Lifeward Ltd.

Previous wording

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Current wording

NAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Previous wording

Results of Operations for the Three and Six Months Ended June 30, 2025 and June 30, 2024

Current wording

Results of Operations for the Three and Nine Months Ended September 30, 2025 and September 30, 2024

Previous wording

Our operating results for the three and six months ended June 30, 2025, as compared to the same period in 2024, are presented below. The results set forth below are not necessarily indicative of the results to be expected in future periods.

Current wording

Our operating results for the three and nine months ended September 30, 2025, as compared to the same period in 2024, are presented below. The results set forth below are not necessarily indicative of the results to be expected in future periods. (In thousands, except share and per share data)

Previous wording

Three and Six Months Ended June 30, 2025 Compared to Three and Six Months Ended June 30, 2024

Current wording

Three and Nine Months Ended September 30, 2025 Compared to Three and Nine Months Ended September 30, 2024

Previous wording

Financial income, net, decreased by $0.1 million, or 99.3%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

Current wording

Revenues increased by $0.1 million, or 1.1%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to higher Medicare sales, partially offset by lower AlterG product sales.

Previous wording

Gross profit was 43.1% of revenue for the six months ended June 30, 2025, compared to 34.6% of revenue, for the six months ended June 30, 2024. Gross profit for the six months ended June 30, 2024, included $0.8 million for amortization of intangible assets. Excluding the impact of the amortization of intangible assets, gross profit as a percentage of revenue was 41.1% for the six months ended June 30, 2024. The increase was driven by lower production costs following the December 2024 closure of our Fremont manufacturing facility in California and the transition of production to a contract manufacturer, which has already begun to contribute to improved margins in 2025.

Current wording

Gross profit was 43.7% of revenue for the three months ended September 30, 2025, compared to 36.2% for the three months ended September 30, 2024. Gross profit for the three months ended September 30, 2024, included $0.4 million of amortization of intangible assets. Excluding the impact of amortization, gross profit as a percentage of revenue was 42.5% for the three months ended September 30, 2024. The increase was primarily driven by lower production costs following the December 2024 closure of our Fremont, California manufacturing facility.

Previous wording

Our research and development expenses, net, for the three and six months ended June 30, 2025 and 2024 were as follows (in thousands):

Current wording

Our research and development expenses, net, for the three and nine months ended September 30, 2025 and 2024 were as follows (in thousands):

Previous wording

Research and development expenses were $1.7 million for the six months ended June 30, 2025, a decrease of $0.8 million, or 32.5%, compared to the six months ended June 30, 2024. The decrease was primarily attributable to the completion of the development program for the ReWalk 7 and the AlterG NEO.

Current wording

Research and development expenses were $0.7 million for the three months ended September 30, 2025, a decrease of $0.3 million, or 27.8%, compared to the three months ended September 30, 2024. The decrease was primarily attributable to lower costs associated with the development programs of the ReWalk 7 and the AlterG NEO.

Previous wording

Research and development expenses were $0.8 million for the three months ended June 30, 2025, a decrease of $0.4 million, or 36.3%, compared to the three months ended June 30, 2024. The decrease was primarily attributable to the completion of the development program for the ReWalk 7 and the AlterG NEO.

Current wording

Research and development expenses were $2.4 million for the nine months ended September 30, 2025, a decrease of $1.1 million, or 31.1%, compared to the nine months ended September 30, 2024. The decrease was primarily attributable to the completion of the development programs for the ReWalk 7 and AlterG NEO.

Previous wording

Sales and marketing expenses were $3.8 million for the three months ended June 30, 2025, a decrease of $0.6 million, or 14.0%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. Sales and marketing expenses for the three months ended June 30, 2024 included $0.4 million of amortization of intangible assets from the acquisition of AlterG. Additional drivers of the decrease include a reduction in reimbursement and marketing consultants.

