UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended SeptemberJune 30, 2017
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____ to ______
Commission File Number: 001-36612
ReWalk Robotics Ltd.
(Exact name of registrant as specified in charter)
Israel | Not applicable | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. 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 0.25 | RWLK | Nasdaq Capital Market |
+972.4.959.0123
Registrant's telephone number, including area code
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
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
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
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 growthLarge accelerated filer | Accelerated filer | |||
Non-accelerated filer | Smaller reporting company | |||
(Do not check if a smaller reporting company) | Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
As o
REWALK ROBOTICS LTD.
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBERJUNE 30, 2017
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i
General and Where You Can Find Other Information
As used in this quarterly report on Form 10-Q (this “quarterly report”), the terms “ReWalk,” the “Company,” “RRL,” “we,” “us” and “our” refer to ReWalk Robotics Ltd. and its subsidiaries, unless the context clearly indicates otherwise. Our website is www.rewalk.com. Information contained, 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
(In thousands, except share and per share data)
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
| ||||||||
CURRENT ASSETS | ||||||||
| ||||||||
Cash and cash equivalents | $ | 64,236 | $ | 20,350 | ||||
Trade receivable, net | 779 | 684 | ||||||
Prepaid expenses and other current assets | 834 | 672 | ||||||
Inventories | 3,346 | 3,542 | ||||||
Total current assets | 69,195 | 25,248 | ||||||
| ||||||||
LONG-TERM ASSETS | ||||||||
| ||||||||
Restricted cash and other long-term assets | 1,039 | 1,033 | ||||||
Operating lease right-of-use assets | 1,116 | 1,349 | ||||||
Property and equipment, net | 355 | 437 | ||||||
Total long-term assets | 2,510 | 2,819 | ||||||
Total assets | $ | 71,705 | $ | 28,067 | ||||
| September 30, | December 31, | ||||||
| 2017 | 2016 | ||||||
| ASSETS | |||||||
| CURRENT ASSETS | |||||||
| Cash and cash equivalents | $ | 12,928 | $ | 23,678 | |||
| Trade receivable, net | 1,265 | 1,254 | |||||
| Prepaid expenses and other current assets | 1,703 | 1,291 | |||||
| Inventory | 3,500 | 3,264 | |||||
| Total current assets | 19,396 | 29,487 | |||||
| LONG-TERM ASSETS | |||||||
| Other long term assets | 1,182 | 1,018 | |||||
| Property and equipment, net | 906 | 1,258 | |||||
| Total long-term assets | 2,088 | 2,276 | |||||
| Total assets | $ | 21,484 | $ | 31,763 | |||
| September 30, | December 31, | ||||||
| 2017 | 2016 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
| CURRENT LIABILITIES | |||||||
| Current maturities of long term loan | $ | 5,663 | $ | 7,495 | |||
| Trade payables | 2,426 | 3,424 | |||||
| Employees and payroll accruals | 858 | 1,019 | |||||
| Deferred revenues and customers advances | 133 | 54 | |||||
| Other current liabilities | 537 | 406 | |||||
| Total current liabilities | 9,617 | 12,398 | |||||
| LONG-TERM LIABILITIES | |||||||
| Long term loan, net of current maturities | 10,003 | 10,518 | |||||
| Deferred revenues | 250 | 284 | |||||
| Other long-term liabilities | 274 | 303 | |||||
| Total long-term liabilities | 10,527 | 11,105 | |||||
| Total liabilities | 20,144 | 23,503 | |||||
| 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, respectively | 60 | 45 | |||||
| Additional paid-in capital | 126,338 | 114,707 | |||||
| Accumulated deficit | (125,058 | ) | (106,492 | ) | |||
| Total shareholders’ equity | 1,340 | 8,260 | |||||
| Total liabilities and shareholders’ equity | $ | 21,484 | $ | 31,763 | |||
| 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 revenues | 1,024 | 1,110 | 3,740 | 3,410 | |||||||||||
| Gross profit | 708 | 290 | 2,498 | 868 | |||||||||||
| Operating expenses: | |||||||||||||||
| Research and development, net | 1,618 | 1,968 | 4,433 | 6,737 | |||||||||||
| Sales and marketing | 2,637 | 3,774 | 8,643 | 10,577 | |||||||||||
| General and administrative | 1,805 | 1,951 | 5,796 | 5,960 | |||||||||||
| Total operating expenses | 6,060 | 7,693 | 18,872 | 23,274 | |||||||||||
| Operating loss | (5,352 | ) | (7,403 | ) | (16,374 | ) | (22,406 | ) | |||||||
| Loss on extinguishment of debt | — | — | 313 | — | |||||||||||
| Financial expenses, net | 479 | 508 | 1,843 | 1,514 | |||||||||||
| Loss before income taxes | (5,831 | ) | (7,911 | ) | (18,530 | ) | (23,920 | ) | |||||||
| Income taxes | 15 | 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 diluted | 21,660,757 | 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 STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(In thousands, except share and per share data)
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
(Unaudited) | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Current maturities of operating leases | 640 | 660 | ||||||
Trade payables | 2,080 | 2,268 | ||||||
Employees and payroll accruals | 695 | 867 | ||||||
Deferred revenues | 330 | 441 | ||||||
Other current liabilities | 457 | 432 | ||||||
Total current liabilities | 4,202 | 4,668 | ||||||
| ||||||||
LONG-TERM LIABILITIES | ||||||||
Deferred revenues | 727 | 667 | ||||||
Non-current operating leases | 662 | 923 | ||||||
Other long-term liabilities | 36 | 35 | ||||||
Total long-term liabilities | 1,425 | 1,625 | ||||||
| ||||||||
Total liabilities | 5,627 | 6,293 | ||||||
| ||||||||
COMMITMENTS AND CONTINGENT LIABILITIES | ||||||||
SHAREHOLDERS’ EQUITY | ||||||||
| ||||||||
Share capital | ||||||||
Ordinary share of NIS 0.25 par value-Authorized: 60,000,000 shares at June 30, 2021 and December 31, 2020; Issued and outstanding: 46,201,052 and 25,332,225 shares at June 30, 2021 and December 31, 2020, respectively | 3,394 | 1,827 | ||||||
Additional paid-in capital | 250,332 | 201,392 | ||||||
Accumulated deficit | (187,648 | ) | (181,445 | ) | ||||
Total shareholders’ equity | 66,078 | 21,774 | ||||||
Total liabilities and shareholders’ equity | $ | 71,705 | $ | 28,067 | ||||
| Ordinary Share | Additional paid-in capital | Accumulated deficit | Total shareholders’ equity | |||||||||||
| Number | Amount | |||||||||||||
| Balance as of January 1, 2016 | 12,222,583 | 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-employees | 128,496 | 1 | 17 | — | 18 | |||||||||
| Issuance of ordinary shares in at-the-market offering, net of issuance expenses in the amount of $468 | 692,062 | 2 | 4,097 | — | 4,099 | |||||||||
| Issuance of warrants to purchase ordinary shares | — | — | 1,239 | — | 1,239 | |||||||||
| Cashless exercise of warrants into ordinary shares | 45,116 | *) | *) | — | — | |||||||||
| 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, 2016 | 16,338,257 | 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, 2017 | 21,823,771 | 60 | 126,338 | (125,058 | ) | 1,340 | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
REWALK ROBOTICS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Revenues | $ | 1,436 | $ | 1,668 | $ | 2,752 | $ | 2,428 | ||||||||
Cost of revenues | 709 | 646 | 1,318 | 1,033 | ||||||||||||
| ||||||||||||||||
Gross profit | 727 | 1,022 | 1,434 | 1,395 | ||||||||||||
| ||||||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 810 | 954 | 1,605 | 1,939 | ||||||||||||
Sales and marketing | 1,613 | 1,353 | 3,284 | 3,034 | ||||||||||||
General and administrative | 1,445 | 1,267 | 2,707 | 2,576 | ||||||||||||
| ||||||||||||||||
Total operating expenses | 3,868 | 3,574 | 7,596 | 7,549 | ||||||||||||
| ||||||||||||||||
Operating loss | (3,141 | ) | (2,552 | ) | (6,162 | ) | (6,154 | ) | ||||||||
Financial expenses (income), net | (9 | ) | 235 | (13 | ) | 481 | ||||||||||
| ||||||||||||||||
Loss before income taxes | (3,132 | ) | (2,787 | ) | (6,149 | ) | (6,635 | ) | ||||||||
Taxes on income | 9 | 68 | 54 | 60 | ||||||||||||
| ||||||||||||||||
Net loss | $ | (3,141 | ) | $ | (2,855 | ) | $ | (6,203 | ) | $ | (6,695 | ) | ||||
| ||||||||||||||||
Net loss per ordinary share, basic and diluted | $ | (0.07 | ) | $ | (0.22 | ) | $ | (0.15 | ) | $ | (0.57 | ) | ||||
| ||||||||||||||||
Weighted average number of shares used in computing net loss per ordinary share, basic and diluted | 46,123,222 | 13,101,275 | 41,210,527 | 11,744,275 | ||||||||||||
| 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: | |||||||
| Depreciation | 516 | 503 | |||||
| Share-based compensation to employees and non- employees | 2,597 | 2,458 | |||||
| Deferred taxes | (20 | ) | (64 | ) | |||
| Loss on extinguishment of debt | 313 | — | |||||
| Financial expenses related to long term loan | 87 | 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 customers | 45 | 116 | |||||
| Other current and long term liabilities | 102 | 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-employees | 28 | 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 activities | 6,341 | 15,138 | |||||
| Decrease in cash and cash equivalents | (10,750 | ) | (5,470 | ) | |||
| Cash and cash equivalents at beginning of period | 23,678 | 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 | |||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
REWALK ROBOTICS LTD. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
(In thousands, except share data)
Ordinary Shares | Additional paid-in | Accumulated | Total shareholders’ | |||||||||||||||||
Number | Amount | capital | deficit | equity | ||||||||||||||||
Balance as of April 1, 2020 | 12,930,155 | 903 | 184,489 | (172,309 | ) | 13,083 | ||||||||||||||
Share-based compensation to employees and non-employees | — | — | 113 | — | 113 | |||||||||||||||
Issuance of ordinary shares upon exercise of options to purchase ordinary shares and RSUs by employees and non-employees | 14,030 | 0* | ) | — | — | — | ||||||||||||||
Exercise of warrants (1) (2) | 1,246,500 | 90 | 1,468 | — | 1,558 | |||||||||||||||
Net loss | — | — | — | (2,855 | ) | (2,855 | ) | |||||||||||||
Balance as of June 30, 2020 | 14,190,685 | 993 | 186,070 | (175,164 | ) | 11,899 | ||||||||||||||
| ||||||||||||||||||||
Balance as of April 1, 2021 | 46,092,577 | 3,385 | 250,141 | (184,507 | ) | 69,019 | ||||||||||||||
Share-based compensation to employees and non-employees | — | — | 200 | — | 200 | |||||||||||||||
Issuance of ordinary shares upon exercise of options to purchase ordinary shares and RSUs by employees and non-employees | 108,475 | 9 | (9 | ) | — | — | ||||||||||||||
Net loss | — | — | — | (3,141 | ) | (3,141 | ) | |||||||||||||
Balance as of June 30, 2021 | 46,201,052 | 3,394 | 250,332 | (187,648 | ) | 66,078 | ||||||||||||||
*) | Represents an amount lower than $1. | |
(1) | See Note 7e to the condensed consolidated financial statements | |
(2) | See Note 7c 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 Shares | Additional paid-in | Accumulated | Total shareholders’ | |||||||||||||||||
Number | Amount | capital | deficit | equity | ||||||||||||||||
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 | 0* | ) | — | — | — | ||||||||||||||
Issuance of ordinary shares in “best efforts” offering, net of issuance expenses in the amount of $1,056 (1) | 4,053,172 | 290 | 3,720 | — | 4,010 | |||||||||||||||
