PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our ordinary shares began trading publicly on The Nasdaq Global Market on September 12, 2014, under the symbol “RWLK” and were transferred for listing on The Nasdaq Capital Market effective May 25, 2017. In January 2024, the symbol for our ordinary shares was changed to “LFWD”. As of March 6, 2025, we had approximately 32,492 shareholders of record.
Dividend Policy
We have never declared or paid any cash dividends on our ordinary shares. We do not anticipate paying any cash dividends in the foreseeable future. We currently intend to retain future earnings, if any, to finance operations and expand our business. Any future determination relating to our dividend policy will be made at the discretion of our board of directors and will depend on a number of factors, including future earnings, capital requirements, financial condition and future prospects and other factors our board of directors may deem relevant. The distribution of dividends may also be limited by Israeli law, which permits the distribution of dividends only out of retained earnings or otherwise upon the permission of an Israeli court.
Israeli Taxes Applicable to U.S. Holders
A non-Israeli resident who derives capital gains from the sale of shares in an Israeli resident company that were purchased after the company was listed for trading on a stock exchange outside of Israel will be exempt from Israeli tax so long as (amongst other things) the shares were not held through a permanent establishment that the non-resident maintains in Israel. A partial exemption may be available for non-Israeli resident shareholders who acquired their shares prior to the issuer’s initial public offering.
However, non-Israeli corporations will not be entitled to the foregoing exemption if Israeli residents (i) have a controlling interest of more than 25% in such non-Israeli corporation or (ii) are the beneficiaries of, or are entitled to, 25% or more of the revenue or profits of such non-Israeli corporation, whether directly or indirectly. Such exemption is not applicable to a person whose gains from selling or otherwise disposing of the shares are deemed to be a business income. Additionally, under the United States-Israel Tax Treaty, or the treaty, the sale, exchange or other disposition of shares by a shareholder who (i) is a U.S. resident (for purposes of the treaty), (ii) holds the shares as a capital asset, and (iii) is entitled to claim the benefits afforded to such person by the treaty, is generally exempt from Israeli capital gains tax. Such exemption will not apply if: (i) the capital gain arising from the sale, exchange or other disposition can be attributed to a permanent establishment in Israel; (ii) the shareholder holds, directly or indirectly, shares representing 10% or more of the voting capital during any part of the 12-month period preceding the disposition, subject to certain conditions; or (iii) such U.S. resident is an individual and was present in Israel for 183 days or more during the relevant taxable year. In such case, the sale, exchange, or disposition of our ordinary shares should be subject to Israeli tax, to the extent applicable; however, under the treaty, the taxpayer would be permitted to claim a credit for such taxes against the U.S. federal income tax imposed with respect to such sale, exchange, or disposition, subject to the limitations under U.S. law applicable to foreign tax credits. The treaty does not relate to U.S. state or local taxes.
In some instances where our shareholders may be liable for Israeli tax on the sale of their ordinary shares, the payment of the consideration may be subject to the withholding of Israeli tax at source. If the above exemptions from capital gains tax are not available, individuals will be subject to a 25% tax rate on real capital gains derived from the sale of shares as long as the individual is not a substantial shareholder of the corporation issuing the shares (in which case the individual will be subject to a 30% tax rate), and corporations will be subject to a 23% corporate tax rate. A substantial shareholder is generally a person who alone or together with such person’s relative or another person who collaborates with such person on a permanent basis, holds, directly or indirectly, at least 10% of any of the means of control of the corporation, including the right to vote, receive profits, nominate a director or an executive officer, receive assets upon liquidation, or order someone who holds any of the aforesaid rights how to act, regardless of the source of such right. The determination of whether the individual is a substantial shareholder will be made on the date on which the securities are sold. In addition, the individual will be deemed to be a substantial shareholder if at any time during the 12 months preceding the date of the sale he or she was a substantial shareholder.
Dividends paid on publicly traded shares, like our ordinary shares, to non-Israeli residents are generally subject to Israeli income tax at the rate of 25%, or 30% if the recipient of the dividend was a substantial shareholder at the time of distribution or at any time during the prior 12-month period. Such dividends are generally subject to Israeli withholding tax at a rate of 25% if the shares are registered with a nominee company (whether the recipient is a substantial shareholder or not), unless a different rate is provided under an applicable tax treaty, provided that a certificate from the Israeli Tax Authority allowing for a reduced withholding tax rate is obtained in advance. Under the United States-Israel Tax Treaty, the maximum rate of tax withheld at source in Israel on dividends paid to a holder of our ordinary shares who is a U.S. resident (for purposes of the treaty) is 25%. The treaty provides for reduced tax rates on dividends if (a) the shareholder is a U.S. corporation holding at least 10% of our issued voting power during the part of the tax year that precedes the date of payment of the dividend and held such minimal percentage during the whole of its prior tax year, and (b) not more than 25% of the Israeli company’s gross income consists of interest or dividends, other than dividends or interest received from subsidiary corporations or corporations 50% or more of the outstanding voting shares of which is owned by the Israeli company. The reduced treaty rate, if applicable, is 15% in the case of dividends paid from income derived from a Beneficiary or Preferred Enterprise (which is entitled to corporate tax benefits) or 12.5% otherwise. We cannot assure you that in the event we declare a dividend we will designate the income out of which the dividend is paid in a manner that will reduce shareholders’ tax liability. If the dividend is attributable partly to income derived from a Beneficiary or Preferred Enterprise and partly to other sources of income, the withholding rate will be a blended rate reflecting the relative portions of the two types of income. U.S. residents who are subject to Israeli withholding tax on a dividend may be entitled to a credit or deduction for U.S. federal income tax purposes in the amount of the taxes withheld.
