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 March 31,September 30, 2023
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEEXCHANGE 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. Employer Identification No.) | ||
3 Hatnufa Street, Floor 6, Yokneam Ilit, Israel | 2069203 | ||
(Address of principal executive offices) | (Zip Code) | ||
+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 |
Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically 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 May 11,November 14, 2023, the registrant had outstanding 59,570,788 60,024,643 ordinary shares, par value NIS 0.25 per share.
REWALK ROBOTICS LTD.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31,SEPTEMBER 30, 2023
TABLE OF CONTENTS
Page No. | ||
4 | ||
| 4 | ||
| 6 | ||
7 | ||
Introduction and Where You Can Find Other Information
As used in this quarterly report on Form 10-Q (this “quarterly report”), the terms “ReWalk,” the “Company,” “RRL,” “we,” “us” and “our” refer to ReWalk Robotics Ltd. and its subsidiaries, unless the context clearly indicates otherwise. Our website is www.rewalk.com. Information contained in, or that can be accessed through, our website does not constitute a part of this quarterly report and is not incorporated by reference herein. We have included our website address in this quarterly report solely for informational purposes. Information that we furnish to or file with the Securities and Exchange Commission (the “SEC”), including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to, or exhibits included in, these reports are available for download, free of charge, on our website as soon as reasonably practicable after such materials are filed with or furnished to the SEC. Our SEC filings, including exhibits filed or furnished therewith, are also available on the SEC’s website at http://www.sec.gov.
Special Note Regarding Forward-Looking Statements
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 the 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:
• | 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 |
• | our ability to achieve reimbursement from third-party payors or advance Centers for Medicare & Medicaid Services (“CMS”) coverage for our products, including our ability to successfully submit cases for Medicare coverage through Medicare Administrative Contractors; |
• | our ability to regain and 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; |
• | our ability to, successfully integrate the |
• | 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; |
2
• | 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 impact of the market price of our ordinary shares on the determination of whether we are a passive foreign investment company; |
• | the adverse effect that the recent COVID-19 pandemic has had and continues to have on our business and results of operations; |
• | market and other conditions, including the extent to which inflation or global instability may disrupt our business operations or our financial condition or the financial condition of our customers and |
• | other factors discussed in the |
The preceding list is not intended to be an exhaustive list of all of our forward-looking statements.statements contained in this quarterly report. 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 I, Item 1A. Risk Factors” of our 2022 annual report on 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.
PART I - FINANCIAL INFORMATION
ITEM 1.1. FINANCIAL STATEMENTS
REWALK ROBOTICS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
March 31, | December 31, | September 30, | December 31, | |||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
ASSETS | ||||||||||||||||
CURRENT ASSETS | ||||||||||||||||
Cash and cash equivalents | $ | 61,883 | $ | 67,896 | $ | 32,590 | $ | 67,896 | ||||||||
Trade receivable, net | 532 | 1,036 | ||||||||||||||
| Trade receivable, net (Net from credit losses of $352 and $26 as of September 30, 2023 and December 31, 2022, respectively) | 3,529 | 1,036 | ||||||||||||||
Prepaid expenses and other current assets | 1,434 | 649 | 2,254 | 649 | ||||||||||||
Inventories | 3,027 | 2,929 | 6,043 | 2,929 | ||||||||||||
Total current assets | 66,876 | 72,510 | 44,416 | 72,510 | ||||||||||||
