What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-02-27 compared with 2023-02-23 · 448 added, 346 removed, 842 unchanged (49% of the section changed)

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— Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on management’s assessment, management has concluded

that our internal control over financial reporting was effective as of December 31, 2022 to provide reasonable assurance regarding

the reliability of financial reporting and the preparation of consolidated financial statements for external reporting purposes in accordance

We have excluded from the scope of our assessment of internal control

over financial reporting the operations and related assets of AlterG, which we acquired on August 11, 2023.

Based on management’s

assessment, management has concluded that our internal control over financial reporting was effective as of December 31, 2023 to

provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements

for external reporting purposes in accordance with U.S.

This annual report does not include an attestation report of our

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Not applicable

REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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Chief Financial Officer

Charles Remsberg

Chief Sales Officer

Jeannine Lynch

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Michael Lawless has served

as the Company’s Chief Financial Officer since September 2022.

Prior to ReWalk Robotics Mr.

Lawless served as a CFO consultant for

Danforth Advisors, LLC, a provider of outsourced services to the life sciences industry, starting in 2021.

as our Chief Financial Officer since September 2022.

Prior to Lifeward, Mr.

Lawless served as a CFO consultant for Danforth Advisors,

LLC, a provider of financial consulting services to the life sciences industry.

From 2015 to 2020, Mr.

Lawless held several financial

leadership positions including Division CFO at Azenta, Inc.

(formerly Brooks Automation, Inc.), a worldwide provider of management solutions

for biological samples.

Previously, Mr.

Lawless served

as a Division CFO of Azenta, Inc.

(formerly known as Brooks Automation, Inc.), a leading provider of life sciences solutions worldwide,

from 2017 to 2020, and as Senior Director of Financial Planning and Analysis at Azenta from 2015 to 2017.

Among other positions, Mr.

also held several financial leadership roles for PerkinElmer, Inc.

from 2007 to 2012.

Lawless has a Bachelor of Arts degree

in Economics from Swarthmore College, a Master of Business Administration degree from the Tuck School of Business at Dartmouth College

and is a Certified Public Accountant.

Jeannine Lynch has served

as the Company’s Vice President of Market Access and Strategy since August 2021.

Prior to ReWalk, Ms.

Lynch served as Senior Director

of Patient Access Services at BioMarin Pharmaceuticals from April 2009 to September 2021.

Lawless also held financial leadership roles for AECOM Technology, Inc., PerkinElmer, Inc., Momenta

Pharmaceuticals, Inc.

and CTI Molecular Imaging, Inc.

Lawless has a Bachelor of Arts degree in Economics from Swarthmore College,

a Master of Business Administration degree from the Tuck School of Business at Dartmouth College and is a Certified Public Accountant.

Charles Remsberg has served

as our Chief Sales Officer since August 2023.

Prior to Lifeward, Mr.

Remsberg served as CEO of AlterG from March 2017 until the

acquisition of AlterG in August 2023.

An industry veteran of over 30 years, Charles has been responsible for bringing innovative

rehabilitation technology to physical therapy, neuro-rehabilitation, sports medicine, and wellness customers.

Prior to serving at

Remsberg served in both executive and commercial leadership roles for Tibion (for which he served as the CEO from December

2009 to April 2013, when it was acquired by AlterG), Hocoma (for which he served as the U.S.

CEO and Global Head of Sales from September

2003 to November 2009), and Biodex Medical Systems (for which he served as the Head of Worldwide Sales from January 1997 to October 2002).

He holds an AS in Business Administration from Suffolk County Community College.

Jeannine Lynch has served as our Vice President

of Market Access and Strategy since August 2021.

Prior to Lifeward, Ms.

Lynch served as Senior Director of Patient Access Services at

BioMarin Pharmaceuticals from April 2009 to September 2021.

In addition to her work with BioMarin, Ms.

has worked for industry leaders such as Genentech and Pfizer/Agouron.

She has held leadership roles in commercial management, product

launches and built customized patient services to address several different rare and ultrarare medical conditions.

Lynch also sits

on the Board of Directors for MVP, a non-profit organization to help young people of color prepare, perform, progress, and prosper in

their education, leadership and early professional careers.

Lynch is a graduate of the University of California Berkeley and holds

a Master of Public Health from the University of Michigan.

Almog Adar became

has served as the Vice President of Finance since December 2022.

Lynch has worked for industry leaders

such as Genentech and Pfizer/Agouron.

She has held leadership roles in commercial management, product launches and built customized patient

services to address several different rare and ultrarare medical conditions.

Lynch also sits on the Board of Directors for MVP, a

non-profit organization to help young people of color prepare, perform, progress, and prosper in their education, leadership and early

professional careers.

Lynch is a graduate of the University of California Berkeley and holds a Master of Public Health from the University

Almog Adar has served as

our Vice President of Finance since December 2022.

From 2020 to 2022, Mr.

Adar served as our Director of Finance and Corporate

Financial Controller.

Prior to ReWalk Robotics Mr.

Adar served as Controller of Infinya recycling Ltd (Previously Amnir Recycling)., from

January 2018 until December 2019.

Adar served as our Director of Finance and Corporate Financial

Prior to Lifeward, Mr.

Adar served as Controller of Infinya Recycling Ltd.

(previously Amnir Recycling) from January 2018

until December 2019.

From January 2016 until December 2017, Mr.

Adar served as Assistant Controller of Delta Galil Industries.

Adar has a Bachelor of Arts degree in Accounting and Economics from the Open University of Israel and is a Certified Public Accountant

licensed by the Israeli Ministry of Justice.

has a Bachelor of Arts degree in Accounting and Economics from the Open University of Israel and is a Certified Public Accountant licensed

by the Israeli Ministry of Justice.

The remaining information required by this Item will be included

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is incorporated herein by reference from, our Proxy Statement.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

AND RELATED STOCKHOLDER MATTERS

The information required by this Item 12 will be included in and

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PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item 14 will be included in and

is incorporated herein by reference, from our Proxy Statement.

The information required by this Item 14 will be included in and is incorporated herein

by reference, from our Proxy Statement.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

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EXHIBIT INDEX

and Plan of Merger, dated as of August 8, 2023, by and among ReWalk Robotics, Inc., Atlas Merger Sub, Inc., AlterG Inc.

and Shareholder

Representative Services LLC (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed with the

SEC on August 9, 2023).

Fourth Amended

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Company’s Current Report on Form 8-K filed with the SEC on January 4, 2016).

of common warrant to purchase ordinary shares in November 2018 follow-on offering (incorporated by reference to Exhibit 4.7 to the Company’s

registration statement on Form S-1/A (File No.

333-227852), filed with the SEC on November 14, 2018).

of underwriter warrant from November 2018 follow-on offering (incorporated by reference to Exhibit 4.8 to the Company’s registration

statement on Form S-1/A (File No.

333-227852), filed with the SEC on November 14, 2018).

Amendment to Warrant to Purchase Shares between the Company and Kreos Capital V (Expert Fund) Limited, dated November 20, 2018 (incorporated

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333-197344), filed with the SEC on August 20, 2014).**

Incentive Plan (incorporated by reference to Exhibit 10.12 to the Company’s registration statement on Form F-1 (File No.

filed with the SEC on July 10, 2014).**

Equity Incentive Sub Plan (incorporated by reference to Exhibit 10.13 to the Company’s registration statement on Form F-1 (File

333-197344), filed with the SEC on July 10, 2014).**

Equity Incentive Sub Plan (incorporated by reference to Exhibit 10.14 to the Company’s registration statement on Form F-1 (File

333-197344), filed with the SEC on July 10, 2014).**

Option Plan (incorporated by reference to Exhibit 10.15 to the Company’s registration statement on Form F-1 (File No.

filed with the SEC on July 10, 2014).**

2014 Incentive

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Exhibit 10.22 to the Company’s Annual Report on Form 10-K filed with the SEC on February 17, 2017, as amended on April 27, 2017).**

ReWalk Robotics

Compensation Policy for Executive Officers and Non-Executive Directors, as amended (incorporated by reference to Exhibit 10.1 of

the Company’s Current Report on Form 8-K filed with the SEC on May 21, 2021).**

Amendment No.

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on Form 10-Q filed with the SEC on May 13, 2022).* **

Employment Agreement, dated September

2, 2022, by and between the Company and Michael A.

Lawless (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly

report on Form 10-Q filed with the SEC on November 7, 2022).* **

Form of Restricted Share Unit Award

(Inducement Award) for non-Israeli employees and executives (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly

report on Form 10-Q filed with the SEC on November 7, 2022).**

List of subsidiaries of the

Company (incorporated by reference to Exhibit 21.1 to the Company’s registration statement on Form S-1/A (File No.

filed with the SEC on November 7, 2018).

Consent of Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global Limited.

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act 2002.

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act 2002.

Certification of Principal Executive Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002.***

Certification of Principal Financial Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002.***

1 to Employment Agreement, dated May 4, 2023, by and between the Company and Almog Adar (incorporated by reference to Exhibit 10.1

to the Company’s Quarterly report on Form 10-Q filed with the SEC on August 11, 2023).**

Agreement, dated September 2, 2022, by and between the Company and Michael A.

Lawless (incorporated by reference to Exhibit 10.1 to the

Company’s Quarterly report on Form 10-Q filed with the SEC on November 7, 2022).* **

Agreement, dated as of January 1, 2023), by and between the Company and Richner Consultants LLC (incorporated by reference to Appendix

A to the Company’s Definitive Proxy Statement on Schedule 14A filed with the SEC on August 9, 2023).**

Robotics Ltd.

