | 4,414   |   |                                                                 | 
|Intangible assets                                               |  | 6    |  |              | 11,355  |   |                                                                 | 
|Total non-current assets                                        |  |      |  |              | 16,197  |   |                                                                 | 
|Total assets                                                    |  |      |  |              | 51,538  |   |                                                                 | 
|                                                                |  |      |  |              |         |   |                                                                 | 
|Liabilities                                                     |  |      |  |              |         |   |                                                                 | 
|Trade payables                                                  |  |      |  |              | 1,727   |   |                                                                 | 
|Other payables                                                  |  | 7    |  |              | 1,814   |   |                                                                 | 
|Total current liabilities                                       |  |      |  |              | 3,541   |   |                                                                 | 
|                                                                |  |      |  |              |         |   |                                                                 | 
|Liability in respect of government grants                       |  | 8    |  |              | 993     |   |                                                                 | 
|Other long-term liabilities                                     |  | 9    |  |              | -       |   |                                                                 | 
|Total non-current liabilities                                   |  |      |  |              | 993     |   |                                                                 | 
|Total liabilities                                               |  |      |  |              | 4,534   |   |                                                                 | 
|                                                                |  |      |  |              |         |   |                                                                 | 
|Equity                                                          |  |      |  |              |         |   |                                                                 | 
|Share capital                                                   |  | 11   |  |              | 3,863   |   |                                                                 | 
|Share premium                                                   |  |      |  |              | 63,054  |   |                                                                 | 
|Treasury shares                                                 |  |      |  |              | (5,260  | ) |                                                                 | 
|Warrants                                                        |  |      |  |              | 6,934   |   |                                                                 | 
|Capital reserve from transactions with controlling shareholders |  |      |  |              | 1,866   |   |                                                                 | 
|Capital reserve for share-based payments                        |  |      |  |              | 12,681  |   |                                                                 | 
|Accumulated loss                                                |  |      |  |              | (36,134 | ) |                                                                 | 
|Total equity                                                    |  |      |  |              | 47,004  |   |                                                                 | 
|Total liabilities and equity                                    |  |      |  |              | 51,538  |   |                                                                 | 



The
accompanying notes are an integral part of these consolidated financial statements.





F-4







Nano
Dimension Ltd.

Consolidated
Statements of Profit or Loss and Other Comprehensive Income





|                                              |  |      |  | For the Year EndedDecember 31, |         |   | Convenience translation into US dollars (Note 2S) Year ended December 31, | 
|--------------------------------------------- |  | ---- |  | ------------------------------ | ------- | - | ------------------------------------------------------------------------- | 
|                                              |  | Note |  | 2014                           |         |   | 2015                                                                      | 
|                                              |  |      |  | ThousandNIS                    |         |   | ThousandNIS                                                               | 
|                                              |  |      |  |                                |         |   |                                                                           | 
|Revenues                                      |  | 12   |  |                                | -       |   |                                                                           | 
|                                              |  |      |  |                                |         |   |                                                                           | 
|Cost of revenues                              |  | 13   |  |                                | -       |   |                                                                           | 
|                                              |  |      |  |                                |         |   |                                                                           | 
|Cost of revenues - amortization of intangible |  | 6    |  |                                | -       |   |                                                                           | 
|                                              |  |      |  |                                |         |   |                                                                           | 
|Total cost of revenues                        |  |      |  |                                | -       |   |                                                                           | 
|                                              |  |      |  |                                |         |   |                                                                           | 
|Gross loss                                    |  |      |  |                                | -       |   |                                                                           | 
|                                              |  |      |  |                                |         |   |                                                                           | 
|Research and development expenses, net        |  | 14.A |  |                                | 3,339   |   |                                                                           | 
|                                              |  |      |  |                                |         |   |                                                                           | 
|General and administrative expenses           |  | 14.B |  |                                | 1,426   |   |                                                                           | 
|                                              |  |      |  |                                |         |   |                                                                           | 
|Other income                                  |  |      |  |                                | 62      |   |                                                                           | 
|                                              |  |      |  |                                |         |   |                                                                           | 
|Operating loss                                |  |      |  |                                | (4,703  | ) |                                                                           | 
|                                              |  |      |  |                                |         |   |                                                                           | 
|Listing expenses                              |  |      |  |                                | 9,358   |   |                                                                           | 
|                                              |  |      |  |                                |         |   |                                                                           | 
|Finance income                                |  | 14.C |  |                                | 1       |   |                                                                           | 
|                                              |  |      |  |                                |         |   |                                                                           | 
|Finance expense                               |  | 14.C |  |                                | 118     |   |                                                                           | 
|                                              |  |      |  |                                |         |   |                                                                           | 
|Total comprehensive loss                      |  |      |  |                                | (14,178 | ) |                                                                           | 
|                                              |  |      |  |                                |         |   |                                                                           | 
|Basic and diluted loss per share (in NIS)     |  | 16   |  |                                | (1.11   | ) |                                                                           | 



The
accompanying notes are an integral part of these consolidated financial statements.





F-5







Nano
Dimension Ltd.

Consolidated
Statements of Changes in Equity





|                                                                                                |  | Share capital |       |  | Share premium |  |         | Treasury shares |  |  | Warrants     |   |  | Capital reserve from transactions with controlling shareholders |        |   | Capital reserve for share- based payments |  |       | Accumulated loss |  |  | Total equity |  
|----------------------------------------------------------------------------------------------- |  | ------------- | ----- |  | ------------- |  | ------- | --------------- |  |  | ------------ | - |  | --------------------------------------------------------------- | ------ | - | ----------------------------------------- |  | ----- | ---------------- |  |  | ------------ | -
|                                                                                                |  | Thousand NIS  |       |  | Thousand NIS  |  |         | Thousand NIS    |  |  | Thousand NIS |   |  | Thousand NIS                                                    |        |   | Thousand NIS                              |  |       | Thousand NIS     |  |  | Thousand NIS |  
|For the year ended December 31, 2016:                                                           |  |               |       |  |               |  |         |                 |  |  |              |   |  |                                                                 |        |   |                                           |  |       |                  |  |  |              |  
|Balance as of January 1, 2016                                                                   |  |               | 3,863 |  |               |  | 63,054  |                 |  |  | (5,260       | ) |  |                                                                 | 6,934  |   |                                           |  | 1,866 |                  |  |  | 12,681       |  
|Issuance of Ordinary Shares and warrants, net                                                   |  |               | 1,063 |  |               |  | 45,287  |                 |  |  | -            |   |  |                                                                 | -      |   |                                           |  | -     |                  |  |  | -            |  
|Exercise of warrants and options                                                                |  |               | 520   |  |               |  | 10,479  |                 |  |  | -            |   |  |                                                                 | (2,559 | ) |                                           |  | -     |                  |  |  | (2,788       | )
|Share-based payments                                                                            |  |               | -     |  |               |  | -       |                 |  |  | -            |   |  |                                                                 | -      |   |                                           |  | -     |                  |  |  | 9,682        |  
|Net loss                                                                                        |  |               | -     |  |               |  | -       |                 |  |  | -            |   |  |                                                                 | -      |   |                                           |  | -     |                  |  |  | -            |  
|                                                                                                |  |               |       |  |               |  |         |                 |  |  |              |   |  |                                                                 |        |   |                                           |  |       |                  |  |  |              |  
|Balance as of December 31, 2016                                                                 |  |               | 5,446 |  |               |  | 118,820 |                 |  |  | (5,260       | ) |  |                                                                 | 4,375  |   |                                           |  | 1,866 |                  |  |  | 19,575       |  
|                                                                                                |  |               |       |  |               |  |         |                 |  |  |              |   |  |                                                                 |        |   |                                           |  |       |                  |  |  |              |  
|Balance as of December 31, 2016- Convenience translation into US dollars (Note 2S)-Thousand USD |  |               | 1,417 |  |               |  | 30,902  |                 |  |  | (1,368       | ) |  |                                                                 | 1,138  |   |                                           |  | 485   |                  |  |  | 5,091        |  



|                                              |  | Share capital |       |  | Share premium |  |        | Treasury shares |  |  | Warrants     |   |  | Capital reserve from transactions with controlling shareholders |       |   | Capital reserve for share- based payments |  |       | Accumulated loss |  |  | Total equity |  
|--------------------------------------------- |  | ------------- | ----- |  | ------------- |  | ------ | --------------- |  |  | ------------ | - |  | --------------------------------------------------------------- | ----- | - | ----------------------------------------- |  | ----- | ---------------- |  |  | ------------ | -
|                                              |  | Thousand NIS  |       |  | Thousand NIS  |  |        | Thousand NIS    |  |  | Thousand NIS |   |  | Thousand NIS                                                    |       |   | Thousand NIS                              |  |       | Thousand NIS     |  |  | Thousand NIS |  
|For the year ended December 31, 2015:         |  |               |       |  |               |  |        |                 |  |  |              |   |  |                                                                 |       |   |                                           |  |       |                  |  |  |              |  
|Balance as of January 1, 2015                 |  |               | 2,337 |  |               |  | 14,334 |                 |  |  | (5,260       | ) |  |                                                                 | 2,466 |   |                                           |  | 1,866 |                  |  |  | 62           |  
|Issuance of Ordinary Shares and warrants, net |  |               | 1,498 |  |               |  | 48,054 |                 |  |  | --           |   |  |                                                                 | 4,532 |   |                                           |  | --    |                  |  |  | --           |  
|Exercise of warrants and options              |  |               | 28    |  |               |  | 666    |                 |  |  | --           |   |  |                                                                 | (64   | ) |                                           |  | --    |                  |  |  | (109         | )
|Share-based payments                          |  |               | --    |  |               |  | --     |                 |  |  | --           |   |  |                                                                 | --    |   |                                           |  | --    |                  |  |  | 12,728       |  
|Net loss                                      |  |               | --    |  |               |  | --     |                 |  |  | --           |   |  |                                                                 | --    |   |                                           |  | --    |                  |  |  | --           |  
|                                              |  |               |       |  |               |  |        |                 |  |  |              |   |  |                                                                 |       |   |                                           |  |       |                  |  |  |              |  
|Balance as of December 31, 2015               |  |               | 3,863 |  |               |  | 63,054 |                 |  |  | (5,260       | ) |  |                                                                 | 6,934 |   |                                           |  | 1,866 |                  |  |  | 12,681       |  



The
accompanying notes are an integral part of these consolidated financial statements.





F-6







Nano
Dimension Ltd.