LONG-TERM ASSETS | ||||||||||||||||
Restricted cash and other long-term assets | 692 | 694 | 772 | 694 | ||||||||||||
Operating lease right-of-use assets | 1,250 | 836 | 2,077 | 836 | ||||||||||||
Property and equipment, net | 160 | 196 | 1,047 | 196 | ||||||||||||
| Intangible assets | 13,369 | - | ||||||||||||||
| Goodwill | 7,538 | - | ||||||||||||||
Total long-term assets | 2,102 | 1,726 | 24,803 | 1,726 | ||||||||||||
Total assets | $ | 68,978 | $ | 74,236 | $ | 69,219 | $ | 74,236 | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
REWALK ROBOTICS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
March 31, | December 31, | September 30, | December 31, | |||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
CURRENT LIABILITIES | ||||||||||||||||
Current maturities of operating leases liability | $ | 624 | $ | 564 | $ | 1,245 | $ | 564 | ||||||||
Trade payables | 1,781 | 1,950 | 5,658 | 1,950 | ||||||||||||
Employees and payroll accruals | 513 | 1,282 | 1,701 | 1,282 | ||||||||||||
Deferred revenues | 357 | 301 | 1,611 | 301 | ||||||||||||
| Earnout liability | 1,906 | - | ||||||||||||||
Other current liabilities | 608 | 685 | 693 | 685 | ||||||||||||
Total current liabilities | 3,883 | 4,782 | 12,814 | 4,782 | ||||||||||||
LONG-TERM LIABILITIES | ||||||||||||||||
| Earnout liability | 1,741 | - | ||||||||||||||
Deferred revenues | 895 | 890 | 1,645 | 890 | ||||||||||||
Non-current operating leases liability | 657 | 333 | 856 | 333 | ||||||||||||
Other long-term liabilities | 24 | 66 | 387 | 66 | ||||||||||||
Total long-term liabilities | 1,576 | 1,289 | 4,629 | 1,289 | ||||||||||||
Total liabilities | 5,459 | 6,071 | 17,443 | 6,071 | ||||||||||||
COMMITMENTS AND CONTINGENT LIABILITIES | ||||||||||||||||
Shareholders’ equity: | ||||||||||||||||
Share capital | ||||||||||||||||
Ordinary share of NIS 0.25 par value-Authorized: 120,000,000 shares at March 31, 2023 and December 31, 2022; Issued: 63,145,562 and 63,023,506 shares at March 31, 2023 and December 31, 2022, respectively; Outstanding: 59,482,004 and 60,090,298 shares as of March 31, 2023 and December 31, 2022 respectively | 4,445 | 4,489 | ||||||||||||||
| Ordinary share of NIS 0.25 par value-Authorized: 120,000,000 shares at September 30, 2023 (unaudited) and December 31, 2022; Issued: 64,047,124 and 63,023,506 shares at September 30, 2023 (unaudited) and December 31, 2022, respectively; Outstanding: 60,024,517 and 60,090,298 shares as of September 30, 2023 (unaudited) and December 31, 2022 respectively | 4,481 | 4,489 | ||||||||||||||
Additional paid-in capital | 280,152 | 279,857 | 280,742 | 279,857 | ||||||||||||
Treasury Shares at cost, 3,663,558 and 2,933,208 ordinary shares at March 31, 2023 and December 31, 2022 respectively | (3,007 | ) | (2,431 | ) | ||||||||||||
| Treasury Shares at cost, 4,022,607 and 2,933,208 ordinary shares at September 30, 2023 and December 31, 2022 respectively | (3,203 | ) | (2,431 | ) | ||||||||||||
Accumulated deficit | (218,071 | ) | (213,750 | ) | (230,244 | ) | (213,750 | ) | ||||||||
Total shareholders’ equity | 63,519 | 68,165 | 51,776 | 68,165 | ||||||||||||
Total liabilities and shareholders’ equity | $ | 68,978 | $ | 74,236 | $ | 69,219 | $ | 74,236 | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
REWALK ROBOTICS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended March 31, | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Revenues | $ | 1,230 | $ | 876 | $ | 4,403 | $ | 886 | $ | 6,970 | $ | 3,332 | ||||||||||||
Cost of revenues | 659 | 611 | 3,540 | 665 | 4,960 | 2,100 | ||||||||||||||||||
Gross profit | 571 | 265 | 863 | 221 | 2,010 | 1,232 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Research and development, net | 752 | 907 | 1,262 | 1,065 | 2,830 | 2,928 | ||||||||||||||||||
Sales and marketing | 2,484 | 2,184 | 4,088 | 2,588 | 9,076 | 7,119 | ||||||||||||||||||
General and administrative | 1,710 | 1,462 | 3,455 | 2,001 | 7,579 | 5,282 | ||||||||||||||||||
Total operating expenses | 4,946 | 4,553 | 8,805 | 5,654 | 19,485 | 15,329 | ||||||||||||||||||
Operating loss | (4,375 | ) | (4,288 | ) | (7,942 | ) | (5,433 | ) | (17,475 | ) | (14,097 | ) | ||||||||||||
Financial expenses (income), net | (78 | ) | 24 | |||||||||||||||||||||
| Financial (expenses) income, net | 411 | (1 | ) | 1,047 | (69 | ) | ||||||||||||||||||