Compensation Policy for Executive Officers and Non-Executive Directors (incorporated by reference to Appendix B to the Company’s

Definitive Proxy Statement on Schedule 14A filed with the SEC on August 9, 2023).**

Agreement, dated as of August 11, 2023, by and between the Company and Charles Remsberg (incorporated by reference to Exhibit 10.1 to

the Company’s Quarterly report on Form 10-Q filed with the SEC on November 14, 2023).**

of Restricted Share Unit Award (Inducement Award) for non-Israeli employees and executives (incorporated by reference to Exhibit 10.2

to the Company’s Quarterly report on Form 10-Q filed with the SEC on November 14, 2023).**

List of subsidiaries of the Company.***

Consent of Kost Forer Gabbay & Kasierer, a member of

Ernst & Young Global Limited.

Certification of Principal Executive Officer pursuant to

Section 302 of the Sarbanes-Oxley Act 2002.

Certification of Principal Financial Officer pursuant to

Section 302 of the Sarbanes-Oxley Act 2002.

Certification of Principal Executive Officer and Principal

Financial Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.***

Certification of Principal Financial Officer pursuant to

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.***

Recovery Policy (incorporated by reference to Annex A to the ReWalk Robotics Ltd.

Compensation Policy for Executive Officers and Non-Executive

Directors filed herewith as Exhibit 10.21).

XBRL Instance Document.

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XBRL Taxonomy Extension Definition Linkbase Document.

Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K.

Certain identified information in the exhibit has been omitted because it is the type of information that (i) the Company customarily

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Director and Chief Executive Officer

(Principal Executive Officer)

February 27, 2024

Larry Jasinski

(Principal Executive Officer)

/s/ Mike Lawless

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February 27, 2024

/s/ Yohanan R Engelhardt

February 23, 2023

Yohanan R Engelhardt

John William Poduska

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John William Poduska

February 23, 2023

/s/ Yasushi Ichiki

February 23, 2023

Yasushi Ichiki

/s/ Aryeh Dan

February 23, 2023

/s/ Randel Richner

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue recognition

Description of the Matter

As described in Note 2 to the consolidated financial statements, the Company generates revenues from sales of products.

As described in Note 2 to the consolidated financial statements, the Company generates revenues from sales of its medical devices.

Revenue is recognized when obligations under the terms of a contract with the Company's customers are satisfied.

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Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis.

Auditing the Company’s revenue recognition involves subjective assumptions used in determining the standalone selling price of distinct performance obligations.

The Company does not sell the service type warranty of its SCI products on a standalone basis.

Auditing the Company’s evaluation of the allocation of the transaction price to the distinct performance obligations was challenging due to the effort and assumptions required to evaluate the standalone selling price of the SCI products service type warranty.

The assumptions used in determining the standalone selling price of the service type warranty included costs allocation, inflation rates and expected margins.

How We Addressed the

Matter in Our Audit

Our audit procedures included, among others, reading the executed contract and purchase order to understand the contract, identify the performance obligations and evaluate management’s identification of the distinct performance obligations for a sample of contracts.

To test the management’s determination of standalone selling prices for each performance obligation, our audit procedures included, among others, evaluating the methodology applied and testing the calculations as well as the completeness and accuracy of the underlying data and assumptions used by the Company in its estimates.

To test the management’s determination of standalone selling prices of the SCI products service type warranty, our audit procedures included, among others, evaluating the methodology applied and testing the calculations as well as the completeness and accuracy of the underlying data including the costs allocation, inflation rates and expected margins used by the Company in its estimates.

We also evaluated the Company’s disclosures included in notes to the consolidated financial statements.

Business Combinations – Valuation

Description of the Matter

As discussed in Notes 2 and 5 to the consolidated financial statements, the Company completed an acquisition of AlterG Inc.

during 2023 for consideration of $22.1 million.

The Company accounted for this acquisition as a business combination.

The acquisition resulted in the recognition of intangible assets amounting to $14.1 million, which consisted of technology, customer relationship, trademark assets and backlog of $6.1 million, $6.9 million, $0.8 million and $0.3 million respectively.

Auditing the Company’s estimation of the fair value of the acquired intangible assets was complex due to the estimation and uncertainty in the Company’s determination of the fair value of acquired identifiable intangible assets.

The estimation uncertainty for the acquired intangible assets was primarily due to the underlying assumptions about the future performance of the acquired business, which were utilized in determining the fair value of the acquired intangible assets.

The significant assumptions used by management included discount rates and certain assumptions that form the basis of the forecasted results, including revenue growth rates.

These significant assumptions were forward-looking and could be affected by future economic and market conditions.

How We Addressed the

Matter in Our Audit

To test the estimated fair value of the acquired intangible assets, our audit procedures included, among others, assessing the fair value methodology used by the Company and testing the significant assumptions and the underlying data used by the Company in its analyses.

We also performed sensitivity analyses over the significant assumptions used to evaluate the change in the fair value resulting from changes in the assumptions.

Additionally, we tested the completeness and accuracy of the underlying data used in the valuation.

We involved our valuation specialists to assist us in our evaluation of the Company’s valuation model, related assumptions and output of the valuation model.

KOST FORER GABBAY & KASIERER

A Member of Ernst & Young Global

A Member of EY Global

We have served as the Company’s auditor since 2014.

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Cash and cash equivalents

Trade receivable, net

Trade receivable, net of credit losses of $ 328 and $ 26 , respectively

Prepaid expenses and other current assets

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Property and equipment, net

Intangible assets

Total long-term assets

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CURRENT LIABILITIES:

Current maturities of operating leases liability

Trade payables

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Deferred revenue

Current maturities of operating leases liability

Earnout liability

Other current liabilities

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LONG-TERM LIABILITIES

Deferred revenue

Earnout liability

Deferred revenues

Non-current operating leases liability

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Ordinary share of NIS 0.25 par value-Authorized:

120,000,000 shares at December 31, 2022 and 2021;

120,000,000 shares at December 31, 2023 and December 31, 2022;

64,132,706 and 63,023,506 shares at December 31, 2023 and December 31, 2022, respectively;

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Additional paid-in capital

Treasury Shares at cost, 2,933,208 ordinary shares at December 31, 2022

Treasury Shares at cost, 4,022,607 and 2,933,208 ordinary shares at December 31, 2023 and December 31, 2022, respectively

Accumulated deficit

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Research and development, net

Sales and marketing, net

Sales and marketing

General and administrative

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Operating loss

Financial expenses (income), net

Financial income, net

Loss before income taxes

Taxes on income

Taxes on income (benefit)

Net loss per ordinary share, basic and diluted

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Issuance of ordinary shares in a “registered direct” offering, net of issuance expenses in the amount of $ 3,215 (1)

Issuance of ordinary shares in a private placement, net of issuance expenses in the amount of $ 993 (1)

Balance as of December 31, 2021

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Issuance of ordinary shares upon vesting of RSUs by employees and non-employees

Issuance of ordinary shares in a “Best Efforts” offering, net of issuance expenses in the amount of $ 3,679 (1)

Exercise of pre-funded warrants and warrants (1)(2)

Issuance of ordinary shares in a “registered direct” offering, net of issuance expenses in the amount of $ 3,215 (1)

Treasury shares at cost

Balance as of December 31, 2022

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Balance as of December 31, 2023

(1) See Note 9a.

(2) See Note 9f.

The accompanying notes are an integral part of these consolidated financial statements.

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Adjustments to reconcile net loss to net cash used in operating activities:

Amortization of intangible assets

Share-based compensation

Deferred taxes

Gain on PPP forgiveness

Foreign currency remeasurement loss

Remeasurement of earnout liability

Interest income

Exchange rate fluctuations

Changes in assets and liabilities:

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Employees and payroll accruals

Deferred revenue

Deferred revenues

Operating lease liabilities and other liabilities

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Cash flows used in investing activities:

Acquisition of a business, net of cash acquired

Purchase of property and equipment

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Cash flows from financing activities:

Repayment of long-term loan

Proceeds from PPP loan (3)

Issuance of ordinary shares in a “best effort” offering, net of issuance expenses in the amount of $ 1,056 (1)

Issuance of ordinary shares in a “registered direct” offering, net of issuance expenses in the amount of $ 977 (1)

Issuance of ordinary shares in a private placement, net of issuance expenses in the amount of $ 959 (1)

Issuance of ordinary shares in a private placement, net of issuance expenses paid in the amount of $ 3,679 (1)

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Effect of Exchange rate changes on Cash, Cash Equivalents and Restricted Cash

(Decrease) increase in cash, cash equivalents, and restricted cash

Increase (decrease) in cash, cash equivalents, and restricted cash

Cash, cash equivalents, and restricted cash at beginning of period

Cash, cash equivalents, and restricted cash at end of period

(1) See Note 9a.

(2) See Note 9f.

The accompanying notes are an integral part of these consolidated financial statements.

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Supplemental disclosures of non-cash flow information

Expenses related to offerings not yet paid (1)

Classification of other current assets to property and equipment, net

Classification of inventory to property and equipment

Amounts related to shares re-purchase not yet paid

ROU assets obtained from new lease liabilities

Supplemental disclosures of cash flow information:

Cash paid for income taxes

Cash paid for interest

Cash received from interest

Reconciliation of cash, cash equivalents and restricted cash as shown in the consolidated statements of cash flows

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Total Cash, cash equivalents, and restricted cash

(1) See Note 9a.

