QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Trading Symbol
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Name of each exchange on which registered
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Large accelerated filer ☐
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Accelerated filer ☐
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Smaller reporting company
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Emerging growth company
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LIFEWARD LTD. FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2024 TABLE OF CONTENTS | ||
Page No. | ||
2 | ||
FINANCIAL INFORMATION | 3 | |
FINANCIAL STATEMENTS | 3 | |
CONDENSED CONSOLIDATED BALANCE SHEETS – SEPTEMBER 30, 2024 (unaudited) AND DECEMBER 31, 2023 | 3 | |
5 | ||
6 | ||
7 | ||
8 | ||
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 26 | |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 35 | |
CONTROLS AND PROCEDURES | 35 | |
OTHER INFORMATION | 36 | |
LEGAL PROCEEDINGS | 36 | |
RISK FACTORS | 36 | |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 37 | |
DEFAULTS UPON SENIOR SECURITIES | 37 | |
MINE SAFETY DISCLOSURES | 37 | |
OTHER INFORMATION | 37 | |
EXHIBITS | 38 | |
39 |
• | our expectations regarding future growth, including our ability to increase sales in our existing geographic markets and expand to new markets; |
• | our ability to maintain and grow our reputation and the market acceptance of our products; |
• | our ability to achieve reimbursement from third-party payors or advance Centers for Medicare & Medicaid Services (“CMS”) coverage for our products, including our ability to successfully submit and gain approval of cases for Medicare coverage through Medicare Administrative Contractors (“MACs”); |
• | our ability to continue to successfully integrate the operations of AlterG, Inc. into our organization, and realize the anticipated benefits therefrom; |
• | our ability to have sufficient funds to meet certain future capital requirements, which could impair our efforts to develop and commercialize existing and new products; |
• | our ability to be successful in achieving expected operating efficiencies and sustaining or improving operating expense reductions, and our ability to handle any business disruptions that may occur in connection with streamlining operations; |
• | our ability to navigate any difficulties associated with moving production of our AlterG Anti-Gravity Systems to a contract manufacturer; |
• | our ability to leverage our sales, marketing and training infrastructure; |
• | our ability to grow our business through acquisitions of businesses, products or technologies, and the failure to manage acquisitions, or the failure to integrate them with our existing business; |
• | our expectations as to our clinical research program and clinical results; |
• | our ability to obtain certain components of our products from third-party suppliers and our continued access to our product manufacturers; |
• | our ability to improve our products and develop new products; |
• | our compliance with medical device reporting regulations to report adverse events involving our products, which could result in voluntary corrective actions or enforcement actions such as mandatory recalls, and the potential impact of such adverse events on our ability to market and sell our products; |
• | our ability to gain and maintain regulatory approvals and to comply with any post-marketing requests; |
• | the risk of a cybersecurity attack or incident relating to our information technology systems significantly disrupting our business operations; |
• | our ability to maintain adequate protection of our intellectual property and to avoid violation of the intellectual property rights of others; |
• | the impact of substantial sales of our shares by certain shareholders on the market price of our ordinary shares; |
• | our ability to use effectively the proceeds of our offerings of securities, if any; |
• | our ability to manage challenges and expenses associated with activist shareholder activities, including litigation; |
• | the impact of the market price of our ordinary shares on the determination of whether we are a passive foreign investment company; |
• | market and other conditions, including the extent to which inflation or global instability may disrupt our business operations or our financial condition or the financial condition of our customers and suppliers, including the ongoing war in the Middle East and the increasing tensions between China and Taiwan; and |
• | other factors discussed in the “Risk Factors” section of our 2023 annual report on Form 10-K and in our subsequent reports filed with the SEC. |
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LIFEWARD LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
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(In thousands, except share and per share data)
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September 30,
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December 31,
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|||||||
2024
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2023
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|||||||
(unaudited)
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||||||||
ASSETS
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||||||||
CURRENT ASSETS
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Cash and cash equivalents
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$
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$
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Trade receivables, net of credit losses of $
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Prepaid expenses and other current assets
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Inventories
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Total current assets
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LONG-TERM ASSETS
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Restricted cash and other long-term assets
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Operating lease right-of-use assets
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Property and equipment, net
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Intangible assets
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Goodwill
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Total long-term assets
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||||||
Total assets
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$
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$
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LIFEWARD LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
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(In thousands, except share and per share data)
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September 30,
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December 31,
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|||||||
2024
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2023
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|||||||
(unaudited)
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||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
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||||||||
CURRENT LIABILITIES
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||||||||
Trade payables
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$
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$
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||||
Employees and payroll accruals
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Deferred revenues
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Current maturities of operating leases liability
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Earnout liability
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Other current liabilities
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Total current liabilities
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LONG-TERM LIABILITIES
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Earnout liability
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Deferred revenues
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Non-current operating leases liability
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Other long-term liabilities
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Total long-term liabilities
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Total liabilities