Loss before income taxes | (4,297 | ) | (4,312 | ) | (7,531 | ) | (5,434 | ) | (16,428 | ) | (14,166 | ) | ||||||||||||
Taxes on income | 24 | 38 | - | 26 | 66 | 90 | ||||||||||||||||||
Net loss | $ | (4,321 | ) | $ | (4,350 | ) | $ | (7,531 | ) | $ | (5,460 | ) | $ | (16,494 | ) | $ | (14,256 | ) | ||||||
Net loss per ordinary share, basic and diluted | $ | (0.07 | ) | $ | (0.07 | ) | $ | (0.13 | ) | $ | (0.09 | ) | $ | (0.28 | ) | $ | (0.23 | ) | ||||||
Weighted average number of shares used in computing net loss per ordinary share, basic and diluted | 59,515,524 | 62,493,496 | 59,798,413 | 62,793,847 | 59,509,781 | 62,611,580 | ||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
REWALK ROBOTICS LTD. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(In thousands, except share data)
(Unaudited)
Ordinary Shares | Additional paid-in | Treasury | Accumulated | Total shareholders’ | Ordinary Shares | Additional paid-in | Treasury | Accumulated | Total shareholders’ | |||||||||||||||||||||||||||||||||||||||
Number | Amount | capital | Shares | deficit | equity | Number | Amount | capital | Shares | deficit | equity | |||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2021 | 62,480,163 | $ | 4,661 | $ | 278,903 | $ | - | $ | (194,181 | ) | $ | 89,383 | ||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2022 | 62,678,308 | 4,675 | 279,215 | - | (202,977 | ) | 80,913 | |||||||||||||||||||||||||||||||||||||||||
Share-based compensation to employees and non-employees | - | - | 153 | - | - | 153 | - | - | 320 | - | - | 320 | ||||||||||||||||||||||||||||||||||||
Issuance of ordinary shares upon vesting of employees and non-employees RSUs | 28,354 | 2 | (2 | ) | - | - | - | 223,637 | 16 | (16 | ) | - | - | - | ||||||||||||||||||||||||||||||||||
| Treasury Shares at cost | (184,629 | ) | (13 | ) | - | (170 | ) | (183 | ) | |||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | (4,350 | ) | (4,350 | ) | - | - | - | - | (5,460 | ) | (5,460 | ) | ||||||||||||||||||||||||||||||||
Balance as of March 31, 2022 | 62,508,517 | 4,663 | 279,054 | - | (198,531 | ) | 85,186 | |||||||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2022 | 62,717,316 | 4,678 | 279,519 | (170 | ) | (208,437 | ) | 75,590 | ||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2022 | 60,090,298 | 4,489 | 279,857 | (2,431 | ) | (213,750 | ) | 68,165 | ||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2023 | 59,346,139 | 4,435 | 280,455 | (3,203 | ) | (222,713 | ) | 58,974 | ||||||||||||||||||||||||||||||||||||||||
Share-based compensation to employees and non-employees | - | - | 304 | - | - | 304 | - | - | 333 | - | - | 333 | ||||||||||||||||||||||||||||||||||||
Issuance of ordinary shares upon vesting of RSUs by employees and non-employees | 122,056 | 9 | (9 | ) | - | - | - | 678,378 | 46 | (46 | ) | - | - | - | ||||||||||||||||||||||||||||||||||
Treasury shares at cost | (730,350 | ) | (53 | ) | - | (576 | ) | - | (629 | ) | ||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | (4,321 | ) | (4,321 | ) | - | - | - | - | (7,531 | ) | (7,531 | ) | ||||||||||||||||||||||||||||||||
Balance as of March 31, 2023 | 59,482,004 | $ | 4,445 | $ | 280,152 | $ | (3,007 | ) | $ | (218,071 | ) | $ | 63,519 | |||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2023 | 60,024,517 | 4,481 | 280,742 | (3,203 | ) | (230,244 | ) | 51,776 | ||||||||||||||||||||||||||||||||||||||||
| Ordinary Shares | Additional paid-in | Treasury | Accumulated | Total shareholders’ | ||||||||||||||||||||
| Number | Amount | capital | Shares | deficit | equity | |||||||||||||||||||
| 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 | - | - | 646 | - | - | 646 | ||||||||||||||||||
| Issuance of ordinary shares upon vesting of employees and non-employees RSUs | 421,782 | 30 | (30 | ) | - | - | - | |||||||||||||||||
| Treasury Shares at cost | (184,629 | ) | (13 | ) | - | (170 | ) | - | (183 | ) | ||||||||||||||
| Net loss | - | - | - | - | (14,256 | ) | (14,256 | ) | ||||||||||||||||
| Balance as of September 30, 2022 | 62,717,316 | 4,678 | 279,519 | (170 | ) | (208,437 | ) | 75,590 | ||||||||||||||||
| Balance as of December 31, 2022 | 60,090,298 | 4,489 | 279,857 | (2,431 | ) | (213,750 | ) | 68,165 | ||||||||||||||||
