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REWALK ROBOTICS LTD. – 10-Q – MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operation should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes included elsewhere in this quarterly report and with our audited consolidated financial statements included in our Form 10-K for the year endedDecember 31, 2021 as filed with theSEC onFebruary 24, 2022 and amended onMay 2, 2022 (the "2021 Form 10-K"). In addition to historical condensed financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. For a discussion of factors that could cause or contribute to these differences, see "Special Note Regarding Forward-Looking Statements" above. Overview We are an innovative medical device company that is designing, developing, and commercializing robotic exoskeletons that allow individuals with mobility impairments or other medical conditions the ability to stand and walk once again. We have developed and are continuing to commercialize our ReWalk Personal and ReWalk Rehabilitation devices for individuals with spinal cord injury ("SCI Products"), which are exoskeletons designed for individuals with paraplegia that use our patented tilt-sensor technology and an on-board computer and motion sensors to drive motorized legs that power movement. We have also developed and began commercializing our ReStore device inJune 2019 . ReStore is a powered, lightweight soft exo-suit intended for use in the rehabilitation of individuals with lower limb disability due to stroke. During the second quarter of 2020 we have finalized and moved to implement two separate agreements to distribute additional product lines in the U.S. market. The Company will be the exclusive distributor of the MediTouch Tutor movement biofeedback systems inthe United States and will also have distribution rights for the MYOLYN MyoCycleFES cycles toU.S. rehabilitation clinics and personal sales through theU.S. Department of Veterans Affairs ("VA") hospitals and other personal sales. These new products will improve our product offering to clinics as well as patients within theVA as they both have similar clinician and patient profile.
Our principal markets are
direct sales operation in
distribution partners in certain other major countries. We have offices in
operate our business from.
We have in the past generated and expect to generate in the future revenues from a combination of third-party payors, self-payors, including private and government employers, and institutions. While a broad uniform policy of coverage and reimbursement by third-party commercial payors currently does not exist inthe United States for electronic exoskeleton technologies such as the ReWalk Personal, we are pursuing various paths of reimbursement and support fundraising efforts by institutions and clinics. InDecember 2015 , theU.S. Department of Veterans Affairs , or theVA , issued a national policy for the evaluation, training and procurement of ReWalk Personal exoskeleton systems for all qualifying veterans acrossthe United States . TheVA policy is the first national coverage policy inthe United States for qualifying individuals who have suffered spinal cord injury. As ofDecember 31, 2021 , we had placed 25 units as part of theVA policy. According to a 2017 report published by theCenters for Medicare and Medicaid Services , or CMS, approximately 55% of the spinal cord injury population which are at least five years post their injury date are covered by CMS. InJuly 2020 , a code was issued for ReWalk Personal 6.0 (effectiveOctober 1, 2020 ), which might later be followed by coverage policy of CMS. Additionally, to date, several private insurers inthe United States andEurope have provided reimbursement for ReWalk in certain cases. InGermany , we continue to make progress toward achieving ReWalk coverage from the various government, private and worker's compensation payors. InSeptember 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. InFebruary 2018 , the head office of German statutory health insurance, or SHI, Spitzenverband ("GKV") confirmed their decision to list the ReWalk Personal 6.0 exoskeleton system in the German Medical Device Directory. This decision means that ReWalk will be 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 we announced several new agreements with German SHIs such as TK and DAK Gesundheit and others as well as the firstGerman Private Health Insurer ("PHI") that have chosen to enter into an agreement that outlines the process of obtaining a device for eligible insured patient. 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 6.0 device for their beneficiaries within their system. During the second quarter of 2020 we finalized and moved to implement two separate agreements to distribute additional product lines in the U.S. market. The Company will be the exclusive distributor of the MediTouch Tutor movement biofeedback systems inthe United States and will also have distribution rights for the MYOLYN MyoCycleFES cycles toU.S. rehabilitation clinics and personal sales through theVA hospitals. These new products will improve our product offering to clinics as well as patients within theVA as they both have similar clinician and patient profile. We have incurred net losses and negative cash flow from operations since inception and anticipate this to continue in the near term. We will continue to evaluate spending while continuing to focus resources on activities to commercialize the Restore device for stroke patients, achieving additional commercial reimbursement coverage decisions for our ReWalk Personal device, continued research and development activities related mainly to our product line maintenance as well as our soft exo-suit design and activities related to our FDA 522 postmarket study. 24 --------------------------------------------------------------------------------
First Quarter 2022 and Subsequent Period Business Highlights
• Total revenue for the first quarter of 2022 was
million in the first quarter of 2021;
• Placed on
Coding System (HCPCS) meeting that includes benefit category determination for
the first time under the new DEMPOS rules. This is based on previous
interactions with CMS to determine ReWalk's benefit category and payment
status;
• ReWalk has increased resources and presence in VA Polytrauma/TBI Care Systems
as well as a process to expand training through the
Based Outpatient Clinic network; • Strong cash position with$82.6 million as ofMarch 31, 2022 ;
• The Company's operating expenses were
2022, compared to$3.7 million in the first quarter of 2021;
• In
of the Israel Innovation Authority MAGNET incentive program, where it will
collaborate with several universities to develop advanced technologies aimed
at improving the human-exoskeleton interaction.