Consolidated
Statements of Changes in Equity (Continued)





|                                                                     |  | Share capital |       |  | Share premium |  |        | Treasury shares |  |  | Warrants     |   |  | Capital reserve from transactions with controlling shareholders |       |  | Capital reserve for share- based payments |  |       | Other capital reserves |  |  | Accumulated loss |  |  | Total equity (deficit) |       
|-------------------------------------------------------------------- |  | ------------- | ----- |  | ------------- |  | ------ | --------------- |  |  | ------------ | - |  | --------------------------------------------------------------- | ----- |  | ----------------------------------------- |  | ----- | ---------------------- |  |  | ---------------- |  |  | ---------------------- | ------
|                                                                     |  | Thousand NIS  |       |  | Thousand NIS  |  |        | Thousand NIS    |  |  | Thousand NIS |   |  | Thousand NIS                                                    |       |  | Thousand NIS                              |  |       | Thousand NIS           |  |  | Thousand NIS     |  |  | Thousand NIS           |       
|For the year ended December 31, 2014:                                |  |               |       |  |               |  |        |                 |  |  |              |   |  |                                                                 |       |  |                                           |  |       |                        |  |  |                  |  |  |                        |       
|Balance as of January 1, 2014 (*)                                    |  |               | 1,743 |  |               |  | 10,196 |                 |  |  | (5,260       | ) |  |                                                                 | 2,466 |  |                                           |  | 776   |                        |  |  | --               |  |  |                        | (9,145
|Effect of reverse acquisition                                        |  |               | --    |  |               |  | --     |                 |  |  | --           |   |  |                                                                 | --    |  |                                           |  | --    |                        |  |  | --               |  |  |                        | 9,145 
|Issuance of share capital, net                                       |  |               | 594   |  |               |  | 4,138  |                 |  |  | --           |   |  |                                                                 | --    |  |                                           |  | --    |                        |  |  | --               |  |  |                        | --    
|Capital contribution from transactions with controlling shareholders |  |               | --    |  |               |  | --     |                 |  |  | --           |   |  |                                                                 | --    |  |                                           |  | 1,090 |                        |  |  | --               |  |  |                        | --    
|Share-based payments                                                 |  |               | --    |  |               |  | --     |                 |  |  | --           |   |  |                                                                 | --    |  |                                           |  | --    |                        |  |  | 62               |  |  |                        | --    
|Net loss                                                             |  |               | --    |  |               |  | --     |                 |  |  | --           |   |  |                                                                 | --    |  |                                           |  | --    |                        |  |  | --               |  |  |                        | --    
|                                                                     |  |               |       |  |               |  |        |                 |  |  |              |   |  |                                                                 |       |  |                                           |  |       |                        |  |  |                  |  |  |                        |       
|Balance as of December 31, 2014                                      |  |               | 2,337 |  |               |  | 14,334 |                 |  |  | (5,260       | ) |  |                                                                 | 2,466 |  |                                           |  | 1,866 |                        |  |  | 62               |  |  |                        | --    



(*)
Restated as a result of the retroactive implementation of a reverse acquisition.



The
accompanying notes are an integral part of these consolidated financial statements.





F-7







Nano
Dimension Ltd.

Consolidated
Statements of Cash Flows





|                                                                  |  | For the Year Ended December 31, |         |   | Convenience translation into US dollars (Note 2S) Year ended December 31, | 
|----------------------------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------------------------------------------------- | 
|                                                                  |  | 2014                            |         |   | 2015                                                                      | 
|                                                                  |  | Thousand NIS                    |         |   | Thousand NIS                                                              | 
|Cash flow from operating activities:                              |  |                                 |         |   |                                                                           | 
|Net loss                                                          |  |                                 | (14,178 | ) |                                                                           | 
|Adjustments:                                                      |  |                                 |         |   |                                                                           | 
|Depreciation and amortization                                     |  |                                 | 30      |   |                                                                           | 
|Listing expenses                                                  |  |                                 | 9,193   |   |                                                                           | 
|Revaluation of controlling shareholders loans                     |  |                                 | 36      |   |                                                                           | 
|Government grants in respect of research and development expenses |  |                                 | (188    | ) |                                                                           | 
|Revaluation of liability in respect of government grants          |  |                                 | 42      |   |                                                                           | 
|Revaluation of derivative instruments                             |  |                                 | --      |   |                                                                           | 
|Financing expenses (income)                                       |  |                                 | --      |   |                                                                           | 
|Controlling shareholder wages and accompanying expenses           |  |                                 | 1,051   |   |                                                                           | 
|Non- cash R&D expenses                                            |  |                                 | --      |   |                                                                           | 
|Share-based payments                                              |  |                                 | 62      |   |                                                                           | 
|                                                                  |  |                                 | 10,226  |   |                                                                           | 
|Changes in assets and liabilities:                                |  |                                 |         |   |                                                                           | 
|Increase in other receivables                                     |  |                                 | (429    | ) |                                                                           | 
|Increase in trade receivables                                     |  |                                 |         |   |                                                                           | 
|Increase in other payables                                        |  |                                 | 703     |   |                                                                           | 
|Increase in trade payables                                        |  |                                 | 210     |   |                                                                           | 
|Increase in other long term liabilities                           |  |                                 | -       |   |                                                                           | 
|                                                                  |  |                                 | 484     |   |                                                                           | 
|Net cash used in operating activities                             |  |                                 | (3,468  | ) |                                                                           | 
|                                                                  |  |                                 |         |   |                                                                           | 
|Cash flow from investing activities:                              |  |                                 |         |   |                                                                           | 
|Redemption of restricted bank deposits                            |  |                                 | --      |   |                                                                           | 
|Development expenditure capitalized as intangible assets          |  |                                 | --      |   |                                                                           | 
|Acquisition of property plant and equipment                       |  |                                 | (1,131  | ) |                                                                           | 
|Net cash used in investing activities                             |  |                                 | (1,131  | ) |                                                                           | 
|                                                                  |  |                                 |         |   |                                                                           | 
|Cash flow from financing activities:                              |  |                                 |         |   |                                                                           | 
|Cash acquired upon reverse acquisition                            |  |                                 | 79      |   |                                                                           | 
|Proceeds from issuance of Ordinary Shares and warrants, net       |  |                                 | 4,732   |   |                                                                           | 
|Exercise of warrants and options                                  |  |                                 |         |   |                                                                           | 
|Short-term loans received                                         |  |                                 | 65      |   |                                                                           | 
|Amounts recognized in respect of government grants liability, net |  |                                 | 516     |   |                                                                           | 
|Proceeds from controlling shareholder loans                       |  |                                 | 37      |   |                                                                           | 
|Payment of controlling shareholder loans                          |  |                                 | (29     | ) |                                                                           | 
|Net cash provided by financing activities                         |  |                                 | 5,400   |   |                                                                           | 
|Increase in cash and cash equivalents                             |  |                                 | 801     |   |                                                                           | 
|Cash and cash equivalents at beginning of the year                |  |                                 | 5       |   |                                                                           | 
|Effect of exchange rate fluctuations on cash and cash equivalents |  |                                 | --      |   |                                                                           | 
|Cash and cash equivalents at end of year                          |  |                                 | 806     |   |                                                                           | 
|                                                                  |  |                                 |         |   |                                                                           | 
|Non-cash transactions:                                            |  |                                 |         |   |                                                                           | 
|Property plant and equipment acquired in credit                   |  |                                 | -       |   |                                                                           | 



The
accompanying notes are an integral part of these consolidated financial statements.





F-8







Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements



Note
1 – General



|A. | Reporting
    Entity
|-- | --------------------



Z.B.I.
Ltd. was established in Israel in 1960 and its shares have been traded on the Tel Aviv Stock Exchange (the “TASE”) since
1977. On March 7, 2014, Z.B.I. Ltd. distributed the shares of its subsidiary, B.G.I. Investments (1961) Ltd., to its shareholders
(dividend in-kind), such that after said distribution, it became a “shell corporation”. On October 29, 2014, Z.B.I.
Ltd. changed its name to its current name, Nano Dimension Ltd. (the “Company”). As of the date of the completion of
the Acquisition (see subsection B), the Company engages, by means of the subsidiary Nano Dimension Technologies Ltd. (“Nano–Technologies”),
in research and development of a three-dimensional (3-D) printer (which prints electronic circuits boards - PCB cards) and development
of nanotechnology based conductive and dielectric inks, which are supplementary products to the 3-D printer.



Since
August 25, 2014, the Company has devoted substantially all of its financial resources to develop its products and has financed
its operations primarily through the issuance of equity securities. The amount of the Company’s future net losses will depend,
in part, on completing the development of its products, the rate of its future expenditures, its ability to generate significant
revenues from the sell of its products and, and its ability to obtain funding through the issuance of securities, strategic collaborations
or grants. To date, the Group (as defined in subsection C below) has not yet commercialized any of its products and has generated
insignificant revenues, mainly from operating leases of its 3D printers (see note 12). The Group’s ability to generate revenue
and achieve profitability depends on its ability to successfully complete the development of, and to commercialize, its products.
The Group was able to obtain funding thus far and believes it has enough funding to complete the development of its products.



|B. | On
    August 25, 2014, the acquisition of Nano–Technologies by the Company (the “Acquisition”) was completed, and
    the shareholders of Nano–Technologies received approximately 37.38% of the Company’s ordinary shares (“Ordinary
    Shares”). Based on the guidance in International Financial Reporting Standards (“IFRS”) 3 Business Combinations,
    this transaction was accounted for by analogy to a reverse acquisition, as the shareholders of Nano–Technologies hold
    significantly more voting rights than any other vote holder, with the other shareholdings widely dispersed, and the former
    shareholders of Nano–Technologies dominate the management of the Company. Hence, it was determined that the Company
    was the acquired entity for accounting purposes and that the Company was not an actual business (but rather a public shell
    corporation). The financial statements were prepared as a continuation of Nano–Technologies’ financial statements and
    the assets and liabilities have been recognized at their carrying amounts in Nano–Technologies immediately prior to
    the transaction. Furthermore, the Company’s comparative figures were restated to reflect Nano–Technologies’ financial
    position and operating results as if it has always owned the operations acquired in the Acquisition.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In
light of the above, balances of assets, liabilities and expenses which refer to the Company’s past operations prior to the Acquisition
are excluded from these financial statements, except for adjusting retroactively the legal share capital to reflect the legal
share capital of the Company.



The
consideration for the Acquisition consists of shares issuance listing expenses, which in accordance with IFRS 2 Share-based
Payment were recognized in the statement of “Profit or Loss and Other Comprehensive Income” in the amount of NIS
9,358,000. The amount of the expenses represents the effective cost of the Acquisition of the Company, and was determined based
on the fair value of the Company’s traded shares, a public shell on the date of the Acquisition.



The
Ordinary Shares are traded on the TASE. In addition, since March 2016, the Company’s American Depositary Shares (“ADSs”)
have been trading on the Nasdaq Capital Market.



F-9







Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements

Note
1 – General (Continued)



|C. | Definitions
|-- | -----------



In
these financial statements –

The
Group – the Company and Nano –Technologies.

Related
Party – Within its meaning in International Accounting Standards (“IAS”) 24 (2009) Related Party Disclosures.



Note
2 – Summary of Significant Accounting Policies



Nano–Technologies’
accounting policies set out below have been applied consistently for all periods presented in these consolidated financial statements,
and have been applied consistently by Group entities.



|A. | Basis
    for presentation of the financial statements
|-- | ------------------------------------------------------



The
Group’s financial statements as of December 31, 2016, and December 31, 2015 and for each of the three years in the period
ended on December 31, 2016 comply with IFRS as issued by the International Accounting Standards Board (“IASB”).



The
financial statements have been prepared under the historical cost convention, subject to adjustments for revaluation of certain
financial liabilities (including derivative instruments) to fair value through profit or loss.



The
consolidated financial statements were authorized for issuance by the Company’s Board of Directors on March 6, 2017.



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



The
preparation of financial statements in conformity with IFRS as issued by the IASB requires management to make judgments, estimates
and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and
expenses. Actual results may differ from these estimates.



The
preparation of accounting estimates used in the preparation of the Group’s financial statements requires management of the
Company to make assumptions regarding circumstances and events that involve considerable uncertainty. Management of the Company
prepares the estimates on the basis of past experiences, various facts, external circumstances, and reasonable assumptions according
to the pertinent circumstances of each estimate. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.



Below
is information about significant assumptions made by the Group with respect to estimates and judgments:



| | - | Contingent
    liabilities
| | - | --------------------------

The
evaluations of provisions and contingent liabilities are based on best professional judgment, taking into consideration the stage
of the proceedings, as well as cumulative legal experience in the various topics. Whereas the results of certain lawsuits shall
be determined by the courts, these results may differ from these evaluations.



