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Form 10-Q ReWalk Robotics Ltd. For: Jun 30

August 9, 2022 9:03 AM EDT

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0001607962false--12-312022Q200-0000000Calculation of weighted average remaining contractual term does not include the RSUs that were granted, which have an indefinite contractual term. Represents warrants for ordinary shares issuable upon an exercise price of $7.50 per share, which were granted on December 31, 2015 to Kreos Capital V (Expert) Fund Limited, or Kreos, in connection with a loan made by Kreos to us 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 the 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 June 30, 2022. Represents common warrants that were issued as part of the $8.0 million drawdown under the Loan Agreement which occurred on December 28, 2016. See footnote 1 for exercisability terms. Represents common warrants that were issued as part of the Company’s follow-on public offering in November 2018. 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. 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. 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. Represents warrants that were issued to the placement agent as compensation for its role in the Company’s April 2019 registered direct offering. Represents warrants that were issued to certain institutional investors in a warrant exercise agreement on June 5, 2019, and June 6, 2019, respectively. 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. Represents warrants that were issued to certain institutional investors in a warrant exercise agreement in June 2019. 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. 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. 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. 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. Represents warrants that were issued to the placement agent as compensation for its role in the Company’s July 2020 registered direct offering. 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. 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. Represents warrants that were issued to certain institutional purchasers in a private placement in our private placement offering of ordinary shares in February 2021. Represents warrants that were issued to the placement agent as compensation for its role in the Company’s private placement offering in February 2021 (the “February 2021 Offering”). Represents warrants that were issued to certain institutional purchasers in a private placement in our registered direct offering of ordinary shares in September 2021. Represents warrants that were issued to the placement agent as compensation for its role in the Company’s September 2021 registered direct offering. 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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2022
 
or
 
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _____ to ______
 
Commission File Number: 001-36612
 
 
ReWalk Robotics Ltd.
(Exact name of registrant as specified in charter)
 
Israel
 
Not applicable
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
3 Hatnufa Street, Floor 6, Yokneam Ilit, Israel
 
2069203
(Address of principal executive offices)
 
(Zip Code)
 
+972.4.959.0123
Registrant’s telephone number, including area code
 

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Trading symbol
 
Name of exchange on which registered
Ordinary shares, par value NIS 0.25
 
RWLK
 
Nasdaq Capital Market
 

 
Indicate by a check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 
Yes     No
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
 
Yes     No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
Accelerated filer
Non-accelerated filer 
Smaller reporting company
 
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
Yes     No
 
As of August, 9, 2022, the Registrant had outstanding 62,823,243 ordinary shares, par value NIS 0.25 per share.
 

 
REWALK ROBOTICS LTD.
 
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2022
 
TABLE OF CONTENTS
 
 
Page No.
2
3
3
 
3-4
 
5
 
6-7
 
8
 
9-26
27
37
37
38
38
38
38
38
38
38
39
40
 

 
Introduction and Where You Can Find Other Information
 
As used in this quarterly report on Form 10-Q (this “quarterly report”), the terms “ReWalk,” the “Company,” “RRL,” “we,” “us” and “our” refer to ReWalk Robotics Ltd. and its subsidiaries, unless the context clearly indicates otherwise. Our website is www.rewalk.com. Information contained in, or that can be accessed through, our website does not constitute a part of this quarterly report on Form 10-Q and is not incorporated by reference herein. We have included our website address in this quarterly report solely for informational purposes. Information that we furnish to or file with the Securities and Exchange Commission (the “SEC”), including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to, or exhibits included in, these reports are available for download, free of charge, on our website as soon as reasonably practicable after such materials are filed with or furnished to the SEC. Our SEC filings, including exhibits filed or furnished therewith, are also available on the SEC’s website at http://www.sec.gov.
 
Special Note Regarding Forward-Looking Statements
 
In addition to historical information, this quarterly report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, that are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, potential market opportunities and the effects of competition. Forward-looking statements may include projections regarding our future performance and, in some cases, can be identified by words like “anticipate,” “assume,” “believe,” “could,” “seek,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “future,” “should,” “will,” “would” or similar expressions that convey uncertainty of future events or outcomes and the negatives of those terms. These statements may be found in 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 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.
 