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COMMITMENTS AND CONTINGENT LIABILITIES
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Shareholders’ equity:
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Share capital
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Ordinary share of NIS
Issued:
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Additional paid-in capital
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Treasury Shares at cost,
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(
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)
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(
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)
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||||
Accumulated deficit
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(
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)
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(
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)
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||||
Total shareholders’ equity
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||||||
Total liabilities and shareholders’ equity
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$
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$
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Three Months Ended
September 30,
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Nine Months Ended
September 30,
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||||||||||||||
2024
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2023
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2024
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2023
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|||||||||||||
Revenues
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$ |
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$ |
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$
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$
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||||||||
Cost of revenues
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||||||||||||
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||||||||||||||||
Gross profit
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Operating expenses:
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Research and development, net
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Sales and marketing
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General and administrative
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Total operating expenses
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Operating loss
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(
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)
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(
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)
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(
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)
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(
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Financial income, net
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Loss before income taxes
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(
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(
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(
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(
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Taxes on income
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Net loss
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$
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(
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$ |
(
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$
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(
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$
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(
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) | ||||
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||||||||||||||||
Net loss per ordinary share, basic and diluted
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$
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(
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)
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$ |
(
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)
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$
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(
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)
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$
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(
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)
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||||
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||||||||||||||||
Weighted average number of shares used in computing net loss per ordinary share, basic and diluted (1)
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Ordinary Shares
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Additional paid-in
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Treasury
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Accumulated
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Total
shareholders’
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||||||||||||||||||||
Number (1)
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Amount
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capital
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Shares
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deficit
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equity
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|||||||||||||||||||
Balance as of June 30, 2023
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$ |
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$ |
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$ |
(
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)
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$ |
(
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)
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$ |
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|||||||||||
Share-based compensation to employees and non-employees
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-
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||||||||||||||||||
Issuance of ordinary shares upon vesting of employees and non-employees RSUs
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(
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)
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|||||||||||||||||
Net loss
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-
|
|
|
|
(
|
)
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(
|
)
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||||||||||||||||
Balance as of September 30, 2023
|
|
$ |
|
$ |
|
$ |
(
|
)
|
$ |
(
|
)
|
$ |
|
|||||||||||
|
||||||||||||||||||||||||
Balance as of June 30, 2024
|
|
$ |
|
$ |
|
$ |
(
|
)
|
$ |
(
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)
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$ |
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|||||||||||
Share-based compensation to employees and non-employees
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-
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||||||||||||||||||
Issuance of ordinary shares upon vesting of RSUs by employees and non-employees
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|
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(
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)
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|||||||||||||||||
Net loss
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-
|
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|
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(
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)
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(
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)
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||||||||||||||||
Balance as of September 30, 2024
|
|
$ |
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$ |
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$ |
(
|
)
|
$ |
(
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)
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$ |
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Ordinary Shares
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Additional paid-in
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Treasury
