LFWD 10-K
Lifeward Ltd. (LFWD)
10-K
2026-03-18
For: 2025-12-31
View Original
Added on
April 10, 2026
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-K
EXCHANGE
ACT OF 1934
For
the fiscal year ended December
31 , 2025
or
EXCHANGE
ACT OF 1934
For
the transition period from ______ to ______
Commission
File Number: 001-36612
(Exact name of registrant as specified in charter)
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Not
applicable |
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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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Registrant’s
telephone number, including area code: +508 .251.1154
Securities
registered pursuant to Section 12(b) of the Act:
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Title
of Each Class |
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Trading
Symbol(s) |
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Name
of Each Exchange on Which Registered |
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Securities
Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark
if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐ No ☒
Indicate by check mark
if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes
☐ No ☒
Indicate by a check mark
whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller
reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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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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If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 USC. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐
No ☒
The
aggregate market value of the Ordinary Shares held by non-affiliates of the Registrant based upon the closing price of the Ordinary Shares
as reported by The Nasdaq Capital Market on June 30, 2025 (the last business day of the Registrant’s most recently completed second
fiscal quarter) was $9,971,778 .
As of March 17, 2026,
the Registrant had outstanding 1,528,222
Ordinary Shares.
DOCUMENTS
INCORPORATED BY REFERENCE
None.
LIFEWARD
LTD.
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2025
TABLE OF CONTENTS
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2025
TABLE OF CONTENTS
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PART
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PART
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PART
III | ||
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PART
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F -
1 | ||
i
Definitions
and Introduction
Our
legal name is Lifeward Ltd. Our name was previously ReWalk Robotics Ltd., which we changed to Lifeward Ltd. effective September 10, 2024.
We are a company limited by shares organized under the laws of the State of Israel and were founded in 2001. In September 2014, we listed
our shares on The Nasdaq Global Market, and in May 2017 we transferred our listing to The Nasdaq Capital Market. We have irrevocably appointed
Lifeward, Inc. as our agent to receive service of process in any action against us in any United States federal or state court. The address
of Lifeward, Inc. is 2 Cabot Rd., Hudson, Massachusetts 01749. As used herein, and unless the context clearly indicates otherwise, the
terms “Lifeward”, the “Company”, “we”, “us”, “our” or “ours” refer
to Lifeward and its subsidiaries.
Special
Note Regarding Forward-Looking Statements
This
annual report on Form 10-K (“annual report”) contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, or the Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange
Act, and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, that are based on our management’s
beliefs and assumptions and on information currently available to our management. Forward-looking statements include information concerning
our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment,
potential growth opportunities, potential market opportunities and the effects of competition. Forward-looking statements may include
projections regarding our future performance and, in some cases, can be identified by words such as “anticipate,” “assume,”
“believe,” “could,” “seek,” “estimate,” “expect,” “intend,” “may,”
“plan,” “potential,” “predict,” “project,” “future,” “should,”
“will,” “would” or similar expressions that convey uncertainty of future events or outcomes and the negatives
of those terms. These statements may be found in the sections of this annual report titled “Part I. Item 1. Business,” “Part
I. Item 1A. Risk Factors,” “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations” and elsewhere in this annual report. The statements are based on our beliefs, assumptions and expectations of future
performance, taking into account the information currently available to us. These statements are only predictions based upon our current
expectations and projections about future events. There are important factors that could cause our actual results, levels of activity,
performance or achievements to differ materially from the results, levels of activity, performance or achievements expressed or implied
by the statements.
These
factors include those listed in “Part I. Item 1A. Risk Factors,” including those factors summarized below.
| • |
our expectations regarding future growth, including
our ability to increase sales in our existing geographic markets and expand to new markets; |
| • |
our ability to continue as a going concern for
the next twelve months; |
| • |
our ability to maintain and grow our reputation
and the market acceptance of our products; |
| • |
our ability to achieve reimbursement from third-party
payors for Private, Governments, and 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 successfully integrate the operations
of AlterG, Inc. (“AlterG”) 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 realize the expected benefits from
cost reduction initiatives, including streamlining operations and the completed transition of the manufacturing of our ReWalk products
to in-house manufacturing, and our ability to manage any related business disruptions; |
| • |
our ability to achieve expected operating efficiencies
and sustain or improve operating expense reductions, and our ability to handle any business disruptions that may occur in connection with
streamlining operations; |
| • |
our reliance on third-party contract manufacturers
for the production of our AlterG Anti-Gravity Systems and our ability to maintain product quality, ensure timely production and delivery,
and manage potential supply chain disruptions; |
ii
| • |
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 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; |
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our ability to gain and maintain regulatory approvals
and to comply with any post-marketing requests; |
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the risk of a cybersecurity attack or incident
relating to our information technology systems significantly disrupting our business operations; |
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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; |
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our ability to maintain compliance with the continued
listing requirements of the Nasdaq Capital Market and the risk that our ordinary shares will be delisted if we cannot do so; |
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our ability to effectively use the proceeds from
our recent offerings of securities; |
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our ability to repay amounts due, and perform
our obligations under and comply with the terms and conditions of, the Secured Promissory Notes with Oramed; |
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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 inflationary pressures, interest rate and currency rate fluctuations, and changes in trade policies (including tariffs and trade
protection measures that have been or may in the future be imposed by the U.S. or other countries), or global instability may disrupt
our business operations or our financial condition or the financial condition of our customers and suppliers, including the ongoing Russia-Ukraine
conflict, ongoing conflict in the Middle East (including any escalation or expansion) and the increasing tensions between China and Taiwan;
and |
| • |
other factors discussed in “Part I. Item
1A. Risk Factors.” |
You
should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in
the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and
circumstances reflected in the forward-looking statements will be achieved or will occur.
You
should not put undue reliance on any forward-looking statements. Any forward-looking statement in this annual report speaks only as of
the date hereof. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason
after the date of this annual report, to conform these statements to actual results or to changes in our expectations.
Summary
Risk Factors
| • |
We have concluded that there is substantial doubt
as to our ability to continue as a going concern. |
| • |
We may not have sufficient funds to meet certain
future operating needs or capital requirements, which could impair our efforts to develop and commercialize existing and new products,
and as a result, we may in the future consider one or more capital-raising transactions, including future equity or debt financings, strategic
transactions, or borrowings which may also further dilute our shareholders or place us under restrictive covenants limiting our ability
to operate freely. |
| • |
We may not fully realize the anticipated
positive impacts to future financial results from our streamlining efforts. |
iii
| • |
We face economic and political risks associated
with doing business in Taiwan, particularly due to the geopolitical tension between Taiwan and China, and in Russia that could negatively
affect our business and hence the value of your investment. |
| • |
If we fail to meet the requirements for continued listing on the Nasdaq Capital Market, our ordinary shares could be delisted from trading, which would decrease the liquidity of our ordinary shares and our ability to raise additional capital. |
| • |
We rely primarily on sales of our ReWalk Personal
Exoskeletons, AlterG Anti-Gravity systems, MyoCycle FES cycles, and related consumables, services, and extended warranties for our revenue.
We may not be able to achieve or maintain market acceptance of the ReWalk, AlterG, or MyoCycle products or to generate sufficient revenue
from these current and future products to sustain our operations. |
| • |
We may fail to secure or maintain adequate insurance
coverage or reimbursement for our products by third-party payors, which risk may be heightened if insurers find the products to be investigational
or experimental or if new government regulations change existing reimbursement policies. Additionally, such coverage or reimbursement,
even if maintained, may not produce revenue that are high enough to allow us to sell our products profitably. |
| • |
Defects in our products or the software that drives
them could adversely affect the results of our operations. |
| • |
The potential health benefits of our ReWalk products
have not been substantiated by long-term clinical data, which could limit sales of such products. |
| • |
We rely on third-party contract manufacturers
to produce our AlterG products and on third-party suppliers for certain components used in our ReWalk and AlterG products. |
| • |
We may receive a significant number of warranty
claims or our ReWalk, AlterG, or ReStore systems may require significant amounts of service after sale. |
| • |
We may not be able to enhance our exoskeleton
product offerings through our research and development efforts. |
| • |
We may enter into collaborations, in-licensing
arrangements, joint ventures, strategic alliances, business acquisitions or partnerships with third parties that may not result in the
development of commercially viable products or the generation of significant future revenue. |
| • |
Our devices are subject to the FDA’s regulations
pertaining to marketing and promotional communications, among others. Failure to comply with such regulations may give rise to a number
of potential FDA enforcement actions, any of which could have a material adverse effect on our business. |
| • |
We are not able to protect our intellectual property
rights in all countries. |
| • |
If we are unable to offer our key management personnel
long-term incentive compensation, including options, and restricted stock units, as part of their total compensation package, we may have
difficulty retaining such personnel, which would adversely affect our operations and financial performance. |
| • |
Conditions in Israel, including Israel’s
wars against Hamas and other terrorist organizations in the Gaza Strip, against Hezbollah on Israel’s northern border, and tensions
or hostilities involving Iran, including any escalation into a broader regional conflict, may materially and adversely affect our business
and results of operations. |
| • |
Our technology development and quality headquarters
and the manufacturing facility for our ReWalk products are located in Israel and, therefore, our results may be adversely affected by
economic restrictions imposed on, and political and military instability in, Israel. |
| • |
Our operations may be disrupted as a result of
the obligation of Israeli citizens to perform military service. |
| • |
Your rights and responsibilities as a shareholder
will be governed by Israeli law, which differs in some material respects from the rights and responsibilities of shareholders of U.S.
companies. |
| • |
Our business could be negatively affected as a
result of actions of activist shareholders, which could be disruptive and costly and may impact the trading value of our securities. |
iv
Where
You Can Find Other Information
Our
principal executive offices are located at 2 Cabot Rd., Hudson, MA 01749, and our telephone number is (508) 251-1154. Our website is golifeward.com.
Information contained, or that can be accessed through, our website does not constitute a part of this annual report and is not
incorporated by reference herein. We have included our website address in this annual report solely for informational purposes. Information
that we furnish or file with the Securities and Exchange Commission (the “SEC”), including annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K and any amendments to, or exhibits included in, these reports are available for download,
free of charge, on our website as soon as reasonably practicable after such materials are filed or furnished with the SEC. The SEC also
maintains a website at www.SEC.gov that contains reports, proxy and information statements, and other information regarding issuers that
file electronically with the SEC. Our SEC filings, including exhibits filed or furnished therewith, are also available on this website.
PART
I
ITEM
1. BUSINESS
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, were collected to demonstrate
the safety and efficacy of this feature and support the FDA submission. In March 2025, we received 510(k) clearance from the U.S. Food
and Drug Administration (“FDA”) for the ReWalk 7 Personal Exoskeleton device, a next-generation ReWalk model.
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. The ReStore is a powered, lightweight soft
exo-suit intended for use during the rehabilitation of individuals with lower limb disabilities due to stroke. Sales of the device in
the European Union ceased in May 2024. In the second quarter of 2020, we signed an agreement to become 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. We continue to distribute these products; however, our distribution rights
are no longer exclusive.
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. The
purchase agreement also provided for the potential of additional cash earnout payments based on AlterG’s revenue growth over the
two years following the closing; however, no earnout payments were earned. 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 6,000 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 injury and disability.
1
In
February 2026, we entered into an Intellectual Property Assignment and Technology Transfer Agreement with Skelable Ltd., an Israeli technology
company, pursuant to which we agreed to acquire certain intellectual property and related technology assets associated with a powered
upper-body robotic orthotic system designed to assist individuals with impaired upper-limb function, including stroke survivors. The transaction
remains subject to customary closing conditions. As part of the transaction, certain key employees of Skelable are expected to join our
company. The consideration consists primarily of our ordinary shares and is subject to the achievement of certain milestones. The technology
remains under development and is intended to expand our neurorehabilitation platform beyond lower-limb exoskeleton systems.
In
March 2025, we announced an agreement with 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,
to increase our penetration of SCI Products into the workers’ compensation market. 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.
In
December 2025, we announced a distribution agreement with Verita Neuro, a provider of intensive neurological rehabilitation services.
Pursuant to the agreement, Verita Neuro will serve as a distributor of the ReWalk Personal Exoskeleton in certain international markets,
including Mexico, Thailand and the United Arab Emirates. Through its network of rehabilitation centers, Verita Neuro integrates advanced
technologies and therapies to support individuals with neurological injuries. We believe this agreement will expand access to the ReWalk
Personal Exoskeleton in additional international markets and support broader adoption of our technology.
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, 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, Hudson, Massachusetts, and Berlin, Germany.
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, 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 engaged with CMS regarding the Medicare coverage framework applicable to personal exoskeletons. In 2024, 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 that is at least five years post-injury, 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.
2
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. CMS determined this payment rate using a “gap-filling” methodology, which is applied when a technology
has no prior fee schedule pricing history. In establishing the payment amount for HCPCS code K1007, CMS considered available pricing information
for exoskeleton devices from Lifeward and other manufacturers.
In
June 2025, an Administrative Law Judge (“ALJ”) ruled in favor of a Medicare beneficiary’s appeal and determined that
their ReWalk Personal Exoskeleton shall be covered and reimbursed by Medicare as a “reasonable and necessary” medical device
that enables walking after SCI. This ruling established a legal basis that the ReWalk system constitutes a reasonable and necessary medical
intervention for paralyzed individuals.
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.
On
January 12, 2026, we entered into a Share Purchase Agreement with Oramed Pharmaceuticals, Inc. (“Oramed”) and Oratech Pharma,
Inc. (“Oratech”), pursuant to which we agreed to acquire all of the outstanding equity interests of Oratech, a wholly owned
subsidiary of Oramed. Upon closing of the transaction, and subject to the satisfaction of customary closing conditions, we will issue
to Oramed ordinary shares and pre-funded warrants representing up to 49.99% of our fully diluted equity capitalization, with the number
of ordinary shares issued at closing not exceeding 45% of our outstanding ordinary shares immediately after closing. We will also issue
transaction warrants and agreed to make quarterly revenue sharing payments equal to 4% of net revenues from sales of our ReWalk Personal
Exoskeleton products and related extended warranties, subject to certain caps and termination events.
In
connection with the transaction, we also entered into a Securities Purchase Agreement with Oramed and certain investors providing for
the issuance of up to $20.0 million of senior secured convertible notes, including $10.0 million to be issued at closing, together with
accompanying warrants.
On
March 12, 2026, our shareholders approved the transaction. We anticipate closing the transaction following the satisfaction of customary
closing conditions.
In
connection with the anticipated transaction, we received bridge financing from Oramed. On November 14, 2025, we entered into a Secured
Promissory Note (the “Initial Secured Promissory Note”) with Oramed Ltd., pursuant to which we issued to Oramed Ltd. a secured
promissory note in the principal amount of $3.0 million. The loan bears interest at a rate of 15% per annum, is secured by a lien on our
cash and matures on May 14, 2026.
3
On
February 12, 2026, we entered into an additional Secured Promissory Note (the “Subsequent Secured Promissory Note”) with Oramed,
pursuant to which we issued a secured promissory note in the initial principal amount of $525,000, which amount may be increased by up
to an additional $975,000 upon the mutual consent of the parties. The Subsequent Secured Promissory Note is secured by a lien on our cash,
accrues interest at a rate of 24% per annum and matures on the earlier of August 12, 2026, or the failure to obtain shareholder approval
of the transactions contemplated by the Securities Purchase Agreement and the Share Purchase Agreement described above.
On
March 11, 2026, we and Oramed agreed to increase the principal amount available under the Subsequent Secured Promissory Note by an additional
$500,000, resulting in an aggregate principal amount of $1,025,000 available under such note.
ReWalk
Personal Exoskeleton and ReWalk Rehabilitation Exoskeleton
Development
of our SCI Products took over a decade and was spurred by the experiences of our founder, Dr. Amit Goffer, who became a quadriplegic due
to an accident. Current ReWalk designs are intended for people with paraplegia, an SCI resulting in complete or incomplete paralysis of
the legs, who have the use of their upper bodies and arms. We currently offer two products in this category: the ReWalk Personal Exoskeleton
and the ReWalk Rehabilitation Exoskeleton. The ReWalk Rehabilitation Exoskeleton is substantially similar to the ReWalk Personal Exoskeleton
system except that it is sold with multiple sizes of our adjustable parts to allow different users the ability to train within a clinic.
In recent years, substantially all the ReWalk units sold by the Company have been ReWalk Personal systems and we expect our commercial
efforts to continue to focus on this model.
The
ReWalk Personal Exoskeleton is a novel product that seeks to fundamentally change the health and life experiences of users. Designed for
daily use, the device is battery-powered and consists of a wearable exoskeleton with integrated motors at the joints, an array of sensors
and a computer-based control system to power knee and hip movement. The user controls the device movement using a combination of user
inputs on the wrist-worn controller, as well as through subtle weight shifts of the upper body. Because the exoskeleton supports its own
weight and facilitates the user’s gait, users do not expend unnecessary energy while walking. The ReWalk Personal Exoskeleton also
allows users to sit, stand and climb and descend stairs and curbs. In March 2023, the FDA cleared the ReWalk Personal Exoskeleton for
use on stairs and curbs, allowing users to participate in walking activities in more real-world environments in their daily lives and
experience more opportunities to enjoy the health benefits of walking.
|
ReWalk
Personal Exoskeleton: intended for everyday use at home, at work or in the community with a trained companion. We began marketing
ReWalk Personal Exoskeleton in Europe with CE mark clearance at the end of 2012. We received FDA de novo authorization to market the ReWalk
Personal Exoskeleton in the United States in June 2014. FDA subsequently cleared 510(k) premarket notifications for modifications to the
ReWalk, including for use of the ReWalk on curbs and stairs. ReWalk Personal Exoskeleton units are all manufactured according to
the same mechanical specifications. Each unit is then permanently sized to fit the individual user and the software is configured for
the user’s specifications by the rehabilitation center, clinic, or distributor. In March 2025, we received 510(k) clearance from
the FDA for the ReWalk™ 7, the seventh generation of the ReWalk system, which includes innovative new and enhanced features such
as cloud connectivity, an improved user interface, crutch-mounted push-button control, customizable walking speeds, and seamless activation
for stairs and curbs. The ReWalk™ 7 received CE Mark approval in September 2025.
ReWalk
Rehabilitation Exoskeleton: the current offering for clinics who wish to implement exoskeleton training is composed of our ReWalk
Personal Exoskeleton unit along with multiple sizing of different parts, enabling multiple patient use. The ReWalk Rehabilitation Exoskeleton
provides a valuable means of exercise, training, and therapy. Use of the ReWalk Rehabilitation Exoskeleton in the clinic also enables
individuals to evaluate their capacity for using the ReWalk Personal Exoskeleton in the future.
|
|
ReWalk
Personal Exoskeleton
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4
Additionally,
we have received regulatory approval to sell the ReWalk Personal Exoskeleton device in other countries. In the future we intend to seek
approval from the applicable regulatory agencies in other jurisdictions where we may seek to market ReWalk Personal Exoskeleton. For more
information about the safety of using our SCI products see “Part I, Item 1A. Risk Factors—Risks Related to our Business and
our Industry— Defects in our products or the software that drives them could adversely affect the results of our operations.”
Overview
of Spinal Cord Injury
Spinal
Cord Injury
The
spine is the central core of the human skeleton and provides structural support, alignment, and flexibility to the body. The spinal cord,
housed inside the bones of the spinal column, is a complex bundle of nerves serving as the main pathway for information connecting the
brain, and nervous system. Spinal cord injury is a serious medical condition that occurs as a result of physical damage to the nerves
of the spinal cord, resulting in a loss of function, such as mobility or feeling. In most people who have spinal cord injury, the spinal
cord is intact. Spinal cord injury is not the same as back injury, which may result from pinched nerves or ruptured disks. Even when a
person sustains a break in a vertebra or vertebrae, there may not be any spinal cord injury if the spinal cord itself is not affected.
There are two types of spinal cord injury – complete and incomplete. In a complete injury, a person loses all ability to feel and
voluntarily move below the level of the injury. In an incomplete injury, there is some functioning below the level of the injury.
Upon
medical examination, a patient is assigned a level of injury depending on the location of the spinal cord injury. Cervical level injuries
cause paralysis or weakness in both arms and legs and is referred to as quadriplegia. Sometimes this type of injury is accompanied by
loss of physical sensation, respiratory issues, bowel, bladder, and sexual dysfunction. Thoracic level injuries can cause paralysis or
weakness of the legs (paraplegia) along with loss of physical sensation, bowel, bladder, and sexual dysfunction. In most cases, arms and
hands are not affected. Lumbar level injuries result in paralysis or weakness of the legs (paraplegia). Loss of physical sensation, bowel,
bladder, and sexual dysfunction can occur. The shoulder, arm, and hand functions are usually unaffected. Sacral level injuries primarily
cause loss of bowel and bladder function as well as sexual dysfunction.
Clinical
Evidence
Published
clinical studies indicate the ReWalk Personal Exoskeleton’s ability to deliver a functional walking speed. In addition, certain
potential secondary health benefits have been reported in literature as well as by healthcare practitioners and ReWalk users, including
study participants. Although these benefits have not been established as conclusive clinical data in randomized controlled trials, these
reported secondary health benefits include:
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● |
Restoration
of functional ambulation (permitting community access); |
|
● |
Cardiopulmonary
health improvement; |
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● |
Reduction
of muscle spasticity; |
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● |
Reduction
and reversal of bone mineral density loss; |
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● |
Bowel
and bladder management (improved autonomic function); |
5
|
● |
Pain
reduction; |
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Multidimensional
quality of life improvements. |
We
believe that using our SCI Products may have the ability to reduce the lifetime healthcare costs of individuals with spinal cord injuries,
which we believe will make our SCI Products economically attractive for individuals and third-party payors. While we believe that using
our SCI Products could potentially offer significant advantages over competing technologies and therapies, disadvantages include the time
it takes for a user to put on the device, the slower pace of the device compared to a wheelchair, the training required by the user and
companion to use the device, the weight of the device when carried, which makes it more burdensome for a companion to transport than a
wheelchair, and the requirement that users be accompanied by a trained companion.
Market
Opportunity
Current
and near-term market opportunities include providing a solution for persons with SCI that can be used in the clinic and/or home settings.
For persons with SCI, reduced physical activity and the predominance of seated activities can lead to severe physical and psychological
deterioration, resulting in bad health, poor quality of life, low self-esteem, and high medical expenses. In addition, the secondary medical
consequences of paralysis can include difficulty with bowel and urinary tract function, osteoporosis, loss of lean mass, gain in fat mass,
insulin resistance, diabetes, and heart disease. The cost of treating these conditions is substantial. The National Spinal Cord Injury
Statistical Center (“NSCISC”) estimates that complications related to paraplegia cost approximately $670,000 in the
first-year post-injury, excluding indirect costs such as loss in wages, fringe benefits, and productivity, and significant additional
amounts over the course of an individual’s lifetime. Further, secondary complications related to spinal cord injury can reduce life
expectancies for SCI patients. The young average age at time of injury and significant remaining life expectancy, the likelihood of living
at home, and the lifetime cost of treatment highlight the need for an out-of-hospital solution with demonstrated health and social benefits.
The
NSCISC estimates according to its 2025 SCI Fact Sheet that there are approximately 308,000 people in the United States living with
SCI, with an annual incidence of approximately 18,000 new cases per year. According to the VHA data there are approximately 42,000 of
such patients who are veterans and are eligible for medical care and other benefits from the VHA, out of which the VHA states that 27,000
veterans are receiving SCI treatment annually. With 25 VHA spinal cord injury centers designated SCI/D Hub locations, the VHA has the
largest single network of spinal cord injury care in the United States.
According
to the NSCISC, since 2015 motor vehicle crashes have been the leading cause of reported spinal cord injury cases (37%), followed by falls
(32%), acts of violence (15%) and sports injuries (8%). Approximately 78% of spinal cord injuries occur among the male population. According
to NSCISC data, upon hospital discharge, 87% of persons with spinal cord injuries are sent to private, non-institutional residence (in
most cases, their homes prior to injury).
Based
on information from the 2023 annual report published by the NSCISC, 40% of the total U.S. population of SCI patients suffered injuries
between levels T4 and L5. Four published ReWalk trials for SCI patients had an aggregate screening acceptance rate of 50% considering
all current FDA limitations, resulting in an estimated 20% of the total population of SCI patients can be considered as candidates for
current ReWalk Personal Exoskeleton or ReWalk Rehabilitation Exoskeleton according to the device instructions for use. For important qualifying
information about this determination, see “Part I, Item 1A. Risk Factors—Risks Related to our Business and our Industry—The
market for medical exoskeletons, including soft exo-suit devices, remains relatively new and unproven, and important assumptions about
the potential market for our current and future products may be inaccurate.”
Third-Party
Reimbursements
United
States
In
the U.S., individuals typically obtain a ReWalk Personal Exoskeleton for home use through third-party medical coverage. For an individual
who suffered an SCI through a work-related incident, workers’ compensation insurance can be a source of funding to purchase the
device. Similarly, for U.S. veterans, an individual may be covered by the VHA for the purchase of the device regardless of whether the
SCI occurred during active military service.
6
In
December 2015, the VHA issued a national policy or standard operating procedure (“SOP”) for the evaluation, training, and
procurement of ReWalk Personal Exoskeleton systems for all qualifying veterans across the United States and U.S. Territories. The VHA
SOP is the first national coverage policy in the United States for qualifying individuals who are living with spinal cord injury. In June
2018, the VHA updated the SOP, in part, to expand training options for individuals who could not complete the mandatory training due to
excessive distance/drive times from a VHA-designated site. As of December 31, 2025, we had placed 51 units as part of the VHA policy.
The VHA accounted for 3.8% of our total revenue for the year ended December 31, 2025.
We
continue to work with the VHA to both accelerate the pace of implementation of the current VHA policy nationally, and to again expand
opportunities for veterans to gain access to assessments, training, and devices in facilities outside VHA’s traditional spinal cord
injury “hub and spoke” infrastructure. Community-based, non-VHA clinics are also being leveraged to allow veterans to be trained
closer to their homes, while still being reimbursed by the VHA as part of the VHA’s Community Care Network program.
Successful
commercialization depends in significant part on adequate coverage and reimbursement from third party payors, which may include government
payors (such as Medicare and Medicaid programs in the United States), managed care organizations, and private health insurers. In general,
each third-party payor decides which devices will be covered and reimbursed, establishes reimbursement and co-pay levels and sets conditions
for coverage and reimbursement.
While
no broad uniform policy of coverage and reimbursement for electronic exoskeleton medical technology exists among commercial insurance
payors in the United States, reimbursement may be evaluated by the payor on a case-by-case basis. To date, payments for the ReWalk Personal
Exoskeleton have been made primarily through case-by-case determinations by third-party payors, including commercial insurers in the United
States, by self-payors and donations and, to a lesser extent, through the use of funds from insurance and/or accident settlements.
According
to the NSCISC 2024 annual report, approximately 57% of the spinal cord injury population received primary coverage from Medicare and Medicaid
within five years after their injury date, with Medicare representing the majority of cases.
In
order to be covered and reimbursed by Medicare, the ReWalk Personal Exoskeleton must, among other things, be classified into an applicable
Medicare benefit category. In addition, appropriate codes describing the technology must also be established to facilitate billing and
claims processing.
In
December 2019, we submitted the first application for a unique code to describe the ReWalk Personal Exoskeleton and, in July 2020, a unique
code was issued for ReWalk Personal Exoskeleton. On April 11, 2024, CMS revised its April 2024 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.
For
more information about coverage and reimbursement risk factors, see “Part I, Item 1A. Risk Factors—Risks Related to our Business
and our Industry.”
As
part of our plan for growth, we intend to continue working with both national and regional commercial insurance companies, health care
practitioners, physicians, researchers, and the SCI community to support efforts to demonstrate the benefits of our SCI Products. In addition,
we plan to pursue potential coverage policies with third party payors based on supportive data and appeal rulings that have deemed exoskeleton
devices medically necessary and not investigational for individuals with SCI. Our efforts in the future will be focused on continued education
of third-party payors through data application, published clinical literature, and work with advocacy groups and health and care providers.
In addition, we will continue ongoing communication to seek greater clarity regarding Medicare coverage and reimbursement standards applicable
to the ReWalk Personal Exoskeleton.
7
Europe
Reimbursement
for ReWalk in Europe varies by country and historically certain third-party payors have provided reimbursement for our products in certain
cases in Germany and Italy.
We
initially focused our European efforts in Germany where we continue to make progress toward achieving ReWalk coverage from the various
government, private, and workers’ compensation payors. Specifically:
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In
September 2017, the German insurer BARMER confirmed it will provide ReWalk systems to all qualifying beneficiaries. BARMER provides coverage
for nearly nine million people in Germany, as a member of the SHI network and one of the most significant national insurers in the country.
Exoskeletons are provided to users that meet certain inclusion criteria and assessment by the German Health Insurance Medical Service
(Medizinischer Dienst der Krankenversicherungen) before and after training. |
| ● |
In
September 2017 Germany’s national social accident insurance provider, DGUV, indicated that the DGUV’s member payors, including
the health insurance association Berufsgenossenschaft (also known as BG) and state insurers, will
approve the supply of exoskeleton systems for qualifying beneficiaries on a case-by-case basis. DGUV is comprised of 33 different insurers,
which provide coverage for more than 80 million individuals in Germany. Per the agreement, eligible individuals go to BG clinics for evaluation
as a part of the procurement. In May 2020 the DGUV agreed to a binding offer to the evaluation, training, and supply of the ReWalk Personal
Exoskeleton to qualified individuals. |
| ● |
In
February 2018, the GKV-Spitzenverband (Central Federal Association of (the) Statutory Health Insurance Funds) confirmed its decision to
list the ReWalk Personal Exoskeleton system in the German MDD, a comprehensive list of all medical devices which are principally and regularly
reimbursed by German SHI and PHI providers. The ReWalk Personal was added to the official German list of medical aids, code number 23.29.01.2001,
in June 2018. This decision means that ReWalk Personal Exoskeleton is listed among all medical devices for compensation, which SHI providers
can procure for any approved beneficiary on a case-by-case basis. |
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● |
During
the year 2020 we announced several new agreements with SHIs such as TK and DAK-Gesundheit and others as well as the first PHI that chose
to enter into an agreement with us that outline the process to obtaining a device for eligible insured patients. |
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In
March 2021 we entered into a contract with BKK Mobile Oil health insurance to supply ReWalk’s Personal Exoskeleton to eligible persons
in Germany. |
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● |
In
June 2020, BARMER appealed the decision of the State Social Court, which ordered the supply of the SHI’s insured SCI person with
ReWalk. The State Social Court ruled and deemed ReWalk as the medical aid which will directly compensate the plaintiff’s disability.
BARMER initially appealed this ruling with the Federal Social Court (Bundessozialgericht), but
later, in November 2022, withdrew its pending case and accepted the prior ruling from the state court that exoskeletons are considered
as a direct disability compensation. This outcome means that an eligible insured person with SCI in Germany has a legal basis for the
supply of an exoskeleton as an orthopedic aid for direct disability compensation. Patients in Germany who are covered under these contracts
and policies must be medically evaluated for their eligibility to use the ReWalk Personal Exoskeleton device. If medically qualified,
the patient, along with his or her physician, must apply for coverage of the device. If a patient is found eligible and medically fit
to use our ReWalk Personal Exoskeleton device, we first enter into a rental agreement which allows the patient the necessary period to
train on how to use the device which usually takes between 3 to 6 months and then, after approval from the insurer, the patient receives
a personal device to use at home and in the community. |
8
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● |
In
February 2025, we finalized an agreement with BARMER to formalize the reimbursement process for the provision of ReWalk exoskeletons to
medically eligible beneficiaries. With the completion of the BARMER contract, approximately 45% of the 70 million people in Germany
covered by Statutory Health Insurance now have coverage policies with a defined reimbursement process for personal exoskeletons.
We are currently working with several additional SHIs and PHIs on securing a formal operating contract that will establish the process
of obtaining a ReWalk Personal Exoskeleton for their beneficiaries within their system. |
As
of December 31, 2025, there were 49 insurance cases pending in Germany. We believe that our recent coverage decisions and the existing
claims will eventually lead other German insurers to provide coverage on a broader scale, but this is not guaranteed. For more information,
see “Part I, Item 1A. Risk Factors—Risks Related to our Business and our Industry— We may fail to secure or maintain
adequate insurance coverage or reimbursement for our products by third-party payors which risk may be heightened if insurers find the
products to be investigational or experimental or if new government regulations change existing reimbursement policies. Additionally,
such coverage or reimbursement, even if maintained, may not produce revenue that is high enough to allow us to sell our products profitably.”
We
continue to support clinical research and academic publications, which we believe will further support the case for coverage.
We
have distribution agreements in several European countries where we also had success with reimbursement by private insurers and worker’s
compensation. One of the examples was achieved in March 2018, when the Italian Ministry of Labor and Social Policy’s statutory insurance
corporation put in place a coverage policy that will provide exoskeleton systems for all qualifying beneficiaries. This policy, the first
of its kind in Italy, provides individuals with spinal cord injury access to obtain their own ReWalk Personal Exoskeleton device so that
they can stand and walk again. Since the initiation of coverage, we have supplied 10 units through our Italian distributor to individuals
covered by this policy.
Other
Funding Sources
In
addition to being funded by third-party payors, including private insurance plans, government programs such as the VHA, and workers’
compensation plans, ReWalk Personal Exoskeleton is also funded by self-payors. This includes individuals who purchase ReWalk with funds
from legal settlements with insurance companies or third parties.
9
AlterG
Anti-Gravity System
The
DAP technology that underpins our AlterG Anti-Gravity technology originated from researchers at the NASA Moffet Field Research Center
to help astronauts maintain their muscle strength and bone density during extended periods in space outside of the effects of earth’s
gravity. The DAP technology was used to create a pressurized bubble that could exert pressure on an astronaut while exercising to simulate
the impact of gravity. While the technology ultimately was never implemented by NASA, it also had promise for use on earth.
The
DAP technology was modified by the founders of AlterG, Inc. for the opposite purpose of using the buoyancy of a pressurized air chamber
to uniformly reduce gravitational load and body weight. With subsequent product development, the initial AlterG Anti-Gravity system design
was supplemented with other complementary features. Our current models utilize a precise air calibration system which modulates the air
pressure supporting the user 100 times a second to ensure precise and consistent weight displacement that allows for modification of the
pressurized support in one-percent increments of each user’s weight. Additionally, the AlterG systems can be fitted with cameras
for live video monitoring and pressure sensors that track the user’s gait pattern.
Our
proprietary Stride Smart software can provide real-time data and analytics so that the user can watch and self-correct gait abnormalities.
Clinicians also can simultaneously read and respond to five gait assessment key performance indicators (“KPIs”). The five
KPIs include:
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weight-bearing
symmetry; |
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step
length symmetry; |
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stance
time symmetry; |
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cadence
(stepping frequency); and |
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pain
level. |
The
Stride Smart software provides clinicians with clear, objective data with which to assess, adjust, and modify a patient’s rehabilitation
progress. Since Stride Smart collects and presents patient gait data automatically, clinicians can focus their efforts rehabbing the patient
and selecting the data most useful to their gait analysis and correction recommendations.
Based
on usage patterns and feedback of clinicians, we believe that the AlterG Anti-Gravity system provides a versatile tool for the rehabilitation
of lower extremity injuries and conditions. By treating a broad range of conditions and facilitating faster recovery times, the AlterG
Anti-Gravity system enables rehabilitation clinics the opportunity to gain more referrals, increase the throughput of the facility, and
improve the productivity of the staff.
We
offer a range of AlterG Anti-Gravity systems depending on the needs and budget of each customer as follows:
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• |
NEO
– Introduced in 2024, this is the entry-level and most accessible model of Anti-Gravity system to enable increased adoption of Anti-Gravity
technology across a broader range of clinics and training facilities. The NEO model delivers the same patented DAP technology with
an updated platform and new electronic handrail height adjustment. The NEO is equipped to run at up to 10 miles per hour (“mph”)
in forward and 3 mph in reverse with a maximum incline of 15 degrees; |
10
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• |
NEO+ – The most versatile offering within the AlterG family builds upon the benefits
of the NEO with added speed up to 12 mph and an integrated camera. The NEO+ also offers additional options for further customization,
including a high-speed option of up to 15 mph and the addition of our Stride Smart gait analytics software package; and |
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• |
PRO – The PRO is our top-of-the-line model for sports medicine and elite sports
applications with utilization by professional and collegiate athletes. The PRO is designed for robust performance with a slat-belt design
equipped to run at up to 18 mph in forward and 10 mph in reverse, with all software and speed options included as standard. |
In addition to sales of the AlterG Anti-Gravity systems, we also provide
consumables and services that support the utilization of the installed base. For example, the AlterG systems require the users to wear
proprietary shorts that zip the user into the air chamber to create the seal to maintain the air pressure. With frequent use, these shorts
need to be periodically replaced. Additionally, we maintain a network of approximately 40 contract service engineers who perform the installation,
maintenance, and repair work. As the 12-month assurance warranties expire, we market extended service contracts which can provide a recurring
revenue base that can grow with the size of the installed base.
The potential market for AlterG Anti-Gravity systems is large and fragmented
with several types of facilities that treat patients with conditions who could benefit from rehabilitation using partial weight displacement.
According to the MedPAC 2025 Report, there are approximately 1,200 certified inpatient rehabilitation facilities in the U.S. These facilities
treat patients with a range of conditions including stroke, lower extremity fractures, joint replacements, neurological conditions and
brain injury, cardiac conditions, and other types of orthopaedic conditions. Depending on the specific details of each case, many of these
patients are candidates for therapy using partial weight displacement. Globally, we estimate that there are approximately 3,500 inpatient
rehabilitation facilities that are comparable in budget and quality of care to those in the U.S.
The largest potential market for the AlterG Anti-Gravity systems are
outpatient clinics, some of which are in national and regional affiliations and most of which are independent facilities. According to
the IBIS World Industry Report (which tracks the number of physical therapy rehabilitation centers), there were approximately 54,000 outpatient
clinics in the U.S. in 2024. These facilities treat patients with less severe conditions than inpatient facilities with a greater mix
of patients skewed towards lower extremity fractures, joint replacements, and other types of orthopedic conditions. Globally, we estimate
that there are over 100,000 outpatient clinics based on scaling of population and standard of living that there are over 100,000 outpatient
clinics. One other major segment of the market for AlterG systems consists of professional and elite level sports teams, including major
university and college sports programs. These teams use the AlterG Anti-Gravity system to assist their players in maintaining higher levels
of fitness and accelerating the recovery time from sports-related injuries. Based on our internal estimates of the market, we believe
that there are approximately 1,400 sports programs in the U.S. who are potential AlterG customers. Globally, we estimate this figure to
be greater than 4,000 teams.
|
ReStore Exo-Suit
In June 2017, we unveiled our lightweight ReStore Exo-Suit system designed
initially for rehabilitation of stroke patients. The patented soft exo-suit technology was originally developed at Harvard University’s
Wyss Institute for Biologically Inspired Engineering (“Harvard”), where it also underwent initial clinical testing that demonstrated
potential to improve walking for stroke survivors. ReWalk and Harvard entered into a multi-year research collaboration agreement in 2016
which provides ReWalk license to intellectual property relating to lightweight exo-suit system technologies for lower limb disabilities
and provides access to future innovations that emerge from this collaboration and may be relevant to additional stroke products or other
therapies. The development and regulatory clearance process for ReStore took us approximately three years. We received FDA clearance for
ReStore in June 2019, and also obtained a CE mark in May 2019. Following the regulatory clearances, we began to commercialize the ReStore
product but because the ReStore product was not planned for MDR conformity we had to cease sales in the EU in May 2024. For more information
on the collaboration with Harvard, see “Research and Development-Research and Development Collaborations.” |
|
ReStore Exo-Suit
|
11
The ReStore product consists of a soft, fabric-based design that connects
to a lightweight waist pack and mechanical cables that help lift the patient’s affected leg in synchronized timing with their natural
walking pattern. The lightweight structure wraps around the waist and supports an actuator with a motor, computer, and cable, along with
sensors attached to a stable point on the user’s calf and footplate in the user’s shoe. This design provides targeted mechanical
assistance to the patient’s ankle during forward propulsion (plantarflexion) and ground clearance (dorsiflexion), two key phases
of the gait cycle. The ReStore system is designed to provide advantages to stroke rehabilitation clinics and therapists as compared to
other traditional therapies and devices by enabling the therapist to specifically target and train for improved propulsion symmetry, which
is a key contributor to improved walking speed and efficiency for patients recovering from stroke.
Published clinical trials comparing the use of the soft exo-suit design
versus traditional rehabilitation training with stroke patients have shown varying levels of improvements, with the main ones being improved
walking speed, improved propulsion symmetry, reductions in compensatory behaviors including paretic hip hiking and circumduction as well
as reduction in metabolic burden associated with post stroke walking.
The main market for ReStore is rehabilitation clinics with a stroke
therapy program or clinics that would like to broaden their stroke presence. This product is marketed and sold directly to rehabilitation
clinics for use during the treatment of their patients which is generally reimbursed by commercial and government payors. During the second
half of 2019 we expanded our sales and marketing presence in the United States to accelerate product penetration after receiving FDA clearance
and CE mark. These efforts were adversely impacted by the COVID-19 pandemic, as clinics and hospitals shifted resources and attention
during the pandemic. During 2024, new research was published on the clinical efficacy using ReStore in stroke rehabilitation and we see
this technology as a building block for future portfolio development.
Stroke incidence in the United States is estimated at approximately
800,000 cases per year, with roughly 75–80% of individuals surviving the acute event. Among stroke survivors, motor impairments
are common, and an estimated 30–40% experience persistent lower-limb gait or mobility limitations requiring rehabilitation.
In the United States, individuals recovering from stroke receive therapy
across inpatient rehabilitation facilities, hospital-based rehabilitation programs, and outpatient physical therapy clinics, representing
several thousand sites of care nationwide.
With the clinical evidence we have to date on ReStore, its unique design
and its cost-effectiveness compared to other products, we believe the ReStore soft exosuit has the potential to be adopted by clinics
for use in the therapy of their stroke patients. However, we also recognize that the process to achieve this may be lengthy and will likely
occur only once national or regional healthcare providers include the device within their stroke therapy programs. We also believe that
accelerating adoption may require additional clinical evidence as well as continued education regarding the ReStore design and its potential
advantages compared to existing therapies and products.
As of December 31, 2025, and December 31, 2024, we had placed 48 and
43 ReStore units, respectively.
ReBoot Product
We are also in the research stage of ReBoot, a soft exoskeleton for
stroke home and community use, and are currently evaluating the reimbursement landscape and the potential clinical impact of this device.
This product would be a complementary product to ReStore, and it received Breakthrough Device Designation from the FDA in November 2021.
The ReBoot is a lightweight, battery-powered exo-suit intended to assist ambulatory functions in individuals with reduced ankle function
related to neurological injuries, such as stroke. The ReBoot is a customizable personalized device intended for home and community use
with an estimated market of approximately 400,000 annual stroke patients who require walking assistance after being discharged home. Further
investment in the development path of the ReBoot was paused in 2023 pending further determination about the clinical and commercial opportunity
of this device and at this time it remains on hold.
12
Sales and Marketing Activities
With added resources from acquiring AlterG, Inc., we have created a
U.S. commercial team that we believe has the capacity and capabilities to support a broad range of physical and neurological rehabilitation
products for use in facilities, the home and the community. As part of this integration, we have rebranded our company under the name
Lifeward, to emphasize our commitment to pioneering a portfolio of innovative technologies to empower the pursuit of life’s ambitions
in the face of physical limitation or disability. For the sake of clarity, we will continue to use the ReWalk name to designate our line
of exoskeleton products and the AlterG name to describe our line of Anti-Gravity systems.
In the U.S., our commercial efforts are direct sales focused generally
on rehabilitation centers, hospitals, rehabilitation clinics, and similar facilities that treat patients who could benefit from offerings
within our portfolio of products. We market our facility-based products, such as the AlterG and the MyoCycle Pro to these institutions
for their use in providing care to their patients. We also market our home-based products, such as the ReWalk Personal Exoskeleton or
MyoCycle Home, to physicians and physical therapists for referrals to individuals who could benefit from these devices as part of a home-based
activity regimen that elevates the health and wellness of these individuals. Additionally, some sales of the ReWalk Personal Exoskeleton
or MyoCycle Home are also generated from referrals through the spinal cord injury community and direct inquiries from potential users
through our different marketing efforts. Beyond healthcare facilities, we also market our AlterG systems to professional and college sports
teams who use the systems to help their athletes recover from lower extremity sports injuries.
Outside the U.S., our distribution varies depending on the product and
the geographic market. We market our ReWalk Personal Exoskeleton product directly in Germany and primarily through third-party distributors,
who maintain the customer relationships, in our other markets. We market our AlterG systems directly in Canada, and in other territories
utilize a network of over 40 third-party distributors who generally have exclusivity in their respective geographic territories.
As of December 31, 2025, we had placed 131 ReWalk Rehabilitation Exoskeleton
units in use at rehabilitation centers and 778 ReWalk Personal Exoskeleton units in a home or community use, compared to 131 ReWalk Rehabilitation
Exoskeleton units and 689 ReWalk Personal Exoskeleton units as of December 31, 2024. We estimate the installed base of AlterG systems
is over 6,000 installed units worldwide as of December 31, 2025. With the finalization of the Medicare payment rates for exoskeletons
that was effective April 1, 2024, we have begun to aggressively target the eligible Medicare customer base for growth while also continuing
to focus on expanding commercial and other reimbursement coverage. Additionally, with our increased direct sales resources and distributor
network, we also expect to further penetrate the base of facilities which could utilize AlterG systems for rehabilitation of their patients.
Competition
The market in which we operate is characterized by active competition
and rapid technological change, and we expect competition to increase. Competition arises from providers of other mobility systems and
prosthetic devices used in the clinic and/or home settings.
We are aware of several other companies developing competing technology
and devices, and some of these competitors may have greater resources, greater name recognition, broader product lines, or larger customer
bases than we do.
In the market for anti-gravity rehabilitation systems, our AlterG systems
compete with other treadmill-based rehabilitation technologies offered by various medical device and rehabilitation equipment manufacturers,
including systems offered by companies such as BTL Industries and other providers of rehabilitation treadmills and gait-training technologies
used in clinical rehabilitation and sports performance settings. We believe that our AlterG systems differentiate themselves through their
proprietary Differential Air Pressure technology, which allows precise and comfortable body-weight support during rehabilitation and athletic
training.
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Our principal competitors in the medical exoskeleton market consist
of Ekso Bionics (NASDAQ: EKSO), Rex Bionics Pty, Cyberdyne (Tokyo Stock Exchange: 7779), FREE Bionics, DIH (formerly known as Hocoma),
Wandercraft, and Bioness (acquired by Bioventus (NASDAQ: BVS)). The competitors’ products may also compete with the ReStore Exo-Suit,
as well as manual forms of gait training which do not involve robotic assistive devices.
We believe that our ReWalk Personal Exoskeleton possesses key competitive
advantages over these companies’ products, such as our tilt-sensor technology that provides a self-initiated walking experience,
six degrees of freedom which enable a more natural gait, the ability to support its own weight, and robust durability in real-world conditions.
In addition, ReWalk Personal Exoskeleton is the only medical exoskeleton with FDA and CE clearance for use on stairs and curbs, which
greatly improves the ability to use the device in everyday real-world environments.
We believe that our ReStore Exo-Suit device has several competitive
advantages over the products of our competitors, including a design that facilitates a natural, functional walking pattern through flexible
materials, sensors, and powered plantarflexion as well as dorsiflexion, making it the only solution of its type of which we are aware
of that supports such movements, achieving that with a lower cost and weight than rigid exoskeletal devices.
In addition, we are aware of a number of academic and early stage research
into exoskeletons for various applications. Other medical device or robotics companies, academic and research institutions, or others
may develop new technologies or therapies that provide a superior walking experience, are more effective in treating the secondary medical
conditions that we target or are less expensive than our current or future products. Our technologies and products could be rendered obsolete
by such developments.
We may also compete with other treatments and technologies that address
the secondary medical conditions that ReWalk seeks to mitigate.
Community Engagement and Education
We devote significant resources to engagement with and education of
the spinal cord injury community with respect to the benefits of our SCI Products. We actively seek opportunities to partner with hospitals,
rehabilitation centers and key opinion leaders to engage in research and development and clinical activities. We also seek to educate
and gain support from organizations such as patient advocacy groups and clinician societies with the goal of promoting adoption of exoskeleton
technology from patient, clinician, and payor communities. We believe that our success has been and will continue to be driven in part
by our reputation and acceptance within the spinal cord injury community.
To date, multiple advocacy groups have issued public endorsements of
the ReWalk Personal Exoskeleton, including leading United States-based national organizations such as the United Spinal Association and
the Dana and Christopher Reeves Foundation, as well as others. In addition, the National Institute for Health and Care excellence in the
United Kingdom (also known as “NICE”) has issued a public announcement regarding the ReStore device.
Services and Customer Support
Our commercial centers of operations in Hudson, Massachusetts and Berlin,
Germany coordinate all customer support and product service functions for North America and Europe, respectively, through dedicated technical
service personnel who provide product services and customer support through training to healthcare providers and support to product users.
Research and Development
We are committed to investing in a robust research and development program
to support our current product line and to potentially develop our pipeline of new and complementary products, and we believe that ongoing
research and development efforts are essential to our success. Our research and development team consists of both in-house and external
staff, including engineers, machinists, researchers and marketing, quality, manufacturing, regulatory and clinical personnel, which we
employ as efficiently as possible meet our current and future needs, and who work closely together to design, enhance, and validate our
technologies. This research and development team conceptualizes technologies and then builds and tests prototypes before refining and/or
redesigning, as necessary. Our regulatory and clinical personnel work in parallel with engineers and researchers, allowing us to anticipate
and resolve potential issues at early stages in the development cycle. Our level of research and development investment depends on our
available resources, business plans, and future needs. For more information, see “Part I, Item 1A. Risk Factors — Risks Related
to Our Business and Our Industry — Our future growth and operating results will depend on our ability to develop, receive regulatory
clearance for, and commercialize new products and penetrate new product and geographic markets.”
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We have implemented product design improvements for the ReWalk Personal
Exoskeleton, including enhancements incorporated into the ReWalk 7 system, which received regulatory clearance and has been commercially
launched.
In the longer term we are conducting research on our next generation
exoskeleton with design improvements and advanced robotic technologies such as AI and sensor fusion. New medical indications impacting
the ability to walk that we may pursue include multiple sclerosis, cerebral palsy, Parkinson’s disease, and assistance for elderly
individuals.
We are also considering new generations of anti-gravity systems utilizing
our DAP technology, including the NEO which was introduced in 2024 as an entry-level and most accessible model of Anti-Gravity™
system to enable increased adoption of Anti-Gravity™ technology across a broader range of clinics and training facilities. Additionally,
we are evaluating other applications for DAP technology to create entirely new rehabilitation systems for our facility-based customers.
We conduct our research and development efforts mainly at our facility
in Yokneam, Israel. We believe that the close interaction among our research and development and manufacturing groups allows for timely
and effective realization of our new product concepts.
Our research and development efforts have been financed, in part, through
funding from the Israel Innovation Authority (formerly known as Office of the Chief Scientist in the Israel Ministry of Economy) (the
“IIA”). From our inception through December 31, 2025, we received funding totaling $2.8 million from the IIA. For more information
regarding our research and development financing arrangements, see “Part II. Item 7. Management’s Discussion and Analysis
of Financial Condition and Results of Operations—Liquidity and Capital Resources” and “—Grants and Other Funding.”
Research and Development Collaborations
On April 1, 2022, we entered a research and development cooperation
agreement with several companies and universities in the Human Robot Interaction (“HRI”) Consortium, part of the IIA’s
MAGNET incentive program. This incentive program provides grants for R&D collaboration as part of a consortium comprised of private
businesses and leading academic centers. The goals of the HRI consortium are to “develop advanced technologies aimed at providing
robots with social capabilities, enabling them to carry out various tasks and effective interactions with different users in diverse operational
environments.” The total program has a budget of NIS 57 million, which includes funding for research and development grants to help
drive technological innovation. The Consortium is a 3-year program which has allocated NIS 1.745 million to fund ReWalk-specific projects
over the first 18-month period of the program. In November 2023, we entered the second 18-month period of the program, the Consortium
has allocated NIS 1.336 million to fund ReWalk-specific projects over the second 18-month period. As of December 31, 2025, the Company
spent total funds in the amount of NIS 3.0 million. As a member of the HRI Consortium, we collaborate with several universities to develop
advanced technologies aimed at improving the human-exoskeleton interaction. This research collaboration with top researchers in the fields
of robotics, behavioral sciences and human-computer interaction will seek to make the use of exoskeletons easier and more natural to promote
wider adoption of the technology.
On May 16, 2016, we entered into the Research Collaboration Agreement
(“Collaboration Agreement”) and the Exclusive License Agreement (“Harvard License Agreement”) with Harvard. Under
the Collaboration Agreement, we and Harvard agreed to collaborate on research regarding the development of lightweight soft suit exoskeleton
system technologies for lower limb disabilities, which are intended to treat stroke, multiple sclerosis, mobility limitations for the
elderly and other medical applications. Under the Collaboration Agreement, we paid Harvard quarterly installment payments to help fund
the research. Subject to the terms of the Collaboration Agreement, we and Harvard were required to report our respective research results
and findings to each other on a regular basis. The Collaboration Agreement governed ownership of the research results and inventions generated
in performance of the research collaboration and provided us the option to negotiate with Harvard for a license to certain new inventions
of Harvard conceived in performance of the collaboration. The Collaboration Agreement concluded on March 31, 2022.
Under the Harvard License Agreement, we have been granted an exclusive, worldwide royalty-bearing license under certain patents of Harvard relating to lightweight “soft suit” exoskeleton system technologies for lower limb disabilities, a royalty-free license under certain related know-how and the option to obtain a license to certain inventions conceived under our joint research collaboration. Harvard retains the right to practice the patents for research, educational and scholarly purposes. We are required to use commercially reasonable efforts to develop products under the Harvard License Agreement in accordance with an agreed-upon development plan and to introduce and market such products commercially. In addition to an upfront fee and royalties on net sales, we are obligated to pay Harvard certain milestone payments upon the achievement of certain product development and commercialization milestones. We have also agreed to reimburse Harvard for expenses incurred in connection with the filing, prosecution, and maintenance of the licensed patents.
The Harvard License Agreement will continue in full force and effect until the expiration of the last-to-expire valid claim of the licensed patents, or it is terminated in accordance with its terms. We may terminate the License Agreement for any reason upon 60 days’ prior written notice, while Harvard may terminate the License Agreement if we do not maintain requisite insurance or become insolvent. The Harvard License Agreement may also be terminated by Harvard or us due to the other party’s material uncured breach. The Harvard License Agreement contains, as applicable, customary representations and warranties and customary enforcement, indemnification, and insurance provisions.
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Intellectual Property
Protection of our intellectual property is important to our business.
We seek to protect our intellectual property through a combination of patents, trademarks, confidentiality, and assignment agreements
with our employees and certain of our contractors and confidentiality agreements with certain of our consultants, scientific advisors
and other vendors and contractors. In addition, we rely on trade secrets law to protect our proprietary software and product candidates/products
in development.
In addition to our portfolio of issued patents and pending patent applications,
we license certain patented and patented pending technology from a third party as described above under the “Research and Development”
section.
For our ReWalk product line, as of December 31, 2025, we have 12 issued
patents in the United States and 34 issued patents outside of the United States, as well as 7 pending patent applications for our technology
in the United States, China, and Europe, including one pending international PCT application. For our patents associated with DAP
and other AlterG technology, as of December 31, 2025, we have 30 issued patents in the United States and 7 patents issued outside the
United States, as well as 2 pending patent applications for anti-gravity associated technology in the United States and one pending international
PCT application.
In the United States and Europe, we have apparatus patent claims covering
aspects of both our exoskeleton and our anti-gravity products and similar devices or systems, which focus on protecting our products in
terms of structural characteristics and functionality. Moreover, we also have method patent claims covering certain methods of operation
and control of our exoskeleton and anti-gravity products, which provide additional protection for our technology. We do not currently
license any of the technology contained in our currently commercialized ReWalk and AlterG products, other than with respect to technology
that is generally publicly available, but we may do so in the future.
Patents filed both in the United States and Europe (as well as other
countries) generally have a term of 20 years from their earliest effective filing date, although they can be slightly longer depending
upon a local jurisdiction’s rules and laws. For example, the oldest of our issued patents relating to our tilt-sensor technology
was filed in May 2001 in the United States and would typically expire in May 2021. However, this patent actually expired in April of 2023
due to patent term adjustment (PTA) of 689 days for delays in examination by the United States Patent and Trademark Office.
