Lifeward Ltd. 10-Q

ITEM 1. FINANCIAL STATEMENTS REWALK ROBOTICS LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) March 31, December 31, 2021 2020 (unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 67,411 $ 20,350 Trade receivable, net 498 684 Prepaid expenses and other current assets 517 672 Inventories 3,493 3,542 Total current assets 71,919 25,248 LONG-TERM ASSETS Restricted cash and other long-term assets 1,021 1,033 Operating lease right-of-use assets 1,229 1,349 Property and equipment, net 392 437 Total long-term assets 2,642 2,819 Total assets $ 74,561 $ 28,067 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) March 31, December 31, 2021 2020 (unaudited) LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES Current maturities of operating leases 633 660 Trade payables 1,981 2,268 Employees and payroll accruals 577 867 Deferred revenues 388 441 Other current liabilities 443 432 Total current liabilities 4,022 4,668 LONG-TERM LIABILITIES Deferred revenues 706 667 Non-current operating leases 782 923 Other long-term liabilities 32 35 Total long-term liabilities 1,520 1,625 Total liabilities 5,542 6,293 COMMITMENTS AND CONTINGENT LIABILITIES Shareholders’ equity: Share capital Ordinary share of NIS 0.25 par value-Authorized: 60,000,000 shares at March 31, 2021 and December 31, 2020; Issued and outstanding: 46,092,577 and 25,332,225 shares at March 31, 2021 and December 31, 2020, respectively 3,385 1,827 Additional paid-in capital 250,141 201,392 Accumulated deficit (184,507 ) (181,445 ) Total shareholders’ equity 69,019 21,774 Total liabilities and shareholders’ equity $ 74,561 $ 28,067 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 March 31, 2021 2020 Revenues $ 1,316 $ 760 Cost of revenues 609 387 Gross profit 707 373 Operating expenses: Research and development, net 795 985 Sales and marketing 1,671 1,681 General and administrative 1,262 1,309 Total operating expenses 3,728 3,975 Operating loss (3,021 ) (3,602 ) Financial expenses (income), net (4 ) 246 Loss before income taxes (3,017 ) (3,848 ) Taxes on income (tax benefit) 45 (8 ) Net loss $ (3,062 ) $ (3,840 ) Net loss per ordinary share, basic and diluted $ (0.08 ) $ (0.37 ) Weighted average number of shares used in computing net loss per ordinary share, basic and diluted 36,187,789 10,374,116 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 Share Additional paid-in capital Total shareholders’ equity (deficiency) Number Amount Accumulated deficit Balance as of December 31, 2019 7,319,560 504 178,745 (168,469 ) 10,780 Share-based compensation to employees and non-employees — — 199 — 199 Issuance of ordinary shares upon exercise of options to purchase ordinary shares and restricted stock units (“RSUs”) by employees and non-employees 10,595 * ) — — — Issuance of ordinary shares in “best efforts” offering, net of issuance expenses in the amount of $1,056 (1) 4,053,172 290 3,720 — 4,010 Exercise of pre-funded warrants (1) 1,546,828 109 1,825 — 1,934 Net loss — — — (3,840 ) (3,840 ) Balance as of March 31, 2020 12,930,155 903 184,489 (172,309 ) 13,083 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 — 168 Issuance of ordinary shares upon vesting of RSUs by employees and non-employees 24,096 2 (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 Net loss — — — (3,062 ) (3,062 ) Balance as of March 31, 2021 46,092,577 3,385 250,141 (184,507 ) 69,019 *) Represents an amount lower than $1. (1) See Note 7.e. to the condensed consolidated financial statements. (2) See Note 7.c. to the condensed consolidated financial statements. The accompanying notes are an integral part of these condensed consolidated financial statements. 6 REWALK ROBOTICS LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Three Months Ended March 31, 2021 2020 Cash flows used in operating activities: Net loss $ (3,062 ) $ (3,840 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 70 75 Share-based compensation to employees and non-employees 168 199 Deferred taxes — (4 ) Changes in assets and liabilities: Trade receivables, net 186 68 Prepaid expenses, operating lease right-of-use assets and other assets 264 (448 ) Inventories 49 (267 ) Trade payables (384 ) 79 Employees and payroll accruals (290 ) (143 ) Deferred revenues (14 ) (64 ) Operating lease liabilities and other liabilities (160 ) 4 Net cash used in operating activities (3,173 ) (4,341 ) Cash flows used in investing activities: Purchase of property and equipment (9 ) (9 ) Net cash used in investing activities (9 ) (9 ) Cash flows from financing activities: Repayment of long term loan — (1,266 ) Issuance of ordinary shares in a “best efforts” offerings, net of issuance expenses paid in the amount of $ 1,044 (1) — 4,022 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 1,934 Net cash provided by financing activities 50,236 4,690 Increase in cash, cash equivalents, and restricted cash 47,054 340 Cash, cash equivalents, and restricted cash at beginning of period 21,054 16,992 Cash, cash equivalents, and restricted cash at end of period $ 68,108 $ 17,332 Supplemental disclosures of non-cash flow information “Best efforts” offering issuance cost not yet paid (1) $ — $ 12 Classification of inventory to property and equipment, net $ — $ 50 Expenses related to offerings not yet paid (1) $ 97 $ — Classification of other current assets to property and equipment, net $ 16 $ — Supplemental cash flow information: Cash and cash equivalents $ 67,411 $ 16,602 Restricted cash included in other long-term assets 697 730 Total Cash, cash equivalents, and restricted cash $ 68,108 $ 17,332 (1) See Note 7.e. to the condensed consolidated financial statements. (2) See Note 7.c. to the condensed consolidated financial statements. The accompanying notes are an integral part of these consolidated financial statements. 