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Accumulated
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Total
shareholders’
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||||||||||||||||||||
Number (1)
|
Amount
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capital
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Shares
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deficit
|
equity
|
|||||||||||||||||||
Balance as of December 31, 2022
|
|
$ |
|
$ |
|
$ |
(
|
)
|
$ |
(
|
)
|
$ |
|
|||||||||||
Share-based compensation to employees and non-employees
|
-
|
|
|
|
|
|
||||||||||||||||||
Issuance of ordinary shares upon vesting of employees and non-employees RSUs
|
|
|
(
|
)
|
|
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|||||||||||||||||
Treasury shares at cost
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(
|
)
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(
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)
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(
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)
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(
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)
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||||||||||||||||
Net loss
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-
|
|
|
|
(
|
)
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(
|
)
|
||||||||||||||||
Balance as of September 30, 2023
|
|
$ |
|
$ |
|
$ |
(
|
)
|
$ |
(
|
)
|
$ |
|
|||||||||||
|
||||||||||||||||||||||||
Balance as of December 31, 2023
|
|
$ |
|
$ |
|
$ |
(
|
)
|
$ |
(
|
)
|
$ |
|
|||||||||||
Share-based compensation to employees and non-employees
|
-
|
|
|
|
|
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||||||||||||||||||
Issuance of ordinary shares upon vesting of RSUs by employees and non-employees
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|
|
(
|
)
|
|
|
|
|||||||||||||||||
Net loss
|
-
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
Balance as of September 30, 2024
|
|
$ |
|
$ |
|
$ |
(
|
)
|
$ |
(
|
)
|
$ |
|
|
Nine Months Ended
September 30, |
|||||||
|
2024
|
2023
|
||||||
Cash flows used in operating activities:
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||||||||
Net loss
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$
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(
|
)
|
$
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(
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation
|
|
|
||||||
Amortization of intangible assets
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|
||||||
Share-based compensation
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|
||||||
Remeasurement of earnout liability
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(
|
)
|
|
|||||
Interest income
|
(
|
)
|
(
|
)
|
||||
Exchange rate fluctuations
|
|
|
||||||
Changes in assets and liabilities:
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||||||||
Trade receivables, net
|
(
|
)
|
(
|
)
|
||||
Prepaid expenses, operating lease right-of-use assets and other assets
|
|
(
|
)
|
|||||
Inventories
|
(
|
)
|
(
|
)
|
||||
Trade payables
|
(
|
)
|
|
|||||
Employees and payroll accruals
|
(
|
)
|
(
|
)
|
||||
Deferred revenues
|
(
|
)
|
(
|
)
|
||||
Operating lease liabilities and other liabilities
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(
|
)
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(
|
)
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||||
Net cash used in operating activities
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$
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(
|
)
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$
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(
|
)
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||
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||||||||
Cash flows used investing activities:
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||||||||
Purchase of property and equipment
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(
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)
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|||||
Acquisition of a business, net of cash acquired
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(
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)
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|||||
Net cash used in investing activities
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$
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$
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(
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)
|
|||
Cash flows used in financing activities:
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||||||||
Purchase of treasury shares
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|
(
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)
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|||||
Net cash used in financing activities
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$
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$
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(
|
)
|
|||
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||||||||
Effect of Exchange rate changes on Cash, Cash Equivalents and Restricted Cash
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(
|
)
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(
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)
|
||||
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
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$
|
|
$
|
|
||||
Supplemental disclosures of non-cash flow information
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||||||||
Classification of inventory to property and equipment, net
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$
|
|
$
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|
||||
ROU assets obtained from new lease liabilities
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$
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|
$
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|
||||
Supplemental cash flow information:
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||||||||
Cash and cash equivalents
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$
|
|
$
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|
||||
Restricted cash included in other long-term assets
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|
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||||||
Total Cash, cash equivalents, and restricted cash
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$
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|
$
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LIFEWARD LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
a. |
Lifeward Ltd. (“LL,” and together with its subsidiaries, the “Company”) was originally incorporated under the laws of the State of Israel on June 20, 2001, and commenced operations on the same date under the name Argo Medical Technologies Ltd. This name was later changed to ReWalk Robotics Ltd. on June 18, 2014. On January 29, 2024, the Company announced that it had rebranded as Lifeward, with each subsidiary of LL renamed to reflect the new corporate identity. The Company officially changed its name to Lifeward Ltd. on September 10, 2024.
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b. |
LL has three wholly owned (directly and indirectly) subsidiaries: (i) Lifeward Inc. (“LI”) originally incorporated under the laws of Delaware on February 15, 2012 under the name of ReWalk Robotics, Inc., (ii) Lifeward GMBH (“LG”) originally incorporated under the laws of Germany on January 14, 2013 under the name of ReWalk Robotics GMBH, and (iii) Lifeward CA, Inc. ( “LCAI”) originally incorporated in Delaware on October 21, 2004 under the name of Gravus, Inc., which was later changed to AlterG, Inc. on June 30, 2005.
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c. |
The Company is 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. 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.
The Company has sought to expand its product offerings beyond the SCI Products through internal development and distribution agreements. The Company has developed its ReStore Exo-Suit device (the “ReStore”), 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 disabilities due to stroke. During the second quarter of 2020, the Company signed an agreement to distribute product lines in the United States. The Company is 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. We refer to the MyoCycle devices as our “Distributed Product.”
