UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended SeptemberJune 30, 20172020

or

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

For the transition period from _____ to ______

Commission File Number: 001-36612
rewalklogo20fa06.jpg

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

Title of each class
Trading symbol
Name of exchange on which registered
Ordinary shares, par value NIS 0.25RWLKNasdaq Capital Market


+972.4.959.0123
Registrant'sRegistrant’s telephone number, including area code

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

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 x No o

Yes ☒     No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x    No o


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.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 o
☐
Accelerated filer o
☐
Non-accelerated filer o
☒
Smaller reporting company x
☒
(Do not check if a smaller reporting company)
Emerging growth company x
☐

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. x☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o No x

Yes ☐   No ☒
As of October 31, 2017of August 6, 2020, the Registrant had outstanding 22,066,352 19,158,963 ordinary shares, par value NIS 0.010.25 per share.


REWALK ROBOTICS LTD.
 
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBERJUNE 30, 20172020
 
TABLE OF CONTENTS
 
 Page No.
GENERAL AND WHERE YOU CAN FIND MORE INFORMATION
2
ii
PART I
FINANCIAL INFORMATION
3
1
ITEM 1.
FINANCIAL STATEMENTS (unaudited)
3
1
 
CONDENSED CONSOLIDATED BALANCE SHEETS - SEPTEMBERJUNE 30, 20172020 AND DECEMBER 31, 20162019
3
1-2
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS-OPERATIONS - THREE AND NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 20172020 AND 20162019
5
3
 
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS'SHAREHOLDERS’ EQUITY  - SEPTEMBERJUNE 30, 20172020 AND DECEMBER 31, 20162019
6
4-5
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 20172020 AND 20162019
7
6
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8
7
ITEM 2.
MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
23
29
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
35
46
ITEM 4.
CONTROLS AND PROCEDURES
35
46
PART II
OTHER INFORMATION
37
47
ITEM 1.
LEGAL PROCEEDINGS
37
47
ITEM 1A.
RISK FACTORS
37
47
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
42
53
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
43
53
ITEM 4.
MINE SAFETY DISCLOSURES
43
53
ITEM 5.
OTHER INFORMATION
43
53
ITEM 6.
EXHIBITS
44
54
SIGNATURES
45
55

i

















General and Where You Can Find Other Information

As used in this quarterly report on Form 10-Q, the terms “ReWalk,” “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, or that can be accessed through, our website does not constitute a part of this quarterly report on Form 10-Q 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. You may obtain and copy any document we file with or furnish to the SEC at the SEC’s public reference room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the SEC’s public reference facilities by calling the SEC at 1-800-SEC-0330. You may request copies of these documents, upon payment of a duplicating fee, by writing to the SEC at its principal office at 100 F Street, NE, Room 1580, Washington, D.C. 20549.


PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

REWALK ROBOTICS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share data)
 
September 30, December 31, June 30,  December 31, 
2017 2016 2020  2019 
ASSETS         
   
CURRENT ASSETS         
   
Cash and cash equivalents$12,928
 $23,678
 $14,064  $16,253 
Trade receivable, net1,265
 1,254
  1,054   794 
Prepaid expenses and other current assets1,703
 1,291
  1,123   903 
Inventory3,500
 3,264
Inventories  3,455   3,123 
Total current assets19,396
 29,487
  19,696   21,073 
           
LONG-TERM ASSETS 
  
        
           
Other long term assets1,182
 1,018
Restricted cash and other long term assets  1,037   1,061 
Operating lease right-of-use assets  1,526   1,737 
Property and equipment, net906
 1,258
  447   501 
Total long-term assets2,088
 2,276
  3,010   3,299 
   
Total assets$21,484
 $31,763
 $22,706  $24,372 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

REWALK ROBOTICS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share data)
 
September 30, December 31, June 30,  December 31, 
2017 2016 2020  2019 
LIABILITIES AND SHAREHOLDERS’ EQUITY         
CURRENT LIABILITIES         
Current maturities of long term loan$5,663
 $7,495
Current maturities of long term loans $4,548  $5,438 
Current maturities of operating leases  620   637 
Trade payables2,426
 3,424
  2,117   2,698 
Employees and payroll accruals858
 1,019
  796   670 
Deferred revenues and customers advances133
 54
Deferred revenues  279   323 
Other current liabilities537
 406
  487   402 
Total current liabilities9,617
 12,398
  8,847   10,168 
           
LONG-TERM LIABILITIES 
  
        
Long term loan, net of current maturities10,003
 10,518
  218   1,527 
Deferred revenues250
 284
  594   521 
Non-current operating leases  1,098   1,315 
Other long-term liabilities274
 303
  50   61 
Total long-term liabilities10,527
 11,105
  1,960   3,424 
           
Total liabilities20,144
 23,503
  10,807   13,592 
           
COMMITMENTS AND CONTINGENT LIABILITIES

 

        
Shareholders’ equity: 
  
        
           
Share capital 
  
        
Ordinary shares, par value NIS 0.01 per share-Authorized: 250,000,000 shares at September 30, 2017 and December 31, 2016; Issued and outstanding: 21,823,771 and 16,338,257 shares at September 30, 2017 and December 31, 2016, respectively60
 45
Ordinary share of NIS 0.25 par value-Authorized: 60,000,000 shares at June 30, 2020 and December 31, 2019; Issued and outstanding: 14,190,685 and 7,319,560 shares at June 30, 2020 and December 31, 2019, respectively  993   504 
Additional paid-in capital126,338
 114,707
  186,070   178,745 
Accumulated deficit(125,058) (106,492)  (175,164)  (168,469)
Total shareholders’ equity1,340
 8,260
  11,899   10,780 
Total liabilities and shareholders’ equity$21,484
 $31,763
 $22,706  $24,372 
 
 The accompanying notes are an integral part of these consolidated financial statements.


REWALK ROBOTICS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

(In thousands, except share and per share data)
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Revenues$1,732
 $1,400
 $6,238
 $4,278
Cost of revenues1,024
 1,110
 3,740
 3,410
        
Gross profit708
 290
 2,498
 868
        
Operating expenses:       
Research and development, net1,618
 1,968
 4,433
 6,737
Sales and marketing2,637
 3,774
 8,643
 10,577
General and administrative1,805
 1,951
 5,796
 5,960
        
Total operating expenses6,060
 7,693
 18,872
 23,274
        
Operating loss(5,352) (7,403) (16,374) (22,406)
Loss on extinguishment of debt—
 —
 313
 —
Financial expenses, net479
 508
 1,843
 1,514
        
Loss before income taxes(5,831) (7,911) (18,530) (23,920)
Income taxes15
 9
 25
 39
        
Net loss$(5,846) $(7,920) $(18,555) $(23,959)
        
Net loss per ordinary share, basic and diluted$(0.27) $(0.62) $(1.00) $(1.92)
        
Weighted average number of shares used in computing net loss per ordinary share, basic and diluted21,660,757
 12,759,887
 18,463,444
 12,495,433

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

; REWALK ROBOTICS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITYOPERATIONS
(Unaudited)

(In thousands, except share and per share data)

  Three Months Ended
June 30,		  Six Months Ended
June 30,		 
  2020  2019  2020  2019 
Revenues $1,668  $877  $2,428  $2,458 
Cost of revenues  646   442   1,033   1,097 
                 
Gross profit  1,022   435   1,395   1,361 
                 
Operating expenses:                
Research and development, net  954   1,860   1,939   3,274 
Sales and marketing  1,353   1,531   3,034   3,118 
General and administrative  1,267   1,279   2,576   2,779 
                 
Total operating expenses  3,574   4,670   7,549   9,171 
                 
Operating loss  (2,552)  (4,235)  (6,154)  (7,810)
Financial expenses, net  235   353   481   771 
                 
Loss before income taxes  (2,787)  (4,588)  (6,635)  (8,581)
Taxes on income (tax benefit)    68   (1)  60   6 
                 
Net loss $(2,855) $(4,587) $(6,695) $(8,587)
                 
Net loss per ordinary share, basic and diluted $(0.22) $(0.88) $(0.57) $(2.03)
                 
Weighted average number of shares used in computing net loss per ordinary share, basic and diluted  13,101,275   5,213,446   11,744,275   4,236,788 
 Ordinary Share Additional
paid-in
capital		 Accumulated
deficit		 Total
shareholders’
equity
 Number Amount 
Balance as of January 1, 201612,222,583
 33
 94,876
 (73,989) 20,920
Share-based compensation to employees and non-employees—
 —
 3,398
 —
 3,398
Issuance of ordinary shares upon exercise of options to purchase ordinary shares and RSUs by employees and non-employees128,496
 1
 17
 —
 18
Issuance of ordinary shares in at-the-market offering, net of issuance expenses in the amount of $468692,062
 2
 4,097
 —
 4,099
Issuance of warrants to purchase ordinary shares—
 —
 1,239
 —
 1,239
Cashless exercise of warrants into ordinary shares45,116
 *)
 *)
 —
 —
Issuance of ordinary shares and warrants to purchase ordinary shares in follow-on public offering, net of issuance expenses
in an amount of $1,099		3,250,000
 9
 11,080
 —
 11,089
Net loss—
 —
 —
 (32,503) (32,503)
          
Balance as of December 31, 201616,338,257
 45
 114,707
 (106,492) 8,260
Cumulative effect to stock based compensation from adoption of a new accounting standard—
 —
 11
 (11) —
Share-based compensation to employees and non-employees—
 —
 2,597
 —
 2,597
Issuance of ordinary shares upon exercise of options to purchase ordinary shares and RSUs by employees and non-employees (1)105,606
 *)
 28
 —
 28
Issuance of ordinary shares in at-the-market offering, net of issuance expenses in the amount of $439 (2)5,379,908
 15
 8,995
 —
 9,010
Net loss—
 —
 —
 (18,555) (18,555)
Balance as of September 30, 201721,823,771
 60
 126,338
 (125,058) 1,340
*)Represents an amount lower than $1.
(1)See Note 8b to the condensed consolidated financial statements
(2)See Note 8e to the condensed consolidated financial statements



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

REWALK ROBOTICS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSCHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
(In thousands)
thousands, except share data)
 Nine Months Ended September 30,
 2017 2016
Cash flows from operating activities:   
Net loss$(18,555) $(23,959)
Adjustments to reconcile net loss to net cash used in operating activities:   
    
Depreciation516
 503
Share-based compensation to employees and non- employees2,597
 2,458
Deferred taxes(20) (64)
Loss on extinguishment of debt313
 —
Financial expenses related to long term loan87
 495
    
Changes in assets and liabilities:   
    
Trade receivables, net(11) 1,202
Prepaid expenses and other current and long term assets(556) (804)
Inventories(381) (1,004)
Trade payables(1,048) 960
Employees and payroll accruals(161) (285)
Deferred revenues and advances from customers45
 116
Other current and long term liabilities102
 182
Net cash used in operating activities(17,072) (20,200)
    
Cash flows from investing activities:   
Purchase of property and equipment(19) (408)
Net cash used in investing activities(19) (408)
    
Cash flows from financing activities:   
Issuance of ordinary shares upon exercise of options to purchase ordinary shares by employees and non-employees28
 23
Proceeds from long term loan—
 12,000
Debt issuance cost—
 (441)
Repayment of long term loan(2,747) (554)
Issuance of ordinary shares in at-the-market offering, net of issuance expenses paid in the amount of $389 (1)9,060
 4,110
Net cash provided by financing activities6,341
 15,138
    
Decrease in cash and cash equivalents(10,750) (5,470)
Cash and cash equivalents at beginning of period23,678
 17,869
Cash and cash equivalents at end of period$12,928
 $12,399
    
Supplemental disclosures of non-cash flow information   
At-the-market offering expenses not yet paid$50
 $11
Classification of inventory to property and equipment, net$145
 $113
  Ordinary Share  Additional paid-in  Accumulated  Total
shareholders’
 
  Number  Amount  capital  deficit  equity 
Balance as of April 1, 2019  3,695,174   253   158,720   (156,918)  2,055 
Share-based compensation to employees and non-employees  —   —   314   —   314 
Issuance of ordinary shares upon exercise of options to purchase ordinary shares and RSUs by employees and non-employees  14,817   1   —   —   1 
Issuance of ordinary shares in a “Registered Direct” offerings , net of issuance expenses in the amount of $1,125 (1)  1,650,248   115   8,010   —   8,125 
Issuance of ordinary shares in a “Warrant exercise” agreement, net of issuance expenses in the amount of $1,019 (1)  1,464,665   102   9,864   —   9,966 
Exercise of pre-funded warrants and warrants (1) (2)  464,206   32   1,362   —   1,394 
Net loss  —   —   —   (4,587)  (4,587)
Balance as of June 30, 2019  7,289,110   503   178,270   (161,505)  17,268 
                     
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   *)  —   —   — 
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 

*)Represents an amount lower than $1.
(1) See Note 8e to the condensed consolidated financial statements.
(1)See Note 8f to the condensed consolidated financial statements
(2)See Note 8d to the condensed consolidated financial statements
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
REWALK ROBOTICS LTD. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
(In thousands, except share data)

  Ordinary Share  Additional
paid-in		  Accumulated  Total
shareholders’
 
  Number  Amount  capital  deficit  equity 
Balance as of January 1, 2019  2,813,087   193   154,670   (152,918)  1,945 
Share-based compensation to employees and non-employees  —   —   633   —   633 
Issuance of ordinary shares upon exercise of options to purchase ordinary shares and RSUs by employees and non-employees  17,023   1   —   —   1 
Issuance of ordinary shares in a “best efforts” offering, net of issuance expenses in the amount of $686 (1)  760,000   52   3,632   —   3,684 
Exercise of pre-funded warrants and warrants (1) (2)  584,087   40   1,461   —   1,501 
Issuance of ordinary shares in a “Registered Direct” offerings , net of issuance expenses in the amount of $1,125 (1)  1,650,248   115   8,010   —   8,125 
Issuance of ordinary shares in a “Warrant exercise” agreement, net of issuance expenses in the amount of $1,019 (1)  1,464,665   102   9,864   —   9,966 
Net loss  —   —   —   (8,587)  (8,587)
Balance as of June 30, 2019  7,289,110   503   178,270   (161,505)  17,268 
                     
Balance as of January 1, 2020  7,319,560   504   178,745   (168,469)  10,780 
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   *)  —   —   — 
Issuance of ordinary shares in “best efforts” offering, net of issuance expenses in the amount of $1,056 (2)  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 
*)Represents an amount lower than $1.
(1)See Note 8f to the condensed consolidated financial statements
(2)See Note 8d to the condensed consolidated financial statements
The accompanying notes are an integral part of these condensed consolidated financial statements.
5

REWALK ROBOTICS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
  Six Months Ended
June 30,		 
  2020  2019 
Cash flows used in operating activities:
      
Net loss $(6,695) $(8,587)
Adjustments to reconcile net loss to net cash used in operating activities:        
         
Depreciation  151   173 
Share-based compensation to employees and non-employees  312   633 
Deferred taxes  (50)  (51)
Changes in assets and liabilities:        
Trade receivables, net  (260)  341 
Prepaid expenses, operating lease right-of-use assets and other assets  (240)  (632)
Inventories  (382)  (421)
Trade payables  (581)  399 
Employees and payroll accruals  126   (12)
Deferred revenues and advances from customers  29   202 
Operating lease liabilities and other liabilities  57   (1)
Net cash used in operating activities  (7,533)  (7,956)
         
Cash flows used in investing activities:
        
Purchase of property and equipment  (15)  — 
Net cash used in investing activities  (15)  — 
         
Cash flows from financing activities:
        
Repayment of long-term loan  (2,591)  (821)
Proceeds from issuance of long-term debt  392   — 
Issuance of ordinary shares in a “best efforts” offerings, net of issuance expenses paid in the amount of $ 1,056 (1)  4,010   — 
Issuance of ordinary shares in a “best efforts” offering,  net of issuance expenses in the amount of $ 686 (1)  —   3,684 
Issuance of ordinary shares in a “registered direct” offerings, net of issuance expenses in the amount of $1,035 (1)  —   8,215 
Issuance of ordinary shares in a “warrant exercise” agreement, net of issuance expenses in the amount of $ 1,019 (1)  —   9,966 
Exercise of pre-funded warrants and warrants (1) (2)  3,492   1,429 
Net cash provided by financing activities  5,303   22,473 
         
Increase (decrease) in cash, cash equivalents, and restricted cash  (2,245)  14,517 
Cash, cash equivalents, and restricted cash at beginning of period  16,992   10,347 
Cash, cash equivalents, and restricted cash at end of period $14,747  $24,864 
Supplemental disclosures of non-cash flow information
        
“Registered direct” offerings issuance cost not yet paid (1) $—  $90 
Classification of other current assets to property and equipment, net $32  $— 
Classification of inventory to property and equipment, net $50  $— 
Cashless exercise of pre-funded warrants (1) (2) $—  $72 
Initial recognition of operating lease right-of-use assets $—  $2,099 
Initial recognition of operating lease liabilities $—  $(2,249)
Supplemental cash flow information:
        
Cash and cash equivalents $14,064  $24,054 
Restricted cash included in other long-term assets  683   810 
Total Cash, cash equivalents, and restricted cash $14,747  $24,864 
(1)See Note 8f to the condensed consolidated financial statements.
(2)See Note 8d to the condensed consolidated financial statements
The accompanying notes are an integral part of these consolidated financial statements.
6
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1:-    GENERAL


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;2012 and (ii) ReWalk Robotics GMBH. (“RRG”) incorporated under the laws of Germany on January 14, 2013.


c.
DuringThe Company is designing, developing and commercializing robotic exoskeletons that allow individuals with mobility impairments or other medical conditions the nine months ended September 30, 2017,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 issueddeveloped and, sold 5,379,908 ordinary shares at an average pricein June 2019, started to commercialize the ReStore following receipt of $1.76 per share under its ATM Offering Program (as defined in Note 8e)European Union CE mark and United States Food and Drug Administration (“FDA”). The gross proceedsReStore is a powered, lightweight soft exo-suit intended for use in the rehabilitation of individuals with lower limb disability due to thestroke. The Company were $9.4 million,markets and sells its products directly to institutions and individuals in Germany and the net aggregate proceeds after deducting commissions, feesUnited States and offering expensesthrough third-party distributors in the amount of $439 thousand were $9.0 million. As a result, from the inception of the ATM Offering Program in May 2016 until September 30, 2017,other markets. In its direct markets, the Company has issuedestablished relationships with rehabilitation centers and sold 6,071,970ordinary shares at an average price of $2.31 per share underthe spinal cord injury community, and in its ATM Offering Program, with gross proceeds of $14.0 million,indirect markets, the Company’s distributors maintain these relationships. RRI markets and net aggregate proceeds of $13.1 million after deducting commissions, fees and offering expensessells products mainly in the amount of $907 thousand. The Company may raise up to $25 million under its ATM Offering Program pursuant to the terms of its agreement with the sales agent. However, due to limitations under the rules of Form S-3, which have applied to the Company since it filed its annual report on Form 10-K for the fiscal year ended December 31, 2016 on February 17, 2017, taking into account ordinary shares issuedand settled underUnited States. RRG sell the Company’s ATM Offering Program since February 17, 2017, as of September 30, 2017, the Company may issue up to $4.3 millionproducts mainly in primary offerings under its effective shelf registration statement on Form S-3 (File No. 333- 209833) (the “Form S-3”), including its ATM Offering Program, during the 12 months following February 17, 2017, unlessGermany and until it is no longer subject to such limitations. See Note 8e for more information about the Company’s ATM Offering Program and the related limitations under its Form S-3.
Europe.

The company added two new product lines through distribution agreements and intends to start to market them during the third quarter.

d.The Company dependsworldwide spread of COVID-19 has resulted in a global economic slowdown and is expected to continue to disrupt general business operations until the disease is contained. This has already had a negative impact on one contract manufacturer. Reliance on this vendor makesthe Company's sales and results of operations during the first quarter of 2020, and the Company vulnerableexpects that it will continue to possible capacity constraintsnegatively affect its sales and reduced control over component availability, delivery schedules, manufacturing yieldsresults of operations but the Company is currently unable to predict the scale and costs. This vendor accounted for 0% and 12%duration of that impact. As of the Company's total trade payablesdate of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require an update of its accounting estimates or judgments or revision of the carrying value of its assets or liabilities. This determination may change as of September 30, 2017new events occur and December 31, 2016, respectively.additional information is obtained. Actual results could differ from our estimates and judgments, and any such differences may be material to our financial statements.
7

REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

e.On January 9, 2017, the Company announced its plan to reduce total operating expenses in 2017 by up to 30% as compared to 2016. The Company has been working toward such reductions through a combination of targeted savings, including by establishing quality improvement initiatives and lowering overall product cost, realigning the Company’s staffing priorities and reducing the size of its staff, including its reimbursement personnel, reducing spending on external appeals, and lowering other corporate spending.

f.The Company hadhas an accumulated deficit in the total amount of $125.1approximately $175.2 million as of SeptemberJune 30, 20172020 and negative cash flow from operations of $7.5 million, and further losses are anticipated in the development of its business. Those factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due.
The Company intends to finance operating costs over the next twelve months with existing cash on hand, reductions inreducing operating spend, issuances under the Company's ATM Offering Program or otherand future issuances of equity and debt securities, or through a combination of the foregoing. However, the Company will need to seek additional sources of financing if the Company requirerequires more funds than anticipated during the next 12 months or in later periods.
The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and liabilities and commitments in the normal course of business.
The condensed consolidated financial statements for the three and ninesix months ended SeptemberJune 30, 20172020 do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to the Company’s ability to continue as a going concern.

REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 2:-
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 the opinion of management, the accompanying financial statements include all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company'sCompany’s (i) consolidated financial position as of SeptemberJune 30, 2017,2020, (ii) consolidated results of operations for the three and ninesix months ended SeptemberJune 30, 20172020, (iii) consolidated statements of changes in shareholders’ equity as of June 30, 2020 and (iii)(iv) consolidated cash flows for the ninesix months ended SeptemberJune 30, 2017.2020. The results for the three and ninesix months periods ended SeptemberJune 30, 2017,2020, as applicable, are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.
2020.

NOTE 3:-    SIGNIFICANT ACCOUNTING POLICIES

a.The significant accounting policies applied in the audited consolidated financial statements of the Company as disclosed in the Company's annual report on Form 10-K for the year ended December 31, 2016 filed with the SEC on February 17, 2017, as amended on Form 10-K/A filed with the SEC on April 27, 2017 (the “2016 Form 10-K”), are applied consistently in these unaudited interim condensed consolidated financial statements.

b.Recent Accounting Pronouncements:

Recently Implemented Accounting Pronouncements

Inventory - In July 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2015-11, “Simplifying the Measurement of Inventory.” The standard changes the inventory valuation method from the lower of cost or market to the lower of cost or net realizable value for inventory valued under the first-in, first-out or average cost methods. This standard is effective for fiscal years beginning after December 15, 2016, including interim periods and requires prospective adoption with early adoption permitted. The update was effective for the Company beginning January 1, 2017. The adoption of this standard did not materially impact the Company's financial statements.8
Deferred Taxes - In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes", which simplifies the presentation of deferred income taxes. ASU 2015-17 provides presentation requirements to classify deferred tax assets and liabilities, along with any related valuation allowance, as noncurrent on the balance sheet. The standard is effective for fiscal years beginning after December 15, 2016, including interim periods within that reporting period. The Company elected to implement this ASU-2015-17 prospectively. The update was effective for the Company beginning January 1, 2017. The adoption of this standard did not materially impact the Company's financial statements.

Recent Accounting Pronouncements Not Yet Adopted

Revenues - In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most current revenue recognition guidance, including industry-specific guidance. The core principle is that an entity will recognize revenue to depict the transfer of goods or services to customers in an amount that the entity expects to be entitled to in exchange for those goods or services. The standard provides a five-step model to determine when and how revenue is recognized. Other major provisions of the standard include capitalization of certain contract costs, consideration of time value of money in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The standard also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers.

REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 3:-
SIGNIFICANT ACCOUNTING POLICIES

a.
Revenue Recognition 

The guidance permits two methods of adoption: the full retrospective method, in which case the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective transition method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application.

The Company has substantially completedgenerates revenues from sales of products. The Company sells its evaluation of significant contractsproducts directly to end customers and through distributors. The Company sells its products to private individuals (who finance the review of its current accounting policiespurchases by themselves, through fundraising or reimbursement coverage from insurance companies), rehabilitation facilities and practices to identify potential differences that would result from applying the requirements of the new standard to the Company’s revenue contracts. In addition, the Company is in the process of identifying the appropriate changes to business processes, systems and controls to support recognition and disclosure under the new standard.distributors. 

While a final decision has not been made, the Company expects to adopt the new revenue standard in the first quarterDisaggregation of 2018 applying the modified retrospective transition method. The Company does not expect the adoption of the new revenue standard to have a material impact on the amount and timing of revenue recognized in the Company's consolidated financial statements.Revenues (in thousands)

  Three Months Ended
June 30,		  Six Months Ended
June 30,		 
  2020  2019  2020  2019 
Units placed $1,428  $772  $2,061  $2,246 
Spare parts and warranties  240   105   367   212 
Total Revenues $1,668  $877  $2,428  $2,458 
Leases9 - In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). Under the new guidance, a lessee will be required to recognize assets and liabilities for all leases with lease terms of more than 12 months. Consistent with current generally accepted accounting principles, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. This ASU requires additional disclosures. The standard is effective for annual periods beginning after December 15, 2018 and interim periods within those fiscal years. The ASU requires adoption based upon a modified retrospective transition approach. Early adoption is permitted. The Company has not yet determined whether it will elect early adoption and is currently evaluating the impact of the pending adoption of this ASU on the Company's consolidated financial statements and related disclosures.
 
Statement of Cash Flows - In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments.” The standard addresses several matters of diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows including the presentation of debt extinguishment costs and distributions received from equity method investments. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods and allows for retrospective adoption with early adoption permitted. The Company has chosen not to adopt this standard early, and does not expect the adoption of the standard to have a material impact on the Company's consolidated financial statements.

Statement of Cash Flows - On November 17, 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force).” This ASU requires the statement of cash flows to explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents are to be included with cash and cash equivalents when reconciling the beginning of period and end of period amounts shown on the statement of cash flows.  ASU No. 2016-18 will be effective for the Company as of January 1, 2018. The Company does not expect the adoption of this ASU to have a material impact on the Company's consolidated financial statements.

REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Units placed
The Company currently offer three products: ReWalk Personal, ReWalk Rehabilitation (both of which are units for spinal cord injury (“SCI Products”)) and ReStore soft suit exoskeleton for rehabilitation of individuals suffering from stroke. SCI Products are currently designed for everyday use by paraplegic individuals at home and in their communities, and is 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. 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.

Units placed includes revenue from sales of SCI Products and ReStore.

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 also offers a rent-to-purchase model in which the Company recognizes revenue ratably according to the agreed rental monthly fee.
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- 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.

10

REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Contract balances (in thousands)
  June 30,  December 31, 
  2020  2019 
Trade receivable, net (1) $1,054  $794 
Deferred revenues (1) (2) $873  $844 

(1)
Balance presented net of unrecognized revenues that were not yet collected.

(2)
$276 thousand of December 31, 2019 deferred revenues balance were recognized as revenues during the six months ended June 30, 2020.
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, 2020 and the estimated revenue expected to be recognized in the future related to the service type warranty amounts to $1,090 thousand, which is fulfilled over one to five years. 

Share Based Compensation11 - On May 10, 2017,
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

b.
New Accounting Pronouncements
Recent Accounting Pronouncements Not Yet Adopted
In June 2016, the FASB issued ASU 2017-09, “Compensation - Stock CompensationNo. 2016-13, Financial Instruments—Credit Losses (Topic 718), Scope326): Measurement of Modification Accounting.” This ASU clarifies when changesCredit Losses on Financial Instruments and subsequent amendments to the terms or conditionsinitial guidance under ASU 2018-19, ASU 2019-04 and ASU 2019-05, which amends the current approach to estimate credit losses on certain financial assets, including trade and other receivables. Generally, this amendment requires entities to establish a valuation allowance for the expected lifetime losses of a share-based payment award must be accounted for as modifications. Entities will applythese certain financial assets. Upon the modification accounting guidance if the value, vesting conditions or classificationinitial recognition of the award changes. They will have to make all of the disclosures about modifications that are required today, in addition to disclosing that compensation expense has not changed, to the extent applicable. The ASU also clarifies that a modification to an award could be significant and therefore require disclosure, even if modification accounting is not required. ASU No. 2017-09such assets, which will be based on, among other things, historical information, current conditions, and reasonable supportable forecasts. Subsequent changes in the valuation allowance are recorded in current earnings and reversal of previous losses are permitted. Currently, U.S. GAAP requires entities to write down credit losses only when losses are probable and loss reversals are not permitted. Originally, ASU 2016-13 was effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. Early2019, with early adoption is permitted,permitted. An entity should apply the standard by recording a cumulative effect adjustment to retained earnings upon adoption. In November 2019, FASB issued ASU No. 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842).  This ASU defers the effective date of ASU 2016-13 for public companies that are considered smaller reporting companies as defined by the SEC to fiscal years beginning after December 15, 2022, including in any interim period for which financial statements have not yet been issued or made available for issuance. The ASU will be applied prospectively to awards modified on or after the adoption date.periods within those fiscal years. The Company is currently evaluatingplanning to adopt this standard in the impactfirst quarter of the pendingfiscal 2023. The adoption of this ASU on its consolidatedstandard is not expected to result in a material impact to the Company’s financial statements and related disclosures.statements.

12

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. One customer represented 12.7%
  June 30,  December 31, 
  2020  2019 
Customer A  10%  *)
Customer B  10%  *)
Customer C  10%  *)
Customer D  10%  *)
Customer E  *)  14%
Customer F  *)  13%
Customer G  *)  13%
Customer H  *)  12%
Customer I  *)  12%
Customer J  *)  12%
Customer K  *)  12%

*)
Less than 10%
The Company’s trade receivables are geographically diversified and 0%derived primarily from sales to customers in various countries, mainly in the United States and Europe. Concentration of the Company'scredit risk with respect to trade receivable, net balance asreceivables is limited by credit limits, ongoing credit evaluation and account monitoring procedures. The Company performs ongoing credit evaluations of Septemberits 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, 20172020 and December 31, 2016, respectively. A second customer represented 12.3% and 4.9% of the Company's2019 trade receivable, net balance as of September 30, 2017 and December 31, 2016, respectively. Trade receivables are presented net of allowance for doubtful accounts in the amount of $125$31 thousand and $333$31 thousand, respectively, and net of sales return reserve $0 as of $105June 30, 2020 and $86 thousand as of September 30, 2017 and December 31, 2016.2019.


d.
Warranty provision

The Company providesprovided a two-year standard warranty for its products. In the beginning of 2018 we updated our service policy for new devices sold to include 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, 2019 $227 
Provision  46 
Usage  (87)
Balance at June 30, 2020 $186 
13
 US Dollars in thousands
Balance at December 31, 2016$498
Provision311
Usage(275)
Balance at September 30, 2017$534


NOTE 4:-    INVENTORY

The components of inventory are as follows (in thousands):

 September 30, December 31,
 2017 2016
Finished products3,500
 3,264
 $3,500
 $3,264

REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 5:-    COMMITMENTS AND CONTINGENT LIABILITIES

NOTE 4:-INVENTORIES
The components of inventories are as follows (in thousands):
  June 30,  December 31, 
  2020  2019 
Finished products $2,696  $2,394 
Raw materials  759   729 
  $3,455  $3,123 
NOTE 5:-COMMITMENTS AND CONTINGENT LIABILITIES

a.
Purchase commitments:

The Company has contractual obligations to purchasegoods from its contract manufacturer Sanmina Corporation.as well as raw materials from different vendors. Purchase obligations do not include contracts that may be canceled without penalty. As of SeptemberJune 30, 2017,2020, non-cancelable outstanding obligations to the Company’s contract manufacturer and raw material vendors amounted to approximately $806 thousand.$1 million.

b.
Operating lease commitment:

(i)
The Company operates from leased facilities in Israel, the United States and Germany. These leases expire between 2020 and 2023. A portion of our facilities leases is generally subject to annual changes in the Consumer Price Index (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 2020 and 2022. A subset of our cars leases is considered variable. The variable lease payments for such cars 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 $38 thousand as of June 30, 2020.
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, 2020 are as follows (in thousands):
2020 $707 
2021  681 
2022  603 
2023  162 
Total lease payments  2,153 
Less: imputed interest  (435)
Present value of future lease payments  1,718 
Less: current maturities of operating leases  (620)
Non-current operating leases $1,098 
     
Weighted-average remaining lease term (in years)  3.18 
Weighted-average discount rate  12.6%
Lease expense under the Company’s operating leases were $217 thousand and $180 thousand for the three months ended June 30, 2020 and 2019, respectively. For the six months ended June 30, 2020 and 2019 the lease expense were $400 thousand and $360 thousand, respectively.
14

REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

b.c.
Royalties:

The Company’s research and development efforts are financed, in part, through funding from the Israel Innovation Authority (the “IIA”) (formerly known as the Israeli Office of the Chief Scientist in the Israel Ministry of Economy). During the nine months ended September 30, 2017 the Company received $828 thousand from the IIA to fund its research and development efforts.BIRD. Since the Company’s inception through SeptemberJune 30, 2017,2020, the Company received funding from the IIA and BIRD in the total amount of $1.6 million.$1.97 million and $500 thousand, respectively. Out of the $1.6$1.97 million in funding from the IIA, a total amount of $1.2$1.57 million were royalty bearing grants (as of SeptemberJune 30, 2017,2020, the Company paid royalties to the IIA in the total amount of $50$56 thousand), while a total amount of $400 thousand was received in consideration of 5,237209 convertible preferred A shares, which converted after ourthe Company’s initial public offering in September 2014 into ordinary shares in a conversion ratio of 1 to 1. The Company is obligated to pay royalties to the IIA, amounting to 3%-3.5% of the sales of the products and other related revenues generated from such projects, up to 100% of the grants received. The royalty payment obligations also bear interest at the LIBOR rate. The obligation to pay these royalties is contingent on actual sales of the applicable products and in the absence of such sales, no payment is required. 

Additionally, the License Agreement requires the Company to pay Harvard royalties on net sales, See note 7 below for more information about the Collaboration Agreement and the License Agreement.
Royalties expenses in cost of revenue were $0 and $2 thousand for the three months ended June 30, 2020 and 2019, respectively. For the six months ended June 30, 2020 and 2019, the royalties expenses were $3 thousand and $5 thousand, respectively.

As of SeptemberJune 30, 2017,2020, the contingent liability to the IIA amounted to $1.1$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:

REWALK ROBOTICS LTD. AND SUBSIDIARIES(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) if such transfer of know-how arises in connection with a liquidation by reason of insolvency or receivership of the grant recipient.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


c.d.
Liens:

As discussed in Note 6 to ourthe Company’s audited consolidated financial statements included in the Company'sits annual report on Form 10-K for the fiscal year ended December 31, 2016, filed with the SEC on February 17, 2017, as amended on Form 10-K/A filed with the SEC on April 27, 20172019 (the “2016“2019 Form 10-K”), the Company is party to the Loan Agreementa loan agreement, as amended (the “Loan Agreement”), with Kreos Capital V (Expert Fund) Limited (“Kreos”), pursuant to which Kreos extended a $20 million line of credit to the Company. In connection with the Loan Agreement, the Company granted Kreos a first priority security interest over all of its assets, including intellectual property and equity interests in its subsidiaries, subject to certain permitted security interests.interests
The Company'sCompany’s other long-term assets which were in the amount of $850$683 thousand as of September 30, 2017, have been pledged to third parties as a security in respect of a guarantee granted to a third partylease agreements. 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)

d.e.
Legal Claims:

Occasionally the Company is involved in various claims, lawsuits, regulatory examinations, investigations and other legal matters arising, for the most part, in the ordinary course of business. The outcome of litigation and other legal matters is inherently uncertain. In making a determination regarding accruals, using available information, the Company evaluates the likelihood of an unfavorable outcome in legal or regulatory proceedings to which the Company is a party and records a loss contingency when it is probable a liability has been incurred and the amount of the loss can be reasonably estimated. Where the Company determines an unfavorable outcome is not probable or reasonably estimable, the Company does not accrue for any potential litigation loss. These subjective determinations are based on the status of such legal or regulatory proceedings, the merits of ourthe company's defenses and consultation with legal counsel. Actual outcomes of these legal and regulatory proceedings may materially differ from the Company’s current estimates. It is possible that resolution of one or more of the legal matters currently pending or threatened could result in losses material to the Company’s consolidated results of operations, liquidity or financial condition.

As set forth below,previously disclosed, between September 2016 and January 2017, eight substantially similar putative securities class actions were filed againston behalf of alleged shareholders that purchased or acquired the Company. Four of these actions have been dismissedCompany ordinary shares pursuant and/or traceable to its registration statement on procedural grounds, one was voluntarily dismissed and three are pending, including two actions which have been consolidated and one action brought by the plaintiffs whose actions were dismissed.

Dismissed Actions:
◦
On September 20, November 3, November 9, and November 10, 2016, respectively, four putative class actions on behalf of alleged shareholders that purchased or acquired the Company's ordinary shares pursuant and/or traceable to the registration statement used in connection with the Company's IPO were commenced in the Superior Court of the State of California, County of San Mateo. The actions were filed against the Company, certain of the Company's current and former directors and officers, and the underwriters of the Company's IPO. We refer to these actions as the “California State Court Actions.” The complaints in the California State Court Actions asserted various claims under the Securities Act. Each of the California State Court Actions was dismissed for lack of personal jurisdiction in January 2017.
◦On January 24, 2017, a substantially similar class action was commenced in the United States District Court for the Northern District of California (Case No. 4:17-cv-362) against the same defendants as in the California State Court Actions plus certain additional defendants. This action is referred to as the “California Federal Court Action.” On March 23, 2017, this case was voluntarily dismissed.
Pending Actions:
◦On or about October 31, 2016, a class action with claims substantially similar to the California State Court Actions was commenced in the Massachusetts Superior Court, Suffolk County, by a different plaintiff (Civ. Action No. 16-3336), alleging claims under Section 11 of the Securities Act against the Company, certain of the Company's current and former directors and officers, and the underwriters of the Company's IPO, and alleging claims under Section 15 of the Securities Act against the Company and certain of the Company's current and former directors and officers.
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

◦
On or about November 30, 2016, a substantially similar class action was commenced in the Massachusetts Superior Court, Suffolk County, by a different plaintiff (Civ. Action No. 16-3670) alleging claims under Sections 11 and 15 of the Securities Act against the same defendants as in the action commenced on October 31, 2016, and also alleging claims under Section 12(a)(2) of the Securities Act against the Company, certain of the Company's current and former directors and officers, and the underwriters of the Company's IPO. This action was ordered consolidated in the Massachusetts Superior Court, Suffolk County on January 9, 2017 with the action commenced on October 31, 2016, and the two actions are referred to as the “Consolidated Massachusetts State Court Actions”. The plaintiffs in the Consolidated Massachusetts State Court Actions filed a consolidated amended complaint on March 20, 2017. The Company moved to dismiss the Consolidated Massachusetts State Court Actions on June 2, 2017. For more information, see Note 11.
◦
On or about January 31, 2017, a substantially similar class action was commenced in the United States District Court for the District of Massachusetts (Case No. 1:17-cv-10169) by four of the same plaintiffs who commenced the California State Court Actions, and two additional plaintiffs, alleging claims under Sections 11 and 12(a)(2) of the Securities Act against the Company, certain of the Company's current and former directors and officers, and the underwriters of the Company's IPO, and alleging claims under Section 15 of the Securities Act against certain of the Company's current and former directors and officers. This action is referred to as the “Massachusetts Federal Court Action.” On July 6, 2017, the Company moved to stay the Massachusetts Federal Court Action. The plaintiffs in the Massachusetts Federal Court Action filed a consolidated amended complaint on August 9, 2017. For more information, see Note 11.

The complaints in all of the actions listed above allege that the Company's registration statementForm F-1 (File No. 333-197344) used in connection with the initial public offering, or the Company’s IPO, were commenced in the following courts: (i) the Superior Court of the State of California, County of San Mateo; (ii) the Superior Court of the Commonwealth of Massachusetts, Suffolk County; (iii) the United States District Court for the Northern District of California; and (iv) the United States District Court for the District of Massachusetts. As of March 31, 2020, all complaints have been dismissed, with one dismissal appealed. The actions involved or involve claims under various sections of the Securities Act of 1933, or the Securities Act, against the Company, certain of its current and former directors and officers, the underwriters of the Company’s IPO and certain other defendants.

The four actions commenced in the Superior Court of the State of California, County of San Mateo were dismissed in January 2017 for lack of personal jurisdiction, and the action commenced in the United States District Court for the Northern District of California was voluntarily dismissed in March 2017. Additionally, the two actions commenced in the Superior Court of the Commonwealth of Massachusetts, Suffolk County, or the Superior Court, were consolidated in December 2017, and voluntarily dismissed with prejudice in November 2018, after the District Court for the District of Massachusetts partially dismissed the related claims in that court and the parties in the Superior Court entered a stipulation of dismissal with prejudice.

The action commenced in the United States District Court for the District of Massachusetts (the “District Court”), alleging violations of Sections 11 and 15 of the Securities Act and Sections 10(b) and 20(a) of the Exchange Act, was partially dismissed on August 23, 2018. In particular, the District Court granted the motion to dismiss the claims under Sections 11 and 15 of the Securities Act, finding that the plaintiff failed to disclose thatplead a false or misleading statement in the Company was unprepared or unable to comply with certain regulatory special controlsIPO registration statement. The District Court did not address the claims under Sections 10(b) and to provide20(a) of the FDA with a postmarket surveillance study on the Company's ReWalk Personal device, and that,Exchange Act because, as a result of such alleged omission, the plaintiffs suffered damages. The Massachusetts Federaldismissal of the claims under the Securities Act, the lead plaintiff lacked standing to pursue those claims. Because the action in the District Court Action also allegeswas styled as a class action, the District Court permitted the plaintiff to file a supplemental memorandum concerning standing or a motion to appoint a substitute or supplemental plaintiff. On September 10, 2018, the plaintiff sought leave to amend his complaint to add a new plaintiff that certain statements issued bypurportedly has standing to pursue Exchange Act claims, and the Company after its IPO are materially misleading because they omitted certain information. The Company believes thatopposed the allegations made inmotion to amend on September 24, 2018. On May 16, 2019, the complaints are without meritcourt denied the plaintiff’s motion to amend and intends to defend itself vigorously against the complaints relatingcomplaint was dismissed. Thereafter, the plaintiff timely appealed to the three pending actions.United States Court of Appeals for the First Circuit. The appeal has been fully briefed and the court held oral arguments on March 2, 2020.

Based on information currently available and the earlycurrent stage of the litigation, the Company is unable to reasonably estimate a possible loss or range of possible losses, if any, with regard to these lawsuits;the remaining lawsuit in the District Court; therefore, no litigation reserve has been recorded in the Company'sCompany’s condensed consolidated balance sheetsheets as of SeptemberJune 30, 2017. The2020. the Company will continue to evaluate information as it becomes known and will record an estimate for losses at the time or times if and when it is probable that a loss will be incurred and the amount of the loss is reasonably estimable.