The preceding list is not intended to be an exhaustive list of all of our forward-looking statements. The statements are based on our beliefs, assumptions, and expectations of future performance, taking into account the information currently available to us. These statements are only predictions based upon our current expectations and projections about future events. There are important factors that could cause our actual results, levels of activity, performance, or achievements to differ materially from the results, levels of activity, performance or achievements expressed or implied by the statements. In particular, you should consider the risks provided under “Part I, Item 1A. Risk Factors” of our 2021 annual report on Form 10-K, and in other reports subsequently filed by us with, or furnished to, the SEC.
 
You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur.
 
Any forward-looking statement in this quarterly report speaks only as of the date hereof. Except as required by law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future developments or otherwise.
 
2

 
PART I - FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS
 
REWALK ROBOTICS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
 
 
 
June 30,
   
December 31,
 
 
 
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
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
3

 
REWALK ROBOTICS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
 
 
 
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
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
4

 

REWALK ROBOTICS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share data)
 
 
 
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
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
5

 

REWALK ROBOTICS LTD. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
(In thousands, except share data)
 
   
Ordinary Shares
   
Additional
paid-in
   
Accumulated
   
Total
shareholders’
 
   
Number
   
Amount
   
capital
   
deficit
   
equity
 
Balance as of April 1, 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
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
6

  

REWALK ROBOTICS LTD. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(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.
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
7

 

REWALK ROBOTICS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 
 
 
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.
 
The accompanying notes are an integral part of these consolidated financial statements.
8

 

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

 

NOTE 1:GENERAL

 

a.ReWalk Robotics Ltd. (“RRL”, and together with its subsidiaries, the “Company”) was incorporated under the laws of the State of Israel on June 20, 2001 and commenced operations on the same date.

 

b.RRL has two wholly-owned subsidiaries: (i) ReWalk Robotics Inc. (“RRI”) incorporated under the laws of Delaware on February 15, 2012 and (ii) ReWalk Robotics GMBH. (“RRG”) incorporated under the laws of Germany on January 14, 2013.

 

The Company is designing, developing, and commercializing robotic exoskeletons that allow individuals with mobility impairments or other medical conditions the ability to stand and walk once again. The Company has developed and is continuing to commercialize the ReWalk, an exoskeleton designed for individuals with paraplegia that uses its patented tilt-sensor technology and an on-board computer and motion sensors to drive motorized legs that power movement. The ReWalk system consists of a light wearable brace support suit which integrates motors at the joints, rechargeable batteries, an array of sensors and a computer-based control system to power knee and hip movement. Additionally, the Company developed and, in June 2019, started to commercialize the ReStore following receipt of European Union CE mark and United States Food and Drug Administration (“FDA”) clearance. The ReStore is a powered, lightweight soft exo-suit intended for use in the rehabilitation of individuals with lower limb disability due to stroke. The Company markets and sells its products directly to institutions and individuals and through third-party distributors. The Company sells its products directly primarily in Germany and the United States, and primarily through 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 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 continue to negatively affect its sales and results of operations; 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 than 12 months following the issuance date of its condensed consolidated unaudited financial statements for the three and six months ended June 30, 2022. The Company expects to incur future net losses and its transition to profitability is dependent upon, among other things, the successful development and commercialization of its products and product candidates, and the achievement of a level of revenues adequate to support its cost structure. Until the Company achieves profitability or generates positive cash flows, it will continue to need to raise additional cash. the Company intends to fund future operations through cash on hand, additional private and/or public offerings of debt or equity securities, cash exercises of outstanding warrants or a combination of the foregoing. In addition, the Company may seek additional capital through arrangements with strategic partners or from other sources and will continue to address its cost structure. Notwithstanding, there can be no assurance that the Company will be able to raise additional funds or achieve or sustain profitability or positive cash flows from operations.

 

NOTE 2:UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles and standards of the Public Company Accounting Oversight Board for interim financial information. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles in the United States for complete financial statements. In management’s opinion, the accompanying financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. The Company’s interim period results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year.
 
These financial statements and accompanying notes should be read in conjunction with the 2021 consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2021 filed with the SEC on February 24, 2022, as amended on May 2, 2022 (the “2021 Form 10-K”). There have been no changes in the significant accounting policies from those that were disclosed in the audited consolidated financial statements for the fiscal year ended December 31, 2021 included in the 2021 Form 10-K, unless otherwise stated.
 

