UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2021March 31, 2022
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from______to______
Commission File Number: 001-36612
ReWalk Robotics Ltd.
(Exact name of registrant as specified in charter)
Israel |
| Not applicable |
(State or other jurisdiction of incorporation or organization) |
| (I.R.S.
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3 Hatnufa Street, Floor 6, Yokneam Ilit, Israel |
| 2069203 |
(Address of principal executive offices) |
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Securities registered pursuant to Section 12(b) of the Act:
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+972.4.959.0123
Registrant's telephone number, including area code
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol | Name of each exchange on which registered | ||
Ordinary shares, par value NIS 0.25 | RWLK | Nasdaq Capital Market |
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Accelerated filer ☐ | |||
Non-accelerated filer ☒ | Smaller reporting company ☒ | |||
| Emerging growth company ☐ |
If an emerging growth company, 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 whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
As of August 6, 2021,May 13, 2022, the Registrantregistrant had outstanding 46,410,97362,509,872 ordinary shares, par value NIS 0.25 per share.
REWALK ROBOTICS LTD.
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2021MARCH 31, 2022
TABLE OF CONTENTS
i
• | our expectations regarding future growth, including our ability to increase sales in our existing geographic markets and expand to new markets; | ||
• | our ability to maintain and grow our reputation and the market acceptance of our products; | ||
• | our ability to achieve reimbursement from third-party payors or advance Centers for Medicare & Medicaid Services (“CMS”) coverage for our products; | ||
• | our ability to maintain compliance with the continued requirements of the Nasdaq Capital Market and the risk that our ordinary shares will be delisted if we do not comply with such requirements; | ||
• | the adverse effect that the COVID-19 pandemic has had and continues to have on our business and results of operations; | ||
• | our ability to have sufficient funds to meet certain future capital requirements, which could impair our efforts to develop and commercialize existing and new products; | ||
• | our limited operating history and our ability to leverage our sales, marketing and training infrastructure; | ||
• | our ability to grow our business through acquisitions of businesses, products or technologies, and the failure to manage acquisitions, or the failure to integrate them with our existing business, which could have a material adverse effect on our business, financial condition, and operating results; | ||
• | our expectations as to our clinical research program and clinical results; | ||
• | our ability to obtain certain components of our products from third-party suppliers and our continued access to our product manufacturers; | ||
• | our ability to improve our products and develop new products; | ||
• | our compliance with medical device reporting regulations to report adverse events involving our products, which could result in voluntary corrective actions or enforcement actions such as mandatory recalls, and the potential impact of such adverse events on our ability to market and sell our products; | ||
• | our ability to gain and maintain regulatory approvals and to comply with any post-marketing requests | ||
• | the risk of a cybersecurity attack or breach of our information technology systems significantly disrupting our business operations; | ||
• | our ability to maintain adequate protection of our intellectual property and to avoid violation of the intellectual property rights of others; | ||
• | the impact of substantial sales of our shares by certain shareholders on the market price of our ordinary shares; | ||
• | our ability to use effectively the proceeds of our offerings of securities; | ||
• | the risk of substantial dilution resulting from the periodic issuances of our ordinary shares; | ||
• | the impact of the market price of our ordinary shares on the determination of whether we are a passive foreign investment company; | ||
• | market and other conditions; and | ||
• | other factors discussed in the “Risk Factors” section of our 2021 annual report on Form 10-K and in our subsequent reports filed with the SEC. |
ii
REWALK ROBOTICS LTD. AND SUBSIDIARIES
(In thousands, except share and per share data)
March 31, | December 31, | |||||||
2022 | 2021 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
| ||||||||
CURRENT ASSETS | ||||||||
| ||||||||
Cash and cash equivalents | $ | 82,632 | $ | 88,337 | ||||
Trade receivable, net | 564 | 585 | ||||||
Prepaid expenses and other current assets | 1,378 | 610 | ||||||
Inventories | 3,232 | 2,989 | ||||||
Total current assets | 87,806 | 92,521 | ||||||
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LONG-TERM ASSETS | ||||||||
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Restricted cash and other long-term assets | 1,062 | 1,064 | ||||||
Operating lease right-of-use assets | 823 | 881 | ||||||
Property and equipment, net | 307 | 284 | ||||||
Total long-term assets | 2,192 | 2,229 | ||||||
Total assets | $ | 89,998 | $ | 94,750 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
| ||||||||
CURRENT ASSETS | ||||||||
| ||||||||
Cash and cash equivalents | $ | 64,236 | $ | 20,350 | ||||
Trade receivable, net | 779 | 684 | ||||||
Prepaid expenses and other current assets | 834 | 672 | ||||||
Inventories | 3,346 | 3,542 | ||||||
Total current assets | 69,195 | 25,248 | ||||||
| ||||||||
LONG-TERM ASSETS | ||||||||
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Restricted cash and other long-term assets | 1,039 | 1,033 | ||||||
Operating lease right-of-use assets | 1,116 | 1,349 | ||||||
Property and equipment, net | 355 | 437 | ||||||
Total long-term assets | 2,510 | 2,819 | ||||||
Total assets | $ | 71,705 | $ | 28,067 |
March 31, | December 31, | |||||||
2022 | 2021 | |||||||
(unaudited) | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Current maturities of operating leases | $ | 638 | $ | 641 | ||||
Trade payables | 1,465 | 1,384 | ||||||
Employees and payroll accruals | 677 | 1,142 | ||||||
Deferred revenues | 323 | 316 | ||||||
Other current liabilities | 517 | 555 | ||||||
Total current liabilities | 3,620 | 4,038 | ||||||
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LONG-TERM LIABILITIES | ||||||||
Deferred revenues | 825 | 866 | ||||||
Non-current operating leases | 330 | 418 | ||||||
Other long-term liabilities | 37 | 45 | ||||||
Total long-term liabilities | 1,192 | 1,329 | ||||||
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Total liabilities | 4,812 | 5,367 | ||||||
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COMMITMENTS AND CONTINGENT LIABILITIES | ||||||||
Shareholders’ equity: | ||||||||
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Share capital | ||||||||
Ordinary share of NIS 0.25 par value-Authorized: 120,000,000 shares at March 31, 2022 and December 31, 2021; Issued and outstanding: 62,508,517 and 62,480,163 shares at March 31, 2022 and December 31, 2021, respectively | 4,663 | 4,661 | ||||||
Additional paid-in capital | 279,054 | 278,903 | ||||||
Accumulated deficit | (198,531 | ) | (194,181 | ) | ||||
Total shareholders’ equity | 85,186 | 89,383 | ||||||
Total liabilities and shareholders’ equity | $ | 89,998 | $ | 94,750 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
14
REWALK ROBOTICS LTD. AND SUBSIDIARIES
(Unaudited)
(In thousands, except share and per share data)
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
(Unaudited) | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Current maturities of operating leases | 640 | 660 | ||||||
Trade payables | 2,080 | 2,268 | ||||||
Employees and payroll accruals | 695 | 867 | ||||||
Deferred revenues | 330 | 441 | ||||||
Other current liabilities | 457 | 432 | ||||||
Total current liabilities | 4,202 | 4,668 | ||||||
| ||||||||
LONG-TERM LIABILITIES | ||||||||
Deferred revenues | 727 | 667 | ||||||
Non-current operating leases | 662 | 923 | ||||||
Other long-term liabilities | 36 | 35 | ||||||
Total long-term liabilities | 1,425 | 1,625 | ||||||
| ||||||||
Total liabilities | 5,627 | 6,293 | ||||||
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COMMITMENTS AND CONTINGENT LIABILITIES | ||||||||
SHAREHOLDERS’ EQUITY | ||||||||
| ||||||||
Share capital | ||||||||
Ordinary share of NIS 0.25 par value-Authorized: 60,000,000 shares at June 30, 2021 and December 31, 2020; Issued and outstanding: 46,201,052 and 25,332,225 shares at June 30, 2021 and December 31, 2020, respectively | 3,394 | 1,827 | ||||||
Additional paid-in capital | 250,332 | 201,392 | ||||||
Accumulated deficit | (187,648 | ) | (181,445 | ) | ||||
Total shareholders’ equity | 66,078 | 21,774 | ||||||
Total liabilities and shareholders’ equity | $ | 71,705 | $ | 28,067 |
Three Months Ended | ||||||||
March 31, | ||||||||
2022 | 2021 | |||||||
Revenues | $ | 876 | $ | 1,316 | ||||
Cost of revenues | 611 | 609 | ||||||
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Gross profit | 265 | 707 | ||||||
| ||||||||
Operating expenses: | ||||||||
Research and development | 907 | 795 | ||||||
Sales and marketing | 2,184 | 1,671 | ||||||
General and administrative | 1,462 | 1,262 | ||||||
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Total operating expenses | 4,553 | 3,728 | ||||||
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Operating loss | (4,288 | ) | (3,021 | ) | ||||
Financial expenses (income), net | 24 | (4 | ) | |||||
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Loss before income taxes | (4,312 | ) | (3,017 | ) | ||||
Taxes on income | 38 |
| 45 | |||||
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Net loss | $ | (4,350 | ) | $ | (3,062 | ) | ||
| ||||||||
Net loss per ordinary share, basic and diluted | $ | (0.07 | ) | $ | (0.08 | ) | ||
| ||||||||
Weighted average number of shares used in computing net loss per ordinary share, basic and diluted | 62,493,496 | 36,187,789 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
25
REWALK ROBOTICS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Revenues | $ | 1,436 | $ | 1,668 | $ | 2,752 | $ | 2,428 | ||||||||
Cost of revenues | 709 | 646 | 1,318 | 1,033 | ||||||||||||
| ||||||||||||||||
Gross profit | 727 | 1,022 | 1,434 | 1,395 | ||||||||||||
| ||||||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 810 | 954 | 1,605 | 1,939 | ||||||||||||
Sales and marketing | 1,613 | 1,353 | 3,284 | 3,034 | ||||||||||||
General and administrative | 1,445 | 1,267 | 2,707 | 2,576 | ||||||||||||
| ||||||||||||||||
Total operating expenses | 3,868 | 3,574 | 7,596 | 7,549 | ||||||||||||
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Operating loss | (3,141 | ) | (2,552 | ) | (6,162 | ) | (6,154 | ) | ||||||||
Financial expenses (income), net | (9 | ) | 235 | (13 | ) | 481 | ||||||||||
| ||||||||||||||||
Loss before income taxes | (3,132 | ) | (2,787 | ) | (6,149 | ) | (6,635 | ) | ||||||||
Taxes on income | 9 | 68 | 54 | 60 | ||||||||||||
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Net loss | $ | (3,141 | ) | $ | (2,855 | ) | $ | (6,203 | ) | $ | (6,695 | ) | ||||
| ||||||||||||||||
Net loss per ordinary share, basic and diluted | $ | (0.07 | ) | $ | (0.22 | ) | $ | (0.15 | ) | $ | (0.57 | ) | ||||
| ||||||||||||||||
Weighted average number of shares used in computing net loss per ordinary share, basic and diluted | 46,123,222 | 13,101,275 | 41,210,527 | 11,744,275 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
REWALK ROBOTICS LTD. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
(Unaudited)
(In thousands, except share data)
Ordinary Shares | Additional paid-in | Accumulated | Total shareholders’ | |||||||||||||||||
Number | Amount | capital | deficit | equity | ||||||||||||||||
Balance as of April 1, 2020 | 12,930,155 | 903 | 184,489 | (172,309 | ) | 13,083 | ||||||||||||||
Share-based compensation to employees and non-employees | — | — | 113 | — | 113 | |||||||||||||||
Issuance of ordinary shares upon exercise of options to purchase ordinary shares and RSUs by employees and non-employees | 14,030 | 0* | ) | — | — | — | ||||||||||||||
Exercise of warrants (1) (2) | 1,246,500 | 90 | 1,468 | — | 1,558 | |||||||||||||||
Net loss | — | — | — | (2,855 | ) | (2,855 | ) | |||||||||||||
Balance as of June 30, 2020 | 14,190,685 | 993 | 186,070 | (175,164 | ) | 11,899 | ||||||||||||||
| ||||||||||||||||||||
Balance as of April 1, 2021 | 46,092,577 | 3,385 | 250,141 | (184,507 | ) | 69,019 | ||||||||||||||
Share-based compensation to employees and non-employees | — | — | 200 | — | 200 | |||||||||||||||
Issuance of ordinary shares upon exercise of options to purchase ordinary shares and RSUs by employees and non-employees | 108,475 | 9 | (9 | ) | — | — | ||||||||||||||
Net loss | — | — | — | (3,141 | ) | (3,141 | ) | |||||||||||||
Balance as of June 30, 2021 | 46,201,052 | 3,394 | 250,332 | (187,648 | ) | 66,078 |
Ordinary Share | Additional paid-in | Accumulated | Total shareholders’ | |||||||||||||||||
Number | Amount | capital | deficit | equity | ||||||||||||||||
Balance as of December 31, 2020 | 25,332,225 | 1,827 | 201,392 | (181,445 | ) | 21,774 | ||||||||||||||
Share-based compensation to employees and non-employees | - | - | 168 | - | 168 | |||||||||||||||
Issuance of ordinary shares upon vesting of RSUs by employees and non-employees | 24,096 | 2 | (2 | ) | - | - | ||||||||||||||
Issuance of ordinary shares in a private placement, net of issuance expenses in the amount of $3,679 (1) | 10,921,502 | 832 | 35,489 | - | 36,321 | |||||||||||||||
Exercises of warrants (2) | 9,814,754 | 724 | 13,094 | - | 13,818 | |||||||||||||||
Net loss | - | - | - | (3,062 | ) | (3,062 | ) | |||||||||||||
Balance as of March 31, 2021 | 46,092,577 | 3,385 | 250,141 | (184,507 | ) | 69,019 | ||||||||||||||
| ||||||||||||||||||||
Balance as of December 31, 2021 | 62,480,163 | 4,661 | 278,903 | (194,181 | ) | 89,383 | ||||||||||||||
Share-based compensation to employees and non-employees | - | - | 153 | - | 153 | |||||||||||||||
Issuance of ordinary shares upon vesting of RSUs by employees and non-employees | 28,354 | 2 | (2 | ) | - | - | ||||||||||||||
Net loss | - | - | - | (4,350 | ) | (4,350 | ) | |||||||||||||
Balance as of March 31, 2022 | 62,508,517 | 4,663 | 279,054 | (198,531 | ) | 85,186 |
|
| |
(1) | See Note | |
| (2) | See Note |
The accompanying notes are an integral part of these condensed consolidated financial statements.
