UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington,
D.C. 20549



FORM  20-F



(Mark One)

☐
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934



OR



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



For the fiscal
year ended December 31, 2016



OR



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



OR



☐
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.



Date of event requiring this shell company
report _______________



Commission file
number:  000-29884



EVIATION AIRCRAFT
LTD.

(Exact name
of Registrant as specified in its charter)



|Eviation
Aircraft Ltd.                          |  | Israel                                         
|----------------------------------------------- |  | -----------------------------------------------
|(Translation of Registrant’s name into English) |  | (Jurisdiction of incorporation or organization)



Tel: +972-8-913-7914

Facsmilie:
+972-8-915-7234

1 Ha’Ofeh
Street, Kadima-Tzoran, Israel

(Address of principal
executive offices)



Liza
Ohayon, Chief Financial Officer

1
Ha’Ofeh Street,

Kadima-Tzoran,
Israel 6092000



(Name, Telephone,
E-mail and/or Facsimile number and Address of the Registrant’s Contact Person)



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



Securities registered
or to be registered pursuant to Section 12(g) of the Act: ordinary shares, no par value per share.



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: As of December 31, 2016, there were 10,000,000 ordinary shares, no par value per share, outstanding.



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 Securities 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 Securities Exchange Act of 1934 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 (§229.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files).



Yes☐No☐



Indicate by check
mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated
filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):



|Large accelerated filer☐ | Accelerated filer☐      
|------------------------ | ------------------------
|Non-accelerated filer☒   | Emerging Growth Company☐



If
an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards†
provided pursuant to Section 13(a) of the Exchange Act.☐



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 elected
to follow.



Item
17☐Item
18☐



If this is an
annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).



Yes☐No☒


















FORM 20-F

ANNUAL
REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 2016



|PART
    ONE                  |                                                                                 
|----------------------------- | --------------------------------------------------------------------------------
|                              |                                                                                 
|Item 1.                       | Identity of Directors, Senior
    Management and Advisors                       
|Item 2.                       | Offer Statistics and Expected Timetable                                         
|Item 3.                       | Key Information                                                                 
|Item 4.                       | Information on the Company                                                      
|Item 4A.                      | Unresolved Staff Comments                                                       
|Item 5.                       | Operating and Financial Review and Prospects                                    
|Item 6.                       | Directors, Senior Management and Employees                                      
|Item 7.                       | Major Shareholders and Related Party Transactions                               
|Item 8.                       | Financial Information                                                           
|Item 9.                       | The Offer and Listing                                                           
|Item 10.                      | Additional Information                                                          
|Item 11.                      | Quantitative and Qualitative Disclosures About
    Market Risk                  
|Item 12.                      | Description of Securities Other Than Equity
    Securities                      
|                              |                                                                                 
|PART
    TWO                  |                                                                                 
|                              |                                                                                 
|Item 13.                      | Defaults, Dividend Arrearages and Delinquencies                                 
|Item 14.                      | Material Modifications to the Rights of Security
    Holders and Use of Proceeds
|Item 15.                      | Controls and Procedures                                                         
|Item 16.                      | [Reserved]                                                                      
|Item 16A.                     | Audit Committee Financial Expert                                                
|Item 16B.                     | Code of Ethics                                                                  
|Item 16C.                     | Principal Accountant Fees and Services                                          
|Item 16D.                     | Exemptions from the Listing Standards for Audit
    Committees                  
|Item 16E.                     | Purchases of Equity Securities by the Issuer
    and Affiliated Purchasers      
|Item 16F.                     | Change in Registrant’s Certifying Accountant                                    
|Item 16G.                     | Corporate Governance                                                            
|Item 16H.                     | Mine Safety Disclosure                                                          
|                              |                                                                                 
|PART
    THREE                |                                                                                 
|                              |                                                                                 
|Item 17.                      | Financial Statements                                                            
|Item 18.                      | Financial Statements                                                            
|Item 19.                      | Exhibits                                                                        
|                              |                                                                                 
|Signatures                    |                                                                                 
|                              |                                                                                 
|Index to Financial Statements | F-1                                                                             








Table of Contents




CERTAIN
TERMS AND CONVENTIONS



In
this annual report, unless the context otherwise requires:



| | § | references to “Eviation,” “we,”
    “us,” “our,” “our company” and “the Company” refer to Eviation Aircraft Ltd.
    and its subsidiary, Eviation Tech Ltd.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| | § | references to “U.S. Dollars,” “$”
    or “dollars” are to U.S. dollars;
| | - | -----------------------------------------------------------------------



| | § | references to “NIS” or “shekels”
    are to New Israeli Shekels;
| | - | ----------------------------------------------------------------



| | § | references to “ordinary shares”,
    “our shares” and similar expressions refer to our Ordinary Shares, no par value per share;
| | - | -------------------------------------------------------------------------------------------------------------------------------



| | § | references to the “articles of association”
    or “amended articles” are to our Amended and Restated Articles of Association;
| | - | ------------------------------------------------------------------------------------------------------------------------------



| | § | references to the “Companies Law”
    are to the Israeli Companies Law, 5759-1999, as amended;
| | - | ----------------------------------------------------------------------------------------------



| | § | references to the “Securities Act”
    are to the Securities Act of 1933, as amended;
| | - | -------------------------------------------------------------------------------------



| | § | references to the “Exchange Act”
    are to the Securities Exchange Act of 1934, as amended;
| | - | --------------------------------------------------------------------------------------------



| | § | references to the “SEC” are to the
    United States Securities and Exchange Commission.
| | - | ----------------------------------------------------------------------------------------



Unless
derived from our financial statements or otherwise noted, amounts presented in this annual report are translated at the rate of
$1.00 = NIS 3.845, the exchange rate between the NIS and the U.S. dollar reported by the Bank of Israel as of December 30, 2016.



This
annual report includes other statistical, market and industry data and forecasts which we obtained from publicly available information
and independent industry publications and reports that we believe to be reliable sources. Some data is also based on our good
faith estimates, which are derived from management’s knowledge of the industry and independent sources. These publicly available
industry publications and reports generally state that they obtain their information from sources that they believe to be reliable,
but they do not guarantee the accuracy or completeness of the information. Although we believe that these sources are reliable
and are not aware of any misstatements regarding the industry data presented in this annual report, we have not independently
verified the information contained in such publications. Certain estimates and forecasts involve uncertainties and risks and are
subject to change based on various factors, including those discussed under the headings “—Special Note Regarding
Forward-Looking Statements” and “Item 3.D —Risk Factors” in this annual report.



All
trademarks, service marks, trade names and registered marks used in this report are trademarks, trade names or registered marks
of their respective owners.





1


Table of Contents




FORWARD-LOOKING
STATEMENTS



In
addition to historical information, this report on Form 20-F contains forward-looking statements. These statements relate to future
events or other future financial performance, and are identified by terminology such as “may,” “will,”
“should,” “expect,” “scheduled,” “plan,” “intend,” “anticipate,”
“believe,” “estimate,” “aim,” “potential,” or “continue” or the negative
of those terms or other comparable terminology. These forward-looking statements are subject to certain risks, uncertainties and
assumptions about us that could cause actual results to differ materially from those reflected in the forward-looking statements.
These forward-looking statements are based, among other things, on assumptions in connection with:



| | ● | our intended
    business plans;                                                                                                                                           
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                            
| | ● | our ability to
    raise working capital to realize our business plans;                                                                                                    
| |   |                                                                                                                                                                            
| | ● | the regulatory
    and competitive landscape of the light aircraft aviation industry;                                                                                      
| |   |                                                                                                                                                                            
| | ● | the viability
    and profitability of the light aircraft aviation market which we have newly entered;                                                                     
| |   |                                                                                                                                                                            
| | ● | market acceptance
    of our light electric powered passenger aviation aircraft;                                                                                           
| |   |                                                                                                                                                                            
| | ● | our
    expectations regarding our expenses and future revenue;                                                                                                            
| |   |                                                                                                                                                                            
| | ● | The ability to
    control costs;                                                                                                                                          
| |   |                                                                                                                                                                            
| | ● | Changes in costs
    and the availability of goods and services;                                                                                                           
| |   |                                                                                                                                                                            
| | ● | our
    expectations regarding competition as more and larger companies enter our markets and as existing competitors improve or expand
    their product offerings;       
| |   |                                                                                                                                                                            
| | ● | our
    anticipated cash needs and our estimates regarding our capital requirement;                                                                                        
| |   |                                                                                                                                                                            
| | ● | the possibility
    of future litigation;                                                                                                                                  
| |   |                                                                                                                                                                            
| | ● | market, economic
    and political factors in Israel, where our design operations we will be based, and worldwide;                                                         
| |   |                                                                                                                                                                            
| | ● | our contractors’
    technical, professional and financial ability to deliver on and comply with their contractual undertakings with us and our
    subsidiary;            
| |   |                                                                                                                                                                            
| | ● | our ability to familiarize
    ourselves with the light aircraft passenger aviation market, and to track, monitor and manage the projects which we have
    undertaken; and
| |   |                                                                                                                                                                            
| | ● | the price and
    liquidity of our Ordinary Shares.                                                                                                                        



Assumptions
relating to the foregoing involve judgment with respect to, among other things, future economic, competitive and market conditions,
and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our
control. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion
of such information should not be regarded as a representation by us or any other person that our objectives or plans will be
achieved. Factors that could cause actual results to differ from our expectations or projections include the risks and uncertainties
relating to our business described in this report under “Item 3.D: Risk Factors,” “Item 5: Operating and Financial
Review and Prospects” and elsewhere in this report. Readers are cautioned not to place undue reliance on these forward-looking
statements, which reflect management’s analysis as of the date hereof. We undertake no obligation to publicly revise these
forward-looking statements to reflect events or circumstances that arise after the date hereof, except as required by applicable
law. In addition to the disclosure contained herein, readers should carefully review any disclosure of risks and uncertainties
contained in other documents that we file from time to time with the Securities and Exchange Commission.



To
the extent that this Report contains forward-looking statements (as distinct from historical information), we desire to take advantage
of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and we are therefore including this statement
for the express purpose of availing ourselves of the protections of the safe harbor with respect to all forward-looking statements.



2


Table of Contents




PART
I



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



Not
applicable



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



Not
applicable



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



A.
SELECTED FINANCIAL DATA



You
should read the following selected consolidated financial data in conjunction with the section of this annual report entitled
“Item 5 - Operating and Financial Review and Prospects” and our consolidated financial statements and the notes thereto
included elsewhere in this annual report.



The
selected data presented below under the captions “Statement of Comprehensive Income Data,” for each of the years in
the three-year period ended December 31, 2016 and under "Statement of Financial Position Data” as of December 31, 2016
and 2015, are derived from our audited consolidated financial statements appearing elsewhere in this annual report. The selected
data should be read in conjunction with the consolidated financial statements and the related notes. The consolidated financial
statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board.



At
December 31, 2015, Eviation Aircraft Ltd., formerly known as R.V.B. Holdings Ltd. (the “Company”) was under the management
of a Temporary Liquidator (the “Temporary Liquidator”) appointed by the District Court of Tel Aviv in Israel at the
request of certain creditors of the Company with a mandate to identify and liquidate the Company’s assets. Effective February
2016, the Company was sold to two principal shareholders of the Company. The financial information below through December 31,
2015 represents the historical results of the waste disposal management business in which the Company was previously engaged prior
to the sale of the Company by the Temporary Liquidator, which we have classified as discontinued operations. See Item 4 below.



Year
ended December 31,

(U.S.
dollars in thousand, except share and per share data)



|                                                                                                         |  | 2016 |           |   | 2015 |  |       | 2014 | 
|-------------------------------------------------------------------------------------------------------- |  | ---- | --------- | - | ---- |  | ----- | ---- | 
|Statement of Comprehensive Income Data:                                                                  |  |      |           |   |      |  |       |      | 
|Research and development expenses                                                                        |  |      | 1,829     |   |      |  | ---   |      | 
|Marketing, administrative and general expenses                                                           |  |      | 341       |   |      |  | ---   |      | 
|Total Expenses                                                                                           |  |      | 2,170     |   |      |  | ---   |      | 
|                                                                                                         |  |      |           |   |      |  |       |      | 
|Operating loss                                                                                           |  |      | 2,170     |   |      |  | ---   |      | 
|Financing Income                                                                                         |  |      | (22       | ) |      |  | ---   |      | 
|Financing Expenses                                                                                       |  |      | 93        |   |      |  | ---   |      | 
|Financing Expenses, Net                                                                                  |  |      | 71        |   |      |  | ---   |      | 
|Loss before taxes on income                                                                              |  |      | (2,241    | ) |      |  | ---   |      | 
|Taxes on income                                                                                          |  |      | (553      | ) |      |  | ---   |      | 
|Loss from continuing operations                                                                          |  |      | 1,688     |   |      |  | ---   |      | 
|Loss from discontinued operation                                                                         |  |      | ---       |   |      |  | 226   |      | 
|Loss for the year                                                                                        |  |      | 1,688     |   |      |  | 226   |      | 
|Loss attributable to:                                                                                    |  |      |           |   |      |  |       |      | 
|Owners of the Company                                                                                    |  |      | 1,688     |   |      |  | 201   |      | 
|Non-controlling interests                                                                                |  |      | ---       |   |      |  | 25    |      | 
|Loss for the year                                                                                        |  |      | 1,688     |   |      |  | 226   |      | 
|Continued operations (in $)                                                                              |  |      |           |   |      |  |       |      | 
|Basic and diluted loss per ordinary share                                                                |  |      | 0.20      |   |      |  |       |      | 
|Discontinued operation (in $)                                                                            |  |      |           |   |      |  |       |      | 
|Basic and diluted loss per ordinary share                                                                |  |      |           |   |      |  | 26.43 |      | 
|Weighted average number of ordinary shares used in basic and diluted loss per Ordinary Share calculation |  |      | 8,494,658 |   |      |  | 7,605 |      | 





3


Table of Contents




For
the year ended December 31,



|                                                           |  | 2016 |       |   | 2015 |  |        | 2014 | 
|---------------------------------------------------------- |  | ---- | ----- | - | ---- |  | ------ | ---- | 
|Statement
    of Financial Position Data:                  |  |      |       |   |      |  |        |      | 
|Cash
    and cash equivalents                              |  |      | 858   |   |      |  | -      |      | 
|Property
    and equipment, net                            |  |      | 305   |   |      |  | -      |      | 
|Total
    assets                                           |  |      | 1,257 |   |      |  | 20     |      | 
|Shareholders
    loans                                     |  |      | (617  | ) |      |  | -      |      | 
|Equity
    attributable to owners of the Company (deficit) |  |      | 163   |   |      |  | (1,127 | )    | 
|Non-controlling
    interests                              |  |      | -     |   |      |  | 173    |      | 
|Total
    Equity(deficit)                                  |  |      | 163   |   |      |  | (954   | )    | 





Effective
March 2, 2017, the Company changed its corporate name to Eviation Aircraft Ltd.



B.
CAPITALIZATION AND INDEBTEDNESS





Not
applicable.



C.
REASONS FOR THE OFFER AND USE OF PROCEEDS



Not
applicable.



D.
RISK FACTORS



The
risk factors below relate solely to our current business focus in the area of developing and commercializing a light passenger
electric operated propulsion aircraft. You should carefully consider the risks described below and in the other sections of, and
the documents we have incorporated by reference into this prospectus before making an investment decision. The risks described
below and in the documents we have incorporated by reference into this prospectus are not the only ones facing our company. Our
business, financial condition or results of operations could be materially adversely affected by any of these risks. The trading
price of our ordinary shares could decline due to any of these risks.



RISKS
RELATED TO OUR NEW BUSINESS AND PRODUCTS



We
are a start-up company.



The
Company’s sole business is ownership of its wholly owned newly created subsidiary, Eviation Tech Ltd., an Israeli start-up
company engaged in designing and developing an electric powered light passenger aviation aircraft. We have not generated any revenue
since the commencement of our current operation in May 2016. We are currently in the proof of concept stage, and intend to test
all the components of the enabling core technologies (airframe design, electric drive, battery technology and autonomous flight
and sensing systems). Testing will take place on the scaled models that are currently under construction. We expect to incur significant
operating losses for the foreseeable future, and there can be no assurance that we will be able to validate and market products
in the future that will generate revenues, or that any revenues generated will be sufficient for us to become profitable or thereafter
maintain profitability. We believe that our available cash resources including shareholder credit facilities and the newly approved
program from the Israeli Office of the Chief Scientist ("OCS") are sufficient to meet our operating requirements in
the foreseeable future.





4


Table of Contents




We
have no operating history upon which to evaluate our business.



We
have no history of operations in our industry as we have embarked on a new business venture. Accordingly, it is more difficult
to accurately assess growth rate and earnings potential. Our business is dependent upon the implementation of our business plan.
Our limited operating history makes it difficult for prospective investors to evaluate our business. Therefore, our operations
are subject to all of the risks inherent in the initial expenses, challenges, complications and delays frequently encountered
in connection with the early stages of any new business, as well as those risks that are specific to a newly emerging and untried
field within the aviation industry, electric powered light aviation aircraft. Investors should evaluate us in light of the problems
and uncertainties frequently encountered by early stage companies attempting, like ours, to develop markets for new products,
services, and technologies, such as unforeseen capital requirements, failure of market acceptance, failure to establish business
relationships, and competitive disadvantages as against larger and more established companies. If we are unable to successfully
address these difficulties as they arise, our future growth and earnings will be negatively affected.



We
may be unable to obtain additional capital that we will require to implement our business plan, which could restrict our ability
to grow.



Our
Subsidiary has, to date, received loans of approximately $2.7 million from Aviv Tzidon (“Aviv”) and Magic Stones-Gemstone
Import and Marketing Ltd. (“Magic Stones”), our shareholders, under the terms of agreements with these shareholders.
The Subsidiary has under these agreements $1.8 million in unutilized credit availability. In addition, we have received a loan
in the principal amount of $0.5 million from these shareholders. We expect that these amounts will sufficient to meet our operating
requirements in the new business focus in the foreseeable future.



However,
we will require additional capital to continue implementing our business plan and to grow our business beyond the development
phase. We plan to partner with an established airframe manufacturer to support and fund the process of commercialization of the
design. We may not, however, succeed in securing such partnership and obtaining the additional capital required, and if we are
able to secure such additional capital, it may not be pursuant to terms deemed favorable to our Company or our shareholders. We
may seek to sell additional equity or debt securities or obtain additional credit facilities. The sale of additional equity securities
could result in dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations
and could require us to agree to operating and financing covenants that would restrict our operations. Our ability to obtain additional
capital on acceptable terms is subject to a variety of uncertainties, including:



| | ● | investors’
    perception of an aviation company, and demand for its securities;         
| | - | -----------------------------------------------------------------------------------------
| |   |                                                                                          
| | ● | conditions of the
    U.S. and other capital markets in which we may seek to raise funds;
| |   |                                                                                          

Financing
may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms
favorable to us, or at all, could have a material adverse effect on our business, financial condition and results of operations.
In addition, our administrative requirements (such as salaries, insurance, expenses and general overhead expenses, as well as
legal compliance costs and accounting expenses) may require a substantial amount of additional capital and cash flow.



We
may pursue sources of additional capital through various financing transactions or arrangements, including partnership with an
established airframe manufacturer, joint venturing of projects, debt financing, equity financing or other means. We may not be
successful in locating suitable financing transactions in the time period required or at all, and we may not obtain the capital
we require by other means. If we do not succeed in raising additional capital, our resources may not be sufficient to fund our
planned operations going forward. Any additional capital raised through the sale of equity may dilute the ownership percentages
of our shareholders, and could also result in a decrease in the fair market value of our equity securities because our assets
would be owned by a larger pool of outstanding equity. The terms of securities we issue in future capital transactions may be
more favorable to our new investors, and may include preferences, superior voting rights and the issuance of other derivative
securities, and issuances of incentive awards under equity employee incentive plans, which may have a further dilutive effect.





5


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Our
ability to obtain needed financing may be impaired by such factors as the capital markets, our status as a new enterprise without
a significant demonstrated operating history and/or the loss of key management. If the amount of capital we are able to raise
from financing activities, together with our revenues from operations, is not sufficient to satisfy our capital needs, we may
be required to cease our operations.



We
may incur substantial costs in pursuing future capital financing, including investment banking fees, legal fees, accounting fees,
securities law compliance fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash
expenses in connection with certain securities we may issue, such as convertible notes, which may adversely impact our financial
condition.



A
default by us under the secured financing arrangement with our shareholders would enable them to take control of our assets.



Under
the credit facilities referred to above with our shareholders, Aviv and Magic Stones, we have granted to such shareholders a security
interest on all of the assets of the Subsidiary, including its intellectual property as well as our shareholdings of our Subsidiary.
A default by us under this financing arrangement would enable the holder to foreclose on our assets, including our intellectual
property. Any foreclosure could force us to substantially curtail or cease our operations on our newly entered aviation business.



Our
lack of diversification will increase the risk of an investment in the Company, and our financial condition and results of operation
may deteriorate if we fail to diversify.



Our
new business will initially be in the regional transportation (or aviation) industry. Larger companies have the ability to manage
their risk by diversification. However, we will lack diversification, in terms of both the nature and geographic scope of our
business. As a result, we will likely be impacted more acutely by factors affecting our industry or the regions in which we operate
than we would if our business were more diversified, enhancing our risk profile. If we cannot diversify or expand our operations,
our financial condition and results of operations could deteriorate.



The
success of our business depends upon the continuing contributions of our Chief Executive Officer and other key personnel and our
ability to attract highly qualified personnel to expand our business.



We
will rely heavily on the services of our CEO, Mr. Omer Bar-Yohay, as well as one of our principal shareholder and director, Mr.
Aviv Tzidon, and other senior management personnel that we intend to hire. Loss of the services of any of such individuals or
any other key management and technical personnel could have a material adverse impact on our future operations. Our success is
also dependent on our ability to retain these key employees and our ability to attract and retain, among others, skilled financial,
engineering, technical and managerial personnel to continue the development and commercialization of the Eviation Aircraft. As
such, our future success highly depends on our ability to attract, retain and motivate personnel, including contractors, required
for the development, maintenance and expansion of our activities. There can be no assurance that we will be able to retain our
existing personnel or attract additional qualified employees or consultants. The loss of personnel or the inability to hire and
retain additional qualified personnel in the future could have a material adverse effect on our business, financial condition
and results of operation. In addition, if we fail to engage qualified personnel, we may be unable to meet our responsibilities
as a public reporting company under the rules and regulations of the Securities and Exchange Commission.





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The
product we intend to market may not be accepted by the market.



Our
success depends on the acceptance of our electric propulsion aircraft (the “Eviation Aircraft”) as a viable alternative
to the current existing land based regional transportation options. Market acceptance will depend upon several factors, including
(a) the desire and ability of consumers to use Eviation Aircraft (b) the accessibility of the Eviation Aircraft; and (c) the convenience
of using the Eviation Aircraft. A number of factors may inhibit acceptance of the Eviation Aircraft, including (i) the ease of
use of competing alternatives such as cars, trains and buses; (ii) our inability to change consumers’ habits of using other
modes of transportation such automobile, train and buses for regional travel; (iii) our inability to change consumers’ perception
that using light aircraft is highly expensive and is reserved primarily for the affluent; and (iv) fear of individuals to use
the Eviation Aircraft. If the Eviation Aircraft is not accepted by the market, we may have to curtail our business operations,
which could have a material negative effect on operating results and result in a lower share price.



We
may not be able to compete successfully against current and future competitors.



We
will compete, in our proposed businesses, with other companies, some of which have far greater marketing and financial resources
and experience than we do. A number of companies may develop and offer products that provide the same or greater functionality
than our product. We may not be able to maintain our competitive position against current or potential competitors, especially
those in the general aviation market with significantly greater financial, marketing, service, support, technical and other resources.
Competitors with greater resources may be able to undertake more extensive marketing campaigns, adopt more aggressive pricing
policies and make more attractive offers to potential employees, distributors, resellers or other strategic partners. We expect
additional competition from other established and emerging companies as the market for light aircraft continues to develop.



In
addition, we cannot guarantee that we will be able to penetrate the regional transportation market and be able to compete at a
profit. In addition to established competitors, other companies can easily enter our market and compete with us. Effective competition
could result in price reductions, reduced margins or have other negative implications, any of which could adversely affect our
business and chances for success. Competition is likely to increase significantly as new companies enter the market and current
competitors expand their services. Many of these potential competitors are likely to enjoy substantial competitive advantages,
including: larger technical staffs, greater name recognition, larger customer bases and substantially greater financial, marketing,
technical and other resources. To be competitive, we must respond promptly and effectively to the challenges of technological
change, evolving standards and competitors’ innovations by continuing to enhance our services and sales and marketing channels.
Any pricing pressures, reduced margins or loss of market share resulting from increased competition or our failure to compete
effectively, could seriously damage our business and chances for success.



We
may be forced to abandon development of the Eviation Aircraft altogether, which will significantly impair our ability to generate
revenues.



We
are currently in the proof of concept stage, and intend to test all the components of the Eviation Aircraft enabling core technologies
(airframe design, electric drive, battery technology and autonomous flight and sensing systems). Testing will take place on the
scaled models and Eviation Aircraft that are currently under construction by the Subsidiary. Upon the completion of the testing,
the results of such testing may not support the claims sought by us. Further, success in the proof of concept stage does not ensure
that the later stages of development would be successful, and the results of later testing may not meet our expectation or the
results of the proof of concept stage. Any such failure may cause us to abandon the development of the Eviation Aircraft altogether.



Our
future growth is dependent upon consumers’ willingness to adopt light electric aircraft.



Our
growth is highly dependent upon the adoption by consumers of light electric aircraft as a viable alternative for regional travel,
and we are subject to an elevated risk of any reduced demand for, alternative fuel aircraft in general, and light electric aircraft
in particular. If the market for light electric aircraft in North America, Europe and Asia does not develop as we expect, or develops
more slowly than we expect, our business, prospects, financial condition and operating results will be harmed. The market for
alternative fuel aircraft is relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition,
additional competitors, evolving government regulation and industry standards.





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Other
factors that may influence the adoption of alternative fuel aircraft, and specifically electric aircraft, include:



| | ● | perceptions about
    electric aircraft quality, safety (in particular with respect to lithium-ion battery packs), design, performance and cost,
    especially if adverse events or accidents occur that are linked to the quality or safety of electric aircraft, such as those
    relating to the battery in the Boeing Dreamliner;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                        
| | ● | perceptions about
    airplane safety in general, in particular safety issues that may be attributed to the use of advanced technology;                                                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                                                                        
| | ● | the limited range
    over which electric aircraft may fly on a single battery charge and the effects of weather on this range;                                                                                                                                                                                                        
| |   |                                                                                                                                                                                                                                                                                                                                        
| | ● | the decline of an
    electric aircraft’s range resulting from deterioration over time in the battery’s ability to hold a charge;                                                                                                                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                                                        
| | ● | The availability
    of service for electric aircraft;                                                                                                                                                                                                                                                                                 
| |   |                                                                                                                                                                                                                                                                                                                                        
| | ● | concerns about electric
    grid capacity and reliability, which could derail our present efforts to promote electric aircraft as a practical solution
    to aircraft which require gasoline;                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                        
| | ● | consumers’
    desire and ability to use electric aircraft in regional trips instead of other alternatives such as trains, buses and cars;                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                                        
| | ● | government regulations
    and economic incentives promoting fuel efficiency and alternate forms of energy as well as tax and other governmental incentives
    to purchase and use electric aircraft;                                                                                                                                 



Our
business is subject to extensive and costly government regulation.



When
completed, Eviation Aircraft would be subject to extensive regulation and we may never obtain the certification required for its
operation. In the U.S., the Eviation Aircraft must comply with Federal Aviation Administration("FAA") regulations governing
production and quality systems, airworthiness and installation approvals, repair procedures and continuing operational safety
before it can be certified. The FAA and foreign regulatory authorities have full discretion over this approval process. We will
need to perform significant testing of the Eviation Aircraft and its systems before we could file an application for certification.
We may encounter delays or rejections based upon the FAA regulations, which may delay the commercialization of our product. Failure
to obtain FAA certification of the Eviation Aircraft in a timely manner or at all will severely undermine our business by delaying
or halting commercialization of our product, imposing costly procedures and diminishing competitive advantage, and we may be required
to cease our operations.



Our
business is also subject to various federal, state, and local laws and regulations relating to environmental footprint in emissions,
noise and treatment of hazardous materials. However, the costs incurred to ensure continued environmental compliance could have
a material impact on our results of operations, financial condition or cash flows if additional work requirements or more stringent
clean-up standards are imposed by regulators, new areas of soil, air and groundwater contamination are discovered and/or expansions
of work scope are prompted by the results of investigations.





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We
may be subject to legal proceedings and/or to product liability lawsuits.



We
could incur substantial costs in connection with product liability or other tortious claims relating to the Eviation Aircraft.
The Eviation Aircraft may be involved in aerial accidents, which may cause death, bodily injury and other damages. These accidents
may expose us to product liability or other type of tortious lawsuits. If product liability or tortious lawsuits are successfully
brought against us, we may incur substantial liabilities and may be required to limit or to halt the operation of the Eviation
Aircraft, which may result in substantial losses. In addition, such accidents would deter consumers from using our product, which
could have a material impact on our results of operations, financial condition or cash flow and may cause us to cease operations.
Our business exposes us to potential product liability and aerial accidents risks, which are inherent in the testing, manufacturing,
and marketing aviation products and services. We may not be able to avoid product liability or tortious claims. Product liability
and aerial accidents insurance are expensive, subject to deductibles and coverage limitations, and may not be available in the
amounts that we desire for a price we are willing to pay. Product liability and aerial accidents insurance for aviation companies
is generally expensive, if available at all. If, at any time, we are unable to obtain sufficient insurance coverage on reasonable
terms or to otherwise protect against potential product liability or tortious claims, we may be unable to test, market or commercialize
our product. A successful product liability claim or tort claim brought against us in excess of our insurance coverage, if any,
may cause us to incur substantial liabilities, and, as a result, our business, liquidity and results of operations would be materially
adversely affected. In addition, the existence of a product liability claim or tortious claim could affect the market price of
our securities.



If
we are unable to obtain adequate insurance, our financial condition could be adversely affected in the event of uninsured or inadequately
insured loss or damage. Our ability to effectively recruit and retain qualified officers and directors could also be adversely
affected if we experience difficulty in obtaining adequate directors’ and officers’ liability insurance.



Our
business will expose us to potential liability that results from risks associated with conducting testing on the Eviation Aircraft
and from flying the Eviation Aircraft. A successful liability claim, if any, brought against us could have a material adverse
effect on our business, prospects, financial condition and results of operations even though liability insurance is successfully
maintained or obtained. The current and planned insurance coverages may only mitigate a small portion of a substantial claim against
us. In addition, we may be unable to maintain sufficient insurance as a public company to cover liability claims made against
our officers and directors. If we are unable to adequately insure our officers and directors, we may not be able to retain or
recruit qualified officers and directors to manage the Company.



Two
shareholders control more than 80% of the Company



Each
of Aviv and Magic Stones currently own 41.21% of the Company’s outstanding share capital. Accordingly, they alone can make
determinations on any matter requiring shareholder approval other than those decisions that require special approval. See Item
10, “Memorandum and Articles of Association – Special approval.”



If
we are considered to be a passive foreign investment company ("PFIC"), either presently or in the future, U.S. Holders
will be subject to adverse U.S. tax consequences.



