UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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 each exchange on which registered
Ordinary shares, par value NIS 0.25
RWLK
NasdaqCapital Market
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐
Accelerated filer ☐
Non-accelerated filer ☒
Smaller reporting company ☒
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
As of May 13, 2022, the registrant had outstanding 62,509,872ordinary shares, par value NIS 0.25 per share.
REWALK ROBOTICS LTD.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2022
TABLE OF CONTENTS
Page No.
GENERAL AND WHERE YOU CAN FIND MORE INFORMATION
2
PART I
FINANCIAL INFORMATION
3
ITEM 1.
FINANCIAL STATEMENTS (unaudited)
CONDENSED CONSOLIDATED BALANCE SHEETS - MARCH 31, 2022 AND DECEMBER 31, 2021
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 2022 AND 2021
5
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - MARCH 31, 2022 AND 2021
6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - THREE MONTHS ENDED MARCH 31, 2022 AND 2021
7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
24
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
33
ITEM 4.
CONTROLS AND PROCEDURES
PART II
OTHER INFORMATION
34
LEGAL PROCEEDINGS
ITEM 1A.
RISK FACTORS
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
36
DEFAULTS UPON SENIOR SECURITIES
MINE SAFETY DISCLOSURES
ITEM 5.
ITEM 6.
EXHIBITS
37
SIGNATURES
38
REWALK ROBOTICS LTD. AND SUBSIDIARIES
(In thousands, except share and per share data)
March 31,
December 31,
2022
2021
(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
82,632
88,337
Trade receivable, net
564
585
Prepaid expenses and other current assets
1,378
610
Inventories
3,232
2,989
Total current assets
87,806
92,521
LONG-TERM ASSETS
Restricted cash and other long-term assets
1,062
1,064
Operating lease right-of-use assets
823
881
Property and equipment, net
307
284
Total long-term assets
2,192
2,229
Total assets
89,998
94,750
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Current maturities of operating leases
638
641
Trade payables
1,465
1,384
Employees and payroll accruals
677
1,142
Deferred revenues
323
316
Other current liabilities
517
555
Total current liabilities
3,620
4,038
LONG-TERM LIABILITIES
825
866
Non-current operating leases
330
418
Other long-term liabilities
45
Total long-term liabilities
1,192
1,329
Total liabilities
4,812
5,367
COMMITMENTS AND CONTINGENT LIABILITIES
Shareholders’ equity:
Share capital
Ordinary share of NIS 0.25par value-Authorized: 120,000,000shares at March 31, 2022
and December 31, 2021; Issued and outstanding: 62,508,517and 62,480,163shares at
March 31, 2022 and December 31, 2021, respectively
4,663
4,661
Additional paid-in capital
279,054
278,903
Accumulated deficit
(198,531
)
(194,181
Total shareholders’ equity
85,186
89,383
Total liabilities and shareholders’ equity
4
(Unaudited)
Three Months Ended
Revenues
876
1,316
Cost of revenues
611
609
Gross profit
265
707
Operating expenses:
Research and development
907
795
Sales and marketing
2,184
1,671
General and administrative
1,462
1,262
Total operating expenses
4,553
3,728
Operating loss
(4,288
(3,021
Financial expenses (income), net
(4
Loss before income taxes
(4,312
(3,017
Taxes on income
Net loss
(4,350
(3,062
Net loss per ordinary share, basic and diluted
(0.07
(0.08
Weighted average number of shares used in computing net loss per ordinary share, basic and diluted
62,493,496
36,187,789
(In thousands, except share data)
Ordinary Share
Additional
paid-in
Accumulated
Total
shareholders’
Number
Amount
capital
deficit
equity
Balance as of December 31, 2020
25,332,225
1,827
201,392
(181,445
21,774
Share-based compensation to employees and non-employees
-
168
Issuance of ordinary shares upon vesting of RSUs by employees and non-employees
24,096
(2
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
Exercises of warrants (2)
9,814,754
724
13,094
13,818
Balance as of March 31, 2021
46,092,577
3,385
250,141
(184,507
69,019
Balance as of December 31, 2021
62,480,163
153
28,354
Balance as of March 31, 2022
62,508,517
(1)
See Note 7.e. to the condensed consolidated financial statements.