16

REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 6:-
PAYCHECK PROTECTION PROGRAM LOAN


NOTE 6:-    LOAN AGREEMENT WITH KREOS AND RELATED WARRANT TO PURCHASE ORDINARY SHARES

On December 30, 2015, the CompanyApril 21, 2020, RRI entered into thea loan  agreement (the "Loan Agreement"“PPP Loan”) with Kreos Capital V (Expert Fund) Limited ("Kreos"Silicon Valley Bank (the “Lender”), pursuant to which Kreos extended a line of credit to the Company evidencing an unsecured promissory note in the amount of $20 million. For more information, see Note 6$392 thousand (the “PPP Note”) pursuant to our audited consolidated financial statements included in our 2016 Form 10-K.

On June 9, 2017, the Company and Kreos entered into the First Amendment of the Loan AgreementPaycheck Protection Program (the "Loan Amendment"“PPP”). As of that date the outstanding principal amount under the Loan Agreement (the "Outstanding Principal Amount") was $17.2 million. Under the Loan Amendment $3 million of the Outstanding Principal Amount was extended by an additional 3 years with the same interest rateCoronavirus Aid, Relief, and became subject to repayment in accordance with, and subjectEconomic Security (CARES) Act. Subject to the terms of a secured convertible promissory note (the "Kreos Convertible Note"). The Kreos Convertiblethe PPP Note, may be converted into up to 2,523,660 ordinary shares of the CompanyPPP Loan bears interest at a fixed conversion pricerate of $1.2681% per share (subjectyear, with the first six months of interest deferred, and has an initial term of two years. The PPP Loan is unsecured and guaranteed by the Small Business Administration.

The PPP Loan may be used for payroll costs, costs related to customary antidilution adjustments in connection withcertain 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.  PPP loan recipients can apply for and be granted forgiveness for all or a share split, reverse share split, share dividend, combination, reclassification or otherwise), thus reducing the Outstanding Principal Amount by $3 million to $14.2 million. Kreos may convert the then-outstanding principalportion of loan granted under the Kreos Convertible Note in whole or in part, in one or more occasions, at any time untilPPP, with such forgiveness to be determined, subject to limitations, based on the earlier of (i) the maturity date of June 9, 2020 or (ii) a "Change of Control", as defined in the Loan Agreement. In addition, at any time until the maturity date of June 9, 2020, Kreos has the right to convert the “end of loan payments” under the Loan Agreement, in whole or in part, into ordinary shares at a conversion price of $1.268 per share. Because the aggregate amount the Company drew down under the Loan Agreement equals $20 million and the total “end of loan payments” equal $200 thousand, Kreos has the right to convert up to 157,729 additional ordinary shares (subject to customary anti-dilution adjustments), making the total number of ordinary shares issuable upon conversionuse of the Kreos Convertible Note 2,523,660 (subject to customary anti-dilution adjustments).
loan proceeds for payment of payroll costs and any payments of mortgage interest, rent, and utilities. The Outstanding Principal Amount under the Loan Agreement is not convertible and remainsterms of any forgiveness may also be subject to repaymentfurther requirements in accordanceany regulations and guidelines the Small Business Administration may adopt.

The PPP Note provides for customary events of default including, among other things, cross-defaults on any other loan with the terms and conditionsLender. The PPP Loan may be accelerated upon the occurrence of an event of default.

The follow table presents the scheduled principal payments of the Company's PPP Loan Agreement, provided that such amount shall be repaid by the Company in accordance with an amended repayment schedule. The Company concluded that the exchange of the $3 million for the convertible promissory note is not a troubled debt restructuring under applicable accounting guidance because the lenders did not grant a concession. The modification was analyzed under ASC 470 Debt to determine if extinguishment accounting was applicable. Under ASC 470-50-40-10 a modification or an exchange that adds or eliminates a substantive conversion optionpayable as of the conversion date is always considered substantial and requires extinguishment accounting. Since this modification added a substantive conversion option, extinguishment accounting is applicable. The difference between the fair value of the new debt with the pre-modification carrying amount of the old debt represented a loss on extinguishment in the amount of $313 thousand.

According to the Loan Agreement the repayment period will be extended to 36 months if the Company raises $20 million or more in connection with the issuance of shares of its capital stock (including debt securities convertible into shares of the Company’s capital stock). As of June 30, 20172020, shown if the Company had raised more than $20 million and therefore the repayment period was extended by an additional 12 months to 36 months.PPP Loan is not forgiven:

Period Amount 
Remainder of 2020 $41 
2021  263 
2022  88 
Total principal payments $392 
     
Current portion $174 
Long-term portion  218 
Note payable, net $392 

17

REWALK ROBOTICS LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 7:-    
NOTE 7:-RESEARCH COLLABORATION AGREEMENT AND LICENSE AGREEMENT

On May 16, 2016, the Company entered into a Research Collaboration Agreement (“Collaboration Agreement”) and an Exclusive License Agreement (“License Agreement”) with Harvard. The Research Collaboration Agreement was amended on May 1, 2017 and April 1, 2018 (as amended, the “Collaboration Agreement”), and the Exclusive License Agreement was amended on April 1, 2018 (as amended, the “License Agreement”), to extend the term of the Collaboration Agreement by one year to May 16, 2022 and reallocate the Company’s quarterly installment payments to Harvard through such date, and to make certain technical changes.

Under the Collaboration Agreement, Harvard and 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 pay in quarterly installments for the funding of this research, subject to a minimum funding commitment under applicable circumstances. The
On April 30, 2020, the Company and Harvard amended the Collaboration Agreement will expire on May 16, 2021.with certain adjustments to the quarterly installments and extending the term an additional three quarters until February 2023.

Under the Harvard License Agreement, Harvard has granted the Company an exclusive, worldwide royalty-bearing license under certain patents of Harvard relating to lightweight “soft suit” exoskeleton system technologies for lower limb disabilities, a royalty-free license under certain related know-how and the option to obtain a license under certain inventions conceived under the joint research collaboration.

REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The Harvard License Agreement requires 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. As of SeptemberJune 30, 2017,2020, the company achieved the three development milestones. The Company did not achieve any of these milestones, and is evaluatingcontinues to evaluate the likelihood that the other milestones will be achieved on a quarterly basis. Moreover, since such royalties are dependent on future product sales which are neither determinable nor reasonably estimable, these royalty payments are not recorded on the Company's condensed consolidated balance sheet as of September 30, 2017.

The Company'sCompany’s total payment obligation under the Collaboration Agreement and the License Agreement is $6.3$7.2 million, some of which is subject to a minimum funding commitment under applicable circumstances as indicated above.

The Company has recorded expenses in the amount of $465$202 thousand and $267$424 thousand during the three months period ended September 30, 2017 and September 30, 2016 respectively. The Company has recorded expenses in the amount of $1.2 million and $1.3 million during the nine months period ended September 30, 2017 and September 30, 2016 respectively. Those expenseswhich 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 and six months ended June 30, 2020, 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.

18
NOTE 8:-    SHAREHOLDERS’ EQUITY

REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 8:-SHAREHOLDERS’ EQUITY

a.
Reverse share split: 
On March 27, 2019, the Company’s shareholders approved (i) a reverse share split within a range of 1:8 to 1:32, to be effective at the ratio and on a date to be determined by the Board of Directors, and (ii) amendments to the Company’s Articles of Association authorizing an increase in the Company’s authorized share capital (and corresponding authorized number of ordinary shares, proportionally adjusting such number for the reverse share split) by up to NIS 17.5 million. Following the shareholder approval, an authorized committee of the Board of Directors of the Company approved a one-for-twenty-five reverse share split of the Company’s ordinary shares, and the Company filed the Third Amended and Restated Articles of Association of the Company with the Registrar of Companies of the State of Israel to effect the reverse share split and to increase the Company’s authorized share capital after the effect of the reverse share split. The reverse share split became effective on April 1, 2019. Additionally, effective at the same time, the total number of ordinary shares the Company is authorized to issue changed from 250,000,000 shares to 60,000,000 shares, the par value per share of the ordinary shares changed to NIS 0.25 and the authorized share capital of the Company changed from NIS 2,500,000 to NIS 15,000,000. All share and per share data included in these condensed consolidated financial statements, for periods before the three months ended June 30, 2019, give retroactive effect to the reverse stock split.

Upon the effectiveness of the reverse share split, every twenty-five shares were automatically combined and converted into one ordinary share. Appropriate adjustments were also made to all outstanding derivative securities of the Company, including all outstanding equity awards and warrants.

No fractional shares were issued in connection with the reverse share split. Instead, all fractional shares (including shares underlying outstanding equity awards and warrants) were rounded down to the nearest whole number.
19
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

b.
Share option plans:

As of SeptemberJune 30, 2017,2020, and December 31, 2016,2019, the Company had reserved 602,158 and 380,1531,559,751 and 12,409 ordinary 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'sCompany’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.
The fair value for options granted during the ninesix months ended SeptemberJune 30, 2017 and September 30, 20162019  was estimated at the date of the grant using a Black-Scholes-Merton option pricing model with the following assumptions:

  Six Months Ended
June 30,		 
  2019 
Expected volatility  57.5%
Risk-free rate  2.22%
Dividend yield  —%
Expected term (in years)  6.11 
Share price $5.37 
               There were no options granted during the six months ended June 30, 2020.
  Nine Months Ended September 30,
  2017 2016
Expected volatility 56% - 58% 53% - 60%
Risk-free rate 1.78% - 2.07% 1.16%-1.60%
Dividend yield —% —%
Expected term (in years) 5.31-6.11 5.31-6.11
Share price $1.3- $2.1 $6.8- $11.88

The fair value of restricted share units (“RSUs”) granted is determined based on the price of the Company'sCompany’s ordinary shares on the date of grant.
A summary of employee share options to purchase ordinary shares and RSUsactivity during the ninesix months ended SeptemberJune 30, 20172020 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  74,713  $41.6   6.34  $135 
Granted  —   —         
Exercised  —   —         
Forfeited  (1,502)  129.90         
Options outstanding at the end of the period  73,211  $39.8   5.83  $582 
                 
Options exercisable at the end of the period  51,153  $47.99   4.85  $— 
20

REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

A summary of employee RSUs activity during the six months ended June 30, 2020 is as follows:
  Number of shares underlying outstanding RSUs  Weighted
average
grant
date fair value		 
Unvested RSUs at the beginning of the period  62,378  $44.61 
Granted  300,000   2.23 
Vested  (24,625)  14.80 
Forfeited  (6,992)  8.24 
Unvested RSUs at the end of the period  330,761  $6.39 
 Nine Months Ended September 30, 2017
 Number 
Average
exercise
price
 
Average
remaining
contractual
life (in years) (1)
 
Aggregate
intrinsic
value (in
thousands)
Options and RSUs outstanding at the beginning of the period2,251,014
 $6.47
 7.80 $1,740
Options granted413,746
 2.01
    
RSUs granted230,484
 —
    
Options exercised (2)(30,192) 1.39
    
RSUs vested (2)(59,450) —
    
RSUs forfeited(44,196) —
    
Options forfeited(169,008) 2.99
    
        
Options and RSUs outstanding at the end of the period2,592,398
 $5.39
 7.45 $578
        
Options exercisable at the end of the period1,272,727
 $6.12
 6.46 $64

(1)Calculation of weighted average remaining contractual term does not include RSUs, which have an indefinite contractual term.
(2)During the nine months period ended September 30, 2017, the aggregate number of ordinary shares that were issued pursuant to RSUs that became vested and options that were exercised on a net basis was 87,795 ordinary shares.

The weighted average grant date fair value of options granted during the ninesix months ended SeptemberJune 30, 2017 and September 30, 20162019 was $1.10 and $4.75, respectively.$2.98. The weighted average grant date fair value of RSUs granted during the nine month periodsix months ended SeptemberJune 30, 20172020 and September 30, 20162019 was $2.01$2.23 and $9.28,$4.69 respectively.

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. Total intrinsic value ofNo options were exercised for each ofduring the ninesix months ended SeptemberJune 30, 20172020 and SeptemberJune 30, 2016 was $29 thousand and $844 thousand respectively.2019. As of SeptemberJune 30, 2017,2020, there were $5.1 million$968 thousand of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Company's 2012 Equity Incentive Plan and its 2014 Plan. This cost is expected to be recognized over a period of approximately 2.12.85 years.

The number of options and RSUs outstanding as of SeptemberJune 30, 20172020 is set forth below, with options separated by range of exercise price. The below does not reflect the results of the Equity Exchange Program (as defined below) completed on October 5, 2017.
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 
Range of exercise price Options and RSUs outstanding as of September 30, 2017 
Weighted
average
remaining
contractual
life (years) (1)
 Options exercisable as of September 30, 2017 
Weighted
average
remaining
contractual
life (years) (1)
RSUs only 353,437
 —
 —
 —
$0.82 31,803
 3.29
 31,803
 3.29
$1.32 335,095
 4.75
 330,095
 4.67
$1.47 - $2.20 762,937
 8.07
 338,830
 6.35
$6.80- $8.99 663,382
 8.09
 322,536
 7.96
$9.22- $10.98 201,343
 8.42
 75,586
 8.10
$19.62-$20.97 244,401
 7.17
 173,877
 7.15
  2,592,398
 7.45
 1,272,727
 6.46
Range of exercise price Options and RSUs outstanding as of
June 30,
2020		  
Weighted
average
remaining
contractual
life (years) (1)
  Options
outstanding and exercisable as of
June 30,
2020		  
Weighted
average
remaining
contractual
life (years) (1)
 
RSUs only  330,761   —   —   — 
$5.37  12,425   8.75   3,882   8.75 
$20.42 - $33.75  36,299   5.76   24,633   4.78 
$37.14 - $38.75  10,164   3.47   10,164   3.47 
$50 - $52.5  11,228   5.17   9,379   4.82 
$182.5 - $524.25  3,095   5.08   3,095   5.08 
   403,972   5.83   51,153   4.85 
 

(1)
Calculation of weighted average remaining contractual term does not include the RSUs that were granted, which have an indefinite contractual term.

On September 6, 2017, the Company commenced a one-time equity award exchange program (the “Equity Exchange Program”), offering to certain eligible employees, executive officers and consultants the opportunity to cancel certain outstanding “underwater” stock options issued under the 2014 Plan, in exchange for the grant under such plan of a lesser number of RSUs. The Company's non-employee directors and retirees were not eligible to participate in the Equity Exchange Program. The Company conducted the Equity Exchange Program as a “value-for-value” exchange, pursuant to which the Company issued new RSUs with a value approximately equal to the value of the options that are surrendered, in accordance with the terms approved by the Company’s shareholders at the annual meeting of shareholders held on June 27, 2017. The primary purpose of the Equity Exchange Program was to restore the intended retention and incentive value of certain employee and consultant equity awards. Participation in the Equity Exchange Program was voluntary. The Company used the 52-week high closing price of its ordinary shares (as measured at the commencement of the Equity Exchange Program) as a threshold for options eligible to be exchanged. For more information on the results of the Equity Exchange Program, see Note 11.



c.
b.
Share-based awards to non-employee consultants:
 
The Company granted 3,454 options to a non-employee consultant on March 12, 2007, which were exercised during the nine months ended September 30, 2017. The Company granted 14,357 fully vested RSUs during the nine months ended September 30, 2017 to non-employee consultants. As of SeptemberJune 30, 2017,2020, there are no outstanding options or RSUs held by non-employee consultants.
21
c.Warrants to purchase ordinary shares:

The following table summarizes information about warrants outstanding and exercisable as of September 30, 2017:
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Issuance dateWarrants outstanding Exercise
price
per warrant		 Warrants
exercisable		 Contractual term
 (number)   (number)  
        
July 14, 2014 (1)403,804
 $10.08
 403,804
 July 13, 2018
December 30, 2015 (2)119,295
 $9.64
 119,295
 See footnote (2)
November 1, 2016 (3)2,437,500
 $4.75
 2,437,500
 November 1, 2021
December 28, 2016 (4)47,717
 $9.64
 47,717
 See footnote (4)
 3,008,316
   3,008,316
  


(1)d.Represents warrants
Warrants to purchase ordinary shares:
The following table summarizes information about warrants outstanding and exercisable as of June 30, 2020:
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)
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)  4,353,500  $1.250   4,353,500 February 10, 2025
February 10, 2020 (14)  336,000  $1.5625   336,000 February 10, 2025
   7,549,478       7,549,478  

(1)
Represents warrants for ordinary shares atissuable upon an exercise price of $10.08$7.5 per share, which were granted on July 14, 2014 as part of our series E investment round.
(2)Represents a warrant to purchase ordinary shares at an exercise price of $9.64 per share, which was issued on December 31, 2015 to Kreos Capital V (Expert) Fund Limited, or Kreos, in connection with a loan made by Kreos to us. The warrant isus and are currently exercisable (in whole or in part) until 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 the assets or shares of us 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. None of these warrants had been exercised as of SeptemberJune 30, 2017.2020.


(3)(2)
Represents warrants issued as part of our follow-on offering in November 2016. At any time, the board of directors may reduce the exercise price of the warrants to any amount and for any period of time it deems appropriate.

22

REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(4)(3)
Represents a warrant in the amount of 47,717 ordinary sharescommon warrants that were issued to Kreos as part of the $8.0 million drawdown under the Loan Agreement which occurred on December 28, 2016. See footnote 2 above1 for exercisability terms.

(4)
Represents common warrants that were issued as part of our follow-on offering in November 2018.

(5)
Represents common warrants that were issued to the underwriters as compensation for their role in our follow-on offering in November 2018.

(6)
Represents warrants that were issued to the exclusive placement agent as compensation for its role in our follow-on offering in February 2019.

(7)
Represents warrants that were issued to certain institutional purchasers in a private placement in our registered direct offering of ordinary shares in April 2019.


(8)
Represents warrants that were issued to the placement agent as compensation for its role in our April 2019 registered direct offering.

(9)
Represents warrants that were issued to certain institutional investors in a warrant exercise agreement on June 5, 2019 and June 6, 2019, respectively.

d.(10)
Represents warrants that were issued to the placement agent as compensation for its role in our June 2019 warrant exercise agreement and concurrent private placement of warrants.

(11)
Represents warrants that were issued to certain institutional purchasers in a private placement in the Company’s registered direct offering of ordinary shares in June 2019.


(12)
Represents warrants that were issued to the placement agent as compensation for its role in our June 2019 registered direct offering and concurrent private placement of warrants.


(13)
Represents warrants that were issued to certain institutional purchasers in a private placement in the Company’s best efforts offering of ordinary shares in February 2020.


(14)
Represents warrants that were issued to the placement agent as compensation for its role in the Company’s February 2020 best efforts offering.


e.
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 for the periods shown below as follows (in thousands):
  Six Months Ended
June 30,		 
  2020  2019 
Cost of revenues $4  $7 
Research and development, net  74   124 
Sales and marketing  48   126 
General and administrative  186   376 
Total $312  $633 
 Nine Months Ended September 30,
 2017 2016
Cost of revenues$57
 $78
Research and development, net344
 398
Sales and marketing, net585
 606
General and administrative1,611
 1,376
Total$2,597
 $2,458
23

REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


f.
Equity raise:


1.
e.At-the-market offering program:
Follow-on offerings

On May 10, 2016,In November 2018, the Company entered into an equity distributionunderwriting agreement (the “Equity Distribution Agreement”) with Piper Jaffray, pursuantH.C. Wainwright & Co., LLC (“H.C. Wainwright”), in connection with the Company’s follow-on public offering of 496,040 units, each consisting of one ordinary share and one common warrant to which it may offer and sell, from timepurchase one ordinary share with an exercise price of $7.5 per warrant. Each unit was sold to time,the public at a price of $7.50 per unit. On November 18, 2018, H.C. Wainwright exercised in full its option to purchase 231,964 ordinary shares havingfor $7.25 per share and/or common warrants to purchase up to an aggregate offeringadditional 231,964 ordinary shares for $0.25 per warrant.
Additionally, the Company issued and sold 1,050,372 pre-funded units at a price to the public of $7.25 per unit. Each unit containing one pre-funded warrant with an exercise price of up to $25 million, through Piper Jaffray acting as its agent. Subject to the terms and conditions of the Equity Distribution Agreement, Piper Jaffray will use its commercially reasonable efforts to sell on the Company’s behalf all of the ordinary shares requested to be sold by the Company, consistent with its normal trading and sales practices. Piper Jaffray may also act as principal in the sale of ordinary shares under the Equity Distribution Agreement. Sales may be made under the Company's Form S-3, in what may be deemed “at-the-market” equity offerings as defined in Rule 415 promulgated under the Securities Act of 1933, as amended (the “ATM Offering Program”). Sales may be made directly on or through the NASDAQ Capital Market, the existing trading market for the Company's ordinary shares, to or through a market maker other than on an exchange or otherwise, in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices, and/or any other method permitted by law, including in privately negotiated transactions. Piper Jaffray is entitled to compensation at a fixed commission rate of 3.0% of the gross sales price$0.25 per share sold through it as agent under the Equity Distribution Agreement. Where Piper Jaffray acts as principal in the saleand one warrant to purchase one ordinary share with an exercise price of ordinary shares under the Equity Distribution Agreement, such rate of compensation will not apply, but in no event will the$7.50 per warrant. The total compensation of Piper Jaffray, when combined with the reimbursement of Piper Jaffray for the out-of-pocket fees and disbursements of its legal counsel, exceed 8.0% of the gross proceeds received from the November 2018 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 three months ended June 30, 2019, additional pre-funded warrants and warrants to purchase an aggregate 584,087 ordinary shares had been exercised, for additional proceeds of $107,303. 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 became immediately exercisable starting on November 20, 2018 until November 15, 2023 at $9.375 per share.
In February 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 February 2019 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.
In April 2019, the Company entered into securities purchase agreements with certain institutional purchasers whereby the Company issued 816,914 ordinary shares at $5.2025 per ordinary share and warrants to purchase up to 408,457 ordinary shares with an exercise price of $5.14 per share, exercisable from April 5, 2019 until October 7, 2024, in a private placement that took place concurrently with the Company’s registered direct offering of ordinary shares in April 2019. Additionally, the Company issued warrants to purchase up to 49,015 ordinary shares, with an exercise price of $6.503125 per share, exercisable from April 5, 2019 until April 3, 2024, to representatives of H.C. Wainwright as compensation for its role as the placement agent in our April 2019 registered direct offering and concurrent private placement of warrants.
24

 REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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, par value NIS 0.25 per share 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.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.