We currently hold a registered trademark in the United States, Europe,
Israel, and the United Kingdom, for the mark ReWalk®. We currently hold a registered trademark in United States, Europe and the United
Kingdom for the mark ReStore®. We currently hold the trademarks Alter G™ and Anti-Gravity Treadmill™ in the United States,
Canada and Japan. The trademark Alter G™ is also held in the United Kingdom and Europe. We currently hold the registered trademark
Defy Gravity® in the United States. We also hold a registered trademark for Lifeward® in the Europe, the United Kingdom, and
Israel. The application to register the trademark Lifeward™ is pending in the United States.
We cannot be sure that our intellectual property will provide
us with a competitive advantage especially as some of our older patents begin to expire, or that we will not infringe on the intellectual
property rights of others. In addition, we cannot be sure that any patents will be granted in a timely manner or at all with respect to
any of our patent pending applications. For a more comprehensive discussion of the risks related to our intellectual property, see “Part
I, Item 1A. Risk Factors—Risks Related to Our Intellectual Property.”
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Government Regulation
U.S. Regulation
Our medical products and manufacturing operations are regulated by the
FDA and other federal and state agencies. Our products are regulated as medical devices in the United States under the Federal Food, Drug,
and Cosmetic Act, or the FFDCA, as implemented and enforced by the FDA. The FDA regulates the development, testing, manufacturing, labeling,
storage, installation, servicing, advertising, promotion, marketing, distribution, import, export, and market surveillance of our medical
devices.
Premarket Regulatory Requirements
Unless an exemption applies, each medical device commercially distributed
in the United States requires either FDA clearance of a 510(k) premarket notification, approval of a premarket approval application (PMA),
or issuance of a de novo classification order. Under the FFDCA, medical devices are classified into one of three classes—Class I,
Class II or Class III—depending on the degree of risk associated with each medical device and the extent of control needed to provide
reasonable assurance of safety and effectiveness. Classification of a device is important because the class to which a device is assigned
determines, among other things, the necessity and type of FDA review required prior to marketing the device. Class I devices are those
for which reasonable assurance of safety and effectiveness can be assured by adherence to general controls that include compliance with
the applicable portions of the FDA’s Quality Management System Regulation, or QMSR, facility registration and product listing, reporting
of adverse medical events, and appropriate, truthful and non-misleading labeling, advertising, and promotional materials. Class I also
includes devices for which there is insufficient information to determine that general controls are sufficient to provide reasonable assurance
of the safety and effectiveness of the device or to establish special controls to provide such assurance, but that are not life-supporting
or life-sustaining or for a use which is of substantial importance in preventing impairment of human health, and that do not present a
potential unreasonable risk of illness of injury.
Class II devices are those for which general controls alone are insufficient
to provide reasonable assurance of safety and effectiveness and there is sufficient information to establish “special controls.”
These special controls can include performance standards, post-market surveillance, and patient registries. While most Class I devices
are exempt from the 510(k) premarket notification requirement, most Class II devices require a 510(k) premarket notification to be marketed
in the U.S. As a result, manufacturers of most Class II devices are required to submit to the FDA premarket notifications under Section
510(k) of the FFDCA in order to market or commercially distribute those devices. To obtain 510(k) clearance, manufacturers must demonstrate
that the proposed device is “substantially equivalent” to a predicate device already on the market. A predicate device is
a legally marketed device that is not subject to premarket approval, or PMA, meaning, (i) a device that was legally marketed prior to
May 28, 1976 (pre-amendments device) and for which a PMA is not required, (ii) a device that has been reclassified from Class III to Class
II or I, or (iii) a device that was found substantially equivalent through the 510(k) process. If the FDA agrees that the device is substantially
equivalent to a predicate device currently on the market, it will grant 510(k) clearance to commercially market the device. If the device
is not “substantially equivalent” to a previously cleared device, the device is automatically a Class III device. The device
sponsor must then fulfill more rigorous premarket approval requirements or can request a risk-based classification determination for the
device in accordance with the “de novo” classification process, which is a route to market for medical devices that are low
to moderate risk but are not substantially equivalent to a predicate device.
Devices that are intended to be life sustaining or life supporting,
devices that are implantable, devices that present a potential unreasonable risk of harm or are of substantial importance in preventing
impairment of health, and devices that are not substantially equivalent to a predicate device are placed in Class III and generally require
approval of a PMA, unless the device is a pre-amendment device not yet subject to a regulation requiring premarket approval. The PMA process
is more demanding than the 510(k) premarket notification process. In a PMA, the manufacturer must demonstrate that the device is safe
and effective, and the PMA must be supported by extensive data, including data from preclinical studies and clinical trials. The PMA must
also contain a full description of the device and its components, a full description of the methods, facilities and controls used for
manufacturing, and proposed labeling. Following receipt of a PMA, the FDA determines whether the application is sufficiently complete
to permit a substantive review. If the FDA accepts the application for review, it has 180 days under the FFDCA to complete its review
of a PMA, although in practice, the FDA’s review often takes significantly longer and can take one year or more.
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Clinical trials are almost always required to support PMAs and are sometimes
required to support 510(k) submissions. All clinical investigations of devices to determine safety and effectiveness must be conducted
in accordance with the FDA’s investigational device exemption, or IDE, regulations that govern investigational device labeling,
prohibit promotion of the investigational device, and specify recordkeeping, reporting and monitoring responsibilities of study sponsors
and study investigators. If the device presents a “significant risk,” as defined by the FDA, the agency requires the device
sponsor to submit an IDE application to the FDA, which must become effective prior to commencing human clinical trials. The IDE will automatically
become effective 30 days after receipt by the FDA, unless the FDA denies the application or notifies the company that the investigation
may not begin. If the FDA determines that there are deficiencies or other concerns with an IDE that require modification of the study,
the FDA may permit a clinical trial to proceed under a conditional approval. In addition, the study must be approved by, and conducted
under the oversight of, an Institutional Review Board, or IRB, for each clinical site. If the device presents a non-significant risk to
the patient, a sponsor may begin the clinical trial after obtaining approval for the trial by one or more IRBs without separate approval
from the FDA, but must still comply with abbreviated IDE requirements, such as monitoring the investigation, ensuring that the investigators
obtain informed consent, and labeling and record-keeping requirements.
In June 2014, the FDA granted our request for “de novo”
classification, and classified ReWalk as a Class II powered exoskeleton device subject to special controls. The ReWalk is intended to
enable individuals with spinal cord injuries to perform ambulatory functions under supervision of a specially trained companion, and inside
rehabilitation institutions. The special controls established in the de novo classification order for all powered exoskeleton devices
include the following: clinical testing to demonstrate safe and effective use considering the level of supervision necessary and the use
environment; non-clinical safety and performance testing, including durability testing to demonstrate that the device performs as intended
under anticipated conditions of use; a training program; and labeling related to device use and user training. The special controls of
this de novo order also apply to competing powered exoskeleton products seeking FDA clearance.
In June 2019, the FDA issued a 510(k) clearance for ReStore, which means
that the device can be marketed in the U.S. ReStore is intended to be used to assist ambulatory functions in rehabilitation institutions
under the supervision of a trained therapist for people with hemiplegia or hemiparesis due to stroke. ReStore complies with special controls
for powered exoskeletons as described above. In order for us to market ReStore and ReWalk, we must comply with both these special controls
as well as general controls, including controls related to quality, facility registration, reporting of adverse events and labelling.
Failure to comply with the general and special controls could lead to removal of ReStore or ReWalk from the market, which would have a
material adverse effect on our business.
In March 2023, we received 510(k) clearance for the ReWalk Personal
Exoskeleton with an indication for standing and walking on level surfaces and mild slopes and ascending and descending stairs and curbs.
In June 2024, we submitted a 510(k) premarket notification for the ReWalk 7 Personal Exoskeleton, a next-generation ReWalk model, and
the 510(k) was cleared by FDA in March 2025.
For more information, see “Part I, Item 1A. Risk Factors-Risks
Related to Government Regulation-We are subject to extensive governmental regulations relating to the manufacturing, labelling and marketing
of our products, and a failure to comply with such regulations could lead to withdrawal or recall of our products from the market.”
Expedited Development and Review Programs
FDA’s Breakthrough Devices Program is a voluntary program offered
to manufacturers of certain medical devices and device-led combination products that may provide for more effective treatment or diagnosis
of life-threatening or irreversibly debilitating diseases or conditions. The goal of the program is to provide patients and health care
providers with more timely access to qualifying devices by expediting their development, assessment and review, while preserving the statutory
standards for marketing authorization.
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The program is available to medical devices that meet certain eligibility
criteria, including that the device provides more effective treatment or diagnosis of life-threatening or irreversibly debilitating diseases
or conditions, and that the device meets one of the following criteria: (i) the device represents a breakthrough technology, (ii) no approved
or cleared alternatives exist, (iii) the device offers significant advantages over existing approved or cleared alternatives, or (iv)
the availability of the device is in the best interest of patients. Breakthrough Device designation provides certain benefits to device
developers, including more interactive and timely communications with FDA staff, use of post market data collection, when scientifically
appropriate, to facilitate expedited and efficient development and review of the device, opportunities for efficient and flexible clinical
study design, and prioritized review of premarket submissions.
Post-Market Regulatory Requirements
After a device is cleared for marketing, numerous regulatory requirements
apply. These include:
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establishment registration and device listing; |
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development of a quality assurance system, including establishing and implementing procedures
to design and manufacture devices; |
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labeling regulations that prohibit the promotion of products for unapproved or “off-label”
uses and impose other restrictions on labeling; |
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FDA’s Unique Device Identification requirements that call for a unique device identifier
(UDI) on device labels and packages and submission of data to the FDA’s Global Unique Device Identification Database (GUDID); |
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medical device reporting regulations that require manufacturers to report to the FDA
if a device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute
to a death or serious injury if it were to recur; and corrections and removal reporting regulations that require manufacturers report
to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy
a violation of the FFDCA that may present a risk to health; and |
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post-market surveillance. |
Our manufacturing processes are required to comply with the applicable
portions of the FDA’s Quality Management System Regulation (“QMSR”) that covers the methods and the facilities and controls
for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation,
and servicing of finished devices intended for human use. The QMSR became effective in February 2026 and replaced the Quality System
Regulation (“QSR”). The QMSR incorporates by reference the international standard for medical device quality management
systems set by the International Organization for Standardization (ISO), ISO 13485:2016. We actively maintain compliance with the FDA’s
QMSR, and the European Union’s Quality Management Systems requirements, ISO 13485:2016.
As a manufacturer, we are subject to periodic scheduled or unscheduled
inspections by the FDA. If the FDA believes we or any of our contract manufacturers are not in compliance with the quality system requirements,
or other post-market requirements, it has significant enforcement authority. Specifically, if the FDA determines that we failed to comply
with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following
sanctions:
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untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; |
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customer notifications or repair, replacement, or refunds; |
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recalls, withdrawals, or administrative detention or seizure of our products; |
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operating restrictions or partial suspension or total shutdown of production; |
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refusing or delaying requests for approval of pre-market approval applications relating
to new products or modified products; |
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withdrawing PMA approval; |
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refusal to grant export approvals for our products; or |
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pursuing criminal prosecution. |
Any such action by the FDA would have a material adverse effect on our
business. In addition, these regulatory controls, as well as any changes in FDA policies, can affect the time and cost associated with
the development, introduction, and continued availability of new products. Where possible, we anticipate these factors in our product
development processes.
Regulation Outside of the U.S.
In addition to the United States regulations, we are subject to a variety
of foreign regulations governing clinical trials, manufacturing and commercial sales and distribution of our products. In the E.U., medical
devices are regulated by the European Union Medical Devices Regulation (EU) 2017/745 or MDR, which became applicable on May 26, 2021,
and replaced the E.U. Medical Devices Directive 93/42/EEC, or MDD. The MDR and its associated guidance documents and harmonized standards,
govern, among other things, device design and development, preclinical and clinical or performance testing, premarket conformity assessment,
registration, manufacturing, labeling, claims, distribution, export and import and post-market surveillance, vigilance, and market surveillance.
Before a device can be placed on the market in the E.U., compliance
with the MDR requirements must be demonstrated in order to affix the CE mark to the product. The method of assessing conformity varies
depending on the class of the product but normally involves a combination of self-assessment by the manufacturer and a third-party assessment
by a “Notified Body.” This third-party assessment may consist of an audit of the manufacturer’s quality system or specific
testing of the manufacturer’s product. The Notified Body issues a CE Certificate of Conformity to confirm successful completion
of a conformity assessment procedure conducted in relation to the medical device and its manufacturer and their conformity with the essential
requirements provided in the MDR. Under transitional provisions provided in the MDR, medical devices that had valid CE Certificates of
Conformity issued under the MDD prior to May 26, 2021 and that remained valid (and not withdrawn) on March 20, 2023, can continue to be
placed on the EEA market until the end of December 2027 or 2028 (depending on the class of device), provided the device’s manufacturer
complies with certain requirements, including that there are no significant changes in the design and intended purpose of the applicable
device. After the expiry of any applicable transitional period, only devices that have been CE marked on the basis of the MDR may be placed
on the market in the EEA. We comply with the E.U. requirements and have received a Notified Body Certificate of Conformity under the MDR
for ReWalk 7 Personal Exoskeleton. Prior models of our ReWalk system are CE marked under the MDD and continue to be placed on the EU market
in compliance with the MDR transitional provisions. The ReStore product was not planned for MDR conformity and accordingly, we had
to cease sales of the ReStore in the E.U. in May 2024.
Following the U.K.’s exit from the E.U. (known as “Brexit”),
the MDR applies in Northern Ireland but does not apply in Great Britain (England, Scotland and Wales). The medical device legislative
framework in Great Britain is set out in the Medical Devices Regulations 2002, as amended. These regulations are based on the previous
medical device directives of the E.U. but modified to operate independently of E.U. law. The Medical Devices Regulations 2002 contain
certain Great Britan-specific requirements, including the introduction of the UK Conformity Assessed, or UKCA, marking (although
E.U. CE marks will be recognized potentially up until June 2030 or later (subject to further consultation)), the requirement for manufacturers
located outside of the U.K. to appoint a “UK Responsible Person” if they place devices on the Great Britain market, and expanded
device registration requirements.
Sales in other jurisdictions are subject to the foreign government regulations
of the relevant jurisdiction, and in most cases, we must obtain approval by the appropriate regulatory authorities before we can commence
clinical trials or marketing activities in those countries. The approval process varies from country to country, and the time may be longer
or shorter than that required to obtain a marketing authorization in the United States or the CE mark in the E.U. The requirements governing
the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country.
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The policies of the FDA and foreign regulatory authorities may change,
and additional government regulations may be enacted that could prevent or delay regulatory approval of our products and could also increase
the cost of regulatory compliance. We cannot predict the likelihood, nature, or extent of adverse governmental regulation that might arise
from future legislative or administrative action, either in the United States or abroad.
U.S. Anti-Kickback, False Claims and Other Healthcare Fraud and Abuse
Laws
In the United States, there are federal and state anti-kickback laws
that prohibit the payment or receipt of kickbacks, bribes or other remuneration intended to induce the purchase or recommendation of healthcare
products and services. Violations of these laws can lead to civil and criminal penalties, including exclusion from participation in federal
healthcare programs. These laws apply to manufacturers of products, such as us, with respect to our financial relationship with hospitals,
physicians and other potential purchasers or acquirers of our products. The U.S. government has published regulations that identify “safe
harbors” or exemptions for certain practices from enforcement actions under the federal anti-kickback statute, and we will seek
to comply with the safe harbors where possible. The federal anti-kickback law also contains several statutory safe harbors. To qualify
for a safe harbor, the activity must fit squarely within the safe harbor. Arrangements that do not meet a safe harbor are not necessarily
illegal but must be evaluated on a case-by-case basis. A person or entity may be found to violate the anti-kickback statute even absent
actual knowledge of this statute or specific intent to violate it. In addition, the government may assert that a claim that includes items
or services resulting from a violation of the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the
federal False Claims Act (“FCA”).
The civil FCA prohibits, among other things, any person or entity from
knowingly presenting, or causing to be presented, a false or fraudulent claim for payment to, or approval by, the federal government,
knowingly making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal
government, or avoiding, decreasing, or concealing an obligation to pay money to the federal government. A claim includes “any request
or demand” for money or property presented to the U.S. government. The civil FCA has been used to assert liability on the basis
of kickbacks and other improper referrals, improper use of Medicare provider or supplier numbers when detailing a provider of services,
improper promotion of off-label uses not covered by a device’s clearance or approval, and allegations as to misrepresentations with
respect to products, contract requirements, and services rendered. In addition, private payors have been filing follow-on lawsuits alleging
fraudulent misrepresentation, although establishing liability and damages in these cases is more difficult than under the FCA. Intent
to deceive is not required to establish liability under the civil FCA. Civil FCA actions may be brought by the government or may be brought
by private individuals on behalf of the government, called “qui tam” actions. If the government decides to intervene in a
qui tam action and prevails in the lawsuit, the individual will share in the proceeds from any fines or settlement funds. If the government
declines to intervene, the individual may pursue the case alone. The civil FCA provides for treble damages and a civil penalty for each
false claim, such as an invoice or pharmacy claim for reimbursement, which can aggregate into millions of dollars. For these reasons,
FCA lawsuits against biopharmaceutical and device companies have resulted in substantial civil and criminal settlements, as much as $3.0
billion, regarding certain sales practices and promoting off label uses. Civil FCA liability may further be imposed for known Medicare
or Medicaid overpayments that are not refunded within 60 days of discovering the overpayment, even if the overpayment was not caused by
a false or fraudulent act. In addition, conviction or civil judgment for violating the FCA may result in exclusion from federal health
care programs, and suspension and debarment from government contracts, and refusal of orders under existing government contracts.
The government may further prosecute conduct constituting a false claim
under the criminal FCA. The criminal FCA prohibits the making or presenting of a claim to the government knowing such claim to be false,
fictitious, or fraudulent and, unlike the civil FCA, requires proof of intent to submit a false claim.
21
The civil monetary penalties statute is another statute under which
medical device companies may potentially be subject to enforcement. Among other things, the civil monetary penalties statue imposes fines
against any person who offers to provide remuneration to any individual eligible for benefits under Medicare or Medicaid that the offerer
knows or should know is likely to influence the individual’s selection of a particular provider or supplier of any item or service
reimbursable under those programs.
The federal Health Insurance Portability and Accountability Act of 1996
(“HIPAA”) also created federal criminal statutes that prohibit, among other actions, knowingly and willfully executing, or
attempting to execute, a scheme to defraud or to obtain, by means of false or fraudulent pretenses, representations or promises, any of
the money or property owned by, or under the custody or control of, a healthcare benefit program, regardless of whether the payor is public
or private, in connection with the delivery or payment for health care benefits, knowingly and willfully embezzling or stealing from a
health care benefit program, willfully obstructing a criminal investigation of a health care offense and knowingly and willfully falsifying,
concealing, or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery
of, or payment for, healthcare benefits, items, or services relating to healthcare matters. Additionally, the Patient Protection and Affordable
Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, or collectively the “ACA”, amended
the intent requirement of certain of these criminal statutes under HIPAA so that a person or entity no longer needs to have actual knowledge
of the statute, or the specific intent to violate it, to have committed a violation.
The Physician Payments Sunshine Act (“Sunshine Act”) requires
annual reporting, by applicable device and drug manufacturers, of covered products, payments, and other transfers of value to certain
health care providers, and ownership and investment interests held by physicians and their immediate family members.
Further, we may be subject to data privacy and security regulation by
both the federal government and the states in which we conduct our business. HIPAA, as amended by the Health Information Technology for
Economic and Clinical Health Act (“HITECH”) and its respective implementing regulations imposes certain requirements on covered
entities relating to the privacy, security, and transmission of certain individually identifiable health information, known as protected
health information. Among other things, HITECH, through its implementing regulations, makes HIPAA’s security standards and certain
privacy standards directly applicable to business associates, defined as a person or organization, other than a member of a covered entity’s
workforce, that creates, receives, maintains, or transmits protected health information on behalf of a covered entity for a function or
activity regulated by HIPAA. HITECH also strengthened the civil and criminal penalties that may be imposed against covered entities, business
associates, and individuals, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal
courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions. In addition,
other federal and state laws may govern the privacy and security of health and other information in certain circumstances, many of which
differ from each other in significant ways and may not be pre-empted by HIPAA, thus complicating compliance efforts.
Many states have also adopted laws similar to each of the above federal
laws, which may be broader in scope and apply to items or services reimbursed by any third-party payor, including commercial insurers.
Certain states also require implementation of commercial compliance programs and compliance with the medical device industry’s otherwise
voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government, or otherwise restrict payments
or the provision of other items of value that may be made to healthcare providers and other potential referral sources; impose restrictions
on marketing practices; or require companies to track and report information related to payments, and other items of value to physicians
and other healthcare providers.
If our operations are found to be in violation of any of the laws or
regulations described above or any other applicable laws, we may be subject to penalties or other enforcement actions, including criminal
and significant civil monetary penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in government healthcare
programs, corporate integrity agreements, suspension and debarment from government contracts, and refusal of orders under existing government
contracts, reputational harm, diminished profits and future earnings, and the curtailment or restructuring of our operations, any of which
could adversely affect our ability to operate our business and our results of operations. Enforcement actions can be brought by federal
or state governments, or as “qui tam” actions brought by individual whistleblowers in the name of the government under the
civil FCA if the violations are alleged to have caused the government to pay a false or fraudulent claim.
22
To the extent that any of our products are sold in a foreign country,
we may be subject to similar foreign laws and regulations, which may include, for instance, applicable post-marketing requirements, including
safety surveillance, anti-fraud and abuse laws, and implementation of corporate compliance programs and reporting of payments or transfers
of value to healthcare professionals.
Coverage and Reimbursement
The commercial success of our product candidates and our ability to
commercialize any approved product candidates successfully will depend in part on the extent to which governmental payor programs at the
federal and state levels, including Medicare and Medicaid, private health insurers, and other third-party payors provide coverage for
and establish adequate reimbursement levels for our products. Government authorities, private health insurers, and other organizations
generally decide which products and services they will pay for and establish reimbursement levels for healthcare. Medicare is a federally
funded program managed by CMS through local fiscal intermediaries and carriers that administer coverage and reimbursement for certain
healthcare items and services furnished to the elderly and disabled. Medicaid is an insurance program for certain categories of patients
whose income and assets fall below state defined levels and who are otherwise uninsured that is both federally and state funded and managed
by each state. In the United States, private health insurers and other third-party payors often provide reimbursement for products and
services based on the level at which the government provides reimbursement through the Medicare or Medicaid programs for such products
and services.
In the United States, the European Union, and other potentially significant
markets for our products, government authorities and third-party payors are increasingly attempting to limit or regulate the price of
medical products and services, particularly for new and innovative products and therapies, which often has resulted in average selling
prices lower than they would otherwise be. In the United States, it is also common for certain government and private health plans to
use coverage determinations to leverage rebates from labelers to reduce the plans’ net costs. These restrictions and limitations
influence the purchase of healthcare services and products and lower the realization of manufacturers’ sales of products. Third-party
payors are developing increasingly sophisticated methods of controlling healthcare costs. Third-party payors may limit coverage to specific
therapeutic products on an approved list, or formulary, which might not include all the FDA-approved products for a particular indication
or might impose high co-payment amounts to influence patient choice. Third-party payors also control costs by requiring prior authorization
or imposing other restrictions. Third-party payors are increasingly challenging the price and examining the medical necessity and cost-effectiveness
of medical products and services, in addition to their safety and efficacy.
Federal programs also impose price controls through mandatory ceiling
prices on purchases by federal agencies and federally funded hospitals and clinics. These restrictions and limitations influence the purchase
of healthcare services and products. Legislative proposals to reform healthcare or reduce costs under government programs may result in
lower reimbursement for our products or exclusion of our products.
Private payors often rely on the lead of the governmental payors in
rendering coverage and reimbursement determinations. Therefore, achieving favorable CMS coverage and reimbursement is usually a significant
gating issue for successful introduction of a new product.
Further, the increased emphasis on managed healthcare in the United
States and on country and regional pricing and reimbursement controls in the European Union will put additional pressure on product pricing,
reimbursement, and utilization, which may adversely affect our future product sales and results of operations. These pressures can arise
from rules and practices of managed care groups, competition from other products, judicial decisions and governmental laws and regulations
related to Medicare, Medicaid, and healthcare reform, and pricing in general. Patients who are prescribed treatments for their conditions
and providers performing the prescribed services generally rely on third-party payors to reimburse all or part of the associated healthcare
costs. Sales of our product candidates will therefore depend substantially, both domestically and abroad, on the extent to which the costs
of our products will be paid by health maintenance, managed care, and similar healthcare management organizations, or reimbursed by government
health administration authorities, such as Medicare and Medicaid, private health insurers, and other third-party payors.
23
Moreover, a payor’s decision to provide coverage for a product
does not imply that an adequate reimbursement rate will be approved or that significant price concessions will not be required to avoid
restrictive conditions. High health plan co-payment requirements may result in patients seeking alternative therapies. Adequate third-party
reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment.
Legislative proposals to reform healthcare or reduce costs under government insurance programs may result in lower reimbursement for our
products or exclusion of our products from coverage. The cost containment measures that healthcare payors and providers are instituting
and any healthcare reform could significantly reduce our revenue from the sale of any approved product candidates.
Healthcare Reform Measures
The United States and many foreign jurisdictions have enacted or proposed
legislative and regulatory changes affecting the healthcare system. The United States government, state legislatures and foreign governments
also have shown significant interest in implementing cost-containment programs to limit the growth of government-paid healthcare costs,
including price controls, restrictions on reimbursement and requirements for substitution of generic products for branded prescription
drugs.
The ACA substantially changed the way healthcare is financed by both
governmental and private insurers and significantly impacts the pharmaceutical industry. The ACA was intended to broaden access to health
insurance, reduce or constrain the growth of healthcare spending, enhance remedies against healthcare fraud and abuse, add new transparency
requirements for healthcare and health insurance industries, impose new taxes and fees on pharmaceutical and medical device manufacturers,
and impose additional health policy reforms.
The Budget Control Act of 2011, among other things, created the Joint
Select Committee on Deficit Reduction to recommend proposals in spending reductions to Congress. The Joint Select Committee did not achieve
its targeted deficit reduction of an amount greater than $1.2 trillion for the fiscal years 2012 through 2021, triggering the legislation’s
automatic reductions to several government programs. These reductions included aggregate reductions to Medicare payments to healthcare
providers of up to 2.0% per fiscal year. The Bipartisan Budget Act of 2018 retained the federal budget “sequestration” Medicare
payment reductions of 2% and extended it through 2031. Under the Consolidated Appropriations Acts of 2023 and 2024, the Medicare
sequester percentage in FY2032 is scheduled to be 2% from April 1, 2032, through September 30, 2032, and 0% for October 1, 2032 through
March 31, 2032 unless congressional action is taken. On January 2, 2013, the American Taxpayer Relief Act was signed into law, which,
among other things, reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment
centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.
Further legislative and regulatory changes remain possible. It is unknown
what form any such changes or any law would take, and how or whether it may affect our business in the future. We expect that changes
or additions to the Medicare and Medicaid programs, and changes stemming from other healthcare reform measures, especially with regard
to healthcare access, financing or other legislation in individual states, could have a material adverse effect on the healthcare industry.
At the state level, legislatures may also increasingly pass legislation
and implement regulations designed to control product pricing, including price or patient reimbursement constraints, discounts, restrictions
on certain product access and marketing cost disclosure and transparency measures.
We expect that additional federal, state, and foreign healthcare reform
measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare
products and services, which could result in limited coverage and reimbursement and reduced demand for our products, or additional pricing
pressures.
24
Environmental Matters
We are subject to various environmental, health and safety laws and
regulations, including those governing air emissions, water and wastewater discharges, noise emissions, the use, transport, management
and disposal of chemicals and hazardous materials and wastes, the import, export and registration of chemicals, and the cleanup of contaminated
sites. Based on information currently available to us, we do not expect environmental or health and safety costs and contingencies to
have a material adverse effect on us. The operation of our business and facilities, however, entails risks in these areas. Significant
expenditures could be required in the future to comply with environmental or health and safety laws, regulations, or requirements.
In Israel, where
we manufacture our ReWalk products at our facility, we do not utilize chemicals that require a toxic materials license. In the U.S., where
our contract manufacturer produces our AlterG products, we do not utilize chemicals which require a toxic materials license. Out Contract
manufacturer has a hazardous waste disposal license with the EPA ID# NHD500017052 and dispose of our expired and empty containers through
a process in accordance with the license supplier “Republic Services” with EPA ID# NHD500018452.
In the European marketplace, electrical and electronic equipment and
its packaging is required to comply with a number of regulatory regimes aimed at ensuring product safety and protecting the environment,
including the Directive on Waste Electrical and Electronic Equipment, which aims to prevent waste by encouraging reuse and recycling,
and the Directive on Restriction of Use of Certain Hazardous Substances, which restricts the use of ten hazardous substances in electrical
and electronic products. Our products and certain components of such products “placed on the market” in the E.U. (whether
or not manufactured in the E.U.) are subject to these and other legislative regimes. Additionally, we are required to comply with certain
laws, regulations, and directives, including the Toxic Substances Control Act in the United States and the REACH Regulation in the E.U.,
governing chemicals. These and similar laws and regulations require the testing, reporting, labelling, and registration of certain chemicals
we use and ship. We believe we comply in all material respects with applicable environmental and product conformity laws and regulations.
Manufacturing
Our ReWalk exoskeletons, ReStore exo-suits, and AlterG Anti-Gravity
systems include off-the-shelf and custom-made components produced to our specifications by various third parties for technical and cost-effectiveness.
During 2025, we terminated our contract manufacturing agreement with Sanmina Corporation for the manufacture of our ReWalk exoskeletons
and ReStore exo-suits. We transitioned the manufacturing of ReWalk exoskeletons to the Lifeward Ltd. facility. We contracted with Cirtronics
Corporation (“Cirtronics”), a well-established contract manufacturer with expertise in the medical device industry, for the
manufacture of the AlterG product at its facility in Milford, New Hampshire beginning January 2025. Each product line is manufactured
pursuant to the same applicable set of specifications. We place our manufacturing orders with Cirtronics and other suppliers pursuant
to purchase orders or by providing forecasts for future requirements. We may terminate our relationship with Cirtronics upon at least
one year’s notice prior to the expiration of the initial term or renewal term of the contract. We may terminate our relationship
with other suppliers at any time upon written notice. Either we or Cirtronics may terminate the relationship in the event of a material
breach, subject to a 45-day cure period in the case of Cirtronics. The agreement with Cirtronics contains a limitation on liability that
applies equally to us and Cirtronics.
We believe that the contract manufacturing relationships with Cirtronics
and in-house production at the Lifeward Ltd. allow us to operate our business efficiently by focusing our internal efforts on the development
and commercialization of our technology and products and provide us with substantial scale-up capacity.
We conduct regular on-site quality testing at Cirtronics’ facility
and obtain full quality inspection reports. We maintain a non-disclosure agreement with Cirtronics.
We develop certain of the software components internally and license
other software components that are generally available for commercial use as open-source software.
We manufacture products based upon internal sales forecasts. We deliver products to customers
and distributors based on purchase orders received, and our goal is to fulfill each customer’s order for products in regular production
within two weeks of receipt of the order.
25
Suppliers
We have contracted with Cirtronics for the sourcing of substantially
all components and raw materials for the manufacture of our AlterG products, although there are instances that we purchase raw materials
ourselves. We are sourcing all components and raw materials for the manufacture of our ReWalk exoskeleton device.
Components of our products and raw materials are sourced from suppliers
in the United States, Europe, China, Taiwan, and Israel, and we depend on certain of these components and raw materials, including certain
electronic parts, for the manufacture of our products. To date, we have not experienced significant volatility in the prices of these
components and raw materials. However, prices may fluctuate due to a number of factors, including purchase volumes, general economic conditions,
currency exchange rates, industry cycles, production levels, supply availability, tariffs, and trade policies.
We believe that Cirtronics’ facility, together with our manufacturing
and supply arrangements, are sufficient to support our anticipated capacity needs for the foreseeable future.
Human Capital
Employees
As of December 31, 2025, we had 81 employees (including full-time and
hourly employees), of whom 46 were located in the United States, 25 were located in Israel and 10 were located in Europe. The majority
of our employees are, and have been, engaged in sales and marketing activities. We do not employ a significant number of temporary or
part time employees.
We are subject to labor laws and regulations within our locations mainly
in the U.S., Germany, and Israel. These laws and regulations principally concern matters such as pensions, paid annual vacation, paid
sick days, length of the workday and work week, minimum wages, overtime pay, insurance for work-related accidents, severance pay and other
conditions of employment. Our employees are not represented by a labor union. We consider our relationship with our employees to be good.
To date, we have not experienced any work stoppages.
Compensation and Benefits
We provide our employees with competitive salaries and bonuses, opportunities
for equity ownership, and a robust employment package that promotes well-being across all aspects of our employees’ lives, including
health care, retirement planning, and paid time off. We also invest in the ongoing development of our employees through our internal training
programs.
Diversity and Inclusion
We value the diversity of our employees and take pride in our commitment
to diversity and inclusion across all levels of our organizational structure. We encourage a diversity of views and strive to create an
equal opportunity workplace, including working with managers to develop strategies for building diverse teams and promoting the advancement
of employees from diverse backgrounds.
26
Financial Information about Geographic Areas and Significant Customer
Information
The following table sets forth the geographical breakdown of our revenue
for each of the years ended December 31, 2025, and 2024 (in thousands):
|
Year Ended December 31, |
||||||||
|
2025 |
2024 |
|||||||
|
Revenue based on customer’s location: |
||||||||
|
United States |
$ |
13,237 |
$ |
14,425 |
||||
|
Europe |
2,907 |
5,124 |
||||||
|
Germany |
4,014 |
4,422 |
||||||
|
Asia-Pacific |
460 |
825 |
||||||
|
Rest of the world |
1,416 |
867 |
||||||
|
Total revenue |
$ |
22,034 |
$ |
25,663 |
||||
Additional
discussion of financial information by reportable segment and geographic area and sales in excess of 10% of total revenue to certain of
our customers is contained in Note 13 to our consolidated financial statements set forth in “Part II. Item 8. Financial Statements
and Supplementary Data” of this annual report.
2025
Recent Developments
|
• |
In
March 2026, we received written notification from The Nasdaq Stock Market LLC confirming that we had regained compliance with the minimum
bid price requirement for continued listing on The Nasdaq Capital Market following the effectiveness of the reverse share split. |
|
• |
In
March 2026, we announced a collaboration with Shirley Ryan AbilityLab to expand evaluation and access opportunities for the ReWalk Personal
Exoskeleton for individuals with spinal cord injuries in the United States. |
|
• |
In
February 2026, we entered into a definitive agreement to acquire certain technology assets and related intellectual property from Skelable
Ltd. relating to a powered upper-extremity orthotic device under development. The consideration for the transaction consists primarily
of our equity, payable upon the achievement of specified milestones. |
|
• |
In
February 2026, we effected a 1-for-12 reverse share split of our ordinary shares, which began trading on a split-adjusted basis on February
24, 2026. The reverse share split was implemented to regain compliance with the minimum bid price requirement of The Nasdaq Capital Market. |
|
• |
In
January 2026, we announced that we had entered into a strategic investment and collaboration agreement with Oramed, pursuant to which
the parties intend to collaborate on the development and commercialization of certain technologies and products. The transaction contemplates
a strategic investment by Oramed in the Company and the transfer of certain intellectual property and technology rights, including rights
related to Oramed’s POD™ oral drug delivery platform, subject to the satisfaction of closing conditions and other customary
terms. |
|
• |
In
December 2025, we entered into an international distribution agreement with Verita Neuro pursuant to which Verita Neuro will serve as
the exclusive distributor of the ReWalk Personal Exoskeleton in certain international markets, initially including Mexico, Thailand, and
the United Arab Emirates. |
|
• |
In
December 2025, we announced expanded reimbursement coverage for the ReWalk 7 Personal Exoskeleton following prior authorization approval
under a Humana Medicare Advantage plan in the United States, which may expand patient access to the device. |
|
• |
In
November 2025, we announced that Aetna had issued a positive coverage decision for the ReWalk Personal Exoskeleton for eligible individuals
with spinal cord injuries, which may expand patient access to the device in the United States. |
|
• |
In
November 2025, we secured a $3.0 million bridge loan from Oramed Ltd. as part of a broader strategic transaction, to support ongoing operations
and strategic initiatives. |
|
• |
In
September 2025, we received CE Mark approval for the ReWalk 7 Personal Exoskeleton, enabling commercial sales in Europe, which currently
represents approximately 40% of our exoskeleton sales. |
|
• |
In
June 2025, we completed a public offering generating gross proceeds of approximately $2.6 million to support continuing commercial efforts,
working capital, and general corporate purposes. |
|
• |
In
the second quarter of 2025, we successfully transitioned to in-house manufacturing of the ReWalk Personal Exoskeleton, concluding our
agreement with Sanmina and enabling cost savings, improved quality control, and greater production flexibility. |
|
• |
In
March 2025, we announced an agreement with CorLife, to become the exclusive distributor for the ReWalk Personal Exoskeleton for individuals
with workers' compensation claims. |
|
• |
In
March 2025, we launched ReWalk 7, the newest generation of our personal exoskeleton, in the U.S. market following FDA clearance. |
|
• |
In
February 2025, we announced an agreement with BARMER, Germany’s second largest statutory health insurance company, to streamline
access to ReWalk Personal Exoskeletons for eligible beneficiaries, adding approximately 8.5 million covered lives in Germany. |
|
• |
In
January 2025, we completed a registered direct offering for gross proceeds of approximately $5.0 million to fund continuing commercial
efforts, working capital, and general corporate purposes. |
|
|
27
ITEM 1A. RISK
FACTORS
Our business faces significant risks. You should carefully
consider all of the information set forth in this annual report and in our other filings with the SEC, including the following risk factors
which we face and which are faced by our industry. Our business, financial condition and results of operations could be materially and
adversely affected by any of these risks. In that event, the trading price of our ordinary shares would likely decline and you might lose
all or part of your investment. This report also contains forward-looking statements that involve risks and uncertainties. Our results
could materially differ from those anticipated in these forward-looking statements, as a result of certain factors including the risks
described below and elsewhere in this report and our other SEC filings. See also “Special Note Regarding Forward-Looking Statements”
on page (ii).
Risks Related to Our Business and Our Industry
We have concluded that there is substantial doubt as to our ability to
continue as a going concern.
As of December 31, 2025, we had an accumulated deficit in the total
amount of approximately $284.7 million and anticipate further losses in the development of our business. Those factors raise substantial
doubt about our ability to continue as a going concern. Our ability to continue as a going concern depends upon our obtaining the necessary
financing to meet our obligations and timely repay our liabilities arising from normal business operations. The financial statements have
been prepared assuming that we will continue to operate as a going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. Management concluded that substantial doubt about our ability to continue as a going
concern exists as of the date of the issuance of these financial statements. Our auditors also included an explanatory paragraph to their
audit opinion relating to our accompanying consolidated financial statements for the fiscal year ended December 31, 2025 regarding the
substantial doubt about our ability to continue as a going concern. If we are unable to secure additional capital, including through the
closing of the Oramed transaction and by other means, we may be required to take additional measures to reduce costs in order to conserve
our cash in amounts sufficient to sustain operations and meet our obligations. If we become insolvent, investors in our securities may
lose the entire value of their investment in our business. The accompanying financial statements do not include any adjustments that may
be necessary should we be unable to continue as a going concern, and it is not possible for us to predict at this time the potential success
of our business.
We may fail to realize the benefits expected from our acquisition of
AlterG, which could adversely affect the price of our ordinary shares.
As discussed above in “Part I. Item 1. Business - Overview”,
on August 11, 2023, we completed the acquisition of AlterG which became an indirect and wholly-owned subsidiary of the Company.
The anticipated benefits from our acquisition of AlterG are based on
projections and assumptions about the combined businesses of ReWalk and AlterG, which may not materialize as expected or which may prove
to be inaccurate. The value of our ordinary shares could be adversely affected if we are unable to realize the anticipated benefits from
the acquisition on a timely basis or at all. Achieving the benefits of the acquisition will depend, in part, on our ability to integrate
the business, operations and products of AlterG successfully and efficiently with our business. The process of integrating the operations
of ReWalk and AlterG could encounter unexpected costs and delays, which include: the loss of key personnel; the loss of key customers;
the loss of key suppliers; inability to properly identify, acquire or obtained required regulatory approvals; and unanticipated issues
in integrating sales, marketing and administrative functions. In addition, the acquired AlterG business, products and technologies may
not achieve anticipated revenues and income growth.
Further, the integration of AlterG may involve a number of additional
risks, including diversion of management’s attention away from the rest of the business, which could adversely affect our results
of operations. In addition, our failure to identify or accurately assess the magnitude of certain liabilities we assumed in the acquisition
could result in unexpected litigation or regulatory exposure, unfavorable accounting charges, unexpected increases in taxes due, a loss
of anticipated tax benefits or other adverse effects on our business, operating results or financial condition. If we do not realize the
expected benefits or synergies of the acquisition, such as revenue gains or cost reductions, there could be a material adverse effect
on our business, results of operations, and financial condition.
28
Global, regional, and local economic weakness and
uncertainty could adversely affect our demand for our products and services and our business and financial performance.
Our business and financial performance depends on worldwide economic
conditions and the demand for our products and services in the markets in which we compete. Ongoing economic weakness, including an economic
slowdown or recession, uncertainty in markets throughout the world and other adverse economic conditions, including inflation, changes
in monetary policy and interest rate fluctuations, have resulted, and may result in the future, in decreased demand for our products and
services and increased expenses and difficulty in managing inventory levels and accurately forecasting revenue, gross margin, cash flows
and expenses. Ongoing U.S. federal government spending limits may continue to reduce demand for our products and services from organizations
that receive funding from the U.S. government and could negatively affect macroeconomic conditions in the United States, which could further
reduce demand for our products and services.
Prolonged or more severe economic weakness and uncertainty could also
cause our expenses to vary materially from our expectations. Any financial turmoil affecting the banking system and financial markets
or any significant financial services institution failures could negatively impact our treasury operations, as the financial condition
of such parties may deteriorate rapidly and without notice. Poor financial performance of asset markets and the adverse effects of fluctuating
currency exchange rates could lead to higher pension and post-retirement benefit expenses. Interest and other expenses could vary materially
from expectations depending on changes in interest rates, borrowing costs, currency exchange rates, costs of hedging activities and the
fair value of derivative instruments. Economic downturns also may lead to future restructuring actions and associated expenses.
We may not have sufficient funds to meet certain
future operating needs or capital requirements, which could impair our efforts to develop and commercialize existing and new products,
and as a result, we may in the future consider one or more capital-raising transactions, including future equity or debt financings, strategic
transactions, or borrowings which may also further dilute our shareholders or place us under restrictive covenants limiting our ability
to operate freely.
We intend to finance our business by close management of our operating
expenses until we reach profitable operation using existing cash on hand, issuances of equity and/or debt securities, and other future
public or private issuances of securities, cash exercised of outstanding warrants, or through a combination of the foregoing, though we
may also consider additional capital raising alternatives, such as entering into a credit facility, if the foregoing alternatives are
not available to us or unavailable on reasonable terms. We had cash and cash equivalents of $2.2 million as of December 31, 2025. However,
we will need to seek additional sources of financing if we require more funds than anticipated during the next 12 months or in later periods.
In January 2026, we entered into a securities purchase agreement (the
“Securities Purchase Agreement”) with Oramed and certain investors and Oramed, as collateral agent, pursuant to which we agreed
to issue to Oramed and the certain investors senior secured convertible notes convertible into Ordinary Shares and accompanying warrants
to purchase Ordinary Shares. Pursuant to the Securities Purchase Agreement, subject to the satisfaction of other closing conditions, we
agreed to issue to these investors (i) (A) $10,000,000.00 aggregate principal amount senior secured convertible notes (the “Initial
Notes”), convertible into Ordinary Shares, and (B) accompanying warrants to purchase Ordinary Shares (the “Initial Warrants”);
and (ii) (A) $10,000,000.00 aggregate principal amount senior secured convertible notes (the “Second Notes”, and together
with the Initial Notes, the “Notes” and each a “Note”), convertible into Ordinary Shares, and (B) accompanying
warrants to purchase Ordinary Shares (the “Second Warrants”, and together with the Initial Warrants, the “Common Warrants”
and the Common Warrants together with the Transaction Warrants, the “Warrants”). The funding of the Second Notes is
also subject to customary closing conditions and either (i) us achieving, as of the most recently completed fiscal quarter end for
which we have publicly filed or furnished financial statements, at least a one hundred fifty percent (150%) increase in ReWalk Unit Sales
(as defined in the Securities Purchase Agreement), measured in U.S. dollars, relative to the trailing twelve‑month period immediately
preceding the Additional Closing Date as defined in the Securities Purchase Agreement), or (ii) the closing price of our Ordinary Shares
on the Trading Market (as defined in the Securities Purchase Agreement) equals or exceeds $13.8 per share (which amount reflects the adjustment
for the reverse stock split that became effective on February 24, 2026) on each Trading Day (as defined in the Securities Purchase Agreement)
during the ten (10) consecutive Trading Days immediately prior to the Additional Closing Date. The transaction is subject to customary
closing conditions and there can be no assurance that these conditions will be satisfied or waived, or that the transaction will close
on the anticipated timeline, or at all. Based on our current operating plan, we will require additional capital to fund our ongoing operations
and execute our business strategy.
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Raising additional capital in the public markets could also entail certain
downsides. Although we are currently eligible to use our Form S-3, we are limited to selling no more than one-third of our unaffiliated
market capitalization, or public float, on Form S-3 in a 12-month period unless our public float rises above $75 million. During the twelve-month
period ended March 17, 2026, we had sold a total of $2.8 million in offerings pursuant to shelf registration statements which will limit
our capacity to sell our ordinary shares under our current shelf registration statement. For more information on our inability to use
Form S-3, see “Part II. Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity
and Capital Resources—Equity Raises” below. Additionally, due to these limitations on our use of Form S-3, we may be required
to seek other methods for access to capital, such as a registration statement on Form S-1. The preparation of a registration statement
on Form S-1 is, and has in the past, been more time-consuming and costly than using Form S-3. We may also conduct fundraising transactions
in the form of private placements, potentially with registration rights or priced at a discount to the market value of our ordinary shares,
which could require shareholder approval under the rules of The Nasdaq Stock Market LLC (“Nasdaq”), or other equity raise
transactions such as equity lines of credit. In addition to entailing increased capital costs, any such transactions have historically
resulted in and could result in substantial dilution of our shareholders’ interests and may also transfer control to a new investor
or diminish the value of an investment in our ordinary shares.
We may also need to pursue additional strategic transactions, such as
joint ventures, in-licensing transactions, or the sale of our business, or all, or substantially all, of our assets if our financial stability
is uncertain, and we are unable to raise additional capital effectively. These strategic transactions have in the past and could in the
future require significant management attention, disrupt our business, adversely affect our financial results, be unsuccessful or fail
to achieve the desired results.
Overall, if we cannot raise the required funds, or cannot raise them
on terms acceptable to us or investors, we may be forced to curtail substantially our current operations or cease operations altogether.
Further, external perceptions regarding our ability to continue as a going concern may make it more difficult for us to obtain
financing for the continuation of our operations or require us to obtain financing on terms that are more favorable to investors, and
could result in the loss of confidence by investors and suppliers. As such, our failure to continue as a going concern could
harm our business, operating results and financial position and severely affect the value of your investment.
We may not fully realize the anticipated positive
impacts to future financial results from our streamlining efforts.
We began streamlining our U.S. operations, including closing two U.S.
facilities to complete the integration following the acquisition of AlterG. As a result of the organizational changes, we reduced our
total headcount by greater than 35% since the closing of the AlterG acquisition. Key functions located at the affected facilities were
integrated into the operations of the Marlborough, Massachusetts facility, and manufacturing of the AlterG Anti-Gravity Systems was assumed
by Cirtronics Corporation, a nationally recognized contract manufacturer specializing in the manufacture of precision medical devices
and instrumentation. Further, in the second quarter of 2025, we transitioned the manufacturing of our ReWalk products to our in-house
manufacturer in an effort to reduce costs and provide us with more control over product quality. As a result, we terminated our agreement
with Sanmina Corporation, an international contract manufacturer that manufactured our ReWalk products at its facility in Israel since
2013 and sourced the components and raw materials necessary for manufacturing. We expect that such consolidation may reduce operating
expenses and improve gross margins once the full impact of these measures is realized, which we believe may contribute to our goal of
reducing costs and achieving profitability. Our ability to achieve the anticipated cost savings and other benefits from such streamlining
efforts is subject to many estimates and assumptions and may vary materially based on factors such as market conditions and the effect
of our streamlining efforts on our work force. These estimates and assumptions are subject to significant economic, competitive and other
uncertainties, some of which are beyond our control. We cannot assure that we will fully realize the anticipated positive impacts to future
financial results from our current or future streamlining efforts. If our estimates and assumptions are incorrect or if other unforeseen
events occur, we may not achieve the cost savings expected from such streamlining, and our business, financial condition and results of
operations could be materially adversely affected.
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We may encounter difficulties in transitioning the
manufacturing of our ReWalk products to our in-house manufacturer.
In the second quarter of 2025, we transitioned the manufacturing of
our ReWalk products to our in-house manufacturer in an effort to reduce costs and provide us with more control over product quality. As
a result, we terminated our agreement with Sanmina Corporation, an international contract manufacturer that manufactured our ReWalk products
at its facility in Israel since 2013 and sourced the components and raw materials necessary for manufacturing.
However, to fully establish our manufacturing operations, we will need
to identify, recruit and build experienced teams, and there are can be no assurance that we will be successful in doing so. Additionally,
Sanima previously contracted directly with third-party suppliers to supply certain components of our products. We cannot guarantee that
we will be able to establish similar agreements to source sufficient quantities or obtain components at commercially reasonable costs.
If we are unable to manufacture products that consistently meet specifications,
are produced in necessary quantities, comply with regulatory requirements and quality control standards and are delivered at commercially
acceptable costs and on a timely basis, it will have a material adverse effect on our business, financial condition and results of operations.
The process of moving our manufacturing operations in house is time consuming, costly and may disrupt our operations. There can be no
assurance that we will fully realize the anticipated benefits from such transition.
We face economic and political risks associated with
doing business in Taiwan, particularly due to the geopolitical tension between Taiwan and China, and in Russia that could negatively affect
our business and hence the value of your investment.
Currently, we rely on third party suppliers in Taiwan for a
portion of the components we use in our AlterG products. Accordingly, our business, financial condition and results of operations and
the market price of our securities may be affected by changes in governmental policies, taxation, growth rate, inflation rate or interest
rates and by social instability and diplomatic and social developments in or affecting Taiwan. In addition, changes in international
trade policies, including the potential imposition of tariffs, export controls or other trade restrictions affecting goods manufactured
in Taiwan, could increase our costs or disrupt the supply of components used in our AlterG products.
In particular, the unique political status of Taiwan and its internal
political movement cause sustained tension between China and Taiwan. Past developments related to the interactions between China and Taiwan,
especially in relation to trade activities such as bans on exports of goods from time to time, have on occasions depressed the transactions
and business operations of certain Taiwanese companies and overall economic environment. We cannot predict whether there will be escalation
of the tensions between China and Taiwan, which would lead to new bans or tariffs on exports or even conflict. Any conflict which threatens
the military, political or economic stability in Taiwan could have a material adverse effect on our current or future business and financial
conditions and results of operations.
In addition, we also sell our AlterG products to a distributor in
Russia. The current invasion of Ukraine by Russia has escalated tensions among the United States, the North Atlantic Treaty Organization
(“NATO”) and Russia. The United States and other NATO member states, as well as non-member states, have announced sanctions
against Russia and certain Russian banks, enterprises and individuals. AlterG prior to the acquisition, and Lifeward subsequent to the
acquisition, has remained in compliance with these sanctions by obtaining export licenses for each shipment to our distributor that serves
Russia. These and any future additional sanctions and any resulting conflict between Russia, the United States and NATO countries could
have an adverse impact on our current operations.
Further, such invasion, ongoing military conflict, resulting sanctions
and related countermeasures by NATO states, the United States and other countries are likely to lead to market disruptions, including
significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions for equipment, which could
have an adverse impact on our operations and financial performance.
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Our future growth and operating results will depend
on our ability to develop, receive regulatory clearance for and commercialize new products and penetrate new product and geographic markets.
We are currently engaged in research and development efforts to address
the needs of patients with mobility impairments besides paraplegia, such as stroke, and, in the future, we may engage in efforts to address
these needs in patients with other conditions such as multiple sclerosis, cerebral palsy, Parkinson’s disease and elderly assistance.
In 2019, we commercialized the ReStore Exo-Suit for stroke rehabilitation. While we previously marketed this product in multiple markets,
we ceased sales in the European Union in May 2024 and the product currently represents a limited portion of our business. For more information,
see “Part, Item 1. Business—ReStore Products” above. While our Collaboration Agreement with Harvard for the design,
research and develop lightweight exoskeleton system technologies for lower limb disabilities intended to treat stroke, multiple sclerosis,
mobility limitations for the elderly and other medical applications successfully concluded on March 31, 2022, Harvard has licensed to
us certain of its intellectual property relating to lightweight exoskeleton system technologies for lower limb disabilities. We are obligated
to use commercially reasonable efforts to develop products under the license in accordance with an agreed-upon development plan and to
introduce and market such products commercially.
Our future growth will depend on our ability to expand the adoption
of our existing ReWalk and AlterG product lines and to successfully develop and commercialize new products and technologies addressing
mobility impairments. As such, our future results will depend on our ability to successfully develop and commercialize such new products
and to penetrate targeted rehabilitation and mobility markets with our existing and future products. We cannot ensure that we will be
able to introduce new products, products currently under development or products contemplated for future development for additional indications
in a timely manner, or at all, as it depends on our available resources to fund such projects, as well as our ability to conduct clinical
trials and testing. While we have previously obtained regulatory clearance for certain of our products, obtaining clearance for any other
products we may develop could be an extensive, costly, and time-consuming process, which could delay any planned commercialization timelines.
For more information on the clearance processes for our products, see “Part I, Item 1. Business—Government Regulation”
above.
Harvard may terminate its License Agreement with us if we fail to maintain
the requisite insurance or become insolvent. Any such termination of this aspect of the collaboration with Harvard could impair our research
and development efforts into lightweight soft suit exoskeleton system technologies for lower limb disabilities such as the ReBoot device
which is intended to be used at home by people who suffered a stroke. In addition, we may not be able to clinically demonstrate the medical
benefits of our products for new indications. We have limited clinical data demonstrating the benefits of our products and we might not
be able to support the economic benefits our products have for our potential customers. We may also be unable to gain necessary regulatory
clearances or approvals to enable us to market new products for additional indications or the regulatory process may be more costly and
time-consuming than expected, which could adversely impact us given our cash position and ongoing capital requirements.
Even if we are successful in the design and development of new products,
our growth and results of operations will depend on our ability to penetrate new markets and gain acceptance and reimbursement coverage
in non-SCI markets such as the stroke rehabilitation market, and, in the longer term, the home use device market for stroke-caused lower
limb disability, multiple sclerosis, elderly assistance and cerebral palsy patients. We may not be able to gain such market acceptance
and coverage for these indications in a timely manner, or at all.
While our new products currently under development will share some aspects
of the core technology platform of our current products, their design features and components may differ from our current products. Accordingly,
these products will also be subject to the risks described in the risk factor immediately below entitled “We rely primarily on sales
of our ReWalk Personal Exoskeletons, AlterG Anti-Gravity systems, and MyoCycle FES cycles and related service contracts and extended warranties
for our revenue. We may not be able to achieve or maintain market acceptance of our ReWalk, AlterG, or ReStore products, or to generate
sufficient revenue from these current and future products to sustain our operations.” To the extent we are unable to successfully
develop and commercialize products beyond our existing commercial product portfolio, we will not meet our operating and financial objectives.
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We rely primarily on sales of our ReWalk Personal
Exoskeletons, AlterG Anti-Gravity systems, and MyoCycle FES cycles and related service contracts and extended warranties for our revenue.
We may not be able to achieve or maintain market acceptance of our ReWalk, AlterG, or MyoCycle products or to generate sufficient revenue
from these current and future products to sustain our operations.