Evolving COVID-19 Pandemic
The impact of the COVID-19 pandemic has resulted in, and will likely continue to result in, significant disruptions to the global economy and the capital markets, as well as our business. A significant number of our global suppliers, vendors, distributors and manufacturing facilities are located in regions that have been affected by the pandemic. Those operations have been materially adversely affected by restrictive government and private enterprise measures implemented in response to the pandemic, which in turn, has negatively impacted our operations. Despite the distribution of COVID-19 vaccines, new and occasionally more virulent variants of the virus that causes COVID-19, including the Delta and Omicron variants, have emerged, and there is significant uncertainty as to how the countries in which we do business will continue to respond to such outbreaks, including whether there will be future partial or total shutdowns, which would adversely affect our business. The COVID-19 pandemic has affected our ability to engage with our SCI Products, ReStore and Distributed Products existing customers, conduct trials of candidates, deliver ordered units or repair existing systems and provide training of our products to new patients who have largely remained at home due to local movement restrictions and to rehabilitation centers, which have temporarily shifted priorities and responses to pandemic-related medical equipment. In addition, staffing shortages within the healthcare system itself has resulted in a diminished demand for our SCI Products as the attention of healthcare workers and potential patients has turned elsewhere. As a result, our sales and results of operations have been adversely impacted. We believe that these adverse impacts may continue as long as the pandemic continues to impact our key markets, which areGermany andthe United States , especially as long as our ability to conduct trials of product candidates is limited or if our existing customers can't train with our SCI Products and as long as capital budgets for rehabilitation devices such as the ReStore remain reduced or on-hold. Additionally, some clinics, such asVA clinics, and many other healthcare facilities, are enforcing in-clinic restrictions that affect our ability to demonstrate our devices to patients or start training for qualified potential customers. We continue to monitor our sales pipeline on a day-to-day basis in order to assess the effect of these limitations as some have short term effects and others affect our future pipeline development. While our sole manufacturer, Sanmina Corporation, has not shut down its facilities during the COVID-19 pandemic, supply chain delays, component shortages have had a limited impact on our manufacturing and are also leading to price increases of specific parts. Other adverse impacts on our production capacity as a result of government directives or health protocols can occur. Moreover, the current limitations on our sales activities has made it difficult to effectively forecast our future requirements for systems. For more information, see "Part I, Item 1A. Risk Factors." of our 2021 Form 10-K in addition to the "Risk Factors" section included below. In addition, our future results of operations and liquidity could be adversely impacted by delays in payments of outstanding receivable amounts beyond normal payment terms, supply chain disruptions and operational challenges faced by our customers. The occurrence of new outbreaks of COVID-19 could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn or a global recession that could cause significant volatility or decline in the trading price of our securities, affect our ability to execute strategic business activities such as business combination, affect demand for our products and likely impact our operating results. These may further limit or restrict our ability to access capital on favorable terms, or at all, lead to consolidation that negatively impacts our business, weaken demand, increase competition, cause us to reduce our capital spend further, or otherwise disrupt our business. 25 -------------------------------------------------------------------------------- During the pandemic, we have implemented remote working procedures inthe United States ,Germany andIsrael and are establishing in-office measures to contain the spread of COVID-19 according to local regulations. With the vaccination of most of our employees, we gradually returned to work from our offices during 2021 but are currently facing another disruption with the spread of the Omicron variant. Despite this current situation and the challenges it imposes, we have developed several methods to continue to engage with our current and prospective customers with some success through video conferencing, virtual training events, and online education demos to offer our support and showcase the value of our products.