(2) See Note 9f.

The accompanying notes are an integral part of these consolidated financial statements.

REWALK ROBOTICS LTD.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

dollars in thousands

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.

RRL has two wholly owned subsidiaries:

RRL has three wholly-owned (directly and indirectly) 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 a medical device company that is designing, developing, and commercializing innovative technologies that enable mobility and wellness in rehabilitation and daily life for individuals with neurological conditions.

Our initial product offerings were the ReWalk Personal and ReWalk Rehabilitation Exoskeleton devices for individuals with spinal cord injury.

These devices are robotic exoskeletons that are designed for individuals with paraplegia that use our patented tilt-sensor technology and an on-board computer and motion sensors to drive motorized legs that power movement.

(“RRI”) incorporated under the laws of Delaware on February 15, 2012, (ii) ReWalk Robotics GMBH (“RRG”) incorporated under the laws of Germany on January 14, 2013, and (iii) AlterG, Inc.

(“AlterG”) incorporated in Delaware on October 21, 2004 under the name of Gravus, Inc.

On June 30, 2005, the Company re-incorporated in Delaware and changed its name to AlterG, Inc.

in September 2005.

The Company’s initial product offerings were the ReWalk Personal and ReWalk Rehabilitation Exoskeleton devices for individuals with spinal cord injury (collectively, the “SCI Products”).

These devices are robotic exoskeletons that are designed for individuals with paraplegia that use the Company’s patented tilt-sensor technology and an on-board computer and motion sensors to drive motorized legs that power movement.

These SCI Products allow individuals with spinal cord injury the ability to stand and walk again during everyday activities at home or in the community.

We have sought to expand our product offerings beyond the SCI Products through internal development and distribution agreements.

We have developed our ReStore Exo-Suit device, which we began commercializing in June 2019.

The Company has sought to expand the product offerings beyond the SCI Products through internal development and distribution agreements.

The Company has developed its ReStore Exo-Suit device, which it began commercializing in June 2019.

The ReStore is a powered, lightweight soft exo-suit intended for use during the rehabilitation of individuals with lower limb disability due to stroke.

During the second quarter of 2020, we signed two separate agreements to distribute additional product lines in the United States.

We are the exclusive distributor of the MYOLYN MyoCycle FES Pro cycles to U.S.

rehabilitation clinics and for the MyoCycle Home cycles available to US veterans through VA hospitals.

In the second quarter of 2020, we also became the exclusive distributor of the MediTouch Tutor movement biofeedback systems in the United States;

however, due to unsatisfactory sales performance of the MediTouch product lines, we terminated this agreement as of January 31, 2023.

We will continue to evaluate other products for distribution or acquisition that can broaden our product offerings further to help individuals with neurological injury and disability.

During the second quarter of 2020, the Company signed two separate agreements to distribute additional product lines in the United States.

The Company is the exclusive distributor of the MYOLYN MyoCycle FES Pro cycles to United States (“U.S.”) rehabilitation clinics and for the MyoCycle Home cycles available to US veterans through VA hospitals.

In the second quarter of 2020, the Company also became the exclusive distributor of the MediTouch Tutor movement biofeedback systems in the United States;

however, due to unsatisfactory sales performance of the MediTouch product lines, the Company terminated this agreement as of January 31, 2023.

We refer to the MediTouch and MyoCycle devices as the Company’s “Distributed Products.”

On August 11, 2023, pursuant to an Agreement and Plan of Merger among RRI, AlterG, Atlas Merger Sub, Inc., a wholly owned subsidiary of RRI (“Merger Sub”), and Shareholder Representative Services LLC, dated August 11, 2023, RRI acquired AlterG and AlterG became a wholly owned subsidiary of the Company.

For accounting purposes, RRI was considered the acquirer and AlterG was considered the acquiree.

The acquisition was accounted for using the acquisition method of accounting.

See Note 5 for additional information.

The Company made its first acquisition to supplement its internal growth when it acquired AlterG, a leading provider of AlterG Anti-Gravity systems for use in physical and neurological rehabilitation.

The Company paid a cash purchase price of $19.0 million at closing and additional cash earnouts may be paid based upon a percentage of AlterG’s year-over-year revenue growth over the two years following the closing.

The AlterG Anti-Gravity systems use patented, NASA-derived Differential Air Pressure (“DAP”) technology to reduce the effects of gravity and allow people to rehabilitate with finely calibrated support and reduced pain.

The Company will continue to evaluate other products for distribution or acquisition that can broaden its product offerings further to help individuals with physical and neurological injury and disability.

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.

The Company sells its products directly primarily in the United States, through a combination of direct sales and distributors (depending on the product line) in Germany, Canada, and Australia, and primarily through distributors in other markets.

In its direct markets, the Company has established relationships with clinics and rehabilitation centers, professional and college sports teams, and individuals and organizations in the spinal cord injury community, and in its indirect markets, the Company’s distributors maintain these relationships.

RRI and AlterG market and sell products mainly in the United States.

RRG markets and sells the Company’s products mainly in Germany and Europe.

The Company depends on one contract manufacturer, Sanmina.

Reliance on this vendor makes the Company vulnerable to possible capacity constraints and reduced control over component availability, delivery schedules, manufacturing yields and costs.

The worldwide spread of COVID-19 has resulted in, and could potentially continue to result in, significant disruptions to the global economy and the capital markets, as well as our business.

This has resulted in a negative impact on the Company’s sales and results of operations since the start of the pandemic, and there is significant uncertainty as to how the countries in which we do business will continue to respond to such outbreaks, including whether there will be future partial or total shutdowns, which would adversely affect our business.

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 our estimates and judgments, and any such differences may be material to our financial statements.

The Company depends on one contract manufacturer to manufacture the ReWalk and the ReStore products in its portfolio, Sanmina.

Reliance on this vendor makes the Company vulnerable to possible capacity constraints and reduces control over component availability, delivery schedules, manufacturing yields and costs.

For the full year ended December 31, 2023 the Company incurred a consolidated net loss of $ 22.1 million and has an accumulated deficit in the total amount of $ 235.9 million.

The Company’s negative operating cash flow for the full year ended December 31, 2023 was $ 20.7 million.

Our cash and cash equivalent on December 31, 2022 totaled $ 67.9 million.

Our cash and cash equivalent on December 31, 2023 totalled $ 28.1 million.

The Company has sufficient funds to support its operation for more than 12 months following the approval of its consolidated financial statements for the fiscal year ended December 31, 2023.

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 the Company’s products and product candidates, the establishment of contracts for the distribution of new product lines, or the acquisition of additional product lines, any of which, or in combination, would contribute to the achievement of a level of revenue adequate to support the cost structure.

The Company expects to incur future net losses and the transition to profitability is dependent upon, among other things, the successful development and commercialization of the Company’s products and product candidates, the establishment of contracts for the distribution of new product lines, or the acquisition of additional product lines, any of which, or in combination, would contribute to the achievement of a level of revenue adequate to support the cost structure.

Until the Company achieves profitability or generates positive cash flows, it will continue to need to raise additional cash.

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Notwithstanding, there can be no assurance that the Company will be able to raise additional funds or achieve or sustain profitability or positive cash flows from operations.

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements are prepared according to United States generally accepted accounting principles (“U.S.

SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S.

GAAP”), applied on a consistent basis, as follows:

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The preparation of the consolidated financial statements in conformity with U.S.

generally accepted accounting principles requires management to make estimates, judgments, and assumptions.

GAAP requires management to make estimates, judgments, and assumptions.

The Company’s management believes that the estimates, judgments, and assumptions used are reasonable based upon information available at the time they are made.

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Actual results could differ from those estimates.

On an ongoing basis, the Company’s management evaluates estimates, including those related to inventories, fair values of share-based awards, contingent liabilities, provision for warranty, allowance for doubtful account and sales return reserve.

Such estimates are based on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Financial Statements in U.S.

Since 2015, most of the Company’s expenses were denominated in United States dollars (“dollars”) and the remaining expenses were denominated in New Israeli Shekels (“NIS”) and Euros.

Until 2018 most of the Company’s revenue was denominated in U.S.

dollars and the remainder of our revenue was denominated in Euros and British pound, whereas, in the last four years our Euro-denominated revenue is higher than our dollar-denominated revenue.

However, the selling prices are linked to the Company’s price list which is determined in dollars, the budget is managed in dollars, financing activities including loans and fundraising activities, are made in U.S.

dollars and the Company’s management believes that the dollar is the primary currency of the economic environment in which the Company and each of its subsidiaries operate.

The functional currency is the currency that best reflects the economic environment in which the Company and its subsidiaries operate and conduct their transactions.

Most of the Company’s revenues and costs are incurred in U.S.

In addition, the Company’s financing activities are incurred in U.S.

The Company’s management believes that the dollar is the primary currency of the economic environment in which the Company and each of its subsidiaries operate.

Thus, the dollar is the Company’s and its subsidiary's functional and reporting currency.

Accordingly, transactions denominated in currencies other than the functional currency are re-measured to the functional currency in accordance with Accounting Standards Codification (“ASC”) No.

830, “Foreign Currency Matters” at the exchange rate at the date of the transaction or the average exchange rate in the relevant reporting period.