We currently rely, and expect in the future to 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. In 2019, we commercialized the ReStore lightweight soft exo-suit for stroke rehabilitation in the United States and the
European Union following receipt of FDA clearance and CE mark. We ceased sales of the ReStore in the European Union in May 2024, and the
product currently represents a limited portion of our overall business. Several factors could negatively affect our ability to achieve
and maintain market acceptance of our ReWalk, AlterG, or ReStore systems, which could in turn materially impair our business, financial
condition, and operating results, as follows:
|
• |
ReWalk. We have sold a limited number of ReWalk
systems, and market acceptance and adoption depend on educating people with limited upright mobility and health care providers as to the
distinct features, ease-of-use, positive lifestyle impact, and other benefits of ReWalk compared to alternative technologies. ReWalk may
not be perceived to have sufficient potential benefits compared with these alternatives. Users may also choose other alternatives due
to disadvantages of ReWalk, including the time it takes for a user to put on the device, the slower pace of ReWalk compared to a wheelchair,
the weight of ReWalk when carried, which makes it more burdensome for a companion to transport than a wheelchair, the required training,
and the requirement that users be accompanied by a trained companion. Also, we believe that healthcare providers tend to be slow to change
their medical treatment practices because of perceived liability risks arising from the use of new products and the uncertainty of third-party
reimbursement. Accordingly, healthcare providers may not recommend ReWalk until there is sufficient support for the device to convince
them to alter the treatment methods they typically recommend, such as expanded reimbursement coverage by payors, and/or recommendations
by prominent healthcare providers or other key opinion leaders in the spinal cord injury community that ReWalk is effective in providing
identifiable immediate and long-term health benefits. |
|
• |
AlterG. The AlterG Anti-Gravity system has broad
clinical utility for treating a wide variety of lower extremity conditions where partial displacement of a patient’s weight can
enable exercise which facilitates healing and recovery of improved function. The potential of the AlterG Anti-Gravity systems to achieve
greater penetration of the addressable market of rehabilitation hospitals, clinics, and sports medicine practices will depend upon the
continued expansion of conditions for which clinicians utilize the AlterG and the ability for greater numbers of these facilities to afford
the initial capital outlay for these devices. In 2024 we introduced the AlterG NEO, a new, lower-cost AlterG system, which we believe
is more affordable for smaller, independent rehabilitation clinics. However, there can be no assurance that the introduction of this product
can expand the size of the addressable market or will not reduce the sales of the existing, higher-priced models. |
|
• |
ReStore. The ReStore system is designed to provide
advantages to stroke rehabilitation clinics and therapists as compared to other traditional therapies and devices by minimizing setup
time, improving patients’ clinical results during therapy, supplying real-time analytics to optimize session productivity, and generating
ongoing data reports to assist with tracking patient progress Since the ReStore device is currently only indicated for use in the rehabilitative
clinical setting, its market reception will depend heavily on our ability to demonstrate to clinics and therapists the systemic and economic
benefits of using the ReStore device, its clinical advantage when compared to other devices or manual therapy, the functionality of the
device for a significant portion of the patients that they treat and the overall advantages that the device provides to their patients
compared to other technologies. The ReStore system is indicated for use in clinical rehabilitation settings. The product previously received
FDA clearance and CE mark in 2019; however, we ceased sales of the ReStore in the European Union in May 2024 and the CE mark is no longer
maintained. The ReStore system currently represents a limited and non-material portion of our business in the United States. |
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As a general matter, achieving and maintaining market acceptance of
our current or future products could be negatively impacted by many other factors, including, but not limited to the following: contribution
to death or serious injury or malfunction, results of clinical studies relating to our or similar products; claims that our products,
or any of their components, infringe on patent or other intellectual property rights of third parties; our ability to support financially
and leverage our sales, marketing and training infrastructure, as well as our level of research and development efforts; our ability to
enhance and broaden our research and development efforts and product offerings in response to the evolving demands of people with paraplegia
and lower limb disability and healthcare providers; our estimates regarding our current or future addressable market; perceived risks
associated with the use of our products or similar products or technologies; the introduction of new competitive products or greater acceptance
of competitive products; adverse regulatory or legal actions relating to our products or similar products or technologies; and problems
arising from the outsourcing of our manufacturing capabilities, or our existing manufacturing and supply relationships. Any or all of
these factors could materially and negatively impact our business, financial condition and operating results.
The market for medical exoskeletons, including soft
suit devices, remains relatively new and unproven, and important assumptions about the potential market for our current and future products
may be inaccurate.
The market for medical exoskeletons, including
lightweight exo-suit devices, remains relatively new and unproven. Accordingly, it is difficult to predict the future size and rate of
growth of the market. We cannot be certain whether the market will continue to develop or if medical exoskeletons will achieve and sustain
a level of market acceptance and demand sufficient for us to continue to generate revenue and achieve profitability.
We obtained FDA de novo authorization for our ReWalk Personal Exoskeleton
device in June 2014. FDA subsequently cleared 510(k) premarket notifications for modifications to the ReWalk, including for use of the
ReWalk on curbs and stairs. In March 2025, the FDA granted 510(k) clearance for our ReWalk 7 next-generation personal exoskeleton system.
This marketing authorization permits us to market the device for use by individuals with spinal cord injury at levels T7 to L5 to perform
ambulatory functions in home and community settings with supervision of a specially certified companion, and for use by individuals in
rehabilitation institutions with spinal cord injury at levels T4 to T6. We obtained FDA clearance for our ReStore system in June 2019,
which permits the device to be used in rehabilitation institutions under the supervision of a trained therapist to assist ambulatory functions
for individuals with hemiplegia or hemiparesis due to stroke who are able to ambulate at least 1.5 meters (5 feet) with minimal to moderate
assistance. While the ReStore system remains cleared by the FDA, the product currently represents a limited portion of our business.
Future products for those with paraplegia or other mobility impairments
or spinal cord injuries may have the same or other restrictions.
Our business strategy is based, in part, on our estimates of the number
of individuals with physical limitations and disability and considers the occurrence of spinal cord injuries, strokes, lower-extremity
orthopedic injury or surgery, neurological disease, and obesity in our target markets, and the percentage of those groups that would be
able to use our current and future products. Limited sources exist to obtain reliable market data with respect to the number of mobility-impaired
individuals and the incurrence of spinal cord injuries and strokes in our target markets. In addition, there are no third-party reports
or studies regarding what percentage of those with limited mobility and/or spinal cord injuries would be able to use exoskeletons, in
general, or our current or planned future products, in particular. Our assumptions may be inaccurate and may change.
The NSCISC estimates according to its 2024 SCI Data Sheet that there
are 308,000 people in the United States living with SCI, with an annual incidence of approximately 18,000 new cases per year. Based on
information from the 2023 annual report published by the NSCISC, 40% of the total U.S. population of SCI patients suffered injuries between
levels T4 and L5. Four published ReWalk trials with respect to such eligible SCI patients had an aggregate screening acceptance
rate of 50% considering all current FDA limitations, resulting in an estimated 20% of the total population of SCI patients being qualified
candidates for current ReWalk products under its medical labeling criteria. There may be other permanent or short-term factors that affect
the market size such as the ability to participate in the training program, the ability to use the device in the user’s current
home environment as well as available companion support. With respect to our ReStore product for stroke rehabilitation, the device is
indicated for use in rehabilitation clinics under the supervision of trained therapists. While there are numerous inpatient, outpatient
and rehabilitation clinics in the United States that treat stroke patients, the ReStore product currently represents a limited portion
of our business. For more information regarding our product portfolio and market opportunities, see “Part I, Item 1. Business—ReWalk
Personal and ReWalk Rehabilitation Products—Market Opportunity. For more information regarding the potential market for future products,
including our lightweight soft suit exoskeleton, see “Part I, Item 1. Business—ReWalk Personal and ReWalk Rehabilitation Products—Market
Opportunity” above.
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We cannot assure you that our estimate regarding our current products
is accurate or that our estimate regarding future products will remain the same. FDA or CE mark clearance for such products, if received
at all, may contain different limitations from the ones the FDA or E.U. has placed on the devices we currently market for paraplegia.
If our estimates of our current or future addressable market are incorrect, our business may not develop as we expect, and the price of
our securities may suffer.
We may fail to secure or maintain adequate insurance
coverage or reimbursement for our products by third-party payors, which risk may be heightened if insurers find the products to be investigational
or experimental or if new government regulations change existing reimbursement policies. Additionally, such coverage or reimbursement,
even if maintained, may not produce revenue that is high enough to allow us to sell our products profitably.
We expect that in the future a significant source of payment for ReWalk
systems will be private insurance plans and managed care programs, government programs such as Medicare, the VHA, workers’ compensation
plans, and other third-party payors.
In the United States, generally, private insurance companies do not
cover or provide reimbursement for any medical exoskeleton products for personal use, including ReWalk Personal Exoskeleton, and may ultimately
provide no coverage at all. Additionally, there is limited clinical data related to the ReWalk and ReStore systems, and third-party payors
may consider use of them to be experimental and therefore refuse to cover any or all of them. Additionally, the majority of independent
medical review decisions to date made following the denial of ReWalk coverage have determined that ReWalk is experimental and/or investigational,
citing a lack of clinical data.
As described above, in the United States, many private third-party payors
use coverage decisions and payment amounts determined by CMS as guidelines in setting their coverage and reimbursement policies. In July
2020, CMS issued a Healthcare Common Procedure Coding System Level II Code for ReWalk Personal Exoskeleton. These codes are used to identify
medical products and supplies and to facilitate insurance claim submissions and processing for these items. On November 1, 2023, CMS issued
Calendar Year 2024 Home Health Prospective Payment System Rule, which explicitly included exoskeletons within a Medicare brace benefit
category, effective January 1, 2024. On April 11, 2024, CMS revised its April 2024 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, and under the January 2026
DMEPOS fee schedule, the maximum ceiling amount for HCPCS code K1007 is $114,097, effective January 1, 2026. CMS established the
initial payment amount through a gap-filling methodology because the technology lacked a fee schedule-based pricing history and CMS concluded
that lower-extremity exoskeletons could not be adequately described by, or considered comparable to, existing codes or combinations of
codes.
However, even with a positive coverage and reimbursement response from
CMS regarding a product of ours, future action by CMS or other government agencies may diminish possible payments to physicians, outpatient
centers and/or hospitals that purchase our products for use by their patients and possible payments to individuals who purchase the ReWalk
Personal Exoskeleton for their own use. Additionally, a decision by CMS to provide reimbursement could influence other payors, including
private insurers. The existence of a HCPCS code, a Medicare benefit category, or a fee schedule amount does not guarantee favorable claim
determinations, adequate payment levels, broad beneficiary access, or adoption by commercial payors, and if CMS or its contractors impose
restrictive payment, documentation, or coverage conditions, our products may not be reimbursed at a cost-effective level or at all. Those
private third-party payors that do not follow the Medicare guidelines may adopt different coverage and reimbursement policies for purchase
of our products or their use in a hospital or rehabilitative setting. In addition, we expect that the purchase of ReWalk Rehabilitation
Exoskeleton systems and the ReStore system, as it is currently being sold for use in rehabilitative settings, will require the approval
of senior management at hospitals or rehabilitation facilities, inclusion in the hospitals’ or rehabilitation facilities’
budget process for capital expenditures, and in the case of ReWalk Personal Exoskeleton, fundraising, and financial planning or assistance.
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In December 2015, the VHA issued a national reimbursement policy for
the ReWalk system, which entails the evaluation, training and procurement of ReWalk Personal Exoskeleton systems for all qualifying veterans
across the United States. In June 2018 the VHA updated its policy to expand training options for individuals who could not complete
mandatory training because of distance or drive-time barriers.
Third-party payors are developing increasingly sophisticated methods
of controlling healthcare costs. These cost control methods include prospective payment systems, capitated rates, benefit redesigns and
an exploration of other cost-effective methods of delivering healthcare. These cost control methods potentially limit the amount that
healthcare providers may be willing to pay for electronic exoskeleton medical technology if they provide coverage at all. We may be unable
to sell our products on a profitable basis if third-party payors deny coverage or provide insufficient levels of reimbursement.
Future legislation could result in modifications to the existing public
and private health care insurance systems that would have a material adverse effect on the reimbursement policies discussed above. If
enacted and implemented, any measures to restrict health care spending could result in decreased revenue from our products and decrease
potential returns from our research and development initiatives.
Outside the United States, in September 2017, BARMER signed a confirmation
and letter of agreement regarding the provision of ReWalk systems for all qualifying beneficiaries and the German national social accident
insurance provider DGUV indicated that its member payors will approve the supply of exoskeleton systems for qualifying beneficiaries on
a case-by-case basis. In February 2025, we finalized an agreement with BARMER to formalize the reimbursement process for the provision
of ReWalk exoskeletons to medically eligible beneficiaries. However, no broad uniform policy of coverage and reimbursement for electronic
exoskeleton medical technology exists among third-party payors in the United States, although reimbursement may be achieved on a case-by-case
basis. To date, payments for our products, which are largely for our ReWalk systems, have been made primarily through case-by-case determinations
by third-party payors (including several private insurers in the United States), by self-payors and, to a lesser extent, through the use
of funds from insurance and/or accident settlements.
Defects in our products or the software that drives
them could adversely affect the results of our operations.
The design, manufacture and marketing of our products involve certain
inherent risks. Manufacturing or design defects, unanticipated use of ReWalk, ReStore, or AlterG, or inadequate disclosure of risks relating
to the use of our products can lead to injury or other adverse events. In addition, because the manufacturing of some of our products
is outsourced to Cirtronics, the original equipment manufacturer of such products, we may not be aware of manufacturing defects that could
occur. Such adverse events could lead to recalls or safety alerts relating to those products (either voluntary or required by the FDA
or similar governmental authorities in other countries), and could result, in certain cases, in the removal of our products from the market.
A recall could result in significant costs. To the extent any manufacturing defect occurs, our agreement with Cirtronics contains a limitation
on Cirtronics’s liability, and therefore we could be required to incur the majority of related costs. Product defects or recalls
could also result in our inability to profitably grow our business due to parts shortages, increased field service demand, and inventory
shortages, and the resulting negative publicity, customer dissatisfaction, damage to our reputation or, in some circumstances, delays
in new product clearances or approvals.
When an exoskeleton is used by a paralyzed individual to walk, the individual
relies completely on the exoskeleton to hold him or her upright. Between 2013 and 2021, we submitted medical device reports (“MDRs”)
to the FDA (and equivalent authorities outside of the United States) relating to reports of falls and fractures of individuals using the
ReWalk Personal Exoskeleton system. We conducted a voluntary correction related to certain use instructions in the device’s labeling,
which the FDA classified as a Class II recall. The recall was closed in November 2019, and the FDA cleared our 510(k) containing revised
instructions for use in May 2020. Since that time, we have submitted eight further MDRs.
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In addition, our products incorporate sophisticated computer software
and hardware. Complex software frequently contains errors, especially when first introduced. Our software may experience errors or performance
problems in the future. If any part of our product’s hardware or software were to fail, the user could experience death or serious
injury. For example, in 2021 ReWalk submitted MDRs to the FDA and medical device vigilance reports to the European regulatory authorities
and initiated a correction in response to two complaints regarding battery thermal runaway events. The correction that includes clarification
of previous instructions and additional information on battery operation and storage is closed in Europe and in the United States. ReWalk
separately initiated a design project to improve power management and battery operation during charge and discharge, and this design improvement
was released in the ReWalk 7 Personal Exoskeleton. Additionally, users may not use or maintain our products in accordance with safety,
storage, and training protocols, which could enhance the risk of death or injury. Any such occurrence could cause delay in market acceptance
of our products, damage to our reputation, the need for additional regulatory filings, product recalls, increased service and warranty
costs, product liability claims, and loss of revenue relating to hardware or software defects.
The medical device industry has historically been subject to extensive
litigation over product liability claims. We have been and anticipate that as part of our ordinary course of business we may be subject
to product liability claims alleging defects in the design, manufacture, or labeling of any of our products which has resulted in an injury
or death. A product liability claim, regardless of its merit or eventual outcome, could result in significant legal defense costs and
high punitive damage payments. Although we maintain product liability insurance, the coverage is subject to deductibles and limitations,
and may not be adequate to cover future claims. Additionally, we may be unable to maintain our existing product liability insurance in
the future at satisfactory rates or adequate amounts. Any alleged defect that has resulted in an adverse event involving our products
could result in future voluntary corrective actions, such as recalls or customer letters, or in an FDA enforcement action, such as a mandatory
recall, notification to healthcare professionals and users, warning letter, seizure, injunction or import alert. In addition, failure
to report such adverse events to appropriate government authorities on a timely basis, or at all, could result in enforcement action against
us. Any action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require financial resources and distract
management, and may harm our reputation and financial results.
If we are unable to leverage our sales, marketing,
and training infrastructure we may fail to increase our sales.
A key element of our long-term business strategy is the continued leveraging
of our sales, marketing, training, and reimbursement infrastructure, through the training, retention, and motivation of skilled sales
and marketing representatives and reimbursement personnel with industry experience and knowledge. Our ability to derive revenue from sales
of our products depends largely on our ability to market the products and obtain reimbursements for them. In order to continue growing
our business efficiently, we must therefore coordinate the development of our sales, marketing, training and reimbursement infrastructure
with the timing of regulatory approvals, decisions regarding reimbursements, limited resources consideration and other factors in various
geographies. Managing and maintaining our sales and marketing infrastructure is expensive and time consuming, and an inability to leverage
such an organization effectively, or in coordination with regulatory or other developments, could inhibit potential sales and the penetration
and adoption of our products into both existing and new markets. However, certain decisions we make regarding staffing in these areas
in our efforts to maintain an adequate spending level could have unintended negative effects on our revenue, such as by weakening our
sales infrastructure, impairing our reimbursement efforts and/or harming the quality of our customer service.
Additionally, we expect to face significant challenges as we manage
and continue to improve our sales and marketing infrastructure and work to retain the individuals who make up those networks. Newly hired
sales representatives require training and take time to achieve full productivity. If we fail to train new hires adequately, or if we
experience high turnover in our sales force in the future, we cannot be certain that new hires will become as productive as may be necessary
to maintain or increase our sales. In addition, if we are not able to retain existing and recruit new trainers to our clinical staff,
we may not be able to successfully train customers on the use of ReWalk, AlterG, or ReStore systems which could inhibit new sales and
harm our reputation. If we are unable to expand our sales, marketing, and training capabilities, we may not be able to effectively commercialize
our products, or enhance the strength of our brand, which could have a material adverse effect on our operating results.
37
The potential health benefits of our ReWalk products
have not been substantiated by long-term clinical data, which could limit sales of such products.
Although published research and users of our ReWalk products have reported
the potential secondary health benefits of our ReWalk products such as a reduction in pain and spasticity, improved bowel and urinary
tract functions and emotional and psychosocial benefits, among others, currently there is no large scale, randomized clinical trial establishing
the secondary health benefits of ReWalk products due to the relatively small size of the applicable user population. There is also a lack
of randomized clinical data for such health benefits of the ReStore-specifically its long-term benefits following the usage of the product
within the clinic as the trials conducted to date using this product are limited.
As a result, potential customers and healthcare providers may be slower
to adopt or recommend ReWalk products or ReStore and third-party payors may not be willing to provide coverage or reimbursement for our
products. In addition, future studies or clinical experience may indicate that treatment with our current or future products is not superior
to treatment with alternative products or therapies. Such results could slow the adoption of our products and significantly reduce our
sales.
We depend on third-party suppliers to manufacture
our AlterG products and we rely on a limited number of third-party suppliers for certain components of our products.
We have contracted with Cirtronics, a well-established contract manufacturer
with expertise in the medical device industry, for the manufacture of all our AlterG products and the sourcing of all of our components
and raw materials for those products. We may terminate our relationship with Cirtronics through notice at least one year prior to the
expiration of the initial term or renewal term of the contract. Either we, on the one hand, or Cirtronics, on the other hand, may
terminate the relationship in the event of a material breach, subject to a 45-day period. For our business strategy to be successful,
Cirtronics must be able to manufacture our products in sufficient quantities, in compliance with regulatory requirements and quality control
standards, in accordance with agreed upon specifications, at acceptable costs and quality levels, and on a timely basis. Increases in
our product sales, whether forecasted or unanticipated, could strain the ability of Cirtronics to manufacture an increasingly large supply
of our current or future products in a manner that meets these various requirements. In addition, although we are not restricted from
engaging an alternative manufacturer, and potentially have the capabilities to manufacture our products in-house, the process of moving
our manufacturing activities would be time consuming and costly, and may limit our ability to meet our sales commitments, which could
harm our reputation and could have a material adverse effect on our business. In the second quarter of 2025, we transitioned the manufacturing
of our ReWalk products to our in-house manufacturer in an effort to reduce costs and provide us with more control over product quality.
As a result, we terminated our agreement with Sanmina Corporation, an international contract manufacturer that manufactured our ReWalk
products at its facility in Israel since 2013 and sourced the components and raw materials necessary for manufacturing. Moreover, the
failure of Cirtronics to comply with applicable regulatory requirements could expose us to regulatory action including warning letters,
product recalls, termination of distribution, product seizures or civil penalties.
We also rely on third-party suppliers, many of which contract directly
with Cirtronics, to supply certain components of our products, and in some cases, we purchase these components ourselves. Neither Lifeward
nor Cirtronics has long-term supply agreements with most of the suppliers and, in many cases, make purchases on a purchase order basis
and our ability to secure adequate quantities of such products may be limited. Suppliers may encounter problems that limit their ability
to manufacture components for our products, including financial difficulties or damage to their manufacturing equipment or facilities.
If Lifeward or Cirtronics fails to obtain sufficient quantities of high-quality components to meet demand on a timely basis, we could
lose customer orders, our reputation may be harmed, and our business could suffer.
Our results of operations and liquidity could be adversely impacted
by supply chain disruptions and operational challenges faced by our manufacturer or suppliers. Cirtronics generally uses a small number
of suppliers for the AlterG products. Depending on a limited number of suppliers exposes us to risks, including limited control over pricing,
availability, quality, and delivery schedules. If any one or more of our suppliers ceases to provide sufficient quantities of components
in a timely manner or on acceptable terms, we or Cirtronics would have to seek alternative sources of supply or accept price increases
as we saw during the pandemic. It may be difficult to engage additional or replacement suppliers in a timely manner. Failure of these
suppliers to deliver products at the level our business requires would limit our ability to meet our sales commitments, which could harm
our reputation and could have a material adverse effect on our business. The ability of these suppliers to perform is largely outside
of our control. We or Cirtronics may also have difficulty obtaining similar components from other acceptable suppliers, which could require
us to cease using the components, seek alternative components or technologies and we could be forced to modify our products to incorporate
alternative components or technologies, which could result in a requirement to seek additional regulatory clearances or approvals. Any
disruption of this nature or increased expenses could harm our commercialization efforts and adversely affect our operating results.
38
Cirtronics manufacturing and assembly of our AlterG products pursuant
to our specifications is conducted at a single facility in Milford, New Hampshire. Accordingly, we are highly dependent on the uninterrupted
and efficient operation of these facilities. If operations at either of these facilities were to be disrupted as a result of acts of war
or terrorism, equipment failures, earthquakes and other natural disasters, fires, accidents, work stoppages, power outages, or other reasons
such as a local shutdown as we experienced during the COVID-19 pandemic, our business, financial condition and results of operations could
be materially adversely affected. Although our manufacturing and assembly operations could be transferred elsewhere, either in-house or
to alternative Cirtronics facilities, the process of relocating these operations would cause delays in production. Lost sales or increased
costs that we may experience during the disruption, or a forced relocation, of operations may not be recoverable under our insurance policies,
and longer-term business disruptions could result in a loss of customers. If this were to occur, our business, financial condition and
operations could be materially negatively impacted. Additionally, our reliance on Cirtronics as a contract manufacturer or any other contract
manufacturer makes us vulnerable to possible capacity constraints and reduced control over component availability, delivery schedules,
manufacturing yields and costs.
We operate in a competitive industry that is subject
to rapid technological change, and we expect competition to increase.
There are several other companies developing technology and devices
that compete with our products. Our principal competitors in the medical exoskeleton market consist of Ekso Bionics, Rex Bionics, Cyberdyne,
FREE Bionics, Wandercraft, and others. These companies have products currently available for institutional use and in some cases personal
use. We expect some of such products to become available for personal use in the next few years, especially as we continue to expand coverage
by different payors and geographies. In addition, we compete with alternative devices and alternative therapies, including treadmill-based
gait therapies, such as those offered by DIH (formerly known as Hocoma), Boost, Aretech, BTL, Reha Technology, and Bioness, which is a
unit of Bioventus. Our competitor base may change or expand as we continue to develop and commercialize our soft suit exoskeleton product
in the future. These or other medical device or robotics companies, academic and research institutions, or others, may develop new technologies
or therapies that provide a superior walking and usage experience, are more effective in treating the secondary medical conditions that
we target or are less expensive than ReWalk, AlterG, or ReStore, or future products. Our technologies and products could be rendered obsolete
by such developments. We may also compete with other treatments and technologies that address the secondary medical conditions that our
products seek to mitigate.
Our competitors may respond more quickly to new or emerging technologies,
undertake more extensive marketing campaigns, have greater financial, marketing, and other resources than we do or may be more successful
in attracting potential customers, employees, and strategic partners. In addition, potential customers, such as hospitals and rehabilitation
centers, could have long-standing or contractual relationships with competitors or other medical device companies. Potential customers
may be reluctant to adopt ReWalk, AlterG, or ReStore, particularly if it competes with or has the potential to compete with or diminish
the need/utilization of products or treatments supported through these existing relationships. If we are not able to compete effectively,
our business and results of operations will be negatively impacted.
In addition, because we operate in a new market, the actions of our
competitors could adversely affect our business. Adverse events such as product defects or legal claims with respect to competing or similar
products could cause reputational harm to the exoskeleton market on the whole. Further, adverse regulatory findings or reimbursement-related
decisions with respect to other exoskeleton products could negatively impact the entire market and, accordingly, our business.
39
We utilize independent distributors for the ReWalk
and AlterG products who are free to market other products that compete with ours.
While we expect that the percentage of our sales generated from independent
distributors will decrease over time as we continue to focus our resources on achieving reimbursement within our direct markets in the
United States and Europe, we believe that independent distributors of the ReWalk or AlterG products will continue to be an important
distribution channel for us in the future. None of our independent distributors has been required to sell our products exclusively. Our
agreements with these distributors generally have one-year initial terms and automatic renewals for an additional year. If any of our
key independent distributors of the ReWalk or AlterG products were to cease to distribute our products, our sales could be adversely affected.
In such a situation, we may need to seek alternative independent distributors or increase our reliance on our other independent distributors
or our direct sales representatives, which may not prevent our sales from being adversely affected. Additionally, to the extent that we
enter additional arrangements with independent distributors to perform sales, marketing, or distribution services, the terms of the arrangements
could cause our product margins to be lower than if we directly marketed and sold our products.
We may receive a significant number of warranty claims
or our ReWalk, AlterG, or ReStore systems may require significant amounts of service after sale.
Sales of ReWalk systems generally include a five-year warranty for parts
and services, other than for normal wear and tear. However, systems sold to customers reimbursed through CMS programs are typically provided
with a two-year warranty. Some of our active devices delivered prior to 2019 included a two-year warranty, and these customers have the
option to purchase an extended warranty for up to an additional three years. Our ReStore product offering includes a two-year warranty
for parts and services, and AlterG Anti-Gravity systems are sold with a one-year factory warranty covering parts and services. If warranty
claims, product returns, or service requirements exceed our expectations, we may incur unanticipated costs for parts and services, which
could materially adversely affect our operating results.
We may not be able to enhance our exoskeleton product offerings through
our research and development efforts.
In order to increase our sales and our market share in the exoskeleton
market, we are working to enhance and broaden our research and development efforts and product offerings in response to the evolving demands
of people with paraplegia, paralysis, other medical conditions and healthcare providers, as well as competitive technologies. We are also
currently involved in ongoing research and development efforts directed to the needs of patients with other mobility impairments, such
as stroke, and began commercializing our ReStore product for stroke patients in 2019. We currently market the device in the United
States on a limited basis, and sales in the European Union ceased in May 2024. Depending on our future resources and business focus, we
plan to address these needs in patients with other conditions or devices for stroke patients to be used at home, improving our current
products, or developing products to address additional medical conditions such as multiple sclerosis, Parkinson’s disease or cerebral
palsy and support elderly assistance. We may decide to invest our business development resources in partnerships, licensing agreements,
business acquisition and other ways that will provide us new product offerings without significant research and development activities.
We may not be successful in developing, obtaining regulatory approval for, or marketing our currently proposed products, or our approved
products for additional indications, products proposed to be created in the future or products that will be available for us through business
acquisitions. In addition, notwithstanding our market research efforts, our future products may not be accepted by consumers, their caregivers,
healthcare providers or third-party payors who reimburse consumers for our products. The success of any proposed product offerings will
depend on numerous factors, including our ability to:
|
• |
identify the product features that people with paraplegia or paralysis, their caregivers,
and healthcare providers are seeking in a medical device that restores upright mobility and successfully incorporate those features into
our products; |
|
• |
identify the product features that people with stroke, multiple sclerosis or other similar
indications require while the products are used at home as well as what items are valuable to the clinics that provide them rehabilitation; |
|
• |
develop and introduce proposed products in sufficient quantities and in a timely manner; |
40
|
• |
adequately
protect our intellectual property and avoid infringing upon the intellectual property rights of third-parties; |
|
• |
demonstrate
the safety, efficacy, and health benefits of proposed products; and |
|
• |
obtain
the necessary regulatory clearances and approvals for proposed products. |
If
we fail to generate demand by developing products that incorporate features desired by consumers, their caregivers or healthcare providers,
or if we do not obtain regulatory clearance or approval for proposed products in time to meet market demand, we may fail to generate sales
sufficient to achieve or maintain profitability. We have in the past experienced, and we may in the future experience, delays in various
phases of product development, including during research and development, manufacturing, limited release testing, marketing, and customer
education efforts. Such delays could cause customers to delay or forgo purchases of our products, or to purchase our competitors’
products. Even if we are able to successfully develop proposed products when anticipated, these products may not produce sales in excess
of the costs of development, and they may be quickly rendered obsolete by changing consumer preferences or the introduction by our competitors
of products embodying new technologies or features.
We
may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances, business acquisitions or partnerships with
third parties that may not result in the development of commercially viable products or the generation of significant future revenue.
In
the ordinary course of our business, we may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances,
business acquisitions, partnerships or other arrangements to develop our products and to pursue new geographic or product markets. Proposing,
negotiating, and implementing collaborations, in-licensing arrangements, joint ventures, strategic alliances, or partnerships may be a
lengthy and complex process. Other companies, including those with substantially greater financial, marketing, sales, technology or other
business resources, may compete with us for these opportunities or arrangements. We may not identify, secure, or complete any such transactions
or arrangements in a timely manner, on a cost-effective basis, on acceptable terms or at all. We have limited institutional knowledge
and experience with respect to these business development activities, and we may also not realize the anticipated benefits of any such
transaction or arrangement. In particular, these collaborations may not result in the development of products that achieve commercial
success or result in significant revenue and could be terminated prior to developing any products. For example, we have entered into agreements
with MediTouch and MYOLYN for the distribution of their products in the U.S. After several years of commercial collaboration, we determined
that the agreement with MediTouch would not yield commercially acceptable results for us and we terminated the agreement as of January
31, 2023. Similarly, the distribution arrangement with MYOLYN or other new future arrangements may not be as productive or successful
as we hope.
On
May 16, 2016, we entered into the Collaboration Agreement and License Agreement with Harvard. Pursuant to the Collaboration Agreement,
we have agreed to collaborate with Harvard for the research, design, development, and commercialization of lightweight exoskeleton system
technologies for lower limb disabilities, aimed to treat stroke, multiple sclerosis, mobility limitations for the elderly and other medical
applications. The Collaboration Agreement concluded on March 31, 2022. The License Agreement will continue in full force and effect until
the expiration of the last-to-expire valid claim of the licensed patents. For more information on the collaboration with Harvard, see
“Part I. Item 1. Business - Research and Development - Research and Development Collaboration.”
Additionally,
as we pursue these arrangements and choose to pursue other collaborations, in-licensing arrangements, joint ventures, strategic alliances,
or partnerships in the future, we may not be in a position to exercise sole decision-making authority regarding the transaction or arrangement.
This could create the potential risk of creating impasses on decisions, and our collaborators may have economic or business interests
or goals that are, or that may become, inconsistent with our business interests or goals. It is possible that conflicts may arise with
our collaborators. Our collaborators or any future collaborators may act in their self-interest, which may be adverse to our best interest,
and they may breach their obligations to us. Disputes between us and our collaborators or any future collaborators may result in litigation
or arbitration which would increase our expenses and divert the attention of our management. Further, these transactions and arrangements
are contractual in nature and may be terminated or dissolved under the terms of the applicable agreements. Our collaborators or any future
collaborators may allege that we have breached our agreement with them, and accordingly seek to terminate such agreement, which could
adversely affect our competitive business position and harm our business prospects.
41
We
may seek 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, could have a material adverse effect on our business, financial condition, and
operating results.
From
time to time, we may consider opportunities to acquire or license other products or technologies that may enhance our product platform
or technology, expand the breadth of our markets or customer base, or advance our business strategies. For example, as discussed above
in “Part I. Item 1. Business - Overview”, on August 11, 2023, we completed the acquisition of AlterG which became an indirect
and wholly-owned subsidiary of the Company, and on February 19, 2026, we entered into an Intellectual Property Assignment and Technology
Transfer Agreement with Skelable Ltd. to acquire certain assets, including certain intellectual property and related technology assets.
Potential acquisitions involve numerous risks, including:
|
● |
problems
assimilating the acquired products or technologies; |
|
● |
issues
maintaining uniform standards, procedures, controls and policies; |
|
● |
problems
integrating employees from an acquired organization into our company and integrating each company’s accounting, management information,
human resources and other administrative systems; |
|
● |
unanticipated
costs associated with acquisitions; |
|
● |
diversion
of management’s attention from our existing business operations; |
|
● |
potential
incurrence of debt, contingent liabilities or amortization expenses, or write-offs of goodwill; |
|
● |
risks
associated with entering new markets in which we have limited or no experience; and |
|
● |
increased
legal and accounting costs relating to the acquisitions or compliance with regulatory matters. |
We
have no current commitments with respect to any acquisition or licensing. We do not know if we will be able to identify such acquisitions
or licensing we deem suitable, whether we will be able to successfully complete any such transactions on favorable terms, or at all, or
whether we will be able to successfully integrate any acquired products or technologies. Our potential inability to integrate any acquired
products or technologies effectively may adversely affect our business, operating results, and financial condition. For more information,
see the risk factor above entitled “Risks Related to Our Business and Our Industry – We may fail to realize the benefits expected
from our acquisition of AlterG, which could adversely affect the price of our ordinary shares.”
Risks
Related to Government Regulation
Although
the FDA granted Breakthrough Device Designation status to our ReBoot device, this designation does not guarantee regulatory clearance,
or a speedier clearance timeline.
In
November 2021, the FDA granted Breakthrough Device Designation status to ReBoot, a personal soft exo-suit for home and community use by
individuals post-stroke. For more information regarding the Breakthrough Device, see “Part I, Item 1. Business-Government Regulation”
above.
However,
achieving Breakthrough Device Designation status does not guarantee regulatory clearance or approval or a speedier clearance or approval
timeline. We have not yet submitted a premarket submission to the FDA or any foreign regulatory agency for clearance or other marketing
authorization of ReBoot. 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 it remains indefinitely on hold.
42
U.S.
healthcare reform measures and other potential legislative initiatives could adversely affect our business.
Changes
in United States federal and state legislation, regulation, global trade, reimbursement policy, enforcement priorities, and government
policy could substantially impact our business and the medical device industry generally. Certain proposals, if enacted into law, could
impose limitations on the prices we will be able to charge for our ReWalk system or any products we may develop and offer in the future,
or the amounts of reimbursement available for such products from governmental agencies or third-party payors. Additionally, any reduction
in reimbursement from Medicare or other government-funded federal programs, including the VHA, or state healthcare programs could lead
to a similar reduction in payments from private commercial payors. The FDA’s policies may also change, and additional government
regulations may be issued that could prevent, limit, or delay regulatory approval of our future products, or impose more stringent product
labeling and post-marketing testing and other requirements.
We
expect that changes or additions to the Medicare and Medicaid programs and changes stemming from other healthcare reform measures, especially
with regard to healthcare access, financing or other legislation in individual states, could have a material adverse effect on the healthcare
industry and on coverage, reimbursement, purchasing decisions, capital budgets, and demand for our products.
The
Budget Control Act of 2011, among other things, created the Joint Select Committee on Deficit Reduction to recommend proposals in spending
reductions to Congress. The Joint Select Committee did not achieve its targeted deficit reduction of an amount greater than $1.2 trillion
for the fiscal years 2012 through 2021, triggering the legislation’s automatic reductions to several government programs. These
reductions included aggregate reductions to Medicare payments to healthcare providers of up to 2% per fiscal year. The Bipartisan Budget
Act of 2018 retained the federal budget “sequestration” Medicare payment reductions of 2% and extended it through 2031. Under
the Consolidated Appropriations Acts of 2023 and 2024, the Medicare sequester percentage in FY2032 is scheduled to be 2% from April 1,
2032, through September 30, 2032, and 0% for October 1, 2032 through March 31, 2033, unless congressional action is taken.
On
January 2, 2013, the American Taxpayer Relief Act was signed into law, which, among other things, reduced Medicare payments to several
types of providers, including hospitals, imaging centers, and cancer treatment centers, and increased the statute of limitations period
for the government to recover overpayments to providers from three to five years.
The
implementation of cost containment measures or other healthcare reforms may thus prevent us from being able to generate revenue, attain
profitability or further commercialize our existing or future products. We are currently unable to predict what additional legislation
or regulation, if any, relating to the health care industry may be enacted in the future or what effect recently enacted federal legislation
or any such additional legislation or regulation would have on our business. The pendency or approval of such proposals or reforms could
result in a decrease in our stock price or limit our ability to raise capital or to enter into collaboration agreements for the further
development and commercialization of our programs and products.
Our
devices are subject to the FDA’s regulations pertaining to marketing and promotional communications, among others. Failure to comply
with such regulations may give rise to a number of potential FDA enforcement actions, any of which could have a material adverse effect
on our business.
Our
sales and marketing efforts, as well as promotions, are subject to various laws and regulations. Medical device promotions must be consistent
with and not contrary to labeling and the indication for use, be truthful and not false or misleading, and be adequately substantiated.
In addition to the requirements applicable to 510(k)-cleared products, we may also be subject to enforcement action in connection with
any promotion of an investigational new device. A sponsor or investigator, or any person acting on behalf of a sponsor or investigator,
may not represent in a promotional context that an investigational new device is safe or effective for the purposes for which it is under
investigation or otherwise promote the device.
43
Our
marketing and promotional materials are subject to FDA scrutiny to ensure that the device is being marketed in compliance with these requirements.
If the FDA investigates our marketing and promotional materials and finds that any of our current or future commercial products were being
marketed for unapproved or uncleared uses or in a false or misleading manner, we could be subject to FDA enforcement or enforcement from
other government agencies, and/or false advertising consumer lawsuits, each of which could have a material adverse effect on our business.
We
are subject to extensive governmental regulations relating to the manufacturing, labeling, and marketing of our products, and a failure
to comply with such regulations could lead to withdrawal or recall of our products from the market.
Our
medical products and manufacturing operations are subject to regulation by the FDA, the European Union, and other governmental authorities
both inside and outside of the United States. These agencies enforce laws and regulations that govern the development, testing, manufacturing,
labeling, storage, installation, servicing, advertising, promoting, marketing, distribution, import, export and market surveillance of
our products.
Our
products are regulated as medical devices in the United States under the Federal Food Drug, and Cosmetic Act, (“FFDCA”) as
implemented and enforced by the FDA. Under the FFDCA, medical devices are classified into one of three classes (Class I, Class II or Class
III) depending on the degree of risk associated with the medical device, what is known about the type of device, and the extent of control
needed to provide reasonable assurance of safety and effectiveness. Classification of a device is important because the class to which
a device is assigned determines, among other things, the necessity and type of FDA review required prior to marketing the device. For
more information, see “Part I, Item 1. Business-Government Regulation” above.
In
June 2014, the FDA granted our request for “de novo” classification, which provides a route to market for medical devices
that are low to moderate risk, but are not substantially equivalent to a predicate device, and classified ReWalk as Class II powered exoskeleton
device subject to certain special controls. In March 2023 the FDA granted 510(k) clearance 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. In March 2025
we received 510(k) clearance from FDA for the ReWalk 7 Personal Exoskeleton, a next-generation ReWalk model. The ReWalk is intended to
enable individuals with spinal cord injuries to perform ambulatory functions under supervision of a specially trained companion, indoor
and outdoor. The special controls established in the de novo order for all powered exoskeletons include the following: clinical testing
to demonstrate safe and effective use considering the level of supervision necessary and the use environment; non-clinical safety and
performance testing, including durability testing to demonstrate that the device performs as intended under anticipated conditions of
use; a training program; and labeling related to device use and user training. In order for us to market ReWalk, we must comply with both
general controls, including controls related to quality, facility registration, reporting of adverse events and labeling, and the special
controls established for the device. Failure to comply with these requirements could lead to an FDA enforcement action, which would have
a material adverse effect on our business.
In
June 2019, the FDA issued a 510(k) clearance for our ReStore device. ReStore is intended to be used to assist ambulatory functions in
rehabilitation institutions under the supervision of a trained therapist for people with hemiplegia or hemiparesis due to stroke who have
a specified amount of ambulatory function. In order for us to market ReStore and ReWalk, we must comply with both general controls, including
controls related to quality, facility registration, reporting of adverse events and labeling, and the special controls established for
powered exoskeleton devices as described above. Failure to comply with these requirements could lead to an FDA enforcement action, which
would have a material adverse effect on our business.
In
the E.U. we are subject to regulations and standards regulating the design, manufacture, clinical trials, labeling and adverse event (i.e.,
vigilance) reporting for medical devices. The Medical Devices Regulation (EU) 2017/745 (MDR) became fully applicable on May 26, 2021,
repealing and replacing the pre-existing E.U. Medical Devices Directive 93/42/EEC, MDD. Devices that comply with the requirements of the
MDR, subject to certain transitional provisions that allow continued compliance of certain products to the MDD, are entitled to bear the
CE mark, indicating that the device conforms to the essential requirements of the MDR and, accordingly, can be commercially distributed
throughout the European Economic Area (i.e., the E.U. Member States plus Norway, Iceland, and Lichtenstein). We received the CE mark for
our ReStore device under the MDD and because the ReStore was not planned for MDR conformity, we ceased sales of the ReStore in the E.U.
in May 2024. For our ReWalk Systems, we received MDR certification for the ReWalk 7 Personal Exoskeleton device in September 2025.
Prior models of our ReWalk system are CE marked under the MDD and continue to be placed on the EU market in compliance with the MDR transitional
provisions. As compared with the MDD, the MDR includes additional premarket and post-market requirements, as well as potential product
reclassifications and more stringent commercialization requirements that could adversely affect our CE mark. Failure to comply with these
new requirements could lead to substantial penalties, including fines, revocation or suspension of the CE mark and criminal sanctions.
44
Following
the introduction of a product to a particular market, the competent governmental agencies in that market (and/or Notified Bodies in the
E.U.) will periodically inspect our manufacturing processes and quality controls, and we are under a continuing obligation to ensure that
all applicable regulatory requirements continue to be met. The process of complying with the applicable good manufacturing practices,
adverse event reporting and other requirements can be costly and time consuming, and could delay or prevent the production, manufacturing,
or sale of our devices. In addition, if we fail to comply with applicable regulatory requirements, it could result in fines, closure of
manufacturing sites, seizures or recalls of products and damage to our reputation, as well as enforcement actions against us. For example,
the FDA could request that we recall our ReWalk Personal Exoskeleton or ReStore device in case of product defects or require us to conduct
post-market surveillance studies. If we fail to recall the device and/or conduct requested post-market surveillance studies to FDA’s
satisfaction, we could be subject to FDA enforcement action.
In
addition, governmental agencies may impose new requirements regarding registration or labeling that may require us to modify or re-register
our products or otherwise impact our ability to market our products in those countries. The process of complying with these governmental
regulations can be costly and time-consuming, and could delay or prevent the production, manufacturing, or sale of our products.
If
we or our third-party manufacturers fail to comply with the FDA’s Quality Management System Regulation, or QMSR, our manufacturing
operations could be interrupted.
We
and our contract manufacturers, Sanmina and Cirtronics, are required to comply with the FDA’s QMSR which covers the methods and
documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage, and shipping
of our products. The QMSR became effective in February 2026 and amended the QSR. The QMSR incorporates by reference the international
standard for medical device quality management systems set by the International Organization for Standardization (ISO), ISO 13485:2016.
We, Sanmina, Cirtronics and our suppliers are also subject to the regulations of foreign jurisdictions regarding the manufacturing process
if we or our distributors market our products abroad. We actively maintain compliance with the FDA’s QMSR, and the European Union’s
Quality Management Systems requirements, ISO 13485:2016. We continue to monitor our quality management to maintain our overall level of
compliance. Our facilities are subject to periodic and unannounced inspection by U.S. and foreign regulatory agencies to audit compliance
with the QMSR and comparable foreign regulations. If our facilities or those of Sanmina of Cirtronics or our suppliers are found to be
in violation of applicable laws and regulations, or if we, Sanmina, Cirtronics or our suppliers fail to take satisfactory corrective action
in response to an adverse inspection, the regulatory authority could take enforcement action, including any of the following sanctions:
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letters, warning letters, fines, injunctions, consent decrees and civil penalties; |
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customer
notifications or repair, replacement, or refunds; |
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operating
restrictions or partial suspension or total shutdown of production; |
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recalls,
withdrawals, or administrative detention or seizure of our products; |
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denials
or delays of approvals for pre-market approval applications relating to new products or modified products; |
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withdrawals
of a PMA approvals; |
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refusal
to provide Certificates for Foreign Government; |
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refusal
to grant export approval for our products; or |
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pursuit
of criminal prosecution. |
Any
of these sanctions could impair our ability to produce our products in a cost-effective and timely manner in order to meet our customers’
demands and could have a material adverse effect on our reputation, business, results of operations, and financial condition. We may also
be required to bear other costs or take other actions that may have a negative impact on our future sales and our ability to generate
profits.
We
are subject to various laws and regulations, including “fraud and abuse” laws and anti-bribery laws, which, if violated, could
subject us to substantial penalties.
Medical
device companies such as ours have faced lawsuits and investigations pertaining to alleged violations of numerous statutes and regulations,
including anti-corruption laws and health care “fraud and abuse” laws, such as the federal False Claims Act, the federal Anti-Kickback
Statute, and the U.S. Foreign Corrupt Practices Act, or the FCPA.
U.S.
federal and state laws, including the federal Sunshine Act, and the implementation of Open Payments regulations under the Sunshine Act,
require medical device companies to disclose certain payments or other transfers of value made to certain healthcare providers or funds
spent on marketing and promotion of medical device products. Further, some state laws require medical device companies to report information
related to payments to physicians and other health care providers or marketing expenditures. They also impose additional administrative
and compliance burdens on us. In particular, these laws influence, among other things, how we structure our sales offerings and other
interactions with health care providers, including discount practices, customer support, education and training programs and physician
consulting and other service arrangements, including those with marketers and sales agents. We may face significant costs in attempting
to comply with these laws and regulations. If we are found to be in violation of any of these requirements or any actions or investigations
are instituted against us, those actions could be costly to defend and could have a significant impact on our business, including the
imposition of significant criminal and civil fines and penalties, exclusion from federal healthcare programs or other sanctions, and damage
to our reputation or business.
The
FCPA applies to companies like ours that are issuers of a class of securities registered under the Exchange Act. The FCPA and other global
and local anti-bribery laws which apply to various aspects of our operations generally prohibit companies and their directors, officers,
employees, agents, and other intermediaries from, directly or indirectly, authorizing, promising, offering, providing, or making improper
payments or giving anything else of value to government officials for the purpose of obtaining or retaining an unfair business advantage.
The FCPA also requires issuers to make and keep books and records that accurately and fairly reflect the transactions of the corporation
and to devise and maintain an adequate system of internal accounting controls sufficient to assure management’s control, authority,
and responsibility over the company's assets. In various jurisdictions, our operations require us and third parties acting on our behalf
to routinely interact with government officials, including medical personnel who may be considered government officials for purposes of
these laws. Other applicable anti-bribery laws, including the U. K. Bribery Act, also prohibit improper payments to private parties and
prohibit the receipt of improper payments. Our policies mandate compliance with applicable anti-bribery laws and prohibit our employees
and third parties we engage from offering, making or receiving corrupt payments. We have also implemented an anti-corruption compliance
program to mitigate the risk of violations of anti-bribery laws relating to our international operations. However, our program cannot
eliminate all risk that unauthorized improper acts have been or will be committed by our employees, agents, or other third parties acting
on our behalf. Violations of anti-bribery laws, or allegations of such violations, could result in civil or criminal sanctions or other
adverse consequences, including disruption of our business and harming our financial condition, results of operations, cash flows and
reputation.
46
If
we are found to have violated laws protecting the confidentiality of patient health information, we could be subject to civil or criminal
penalties, which could increase our liabilities and harm our reputation or our business.
There
are a number of federal, state and foreign laws protecting the confidentiality of certain patient health information, including patient
records, and restricting the use and disclosure of that protected information. In particular, the U.S. Department of Health and Human
Services, or HHS, promulgated patient privacy rules under HIPAA. These privacy rules protect medical records and other personal health
information by limiting their use and disclosure, giving individuals the right to access, amend and seek accounting of their own health
information and limiting most use and disclosures of health information to the minimum amount reasonably necessary to accomplish the intended
purpose. Additionally, the E.U. General Data Protection Regulation (the “EU GDPR”) and E.U. Member State laws, along with
the data protection laws in the United Kingdom (as specified below), impose more stringent data protection requirements and provides for
penalties for noncompliance. Additionally, if we or any of our service providers are found to be in violation of the promulgated patient
privacy rules under HIPAA, the EU GDPR, E.U. Member State laws, or UK data protection laws, we could be subject to civil or criminal penalties,
which could be substantial and could increase our liabilities, harm our reputation and have a material adverse effect on our business,
financial condition and operating results.
A
number of U.S. states have also enacted data privacy and security laws and regulations that govern the collection, use, disclosure, transfer,
storage, disposal, and protection of sensitive personal information, such as social security numbers, financial information and other
personal information. For example, several U.S. territories and all 50 states now have data breach laws that require timely notification
to individual victims, and at times regulators, if a company has experienced the unauthorized access or acquisition of sensitive personal
data. Several states have also enacted comprehensive consumer privacy laws that regulate controllers’ processing of consumers’
personal data, including the California Consumer Privacy Act (“CCPA”), which went into effect on January 1, 2020 and, among
other things, established a comprehensive privacy framework for covered businesses by creating an expanded definition of personal
information, establishing new data privacy rights for consumers in the State of California, imposing special rules on the collection of
consumer data from minors, and creating a new and potentially severe statutory damages framework for violations of the CCPA and for businesses
that fail to implement reasonable security procedures and practices to prevent data breaches. The CCPA was amended by the California Privacy
Rights Act which, as of January 1, 2023, has significantly modified the CCPA, including by expanding consumers’ rights with respect
to certain categories of sensitive personal information.
Similar
laws have been passed in numerous other states. Other states have proposed new privacy laws which, if enacted, may add additional complexity,
variation in requirements, restrictions and potential legal risk, require additional investment of resources in compliance programs, impact
strategies and the availability of previously useful data and could result in increased compliance costs and/or changes in business practices
and policies. The existence of comprehensive privacy laws in different states in the country would make our compliance obligations more
complex and costly and may increase the likelihood that we may be subject to enforcement actions or otherwise incur liability for noncompliance.
There are also states that are specifically regulating health information. For example, Washington’s My Health My Data Act, which
became effective on March 31, 2024, regulates the collection and sharing of health information and has a private right of action, which
further increases the relevant compliance risk. Connecticut and Nevada have also passed similar laws regulating consumer health data.
In addition, other states have proposed and/or passed legislation that regulates the privacy and/or security of certain specific types
of information. For example, a small number of states have passed laws that regulate biometric data specifically.
We
will continue to monitor and assess the impact of state law developments, which may impose substantial penalties for violations, impose
significant costs for investigations and compliance, allow private class-action litigation and carry significant potential liability for
our business. These various privacy and security laws may impact our business activities, including our identification of research subjects,
relationships with business partners and ultimately the marketing and distribution of our products. State laws are changing rapidly and
there are discussions in the U.S. Congress of new comprehensive federal data privacy laws to which we could become subject to, if enacted.
47
Our
operations may also be subject to European data privacy laws, regulations and guidelines. The collection, use, storage, disclosure, transfer,
or other processing of personal information regarding individuals in the EEA and UK, including personal health data, is subject to the
EU GDPR, with respect to the EEA and the UK General Data Protection Regulation and UK Data Protection Act 2018 with respect to the UK,
or UK GDPR, and collectively with the EU GDPR referred to as the “GDPR” in this document unless specified otherwise. The GDPR
is wide-ranging in scope and imposes numerous requirements on companies that process personal information, including requirements relating
to processing of special categories of personal information (such as health data), relying on a legal basis or condition for processing
personal information, where required obtaining consent of the individuals to whom the personal information relates, providing information
to individuals regarding data processing activities, conducting privacy impact assessments for “high risk” processing, implementing
safeguards to protect the security and confidentiality of personal information, implementing limitations on the retention of personal
information, providing mandatory notification of data breaches, and taking certain measures when engaging third-party processors. The
GDPR also imposes strict rules on the transfer of personal information to countries outside the EEA and UK to non-adequate territories,
including the United States in certain circumstances unless derogation exists or a valid GDPR transfer mechanism (for example, the European
Commission approved Standard Contractual Clauses, or SCCs, and the UK International Data Transfer Agreement/Addendum, or UK IDTA) have
been put in place. Where relying on the SCCs /UK IDTA for data transfers, we may also be required to carry out transfer impact assessments
to assess whether the recipient is subject to local laws which allow public authority access to personal information. Failure to comply
with the GDPR, and any supplemental EEA Member State or UK national data protection laws which may apply by virtue of the location of
the individuals whose personal information we collect, may result in substantial penalties, including potential fines of up to €20
million (£17.5 million for the UK GDPR) or 4% of annual global revenues for the preceding financial year, whichever is greater. The
GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities,
seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR. The GDPR increases our responsibility
and liability in relation to personal information that we process where such processing is subject to the GDPR, and requires us to put
in place additional mechanisms to ensure compliance with the GDPR, including as implemented by individual countries. Compliance with the
GDPR will be a rigorous and time-intensive process that may increase our cost of doing business or require us to change our business practices,
and despite those efforts, there is a risk that we may be subject to fines and penalties, litigation, and reputational harm in connection
with our European activities.
Furthermore,
in the EEA, the NIS 2 Directive (“NIS 2”) is replacing the cybersecurity legal framework under the current NIS framework,
aiming to ensure a high level of cybersecurity in the region. NIS 2 brings new medium and large organizations providing services in the
EEA within scope of the legal framework. It extends to additional sectors and expands the list of in-scope healthcare organizations, including
to certain providers engaged in research and development of medicinal products. The new regime imposes direct obligations on management
in respect of an in-scope organization's compliance with NIS 2, requires covered organizations to put in place certain cyber risk management
measures, strengthens incident reporting requirements and provides supervisory authorities with a greater oversight. The majority of obligations
will come into force when national legislation implementing NIS 2 becomes effective in the relevant EU Member State. EU Member States
had until 17 October 2024 to transpose NIS 2 into national legislation, although many countries have still not completed the transposition.
As such, the cybersecurity regulatory landscape in the EU is currently fragmented and uncertain. To the extent we are subject to NIS 2, we
will require additional investment of our resources in compliance programs. Under NIS 2 companies may be subject to administrative fines
of up to the higher amount of €10 million or 2% of worldwide turnover.
All
of these evolving compliance and operational requirements impose significant costs, such as costs related to organizational changes, implementing
additional protection technologies, training employees and engaging consultants and legal advisors, which are likely to increase over
time. In addition, such requirements may require us to modify our data processing practices and policies, utilize management’s time
and/or divert resources from other initiatives and projects. The interpretation and enforcement of the laws and regulations described
above are uncertain and subject to change and may require substantial costs to monitor and implement compliance with any additional requirements.