Exercise of pre-funded warrants and warrants (1) (2) | 2,793,328 | 199 | 3,293 | — | 3,492 | |||||||||||||||
Net loss | — | — | — | (6,695 | ) | (6,695 | ) | |||||||||||||
Balance as of June 30, 2020 | 14,190,685 | 993 | 186,070 | (175,164 | ) | 11,899 | ||||||||||||||
| ||||||||||||||||||||
Balance as of January 1, 2021 | 25,332,225 | 1,827 | 201,392 | (181,445 | ) | 21,774 | ||||||||||||||
Share-based compensation to employees and non-employees | — | — | 368 | — | 368 | |||||||||||||||
Issuance of ordinary shares upon vesting of RSUs by employees and non-employees | 132,571 | 11 | (11 | ) | — | — | ||||||||||||||
Issuance of ordinary shares in a private placement, net of issuance expenses in the amount of $ 3,679 (1) | 10,921,502 | 832 | 35,489 | — | 36,321 | |||||||||||||||
Exercise of warrants (2) | 9,814,754 | 724 | 13,094 | — | 13,818 | |||||||||||||||
Net loss | — | — | — | (6,203 | ) | (6,203 | ) | |||||||||||||
Balance as of June 30, 2021 | 46,201,052 | 3,394 | 250,332 | (187,648 | ) | 66,078 | ||||||||||||||
*) | Represents an amount lower than $1. | |
(1) | See Note 7e to the condensed consolidated financial statements | |
(2) | See Note 7c 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, | ||||||||
2021 | 2020 | |||||||
Cash flows used in operating activities: | ||||||||
Net loss | $ | (6,203 | ) | $ | (6,695 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation | 141 | 151 | ||||||
Share-based compensation to employees and non-employees | 368 | 312 | ||||||
Deferred taxes | (11 | ) | (50 | ) | ||||
Changes in assets and liabilities: | ||||||||
Trade receivables, net | (95 | ) | (260 | ) | ||||
Prepaid expenses, operating lease right-of-use assets and other assets | 85 | (240 | ) | |||||
Inventories | 138 | (382 | ) | |||||
Trade payables | (285 | ) | (581 | ) | ||||
Employees and payroll accruals | (172 | ) | 126 | |||||
Deferred revenues | (51 | ) | 29 | |||||
Operating lease liabilities and other liabilities | (255 | ) | 57 | |||||
Net cash used in operating activities | (6,340 | ) | (7,533 | ) | ||||
| ||||||||
Cash flows used in investing activities: | ||||||||
Purchase of property and equipment | (11 | ) | (15 | ) | ||||
Net cash used in investing activities | (11 | ) | (15 | ) | ||||
| ||||||||
Cash flows from financing activities: | ||||||||
Repayment of long-term loan | 0— | (2,591 | ) | |||||
Proceeds from issuance of long-term debt | 0— | 392 | ||||||
Issuance of ordinary shares in a “best efforts” offering, net of issuance expenses paid in the amount of $ 1,056 (1) | 0— | 4,010 | ||||||
Issuance of ordinary shares in a private placement, net of issuance expenses paid in the amount of $ 3,582 (1) | 36,418 | 0— | ||||||
Exercise of pre-funded warrants and warrants (1) (2) | 13,818 | 3,492 | ||||||
Net cash provided by financing activities | 50,236 | 5,303 | ||||||
| ||||||||
Increase (decrease) in cash, cash equivalents, and restricted cash | 43,885 | (2,245 | ) | |||||
Cash, cash equivalents, and restricted cash at beginning of period | 21,054 | 16,992 | ||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 64,939 | $ | 14,747 | ||||
Supplemental disclosures of non-cash flow information | ||||||||
Expenses related to offerings not yet paid (1) | $ | 97 | $ | 0— | ||||
Classification of other current assets to property and equipment, net | $ | 16 | $ | 32 | ||||
Classification of inventory to property and equipment, net | $ | 32 | $ | 50 | ||||
Classification of inventory to other current assets | $ | 26 | $ | 0— | ||||
Supplemental cash flow information: | ||||||||
Cash and cash equivalents | $ | 64,236 | $ | 14,064 | ||||
Restricted cash included in other long-term assets | 703 | 683 | ||||||
Total Cash, cash equivalents, and restricted cash | $ | 64,939 | $ | 14,747 | ||||
(1) | See Note 7e to the condensed consolidated financial statements. | |
(2) | See Note 7c 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
a.ReWalk Robotics Ltd. (“RRL”, and together with its subsidiaries, the “Company”) was incorporated under the laws of the State of Israel on June 20, 2001 and commenced operations on the same date.
b.RRL has two wholly-owned subsidiaries: (i) ReWalk Robotics Inc. (“RRI”) incorporated under the laws of Delaware on February 15, 2012 and (ii) ReWalk Robotics GMBH. (“RRG”) incorporated under the laws of Germany on January 14, 2013.
The Company intendsis designing, developing and commercializing robotic exoskeletons that allow individuals with mobility impairments or other medical conditions the ability to finance operating costs overstand and walk once again. The Company has developed and is continuing to commercialize the next twelve monthsReWalk, an exoskeleton designed for individuals with existing cashparaplegia that uses its patented tilt-sensor technology and an on-board computer and motion sensors to drive motorized legs that power movement. The ReWalk system consists of a light wearable brace support suit which integrates motors at the joints, rechargeable batteries, an array of sensors and a computer-based control system to power knee and hip movement. There are currently two types of ReWalk products: ReWalk Personal and ReWalk Rehabilitation. ReWalk Personal is designed for everyday use by individuals at home and in their communities and is custom-fitted for each user. ReWalk Rehabilitation is designed for the clinical rehabilitation environment where it provides individuals access to valuable exercise and therapy. Additionally, the Company developed and, in June 2019, started to commercialize the ReStore following receipt of European Union CE mark and United States Food and Drug Administration (“FDA”). The ReStore is a powered, lightweight soft exo-suit intended for use in the rehabilitation of individuals with lower limb disability due to stroke. The Company markets and sells its products directly to institutions and individuals in Germany and the United States and through third-party distributors in other markets. In its direct markets, the Company has established relationships with rehabilitation centers and the spinal cord injury community, and in its indirect markets, the Company’s distributors maintain these relationships. RRI markets and sells products mainly in the United States. RRG sell the Company’s products mainly in Germany and Europe.
During the second quarter of 2020, we finalized two separate agreements to distribute additional product lines in the U.S. market. The Company will be the exclusive distributor of the MediTouch Tutor movement biofeedback systems in the United States and will also have distribution rights for the MYOLYN MyoCycle FES cycles to U.S. rehabilitation clinics and personal sales through the U.S. Department of Veterans Affairs (“VA”) hospitals. These new products will improve our product offering to clinics as well as patients within the VA as they both have similar clinician and patient profiles.
c.The worldwide spread of the novel coronavirus (“COVID-19”) in March 2020 has resulted in a global economic slowdown and is expected to continue to disrupt general business operations until the disease is contained. This pandemic had a negative impact on hand, reductions in operating spend, issuances under the Company's ATM Offering Program or other future issuancessales and results of equityoperations since 2020, and debt securities, or through a combinationthe Company expects that it will continue to negatively affect its sales and results of operations as long as the pandemic impacts our direct markets in Germany and the United States and disturbs our ability to trial new ReWalk Personal 6.0 patients, access clinics to demonstrate our rehab products and customers are unable to continue their in-clinic training. The Company is currently unable to predict the scale and duration of that impact due to the considerable uncertainty that still surrounds the length of time that the areas in which we operate will continue to be impacted by the measures designed to reduce and contain the spread of the foregoing. However,virus taken on international, national and local levels. As of the date of issuance of these financial statements, the Company will needis not aware of any specific event or circumstance that would require an update to seekthe Company’s accounting estimates or judgments or revision of the carrying value of its assets or liabilities. This determination may change as new events occur and additional sources of financing ifinformation is obtained. Actual results could differ from our estimates and judgments, and any such differences may be material to our financial statements.
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REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
d.In the six months ended June 30, 2021, the Company requireincurred a consolidated net loss of $6.2 million and as of June 30, 2021, the Company has an accumulated deficit in the total amount of $187.6 million. The Company’s cash and cash equivalents as of June 30, 2021, were $64.2 million and the Company’s negative operating cash flow for the six months ended June 30, 2021, was $6.3 million. The Company has sufficient funds to support its operations for more funds than anticipated during the next 12 months or in later periods.
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, 2017,2021, (ii) consolidated results of operations for the three and ninesix months ended SeptemberJune 30, 20172021, (iii) consolidated statements of changes in shareholders’ equity as of June 30, 2021 and (iii)(iv) consolidated cash flows for the ninesix months ended SeptemberJune 30, 2017.2021. The results for the three and nine monthssix month periods ended SeptemberJune 30, 2017,2021, as applicable, are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.2021.
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REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 3:- SIGNIFICANT ACCOUNTING POLICIES
a.Revenue Recognition
The Company generates revenues from sales of products. The Company sells its products directly to end customers and through distributors. The Company sells its products to private individuals (who finance the purchases by themselves, through fundraising or reimbursement coverage from insurance companies), rehabilitation facilities and distributors.
Disaggregation of Revenues (in thousands)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Units placed | $ | 1,313 | $ | 1,428 | $ | 2,455 | $ | 2,061 | ||||||||
Spare parts and warranties | 123 | 240 | 297 | 367 | ||||||||||||
Total Revenues | $ | 1,436 | $ | 1,668 | $ | 2,752 | $ | 2,428 | ||||||||
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REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Units placed
The Company currently offers five products: (1) ReWalk Personal; (2) ReWalk Rehabilitation; (3) ReStore; (4) MyoCycle; and (5) MediTouch.
ReWalk Personal and ReWalk Rehabilitation are units for spinal cord injuries (“SCI Products”). SCI Products are currently designed for everyday use by paraplegic individuals at home and in their communities, and are custom fitted for each user, as well as for use by paraplegia patients in the clinical rehabilitation environment, where they provide individuals access to valuable exercise and therapy.