Individuals who are subject to tax in Israel are also subject to an additional tax at the rate of 5% on annual income exceeding a certain threshold (NIS 721,560 for 2025, linked to the annual change in the Israeli Consumer Price Index), including, but not limited to, income derived from dividends, interest, and capital gains.
Recent Sales of Unregistered Equity Securities
None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
ITEM 6. [RESERVED]
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our audited consolidated financial statements and the related notes included elsewhere in this annual report. This discussion contains forward-looking statements that are based on our management’s current expectations, estimates and projections for our business, which are subject to a number of risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Special Note Regarding Forward-Looking Statements” and “Part I. Item 1A. Risk Factors.”
Overview
We are a medical device company that designs, develops, and commercializes life-changing solutions that span the continuum of care in physical rehabilitation and recovery, delivering proven functional and health benefits in clinical settings as well as in the home and community. Our initial product offerings were the ReWalk Personal and ReWalk Rehabilitation Exoskeleton devices for individuals with spinal cord injury (“SCI Products”). These devices are robotic exoskeletons that are designed for individuals with paraplegia that use our patented tilt-sensor technology and an onboard computer and motion sensors to drive motorized legs that power movement. These SCI Products allow individuals with spinal cord injury (“SCI”) the ability to stand and walk again during everyday activities at home or in the community. In March 2023, we received clearance of our premarket notification (“510(k)”) from the U.S. Food and Drug Administration (“FDA”) for the ReWalk Personal Exoskeleton with stair and curb functionality, which adds usage on stairs and curbs to the indication for use for the device in the U.S. The clearance permits U.S. customers to participate in more walking activities in real-world environments in their daily lives where stairs or curbs may have previously limited them when using the exoskeleton for its intended, FDA-indicated uses. This feature has been available in Europe since initial CE Clearance, and real-world data from a cohort of 47 European users throughout a period of over seven years consisting of over 18,000 stair steps was collected to demonstrate the safety and efficacy of this feature and support the FDA submission. In June 2024, we submitted to the FDA a 510(k) premarket notification for ReWalk 7 Personal Exoskeleton device, a next-generation ReWalk model, and such 510(k) is pending FDA review.
We have sought to expand our product offerings beyond the SCI Products through internal development, distribution agreements, and acquisitions. We have developed our ReStore Exo-Suit device, which we began commercializing in June 2019 (we ceased sales in the EU in May 2024). The ReStore is a powered, lightweight soft exo-suit intended for use during the rehabilitation of individuals with lower limb disabilities due to stroke. In the second quarter of 2020, we finalized and moved to implement two separate agreements to distribute additional product lines in the United States, one of which we later discontinued. 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 U.S. veterans through the Veterans Health Administration (“VHA”) hospitals.
In August 2023, we made our first acquisition to supplement our internal growth when we acquired AlterG, a leading provider of Anti-Gravity systems for use in physical and neurological rehabilitation. We paid a cash purchase price of approximately $19 million at closing and additional cash earnout payments may be paid based upon a percentage of AlterG’s revenue growth over the two years following the closing. The AlterG Anti-Gravity systems use patented, National Aeronautics and Space Administration (“NASA”) derived differential air pressure (“DAP”) technology to reduce the effects of gravity and allow patients to rehabilitate with finely calibrated support and reduced pain. AlterG Anti-Gravity systems are utilized in over 4,000 facilities globally in more than 40 countries. 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.
In March 2025, we announced an agreement to increase our penetration of SCI Products into the workers’ compensation market in which CorLife, LLC., a Delaware limited liability company (“CorLife”) and a division of Numotion, the nation’s leading and largest provider of products and services that provide mobility, health and personal independence. Pursuant to the agreement, CorLife became the exclusive distributor for the ReWalk Personal Exoskeleton for individuals with workers’ compensation claims. The agreement leverages CorLife’s extensive network of credentialed providers and experts to include the ReWalk Personal Exoskeleton among the services and equipment they provide to thousands of injured workers each year. Under the agreement, the CorLife reimbursement team manages all workers’ compensation claims submissions for the ReWalk Personal Exoskeleton. We believe this agreement will build awareness of the benefits of the ReWalk Personal Exoskeleton among individuals with workers’ compensation coverage and gain us access to the resources of CorLife to facilitate efficient processing of claims.
