Israel | Not applicable | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Identification No.) | |
3 Hatnufa Street, Floor 6, Yokneam Ilit, Israel | 2069203 | |
(Address of principal executive offices) | (Zip Code) |
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Title of each class | Trading symbol | Name of exchange on which registered | ||
Ordinary shares, par value NIS 0.25 | RWLK | Nasdaq Capital Market |
Large accelerated filer | Accelerated filer |
Non-accelerated filer | Smaller reporting company |
Emerging growth company |
Page No. | ||
38 | ||
38 | ||
38 | ||
38 | ||
38 | ||
38 | ||
38 | ||
39 | ||
40 |
• | our expectations regarding future growth, including our ability to increase sales in our existing geographic markets and expand to new markets; | ||
• | our ability to maintain and grow our reputation and the market acceptance of our products; | ||
• | our ability to achieve reimbursement from third-party payors or advance Centers for Medicare & Medicaid Services (“CMS”) coverage for our products; | ||
• | our ability to maintain compliance with the continued requirements of the Nasdaq Capital Market and the risk that our ordinary shares will be delisted if we do not comply with such requirements; | ||
• | the adverse effect that the COVID-19 pandemic has had and continues to have on our business and results of operations; | ||
• | our ability to have sufficient funds to meet certain future capital requirements, which could impair our efforts to develop and commercialize existing and new products; | ||
• | our limited operating history and our ability to leverage our sales, marketing and training infrastructure; | ||
• | our ability to grow our business through acquisitions of businesses, products or technologies, and the failure to manage acquisitions, or the failure to integrate them with our existing business, which could have a material adverse effect on our business, financial condition, and operating results; | ||
• | our expectations as to our clinical research program and clinical results; | ||
• | our ability to obtain certain components of our products from third-party suppliers and our continued access to our product manufacturers; | ||
• | our ability to improve our products and develop new products; | ||
• | our compliance with medical device reporting regulations to report adverse events involving our products, which could result in voluntary corrective actions or enforcement actions such as mandatory recalls, and the potential impact of such adverse events on our ability to market and sell our products; | ||
• | our ability to gain and maintain regulatory approvals and to comply with any post-marketing requests | ||
• | the risk of a cybersecurity attack or breach of our information technology systems significantly disrupting our business operations; | ||
• | our ability to maintain adequate protection of our intellectual property and to avoid violation of the intellectual property rights of others; | ||
• | the impact of substantial sales of our shares by certain shareholders on the market price of our ordinary shares; | ||
• | our ability to use effectively the proceeds of our offerings of securities; | ||
• | the risk of substantial dilution resulting from the periodic issuances of our ordinary shares; | ||
• | the impact of the market price of our ordinary shares on the determination of whether we are a passive foreign investment company; | ||
• | market and other conditions; and | ||
• | other factors discussed in the “Risk Factors” section of our 2021 annual report on Form 10-K and in our subsequent reports filed with the SEC. |
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 78,832 | $ | 88,337 | ||||
Trade receivable, net | 866 | 585 | ||||||
Prepaid expenses and other current assets | 957 | 610 | ||||||
Inventories | 3,098 | 2,989 | ||||||
Total current assets | 83,753 | 92,521 | ||||||
LONG-TERM ASSETS | ||||||||
Restricted cash and other long-term assets | 1,020 | 1,064 | ||||||
Operating lease right-of-use assets | 744 | 881 | ||||||
Property and equipment, net | 281 | 284 | ||||||
Total long-term assets | 2,045 | 2,229 | ||||||
Total assets | $ | 85,798 | $ | 94,750 |
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 |
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
(unaudited) | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Current maturities of operating leases | $ | 610 | $ | 641 | ||||
Trade payables | 1,552 | 1,384 | ||||||
Employees and payroll accruals | 965 | 1,142 | ||||||
Deferred revenues | 335 | 316 | ||||||
Other current liabilities | 337 | 555 | ||||||
Total current liabilities | 3,799 | 4,038 | ||||||
LONG-TERM LIABILITIES | ||||||||
Deferred revenues | 810 | 866 | ||||||
Non-current operating leases | 207 | 418 | ||||||
Other long-term liabilities | 69 | 45 | ||||||
Total long-term liabilities | 1,086 | 1,329 | ||||||
Total liabilities | 4,885 | 5,367 | ||||||
COMMITMENTS AND CONTINGENT LIABILITIES | ||||||||
SHAREHOLDERS’ EQUITY | ||||||||
Share capital | ||||||||
Ordinary share of NIS 0.25 par value-Authorized: 120,000,000 shares at June 30, 2022 and December 31, 2021; Issued and outstanding: 62,678,308 and 62,480,163 shares at June 30, 2022 and December 31, 2021, respectively | 4,675 | 4,661 | ||||||
Additional paid-in capital | 279,215 | 278,903 | ||||||
Accumulated deficit | (202,977 | ) | (194,181 | ) | ||||
Total shareholders’ equity | 80,913 | 89,383 | ||||||
Total liabilities and shareholders’ equity | $ | 85,798 | $ | 94,750 |
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 |
REWALK ROBOTICS LTD. AND SUBSIDIARIES
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 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Revenues | $ | 1,570 | $ | 1,436 | $ | 2,446 | $ | 2,752 | ||||||||
Cost of revenues | 824 | 709 | 1,435 | 1,318 | ||||||||||||
Gross profit | 746 | 727 | 1,011 | 1,434 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development, net | 956 | 810 | 1,863 | 1,605 | ||||||||||||
Sales and marketing | 2,347 | 1,613 | 4,531 | 3,284 | ||||||||||||
General and administrative | 1,819 | 1,445 | 3,281 | 2,707 | ||||||||||||
Total operating expenses | 5,122 | 3,868 | 9,675 | 7,596 | ||||||||||||
Operating loss | (4,376 | ) | (3,141 | ) | (8,664 | ) | (6,162 | ) | ||||||||
Financial expenses (income), net | 44 | (9 | ) | 68 | (13 | ) | ||||||||||
Loss before income taxes | (4,420 | ) | (3,132 | ) | (8,732 | ) | (6,149 | ) | ||||||||
Taxes on income | 26 | 9 | 64 | 54 | ||||||||||||
Net loss | $ | (4,446 | ) | $ | (3,141 | ) | $ | (8,796 | ) | $ | (6,203 | ) | ||||
Net loss per ordinary share, basic and diluted | $ | (0.07 | ) | $ | (0.07 | ) | $ | (0.14 | ) | $ | (0.15 | ) | ||||
Weighted average number of shares used in computing net loss per ordinary share, basic and diluted | 62,544,467 | 46,123,222 | 62,519,063 | 41,210,527 |
REWALK ROBOTICS LTD. AND SUBSIDIARIES
Ordinary Shares | Additional paid-in | Accumulated | Total shareholders’ | |||||||||||||||||
Number | Amount | capital | deficit | equity | ||||||||||||||||
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 vesting of 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 | ||||||||||||||
Balance as of April 1, 2022 | 62,508,517 | 4,663 | 279,054 | (198,531 | ) | 85,186 | ||||||||||||||
Share-based compensation to employees and non-employees | - | - | 173 | - | 173 | |||||||||||||||
Issuance of ordinary shares upon vesting of RSUs by employees and non-employees | 169,791 | 12 | (12 | ) | - | - | ||||||||||||||
Net loss | - | - | - | (4,446 | ) | (4,446 | ) | |||||||||||||
Balance as of June 30, 2022 | 62,678,308 | 4,675 | 279,215 | (202,977 | ) | 80,913 |
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, 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 | ||||||||||||||
Balance as of January 1, 2022 | 62,480,163 | 4,661 | 278,903 | (194,181 | ) | 89,383 | ||||||||||||||
Share-based compensation to employees and non-employees | - | - | 326 | - | 326 | |||||||||||||||
Issuance of ordinary shares upon vesting of RSUs by employees and non-employees | 198,145 | 14 | (14 | ) | - | - | ||||||||||||||
Net loss | - | - | - | (8,796 | ) | (8,796 | ) | |||||||||||||
Balance as of June 30, 2022 | 62,678,308 | 4,675 | 279,215 | (202,977 | ) | 80,913 |
(1) | See Note 7e to the condensed consolidated financial statements. |
(2) | See Note 7c to the condensed consolidated financial statements. |
REWALK ROBOTICS LTD. AND SUBSIDIARIES
Six Months Ended June 30, | ||||||||
2022 | 2021 | |||||||
Cash flows used in operating activities: | ||||||||
Net loss | $ | (8,796 | ) | $ | (6,203 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation | 110 | 141 | ||||||
Share-based compensation to employees and non-employees | 326 | 368 | ||||||
Deferred taxes | (7 | ) | (11 | ) | ||||
Finance expense, net | 164 | - | ||||||
Trade receivables, net | (281 | ) | (95 | ) | ||||
Prepaid expenses, operating lease right-of-use assets and other assets | (183 | ) | 85 | |||||
Inventories | (228 | ) | 138 | |||||
Trade payables | 168 | (285 | ) | |||||
Employees and payroll accruals | (177 | ) | (172 | ) | ||||
Deferred revenues | (37 | ) | (51 | ) | ||||
Operating lease liabilities and other liabilities | (436 | ) | (255 | ) | ||||
Net cash used in operating activities | (9,377 | ) | (6,340 | ) | ||||
Cash flows used in investing activities: | ||||||||
Purchase of property and equipment | (18 | ) | (11 | ) | ||||
Net cash used in investing activities | (18 | ) | (11 | ) | ||||
Cash flows from financing activities: | ||||||||
Issuance of ordinary shares in a private placement, net of issuance expenses paid in the amount of $3,582 (1) | - | 36,418 | ||||||
Exercise of pre-funded warrants and warrants (1) (2) | - | 13,818 | ||||||
Net cash provided by financing activities | - | 50,236 | ||||||
Effect of Exchange rate changes on Cash, Cash Equivalents and Restricted Cash | (164 | ) | - | |||||
Increase (decrease) in cash, cash equivalents, and restricted cash | (9,395 | ) | 43,885 | |||||
Cash, cash equivalents, and restricted cash at beginning of period | 89,050 | 21,054 | ||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 79,491 | $ | 64,939 | ||||
Supplemental disclosures of non-cash flow information | ||||||||
Expenses related to offerings not yet paid (1) | $ | - | $ | 97 | ||||
Classification of other current assets to property and equipment, net | $ | 22 | $ | 16 | ||||
Classification of inventory to property and equipment, net | $ | 67 | $ | 32 | ||||
Classification of inventory to other current assets | $ | 109 | $ | 26 | ||||
Supplemental cash flow information: | ||||||||
Cash and cash equivalents | $ | 78,832 | $ | 64,236 | ||||
Restricted cash included in other long-term assets | 659 | 703 | ||||||
Total Cash, cash equivalents, and restricted cash | $ | 79,491 | $ | 64,939 |
(1) | See Note 7e to the condensed consolidated financial statements. |
(2) | See Note 7c to the condensed consolidated financial statements. |
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 intends to finance operating costs over the next twelve monthsis designing, developing, and commercializing robotic exoskeletons that allow individuals with existing cash on hand, reductions in operating spend, issuances under the Company's ATM Offering Programmobility impairments or other future issuancesmedical conditions the ability to stand and walk once again. The Company has developed and is continuing to commercialize the ReWalk, an exoskeleton designed for individuals with paraplegia that uses its patented tilt-sensor technology and an on-board computer and motion sensors to drive motorized legs that power movement. The ReWalk system consists of equitya light wearable brace support suit which integrates motors at the joints, rechargeable batteries, an array of sensors and debt securities, ora computer-based control system to power knee and hip movement. Additionally, the Company developed and, in June 2019, started to commercialize the ReStore following receipt of European Union CE mark and United States Food and Drug Administration (“FDA”) clearance. The ReStore is a powered, lightweight soft exo-suit intended for use in the rehabilitation of individuals with lower limb disability due to stroke. The Company markets and sells its products directly to institutions and individuals and through a combinationthird-party distributors. The Company sells its products directly primarily in Germany and the United States, and primarily through 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 markets and sells the Company’s products mainly in Germany and Europe.