At the end of each reporting period, financial assets and liabilities are re-measured to the functional currency using exchange rates in effect at the balance sheet date.

Non-financial assets and liabilities are re-measured at historical exchange rates.

All transaction gains and losses of the re-measured monetary balance sheet items are reflected in the consolidated statements of operations.

Accordingly, monetary accounts maintained in currencies other than the U.S.

dollar are remeasured into U.S.

dollars in accordance with ASC 830 “Foreign Currency Matters.” All transaction gains and losses of the remeasured monetary balance sheet items are reflected in the consolidated statements of operations as financing income or expenses as appropriate.

Principles of Consolidation:

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, RRI and RRG.

All intercompany transactions and balances have been eliminated upon consolidation.

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.

Intercompany balances have been eliminated upon consolidation.

Cash Equivalents:

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When recorded, the reserves are intended to reduce the carrying value of inventory to its net realizable value.

If actual demand for the Company’s products deteriorates, or market conditions are less favorable than those projected, additional inventory reserves may be required.

In the years ended December 31, 2022, 2021 and 2020, the Company applied inventory reserves in the amount of $ 502 thousand, $ 252 thousand, and $ 215 thousand, respectively.

The inventory reserves were recorded in cost of revenue.

Balances and transactions with related parties:

In September 2013, the Company entered into a share purchase agreement and a strategic alliance with Yaskawa Electric Corporation (“YEC”), pursuant to which YEC has agreed to distribute the Company’s products, in addition to providing sales, marketing, service and training functions, in Japan, China (including Hong-Kong and Macau), Taiwan, South Korea, Singapore and Thailand.

On May 15, 2018, we terminated the distribution rights granted to Yaskawa in China (including Hong Kong and Macau).

We terminated all other distribution rights granted to Yaskawa effective September 24, 2020.

If actual demand for the Company’s products deteriorates, or market conditions are less favourable than those projected, additional inventory reserves may be required.

Property and Equipment:

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Leasehold improvements

Over the shorter of the lease term or

estimated useful life

Over the shorter of the lease term

or estimated useful life

Business Combinations

The Company accounts for business combinations in accordance with ASC 805, “Business Combinations” (“ASC 805”).

For business combinations accounted for under the acquisition method, ASC 805 requires recognition of assets acquired, liabilities assumed, and any non-controlling interest at the acquisition date, measured at their fair values as of that date.

The Company determines the recognition of intangible assets based on the following criteria:

(i) the intangible asset arises from contractual or other rights;

or (ii) the intangible asset is separable or divisible from the acquired entity and capable of being sold, transferred, licensed, returned or exchanged.

The excess of the fair value of the purchase price over the fair values of the identifiable assets and liabilities is recorded as goodwill.

Determining the fair value of the identifiable assets and liabilities requires management to use significant judgment and estimates including the forecasted revenue and revenues growth rates, discount rates, customer contract renewal rates and customer attrition rates.

The process of estimating the fair values requires significant estimates, especially with respect to intangible assets.

Management’s determination of fair value of assets acquired and liabilities assumed at the acquisition date is based on the best information available in the circumstances and incorporates management’s own assumptions and involves a significant degree of judgment.

Acquisition related costs include legal fees, consulting and success fees, and other non-recurring integration related costs.

Acquisition-related costs are expensed as incurred.

Goodwill and Other Intangibles

For business combinations, the purchase prices are allocated to the tangible assets and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition dates, with the remaining unallocated purchase prices recorded as goodwill.

The Company has no indefinite-lived intangible assets other than goodwill.

Acquired identifiable finite-lived intangible assets include identifiable acquired technology, customer relationships, trademarks and backlog and are amortized on a straight-line basis over the estimated useful lives of the assets.

The Company routinely reviews the remaining estimated useful lives of finite-lived intangible assets.

Goodwill is not amortized and is tested for impairment at least annually.

The Company operates as one reporting unit and the fair value of the reporting unit is estimated using quoted market prices of the Company’s stock in active markets.

The Company tests goodwill for impairment annually in the fourth quarter and whenever events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable.

When testing goodwill for impairment, the Company may first perform a qualitative assessment.

If the Company determines it is not more likely than not the reporting unit’s fair value is less than its carrying value, then no further analysis is necessary.

If the Company determines that it is more likely than not that the fair value of its reporting unit is less than its carrying amount, then the quantitative impairment test will be performed.

The Company may elect to bypass the qualitative assessment and proceed directly to performing a quantitative analysis.

Under the quantitative impairment test, if the carrying amount of the Company’s reporting unit exceeds its fair value, the Company recognizes an impairment of goodwill for the amount of this excess.

As of December 31, 2023, no impairments of goodwill have been recognized.

Impairment of Long-Lived Assets

The Company’s long-lived assets are reviewed for impairment in accordance with ASC No.

360, “Property, Plant and Equipment” whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable.

The Company’s long-lived assets, including right-of-use (“ROU”) assets and identifiable intangible assets that are subject to amortization, are reviewed for impairment in accordance with ASC 360, “Property, Plant and Equipment” whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable.

Recoverability of assets (or asset group) to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets.

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Revenue Recognition:

The Company generates revenue from sales of products.

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 activities, or under reimbursement coverage from insurance companies), rehabilitation facilities and distributors.

The Company recognized revenue in accordance with ASC Topic 606 when, or as, control of the promised good or service is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

The Company sells its products to clinics and rehabilitation centres, professional and college sports teams, private individuals (who finance the purchases by themselves, through fundraising or reimbursement coverage from insurance companies), and distributors.

The Company recognizes revenue in accordance with ASC 606, “Revenue Recognition” when, or as, control of the promised good or service is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

The Company applies the following five steps:

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The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring products or services to the customer.

Determining the transaction price requires of level judgment, which is discussed by revenue category in further detail below.

The Company does not offer extended payment terms beyond one year to customers.

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Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis.

The Company determines standalone selling price based on the price at which the performance obligation is sold separately.

Recognize revenue when or as the Company satisfies a performance obligation

The Company generally satisfies performance obligations at a point in time, once the customer has obtained the legal title to the items purchased or service provided.

Revenue is recognized when or as performance obligations are satisfied by transferring control of a promised good or service to a customer.

Control either transfers over time or at a point in time, which affects when revenue is recorded.

The Company has elected to apply the practical expedient for financing component for transactions in which the difference between the payment date and the revenue recognition timing is up to 12 months.

Disaggregation of Revenue (in thousands):

Year Ended December 31,

Service and warranty

Total Revenues

Product revenue

Revenue from Products is comprised of sale of Anti-Gravity products, sale of systems products to rehabilitation facilities and sale of ReWalk Personal Exoskeleton systems to end users.

Revenues generated from the sale of Products are recognized at a point in time, once the customer has obtained the legal title to the items purchased.

For systems sold to rehabilitation facilities, the Company includes insignificant training and considers the elements in the arrangement to be a single performance obligation.

Therefore, the Company recognizes revenue for the system and training only after delivery in accordance with the agreement's delivery terms to the customer and after the training has been completed.

For sales of Personal systems to end users, and for sales of Personal or Rehabilitation systems to third party distributors, the Company does not provide training to the end user as this training is completed by the Rehabilitation centers or by the distributor that have previously completed the ReWalk Training program.

Therefore, the Company recognizes revenue for the system only when control is transferred after delivery and when the training has been completed, in accordance with the agreements terms with the customer.

For sales of ReWalk Personal Exoskeleton systems to end users, and for sales of ReWalk Personal or ReWalk Rehabilitation Exoskeleton systems to third party distributors, the Company does not provide training to the end user as this training is completed by the rehabilitation center or by the distributor that have previously completed the ReWalk Training program.

Therefore, the Company recognizes revenue in such sales upon delivery.

Revenue is recognized based on the transaction price at the time the related performance obligation is satisfied by transferring a promised product or service to a customer.

The Company generally does not grant a right of return for its products.

In rare circumstances the Company provides a right of return of its products.

In those cases, the Company records reductions to revenue for expected future product returns based on the Company’s historical experience and estimates.

Disaggregation of Revenue (in thousands)

Year Ended December 31,

Spare parts and warranties

Total Revenue

During 2022, the Company offered five products:

(1) ReWalk Personal, (2) ReWalk Rehabilitation, (3) ReStore, (4) MyoCycle and (5) MediTouch.

Due to unsatisfactory sales performance of the MediTouch product lines, we terminated this agreement as of January 31, 2023.

ReWalk Personal and ReWalk Rehabilitation are SCI Products, which are currently designed for everyday use by paraplegic individuals at home and in their communities.

The SCI Products are custom fitted for each user, as well as for use by paraplegic patients in the clinical rehabilitation environment, where they provide individuals access to valuable exercise and therapy.

ReWalk Rehabilitation which is a ReWalk Personal 6.0 product sold with multiple sizes of our adjustable parts to allow different users the ability to train within a clinic .

The 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 Company also sells Distributed Products that include the MyoCycle, which uses Functional Electrical Stimulation (“FES”) technology, and MediTouch tutor movement biofeedback devices.

The Company markets the Distributed Products in the United States for use at home or in clinic.

Units placed include revenue from sales of SCI Products, ReStore, and Distributed Products.

For units placed, the Company recognizes revenue when it transfers control and title has passed to the customer.

Each unit placed is considered an independent, unbundled performance obligation.

The Company also offers a rent-to-purchase model in which the Company recognizes revenue ratably according to the agreed rental monthly fee.