F-10







Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements



Note
2 – Summary of Significant Accounting Policies (Continued)



|B. | Use
    of estimates and judgments(Continued)
|-- | ---------------------------------------------



| | - | Intangible
    assets
| | - | ---------------------

Development expenses in the period
until August 1, 2015 were expensed as incurred. On August 1, 2015, the Group met all the required conditions to recognize intangible
assets in accordance with IAS 38 Intangible Assetsand started recognizing intangible assets arising from internal development.
The capitalization is the outcome of meeting all the criteria in IAS 38, which are (i) development costs that can be measured
reliably, (ii) the product or process is technically and commercially feasible, (iii) future economic benefits are probable, and
(iv) the Group has the intention and sufficient resources to complete development and to use or sell the asset. In the fourth
quarter of 2016, the Company ceased to capitalize development cost and began to amortize its intangible assets. The estimated
useful lives of the capitalized development expenses for the current period is 10 years. See also Note 2.L regarding research
and development and amortization of intangible assets.





| | - | Share-based
    payments
| | - | ------------------------

Estimating fair value for share-based
payment transactions requires determination of the most appropriate valuation model, which depends on the terms and conditions
of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model, including the expected
life of the share option and volatility and making assumptions about them. For the measurement of the fair value of equity-settled
transactions with employees at the grant date, the Group uses a binomial model. See also note 2.N and note 17.





| | - | Liability
    in respect of government grants
| | - | ---------------------------------------------

See
note 8 regarding the discount rate that was used in evaluating the liability in respect of government grants.



| | - | Operating
    lease- Group as lessor
| | - | ------------------------------------

The
Group has entered into leases of its 3D printers. The Group has determined, based on an evaluation of the terms and conditions
of the agreements, such as the lease term not constituting a major part of the economic life of the printer and the present value
of the minimum lease payments not amounting to substantially all of the fair value of the printer, that it retains all the significant
risks and rewards of ownership of these properties and accounts for the contracts as operating leases.



|C. | Subsidiary
|-- | ----------



A
subsidiary is an entity controlled by the Company. The Company controls an entity when it is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The
financial statements of the subsidiary are included in the consolidated financial statements from the date that control commences
until the date that control is lost. The accounting policies of the subsidiary are aligned with the policies adopted by the Group.



|D. | Functional
    currency and presentation currency
|-- | -------------------------------------------------



| | (1) | Functional
    currency and presentation currency
| | --- | -------------------------------------------------



These
financial statements are presented in New Israeli Shekels (“NIS”), which is the Group’s functional currency. The
figures in the tables are rounded to the nearest one thousand, unless otherwise noted. The NIS is the currency that represents
the principal economic environment in which the Group operates.



F-11







Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements



Note
2 – Summary of Significant Accounting Policies (Continued)



|D. | Functional
    currency and presentation currency (Continued)
|-- | -------------------------------------------------------------



| | (2) | Foreign
    currency transactions
| | --- | ---------------------------------



Transactions
in foreign currencies (currency other than the NIS) are translated to the functional currency of the Group at exchange rates at
the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated
to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference
between amortized cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during
the year, and the amortized cost in foreign currency translated at the exchange rate at the end of the year.



Non-monetary
items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of
the transaction.



Foreign
currency differences arising on translation are recognized in profit or loss.



| | (3) | Index
    linked financial items
| | --- | --------------------------------



Financial
assets and liabilities which according to their terms are linked to changes in the Israeli Consumer Price Index (the “Index”)
are adjusted according to the relevant Index on every reporting date in accordance with the terms of the agreement. Linkage differences
deriving from said adjustment are recorded to profit and loss.



| | (4) | Below
    are details regarding the Index and the exchange rate of the U.S. dollar (“Dollar” or “$”):
| | --- | -----------------------------------------------------------------------------------------------------



| |                              |  | Consumer Price Index |         |   | Dollar | 
| | ---------------------------- |  | -------------------- | ------- | - | ------ | 
| |                              |  |                      |         |   |        | 
| | December 31, 2016            |  |                      | 100.878 |   |        | 
| | December 31, 2015            |  |                      | 101.184 |   |        | 
| | December 31, 2014            |  |                      | 102.1   |   |        | 
| | Change in percentages:       |  |                      |         |   |        | 
| | Year ended December 31, 2016 |  |                      | (0.3    | ) |        | 
| | Year ended December 31, 2015 |  |                      | (0.9    | ) |        | 
| | Year ended December 31, 2014 |  |                      | (0.2    | ) |        | 



|E. | Financial
    instruments
|-- | -------------------------



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



Initial
recognition of financial assets



The
Group initially recognizes loans and receivables and deposits on the date that they are created. Non-derivative financial instruments
are comprised of other receivables and cash and cash equivalents.



Loans
and receivables



Loans
and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
Such assets are recognized initially at their fair value plus any directly attributable transaction costs. Subsequent to initial
recognition, loans and receivables are measured at amortized cost using the effective interest method, minus any impairment losses.



Loans
and receivables comprise cash and cash deposits and trade and other receivables.





F-12







Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements



Note
2 – Summary of Significant Accounting Policies (Continued)



|E. | Financial
    instruments (Continued)
|-- | -------------------------------------



Cash
and cash equivalents



Cash
and cash equivalents include cash balances available for immediate use.



Cash
equivalents include short-term deposits with banking corporation (with original maturities of three months or less) that are readily
convertible into known amounts of cash and are exposed to insignificant risks of change in value.



| | (2) | Non
    derivative Financial Liabilities
| | --- | ----------------------------------------



Non-derivative
financial liabilities include trade and other payables.



Initial
recognition of financial liabilities



The
Group initially recognizes financial liabilities on the trade date at which the Group becomes a party to the contractual provisions
of the instrument.



Financial
liabilities are recognized initially at their fair value, plus any directly attributable transaction costs. Subsequent to initial
recognition, these financial liabilities are measured, at amortized cost, using the effective interest method.



Transaction
costs directly attributable to an expected issuance of an instrument that will be classified as a financial liability are recognized
as an asset in the framework of deferred expenses in the statement of financial position. These transaction costs are deducted
from the financial liability upon its initial recognition, or are amortized as financing expenses in the statement of “Profit
or Loss and Other Comprehensive Income” when the issuance is no longer expected to occur.



Derecognition
of financial liabilities



Financial
liabilities are derecognized when the obligation of the Group, as specified in the agreement, expires or when it is discharged
or cancelled.



| | (3) | Determination
    of fair value
| | --- | -------------------------------



Preparation
of the financial statements requires the Group to determine the fair value of certain assets and liabilities.



When
determining the fair value of an asset or liability, the Group uses observable market data as much as possible. There are three
levels of fair value measurements in the fair value hierarchy that are based on the data used in the measurement, as follows:



| | ● | Level
    1: quoted prices (unadjusted) in active markets for identical assets or liabilities.                          
| | - | ------------------------------------------------------------------------------------------------------------------------
| | ● | Level
    2: inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly.
| | ● | Level
    3: inputs that are not based on observable market data (unobservable inputs).                                 



Further
information about the assumptions that were used to determine fair value is included in Note 18.H on financial instruments.





F-13







Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements



Note
2 – Summary of Significant Accounting Policies (Continued)



|F. | Property
    plant and equipment
|-- | --------------------------------



Property
plant and equipment are presented according to cost, including directly attributed acquisition costs, minus accumulated depreciation
and losses from accrued decrease in value. Improvements and upgrades are included in the assets’ costs whereas maintenance
and repair costs are recognized in profit and loss as accrued.



The
depreciation is calculated in equal yearly rates during the period of the useful life span of the assets, as follows:



| |                                                  |  | % |            
| | ------------------------------------------------ |  | - | -----------
| |                                                  |  |   |            
| | Development
    equipment                        |  |   | 7
    - 15 
| | Computers                                        |  |   | 20
    - 33
| | Furnishings
    and equipment                    |  |   | 7
    - 15 
| | Leasehold
    Improvements                       |  |   | 7
    - 10 
| | Printers
    leased to clients- See note 2.J.(2) |  |   | 25         



Raw
materials are depreciated only when they are available for use, i.e. when they are in the location and condition necessary for
it to be capable of operating in the manner intended by management. See also note 5.



|G. | Impairment
    of non-financial assets
|-- | --------------------------------------



The
carrying amounts of the Group’s non-financial assets are reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.



The
recoverable amount of an asset is the greater of its value in use and its fair value, minus the costs of disposal. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
the assessments of market participants regarding the time value of money and the risks specific to the asset, for which the estimated
future cash flows from the asset were not adjusted.



An
impairment loss is recognized if the carrying amount of an asset exceeds its estimated recoverable amount. Impairment losses are
recognized in profit or loss.



|H. | Provisions
|-- | ----------



A
provision for claims is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that
can be estimated reliably and it is probable that an outflow of economic benefits will be required to settle the obligation. When
the value of time is material, the provision is measured at its present value.



|I. | Treasury
    shares
|-- | -------------------



When
share capital recognized as equity is repurchased by the Group, the amount of the consideration paid, which includes directly
attributable costs, net of any tax effects, is recognized as a deduction from equity. Repurchased shares are classified as treasury
shares. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and
the resulting surplus on the transaction is carried to share premium, whereas a deficit on the transaction is deducted from retained
earnings.



F-14







Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements



Note
2 – Summary of Significant Accounting Policies (Continued)



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



The
revenues recognized during the year ended December 31, 2016 are comprised of revenues in the ordinary course of business from
leases of the Group’s 3D printers. The lease agreements also include a certain amount of ink, that is supplied to the beta customers
during the lease period. See also note 12.



| | (1) | Sale
    of goods
| | --- | -----------------

Revenue
from the sale of goods in the ordinary course of business is measured at the fair value of the consideration received or receivable.
Revenue is recognized when persuasive evidence exists (usually in the form of an executed sales agreement) that the significant
risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs
and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the
amount of revenue can be measured reliably. Transfers of risks and rewards vary depending on the individual terms of the contract
of sale. When two or more revenue generating activities or deliverables are sold under a single arrangement, each deliverable
that is considered to be a separate unit of account is accounted for separately. The allocation of consideration from a revenue
arrangement to its separate units of account is based on the relative fair values of each unit. If the fair value of the delivered
item is not reliably measurable, then revenue is allocated based on the difference between the total arrangement consideration
and the fair value of the undelivered item.



| | (2) | Rental
    income
| | --- | -----------------

The Company’s beta program,
launched in the second half of 2016, involves delivering its printers to leading companies and partners world-wide through a lease
model. Rental income is recognized in profit or loss, on a straight-line basis over the term of the lease. The Group has recognized
deferred revenue in respect to amounts that the Group received as of December 31, 2016, and will be recognized as revenues in
the following year, see also note 7.





|K. | Research
    and development and Intangible assets
|-- | --------------------------------------------------



Expenditure
on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognized
in profit or loss when incurred.



Development
activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditure
is capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible,
future economic benefits are probable, and the Group has the intention and sufficient resources to complete development and to
use or sell the asset.



The
expenditure capitalized in respect of development activities includes the cost of materials, direct labor and overhead costs that
are directly attributable to preparing the asset for its intended use. During 2016, the Group capitalized development expenses
with regard to the internal development of its products in an amount of NIS 15,408,000 (in 2015: NIS 11,355,000). Other research
and development expenditures are recognized in profit or loss as incurred.