Results of Operations for the Three Months Ended
2021
Our operating results for the three months endedMarch 31, 2022 , as compared to the same period in 2021, are presented below. The results set forth below are not necessarily indicative of the results to be expected in future periods. Three Months Ended March 31, 2022 2021 Revenues $ 876$ 1,316 Cost of revenues 611 609 Gross profit 265 707 Operating expenses: Research and development 907 795 Sales and marketing 2,184 1,671 General and administrative 1,462 1,262 Total operating expenses 4,553 3,728 Operating loss (4,288 ) (3,021 ) Financial expenses (income), net 24 (4 ) Loss before income taxes (4,312 ) (3,017 ) Taxes on income 38 45 Net loss$ (4,350 ) $ (3,062 ) Net loss per ordinary share, basic and diluted $
(0.07 )
Weighted average number of shares used in computing net loss
per ordinary share, basic and diluted
62,493,496 36,187,789
26
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Three Months Ended
Revenues
Our revenues for the three months endedMarch 31, 2022 and 2021 were as follows: Three Months Ended March 31, 2022 2021 (in thousands, except unit amounts) Personal unit revenues $ 770 $ 1,308 Rehabilitation unit revenues 106 8 Revenues $ 876 $ 1,316
Personal unit revenues consist of ReWalk Personal 6.0 and Distributed Products
sale, rental, service and warranty revenue for home use.
Rehabilitation unit revenues consist of ReStore, Distributed Products and SCI Products sale, rental, service and warranty revenue to clinics, hospitals for treating patients with relevant medical conditions or medical academic centers. Revenues decreased by$440 thousand , or 33%, for the three months endedMarch 31, 2022 compared to the three months endedMarch 31, 2021 . The decrease is due to lower number of ReWalk Personal 6.0 units sold inthe United States andGermany . In the future, we expect our growth to be driven by sales of our ReWalk Personal device to third-party payors as we continue to focus our resources on broader commercial coverage policies with third-party payors as well as sales of the ReStore and other products to rehabilitation clinics and for personal use.
Gross Profit
Our gross profit for the three months ended
follows (in thousands):
Three Months Ended March 31,
2022 2021
Gross profit $ 265 $ 707
Gross profit was 30% of revenue for the three months ended March 31, 2022
compared to 54% for the three months ended March 31, 2021 . The decrease in gross
profit for the three months ended March 31, 2022 was mainly driven by the lower
volume of units sold and a decrease in our average selling price due to a change
in sales mix.
We expect our gross profit to improve, assuming we increase our sales volumes,
which could also decrease the product manufacturing costs. Improvements may be
partially offset by the lower margins we currently expect from ReStore and our
Distributed Products as well as due to an increase in the cost of product parts,
especially as long as COVID-19 pandemic is affecting the market.
27
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Research and Development Expenses
Our research and development expenses, net, for the three months ended
2022
Three Months Ended March 31,
2022 2021
Research and development expenses $ 907 $ 795
Research and development expenses, increased by$112 thousand , or 14%, for the three months endedMarch 31, 2022 compared to the three months endedMarch 31, 2021 . The increase is attributable to increased consulting and subcontractors expenses. We intend to focus our research and development expenses mainly on our current products maintenance and improvement as well as developing our "soft suit" exoskeleton for additional indications affecting the ability to walk or a home use design such as the ReBoot design.
Sales and Marketing Expenses
Our sales and marketing expenses for the three months ended
2021 were as follows (in thousands):
Three Months Ended March 31,
2022 2021
Sales and marketing expenses $ 2,184 $ 1,671
Sales and marketing expenses increased by $513 thousand , or 31%, for the three
months ended March 31, 2022 compared to the three months ended March 31, 2021 .
The increase was driven by higher employee and employee related expenses, travel
and tradeshows activities.
In the near term our sales and marketing expenses are expected to be driven by
our efforts to expand our reimbursement coverage of our ReWalk Personal device
and to expand our current product commercialization.
General and Administrative Expenses
Our general and administrative expenses for the three months ended
2022
Three Months Ended March 31,
2022 2021
General and administrative $ 1,462 $ 1,262
General and administrative expenses increased by $200 thousand , or 16%, for the
three months ended March 31, 2022 compared to the three months ended March 31,
2021 . The increase was driven by increased personnel and personnel related
expenses as well as professional services expenses.
28
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Financial Expenses (Income), Net
Our financial expenses (income), net, for the three months ended
and 2021 were as follows (in thousands):
Three Months Ended March 31,
2022 2021
Financial expenses (income), net $ 24 $ (4 )
Financial expenses (income), net, increased by $28 thousand for the three months
ended March 31, 2022 compared to the three months ended March 31, 2021 . This
increase was primarily due to exchange rate fluctuations.