We
will be a passive foreign investment company, or a PFIC, if 75% or more of our gross income in a taxable year, including our pro
rata share of the gross income of any company, U.S. or foreign, in which we are considered to own, directly or indirectly, 25%
or more of the shares by value, is passive income. Alternatively, we will be considered a PFIC if at least 50% of our assets in
a taxable year, averaged over the year and ordinarily determined based on fair market value, including our pro rata share of the
assets of any company in which we are considered to own, directly or indirectly, 25% or more of the shares by value, are held
for the production of, or produce, passive income. If we were to be a PFIC, and a U.S. Holder does not make an election to treat
us as a “qualified electing fund,” or QEF, or a “mark to market” election, “excess distributions”
to a U.S. Holder, and any gain recognized by a U.S. Holder on a disposition of our ordinary shares, would be taxed in an unfavorable
way. Among other consequences, our dividends would be taxed at the regular rates applicable to ordinary income, rather than the
15% maximum rate applicable to certain dividends received by an individual from a qualified foreign corporation. The tests for
determining PFIC status are applied annually and it is difficult to make accurate predictions of future income and assets, which
are relevant to the determination of PFIC status. In addition, under the applicable statutory and regulatory provisions, it is
unclear whether we would be permitted to use a gross loss from sales (sales less cost of goods sold) to offset our passive income
in the calculation of gross income.



In
light of the uncertainties described above, we have not obtained an opinion of counsel with respect to our PFIC status and no
assurance can be given that we will not be a PFIC in any year. If we determine that we have become a PFIC, we will then notify
our U.S. Holders and provide them with the information necessary to comply with the QEF rules. If the IRS determines that we are
a PFIC for a year with respect to which we have determined that we were not a PFIC, however, it might be too late for a U.S. Holder
to make a timely QEF election, unless the U.S. Holder qualifies under the applicable treasury regulations to make a retroactive
(late) election. U.S. Holders who hold ordinary shares during a period when we are 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. Holders who made a timely QEF or mark-to-market
election.





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RISK
FACTORS RELATED TO THE INTELLECTUAL PROPERTY UTILIZED IN OUR EVIATION BUSINESS



If
we fail to adequately protect, enforce or secure rights to the patents which we own or that were licensed to us or any patents
we may own in the future, the value of our intellectual property rights would diminish and our business and competitive position
would suffer.



Our
success, competitive position and future revenues, if any, depend in part on our ability to obtain and successfully leverage intellectual
property covering the Eviation Aircraft, know-how, methods, processes and other technologies, to protect our trade secrets, to
prevent others from using our intellectual property and to operate without infringing the intellectual property rights of third
parties.



The
risks and uncertainties that we face with respect to our intellectual property rights include, but are not limited to, the following:



| | ● | the
    degree and range of protection any patents will afford us against competitors;                                                                         
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                
| | ● | the patents concerning
    our business activities were not registered in all countries and therefore our patent protection may be lacking in some territories;
| |   |                                                                                                                                                                
| | ● | if and when patents
    will be issued;                                                                                                                        
| |   |                                                                                                                                                                
| | ● | whether or not others
    will obtain patents claiming aspects similar to those covered by our own or licensed patents and patent applications;                
| |   |                                                                                                                                                                
| | ● | we may be subject
    to interference or derivation proceedings;                                                                                               
| |   |                                                                                                                                                                
| | ● | we may be subject
    to opposition or post-grant proceedings in the U.S. and foreign countries;                                                               
| |   |                                                                                                                                                                
| | ● | any patents that
    are issued may not provide meaningful protection;                                                                                         
| |   |                                                                                                                                                                
| | ● | we may not be able
    to develop additional proprietary technologies that are patentable;                                                                     
| |   |                                                                                                                                                                
| | ● | other companies
    may challenge patents licensed or issued to us or our customers;                                                                           
| |   |                                                                                                                                                                
| | ● | other companies
    may independently develop similar or alternative technologies, or duplicate our technologies;                                              
| |   |                                                                                                                                                                
| | ● | other companies
    may design around technologies we have licensed or developed;                                                                              
| |   |                                                                                                                                                                
| | ● | enforcement of patents
    is complex, uncertain and expensive; and                                                                                            
| |   |                                                                                                                                                                
| | ● | we may need to initiate
    litigation or administrative proceedings that may be costly whether we win or lose.                                                





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If
patent rights covering our product and methods are not sufficiently broad, they may not provide us with any protection against
competitors with similar products and technologies. Furthermore, if the United States Patent and Trademark Office, or the USPTO,
or any foreign patent office issue patents to us or our licensors, others may challenge the patents or design around the patents,
or the patent office or the courts may invalidate the patents. Thus, any patents we own or license from or to third parties may
not provide any protection against our competitors.



We
cannot be certain that patents will be issued as a result of any pending applications, and we cannot be certain that any of our
issued patents or patents licensed from a third-party will give us adequate protection from competing products. For example, issued
patents, including the patents licensed by us, may be circumvented or challenged, declared invalid or unenforceable, or narrowed
in scope.



In
addition, since publication of discoveries in the scientific or patent literature often lags behind actual discoveries, we cannot
be certain that we were the first to make our inventions or to file patent applications covering those inventions.



It
is also possible that others may obtain issued patents that could prevent us from commercializing our products or require us to
obtain licenses requiring the payment of significant fees or royalties in order to enable us to conduct our business. As to those
patents that we have licensed, our rights depend on maintaining our obligations to the licensor under the applicable license agreement,
and we may be unable to do so.



In
addition to patents and patent applications, we depend upon proprietary know-how to protect our proprietary technology. We require
our employees, consultants, advisors and collaborators to enter into confidentiality agreements that limit the disclosure of confidential
information to any other parties. We also require our employees and consultants to disclose and assign to us their ideas, developments,
discoveries and inventions. These agreements may not, however, provide adequate protection for our know-how or other proprietary
information in the event of any unauthorized use or disclosure.



Our
commercial success will depend in part on the ability of the licensors of key technologies to maintain protection of their intellectual
property.



Our
success will depend in part on the ability of the licensors of key technologies for use in our new business to obtain, maintain
and enforce patent and other intellectual property rights for the technology and to preserve trade secrets, and on our ability
to operate without infringing upon the proprietary rights of third parties. We cannot be certain that our licensors were the first
inventors of inventions covered by their patents and patent applications or that they were the first to file. Accordingly, there
can be no assurance that licensed patents and patents application used by the Subsidiary are valid or will afford us protection
against competitors with similar technologies. Failure to obtain or maintain patent or other intellectual property protection
on the technology underlying our licensed electric double box tail aircraft may have a material adverse effect on our competitive
position and business prospects. It is also possible that the technology may infringe on third party patents or other intellectual
property rights owned by others. If we are found liable for infringement, we may be liable for significant money damages and may
encounter significant delays in bringing products and services to market.



Obtaining
and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other
requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for noncompliance
with these requirements.



Periodic
maintenance fees on any issued patent are due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime
of the patent. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary,
fee payment and other similar provisions during the patent application process. While an inadvertent lapse can in many cases be
cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance
can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights
in the relevant jurisdiction. Noncompliance events that could result in abandonment or lapse of a patent or patent application
include, but are not limited to, failure to respond to office actions within prescribed time limits, non-payment of fees and failure
to properly legalize and submit formal documents. In such an event, our competitors might be able to enter the market, which would
have a material adverse effect on our business.





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Costly
litigation may be necessary to protect our intellectual property rights and we may be subject to claims alleging the violation
of the intellectual property rights of others.



We
may face significant expense and liability as a result of litigation or other proceedings relating to patents and other intellectual
property rights of others. In the event that another party has also filed a patent application or been issued a patent relating
to an invention or technology claimed by us in pending applications, we may be required to participate in an interference proceeding
declared by the USPTO to determine priority of invention, which could result in substantial uncertainties and costs for us, even
if the eventual outcome is favorable to us. We, or our licensors, also could be required to participate in interference proceedings
involving issued patents and pending applications of another entity. An adverse outcome in an interference proceeding could require
us to cease using the technology or to license rights from prevailing third parties.



The
cost to us of any patent litigation or other proceeding relating to our licensed patents or patent applications, even if resolved
in our favor, could be substantial and could divert management’s resources and attention. Our ability to enforce our patent
protection could be limited by our financial resources, and may be subject to lengthy delays. A third party may claim that we
are using inventions claimed by their patents and may go to court to stop us from engaging in our normal operations and activities,
such as research, development and the sale of any future products. Such lawsuits are expensive and would consume time and other
resources. There is a risk that a court will decide that we are infringing the third party’s patents and will order us to
stop the activities claimed by the patents, redesign our products or processes to avoid infringement or obtain licenses (which
may not be available on commercially reasonable terms or at all). In addition, there is a risk that a court will order us to pay
the other party damages for having infringed their patents.



Moreover,
there is no guarantee that any prevailing patent owner would offer us a license so that we could continue to engage in activities
claimed by the patent, or that such a license, if made available to us, could be acquired on commercially acceptable terms. In
addition, third parties may, in the future, assert other intellectual property infringement claims against us with respect to
our product candidate, technologies or other matters. Any claims of infringement asserted against us, whether or not successful,
may have a material adverse effect on us.



We
rely on confidentiality agreements that could be breached and may be difficult to enforce, which could result in third parties
using our intellectual property to compete against us.



Although
we believe that we take reasonable steps to protect our intellectual property, including the use of agreements relating to the
non-disclosure of confidential information to third parties, as well as agreements that purport to require the disclosure and
assignment to us of the rights to the ideas, developments, discoveries and inventions of our employees and consultants while we
employ them, the agreements can be difficult and costly to enforce. Although we seek to enter into these types of agreements with
our contractors, consultants, advisors and research collaborators, to the extent that employees and consultants utilize or independently
develop intellectual property in connection with any of our projects, disputes may arise as to the intellectual property rights
associated with the Eviation Aircraft or any future product. If a dispute arises, a court may determine that the right belongs
to a third party. In addition, enforcement of our rights can be costly and unpredictable. We also rely on trade secrets and proprietary
know-how that we seek to protect in part by confidentiality agreements with our employees, contractors, consultants, advisors
or others. Despite the protective measures we employ, we still face the risk that:



| | ● | these agreements
    may be breached;                                                        
| | - | ---------------------------------------------------------------------------------------------
| |   |                                                                                              
| | ● | these agreements
    may not provide adequate remedies for the applicable type of breach;    
| |   |                                                                                              
| | ● | our proprietary
    know-how will otherwise become known; or                                 
| |   |                                                                                              
| | ● | our competitors
    will independently develop similar technology or proprietary information.





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International
patent protection is particularly uncertain, and if we are involved in opposition proceedings in foreign countries, we may have
to expend substantial sums and management resources.



Patent
law outside the United States may be different than in the United States. Further, the laws of some foreign countries may not
protect our intellectual property rights to the same extent as the laws of the United States, if at all. A failure to obtain sufficient
intellectual property protection in any foreign country could materially and adversely affect our business, results of operations
and future prospects. Moreover, we may participate in opposition proceedings to determine the validity of our foreign patents
or our competitors’ foreign patents, which could result in substantial costs and divert management’s resources and
attention.



Intellectual
property rights do not necessarily address all potential threats to our competitive advantage.



The
degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have
limitations, and may not adequately protect our business, or permit us to maintain our competitive advantage. The following examples
are illustrative:



| | ● | others may be able
    to design or develop an aircraft that is substantially similar to the Eviation Aircraft or any future product but that are
    not covered by the claims of the patents that we own or have exclusively licensed;                     
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                              
| | ● | we or our licensors
    or any future strategic partners might not have been the first to make the inventions covered by the issued patent or pending
    patent application that we own or have exclusively licensed;                                       
| |   |                                                                                                                                                                                                                                                              
| | ● | we or our licensors
    or any future strategic partners might not have been the first to file patent applications covering certain of our inventions;                                                                                                       
| |   |                                                                                                                                                                                                                                                              
| | ● | others may independently
    develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property
    rights;                                                                                       
| |   |                                                                                                                                                                                                                                                              
| | ● | it is possible that
    our pending patent applications will not lead to issued patents;                                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                              
| | ● | issued patents that
    we own or have exclusively licensed may not provide us with any competitive advantages, or may be held invalid or unenforceable,
    as a result of legal challenges by our competitors;                                             
| |   |                                                                                                                                                                                                                                                              
| | ● | our competitors
    might conduct research and development activities in countries where we do not have patent rights and then use the information
    learned from such activities to develop competitive products for sale in our major commercial markets;
| |   |                                                                                                                                                                                                                                                              
| | ● | we may not develop
    additional proprietary technologies that are patentable;                                                                                                                                                                              



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



We
may be subject to claims that former employees, collaborators or other third parties have an interest in our 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 product candidates. Litigation may be necessary to defend against
these and other claims challenging inventorship. 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. In addition, the Israeli
Supreme Court ruled in 2012 that an employee who receives a patent or contributes to an invention during his employment may be
allowed to seek compensation for such contributions from his or her employer, even if the employee’s contract of employment
specifically states otherwise and the employee has transferred all intellectual property rights to the employer. The Israeli Supreme
Court ruled that the fact that a contract revokes an employee’s right for royalties and compensation, does not rule out
the right of the employee to claim their right for royalties. As a result, it is unclear whether and, if so, to what extent our
employees may be able to claim compensation with respect to our future revenue. We may receive less revenue from future products
if any of our employees successfully claim for compensation for their work in developing our intellectual property, which in turn
could impact our future profitability.





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RISKS
RELATED TO OUR ISRAELI OPERATIONS



You
may have difficulty enforcing a judgment issued by a court in the United States against us in Israel.



We
are organized under the laws of Israel and our headquarters are in Israel. All of our officers and directors reside outside of
the United States. Therefore, you may not be able to enforce any judgment obtained in the United States against us or any of such
persons. You may not be able to enforce civil actions under United States securities laws if you file a lawsuit in Israel. In
addition, if a foreign judgment is enforced by an Israeli court, it will be payable in Israeli currency.



Currency
fluctuations may affect the value of our assets and decrease our earnings.



The
Company's functional currency is the U.S. dollar. We anticipate that a significant portion of our expenses will continue to be
denominated in NIS. The devaluation of the U.S. dollar against the NIS may decrease the value of our assets and could impact our
business.



Your
rights and responsibilities as a shareholder will be governed by Israeli law and differ in some respects from the rights and responsibilities
of shareholders under U.S. law.



We
are incorporated under Israeli law. The rights and responsibilities of the holders of our ordinary shares are governed by our
amended and restated articles of association (“Articles of Association”) and by Israeli law. These rights and responsibilities
differ in some respects from the rights and responsibilities of shareholders in typical U.S. corporations. In particular, a shareholder
of an Israeli company has a duty to act in good faith toward the company and other shareholders and to refrain from abusing his
power in the company, including, among other things, in voting at the general meeting of shareholders on certain matters. See
“Item 10.B. Additional Information – Memorandum and Articles of Association”



It
may be difficult to enforce a U.S. judgment against us or our officers and directors or to assert U.S. securities law claims in
Israel.



We
are incorporated in Israel. All of our directors and officers reside outside of the United States. Service of process on them
may be difficult to effect in the United States. Furthermore, because a substantial portion of our assets are located in Israel,
any judgment obtained in the United States against us or any of our directors and officers may not be collectible within the United
States.



An
Israeli court may declare a judgment rendered by a foreign court in a civil matter, including judgments awarding monetary or other
damages in non-civil matters, enforceable if it finds that:



| | 1. | the judgment was
    rendered by a court which was, according to the court's jurisdiction laws, competent to render it;
| | -- | -----------------------------------------------------------------------------------------------------------------------



| | 2. | the judgment is
    no longer appealable;                                                                                                                                                                           
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                     
| | 3. | the obligation in
    the judgment is enforceable according to the rules relating to the enforceability of judgments in Israel and the substance
    of the judgment is not contrary to public policy in Israel; and



| | 4. | the judgment can
    be executed in the state in which it was given.
| | -- | --------------------------------------------------------------------





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A
foreign judgment will not be declared enforceable by Israeli courts if it was given in a state, the laws of which do not provide
for the enforcement of judgments of Israeli courts (subject to exceptional cases) or if its enforcement is likely to prejudice
the sovereignty or security of Israel. An Israeli court also will not declare a foreign judgment enforceable if it is proven to
the Israeli court that:



| | 1. | the judgment was
    obtained by fraud;
| | -- | ---------------------------------------



| | 2. | there was no due
    process;
| | -- | -----------------------------



| | 3. | the judgment was
    given by a court not competent to render it according to the laws of private international law in Israel;
| | -- | ------------------------------------------------------------------------------------------------------------------------------



| | 4. | the judgment conflicts
    with another judgment that was given in the same matter between the same parties and which is still valid; or
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------



| | 5. | at the time the
    action was brought to the foreign court a claim in the same matter and between the same parties was pending before a court
    or tribunal in Israel.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Israeli
courts may refuse to hear a claim based on a violation of U.S. securities laws because Israel is not the most appropriate forum
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
U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved
as a fact that can be a time-consuming and costly process. Certain matters of procedure will also be governed by Israeli law.
Additionally, there is doubt as to the enforceability of civil liabilities under the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, in original actions instituted in Israel.



Conditions
in Israel may adversely affect our operations and may limit our ability to produce and sell our products.



We
are incorporated under Israeli law and our principal offices are located in Israel. Political, economic and military conditions
in Israel directly affect our operations. Since the establishment of the State of Israel in 1948, a number of armed conflicts
have taken place between Israel and its Arab neighbors and a state of hostility, varying in degree and intensity, has led to security
and economic problems for Israel. We could be adversely affected by any major hostilities involving Israel, the interruption or
curtailment of trade between Israel and its trading partners, a significant increase in inflation, or a significant downturn in
the economic or financial condition of Israel. Ongoing and revived hostilities with the Palestinians or Arab countries might require
more widespread military reserve service by some of our employees, which could have an adverse effect on our business. In addition,
several Arab and Muslim countries still restrict business with Israeli companies. We could be adversely affected by restrictive
laws or policies directed towards Israel or Israeli businesses.



Generally,
all male adult citizens and permanent residents of Israel under the age of 45 can, unless exempt, be called up and obligated to
perform active military reserve duty for as many as 36 days annually (beyond this age, they may be called up and obligated to
take part in military training for as many as 13 days annually). Additionally, all Israeli residents of this age are subject to
being called to active duty at any time. Although we have operated effectively under these requirements since we began operations,
we cannot assess the full impact of these requirements on our workforce or business if political and military conditions should
change, and we cannot predict the effect on us of any expansion or reduction of these obligations.



RISKS
RELATING TO OWNERSHIP OF OUR ORDINARY SHARES



If
we are considered to have been a shell company at any point in the past, we will be subject to various restrictions and requirements
under the U.S. Securities Laws.



While
we are not as of the date of this report on Form 20-F a shell company, the Company may be deemed to have been, at one point or
another in time prior to the commencement of our new business focus, a shell company. A “shell company”, as defined
by Rule 12b-2 promulgated under the Securities Exchange Act of 1934, is (1) a company that has no or nominal operations; and (2)
either: (i) no or nominal assets; (ii) assets consisting solely of cash and cash equivalents; or (iii) assets consisting of any
amount of cash and cash equivalents and nominal other assets. If however, due to the scope or range of our operations we are deemed
to have been a shell company, then certain consequences follow.





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During
the period in which we are deemed to be a shell company and for a period of one year following the filing of this report on
Form 20-F for the year ending December 31, 2016, the provisions of Rule 144 promulgated under the Securities Exchange Act of
1934 may not be used for resale of shares issued by us.  These restrictions may limit our ability to raise capital via the private placement of our shares.



We
are unlikely to pay dividends in the foreseeable future and any return on investment may be limited to the value of our ordinary
shares.



Under
the Israeli Companies Law, dividends may only be paid out of profits legally available for distribution and provided that there
is no reasonable concern that such payment will prevent us from satisfying our existing and foreseeable obligations as they become
due. In addition, a competent court may approve, as per a motion to be filed by a company in accordance with the Israeli Companies
Law requirements, a payment which does not meet the profits test, provided that the court was convinced that there is no reasonable
concern that such payment will prevent the company from satisfying its existing and foreseeable obligations as they become due.
We do not expect to declare or pay cash dividends in the foreseeable future and intend to retain future earnings, if any, to finance
the growth and development of our business. If we do not pay dividends, our ordinary shares may be less valuable because a return
on your investment will only occur if our share price appreciates. If we issue additional shares in the future, it will result
in the dilution of our existing shareholders.



We
are authorized to issue up to 700,000,000 ordinary shares. Our board of directors may choose to issue some or all of such shares
to acquire one or more companies or products and to fund our overhead and general operating requirements. The issuance of any
such shares will reduce the book value per share and may contribute to a reduction in the market price of the outstanding shares
of our ordinary shares. If we issue any such additional shares, such issuance will reduce the proportionate ownership and voting
power of all current shareholders. Further, such issuance may result in a change of control of our company.



Trading
of our ordinary shares is restricted by the Securities Exchange Commission’s penny stock regulations, which may limit a
shareholder’s ability to buy and sell our ordinary shares.



The
Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be any equity security
that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain
exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers
who sell to persons other than established customers and “accredited investors”. The term “accredited investor”
refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or
annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to
a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form
prepared by the Securities and Exchange Commission, which provides information about penny stocks and the nature and level of
risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the
penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing
the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer
and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction
and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules
require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special
written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written
agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the
secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the
ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit
the marketability of our ordinary shares.





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FINRA
sales practice requirements may also limit a shareholder’s ability to buy and sell our shares.



In
addition to the “penny stock” rules described above, the Financial Industry Regulatory Authority (“FINRA”)
has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds
for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their
non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial
status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there
is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements
make it more difficult for broker-dealers to recommend that their customers buy our ordinary shares, which may limit your ability
to buy and sell our shares and have an adverse effect on the market for our shares.



The
market for our ordinary shares is illiquid and the price of our ordinary shares may be negatively impacted by factors that are
unrelated to our operations.



Although
our ordinary shares are currently listed for quotation on the OTC Pink there is no market for our ordinary shares. Even when a
market is established and trading begins, trading through the OTCPK is frequently thin and highly volatile. There is no assurance
that a sufficient market will develop in our shares, in which case it could be difficult for shareholders to sell their shares.
The market price of our ordinary shares could fluctuate substantially due to a variety of factors, including market perception
of our ability to achieve our planned growth, quarterly operating results of our competitors, trading volume in our ordinary shares,
changes in general conditions in the economy and the financial markets or other developments affecting our competitors or us.
In addition, the stock market is subject to extreme price and volume fluctuations. This volatility has had a significant effect
on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have
the same effect on our ordinary shares.



If
we fail to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002, it could have
a material adverse effect on our business, operating results and share price.



The
Sarbanes-Oxley Act of 2002 imposes certain duties on us. Our efforts to comply with the management assessment requirements of
Section 404 thereof have resulted in a devotion of management time and attention to compliance activities, and we expect these
efforts to require the continued commitment of significant resources. If we fail to maintain the adequacy of our internal controls,
we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting.
We may also identify material weaknesses or significant deficiencies in our internal control over financial reporting. In addition,
our internal control over financial reporting has not been, and is not required to be, audited by our independent registered public
accounting firm. In the future, if we are unable to assert that our internal controls are effective, our investors could lose
confidence in the accuracy and completeness of our financial reports, which in turn could cause our share price to decline. Failure
to maintain effective internal control over financial reporting could also result in investigation and/or sanctions by regulatory
authorities, and could have a material adverse effect on our business and operating results, investor confidence in our reported
financial information, and the market price of our ordinary shares.



We
will likely issue additional capital shares in the future, which would dilute our existing shareholders.



In
the future, we will likely issue our previously authorized and unissued securities, including shares of our ordinary shares or
securities convertible into or exchangeable for our ordinary shares, resulting in the dilution of the ownership interests of our
shareholders. We are authorized under our amended and restated certificate of incorporation to issue 700,000,000 ordinary shares.



We
currently do not have any commitments for funding. In addition, we may also issue additional ordinary shares or securities convertible
into or exchangeable for our ordinary share in connection with the hiring of personnel, future acquisitions, future private placements
of our securities for capital raising purposes or for other business purposes. Future issuances of our ordinary shares, or the
perception that such issuances could occur, could have a material adverse effect on the price of our ordinary shares.





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|ITEM 4. | INFORMATION ON
    The COmpany
|------- | ------------------------------



A.
HISTORY OVERVIEW OF THE COMPANY



Our
legal and commercial name is Eviation Aircraft Ltd. Our offices are at 1 Ha’Ofe St., Kadima-Tzoran, Israel, 6092000. Our
corporate governance complies with the Israeli Companies Law, 1999, as amended (the “Companies Law”). Our shares are
currently quoted on the OTC Market, Pink, under the symbol, EVTNF.



The
Company, formerly known as R.V.B. Holdings Ltd. (“RVB”), is an Israeli company that was formed in January 1998 to
receive all of the assets and liabilities of the defense related business of BVR Technologies Ltd. in accordance with the terms
of a reorganization plan. BVR commenced operations as an independent company effective as of January 1, 1998. In November 2009,
BVR sold substantially all of its assets and liabilities, including the brand name “B.V.R.”, to Elbit Systems Ltd.
(“Elbit”) and following the sale changed its name in January 2010 to R.V.B. Holdings Ltd. RVB was controlled by Mr.
Aviv Tzidon, one of our principal shareholders and a director in our Company until March 2010, when Greenstone Industries Ltd.
(“Greenstone”) purchased a controlling interest in the Company from A.O. Tzidon (1999) Ltd. and Aviv Tzidon.



On
April 2, 2015, the Tel Aviv District Court (the “Court”) granted Greenstone’s petition, due to the financial
and business condition of the Company, to appoint Adv. Mordechai Shalev as the Temporary Liquidator of the Company, with a mandate
to identify and liquidate the Company’s assets and to investigate its conduct.



On
October 28, 2015, the Temporary Liquidator filed with the Court an agreement for the sale of the Company (the “Agreement”)
by way of a share issuance to Aviv and Magic Stones. The Agreement was reached following a ‘request for proposals’
(RFP) procedure carried out by the Temporary Liquidator to sell the Company free and clear from all assets and obligations of
any kind.



Following
the approval of the Agreement by the Court on February 2, 2016, the following was implemented (1) canceling the nominal value
of the Company’s shares, such that the Company’s shares will not have any nominal value, (2) converting 71,923,175
non-tradeable options to purchase ordinary shares of the Company into 71,923,175 ordinary shares of the Company, (3) effectuating
a reverse split of the Company’s shares at a ratio of 30,465:1, such that for each 30,465 shares of the Company, the shareholders
of the Company received one share, and (4) increasing the share capital of the Company to 700,000,000 ordinary shares of the Company
with no nominal value.   After giving effect to such actions and prior to the share issuances to Aviv and Magic Stones,
the total number of issued ordinary shares of the Company was 10,000. The reverse split became effective on February 25,
2016.



Pursuant
to the Agreement, the Company, at the direction of the Temporary Liquidator, issued to Aviv and Magic Stones, in the aggregate,
9,990,000 ordinary shares representing, on the date of their issuance, 99.9% of the issued and outstanding share capital of the
Company, in consideration for which these shareholders paid to the Temporary Liquidator the amount of NIS 600,000 (approximately
$153,000 at the exchange rate in effect at the time of the purchase).



Following
the acquisition of the Company, the Board of the Company identified a new business direction to pursue in the area of aviation
transportation via light electrically operated aircrafts. The viable electric aircraft eco-system that the Company seeks to establish
is intended to enable passengers to book an “on demand” flight as a cost-effective solution compared with other available
transportation methods of regional travels. The aircraft to be developed will be inexpensive to operate, significantly reducing
the cost of travel for passengers and is planned to be an emissions-free, quiet, high speed, safe and easy to operate, with lower
operating and ownership costs. In furtherance thereof, on May 15, 2016, the Company established a new, wholly-owned Israeli
subsidiary company under the name “Eviation Tech Ltd.”, or the Subsidiary, for the purpose of developing and commercializing
its new business focus. On July 17, 2016, Aviv and Magic Stones assigned or otherwise transferred to our Subsidiary all rights
that each had or entered into relating to the new business focus of light aircraft aviation technology.





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Our
legacy business of waste management as at December 31, 2015 has been discontinued. The discussion below relates solely to our
new business focus in light aviation regional transportation field.



On
March 2, 2017, our corporate name change to “Eviation Aircraft Ltd.” became effective. We adopted our new name as
part of our transformation into our new business focus of designing, developing and manufacturing a light electric passenger aircraft
and providing supportive services required for an economically viable electric aircraft
eco-system.In connection with the Company’s name change, effective March 2, 2017, the Company’s ordinary shares
began to be quoted under the ticker symbol EVTNF on the OTC Markets Pink Tier.



B.
AVIATION BUSINESS OVERVIEW



OUR
BUSINESS



We
incorporated in Israel on May 15, 2016 Eviation Tech Ltd., as a wholly-owned subsidiary of the Company, a private company limited
by shares. Through the Subsidiary, we are designing, developing and intend to manufacture a light, electric passenger aircraft,
which we refer to as the “Eviation Aircraft”, and to provide supportive services required for an economically viable
electric aircraft eco-system.



The
viable electric aircraft eco-system is intended to enable passengers to book an “on demand” flight as a cost-effective
solution compared with other available transportation methods of regional travels. The Eviation Aircraft to be developed will
be inexpensive to operate, significantly reducing the cost of travel for passengers. A passenger aircraft that’s cheap to
own and operate, quiet, fast and easy to fly, will eventually create, we believe, a market shift for short haul regional travel.



We
are currently in the proof of concept stage, and intend to test all the components of the enabling core technologies (airframe
design, electric drive, battery technology and autonomous flight and sensing systems). Testing will take place on the scaled models
that are currently under construction by the Subsidiary.



ABOUT
THE EVIATION AIRCRAFT



The
Eviation Aircraft is planned to be an emissions-free, quiet, high speed, safe and easy to fly aircraft, with lower operating and
ownership costs. We expect this aircraft to achieve a reduction of over 60% in direct operating costs, compared with similarly
sized non-electric aircraft. We also estimate that such cost reduction, combined with the inherently low maintenance costs of
electrical drives, will place the Eviation Aircraft in competition with personal automobiles and the various modes of public transportation
to destinations over 100 miles away.



The
Eviation Aircraft is designed to accommodate six or eight passengers for a maximum travel distance of 800 miles, using electrical
power only. It will be able cruise at over 200 knots (ktas) using only 90 kilowatt (kW) of power, at a cost per seat mile, or
“CASM”, of approximately US $0.10, allowing the Eviation Aircraft to favorably compete in the general aviation market
in addition to providing a viable alternative to the regional transportation options of today.



The
Eviation Aircraft is designed to provide an economically accessible travel option for a wider range of passengers. In addition,
due to the quiet and emission free engine of the Eviation Aircraft, the Subsidiary will be able to utilize many small airfields
that were not previously accessible due to environmental regulations.



In
addition to the License and Service Agreement entered on September 1, 2015 by Aviv and Magic Stones and subsequently assigned
to the Subsidiary, the details of which are discussed below under the caption “Material Agreements”, we intend to
enter into joint development and risk-sharing agreements with established OEMs and Tier 1 suppliers or systems. The agreements
are intended to further the development of the aircraft and reduce the risks involved in the type certification of a new aircraft.



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CORE
ENABLING TECHNOLOGIES FOR THE EVIATION AIRCRAFT



The
Eviation Aircraft development process includes the following core-enabling technologies in different stages of their development
cycle status.