In
the fourth quarter of 2016 the Group ceased to capitalize development expenses and began to amortize the intangible asset arising
from capitalization of development expenses, upon the initiation of its beta program. In subsequent periods, capitalized development
expenditure is measured at cost minus accumulated amortization and accumulated impairment losses.



F-15







Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements



Note
2 – Summary of Significant Accounting Policies (Continued)



|L. | Amortization
|-- | ------------



Amortization
is a systematic allocation of the amortizable amount of an intangible asset over its useful life. The amortizable amount is the
cost of the asset, minus its residual value.



Amortization
is recognized in profit or loss on a straight-line basis, over the estimated useful lives of the intangible assets from the date
they are available for use, since these method most closely reflect the expected pattern of consumption of the future economic
benefits embodied in each asset.



The
estimated useful lives of the capitalized development costs for the current period has been determined by the company’s
management as 10 years.



Amortization
methods, useful lives and residual values are reviewed at the end of each reporting year and adjusted if appropriate.



|M. | Government
    grants
|-- | ---------------------



Government
grants are recognized initially at fair value when there is reasonable assurance that they will be received and the Group will
comply with the conditions associated with the grant.



Grants from the National Innovation
Authority (the “NIA”), previously the Israeli Office of the Chief Scientist of the Ministry of Economy (the “OCS”)
in respect of research and development projects are accounted for as forgivable loans according to IAS 20 Accounting for Government
Grants and Disclosure of Government Assistance. Grants received from the NIA are recognized as a liability according to their
fair value on the date of their receipt, unless it is reasonably certain, on that date, that the amount received will not be refunded.
The amount of the liability is reexamined each period, and any changes in the present value of the cash flows discounted at the
original interest rate of the grant are recognized in profit or loss. The difference between the amount received and the fair
value on the date of receiving the grant is recognized as a deduction of research and development expenses. Expenses related
to revaluation of the liability in respect of government grants were recognized in the statements of profit or loss and other
comprehensive income as finance expenses.





|N. | Share-based
    payment transactions
|-- | ------------------------------------



The
grant date fair value of share-based payment awards granted to employees is recognized as salary costs, with a corresponding increase
in equity, over the period that the employees become unconditionally entitled to the awards.



Share-based
payment arrangements in which the subsidiary grants rights to parent company equity instruments to its employees are accounted
for by the Group as equity-settled share-based payment transactions.



|O. | Employee
    benefits
|-- | ---------------------



The
Group’s liability for severance pay for its employees is calculated pursuant to Israeli Severance Pay Law (1963) (the “Severance
Pay Law”). The Group’s liability is covered by monthly deposits with severance pay funds and insurance policies. For
all of the Group’s employees, the payments to pension funds and to insurance companies exempt the Group from any obligation towards
its employees, in accordance with Section 14 of the Severance Pay Law, which is accounted for as a defined contribution plan (as
defined below). Accumulated amounts in pension funds and in insurance companies are not under the Group’s control or management
and, accordingly, neither those amounts nor the corresponding accrual for severance pay are presented in the consolidated statements
of financial position.



A
defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity
and has no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension
plans are recognized as an expense in profit or loss in the periods during which related services are rendered by employees.



F-16







Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements



Note
2 – Summary of Significant Accounting Policies (Continued)



|P. | Loss
    per share
|-- | ------------------



The
Group presents basic and diluted loss per share for its Ordinary Shares. Basic loss per share is calculated by dividing the loss
attributable to ordinary shareholders of the Company by the weighted average number of Ordinary Shares outstanding during the
year, adjusted for treasury shares. Diluted loss per share is determined by adjusting the loss attributable to ordinary shareholders
of the Company and the weighted average number of Ordinary Shares outstanding, after adjustment for treasury shares, for the effects
of all dilutive potential Ordinary Shares, which comprise share options and share options granted to employees.



|Q. | The
    operating cycle
|-- | -----------------------



The
operating cycle period of the Group is 12 months.



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



| | (1) | IFRS
    9 (2014) – Financial Instruments
| | --- | -----------------------------------------

IFRS
9 (2014) replaces the current guidance in IAS 39, Financial Instruments: Recognition and Measurement. IFRS 9 (2014) includes
revised guidance on the classification and measurement of financial instruments, a new ‘expected credit loss’ model
for calculating impairment for most financial assets, and new guidance and requirements with respect to hedge accounting. IFRS
9 (2014) is effective for annual periods beginning on or after January 1, 2018 with early adoption being permitted. The Group
has examined the effects of applying IFRS 9 (2014), and in its opinion the effect on the financial statements will be immaterial.



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

IFRS
15 replaces the current guidance regarding recognition of revenues and presents a comprehensive framework for determining whether
revenue should be recognized and when and at what amount. IFRS 15 is applicable for annual periods beginning on or after January
1, 2018 and earlier application is permitted. The Group has examined the effects of applying IFRS 15, and in its opinion the effect
on the financial statements will be immaterial.



| | (3) | IFRS
    16- Leases
| | --- | -------------------

IFRS
16 replaces IAS 17, Leases and its related interpretations. For lessees, the standard presents a unified model for the accounting
treatment of all leases according to which the lessee has to recognize an asset and liability in respect of the lease in its financial
statements. IFRS 16 is applicable for annual periods as of January 1, 2019, with the possibility of early adoption, so long as
the company has also early adopted IFRS 15, Revenue from Contracts with Customers. The Group has not yet commenced examining the
effects of adopting IFRS 16 on the financial statements.



|S. | Convenience
    translation into U.S. dollars
|-- | ---------------------------------------------



For
the convenience of the reader, the reported NIS figures as of December 31, 2016 and for the year then ended, have been presented
in dollars, translated at the representative rate of exchange as of December 31, 2016 (NIS 3.845 = $1.00). The dollar amounts
presented in these financial statements should not be construed as representing amounts that are receivable or payable in dollars
or convertible into dollars, unless otherwise indicated.



F-17







Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements

Note
3.A – Cash



| |                                 |  | December 31, |       
| | ------------------------------- |  | ------------ | ------
| |                                 |  | 2015         |       
| |                                 |  | Thousand NIS |       
| |                                 |  |              |       
| | Bank accounts- dominated in NIS |  |              | 14,395
| | Bank accounts- other            |  |              | 19,416
| |                                 |  |              | 33,811



Note
3.B – Restricted deposits



| | 1. | The
    Group has a restricted deposit for its credit cards in an amount of NIS 500,000. The deposit is not linked and has an annual
    interest rate of 0.02%.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | The
    Group has a restricted deposit for the lease of its offices and labs in an amount of NIS 425,000. The deposit is not linked
    and has an annual interest rate of 0.01%. The Group expect to lease its offices and labs for a period of more than a year,
    thus the restricted deposit was classified as long term deposit.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Note
4 – Other receivables



| |                                             |  | December 31, |      
| | ------------------------------------------- |  | ------------ | -----
| |                                             |  | 2015         |      
| |                                             |  | Thousand NIS |      
| |                                             |  |              |      
| | Government authorities                      |  |              | 639  
| | Prepaid expenses                            |  |              | 203  
| | Receivables in respect of government grants |  |              | 142  
| | Others                                      |  |              | 46   
| |                                             |  |              | 1,030



F-18







Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements



Note
5 – Property plant and equipment



|                        |  | Development equipment |        |   | Computers    |  |       | Furniture and equipment |  |  | Leasehold improvements |   |  | Printers leased to clients |     |   | Raw Materials (*) |  |       | Total        | 
|----------------------- |  | --------------------- | ------ | - | ------------ |  | ----- | ----------------------- |  |  | ---------------------- | - |  | -------------------------- | --- | - | ----------------- |  | ----- | ------------ | 
|                        |  | Thousand NIS          |        |   | Thousand NIS |  |       | Thousand NIS            |  |  | Thousand NIS           |   |  | Thousand NIS               |     |   | Thousand NIS      |  |       | Thousand NIS | 
|Cost                    |  |                       |        |   |              |  |       |                         |  |  |                        |   |  |                            |     |   |                   |  |       |              | 
|As of January 1, 2015   |  |                       | 1,012  |   |              |  | 87    |                         |  |  | 37                     |   |  |                            | 34  |   |                   |  | -     |              | 
|Additions               |  |                       | 2,047  |   |              |  | 654   |                         |  |  | 116                    |   |  |                            | 910 |   |                   |  | -     |              | 
|Disposals               |  |                       | (161   | ) |              |  | -     |                         |  |  | (5                     | ) |  |                            | (58 | ) |                   |  | -     |              | 
|As of December 31, 2015 |  |                       | 2,898  |   |              |  | 741   |                         |  |  | 148                    |   |  |                            | 886 |   |                   |  | -     |              | 
|Additions               |  |                       | 1,384  |   |              |  | 473   |                         |  |  | 320                    |   |  |                            | 45  |   |                   |  | 1,328 |              | 
|Disposals               |  |                       | (1,085 | ) |              |  | -     |                         |  |  | -                      |   |  |                            | -   |   |                   |  | -     |              | 
|As of December 31, 2016 |  |                       | 3,197  |   |              |  | 1,214 |                         |  |  | 468                    |   |  |                            | 931 |   |                   |  | 1,328 |              | 
|                        |  |                       |        |   |              |  |       |                         |  |  |                        |   |  |                            |     |   |                   |  |       |              | 
|Depreciation accrued    |  |                       |        |   |              |  |       |                         |  |  |                        |   |  |                            |     |   |                   |  |       |              | 
|As of January 1, 2015   |  |                       | 18     |   |              |  | 8     |                         |  |  | 6                      |   |  |                            | 3   |   |                   |  | -     |              | 
|Additions               |  |                       | 111    |   |              |  | 111   |                         |  |  | 7                      |   |  |                            | 13  |   |                   |  | -     |              | 
|Disposals               |  |                       | (12    | ) |              |  | -     |                         |  |  | -                      | * |  |                            | (6  | ) |                   |  | -     |              | 
|As of December 31, 2015 |  |                       | 117    |   |              |  | 119   |                         |  |  | 13                     |   |  |                            | 10  |   |                   |  | -     |              | 
|Additions               |  |                       | 266    |   |              |  | 328   |                         |  |  | 21                     |   |  |                            | 68  |   |                   |  | 49    |              | 
|Disposals               |  |                       | (85    | ) |              |  | -     |                         |  |  | -                      |   |  |                            | -   |   |                   |  | -     |              | 
|As of December 31, 2016 |  |                       | 298    |   |              |  | 447   |                         |  |  | 34                     |   |  |                            | 78  |   |                   |  | 49    |              | 
|                        |  |                       |        |   |              |  |       |                         |  |  |                        |   |  |                            |     |   |                   |  |       |              | 
|Carrying amount         |  |                       |        |   |              |  |       |                         |  |  |                        |   |  |                            |     |   |                   |  |       |              | 
|As of December 31, 2016 |  |                       | 2,899  |   |              |  | 767   |                         |  |  | 434                    |   |  |                            | 853 |   |                   |  | 1,279 |              | 
|As of December 31, 2015 |  |                       | 2,781  |   |              |  | 622   |                         |  |  | 135                    |   |  |                            | 876 |   |                   |  | -     |              | 



|(*) | During
    the year ended December 31, 2016 the Group acquired raw materials for the building of its 3D printers, with the intention
    of leasing those printers to clients as a part of the Company’s beta plan.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



During
the year ended December 31, 2016, the Group acquired property plant and equipment on credit in the amount of NIS 1,013,000.



During
the year ended in December 31, 2016, the Group recognized an amount of NIS 1,328,000 as property plant and equipment in respect
to printers that it leases to its clients. This amount include an amount of NIS 852,000 that was previously capitalized as an
intangible asset.



