Business Context and Reporting Period
This Form 8-K, dated November 16, 2018, reports on ReWalk Robotics Ltd. (the "Company"), an emerging growth company incorporated in Israel. The filing details a material definitive agreement entered into on November 16, 2018, regarding an underwritten public offering of units and pre-funded units, which closed on November 20, 2018. The Company develops lightweight exo-suit technology for individuals with lower limb disabilities.
Key Financial Metrics
- Net Proceeds: Approximately $12.1 million from the public offering, excluding proceeds from warrant exercises and before estimated offering expenses of approximately $0.6 million.
- Debt Repayment: $3.6 million of offering proceeds was used to repay outstanding indebtedness under the Kreos V Convertible Note and related payments.
- Outstanding Debt: As of November 20, 2018, the outstanding principal under the Kreos V Loan Agreement was approximately $9.7 million.
- Deferred Payments: The amended loan agreement defers approximately $3.9 million of payments compared to the prior schedule.
- Offering Structure: 12,401,390 units at $0.30 per unit and 26,259,332 pre-funded units at $0.29 per unit, plus a fully exercised option for additional securities.
Material Changes
The primary material change is the successful completion of a capital raise and the concurrent restructuring of existing debt obligations. The Company utilized a portion of the new equity capital to extinguish a specific convertible note held by Kreos Capital V (Expert Fund) Limited ("Kreos V"). Additionally, the Company amended the Kreos V Loan Agreement to defer significant principal payments due in 2018 and 2019, improving short-term liquidity. The Company also amended a warrant held by Kreos V, reducing the exercise price from $9.64 to $0.30 per share.
Guidance, Outlook, and Risks
Use of Proceeds: The Company intends to use the remaining net proceeds for sales and marketing expenses related to market development, broadening third-party payor coverage, and research and development costs for new exo-suit indications.
Lock-up Restrictions: The Company is subject to a 90-day lock-up period following November 16, 2018, restricting the issuance of equity or convertible securities, with specific exceptions for strategic transactions and the Timwell Corporation Limited investment agreement.
Ownership Blockers: Warrants issued in the offering contain provisions limiting holder ownership to 4.99% (or 9.99% with notice) of outstanding ordinary shares immediately after exercise.
Risks: The filing notes that the Company is an emerging growth company and that the offering terms are subject to customary adjustments for stock splits or dividends. The Company also faces the risk of future dilution from the exercise of common warrants, pre-funded warrants, and underwriter warrants.
Investor Verification Checklist
- Verify the final net proceeds after deducting the estimated $0.6 million in offering expenses.
- Confirm the impact of the $3.9 million deferred payment schedule on future cash flow requirements under the Kreos V Loan Agreement.
- Review the full text of the Underwriting Agreement and warrant forms (Exhibits 1.1, 4.1, 4.2, 4.3, 4.4) for specific anti-dilution provisions and exercise terms.
- Monitor the status of the Timwell Corporation Limited investment agreement, which is exempt from the lock-up restrictions.
- Assess the potential dilution from the 2,667,590 underwriter warrants exercisable at $0.375 per share.