Income Taxes
Our income tax for the three months endedMarch 31, 2022 and 2021 was as follows (in thousands): Three Months Ended March 31, 2022 2021 Income taxes $ 38 $ 45 Income taxes decreased by$7 thousand , or 16%, for the three months endedMarch 31, 2022 compared to the three months endedMarch 31, 2021 mainly due to higher deferred income tax resulting from a decrease in deferred revenues.
Critical Accounting Policies and Estimates
Our condensed consolidated financial statements are prepared in accordance withU.S. GAAP. The preparation of our condensed financial statements requires us to make estimates, judgments and assumptions that can affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates, judgments and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known. Besides the estimates identified above that are considered critical, we make many other accounting estimates in preparing our condensed financial statements and related disclosures. See Note 2 to our audited consolidated financial statements included in our 2021 Form 10-K for a description of the significant accounting policies that we used to prepare our consolidated financial statements. There have been no material changes to our critical accounting policies or our critical judgments from the information provided in "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies" of our 2021 Form 10-K, except for the updates provided in Note 3 of our unaudited condensed consolidated financial statements set forth in "Part I, Item 1. Financial Statements" of this quarterly report.
Recent Accounting Pronouncements
See Note 3 to our unaudited condensed consolidated financial statements set
forth in "Part I, Item 1. Financial Statements" of this quarterly report for
information regarding new accounting pronouncements.
29 --------------------------------------------------------------------------------
Liquidity and Capital Resources
Sources of Liquidity and Outlook
Since inception, we have funded our operations primarily through the sale of certain of our equity securities and convertible notes to investors in private placements, the sale of our ordinary shares in public offerings and the incurrence of bank debt. As ofMarch 31, 2022 , we incurred a consolidated net loss of$4.4 million and have an accumulated deficit in the total amount of$198.5 million . Our cash and cash equivalent as ofMarch 31, 2022 , totaled$82.6 million and our negative operating cash flow for the three months endedMarch 31, 2022 , was$5.7 million . We have sufficient funds to support our operation for more than 12 months following the issuance date of our condensed consolidated unaudited financial statements for the three months endedMarch 31, 2022 . 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 achievement of a level of revenues adequate to support our cost structure. Until we achieve profitability or generate positive cash flows, we will continue to need to raise additional cash. We intend to fund future operations through cash on hand, additional private and/or public offerings of debt or equity securities, cash exercises of outstanding warrants or a combination of the foregoing. In addition, we may seek additional capital through arrangements with strategic partners or from other sources and we will continue to address our cost structure. Notwithstanding, there can be no assurance that we will be able to raise additional funds or achieve or sustain profitability or positive cash flows from operations. Our anticipated primary uses of cash are (i) sales, marketing and reimbursement expenses related to market development activities of our ReStore and Personal 6.0 devices, broadening third-party payor and CMS coverage for our ReWalk Personal device and commercializing our new product lines added through distribution agreements; (ii) research and development of our lightweight exo-suit technology for potential home personal health utilization for multiple indications and future generation designs for our spinal cord injury device; (iii) routine product updates; (iv) general corporate purposes, including working capital needs; and (v) potential acquisitions of business. 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 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. Equity Raises Beginning with the filing of our Form 10-K onFebruary 17, 2017 , we were subject to limitations under the applicable rules of Form S-3, which constrained our ability to secure capital pursuant to our ATM Offering Program (as defined below) or other 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 our annual report for the year endedDecember 31, 2020 , we were no longer subject to these limitations, because our public float had reached at least$75 million in the 60 days preceding the filing of that annual report. Likewise, because our public float was at least$75 million within the 60 days preceding the date of our 2021 Annual Report, we are not currently subject to these limitations. Our currently effective registration statement on Form S-3 expires onMay 23, 2022 . We have filed a new registration statement on Form S-3 to replace our expiring registration statement which has not yet been declared effective by theSEC . Assuming our new Form S-3 becomes effective and is available for our use during 2022, we will continue to not be subject to these limitations for the remainder of the 2022 fiscal year and until such time as we file our next annual report