F-19







Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements



Note
6 – Intangible assets



Intangible
assets include development expenses that were capitalized. The expenditure capitalized in respect of development activities includes
the cost of materials, direct labor and overhead costs that are directly attributable to preparing the asset for its intended
use. See also notes 2.B and 2.L.



| |                                        |  | December 31, |       
| | -------------------------------------- |  | ------------ | ------
| |                                        |  | 2015         |       
| |                                        |  | Thousand NIS |       
| |                                        |  |              |       
| | Balance as of January 1                |  |              | -     
| | Capitalization of development expenses |  |              | 11,355
| | Amortization                           |  |              | -     
| | Balance as of December 31              |  |              | 11,355



Note
7 – Other payables



| |                                                    |  | December 31, |      
| | -------------------------------------------------- |  | ------------ | -----
| |                                                    |  | 2015         |      
| |                                                    |  | Thousand NIS |      
| |                                                    |  |              |      
| | Accrued expenses                                   |  |              | 215  
| | Deferred revenue                                   |  |              | -    
| | Other short time liabilities                       |  |              | -    
| | Employees and related liabilities                  |  |              | 1,090
| | Government authorities                             |  |              | 316  
| | Current maturities in respect of government grants |  |              | 96   
| | Others                                             |  |              | 97   
| |                                                    |  |              | 1,814



Note
8 – Liability in respect of government grants



| |                                                                        |  | 2015         |       |   | 2016         | 
| | ---------------------------------------------------------------------- |  | ------------ | ----- | - | ------------ | 
| |                                                                        |  | Thousand NIS |       |   | Thousand NIS | 
| | Balance as of January 1                                                |  |              | 370   |   |              | 
| | Amounts received during the year                                       |  |              | 883   |   |              | 
| | Amounts not yet received                                               |  |              | 142   |   |              | 
| | Amounts recognized as an offset from research and development expenses |  |              | (383  | ) |              | 
| | Revaluation of the liability                                           |  |              | 77    |   |              | 
| | Balance as of December 31                                              |  |              | 1,089 |   |              | 
| |                                                                        |  |              |       |   |              | 
| | Current maturities in respect of government grants                     |  |              | 96    |   |              | 
| |                                                                        |  |              |       |   |              | 
| | Long term liability in respect of government grants                    |  |              | 993   |   |              | 



F-20









Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements



Note
8 – Liability in respect of government grants (Continued)



On
September 30, 2014, Nano-Technologies received an approval from the NIA, then the OCS, to finance a development project in a scope
of up to NIS 3,700,000, while the NIA’s share of financing the aforesaid amount would be up to 50%. In consideration, Nano-Technologies
undertook to pay the NIA royalties in the rate of 3% of the future sales up to the amount of the grants received. On the date
on which the grants were received, the Group recognized a liability using a discount rate of 30%,



On
December 22, 2015, Nano- Technologies received an approval from the NIA to support its development of a 3D PCB printer. The approved
budget is up to NIS 4,400,000, and the contribution by the NIA to the research and development budget is 50% of expenditures.
On the date on which the grants were received, the Group recognized a liability using a discount rate of 19.5%,



See
also note 20.B regarding an additional approval received after the reporting date.



Note
9 – Other Long-term Liabilities



Other
long-term liabilities represent cash and property, plant and equipment items received in respect of lease of additional office.



Note
10 – Commitments and contingent liabilities



|A. | Licenses
|-- | --------



On
September 15, 2014, Nano-Technologies engaged in a licensing agreement with Yissum – Research Development Company of the
Hebrew University of Jerusalem, Ltd. (“Yissum”), whereby Nano-Technologies would be granted an exclusive right to use
the patents owned by Yissum, which would enable Nano-Technologies to manufacture nano-conductive ink for printing electronic circuits
with a unique method. In consideration for the said exclusive usage right, Nano-Technologies would pay Yissum royalties of approximately
3% of the total sales of the conductive ink (which are generated for Nano-Technologies after the conclusion of the development
process and the beginning of the actual production and sale). The terms of the licensing agreement are for the duration of the
patents and patent requests.



On
April 2, 2015, Nano-Technologies and Yissum entered into an amended and restated agreement pursuant to which the license granted
to Nano-Technologies was expanded such that Nano-Technologies received exclusive rights for use of a unique method to produce
silver nano-particles for the production of conductive ink for any purpose and any potential market that it defines as a target
market. On May 14, 2015, in connection with the entry into the amended and restated agreement, the Company’s board of directors
approved a grant of 559,097 non-tradable share options to Yissum, immediately exercisable into 559,097 Ordinary Shares, during
a period of five years and in consideration for an exercise price of NIS 2.7 per share.



Subsequent
to the above transaction and considering further developments, management performed a reassessment and determined that there are
no clear plans on starting research and development projects for the use of the unique method to produce silver nano-particles
for the production of conductive ink for any new purpose and any new potential market in the foreseeable future. Accordingly,
the cost of the license was impaired and recognized as an expense during the year ended December 31, 2015.



F-21







Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements



Note
10 – Commitments and contingent liabilities(Continued)



|B. | Contingent
    liabilities
|-- | --------------------------



On
March 19, 2015, a claim was filed seeking damages in the amount of NIS 20,000,000 against the Company, Nano-Technologies, shareholders
of the Company, officers and employees of the Group (the “Original Defendants”). The claim was filed by a third party
(the “Plaintiff”) alleging that commercial secrets and technology that were developed by such third party in the field
of 3-D printing was misappropriate, allegedly, through an officer and additional employee of the Group that were employed thereby
in the past. In addition, the Plaintiff sought, among others, to order the Defendants, if the claim was accepted, to cease to
make use of the allegedly misappropriated know-how and technology, and assign the rights to certain patents and patent applications
owned by the Group to said third party.



In
May 2015, the Defendants filed a statement of defense, within which the Defendants denied the allegations attributed to them in
the statement of claim, and in which it argued, inter alia, that they did not misappropriate or make use of intellectual property,
know-how or trade secrets belonging to the Plaintiff. The Defendants stated that the production of ink based on silver nano-particles
is based on a license lawfully held by the Group from Yissum, and on the basis of a specialized formulation developed by its staff.
It was additionally stated that the 3-D printing technology used by the Group is materially different from the printing technologies
of the Plaintiff and that the patent applications filed by the Group in the United States claim technological inventions that
are independent developments of the Group.



In
October 2015, following the request of an officer and employee to dismiss the claim against them, and the consent of the plaintiff
to delete the claim (while maintaining the right to file a claim against them in the Israeli Labor Court at a later date), the
court ordered the dismissal of the claim only against the officer and the employee, and ordered the Plaintiff to pay expenses.



On
May 2, 2016, the Plaintiff filed a Motion to Amend the Statement of Claim, a Motion for a Temporary Injunction and a Motion for
a Protective Order. In the Motion for a Temporary Injunction, the Plaintiff aimed. Among others, to prevent the use of the disputed
technology and the transfer of the relevant patent.



On
May 30, 2016, a pre-trial hearing took place. During the hearing the parties agreed to turn to mediation proceedings for the purpose
of resolving the dispute amicably.



On
September 29, 2016, a mediation meeting took place and the parties are currently engaged in a confidential settlement discussions.



As
of the date of the approval of the financial statements, the Group, after taking legal advice, is in the opinion that if the mediation
proceeding will not be resolved to the satisfaction of the Group, and the parties will return to resolve the dispute in court,
then the Group is unable to assess the chances of the claim in light of the preliminary stage of the proceedings, before the Plaintiff
has been allowed to amend the Statement of Claim and before the parties engaged in discovery.



|C. | Commitments
|-- | -----------



The
Group leases its headquarters, manufacturing and research and development facility and cars under long-term non-cancelable operating
leases, certain of which provide for renewal options.



Leasing
expenses for the year 2016 were approximately NIS 1,566,000 (2015: NIS 957,000).



Future
minimum lease payments for all existing long-term, non-cancelable operating leases, as well as purchase orders as of December
31, 2016 are as follows:





| |       |  | Thousand NIS |      
| | ----- |  | ------------ | -----
| | 2017  |  |              | 7,925
| | 2018  |  |              | 1,880
| | Total |  |              | 9,805



F-22







Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements

Note
11 – Equity



|A. | The
    Company’s share capital (in thousands of Ordinary Shares)
|-- | -----------------------------------------------------------------



| |                                                    |  | Ordinary Shares |        
| | -------------------------------------------------- |  | --------------- | -------
| |                                                    |  | 2015            |        
| | Issued and paid-up share capital as at December 31 |  |                 | 34,321 
| | Authorized share capital                           |  |                 | 200,000



|B. | Transactions
    with issued and paid up share capital
|-- | ------------------------------------------------------



On
May 18, 2014, the Company engaged with Nano-Technologies and its shareholders in a contingent agreement for a private placement
(the “Agreement”), such that after the completion of the transaction, the Company will hold all of the issued and paid
up capital of Nano-Technologies, and the shareholders of Nano-Technologies (the “Offerees”) will be related parties
in the Company and will appoint directors on their behalf (the “Transaction” or the “Merger Transaction”).
The completion of the Transaction was contingent upon the fulfillment of completion of raising capital in a total amount of $1,500,000
that will be raised from investors in return to allocation of shares (“Capital Raising”). On the date of the completion
of the Transaction, and subject to the completion of the Capital Raising as stated, and subject to the fulfillment of the conditions
precedent set forth in the Agreement, the Offerees will transfer to the Company all of their holdings in the shares of Nano-Technologies,
constituting all of the issued and paid up capital, and in consideration the Company will allocate to Offerees 6,931,303 Ordinary
Shares, which constituted, after their allocation, and after the allocation of the Capital Raising shares, holdings at a rate
of approximately 37.38% of the issued and paid up share capital of the Company and 4,322,329 non-tradable warrants that are exercisable
into 4,322,329 Ordinary Shares, at an exercise price of NIS 0.8655 per share, provided that the Group meets the milestones set
forth in the Agreement.



The
milestones are based on the Company’s revenues and market capitalization in the TASE. As part of the Company’s engagement
in the Merger Transaction, the Company engaged on July 3, 2014 in a private placement agreement with a third party (the “Investor”),
whereby in consideration for a total of approximately NIS 2,569,000, the Company allocated to the Investor 2,967,938 Ordinary
Shares. As a part of the Agreement, the Investor was given the right to appoint a director on its behalf to the Company’s
board of directors and the right to join a private allocation to the current Related Parties of the Company, in the event that
the Company seeks to raise additional cash capital.



In
addition, the Company engaged in agreements with additional investors whereby in consideration for a total of approximately NIS
1,378,000, the Company will allocate to investors 1,592,143 Ordinary Shares and it was determined that as a part of raising the
capital, the Company would allocate to Related Parties therein 1,375,794 Ordinary Shares in consideration for a total of approximately
NIS 1,191,000.



On
August 17, 2014, the general meeting of the Company’s shareholders approved the Merger Transaction, including the allocation
of shares and non-tradable warrants to Offerees and the allocation of shares to Investors and related parties. On August 25, 2014,
the Merger Transaction, including the Capital Raising as stated was completed, and therefore, as of this date, the Company holds
all of the issued and paid up capital of Nano-Technologies. This transaction was accounted for by analogy to a reverse acquisition,
with the financial statements prepared as a continuation of Nano–Technologies financial statements, while the equity was
adjusted to reflect retroactively the legal share capital of the Company.