ReStore is a powered, lightweight soft exo-suit intended for use in the rehabilitation of individuals with lower limb disability due to stroke in the clinical rehabilitation environment.
The MyoCycle device uses Functional Electrical Stimulation (“FES”) technology to facilitate therapeutic exercise for persons with muscle weakness or paralysis caused by disorders like spinal cord injury, multiple sclerosis, and stroke.
The MediTouch Tutor movement biofeedback product line includes the Arm, Hand, 3D and Leg Tutor devices. These devices are used by physical and occupational therapists to evaluate functional tasks during rehabilitation of neurologic disorders and can also be used by patients remotely at home.
Pursuant to two separate distribution agreements entered into during the second quarter of 2020, the Company now markets both the MediTouch and MyoCyle products (together the “Distributed Products”) in the United States for use at home or in the clinic.
Units placed includes revenue from sales or rental of SCI Products, ReStore and the Distributed Products.
For units placed, the Company recognizes revenues when it transfers control and title has passed to the customer. Each unit placed is considered an independent, unbundled performance obligation. The Company generally does not grant a right of return for its products besides isolated cases where we than asses the likelihood of such event to occur based on our historical experience and future estimates. The Company also offers a rent-to-purchase model in which the Company recognizes revenue ratably according to the agreed rental monthly fee.
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.
The Distributed Products are offered with an assurance-type warranty that is covered by the vendor ranging from one year to ten years depending on the specific product and part.
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REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Contract balances (in thousands)
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Trade receivable, net (1) | $ | 779 | $ | 684 | ||||
Deferred revenues (1) (2) | $ | 1,057 | $ | 1,108 | ||||
(1) | Balance presented net of unrecognized revenues that were not yet collected. | |
(2) | During the |
| revenues. | |
Deferred revenue is comprised mainly of unearned revenue related to service type warranty but also includes other offerings for which the Company has been paid in advance and earns revenue when the Company transfers control of the product or service.
The Company’s unfilled performance obligations as of June 30, 2021, and the estimated revenue expected to be recognized in the future related to the service type warranty amounts to $1,092 thousand, which is fulfilled over one to five years.
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REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
b.New Accounting Pronouncements
Recent Accounting Pronouncements Not Yet Adopted
i.Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity
In July 2015,August 2020, the Financial Accounting Standards Board (the “FASB”(“FASB”) issued ASU No. 2020-06, Accounting Standards Updatefor Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU”ASU 2020-06”) 2015-11, “Simplifying, which simplifies the Measurementaccounting for certain financial instruments with characteristics of Inventory.” The standardliabilities and equity, including convertible instruments and contracts in an entity’s own equity. Among other changes, ASU 2020-06 removes from U.S. GAAP the inventory valuationliability and equity separation model for convertible instruments with a cash conversion feature and a beneficial conversion feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt. Similarly, the embedded conversion feature will no longer be amortized into income as interest expense over the life of the instrument. Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. Additionally, ASU 2020-06 requires the application of the if-converted method fromto calculate the lowerimpact 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 standardconvertible instruments on diluted earnings per share (“EPS”). ASU 2020-06 is effective for fiscal years beginning after December 15, 2016, including interim periods and requires prospective adoption2021, 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.
ii.Financial Instruments
In May 2014, theJune 2016, FASB issued ASU No. 2014-09, Revenue from Contracts with Customers2016-13, Financial Instruments - Credit Losses (Topic 606) (“326): Measurement of Credit Losses on Financial Instruments. 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 depict2016-13 amends 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-stepimpairment model to determine when and how revenue is recognized. Other major provisionsutilize an expected loss methodology in place of the standard include capitalization of certain contract costs, consideration of time value of moneycurrently used incurred loss methodology, which will result in the transaction price, and allowing estimatesmore timely recognition 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.
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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, | |||||||
2021 | 2020 | |||||||
Customer A | 15 | % | 0*) | |||||
Customer B | 14 | % | 0*) | |||||
Customer C | 14 | % | 0*) | |||||
Customer D | 13 | % | 0*) | |||||
Customer E | 13 | % | 0*) | |||||
Customer F | 0*) | 15 | % | |||||
Customer G | 0*) | 15 | % | |||||
Customer H | 0*) | 15 | % | |||||
Customer I | 0*) | 14 | % | |||||
Customer J | 0*) | 12 | % | |||||
Customer K | 0*) | 11 | % | |||||
*) Less than 10%
The Company’s trade receivables are geographically diversified and 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, 20172021, and December 31, 2016, respectively. A second customer represented 12.3% and 4.9% of the Company's2020, 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$42 thousand and $333$102 thousand, respectively and net of sales return reserve of $105 thousand as of September 30, 2017 and December 31, 2016.
d.Warranty provision
The Company providesprovided a two-year standard warranty for its products. As of 2018, our service policy for new devices sold includes five-year warranties. The Company determined that the first two years of warranty is an assurance-type warranty and records a provision for the estimated cost to repair or replace products under warranty at the time of sale. Factors that affect the Company’s warranty reserve include the number of units sold, historical and anticipated rates of warranty repairs and the cost per repair.
US Dollars in thousands | ||||
Balance at December 31, 2020 | $ | 140 | ||
Provision | 109 | |||
Usage | (131 | ) | ||
Balance at June 30, 2021 | $ | 118 | ||
e.Basic and diluted net loss per ordinary share
Basic net loss per ordinary share is computed based on the weighted average number of ordinary shares outstanding during each year.
For the six months ended June 30, 2021, the total number of ordinary shares related to the outstanding warrants and share option plans aggregated to 12,210,449, was excluded from the calculations of diluted loss per ordinary share since it would have an anti-dilutive effect.
13
| US Dollars in thousands | |||
| Balance at December 31, 2016 | $ | 498 | |
| Provision | 311 | ||
| Usage | (275 | ) | |
| Balance at September 30, 2017 | $ | 534 | |
| September 30, | December 31, | ||||||
| 2017 | 2016 | ||||||
| Finished products | 3,500 | 3,264 | |||||
| $ | 3,500 | $ | 3,264 | ||||
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 4:INVENTORIES
The components of inventories are as follows (in thousands):
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Finished products | $ | 2,632 | $ | 2,764 | ||||
Raw materials | 714 | 778 | ||||||
$ | 3,346 | $ | 3,542 | |||||
In the six months ended June 30, 2021, and 2020, the Company wrote off inventory in the amount of $58 and $5 thousand, respectively. The write off inventory were recorded in cost of revenue.
NOTE 5:- COMMITMENTS AND CONTINGENT LIABILITIES
a.Purchase commitments:
The Company has contractual obligations to purchase
goods from its contract manufacturerb.Operating lease commitment:
(i)The Company operates from leased facilities in Israel, the United States and Germany. These leases expire between 2021 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 between 2021 and 2023. A subset of our car leases is considered variable. The variable lease payments for such car leases are based on actual mileage incurred at the stated contractual rate. RRL and RRG have an option to be released from these agreements, which may result in penalties in a maximum amount of approximately $24 thousand as of June 30, 2021.
The Company's future lease payments for its facilities and cars, which are presented as current maturities of operating leases and non-current operating leases liabilities on the Company's condensed consolidated balance sheets as of June 30, 2021, are as follows (in thousands):
2021 | $ | 343 | ||
2022 | 664 | |||
2023 | 481 | |||
Total lease payments | 1,488 | |||
Less: imputed interest | (186 | ) | ||
Present value of future lease payments | 1,302 | |||
Less: current maturities of operating leases | (640 | ) | ||
Non-current operating leases | $ | 662 | ||
Weighted-average remaining lease term (in years) | 2.22 | |||
Weighted-average discount rate | 12.6 | % |
Lease expense under the Company’s operating leases were $178 thousand and $217 thousand for the three months ended June 30, 2021, and 2020, respectively. For the six months ended June 30, 2021, and 2020 the lease expense were $364 thousand and $400 thousand, respectively.
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REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
c.Royalties:
The Company’s research and development efforts are financed, in part, through funding from the Israel Innovation Authority (the(the “IIA”) (formerly known asand 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 researchIsrael-U.S. Binational Industrial Research and development efforts.Development Foundation (“BIRD”). Since the Company’s inception through SeptemberJune 30, 2017,2021, 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 bearingroyalty-bearing grants (as of SeptemberJune 30, 2017,2021, the Company paid royalties to the IIA in the total amount of $50$99 thousand), while a total amount of $400 thousand was received in consideration of 5,237209 convertible preferred A shares, which were 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 Exclusive License Agreement between the Company and Harvard requires the Company to pay Harvard royalties on net sales. See note 6 below for more information about the Collaboration Agreement and the License Agreement.
Royalties expenses in cost of revenue were $6 and $0 thousand for the three months ended June 30, 2021 and 2020, respectively. For the six months ended June 30, 2021, and 2020, the royalties expenses were $6 thousand and $3 thousand, respectively.
As of SeptemberJune 30, 2017,2021, the contingent liability to the IIA amounted to $1.1$1.6 million.
(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 fiscal year ended December 31, 2016, filed withsale of the SEC on February 17, 2017,grant recipient itself, as amended on Form 10-K/A filed with the SEC on April 27, 2017 (the “2016 Form 10-K”),case may be, which portion will not exceed six times the Company isamount 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 to the Loan Agreement with Kreos pursuant to which Kreos extended a $20 million linein exchange for its IIA-funded know-how; (c) such transfer of credit to the Company. InIIA-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 Loan Agreement,grant recipient.
d.Liens:
As part of 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.
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REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
e.Legal Claims:
Occasionally, the Company is involved in various claims such as product liability claims, lawsuits, regulatory examinations, investigations, and other legal matters arising, for the most part, in the ordinary course of business. 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 our 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.
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REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 6:- LOAN AGREEMENT WITH KREOS AND RELATED WARRANT TO PURCHASE ORDINARY SHARES
On May 16, 2016, the Company entered into a Research Collaboration Agreement (“Collaboration Agreement”) and an Exclusive 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”) with Harvard.
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 installmentspaying for the funding of this research in quarterly installments, subject to a minimum funding commitment under applicable circumstances. The Collaboration Agreement will expire on MayFebruary 16, 2021.
Under the 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.
The Company'sCompany’s total payment obligation under the Collaboration Agreement and the Harvard License Agreement is $6.3was $7.2 million as of the initial date, some of which iswas subject to a minimum funding commitment under applicable circumstances as indicated above.
The Company has recorded expenses in the amount of $465$162 thousand and $267$202 thousand duringfor the three months period ended SeptemberJune 30, 20172021, and September2020, respectively. For the six months ended June 30, 2016 respectively. The Company has recorded expenses in2021, and 2020 the amount of $1.2 millionexpense were $320 thousand and $1.3 million during the nine months period ended September 30, 2017 and September 30, 2016 respectively. Those expenses$424 thousand, respectively which are part of the total payment obligation indicated above, as research and development expenses related to the License Agreement and to the Collaboration Agreement. 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.