(2)
See Note 7.c. to the condensed consolidated financial statements.
(In thousands)
Cash flows used in operating activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation
53
70
Deferred taxes
1
Changes in assets and liabilities:
Trade receivables, net
21
186
Prepaid expenses, operating lease right-of-use assets and other assets
(706
264
(325
49
81
(384
(465
(290
(34
(14
Operating lease liabilities and other liabilities
(137
(160
Net cash used in operating activities
(5,708
(3,173
Cash flows used in investing activities:
Purchase of property and equipment
(3
(9
Net cash used in investing activities
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 warrants (1)
Net cash provided by financing activities
50,236
Increase (decrease) in cash, cash equivalents, and restricted cash
(5,711
47,054
Cash, cash equivalents, and restricted cash at beginning of period
89,050
21,054
Cash, cash equivalents, and restricted cash at end of period
83,339
68,108
Supplemental disclosures of non-cash flow information
Expenses related to offerings not yet paid (1)
97
Classification of inventory to property and equipment, net
51
Classification of inventory to other current assets
54
Classification of other current assets to property and equipment, net
22
16
Supplemental cash flow information:
67,411
Restricted cash included in other long-term assets
697
Total Cash, cash equivalents, and restricted cash
The accompanying notes are an integral part of these consolidated financial statements.
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.
d.As of March 31, 2022, the Company incurred a consolidated net loss of $4.4million and has an accumulated deficit in the total amount of $198.5million. The Company’s cash and cash equivalent as of March 31, 2022 totaled $82.6million and the Company’s negative operating cash flow for the three months ended March 31, 2022 was $5.7million. 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 months ended March 31, 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.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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.
9
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)
Units placed
778
Spare parts and warranties
98
174
Total Revenues
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 a clinic.
Units placed includes revenue from sales 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.
10
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 sold 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.
Contract balances (in thousands)
Trade receivable, net (1)
Deferred revenues (1) (2)
1,148
1,182
Balance presented net of unrecognized revenues that were not yet collected.
During the three months ended March 31, 2022, $123thousand 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 March 31, 2022 and the estimated revenue expected to be recognized in the future related to the service type warranty amounts to $1,18 million, which is fulfilled over one to five years.
11
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. The below table reflects the concentration of credit risk for the Company’s current customers as of the quarter ended March 31, 2022, to which substantial sales were made:
Customer A
%
*
Customer B
20
Customer C
15
Customer D
Customer E
Customer F
Customer G
18
Customer H
Customer I
Customer J
*) 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 March 31, 2022 and December 31, 2021 trade receivables are presented net of allowance for doubtful accounts in the amount of $27thousand and $42thousand, respectively, and net of sales return reserve of $52thousand and $43thousand, 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 includesfive-yearwarranty. 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
67
Usage
(72
Balance at March 31, 2022
107
12
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.
e.New Accounting Pronouncements
Recently Implemented Accounting Pronouncement
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
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.
13
NOTE 4:INVENTORIES
The components of inventories are as follows (in thousands):
Finished products
2,695
2,284
Raw materials
537
705
In the three months ended March 31, 2022 and 2021, the Company wrote off inventory in the amount of $2and $38thousand, respectively. The write off inventory were recorded in cost of revenues.
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 March 31, 2022, non-cancelable outstanding obligations amounted to approximately $1.5million.
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 $23thousand as of March 31, 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 March 31, 2022 are as follows (in thousands):
520
2023
523
2025
Total lease payments
1,079
Less: imputed interest
(111
Present value of future lease payments
968
Less: current maturities of operating leases
(638
Weighted-average remaining lease term (in years)
1.62
Weighted-average discount rate
12.5
14
Lease expense under the Company’s operating leases was $179thousand and $186thousand for the three months ended March 31, 2022 and 2021, respectively.
c.Royalties:
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 revenues were $3and $0thousand for the three months ended March 31, 2022 and 2021, respectively.