F-23







Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements



Note
11 – Equity (Continued)



|B. | Transactions
    with issued and paid up share capital (Continued)
|-- | ------------------------------------------------------------------



In
January 2015, the Company completed fund raising, in which the Company issued to investors 1,508,572 Ordinary Shares, which constituted
approximately 7.5% of the issued and paid up share capital of the Company at that time, and 1,508,572 non-tradable warrants, which
are exercisable into 1,508,572 Ordinary Shares, according to the exercise terms determined. In addition, the Company has undertaken
vis-à-vis the investors a price adjustment mechanism that will be activated if, during a period of 18 months from the issuance
date, the Company performs additional fundraising, within which shares are allocated at a price that is lower than NIS 1.4 per
share. The immediate consideration (gross) received as a result of the aforesaid fund raising amounted to a total of NIS 2,112,000.
The immediate consideration (net) received as a result of the aforesaid fund raising amounted to a total of NIS 2,065,000. From
the net issuance consideration, a total of approximately NIS 91,000 was attributed to the fair value of a financial derivative
(adjustment mechanism). The remainder of the issuance consideration was attributed to equity instruments (shares and warrants),
based on their relative fair value near the issuance date. Accordingly, a total of NIS 1,542,000 was attributed to Ordinary Shares
and NIS 432,000 was attributed to warrants.



On
February 16, 2015, the general meeting of the Company’s shareholders approved a private placement of 285,715 Ordinary Shares,
which constituted approximately 1.4% of the issued and paid up share capital on the same date and 285,715 non-tradable warrants,
which are exercisable into 285,715 Ordinary Shares, according to the exercise terms determined, to the chairman of the Company’s
board of directors and an additional director of the Company. The immediate consideration (gross and net) received as a result
of the aforesaid fund raising amounted to a total of NIS 400,000.



The
shares and warrants were issued in April 2015. In addition, the Company has undertaken vis-à-vis the investors a price
adjustment mechanism that will be activated if, during a period of 18 months from the issuance date, the Company performs additional
fundraising, within which shares are allocated at a price that is lower than NIS 1.4 per share. The issuance consideration was
allocated to equity instruments (Ordinary Shares and warrants), based on the relative fair value thereof on the issuance date.
Accordingly, a total of approximately NIS 254,000 was attributed to Ordinary Shares and a total of approximately NIS 146,000 was
attributed to warrants.



In
March 2015, the Company completed additional fund raising from investors and related parties of the Company, in which the Company
issued 3,956,545 Ordinary Shares, which constituted approximately 16.5% of the Company’s issued and paid up share capital
at the time. In addition, the Company has undertaken vis-à-vis the investors a price adjustment mechanism that will be
activated if the Company performs additional fundraising during a period of 18 months from the issuance date, within which shares
are allocated at a price that is lower than NIS 1.65 per share, or if shares are allocated at a price equal to or less than NIS
2 thereafter. The immediate consideration (gross) received as a result of the aforesaid fund raising amounted to a total of approximately
NIS 6,528,000. The immediate consideration (net) received as a result of the aforesaid fund raising amounted to a total of approximately
NIS 6,402,000. From the net issuance consideration, a total of approximately NIS 37,000 was attributed to a financial derivative
(adjustment mechanism), in accordance with a valuation calculated by the Company with the assistance of an external appraiser.
The remainder of the issuance consideration in the amount of approximately NIS 6,365,000 was attributed to share capital.



F-24







Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements



Note
11 – Equity (Continued)



|B. | Transactions
    with issued and paid up share capital (Continued)
|-- | ------------------------------------------------------------------



On
July 29, 2015, the Company completed additional fund raising from investors and related parties of the Company, in which the Company
issued 7,671,089 Ordinary Shares, which constituted approximately 23.61% of the issued and paid up share capital of the Company
on the same date and 3,835,546 non-tradable warrants, which are exercisable into 3,835,546 Ordinary Shares, according to the exercise
terms determined. In addition, the Company has undertook vis-à-vis the investors a price adjustment mechanism that would
be activated if the closing price of the Company’s shares at the end of 60 days after the completion of the allocation and the
average closing price of a share of the Company on the five days before the 60th day was less than NIS 5.5. Under this mechanism,
the investors would be entitled to an allocation of shares that will reflect the difference between the share price and the price
paid by them (the “Compensation”), while the share price based on which the Compensation was calculated would not
be less than NIS 4.75. In addition, the Company undertook vis-à-vis the investors an additional price adjustment mechanism
that would be activated if the Company performs additional fundraising during a period of 12 months from the allocation date,
within which shares would be allocated a price that is less than NIS 5.5 per share. The immediate (gross) consideration received
in the issuance amounted to a total of approximately NIS 42,191,000. The net issuance consideration (after the reduction of issuance
expenses) amounted to a total of approximately NIS 38,706,000. From the net issuance consideration, a total of approximately NIS
1,306,000 was attributed to a financial derivative (adjustment mechanism), in accordance with a valuation calculated by the Company
with the assistance of an external appraiser. The remaining of the issuance consideration was attributed to equity instruments
(Ordinary Shares and warrants), based on their relative fair value on the issuance date. Accordingly, a total of NIS 34,203,000
was attributed to shares and NIS 3,197,000 was attributed to warrants.



On
December 1, 2015, the Company issued, as an extension to the issuance in July 29, 2015, pursuant to a private placement, an aggregate
of 1,552,877 Ordinary Shares. In addition, the Company issued non-tradable warrants to purchase up to 776,440 Ordinary Shares
at an exercise price of NIS 9.00 per share. These warrants will expire 24 months from the date of issuance. The total (gross)
consideration was approximately NIS 8,541,000. The total (net) consideration was approximately NIS 7,946,000, which was attributed
to equity instruments (shares and warrants), based on their relative fair value on the issuance date. Accordingly, a total of
NIS 7,188,000 was attributed to shares and NIS 758,000 was attributed to warrants.



On
September 29, 2016, the Company issued, pursuant to a public offering in the U.S., an aggregate of 9,250,000 Ordinary Shares.
On October 11, 2016, the underwriters exercised their option to purchase an additional 1,376,375 Ordinary Shares, bringing the
total gross proceeds from the offering to approximately NIS 51,872,000 ($13,800,000), before deducting underwriting discounts
and commissions and other offering-related expenses. The total (net) consideration was approximately NIS 46,350,000.



|C. | Treasury
    shares
|-- | -------------------



As
of December 31, 2016, the Company held 527,032 Ordinary Shares, constituting approximately 1.1% of its issued and paid up share
capital.



Note
12 – Revenue



| |                  |  | For the year ended December 31 |  
| | ---------------- |  | ------------------------------ | -
| |                  |  | 2014                           |  
| |                  |  | Thousand NIS                   |  
| | Printers rentals |  |                                | -
| | Ink              |  |                                | -
| | Total revenue    |  |                                | -



F-25







Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements



Note
13 – Cost of revenues



| |                                                     |  | For the year ended December 31 |  
| | --------------------------------------------------- |  | ------------------------------ | -
| |                                                     |  | 2014                           |  
| |                                                     |  | Thousand NIS                   |  
| | According to sources of revenue -                   |  |                                | -
| | Depreciation of printers leased in operating leases |  |                                | -
| | Ink                                                 |  |                                | -
| | Total                                               |  |                                | -



Note
14 – Further detail of profit or loss sections



|                                                                                 |  | For
    the year ended December 31 |      
|-------------------------------------------------------------------------------- |  | ---------------------------------- | -----
|                                                                                 |  | 2014                               |      
|                                                                                 |  | Thousand
    NIS                   |      
|A.
    Research and development expenses, net                                    |  |                                    |      
|Payroll                                                                          |  |                                    | 1,565
|Materials                                                                        |  |                                    | 292  
|Subcontractors                                                                   |  |                                    | 1,290
|Patent
    registration                                                          |  |                                    | 117  
|Depreciation                                                                     |  |                                    | 30   
|Rental
    fees and maintenance                                                  |  |                                    | 166  
|Other                                                                            |  |                                    | 67   
|                                                                                 |  |                                    | 3,527
|Less
    – Development expenditure capitalized as intangible and tangible assets |  |                                    | --   
|Less
    – government grants                                                     |  |                                    | (188 
|                                                                                 |  |                                    | 3,339
|                                                                                 |  |                                    |      
|B.
    General and administrative expenses                                       |  |                                    |      
|Payroll                                                                          |  |                                    | 491  
|Fees                                                                             |  |                                    | 70   
|Professional
    services                                                        |  |                                    | 525  
|Directors
    pay                                                                |  |                                    | 192  
|Office
    expenses                                                              |  |                                    | 37   
|Travel
    abroad                                                                |  |                                    | --   
|Other                                                                            |  |                                    | 111  
|                                                                                 |  |                                    | 1,426
|                                                                                 |  |                                    |      
|C.
    Finance income                                                            |  |                                    |      
|Exchange
    rate differences                                                    |  |                                    | 1    
|Revaluation
    of derivative instruments                                        |  |                                    | --   
|                                                                                 |  |                                    | 1    
|Finance
    expense                                                              |  |                                    |      
|Interest
    on controlling shareholders loans                                   |  |                                    | 36   
|Bank
    fees                                                                    |  |                                    | 40   
|Revaluation
    of liability in respect of government grants                     |  |                                    | 42   
|                                                                                 |  |                                    | 118  



*Reclassification



F-26







Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements





Note
15 – Taxes on income



|A. | Corporate
    tax rate
|-- | ----------------------



Presented
hereunder are the tax rates relevant to the Company in the years 2014-2016:

2014
– 26.5%,

2015
– 26.5%, and

2016
– 25%.



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 of 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 would be to reduce the corporate tax rate to 24% as of January 2017 and the second step would be to reduce
the corporate tax rate to 23% as of January 2018.



This
change has no impact on the financial statements.



|B. | Theoretical
    tax
|-- | -------------------



The
following presents the adjustment between the theoretical tax amount and the tax amount included in the financial statements:



| |                                                                                                         |  | For the year ended December 31, |        
| | ------------------------------------------------------------------------------------------------------- |  | ------------------------------- | -------
| |                                                                                                         |  | 2014                            |        
| |                                                                                                         |  | Thousand NIS                    |        
| | Loss before taxes on income                                                                             |  |                                 | (14,178
| | Statutory tax rate                                                                                      |  |                                 | 26.5   
| | Theoretical tax benefit                                                                                 |  |                                 | (3,757 
| | Increase in tax liability due to:                                                                       |  |                                 |        
| | Issuance expenses                                                                                       |  |                                 | 2,480  
| | Unrecognized expenses                                                                                   |  |                                 | 289    
| | Losses and benefits for tax purposes and temporary provisions for which no deferred taxes were recorded |  |                                 | 988    
| | Taxes on income                                                                                         |  |                                 | --     



|C. | Tax
    assessments
|-- | -------------------



The
Company has final tax assessments until and including the 2012 tax year.



|D. | Accumulated
    losses for tax purposes
|-- | ---------------------------------------



As
of the reporting date, the Group has net operating loss for tax purposes in the amount of approximately NIS 61,000,000. The Israeli
tax authorities may not permit the off-set of the total amount of the accumulated losses. The Group has not recognized
a tax asset for the aforesaid losses, in the absence of an expectation of using them in the foreseeable future.



F-27







Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements



Note
16 – Loss per share



| |                                                                                                                             |  | For the year ended December 31 |       
| | --------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------ | ------
| |                                                                                                                             |  | 2014                           |       
| | Weighted average of number of Ordinary Shares used in the calculation of the basic and diluted loss per share (in thousand) |  |                                | 12,754
| | Net loss used in calculation (thousand NIS)                                                                                 |  |                                | 14,178



At
December 31, 2016, 13,415,764 options (in 2015: 17,426,479, and 2014: 556,317) were excluded from the diluted weighted average
number of Ordinary Shares calculation as their effect would have been anti-dilutive.