10


 

REWALK ROBOTICS LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 
NOTE 3:SIGNIFICANT ACCOUNTING POLICIES
 
  a.
Revenue Recognition
 
The Company generates revenues from sales of products. The Company sells its products directly to end customers and through distributors. The Company sells its products to private individuals (who finance the purchases by themselves, through fundraising or reimbursement coverage from insurance companies), rehabilitation facilities and distributors.
 
Disaggregation of Revenues (in thousands) 
 
 
 
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
 
 
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)

 

Units placed
 
The Company currently offers five products: (1) ReWalk Personal; (2) ReWalk Rehabilitation; (3) ReStore; (4) MyoCycle; and (5) MediTouch.
 
ReWalk Personal and ReWalk Rehabilitation are units for spinal cord injuries (“SCI Products”). SCI Products are currently designed for everyday use by paraplegic individuals at home and in their communities, and are custom fitted for each user, as well as for use by paraplegia patients in the clinical rehabilitation environment, where they provide individuals access to valuable exercise and therapy.
 
ReStore is a powered, lightweight soft exo-suit intended for use in the rehabilitation of individuals with lower limb disability due to stroke in the clinical rehabilitation environment.
 
The MyoCycle device uses Functional Electrical Stimulation (“FES”) technology to facilitate therapeutic exercise for persons with muscle weakness or paralysis caused by disorders like spinal cord injury, multiple sclerosis, and stroke.
 
The MediTouch Tutor movement biofeedback product line includes the Arm, Hand, 3D and Leg Tutor devices. These devices are used by physical and occupational therapists to evaluate functional tasks during rehabilitation of neurologic disorders and can also be used by patients remotely at home.
 
Pursuant to two separate distribution agreements entered into during the second quarter of 2020, the Company now markets both the MediTouch and MyoCyle products (together the “Distributed Products”) in the United States for use at home or in the clinic.
 
Units placed includes revenue from sales or rental of SCI Products, ReStore and the Distributed Products.
 
For units placed, the Company recognizes revenues when it transfers control and title has passed to the customer. Each unit placed is considered an independent, unbundled performance obligation. The Company generally does not grant a right of return for its products besides isolated cases where the Company assesses the likelihood of such event to occur based on the Company’s historical experience and estimates. The Company also offers a rent-to-purchase model in which the Company recognizes revenue ratably according to the agreed rental monthly fee.
 
Spare parts and warranties
 
Spare parts are sold to private individuals, rehabilitation facilities and distributors. Revenue is recognized when the Company satisfies a performance obligation by transferring control over promised goods or services to the customer. Each part sold is considered an independent, unbundled performance obligation.
 
Warranties are classified as either assurance type or service type warranty. A warranty is considered an assurance type warranty if it provides the consumer with assurance that the product will function as intended for a limited period of time.
 
In the beginning of 2018, the Company updated its service policy for SCI Products to include a five-year warranty compared to a period of two years that were included in the past for parts and services. The first two years are considered as assurance type warranty and the additional period is considered an extended service arrangement, which is a service type warranty. An assurance type warranty is not accounted for as separate performance obligations under the revenue model. A service type warranty is either sold with a unit or separately for units for which the warranty has expired. Revenue is then recognized ratably over the life of the warranty.
 
The ReStore device is offered with a two-year warranty which is considered as assurance type warranty.
 
The Distributed Products are offered with an assurance-type warranty that is covered by the vendor ranging from one year to ten years depending on the specific product and part.

 

12


 

REWALK ROBOTICS LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

Contract balances (in thousands)
 
 
 
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.
 
Deferred revenue is comprised mainly of unearned revenue related to service type warranty but also includes other offerings for which the Company has been paid in advance and earns revenue when the Company transfers control of the product or service.
 
The Company’s unfilled performance obligations as of June 30, 2022, and the estimated revenue expected to be recognized in the future related to the service type warranty amounts to $1.2 million, which is fulfilled over one to five years.

 

13


 

REWALK ROBOTICS LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

  b.
Concentrations of Credit Risks:
 
Concentration of credit risk with respect to trade receivable is primarily limited to a customer to which the Company makes substantial sales.
 