During the second quarter of 2020, the Company finalized two separate agreements to distribute additional product lines in the U.S. market. The Company is the exclusive distributor of the foregoing. However,MediTouch Tutor movement biofeedback systems in the United States and has 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 have improved the Company’s product offering to clinics as well as patients within the VA as they both have similar clinician and patient profiles.
c.The worldwide spread of COVID-19 has resulted in a global economic slowdown and is expected to continue to disrupt general business operations until the disease is contained. This has had a negative impact on the Company’s sales and results of operations since the start of the pandemic, and the Company expects that it will needcontinue to seek additional sourcesnegatively affect its sales and results of financing ifoperations; however, the Company is currently unable to predict the scale and duration of that impact. As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require an update of its accounting estimates or judgments or revision of the carrying value of its assets or liabilities. This determination may change as new events occur and additional information is obtained. Actual results could differ from management’s estimates and judgments, and any such differences may be material to the Company’s financial statements.
9
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
d.As of June 30, 2022, the Company incurred a consolidated net loss of $8.8 million and has an accumulated deficit in the total amount of $203.0 million. The Company’s cash and cash equivalent as of June 30, 2022 totaled $78.8 million and the Company’s negative operating cash flow for the six months ended June 30, 2022 was $9.4 million. The Company has sufficient funds to support its operations for more funds than anticipated during the next 12 months or in later periods.
10
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Units placed | $ | 1,457 | $ | 1,313 | $ | 2,235 | $ | 2,455 | ||||||||
Spare parts and warranties | 113 | 123 | 211 | 297 | ||||||||||||
Total Revenues | $ | 1,570 | $ | 1,436 | $ | 2,446 | $ | 2,752 |
11
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
12
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
Trade receivable, net (1) | $ | 866 | $ | 585 | ||||
Deferred revenues (1) (2) | $ | 1,145 | $ | 1,182 |
(1) | Balance presented net of unrecognized revenues that were not yet collected. |
(2) | During the six months ended June 30, 2022, $200 thousand of the December 31, 2021, deferred revenues balance was recognized as revenues. |
13
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Concentrations of Credit Risks: |
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
Customer A | 17 | % | * | ) | ||||
Customer B | 12 | % | * | ) | ||||
Customer C | 12 | % | 12 | % | ||||
Customer D | * | ) | 20 | % | ||||
Customer E | * | ) | 18 | % | ||||
Customer F | * | ) | 16 | % | ||||
Customer G | * | ) | 10 | % |
*) | Less than 10% |
Warranty provision |
US Dollars in thousands | ||||
Balance at December 31, 2021 | $ | 112 | ||
Provision | 162 | |||
Usage | (169 | ) | ||
Balance at June 30, 2022 | $ | 105 |
US Dollars in thousands | |||
Balance at December 31, 2016 | $ | 498 | |
Provision | 311 | ||
Usage | (275 | ) | |
Balance at September 30, 2017 | $ | 534 |
14
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)
d. | Basic and diluted net loss per ordinary share |
e. | New Accounting Pronouncements |
i. | Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity |
i. | Financial Instruments |
15
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, | |||||||
2022 | 2021 | |||||||
Finished products | $ | 2,559 | $ | 2,284 | ||||
Raw materials | 539 | 705 | ||||||
$ | 3,098 | $ | 2,989 |
During the six months ended June 30, 2022, and 2021, the Company wrote off inventory in the amount of $16 and $58 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 2022 and 2023. A portion of the Company’s facilities leases is generally subject to annual changes in the Consumer Price Index (the “CPI”). The changes to the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred.
(ii)RRL and RRG lease cars for their employees under cancelable operating lease agreements expiring at various dates in between 2022 and 2025. A subset of the Company’s cars leases is considered variable. The variable lease payments for such cars leases are based on actual mileage incurred at the stated contractual rate. RRL and RRG have an option to be released from these agreements, which may result in penalties in a maximum amount of approximately $23 thousand as of June 30, 2022.
The Company's future lease payments for its facilities and cars, which are presented as current maturities of operating leases and non-current operating leases liabilities on the Company's condensed consolidated balance sheets as of June 30, 2022, are as follows (in thousands):
2022 | $ | 334 | ||
2023 | 514 | |||
2024 | 47 | |||
2025 | 7 | |||
Total lease payments | 902 | |||
Less: imputed interest | (85 | ) | ||
Present value of future lease payments | 817 | |||
Less: current maturities of operating leases | (610 | ) | ||
Non-current operating leases | $ | 207 | ||
Weighted-average remaining lease term (in years) | 1.46 | |||
Weighted-average discount rate | 12.5 | % |
Lease expense under the Company’s operating leases was $184 thousand and $178 thousand for the three months ended June 30, 2022, and 2021, respectively. For the six months ended June 30, 2022, and 2021, the lease expense was $363 thousand and $364 thousand, respectively.
16
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
c.Royalties:
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.
17
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.
18
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
19
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, 2017,2022, and December 31, 2016,2021, 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, 20172022, 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 |
A summary of employeeemployees and non-employees share options to purchase ordinary shares and RSUsactivity during the ninesix months ended SeptemberJune 30, 20172022, is as follows:
Number | Average exercise price | Average remaining contractual life (in years) | Aggregate intrinsic value (in | |||||||||||||
Options outstanding as of December 31, 2021 | 61,832 | $ | 38.34 | 4.55 | $ | - | ||||||||||
Granted | - | - | - | - | ||||||||||||
Exercised | - | - | - | - | ||||||||||||
Forfeited | (17,838 | ) | 31.13 | - | - | |||||||||||
Options outstanding as of June 30, 2022 | 43,994 | $ | 41.27 | 4.89 | $ | - | ||||||||||
| ||||||||||||||||
Options exercisable as of June 30, 2022 | 41,638 | $ | 43.28 | 4.79 | $ | - |
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 |
The weighted average grant date fair value of options granted during the nine months ended September 30, 2017 and September 30, 2016 was $1.10 and $4.75, respectively. The weighted average grant date fair value of RSUs granted during the nine month period ended September 30, 2017 and September 30, 2016 was $2.01 and $9.28, respectively.
No options were exercised during the three months ended June 30, 2022 and 2021.
20
REWALK ROBOTICS LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The fair value of options exercised for eachRSUs granted is determined based on the price of the nineCompany's ordinary shares on the date of grant.
RSUs generally vest over four years, with certain RSUs to non-employee directors vesting quarterly over one year. Any RSUs that is canceled before the vesting becomes available for future grants under the 2014 Plan.
A summary of employees and non-employees RSUs activity during the six months ended SeptemberJune 30, 20172022, is as follows:
Number of underlying outstanding RSUs | Weighted grant value | |||||||
Unvested RSUs as of January 1, 2022 | 1,356,284 | $ | 1.61 | |||||
Granted | 97,735 | 1.14 | ||||||
Vested | (198,145 | ) | 1.99 | |||||
Forfeited | (210,641 | ) | 1.53 | |||||
Unvested RSUs as of June 30, 2022 | 1,045,233 | $ | 1.51 |
The weighted average grant date fair value of RSUs granted during the six months ended June 30, 2022, and September2021, was $1.14 and $1.75, respectively.
As of June 30, The number of options and RSUs outstanding as of Range of exercise price Options June 30, Weighted average remaining contractual life (years) (1) Options June 30, Weighted average remaining contractual life (years) (1) RSUs only 1,045,233 - - - $5.37 12,425 6.75 10,095 6.75 $20.42 - $33.75 13,317 5.71 13,291 5.71 $37.14 - $38.75 8,946 1.48 8,946 1.48 $50 - $52.5 6,731 4.97 6,731 4.97 $182.5 - $524.25 2,575 3.35 2,575 3.35 1,089,227 4.89 41,638 4.79 (1) Calculation of weighted average remaining contractual term does not include the RSUs that were granted, which have an indefinite contractual term. b.Share-based awards to non-employee As of 21 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 Issuance date Warrants outstanding Exercise price per warrant Warrants outstanding exercisable Contractual term (number) (number) December 31, 2015 (1) 4,771 $ 7.500 4,771 See footnote (1) December 28, 2016 (2) 1,908 $ 7.500 1,908 See footnote (1) November 20, 2018 (3) 126,839 $ 7.500 126,839 November 20, 2023 November 20, 2018 (4) 106,680 $ 9.375 106,680 November 15, 2023 February 25, 2019 (5) 45,600 $ 7.187 45,600 February 21, 2024 April 5, 2019 (6) 408,457 $ 5.140 408,457 October 7, 2024 April 5, 2019 (7) 49,015 $ 6.503 49,015 April 3, 2024 June 5, 2019, and June 6, 2019 (8) 1,464,665 $ 7.500 1,464,665 June 5, 2024 June 5, 2019 (9) 87,880 $ 9.375 87,880 June 5, 2024 June 12, 2019 (10) 416,667 $ 6.000 416,667 December 12, 2024 June 10, 2019 (11) 50,000 $ 7.500 50,000 June 10, 2024 February 10, 2020 (12) 28,400 $ 1.250 28,400 February 10, 2025 February 10, 2020 (13) 105,840 $ 1.563 105,840 February 10, 2025 July 6, 2020 (14) 448,698 $ 1.760 448,698 January 2, 2026 July 6, 2020 (15) 296,297 $ 2.278 296,297 January 2, 2026 December 8, 2020 (16) 586,760 $ 1.340 586,760 June 8, 2026 December 8, 2020 (17) 108,806 $ 1.792 108,806 June 8, 2026 February 26, 2021 (18) 5,460,751 $ 3.600 5,460,751 August 26, 2026 February 26, 2021 (19) 655,290 $ 4.578 655,290 August 26, 2026 September 29, 2021 (20) 8,006,759 $ 2.000 8,006,759 March 29, 2027 September 29, 2021 (21) 960,811 $ 2.544 960,811 September 27, 2026 19,420,894 19,420,894 (1) Represents warrants (2) Represents (3) Represents common warrants that were issued as part of the Company’s follow-on public offering in November 2018. 22 REWALK ROBOTICS LTD. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (4) Represents common warrants that were issued to the underwriters as compensation for their role in the Company’s follow-on public offering in November 2018. (5) Represents warrants that were issued to the exclusive placement agent as compensation for its role in the Company’s follow-on public offering in February 2019. (6) Represents warrants that were issued to certain institutional purchasers in a private placement in the Company’s registered direct offering of ordinary shares in April 2019. (7) Represents warrants that were issued to the placement agent as compensation for its role in the Company’s April 2019 registered direct offering. (8) Represents warrants that were issued to certain institutional investors in a warrant exercise agreement on June 5, 2019, and June 6, 2019, respectively. (9) Represents warrants 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. (10) Represents warrants that were issued to certain institutional investors in a warrant exercise agreement in June 2019. (11) Represents warrants 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. (12) Represents warrants that were issued to certain institutional purchasers in a private placement in the Company’s best efforts offering of ordinary shares in February 2020. During the year ended December 31, 2021, 3,740,100 warrants were exercised for total consideration of $4,675,125. (13) Represents warrants that were issued to the placement agent as compensation for its role in the Company’s February 2020 best efforts offering. During the year ended December 31, 2021, 230,160 warrants were exercised for total consideration of $359,625. (14) Represents warrants that were issued to certain institutional purchasers in a private placement in our registered direct offering of ordinary shares in July 2020. During the year ended December 31, 2021, 2,020,441 warrants were exercised for total consideration of $3,555,976. (15) Represents warrants that were issued to the placement agent as compensation for its role in the Company’s July 2020 registered direct offering. (16) Represents warrants that were issued to certain institutional purchasers in a private placement in our private placement offering of ordinary shares in December 2020. During the year ended December 31, 2021, 3,598,072 warrants were exercised for total consideration of $4,821,416. (17) Represents warrants that were issued to the placement agent as compensation for its role in the Company’s December 2020 private placement. During the year ended December 31, 2021, 225,981 warrants were exercised for total consideration of $405,003. (18) Represents warrants that were issued to certain institutional purchasers in a private placement in our private placement offering of ordinary shares in February 2021. 23 REWALK ROBOTICS LTD. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (19) Represents warrants that were issued to the placement agent as compensation for its role in Company’s private placement offering in February 2021. (20) Represents warrants that were issued to certain institutional purchasers in a private placement in our registered direct offering of ordinary shares in September 2021. (21) Represents warrants that were issued to the placement agent as compensation for its role in the Company’s September 2021 registered direct offering. d.Share-based compensation expense for employees and non-employees: The Company recognized non-cash share-based compensation expense for Six Months Ended June 30, 2022 2021 Cost of revenues $ 6 $ 4 Research and development 33 14 Sales and marketing 96 77 General and administrative 191 273 Total $ 326 $ 368 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 Offering. On September 27, 2021, the Company signed a purchase agreement with certain institutional investors for the issuance and sale of 15,403,014 ordinary shares, par value NIS 0.25 per share, pre-funded warrants to purchase up to an aggregate of 610,504 ordinary shares and ordinary warrants to purchase up to an aggregate of 8,006,759 ordinary shares at an exercise price of $2.00 per share. The Pre-Funded Warrants have an exercise price of $0.001 per Ordinary Share and are immediately exercisable and can be exercised at any time after their original issuance until such pre-funded warrants are exercised in full. Each ordinary share was sold at an offering price of $2.035 and each pre-funded warrant was sold at an offering price of $2.034 (equal to the purchase price per ordinary share minus the exercise price of the pre-funded warrant). The offering of the ordinary shares, the pre-funded warrants and the ordinary shares that are issuable from time to time upon exercise of the pre-funded warrants was made pursuant to the Company’s shelf registration statement on Form S-3 initially filed with the Securities and Exchange Commission (“SEC”) on May 9, 2019, and declared effective by the SEC on May 23, 2019, and the ordinary warrants were issued in a concurrent private placement. The ordinary warrants are exercisable at any time and from time to time, in whole or in part, following the date of issuance and ending five and one-half years from the date of issuance. All of the pre-funded warrants were exercised in full on September 27, 2021, and the offering closed on September 29, 2021. Additionally, the Company issued warrants to purchase up to 960,811 ordinary shares, with an exercise price of $2.5438 per share, exercisable from September 27, 2021, until September 27, 2026, to certain representatives of H.C. Wainwright as compensation for its role as the placement agent in our September 2021 registered direct offering. 