As of March 31, 2022, the contingent liability to the IIA amounted to $1.6million. 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 $707thousand 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.
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 any pending or threatened litigation and other legal matters is inherently uncertain, and it is possible that resolution of any such matters could result in losses material to the Company’s consolidated results of operations, liquidity, or financial condition. Except as otherwise disclosed herein, the Company is not currently party to any material litigation.
NOTE 6:RESEARCH COLLABORATION AGREEMENT AND LICENSE AGREEMENT
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 March 31, 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 $10thousand and $159thousand as research and development expenses related to the License Agreement and to the Collaboration Agreement for the three months ended March 31, 2022, and 2021, 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.
NOTE 7:SHAREHOLDERS’ EQUITY
a.Share option plans:
As of March 31, 2022, and December 31, 2021, the Company had reserved 379,763and 233,957ordinary 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 three months ended March 31, 2022 and 2021.
The fair value of RSUs granted is determined based on the price of the Company's ordinary shares on the date of grant.
A summary of employee share options activity during the three months ended March 31, 2022 is as follows:
Average
exercise
price
remaining
contractual
life (in years)
Aggregate
intrinsic
value
(in thousands)
Options outstanding at the beginning of the period
61,832
38.34
4.55
Granted
Exercised
Forfeited
(165
15.09
Options outstanding at the end of the period
61,667
38.37
3.71
Options exercisable at the end of the period
57,732
40.32
3.50
17
A summary of employees and non-employees RSUs activity during the three months ended March 31, 2022 is as follows:
Number of shares
underlying
outstandingRSUs
Weightedaverage
grant date fair value
Unvested RSUs at the beginning of the period
1,356,284
1.61
55,000
1.12
Vested
(28,354
2.04
(200,641
1.53
Unvested RSUs at the end of the period
1,182,289
1.59
The weighted average grant date fair value of RSUs granted during the three months ended March 31, 2022, and 2021 was $1.12and $1.32, respectively.
As of March 31, 2022, there were $1.5million 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 2.7years.
The number of options and RSUs outstanding as of March 31, 2022 is set forth below, with options separated by range of exercise price.
Range of exercise price
Options and RSUs outstanding as of
March 31, 2022
Weighted
average
life (years) (1)
Options outstanding and exercisable as of
RSUs only
$5.37
12,425
6.99
9,318
$20.42- $33.75
30,990
2.65
30,162
2.55
$37.14- $38.75
8,946
1.73
$50- $52.50
6,731
5.22
$182.5- $524
2,575
3.60
1,243,956
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 March 31, 2022, there are no outstanding options or RSUs held by non-employee consultants.
c.Warrants to purchase ordinary shares:
The following table summarizes information about warrants outstanding and exercisable that were classified as equity as of March 31, 2022:
Issuance date
Warrants
outstanding
Exercise price
per warrant
outstanding and
exercisable
Contractual
term
(number)
December 31, 2015 (1)
4,771
7.500
See footnote (1)
December 28, 2016 (2)
1,908
November 20, 2018 (3)
126,839
November 20, 2023
November 20, 2018 (4)
106,680
9.375
November 15, 2023
February 25, 2019 (5)
45,600
7.187
February 21, 2024
April 5, 2019 (6)
408,457
5.140
October 7, 2024
April 5, 2019 (7)
49,015
6.503
April 3, 2024
June 5, 2019, and June 6, 2019 (8)
1,464,665
June 5, 2024
June 5, 2019 (9)
87,880
June 12, 2019 (10)
416,667
6.000
December 12, 2024
June 10, 2019 (11)
50,000
June 10, 2024
February 10, 2020 (12)
28,400
1.250
February 10, 2025
February 10, 2020 (13)
105,840
1.563
July 6, 2020 (14)
448,698
1.760
January 2, 2026
July 6, 2020 (15)
296,297
2.278
December 8, 2020 (16)
586,760
1.340
June 8, 2026
December 8, 2020 (17)
108,806
1.792
February 26, 2021 (18)
5,460,751
3.600
August 26, 2026
February 26, 2021 (19)
655,290
4.578
September 29, 2021 (20)
8,006,759
2.000
March 29, 2027
September 29, 2021 (21)
960,811
2.544
September 27, 2026
19,420,894
Represents warrants for ordinary shares issuable upon an exercise price of $7.50per share, which were granted on December 31, 2015 to Kreos Capital V (Expert) Fund Limited (“Kreos”) in connection with a loan made by Kreos to the Company 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 the Company with or into, or the sale or license of all or substantially all the assets or shares of the Company to, any other entity or person, other than a wholly owned subsidiary of the Company, 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 March 31, 2022.