7 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”). 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 sell the Company’s products mainly in Germany and Europe. During the second quarter of 2020, we finalized two separate agreements to distribute additional product lines in the U.S. market. The Company will be the exclusive distributor of the MediTouch Tutor movement biofeedback systems in the United States and will also have distribution rights for the MYOLYN MyoCycle FES cycles to U.S. rehabilitation clinics and personal sales through the U.S. Department of Veterans Affairs (“VA”) hospitals. These new products will improve our product offering to clinics as well as patients within the VA as they both have similar clinician and patient profiles. c. The worldwide spread of the novel coronavirus (“COVID-19”) 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 during 2020, and the Company expects that it will continue to negatively affect its sales and results of operations as long as the pandemic impacts our direct markets in Germany and the United States and disturbs our ability to trial new ReWalk Personal 6.0 patients and access clinics to demonstrate our rehab products. The Company is currently unable to predict the scale and duration of that impact due to the considerable uncertainty that still surrounds the length of time that the areas in which we operate will continue to be impacted by the measures designed to reduce and contain the spread of the virus taken on international, national and local levels. 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 to the Company’s accounting estimates or judgments or revision of the carrying value of its assets or liabilities. This determination may change as new events occur and additional information is obtained. Actual results could differ from our estimates and judgments, and any such differences may be material to our financial statements. d. As of March 31, 2021, the Company incurred a consolidated net loss of $3.1 million and has an accumulated deficit in the total amount of $184.5 million. The Company’s cash and cash equivalent as of March 31, 2021 totaled $67.4 million and the Company’s negative operating cash flow for the three months ended March 31, 2021 was $3.2 million. The Company has sufficient funds to support its operations for more than 12 months following the issuance date of our condensed consolidated unaudited financial statements for the three months ended March 31, 2021. The Company expects to incur future net losses and our transition to profitability is dependent upon, among other things, the successful development and commercialization of our products and product candidates, the achievement of a level of revenues adequate to support our cost structure. Until we achieve profitability or generate positive cash flows, we will continue to need to raise additional cash. We intend to fund future 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, we may seek additional capital through arrangements with strategic partners or from other sources and we will continue to address our cost structure. Notwithstanding, there can be no assurance that we will be able to raise additional funds or achieve or sustain profitability or positive cash flows from operations. 8 REWALK ROBOTICS LTD. AND SUBSIDIARIES 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 the opinion of management, the accompanying financial statements include all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company's (i) condensed consolidated financial position as of March 31, 2021, (ii) condensed consolidated results of operations for the three months ended March 31, 2021, (iii) condensed consolidated statements of changes in shareholders’ equity and (iv) condensed consolidated cash flows for the three months ended March 31, 2021. The results for the three months periods ended March 31, 2021, as applicable, are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. 