Note
17 – Share-based payments



|A. | On
    November 30, 2014, the Company’s board of directors approved the grant of 185,439 non-tradable share options to an external
    consultant of the Company. The share options are exercisable into 185,439 Ordinary Shares, which constituted approximately
    0.8% of the Company’s share capital (on a fully diluted basis) at that date, in consideration for an exercise price
    of NIS 2 per share. 46,363 of the share options were exercisable immediately, and the remaining 139,076 share options will
    vest gradually over a period of 7 quarters, starting at January 1, 2015, provided that, the consultant continues to be the
    Company’s consultant. The share options will expire at December 1, 2017.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



On
December 17, 2014, the Company’s board of directors approved the grant of 370,878 non-tradable share options to an
additional external consultant of the Company. The share options are exercisable into 370,878 Ordinary Shares, which constituted
approximately 1.6% of the Company’s share capital (on a fully diluted basis) at that date. 185,439 of the share options
were exercisable immediately, for a period of 18 months from the grant date, in consideration for an exercise price of NIS 2 per
share, and the remaining 185,439 share options are exercisable subject to a vesting period of 18 months, for a period of three
years and in consideration for an exercise price of NIS 3 per share.



During
2015, the Company’s board of directors approved the grant of 609,888 non-tradable share options to an external consultant
of the Company. The share options are exercisable into 609,888 Ordinary Shares. 50,824 of the share options were exercisable immediately
and the remaining 559,064 share options will vest in 11 equal quarterly batches over a period of 33 months, starting 3 months
from the grant date. Each stock option is exercisable during a period of three years from the vesting date, based on the amount
of the financial benefit inherent in it on the exercise date (based on a cashless exercise mechanism). The exercise price of the
first 304,944 Ordinary Shares is NIS 2 for each share option, and the exercise price of the remaining 304,944 Ordinary Shares
is NIS 3 for each share option. The options include a cashless exercise mechanism.



On
August 20, 2015, the Company’s board of directors approved the grant of 75,252 non-tradable share options to fundraising
finders. The share options are exercisable into 75,252 Ordinary Shares during a period of 24 months, in consideration for an exercise
price of NIS 9 for each share.



On
November 5, 2015, the Company granted to employees of the Company (including the Company’s CFO), 1,512,500 share options (non-tradable),
which are exercisable into 1,512,500 Ordinary Shares. One third of the share options would vest on year after the commencement
of employment, and the remaining would vest in eight equal quarterly batches over a period of two years. The share options will
be exercisable during the earlier of a period of four years from the vesting date, or 90 days from the end of employment date,
in consideration for an exercise price of NIS 1.65 for each stock option. The options include a cashless exercise mechanism.



On
December 6, 2015, the Company issued non-tradable options to purchase 50,000 Ordinary Shares to a service provider at an exercise
price of NIS 9.00 per share. The options were exercisable immediately. Such options will expire 24 months from the date of issuance.



F-28







Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements



Note
17 – Share-based payment (Continued)



On
December 6, 2015, the Company issued non-tradable options to purchase 100,000 Ordinary Shares to an advisor at an exercise price
of NIS 9.00 per share. Such options vest quarterly over two years and expire 48 months from the date of issuance. The options
include a cashless exercise mechanism.



On
December 13, 2015, the Company granted to employees of the Company 452,500 non tradable share options, which are exercisable into
452,500 Ordinary Shares. One third of the share options will vest after one year from commencement of employment, and the remaining
will vest in eight equal quarterly batches over a period of two years. The share options will be exercisable during the earlier
of a period of four years from the vesting date, or 90 days from the end of employment date, in consideration for an exercise
price of NIS 1.65 for each share option. The options include a cashless exercise mechanism.



On
November 16, 2016, the Company granted to employees of the Company 976,500 share options (non-tradable), which are exercisable
into 976,500 Ordinary Shares. One third of the share options will vest after one year from commencement of employment, and the
remaining will vest in eight equal quarterly batches over a period of two years. The share options will be exercisable during
the earlier of a period of four years from the vesting date, or 90 days from the end of employment date, in consideration for
an exercise price of NIS 1.65 for each share option. The options include a cashless exercise mechanism.



On
November 29, 2016, the Company issued non-tradable options to purchase 200,000 Ordinary Shares to four advisors (divided equally
among them) at an exercise price of NIS 7.50 per share. Such options vest quarterly over one year and expire 3 years from the
grant date.



|B. | On
    February 16, 2015, the general meeting of the Company’s shareholders approved a grant of 370,878 non-tradable share
    options to the chairman of the board, which are exercisable into 370,878 Ordinary Shares, subject to a vesting period of 2
    years and for an expiration period of 5 years from the grant date, with an exercise price of NIS 1.75 per share. The options
    include a cashless exercise mechanism.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



On
July 20, 2015, the general meeting of the Company’s shareholders approved a grant of 1,600,000 share options (non-tradable)
to the four controlling shareholders (divided equally among them), which are exercisable into 1,600,000 Ordinary Shares.. Additionally,
the general meeting of the Company’s shareholders approved a grant of 760,000 share options (non-tradable) to four directors
of the Company (of which 400,000 share options are granted to the chairman of the board), which are exercisable into 760,000 Ordinary
Shares.. The share options granted to the four controlling shareholders of the Company, the chairman of the board of directors
and the three additional directors of the Company will vest in 12 equal quarterly batches over a period of three years, and be
exercisable during a period of five years from the grant date, in consideration for an exercise price of NIS 5.5 for each share.
The options include a cashless exercise mechanism.



On
October 21, 2015, the general meeting of the Company’s shareholders approved a grant of 360,000 non-tradable share options
for each of the two external directors and the independent director, which are exercisable into 360,000 Ordinary Shares.. The
share options will vest in 12 equal quarterly batches over a period of 3 years, and be exercisable during a period of 5 years
from the grant date, in consideration for an exercise price of NIS 5.5 for each share option. The options include a cashless exercise
mechanism.



On
December 31, 2015, the general meeting of the Company’s shareholders approved a grant of 250,000 share options (non-tradable)
to a director, which are exercisable into 250,000 Ordinary Shares. The share options will vest in 12 equal quarterly batches over
a period of three years, starting from January 1, 2016, and be exercisable during a period of five years from the grant date,
in consideration for an exercise price of NIS 9 for each share option. The options include a cashless exercise mechanism.



|C. | On
    April 2, 2015, the Company’s board of directors approved a grant of 559,097 non-tradable share options to Yissum- see
    Note 10.A.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------



F-29







Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements



Note
17 – Share-based payment (Continued)



|D. | The
    fair value of share options is measured using the Black-Scholes formula or Binomial pricing model. Measurement inputs include
    the share price on the measurement date, the exercise price of the instrument, expected volatility (based on the weighted
    average volatility of a sample of companies’ shares which are similar in characteristics and operations to the Group, over
    the expected term of the options), expected term of the options, expected dividends, and the risk-free interest rate (based
    on government debentures).
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
following is the data used in determining the fair value of the share options:



| |                                                          |  |  | 17.A-
    consultants and employees |   |  |  | 17.B-
    directors |   |  |  | 17.C-
    Yissum |  
| | -------------------------------------------------------- |  |  | ----------------------------------- | - |  |  | ------------------- | - |  |  | ---------------- | -
| | Number
    of share options granted                      |  |  | 4,532,957                           |   |  |  | 3,340,878           |   |  |  | 559,097          |  
| | Fair
    value in the grant date (thousand NIS)          |  |  | 9,948                               |   |  |  | 11,263              |   |  |  | 2,833            |  
| | Range
    of share price (NIS)                           |  |  | 1.507
    – 7.07                    |   |  |  | 2.76
    – 7.24     |   |  |  | 7.03             |  
| | Range
    of exercise price (NIS)                        |  |  | 1.65
    - 9                        |   |  |  | 1.75
    – 9        |   |  |  | 2.7              |  
| | Range
    of expected share price volatility             |  |  | 49.37%-62.69                        | % |  |  | 53.75%-61.27        | % |  |  | 57.26            | %
| | Range
    of estimated life (years)                      |  |  | 1.5
    – 7.05                      |   |  |  | 4
    – 5           |   |  |  | 5                |  
| | Range
    of weighted average of risk-free interest rate |  |  | 0.23%-1.72                          | % |  |  | 0.88%-1.32          | % |  |  | 1.15             | %
| | Expected
    dividend yield                              |  |  | --                                  |   |  |  | --                  |   |  |  | --               |  
| | Outstanding
    as of December 31, 2016                  |  |  | 3,799,892                           |   |  |  | 3,340,878           |   |  |  | 223,697          |  
| | Exercisable
    as of December 31, 2016                  |  |  | 1,521,687                           |   |  |  | 1,557,556           |   |  |  | 223,697          |  



|E. | The
number of share options granted to employees and consultants, and included in Note 17.A are as follows:
|-- | -----------------------------------------------------------------------------------------------------------





| |                                     |  | 2015 |           |   | 2016 | 
| | ----------------------------------- |  | ---- | --------- | - | ---- | 
| | Outstanding
    at January 1        |  |      | 556,317   |   |      | 
| | Granted
    during the year         |  |      | 2,800,140 |   |      | 
| | Exercised
    during the year (*)   |  |      | (205,439  | ) |      | 
| | Forfeited
    during the year       |  |      | (80,000   | ) |      | 
| | Outstanding
    at December 31 (**) |  |      | 3,071,018 |   |      | 
| | Exercisable
    as of December 31   |  |      | 733,984   |   |      | 





The number of share options granted
to directors and included in Note 17.B are as follows:



| |                               |  | 2015 |           |  | 2016 | 
| | ----------------------------- |  | ---- | --------- |  | ---- | 
| | Outstanding at January 1      |  |      | --        |  |      | 
| | Granted during the year       |  |      | 3,090,878 |  |      | 
| | Exercised during the year     |  |      | --        |  |      | 
| | Outstanding at December 31    |  |      | 3,090,878 |  |      | 
| | Exercisable as of December 31 |  |      | 382,123   |  |      | 





The number of share options granted to Yissum
and included in Note 17.C are as follows:



| |                               |  | 2015 |         |  | 2016 | 
| | ----------------------------- |  | ---- | ------- |  | ---- | 
| | Outstanding at January 1      |  |      | --      |  |      | 
| | Granted during the year       |  |      | 559,097 |  |      | 
| | Exercised during the year     |  |      | --      |  |      | 
| | Outstanding at December 31    |  |      | 559,097 |  |      | 
| | Exercisable as of December 31 |  |      | 559,097 |  |      | 



|(*) | The
    weighted average exercise price at the date of exercise for share options exercised in 2016 and 2015 was NIS 1.65.
|--- | --------------------------------------------------------------------------------------------------------------------------



|(**) | The
    exercise price of all of the outstanding options is NIS 1.65.
|---- | ---------------------------------------------------------------------



The
weighted average contractual life of the outstanding options as of December 31, 2016, is 4.52 years.



|F. | Expenses
    for share based payments in 2016 include expenses in an amount of approximately NIS 1,824,000 that were capitalized to
    an intangible asset - see note 2.L.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-30







Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements



Note
18 – Financial instruments



|A. | Risk
    management policy
|-- | --------------------------



The
actions of the Group expose it to various financial risks, such as a market risk (including a currency risk, fair value risk regarding
interest rate and price risk), credit risk, liquidity risk and cash flow risk for the interest rate. The comprehensive risk-management
policy of the Group focuses on actions to limit the potential negative impacts on financial performance of the Group to a minimum.
The Group does not typically use derivative financial instruments in order to hedge exposures. Risk management is performed by
the Group’s Chief Executive Officer in accordance with the policy approved by the board of directors.



|B. | Credit
    risk
|-- | ---------------



The
Group does not have a significant concentration of credit risks.