Current wording

Sales and marketing expenses were $3.2 million for the three months ended September 30, 2025, a decrease of $1.0 million, or 23.8%, compared to the three months ended September 30, 2024. Sales and marketing expenses for the three months ended September 30, 2024 included $0.4 million of amortization of intangible assets related to the acquisition of AlterG. Additional drivers of the decrease include a reduction in reimbursement and marketing consultants.

Previous wording

Sales and marketing expenses were $7.6 million for the six months ended June 30, 2025, a decrease of $1.8 million, or 19.1%, for the six months ended June 30, 2025, compared to the six months ended June 30, 2024. Sales and marketing expenses for the six months ended June 30, 2024 included $0.8 million of amortization of intangible assets from the acquisition of AlterG. Additional drivers of the decrease Additional drivers of the decrease include a reduction in reimbursement and marketing consultants and lower promotional spending.

Current wording

Sales and marketing expenses were $10.8 million for the nine months ended September 30, 2025, a decrease of $2.8 million, or 20.5%, compared to the nine months ended September 30, 2024. Sales and marketing expenses for the nine months ended September 30, 2024, included $1.2 million of amortization of intangible assets related to the acquisition of AlterG. Additional drivers of the decrease include a reduction in reimbursement and marketing consultants and lower promotional spending. These reductions reflect the Company’s continued focus on optimizing its commercial operations.

Previous wording

General and administrative expenses were $1.7 million for the three months ended June 30, 2025, an increase of $0.1 million, or 9.2%, compared to the same period in 2024. General and administrative expenses in the three months ended June 30, 2024, included a net benefit of $0.5 million related to income recognized from post-closing adjustments in connection with the acquisition of AlterG. The increase in the current period was also driven by a $0.4 million bad debt expense, primarily associated with the resolution of certain outstanding Medicare claims, and restructuring costs partially offset by eliminating the earnout liability.

Current wording

General and administrative expenses were $2.0 million for the three months ended September 30, 2025, an increase of $1.7 million, compared to the three months ended September 30, 2024. General and administrative expenses for the three months ended September 30, 2024, included a net benefit of $2.0 million related to income recognized from the release of an earnout provision in connection with the acquisition of AlterG. Excluding this income, general and administrative expenses decreased for the three months ended September 30, 2025, compared to the same period in 2024, primarily due to lower professional costs.

Previous wording

General and administrative expenses were $4.0 million for the six months ended June 30, 2025, an increase of $0.8 million, or 24.3%, compared to the same period in 2024. General and administrative expenses in the six months ended June 30, 2024, included a net benefit of $0.5 million related to income recognized from post-closing adjustments in connection with the acquisition of AlterG. The increase in the current period was also driven by a $0.6 million bad debt expense, primarily associated with the resolution of certain outstanding Medicare claims, and restructuring costs partially offset by eliminating the earnout liability.

Current wording

General and administrative expenses were $5.9 million for the nine months ended September 30, 2025, an increase of $2.5 million, or 72.8%, compared to the nine months ended September 30, 2024. General and administrative expenses for the nine months ended September 30, 2024, included a net benefit of $2.5 million related to income recognized from the release of an earnout provision in connection with the acquisition of AlterG, compared to an income of $0.6 million recorded in 2025. The increase in the current period was also driven by a $0.6 million bad debt expense, primarily associated with the resolution of certain outstanding Medicare claims, and restructuring costs related to the leadership transition.

Previous wording

Our impairment charges for the three and six months ended June 30, 2025 and 2024 were as follows (in thousands):

Current wording

Our impairment charges, for the three and nine months ended September 30, 2025 and 2024 were as follows (in thousands):

Previous wording

During the three and six months ended June 30, 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 impairment does not impact our liquidity or ongoing operations.

Current wording

During the nine months ended September 30, 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

Previous wording

Our financial income, net, for the three and six months ended June 30, 2025 and 2024 were as follows (in thousands):

Current wording

Our financial income (expenses), net, for the three and nine months ended September 30, 2025 and 2024 were as follows (in thousands):

Previous wording

The decrease was primarily attributable to lower yields on a reduced cash balance, reflecting fewer funds on deposit.