9 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 March 31, 2021 2020 Units placed $ 1,142 $ 633 Spare parts and warranties 174 127 Total Revenues $ 1,316 $ 760 Units placed The Company currently offers five products: (1) ReWalk Personal; (2) ReWalk Rehabilitation; (3) ReStore; (4) MyoCycle; and (5) MediTouch. ReWalk Personal and ReWalk Rehabilitation are units for spinal cord injuries (“SCI Products”). SCI Products are currently designed for everyday use by paraplegic individuals at home and in their communities, and are custom fitted for each user, as well as for use by paraplegia patients in the clinical rehabilitation environment, where they provide individuals access to valuable exercise and therapy. ReStore is a powered, lightweight soft exo-suit intended for use in the rehabilitation of individuals with lower limb disability due to stroke in the clinical rehabilitation environment. The MyoCycle device uses Functional Electrical Stimulation (“FES”) technology to facilitate therapeutic exercise for persons with muscle weakness or paralysis caused by disorders like spinal cord injury, multiple sclerosis, and stroke. The MediTouch Tutor movement biofeedback product line includes the Arm, Hand, 3D and Leg Tutor devices. These devices are used by physical and occupational therapists to evaluate functional tasks during rehabilitation of neurologic disorders and can also be used by patients remotely at home. Pursuant to two separate distribution agreements entered into during the second quarter of 2020, the Company now markets both the MediTouch and MyoCyle products (together the “Distributed Products”) in the United States for use at home or in the clinic. Units placed includes revenue from sales or rental of SCI Products, ReStore and the Distributed Products. For units placed, the Company recognizes revenues when it transfers control and title has passed to the customer. Each unit placed is considered an independent, unbundled performance obligation. The Company generally does not grant a right of return for its products besides isolated cases where we than asses the likelihood of such event to occur based on our historical experience and future estimates. The Company also offers a rent-to-purchase model in which the Company recognizes revenue ratably according to the agreed rental monthly fee. 10 REWALK ROBOTICS LTD. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 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. Contract balances (in thousands) March 31, December 31, 2021 2020 Trade receivable, net (1) $ 498 $ 684 Deferred revenues (1) (2) $ 1,094 $ 1,108 (1) Balance presented net of unrecognized revenues that were not yet collected. (2) During the three months ended March 31, 2021, $191 thousand of the December 31, 2020 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, 2021 and the estimated revenue expected to be recognized in the future related to the service type warranty amounts to $1,097 thousand, which is fulfilled over one to five years. 11 REWALK ROBOTICS LTD. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) b. New Accounting Pronouncements Recent Accounting Pronouncements Not Yet Adopted i. Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity In 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 is not expected to result in a material impact to the Company’s financial statements. ii. 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 on the Company beginning on January 1, 2023. The Company is currently evaluating the impact of this new standard on its financial statements. c. Concentrations of Credit Risks: Concentration of credit risk with respect to trade receivable is primarily limited to a customer to which the Company makes substantial sales. The below table reflects the concentration of credit risk for the Company’s current customers as of the quarter ended March 31, 2021, to which substantial sales were made: March 31, December 31, 2021 2020 Customer A 24 % * ) Customer B 23 % * ) Customer C 18 % * ) Customer D 18 % 11 % Customer E 13 % 12 % Customer F * ) 15 % Customer G * ) 15 % Customer H * ) 15 % Customer I * ) 14 % *) 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, 2021 and December 31, 2020 trade receivables are presented net of allowance for doubtful accounts in the amount of $101 thousand and $102 thousand, respectively. 12 REWALK ROBOTICS LTD. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) d. Warranty provision The Company provided a two-year standard warranty for its products. As of 2018, our service policy for new devices sold includes five-year warranties. The Company determined that the first two years of warranty is an assurance-type warranty and records a provision for the estimated cost to repair or replace products under warranty at the time of sale. Factors that affect the Company’s warranty reserve include the number of units sold, historical and anticipated rates of warranty repairs and the cost per repair. US Dollars in thousands Balance at December 31, 2020 $ 140 Provision 52 Usage (68 ) Balance at March 31, 2021 $ 124 e. Basic and diluted net loss per ordinary share: Basic net loss per ordinary share is computed based on the weighted average number of ordinary shares outstanding during each year. The total number of ordinary shares related to the outstanding warrants aggregated to 10,550,625, was excluded from the calculations of diluted loss per ordinary share since it would have an anti-dilutive effect. NOTE 4: INVENTORIES The components of inventories are as follows (in thousands): March 31, December 31, 2021 2020 Finished products $ 2,777 $ 2,764 Raw materials 716 778 $ 3,493 $ 3,542 In the three months ended March 31, 2021 and 2020, the Company wrote off inventory in the amount of $38 and $1 thousand, respectively. The write off inventory were recorded in cost of revenue. 