24 REWALK ROBOTICS LTD. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) As of June 30, 2022, a total of 9,814,754 previously issued warrants with NOTE The components of financial expenses (income), net were as follows (in thousands): Three Months Ended June 30, June 30, 2022 2021 2022 2021 Foreign currency transactions and other $ 39 $ (14 ) ) Bank commissions 5 5 $ 44 $ (9 ) NOTE Summary information about geographic 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 Three Months Ended June 30, Six Months Ended 2022 2021 2022 2021 $ 798 $ 1,130 1,535 1,563 111 57 Africa 2 2 $ 2,446 $ 2,752 25 REWALK ROBOTICS LTD. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) June 30, December 31, 2022 2021 Long-lived assets by geographic region (*): Israel $ 580 $ 629 United States 375 493 Germany 70 43 $ 1,025 $ 1,165 *) Long-lived assets are comprised of property and equipment, net, and operating lease right-of-use assets. Six Months Ended 2022 2021 Major customer data as a percentage of total revenues: Customer A Customer B *) Less than 10%. In May 2021, the FDA granted breakthrough design designation to the ReWalk Personal stairs feature. In June 2022, we submitted a 510(k) application to the FDA for our ReWalk Personal exoskeleton system seeking clearance for the use of ReWalk Personal units on stairs and We have also developed and began commercializing our ReStore device in June 2019. ReStore is a powered, lightweight soft exo-suit intended for use in the rehabilitation of individuals with Our principal markets are the United States and Europe. In Europe, we have a direct sales operation in Germany and We have in the past generated and expect to generate in the future According to a 2017 report published by Additionally, to date, several private insurers in the United States and Europe have provided reimbursement for ReWalk in certain Total revenue for the second quarter of 2022 was $1.6 million, compared to $1.4 million in the second quarter of 2021; Strong cash position with $78.8 million as of June 30, 2022; The Company’s operating expenses were $5.1 million in the second quarter of 2022, compared to $3.9 million in the second quarter of 2021; In June 2022, the Company announced that its Board of Directors (the “Board”) had approved a program to repurchase up to $8.0 million of the Company’s ordinary shares, par value NIS 0.25 per share, subject to receipt of Israeli court approval. In July 2022, the Company announced that it had received approval from an Israeli court for the share repurchase program, valid through January 20, 2023. The process to begin repurchasing shares is underway; ● On June 8th, the Company presented before CMS at its Healthcare Common Procedure Coding System (HCPCS) meeting, detailing why CMS should promptly assign the ReWalk Personal Prosthetic Exoskeleton to the “artificial leg” prosthetic benefit category. No preliminary determination was made during the meeting, and ReWalk is currently awaiting further feedback from CMS, which it expects to receive during the second half of 2022. Although we have seen the U.S. and German markets start to fully open for the first time since the pandemic started in early 2020, allowing us to restart market development and access programs, the COVID-19 pandemic has continued to affect our ability to engage with our SCI Products, ReStore and Distributed Products existing customers, conduct trials of product candidates, deliver ordered units or repair existing systems and provide training for 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. In addition, staffing shortages within the healthcare system itself has resulted in a diminished demand for our SCI Products as the attention of healthcare workers and potential patients has turned elsewhere. As a result, our sales and results of operations have been adversely impacted. We believe that these adverse impacts may continue as long as the pandemic continues to impact our key markets, which are Germany and the United States, especially as long as our ability to conduct trials of product candidates is limited or if our existing customers can’t train with our SCI Products and as long as capital budgets for rehabilitation devices such as the ReStore remain reduced or on-hold. Additionally, some clinics, such as VA clinics, and many other healthcare facilities, have historically been enforcing in-clinic restrictions, which have to date affected our ability to demonstrate our devices to patients or start training for qualified potential customers; although we are starting to see this trend revert back to pre-pandemic levels. We continue to Revenues increased by Revenues Under the program, share repurchases may be made from time to time using a variety of methods, including open market transactions or in privately negotiated transactions. Such repurchases will be made in accordance with all applicable securities laws and regulations, including restrictions relating to volume, price and timing under applicable law, including Rule 10b-18 under the The repurchase program does not require us to 1,147 1,147 2,124 1,8782016 was $29 thousand and $844 thousand respectively. As of September 30, 2017,2022, there were $5.1$1.3 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 2.12.5 years.TheSeptemberJune 30, 20172022, 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.
and RSUs
outstanding
as of
2022
outstanding
and
exercisable
as of
2022 REWALK ROBOTICS LTD. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Range of exercise price Options and RSUs outstanding as of September 30, 2017 Options exercisable as of September 30, 2017 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 On September 6, 2017, the Company commenced a one-time equity award exchange program (the “Equity Exchange Program”), offering to certain eligible employees, executive officers and consultants the opportunity to cancel certain outstanding “underwater” stock options issued under the 2014 Plan, in exchange for the grant under such plan of a lesser number of RSUs. The Company's non-employee directors and retirees were not eligible to participate in the Equity Exchange Program. The Company conducted the Equity Exchange Program as a “value-for-value” exchange, pursuant to which the Company issued new RSUs with a value approximately equal to the value of the options that are surrendered, in accordance with the terms approved by the Company’s shareholders at the annual meeting of shareholders held on June 27, 2017. The primary purpose of the Equity Exchange Program was to restore the intended retention and incentive value of certain employee and consultant equity awards. Participation in the Equity Exchange Program was voluntary. The Company used the 52-week high closing price of its ordinary shares (as measured at the commencement of the Equity Exchange Program) as a threshold for options eligible to be exchanged. For more information on the results of the Equity Exchange Program, see Note 11.b.Share-based awards to non-employee consultants:The Company granted 3,454 options to a non-employee consultant on March 12, 2007, which were exercised during the nine months ended September 30, 2017. The Company granted 14,357 fully vested RSUs during the nine months ended September 30, 2017consultants. consultants:SeptemberJune 30, 2017,2022, there are no outstanding options or RSUs held by non-employee consultants.c.Warrants to purchase ordinary shares:SeptemberJune 30, 2017:2022:
and REWALK ROBOTICS LTD. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 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 to purchasefor ordinary shares atissuable upon an exercise price of $10.08$7.50 per share, which were granted on July 14, 2014 as part of our series E investment round.(2)Represents a warrant to purchase ordinary shares at an exercise price of $9.64 per share, which was issued on December 31, 2015 to Kreos Capital V (Expert) Fund Limited, or Kreos, in connection with a loan made by Kreos to us. The warrant isus and are currently exercisable (in whole or in part) until the earlier of (i) December 30, 2025 or (ii) immediately prior to the consummation of a merger, consolidation, or reorganization of us with or into, or the sale or license of all or substantially all the assets or shares of us to, any other entity or person, other than a wholly-owned subsidiary of us, excluding any transaction in which ourthe Company’s shareholders prior to the transaction will hold more than 50% of the voting and economic rights of the surviving entity after the transaction. None of these warrants had been exercised as of SeptemberJune 30, 2017.2022. (3)Represents warrants issued as part of our follow-on offering in November 2016.(4)a warrant in the amount of 47,717 ordinary sharescommon warrants that were issued to Kreos as part of the $8.0 million drawdown under the Loan Agreement which occurred on December 28, 2016. See footnote 2 above1 for exercisability terms. d.Share-based compensation expense for employees and non-employees:both employees and non-employees in the condensed consolidated statements of operations for the periods shown below as follows (in thousands): 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 e.At-the-market offering program:On May 10, 2016, the Company entered into an equity distribution agreement (the “Equity Distribution Agreement”)Piper Jaffray, pursuantexercise prices ranging from $1.25 to which it may offer and sell, from time to time, ordinary shares having an aggregate offering price of up to $25 million, through Piper Jaffray acting as its agent. Subject to the terms and conditions of the Equity Distribution Agreement, Piper Jaffray will use its commercially reasonable efforts to sell on the Company’s behalf all of the ordinary shares requested to be sold by the Company, consistent with its normal trading and sales practices. Piper Jaffray may also act as principal in the sale of ordinary shares under the Equity Distribution Agreement. Sales may be made under the Company's Form S-3, in what may be deemed “at-the-market” equity offerings as defined in Rule 415 promulgated under the Securities Act of 1933, as amended (the “ATM Offering Program”). Sales may be made directly on or through the NASDAQ Capital Market, the existing trading market$1.79 have been exercised for the Company's ordinary shares, to or through a market maker other than on an exchange or otherwise, in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices, and/or any other method permitted by law, including in privately negotiated transactions. Piper Jaffray is entitled to compensation at a fixed commission rate of 3.0% of the gross sales price 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. The Company is not required to sell any of its ordinary shares at any time.The Company may raise up to $25 million under its ATM Offering Program pursuant to the terms of its agreement with the sales agent. However, due to limitations under the rules of Form S-3, which have applied to the Company since it filed its annual report on Form 10-K for the fiscal year ended December 31, 2016 on February 17, 2017, taking into account ordinary shares issued and settled under the Company’s ATM Offering Program since February 17, 2017, as of September 30, 2017, the Company may issue up to $4.3 million in primary offerings under its effective shelf registration statement on Form S-3 (File No. 333- 209833), including its ATM Offering Program, during the 12 months following February 17, 2017, unless and until it is no longer subject to such limitations.During the nine months ended September 30, 2017, the Company issued and sold 5,379,908 ordinary shares at an average price of $1.76 per share under its ATM Offering Program. The gross proceeds to the Company were $9.4 million, and the net aggregate proceeds after deducting commissions, fees and offering expenses in the amount of $439 thousand were $9.0 million. As a result, from the inception of the ATM Offering Program in May 2016 until September 30, 2017, the Company had sold 6,071,970 ordinary shares under the ATM Offering Program for gross proceeds of $14.0 million and net proceeds to the Company of $13.1 million (after commissions, fees and expenses). Additionally, as of that date, the Company had paid Piper Jaffray compensation of $420 thousand and had incurred total expenses of approximately $907 thousand in connection with the ATM Offering Program.$13.8 million.9:- 8:FINANCIAL EXPENSES (INCOME), NET $ 54 $ (28 14 15 ) $ 68 $ (13 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 REWALK ROBOTICS LTD. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)10:- 9:GEOGRAPHIC INFORMATION AND MAJOR CUSTOMER AND PRODUCT DATAareas:ASCareas: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 September 30, Nine Months Ended September 30,
June 30, 2017 2016 2017 2016 Revenues based on customer’s location: Israel $ — $ — $ — $ — United States 801 710 4,242 2,976 $ 578 $ 654 Europe 931 404 1,996 908 888 726 Asia-Pacific — 286 — 394 103 55 1 1 Total revenues $ 1,732 $ 1,400 $ 6,238 $ 4,278 $ 1,570 $ 1,436 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 (*) Long-lived assets are comprised of property and equipment, net.Major customer data as a percentage of total revenues (in thousands): September 30, December 31, 2017 2016 Customer A 42.6 % 33.3 %