Failure, or perceived failure, to comply with U.S. or international data protection laws and regulations could result in government enforcement
actions (which could include substantial civil and/or criminal penalties), private litigation, including class action privacy litigation
in certain jurisdictions, and/or adverse publicity. which would subject us to significant fines, sanctions, awards, injunctions, penalties
or judgments. All of the above could negatively affect our financial condition, operating results and business.
48
Our
use of new and evolving technologies, such as artificial intelligence, may present risks and challenges that can impact our business,
including by posing cybersecurity and other risks to our confidential and/or proprietary information, including personal information,
and as a result we may be exposed to reputational harm and liability.
We
may integrate and use artificial intelligence (“AI”) in our products, operations and business processes. For example, we have
developed a prototype with integrated advanced sensing technologies and AI to enable autonomous decision making. Use of this technology
presents risks and challenges that could affect our business and we may experience brand or reputational harm, competitive harm or legal
liability.
A
growing number of legislators and regulators are adopting laws and regulations and have focused enforcement efforts on the adoption of
artificial intelligence, and use of such technologies in compliance with ethical standards and societal expectations. These developments
may increase our compliance burden and costs in connection with use of artificial intelligence and lead to legal liability if we fail
to meet evolving legal standards or if use of such technologies results in harms or other causes of action we did not predict. For example,
the EU’s Artificial Intelligence Act (“AI Act”) entered into force on August 1, 2024, with most provisions becoming
effective on August 2, 2026. This legislation imposes significant obligations on providers and deployers of artificial intelligence systems,
and encourages providers and deployers of artificial intelligence systems to account for EU ethical principles in their development and
use of these systems. The scope of requirements depends on legal and risk determinations that rely on novel legal provisions that have
not yet been interpreted by courts or regulators, and non-compliance can lead to significant fines.
Likewise,
in the U.S., several states, including Colorado and California, passed laws that are in effect or will take effect in 2026, to regulate
various uses of artificial intelligence, including to make consequential decisions. In addition, various federal regulators have issued
guidance and focused enforcement efforts on the use of AI in regulated sectors. The FDA, for example, issued guidance on the use of artificial
intelligence in medical devices, requiring detailed risk management and review processes to obtain approvals. Our development and use
of AI systems governed by these laws or regulations will need to meet higher standards of data quality, transparency, monitoring and human
oversight, and we would need to adhere to specific and potentially burdensome and costly ethical, accountability, and administrative requirements,
with the potential for significant enforcement or litigation in the event of any perceived non-compliance. We cannot predict the
ultimate content, timing, or effect of any new regulatory requirements or guidance, and failure to obtain or maintain required regulatory
clearances or approvals, or to comply with applicable regulatory requirements, could result in enforcement actions, injunctions, civil
or criminal penalties, and may materially adversely affect our ability to commercialize AI-enabled products and our financial condition
and results of operations.
The
rapid evolution of artificial intelligence will require the application of significant resources to design, develop, test and maintain
such systems to help ensure that artificial intelligence is implemented in accordance with applicable law and regulation and in a socially
responsible manner and to minimize any real or perceived unintended harmful impacts. Furthermore, our existing competitors and emerging
players may outpace us in implementing advanced artificial intelligence technologies that comply with evolving regulatory standards.
The
use of certain artificial intelligence technologies can also give rise to intellectual property risks, including by disclosing or otherwise
compromising our confidential or proprietary intellectual property, or by undermining our ability to assert or defend ownership rights
in intellectual property created with the assistance of artificial intelligence tools, which could result in costly litigation, royalty
obligations, and loss of customer goodwill.
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AI
technologies are inherently subject to limitations and may produce inaccurate, incomplete, or unreliable outputs and may fail to adapt
to highly individual biomechanics of each user. Given the critical nature of our products, this potentially exposes us to significant
product liability risks, including but not limited to claims alleging design defects, manufacturing defects, and negligence. Furthermore,
the application of traditional product liability principles to AI-enabled medical devices remains unsettled, and this legal uncertainty
makes it difficult to predict and manage our product liability risk. While we maintain product liability insurance, there can be no assurance
that our insurance coverage will be adequate to cover all claims. Any product liability claim, regardless of its merit or outcome, could
result in significant legal defense costs and diversion of management resources.
Our
vendors may in turn incorporate artificial intelligence tools into their offerings, and the providers of these artificial intelligence
tools may not meet existing or rapidly evolving regulatory or industry standards, including with respect to privacy and data security.
Further, bad actors around the world use increasingly sophisticated methods, including the use of artificial intelligence, to engage in
illegal activities involving the theft and misuse of personal information, confidential information and intellectual property. Any of
these effects could damage our reputation, result in the loss of valuable property and information, cause us to breach applicable laws
and regulations, and adversely impact our business.
Compliance
with various regulations, including those related to our status as a U.S. public company and the manufacturing, labeling, and marketing
of our products, may result in heightened general and administrative expenses and costs, divert management’s attention from revenue-generating
activities and pose challenges for our management team, which has limited time, personnel and finances to devote to regulatory compliance.
As
a U.S. public company, we are subject to various regulatory and reporting requirements, including those imposed by the SEC, the Sarbanes-Oxley
Act of 2002, or the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act,
the listing requirements of The Nasdaq Capital Market and other applicable securities rules and regulations. Additionally, our medical
products and manufacturing operations are regulated by the FDA, the European Union and other governmental authorities both inside and
outside of the United States. Compliance with the rules and regulations applicable to us as a publicly traded company in the United States
and medical device manufacturer has greatly increased, and may continue to increase, our legal, general and administrative and financial
compliance costs and has made, and may continue to make, some activities more difficult, time-consuming or costly. Additionally, these
regulatory requirements have diverted, and may continue to divert, management’s attention from revenue-generating activities and
may increase demands on management’s already-limited resources.
Our
management team consists of few employees, as the majority of our employees are engaged in sales and marketing and research and development
activities. For more information, see “Part I, Item 1. Business—Employees” above. In light of such constraints on its
time, personnel and finances, our management may not be able to implement programs and policies in an effective and timely manner to respond
adequately to the heightened legal, regulatory and reporting requirements applicable to us. In the past, for example, we have not always
been able to respond on a timely basis to requests from regulators, although we have not to date experienced any long-term material adverse
consequences as a result. Similar deficiencies, weaknesses, or lack of compliance with public company, medical device and other regulations
could harm our reputation in the capital markets or for quality and safety, negatively affect our ability to maintain our Nasdaq listing
or our public company status and to develop, commercialize or continue selling our products on a timely and cost effective basis, and
cause us to incur sanctions, including fines, injunctions, and penalties.
In addition,
complying with public disclosure rules makes the operations of our business more visible, which could result in threatened or actual litigation,
including by competitors and other third parties. If such claims were to be successful, our business and operating results could be harmed,
and even if any claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to
resolve them, could divert the resources of our management and harm our business and operating results.
We
are also subject to the requirement of Section 1502 of the Dodd-Frank Act and SEC rules related thereto to conduct due diligence and disclose
and report on whether certain minerals and metals, known as “conflict minerals,” are contained in our products and whether
they originate from the Democratic Republic of Congo and certain adjoining countries. Each year our management team devotes significant
time to conduct the required due diligence, and we may face reputational challenges if we determine that certain of our products contain
minerals that are not determined to be conflict free, or if we are unable to sufficiently verify the origins of all conflict minerals
used in our products through the procedures we implement.
50
Risks
Related to Our Intellectual Property and Information Technology
We
depend on computer and telecommunications systems we do not own or control and failures in our systems or a cybersecurity attack or incident
relating to our IT systems or technology could significantly disrupt our business operations or result in sensitive customer information
being compromised which would negatively materially affect our reputation and/or results of operations.
We
have entered into agreements with third parties for hardware, software, telecommunications, and other information technology services
in connection with the operation of our business. It is possible we or a third party that we rely on could incur interruptions from a
loss of communications, hardware or software failures, a cybersecurity attack, data breach or an incident relating to our IT systems or
technology including, ransomware, social engineering (including phishing attacks), the theft, fraud, and subsequent misuse of employee
credentials, denial-of-service attacks, business email compromises, computer viruses or malware. We believe that we have positive relations
with our vendors and maintain adequate anti-virus and malware software and controls; however, any interruptions to our arrangements with
third parties, to our computing and communications infrastructure, or to our information systems or any of those operated by a third party
that we rely on could significantly disrupt our business operations.
In
the current environment, there are numerous and evolving risks to cybersecurity and privacy, including criminal hackers, hacktivists,
state-sponsored intrusions, industrial espionage, employee or vendor malfeasance and human or technological error. Cybersecurity incidents
and data breaches at other companies and in government agencies have increased in recent years, and security industry experts and government
officials have warned about the risks of hackers and cyberattacks targeting businesses such as ours. Attempts to disrupt or gain unauthorized
access to our and our third-party vendors’ information systems from malicious third parties or insider threats may incorporate widely
varying and frequently changing tactics, which may be enhanced or facilitated by artificial intelligence. Computer hackers and others
routinely attempt to breach the security of technology products, services, and systems, and to fraudulently induce employees, customers,
or others to disclosure information or unwittingly provide access to systems or data. A cyberattack of our systems or networks that impairs
our information technology systems could disrupt our business operations and result in loss of service to customers, including technical
support for our ReWalk devices. While we have certain cybersecurity safeguards in place designed to protect and preserve the integrity
of our information technology systems, like other companies in our industry, we, and our third-party vendors, have experienced and expect
to continue to experience threats, including actual or attempted cyberattacks relating to our IT systems and networks. However, none of
these actual or attempted cyberattacks has had a material effect on our operations, business strategy, or financial condition. Although
we maintain cyber liability insurance, this insurance may not provide adequate coverage against potential liabilities related to any experienced
cybersecurity incident or data breach.
Additionally,
we have access to sensitive customer information in the ordinary course of business. If a significant cybersecurity incident occurred,
our reputation may be adversely affected, customer confidence may be diminished, or we may be subject to legal claims, any of which may
contribute to the loss of customers and have a material adverse effect on us. For more information, see “Risks Related to Government
Regulation” above. If we are found to have violated laws protecting the confidentiality of patient health information, we could
be subject to civil or criminal penalties, which could increase our liabilities and harm our reputation or our business. Our contracts
may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts
are sufficient to protect us from liabilities, damages, or claims related to our privacy and data security obligations.
51
Our success depends in part on our ability to obtain
and maintain protection for the intellectual property relating to or incorporated into our products.
Our success depends in part on our ability to obtain and maintain protection
for the intellectual property relating to or incorporated into our products. We seek to protect our intellectual property through a combination
of patents, trademarks, confidentiality, and assignment agreements with our employees and certain of our contractors, and confidentiality
agreements with certain of our consultants, scientific advisors, and other vendors and contractors. In addition, we rely on trade secret
law to protect our proprietary software and product candidates/products in development. For more information, see “Part I, Item
1. Business—Intellectual Property” above.
Our patent position with respect to our exoskeleton and anti-gravity
systems can be highly uncertain and involves many new and evolving complex legal, factual, and technical issues. Patent laws and interpretations
of those laws are subject to change, and any such changes may diminish the value of our patents or narrow the scope of our right to exclude
others. In addition, we may fail to apply for or be unable to obtain patents necessary to protect our technology or products from competition
or fail to enforce our patents due to lack of information about the exact use of technology or processes by third parties. Also, we cannot
be sure that any patents will be granted in a timely manner or at all with respect to any of our patent pending applications or that any
patents that are granted will be adequate to exclude others for any significant period of time or at all. Given the foregoing and in order
to continue reducing operational expenses in the future, we may invest fewer resources in filing and prosecuting new patents and on maintaining
and enforcing various patents, especially in regions where we currently do not focus our market growth strategy.
Litigation to establish or challenge the validity of patents, or to
defend against or assert against others infringement, unauthorized use, enforceability, or invalidity, can be lengthy and expensive and
may result in our patents being invalidated or interpreted narrowly and restricting our ability to be granted new patents related to our
pending patent applications. Even if we prevail, litigation may be time consuming, force us to incur significant costs, and could divert
management’s attention from managing our business while any damages or other remedies awarded to us may not be valuable. In addition,
U.S. patents and patent applications may be subject to interference proceedings, and U.S. patents may be subject to re-examination and
review proceedings in the U.S. Patent and Trademark Office. Foreign patents may also be subject to opposition or comparable proceedings
in the corresponding foreign patent offices. Any of these proceedings may be expensive and could result in the loss of a patent or denial
of a patent application, or the loss or reduction in the scope of one or more of the claims of a patent or patent application.
In addition, we seek to protect our trade secrets, know-how, and confidential
information that is not patentable by entering into confidentiality and assignment agreements with our employees and certain of our contractors
and confidentiality agreements with certain of our consultants, scientific advisors, and other vendors and contractors. However, we may
fail to enter into the necessary agreements, and even if entered into, these agreements may be breached or otherwise fail to prevent disclosure,
third-party infringement, or misappropriation of our proprietary information, may be limited as to their term and may not provide an adequate
remedy in the event of unauthorized disclosure or use of proprietary information. Enforcing a claim that a third party illegally obtained
or is using our trade secrets without authorization may be expensive and time consuming, and the outcome is unpredictable. Some of our
employees or consultants may own certain technology which they license to us for a set term. If these technologies are material to our
business after the term of the license, our inability to use them could adversely affect our business and profitability.
We also have taken precautions to initiate reasonable safeguards to
protect our information technology systems. However, these measures may not be adequate to safeguard our proprietary information, which
could lead to the loss or impairment thereof or to expensive litigation to defend our rights against competitors who may be better funded
and have superior resources. In addition, unauthorized parties may attempt to copy or reverse engineer certain aspects of our products
that we consider proprietary, or our proprietary information may otherwise become known or may be independently developed by our competitors
or other third parties. If other parties are able to use our proprietary technology or information, our ability to compete in the market
could be harmed. Further, unauthorized use of our intellectual property may have occurred, or may occur in the future, without our knowledge.
If we are unable to obtain or maintain adequate protection for intellectual property, or
if any protection is reduced or eliminated, competitors may be able to use our technologies, resulting in harm to our competitive position.
52
Our patents and proprietary technology and processes may not provide us with a competitive advantage.
Robotics, exoskeletons, and anti-gravity system technologies have been
developing rapidly in recent years. We are aware of several other companies developing competing exoskeleton devices for individuals with
limited mobility and we expect the level of competition and the pace of development in our industry to increase. Likewise, we are aware
of several companies with commercial anti-gravity or treadmill-based gait therapy systems. For more information, see “Part I, Item
1. Business—Competition” above. While we believe our tilt-sensor technology provides a more natural and superior method of
exoskeleton activation, which creates a better user experience, as well as that our licensed technology used in our ReStore device is
unique and provides better results when compared to other products, a variety of other activation and control methods exist for exoskeletons,
several of which are being developed by our competitors, or may be developed in the future. Additionally, while our DAP technology provides
what we believe is a superior method for partial weight displacement with strong market acceptance, there may be competitors developing
innovative alternative gait therapies that could be introduced in the future. As a result, our patent portfolio and proprietary technology
and processes may not provide us with a significant advantage over our competitors, and competitors may be able to design and sell alternative
products that are equal to or superior to our products without infringing on our patents. In addition, as our current patents begin to
expire, we may lose a competitive advantage over our competitors as we will no longer be able to keep our competitors from practicing
the technology covered by the claim of the expired patents. We may also be unable to adequately develop new technologies and obtain future
patent protection to preserve a competitive advantage. If we are unable to maintain a competitive advantage, our business and results
of operations may be materially adversely affected.
Even in instances where others are found to infringe on our patents,
many countries have laws under which a patent owner may be compelled to grant licenses for the use of the patented technology to other
parties. In addition, many countries limit the enforceability of patents against other parties, including government agencies or government
contractors. In these countries, a patent owner may have limited remedies, which could diminish the value of a patent in those countries.
Further, the laws of some countries do not protect intellectual property rights to the same extent as the laws of the United States, particularly
in the field of medical products, and effective enforcement in those countries may not be available. The ability of others to market comparable
products could adversely affect our business.
We are not able to protect our intellectual property
rights in all countries.
Filing, prosecuting, maintaining, and defending patents on each of our
products in all countries throughout the world would be prohibitively expensive, and thus our intellectual property rights outside the
United States and Europe are limited. In addition, the laws of some foreign countries, especially developing countries, such as China,
do not protect intellectual property rights to the same extent as federal and state laws in the United States. Also, it may not be possible
to effectively enforce intellectual property rights in some countries at all or to the same extent as in the United States and other countries.
Consequently, we are unable to prevent third parties from using our inventions in all countries, or from selling or importing products
made using our inventions in the jurisdictions in which we do not have (or are unable to effectively enforce) patent protection. Competitors
may use our technologies in jurisdictions where we have not obtained patent protection to develop, market or otherwise commercialize their
own products, and we may be unable to prevent those competitors from importing those infringing products into territories where we have
patent protection, but enforcement may not be as strong as in the United States. These products may compete with our products, and our
patents and other intellectual property rights may not be effective or sufficient to prevent them from competing in those jurisdictions.
Moreover, strategic partners, competitors, or others in the chain of commerce may raise legal challenges against our intellectual property
rights or may infringe upon our intellectual property rights, including through means that may be difficult to prevent or detect.
Many companies have encountered significant problems in protecting and
defending intellectual property rights in foreign jurisdictions. Proceedings to enforce our patent rights in the United States or foreign
jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our
patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing, and could provoke third
parties to assert patent infringement or other claims against us. We may not prevail in any lawsuits that we initiate, and the damages
or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights
in the United States and around the world may be inadequate to obtain a significant commercial advantage from the intellectual property
that we develop or license from third parties.
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We may be subject to patent infringement claims, which
could result in substantial costs and liability and prevent us from commercializing our current and future products.
The medical device industry is characterized by competing intellectual
property and a substantial amount of litigation over patent rights. Our competitors in both the United States and abroad, many of which
have substantially greater resources and have made substantial investments in competing technologies, have been issued patents and filed
patent applications with respect to their products and processes and may apply for other patents in the future. The large number of patents,
the rapid rate of new patent issuances, and the complexities of the technology involved increase the risk of patent litigation.
Determining whether a product infringes a patent involves complex legal
and factual issues and the outcome of patent litigation is often uncertain. Even though we have conducted research of issued patents,
no assurance can be given that patents containing claims covering our products, technology or methods do not exist, have not been filed
or could not be filed or issued. In addition, because patent applications can take years to issue and because publication schedules for
pending applications vary by jurisdiction, there may be applications now pending of which we are unaware, and which may result in issued
patents that our current or future products infringe. Also, because the claims of published patent applications can change between publication
and patent grant, published applications that initially do not appear to be problematic may issue with claims that potentially cover our
products, technology, or methods.
Infringement actions and other intellectual property claims brought
against us, whether with or without merit, may cause us to incur substantial costs and could place a significant strain on our financial
resources, divert the attention of management, and harm our reputation. We cannot be certain that we will successfully defend against
any allegations of infringement. If we are found to infringe another party’s patents, we could be required to pay damages. We could
also be prevented from selling our infringing products, unless we can obtain a license to use the technology covered by such patents or
can redesign our products so that they do not infringe. A license may be available on commercially reasonable terms or none at all, and
we may not be able to redesign our products to avoid infringement. Further, any modification to our products could require us to conduct
clinical trials and revise our filings with the FDA and other regulatory bodies, which would be time consuming and expensive. In these
circumstances, we may not be able to sell our products at competitive prices or at all, and our business and operating results could be
harmed.
We rely on trademark protection to distinguish our
products from the products of our competitors.
We rely on trademark protection to distinguish our products from the
products of our competitors. We currently hold a registered trademark in the United States, Europe, Israel, and the United Kingdom, for
the mark ReWalk®. We currently hold a registered trademark in United States, Europe and the United Kingdom for the mark ReStore®.
We currently hold the trademarks Alter G™ and Anti-Gravity Treadmill™ in the United States, Canada, and . The trademark Alter
G™ is also held in the United Kingdom and Europe. We currently hold the registered trademark Defy Gravity® in the United States.
We also hold a registered trademark for Lifeward® in Europe, the United Kingdom, and Israel. The application to register the trademark
Lifeward™ is pending in the United States. In jurisdictions where we have not registered our trademark and are using it, and as
permitted by applicable local law, we rely on common law trademark protection. Third parties may oppose our trademark applications, or
otherwise challenge our use of the trademarks, and may be able to use our trademarks in jurisdictions where they are not registered or
otherwise protected by law. If our trademarks are successfully challenged or if a third party is using confusingly similar or identical
trademarks in particular jurisdictions before we do, we could be forced to rebrand our products, which could result in loss of brand recognition,
and could require us to devote additional resources to marketing new brands. If others are able to use our trademarks, our ability to
distinguish our products may be impaired, which could adversely affect our business. Further, we cannot assure you that competitors will
not infringe upon our trademarks, or that we will have adequate resources to enforce our trademarks.
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We may be subject to damages resulting from claims
that our employees or we have wrongfully used or disclosed alleged trade secrets of their former employers.
Many of our employees were previously employed at other medical device
companies, including our competitors or potential competitors, and we may hire employees in the future that are so employed. We could
in the future be subject to claims that these employees, or we, have inadvertently or otherwise used or disclosed trade secrets or other
proprietary information of their former employers. If we fail in defending against such claims, a court could order us to pay substantial
damages and prohibit us from using technologies or features that are found to incorporate or be derived from the trade secrets or other
proprietary information of the former employers. If any of these technologies or features that are important to our products, this could
prevent us from selling those products and could have a material adverse effect on our business. Even if we are successful in defending
against these claims, such litigation could result in substantial costs and divert the attention of management.
Risks Related to Ownership of Our Ordinary Shares
Sales of a substantial number of ordinary shares by
us or our large shareholders, certain of whom may have registration rights, or dilutive exercises of a substantial number of warrants
by our warrant-holders could adversely affect the value of our ordinary shares.
Sales by us or our shareholders of a substantial number of ordinary
shares in the public market, or the perception that these sales might occur, could cause the value of our ordinary shares to decline or
could impair our ability to raise capital through a future sale of our equity securities. Additionally, dilutive exercises of a substantial
number of warrants by our warrant-holders, or the perception that such exercises may occur, could put downward price on the market price
of our ordinary shares.
As of March 18, 2026, 701,757 ordinary shares were issuable pursuant
to the exercise of warrants, with exercise prices ranging from $7.80 to $384.56 per warrant, issued in private and registered offerings
of ordinary shares and warrants in December 2020, February 2021, September 2021, January 2025 and June 2025. We have registered with the
SEC all of these warrants and/or the resale of the shares issuable upon their exercise. All share and per share amounts presented
in this note have been retroactively adjusted to reflect the Company’s 1-for-12 reverse share split effected on February 24, 2026.
For more information, “Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity
and Capital Resources—Equity Raises”, below.
All shares sold pursuant to an offering covered by a registration statement
would be freely transferable. With respect to the outstanding warrants, there may be certain restrictions on the holders to sell the underlying
ordinary shares to the extent they are restricted securities, held by “affiliates” or would exceed certain ownership thresholds.
Certain of our largest shareholders, may also have limitations under Rule 144 under the Securities Act on the resale of certain ordinary
shares they hold unless they are registered for resale under the Securities Act. Despite these limitations and the liquidity that we may
gain from cash exercises of outstanding warrants, if we, our existing shareholders, or their affiliates sell a substantial number of the
above-mentioned ordinary shares in the public market, the market price of our ordinary shares could decrease significantly. Shareholders
may also incur substantial dilution if holders of our warrants exercise their warrants to purchase ordinary shares, which could lower
the market price of our ordinary shares. Any such decrease could impair the value of your investment in us.
Future grants of ordinary shares under our equity
incentive plans to our employees, non-employee directors and consultants, or sales by these individuals in the public market, could result
in substantial dilution, thus decreasing the value of your investment in our ordinary shares, and certain grants may also require shareholder
approval. In addition, stockholders will experience dilution upon the exercise of outstanding warrants.
We have historically used, and continue to use, our ordinary shares
as a means of both rewarding our employees, non-employee directors, and consultants and aligning their interests with those of our shareholders.
As of December 31, 2025, 39,851 ordinary shares remained available for issuance to our and our affiliates’ respective employees,
non-employee directors, and consultants under our equity incentive plans, including 125,882 ordinary shares were subject to outstanding
awards (consisting of outstanding options to purchase 52,450 ordinary shares and 73,432 ordinary shares underlying unvested RSUs). For
more information, see Note 8c to our consolidated financial statements for the year ended December 31, 2025, below.
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Additionally, to the extent registered on a Form S-8, ordinary shares
granted or issued under our equity incentive plans will, subject to vesting provisions, lock-up restrictions, and Rule 144 volume limitations
applicable to our “affiliates,” be available for sale in the open market immediately upon registration. Further, as of December
31, 2025, there were 707,097 ordinary shares underlying issued and outstanding warrants, which if exercised for ordinary shares, could
decrease the net tangible book value of our ordinary shares and cause dilution to our existing shareholders. Sales of a substantial number
of the above-mentioned ordinary shares in the public market could result in a significant decrease in the market price of our ordinary
shares and have a material adverse effect on an investment in our ordinary shares.
If we do not meet the expectations of equity research
analysts, if any, if the equity analysts following our business do not continue to publish research or reports about our business, or
if the analyst issues unfavorable commentary or a downgrade of the rating on our ordinary shares, the price of our ordinary shares could
decline. Additionally, we may fail to meet publicly announced financial guidance or other expectations about our business, which could
cause our ordinary shares to decline in value.
There are currently three equity analysts publishing research reports
about our business, and we are currently seeking to attract additional coverage. If our results of operations are below the analysts’
consensus financial estimates, our share price could decline. Moreover, the price of our ordinary shares could decline if one or more
securities analysts downgrade the rating on our ordinary shares or if analysts issue other unfavorable commentary or stop publishing research
or reports about us or our business. Given that there are only three analysts that currently cover our business, we face an increased
risk that the evaluation of our business by any one of the analysts, if less than positive, will cause a larger decline in our stock price
than would otherwise be the case if we had a greater number of analysts covering our business.
From time to time, we have also faced difficulty accurately projecting
our earnings and have missed certain of our publicly announced guidance. If our financial results for a particular period do not meet
our guidance or if we reduce our guidance for future periods, the market price of our ordinary shares may decline.
We are a “smaller reporting company” and
the reduced reporting requirements applicable to such companies may make our ordinary shares less attractive to investors.
We are a “smaller reporting company” as defined in Item
10(f)(1) of Regulation S-K, which allows us to take advantage of certain scaled disclosure requirements available specifically to smaller
reporting companies. For example, we may continue to use reduced compensation disclosure obligations, and, provided we are also a “non-accelerated
filer,” we will not be obligated to follow the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. We will
remain a smaller reporting company until the last day of the fiscal year in which we have at least $100 million in revenue and at least
$700 million in aggregate market value of ordinary shares held by non-affiliated persons and entities (known as “public float”),
or, alternatively, if our revenue exceed $100 million, until the last day of the fiscal year in which our public float was at least $250.0
million (in each case, with respect to public float, as measured as of the last business day of the second quarter of such fiscal year).
For the year ended December 31, 2025, we recorded revenue of approximately $22 million.
We cannot predict or otherwise determine if investors will find our
securities less attractive as a result of our reliance on exemptions as a smaller reporting company and/or “non-accelerated filer.”
If some investors find our securities less attractive as a result, there may be a less active trading market for our ordinary shares and
the price of our ordinary shares may be more volatile.
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We are subject to ongoing costs and risks associated
with determining whether our existing internal controls over financial reporting systems are compliant with Section 404 of the Sarbanes-Oxley
Act, and if we fail to achieve and maintain adequate internal controls, it could have a material adverse effect on our stated results
of operations and harm our reputation.
We are required to comply with the internal control, evaluation, and
certification requirements of Section 404 of the Sarbanes-Oxley Act and the Public Company Accounting Oversight Board, which requires
us to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. Once
we no longer qualify as a “smaller reporting company” and “non-accelerated filer,” our independent registered
public accounting firm will need to attest to the effectiveness of our internal control over financial reporting under Section 404. When
our independent registered public accounting firm is required to undertake an assessment of our internal control over financial reporting,
the cost of our compliance with Section 404 will correspondingly increase. Our compliance with applicable provisions of Section 404 will
require that we incur substantial accounting expense and expend significant management time on compliance-related issues as we implement
additional corporate governance practices and comply with reporting requirements. Moreover, if we are not able to comply with the requirements
of Section 404 applicable to us in a timely manner, or if we or our independent registered public accounting firm identifies deficiencies
in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline
and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial
and management resources.
The process of determining whether our existing internal controls over
financial reporting systems are compliant with Section 404 and whether there are any material weaknesses or significant deficiencies in
our existing internal controls requires the investment of substantial time and resources, including by our Chief Financial Officer and
other members of our senior management. This determination and any remedial actions required could divert internal resources and take
a significant amount of time and effort to complete and could result in us incurring additional costs that we did not anticipate, including
the hiring of outside consultants. We could experience higher than anticipated operating expenses and higher independent auditor fees
during and after the implementation of these changes.
Irrespective of compliance with Section 404, any failure of our internal
controls could have a material adverse effect on our stated results of operations and harm our reputation. If we are unable to implement
any of the required changes to our internal control over financial reporting effectively or efficiently or are required to do so earlier
than anticipated, it could adversely affect our operations, financial reporting and/or results of operations and could result in an adverse
opinion on internal controls from our management and our independent auditors. Further, if our internal control over financial reporting
is not effective, the reliability of our financial statements may be questioned, and our share price may suffer.
U.S. holders of our ordinary shares
may suffer adverse U.S. tax consequences if we are characterized as a passive foreign investment company, or a PFIC,
under Section 1297(a) of the Code.
Generally, if for any taxable year 75% or more of our gross income is
passive income, or at least 50% of the average quarterly value of our assets (which may be determined in part by the market value of our
ordinary shares, which is subject to change) are held for the production of, or produce passive income, we would be characterized as a
passive foreign investment company, or PFIC, for U.S. federal income tax purposes. Passive income for this purpose generally includes,
among other things, certain dividends, interest, royalties, rents, and gains from commodities and securities transactions and from the
sale or exchange of property that gives rise to passive income. Passive income also includes amounts derived by reason of the temporary
investment of funds, including those raised in an offering. In determining whether a non-U.S. corporation is a PFIC, a proportionate share
of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into
account.
The determination of whether we are a PFIC will depend on the nature
and composition of our income and the nature, composition, and value of our assets from time to time. The 50% passive asset test described
above is generally based on the fair market value of each asset, with the value of goodwill and going concern value determined in large
part by reference to the market value of our ordinary shares, which may be volatile. If we are characterized as a “controlled foreign
corporation,” or a “CFC”, under Section 957(a) of the Code and not considered publicly traded throughout the relevant
taxable year, however, the passive asset test may be applied based on the adjusted tax bases of our assets instead of the fair market
value of each asset (as described above). However, if we are treated as publicly traded for at least 20 trading days during the relevant
taxable year, our assets would generally be required to be measured at their fair market value, even if we are a CFC.
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Based on our gross income and assets, the market price of our ordinary
shares, and the nature of our business, we believe that we were not a PFIC for the taxable year ended December 31, 2025. However,
this determination is subject to uncertainty. In addition, there is a significant risk that we may be a PFIC for future taxable years,
unless the market price of our ordinary shares increases, or we reduce the amount of cash and other passive assets we hold relative to
the amount of non-passive assets we hold. Accordingly, no assurances can be made regarding our PFIC status in one or more subsequent years,
and we express no opinion with respect to our PFIC status in the taxable year ended December 31, 2025, or the current year 2026, and also
expresses no opinion with respect to our predictions or past determinations regarding our PFIC status in the past or in the future.
If we are characterized as a PFIC, U.S. holders of our ordinary shares
may suffer adverse tax consequences, including having gains realized on the sale of our ordinary shares treated as ordinary income, rather
than capital gain, the loss of the preferential tax rate applicable to dividends received on our ordinary shares by individuals who are
U.S. holders and having interest charges apply to distributions by us and to the proceeds of sales of our ordinary shares. In addition,
special information reporting may be required. Certain elections exist that may alleviate some of the adverse consequences of PFIC status
and would result in an alternative treatment (such as mark-to-market treatment or being able to make a qualified electing fund election).
However, we do not intend to provide the information necessary for U.S. Holders to make qualified electing fund elections if we are classified
as a PFIC.
Additionally, if we are characterized as a PFIC, for any taxable year
during which a U.S. holder holds ordinary shares, we generally will continue to be treated as a PFIC with respect to such U.S. holder
for all succeeding years during which such U.S. holder holds ordinary shares unless we cease to be a PFIC and such U.S. holder makes a
“deemed sale” election with respect to such ordinary shares. If such election is made, such U.S. holder will be deemed to
have sold such ordinary shares held by such U.S. holder at their fair market value on the last day of the last taxable year in which we
qualified as a PFIC, and any gain from such deemed sale would be treated as described above.
Each U.S. holder of our ordinary shares is strongly urged to consult
his, her or its tax advisor regarding the application of these rules and the availability of any potential elections.
The price of our ordinary shares may be volatile,
and you may lose all or part of your investment.
The market price of our ordinary shares has been in the past, and could
continue to be, highly volatile and may fluctuate substantially as a result of many factors. Moreover, while there is no established public
trading market for the warrants offered in our follow-on public offerings, and we do not expect one to develop, our ordinary shares will
be issuable pursuant to exercise of these warrants. Because the warrants are exercisable into our ordinary shares, volatility, or a reduction
in the market price of our ordinary shares could have an adverse effect on the trading price of the warrants. Factors which may cause
fluctuations in the price of our ordinary shares include, but are not limited to:
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actual or anticipated fluctuations in our growth rate or results of operations or those
of our competitors; |
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customer acceptance of our products; |
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announcements by us or our competitors of new products or services, commercial relationships,
acquisitions, or expansion plans; |
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announcements by us or our competitors of other material developments; |
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our involvement in litigation; |
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changes in government regulation applicable to us and our products; |
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sales, or the anticipation of sales, of our ordinary shares, warrants and debt securities
by us, or sales of our ordinary shares by our insiders or other shareholders, including upon expiration of contractual lock-up agreements; |
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developments with respect to intellectual property rights; |
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competition from existing or new technologies and products; |
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changes in key personnel; |
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the trading volume of our ordinary shares; |
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changes in the estimation of the future size and growth rate of our markets; |
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changes in our quarterly or annual forecasts with respect to operating results and financial
conditions; |
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general economic and market conditions and; |
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announcements regarding business acquisitions. |
In addition, the stock markets have experienced extreme price and volume
fluctuations. Broad market and industry factors may materially harm the market price of our ordinary shares, regardless of our operating
performance. Technical factors in the public trading market for our ordinary shares may produce price movements that may or may not comport
with macro, industry or Company-specific fundamentals, including, without limitation, the sentiment of retail investors (including
as may be expressed on financial trading and other social media sites), the amount and status of short interest in our securities, access
to margin debt, trading in options and other derivatives on our ordinary shares and any related hedging or other technical trading factors. In
the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has
often been instituted against that company, as was the case for Lifeward in a securities class action dismissed in full in November 2020.
If we become involved in any similar litigation, we could incur substantial costs and our management’s attention and resources could
be diverted.
Our business could be negatively affected as a result of actions of activist
shareholders, which could be disruptive and costly and may impact the trading value of our securities.
We value constructive input from investors and regularly engage in dialogue
with our shareholders regarding strategy and performance. While our Board of Directors and management team welcome their views and opinions
with the goal of enhancing value for all shareholders, we may from time to time be subject to actions or proposals from activist shareholders
that may not align with our business strategies or the best interests of all of our shareholders.
Responding to such actions can be costly and time-consuming and may
disrupt our operations or divert the attention of management and our Board of Directors from executing our business strategy. In addition,
these activities may create uncertainty regarding our strategic direction, which could adversely affect the market price and volatility
of our securities.
Risks Related to Our Incorporation and Location in Israel
Political, economic and military instability in Israel
or the Middle East may adversely affect our business.
We are incorporated
under the laws of the State of Israel, where we also maintain facilities. A significant portion of our research and development activities
and certain other activities (primarily of the manufacturing, quality control and R&D functions of the legacy ReWalk business) as
well as certain finance functions, are located in Israel, and certain of our officers and directors are residents of Israel. Accordingly,
political, economic and military conditions in Israel and the surrounding region directly affect our business and operations, and could
materially and adversely affect our ability to operate from Israel.
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On October 7, 2023, Hamas terrorists infiltrated Israel’s southern
border from Gaza and conducted a series of attacks on civilian and military targets. In response, Israel’s security cabinet declared
war against Hamas, and later against Hezbollah (the “Israel-Hamas-Hezbollah war”). Hostilities subsequently escalated between
Israel and a number of terrorist organizations, including conflicts with Hezbollah along Israel’s northern border with Lebanon,
with Iran (including a war during June 2025) and with the Houthis in Yemen, Iran and the Houthis both launched drone and missile attacks
on military and civilian targets within Israel. In addition, the Houthi movement has disrupted international commerce by launching a number
of attacks on commercial vessels traversing the Gulf of Aden and the Red Sea. A ceasefire between Israel and Lebanon (with respect to
Hezbollah) was announced in November 2024, a ceasefire between Israel and Iran was announced in June 2025 and a ceasefire between Israel
and Hamas was announced in October 2025. However, in late February 2026 the United States, together with Israel, launched a major joint
military campaign of air and missile strikes against targets in Iran, which triggered a broad Iranian response and contributed to significant
regional instability, including, in early March 2026, resumed conflicts with Hezbollah. The situation remains highly fluid, and we are
unable to predict if, when, or on what terms this escalation will be resolved.
Our commercial
insurance does not cover losses that may occur as a result of events associated with war and terrorism. Although the Israeli government
currently covers certain damages that are caused by terrorist attacks or acts of war, we cannot assure you that this government coverage
will be maintained or that it will sufficiently cover our potential damages. Any losses or damages incurred by us could have a material
adverse effect on our business, financial condition and results of operations.
Since the beginning of the Israel-Hamas-Hezbollah
war, the international credit rating agencies have reviewed Israel’s credit rating and lowered them. For example, Fitch has lowered
Israel’s credit rating from A+ to A and S&P Global Ratings lowered its long-term foreign and local currency sovereign credit
ratings on Israel to A+ from AA- and the short-term ratings to A-1 from A-1+. Credit rating agencies could further lower Israel’s
credit rating in the future, which could disrupt the business environment in Israel and make it more difficult for us to raise capital.
To date, we have not experienced any material interruptions resulting
from the Israel-Hamas-Hezbollah or the Israel-Iran war. However, circumstances are evolving, and the intensity and duration of any of
these ongoing regional hostilities is difficult to predict, as are their impacts on our business and operations. Prolonged or heightened
instability could adversely impact our business, financial condition and results of operations in the future. Further escalation, whether
as the result of the direct confrontations between Israel and Iran and between Israel and Hezbollah, or as the result of the involvement
of other regional proxy groups and countries and non-state organizations in the region, could result in additional mobilization of reserve
personnel in Israel, further restrictions on movement or commerce (such as an interruption of operations at the Tel Aviv airport that
could prevent or delay shipments of our components or products), damage to infrastructure, supply chain interruptions, disruptions to
global energy markets and heightened cybersecurity threats. Any of the foregoing could materially and adversely affect our operations,
financial condition and results of operations, particularly if disruptions are prolonged or recur.
Further, in the past, the State of Israel and Israeli companies have
been subjected to economic boycotts and several countries, principally in the Middle East, still restrict business with the State of Israel
and with Israeli companies. The current perception of Israel, Israeli and Israeli-related companies by the global community (as represented,
for example, by claims filed since the outbreak of the current war with the International Court of Justice and the International Criminal
Court’s recent issuance of warrants of arrest for the Israeli Prime Minister and former Minister of Defense) may cause an increase
in sanctions and other adverse measures against Israel, Israeli and Israeli-related companies and their products and services. Additionally,
there have been increased efforts by countries, activists and organizations to cause companies and consumers to boycott Israeli goods
and services or otherwise restrict business with Israel, Israeli and Israeli-related companies, which may impact our ability to do
business. Such restrictive laws, efforts and policies, particularly if they become widespread, as well as current and future rulings
and orders of international tribunals against Israel, may have an adverse impact on our operating results, financial condition or the
expansion of our business.
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Many of our employees and independent contractors
who reside in Israel are required to perform military reserve duty, which may disrupt their work for us.
Approximately 31% of our employees are located in Israel. Many of our
employees and independent contractors in Israel may be called upon to perform military reserve duty annually until they reach the age
of 40 (and in some cases, depending on their military duties up to the age of 45 or even 49) and, in emergency circumstances, could be
called to immediate and unlimited active duty (subject to approval by the Israeli government). Although to date none of our Israeli employees
have been mobilized for emergency military service, we cannot predict whether there will be further mobilization of reservists and any
further mobilization could further impact our employees, including employees who serve in critical roles in our company, which could materially
and adversely affect our business, financial condition and results of operations.
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.
From our inception through December 31, 2025, we received a total of
$2.8 million from the IIA. We may in the future apply to receive additional grants from the IIA to support our research and development
activities. With respect to some grants that were royalty-bearing grants, we are committed to paying royalties at a rate of 3.0% on sales
proceeds up to the total amount of grants received, linked to the dollar, and bearing interest at an annual rate of SOFRPR applicable
to dollar deposits. Even after payment in full of these amounts, we will still be required to comply with the requirements of the Israeli
Encouragement of Industrial Research, Development and Technological Innovation Law, 5744-1984, or the R&D Law, and related regulations,
with respect to those past grants. When a company develops know-how, technology or products using IIA grants, the terms of these grants
and the R&D Law restrict the transfer outside of Israel of such know-how, and of the manufacturing or manufacturing rights of such
products, technologies, or know-how, without the prior approval of the IIA. Therefore, if aspects of our technologies are deemed to have
been developed with IIA funding, the discretionary approval of an IIA committee would be required for any transfer to third parties outside
of Israel of know-how or manufacturing or manufacturing rights related to those aspects of such technologies. Furthermore, the IIA may
impose certain conditions on any arrangement under which it permits us to transfer technology or development out of Israel or may not
grant such approvals at all.
Furthermore, the consideration available to our shareholders in a future
transaction involving the transfer outside of Israel of technology or know-how developed with IIA funding (such as a merger or similar
transaction) may be reduced by any amounts that we are required to pay to the IIA.
In addition to the above, any non-Israeli citizen, resident or entity
that, among other things, (i) becomes a holder of 5% or more of our share capital or voting rights, (ii) is entitled to appoint one or
more of our directors or our chief executive officer or (iii) serves as one of our directors or as our chief executive officer (including
holders of 25% or more of the voting power, equity or the right to nominate directors in such direct holder, if applicable) is required
to notify the IIA and undertake to comply with the rules and regulations applicable to the grant programs of the IIA, including the restrictions
on transfer described above. Such notification will be required in connection with the investment being made by an investor which may
discourage or limit investments from foreign investors in our company.
We may become subject to claims for remuneration or royalties for assigned
service invention rights by our employees, which could result in litigation and adversely affect our business.
A significant portion of our intellectual property has been developed
by our employees in the course of their employment for us. Under the Israeli Patent Law, 5727-1967 (the “Patent Law”) and
recent decisions by the Israeli Supreme Court and the Israeli Compensation and Royalties Committee, a body constituted under the Patent
Law, employees may be entitled to remuneration for intellectual property that they develop for us unless they explicitly waive any such
rights. Although we enter into agreements with our employees pursuant to which they agree that any inventions created in the scope of
their employment or engagement are owned exclusively by us, we may face claims demanding remuneration. As a consequence of such claims,
we could be required to pay additional remuneration or royalties to our current and former employees, or be forced to litigate such claims,
which could negatively affect our business.
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Provisions of Israeli law and our Articles of Association
may delay, prevent, or otherwise impede a merger with, or an acquisition of, us, even when the terms of such a transaction are favorable
to us and our shareholders.
Israeli corporate law regulates mergers, requires tender offers for
acquisitions of shares above specified thresholds, requires special approvals for transactions involving directors, officers or significant
shareholders and regulates other matters that may be relevant to such types of transactions. For example, a tender offer for all of a
company’s issued and outstanding shares can only be completed if the acquirer receives positive responses from the holders of at
least 95% of the issued share capital. Completion of the tender offer also requires approval of a majority of the offerees that do not
have a personal interest in the tender offer, unless at least 98% of the company’s outstanding shares are tendered. Furthermore,
the shareholders, including those who indicated their acceptance of the tender offer (unless the acquirer stipulated in its tender offer
that a shareholder that accepts the offer may not seek appraisal rights), may, at any time within six months following the completion
of the tender offer, petition an Israeli court to alter the consideration for the acquisition. Israeli law also requires a “special
tender offer” in certain cases where a shareholder crosses the 25% or 45% holding threshold, and it imposes procedural and special
voting requirements for the approval of a merger in certain cases.
Our Articles of Association provide that our directors (other than external
directors, if applicable) are elected on a staggered basis, such that a potential acquirer cannot readily replace our entire board of
directors at a single annual general shareholder meeting. This could prevent a potential acquirer from receiving board approval for an
acquisition proposal that our board of directors opposes.
Furthermore, Israeli tax considerations may make potential transactions
unappealing to us or to our shareholders whose country of residence does not have a tax treaty with Israel exempting such shareholders
from Israeli tax. For example, Israeli tax law does not recognize tax-free share exchanges to the same extent as U.S. tax law. With respect
to mergers involving an exchange of shares, Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent
on the fulfilment of a number of conditions, including, in some cases, a holding period of two years from the date of the transaction
during which sales and dispositions of shares of the participating companies are subject to certain restrictions. Moreover, with respect
to certain share swap transactions, the tax deferral is limited in time, and when such time expires, the tax becomes payable even if no
disposition of the shares has occurred. These and other similar provisions could delay, prevent or impede an acquisition of us or our
merger with another company, even if such an acquisition or merger would be beneficial to us or to our shareholders.
It may be difficult to enforce a judgment of a U.S.
court against us, our officers, and directors, to assert U.S. securities laws claims in Israel or to serve process on our officers and
directors.
We are incorporated in Israel. Although currently the majority of our
directors and executive officers reside within the United States and most of the assets of these persons are also likely located within
the United States, some of our directors and executive officers reside and may have the majority of their assets outside the United States.
Additionally, most of our assets are located outside of the United States. Therefore, a judgment obtained against us, or those of our
directors and executive officers residing outside of the United States, including a judgment based on the civil liability provisions of
the U.S. federal securities laws, may not be collectible in the United States and may not be enforced by an Israeli court. It also may
be difficult for you to effect service of process in the United States on those directors and executive officers residing outside of the
United States or to assert U.S. securities law claims in original actions instituted in Israel. Israeli courts may refuse to hear a claim
based on an alleged violation of U.S. securities laws reasoning that Israel is not the most appropriate forum in which to bring such a
claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable
to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proven as a fact by expert witnesses,
which can be a time-consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding
case law in Israel that addresses the matters described above. As a result of the difficulty associated with enforcing a judgment against
us in Israel, you may be able to collect only limited, or may be unable to collect any, damages awarded by either a U.S. or foreign court.
62
Our articles of association provide that, unless we consent in writing
to the selection of an alternative forum, (i) the federal courts of the United States will be the exclusive forum for the resolution of
any claim arising under the Securities Act, and (ii) the Tel-Aviv District Court will be the exclusive forum for (a) a derivative action
or derivative proceeding that is filed in the name of the Company; (b) any action grounded in a breach of fiduciary duty of a director,
officeholder or other employee towards us or our shareholders; or (c) any action the cause of which results from any provision of the
Companies Law or the Israel Securities Law, 5728-1968. We have retained the ability to consent to an alternative forum in circumstances
if we determine shareholder interests are best served by permitting a particular dispute to proceed in a forum other than the federal
district courts or State of Israel, as applicable. However, there is uncertainty as to whether a court would enforce these provisions.
Your rights and responsibilities as a shareholder
will be governed by Israeli law, which differs in some material respects from the rights and responsibilities of shareholders of U.S.
companies.
The rights and responsibilities of the holders of our ordinary shares
are governed by our Articles of Association and by Israeli law. These rights and responsibilities differ in some material respects from
the rights and responsibilities of shareholders in U.S.-based corporations. In particular, a shareholder of an Israeli company has a duty
to act in good faith and in a customary manner in exercising its rights and performing its obligations towards the company and other shareholders,
and to refrain from abusing its power in the company, including, among other things, in voting at a general meeting of shareholders on
matters such as amendments to a company’s articles of association, increases in a company’s authorized share capital, mergers
and acquisitions and related party transactions requiring shareholder approval. In addition, a shareholder who is aware that it possesses
the power to determine the outcome of a shareholder vote or to appoint or prevent the appointment of a director or executive officer in
the company has a duty of fairness toward the company. There is limited case law available to assist us in understanding the nature of
this duty or the implications of these provisions. These provisions may be interpreted to impose additional obligations and liabilities
on holders of our ordinary shares that are not typically imposed on shareholders of U.S. corporations.
Risks Related to the Oramed Transaction
We will be subject to business uncertainties, including
the risk of litigation, and contractual restrictions, prior to the closing of the Oramed Transaction and for a period of time thereafter,
which may cause disruptions to our business and make it more difficult to maintain relationships with employees, suppliers or customers.
Uncertainty about the effects of the Oramed Transaction on employees,
suppliers and customers may adversely affect our ability to attract, retain and motivate key personnel until the Oramed Transaction is
completed and for a period of time thereafter, and could cause suppliers, customers and others that engage with us to seek to change their
existing business relationships with us.
The pursuit of the Oramed Transaction and the preparation for the integration of
our company and Oratech has placed and may place a significant burden on management and internal resources. The diversion of management’s
attention away from day-to-day business concerns and any difficulties encountered in the transition and integration process could have
a material adverse effect on our business, financial condition and results of operations.
If management is not able to effectively manage the integration process,
or if any significant business activities are interrupted as a result thereof, our business, financial condition and results of operations
could suffer. We also cannot guarantee that the benefits that we currently expect to realize as a result of the Oramed Transaction will
be achieved within our anticipated time frames or at all. Additionally, we may incur substantial expenses in connection with the acquisition
and integration of Oratech, which may exceed expectations and offset certain anticipated benefits.
63
Until the completion of the Oramed Transaction or
the termination of the Share Purchase Agreement and Securities Purchase Agreement in accordance with their terms, we are prohibited from
taking certain actions that might otherwise be beneficial to us and our shareholders.
During the period between the signing of the Share Purchase Agreement
and the effective time of the closing of the Oramed Transaction (or until the earlier termination of the Share Purchase Agreement), the
Share Purchase Agreement restricts us from amending our organizational documents, making material changes to our method of accounting,
or be a party to any merger or similar transaction, in each case without the consent of Oratech. These restrictions may prevent us from
taking actions during the pendency of the Oramed Transaction that would have been beneficial. Adverse effects arising from these restrictions
during the pendency of the Oramed Transaction could be exacerbated by any delays in consummation of the Oramed Transaction or termination
of the Share Purchase Agreement.
If the Oramed Transaction is consummated, Oramed will
have significant control and influence over our company.
Upon consummation of the Oramed Transaction, four (4) Oramed nominees
will be appointed as members of our Board of Directors and Oramed will own a significant percentage of our ordinary shares. Oramed will
likely have the ability effectively to control the outcome of all matters requiring shareholder approval, including the election of directors.
In the event Oramed increases its ownership to 50% or greater, we may determine that we are a “controlled company” as defined
in the Nasdaq Listing Rules. Although currently there is no intention to take advantage of this exemption, if we are in a position to
do so in the future, and elect to do so, we would not be required to have a majority of our directors be independent, nor would we be
required to have a compensation committee or an independent board nominating function. If that were to occur, shareholders would not have
the same protections afforded to shareholders of companies that are subject to all of the corporate governance rules for Nasdaq-listed
companies. Therefore, if we were to elect to become a controlled company, our ordinary shares may be less attractive to some investors
or such status may otherwise adversely affect our stock price.
The terms of the Securities Purchase Agreement, Notes
and ancillary documentation require us to meet certain operating covenants and place restrictions on our operating and financial flexibility.
If we raise additional capital through debt financing, the terms of any new debt could further restrict our ability to operate our business.
The Notes, if issued, will be secured by a lien on substantially all
of our assets. In addition, the Securities Purchase Agreement and Notes contain customary affirmative and negative covenants and events
of default. Affirmative covenants include, among others, covenants requiring us to protect and maintain our intellectual property and
comply with all applicable laws, deliver certain financial reports and maintain insurance coverage. Negative covenants include, among
others, covenants restricting us from transferring any part of our business or intellectual property, incurring additional indebtedness,
engaging in mergers or acquisitions, repurchasing shares, paying dividends or making other distributions, making investments, and creating
other liens on our assets, including our intellectual property, in each case subject to customary exceptions. If we raise any additional
debt financing, the terms of such additional debt could further restrict our operating and financial flexibility. These restrictions may
include, among other things, limitations on the incurrence of additional debt and specific restrictions on the use of our assets, as well
as prohibitions on our ability to create liens, pay dividends, redeem capital stock or make investments. If we default under the terms
of the Notes or any future debt facility, holders of these Notes may accelerate all of our repayment obligations, potentially requiring
us to renegotiate our agreement on terms less favorable to us or to immediately cease operations. Further, if we were to be liquidated,
the holders of the Notes’ rights to repayment would be senior to the rights of the holders of our ordinary shares. The holders of
the Notes could declare an event of default upon the occurrence of any event that could reasonably be expected to result in what they
interpret as a material adverse effect as defined under the Notes. Any declaration by the holders of the Notes of an event of default
could significantly harm our business and operations and could cause the price of our ordinary shares to materially decline.
64
The debt under the Notes or any future debt we may incur could have significant adverse consequences,
including:
| • |
requiring us to dedicate a substantial portion of cash flow from operations or cash on hand to the payment of interest on, and principal
of, our debt, which will reduce the amounts available to fund working capital, capital expenditures, product development efforts, and
other general corporate purposes; |
| • |
increasing our vulnerability to adverse changes in general economic, industry, and market conditions; |
| • |
subjecting us to restrictive covenants that may reduce our ability to take certain corporate actions or obtain further debt or equity
financing; |
| • |
limiting our flexibility in planning for, or reacting to, changes in our business and our industry; and |
| • |
placing us at a competitive disadvantage compared to our competitors that have less debt or better debt servicing options.
|
In order to satisfy our current and future debt service obligations,
we will be required to raise funds from external sources. We may be unable to arrange for additional financing to pay the amounts due
under our existing debt. Funds from external sources may not be available on acceptable terms, if at all. Our failure to satisfy our current
and future debt obligations could materially adversely affect our financial condition and results of operations.
There can be no assurances that Oratech’s proprietary
POD™ technology will receive the necessary regulatory approvals.
There can be no assurances that Oratech’s proprietary POD™
technology will receive the necessary regulatory approvals for the Phase 3 oral insulin trial in the United States or that the technology
will be developed and commercialized successfully. Under a clinical trial management agreement, Oramed will retain responsibility for
managing and funding the anticipated POD™ clinical program. In addition, we will be subject to a number of risks including risks
relating to the lack of control over the clinical trial and potential disagreements with Oramed about how to manage the potential trial
which may result in the delay or termination of the commercialization of Oratech’s products or product candidates or that result
in costly litigation or arbitration that would divert our management attention and resources.
There can be no assurances that Oratech’s proprietary
POD™ technology will receive the necessary regulatory approvals.
There can be no assurances that Oratech’s proprietary POD™
technology will receive the necessary regulatory approvals for the Phase 3 oral insulin trial in the United States or that the technology
will be developed and commercialized successfully. Under a clinical trial management agreement, Oramed will retain responsibility for
managing and funding the anticipated POD™ clinical program. In addition, we will be subject to a number of risks including risks
relating to the lack of control over the clinical trial and potential disagreements with Oramed about how to manage the potential trial
which may result in the delay or termination of the commercialization of Oratech’s products or product candidates or that result
in costly litigation or arbitration that would divert our management attention and resources.
General Risks
Exchange rate fluctuations between the U.S. dollar,
the euro and the NIS may negatively affect our earnings.
The U.S. dollar is our functional and reporting currency. However, we
pay a significant portion of our expenses in NIS and in euro, and we expect this to continue. As a result, we are exposed to exchange
rate risks that may materially and adversely affect our financial results. Accordingly, any appreciation of the NIS or euro relative to
the U.S. dollar would adversely impact our net loss or net income, if any. For example, if the NIS appreciates against the U.S. dollar
or if the value of the NIS declines against the U.S. dollar at a time when the rate of inflation in the cost of Israeli goods and services
exceeds the rate of decline in the relative value of the NIS, then the U.S. dollar cost of our operations in Israel would increase and
our results of operations could be materially and adversely affected.
Our operations also could be adversely affected if we are unable to
effectively hedge against currency fluctuations in the future.