| Share-based compensation to employees and non-employees | - | - | 955 | - | - | 955 | ||||||||||||||||||
| Issuance of ordinary shares upon vesting of RSUs by employees and non-employees | 1,023,618 | 70 | (70 | ) | - | - | - | |||||||||||||||||
| Treasury shares at cost | (1,089,399 | ) | (78 | ) | - | (772 | ) | - | (850 | ) | ||||||||||||||
| Net loss | - | - | - | - | (16,494 | ) | (16,494 | ) | ||||||||||||||||
| Balance as of September 30, 2023 | 60,024,517 | 4,481 | 280,742 | (3,203 | ) | (230,244 | ) | 51,776 | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
REWALK ROBOTICS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended March 31, | Nine Months Ended September 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Cash flows used in operating activities: | ||||||||||||||||
Net loss | $ | (4,321 | ) | $ | (4,350 | ) | $ | (16,494 | ) | $ | (14,256 | ) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||||
Depreciation | 36 | 53 | ||||||||||||||
| Depreciation and amortization | 898 | 161 | ||||||||||||||
Share-based compensation | 304 | 153 | 955 | 646 | ||||||||||||
Remeasurement of earn out liability | 40 | - | ||||||||||||||
Deferred taxes | - | 1 | - | 2 | ||||||||||||
Foreign currency remeasurement loss | 11 | - | ||||||||||||||
| Interest income | (13) | - | ||||||||||||||
| Exchange rate fluctuations | 24 | 182 | ||||||||||||||
Changes in assets and liabilities: | ||||||||||||||||
Trade receivables, net | 504 | 21 | (720 | ) | 138 | |||||||||||
Prepaid expenses, operating lease right-of-use assets and other assets | (1,370 | ) | (706 | ) | (849 | ) | (115 | ) | ||||||||
Inventories | (119 | ) | (325 | ) | (480 | ) | (550 | ) | ||||||||
Trade payables | 23 | 81 | 1,895 | 524 | ||||||||||||
Employees and payroll accruals | (769 | ) | (465 | ) | (347 | ) | (153 | ) | ||||||||
Deferred revenues | 61 | (34 | ) | (23 | ) | (5 | ) | |||||||||
Operating lease liabilities and other liabilities | 407 | (137 | ) | (1,069 | ) | (552 | ) | |||||||||
Net cash used in operating activities | (5,233 | ) | (5,708 | ) | (16,183 | ) | (13,978 | ) | ||||||||
Cash flows used in investing activities: | ||||||||||||||||
Purchase of property and equipment | - | (3 | ) | (2 | ) | (25 | ) | |||||||||
| Acquisition of a business, net of cash acquired | (18,068 | ) | - | |||||||||||||
Net cash used in investing activities | - | (3 | ) | (18,070 | ) | (25 | ) | |||||||||
Cash flows from financing activities: | ||||||||||||||||
Purchase of treasury shares | (771 | ) | - | (992 | ) | (183 | ) | |||||||||
Net cash used in financing activities | (771 | ) | - | (992 | ) | (183 | ) | |||||||||
Effect of Exchange rate changes on Cash, Cash Equivalents and Restricted Cash | (11 | ) | - | (24 | ) | (182 | ) | |||||||||
Decrease in cash, cash equivalents, and restricted cash | (6,015 | ) | (5,711 | ) | (35,269 | ) | (14,368 | ) | ||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 68,555 | 89,050 | 68,555 | 89,050 | ||||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 62,540 | $ | 83,339 | $ | 33,286 | $ | 74,682 | ||||||||
Supplemental disclosures of non-cash flow information | ||||||||||||||||
| Classification of other current assets to property and equipment, net | $ | - | $ | 22 | ||||||||||||
Classification of inventory to property and equipment, net | $ | - | $ | 51 | $ | 194 | $ | 67 | ||||||||
Classification of other current assets to property and equipment, net | $ | - | $ | 22 | ||||||||||||
| Classification of property and equipment, net to inventory | $ | 39 | $ | - | ||||||||||||
ROU assets obtained from new lease liabilities | $ | 513 | $ | - | $ | 513 | $ | - | ||||||||
Supplemental cash flow information: | ||||||||||||||||
Cash and cash equivalents | $ | 61,883 | $ | 82,632 | $ | 32,590 | $ | 74,027 | ||||||||
Restricted cash included in other long-term assets | 657 | 707 | 696 | 655 | ||||||||||||
Total Cash, cash equivalents, and restricted cash | $ | 62,540 | $ | 83,339 | $ | 33,286 | $ | 74,682 | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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 |
| c. | The Company is a medical device company that is designing, developing, and commercializing innovative technologies that enable mobility and wellness in rehabilitation and daily life for individuals with physical and neurological conditions. |