On August 11, 2023, pursuant to an Agreement and Plan of Merger among LI, AlterG, Inc., Atlas Merger Sub, Inc., a wholly owned subsidiary of AlterG, Inc. (“Merger Sub”), and Shareholder Representative Services LLC, dated August 8, 2023, LI acquired AlterG, Inc. and AlterG, Inc. became a wholly owned subsidiary of the Company. With the rebranding of the Company, AlterG, Inc. was renamed as LCAI.
For accounting purposes, LI was considered the acquirer and AlterG, Inc. 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, Inc., a leading provider of anti-gravity systems for use in physical and neurological rehabilitation. The Company paid a cash purchase price of approximately $
|
8
LIFEWARD LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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 the United States, through a combination (depending on the product line) of direct sales and distributors 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.
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d. |
As of September 30, 2024, the Company incurred a consolidated net loss of $
|
e. |
The Company expects to incur future net losses and its transition to profitability is dependent upon, among other things, the successful development and commercialization of its products and product candidates, 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 revenues adequate to support its cost structure. If the Company does not achieve a level of revenues adequate to support its cost structure, it will implement cost reduction measures. These plans may include restructuring efforts and additional cost reductions if needed. Until the Company achieves profitability or generates positive cash flows, it will continue to need to raise additional cash. The Company intends to fund future operations through cash on hand, additional private and/or public offerings of debt or equity securities, cash exercises of outstanding warrants or a combination of the foregoing. In addition, the Company may seek additional capital through arrangements with strategic partners or from other sources and will continue to address its cost structure. Notwithstanding, there can be no assurance that the Company will be able to raise additional funds or achieve or sustain profitability or positive cash flows from operations.
|
9
LIFEWARD LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
a. |
Business Combinations
The Company accounts for business combinations in accordance with ASC 805, “Business Combinations”. 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.
|
b. |
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.
|
10
LIFEWARD LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
c. |
Fair Value Measurements
|
Fair value measurements as of
|
||||||||||
Description
|
Fair Value
Hierarchy
|
September 30,
2024
|
December 31,
2023
|
|||||||
Financial assets:
|
||||||||||
Money market funds included in cash and cash equivalent
|
Level 1
|
$
|
|
$
|
|
|||||
Treasury bills included in cash and cash equivalent
|
Level 1
|
|
|
|||||||
Total Assets Measured at Fair Value
|
$
|
|
$
|
|
||||||
Financial Liabilities:
|
||||||||||
Earnout
|
Level 3
|
$
|
|
$
|
|
|||||
Total liabilities measured at fair value
|
$
|
|
$
|
|
11
LIFEWARD LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
Earnout
|
|||
Balance December 31, 2023
|
$
|
|
||
Change in fair value
|
(
|
)
|
||
Balance September 30, 2024
|
$
|
|
d. |
Revenue Recognition
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
|
2024
|
2023
|
2024
|
2023
|
||||||||||||
Product
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Rental
|
|
|
|
|
||||||||||||
Service and warranty
|
|
|
|
|
||||||||||||
Total Revenues
|
$
|
|
$
|
|
$
|
|
$
|
|
12
LIFEWARD LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
September 30,
|
December 31,
|
||||||
|
2024
|
2023
|
||||||
Trade receivable, net of credit losses (1)
|
$
|
|
$
|
|
||||
Deferred revenues (1) (2)
|
$
|
|
$
|
|
(1) |
Balance presented net of unrecognized revenues that were not yet collected.
|
(2) |
During the nine months ended September 30, 2024, $
|
13
LIFEWARD LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
e. |
Concentrations of Credit Risks:
|
|
September 30,
|
December 31,
|
||||||
|
2024
|
2023
|
||||||
Customer A
|
|
%
|
|
f. |
Warranty provision
|
|
US Dollars
in
thousands
|
|||
Balance at December 31, 2023
|
$
|
|
||
Provision
|
|
|||
Usage
|
(
|
)
|
||
Balance at September 30, 2024
|
$
|
|
g. |
Basic and diluted net loss per ordinary share:
|
14
LIFEWARD LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
h. |
New Accounting Pronouncements
|
|
i.
|
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.
|
ii.
|
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.