We are in the research stage of ReBoot, a personal soft exo-suit for home and community use by individuals post-stroke, and we are currently evaluating the reimbursement landscape and the potential clinical impact of this device. This product would be a complementary product to ReStore as it provides active assistance to the ankle during plantar flexion and dorsiflexion for gait and mobility improvement in the home environment, and it received Breakthrough Device Designation from the FDA in November 2021. Further investment in the development path of the ReBoot was paused in 2023 pending determination regarding the clinical and commercial opportunity of this device and at this time it remains on hold.
Our principal markets are primarily in the United States and Europe with some lesser sales in Asia, the Middle East and South America. We sell our products primarily directly in the United States, through a combination of direct sales and distributors (depending on the product line) in Germany and Canada, and primarily through distributors in other markets. In markets where we sell direct to consumers, we have established relationships with clinics and rehabilitation centers, professional and college sports teams, and individuals and organizations in the SCI community, and in markets where we do not sell direct to consumers, our distributors maintain these relationships. We have primary offices in Yokneam, Israel, Marlborough, Massachusetts, and Berlin, Germany. We also had offices in Fremont, California and Queens, New York where we ceased operations as of December 31, 2024.
We have in the past generated and expect to generate in the future revenue from a combination of clinics and rehabilitation centers, commercial distributors, third-party payors (including private and government payors), professional and college sports teams, and self-pay individuals. While a broad uniform policy of coverage and reimbursement by third-party commercial payors currently does not exist in the United States for exoskeleton technologies such as the ReWalk Personal Exoskeleton, we are pursuing various paths of reimbursement and support fundraising efforts by institutions and clinics, such as the VHA policy that was issued in December 2015 for the evaluation, training, and procurement of ReWalk Personal Exoskeleton systems for all qualifying veterans living with SCI across the United States.
We have also been pursuing updates with the CMS to clarify the Medicare coverage category (i.e., benefit category) applicable for personal exoskeletons. In 2022, the National Spinal Cord Injury Statistical Center (“NSCISC”), which maintains the world’s largest database on spinal cord injury research, reported that CMS is the primary payor for approximately 57% of the SCI population which are at least five years post their injury date, with Medicare representing a majority of this percentage. In July 2020, following a successful submission and hearing process, a code was issued for ReWalk Personal Exoskeleton, which may be used for purposes of claim submission to Medicare, Medicaid, and other payors.
On November 1, 2023, CMS released the Calendar Year 2024 Home Health Prospective Payment System Final Rule, CMS-1780-F (“Final Rule”), which was adopted through the notice and comment rulemaking process. The Final Rule includes a policy confirming that personal exoskeletons are included in the Medicare brace benefit category, as of January 1, 2024. Medicare personal exoskeleton claims with dates of service on or after January 1, 2024 that are billed using HCPCS code K1007 are assigned to the brace benefit category. CMS reimburses items classified under the brace benefit category using a lump sum payment methodology.
On April 11, 2024, CMS revised its April 2024 Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (“DMEPOS”) Fee Schedule to include a final lump-sum Medicare purchase fee schedule amount for personal exoskeletons (HCPCS code K1007) with an established rate of $91,032. The final payment determination was made by CMS by applying a “gap filling” process, which was used in light of CMS determining that the code describing the technology has no fee schedule pricing history and that lower extremity exoskeletons incorporate “revolutionary features” that cannot be described by or considered comparable to any other existing code or combination of codes. As part of gap-filling, CMS utilizes verifiable supplier or commercial pricing information and adjusts this pricing information according to a deflation and update factor methodology. In applying this formula to the K1007 code describing the ReWalk Personal Exoskeleton, CMS says that it calculated this final payment amount by averaging pricing information for exoskeleton devices from Lifeward and other manufacturers.
In Germany, we continue to make progress toward achieving coverage from the various government, private and worker’s compensation payors for our SCI products. In September 2017, each of German insurer BARMER GEK (“BARMER”) and national social accident insurance provider Deutsche Gesetzliche Unfallversicherung (“DGUV”) indicated that they will provide coverage to users who meet certain inclusion and exclusion criteria. In February 2018, the head office of German Statutory Health Insurance (“SHI”) Spitzenverband (“GKV”) confirmed its decision to list the ReWalk Personal Exoskeleton system in the German Medical Device Directory. This decision means that ReWalk is listed among all medical devices for compensation, which SHI providers can procure for any approved beneficiary on a case-by-case basis. During the year 2020 and 2021, we announced several new agreements with German SHIs, including TK and DAK Gesundheit, as well as the first German Private Health Insurer (“PHI”), which outline the process of obtaining our devices for eligible insured patients. In February 2025, we finalized an agreement with BARMER to formalize the reimbursement process for the provision of ReWalk exoskeletons to medically eligible beneficiaries. We are also currently working with several additional SHIs on securing a formal operating contract that will establish the process of obtaining a ReWalk Personal Exoskeleton for their beneficiaries within their system. Additionally, to date, several private insurers in the United States and Europe are providing reimbursement for ReWalk in certain cases.