Airframe
design



We
have developed a highly efficient airframe, designed and built from the ground up for electric propulsion. The air frame allows
for efficient use of distributed propulsion; low cooling drag and efficient thermal management. The airframe has been extensively
tested and analyzed and is expected to fly at scale in the first half of 2017. The first full scale, 6 passengers carrying implementation
of the airframe is to be constructed throughout 2017 and 2018 and is expected to be ready for first prototype flight by the third
quarter of 2018. The construction of the full-scale aircraft has been found eligible for Israeli government support, and was granted
in December 2016 3,000,000 NIS (equal to approximately $780 thousand at the time of grant) in match-up funding, over the period
of construction of the full-scale aircraft. The funds are considered as a loan, to be repaid out of future revenues. On February
27,2017, our Subsidiary received NIS 150 thousand (approximately $40 thousand) as advance. The remaining funds will be received
subject to actual cost that will be incurred by the Subsidiary and in accordance with the approved budget as included in the signed
Support and Investment Agreement with the OCS.



Electric
drive



Two
sets of highly efficient motors and controllers has been purchased and integrated as the electric drive system of the aircraft.
Suitable motors and controllers are manufactured by two separate potential suppliers and testing and integration will be performed
on both, to allow supply chain flexibility in the future.



Battery
technology



The
Eviation Aircraft will utilize an aluminum-air battery to be developed and supplied by Phinergy Ltd., a company controlled by
Aviv, and a Lithium Polymer buffer battery for high power at takeoff, as well as for regenerated power storage. The aluminum-air
battery system produces electricity from the reaction of oxygen in the air with aluminum, and will be integrated into our airframes
as part of a combined battery solution. The integration and optimization of the batteries and energy storage system design for
our airframe has been performed by us during the second half of 2016.



Autonomous
flight and sensing systems



In
addition to the development and manufacturing of the Eviation Aircraft, we are also developing related services and technologies
that will demonstrate our vision of the Eviation Aircraft eco-system. These developments include stand-alone low cost auto-piloting
solutions, high volume, machine airspace management and real-time remote assistance and piloting service. These technologies are
sub-systems that could be integrated into existing and future general aviation aircraft as products or services, regardless of
the maturity of the Eviation Aircraft.





Remote
Ground Station Assistance and Control



Under
the Laminar MOU discussed below, Aviv has contracted on our behalf with Mr. Austin Meyer and Laminar Research LLC, for the development
of the software to be integrated into the Subsidiary’s ground stations and air traffic control demonstrators. The software
that includes uniquely modified versions of a commercially available flight simulator and a controller, developed for and owned
by the Subsidiary, will be integrated into the Eviation Aircraft’s hardware. The system created shall be used for safety
support, to safely manage and control high numbers of aircraft in a given airspace.





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Collision
Avoidance and Remote Communication



We
are also developing an obstacle detection and collision warning system, in addition to other optical sensors to assist with full
surrounding awareness by the aircraft. This system will also include a machine to machine (M2M) data connection that will allow
the plane to communicate with other planes for safety and automated formation flights.



Auto
Landing System



We
have purchased all rights under a U.S. patent for a high precision electro-optical positioning system. Under the rights obtained,
the Subsidiary has completed the conceptual design of a low-cost auto-landing system, currently being developed under contract
with Zickel Engineering Ltd. The system prototype was completed during the second half of 2016, and integrated as part of our
advanced auto-pilot system. As such, this feature will be integrated into the Eviation Aircraft, and its scale models.



The
autonomous flight and sensing systems are also intended to be developed as the first stage for auto-pilot aircraft.



MARKET
OVERVIEW



General
Aviation



General
aviation, comprising all aircraft other than military aircraft and scheduled commercial airliners, presents an uncommon form of
long distance transport method.



According
to the 2014 General Aviation Statistical Databook and 2015 Industry Outlook, the general aviation market includes approximately
400,000 aircraft worldwide, ranging from two-seat training aircraft and utility helicopters to intercontinental business jets flying
today, most of which are based in the United States and Europe. In the U.S., the general aviation fleet flies almost 23 million
flight hours to more than 5,000 U.S. public airports, while scheduled commercial airlines serve less than 500 airports. The European
general aviation fleet can access over 4,200 airports.



The
global aviation industry has been growing and developing over the past few years. In 2014, the general aviation
industry showed total revenue of approximately $24.5 billion and delivery of 2,454 in new aircraft revenue, a slight increase
compared to the previous year. The increase is mostly attributable to a 6.5% increase in the number of business jets
delivered that year. In comparison, the commercial aviation industry is estimated at $260 billion in new aircraft deliveries
each year. Moreover, commercial aviation has been growing at roughly 5% per year since 1980, compared with a 0.5% annual
growth for general aviation since 2010.



Regional
Transportation



According
to national household travel surveys made in 2001 and 2009, or NHTS, as summarized in Long Distance Transportation Patterns: Mode
Choice, out of the 2.6 billion trips of over 50 miles in distance taken annually by Americans, 2.36 billion trips are of 100-750
miles, making the regional distance account for 91% of the total trips taken, and an estimated total of over $1 trillion spent
on this type of travel.



We
aim to target trips at a destination distance of 100-749 miles, rendering 50-100 miles more suitable for a car and trips over
750 miles for main-stream commercial aviation. According to the data provided by the NHTS, we estimate a regional-distance trip
that accounts for 91% of all trips over 50 miles, and that is served almost exclusively by cars (93.1%).



Management
believes that building a plane that will cruise at 4-5 times the speed of a car on a highway, but at a cost per mile that’s
closer to a bus or a regional train is possible with electric propulsion. Our proposed aircraft plane design will have two overlapping
missions at the core of the Eviation business plan – first to compete in the General Aviation market, and second to make
light aviation a real regional transportation alternative.





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Competitive
Modes of Travel



The
Eviation Aircraft will compete with light aircraft in the general aviation market and with trains, buses and private automobiles
in the regional travel market. Light aircraft are highly expensive for travel. The CASM (cost per seat mile) for light aircraft
is estimated at US $0.20 to US $0.50, not including pilot’s expenses.



According
to an AAA, “Your Driving Costs” 2015 report, the driving CASM for a mid-size sedan at full seating capacity in 2015
was US $0.12 - US $0.20. The average CASM in the commercial aviation industry is US $0.13, but additional costs for the customer
significantly vary based on competition on routes, so that regional prices in the U.S. commercial aviation industry range between
US $0.21 and US $0.90 cents per mile traveled. Buses and regional trains are less expensive (CASM of US $0.8 - US $0.11), but
are also very slow in commute. High speed trains are more expensive (CASM of US $0.25 - US $0.35), and like commercial aviation
require a significant investment in infrastructure.



The
Eviation Aircraft adds a unique and inexpensive alternative to the current existing regional transportation options for travel
distances of 100-750, while using the existing infrastructure of general aviation, at an estimated CASM of US $0.10 or less.



OUR
BUSINESS STRATEGY



Our
business plan includes four distinct stages as described below:



1.       Proof
of Concept – We are currently in the proof of concept stage, and intends to test all the components of the Eviation
Aircraft core enabling technologies (airframe design, electric drive, battery technology and autonomous flight and sensing systems).
Testing will take place on the scaled models and the full-scale aircraft once completed. Our goal is to successfully complete
the construction and first test flights of the Eviation Aircraft. We expect to complete the proof of concept stage by the end
of 2018. The expected cost of this stage is approximately US $3.4 million.



2.       Aircraft
and Services Development – Following the proof of concept stage, we intend to develop potential products to defined
services and solutions and protect any intellectual property created during the proof of concept stage. We also intend to partner
with leading aerospace industrial suppliers to commercialize and market these services and solutions. This stage will focus mainly
on the development and commercialization of autonomous flight and sensing systems, including the remote pilot assistance and auto
landing system. In addition, we intend to continue the flight testing of the Eviation Aircraft to both validate and improve the
Aircraft’s design. We expect to complete this stage by the end of 2019 at an estimated cost of approximately US $2 million.



3.       Production- In this third stage we plan to complete the industrial production design process for the Eviation Aircraft, based on the
results of the flight tests for the purpose of commercialization and type certification of the Eviation Aircraft. We further intend
to partner with established airframe manufacturers to support the process of commercialization of the design. We also plan, based
on the assessment of the certification process, to complete the development of the transportation service platform and initiate
marketing. We may independently manufacture a limited series of experimental Eviation Aircraft, to be sold in the U.S. market.
This stage is planned to be completed by the end of 2020. We cannot estimate the cost at this time.



4.       Production
and Operations - In the fourth and final stage, we plan to complete the certification process of the Eviation Aircraft and
partner with manufacturers and marketers for the commercialization of the aircraft, along with additional developed systems and
services. We estimate the earliest expected sale of a complete certified Eviation Aircraft will be in the year 2022.





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EMPLOYEES



As
of the date of this report on Form 20-F, we have, through our Subsidiary, nine employees in Israel, of which eight are engaged
in design and development.



CAPITAL
RESOURCES



In
order to advance the business of the Company, on July 17, 2016, Aviv and Magic Stones, on the one hand, and the Company, on the
other, entered into a loan and security agreement pursuant to which these shareholders advanced a total of $500,000 to our Company
for a period of seven years at an annual interest rate equal to the lower of (i) 3.2% per annum, and (ii) the minimum rate required
by law to avoid the imputing of tax. As security for such loan, we granted to the advancing shareholders a specific lien and security
interest on all of the shares of the Subsidiary held by us. The loan may be repaid at any time in minimum increments of $50,000.
The proceeds of the loan are to be used for funding our on-going operations.



Additionally,
on July 17, 2016, Aviv and Magic Stones entered a loan and security agreement with our Subsidiary pursuant to which they will
provide a credit line of up to $4,500,000 for a period of seven years at an annual interest rate equal to the lower of (i) 3.2%
per annum, and (ii) the minimum rate required by law to avoid the imputing of tax. Draws on such credit line may be made in increments
of not less than $50,000, and outstanding amounts on the credit line may be repaid in increments of not less than $50,000. Accrued
interest is payable annually. As security for amounts owing under the credit line, the Subsidiary granted to these shareholders
a floating lien and charge on all the assets of the Subsidiary, and a specific charge on all the intellectual property rights
owned by the Subsidiary at any time. An event of default on any one of the loan made to us and the credit line granted to the
Subsidiary triggers an event of default under the other of such loan and credit line. As of the date of this report, our Subsidiary
has drawn down on approximately $2.7 million under this facility.



MATERIAL
AGREEMENTS



License
and Service Agreement for the manufacturing of the scaled models and electric synergy prime aircraft



On
September 1, 2015, our shareholder, Aviv, entered on behalf of our Subsidiary into a License and Service Agreement (“the
LSA”) with Mr. John McGinnis, on behalf of himself and on behalf of his companies (collectively, “McGinnis”),
for a patent and know-how in the field of aircraft, including a Double Boxtail Aircraft design. Pursuant to the terms of the LSA,
our Subsidiary acquired a worldwide exclusive license to a patent and know-how necessary for the completion and utilization of
a flying electric Double Boxtail aircraft for use solely in the field of electric powered aircraft (including hybrid electric)
above 55lbs, including the rights to develop, make, commercialize, and import products and processes. Three years after the termination
of the agreement, the license will automatically become non-exclusive. As of December 31, 2016 the Company paid US $700 thousand
for the development and production of scaled demonstrators and additional development and production services relating to a full
scale electric synergy prime aircraft.



In
addition, the Subsidiary can select to continue to engage McGinnis for additional development projects in the future.



Pursuant
to the terms of the LSA, McGinnis is and shall remain the sole and exclusive owner of the patent and the know-how he has developed
that relates thereto. Any intellectual property developed in the course of or as a result of the services under the LSA shall
belong to McGinnis and will automatically and for no additional consideration licensed to us under the license granted in this
agreement. We will have the right to coordinate, review, comment and approve any filing, prosecution, maintenance and enforcement
of patent applications and patents on the new developed intellectual property.



As
of March 2016, due to a lack of progress in the development and supply of the model or the completion of the synergy prime aircraft,
the LSA has in effect been suspended, and could be reinstated in agreement between the parties in any stage. The suspension of
the LSA has led us to focus only on the development of the Eviation Aircraft and accelerate its construction program as described
above.





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Administrative
Services Agreement for the provision of various services and the lease of office space



On
November 30, 2015, Aviv and Mr. Michael Ilan (beneficial owner of Magic Stones) entered into an Administrative Services Agreement
with Phinergy Ltd., a company also controlled by Aviv and Mr. Ilan – “the ASA”. Pursuant to the ASA, Phinergy
provides our Subsidiary with (i) administrative and general services, including secretarial and management services; (ii) human
resource services; (iii) accounting and bookkeeping services, including the services of a chief financial officer; and (iv) office
space and office services, including telephone, fax and data communications and cleaning services (the services described in (i)
through (iv), collectively – the “Services”). In consideration for these Services, our Subsidiary pays to Phinergy
a monthly fee, calculated on the basis of the actual cost to Phinergy of providing the Services, derived as a percentage of the
global costs paid for Phinergy for receiving such services for itself and our Subsidiary together. Fees are paid on a quarterly
basis in arrears.



The
Laminar MOU



On
February 5, 2016, our Subsidiary (as then an entity in formation) entered into a “Memorandum of Understandings” with
Laminar Research LLC (the “Laminar MOU” and “Laminar”, respectively) for the development of an air traffic
control (ATC) algorithm and its implementation on subscale aircraft models. The Laminar MOU comprises several steps of development
by Laminar, for a total payment of $180,000. Our Subsidiary receives an irrevocable, royalty-free license for a limited number
of copies of the finished software products. Progress and integration of this concept will be synchronized with the NASA UTM project.
The Company engages with this development through itsGeneral Aviation
Manufacturer's Association ("GAMA") membership.



INTELLECTUAL
PROPERTY



In
July 2016, our Subsidiary acquired from Eye Point Ltd., a company owned by Mr. Dekel Tzidon, all rights under US patent No. 8,314,928
(the “Eye Point Patent”). The Eye Point Patent will expire on November 12, 2026. This patent allows us to develop
our conceptual design of an auto-landing system.



We
also license US Patent No. 8,657,226, owned by McGinnis, pursuant to the LSA. This patent will expire on April 26, 2029. Pursuant
to our agreement with McGinnis, any patents and other types of intellectual property developed in the framework of the LSA will
be owned by McGinnis and will be added to the license already granted by McGinnis for no additional consideration.



We
currently rely upon a combination of trade secrets, patents, copyrights, and trademarks, as well as non-disclosure agreements
and invention assignment agreements, to protect our technologies and other proprietary Company information.



Our
policy is to require our employees, consultants, advisors and collaborators to execute confidentiality agreements. Additionally,
we require our employees and consultants to execute assignment of invention agreements upon the commencement of employment, consulting
or advisory relationships. These agreements generally provide that all confidential information developed or made known to a party
by us during the course of the party’s association with our Company is to be kept confidential and not to be disclosed to
third parties except in specific circumstances. In the case of employees and consultants, the agreements also provide that all
inventions conceived by the individuals in the course of their employment or consulting relationship will be our exclusive property.



While
our intellectual property rights in the aggregate are important to the operation of our business, we do not believe that our business
would be materially affected by the expiration of any particular intellectual property right or termination of any particular
intellectual property patent license agreement.





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REGULATORY
ASPECTS



Our
business is regulated by the FAA and the Department of Homeland Security. In the U.S., the Eviation Aircraft will be required
to comply with FAA regulations governing production and quality systems, airworthiness and installation approvals, repair procedures
and continuing operational safety. When we reach the stage of mass production and deployment of the Eviation Aircraft, we will
also be subject to various federal, state, and local laws and regulations relating to environmental protection, including the
discharge, treatment, storage, disposal and remediation of hazardous substances and wastes. We will continually assess our compliance
status and management of environmental matters to ensure our operations are in substantial compliance with all applicable environmental
laws and regulations. Investigation, remediation, operation and maintenance costs associated with environmental compliance and
management of sites will be a normal, recurring part of our operations. It is reasonably possible that costs we incur to ensure
continued environmental compliance could have a material impact on our results of operations, financial condition or cash flows,
if additional work requirements or more stringent clean-up standards are imposed by regulators, new areas of soil, air and groundwater
contamination are discovered and/or expansions of work scope are prompted by the results of investigations.



Standards
bodies, which are formal and informal associations that seek to establish voluntary, non-governmental product and technology standards,
are influential in the United States and abroad. ASTM International (American
Society for Testing and Materials International) is an internationalstandards organizationthat
develops and publishes voluntary consensus technicalstandardsfor
a wide range of materials, products, systems, and services.
Some 12,575 ASTM voluntary consensus standards operate globally. We are an active member in F39 and F44 ASTM regulatory
committees, helping to define the standards for electric propulsion in aviation.



As
of November 2, 2016, we are an associate member of GAMA,an aviation industry trade association representing general
aviation (non-military & non-airliner) aircraft manufacturers and related enterprises, chiefly in the United States.



COMPETITION



Our
competitive landscape includes companies that are established airframe manufacturers, and startups building electric aircraft.
In product terms, the companies are making fixed wing aircraft, rotorcrafts and combinations thereof. The leader among the established
manufacturers is Airbus, that has created the e-fan program and demonstrated manned electric flight of a 2-seat electric trainer
in 2014. Other companies including Pipistrel of Slovenia which is already producing a light fully electric aircraft called the
pipistrel Alpha Electro. Several American startups, are developing electric Vertical TakeOff and Landing (VTOL) aircraft, that
will compete for funding and market share in the future. The leading companies to date are Zee Aero LLC and Joby Aviation LLC,
both based in California, USA.



It
is our view that the unique efficiency of our Eviation Aricraft design will make for a unique value proposition for regional distance
travel, while the VTOL capabilities of the competition will make them more expensive and offer a shorter range of flight. As such,
we foresee potential synergies and a basis for collaboration allowing players to further focus their advantages in the market,
when the competitors' VTOL aircraft serves to extend the reach of potential clients to our aircrafts at the airfields.



DEVELOPMENT
AWARDS



On
December 18, 2016 our Subsidiary signed a Support and Investment Agreement with the Office of the Chief Scientist (“OCS”)
of the Ministry of National Infrastructures, Energy, Water and Resources of Israel. Under the agreement, the Company will develop
passenger's electric aircraft. The plan will be performed during 24 months commencing on January 1, 2017. The Subsidiary is entitled
to receive up to 50% of the actual costs and up to NIS 3 million (approximately $780 thousand). As a security, the Subsidiary
provided a bank guarantee in the amount of NIS 225 thousand that will be effective until 3 months after the end of the project.
The Subsidiary is expected to record a lien on a bank deposit in the same amount in favor of the bank providing the guarantee.
According to the agreement, the Subsidiary will be required to pay royalties in an amount of 5% on sales of products and services
derived from a technology developed using these grants until 100% of the CPI-linked grant plus interest is repaid. On February
27,2017, our Subsidiary received NIS 150 thousand (approximately $40 thousand) as advance.





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RESEARCH
AND DEVELOPMENT



Research
and development expenses recorded in 2016 amounted to $1,829 thousand.



C.
ORGANIZATIONAL STRUCTURE



See
discussion above.



D.
PROPERTY, PLANTS AND EQUIPMENT



All
of our facilities are leased, and we do not own any real property. Our principal executive offices are located in 1 Ha’Ofeh
Street, Kadima-Tzoran, Israel. The space is in a commercial office building and has approximately 200 square meters pursuant to
a 2-month lease which commenced on December 1, 2015 with 6 option periods of 12 months each that will be automatically exercised
unless we provide termination notice within 90 days before the end of each lease period. We have no material tangible fixed assets
apart from the properties described above.



On
January 9, 2017, we entered into a lease agreement for additional office space and parking spots with a related party. The lease
period commenced on January 1, 2017 for one year with an option to extend the lease period for up to an additional six years.
The contract is renewed automatically unless the Company provides a termination notice within 90 days before the end of each year
lease period.



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



None.



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



YOU
SHOULD READ THE FOLLOWING DISCUSSION AND ANALYSIS IN CONJUNCTION WITH ITEM 3 "SELECTED FINANCIAL DATA" AND OUR CONSOLIDATED
FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED ELSEWHERE IN THIS ANNUAL REPORT. THIS "OPERATING AND FINANCIAL REVIEW AND
PROSPECTS" SECTION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS INCLUDING, BUT NOT LIMITED
TO, THOSE SET FORTH UNDER THE CAPTION "RISK FACTORS" AND ELSEWHERE IN THIS REPORT.



A.  OPERATING
RESULTS



Summary



Due
to the financial and business condition of the Company, in April 2015, at creditors’ request, the Tel Aviv District Court
appointed a Temporary Liquidator to obtain and realize the Company’s assets and to settle its liabilities. The Temporary
Liquidator arranged for the transfer and assumption of all assets and liabilities of the Company to a trust managed by him, and
the issuance to Aviv and Magic Stones, our shareholders, of 9,990,000 ordinary shares of the Company representing 99.9% of the
issued and outstanding share capital of the Company. The agreement between these shareholders and the Temporary Liquidator on
behalf of the Company, was executed on October 22, 2015 (the “Agreement”), and the Tel Aviv District Court approved
the sale to Aviv and Magic Stones on February 2, 2016.



Following
the approval of the Agreement by the Court, the following was implemented (1) canceling the nominal value of the Company’s
shares, such that the Company’s shares will not have any nominal value, (2) converting 71,923,175 non-tradeable options
to purchase ordinary shares of the Company into 71,923,175 ordinary shares of the Company, (3) effectuating a reverse split of
the Company’s shares at a ratio of 30,465:1, such that for each 30,465 shares of the Company, the shareholders of the Company
received one share, and (4) increasing the share capital of the Company to 700,000,000 ordinary shares of the Company with no
nominal value.   After giving effect to such actions and prior to the share issuances to Aviv and Magic Stones, the
total number of issued ordinary shares of the Company was 10,000. The reverse split became effective on February 25, 2016.



We
embarked, through a newly created subsidiary established in May 2016, in the design and development of a light propulsion electrically
powered passenger aviation aircraft. We are currently in the proof of concept stage, and intend to test all the components of
the Eviation Aircraft core enabling technologies (airframe design, electric drive, battery technology and autonomous flight and
sensing systems). Testing will take place on the scaled models and the full-scale aircraft once completed.



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Results
of Operations



The
Company’s legacy operations in waste disposal in existence as of December 31, 2015 has been discontinued and the comparative
results for 2014 and 2015 have been presented in 2016 financial statements as discontinued operation. As such, a period-to-period
analysis will be of limited value in assessing our operations or prospects and the analysis below refers solely to operations
results of 2016 as we commenced our new business focus in 2016.



Year
Ended December 31, 2016 Compared to Year Ended December 31, 2015



The
operation loss for the year ended December 31, 2016 was $2,170 thousand is attributable to the expenses incurred in the design
and development of the light, electric passenger aircraft - the Eviation Aircraft.



Revenues.



No
revenues have been recorded in the year 2016.



Research
and development expenses.



Research
and development expenses for the year ended December 31, 2016 were $1,829 thousand and primarily consisted of salary, materials
and subcontractor's payments related to the development of the Eviation Aircraft which started in 2016.



Marketing, general and administrative
expenses.



Marketing
expenses for the year ended December 31, 2016 were $80 thousand and included primarily professional fees paid to third parties
consultants and expenses incurred in connection with travel and lodging undertaken to advance the business of the Company and
meet prospective investors, strategic suppliers and customers.



General
and administrative expenses for the year ended December 31, 2016 were $261 thousand. The expenses in 2016 are primarily attributable
to legal, audit and insurance related expenses.



Financing
Expenses, Net.



Financing
expenses, net, in 2016 was an immaterial amount and consist mainly of interest expense on shareholders loan offset by exchange
rate differences.



Taxes
on income



Income
tax benefit in 2016 amounted to $553 thousand and derived from recording a tax asset which offset a tax provision that was recorded
in respect of shareholders loan that been provided in favorable terms.



Loss
from discontinued operation



No
loss from discontinued operation in 2016 compare to $226 thousand in 2015 attributable to the Company’s legacy operations
in waste disposal which been ceased in 2015 with the appointment of the Temporary Liquidator by the Court.





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Year
Ended December 31, 2015 Compared to Year Ended December 31, 2014



Our
loss from discontinued operation for the year ended December 31, 2015 and 2014 was $226 thousand and $1,596 thousand, respectively.
The decrease in the loss from discontinued operation for the year ended December 31, 2015 as compared to the year ended December
31, 2014 is primarily attributable to the cessation of substantially all operational activities by the Company in March 2015 and
the appointment in April 2015 of the Temporary Liquidator by the Court.



Critical
Accounting Policies and Estimates



Our
discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements,
which have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standard Board (IASB).



The
preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent liabilities. On an on-going basis, we evaluate our estimates,
including those related to income taxes, contingencies and litigation. We base our estimates on historical experience and on various
other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ
from these estimates under different assumptions or conditions.



For
a further description of our material accounting policies, please read Note 3 to Eviation Aircraft consolidated financial statements
for the year ended December 31, 2016, starting on page F-1 of this annual report.



Recently
Issued Accounting Standards



A
number of new standards, amendments to standards and interpretations were not yet in effect for the year ended December 31, 2016,
and have not been applied in preparing our consolidated financial statements as of that date. Those standards are not expected
to have a material impact on the Company's financial statement.



Impact
of Israeli Tax Policies and Government Programs on our Operating Results



Tax
regulations have a material impact on our business, particularly in Israel where we have our headquarters. The summary in Item
10. E describes the current tax structure applicable to companies in Israel, with special reference to its effect on us.



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B.
LIQUIDITY AND CAPITAL RESOURCES



Cash
flows used in operating activities during 2016 amounted to US$ 1,725 thousand. Cash flows during 2016 were mainly used to finance
the Company's expenses related to its new business focus operation - the design and development of the Eviation Aircraft.



Cash
flows used in investment activities during 2016 amounted to US$ 395 thousand, mainly relating to purchase of fixed assets.



Cash
flows provided by financing activities during 2016 amounted to US$ 2,965 thousand relating to loans obtained from shareholders.



The
Company believes that its available cash resources, including the shareholder credit facilities and the newly awarded grant from
the OCS toward the design and development of the aircraft, are sufficient to meet its operating requirements in the new business
focus in the foreseeable future.



C.
RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.



Our
research and development expenses consist primarily of costs related to the design and development our model light passenger aircraft.
We charge all research and development expenses to operations as they are incurred. We expect our research and development expense
to remain our primary expense in the near future as we continue to develop our prototype.



The
Company’s legacy operations in waste disposal management in existence as of December 31, 2015 have been discontinued and
has been so recorded in our financials. Accordingly, there are no comparative year-to-year analysis of design and development
related expenses as we commenced our new business focus in 2016.





|                             |  | 2016              |       |  | 2015 |  |   | 2014 | 
|---------------------------- |  | ----------------- | ----- |  | ---- |  | - | ---- | 
|                             |  | (in US$ thousand) |       |  |      |  |   |      | 
|Payroll and related expenses |  |                   | 505   |  |      |  | - |      | 
|Materials and subcontractors |  |                   | 1,224 |  |      |  | - |      | 
|Rent and office maintenance  |  |                   | 46    |  |      |  | - |      | 
|Depreciation                 |  |                   | 31    |  |      |  | - |      | 
|Other                        |  |                   | 23    |  |      |  | - |      | 
|Total                        |  |                   | 1,829 |  |      |  | - |      | 



Due
to the inherently unpredictable nature of the design and development of light propulsion passenger aircraft with the desired feature,
we are unable to estimate with any certainty the costs we will incur in the continued development of the aircraft model.



While
we are currently focused on advancing the design and development of the aircraft model, our future research and development expenses
will depend on the success of the design and development process, as well as available resources and the ongoing assessments of
commercial potential. In addition, we cannot forecast with any degree of certainty the success of any future commercialization
arrangements, when such commercialization arrangements will be secured, if at all, and to what degree such arrangements would
affect our development plans and capital requirements. See “Item 3. Key Information – D. Risk Factors.



As
we advance the design and development of the aircraft model and assess the commercial potential of continued development plans,
we may modify our plans.





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We
expect our research and development expenses to increase from current levels as we continue the design and development of the
aircraft. The lengthy process of completing a model aircraft and also addressing regulatory requirements requires substantial
expenditures. Any failure or delay in completing development of a model aircraft, or in obtaining regulatory approvals, could
cause a delay in generating product revenue and cause our research and development expenses to increase and, in turn, have a material
adverse effect on our operations. Due to the factors set forth above, we are not able to estimate with any certainty if and when
we would recognize any net revenues from our operations.



D.
TREND INFORMATION



We
have recently begun to engage in the general aviation industry and are focus primarily on the design and development of a light
electric powered passenger aircraft. It is not possible for us to predict with any degree of accuracy the outcome of our research
and development or our commercialization success. Our research and development expenditure is our primary expenditure. Increases
or decreases in research and development expenditure are primarily attributable to the level and results of our design and development
plans and activities relating to the aircraft, our assessment of commercial potential and the amount of expenditure on these activities.
As we are still in the development stage and no revenue incurred in 2016 or expected to be generated in the foreseeable future
we cannot analyses the trend if at all in the electric aviation industry.



E.
OFF-BALANCE SHEET ARRANGEMENTS



We
are not party to any material off-balance sheet arrangements.



F.
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS



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



|                                                     |  | Total               |  | Less
    than I year |  | 1-3
    years |  | 3-5
    years |  | More
    than 5 years
|---------------------------------------------------- |  | ------------------- |  | -------------------- |  | ------------- |  | ------------- |  | ---------------------
|                                                     |  | US$
    in thousand
|Office
    Lease obligations                         |  | 33                  |  | -                    |  | 33            |  |               |  |                      
|Employees
    and institutions in respect of payroll |  | 75                  |  | 75                   |  |               |  |               |  |                      
|Related
    party                                    |  | 321                 |  | 321                  |  |               |  |               |  |                      
|Accrued
    interest                                 |  | 35                  |  | 35                   |  |               |  |               |  |                      
|Shareholders
    loan                                |  | 2,965               |  |                      |  |               |  |               |  | 2,965                
|Total                                                |  | 3,429               |  | 431                  |  | 33            |  | -             |  | 2,965                



The
foregoing table does not include our development/manufacturing agreements pursuant to which we are obligated to make various payments
upon the achievement of agreed upon milestones. We are unable to currently estimate the actual amount or timing of these payments.



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



A.
Directors and Senior Management



Until
April 2, 2015, the Company’s board of directors was comprised of Yair Fudim, chairman, Mordechai (Moti) Menashe, Jonathan
Regev, Alicia Rotbard and Gedaliah Shelef. In addition, Ofer Nave served as the Company’s chief financial officer. On April
2, 2015, upon the appointment of a TemporaryLiquidator
by the Court and in accordance with the Companies Ordinance, 5743-1983, the authority of
the directors ceased and Ofer Nave ceased to serve as the Company’s chief financial officer. As such, as of May 14, 2015,
Mordechai Shalev, Adv., the TemporaryLiquidator, served as the Company’s sole
officer and the Company had no appointed directors through February 2, 2016, when the sale of the Company to Aviv and Magic Stones,
our shareholders, approved by the Court.