for the year endedDecember 31, 2022 , at which time we will be required to re-test our status under these rules. If our public float subsequently drops below$75 million as of the filing of our next annual report on Form 10-K, or at the time we file a new Form S-3, we will become subject to these limitations again, until the date that our public float again reaches$75 million . These limitations do not apply to secondary offerings for the resale of our ordinary shares or other securities by selling shareholders or to the issuance of ordinary shares upon conversion by holders of convertible securities, such as warrants. We have registered up to$100 million of ordinary shares warrants and/or debt securities and certain other outstanding securities with registration rights on our new registration statement on Form S-3, which will be available for our use once the registration statement has been declared effective by theSEC . 30 --------------------------------------------------------------------------------
Equity Offerings and Warrant Exercises
OnFebruary 19, 2021 , we entered into a purchase agreement with certain institutional and other accredited investors for the issuance and sale of 10,921,502 ordinary shares, par valueNIS 0.25 per share at$3.6625 per ordinary share and warrants to purchase up to an aggregate of 5,460,751 ordinary shares with an exercise price of$3.6 per share, exercisable fromFebruary 19, 2021 , untilAugust 26, 2026 . Additionally, we issued warrants to purchase up to 655,290 ordinary shares, with an exercise price of$4.578125 per share, exercisable fromFebruary 19, 2021 , untilAugust 26, 2026 , to certain representatives ofH.C. Wainwright as compensation for its role as the placement agent in ourFebruary 2021 Offering. OnSeptember 27, 2021 , we signed a purchase agreement with certain institutional investors for the issuance and sale of 15,403,014 ordinary shares, pre-funded warrants to purchase up to an aggregate of 610,504 ordinary shares and ordinary warrants to purchase up to an aggregate of 8,006,759 ordinary shares at an exercise price of$2.00 per share. The pre-funded warrants have an exercise price of$0.001 per ordinary share and are immediately exercisable and can be exercised at any time after their original issuance until such pre-funded warrants are exercised in full. Each ordinary share was sold at an offering price of$2.035 and each pre-funded warrant was sold at an offering price of$2.034 (equal to the purchase price per ordinary share minus the exercise price of the pre-funded warrant). The offering of the ordinary shares, the pre-funded warrants and the ordinary shares that are issuable from time to time upon exercise of the pre-funded warrants was made pursuant to our shelf registration statement on Form S-3 initially filed with theSEC onMay 9, 2019 , and declared effective by theSEC onMay 23, 2019 , and the ordinary warrants were issued in a concurrent private placement. The ordinary warrants are exercisable at any time and from time to time, in whole or in part, following the date of issuance and ending five and one-half years from the date of issuance. All of the pre-funded warrants were exercised in full onSeptember 27, 2021 , and the offering closed onSeptember 29, 2021 . Additionally, we issued warrants to purchase up to 960,811 ordinary shares, with an exercise price of$2.5438 per share, exercisable fromSeptember 27, 2021 , untilSeptember 27, 2026 , to certain representatives ofH.C. Wainwright as compensation for its role as the placement agent in ourSeptember 2021 private placement offering.
As of
exercise prices ranging from
proceeds of approximately
ATM Offering Program
OnMay 10, 2016 , we entered into our Equity Distribution Agreement withPiper Jaffray , as amended onMay 9, 2019 , pursuant to which we may offer and sell, from time to time, ordinary shares having an aggregate offering price of up to$25.0 million throughPiper Jaffray acting as our agent (the "ATM Offering Program"). Subject to the terms and conditions of the Equity Distribution Agreement,Piper Jaffray will use its commercially reasonable efforts to sell on our behalf all of the ordinary shares requested to be sold by us, consistent with its normal trading and sales practices.Piper Jaffray may also act as principal in the sale of ordinary shares under the Equity Distribution Agreement. Such sales may be made under our Form S-3 in what may be deemed "at-the-market" equity offerings as defined in Rule 415 promulgated under the Securities Act, directly on or through the Nasdaq Capital Market, to or through a market maker other than on an exchange or otherwise, in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices, and/or any other method permitted by law, including in privately negotiated transactions.Piper Jaffray is entitled to compensation at a fixed commission rate of 3% of the gross sales price per share sold through it as agent under the Equity Distribution Agreement. WherePiper Jaffray acts as principal in the sale of ordinary shares under the Equity Distribution Agreement, such rate of compensation will not apply, but in no event will the total compensation ofPiper Jaffray , when combined with the reimbursement ofPiper Jaffray for the out-of-pocket fees and disbursements of its legal counsel, exceed 8.0% of the gross proceeds received from the sale of the ordinary shares. We may instructPiper Jaffray not to sell ordinary shares if the sales cannot be