The
cash and cash equivalents of the Group are deposited in Israeli and U.S. banking corporations. In the estimation of the Group’s
management, the credit risk for these financial instruments is low.



|C. | Classification
    of financial instruments
|-- | -------------------------------------------



The
following is a classification of the financial assets and financial liabilities of the Group for groups of financial instruments
in accordance with IAS 39:



| |                                                  |  | December 31, |       
| | ------------------------------------------------ |  | ------------ | ------
| |                                                  |  | 2015         |       
| |                                                  |  | Thousand NIS |       
| | Financial assets                                 |  |              |       
| | Cash and cash equivalents                        |  |              | 33,811
| | Restricted deposits                              |  |              | 928   
| | Trade receivables                                |  |              | -     
| | Other receivables                                |  |              | 249   
| |                                                  |  |              | 34,988
| | Financial liabilities                            |  |              |       
| | Financial liabilities measured at amortized cost |  |              | 4,218 



|D. | Currency
    risk
|-- | -----------------



A
currency risk is the risk of fluctuations in a financial instrument, as a result of changes in the exchange rate of the foreign
currency.



F-31







Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements



Note
18 – Financial instruments (Continued)



|D. | Currency
    risk (Continued)
|-- | -----------------------------



The
following is the classification and linkage terms of the financial instruments of the Group (in thousand NIS):



| |                                          |  | NIS |        |   | Linked to the US dollar |  |        | Linked to the EURO and Other |  |  | Total |  
| | ---------------------------------------- |  | --- | ------ | - | ----------------------- |  | ------ | ---------------------------- |  |  | ----- | -
| | December 31, 2016                        |  |     |        |   |                         |  |        |                              |  |  |       |  
| | Cash and cash equivalents                |  |     | 3,501  |   |                         |  | 44,065 |                              |  |  | 33    |  
| | Restricted deposits                      |  |     | 925    |   |                         |  | --     |                              |  |  | --    |  
| | Trade receivables                        |  |     | --     |   |                         |  | 149    |                              |  |  |       |  
| | Other receivables                        |  |     | 1,408  |   |                         |  | --     |                              |  |  | --    |  
| |                                          |  |     | 5,834  |   |                         |  | 44,214 |                              |  |  | 33    |  
| | Financial liabilities at amortized cost  |  |     | 6,651  |   |                         |  | 3,586  |                              |  |  | 53    |  
| | Total net financial assets (liabilities) |  |     | (817   | ) |                         |  | 40,628 |                              |  |  | (20   | )
| |                                          |  |     |        |   |                         |  |        |                              |  |  |       |  
| | December 31, 2015                        |  |     |        |   |                         |  |        |                              |  |  |       |  
| | Cash and cash equivalents                |  |     | 14,395 |   |                         |  | 19,416 |                              |  |  | --    |  
| | Restricted deposits                      |  |     | 928    |   |                         |  | --     |                              |  |  | --    |  
| | Other receivables                        |  |     | 249    |   |                         |  | --     |                              |  |  | --    |  
| |                                          |  |     | 15,572 |   |                         |  | 19,416 |                              |  |  |       |  
| | Financial liabilities at amortized cost  |  |     | 2,568  |   |                         |  | 1,650  |                              |  |  |       |  
| | Total net financial assets               |  |     | 13,004 |   |                         |  | 17,766 |                              |  |  |       |  



The
following is a sensitivity analysis of changes in the exchange rate of the dollar as of the report date:



| |                               |  | Profit
    (loss) from the change 
    thousand NIS |       
| | ----------------------------- |  | --------------------------------------------------- | ------
| | Increase
    at a rate of 5%  |  |                                                     | (2,031
| | Increase
    at a rate of 10% |  |                                                     | (4,063
| | Decrease
    at a rate of 5%  |  |                                                     | 2,031 
| | Decrease
    at a rate of 10% |  |                                                     | 4,063 



|E. | Fair
    value of financial instruments
|-- | ---------------------------------------



The
fair value of the financial instruments of the Group is similar or equal to their book value.



F-32







Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements



Note
18 – Financial instruments (Continued)



|F. | Liquidity
    risk
|-- | ------------------



The
table below presents the repayment dates of the Group’s financial liabilities based on the contractual terms in undiscounted
amounts:





| |                                           |  | First year |       |  | More than a year or undetermined |  |       | Total | 
| | ----------------------------------------- |  | ---------- | ----- |  | -------------------------------- |  | ----- | ----- | 
| | December 31, 2016                         |  |            |       |  |                                  |  |       |       | 
| | Trade payables                            |  |            | 2,612 |  |                                  |  | --    |       | 
| | Other payables                            |  |            | 4,750 |  |                                  |  | 98    |       | 
| | Liability in respect of government grants |  |            | --    |  |                                  |  | 2,420 |       | 
| |                                           |  |            | 7,362 |  |                                  |  | 2,518 |       | 
| | December 31, 2015                         |  |            |       |  |                                  |  |       |       | 
| | Trade payables                            |  |            | 1,727 |  |                                  |  | --    |       | 
| | Other payables                            |  |            | 1,718 |  |                                  |  | 96    |       | 
| | Liability in respect of government grants |  |            | --    |  |                                  |  | 993   |       | 
| |                                           |  |            | 3,445 |  |                                  |  | 1,089 |       | 



|G. | Level
    3 financial instruments carried at fair value
|-- | -------------------------------------------------------



Fair
value was measured based on the Binomial pricing model.



The
table hereunder presents a reconciliation from the opening balance to the closing balance of financial instruments carried at
fair value level 3 of the fair value hierarchy:





| |                                              |  | Financial liabilities- derivatives measured at fair value through profit or loss |       
| | -------------------------------------------- |  | -------------------------------------------------------------------------------- | ------
| | Balance as of January 1, 2015                |  |                                                                                  | --    
| | Issuances                                    |  |                                                                                  | 1,434 
| | Total gains recognized in profit or loss (*) |  |                                                                                  | (1,434
| | Balance as of December 31, 2015              |  |                                                                                  | --    



|(*) | Under
    financing income and expenses.
|--- | ----------------------------------------



F-33







Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements



Note
19 – Transactions and Balances with related parties



For
the period prior to the Acquisition, the related parties referred to in this Note are Nano–Technologies related parties.



|A. | Balances
    with related parties
|-- | ---------------------------------



| |                |  | December 31,  |    
| | -------------- |  | ------------- | ---
| |                |  | 2015          |    
| |                |  | Thousands NIS |    
| | Other payables |  |               | 241



|B. | Controlling
    shareholder benefits
|-- | ------------------------------------



| |                                                                          |  | Year ended on December 31, |      
| | ------------------------------------------------------------------------ |  | -------------------------- | -----
| |                                                                          |  | 2014                       |      
| |                                                                          |  | Thousand NIS               |      
| | Salaries and related expenses- related parties employed by the Group (*) |  |                            | 1,788
| | Number of related parties                                                |  |                            | 4    
| | Compensation for directors not employed by the Group                     |  |                            | 192  
| | Number of directors                                                      |  |                            | 6    



|(*) | In
    2014, expenses in the amount of approximately NIS 1,051,000, with respect to services rendered by the controlling shareholders,
    are included at their fair value amount in the financial statements against capital reserves as these services were not remunerable.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|C. | On
    February 16, 2015, the general meeting of the Company’s shareholders approved a private placement of 285,715 Ordinary
    Shares- see Note 11.B. In addition, on February 16, 2015, the Company’s general meeting of the Company’s shareholders
    approved the Company’s engagement in an agreement with Mr. Itschak Shrem for his services as chairman of the Company’s
    board of directors for a period of three years. In accordance with the terms of employment, Mr. Shrem will be entitled to
    a monthly salary of NIS 7,500, which will be increased to a total of NIS 10,000 if and when the Company completes fund raising
    of at least NIS 8,000,000, for 40% capacity employment. In addition, Mr. Shrem will be entitled, at no consideration, to a
    grant of 370,878 stock options- see Note 17.B.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-34







Nano
Dimension Ltd.

Notes
to the Consolidated Financial Statements



Note
19 – Transactions and Balances with related parties (Continued)



|D. | On
    July 20, 2015, the general meeting of the Company’s shareholders approved the terms of employment of the four controlling
    shareholders of the Company, in their capacities as officers and directors of the Company, as set forth below: Mr. Amit Dror,
    who serves as Chief Executive Officer of the Company, Mr. Dagi Ben-Noon, who serves as Chief Operating Officer, Mr. Simon
    Anthony-Fried, who serves as Chief Marketing Officer, and Mr. Sharon Fima, who serves as Chief Technologies Officer. Under
    the approved terms of employment, each of the controlling shareholders will be entitled, during a period of three years and
    in consideration for a full-time position, to a monthly salary of approximately NIS 37,000, in addition to social benefits
    as customary. In addition, the general meeting of the Company’s shareholders approved a grant of 1,600,000 stock options
    (non-tradable) to the four controlling shareholders (divided equally among them), which are exercisable into 1,600,000 Ordinary
    Shares. Additionally, the general meeting of the Company’s shareholders approved the update to the terms of employment
    of Mr. Itschak Shrem, in his capacity as chairman of the Company’s board of directors for a period of three years. Mr.
    Shrem will be entitled to a monthly salary of NIS 30,000, for a 75% position. In addition, the general meeting of the Company’s
    shareholders approved a grant of 760,000 share options (non-tradable) to four directors of the Company (400,000 of which are
    granted to the chairman of the board), which are exercisable into 760,000 Ordinary Shares.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|E. | On
    December 31, 2015, the general meeting of the Company’s shareholders approved to amend the notice period of the four
    controlling shareholders of the Company: Mr. Amit Dror, who serves as Chief Executive Officer of the Company, Mr. Dagi Ben-Noon,
    who serves as Chief Operating Officer, Mr. Simon Anthony-Fried, who serves as Chief Marketing Officer, and Mr. Sharon Fima,
    who serves as Chief Technologies Officer, to a period of 6 months. The general meeting of the Company’s shareholders
    also approved to amend the Company’s compensation policy accordingly.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|F. | On
    January 27, 2016, pursuant to an exercise of 3,746,161 warrants by Mr. Amit Dror, who serves as Chief Executive Officer of
    the Company, Mr. Dagi Ben-Noon, who serves as Chief Operating Officer, Mr. Simon Anthony-Fried, who serves as Chief Marketing
    Officer, and Mr. Sharon Fima, who serves as Chief Technologies Officer, and in consideration of approximately NIS 3,242 thousands,
    the Company issued 3,746,161 Ordinary Shares.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Note
20 – Events after the reporting date



|A. | After
    the reporting date, on January 2017, the Company issued 75,000 Ordinary Shares (15,000 ADSs) and non-tradable options to purchase
    75,000 Ordinary Shares (15,000 ADSs), to a service provider at an exercise price of USD 10.00 per ADS. The options are exercisable
    immediately and will expire 18 months from the grant date. The options include a cashless exercise mechanism.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|B. | After
    the reporting date, on February 2017, Nano- Technologies received an approval from the NIA to support the development of 3D
    printing of advanced ceramic materials in inkjet technology. The approved budget is up to NIS 1,400,000 million, and the contribution
    by the NIA to the research and development budget is 50% of expenditures.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





F-35