June 30,20.4 % * ) 11.7 % - NOTE 11:- SUBSEQUENT EVENTSa.Legal claims: class action litigation (see Note 5d)As of November 1, 2017, there were three pending class action lawsuits againstIn June 2022, the Company and certain other defendants alleging claims under the Securities Act in connection withannounced that its Board of Directors (the “Board”) had approved a program to repurchase up to $8.0 million of the Company’s registration statement used in its IPO, includingordinary shares, par value NIS 0.25 per share, subject to receipt of Israeli court approval. In July 2022, the Consolidated Massachusetts State Court Actions and the Massachusetts Federal Court Action. These actions are further described above in Note 5d.Consolidated Massachusetts State Court Actions: TheCompany announced that it had received approval from an Israeli court heard oral argument on the Company's’ motion to dismiss on October 16, 2017.Massachusetts Federal Court Action: The court denied the Company's motion to stay and has set the time for the Company's motion to dismiss to November 10, 2017.b.Share option plans: Equity Exchange Program (see Note 8a)On the Equity Exchange Program’s expiration date of October 4, 2017, 46 holders tendered options to purchase an aggregate of 945,416 ordinary shares, representing 96.4% of all options eligible for exchange, and on October 5, 2017, the Company granted to these holders an aggregate of 251,872 new RSUs. 180,167 of these new RSUs were granted to the Company’s executive officers and “named executive officers” (as defined in Item 402 of Regulation S-K of the SEC). Unless the Company’s compensation committee accelerates their vesting, the new RSUs vest over a three-year period, with one-third vesting on the first anniversary of the date of grant and one-third vesting on each of the next two successive anniversaries. Additionally, the forfeiture terms of the new RSUs are substantially the same as those that apply generally to previously-granted RSUs granted under the 2014 Plan. The Equity Exchange Program is further described above in Note 8a.The stock options exchanged pursuant to the Exchange Program were canceled and the ordinary shares underlying such options became available for issuance under the 2014 Plan.Table of Contentsshare repurchase program, valid through January 20, 2023.MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS2016 Form 10-K for the year ended December 31, 2021 as filed with the SEC.SEC on February 24, 2022 and amended on May 2, 2022 (the “2021 Form 10-K”). 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.above.Special Note Regarding Forward-Looking StatementsIn addition to historical information, this quarterly report on Form 10-Q (this “quarterly report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, that are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, potential market opportunities and the effects of competition. Forward-looking statements may include projections regarding our future performance and, in some cases, can be identified by words like “anticipate,” “assume,” “believe,” “could,” “seek,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “future,” “should,” “will,” “would” or similar expressions that convey uncertainty of future events or outcomes and the negatives of those terms. These statements may be found in this section of this quarterly report titled “Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this quarterly report. These statements include, but are not limited to, statements regarding:our expectations regarding future growth, including our ability to increase sales in our existing geographic markets expand to new markets and achieve our planned expense reductions;our management’s conclusion in the notes to our unaudited condensed consolidated financial statements included in this report and to our audited consolidated financial statements for fiscal 2016, and our independent registered public accounting firm’s statement in its opinion relating to our audited consolidated financial statements for fiscal 2016, that there are a substantial doubts as to our ability to continue as a going concern;our ability to maintain and grow our reputation and the market acceptance of our products;our ability to achieve reimbursement from third-party payors for our products;our expectations as to our clinical research program and clinical results;our expectations as to the results of and Food and Drug Administration’s (the "FDA") potentialregulatory developments with respect to our mandatory 522 postmarket surveillance study;the outcome of ongoing shareholder class action litigation relating to our IPO;our ability to repay our secured indebtedness;our ability to improve our products and develop new products;our ability to maintain adequate protection of our intellectual property and to avoid violation of the intellectual property rights of others;our ability to gain and maintain regulatory approvals;our ability to secure capital from equity and debt financings in light of limitations under our Form S-3,the price range of our ordinary shares and conditions in the financial markets, and that risk that such financings may dilute our shareholders or restrict our business;Overviewour ability to use effectively the proceeds of any offerings of our securities;the impact of the market price of our ordinary shares on the determination of whether we are a passive foreign investment company;our ability to maintain relationships with existing customers and develop relationships with new customers.our ability to comply with the continued listing requirements of the NASDAQ Capital Market and the risk that our ordinary shares will be delisted if we cannot do so; andour compliance with medical device reporting regulations to report adverse events involving our products and the potential impact of such adverse events on our ability to market and sell its products.The preceding list is not intended to be an exhaustive list of all of our statements. The statements are based on our beliefs, assumptions and expectations of future performance, taking into account the information currently available to us. These statements are only predictions based upon our current expectations and projections about future events. There are important factors that could cause our actual results, levels of activity, performance or achievements to differ materially from the results, levels of activity, performance or achievements expressed or implied by the forward-looking statements. In particular, you should consider the risks provided under “Part 1, Item 1A. Risk Factors” of our 2016 Form 10-K, and in other reports filed by us with the SEC.You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur.Any forward 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 ReWalk an exoskeletonPersonal and ReWalk Rehabilitation devices for individuals with spinal cord injury (“SCI Products”), which are exoskeletons designed for individuals with paraplegia that usesuse our patented tilt-sensor technology and an onboardon-board computer and motion sensors to drive motorized legs that power movement.We currently derive revenue from sellingReWalk Rehabilitation exoskeleton devices that allowcurbs in the United States, which is currently under review.paraplegialower limb disability due to stroke. During the abilitysecond quarter of 2020 we finalized and moved to stand and walk once again. ReWalk Personal is currently designed for everyday use by individuals at home and in their communities, and is custom-fitted for each user. ReWalk Rehabilitation is designed for the clinical rehabilitation environment where it provides valuable exercise and therapy. It also enables individualsimplement two separate agreements to evaluate their capacity for using ReWalk Personal in the future.Since obtaining CE mark clearance at the end of 2012 and FDA clearance in June 2014 we have continued to increase our focus on selling the Personal device through third party payorsdistribute additional product lines in the U.S. market. We 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 U.S. Department of Veteran Affairs (“VA”) hospitals. These new products will improve our product offering to clinics as well as patients within the VA as they both have similar clinician and patient profile.through distributorsthe United Kingdom and work with distribution partners in certain other parts of the world. Additionally, wemajor countries. We have received regulatory approval to sell the ReWalk deiceoffices in other countries. In the future, we intend to seek approval from the applicable regulatory agencies in other jurisdictionsMarlborough, Massachusetts, Berlin, Germany and Yokneam, Israel, where we seek to market ReWalk. expect to generate revenues from a combination of third-party payors, self-payors, including private and government employers, and institutions. While a broad uniform policy of coverage and reimbursement by third-party commercial payors currently does not exist in the United States for electronic exoskeleton technologies such as the ReWalk Personal, we are pursuing various paths of reimbursement and support fundraising efforts by institutions and clinics. In December 2015, the Veterans' Administration (the “VA”)VA issued a national policy for the evaluation, training and procurement of ReWalk Personal exoskeleton systems for all qualifying veterans across the United States. The VA policy is the first national coverage policy in the United States for qualifying individuals who have suffered spinal cord injury. As of SeptemberJune 30, 2017,2022, we had placed 1630 units as part of the VA policy. We also regularly assist in litigation effortsindividuals bringing claims against nationalthe Centers for Medicare and regional insurers for reimbursementMedicaid Services (“CMS”), approximately 55% of the spinal cord injury population which are at least five years post their injury date are covered by CMS. In July 2020, a code was issued for ReWalk device,Personal 6.0 (effective October 1, 2020), which might later be followed by coverage policy of CMS. On June 8, 2022, CMS held its First Biannual Healthcare Common Procedure Coding System (HCPCS) public meeting to discuss several preliminary benefit and have receivedpayment decisions under the new Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) rules. Included on the agenda was a discussion of the Medicare benefit category and payment determination for the ReWalk Personal 6.0. No preliminary determination was made during the meeting, and we are currently awaiting further feedback from CMS, which we expect to receive revenues from settlements or judgments paid toduring the insured users. second half of 2022.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 signedindicated that they will provide coverage to users who meet certain inclusion and exclusion criteria. In February 2018, the head office of German statutory health insurance (“SHI”), Spitzenverband (“GKV”) confirmed their decision to list the ReWalk Personal 6.0 exoskeleton system in the German Medical Device Directory. This decision means that ReWalk will be listed among all medical devices for compensation, which SHI providers can procure for any approved beneficiary on a confirmationcase-by-case basis. During the year 2020 we announced several new agreements with German SHIs such as TK and letterDAK Gesundheit and others as well as the first German Private Health Insurer (“PHI”) that have chosen to enter into an agreement that outlines the process of agreement, respectively, regardingobtaining a device for eligible insured patient. We are currently working with several additional SHIs and PHIs on securing a formal operating contract that will establish the provisionprocess of obtaining a ReWalk systemsPersonal 6.0 device for all qualifying beneficiaries.their beneficiaries within their system.● ● ● ● Contentsengage with U.S. and European national and regional insurance providers, including European workers’ compensation groups, to secure potential coverage policies basedmonitor our sales pipeline on supportive data and appeal rulings that have deemed exoskeleton devices a “medically necessary” standard of care for individuals with SCI. As part of this ongoing initiative, a large national insurance provider has requested additional information from usday-to-day basis in order to continue to evaluateassess the effect of these limitations as some have short term effects and others affect our future pipeline development. While our sole manufacturer, Sanmina Corporation, has not shut down its facilities during the COVID-19 pandemic, supply chain delays, component shortages have had a change from its current non-coverage policy. Welimited impact on our manufacturing and are also submitting dataleading to two additional U.S. commercial groupsprice increases of specific parts. Other adverse impacts on our production capacity as a result of government directives or health protocols can occur. Moreover, the current limitations on our sales activities has made it difficult to effectively forecast our future requirements for policy reviews. In the future, we intend to pursue reimbursement coverage through the Centers for Medicare and Medicaid Services (“CMS”). While we believe that a positive response from CMS may broaden coverage by private insurers, we cannot currently predict how long it would take for us to receive a decision from CMS.systems. For more information, see “Part I.I, Item 1A. Risk Factors-Risks RelatedFactors.” of our 2021 Form 10-K in addition to Our Businessthe “Risk Factors” section included below.Our Industry-We may failliquidity could be adversely impacted by delays in payments of outstanding receivable amounts beyond normal payment terms, supply chain disruptions and operational challenges faced by our customers. The occurrence of new outbreaks of COVID-19 could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn or a global recession that could cause significant volatility or decline in the trading price of our securities, affect our ability to secure or maintain adequate insurance coverage or reimbursementexecute strategic business activities such as business combination, affect demand for ReWalk by third-party payors, including the VA, which risk may be heightened if insurers find ReWalk to be investigational or experimental or if new government regulations change existing reimbursement policies. Additionally, such coverage or reimbursement, even if maintained, may not produce revenues that are high enough to allow us to sell our products profitably” inand likely impact our 2016 Form 10-K.In early January 2017, we announcedoperating results. These may further limit or restrict our plansability to access capital on favorable terms, or at all, lead to consolidation that negatively impacts our business, weaken demand, increase competition, cause us to reduce our operating expensescapital spend further, or otherwise disrupt our business. 