The
following table sets forth the name, age and position of each of our executive officers and directors, as of the date of this
report. Unless otherwise stated, the address for any of the individuals listed below is c/o Eviation Aircraft Ltd., 1 Ha’Ofe
St., Kadima-Tzoran, Israel, 6092000.



|Name                   |  | Age |  | Position                              
|---------------------- |  | --- |  | --------------------------------------
|Aviv Tzidon            |  | 60  |  | Chairman of the Board of
    Directors
|Omer Bar-Yohay         |  | 38  |  | Chief Executive Officer               
|Liza Ohayon            |  | 42  |  | Chief Financial Officer               
|Dan Halutz (1)         |  | 69  |  | Independent Director                  
|Ilanit Zalmanovich     |  | 47  |  | Director                              
|Avi Toledano           |  | 56  |  | Director                              
|Abraham Nahmias        |  | 61  |  | Director                              
|Orit Stav (2)          |  | 45  |  | External Director                     
|Aviad Pundak Mintz (1) |  | 52  |  | External Director                     



|(1) | Member
                                         of our Audit and our Compensation Committees.  
|--- | -----------------------------------------------------------------------------------------------
|(2) | Chairman
                                         of our Audit and our Compensation Committees.



Executive
Officers



Omer
Bar-Yohay was appointed as the Company's Chief Executive Officer on April 3, 2016. Mr. Bar-Yohay served in the Israel Defense
Forces from 1997 to 2008, and departed from service with the rank of Major. From 2008 to 2015 Mr. Bar-Yohay served in the office
of the Prime Minister of Israel in various managerial positions. Mr. Bar-Yohay holds a BA in History from the Hebrew University
in Jerusalem.



Liza
Ohayon was appointed as the Company's Chief Financial Officer on April 3, 2016. Ms. Ohayon joined Phinergy Ltd. in July 2015
and serves as its VP Finance and serves as our chief financial officer pursuant to the Administrative Services Agreement with
Phinergy Ltd. Prior to joining Phinergy, between March 2010 and March 2015, Ms. Ohayon served in several positions in Telit Communications
PLC, a global leader in Internet of Things (IoT) enablement, including Tax Director and Corporate Controller. Between April 2001
and September 2009 Ms. Ohayon worked in PriceWaterHouseCoopers Israel and New York and has vast experience in managing and leading
assurance engagements with private and public companies from the technology and retail industries. She is also very experienced
in supporting startups from inception to maturity. Ms. Ohayon holds a BA in Business Administration and Accounting awarded by
the College of Management Academic Studies in Rishon LeZion, Israel and she is a Certified Public Accountant in Israel.





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Directors



Aviv
Tzidon was appointed as a director on February 2, 2016 and as the Company’s Chairman of the board of directors on April
3, 2016. Mr. Tzidon is the Founder and CEO of Phinergy Ltd., an Israeli private company which operates in the green energy industry
and develops metal-air energy systems. Aviv is an accomplished entrepreneur who founded over ten high-tech companies, three of
which were quoted on NASDAQ and another on the Frankfurt stock exchange. Aviv is a creative thinker who likes to think "out
of the box".  He holds over fifteen granted patents, many of which have led to breakthrough innovations across various
industry segments (positioning systems, network protocol, navigation accuracy, virtual studio). These innovations have been implemented
into a wide range of products and applications, from air combat training for the military to 3D graphics for TV broadcasting.



Dan
Halutz was appointed as a director in July 17, 2016. Mr. Halutz served as the Chief of Staff of the Israel Defense Forces
and commander of the Israeli Air Force from April 2000 to February 2007. From 2008 to 2010, Mr. Halutz was the chairman of the
board of Starling Advanced Communications Ltd., a private Israeli company specializing in satellite communications and served
as the chief executive officer of Kamor Motors Ltd., an Israeli company traded on the Tel Aviv Stock Exchange, specializing in
importing BMW products to Israel and Bulgaria. From 2013 to 2016, Mr. Halutz served as the Chairman of Jobookit Holdings Ltd.,
an Israeli company traded on the Tel Aviv Stock Exchange that specializes in on-line recruitment software. Mr. Haloutz is partnering
a few private consulting companies and serves as a board member in two additional companies: Berman Bakery Ltd which
is a private company and Intergama Holdings Ltd. a public company traded on the Tel-Aviv Stock Exchange. Mr. Halutz has a BA in
economics and completed an Advanced Management Program course in Harvard University.



Ilanit
Zalmanovich was appointed as a director in February 2, 2016. Since March 2016, Ms. Zalmanovich has been serving as General
Legal Counsel of Waxman Govrin Geva Engineering Com, an Israel based company engaged in project management of civil engineering.
Between 2014 and 2015, Ms. Zalmanovich was in private legal practice. Between May 2008 and December 2012, she was General Counsel
to Redstone Real Estate Group out of Israel, a real estate investment fund. Prior thereto, from May 1995 to May 2005, she served
as Legal Counsel to Shikun Ubinuei & Solel Boneh Group in Israel. Ms. Zalmanovich holds a LLB degree in Law from Tel Aviv
University (1995) and M.B.A. from Ben Gurion University in Israel (2000).



Avi
Toledano was appointed as a director on February 2, 2016. Mr. Toledano is currently focusing on investment related activities
in real estate. Between November 2006 and March 2013 Mr. Toledano served as a director in Teva Naot. Prior to that, from January
1986 to December 2005, Mr. Toledano was a partner at Ernst and Young Israel – Kost Forer Gabbay & Kasierer, where he
focused on mergers and acquisitions. Mr. Toledano holds a BA degree in Economics and Accounting from the College of Management
Academic Studies and has been a Certified Public Accountant in Israel since 1988.



Abraham
Nahmias was appointed as a director on February 2, 2016.   Mr. Abraham Nahmias is a senior partner in Nahmias Grinberg
Shachar C.P.A. (Isr.) since January 1985. Mr. Nahmias possesses more than 20 years of experience as a director in several public
companies in a broad range of fields. He currently serves as a director in Nano Dimension Ltd (since 2014), in Orad Ltd (since
2011), in Allium Medical Solutions Ltd (since 2014), and in Cellect Biomed Ltd (since 2014). Mr. Nahmias holds a BA degree in
Economics and Accounting from Tel Aviv University and has been a Certified Public Accountant in Israel since January 1981.



Orit
Stav was appointed as a director on February 2, 2016. Ms. Stav is an experienced investment manager with more than 15 years
of experience in the Venture Capital & Private Equity industries, as well as in the technology sector.   Ms. Stav
currently serves as a professional board member in an additional six public companies (I.B.I Investment House Ltd., Elbit Vision
Systems Ltd., Aran Research & Development Ltd., Israel Canada Ltd., O.R.T Technologies Ltd. and Prior-Tech Ltd.). From
January 2006 to March 2010, Ms. Stav represented Siemens Venture Capital (SVC) in Israel and was responsible for all Siemens investments
in Israel. Prior to joining SVC, from January 1998 to May 2005 Ms. Stav was a partner at Platinum Neurone Ventures, an Israeli
venture capital fund where she led investments from seed stage to successful exits and was responsible for two M&A transactions.
She has gained experience working with entrepreneurs, represented the fund as a board member in portfolio companies and worked
with leading international VCs. Ms. Stav holds a Master of Business Administration from Hertfordshire University, UK, and a Bachelor
degree in Arts (Economics and Management) from Tel Aviv University.





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Aviad
Pundak-Mintz was appointed as a director on February 2, 2016. Mr. Pundak-Mintz serves as the Venture Partner and General Partner
of Gemini Israel Funds. Mr. Pundak-Mintz joined Gemini Israel Funds in 1999 and specializes in the area of enterprise software
and systems investments. He is employed at Pointer Telocation Ltd. He draws on his start-up, venture capital and scientific background
to make seed investments at Gemini Fund. Mr. Pundak-Mintz was Venture Partner of Gemini Fund IV, Gemini Fund III and Gemini Fund
V. Previously, Mr. Pundak-Mintz worked at Neurone Venture. He served as the Acting Chief Executive Officer of Sphera Corporation
since 2003, where he streamlined the operations of Sphera, lead it to its highest revenues in a quarter and recruited a top class
Chief Executive Officer as his replacement. Prior to becoming a venture capitalist, Mr. Pundak-Mintz held a number of positions
in business development and marketing at Nexus Telecommunications. Mr. Pundak-Mintz’ team developed the first SDH system.
He has been a Director of BlazeMeter LLC since July 2012. He has been a Director of CloudShare Ltd. and dbMotion Ltd. since June
28, 2005. He has been a Director of Metrolight Ltd. since August 16, 2007. He serves as a Director of SaaSPulse and IT Structures.
Mr. Pundak-Mintz serves as a Member of the Advisory Board at Zlago, LLC. He serves as a Director of ebuzzing SARL and Teads (alternative
name Wikio Group). Mr. Pundak-Mintz serves as Board Observer of OpTier, Inc. He served as a Director of Totango Ltd., TaKaDu Ltd.,
Traiana, Inc., ItemField, Inc., Neocleus, Inc., and Octavian, Inc. He served as a Director of Diligent Technologies Corporation
since October 4, 2004. He served as a Director of Sphera Corporation since June 28, 2005. Mr. Pundak-Mintz served in the Israeli
Navy as a project engineer for naval underwater systems. Mr. Pundak-Mintz is a frequent speaker in Israel and Europe on venture
capital and high technology topics. He holds an M.B.A. degree from INSEAD and MSc in Vision-Computer Science at the Weizmann Institute.
Mr. Pundak-Mintz holds a B.Sc. degree, with honors, in electrical engineering and a B.A. degree in mathematics, with distinction,
from Ohio State University.



Arrangements
for Election of Directors and Members of Management; Family Relationships



There
are no arrangements or understandings with major shareholders, customers, suppliers or others related to the election of our board
of directors or the appointment of members of our senior management. There are furthermore no family relationships among any directors
or members of our senior management.



B.
COMPENSATION



Compensation
of Officers and Directors



The
aggregate compensation, including non-cash share-based compensation (consisting of expenses related to option grants), for the
year ended December 31, 2016 paid to all nine persons who served as directors and/or executive officers during that year,
was approximately $ 252 thousand. The amount includes approximately $230 thousand of gross compensation with respect to our chief
executive officer, excluding business travel, professional and business association dues and expenses reimbursements, and other
expenses commonly reimbursed by companies in Israel.



In
addition, during 2016 we granted to our officers and directors an aggregate amount of 262,500 options at an exercise price
of US$ 1.00.  All of such options will expire within ten (10) years from the date of grant.



Our
compensation for our chief executive officer is paid pursuant to an employment agreement and is based, in part, on his contribution
to our management, operations and our success. In 2016, we paid our Chief Executive Officer (Mr. Omer Bar Yohay) approximately
$230 thousand. Our Chief Financial Officer (Ms. Liza Ohayon) is employed by Phinergy Ltd. and serves as our chief financial officer
pursuant to an Administrative Services Agreement with Phinergy Ltd. We do not directly compensate our chief financial officer
for services rendered; our Subsidiary pays to Phinergy a monthly fee, calculated on the basis of the actual cost to Phinergy,
of providing the contracted for services, including those of our chief financial officer, derived as a percentage of the global
costs paid for Phinergy for receiving such services for itself and our Subsidiary together.



Employment
and Consulting Agreements with Executive Officers



We
have entered into written employment agreement with our chief executive officer. This agreement contains provisions regarding
non-competition, confidentiality of information and assignment of inventions. The non-competition provision applies for a period
that is generally 12 months following termination of employment. The enforceability of covenants not to compete in Israel and
in the United States is subject to limitations. The employment agreement of the executive officer is terminable at will, upon
90 days written notice, by either side to the agreement.







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Companies
Law requirements



Pursuant
to the Companies Law, the compensation (including insurance, indemnification and exculpation) of our directors requires the approval
of our compensation committee, the subsequent approval of the board of directors and, unless exempted under regulations promulgated
under the Companies Law, the approval of the shareholders at a general meeting. If the compensation of our directors is inconsistent
with our stated compensation policy, then the approval of the company’s shareholders requires that either:



| | ● | a
                                         majority of the shares held by shareholders who are not controlling shareholders and
                                         do not have a personal interest in such matter and who are present and voting at the
                                         meeting, are voted in favor of approving the compensation package, excluding abstentions;
                                         or
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ● | the
                                         total number of shares voted by non-controlling shareholders and shareholders who do
                                         not have a personal interest in such matter that are voted against the compensation package
                                         does not exceed 2% of the aggregate voting rights in the company.                                                           



The
compensation (including insurance, indemnification and exculpation) of a public company’s office holders (other than directors
as described above, and the chief executive officer as described below) is, subject to certain exceptions, to be approved first
by the compensation committee; second by the company’s board of directors; and third, if such compensation arrangement is
inconsistent with the company’s stated compensation policy, the company’s shareholders provided that either:



| | ● | a
                                         majority of the shares held by shareholders who are not controlling shareholders and
                                         do not have a personal interest in such matter and who are present and voting at the
                                         meeting are voted in favor of approving the compensation package, excluding abstentions;
                                         or
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ● | the
                                         total number of shares of non-controlling shareholders and shareholders who do not have
                                         a personal interest in such matter voting against the compensation package does not exceed
                                         2% of the aggregate voting rights in the company.                                                                        



Under
the Companies Law, if the shareholders of the company do not approve the compensation arrangement with an office holder who is
not a director, including the chief executive officer, the compensation committee and board of directors may override the shareholders’
decision, subject to certain conditions. Under certain circumstances, the compensation committee and board of directors may waive
the shareholder approval requirement in respect of the compensation arrangements with a candidate for chief executive officer
if they determine that the compensation arrangements are consistent with the company’s stated compensation policy.



In
the event that an existing compensation arrangement with an office holder who is not a director, including the chief executive
officer, is amended, only the approval of the compensation committee is required, so long as the compensation committee determines
that the amendment is not material in relation to the existing compensation arrangement. With regards to an office holder who
is neither a director nor the chief executive officer, an existing compensation arrangement may be amended with the approval of
the chief executive officer, so long as the amendment is not material and is consistent with the company’s stated compensation
policy and that such approval method is provided for in the company’s stated compensation policy.



Director
Compensation



Our
directors are entitled to cash compensation and equity compensation as follows:



Cash
Compensation to Directors



The
independent director and the external directors are entitled to compensation as provided in regulations adopted under the Companies
Law. Other directors are not entitled to any cash compensation.





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Cash
Compensation to Chairman of the Board



The
chairman of the board is not entitled to any cash compensation.



Option Plan



On July 17, 2016,
the board of directors approved the adoption of the "2016 Equity Incentive Plan" ("ESOP") and approved to reserve
1,000,000 ordinary shares (no par value) for issuance to employees, officers, directors, consultants and certain other service
providers of the Company and the Company's affiliates. The ESOP is intended to benefit us by enhancing our ability to attract and
retain qualified individuals and increasing their ownership interests in us. The following is a summary of the material terms of
the ESOP.



In
general, when a grantee’s employment or service with us terminates, his or her equity awards will no longer continue to vest
following termination, and the holder may exercise any vested equity awards for a period of 90 days following termination without
cause. If a grantee’s employment with us terminates due to disability or if the termination of employment results from his
or her death, then the grantee or his or her estate (as applicable) generally has 12 months to exercise the equity award; however,
the equity award may not be exercised after its scheduled expiration date. If termination of employment results from the dismissal
of the grantee for cause, his or her outstanding equity awards will expire upon termination.



Under certain circumstances,
ordinary shares underlying equity awards previously granted under the ESOP may again become available for grant. Such circumstances
include if an equity award should expire or become unexercisable without having been exercised in full.



The exercise prices,
if applicable, is determined by the compensation committee and specified in each award agreement. In general, the exercise price
for options is the fair market value of our shares on the date of grant as determined in good faith by our board of directors.



We have elected to
issue our options, restricted share units and shares granted or issued to most of our Israeli participants in the ESOP under Section
102(b)(3) of the Israeli Income Tax Ordinance, which is the capital gains track. Options, restricted share units and shares granted
or issued in accordance with the capital gains track under the ESOP are granted or issued to a trustee and are held by the trustee
for two years from the date of grant or issuance. Under the capital gains track, we are not allowed an Israeli tax deduction for
the grant or issuance of the options, restricted share units or shares.



Our Board administers
the ESOP. The Board determines the eligible individuals who receive equity awards under the ESOP, the number of ordinary shares
covered by those equity awards, the terms under which such equity awards may be exercised and the other terms and conditions of
the equity awards, all in accordance with the provisions of the ESOP.



Participants in the ESOP may not transfer
their equity awards, except in the event of death.



In the case of certain changes in our share
capital structure, such as a consolidation or share split or share dividend, appropriate adjustments will be made to the numbers
of shares subject to equity awards and exercise prices, if applicable.



Our compensation committee and/or board
of directors may at any time amend or terminate the ESOP; however, any amendment or termination may not adversely affect any options
or shares granted under the ESOP prior to such action. The ESOP provides that if the board of directors desires, it can, with
the consent of the award holder, cancel an outstanding award or amend an outstanding award, including, if applicable, the exercise
price. For amendments affecting our directors and officers, compensation committee and/or shareholder approval may also be necessary.
See “Item 6.C. — Board Practices — Fiduciary duties and approval of specified related party
transactions under Israeli law.”





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Equity
Compensation



In
October 15, 2016, the Company granted options to purchase 37,500 ordinary shares of the Company to each of the Company's directors
at an exercise price of $1.00 per share. The options are scheduled to vest in four annual installments from July 17, 2017, the
vesting commencement date, as follows: 10,000 options on each of the first, second and third anniversaries of the vesting commencement
date and 7,500 on the fourth anniversary of the vesting commencement date, subject to option holder’s continuing to be a
director of the Company or any affiliate thereof through such dates. Notwithstanding the above, the vesting of the options may
accelerate so that all shares subject to the option will be fully vested and exercisable immediately prior to the occurrence of
any of the following corporate transaction: (i) a merger, acquisition, reorganization or consolidation in which the Company is
not the surviving entity; (ii) the sale, transfer, exchange or other disposition of all or substantially all of the shares or
assets of the Company.



C.
BOARD PRACTICES

Appointment
and Terms of Office



Under
the Companies Law and our articles of association, the supervision of the management of our business is vested in our board of
directors.There must be at least 2 and not more
than 11 directors on the board of the Company including at least two external directors and one independent director. Any single
shareholder of the Company holding at least twenty five percent (25%) of the issued shares of the Company may appoint, dismiss
and replace two directors. The Board may appoint one independent director, and other directors, so long as the aggregate number
of directors serving is less than the maximum amount. The provisions regarding the appointment of external directors are governed
by the Companies Law. Directors serve until the next Annual General Meeting, unless their offices are vacated earlier under any
relevant provision of our Articles of Association.



Alternate
Directors



Our
Articles of Association provide that a director may appoint, by written notice to us, any individual to serve as an alternate
director. Currently, no alternate directors have been appointed. Under the Israeli Companies Law, (i) a director of a company
whose articles of association permit the appointment of an alternate director to the board, may appoint another director as an
alternate director to a committee of the board, provided that the alternate director is not already a member of such committee
and further provided that if the appointing director is an external director, the alternate director shall possess the financial
and accounting expertise or the professional qualification (as described under “External Directors” below) possessed
by the appointing director, and (ii) an external director may not appoint an alternate director except as set forth in clause
(i).



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External
Directors



Under
the Companies Law, companies incorporated under the laws of Israel whose shares have been offered to the public in or outside
of Israel are required to appoint at least two external directors. This law provides that a person may not be appointed as an
external director if the person or the person’s relative, partner, employer or any entity under the person’s control,
has, as of the date of the person’s appointment to serve as external director, or had, during the two years preceding that
date, any affiliation with the company or any entity controlling, controlled by or under common control with the company. The
term “affiliation” includes:



| | ● | an employment relationship
    with the company;                                                                                                                                                             
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                              
| | ● | a business or professional
    relationship with the company maintained on a regular basis;                                                                                                                  
| |   |                                                                                                                                                                                                              
| | ● | control of the company;
    and                                                                                                                                                                              
| |   |                                                                                                                                                                                                              
| | ● | service as an office
    holder, except where the director was appointed as such for the purpose of serving as an external director of a company that
    was contemplating becoming a publicly held company.



No
person may serve as an external director if the person’s position or other business activities create, or may create, a
conflict of interest with the person’s responsibilities as an external director or may otherwise interfere with the person’s
ability to serve as an external director.



External
directors are to be elected by a majority vote at a shareholders’ meeting, provided that either:



| | 1. | at least one-third
    of the shares of non-controlling shareholders voted at the meeting (disregarding votes abstained), vote in favor of election
    of the director; or             
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                         
| | 2. | the total number
    of shares of non-controlling shareholders voted against the election of the director does not exceed one percent of the aggregate
    voting rights in the company.



The
initial term of an external director will be three years and may be extended for an additional three years. Each committee of
a company’s board of directors will be required to include at least one external director and the audit committee of a company’s
board of directors is required to include all of the external directors.



An
external director is entitled to compensation as provided in regulations adopted under the Companies Law and is otherwise prohibited
from receiving any other compensation, directly or indirectly, in connection with service provided as an external director.



Under
regulations recently promulgated under the Companies Law, at least one of the external directors serving on a company’s
board of directors is required to have “financial and accounting expertise” and the other external director or directors
are required to have “professional qualification”.



The
recently promulgated regulations set out the conditions and criteria for a director qualifying as having a "financial and
accounting expertise" or a "professional qualification". A director with financial and accounting expertise is
a director who, due to his education, experience and skills, possesses capabilities relating to and an understanding of business
and accounting matters and financial statements, which enable him to understand in depth the company’s financial statements
and to initiate a debate regarding the manner in which the company’s financial information is presented. A director who
meets certain professional qualifications is a director who satisfies one of the following requirements: (i) the director holds
an academic degree in either economics, business administration, accounting, law or public administration, (ii) the director either
holds another academic degree or has obtained other high education in the company’s primary field of business or in an area
that is relevant to his position, (iii) the director has at least five (5) years of experience serving in one of the following
capacities or an aggregate of at least five (5) years of experience in two or more of the following capacities: (a) a senior business
management position of a company with a substantial scope of business, (b) a senior position in the primary field of business
of the company or (c) a senior public administration position. A proposed external director must submit to the company a declaration
as to his or her compliance with the requirements for his or her election as an external director (including with respect to such
person’s financial and accounting expertise or professional qualification).





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The
board of directors should determine the minimum number of directors having financial and accounting expertise in addition to the
external directors. In determining such number the board of directors shall consider, among other things, the type and size of
the company and the scope and complexity of its operations.



Audit
Committee



Under
the Companies Law, the board of directors of any publicly traded company must appoint an audit committee, comprised of at least
three directors including all of the external directors but excluding: (a) the chairman of the board of directors; (b) any controlling
shareholder or relative of a controlling shareholder; or (c) any director employed by the company or who provides services to
the company on a regular basis. Under the Nasdaq rules, we are required to have at least three independent directors on the audit
committee. In addition, Nasdaq requires that each member of the audit committee (i) be independent (as defined above under “Independent
Directors”); (ii) meet the criteria for independence set forth in certain rules under the US Securities Exchange Act of
1934 (subject to certain exemptions); (iii) not have participated in the preparation of the financial statements of the company
or any current subsidiary of the company at any time during the past three years; and (iv) be able to read and understand fundamental
financial statements, including a company's balance sheet, income statement and cash flow statement. Additionally, each company
must certify that it has, and will continue to have, at least one member of the audit committee who has past employment experience
in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background
which results in the individual's financial sophistication, including being or having been a chief executive officer, chief financial
officer or other senior officer with financial oversight responsibilities.



The
roles of our audit committee under the Companies Law include identifying irregularities in the management of the Company’s
business and approving related party transactions as required by law. The responsibilities of the audit committee under the Nasdaq
rules include, among other things, evaluating the independence of a company’s auditors.



In
addition to such functions as the audit committee may have under the Companies Law or under the Nasdaq rules, the primary purpose
of our audit committee is to assist the board of directors in fulfilling its responsibility to oversee management’s conduct
of the financial reporting process, the systems of internal accounting and financial controls and the annual independent audit
of the Company’s financial statements. The audit committee reviews with management and our auditors the audited financial
statements included in our Annual Report on Form 20-F.



The
audit committee must observe the independence of our auditors and has the authority and responsibility to nominate for shareholder
approval, evaluate and, where appropriate, replace our independent auditors.



In
discharging its oversight role, our audit committee is empowered to investigate any matter brought to its attention with full
access to all books, records, facilities and personnel of the company and the power to retain independent counsel, auditors or
other experts for this purpose.



Upon
the appointment of the Temporary Liquidator by the Court and in accordance with the Companies Ordinance, 5743-1983, the authorities
of the directors ceased and the Company has no audit committee as of December 31, 2015.



On
April 3, 2016 the board of directors established an audit committee comprising Ms. Orit Stav as the chairperson of the committee
and Ms. Ilanit Zalmanovich and Mr. Aviad Pundak-Mintz.



On
July 17, 2016, the board of directors appointed Mr. Dan Halutz to serve on the audit committee; Ilanit Zalmanovich resigned from
the audit committee.



Compensation
Committee



On
April 3, 2016, the board of directors established a compensation committee comprising Ms. Orit Stav as the chairperson of the
committee and, Ms. Ilanit Zalmanovich and Mr. Aviad Pundak-Mintz as members of the committee. On July 17, 2016, the board of directors
appointed Mr. Dan Halutz as a member to the compensation committee and Ilanit Zalmanovich resigned from the committee.





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As
per the Companies Law, the roles of a compensation committee are, among others, as follows:



| | (1) | to recommend to
    the board of directors with regards to the compensation policy for directors and officers, and recommend to the board of directors
    once every three years regarding extension of the compensation policy that had been approved for a period of more than three
    years;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | to recommend to
    the board of directors regarding the update of the compensation policy, from time to time, and examine its implementation;                               
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                              
| | (3) | to decide whether
    to approve the terms of office and employment of directors and officers that require approval of the compensation committee;
    and                   
| |     |                                                                                                                                                                              
| | (4) | to decide, in certain
    circumstances, whether to exempt the approval of employment terms of a Chief Executive Officer from the requirements of shareholders’
    approval.



In
addition to the roles mentioned above our compensation committee will also make recommendations to our board of directors regarding
the awarding of employee options.



In
accordance with the provisions of the Companies Law, a compensation policy must be adopted by the Company. A compensation policy
must be approved by the board of directors after receiving and considering the recommendations of the compensation committee.
In addition, the compensation policy requires the approval of the general meeting of the shareholders. In Public Companies, shareholder
approval requires one of the following: (i) the majority of shareholder votes counted at the general meeting including the majority
of all of the votes of those shareholders who are non-controlling shareholders or do not have a personal interest in the approval
of the compensation policy, who participate at the meeting (excluding abstentions) or (ii) the total number of votes against the
proposal among the shareholders mentioned in paragraph (i) does exceed two percent (2%) of the total voting rights in the company.
Under special circumstances, the board of directors may approve the compensation policy despite the objection of the shareholders
on the condition that the compensation committee and then the board of directors decide, on the basis of detailed arguments and
after discussing again the compensation policy, that approval of the compensation policy, despite the objection at the meeting
of shareholders, is for the benefit of the company.



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Internal
Auditor



Under
the Companies Law, the board of directors of a public company must appoint an internal auditor, nominated by its audit committee.
The role of the internal auditor is to examine, among other matters, whether the Company’s actions comply with the law and
orderly business procedure. Under the Companies Law, the internal auditor may be an employee of the Company but not an office
holder, an affiliate, or a relative of an office holder or affiliate, and he may not be the Company’s independent accountant
or its representative. On July 17, 2016 the audit committee appointed Ezra-Yehuda-Rosenblum Consulting, Control & Risk Management
Firm to serve as an internal auditor of the Company in accordance with the requirements of the Companies Law.



D.
EMPLOYEES



As
of December 31, 2016, the Company had six employees, all of which were employed by our Subsidiary.



While
none of our employees is party to any collective bargaining agreements, certain provisions of the collective bargaining agreements
between the Histadrut (General Federation of Labor in Israel) and the Coordination Bureau of Economic Organizations (including
the Industrialists’ Associations) are applicable to our employees in Israel by order of the Israeli Ministry of the Economy
and Industry. These provisions primarily concern pension fund benefits for all employees, insurance for work-related accidents,
recuperation pay and travel expenses.



None
of our employees are represented by a labor union or covered under a collective bargaining agreement. We have never experienced
any employment-related work stoppages and believe our relationships with our employees are good.



E.
SHARE OWNERSHIP



The
following table sets forth information with respect to the beneficial ownership of our ordinary shares as of the date of this
report, following the issuance, to:



| | ● | each of our directors,
    executive officers and senior management and employees individually; and
| | - | ---------------------------------------------------------------------------------------------------



| | ● | all of our executive
    officers, directors, and senior management and employees as a group.
| | - | ---------------------------------------------------------------------------------------------



The
beneficial ownership of our ordinary shares in this table is determined in accordance with the rules of the SEC. Under these rules,
a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power
to vote or to direct the voting of the security, or investment power, which includes the power to dispose of or to direct the
disposition of the security. For purposes of the table below, we deem ordinary shares issuable pursuant to options or warrants
that are currently exercisable or exercisable within 60 days of the date of this report, if any, to be outstanding and to be beneficially
owned by the person holding the options or warrants for the purposes of computing the percentage ownership of that person, but
we do not treat them as outstanding for the purpose of computing the percentage ownership of any other person. The percentage
of ordinary shares beneficially owned is based on 10,000,000 issued ordinary shares as of the date of this report.





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Unless
otherwise noted below, each shareholder’s address is c/o Eviation Aircraft Ltd., 1 Ha’Ofe St., Kadima-Tzoran, Israel,
6092000.



|Name                                               |  | Number
    of Ordinary Shares Beneficially owned |           |     | Percentage
    of Outstanding Ordinary Shares | 
|-------------------------------------------------- |  | ------------------------------------------------ | --------- | --- | --------------------------------------------- | 
|Aviv
    Tzidon, Chairman of the Board             |  |                                                  | 4,120,875 | (1) |                                               | 
|Omer
    Bar-Yohay, Chief Executive Officer        |  |                                                  | 999,000   | (2) |                                               | 
|Liza
    Ohayon, Chief Financial Officer           |  |                                                  | -         |     |                                               | 
|Dan
    Halutz, Independent Director               |  |                                                  | -         | (1) |                                               | 
|Ilanit
    Zalmanovich, Director                   |  |                                                  | -         | (1) |                                               | 
|Avi
    Toledano, Director                         |  |                                                  | -         | (1) |                                               | 
|Abraham
    Nahmias, Director                      |  |                                                  | -         | (1) |                                               | 
|Orit
    Stav, External Director                   |  |                                                  | -         | (1) |                                               | 
|Aviad
    Pundak Mintz, External Director          |  |                                                  | -         | (1) |                                               | 
|Directors
    and Officers as a Group ( 9 persons) |  |                                                  | 5,119,875 |     |                                               | 



|1. | Does
    not include options granted on October 15, 2016 to purchase up to 37,500 ordinary shares at a per share exercise price
    of $1.00 which is to vest as follows: options for 10,000 shares is to vest on each of July 17, 2017, 2018 and 2019 and options
    for 7,500 shares are to vest on July 17, 2020.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                      
|2. | On May 22, 2016,
    Mr. Yohai and each of Aviv and Magic Stones entered into an agreement pursuant to which each of Aviv and Magic Stones transferred
    to Mr. Yohai 499,500 shares, or a total of 999,000 shares.                                                                                                



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



The
following table sets forth certain information regarding the beneficial ownership of our ordinary shares as of the date of this
report, by each person or entity known to own beneficially more than 5% of our outstanding ordinary shares based on information
provided to us by the holders or disclosed in public filings with the Securities and Exchange Commission.