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, par value NIS 0.25 per 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.  During the three months ended March 31, 2020, all pre-funded warrants to purchase ordinary shares were exercised. During the three months ended June 30, 2020, 1,246,500 warrants to purchase ordinary shares were exercised.


2.
Investment agreement
On March 6, 2018, the Company 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 the Company agreed to issue to Timwell, in three different tranches, an aggregate of 640,000 ordinary shares in return for aggregate gross proceeds of $20 million. The closing of each tranche is subject to certain closing conditions. The closing of the first tranche (the “First Tranche Closing”) took place on May 15, 2018, upon which Timwell received 160,000 ordinary shares for an aggregate purchase price of $5,000,000, and Timwell and the Company signed a registration rights agreement in the form attached to the Investment Agreement. The net aggregate proceeds of the First Tranche Closing after deducting fees and other related expenses in the amount of approximately $705 thousands were approximately $4.3 million. The remaining investment is to occur in two tranches, including $10 million for the issuance to Timwell of 320,000 ordinary shares (the “Second Tranche”) and $5 million for the issuance to Timwell of 160,000 ordinary shares (the “Third Tranch”). The closing of the second and third tranches is subject to specified closing conditions, including, with respect to the second tranche, the signing of a license agreement and a supply agreement and the formation of the China JV (the “China JV”) based on the JV Framework Agreement, and, with respect to the third tranche, the successful production of certain ReWalk products by the China JV. The second tranche closing was initially expected to occur by July 1, 2018 and the third tranche closing was initially expected to occur by December 31, 2018 and no later than April 1, 2019.

25
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

In May 2018, the Company entered into a fee and release agreement with Canaccord Genuity LLC (“Canaccord Genuity”) requiring the Company to pay to Canaccord Genuity, in connection with a settlement, in addition to certain cash amounts, (i) $125 thousand in ordinary shares of the Company after the First Tranche Closing of the Timwell transaction and (ii) $225 thousand in ordinary shares of the Company after the closing of the Second Tranche of the Timwell transaction (or such lower amount if the Second Tranche Closing is less than $10.0 million). The price per share used for calculation of the number of ordinary shares issued by the Company to Canaccord Genuity is based on the volume weighted average price of the Company’s ordinary shares as reported on the Nasdaq Capital Market for the five consecutive trading days prior to the date of issuance. The Company is not requiredalso obligated to sell anypay $100 thousand in cash following the closing of itsthe Third Tranche of $5.0 million (or such lower amount if the Third Tranche Closing is less than $5.0 million). Following the First Tranche Closing in May 15, 2018, the Company issued 4,715 ordinary shares at any time.to Canaccord Genuity.

TheIn late March 2020, Timwell notified the Company may raise upthat it would not invest the second and third tranches under the Investment Agreement. In response, in early April 2020, the Company’s Board of Directors also removed Timwell’s designee, who was appointed pursuant to $25 million under its ATM Offering Programthe Investment Agreement, from the Board of Directors, due to this breach pursuant to the terms of its agreement with the sales agent. However, due to limitations under the rules of Form S-3, which have applied toInvestment Agreement. As the Company since it filed its annual report on Form 10-Kcontinues to view China as a market with key opportunities for the fiscal year ended December 31, 2016 on February 17, 2017, taking into account ordinary shares issued and settled under the Company’s ATM Offering Program since February 17, 2017, as of September 30, 2017,products designed for stroke patients, the Company may issue upcontinues to $4.3 million in primary offerings under its effective shelf registration statement on Form S-3 (File No. 333- 209833), including its ATM Offering Program, duringevaluate potential relationships with other groups to penetrate the 12 months following February 17, 2017, unless and until it is no longer subject to such limitations.Chinese market.

During the nine months ended September 30, 2017, the Company issued and sold 5,379,908 ordinary shares at an average price of $1.76 per share under its ATM Offering Program. The gross proceeds to the Company were $9.4 million, and the net aggregate proceeds after deducting commissions, fees and offering expenses in the amount of $439 thousand were $9.0 million. As a result, from the inception of the ATM Offering Program in May 2016 until September 30, 2017, the Company had sold 6,071,970 ordinary shares under the ATM Offering Program for gross proceeds of $14.0 million and net proceeds to the Company of $13.1 million (after commissions, fees and expenses). Additionally, as of that date, the Company had paid Piper Jaffray compensation of $420 thousand and had incurred total expenses of approximately $907 thousand in connection with the ATM Offering Program.
26

REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTE 9:-NOTES TO CONDENSED CONSOLIDATED FINANCIAL EXPENSES, NETSTATEMENTS (UNAUDITED)
NOTE 9:-FINANCIAL EXPENSES, NET
 
The components of financial expenses, net were as follows (in thousands):
 
  Three Months Ended
June 30,		  Six Months Ended
June 30,		 
  2020  2019  2020  2019 
Foreign currency transactions and other $(19) $(43) $(92) $(40)
Financial expenses related to loan agreement with Kreos  249   386   559   790 
Bank commissions  5   10   14   21 
  $235  $353  $481  $771 
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Foreign currency transactions and other$(37) $17
 $(113) $60
Financial expenses related to loan agreement with Kreos510
 495
 1,932
 1,462
Bank commissions6
 5
 24
 28
Income related to hedging transactions—
 (9) —
 (36)
 $479
 $508
 $1,843
 $1,514

REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 10:-
GEOGRAPHIC INFORMATION AND MAJOR CUSTOMER AND PRODUCT DATA

NOTE  10:-    GEOGRAPHIC INFORMATION AND MAJOR CUSTOMER AND PRODUCT DATA

Summary information about geographic areas:areas:
ASC 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 the enterprise’s performance. The Company manages its business on the basis of one reportable segment and derives revenues from selling systemsunits and services (see Note 1 for a brief description of the Company’s business). The belowfollowing is a summary of revenues within geographic areas (in thousands):  areas:
Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended
June 30,		  Six Months Ended
June 30,		 
2017 2016 2017 2016 2020  2019  2020  2019 
Revenues based on customer’s location:                   
Israel$—
 $—
 $—
 $—
 $—  $2  $—  $2 
United States801
 710
 4,242
 2,976
  631   426   847   923 
Europe931
 404
 1,996
 908
  1,035   418   1,577   1,497 
Asia-Pacific—
 286
 —
 394
  2   31   4   36 
Total revenues$1,732
 $1,400
 $6,238
 $4,278
 $1,668  $877  $2,428  $2,458 
 
27
 September 30, December 31,
 2017 2016
Long-lived assets by geographic region (*):   
Israel$330
 $476
United States361
 565
Germany215
 217
 $906
 $1,258
(*)    Long-lived assets are comprised of property and equipment, net.
Major customer data as a percentage of total revenues (in thousands):
 September 30, December 31,
 2017 2016
Customer A42.6% 33.3%

REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


NOTE 11:- SUBSEQUENT EVENTS
  June 30,  December 31, 
  2020  2019 
Long-lived assets by geographic region (*):      
Israel $164  $179 
United States  213   244 
Germany  70   78 
  $447  $501 
 
a.(*)Legal claims: class action litigation (see Note 5d)Long-lived assets are comprised of property and equipment, net.

  Six Months Ended
June 30,		 
  2020  2019 
Major customer data as a percentage of total revenues:      
Customer A  10.3%  *)
Customer B  *)  17.1%
As of November 1, 2017, there were three pending class action lawsuits against the Company and certain other defendants alleging claims under the Securities Act in connection with the Company’s registration statement used in its IPO, including the Consolidated Massachusetts State Court Actions and the Massachusetts Federal Court Action. These actions are further described above in Note 5d.

Consolidated Massachusetts State Court Actions: The court heard oral argument on the Company's’ motion to dismiss on October 16, 2017.
Massachusetts Federal Court Action: The court denied the Company's motion to stay and has set the time for the Company's motion to dismiss to November 10, 2017.

NOTE 11:-
b.Share option plans: Equity Exchange Program (see Note 8a) SUBSEQUENT EVENTS

On July 6, 2020 the Equity Exchange Program’s expiration dateCompany entered into a purchase agreement with certain institutional investors for the issuance and sale of October 4, 2017, 46 holders tendered options4,938,278 ordinary shares, par value NIS 0.25 per share, at $1.8225 per ordinary share and warrants to purchase an aggregate of 945,416up to 2,469,139 ordinary shares representing 96.4%with an exercise price of all options eligible for exchange, and on October 5, 2017,$1.76 per share, exercisable from July 6, 2020 until January 6, 2026. Additionally, the Company grantedissued warrants to these holderspurchase up to 296,297 ordinary shares, with an aggregateexercise price of 251,872 new RSUs. 180,167$2.2781 per share, exercisable from July 6, 2020 until July 2, 2025, to certain representatives of these new RSUs were granted toH.C. Wainwright as compensation for its role as the Company’s executive officers and “named executive officers” (as definedplacement agent in Item 402 of Regulation S-K of the SEC). Unless the Company’s compensation committee accelerates their vesting, the new RSUs vest over a three-year period, with one-third vesting on the first anniversary of the date of grant and one-third vesting on each of the next two successive anniversaries. Additionally, the forfeiture terms of the new RSUs are substantially the same as those that apply generally to previously-granted RSUs granted under the 2014 Plan. The Equity Exchange Program is further described above in Note 8a.our July 2020 registered direct offering.

The stock options exchanged pursuant to the Exchange Program were canceled and the ordinary shares underlying such options became available for issuance under the 2014 Plan.
28

Table of Contents

ITEM 2. MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operation should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes included elsewhere in this quarterly report and with our audited consolidated financial statements included in our 20162019 Form 10-K as filed with the SEC. In addition to historical condensed financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. For a discussion of factors that could cause or contribute to these differences, see “Special Note Regarding Forward-Looking Statements” below.

Special Note Regarding Forward-Looking Statements

In addition to historical information, this quarterly report on Form 10-Q (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:

our expectations regarding future growth, including our ability to increase sales in our existing geographic markets expand to new markets and achieve our planned expense reductions;

our management’s conclusion in the notes to our unaudited condensed consolidated financial statements included in this report and to our audited consolidated financial statements for fiscal 2016, and our independent registered public accounting firm’s statement in its opinion relating to our audited consolidated financial statements for fiscal 2016, that there are a substantial doubts as to our ability to continue as a going concern;

our ability to maintain and grow our reputation and the market acceptance of our products;

our ability to achieve reimbursement from third-party payors for our products;

our expectations as to our clinical research program and clinical results;

our expectations as to the results of and Food and Drug Administration’s (the "FDA") potential
regulatory developments with respect to our mandatory 522 postmarket surveillance study;

the outcome of ongoing shareholder class action litigation relating to our IPO;

our ability to repay our secured indebtedness;

our ability to improve our products and develop new products;

our ability to maintain adequate protection of our intellectual property and to avoid violation of the intellectual property rights of others;

our ability to gain and maintain regulatory approvals;

our ability to secure capital from equity and debt financings in light of limitations under our Form S-3,
the price range of our ordinary shares and conditions in the financial markets, and that risk that such financings may dilute our shareholders or restrict our business;
Table of Contents


our ability to use effectively the proceeds of any offerings of our securities;

the impact of the market price of our ordinary shares on the determination of whether we are a passive foreign investment company;

our ability to maintain relationships with existing customers and develop relationships with new customers.

our ability to comply 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; and

our compliance with medical device reporting regulations to report adverse events involving our products and the potential impact of such adverse events on our ability to market and sell its products.

The preceding list is not intended to be an exhaustive list of all of our 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 forward-looking statements. In particular, you should consider the risks provided under “Part 1, Item 1A. Risk Factors” of our 20162019 Form 10-K, and in other reports filed by us with 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 lookingforward-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.
29

Overview
We are an innovative medical device company that 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. We have developed and are continuing to commercialize our ReWalk an exoskeletonPersonal and ReWalk Rehabilitation devices for individuals with spinal cord injury (“SCI Products”), which are exoskeletons designed for individuals with paraplegia that usesuse our patented tilt-sensor technology and an onboardon-board computer and motion sensors to drive motorized legs that power movement.

We currently derive revenue from sellinghave also developed and began commercializing our ReStore device in June 2019. ReStore is a powered, lightweight soft exo-suit intended for use in the ReWalk Personal and ReWalk Rehabilitation exoskeleton devices that allowrehabilitation of individuals with paraplegialower limb disability due to stroke. Our principal markets are the ability to standUnited States and walk once again. ReWalk Personal is currently 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 valuable exercise and therapy. It also enables individuals to evaluate their capacity for using ReWalk Personal in the future.
Since obtaining CE mark clearance at the end of 2012 and FDA clearance in June 2014Europe. In Europe, we have continued to increase our focus on selling the Personal device through third party payorsa direct sales operation in the U.S. and Germany and through distributorsthe United Kingdom and work with distribution partners in certain other parts of the world. Additionally, wemajor countries. We have received regulatory approval to sell the ReWalk deiceoffices in other countries. In the future, we intend to seek approval from the applicable regulatory agencies in other jurisdictionsMarlborough, Massachusetts, Berlin, Germany and Yokneam, Israel, where we seek to market ReWalk.operate our business from.
We have in the past generated and expect to generate in the future expect to generate revenues from a combination of third-party payors, self-payors, including private and government employers, and institutions. While a broad uniform policy of coverage and reimbursement by third-party commercial payors currently does not exist in the United States for electronic exoskeleton technologies such as the ReWalk Personal, we are pursuing various paths of reimbursement and support fundraising efforts by institutions and clinics. In December 2015, the Veterans' Administration (the “VA”)U.S. Department of Veterans Affairs, or the VA, issued a national policy for the evaluation, training and procurement of ReWalk Personal exoskeleton systems for all qualifying veterans across the United States. The VA policy is the first national coverage policy in the United States for qualifying individuals who have suffered spinal cord injury. As of SeptemberJune 30, 2017,2020, we had placed 1624 units as part of the VA policy. We also regularly assist in litigation efforts
 According to a 2017 report published by individuals bringing claims against nationalthe Centers for Medicare and regional insurers for reimbursementMedicaid Services, or CMS, approximately 55% of the spinal cord injury population which are at least five years post their injury date are covered by CMS. In July 2020, a code was issued for ReWalk device, and have received and expect to receive revenues from settlements or judgments paid to the insured users. Personal 6.0(effective October 1, 2020), which might later be followed by coverage policy of CMS.  
Additionally, to date, several private insurers in the United States and Europe have provided reimbursement for ReWalk in certain cases,cases. In Germany, we continue to make progress toward achieving ReWalk coverage from the various government, private and inworker’s compensation payors. In September 2017, each of German insurer BARMER GEK ("Barmer"(“Barmer”) and national social accident insurance provider Deutsche Gesetzliche Unfallversicherung (“DGUV”), signedindicated that they will provide coverage to users who meet certain inclusion and exclusion criteria. In February 2018, the head office of German statutory health insurance, or SHI, Spitzenverband (“GKV”) confirmed their decision to list the ReWalk Personal 6.0 exoskeleton system in the German Medical Device Directory. This decision means that ReWalk will be listed among all medical devices for compensation, which SHI providers can procure for any approved beneficiary on a confirmationcase-by-case basis.
During the second quarter of 2020 we have finalized and lettermoved to implement two separate agreements to distribute additional product lines in the U.S. market. The Company will be the exclusive distributor of agreement, respectively, regarding the provisionMediTouch Tutor movement biofeedback systems in the United States, and will also have distribution rights for the MYOLYN MyoCycle Functional Electrical Stimulation (“FES”) cycles to U.S. rehabilitation clinics and personal sales through the U.S. Department of ReWalk systems for all qualifying beneficiaries.Veterans Affairs (“VA”) hospitals. These new products will improve our product offering to clinics as well as patients within the VA as they both have similar clinician and patient profile.
30

Second Quarter 2020 and Subsequent Period Business Highlights

●
Total revenue for the second quarter of 2020 was $1.7 million compared to $0.9 million in the prior year quarter;


●
Record Gross Margin of approx. 61.3% compared to 49.6% in the prior year quarter;


●
Raised total of $10.6 million in gross proceeds from warrants exercise during the second quarter and a subsequent registered direct offering in July; and


●The Centers for Medicare and Medicaid Services ("CMS") issued Healthcare Common Procedure Coding System ("HCPCS") Level II Code K1007 in response to the Company's application. This decision, which will be effective on October 1, 2020, establishes the first such code for exoskeletons.

Evolving COVID-19 Pandemic
The impact of the novel coronavirus (COVID-19) pandemic has been and will likely continue to be extensive in many aspects of society, which has resulted in and will likely continue to result in significant disruptions to the global economy, as well as businesses and capital markets around the world. In an effort to halt the outbreak of COVID-19, a number of countries, including the United States and many countries in Europe, have placed significant restrictions on travel, and many businesses have announced extended closures. Although certain of these countries or locales within the countries have begun to allow reopening of certain businesses, it is unclear how long total or partial shutdowns may last and whether additional shutdowns will be necessary to the extent future outbreaks occur.
The COVID-19 pandemic has affected our ability to engage with our SCI Products and ReStore customers, deliver ordered units or repair existing systems, and provide training of our products to new patients who have largely remained at home due to local movement restrictions and to rehabilitation centers, which have temporarily shifted priorities and responses to pandemic-related medical equipment. As a result, our revenues in the first quarter of 2020 have been adversely impacted. During the second quarter of 2020, we were able to deliver several units that we could not complete in the first quarter of 2020. The overall impact of the limitations on our sales efforts are currently difficult to determine, but we believe that the adverse impact may continue especially as our ability to trial new patients with our SCI Products is limited and as capital budgets for rehabilitation devices such as the ReStore are reduced or currently on-hold in most of the clinics. We continue to engage with U.S. and European national and regional insurance providers, including European workers’ compensation groups, to secure potential coverage policies basedmonitor our sales pipeline on supportive data and appeal rulings that have deemed exoskeleton devices a “medically necessary” standard of care for individuals with SCI. As part of this ongoing initiative, a large national insurance provider has requested additional information from usday-to-day basis in order to continueassess the quarterly effect of these limitations as some have short term effects and some affects our future pipeline development.  Limitations on travel and business closures recommended by federal, state, and local governments, could, among other things, impact our ability to evaluate a changeenroll patients in clinical trials, recruit clinical site investigators, and obtain timely approvals from local regulatory authorities. While our manufacturer, Sanmina Corporation, has not shut down its facilities during the COVID-19 pandemic, our manufacturing may also be impacted due to supply chain delays or adverse impacts on our production capacity due to government directives or health protocols that might impact our production facility, and the current non-coverage policy. We are also submitting data to two additional U.S. commercial groups for policy reviews. 
In the future, we intend to pursue reimbursement coverage through the Centers for Medicare and Medicaid Services (“CMS”). While we believe that a positive response from CMS may broaden coverage by private insurers, we cannot currently predict how longlimitations on our sales activities has made it would takehard for us to receive a decision from CMS.effectively forecast our future requirements for systems. For more information, see “Part I.II, Item 1A. Risk Factors-Risks RelatedFactors-A pandemic, epidemic or outbreak of an infectious disease, such as COVID-19, has adversely affected and may continue to Our Businessmaterially and Our Industry-We may failadversely impact our business, our operations and our financial results” and “Part II, Item 1A. Risk Factors-We depend on a single third party to secure or maintain adequate insurance coverage or reimbursement for ReWalk by third-party payors, including the VA, which risk may be heightened if insurers find ReWalk to be investigational or experimental or if new government regulations change existing reimbursement policies. Additionally, such coverage or reimbursement, even if maintained, may not produce revenues that are high enough to allow us to sellmanufacture our products, profitably”and we rely on a limited number of third-party suppliers for certain components of our products.”
31
Our future results of operations and liquidity could be adversely impacted by delays in payments of outstanding receivable amounts beyond normal payment terms, supply chain disruptions and operational challenges faced by our 2016 Form 10-K.
In early January 2017, we announcedcustomers. Continued outbreaks of COVID-19 could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn or a global recession that could affect demand for our plansproducts and likely impact our operating results. These may further limit or restrict our ability to access capital on favorable terms, or at all, lead to consolidation that negatively impacts our business, weaken demand, increase competition, cause us to reduce our operatingcapital spend further, or otherwise disrupt our business.
To align our expenses in 2017 by up to 30% as compared to 2016. We have been working toward such reductions through a combination of targeted savings, including by establishing quality improvement initiatives and lowering overall product cost, realigning our staffing priorities and reducing the size of our staff, including our reimbursement personnel, reducing spending on external appeals and lowering other corporate spending. In the near future, we intend to continue focusing on our reimbursement efforts with our streamlined staffing by pursuing insurance claims on a case-by-case basis, managing claims through the review process and external appeals, and investing in efforts to expand coverage.
In June 2017, we unveiled our lightweight “soft suit” exoskeleton prototype, in anticipation of later clinical studies and commercialization of an initial indication designed for strokes, and in October 2017, we announced the start of pre-clinical testing on the Restore “soft suit” system for stroke patients. A prospective clinical trial with the Restore system is targetedcurrent business environment, we took measures to beginadjust our cost structure and anticipated cash usage that have taken effect  in early 2018,the second quarter and we aim to commercializebeyond, which included reducing our personnel costs and deferring our subcontractors costs mainly within the system for use by stroke patientsresearch and development segment as well as short term reduction in Europeemployee’s hours of work in late 2018, followed byspecific areas, eliminating or reducing non-critical consultants, implementing remote working in the United States and Germany, and establishing in-office measures to contain the spread of COVID-19. These cost actions are designed to retain talent and preserve cash returns, while at the same time continuing to invest in late 2018strategic goals. These cost actions are intended to last throughout 2020 as needed, but the Company will continue to monitor the environment and extend or early 2019, subject to the timing and receipt of CE mark and FDA clearance, respectively. We have not yet applied formodify these clearances and intend to apply in mid-2018. Obtaining clearance could involve an extensive and time-consuming process and delay commercialization beyond our planned timetable, and we cannot make any assurances regarding the ultimate timing of FDA or CE mark clearance or commercialization of the products. For more information on the clearance processes, see “Part I, Item 1. Business-Government Regulation” in our 2016 Form 10-K. For more information on the Restore system, see our Current Report on Form 8-K filed with the SEC on October 23, 2017.
We intend to focus our research and development efforts in the near term primarily on the Restore system for stroke patients and in the longer term on “soft suit” exoskeletons for additional indications affecting the ability to walk, including multiple sclerosis, cerebral palsy, Parkinson’s disease and elderly assistance,actions, if necessary. Despite this current situation and the next generationchallenges it imposes, we continue to regularly engage with our current and prospective customers through video conferencing, virtual training events and online education demos to offer our support and showcase the value of our current ReWalk device. We anticipate that the next generation of the ReWalk will be a structural exoskeleton similar to our existing ReWalk devices, but with a slimmer profile, lighter body and improved drive mechanism.
We have incurred net losses and negative cash flows from operations since inception. We anticipate that this will continue in the near term as we plan to focus our resources mainly on reimbursement efforts, and efforts to expand coverage for the ReWalk system, clinical studies, including our FDA postmarket study, the development and commercialization efforts for the lightweight “soft suit” exoskeleton to treat stroke patients and development efforts for similar “soft suit” exoskeleton technology for other indications affecting the ability to walk. We are committed to maintaining optionality to ensure that we can operate our business without interruptions, enhance our product portfolio and pursue new markets. As such, from time to time, we have engaged and may in the future engage in strategic transactions designed to enhance shareholder value including, but not limited to, alliances, such as our strategic alliance with Yaskawa Electric Corporation, divestitures, private placements, sales of our assets or business and joint ventures.