13 REWALK ROBOTICS LTD. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 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, 2021, non-cancelable outstanding obligations amounted to approximately $1.2 million. b. Operating lease commitment: (i) The Company operates from leased facilities in Israel, the United States and Germany. These leases expire between 2021 and 2023. A portion of 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 2021 and 2023. 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 March 31, 2021. The Company's future lease payments for its facilities and cars, which are presented as current maturities of operating leases and non-current operating leases liabilities on the Company's condensed consolidated balance sheets as of March 31, 2021 are as follows (in thousands): 2021 $ 513 2022 662 2023 481 Total lease payments 1,656 Less: imputed interest (241 ) Present value of future lease payments 1,415 Less: current maturities of operating leases (633 ) Non-current operating leases $ 782 Weighted-average remaining lease term (in years) 2.47 Weighted-average discount rate 12.6 % Lease expense under the Company’s operating leases was $186 and $183 for the three months ended March 31, 2021 and 2020, respectively. 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”). Since the Company’s inception through March 31, 2021, the Company received funding from the IIA and BIRD in the total amount of $1.97 million and $500 thousand, respectively. Out of the $1.97 million in funding from the IIA, a total amount of $1.57 million were royalty-bearing grants (as of March 31, 2021, the Company paid royalties to the IIA in the total amount of $99 thousand), while 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. 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. 14 REWALK ROBOTICS LTD. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The royalty payment obligations also bear interest at the LIBOR rate. The obligation to pay these royalties is contingent on actual sales of the applicable products and in the absence of such sales, no payment is required. Additionally, the Exclusive License Agreement between the Company and Harvard requires the Company to pay Harvard royalties on net sales. See note 6 below for more information about the Collaboration Agreement and the License Agreement. Royalty expenses in cost of revenue were $0 and $3 thousand for the three months ended March 31, 2021 and 2020, respectively. As of March 31, 2021, 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 $697 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. 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. 15 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 and an Exclusive License Agreement with Harvard. The Research Collaboration Agreement was amended on May 1, 2017 and April 1, 2018 (as amended, the “Collaboration Agreement”), and the Exclusive License Agreement was amended on April 1, 2018 (as amended, the “License Agreement”), 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 16, 2023, when it will expire. Under the Collaboration Agreement, Harvard and the Company have agreed to collaborate on research regarding the development of lightweight “soft suit” exoskeleton system technologies for lower limb disabilities, which are intended to treat stroke, multiple sclerosis, mobility limitations for the elderly and other medical applications. The Company has committed to paying for the funding of this research in quarterly installments, subject to a minimum funding commitment under applicable circumstances. The Collaboration Agreement will expire on February 16, 2023. 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 will continue in full force and effect until the expiration of the last-to-expire valid claim of the licensed patents. The Company’s total payment obligation under the Collaboration Agreement and the Harvard License Agreement was $7.2 million as of the initial date, some of which was subject to a minimum funding commitment under applicable circumstances as indicated above which were all completed as of March 31, 2021. The Company has recorded expenses in the amount of $159 thousand and $222 thousand as research and development expenses related to the License Agreement and to the Collaboration Agreement for the three months ended March 31, 2021, and 2020, respectively. No withholding tax was deducted from the Company’s payments to Harvard in respect of the Collaboration Agreement and the License Agreement since this is not taxable income in Israel in accordance with Section 170 of the Israel Income Tax Ordinance 1961-5721. 16 REWALK ROBOTICS LTD. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 7: SHAREHOLDERS’ EQUITY a. Share option plans: As of March 31, 2021, and December 31, 2020, the Company had reserved 668,944 and 604,320 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 three months ended March 31, 2021 and 2020. 