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REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 8:- 7:SHAREHOLDERS’ EQUITY
a.Share option plans:
As of SeptemberJune 30, 2017,2021, and December 31, 2016,2020, the Company had reserved 602,158
Options to purchase ordinary shares generally vest over four years, with certain options to non-employee directors vesting quarterly over one year. Any option that is forfeited or canceled before expiration becomes available for future grants under the 2014 Plan.
There were no options granted during the ninesix months ended SeptemberJune 30, 20172021, and September 30, 2016 was estimated at the date of the grant using a Black-Scholes-Merton option pricing model with the following assumptions:
| 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 employeeemployees and non-employees share options to purchase ordinary shares and RSUsactivity during the ninesix months ended SeptemberJune 30, 20172021, is as follows:
Number | Average exercise price | Average remaining contractual life (in years) | Aggregate intrinsic value (in thousands) | |||||||||||||
Options outstanding at the beginning of the period | 69,606 | $ | 37.90 | 5.59 | $ | 0— | ||||||||||
Granted | 0— | 0— | — | — | ||||||||||||
Exercised | 0— | 0— | — | — | ||||||||||||
Forfeited | (5,563 | ) | 33.64 | — | — | |||||||||||
Options outstanding at the end of the period | 64,043 | $ | 38.31 | 5.08 | $ | 0— | ||||||||||
| ||||||||||||||||
Options exercisable at the end of the period | 53,547 | $ | 42.71 | 4.65 | $ | 0— | ||||||||||
| 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 period | 2,251,014 | $ | 6.47 | 7.80 | $ | 1,740 | ||||||
| Options granted | 413,746 | 2.01 | ||||||||||
| RSUs granted | 230,484 | — | ||||||||||
| 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 period | 2,592,398 | $ | 5.39 | 7.45 | $ | 578 | ||||||
| Options exercisable at the end of the period | 1,272,727 | $ | 6.12 | 6.46 | $ | 64 | ||||||
A summary of options grantedemployees and non-employees RSUs activity during the ninesix months ended SeptemberJune 30, 2017 and September 30, 2016 was $1.10 and $4.75, respectively. 2021, is as follows:
Number of shares underlying outstanding RSUs | Weighted average grant date fair value | |||||||
Unvested RSUs at the beginning of the period | 1,251,311 | $ | 1.69 | |||||
Granted | 583,216 | 1.75 | ||||||
Vested | (132,571 | ) | 2.24 | |||||
Forfeited | (106,370 | ) | 1.57 | |||||
Unvested RSUs at the end of the period | 1,595,586 | $ | 1.60 | |||||
The weighted average grant date fair value of RSUs granted during the nine month periodsix months ended SeptemberJune 30, 20172021, and September 30, 20162020 was $2.01$1.75 and $9.28,$2.23, respectively.
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REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The aggregate intrinsic value in the table above represents the total intrinsic value that would have been received by the option holders had all option holders that hold options with positive intrinsic value exercised their options on the last date of the exercise period. Total intrinsic value ofNo options were exercised for each ofduring the ninesix months ended SeptemberJune 30, 20172021, and SeptemberJune 30, 2016 was $29 thousand and $844 thousand respectively.2020. As of SeptemberJune 30, 2017,2021, there were $5.1$2.3 million 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 2.13.05 years.
The number of options and RSUs outstanding as of SeptemberJune 30, 20172021, 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.
Range of exercise price | Options and RSUs outstanding as of June 30, 2021 | Weighted average remaining contractual life (years) (1) | Options outstanding and exercisable as of June 30, 2021 | Weighted average remaining contractual life (years) (1) | ||||||||||||
RSUs only | 1,595,586 | — | 0— | — | ||||||||||||
$5.37 | 12,425 | 7.75 | 6,989 | 7.75 | ||||||||||||
$20.42 - $33.75 | 32,905 | 4.71 | 27,845 | 4.32 | ||||||||||||
$37.14 - $38.75 | 9,316 | 2.48 | 9,316 | 2.48 | ||||||||||||
$50 - $52.5 | 6,731 | 5.97 | 6,731 | 5.97 | ||||||||||||
$182.5 - $524.25 | 2,666 | 4.20 | 2,666 | 4.20 | ||||||||||||
1,659,629 | 5.08 | 53,547 | 4.65 | |||||||||||||
(1) | ||
| 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 | |||||||||
Calculation of weighted average remaining contractual term does not include the RSUs that were granted, which have an indefinite contractual term. |
b.Share-based awards to non-employee consultants:
As of SeptemberJune 30, 2017,2021, there are no outstanding options or RSUs held by non-employee consultants.
19
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
c.Warrants to purchase ordinary shares:
The following table summarizes information about warrants outstanding and exercisable as of SeptemberJune 30, 2017:2021:
Warrants | ||||||||||||||||
Warrant | Exercise price per | outstanding and | Contractual | |||||||||||||
Issuance date | outstanding | warrant | exercisable | term | ||||||||||||
(number) | (number) | |||||||||||||||
December 31, 2015 (1) | 4,771 | $ | 7.500 | 4,771 | See footnote (1) | |||||||||||
November 1, 2016 (2) | 97,496 | $ | 118.750 | 97,496 | November 1, 2021 | |||||||||||
December 28, 2016 (3) | 1,908 | $ | 7.500 | 1,908 | See footnote (1) | |||||||||||
November 20, 2018 (4) | 126,839 | $ | 7.500 | 126,839 | November 20, 2023 | |||||||||||
November 20, 2018 (5) | 106,680 | $ | 9.375 | 106,680 | November 15, 2023 | |||||||||||
February 25, 2019 (6) | 45,600 | $ | 7.187 | 45,600 | February 21, 2024 | |||||||||||
April 5, 2019 (7) | 408,457 | $ | 5.140 | 408,457 | October 7, 2024 | |||||||||||
April 5, 2019 (8) | 49,015 | $ | 6.503 | 49,015 | April 3, 2024 | |||||||||||
June 5, 2019, and June 6, 2019 (9) | 1,464,665 | $ | 7.500 | 1,464,665 | June 5, 2024 | |||||||||||
June 5, 2019 (10) | 87,880 | $ | 9.375 | 87,880 | June 5, 2024 | |||||||||||
June 12, 2019 (11) | 416,667 | $ | 6.000 | 416,667 | December 12, 2024 | |||||||||||
June 10, 2019 (12) | 50,000 | $ | 7.500 | 50,000 | June 10, 2024 | |||||||||||
February 10, 2020 (13) | 28,400 | $ | 1.250 | 28,400 | February 10, 2025 | |||||||||||
February 10, 2020 (14) | 105,840 | $ | 1.5625 | 105,840 | February 10, 2025 | |||||||||||
July 6, 2020 (15) | 448,698 | $ | 1.76 | 448,698 | July 2, 2025 | |||||||||||
July 6, 2020 (16) | 296,297 | $ | 2.2781 | 296,297 | July 2, 2025 | |||||||||||
December 3, 2020 (17) | 586,760 | $ | 1.34 | 586,760 | June 8, 2026 | |||||||||||
December 3, 2020 (18) | 108,806 | $ | 1.7922 | 108,806 | June 8, 2026 | |||||||||||
February 26, 2021 (19) | 5,460,751 | $ | 3.6 | 5,460,751 | August 26, 2026 | |||||||||||
February 26, 2021 (20) | 655,290 | $ | 4.5781 | 655,290 | August 26, 2026 | |||||||||||
10,550,820 | 10,550,820 | |||||||||||||||
(1) | ||
| Issuance date | Warrants 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 | ||||||||||
Represents warrants |
| 2021. | |
(2) | Represents warrants issued as part of |
| At any time, the Company’s board of directors may reduce the exercise price of the warrants to any amount and for any period of time it deems appropriate. | |
(3) | Represents |
20
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(4) | Represents warrants for ordinary shares that were issued as part of the Company’s follow-on offering in November 2018. | |
(5) | Represents warrants for ordinary shares that were issued to the underwriters as compensation for their role in the Company’s follow-on offering in November 2018. | |
(6) | Represents warrants for ordinary shares that were issued to the exclusive placement agent as compensation | |
(7) | Represents warrants for ordinary shares that were issued to certain institutional purchasers in a private placement in the Company’s registered direct offering of ordinary shares in April 2019. | |
(8) | Represents warrants for ordinary shares that were issued to the placement agent as compensation for its role in the Company’s April 2019 registered direct offering. | |
(9) | Represents warrants for ordinary shares that were issued to certain institutional investors in a warrant exercise agreement on June 5, 2019, and | |
(10) | Represents warrants for ordinary shares that were issued to the placement agent as compensation for its role in the Company’s June 2019 warrant exercise agreement and concurrent private placement of warrants. | |
(11) | Represents warrants for ordinary shares that were issued to certain institutional investors in a warrant exercise agreement in June 2019. | |
(12) | Represents warrants for ordinary shares that were issued to the placement agent as compensation for its role in the Company’s June 2019 registered direct offering and concurrent private placement of warrants. | |
(13) | Represents warrants for ordinary shares that were issued to certain institutional purchasers in a private placement in the Company’s best efforts offering of ordinary shares in February 2020. During the six months ended June 30, 2021, 3,740,100 warrants were exercised for total consideration of $4,675,125. | |
(14) | Represents warrants for ordinary shares that were issued to the placement agent as compensation for its role in the Company’s February 2020 best efforts offering. During the six months ended June 30, 2021, 230,160 warrants were exercised for total consideration of $359,625. | |
(15) | Represents warrants for ordinary shares that were issued to certain institutional purchasers in a private placement in our registered direct offering of ordinary shares in July 2020. During the six months ended June 30, 2021, 2,020,441 warrants were exercised for total consideration of $3,555,976. | |
(16) | Represents warrants for ordinary shares that were issued to the placement agent as compensation for its role in the Company’s July 2020 registered direct offering. | |
(17) | Represents warrants for ordinary shares that were issued to certain institutional purchasers in a private placement in our private placement offering of ordinary shares in December 2020. During the six months ended June 30, 2021, 3,598,072 warrants were exercised for total consideration of $4,821,416. | |
(18) | Represents warrants for ordinary shares that were issued to the placement agent as compensation for its role in the Company’s December 2020 private placement. During the six months ended June 30, 2021, 225,981 warrants were exercised for total consideration of $405,003. | |
(19) | Represents warrants for ordinary shares that were issued to certain institutional purchasers in a private placement in our private placement offering of ordinary shares in February 2021. | |
(20) | Represents warrants for ordinary shares that were issued to the placement agent as compensation for its role in the Company’s February 2021 private placement. |
21
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
d.Share-based compensation expense for employees and non-employees:
The Company recognized non-cash share-based compensation expense for both employees and non-employees in the condensed consolidated statements of operations for the periods shown below as follows (in thousands):
Six Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
Cost of revenues | $ | 4 | $ | 4 | ||||
Research and development | 14 |
| 74 | |||||
Sales and marketing | 77 | 48 | ||||||
General and administrative | 273 | 186 | ||||||
Total | $ | 368 | $ | 312 | ||||
e.Equity raise:
1.Follow-on offerings and warrants exercise:
On February 19, 2021, the Company entered into a purchase agreement with certain institutional and other accredited investors for the issuance and sale of 10,921,502 ordinary shares, par value NIS 0.25 per share at $3.6625 per ordinary share and warrants to purchase up to an aggregate of 5,460,751 ordinary shares with an exercise price of $3.6 per share, exercisable from February 19, 2021, until August 26, 2026. Additionally, the Company issued warrants to purchase up to 655,290 ordinary shares, with an exercise price of $4.578125 per share, exercisable from February 19, 2021, until August 26, 2026, to certain representatives of H.C. Wainwright & Co., LLC (“H.C. Wainwright”) as compensation for its role as the placement agent in our February 2021 private placement offering.