Components of Our Statements of Operations
Revenue
We currently rely, and in the future will rely, on sales of our ReWalk Personal Exoskeletons, AlterG Anti-Gravity systems, MyoCycle FES cycles, and related consumables, services, and extended warranties for our revenue. Our revenue is derived from a combination of third-party payors, including private and government employers, institutions, and self-payors. Payments for our products by third party payors have been made primarily through case-by-case determinations. Third-party payors include, without limitation, private insurance plans, workers’ compensation programs, managed care organizations, and government programs including the VHA and Medicare. We expect that third-party payors will be an increasingly important source of revenue in the future as we increase the volume of sales of ReWalk Personal systems to Medicare-eligible beneficiaries following establishment of a benefit category and pricing. In December 2015, the VHA issued a national policy for the evaluation, training, and procurement of ReWalk Personal Exoskeleton systems for all qualifying veterans across the United States. The VHA policy is the first national coverage policy in the United States for qualifying individuals who have suffered spinal cord injury.
ReWalk Personal and ReWalk Rehabilitation Exoskeleton systems are generally covered by a five-year warranty from the date of purchase, which is included in the purchase price. ReWalk systems sold to Medicare beneficiaries carry a two-year warranty, consistent with the coverage decision by CMS. The warranty covers all elements of the systems (except the batteries, which carry a one-year warranty), other than repairs for normal wear and tear. The AlterG Anti-Gravity systems are sold with a one-year factory warranty covering parts and services in the U.S. and a two-year factory warranty covering parts only in the rest of the world. The ReStore device is sold with a two-year warranty.
Cost of Revenue and Gross Profit
For ReWalk and ReStore, cost of revenue consists primarily of complete systems purchased from our outsourced manufacturer, Sanmina. For these products, cost of revenue also includes internal costs such as salaries and related personnel costs including non-cash share-based compensation, functions that support manufacturing and inventory management, training and inspection, service activities, freight costs, and reserves for warranty and inventory condition. The cost of revenue also includes royalties and expenses related to royalty-bearing research and development grants.
For our AlterG systems, which we manufactured at our facility in Fremont, California until December 31,2024, cost of revenue consists primarily of raw materials, direct labor, indirect labor, and other factory overhead costs such as rent and utilities. In addition, cost of revenue also includes field service costs, shipping expenses and reserves for warranty and inventory condition.
For certain products that we distributed, such as the MyoCycle and Meditouch product lines, cost of revenue consists primarily of complete systems purchased from the manufacturers. In addition, the cost of revenue also includes field service costs and shipping expenses.
Our gross profit and gross margin (defined as gross profit as a percentage of revenue) are influenced by a number of factors, including the volume and price of our products sold, fluctuations in the mix of products sold, and variability in our cost of revenue. We expect gross profit and gross margin will expand in the future as we increase our revenue volumes and realize operating efficiencies associated with greater scale which will reduce the cost of revenue as a percentage of revenue.
Operating Expenses
Research and Development Expenses, Net
Research and development expenses, net consist primarily of salaries and related personnel costs including share-based compensation, supplies, materials, and consulting expenses associated with to product design and development, clinical studies, regulatory submissions, patent costs, sponsored research and other related activities. We expense all research and development expenses as they are incurred.
Research and development expenses are presented net of the amount of any grants we receive for research and development in the period in which we receive the grant. We previously received grants and other funding from the IIA. Certain of those grants require us to pay royalties on sales of certain systems, which are recorded as cost of revenue. We may receive additional funding from these entities or others in the future. See “Grants and Other Funding” below.
Sales and Marketing Expenses
Our sales and marketing expenses consist primarily of salaries and related personnel costs including share-based compensation for sales, sales support, marketing, and reimbursement related activities, travel, marketing, advertisement, tradeshows and conferences, lobbying, and public relations activities.
General and Administrative Expenses
Our general and administrative expenses consist primarily of salaries and related personnel costs including share-based compensation for our administrative, finance, and general management personnel, professional services, and insurance.
Financial Expenses (Income), Net
Financial income and expenses consist of bank commissions, foreign exchange gains and losses, interest earned on investments in short term deposits and royalty income.
Interest income consists of interest earned on our cash and cash equivalent balances. Interest expense consists of interest accrued on, and certain other costs with respect to any indebtedness. Foreign currency exchange changes reflect gains or losses related to transactions denominated in currencies other than the U.S. dollar.
Taxes on Income
As of December 31, 2024, we had not yet generated taxable income in Israel. As of that date, our net operating loss carryforwards for Israeli tax purposes amounted to approximately $256.5 million.