|
|
September 30,
|
December 31,
|
||||||
|
2024
|
2023
|
||||||
Finished products
|
$
|
|
$
|
|
||||
Raw materials
|
|
|
||||||
|
$
|
|
$
|
|
The total consideration transferred is as follows (in thousands):
|
||||
Cash
|
$
|
|
||
Earnout payments
|
$
|
|
||
Total consideration
|
$
|
|
Earnout payments
15
LIFEWARD LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Cash and cash equivalent
|
$
|
|
||
Restricted cash
|
|
|||
Accounts receivable
|
|
|||
Inventory
|
|
|||
Prepaid expenses and other current assets
|
|
|||
Right of use asset
|
|
|||
Property and equipment, net
|
|
|||
Other non-current assets
|
|
|||
Goodwill
|
|
|||
Intangible assets
|
|
|||
Accounts payable
|
(
|
)
|
||
Accrued compensation
|
(
|
)
|
||
Other accrued liabilities
|
(
|
)
|
||
Deferred revenue
|
(
|
)
|
||
Warranty Obligations
|
(
|
)
|
||
Leases Liability
|
(
|
)
|
||
Total purchase consideration
|
$
|
|
Estimated
Fair Value
|
Estimated
Useful Life
(Years)
|
|||||||
Trademark
|
$
|
|
|
|||||
Technology
|
|
|
||||||
Customer relationship - Warranty
|
|
|
||||||
Customer relationship - Rental
|
|
|
||||||
Customer relationship - Distribution
|
|
|
||||||
Backlog
|
|
|
16
LIFEWARD LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Cost
|
September 30, 2024 Accumulated
Amortization
|
Intangible
Assets, Net
|
||||||||||
Trademark
|
$ |
|
$ |
(
|
)
|
$ |
|
|||||
Technology
|
|
(
|
)
|
|
||||||||
Customer relationship - Warranty
|
|
(
|
)
|
|
||||||||
Customer relationship - Rental
|
|
(
|
)
|
|
||||||||
Customer relationship - Distribution
|
|
(
|
)
|
|
||||||||
Backlog
|
|
(
|
)
|
|
||||||||
Total Amortized Intangible Assets
|
$ |
|
$ |
(
|
)
|
$ |
|
Fiscal 2024 (period remaining)
|
$
|
|
||||||||||
Fiscal 2025
|
|
|||||||||||
Fiscal 2026
|
|
|||||||||||
Fiscal 2027
|
|
|||||||||||
Fiscal 2028
|
|
|||||||||||
Total
|
$ |
|
a. |
Purchase commitments:
|
b. |
Operating lease commitment:
|
(i) |
|
17
LIFEWARD LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(ii) |
|
2024
|
$
|
|
||
2025
|
|
|||
2026
|
|
|||
Total lease payments
|
|
|||
Less: imputed interest
|
(
|
)
|
||
Present value of future lease payments
|
|
|||
Less: current maturities of operating leases
|
|
|||
Non-current operating leases
|
$
|
|
||
Weighted-average remaining lease term (in years)
|
|
|||
Weighted-average discount rate
|
|
%
|
c. |
Royalties
|
18
LIFEWARD LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
d. |
Liens:
|
e. |
Legal Claims:
|
19
LIFEWARD LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
a. |
Reverse share split:
|
b. |
Share option plans:
|
|
Number
|
Weighted
average
exercise
price
|
Weighted
average
remaining
contractual
life (years)
|
Aggregate
intrinsic
value (in
thousands)
|
||||||||||||
Options outstanding as of December 31, 2023
|
|
$
|
|
|
$
|
|
||||||||||
Granted
|
|
|
-
|
-
|
||||||||||||
Exercised
|
|
|
-
|
-
|
||||||||||||
Forfeited
|
|
|
-
|
-
|
||||||||||||
Options outstanding as of September 30, 2024
|
|
$
|
|
|
$
|
|
||||||||||
|
||||||||||||||||
Options exercisable as of September 30, 2024
|
|
$
|
|
|
$
|
|
20
LIFEWARD LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
Number of
shares
underlying
outstanding
RSUs
|
Weighted-
average
grant date
fair value
|
||||||
Unvested RSUs as of December 31, 2023
|
|
$
|
|
|||||
Granted
|
|
|
||||||
Vested
|
(
|
)
|
|
|||||
Forfeited
|
(
|
)
|
|
|||||
Unvested RSUs as of September 30, 2024
|
|
$
|
|
Weighted
average
remaining
contractual
life (years) (1)
|
Options outstanding and
exercisable as of
September 30, 2024
|
Weighted
average
remaining
contractual
life (years) (1)
|
|||||||||||||||
Range of exercise price
|
Options and RSUs
outstanding as of
September 30, 2024
|
||||||||||||||||
RSUs only
|
|
-
|
|
-
|
|||||||||||||
$
|
|
|
|
|
|||||||||||||
$
|
|
|
|
|
|||||||||||||
$
|
|
|
|
|
|||||||||||||
$
|
|
|
|
|
|||||||||||||
|
|
|
|
(1) |
Calculation of weighted average remaining contractual term does not include the RSUs that were granted, which have an indefinite contractual term.