 
 
June 30,
 
 
December 31,
 
 
 
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%
 
The Company’s trade receivables are geographically diversified and derived primarily from sales to customers in various countries, mainly in the United States and Europe. Concentration of credit risk with respect to trade receivables is limited by credit limits, ongoing credit evaluation and account monitoring procedures. The Company performs ongoing credit evaluations of its distributors based upon a specific review of all significant outstanding invoices. The Company writes off receivables when they are deemed uncollectible and having exhausted all collection efforts. As of June 30, 2022 and December 31, 2021, trade receivables are presented net of allowance for doubtful accounts in the amount of $26 thousand and $42 thousand, respectively, and net of sales return reserve of $52 thousand and $43 thousand, respectively.
 
  c.
Warranty provision
 
The Company provided a two-year standard warranty for its products. In the beginning of 2018, our service policy for new devices sold includes five-year warranty. The Company determined that the first two years of warranty is an assurance-type warranty and records a provision for the estimated cost to repair or replace products under warranty at the time of sale. Factors that affect the Company’s warranty reserve include the number of units sold, historical and anticipated rates of warranty repairs and the cost per repair.
 
 
 
US Dollars
in thousands
 
Balance at December 31, 2021
 
$
112
 
Provision
 
 
162
 
Usage
 
 
(169
)
Balance at June 30, 2022
 
$
105
 

 

14


 

REWALK ROBOTICS LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

  d.
Basic and diluted net loss per ordinary share
 
Basic net loss per ordinary share is computed based on the weighted average number of ordinary shares outstanding during each year.
 
For the six months ended June 30, 2022, the total number of ordinary shares related to the outstanding warrants and share option plans aggregated to 19,420,894, was excluded from the calculations of diluted loss per ordinary share since it would have an anti-dilutive effect.
 
  e.
New Accounting Pronouncements
 
Recently Implemented Accounting Pronouncements
 
  i.
Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity
 
In August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Among other changes, ASU 2020-06 removes from U.S. GAAP the liability and equity separation model for convertible instruments with a cash conversion feature and a beneficial conversion feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt. Similarly, the embedded conversion feature will no longer be amortized into income as interest expense over the life of the instrument. Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share (“EPS”). ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted for fiscal years beginning after December 15, 2020 and can be adopted on either a fully retrospective or modified retrospective basis. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
 
Recent Accounting Pronouncements Not Yet Adopted
 
  i.
Financial Instruments
 
In June 2016, FASB issued ASU 2016-13, Financial Instruments - –Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses. Topic 326 will be effective for the Company beginning on January 1, 2023. The Company is currently evaluating the impact of this new standard on its consolidated financial statements.

 

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 manufacturer as well as raw materials from different vendors. Purchase obligations do not include contracts that may be canceled without penalty. As of June 30, 2022, non-cancelable outstanding obligations amounted to approximately $1.1 million.

 

b.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:

 

The Company’s research and development efforts are financed, in part, through funding from the Israel Innovation Authority (the “IIA”) and the Israel-U.S. Binational Industrial Research and Development Foundation (“BIRD”). During the three months ended June 30, 2022, the Company received $184 thousand from the IIA to fund its research and development efforts.

 

Since the Company’s inception through June 30, 2022, the Company received funding from the IIA and BIRD in the total amount of $2.15 million and $500 thousand, respectively. Out of the $2.15 million in funding from the IIA, a total amount of $1.57 million were royalty-bearing grants (as of June 30, 2022, the Company paid royalties to the IIA in the total amount of $105 thousand), a total amount of $400 thousand was received in consideration of 209 convertible preferred A shares, which were converted after the Company’s initial public offering in September 2014 into ordinary shares in a conversion ratio of 1 to 1, while a total amount of $184 thousand was received without future obligation. The Company is obligated to pay royalties to the IIA, amounting to 3% of the sales of the products and other related revenues generated from such projects, up to 100% of the grants received.
 
The royalty payment obligations also bear interest at the LIBOR rate. The obligation to pay these royalties is contingent on actual sales of the applicable products and in the absence of such sales, no payment is required.
 
Additionally, the Exclusive License Agreement between the Company and Harvard University’s Wyss Institute for Biologically Inspired Engineering ("Harvard") requires the Company to pay Harvard royalties on net sales. See note 6 below for more information about the Collaboration Agreement and the License Agreement.
 
Royalties expenses in cost of revenue were $1 and $6 thousand for the three months ended June 30, 2022 and 2021, respectively. For the six months ended June 30, 2022, and 2021, the royalties expenses were $4 thousand and $6 thousand, respectively.
 