A.
MAJOR SHAREHOLDERS



The
following table sets forth information with respect to the beneficial ownership of our ordinary shares as of the date of this
report, by each person or entity known by us to own beneficially more than 5% of our outstanding ordinary shares.



The
beneficial ownership of our ordinary shares in this table is determined in accordance with the rules of the SEC. Under these rules,
a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power
to vote or to direct the voting of the security, or investment power, which includes the power to dispose of or to direct the
disposition of the security. For purposes of the table below, we deem ordinary shares issuable pursuant to options or warrants
that are currently exercisable or exercisable within 60 days of the date of this report, if any, to be outstanding and to be beneficially
owned by the person holding the options or warrants for the purposes of computing the percentage ownership of that person, but
we do not treat them as outstanding for the purpose of computing the percentage ownership of any other person. The percentage
of ordinary shares beneficially owned is based on 10,000,000 ordinary shares. The data
presented is based on information provided to us by the holders, or disclosed in public regulatory filings in the U.S. or Israel,
in accordance with the applicable law.



None
of our shareholders has different voting rights from other shareholders. To the best of our knowledge, we are not owned or controlled,
directly or indirectly, by another corporation or by any foreign government. We are not aware of any arrangement that may, at
a subsequent date, result in a change of control of our Company.



|Name                                                |  | Number of
    Ordinary Shares Beneficially owned |           |  | Percentage of
    Outstanding Ordinary Shares | 
|--------------------------------------------------- |  | ------------------------------------------------ | --------- |  | --------------------------------------------- | 
|Aviv
    Tzidon, Chairman of the Board (2)          |  |                                                  | 4,120,875 |  |                                               | 
|Magic
    Stones Gemstone Import and Marketing Ltd. |  |                                                  | 4,120,875 |  |                                               | 
|Omer
    Bar-Yohay  (CEO) (1)                       |  |                                                  | 999,000   |  |                                               | 
|Dekel
    Tzidon(1)                                 |  |                                                  | 749,250   |  |                                               | 



|1. | On May
    22, Mr. Bar Yohai purchased 10% of the shares held by Aviv and Magic Stones (5% from each). In addition, Mr. Dekel Tzidon
    (a brother of Aviv and a director in the Subsidiary) purchased 7.5% of the shares held by Aviv and Magic Stones (3.75% from
    each).                          
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                          
|2  | Does
not include options granted on October 15, 2016 to purchase up to 37,500 ordinary shares at a per share exercise price
of $1.00 which is to vest as follows: options for 10,000 shares is to vest on each of July 17, 2017, 2018 and 2019 and options
for 7,500 shares are to vest on July 17, 2020.





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B.
RELATED PARTY TRANSACTIONS



Insurance.
We have obtained directors and officers’ liability insurance for the benefit of our office holders and intend to continue
and obtain such insurance and pay all premiums thereunder to the fullest extent permitted by the Companies Law. Under the Companies
Law, an Israeli company may not exempt an office holder from liability for a breach of his duty of loyalty, but may exempt in
advance an office holder from his liability to the company, in whole or in part, for a breach of his duty of care.



Our
Articles of Association provide that, subject to the provisions of the Companies Law, we may enter into a contract for the insurance
of the liability of any of our office holders for acts which he or she performed in his or her capacity as an office holder in
relation to:



| | ● | a breach of his/her
    duty of care to us or to another person;                                                                                                                                
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                 
| | ● | a breach of his/her
    duty of loyalty to us, provided that the office holder acted in good faith and had reasonable cause to assume that his/her
    act would not prejudice our interests; or
| |   |                                                                                                                                                                                                 
| | ● | a financial liability
    imposed upon him/her in favor of another person.                                                                                                                      



Indemnification
of Office Holders. Our Articles of Association provide that we may indemnify an office holder against:



| | ● | a financial liability
    imposed on an office holder in favor of another person by any judgment, including a judgment given as a result of a settlement
    or an arbitrator’s award which has been confirmed by a court in respect of an act performed by the 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 (i) no indictment
    (as defined in the Companies Law) was filed against such office holder as a result of such investigation or proceeding; and
    (ii) 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 offence that does not require proof of criminal intent; and
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ● | reasonable litigation
    costs, including attorney’s fees, expended by an office holder or which were imposed on an office holder by a court
    in proceedings filed against the office holder by the Company or in its name or by any other person or in a criminal charge
    in respect of which the office holder was acquitted or in a criminal charge in respect of which the office holder was convicted
    for an offence which did not require proof of criminal intent.                                                                                                                                                                                                                                                                            





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Our
Articles of Association also include:



| | ● | authorization to
    undertake, in advance, to indemnify an office holder, provided that the undertaking is limited to specified events which the
    board of directors believes are anticipated and limited in amount determined by the board of directors to be reasonable under
    the circumstances; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                               
| | ● | authorization to
    indemnify retroactively an office holder.                                                                                                                                                                                                                                                



We
have agreed to indemnify our office holders under indemnification agreements with each office holder, to the maximum extent permitted
under the Companies Law.



Under
the terms of the indemnification agreement, the total amount of indemnification for each case (including all matters connected
therewith), shall not exceed US$ 1,000,000 (in addition to any amounts paid under an insurance coverage).



Grant
of Options. In October 15, 2016, the Company granted options to purchase 37,500 ordinary shares of the Company to each of Aviv
Tzidon, Abraham Nahmias, Avi Toledano, Aviad Pundak Mintz, Orit Stav, Ilanit Zalmanovich and Dan Halutz, at an exercise price
for each of such share of $1.00. The options shall vest in four annual installments as follows: 10,000 options on each of the
first, second and third anniversaries of July 17, 2016, the vesting commencement date, and 7,500 on the fourth anniversary of
the vesting commencement date, so that four (4) years following the vesting commencement date, all options will be fully vested
and exercisable, subject to option holder’s continuing to be a director of the Company or any affiliate thereof through
such dates. Notwithstanding the above, the vesting of the options may accelerate so that all shares subject to the option will
be fully vested and exercisable immediately prior to the occurrence of a corporate transaction (as such term is defined in the
Company’s Option Plan).



Loan
and Security Agreement for the Company. The Company entered into a Loan and Security Agreement, dated July 17, 2016 with each
of Aviv and Magic Stones, our shareholders, pursuant to which these shareholders loaned a total of $500,000 to the Company for
a period of seven years at an annual interest rate equal to the lower of (i) 3.2% per annum, and (ii) the minimum rate required
by law to avoid the imputing of tax. As security for such loan, the Company granted to these shareholders a specific lien and
security interest on all of the shares of its Subsidiary. The loan may be repaid by the Company at any time in minimum increments
of $50,000. The proceeds of the loan are to be used for funding the on-going operations of the Company.



Loan
and Security Agreement for our Subsidiary. our Subsidiary entered into a Loan and Security Agreement, dated July 17, 2016, with
each of Aviv and Magic Stones, our shareholders, pursuant to which these shareholders granted a credit line to our Subsidiary
of up to a total of $4,500,000 for a period of seven years at an annual interest rate equal to the lower of (i) 3.2% per annum,
and (ii) the minimum rate required by law to avoid the imputing of tax. Draws on such credit line may be made in increments of
not less than $50,000, and outstanding amounts on the credit line may be repaid in increments of not less than $50,000. Accrued
interest is payable annually. As security for amounts owing under the credit line, our Subsidiary granted to the lending shareholders
a floating lien and charge on all of its assets, and a specific charge on all of the intellectual property rights owned by Subsidiary
at any time. An event of default on any one of the loan made to the Company and the credit line granted to the Subsidiary triggers
an event of default under the other of such loan and credit line. As of December 31,2016, the Subsidiary has drawn down on approximately
$2.5 million under the facility.



Our
Subsidiary and each of Aviv and Magic Stones, our shareholders, each holding 41.21% of our outstanding ordinary shares, entered
into an Assignment and Assumption Agreement, dated July 17, 2016, pursuant to which the Subsidiary acquired from these shareholders
their respective rights in all of the License and Service Agreement with McGinnis, the Administrative Services Agreement with
Phinergy, and the Laminar MOU, all of which are described in the Material Agreements Section above. The rights transferred under
the Assignment and Assumption Agreement were valued at $1.4 million and includes certain expenses and partial payments made in
respect of the Material Agreements.



Eye
Point Patent – In July 2016, our Subsidiary acquired from Eye Point Ltd. A company owned by one of the Company's shareholders,
Mr. Dekel Tzidon, all rigths under US patent No.8,314,928 (the "Eye Point Patent") for a total amount of $38 thousand.
The Eyepoint Patent will expire on November 12,2026. This patent allowed us to develop conceptual design of an auto-landing system.





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C.
INTEREST OF EXPERT AND COUNSEL



Not
applicable



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



See
Item 18



Legal
Proceedings



From
time to time, we may be subject to legal proceedings and claims in the ordinary course of business. We are currently not involved
in any pending or contemplated legal proceedings that could reasonably be expected to have a material adverse effect on our business,
prospects, financial condition or results of operations. We may become involved in material legal proceedings in the future. Regardless
of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources
and other factors.



Dividend
Distribution Policy



We
do not intend to pay cash dividends on our ordinary shares in the foreseeable future. We currently intend to retain all future
earnings to finance operations and to expand our business.



Under
the provisions of our Articles of Association, the declaration of any final cash dividends in respect of any fiscal period requires
shareholder approval, which may reduce but not increase such dividend from the amount proposed by our board of directors; provided
that any failure by the shareholders to approve a final dividend will not affect any interim dividend which has been paid. Payments
of dividends may be subject to withholding and other taxes.



B.
SIGNIFICANT CHANGES



None
other than disclosed in this report.



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



A. Offer
and Listing Details



Share
Price History



According
to the website of the OTC Pink, the Company’s ordinary shares have not traded since February 22, 2016. In light of the lack
of trading and the effect of the 30,465 for 1 reverse split effected on February 25, 2016, the Company does not believe that the
listed share price $30.465 per share and the high and low of $30.005 per share on the OTC Pink website reflect a reasonable trading
price of the Company’s ordinary shares. Additionally, given the change in business focus of the Company in 2016 and the
discontinuation of the Company’s legacy business in 2016, we do not believe that providing the high and low closing market
prices for the ordinary shares during the preceding five years, is useful.



As
a result of the removal of our ordinary shares from quotation on the Nasdaq Capital Market, our ordinary shares are not regularly
covered by securities analysts and the media and the trading of our ordinary shares is very limited. Such limited trading could
result in lower prices for our ordinary shares than might otherwise prevail and in larger spreads between the bid and asked prices
for our ordinary shares.  Additionally, certain investors will not purchase securities that are quoted on the pink sheets,
which could materially impair our ability to raise funds through the issuance of our ordinary shares in the securities markets.



B. 
Plan of Distribution



Not
applicable.





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C.
Markets



Our
ordinary shares were traded on the Nasdaq Capital Market until February, 2003 under the ticker symbol BVRSF. Our ordinary shares
were then delisted from the Nasdaq Capital Market after we failed to comply with its required listing standards. Our ordinary
shares traded on the Over-the-Counter Bulletin Board under the symbol “BVRSF.OB” from February, 2003 until March 2010.
Following the Elbit Transaction and our name change to R.V.B. Holdings Ltd, we changed our ticker symbol and on March 2, 2010
our ordinary shares began trading on the Over-the-Counter Bulletin Board under the symbol “RVBHF”. From May 1, 2014-March
1, 2017, our ordinary shares have been quoted on OTC Pink. Since March 2, 2017, our ordinary shares have been quoted on OTC Pink
under the symbol “EVTNF”.



D. 
Selling Shareholders



Not
applicable.



E.
Dilution



Not
applicable.



F.
Expenses of the Issue



Not
applicable.



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



A.
SHARE CAPITAL



Not
applicable



B.
MEMORANDUM AND ARTICLES OF ASSOCIATION



Objects
and Purposes



We
are a public company registered under the Companies Law as Eviation Aircraft Ltd., formerly, R.V.B. Holdings Ltd (formerly B.V.R.
Systems (1998) Ltd.), registration number 52-004362-1. Pursuant to Article 4.2 of our Articles of Association, our objective is
any purpose stated in the Company’s memorandum of association and to engage in any lawful activity.



On
September 26, 2016, the Company shareholders approved a new Articles of Association for the Company.



Board
of Directors



Under
the Companies Law and our articles of association, our board of directors may exercise all powers and take all actions that are
not required under the Companies Law or under our articles of association to be exercised or taken by another corporate body,
including the power to borrow money for the purposes of our Company. Our directors are not subject to any age limit requirement,
nor are they disqualified from serving on our board of directors because of a failure to own a certain amount of our shares.



Dividend
and Liquidation Rights



The
holders of the ordinary shares are entitled to their proportionate share of any cash dividend, share dividend or dividend in kind
declared with respect to our ordinary shares on or after the date of this annual report. We may declare dividends out of profits
legally available for distribution. Under the Companies Law, a company may distribute a dividend only if the distribution does
not create a reasonable risk that the company will be unable to meet its existing and anticipated obligations as they become due.
Furthermore, a company may only distribute a dividend out of the company’s profits, as defined under the Companies Law.
If the company does not meet the profit requirement, a court may allow it to distribute a dividend, as long as the court is convinced
that there is no reasonable risk that such distribution might prevent the company from being able to meet its existing and anticipated
obligations as they become due.





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Under
the Companies Law, the declaration of a dividend does not require the approval of the shareholders of a company unless the company’s
articles of association provide otherwise. Our articles of association provide that the board of directors may declare and distribute
dividends without the approval of the shareholders. In the event of our liquidation, holders of our ordinary shares have the right
to share ratably in any assets remaining after payment of liabilities, in proportion to the paid-up par value of their respective
holdings.



These
rights may be affected by the grant of preferential liquidation or dividend rights to the holders of a class of shares that may
be authorized in the future.



Voting,
Shareholder Meetings and Resolutions



Holders
of ordinary shares have one vote for each ordinary share held on all matters submitted to a vote of shareholders. This right may
be changed if shares with special voting rights are authorized in the future.



Our
articles of association and the laws of the State of Israel do not restrict the ownership or voting of ordinary shares by non-residents
of Israel.



Under
the Companies Law, an annual meeting of our shareholders should be held once every calendar year, but no later than 15 months
from the date of the previous annual meeting. The quorum required under our articles of association for a general meeting of shareholders
consists of at least two shareholders present in person or by proxy holding in the aggregate at least 25% of the voting power.
According to our articles of association a meeting adjourned for lack of a quorum generally is adjourned to the following day,
at the same time and place or any time and place as the board of directors designates in a notice to the shareholders. At the
adjourned meeting, if a legal quorum is not present after 30 minutes from the time specified for the commencement of the adjourned
meeting, then the meeting shall take place regardless of the number of members present and in such event the required quorum shall
consist of any number of shareholder's present in person or by proxy.



Most
shareholders’ resolutions, including resolutions to:



amend
our articles of association (except as set forth below);



make
changes in our capital structure such as a reduction of capital, increase of capital or share split, merger or consolidation;



authorize
a new class of shares;



elect
directors, other than external directors; or



appoint
auditors



will
be deemed adopted if approved by the holders of a majority of the voting power represented at a shareholders’ meeting, in
person or by proxy, and voting on that resolution.



Notices



Under
the Companies Law, shareholders’ meetings generally require prior notice of at least 21 days, or 35 days if the meeting
is adjourned for the purpose of voting on any of the following matters:



| | (1) | appointment and
    removal of directors;                                                                                                                              
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                        
| | (2) | approval of certain
    matters relating to the fiduciary duties of office holders and of certain transactions with interested parties;                                
| |     |                                                                                                                                                                        
| | (3) | approval of certain
    mergers; and                                                                                                                                   
| |     |                                                                                                                                                                        
| | (4) | any other matter
    in respect of which the articles of association provide that resolutions of the general meeting may be approved by means of
    a voting document.





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Modification
of Class Rights



The
Companies Law provides that, unless otherwise provided by the articles of association, the rights of a particular class of shares
may not be adversely modified without the vote of a majority of the affected class at a separate class meeting.



Election
of Directors



The
Board may include between two and eleven directors. Any single shareholder holding at least 25% of the issued and outstanding
shares of the Company may appoint and dismiss up to two directors to the Board. The Board must include an independent director
who is approved by the Audit Committee of the Company and appointed by the other members of the Board. Under the Law, the Board
must also include at least two external directors.



Directors
are elected at the General Meeting of the Company and serve until the following General Meeting unless they are dismissed or resign
by the shareholders that appointed them. Changes to the Articles of Association that address the rights to appoint directors require
the consent of 65% of the issued and outstanding shares of the Company.



Approval
of Specified Related Party Transactions



Transactions
Requiring Special Approval



The
Companies Law requires that an office holder disclose to the company any personal interest that he or she may have, and all related
material information known to him or her, in connection with any existing or proposed transaction by the company. The disclosure
is required to be made promptly and in any event, no later than the board of directors meeting in which the transaction is first
discussed. If the transaction is an extraordinary transaction, the office holder must also disclose any personal interest held
by his or her relative.



An
“office holder” is defined in the Companies Law as a general manager, chief business manager, deputy general manager,
vice general manager, any person assuming the responsibilities of any of the foregoing positions without regard to such person’s
title and a director or any manager who is directly subject to the general manager.



The
Companies Law imposes a duty of care and a fiduciary duty on all office holders of a company. The duty of care requires an office
holder to act with the level of care which a reasonable office holder in the same position would have acted under the same circumstances.
The duty of care includes a duty to use reasonable means to obtain:



information
on the appropriateness of a given act or action to be approved or performed by the officer holder by virtue of his or her position;
and



all
other important information pertaining to such an act or action.



The
fiduciary duty requires an office holder to act in good faith for the interests of the company and includes a duty to:



refrain
from any conflict of interest between the performance of the office holder’s duties in the company and his or her personal
affairs;



refrain
from any activity that is competitive with the company;





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



disclose
to the company any information or documents relating to a company’s affairs which the office holder has received due to
his or her position as an office holder.



Each
person listed in the table under “Item 6 – Directors, Senior Management and Employees – A. Directors and Senior
Management” is an office holder.



Under
the Companies Law, a “personal interest” is defined as the personal interest of a person in an action or in a transaction
of the company, including the personal interest of such person’s relative or the interest of any other corporate body in
which the person and/or such person’s relative is a director or general manager, a 5% shareholder or holds 5% or more of
the voting rights, or has the right to appoint at least one director or the general manager, but excluding a personal interest
stemming solely from the fact of holding shares in the company. A personal interest also includes a personal interest of a person
who votes according to a proxy of another person, even if the other person has no personal interest, and a personal interest of
a person who gave a proxy to another person to vote on his behalf – all whether the discretion how to vote lies with the
person voting or not.



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



not
in the ordinary course of business;



not
on market terms; or



likely
to have a material impact on the company’s profitability, assets or liabilities.



Under
the Companies Law, once an office holder complies with the above disclosure requirement, the board of directors may approve the
transaction, unless the company’s articles of association provide otherwise. A transaction that is adverse to the company’s
interest may not be approved. If the transaction is (i) an extraordinary transaction with an office holder or a third party in
which the office holder has a personal interest, or (ii) an engagement by the company with an office holder who is not a director
regarding his or her service and terms of employment, including an undertaking to indemnify, exculpate or insure such office holder,
then it must be approved by the audit committee, before the board approval. In the event that an amendment is made to an existing
engagement with an office holder, such amendment does not require board approval to the extent that it is immaterial to the existing
engagement. Transaction between a company and its directors regarding such directors' service and terms of employment, including
with respect to exculpation, indemnification or insurance, including compensation for non-directorial duties in the company, require
the approval of each of the audit committee, the board of directors and the shareholders, in that order.



Extraordinary
transactions of a public company with its 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, and the terms of engagement of the company,
directly or indirectly, with a controlling shareholder or a controlling shareholder’s relative (including through a corporation
controlled by a controlling shareholder), regarding the company’s receipt of services from the controlling shareholder,
and if such controlling shareholder is also an office holder or an employee of the company, regarding his or her terms of engagement
and employment, require the approval of the audit committee, the board of directors and the shareholders of the company. The shareholders’
approval must satisfy either of the following criteria:



the
majority must include a majority of the total votes of shareholders who are present and voting at the meeting and who have no
personal interest in the transaction (the votes of abstaining shareholders shall not be included in the number of the said total
votes); or



the
total of opposition votes, among the shareholders who are present at the meeting and who have no personal interest in the transaction,
shall not exceed 2% of the aggregate voting rights in the company.





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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; unless, with respect to transactions
not involving the receipt of services or compensation, the audit committee has determined that a longer term is reasonable under
the circumstances.



A
person who has a personal interest in a matter 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. However, if the chairman of the board of directors or the chairman
of the audit committee has determined that the presence of an office holder with a personal interest is required, such office
holder may be present at the meeting. Notwithstanding the foregoing, a director who has a personal interest may be present at
the meeting and vote on the matter if a majority of the directors or members of the audit committee have a personal interest in
the approval of such transaction. If a majority of the directors have a personal interest in a transaction, such transaction requires
approval of the shareholders of the company.



Under
the Companies Law, the disclosure requirements which apply to an office holder also apply to a controlling shareholder of a public
company. A shareholder is presumed to have “control” of the company and thus to be a controlling shareholder of the
company if the shareholder holds 50% or more of the “means of control” of the company. “Means of control”
is defined as (1) the right to vote at a general meeting of a company or a corresponding body of another corporation; or (2) the
right to appoint directors of the corporation or its general manager. For the purpose of approving transactions with controlling
shareholders, the term also includes any shareholder that holds 25% or more of the voting rights in a public company if no other
shareholder owns more than 50% of the voting rights in the company. For purposes of determining the holding percentage stated
above, two or more shareholders who have a personal interest in a transaction that is brought for the company’s approval
are deemed as joint holders.



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 indicate so will result in the invalidation of that shareholder’s
vote.



For
information concerning the direct and indirect personal interests of certain of our office holders and principal shareholders
in certain transactions with us, see “Item 7.B. – Major Shareholders and Related Party Transactions – Related
Party Transactions.”



Rights,
Preferences and Restrictions on Shares



Modifications
of Share Rights



Under
our Articles of Association, the rights attached to any class may be varied by adoption of the necessary amendment of the Company’s
Articles of Association, provided that the holders of the majority of the shares of such class represented at a meeting of the
shareholders of such class. Our Articles of Association require for quorum at a meeting of a particular class of shares the presence
of two shareholders holding at least 25% of the voting power of that class. Our Articles of Association may be amended by majority
of the voting power of our Company represented at a shareholders meeting and voting thereon, except that the provisions of our
Articles of Association relating to mergers and acquisitions can only be amended by a vote of 75% of the voting power of our Company
represented at a meeting and voting thereon.



Shareholders
Meetings and Resolutions



We
are required to hold an annual general meeting of our shareholders once every calendar year, but 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 extraordinary general meetings. Our board of directors may call extraordinary general meetings whenever it sees fit, at
such time and place, within or without the State of Israel, as it may be determined. In addition, the Companies Law provides that
the board of directors of a public company is required to convene an extraordinary meeting upon the request of (a) any two directors
of the company or one quarter of the company’s board of directors or (b) one or more shareholders holding, in the aggregate,
(i) five percent of the outstanding shares of the company and one percent of the voting power in the company or (ii) five percent
of the voting power in the company.





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The
quorum required by our Articles of Association for a meeting of shareholders consists of at least two shareholders present in
person or by proxy who hold or represent between them at least 25% of the voting power in our Company. A meeting adjourned for
lack of quorum is adjourned to the following day at the same time and place or any time and place as the board decides. At such
reconvened meeting, the required quorum consists of any number of shareholders present in person or by proxy.



Limitation
on Ownership of Securities



The
ownership and voting of our ordinary shares by non-residents of Israel are not restricted in any way by our Articles of Association
or by the laws of the State of Israel, except for shareholders who are subjects of countries which are enemies of the State of
Israel.



Mergers
and Acquisitions; Anti-takeover Provisions



The
Companies Law includes provisions allowing corporate mergers. These provisions require that the board of directors of each company
that is party to the merger approve the transaction. In addition, the holders of the majority of the shares of each company must
approve the merger. The Companies Law does not require court approval of a merger other than in specified situations. Under the
Companies Law, a merging company must inform its creditors of the proposed merger. However, upon the request of a creditor of
either party to the proposed merger, a 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 of the merger
to their creditors.



A
merger may not be completed until at least 50 days have passed from the time that a merger proposal was filed with the Israeli
Registrar of Companies and 30 days have passed from the shareholders’ approval of the merger in each of the merging companies.



The
Companies Law also provides that the acquisition of shares in a public company on the open market (i.e., from other shareholders
of the company) must be made by means of a tender offer if, as a result of the acquisition, the purchaser would become a 25% shareholder
of the company. The rule does not apply if there already is another 25% shareholder of the company. Similarly, the law provides
that an acquisition of shares in a public company must be made by means of a tender offer if, as a result of the acquisition,
the purchaser would become a 45% shareholder of the company, unless there is already another 45% shareholder of the company.



If,
following any acquisition of shares, the purchaser would hold 90% or more of the shares of the company that acquisition must be
made by means of a tender offer for all of the target company’s shares. An acquirer who wishes to eliminate all minority
shareholders must do so by means of a tender offer and acquire 95% of all shares not held by or for the benefit of the acquirer
prior to the acquisition. However, in the event that the tender offer to acquire that 95% is not successful, the acquirer may
not acquire tendered shares if by doing so the acquirer would own more than 90% of the shares of the target company.



Changes
in Capital



Our
Articles of Association enable us to increase or reduce our share capital. Any such changes are subject to the provisions of the
Companies Law and must be approved by a resolution passed by a majority of the voting power of our Company present, in person
or by proxy, at a general meeting and voting on such change in the capital. In addition, certain transactions, which have the
effect of reducing capital, such as the declaration and payment of dividends under certain conditions and the issuance of shares
for less than their nominal value, require a resolution of the board of directors and court approval.



Compensation.
Every Israeli public company must adopt a compensation policy, recommended by the compensation committee, and approved by the
board of directors and the shareholders, in that order. The shareholder approval requires a majority of the votes cast by shareholders,
excluding any controlling shareholder and those who have a personal interest in the matter (similar to the threshold described
below under " – Shareholders"). In general, all office holders’ terms of compensation – including
fixed remuneration, bonuses, equity compensation, retirement or termination payments, indemnification, liability insurance and
the grant of an exemption from liability – must comply with the company's compensation policy. In addition, the compensation
terms of directors, the chief executive officer, and any employee or service provider who is considered a controlling shareholder
generally must be approved separately by the compensation committee, the board of directors and the shareholders of the company,
in that order. The compensation terms of other officers require the approval of the compensation committee and the board of directors.





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Tax
Law. Israeli tax law treats some acquisitions, such as a stock-for-stock swap between an Israeli company and a foreign company,
less favorably than U.S. tax law. For example, Israeli tax law may subject a shareholder who exchanges his ordinary shares for
shares in a foreign corporation to immediate taxation, unless a specific tax ruling is obtained from the Israeli Tax Authority
prior to the transaction. Please see "Item 10.E Taxation — Israeli Taxation."



Exculpation,
Indemnification and Insurance of Directors and Officers



Our
articles of association allow us to indemnify, exculpate and insure our office holders, which includes our directors, to the fullest
extent permitted by the Companies Law (other than with respect to certain expenses in connection with administrative enforcement
proceedings under the Israeli Securities Law).



Under
the Companies Law, a company may indemnify an office holder in respect of some liabilities, either in advance of an event or following
an event. If a company undertakes to indemnify an office holder in advance against monetary liability incurred in his or her capacity
as an office holder, whether imposed in favor of another person pursuant to a judgment, a settlement or an arbitrator’s
award approved by a court, the indemnification must be limited to foreseeable events in light of the company’s actual activities
at the time of the indemnification undertaking and to a specific sum or a reasonable criterion under such circumstances, as determined
by the board of directors.



Under
the Companies Law, only if and to the extent provided by its articles of association, a company may indemnify an office holder
against the following liabilities or expenses incurred in his or her capacity as an office holder:



any
monetary liability whether imposed on him or her in favor of another person pursuant to a judgment, a settlement or an arbitrator’s
award approved by a court;



reasonable
litigation expenses, including attorneys’ fees, incurred by him or her as a result of an investigation or proceedings instituted
against him or her by an authority empowered to conduct an investigation or proceedings, which are concluded either (i) without
the filing of an indictment against the office holder and without the levying of a monetary obligation in lieu of criminal proceedings
upon the office holder, or (ii) without the filing of an indictment against the office holder but with levying a monetary obligation
in substitute of such criminal proceedings upon the office holder for a crime that does not require proof of criminal intent;



reasonable
litigation expenses, including attorneys’ fees, in proceedings instituted against him or her by the company, on the company’s
behalf or by a third-party, or in connection with criminal proceedings in which the office holder was acquitted, or as a result
of a conviction for a crime that does not require proof of criminal intent, or in connection with an administrative enforcement
proceeding or financial sanction instituted against him; and



reasonable
litigation expenses, including attorneys’ fees, incurred by him or her as a result of an administrative enforcement proceeding
instituted against him or her.



Under
the Companies Law, a company may obtain insurance for an office holder against liabilities incurred in his or her capacity as
an office holder, if and to the extent provided for in its articles of association. These liabilities include a breach of duty
of care to the company or a third-party, a breach of duty of loyalty, any monetary liability imposed on the office holder in favor
of a third-party, and reasonable litigation expenses, including attorney fees, incurred by an office holder as a result of an
administrative enforcement proceeding instituted against him.





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A
company may, in advance only, exculpate an office holder for a breach of the duty of care, except in connection with a distribution
of dividends or a repurchase of the company’s securities. A company may not exculpate an office holder from a breach of
the duty of loyalty towards the company.



Under
the Companies Law, however, an Israeli company may only indemnify or insure an office holder against a breach of duty of loyalty
to the extent that the office holder acted in good faith and had reasonable grounds to assume that the action would not prejudice
the company. In addition, an Israeli company may not indemnify, insure or exculpate an office holder against a breach of duty
of care if committed intentionally or recklessly, or an action committed with the intent to derive an unlawful personal gain,
or for a fine or forfeit levied against the office holder.



We
have purchased liability insurance and entered into indemnification and exculpation agreements for the benefit of our office holders
in accordance with the Companies Law and our articles of association.



C. MATERIAL
CONTRACTS



Other
than as described in other parts of this annual report, we have no other material contracts to which we were party during the
last completed fiscal year.



D.
EXCHANGE CONTROLS



Other
than general anti-money laundering regulations, there are currently no Israeli currency control regulations in effect that restrict
our import or export of capital to or from the State of Israel, or the availability of cash and cash equivalents for use by our
Company. Under the Bank of Israel Law, 5770-2010, the Governor of the Bank of Israel, with the approval of the monetary policy
committee of the Bank of Israel, is authorized to issue an administrative order restricting the transfer of funds to or from Israel.
However, such an order is only likely to be issued under emergency circumstances and only for a temporary period, if necessary
for the achievement of the goals of the Bank of Israel or the carrying out of its responsibilities under Israeli law. Furthermore,
Israel has agreed, pursuant to international agreements to which it is a party (including incident to Israel’s having joined
the International Monetary Fund) to allow for the free flow of capital to and from within its borders. Certain transactions nevertheless
require the filing of reports with the Bank of Israel.