2017 by up to 30% as compared to 2016. We have been working toward such reductions through a combination of targeted savings, including by establishing quality improvement initiatives and lowering overall product cost, realigning our staffing priorities and reducing the size of our staff, including our reimbursement personnel, reducing spending on external appeals and lowering other corporate spending. In the near future, we intend to continue focusing on our reimbursement efforts with our streamlined staffing by pursuing insurance claims on a case-by-case basis, managing claims through the review process and external appeals, and investing in efforts to expand coverage.In June 2017, we unveiled our lightweight “soft suit” exoskeleton prototype, in anticipation of later clinical studies and commercialization of an initial indication designed for strokes, and in October 2017, we announced the start of pre-clinical testing on the Restore “soft suit” system for stroke patients. A prospective clinical trial with the Restore system is targeted to begin in early 2018, and we aim to commercialize the system for use by stroke patients in Europe in late 2018, followed by the United States, in late 2018 or early 2019, subjectGermany and Israel and are establishing in-office measures to contain the timing and receiptspread of CE mark and FDA clearance, respectively. We have not yet applied for these clearances and intendCOVID-19 according to apply in mid-2018. Obtaining clearance could involve an extensive and time-consuming process and delay commercialization beyondlocal regulations. With the vaccination of most of our planned timetable, andemployees, we cannot make any assurances regardinggradually returned to work from our offices during 2021 but are currently facing another disruption with the ultimate timing of FDA or CE mark clearance or commercializationspread of the products. For more information on the clearance processes, see “Part I, Item 1. Business-Government Regulation” in our 2016 Form 10-K. For more information on the Restore system, see our Current Report on Form 8-K filed with the SEC on October 23, 2017.We intend to focus our research and development efforts in the near term primarily on the Restore system for stroke patients and in the longer term on “soft suit” exoskeletons for additional indications affecting the ability to walk, including multiple sclerosis, cerebral palsy, Parkinson’s disease and elderly assistance,Omicron variant. Despite this current situation and the next generationchallenges it imposes, we have developed several methods to continue to engage with our current and prospective customers with some success through video conferencing, virtual training events, and online education demos to offer our support and showcase the value of our current ReWalk device. We anticipate that the next generation of the ReWalk will be a structural exoskeleton similar to our existing ReWalk devices, but with a slimmer profile, lighter body and improved drive mechanism.products.We have incurred net losses and negative cash flows from operations since inception. We anticipate that this will continue in the near term as we plan to focus our resources mainly on reimbursement efforts, and efforts to expand coverage for the ReWalk system, clinical studies, including our FDA postmarket study, the development and commercialization efforts for the lightweight “soft suit” exoskeleton to treat stroke patients and development efforts for similar “soft suit” exoskeleton technology for other indications affecting the ability to walk. We are committed to maintaining optionality to ensure that we can operate our business without interruptions, enhance our product portfolio and pursue new markets. As such, from time to time, we have engaged and may in the future engage in strategic transactions designed to enhance shareholder value including, but not limited to, alliances, such as our strategic alliance with Yaskawa Electric Corporation, divestitures, private placements, sales of our assets or business and joint ventures.Third Quarter 2017 Business HighlightsRevenues grew 24% to $1.7 million and 46% to $6.2 million for the three and nine months ended September 30, 2017, respectively, compared to revenues of $1.4 million and $4.3 million for the three and nine months ended September 30, 2016, respectively.We placed 16 ReWalk devices during the quarter ended September 30, 2017, of which 10 were placed in the Unites States, 3 were in our direct markets in Europe, and 3 were in other markets.We secured 7 favorable case by case insurance reimbursement decisions.We increased pending insurance claims to 218 in the U.S. and Germany, as of September 30, 2017, compared to 149 as of the end of the prior year period.Barmer confirmed it will provide ReWalk systems to all qualifying beneficiaries. Barmer provides insurance coverage for nearly ten million people in Germany, as a member of the German Statutory Health Insurance network and one of the most significant national insurers in the country. Exoskeletons will be provided to users that meet certain inclusion criteria and assessment by the German Health Insurance Medical Service (Medizinischer Dienst der Krankenversicherungen) before and after training. Barmer has already begun processing claims with users entering training for in-home use of an exoskeleton.Germany’s national social accident insurance provider, DGUV, signed a confirmation letter with ReWalk, stipulating that the DGUV's member payers, including the health insurance association Berufsgenossenschaft (also known as BG) and state insurers, will approve the supply of exoskeleton systems for qualifying beneficiaries on a case-by-case basis. DGUV is comprised of 35 different insurers, which provide coverage for more than 70 million individuals in Germany. Per the agreement, eligible individuals will go to BG clinics for evaluation as a part of the procurement.Completed critical design review processes and began the pre-clinical testing of the Restore lightweight soft-exosuit base design in preparation for the clinical study and commercialization of an initial indication designed for stroke patients.Total operating expenses in the third quarter of 2017 were $6.1 million, compared with $7.7 million in the prior year period. The reduction in operating expenses reflected our initiatives to reduce spending, as announced earlier in 2017.During the quarter ended September 30, 2017, we sold 1,678,288 shares generating total net proceeds to the Company of $2.9 million (after commissions, fees and expenses) under our ATM Offering Program. For more information, see Note 8e to our unaudited condensed consolidated financial statements set forth in “Part I, Item 1. Financial Statements” above and “Liquidity and Capital Resources” below.NineSix Months Ended SeptemberJune 30, 20172022 and SeptemberJune 30, 20162021ninesix months ended SeptemberJune 30, 2017,2022, as compared to the same periods in 2016,2021, are presented below. Thebelow (in thousands, except share and per share data). The results set forth below are not necessarily indicative of the results to be expected in future periods.
June 30,
June 30, 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 NineSix Months Ended SeptemberJune 30, 20172022 Compared to Three and NineSix Months Ended SeptemberJune 30, 20162021Revenuesninesix months ended SeptemberJune 30, 20172022, and 20162021, were as follows:
June 30,
June 30, Personal unit revenues consist of ReWalk Personal 6.0 and Distributed Products sale, rental, service and warranty revenue for home use. 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 $332$134 thousand, or 24%9%, for the three months ended SeptemberJune 30, 20172022, compared to the three months ended SeptemberJune 30, 2016. 2021. The increase is due to higher number of personal 6.0 units sold in Europe and higher number of distributed products sold in the United States.increaseddecreased by $2.0 million,$306 thousand, or 46%11%, for the ninesix months ended SeptemberJune 30, 20172022, compared to the ninesix months ended SeptemberJune 30, 2016.2021. The increase in revenuedecrease was driven primarily due to sales mix, including higher sales to the VA for use in an ongoing clinical study, reaching, asby a lower number of September 30, 2017, 60personal 6.0 and rehabilitation units placed as part of the study since its inceptionsold in the fourth quarter of 2015, and an increase in the conversion of rental units into purchases.United States during Q1-22.payors.payors as well as sales of the ReStore and other products to rehabilitation clinics and personal users.ninesix months ended SeptemberJune 30, 20172022, and 20162021 were as follows (in thousands):
June 30,
June 30, Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Gross profit $ 708 $ 290 $ 2,498 $ 868 threesix months ended SeptemberJune 30, 2017,2022, compared to 21% of revenue52% for the six months ended June 30, 2021. The decrease in gross profit for the three months ended SeptemberJune 30, 2016. Gross profit2022, was 40% of revenue for the nine months ended September 30, 2017, compared to 20% of revenue for the nine months ended September 30, 2016.mainly driven by higher freight and service-related expenses. The increasedecrease in gross profit for the six months ended June 30, 2022, was mainly driven by a lower volume of units sold during Q1-22 and a decrease in average selling price due to a change in sales mix the increase in the conversion of rental units into purchasesas well as higher freight and lower product costs.service-related expenses.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 currently expect from ReStore and our Distributed Products as well as due to an increase in the cost of product parts, especially as long as COVID-19 pandemic is affecting the market.ninesix months ended SeptemberJune 30, 20172022, and 20162021 were as follows (in thousands):
June 30,
June 30, 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 decreased by $350increased $146 thousand, or 18%, for the three months ended SeptemberJune 30, 20172022, compared to the three months ended SeptemberJune 30, 2016.2021. Research and development expenses increased $258 thousand, or 16%, for the six months ended June 30, 2022, compared to the six months ended June 30, 2021. The decrease in expensesincrease is primarily attributable to aincreased personnel and personnel related expenses and subcontractors’ expenses offset partially with grant received from the IIA, which were credited to research and development expenses, and a decrease in personnel costs and personnel-related costs, partially offset by an increase in costs related to development of the Restore device. Additionally, 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.IIA.in the near term primarilymainly on the Restore system for stroke patientsour current products maintenance and in the longer term on aimprovement 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 andor a home use design such as the next generation of our current ReWalk device.ReBoot design.ninesix months ended SeptemberJune 30, 20172022, and 20162021 were as follows (in thousands):
June 30,
June 30, 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 decreased $1.1 million,increased $734 thousand, or 30%46%, for the three months ended SeptemberJune 30, 20172022, compared to the three months ended SeptemberJune 30, 2016.2021. Sales and marketing expenses decreased $1.9increased $1.2 million, or 18%38%, for the ninesix months ended SeptemberJune 30, 20172022, compared to the ninesix months ended SeptemberJune 30, 2016.2021. The decrease isincrease for the three and six months ended June 30, 2022, was driven mainly by lowerhigher consulting expenses, tradeshows activities and personnel and personnel-related costs and consulting expenses as result of our recent cost reduction efforts.personnel related expenses.commercialization andefforts expand our reimbursement efforts for thecoverage of our 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.our current product commercialization.ninesix months ended SeptemberJune 30, 20172022, and 20162021 were as follows (in thousands):
June 30,
June 30, 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 decreased $146increased $374 thousand, or 7%26%, for the three months ended SeptemberJune 30, 20172022, compared to the three months ended SeptemberJune 30, 2016.2021. General and administrative expenses decreased $164increased $574 thousand, or 21%, for the ninesix months ended SeptemberJune 30, 20172022, compared to the ninesix months ended SeptemberJune 30, 2016.2021. The increase in the three and six months ended June 30, 2022, was mainly driven by increased professional services expenses due to the 2022 proxy process offset partially with a decrease in expenses is primarily attributable to lower professional expenses and personnel-relatedinsurance costs.Loss on Extinguishment of DebtLoss on extinguishment of debt of $313 thousand for the nine months ended September 30, 2017 is due to amending of our debt under the Loan Agreement with Kreos, such that $3.0 million in principal is now subject to the Kreos Convertible Note. The entry into the Kreos Convertible Note, which decreased the outstanding principal amount under the Loan Agreement from $17.2 million to $14.2 million, resulted in extinguishment of debt accounting treatment.ninesix months ended SeptemberJune 30, 20172022, and 20162021 were as follows (in thousands):
June 30,
June 30, Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Financial expenses, net $ 479 $ 508 $ 1,843 $ 1,514 decreased $29increased by $53 thousand, or 6% for the three months ended SeptemberJune 30, 20172022, compared to the three months ended SeptemberJune 30, 2016.2021. Financial expenses, net, increased $329by $81 thousand, or 22% for the ninesix months ended SeptemberJune 30, 20172022, compared to the ninesix months ended SeptemberJune 30, 2016. This2021. The increase with respectwas primarily due to the nine-month period is attributable mainly to interest expenses related to our Loan Agreement with Kreos.exchange rate fluctuations.TaxTaxestaxtaxes for the three and ninesix months ended SeptemberJune 30, 20172022, and 2016 was2021 were as follows (in thousands):
June 30,
June 30, Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Income tax $ 15 $ 9 $ 25 $ 39 Income taxesTaxes on income increased $6$17 thousand or 189% for the three months ended SeptemberJune 30, 20172022, compared to the three months ended SeptemberJune 30, 2016. Income taxes decreased $142021. Taxes on income increased $10 thousand or 19% for the ninesix months ended SeptemberJune 30, 20172022, compared to the ninesix months ended SeptemberJune 30, 2016.2021. The increase in the three and six months ended June 30, 2021, was mainly due to deferred taxes and timing differences in our subsidiaries.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 20162021 Form 10-K for a description of the significant accounting policies that we used to prepare our consolidated financial statements.20162021 Form 10-K,except for the updates provided in Note 3b3 of our unaudited condensed consolidated financial statements set forth in “Part I, Item 1. Financial Statements” of this quarterly report.report.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.AsDuring the six months ended June 30, 2022, we incurred a consolidated net loss of September$8.8 million and as of June 30, 2017, the Company2022, we had an accumulated deficit of $203.0 million. Our cash and cash equivalents of $12.9 million. The Company had an accumulated deficit in the total amount of $125 million as of SeptemberJune 30, 20172022, were $78.8 million and further losses are anticipated inour negative operating cash flow for the development of its business. Those factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due.The Company intends to finance operating costs over the next twelvesix months with existing cash on hand, reductions in operating spend, issuances under the Company's ATM Offering Program or other future issuances of equity and debt securities, or through a combination of the foregoing. However, the Company will need to seek additional sources of financing ifended June 30, 2022, was $9.4 million. We believe we require more funds than anticipated during the next 12 months or in later periods. For more information, see “Part II, Item 1A. Risk Factors-We may not have sufficient funds to meet certain future capital requirements or growsupport our business, and may need to take advantageoperations for more than 12 months following the issuance date 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 accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and liabilities and commitments in the normal course of business. The condensed consolidatedunaudited financial statements for the three and ninesix months ended SeptemberJune 30, 2017 do not include any adjustments2022.