We cannot predict any future trends in the rate of inflation in Israel
or the rate of depreciation (if any) of the NIS against the U.S. dollar. For example, the NIS appreciated against the U.S. dollar by approximately
12.5% in 2025 and depreciated by approximately 0.6% and 3.1% in 2024 and 2023, respectively. The annual inflation rate in Israel was 2.6%,
3.2% and 3.0% for the years ended December 31, 2025, 2024 and 2023, respectively.
We have in the past engaged in limited hedging activities, and we may
enter into other hedging arrangements with financial institutions from time to time. Any hedging strategies that we may implement in the
future to mitigate currency risks, such as forward contracts, options and foreign exchange swaps related to transaction exposures may
not eliminate our exposure to foreign exchange fluctuations.
65
We are subject to certain regulatory regimes that
may affect the way that we conduct business internationally, and our failure to comply with applicable laws and regulations could materially
adversely affect our reputation and result in penalties and increased costs.
We are subject to a complex system of laws and regulations related to
international trade, including economic sanctions and export control laws and regulations. We also depend on our distributors and
agents for compliance and adherence to local laws and regulations in the markets in which they operate. Significant political or regulatory
developments in the jurisdictions in which we sell our products, such as those stemming from the presidential administration in the United
States or the U.K.’s exit from the E.U., are difficult to predict and may have a material adverse effect on us. For example,
in the United States, the Trump administration-imposed tariffs on imports from China, Mexico, Canada, and other countries, and expressed
support for greater restrictions on free trade and increase tariffs on goods imported into the United States. Changes in U.S. political,
regulatory, and economic conditions or in its policies governing international trade and foreign manufacturing and investment in the United
States could adversely affect our sales in the United States.
We are also subject to the FCPA and may be subject to similar worldwide
anti-bribery laws that generally prohibit companies and their intermediaries from making corrupt payments to government officials
for the purpose of obtaining or retaining business. Despite our compliance and training programs, we cannot be certain that our
procedures will be sufficient to ensure consistent compliance with all applicable international trade and anti-corruption laws, or that
our employees or channel partners will strictly follow all policies and requirements to which we subject them. Any alleged or actual
violations of these laws may subject us to government scrutiny, investigation, debarment, and civil and criminal penalties, which may
have an adverse effect on our results of operations, financial condition and reputation.
Our business may be materially affected by changes
to fiscal and tax policies. Potentially negative or unexpected tax consequences of these policies, or the uncertainty surrounding their
potential effects, could adversely affect our results of operations and share price.
The rules dealing with U.S. federal, state and local income taxation
are constantly under review by persons involved in the legislative process and by the Internal Revenue Service (the “IRS”)
and the U.S. Treasury Department. Changes to tax laws (which changes may have retroactive application) could adversely affect us or holders
of our ordinary shares. In recent years, many such changes have been made, and changes are likely to continue to occur in the future.
It cannot be predicted whether, when, in what form or with what effective dates tax laws, regulations and rulings may be enacted, promulgated
or issued, which could result in an increase in our or our shareholders’ tax liability or require changes in the manner in which
we operate in order to minimize or mitigate any adverse effects of changes in tax law.
In addition, foreign governments may enact tax laws in response to the
changes in the rules dealing with U.S. federal, state and local income taxation or otherwise that could result in further changes to global
taxation and materially affect our financial position and results of operations. The uncertainty surrounding the effect of the reforms
on our financial results and business could also weaken confidence among investors.
Certain U.S. holders of our ordinary shares may suffer
adverse U.S. tax consequences if we are characterized as a controlled foreign corporation, or a CFC, under Section 957 of the Code.
Each “Ten Percent Shareholder” (as defined below) in a non-U.S.
corporation that is classified as a “controlled foreign corporation,” or a CFC, for U.S. federal income tax purposes generally
is required to include in income for U.S. federal tax purposes such Ten Percent Shareholder’s pro rata share of the CFC’s
“Subpart F income,” global intangible low-taxed income, and investment of earnings in U.S. property, even if the CFC has made
no distributions to its shareholders. Subpart F income generally includes dividends, interest, rents and royalties, gains from the sale
of securities and income from certain transactions with related parties. In addition, a Ten Percent Shareholder that realizes gain
from the sale or exchange of shares in a CFC may be required to classify a portion of such gain as dividend income rather than capital
gain. A non-U.S. corporation generally will be classified as a CFC for U.S. federal income tax purposes if Ten Percent Shareholders own,
directly or indirectly, more than 50% of either the total combined voting power of all classes of stock of such corporation entitled to
vote or of the total value of the stock of such corporation. A “Ten Percent Shareholder” is a United States person (as defined
by the Code), who owns or is considered to own 10% or more of (1) the total combined voting power of all classes of stock entitled to
vote or (2) the value of all classes of stock of such corporation. The determination of CFC status is complex and includes attribution
rules, the application of which is not entirely certain.
66
During our 2025 taxable year, we believe that we had one shareholder
that was a Ten Percent Shareholder for U.S. federal income tax purposes. However, our CFC status for the taxable year ending on December
31, 2025, and our current taxable year is unknown, and we may be a CFC for the taxable year ending on December 31, 2026, our current taxable
year or a following year. In addition, recent changes to the attribution rules relation to the determination of CFC status may make it
difficult to determine our CFC status for any taxable year or the CFC status of any of our subsidiaries. U.S. holders should consult their
own tax advisors with respect to the potential adverse U.S. tax consequences of becoming a Ten Percent Shareholder in a CFC. If we are
classified as both a CFC and a passive foreign investment company, or PFIC, we generally will not be treated as a PFIC with respect to
those U.S. holders that meet the definition of a Ten Percent Shareholder during the period in which we are a CFC.
If there are significant disruptions in our information
technology systems, our business, financial condition, and operating results could be adversely affected.
The efficient operation of our business depends on our information technology
systems. We rely on our information technology systems to effectively manage sales and marketing data, accounting and financial functions,
inventory management, product development tasks, research and development data, customer service and technical support functions. Our
information technology systems are vulnerable to damage or interruption from earthquakes, fires, floods and other natural disasters, terrorist
attacks, attacks by computer viruses or hackers, power losses, and computer system or data network failures. In addition, our data management
application is hosted by a third-party service provider whose security and information technology systems are subject to similar risks,
and our products’ systems contain software which could be subject to computer virus or hacker attacks or other failures.
The failure of our or our service providers’ information technology
systems or our products’ software to perform as we anticipate or our failure to effectively implement new information technology
systems could disrupt our entire operation or adversely affect our software products and could result in decreased sales, increased overhead
costs, and product shortages, all of which could have a material adverse effect on our reputation, business, financial condition, and
operating results.
If we fail to properly manage our anticipated growth,
our business could suffer.
Our growth and product expansion has placed, and we expect that it will
continue to place, a significant strain on our management team and on our financial resources. Failure to manage our growth effectively
could cause us to misallocate management or financial resources, and result in losses or weaknesses in our infrastructure, which could
materially adversely affect our business. Additionally, our anticipated growth will increase the demands placed on our suppliers, resulting
in an increased need for us to manage our suppliers and monitor for quality assurance. Any failure by us to manage our growth effectively
could have an adverse effect on our ability to achieve our business objectives.
We are highly dependent on the knowledge
and skills of our senior management, and if we are not successful in attracting
and retaining highly qualified personnel, we may not be able to successfully implement our business strategy.
Our ability to compete in the highly competitive medical devices industry
depends upon our ability to attract and retain highly qualified managerial, scientific, sales and medical personnel. We are highly dependent
on our senior management team and have benefited substantially from the leadership and performance of our senior management. For example,
we depend on our Chief Executive Officer’s experience successfully scaling an early-stage medical device company, as well as the
experience of other members of management. The loss of the services of any of our executive officers and other key employees, and our
inability to find suitable replacements could result in delays in product development and harm our business. Competition for senior management
in our industry is intense, and we cannot guarantee that we will be able to retain our personnel. Additionally, we do not carry key man
insurance on any of our current executive officers. The loss of the services of certain members of our senior management could prevent
or delay the implementation and completion of our strategic objectives or divert management’s attention to seeking qualified replacements.
67
Shutdowns
of the U.S. federal government could materially impair our business and financial condition.
Development
of our product candidates and/or regulatory approval may be delayed for reasons beyond our control. For example, in recent years, the
U.S. government shut down several times and certain regulatory agencies, such as the FDA and the SEC, had to furlough critical FDA, SEC,
and other government employees and stop critical activities. Without appropriation of sufficient funding to federal agencies, our business
operations related to our product development activities for the U.S. market could be impacted. If a prolonged government shutdown or
budget sequestration occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions,
which could have a material adverse effect on our business. Further, in our operations as a public company, future government shutdowns
could impact our ability to access the public markets, such as through the declaration of effectiveness of registration statements and
obtain necessary capital in order to properly capitalize and continue our operations.
ITEM
1B. UNRESOLVED STAFF COMMENTS
None.
ITEM
1C. CYBERSECURITY
Cybersecurity
Risk Management and Strategy
We
rely on information systems and the data stored on them to conduct our operations. We
have adopted
and maintain a cybersecurity risk management program in accordance with our risk profile and business that is informed
by and incorporates elements of industry standards.
Our
cybersecurity risk management program incorporates multiple components, including, but not limited to, ongoing monitoring of critical
risks from cybersecurity threats using automated tools. Additionally, we have implemented an employee education and training program,
which we provide on an annual basis, that is designed to raise awareness of cybersecurity threats. To support our cybersecurity risk management
program, we leverage managed service providers and other third-party information technology and cybersecurity providers and consultants,
including to perform regular system scans and threat intelligence analysis. Additionally,
we require certain
third-party providers and consultants to adhere to contractual requirements relating to privacy and cybersecurity standards.
Governance
68
ITEM
2. PROPERTIES
Our
corporate headquarters are located in Yokneam, Israel, our U.S. headquarters are located in Hudson, Massachusetts and our European headquarters
are located in Berlin, Germany.
All
of our facilities are leased, and we do not own any real property. The table below sets forth details of the square footage of our current
leased properties, all of which are utilized. We have no material tangible fixed assets apart from the properties described below.
|
|
|
Square
feet
(approximate)
|
| |
|
Hudson, Massachusetts
|
|
|
16,335
|
|
|
Yokneam, Israel
|
|
|
11,500
|
|
|
Berlin, Germany
|
|
|
950
|
|
|
Total
|
|
|
28,785
|
|
We
believe our facilities are adequate and suitable for our current needs.
ITEM
3. LEGAL PROCEEDINGS
Occasionally
we are involved in various claims, lawsuits, regulatory examinations, investigations and other legal matters arising, for the most part,
in the ordinary course of business. The outcome of litigation and other legal matters is inherently uncertain. In making a determination
regarding accruals, using available information, we evaluate the likelihood of an unfavorable outcome in legal or regulatory proceedings
to which we are a party and records a loss contingency when it is probable a liability has been incurred and the amount of the loss can
be reasonably estimated.
Where
we determine an unfavorable outcome is not probable or reasonably estimable, we do not accrue for any potential litigation loss. These
subjective determinations are based on the status of such legal or regulatory proceedings, the merits of our defense's and consultation
with legal counsel. Actual outcomes of these legal and regulatory proceedings may materially differ from our current estimates. It is
possible that resolution of one or more of the legal matters currently pending or threatened could result in losses material to our consolidated
results of operations, liquidity, or financial condition.
For
information regarding legal proceedings, see Note 7 “Commitments and Contingent Liabilities” in the notes to our audited consolidated
financial statements included in this annual report, which discussion we incorporate by reference into this Item.
ITEM
4. MINE SAFETY DISCLOSURES.
Not
applicable.
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 18, 2026, we had approximately 2,699 shareholders of record.
69
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 entities will not be entitled to the foregoing exemption if Israeli residents (i) have a controlling interest of more than
25% in such non-Israeli entity or (ii) are the beneficiaries of, or are entitled to, 25% or more of the revenue or profits of such non-Israeli
entity, 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 which was subject to benefits under the Encouragement of Capital Investments Law, 5719-1959
(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 3% on annual income exceeding a certain threshold
(NIS 721,560 for 2026, linked to the annual change in the Israeli Consumer Price Index), including, but not limited to, income derived
from dividends, interest, and capital gains. In addition, beginning in 2025, certain capital income, including dividends, interest
and capital gains, may be subject to an additional 2% surtax in Israel to the extent such income exceeds the above-mentioned threshold.
70
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, were collected to demonstrate
the safety and efficacy of this feature and support the FDA submission. In March 2025, we received 510(k) clearance from the U.S. Food
and Drug Administration (“FDA”) for the ReWalk 7 Personal Exoskeleton device, a next-generation ReWalk model.
71
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. The ReStore is a powered, lightweight soft
exo-suit intended for use during the rehabilitation of individuals with lower limb disabilities due to stroke. Sales of the device in
the European Union ceased in May 2024. In the second quarter of 2020, we signed an agreement to become 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. We continue to distribute these products; however, our distribution rights
are no longer exclusive.
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. The
purchase agreement also provided for the potential of additional cash earnout payments based on AlterG’s revenue growth over the
two years following the closing; however, no earnout payments were earned. 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 6,000 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 injury and disability.
In
February 2026, we entered into an Intellectual Property Assignment and Technology Transfer Agreement with Skelable Ltd., an Israeli technology
company, pursuant to which we agreed to acquire certain intellectual property and related technology assets associated with a powered
upper-body robotic orthotic system designed to assist individuals with impaired upper-limb function, including stroke survivors. The transaction
remains subject to customary closing conditions. As part of the transaction, certain key employees of Skelable are expected to join our
company. The consideration consists primarily of our ordinary shares and is subject to the achievement of certain milestones. The technology
remains under development and is intended to expand our neurorehabilitation platform beyond lower-limb exoskeleton systems.
In
March 2025, we announced an agreement with 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,
to increase our penetration of SCI Products into the workers’ compensation market. 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.
In
December 2025, we announced a distribution agreement with Verita Neuro, a provider of intensive neurological rehabilitation services.
Pursuant to the agreement, Verita Neuro will serve as a distributor of the ReWalk Personal Exoskeleton in certain international markets,
including Mexico, Thailand and the United Arab Emirates. Through its network of rehabilitation centers, Verita Neuro integrates advanced
technologies and therapies to support individuals with neurological injuries. We believe this agreement will expand access to the ReWalk
Personal Exoskeleton in additional international markets and support broader adoption of our technology.
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, 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, Hudson, Massachusetts, and Berlin, Germany.
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, 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.
72
We
have engaged with CMS regarding the Medicare coverage framework applicable to personal exoskeletons. In 2024, 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 that is at least five years post-injury, 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. CMS determined this payment rate using a “gap-filling” methodology, which is applied when a technology
has no prior fee schedule pricing history. In establishing the payment amount for HCPCS code K1007, CMS considered available pricing information
for exoskeleton devices from Lifeward and other manufacturers.
In
June 2025, an Administrative Law Judge (“ALJ”) ruled in favor of a Medicare beneficiary’s appeal and determined that
their ReWalk Personal Exoskeleton shall be covered and reimbursed by Medicare as a “reasonable and necessary” medical device
that enables walking after SCI. This ruling established a legal basis that the ReWalk system constitutes a reasonable and necessary medical
intervention for paralyzed individuals.
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.
73
On
January 12, 2026, we entered into a Share Purchase Agreement with Oramed Pharmaceuticals, Inc. (“Oramed”) and Oratech Pharma,
Inc. (“Oratech”), pursuant to which we agreed to acquire all of the outstanding equity interests of Oratech, a wholly owned
subsidiary of Oramed. Upon closing of the transaction, and subject to the satisfaction of customary closing conditions, we will issue
to Oramed ordinary shares and pre-funded warrants representing up to 49.99% of our fully diluted equity capitalization, with the number
of ordinary shares issued at closing not exceeding 45% of our outstanding ordinary shares immediately after closing. We will also issue
transaction warrants and agreed to make quarterly revenue sharing payments equal to 4% of net revenues from sales of our ReWalk Personal
Exoskeleton products and related extended warranties, subject to certain caps and termination events.
In
connection with the transaction, we also entered into a Securities Purchase Agreement with Oramed and certain investors providing for
the issuance of up to $20.0 million of senior secured convertible notes, including $10.0 million to be issued at closing, together with
accompanying warrants.
On
March 12, 2026, our shareholders approved the transaction. We anticipate closing the transaction following the satisfaction of customary
closing conditions.
In
connection with the anticipated transaction, we received bridge financing from Oramed. On November 14, 2025, we entered into a Secured
Promissory Note (the “Initial Secured Promissory Note”) with Oramed Ltd., pursuant to which we issued to Oramed Ltd. a secured
promissory note in the principal amount of $3.0 million. The loan bears interest at a rate of 15% per annum, is secured by a lien on our
cash and matures on May 14, 2026.
On
February 12, 2026, we entered into an additional Secured Promissory Note (the “Subsequent Secured Promissory Note”) with Oramed,
pursuant to which we issued a secured promissory note in the initial principal amount of $525,000, which amount may be increased by up
to an additional $975,000 upon the mutual consent of the parties. The Subsequent Secured Promissory Note is secured by a lien on our cash,
accrues interest at a rate of 24% per annum and matures on the earlier of August 12, 2026, or the failure to obtain shareholder approval
of the transactions contemplated by the Securities Purchase Agreement and the Share Purchase Agreement described above.
On
March 11, 2026, we and Oramed agreed to increase the principal amount available under the Subsequent Secured Promissory Note by an additional
$500,000, resulting in an aggregate principal amount of $1,025,000 available under such note.
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.
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.
74
Cost
of Revenue and Gross Profit
For
ReWalk, which we began manufacturing at our facility in Yokneam, Israel in April 2025, cost of revenue consists primarily of raw materials,
direct labor, including wages and related benefits for employees directly engaged in the manufacturing process, as well as 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.
Starting
in January 2025, the Company signed a contract with Cirtronics Corporation to manufacture and assemble our AlterG products. 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.
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
the MyoCycle product line, which we distribute, 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 that
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 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 and market access activities, travel, marketing, advertising, 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
(Expeses) Income, Net
Financial
income and expenses consist primarily of bank commissions, foreign exchange gains and losses, interest income earned on investments in
short-term deposits, interest expense on our outstanding borrowings, and changes in the fair value of derivative liabilities associated
with our loan arrangements.
Interest
income consists of interest earned on our cash and cash equivalent balances. Interest expense consists primarily of interest accrued on
our outstanding borrowings and certain other costs associated with such indebtedness. Changes in the fair value of derivative liabilities
reflect the periodic remeasurement of derivatives embedded in or associated with our loan agreements. Foreign currency exchange changes
reflect gains or losses related to transactions denominated in currencies other than the U.S. dollar.
75
Taxes
on Income
As
of December 31, 2025, 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 $279.9 million.
As
of December 31, 2024, the Company had approximately $49.5 million of U.S. federal net operating loss (“NOL”) carryforwards
and $35.3 million of state NOL carryforwards. Federal NOLs generated prior to January 1, 2018 will begin to expire in 2027, while federal
NOLs generated in tax years beginning after January 1, 2018 may be carried forward indefinitely. State NOLs will begin to expire in 2028,
subject to applicable state tax laws.
Our
taxable income generated outside of Israel will be subject to the applicable corporate tax rates in those jurisdictions. Accordingly,
our effective tax rate will depend on the geographic distribution of our taxable income.
Grants
and Other Funding
Israel
Innovation Authority (formerly known as the Office of the Chief Scientist)
From
our inception through December 31, 2025, we have received approximately $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 $117 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, 2025, 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, 2025 Compared to Year Ended December 31, 2024
Revenue
Our
revenue for 2025 and 2024 were as follows (dollars in thousands, except unit amounts):
|
|
Years
Ended December 31, |
|||||||
|
|
2025 |
2024
|
||||||
|
Revenue |
$ |
22,034 |
$ |
25,663 |
||||
76
Revenue
consists primarily of transactions for our portfolio of ReWalk, AlterG, ReStore and MyoCycle systems.
Revenue
was $22.0 million, a decrease of $3.6 million, or 14%, during 2025 as compared to 2024. Of this decrease, $3.0 million was attributable
to reduced AlterG sales, primarily reflecting lower international demand and fewer system shipments compared to 2024. The remaining $0.6
million decline was mainly due to decreased revenue from MyoCycle.
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, government third-party payors and through channel partnerships. We also expect increased shipments of our AlterG Anti-Gravity
systems over time as we continue to expand our penetration of rehabilitation clinics in the U.S. and internationally.
Gross
Profit
Our gross profit for
2025 and 2024 were as follows (in thousands):
|
|
|
Years
Ended December 31, |
| |||||
|
|
|
2025 |
|
|
2024 |
| ||
|
Gross profit |
|
$ |
8,428 |
|
$ |
8,216 |
| |
Gross
profit was $8.4 million, or 38% of revenue, for 2025, as compared to a gross profit of $8.2 million, or 32% of revenue, for 2024. The
increase in gross margin was primarily attributable to the absence in 2025 of approximately $1.5 million of amortization expenses and
$1.2 million of restructuring expenses recognized in 2024. Excluding these items, gross profit decreased year over year, primarily due
to lower sales and inventory write-downs related to the termination of our manufacturing agreement with Sanmina and obsolete ReStore inventory.
We
expect gross profit and gross margin to improve over time as revenue volumes increase and we realize operating efficiencies associated
with greater scale. Gross margin is also expected to improve as a result of the transition of AlterG system production from our Fremont,
California facility, where operations were discontinued as of December 31, 2024, to a contract manufacturer. In addition, during April
2025 we transitioned the production of ReWalk to in-house manufacturing, which we expect will further support gross margin improvement
over time through better utilization of our manufacturing capacity and enhanced control over production costs. These expected improvements
are not expected to be impacted by the inventory write-downs recorded in 2025, which we believe were largely non-recurring in nature.
Research
and Development Expense, Net
Our research and development
expense, net for 2025 and 2024 was as follows (in thousands):
|
|
|
Years
Ended December 31, |
| |||||
|
|
|
2025 |
|
2024 |
| |||
|
Research and development
expense, net |
|
$ |
3,249 |
|
$ |
4,625 |
| |
Research
and development expense was $3.2 million in 2025, a decrease of $1.4 million, or 30%, as compared to 2024. The decrease is primarily attributable
to lower costs associated with the development projects for the ReWalk 7 and NEO products, which were substantially completed.
Following
the FDA clearance of the ReWalk 7 next-generation exoskeleton model in 2025, we expect to focus our research and development efforts primarily
on product improvements and ongoing enhancements to our current products. We also continue development initiatives aimed at reducing material
costs for our ReWalk and AlterG product lines. In addition, we expect to invest in the development and integration of technologies acquired
as part of the Skelable transaction.
77
Sales
and Marketing Expense
Our sales and marketing
expense for 2025 and 2024 was as follows (in thousands):
|
|
Years
Ended December 31, |
|||||||
|
|
2025 |
2024 |
||||||
|
Sales and marketing expense |
$ |
13,875 |
$ |
17,949 |
||||
Sales
and marketing expense was $13.9 million in 2025, a decrease of $4.1 million, or 23%, as compared to 2024. Of this decrease, approximately
$1.5 million was attributable to amortization expense recognized in 2024 that did not recur in 2025. The remaining $2.6 million decrease
was primarily driven by lower reimbursement, trade show, and marketing consultant expenses, as well as reductions in headcount, sales
commissions, and travel-related costs.
In
the near term, our sales and marketing expenses are expected to be driven by our efforts to facilitate growth in sales of our commercial
product lines, expand reimbursement coverage for our ReWalk Personal Exoskeleton device, support training activities of ReWalk customers,
promote sales through channel partners, and increase adoption of our AlterG Anti-Gravity systems through greater penetration of rehabilitation
clinics and hospitals and expansion of our distributor network internationally.
General
and Administrative Expense
Our general and administrative
expense for 2025 and 2024 was as follows (in thousands):
|
|
Years
Ended December 31, |
|||||||
|
|
2025 |
2024 |
||||||
|
General and administrative |
$ |
8,195 |
$ |
5,195 |
||||
General
and administrative expense was $8.2 million, an increase of $3.0 million, or 58%, as compared to 2024. Both periods included incomes related
to the earnout liability; however, the net income recognized in 2025 was approximately $2.0 million lower than the income recognized in
2024. Excluding this item, the increase was primarily attributable to restructuring expenses associated with the departure of the Company’s
former Chief Executive Officer and transaction-related costs incurred in connection with the Oramed transaction.
Impairment
charges
|
|
Years
Ended December 31, |
|||||||
|
|
2025 |
2024 |
||||||
|
Impairment charges |
$ |
2,783 |
$ |
9,794 |
||||
During
the year ended December 31, 2025, we recorded a goodwill impairment charge of $2.8 million primarily resulting from a sustained decline
in our share price, which constituted a triggering event under ASC 350 and indicated that our market capitalization was below our carrying
value. This non-cash impairment charge does not affect our liquidity, cash flows, or ongoing operations. By comparison, in 2024 we recognized
an impairment charge of $9.8 million, primarily related to certain acquired intangible assets, due to lower-than-expected financial performance.
Financial
(expense) income, net
Our financial income,
net for 2025 and 2024 was as follows (in thousands):
|
|
Years
Ended December 31, |
|||||||
|
|
2025 |
2024 |
||||||
|
Financial
(expenses) income, net |
$ |
(295 |
) |
$ |
448 |
|||
Financial
(expenses) income, net, reflects a decrease in financial income of $0.7 million during 2025 as compared to 2024. The decrease was
mainly attributable to interest expense recognized on the Oramed short-term loan in 2025, lower yields on a reduced cash balance reflecting
fewer funds on deposit, and unfavorable foreign currency exchange rate fluctuations.
78
Income
Tax
Our Income tax expense
(benefit) for 2025 and 2024 was as follows (in thousands):
|
|
|
Years
Ended December 31, |
| |||||
|
|
|
2025 |
|
|
2024 |
| ||
|
Taxes on income (benefit) |
|
$ |
(55 |
) |
|
$ |
43 |
|
Income
tax changed by $98 thousand during 2025 as compared to 2024, primarily due to lower current tax expenses in certain foreign jurisdictions.
Year
Ended December 31, 2024 Compared to Year Ended December 31, 2023
A
discussion of changes in our results of operations in 2024 compared to 2023 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, 2024, filed with the SEC on March 7, 2025, 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, the 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. Actual results could differ materially from those estimates as circumstances
change and additional information becomes known. In addition to 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 affected 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.
79
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.
With
the recent establishment of a Medicare reimbursement pathway for the ReWalk product, the Company includes variable consideration in the
form of implicit price concessions if, 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.
For
contracts with Medicare, the Company determines the amount of variable consideration that should be included at the transaction price,
using contractual agreements and historical reimbursement experience with Medicare. The Company applies constraint to the transaction
price, such that revenue is recorded only to the extent that it is probable that a significant reversal in the amount of the cumulative
revenue recognized will not occur in the future. If actual amounts of consideration ultimately received differ from the Company’s
estimates, the Company adjusts these estimates, which would affect revenue in the period such adjustments become known.
A
portion of the Company's sales of products to customers are made through lease arrangements which typically include AlterG Anti-Gravity
systems.
Revenue
for the lease of AlterG Anti-Gravity systems is accounted for under ASC Topic 842, Leases. AlterG Anti-Gravity systems being utilized
under service agreements, accounted for in accordance with ASC 842 as an operating lease. Revenues are recognized ratably over the lease
term.
The
Company provides product assurance warranties for periods of 1- 10 years (usually 2 years) that cover the compliance of the products with
agreed-upon specifications. A provision is recorded for estimated warranty costs based on the Company's experience.
In
certain contracts, the Company also provides a service-type warranty. Service-type warranty is accounted for as a separate performance
obligation, and revenue is recognized ratably over the service period as the customer consumes the benefit over the service term.
Goodwill
Impairment
Goodwill
represents the excess of the purchase price over the fair value of the identifiable net assets acquired in a business combination. Goodwill
is not amortized but is tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that
the carrying value of goodwill may not be recoverable.
We
perform our annual goodwill impairment test during the fourth quarter of each fiscal year, or more frequently if impairment indicators
arise. Such indicators may include, among others, a sustained decline in our market capitalization, significant adverse changes in economic
or industry conditions, changes in the manner in which a reporting unit is utilized, or other factors that may affect the fair value of
the reporting unit.
The
goodwill impairment test is performed at the reporting unit level. We may first perform a qualitative assessment to determine whether
it is more likely than not that the fair value of the reporting unit is less than its carrying value. If, based on the qualitative assessment,
we determine that it is more likely than not that the fair value of the reporting unit is less than its carrying value, or if we elect
to bypass the qualitative assessment, we perform a quantitative impairment test. In the quantitative test, we compare the fair value of
the reporting unit with its carrying amount, including goodwill. If the carrying amount exceeds the reporting unit’s fair value,
an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to the reporting
unit.
Determining
the fair value of a reporting unit requires management to make certain estimates and assumptions, including assumptions related to the
Company’s market capitalization and the appropriate control premium applied in the market approach valuation. These estimates involve
judgment and are based on publicly available market data, including control premium studies for comparable public company transactions.
These estimates are inherently uncertain and may differ from actual market conditions. Changes in the Company’s market capitalization,
control premium assumptions, or overall market conditions could result in impairment charges in future periods.
During
the second quarter of 2025, we recorded a goodwill impairment charge following the identification of impairment indicators and the completion
of a quantitative impairment analysis. Our annual impairment test performed in the fourth quarter of 2025 did not result in any additional
impairment.
80
Inventory Valuation
Inventories are stated at the lower of cost or net realizable value.
Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion,
disposal, and transportation. The carrying value of our inventory is reduced for excess or obsolete inventory based on assumptions
about future demand and market conditions. If actual future demand or market conditions are less favorable than those projected by management,
additional inventory write-downs may be required, which could have a material adverse effect on our results of operations.
Valuation of Derivative Liability
Our derivative liabilities are recorded at fair value based on observable
and unobservable inputs. For the derivative liability related to the promissory note with Oramed, these inputs include our stock price,
the expected volatility of our stock price, the remaining term of the loan, and assumptions regarding the probability of an equity financing
that would result in an adjustment to the conversion price of the convertible loan.
The derivative liability associated with the compound derivative feature
in the term loan with Oramed is based on similar assumptions, including the credit spread and the remaining term of the debt.
Recently Issued and Adopted Accounting Pronouncements
A discussion of recent accounting pronouncements is included in Note 2z, 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, the incurrence of bank debt and loans (including the [Loan] from Oramed.
As of December 31, 2025, we had cash and cash equivalents of $2.2 million.
We had an accumulated deficit in the total amount of $284.7 million as of December 31, 2025 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.
We intend 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, 2025 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.
81
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 the development and commercialization of the upper-body exoskeleton technology acquired from Skelable for potential personal
health and rehabilitation applications across multiple indications; (iii) routine product updates; (iv) potential acquisitions of businesses
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 until such time as our
public float reaches at least $75 million. When we file our next annual report for the year ended December 31, 2026, we will
also be required to re-test our status under these rules. 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 outstanding
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 January 2026 (the “2026 Shelf Registration Statement”).
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 151,515 ordinary shares and ordinary warrants to purchase up to an aggregate of 151,514 ordinary shares at
an exercise price of $33 per share. Each ordinary share was sold at an offering price of $33. 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 9,088 ordinary shares, with an exercise price of $41.25 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.
82
On March 7, 2025, the Company entered into an At-the-Market (“ATM”)
Offering Agreement with H.C. Wainwright & Co., LLC (“HCW”), pursuant to which the Company may, from time to time, offer
and sell its ordinary shares having an aggregate offering price of up to $5.5 million through HCW acting as the Company’s sales
agent. Sales of ordinary shares under the ATM program will be made at prevailing market prices or as otherwise agreed with HCW. The Company
is not obligated to make any sales under the agreement and may suspend or terminate the program at any time at its discretion.
During the three and twelve months ended December 31, 2025, the Company
sold 114,008 and 289,903 ordinary shares, respectively, under the ATM program at an average price of $7.62 and $9.67 per share, respectively,
for total gross proceeds of approximately $0.9 million and $2.8 million. The Company paid aggregate fees and commissions of $0.1 million
to HCW and incurred other expenses of approximately $0.2 million, resulting in net proceeds of approximately $2.5 million. The Company’s
ATM program expired on November 16, 2025.
On June 25, 2025, the Company entered into a securities purchase agreement
with certain institutional investors for the issuance and sale of 333,333 ordinary shares and warrants to purchase up to an aggregate
of 333,328 ordinary shares at an exercise price of $7.8 per share. Each ordinary share was sold at a combined offering price of $7.8 together
with a warrant to purchase one ordinary share. The offering of the ordinary shares and the ordinary shares issuable upon exercise of the
warrants was made pursuant to the Company’s registration statement on Form S-1, initially filed with the SEC on June 20, 2025, and
declared effective by the SEC on June 25, 2025. The warrants are exercisable at any time and from time to time, in whole or in part, following
the date of issuance and ending five years from the date of issuance. The offering closed on June 26, 2025. Additionally, the Company
issued warrants to purchase up to 20,000 ordinary shares, with an exercise price of $9.75 per share, exercisable at any time and from
time to time, in whole or in part, following the date of issuance and ending five years from the date of issuance, to certain representatives
of H.C. Wainwright as compensation for its role as the placement agent in the June 2025 public offering.
The warrants issued in the January 2025 private placement and the June
2025 public offering are considered freestanding instruments. As the warrants are indexed to the Company's ordinary shares and meet the
criteria for equity classification, they are recorded in shareholders’ equity on the Company’s consolidated balance sheets.
Agreements with Oramed
On January 12, 2026, we entered into a Share Purchase Agreement with
Oramed Pharmaceuticals, Inc. (“Oramed”) and Oratech Pharma, Inc. (“Oratech”), pursuant to which we agreed to acquire
all of the outstanding equity interests of Oratech, a wholly owned subsidiary of Oramed. Upon closing of the transaction, and subject
to the satisfaction of customary closing conditions, we will issue to Oramed ordinary shares and pre-funded warrants representing up to
49.99% of our fully diluted equity capitalization, with the number of ordinary shares issued at closing not exceeding 45% of our outstanding
ordinary shares immediately after closing. We will also issue transaction warrants and agreed to make quarterly revenue sharing payments
equal to 4% of net revenues from sales of our ReWalk Personal Exoskeleton products and related extended warranties, subject to certain
caps and termination events.
In connection with the transaction, we also entered into a Securities
Purchase Agreement with Oramed and certain investors providing for the issuance of up to $20.0 million of senior secured convertible notes,
including $10.0 million to be issued at closing, together with accompanying warrants.
On March 12, 2026, our shareholders approved the transaction. We anticipate
closing the transaction following the satisfaction of customary closing conditions.
In connection with the anticipated transaction, we received bridge financing
from Oramed. On November 14, 2025, we entered into a Secured Promissory Note (the “Initial Secured Promissory Note”) with
Oramed Ltd., pursuant to which we issued to Oramed Ltd. a secured promissory note in the principal amount of $3.0 million. The loan bears
interest at a rate of 15% per annum, is secured by a lien on our cash and matures on May 14, 2026.
On February 12, 2026, we entered into an additional Secured Promissory
Note (the “Subsequent Secured Promissory Note”) with Oramed, pursuant to which we issued a secured promissory note in the
initial principal amount of $525,000, which amount may be increased by up to an additional $975,000 upon the mutual consent of the parties.
The Subsequent Secured Promissory Note is secured by a lien on our cash, accrues interest at a rate of 24% per annum and matures on the
earlier of August 12, 2026 or the failure to obtain shareholder approval of the transactions contemplated by the Securities Purchase Agreement
and the Share Purchase Agreement described above.
On March 11, 2026, we and Oramed agreed to increase the principal amount
available under the Subsequent Secured Promissory Note by an additional $500,000, resulting in an aggregate principal amount of $1,025,000
available under such note.
Cash Flows
|
|
Years Ended December 31, |
|||||||||||
|
|
2025 |
2024 |
2023 |
|||||||||
|
Net cash used in operating activities |
$ |
(16,826 |
) |
$ |
(21,718 |
) |
$ |
(20,667 |
) | |||
|
Net cash used in investing activities |
(16 |
) |
- |
(18,149 |
) | |||||||
|
Net cash provided by (used in) financing activities |
12,203 |
- |
(992 |
) | ||||||||
|
Effect of Exchange rate changes on Cash, Cash Equivalents and Restricted Cash |
110 |
34 |
45 |
|||||||||
|
Net cash flow |
$ |
(4,529 |
) |
$ |
(21,684 |
) |
$ |
(39,763 |
) | |||
83
Year Ended December 31, 2025 to Year Ended December 31,
2024
Net Cash Used in Operating Activities
Net cash used in operating activities was $16.8 million in 2025, a decrease
of $4.9 million as compared to 2024. The decrease was primarily attributable to improved working capital, including higher collections
of trade receivables and a reduction in inventory levels reflecting inventory management and, to a lesser extent, inventory write-downs.
These factors were partially offset by lower revenues relative to operating expenses.
Net Cash Used in Investing Activities
Net cash used in investing activities increased by $16 thousand in 2025 compared to 2024,
primarily reflecting slightly higher purchases of property and equipment.
Net Cash Provided by Financing Activities
Net cash provided by financing activities was $12.2 million in 2025,
primarily reflecting proceeds from registered direct offerings, issuances of ordinary shares under the Company’s at-the-market program
and public offering, as well as proceeds from the bridge loan from Oramed.
Year Ended December 31, 2024 Compared to Year Ended
December 31, 2023
A discussion of changes in our cash flows in 2024 compared to 2023 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, 2024, filed with the SEC
on March 7, 2025, which is available free of charge on the SECs website at www.sec.gov and at golifeward.com, and is incorporated by reference
herein.
Obligations and Commercial Commitments
Set forth below is a summary of our contractual obligations as of December 31, 2025:
|
|
Payments due by period (in dollars, in thousands) |
|||||||||||||||
|
Contractual obligations |
Total |
Less than 1 year |
1-3 years |
3-5 years |
||||||||||||
|
|
||||||||||||||||
|
Purchase obligations (1) |
$ |
6,036 |
$ |
6,036 |
$ |
— |
$ |
— |
||||||||
|
Operating lease obligations (2) |
1,917 |
452 |
1,166 |
299 |
||||||||||||
|
Total |
$ |
7,953 |
$ |
6,488 |
$ |
1,166 |
$ |
299 |
||||||||
|
(1) |
Purchase obligations consist of non-cancelable purchase orders
with suppliers for the manufacture of our ReWalk systems produced in-house and for AlterG Anti-Gravity systems manufactured by our contract
manufacturer, Cirtronics Corporation. Purchase orders are placed with suppliers based on our sales forecasts and anticipated production
requirements. |
|
(2) |
Our operating leases consist of leases for our facilities in the United States, Israel
and Germany and motor vehicles in Israel. |
We calculated the payments due under our operating lease obligation
for our Israeli office that are to be paid in NIS at a rate of exchange of NIS 3.19:$1.00, which was the applicable exchange rate as of
December 31, 2025.
Off-Balance Sheet Arrangements
We had no off-balance sheet arrangements or guarantees of third-party
obligations during the periods presented.
Trend Information
For information on significant known trends, please see “Part
I-Item 1. Business – Overview” in this annual report.
84
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
Currency Exchange Risk
Our results of operations and cash flows are affected by fluctuations
in foreign currency exchange rates. Since 2015, most of our expenses were denominated in U.S. dollars and the remaining expenses
were denominated in NIS and euro, until 2018 most of our revenue was denominated in U.S. dollars and the remainder of our revenue was
denominated in euro and British pound whereas in the last four years our euro revenue is higher than our U.S dollar revenue. Accordingly,
changes in the value of the NIS and Euro relative to the U.S. dollar in each of the years 2025, 2024, and 2023 impacted amounts recorded
on our consolidated statements of operations for these periods. We expect that the denominations of our revenue and expenses in 2026 will
be consistent with what we experienced in 2025.
The following table presents information about the devaluation in the
exchange rates of the NIS and euro against the U.S. dollar in 2025, 2024 and 2023:
|
|
Change in Average Exchange Rate |
|||||||
|
Period |
NIS against the U.S. Dollar (%) |
Euro against the U.S. Dollar (%) |
||||||
|
2025 |
7.13 |
|
4.20 |
|||||
|
2024 |
(0.25 |
) |
0.06 |
|||||
|
2023 |
(9.00 |
) |
2.67 |
|||||
The figures above represent the change in the average exchange rate
in the given period compared to the average exchange rate in the immediately preceding period. Negative figures represent the appreciation
of the U.S. dollar compared to the NIS or the euro. A 10% increase or decrease in the value of the NIS against the U.S. dollar would have
decreased or increased our net loss by approximately $555 thousand in 2025. A 10% increase or decrease in the value of the euro against
the U.S. dollar would have decreased or increased our net loss by approximately $92 thousand in 2025.
Other Market Risks
We do not believe that we have material exposure to interest rate risks or to inflationary
risks.
ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
The information required hereunder is set forth under Report of Independent
Registered Public Accounting Firm, Consolidated Balance Sheets, Consolidated Statements of Operations, Statements of Changes in Shareholders’
Equity, Consolidated Statements of Cash Flows and Notes to Consolidated Financial Statements included in the Consolidated Financial Statements
that are a part of this annual report. Other financial information is included in the Consolidated Financial Statements that are a part
of this annual report.
85
ITEM 9. CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to
ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the
time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required financial
disclosure.
As of the end of the period covered by this annual report, we carried
out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e)
and Rule 15d-15(e) of the Exchange Act). Based upon, and as of the date of, this evaluation, the Chief Executive Officer and the Chief
Financial Officer concluded that our disclosure controls and procedures were effective such that the information required to be disclosed
by us in our SEC reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and
is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to
allow timely decisions regarding required disclosure.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate
internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over
financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with U.S. GAAP.
Our internal control over financial reporting includes those policies
and procedures that:
|
● |
pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of our assets; |
|
● |
provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations
of our management and directors; and |
|
● |
provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of our assets that could have a material effect on our financial statements. |
Management has assessed the effectiveness of our internal control over
financial reporting as of December 31, 2025. In making its assessment, management used the criteria described in Internal Control
— Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on management’s assessment, management has concluded that
our internal control over financial reporting was effective as of December 31, 2025 to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of consolidated financial statements for external reporting purposes in accordance
with U.S. GAAP.
This annual report does not include an attestation report of our independent registered
public accounting firm regarding internal controls over financial reporting because we are exempt from this requirement as a smaller reporting
company and non-accelerated filer.
86
Changes in Internal Control over Financial Reporting
During the fourth quarter of the fiscal year ended December 31,
2025, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange
Act) that materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER
INFORMATION
Rule 10b5-1 Trading Arrangements
During the quarter ended December 31, 2025, none of our directors
or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated a “Rule 10b5-1 trading
arrangement” or “non-Rule 10b5-1 trading arrangement” (as each term is defined in Item 408(a) of Regulation S-K).
ITEM 9C. DISCLOSURE
REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable
87
PART III
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information About Our Directors
The following table sets forth the
names and ages of the directors of the Company as of March 18, 2026 and their principal occupations at present and for the past five years.
Our Board of Directors (the “Board”) currently consists of five members and is divided into three classes. Class I consists
of 0 directors, Class II consists of three directors and Class III consists of two directors. One class is elected each year at the annual
meeting of stockholders for a term of three years. The term of the Class III directors expires at the 2026 Annual Meeting of Shareholders.
No family relationships exist between any directors or executive officers, as such term is defined in Item 401 of Regulation S-K promulgated
under the Exchange Act.
|
Name |
|
Age |
|
Current Position with the Company |
|
Director Since |
|
Mark Grant |
|
56 |
|
President, Chief Executive and Director |
|
2025 |
|
Dr. John William Poduska* (2)(3) |
|
88 |
|
Class II Director |
|
2014 |
|
Randel E. Richner* (1)(2) |
|
70 |
|
Class II Director |
|
2020 |
|
Michael Swinford*(1) |
|
57 |
|
Class III Director |
|
2024 |
|
Robert Marshall*(3) |
|
59 |
|
Class III Director, Chairman |
|
2024 |
|
|
|
* Independent
(1) Member of Nominating and Corporate Governance Committee.
(2) Member of Compensation Committee.
(3) Member of Audit Committee.
Class III Directors
Continuing in Office Until the 2026 Annual General Meeting of Shareholders
Set forth below is a list of our directors
continuing in office until the 2026 annual general meeting of shareholders, together with certain biographical information, including
their ages as of the date of this annual report:
Robert
Marshall, 59, has served on our Board since November 2024 and has served as our Chairman since January 2026. Mr. Marshall has served
as the Chief Financial Officer and Treasurer of Lantheus Holdings, Inc. (“Lantheus”), a public radiopharmaceutical company,
since September 2018. Prior to joining Lantheus, Mr. Marshall spent 16 years with Zimmer Biomet Holdings, Inc. (“Zimmer
Biomet”), a public global medical device company with a leading position in musculoskeletal health, in which he held various
senior leadership roles, including Vice President, Investor Relations and Corporate Treasurer, and most recently Vice President, Americas
Finance, for the U.S., Canadian and Latin American commercial markets. Before Zimmer Biomet, Mr. Marshall was employed with Brown &
Williamson Tobacco, a subsidiary of British American Tobacco, p.l.c., in Louisville, Kentucky, where he held several positions of increasing
responsibility. Mr. Marshall holds a Master of Business Administration from Indiana University, South Bend, and a Bachelor of Business
Administration in Finance from the University of Notre Dame. He also holds the CFA designation. We believe that Mr. Marshall’s extensive
financial leadership experience provide him the qualifications and skills to serve as a member of our Board.
Michael
Swinford, 57, has served on our Board since April 2024. Mr. Swinford has been Chief Executive Officer of Numotion
since July 2014, where he has grown the company to become the largest provider of mobility and independence solutions in the United States
– serving over 400,000 individuals annually with Spinal Cord Injuries, Traumatic Brain Injuries, ALS, Muscular Dystrophy, Cerebral
Palsy, Multiple Sclerosis, Spinal Muscular Atrophy, Amputees and many other mobility related disabilities. As CEO at Numotion, Mr. Swinford
has expanded commercial coverage with over 5000 health plans, rehab hospitals, specialty and multi-disciplinary clinics, skilled nursing
facilities, primary care, and home health providers. Mr. Swinford has led efforts for benefit coverage determination for Power Wheelchair
Seat Elevation systems in 2023 and is actively leading efforts for Power Standing Wheelchairs and reform of Service and Repair regulations
and reimbursement levels. Prior to Numotion, Mr. Swinford had a highly successful 22-year career at GE Healthcare, including serving
as the President and CEO of GE Healthcare Services and as an officer of General Electric Company. Mr. Swinford held various operational
and commercial roles throughout his career leading through various business cycles from start-ups to turnarounds. Mr. Swinford also serves
as a director of CareATC, a technology enabled population health primary care provider, as well as a director of Aspen Surgical, a global
surgical supply manufacturer. We believe that Mr. Swinford’s extensive experience with health and rehabilitation products, as well
as his knowledge of the reimbursement process, provide him the qualifications and skills to serve as a member of our Board.
88
Class II Directors
Continuing in Office Until the 2028 Annual General Meeting of Shareholders
Set forth below is a list of our directors
continuing in office until the 2028 annual general meeting of shareholders, together with certain biographical information, including
their ages as of the date of this annual report:
Mark
Grant, 56, has served as our President and co-Chief Executive Officer and as a member of our Board of Directors since June 2025,
and brings over 25 years of leadership experience in healthcare and medical technology. Prior to Lifeward, Mr. Grant served as President
of Americas & Chief Commercial Officer of IMRA Surgical, a company specializing in surgical robotic training, since March 2023. From
May 2004 to March 2023, Mr. Grant worked at Medtronic plc (“Medtronic”), a global healthcare technology company, where he
held various positions of increasing responsibility, most recently as Vice President, Americas Region. In his role at Medtronic, he led
the $1.5 billion Americas region and oversaw a 2,000-person commercial organization. Mr. Grant received his B.S. in Industrial Technology
from East Carolina University. We believe that Mr. Grant’s. successful leadership and executive experience, along with his extensive
knowledge of the medical devices industry, provide him the qualifications and skills to serve as a member of our Board.
Dr.
John William Poduska, 88, has served on our Board since 2014. He
also serves as a director on the boards of a number of privately-held companies. Dr. Poduska also served as a director of EXA Corporation
(Nasdaq: EXA), where he served as chairman of the company and a member of the nominating and corporate governance committee, until 2018,
Novell, Inc. until 2011 and of Anadarko Petroleum Corporation and Safeguard Scientifics, Inc. until 2009. Dr. Poduska was the Chairman
of Advanced Visual Systems Inc., a provider of visualization software, from January 1992 to December 2001. From December 1989 until December
1991, Dr. Poduska was President and Chief Executive Officer of Stardent Computer Inc., a computer manufacturer. From December 1985 until
December 1989, Dr. Poduska served as Chairman and Chief Executive Officer of Stellar Computer Inc., a computer manufacturer he founded
which is the predecessor of Stardent Computer Inc. Prior to founding Stellar Computer, Inc., Dr. Poduska founded Apollo Computer Inc.
and Prime Computer, Inc. Dr. Poduska holds a Sc.D. from MIT and an Honorary Doctorate of Humane Letters from Lowell University. We believe
that Dr. Poduska’s varied director experience, both in private and public companies, his expertise in computer engineering and his
familiarity with developing companies equip him with the qualifications and skills to serve as a member of our Board.
Randel
E. Richner, 70, has served on our Board since November 2020. Ms. Richner has over 30 years’ experience in health policy,
reimbursement and economics. From 2013 to 2015, Ms. Richner served as Executive Vice President of Intralign Health, LLC. From
2006 to 2012, she was President and Founder of Neocure Group, data analytics, health economics and reimbursement strategic services, acquired
by Intralign Health, LLC in 2013. From 1997 to 2006, Ms. Richner was Vice President of Global Government Affairs and Reimbursement,
Boston Scientific Corporation. Ms. Richner has engaged with U.S. Congress and CMS, appointed as first industry representative,
Executive Committee (EC) Medicare Coverage Advisory Committee (MCAC). She has served on the Executive Dean’s Advisory Board,
University of Michigan’s School of Public Health, since 2007, and has served on multiple boards including MassMedic (founding
Women in MedTech), Executive Advisory Board Center for Evaluation Value, Risk Tufts New England Medical Center, International Society
of Pharmacoeconomics and Research (ISPOR), founding the U.S. Medical Device Council. Ms. Richner has been an invited executive lecturer
at Dartmouth, Tuck School of Business; University of Michigan School of Engineering and University of Michigan School of Public Health. She
has a Master of Public Health in Health Policy and Administration and a Bachelor of Science in Nursing from University of Michigan. We
believe that Ms. Richner’s extensive leadership and board membership experience in the healthcare industry, as well as her familiarity
with health economics and reimbursement procedures, provides her with a unique perspective of our market and the qualifications and skills
to serve as a member of our Board.
89
Information About
Our Executive Officers
The following table sets forth the
name, age and position of each of our executive officers as of March 18, 2026:
|
Name |
|
Age |
|
Position |
|
Mark Grant |
|
56 |
|
President, Chief Executive Officer and Director |
|
Almog Adar |
|
42 |
|
Chief Financial Officer |
|
Jeannine Lynch |
|
61 |
|
Vice President of Market Access |
Mark
Grant has served as our President and Chief Executive Officer and as a member of our board of directors since July 2025. Mr. Grant
previously served as our President and co-Chief Executive Officer from June 2025 to July 2025. From March 2023 until June 2025, Mr. Grant
served as President of Americas and Chief Commercial Officer of IMRA Surgical, a company specializing in surgical robotic training. From
May 2004 until March 2023, Mr. Grant served in various positions of increasing responsibility at Medtronic plc (“Medtronic”),
a global healthcare technology company, most recently as Vice President, Americas. Mr. Grant holds a B.S. in Industrial Technology from
East Carolina University.
Almog
Adar has served as our Chief Financial Officer since August 2025. Prior to his appointment as Chief Financial Officer, Mr.
Adar served as our Vice President of Finance since December 2022 and as our Chief Accounting Officer since March 2022 and as our Director
of Finance and Corporate Financial Controller from 2020 to December 2022. Prior to Lifeward, Mr. Adar served as Controller of Infinya
Recycling Ltd. (previously Amnir Recycling) from January 2018 until December 2019. From January 2016 until December 2017, Mr. Adar served
as Assistant Controller of Delta Galil Industries. Mr. Adar has a Bachelor of Arts degree in Accounting and Economics from the Open University
of Israel and is a Certified Public Accountant licensed by the Israeli Ministry of Justice.
Jeannine
Lynch has served as our Vice President of Market Access and Strategy since August 2021. Prior to Lifeward, Ms. Lynch served
as Senior Director of Patient Access Services at BioMarin Pharmaceuticals from April 2009 to September 2021. In addition to her work with
BioMarin, Ms. Lynch has worked for industry leaders such as Genentech and Pfizer/Agouron. She has held leadership roles in commercial
management, product launches and built customized patient services to address several different rare and ultrarare medical conditions.
Ms. Lynch also served on the Board of Directors for MVP, a non-profit organization to help young people of color prepare, perform, progress,
and prosper in their education, leadership and early professional careers. Ms. Lynch is a graduate of the University of California Berkeley
and holds a Master of Public Health from the University of Michigan.
Board Leadership Structure
Although the Board does not currently
have a formal policy requiring the offices of Chairman of the Board and CEO to be separate, the Israel Companies Law provides that one
individual cannot serve as both Chairman and CEO, unless the shareholders approve such dual role, with each such approval to be valid
for not more than three years. Currently, we have separated the positions of CEO and Chairman of the Board in recognition of the differences
between the two roles. The CEO is responsible for the day-to-day leadership and performance of the Company, while the Chairman of the
Board (in collaboration with other members of the Board) sets the strategic direction of the Company, provides guidance to the management,
sets the agenda for the Board meetings (in collaboration with the other members of the Board) and presides over meetings of the Board.
We believe that the current separation between Chairman and CEO allows each of them to better focus on their designated responsibilities.
In addition, we believe that the current separation provides a more effective monitoring and objective evaluation of the performance of
the CEO. The Board believes it is important that the Company retain organizational flexibility to determine whether the roles of CEO and
Chairman of the Board should be separated or combined.
90
Risk
Management
The
Board is actively involved in the oversight and management of risks that could affect the Company. This oversight and management is conducted
primarily through committees of the Board, as disclosed in the descriptions of each of the committees above and in the charters of each
of the committees, but the full Board has retained responsibility for general oversight of risks. The Board regularly receives reports
from members of senior management on areas of material risk to the Company, including operational (which itself includes cybersecurity
matters), financial, regulatory and legal. The audit committee oversees management of financial risks (including liquidity and credit),
approves all transactions with related persons and is primarily responsible for oversight of the Company’s financial reporting process
and internal control over financial reporting. The compensation committee is responsible for overseeing the management of risks relating
to the Company’s executive compensation plans and arrangements. The nominating and corporate governance committee oversees the Company’s
corporate governance programs, including the administration of the Code of Business Conduct and Ethics. The Board discharges its oversight
responsibility through full reports by each committee chair regarding the relevant committee’s actions, as well as through regular
reports directly from officers responsible for oversight of particular risks within the Company.
Opt-Out
of Certain Israel Companies Law Requirements
As
an Israeli company, we are required to comply with the requirements of the Israel Companies Law and the regulations promulgated thereunder.
Until early 2018, our Board was required to include at least two “external directors” as defined under the Israel Companies
Law. In addition, we were required to comply with certain requirements under the Israel Companies Law regarding the composition of our
audit committee and compensation committee, including requirements relating to the inclusion and role of the external directors on such
committees. Pursuant to regulations then promulgated under the Israel Companies Law, however, we — as a company that does not have
a controlling shareholder, and that complies with the U.S. securities laws and the corporate governance rules of the Nasdaq Stock Market
(“Nasdaq”) — were permitted to “opt out” of the requirement to appoint external directors as well as the
above requirements related to the composition of the audit committee and the compensation committee. In February 2018, our Board determined
that opting out of such requirements would be beneficial to the Company and we opted out of such requirements.
However,
as described above, upon the closing of the Oratech acquisition with Oramed, Oramed is expected to hold at least 45.00%, and potentially
in excess of 49.99%, of the outstanding voting power of the Company, and will become a controlling shareholder of the Company. As a result,
subject to and upon the closing of the Oratech Acquisition, we will again be required to comply with the requirement under the Israel
Companies Law that our Board include at least two external directors and the requirements regarding the composition of our audit committee
and compensation committee, including requirements relating to the inclusion and role of the external directors on such committees, as
discussed below.