During the six months ended June 30, 2021, a total of 9,814,754 outstanding warrants with exercise prices ranging from $1.25 to $1.79 were exercised, for total gross proceeds of approximately $13.8 million.
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 and six months ended June 30, 2020, a total of 1,246,500 outstanding warrants with an exercise price of $1.25 were exercised, for total gross proceeds of approximately $1.6 million.
22
| Nine Months Ended September 30, | |||||||
| 2017 | 2016 | ||||||
| Cost of revenues | $ | 57 | $ | 78 | |||
| Research and development, net | 344 | 398 | |||||
| Sales and marketing, net | 585 | 606 | |||||
| General and administrative | 1,611 | 1,376 | |||||
| Total | $ | 2,597 | $ | 2,458 | |||
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 9:- 8:FINANCIAL EXPENSES, NET
The components of financial expenses, net were as follows (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Foreign currency transactions and other | $ | (14 | ) | $ | (19 | ) | $ | (28 | ) | $ | (92 | ) | ||||
Financial expenses related to loan agreement with Kreos | 0— | 249 | 0— | 559 | ||||||||||||
Bank commissions | 5 | 5 | 15 | 14 | ||||||||||||
$ | (9 | ) | $ | 235 | $ | (13 | ) | $ | 481 | |||||||
| 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 Kreos | 510 | 495 | 1,932 | 1,462 | |||||||||||
| Bank commissions | 6 | 5 | 24 | 28 | |||||||||||
| Income related to hedging transactions | — | (9 | ) | — | (36 | ) | |||||||||
| $ | 479 | $ | 508 | $ | 1,843 | $ | 1,514 | ||||||||
NOTE 10:- 9:GEOGRAPHIC INFORMATION AND MAJOR CUSTOMER AND PRODUCT DATA
Summary information about geographic 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 one1 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):
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Revenues based on customer’s location: | ||||||||||||||||
United States | $ | 654 | $ | 631 | $ | 1,130 | $ | 847 | ||||||||
Europe | 726 | 1,035 | 1,563 | 1,577 | ||||||||||||
Asia-Pacific | 55 | 2 | 57 | 4 | ||||||||||||
Africa | 1 | 0— | 2 | 0— | ||||||||||||
Total revenues | $ | 1,436 | $ | 1,668 | $ | 2,752 | $ | 2,428 | ||||||||
23
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Revenues based on customer’s location: | |||||||||||||||
| Israel | $ | — | $ | — | $ | — | $ | — | |||||||
| United States | 801 | 710 | 4,242 | 2,976 | |||||||||||
| Europe | 931 | 404 | 1,996 | 908 | |||||||||||
| Asia-Pacific | — | 286 | — | 394 | |||||||||||
| Total revenues | $ | 1,732 | $ | 1,400 | $ | 6,238 | $ | 4,278 | |||||||
| September 30, | December 31, | ||||||
| 2017 | 2016 | ||||||
| Long-lived assets by geographic region (*): | |||||||
| Israel | $ | 330 | $ | 476 | |||
| United States | 361 | 565 | |||||
| Germany | 215 | 217 | |||||
| $ | 906 | $ | 1,258 | ||||
| September 30, | December 31, | ||||
| 2017 | 2016 | ||||
| Customer A | 42.6 | % | 33.3 | % | |
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Long-lived assets by geographic region (*): | ||||||||
Israel | $ | 794 | $ | 953 | ||||
United States | 628 | 790 | ||||||
Germany | 49 | 43 | ||||||
$ | 1,471 | $ | 1,786 | |||||
*) | Long-lived assets are comprised of property and equipment, net, and operating lease right-of-use assets. |
Six Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
Major customer data as a percentage of total revenues: | ||||||||
Customer A | 0* | ) | 10.3 | % | ||||
*) | Less than 10%. |
24
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 2016 Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”) as filed with the SEC.SEC on February 18, 2021. 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:
•
the adverse effect that the COVID-19 pandemic has had and may continue to have on our business and results of operations;
•
our ability to have sufficient funds to meet certain future capital requirements, which could impair our efforts to develop and commercialize existing and new products;
•
our ability to maintain compliance with the continued listing requirements of the Nasdaq Capital Market and the risk that our ordinary shares will be delisted if we cannot do so;
•
our expectations regarding future growth, including our ability to increase sales in our existing geographic markets and expand to new markets and achieve our planned expense reductions;
•
our ability to maintain and grow our reputation and the market acceptance of our products;
•
our ability to achieve reimbursement from third-party payors or advance CMS coverage for our products;
•
our limited operating history and our ability to leverage our sales, marketing and training infrastructure;
•
our expectations as to our clinical research program and clinical results;
•
our ability to obtain certain components of our products from third-party suppliers and our continued access to our product manufacturers;
•
our ability to improve our products and develop new products;
•
our compliance with medical device reporting regulations to report adverse events involving our products, which could result in voluntary corrective actions or enforcement actions such as mandatory recalls, and the potential impact of such adverse events on ReWalk’s ability to market and sell its products;
•
our ability to gain and maintain regulatory approvals;
•
our expectations as to the results of and Food and Drug Administration’s (the "FDA")the FDA, potential
•
the outcomerisk of ongoing shareholder class action litigation relating toa cybersecurity attack or breach of our IPO;
•
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;
•
the impact of limitations undersubstantial sales of our Form S-3,
•
our ability to use effectively the proceeds of anyour offerings of securities;
•
the risk of substantial dilution resulting from the periodic issuances 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;
•
market and sell its products.other conditions; and
•
other factors discussed in “Part II. Item 1A. Risk Factors.”
25
The preceding list is not intended to be an exhaustive list of all of our forward-looking statements. The statements are based on our beliefs, assumptions, and expectations of future performance, taking into account the information currently available to us. These statements are only predictions based upon our current expectations and projections about future events. There are important factors that could cause our actual results, levels of activity, performance, or achievements to differ materially from the results, levels of activity, performance or achievements expressed or implied by the forward-looking statements. In particular, you should consider the risks provided under “Part 1, Item 1A. Risk Factors” of our 20162020 Form 10-K, and in other reports subsequently filed by us with, or furnished to, the SEC.
You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur.
Any forward 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.
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 SCI Products, ReWalk an exoskeleton that usesPersonal and ReWalk Rehabilitation devices, which are exoskeletons designed for individuals with spinal cord injuries,and for individuals with paraplegia. The SCI Products use 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 our ReStore device, which we began commercializing 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. During the abilitysecond quarter of 2020, we finalized and moved to standimplement two separate agreements to distribute additional product lines in the United States. The Company is the exclusive distributor of the MediTouch Tutor movement biofeedback systems in the United 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 designedwill also have distribution rights for the clinicalMYOLYN MyoCycle FES cycles to U.S. rehabilitation environment where it provides valuable exerciseclinics and therapy. It also enables individualspersonal sales through the U.S. Department of Veterans Affairs (“VA”) hospitals and other personal sales. These Distributed Products will improve our product offering to evaluate their capacity for using ReWalk Personal inclinics as well as patients within the future.
Our principal markets are the end of 2012United States 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 approvalMarlborough, Massachusetts, Berlin, Germany and Yokneam, Israel, from the applicable regulatory agencies in other jurisdictions where we seek to market ReWalk.
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(including private and government employers,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. InAs of June 30, 2021, we had placed 24 ReWalk Personal 6.0 units as part of a VA policy issued in December 2015 the Veterans' Administration (the “VA”) issued a national policy for the evaluation, training, and procurement of ReWalk Personal exoskeleton systems for all qualifying veterans suffering from spinal cord injury across the United States. The VA policy is
According to a 2017 report published by the first nationalCenters for Medicare and Medicaid 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 Personal 6.0 (effective October 1, 2020), which might later be followed by coverage policy in the United States for qualifying individuals who have suffered spinal cord injury. As of September 30, 2017, we had placed 16 units as part of the VA policy. We also regularly assist in litigation efforts by individuals bringing claims against national and regional insurers for reimbursement of the ReWalk device, and have received and expect to receive revenues from settlements or judgments paid to the insured users. 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
26
Second Quarter 2021 and Subsequent Period Business Highlights
•
Total revenue in the second quarter of 2021 was $1.4 million;
•
Second quarter 2021 marks the fourth consecutive quarter over quarter growth;
•
Gross margin was 51% in the second quarter of 2021;
•
Total operating expenses were $3.9 million in the second quarter of 2021;
•
Cash position remains strong with $64.2 million;
•
Additional five BKK partners have joined the operating contract in Germany and
•
Jeannine Lynch will join the Company as its VP of strategy and market access on August 31, 2021.
Evolving COVID-19 Pandemic
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 many countries in Europe, have placed significant restrictions on travel, and many businesses have announced extended closures. Although many of these countries or the locales within these countries have begun to allow reopening of certain businesses, particularly due to the distribution of vaccinations, it is unclear how long any total or partial shutdowns could last, and whether additional shutdowns will be necessary to halt potential future outbreaks especially as new variants such as the Delta variant are emerging, and they might impact the vaccine efficiency.
The COVID-19 pandemic has affected our ability to engage with our SCI Products, ReStore and Distributed Products existing customers, conduct trials of new product candidates, 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 sales and results of operations were adversely impacted. We believe that these adverse impacts may continue as long as the pandemic status remains in our key markets in the United States and Germany, especially as long as our ability to conduct trials of new patients is limited or if our existing customers can’t train with our SCI Products and as long as capital budgets for all qualifying beneficiaries.
In addition, 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.
During the pandemic, we have implemented remote working procedures 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.