The Company has sought to expand its product offerings beyond the SCI Products through internal development and distribution agreements. The Company has developed its ReStore Exo-Suit device, which it began commercializing in June 2019. The ReStore is a powered, lightweight soft exo-suit intended for use during the rehabilitation of individuals with lower limb disability due to stroke. During the second quarter of 2020, the Company signed two separate agreements to distribute additional product lines in the United States. The Company is the exclusive distributor of the MYOLYN MyoCycle FES Pro cycles to U.S. rehabilitation clinics and for the MyoCycle Home cycles available to US veterans through VA hospitals. In the second quarter of 2020, the Company also became the exclusive distributor of the MediTouch Tutor movement biofeedback systems in the United States; however, due to unsatisfactory sales performance of the MediTouch product lines, the Company terminated this agreement as of January 31, 2023. We refer to the MediTouch and MyoCycle devices as our “Distributed Products.”
On August 11, 2023, pursuant to an Agreement and Plan of Merger among RRI, AGI, Atlas Merger Sub, Inc., a wholly owned subsidiary of RRI (“Merger Sub”), and Shareholder Representative Services LLC, date August 8, 2023, RRI acquired AGI and AGI became a wholly owned subsidiary of the Company.
For accounting purposes, RRI was considered the acquirer and AGI was considered the acquiree. The acquisition was accounted for using the acquisition method of accounting. See Note 5 for additional information.
The Company made its first acquisition to supplement its internal growth when it acquired AGI, a leading provider of AlterG Anti-Gravity systems for use in physical and neurological rehabilitation. The Company paid a cash purchase price of $19.0 million at closing and additional cash earnouts may be paid based upon a percentage of AlterG’s year-over-year revenue growth over the two years following the closing. The AlterG systems use patented, NASA-derived Differential Air Pressure (“DAP”) technology to reduce the effects of gravity and allow people to rehabilitate with finely calibrated support and reduced pain. The Company will continue to evaluate other products for distribution or acquisition that can broaden its product offerings further to help individuals with physical and neurological injury and disability.
9
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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, through a combination (depending on the product line) of direct sales and distributors in Germany, Canada, and Australia, and primarily through distributors in other markets. In its direct markets, the Company has established relationships with clinics and rehabilitation centers, professional and college sports teams, and individuals and organizations in the spinal cord injury community, and in its indirect markets, the Company’s distributors maintain these relationships. RRI markets and sellsAGI market and sell products mainly in the United States. RRG markets and sells the Company’s products mainly in Germany and Europe.
6
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
d. | As of |
The Company expects to incur future net losses and its transition to profitability is dependent upon, among other things, the successful development and commercialization of its products and product candidates, the establishment of contracts for the distribution of new product lines, or the acquisition of additional product lines, any of which, or in combination, would contribute to the achievement of a level of revenues adequate to support its cost structure. Until the Company achieves profitability or generates positive cash flows, it will continue to need to raise additional cash. The 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, the Company may seek additional capital through arrangements with strategic partners or from other sources and will continue to address its cost structure. Notwithstanding, there can be no assurance that the Company will be able to raise additional funds or achieve or sustain profitability or positive cash flows from operations.