Director
Independence
Our
Board has determined that, other than Mark Grant, our President and CEO, all of our current directors, and each former director who served
as a member of the Board during the last fiscal year, are independent under Nasdaq listing standards. As described above, upon and subject
to the closing of the Oratech Acquisition we will be required to have at least two external directors. The definition of "independent
director" under the NASDAQ listing standards and "external director" under the Israel Companies Law overlap to some extent, so that we
would generally expect the two directors serving as external directors to satisfy the requirements to be independent under the NASDAQ
listing standards. Furthermore, our Board also determined that all current members of the audit committee and compensation committee,
as well as Messrs. Rozenbaum and Sigsbee, who will become members of the audit committee and compensation committee upon and subject to
the closing of the Oratech Acquisition, as well as the current members of the nominating and corporate governance committee, are independent
under the applicable Nasdaq listing standards and rules and regulations of the SEC. In making its determinations regarding independence,
the Board carefully reviewed the categorical tests enumerated in the Nasdaq independence definition and (in the case of external directors)
the standards imposed by Israeli law, as well as the individual circumstances of each director with regard to each director’s business
and personal activities as they may relate to the Company and our management.
91
Israel
Companies Law Requirements
Under
the Israel Companies Law, the definition of "external director" includes a set of statutory criteria that must be satisfied, including
criteria whose aim is to ensure that there be no factor which would impair the ability of the external director to exercise independent
judgment. The definition of "independent director” specifies similar requirements and also provide that the board must consider
any factor which would impair the ability of the independent director to exercise independent judgment. In addition, both external directors
and independent directors serve for a period of three years; external directors serve pursuant to the requirements of the Israel Companies
Law and independent directors serve pursuant to the staggered board provisions of our Articles of Association. However, external directors
must be elected by a Special Majority (as defined below under " - Approval of Related Party Transactions Under Israeli Law") of shareholders
while independent directors may be elected by an ordinary majority.
Under
the Israel Companies Law, subject to certain opt-out rights available to certain Israeli companies, we are required to have at least two
external directors. External directors must meet stringent standards of independence from us, from our management and from any controlling
shareholder (defined for this purpose as any shareholder who holds 50% or more of our outstanding shares, or who has the right to appoint
the majority of our directors or our general manager). In addition, no person may serve as an external director if that person’s
position or professional or other activities create, or may create, a conflict of interest with that person’s responsibilities as
a director or otherwise interfere with that person’s ability to serve as an external director or if the person is an employee of
the Israel Securities Authority or of an Israeli stock exchange. These independence standards are applicable beginning two years before
the external director’s election and continuing for two years after the external director’s term of service. In addition to
election by the normal majority vote, external directors must generally be elected by a majority vote of the shares held by shareholders
other than controlling shareholders. Subject to and upon the closing of the Oratech Acquisition, Moshe Rozenbaum and William Mark Sigsbee
will serve as our external directors.
Nasdaq
Listing Standards
The
Nasdaq definition of “independent director” includes a series of objective tests. Specifically, a director is deemed independent
under the Nasdaq rules if such director is not an executive officer or employee of the Company or any other individual having a relationship
which, in the opinion of the company’s Board, would interfere with the exercise of independent judgment in carrying out the responsibilities
of a director. Generally, the following persons are not considered independent, among others:
|
•
|
a director who is, or
at any time during the past three years was, employed by the company; |
|
•
|
a director who accepted
or who has a family member who accepted any compensation from the company in excess of $120,000 during any period of twelve consecutive
months within the three years preceding the determination of independence, other than compensation for board or board committee service,
compensation paid to a family member who is an employee (other than an executive officer) of the company, or benefits under a tax-qualified
retirement plan, or non-discretionary compensation; |
|
•
|
a director who is a family
member of an individual who is, or at any time during the past three years was, employed by the company as an executive officer;
|
|
•
|
a director who is, or
has a family member who is, a partner in, or a controlling shareholder or an executive officer of, any organization to which the company
made, or from which the company received, payments for property or services in the current or any of the past three fiscal years that
exceed 5% of the recipient’s consolidated gross revenues for that year, or $200,000, whichever is more, other than the following:
(i) payments arising solely from investments in the company’s securities; or (ii) payments under non-discretionary charitable contribution
matching programs; |
92
|
•
|
a
director who is, or has a family member who is, employed as an executive officer of another entity where at any time during the past three
years any of the executive officers of the company serve on the compensation committee of such other entity; and |
|
•
|
a director who is, or
has a family member who is, a current partner of the company’s outside auditor, or was a partner or employee of the company’s
outside auditor who worked on the company’s audit at any time during any of the past three years. |
Audit
Committee
We
have a separately designated standing audit committee. The audit committee currently consists of Mr. Robert Marshall and Dr. John William
Poduska. Mr. Marshall serves as the chairman of the audit committee. The audit committee holds a minimum of four meetings per year and
meets more frequently as circumstances require. The audit committee met four times during the fiscal year ended December 31, 2025.
Israel
Companies Law Requirements
Under
the Israel Companies Law, we are required to appoint an audit committee. As discussed above under “Opt-Out of Certain Israel Companies
Law Requirements,” in February 2018 we opted out of certain additional Israel Companies Law requirements relating to the audit committee,
including certain requirements as to the composition of our audit committee. However, as described above, subject to and upon the
closing of the Oratech Acquisition we will be required to comply again with the requirements under the Israel Companies Law regarding
the composition of our audit committee, including requirements relating to the inclusion and role of the external directors on such committee.
Such requirements provide that the audit committee must be comprised of at least three directors, including all of the external directors
(one of whom must serve as chair of the committee). The audit committee may not include the following: the chairman of the board; a controlling
shareholder of the company or a relative of a controlling shareholder; a director employed by or providing services on a regular basis
to the company, to a controlling shareholder or to an entity controlled by a controlling shareholder; or a director who derives most of
his or her income from a controlling shareholder. In addition, a majority of the members of the audit committee must be unaffiliated directors.
In general, an unaffiliated director under the Israel Companies Law is defined as either (i) an external director, or (ii) an individual
who has not served as a director of the company for a period exceeding nine consecutive years and who meets the qualifications for being
appointed as an external director, except that he or she need not meet the requirement for accounting and financial expertise or professional
qualification.
Nasdaq
Listing Standards and SEC Requirements
Under
the Nasdaq corporate governance rules, we are required to maintain an audit committee consisting of at least three independent directors,
each of whom is financially literate and one of whom has accounting or related financial management expertise. Additionally, we must state
whether any members of the audit committee qualifies as an “audit committee financial expert” under Item 407(d) of Regulation
S-K as promulgated by the SEC.
All
members of the audit committee meet the requirements for financial literacy under the applicable rules and regulations of the SEC and
the Nasdaq corporate governance rules. Our Board has determined that Robert Marshall is an “audit committee financial expert”
as defined by the SEC rules and has the requisite financial sophistication as defined by the Nasdaq corporate governance rules.
Each
of the current audit committee members is “independent” as such term is defined under the Nasdaq corporate governance rules
and under Rule 10A-3(b)(1) under the Exchange Act, which is different from the general test for independence of board members and members
of other committees.
Audit
Committee Role
Our
Board has adopted an audit committee charter that sets forth the responsibilities of the audit committee consistent with the rules of
the SEC and the Nasdaq corporate governance rules, as well as the requirements for such committee under the Israel Companies Law, including
the following:
|
•
|
overseeing our independent
registered public accounting firm and recommending the engagement, compensation or termination of engagement of our independent registered
public accounting firm to the Board in accordance with Israeli law; |
93
|
•
|
reviewing regularly the
senior members of the independent auditor’s team, including the lead audit partner and reviewing partner; |
|
•
|
pre-approving the terms
of audit, audit-related and permitted non-audit services provided by the independent registered public accounting firm;
|
|
•
|
recommending the engagement
or termination of the person filling the office of our internal auditor; |
|
•
|
reviewing periodically
with management, the internal auditor and the independent registered public accounting firm the adequacy and effectiveness of the Company’s
internal control over financial reporting; and |
|
•
|
reviewing with management
and the independent registered public accounting firm the annual and quarterly financial statements of the Company prior to filing with
the SEC. |
The
charter of the audit committee is available at https://ir.golifeward.com/corporate-governance/charters-and-policies.
Information contained on, or that can be accessed through, our website does not constitute a part of this annual report and is not incorporated
by reference herein.
The
audit committee provides assistance to our Board in fulfilling its legal and fiduciary obligations in matters involving our accounting,
auditing, financial reporting, internal control over financial reporting and legal compliance. Specifically, the audit committee pre-approves
the services performed by our independent registered public accounting firm and reviews the firm’s reports regarding our accounting
practices and systems of internal control over financial reporting. The audit committee also oversees the audit efforts of our independent
registered public accounting firm and takes those actions that it deems necessary to satisfy itself that such accountants are in fact
independent of management.
Under
the Israel Companies Law, the audit committee is responsible for:
|
•
|
determining whether there
are deficiencies in the business management practices of the Company and making recommendations to our Board to improve such practices;
|
|
•
|
determining whether to
approve certain related party transactions, and classifying transactions in which a controlling shareholder has a personal benefit or
other interest as significant or insignificant (which affects the required approvals) (see “—Approval of Related Party Transactions
under Israeli Law” below); |
|
•
|
examining our internal
controls and internal auditor’s performance, including whether the internal auditor has sufficient resources and tools to dispose
of its responsibilities, and in certain cases approving the annual work plan of our internal auditor; |
|
•
|
examining the scope of
our auditor’s work and compensation and submitting a recommendation with respect thereto to our Board or shareholders, depending
on which of them is considering the appointment of our auditor; and |
|
•
|
establishing procedures
for the handling of employees’ complaints as to the deficiencies in the management of our business and the protection to be provided
to such employees. |
The
audit committee may not approve any actions requiring its approval unless at the time of the approval a majority of the committee’s
members are present, including at least one external director. See “—Approval of Related Party Transactions under Israeli
Law” below.
Compensation
Committee
We
have a separately designated standing compensation committee. The compensation committee currently consists of Ms. Randel E. Richner and
Dr. John William Poduska. Dr. Poduska serves as the chairman of the compensation committee. The compensation committee meets as circumstances
require and held six meetings during the year ended December 31, 2025.
94
Israel
Companies Law Requirements
Under
the Israel Companies Law, the board of directors of a public company must appoint a compensation committee. As discussed above under “Opt-Out
of Certain Israel Companies Law Requirements,” in February 2018 we opted out of certain additional Israel Companies Law requirements
relating to the compensation committee, including certain requirements as to the composition of our compensation committee. However,
as described above, subject to and upon the closing of the Oratech Acquisition we will be required to comply again with the requirements
under the Israel Companies Law regarding the composition of our compensation committee, including requirements relating to the inclusion
and role of the external directors on such committee. The compensation committee must be comprised of at least three directors, including
all of the external directors, one of whom must be the chair of the compensation committee. The external directors must constitute a majority
of the members of the compensation committee. The compensation committee may not include the following: the chairman of the board; a controlling
shareholder of the company or a relative of a controlling shareholder; a director employed by or providing services on a regular basis
to the company, to a controlling shareholder or to an entity controlled by a controlling shareholder; or a director who derives most of
his or her income from a controlling shareholder.
The
duties of the compensation committee include the recommendation to the company’s board of directors of a compensation policy regarding
the terms of engagement of directors and of specified members of senior management. That compensation policy must be adopted by the company’s
board of directors, after considering the recommendations of the compensation committee, and must then be approved by the company’s
shareholders, which approval requires a Special Majority (as defined below under “—Approval of Related Party Transactions
under Israeli Law— Disclosure of Personal Benefits or Other Interests of an Office Holder and Approval of Certain Transactions”).
Our Board adopted a compensation policy, which our shareholders approved at the annual general meeting of our shareholders held on September
13, 2024 (the “Compensation Policy”).
The
compensation policy of an Israeli company must serve as the basis for decisions concerning the financial terms of employment or engagement
of office holders, including compensation, benefits, exculpation, insurance and indemnification. The compensation policy must take into
account certain factors, including advancement of the company’s objectives, the company’s business plan and its long-term
strategy, and creation of appropriate incentives. It must also consider, among other things, the company’s risk management, size
and the nature of its operations. The compensation policy must include certain principles, such as: a link between variable compensation
and long-term performance and measurable criteria; the relationship between variable and fixed compensation; and the minimum holding or
vesting period for variable, equity-based compensation. We believe that the Compensation Policy satisfies these requirements.
The
compensation committee is responsible for (a) recommending the Compensation Policy to our Board for its approval (and subsequent approval
by our shareholders) and (b) carrying out duties related to the Compensation Policy and to the compensation of our directors and senior
management, including:
|
•
|
reviewing and making
recommendations regarding our Compensation Policy at least every three years; |
|
•
|
recommending to the Board
periodic updates to the Compensation Policy; |
|
•
|
assessing implementation
of the Compensation Policy; |
|
•
|
approving compensation
terms of executive officers, directors and employees affiliated with controlling shareholders; and |
|
•
|
exempting certain compensation
arrangements from the requirement to obtain shareholder approval under the Israel Companies Law. |
95
Nasdaq
Listing Standards and Section 16 of the Exchange Act
Under
the Nasdaq corporate governance rules, we are required to maintain a compensation committee consisting of at least two independent directors.
Each of the members of the compensation committee is required to be independent under the Nasdaq listing standards relating to compensation
committee members, which are different from the general test for independence of the Board and members of other committees. In assessing
independence, the Board considered all factors specifically relevant to determining whether a director has a relationship to the Company
which is material to that director’s ability to be independent from management in connection with the duties of a compensation committee
member and determined that each of the members of the compensation committee satisfies those requirements. Additionally, transactions
between us and our directors and executive officers will be considered exempt from short-swing liability under Section 16(b) of the Exchange
Act if approved by our Board or a committee composed solely of two or more “non-employee directors,” as defined in Rule 16b-3
under the Exchange Act (“Rule 16b-3”). Our Board has determined that each of the members of the compensation committee
is a “non-employee director,” as defined in Rule 16b-3.
Compensation
Committee Role
Our
Board has adopted a compensation committee charter setting forth the responsibilities of the committee, which include:
|
•
|
reviewing and approving
the granting of options and other incentive awards under the Company’s equity compensation plans to the extent such authority is
delegated by our Board; |
|
•
|
recommending the Company’s
compensation policy and reviewing that policy from time to time both with respect to the CEO and other office holders and generally, including
to assess the need for periodic updates; |
|
•
|
reviewing and approving
corporate goals relevant to the compensation of the CEO and other officers and evaluating the performance of the CEO and other officers;
and |
|
•
|
reviewing, evaluating
and making recommendations regarding the compensation and benefits for our non-employee directors. |
The
charter of the compensation committee is available at https://ir.golifeward.com/corporate-governance/charters-and-policies.
Information contained on, or that can be accessed through, our website does not constitute a part of this annual report and is not incorporated
by reference herein.
Subject
to applicable law, the compensation committee may delegate its authority to subcommittees established from time to time by the committee.
Such subcommittees shall consist of one or more members of the committee or the board and shall report to the committee. The compensation
committee is authorized to retain and terminate compensation consultants, legal counsel or other advisors to the committee and to approve
the engagement of any such consultant, counsel or advisor, to the extent it deems necessary or appropriate after specifically analyzing
the independence of any such consultant retained by the compensation committee.
Compensation
Consultant
The
compensation committee has authority to retain compensation consulting firms to assist it in the evaluation of executive officer and employee
compensation and benefit programs. The compensation committee has retained Aon Hewitt (“Aon”) as its independent compensation
advisor. Aon provides an objective perspective as to the reasonableness of our executive compensation programs and practices and their
effectiveness in supporting our business and compensation objectives, as well as our equity compensation plans and number of shares available
for grants.
Although
Aon regularly consults with management in performing work requested by the compensation committee, it did not perform any separate additional
services for management. The compensation committee has assessed the independence of Aon pursuant to applicable SEC rules and concluded
that no conflict of interest exists that would prevent Aon from independently representing the compensation committee.
96
Nominating
and Corporate Governance Committee
The
nominating and corporate governance committee currently consists of Ms. Randel E. Richner and Mr. Michael Swinford. Ms. Richner serves
as the chairman of the nominating and corporate governance committee. The nominating and corporate governance committee meets as circumstances
require, with two meetings having taken place during the fiscal year ended December 31, 2025. Our Board has adopted a nominating and corporate
governance committee charter that sets forth the responsibilities of the nominating and corporate governance committee, which include:
|
•
|
overseeing and assisting
our Board in reviewing and recommending nominees for election as directors; |
|
•
|
reviewing and evaluating
recommendations regarding management succession; |
|
•
|
assessing the performance
of the members of our Board; and |
|
•
|
establishing and maintaining
effective corporate governance policies and practices, including, but not limited to, developing and recommending to our Board a code
of conduct. |
The
nominating and corporate governance committee considers proposals from a number of sources, including recommendations for nominees from
shareholders submitted upon written notice to the chairman of the nominating and corporate governance committee, c/o Lifeward Ltd., 2
Cabot Rd., Hudson, MA 01749. Other sources include referrals from other directors, members of management and the Company’s advisors.
When considering a person to be recommended for nomination as a director, the nomination and governance committee evaluates, whether sourced
by a shareholder or otherwise, among other factors, experience, accomplishments, education, skills, personal and professional integrity,
diversity of the Board and the candidate’s ability to devote the necessary time for service as a director (including directorships
and other positions held at other corporations and organizations). The nominating and governance committee does not use different
standards to evaluate nominees depending on whether they are proposed by our directors and management or by our shareholders.
The
nominating and corporate governance committee has no specific policy on director diversity. However, the Board reviews diversity of viewpoints,
background, experience, accomplishments, education and skills when evaluating nominees. The Board believes that such diversity is important
because it provides varied perspectives and promotes active and constructive discussion among directors and between the Board and management,
resulting in more effective oversight of management’s formulation and implementation of strategic initiatives. In addition, in the
Board’s executive sessions and in annual performance evaluations conducted by the Board and its committees, the Board from time
to time considers whether the Board’s composition promotes a constructive and collegial environment. In determining whether an incumbent
director should stand for reelection, the nominating and corporate governance committee considers the above factors, as well as that director’s
personal and professional integrity, attendance, preparedness, participation and candor and other relevant factors as determined by the
Board. Additionally, under Israeli law, if at the time of election of a director, (or, if a board is required to include external directors,
an external director), all of the members of the Board are of the same gender, the director (or, if applicable, the external director)
to be elected must be of the other gender. The charter of the nominating and corporate governance committee is available at https://ir.golifeward.com/corporate-governance/charters-and-policies.
Information contained on, or that can be accessed through, our website does not constitute a part of this annual report and is not incorporated
by reference herein.
Delinquent
Section 16(a) Reports
Section
16(a) of the Exchange Act requires that the Company’s directors, executive officers and persons who own more than 10% of our outstanding
ordinary shares file with the SEC initial reports of ownership in our ordinary shares and reports of changes in ownership in our
ordinary shares. Based solely on a review of reports filed during the fiscal year ended December 31, 2025 and certain of our internal
records, we believe that all Section 16(a) filing requirements applicable to our directors, officers and greater than 10% beneficial owners
were satisfied on a timely basis, except each of Robert J. Marshall, Randel Richner, Hadar Levy, William John Poduska, Joseph E. Turk
and Michael Swinford filed one late Form 4 with respect to the grant of an equity award.
97
Code
of Ethics
We
have adopted a Code of Conduct and Ethics (the “Code of Ethics”), which applies to all officers, directors and employees.
The Code of Ethics is available on our website at https://ir.golifeward.com/corporate-governance/charters-and-policies. Any amendments
to the Code of Ethics, or any waivers of its requirements, are expected to be disclosed on our website to the extent required by applicable
rules and exchange requirements, including in order to satisfy Item 5.05 of Form 8-K. The reference to our website address here and elsewhere
in this proxy statement does not constitute incorporation by reference of the information contained at or available through our website.
Policy
Prohibiting Insider Trading and Related Procedure
We
have adopted
insider trading policies and procedures governing the purchase, sale, and other dispositions of our securities by directors, officers,
and employees that we believe are reasonably designed to promote compliance with insider trading laws, rules and regulations, and applicable
Nasdaq listing standards. Our insider trading policy states, among other things, that our directors, officers, and employees are prohibited
from trading in such securities while in possession of material, nonpublic information. The foregoing summary of our insider trading policies
and procedures does not purport to be complete and is qualified by reference to our Insider Trading Policy filed as an exhibit to this
Annual Report on Form 10-K. In addition, with regard to the Company's trading in its own securities, it is our policy to comply with the
federal securities laws and the applicable exchange listing requirements.
Policy
on Trading, Pledging and Hedging of Company Stock
Under
the terms of our insider trading policy, our executive officers and directors are prohibited from: trading in call or put options involving
our securities and other derivative securities; engaging in short sales of our securities; holding our securities in a margin account,
all forms of hedging or monetizing our transactions, such as zero-cost collars and forward sale contracts and pledging company securities
to secure margin or other loans.
ITEM
11. EXECUTIVE COMPENSATION
As
a smaller reporting company, we have opted to comply with the executive compensation rules otherwise applicable to “smaller reporting
companies,” as such term is defined in Rule 12b-2 under the Exchange Act.
This
section provides certain compensation-related information for (1) all individuals who served as our CEO during any part of the year ended
December 31, 2025, and (2) our two most highly compensated executive officers (other than our CEO) who were serving as executive officers
as of December 31, 2025 (together, our “Named Executive Officers”).
Named
Executive Officers
Our
Named Executive Officers for the year ended December 31, 2025, which consists of our principal executive officer and our three other most
highly compensated executive officers, are:
| • |
Mark Grant, our President and co-CEO from June
2, 2025 until June 30, 2025, and our President and Chief Executive Officer effective July 1, 2025; |
| • |
Larry Jasinski, our former CEO from September
2012 until June 1, 2025, and our former co-CEO from June 2, 2025 until June 30, 2025; |
| • |
Almog Adar, our Chief Financial Officer; and
|
| • |
Jeannine Lynch, our Vice President of Market Access
and Strategy. |
98
2025
Summary Compensation Table
The
following table provides information regarding the total compensation awarded to, earned by, or paid to our Named Executive Officers for
services rendered to us in all capacities for the fiscal year ended December 31, 2025.
|
Name
and Principal Position |
Year
|
Salary
($) |
Bonus
($) |
Option
Awards ($)(1) |
Stock
Awards ($)(2) |
Non-Equity
Incentive Plan Compensation($)(3) |
All
Other Compensation ($) |
Total
($) |
||||||||||||||||||||||
|
Mark Grant, (4)
|
|
|||||||||||||||||||||||||||||
|
President and Chief Executive
Officer |
2025
|
253,750
|
177,625(5)
|
403,491
|
—
|
—
|
—
|
834,866
|
||||||||||||||||||||||
|
Larry Jasinski, (6)
|
2025
|
221,156
|
—
|
—
|
—
|
—
|
577,045(7)
|
798,201
|
||||||||||||||||||||||
|
Former Chief Executive
Officer |
2024
|
442,312
|
—
|
—
|
—
|
30,962
|
—
|
473,274
|
||||||||||||||||||||||
|
Almog Adar,
|
|
|||||||||||||||||||||||||||||
|
Chief Financial Officer
|
2025
|
277,083
|
40,000(8)
|
133,242
|
—
|
22,050
|
—
|
472,375
|
||||||||||||||||||||||
|
2024
|
204,913
|
—
|
—
|
—
|
10,000
|
68,023
|
282,936
|
|||||||||||||||||||||||
|
Jeannine Lynch,
|
|
|||||||||||||||||||||||||||||
|
Vice President of Market
Access and Strategy |
2025
|
361,637
|
—
|
—
|
35,375
|
6,329
|
—
|
403,341
|
||||||||||||||||||||||
|
2024
|
359,004
|
—
|
—
|
—
|
—
|
—
|
359,004
|
|||||||||||||||||||||||
| (1) |
The amounts reported represent the aggregate grant
date fair value of stock options awarded to the Named Executive Officers during the fiscal year ended December 31, 2025, calculated in
accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”), disregarding
estimated forfeitures related to service-based vesting. For a description of the assumptions used in determining these values, see Notes
2m and 9c to our consolidated financial statements included in our 2025 Annual Report.
The amounts reported in this column reflect the accounting cost for the stock options and do not correspond to the actual economic value
that may be received by the Named Executive Officers upon the exercise of the stock options or any sale of the underlying shares
|
| (2) |
Amounts represent the aggregate grant date fair
value of such awards computed in accordance with FASB ASC Topic 718. The fair value of restricted share units (“RSUs”) granted
is determined based on the price of the Company’s Ordinary Shares on the date of grant. This amount does not correspond to the actual
value that may be recognized by the Named Executive Officer upon the vesting and subsequent settlement of the restricted share units. For
a description of the assumptions used in determining these values, see Notes 2m and 9c to our consolidated financial statements included
in our 2025 Annual Report. |
| (3) |
Amounts represent the annual bonuses earned in
fiscal year ended December 31, 2025, based on the achievement of certain Company, and, if applicable, individual performance objectives.
For more information on these bonuses, see the description of the annual performance bonuses under “2025 Bonuses” below.
|
| (4) |
Mr. Grant commenced employment with the Company
on June 2, 2025. The amount reported represents his actual base salary earned during 2025. His annualized base salary for 2025 was $435,000.
|
| (5) |
The amount represents the amount of the bonus
that Mr. Grant is guaranteed to receive for the fiscal year ended December 31, 2025 pursuant to the Grant Employment Agreement. For more
information on Mr. Grants bonus, see the descriptions of his bonus under “2025 Bonuses” below. |
| (6) |
Mr. Jasinski’s employment with the Company
terminated on June 30, 2025. Following this termination of employment, Mr. Jasinski served as a consultant to the Company from July 1,
2025 through December 31, 2025. |
| (7) |
The amount represents the severance payments Mr.
Jasinski received in 2025 pursuant to the Jasinski Separation Agreement, accrued but unused vacation that was paid to Mr. Jasinski upon
his termination of employment, and monthly consulting fees Mr. Jasinski received in 2025 pursuant to the Jasinski Consulting Agreement.
For more information regarding Mr. Jasinski’s severance payments and consulting fees, see the description of such amounts under
“Employment Agreements of Named Executive Officers” below. |
| (8) |
The amount represents the portion of a retention
bonus that Mr. Adar was entitled to receive in 2025 pursuant to the Adar Employment Agreement. For more information on Mr. Adar’s
retention bonus, see the descriptions of his bonus under “2025 Bonuses” below. |
99
Pursuant
to regulations promulgated under the Israel Companies Law, we are required to disclose the total compensation earned during 2025 by our
five most highly-compensated office holders (as defined in the Israel Companies Law). Three of such individuals are our Named Executive
Officers, as defined above, and their respective total compensation for 2025 is set forth in the Summary Compensation Table. The other
two individuals, and their respective total compensation for 2025, is as follows:
|
Name
and Principal Position |
Salary
($) |
Stock
Awards ($)(1) |
Non-Equity
Incentive Plan Compensation($)(2) |
All
Other Compensation ($) |
Total
($) |
|||||||||||||||
|
Charles Remsberg,
|
||||||||||||||||||||
|
Chief Sales Officer(3)
|
118,750
|
—
|
—
|
274,682(4)
|
393,432
|
|||||||||||||||
|
Miri Pariente,
|
||||||||||||||||||||
|
Vice President of Operations,
|
||||||||||||||||||||
|
Regulatory and Quality(5)
|
206,165
|
35,375
|
15,621
|
100,398(6)
|
357,559
|
|||||||||||||||
|
|
|
|
(1)
|
Amounts
represent the aggregate grant date fair value of such awards computed in accordance with FASB ASC Topic 718. The fair value of restricted
share units (“RSUs”) granted is determined based on the price of the Company’s Ordinary Shares on the date of grant.
This amount does not correspond to the actual value that may be recognized by the Named Executive Officer upon the vesting and subsequent
settlement of the restricted share units. The valuation assumptions used in determining such amounts are described in Notes 2m and 9c
to our consolidated financial statements included in our 2025 Annual Report. |
|
(2)
|
Amounts
represent the annual bonuses earned in fiscal year ended December 31, 2025 based on the achievement of certain Company, and, if applicable,
individual performance objectives. For more information on these bonuses, see the description of the annual performance bonuses under
“2025 Bonuses” below. |
|
(3)
|
Mr.
Remsberg’s employment with the Company terminated on May 15, 2025. |
|
(4)
|
The
amount represents the severance payments Mr. Remsberg received in 2025 pursuant to the Remsberg Separation Agreement, accrued but unused
vacation that was paid to Mr. Remsberg upon his termination of employment. |
|
(5)
|
The
amounts set forth for Ms. Pariente in the columns “Salary,” “Non-Equity Incentive Plan,” and “All Other
Compensation” represent payments, contributions and/or allocations that were made in New Israel Shekels (“NIS”) and
have been translated to U.S. dollars according to the average exchange rate on the applicable period. |
|
(6)
|
Consists
of $61,263 for payments, contributions and/or allocations for social benefits and the aggregate incremental cost to the Company of $39,135
with respect to Ms. Pariente’s personal use of a Company-leased car. |
Narrative
Disclosure to the 2025 Summary Compensation Table
Our
compensation committee reviews and approves the compensation of our executive officers and is primarily responsible for determining the
compensation for the Named Executive Officers and office holders (within the meaning of the Israeli Companies Law) consistent with our
overall executive compensation philosophy. Our compensation committee reviews and discusses the compensation of other officers with the
chief executive officer and considers overall Company performance against goals, individual executive performance, and internal and external
equity as key factors in those decisions. We develop our compensation programs after reviewing publicly available compensation data. Aon
advises the compensation committee on all of the principal aspects of executive compensation. Aon attends meetings of the compensation
committee when requested to do so. Aon reports directly to the compensation committee and not to management, although it meets with management
for purposes of gathering information for its analyses and recommendations. The compensation committee has assessed the independence of
Aon consistent with SEC regulations and Nasdaq listing standards and has concluded that the engagement of Aon does not raise any conflict
of interest.
100
Base
Salaries
At
the beginning of 2025, our compensation committee reviewed and approved the base salaries of the Named Executive Officers (other than
Mr. Grant, who was not employed by the Company at the time) based on an analysis of external market conditions and individual performance
against goals. In the case of Mr. Adar, his base salary was approved in the beginning of 2025 and, in connection with his promotion to
become our Chief Financial Officer, it was increased on August 1, 2025. The table below sets forth the base salaries for each of the Named
Executive Officers for 2025:
|
Name
|
2025
Base Salary ($) |
|||
|
Mark Grant
|
435,000
|
|||
|
Larry Jasinski
|
442,312
|
|||
|
Almog Adar(1)
|
315,000
|
|||
|
Jeannine Lynch
|
361,637
|
|||
| (1) |
Mr. Adar’s base salary was increased from
$250,000 to $315,000 on August 1, 2025 as a result of his promotion to become our Chief Financial Officer. |
2025
Bonuses
All
employees who have bonus features in their employment agreements, including our Named Executive Officers, were eligible to participate
in a non-equity incentive plan for fiscal year 2025, pursuant to which employees were eligible to earn a bonus with respect to their performance
in such year. Each Named Executive Officer’s target was equal to a specified percentage of his or her base salary, and, except in
the case of Mr. Grant and Mr. Adar, the actual bonus paid was based on the achievement revenue and net income targets and individual performance
metrics. The revenue and net income targets are set forth in the Compensation Policy that has been approved by our shareholders. Not all
goals are required to be satisfied for a Named Executive Officer to earn a portion of the bonus.
The
percentage of the bonus to be paid may vary depending on the specific target and the level of achievement. In February 2026, the compensation
committee completed an evaluation of the Company’s overall performance for 2025 and the Named Executive Officers’ respective
contributions in achieving this performance. The compensation committee’s review was based on Company performance against business
objectives, as well as personal performance against individual goals established by the compensation committee. The revenue and net income
targets for 2025 were not achieved and, therefore, no bonus was paid with respect to those corporate performance goals. However, Mr. Adar
and Ms. Lynch partially achieved certain individual performance goals and, based on the compensation committee’s evaluation, following
the recommendation of the compensation committee, the Board approved bonuses for Mr. Adar and Ms. Lynch equal to $22,050 and $6,329, respectively.
Notwithstanding
the foregoing, Mr. Grant and Mr. Adar received certain guaranteed bonus amounts for the fiscal year ended December 31, 2025. Pursuant
to the Grant Employment Agreement, Mr. Grant was guaranteed a bonus under the non-equity incentive plan at the minimum amount of 70% of
his 2025 base salary (which will be prorated based on the number of days that Mr. Grant was employed by the Company in the 2025 fiscal
year), provided that Mr. Grant is employed by the Company on the date the bonus is paid. While Mr. Grant did not earn a bonus based on
Company and/or individual performance, he received a bonus for fiscal year ended December 31, 2025 in the amount of $177,625 pursuant
to the Grant Employment Agreement.
Pursuant
to the Adar Employment Agreement, for the fiscal year ended December 31, 2025, Mr. Adar was eligible to earn an annual bonus equal to
35% of his 2025 base salary, structured as follows: (a) Mr. Adar was entitled to a retention payment in the total amount of $80,000 (the
“Adar Retention Payment”), to be paid in two equal installments, with the first installment being paid on the first payroll
date following his appointment as Chief Financial Officer, and the second installment to be paid when the Company pays 2025 bonuses to
other executives, subject to Mr. Adar’s continued employment on the date of payment; and (b) Mr. Adar was eligible to earn up to
an additional 7% of his base salary (provided that the total annual bonus Mr. Adar is eligible to earn for the fiscal year ended December
31, 2025 will not exceed 35% of his 2025 base salary), prorated for the period commencing on August 1, 2025 through December 31, 2025,
based on Mr. Adar’s achievement of individual metrics and milestones as determined by our Board of Directors (the amounts in (a)
and (b), the “Adar 2025 Bonus”). Mr. Adar earned 50% of the Adar Retention Payment in 2025, which was paid on August 15, 2025,
and the remaining 50% is expected to be paid on March 31, 2026. Because the remaining 50% of the Adar Retention Payment was not earned
in fiscal year ended December 31, 2025, such amount is not reflected in the Summary Compensation Table above pursuant to SEC guidance.
101
Equity
Compensation
Our
equity grant program is intended to align the interests of our Named Executive Officers with those of our shareholders and to motivate
them to make important contributions to our performance. In 2025, stock options and RSU grants were made following shareholder approval
of our 2025 Incentive Compensation Plan (the “2025 Plan”).
Employee
Benefits and Perquisites
We
currently maintain the Lifeward, Inc. 401(k) Plan, a defined contribution plan, or the 401(k) Plan, for the benefit of our employees,
including our Named Executive Officers, who satisfy certain eligibility requirements. Our Named Executive Officers were eligible to participate
in the 401(k) Plan on the same terms as our other full-time employees. We believe that providing a vehicle for retirement savings though
our 401(k) Plan adds to the overall desirability of our executive compensation package and further incentivizes our employees, including
our Named Executive Officers.
Currently,
we do not view perquisites or other personal benefits as a significant component of our Compensation Policy.
Equity
Grant Timing
Our
policies and practices regarding the granting of equity awards are carefully designed to ensure compliance with applicable securities
laws and to maintain the integrity of our executive compensation program. The compensation committee of our Board of Directors is responsible
for the timing and terms of equity awards to executives and other eligible employees.
The
timing of equity award grants is determined with consideration to a variety of factors, including but not limited to, the achievement
of pre-established performance goals and market conditions. We do not follow a predetermined schedule for the granting of equity awards.
In determining the timing and terms of an equity award, the Board of Directors or the compensation committee may consider material
nonpublic information to ensure that such grants are made in compliance with applicable laws and regulations. The board’s or
the compensation committee’s procedures to prevent the improper use of material nonpublic information in connection with
the granting of equity awards include oversight by legal counsel and, where appropriate, delaying the grant of equity awards until the
public disclosure of such material nonpublic information.
We
are committed to maintaining transparency in our executive compensation practices and to making equity awards in a manner that is not
influenced by the timing of the disclosure of material nonpublic information for the purpose of affecting the value of executive
compensation. We regularly review our policies and practices related to equity awards to ensure they meet the evolving standards of corporate
governance.
On
June 2, 2025, the compensation committee awarded a stock option grant to Mr. Grant, one of our Named Executive Officers, during the period
beginning four business days before and ending one business day after the filing or furnishing of a Form 10-Q, Form 10-K or Form 8-K that
discloses material nonpublic information, or the Designated Period. In addition, on August 13, 2025, the compensation committee awarded
a stock option grant to Mr. Adar, one of our Named Executive Officers, during the Designated Period. As required by Item 402(x) of Regulation
S-K under the Exchange Act, we are providing the following information related to the stock option grants awarded to Messrs. Grant and
Adar during the Designated Period occurring in the fiscal year ended December 31, 2025. All share and per share amounts presented in this
note have been retroactively adjusted to reflect the Company’s 1-for-12 reverse share split effected on February 24, 2026.
|
Name
|
Grant
Date
|
Number
of securities underlying the award ($/sh)
|
Exercise
price of the award ($/Sh)
|
Grant
date fair value of the award (1) |
Percentage
change in the closing market price of the securities underlying the award between the trading
day
ending immediately prior to the disclosure of material nonpublic information and the trading day beginning immediately following the disclosure
of material nonpublic information |
|
William
Mark Grant |
June
2, 2025 |
33,333
|
14.70
|
403,491
|
0.41%(2)
|
|
Almog
Adar |
August
13, 2025 |
18,750
|
8.60
|
133,242
|
(11.6%)(3)
|
| (1) |
The
grant date fair value of such award was calculated in accordance with FASB ASC Topic 718, disregarding estimated forfeitures related to
service-based vesting. For a description of the assumptions used in determining these values, see Notes 2m and
9c to our consolidated financial statements included in our 2025 Annual Report. |
| (2) |
The
closing price per share of our common stock on June 2, 2025 (the trading date ending immediately prior to the filing of our Form 8-K on
June 3, 2025) was $14.70, and the closing price per share of our common stock on June 4, 2025 (the next trading date beginning immediately
following the filing of our Form 8-K on June 3, 2025) was $14.76. |
| (3) |
The
closing price per share of our common stock on August 13, 2025 (the trading date ending immediately prior to the filing of our Form 10-Q
on August 14, 2025) was $8.60, and the closing price per share of our common stock on August 15, 2025 (the next trading date beginning
immediately following the filing of our Form 10-Q on August 14, 2025) was $7.60. |
102
Employment
Agreements of Named Executive Officers
Each
of Mr. Grant, our current President and CEO, Mr. Adar, our Chief Financial Officer, and Ms. Lynch, our Vice President of Market Access
and Strategy, previously entered into an employment agreement with our Subsidiary. These employment agreements set forth their respective
terms of employment, which terms are generally applicable to all of our executives, covering matters such as vacation, health and other
benefits. The following are descriptions of the material terms of our Named Executive Officers’ employment agreements.
Mark Grant
In connection with Mr. Grant’s appointment as the Company’s President and Chief Executive Officer, the Company and Mr. Grant entered into an employment agreement on May 16, 2025 (the “Grant Employment Agreement”). Pursuant to the Grant Employment Agreement, which is effective as of the Effective Date, Mr. Grant receives (i) an annual base salary of $435,000, subject to periodic adjustments as may be determined from time to time by the compensation committee of the Board and (ii) an annual performance bonus up to 70% of annual base salary, subject to the achievement of objectives as determined by the compensation committee of the Board, which will be pro-rated for the remainder of 2025. Mr. Grant also received an inducement grant of options (the “Option”) to purchase 400,000 of the Company’s Ordinary Shares, in accordance with Nasdaq Listing Rule 5635(c)(4), which vest in four equal annual installments beginning on the first anniversary of the grant date. The terms of the Option are materially consistent with the Company’s form of inducement option award agreements for employees and executive officers.
103
Upon
a termination of Mr. Grant’s employment due to death, disability, termination for “Cause” (as defined in the Grant Employment
Agreement) or resignation without “Good Reason” (as defined in the Grant Employment Agreement), Mr. Grant is entitled to receive:
(i) any base salary earned through the date of termination and any unpaid expense reimbursements, (ii) any earned but unpaid wages required
to be paid by law and (iii) any vested benefits he may have under any employee benefit plan through the termination date (collectively,
the “Accrued Benefits”).
Upon
a termination of Mr. Grant’s employment without “Cause” by the Company or resignation for “Good Reason”
by Mr. Grant, in addition to the Accrued Benefits, and subject to Mr. Grant’s execution of the Separation Agreement (as defined
in the Employment Agreement), Mr. Grant is entitled to receive: (i) continuation of his base salary for six (6) months (the “Grant
Severance Pay”), (ii) payment of his target bonus for the then-current year paid in six (6) substantially equal installments over
a six-month period and in accordance with the Company’s standard payroll practices, (iii) reimbursement of monthly health insurance
premium equal to the monthly employer contribution that the Company would have made if he had remained employed by the Company until the
earliest of (a) the end of the period over which the Company pays the Grant Severance Pay, (b) the date on which Mr. Grant becomes eligible
to receive group medical plan benefits from another employer, or (c) the date on which Mr. Grant is no longer eligible to receive such
coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”). In addition, if such termination
without “Cause” or resignation for “Good Reason” occurs within ninety (90) days prior to a Change of Control (as
defined in the Grant Employment Agreement) or twelve (12) months immediately following a Change of Control, then in addition to the Accrued
Benefits, and subject to Mr. Grant’s execution of the Separation Agreement, Mr. Grant is entitled to receive: (i) continuation of
base salary for twelve (12) months (the “Grant Change of Control Severance Pay”), (ii) lump-sum payment in an amount equal
to his target bonus for the then-current year and (iii) reimbursement of monthly health insurance premium equal to the monthly employer
contribution that the Company would have made if he had remained employed by the Company until the earliest of (a) the end of the period
over which the Company pays the Grant Change of Control Severance Pay, (b) the date on which Mr. Grant becomes eligible to receive group
medical plan benefits from another employer, or (c) the date on which Mr. Grant is no longer eligible to receive such coverage under COBRA.
The
Grant Employment Agreement is governed by the laws of the State of North Carolina and contains non-solicitation and non-competition covenants
(each of which remains in effect during the term of employment and for a period of 12 months following termination of employment) and
confidentiality, trade secrets and inventions clauses.
Larry
Jasinski
On
January 17, 2011, we entered into an employment agreement with Mr. Jasinski, pursuant to which he served as the CEO of the Company beginning
on February 12, 2012 (as amended from time to time, the “Jasinski Employment Agreement”). Mr. Jasinski served as co-CEO from
June 2, 2025 until June 30, 2025, and thereafter ceased to serve as an officer of the Company.
The
Jasinski Employment Agreement provided for an annual base salary, subject to annual increases in the discretion of, the Company, and an
annual performance bonus. In accordance with previous shareholder approvals, and effective as of January 1, 2025, the annual base salary
was $442,312. The annual performance bonus was originally set at up to 35% of annual base salary. In 2020, this was increased to an annual
performance bonus of up to 70% of annual base salary for achieving 100% of targets (with adjustment upward or downward for performance
exceeding or failing to meet such objectives, respectively).
In
the event that Mr. Jasinski’s employment was terminated by the Company without “Cause” (as defined in the Jasinski Employment
Agreement ), or if Mr. Jasinski terminated his employment for “Good Reason” (as defined in the Jasinski Employment Agreement),
he would be entitled to certain severance payments and benefits, including: (i) a lump sum payment equal to 90 days of his base salary,
(ii) an annual performance bonus (calculated based on the assumption that to the extent performance objectives were achieved in the six-month
period preceding his termination, they will also be achieved in the six months following termination), (iii) reimbursement for any COBRA
or other medical, dental and vision premiums for six months following his termination and (iv) continued participation in any employee
and executive benefit programs in effect as of his termination and reimbursement for the premium or other fees associated with continuation
in any insurance program available to the Company’s employees as a non-employee or in a comparable program if participation as a
non-employee would be barred. The Jasinski Employment Agreement further provided that if Mr. Jasinski’s employment was terminated
without Cause or by Mr. Jasinski for Good Reason, any unvested portion of the options promised in the Jasinski Employment Agreement, which
would have vested during the six months following such termination had Mr. Jasinski remained employed by the Company, would automatically
vest. If Mr. Jasinski terminated his employment without Good Reason, he would be entitled to receive a pro-rated amount of his annual
performance bonus as determined in good faith by the Board. Mr. Jasinski was not be entitled to any severance if he was terminated by
the Company for Cause.
104
The
Jasinski Employment Agreement was amended in 2020 to provide that if a “Change of Control” (as defined in the Jasinski Employment
Agreement) occurred, and within one year following such Change of Control Mr. Jasinski was terminated without Cause or he resigned for
Good Reason, Mr. Jasinski would be entitled to severance of 18 months’ salary as well as an annual bonus for the year in which the
termination occurs (assuming achievement of 100% of milestones and targets set by the Board of Directors).
The
Jasinski Employment Agreement was governed by the laws of the State of Delaware and contained non-solicitation and non-competition covenants
(each of which remained in effect during the term of employment and for 12 months following termination of employment) and trade secrets
and inventions clauses.
On
June 30, 2025, we entered into a separation agreement with Mr. Jasinski, which included a release of claims in favor of the Company, pursuant
to which he was entitled to receive: (i) the gross amount of $221,156.04, which was paid in 12 substantially equal installments, (ii)
his annual bonus for the fiscal year ended December 31, 2025, which was paid in a lump sum in an amount based on the actual achievement
of objectives during the 6-month period preceding the termination date and assumed 100% achievement of objectives during the 6-month period
following the termination date, (iii) a monthly payment equal to the full monthly COBRA premium to continue health coverage for Mr. Jasinski
and his eligible dependents until the earliest of (a) the 6-month anniversary of the date of termination, and (b) the cessation of Mr.
Jasinski’s health continuation rights under COBRA.
In
addition, on June 30, 2025, we entered into a consulting agreement with Mr. Jasinski for a period of six months from July 1, 2025 through
December 31 2025 (the “Consulting Period”), pursuant to which we agreed to pay Mr. Jasinski $18,429.67 per month for each
month Mr. Jasinski performed consulting services pursuant to such agreement. Any of Mr. Jasinski’s outstanding and unvested RSUs
as of Mr. Jasinski’s termination of employment continued to vest during the Consulting Period.
Almog
Adar
In
connection with Mr. Adar’s appointment as the Company’s Chief Financial Officer, the Company and Mr. Adar entered into a first
amendment to Mr. Adar’s then-existing employment agreement with the Company, effective as of August 1, 2025 (the “Adar Employment
Agreement”). Pursuant to the Adar Employment Agreement, Mr. Adar is entitled to receive (i) an annual base salary of $315,000, subject
to periodic adjustments as may be determined from time to time by the compensation committee of the Board and (ii) an annual performance
bonus of up to 35% of his annual base salary, subject to the achievement of objectives as determined by the compensation committee of
the Board. For the fiscal year ended December 31, 2025, Mr. Adar’s annual performance bonus will be structured in the form of the
Adar 2025 Bonus described under “2025 Bonuses” above. The Adar Employment Agreement also provided Mr. Adar with the right
to receive an option to purchase 225,000 of the Company’s Ordinary Shares, which vests in four equal annual installments beginning
on the first anniversary of the grant date, subject to Mr. Adar’s continued service with the Company and subject to the terms of
the 2025 Plan.
Upon
a termination of Mr. Adar’s employment without “Cause” by the Company or resignation for “Good Reason” by
Mr. Adar, and subject to Mr. Adar’s execution of a release agreement in the form acceptable to the Company, Mr. Adar is entitled
to receive: (i) continuation of his base salary for six (6) months (the “Adar Severance Pay”), (ii) payment of his target
bonus for the then-current year paid in six (6) substantially equal installments over a six-month period and in accordance with the Company’s
standard payroll practices, (iii) reimbursement of monthly health insurance premium equal to the monthly employer contribution that the
Company would have made if he had remained employed by the Company until the earliest of (a) the end of the period over which the Company
pays the Adar Severance Pay, (b) the date on which Mr. Adar becomes eligible to receive group medical plan benefits from another employer,
or (c) the date on which Mr. Adar is no longer eligible to receive such coverage under COBRA. In addition, if such termination without
“Cause” or resignation for “Good Reason” occurs within ninety (90) days prior to a Change of Control (as defined
in the Adar Employment Agreement) or twelve (12) months immediately following a Change of Control, and subject to Mr. Adar’s execution
of the Separation Agreement, Mr. Adar is entitled to receive: (i) salary continuation at the Base Salary (as defined in the Adar Employment
Agreement) rate for twelve (12) months (the “Adar Change of Control Severance Pay”), (ii) lump-sum payment in an amount equal
to his target bonus for the then-current year, (iii) reimbursement of monthly health insurance premium equal to the monthly employer contribution
that the Company would have made if he had remained employed by the Company until the earliest of (a) the end of the period over which
the Company pays the Adar Change of Control Severance Pay, (b) the date on which Mr. Adar becomes eligible to receive group medical plan
benefits from another employer, or (c) the date on which Mr. Adar is no longer eligible to receive such coverage under COBRA, and (iv)
accelerated vesting of all unvested restricted share units and options, which will vest and become immediately exercisable upon the effective
date of the termination of Mr. Adar’s employment.
105
The
Adar Employment Agreement is governed by the laws of the Commonwealth of Massachusetts and contains non-solicitation and non-competition
covenants (each of which remains in effect during the term of employment and for a period of 12 months following termination of employment)
and confidentiality, trade secrets and inventions clauses.
Jeannine
Lynch
On
July 22, 2021, we entered into an employment agreement with Jeannine Lynch to serve as Vice President of Market Access and Strategy of
the Company, effective August 31, 2021 (the “Lynch Employment Agreement”). Pursuant to the terms of the Lynch Employment Agreement,
Ms. Lynch is entitled to (i) an annual base salary of $320,000, which was increased to $361,637 effective April 1, 2025, subject to increases
as may be determined from time to time by the compensation committee of the Board and (ii) an annual performance bonus up to 35% of annual
base salary, subject to the achievement of objectives as determined by the compensation committee of the Board. The Lynch Employment Agreement
may be terminated by the Company upon prior written notice.
In
the event that (x) Ms. Lynch’s employment is terminated for any reason other than for “cause” (as defined therein),
death, or disability, (y) the Company moves its primary office outside of the United States and/or reduces Ms. Lynch’s title or
primary responsibilities, or (z) the Company moves Ms. Lynch’s principal location of work, the Company shall pay monthly severance
to Ms. Lynch at the rate per annum of her salary and bonus (and the replacement cost of her benefits) at the time of such termination
for a period from the date of such termination to the date which is six months after such termination.
In
the event that the Company is subject to a merger or acquisition where Ms. Lynch is terminated during the 12-month period following the
closing of the transaction, 100% of the then-unvested and outstanding equity awards held by Ms. Lynch will vest upon such termination.
Ms.
Lynch is not entitled to receive any termination or change in control benefits under our Compensation Policy.
The
Lynch Employment Agreement is governed by the laws of the Commonwealth of Massachusetts and contains non-solicitation and non-competition
covenants (each of which remains in effect during the term of employment and for a period of 12 months following termination of employment)
and trade secrets and inventions clauses.
106
Outstanding
Equity Awards at 2025 Fiscal Year-End
The
following table sets forth information concerning outstanding equity awards as of December 31, 2025, for each Named Executive Officer.
This information reflects the number of ordinary shares of the Company after the 1-for-12 reverse share split of the ordinary shares effected
by the Company on February 24, 2026.
|
|
|
Option
Awards |
Stock
Awards |
|||||||||||||||||||||
|
Name |
Grant
Date(1) |
Number
of Securities Underlying Unexercised Options Exercisable (#) |
Number
of Securities Underlying Unexercised Options Unexercisable (#) |
Option Exercise Price ($) |
Option Expiration Date |
Number
of Shares or Units of Stock that Have Not Vested (#) |
Market Value of Shares or Units of Stock that Have Not Vested(2) ($) |
|||||||||||||||||
|
Mark Grant |
6/2/2025(3) |
— |
33,333 |
14.70 |
6/2/2035 |
|||||||||||||||||||
|
Larry Jasinski |
6/27/2017(4) |
59 |
— |
4,410.00 |
3/31/2026 |
|||||||||||||||||||
|
|
5/3/2018(5) |
104 |
— |
2,257.50 |
3/31/2026 |
|||||||||||||||||||
|
|
3/27/2019(6) |
147 |
— |
450.66 |
3/31/2026 |
|||||||||||||||||||
|
Almog Adar |
8/2/2022(7) |
|
297 |
2,055 |
||||||||||||||||||||
|
6/30/2023(8) |
|
744 |
5,148 |
|||||||||||||||||||||
|
8/13/2025(9) |
— |
18,750 |
8.60 |
8/13/2035 |
||||||||||||||||||||
|
Jeannine Lynch |
8/2/2022(10) |
|
409 |
2,830 |
||||||||||||||||||||
|
6/30/2023(11) |
|
818 |
5,661 |
|||||||||||||||||||||
|
11/11/2025(12) |
|
4,166 |
28,829 |
|||||||||||||||||||||
|
|
|
|
(1) |
Awards
granted prior to 2025 were granted under the Company’s 2014 Equity Incentive Plan, as amended from time to time, and awards granted
in 2025 were granted under the 2025 Plan. |
|
(2) |
The
amount listed in this column represents the product of $6.92, which was the closing market price of the Company’s Ordinary Shares
as of December 31, 2025, multiplied by the number of shares subject to the award. |
|
(3) |
Option
awards vest with respect to 1/4th of the original number of Ordinary Shares subject thereto on each annual anniversary of June 2, commencing
on June 2, 2026 and ending on June 2, 2029. |
|
(4) |
This
award is fully vested. |
|
(5) |
This
award is fully vested. |
|
(6) |
This
award is fully vested. |
|
(7) |
1/4th
of the RSU award vests on an annual basis commencing on August 2, 2023, and ending on August 2, 2026. |
|
(8) |
1/4th
of the RSU award vests on an annual basis commencing on June 30, 2025, and ending on June 30, 2027. |
|
(9) |
Option
awards vest with respect to 1/4th of the original number of Ordinary Shares subject thereto on each annual anniversary of August 13, commencing
on August 13, 2026 and ending on August 13, 2029. |
|
(10) |
1/4th
of the RSU award vests on an annual basis commencing on August 2, 2023, and ending on August 2, 2026. |
|
(11) |
1/4th
of the RSU award vests on an annual basis commencing on June 30, 2025, and ending on June 30, 2027. |
|
(12) |
1/4th
of the RSU award vests on an annual basis commencing on December 11, 2026, and ending on December 11, 2029. |
Potential
Payments Upon Termination or Change in Control
We
have adopted, pursuant to shareholder approval, our Compensation Policy, which provides for certain benefits to our executive officers
upon retirement or termination, whether or not in the event of a change in control. We may memorialize any of these benefits in arrangements
we enter into with individual executive officers. Under the Compensation Policy, executive officers may be entitled to advance notice
of termination of up to 12 months and to obtain up to 12 months of post-termination health insurance. In addition to receiving severance
pay as required or facilitated under the local laws of the relevant jurisdiction, executive officers may have the right to receive up
to 12 months of base salary (18 months in the case of the CEO), bonus and benefits, taking into account the period of the officer’s
service or employment, his or her performance during employment and contribution to the Company’s targets and profits and the circumstances
surrounding termination of his or her employment. These benefits are designed to attract and motivate highly skilled professionals to
join our Company and to enable us to retain key management.
107
To
the extent our Named Executive Officers are entitled to receive severance (except for any severance payments mandated by Israeli law for
our Israeli employees) or change in control benefits, such entitlements are contractually agreed upon between the Company and the applicable
Named Executive Officer. Accordingly, for further information regarding the payments and benefits our Named Executive Officers are entitled
to receive upon a termination or change in control, please see “Executive Compensation — Employment Agreements of Named Executive
Officers.”
Compensation
Committee Interlocks and Insider Participation
None
of the members of the compensation committee is, or has ever been, an officer or employee of the Company or any of its subsidiaries. In
addition, during the last fiscal year, no executive officer of the Company served as a member of the board of directors or the compensation
committee of another entity that has one or more executive officers serving on the Company’s compensation committee or the Board.
Policy
for Recoupment of Incentive Compensation (Clawback Policy)
On
September 13, 2023, we adopted an amended and restated policy for recoupment of incentive compensation (the “Clawback Policy”)
in compliance with the requirements of the Dodd-Frank Act, final SEC rules and applicable Nasdaq listing standards (the “final clawback
rules”), which covers our current and former executive officers, including all of our named executive officers. Under the Clawback
Policy, in the event that we are required to prepare a restatement of our previously issued financial statements due to our material noncompliance
with any financial reporting requirement under securities laws, we are required to recover (subject to certain limited exceptions described
in the Clawback Policy and permitted under the final clawback rules) any cash or equity incentive-based compensation received by any current
or former executive officer after the effective date of the Clawback Policy and in the three years prior to the date we are required to
restate our financial statements that is in excess of the amount that would have been received based on the restated financial statements.