Similarly,
there are no currently effective Israeli governmental laws, decrees, regulations or other legislation that restrict the payment
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 some transactions. However, legislation
remains in effect under which currency controls can be imposed by administrative action at any time.



E.
TAXATION



HOLDERS
OF OUR ORDINARY SHARES SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE UNITED STATES, ISRAELI OR OTHER TAX CONSEQUENCES OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF ORDINARY SHARES, INCLUDING, IN PARTICULAR, THE EFFECT OF ANY FOREIGN, STATE OR LOCAL TAXES.



Israeli
Tax Considerations and Government Programs



The
following is a summary of the current tax structure applicable to companies in Israel, with special reference to its effect on
us. The following also contains a discussion of certain Israeli and United States tax consequences to purchasers of our ordinary
shares and certain Israeli Government programs benefiting us. To the extent that the discussion is based on new tax legislation
that has not been subject to judicial or administrative interpretation, there can be no assurance that the views expressed in
the discussion will be accepted by the tax authorities in question. The discussion is not intended, and should not be construed,
as legal or professional tax advice and is not exhaustive of all possible tax considerations.





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General
Corporate Tax Structure



Israeli
companies were generally subject to corporate tax at a rate of 25% in 2016. In December 2016, the Israeli Parliament approved
a measure whereby the corporate tax rate would be reduced in two stages from 25% to 23%, starting with a corporate income tax
rate of 24% beginning January 2017 which is to be reduced to 23% beginning January 2018.



Capital
Gains Tax on Sales of Our Ordinary Shares



Capital
gains tax is imposed on the disposal of capital assets by an Israeli resident and on the disposal of such assets by a non- Israel
resident, if those assets are either: (i) located in Israel; (ii) shares or rights to shares in an Israeli resident company, or
(iii) represent, directly or indirectly, rights to assets located in Israel. The Israeli Income Tax Ordinance, 1961 [new version]
(the “Ordinance”) distinguishes between “Real Capital Gain” and “Inflationary Surplus”. The
Real Capital Gain on the disposition of a capital asset is the amount of total capital gain in excess of Inflationary Surplus.
Inflationary Surplus is generally computed on the basis of the increase in the Israeli Consumer Price Index between the date of
purchase and the date of disposal of the capital asset.



Real
Capital Gain generated by a company is generally subject to tax at the corporate tax rate (25% in 2016). The Real Capital Gain
accrued by individuals on the sale of our ordinary shares will be taxed at the rate of 25%. However, if the individual shareholder
is a “Controlling Shareholder” (i.e., a person who holds, directly or indirectly, alone or together with another,
10% or more of one of the Israeli resident company’s “means of control” (including, among others, the right
to company profits, voting rights, the right to the company’s liquidation proceeds and the right to appoint a company director)
at the time of sale or at any time during the preceding 12 month period)), such gain will be taxed at the rate of 30%. In addition,
there is a 2% excess tax for individuals whose taxable income in Israel exceeds 810,720 NIS in 2016 or 3% excess tax for individuals
with taxable income in Israel exceeding 640,000 NIS in 2017).



Individual
and corporate shareholders dealing in securities in Israel are taxed at the tax rates applicable to business income (and not capital
gains) – 25% for corporations in 2016 (24% in 2017 or 23% in 2018) and a marginal tax rate of up to 50% for individuals
in 2016 (including a 2% excess tax for individuals whose taxable income in Israel exceeds 810,720 NIS in 2016 or 3% excess tax
for individuals with taxable income in Israel exceeding 640,000 NIS in 2017).



Notwithstanding
the foregoing, capital gains generated from the sale of our securities by a non-Israeli shareholder may be exempt under the Ordinance
from Israeli taxes provided that all the following cumulative conditions are met: (i) the securities were purchased upon or after
the registration of the securities on a stock exchange (this requirement generally does not apply to shares purchased on or after
January 1, 2009); (ii) the seller of the securities does not have a permanent establishment in Israel to which the generated capital
gain is attributable; and (iii) if the seller is a corporation, less than 25% of its means of control are held, directly and indirectly,
by Israeli resident shareholders. In addition, the sale of the securities may be exempt from Israeli capital gain tax under the
provisions of an applicable tax treaty. For example, the Convention between the Government of the United States of America and
the Government of Israel with respect to Taxes on Income (the “Israel-U.S. Double Tax Treaty”) exempts U.S. residents
from Israeli capital gains tax in connection with such sale, provided that: (i) the U.S. resident owned, directly or indirectly,
less than 10% of the Israeli resident company’s voting power at any time within the 12-month period preceding such sale;
(ii) the seller, if an individual, has been present in Israel for less than 183 days (in the aggregate) during the taxable year;
and (iii) the capital gain from the sale was not generated through a permanent establishment of the U.S. resident in Israel.



Either
the purchaser of the securities, the stockbrokers who effected the transaction or the financial institution holding the traded
securities through which the payment to the seller is made is obligated, subject to the above-referenced exemptions, to withhold
tax on the Real Capital Gains resulting from the real capital gain or the consideration in the sale of securities at the rate
of 25% in respect of a corporation and/or an individual.





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A
detailed return, including a computation of the tax due, must be filed and an advance payment must be paid on January 31 and July
31 of each tax year for sales of securities traded on a stock exchange made in the 6 months period prior to the month of each
of the aforementioned filing dates. However, if all tax due was withheld at source according to applicable provisions of the Ordinance
and the regulations promulgated thereunder, the return does not need to be filed and no advance payment is required. Capital gains
are also reportable on an annual income tax return.



Taxation
of Dividends



As
of January 1, 2012, a distribution of dividends from income derived during any period for which the Israeli company is not entitled
to reduced tax rates applicable to an Approved Enterprise/Benefited Enterprise/ Preferred Enterprise under the Law for the Encouragement
of Capital Investments-1959, to an Israeli resident individual, will generally be subject to tax at a rate of 25%. However, a
30% tax rate will apply if the dividend recipient is a “Controlling Shareholder” (as defined above) at the time of
distribution or at any time during the preceding 12 month period. In addition, there is a 2% excess tax for individuals whose
taxable income in Israel exceeds 810,720 NIS in 2016 or 3% excess tax for individuals with taxable income in Israel exceeding
640,000 NIS in 2017. If the recipient of the dividend is an Israeli resident corporation, such dividend will be exempt from tax
in Israel provided that the income from which such dividend was distributed was derived or accrued within Israel.



The
aforementioned rates may be reduced by an applicable double tax treaty. Thus, under the Israel – U.S. Double Tax Treaty
the following rates will apply in respect of dividends distributed by an Israeli resident company to a U.S. resident: (i) if the
U.S. resident is a corporation which holds during that portion of the taxable year which precedes the date of payment of the dividend
and during the whole of its prior taxable year (if any), at least 10% of the outstanding shares of the voting stock of the Israeli
resident paying corporation and not more than 25% of the gross income of the Israeli resident paying corporation for such prior
taxable year (if any) consists of certain type of interest or dividends – the tax rate is 12.5%, (ii) if both the conditions
mentioned in section (i) above are met and the dividend is paid from an Israeli resident company's income which was entitled to
a reduced tax rate applicable to an Approved Enterprise/ Benefited Enterprise/Preferred Enterprise – the tax rate is 15%,
and (iii) in all other cases, the tax rate is 25%. The aforementioned rates under the Israel - U.S. Double Tax Treaty will not
apply if the dividend income has been derived through a permanent establishment of the U.S. resident in Israel.



In
general, dividend derived from an Israeli resident company (other than a family company), is not subject to tax as part of the
company's taxable income. However, dividend derived from non-Israeli resident or dividend derived from an Approved Enterprise's/Privileged
Enterprise's/Preferred Enterprise is subject to tax as described below.



Our
company is obligated to withhold tax, upon the distribution of a dividend at the regular rate but it may in the future qualify
for lower rates to be attributed as a Preferred Enterprise.



United
States Federal Income Tax Considerations



The
following discussion describes certain material United States (“U.S.”) federal income tax consequences of the purchase,
ownership and disposition of our ordinary shares.



For
purposes of this discussion, a “U.S. holder” is a beneficial owner of ordinary shares who or which is any of the following
for U.S. federal income tax purposes:



a
citizen or resident of the U.S. or someone treated as a U.S. citizen or resident of the U.S.;



a
corporation (or another entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under
the laws of the U.S., any state thereof, or the District of Columbia;





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an
estate, the income of which is subject to U.S. federal income taxation regardless of its source; or



a
trust, if (a) a U.S. court is able to exercise primary supervision over its administration and one or more U.S. persons have the
authority to control all of its substantial decisions, or (b) the trust was in existence and treated as a U.S. person on August
20, 1996 and has a valid election in effect under applicable Treasury Regulations (as defined below) to be treated as a U.S. person.



A
“Non-U.S. Holder” is a beneficial owner of our ordinary shares that is neither a U.S. Holder nor a partnership (or
other entity treated as a partnership for U.S. federal income tax purposes).



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, hold or dispose of the Company’s ordinary shares.
This summary generally considers only U.S. holders that will own the ordinary shares as capital assets and does not consider the
U.S. tax consequences to a person that is not a U.S. holder or the tax treatment of persons who hold the ordinary shares through
a partnership or other pass-through entity. In addition, the possible application of U.S. federal estate or gift taxes or any
aspect of state, local or non-U.S. tax laws is not considered. This discussion is based on current provisions of the Internal
Revenue Code of 1986, as amended (the “Code”), Treasury Regulations promulgated under the Code by the U.S. Treasury
Department (including proposed and temporary regulations) (the “Treasury Regulations”), rulings, current administrative
interpretations and official pronouncements by the Internal Revenue Service (the “IRS”), and judicial decisions, all
as currently in effect and all of which are subject to differing interpretations or to change, with a retroactive effect. Such
changes could materially and adversely affect the tax consequences described below. No assurance can be given that the IRS would
not assert, or that a court would not sustain, a position contrary to any of the tax consequences described below.



This
discussion does not address all aspects of U.S. federal income taxation that may be relevant to any particular U.S. holder based
on the holder’s particular circumstances, such as, persons who own, directly, indirectly or constructively, 10% or more
(by voting power or value) of our outstanding voting shares;



investors
holding ordinary shares as part of a “hedging,” “integrated” or “conversion” transaction or
as a position in a “straddle” for U.S. federal income tax purposes;



persons
whose functional currency is not the U.S. dollar;



persons
who acquire their ordinary shares in a compensatory transaction;



partnerships
(including entities classified as partnerships for U.S. federal income tax purposes) or other pass-through entities, or holders
that will hold ordinary shares through such entities;



certain
former citizens or residents of the United States;



dealers
or traders in securities, commodities or currencies;



insurance
companies;



regulated
investment companies;



real
estate investment trusts, regulated investment companies or grantor trusts;



traders
who elect to mark-to-market their securities;



tax-exempt
entities or organizations;



banks
or other financial institutions;



U.S.
expatriates; and



persons
subject to the alternative minimum tax.





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HOLDER
RELIANCE ON TAX STATEMENTS



THIS
SUMMARY OF MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. EACH
HOLDER SHOULD CONSULT ITS TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO IT OF AN INVESTMENT IN THE ORDINARY SHARES,
INCLUDING THE EFFECTS OF APPLICABLE UNITED STATES FEDERAL INCOME TAX LAWS AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE UNITED
STATES FEDERAL ESTATE OR GIFT TAX RULES OR UNDER THE LAWS OF ANY FOREIGN, STATE OR LOCAL JURISDICTION OR UNDER ANY APPLICABLE
TAX TREATY.



Availability
of Reduced Tax Rates



Recent
U.S. legislation increased to 20% the maximum U.S. Federal income tax rate on certain long-term capital gains and on qualifying
dividends. Long-term capital gains from the sale of our ordinary shares may be eligible for this rate, although the actual rates
may be higher due to the phase out of certain tax deductions, exemptions and credits. Subject to the discussion below, dividends,
if any, may also be eligible for this 20% maximum rate on long-term capital gains, provided that we do not constitute a passive
foreign investment company (a “PFIC”). However, tax rates are subject to change, especially given the uncertain economic
conditions in the United States and the size of the federal deficit. U.S. holders should consult their tax advisors.



Distributions
on the Ordinary Shares



In
general (and subject to the PFIC rules discussed below), any distribution paid by us on the ordinary shares to a U.S. holder will
be treated as dividend income if the distribution does not exceed our current or accumulated earnings and profits, as determined
for U.S. federal income tax purposes. If holding period and other requirements are met, dividends paid to non-corporate U.S. holders
currently should generally qualify for the reduced maximum tax rate of 20% as long as our ordinary shares remain “readily
tradable on an established securities market in the United States,” provided that we are not considered a PFIC (as discussed
below) in the taxable year in which the dividend is paid or in any preceding taxable year. The amount of any distribution which
exceeds these earnings and profits will be treated first as a non-taxable return of capital, reducing the U.S. holder’s
tax basis in its ordinary shares to the extent thereof, and then as capital gain, and as long-term capital gain if the U.S. holder’s
holding period exceeds one year, from the deemed disposition of the ordinary shares (subject to the PFIC rules discussed below).
Corporate holders generally will not be allowed a deduction for dividends received on the ordinary shares.



A
dividend paid by us in NIS will be included in the income of U.S. holders at the U.S. dollar value of the dividend, based upon
the spot rate of exchange in effect on the date of the distribution. U.S. holders will have a tax basis in NIS for U.S. federal
income tax purposes equal to that U.S. dollar value. Any subsequent gain or loss resulting from exchange rate fluctuations between
the day the dividend was included in the income of U.S. holders and the day the NIS are converted into U.S. dollars or are otherwise
disposed of, will be taxable as ordinary income, gain or loss from U.S. sources.



Dividends
paid by us generally will be foreign source “passive income” for U.S. foreign tax credit purposes or, in the case
of a U.S. holder that is a financial services entity, “financial services income.” U.S. holders may elect to claim
as a foreign tax credit against their U.S. federal income tax liability the Israeli income tax withheld from dividends received
on the ordinary shares. The Code provides limitations on the amount of foreign tax credits that a U.S. holder may claim. U.S.
holders that do not elect to claim a foreign tax credit may instead claim a deduction for Israeli income tax withheld, but only
for a year in which these U.S. holders elect to do so for all foreign income taxes. The rules relating to foreign tax credits
are complex (and may also be impacted by the tax treaty between the United States and Israel), and you should consult your tax
advisor to determine whether and if you would be entitled to this credit.





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Subject
to the discussion below under “Backup Withholding Tax and Information Reporting Requirements,” if you are a Non-U.S.
Holder, you generally will not be subject to U.S. federal income (or withholding) tax on dividends received by you on your ordinary
shares, unless:



| | ● | you conduct a trade
    or business in the U.S. and such income is effectively connected with that trade or business (and, if required by an applicable
    income tax treaty, the dividends are attributable to a permanent establishment or fixed base that such holder maintains in
    the U.S.); or
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | you are an individual
    and have been present in the U.S. for 183 days or more in the taxable year of such sale or exchange and certain other conditions
    are met.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



Sale
or Other Disposition of the Ordinary Shares



Upon
the sale or other disposition of the ordinary shares (subject to the PFIC rules discussed below), a U.S. holder generally will
recognize capital gain or loss in an amount equal to the difference between the amount realized on the sale or exchange and the
U.S. holder’s tax basis in the ordinary shares. The gain or loss recognized on the sale or exchange of the ordinary shares
generally will be long-term capital gain or loss if the U.S. holder’s holding period of the ordinary shares is more than
one year at the time of the disposition.



Gain
or loss recognized by a U.S. holder on a sale or exchange of ordinary shares generally will be treated as U.S. source income or
loss for U.S. foreign tax credit purposes. Under the tax treaty between the United States and Israel, gain derived from the sale,
exchange or other disposition of ordinary shares by a holder who is a resident of the U.S. for purposes of the treaty and who
sells the ordinary shares within Israel may be treated as foreign source income for U.S. foreign tax credit purposes.



The
amount of a distribution paid to a U.S. Holder in a foreign currency will be the dollar value of the foreign currency calculated
by reference to the spot exchange rate on the day the U.S. Holder receives the distribution, regardless of whether the foreign
currency is converted into U.S. dollars at that time. Any foreign currency gain or loss a U.S. Holder realizes on a subsequent
conversion of foreign currency into U.S. dollars will be U.S. source ordinary income or loss. If dividends received in foreign
currency are converted into U.S. dollars on the day they are received, a U.S. Holder generally should not be required to recognize
foreign currency gain or loss in respect of the dividend.



An
accrual basis U.S. Holder may elect the same treatment required of cash basis taxpayers with respect to foreign currency gain
or loss realized on a sale or disposition of our ordinary shares that are traded on an established securities market, provided
that the election is applied consistently from year to year. Such election may not be changed without the consent of the IRS.
In the event that an accrual basis U.S. Holder does not elect to be treated as a cash basis taxpayer for this purpose (pursuant
to the Treasury regulations applicable to foreign currency transactions), such U.S. Holder may have a foreign currency gain or
loss for U.S. federal income tax purposes because of differences between the U.S. dollar value of the currency received prevailing
on the trade date and the settlement date. Any such foreign currency gain or loss would be treated as ordinary income or loss
and would be in addition to the gain or loss, if any, recognized by such U.S. Holder on the sale or other disposition of our ordinary
shares. Any foreign currency gain or loss a U.S. Holder realizes will generally be U.S. source ordinary income or loss.



The
U.S. rules relating to foreign currency gains and losses are complex, and you should consult with your tax advisor to determine
whether and to what extent you would have to recognize such foreign currency gains or losses.



Subject
to the discussion below under “United States Information Reporting and Backup Withholding,” if you are a
Non-U.S. Holder, you generally will not be subject to U.S. federal income or withholding tax on any gain realized on the sale
or exchange of our ordinary shares unless:



| | ● | such gain is effectively connected with your
    conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, the gain is attributable
    to a permanent establishment or fixed base that you maintain in the United States); or
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | you are an individual and have been present
    in the United States for 183 days or more in the taxable year of such sale or exchange and certain other conditions are met.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------





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Passive
Foreign Investment Companies



In
general, a foreign (i.e., non-U.S.) corporation will be a PFIC for any taxable year in which, after applying the relevant look-through
rules with respect to the income and assets of its subsidiaries, either (1) 75% or more of its gross income in the taxable year
is “passive income,” or (2) assets held for the production of, or that produce, passive income comprise 50% or more
of the average of its total asset value in the taxable year. For purpose of the income test, passive income includes dividends,
interest, royalties, rents, annuities and net gains from the disposition of assets, which produce passive income. For purposes
of the assets test, assets held for the production of passive income includes assets held for the production of, or that produce
dividends, interest, royalties, rents, annuities, and other income included in the income test. In determining whether we meet
the assets test, cash is considered a passive asset and the total value of our assets generally will be treated as equal to the
sum of the aggregate fair market value of our outstanding shares plus our liabilities. If we own at least 25% (by value) of the
shares of another corporation, we will be treated, for purposes of the PFIC tests, as owning our proportionate share of the other
corporation’s assets and receiving our proportionate share of the other corporation’s income. The income test is conducted
at the taxable year-end. The asset test is conducted on a quarterly basis and the quarterly results are then averaged together.



If
a corporation is treated as a PFIC for any year during a U.S. holder’s holding period and the U.S. holder does not timely
elect to treat the corporation as a “qualified electing fund” under Section 1295 of the Code or elect to mark its
ordinary shares to market (both as described below), any gain on the disposition of the shares will be treated as ordinary income,
rather than capital gain, and the holder will be required to compute its tax liability on that gain, as well as on dividends and
other distributions, as if the income had been earned ratably over each day in the U.S. holder’s holding period for the
shares. The portion of the gain and distributions allocated to prior taxable years in which a corporation was a PFIC will be ineligible
for any preferential tax rate otherwise applicable to any “qualified dividend income” or capital gains, and will be
taxed at the highest ordinary income tax rate in effect for each taxable year to which this portion is allocated. An interest
charge will be imposed on the amount of the tax allocated to these taxable years. A U.S. holder may elect to treat a corporation
as a qualified electing fund only if the corporation complies with requirements imposed by the IRS to enable the shareholder and
the IRS to determine the corporation’s ordinary income and net capital gain. Additionally, if a corporation is a PFIC, a
U.S. holder who acquires shares in the corporation from a decedent will be denied the normally available step-up in tax basis
to fair market value for the shares at the date of death and instead will have a tax basis equal to the decedent’s tax basis
if lower than fair market value. These adverse tax consequences associated with PFIC status could result in a material increase
in the amount of tax that a U.S. holder would owe and an imposition of tax earlier than would otherwise be imposed and additional
tax form filing requirements. Unless otherwise provided by the IRS, if a corporation is classified as a PFIC, a U.S. holder will
generally be required to file an informational return annually to report its ownership interest in such entity.



Available
Elections. If we become a PFIC for any taxable year, U.S. holders should consider whether or not to elect to treat us as a “qualified
electing fund” or to elect to “mark-to-market” their ordinary shares in order to mitigate the adverse tax consequences
of PFIC status.



If
a U.S. holder makes a qualified electing fund election (a “QEF election”) for its ordinary shares that is effective
from the first taxable year that the U.S. holder holds our ordinary shares and during which we are a PFIC, the electing U.S. holder
will avoid the adverse consequences of our being classified as a PFIC but will instead be required to include in income a pro
rata share of our net capital gain, if any, and other earnings and profits (“ordinary earnings”) as long-term capital
gains and ordinary income, respectively, on a current basis, in each case whether or not distributed, in the taxable year of the
U.S. holder in which or with which our taxable year ends. A subsequent distribution of amounts that were previously included in
the gross income of U.S. holders should not be taxable as a dividend to those U.S. holders who made a QEF election. In the event
we incur a net loss for a taxable year, such loss will not be available as a deduction to an electing U.S. holder, and may not
be carried forward or back in computing our net capital gain or ordinary earnings in other taxable years. The tax basis of the
shares of an electing U.S. holder generally will be increased by amounts that are included in income, and decreased by amounts
distributed but not taxed as dividends, under the QEF rules described above. In order to make (or maintain) a QEF election, the
U.S. holder must annually complete and file IRS Form 8621. In addition, we must make certain information regarding our net capital
gains and ordinary earnings available to the U.S. holder and permit our books and records to be examined to verify such information.
Therefore, we will monitor our PFIC status and make a disclosure to our shareholders if we determine that we have become a PFIC.
If we are a PFIC for any year and you make a request to us in writing at the address on the cover of our latest Annual Report
on Form 20-F, Attention Chief Financial Officer, for the information required to make a QEF election, we will promptly make the
information available to you and comply with any other applicable requirements of the Code.





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A
QEF election, once made with respect to us, applies to the tax year for which it was made and to all subsequent tax years, unless
the election is invalidated or the IRS consents to revocation of the election. If you make a QEF election and we cease to be classified
as a PFIC in a subsequent tax year, the QEF election will remain in effect, although it will not be applicable during those tax
years in which we are not classified as a PFIC. Therefore, if we – after ceasing to be classified as a PFIC – again
are classified as a PFIC in a subsequent tax year, the QEF election will be effective and you will again be subject to the rules
described above for U.S. holders making QEF elections in such tax year and any subsequent tax years in which we are classified
as a PFIC. A QEF election also remains in effect even after you dispose of all of your direct and indirect interest in our ordinary
shares. As a result, if you subsequently acquire any of our ordinary shares or an interest in any of our ordinary shares, you
will again be subject to the rules described above for U.S. holders making a QEF election for each tax year in which we are classified
as a PFIC.



Alternatively,
if a U.S. holder elects to “mark-to-market” its ordinary shares, the U.S. holder will generally include in its income
any excess of the fair market value of our ordinary shares at the close of each taxable year over the holder’s adjusted
basis in such ordinary shares. If a U.S. holder makes a valid mark-to-market election with respect to our ordinary shares for
the first taxable year of the U.S. holder in which the U.S. holder holds (or is deemed to hold) our ordinary shares and for which
we are determined to be a PFIC, such holder generally will not be subject to the PFIC rules described above in respect to its
ordinary shares. A U.S. holder generally will be allowed an ordinary deduction for the excess, if any, of the adjusted tax basis
of the ordinary shares over the fair market value of the ordinary shares as of the close of the taxable year, or the amount of
any net mark-to-market gains recognized for prior taxable years, whichever is less. A U.S. holder’s adjusted tax basis in
the ordinary shares will generally be adjusted to reflect the amounts included or deducted under the mark-to-market election.
Additionally, any gain on the actual sale or other disposition of the ordinary shares generally will be treated as ordinary income.
Ordinary loss treatment also will apply to any loss recognized on the actual sale or other disposition of ordinary shares to the
extent that the amount of such loss does not exceed the net mark-to-market gains previously included with respect to such ordinary
shares. A mark-to-market election applies to the tax year for which the election is made and to each subsequent year, unless our
ordinary shares cease to be marketable, as specifically defined, or the IRS consents to revocation of the election. No view is
expressed regarding whether our ordinary shares are marketable for these purposes or whether the election will be available.



If
a U.S. holder makes either the QEF election or the mark-to-market election, distributions and gain will not be recognized ratably
over the U.S. holder’s holding period or be subject to an interest charge as described above. Further, the denial of basis
step-up at death described above will not apply. If a U.S. holder elects to treat us as a “qualified electing fund,”
gain on the sale of the ordinary shares will be characterized as capital gain. However, U.S. holders making one of these two elections
may experience current income recognition, even if we do not distribute any cash. The elections must be made with the U.S. holder’s
federal income tax return for the year of election, filed by the due date of the return (as it may be extended) or, under certain
circumstances provided in applicable Treasury Regulations, subsequent to that date.



WE
DO NOT INTEND TO PROVIDE THE INFORMATION NECESSARY FOR U.S. HOLDERS TO MAKE QUALIFIED ELECTING FUND ELECTIONS IF WE ARE CLASSIFIED
AS A PFIC. U.S. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS TO DETERMINE WHETHER ANY OF THESE ELECTIONS WOULD BE AVAILABLE AND IF
SO, WHAT THE CONSEQUENCES OF THE ALTERNATIVE TREATMENTS WOULD BE IN THEIR PARTICULAR CIRCUMSTANCES.





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Legislation
regarding Medicare Tax



For
taxable years beginning after December 31, 2012, a U.S. holder that is an individual or estate, or a trust that does not fall
into a special class of trusts that is exempt from such tax, will be subject to a 3.8% tax on the lesser of (1) the U.S. holder’s
“net investment income” for the relevant taxable year and (2) the excess of the U.S. Investor’s modified adjusted
gross income for the taxable year over a certain threshold (which, in the case of individuals, will be between US$125,000 and
US$250,000 depending on the individual’s circumstances). A U.S. holder’s “net investment income” may generally
include its dividend income and its net gains from the disposition of shares, unless such dividends or net gains are derived in
the ordinary course of the conduct of a trade or business (other than a trade or business that consists of certain passive or
trading activities). If you are a U.S. holder that is an individual, estate or trust, you are urged to consult your tax advisors
regarding the applicability of the Medicare tax to your income and gains in respect of your investment in the shares.



Withholdable
Payments to Foreign Financial Entities and Other Foreign Entities



A
non-U.S. holder may be subject to a U.S. federal withholding tax at a rate of 30% on certain payments made beginning January 1,
2014 to certain non-U.S. entities if certain disclosure requirements related to U.S. accounts maintained by, or the U.S. ownership
of, the non-U.S. holder are not satisfied. Such payments would include U.S.-source dividends and the gross proceeds from the sale
or other disposition of our ordinary shares that can produce U.S.-source dividends. Non-U.S. holders should consult their own
tax advisors regarding the effect, if any, of such withholding taxes on their ownership and disposition of our ordinary shares.



United
States Information Reporting and Backup Withholding



In
general, U.S. holders may be subject to certain information reporting requirements under the Code relating to their purchase and/or
ownership of shares of a foreign corporation such as the Company. Failure to comply with these information reporting requirements
may result in substantial penalties.



For
example, recently enacted legislation generally requires certain individuals who are U.S. holders to file Form 8938 to report
the ownership of specified foreign financial assets for tax years beginning after March 18, 2010 if the total value of those assets
exceeds an applicable threshold amount (subject to certain exceptions). For these purposes, a specified foreign financial asset
includes not only a financial account (as defined by the Code and applicable Treasury Regulations for these purposes) maintained
by a foreign financial institution, but also any stock or security issued by a non-U.S. person, any financial instrument or contract
held for investment that has an issuer or counterparty other than a U.S. person and any interest in a foreign entity, provided
that the asset is not held in an account maintained by a financial institution. The minimum applicable threshold amount is generally
US$50,000 in the aggregate, but this threshold amount varies depending on whether the individual lives in the U.S., is married,
files a joint income tax return with his or her spouse, etc. Certain domestic entities that are U.S. holders may also be required
to file Form 8938 in the near future. U.S. holders are urged to consult with their tax advisors regarding their reporting obligations,
including the requirement to file IRS Form 8938.



Dividend
payments and proceeds from the sale or disposal of ordinary shares may be subject to information reporting to the IRS and possible
U.S. federal backup withholding at the rate of 31%. Certain holders (including, among others, corporations) are generally not
subject to information reporting and backup withholding. A U.S. holder generally will be subject to backup withholding if such
holder is not otherwise exempt and such holder:



fails
to furnish its taxpayer identification number, or TIN, which, for an individual, is ordinarily his or her social security number,



furnishes
an incorrect TIN,



is
notified by the IRS that it is subject to backup withholding because it has previously failed to properly report payments of interest
or dividends, or



fails
to certify, under penalties of perjury, that it has furnished a correct TIN and that the IRS has not notified the U.S. holder
that it is subject to backup withholding.



Any
U.S. holder who is required to establish exempt status generally must file IRS Form W-9 (“Request for Taxpayer Identification
Number and Certification”).





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Amounts
withheld as backup withholding may be credited against a U.S. holder’s federal income tax liability. A U.S. holder may obtain
a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the
IRS and furnishing any required information.



THE
DISCUSSION ABOVE IS A GENERAL SUMMARY. IT DOES NOT COVER ALL TAX MATTERS THAT MAY BE OF IMPORTANCE TO A PROSPECTIVE INVESTOR.
EACH PROSPECTIVE INVESTOR IS URGED TO CONSULT ITS OWN TAX ADVISOR ABOUT THE TAX CONSEQUENCES TO IT OF AN INVESTMENT IN OUR ORDINARY
SHARES IN LIGHT OF THE INVESTOR’S OWN CIRCUMSTANCES.



F.
DIVIDENDS AND PAYING AGENTS



–Not applicable



G.
STATEMENT BY EXPERTS



–Not applicable



H.
DOCUMENTS ON DISPLAY



All
documents referenced herein concerning us are archived at our principal offices located at: 1 Ha’Ofe St., Kadima-Tzoran,
Israel, 6092000.



I.
SUBSIDIARY INFORMATION



–Not applicable



|ITEM 11. | Quantitative and Qualitative Disclosures
    about Market Risk
|-------- | --------------------------------------------------------------



Market
risk represents the risk of changes in the value of a financial instrument caused by fluctuations in interest rates, equity prices
and foreign currency exchange rates.



Interest
Rate Risk



Our
cash and cash equivalents consist of cash in bank accounts. The primary objectives of our investment activities are to preserve
principal and provide liquidity without significantly increasing risk. We do not enter into investments for trading or speculative
purposes. The shareholders loan is subject to interest of the lower of 3.2% per annum or the minimum rate required by the Israeli
tax law (In 2016 2.56%). Due to the initial measurement of the shareholders loan at fair value with an implied annual interest
of 34%, a hypothetical 100 basis point change in interest rates would not have a material effect on the fair value of the shareholders
loan or cash balances for the periods presented.