As of June 30, 2022, the contingent liability to the IIA amounted to $1.6 million. The Israeli Research and Development Law provides that know-how developed under an approved research and development program may not be transferred to third parties without the approval of the IIA. Such approval is not required for the sale or export of any products resulting from such research or development. The IIA, under special circumstances, may approve the transfer of IIA-funded know-how outside Israel, in the following cases:
 
(a) the grant recipient pays to the IIA a portion of the sale price paid in consideration for such IIA-funded know-how or in consideration for the sale of the grant recipient itself, as the case may be, which portion will not exceed six times the amount of the grants received plus interest (or three times the amount of the grant received plus interest, in the event that the recipient of the know-how has committed to retain the research and development activities of the grant recipient in Israel after the transfer); (b) the grant recipient receives know-how from a third party in exchange for its IIA-funded know-how; (c) such transfer of IIA-funded know-how arises in connection with certain types of cooperation in research and development activities; or (d) if such transfer of know-how arises in connection with a liquidation by reason of insolvency or receivership of the grant recipient.

 

d.Liens:

 

As part of the Company’s other long-term assets and restricted cash, an amount of $659 thousand has been pledged as security in respect of a guarantee granted to a third party. Such deposit cannot be pledged to others or withdrawn without the consent of such third party.

 

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. 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. While the outcome of any pending or threatened litigation and other legal matters is inherently uncertain, the Company is not currently party to any material litigation.

 

18


 

REWALK ROBOTICS LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 6:RESEARCH COLLABORATION AGREEMENT AND LICENSE AGREEMENT
 
On May 16, 2016, the Company entered into a Research Collaboration Agreement (“Collaboration Agreement”) and an Exclusive License Agreement (“License Agreement”) with Harvard. The Research Collaboration Agreement was amended on May 1, 2017, and April 1, 2018 (as amended, the “Collaboration Agreement”), and the Exclusive License Agreement was amended on April 1, 2018 (as amended, the “License Agreement”), to extend the term of the Collaboration Agreement by one year to May 16, 2022 and reallocate the Company’s quarterly installment payments to Harvard through such date, and to make certain technical changes. On April 30, 2020, the Company and Harvard amended the Collaboration Agreement, which included certain adjustments to the quarterly installments and extended the term an additional three quarters until February 2023. On October 14, 2021, the Company and Harvard further amended the Collaboration Agreement, to make certain adjustments to the quarterly installments and technical changes. The Collaboration Agreement concluded on March 31, 2022.
 
Under the License Agreement, Harvard has granted the Company an exclusive, worldwide royalty-bearing license under certain patents of Harvard relating to lightweight “soft suit” exoskeleton system technologies for lower limb disabilities, a royalty-free license under certain related know-how and the option to obtain a license under certain inventions conceived under the joint research collaboration.
 
The License Agreement required the Company to pay Harvard an upfront fee, reimbursements for expenses that Harvard incurred in connection with the licensed patents, royalties on net sales and several milestone payments contingent upon the achievement of certain product development and commercialization milestones. The Harvard License Agreement will continue in full force and effect until the expiration of the last-to-expire valid claim of the licensed patents. As of June 30, 2022, the Company achieved three of the milestones which represent all development milestones under the License Agreement. The Company continues to evaluate the likelihood that the other milestones will be achieved on a quarterly basis.
 
The Company has recorded expenses in the amount of $24 thousand and $162 thousand as research and development expenses related to the License Agreement and to the Collaboration Agreement for the three months ended June 30, 2022, and 2021, respectively. For the six months ended June 30, 2022, and 2021, the expense were $34 thousand and $320 thousand, respectively. No withholding tax was deducted from the Company’s payments to Harvard in respect of the Collaboration Agreement and the License Agreement since this is not taxable income in Israel in accordance with Section 170 of the Israel Income Tax Ordinance 1961-5721.
 

19


 

REWALK ROBOTICS LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 7: SHAREHOLDERS’ EQUITY

 

a.Share option plans:

 

As of June 30, 2022, and December 31, 2021, the Company had reserved 364,701 and 233,957 ordinary shares, respectively, for issuance to the Company’s and its affiliates’ respective employees, directors, officers and consultants pursuant to equity awards granted under the Company’s 2014 Incentive Compensation Plan (the “2014 Plan”).