Since the acquisition of AlterG, Lifeward Inc. and AlterG have been filing a consolidated tax return in the U.S. Together, they have federal net operating loss (“NOL”) carryforwards totaling $48.7 million and state NOL carryforwards of $30.9 million, which are set to begin expiring in 2025 and 2028, respectively.
Our taxable income generated outside of Israel will be subject to the regular corporate tax rate in the applicable jurisdictions. As a result, our effective tax rate will be a function of the relative proportion of our taxable income that is generated in those locations compared to our overall net income.
Grants and Other Funding
Israel Innovation Authority (formerly known as the Office of the Chief Scientist)
From our inception through December 31, 2024, we have received a total of $2.8 million in funding from the IIA, $1.6 million of which are royalty-bearing grants, $400 thousand were received in consideration for an investment in our preferred shares while $806 thousand was received without future obligation. Of the royalty-bearing grants received, we have paid royalties to the IIA in the total amount of $114 thousand. The agreements with IIA require us to pay royalties at a rate of 3% on sales of certain systems and related services up to the total amount of funding received for the development of these systems, linked to the dollar, and bearing interest at an annual rate of SOFRPR applicable to dollar deposits. If we transfer IIA-supported technology or know-how outside of Israel, we will be liable for additional payments to IIA depending upon the value of the transferred technology or know-how, the amount of IIA support, the time of completion of the IIA-supported research project and other factors. As of December 31, 2024, the aggregate contingent liability to the IIA was $1.6 million. For more information, see “Part I, Item 1A. Risk Factors-We have received Israeli government grants for certain of our research and development activities and we may receive additional grants in the future. The terms of those grants restrict our ability to manufacture products or transfer technologies outside of Israel and we may be required to pay penalties in such cases or upon the sale of our company.”
Results of Operations
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
Revenue
Our revenue for 2024 and 2023 were as follows (dollars in thousands, except unit amounts):
| | | Years Ended December 31, | |
| | | 2024 | | | 2023 | |
| Revenue | | $ | 25,663 | | | $ | 13,854 | |
Revenue consist of transactions for our portfolio of ReWalk, AlterG, ReStore and MyoCycle systems.
Revenue was $25.7 million, an increase of $11.8 million, or 85%, during 2024 as compared to 2023. Of this increase, $7.9 million was attributable to the full year impact of the AlterG business. The remaining increase of $3.9 million was primarily from higher revenue from ReWalk Personal Exoskeletons in the U.S. due to Medicare coverage.
In the future, we expect our growth to be primarily driven by sales of our ReWalk Personal device through expansion of coverage and reimbursement by commercial and government third-party payors, more shipments of our AlterG Anti-Gravity system through greater penetration of rehabilitation clinics in the U.S. and internationally, and more placements of the MyoCycle device with rehabilitation clinics and personal users.
Gross Profit
Our gross profit for 2024 and 2023 were as follows (in thousands):
| | | Years Ended December 31, | |
| | | 2024 | | | 2023 | |
| Gross profit | | $ | 8,216 | | | $ | 4,453 | |
Gross profit was $8.2 million, or 32% of revenue, for 2024, as compared to a gross profit of $4.5 million, or 32% of revenue for 2023. This increase was a result of higher sales volume from ReWalk Personal Exoskeletons due to CMS coverage in the U.S., along with a full year of revenue from AlterG, both contributing to the overall growth in gross profit.
We expect gross profit and gross margin will increase in the future as we increase our revenue volumes and realize operating efficiencies associated with greater scale which will reduce the cost of revenue as a percentage of revenue. Gross margin is also expected to increase in the future as a result of the transition of the production of the AlterG systems from our factory in Fremont, California, where we discontinued operations as of December 31, 2024, to a contract manufacturer.
Research and Development Expense, Net
Our research and development expense, net for 2024 and 2023 was as follows (in thousands):
| | | Years Ended December 31, | |
| | | 2024 | | | 2023 | |
| Research and development expense, net | | $ | 4,625 | | | $ | 4,148 | |
Research and development expense was $4.6 million in 2024, an increase of $0.5 million, or 11.5%, during 2024 as compared to 2023. The increase is attributable to the full year impact of the AlterG business and included investments in new product development projects.
We intend to focus the rest of our research and development expenses mainly on our current product support, as well as to advance the FDA review of the submission for clearance of the ReWalk 7 next-generation exoskeleton model. We also have ongoing product development activity to reduce the material costs for our ReWalk and AlterG product lines.
Sales and Marketing Expense
Our sales and marketing expense for 2024 and 2023 was as follows (in thousands):
| | | Years Ended December 31, | |
| | | 2024 | | | 2023 | |
| Sales and marketing expense | | $ | 17,949 | | | $ | 13,922 | |
Sales and marketing expense was $17.9 million in 2024, an increase of $4.0 million, or 28.9%, during 2024 as compared to 2023. The increase was primarily due to higher personnel-related expenses from increased headcount following the AlterG acquisition and additional spending on promotional activities.