Third Quarter 2017 Business Highlights

Revenues grew 24% to $1.7 million and 46% to $6.2 million for the three and nine months ended September 30, 2017, respectively, compared to revenues of $1.4 million and $4.3 million for the three and nine months ended September 30, 2016, respectively.

We placed 16 ReWalk devices during the quarter ended September 30, 2017, of which 10 were placed in the Unites States, 3 were in our direct markets in Europe, and 3 were in other markets.

We secured 7 favorable case by case insurance reimbursement decisions.

We increased pending insurance claims to 218 in the U.S. and Germany, as of September 30, 2017, compared to 149 as of the end of the prior year period.

Barmer confirmed it will provide ReWalk systems to all qualifying beneficiaries. Barmer provides insurance coverage for nearly ten million people in Germany, as a member of the German Statutory Health Insurance network and one of the most significant national insurers in the country. Exoskeletons will be provided to users that meet certain inclusion criteria and assessment by the German Health Insurance Medical Service (Medizinischer Dienst der Krankenversicherungen) before and after training. Barmer has already begun processing claims with users entering training for in-home use of an exoskeleton.products.

Germany’s national social accident insurance provider, DGUV, signed a confirmation letter with ReWalk, stipulating that the DGUV's member payers, including the health insurance association Berufsgenossenschaft (also known as BG) and state insurers, will approve the supply of exoskeleton systems for qualifying beneficiaries on a case-by-case basis. DGUV is comprised of 35 different insurers, which provide coverage for more than 70 million individuals in Germany. Per the agreement, eligible individuals will go to BG clinics for evaluation as a part of the procurement.32

Completed critical design review processes and began the pre-clinical testing of the Restore lightweight soft-exosuit base design in preparation for the clinical study and commercialization of an initial indication designed for stroke patients.

Total operating expenses in the third quarter of 2017 were $6.1 million, compared with $7.7 million in the prior year period. The reduction in operating expenses reflected our initiatives to reduce spending, as announced earlier in 2017.

During the quarter ended September 30, 2017, we sold 1,678,288 shares generating total net proceeds to the Company of $2.9 million (after commissions, fees and expenses) under our ATM Offering Program. For more information, see Note 8e to our unaudited condensed consolidated financial statements set forth in “Part I, Item 1. Financial Statements” above and “Liquidity and Capital Resources” below.


Results of Operations for the Three and NineSix Months Ended SeptemberJune 30, 20172020 and SeptemberJune 30, 20162019
Our operating results for the three and ninesix months ended SeptemberJune 30, 2017,2020, as compared to the same periods in 2016,2019, are presented below. TheThe results set forth below are not necessarily indicative of the results to be expected in future periods.
  Three Months Ended
June 30,		  Six Months Ended
June 30,		 
  2020  2019  2020  2019 
Revenues $1,668  $877  $2,428  $2,458 
Cost of revenues  646   442   1,033   1,097 
                 
Gross profit  1,022   435   1,395   1,361 
                 
Operating expenses:                
Research and development, net  954   1,860   1,939   3,274 
Sales and marketing  1,353   1,531   3,034   3,118 
General and administrative  1,267   1,279   2,576   2,779 
                 
Total operating expenses  3,574   4,670   7,549   9,171 
                 
Operating loss  (2,552)  (4,235)  (6,154)  (7,810)
Financial expenses, net  235   353   481   771 
                 
Loss before income taxes  (2,787)  (4,588)  (6,635)  (8,581)
Taxes on income (tax benefit)    68   (1)  60   6 
                 
Net loss $(2,855) $(4,587) $(6,695) $(8,587)
                 
Net loss per ordinary share, basic and diluted $(0.22) $(0.88) $(0.57) $(2.03)
                 
Weighted average number of shares used in computing net loss per ordinary share, basic and diluted  13,101,275   5,213,446   11,744,275   4,236,788 
33
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Revenues$1,732
 $1,400
 $6,238
 $4,278
Cost of revenues1,024
 1,110
 3,740
 3,410
        
Gross profit708
 290
 2,498
 868
        
Operating expenses: 
  
  
  
Research and development, net1,618
 1,968
 4,433
 6,737
Sales and marketing2,637
 3,774
 8,643
 10,577
General and administrative1,805
 1,951
 5,796
 5,960
        
Total operating expenses6,060
 7,693
 18,872
 23,274
        
Operating loss(5,352) (7,403) (16,374) (22,406)
        
Loss on extinguishment of debt—
 —
 313
 —
Financial expenses, net479
 508
 1,843
 1,514
        
Loss before income taxes(5,831) (7,911) (18,530) (23,920)
Income taxes15
 9
 25
 39
Net loss$(5,846) $(7,920) $(18,555) $(23,959)
        
Net loss per ordinary share, basic and diluted$(0.27) $(0.62) $(1.00) $(1.92)
        
Weighted average number of shares used in computing net loss per ordinary share, basic and diluted21,660,757
 12,759,887
 18,463,444
 12,495,433



Three and NineSix Months Ended SeptemberJune 30, 20172020 Compared to Three and NineSix Months Ended SeptemberJune 30, 20162019
Revenues
Our revenues for the three and ninesix months ended SeptemberJune 30, 20172020 and 20162019 were as follows:
  Three Months Ended
June 30,		  Six Months Ended
June 30,		 
  2020  2019  2020  2019 
  (in thousands, except unit amounts)  (in thousands, except unit amounts) 
Personal unit revenues $1,667  $851  $2,381  $2,397 
Rehabilitation unit revenues  1   26   47   61 
Revenues $1,668  $877  $2,428  $2,458 
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
 (in thousands, except unit amounts) (in thousands, except unit amounts)
Personal units placed15
 20
 81
 75
Rehabilitation units placed1
 3
 3
 5
Total units placed16
 23
 84
 80
Personal unit revenues$1,707
 $1,250
 $6,033
 $3,929
Rehabilitation unit revenues$25
 $150
 $205
 $349
Revenues$1,732
 $1,400
 $6,238
 $4,278
Revenues increased by $332$791 thousand, or 24%90%, for the three months ended SeptemberJune 30, 20172020 compared to the three months ended SeptemberJune 30, 2016.2019. Revenues increased by $2.0 million, or 46%, forremained flat the ninesix months ended SeptemberJune 30, 20172020 compared to the ninesix months ended SeptemberJune 30, 2016.2019. The increase in revenue for three months ended June 30, 2020 was driven primarily due to sales mix, includingby higher sales to the VA for usenumber of personal units sold in an ongoing clinical study, reaching, as of September 30, 2017, 60 units placed as part of the study since its inception in the fourth quarter of 2015, and an increase in the conversion of rental units into purchases.Europe.
In the future we expect our growth to be driven by sales of our ReWalk Personal device to third-party payors as we continue to focus our resources on broader commercial coverage policies with third-party payors.payors as well as sales of the ReStore and other products to rehabilitation clinics and personal users.
Gross Profit
Our gross profit for the three and ninesix months ended SeptemberJune 30, 20172020 and 20162019 were as follows (in thousands):
  Three Months Ended
June 30,		  Six Months Ended
June 30,		 
  2020  2019  2020  2019 
Gross profit $1,022  $435  $1,395  $1,361 
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Gross profit$708
 $290
 $2,498
 $868
Gross profit was 41%61% of revenue for the three months ended SeptemberJune 30, 2017,2020 compared to 21% of revenue50% for the three months ended SeptemberJune 30, 2016.2019. Gross profit was 40%57% of revenue for the ninesix months ended SeptemberJune 30, 2017,2020 compared to 20% of revenue55% for the ninesix months ended SeptemberJune 30, 2016.2019. The increase in gross profit for the three  months ended June 30, 2020 was mainly driven by sales mix, thehigher number of units placed as well as increase in average selling price. The gross profit has remained generally flat in the conversion of rental units into purchases and lower product costs.six months ended June 30, 2020 compared to the six months ended June 30, 2019 with a slight increase due to reduced warranty expenses.
We expect our gross profit to gradually improve asassuming we increase revenue and lower our unitsales volumes which could also decrease the product manufacturing costs through implementation of certain cost reduction projects and economies of scale whichcosts. Improvements may be partially offset by potential price increase.the lower margins we expect upon the launch period of our new ReStore and distributed products as well as due to an increase in the cost of product parts.
34

Research and Development Expenses
Our research and development expenses, net, for the three and ninesix months ended SeptemberJune 30, 20172020 and 20162019 were as follows (in thousands): 
  Three Months Ended
June 30,		  Six Months Ended
June 30,		 
  2020  2019  2020  2019 
Research and development expenses, net $954  $1,860  $1,939  $3,274 
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Research and development expenses, net$1,618
 $1,968
 $4,433
 $6,737
Table of Contents

Research and development expenses, net, decreased by $350$906 thousand, or 18%49%, for the three months ended SeptemberJune 30, 20172020 compared to the three months ended SeptemberJune 30, 2016. The decrease in expenses is primarily attributable to a grant received from the IIA, which were credited to research and development expenses, and a decrease in personnel costs and personnel-related costs, partially offset by an increase in costs related to development of the Restore device. Additionally,2019. Research and development expenses, net, decreased $2.3 million,$1,335 thousand, or 34%41%, for the ninesix months ended SeptemberJune 30, 20172020 compared to the ninesix months ended SeptemberJune 30, 2016.2019. The decrease in expenses is primarily attributable to a one-time chargedecreased costs associated with the development and clinical study costs of $1.1 million recorded in 2016 related to the Collaboration Agreement and License Agreement with Harvard,  grants received from the IIA which were credited to research and development expenses, net during the nine months ended September 30, 2016 and a decrease in personnel costs and personnel-related costs.our ReStore soft suit exoskeleton.
We intend to focus our research and development expenses in the near term primarilymainly on the Restore system for stroke patients and in the longer term on aour current products maintenance as well as developing our “soft suit” exoskeleton for additional indications affecting the ability to walk including multiple sclerosis, cerebral palsy, Parkinson’s disease and elderly assistance and the next generation of our current ReWalk device.or a home use design.
Sales and Marketing Expenses
Our sales and marketing expenses for the three and ninesix months ended SeptemberJune 30, 20172020 and 20162019 were as follows (in thousands): 
  Three Months Ended
June 30,		  Six Months Ended
June 30,		 
  2020  2019  2020  2019 
Sales and marketing expenses $1,353  $1,531  $3,034  $3,118 
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Sales and marketing expenses$2,637
 $3,774
 $8,643
 $10,577
Sales and marketing expenses decreased $1.1 million,$178 thousand, or 30%12%, for the three months ended SeptemberJune 30, 20172020 compared to the three months ended SeptemberJune 30, 2016.2019. Sales and marketing expenses decreased $1.9 million,$84 thousand, or 18%3%, for the ninesix months ended SeptemberJune 30, 20172020 compared to the ninesix months ended SeptemberJune 30, 2016.2019. The decrease is driven mainly by lower personnel and personnel-related costs and consultingtravel expenses as result of our recent cost reduction efforts.due to the Covid-19 restrictions.

In the near term our sales and marketing expenses are expected to be driven by our commercializationefforts to commercialize our current products and to increase reimbursement efforts forcoverage of the ReWalk Personal device as we continue to pursue insurance claims on a case by case basis, manage claims through the review process and external appeals and invest in efforts to expand coverage.device.
General and Administrative Expenses
Our general and administrative expenses for the three and ninesix months ended SeptemberJune 30, 20172020 and 20162019 were as follows (in thousands): 
  Three Months Ended
June 30,		  Six Months Ended
June 30,		 
  2020  2019  2020  2019 
General and administrative expenses $1,267  $1,279  $2,576  $2,779 
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
General and administrative$1,805
 $1,951
 $5,796
 $5,960
General and administrative expenses decreased $146$12 thousand, or 1%, for the three months ended June 30, 2020 compared to the three months ended June 30, 2019. General and administrative expenses decreased $203 thousand, or 7%, for the threesix months ended SeptemberJune 30, 20172020 compared to the six months ended June 30, 2019. The expenses for the three months ended September 30, 2016. General and administrative expenses decreased $164 thousand, forperiod remained flat whereas the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. The decrease in expenses is primarily attributable tothe six months period was mainly driven by lower professional expenses and personnel-related costs.
Loss on Extinguishment of Debtnon-cash compensation expenses.

Loss on extinguishment of debt of $313 thousand for the nine months ended September 30, 2017 is due to amending of our debt under the Loan Agreement with Kreos, such that $3.0 million in principal is now subject to the Kreos Convertible Note. The entry into the Kreos Convertible Note, which decreased the outstanding principal amount under the Loan Agreement from $17.2 million to $14.2 million, resulted in extinguishment of debt accounting treatment.35

Financial Expenses, Net
Our financial expenses, net, for the three and ninesix months ended SeptemberJune 30, 20172020 and 20162019 were as follows (in thousands): 
  Three Months Ended
June 30,		  Six Months Ended
June 30,		 
  2020  2019  2020  2019 
Financial expenses, net $235  $353  $481  $771 
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Financial expenses, net$479
 $508
 $1,843
 $1,514

Financial expenses, net, decreased $29$118 thousand, or 6%33%, for the three months ended SeptemberJune 30, 20172020 compared to the three months ended SeptemberJune 30, 2016.2019. Financial expenses, net, increased $329decreased $290 thousand, or 22%38%, for the ninesix months ended SeptemberJune 30, 20172020 compared to the ninesix months ended SeptemberJune 30, 2016. This increase with respect to the nine-month period2019. The decrease is attributable mainly to decreased interest expenses related to ourthe Loan Agreement with Kreos.
Income TaxTaxes
Our income tax for the three and ninesix months ended SeptemberJune 30, 20172020 and 20162019 was as follows (in thousands): 
  Three Months Ended
June 30,		  Six Months Ended
June 30,		 
  2020  2019  2020  2019 
Taxes on income (tax benefit) $68  $(1) $60  $6 
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Income tax$15
 $9
 $25
 $39

Income taxesTaxes on income increased $6$69 thousand for the three months ended SeptemberJune 30, 20172020 compared to the three months ended SeptemberJune 30, 2016. Income taxes decreased $142019. Taxes on income increased $54 thousand for the ninesix months ended SeptemberJune 30, 20172020 compared to the ninesix months ended SeptemberJune 30, 2016.2019. The increase is due to higher tax provision in our U.S subsidiary.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with United States GAAP.generally accepted accounting principles. The preparation of our financial statements requires us to make estimates, judgments and assumptions that can affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates, judgments and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known. Besides the estimates identified above that are considered critical, we make many other accounting estimates in preparing our financial statements and related disclosures. See Note 2 to our audited consolidated financial statements included in our 20162019 Form 10-K for a description of the significant accounting policies that we used to prepare our consolidated financial statements.
There have been no material changes to our critical accounting policies or our critical judgments from the information provided in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies” of our 20162019 Form 10-Kexcept for the updates provided in Note 3bnote 3 of our unaudited condensed consolidated financial statements set forth in “Part I, Item 1. Financial Statements” of this quarterly report.
Recent Accounting Pronouncements
See Note 3b3 to our unaudited condensed consolidated financial statements set forth in “Part I, Item 1. Financial Statements” of this quarterly report for information regarding new accounting pronouncements.

Liquidity and Capital Resources
 
Sources of Liquidity and Outlook

Since inception, we have funded our operations primarily through the sale of certain of our equity securities and convertible notes to investors in private placements, the sale of our ordinary shares in public offerings and the incurrence of bank debt.

As of SeptemberJune 30, 2017,2020, the Company had cash and cash equivalents of $12.9$14.1 million. The Company hadhas an accumulated deficit in the total amount of $125approximately $175.2 million as of SeptemberJune 30, 20172020 and further losses are anticipated in the development of its business. Those factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they becomecome due.

The Company intends to finance operating costs over the next twelve months with existing cash on hand, reductions inreducing operating spend, issuances under the Company's ATM Offering Program or otherand future issuances of equity and debt securities, or through a combination of the foregoing. However, the Company will need to seek additional sources of financing if we requirethe Company requires more funds than anticipated during the next 12 months or in later periods.

We previously considered the Investment Agreement with Timwell as a potential source of ongoing liquidity. However, Timwell notified us that it would not invest the second and third tranches under the Investment Agreement. For more information, see “Part II, Item 1A. Risk Factors-We may not have sufficient funds to meet certain future capital requirements or grow our business, and may need to take advantage of various forms of capital-raising transactions. Future equity or debt financings or strategic transactions may dilute our shareholders, disrupt our business or place us under restrictive covenants, while limitations under our registration statement on Form S-3 may make it more difficult for us to raise money in the public markets.”“Timwell Private Placement” below.

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and liabilities and commitments in the normal course of business. The condensed consolidated financial statements for the three and ninesix months ended SeptemberJune 30, 20172020 do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to the Company’s ability to continue as a going concern.

Our anticipated primary uses of cash are (i) sales, marketing and reimbursement expenses related to market development activities of our ReStore device and our distributed products as well as broadening third-party payor coverage to our SCI Products, and (ii) research and development costs related to developingour current products maintenance and expanding the indication of use of our lightweight “soft suit” exoskeleton technology for various lower limb disabilities, including stroke andto other indications affecting the ability to walk.medical conditions as well as home therapy. Our future cash requirements will depend on many factors, including our rate of revenue growth, the expansion of our sales and marketing activities, the timing and extent of our spending on research and development efforts our sales and marketing activities and international expansion. In order to meetIf our current estimates of revenue, expenses or capital or liquidity requirements change or are inaccurate, we may seek to sell additional equity or debt securities, arrange for additional bank debt financing or refinance our indebtedness, sell or license our assets, or pursue strategic transactions, such as the sale of our business or all or substantially all of our assets.indebtedness. There can be no assurance that we will be able to raise such funds on acceptable terms. For more information, see “Part I, Item 1A. Risk Factors-We have concluded that there are substantial doubts as to our ability to continue as a going concern.” in our 2016 Form 10-K and “We may not have sufficient funds to meet certain future capital requirements or grow our business, and may need to take advantage of various forms of capital-raising transactions. Future equity or debt financings may dilute our shareholders, disrupt our business or place us under restrictive covenants, while limitations under our Form S-3 may make it more difficult for us to raise money in the public markets” in “Part II, Item 1. Risk Factors” of this quarterly report.

Loan Agreement with Kreos and Related Warrant to Purchase Ordinary Shares

On December 30, 2015, we entered into the Loan Agreementa loan agreement (the “Loan Agreement”) with Kreos Capital V (Expert Fund) Limited (“Kreos”) pursuant to which Kreos extended a line of credit to us in the amount of $20.0$20 million. On January 4, 2016, we drew down $12.0 million under the Loan Agreement. Under the terms of the Loan Agreement we were entitled to draw down up to an additional $8.0 million until December 31, 2016, if we raised $10.0 million or more in the issuance of shares of our capital stock (including debt convertible into shares of our capital stock) by December 31, 2016. On December 28, 2016, we drew down the remaining $8.0 million available under the Loan Agreement. Interest is 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 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 paid Kreos a transaction fee equal to 1.0% of the total available amount of the line of credit upon the execution of the agreement and we will be required to pay Kreos an end“end of loan paymentpayment” equal to 1.0% of the amount of each tranche drawn down upon the expiration of each such tranche. During the nine months ended September 30, 2017 the Company paid $23 thousand of fees in connection with the Loan Agreement, compared to $501 thousand during the fiscal year ended December 31, 2016. 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.