19
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.
(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, 3,740,100warrants 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, 230,160warrants 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, 2,020,441warrants 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, 3,598,072warrants 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, 225,981warrants 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.
(19)
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”).
(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 both employees and non-employees in the condensed consolidated statements of operations as follows (in thousands):
Research and development, net
83
123
e.Equity raise:
Follow-on offerings and warrants exercise:
OnFebruary 19, 2021, the Company entered into a purchase agreement with certain institutional and other accredited investors for the issuance and sale of 10,921,502ordinary shares, par value NIS 0.25per share at $3.6625per ordinary share and warrants to purchase up to an aggregate of 5,460,751ordinary shares with an exercise price of $3.6per share, exercisable from February 19, 2021 until August 26, 2026. Additionally, the Company issued warrants to purchase up to 655,290ordinary shares, with an exercise price of $4.578125per 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.
As of March 31, 2022, a total of 9,814,754previously issued warrants with exercise prices ranging from $1.25to $1.79 have been exercised for total gross proceeds of approximately $13.8million.
NOTE 8:FINANCIAL EXPENSES (INCOME), NET
The components of financial expenses (income), net were as follows (in thousands):
Foreign currency transactions and other
Bank commissions
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 onereportable segment and derives revenues from selling systems 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):
Revenues based on customer’s location:
United States
220
476
Europe
647
837
Asia-Pacific
Africa
Total revenues
Long-lived assets by geographic region (*):
629
453
493
Germany
66
43
1,130
1,165
(*)
Long-lived assets are comprised of property and equipment, net, and operating lease right-of-use assets.
Major customer data as a percentage of total revenues:
*)
Less than 10%.
Total revenue for the first quarter of 2022 was $0.9 million, compared to $1.3 million in the first quarter of 2021;
Placed on June 8th CMS agenda of the Biannual Healthcare Common Procedure Coding System (HCPCS) meeting that includes benefit category determination for the first time under the new DEMPOS rules. This is based on previous interactions with CMS to determine ReWalk’s benefit category and payment status;
ReWalk has increased resources and presence in VA Polytrauma/TBI Care Systems as well as a process to expand training through the VA’s designated Community Based Outpatient Clinic network;
Strong cash position with $82.6 million as of March 31, 2022;
The Company’s operating expenses were $4.6 million in the first quarter of 2022, compared to $3.7 million in the first quarter of 2021;
In April 2022, the Company joined the Human Robot Interaction Consortium, part of the Israel Innovation Authority MAGNET incentive program, where it will collaborate with several universities to develop advanced technologies aimed at improving the human-exoskeleton interaction.
59
2,687
We calculated the payments due under our operating lease obligation for our Israeli office that are to be paid in NIS at a rate of exchange of NIS 3.176: $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 €1.00: $1.109, both of which were the applicable exchange rates as of March 31, 2022.
Employment Agreement dated December 10, 2019, by and between the Company and Almog Adar. ^
Separation Agreement, dated March 8, 2022, by and between the Company and Ori Gon.