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, 2021 is as follows: Number Average exercise price Average remaining contractual life (in years) Aggregate intrinsic value (in thousands) Options outstanding at the beginning of the period 69,606 $ 37.90 5.59 $ — Granted — — — — Exercised — — — — Forfeited (1,860 ) 26.83 — — Options outstanding at the end of the period 67,746 $ 38.20 5.04 $ — Options exercisable at the end of the period 54,779 $ 43.17 4.47 $ — 17 REWALK ROBOTICS LTD. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) A summary of employee RSUs activity during the three months ended March 31, 2021 is as follows: Number of shares underlying outstanding RSUs Weighted average grant date fair value Unvested RSUs at the beginning of the period 1,251,311 $ 3.20 Granted 13,000 1.32 Vested (24,096 ) 1.60 Forfeited (75,764 ) 1.60 Unvested RSUs at the end of the period 1,164,451 $ 3.90 The weighted average grant date fair value of RSUs granted during the three months ended March 31, 2020 was $1.32. The Company did not grant RSUs during the three months ended March 31, 2020. 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 March 31, 2021 and March 31, 2020. As of March 31, 2021, there were $1.5 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 2.89 years. The number of options and RSUs outstanding as of March 31, 2021 is set forth below, with options separated by range of exercise price. Range of exercise price Options and RSUs outstanding as of March 31, 2021 Weighted average remaining contractual life (years) (1) Options outstanding and exercisable as of March 31, 2021 Weighted average remaining contractual life (years) (1) RSUs only 1,164,451 — — — $5.37 12,425 7.99 6,212 7.99 $20.42 - $33.75 34,620 4.71 28,235 4.18 $37.14 - $38.75 9,992 2.54 9,992 2.54 $50 - $52.50 8,043 5.21 7,674 5.16 $182.5 - $524 2,666 4.45 2,666 4.45 1,232,197 5.04 54,779 4.47 (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 March 31, 2021, there are no outstanding options or RSUs held by non-employee consultants. 18 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 March 31, 2021: Issuance date Warrants outstanding Exercise price per warrant Warrants outstanding and exercisable Contractual term (number) (number) December 31, 2015 (1) 4,771 $ 7.500 4,771 See footnote (1) November 1, 2016 (2) 97,496 $ 118.750 97,496 November 1, 2021 December 28, 2016 (3) 1,908 $ 7.500 1,908 See footnote (1) November 20, 2018 (4) 126,839 $ 7.500 126,839 November 20, 2023 November 20, 2018 (5) 106,680 $ 9.375 106,680 November 15, 2023 February 25, 2019 (6) 45,600 $ 7.187 45,600 February 21, 2024 April 5, 2019 (7) 408,457 $ 5.140 408,457 October 7, 2024 April 5, 2019 (8) 49,015 $ 6.503 49,015 April 3, 2024 June 5, 2019 and June 6, 2019 (9) 1,464,665 $ 7.500 1,464,665 June 5, 2024 June 5, 2019 (10) 87,880 $ 9.375 87,880 June 5, 2024 June 12, 2019 (11) 416,667 $ 6.000 416,667 December 12, 2024 June 10, 2019 (12) 50,000 $ 7.500 50,000 June 10, 2024 February 10, 2020 (13) 28,400 $ 1.250 28,400 February 10, 2025 February 10, 2020 (14) 105,840 $ 1.5625 105,840 February 10, 2025 July 6, 2020 (15) 448,698 $ 1.76 448,698 July 2, 2025 July 6, 2020 (16) 296,297 $ 2.2781 296,297 July 2, 2025 December 3, 2020 (17) 586,760 $ 1.34 586,760 June 8, 2026 December 3, 2020 (18) 108,806 $ 1.7922 108,806 June 8, 2026 February 26, 2021 (19) 5,460,751 $ 3.6 5,460,751 August 26, 2026 February 26, 2021 (20) 655,290 $ 4.5781 655,290 August 26, 2026 10,550,820 10,550,820 (1) Represents warrants for ordinary shares issuable upon an exercise price of $7.500 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 March 31, 2021. (2) Represents warrants issued as part of the Company’s follow-on offering in November 2016. At any time, the Company’s board of directors may reduce the exercise price of the warrants to any amount and for any period of time it deems appropriate. (3) Represents common warrants that were issued as part of the $8.000 million December 28, 2016 drawdown under the Loan Agreement between the Company and Kreos, pursuant to which Kreos extended a line of credit to us in the amount of $20 million, with interest payable monthly in arrears on any amounts drawn down at a rate of 10.75% per year from the applicable drawdown date through December 29, 2020, the date on which all principal was repaid. See footnote 1 for exercisability terms of the common warrants. 19 REWALK ROBOTICS LTD. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (4) Represents common warrants that were issued as part of the Company’s follow-on offering in November 2018. (5) Represents common warrants that were issued to the underwriters as compensation for their role in the Company’s follow-on offering in November 2018. (6) Represents warrants that were issued to the exclusive placement agent as compensation for its role in the Company’s follow-on offering in February 2019. (7) 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. (8) Represents warrants that were issued to the placement agent as compensation for its role in the Company’s April 2019 registered direct offering. (9) Represents warrants that were issued to certain institutional investors in a warrant exercise agreement on June 5, 2019 and June 6, 2019, respectively. (10) 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. (11) Represents warrants that were issued to certain institutional investors in a warrant