46
REWALK ROBOTICS LTD. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
(In thousands, except share data)
Ordinary Shares | Additional paid-in | Accumulated | Total shareholders’ | |||||||||||||||||
Number | Amount | capital | deficit | equity | ||||||||||||||||
Balance as of January 1, 2020 |
|
| 7,319,560 |
|
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| 504 |
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| 178,745 |
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| (168,469 | ) |
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| 10,780 |
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Share-based compensation to employees and non-employees | — | — | 312 | — | 312 | |||||||||||||||
Issuance of ordinary shares upon vesting of RSUs by employees and non-employees | 24,625 | 0* | ) | — | — | — | ||||||||||||||
Issuance of ordinary shares in “best efforts” offering, net of issuance expenses in the amount of $1,056 (1) | 4,053,172 | 290 | 3,720 | — | 4,010 | |||||||||||||||
Exercise of pre-funded warrants and warrants (1) (2) | 2,793,328 | 199 | 3,293 | — | 3,492 | |||||||||||||||
Net loss | — | — | — | (6,695 | ) | (6,695 | ) | |||||||||||||
Balance as of June 30, 2020 | 14,190,685 | 993 | 186,070 | (175,164 | ) | 11,899 | ||||||||||||||
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Balance as of January 1, 2021 | 25,332,225 | 1,827 | 201,392 | (181,445 | ) | 21,774 | ||||||||||||||
Share-based compensation to employees and non-employees | — | — | 368 | — | 368 | |||||||||||||||
Issuance of ordinary shares upon vesting of RSUs by employees and non-employees | 132,571 | 11 | (11 | ) | — | — | ||||||||||||||
Issuance of ordinary shares in a private placement, net of issuance expenses in the amount of $ 3,679 (1) | 10,921,502 | 832 | 35,489 | — | 36,321 | |||||||||||||||
Exercise of warrants (2) | 9,814,754 | 724 | 13,094 | — | 13,818 | |||||||||||||||
Net loss | — | — | — | (6,203 | ) | (6,203 | ) | |||||||||||||
Balance as of June 30, 2021 | 46,201,052 | 3,394 | 250,332 | (187,648 | ) | 66,078 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
REWALK ROBOTICS LTD. AND SUBSIDIARIES
(Unaudited)
(In thousands)
Six Months Ended | Three Months Ended | |||||||||||||||
June 30, | March 31, | |||||||||||||||
2021 | 2020 | 2022 | 2021 | |||||||||||||
Cash flows used in operating activities: | ||||||||||||||||
Net loss | $ | (6,203 | ) | $ | (6,695 | ) | $ | (4,350 | ) | $ | (3,062 | ) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||||
Depreciation | 141 | 151 | 53 | 70 | ||||||||||||
Share-based compensation to employees and non-employees | 368 | 312 | 153 | 168 | ||||||||||||
Deferred taxes | (11 | ) | (50 | ) | 1 |
| 0 |
| ||||||||
Changes in assets and liabilities: | ||||||||||||||||
Trade receivables, net | (95 | ) | (260 | ) | 21 |
| 186 | |||||||||
Prepaid expenses, operating lease right-of-use assets and other assets | 85 | (240 | ) | (706 | ) | 264 | ||||||||||
Inventories | 138 | (382 | ) | (325 | ) | 49 |
| |||||||||
Trade payables | (285 | ) | (581 | ) | 81 |
| (384 | ) | ||||||||
Employees and payroll accruals | (172 | ) | 126 | (465 | ) | (290 | ) | |||||||||
Deferred revenues | (51 | ) | 29 | (34 | ) | (14 | ) | |||||||||
Operating lease liabilities and other liabilities | (255 | ) | 57 | (137 | ) | (160 | ) | |||||||||
Net cash used in operating activities | (6,340 | ) | (7,533 | ) | (5,708 | ) | (3,173 | ) | ||||||||
| ||||||||||||||||
Cash flows used in investing activities: | ||||||||||||||||
Purchase of property and equipment | (11 | ) | (15 | ) | (3 | ) | (9 | ) | ||||||||
Net cash used in investing activities | (11 | ) | (15 | ) | (3 | ) | (9 | ) | ||||||||
| ||||||||||||||||
Cash flows from financing activities: | ||||||||||||||||
Repayment of long-term loan | 0— | (2,591 | ) | |||||||||||||
Proceeds from issuance of long-term debt | 0— | 392 | ||||||||||||||
Issuance of ordinary shares in a “best efforts” offering, net of issuance expenses paid in the amount of $ 1,056 (1) | 0— | 4,010 | ||||||||||||||
Issuance of ordinary shares in a private placement, net of issuance expenses paid in the amount of $ 3,582 (1) | 36,418 | 0— | ||||||||||||||
Exercise of pre-funded warrants and warrants (1) (2) | 13,818 | 3,492 | ||||||||||||||
Issuance of ordinary shares in a private placement, net of issuance expenses paid in the amount of $3,582 (1) | 0 | 36,418 | ||||||||||||||
Exercise of warrants (1) | 0 | 13,818 | ||||||||||||||
Net cash provided by financing activities | 50,236 | 5,303 | 0 | 50,236 | ||||||||||||
| ||||||||||||||||
Increase (decrease) in cash, cash equivalents, and restricted cash | 43,885 | (2,245 | ) | (5,711 | ) | 47,054 | ||||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 21,054 | 16,992 | 89,050 | 21,054 | ||||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 64,939 | $ | 14,747 | $ | 83,339 | $ | 68,108 | ||||||||
Supplemental disclosures of non-cash flow information | ||||||||||||||||
Expenses related to offerings not yet paid (1) | $ | 97 | $ | 0— | $ | 0 | $ | 97 | ||||||||
Classification of other current assets to property and equipment, net | $ | 16 | $ | 32 | ||||||||||||
Classification of inventory to property and equipment, net | $ | 32 | $ | 50 | $ | 51 | $ | 0 | ||||||||
Classification of inventory to other current assets | $ | 26 | $ | 0— | $ | 54 | $ | 0 | ||||||||
Classification of other current assets to property and equipment, net | $ | 22 | $ | 16 | ||||||||||||
Supplemental cash flow information: | ||||||||||||||||
Cash and cash equivalents | $ | 64,236 | $ | 14,064 | $ | 82,632 | $ | 67,411 | ||||||||
Restricted cash included in other long-term assets | 703 | 683 | 707 | 697 | ||||||||||||
Total Cash, cash equivalents, and restricted cash | $ | 64,939 | $ | 14,747 | $ | 83,339 | $ | 68,108 |
(1) | See Note | ||
| (2) | See Note |
The accompanying notes are an integral part of these consolidated financial statements.
67
NOTE 1:GENERAL
a.ReWalk Robotics Ltd. (“RRL”, and together with its subsidiaries, the “Company”) was incorporated under the laws of the State of Israel on June 20, 2001 and commenced operations on the same date.
b.RRL has two wholly-owned subsidiaries: (i) ReWalk Robotics Inc. (“RRI”) incorporated under the laws of Delaware on February 15, 2012 and (ii) ReWalk Robotics GMBH. (“RRG”) incorporated under the laws of Germany on January 14, 2013.
The Company is designing, developing, and commercializing robotic exoskeletons that allow individuals with mobility impairments or other medical conditions the ability to stand and walk once again. The Company has developed and is continuing to commercialize the ReWalk, an exoskeleton designed for individuals with paraplegia that uses its patented tilt-sensor technology and an on-board computer and motion sensors to drive motorized legs that power movement. The ReWalk system consists of a light wearable brace support suit which integrates motors at the joints, rechargeable batteries, an array of sensors and a computer-based control system to power knee and hip movement. There are currently two types of ReWalk products: ReWalk Personal and ReWalk Rehabilitation. ReWalk Personal is designed for everyday use by individuals at home and in their communities and is custom-fitted for each user. ReWalk Rehabilitation is designed for the clinical rehabilitation environment where it provides individuals access to valuable exercise and therapy. Additionally, the Company developed and, in June 2019, started to commercialize the ReStore following receipt of European Union CE mark and United States Food and Drug Administration (“FDA”). clearance. The ReStore is a powered, lightweight soft exo-suit intended for use in the rehabilitation of individuals with lower limb disability due to stroke. The Company markets and sells its products directly to institutions and individuals and through third-party distributors. The Company sells its products directly primarily in Germany and the United States, and primarily through third-party distributors in other markets. In its direct markets, the Company has established relationships with rehabilitation centers and the spinal cord injury community, and in its indirect markets, the Company’s distributors maintain these relationships. RRI markets and sells products mainly in the United States. RRG sellmarkets and sells the Company’s products mainly in Germany and Europe.
During the second quarter of 2020, wethe Company finalized two separate agreements to distribute additional product lines in the U.S. market. The Company will beis the exclusive distributor of the MediTouch Tutor movement biofeedback systems in the United States and will also havehas distribution rights for the MYOLYN MyoCycle FES cycles to U.S. rehabilitation clinics and personal sales through the U.S. Department of Veterans Affairs (“VA”) hospitals. These new products will improve ourhave improved the Company’s product offering to clinics as well as patients within the VA as they both have similar clinician and patient profiles.
c.The worldwide spread of the novel coronavirus (“COVID-19”) in March 2020COVID-19 has resulted in a global economic slowdown and is expected to continue to disrupt general business operations until the disease is contained. This pandemichas had a negative impact on the Company'sCompany’s sales and results of operations since 2020,the start of the pandemic, and the Company expects that it will continue to negatively affect its sales and results of operations as long asoperations; however, the pandemic impacts our direct markets in Germany and the United States and disturbs our ability to trial new ReWalk Personal 6.0 patients, access clinics to demonstrate our rehab products and customers are unable to continue their in-clinic training. The Company is currently unable to predict the scale and duration of that impact due to the considerable uncertainty that still surrounds the length of time that the areas in which we operate will continue to be impacted by the measures designed to reduce and contain the spread of the virus taken on international, national and local levels.impact. As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require an update to the Company’sof its accounting estimates or judgments or revision of the carrying value of its assets or liabilities. This determination may change as new events occur and additional information is obtained. Actual results could differ from ourmanagement’s estimates and judgments, and any such differences may be material to ourthe Company’s financial statements.