Spare parts and warranties

Spare parts are sold to private individuals, rehabilitation facilities and distributors.

Revenue is recognized when the Company satisfies a performance obligation by transferring control over promised goods or services to the customer.

Each part sold is considered an independent, unbundled performance obligation.

In rare circumstances when the Company provides a right of return for its products.

the Company records reductions to revenue for expected future product returns based on the Company’s historical experience and estimates.

During 2023, the Company offered six products:

(1) ReWalk Personal Exoskeletons, (2) ReWalk Rehabilitation Exoskeleton, (3) ReStore, (4) AlterG Anti-Gravity systems, (5) MyoCycle and (6) MediTouch.

Due to unsatisfactory sales performance of the MediTouch product lines, the Company terminated this agreement as of January 31, 2023.

Rental revenue

Rental revenue for the AlterG Anti-Gravity systems is accounted for under ASC Topic 842, Leases.

The Company rents its products to customers for a fixed monthly fee over the rental term, which typically ranges from 2 to 3 years.

Rental revenues are recorded as earned on a monthly basis.

See Note 2x for additional information.

For the SCI Products, the Company also offers a rent-to-purchase model in which the Company recognizes revenue ratably according to the agreed rental monthly fee for a limited period prior to selling its products.

Service and warranties

The Company services its products after expiration of the initial warranty.

Service revenue, consisting of time and materials to perform the repairs, is recorded as services are rendered.

Determining the transaction price requires of level judgment, which is discussed by revenue category in further detail below.

Warranties are classified as either an assurance type or a service type warranty.

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The ReStore device is sold with a two-year warranty which is considered as assurance type warranty.

The Distributed Products are sold with assurance type warranty ranging from between one year to ten years, depending on the specific product and part.

The Distributed Products are sold with assurance type warranty ranging between three years to ten years, depending on the specific product and part.

F or AlterG Anti-Gravity Products, the Company offers customers extended warranty contracts that extend or enhance the technical support, parts, and labor coverage offered as part of the base warranty included with the Anti-Gravity system products.

Extended warranty revenue is recognized ratably over the extended warranty coverage period.

The Company offers a one-year assurance type warranty to customers in the U.S.

and two years assurance type warranty for spare parts only to its international distributors.

For these products, the Company determines standalone selling price based on the price at which the performance obligation is sold separately.

Contract balances (in thousands):

Trade receivable, net (1)

Deferred revenue (1) (2)

Balance presented net of unrecognized revenue that were not yet collected.

Trade receivable, net of credit losses (1)

Deferred revenues (1) (2)

Balance presented net of unrecognized revenue that was not yet collected.

$ 435 thousands of the December 31, 2022 deferred revenue balance was recognized as revenue during the year ended December 31, 2023.

Deferred revenue is composed primarily of unearned revenue related to service type warranty obligations as well as other advances and payments which the Company received from customers prior to satisfying the performance obligation, for which revenue has not yet been recognized.

Deferred revenue which represent a contract liability, include unearned amounts related to service type warranty obligations as well as other advances and payments which the Company received from customers prior to satisfying the performance obligation, for which revenue has not yet been recognized.

The Company's unearned performance obligations as of December 31, 2023 and the estimated revenue expected to be recognized in the future related to the service type warranty amounts to $3.1 million, which will be fulfilled over one to five years.

Accounting for Share-Based Compensation:

The Company accounts for share-based compensation in accordance with ASC No.

718, “Compensation-Stock Compensation” (“ASC No.

718 requires companies to estimate the fair value of equity-based payment awards on the date of grant using an Option-Pricing Model (“OPM”).

The Company accounts for share-based compensation in accordance with ASC 718, “Compensation-Stock Compensation” (“ASC 718”).

ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date of grant using an Option-Pricing Model (“OPM”).

The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company’s consolidated statements of operations.

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Expected volatility is calculated based on actual historical stock price movements over the most recent periods ending on the grant date, equal to the expected term of the options, or based on certain peer companies that the Company considered to be comparable, in case there is no sufficient trading volume to rely on market volatility.

The expected option term is determined based on the simplified method in accordance with Staff Accounting Bulletin No.

110, as adequate historical experience is not available to provide a reasonable estimate.

The expected option term is determined based on the simplified method, as adequate historical experience is not available to provide a reasonable estimate.

The simplified method will continue to apply until enough historical experience is available to provide a reasonable estimate of the expected term.

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The fair value of Restricted Stock Units (“RSUs”) granted is determined based on the price of the Company’s ordinary shares on the date of grant.

There were no options granted during the twelve months ended December 31, 2022, 2021, and 2020.

The Company accounts for options granted to consultants and other service providers under ASC No.

The Company accounts for options granted to consultants and other service providers under ASC 718.

The fair value of these options was estimated using a Black-Scholes-Merton option-pricing model.

The non-cash compensation expenses related to employees and non-employees for the years ended December 31, 2022, 2021 and 2020 amounted to $ 993 thousand, $ 833 thousand and $ 749 thousand respectively.

Warrants to Acquire Ordinary Shares:

During the twelve -month ended December 31, 2021, the Company issued warrants to acquire up to 15,083,611 ordinary shares.

There were no issued warrants during the twelve months ended December 31, 2022.

There were no issued warrants during the twelve months ended December 31, 2023 and 2022.

The Company assessed the warrants pursuant to ASC 480 "Distinguishing Liabilities from Equity" and ASC 815 "Derivatives and Hedging" and determined that the warrants should be accounted for as equity and not as a derivative liability.

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Research and development costs are charged to the consolidated statement of operations as incurred and are presented net of the amount of any grants the Company received for research and development in the period in which the grant was received.

The Company accounts for income taxes in accordance with ASC No.

740, “Income Taxes” (“ASC No.

740”), using the liability method whereby deferred tax assets and liability account balances are determined based on the differences between financial reporting and the tax basis for assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

The Company accounts for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”), using the liability method whereby deferred tax assets and liability account balances are determined based on the differences between financial reporting and the tax basis for assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to the amounts that are more likely-than-not to be realized.

740 contains a two-step approach to recognizing and measuring a liability for uncertain tax positions.

ASC 740 contains a two-step approach to recognizing and measuring a liability for uncertain tax positions.

The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes.

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As of December 31, 2023, and 2022, the Company did not identify any significant uncertain tax positions.

Warranty provision:

For assurance-type warranty, the Company records a provision for the estimated cost to repair or replace products under warranty at the time of sale.

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Balance at December 31, 2022

AlterG acquisition – see note 5

Balance at December 31, 2023

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The bank deposits are held in financial institutions which management believes are institutions with high credit standing, and accordingly, minimal credit risk from geographic or credit concentration exists with respect to these deposits.

The below table reflects the concentration of credit risk for the Company’s current customers as of December 31, 2023, to which substantial sales were made.

Concentration of credit risk with respect to trade receivable is primarily limited to a customer to which the Company makes substantial sales.

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 December 31, 2022, and 2021 trade receivables are presented net of $ 26 thousand and $ 42 thousand allowance for doubtful accounts, respectively.

The allowance for credit losses is based on the Company's assessments of factors that may affect a customer's ability to pay.

The Company regularly reviews the adequacy of the allowance for credit losses based on a combination of factors, including an assessment of the current customer's aging balance, the nature and size of the customer, the financial condition of the customer, and the amount of any receivables in dispute.

The Company does not have any off-balance sheet credit exposure related to its customers.

As of December 31, 2023, and 2022 trade receivables are presented net of $ 328 thousand and $ 26 thousand allowance for credit losses, respectively.

Accrued Severance Pay:

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The carrying amounts of cash and cash equivalents, short term deposits, trade receivables and trade payables approximate their fair value due to the short-term maturity of such instruments.

The following tables present information about the Company’s financial assets and liabilities that are measured in fair value on a recurring basis as of December 31, 2023 and December 31, 2022 (in thousands):

Fair value measurements as of

Fair Value Hierarchy

December 31, 2023

Financial assets:

Money market funds included in cash and cash equivalent

Treasury bills included in cash and cash equivalent

Total Assets Measured at Fair Value

Financial Liabilities:

Total liabilities measured at fair value

The Company classifies cash equivalents within Level 1, because the Company uses quoted market prices or alternative pricing sources and models utilizing market observable inputs to determine their fair values.

The earnout was valued using a Monte Carlo simulation analysis, which is considered to be a Level 3 fair value measurement.

The following table summarizes the earnout liability activity as of December 31, 2023 (in thousands):

Initial Measurement (August 11, 2023)

Change in fair value

Balance December 31, 2023

Basic and Diluted Net Loss Per Share:

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Diluted loss per share is computed based on the weighted average number of ordinary shares outstanding during the period, plus dilutive potential shares considered outstanding during the period.

The following table sets forth the computation of the Company’s basic and diluted net loss per ordinary share (in thousands, except share and per share data):

Year ended December 31,

Net loss attributable to ordinary shares

Shares used in computing net loss per ordinary shares, basic and diluted

Net loss per ordinary share, basic and diluted

Basic and diluted net loss per share was the same for each period presented as the inclusion of all potential shares of ordinary shares and warrants outstanding would have been anti-dilutive.

For the twelve months ended December 31, 2022, the total number of ordinary shares related to the outstanding warrants and share option plans aggregated to 19,464,888 , was excluded from the calculations of diluted loss per ordinary share since it would have an anti-dilutive effect.