In connection with the $12.0 million drawdown under the Loan Agreement, we issued to Kreos the warrant to purchase up to 119,2954,771 of our ordinary shares at an exercise price of $9.64$241.0 per share, which represented the average of the closing prices of our ordinary shares for the 30-day calendar period prior to the date of the issuance of the warrant, subject to adjustment as set forth in the warrant. In connection with the $8.0 million drawdown under the Loan Agreement on December 28, 2016, we increased the amount of the warrant from $1.15 million to $1.61 million, or by $460 thousand, such that the warrant represents the right to purchase up to 167,0126,679 of our ordinary shares. The increase was based on the terms of the warrant, which provide that the amount of the warrant will be increased by 5.75% of any additional drawdowns. 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.

On June 9, 2017, the Company and Kreos entered into the First Amendment.Amendment of the Loan Agreement (the “First Amendment”). As of that date the outstanding principal amount under the Loan Agreement was $17.2 million,million. Under the First Amendment, $3.0 million of the outstanding principal under the Loan Agreement is subject to repayment pursuant to the senior secured Kreos Convertible Note issued on June 9, 2017, thus reducing the outstanding principal amount under the Loan Agreement to $14.2 million as of June 9, 2017. This amended outstanding principal amount remains subject to repayment in accordance with the terms and conditions of the Loan Agreement and an amended repayment schedule. Interest on the Kreos Convertible Note is payable monthly in arrears at a rate of 10.75% per year.

Kreos may convert the then-outstanding principal and “end of loan payments” under the Kreos Convertible Note, in whole or in part, on one or more occasions, into up to 2,523,660100,946 ordinary shares, at a conversion price per share equal to $1.268$31.7 per share (subject to customary anti-dilution adjustments) at any time until the earlier of (i) the maturity date of June 9, 2020 or (ii) a “Change of Control,” as defined in the Loan Agreement.For more information, see
On November 20, 2018, the Company and Kreos entered into the Second Amendment of the Loan Agreement (the “Second Amendment”). In the Second Amendment, the Company agreed to repay $3.6 million to Kreos in satisfaction of all outstanding indebtedness under the Kreos Convertible Note and other related payments, including prepayment costs and end of loan payments and Kreos agreed to terminate the Kreos Convertible Note. The Company repaid Kreos the $3.6 million by issuing to Kreos 192,000 units and 288,000 pre-funded units at the applicable public offering prices for an aggregate price of $3.6 million (including the aggregate exercise price for the ordinary shares to be received upon exercise of the pre-funded warrants, assuming Kreos exercises all of the pre-funded warrants it purchased as part of the Company’s public offering). The Company and Kreos also agreed to revise the principal and the repayment schedule under the Kreos Loan Agreement. The revised repayment schedule, effectively deferred an additional $1.1 million of payments that were due in 2018 and $2.8 million that were due in 2019 under the loan’s prior repayment schedule, for total deferred payments of $3.9 million compared to the prior repayment schedule. 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. The Second Amendment also made certain changes to the prepayment premiums under the Kreos Loan Agreement, tying them to the date of the Second Amendment.
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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 existing exercise price of $7.5 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 $7.5 per share with an exercise period of five years.
As of June 30, 2020, the outstanding principal amount under the Kreos Loan Agreement was $4.4 million. Depending on our liquidity needs, we may seek to refinance up to a substantial portion of our indebtedness under our Kreos Loan Agreement, which we have considered with Kreos from time to time, including by exchanging our indebtedness with Kreos for new convertible debt from a third-party investor, or by borrowing additional funds.

Paycheck Protection Program Loan Agreement

On April 21, 2020, RRI entered into a Note agreement evidencing an unsecured loan in the amount of $392 thousand under the PPP as part of 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. While the Company currently believes that its use of the Note proceeds will meet the conditions for forgiveness under the PPP, no assurance is provided that the Company will obtain forgiveness of the Note in whole or in part.

Equity Raises 
Form S-3 Limitations

              Since we filed our Form 10-K on February 17, 2017, we have been subject to limitations under the applicable rules of Form S-3, which constrain our ability to secure capital pursuant to our condensed consolidated financial statements includedATM Offering Program 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 “Part I, Item 1”any 12-month period. Pursuant to these rules, until August 25, 2020, we may not sell in primary offerings under our Form S-3 more than approximately $11.9 million in any 12-month period, unless and until we are no longer subject to these limitations. We will cease to be subject to these limitations once our public float exceeds $75 million. As of the date of this quarterly report.report, we have sold approximately $9.0  million in securities under our Form S-3 during the last 12 months, when we were subject to these restrictions and, therefore, we can sell securities in the amount of $2.9 million under our Form S-3. We will also recalculate the amount of this limitation if or when we conduct another takedown under Form S-3. Additionally, 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 Form S-3 expires on May 23, 2022. With respect to our ATM Offering Program, because we have sold $15.7 million in the program since its inception, we could only raise up to a remaining $9.3 million using the program, subject to the $11.9 million limitation on use of Form S-3.
Because of these limitations, to raise capital in securities offerings above the limitation applicable to us for sales under Form S-3 and our ongoing liquidity needs, we may be required to seek and are currently actively exploring other methods of completing primary offerings, including, a registration statement on Form S-1 (which has no such size limitations), the preparation of which is more time-consuming and costly, including due to potential SEC review. We may also conduct such offerings in the form of private placements, potentially with registration rights or priced at a discount to the market value of our ordinary shares, which could require shareholder approval under the rules of the NASDAQ. Any such transactions, including the perception that we will conduct a transaction, could result in substantial dilution of shareholders’ interests.
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Equity RaisesInitial Public Offering and Follow-on Offerings

Our initial public offering in September 2014 generated $36.3 million in net proceeds. Additionally, on May 9, 2016, the SEC declared effective our Form S-3, pursuant to which we registered up to $100 million of ordinary shares, warrants and/or debt securities and up to 4,388,143175,525 ordinary shares offered by selling shareholders named therein. On May 10, 2016, we entered into our Equity Distribution Agreement with Piper Jaffray, pursuant to which we may offer and sell, from time to time, ordinary shares having an aggregate offering price of up to $25.0 million through Piper Jaffray acting as our agent. The ordinary shares issued under the Equity Distribution Agreement may be registered under the Securities Act using our Form S-3.
Additionally, on November 1, 2016, we closed our follow-on public offering of 3,250,000130,000 units, each consisting of one ordinary share and 0.75 of a warrant to purchase one ordinary share. The ordinary shares and the warrants underlying the units and the ordinary shares issuable upon exercise of the warrants are registered under the Securities Act on our Form S-3. The warrants became exercisable during the period commencing from the date of original issuance and ending on November 1, 2021, the expiration date of the warrants, at an initial exercise price of $118.75 per ordinary share. Our net aggregate proceeds, after deducting underwriting discounts and commissions and estimated expenses, were $11.1 million. We also granted Oppenheimer & Co. (“Oppenheimer”), as underwriter under the underwriting agreement, an option to purchase up to 19,500 additional units at the public offering price, less the underwriting discount, for 30 days after October 27, 2016, which Oppenheimer did not exercise.
Table
On November 21, 2017, we closed the base portion of Contentsour follow-on offering of 274,280 ordinary shares. Each ordinary share was sold to the public at a price of $26.25. On November 22, 2017, National Securities Corporation, as underwriter, exercised in full its option to purchase 41,142 additional ordinary shares at the public offering price of $26.25 per unit, less the underwriting discount. The Company’s net aggregate proceeds of the base offering and over-allotment exercise, after deducting underwriting discounts and commissions and expenses, were $7.2 million.
On November 20, 2018, the Company completed its follow-on 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 year ended December 31, 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. See Note 8b (2) in our 2019 form 10-K for more information about the Company’s follow-on public offering.

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.
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Since we filed our 2016 Form 10-K on February 17, 2017, we have been subject
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, par value NIS 0.25 per share and a concurrent private placement of warrants to limitations under the applicable rules of Form S-3, which constrain our ability to secure capitalpurchase ordinary shares. The ordinary shares were offered pursuant to our ATM Offering Program or other public offerings pursuant to our effective Form S-3. These rules limitThe Company signed a purchase agreement with certain institutional investors for the sizeissuance and sale of primary securities offerings conducted by issuers816,914 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 aggregate market valueexercise price of common stock held by nonaffiliated persons$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 entities (known as our “public float”)concurrent private placement of less than $75 million to no more than one-third of their public float in any 12-month period. As of February 17, 2017, our public float was approximately $41.2 million, restrictingwarrants.

On June 12, 2019, the size of primary offerings under our Form S-3 to approximately $13.7 millionCompany entered into a purchase agreement with certain institutional investors for the following 12 months, unlessissuance and until we are no longer subject to these limitations. We will cease to be subject to these limitations once our public float exceeds $75 million, in which case we would reassess the applicationsale of these rules in 2018, when we file our annual report on Form 10-K for the fiscal year ending December 31, 2017. Additionally, these limitations do not apply to secondary offerings for the resale of our833,334 ordinary shares, or other securities by selling shareholders orpar value NIS 0.25 per share, at $6.00 per ordinary share and warrants to the issuancepurchase 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 upon conversion by holders of convertible securities, such as warrants. Taking into accountin 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.
 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 settled under our ATM since February 17, 2017,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, par value NIS 0.25 per 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 of September 30, 2017, our remaining capacitycompensation for primary offerings under our Form S-3 duringits role as the 12 months after February 17, 2017 was $4.3 million, assuming we remain subject to such limitations throughout that 12-month period.

To raise additional capital in securities offerings above that limitation, we may be required to seek other methods of completing primary offerings, including, for example, under a registration statement on Form S-1 (which has no such size limitations), the preparation of which would be more time-consuming and costly, including due to potential SEC review. We may also conduct such offeringsplacement agent in the formCompany’s February 2020 offering.
On July 6, 2020 the Company entered into a purchase agreement with certain institutional investors for the issuance and sale of private placements, potentially with registration rights or priced at a discount to the market value of our4,938,278 ordinary shares, which could require shareholder approval underpar value NIS 0.25 per share, 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 rulesCompany 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 NASDAQ. Any such transactions could resultplacement agent in substantial dilution of shareholders’ interests.our July 2020 registered direct offering.
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ATM Offering Program

On May 10, 2016, we entered into our Equity Distribution Agreement with Piper Jaffray, pursuant to which we may offer and sell, from time to time, ordinary shares having an aggregate offering price of up to $25.0 million through Piper Jaffray acting as our agent. Subject to the terms and conditions of the Equity Distribution Agreement, Piper Jaffray will use its commercially reasonable efforts to sell on our behalf all of the ordinary shares requested to be sold by us, consistent with its normal trading and sales practices. Piper Jaffray may also act as principal in the sale of ordinary shares under the Equity Distribution Agreement. Such sales may be made under our Form S-3 in what may be deemed “at-the-market” equity offerings as defined in Rule 415 promulgated under the Securities Act, directly on or through the NASDAQNasdaq Capital Market, to or through a market maker other than on an exchange or otherwise, in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices, and/or any other method permitted by law, including in privately negotiated transactions. Taking into account ordinary shares issued and settled under our ATM since February 17, 2017, as of September 30, 2017, our remaining capacity for primary offerings under our Form S-3 during the 12 months after February 17, 2017 was $4.3 million, assuming we remain subject to such limitations throughout that 12-month period.

Piper Jaffray is entitled to compensation at a fixed commission rate of 3.0%3% of the gross sales price per share sold through it as agent under the Equity Distribution Agreement. Where Piper Jaffray acts as principal in the sale of ordinary shares under the Equity Distribution Agreement, such rate of compensation will not apply, but in no event will the total compensation of Piper Jaffray, when combined with the reimbursement of Piper Jaffray for the out-of-pocket fees and disbursements of its legal counsel, exceed 8.0% of the gross proceeds received from the sale of the ordinary shares.

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We may instruct Piper Jaffray not to sell ordinary shares if the sales cannot be effected at or above the price designated by us in any instruction. We or Piper Jaffray may suspend an offering of ordinary shares under the ATM Offering Program upon proper notice and subject to other conditions, as further described in the Equity Distribution Agreement. Additionally, the ATM Offering Program will terminate on the earlier of (i) the sale of all ordinary shares subject to the Equity Distribution Agreement or (ii) the termination of the Equity Distribution Agreement. The Equity Distribution Agreement may be terminated by Piper Jaffray or us at any time on the close of business on the date of receipt of written notice, and by Piper Jaffray at any time in certain circumstances, including any suspension or limitation on the trading of our ordinary shares on the NASDAQNasdaq Capital Market, as further described in the Equity Distribution Agreement. During the nine months ended SeptemberAs of June, 30, 2017, the Company issued and sold 5,379,908 ordinary shares at an average price of $1.76 per share under its ATM Offering Program (as defined in Note 8e below). The gross proceeds to the Company were $9,448 thousand, and the net aggregate proceeds after deducting commissions, fees and offering expenses in the amount of $439 thousand were $9.0 million. As a result, from the inception of the ATM Offering Program in May 2016 until September 30, 2017,2020, we had sold 6,071,970302,092 ordinary shares under the ATM Offering Program for net proceeds to us of $13.1$14.5 million (after commissions, fees and expenses). Additionally, as of that date, we had paid Piper Jaffray compensation of $420$471 thousand and had incurred total expenses of approximately $907 thousand$1.2 million in connection with the ATM Offering Program. WeSubject to the limitations under Form S-3 due to our public float, we intend to continue using this programthe ATM Offering Program opportunistically to raise additional funds.
TableIn connection with our July 2020 share purchase agreement, the Company agreed for a period of Contents

Follow-on35 days following the closing of the Offering not to issue, enter into an agreement to issue or announce the issuance or proposed issuance of Units

On November 1, 2016, we closed our follow-on public offering of 3,250,000 units, each consisting of one ordinary share and 0.75 of a warrant to purchase one ordinary share. The units were not issued or certificated, and the ordinary shares and warrants underlying the units were immediately separable and issued separately. The warrants are not listed on the NASDAQ Capital Market, any other national securities exchangeOrdinary Shares or any other nationally recognized trading system.securities convertible into, or exercisable or exchangeable for, Ordinary Shares. The Purchase Agreement does not apply to, in addition to certain customary exceptions, certain limited securities issuances, the issuance by the Company of equity or debt securities pursuant to acquisitions or strategic transactions approved by a majority of the Company’s disinterested directors, where not for the purpose of raising capital, or certain other compensatory issuances. The Company has also agreed for a period of twelve months following the closing date of the Offering not to (i) issue or agree to issue equity or debt securities convertible into, or exercisable or exchangeable for, ordinary shares andat a conversion price, exercise price or exchange price which floats with the warrants underlyingtrading price of the units andOrdinary Shares or which may be adjusted after issuance upon the occurrence of certain events or (ii) enter into any agreement, including an equity line of credit, whereby the Company may issue securities at a future-determined price, other than an at–the-market facility with the Placement Agent ninety (90) days after the closing date of the Offering.
Subject to the limitations under Form S-3 due to our public float, we intend to continue using the at-the-market offering or similar continuous offering programs opportunistically to raise additional funds.
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, issuable upon exerciseat a price per share of $31.25. The Investment Agreement contemplates issuances in three tranches, including $5 million for 160,000 shares in the warrants are registered underfirst tranche, $10 million for 320,000 shares in the Securities Actsecond 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 our Form S-3. Our estimatedMay 15, 2018. The net aggregate proceeds after deducting underwriting discountscommissions, fees and commissionsoffering expenses in the amount of approximately $705 thousand were approximately $4.3 million.
The closings of the Second Tranche and estimated expenses,Third Tranche were $11.1 million.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 Third Tranche Closing 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 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 granted Oppenheimer, as underwriterprovide for RealCan or an affiliate to invest in us.

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In late March 2020, Timwell notified us that it would not invest the second and third tranches under the underwriting agreement, an optionInvestment Agreement. In response, in early April 2020, our Board of Directors also removed Timwell’s designee, who was appointed pursuant to purchase up to 487,500 additional units at the public offering price, less the underwriting discount, for 30 days after October 27, 2016, which Oppenheimer did not exercise.

The warrants became exercisable during the period commencingInvestment Agreement, from the dateBoard of original issuance and ending on November 1, 2021,Directors, due to this breach pursuant to the expiration dateterms of the warrants, at an initial exercise price of $4.75 per ordinary share. The exercise priceInvestment 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 number of ordinary shares into which the warrants may be exercised are subject to adjustment upon certain corporate events, including stock splits, reverse stock splits, combinations, stock dividends, recapitalizations, reorganizations and certain other events. Our board of directors may also determine to make such adjustments to the exercise price and number of ordinary shares to be issued upon exercise based on similar events, including the granting of stock appreciation rights, phantom stock rights or other rights with equity features. At any time, the board of directors may reduce the exercise price of the warrants to any amount and for any period of time it deems appropriate. As of September 30, 2017, none of the warrants issued in the follow-on offering had been exercised.Chinese market.

Cash Flows for the NineSix Months Ended SeptemberJune 30, 20172020 and SeptemberJune 30, 20162019 (in thousands):
  Six Months Ended
June 30,		 
  2020  2019 
Net cash used in operating activities $(7,533) $(7,956)
Net cash used in investing activities  (15)  — 
Net cash provided by financing activities  5,303   22,473 
Net cash flow $(2,245) $14,517 
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 Nine Months Ended September 30,
 2017 2016
Net cash used in operating activities$(17,072) $(20,200)
Net cash used in investing activities(19) (408)
Net cash provided by financing activities6,341
 15,138
Net cash flow$(10,750) $(5,470)
Net Cash Used in Operating Activities
Net cash used in operating activities decreased to $17.1$7.5 million for the ninesix months ended SeptemberJune 30, 20172020 compared to $20.2$8.0 million for the ninesix months ended SeptemberJune 30, 20162019 primarily as a result of increased revenue, lowerdue to reduction in the operating expenses as result of recent cost reduction efforts, and a decreasecosts that was larger than the offset due to  changes in expenses related to Collaboration Agreement and the License Agreement, as discussed above.working capital.
Net Cash Used in Investing Activities
Net cash used in investing activities decreased to $19 thousand for the nine months ended September 30, 2017 compared to $408 thousand for the nine months ended September 30, 2016 primarily as a result of decreased use of cash for the purchase of property and equipment.
Net Cash Provided by Financing Activities
Net cash provided by financing activities was $6.3decreased to $5.3 million for the ninesix months ended SeptemberJune 30, 2017,2020 compared to $15.1$22.5 million provided by financing activities for the six months ended June 30, 2019, primarily due to the lower proceeds from equity raise activities in the ninesix months ended SeptemberJune 30, 2016. The decrease is related primarily to the receipt of proceeds under our Loan Agreement in the nine months period ended September 30, 2016, which were higher2020, than the proceeds we received from issuance of ordinary sharesequity raise activities for the six months ended June 30, 2019, as well as increase in the ATM Offering Program in the nine months period ended September 30, 2017.loan repayments to Kreos.
Table of Contents

Obligations and Commercial Commitments
Set forth below is a summary of our contractual obligations as of SeptemberJune 30, 2017.2020.
Payments due by period (in dollars, in thousands) Payments due by period (in dollars, in thousands) 
Contractual obligationsTotal Less than 1 year1-3 years3-5 yearsMore than 5 years Total  Less than
1 year		  1-3 years  3-5 years  More than
5 years		 
Purchase obligations (1)$806
 $806
 $—
 $—
 $—
 $1,005  $1,005  $—  $—  $— 
Collaboration Agreement and License Agreement obligations (2)4,238
 1,350
 2,100
 788
 —
  2,483   1,083   1,400   —   — 
Operating lease obligations (3)4,251
 636
 1,173
 1,190
 1,252
  2,153   707   1,284   162   — 
Long-term debt obligations (4)19,288
 5,663
 13,625
 —
 —
  5,117   4,899   218   —   — 
Total$28,583
 $8,455
 $16,898
 $1,978
 $1,252
 $10,758  $7,694  $2,902  $162  $— 

(1)    The Company depends on one contract manufacturer, Sanmina. We place our manufacturing orders with Sanmina pursuant to purchase orders or by providing forecasts for future requirements.
(1)The Company depends on one contract manufacturer, Sanmina, 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 requirements. Additionally, we have purchase obligations to our raw material vendors related to the ReStore production, which began in the second quarter of 2019 following regulatory clearance.
(2)    Our Research Collaboration Agreement is for a period of five years and requires us to pay in quarterly installments for the funding of our joint research collaboration with Harvard, subject to a minimum funding commitment under applicable circumstances. Our License Agreement consists of patent reimbursement expenses payments and of license upfront fee payment. There are also several milestone payments contingent upon the achievement of certain product development and commercialization milestones and royalty payments on net sales from certain patents licensed to Harvard. These product development and commercialization milestones depend on favorable clinical developments, sales and regulatory actions, some or all of which may not occur. Since the achievement and timing of these milestones is neither determinable nor reasonably estimable, these milestone payments are not included in this “Contractual Obligations” table or recorded on our consolidated condensed balance sheet as of September 30, 2017. Moreover, since such royalties are dependent on future product sales which are neither determinable nor reasonably estimable, these royalty payments are not included in this “Contractual Obligations” table or recorded on our condensed consolidated balance sheet as of September 30, 2017. For more information, see Note 7 to our condensed consolidated financial statements included in “Part I, Item 1” of this quarterly report.
(2)
Our Collaboration Agreement was originally signed for a period of six years and as of June 30, 2020 has a remaining term of approx. 2.66 years, it requires us to pay in quarterly installments for the funding of our joint research collaboration with Harvard, subject to a minimum funding commitment under applicable circumstances. Our License Agreement consists of patent reimbursement expenses payments and of a license upfront fee payment. There are also several milestone payments contingent upon the achievement of certain product development and commercialization milestones and royalty payments on net sales from certain patents licensed to Harvard. These product development milestones have been met as of June 30, 2020. There are commercialization milestones which depend on us reaching certain sales amounts some or all of which may not occur.
(3)    Our operating leases consist of leases for our facilities and motor vehicles. For more information, see “-Liquidity and Capital Resources -Loan Agreement with Kreos and Related Warrant to Purchase Ordinary Shares” above.
(3)Our operating leases consist of leases for our facilities and motor vehicles.
(4)    Our long-term debt obligations consist of payments of principal and interest under our Loan Agreement with Kreos.
(4)Our long-term debt obligations consist of payments of principal and interest under our Loan Agreement with Kreos and the PPP Note . For more information, see “-Liquidity and Capital Resources” above.
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 3.526:3.466:$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 1.18191.120 euro:$1:00, both of which were the applicable exchange rates as of SeptemberJune 30, 2017.2020. We calculated the payments due under our Loan Agreement with Kreos according to the current schedule of repayment of principal and interest.
Off-Balance Sheet Arrangements
We had no off-balance sheet arrangements or guarantees of third-party obligations as of SeptemberJune 30, 2017. 2020.
 