Results of Operations for the Three and NineSix Months Ended SeptemberJune 30, 20172021 and SeptemberJune 30, 2016
Our operating results for the three and ninesix months ended SeptemberJune 30, 2017,2021, as compared to the same periods in 2016,2020, are presented below. T
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Revenues | $ | 1,436 | $ | 1,668 | $ | 2,752 | $ | 2,428 | ||||||||
Cost of revenues | 709 | 646 | 1,318 | 1,033 | ||||||||||||
| ||||||||||||||||
Gross profit | 727 | 1,022 | 1,434 | 1,395 | ||||||||||||
| ||||||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 810 | 954 | 1,605 | 1,939 | ||||||||||||
Sales and marketing | 1,613 | 1,353 | 3,284 | 3,034 | ||||||||||||
General and administrative | 1,445 | 1,267 | 2,707 | 2,576 | ||||||||||||
| ||||||||||||||||
Total operating expenses | 3,868 | 3,574 | 7,596 | 7,549 | ||||||||||||
| ||||||||||||||||
Operating loss | (3,141 | ) | (2,552 | ) | (6,162 | ) | (6,154 | ) | ||||||||
Financial expenses (income), net | (9 | ) | 235 | (13 | ) | 481 | ||||||||||
| ||||||||||||||||
Loss before income taxes | (3,132 | ) | (2,787 | ) | (6,149 | ) | (6,635 | ) | ||||||||
Taxes on income | 9 | 68 | 54 | 60 | ||||||||||||
| ||||||||||||||||
Net loss | $ | (3,141 | ) | $ | (2,855 | ) | $ | (6,203 | ) | $ | (6,695 | ) | ||||
| ||||||||||||||||
Net loss per ordinary share, basic and diluted | $ | (0.07 | ) | $ | (0.22 | ) | $ | (0.15 | ) | $ | (0.57 | ) | ||||
| ||||||||||||||||
Weighted average number of shares used in computing net loss per ordinary share, basic and diluted | 46,123,222 | 13,101,275 | 41,210,527 | 11,744,275 | ||||||||||||
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| 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 revenues | 1,024 | 1,110 | 3,740 | 3,410 | |||||||||||
| Gross profit | 708 | 290 | 2,498 | 868 | |||||||||||
| Operating expenses: | |||||||||||||||
| Research and development, net | 1,618 | 1,968 | 4,433 | 6,737 | |||||||||||
| Sales and marketing | 2,637 | 3,774 | 8,643 | 10,577 | |||||||||||
| General and administrative | 1,805 | 1,951 | 5,796 | 5,960 | |||||||||||
| Total operating expenses | 6,060 | 7,693 | 18,872 | 23,274 | |||||||||||
| Operating loss | (5,352 | ) | (7,403 | ) | (16,374 | ) | (22,406 | ) | |||||||
| Loss on extinguishment of debt | — | — | 313 | — | |||||||||||
| Financial expenses, net | 479 | 508 | 1,843 | 1,514 | |||||||||||
| Loss before income taxes | (5,831 | ) | (7,911 | ) | (18,530 | ) | (23,920 | ) | |||||||
| Income taxes | 15 | 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 diluted | 21,660,757 | 12,759,887 | 18,463,444 | 12,495,433 | |||||||||||
Three and NineSix Months Ended SeptemberJune 30, 20172021 Compared to Three and NineSix Months Ended SeptemberJune 30, 2016
Revenues
Our revenues for the three and ninesix months ended SeptemberJune 30, 20172021, and 20162020 were as follows:
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
(in thousands, except unit amounts) | (in thousands, except unit amounts) | |||||||||||||||
Personal unit revenues | $ | 1,153 | $ | 1,667 | $ | 2,461 | $ | 2,381 | ||||||||
Rehabilitation unit revenues | 283 | 1 | 291 | 47 | ||||||||||||
| ||||||||||||||||
Revenues | $ | 1,436 | $ | 1,668 | $ | 2,752 | $ | 2,428 | ||||||||
| 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 placed | 15 | 20 | 81 | 75 | |||||||||||
| Rehabilitation units placed | 1 | 3 | 3 | 5 | |||||||||||
| Total units placed | 16 | 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 | |||||||
Personal unit revenues consist of ReWalk Personal 6.0 and Distributed Products sale, rental, service and warranty revenue for home use.
Rehabilitation unit revenues consist of ReStore, Distributed Products and SCI Products sale, rental, service and warranty revenue to clinics, hospitals for treating patients with relevant medical conditions.
Revenues increaseddecreased by $332$232 thousand, or 24%14%, for the three months ended SeptemberJune 30, 20172021, compared to the three months ended SeptemberJune 30, 2016. Revenues increased by $2.0 million, or 46%, for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016.2020. The increase in revenue was primarilydecrease is due to sales mix, including higher sales tolower number of personal units sold in Europe and the VA for use 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, andUnites States offset with an increase in the conversionnumber of rentalrehabilitation units into purchases.
Revenues increased by $324 thousand, or 13%, for the six months ended June 30, 2021, compared to the six months ended June 30, 2020. The increase was driven primarily by higher number of personal and rehabilitation units sold in Unites States.
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.
Gross Profit
Our gross profit for the three and ninesix months ended SeptemberJune 30, 20172021, and 20162020 were as follows (in thousands):
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Gross profit | $ | 727 | $ | 1,022 | $ | 1,434 | $ | 1,395 | ||||||||
| 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%51% of revenue for the three months ended SeptemberJune 30, 2017,2021, compared to 21% of revenue61% for the three months ended SeptemberJune 30, 2016.2020. Gross profit was 40%52% of revenue for the ninesix months ended SeptemberJune 30, 2017,2021, compared to 20% of revenue57% for the ninesix months ended SeptemberJune 30, 2016.2020. The increasedecrease in gross profit for the three and six months ended June 30, 2021, was mainly driven by change in sales mix the increase in the conversion of rental units into purchases and lower product costs.
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.
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Research and Development Expenses
Our research and development expenses, net, for the three and ninesix months ended SeptemberJune 30, 20172021, and 20162020 were as follows (in thousands):
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Research and development expenses | $ | 810 | $ | 954 | $ | 1,605 | $ | 1,939 | ||||||||
| 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 | |||||||
Research and development expenses net, decreased by $350$144 thousand, or 18%15%, for the three months ended SeptemberJune 30, 20172021, compared to the three months ended SeptemberJune 30, 2016.2020. Research and development expenses decreased $334 thousand, or 17%, for the six months ended June 30, 2021, compared to the six months ended June 30, 2020. The decrease in expenses is primarily attributable to a grant received from the IIA, which were credited to researchlower number of employees and developmentemployee-related expenses and a decrease in personnel costs and personnel-related costs,offset partially offset by an increase in costs related to development of the Restore device. Additionally, Research and development expenses, net, decreased $2.3 million, or 34%, for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. The decrease in expenses is primarily attributable to a one-time charge 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.
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.
Sales and Marketing Expenses
Our sales and marketing expenses for the three and ninesix months ended SeptemberJune 30, 20172021, and 20162020 were as follows (in thousands):
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Sales and marketing expenses | $ | 1,613 | $ | 1,353 | $ | 3,284 | $ | 3,034 | ||||||||
| 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,increased $260 thousand, or 30%19%, for the three months ended SeptemberJune 30, 20172021, compared to the three months ended SeptemberJune 30, 2016.2020. Sales and marketing expenses decreased $1.9 million,increased $250 thousand, or 18%8%, for the ninesix months ended SeptemberJune 30, 20172021, compared to the ninesix months ended SeptemberJune 30, 2016.2020. The decrease isincrease for the three and six months ended June 30, 2020, was driven mainly by lower personnela higher number of employees and personnel-related costs and consulting expenses as result of our recent cost reduction efforts.
In the near term our sales and marketing expenses are expected to be driven by our commercializationefforts to commercialize our current product offerings 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.
General and Administrative Expenses
Our general and administrative expenses for the three and ninesix months ended SeptemberJune 30, 20172021, and 20162020 were as follows (in thousands):
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
General and administrative expenses | $ | 1,445 | $ | 1,267 | $ | 2,707 | $ | 2,576 | ||||||||
| 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 $146increased $178 thousand, or 7%14%, for the three months ended SeptemberJune 30, 20172021, compared to the three months ended SeptemberJune 30, 2016.2020. General and administrative expenses decreased $164increased $131 thousand, or 5%, for the ninesix months ended SeptemberJune 30, 20172021, compared to the ninesix months ended SeptemberJune 30, 2016.2020. The decreaseincrease in expenses is primarily attributable to lower professional expensesthe three and personnel-related costs.
Financial Expenses, Net
Our financial expenses, net, for the three and ninesix months ended SeptemberJune 30, 20172021, and 20162020 were as follows (in thousands):
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Financial expenses (income), net | $ | (9 | ) | $ | 235 | $ | (13 | ) | $ | 481 | ||||||
| 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$244 thousand, or 6% for the three months ended SeptemberJune 30, 20172021, compared to the three months ended SeptemberJune 30, 2016.2020. Financial expenses, net, increased $329decreased $494 thousand, or 22% for the ninesix months ended SeptemberJune 30, 20172021, compared to the ninesix months ended SeptemberJune 30, 2016. This increase with respect2020. The decrease is mainly due to the nine-month period is attributable mainly tolower interest expenses related to ourthe Loan Agreement with Kreos.
Income Tax
Our income tax for the three and ninesix months ended SeptemberJune 30, 20172021, and 20162020 was as follows (in thousands):
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Taxes on income | $ | 9 | $ | 68 | $ | 54 | $ | 60 | ||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Income tax | $ | 15 | $ | 9 | $ | 25 | $ | 39 | |||||||
Taxes on income decreased $59 thousand or 87% for the three months ended SeptemberJune 30, 20172021, compared to the three months ended SeptemberJune 30, 2016. Income taxes2020. Taxes on income decreased $14$6 thousand or 10% for the ninesix months ended SeptemberJune 30, 20172021, compared to the ninesix months ended SeptemberJune 30, 2016.
Critical Accounting Policies and Estimates
Our condensed consolidated financial statements are prepared in accordance with United StatesU.S. GAAP. The preparation of our condensed 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 condensed financial statements and related disclosures. See Note 2 to our audited consolidated financial statements included in our 20162020 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 20162020 Form 10-K,
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.
In the six months ended June 30, 2017,2021, the Company had cashincurred a consolidated net loss of $6.2 million and cash equivalentsas of $12.9 million. TheJune 30, 2021, the Company hadhas an accumulated deficit in the total amount of $125 million$187.6 million. Our cash and cash equivalents as of SeptemberJune 30, 20172021, were $64.2 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 uponnegative operating cash flow for the Company obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due.
We expect to reflectincur future net losses and our transition to profitability is dependent upon, among other things, the possiblesuccessful development and commercialization of our products and product candidates, the achievement of a level of revenues adequate to support our cost structure. Until we achieve profitability or generate positive cash flows, we will continue to need to raise additional cash. We intend to fund future effectsoperations through cash on hand, additional private and/or public offerings of debt or equity securities, cash exercises of outstanding warrants or a combination of the recoverabilityforegoing. In addition, we may seek additional capital through arrangements with strategic partners or from other sources and classification of assetswe will continue to address our cost structure. Notwithstanding, there can be no assurance that we will be able to raise additional funds or the amounts and classification of liabilities that may resultachieve or sustain profitability or positive cash flows from uncertainty related to the Company’s ability to continue as a going concern.