In the near term our sales and marketing expense are expected to be driven by our efforts to facilitate growth in the sales of our commercial product lines, expand the reimbursement coverage of our ReWalk Personal Exoskeleton device, and support the training activities of ReWalk customers.
General and Administrative Expense
Our general and administrative expense for 2024 and 2023 was as follows (in thousands):
| | | Years Ended December 31, | |
| | | 2024 | | | 2023 | |
| General and administrative | | $ | 5,195 | | | $ | 9,995 | |
General and administrative expense was $5.2 million, a decrease of $4.8 million, or 48.0%, during 2024 as compared to 2023. The decrease was mainly driven by remeasurement of earn out liability of $2.6 million and decrease in M&A related expenses to the AlterG acquisition in 2023.
Impairment charges
| | | Years Ended December 31, | |
| | | 2024 | | | 2023 | |
| Impairment charges | | $ | 9,794 | | | $ | - | |
During the year ended December 31, 2024, we recorded an impairment charge of $9.8 million primarily related to certain acquired intangible assets, due to lower-than-expected financial performance
Financial income, net
Our financial income, net for 2024 and 2023 was as follows (in thousands):
| | | Years Ended December 31, | |
| | | 2024 | | | 2023 | |
| Financial income, net | | $ | 448 | | | $ | 1,467 | |
Financial income, net, reflects a decrease in financial income of $1.0 million during 2024 as compared to 2023. The decrease in financial income was primarily due to lower yielding interest earning accounts, a decline in interest income, and unfavourable exchange rate fluctuations.
Income Tax
Our income tax for 2024 and 2023 was as follows (in thousands):
| | | Years Ended December 31, | |
| | | 2024 | | | 2023 | |
| Taxes on income (benefit) | | $ | 43 | | | $ | (12 | ) |
Income tax increased by $55 thousand during 2024 as compared to 2023, mainly due to our subsidiary’s activity in Germany.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
A discussion of changes in our results of operations in 2023 compared to 2022 has been omitted from this annual report on Form 10-K but may be found in “Part I. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 27, 2024, as amended on April 29, 2024, which is available free of charge on the SEC’s website at www.sec.gov and at golifeward.com, and is incorporated by reference herein.
Critical Accounting Policies
Our consolidated financial statements are prepared in accordance with United States generally accepted accounting principles. The preparation of our financial statements requires us to make estimates, judgments and assumptions that can affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We base our estimates, judgments and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known. Besides the estimates identified above that are considered critical, we make many other accounting estimates in preparing our financial statements and related disclosures. See Note 2 to our consolidated financial statements presented elsewhere in this annual report for a description of the significant accounting policies that we used to prepare our consolidated financial statements. The critical accounting policies that were impacted by the estimates, judgments and assumptions used in the preparation of our consolidated financial statements are discussed below.
Revenue Recognition
Our revenue is recognized in accordance with ASC Topic 606 when obligations under the terms of a contract with our customer are satisfied; generally, this occurs with the transfer of control of our products or services. Revenue is measured as the amount of consideration to which we expect to be entitled in exchange for transferring products or providing services. To achieve this core principle, we apply the following five steps:
1. identify the contract with a customer;
2. identify the performance obligations in the contract;
3. determine the transaction price;
4. allocate the transaction price to performance obligations in the contract; and
5. recognize revenue when or as we satisfy a performance obligation.
Provisions are made at the time of revenue recognition for any applicable warranty cost expected to be incurred. The timing for revenue recognition among the various products and customers is dependent upon satisfaction of such criteria and generally varies from either shipment or delivery to the customer depending on the specific shipping terms of a given transaction, as stipulated in the agreement with each customer. Other than pricing terms which may differ due to the different volumes of purchases between distributors and end-users, there are no material differences in the terms and arrangements involving direct and indirect customers. Our products sold through agreements with distributors are non-exchangeable, non-refundable, non-returnable and without any rights of price protection or stock rotation. Accordingly, we consider all the distributors as end-users. We generally do not grant a right of return for our products except in rare circumstances, and in those cases we record reductions to revenue for expected future product returns based on our historical experience and estimates.
For the majority of sales of ReWalk Rehabilitation Exoskeleton systems, we include insignificant training and consider the elements in the arrangement to be a single performance obligation. 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 agreement terms with the customer, once all other revenue recognition criteria have been met. For sales of ReWalk Personal Exoskeleton systems to end users, and for sales of ReWalk Personal Exoskeleton or ReWalk Rehabilitation Exoskeleton systems to third party distributors, we do 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.
Warranties are classified as either assurance type or service type warranty. A warranty is considered an assurance type warranty if it provides the consumer with assurance that the product will function as intended for a limited period of time.