7
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
d.In the six months ended June 30, 2021,As of March 31, 2022, the Company incurred a consolidated net loss of $6.2$4.4 million and as of June 30, 2021, the Company has an accumulated deficit in the total amount of $187.6$198.5 million. The Company’s cash and cash equivalentsequivalent as of June 30, 2021, were $64.2March 31, 2022 totaled $82.6 million and the Company’s negative operating cash flow for the sixthree months ended June 30, 2021,March 31, 2022 was $6.3$5.7 million. The Company has sufficient funds to support its operations for more than 12 months following the issuance date of ourits condensed consolidated unaudited financial statements for the three and six months ended June 30, 2021.March 31, 2022. The Company expects to incur future net losses and ourits transition to profitability is dependent upon, among other things, the successful development and commercialization of ourits products and product candidates, and the achievement of a level of revenues adequate to support ourits cost structure. Until we achievethe Company achieves profitability or generategenerates positive cash flows, weit will continue to need to raise additional cash. We intendthe Company intends to fund future operations through cash on hand, additional private and/or public offerings of debt or equity securities, cash exercises of outstanding warrants or a combination of the foregoing. In addition, wethe Company may seek additional capital through arrangements with strategic partners or from other sources and we will continue to address ourits cost structure. Notwithstanding, there can be no assurance that wethe Company will be able to raise additional funds or achieve or sustain profitability or positive cash flows from operations.
8
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 2:UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles and standards of the Public Company Accounting Oversight Board for interim financial information. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles in the United States for complete financial statements. In themanagement’s opinion, of management, the accompanying financial statements includereflect all adjustments (consisting of a normal recurring accruals) considerednature that are necessary for a fair presentation of the Company’s (i) consolidated financial position as of June 30, 2021, (ii) consolidated results of operations for the three and six months ended June 30, 2021, (iii) consolidated statements of changes in shareholders’ equity as of June 30, 2021 and (iv) consolidated cash flows for the six months ended June 30, 2021. The results for the three and six monthinterim periods ended June 30, 2021, as applicable, arepresented. The Company’s interim period results do not necessarily indicative ofindicate the results that may be expected for any other interim period or for the full fiscal year.
These financial statements and accompanying notes should be read in conjunction with the 2021 consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for its fiscal year endingended December 31, 2021.2021 filed with the SEC on February 24, 2022, as amended on May 2, 2022 (the “2021 Form 10-K”). There have been no changes in the significant accounting policies from those that were disclosed in the audited consolidated financial statements for the fiscal year ended December 31, 2021 included in the 2021 Form 10-K, unless otherwise stated.
89
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 3:SIGNIFICANT ACCOUNTING POLICIES
a.Revenue Recognition
The Company generates revenues from sales of products. The Company sells its products directly to end customers and through distributors. The Company sells its products to private individuals (who finance the purchases by themselves, through fundraising or reimbursement coverage from insurance companies), rehabilitation facilities and distributors.
Disaggregation of Revenues (in thousands)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Units placed | $ | 1,313 | $ | 1,428 | $ | 2,455 | $ | 2,061 | ||||||||
Spare parts and warranties | 123 | 240 | 297 | 367 | ||||||||||||
Total Revenues | $ | 1,436 | $ | 1,668 | $ | 2,752 | $ | 2,428 |
9
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Units placed | $ | 778 | $ | 1,142 | ||||
Spare parts and warranties | 98 | 174 | ||||||
Total Revenues | $ | 876 | $ | 1,316 |
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Units placed
The Company currently offers five products: (1) ReWalk Personal; (2) ReWalk Rehabilitation; (3) ReStore; (4) MyoCycle; and (5) MediTouch.
ReWalk Personal and ReWalk Rehabilitation are units for spinal cord injuries (“SCI Products”). SCI Products are currently designed for everyday use by paraplegic individuals at home and in their communities, and are custom fitted for each user, as well as for use by paraplegia patients in the clinical rehabilitation environment, where they provide individuals access to valuable exercise and therapy.
ReStore is a powered, lightweight soft exo-suit intended for use in the rehabilitation of individuals with lower limb disability due to stroke in the clinical rehabilitation environment.
The MyoCycle device uses Functional Electrical Stimulation (“FES”) technology to facilitate therapeutic exercise for persons with muscle weakness or paralysis caused by disorders like spinal cord injury, multiple sclerosis, and stroke.
The MediTouch Tutor movement biofeedback product line includes the Arm, Hand, 3D and Leg Tutor devices. These devices are used by physical and occupational therapists to evaluate functional tasks during rehabilitation of neurologic disorders and can also be used by patients remotely at home.
Pursuant to two separate distribution agreements entered into during the second quarter of 2020, the Company now markets both the MediTouch and MyoCyle products (together the “Distributed Products”) in the United States for use at home or in thea clinic.
Units placed includes revenue from sales or rental of SCI Products, ReStore and the Distributed Products.
For units placed, the Company recognizes revenues when it transfers control and title has passed to the customer. Each unit placed is considered an independent, unbundled performance obligation. The Company generally does not grant a right of return for its products besides isolated cases where we than assesthe Company assesses the likelihood of such event to occur based on ourthe Company’s historical experience and future estimates. The Company also offers a rent-to-purchase model in which the Company recognizes revenue ratably according to the agreed rental monthly fee.
10
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Spare parts and warranties
Spare parts are sold to private individuals, rehabilitation facilities and distributors. Revenue is recognized when the Company satisfies a performance obligation by transferring control over promised goods or services to the customer. Each part sold is considered an independent, unbundled performance obligation.
Warranties are classified as either assurance type or service type warranty. A warranty is considered an assurance type warranty if it provides the consumer with assurance that the product will function as intended for a limited period of time.
In the beginning of 2018, the Company updated its service policy for SCI Products to include a five-yearfive- year warranty compared to a period of two years that were included in the past for parts and services. The first two years are considered as assurance type warranty and the additional period is considered an extended service arrangement, which is a service type warranty. An assurance type warranty is not accounted for as separate performance obligations under the revenue model. A service type warranty is either sold with a unit or separately for units for which the warranty has expired. Revenue is then recognized ratably over the life of the warranty.
The ReStore device is offered with a two-year warranty which is considered as assurance type warranty.
TheThe Distributed Products are offeredsold with an assurance-type warranty that is covered by the vendor ranging from one year to ten years depending on the specific product and part.
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REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Contract balances (in thousands)
June 30, | December 31, | March 31, | December 31, | |||||||||||||
2021 | 2020 | 2022 | 2021 | |||||||||||||
Trade receivable, net (1) | $ | 779 | $ | 684 | $ | 564 | $ | 585 | ||||||||
Deferred revenues (1) (2) | $ | 1,057 | $ | 1,108 | $ | 1,148 | $ | 1,182 |
(1) |
| Balance presented net of unrecognized revenues that were not yet collected. |
(2) |
| During the |
Deferred revenue is comprised mainly of unearned revenue related to service type warranty but also includes other offerings for which the Company has been paid in advance and earns revenue when the Company transfers control of the product or service.
The Company’s unfilled performance obligations as of June 30, 2021,March 31, 2022 and the estimated revenue expected to be recognized in the future related to the service type warranty amounts to $1,092 thousand,$1,18 million, which is fulfilled over one to five years.
11
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
b.Concentrations of Credit Risks:
b.Concentration of credit risk with respect to trade receivable is primarily limited to a customer to which the Company makes substantial sales. The below table reflects the concentration of credit risk for the Company’s current customers as of the quarter ended March 31, 2022, to which substantial sales were made:
March 31, | December 31, | |||||||
2022 | 2021 | |||||||
Customer A | 21 | % | * | ) | ||||
Customer B | 20 | % | * | ) | ||||
Customer C | 15 | % | * | ) | ||||
Customer D | 15 | % | * | ) | ||||
Customer E | 10 | % | * | ) | ||||
Customer F | * | ) | 20 | % | ||||
Customer G | * | ) | 18 | % | ||||
Customer H | * | ) | 16 | % | ||||
Customer I | * | ) | 12 | % | ||||
Customer J | * | ) | 10 | % |
*) Less than 10%
The Company’s trade receivables are geographically diversified and derived primarily from sales to customers in various countries, mainly in the United States and Europe. Concentration of credit risk with respect to trade receivables is limited by credit limits, ongoing credit evaluation and account monitoring procedures. The Company performs ongoing credit evaluations of its distributors based upon a specific review of all significant outstanding invoices. The Company writes off receivables when they are deemed uncollectible and having exhausted all collection efforts. As of March 31, 2022 and December 31, 2021 trade receivables are presented net of allowance for doubtful accounts in the amount of $27 thousand and $42 thousand, respectively, and net of sales return reserve of $52 thousand and $43 thousand, respectively.
c.Warranty provision
The Company provided a two-year standard warranty for its products. In the beginning of 2018, our service policy for new devices sold includes five-year warranty. The Company determined that the first two years of warranty is an assurance-type warranty and records a provision for the estimated cost to repair or replace products under warranty at the time of sale. Factors that affect the Company’s warranty reserve include the number of units sold, historical and anticipated rates of warranty repairs and the cost per repair.
US Dollars in thousands | ||||
Balance at December 31, 2021 | $ | 112 | ||
Provision | 67 | |||
Usage | (72 | ) | ||
Balance at March 31, 2022 | $ | 107 |
12
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
d.Basic and diluted net loss per ordinary share
Basic net loss per ordinary share is computed based on the weighted average number of ordinary shares outstanding during each year.
e.New Accounting Pronouncements
RecentRecently Implemented Accounting Pronouncements Not Yet AdoptedPronouncement
i. | Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity |
i.Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity
In August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Among other changes, ASU 2020-06 removes from U.S. GAAP the liability and equity separation model for convertible instruments with a cash conversion feature and a beneficial conversion feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt. Similarly, the embedded conversion feature will no longer be amortized into income as interest expense over the life of the instrument. Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share (“EPS”). ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted for fiscal years beginning after December 15, 2020 and can be adopted on either a fully retrospective or modified retrospective basis. The adoption of this standard isdid not expected to result inhave a material impact toon the Company’s consolidated financial statements.
ii.Financial Instruments
Recent Accounting Pronouncements Not Yet Adopted
i. | Financial Instruments |
In June 2016, FASB issued ASU 2016-13, Financial Instruments - Credit–Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses. Topic 326 will be effective onfor the Company beginning on January 1, 2023. The Company is currently evaluating the impact of this new standard on its consolidated financial statements.
1213
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
c.Concentrations of Credit Risks:
Concentration of credit risk with respect to trade receivable is primarily limited to a customer to which the Company makes substantial sales.
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Customer A | 15 | % | 0*) | |||||
Customer B | 14 | % | 0*) | |||||
Customer C | 14 | % | 0*) | |||||
Customer D | 13 | % | 0*) | |||||
Customer E | 13 | % | 0*) | |||||
Customer F | 0*) | 15 | % | |||||
Customer G | 0*) | 15 | % | |||||
Customer H | 0*) | 15 | % | |||||
Customer I | 0*) | 14 | % | |||||
Customer J | 0*) | 12 | % | |||||
Customer K | 0*) | 11 | % |
*) Less than 10%
The Company’s trade receivables are geographically diversified and derived primarily from sales to customers in various countries, mainly in the United States and Europe. Concentration of credit risk with respect to trade receivables is limited by credit limits, ongoing credit evaluation and account monitoring procedures. The Company performs ongoing credit evaluations of its distributors based upon a specific review of all significant outstanding invoices. The Company writes off receivables when they are deemed uncollectible and having exhausted all collection efforts. As of June 30, 2021, and December 31, 2020, trade receivables are presented net of allowance for doubtful accounts in the amount of $42 thousand and $102 thousand, respectively.
d.Warranty provision
The Company provided a two-year standard warranty for its products. As of 2018, our service policy for new devices sold includes five-year warranties. The Company determined that the first two years of warranty is an assurance-type warranty and records a provision for the estimated cost to repair or replace products under warranty at the time of sale. Factors that affect the Company’s warranty reserve include the number of units sold, historical and anticipated rates of warranty repairs and the cost per repair.