exercise agreement in June 2019. (12) 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. (13) Represents warrants that were issued to certain institutional purchasers in a private placement in the Company’s best efforts offering of ordinary shares in February 2020. During the three months ended March 31, 2021 3,740,100 warrants were exercised for total consideration of $4,675,125. (14) 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 three months ended March 31, 2021 230,160 warrants were exercised for total consideration of $359,625. (15) 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 three months ended March 31, 2021 2,020,441 warrants were exercised for total consideration of $3,555,976. (16) Represents warrants that were issued to the placement agent as compensation for its role in the Company’s July 2020 registered direct offering. (17) 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 three months ended March 31, 2021 3,598,072 warrants were exercised for total consideration of $4,821,416. (18) Represents warrants that were issued to the placement agent as compensation for its role in the Company’s December 2020 private placement. During the three months ended March 31, 2021 225,981 warrants were exercised for total consideration of $405,003. (19) Represents warrants that were issued to certain institutional purchasers in a private placement in our private placement offering of ordinary shares in February 2021. 20 REWALK ROBOTICS LTD. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (20) Represents warrants that were issued to the placement agent as compensation for its role in the Company’s February 2021 private placement. 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): Three Months Ended March 31, 2021 2020 Cost of revenues $ 2 $ 2 Research and development, net (2 ) 42 Sales and marketing 45 29 General and administrative 123 126 Total $ 168 $ 199 e. Equity raise: 1. Follow-on offerings and warrants exercise: On February 19, 2021, the Company entered into a purchase agreement with certain institutional and other accredited investors for the issuance and sale of 10,921,502 ordinary shares, par value NIS 0.25 per share at $3.6625 per ordinary share and warrants to purchase up to an aggregate of 5,460,751 ordinary shares with an exercise price of $3.6 per share, exercisable from February 19, 2021 until August 26, 2026. Additionally, the Company issued warrants to purchase up to 655,290 ordinary shares, with an exercise price of $4.578125 per share, exercisable from February 19, 2021 until August 26, 2026, to certain representatives of H.C. Wainwright & Co., LLC (“H.C. Wainwright”) as compensation for its role as the placement agent in our February 2021 private placement offering. During the three months ended March 31, 2021, we received a total of 9,814,754 outstanding warrants with exercise prices ranging from $1.25 to $1.79 were exercised, for total gross proceeds of approximately $13.8 million. On February 10, 2020, the Company closed a “best efforts” public offering whereby the Company issued an aggregate of 5,600,000 of common units and pre-funded units at a public offering price of $1.25 per common unit and $1.249 per pre-funded unit. As part of the public offering, the Company entered into a securities purchase agreement with certain institutional purchasers. Each common unit consisted of one ordinary share, par value NIS 0.25 per share, and one common warrant to purchase one ordinary share. Each pre-funded unit consisted of one pre-funded warrant to purchase one ordinary share and one common warrant. Additionally, the Company issued warrants to purchase up to 336,000 ordinary shares, with an exercise price of $1.5625 per share, to representatives of H.C. Wainwright as compensation for its role as the placement agent in the Company’s February 2020 offering. During the three months ended March 31, 2020 all pre-funded warrants to purchase ordinary shares were exercised. 21 REWALK ROBOTICS LTD. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 8: FINANCIAL EXPENSES (INCOME), NET The components of financial expenses (income), net were as follows (in thousands): Three Months Ended March 31, 2021 2020 Foreign currency transactions and other $ (14 ) $ (73 ) Financial expenses related to loan agreement with Kreos — 310 Bank commissions 10 9 $ (4 ) $ 246 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 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): Three Months Ended March 31, 2021 2020 Revenues based on customer’s location : Israel — — United States $ 476 $ 216 Europe 837 542 Asia-Pacific 2 2 Africa 1 — Total revenues $ 1,316 $ 760 March 31, December 31, 2021 2020 Long-lived assets by geographic region (*): Israel $ 145 $ 145 United States 217 249 Germany 30 43 $ 392 $ 437 (*) Long-lived assets are comprised of property and equipment, net. 22 REWALK ROBOTICS LTD. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Three Months Ended March 31, 2021 2020 Major customer data as a percentage of total revenues: Customer A 15 % * ) Customer B 10 % — Customer C 10 % — Customer D — 22 % Customer E — 14 % Customer F — 13 % Customer G — 12 % Customer H — 11 % *) Less than 10%. 23