Director
Compensation
The
following table provides certain information concerning the compensation for services rendered in all capacities by each non-employee
director serving on our Board during the year ended December 31, 2025, other than Mr. Mark Grant, our CEO, and Larry Jasinski, our former
CEO, who did not receive additional compensation for his services as director and whose compensation is set forth in the Summary Compensation
Table found elsewhere in this annual report.
|
Name |
Fees
Earned in Cash ($) |
Share
Awards ($)(1) |
Total ($) |
|
Dr.
John William Poduska |
61,351(2) |
25,000 |
86,351 |
|
Randel
Richner |
61,478(3) |
25,000 |
86,478 |
|
Joseph
Turk |
85,786(4) |
12,500(5) |
98,286 |
|
Hadar
Levy |
49,277(6) |
25,000 |
74,277 |
|
Michael
Swinford |
52,527(7) |
25,000 |
77,527 |
|
Robert
Marshall |
58,551(8) |
25,000 |
83,551 |
| (1) |
Amounts
represent the aggregate grant date fair value of an award of 35,899 RSUs issued under the Amended and Restated 2025 Incentive Compensation
Plan (the “2025 Plan”) as an annual award to the applicable directors, computed in accordance with Financial Accounting Standards
Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”). The fair value of RSUs granted is determined based
on the price of the Company’s Ordinary Shares on the date of grant. All RSUs become vested and exercisable in four equal quarterly
installments starting three months following the grant date. The valuation assumptions used in determining such amounts are described
in Notes 2k and 8c to our consolidated financial statements included in our Annual Report, filed on March 7, 2025. |
108
|
(2) |
Represents
$24,658 earned by Dr. Poduska as an annual retainer for serving as a non-employee director on the Board of Directors, a cash payment of
$12,500 received in lieu of equity compensation (as discussed below), $15,279 for attending meetings of the Board of Directors, $2,836
for serving as a member of the audit committee, $6,078 for serving as the chairman of the compensation committee. |
|
(3) |
Represents
$24,658 earned by Ms. Richner as an annual retainer for serving as a non-employee director on the Board of Directors, a cash payment of
$12,500 received in lieu of equity compensation, $18,893 for attending meetings of the Board of Directors, $5,427 for serving as a member
of the compensation committee. |
|
(4) |
Represents
$37,513 earned by Mr. Turk as an annual retainer for serving as our Chairman of the Board of Directors, a cash payment of $12,500 earned
in lieu of equity compensation, $28,044 for attending meetings of the Board of Directors and $7,729 for serving as a member of the compensation
committee. Mr. Turk elected to step down from the Board of Directors effective as of December 31, 2025. |
|
(5) |
At
our annual meeting for fiscal year ended December 31, 2024, our stockholders approved the right for the Chairman of the Board of Directors
to receive an Annual RSU Grant (or a cash fee in lieu of an equity grant) having a value equal to $100,000 on the date of grant. Due to
an insufficient number of shares under our 2025, Mr. Turk elected to forgo a portion of his Annual RSU Grant equal to $50,000 and, instead,
in lieu of such equity compensation, receive such amount in cash in 4 substantially equal quarterly installments, subject to Mr. Turk’s
continued service as a member of the Board of Directors. Mr. Turk earned $12,500 of this $50,000 cash amount before electing to step down
from the Board of Directors effective December 31, 2025. |
|
(6) |
Represents
$24,658 earned by Mr. Levy as an annual retainer for serving as a non-employee director on the Board of Directors, a cash payment of $12,500
received in lieu of equity compensation, $9,788 for attending meetings of the Board of Directors and $2,331 for serving as a member of
the audit committee. Mr. Levy elected to step down from the Board of Directors effective as of February 24, 2026. |
|
(7) |
Represents $24,658 earned
by Mr. Swinford as a portion of the annual retainer for serving as a non-employee director on the Board of Directors, a cash payment of
$12,500 received in lieu of equity compensation, $15,369 for attending meetings of the Board of Directors. |
|
(8) |
Represents $24,658 earned
by Mr. Marshall as a portion of the annual retainer for serving as a non-employee director on the Board of Directors, a cash payment of
$12,500 received in lieu of equity compensation, $17,229 for attending meetings of the Board of Directors and $4,164 for serving as a
member of the audit committee. Mr. Marshall was appointed Chairman of the Board of Directors effective January 1, 2026. |
The
aggregate number of Ordinary Shares subject to outstanding options and RSU awards for each of our non-employee directors as of December
31, 2025, is shown below. Information regarding Mr. Grant’s and Mr. Jasinski’s outstanding equity awards as of December 31,
2025, is set forth in the Outstanding Equity Awards Table found elsewhere in this annual report. This information reflects the number
of ordinary shares of the Company after the 1-for-12 reverse share split of the ordinary shares effected by the Company on February 24,
2026.
|
Name |
Number
of Shares |
|
Dr.
John William Poduska |
2,243 |
|
Randel
Richner |
2,243 |
|
Joseph
Turk (1) |
— |
|
Hadar
Levy(2) |
2,243 |
|
Michael
Swinford |
2,243 |
|
Robert
Marshall |
2,243 |
(1)
Mr. Turk elected to step down from the Board of Directors effective December 31, 2025.Mr. Levy elected to step down from the Board of
Directors effective February 24, 2026.
109
Cash
compensation for our independent, non-employee directors’ services is governed by previous decisions of our compensation committee,
Board of Directors and shareholders, and is subject to terms and conditions of our Compensation Policy. Additionally, each independent,
non-employee director currently receives upon his or her appointment a restricted share unit award (the “Initial RSU Award”),
with such Initial RSU Award having a value equal to $50,000 on the date of grant (in each case, as determined based on the closing price
of our Ordinary Shares on the date of grant). Each independent, non-employee director is also entitled to receive an annual grant
of RSUs, with such Annual RSU Award having a value equal to $50,000 on the date of grant, except in the case of the Chairman of the Board
of Directors, who is eligible to receive an annual grant of RSUs having a value equal to $100,000 on the date of the grant (each annual
RSU grant, the “Annual RSU Award”). The Initial RSU Award and Annual RSU Award each vest ratably in four equal quarterly instalments
starting three months from the date of grant (subject to the non-employee director’s continued service with the Company through
each applicable vesting date), with the vesting of such awards to be accelerated upon certain change of control events in accordance with
the Compensation Policy. At our 2020 annual general meeting, our shareholders approved an amendment to our then-current Compensation Policy
whereby (x) all or a portion of our non-directors’ cash compensation may be paid in equity, at the discretion of our compensation
committee, in order to preserve the Company’s cash, and (y) equity compensation of directors will be payable in the first instance
in RSUs but such compensation may also be payable, at the discretion of our compensation committee, in cash, based on a formula to be
determined and with such payment provisions as shall result in the equivalent effect of vesting of RSUs, in order to preserve the equity
available for incentives.
In
addition, each director is reimbursed for out-of-pocket expenses in connection with attending meetings of the Board of Directors or committees.
Directors are also indemnified and insured by us for actions associated with being a director to the extent permitted under Israeli law.
Further, none of our non-employee directors receive any benefits upon termination of their directorship positions. The compensation committee
reviews director compensation annually and makes recommendations to the Board of Directors with respect to compensation and benefits provided
to the members of the Board of Directors.
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
As
of March 9, 2026, there were 1,528,207 ordinary shares outstanding, excluding ordinary shares issuable in connection with the exercise
of outstanding warrants or outstanding options or upon the vesting of restricted stock units (“RSUs”). The voting rights of
all shareholders are the same. This information reflects the number of ordinary shares of the Company after the 1-for-12 reverse share
split of the ordinary shares effected by the Company on February 24, 2026.
The
following table sets forth certain information as of March 9, 2025, concerning the number of ordinary shares beneficially owned, directly
or indirectly, by:
(1) each
person, or group of affiliated persons, known to us to beneficially own more than 5% of our outstanding ordinary shares;
(2) each
of our directors and director nominees;
(3) each
of our Named Executive Officers (as defined under “Summary Compensation Table” above); and
(4) all
of our directors and executive officers as a group.
Beneficial
ownership is determined in accordance with the rules of the SEC based on voting and investment power with respect to such shares. Shares
subject to options or warrants that are currently exercisable or exercisable within 60 days of March 9, 2026 and shares subject to RSUs
that were vested as of or will vest within 60 days of March 9, 2026 are deemed to be outstanding and to be beneficially owned by the person
holding such options, RSUs or warrants for the purpose of computing the percentage ownership of such person. However, such shares are
not deemed to be outstanding and to be beneficially owned for the purpose of computing the percentage ownership of any other person.
110
Under the terms of certain outstanding warrants, a holder may not exercise
the warrants to the extent that such shareholder, together with its affiliates, would beneficially own, after such exercise, more than
4.99% or 9.99% of the ordinary shares then outstanding, as applicable (subject to the right of the shareholder with a 4.99% ownership
limitation to increase or decrease such beneficial ownership limitation upon notice to us, provided that such limitation cannot exceed
9.99%), and provided that any increase in the beneficial ownership limitation shall not be effective until 61 days after such notice is
delivered. Consistent with beneficial ownership reporting principles under Section 13(d) of the Exchange Act, the below table only shows
ordinary shares underlying warrants that are deemed to be beneficially owned, assuming compliance with these ownership limitations.
All information with respect to the beneficial ownership of any principal
shareholder has been furnished by such shareholder or is based on our filings with the SEC and, unless otherwise indicated below, we believe
that persons named in the table have sole voting and sole investment power with respect to all the ordinary shares shown as beneficially
owned, subject to community property laws, where applicable. The ordinary shares beneficially owned by our directors and officers may
include shares owned by their respective family members, as to which such directors and officers disclaim beneficial ownership. Unless
otherwise noted below, each shareholder’s address is c/o Lifeward Ltd., 2 Cabot Rd., Hudson, MA 01749.
|
Name |
Number of Shares |
Percentage |
||||||
|
Greater than 5% Beneficial Owners: |
- |
- |
||||||
|
Named Executive Officers, Directors and Director Nominees: |
||||||||
|
Mark Grant(1) |
- |
- |
||||||
|
Randel Richner(2) |
3,292 |
* |
||||||
|
Dr. John William Poduska(3) |
3,166 |
* |
||||||
|
Michael Swinford(4) |
6,914 |
* |
||||||
|
Robert Marshall(5) |
1,494 |
* |
||||||
|
Jeannine Lynch(6) |
2,311 |
* |
||||||
|
Almog Adar(7) |
2,083 |
* |
||||||
|
Lawrence Jasinski(8) |
310 |
* |
||||||
|
All directors and executive officers as a group (eight persons) (9) |
19,570 |
1.3 |
% | |||||
|
* |
Ownership of less than 1%. |
| (1) |
Mr. Grant commenced serving as our President and co-Chief Executive Officer and as a member of our Board of Directors effective June
2, 2025 and as President and sole Chief Executive Officer effective July 1, 2025. |
| (2) |
Consists of 3,292 Ordinary Shares, including 747 ordinary shares underlying RSUs vesting within 60 days. |
| (3) |
Consists of 3,164 Ordinary Shares, including 747 shares underlying RSUs vesting within 60 days, and 2 exercisable options to purchase
ordinary shares. |
| (4) |
Consists of 6,914 Ordinary Shares, including 747 ordinary shares underlying RSUs vesting within 60 days. |
| (5) |
Consists of 1,494 Ordinary Shares, including 747 ordinary shares underlying RSUs vesting within 60 days. |
| (6) |
Consists of 2,311 Ordinary Shares. |
| (7) |
Consists of 2,083 Ordinary Shares. |
| (8) |
Consists of 310 exercisable options to purchase ordinary shares. |
| (9) |
Consists of (i)16,270 ordinary shares directly or beneficially owned by our executive officers and our directors other than Mr. Grant;
(ii) 312 ordinary shares constituting the cumulative aggregate number of options granted to the director; and (iii) 2,988 shares underlying
RSUs vesting within 60 days. |
Equity Compensation Plan Information
The following table provides information as of December 31, 2025 with
respect to the ordinary shares that may be issued under our existing equity compensation plans. The information below reflects a number
of ordinary shares of the Company after the 1-for-12 reverse share split of the ordinary shares effected by the Company on February 24,
2026.
111
|
Plan Category |
Number of securities to be issued upon exercise of outstanding options, warrants and rights |
Weighted average exercise price of outstanding options, warrants and rights |
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in first column) |
|||||||||
|
Equity compensation plans approved by security holders (1) |
92,549(1) |
$ |
46.47(2) |
39,851(3) |
||||||||
|
Equity compensation plans not approved by security holders (2) |
33,333(4) |
$ |
14.70 |
— |
||||||||
|
Total |
125,882 |
$ |
26.28 |
39,851 |
||||||||
|
|
|
|
(1) |
Includes our 2014 Incentive Compensation Plan (the “2014 Plan”) and our 2025
Plan. |
|
(2) |
The weighted-average exercise price is calculated based solely on the exercise prices
of the outstanding options to purchase ordinary shares. It does not reflect the ordinary shares that will be issued upon the vesting of
outstanding awards of RSUs, which have no exercise price. |
|
(3) |
As of December 31, 2025, a total of 39,851 ordinary shares were available for issuance
under our 2025 Plan. Our 2025 Plan does not include an “evergreen” provision. The shares underlying awards under the 2025
Plan (or awards under the 2014 Plan) that are forfeited (including any shares subject to an award (or any such other award) that are repurchased
by the Company due to failure to meet any applicable condition), cancelled, terminated or expire unexercised shall be available for issuance
pursuant to future awards under the 2022 Plan. The Company no longer makes grants under the 2014 Plan. |
|
(4) |
Represents
an inducement grant of 33,333 options to purchase ordinary shares made to Mark Grant (the “Grant Inducement Award”) as an
inducement grant which were granted outside of our 2014 Plan but are subject to the terms and conditions applicable to options granted
under our 2014 Plan. The Grant Inducement Award vests in four equal annual installments commencing on the date of grant, provided, that,
in the event Mr. grant’s employment with us is terminated by us without “cause” or by the applicable executive for “good
reason” within 90 days prior to a “change of control” or one year following a change of control (each, as defined in
the applicable executive’s employment agreement with us), the Grant Inducement Award will fully vest upon the later of the date
of the termination or the date of the change in control, subject to the applicable executive’s execution of a release of claims. |
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Director
Independence
The
information required by Item 407(a) of Regulation S-K is incorporated by reference herein from Item 10 above as set forth under the caption
“Director Independence.”
Certain
Relationships and Related Transactions
See
“Item 11. Executive Compensation —Employment Agreements of Named Executive Officers” above for a description of employment
agreements between us and the Named Executive Officers.
112
We
describe below transactions and series of similar transactions which are currently proposed or to which we have been or were a party since
January 1, 2024, in which (a) the amount involved exceeds or exceeded the lesser of $120,000 or one percent of the average of the Company’s
total assets at year-end for the last two completed fiscal years and (b) any of our directors, executive officers, beneficial owners of
more than 5% of our ordinary shares, or any affiliates or members of the immediate family of any of the foregoing persons, had or will
have a direct or indirect material interest. Although we do not have a formal written policy as to the approval of related party transactions,
all related party transactions for which disclosure would be required under Item 404 of Regulation S-K are approved based on procedures
under Israeli law, as is duly memorialized in the minutes of the meetings of the Board and audit committee, as applicable.
Transactions
with Current and/or Former 5% Beneficial Owners
Since
January 1, 2024, we entered into the following transactions with other shareholders who are currently 5% beneficial owners or who we believe
beneficially owned at the time of such transactions or became as a result of such transactions more than 5% of our ordinary shares, based
on a review of Schedule 13G filings made and Company records during such period.
Agreements
with Directors, Officers and Others
Employment
Agreements
We
have entered into written employment agreements with each of our executive officers. These agreements provide for notice periods of varying
duration for termination of the agreement by us or by the relevant executive officer, during which time the executive officer will continue
to receive base salary and benefits. We have also entered into customary non-competition, confidentiality of information and ownership
of inventions arrangements with our executive officers. However, the enforceability of the noncompetition provisions may be limited under
applicable law.
Options
Since
our inception we have granted options to purchase our ordinary shares to our officers and certain of our directors. Such option agreements
may contain acceleration provisions upon certain merger, acquisition, or change of control transactions.
Exculpation,
Indemnification and Insurance
Our
Articles of Association permit us to exculpate, indemnify and insure certain of our office holders to the fullest extent permitted by
the Israel Companies Law. We have entered into indemnification agreements with our office holders, exculpating them from a breach of their
duty of care to us to the fullest extent permitted by law and undertaking to indemnify them to the fullest extent permitted by law, subject
to certain exceptions, including with respect to liabilities resulting from our IPO to the extent that these liabilities are not covered
by insurance.
Consulting
Agreement and Supplement Agreement with Randel E. Richner
At
our 2022 annual meeting of shareholders, our shareholders approved the terms of a Consulting Agreement with Richner Consultants LLC, a
Delaware company (the “Consultant”) owned by Randel E. Richner, a member of our Board. Pursuant to the Consulting Agreement,
the Consultant provided us with the following services during 2022: strategic advisory consultation on activities related to CMS, including
reviewing Company submissions to CMS; reviewing the Company’s dossier submitted to third-party insurers; coordinating and establishing
lobbying efforts for the Company with U.S. government agencies; review and support with respect to reimbursements from private payers
and with on-going interactions with the U.S. Veterans Benefits Administration; and other reimbursement-related matters as designated and
agreed to with our CEO, including international reimbursement activities as needed. The services to be provided under the Consulting Agreement
by the Consultant were provided solely by Ms. Richner.
113
The
services were provided on an hourly basis at a rate of $425 per hour, payable by us on a monthly basis subject to the Consultant providing
monthly invoices for the review of both our Chairman of the Board and our CEO. Under the Consulting Agreement, the aggregate total number
of consulting hours provided by the Consultant could not exceed 282 hours.
The
initial term of the Consulting Agreement commenced January 1, 2022, and expired December 31, 2022. Approximately $119,850 was owed and
paid to the Consultant for the initial term of the Consulting Agreement.
At
our 2023 annual meeting of shareholders, our shareholders approved an extension of the Consulting Agreement until the earlier of December
31, 2023 or such time as we receive approval from CMS. The extension term of the Consulting Agreement commenced January 1, 2023,
and expired December 31, 2023. Approximately $119,999 was owed and paid to the Consultant for the extension term of the Consulting Agreement.
However,
because the process of receiving reimbursement approval from CMS was far more complex and time-consuming than was initially contemplated,
Ms. Richner was required to invest far more time during each of 2022 and 2023 than the maximum number of 282 consulting hours for each
of 2022 and 2023 provided by the Consulting Agreement, as amended. Ms. Richner also provided services during the first four months of
2024. In addition, as a result of expending so much time in providing her consulting services to us, Ms. Richner was not able to take
on other, higher-paying consulting assignments. The actual number of additional hours invested by Ms. Richner during 2022 and 2023 in
excess of the maximum number of 282 hours per year provided in the Consulting Agreement, at her then-hourly rate of $425, and the hours
expended by Ms. Richner in 2024 (for which Ms. Richner and we agreed that the hourly rate should be $550 per hour, which better represented
Ms. Richner’s then-new standard hourly rate), came to an aggregate of $297,000. At our 2024 annual meeting of shareholders, our
shareholders approved compensating Ms. Richner for such excess hours in the form of equity compensation pursuant to an Amendment
and Supplement Agreement among the Company, the Consultant and Ms. Richner (the “Supplement Agreement”), subject to approval
by our shareholders of a new equity compensation plan. The Supplement Agreement provided for a grant of equity compensation to Ms. Richner
(rather than to the Consultant) in the form of stock options to purchase our ordinary shares, to be issued in three tranches as follows:
|
• |
On
November 10, 2024, options will be issued having an aggregate value of $120,000, calculated utilizing a Black-Scholes valuation model
based on the closing price of our ordinary shares on such date, but in no event will we issue such options in 2024 to purchase more than
45,614 ordinary shares; |
|
• |
On
November 11, 2025, options will be issued having an aggregate value of $120,000, calculated utilizing a Black-Scholes valuation model
based on the closing price of our ordinary shares on such date, but in no event will we issue such options in 2025 to purchase more than
45,614 ordinary shares; and |
|
• |
On
November 12, 2026, options will be issued having an aggregate amount of $57,000, calculated utilizing a Black-Scholes valuation model
based on the closing price of our ordinary shares on such date, but in no event will we issue such options in 2026 to purchase more than
21,662 ordinary shares. |
By
way of example only, utilizing a Black-Scholes valuation of $2.35 per share underlying the options based on the closing price of our ordinary
shares of $3.90 on July 15, 2024, the number of shares underlying the three grants of options to be made to Ms. Richner described above
would have been 51,111, 51,111 and 10,668, respectively, but due to the caps described above on the number of shares that can underlie
grants of options to Ms. Richner, the number of shares would be 45,614, 45,614 and 10,66 respectively.
The
grant provided that each of the stock options will vest immediately upon issuance and will be exercisable for a term of seven years, whether
or not Ms. Richner continues to serve as a member of the Board, the exercise price per share of the options will be the closing price
of our ordinary shares used for purposes of the respective Black-Scholes valuation, and the stock options can be exercised on a net exercise
basis. Finally, as long as Ms. Richner remains engaged by us as a member of the Board, her ability to engage in any transactions in relation
to the ordinary shares underlying the stock options will be subject to our Insider Trading Policy.
114
As
described above, as of the date of this annual report our shareholders have not approved a new equity incentive compensation plan.
Distribution
Agreement with CorLife for which Michael Swinford Serves As CEO
On
March 6, 2025, we announced an agreement in which CorLife will become the exclusive distributor for the ReWalk Personal Exoskeleton
for individuals with workers’ compensation claims. Michael Swinford, a member of our Board, serves as the Chief Executive
Officer of Numotion, the parent company of CorLife. Our Board of Directors reviewed the financial terms of the contract which were
negotiated at arms-length and the transaction was approved by the Board.
Approval
of Related Party Transactions Under Israeli Law
Disclosure
of Personal Benefits or Other Interests of an Office Holder and Approval of Certain Transactions
The
Israel Companies Law requires that an office holder promptly disclose to the board of directors any personal benefit or other interest
that he or she may have, and all related material information or documents, concerning any existing or proposed transaction with the company.
A personal benefit or other interest includes the individual’s own benefit or other interest and, in some cases, a personal benefit
or other interest of such person’s relative or an entity in which such individual, or his or her relative, is a 5% or greater shareholder,
director or general manager, or in which he or she has the right to appoint at least one director or the general manager, but does not
include a personal benefit or other interest stemming only from ownership of our shares.
If
an office holder has a personal benefit or other interest in a transaction, approval by the board of directors is required for the transaction.
Once an office holder has disclosed his or her personal benefit or other interest in a transaction, the board of directors may approve
an action by the office holder that would otherwise be deemed a breach of duty of loyalty. A company may not, however, approve a transaction
or action unless it is in the best interests of the company, or if the office holder is not acting in good faith.
Special
approval is required for an extraordinary transaction, which under the Israel Companies Law is defined as any of the following:
|
• |
a
transaction other than in the ordinary course of business; |
|
• |
a
transaction that is not on market terms; or |
|
• |
a
transaction that may have a material impact on a company’s profitability, assets or liabilities. |
An
extraordinary transaction in which an office holder has a personal benefit or other interest requires approval first by the company’s
audit committee and subsequently by the board of directors. The compensation of, or an undertaking to indemnify or insure, an office holder
who is not a director requires approval first by the company’s compensation committee, then by the company’s board of directors
and, if such compensation arrangement or an undertaking to indemnify or insure is inconsistent with the Company’s compensation policy
or if the office holder is the Chief Executive Officer (apart from a number of specific exceptions), then such arrangement is subject
to shareholder approval by a simple majority, which must also include at least a majority of the shares voted by all shareholders who
are neither controlling shareholders nor have a personal benefit or other interest in such compensation arrangement (alternatively, in
addition to a simple majority, the total number of shares voted against the compensation arrangement by non-controlling shareholders and
shareholders who do not have a personal benefit or other interest in the arrangement may not exceed 2% of our outstanding shares). We
refer to this as the “Special Majority”. Arrangements regarding the compensation, indemnification or insurance of a director
require the approval of the compensation committee, board of directors and shareholders by a simple majority, in that order, and under
certain circumstances, a Special Majority.
115
Generally,
a person who has a personal benefit or other interest in a matter that is considered at a meeting of the board of directors or the audit
committee may not be present at such a meeting or vote on that matter unless the chairman of the board of directors or the audit committee
(as applicable) determines that he or she should be present in order to present the transaction that is subject to approval. If a majority
of the members of the board of directors or the audit committee (as applicable) have a personal benefit or other interest in the approval
of a transaction, then all directors may participate in discussions of the board of directors or the audit committee (as applicable) on
such transaction and in the voting, but shareholder approval is also required for such transaction.
Disclosure
of Personal Benefits or Other Interests of Controlling Shareholders and Approval of Certain Transactions
Pursuant
to the Israel Companies Law, the disclosure requirements regarding personal benefits or other interests that apply to directors and executive
officers also apply to a controlling shareholder of a public company. In this context, a controlling shareholder includes a shareholder
who holds 25% or more of our outstanding shares if no other shareholder holds more than 50% of our outstanding shares. For this purpose,
the holdings of all shareholders who have a personal benefit or other interest in the same transaction will be aggregated. The approval
of the audit committee, the board of directors and the shareholders of the company, in that order, is required for (a) extraordinary transactions
with a controlling shareholder or in which a controlling shareholder has a personal benefit or other interest, (b) our engagement with
a controlling shareholder or his or her relative, directly or indirectly, for the provision of services to us, (c) the terms of engagement
and compensation of a controlling shareholder or his or her relative who is not an office holder or (d) our employment of a controlling
shareholder or his or her relative, other than as an office holder. In addition to shareholder approval by a simple majority, the transaction
must be approved by a Special Majority.
To
the extent that any such transaction with a controlling shareholder is for a period extending beyond three years, approval is required
once every three years, unless, with respect to certain transactions, the audit committee determines that the duration of the transaction
is reasonable under the circumstances.
Arrangements
regarding the compensation, indemnification or insurance of a controlling shareholder in his or her capacity as an office holder require
the approval of the compensation committee, board of directors and shareholders, in that order, by a Special Majority, and the terms must
be consistent with our Compensation Policy.
Pursuant
to regulations promulgated under the Israel Companies Law, certain transactions with a controlling shareholder or his or her relative,
or with directors, that would otherwise require approval of our shareholders may be exempt from shareholder approval upon certain determinations
of the audit committee and board of directors. Under these regulations, we must publish these determinations, and a shareholder holding
at least 1% of our outstanding shares may, within 14 days of after publication, demand shareholder approval despite such determinations.
116
Principal
Accounting Fees and Services
The
following table sets forth, for each of the years indicated, the fees expensed by Kost Forer Gabbay & Kasierer, our independent registered
public accounting firm, in each such year.
|
|
2024 |
2025 |
||||||
|
|
($
in thousands) |
|||||||
|
Audit Fees(1) |
$ |
250 |
$ |
280 |
||||
|
Audit-Related Fees(2) |
$ |
- |
$ |
- |
||||
|
Tax Fees(3) |
$ |
30 |
$ |
58 |
||||
|
All Other Fees(4) |
$ |
4 |
$ |
4 |
||||
|
Total: |
$ |
284 |
$ |
342 |
||||
|
|
|
|
(1) |
“Audit
fees” include fees for services performed by our independent public accounting firm in connection with our annual audit for 2024
and 2025, fees related to the review of quarterly financial statements, fees related to the pro forma financial information and fees for
consultation concerning financial accounting and reporting standards. |
|
(2) |
“Audit-related
fees” relate to assurance and associated services that are traditionally performed by an independent auditor, including accounting
consultation and consultation concerning financial accounting, reporting standards and due diligence. |
|
(3) |
“Tax
fees” include fees for professional services rendered by our independent registered public accounting firm for tax compliance, transfer
pricing and tax advice on actual or contemplated transactions. |
|
(4) |
“All
other fees” include fees for services rendered by our independent registered public accounting firm with respect to government incentives
and other matters. |
Audit
Committee’s Pre-Approval Policies and Procedures
The
audit committee has adopted a pre-approval policy for the engagement of our independent accountant to perform certain audit and non-audit
services. Pursuant to this policy, which is designed to ensure that such engagements do not impair the independence of our auditors, the
audit committee pre-approves annually a catalog of specific audit and non-audit services in the categories of audit service, audit-related
service and tax services that may be performed by our independent accountants.
All
engagements by us of the auditors for 2024 and 2025 were pre-approved by the audit committee.
117
PART
IV
ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)(1)
Financial Statements.
The
Consolidated Financial Statements filed as part of this annual report are identified in the Index to Consolidated Financial Statements
on page F-1 hereto.
(a)(2)
Financial Statement Schedules.
Financial
Statement Schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
(a)(3)
Exhibits.
The
exhibits listed in the Exhibit Index are filed, furnished, or incorporated by reference in this report.
118
EXHIBIT INDEX
119
120
|
101.INS |
XBRL Instance Document. |
|
101.SCH |
XBRL Taxonomy Extension
Schema Document. |
|
101.PRE |
XBRL Taxonomy Presentation
Linkbase Document. |
|
101.CAL |
XBRL Taxonomy Calculation
Linkbase Document. |
|
101.LAB |
XBRL Taxonomy Label Linkbase
Document. |
|
101.DEF |
XBRL Taxonomy Extension
Definition Linkbase Document. |
|
104 |
Cover Page Interactive
Data File (formatted as inline XBRL and contained in Exhibit 101) |
|
+ |
Schedules have been omitted
pursuant to Item 601(b)(2) of Regulation S-K. |
|
* |
Certain identified information
in the exhibit has been omitted because it is the type of information that (i) the Company customarily and actually treats as private
and confidential, and (ii) is not material. |
|
** |
Management contract or
compensatory plan, contract or arrangement. |
|
*** |
Furnished
herewith. |
ITEM
16. FORM 10-K SUMMARY
Not
applicable.
121
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
|
|
Lifeward
Ltd. | |
|
|
|
|
|
|
By: |
/s/ Mark Grant |
|
|
|
Name: Mark Grant |
|
|
|
Title: Chief Executive
Officer |
Date: March 18, 2026
122
POWER
OF ATTORNEY
KNOW
ALL PERSONS BY THESE PRESENT: That the undersigned officers and directors of Lifeward Ltd. do hereby constitute and appoint Mark Grant
and Almog Adar the lawful attorney and agent with power and authority to do any and all acts and things and to execute any and all instruments
which said attorney and agent determines may be necessary or advisable or required to enable Lifeward Ltd. to comply with the Securities
and Exchange Act of 1934, as amended, and any rules or regulations or requirements of the Securities and Exchange Commission in connection
with this report. Without limiting the generality of the foregoing power and authority, the powers granted include the power and authority
to sign the names of the undersigned officers and directors in the capacities indicated below to this report or amendments or supplements
thereto, and each of the undersigned hereby ratifies and confirms all that said attorneys and agents, or either of them, shall do or cause
to be done by virtue hereof. This Power of Attorney may be signed in several counterparts.
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
|
Signature |
|
Title |
|
Date |
|
|
|
|
|
|
|
/s/ Mark Grant |
|
Director, President and
Chief Executive Officer |
|
March
18, 2026 |
|
Mark Grant |
|
(Principal Executive
Officer) |
|
|
|
|
|
|
|
|
|
/s/ Almog Adar |
|
Chief Financial Officer |
|
March
18, 2026 |
|
Almog Adar |
|
(Principal Financial
and Accounting Officer) |
|
|
|
|
|
|
|
|
|
/s/ Robert Marshall |
|
Chairman of the Board |
|
March
18, 2026 |
|
Robert Marshall |
|
|
|
|
|
|
|
|
|
|
|
/s/ Dr. John William
Poduska |
|
Director |
|
March
18, 2026 |
|
Dr. John William Poduska |
|
|
|
|
|
|
|
|
|
|
|
/s/ Randel Richner |
|
Director |
|
March
18, 2026 |
|
Randel Richner |
|
|
|
|
|
|
|
|
|
|
|
/s/ Michael Swinford |
|
Director |
|
March
18, 2026 |
Michael Swinford
123
PART
IV
LIFEWARD
LTD
CONSOLIDATED
FINANCIAL STATEMENTS
U.S.
DOLLARS IN THOUSANDS
INDEX
|
|
Page
|
|
F -
2 | |
|
(PCAOB
ID:
|
|
|
F -
4 | |
|
F -
6 | |
|
F -
7 | |
|
F -
8 | |
|
F -10
|
|
|
Kost
Forer Gabbay & Kasierer
Menachem Begin 144,
Tel-Aviv 6492102, Israel
|
Tel: +972-3-6232525
Fax: +972-2-5622555
ey.com
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Shareholders and the Board of Directors of
LIFEWARD
LTD.
Opinion
on the Financial Statements
We
have audited the accompanying consolidated balance sheets of Lifeward Ltd. and subsidiaries (the Company) as of December 31, 2025 and
2024, the related consolidated statements of operations, changes is shareholders’ equity and cash flows for each of the three years
in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company
at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December
31, 2025, in conformity with U.S. generally accepted accounting principles.
The
Company's Ability to Continue as a Going Concern
The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed
in Note 1e to the financial statements, the Company has suffered recurring losses from operations, has negative cash flows from operating
activities, and has stated that substantial doubt exists about the Company’s ability to continue as a going concern. Management's
evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 1e. The consolidated
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis
for Opinion
These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits
we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide
a reasonable basis for our opinion.
Critical
Audit Matters
The
critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated
or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial
statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters
does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the
critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they
relate.
F
- 2
|
|
Revenue
recognition |
|
|
|
|
Description
of the Matter |
As
described in Note 2 of the consolidated financial statements, the Company recognizes revenues from the sale of its products at a point
in time based on the consideration to which the company is entitled to in exchange for sales of its products.
The
Company estimates the amount of variable consideration that is included in the transaction price mainly by estimating claims reimbursement
by the Centers for Medicare & Medicaid Services (CMS), which is based primarily on actual historical collection experience from CMS.
Auditing
the Company’s measurement of variable consideration involved challenging judgment because the calculation includes uncertainty and
subjective management assumptions that were required to evaluate the transaction price adjustments. |
|
|
|
|
How
We Addressed the
Matter
in Our Audit |
To
test the estimate of variable consideration, our audit procedures included, evaluating the methodology used and testing the underlying
data used by management in its analysis, performing independent recalculation of management's estimate and evaluating the historical accuracy
by comparing such estimates to subsequent actual results. We assessed the historical accuracy of management’s estimate and performed
sensitivity analyses to evaluate the changes in variable consideration that would result from changes in the expected collection rates
used and the corresponding effect on revenues. |
|
|
Goodwill
Impairment |
|
|
|
|
Description
of the Matter |
As
discussed in Note 2 to the consolidated financial statements, goodwill is tested by the Company’s management for impairment at the
reporting unit level at least annually, unless there are indications of impairment at other points throughout the year. During the year
ended December 31, 2025, the Company recorded goodwill impairment charges of $2.8 million as it was determined that the fair value of
its reporting unit was less than its carrying value.
As
of December 31, 2025, the goodwill balance was $4.7 million.
We
identified the valuation of goodwill for the Company’s reporting unit as a critical audit matter because of the significant judgments
made by management to estimate the fair value of the reporting unit. This required a high degree of auditor judgment and an increased
extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness
of management’s judgments and estimates related to the estimated control premium. |
|
|
|
|
How
We Addressed the
Matter
in Our Audit |
To
test the fair value of the reporting unit, our audit procedures included, among other, testing the completeness and accuracy of underlying
data used in the estimate of the control premium; and evaluating the significant assumptions used by management in developing the control
premium estimate. With the assistance of our fair value specialists, we evaluated the reasonableness of the Company’s control premium
by comparing it to data from publicly available premium studies for public company transactions. |
/S/
KOST FORER GABBAY & KASIERER
A
Member of EY Global
We
have served as the Company’s auditor since 2014.
March
18, 2026
F
- 3
LIFEWARD
LTD. AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
U.S.
dollars in thousands
|
|
December
31, |
|||||||
|
|
2025
|
2024
|
||||||
|
ASSETS
|
||||||||
|
CURRENT ASSETS:
|
||||||||
|
Cash and cash equivalents
|
$
|
|
$
|
|
||||
|
Restricted cash
|
|
|
||||||
|
Trade receivables, net
of credit losses of $ |
|
|
||||||
|
Prepaid expenses and
other current assets |
|
|
||||||
|
Inventories
|
|
|
||||||
|
Total current assets
|
|
|
||||||
|
LONG-TERM ASSETS
|
||||||||
|
Restricted cash and other
long-term assets |
|
|
||||||
|
Operating lease right-of-use
assets |
|
|
||||||
|
Property and equipment,
net |
|
|
||||||
|
Goodwill
|
|
|
||||||
|
Total long-term assets
|
|
|
||||||
|
Total assets
|
$
|
|
$
|
|
||||
The
accompanying notes are an integral part of these consolidated financial statements.
F
- 4
LIFEWARD
LTD. AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
U.S.
dollars in thousands (except share and per share data)
|
|
December
31, |
|||||||
|
|
2025
|
2024
|
||||||
|
LIABILITIES AND SHAREHOLDERS’
EQUITY |
||||||||
|
CURRENT LIABILITIES:
|
||||||||
|
Trade payables
|
$
|
|
$
|
|
||||
|
Employees and payroll
accruals |
|
|
||||||
|
Deferred revenue
|
|
|
||||||
|
Convertible promissory
notes |
|
|
||||||
|
Current maturities of
operating leases liability |
|
|
||||||
|
Earnout liability
|
|
|
||||||
|
Other current liabilities
|
|
|
||||||
|
Total current liabilities
|
|
|
||||||
|
LONG-TERM LIABILITIES
|
||||||||
|
Deferred revenues
|
|
|
||||||
|
Non-current operating
leases liability |
|
|
||||||
|
Other long-term liabilities
|
|
|
||||||
|
Total long-term liabilities
|
|
|
||||||
|
Total liabilities
|
|
|
||||||
|
COMMITMENTS AND CONTINGENT
LIABILITIES |
||||||||
|
Shareholders’ equity:
|
||||||||
|
Ordinary
share of NIS |
|
|
||||||
|
Additional paid-in capital
|
|
|
||||||
|
Treasury
Shares at cost, |
(
|
)
|
(
|
)
| ||||
|
Accumulated deficit
|
(
|
)
|
(
|
)
| ||||
|
Total shareholders’
equity |
|
|
||||||
|
Total liabilities and
shareholders’ equity |
$
|
|
$
|
|
||||
The
accompanying notes are an integral part of these consolidated financial statements.
(1)
Reflects the one-for-seven reverse share split that became effective on March 15, 2024, and the one-for-twelve reverse share split that
became effective on February 24, 2026. See Note 8a to the consolidated financial statements.
F
- 5
LIFEWARD
LTD. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
U.S.
dollars in thousands (except share and per share data)
|
|
Year
ended December 31, |
|||||||||||
|
|
2025
|
2024
|
2023
|
|||||||||
|
Revenue
|
$
|
|
$
|
|
$
|
|
||||||
|
Cost
of revenue |
|
|
|
|||||||||
|
Gross
profit |
|
|
|
|||||||||
|
Operating
expenses: |
||||||||||||
|
Research
and development, net |
|
|
|
|||||||||
|
Sales
and marketing |
|
|
|
|||||||||
|
General
and administrative |
|
|
|
|||||||||
|
Impairment
charges |
|
|
|
|||||||||
|
Total
operating expenses |
|
|
|
|||||||||
|
Operating
loss |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Financial
(expense) income, net |
(
|
)
|
|
|
||||||||
|
Loss
before income taxes |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Taxes
on income (benefit) |
(
|
)
|
|
(
|
)
| |||||||
|
Net
loss |
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| |||
|
Net
loss per ordinary share, basic and diluted |
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| |||
|
Weighted
average number of shares used in computing net loss per ordinary share, basic and diluted (1) |
|
|
|
|||||||||
The
accompanying notes are an integral part of these consolidated financial statements.
(1)
Reflects the one-for-seven reverse share split that became effective on March 15, 2024, and the one-for-twelve reverse share split that
became effective on February 24, 2026. See Note 8a to the consolidated financial statements.
F
- 6
LIFEWARD
LTD. AND SUBSIDIARIES
STATEMENTS
OF CHANGES IN SHAREHOLDERS’ EQUITY
U.S.
dollars in thousands (except share data)
|
|
Ordinary
Share |
Additional
paid-in
|
Treasury
|
Accumulated
|
Total
shareholders’
|
|||||||||||||||||||
|
|
Number
(1) |
Amount
|
capital
|
Shares
|
deficit
|
equity
|
||||||||||||||||||
|
Balance
as of December 31, 2022 |
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
|||||||||||
|
Share-based
compensation to employees and non-employees |
‐
|
|
|
|
|
|
||||||||||||||||||
|
Issuance
of ordinary shares upon vesting of RSUs by employees and non-employees |
|
|
(
|
)
|
|
|
|
|||||||||||||||||
|
Treasury
shares at cost |
(
|
)
|
(
|
)
|
|
(
|
)
|
|
(
|
)
| ||||||||||||||
|
Net
loss |
‐
|
|
|
|
(
|
)
|
(
|
)
| ||||||||||||||||
|
Balance
as of December 31, 2023 |
|
|
|
(
|
)
|
(
|
)
|
|
||||||||||||||||
|
Share-based
compensation to employees and non-employees |
‐
|
|
|
|
|
|
||||||||||||||||||
|
Issuance
of ordinary shares upon vesting of RSUs by employees and non-employees |
|
|
(
|
)
|
|
|
|
|||||||||||||||||
|
Net
loss |
‐
|
|
|
|
(
|
)
|
(
|
)
| ||||||||||||||||
|
Balance
as of December 31, 2024 |
|
|
|
(
|
)
|
(
|
)
|
|
||||||||||||||||
|
Share-based
compensation to employees and non-employees |
-
|
|
|
|
|
|
||||||||||||||||||
|
Issuance
of ordinary shares upon vesting of RSUs by employees and non-employees |
|
|
(
|
)
|
|
|
|
|||||||||||||||||
|
Issuance
of ordinary shares under at-the-market offering, net of issuance costs of $ |
|
|
|
|
|
|
||||||||||||||||||
|
Issuance
of ordinary shares in a in a public offering, net of issuance expenses in the amount of $ |
|
|
(
|
)
|
|
|
|
|||||||||||||||||
|
Issuance
of ordinary shares in a Registered Direct offering, net of issuance expenses in the amount of $ |
|
|
|
|
|
|
||||||||||||||||||
|
Net
loss |
‐
|
- |
|
|
(
|
)
|
(
|
)
| ||||||||||||||||
|
Balance
as of December 31, 2025 |
|
|
|
(
|
)
|
(
|
)
|
|
||||||||||||||||
(1)
Reflects the one-for-seven reverse share split that became effective on March 15, 2024, and the one-for-twelve reverse share split that
became effective on February 24, 2026. See Note 8a to the consolidated financial statements.
(2)
See Note 8b to the condensed consolidated financial statements.
The
accompanying notes are an integral part of these consolidated financial statements.
F
- 7
LIFEWARD
LTD. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
U.S.
dollars in thousands
|
|
Year
ended December 31, |
|||||||||||
|
|
2025
|
2024
|
2023
|
|||||||||
|
Cash
flows used in operating activities: |
||||||||||||
|
Net
loss |
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| |||
|
Adjustments
to reconcile net loss to net cash used in operating activities: |
||||||||||||
|
Depreciation
|
|
|
|
|||||||||
|
Amortization
of intangible assets |
|
|
|
|||||||||
|
Impairment of intangible
and tangible assets |
|
|
|
|||||||||
|
Share-based
compensation |
|
|
|
|||||||||
|
Remeasurement
of earnout liability |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Accrued
interest |
|
|
(
|
)
| ||||||||
|
Change
in fair value of derivative liability |
(
|
)
|
|
|
||||||||
|
Exchange
rate fluctuations |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Changes
in assets and liabilities: |
||||||||||||
|
Trade
receivables, net |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Prepaid
expenses and other assets |
|
|
(
|
)
| ||||||||
|
Operating
lease right-of-use assets |
|
|
|
|||||||||
|
Inventories
|
|
(
|
)
|
(
|
)
| |||||||
|
Trade
payables |
(
|
)
|
(
|
)
|
|
|||||||
|
Employees
and payroll accruals |
|
(
|
)
|
(
|
)
| |||||||
|
Deferred
revenues |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Operating
lease liabilities |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Other
liabilities |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Net
cash used in operating activities |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Cash
flows used in investing activities: |
||||||||||||
|
Acquisition
of a business, net of cash acquired |
|
|
(
|
)
| ||||||||
|
Purchase
of property and equipment |
(
|
)
|
|
(
|
)
| |||||||
|
Net
cash used in investing activities |
(
|
)
|
|
(
|
)
| |||||||
|
Cash
flows used in financing activities: |
||||||||||||
|
Issuance
of ordinary shares in a Registered Direct offering, net of issuance expenses in the amount of $ |
|
|
|
|||||||||
|
Issuance
of ordinary shares under at-the-market offering, net of issuance costs of $ |
|
|
|
|||||||||
|
Issuance
of ordinary shares in a public offering, net of issuance expenses in the amount of $ |
|
|
|
|||||||||
|
Purchase
of treasury shares |
|
|
(
|
)
| ||||||||
|
Proceeds
from short term loan |
|
|
|
|||||||||
|
Proceeds
from bifurcated embedded derivatives |
|
|
|
|||||||||
|
Net cash provided by (used in) financing activities |
|
|
(
|
)
| ||||||||
|
Effect
of Exchange rate changes on Cash, Cash Equivalents and Restricted Cash |
|
|
|
|||||||||
|
Decrease
in cash, cash equivalents, and restricted cash |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Cash,
cash equivalents, and restricted cash at beginning of period |
|
|
|
|||||||||
|
Cash,
cash equivalents, and restricted cash at end of period |
$
|
|
$
|
|
$
|
|
||||||
(1)
See Note 8b to the condensed consolidated financial statements.
The
accompanying notes are an integral part of these consolidated financial statements.
F
- 8
LIFEWARD
LTD. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
U.S.
dollars in thousands
|
|
Year
ended December 31, |
|||||||||||
|
|
2025
|
2024
|
2023
|
|||||||||
|
|
||||||||||||
|
Supplemental
disclosures of non-cash flow information |
||||||||||||
|
Classification
of inventory to property and equipment, net |
$
|
|
$
|
|
$
|
|
||||||
|
Expenses
related to offerings not yet paid (1) |
$
|
|
$
|
|
$
|
|
||||||
|
ROU
assets obtained from lease liabilities |
$
|
|
$
|
|
$
|
|
||||||
|
Supplemental
disclosures of cash flow information: |
||||||||||||
|
Cash
paid (received) for income taxes |
$
|
|
$
|
(
|
)
|
$
|
|
|||||
|
Cash
received from interest |
$
|
|
$
|
|
|
|||||||
|
Reconciliation
of cash, cash equivalents and restricted cash as shown in the consolidated statements of cash flows |
||||||||||||
|
Cash
and cash equivalents |
$
|
|
$
|
|
$
|
|
||||||
|
Restricted
cash |
$
|
|
$
|
|
$
|
|
||||||
|
Total
Cash, cash equivalents, and restricted cash |
$
|
|
$
|
|
$
|
|
||||||
|
(1) See Note 8b to the condensed consolidated
financial statements |
The
accompanying notes are an integral part of these consolidated financial statements.
F
- 9
LIFEWARD
LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
U.S. dollars in thousands
NOTE
1:- GENERAL
| 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.
|
| 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. |
| 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. In
the past, the Company developed the ReStore Exo-Suit device (“ReStore”), a powered, lightweight soft exo-suit intended for
use during the rehabilitation of individuals with lower limb disabilities due to stroke. The Company is no longer actively commercializing
the ReStore product. The Company distributes the MYOLYN MyoCycle FES Pro cycles to U.S. rehabilitation clinics and the MyoCycle Home
cycles available to U.S. veterans through VA hospitals on a non-exclusive basis.
In
August 2023, the Company acquired AlterG, Inc., a provider of anti-gravity systems. AlterG’s systems utilize patented, NASA-derived
Differential Air Pressure (“DAP”) technology designed to reduce the effects of gravity and enable patients to rehabilitate
with calibrated support and reduced pain. Following the Company’s rebranding, AlterG, Inc. was renamed LCAI and operates as a wholly
owned subsidiary of the Company.
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, individuals and organizations in the spinal
cord injury community, and in its indirect markets, the Company’s distributors maintain these relationships.
F - 10
| d. |
Beginning
in the second quarter of 2025, the Company transitioned the manufacturing of its ReWalk exoskeleton products to its facility in Yokneam,
Israel, where the Company currently manufactures these systems. |
The
Company depends on one contract manufacturer to manufacture the AlterG products in its portfolio, Cirtronics Corporation. Reliance on
this vendor makes the Company vulnerable to possible capacity constraints and reduces control over component availability, delivery schedules,
manufacturing yields and costs.
| e. |
As
of December 31, 2025, the Company incurred a consolidated net loss of $ |
The
Company expects to continue to generate operating losses and negative operating cash flows in the foreseeable future and will require
additional funding to support its planned operations. These conditions raise substantial doubt about the Company’s ability to continue
as a going concern for a period of one year from the date that these consolidated financial statements are issued.
Management
intends to raise additional capital through one or more financings in the near term in order to meet the Company’s cash requirements
for the next 12 months. As described in Note 15 – Subsequent Events, in January 2026 the Company entered into agreements with Oramed
Pharmaceuticals, Inc. and its subsidiary Oratech Pharma, Inc. which include a potential strategic transaction and related financing arrangements.
On March 12, 2026, the Company’s shareholders approved the transaction. However, the closing of the transaction remains subject
to the satisfaction of customary closing conditions, and there can be no assurance that the transaction will be completed or that the
Company will receive the anticipated funding. If completed, the transaction is expected to provide the Company with additional liquidity
to support its operations.
If
the Company is unable to obtain additional capital, management may implement measures intended to manage cash expenditures and preserve
liquidity. These measures may include prioritizing research and development activities, delaying certain product development initiatives,
and reducing discretionary operating expenses such as marketing, travel and other non-essential costs.
Accordingly,
the Company has concluded that substantial doubt exists about its ability to continue as a going concern for a period of at least 12 months
from the date of issuance of these consolidated financial statements.
The
consolidated financial statements do not include any adjustments to the carrying amounts and classifications of assets and liabilities
that might result should the Company be unable to continue as a going concern. Such adjustments could be material.
NOTE
2:- SIGNIFICANT ACCOUNTING POLICIES
The
consolidated financial statements have been prepared in with U.S. generally accepted accounting principles, applied on a consistent basis,
as follows:
|
a.
|
Use
of Estimates |
The
preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments, and
assumptions. The Company’s management believes that the estimates, judgments, and assumptions used are reasonable based upon information
available at the time they are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenue
and expenses during the reporting period. Actual results could differ from those estimates.
On
an ongoing basis, the Company’s management evaluates estimates, including those related to inventories, fair values of share-based
awards, derivatives, contingent liabilities, goodwill impairment, provision for warranty, allowance for credit losses, revenue recognition,
and deferred taxes. Such estimates are based on historical experience and on various other assumptions that are believed to be reasonable,
the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ
from those estimates.
F - 11
| b. |
Financial Statements in
U.S. Dollars: |
The
functional currency is the currency that best reflects the economic environment in which the Company and its subsidiaries operate and
conduct their transactions. Most of the Company’s revenues and costs are incurred in U.S. dollar. In addition, the Company’s
financing activities are incurred in U.S. dollars. The Company’s management believes that the dollar is the primary currency of
the economic environment in which the Company and each of its subsidiaries operate. Thus, the dollar is the Company’s and its subsidiary's
functional and reporting currency.
Accordingly,
monetary accounts maintained in currencies other than the U.S. dollar are remeasured into U.S. dollars in accordance with ASC 830 “Foreign
Currency Matters.” All transaction gains and losses of the remeasured monetary balance sheet items are reflected in the consolidated
statements of operations as financing income or expenses as appropriate.
| c. |
Principles of Consolidation:
|
The
consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany balances have been
eliminated upon consolidation.
| d. |
Cash Equivalents:
|
Cash
equivalents are short-term highly liquid investments that are readily convertible to cash with original maturities of three months or
less, at the date acquired.
| e. |
Inventories:
|
Inventories
are stated at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of
business, less reasonably predictable costs of completion, disposal, and transportation. Inventory write-offs are provided to cover risks
arising from slow-moving items or technological obsolescence.
The
Company periodically evaluates the ability to realize the value of inventory based on a combination of factors, including the quantities
on hand relative to historical, current, and projected sales volume. Purchasing requirements and alternative usage are explored within
these processes to mitigate inventory exposure. Based on this evaluation, an impairment charge is recorded when required to write-down
inventory to its net realized value. Any write-off is recognized in the consolidated statements of operations as cost of revenues.
Cost
is determined as follows:
Finished
products - based on raw materials and manufacturing costs on an average basis.
Work
in process - based on raw materials, labor, and applicable manufacturing overhead on an average cost basis.
Raw
materials - The weighted average cost method.
F - 12
| f. |
Property and Equipment:
|
Property
and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the
estimated useful lives of the assets at the following annual rates:
|
|
Percentage
of Original Cost |
||
|
Computer equipment
|
|
||
|
Office furniture and
equipment |
|
||
|
Machinery and laboratory
equipment |
|
||
|
Field service units
|
|
||
|
Leasehold improvements
|
|
| g. |
Business Combinations
|
The
Company accounts for business combinations in accordance with ASC 805, “Business Combinations” (“ASC 805”). For
business combinations accounted for under the acquisition method, ASC 805 requires recognition of assets acquired, liabilities assumed,
and any non-controlling interest at the acquisition date, measured at their fair values as of that date. The Company determines the recognition
of intangible assets based on the following criteria: (i) the intangible asset arises from contractual or other rights; or (ii) the intangible
asset is separable or divisible from the acquired entity and capable of being sold, transferred, licensed, returned or exchanged.
The
excess of the fair value of the purchase price over the fair values of the identifiable assets and liabilities is recorded as goodwill.
Determining the fair value of the identifiable assets and liabilities requires management to use significant judgment and estimates including
the forecasted revenue and revenues growth rates, discount rates, customer contract renewal rates and customer attrition rates. The process
of estimating the fair values requires significant estimates, especially with respect to intangible assets. Management’s determination
of fair value of assets acquired and liabilities assumed at the acquisition date is based on the best information available in the circumstances
and incorporates management’s own assumptions and involves a significant degree of judgment.
Acquisition
related costs include legal fees, consulting and success fees, and other non-recurring integration related costs. Acquisition-related
costs are expensed as incurred.
| h. |
Goodwill
and Other Intangibles |
For
business combinations, the purchase prices are allocated to the tangible assets and intangible assets acquired and liabilities assumed
based on their estimated fair values on the acquisition dates, with the remaining unallocated purchase prices recorded as goodwill.
The
Company has no indefinite-lived intangible assets other than goodwill. Acquired identifiable finite-lived intangible assets include identifiable
acquired technology, customer relationships, trademarks and backlog and are amortized on a straight-line basis over the estimated useful
lives of the assets. The Company routinely reviews the remaining estimated useful lives of finite-lived intangible assets.
Goodwill
is not amortized and is tested for impairment at least annually.
The
Company operates as one reporting unit and the fair value of the reporting unit is estimated using quoted market prices of the Company’s
stock in active markets. The Company tests goodwill for impairment annually in the fourth quarter and whenever events or changes in circumstances
indicate the carrying amount of goodwill may not be recoverable.
When
testing goodwill for impairment, the Company may first perform a qualitative assessment. If the Company determines it is not more likely
than not the reporting unit’s fair value is less than its carrying value, then no further analysis is necessary. If the Company
determines that it is more likely than not that the fair value of its reporting unit is less than its carrying amount, then the quantitative
impairment test will be performed. The Company may elect to bypass the qualitative assessment and proceed directly to performing a quantitative
analysis. Under the quantitative impairment test, if the carrying amount of the Company’s reporting unit exceeds its fair value,
the Company recognizes an impairment of goodwill for the amount of this excess.