 

Options to purchase ordinary shares generally vest over four years, with certain options to non-employee directors vesting quarterly over one year. Any option that is forfeited or canceled before expiration becomes available for future grants under the 2014 Plan.

 

There were no options granted during the six months ended June 30, 2022, and 2021.

 

A summary of employees and non-employees share options activity during the six months ended June 30, 2022, is as follows:

 

   

Number

   

Average

exercise

price

   

Average

remaining

contractual

life

(in years)

   

Aggregate

intrinsic

value (in
thousands)

 

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

   

$

-

 

 

The aggregate intrinsic value in the table above represents the total intrinsic value that would have been received by the option holders had all option holders that hold options with positive intrinsic value exercised their options on the last date of the exercise period.

 

No options were exercised during the 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 RSUs granted is determined based on the price of the Company'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 June 30, 2022, is as follows:

 

   

Number of
shares

underlying

outstanding

RSUs

   

Weighted
average

grant
date fair

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 2021, was $1.14 and $1.75, respectively.

 

As of June 30, 2022, there were $1.3 million of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Company's 2014 Plan. This cost is expected to be recognized over a period of approximately 2.5 years.

 

The number of options and RSUs outstanding as of June 30, 2022, is set forth below, with options separated by range of exercise price.

 

Range of exercise price

 

Options
and RSUs

outstanding
as of

June 30,
2022

   

Weighted

average

remaining

contractual

life

(years) (1)

   

Options
outstanding

and
exercisable
as of

June 30,
2022

   

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 consultants:

 

As of June 30, 2022, there are no outstanding options or RSUs held by non-employee consultants.

 

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 June 30, 2022:

 

Issuance date

 

Warrants

outstanding

   

Exercise price

per warrant

   

Warrants

outstanding
and

exercisable

   

Contractual

term

 
   

(number)

         

(number)

       

December 31, 2015 (1)

   

4,771

   

$

7.500

     

4,771

     

See footnote (1)

 

December 28, 2016 (2)

   

1,908

   

$

7.500

     

1,908

     

See footnote (1)

 

November 20, 2018 (3)

   

126,839

   

$

7.500

     

126,839

     

November 20, 2023

 

November 20, 2018 (4)

   

106,680

   

$

9.375

     

106,680

     

November 15, 2023

 

February 25, 2019 (5)

   

45,600

   

$

7.187

     

45,600

     

February 21, 2024

 

April 5, 2019 (6)

   

408,457

   

$

5.140

     

408,457

     

October 7, 2024

 

April 5, 2019 (7)

   

49,015

   

$

6.503

     

49,015

     

April 3, 2024

 

June 5, 2019, and June 6, 2019 (8)

   

1,464,665

   

$

7.500

     

1,464,665

     

June 5, 2024

 

June 5, 2019 (9)

   

87,880

   

$

9.375

     

87,880

     

June 5, 2024

 

June 12, 2019 (10)

   

416,667

   

$

6.000

     

416,667

     

December 12, 2024

 

June 10, 2019 (11)

   

50,000

   

$

7.500

     

50,000

     

June 10, 2024

 

February 10, 2020 (12)

   

28,400

   

$

1.250

     

28,400

     

February 10, 2025

 

February 10, 2020 (13)

   

105,840

   

$

1.563

     

105,840

     

February 10, 2025

 

July 6, 2020 (14)

   

448,698

   

$

1.760

     

448,698

     

January 2, 2026

 

July 6, 2020 (15)

   

296,297

   

$

2.278

     

296,297

     

January 2, 2026

 

December 8, 2020 (16)

   

586,760

   

$

1.340

     

586,760

     

June 8, 2026

 

December 8, 2020 (17)

   

108,806

   

$

1.792

     

108,806

     

June 8, 2026

 

February 26, 2021 (18)

   

5,460,751

   

$

3.600

     

5,460,751

     

August 26, 2026

 

February 26, 2021 (19)

   

655,290

   

$

4.578

     

655,290

     

August 26, 2026

 

September 29, 2021 (20)

   

8,006,759

   

$

2.000

     

8,006,759

     

March 29, 2027

 

September 29, 2021 (21)

   

960,811

   

$

2.544

     

960,811

     

September 27, 2026

 
     

19,420,894

             

19,420,894

         
     
 

(1)

Represents warrants for ordinary shares issuable upon an exercise price of $7.50 per share, which were granted on December 31, 2015 to Kreos Capital V (Expert) Fund Limited, or Kreos, in connection with a loan made by Kreos to us 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 the 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 June 30, 2022.