Our anticipated primary uses of cash areare: (i) sales, marketing and reimbursement expenses related to market development activities of our ReStore and Personal 6.0 devices, broadening third-party payor and CMS coverage for our ReWalk Personal device and commercializing our new product lines added through distribution agreements; (ii) research and development costs related to developingof our lightweight “soft suit” exoskeletonexo-suit technology for various lower limb disabilities,potential home personal health utilization for multiple indications and future generation designs for our spinal cord injury device; (iii) routine product updates; and (iv) general corporate purposes, including stroke and other indications affecting the abilityworking capital needs. We may also use such proceeds for potential acquisitions, although we do not currently have any agreement or understanding with respect to walk.an acquisition in which we plan to invest such proceeds. 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 Agreement with Kreos pursuant to which Kreos extended a line of credit to us in the amount of $20.0 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 iswith interest payable monthly in arrears on any amounts drawn down at a rate of 10.75% per year from the applicable drawdown date through the date on which all principal is repaid. As of June 30, 2017, the Company raised more than $20$20.0 million in connection with the issuance of its share capital and, therefore, in accordance with the terms of the Loan Agreement, the repayment period was extended from 24 months to 36 months. The principal was also reduced in connection with the issuance of the Kreos Convertible Note on June 9, 2017. Pursuant to the Loan Agreement, we 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 of loan payment 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.
Pursuant to the terms of the warrant, in connection with the $12.0$20.0 million drawdown under the Loan Agreement on January 4, 2016, 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 ourincreased to 6,679 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 167,012 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.2016. Subject to the terms of the warrant, the warrant is exercisable, in whole or in part, at any time prior to the earlier of (i) December 30, 2025, or (ii) immediately prior to the consummation of a merger, consolidation, or reorganization of us with or into, or the sale or license of all or substantially all our assets or shares to, any other entity or person, other than a wholly- ownedwholly-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.
32
On June 9, 2017, the Company and Kreos entered into the First Amendment. As of that date the outstanding principal amountAmendment, under the Loan Agreement was $17.2 million, Under the First Amendment,which $3.0 million of the outstanding principal under the Loan Agreement isbecame subject to repayment pursuant to the senior secured Kreos Convertible Note issued on June 9, 2017, thus reducing2017.
On November 20, 2018, the Company and Kreos entered into the Second Amendment of the Loan Agreement, in which the Company repaid Kreos the $3.6 million other related payments, including prepayment costs and end of loan payments, terminating the Kreos Note, by issuing to Kreos 192,000 units and 288,000 pre-funded units as part of an underwritten public offering at the public offering prices, and the parties agreed to revise the principal and the repayment schedule under the Kreos Loan. Additionally, Kreos and the Company entered into the Kreos Warrant Amendment, which amended the exercise price of the warrant to purchase 6,679 ordinary shares currently held by Kreos from $241 to $7.5.
On June 5, 2019, and June 6, 2019, the Company entered into warrant exercise agreements with certain institutional investors of warrants to purchase the Company’s ordinary shares, pursuant to which, Kreos agreed to exercise in cash their November 2018 warrants at the then-effective exercise price of $7.50 per share. Under the exercise agreements, the Company also agreed to issue to Kreos new warrants to purchase up to 480,000 ordinary shares at an exercise price of $7.50 per share with an exercise period of five years.
On December 29, 2020, the Company repaid in full the remaining loan principal amount to Kreos including end of loan payments and by that discharged all of its obligation to Kreos Accordingly, as of December 31, 2020, the outstanding principal amount under the Kreos Loan Agreement was zero.
Paycheck Protection Program Loan Agreement
On April 21, 2020, RRI entered into a note agreement (the “Note”) evidencing an unsecured loan in the amount of $392 thousand under the Paycheck Protection Program (the “PPP”) as part of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) enacted on March 27, 2020. The Note provides for an interest rate of 1.00% per year and matures two years after the date of initial disbursement. Beginning on the seventh month following the date of initial disbursement, RRI is required to $14.2 million asmake 18 monthly payments of June 9, 2017. This amended outstanding principal amount remainsand 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 repaymentlimitations, 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 accordanceany regulations and guidelines the Small Business Administration may adopt.
On September 29, 2020, the Company submitted an application for loan forgiveness and on November 6, 2020, the Company received confirmation of its PPP Note forgiveness.
Equity Raises
Form S-3 Limitations
Beginning with the terms and conditionsfiling 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.
33
Equity Offerings and Subsequent Warrant Exercises
On November 20, 2018, the Company completed a follow-on underwritten public offering in which the Company issued and sold 728,019 units, each consisting of one ordinary share and one warrant to purchase one ordinary share. Each unit was sold to the public at a discountprice of $7.5 per unit, additionally the Company issued and sold 1,050,373 pre-funded units, each unit was sold to the market valuepublic at a price of our$7.25 per unit. Each unit containing one pre-funded warrant with an exercise price of $0.25 per share and one warrant to purchase one ordinary share. The total gross proceeds received from the follow-on public offering, before deducting commissions, discounts, and expenses, were $13.1 million (including proceeds from the exercise of 90,691 pre-funded warrants at the closing of the offering). As of December 31, 2018, additional pre-funded warrants to purchase an aggregate 562,466 ordinary shares had been exercised, for additional proceeds of $140,617. During the nine months ended September 30, 2019, additional pre-funded warrants and warrants to purchase an aggregate 2,048,752 ordinary shares had been exercised, for additional proceeds of $12.4 million. As compensation for their role in the offering, the Company also issued to the underwriters warrants to purchase up to 106,680 ordinary shares, which could require shareholder approval underare immediately exercisable starting on November 20, 2018, until November 15, 2023, at $9.375 per share.
On February 15, 2019, the rulesCompany entered into an exclusive placement agent Agreement with H.C. Wainwright, on a reasonable best-efforts basis in connection with a public offering of 760,000 ordinary shares at a price of $5.75 per Share. The total gross proceeds received from the follow-on public offering, before deducting commissions, discounts, and expenses, were $4.37 million. The Company also issued to H.C. Wainwright and/or its designees warrants to purchase up to 45,600 ordinary shares, which are immediately exercisable starting on February 25, 2019, until February 21, 2024, at $7.1875 per share.
On April 3, 2019, the Company entered into an exclusive placement agent Agreement with H.C. Wainwright in connection with a registered direct offering of the NASDAQ. Any such transactions could resultCompany’s ordinary shares, and a concurrent private placement of warrants to purchase ordinary shares. The ordinary shares were offered pursuant to our Form S-3. The Company signed a purchase agreement with certain institutional investors for the issuance and sale of 816,914 ordinary shares at $5.2025 per ordinary share and warrants to purchase up to 408,457 ordinary shares at an exercise price of $5.14. The warrants issued to these purchasers will be exercisable at any time and from time to time, in substantial dilutionwhole or in part, following the date of shareholders’ interests.issuance and ending five and one-half years from the date of issuance, at an exercise price of $5.14. The Company also issued to H.C. Wainwright and/or its designees warrants to purchase up to 49,015 ordinary shares. The warrants issued to H.C. Wainwright will be exercisable at any time and from time to time, in whole or in part, following the date of issuance and ending five years from the date of the execution of the purchase agreement, at a price per share equal to $6.503125. The gross proceeds from the offering, before deducting placement agent fees and offering expenses, were approximately $4.25 million.
On June 5, 2019, and June 6, 2019, the Company entered into warrant exercise agreements with certain institutional investors whereby the Company issued warrants to purchase up to 1,464,665 ordinary shares with an exercise price of $7.50 per share, exercisable from June 5, 2019, or June 6, 2019, until June 5, 2024, or June 6, 2024, respectively. Additionally, the Company issued warrants to purchase up to 87,880 ordinary shares, with an exercise price of $9.375 per share, exercisable from June 5, 2019, until June 5, 2024, to certain representatives of H.C. Wainwright as compensation for its role as the placement agent in our June 2019 warrant exercise agreement and concurrent private placement of warrants.
On June 12, 2019, the Company entered into a purchase agreement with certain institutional investors for the issuance and sale of 833,334 ordinary shares, at $6.00 per ordinary share and warrants to purchase up to 416,667 ordinary shares with an exercise price of $6.00 per share, exercisable from June 12, 2019, until December 12, 2024, in a private placement that took place concurrently with our registered direct offering of ordinary shares in June 2019. Additionally, the Company issued warrants to purchase up to 50,000 ordinary shares, with an exercise price of $7.50 per share, exercisable from June 12, 2019, until June 10, 2024, to certain representatives of H.C. Wainwright as compensation for its role as the placement agent in our June 2019 registered direct offering and concurrent private placement of warrants.
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On February 10, 2020, the Company closed a “best efforts” public offering whereby the Company issued an aggregate of 5,600,000 of common units and pre-funded units at a public offering price of $1.25 per common unit and $1.249 per pre-funded unit. As part of the public offering, the Company entered into a securities purchase agreement with certain institutional purchasers. Each common unit consisted of one ordinary share, and one common warrant to purchase one ordinary share. Each pre-funded unit consisted of one pre-funded warrant to purchase one ordinary share and one common warrant. Additionally, the Company issued warrants to purchase up to 336,000 ordinary shares, with an exercise price of $1.5625 per share, to representatives of H.C. Wainwright as compensation for its role as the placement agent in the Company’s February 2020 offering. As of December 31, 2020, all pre-funded warrants to purchase ordinary shares had been exercised and 1,831,500 common warrants to purchase ordinary shares had been exercised.
On July 6, 2020, the Company entered into a purchase agreement with certain institutional investors for the issuance and sale of 4,938,278 ordinary shares, at $1.8225 per ordinary share and warrants to purchase up to 2,469,139 ordinary shares with an exercise price of $1.76 per share, exercisable from July 6, 2020, until January 6, 2026. Additionally, the Company issued warrants to purchase up to 296,297 ordinary shares, with an exercise price of $2.2781 per share, exercisable from July 6, 2020, until July 2, 2025, to certain representatives of H.C. Wainwright as compensation for its role as the placement agent in our July 2020 registered direct offering.
On December 8, 2020, the Company entered into a private placement with certain institutional investors for the issuance and sale of 5,579,776 ordinary shares, at $1.43375 per ordinary and warrants to purchase up to 4,184,832 ordinary shares with exercise price of $1.34 per share, exercisable from December 8, 2020, until June 8, 2026. Additionally, the Company issued warrants to purchase up to 334,787 ordinary shares, with an exercise price of $1.7922 per share, exercisable from December 8, 2020, until June 8, 2026, to certain representatives of H.C. Wainwright as compensation for its role as the placement agent in our December 2020 private placement.
On February 19, 2021, the Company entered into a purchase agreement with certain institutional and other accredited investors for the issuance and sale of 10,921,502 ordinary shares, at $3.6625 per ordinary share and warrants to purchase up to an aggregate of 5,460,751 ordinary shares with an exercise price of $3.60 per share, exercisable from February 19, 2021, until August 26, 2026. Additionally, the Company issued warrants to purchase up to 655,290 ordinary shares, with an exercise price of $4.578125 per share, exercisable from February 19, 2021, until August 26, 2026, to certain representatives of H.C. Wainwright as compensation for its role as the placement agent in our February 2021 private placement offering.