As
a result of this assessment, the Company recorded a goodwill impairment of $2.8
million during the year ended December 31, 2025. During the year ended December 31, 2024, no impairments of goodwill have been recognized.
F - 13
| i. |
Impairment of Long-Lived
Assets |
The
Company’s long-lived assets, including right-of-use (“ROU”) assets and identifiable intangible assets that are subject
to amortization, are reviewed for impairment in accordance with ASC 360, “Property, Plant and Equipment” whenever events or
changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable. Recoverability of assets
(or asset group) to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows
expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceeds the fair value of the assets. There were no impairment charges to long-lived
assets during the year ended December 31, 2025.
During
the year ended December 31, 2024, the Company recorded an impairment charge in the amount of $9.8
million
| j. |
Restricted
cash and Other long-term assets: |
Other
long-term assets include long-term prepaid expenses and restricted cash deposits for offices and cars leasing based upon the term of the
remaining restrictions.
F - 14
| k. |
Treasury shares
|
The
Company repurchased its ordinary shares and holds them as treasury shares. The Company presents the cost to repurchase treasury shares
as a reduction of shareholders’ equity.
| l. |
Revenue Recognition:
|
The
Company generates revenues from sales of products. The Company sells its products directly to end customers and through distributors.
The Company sells its products to clinics and rehabilitation centres, professional and college sports teams, private individuals (who
finance the purchases by themselves, through fundraising or reimbursement coverage from insurance companies), and distributors.
The
Company recognizes revenue in accordance with ASC 606, “Revenue Recognition” when, or as, control of the promised good or
service is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange
for those goods or services. The Company applies the following five steps:
| 1. |
Identify the contract
with a customer |
The
Company generally considers a purchase order or a signed quote to be a contract with a customer. In evaluating the contract with a customer,
the Company analyses the customer’s intent and ability to pay the amount of promised consideration and considers the probability
of collecting substantially all of the consideration.
| 2. |
Identify the performance
obligations in the contract |
Performance
obligations promised in a contract are identified based on the products and services that will be transferred to the customer that are
both capable of being distinct, whereby the customer can benefit from the products or services either on their own or together with other
resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby
the transfer of the products and services is separately identifiable from other promises in the contract.
| 3. |
Determine the transaction
price |
The
transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring products
or services to the customer. Determining the transaction price requires of level judgment, which is discussed by revenue category in further
detail below.
The
Company does not offer extended payment terms beyond one year to customers and has chosen to apply the practical expedient, opting not
to evaluate payment terms of one year or less for the existence of a significant financing component.
Sales
and other taxes collected from customers on behalf of governmental authorities are accounted for on a net basis and are not included in
revenues.
| 4. |
Allocate the transaction
price to performance obligations in the contract |
If
the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation.
Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation
based on a relative standalone selling price basis. Certain arrangements with customers contain multiple distinct performance obligations.
For these arrangements, the Company allocates the transaction price to each performance obligation based on its relative standalone selling
price (SSP). The Company generally establishes SSPs based on observable selling prices.
| 5. |
Recognize revenue when
or as the Company satisfies a performance obligation |
Revenue
is recognized when or as performance obligations are satisfied by transferring control of a promised good or service to a customer. Control
either transfers over time or at a point in time, which affects when revenue is recorded.
F - 15
Disaggregation
of Revenue (in thousands):
|
|
Year
Ended December 31, |
|||||||||||
|
|
2025
|
2024
|
2023
|
|||||||||
|
Sale of product
|
$
|
|
$
|
|
$
|
|
||||||
|
Lease of products
|
|
|
|
|||||||||
|
Service and warranty
|
|
|
|
|||||||||
|
Total Revenues
|
$
|
|
$
|
|
$
|
|
||||||
Product
revenue
The
Company offered to its customers five products: (1) ReWalk Personal, (2) ReWalk Rehabilitation, (3) AlterG Anti-Gravity system, (4) MyoCycle,
and (5) ReStore.
Revenue
from Products sold to rehabilitation facilities and end users is recognized at a point in time once the customer has obtained control
of the products usually upon delivery.
The
Company generally does not grant a right of return for its products.
With
the recent establishment of a Medicare reimbursement pathway for the ReWalk product, the Company includes variable consideration in the
form of implicit price concessions if, 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.
For
contracts with Medicare, the Company determines the amount of variable consideration that should be included at the transaction price,
using contractual agreements and historical reimbursement experience with Medicare. The Company applies constraint to the transaction
price, such that revenue is recorded only to the extent that it is probable that a significant reversal in the amount of the cumulative
revenue recognized will not occur in the future. If actual amounts of consideration ultimately received differ from the Company’s
estimates, the Company adjusts these estimates, which would affect revenue in the period such adjustments become known.
Payment
terms between the Company and its payors typically range between 30 to 45 days, depending on the type of payer, country of sale, and the
products or services offered. However, for CMS, payments may take up to twelve months.
Lease
revenue
A
portion of the Company's sales of products to customers are made through lease arrangements which typically include AlterG Anti-Gravity
systems.
Revenue
for the lease of AlterG Anti-Gravity systems is accounted for under ASC Topic 842, Leases. AlterG Anti-Gravity systems being utilized
under service agreements, accounted for in accordance with ASC 842 as an operating lease. Revenues are recognized ratably over the lease
term. See Note 2y for more additional information.
Service
and warranties
The
Company provides product assurance warranties for periods of 1 -
10
years (usually 2
years) that cover the compliance of the products with agreed-upon specifications. A provision is recorded for estimated warranty costs
based on the Company's experience.
A
warranty is considered an assurance type warranty if it provides the customer with assurance that the product will function as intended
for a limited period of time. An assurance type warranty is not accounted for as a separate performance obligation under the revenue model.
In
certain contracts, the company also provides a service-type warranty. Service-type warranty is accounted for as a separate performance
obligation, and revenue is recognized ratably over the service period as the customer consumes the benefit over the service term.
F - 16
Contract
balances (in thousands):
|
|
December 31,
|
December 31,
|
||||||
|
|
2025
|
2024
|
||||||
|
Trade receivable, net
of credit losses |
$
|
|
$
|
|
||||
|
Deferred revenues (1)
|
$
|
|
$
|
|
||||
| (1) |
$
|
Deferred
revenue is composed primarily of unearned revenue related to service type warranty obligations, multi-year services contracts, as well
as other advances and payments which the Company received from customers prior to satisfying the performance obligation, for which revenue
has not yet been recognized.
The
Company's unearned performance obligations as of December 31, 2025 and
the estimated revenue expected to be recognized in the future amounts to $2.3 million, which will be fulfilled over one to five years.
| m. |
Accounting for Share-Based
Compensation: |
The
Company accounts for share-based compensation in accordance with ASC 718, “Compensation-Stock Compensation” (“ASC 718”).
ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date of grant using an Option-Pricing Model
(“OPM”). The value of the award is recognized as an expense over the requisite service periods in the Company’s consolidated
statements of operations.
The
Company recognizes compensation expenses for the value of its awards granted based on the straight-line method over the requisite service
period of each of the awards. The Company accounts for forfeitures as they occur.
The
Company selected the Black-Scholes-Merton option pricing model as the most appropriate fair value method for its share-option awards.
The option-pricing model requires a number of assumptions, of which the most significant are the fair market value of the underlying ordinary
share, expected share price volatility and the expected option term. Expected volatility is calculated based on actual historical stock
price movements over the most recent periods ending on the grant date, equal to the expected term of the options. The expected option
term is determined based on the simplified method, as adequate historical experience is not available to provide a reasonable estimate.
The simplified method will continue to apply until enough historical experience is available to provide a reasonable estimate of the expected
term. The risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term. The Company has historically
not paid dividends and has no foreseeable plans to pay dividends.
The
fair value of Restricted Stock Units (“RSUs”) granted is determined based on the price of the Company’s ordinary shares
on the date of grant.
The
Company elects the straight-line recognition method for awards subject to graded vesting based only on a service condition
The
Company accounts for options granted to consultants and other service providers under ASC 718. The fair value of these options was estimated
using a Black-Scholes-Merton option-pricing model.
F - 17
| n. |
Warrants to Acquire Ordinary
Shares: |
During
the twelve-month ended December 31, 2025, the Company issued warrants to acquire up to 513,930
ordinary shares. There were no issued warrants during the twelve months ended December 31, 2024. Refer to Note 8f for additional information.
The
Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s
specific terms and applicable authoritative guidance. The assessment considers whether the warrants are freestanding financial instruments,
meet the definition of a liability under ASC 480, are indexed to the Company’s own shares and whether the warrants are eligible
for equity classification under ASC 815-40. This assessment is conducted at the time of warrant issuance and as of each subsequent reporting
period end date while the warrants are outstanding.
Warrants
that meet all the criteria for equity classification, are required to be recorded as a component of additional paid-in capital. Warrants
that do not meet all the criteria for equity classification, are required to be recorded as liabilities at their initial fair value on
the date of issuance and remeasured to fair value through earnings at each balance sheet date thereafter.
| o. |
Research and Development
Costs: |
Research
and development costs are charged to the consolidated statement of operations as incurred and are presented net of the amount of any grants
the Company received for research and development in the period in which the grant was received.
| p. |
Income Taxes
|
The
Company accounts for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”), using the liability
method whereby deferred tax assets and liability account balances are determined based on the differences between financial reporting
and the tax basis for assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences
are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to the amounts that are
more likely-than-not to be realized.
ASC
740 contains a two-step approach to recognizing and measuring a liability for uncertain tax positions. The first step is to evaluate the
tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more
likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any
related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely
to be realized upon ultimate settlement. The Company accrues interest and penalties related to unrecognized tax benefits in its taxes
on income.
As of
December 31, 2025, and 2024, the Company did not identify any significant uncertain tax positions.
| q. |
Warranty
provision: |
For
assurance-type warranty, the Company records a provision for the estimated cost to repair or replace products under warranty at the time
of sale. Factors that affect the Company’s warranty reserve include the number of units sold, historical and anticipated rates of
warranty repairs and the cost per repair.
|
|
US
Dollars
in
thousands
|
|||
|
Balance
at December 31, 2024 |
$
|
|
||
|
Provision
|
|
|||
|
Usage
|
(
|
)
| ||
|
Balance
at December 31, 2025 |
$
|
|
||
F - 18
| r. |
Concentrations of Credit
Risks: |
Financial
instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents and trade
receivables.
The
Company’s cash and cash equivalents are deposited in major banks in Israel, the United States and Germany. Such deposits in the
United States may be in excess of insured limits and are not insured in other jurisdictions. The Company maintains cash and cash equivalents
with diverse financial institutions and monitors the amount of credit exposure to each financial institution. The bank deposits are held
in financial institutions which management believes are institutions with high credit standing, and accordingly, minimal credit risk from
geographic or credit concentration exists with respect to these deposits.
The
below table reflects the concentration of credit risk for the Company’s current customers as of December 31, 2025 and 2024, to which
substantial sales were made.
Concentration
of credit risk with respect to trade receivable is primarily limited to a customer to which the Company makes substantial sales.
|
|
December
31, |
|||||||
|
|
2025
|
2024
|
||||||
|
Customer A
|
|
%
|
|
%
| ||||
The
allowance for credit losses is based on the Company's assessments of the collectability of accounts. The Company regularly reviews the
adequacy of the allowance for credit losses based on a combination of factors, including an assessment of the current customer's aging
balance, the nature and size of the customer, the financial condition of the customer, and the amount of any receivables in dispute. The
Company does not have any off-balance sheet credit exposure related to its customers. As of December 31, 2025, and 2024 trade receivables
are presented net of allowance for credit losses in the amount of $192
thousand and $160
thousand respectively.
| s. |
Accrued
Severance Pay: |
Pursuant
to Israel’s Severance Pay Law, Israeli employees are entitled to severance pay equal to one month’s salary for each year of
employment, or a portion thereof. All of the employees of the LL elected to be included under section 14 of the Severance Pay Law, 1963
(“section 14”). According to this section, these employees are entitled only to monthly deposits, at a rate of 8.33 %
of their monthly salary, made in their name with insurance companies. Payments in accordance with section 14 release the Company from
any future severance payments (under the above Israeli Severance Pay Law) in respect of those employees; therefore, related assets and
liabilities are not presented in the balance sheet.
Total
Company’s expenses related to severance pay amounted to $146
thousand, $126
thousand and $114
thousand for the years ended December 31, 2025, 2024 and 2023, respectively.
F - 19
| t. |
Fair Value Measurements:
|
Fair
value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal
or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
The Company uses a three -tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring
basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement.
The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs when determining
fair value. If a financial instrument uses inputs that fall in different levels of the hierarchy, the instrument will be categorized based
upon the lowest level of input that is significant to the fair value calculation. The three -tiers are defined as follows:
| ▪ |
Level 1. Observable
inputs based on unadjusted quoted prices in active markets for identical assets or liabilities; |
| ▪ |
Level 2. Inputs,
other than quoted prices in active markets, that are observable either directly or indirectly; and |
| ▪ |
Level 3. Unobservable
inputs for which there is little or no market data requiring the Company to develop its own assumptions. |
The
carrying amounts of cash and cash equivalents, short term deposits, trade receivables and trade payables approximate their fair value
due to the short-term maturity of such instruments.
The
following tables present information about the Company’s financial assets and liabilities that are measured in fair value on a recurring
basis as of December 31, 2025 and December 31, 2024 (in thousands):
|
Fair
value measurements as of |
||||||||||
|
Description
|
Fair
Value Hierarchy |
December 31,
2025
|
December 31,
2024
|
|||||||
|
Financial
assets: |
|
|||||||||
|
|
||||||||||
|
Money market funds included
in cash and cash equivalent |
Level 1
|
$
|
|
$
|
|
|||||
|
|
||||||||||
|
Total Assets Measured
at Fair Value |
|
$
|
|
$
|
|
|||||
|
|
||||||||||
|
Financial
Liabilities: |
|
|||||||||
|
Earnout
|
Level 3
|
$
|
|
$
|
|
|||||
|
Derivative liability
|
Level 3
|
$
|
|
|
||||||
|
Total liabilities measured
at fair value |
|
$
|
|
$
|
|
|||||
The
Company classifies Money market funds within Level 1, because the Company uses quoted market prices or alternative pricing sources and
models utilizing market observable inputs to determine their fair values.
The
estimated fair value of the earnout is determined using Level 3 inputs. Inherent in a Monte Carlo simulation analysis are assumptions
related to projected revenues, expected term, volatility, annual revenue yield and interest rate. The interest rate is based on the U.S.
Technology B bond yield.
The
estimated fair value of the derivative liability is using the Black-Scholes option-pricing model, which is a Level 3 fair value measurement.
The model requires the use of several key assumptions, including the stock price, exercise price, expected term, expected volatility,
risk-free interest rate, and expected dividend yield.
The
following table provides the inputs used for Level 3 fair value measurements of derivative liability:
|
|
December
31, 2025 |
|||
|
Stock price
|
$
|
|
| |
|
Term (in years)
|
|
|||
|
Volatility
|
|
%
| ||
|
Risk-free rate
|
|
%
| ||
|
Dividend
yield |
$
|
|
%
| |
F - 20
The
following table summarizes the earnout liability activity as of December 31, 2025 (in thousands):
|
|
Earnout
|
|||
|
Balance December 31,
2024 |
$
|
|
||
|
Change in fair value
|
$
|
(
|
)
| |
|
Balance December 31,
2025 |
$
|
|
||
As
part of the acquisition of AlterG Inc., the Company was obligated to pay an earnout based on the performance of the acquired entity, LCAI.
The earnout consists of two potential payments:
1.
A cash payment equal to 65% of the amount, if any, by which LCAI’s revenue for the first 12-month period
following the acquisition exceeds a predefined revenue target (“First Earnout Payment”).
2. A
cash payment equal to 65% of the amount, if any, by which LCAI’s revenue for the subsequent 12-month period exceeds its respective
revenue target.
At
the acquisition date, management estimated the fair value of the total earnout liability at approximately $3.6
million, based on the actual performance of LCAI to date and the assessed probability of meeting the revenue targets. The earnout liability
is recognized in the consolidated financial statements and is remeasured at each reporting period, with changes in fair value recorded
through the consolidated statement of operations.
LCAI
did not meet the first and the second revenue targets, and therefore, no payment was made.
During
the year ended December 31, 2025, the Company recognized a change in fair value of the earnout of approximately $608
thousand, which was recorded under general and administrative expenses in the consolidated statement of operations.
Derivative
liability at fair value
The
following table summarizes the derivative liability activity as of December 31, 2025 (in thousands):
|
|
Derivative
liability |
|||
|
Balance November 14,
2025 |
$
|
|
||
|
Issuance of embedded
derivative |
$
|
|
||
|
Change in fair value
|
$
|
(
|
)
| |
|
Balance December 31,
2025 |
$
|
|
||
The
estimated fair value of the asset group, is part of an impairment assessment, is determined using Level 3 inputs, by applying both a market
and cost approach, which we believe most accurately reflects a market participant's viewpoint in assessing its value.
The
goodwill impairment recorded during fiscal year 2025 was estimated using the Company's stock price, a Level 1 input, adjusted for an estimated
control premium. Refer to Note 5 for additional information.
| u. |
Convertible Promissory
Notes |
The
Company applies ASC 470-20, “Debt with Conversion and Other Options” (“ASC 470-20”). In accordance with ASC 470-20
the Company first allocates the proceeds to freestanding liability instrument that are measured at fair value at each reporting date,
based on their fair value. The remaining proceeds are allocated between the convertible debt and any bifurcated embedded derivatives.
In
accordance with ASC 815 “Derivatives and Hedging” (“ASC 815”), the Company bifurcates embedded derivatives for
the conversion option that require bifurcation and accounts for it separately from the convertible debt.
F - 21
The
Company applies ASC 815, “Derivatives and Hedging” to all features related to convertible debt. When features meet the definition
of a derivative that do not qualify for any scope exceptions within ASC 815, they are required to be accounted for separately from the
debt instrument and recorded as derivative instrument liabilities. The fair value assigned to the embedded derivative instruments is marked
to market in each reporting period. The Company has recorded embedded derivative liabilities related to the convertible promissory note.
For
further information regarding the convertible promissory notes, see Note 9.
|
v.
|
Basic and Diluted Net
Loss Per Share: |
Basic
net loss per share is computed by dividing the net loss by the weighted-average number of shares of ordinary shares outstanding during
the period.
Diluted
loss per share is computed based on the weighted average number of ordinary shares outstanding during the period, plus dilutive potential
shares considered outstanding during the period.
| w. |
Contingent liabilities
|
The
Company accounts for its contingent liabilities in accordance with ASC 450, “Contingencies.” A provision is recorded when
it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.
With
respect to legal matters, provisions are reviewed and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings,
advice of legal counsel and other information and events pertaining to a particular matter.
| x. |
Government grants
|
Royalty
and non-royalty-bearing grants from the Israeli Innovation Authority (the “IIA”) of the Ministry of Economy and Industry in
Israel for funding of approved research and development projects are recognized at the time the Company is entitled to such grants, on
the basis of the costs incurred, and are presented as a reduction from research and development expenses (see Note 7c). Research and development
grants recognized during the years ended December 31, 2025, 2024 and 2023 were $27
thousand, $220
thousand and $259
thousand, respectively.
| y. |
Lessee
|
At
the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances
present. Operating lease liabilities and their corresponding right-of-use assets are recorded at commencement date based on the present
value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable.
As such, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar
term an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required
for items, such as initial direct costs paid or incentives received. The lease terms may include options to extend or terminate the lease
when it is reasonably certain that the Company will exercise such options.
Leases
with an initial term of 12 months or less are not recorded on the balance sheet.
The
Company elected the practical expedient to not separate lease and non-lease components for its leases.
Lessor
accounting - Operating leases
A
portion of the AlterG revenues for the AlterG Anti-Gravity systems are made through lease arrangements.
AlterG
products are available for lease agreements ranging from 12
to 42
months. If the customer terminates the contract during the lease period, they are required to pay a cancellation fee. The lease period
may be extended by an additional period as specified in the contract.
F - 22
In
determining the leases classification as a sales type or operating lease, the Company assesses, among other criteria: (i) the lease term
to determine if it is for the major part of the economic life of the underlying equipment; and (ii) the present value of the lease payments
to determine if they are equal to or greater than substantially all of the fair market value of the equipment at the inception of the
lease of AlterG Anti-Gravity systems. When these criteria are not met, the lease accounted for as operating leases and revenues are recognized
over the term of the lease.
Under
these arrangements, when the Company acts as the lessor for its product line, the Company accounted for the lease arrangements as operating
leases in accordance with ASC 842, “Lease” (“ASC 842”).
The
total lease revenue for the AlterG Anti-Gravity Products has amounted to $751
thousand for the year ended December 31, 2025 and $719
thousand for the year ended December 31, 2024.
| z. |
New Accounting Pronouncements
|
Recently
Implemented Accounting Pronouncements
| i. |
In December 2023, the FASB issued ASU 2023-09,
Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure
of specific categories in the rate reconciliation, as well as disclosure of income taxes paid, disaggregated by jurisdiction. ASU 2023-09
is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-09 during
the year ended December 31, 2025 and has applied the disclosure prospectively. For additional information see Note 10 of these consolidated
financial statements. |
Recent
Accounting Pronouncements Not Yet Adopted
| i. |
In November 2024, the
FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation
of Income Statement Expenses, requiring public entities to disclose additional information about specific expense categories in the notes
to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026,
and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact
of adopting ASU 2024-03. |
| ii. |
In July 2025, the FASB issued ASU 2025-05, Financial
Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This amendment introduces
a practical expedient for the application of the current expected credit loss (“CECL”) model to current accounts receivable
and contract assets. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, and interim reporting periods within
those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the timing of adoption and impact of
this amendment on its consolidated financial statements and related disclosures. |
| iii. |
In December 2025, the
FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. The update provides
recognition, measurement, presentation, and disclosure requirements for government grants, including guidance for grants related to an
asset and grants related to income. The amendments introduce two permitted approaches for asset-related grants: a deferred income approach
or a cost accumulation approach. The guidance is effective for the Company beginning December 15, 2028, with early adoption permitted.
The Company is currently evaluating the impact on its consolidated financial statement. |
| iv. |
In December 2025, the
FASB issued ASU 2025-11 to amend the guidance in Interim Reporting (Topic 270). The update provides clarifications intended to improve
the consistency and usability of interim disclosure requirements, including a comprehensive listing of required interim disclosures and
a new disclosure principle for reporting material events occurring after the most recent annual period. The amendments do not change the
underlying objectives of interim reporting but are designed to enhance clarity in application. The guidance is effective for fiscal years
beginning after December 15, 2027, including interim periods within those fiscal years. The Company is currently evaluating the impact
on its consolidated financial statement disclosures. |
F - 23
| NOTE 3:- |
PREPAID EXPENSES
AND OTHER CURRENT ASSETS |
The
components of prepaid expenses and other current assets are as follows (in thousands):
|
|
December
31, |
|||||||
|
|
2025
|
2024
|
||||||
|
Government institutions
|
$
|
|
$
|
|
||||
|
Prepaid expenses
|
|
|
||||||
|
Other assets
|
|
|
||||||
|
$
|
|
$
|
|
|||||
NOTE
4:- INVENTORIES
The
components of inventories are as follows (in thousands):
|
|
December
31, |
|||||||
|
|
2025
|
2024
|
||||||
|
Finished products
|
$
|
|
$
|
|
||||
|
Work in progress
|
|
|||||||
|
Raw materials
|
|
|
||||||
|
|
||||||||
|
|
$
|
|
$
|
|
||||
During
the twelve months ended December 31, 2025, 2024, and 2023, the Company recognized, at cost of revenues, reserves for excess and obsolete
in the amount of $539
thousand, $981
thousand, and $398
thousand, respectively.
F - 24
NOTE
5:- GOODWILL
The
changes in the carrying amount of goodwill:
|
Thousand
Dollars |
||||
|
Balance
as of December 31, 2024 |
$
|
|
||
|
Goodwill
impairment |
(
|
)
| ||
|
Balance
as of December 31, 2025 |
$
|
|
||
The
Company periodically analyses whether any indicators of goodwill impairment have occurred. In the second quarter of 2025, the Company
experienced a decline in its stock price resulting in its market capitalization being less than the carrying value of its one reporting
unit. Thus, the Company performed quantitative assessments of the Company’s reporting unit. The fair value was determined based
on the market approach. The market approach utilizes the Company's market capitalization plus an appropriate control premium. In
calculating the goodwill impairment charges, the Company estimated the fair value of its single reporting unit based on its market capitalization
and an appropriate control premium. Market capitalization is determined by multiplying the number of shares of common stock outstanding
by the market price of its common stock. The control premium, or the amount paid by a new controlling shareholder for the benefits resulting
from synergies and other potential benefits derived from controlling the acquired company, is determined by utilizing data from publicly
available premium studies for similarly situated public company transactions. A goodwill impairment loss was recognized for the difference
between the carrying value of the reporting unit and the fair value.
As
a result of this assessment, the Company recorded a goodwill impairment of $2.8
million during the year ended December 31,2025.
Long-lived
assets:
The
Company evaluates the recoverability of long-lived assets, including property and equipment and intangible assets subject to amortization
for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be fully recoverable.
Such events and changes may include significant changes in performance relative to expected operating results, significant changes in
asset use, significant negative industry or economic trends, and changes in the Company’s business strategy. Recoverability of these
assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate.
If such review indicates that the carrying amount of long-lived assets is not recoverable, the carrying amount of such assets is reduced
to fair value.
The
carrying intangible assets were fully impaired as of December 31, 2024.
NOTE
6:- PROPERTY AND EQUIPMENT, NET
The
components of property and equipment, net are as follows (in thousands):
|
|
December
31, |
|||||||
|
|
2025
|
2024
|
||||||
|
Cost:
|
||||||||
|
Computer equipment
|
$
|
|
$
|
|
||||
|
Office furniture and
equipment |
|
|
||||||
|
Machinery and laboratory
equipment |
|
|
||||||
|
Field service units
|
|
|
||||||
|
Leasehold improvements
|
|
|
||||||
|
$
|
|
$
|
|
|||||
|
|
December
31, |
|||||||
|
2025
|
2024
|
|||||||
|
Accumulated depreciation
|
|
|
||||||
|
Property and equipment,
net |
$
|
|
$
|
|
||||
Depreciation
expenses amounted to $333
thousand, $494
thousand, and $239
thousand for the years ended December 31, 2025, 2024 and 2023, respectively.
In
the fourth quarter of 2024, the Company recorded an impairment charge of $305
thousand related to the closure of its Fremont, California site. The impairment was due to the reduction in the expected future use of
the assets at this location. No impairment charges were recorded for the year ended December 31, 2025.
F - 25
NOTE
7:- COMMITMENTS AND CONTINGENT LIABILITIES
| a. |
Purchase commitment: |
The
Company has contractual obligations to purchase goods from its contract manufacturer as well as raw materials from different vendors.
Purchase obligations do not include contracts that may be cancelled without penalty. As of December 31, 2025, non-cancellable outstanding
obligations amounted to approximately $6.0
million.
| b. |
Operating lease commitment:
|
| (i) |
|
| (ii) |
|
The
Company’s future lease payments for its facilities and cars, which are presented as current maturities of operating leases and non-current
operating leases liabilities on the Company’s consolidated balance sheets as of December 31, 2025 are as follows (in thousands):
|
2026
|
$
|
|
||
|
2027
|
|
|||
|
2028
|
|
|||
|
2029
|
|
|||
|
2030
|
|
|||
|
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 |
|
%
|
Total
lease expense under the Company’s operating leases for the years ended December 31, 2025, 2024 and 2023 were $0.8
million, $1.3
million, and $1.0
million, respectively.
F - 26
| c. |
Royalties: |
The
Company’s research and development efforts are financed, in part, through funding from the IIA. Since the Company’s inception
through December 31, 2025, the Company received funding from the IIA in the total amount of $2.8
million. Out of the $2.8
million in funding from the IIA, a total amount of $1.6
million were royalty-bearing grants, $400
thousand was received in consideration of 209
convertible preferred A shares, which converted after the Company’s initial public offering in September 2014 into ordinary
shares in a conversion ratio of 1 to 1 , while $806
thousand was received without future obligation. The Company is obligated to pay royalties to the IIA, amounting to 3 %
of the sales of the products and other related revenues generated from such projects, up to 100 %
of the grants received. The royalty payment obligations also bear interest at the SOFRPR rate. The obligation to pay these royalties is
contingent on actual sales of the applicable products and in the absence of such sales, no payment is required.
As
of December 31, 2025, the Company paid royalties to the IIA in the total amount of $117
thousand.
Royalties
expenses in cost of revenue were $8
thousand, $2
thousand and $17
thousand, for the years ended December 31, 2025, 2024 and 2023, respectively.
As
of December 31, 2025, the contingent liability to the IIA amounted to $1.6
million. The Israeli Research and Development Law provides that know-how developed under an approved research and development program
may not be transferred to third parties without the approval of the IIA. Such approval is not required for the sale or export of any products
resulting from such research or development. The IIA, under special circumstances, may approve the transfer of IIA-funded know-how outside
Israel, in the following cases:
(a)
the grant recipient pays to the IIA a portion of the sale price paid in consideration for such IIA-funded know-how or in consideration
for the sale of the grant recipient itself, as the case may be, which portion will not exceed six times the amount of the grants received
plus interest (or three times the amount of the grant received plus interest, in the event that the recipient of the know-how has committed
to retain the R&D activities of the grant recipient in Israel after the transfer); (b)
the grant recipient receives know-how from a third party in exchange for its IIA-funded know-how; (c) such transfer of IIA-funded know-how
arises in connection with certain types of cooperation in research and development activities; or (d) If such transfer of know-how arises
in connection with a liquidation by reason of insolvency or receivership of the grant recipient.
LCAI
earns royalties under a license agreement with a third party and is recognized as earned. Royalty payments for the year ended December
31, 2025 and 2024, were $0
and $55
thousand, respectively.
| d. |
Liens |
As
part of the Company’s restricted cash and other long-term assets, as of December 31, 2025, an amount of $410
thousand has been pledged as security in respect of a guarantee granted to a third party. Such deposit cannot be pledged to others or
withdrawn without the consent of such third party.
| e. |
Legal Claims: |
Occasionally,
the Company is involved in various claims such as product liability claims, lawsuits, regulatory examinations, investigations, and other
legal matters arising, for the most part, in the ordinary course of business. While the outcome of any pending or threatened litigation
and other legal matters is inherently uncertain, the Company does not believe the outcome of any of the matters will have a material adverse
effect on the Company’s consolidated results of operation, liquidity or financial condition.
F - 27
NOTE
8:- SHAREHOLDERS’ EQUITY
| a. |
Reverse share split: |
| 1. |
At the Company’s 2023 annual general meeting,
the Company’s shareholders approved (i) a |
Upon
the effectiveness of the reverse share split, every seven shares were automatically combined and converted into one ordinary share. Appropriate
adjustments were also made to all outstanding derivative securities of the Company, including all outstanding equity awards and warrants.
No
fractional shares were issued in connection with the reverse share split. Instead, all fractional shares (including shares underlying
outstanding equity awards and warrants) were rounded down to the nearest whole number.
| 2. |
At the Company’s extraordinary general meeting
of shareholders held on January 6, 2026, the Company’s shareholders approved amendments to the Company’s Articles of Association
to effect (i)
|
On
February 24, 2026, the Company effected the one-for-twelve
reverse share split of its ordinary shares. As a result of the reverse share split, every twelve issued and outstanding
ordinary shares were automatically combined and converted into one ordinary share. The number of the Company’s issued and outstanding
ordinary shares was reduced from 18,339,098
pre-split shares to 1,528,207
post-split shares. Concurrently, the total authorized number of ordinary shares under the Company’s Articles of Association increased
from 75,000,000
ordinary shares to 100,000,000
ordinary shares.
Appropriate
adjustments were also made to all outstanding derivative securities of the Company, including warrants, pre-funded warrants and stock
options, such that the number of ordinary shares underlying such securities and the applicable exercise prices were proportionately adjusted
in accordance with their terms and the Company’s equity incentive plans.
No
fractional shares were issued in connection with the reverse share split and fractional shares were rounded down to the nearest whole
share.
F - 28
| b. |
Equity raise: |
| 1. |
On January 7, 2025, the Company entered into a securities
purchase agreement with certain institutional investors for the issuance and sale of |
| 2. |
On March 7, 2025, the Company entered into an
At-the-Market (“ATM”) Offering Agreement with H.C. Wainwright & Co., LLC (“HCW”), pursuant to which the Company
may, from time to time, offer and sell its ordinary shares having an aggregate offering price of up to $ |
During
the three and twelve months ended December 31, 2025, the Company sold 114,008
and 289,903
ordinary shares, respectively, under the ATM program at an average price of $7.62
and $9.67
per share, respectively, for total gross proceeds of approximately $0.9
million and $2.8
million. The Company paid aggregate fees and commissions of $0.1
million to HCW and incurred other expenses of approximately $0.2
million, resulting in net proceeds of approximately $2.5
million. The Company’s ATM program expired on November 16, 2025.
| 3. |
On June 25, 2025, the Company entered into a securities
purchase agreement with certain institutional investors for the issuance and sale of |
The
warrants issued in the January 2025 private placement and the June 2025 public offering are considered freestanding instruments. As the
warrants are indexed to the Company's ordinary shares and meet the criteria for equity classification, they are recorded in shareholders’
equity on the Company’s consolidated balance sheets.
F - 29
| c. |
Share option plans: |
On
August 1, 2025, the Company’s shareholders approved the Lifeward Ltd. 2025 Incentive Compensation Plan (the “2025 Plan”),
which became effective on the same date. The 2025 Plan provides for the grant of stock options, stock appreciation rights, restricted
stock awards, restricted stock units (“RSUs”), cash-based awards and other stock-based awards to the Company’s and its
affiliates’ respective employees, non-employee directors and consultants. All share and
per share amounts presented in this note have been retroactively adjusted to reflect the Company’s 1-for-12
reverse share split effected on February 24, 2026.
The
Company’s prior Lifeward Ltd. 2014 Incentive Compensation Plan (the “2014 Plan”) expired on August 19, 2024, and no
further grants may be made under it. Certain awards granted under the 2014 Plan remain outstanding and continue to be governed by its
terms.
As
of December 31, 2025, the Company had reserved 39,851
ordinary shares available for issuance to employees, directors, officers and non-employees of the Company. As of December 31, 2024, no ordinary
shares remained reserved, as the Company’s Plan expired on August 19, 2024.
RSUs
have been granted to non-employee directors and employees under the 2025 Plan. An RSU award represents a right to receive the Company’s
ordinary shares upon vesting.
Options
to purchase ordinary shares have been granted to employees and non-employee directors under the Company’s equity incentive plans.
Any
options or RSUs that are forfeited or canceled before expiration become available for future grants under the 2025 Plan, as applicable.
No
stock options were granted during the year ended December 31, 2024. The fair value of stock options granted during the year ended December
31, 2025 was estimated on the grant date using the Black-Scholes-Merton option pricing model based on the following assumptions:
|
Year
Ended
December
31, 2025 |
||||
|
Expected volatility
|
|
%
| ||
|
Risk-free rate
|
|
%
| ||
|
Dividend yield
|
|
%
| ||
|
Expected term (in years)
|
|
|||
|
Share price
|
$
|
|
||
A
summary of the Company’s stock options activity for the year ended December 31, 2025 is as follows:
|
|
Number
|
Weighted
average
exercise
price
|
Weighted
average
remaining
contractual
life
(years) |
Aggregate
intrinsic
value
(in
thousands)
|
||||||||||||
|
Options outstanding at
the beginning of the year |
|
$
|
|
|
$
|
|
||||||||||
|
Granted
|
|
|
- |
- |
||||||||||||
|
Exercised
|
|
|
- |
- |
||||||||||||
|
Forfeited
|
(
|
)
|
|
- |
- |
|||||||||||
|
Options outstanding at
the end of the year |
|
$
|
|
|
$
|
|
||||||||||
|
Options exercisable at
the end of the year |
|
$
|
|
|
$
|
|
||||||||||
F - 30
Options
were granted during the year ended December 31, 2025. No options were granted during the years ended December 31, 2024 and 2023. The weighted
average grant date fair values of options granted during the fiscal year ended December 31, 2025, were $10.31 .
During fiscal years ended December 31, 2024 and 2023 no options were granted. The aggregate intrinsic value in the table above represents
the total intrinsic value that would have been received by the option holders had all option holders who hold options with positive intrinsic
value exercised their options on the last day of the fiscal year. During the years ended December 31, 2025, 2024 and 2023, no options
were exercised. A summary of the Company’s RSU activity for the year ended December 31, 2025 is as follows:
|
Number
of
shares
underlying
outstanding
RSUs
|
Weighted-
average
grant
date
fair
value |
|||||||
|
Unvested RSUs at the
beginning of the year |
|
|
||||||
|
Granted
|
|
|
||||||
|
Vested
|
(
|
)
|
|
|||||
|
Forfeited
|
(
|
)
|
|
|||||
|
Unvested RSUs at the
end of the year |
|
|
||||||
The
weighted average grant date fair values of RSUs granted during the fiscal year ended December 31, 2025, 2024 and 2023, were $8.69 ,
$57.60
and $55.44 ,
respectively.
The
total fair value of RSUs vested during the years ended December 31, 2025, 2024 and 2023 was $0.9
million, $1.4
million, and $1.3
million, respectively. As of December 31, 2025, there was $1.4
million of unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan. This cost
is expected to be recognized as expense over a period of approximately 2.1
years.
The
number of options and RSUs outstanding as of December 31, 2025 is presented below, with options separated by range of exercise prices:
|
Range
of exercise price |
Options
and
RSUs
Outstanding
as
of
December
31,
2025
|
Weighted
average
remaining
contractual
life
(years)
(1) |
Options
Exercisable
as
of
December
31,
2025
|
Weighted
average
remaining
contractual
life
(years)
(1) |
||||||||||||||
|
RSUs
only |
|
-
|
|
- |
||||||||||||||
|
$
|
|
|
|
- |
||||||||||||||
|
$
|
|
|
|
- |
||||||||||||||
|
$
|
|
|
|
|
||||||||||||||
|
$
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|||||||||||||||
| (1) |
Calculation of weighted average remaining contractual
term does not include the RSUs that were granted, which have an indefinite contractual term. |
| d. |
Equity compensation issued to consultants:
|
No
equity awards were granted to non-employees consultants during the year ended December 31, 2025. The Company granted 391
RSUs during the fiscal year ended December 31, 2024, to non-employee consultants. As of December 31, 2025, no
RSUs were outstanding.
F - 31
| e. |
Share-based compensation expense for employees
and non-employees: |
The
Company recognized share-based compensation expense in the consolidated statements of operations as follows (in thousands):
|
|
Year
Ended December 31, |
|||||||||||
|
|
2025
|
2024
|
2023
|
|||||||||
|
Cost of revenue
|
$
|
|
$
|
|
$
|
|
||||||
|
Research and development,
net |
|
|
|
|||||||||
|
Sales and marketing
|
|
|
|
|||||||||
|
General and administrative
|
|
|
|
|||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
||||||
| f. |
Warrants to purchase ordinary shares:
|
The
following table summarizes information about warrants outstanding and exercisable as of December 31, 2025:
|
Issuance
date |
Warrants
outstanding
|
Exercise
price
per
warrant |
Warrants
outstanding
and
exercisable
|
Contractual
term
| |||||||||
|
|
(number)
|
(number)
|
| ||||||||||
|
July 6, 2020 (1)
|
|
$
|
|
|
| ||||||||
|
December 8, 2020 (2)
|
|
$
|
|
|
| ||||||||
|
December 8, 2020 (3)
|
|
$
|
|
|
| ||||||||
|
February 26, 2021 (4)
|
|
$
|
|
|
| ||||||||
|
February 26, 2021 (5)
|
|
$
|
|
|
| ||||||||
|
September 29, 2021 (6)
|
|
$
|
|
|
| ||||||||
|
September 29, 2021 (7)
|
|
$
|
|
|
| ||||||||
|
January 8, 2025 (8)
|
|
$
|
|
|
| ||||||||
|
January 8, 2025 (9)
|
|
$
|
|
|
| ||||||||
|
June 26, 2025 (10)
|
|
$
|
|
|
| ||||||||
|
June 26, 2025 (11)
|
|
$
|
|
|
| ||||||||
|
|
|
|
| ||||||||||
| (1) |
Represents warrants that were issued to certain
institutional purchasers in a private placement in the Company’s registered direct offering of ordinary shares in July 2020. As
of December 31, 2025, |
| (2) |
Represents warrants that were issued to certain
institutional purchasers in a private placement in the Company’s private placement offering of ordinary shares in December 2020.
As of December 31, 2025, |
| (3) |
Represents warrants that were issued to the placement
agent as compensation for its role in the Company’s December 2020 private placement. As of December 31, 2025, |
| (4) |
Represents warrants that were issued to certain
institutional purchasers in a private placement in the Company’s private placement offering of ordinary shares in February 2021.
|
| (5) |
Represents warrants that were issued to the placement
agent as compensation for its role in the Company’s February 2021 private placement. |
| (6) |
Represents warrants that were issued to certain
institutional purchasers in a private placement in the Company’s registered direct offering of ordinary shares in September 2021.
|
| (7) |
Represents warrants that were issued to the placement
agent as compensation for its role in the Company’s September 2021 registered direct offering. |
| (8) |
Represents warrants that were issued to certain
institutional purchasers in a private placement in the Company’s registered direct offering of ordinary shares in January 2025.
|
| (9) |
Represents warrants that were issued to the placement
agent as compensation for its role in the Company’s January 2025 registered direct offering. |
| (10) |
Represents warrants that were issued to certain
institutional investors in connection with the Company’s public offering of ordinary shares in June 2025. |
| (11) |
Represents warrants that were issued to the placement
agent as compensation for its role in the Company’s public offering of ordinary shares in June 2025. |
F - 32
| NOTE 9:- |
CONVERTIBLE PROMISSORY
NOTES |
On
November 14, 2025, the Company entered into a Secured Promissory Note (the ”Note”) with Oramed Ltd. (“Oramed”),
pursuant to which the Company issued a secured promissory note in the principal amount of $3.0 million.
The loan bears interest at a rate of 15 %
per annum and is secured by a lien on the Company’s cash. The loan matures on May
14, 2026 .
The
principal and interest under the Note are convertible into ordinary shares at $5.40 per
share, subject to limitations described therein. The conversion price reflects the Company’s one-for-twelve reverse share split
effected on February 24, 2026. The note contains customary representations, covenants and events of default for transactions of this type,
including limitations on additional indebtedness, liens, guarantees, mergers, asset sales, investments and related party transactions.
Following an event of default, Oramed may accelerate all obligations, impose a default interest rate and exercise other rights and remedies
available under the note or applicable law. As of December 31, 2025, no events of default had occurred. In addition, under certain circumstances
described in the Note, the Company may be required to pay Oramed a termination fee of $500
thousand.
The
Company has evaluated the Note for embedded derivatives required to be bifurcated and concluded that the conversion features and the redemption
features should be bifurcated from the debt host since they are not clearly and closely related to the debt host, meet the definition
of derivative instruments, and do not qualify for a scope exception under ASC 815. Thus, the embedded features were bifurcated from the
debt host and are accounted for at fair value through earnings. The derivative liability is remeasured at fair value at each reporting
date, with changes in fair value recognized in earnings.
The
Company allocated the proceeds between the conversion option (recorded as a derivative liability) and the debt host based on their respective
fair values, with the remaining proceeds allocated to the debt host. The debt host is measured at its amortized cost using the effective
interest method. As of the date of the transaction, the amount allocated to the debt host and the derivative liability was $1.4
million and $1.6
million, respectively. As of December 31, 2025, the amortized cost of the debt host was $1.4
million. For the year ended December 31, 2025, the Company recognized total interest expense of $442
thousand related to the Note, which includes the amortization of the debt discount.
NOTE
10:- INCOME TAXES
The
Company’s subsidiaries are separately taxed under the domestic tax laws of the jurisdiction of incorporation of each entity.
|
a.
|
Corporate
tax rates in Israel: |
Presented
hereunder are the tax rates relevant to the Company in the years 2023-2025:
The
Israeli statutory corporate tax rate and real capital gains were 23
|
b.
|
Income
(loss) before taxes on income is comprised as follows (in thousands): |
|
Year
Ended December 31, |
||||||||||||
|
|
2025
|
2024
|
2023
|
|||||||||
|
Domestic
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| |||
|
Foreign
|
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| ||||
|
c.
|
Taxes
on income (benefit) are comprised as follows (in thousands): |
|
Year
Ended December 31, |
||||||||||||
|
|
2025
|
2024
|
2023
|
|||||||||
|
Current
|
$
|
(
|
) |
$
|
|
$
|
(
|
) | ||||
|
Deferred
|
|
|
|
|||||||||
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
| |||||
|
|
Year
Ended December 31, |
|||||||||||
|
|
2025
|
2024
|
2023
|
|||||||||
|
Domestic
|
$
|
|
$
|
|
$
|
|
||||||
|
Foreign
|
(
|
)
|
|
(
|
)
| |||||||
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
| |||||
F - 33
|
d.
|
Deferred
income taxes (in thousands): |
Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. The Company’s deferred tax assets as of December 31, 2025 and 2024
are derived from temporary differences.
In
assessing the realization of deferred tax assets, the Company considers whether it is more likely than not that all or some portion of
the deferred tax assets will not be realized.
Undistributed
earnings of certain subsidiaries as of December 31, 2025 were immaterial. The Company intends to reinvest these earnings indefinitely
in the foreign subsidiaries. As a result, the Company has not provided for any deferred income taxes.
|
December
31, |
||||||||
|
|
2025
|
2024
|
||||||
|
Deferred
tax assets: |
||||||||
|
Carry
forward tax losses |
$
|
|
$
|
|
||||
|
Research
and development expenses |
|
|
||||||
|
Accrual
and reserves |
|
|
||||||
|
Share
based compensation |
|
|
||||||
|
Credit
tax carry forwards |
|
|
||||||
|
Intangible
Assets |
|
|
||||||
|
Lease
liabilities |
|
|
||||||
|
Total
deferred tax assets |
|
|
||||||
|
Valuation
allowance |
(
|
) |
(
|
) | ||||
|
Deferred
tax assets after valuation allowance |
$
|
|
$
|
|
||||
|
Deferred
tax liabilities: |
||||||||
|
Right-of-use
asset |
(
|
)
|
(
|
)
| ||||
|
Property
and equipment |
(
|
)
|
(
|
)
| ||||
|
Other
|
(
|
)
|
|
|||||
|
Total
deferred tax liabilities |
(
|
)
|
(
|
)
| ||||
|
Net
deferred tax assets |
$
|
|
$
|
|
||||
The
net changes in the total valuation allowance for each of the years ended December 31, 2025, 2024 and 2023, are comprised as follows (in
thousands):
|
|
Year
Ended December 31, |
|||||||||||
|
|
2025
|
2024
|
2023
|
|||||||||
|
Balance at beginning
of year |
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| |||
|
Additions during the
year |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Balance at end of year
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| |||
F - 34
|
e.
|
Reconciliation
of the theoretical tax expenses: |
A
reconciliation of the Company’s theoretical income tax expense to actual income tax expense after the adoption of ASU 23-09 is as
follows (in thousands):
|
Year
Ended December 31, |
||||||||
|
|
2025
|
|||||||
|
Tax
at Israel statutory rate |
$
|
(
|
)
|
|
%
| |||
|
Foreign
Tax Effects |
||||||||
|
United
States |
||||||||
|
Change
in valuation allowance |
$
|
(
|
)
|
|
%
| |||
|
Non-deductible
Impairment |
|
(
|
%
| |||||
|
Other
|
|
(
|
%
| |||||
|
Germany
|
(
|
)
|
|
%
| ||||
|
Changes
in valuation allowance |
|
(
|
%
| |||||
|
Non-taxable
or Non-deductible Items |
|
(
|
%
| |||||
|
Effective
Tax Rate |
$
|
(
|
)
|
|
%
| |||
A
reconciliation of the Company’s theoretical income tax expense to actual income tax expense before the adoption of ASU 23-09 is
as follows (in thousands):
|
Year
Ended December 31, |
||||||||
|
|
2024
|
2023
|
||||||
|
Loss
before taxes, as reported in the consolidated statements of operations |
$
|
(
|
)
|
$
|
(
|
)
| ||
|
Statutory
tax rate |
|
%
|
|
%
| ||||
|
Theoretical
tax benefits on the above amount at the Israeli statutory tax rate |
$
|
(
|
)
|
$
|
(
|
)
| ||
|
Income
tax at rate other than the Israeli statutory tax rate |
(
|
)
|
|
|||||
|
Operating
losses and other temporary differences for which valuation allowance was provided |
|
|
||||||
|
Permanent
differences |
(
|
)
|
(
|
)
| ||||
|
Adjustment
in respect of prior years |
(
|
)
|
(
|
)
| ||||
|
Actual
tax expense (benefit) |
$
|
|
$
|
(
|
)
| |||
|
f.
|
Foreign
tax rates: |
Taxable
income of LI and LCAI was subject to tax at the rate of 21
Taxable
income of LG was subject to tax at the rate of 30
|
g.
|
Tax
assessments: |
LL
has had final tax assessments up to and including the 2020 tax year. LG has had final tax assessments up to and including the 2019 tax
year.
LI
and LCAI file income tax returns in the United States and in various U.S. states. The returns for the years ended December 31, 2022, and
later are generally subject to federal tax examination, while the returns for the years ended December 31, 2021, and later are generally
subject to state tax examination. However, net operating losses and tax credits generally remain subject to tax examination and adjustment
until they are utilized on a future tax return and the statute of limitations closes for that year. Therefore, tax attributes generally
remain open to both federal and state tax examination and adjustment.
F - 35
|
h.
|
Net
operating carry-forward losses for tax purposes: |
As
of December 31, 2025, LL has carry-forward losses amounting to approximately $279.9
million, which can be carried forward for an indefinite period.
As
of December 31, 2025, the Company had approximately $49.5
million of U.S. federal net operating loss (“NOL”) carry forwards, and $35.3
million of state NOL carry forwards, which will begin to expire in 2027
and 2028 , respectively. The federal net operating losses from years beginning after January 1, 2018, of approximately
$20.0
million may be carried forward indefinitely and losses prior to January 1, 2018 of approximately $29.5
million expire beginning in 2027 under prior law.
Internal
Revenue Code Section 382 places a limitation (“Section 382 Limitation") on the amount of taxable income which can be offset by NOL
carry forwards after a change in control (generally greater than 50% change in the value of the stock owned by 5% shareholders during
the testing period) of a loss corporation. California has similar rules. On August 11, 2023, AlterG was involved in an equity transaction
that constitutes a Section 382 change in ownership. The change in ownership limits the ability to utilize net operating loss carry forwards
in future years. The 382-limitation impact on NOLs has been included in the current period provision. The Company may have had earlier
Section 382 changes in ownership. This will be assessed upon realization of tax attributes.
| i. |
Cash paid for income taxes, net of refunds was
as follows: |
We
adopted ASU 2023-09 on a prospective basis for the year ended December 31, 2025 and have included the following table which presents income
taxes paid (net of refunds received) is as follows (in thousands):
|
Year
Ended December 31, 2025 |
||||
|
Israel
|
|
|||
|
Foreign
|
||||
|
United
States |
|
|||
|
Germany
|
|
|||
|
Total
cash taxes paid |
|
|||
NOTE
11:- FINANCIAL (EXPENSES) INCOME, NET
The
components of financial (expenses) income, net were as follows (in thousands):
|
|
Year
Ended December 31, |
|||||||||||
|
|
2025
|
2024
|
2023
|
|||||||||
|
Interest Income (expense),
net |
$
|
(
|
)
|
$
|
|
$
|
|
|||||
|
Bank fees and commissions
|
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Foreign currency transactions
and other |
(
|
)
|
(
|
)
|
|
|||||||
|
Income from derivatives
remeasurement |
|
|
|
|||||||||
|
$
|
(
|
)
|
$
|
|
$
|
|
||||||
F - 36
NOTE
12:- REPORTABLE SEGMENT
ASC
280, “Segment Reporting,” establishes standards for reporting information about operating segments. Operating segments are
defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief
operating decision maker ("CODM") in deciding how to allocate resources and in assessing performance. The Company manages its business
on the basis of one reportable segment and unit and derives revenues mainly from products, lease revenues and warranty and services
(see Note 1 for a brief description of the Company’s business and Note 2l for details on the Company's revenue recognition).
The
Company operates as one operating segment. Operating segments are defined as components of an enterprise for which separate financial
information is regularly evaluated by the CODM, which is the Company’s chief executive officer, who reviews financial information
and annual operating plans presented on a consolidated basis, for purposes of making operating decisions, evaluating financial performance,
and allocating resources. There is no expense or asset information, that are supplemental to those disclosed in these consolidated financial
statements, that are regularly provided to the CODM. The allocation of resources and assessment of performance of the operating segment
is based on consolidated net loss as shown in our consolidated statements of operations. The CODM considers net loss in the annual forecasting
process and reviews actual results when making decisions about allocating resources. Since the Company operates as one operating segment,
financial segment information, including profit or loss and asset information, can be found in the consolidated financial statements.
NOTE
13:- GEOGRAPHIC INFORMATION AND MAJOR
CUSTOMER AND PRODUCT DATA
Total
revenues from external customers on the basis of the Company's geographical areas are as follows (in thousands):
|
|
Year
Ended December 31, |
|||||||||||
|
|
2025
|
2024
|
2023
|
|||||||||
|
Revenue based on customer’s
location: |
||||||||||||
|
United
States |
|
|
|
|||||||||
|
Europe
|
|
|
|
|||||||||
|
Germany
|
|
|
|
|||||||||
|
Asia-Pacific
|
|
|
|
|||||||||
|
Rest
of the world |
|
|
|
|||||||||
|
Total revenues
|
$
|
|
$
|
|
$
|
|
||||||
|
|
December
31, |
|||||||
|
|
2025
|
2024
|
||||||
|
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. |
Major
customers data as a percentage of total revenue:
|
|
Year
Ended December 31, |
|||||||||||
|
|
2025
|
2024
|
2023
|
|||||||||
|
Customer A
|
|
%
|
|
%
|
|
|||||||
|
Customer B
|
|
)
|
|
)
|
|
%
| ||||||
| *) |
Less than 10% |
F - 37
NOTE
14:- BASIC AND DILUTED NET LOSS PER SHARE
The
following table sets forth the computation of the Company’s basic and diluted net loss per ordinary share (in thousands, except
share and per share data):
|
|
Year
ended December 31, |
|||||||||||
|
|
2025
|
2024
|
2023
|
|||||||||
|
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| |||
|
|
||||||||||||
|
Net loss attributable
to ordinary shares |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Shares used in
computing net loss per ordinary shares, basic and diluted * |
|
|
|
|||||||||
|
|
||||||||||||
|
Net loss per ordinary
share, basic and diluted |
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| |||
(*)
Reflects one-for-seven reverse share split that became effective on March 15, 2024. See Note 8a to the consolidated financial
statements. All share and per share amounts presented in this note have been retroactively adjusted to reflect the Company’s 1-for-12
reverse share split effected on February 24, 2026.
Basic
and diluted net loss per share was the same for each period presented as the inclusion of all potential shares of ordinary shares and
warrants outstanding would have been anti-dilutive.
For
the twelve months ended December 31, 2025, 2024 and 2023 the total number of ordinary shares related to the outstanding warrants, share
option plans and convertible notes aggregated to 759,547 ,
198,772
and 228,816 ,
respectively. The amount was excluded from the calculations of diluted loss per ordinary share since it would have an anti-dilutive effect.
NOTE
15:- SUBSEQUENT EVENTS
| a. |
In January 2026, we entered into agreements with
Oramed Pharmaceuticals, Inc. (“Oramed”) and its subsidiary, Oratech Pharma, Inc. (“Oratech”), pursuant to which
we agreed to acquire all of the outstanding equity interests of Oratech and enter into related financing arrangements with Oramed and
certain investors. Additional information regarding these agreements is included in “Part I – Business.” In connection
with the anticipated transaction, we received bridge financing from Oramed. On February 12, 2026, we entered into an additional secured
promissory note with Oramed with an initial principal amount of $ |
| b. |
On February 24, 2026, the Company effected a |
| c. |
On February 19, 2026, we entered into an Intellectual
Property Assignment and Technology Transfer Agreement with Skelable Ltd., an Israeli limited liability company, pursuant to which we agreed
to acquire certain intellectual property and related technology assets associated with a powered upper-body robotic orthotic system. In
connection with the transaction, certain employees of Skelable are expected to enter into employment agreements with us. The consideration
for the assets is up to $
|
F - 38