|
c. |
Share-based awards to non-employee consultants:
|
21
LIFEWARD LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
d. |
Treasury shares:
|
e. |
Warrants to purchase ordinary shares:
|
Issuance date
|
Warrants
outstanding
|
Exercise price
per warrant
|
Warrants
outstanding
and
exercisable
|
Contractual
term
|
|||||||||
|
(number)
|
(number)
|
|
||||||||||
December 31, 2015 (1)
|
|
$
|
|
|
See footnote (1)
|
||||||||
December 28, 2016 (2)
|
|
$
|
|
|
See footnote (1)
|
||||||||
April 5, 2019 (3)
|
|
$
|
|
|
|
||||||||
June 12, 2019 (4)
|
|
$
|
|
|
|
||||||||
February 10, 2020 (5)
|
|
$
|
|
|
|
||||||||
February 10, 2020 (6)
|
|
$
|
|
|
|
||||||||
July 6, 2020 (7)
|
|
$
|
|
|
|
||||||||
July 6, 2020 (8)
|
|
$
|
|
|
|
||||||||
December 8, 2020 (9)
|
|
$
|
|
|
|
||||||||
December 8, 2020 (10)
|
|
$
|
|
|
|
||||||||
February 26, 2021 (11)
|
|
$
|
|
|
|
||||||||
February 26, 2021 (12)
|
|
$
|
|
|
|
||||||||
September 29, 2021 (13)
|
|
$
|
|
|
|
||||||||
September 29, 2021 (14)
|
|
$
|
|
|
|
||||||||
|
|
|
|
22
LIFEWARD LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(1) |
Represents warrants for ordinary shares issuable upon an exercise price of $
|
(2) |
Represents common warrants that were issued as part of the $
|
(3) |
Represents warrants that were issued to certain institutional purchasers in a private placement in the Company’s registered direct offering of ordinary shares in April 2019.
|
(4) |
Represents warrants that were issued to certain institutional investors in a warrant exercise agreement in June 2019.
|
(5) |
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 September 30, 2024,
During the nine months ended September 30, 2024, no warrants were exercised.
|
(6) |
Represents warrants that were issued to the placement agent as compensation for its role in the Company’s February 2020 best efforts offering. As of September 30, 2024,
During the nine months ended September 30, 2024, no warrants were exercised.
|
23
LIFEWARD LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(7) |
Represents warrants that were issued to certain institutional purchasers in a private placement in our registered direct offering of ordinary shares in July 2020. As of September 30, 2024,
During the nine months that ended September 30, 2024, no warrants were exercised.
|
(8) |
Represents warrants that were issued to the placement agent as compensation for his role in the Company’s July 2020 registered direct offering.
|
(9) |
Represents warrants that were issued to certain institutional purchasers in a private placement in our private placement offering of ordinary shares in December 2020. As of September 30, 2024,
During the nine months that ended September 30, 2024, no warrants were exercised.
|
(10) |
Represents warrants that were issued to the placement agent as compensation for its role in the Company’s December 2020 private placement. As of September 30, 2024,
During the nine months that ended September 30, 2024, no warrants were exercised.
|
(11) |
Represents warrants that were issued to certain institutional purchasers in a private placement in our private placement offering of ordinary shares in February 2021.
|
(12) |
Represents warrants that were issued to the placement agent as compensation for its role in the Company’s February 2021 private placement.
|
(13) |
Represents warrants that were issued to certain institutional purchasers in a private placement in our registered direct offering of ordinary shares in September 2021.
|
(14) |
Represents warrants that were issued to the placement agent as compensation for its role in the Company’s September 2021 registered direct offering.