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to our market risk during the thirdsecond quarter of 2017.2020. For a discussion of our exposure to market risk, please see “PartPart II, Item 7A, Quantitative“Quantitative and Qualitative Disclosures About Market Risk” of our 20162019 Form 10-K.

ITEM 4.CONTROLS AND PROCEDURES
 
Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required financial disclosure.


As of the end of the period covered by this quarterly report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon, and as of the date of, this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were effective such that the information required to be disclosed by us in our SEC reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

During the thirdquarter of 2017ended June 30, 2020 there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS
 
There have been no material changes to our legal proceedings as described in “Part I, Item 3. Legal Proceedings” of our 20162019 Form 10-K except as described in Note 5 and 11 in our condensed consolidated financial statements included in “Part I, Item 1” of this quarterly report.

ITEM 1A.RISK FACTORS

There have been no material changes to our risk factors from those disclosed in “Part I, Item 1A. Risk Factors” of our 20162019 Form 10-K except as noted below:

WeRisks Related to an Investment in our Ordinary Shares
A pandemic, epidemic or outbreak of an infectious disease, such as COVID-19, has adversely affected and may not have sufficient fundscontinue to meet certain future capital requirements or growmaterially and adversely impact our business, our operations and our financial results.
The impact of the COVID-19 pandemic has resulted in and will likely continue to result in significant disruptions to the global economy, as well as businesses and capital markets around the world. In an effort to halt the outbreak of COVID-19, a number of countries, including the United States and Germany where we have key operations, placed significant restrictions on travel, and many businesses announced extended closures.   It is unclear how long total or partial shutdowns may needlast and whether additional shutdowns will be necessary to take advantage of various forms of capital-raising transactions. Future equitythe extent future outbreaks occur.

The COVID-19 outbreak has had, and a continuing outbreak or debt financings or strategic transactionsfuture outbreaks may dilute our shareholders, disrupthave, several adverse effects on our business, or place us under restrictive covenants, whileresults of operations and financial condition.

Sales.  In particular, the steps we have taken to safeguard employees and patients have curtailed direct sales activities, including our ability to train patients and rehabilitation centers on how to use our system, which has adversely impacted our revenues in the first quarter of 2020.  The overall impact of the limitations underon our registration statement on Form S-3sales efforts are currently hard to determine because, in addition to the short-term impacts, we are unable to interact and test our system with potential new patients at the same levels that we have before the COVID-19 outbreak.  It may make it more difficulttake an extended period after current restrictions end for us to raise moneyengage potential new clients.  We continue to monitor our sales pipeline on a day-to-day basis in order to assess the quarterly effect of these limitations as some have short term effects and some affects our future pipeline development
Repairs. In addition, we have been unable to repair existing systems with the result that we have had to ship temporary replacement systems in some cases.  We cannot be certain when social distancing restrictions will be fully lifted and, once they are fully lifted, whether sales of our systems will offset the revenue that we have forgone earlier in the public markets.year.  We also cannot be certain that social distancing restrictions or other measures will not be reinstated in the event of a future outbreak of COVID-19 or similar outbreak.
Production and Supply Chain. Our manufacturing may be impacted due to supply chain delays or adverse impacts on our production capacity due to government directives or health protocols that might impact our production facility.  In addition, given the impact of current limitations on our sales activities, it has become hard for us to effectively forecast our future requirements for systems.  Accordingly, there is a greater risk that we may overproduce or underproduce compared to sales.

Regulatory and clinical trials. Limitations on travel and business closures recommended by federal, state, and local governments, could, among other things, impact our ability to enroll patients in clinical trials, recruit clinical site investigators, and obtain timely approvals from local regulatory authorities.  In our postmarket study that we continue to conduct, we may face decreased ability to contact patients where a patient’s COVID-19 status is unknown. Regulatory oversight and actions regarding our products have been and may continue to be disrupted or delayed in regions impacted by COVID-19, including the United States and Europe, which have been and may continue to impact review and approval timelines for products in development and/or changes to existing products that need regulatory review and approval.

Negative impacts on our suppliers and employees.  COVID-19 may impact the health of our employees, directors, partners or customers, reduce the availability of our workforce or those of companies with which we do business, divert our attention toward succession planning, or create disruptions in our supply or distribution networks. The adverse effects of such events on us may include disruption to our operations, or demand for our products in the short and/or long term.
Our future results of operations and liquidity could be adversely impacted by delays in payments of outstanding receivable amounts beyond normal payment terms, supply chain disruptions and operational challenges faced by our customers.  Continued outbreaks of COVID-19 could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn or a global recession that could affect demand for our products and likely impact our operating results. These may further limit or restrict our ability to access capital on favorable terms, or at all, lead to consolidation that negatively impacts our business, weaken demand, increase competition, cause us to reduce our capital spend further, or otherwise disrupt our business.

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We have concluded that there are substantial doubts as to our ability to continue as a going concern.
As of SeptemberJune 30, 2017,2020, we had an accumulated deficit in the total amount of $125approximately $175.2 million and anticipate further losses are anticipated in the development of our business. Those factors raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern depends upon our obtaining the necessary financing to meet our obligations and timely repay our liabilities arising from normal business operations. The financial statements have been prepared assuming that we will continue to operate as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Our auditors also included an explanatory paragraph to their audit opinion relating to our accompanying consolidated financial statements for the fiscal year ended December 31, 2019 regarding the substantial doubts about the Company’s ability to continue as a going concern. If we are unable to secure additional capital, which might also be harder to obtain due to current market conditions and the COVID-19 pandemic, we may be required to take additional measures to reduce costs in order to conserve our cash in amounts sufficient to sustain operations and meet our obligations. If we become insolvent, investors in our securities may lose the entire value of their investment in our business. The accompanying financial statements do not include any adjustments that may be necessary should we be unable to continue as a going concern, and it is not possible for us to predict at this time the potential success of our business.
We may not have sufficient funds to meet certain future capital requirements, which could impair our efforts to develop and commercialize existing and new products, and may need to take advantage of various forms of capital-raising transactions, future equity financings, strategic transactions or borrowings may also further dilute our shareholders or place us under restrictive covenants limiting our ability to operate.
We intend to finance operating costs over the next 12 months with existing cash on hand, issuances of equity and/or debt securities, includingand other future public or private issuances under our ATM Offering Program,of securities, or through a combination of the foregoing. Through equity transactions completed in 2019 and 2020 to date we have raised in the aggregate approximately $43.7 million in gross proceeds. However, we will need to seek additional sources of financing to the extent thatif we require more funds than anticipated during the next 12 months or in later periods, including if we cannot make our loan repayments under our Loan Agreement with Kreos or if we cannot raise sufficient funds from equity issuances, such asissuances. The alternative capital-raising transactions we may seek may entail significant downsides, due to limitations on use of our Form S-3 and under our at-the-market offering program with Piper Jaffray & Co., or the ATM Offering Program. Due to limitations under the rules of Form S-3, which have applied to us since we filed our 2016 Form 10-K, and taking into account ordinary shares issued and settled under our ATM Offering Program, as of September 30, 2017, we could only issue up to $4.3 million in primary offerings under our effective Form S-3, including our ATM Offering Program, during the 12 months following February 17, 2017, until and unless we cease to be subject to these limitations. For more information on these limitations,our inability to use Form S-3, see “Part I,II. Item 2.7. Management’s Discussion and Analysis of Financial Condition and Results of Operations-LiquidityOperations—Liquidity and Capital Resources-EquityResources—Equity Raises.” This limitation makes it more difficult for us to raise money in the public markets.
To raise additional capital in the public markets, including taking into account the limitationlimitations on our Form S-3 use above, we maywill likely be required to seek and are currently actively seeking other more costly or time-consuming methods, such as a registration statementsstatement on Form S-1. The preparation of a registration statement on Form S-1 is more time-consuming and costly. We may also conduct fundraising transactions in the form of private placements, potentially with registration rights or priced at a discount to the market value of our ordinary shares, which could require shareholder approval under the rules of The NASDAQ Stock Market LLC (“NASDAQ”),Nasdaq, or other equity raise transactions.transactions such as equity lines of credit. In addition to entailing increased capital costs, any such transactions could result in substantial dilution of our shareholders’ interests, transfer control to a new investor and diminish the value of an investment in our ordinary shares.
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We may also need to pursue strategic transactions, such as joint ventures, in-licensing transactions or the sale of our business or all or substantially all of our assets. These private financings and strategic transactions have in the past and could in the future require significant management attention, disrupt our business, adversely affect our financial results, be unsuccessful or fail to achieve the desired results. We are in discussions routinely with such possible sources of additional funding, including during the pendency of sales under our ATM Offering Program. We have not entered into any agreement or understanding regarding any such transaction.
funding. As another alternative, we may in the future chooseseek to refinance up to a substantial portion of our remaining indebtedness under theour Kreos Loan Agreement, including by tying our repayment obligations and amortization schedule to the achievement of certain business milestones, which we have considered with Kreos from time to time.time, including by exchanging our indebtedness with Kreos for new convertible debt from a third-party investor, or to borrow additional funds. Agreements governing any borrowing arrangement may contain covenants that could restrict our operations. In sum,

Overall, if we are unablecannot raise the required funds, or cannot raise them on terms acceptable to obtain additional funds on reasonable terms, it could impair our efforts to develop and commercialize existing and new products and to repay our liabilities as they become due, materially harming our results of operations and financial condition.

If we are unable to leverage and expand our sales, marketing, training and reimbursement infrastructure, including in light of our announced plan to reduce corporate spending,us or investors, we may failbe forced to increasecurtail substantially our revenues.
A key element of our long-term business strategy is the continued enhancement of our sales, marketing, training and reimbursement infrastructure, through the training, retaining and motivating of skilled sales and marketing representatives and reimbursement personnel with industry experience and knowledge. Our ability to derive revenue from sales of our products depends largely oncurrent operations or cease operations altogether. Further, external perceptions regarding our ability to marketcontinue as a going concern may make it more difficult for us to obtain financing for the productscontinuation of our operations or require us to obtain financing on terms that are more favorable to investors, and obtain reimbursements for them. In ordercould result in the loss of confidence by investors and suppliers. As such, our failure to continue growingas a going concern could harm our business, efficiently,operating results and financial position and severely affect the value of your investment.

 While we must therefore coordinate the development of our sales, marketing, training and reimbursement infrastructurehave regained compliance with the timingquantitative continued listing rules of regulatory approvals, decisions regarding reimbursements and other factors in various geographies. Managing and maintaining this infrastructure is expensive and time-consuming, and an inability to leverage such an organization effectively, or in coordination with regulatory or other developments, could inhibit potential sales and the penetration and adoption of ReWalk into both existing and new markets. In addition, as previously announced, we have set a goal to reduce total operating expenses in 2017 by up to 30% as compared to 2016, in part through a realignment of and reduction in staffing to match our 2017 business goals. As we move forward with these plans, we intend to continue funding field sales, service and training efforts for our ReWalk products. However, certain decisions we make regarding staffing in these areas in our efforts to decrease expenses could have unintended negative effects on our revenues, such as by weakening our sales infrastructure, impairing our reimbursement efforts and/or harming the quality of our customer service. For instance, the number of our staff focused on reimbursement has decreased, and we recently consolidated the functions of two employees that previously focused on reimbursement into the roles of certain executive officers and employees in other departments. Additionally, our Chief Commercial Officer recently passed away.
We also expect to face significant challenges as we manage and continue to improve our sales and marketing infrastructure and work to retain the individuals who make up those networks. Newly hired sales representatives require training and take time to achieve full productivity. If we fail to train new hires adequately, or if we experience high turnover in our sales force in the future, we cannot be certain that new hires will become as productive as may be necessary to maintain or increase our sales. In addition, if we are not able to retain, subject to our plans to cut operating expenses, and continue to recruit our network of internal trainers,Nasdaq Capital Market, we may not be able to successfully train customersmaintain the listing of our ordinary shares on the use of ReWalk,Nasdaq Capital Market going forward, which could inhibit new salesadversely affect our liquidity and harmthe trading volume and market price of our reputation. ordinary shares.
As previously disclosed, on March 24, 2020, we received a notification letter from Nasdaq stating that we failed to comply with the closing bid price requirement of Nasdaq Rule 5550(a) (“Rule 5550(a)”). If our closing bid price is less than $1 per share for 30 consecutive business days, we will be deficient with Rule 5550(a). On May 11, 2020, we received a notice from Nasdaq stating that we have regained compliance with Rule 5550(a) since our share price was above $1 for 10 consecutive business days and that the matter is now closed.  Our closing share price as of August 10, 2020 was $1.33 If we become non-compliant with Rule 5550(a) in the future (absent any relief, such as the temporary relief imposed by Nasdaq during the ongoing COVID-19 pandemic) and we fail to regain compliance with Rule 5550(a) during the rule’s applicable cure period, Nasdaq will notify us that our ordinary shares are unablesubject to expanddelisting. In the case of non-compliance, there can be no assurance that we will be able to regain compliance with the applicable rules.
Additionally, as previously disclosed, in October 2018, we received a notification letter from Nasdaq stating that, under Nasdaq Rule 5550(b), or Rule 5550(b), we failed to comply with the minimum $35 million market value of listed securities requirement for continued listing on the Nasdaq Capital Market as of October 26, 2018 and did not meet the rule’s alternative $2.5 million shareholders’ equity and $500,000 net income standards as of applicable balance sheet and income statement dates. We regained compliance with Rule 5550(b) in April 2019. Our shareholders’ equity was $11.9 million as of June 30, 2020. However, if our sales, marketingquarterly or annual report for a subsequent fiscal period does not evidence such compliance, we may become immediately subject to delisting without a cure period. For example, if we cannot maintain the requisite cash levels for a compliant amount of shareholders’ equity, our ordinary shares may be at serious risk of immediate delisting.
We would be permitted to appeal any delisting determination to a Nasdaq Hearings Panel, and training capabilities,our ordinary shares would remain listed on the Nasdaq Capital Market pending the panel’s decision after the hearing. If we do not appeal the delisting determination or do not succeed in such an appeal, our ordinary shares would be removed from trading on the Nasdaq Capital Market. Any delisting determination could seriously decrease or eliminate the value of an investment in our ordinary shares and other securities linked to our ordinary shares. While an alternative listing on an over-the-counter exchange could maintain some degree of a market in our ordinary shares, we could face substantial material adverse consequences, including, but not limited to, the following: limited availability for market quotations for our ordinary shares; reduced liquidity with respect to our ordinary shares; a determination that our ordinary shares are “penny stock” under SEC rules, subjecting brokers trading our ordinary shares to more stringent rules on disclosure and the class of investors to which the broker may sell the ordinary shares; limited news and analyst coverage, in part due to the “penny stock” rules; decreased ability to issue additional securities or obtain additional financing in the future; and potential breaches under or terminations of our agreements with current or prospective large shareholders, strategic investors and banks. The perception among investors that we are at heightened risk of delisting could also negatively affect the market price of our securities and trading volume of our ordinary shares.
We may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships with third-parties that may not result in the development of commercially viable products or the generation of significant future revenues.
In the ordinary course of our business, we may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships to develop our products and to pursue new geographic or product markets. Proposing, negotiating, and implementing collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships may be a lengthy and complex process. We may not identify, secure, or complete any such transactions or arrangements in a timely manner, on a cost-effective basis, on acceptable terms or at all. We have limited institutional knowledge and experience with respect to these business development activities, and we may also not realize the anticipated benefits of any such transaction or arrangement. In particular, these collaborations may not result in the development of products that achieve commercial success or result in significant revenues and could be terminated prior to developing any products. For example, we have entered into agreements with MediTouch and Myolyn for the distribution of their products in the U.S., as well as  arrangements with Yaskawa Electric Corporation, or Yaskawa for the distribution of our products in certain Asian markets. We also collaborate with Harvard University’s Wyss Institute for Biologically Inspired Engineering for the research, design, development and commercialization of lightweight exoskeleton system technologies for lower limb disabilities, aimed to treat stroke, multiple sclerosis, mobility limitations for the elderly and other medical applications. Our arrangements with MediTouch, Myolyn, Yaskawa and Harvard, may not be as productive or successful as we hope.
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Additionally, as we pursue these arrangements and choose to pursue other collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships in the future, we may not be in a position to exercise sole decision making authority regarding the transaction or arrangement. This could create the potential risk of creating impasses on decisions, and our collaborators may have economic or business interests or goals that are, or that may become, inconsistent with our business interests or goals. It is possible that conflicts may arise with our collaborators. Our collaborators may act in their self-interest, which may be adverse to our best interest, and they may breach their obligations to us. Any such disputes could result in litigation or arbitration which would increase our expenses and divert the attention of our management. Further, these transactions and arrangements are contractual in nature and may be terminated or dissolved under the terms of the applicable agreements.

We depend on a single third party to manufacture our products, and we rely on a limited number of third-party suppliers for certain components of our products.

We have contracted with Sanmina Corporation, a well-established contract manufacturer with expertise in the medical device industry, for the manufacture of all of our products and the sourcing of all of our components and raw materials. Pursuant to this contract, Sanmina manufactures ReWalk and ReStore, pursuant to our specifications, at its facility in Ma’alot, Israel. We may terminate our relationship with Sanmina at any time upon written notice. In addition, either we or Sanmina may terminate the relationship in the event of a material breach, subject to a 30-day cure period. For our business strategy to be successful, Sanmina must be able to effectively commercialize ReWalk,manufacture our products in sufficient quantities, in compliance with regulatory requirements and quality control standards, in accordance with agreed upon specifications, at acceptable costs and on a timely basis. Increases in our product sales, whether forecasted or enhanceunanticipated, could strain the strengthability of Sanmina to manufacture an increasingly large supply of our brand,current or future products in a manner that meets these various requirements. In addition, although we are not restricted from engaging an alternative manufacturer, and potentially have the capabilities to manufacture our products in-house, the process of moving our manufacturing activities would be time consuming and costly, and may limit our ability to meet our sales commitments, which could harm our reputation and could have a material adverse effect on our business.
We also rely on third-party suppliers, which contract directly with Sanmina, to supply certain components of our products, and in some cases we purchase these components ourselves. Sanmina does not have long-term supply agreements with most of its suppliers and, in many cases, makes purchases on a purchase order basis. Sanmina’s ability to secure adequate quantities of such products may be limited. Suppliers may encounter problems that limit their ability to manufacture components for our products, including financial difficulties or damage to their manufacturing equipment or facilities. If Sanmina fails to obtain sufficient quantities of high quality components to meet demand on a timely basis, we could lose customer orders, our reputation may be harmed and our business could suffer.
Our results of operations and liquidity could be adversely impacted by supply chain disruptions and operational challenges faced by our manufacturer or suppliers. Sanmina generally uses a small number of suppliers for ReWalk and ReStore. Depending on a limited number of suppliers exposes us to risks, including limited control over pricing, availability, quality and delivery schedules. Such risks are heightened in light of the interruptions in supply chains and distribution networks related to the COVID-19 pandemic. If any one or more of our suppliers ceases to provide sufficient quantities of components in a timely manner or on acceptable terms, Sanmina would have to seek alternative sources of supply. It may be difficult to engage additional or replacement suppliers in a timely manner. Failure of these suppliers to deliver products at the level our business requires would limit our ability to meet our sales commitments, which could harm our reputation and could have a material adverse effect on our business. Sanmina also may have difficulty obtaining similar components from other suppliers that are acceptable to the FDA or other regulatory agencies, and the failure of Sanmina’s suppliers to comply with strictly enforced regulatory requirements could expose us to regulatory action including warning letters, product recalls, termination of distribution, product seizures or civil penalties. It could also require Sanmina to cease using the components, seek alternative components or technologies and we could be forced to modify our products to incorporate alternative components or technologies, which could result in a requirement to seek additional regulatory approvals. Any disruption of this nature or increased expenses could harm our commercialization efforts and adversely affect our operating results.