SCI Products typically include a five-year warranty except for certain payors in which it is a two-year warranty. For the five-year warranty, the first two years are considered as an assurance type warranty and the additional three-year period is considered an extended service arrangement, which is a service type warranty. A service type warranty is either sold with a unit or separately for a unit for which the warranty has expired. A service type warranty is accounted as a separate performance obligation and revenue is recognized ratably over the life of the warranty.
With the recent establishment of a Medicare reimbursement pathway for the ReWalk product, the Company includes variable consideration when, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. The Company reassesses variable consideration at each reporting period and, if necessary, these estimates are adjusted to reflect the anticipated amounts to be collected when those facts and circumstances become known.
The ReStore device is sold with a two-year warranty which is considered as assurance type warranty.
The AlterG Anti-Gravity systems are sold with a one-year assurance type warranty for parts and labor in the US and with a two-year assurance type warranty for parts for distributors. We also sell extended warranties for AlterG Anti-Gravity systems for the periods after the expiration of the original warranty. These are accounted for as separate performance obligations from the AlterG Anti-Gravity system.
We rent our AlterG Anti-Gravity systems to customers for a fixed monthly fee over the rental term, which typically ranges from 2 to 3 years. Rental revenues accounted for under ASC Topic 842 and are recorded as earned on a monthly basis. We also offer for the SCI Products a rent-to-purchase model in which we recognize revenue ratably according to the agreed rental monthly fee for a limited period prior to selling its products. For units placed, we transfer control and recognize a sale when title has passed to our customer and rental revenue ratably according to the agreed rental monthly fee. Each unit placed is considered an independent, unbundled performance obligation.
Income Taxes
As part of the process of preparing our consolidated financial statements, we are required to estimate our taxes in each of the jurisdictions in which we operate. We account for income taxes in accordance with ASC Topic 740, “Income Taxes,” or ASC Topic 740. ASC Topic 740 prescribes the use of an asset and liability method whereby deferred tax asset and liability account balances are determined based on the difference between book value and the tax bases of assets and liabilities and carryforward tax losses. Deferred taxes are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. We exercise judgment and provide a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value if it is more likely than not that some portion or all of the deferred tax asset will not be realized. We have established a full valuation allowance with respect to our deferred tax assets.
ASC 740, “Balance Sheet Classification of Deferred Taxes” provides presentation requirements to classify deferred tax assets and liabilities, along with any related valuation allowance, are classified as non-current on the balance sheet. We account for uncertain tax positions in accordance with ASC 740 and recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Accordingly, we report a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. We recognize interest and penalties, if any, related to unrecognized tax benefits in tax expense.
Recently Issued and Adopted Accounting Pronouncements
A discussion of recent accounting pronouncements is included in Note 2y, New Accounting Pronouncements, to our consolidated financial statements included elsewhere in this annual report.
Liquidity and Capital Resources
Sources of Liquidity and Outlook
Since inception, we have funded our operations primarily through the sale of our equity securities and convertible notes to investors in private placements, the sale of our equity securities in public offerings, cash exercises of outstanding warrants and the incurrence of bank debt.
As of December 31, 2024, the Company had cash and cash equivalents of $6.7 million. The Company has an accumulated deficit in the total amount of $264.8 million as of December 31, 2024 and further losses are anticipated in the development of its business. Those factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.
The Company intends to finance operating costs over the next twelve months with existing cash on hand, potential reduction in operating cash burn and future issuances of equity and debt securities, or through a combination of the foregoing. However, we will also need to seek additional sources of financing if we require more funds than anticipated during the next 12 months or in later periods.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and liabilities and commitments in the normal course of business. The consolidated financial statements for the year ended December 31, 2024 do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to the Company’s ability to continue as a going concern.
We expect to incur future net losses and our transition to profitability is dependent upon, among other things, the successful development and commercialization of our products and product candidates, the 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 our cost structure. Until we achieve profitability or generate positive cash flows, we will continue to need to raise additional cash from time to time.
We intend to fund future operations through cash on hand, additional private and/or public offerings of debt or equity securities, cash exercises of outstanding warrants or a combination of the foregoing. In addition, we may seek additional capital through arrangements with strategic partners or from other sources and we will continue to address our cost structure. Notwithstanding, there can be no assurance that we will be able to raise additional funds or achieve or sustain profitability or positive cash flows from operations.
Our anticipated primary uses of cash are funding (i) sales, marketing, and promotion activities related to market development for our ReWalk Personal Exoskeleton device and AlterG Anti-Gravity system, broadening third-party payor and CMS coverage for our ReWalk Personal Exoskeleton device and commercializing our new product lines added through distribution agreements; (ii) development of future generation designs for our ReWalk device, new AlterG products utilizing DAP technology, and our lightweight exo-suit technology for potential home personal health utilization for multiple indications; (iii) routine product updates; (iv) potential acquisitions of businesses, such as our recent acquisition of AlterG, and (v) general corporate purposes, including working capital needs. Our future cash requirements will depend on many factors, including our rate of revenue growth, the expansion of our sales and marketing activities, the timing and extent of our spending on research and development efforts, the attractiveness of potential acquisition candidates and international expansion. If our current estimates of revenue, expenses or capital or liquidity requirements change or are inaccurate, we may seek to sell additional equity or debt securities, arrange for additional bank debt financing, or refinance our indebtedness. There can be no assurance that we will be able to raise such funds on acceptable terms. For more information, see “Part I, Item 1A. Risk Factors-We have concluded that there is substantial doubt as to our ability to continue as a going concern.”