     
 

(2)

Represents common warrants that were issued as part of the $8.0 million drawdown under the Loan Agreement which occurred on December 28, 2016. See footnote 1 for exercisability terms.

     
 

(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 employees and non-employees in the condensed consolidated statements of operations as follows (in thousands):

 

   

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 exercise prices ranging from $1.25 to $1.79 have been exercised for total gross proceeds of approximately $13.8 million.

 

NOTE 8:FINANCIAL EXPENSES (INCOME), NET

 

The components of financial expenses (income), net were as follows (in thousands):

 

   

Three Months Ended

June 30,

   
    Six Months Ended

June 30,

 
   

2022

   

2021

   

2022

   

2021

 

Foreign currency transactions and other

 

$

39

   

$

(14

)

  $ 54     $ (28

)

Bank commissions

   

5

     

5

      14       15  
   

$

44

   

$

(9

)   $ 68     $ (13

)

 

NOTE 9:GEOGRAPHIC INFORMATION AND MAJOR CUSTOMER AND PRODUCT DATA

 

Summary information about geographic areas:

 

ASC 280, “Segment Reporting” establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company manages its business on the basis of one reportable segment and derives revenues from selling units and services (see Note 1 for a brief description of the Company’s business). The following is a summary of revenues within geographic areas (in thousands):

 

   

      Three Months Ended

June 30,      

         

Six Months Ended
June 30,

 
   

2022

   

2021

   

2022

   

2021

 

Revenues based on customer’s location:

                               

United States

  $ 578     $ 654    

$

798

   

$

1,130

 

Europe

    888       726      

1,535

     

1,563

 

Asia-Pacific

    103       55      

111

     

57

 

Africa

    1       1      

2

     

2

 

Total revenues

  $ 1,570     $ 1,436    

$

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
June 30,

 
   

2022

   

2021

 

Major customer data as a percentage of total revenues:

               

Customer A

    20.4 %     * )

Customer B

    11.7 %     -

 

 

*)

Less than 10%.

 
NOTE 10: SUBSEQUENT EVENTS
 
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.
 
26

 

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

 

The following discussion and analysis of our financial condition and results of operation should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes included elsewhere in this quarterly report and with our audited consolidated financial statements included in our Form 10-K for the year ended December 31, 2021 as filed with the 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” above.

 

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 Personal and ReWalk Rehabilitation devices for individuals with spinal cord injury (“SCI Products”), which are exoskeletons designed for individuals with paraplegia that use our patented tilt-sensor technology and an on-board computer and motion sensors to drive motorized legs that power movement.

 

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 curbs in the United States, which is currently under review.

 

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 lower limb disability due to stroke. During the second quarter of 2020 we finalized and moved to implement two separate agreements to distribute 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.

 

Our principal markets are the United States and Europe. In Europe, we have a direct sales operation in Germany and the United Kingdom and work with distribution partners in certain other major countries. We have offices in Marlborough, Massachusetts, Berlin, Germany and Yokneam, Israel, where we operate our business from.

 

We have in the past generated and expect to generate in the future 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 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 June 30, 2022, we had placed 30 units as part of the VA policy.

 

According to a 2017 report published by the Centers for Medicare and Medicaid 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 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 payment 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 during the second half of 2022.

 

Additionally, to date, several private insurers in the United States and Europe have provided reimbursement for ReWalk in certain cases. In Germany, we continue to make progress toward achieving ReWalk coverage from the various government, private and worker’s compensation payors. In September 2017, each of German insurer BARMER GEK (“Barmer”) and national social accident insurance provider Deutsche Gesetzliche Unfallversicherung (“DGUV”), indicated 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 case-by-case basis. During the year 2020 we announced several new agreements with German SHIs such as TK and DAK 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 obtaining 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 process of obtaining a ReWalk Personal 6.0 device for their beneficiaries within their system.

 
27

 
Second Quarter 2022 and Subsequent Period Business Highlights
 
 

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.

 
Evolving COVID-19 Pandemic
 
The