Contingent liabilities

The Company accounts for its contingent liabilities in accordance with ASC No.

450, “Contingencies”.

A provision is recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

The Company accounts for its contingent liabilities in accordance with ASC 450, “Contingencies.” A provision is recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

With respect to legal matters, provisions are reviewed and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter.

Government grants

Government grants received by the Company relating to categories of operating expenditures are credited to the consolidated statements of operations during the period in which the expenditure to which they relate is charged.

Royalty and non-royalty-bearing grants from the Israel Innovation Authority, or the IIA, (formerly known as the Israeli Office of the Chief Scientist), for funding certain approved research and development projects which are recognized at the time when the Company is entitled to such grants, on the basis of the related costs incurred, and are included as a deduction from research and development expenses (see Note 7c).

Royalty and non-royalty-bearing grants from the Israeli Innovation Authority (the “IIA”) of the Ministry of Economy and Industry in Israel for funding of approved research and development projects are recognized at the time the Company is entitled to such grants, on the basis of the costs incurred, and are presented as a reduction from research and development expenses (see Note 8c).

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present.

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Leases with an initial term of 12 months or less are not recorded on the balance sheet.

Lessor accounting - Operating leases

A portion of the AlterG rental revenues for the AlterG Anti-Gravity systems are made through lease arrangements.

AlterG products are available for lease agreements ranging from 12 to 42 months.

If the customer terminates the contract during the lease period, they are required to pay a cancellation fee.

The lease period may be extended by an additional period as specified in the contract.

In determining the leases classification as a sales type or operating lease, the Company assesses, among other criteria:

(i) the lease term to determine if it is for the major part of the economic life of the underlying equipment;

and (ii) the present value of the lease payments to determine if they are equal to or greater than substantially all of the fair market value of the equipment at the inception of the lease AlterG Anti-Gravity systems.

When these criteria are not met, the lease accounted for as operating leases and revenues are recognized over the term of the lease.

Under these arrangements, when the Company acts as the lessor for its product line, the Company accounted for the lease arrangements as operating leases in accordance with ASC 842, “Lease” (“ASC 842”).

The total rental revenue for the AlterG Anti-Gravity Products has amounted to $ 249 thousand from the time of acquisition through December 31, 2023.

New Accounting Pronouncements

Recently Implemented Accounting Pronouncements

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

In August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity.

Among other changes, ASU 2020-06 removes from U.S.

GAAP the liability and equity separation model for convertible instruments with a cash conversion feature and a beneficial conversion feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt.

Similarly, the embedded conversion feature will no longer be amortized into income as interest expense over the life of the instrument.

Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium.

Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share (“EPS”).

ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted for fiscal years beginning after December 15, 2020 and can be adopted on either a fully retrospective or modified retrospective basis.

The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

Financial Instruments

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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 adoption is not expected to result in a material impact on the Company’s consolidated financial statements.

The Company adopted ASU 2016-13 as of January 1, 2023.

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 December 2023, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes - Improvements to Income Tax Disclosures” requiring enhancements and further transparency to certain income tax disclosures, most notably the tax rate reconciliation and income taxes paid.

This ASU is effective for fiscal years beginning after December 15, 2024 on a prospective basis and retrospective application is permitted.

The Company is currently evaluating the impact of the adoption of this standard.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis.

Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280, “Segment Reporting” on an interim and annual basis.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2023-07.

PREPAID EXPENSES AND OTHER CURRENT ASSETS

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Advances to vendors

NOTE 4:- INVENTORIES

The components of inventories are as follows (in thousands):

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During the twelve months ended December 31, 2023, 2022, and 2021, the Company recognized, at cost of revenues, reserves for excess and obsolete in the amount of $ 398 thousand, $ 502 thousand, and $ 252 thousand, respectively.

NOTE 5:- PROPERTY AND EQUIPMENT, NET

NOTE 5:- BUSINESS COMBINATION

On August 11, 2023, pursuant to an Agreement and Plan of Merger among RRI, AlterG, Merger Sub, and Shareholder Representative Services LLC, RRI, August 8, 2023, the Company acquired AlterG and AlterG became a wholly owned subsidiary of the Company.

AlterG develops, manufactures, and markets Anti-Gravity systems for use in physical and neurological rehabilitation and athletic training, both in the United States and internationally.

The aggregate purchase price was a total of $ 19.0 million in cash, subject to working capital and other customary purchase price adjustments.

Additional cash earnouts may be paid based upon a percentage of AlterG’s year-over-year future revenue growth over the next two years subject to working capital and other customary purchase price adjustments.

The total consideration transferred is as follows (in thousands):

Earnout payments

Total consideration

Earnout payments

The Company will pay an amount of cash equal to 65% of the amount, if any, by which AlterG revenue attributable to the first 12 months period exceeds revenue target ("first earnout payment"), and an amount in cash equal to 65% of the amount, if any, by which AlterG revenue attributable to the following 12 months period exceeds the revenue from the first 12 month period ("second earnout payment").

At the date of acquisition, management estimated fair value of the earnout payment based on the actual up to date performance of the acquired entity and the probability of the earn out payment occurrence to be at approximately $ 3.6 million.

The Earn-out was accounted for as a liability and will be remeasured at each reporting period through the consolidated statement of operations.

The Company has accounted for the AlterG acquisition as a business combination.

The Company has preliminarily allocated the purchase price of approximately $ 22.1 million fair values, and the excess of the purchase price over the aggregate fair values is recorded as goodwill.

The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as of the acquisition date (in thousands):

Cash and cash equivalent

Restricted cash

Accounts receivable

Prepaid expenses and other current assets

Right of use asset

Property and equipment, net

Other non-current assets

Intangible assets

Accounts payable

Accrued compensation

Other accrued liabilities

Deferred revenue

Warranty Obligations

Leases Liability

Total purchase consideration

The following table presents the details of the intangible assets acquired at the date of AlterG acquisition (in thousands):

Estimated Useful Life

Customer relationship - Warranty

Customer relationship - Rental

Customer relationship - Distribution

Under the preliminary purchase price allocation, the Company allocates the purchase price to tangible and identified intangible assets acquired and liabilities assumed based on the preliminary estimates of their fair values.

The fair values for the intangible assets acquired were primarily based on significant inputs that are not observable in the market and thus represent a Level 3 measurement in the fair value hierarchy.

Customer relationships, distributor relationships, backlog, trademark and developed technology were valued using the income approach, based on estimated projections of expected cash flows to be generated by the assets, discounted to the present value at discount rates commensurate with perceived risk.

The discounted cash flow analyses factor in assumptions on revenue and expense growth rates including estimates of customer growth and attrition rates, distributor growth and attrition rates, technology obsolescence, and relief from royalty projections.

Additionally, these discounted cash flow analyses factor in expected amounts of working capital, fixed assets, assembled workforce and cost of capital for each intangible asset.

Such estimates are subject to change during the measurement period which is not expected to exceed one year.

Any adjustments to the preliminary purchase price allocation identified during the measurement period will be recognized in the period in which the adjustments are determined.

The Company incurred acquisition-related costs of $ 2.5 million included in General and administrative costs.

The table below presents the pro forma revenue and earnings of the combined business as if the acquisition had occurred as of January 1, 2022 (in thousands):

Twelve Months Ended

The total revenues and net loss of AlterG, included in the consolidated income statement, since the acquisition date through December 31, 2023, amounted to 7,658 thousand and 249 thousand, respectively.

The pro forma financial information for all periods presented above has been calculated after adjusting the results of AlterG to reflect the business combinations accounting effects resulting from these acquisitions.

These proforma results reflect additional depreciation and amortization that would have been charged assuming the fair value adjustments to property, plant, and equipment and intangible asset occurred at the beginning of the period, along with consequential tax effects.

The unaudited pro forma results have been prepared for comparative purposes only and are not necessarily indicative of what would have occurred had the business combinations been completed on January 1, 2022, nor it is necessarily indicative of future results of operations of the combined company.

Furthermore, the unaudited pro forma financial information does not reflect the impact of any synergies resulting from the acquisition.

NOTE 6:- GOODWILL AND OTHER INTANGIBLE ASSETS, NET

The Company has $ 7.5 million of goodwill related to its purchase of AlterG in the third quarter of fiscal year 2023, which has an indefinite life, and is not deductible for tax purposes.

As of December 31, 2023, the components of, and changes in, the carrying amount of intangible assets, net, were as follows (in thousands):

December 31, 2023 Accumulated

Intangible Assets, Net

Customer relationship - Warranty

Customer relationship - Rental

Customer relationship - Distribution

Total Amortized Intangible Assets

The estimated amortization expense is shown below (in thousands):

PROPERTY AND EQUIPMENT, NET

The components of property and equipment, net are as follows (in thousands):

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Depreciation expenses amounted to $ 239 thousand, $ 202 thousand, and $ 266 thousand for the years ended December 31, 2023, 2022 and 2021, respectively.

NOTE 6:- LOAN AGREEMENT WITH KREOS AND RELATED WARRANT TO PURCHASE ORDINARY SHARES

On December 30, 2015, the Company entered into the loan agreement (the “Loan Agreement”) with Kreos Capital V (Expert Fund) Limited (“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 the date on which all principal is repaid.

As of June 30, 2017, the Company raised more than $ 20 million in connection with the issuance of its share capital and, therefore, in accordance with the terms of the Loan Agreement, the repayment period was extended from 24 months to 36 months .