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. 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 management’s opinion, the accompanying financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. The Company’s interim period results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year.
These unaudited interim condensed consolidated financial statements and accompanying notes should be read in conjunction with the 2022 consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2022 (the “2022 Form 10-K”). There have been no changes in the significant accounting policies from those that were disclosed in the consolidated financial statements for the fiscal year ended December 31, 2022 included in the 2022 Form 10-K, unless otherwise stated.
710
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES
| a. | Business Combinations |
The Company accounts for business combinations in accordance with ASC 805, “Business Combinations”. For business combinations accounted for under the acquisition method, ASC 805 requires recognition of assets acquired, liabilities assumed, and any non-controlling interest at the acquisition date, measured at their fair values as of that date. The Company determines the recognition of intangible assets based on the following criteria: (i) the intangible asset arises from contractual or other rights; or (ii) the intangible asset is separable or divisible from the acquired entity and capable of being sold, transferred, licensed, returned or exchanged.
The excess of the fair value of the purchase price over the fair values of the identifiable assets and liabilities is recorded as goodwill. Determining the fair value of the identifiable assets and liabilities requires management to use significant judgment and estimates including the forecasted revenue and revenues growth rates, discount rates, customer contract renewal rates and customer attrition rates. The process of estimating the fair values requires significant estimates, especially with respect to intangible assets. Management’s determination of fair value of assets acquired and liabilities assumed at the acquisition date is based on the best information available in the circumstances and incorporates management’s own assumptions and involves a significant degree of judgment.
Acquisition related costs include legal fees, consulting and success fees, and other non-recurring integration related costs. Acquisition-related costs are expensed as incurred.
| b. | Goodwill and Other Intangibles |
For business combinations, the purchase prices are allocated to the tangible assets and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition dates, with the remaining unallocated purchase prices recorded as goodwill.
The Company has no indefinite-lived intangible assets other than goodwill. Acquired identifiable finite-lived intangible assets include identifiable acquired technology, customer relationships, trademarks and backlog and are amortized on a straight-line basis over the estimated useful lives of the assets. The Company routinely reviews the remaining estimated useful lives of finite-lived intangible assets.
Goodwill is not amortized and is tested for impairment at least annually.
The Company operates as one reporting unit and the fair value of the reporting unit is estimated using quoted market prices of the Company’s stock in active markets. The Company tests goodwill for impairment annually in the fourth quarter and whenever events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable.
When testing goodwill for impairment, the Company may first perform a qualitative assessment. If the Company determines it is not more likely than not the reporting unit’s fair value is less than its carrying value, then no further analysis is necessary. If the Company determines that it is more likely than not that the fair value of its reporting unit is less than its carrying amount, then the quantitative impairment test will be performed. The Company may elect to bypass the qualitative assessment and proceed directly to performing a quantitative analysis. Under the quantitative impairment test, if the carrying amount of the Company’s reporting unit exceeds its fair value, the Company recognizes an impairment of goodwill for the amount of this excess.
11
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
As of September 30, 2023, no impairments of goodwill have been recognized.
The Company evaluates the recoverability of long-lived assets, including property and equipment and intangible assets subject to amortization for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be fully recoverable. Such events and changes may include significant changes in performance relative to expected operating results, significant changes in asset use, significant negative industry or economic trends, and changes in the Company’s business strategy. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If such review indicates that the carrying amount of long-lived assets is not recoverable, the carrying amount of such assets is reduced to fair value. There were no impairment charges to long-lived assets during the periods presented.
c. | Fair Value Measurements |
Cash and cash equivalents, restricted cash, prepaid expenses and other assets, trade payables and accrued expenses and other liabilities, are stated at their carrying value which approximates their fair value due to the short time to the expected receipt or payment.
The following tables present information about the Company’s financial assets and liabilities that are measured in fair value on a recurring basis as of September 30, 2023 and December 31, 2022 (in thousands):
Fair value measurements as of | ||||||||||
Description | Fair Value Hierarchy | September 30, 2023 | December 31, 2022 | |||||||
Financial assets: | ||||||||||
Money market funds included in cash and cash equivalent | Level 1 | $ | 2,507 | $ | - | |||||
Treasury bills included in cash and cash equivalent | Level 1 | 2,507 | - | |||||||
Total Assets Measured at Fair Value | $ | 5,014 | $ | - | ||||||
Financial Liabilities: | ||||||||||
Earnout | Level 3 | $ | 3,647 | $ | - | |||||
Total liabilities measured at fair value | $ | 3,647 | $ | - | ||||||
The Company classifies cash equivalents within Level 1, and earnout is classified within Level 3, because the Company uses quoted market prices or alternative pricing sources and models utilizing market observable inputs to determine their fair values.