|
f. |
Share-based compensation expense for employees and non-employees:
|
|
Nine Months Ended
September 30,
|
|||||||
2024
|
2023
|
|||||||
Cost of revenues
|
$
|
|
$
|
|
||||
Research and development, net
|
|
|
||||||
Sales and marketing
|
|
|
||||||
General and administrative
|
|
|
||||||
Total
|
$
|
|
$
|
|
24
LIFEWARD LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
||||||||||||||
|
2024
|
2023
|
2024
|
2023
|
||||||||||||
Foreign currency transactions and other
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Interest income
|
|
|
|
|
||||||||||||
Bank commissions
|
(
|
)
|
|
(
|
)
|
(
|
)
|
|||||||||
|
$
|
|
$
|
|
$
|
|
$
|
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
|
2024
|
2023
|
2024
|
2023
|
||||||||||||
Revenues based on customer’s location:
|
||||||||||||||||
United States
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Europe
|
|
|
|
|
||||||||||||
Asia-Pacific
|
|
|
|
|
||||||||||||
Rest of the world
|
|
|
|
|
||||||||||||
Total revenues
|
$
|
|
$
|
|
$
|
|
$
|
|
|
September 30,
|
December 31,
|
||||||
|
2024
|
2023
|
||||||
Long-lived assets by geographic region (*):
|
||||||||
Israel
|
$
|
|
$
|
|
||||
United States
|
|
|
||||||
Germany
|
|
|
||||||
|
$
|
|
$
|
|
(*)
|
Long-lived assets are comprised of property and equipment, net, and operating lease right-of-use assets.
|
|
Nine Months Ended
September 30,
|
|||||||
|
2024
|
2023
|
||||||
Major customer data as a percentage of total revenues:
|
||||||||
Customer A
|
|
%
|
|
|||||
Customer B
|
|
)
|
|
%
|
• |
Lifeward initiated actions to further streamline its U.S. operations including closing two U.S. facilities to complete the integration of AlterG. The actions are expected to save the Company approximately $3 million in operating expenses and improve gross margins by approximately two percentage points when the full impact is achieved.
|
• |
Lifeward began selling the AlterG family of products through its German sales organization which the Company expects will result in revenue growth from a more focused sales effort and higher margins with little incremental investment by utilizing its existing sales and support infrastructure in Germany.
|
• |
Lifeward executed a successful launch of the AlterG NEO which was engineered with a new design to allow a lower price point to make the technology more accessible to a broader range of customers. Since the introduction of the NEO at the end of June, Lifeward has generated orders for approximately 40 units as the NEO is quickly becoming a growth driver for the AlterG product line.
|
• |
Lifeward completed its near-term plans to refresh its Board of Directors with the addition of Robert J. Marshall Jr. as a new director and chairman of the Audit Committee.
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
|
2024
|
2023
|
2024
|
2023
|
||||||||||||
Revenues
|
6,128
|
4,403
|
$
|
18,118
|
$
|
6,970
|
||||||||||
Cost of revenues
|
3,908
|
3,540
|
11,746
|
4,960
|
||||||||||||
|
||||||||||||||||
Gross profit
|
2,220
|
863
|
6,372
|
2,010
|
||||||||||||
|
||||||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development, net
|
998
|
1,262
|
3,494
|
2,830
|
||||||||||||
Sales and marketing
|
4,156
|
4,088
|
13,573
|
9,076
|
||||||||||||
General and administrative
|
240
|
3,455
|
3,424
|
7,579
|
||||||||||||
|
||||||||||||||||
Total operating expenses
|
5,394
|
8,805
|
20,491
|
19,485
|
||||||||||||
|
||||||||||||||||
Operating loss
|
(3,174
|
)
|
(7,942
|
)
|
(14,119
|
)
|
(17,475
|
)
|
||||||||
Financial income, net
|
119
|
411
|
495
|
1,047
|
||||||||||||
|
||||||||||||||||
Loss before income taxes
|
(3,055
|
)
|
(7,531
|
)
|
(13,624
|
)
|
(16,428
|
)
|
||||||||
Taxes on income
|
29
|
-
|
40
|
66
|
||||||||||||
|
||||||||||||||||
Net loss
|
$
|
(3,084
|
)
|
$ |
(7,531
|
)
|
$
|
(13,664
|
)
|
$
|
(16,494 |
)
|
||||
|
||||||||||||||||
Net loss per ordinary share, basic and diluted
|
$
|
(0.35
|
)
|
$ |
(0.88
|
)
|
$
|
(1.58
|
)
|
$
|
(1.94
|
)
|
||||
|
||||||||||||||||
Weighted average number of shares used in computing net loss per ordinary share, basic and diluted (1)
|
8,756,882
|
8,542,630
|
8,652,085
|
8,501,397
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
|
2024
|
2023
|
2024
|
2023
|
||||||||||||
Revenues
|
$ |
6,128
|
$ |
4,403
|
$
|
18,118
|
$
|
6,970