ATM Offering Program
On May 10, 2016, we entered into our Equity Distribution Agreement with Piper Jaffray, as amended on May 9, 2019, 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 date that is three years after a new registration statement on Form S-3 goes effective, (iii) our becoming ineligible to use Form S-3 and (iv) termination of the Equity Distribution Agreement.Agreement by the parties. 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. DuringWe temporarily suspended use of the nine months ended September 30, 2017,ATM Offering Program on February 20, 2019 ("Date of Suspension"), to facilitate our February 2019 “best efforts” public offering. Until the Company issuedDate of Suspension, we had sold 302,092 ordinary shares under the ATM Offering Program for net proceeds to us of $14.5 million (after commissions, fees, and sold 5,379,908expenses). Additionally, until the Date of Suspension, we had paid Piper Jaffray compensation of $471 thousand and had incurred total expenses (including such commissions) of approximately $1.2 million in connection with the ATM Offering Program.
We intend to continue using the at-the-market offering or similar continuous offering programs opportunistically to raise additional funds, although we are currently subject to restrictions on using the ATM Offering Program with Piper Jaffray. Under our December 2020 purchase agreement with certain investors, we agreed for a period of one year following December 3, 2020 not to (i) issue or agree to issue equity or debt securities convertible into, or exercisable or exchangeable for, ordinary shares at an averagea conversion price, exercise price or exchange price which floats with the trading price of $1.76 per share under its ATM Offering Program (as definedthe ordinary 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, H.C. Wainwright, beginning on February 1, 2021. Such limitations may inhibit our ability to access capital efficiently.
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 Note 8e below). Thereturn for aggregate gross proceeds to us of $20 million, to issue to Timwell an aggregate of 640,000 of our ordinary shares, at a price per share of $1.25. The Investment Agreement contemplates issuances in three tranches, including $5 million for 160,000 shares in the Company were $9,448 thousand,first tranche, $10 million for 320,000 shares in the second tranche and $5 million for 160,000 shares in the third tranche.
The first tranche, consisting of $5 million for 160,000 shares, closed on May 15, 2018. The net aggregate proceeds after deducting commissions, fees and offering expenses in the amount of $439approximately $705 thousand were $9.0approximately $4.3 million. As
The closings of the second tranche and third tranche were subject to specified closing conditions, including the formation of a result,joint venture, the signing of a license agreement and a supply agreement, and the successful production of certain ReWalk products. The closing of the third tranche was to have occurred by December 31, 2018, and no later than April 1, 2019. We believe that Timwell committed various material breaches of the Investment Agreement, including failure to consummate its second and third investment tranches in the Company for a total of $15 million, failure to enter into a detailed joint venture agreement with the Company, and failure to make payments for product-related commitments. Nevertheless, until March 2020 we continued to engage in a dialogue with Timwell (and its affiliate RealCan) on alternative pathways to allow us to commercialize our products in China through RealCan and its affiliates, and also provide for RealCan or an affiliate to invest in us.
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In late March 2020, Timwell notified us that it would not invest the second and third tranches under the Investment Agreement. In response, in early April 2020, our Board of Directors also removed Timwell’s designee, who was appointed pursuant to the Investment Agreement, from the inceptionBoard of Directors, due to this breach pursuant to the terms of the ATM Offering Program in May 2016 until September 30, 2017,Investment Agreement. We continue to view China as a market with key opportunities for products designed for stroke patients, and therefore we had sold 6,071,970 ordinary shares undercontinue to evaluate potential relationships with other groups to penetrate the ATM Offering Program for net proceeds to us of $13.1 million (after commissions, fees and expenses). Additionally, as of that date, we had paid Piper Jaffray compensation of $420 thousand and had incurred total expenses of approximately $907 thousand in connection with the ATM Offering Program. We intend to continue using this program opportunistically to raise additional funds.
Cash Flows for the NineSix Months Ended SeptemberJune 30, 20172021 and SeptemberJune 30, 2016
Six Months Ended | ||||||||
June 30, | ||||||||
2021 | 2020 | |||||||
Net cash used in operating activities | $ | (6,340 | ) | $ | (7,533 | ) | ||
Net cash used in investing activities | (11 | ) | (15 | ) | ||||
Net cash provided by financing activities | 50,236 | 5,303 | ||||||
Net cash flow | $ | 43,885 | $ | (2,245 | ) | |||
| 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 activities | 6,341 | 15,138 | |||||
| Net cash flow | $ | (10,750 | ) | $ | (5,470 | ) | |
Net Cash Used in Operating Activities
Net cash used in operating activities decreased by $1.2 million or 16% due to $17.1 million forimprovement in working capital as well as no interest payments to Kreos as we repaid our debt under the nine months ended September 30, 2017 compared to $20.2 million for the nine months ended September 30, 2016 primarily as a result of increased revenue, lower operating expenses as result of recent cost reduction efforts, and a decreaseLoan Agreement in expenses related to Collaboration Agreement and the License Agreement, as discussed above.
Net Cash Provided by Financing Activities
Net cash provided by financing activities was $6.3increased by $44.9 million for the ninesix months ended SeptemberJune 30, 2017,2021 compared to $15.1 million in the ninesix months ended SeptemberJune 30, 2016. The decrease is related2020, primarily due to the receipthigher proceeds received through our February 2021 offering and warrants exercises received during the first quarter of proceeds under our2021, as well as the fact that we did not have any principal payments pursuant to the Loan Agreement with Kreos after repaying our debt in the nine months period ended September 30, 2016, which were higher than the proceeds we received from issuance of ordinary sharesfull in the ATM Offering Program in the nine months period ended September 30, 2017.
Obligations and Commercial Commitments
Set forth below is a summary of our contractual obligations as of SeptemberJune 30, 2017.2021.
Payments due by period (in thousands) | ||||||||||||
Less than | ||||||||||||
Contractual obligations | Total | 1 year | 1-3 years | |||||||||
| ||||||||||||
Purchase obligations (1) | $ | 1,307 | $ | 1,307 | $ | — | ||||||
Collaboration Agreement and License Agreement obligations (2) | 1,656 | 1,056 | 600 | |||||||||
Operating lease obligations (3) | 1,659 | 682 | 977 | |||||||||
Total | $ | 4,622 | $ | 3,045 | $ | 1,577 | ||||||
(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. |
(2) | Our Collaboration Agreement with Harvard was originally signed for a period of six years and, as of June 30, 2021, has a remaining term of approximately 1.66 years. Under the Collaboration Agreement, we are required to pay in quarterly installments the funding of our joint research collaboration with Harvard, subject to a minimum funding commitment under applicable circumstances. Our License Agreement with Harvard 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, 2021. 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 in the United States and Israel and motor vehicles. |
| Payments due by period (in dollars, in thousands) | |||||||||||||||||||
| Contractual obligations | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | ||||||||||||||
| Purchase obligations (1) | $ | 806 | $ | 806 | $ | — | $ | — | $ | — | |||||||||
| Collaboration Agreement and License Agreement obligations (2) | 4,238 | 1,350 | 2,100 | 788 | — | ||||||||||||||
| Operating lease obligations (3) | 4,251 | 636 | 1,173 | 1,190 | 1,252 | ||||||||||||||
| Long-term debt obligations (4) | 19,288 | 5,663 | 13,625 | — | — | ||||||||||||||
| Total | $ | 28,583 | $ | 8,455 | $ | 16,898 | $ | 1,978 | $ | 1,252 | |||||||||
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 3.526:3.26:$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 1.18191.188 euro:$1:00, both of which were the applicable exchange rates as of SeptemberJune 30, 2017. 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
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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 2017.2021. 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 20162020 Form 10-K.
ITEM 4.
CONTROLS AND PROCEDURESDisclosure 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 third
PART II - OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGSThere have been no material changes to our legal proceedings as described in “Part I, Item 3. Legal Proceedings” of our 20162020 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 FACTORSThere have been no material changes to our risk factors from those disclosed in “Part I, Item 1A. Risk Factors” of our 20162020 Form 10-K except as noted below:
Risks Related to meet certain future capital requirementsOur Business and Our Industry
Defects in our products 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.
The design, manufacture and timely repay our liabilities arising from normal business operations.
When an exoskeleton is used by a paralyzed individual to walk, the individual relies completely on the use of ReWalk, which could inhibit new sales and harmexoskeleton to hold him or her upright. In addition, our reputation.products incorporate sophisticated computer software. Complex software frequently contains errors, especially when first introduced. Our software may experience errors or performance problems in the future. If we are unable to expand our sales, marketing and training capabilities, we may not be able to effectively commercialize ReWalk, or enhance the strengthany part of our brand, whichproduct’s hardware or software were to fail, the user could haveexperience death or serious injury. For example, ReWalk recently submitted medical device reports, or MDRs, to the FDA and medical device vigilance reports, or MDVs, to the European regulatory authorities and initiated a material adverse effectcorrection in response to two complaints regarding battery thermal runaway events. The correction that includes clarified use instructions and information on our operating results.
The medical device industry has historically been voluntarily dismissed. Assubject to extensive litigation over product liability claims. We have been and anticipate that as part of November 1, 2017, three actions remain pending, including (i) the two actions commencedour ordinary course of business we may be, subject to product liability claims alleging defects in the Superior Court of the Commonwealth of Massachusetts, which have been consolidated, and (ii) the action commenced in the United States District Court for the District of Massachusetts,design, manufacture, or Massachusetts Federal Court, which was brought in part by certain of the plaintiffs whose actions were dismissed in the Superior Court of the State of California, County of San Mateo (referred 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 filed a consolidated amended complaint in August 2017 adding claims that certain statements we made after 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.
Risks Related to Government Regulation
While we addressed the observations that could havethe FDA cited in a materially adverse impact on2015 warning letter related to our financial position, results of operations and cash flows.
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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.
In March 2021, FDA accepted another protocol currently leadingsupplement to the FDAoriginal postmarket study that we prepared to labeladdress our progress as “inadequate.” We may seekinability to modify ourobtain certain study information due to the COVID-19 pandemic. Our modification to the original protocol allowed us to expand the pool of patients and/or decrease the total number of patients, which change will require approvalclose all study sites. The data from the FDA.original postmarket study, along with the real world data, was submitted to FDA and is currently under review. However, despite the revised study protocol there can be no assurance that 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. 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%40% of our revenues in the fiscal year ended December 31, 2016 and the nine months ended September 30, 2017, respectively,2020, from sales of the ReWalk device in the United States and, if we are unable to market the ReWalk device in the United States, we expect that these sales would be adversely impacted, which could materially adversely affect our business and overall results of operations.
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 SECURITIESNot applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5.
OTHER INFORMATIONNot applicable.
ITEM 6. EXHIBIT INDEX
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | |
* | 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: | By: | /s/ Larry Jasinski | |
Larry Jasinski | |||
Chief Executive Officer | |||
Date: August 9, 2021 | By: | /s/ Ori Gon | |
Ori Gon | |||
Chief Financial Officer | |||
(Principal Financial | |||
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