US Dollars in thousands | ||||
Balance at December 31, 2020 | $ | 140 | ||
Provision | 109 | |||
Usage | (131 | ) | ||
Balance at June 30, 2021 | $ | 118 |
e.Basic and diluted net loss per ordinary share
Basic net loss per ordinary share is computed based on the weighted average number of ordinary shares outstanding during each year.
For the six months ended June 30, 2021, the total number of ordinary shares related to the outstanding warrants and share option plans aggregated to 12,210,449, was excluded from the calculations of diluted loss per ordinary share since it would have an anti-dilutive effect.
13
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 4:INVENTORIES
The components of inventories are as follows (in thousands):
June 30, | December 31, | March 31, | December 31, | |||||||||||||
2021 | 2020 | 2022 | 2021 | |||||||||||||
Finished products | $ | 2,632 | $ | 2,764 | $ | 2,695 | $ | 2,284 | ||||||||
Raw materials | 714 | 778 | 537 | 705 | ||||||||||||
$ | 3,346 | $ | 3,542 | $ | 3,232 | $ | 2,989 |
In the sixthree months ended June 30,March 31, 2022 and 2021, and 2020, the Company wrote off inventory in the amount of $58$2 and $5$38 thousand, respectively. The write off inventory were recorded in cost of revenue.revenues.
NOTE 5:COMMITMENTS AND CONTINGENT LIABILITIES
a.Purchase commitments:
TheThe Company has contractual obligations to purchase goods from its contract manufacturer as well as raw materials from different vendors. Purchase obligations do not include contracts that may be canceled without penalty. As of June 30, 2021,March 31, 2022, non-cancelable outstanding obligations amounted to approximately $1.3$1.5 million.
b.Operating lease commitment:
(i)TheThe Company operates from leased facilities in Israel, the United States and Germany. These leases expire between 20212022 and 2023. A portion of ourthe Company’s facilities leases is generally subject to annual changes in the Consumer Price Index (CPI)(the “CPI”). The changes to the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred.
(ii)RRL and RRG lease cars for their employees under cancelable operating lease agreements expiring at various dates in between 20212022 and 2023.2025. A subset of our carthe Company’s cars leases is considered variable. The variable lease payments for such carcars leases are based on actual mileage incurred at the stated contractual rate. RRL and RRG have an option to be released from these agreements, which may result in penalties in a maximum amount of approximately $24$23 thousand as of June 30, 2021.March 31, 2022.
The Company's future lease payments for its facilities and cars, which are presented as current maturities of operating leases and non-current operating leases liabilities on the Company's condensed consolidated balance sheets as of June 30, 2021,March 31, 2022 are as follows (in thousands):
2021 | $ | 343 | ||||||
2022 | 664 | $ | 520 | |||||
2023 | 481 | 523 | ||||||
2024 | 32 | |||||||
2025 | 4 | |||||||
Total lease payments | 1,488 | 1,079 | ||||||
Less: imputed interest | (186 | ) | (111 | ) | ||||
Present value of future lease payments | 1,302 | 968 | ||||||
Less: current maturities of operating leases | (640 | ) | (638 | ) | ||||
Non-current operating leases | $ | 662 | $ | 330 | ||||
Weighted-average remaining lease term (in years) | 2.22 | 1.62 | ||||||
Weighted-average discount rate | 12.6 | % | 12.5 | % |
Lease expense under the Company’s operating leases were $178 thousand and $217 thousand for the three months ended June 30, 2021, and 2020, respectively. For the six months ended June 30, 2021, and 2020 the lease expense were $364 thousand and $400 thousand, respectively.
14
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Lease expense under the Company’s operating leases was $179 thousand and $186 thousand for the three months ended March 31, 2022 and 2021, respectively.
c.Royalties:
Additionally, the Exclusive License Agreement between the Company and Harvard University’s Wyss Institute for Biologically Inspired Engineering ("Harvard") requires the Company to pay Harvard royalties on net sales. See note 6 below for more information about the Collaboration Agreement and the License Agreement.
RoyaltiesRoyalties expenses in cost of revenuerevenues were $6$3 and $0 thousand for the three months ended June 30,March 31, 2022 and 2021, and 2020, respectively. For the six months ended June 30, 2021, and 2020, the royalties expenses were $6 thousand and $3 thousand, respectively.
AsAs of June 30, 2021,March 31, 2022, the contingent liability to the IIA amounted to $1.6$1.6 million. The Israeli Research and Development Law provides that know-how developed under an approved research and development program may not be transferred to third parties without the approval of the IIA. Such approval is not required for the sale or export of any products resulting from such research or development. The IIA, under special circumstances, may approve the transfer of IIA-funded know-how outside Israel, in the following cases:
(a) the grant recipient pays to the IIA a portion of the sale price paid in consideration for such IIA-funded know-how or in consideration for the sale of the grant recipient itself, as the case may be, which portion will not exceed six times the amount of the grants received plus interest (or three times the amount of the grant received plus interest, in the event that the recipient of the know-how has committed to retain the research and development activities of the grant recipient in Israel after the transfer); (b) the grant recipient receives know-how from a third party in exchange for its IIA-funded know-how; (c) such transfer of IIA-funded know-how arises in connection with certain types of cooperation in research and development activities; or (d) ifIf such transfer of know-how arises in connection with a liquidation by reason of insolvency or receivership of the grant recipient.
d.Liens:
AsAs part of the Company’s other long-term assets and restricted cash, an amount of $703$707 thousand has been pledged as security in respect of a guarantee granted to a third party. Such deposit cannot be pledged to others or withdrawn without the consent of such third party.
15
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
e.Legal Claims:
Occasionally, the Company is involved in various claims such as product liability claims, lawsuits, regulatory examinations, investigations, and other legal matters arising, for the most part, in the ordinary course of business. ItThe outcome of any pending or threatened litigation and other legal matters is inherently uncertain, and it is possible that resolution of one or more of the legalany such matters currently pending or threatened could result in losses material to the Company’s consolidated results of operations, liquidity, or financial condition. While the outcome of any pending or threatened litigation and other legal matters is inherently uncertain,Except as otherwise disclosed herein, the Company is not currently party to any material litigation.
16
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 6:RESEARCH COLLABORATION AGREEMENT AND LICENSE AGREEMENT
Under2023. On October 14, 2021, the Company and Harvard further amended the Collaboration Agreement, Harvard andto make certain adjustments to the Company have agreed to collaborate on research regarding the development of lightweight “soft suit” exoskeleton system technologies for lower limb disabilities, which are intended to treat stroke, multiple sclerosis, mobility limitations for the elderly and other medical applications. The Company has committed to paying for the funding of this research in quarterly installments subject to a minimum funding commitment under applicable circumstances. Theand technical changes and establish that the term of the Collaboration Agreement will expirewould conclude on February 16, 2023.
March 31, 2022. As of March 31, 2022, the Collaboration Agreement has expired.
The License Agreement required the Company to pay Harvard an upfront fee, reimbursements for expenses that Harvard incurred in connection with the licensed patents, royalties on net sales and several milestone payments contingent upon the achievement of certain product development and commercialization milestones. The Harvard License Agreement will continue in full force and effect until the expiration of the last-to-expire valid claim of the licensed patents.
The Company’s total payment obligation As of March 31, 2022, the Company achieved three of the milestones which represent all development milestones under the Collaboration Agreement andLicense Agreement. The Company continues to evaluate the Harvard License Agreement was $7.2 million as oflikelihood that the initial date, some of which was subject toother milestones will be achieved on a minimum funding commitment under applicable circumstances as indicated above which were all completed as of June 30, 2021.quarterly basis.
TheThe Company has recorded expenses in the amount of $162$10 thousand and $202$159 thousand for the three months ended June 30, 2021, and 2020, respectively. For the six months ended June 30, 2021, and 2020 the expense were $320 thousand and $424 thousand, respectively which are part of the total payment obligation indicated above, as research and development expenses related to the License Agreement and to the Collaboration Agreement.Agreement for the three months ended March 31, 2022, and 2021, respectively. No withholding tax was deducted from the Company’s payments to Harvard in respect of the Collaboration Agreement and the License Agreement since this is not taxable income in Israel in accordance with Section 170 of the Israel Income Tax Ordinance 1961-5721.
1716
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 7:SHAREHOLDERS’ EQUITY
a.Share option plans:
AsAs of June 30, 2021,March 31, 2022, and December 31, 2020,2021, the Company had reserved 133,037379,763 and 604,320 ordinary233,957ordinary shares, respectively, for issuance to the Company’s and its affiliates’ respective employees, directors, officers, and consultants pursuant to equity awards granted under the Company's 2014 Incentive Compensation Plan (the “2014 Plan”).
Options to purchase ordinary shares generally vest over four years, with certain options to non-employee directors vesting quarterly over one year. Any option that is forfeited or canceled before expiration becomes available for future grants under the 2014 Plan.
There were no options granted during the sixthree months ended June 30, 2021,March 31, 2022 and 2020.2021.
The fair value of restricted share units (“RSUs”)RSUs granted is determined based on the price of the Company’sCompany's ordinary shares on the date of grant.
A summary of employees and non-employeesemployee share options activity during the sixthree months ended June 30, 2021, is as follows:
Number | Average exercise price | Average remaining contractual life (in years) | Aggregate intrinsic value (in thousands) | |||||||||||||
Options outstanding at the beginning of the period | 69,606 | $ | 37.90 | 5.59 | $ | 0— | ||||||||||
Granted | 0— | 0— | — | — | ||||||||||||
Exercised | 0— | 0— | — | — | ||||||||||||
Forfeited | (5,563 | ) | 33.64 | — | — | |||||||||||
Options outstanding at the end of the period | 64,043 | $ | 38.31 | 5.08 | $ | 0— | ||||||||||
| ||||||||||||||||
Options exercisable at the end of the period | 53,547 | $ | 42.71 | 4.65 | $ | 0— |
A summary of employees and non-employees RSUs activity during the six months ended June 30, 2021,March 31, 2022 is as follows:
Number of shares underlying outstanding RSUs | Weighted average grant date fair value | |||||||
Unvested RSUs at the beginning of the period | 1,251,311 | $ | 1.69 | |||||
Granted | 583,216 | 1.75 | ||||||
Vested | (132,571 | ) | 2.24 | |||||
Forfeited | (106,370 | ) | 1.57 | |||||
Unvested RSUs at the end of the period | 1,595,586 | $ | 1.60 |
The weighted average grant date fair value of RSUs granted during the six months ended June 30, 2021, and 2020 was $1.75 and $2.23, respectively.
18
Number | Average exercise price | Average remaining contractual life (in years) | Aggregate intrinsic value (in thousands) | |||||||||||||
Options outstanding at the beginning of the period | 61,832 | $ | 38.34 | 4.55 | $ | - | ||||||||||
Granted | - | - | - | - | ||||||||||||
Exercised | - | - | - | - | ||||||||||||
Forfeited | (165 | ) | 15.09 | - | - | |||||||||||
Options outstanding at the end of the period | 61,667 | $ | 38.37 | 3.71 | $ | - | ||||||||||
| ||||||||||||||||
Options exercisable at the end of the period | 57,732 | $ | 40.32 | 3.50 | $ | - |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The aggregate intrinsic value in the table above represents the total intrinsic value that would have been received by the option holders had all option holders that hold options with positive intrinsic value exercised their options on the last date of the exercise period. No options were exercised during the sixthree months ended June 30,March 31, 2022 and 2021.
17
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
A summary of employees and non-employees RSUs activity during the three months ended March 31, 2022 is as follows:
Number of shares underlying outstanding RSUs | Weighted average grant date fair value | |||||||
Unvested RSUs at the beginning of the period | 1,356,284 | $ | 1.61 | |||||
Granted | 55,000 | 1.12 | ||||||
Vested | (28,354 | ) | 2.04 | |||||
Forfeited | (200,641 | ) | 1.53 | |||||
Unvested RSUs at the end of the period | 1,182,289 | $ | 1.59 |
The weighted average grant date fair value of RSUs granted during the three months ended March 31, 2022, and 2021 was $1.12 and June 30, 2020. As$1.32, respectively.
As of June 30, 2021,March 31, 2022, there were $2.3$1.5 million of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Company's 2014 Plan. This cost is expected to be recognized over a period of approximately 3.052.7 years.
The number of options and RSUs outstanding as of June 30, 2021,March 31, 2022 is set forth below, with options separated by range of exercise price.