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Risks Related to Government Regulation
We have submitted medical device reports, or MDRs, to the FDA (and equivalent authorities outside of the United States) for numerous serious injuries relating to use of the ReWalk Personal system, and conducted a voluntary correction related to certain use instructions in the device’s labeling, which the FDA classified as a Class II recall. If our product may have caused or contributed to a death or a serious injury, or if our product malfunctioned and the malfunction’s recurrence would be likely to cause or contribute to a death or serious injury, we must comply with the FDA’s MDR regulations (and equivalent authorities outside of the United States), which could result in voluntary corrective actions or enforcement actions, such as mandatory recalls.
Under the FDA’s MDR regulations, we are subjectrequired to securities classreport to the FDA information that reasonably suggests a product we market may have caused or contributed to a death or serious injury or malfunctioned and our product or a similar device marketed by us would be likely to cause or contribute to death or serious injury if the malfunction were to recur. In addition, all manufacturers placing medical devices on the market in the European Union are legally bound to report any serious or potentially serious incidents involving devices they produce or sell to the relevant authority in whose jurisdiction the incident occurred. Between 2013 and 2017, we submitted a number of MDRs to the FDA to report incidents in which ReWalk Personal users sustained falls or fractures. The FDA sent us letters requesting additional information relating to these MDRs submitted in 2017, including a request for a failure analysis. In August 2017, we initiated a voluntary correction for the ReWalk device that related to certain use instructions to reduce the risk of tibia/fibula fractures and submitted a report to the FDA under 21 CFR Part 806. Under Part 806, manufacturers and importers are required to make a report to the FDA of any correction or removal of a device if the correction or removal was initiated to reduce a risk to health posed by the device or to remedy a violation of the U.S. Federal Food, Drug, and Cosmetic Act caused by the device that may present a risk to health.
 In June 2018, we received a letter from the FDA agreeing with our decision to initiate a corrective action lawsuits againstfor the ReWalk, classifying the recall action as a Class II recall, and requesting that we make regular status reports to the FDA regarding our progress. While the FDA has statutory authority to require a recall, most recalls are undertaken voluntarily when a medical device is defective, when it could present a risk to health, or when it is both defective and presents a risk to health. In January 2019, we submitted a recall termination request to the FDA. In November 2019 the FDA informed us that may result in an adverse outcome.
Betweenit considered the recall action terminated. In September 20162018, we submitted to the FDA revised labeling that incorporates the revised use instructions intended to prevent the tibia/fibula fractures as a special 510(k). The special 510(k) was not accepted by FDA because it was administratively incomplete, and we withdrew the submission. In January 2017, eight putative class actions2020 we submitted a new 510(k) to the FDA for both the revised labeling/use instructions and additional changes to the device. This new 510(k) was not accepted by FDA because it was administratively incomplete and, accordingly, FDA notified ReWalk on behalf of alleged shareholders that purchased or acquired our ordinary shares pursuant and/or traceable to our registration statement on Form F-1 (File No. 333-197344) used in connection with our IPO, were commenced in the following courts: (i) the Superior CourtJanuary 22, 2020 of the State of California, County of San Mateo; (ii)Refuse-to-Accept (RTA) designation. The company was in communication with the Superior Court ofFDA and has resubmitted an updated 510(k) in February 2020 which was cleared on May 27, 2020. In September 2019, we also submitted a revised technical file with the Commonwealth of Massachusetts, Suffolk County; (iii)additional device changes to the United States District Court forEU notified body and were notified in December 2019 that the Northern District of California; and (iv) the United States District Court for the District of Massachusetts. The actions involve claims under various sections of the Securities Act against us, certainextension of our currentcertification had been granted.
In 2018, we submitted additional MDRs for tibia/fibula fractures that occurred in foreign countries between 2015 and former directors2018. In addition, in 2018 and officers, the underwriters of our IPO and certain other defendants. The four actions commenced in the Superior Court of the State of California, County of San Mateo have been dismissed2019 we submitted MDRs for lack of personal jurisdiction, and the action commencedtibia/fibula fractures that occurred in the United States District Courtand Europe. In 2020 we submitted an MDR for the Northern District of California has been voluntarily dismissed. As of November 1, 2017, three actions remain pending, including (i) the two actions commenced in the Superior Court of the Commonwealth of Massachusetts, which have been consolidated, and (ii) the action commencedtibial fractures that occurred in the United States District Court forStates. Additional fractures or other adverse events may occur in the District of Massachusetts, or Massachusetts Federal Court, which was brought in part by certainfuture that may require us to report to the FDA pursuant to the MDR regulations (or other governmental authorities pursuant to equivalent outside of the plaintiffs whose actions were dismissed in the Superior Court of the State of California, County of San Mateo (referredUnited States regulations), and/or to in this quarterly report as the “Massachusetts Federal Court Action”). The parties in the consolidated Massachusetts State Court Actions have completed briefing on the Company’s motion to dismiss. The plaintiffs in the Massachusetts Federal Court Action filedinitiate a consolidated amended complaint in August 2017 adding claims that certain statements we made afterremoval, correction, or other action. Any adverse event involving our IPO were materially misleading. The court denied the Company’s motion to stay the Massachusetts Federal Court Action, and the Company intends to move to dismiss the action. For more information, see Notes 5d and 11 to our unaudited condensed consolidated financial statements included in “Part I, Item 1” of this quarterly report.
We are generally required, to the extent permitted by Israeli law, to indemnify our current and former directors and officers who are named as defendants in these types of lawsuits. We also have certain contractual indemnification obligations to the underwriters of our IPO regarding the securities class action lawsuits. While a certain amount of insurance coverage is available for expenses or losses associated with these lawsuits, this coverage may not be sufficient. Based on information currently available, we are unable to reasonably estimate a possible loss or range of possible losses, if any, with regard to these lawsuits; therefore, no litigation reserve has been recorded in our consolidated balance sheets. Although we plan to defend against these lawsuits vigorously, there can be no assurance that a favorable final outcome will be obtained. These lawsuits or future litigation may require significant attention from management andproducts could result in significant legal expenses, settlement costsfuture voluntary corrective actions, such as recalls or damage awards that could have a materially adverse impact on our financial position, results of operations and cash flows.

We have initiatedcustomer letters, or in an FDA enforcement action, such as a mandatory postmarketrecall, notification to healthcare professionals and users, warning letter, seizure, injunction or import alert. In addition, failure to report such adverse events to appropriate government authorities on a timely basis, or at all, could result in enforcement action against us. Any action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require financial resources and distract management, and may harm our reputation and financial results.
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While we addressed the observations that the FDA cited in a 2015 warning letter related to our mandatory post-market surveillance study onand initiated the study, we are currently experiencing enrollment issues that make our ReWalk Personal 6.0 with a revised FDA-approvedstudy progress inadequate and our modified protocol addressing certain violations and deficiencies cited(intended to overcome the enrollment issues so that we may complete the study, as required) has not yet been approved by the FDA that had previously led the FDA to warn us of potential regulatory action.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, we could receivebe subject to additional FDA warnings letters or more significant enforcement action, which could materially and adversely affect our labeling or marketing efforts.commercial success.

We are currently 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(“the September 2015 Letter"Warning Letter”), warning ofthreatening 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, and our allegedly deficient protocol for 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"),Letter, requesting additional changes to our study protocol and asking that we complyamend the study within 30 days. This letter also discussed the FDA’s request, as modifiedfurther discussed in our later discussionscommunications with the FDA, for a new premarket notification for our ReWalk device(the "specialdevice, 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 apply enforcement discretion topermit 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 have provided the FDA with the required periodic reports on the study’s progress, in a few cases with delay. Wedelay, and we intend to continue providing the FDA with suchperiodic reports on a timely basis going forward.

We expectas required. Through these reports, we will be ablemade the FDA aware that due to respond promptly to the FDA’s further requests associated with the postmarket surveillance study with the assistance of our outside clinical and regulatory services provider. However,enrollment issues, we may ultimately bewere unable to timely satisfy the FDA's requests with respect totarget enrollment specified in the study. Additionally, asoriginal study protocol.  As of November 1, 2017,June 30, 2020, we had three active centers enrolling patientsparticipating in the study with a total of seven(one site is closed and another site is on hold), but only two sites have successfully enrolled patientspatients.  Twelve subjects have enrolled in the study, two have completed the study, and four active patients, and two others were completingthree are using the process to enroll patients bydevice in the second half of 2017.community. This is substantially below the estimatedrequired number of patients included in our original study protocol.
In March 2020, FDA approved a modified postmarket study protocol currently leading the FDA to label our progress as “inadequate.” We may seek to modify our study protocol to expand the pool of patients and/or decrease the total number of patients, which changethat will require approvalsupplement data from the FDA.clinical study with real-world evidence and the study status was updated to progress adequate in July 2020. ReWalk is actively collecting the real-world evidence in order to fulfill the postmarket study order requirements.  However, despite the revised study protocol there can be no assurance that the FDA will agree to modify our study or that we will managebe able to attractsatisfy the required number of patients under the current requirements or with the revisedpost-market study requirements. Additionally, we are experiencing some study disruptions due to COVID-19 pandemic 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 marketing the ReWalk Personal device in the United States. We derived approximately 64% and 68%41.4% of our revenues in the fiscal year ended December 31, 2016 and the nine months ended September 30, 2017, respectively,2019 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.

If our product may have caused or contributed to a death or a serious injury, or if our product malfunctioned and the malfunction’s recurrence would be likely to cause or contribute to a death or serious injury, we must comply with medical device reporting regulations, which could result in voluntary corrective actions or agency enforcement actions against us.52
Under the medical device reporting (MDR) regulations of the FDA, we are required to report to the FDA any incident in which our product may have caused or contributed to a death or serious injury or in which our product malfunctioned and, if the malfunction were to recur, our product or a similar device marketed by us would be likely to cause or contribute to death or serious injury. In addition, all manufacturers placing medical devices in European Union markets are legally bound to report any serious or potentially serious incidents involving devices they produce or sell to the relevant authority in whose jurisdiction the incident occurred. We recently submitted MDRs to report incidents in which ReWalk Personal users sustained falls or fractures. The FDA has sent us letters requesting additional information relating to these MDRs. Additional events may occur in the future that may require us to report to the FDA pursuant to the MDR regulations. Any adverse event involving our products could result in future voluntary corrective actions, such as recalls or customer letters, agency action, such as inspection, mandatory recall, notification to healthcare professionals and users, or other enforcement action. Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require financial resources and distract management, and may harm our reputation and financial results. In addition, failure to report such adverse events to appropriate government authorities on a timely basis, or at all, could result in enforcement action against us.

A decline in the value of our ordinary shares could result in our being characterized as a passive foreign investment company, which would cause adverse tax consequences for U.S. investors.
Generally, if for any taxable year 75% or more of our gross income is passive income, or at least 50% of the average quarterly value of our assets (which may be determined in part by the market value of our ordinary shares, which is subject to change) are held for the production of, or produce, passive income, we would be characterized as a passive foreign investment company (“PFIC”), for U.S. federal income tax purposes. Passive income for this purpose generally includes, among other things, certain dividends, interest, royalties, rents and gains from commodities and securities transactions and from the sale or exchange of property that gives rise to passive income. Passive income also includes amounts derived by reason of the temporary investment of funds, including those raised in a public offering.  In determining whether a non-U.S. corporation is a PFIC, a proportionate share of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into account.  Based on our gross income and assets, the market price of our ordinary shares, and the nature of our business, we do not believe that we were a PFIC for the taxable year ended December 31, 2016.  However, there can be no assurance that we will not be considered a PFIC for 2017 or any taxable year.  PFIC status is determined as of the end of the taxable year and depends on a number of factors, including the value of a corporation’s assets and the amount and type of its gross income.  Further, because the value of our gross assets is likely to be determined in large part by reference to our market capitalization, there is a significant risk that a decline in the value of our ordinary shares could result in our becoming a PFIC.
If we are characterized as a PFIC, U.S. Holders (as defined below) may suffer adverse tax consequences, including the following: (i) having gains realized on the sale of our securities treated as ordinary income, rather than as capital gains; (ii) losing the preferential rate applicable to dividends received on our ordinary shares by individuals who are U.S. Holders, and (iii) having additional taxes equal to the interest charges generally applicable to underpayments of tax apply to distributions by us and the proceeds of sales of our ordinary shares in public offerings. A “U.S. Holder” is defined as follows: a citizen or resident of the United States; a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any state thereof, including the District of Columbia; an estate the income of which is subject to U.S. federal income taxation regardless of its source; or a trust if such trust has validly elected to be treated as a United States person for U.S. federal income tax purposes or if (1) a court within the United States is able to exercise primary supervision over its administration and (2) one or more United States persons have the authority to control all of the substantial decisions of such trust. Certain elections exist that may alleviate some of the adverse consequences of PFIC status and would result in an alternative treatment (such as mark-to-market treatment). However, we do not intend to provide the information necessary for U.S. Holders to make qualified electing fund elections if we are classified as a PFIC.

Future grants of ordinary shares under our equity incentive plans to our employees, non-employee directors and consultants, or sales by these individuals in the public market, could result in substantial dilution, thus decreasing the value of your investment in our ordinary shares, and certain grants may also require shareholder approval.

We have historically used, and continue to use, our ordinary shares as a means of both rewarding our employees, non-employee directors and consultants and aligning their interests with those of our shareholders. As of September 30, 2017, 3,194,556 ordinary shares remained available for issuance to our and our affiliates’ respective employees, non-employee directors and consultants under our equity incentive plans, including 2,592,398 ordinary shares subject to outstanding awards (consisting of outstanding options to purchase 2,238,961 ordinary shares and 353,437 ordinary shares underlying unvested RSUs). These numbers do not reflect the ultimate results of our one-time Equity Exchange Program for the exchange of “underwater” stock options for new RSUs, which expired on October 4, 2017. For more information, see Note 8a to our unaudited condensed consolidated financial statements set forth in “Part I, Item 1. Financial Statements” above. Additionally, the number of ordinary shares available for issuance under our 2014 Plan may increase each year due to the operation of an “evergreen” provision previously approved by our shareholders. Pursuant to this provision, the 2014 Plan’s reserve increases on January 1 of each calendar year during the plan’s term by the lesser of (i) 972,000, (ii) 4% of the total number of shares outstanding on December 31 of the immediately preceding calendar year and (iii) an amount determined by our board of directors.

We previously signed an agreement with a non-employee consultant, who agreed to assist us in commercially promoting and expanding insurance coverage of our ReWalk devices. Although this agreement terminated in May 2017 and was not extended, if we may choose to compensate this consultant for services in an amount equal to those provided for in the expired agreement, the consultant may receive up to ten percent of the increase in our market capitalization following the dates when coverage becomes active under national insurance policies that the consultant secures for us, subject to certain monetary limits. For more information, see Note 8e to our audited consolidated financial statements in our 2016 Form 10-K. If we opt to pay the consultant in ordinary shares, we may need to seek shareholder approval pursuant to the rules of NASDAQ, potentially due to the size of an issuance or an insufficient number of ordinary shares available for issuance under our 2014 Plan. Any such issuance, or the perception that we will make issuances when we solicit shareholder approval, could substantially dilute existing shareholders and materially decrease the value of an investment in our ordinary shares. Additionally, to the extent registered on a Form S-8, ordinary shares granted or issued under our equity incentive plans will, subject to vesting provisions, lock-up restrictions and Rule 144 volume limitations applicable to our “affiliates,” be available for sale in the open market immediately upon registration. Sales of a substantial number of the above-mentioned ordinary shares in the public market could result in a significant decrease in the market price of our ordinary shares and have a material adverse effect on an investment in our ordinary shares.

Sales of a substantial number of ordinary shares by us, our large shareholders and holders of our warrants and other derivative securities, several of whom have registration rights, or volatility or a reduction in the market price of our ordinary shares could have an adverse effect on our ordinary shares.
Sales by us or our shareholders of a substantial number of ordinary shares in the public market, or the perception that these sales might occur, could cause the value of our ordinary shares to decline or could impair our ability to raise capital through a future sale of, or pay for acquisitions using, our equity securities.
As of September 30, 2017, 403,804 ordinary shares were issuable pursuant to the exercise of outstanding warrants granted as part of our Series E Preferred investment round in July 2014 at an exercise price of $10.08 and 2,437,500 ordinary shares were issuable pursuant to the exercise of warrants issued in our follow-on offering of ordinary shares and warrants in November 2016, with an exercise price of $4.75. There were also 167,012 ordinary shares issuable pursuant to the exercise of warrants granted to Kreos in connection with the Loan Agreement in January and December 2016, with an exercise price of $9.64, and 2,523,660 ordinary shares issuable pursuant to the conversion of the Kreos Convertible Note at a conversion price of $1.268 per share (subject to customary anti-dilution adjustments).
Additionally, pursuant to our Amended and Restated Shareholders’ Rights Agreement, dated July 14, 2014, with certain of our shareholders, as of September 30, 2017, the beneficial owners of approximately 4,116,143 of our ordinary shares were entitled to require that we register their shares under the Securities Act for resale into the public markets. In our Kreos Convertible Note, we separately undertook to prepare and file with the SEC a registration statement to enable the resale by Kreos of up to 2,523,660 ordinary shares to be issued upon conversion of the note, unless they could otherwise be freely sold using Rule 144 under the Securities Act.

All shares sold pursuant to an offering covered by a registration statement would be freely transferable. With respect to the outstanding warrants and the Kreos Convertible Note, there may be certain restrictions on the holders to sell the underlying ordinary shares to the extent they are restricted securities, held by “affiliates” or would exceed certain ownership thresholds. Certain of our largest shareholders, namely, Yaskawa Electric Corporation (“Yaskawa”), and certain entities and individuals affiliated with SCP Vitalife Partners II L.P (“Vitalife”), may also have limitations under Rule 144 under the Securities Act on the resale of certain ordinary shares they hold. Despite these limitations, if we, our existing shareholders or their affiliates sell a substantial number of the above-mentioned ordinary shares in the public market, the market price of our ordinary shares could decrease significantly. Any such decrease could impair the value of your investment in us.
The market price of our ordinary shares has also been highly volatile and may fluctuate substantially due to several factors. Effective May 2017, we transferred our ordinary shares from the NASDAQ Global Market to the NASDAQ Capital Market due to our failure to meet the market value of listed securities requirements and the alternative total assets and total revenue standard requirements of the NASDAQ Global Market. Additionally, since the first quarter of 2017, our ordinary shares have traded periodically between $1.00 and $2.00, reaching an all-time low of $1.10 in the second quarter of 2017. To maintain our current listing on the NASDAQ Capital Market, we must meet certain requirements, including, among others, a minimum closing bid price per share. If the closing bid price of our ordinary shares for 30 consecutive business days is less than $1.00 per share, or if we cannot meet other continued listing requirements, NASDAQ will send us a notification of deficiency and provide us a cure period of 180 days, subject to a potential subsequent cure period of an additional 180 days. After the applicable period, if we cannot show compliance with certain NASDAQ Capital Market listing requirements, we will become subject to delisting proceedings. The perception among investors that we are at heightened risk of delisting could negatively affect the market price and trading volume of our ordinary shares. Additionally, if we become subject to delisting proceedings and fail to appeal a delisting determination, our ordinary shares will be delisted from NASDAQ entirely, which could reduce the number of investors willing to hold or acquire our ordinary shares, increase the volatility of the price of such shares and significantly lower the shares’ trading price and volume. Any of these events could also reduce our liquidity and impair our ability to raise capital.
A small number of our shareholders have a significant influence over matters requiring shareholder approval, which could delay or prevent a change of control.

As of September 30, 2017, the largest beneficial owners of our shares were Yaskawa, certain entities and individuals affiliated with Vitalife, and Kreos, which is deemed a beneficial owner of our ordinary shares pursuant to its right to acquire ordinary shares upon the exercise of the warrants and the conversion of the Kreos Convertible Note, which may be converted at any time, subject to its terms. These holders beneficially owned in the aggregate 23.5% of our ordinary shares as of September 30, 2017 (taking into account Kreos’s beneficial ownership in the total number of ordinary shares outstanding). As a result, Yaskawa and Vitalife, and, if it were to convert all ordinary shares underlying its convertible note, Kreos, could exert significant influence over our operations and business strategy and would together have sufficient voting power to influence significantly the outcome of matters requiring shareholder approval. These matters may include:

determining the composition of our board of directors, which has the authority to direct our business and to appoint and remove our officers;

approving or rejecting a merger, consolidation or other business combination;

raising future capital; and

amending our Second Amended and Restated Articles of Association, as amended by the First Amendment thereto, which govern the rights attached to our ordinary shares.

This concentration of ownership of our ordinary shares could delay or prevent proxy contests, mergers, tender offers, open-market purchase programs or other purchases of our ordinary shares that might otherwise give you the opportunity to realize a premium over the then-prevailing market price of our ordinary shares. This concentration of ownership may also adversely affect our share price.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There are no transactions that have not been previously included in a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K.
 

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

Not applicable.
Not applicable.

ITEM 4.   MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5.   OTHER INFORMATION

Not applicable.


ITEM 6. EXHIBIT INDEX

Exhibit Number Description
31.1
3.1

Third Amended and Restated Articles of Association of the Company (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on April 1, 2019).
10.1

Amendment No. 3 to the Research Collaboration Agreement, dated April 30, 2020, between the Company and the President and Fellows of Harvard College (incorporated by reference to Exhibit 10.34 of the Company’s registration statement on Form S-1 (File No. 333-239733), filed with the SEC on July 7, 2020).^
31.1

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act 2002.
31.2

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act 2002.
32.1

Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2

Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
__________________________
*Furnished herewith.
^Portions of this exhibit (indicated by asterisks) have been omitted under rules of the U.S. Securities and Exchange Commission permitting the confidential treatment of select information.
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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 ReWalk Robotics Ltd.
 
Date: November 2, 2017By:/s/ Larry Jasinski
Name: Larry Jasinski
Title: Chief Executive Officer
(Principal Executive Officer)
   
Date: November 2, 2017August 12, 2020By:/s/ Kevin HershbergerLarry Jasinski
  Name: Kevin HershbergerLarry Jasinski
  Title: Chief Executive Officer
Date: August 12, 2020By:/s/ Ori Gon
Ori Gon
Chief Financial Officer
  (Principal Financial Officer and Principal Accounting Officer)

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