The earnout was valued using a Monta Carlo simulation analysis, which is considered to be a Level 3 fair value measurement.
12
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following table summarizes the warrants liability activity as of September 30, 2023 (in thousands):
Earnout | ||||
Initial Measurement (August 11, 2023) | $ | 3,607 | ||
Change in fair value | 40 | |||
Balance September 30, 2023 | $ | 3,647 | ||
| d. | 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 clinics and rehabilitation centers, professional and college sports teams, 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 September 30, | Nine Months Ended September 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Product | $ | 3,632 | $ | 484 | $ | 5,563 | $ | 2,377 | ||||||||
Rental | 303 | 267 | 685 | 609 | ||||||||||||
Service and warranty | 468 | 135 | 722 | 346 | ||||||||||||
Total Revenues | $ | 4,403 | $ | 886 | $ | 6,970 | $ | 3,332 | ||||||||
Product revenue
Revenue from Products is comprised of sale of anti-gravity products, sale of systems products to rehabilitation facilities and sale of Personal systems to end users. Revenues generated from the sale of Products are recognized at a point in time, once the customer has obtained the legal title to the items purchased.
For systems sold to rehabilitation facilities, the Company includes insignificant training and considers the elements in the arrangement to be a single performance obligation. Therefore, the Company recognizes revenue for the system and training only after delivery in accordance with the agreement's delivery terms to the customer and after the training has been completed.
For sales of Personal systems to end users, and for sales of Personal or Rehabilitation systems to third party distributors, the Company does not provide training to the end user as this training is completed by the Rehabilitation centers or by the distributor that have previously completed the ReWalk Training program. Therefore, the Company recognizes revenue in such sales upon delivery.
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Units placed | $ | 1,126 | $ | 778 | ||||
Spare parts and warranties | 104 | 98 | ||||||
Total Revenues | $ | 1,230 | $ | 876 | ||||
During the periods for the three months ended March 31, 2023, and 2022, the Company offered fivesix products: (1) ReWalk Personal;Personal, (2) ReWalk Rehabilitation;Rehabilitation, (3) ReStore;ReStore, (4) MyoCycle;MyoCycle and (5) MediTouch.MediTouch (6) Anti-Gravity Products. Due to unsatisfactory sales performance of the MediTouch product lines, we terminated thisthe distribution agreement as of January 31, 2023.
13
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
ReWalk Personal and ReWalk Rehabilitation are SCI Products, which are currently designed for everyday use by paraplegic individuals at home and in their communities. The SCI Products are custom fitted for each user, as well as for use by paraplegic patients in the clinical rehabilitation environment, where they provide individuals access to valuable exercise and therapy. ReWalk Rehabilitation which is a ReWalk Personal 6.0 product sold with multiple sizes of our adjustable parts to allow different users the ability to train within a clinic.
The 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 Company also sells Distributed Products that include the MyoCycle, which uses Functional Electrical Stimulation (“FES”) technology, and previously MediTouch tutor movement biofeedback devices. The Company markets the Distributed Products in the United States for use at home or in clinic. On January 31, 2023,
The Anti-Gravity Products are anti-gravity systems for use in physical and neurological rehabilitation and athletic training, both domestically and internationally. This transformative technology uses patented, NASA-derived Differential Air Pressure technology to reduce the effects of gravity and allow people to move in new ways with finely calibrated support and reduced pain.
Rental revenue
Rental revenue for the Anti-Gravity systems is accounted for under ASC Topic 842, Leases. The Company terminatedrents its products to customers for a fixed monthly fee over the distribution agreement with MediTouch.rental term, which typically ranges from 2 to 3 years. Rental revenues are recorded as earned on a monthly basis.
8
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Service and warranties
The Company services its products after expiration of the initial warranty. Service revenue, consisting of time and materials to perform the repairs, is recorded as services are rendered which corresponds with the period in which the related expenses are incurred.