Range of exercise price | Options and RSUs outstanding as of June 30, 2021 | Weighted average remaining contractual life (years) (1) | Options outstanding and exercisable as of June 30, 2021 | Weighted average remaining contractual life (years) (1) | Options and RSUs outstanding as of March 31, 2022 | Weighted average remaining contractual life (years) (1) | Options outstanding and exercisable as of March 31, 2022 | Weighted average remaining contractual life (years) (1) | ||||||||||||||||||||||||
RSUs only | 1,595,586 | — | 0— | — | 1,182,289 | - | - | - | ||||||||||||||||||||||||
$5.37 | 12,425 | 7.75 | 6,989 | 7.75 | 12,425 | 6.99 | 9,318 | 6.99 | ||||||||||||||||||||||||
$20.42 - $33.75 | 32,905 | 4.71 | 27,845 | 4.32 | 30,990 | 2.65 | 30,162 | 2.55 | ||||||||||||||||||||||||
$37.14 - $38.75 | 9,316 | 2.48 | 9,316 | 2.48 | 8,946 | 1.73 | 8,946 | 1.73 | ||||||||||||||||||||||||
$50 - $52.5 | 6,731 | 5.97 | 6,731 | 5.97 | ||||||||||||||||||||||||||||
$182.5 - $524.25 | 2,666 | 4.20 | 2,666 | 4.20 | ||||||||||||||||||||||||||||
$50 - $52.50 | 6,731 | 5.22 | 6,731 | 5.22 | ||||||||||||||||||||||||||||
$182.5 - $524 | 2,575 | 3.60 | 2,575 | 3.60 | ||||||||||||||||||||||||||||
1,659,629 | 5.08 | 53,547 | 4.65 | 1,243,956 | 3.71 | 57,732 | 3.50 |
(1) | Calculation of weighted average remaining contractual term does not include the RSUs that were granted, which have an indefinite contractual term. |
|
b.Share-based awards to non-employee consultants:
As of June 30, 2021,March 31, 2022, there are no outstanding options or RSUs held by non-employee consultants.
1918
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
c.Warrants to purchase ordinary shares:
The following table summarizes information about warrants outstanding and exercisable that were classified as equity as of June 30, 2021:March 31, 2022:
Warrants | ||||||||||||||||
Warrant | Exercise price per | outstanding and | Contractual | |||||||||||||
Issuance date | outstanding | warrant | exercisable | term | ||||||||||||
(number) | (number) | |||||||||||||||
December 31, 2015 (1) | 4,771 | $ | 7.500 | 4,771 | See footnote (1) | |||||||||||
November 1, 2016 (2) | 97,496 | $ | 118.750 | 97,496 | November 1, 2021 | |||||||||||
December 28, 2016 (3) | 1,908 | $ | 7.500 | 1,908 | See footnote (1) | |||||||||||
November 20, 2018 (4) | 126,839 | $ | 7.500 | 126,839 | November 20, 2023 | |||||||||||
November 20, 2018 (5) | 106,680 | $ | 9.375 | 106,680 | November 15, 2023 | |||||||||||
February 25, 2019 (6) | 45,600 | $ | 7.187 | 45,600 | February 21, 2024 | |||||||||||
April 5, 2019 (7) | 408,457 | $ | 5.140 | 408,457 | October 7, 2024 | |||||||||||
April 5, 2019 (8) | 49,015 | $ | 6.503 | 49,015 | April 3, 2024 | |||||||||||
June 5, 2019, and June 6, 2019 (9) | 1,464,665 | $ | 7.500 | 1,464,665 | June 5, 2024 | |||||||||||
June 5, 2019 (10) | 87,880 | $ | 9.375 | 87,880 | June 5, 2024 | |||||||||||
June 12, 2019 (11) | 416,667 | $ | 6.000 | 416,667 | December 12, 2024 | |||||||||||
June 10, 2019 (12) | 50,000 | $ | 7.500 | 50,000 | June 10, 2024 | |||||||||||
February 10, 2020 (13) | 28,400 | $ | 1.250 | 28,400 | February 10, 2025 | |||||||||||
February 10, 2020 (14) | 105,840 | $ | 1.5625 | 105,840 | February 10, 2025 | |||||||||||
July 6, 2020 (15) | 448,698 | $ | 1.76 | 448,698 | July 2, 2025 | |||||||||||
July 6, 2020 (16) | 296,297 | $ | 2.2781 | 296,297 | July 2, 2025 | |||||||||||
December 3, 2020 (17) | 586,760 | $ | 1.34 | 586,760 | June 8, 2026 | |||||||||||
December 3, 2020 (18) | 108,806 | $ | 1.7922 | 108,806 | June 8, 2026 | |||||||||||
February 26, 2021 (19) | 5,460,751 | $ | 3.6 | 5,460,751 | August 26, 2026 | |||||||||||
February 26, 2021 (20) | 655,290 | $ | 4.5781 | 655,290 | August 26, 2026 | |||||||||||
10,550,820 | 10,550,820 |
Issuance date | Warrants outstanding | Exercise price per warrant | Warrants outstanding and exercisable | Contractual term | ||||||||||||
(number) | (number) | |||||||||||||||
December 31, 2015 (1) | 4,771 | $ | 7.500 | 4,771 | See footnote (1) | |||||||||||
December 28, 2016 (2) | 1,908 | $ | 7.500 | 1,908 | See footnote (1) | |||||||||||
November 20, 2018 (3) | 126,839 | $ | 7.500 | 126,839 | November 20, 2023 | |||||||||||
November 20, 2018 (4) | 106,680 | $ | 9.375 | 106,680 | November 15, 2023 | |||||||||||
February 25, 2019 (5) | 45,600 | $ | 7.187 | 45,600 | February 21, 2024 | |||||||||||
April 5, 2019 (6) | 408,457 | $ | 5.140 | 408,457 | October 7, 2024 | |||||||||||
April 5, 2019 (7) | 49,015 | $ | 6.503 | 49,015 | April 3, 2024 | |||||||||||
June 5, 2019, and June 6, 2019 (8) | 1,464,665 | $ | 7.500 | 1,464,665 | June 5, 2024 | |||||||||||
June 5, 2019 (9) | 87,880 | $ | 9.375 | 87,880 | June 5, 2024 | |||||||||||
June 12, 2019 (10) | 416,667 | $ | 6.000 | 416,667 | December 12, 2024 | |||||||||||
June 10, 2019 (11) | 50,000 | $ | 7.500 | 50,000 | June 10, 2024 | |||||||||||
February 10, 2020 (12) | 28,400 | $ | 1.250 | 28,400 | February 10, 2025 | |||||||||||
February 10, 2020 (13) | 105,840 | $ | 1.563 | 105,840 | February 10, 2025 | |||||||||||
July 6, 2020 (14) | 448,698 | $ | 1.760 | 448,698 | January 2, 2026 | |||||||||||
July 6, 2020 (15) | 296,297 | $ | 2.278 | 296,297 | January 2, 2026 | |||||||||||
December 8, 2020 (16) | 586,760 | $ | 1.340 | 586,760 | June 8, 2026 | |||||||||||
December 8, 2020 (17) | 108,806 | $ | 1.792 | 108,806 | June 8, 2026 | |||||||||||
February 26, 2021 (18) | 5,460,751 | $ | 3.600 | 5,460,751 | August 26, 2026 | |||||||||||
February 26, 2021 (19) | 655,290 | $ | 4.578 | 655,290 | August 26, 2026 | |||||||||||
September 29, 2021 (20) | 8,006,759 | $ | 2.000 | 8,006,759 | March 29, 2027 | |||||||||||
September 29, 2021 (21) | 960,811 | $ | 2.544 | 960,811 | September 27, 2026 | |||||||||||
19,420,894 | 19,420,894 |
(1) | Represents warrants for ordinary shares issuable upon an exercise price of $7.50 per share, which were granted on December 31, 2015 to Kreos Capital V (Expert) Fund Limited |
19
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(2) | Represents common warrants |
|
|
20
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| Represents common warrants |
| |
| Represents common warrants |
| |
| Represents warrants |
| |
| Represents warrants |
| |
| Represents warrants |
| |
| Represents warrants |
| |
| Represents warrants |
| |
| Represents warrants |
| |
| Represents warrants |
| |
| Represents warrants |
| |
| Represents warrants |
| |
| Represents warrants |
| |
| Represents warrants |
20
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| Represents warrants |
| |
| Represents warrants |
| Represents warrants |
| |
| Represents warrants |
(20) | Represents warrants that were issued to certain institutional purchasers in a private placement in our registered direct offering of ordinary shares in September 2021. |
(21) | Represents warrants that were issued to the placement agent as compensation for its role in the Company’s September 2021 registered direct offering. |
21
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
d.Share-based compensation expense for employees and non-employees:
The Company recognized non-cash share-based compensation expense for both employees and non-employees in the condensed consolidated statements of operations as follows (in thousands):
Six Months Ended June 30, | Three Months Ended March 31, | |||||||||||||||
2021 | 2020 | 2022 | 2021 | |||||||||||||
Cost of revenues | $ | 4 | $ | 4 | $ | 3 | $ | 2 | ||||||||
Research and development | 14 |
| 74 | |||||||||||||
Research and development, net | 16 |
| (2 | ) | ||||||||||||
Sales and marketing | 77 | 48 | 51 | 45 | ||||||||||||
General and administrative | 273 | 186 | 83 | 123 | ||||||||||||
Total | $ | 368 | $ | 312 | $ | 153 | $ | 168 |
e.Equity raise:
1.Follow-on offerings and warrants exercise:
On February 19, 2021, the Company entered into a purchase agreement with certain institutional and other accredited investors for the issuance and sale of 10,921,502 ordinary shares, par value NIS 0.25 per share at $3.6625 per ordinary share and warrants to purchase up to an aggregate of 5,460,751 ordinary shares with an exercise price of $3.6 per share, exercisable from February 19, 2021 until August 26, 2026. Additionally, the Company issued warrants to purchase up to 655,290 ordinary shares, with an exercise price of $4.578125 per share, exercisable from February 19, 2021 until August 26, 2026, to certain representatives of H.C. Wainwright & Co., LLC (“H.C. Wainwright”) as compensation for its role as the placement agent in our February 2021 private placement offering.
During the six months ended June 30, 2021, a total of 9,814,754 outstanding warrants with exercise prices ranging from $1.25 to $1.79 were exercised, for total gross proceeds of approximately $13.8 million.Offering.
On February 10, 2020, September 27, 2021, the Company closedsigned a “best efforts” public offering whereby the Company issued an aggregate of 5,600,000 of common units and pre-funded units at a public offering price of $1.25 per common unit and $1.249 per pre-funded unit. As part of the public offering, the Company entered into a securities purchase agreement with certain institutional purchasers. Each common unit consistedinvestors for the issuance and sale of one15,403,014 ordinary share,shares, par value NIS 0.25 per share, and one common warrantpre-funded warrants to purchase oneup to an aggregate of 610,504 ordinary shares and ordinary warrants to purchase up to an aggregate of 8,006,759 ordinary shares at an exercise price of $2.00 per share. The Pre-Funded Warrants have an exercise price of $0.001 per Ordinary Share and are immediately exercisable and can be exercised at any time after their original issuance until such pre-funded warrants are exercised in full. Each pre-funded unit consistedordinary share was sold at an offering price of one$2.035 and each pre-funded warrant was sold at an offering price of $2.034 (equal to the purchase oneprice per ordinary share minus the exercise price of the pre-funded warrant). The offering of the ordinary shares, the pre-funded warrants and one common warrant.the ordinary shares that are issuable from time to time upon exercise of the pre-funded warrants was made pursuant to the Company’s shelf registration statement on Form S-3 initially filed with the Securities and Exchange Commission (“SEC”) on May 9, 2019, and declared effective by the SEC on May 23, 2019, and the ordinary warrants were issued in a concurrent private placement. The ordinary warrants are exercisable at any time and from time to time, in whole or in part, following the date of issuance and ending five and one-half years from the date of issuance. All of the pre-funded warrants were exercised in full on September 27, 2021, and the offering closed on September 29, 2021. Additionally, the Company issued warrants to purchase up to 336,000960,811 ordinary shares, with an exercise price of $1.5625$2.5438 per share, exercisable from September 27, 2021, until September 27, 2026, to certain representatives of H.C. Wainwright as compensation for its role as the placement agent in the Company’s February 2020our September 2021 registered direct offering. During the three months ended
As of March 31, 2020, all pre-funded warrants to purchase ordinary shares were exercised. During the three and six months ended June 30, 2020,2022, a total of 1,246,500 outstanding9,814,754 previously issued warrants with an exercise price ofprices ranging from $1.25 wereto $1.79 have been exercised for total gross proceeds of approximately $1.6$13.8 million.