Equity
Price Risk



As
of December 31, 2016, we did not have any marketable securities that were recorded at fair value. Hence there was no exposure
to equity price risk.



Foreign
Currency Exchange Risk



We
are exposed to financial market risk associated with changes in foreign currency exchange rates.



As
of December 31, 2016, we had approximately $370 thousand of cash and restricted cash in New Israeli Shekel (NIS) and approximately
$250 thousand of cash in Euro currency.



For
the year ended December 31, 2016, the majority of our operating expenses other than payroll were denominated in U.S. dollars.
We therefore have not had material foreign currency risk associated with cost-based activities other than payroll. Therefore,
our results of operations are minimally subject to fluctuations from changes in foreign currency rates. We believe the exposure
to foreign currency fluctuation from operating expenses is immaterial at this time as the related costs do not constitute a significant
portion of our total expenses. As we grow operations, our exposure to foreign currency risk will likely become more significant.
For the years ended December 31, 2015 and 2016, we did not enter into any foreign currency exchange contracts. For our non-U.S
dollar expenses a hypothetical 10% weakening in the value of the U.S. Dollar relative to the NIS would have resulted in an increase
in operating expenses of approximately $75 thousand for the year ended December 31, 2016.



|ITEM 12. | Description of Securities Other Than Equity
    Securities
|-------- | ----------------------------------------------------------



Not
applicable.





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



Disclosure
Controls and Procedures



We
maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange
Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s
rules and forms, and that such information is accumulated and communicated to our management to allow timely decisions to be made
regarding required disclosure. Our management has evaluated the effectiveness of our disclosure controls and procedures (as defined
under Rule 13a-15(e) of the Exchange Act) as of December 31, 2016. Based on such review, our management concluded that our disclosure
controls and procedures were not effective as of December 31, 2016.



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 defined under
Exchange Act Rules 13a-15(f) and 15d-15(f).



Our
internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting
Standards (IFRS). Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets, (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the
financial statements.



Our
management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2016.
The framework used by management in making that assessment was the criteria set forth in the document entitled “Internal
Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO
2013 Framework). Based on that assessment, our management has determined and concluded that, as of December 31, 2016, the
Company did not make a significant progress in the documentation of its internal control, hence, the Company’s internal
controls over financial reporting were not effective.





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Our
management, conducted an evaluation, pursuant to Rule 13a-15(c) promulgated under the Exchange Act, of the effectiveness, as of
the end of the period covered by this Annual Report, of its internal control over financial reporting based on the COSO 2013 Framework.
Based on the results of this evaluation, management concluded that as at December 31, 2016 our internal control over financial
reporting was not effective due to the material weakness in internal controls described below.



As
of the date of this Annual Report we have not made significant progress with the design, implementation and documentation of controls
over period end financial disclosure and reporting processes, and we have determined this to be a material weakness.



We
are in the process of remediating the identified material weakness and we will continue to monitor and evaluate the effectiveness
of our disclosure controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed
to take further action and implement additional enhancements or improvements, as necessary.



Attestation
Report of the Registered Public Accounting Firm



This
annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal
control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public
accounting firm pursuant to the Dodd-Frank Act, passed in 2010, which eliminated the requirements for non-accelerated filers.



Changes
in Internal Control over Financial Reporting



Since
there was no maintenance of internal controls as of December 31, 2015 we are in the process of implementing applicable controls
over financial reporting and processes applicable to business in our stage which we commenced immediately with the start of the
activity after the purchase of the Company from the Temporary Liquidator in February 2016. Accordingly,
during the period covered by this annual report, changes in our internal control over financial reporting (as such term is defined
in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act), have occurred as we continue to implement the abovementioned
improvements to our internal control over financial reporting.



|ITEM 16A. | Audit Committee Financial Expert
|--------- | --------------------------------



Our
board of directors has determined that Ms. Orit Stav qualifies as an audit committee financial expert, as defined by the rules
of the SEC, and has the requisite financial experience required by NASDAQ rules, the listing
standards of The NASDAQ Stock Market, as if we were listed thereon (which we are not). In addition, Ms. Orit Stav is independent,
as such term is defined in Rule 10A-3(b)(1) under the Exchange Act.



|ITEM 16B. | Code of Ethics
|--------- | --------------



On
May 15, 2017, our Company has adopted a code of ethics, which applies to all employees, officers and directors, including our
principal executive officer or CEO and our principal financial officer or CFO or other persons performing similar functions.  Copies of our code of ethics are available free of
charge at our executive offices upon request.





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|ITEM 16C. | Principal Accountant Fees and Services
|--------- | --------------------------------------



The
following table presents fees for professional audit services rendered by Somekh Chaikin., an independent registered accounting
firm and a member firm of KPMG International (“Somekh Chaikin”) for the audit of the Company’s consolidated
annual financial statements for the year ended December 31, 2016 and 2015 and for other services rendered as well as for
tax return preparation.  As further discussed below in Item 16F, the Board selected Somekh Chaikin as its independent
auditor starting for the year ending December 31, 2015. In 2016 and 2015, no audit related fees were charged other than stated
below by Somekh Chaikin to the Company.



|                   |  | 2016              |    |  | 2015 |  
|------------------ |  | ----------------- | -- |  | ---- | -
|                   |  | (In
    thousand) |   
|Audit
    Fees (1) |  | $                 | 30 |  |      | $
|Tax
    Fees (2)   |  | $                 | 5  |  |      | $



|(1) | Audit fees consist
    of fees for professional services rendered for the audit of the Company’s consolidated financial statements and review
    of financial statements and services normally provided by the independent auditor in connection with statutory and regulatory
    filings or engagements.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Tax fees are the
    aggregate fees for services rendered by our auditors related to tax compliance in connection with the preparation of tax returns.                                                                                                                                                     



Pre-Approval
Policies and Procedures



The
audit committee approves all audits, audit-related services, tax services and other services provided by our independent auditors.
Any services provided by our independent auditors that are not specially included within the scope of the audit must be pre-approved
by our audit committee prior to any engagement.



|ITEM 16D. | Exemptions from the Listing and Standards
    of Audit Committees
|--------- | -----------------------------------------------------------------



Not
applicable.



|ITEM 16E. | Purchases of Equity Securities by the Issuer
    and Affiliated Purchasers
|--------- | --------------------------------------------------------------------------



Purchases
of Equity Securities by the Issuer



None.



Purchases
of Equity Securities by an Affiliated Purchaser



No
purchases of our equity securities were made in 2016 by an affiliated purchaser.



|Item 16F. | Change in Registrant’s Certifying Accountant
|--------- | --------------------------------------------



For
details related to change in our certifying accountant see Item 16F in our annual report on Form 20-F for the year ended December
31, 2015.



|Item 16G. | Corporate Governance
|--------- | --------------------



Not
applicable.



|Item 16H. | Mine Safety Disclosure
|--------- | ----------------------



Not
applicable.





64


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PART
III



|ITEM 17. | Financial Statements
|-------- | --------------------



Not
applicable.



|ITEM 18. | Financial Statements
|-------- | --------------------



See
Pages F-1 through F-26 of this Annual Report.



|ITEM 19. | Exhibits
|-------- | --------



The
exhibits filed with or incorporated into this annual report are listed on the index of exhibits below.



|Exhibit
    No. |  | Description                                                                                                                                                                                                                                        
|--------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.1             |  | Memorandum of Association
    of Registrant (incorporated by reference to Exhibit 1.1 to the Registrant's report on Form 20-F, filed on September 7,
    2011).                                                                                    
|1.2             |  | Articles of Association
    (incorporated by reference to the report on Form 6-K filed on August 19, 2016).                                                                                                                                        
|1.3             |  | Certificate of Name Change dated February 14, 2017.                                                                                                                                                                                                
|10.1            |  | License and Service
    Agreement, dated September 1, 2015, by our Shareholder Aviv, on behalf of the Subsidiary, with Mr. John McGinnis, on behalf
    of himself and on behalf of his companies, Synergy Aircraft LLC, and MC Squared Design USA.
|10.2            |  | Memorandum of Understanding,
    dated February 5, 2016, by the Subsidiary and Laminar Research LLC.                                                                                                                                               
|10.3            |  | Administrative Services
    Agreement, dated November 30, 2016, by Aviv and Mr. Michael Ilan (beneficial owner of Magic Stones), on behalf of the Subsidiary,
    with Phinergy Ltd., a company controlled by Aviv and Mr. Ilan.                   
|10.4            |  | Patent Purchase Agreement, dated July 2016, between the Subsidiary and Eye Point Ltd., a company owned by Mr. Dekel Tzidon.                                                                                                                        
|10.5            |  | Loan and Security
    Agreement, dated July 17, 2016, between the Company, and Aviv Tzidon and Magic Stones.                                                                                                                                       
|10.6            |  | Loan and Security Agreement, dated July 17, 2016, between the Subsidiary, and Aviv Tzidon and Magic Stones.                                                                                                                                        
|10.7            |  | Assignment and Assumption Agreement, dated July 17, 2016, between the Subsidiary, and Aviv Tzidon and Magic Stones.                                                                                                                                
|10.8            |  | Service Agreement, dated July 17, 2016, between the Company and the Subsidiary, for the purpose of providing CEO services by the Subsidiary to the Company.                                                                                        
|10.9            |  | Employment Agreement between the Company and Omer Bar-Yohay, dated July 1, 2016.                                                                                                                                                                   
|10.10           |  | Form of Amended Indemnification
    Agreement for Directors & Officers (incorporated
    by reference to the report on Form 6-K filed on August 19, 2016).                                                                                         
|10.11           |  | Company’s 2016 Equity Incentive Plan.                                                                                                                                                                                                              
|12.1            |  | Certification of
    principal executive officer  required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended (filed
    herewith);                                                                                              
|12.2            |  | Certification required
    of principal financial officer by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended (filed herewith);                                                                                                   
|13.1            |  | Certification of
    principal executive officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith);                                                                                                                       
|13.2            |  | Certification of
    principal financial officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith);                                                                                                                       
|15.1            |  | Consent from Brightman
    Almagor Zohar & Co.                                                                                                                                                                                                     



65


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SIGNATURE



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 its behalf.



| | EVIATION AIRCRAFT LTD.
| | ----------------------
| |                       
| | By:                   
| | Name:                 
| | Title:                



| | By:    | /s/ Liza
    Ohayon    
| | ------ | -----------------------
| | Name:  | Liza Ohayon            
| | Title: | Chief Financial Officer



Date: 
May 16, 2017







66


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EVIATION
AIRCRAFT LTD.

(Formerly
R.V.B Holdings Ltd.)



CONSOLIDATED
FINANCIAL STATEMENTS

AS
OF AND FOR THE YEAR ENDED DECEMBER 31, 2016



TABLE
OF CONTENTS



|                                                             | Page           
|------------------------------------------------------------ | ---------------
|REPORT
    OF INDEPENDENT REGISTERED  PUBLIC ACCOUNTING FIRM | F-2            
|                                                             |                
|CONSOLIDATED
    FINANCIAL STATEMENTS                        |                
|                                                             |                
|Consolidated statements of Financial Position                | F-4            
|                                                             |                
|Consolidated statements of Comprehensive Income              | F-5            
|                                                             |                
|Consolidated statements of changes in Equity (deficit)       | F-6
    - F-8  
|                                                             |                
|Consolidated statements of Cash Flows                        | F-9            
|                                                             |                
|Notes to Consolidated Financial Statements                   | F-10 -
    F-26
|                                                             |                












F-1


Table of Contents




REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To
the Board of directors and Shareholders of

EVIATION
AIRCRAFT LTD.

(Formerly
R.V.B Holdings Ltd.)



We
have audited the accompanying consolidated statements of financial position of EVIATION AIRCRAFT Ltd. (Formerly R.V.B Holdings
Ltd). and its subsidiary (hereafter - "the Group") as of December 31, 2016 and 2015 and the related consolidated
statements of comprehensive income, changes in equity (deficit) and cash flows for each of the years then ended. These consolidated
financial statements are the responsibility of the Group'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 Group as of December 31, 2016 and 2015, and the results of its operations and its cash flows for each of the
years then ended, inconformity with
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standard Board (IASB).



/s/
Somekh Chaikin



Somekh Chaikin

Certified
Public Accountants (Isr.)

Member
Firm of KPMG International



Tel
Aviv, May 15, 2017.





F-2


Table of Contents








REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and Stockholders of



Eviation
Aircraft Ltd (formerly R.V.B. HoldingsLtd)



Wehaveauditedtheaccompanyingconsolidatedstatementsofcomprehensiveincome,changesinequity
andcashflowsfortheyearendedDecember31, 2014ofEviation
AircraftLtd (formerly R.V.B.Holdings
Ltd.)andits subsidiary (hereafter
-"theGroup").These consolidated financialstatementsare
the responsibility of the Group's managementand
Board ofDirectors.Ourresponsibilityistoexpressanopinion on theseconsolidatedfinancialstatementsbased
on ouraudits.



Weconductedouraudits
in accordance withthe standardsof the Public
Company Accounting Oversight Board (UnitedStates). Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonable
assuranceaboutwhetherthefinancialstatements
are freeof materialmisstatement.TheGroupisnotrequired
to have,norwereweengaged
to perform,an audit ofitsinternal
controlover financialreporting.Our
audits includedconsiderationof internal control
over financialreporting as abasisfordesigningauditprocedures
that are appropriate in thecircumstances,but not
for the purpose ofexpressingan opinionontheeffectivenessof
the Group's internal·control over financialreporting.Accordingly,
weexpressnosuchopinion.
An auditalso includes examining,ona
testbasis, evidencesupportingtheamounts
anddisclosures in the financialstatements,
assessing theaccountingprinciples
used and significantestimatesmade by management,
as wellas evaluatingthe overall financialstatement
presentation.We believe that ourauditsprovidea
reasonablebasis for our opinion.



In
ouropinion, suchconsolidated financialstatementspresentfairly,in
all material respects, theresultsof operations, changes
inequityand cash flows of the Group for theyearended December31, 2014;in
accordancewithInternationalFinancialReportingStandards(IFRS)as issuedby theInternationalAccounting Standard Board (IASB).





/s/ Brightman Almagor Zohar & Co.



Brightman Almagor Zohar & Co.

Certified Public Accountants (lsr.)

A Member of Deloitte Touche Tohmatsu Limited



Tel Aviv, Israel

March 5, 2015







Tel
Aviv - Main Office

1
Azrieli Center Tel Aviv, 6701101 P.O.B. 16593

Tel
Aviv, 6116402 | Tel: +972 (3) 608 5555 | Fax: +972 (3) 609 4022 | info@deloitte.co.il



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firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description
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F-3


Table of Contents




EVIATION
AIRCRAFT LTD.

(Formerly
R.V.B Holdings Ltd.)

CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION



|                                                       |  |      |  | As of December 31, |        
|------------------------------------------------------ |  | ---- |  | ------------------ | -------
|                                                       |  |      |  | 2016               |        
|                                                       |  | Note |  | $ in thousand      |        
|Assets                                                 |  |      |  |                    |        
|                                                       |  |      |  |                    |        
|Current assets                                         |  |      |  |                    |        
|Cash and cash equivalents                              |  |      |  |                    | 858    
|Restricted cash                                        |  |      |  |                    | -      
|Accounts receivable                                    |  | 5    |  |                    | 35     
|Total current assets                                   |  |      |  |                    | 893    
|                                                       |  |      |  |                    |        
|Non-current assets                                     |  |      |  |                    |        
|Property and equipment, net                            |  | 6    |  |                    | 305    
|Long-term restricted bank deposits                     |  |      |  |                    | 59     
|Total  non-current assets                              |  |      |  |                    | 364    
|                                                       |  |      |  |                    |        
|Total assets                                           |  |      |  |                    | 1,257  
|                                                       |  |      |  |                    |        
|Liabilities and equity                                 |  |      |  |                    |        
|                                                       |  |      |  |                    |        
|Current liabilities                                    |  |      |  |                    |        
|Related party                                          |  | 7    |  |                    | 321    
|Trade payables                                         |  |      |  |                    | 23     
|Accounts payable and accruals                          |  | 8    |  |                    | 133    
|Liabilities of a subsidiary held for sale              |  | 9    |  |                    | -      
|Total current liabilities                              |  |      |  |                    | 477    
|                                                       |  |      |  |                    |        
|Non - Current liabilities                              |  |      |  |                    |        
|Shareholders loans                                     |  | 10   |  |                    | 617    
|Total non-current liabilities                          |  |      |  |                    | 617    
|Equity                                                 |  | 14   |  |                    |        
|                                                       |  |      |  |                    |        
|Non-controlling interests                              |  |      |  |                    | -      
|                                                       |  |      |  |                    |        
|Share capital                                          |  |      |  |                    | 63,597 
|Capital reserves                                       |  |      |  |                    | 3,064  
|Accumulated losses                                     |  |      |  |                    | (66,498
|Equity (deficit) attributable to owners of the Company |  |      |  |                    | 163    
|                                                       |  |      |  |                    |        
|Total Equity (deficit)                                 |  |      |  |                    | 163    
|                                                       |  |      |  |                    |        
|Total liabilities and equity                           |  |      |  |                    | 1,257  



|                                                                                           |  |                                                                                                 |  |                                                                                             
|------------------------------------------------------------------------------------------ |  | ----------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------
|Aviv
                                         Tzidon
        Chairman
        of the Board |  | Omer
                                         Bar Yohay
        Chief
        Executive Officer |  | Liza
                                         Ohayon
        Chief
        Financial Officer



Approval
date of the financial statements: May 15, 2017.



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



F-4


Table of Contents




EVIATION
AIRCRAFT LTD.

(Formerly
R.V.B Holdings Ltd.)

CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME



|                                               |  |      |  | For the year ended December 31, |      
|---------------------------------------------- |  | ---- |  | ------------------------------- | -----
|                                               |  |      |  | 2016                            |      
|                                               |  | Note |  | $ in thousand                   |      
|                                               |  |      |  |                                 |      
|Research and development expenses              |  | 16   |  |                                 | 1,829
|Marketing, administrative and general expenses |  | 17   |  |                                 | 341  
|Total expenses                                 |  |      |  |                                 | 2,170
|                                               |  |      |  |                                 |      
|Operating loss                                 |  |      |  |                                 | 2,170
|                                               |  |      |  |                                 |      
|Financing expenses                             |  |      |  |                                 | 93   
|Financing income                               |  |      |  |                                 | (22  
|Financing expenses, net                        |  | 18   |  |                                 | 71   
|                                               |  |      |  |                                 |      
|Loss before taxes on income                    |  |      |  |                                 | 2,241
|                                               |  |      |  |                                 |      
|Taxes on income                                |  |      |  |                                 | (553 
|Loss from continuing operations                |  |      |  |                                 | 1,688
|                                               |  |      |  |                                 |      
|Loss from discontinued operation               |  | 4    |  |                                 | -    
|Loss for the year                              |  |      |  |                                 | 1,688
|                                               |  |      |  |                                 |      
|Attributable to:                               |  |      |  |                                 |      
|Owners of the Company                          |  |      |  |                                 | 1,688
|Non-controlling interests                      |  |      |  |                                 | -    
|                                               |  |      |  |                                 |      
|Loss for the year                              |  |      |  |                                 | 1,688
|                                               |  |      |  |                                 |      
|Continued operations (in $)                    |  |      |  |                                 |      
|Basic and diluted loss per share               |  | 15   |  |                                 | 0.20 
|                                               |  |      |  |                                 |      
|Discontinued operation (in $)                  |  |      |  |                                 |      
|Basic and diluted loss per share               |  | 15   |  |                                 | -    



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



F-5


Table of Contents




EVIATION
AIRCRAFT LTD.

(Formerly
R.V.B Holdings Ltd.)

CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY (DEFICIT)





|                                             |  | For the year ended December 31, 2016 |       
|-------------------------------------------- |  | ------------------------------------ | ------
|                                             |  | Share capital                        |       
|                                             |  | $ in thousand                        |       
|                                             |  |                                      |       
|Balance as of January 1, 2016                |  |                                      | 63,597
|                                             |  |                                      |       
|Changes during the year                      |  |                                      |       
|Capital contribution by shareholders*        |  |                                      | -     
|Share based payment                          |  |                                      | -     
|Shareholders transaction reserve, net of tax |  |                                      | -     
|Comprehensive loss for the year              |  |                                      | -     
|                                             |  |                                      |       
|Balance as of December 31, 2016              |  |                                      | 63,597



*See
note 4.



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



F-6


Table of Contents




EVIATION
AIRCRAFT LTD.

(Formerly
R.V.B Holdings Ltd.)

CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY (DEFICIT)





|                                |  | For the year ended December 31, 2015 |       
|------------------------------- |  | ------------------------------------ | ------
|                                |  | Share capital                        |       
|                                |  | $ in thousand                        |       
|                                |  |                                      |       
|Balance as of January 1, 2015   |  |                                      | 63,597
|                                |  |                                      |       
|Comprehensive loss for the year |  |                                      | -     
|                                |  |                                      |       
|Balance as of December 31, 2015 |  |                                      | 63,597



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



F-7


Table of Contents




EVIATION
AIRCRAFT LTD.

(Formerly
R.V.B Holdings Ltd.)

CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY (DEFICIT)





|                                                                                    |  | For the year ended December 31, 2014 |       
|----------------------------------------------------------------------------------- |  | ------------------------------------ | ------
|                                                                                    |  | Share capital                        |       
|                                                                                    |  | $ in thousand                        |       
|                                                                                    |  |                                      |       
|Balance as of January 1, 2014                                                       |  |                                      | 63,546
|                                                                                    |  |                                      |       
|Changes during the year                                                             |  |                                      |       
|                                                                                    |  |                                      |       
|Share-based payment                                                                 |  |                                      | -     
|Change in non-controlling interests in respect of change in holding in a subsidiary |  |                                      | 51    
|Comprehensive loss for the year                                                     |  |                                      | -     
|                                                                                    |  |                                      |       
|Balance as of December 31, 2014                                                     |  |                                      | 63,597



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



F-8


Table of Contents




EVIATION
AIRCRAFT LTD.

(Formerly
R.V.B Holdings Ltd.)

CONSOLIDATED
STATEMENTS OF CASH FLOWS





|                                                                                     |  |      |  | For the year ended on  December 31, |       
|------------------------------------------------------------------------------------ |  | ---- |  | ----------------------------------- | ------
|                                                                                     |  |      |  | 2016                                |       
|                                                                                     |  | Note |  | $ in thousand                       |       
|Cash flows from operating activity                                                   |  |      |  |                                     |       
|Loss for the year                                                                    |  |      |  |                                     | (1,688
|Adjustments for:                                                                     |  |      |  |                                     |       
|Income tax                                                                           |  |      |  |                                     | (553  
|Depreciation and amortization                                                        |  |      |  |                                     | 31    
|Financial expense, net                                                               |  |      |  |                                     | 69    
|Share-based payments                                                                 |  |      |  |                                     | 9     
|                                                                                     |  |      |  |                                     | (444  
|                                                                                     |  |      |  |                                     |       
|Increase in accounts receivable                                                      |  |      |  |                                     | (35   
|Increase in trade payables                                                           |  |      |  |                                     | 23    
|Increase in accounts payable and accruals                                            |  |      |  |                                     | 98    
|Increase in related parties balance                                                  |  |      |  |                                     | 321   
|                                                                                     |  |      |  |                                     | 407   
|Net cash used in operating activity                                                  |  |      |  |                                     | (1,725
|                                                                                     |  |      |  |                                     |       
|Cash flows from investment activity                                                  |  |      |  |                                     |       
|Increase in restricted bank deposit                                                  |  |      |  |                                     | (59   
|Investment in fixed assets                                                           |  |      |  |                                     | (336  
|Net cash used in investment activity                                                 |  |      |  |                                     | (395  
|                                                                                     |  |      |  |                                     |       
|Cash flows from financing activity                                                   |  |      |  |                                     |       
|Proceeds from shareholders' loans                                                    |  |      |  |                                     | 2,965 
|Net cash provided by financing activity                                              |  |      |  |                                     | 2,965 
|                                                                                     |  |      |  |                                     |       
|Cash flows above include cash flows in respect of discontinued operation as follows: |  | 4    |  |                                     |       
|Net cash used operating activity (*)                                                 |  |      |  |                                     | -     
|Net cash provided by investment activity                                             |  |      |  |                                     | -     
|Net cash provided by financing activity                                              |  |      |  |                                     | -     
|Net cash flows used in discontinued operation                                        |  |      |  |                                     | -     
|                                                                                     |  |      |  |                                     |       
|Exchange differences on balances of cash and cash equivalents                        |  |      |  |                                     | 13    
|Increase/(decrease) in cash and cash equivalents                                     |  |      |  |                                     | 858   
|Balance of cash and cash equivalents at the start of the year                        |  |      |  |                                     | -     
|Balance of cash and cash equivalents at end of the year                              |  |      |  |                                     | 858   
|(*)  Including
    cash interest receipts in the amount of                           |  |      |  |                                     | -     



Non-cash
transaction: Contribution by shareholders - See note 4.



The
accompanying notes are an integral part of the consolidated financial statements



F-9


Table of Contents






EVIATION
AIRCRAFT LTD.

(Formerly
R.V.B Holdings Ltd.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS



NOTE
1 - GENERAL



EVIATION
AIRCRAFT Ltd. (formerly R.V.B. Holdings Ltd.) (the "Company") was incorporated under the laws of the State of Israel.
The name change was in effect at March 2, 2017. The address of the Company’s registered office is 1 Ha’Ofe St., Kadima-Tzoran,
Israel, 6092000.



The
Company’s ordinary shares are traded in the United States on the OTC Market, Pink tier, under the symbol EVTNF (formerly
RVBHF). See note 4 relating to creditors arrangement and discontinued operation in February 2016.



On
May 15, 2016, the Company established a new, wholly-owned Israeli subsidiary company under the name “EViation Tech Ltd.”
(“the Subsidiary”) for the purpose of developing and commercializing electric propulsion aviation, the Company's new
business focus (the “Aviation Business”).



As
of December 31, 2016, the Company had cash and cash equivalent balance of $ 858 thousand and equity attributable to the owners
of the Company of $163 thousand. On July 17, 2016, the Company and its Subsidiary ("the Group") entered into a loan
and security agreements with certain shareholders for a total of $5 million. As of the date of this financial statements, the
Group received $2.9 million of the loans and the Group have under these agreements additional $2.1 million in unutilized credit
availability. The Company's management believes that its available cash resources, including the shareholder credit facilities
and the newly approved program from the OCS toward the design and development of the aircraft (see note 13(a)(2)), are sufficient
to meet its operating requirements in the new business focus in the foreseeable future. Management has the ability to reduce its
expenses if needed, so it can continue to meet its liabilities in the foreseeable future.



NOTE
2 - BASIS OF PREPERATION



| | a. | Statement
                                         of compliance
| | -- | ----------------------------------------------------------------



These
consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standard Board (IASB).



| | b. | Functional
                                         and presentation currency:
| | -- | ------------------------------------------------------------------------------



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



The
currency of the main economic environment in which the Group operates is the US dollar (hereinafter - "the functional
currency").



| | (2) | Translation
                                         of transactions that are not in the functional currency
| | --- | ------------------------------------------------------------------------------------------------------------



In
the preparation of the financial statements, transactions carried out in currencies other than the Company's functional currency
(hereinafter - "foreign currency") are recorded at the exchange rates in effect on the dates of the transaction.



F-10


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EVIATION
AIRCRAFT LTD.

(Formerly
R.V.B Holdings Ltd.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS



NOTE
2 - BASIS OF PREPERATION (continued):



At
each reporting period, monetary items stated in foreign currency are translated according to the exchange rates in effect at that
date; non-monetary items that are measured in terms of historical cost are translated according to the exchange rates in effect
at the time of the transaction in connection with the non-monetary item.



| | (3) | The
                                         method of recording exchange rate differences
| | --- | ------------------------------------------------------------------------------------------



Exchange
rate differences (primarily in respect of monetary balances that are not in the functional currency) are recognized in the income
statement in the period in which they occurred.



| | c. | Basis
                                         of measurement
| | -- | -------------------------------------------------------------



The
consolidated financial statements have been prepared on the historical cost basis except for deferred tax assets and liabilities.



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



Use
of estimates



The
preparation of financial statements in conformity with IFRSs 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 experience, 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.



Determination
of fair value



Preparation
of the financial statements requires the Group to determine the fair value of certain assets and liabilities. Further information
about the assumptions that were used to determine fair value is included in note 10 on shareholders loan and note 14 on share
based payments.



| | e. | Risk
                                         management policy
| | -- | ---------------------------------------------------------------



The
operations 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.



F-11


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EVIATION
AIRCRAFT LTD.

(Formerly
R.V.B Holdings Ltd.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS



NOTE
2 - BASIS OF PREPERATION (continued):



Risk
management is performed by the Group’s Chief Executive Officer in accordance with the policy approved by the board of directors.



The
Group does not have a significant concentration of credit risks. The cash and cash equivalents of the Group are deposited in Israeli
banking corporation. In the estimation of the Group’s management, the credit risk for these financial instruments is low.



NOTE
3 - SIGNIFICANT ACCOUNTING POLICIES:



| | a. | Basis
                                         of consolidation
| | -- | ---------------------------------------------------------------



| | (1) | General
| | --- | -------



The
consolidated financial statements incorporate the financial statements of the Company and an entity controlled by the Company
(its subsidiary).



Control
is achieved when the Company:



| | ● | has
                                         power over the investee;
| | - | ---------------------------------------------------------------------

| | ● | is
                                         exposed, or has rights, to variable returns from its involvement with the investee; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------

| | ● | has
                                         the ability to use its power to affect its returns.
| | - | ------------------------------------------------------------------------------------------------



Income
and expenses of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive
income from the effective date of acquisition and up to the effective date of disposal, as appropriate.



When
necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with
those used by the other members of the Group.



All
intra-group transactions, balances, income and expenses are eliminated in full on consolidation.



| | (2) | Non-controlling
                                         interest
| | --- | -----------------------------------------------------------------



Total
comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this
results in the non-controlling interests having a deficit balance.



| | b. | Cash
                                         and cash equivalents
| | -- | ------------------------------------------------------------------



Cash
and cash equivalents include all highly liquid investments, which include short-term bank deposits (up to three months from date
of deposit) that are not restricted as to withdrawal or use and the period to maturity of which did not exceed three months at
time of investment.



F-12


Table of Contents






EVIATION
AIRCRAFT LTD.

(Formerly
R.V.B Holdings Ltd.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS



NOTE
3 - SIGNIFICANT ACCOUNTING POLICIES (continued):



| | c. | Property
                                         and equipment, net:
| | -- | ---------------------------------------------------------------------



Property
and equipment are measured at cost, including directly attributable costs, less accumulated depreciation.



Depreciation
is calculated on a straight-line basis over the useful life of the assets at annual rates as follows:



| |                                  |  | % |   
| | -------------------------------- |  | - | --
| |                                  |  |   |   
| | Equipment, computers and systems |  |   | 33
| | Leasehold improvements           |  |   | 10
| | Lab Equipment                    |  |   | 20
| | Office furniture                 |  |   | 20



| | d. | Long
                                         term restricted deposits
| | -- | ----------------------------------------------------------------------



Long-term
restricted deposits are deposits which are expected to be restricted for more than a year, as of the date of the statement of
financial position, or are expected to be restricted in the foreseeable future.



| | e. | Financial
                                         liabilities and equity instruments issued by the Company:
| | -- | ------------------------------------------------------------------------------------------------------------



| | (1) | Classification
                                         as a financial liability or an equity instrument
| | --- | --------------------------------------------------------------------------------------------------------



Non-derivative
financial instruments are classified as either financial liabilities or as equity instruments in accordance with the substance
of the contractual arrangement.