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
|
2024
|
2023
|
2024
|
2023
|
||||||||||||
Gross profit
|
$ |
2,220
|
$ |
863
|
$ |
6,372
|
$ |
2,010
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
|
2024
|
2023
|
2024
|
2023
|
||||||||||||
Research and development, net
|
$ |
998
|
$ |
1,262
|
$ |
3,494
|
$ |
2,830
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
|
2024
|
2023
|
2024
|
2023
|
||||||||||||
Sales and marketing
|
$ |
4,156
|
$ |
4,088
|
$ |
13,573
|
$ |
9,076
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
|
2024
|
2023
|
2024
|
2023
|
||||||||||||
General and administrative
|
$ |
240
|
$ |
3,455
|
$ |
3,424
|
$ |
7,579
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
|
2024
|
2023
|
2024
|
2023
|
||||||||||||
Financial income, net
|
$ |
119
|
$ |
411
|
$ |
495
|
$ |
1,047
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
|
2024
|
2023
|
2024
|
2023
|
||||||||||||
Taxes on income
|
$ |
29
|
$ |
-
|
$ |
40
|
$ |
66
|
|
Nine Months Ended
September 30, |
|||||||
|
2024
|
2023
|
||||||
Net cash used in operating activities
|
$
|
(17,749
|
)
|
$
|
(16,183 |
)
|
||
Net cash used in investing activities
|
-
|
(18,070
|
)
|
|||||
Net cash used in financing activities
|
-
|
(992
|
)
|
|||||
Effect of Exchange rate changes on Cash, Cash Equivalents and Restricted Cash
|
(29
|
)
|
(24
|
)
|
||||
Net cash flow
|
$
|
(17,778
|
)
|
$
|
(35,269
|
)
|
|
Payments due by period (in dollars, in thousands)
|
|||||||||||
Contractual obligations
|
Total
|
Less than
1 year |
1-3 years
|
|||||||||
|
||||||||||||
Purchase obligations (1)
|
$
|
5,929
|
$
|
5,929
|
$
|
-
|
||||||
Collaboration Agreement and License Agreement obligations (2)
|
35
|
35
|
-
|
|||||||||
Operating lease obligations (3)
|
1,024
|
974
|
50
|
|||||||||
Earnout liability (4)
|
792
|
-
|
792
|
|||||||||
Total
|
$
|
7,780
|
$
|
6,938
|
$
|
842
|
(1)
|
We depend on one contract manufacturer, Sanmina Corporation, for both the SCI products and the ReStore Products. We place our manufacturing orders with Sanmina pursuant to purchase orders or by providing forecasts for future requirements. The AlterG Anti-Gravity systems are currently produced in Fremont, California by us and following the upcoming closure of our Fremont manufacturing facility at the end of 2024, we will move production to a contract manufacturer. Purchase orders are executed with suppliers based on our sales forecast.
|
(2)
|
Under the Collaboration Agreement, we were required to pay in quarterly installments the funding of our joint research collaboration with Harvard, subject to a minimum funding commitment under applicable circumstances. Our License Agreement with Harvard consists of patent reimbursement expenses payments and a license upfront fee payment. There are also several milestone payments contingent upon the achievement of certain product development and commercialization milestones and royalty payments on net sales from certain patents licensed to Harvard. All product development milestones contemplated by the License Agreement have been met as of September 30, 2024; however, there are still outstanding commercialization milestones under the License Agreement that depend on us reaching certain sales amounts, some or all of which may not occur. Our Collaboration Agreement with Harvard was concluded on March 31, 2022.
|
(3)
|
Our operating leases consist of leases for our facilities in the United States and Israel and motor vehicles.
|
(4)
|
Earnout payments based on AlterG’s revenue growth during the trailing twelve-month periods a year following closing of the transaction.
|
Exhibit
Number
|
|
Description
|
3.1** | ||
101.INS
|
XBRL Instance Document
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
104
|
Cover Page Interactive Data File – formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.
|
*
|
Furnished herewith.
|
**
|
Filed herewith
|
^
|
Portions of this exhibit (indicated by asterisks) have been omitted under rules of the SEC permitting the confidential treatment of select information.
|
|
Lifeward Ltd.
|
|
|
|
|
Date: November 12, 2024
|
By:
|
/s/ Larry Jasinski
|
|
|
Larry Jasinski
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
Date: November 12, 2024
|
By:
|
/s/ Michael Lawless
|
|
|
Michael Lawless
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|