2221
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 8:FINANCIAL EXPENSES (INCOME), NET
The components of financial expenses (income), net were as follows (in thousands):
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Foreign currency transactions and other | $ | 15 | $ | (14 | ) | |||
Bank commissions | 9 | 10 | ||||||
$ | 24 | $ | (4 | ) |
22
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Foreign currency transactions and other | $ | (14 | ) | $ | (19 | ) | $ | (28 | ) | $ | (92 | ) | ||||
Financial expenses related to loan agreement with Kreos | 0— | 249 | 0— | 559 | ||||||||||||
Bank commissions | 5 | 5 | 15 | 14 | ||||||||||||
$ | (9 | ) | $ | 235 | $ | (13 | ) | $ | 481 |
NOTE 9:GEOGRAPHIC INFORMATION AND MAJOR CUSTOMER AND PRODUCT DATA
Summary information about geographic areas:
ASCASC 280, “Segment Reporting” establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company manages its business on the basis of 1 reportable segment and derives revenues from selling unitssystems and services (see Note 1 for a brief description of the Company’s business). The following is a summary of revenues within geographic areas (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | Three Months Ended March 31, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2022 | 2021 | |||||||||||||||||||
Revenues based on customer’s location: | ||||||||||||||||||||||||
United States | $ | 654 | $ | 631 | $ | 1,130 | $ | 847 | $ | 220 | $ | 476 | ||||||||||||
Europe | 726 | 1,035 | 1,563 | 1,577 | 647 | 837 | ||||||||||||||||||
Asia-Pacific | 55 | 2 | 57 | 4 | 8 | 2 | ||||||||||||||||||
Africa | 1 | 0— | 2 | 0— | 1 | 1 | ||||||||||||||||||
Total revenues | $ | 1,436 | $ | 1,668 | $ | 2,752 | $ | 2,428 | $ | 876 | $ | 1,316 |
23
March 31, | December 31, | |||||||
2022 | 2021 | |||||||
Long-lived assets by geographic region (*): | ||||||||
Israel | $ | 611 | $ | 629 | ||||
United States | 453 | 493 | ||||||
Germany | 66 | 43 | ||||||
$ | 1,130 | $ | 1,165 |
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Long-lived assets by geographic region (*): | ||||||||
Israel | $ | 794 | $ | 953 | ||||
United States | 628 | 790 | ||||||
Germany | 49 | 43 | ||||||
$ | 1,471 | $ | 1,786 |
|
|
Six Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
Major customer data as a percentage of total revenues: | ||||||||
Customer A | 0* | ) | 10.3 | % |
| Long-lived assets are comprised of property and equipment, net, and operating lease right-of-use assets. |
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Major customer data as a percentage of total revenues: | ||||||||
Customer A | 18 | % | * | ) | ||||
Customer B | 14 | % | 0 | |||||
Customer C | 13 | % | 0 | |||||
Customer D | 11 | % | 0 | |||||
Customer E | 10 | % | * | ) | ||||
Customer F | 10 | % | 0 | |||||
Customer G | * | ) | 15 | % | ||||
Customer H | 0 | 10 | % | |||||
Customer I | 0 | 10 | % |
*) | Less than 10%. |
24
In addition to historical information, this quarterly report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, that are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, potential market opportunities and the effects of competition. Forward-looking statements may include projections regarding our future performance and, in some cases, can be identified by words like “anticipate,” “assume,” “believe,” “could,” “seek,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “future,” “should,” “will,” “would” or similar expressions that convey uncertainty of future events or outcomes and the negatives of those terms. These statements may be found in this section of this quarterly report titled “Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this quarterly report. These statements include, but are not limited to, statements regarding:
•
the adverse effect that the COVID-19 pandemic has had and may continue to have on our business and results of operations;
•
our ability to have sufficient funds to meet certain future capital requirements, which could impair our efforts to develop and commercialize existing and new products;
•
our ability to maintain compliance with the continued listing requirements of the Nasdaq Capital Market and the risk that our ordinary shares will be delisted if we cannot do so;
•
our expectations regarding future growth, including our ability to increase sales in our existing geographic markets and expand to new markets;
•
our ability to maintain and grow our reputation and the market acceptance of our products;
•
our ability to achieve reimbursement from third-party payors or advance CMS coverage for our products;
•
our limited operating history and our ability to leverage our sales, marketing and training infrastructure;
•
our expectations as to our clinical research program and clinical results;
•
our ability to obtain certain components of our products from third-party suppliers and our continued access to our product manufacturers;
•
our ability to improve our products and develop new products;
•
our compliance with medical device reporting regulations to report adverse events involving our products, which could result in voluntary corrective actions or enforcement actions such as mandatory recalls, and the potential impact of such adverse events on ReWalk’s ability to market and sell its products;
•
our ability to gain and maintain regulatory approvals;
•
our expectations as to the results of the FDA, potential regulatory developments with respect to our mandatory 522 postmarket surveillance study;
•
the risk of a cybersecurity attack or breach of our IT systems significantly disrupting our business operations;
•
our ability to maintain adequate protection of our intellectual property and to avoid violation of the intellectual property rights of others;
•
our ability to establish a pathway to commercialize our products in China;
•
the impact of substantial sales of our shares by certain shareholders on the market price of our ordinary shares;
•
our ability to use effectively the proceeds of our offerings of securities;
•
the risk of substantial dilution resulting from the periodic issuances of our ordinary shares;
•
the impact of the market price of our ordinary shares on the determination of whether we are a passive foreign investment company;
•
market and other conditions; and
•
other factors discussed in “Part II. Item 1A. Risk Factors.”
25
The preceding list is not intended to be an exhaustive list of all of our forward-looking statements. The statements are based on our beliefs, assumptions, and expectations of future performance, taking into account the information currently available to us. These statements are only predictions based upon our current expectations and projections about future events. There are important factors that could cause our actual results, levels of activity, performance, or achievements to differ materially from the results, levels of activity, performance or achievements expressed or implied by the statements. In particular, you should consider the risks provided under “Part 1, Item 1A. Risk Factors” of our 2020 Form 10-K, and in other reports subsequently filed by us with, or furnished to, the SEC.
You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur.
Any forward-looking statement in this quarterly report speaks only as of the date hereof. Except as required by law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future developments or otherwise.
Overview
business from.
The VA policy is the first national coverage policy in the United States for qualifying individuals who have suffered spinal cord injury. As of December 31, 2021, we had placed 25 units as part of the VA policy.
26
•
Total revenue in the second quarter of 2021 was $1.4 million;
•
Second quarter 2021 marks the fourth consecutive quarter over quarter growth;
•
Gross margin was 51% in the second quarter of 2021;
•
Total operating expenses were $3.9 million in the second quarter of 2021;
•
Cash position remains strong with $64.2 million;
•
Additional five BKK partners have joined the operating contract in Germany and
•
Jeannine Lynch will join the Company as its VP of strategy and market access on August 31, 2021.
• | Total revenue for the first quarter of 2022 was $0.9 million, compared to $1.3 million in the first quarter of 2021; |
• | Placed on June 8th CMS agenda of the Biannual Healthcare Common Procedure Coding System (HCPCS) meeting that includes benefit category determination for the first time under the new DEMPOS rules. This is based on previous interactions with CMS to determine ReWalk’s benefit category and payment status; |
• | ReWalk has increased resources and presence in VA Polytrauma/TBI Care Systems as well as a process to expand training through the VA’s designated Community Based Outpatient Clinic network; |
• | Strong cash position with $82.6 million as of March 31, 2022; |
• | The Company’s operating expenses were $4.6 million in the first quarter of 2022, compared to $3.7 million in the first quarter of 2021; |
• | In April 2022, the Company joined the Human Robot Interaction Consortium, part of the Israel Innovation Authority MAGNET incentive program, where it will collaborate with several universities to develop advanced technologies aimed at improving the human-exoskeleton interaction. |
partial or total shutdowns, which would adversely affect our business.
2021 Form 10-K in addition to the “Risk Factors” section included below.
27
Results of Operations for the Three and Six Months Ended June 30,March 31, 2022 and March 31, 2021 and June 30, 2020
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Revenues | $ | 1,436 | $ | 1,668 | $ | 2,752 | $ | 2,428 | ||||||||
Cost of revenues | 709 | 646 | 1,318 | 1,033 | ||||||||||||
| ||||||||||||||||
Gross profit | 727 | 1,022 | 1,434 | 1,395 | ||||||||||||
| ||||||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 810 | 954 | 1,605 | 1,939 | ||||||||||||
Sales and marketing | 1,613 | 1,353 | 3,284 | 3,034 | ||||||||||||
General and administrative | 1,445 | 1,267 | 2,707 | 2,576 | ||||||||||||
| ||||||||||||||||
Total operating expenses | 3,868 | 3,574 | 7,596 | 7,549 | ||||||||||||
| ||||||||||||||||
Operating loss | (3,141 | ) | (2,552 | ) | (6,162 | ) | (6,154 | ) | ||||||||
Financial expenses (income), net | (9 | ) | 235 | (13 | ) | 481 | ||||||||||
| ||||||||||||||||
Loss before income taxes | (3,132 | ) | (2,787 | ) | (6,149 | ) | (6,635 | ) | ||||||||
Taxes on income | 9 | 68 | 54 | 60 | ||||||||||||
| ||||||||||||||||
Net loss | $ | (3,141 | ) | $ | (2,855 | ) | $ | (6,203 | ) | $ | (6,695 | ) | ||||
| ||||||||||||||||
Net loss per ordinary share, basic and diluted | $ | (0.07 | ) | $ | (0.22 | ) | $ | (0.15 | ) | $ | (0.57 | ) | ||||
| ||||||||||||||||
Weighted average number of shares used in computing net loss per ordinary share, basic and diluted | 46,123,222 | 13,101,275 | 41,210,527 | 11,744,275 |
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Revenues | $ | 876 | $ | 1,316 | ||||
Cost of revenues | 611 | 609 | ||||||
Gross profit | 265 | 707 | ||||||
Operating expenses: | ||||||||
Research and development | 907 | 795 | ||||||
Sales and marketing | 2,184 | 1,671 | ||||||
General and administrative | 1,462 | 1,262 | ||||||
Total operating expenses | 4,553 | 3,728 | ||||||
Operating loss | (4,288 | ) | (3,021 | ) | ||||
Financial expenses (income), net | 24 | (4 | ) | |||||
Loss before income taxes | (4,312 | ) | (3,017 | ) | ||||
Taxes on income | 38 | 45 | ||||||
Net loss | $ | (4,350 | ) | $ | (3,062 | ) | ||
Net loss per ordinary share, basic and diluted | $ | (0.07 | ) | $ | (0.08 | ) | ||
Weighted average number of shares used in computing net loss per ordinary share, basic and diluted | 62,493,496 | 36,187,789 |
28
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
June 30, | June 30, | Three Months Ended March 31, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2022 | 2021 | |||||||||||||||||||
(in thousands, except unit amounts) | (in thousands, except unit amounts) | (in thousands, except unit amounts) | ||||||||||||||||||||||
Personal unit revenues | $ | 1,153 | $ | 1,667 | $ | 2,461 | $ | 2,381 | $ | 770 | $ | 1,308 | ||||||||||||
Rehabilitation unit revenues | 283 | 1 | 291 | 47 | 106 | 8 | ||||||||||||||||||
| ||||||||||||||||||||||||
Revenues | $ | 1,436 | $ | 1,668 | $ | 2,752 | $ | 2,428 | $ | 876 | $ | 1,316 |
conditions or medical academic centers.
Revenues increased by $324 thousand, or 13%, for the six months ended June 30, 2021, compared to the six months ended June 30, 2020. The increase was driven primarily by higher number of personal and rehabilitation units sold in Unites States.
Germany.
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Gross profit | $ | 727 | $ | 1,022 | $ | 1,434 | $ | 1,395 |
mix.
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Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Research and development expenses | $ | 810 | $ | 954 | $ | 1,605 | $ | 1,939 |
subcontractors expenses.