Current wording

Financial income, net, decreased by $0.1 million for the three months ended September 30, 2025, compared to the same period in 2024, and by $0.5 million, or 98%, for the nine months ended September 30, 2025, compared to 2024. The decrease was primarily attributable to lower yields on a reduced cash balance, reflecting fewer funds on deposit.

Previous wording

Our income tax for the three and six months ended June 30, 2025 and 2024 was as follows (in thousands):

Current wording

Our income tax for the three and nine months ended September 30, 2025 and 2024 was as follows (in thousands):

Previous wording

Income taxes decreased by $5 thousand, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, mainly due to deferred taxes and timing differences in our subsidiaries.

Current wording

Income taxes decreased by $22 thousand for both the three and nine months ended September 30, 2025, compared to the corresponding periods in 2024. The decrease was primarily attributable to deferred tax adjustments and timing differences in our subsidiaries.

Previous wording

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.

Current wording

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, the incurrence of bank debt and issuance of the Loan to Oramed.

Previous wording

As of June 30, 2025, we had cash and cash equivalents of $5.1 million. We had an accumulated deficit in the total amount of $276.2 million as of June 30, 2025 and further losses are anticipated in the development of its business. Those factors raise substantial doubt about our ability to continue as a going concern. The ability to continue as a going concern is dependent upon us obtaining the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Based on our current operating plan, we believe that our existing cash resources will be sufficient to fund operations into the fourth quarter of 2025.

Current wording

As of September 30, 2025, we had cash and cash equivalents of $2 million. We had an accumulated deficit in the total amount of $279.4 million as of September 30, 2025 and further losses are anticipated in the development of its business. Those factors raise substantial doubt about our ability to continue as a going concern. The ability to continue as a going concern is dependent upon us obtaining the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Based on our current operating plan, we believe that our existing cash resources will be sufficient to fund operations into the fourth quarter of 2025.

Previous wording

The accompanying unaudited condensed consolidated financial statements have been prepared assuming we 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 six months ended June 30, 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 our ability to continue as a going concern.

Current wording

The accompanying unaudited condensed consolidated financial statements have been prepared assuming we 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 nine months ended September 30, 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 our ability to continue as a going concern.

Previous wording

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.

Current wording

We intend to fund future operations through cash on hand, additional private and/or public offerings of debt or equity securities, issuances of debt, 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. We can give no assurances that we will be able to secure additional sources of funds to support our operations on acceptable terms, or at all, or, if such funds are available to us, that such additional financing will be sufficient to meet our needs. If we raise additional funds by issuing equity or convertible debt securities, as we have done pursuant to the loan with Oramed, it could result in dilution to our existing stockholders or increased fixed payment obligations. In addition, as a condition to providing additional funds to us, future investors may demand, and may be granted, rights superior to those of existing stockholders. 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.

Previous wording

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 our 2024 Form 10-K, on March 7, 2025, 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 our 2024 Form 10-K. We will continue to be subject to these limitations for the remainder of the 2024 fiscal year and until the earlier of such time as our public float reaches at least $75 million or when we file our next annual report for the year ended December 31, 2025, at which time we will be required to re-test our status under these rules. If our public float is below $75 million as of the filing of our next annual report on Form 10-K, or at the time we file a new Form S-3, we will continue to be subject to these limitations, until the date that our public float again reaches $75 million. These limitations do not apply to secondary offerings for the resale of our ordinary shares or other securities by selling shareholders or to the issuance of ordinary shares upon conversion by holders of convertible securities, such as warrants. We have registered up to $100 million of ordinary shares warrants and/or debt securities and certain other outstanding securities with registration rights on our registration statement on Form S-3, which was declared effective by the SEC in May 2022 (the “2022 Shelf Registration Statement”). On May 15, 2025, we filed a new registration statement on Form S-3 (the “2025 Shelf Registration Statement”) to register up to $100 million of ordinary shares, warrants and/or debt securities, which has not yet been declared effective by the SEC. The 2022 Shelf Registration Statement expired on May 16, 2025, however, pursuant to Rule 415 of the Securities Act, we are permitted to continue making offers and sales of securities covered by the 2022 Shelf Registration Statement and prospectus supplements thereto until the earlier of the effective date of the 2025 Shelf Registration Statement or 180 days after May 16, 2025.

Current wording

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 our 2024 Form 10-K, on March 7, 2025, 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 our 2024 Form 10-K. We will continue to be subject to these limitations for the remainder of the 2024 fiscal year and until the earlier of such time as our public float reaches at least $75 million or when we file our next annual report for the year ended December 31, 2025, at which time we will be required to re-test our status under these rules. If our public float is below $75 million as of the filing of our next annual report on Form 10-K, or at the time we file a new Form S-3, we will continue to be subject to these limitations, until the date that our public float again reaches $75 million. These limitations do not apply to secondary offerings for the resale of our ordinary shares or other securities by selling shareholders or to the issuance of ordinary shares upon conversion by holders of convertible securities, such as warrants. We have registered up to $100 million of ordinary shares warrants and/or debt securities and certain other outstanding securities with registration rights on our registration statement on Form S-3, which was declared effective by the SEC in May 2022 (the “2022 Shelf Registration Statement”). On May 15, 2025, we filed a new registration statement on Form S-3 (the “2025 Shelf Registration Statement”) to register up to $100 million of ordinary shares, warrants and/or debt securities, which has not yet been declared effective by the SEC. The 2022 Shelf Registration Statement expired on May 16, 2025, however, pursuant to Rule 415 of the Securities Act, we are permitted to continue making offers and sales of securities covered by the 2022 Shelf Registration Statement and prospectus supplements thereto until the earlier of the effective date of the 2025 Shelf Registration Statement or 180 days after May 16, 2025. Such extension period for the 2022 Shelf Registration Statement expired on November 12, 2025.

Previous wording

During the three months ended June 30, 2025, we sold 964,118 of our ordinary shares under the ATM Agreement at an average price of $1.30 per share, for total gross proceeds of approximately $1.3 million. We 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 $1.0 million.

Current wording

During the three and nine months ended September 30, 2025, the Company sold 1,146,629 and 2,110,747 shares, respectively, of its ordinary shares under the ATM program at an average price of $0.60 and $0.92 per share, respectively, for total gross proceeds of approximately $0.7 million and $1.9 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 $1.6 million.

Previous wording

As of June 30, 2025, approximately $4.2 million remained available for future issuance under the ATM Agreement.

Current wording

As of September 30, 2025, approximately $3.5 million remained available for future issuance under the ATM Agreement. The 2022 Shelf Registration Statement, which registered the ordinary shares available for issuance under the ATM Agreement, expired on November 12, 2025, following the 180-day extension permitted under Rule 415 of the Securities Act. Upon expiration of the 2022 Shelf Registration Statement, the Company’s ability to offer or sell ordinary shares under the ATM Agreement terminated.

Previous wording

Cash Flows for the Six Months Ended June 30, 2025 and 2024 (in thousands):

Current wording

Cash Flows for the nine Months Ended September 30, 2025 and 2024 (in thousands):

Previous wording

Net cash used in operating activities decreased by $3.9 million, or 29.1%, due to cash receipts from customers, improved working capital management and reduced operating expenses.

Current wording

Net cash used in operating activities decreased by $4.5 million, or 25.2%, due to cash receipts from customers, improved working capital management and reduced operating expenses.

Previous wording

Net Cash used in Investing Activities

Current wording

Cash used in Investing Activities

Previous wording

Net cash provided by financing activities increased by $7.8 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to the proceeds received through our January 2025 offering, ATM program and our June 2025 offering.

Current wording

Net cash provided by financing activities increased by $8.4 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, primarily due to the proceeds received through our January 2025 offering, June 2025 offering and ATM program.

Previous wording

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 3.372: $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: $1.173, both of which were the applicable exchange rates as of June 30, 2025.

Current wording

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 3.306: $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: $1.174, both of which were the applicable exchange rates as of September 30, 2025.