The principal was also reduced in connection with the issuance of the Kreos Convertible Note on June 9, 2017.

Pursuant to the Loan Agreement, we granted Kreos a first priority security interest over all of our assets, including certain intellectual property and equity interests in its subsidiaries, subject to certain permitted security interests.

Pursuant to the terms of the warrant, in connection with the $ 20 million drawdown under the Loan Agreement on January 4, 2016, we issued to Kreos the warrant to purchase up to 4,771 of our ordinary shares at an exercise price of $ 241.0 per share, increased to 6,679 ordinary shares on December 28, 2016.

Subject to the terms of the warrant, the warrant is exercisable, in whole or in part, at any time prior to the earlier of (i) December 30, 2025, or (ii) immediately prior to the consummation of a merger, consolidation, or reorganization of us with or into, or the sale or license of all or substantially all our assets or shares to, any other entity or person, other than a wholly-owned subsidiary of us, excluding any transaction in which our shareholders prior to the transaction will hold more than 50% of the voting and economic rights of the surviving entity after the transaction.

On June 9, 2017, the Company and Kreos entered into the First Amendment, under which $ 3.0 million of the outstanding principal under the Loan Agreement became subject to repayment pursuant to the senior secured Kreos Convertible Note issued on June 9, 2017.

On November 20, 2018, the Company and Kreos entered into the Second Amendment of the Loan Agreement, in which the Company repaid Kreos the $ 3.6 million other related payments, including prepayment costs and end of loan payments, terminating the Kreos Note, by issuing to Kreos 192,000 units and 288,000 pre-funded units as part of an underwritten public offering at the public offering prices, and the parties agreed to revise the principal and the repayment schedule under the Kreos Loan.

Additionally, Kreos and the Company entered into the Kreos Warrant Amendment, which amended the exercise price of the warrant to purchase 6,679 ordinary shares currently held by Kreos from $ 241.0 to $ 7.50 .

On June 5, 2019, and June 6, 2019, the Company entered into warrant exercise agreements with certain institutional investors of warrants to purchase the Company’s ordinary shares, pursuant to which, Kreos agreed to exercise in cash their November 2018 warrants at the existing exercise price of $ 7.50 per share.

Under the exercise agreements, the Company also agreed to issue to Kreos new warrants to purchase up to 480,000 ordinary shares at an exercise price of $ 7.50 per share and exercise period of five years.

On December 29, 2020, the Company repaid in full the remaining loan principal amount to Kreos including the end of loan payments, and by that discharged all of its obligations to Kreos and as of December 31, 2020, the outstanding principal amount under the Kreos Loan Agreement was zero.

The Company recorded interest expense in the amount of $ 907 thousand during the fiscal year ended December 31, 2020.

NOTE 7:- COMMITMENTS AND CONTINGENT LIABILITIES

COMMITMENTS AND CONTINGENT LIABILITIES

Purchase commitment:

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 December 31, 2022, non-cancelable outstanding obligations amounted to approximately $ 1.9 million.

Purchase obligations do not include contracts that may be cancelled without penalty.

As of December 31, 2023, non-cancellable outstanding obligations amounted to approximately $ 8.6 million.

Operating lease commitment:

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Total lease expenses for the years ended December 31, 2023, 2022 and 2021 were $ 976 thousand, $ 739 thousand, and $ 730 thousand, respectively.

The Company’s research and development efforts are financed, in part, through funding from the IIA.

The Company’s research and development efforts are financed, in part, through funding from the Israel Innovation Authority (“IIA”).

Since the Company’s inception through December 31, 2023, the Company received funding from the IIA in the total amount of $ 2.6 million.

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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 License Agreement requires the Company to pay Harvard royalties on net sales, see Note 9 below for more information about the Collaboration Agreement and the License Agreement.

As of December 31, 2023, the Company paid royalties to the IIA in the total amount of $ 110 thousand.

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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 R&D 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.

The IIA, under special circumstances, may approve the transfer of IIA-funded know-how outside Israel.

A dditionally, the License Agreement requires the Company to pay College (“Harvard”) royalties on net sales, see Note 10 below for more information about the Collaboration Agreement (as defined below) and the License Agreement (as defined below).

As part of the Company’s restricted cash and other long-term assets, as of December 31, 2023, an amount of $ 709 thousand has been pledged as security in respect of a guarantee granted to a third party.

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Follow-on offerings

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 of the 1,546,828 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.

As of December 31, 2022, a total of 5,571,600 common warrants to purchase ordinary shares were exercised, additionally 230,160 common warrants to purchase ordinary shares were exercised to representatives of H.C.

On July 6, 2020, the Company entered into a purchase agreement with certain institutional investors for the issuance and sale of (i) 4,938,278 ordinary shares, par value NIS 0.25 per share, at a price of $ 1.8225 per ordinary share and (ii) warrants to purchase up to 2,469,139 ordinary shares with an exercise price of $ 1.76 per share, exercisable from July 6, 2020, until January 6, 2026 .

Additionally, the Company issued warrants to purchase up to 296,297 ordinary shares, with an exercise price of $ 2.2781 per share, exercisable from July 6, 2020, until July 2, 2025 , to certain representatives of H.C.

Wainwright as compensation for its role as the placement agent in its July 2020 registered direct offering.

As of December 31, 2022, a total of 2,020,441 common warrants to purchase ordinary shares were exercised.

On December 3, 2020, the Company entered into a purchase agreement with certain institutional investors for the issuance and sale of (i) 5,579,776 ordinary shares, par value NIS 0.25 per share, at a price of $ 1.4337 per ordinary share and (ii) warrants to purchase up to 4,184,832 ordinary shares with an exercise price of $ 1.34 per share, exercisable from December 8, 2020, until June 8, 2026 .

Additionally, the Company issued warrants to purchase up to 334,787 ordinary shares, with an exercise price of $ 1.7922 per share, exercisable from December 8, 2020, until June 8, 2026 , to certain representatives of H.C.

Wainwright as compensation for its role as the placement agent in its December 2020 registered direct offering.

As of December 31, 2022, a total of 3,598,072 common warrants to purchase ordinary shares were exercised, additionally 225,981 common warrants to purchase ordinary shares were exercised to representatives of H.C.

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 as compensation for its role as the placement agent in our February 2021 private placement 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.

1 unchanged sentence

Each ordinary shares 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 December 31, 2023, 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.

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2014 Incentive Compensation Plan or the “Plan”.

The Plan provides for the grant of stock options, stock appreciation rights, restricted stock awards, Restricted Stock Units (“RSUs’’), cash-based awards, other stock-based awards and dividend equivalents to the Company’s and its affiliates’ respective employees, non-employee directors and consultants.

The Plan provides for the grant of stock options, stock appreciation rights, restricted stock awards, RSUs, cash-based awards, other stock-based awards and dividend equivalents to the Company’s and its affiliates’ respective employees, non-employee directors and consultants.

Starting in 2014, the Company grants to directors and employees also RSU under this Plan.

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The options generally vest over four years, with certain options granted to non-employee directors vesting over one year.

Any option or RSUs that are forfeited or canceled before expiration becomes available for future grants under the Plan.

Any option or RSUs that are forfeited or cancelled before expiration becomes available for future grants under the Plan.

A summary of employee and non-employee shares options activity during the fiscal year ended 2023 is as follows:

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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, which hold options with positive intrinsic value, exercised their options on the last date of the exercise period.

During the years ended December 31, 2022, 2021 and 2020, no op tions were exercised.

During the years ended December 31, 2023, 2022 and 2021, no options were exercised.

A summary of employee and non-employee RSUs activity during the fiscal year ended 2023 is as follows:

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$ 182.5 -$ 524.25

Calculation of weighted average remaining contractual term does not include the RSUs that were granted, which have an indefinite contractual term.

Equity compensation issued to consultants:

The Company granted 47,522 fully vested RSUs during the fiscal year ended December 31, 2022, to non-employee consultants.

As of December 31, 2022, there are no outstanding options or RSUs held by non-employee consultants.

The Company granted 32,895 RSUs during the fiscal year ended December 31, 2023, to non-employee consultants.

As of December 31, 2023, there are 21,929 outstanding RSUs held by non-employee consultants.

Share-based compensation expense for employees and non-employees:

3 unchanged sentences

Research and development, net

Sales and marketing, net

Sales and marketing

General and administrative

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On June 2, 2022, the Company’s Board of Directors approved a share repurchase program to repurchase up to $ 8.0 million of its Ordinary Shares, par value NIS 0.25 per share.

On July 21, 2022, the Co mpany received approval from an Israeli court for the share repurchase program.

On July 21, 2022, the Company received approval from an Israeli court for the share repurchase program.

The program was scheduled to expire on the earlier of January 20, 2023, or reaching $ 8.0 million of repurchases.

On December 22, 2022, the Company’s Board of Directors approved an extension of the repurchase program, with such extension to be in the aggregate amount of up to $ 5.8 million.

The extension was approved by an Israeli court on February 9, 2023, and will expire on the earlier of August 9, 2023, or reaching the additional $5.8 million of repurchases of ordinary shares.

As of D ecember 31, 2022, pursuant to the Company’s share repurchase program, the Company had repurchased a total of 2,933,208 of its outstanding ordinary shares at a total cost of $ 2.6 million .

As to ordinary shares repurchased after December 31, 2022, see Note 14.

The extension was approved by an Israeli court on February 9, 2023, and it expired on August 9, 2023.