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Sales and marketing expenses | $ | 1,613 | $ | 1,353 | $ | 3,284 | $ | 3,034 |
employee related expenses, travel and tradeshows activities.
commercialization.
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
General and administrative expenses | $ | 1,445 | $ | 1,267 | $ | 2,707 | $ | 2,576 |
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Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Financial expenses (income), net | $ | (9 | ) | $ | 235 | $ | (13 | ) | $ | 481 |
exchange rate fluctuations.
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Taxes on income | $ | 9 | $ | 68 | $ | 54 | $ | 60 |
Taxes on income
report.
31
In the six months ended June 30, 2021, the Company
March 31, 2022.
Loan Agreement with Kreos and Related Warrant to Purchase Ordinary Shares
On December 30, 2015, we entered into the Loan Agreement with Kreos pursuant to which Kreos extended a line of credit to us in the amount of $20.0 million, with interest payable monthly in arrears on any amounts drawn down at a rate of 10.75% per year from the applicable drawdown date through the date on which all principal is repaid. As of June 30, 2017, the Company raised more than $20.0 million in connection with the issuance of its share capital and, therefore, in accordance with the terms of the Loan Agreement, the repayment period was extended from 24 months to 36 months. The principal was also reduced in connection with the issuance of the Kreos Convertible Note on June 9, 2017. Pursuant to the Loan Agreement, we granted Kreos a first priority security interest over all of our assets, including certain intellectual property and equity interests in its subsidiaries, subject to certain permitted security interests.
Pursuant to the terms of the warrant, in connection with the $20.0 million drawdown under the Loan Agreement on January 4, 2016, we issued to Kreos the warrant to purchase up to 4,771 of our ordinary shares at an exercise price of $241.0 per share, increased to 6,679 ordinary shares on December 28, 2016. Subject to the terms of the warrant, the warrant is exercisable, in whole or in part, at any time prior to the earlier of (i) December 30, 2025, or (ii) immediately prior to the consummation of a merger, consolidation, or reorganization of us with or into, or the sale or license of all or substantially all our assets or shares to, any other entity or person, other than a wholly-owned subsidiary of us, excluding any transaction in which our shareholders prior to the transaction will hold more than 50% of the voting and economic rights of the surviving entity after the transaction.
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On June 9, 2017, the Company and Kreos entered into the First Amendment, under which $3.0 million of the outstanding principal under the Loan Agreement became subject to repayment pursuant to the senior secured Kreos Convertible Note issued on June 9, 2017.
On November 20, 2018, the Company and Kreos entered into the Second Amendment of the Loan Agreement, in which the Company repaid Kreos the $3.6 million other related payments, including prepayment costs and end of loan payments, terminating the Kreos Note, by issuing to Kreos 192,000 units and 288,000 pre-funded units as part of an underwritten public offering at the public offering prices, and the parties agreed to revise the principal and the repayment schedule under the Kreos Loan. Additionally, Kreos and the Company entered into the Kreos Warrant Amendment, which amended the exercise price of the warrant to purchase 6,679 ordinary shares currently held by Kreos from $241 to $7.5.
On June 5, 2019, and June 6, 2019, the Company entered into warrant exercise agreements with certain institutional investors of warrants to purchase the Company’s ordinary shares, pursuant to which, Kreos agreed to exercise in cash their November 2018 warrants at the then-effective exercise price of $7.50 per share. Under the exercise agreements, the Company also agreed to issue to Kreos new warrants to purchase up to 480,000 ordinary shares at an exercise price of $7.50 per share with an exercise period of five years.
On December 29, 2020, the Company repaid in full the remaining loan principal amount to Kreos including end of loan payments and by that discharged all of its obligation to Kreos Accordingly, as of December 31, 2020, the outstanding principal amount under the Kreos Loan Agreement was zero.
On April 21, 2020, RRI entered into a note agreement (the “Note”) evidencing an unsecured loan in the amount of $392 thousand under the Paycheck Protection Program (the “PPP”) as part of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) enacted on March 27, 2020. The Note provides for an interest rate of 1.00% per year and matures two years after the date of initial disbursement. Beginning on the seventh month following the date of initial disbursement, RRI is required to make 18 monthly payments of principal and interest. The Note may be used for payroll costs, costs related to certain group health care benefits and insurance premiums, rent payments, utility payments, mortgage interest payments and interest payments on any other debt obligation that were incurred before February 15, 2020. Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all, or a portion of loan granted under the PPP, with such forgiveness to be determined, subject to limitations, based on the use of the loan proceeds for payment of payroll costs and any payments of mortgage interest, rent, and utilities. The terms of any forgiveness may also be subject to further requirements in any regulations and guidelines the Small Business Administration may adopt.
On September 29, 2020, the Company submitted an application for loan forgiveness and on November 6, 2020, the Company received confirmation of its PPP Note forgiveness.
Equity Raises
Beginning with the filing of our Form 10-K on February 17, 2017, we were subject to limitations under the applicable rules of Form S-3, which constrained our ability to secure capital pursuant to our At The Market (“ATM”)ATM Offering Program (as defined below) or other public offerings pursuant to our effective Form S-3. These rules limit the size of primary securities offerings conducted by issuers with a public float of less than $75 million to no more than one-third of their public float in any 12-month period. AsAt the time of February 16, 2021, sincefiling our annual report for the year ended December 31, 2020, we were no longer subject to these limitations, because our public float had reached at least $75 million in the preceding 60 days these limitations will no longer apply to our primary offerings under Form S-3 untilpreceding the filing of that annual report. Likewise, because our public float was at least $75 million within the 60 days preceding the date of our 2021 Annual Report, we are not currently subject to these limitations. Our currently effective registration statement on Form S-3 expires on May 23, 2022. We have filed a new registration statement on Form S-3 to replace our expiring registration statement which has not yet been declared effective by the SEC. Assuming our new Form S-3 becomes effective and is available for our use during 2022, we will continue to not be subject to these limitations for the remainder of the 2022 fiscal year and until such time as we file our next annual report on Form 10-K infor the year ended December 31, 2022, whenat which time we will be required to re-test our status under these rules. If our public float subsequently drops below $75 million as of the filing of that or a subsequentour next annual report on Form 10-K, or at the time we file a new Form S-3, we will become subject to these limitations again, until the date that our public float again reaches $75 million. These limitations do not apply to secondary offerings for the resale of our ordinary shares or other securities by selling shareholders or to the issuance of ordinary shares upon conversion by holders of convertible securities, such as warrants. Our currently effective Form S-3 expires on May 23, 2022. We have registered up to $100 million of ordinary shares warrants and/or debt securities and certain other outstanding securities with registration rights on our new registration statement on Form S-3, which will be available for our use once the Form S-3.
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On November 20, 2018, the Company completed a follow-on underwritten public offering in which the Company issued and sold 728,019 units, each consisting of one ordinary share and one warrant to purchase one ordinary share. Each unit was sold to the public at a price of $7.5 per unit, additionally the Company issued and sold 1,050,373 pre-funded units, each unit was sold to the public at a price of $7.25 per unit. Each unit containing one pre-funded warrant with an exercise price of $0.25 per share and one warrant to purchase one ordinary share. The total gross proceeds received from the follow-on public offering, before deducting commissions, discounts, and expenses, were $13.1 million (including proceeds from the exercise of 90,691 pre-funded warrants at the closing of the offering). As of December 31, 2018, additional pre-funded warrants to purchase an aggregate 562,466 ordinary shares had been exercised, for additional proceeds of $140,617. During the nine months ended September 30, 2019, additional pre-funded warrants and warrants to purchase an aggregate 2,048,752 ordinary shares had been exercised, for additional proceeds of $12.4 million. As compensation for their role in the offering, the Company also issued to the underwriters warrants to purchase up to 106,680 ordinary shares, which are immediately exercisable starting on November 20, 2018, until November 15, 2023, at $9.375 per share.
On February 15, 2019, the Company entered into an exclusive placement agent Agreement with H.C. Wainwright, on a reasonable best-efforts basis in connection with a public offering of 760,000 ordinary shares at a price of $5.75 per Share. The total gross proceeds received from the follow-on public offering, before deducting commissions, discounts, and expenses, were $4.37 million. The Company also issued to H.C. Wainwright and/or its designees warrants to purchase up to 45,600 ordinary shares, which are immediately exercisable starting on February 25, 2019, until February 21, 2024, at $7.1875 per share.
On April 3, 2019, the Company entered into an exclusive placement agent Agreement with H.C. Wainwright in connection with a registered direct offering of the Company’s ordinary shares, and a concurrent private placement of warrants to purchase ordinary shares. The ordinary shares were offered pursuant to our Form S-3. The Company signed a purchase agreement with certain institutional investors for the issuance and sale of 816,914 ordinary shares at $5.2025 per ordinary share and warrants to purchase up to 408,457 ordinary shares at an exercise price of $5.14. The warrants issued to these purchasers will be exercisable at any time and from time to time, in whole or in part, following the date of issuance and ending five and one-half years from the date of issuance, at an exercise price of $5.14. The Company also issued to H.C. Wainwright and/or its designees warrants to purchase up to 49,015 ordinary shares. The warrants issued to H.C. Wainwright will be exercisable at any time and from time to time, in whole or in part, following the date of issuance and ending five years from the date of the execution of the purchase agreement, at a price per share equal to $6.503125. The gross proceeds from the offering, before deducting placement agent fees and offering expenses, were approximately $4.25 million.
On June 5, 2019, and June 6, 2019, the Company entered into warrant exercise agreements with certain institutional investors whereby the Company issued warrants to purchase up to 1,464,665 ordinary shares with an exercise price of $7.50 per share, exercisable from June 5, 2019, or June 6, 2019, until June 5, 2024, or June 6, 2024, respectively. Additionally, the Company issued warrants to purchase up to 87,880 ordinary shares, with an exercise price of $9.375 per share, exercisable from June 5, 2019, until June 5, 2024, to certain representatives of H.C. Wainwright as compensation for its role as the placement agent in our June 2019 warrant exercise agreement and concurrent private placement of warrants.
On June 12, 2019, the Company entered into a purchase agreement with certain institutional investors for the issuance and sale of 833,334 ordinary shares, at $6.00 per ordinary share and warrants to purchase up to 416,667 ordinary shares with an exercise price of $6.00 per share, exercisable from June 12, 2019, until December 12, 2024, in a private placement that took place concurrently with our registered direct offering of ordinary shares in June 2019. Additionally, the Company issued warrants to purchase up to 50,000 ordinary shares, with an exercise price of $7.50 per share, exercisable from June 12, 2019, until June 10, 2024, to certain representatives of H.C. Wainwright as compensation for its role as the placement agent in our June 2019 registered direct offering and concurrent private placement of warrants.
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On February 10, 2020, the Company closed a “best efforts” public offering whereby the Company issued an aggregate of 5,600,000 of common units and pre-funded units at a public offering price of $1.25 per common unit and $1.249 per pre-funded unit. As part of the public offering, the Company entered into a securities purchase agreement with certain institutional purchasers. Each common unit consisted of one ordinary share, and one common warrant to purchase one ordinary share. Each pre-funded unit consisted of one pre-funded warrant to purchase one ordinary share and one common warrant. Additionally, the Company issued warrants to purchase up to 336,000 ordinary shares, with an exercise price of $1.5625 per share, to representatives of H.C. Wainwright as compensation for its role as the placement agent in the Company’s February 2020 offering. As of December 31, 2020, all pre-funded warrants to purchase ordinary shares had been exercised and 1,831,500 common warrants to purchase ordinary shares had been exercised.
On July 6, 2020, the Company entered into a purchase agreement with certain institutional investors for the issuance and sale of 4,938,278 ordinary shares, at $1.8225 per ordinary share and warrants to purchase up to 2,469,139 ordinary shares with an exercise price of $1.76 per share, exercisable from July 6, 2020, until January 6, 2026. Additionally, the Company issued warrants to purchase up to 296,297 ordinary shares, with an exercise price of $2.2781 per share, exercisable from July 6, 2020, until July 2, 2025, to certain representatives of H.C. Wainwright as compensation for its role as the placement agent in our July 2020 registered direct offering.