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.operations.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; (iv) general corporate purposes, including strokeworking capital needs; and other indications affecting the ability to walk.(v) potential acquisitions of business. 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 SharesOn 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 is payable monthly in arrears on any amounts drawn down at a rate of 10.75% per year from the applicable drawdown date through the date on which all principal is repaid. As of June 30, 2017, the Company raised more than $20 million in connection Beginning with the issuancefiling 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 intellectual property and equity interests in its subsidiaries, subject to certain permitted security interests.In connection with the $12.0 million drawdown under the Loan Agreement, we issued to Kreos the warrant to purchase up to 119,295 of our ordinary shares at an exercise price of $9.64 per share, which represented the average of the closing prices of our ordinary shares for the 30-day calendar period prior to the date of the issuance of the warrant, subject to adjustment as set forth in the warrant. In connection with the $8.0 million drawdown under the Loan Agreement on December 28, 2016, we increased the amount of the warrant from $1.15 million to $1.61 million, or by $460 thousand, such that the warrant represents the right to purchase up to 167,012 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. Subject to the terms of the warrant, the warrant is exercisable, in whole or in part, at any time prior to the earlier of (i) December 30, 2025, or (ii) immediately prior to the consummation of a merger, consolidation, or reorganization of us with or into, or the sale or license of all or substantially all our assets or shares to, any other entity or person, other than a wholly- owned subsidiary of us, excluding any transaction in which our shareholders prior to the transaction will hold more than 50% of the voting and economic rights of the surviving entity after the transaction.On June 9, 2017, the Company and Kreos entered into the First Amendment. As of that date the outstanding principal amount under the Loan Agreement was $17.2 million, Under the First Amendment, $3.0 million of the outstanding principal under the Loan Agreement is subject to repayment pursuant to the senior secured Kreos Convertible Note issued on June 9, 2017, thus reducing the outstanding principal amount under the Loan Agreement to $14.2 million as of June 9, 2017. This amended outstanding principal amount remains subject to repayment in accordance with the terms and conditions of the Loan Agreement and an amended repayment schedule. Interest on the Kreos Convertible Note is payable monthly in arrears at a rate of 10.75% per year.Kreos may convert the then-outstanding principal and “end of loan payments” under the Kreos Convertible Note, in whole or in part, on one or more occasions, into up to 2,523,660 ordinary shares, at a conversion price per share equal to $1.268 per share (subject to customary anti-dilution adjustments) at any time until the earlier of (i) the maturity date of June 9, 2020 or (ii) a “Change of Control,” as defined in the Loan Agreement. For more information, see Note 6 to our condensed consolidated financial statements included in “Part I, Item 1” of this quarterly report.Equity RaisesOur initial public offering in September 2014 generated $36.3 million in net proceeds. Additionally, on May 9, 2016, the SEC declared effective our Form S-3, pursuant to which we registered up to $100 million of ordinary shares, warrants and/or debt securities and up to 4,388,143 ordinary shares offered by selling shareholders named therein. On May 10, 2016, we entered into our Equity Distribution Agreement with Piper Jaffray, pursuant to which we may offer and sell, from time to time, ordinary shares having an aggregate offering price of up to $25.0 million through Piper Jaffray acting as our agent. The ordinary shares issued under the Equity Distribution Agreement may be registered under the Securities Act using our Form S-3. Additionally, on November 1, 2016, we closed our follow-on public offering of 3,250,000 units, each consisting of one ordinary share and 0.75 of a warrant to purchase one ordinary share. The ordinary shares and the warrants underlying the units and the ordinary shares issuable upon exercise of the warrants are registered under the Securities Act on our Form S-3.Since we filed our 2016 Form 10-K on February 17, 2017, we have beenwere subject to limitations under the applicable rules of Form S-3, which constrainconstrained our ability to secure capital pursuant to our ATM Offering Program (as defined below) or other public offerings pursuant to our effective Form S-3. These rules limit the size of primary securities offerings conducted by issuers with an aggregate market value of common stock held by nonaffiliated persons and entities (known as our “public float”)a public float of less than $75 million to no more than one-third of their public float in any 12-month period. AsAt the time of February 17, 2017,filing our public float was approximately $41.2 million, restricting the size of primary offerings under our Form S-3 to approximately $13.7 millionannual report for the following 12 months, unless and untilyear ended December 31, 2020, we arewere no longer subject to these limitations. Welimitations, because our public float had reached at least $75 million in the 60 days preceding the filing of that annual report. Likewise, because our public float was at least $75 million within the 60 days preceding the date of our 2021 Annual Report, we are not currently subject to these limitations, and will ceasecontinue to not be subject to these limitations oncefor the remainder of the 2022 fiscal year and until such time as we file our next annual report for the year ended December 31, 2022, at which time we will be required to re-test our status under these rules. If our public float exceedssubsequently drops below $75 million in which case we would reassessas of the applicationfiling of these rules in 2018, when we file our next annual report on Form 10-K, foror at the fiscal year ending December 31, 2017. Additionally,time we file a new Form S-3, we will become subject to these limitations again, until the date that our public float again reaches $75 million. These limitations do not apply to secondary offerings for the resale of our ordinary shares or other securities by selling shareholders or to the issuance of ordinary shares upon conversion by holders of convertible securities, such as warrants. Taking into accountWe have registered up to $100 million of ordinary shares issuedwarrants and/or debt securities and settled undercertain other outstanding securities with registration rights on 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.To raise additional capital in securities offerings above that limitation, we may be required to seek other methods of completing primary offerings, including, for example, under anew registration statement on Form S-1 (which has noS-3, which was declared effective by the SEC in May 2022.size limitations), the preparationpre-funded warrants are exercised in full. Each ordinary share was sold at an offering price of which would be more time-consuming$2.035 and costly, including due to potential SEC review. We may also conduct such offerings in the formeach pre-funded warrant was sold at an offering price of private placements, potentially with registration rights or priced at a discount$2.034 (equal to the market valuepurchase price per ordinary share minus the exercise price of ourthe pre-funded warrant). The offering of the ordinary shares, which could require shareholder approval under the rulespre-funded warrants and the ordinary shares that are issuable from time to time upon exercise of the NASDAQ. Any such transactions could resultpre-funded warrants was made pursuant to our shelf registration statement on Form S-3 initially filed with the SEC on May 9, 2019, and declared effective by the SEC on May 23, 2019, and the ordinary warrants were issued in substantial dilutiona concurrent private placement. The ordinary warrants are exercisable at any time and from time to time, in whole or in part, following the date of shareholders’ interests.issuance and ending five and one-half years from the date of issuance. All of the pre-funded warrants were exercised in full on September 27, 2021, and the offering closed on September 29, 2021. Additionally, we issued warrants to purchase up to 960,811 ordinary shares, with an exercise price of $2.5438 per share, exercisable from September 27, 2021, until September 27, 2026, to certain representatives of H.C. Wainwright as compensation for its role as the placement agent in our September 2021 private placement offering.agent.agent (the “ATM Offering Program”). 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.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.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. During the nine months ended September 30, 2017, the Company issued and sold 5,379,908 ordinary shares at an average price of $1.76 per share under its ATM Offering Program (as defined in Note 8e below). The gross proceeds to the Company were $9,448 thousand, and the net aggregate proceeds after deducting commissions, fees and offering expenses in the amount of $439 thousand were $9.0 million. As a result, from the inceptionWe temporarily suspended use of the ATM Offering Program in May 2016 untilon February 20, 2019 to facilitate our February 2019 “best efforts” public offering. As of September 30, 2017,2020, we had sold 6,071,970302,092 ordinary shares under the ATM Offering Program for net proceeds to us of $13.1$14.5 million (after commissions, fees, and expenses). Additionally, as of that date, we had paid Piper Jaffray compensation of $420$471 thousand and had incurred total expenses (including such commissions) of approximately $907 thousand$1.2 million in connection with the ATM Offering Program. No sales were made under the ATM Offering Program during the year ended December 31, 2021 or during the six months ended June 30, 2022.this programthe at-the-market offering or similar continuous offering programs opportunistically to raise additional funds.Follow-on Offering of UnitsOn November 1, 2016, we closed our follow-on public offering of 3,250,000 units, each consisting of one ordinary share and 0.75 of a warrant to purchase one ordinary share. The units were not issued or certificated, and the ordinary shares and warrants underlyingor which may be adjusted after issuance upon the units were immediately separable and issued separately. The warrants are not listedoccurrence 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 & Co, LLC, beginning on the NASDAQ Capital Market, any other national securities exchange or any other nationally recognized trading system. TheMarch 29, 2022. Such limitations may inhibit our ability to access capital efficiently.warrants underlyingUnited States Securities Exchange Act of 1934, as amended (the “Exchange Act”). The timing and amount of shares repurchased will be determined by our management, within guidelines to be established by the units andBoard or a committee thereof, based on its ongoing evaluation of our capital needs, market conditions, the trading price of our ordinary shares, issuable upon exercisetrading volume and other factors, subject to applicable law. For all or a portion of the warrants are registeredauthorized repurchase amount, we may enter into a plan compliant with Rule 10b5-1 under the SecuritiesExchange Act on our Form S-3. Our estimated net aggregate proceeds, after deducting underwriting discounts and commissions and estimated expenses, were $11.1 million. We also granted Oppenheimer, as underwriter under the underwriting agreement, an optionthat is designed to purchase upfacilitate these repurchases.487,500 additional units at the public offering price, less the underwriting discount, for 30 days after October 27, 2016, which Oppenheimer did not exercise.The warrants became exercisable during the period commencing from the date of original issuance and ending on November 1, 2021, the expiration date of the warrants, at an initial exercise price of $4.75 per ordinary share. The exercise price and theacquire a specific number of ordinary shares, into which the warrantsand may be exercised are subject to adjustment upon certain corporate events, including stock splits, reverse stock splits, combinations, stock dividends, recapitalizations, reorganizations and certain other events. Our board of directors may also determine to make such adjustmentssuspended or discontinued at any time. There can be no assurance as to the exercise price andtiming or number of ordinary shares to be issued upon exercise based on similar events, including the granting of stock appreciation rights, phantom stock rights or other rights with equity features. At any time, the board of directors may reduce the exercise price of the warrants to any amount and for any period of time it deems appropriate. As of September 30, 2017, none of the warrants issuedrepurchases in the follow-on offering had been exercised.future, and any such share repurchases will be funded from available working capital.NineSix Months Ended SeptemberJune 30, 20172022 and SeptemberJune 30, 20162021 (in thousands):
June 30, 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 ) decreased to $17.1increased by $3.04 million for the nine months ended September 30, 2017 compared to $20.2 million for the nine months ended September 30, 2016or 48% primarily as a result of increased revenue, lower operating expenses as result of recent cost reduction efforts,due higher consulting and a decrease in expenses related to Collaboration Agreement and the License Agreement, as discussed above.professional services expenses.Net Cash Used in Investing ActivitiesNet cash used in investing activities decreased to $19 thousand for the nine months ended September 30, 2017 compared to $408 thousand for the nine months ended September 30, 2016 primarily as a result of decreased use of cash for the purchase of property and equipment.was $6.3decreased by $50.2 million for the ninesix months ended SeptemberJune 30, 2017,2022 compared to $15.1 million in the ninesix months ended SeptemberJune 30, 2016. The decrease is related2021, primarily due to the receiptproceeds received through our February 2021 Offering and warrants exercises received during the first quarter of proceeds under our Loan Agreement in the nine months period ended September 30, 2016, which were higher than the proceeds we received from issuance of ordinary shares in the ATM Offering Program in the nine months period ended September 30, 2017.2021.CommercialContractual CommitmentsSeptemberJune 30, 2017.2022.