As of December 31, 2023, pursuant to the Company’s share repurchase program, the Company had repurchased a total of 4,022,607 of its outstanding ordinary shares at a total cost of $ 3.5 million.

Warrants to purchase ordinary shares:

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See footnote (1)

November 20, 2018 (3)

November 20, 2023

November 20, 2018 (4)

November 15, 2023

February 25, 2019 (5)

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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.

R epresents 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.

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.

As of December 31, 2023, 3,740,100 warrants were exercised for total consideration of $ 4,675,125 .

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During the twelve months that ended December 31, 2023, no warrants were exercised.

Represents warrants that were issued to certain institutional purchasers in a private placement in our registered direct offering of ordinary shares in July 2020.

Represents warrants that were issued to certain institutional purchasers in a private placement in the Company’s registered direct offering of ordinary shares in July 2020.

As of December 31, 2023, 2,020,441 warrants were exercised for total consideration of $ 3,555,976 .

1 unchanged sentence

Represents warrants that were issued to the placement agent as compensation for its role in the Company’s July 2020 registered direct offering.

Represents warrants that were issued to certain institutional purchasers in a private placement in our private placement offering of ordinary shares in December 2020.

Represents warrants that were issued to certain institutional purchasers in a private placement in the Company’s private placement offering of ordinary shares in December 2020.

As of December 31, 2023, 3,598,072 warrants were exercised for total consideration of $ 4,821,416 .

3 unchanged sentences

During the twelve months that ended December 31, 2023, no warrants were exercised.

Represents warrants that were issued to certain institutional purchasers in a private placement in our private placement offering of ordinary shares in February 2021.

Represents warrants that were issued to certain institutional purchasers in a private placement in the Company’s private placement offering of ordinary shares in February 2021.

Represents warrants that were issued to the placement agent as compensation for its role in the Company’s February 2021 private placement.

Represents warrants that were issued to certain institutional purchasers in a private placement in our registered direct offering of ordinary shares in September 2021.

Represents warrants that were issued to certain institutional purchasers in a private placement in the Company’s registered direct offering of ordinary shares in September 2021.

Represents warrants that were issued to the placement agent as compensation for its role in the Company’s September 2021 registered direct offering.

RESEARCH COLLABORATION AGREEMENT AND LICENSE AGREEMENT

O n May 16, 2016, the Company entered into a Collaboration Agreement (as amended, the “Collaboration Agreement”) and an Exclusive License Agreement (as amended, the “License Agreement”) with Harvard.

On May 16, 2016, the Company entered into a Collaboration Agreement (as amended, the “Collaboration Agreement”) and an Exclusive License Agreement (as amended, the “License Agreement”) with Harvard.

The Collaboration Agreement concluded on March 31, 2022.

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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.

PAYCHECK PROTECTION PROGRAM LOAN

On April 21, 2020, RRI received an unsecured loan in the principal amount of $ 392 thousand under the Paycheck Protection Program (the “PPP”) administered by the U.S.

Small Business Administration, or the SBA, pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), or the PPP loan.

The terms of the PPP Loan were subsequently revised in accordance with the provisions of the Paycheck Protection Flexibility Act of 2020, or the PPP Flexibility Act, which was enacted on June 5, 2020.

The PPP loan provides for an interest rate of 1.00 % per year and matures two years after the date of initial disbursement, with initial principal and interest payments coming due late in fiscal 2021.

The PPP loan may be used for payroll costs, costs related to certain group health care benefits and insurance premiums, rent payments, utility payments, mortgage interest payments and interest payments on any other debt obligation that were incurred before February 15, 2020.

Under the terms of the CARES Act and the PPP Flexibility Act, the Company may apply for and be granted forgiveness for all or a portion of loan granted under the PPP loan, with such forgiveness to be determined, subject to limitations (including where employees of the Company have been terminated and not re-hired by a certain date), based on the use of the loan proceeds for payment of payroll costs and any payments of mortgage interest, rent, and utilities.

The terms of any forgiveness may also be subject to further requirements in regulations and guidelines adopted by the SBA.

On September 29, 2020, the Company applied for loan forgiveness and on November 6, 2020, the Company received confirmation of its PPP Note forgiveness.

Forgiveness is booked as other income within the marketing and sales expenses because it was granted and used for payroll, rent, and utility costs related to sales efforts.

NOTE 11:- INCOME TAXES

The Company’s subsidiaries are separately taxed under the domestic tax laws of the jurisdiction of incorporation of each entity.

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Year Ended December 31,

Taxes on income are comprised as follows (in thousands):

Taxes on income (benefit) are comprised as follows (in thousands):

Year Ended December 31,

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Share based compensation

Credit tax carry forwards

Lease liabilities

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Right-of-use asset

Intangible Assets

Property and equipment

Net deferred tax assets

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Permanent differences

Actual tax expense

Adjustment in respect of prior years

Actual tax expense (benefit)

Foreign tax rates:

Taxable income of RRI was subject to tax at the rate of 21 % in 2022, 2021 and 2020.

Taxable income of RRI and AlterG was subject to tax at the rate of 21 % in 2023, 2022 and 2021.

Taxable income of RRG was subject to tax at the rate of 30 % in 2023, 2022, and 2021.

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Tax assessments:

RRL and RRG has had final tax assessments up to and including the 2016 tax year.

RRI has had final tax assessments up to and including the 2018 tax year.

RRL, RRI and RRG has had final tax assessments up to and including the 2017 tax year.

AlterG files income tax returns in the United States and in various U.S.

AlterG returns for the years ended December 31, 2020 and later are generally subject to federal tax examination, while the AlterG returns for the years ended December 31, 2019 and later are generally subject to state tax examination.

However, the AlterG net operating losses and tax credits generally remain subject to tax examination and adjustment until they are utilized on a future tax return and the statute of limitations closes for that year.

Thus, the AlterG tax attributes generally remain open to federal and state tax examination and adjustment.

Net operating carry-forward losses for tax purposes:

As of December 31, 2023, RRL has carry-forward losses amounting to approximately $ 242.6 million, which can be carried forward for an indefinite period.

As of December 31, 2023, AlterG had approximately $ 31.4 million of federal net operating loss (“NOL”) carry forwards, and $ 47.2 million of state NOL carry forwards, which will begin to expire in 2025 and 2028 , respectively.

The federal net operating losses from years beginning after January 1, 2018, of approximately $ 14.7 million may be carried forward indefinitely and losses prior to January 1, 2018 of approximately $ 16.7 million expire beginning in 2028 under prior law.

Internal Revenue Code Section 382 places a limitation ("Section 382 Limitation") on the amount of taxable income which can be offset by NOL carry forwards after a change in control (generally greater than 50% change in the value of the stock owned by 5% shareholders during the testing period) of a loss corporation.

California has similar rules.

On August 11, 2023, AlterG was involved in an equity transaction that constitutes a Section 382 change in ownership.

The change in ownership limits the ability to utilize net operating loss carry forwards in future years.

The 382-limitation impact on NOLs has been included in the current period provision.

The Company may have had earlier Section 382 changes in ownership.

This will be assessed upon realization of tax attributes.

FINANCIAL (EXPENSES) INCOME, NET

2 unchanged sentences

Foreign currency transactions and other

Financial expenses related to loan agreement with Kreos

Interest Income

Bank commissions

1 unchanged sentence

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 based on one reportable segment and derives revenue from selling systems and services (see Note 1 for a brief description of the Company’s business).

The following is a summary of revenue within geographic areas (in thousands):

The Company manages its business on a basis of one reportable segment.

Total revenues from external customers on the basis of the Company's geographical areas are as follows (in thousands):

Year Ended December 31,

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United States

Latin America

Total revenue

Rest of the world

Total revenues

Long-lived assets by geographic region:

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Less than 10%

SUBSEQUENT EVENTS

In January 2023, the Company repurchased an additional 730,350 of its ordinary shares for an aggregate consideration of $ 628 thousand.

NOTE 14:- BASIC AND DILUTED NET LOSS PER SHARE

The following table sets forth the computation of the Company’s basic and diluted net loss per ordinary share (in thousands, except share and per share data):

Year ended December 31,

Net loss attributable to ordinary shares

Shares used in computing net loss per ordinary shares, basic and diluted

Net loss per ordinary share, basic and diluted

Basic and diluted net loss per share was the same for each period presented as the inclusion of all potential shares of ordinary shares and warrants outstanding would have been anti-dilutive.

For the twelve months ended December 31, 2023, the total number of ordinary shares related to the outstanding warrants and share option plans aggregated to 19,220,546 , was excluded from the calculations of diluted loss per ordinary share since it would have an anti-dilutive effect.

NOTE 15:- RESTRUCTURING ACTIVITIES

On December 12, 2023, the Board of Directors of the Company approved a re-organization plan (the “2023 Reorganization Plan”) that included, among other things, downsizing approximately 15 % of the Company’s workforce and adapting the Company's organizational structure, roles, and responsibilities accordingly.

During the year ended December 31, 2023, in connection with the 2023 Reorganization Plan, the Company recorded expenses of $ 670 thousand, for one time employee termination benefits and legal expenses.

$ 175 thousand attributable to research and development, net, $ 70 thousand to sales and marketing and $ 425 thousand to General and administrative expenses.

However, none of these amounts were paid in 2023.

The Company does not expect to incur additional costs related to the 2023 Reorganization Plan.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures