Lifeward Ltd
For the period ended Dec 31, 2024. Filed Mar 7, 2025.
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FY2024 · Filed Mar 7, 2025
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Report of Independent Registered Public Accounting Firm
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, 2024 and 2023, 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, 2024, 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, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, 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 the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
F - 2
| Revenue recognition | |
| Description of the Matter | As described in Note 2 of the consolidated financial statements, the Company recognizes revenues from the SCI products at a point in time based on the consideration to which the company is entitled to in exchange for sales of its SCI products, and includes variable consideration. 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. For the year ended December 31, 2024, revenues were $3.2 million. Auditing management's determination of the variable consideration was complex and judgmental due to significant data inputs and subjective assumptions utilized in the process. In determining the variable consideration, management develops estimates based on actual historical collection experience by CMS. |
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| 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. We also evaluated the disclosures included in the notes to the consolidated financial statements. |
| Impairment Assessment of Long-Lived Assets (Assets group) | |
| Description of the Matter | As discussed in note 2 to the consolidated financial statements, long-lived assets are assessed for recoverability whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recoverability of the Long-lived assets (assets group) is measured by a comparison of the undiscounted future cash flows the Long-lived assets (assets group) is expected to generate to the carrying amounts of the assets group. If such evaluation indicates that the carrying amount of the long-lived assets (assets group) is not recoverable, an impairment loss is calculated based on the excess of the carrying amount of the long- lived assets (assets group) over its fair value. The company identified triggering event and performed an impairment assessment with respect to LCAI assets group. For the year ended December 31, 2024, as a result of the assessment, the Company’s recorded an impairment charge of $9.8 Million. Auditing management’s estimation of the fair value of the long-lived assets (assets group) of LCAI was complex and highly judgmental due to the significant measurement uncertainty in determining the fair value of the long-lived assets. In particular, the fair value estimates were sensitive to significant assumptions such as discount rate and forecasted revenues, which are affected by expectations about future market or economic conditions. |
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| How We Addressed the Matter in Our Audit | To test the management's estimation of the fair value of the long-lived assets (assets group) of LCAI, we performed audit procedures that included, assessing the fair value methodologies utilized by management and the significant assumptions, including the completeness and accuracy of the underlying data used in the analyses. we compared the significant assumptions to current financial and operating plans, market and industry studies and historical trends. We also assessed the historical accuracy of management’s forecasts and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value estimates of the long-lived assets that would result from changes in the assumptions. We involved our valuation specialists in evaluating the discount rate and valuation methodology used by the Company. |
KOST FORER GABBAY & KASIERER
A Member of EY Global
We have served as the Company’s auditor since 2014.
Tel-Aviv, Israel
March 7, 2025
F - 3
LIFEWARD LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE
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