1 year (1) (2) (3) 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 (1) The Company depends on one contract manufacturer, Sanmina. We place our manufacturing orders with Sanmina pursuant to purchase orders or by providing forecasts for future requirements.(2) Our Research Collaboration Agreement is for a period of five years and requires us to pay in quarterly installments for the funding of our joint research collaboration with Harvard, subject to a minimum funding commitment under applicable circumstances. Our License Agreement consists of patent reimbursement expenses payments and of license upfront fee payment. There are also several milestone payments contingent upon the achievement of certain product development and commercialization milestones and royalty payments on net sales from certain patents licensed to Harvard. These product development and commercialization milestones depend on favorable clinical developments, sales and regulatory actions, some or all of which may not occur. Since the achievement and timing of these milestones is neither determinable nor reasonably estimable, these milestone payments are not included in this “Contractual Obligations” table or recorded on our consolidated condensed balance sheet as of September 30, 2017. Moreover, since such royalties are dependent on future product sales which are neither determinable nor reasonably estimable, these royalty payments are not included in this “Contractual Obligations” table or recorded on our condensed consolidated balance sheet as of September 30, 2017. For more information, see Note 7 to our condensed consolidated financial statements included in “Part I, Item 1” of this quarterly report.(3) Our operating leases consist of leases for our facilities and motor vehicles. For more information, see “-Liquidity and Capital Resources -Loan Agreement with Kreos and Related Warrant to Purchase Ordinary Shares” above.(4) Our long-term debt obligations consist of payments of principal and interest under our Loan Agreement with Kreos.3.526:3.50:$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 1.18191.04 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.2022.SeptemberJune 30, 2017. 2022.thirdsecond quarter of 2017.2022. 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 20162021 Form 10-K.ChiefPrincipal Financial Officer, as appropriate, to allow timely decisions regarding required financial disclosure.ChiefPrincipal 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 ChiefPrincipal 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 ChiefPrincipal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.thirdquarter of 2017ended June 30, 2022, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.20162021 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.20162021 Form 10-K, except as noted below:We may not have sufficient funds to meet certain future capital requirements or grow our business, and may need to take advantage of various forms of capital-raising transactions. Future equity or debt financings or strategic transactions may dilute our shareholders, disrupt our business or place us under restrictive covenants, while limitations under our registration statement on Form S-3 may make it more difficult for us to raise money in the public markets.As of September 30, 2017, we had an accumulated deficit in the total amount of $125 million, and further losses are anticipated in the development of our business. Those factors raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern depends upon our obtaining the necessary financing to meet our obligations and timely repay our liabilities arising from normal business operations.We intend to finance operating costs over the next 12 months with existing cash on hand, issuances of equity and/or debt securities, including issuances under our ATM Offering Program, or through a combination of the foregoing. However, we will need to seek additional sources of financing to the extent that we require more funds than anticipated during the next 12 months or in later periods, including if we cannot make our loan repayments under our Loan Agreement with Kreos or if we cannot raise sufficient funds from equity issuances, such as the ATM Offering Program. Due to limitations under the rules of Form S-3, which have applied to us since we filed our 2016 Form 10-K, and taking into account ordinary shares issued and settled under our ATM Offering Program, as of September 30, 2017, we could only issue up to $4.3 million in primary offerings under our effective Form S-3, including our ATM Offering Program, during the 12 months following February 17, 2017, until and unless we cease to be subject to these limitations. For more information on these limitations, see “Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-Equity Raises.” This limitation makes it more difficult for us to raise money in the public markets.To raise additional capital in the public markets, including taking into account the limitation above, we may be required to seek other more costly or time-consuming methods, such as registration statements on Form S-1. We may also conduct fundraising transactions in the form of private placements, potentially with registration rights or priced at a discount to the market value of our ordinary shares, which could require shareholder approval under the rules of The NASDAQ Stock Market LLC (“NASDAQ”), or other equity raise transactions. In addition to increased capital costs, any such transactions could result in substantial dilution of our shareholders’ interests, transfer control to a new investor and diminish the value of an investmentdisclosed in our ordinary shares. We may also need to pursue strategic transactions, such as joint ventures, in-licensing transactions or the sale of our business or all or substantially all of our assets. These private financings and strategic transactions could require significant management attention, disrupt our business, adversely affect our financial results, be unsuccessful or fail to achieve the desired results. We are in discussions routinely with such possible sources of additional funding, including during the pendency of sales under our ATM Offering Program. We have not entered into any agreement or understanding regarding any such transaction.As another alternative, we may in the future choose to refinance up to a substantial portion of our remaining indebtedness under the Loan Agreement, including by tying our repayment obligations and amortization schedule to the achievement of certain business milestones, which we have considered with Kreos from time to time. Agreements governing any borrowing arrangement may contain covenants that could restrict our operations. In sum, if we are unable to obtain additional fundsQuarterly Report on reasonable terms, it could impair our efforts to develop and commercialize existing and new products and to repay our liabilities as they become due, materially harming our results of operations and financial condition.If we are unable to leverage and expand our sales, marketing, training and reimbursement infrastructure, including in light of our announced plan to reduce corporate spending, we may fail to increase our revenues.A key element of our long-term business strategy is the continued enhancement of our sales, marketing, training and reimbursement infrastructure, through the training, retaining and motivating of skilled sales and marketing representatives and reimbursement personnel with industry experience and knowledge. Our ability to derive revenue from sales of our products depends largely on our ability to market the products and obtain reimbursements for them. In order to continue growing our business efficiently, we must therefore coordinate the development of our sales, marketing, training and reimbursement infrastructure with the timing of regulatory approvals, decisions regarding reimbursements and other factors in various geographies. Managing and maintaining this infrastructure is expensive and time-consuming, and an inability to leverage such an organization effectively, or in coordination with regulatory or other developments, could inhibit potential sales and the penetration and adoption of ReWalk into both existing and new markets. In addition, as previously announced, we have set a goal to reduce total operating expenses in 2017 by up to 30% as compared to 2016, in part through a realignment of and reduction in staffing to match our 2017 business goals. As we move forward with these plans, we intend to continue funding field sales, service and training efforts for our ReWalk products. However, certain decisions we make regarding staffing in these areas in our efforts to decrease expenses could have unintended negative effects on our revenues, such as by weakening our sales infrastructure, impairing our reimbursement efforts and/or harming the quality of our customer service. For instance, the number of our staff focused on reimbursement has decreased, and we recently consolidated the functions of two employees that previously focused on reimbursement into the roles of certain executive officers and employees in other departments. Additionally, our Chief Commercial Officer recently passed away.We also expect to face significant challenges as we manage and continue to improve our sales and marketing infrastructure and work to retain the individuals who make up those networks. Newly hired sales representatives require training and take time to achieve full productivity. If we fail to train new hires adequately, or if we experience high turnover in our sales force in the future, we cannot be certain that new hires will become as productive as may be necessary to maintain or increase our sales. In addition, if we are not able to retain, subject to our plans to cut operating expenses, and continue to recruit our network of internal trainers, we may not be able to successfully train customers on the use of ReWalk, which could inhibit new sales and harm our reputation. If we are unable to expand our sales, marketing and training capabilities, we may not be able to effectively commercialize ReWalk, or enhance the strength of our brand, which could have a material adverse effect on our operating results.We are subject to securities class action lawsuits against us that may result in an adverse outcome.Between September 2016 and January 2017, eight putative class actions on behalf of alleged shareholders that purchased or acquired our ordinary shares pursuant and/or traceable to our registration statement on Form F-1 (File No. 333-197344) used in connection with our IPO, were commenced in the following courts: (i) the Superior Court of the State of California, County of San Mateo; (ii) the Superior Court of the Commonwealth of Massachusetts, Suffolk County; (iii) the United States District CourtForm10-Q for the Northern District of California; and (iv) the United States District Court for the District of Massachusetts. The actions involve claims under various sections of the Securities Act against us, certain of our current and former directors and officers, the underwriters of our IPO and certain other defendants. The four actions commenced in the Superior Court of the State of California, County of San Mateo have been dismissed for lack of personal jurisdiction, and the action commenced in the United States District Court for the Northern District of California has been voluntarily dismissed. As of November 1, 2017, three actions remain pending, including (i) the two actions commenced in the Superior Court of the Commonwealth of Massachusetts, which have been consolidated, and (ii) the action commenced in the United States District Court for the District of Massachusetts, 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.We are generally required, to the extent permitted by Israeli law, to indemnify our current and former directors and officers who are named as defendants in these types of lawsuits. We also have certain contractual indemnification obligations to the underwriters of our IPO regarding the securities class action lawsuits. While a certain amount of insurance coverage is available for expenses or losses associated with these lawsuits, this coverage may not be sufficient. Based on information currently available, we are unable to reasonably estimate a possible loss or range of possible losses, if any, with regard to these lawsuits; therefore, no litigation reserve has been recorded in our consolidated balance sheets. Although we plan to defend against these lawsuits vigorously, there can be no assurance that a favorable final outcome will be obtained. These lawsuits or future litigation may require significant attention from management and could result in significant legal expenses, settlement costs or damage awards that could have a materially adverse impact on our financial position, results of operations and cash flows.We have initiated a mandatory postmarket surveillance study on our ReWalk Personal 6.0 with a revised FDA-approved protocol, addressing certain violations and deficiencies cited by the FDA that had previously led the FDA to warn us of potential regulatory action. Going forward, if we cannot meet certain FDA requirements for the study or otherwise satisfy FDA requests promptly, or if our study produces unfavorable results, we could receive additional FDA warnings, which could materially and adversely affect our labeling or marketing efforts.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 letter on September 30, 2015 (the "September 2015 Letter"), warning of potential regulatory action against us for violations of Section 522 of the 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. Between June 2014 and our receipt of the September 2015 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 ("the February 2016 Letter"), requesting additional changes to our study protocol and asking that we comply within 30 days. This letter also discussed the FDA’s request, as modified in our later discussions with the FDA, for a new premarket notification for our ReWalk device(the "special 510(k)"), linked to what the FDA viewed as changes 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 to 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 Letter, we had adequately addressed the violations cited in the September 2015 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. We intend to continue providing the FDA with such reports on a timely basis going forward.We expect we will be able to respond promptly to the FDA’s further requests associated with the postmarket surveillance study with the assistance of our outside clinical and regulatory services provider. However, we may ultimately be unable to timely satisfy the FDA's requests with respect to the study. Additionally, as of November 1, 2017, we had three active centers enrolling patients in the study, with a total of seven enrolled patients and four active patients, and two others were completing the process to enroll patients by the second half of 2017. This is substantially below the estimated number of patients included in our study protocol, currently leading the FDA to label our progress as “inadequate.” We may seek to modify our study protocol to expand the pool of patients and/or decrease the total number of patients, which change will require approval from the FDA. However, there can be no assurance that the FDA will agree to modify our study or that we will manage to attract the required number of patients under the current requirements or with the revised requirements. If we cannot meet FDA requirements 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% of our revenues in the fiscal year ended December 31, 2016 and the nine months ended September 30, 2017, respectively, 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.March 31, 2022.If our product may have caused or contributed to a death or a serious injury, or if our product malfunctioned and the malfunction’s recurrence would be likely to cause or contribute to a death or serious injury, we must comply with medical device reporting regulations, which could result in voluntary corrective actions or agency enforcement actions against us.Under the medical device reporting (MDR) regulations of the FDA, we are required to report to the FDA any incident in which our product may have caused or contributed to a death or serious injury or in which our product malfunctioned and, if the malfunction were to recur, our product or a similar device marketed by us would be likely to cause or contribute to death or serious injury. In addition, all manufacturers placing medical devices in European Union markets are legally bound to report any serious or potentially serious incidents involving devices they produce or sell to the relevant authority in whose jurisdiction the incident occurred. We recently submitted MDRs to report incidents in which ReWalk Personal users sustained falls or fractures. The FDA has sent us letters requesting additional information relating to these MDRs. Additional events may occur in the future that may require us to report to the FDA pursuant to the MDR regulations. Any adverse event involving our products could result in future voluntary corrective actions, such as recalls or customer letters, agency action, such as inspection, mandatory recall, notification to healthcare professionals and users, or other enforcement action. Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require financial resources and distract management, and may harm our reputation and financial results. In addition, failure to report such adverse events to appropriate government authorities on a timely basis, or at all, could result in enforcement action against us.A decline in the value of our ordinary shares could result in our being characterized as a passive foreign investment company, which would cause adverse tax consequences for U.S. investors.Generally, if for any taxable year 75% or more of our gross income is passive income, or at least 50% of the average quarterly value of our assets (which may be determined in part by the market value of our ordinary shares, which is subject to change) are held for the production of, or produce, passive income, we would be characterized as a passive foreign investment company (“PFIC”), for U.S. federal income tax purposes. Passive income for this purpose generally includes, among other things, certain dividends, interest, royalties, rents and gains from commodities and securities transactions and from the sale or exchange of property that gives rise to passive income. Passive income also includes amounts derived by reason of the temporary investment of funds, including those raised in a public offering. In determining whether a non-U.S. corporation is a PFIC, a proportionate share of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into account. Based on our gross income and assets, the market price of our ordinary shares, and the nature of our business, we do not believe that we were a PFIC for the taxable year ended December 31, 2016. However, there can be no assurance that we will not be considered a PFIC for 2017 or any taxable year. PFIC status is determined as of the end of the taxable year and depends on a number of factors, including the value of a corporation’s assets and the amount and type of its gross income. Further, because the value of our gross assets is likely to be determined in large part by reference to our market capitalization, there is a significant risk that a decline in the value of our ordinary shares could result in our becoming a PFIC.If we are characterized as a PFIC, U.S. Holders (as defined below) may suffer adverse tax consequences, including the following: (i) having gains realized on the sale of our securities treated as ordinary income, rather than as capital gains; (ii) losing the preferential rate applicable to dividends received on our ordinary shares by individuals who are U.S. Holders, and (iii) having additional taxes equal to the interest charges generally applicable to underpayments of tax apply to distributions by us and the proceeds of sales of our ordinary shares in public offerings. A “U.S. Holder” is defined as follows: a citizen or resident of the United States; a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any state thereof, including the District of Columbia; an estate the income of which is subject to U.S. federal income taxation regardless of its source; or a trust if such trust has validly elected to be treated as a United States person for U.S. federal income tax purposes or if (1) a court within the United States is able to exercise primary supervision over its administration and (2) one or more United States persons have the authority to control all of the substantial decisions of such trust. Certain elections exist that may alleviate some of the adverse consequences of PFIC status and would result in an alternative treatment (such as mark-to-market treatment). However, we do not intend to provide the information necessary for U.S. Holders to make qualified electing fund elections if we are classified as a PFIC.Future grants of ordinary shares under our equity incentive plans to our employees, non-employee directors and consultants, or sales by these individuals in the public market, could result in substantial dilution, thus decreasing the value of your investment in our ordinary shares, and certain grants may also require shareholder approval.We have historically used, and continue to use, our ordinary shares as a means of both rewarding our employees, non-employee directors and consultants and aligning their interests with those of our shareholders. As of September 30, 2017, 3,194,556 ordinary shares remained available for issuance to our and our affiliates’ respective employees, non-employee directors and consultants under our equity incentive plans, including 2,592,398 ordinary shares subject to outstanding awards (consisting of outstanding options to purchase 2,238,961 ordinary shares and 353,437 ordinary shares underlying unvested RSUs). These numbers do not reflect the ultimate results of our one-time Equity Exchange Program for the exchange of “underwater” stock options for new RSUs, which expired on October 4, 2017. For more information, see Note 8a to our unaudited condensed consolidated financial statements set forth in “Part I, Item 1. Financial Statements” above. Additionally, the number of ordinary shares available for issuance under our 2014 Plan may increase each year due to the operation of an “evergreen” provision previously approved by our shareholders. Pursuant to this provision, the 2014 Plan’s reserve increases on January 1 of each calendar year during the plan’s term by the lesser of (i) 972,000, (ii) 4% of the total number of shares outstanding on December 31 of the immediately preceding calendar year and (iii) an amount determined by our board of directors.We previously signed an agreement with a non-employee consultant, who agreed to assist us in commercially promoting and expanding insurance coverage of our ReWalk devices. Although this agreement terminated in May 2017 and was not extended, if we may choose to compensate this consultant for services in an amount equal to those provided for in the expired agreement, the consultant may receive up to ten percent of the increase in our market capitalization following the dates when coverage becomes active under national insurance policies that the consultant secures for us, subject to certain monetary limits. For more information, see Note 8e to our audited consolidated financial statements in our 2016 Form 10-K. If we opt to pay the consultant in ordinary shares, we may need to seek shareholder approval pursuant to the rules of NASDAQ, potentially due to the size of an issuance or an insufficient number of ordinary shares available for issuance under our 2014 Plan. Any such issuance, or the perception that we will make issuances when we solicit shareholder approval, could substantially dilute existing shareholders and materially decrease the value of an investment in our ordinary shares. Additionally, to the extent registered on a Form S-8, ordinary shares granted or issued under our equity incentive plans will, subject to vesting provisions, lock-up restrictions and Rule 144 volume limitations applicable to our “affiliates,” be available for sale in the open market immediately upon registration. Sales of a substantial number of the above-mentioned ordinary shares in the public market could result in a significant decrease in the market price of our ordinary shares and have a material adverse effect on an investment in our ordinary shares.Sales of a substantial number of ordinary shares by us, our large shareholders and holders of our warrants and other derivative securities, several of whom have registration rights, or volatility or a reduction in the market price of our ordinary shares could have an adverse effect on our ordinary shares.Sales by us or our shareholders of a substantial number of ordinary shares in the public market, or the perception that these sales might occur, could cause the value of our ordinary shares to decline or could impair our ability to raise capital through a future sale of, or pay for acquisitions using, our equity securities.As of September 30, 2017, 403,804 ordinary shares were issuable pursuant to the exercise of outstanding warrants granted as part of our Series E Preferred investment round in July 2014 at an exercise price of $10.08 and 2,437,500 ordinary shares were issuable pursuant to the exercise of warrants issued in our follow-on offering of ordinary shares and warrants in November 2016, with an exercise price of $4.75. There were also 167,012 ordinary shares issuable pursuant to the exercise of warrants granted to Kreos in connection with the Loan Agreement in January and December 2016, with an exercise price of $9.64, and 2,523,660 ordinary shares issuable pursuant to the conversion of the Kreos Convertible Note at a conversion price of $1.268 per share (subject to customary anti-dilution adjustments).Additionally, pursuant to our Amended and Restated Shareholders’ Rights Agreement, dated July 14, 2014, with certain of our shareholders, as of September 30, 2017, the beneficial owners of approximately 4,116,143 of our ordinary shares were entitled to require that we register their shares under the Securities Act for resale into the public markets. In our Kreos Convertible Note, we separately undertook to prepare and file with the SEC a registration statement to enable the resale by Kreos of up to 2,523,660 ordinary shares to be issued upon conversion of the note, unless they could otherwise be freely sold using Rule 144 under the Securities Act.All shares sold pursuant to an offering covered by a registration statement would be freely transferable. With respect to the outstanding warrants and the Kreos Convertible Note, there may be certain restrictions on the holders to sell the underlying ordinary shares to the extent they are restricted securities, held by “affiliates” or would exceed certain ownership thresholds. Certain of our largest shareholders, namely, Yaskawa Electric Corporation (“Yaskawa”), and certain entities and individuals affiliated with SCP Vitalife Partners II L.P (“Vitalife”), may also have limitations under Rule 144 under the Securities Act on the resale of certain ordinary shares they hold. Despite these limitations, if we, our existing shareholders or their affiliates sell a substantial number of the above-mentioned ordinary shares in the public market, the market price of our ordinary shares could decrease significantly. Any such decrease could impair the value of your investment in us.The market price of our ordinary shares has also been highly volatile and may fluctuate substantially due to several factors. Effective May 2017, we transferred our ordinary shares from the NASDAQ Global Market to the NASDAQ Capital Market due to our failure to meet the market value of listed securities requirements and the alternative total assets and total revenue standard requirements of the NASDAQ Global Market. Additionally, since the first quarter of 2017, our ordinary shares have traded periodically between $1.00 and $2.00, reaching an all-time low of $1.10 in the second quarter of 2017. To maintain our current listing on the NASDAQ Capital Market, we must meet certain requirements, including, among others, a minimum closing bid price per share. If the closing bid price of our ordinary shares for 30 consecutive business days is less than $1.00 per share, or if we cannot meet other continued listing requirements, NASDAQ will send us a notification of deficiency and provide us a cure period of 180 days, subject to a potential subsequent cure period of an additional 180 days. After the applicable period, if we cannot show compliance with certain NASDAQ Capital Market listing requirements, we will become subject to delisting proceedings. The perception among investors that we are at heightened risk of delisting could negatively affect the market price and trading volume of our ordinary shares. Additionally, if we become subject to delisting proceedings and fail to appeal a delisting determination, our ordinary shares will be delisted from NASDAQ entirely, which could reduce the number of investors willing to hold or acquire our ordinary shares, increase the volatility of the price of such shares and significantly lower the shares’ trading price and volume. Any of these events could also reduce our liquidity and impair our ability to raise capital.A small number of our shareholders have a significant influence over matters requiring shareholder approval, which could delay or prevent a change of control.As of September 30, 2017, the largest beneficial owners of our shares were Yaskawa, certain entities and individuals affiliated with Vitalife, and Kreos, which is deemed a beneficial owner of our ordinary shares pursuant to its right to acquire ordinary shares upon the exercise of the warrants and the conversion of the Kreos Convertible Note, which may be converted at any time, subject to its terms. These holders beneficially owned in the aggregate 23.5% of our ordinary shares as of September 30, 2017 (taking into account Kreos’s beneficial ownership in the total number of ordinary shares outstanding). As a result, Yaskawa and Vitalife, and, if it were to convert all ordinary shares underlying its convertible note, Kreos, could exert significant influence over our operations and business strategy and would together have sufficient voting power to influence significantly the outcome of matters requiring shareholder approval. These matters may include:determining the composition of our board of directors, which has the authority to direct our business and to appoint and remove our officers;approving or rejecting a merger, consolidation or other business combination;raising future capital; andamending our Second Amended and Restated Articles of Association, as amended by the First Amendment thereto, which govern the rights attached to our ordinary shares.This concentration of ownership of our ordinary shares could delay or prevent proxy contests, mergers, tender offers, open-market purchase programs or other purchases of our ordinary shares that might otherwise give you the opportunity to realize a premium over the then-prevailing market price of our ordinary shares. This concentration of ownership may also adversely affect our share price.Quarterly Report on Form 10-Q or in a Current Report on Form 8-K.Description31.1 * __________________________*Furnished herewith.SIGNATURES Date: November 2, 2017By:/s/ Larry Jasinski Name: Title: (Principal Executive Officer) November 2, 2017August 9, 2022Kevin HershbergerAlmog Adar Name: Kevin Hershberger Title: Chief Financial Officer Corporate Financial Controller Officer and
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