effected at or above the price designated by us in any instruction. We orPiper Jaffray may suspend an offering of ordinary shares under the ATM Offering Program upon proper notice and subject to other conditions, as further described in the Equity Distribution Agreement. Additionally, the ATM Offering Program will terminate on the earlier of (i) the sale of all ordinary shares subject to the Equity Distribution Agreement, (ii) the date that is three years after a new registration statement on Form S-3 goes effective, (iii) our becoming ineligible to use Form S-3 and (iv) termination of the Equity Distribution Agreement by the parties. The Equity Distribution Agreement may be terminated byPiper Jaffray or us at any time on the close of business on the date of receipt of written notice, and byPiper Jaffray at any time in certain circumstances, including any suspension or limitation on the trading of our ordinary shares on the Nasdaq Capital Market, as further described in the Equity Distribution Agreement. We temporarily suspended use of the ATM Offering Program onFebruary 20, 2019 to facilitate ourFebruary 2019 "best efforts" public offering. As ofSeptember 30, 2020 , we had sold 302,092 ordinary shares under the ATM Offering Program for net proceeds to us of$14.5 million (after commissions, fees, and expenses). Additionally, as of that date, we had paidPiper Jaffray compensation of$471 thousand and had incurred total expenses (including such commissions) of approximately$1.2 million in connection with the ATM Offering Program. No sales were made under the ATM Offering Program during the year endedDecember 31, 2021 or during the three months endedMarch 31, 2022 . 31 -------------------------------------------------------------------------------- We intend to continue using the at-the-market offering or similar continuous offering programs opportunistically to raise additional funds, although we are currently subject to restrictions on using the ATM Offering Program withPiper Jaffray . Under ourSeptember 2021 purchase agreement with certain investors, equity or debt securities convertible into, or exercisable or exchangeable for, ordinary shares at a conversion price, exercise price or exchange price which floats with the trading price of the ordinary shares or which may be adjusted after issuance upon the occurrence of certain events or (ii) enter into any agreement, including an equity line of credit, whereby the Company may issue securities at a future-determined price, other than an at-the-market facility with the placement agent,H.C. Wainwright & Co, LLC , beginning onMarch 29, 2022 . Such limitations may inhibit our ability to access capital efficiently.
Cash Flows for the Three Months Ended
thousands):
Three Months Ended March 31,
2022 2021
Net cash used in operating activities
Net cash used in investing activities
(3 ) (9 ) Net cash provided by financing activities - 50,236 Net cash flow$ (5,711 ) $ 47,054
Net cash used in operating activities increased by$2.5 million or 80% primarily due to increased insurance prepaid expenses, increased inventory purchases, and higher business development costs.
Net Cash Provided by Financing Activities
Net cash provided by financing activities was
2021
warrants exercises received during the first quarter of 2021.
Obligations and Contractual Commitments
Set forth below is a summary of our contractual obligations as of
2022
32
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Payments due by
period (in dollars, in thousands)
Less than
Contractual obligations Total 1 year 1-3 years
Purchase obligations (1) $ 1,549 $ 1,549 $ -
Collaboration Agreement and License Agreement
obligations (2) 59 59 -
Operating lease obligations (3) 1,079 686 393
Total $ 2,687 $ 2,294 $ 393
(1) The Company depends on one contract manufacturer, Sanmina Corporation, for
both the ReStore products and the SCI Products. We place our manufacturing
orders with Sanmina pursuant to purchase orders or by providing forecasts
for future requirements
(2) Our Collaboration Agreement with Harvard was originally for a term of five
years, commencing in
extend the term by one additional year. The Collaboration Agreement expired
as of
pay in quarterly installments the funding of our joint research
collaboration with Harvard, subject to a minimum funding commitment under
applicable circumstances. Our License Agreement with Harvard consists of
patent reimbursement expenses payments and a license upfront fee payment.
There are also several milestone payments contingent upon the achievement of
certain product development and commercialization milestones and royalty
payments on net sales from certain patents licensed to Harvard. All product
development milestones contemplated by the License Agreement have been met
as of
milestones under the License Agreement that depend on us reaching certain
sales amounts, some or all of which may not occur.
(3) Our operating leases consist of leases for our facilities in the United
States and
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 ofNIS 3 .176:$1.00 , and the payments due under our operating lease obligation for our German subsidiary that are to be paid in euros at a rate of exchange of €1.00:$1.109 , both of which were the applicable exchange rates as ofMarch 31, 2022 .
Off-Balance Sheet Arrangements
We had no off-balance sheet arrangements or guarantees of third-party
obligations as of
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