An
equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
Equity instruments issued by the Company are recorded at the amount of the proceeds received, net of direct issuing costs.



| | (2) | Other
                                         financial liabilities
| | --- | --------------------------------------------------------------------



Other
financial liabilities (credit, loans and accounts payable) are initially measured at fair value, net of transaction costs. Subsequent
to the initial recognition loans are measured at amortized cost using the effective interest method. The value of these financial
liabilities is not materially different than their fair value other than the loans received from certain of the Company’s
Shareholders. These loans were initially recorded at fair value and the remaining amount of cash received was classified as an
equity instrument reflecting the favorable terms of these loans.



| | f. | Leasing
                                         of real estate by the Company
| | -- | ------------------------------------------------------------------------------



Payments
made under operating leases are recognized in the statement of income on a straight-line basis over the term of the lease.



F-13


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EVIATION
AIRCRAFT LTD.

(Formerly
R.V.B Holdings Ltd.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS



NOTE
3 - SIGNIFICANT ACCOUNTING POLICIES (continued):



| | g. | Provisions
| | -- | ----------



A
provision is recognized if, as a result of a past event, the group has a present legal or constructive obligation, and it is probable
that an outflow of economic benefits, which can be estimated reliably, will be used to settle the obligation.



The
amount recognized as a provision, reflects management's best estimate of the amount required in order to settle the
obligation on the balance sheet date, whilst taking into account the risks and uncertainties connected with the obligation.
When the provision is measured using the forecasted cash flows in order to settle the liability, the book value of the
provision is the present value of the forecasted cash flows.



| | h. | Share-based
                                         payments
| | -- | -------------------------------------------------------------



Share-based
payments to employees, directors and others that provide similar services, which are settled in equity instruments of the Group,
are measured at fair value on the grant date. On the grant date, the Company measures the fair value of the granted equity instruments
by using the Black and Scholes model.



If
the equity instruments granted to them have not vested until these employees and directors have completed a defined period of
service, have met performance conditions or defined market conditions are met, the Company recognizes the share-based payment
transactions in its financial statements over the vesting period against an increase in its shareholders' equity, under "Capital
reserves" in respect of share based payments.



At
each balance sheet date, the Company estimates the number of equity instruments that are expected to vest. Any change in the estimate
relative to previous periods is recognized in the income statement over the remaining vesting period.



| | i. | Taxes
                                         on income
| | -- | --------------------------------------------------------



In
view of losses for tax purposes accrued by the Company and given the fact that as of the reporting date there was no certainty
as to the realization of these losses in the foreseeable future, the Company recognized deferred tax asset in respect of carry-forward
losses only to the extent of deferred tax liability, see note 10.



| | j. | Employee
                                         benefits:
| | -- | -----------------------------------------------------------



| | (1) | Defined
                                         contribution plans
| | --- | -------------------------------------------------------------------



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.



Contributions
to a defined contribution plan that are due more than 12 months after the end of the period in which the employees render the
service are discounted to their present value.



F-14


Table of Contents






EVIATION
AIRCRAFT LTD.

(Formerly
R.V.B Holdings Ltd.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS



NOTE
3 - SIGNIFICANT ACCOUNTING POLICIES (continued):



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



Short-term
employee benefits include wages, vacation days, sick leave, recreation and deposits with the National Insurance Institute of Israel,
which are paid within one year of the period in which the employee provides the related service. These benefits are recognized
as an expense upon the provision of services.



| | k. | Research
                                         and development expenditures
| | -- | ------------------------------------------------------------------------------



Research
expenditures are recognized in the consolidated statements of comprehensive income when incurred.



An
intangible asset arising from development or from the development phase of an internal project is recognized if the
Company can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or
sale; the Company's intention to complete the intangible asset and use or sell it; the Company's ability to use or sell
the intangible asset; how the intangible asset will generate future economic benefits; the availability of adequate
technical, financial and other resources to complete the intangible asset; and the Company's ability to measure reliably the
expenditure attributable to the intangible asset during its development.



As
the Company does not meet the criteria aforementioned, development expenditures are recognized in the consolidated statements
of operations when incurred.



| | l. | 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.



Unconditional
government grants are recognized when the Group is entitled to receive them. Grants that compensate the Group for expenses incurred
are presented as a deduction from the corresponding expense.



Grants
that compensate the Group for the cost of an asset are presented as a deduction from the related assets and are recognized in
profit or loss on a systematic basis over the useful life of the asset.



Grants
from the Chief Scientist in respect of research and development projects are accounted for as forgivable loans according to IAS
20. Grants received from the Chief Scientist are recognized as a liability according to their fair value on the date of their
receipt, unless on that date it is reasonably certain 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.



F-15


Table of Contents






EVIATION
AIRCRAFT LTD.

(Formerly
R.V.B Holdings Ltd.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS



NOTE
3 - SIGNIFICANT ACCOUNTING POLICIES (continued):



| | m. | Loss
                                         per share
| | -- | -------------------------------------------------------



The
Company presents basic and diluted loss per share ("EPS") data for its ordinary shares. Basic EPS is calculated by dividing
the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding
during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted
average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise share
options granted to employees and others (See note 15).



| | n. | Exchange
                                         rates and linkage basis:
| | -- | --------------------------------------------------------------------------



| | (1) | Balances
                                         in or linked to foreign currency are presented according to the representative exchange
                                         rate published by the Bank of Israel at the balance sheet date.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Balances
                                         linked to the CPI are presented according to the CPI for the last month of the reporting
                                         period.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Data
                                         in respect of changes in the CPI and the dollar's exchange rate are as presented as follows:
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------



| |                                  |  | The dollar    |       |  | CPI in Israel | 
| | -------------------------------- |  | ------------- | ----- |  | ------------- | 
| |                                  |  | Exchange rate |       |  | Actual CPI    | 
| |                                  |  | (NIS to 1 $)  |       |  | Points        | 
| | Date of the financial statements |  |               |       |  |               | 
| | As of December 31, 2016          |  |               | 3.845 |  |               | 
| | As of December 31, 2015          |  |               | 3.902 |  |               | 



| | Rate of change                       |  | Change in % |      
| | ------------------------------------ |  | ----------- | -----
| | For the year ended December 31, 2016 |  |             | (1.46
| | For the year ended December 31, 2015 |  |             | 0.33 
| | For the year ended December 31, 2014 |  |             | 12.04



NOTE
4 - CREDITORS ARRANGMENT AND DISCONTINUED OPERATION



In
2013, the Company's board of directors has decided to cease the operation of the Y’bllin demonstration facility owned
by EER, formerly a subsidiary of the Company that owned know-how and rights in the field of solid waste treatment. As of
February 2015, the Company completed the evacuation from the Y’bllin facility, the sale of the systems and equipment
and ceased all operations.



On
April 2, 2015, following a creditor petition to the Tel Aviv District Court due to the financial and business condition of the
Company, the Court appointed a temporary liquidator for the Company and its subsidiary.



On
February 2, 2016, the Tel-Aviv District Court approved a creditors arrangement for the sale of the Company, free of any assets
and liabilities (including the Company’s investment and ownership interest in EER) to new shareholders.



F-16


Table of Contents






EVIATION
AIRCRAFT LTD.

(Formerly
R.V.B Holdings Ltd.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS



NOTE
4 - CREDITORS ARRANGMENT AND DISCONTINUED OPERATION (continued):



Upon
the approval of the court the Company emerged from the liquidation status through the issuance of ordinary shares, which represented
99.9% of the issued and outstanding share capital of the Company to the new shareholders in consideration of NIS 600,000 (approximately
$153 thousand) that were paid to the liquidator. The Company emerged from the liquidation free of any assets and liabilities,
and any such assets and liabilities were removed from its statement of financial position, with the net amount of $954 thousand
charged as a capital contribution by the new shareholders.



Pursuant
to the arrangement, the following was agreed and executed: (1) cancelling the nominal value of the Company’s shares, such
that the Company’s shares will not have any nominal value, (2) converting 71,923,175 non-tradable options to purchase ordinary
share of the Company into 71,923,175 ordinary shares, no par value of the Company, (3) implementing a reverse split of the Company’s
shares at a ratio of 30,465:1 (i.e., for each 30,465 shares of the Company, the shareholders of the Company will receive one (1)
share), and (4) increasing the registrar share capital of the Company to 700,000,000 ordinary shares of the Company with no nominal
value. The reverse split became effective on February 25, 2016.



Upon
completion of the above, the Company issued to the purchasers of the Company 9,990,000 ordinary shares of the Company, which represented
99.9% of the issued and outstanding share capital of the Company. In May 2016, the Company started developing its Aviation Business
and all prior activity was classified as discontinued operation.



NOTE
5 - ACCOUNTS RECEIVABLE:



| |                         |  | As of December 31, |   
| | ----------------------- |  | ------------------ | --
| |                         |  | 2016               |   
| |                         |  | $ in thousand      |   
| |                         |  |                    |   
| | Government institutions |  |                    | 28
| | Prepaid expenses        |  |                    | 7 
| |                         |  |                    | 35



F-17


Table of Contents




EVIATION
AIRCRAFT LTD.

(Formerly
R.V.B Holdings Ltd.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS



NOTE
6 - PROPERTY AND EQUIPMENT, NET:



| |                                  |  | As of December 31, |    
| | -------------------------------- |  | ------------------ | ---
| |                                  |  | 2016               |    
| |                                  |  | $ in thousand      |    
| | Cost:                            |  |                    |    
| |                                  |  |                    |    
| | Equipment, computers and systems |  |                    | 295
| | Leasehold improvements           |  |                    | 36 
| | Lab equipment                    |  |                    | 4  
| | Office furniture                 |  |                    | 1  
| |                                  |  |                    | 336
| | Accumulated depreciation:        |  |                    |    
| |                                  |  |                    |    
| | Equipment, computers and systems |  |                    | 30 
| | Leasehold improvements           |  |                    | 1  
| | Lab equipment                    |  |                    | -  
| | Office furniture                 |  |                    | -  
| |                                  |  |                    | 31 
| |                                  |  |                    |    
| | Depreciated cost                 |  |                    | 305



NOTE
7 - RELATED PARTY TRANSACTIONS:



| | a. | As
                                         of December 31, 2015 the total amount of loan received by the Company from its then shareholders
                                         including interest was NIS 3 million (approximately $772 thousand).
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b. | On
                                         November 30, 2015, Aviv Tzidon (hereinafter "Aviv") and Mr. Michael Ilan (beneficial
                                         owner of Magic Stones-Gemstone Import and marketing Ltd. (hereinafter "Magic Stones")
                                         entered on behalf of the Subsidiary in formation into an Administrative Services Agreement
                                         with Phinergy Ltd., a company also controlled by Aviv and Mr. Ilan - “the
                                         ASA”.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Pursuant
to the ASA, Phinergy provides the Subsidiary with (i) administrative and general services, including secretarial and management
services; (ii) human resource services; (iii) accounting and bookkeeping services; and (iv) office space and office services,
including telephone, fax and data communications and cleaning services (the services described in (i) through (iv), collectively
- the “Services”). In consideration for these Services, the Subsidiary is required to pay a monthly fee, calculated
on the basis of the actual cost to Phinergy of providing the Services, derived as a percentage of the global costs paid for Phinergy
for receiving such services for itself and the Subsidiary together. The amount recorded in 2016 in respect of the Service was
approximately $711 thousand. The balance of related party as of December 31, 2016 represent the unpaid balance in respect of 2016
services.



| | c. | On
                                         July 17, 2016, the Company's board of directors (the “Board”) approved the
                                         acquisition, assumption and acceptance by the Subsidiary of all of the assets acquired
                                         and obligations created by Aviv and Magic Stones on behalf of the Subsidiary, and the
                                         transfer to the Subsidiary of all of the contracts, licenses, material goods, intellectual
                                         property and expertise that had been acquired by the two shareholders for and on behalf
                                         of the Subsidiary prior to such date.  The transfer to the Subsidiary of all of
                                         aforesaid assets was made at their deemed acquisition cost of approximately $1.4 million
                                         representing arm's length price, pursuant to an Assignment and Assumption Agreement between
                                         each of the shareholders and the Subsidiary (the “Assignment and Assumption Agreement”).
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





F-18


Table of Contents






EVIATION
AIRCRAFT LTD.

(Formerly
R.V.B Holdings Ltd.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS



NOTE
7 - RELATED PARTY TRANSACTIONS (continued):



The
transfer of the assets and liabilities was deemed borrowed by the Subsidiary under the loan and security agreement (see note 10).
The payment of $1.4 million includes certain expenses and in addition partial payments made in respect of the following assigned
contracts:



| | ● | On
                                         September 1, 2015, Aviv entered on behalf of the Subsidiary into a license and service
                                         agreement with Mr. John McGinnis, on behalf of himself and on behalf of his companies
                                         (collectively, “McGinnis”), for a worldwide exclusive license to a patent
                                         and know-how necessary for the completion and utilization of a flying electric Double
                                         Boxtail aircraft for use solely in the field of electric powered aircraft. The license
                                         will automatically become non-exclusive after three years from the termination of the
                                         agreement. As of December 31, 2016 , the Subsidiary paid US $700 thousand for the development
                                         and production of scaled demonstrators and additional development and production services
                                         relating to a full scale electric synergy prime aircraft.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



According
to the terms of the agreement, the Subsidiary will not be the owners of the physical embodiment of the full scale electric Synergy
prime aircraft or its intellectual property.



In
addition, the Subsidiary can select to continue to engage McGinnis for additional development projects in the future.



Due
to a lack of progress in the development and supply of the model or the completion of the Synergy Prime Aircraft, the agreement
has in effect been suspended, and could be reinstated in agreement between the parties in any stage.



| | ● | On
                                         February 5, 2016, the Subsidiary (as entity that was then in formation) entered a “Memorandum
                                         of Understandings” with Laminar Research LLC (“Laminar MOU") for the development
                                         of an air traffic control algorithm and its implementation on subscale aircraft models.
                                         The Laminar MOU comprises several steps of development by Laminar, for a total payment
                                         by the Subsidiary of $180,000.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
Subsidiary receives an irrevocable, royalty-free license for a limited number of copies of the finished software products. As
of December 31, 2016, out of the $180,000 the Company paid $135,000 and the remaining $45,000 is pending completion of stage 4
as defined in the agreement to the satisfaction of the Company.



| | d. | In
                                         July 2016, the Subsidiary acquired from Eye Point Ltd., a company owned by one of the
                                         Company's shareholders, Mr. Dekel Tzidon, all rights under US patent No. 8,314,928 (the
                                         “Eye Point Patent”) for a total amount of $38,000. The Eye Point Patent will
                                         expire on November 12, 2026. This patent allowed the Company to develop conceptual design
                                         of an auto-landing system.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





F-19


Table of Contents






EVIATION
AIRCRAFT LTD.

(Formerly
R.V.B Holdings Ltd.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS



NOTE
8 - ACCOUNTS PAYABLE AND ACCRUALS:



Composed
as follows:



| |                                                      |  | As of December 31, |    
| | ---------------------------------------------------- |  | ------------------ | ---
| |                                                      |  | 2016               |    
| |                                                      |  | $ in thousand      |    
| |                                                      |  |                    |    
| | Employees and institutions in respect of payroll (*) |  |                    | 75 
| | Accrued Interest                                     |  |                    | 35 
| | Accrued expenses                                     |  |                    | 23 
| |                                                      |  |                    | 133
| | (*) See also note 11.                               



NOTE
9 - LIABILITIES OF A SUBSIDIARY HELD FOR SALE:



| | a. | EER
                                         liabilities are presented as held for sale following the decision of the temporary liquidator
                                         to sell EER’s assets as part of the liquidation process. At December 31, 2015 the
                                         disposal group comprised of liabilities only, in the total amount of $159 thousand, which
                                         comprises of accrued management fees to a related party in the amount of $138 thousand,
                                         trade payables in the amount of $7 thousand and liabilities to employees and institutions
                                         in respect of payroll in the amount of $14 thousand.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Following
the approval of the Tel-Aviv District Court on February 2 2016, the Company emerged from the liquidation free of any assets and
liabilities, and any such assets and liabilities were removed from its statement of financial position, with the net amount charged
as a capital contribution by the new shareholders.



| | b. | The
                                         Company does not have any income and expenses that were recognized directly in other
                                         comprehensive income and relate to non-current assets and disposal groups held for sale.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



NOTE
10 - SHAREHOLDERS LOAN



On
July 17, 2016, the Company entered a loan and security agreement with two of its shareholders Aviv and Magic Stones pursuant to
which they loaned a total of $500 thousand to the Company for a period of seven years.



As
security for such loan, the Company granted to Aviv and Magic Stones a specific lien and security interest on all of the shares
of the Subsidiary held by the Company. The proceeds of the loan are to be used for funding the on-going operations of the Company.



Additionally,
on the same date the Subsidiary entered a loan and security agreement with the same shareholders pursuant to which they granted
the Subsidiary a credit facility of up to $4.5 million for a period of seven years. As security for amounts owing under the credit
facility, the Subsidiary granted to these shareholders a floating lien and charge on all of the assets of the Subsidiary, and
a specific charge on all of the intellectual property rights owned or hereafter acquired by the Subsidiary.



Both
loans accrue interest at an annual interest rate equal to the lower of 3.2% per annum, and the minimum rate required by the Israeli
tax law to avoid the imputing of tax (2016 -2.56%). Accrued interest is payable annually.





F-20


Table of Contents






EVIATION
AIRCRAFT LTD.

(Formerly
R.V.B Holdings Ltd.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS



NOTE
10 - SHAREHOLDERS LOAN (continued):



As
of December 31, 2016 the Company and the Subsidiary received $500 thousand and approximately $2.4 million, respectively, and the
accrued interest amount on both loans is approximately $35 thousand. On April 19, 2017 the Subsidiary received additional of approximately
$273 thousand.



The
fair value of the shareholders loan was initially measured in the amount of $570 thousand and classified under category Level
III. An amount of $1,842 thousand (net of $553 thousand of taxes) was attributed as shareholders equity in respect of the favorable
interest rate provided to the Company by its shareholders. The deferred tax liability created with respect of the loan was offset
against deferred tax asset created with respect of the Group’s carried forward losses.



The
loan was valued as contingent claim on the Company's assets, the inputs used in the determination
of fair value required significant management judgment or estimation, these inputs considered the implied value of the Company’s
assets based on the Company's shareholders loan which reflects all the investments made in the Company as of that day, resulting
with an implied annualinterest rate of 34%.



The
fair value of the shareholders loan as of December 31,2016 was $602 thousand.



NOTE
11 - POST- EMPLOYMENT BENEFITS



Plans
in respect of severance pay



The
Severance Pay Law in Israel requires the Company and its subsidiaries to pay severance pay upon dismissal of an employee or upon
termination of employment in other certain circumstances. In principle, the Severance Pay Law in Israel stipulates that the severance
pay amount equals the employee's last salary multiplied by the amount of years in which the employee was employed.



The
Group applies Section 14 of the Israeli Severance Pay Act of, 1963,to most of its employees pursuant to which it is exempt
from any severance pay liability, subject to it making certain monthly allocations to employees' pension plans. The Group will
not have a legal or constructive obligation to make additional payments if the plan does not have sufficient assets to pay the
entire employee benefits relating to the employee's service during the current period and in previous periods.



NOTE
12 - INCOME TAX:



| | a. | Taxable
                                         income of Israeli companies is subject to tax at the rate of 26.5% in 2014 and 2015,
                                         and 25% in 2016.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



On
January 4, 2016, the Israeli Parliament's Plenum approved by a second and third reading the Bill for Amending the Income Tax Ordinance
(No. 217) (Reduction of Corporate Tax Rate), 2015, which consists of the reduction of the corporate tax rate from 26.5% to 25%,
starting January 1, 2016.



F-21


Table of Contents






EVIATION
AIRCRAFT LTD.

(Formerly
R.V.B Holdings Ltd.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS



NOTE
12 - INCOME TAX (continued):



On
December 22, 2016, the Israeli Parliament's Plenum approved by a second and third reading the Economic Efficiency Law (Legislative
Adjustments for Achieving Budget Objectives in the years 2017 and 2018) - 2016, by which, inter alia, the corporate tax rate would
be reduced from 25% to 23% in two steps. The first step will be to a rate of 24% as from January 2017 and the second step will
be to a rate of 23% as from January 2018.



| | b. | The
                                         Company received final tax assessments (including assessments considered as final) through
                                         to the tax year 2012.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c. | As
                                         at December 31, 2016 the Company has carried forward tax losses in the amount of approximately
                                         NIS 117 million (approximately $30 million). Its Subsidiary has carried forwards losses
                                         in the amount of NIS 7.6 million (approximately $2 million).
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | d. | Deferred
                                         taxes are calculated according to the tax rate anticipated to be in effect on the date
                                         of reversal. See note 10 regarding the deferred taxes created in 2016.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



NOTE
13 - COMMITMENTS AND CONTIGENT LIABILITIES:



| | a. | Commitments:
| | -- | ------------



| | (1) | Lease
                                         agreements
| | --- | ---------------------------------------------------------



The
Company sub leased office space from related party. The lease period commenced on December 1, 2015 for two months with 6 option
periods of 12 months each that will be exercised automatically unless the Company will provide a 90 days early termination notice
before the end of each year lease period. The minimum rentals payable under non-cancellable lease agreement as of December 31,
2016, amount approximately $33 thousand.



On
January 9, 2017 the Company signed additional lease agreement with another related party who is the owner of the same building
in which the Company sub leased the office in 2015 for additional office space and parking spots. The lease period commenced on
January 1, 2017 for one year with an option to extend the lease period for up to additional 6 years. The contract is renewed automatically
unless the Company provide a 90 days early termination notice before the end of each year lease period.



| | (2) | OCS
| | --- | ---



On
December 18, 2016, the Subsidiary signed a Support and Investment Agreement with the Office of the Chief Scientist of the Ministry
of National Infrastructures, Energy, Water and Resources of Israel under the pilot and demonstration project. Under the agreement,
the Company will develop passenger's electric aircraft. The plan will be performed during 24 months commencing on January 1, 2017.
The Subsidiary is entitled to receive up to 50% of the actual costs and up to NIS 3 million (approximately $780 thousand). As
a security, the Subsidiary provided a bank guarantee in the amount of NIS 225 thousand that will be effective until 3 months after
the end of the project.





F-22


Table of Contents






EVIATION
AIRCRAFT LTD.

(Formerly
R.V.B Holdings Ltd.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS



NOTE
13 - COMMITMENTS AND CONTIGENT LIABILITIES (continued):



The
Subsidiary has recorded a lien on a bank deposit in the same amount in favor of the bank providing the guarantee. According to
the agreement, the Subsidiary will be required to pay royalties in an amount of 5% on sales of products and services derived from
a technology developed using these grants until 100% of the CPI-linked grant plus an interest rate determined by the general accountant
at the Israeli Ministry of Finance office is repaid. On February 27, 2017, the Subsidiary received NIS 150 thousand (approximately
$40 thousand) as advance.



| | b. | Contingent
                                         liabilities:
| | -- | ----------------------------------------------------------------



Legal
Proceedings



On
December 31,2014, a shareholder filed a preliminary motion regarding the disclosure of documents before filing a motion to permit
him to file a derivative action against the Company.



On
May 13, 2015 following a petition of the Temporary Liquidator, the Tel Aviv District Court, Economic Division, ordered a stay
for such proceeding due to the appointment of a Temporary Liquidator and instructed the court clerk to close the file. As of the
date of this report the file is closed.



NOTE
14 - SHAREHOLDERS' EQUITY:



| | a. | As
                                         discussed in Note 4, on February 2, 2016, the Company:
| | -- | --------------------------------------------------------------------------------------------------



| | (1) | canceled
                                         the nominal value of the Company’s shares, such that the Company’s shares
                                         will not have any nominal value,                                                                                                                                                                     
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | convert
                                         71,923,175 non-tradable options to purchase ordinary share of the Company into 71,923,175
                                         ordinary shares of the Company,                                                                                                                                                       
| | (3) | conduct
                                         a reverse split of the Company’s shares at a ratio of 30,465:1 (i.e., for each
                                         30,465 shares of the Company, the shareholders of the Company will receive one (1) share),
                                         which reverse split became effective on February 25, 2016 and
| | (4) | increase
                                         the share capital of the Company to 700,000,000 ordinary shares of the Company with no
                                         par value.                                                                                                                                                                              



| | b. | The
                                         authorized ordinary shares of the Company as of December 31, 2016 and 2015 was 700,000,000
                                         and 13,130 shares.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
issued and outstanding ordinary shares of the Company as of December 31, 2016 and 2015 was 10,000,000 and 7,639 shares.



The
holders of ordinary shares are entitled to receive dividends and are entitled to one vote per share at general meetings of the
Company.



| | c. | Share-based
                                         compensation
| | -- | -----------------------------------------------------------------



All
options granted under the “2011 plan” were transferred to the temporary liquidator as part of the liquidation. In February
2016, the options were canceled as part of the sale of the Company to the new shareholders as described in note 4 above.



F-23


Table of Contents






EVIATION
AIRCRAFT LTD.

(Formerly
R.V.B Holdings Ltd.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS



NOTE
14 - SHAREHOLDERS' EQUITY (continued):



On
July 17, 2016, the board of directors approved the adoption of the "2016 Equity Incentive Plan" ("Incentive Plan")
and approved to reserve 1,000,000 ordinary shares (no par value) for issuance to employees, officers, directors, consultants and
certain other service providers of the Company and the Company's affiliates. In October 15, 2016, the Company granted options
to purchase 37,500 ordinary shares of the Company to each of the Company's director (262,500 options in total) at an exercise
price of $1.00 per share.



The
options have contractual life of 10 years and shall vest in four annual installments from July 17, 2016 (the vesting commencement
date) as follows: 10,000 options on each of the first, second and third anniversaries of the vesting commencement date, 7,500
on the fourth anniversary of the vesting commencement date, so that four (4) years following the vesting commencement date, all
options will be fully vested and exercisable, subject to option holder’s continuing to be a director of the Company or any
affiliate thereof through such dates.



Notwithstanding
the above, the vesting of the options may accelerate so that all shares subject to the option will be fully vested and exercisable
immediately prior to the occurrence of any of the following corporate transaction: (i) A merger, acquisition, reorganization or
consolidation in which the Company is not the surviving entity; (ii) The sale, transfer, exchange or other disposition of all
or substantially all of the shares or assets of the Company.



The
fair value of employee share options is measured using the Black-Scholes formula. Measurement inputs include the share price on
the measurement date, the exercise price of the instrument, expected volatility for companies in similar stage of development,
expected dividends, and the risk-free interest rate (based on US dollar government debentures). Service and non-market performance
conditions are not taken into account in determining fair value.



The
parameters used in the measurement of the fair value at the grant date of the options described above, are a share price of $0.24,
an exercise price of US$1 per share, expected volatility of 100%, the expected term of the option of 5.5-7 -years and a
risk-free interest of between 1.36% and 1.58%.



The
Company recorded amount of approximately $9 thousand as cost of share based payment compensation in 2016.



F-24


Table of Contents






EVIATION
AIRCRAFT LTD.

(Formerly
R.V.B Holdings Ltd.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS



NOTE
15 - LOSS PER ORDINARY SHARE:



The
following table summarizes information related to the computation of basic and diluted loss per ordinary share for the years indicated:



| |                                          |  | Year
    ended December 31, |      
| | ---------------------------------------- |  | --------------------------- | -----
| |                                          |  | 2016                        |      
| |                                          |  | $
    thousand              |      
| | Loss
    attributable to ordinary shares |  |                             | 1,688



| |                                                                                                                  |  | Shares |          
| | ---------------------------------------------------------------------------------------------------------------- |  | ------ | ---------
| | Weighted
    average number of ordinary shares used in basic
    and diluted loss per ordinary share calculation |  |        | 8,494,658



| |                                               |  | $ |     
| | --------------------------------------------- |  | - | ----
| | Continued
    operations (in $)               |  |   |     
| | Basic
    and diluted loss per ordinary share |  |   | 0.20
| | Discontinued
    operation (in $)             |  |   |     
| | Basic
    and diluted loss per ordinary share |  |   | -   



In
the years ended December 31, 2015 and 2016 the Company potential dilutive shares, such as stock options were not included in the
computation of diluted net loss per share as the effect of including these shares in the calculation would have been anti-dilutive.
In the year ended December 31, 2016 262,500 potentially dilutive shares were excluded from the calculation of diluted net loss
per share attributable to ordinary shares because their effect would have been anti-dilutive for the period.



NOTE
16 -	RESEARCH AND DEVELOPMENT EXPENSES:



| |                                  |  | Year
                                         ended December
                                         31, |      
| | -------------------------------- |  | --------------------------------------------------------------------------------------------------------- | -----
| |                                  |  | 2016                                                                                                      |      
| |                                  |  | $ in
    thousand                                                                                         |      
| |                                  |  |                                                                                                           |      
| | Payroll                          |  |                                                                                                           | 505  
| | Materials
    and subcontractors |  |                                                                                                           | 1,224
| | Rent
    and office maintenance  |  |                                                                                                           | 46   
| | Depreciation                     |  |                                                                                                           | 31   
| | Other                            |  |                                                                                                           | 23   
| |                                  |  |                                                                                                           | 1,829



F-25


Table of Contents






EVIATION
AIRCRAFT LTD.

(Formerly
R.V.B Holdings Ltd.)

NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS



NOTE
17 -	MARKETING, ADMINISTRATIVE AND GENERAL EXPENSES:



| |                       |  | Year
                                         ended December
                                         31, |    
| | --------------------- |  | --------------------------------------------------------------------------------------------------------- | ---
| |                       |  | 2016                                                                                                      |    
| |                       |  | $
    in thousand                                                                                         |    
| |                       |  |                                                                                                           |    
| | Payroll               |  |                                                                                                           | 9  
| | Professional
    fees |  |                                                                                                           | 244
| | Travels               |  |                                                                                                           | 33 
| | Director
    fees*    |  |                                                                                                           | 22 
| | Insurance             |  |                                                                                                           | 22 
| | Other                 |  |                                                                                                           | 11 
| |                       |  |                                                                                                           | 341



*   Including
share based compensation expenses.



NOTE
18 - FINANCIAL INCOME (EXPENSES), NET:



| |                                    |  | Year
                                         ended December
                                         31, |    
| | ---------------------------------- |  | --------------------------------------------------------------------------------------------------------- | ---
| |                                    |  | 2016                                                                                                      |    
| |                                    |  | $
    in thousand                                                                                         |    
| | Financial
    income:              |  |                                                                                                           |    
| | Exchange
    rate differences      |  |                                                                                                           | (22
| |                                    |  |                                                                                                           | (22
| |                                    |  |                                                                                                           |    
| | Financial
    expenses:            |  |                                                                                                           |    
| | Exchange
    rate differences      |  |                                                                                                           | 9  
| | Interest
    on Shareholders loans |  |                                                                                                           | 82 
| | Bank
    fees                      |  |                                                                                                           | 2  
| |                                    |  |                                                                                                           | 93 
| |                                    |  |                                                                                                           |    
| | Financial
    expenses, net        |  |                                                                                                           | 71 





F-26