Equity Raises
Use of Form S-3
Beginning with the filing of our Form 10-K on February 17, 2017, we were subject to limitations under the applicable rules of Form S-3, which constrained our ability to secure capital with respect to public offerings pursuant to our effective Form S-3. These rules limit the size of primary securities offerings conducted by issuers with a public float of less than $75 million to no more than one-third of their public float in any 12-month period. At the time of filing this annual report, we were subject to these limitations because our public float did not reach at least $75 million in the 60 days preceding the filing of this annual report. We will continue to be subject to these limitations for the remainder of the 2025 fiscal year and until the earlier of such time as our public float reaches at least $75 million or when we file our next annual report for the year ended December 31, 2025, at which time we will be required to re-test our status under these rules. If our public float is below $75 million as of the filing of our next annual report on Form 10-K, or at the time we file a new Form S-3, we will continue to be subject to these limitations, until the date that our public float again reaches $75 million. These limitations do not apply to secondary offerings for the resale of our ordinary shares or other securities by selling shareholders or to the issuance of ordinary shares upon conversion by holders of convertible securities, such as warrants. We have registered up to $100 million of ordinary shares warrants and/or debt securities and certain other outstanding securities with registration rights on our registration statement on Form S-3, which was declared effective by the SEC in May 2022.
Equity Offerings and Warrant Exercises
On January 7, 2025, we entered into a purchase agreement with certain institutional investors for the issuance and sale of 1,818,183 ordinary shares and ordinary warrants to purchase up to an aggregate of 1,818,183 ordinary shares at an exercise price of $2.75 per share. Each ordinary share was sold at an offering price of $2.75. The offering of the ordinary shares and the ordinary shares that are issuable from time to time upon exercise of the pre-funded warrants was made pursuant to our shelf registration statement on Form S-3 initially filed with the SEC on March 30, 2022, and declared effective by the SEC on May 16, 2022, 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 three years from the date of issuance. The offering closed on January 8, 2025. Additionally, we issued warrants to purchase up to 109,091 ordinary shares, with an exercise price of $3.4375 per share, exercisable at any time and from time to time, in whole or in part, following the date of issuance and ending three years from the date of issuance, to certain representatives of H.C. Wainwright as compensation for its role as the placement agent in January 2025 private placement offering.
Share Repurchase Program
On June 2, 2022, our board of directors approved a share repurchase program to repurchase up to $8.0 million of our ordinary shares. On July 21, 2022, we 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, our 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 it expired on August 9, 2023.
As of December 31, 2024, pursuant to the share repurchase program, we had repurchased a total of 574,658 of our outstanding ordinary shares at a total cost of $3.5 million.
Cash Flows
| | | Years Ended December 31, | |
| | | 2024 | | | 2023 | | | 2022 | |
| Net cash used in operating activities | | $ | (21,718 | ) | | $ | (20,667 | ) | | $ | (17,891 | ) |
| Net cash used in investing activities | | | - | | | | (18,149 | ) | | | (25 | ) |
| Net cash used in financing activities | | | - | | | | (992 | ) | | | (2,500 | ) |
| Effect of Exchange rate changes on Cash, Cash Equivalents and Restricted Cash | | | 34 | | | | 45 | | | | (79 | ) |
| Net cash flow | | $ | (21,684 | ) | | $ | (39,763 | ) | | $ | (20,495 | ) |
Year Ended December 31, 2024 to Year Ended December 31, 2023
Net Cash Used in Operating Activities
Net cash used in operating activities was $21.7 million in 2024, an increase of $1.1 million as compared to 2023 mainly due to higher investment in working capital items, including trade receivables and inventory reflecting the timing of collections, payments and inventory management, partially offset by higher revenues in relation to cash expenses.
Net Cash Used in Investing Activities
Net cash used in investing activities decreased by $18.1 million in 2024 as compared to 2023, primarily due to the acquisition of AlterG.
Net Cash Used in Financing Activities
Net cash used in financing activities decreased by $0.9 million in 2024 as compared to 2023, mainly due to the repurchase of our ordinary shares under our share repurchase program, which expired on August 9, 2023.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
A discussion of changes in our cash flows in 2023 compared to 2022 has been omitted from this annual report on Form 10-K but may be found in “Part I. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 27, 2024, as amended on April 29, 2024, which is available free of charge on the SECs website at www.sec.gov and at golifeward.com, and is incorporated by reference herein.