Warranties are classified as either an assurance type or a service type warranty. A warranty is considered an assurance type warranty if it provides the customer with assurance that the product will function as intended for a limited period of time. An assurance type warranty is not accounted for as a separate performance obligation under the revenue model.
14
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SCI Products include a five-year warranty. The first two years are considered as an assurance type warranty and the additional period is considered an extended service arrangement, which is a service type warranty. A service type warranty is either sold with a unit or separately for a unit for which the warranty has expired. A service type warranty is accounted as a separate performance obligation and revenue is recognized ratably over the life of the warranty.
The ReStore device is offeredsold with a two-year warranty which is considered as assurance type warranty.
The Distributed Products are sold with an assurance-typeassurance type warranty ranging from between one year to ten years, depending on the specific product and part.
For Anti-Gravity Products, the Company offers customers extended warranty contracts that extend or enhance the technical support, parts, and labor coverage offered as part of the base warranty included with the anti- gravity system products. Extended warranty revenue is recognized ratably over the extended warranty coverage period. The Company offers a one-year assurance type warranty to customers in the U.S. and two years assurance type warranty for spare parts only to its international distributors.
Contract balances (in thousands)
March 31, | December 31, | September 30, | December 31, | |||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Trade receivable, net of credit losses (1) | $ | 532 | $ | 1,036 | $ | 3,529 | $ | 1,036 | ||||||||
Deferred revenues (1) (2) | $ | 1,252 | $ | 1,191 | $ | 3,256 | $ | 1,191 | ||||||||
(1) | Balance presented net of unrecognized revenues that were not yet collected. |
(2) | During the |
Deferred revenue is composed primarily of unearned revenue related to service type warranty obligations, multi-year services contracts, as well as other advances and payments which the Company received from customers prior to satisfying the performance obligation, for which revenue has not yet been recognized.
The Company’s unearned performance obligations as of March 31,September 30, 2023 and the estimated revenue expected to be recognized in the future related to the service type warranty amounts to $1.2$3.2 million, which will be fulfilled over one to five years.
915
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Concentrations of Credit Risks: The below table reflects the concentration of credit risk for the Company’s current customers as of |
September 30, | December 31, | |||||||
2023 | 2022 | |||||||
Customer A | * | ) | 27 | % | ||||
Customer B | * | ) | 13 | % | ||||
Customer C | - | 13 | % | |||||
Customer D | - | 11 | % | |||||
*) Less than 10% |
The allowance for credit losses is based on the Company’s assessment of the collectability of accounts. The Company regularly assessed collectability based on a combination of factors, including an assessment of the current customer’s aging balance, the nature and size of the customer, the financial condition of the customer, and future expected economic conditions. Trade receivables deemed uncollectable are charged against the allowance for credit losses when identified. As of September 30, 2023, and December 31, 2022, trade receivables are presented net of allowance for credit losses in the amount of $352 thousand and $26 thousand, respectively. |
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
Customer A | 28 | % | 27 | % | ||||
Customer B | 24 | % | 13 | % | ||||
Customer C | * | ) | 13 | % | ||||
Customer D | * | ) | 11 | % | ||||
f. | Warranty provision |
For assurance-type warranty, the Company 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, 2022 | $ | 92 | ||
AGI acquisition – see note 5 | 535 | |||
Provision | 271 | |||
Usage | (285 | ) | ||
Balance at September 30, 2023 | $ | 613 | ||
US Dollars in thousands | ||||
Balance at December 31, 2022 | $ | 92 | ||
Provision | 87 | |||
Usage | (90 | ) | ||
Balance at March 31, 2023 | $ | 89 | ||
| g. | Basic and diluted net loss per ordinary share: Basic and diluted net loss per share was the same for each period presented as the inclusion of all potential shares of ordinary shares and warrants outstanding would have been anti-dilutive. For the nine months ended September 30, 2023 and 2022, the total number of ordinary shares related to the outstanding warrants and share option plans aggregated to 19,463,658 and 19,464,888, respectively, was excluded from the calculations of diluted loss per ordinary share since it would have an anti-dilutive effect. |
1016
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
h. | New Accounting Pronouncements |
Recently Implemented Accounting Pronouncements
| i. |
In June 2016, FASB issued ASU 2016-13, Financial Instruments - 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. The Company adopted ASU 2016-13 as of January 1, 2023. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.