On December 8, 2020, the Company entered into a private placement with certain institutional investors for the issuance and sale of 5,579,776 ordinary shares, at $1.43375 per ordinary and warrants to purchase up to 4,184,832 ordinary shares with exercise price of $1.34 per share, exercisable from December 8, 2020, until June 8, 2026. Additionally, the Company issued warrants to purchase up to 334,787 ordinary shares, with an exercise price of $1.7922 per share, exercisable from December 8, 2020, until June 8, 2026, to certain representatives of H.C. Wainwright as compensation for its role as the placement agent in our December 2020 private placement.
On February 19, 2021, the Companywe entered into a purchase agreement with certain institutional and other accredited investors for the issuance and sale of 10,921,502 ordinary shares, par value NIS 0.25 per share at $3.6625 per ordinary share and warrants to purchase up to an aggregate of 5,460,751 ordinary shares with an exercise price of $3.60$3.6 per share, exercisable from February 19, 2021, until August 26, 2026. Additionally, the Companywe issued warrants to purchase up to 655,290 ordinary shares, with an exercise price of $4.578125 per share, exercisable from February 19, 2021, until August 26, 2026, to certain representatives of H.C. Wainwright as compensation for its role as the placement agent in our February 2021 Offering.
35
No sales were made under the ATM Offering Program during the year ended December 31, 2021 or during the three months ended March 31, 2022.
Timwell Private Placement
On March 6, 2018, we entered into an investment agreement with Timwell Corporation Limited, a Hong Kong corporation (“Timwell”), as amended on May 15, 2018 (the “Investment Agreement”), pursuant to which we agreed, in return for aggregate gross proceeds to us of $20 million, to issue to Timwell an aggregate of 640,000 of our ordinary shares, at a price per share of $1.25. The Investment Agreement contemplates issuances in three tranches, including $5 million for 160,000 shares in the first tranche, $10 million for 320,000 shares in the second tranche and $5 million for 160,000 shares in the third tranche.
The first tranche, consisting of $5 million for 160,000 shares, closed on May 15, 2018. The net aggregate proceeds after deducting commissions, fees and offering expenses in the amount of approximately $705 thousand were approximately $4.3 million.
The closings of the second tranche and third tranche were subject to specified closing conditions, including the formation of a joint venture, the signing of a license agreement and a supply agreement, and the successful production of certain ReWalk products. The closing of the third tranche was to have occurred by December 31, 2018, and no later than April 1, 2019. We believe that Timwell committed various material breaches of the Investment Agreement, including failure to consummate its second and third investment tranches in the Company for a total of $15 million, failure to enter into a detailed joint venture agreement with the Company, and failure to make payments for product-related commitments. Nevertheless, until March 2020 we continued to engage in a dialogue with Timwell (and its affiliate RealCan) on alternative pathways to allow us to commercialize our products in China through RealCan and its affiliates, and also provide for RealCan or an affiliate to invest in us.
36
In late March 2020, Timwell notified us that it would not invest the second and third tranches under the Investment Agreement. In response, in early April 2020, our Board of Directors also removed Timwell’s designee, who was appointed pursuant to the Investment Agreement, from the Board of Directors, due to this breach pursuant to the terms of the Investment Agreement. We continue to view China as a market with key opportunities for products designed for stroke patients, and therefore we continue to evaluate potential relationships with other groups to penetrate the Chinese market.
Six Months Ended | ||||||||||||||||
June 30, | Three Months Ended March 31, | |||||||||||||||
2021 | 2020 | 2022 | 2021 | |||||||||||||
Net cash used in operating activities | $ | (6,340 | ) | $ | (7,533 | ) | $ | (5,708 | ) | $ | (3,173 | ) | ||||
Net cash used in investing activities | (11 | ) | (15 | ) | (3 | ) | (9 | ) | ||||||||
Net cash provided by financing activities | 50,236 | 5,303 | - | 50,236 | ||||||||||||
Net cash flow | $ | 43,885 | $ | (2,245 | ) | $ | (5,711 | ) | $ | 47,054 |
increased insurance prepaid expenses, increased inventory purchases, and higher business development costs.
2021.
Payments due by period (in thousands) | ||||||||||||
Less than | ||||||||||||
Contractual obligations | Total | 1 year | 1-3 years | |||||||||
| ||||||||||||
Purchase obligations (1) | $ | 1,307 | $ | 1,307 | $ | — | ||||||
Collaboration Agreement and License Agreement obligations (2) | 1,656 | 1,056 | 600 | |||||||||
Operating lease obligations (3) | 1,659 | 682 | 977 | |||||||||
Total | $ | 4,622 | $ | 3,045 | $ | 1,577 |
Payments due by period (in dollars, in thousands) | ||||||||||||
Contractual obligations | Total | Less than 1 year | 1-3 years | |||||||||
Purchase obligations (1) | $ | 1,549 | $ | 1,549 | $ | - | ||||||
Collaboration Agreement and License Agreement obligations (2) | 59 | 59 | - | |||||||||
Operating lease obligations (3) | 1,079 | 686 | 393 | |||||||||
Total | $ | 2,687 | $ | 2,294 | $ | 393 |
(1) | The Company depends on one contract manufacturer, Sanmina Corporation, for both the ReStore products and the SCI Products. We place our manufacturing orders with Sanmina pursuant to purchase orders or by providing forecasts for future |
(2) | |
| Our Collaboration Agreement with Harvard was originally |
(3) | |
| Our operating leases consist of leases for our facilities in the United States and Israel and motor vehicles. |
We calculated the payments due under our operating lease obligation for our Israeli office that are to be paid in NIS at a rate of exchange of NIS 3.26:$1.00,3.176: $1.00, and the payments due under our operating lease obligation for our German subsidiary that are to be paid in euros at a rate of exchange of 1.188 euro:$1:00,€1.00: $1.109, both of which were the applicable exchange rates as of June 30, 2021.March 31, 2022.
37
disclosure.
38
The design, manufacturemanufacturing, labeling, and marketing of our products, involve certain inherent risks. Manufacturing or design defects, unanticipated use of ReWalk or ReStore, or inadequate disclosure of risks relatingand a failure to the use of our products can lead to injury or other adverse events. In addition, because the manufacturing of our products is outsourced to Sanmina, our original equipment manufacturer, we may not be aware of manufacturing defects that could occur. Such adverse eventscomply with such regulations could lead to recallswithdrawal or safety alerts relating to our products (either voluntary or required by the FDA or similar governmental authorities in other countries), and could result, in certain cases, in the removalrecall of our products from the market. A recall
When an exoskeleton is used by a paralyzed individual to walk, the individual relies completely on the exoskeleton to hold him or her upright. In addition, our products incorporate sophisticated computer software. Complex software frequently contains errors, especially when first introduced. Our software may experience errors or performance problems in the future. If any part of our product’s hardware or software were to fail, the user could experience death or serious injury.as well as enforcement actions against us. For example, ReWalk recently submitted medical device reports, or MDRs, to the FDA and medicalcould request that we recall our ReWalk Personal 6.0 or ReStore device vigilance reports,in case of product defects, or MDVs,require us to the European regulatory authorities and initiated a correction in response to two complaints regarding battery thermal runaway events. The correction that includes clarified use instructions and information on battery information and storage was implemented in Europe and is in final implementation stage in the United State. Additionally, users may not use or maintain our products in accordance with safety, storage, and training protocols, which could enhance the risk of death or injury. Any such occurrence could cause delay in market acceptance of our products, damage to our reputation, additional regulatory filings, product recalls, increased service and warranty costs, product liability claims and loss of revenue relating to such hardware or software defects.
The medical device industry has historically been subject to extensive litigation over product liability claims. We have been and anticipate that as part of our ordinary course of business we may be, subject to product liability claims alleging defects in the design, manufacture, or labeling of our products. A product liability claim, regardless of its merit or eventual outcome, could result in significant legal defense costs and high punitive damage payments. Although we maintain product liability insurance, the coverage is subject to deductibles and limitations, and may not be adequate to cover future claims. Additionally, we may be unable to maintain our existing product liability insurance in the future at satisfactory rates or adequate amounts.
Risks Related to Government Regulation
While we addressed the observations that the FDA cited in a 2015 warning letter related to our mandatoryconduct post-market surveillance study and initiatedstudies. If we fail to recall the study, we are currently experiencing enrollment issues that make our study progress inadequate and our modified protocol (intendeddevice and/or conduct requested postmarket surveillance studies to overcome the enrollment issues so that we may complete the study, as required) has not yet been approved by FDA. Going forward, if we cannot meet certain FDA requirements and enrollment criteria for the study or otherwise satisfy FDA requests promptly, or if our study produces unfavorable results,FDA’s satisfaction, we could be subject to additional FDA warnings lettersenforcement action.
39
We are conducting an ongoing mandatory FDA postmarket surveillance study on our ReWalk Personal 6.0, which began in June 2016. Before we began the current study, the FDA sent us a warning letter on September 30, 2015 (“the September 2015 Warning Letter”), threatening potential regulatory action against us for violations of Section 522 of the U.S. Federal Food, Drug, and Cosmetic Act, based on our failure to initiate a postmarket surveillance study by the September 28, 2015, deadline, our allegedly deficient protocol forlabeling that study and the lack of progress and communication regarding the study. Between June 2014 and our receipt of the September 2015 Warning Letter, we had responded late to certain of the FDA’s requests related to our study protocol. In February 2016, the FDA sent us an additional information request, or the February 2016 Letter, requesting additional changes to our study protocol and asking that we amend the study within 30 days. This letter also discussed the FDA’s request, as further discussed in later communications with the FDA, for a new premarket notification for our ReWalk device, or a special 510(k), linked to what the FDA viewed as changes to the labeling and the device, including to a computer included with the device. In late March 2016, following multiple discussions with the FDA, including an in-person meeting, the FDA confirmed that the agency would permit the continued marketing of the ReWalk device conditioned upon our timely submitting a special 510(k) and initiating our postmarket surveillance study by June 1, 2016. The special 510(k) was timely submitted on April 8, 2016, and the FDA’s substantial equivalence determination was received by us on July 22, 2016, granting us permission to continue marketing the ReWalk device.
Additionally, we submitted a protocol to the FDA for the postmarket surveillance study that was approved by the FDA on May 5, 2016.
We began the study on June 13, 2016, with Stanford University as the lead investigational site. In August 2016, the FDA sent us a letter stating that, based on its evaluation of our corrective and preventive actions in response to the September 2015 Warning Letter, it appeared we had adequately addressed the violations cited in the September 2015 Warning Letter. As part of our study, we provided the FDA with the required periodic reports on the study’s progress, in a few cases with delay, and we intend to continue providing the FDA with periodic reports as required. Through these reports, we made the FDA aware that due to enrollment issues, we were unable to satisfy the target enrollment specified in the original study protocol. As of March 6, 2021, the study has been closed. Twelve subjects were enrolled in the study, three completed the study and one was using the device at the time the study was closed. This was substantially below the required number of patients included in our original study protocol.
In March 2021, FDA accepted another protocol supplement to the original postmarket study that we prepared to address our inability to obtain certain study information due to the COVID-19 pandemic. Our modification to the original protocol allowed us to close all study sites. The data from the original postmarket study, along with the real world data, was submitted to FDA and is currently under review. However, despite the revised study protocol there can be no assurance that we will be able to satisfy the post-market study requirements. If we cannot meet FDA requirements for the post-market study or timely address requests from the FDA related to the study, or if the results of the study are not as favorable as we expect, the FDA may issue additional warning letters to us, impose limitations on the labeling of our device or require us to stop marketingmodify or re-register our products or otherwise impact our ability to market our products in those countries, such as the ReWalk Personal deviceMay 2021 Medical Device Regulation changes in the United States. We derived 40%European Union. The process of complying with these governmental regulations can be costly and time consuming, and could delay or prevent the production, manufacturing, or sale of our revenues in the year ended December 31, 2020, from sales of the ReWalk device in the United States and, if we are unable to market the ReWalk device in the United States, we expect that these sales would be adversely impacted, which could materially adversely affect our business and overall results of operations.
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* |
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^ | |
| Portions of this exhibit (indicated by asterisks) have been omitted under rules of the |
41
ReWalk Robotics Ltd. | |||
Date: | By: | /s/ Larry Jasinski | |
Larry Jasinski | |||
Chief Executive Officer (Principal Executive Officer) | |||
Date: | By: | /s/ | |
Almog Adar | |||
Director of Finance and Corporate Financial | |||
(Principal Financial and Principal Accounting Officer) | |||
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